Document:

NEITHER
      THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
      HAVE 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 AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
      SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED
      BY SUCH SECURITIES. 

     

    ORGANIC
      TO GO FOOD CORPORATION

     

    WARRANT

     

    
      	
              Warrant
                No. [ ]

            	
              Original
                Issue Date: January [ ], 2008

            

    

     

    Organic
      To Go Food Corporation, a Delaware corporation (the "Company"),
      hereby
      certifies that, for value received, [ ] or its registered assigns (the
"Holder"),
      is
      entitled to purchase from the Company up to a total of [ ]1 
      shares
      of Common Stock (each such share, a "Warrant
      Share"
      and all
      such shares, the "Warrant
      Shares"),
      at any
      time and from time to time from and after the Original Issue Date and through
      and including January [ ], 2013 (the "Expiration
      Date"),
      and
      subject to the following terms and conditions:

     

    1. Definitions.
      As used
      in this Warrant, the following terms shall have the respective definitions
      set
      forth in this Section 1. Capitalized terms that are used and not defined in
      this
      Warrant that are defined in the Purchase Agreement (as defined below) shall
      have
      the respective definitions set forth in the Purchase Agreement.

     

    "Business
      Day"
      means
      any day except Saturday, Sunday and any day that is a federal legal holiday
      in
      the United States or a day on which banking institutions in the State of New
      York or State of Washington are authorized or required by law or other
      government action to close.

     

    
      
        

      

      
        	1	
              	
                A
                  number of shares as equals 45% of the Shares issuable to such investor
                  at
                  Closing under the Purchase
                  Agreement.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

     

    "Common
      Stock"
      means
      the common stock of the Company, par value $0.001 per share, and any securities
      into which such common stock may hereafter be reclassified. 

     

    "Exercise
      Price" means
      $2.50, subject to adjustment in accordance with Section 9.

     

    "Fundamental
      Transaction"
      means
      any of the following: (1) the Company effects any merger or consolidation of
      the
      Company with or into another Person, (2) the Company effects any sale of all
      or
      substantially all of its assets in one or a series of related transactions,
      (3)
      any tender offer or exchange offer (whether by the Company or another Person)
      is
      completed pursuant to which holders of Common Stock are permitted to tender
      or
      exchange their shares for other securities, cash or property, or (4) 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.

     

    “New
      York Courts”
      means
      the state and federal courts sitting in the City of New York, Borough of
      Manhattan.

     

    “Original
      Issue Date”
      means
      the Original Issue Date first set forth on the first page of this
      Warrant.

     

    "Purchase
      Agreement"
      means
      the Securities Purchase Agreement, dated [ ], 2008, to which the Company and
      the
      original Holder are parties.

     

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

     

    2. Registration
      of Warrant.
      The
      Company shall register this Warrant upon records to be maintained by the Company
      for that purpose (the "Warrant
      Register"),
      in the
      name of the record Holder hereof from time to time. The Company may deem and
      treat the registered Holder of this Warrant as the absolute owner hereof for
      the
      purpose of any exercise hereof or any distribution to the Holder, and for all
      other purposes, absent actual notice to the contrary.

     

    3. Registration
      of Transfers.
      The
      Company shall register the transfer of any portion of this Warrant in the
      Warrant Register, upon surrender of this Warrant, with the Form of Assignment
      attached hereto duly completed and signed, to the Company at its address
      specified herein. Upon any such registration or transfer, a new Warrant to
      purchase Common Stock, in substantially the form of this Warrant (any such
      new
      Warrant, a "New
      Warrant"),
      evidencing the portion of this Warrant so transferred shall be issued to the
      transferee and a New Warrant evidencing the remaining portion of this Warrant
      not so transferred, if any, shall be issued to the transferring Holder. The
      acceptance of the New Warrant by the transferee thereof shall be deemed the
      acceptance by such transferee of all of the rights and obligations of a holder
      of a Warrant. 

     

    
      
        
        

      

      
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    4. Exercise
      and Duration of Warrants.
      This
      Warrant shall be exercisable by the registered Holder at any time and from
      time
      to time on or after the Original Issue Date through and including the Expiration
      Date. At 6:30 p.m., New York City time on the Expiration Date, the portion
      of
      this Warrant not exercised prior thereto shall be and become void and of no
      value. The Company may not call or redeem any portion of this Warrant without
      the prior written consent of the affected Holder.

     

    5. Delivery
      of Warrant Shares.

     

    (a) To
      effect
      exercises hereunder, the Holder shall not be required to physically surrender
      this Warrant unless the aggregate Warrant Shares represented by this Warrant
      is
      being exercised. Upon delivery of the Exercise Notice (in the form attached
      hereto) to the Company (with the attached Warrant Shares Exercise Log) at its
      address for notice set forth herein and upon payment of the Exercise Price
      multiplied by the number of Warrant Shares that the Holder intends to purchase
      hereunder, the Company shall promptly (but in no event later than three Trading
      Days after the Date of Exercise (as defined herein)) issue and deliver to the
      Holder, a certificate for the Warrant Shares issuable upon such exercise, which,
      unless otherwise required by the Purchase Agreement, shall be free of
      restrictive legends. The Company shall, upon request of the Holder and
      subsequent to the date on which a registration statement covering the resale
      of
      the Warrant Shares has been declared effective by the Securities and Exchange
      Commission, use its reasonable best efforts to deliver Warrant Shares hereunder
      electronically through the Depository Trust Corporation or another established
      clearing corporation performing similar functions, if available, provided,
      that,
      the Company may, but will not be required to change its transfer agent if its
      current transfer agent cannot deliver Warrant Shares electronically through
      the
      Depository Trust Corporation. A "Date
      of Exercise"
      means
      the date on which the Holder shall have delivered to the Company: (i) the
      Exercise Notice (with the Warrant Exercise Log attached to it), appropriately
      completed and duly signed and (ii) if such Holder is not utilizing the cashless
      exercise provisions set forth in this Warrant, payment of the Exercise Price
      for
      the number of Warrant Shares so indicated by the Holder to be
      purchased.

     

    (b) If
      by the
      third Trading Day after a Date of Exercise the Company fails to deliver the
      required number of Warrant Shares in the manner required pursuant to Section
      5(a), then the Holder will have the right to rescind such exercise.

     

    (c) If
      by the
      third Trading Day after a Date of Exercise the Company fails to deliver the
      required number of Warrant Shares in the manner required pursuant to Section
      5(a), and if after such third Trading Day and prior to the receipt of such
      Warrant Shares, the Holder purchases (in an open market transaction or
      otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
      Holder of the Warrant Shares which the Holder anticipated receiving upon such
      exercise (a "Buy-In"),
      then
      the Company shall (1) pay in cash to the Holder the amount by which (x) the
      Holder's total purchase price (including brokerage commissions, if any) for
      the
      shares of Common Stock so purchased exceeds (y) the amount obtained by
      multiplying (A) the number of Warrant Shares that the Company was required
      to
      deliver to the Holder in connection with the exercise at issue by (B) the
      closing bid price of the Common Stock on the Date of Exercise and (2) at the
      option of the Holder, either reinstate the portion of the Warrant and equivalent
      number of Warrant Shares for which such exercise was not honored or deliver
      to
      the Holder the number of shares of Common Stock that would have been issued
      had
      the Company timely complied with its exercise and delivery obligations
      hereunder. The Holder shall provide the Company written notice indicating the
      amounts payable to the Holder in respect of the Buy-In. 

     

    
      
        
        

      

      
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    (d) The
      Company's obligations to issue and deliver Warrant Shares in accordance with
      the
      terms hereof are absolute and unconditional, irrespective of any action or
      inaction by the Holder to enforce the same, any waiver or consent with respect
      to any provision hereof, the recovery of any judgment against any Person or
      any
      action to enforce the same, or any setoff, counterclaim, recoupment, limitation
      or termination, or any breach or alleged breach by the Holder or any other
      Person of any obligation to the Company or any violation or alleged violation
      of
      law by the Holder or any other Person, and irrespective of any other
      circumstance which might otherwise limit such obligation of the Company to
      the
      Holder in connection with the issuance of Warrant Shares. Nothing herein shall
      limit a Holder's right to pursue any other remedies available to it hereunder,
      at law or in equity including, without limitation, a decree of specific
      performance and/or injunctive relief with respect to the Company's failure
      to
      timely deliver certificates representing Warrant Shares upon exercise of the
      Warrant as required pursuant to the terms hereof.

     

    6. Charges,
      Taxes and Expenses.
      Issuance and delivery of Warrant Shares upon exercise of this Warrant shall
      be
      made without charge to the Holder for any issue or transfer tax, withholding
      tax, transfer agent fee or other incidental tax or expense in respect of the
      issuance of such certificates, all of which taxes and expenses shall be paid
      by
      the Company; provided, however, that the Company shall not be required to pay
      any tax which may be payable in respect of any transfer involved in the
      registration of any certificates for Warrant Shares or Warrants in a name other
      than that of the Holder. The Holder shall be responsible for all other tax
      liability that may arise as a result of holding or transferring this Warrant
      or
      receiving Warrant Shares upon exercise hereof.

     

    7. Replacement
      of Warrant.
      If this
      Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or
      cause to be issued in exchange and substitution for and upon cancellation
      hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
      only
      upon receipt of evidence reasonably satisfactory to the Company of such loss,
      theft or destruction and customary and reasonable indemnity (which shall not
      include a surety bond), if requested. Applicants for a New Warrant under such
      circumstances shall also comply with such other reasonable regulations and
      procedures and pay such other reasonable third-party costs as the Company may
      prescribe. If a New Warrant is requested as a result of a mutilation of this
      Warrant, then the Holder shall deliver such mutilated Warrant to the Company
      as
      a condition precedent to the Company’s obligation to issue the New
      Warrant.

     

    8. Reservation
      of Warrant Shares.
      The
      Company covenants that it will at all times reserve and keep available out
      of
      the aggregate of its authorized but unissued and otherwise unreserved Common
      Stock, solely for the purpose of enabling it to issue Warrant Shares upon
      exercise of this Warrant as herein provided, the number of Warrant Shares which
      are then issuable and deliverable upon the exercise of this entire Warrant,
      free
      from preemptive rights or any other contingent purchase rights of Persons other
      than the Holder (taking into account the adjustments and restrictions of Section
      9). The Company covenants that all Warrant Shares so issuable and deliverable
      shall, upon issuance and the payment of the applicable Exercise Price in
      accordance with the terms hereof, be duly and validly authorized, issued and
      fully paid and nonassessable.

     

    
      
        
        

      

      
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    9. Certain
      Adjustments.
      The
      Exercise Price and number of Warrant Shares issuable upon exercise of this
      Warrant are subject to adjustment from time to time as set forth in this Section
      9.

     

    (a) Stock
      Dividends and Splits.
      If the
      Company, at any time while this Warrant is outstanding, (i) pays a stock
      dividend on its Common Stock or otherwise makes a distribution on any class
      of
      capital stock that is payable in shares of Common Stock, (ii) subdivides
      outstanding shares of Common Stock into a larger number of shares, or (iii)
      combines outstanding shares of Common Stock into a smaller number of shares,
      then in each such case the Exercise Price shall be multiplied by a fraction
      of
      which the numerator shall be the number of shares of Common Stock outstanding
      immediately before such event and of which the denominator shall be the number
      of shares of Common Stock outstanding immediately after such event. Any
      adjustment made pursuant to clause (i) of this paragraph shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such dividend or distribution, and any adjustment pursuant to clause
      (ii) or (iii) of this paragraph shall become effective immediately after the
      effective date of such subdivision or combination.

     

    (b) Fundamental
      Transactions.
      If, at
      any time while this Warrant is outstanding there is a Fundamental Transaction,
      then the Holder shall have the right thereafter to receive, upon exercise of
      this Warrant, the same amount and kind of securities, cash or property as it
      would have been entitled to receive upon the occurrence of such Fundamental
      Transaction if it had been, immediately prior to such Fundamental Transaction,
      the holder of the number of Warrant Shares then issuable upon exercise in full
      of this Warrant (the "Alternate
      Consideration").
      For
      purposes of any such exercise, the determination of the Exercise Price shall
      be
      appropriately adjusted to apply to such Alternate Consideration based on the
      amount of Alternate Consideration issuable in respect of one share of Common
      Stock in such Fundamental Transaction, and the Company shall apportion the
      Exercise Price among the Alternate Consideration in a reasonable manner
      reflecting the relative value of any different components of the Alternate
      Consideration. If holders of Common Stock are given any choice as to the
      securities, cash or property to be received in a Fundamental Transaction, then
      the Holder shall be given the same choice as to the Alternate Consideration
      it
      receives upon any exercise of this Warrant following such Fundamental
      Transaction. The terms of any agreement pursuant to which a Fundamental
      Transaction is effected shall include terms requiring any such successor or
      surviving entity to comply with the provisions of this paragraph (b) and
      insuring that the Warrant (or any such replacement security) will be similarly
      adjusted upon any subsequent transaction analogous to a Fundamental
      Transaction.

     

    (c) Number
      of Warrant Shares.
      Simultaneously with any adjustment to the Exercise Price pursuant to this
      Section 9, the number of Warrant Shares that may be purchased upon exercise
      of
      this Warrant shall be increased or decreased proportionately, so that after
      such
      adjustment the aggregate Exercise Price payable hereunder for the adjusted
      number of Warrant Shares shall be the same as the aggregate Exercise Price
      in
      effect immediately prior to such adjustment.

     

    
      
        
        

      

      
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    (d) Calculations.
      All
      calculations under this Section 9 shall be made to the nearest cent or the
      nearest 1/100th
      of a
      share, as applicable. The number of shares of Common Stock outstanding at any
      given time shall not include shares owned or held by or for the account of
      the
      Company, and the disposition of any such shares shall be considered an issue
      or
      sale of Common Stock.

     

    (e) Notice
      of Adjustments.
      Upon
      the occurrence of each adjustment pursuant to this Section 9, the Company at
      its
      expense will promptly compute such adjustment in accordance with the terms
      of
      this Warrant and prepare a certificate setting forth such adjustment, including
      a statement of the adjusted Exercise Price and adjusted number or type of
      Warrant Shares or other securities issuable upon exercise of this Warrant (as
      applicable), describing the transactions giving rise to such adjustments and
      showing in detail the facts upon which such adjustment is based. Upon written
      request, the Company will promptly deliver a copy of each such certificate
      to
      the Holder and to the Company's Transfer Agent.

     

    (f) Notice
      of Corporate Events.
      If the
      Company (i) declares a dividend or any other distribution of cash, securities
      or
      other property in respect of its Common Stock, including without limitation
      any
      granting of rights or warrants to subscribe for or purchase any capital stock
      of
      the Company or any Subsidiary, (ii) authorizes or approves, enters into any
      agreement contemplating or solicits stockholder approval for any Fundamental
      Transaction or (iii) authorizes the voluntary dissolution, liquidation or
      winding up of the affairs of the Company, then the Company shall deliver to
      the
      Holder a notice describing the material terms and conditions of such transaction
      (but only to the extent such disclosure would not result in the dissemination
      of
      material, non-public information to the Holder) at least 10 calendar days prior
      to the applicable record or effective date on which a Person would need to
      hold
      Common Stock in order to participate in or vote with respect to such
      transaction, and the Company will take all steps reasonably necessary in order
      to insure that the Holder is given the practical opportunity to exercise this
      Warrant prior to such time so as to participate in or vote with respect to
      such
      transaction; provided, however, that the failure to deliver such notice or
      any
      defect therein shall not affect the validity of the corporate action required
      to
      be described in such notice.

     

    10. Payment
      of Exercise Price.
      The
      Holder may pay the Exercise Price in one of the following manners:

     

    (a) Cash
      Exercise.
      The
      Holder may deliver immediately available funds; or

     

    (b) Cashless
      Exercise.
      If an
      Exercise Notice is delivered at a time when a registration statement permitting
      the Holder to resell the Warrant Shares is not then effective or the prospectus
      forming a part thereof is not then available to the Holder for the resale of
      the
      Warrant Shares, then the Holder may notify the Company in an Exercise Notice
      of
      its election to utilize cashless exercise, in which event the Company shall
      issue to the Holder the number of Warrant Shares determined as
      follows:

     

    
      
        
        

      

      
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    X
      = Y
      [(A-B)/A]

     

    where:

     

    X
      = the
      number of Warrant Shares to be issued to the Holder.

     

    Y
      = the
      number of Warrant Shares with respect to which this Warrant is being
      exercised.

     

    A
      = the
      average of the closing prices for the five Trading Days immediately prior to
      (but not including) the Date of Exercise.

     

    B
      = the
      Exercise Price.

     

    For
      purposes of Rule 144 promulgated under the Securities Act, it is intended,
      understood and acknowledged that the Warrant Shares issued in a cashless
      exercise transaction shall be deemed to have been acquired by the Holder, and
      the holding period for the Warrant Shares shall be deemed to have commenced,
      on
      the date this Warrant was originally issued.

     

    11. Limitations
      on Exercise.
      Notwithstanding anything to the contrary contained herein, the number of Warrant
      Shares that may be acquired by the Holder upon any exercise of this Warrant
      (or
      otherwise in respect hereof) shall be limited to the extent necessary to insure
      that, following such exercise (or other issuance), the total number of shares
      of
      Common Stock then beneficially owned by such Holder and its Affiliates and
      any
      other Persons whose beneficial ownership of Common Stock would be aggregated
      with the Holder's for purposes of Section 13(d) of the Exchange Act, does not
      exceed 9.99% of the total number of issued and outstanding shares of Common
      Stock (including for such purpose the shares of Common Stock issuable upon
      such
      exercise). For such purposes, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Exchange Act and the rules and regulations
      promulgated thereunder. This provision shall not restrict the number of shares
      of Common Stock which a Holder may receive or beneficially own in order to
      determine the amount of securities or other consideration that such Holder
      may
      receive in the event of a Fundamental Transaction as contemplated in Section
      9
      of this Warrant. This restriction may not be waived, and notwithstanding
      anything to the contrary in any Transaction Document, may not be amended by
      agreement of the parties. Notwithstanding anything to the contrary contained
      in
      this Warrant or in any other Transaction Document, (a) no term of this Section
      may be waived by any party, nor amended such that the threshold percentage
      of
      ownership would be directly or indirectly increased, (b) no amendment or
      modification to any Transaction Document may be made such that it would have
      the
      effect of modifying or waiving any term of this Section in violation of this
      restriction, (c) this restriction runs with the Warrant and may not be modified
      or waived by any subsequent holder hereof and (d) any attempted waiver,
      modification or amendment of this Section will be void ab initio.

     

    12. No
      Fractional Shares.
      No
      fractional shares of Warrant Shares will be issued in connection with any
      exercise of this Warrant. In lieu of any fractional shares which would,
      otherwise be issuable, the Company shall pay cash equal to the product of such
      fraction multiplied by the closing price of one Warrant Share as reported by
      the
      applicable Trading Market on the date of exercise.

     

    
      
        
        

      

      
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    13. Notices.
      Any and
      all notices or other communications or deliveries hereunder (including, without
      limitation, any Exercise Notice) shall be in writing and shall be deemed given
      and effective on the earliest of (i) the date of transmission, if such notice
      or
      communication is delivered via facsimile at the facsimile number specified
      in
      this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (ii)
      the
      next Trading Day after the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number specified in this Section
      on
      a day that is not a Trading Day or later than 6:30 p.m. (New York City time)
      on
      any Trading Day, (iii) the Trading Day following the date of mailing, if sent
      by
      nationally recognized overnight courier service, or (iv) upon actual receipt
      by
      the party to whom such notice is required to be given. The addresses for such
      communications shall be: (i) if to the Company, to Organic To Go Food
      Corporation, 3317 Third Avenue South, Seattle, Washington 98134, Attn:
      President, or to Facsimile No.: (206)
      838-4695
      (or such
      other address as the Company shall indicate in writing in accordance with this
      Section), or (ii) if to the Holder, to the address or facsimile number appearing
      on the Warrant Register or such other address or facsimile number as the Holder
      may provide to the Company in accordance with this Section.

     

    14. Warrant
      Agent.
      The
      Company shall serve as warrant agent under this Warrant. Upon 10 days' notice
      to
      the Holder, the Company may appoint a new warrant agent. Any corporation into
      which the Company or any new warrant agent may be merged or any corporation
      resulting from any consolidation to which the Company or any new warrant agent
      shall be a party or any corporation to which the Company or any new warrant
      agent transfers substantially all of its corporate trust or shareholders
      services business shall be a successor warrant agent under this Warrant without
      any further act. Any such successor warrant agent shall promptly cause notice
      of
      its succession as warrant agent to be mailed (by first class mail, postage
      prepaid) to the Holder at the Holder's last address as shown on the Warrant
      Register.

     

    15. Miscellaneous.

     

    (a) This
      Warrant shall be binding on and inure to the benefit of the parties hereto
      and
      their respective successors and assigns. Subject to the preceding sentence,
      nothing in this Warrant shall be construed to give to any Person other than
      the
      Company and the Holder any legal or equitable right, remedy or cause of action
      under this Warrant. This Warrant may be amended only in writing signed by the
      Company and the Holder and their successors and assigns.

     

    (b) All
      questions concerning the construction, validity, enforcement and interpretation
      of this Warrant shall be governed by and construed and enforced in accordance
      with the internal laws of the State of New York, without regard to the
      principles of conflicts of law thereof. Each party agrees that all legal
      proceedings concerning the interpretations, enforcement and defense of this
      Warrant and the transactions herein contemplated (“Proceedings”)
      (whether brought against a party hereto or its respective Affiliates, employees
      or agents) shall be commenced exclusively in the New York Courts. Each party
      hereto hereby irrevocably submits to the exclusive jurisdiction of the New
      York
      Courts for the adjudication of any dispute hereunder or in connection herewith
      or with any transaction contemplated hereby or discussed herein, and hereby
      irrevocably waives, and agrees not to assert in any Proceeding, any claim that
      it is not personally subject to the jurisdiction of any New York Court, or
      that
      such Proceeding has been commenced in an improper or inconvenient forum. Each
      party hereto hereby irrevocably waives personal service of process and consents
      to process being served in any such Proceeding by mailing a copy thereof via
      registered or certified mail or overnight delivery (with evidence of delivery)
      to such party at the address in effect for notices to it under this Warrant
      and
      agrees that such service shall constitute good and sufficient service of process
      and notice thereof. Nothing contained herein shall be deemed to limit in any
      way
      any right to serve process in any manner permitted by law. Each party hereto
      hereby irrevocably waives, to the fullest extent permitted by applicable law,
      any and all right to trial by jury in any legal proceeding arising out of or
      relating to this Warrant or the transactions contemplated hereby. If either
      party shall commence a Proceeding to enforce any provisions of this Warrant,
      then the prevailing party in such Proceeding shall be reimbursed by the other
      party for its attorney’s fees and other costs and expenses incurred with the
      investigation, preparation and prosecution of such Proceeding.

     

    
      
        
        

      

      
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    (c) The
      headings herein are for convenience only, do not constitute a part of this
      Warrant and shall not be deemed to limit or affect any of the provisions
      hereof.

     

    (d) In
      case
      any one or more of the provisions of this Warrant shall be invalid or
      unenforceable in any respect, the validity and enforceability of the remaining
      terms and provisions of this Warrant shall not in any way be affected or
      impaired thereby and the parties will attempt in good faith to agree upon a
      valid and enforceable provision which shall be a commercially reasonable
      substitute therefor, and upon so agreeing, shall incorporate such substitute
      provision in this Warrant.

     

    (e) Prior
      to
      exercise of this Warrant, the Holder hereof shall not, by reason of being a
      Holder, be entitled to any rights of a stockholder with respect to the Warrant
      Shares.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK,

    SIGNATURE
      PAGE FOLLOWS]

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
      its
      authorized officer as of the date first indicated above.

    
      	 	 	 
	 	ORGANIC TO GO FOOD
              CORPORATION
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
              Jason Brown
	 	Title: Chairman and Chief Executive Officer 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    EXERCISE
      NOTICE

    ORGANIC
      TO GO FOOD CORPORATION

    WARRANT
      DATED JANUARY [ ], 2008

     

    The
      undersigned Holder hereby irrevocably elects to purchase _____________ shares
      of
      Common Stock pursuant to the above referenced Warrant. Capitalized terms used
      herein and not otherwise defined have the respective meanings set forth in
      the
      Warrant.

     

    (1) The
      undersigned Holder hereby exercises its right to purchase _________________
      Warrant Shares pursuant to the Warrant.

     

    (2) The
      Holder intends that payment of the Exercise Price shall be made as (check
      one):

     

    ____       
      “Cash
      Exercise” under Section 10

     

    ____        “Cashless
      Exercise” under Section 10

     

    (3) If
      the
      holder has elected a Cash Exercise, the holder shall pay the sum of
      $____________ to the Company in accordance with the terms of the
      Warrant.

     

    (4) Pursuant
      to this Exercise Notice, the Company shall deliver to the holder _______________
      Warrant Shares in accordance with the terms of the Warrant.

     

    (5) By
      its
      delivery of this Exercise Notice, the undersigned represents and warrants to
      the
      Company that in giving effect to the exercise evidenced hereby the Holder will
      not beneficially own in excess of the number of shares of Common Stock
      (determined in accordance with Section 13(d) of the Securities Exchange Act
      of
      1934) permitted to be owned under Section 11 of this Warrant to which this
      notice relates.

    

    
      	 	 	 
	 	 	 
	
              Dated:
                ____________,
                ____

            	 	
              Name
                of Holder:

            
	 	 	 
	 	 	
              (Print)
                _____________________

            
	 	 	 
	 	 	
              By:________________________

            
	 	 	
              Name:______________________

            
	 	 	
              Title:_______________________

            
	 	 	 
	 	 	
              (Signature
                must conform in all respects to name of holder as specified on the
                face of
                the Warrant)

            

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Warrant
      Shares Exercise Log

     

    
      	
              Date

            	
              Number
                of Warrant Shares Available to be Exercised

            	
              Number
                of Warrant Shares 

              Exercised

            	
              Number
                of Warrant Shares Remaining to be Exercised

            
	
               

               

               

               

               

               

               

               

               

               

               

               

               

               

            	 	 	 

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ORGANIC
      TO GO FOOD CORPORATION

    WARRANT
      ORIGINALLY ISSUED JANUARY [ ], 2008

    WARRANT
      NO. [ ]

     

    FORM
      OF
      ASSIGNMENT

     

    [To
      be
      completed and signed only upon transfer of Warrant]

     

    FOR
      VALUE
      RECEIVED, the undersigned hereby sells, assigns and transfers unto
      ________________________________ the right represented by the above-captioned
      Warrant to purchase ____________ shares of Common Stock to which such Warrant
      relates and appoints ________________ attorney to transfer said right on the
      books of the Company with full power of substitution in the
      premises.

     

    Dated: _______________,
      ____

     

    _______________________________________

    (Signature
      must conform in all respects to name of holder as specified on the face of
      the
      Warrant)

     

    _______________________________________

    Address
      of Transferee

     

    _______________________________________

     

    _______________________________________

     

    In
      the
      presence of:

     

    __________________________EXHIBIT
      A

    

    THIS
      SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      OR APPLICABLE STATE SECURITIES LAWS, AND ACCORDINGLY, MAY NOT BE OFFERED FOR
      SALE, SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO (A) AN EFFECTIVE
      REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933,
      AS
      AMENDED, OR (B) EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER.
      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.

    

    Original
      Issue Date: January ___, 2008

    Original
      Conversion Price (subject to adjustment herein): $4.25

    

    $_______________

     

    5%
      SECURED CONVERTIBLE NOTE

    DUE
      JANUARY ___, 2011

    

    THIS
      SECURED CONVERTIBLE NOTE is one of a series of duly authorized and validly
      issued Secured Convertible Notes of China Water & Drinks, Inc., a Nevada
      corporation, with headquarters at Unit 07, 6/F, Concordia Plaza, 1 Science
      Museum Road, Tsimshatsui East, Kowloon, Hong Kong (collectively with its
      predecessors, the “Company”),
      designated as its 5% Secured Convertible Note, due on the three year anniversary
      of the Original Issue Date (this note, the “Note”
and,
      collectively with the other such series of notes, the “Notes”).

    

    FOR
      VALUE
      RECEIVED, the Company promises to pay to ________________________ or its
      registered assigns (the “Holder”),
      or
      shall have paid pursuant to the terms hereunder, the principal sum of
      $_______________ by the three year anniversary of the Original Issue Date,
      or
      such earlier date as this Note is required or permitted to be repaid as provided
      hereunder (the “Maturity
      Date”),
      and
      to pay interest to the Holder on the aggregate unconverted and then outstanding
      principal amount of this Note in accordance with the provisions hereof. This
      Note is subject to the following additional provisions:

    

    Section
      1. Definitions.
      For the
      purposes hereof, in addition to the terms defined elsewhere in this Note, (a)
      capitalized terms not otherwise defined herein shall have the meanings set
      forth
      in the Purchase Agreement and (b) the following terms shall have the following
      meanings:

    

    “5%
      Secured Convertible Notes”
means
      the 5% Secured Convertible Notes issued by the Company on the date hereof,
      including this Note.

    

    “Alternate
      Consideration”
shall
      have the meaning set forth in Section 5(h).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    “Bankruptcy
      Event”
means
      any of the following events: (a) the Company or any Significant Subsidiary
      (as
      such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a
      case
      or other proceeding under any bankruptcy, reorganization, arrangement,
      adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
      or
      similar law of any jurisdiction relating to the Company or any Significant
      Subsidiary thereof; (b) there is commenced against the Company or any
      Significant Subsidiary thereof any such case or proceeding that is not dismissed
      within 60 days after commencement; (c) the Company or any Significant Subsidiary
      thereof is adjudicated insolvent or bankrupt or any order of relief or other
      order approving any such case or proceeding is entered; (d) the Company or
      any
      Significant Subsidiary thereof suffers any appointment of any custodian or
      the
      like for it or any substantial part of its property that is not discharged
      or
      stayed within 60 calendar days after such appointment; (e) the Company or any
      Significant Subsidiary thereof makes a general assignment for the benefit of
      creditors; (f) the Company or any Significant Subsidiary thereof calls a meeting
      of its creditors with a view to arranging a composition, adjustment or
      restructuring of its debts; or (g) the Company or any Significant Subsidiary
      thereof, by any act or failure to act, expressly indicates its consent to,
      approval of or acquiescence in any of the foregoing or takes any corporate
      or
      other action for the purpose of effecting any of the foregoing.

    

    “Business
      Day”
means
      any day except Saturday, Sunday, any day which shall be a federal legal holiday
      in the United States or any day on which banking institutions in the State
      of
      New York are authorized or required by law or other governmental action to
      close.

    

    “Buy-In”
shall
      have the meaning set forth in Section 4(d)(v).

    

    “Change
      of Control Transaction”
means
      the occurrence after the date hereof of any of (i) an acquisition after the
      date
      hereof by an individual or legal entity or “group” (as described in Rule
      13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
      through legal or beneficial ownership of capital stock of the Company, by
      contract or otherwise) of in excess of 50% of the voting securities of the
      Company (other than by means of conversion of the Notes), or (ii) the Company
      merges into or consolidates with any other Person (as defined below), or any
      Person merges into or consolidates with the Company and the stockholders of
      the
      Company immediately prior to such transaction own less than 50% of the aggregate
      voting power of the Company or the successor entity resulting from such merger
      or consolidation immediately after such transaction, or (iii) the Company sells
      or transfers all or substantially all of its assets to another Person, or (iv)
      a
      replacement at one time or within a three-year period of more than one-half
      of
      the members of the Company’s board of directors which is not approved by a
      majority of those individuals who are members of the board of directors on
      the
      date hereof (or by those individuals who are serving as members of the board
      of
      directors on any date whose nomination to the board of directors was approved
      by
      a majority of the members of the board of directors who are members on the
      date
      hereof), or (v) the execution by the Company of an agreement to which the
      Company is a party or by which it is bound, providing for any of the events
      set
      forth in clauses (i) through (iv) above.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    “Common
      Stock”
means
      the common stock, par value $.001 per share, of the Company and stock of any
      other class of securities into which such securities may hereafter be
      reclassified or changed into. 

    

    “Common
      Stock Equivalents”
means,
      collectively, Options and Convertible Securities.

    

    “Conversion
      Date”
shall
      have the meaning set forth in Section 4(a).

    

    “Conversion
      Price”
shall
      have the meaning set forth in Section 4(c).

    

    “Conversion
      Shares”
means,
      collectively, the shares of Common Stock issuable upon conversion of this Note
      in accordance with the terms hereof. 

     

    “Convertible
      Securities”
means
      any stock or securities (other than Options) convertible into or exercisable
      or
      exchangeable for shares of Common
      Stock.

     

    “Effectiveness
      Period”
shall
      have the meaning set forth in the Registration Rights Agreement. 

    

    “Event
      of Default”
shall
      have the meaning set forth in Section 9.

    

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

    

    “Fundamental
      Transaction”
shall
      have the meaning set forth in Section 5(h).

    

    “Interest
      Payment Date”
shall
      have the meaning set forth in Section 2(a).

    

    “Late
      Fees”
shall
      have the meaning set forth in Section 2(c).

    

    “Lien”
means
      any lien, mortgage, pledge, assignment, security interest, charge or
      encumbrance, claim or other third party rights or restrictions of any
      kind.

     

    “Mandatory
      Default Amount”
means
      the sum of (i) the greater of (A) 120% of the outstanding principal amount
      of
      this Note, plus all accrued and unpaid interest hereon, or (B) the outstanding
      principal amount of this Note, plus all accrued and unpaid interest hereon,
      divided by the Conversion Price on the date the Mandatory Default Amount is
      either (a) demanded (if demand or notice is required to create an Event of
      Default) or otherwise due or (b) paid in full, whichever has a lower Conversion
      Price, multiplied by the VWAP on the date the Mandatory Default Amount is either
      (x) demanded or otherwise due or (y) paid in full, whichever has a higher VWAP,
      and (ii) all other amounts, costs, expenses and liquidated damages due in
      respect of this Note.

    

    “New
      York Courts”
shall
      have the meaning set forth in Section 10(d).

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    “Note
      Register”
shall
      have the meaning set forth in Section 2(b).

    

    “Notice
      of Conversion”
shall
      have the meaning set forth in Section 4(a). 

     

    “Options”
means
      any rights, warrants or options to subscribe for or purchase shares of
Common
      Stock or
      Convertible Securities.

     

    “Original
      Issue Date”
means
      the date of the first issuance of the Notes, regardless of any transfers of
      any
      Note and regardless of the number of instruments which may be issued to evidence
      such Notes.

    

    “Permitted
      Indebtedness”
means
      (a) the Indebtedness (as defined in Section 3(s) the Purchase Agreement)
      existing on the Original Issue Date and set forth on Schedule
      3(w)
      attached
      to the Purchase Agreement (b) the Indebtedness evidenced by the Notes, and
      (c)
      lease obligations and purchase money indebtedness of up to US$5 million, in
      the
      aggregate, incurred in connection with the acquisition of capital assets and
      lease obligations with respect to newly acquired or leased assets.

    

    “Permitted
      Lien”
means
      the individual and collective reference to the following: (a) Liens for taxes,
      assessments and other governmental charges or levies not yet due or Liens for
      taxes, assessments and other governmental charges or levies being contested
      in
      good faith and by appropriate proceedings for which adequate reserves (in the
      good faith judgment of the management of the Company) have been established
      in
      accordance with GAAP; (b) Liens imposed by law which were incurred in the
      ordinary course of the Company’s business, such as carriers’, warehousemen’s and
      mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in
      the ordinary course of the Company’s business, and which (x) do not individually
      or in the aggregate materially detract from the value of such property or assets
      or materially impair the use thereof in the operation of the business of the
      Company and its Subsidiaries or (y) are being contested in good faith by
      appropriate proceedings, which proceedings have the effect of preventing for
      the
      foreseeable future the forfeiture or sale of the property or asset subject
      to
      such Lien; and (c) Liens incurred in connection with Permitted
      Indebtedness.

     

    “Person”
means
      an individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

    

    “Purchase
      Agreement”
means
      the Securities Purchase Agreement among the Company and the original Holders,
      dated as of January 24, 2008, as amended, modified or supplemented from time
      to
      time in accordance with its terms.

    

    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement among the Company and the Investors (as
      defined in the Registration Rights Agreement), dated as of the date of the
      Purchase Agreement, as amended, modified or supplemented from time to time
      in
      accordance with its terms.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    “Registration
      Statement”
means
      a
      registration statement that registers the Registrable Securities (as defined
      in
      the Registration Rights Agreement) pursuant to the Registration Rights
      Agreement.

    

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

    

    “Share
      Delivery Date”
shall
      have the meaning set forth in Section 4(d)(ii).

    

    “Subsidiary”
shall
      have the meaning set forth in the Purchase Agreement.

    

    “Subsequent
      Financing”
shall
      mean a transaction on or before December 31, 2008 involving the issuance by
      the
      Company of shares of Common Stock with respect to which the Company receives
      gross proceeds of not less than $30 million. 

    

    “Trading
      Day”
means
      a
      day on which the principal Trading Market is open for business.

    

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: the American Stock Exchange, the Nasdaq
      Capital Market, the Nasdaq Global Market, the New York Stock Exchange or the
      OTC
      Bulletin Board.

    

    “Transaction
      Documents”
shall
      have the meaning set forth in the Purchase Agreement.

    

    “VWAP”
means,
      for any date, the price determined by the first of the following clauses that
      applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
      the daily volume weighted average price of the Common Stock for such date (or
      the nearest preceding date) on the Trading Market on which the Common Stock
      is
      then listed or quoted for trading as reported by Bloomberg L.P. (based on a
      Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
      time); (b)  if the Common Stock is not then quoted for trading on the OTC
      Bulletin Board and if prices for the Common Stock are then reported in the
“Pink
      Sheets” published by Pink Sheets, LLC (or a similar organization or agency
      succeeding to its functions of reporting prices), the most recent bid price
      per
      share of the Common Stock so reported; or (c) in all other cases, the fair
      market value of a share of Common Stock as determined by an independent
      appraiser selected in good faith by the Holder and reasonably acceptable to
      the
      Company.

    

    Section
      2. Interest.

    

    a) Payment
      of Interest in Cash.
      The
      Company shall pay interest to the Holder on the aggregate unconverted and then
      outstanding principal amount of this Note at the rate of 5% per annum, payable
      quarterly in arrears on March 31, June 30, September 30 and December 31,
      beginning on March 31, 2008, on each Conversion Date (as to that principal
      amount then being converted), and on the Maturity Date (except that, if any
      such
      date is not a Business Day, then such payment shall be due on the next
      succeeding Business Day) (each such date, an “Interest
      Payment Date”),
      in
      cash.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    b) Interest
      Calculations.
      Interest shall be calculated on the basis of a 360-day year and shall accrue
      daily commencing on the Original Issue Date until payment in full of the
      principal sum, together with all accrued and unpaid interest, liquidated damages
      and other amounts which may become due hereunder, has been made. Interest shall
      cease to accrue with respect to any principal amount converted, provided that
      the Company actually delivers the Conversion Shares within the time period
      as
      set forth in by Section 4(d)(ii). Interest hereunder will be paid to the Person
      in whose name this Note is registered on the records of the Company regarding
      registration and transfers of this Note (the “Note
      Register”).

    

    c) Late
      Fee.
      All
      overdue accrued and unpaid interest to be paid hereunder shall entail a late
      fee
      at an interest rate equal to the lesser of 10% per annum or the maximum rate
      permitted by applicable law (“Late
      Fees”)
      which
      shall accrue daily from the date such interest is due hereunder through and
      including the date of payment in full. 

     

    d) Prepayment.
      Except
      as otherwise set forth in this Note, the Company may not prepay any portion
      of
      the principal amount of this Note without the prior written consent of the
      Holder. 

    

    Section
      3.  Registration
      of Transfers and Exchanges.
      

     

    a) Different
      Denominations.
      This
      Note is exchangeable for an equal aggregate principal amount of Notes of
      different authorized denominations, as requested by the Holder surrendering
      the
      same. No service charge will be payable for such registration of transfer or
      exchange.

     

    b) Investment
      Representations.
      This
      Note has been issued subject to certain investment representations of the
      original Holder set forth in the Purchase Agreement and may be transferred
      or
      exchanged only in compliance with the Purchase Agreement and applicable federal
      and state securities laws and regulations. 

    

    c) Reliance
      on Note Register.
      Prior
      to due presentment for transfer to the Company of this Note, the Company and
      any
      agent of the Company may treat the Person in whose name this Note is duly
      registered on the Note Register as the owner hereof for the purpose of receiving
      payment as herein provided and for all other purposes, whether or not this
      Note
      is overdue, and neither the Company nor any such agent shall be affected by
      notice to the contrary.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    Section
      4. Conversion.

     

    a) Voluntary
      Conversion.
      At any
      time after the Original Issue Date until this Note is no longer outstanding,
      this Note and any accrued and unpaid interest shall be convertible, in whole
      or
      in part, into shares of Common Stock at the option of the Holder, at any time
      and from time to time; provided, however, that the Holder shall not effect
      any conversion of this Note if, immediately after such conversion, the Holder
      and its affiliates would in the aggregate beneficially own more than 9.9% of
      the
      Company's outstanding shares of Common Stock. The Holder shall effect
      conversions by delivering to the Company a Notice of Conversion, the form of
      which is attached hereto as Annex
      A
      (a
“Notice
      of Conversion”),
      specifying therein the principal amount of this Note to be converted and the
      date on which such conversion shall be effected (a “Conversion
      Date”).
      If no
      Conversion Date is specified in a Notice of Conversion, the Conversion Date
      shall be the date that such Notice of Conversion is deemed delivered hereunder.
      The Company shall, promptly upon its receipt of a Notice of Conversion, notify
      the Holder by telephone and by facsimile of the number of shares of Common
      Stock
      outstanding on such date and the number of Conversion Shares which would be
      issuable to the Holder if the conversion requested in such Notice of Conversion
      were effected in full, whereupon, notwithstanding anything to the contrary
      set
      forth in this Note, the Holder may, to the extent that the Holder determines
      that such conversion would result in the Holder and its affiliates beneficially
      owning more than 9.9% of the Company's outstanding shares of Common Stock,
      within one Trading Day of its receipt of the Company's notice as required by
      this sentence, revoke such conversion in whole or in part by notifying the
      Company by telephone or facsimile. To effect conversions hereunder, the Holder
      shall not be required to physically surrender this Note to the Company unless
      the entire principal amount of this Note plus all accrued and unpaid interest
      thereon has been so converted. Conversions hereunder shall have the effect
      of
      lowering the outstanding principal amount of this Note in an amount equal to
      the
      applicable conversion. The Holder and the Company shall maintain records showing
      the principal amount(s) converted and the date of such conversion(s). The
      Holder, and any assignee by acceptance of this Note, acknowledge and agree
      that,
      by reason of the provisions of this paragraph, following conversion of a portion
      of this Note, the unpaid and unconverted principal amount of this Note may
      be
      less than the amount stated on the face hereof. 

    

    b) Automatic
      Conversion.
      Upon,
      and subject to the consummation of, a Subsequent Financing, an amount of this
      Note equal to fifty percent (50%) of the outstanding principal amount
      of this Note as of the Original Issue Date shall be automatically
      converted into shares of Common Stock; provided, that if a portion of
      this Note has previously been converted (voluntarily or otherwise),
      the principal amount of this Note to be automatically
      converted pursuant to this Section 4(b) shall be reduced by the
      aggregate principal amount of this Note converted in such previous
      conversion(s); and provided, further, that the principal amount of this Note
      to
      be automatically converted pursuant to this Section 4(b) shall be further
      reduced such that immediately after such conversion, the Holder and its
      affiliates would not in the aggregate beneficially own more than 9.9% of the
      Company's outstanding shares of Common Stock, giving effect to such conversion.
      Prior to the issuance of any Conversion Shares to the Holder pursuant to an
      automatic conversion under this Section 4(b), the Company shall notify the
      Holder by telephone and by facsimile of the number of shares of Common Stock
      outstanding on such date and the number of Conversion Shares issuable to the
      Holder pursuant to such automatic conversion, whereupon, notwithstanding
      anything to the contrary set forth in this Note, the Holder may require the
      Company to reduce the principal amount of this Note being automatically
      converted, to the extent that such conversion would result in the Holder and
      its
      affiliates, in the aggregate, beneficially owning more than 9.9% of the
      Company's outstanding shares of Common Stock at the time of such conversion
      by
      notifying the Company by telephone or facsimile within one Trading Day of its
      receipt of the Company's notice as required by this sentence. All or any portion
      of such reduced principal amount of this Note that is not automatically
      converted at the election of the Holder pursuant the immediately preceding
      sentence, may be converted at the sole discretion of the Company at any time,
      provided that such conversion will not result in the Holder and its affiliates,
      in the aggregate, beneficially owning more than 9.9% of the Company's
      outstanding shares of Common Stock, giving effect to such
      conversion.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

    c) Conversion
      Price.
      The
“Conversion Price” shall be an amount equal to the greater of (a) to the
      Original Conversion Price, subject to adjustment as provided in Section 5 and
      Section 5.1, or (b) $3.00, subject to adjustment as provided in Section 5 (the
      “Conversion
      Price”).

    

    d) Mechanics
      of Conversion.

     

    i. Conversion
      Shares Issuable Upon Conversion of Principal Amount.
      The
      number of shares of Common Stock issuable upon a conversion hereunder shall
      be
      determined by the quotient obtained by dividing (x) the outstanding principal
      amount and any accrued and unpaid interest of this Note to be converted by
      (y)
      the Conversion Price then in effect.

    

    ii. Delivery
      of Certificate Upon Conversion.
      Not
      later than three (3) Trading Days after each Conversion Date (the “Share
      Delivery Date”),
      the
      Company shall deliver, or cause to be delivered, to the Holder a certificate
      or
      certificates representing the Conversion Shares which, on or after the Effective
      Date, shall be free of restrictive legends and trading restrictions (other
      than
      those which may then be required by the Purchase Agreement) representing the
      number of shares of Common Stock being acquired upon the conversion of this
      Note. On or after the Effective Date (as defined in the Registration Rights
      Agreement), the Company shall use its best efforts to deliver any certificate
      or
      certificates required to be delivered by the Company under this Section 4
      electronically through the Depository Trust Company or another established
      clearing corporation performing similar functions. 

     

    iii. Failure
      to Deliver Certificates.
      If in
      the case of any Notice of Conversion such certificate or certificates are not
      delivered to or as directed by the applicable Holder by the third Trading Day
      after the Conversion Date, the Holder shall be entitled to elect by written
      notice to the Company at any time on or before its receipt of such certificate
      or certificates, to rescind such conversion, in which event the Company shall
      promptly return to the Holder any original Note delivered to the Company and
      the
      Holder shall promptly return the Common Stock certificates representing the
      principal amount of this Note tendered for conversion to the Company, if any
      such certificates have been delivered to the Holder. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    iv. Obligation
      Absolute; Partial Liquidated Damages.
      The
      Company’s obligations to issue and deliver the Conversion Shares upon conversion
      of this Note in accordance with the terms hereof are absolute and unconditional,
      irrespective of any action or inaction by the Holder to enforce the same, any
      waiver or consent with respect to any provision hereof, the recovery of any
      judgment against any Person or any action to enforce the same, or any setoff,
      counterclaim, recoupment, limitation or termination, or any breach or alleged
      breach by the Holder or any other Person of any obligation to the Company or
      any
      violation or alleged violation of law by the Holder or any other Person, and
      irrespective of any other circumstance which might otherwise limit such
      obligation of the Company to the Holder in connection with the issuance of
      such
      Conversion Shares; provided,
      however,
      that
      such delivery shall not operate as a waiver by the Company of any such action
      the Company may have against the Holder. In the event the Holder of this Note
      shall elect to convert any or all of the outstanding principal amount hereof,
      the Company may not refuse conversion based on any claim that the Holder or
      anyone associated or affiliated with the Holder has been engaged in any
      violation of law, agreement or for any other reason, unless an injunction from
      a
      court, on notice to Holder, restraining and or enjoining conversion of all
      or
      part of this Note shall have been sought and obtained, and the Company posts
      a
      surety bond for the benefit of the Holder in the amount of 150% of the
      outstanding principal amount of this Note, which is subject to the injunction,
      which bond shall remain in effect until the completion of arbitration/litigation
      of the underlying dispute and the proceeds of which shall be payable to such
      Holder to the extent it obtains judgment. In the absence of such injunction,
      the
      Company shall issue Conversion Shares or, if applicable, cash, upon the delivery
      to the Company of a Notice of Conversion. If the Company fails for any reason
      to
      deliver to the Holder such certificate or certificates pursuant to Section
      4(d)(ii) by the third Trading Day after the Conversion Date, the Company shall
      pay to such Holder, in cash, as liquidated damages and not as a penalty, for
      each $1000 of principal amount being converted, $10 per Trading Day (increasing
      to $20 per Trading Day on the fifth Trading Day after such liquidated damages
      begin to accrue) for each Trading Day after such fifth Trading Day until such
      certificates are delivered. Nothing herein shall limit a Holder’s right to
      pursue actual damages or declare an Event of Default pursuant to Section 8
      hereof for the Company’s failure to deliver Conversion Shares within the period
      specified herein and such Holder shall have the right to pursue all remedies
      available to it hereunder, at law or in equity including, without limitation,
      a
      decree of specific performance and/or injunctive relief. The exercise of any
      such rights shall not prohibit the Holder from seeking to enforce damages
      pursuant to any other section hereof or under applicable law.

     

    
      
        
        

      

      
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    v. Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Conversion.
      In
      addition to any other rights available to the Holder, if the Company fails
      for
      any reason to deliver to the Holder such certificate or certificates by the
      Share Delivery Date pursuant to Section 4(d)(ii), and if after such Share
      Delivery Date the Holder is required by its brokerage firm to purchase (in
      an
      open market transaction or otherwise) shares of Common Stock to deliver in
      satisfaction of a sale by such Holder of the Conversion Shares which the Holder
      was entitled to receive upon the conversion relating to such Share Delivery
      Date
      (a “Buy-In”),
      then
      the Company shall (A) pay in cash to the Holder (in addition to any other
      remedies available to or elected by the Holder) the amount by which (x) the
      Holder’s total purchase price (including any brokerage commissions) for the
      Common Stock so purchased exceeds (y) the product of (1) the aggregate number
      of
      shares of Common Stock that such Holder was entitled to receive from the
      conversion at issue multiplied by (2) the Conversion Price of such conversion
      and (B) at the option of the Holder, either reissue (if surrendered) this Note
      in a principal amount equal to the principal amount of the attempted conversion
      or deliver to the Holder the number of shares of Common Stock that would have
      been issued if the Company had timely complied with its delivery requirements
      under Section 4(d)(ii). For example, if the Holder purchases 1,000 shares of
      Common Stock having a total purchase price of $5,000 (including brokerage
      commissions) to cover a Buy-In with respect to an attempted conversion of this
      Note into 1,000 shares of Common Stock at a Conversion Price of $4.00 per share,
      under clause (A) of the immediately preceding sentence, the Company shall be
      required to pay the Holder $1,000. The Holder shall provide the Company written
      notice indicating the amounts payable to the Holder in respect of the Buy-In
      and, upon request of the Company, evidence of the amount of such loss. Nothing
      herein shall limit a Holder’s right to pursue any other remedies available to it
      hereunder, at law or in equity including, without limitation, a decree of
      specific performance and/or injunctive relief with respect to the Company’s
      failure to timely deliver certificates representing shares of Common Stock
      upon
      conversion of this Note as required pursuant to the terms hereof. 

    

    vi. Reservation
      of Shares Issuable Upon Conversion.
      The
      Company covenants that it will at all times reserve and keep available out
      of
      its authorized and unissued shares of Common Stock for the sole purpose of
      issuance upon conversion of this Note and payment of interest on this Note,
      each
      as herein provided, free from preemptive rights or any other actual contingent
      purchase rights of Persons other than the Holder (and the other holders of
      the
      Notes), not less than such aggregate number of shares of the Common Stock as
      shall (subject to the terms and conditions set forth in the Purchase Agreement)
      be issuable (taking into account the adjustments and restrictions of Section
      5
      and Section 5.1) upon the conversion of the outstanding principal amount of
      this
      Note and payment of interest hereunder. The Company covenants that all shares
      of
      Common Stock that shall be so issuable shall, upon issue, be duly authorized,
      validly issued, fully paid and nonassessable and, if the Registration Statement
      is then effective under the Securities Act, shall be registered for public
      sale
      in accordance with such Registration Statement.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    vii. Fractional
      Shares.
      Upon a
      conversion hereunder the Company shall not be required to issue stock
      certificates representing fractions of shares of Common Stock, but may if
      otherwise permitted, make a cash payment in respect of any final fraction of
      a
      share based on the VWAP at such time. If the Company elects not, or is unable,
      to make such a cash payment, the Holder shall be entitled to receive, in lieu
      of
      the final fraction of a share, one (1) whole share of Common Stock.

    

    viii. Transfer
      Taxes.
      The
      issuance of certificates for shares of the Common Stock on conversion of this
      Note shall be made without charge to the Holder hereof for any documentary
      stamp
      or similar taxes that may be payable in respect of the issue or delivery of
      such
      certificates, provided that the Company shall not be required to pay any tax
      that may be payable in respect of any transfer involved in the issuance and
      delivery of any such certificate upon conversion in a name other than that
      of
      the Holder of this Note so converted and the Company shall not be required
      to
      issue or deliver such certificates unless or until the person or persons
      requesting the issuance thereof shall have paid to the Company the amount of
      such tax or shall have established to the satisfaction of the Company that
      such
      tax has been paid.

    

    Section
      5. Certain
      Adjustments.

    

    a) Stock
      Dividends and Stock Splits.
      If the
      Company, at any time while this Note is outstanding: (A) pays a stock dividend
      or otherwise makes a distribution or distributions payable in shares of Common
      Stock on shares of Common Stock or any Common Stock Equivalents (which, for
      avoidance of doubt, shall not include any shares of Common Stock issued by
      the
      Company upon conversion of, or payment of interest on, this Note); (B)
      subdivides outstanding shares of Common Stock into a larger number of shares;
      or
      (C) combines (including by way of a reverse stock split) outstanding shares
      of
      Common Stock into a smaller number of shares; then the Conversion Price shall
      be
      multiplied by a fraction of which the numerator shall be the number of shares
      of
      Common Stock (excluding any treasury shares of the Company) outstanding
      immediately before such event and of which the denominator shall be the number
      of shares of Common Stock outstanding immediately after such event. Any
      adjustment made pursuant to this Section shall become effective immediately
      after the record date for the determination of stockholders entitled to receive
      such dividend or distribution and shall become effective immediately after
      the
      effective date in the case of a subdivision, combination or
      re-classification.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    b) Issuance
      of Common Stock Equivalents.
      If the
      Company, at any time while this Note is outstanding, issues Common Stock
      Equivalents to holders of shares of Common Stock entitling them to subscribe
      for
      or purchase shares of Common Stock at a price per share (or a conversion price
      per share) less than the VWAP on the date of issuance of such Common Stock
      Equivalents, the Conversion Price shall be decreased by multiplying the
      Conversion Price in effect immediately prior to the such date of issuance by
      a
      fraction, of which: (A) the numerator shall be the sum of (x) the number of
      shares of Common Stock outstanding immediately prior to such issuance, plus
      (y)
      the total number of shares of Common Stock that the aggregate offering price
      of
      the total number of shares of Common Stock offered for subscription or purchase
      (or the aggregate conversion price of such Convertible Securities) would
      purchase at the VWAP on the date of such issuance; and (B) the denominator
      shall
      be the sum of (x) the number of shares of Common Stock outstanding immediately
      prior to such issuance, plus (y) the number of additional shares of Common
      Stock
      offered for subscription or purchase (or into which such Convertible Securities
      could be converted).

     

    c) Cash
      Dividends or Distributions.
      If the
      Company, at any time while this Note is outstanding, makes a dividend or
      distribution consisting exclusively of cash to holders of the Common Stock,
      the
      Conversion Price shall be decreased by multiplying the Conversion Price in
      effect on the record date for the determination of shareholders entitled to
      such
      distribution by a fraction, of which: (A) the numerator shall be the VWAP on
      such record date less the amount of cash to be distributed per share of Common
      Stock; and (B) the denominator shall be the VWAP on such record date.
      Notwithstanding the foregoing, if (a) the per share amount of such dividend
      or
      distribution equals or exceeds the VWAP on the record date for the determination
      of shareholders entitled to such dividend or distribution or (b) the VWAP on
      such record date exceeds the per share amount of such dividend or distribution
      by less than US$1.00, in lieu of the foregoing adjustment, the Holder shall
      have
      the right to receive upon conversion, in addition to the Conversion Shares,
      such
      dividend or distribution the Holder would have received if it had converted
      this
      Note immediately prior to such record date.

     

    d) Repurchases.
      If the
      Company, at any time while this Note is outstanding, makes a payment in respect
      of a repurchase (including by way of a tender or an exchange offer) of shares
      of
      Common Stock the consideration for which exceeds the VWAP immediately prior to
      the announcement of such repurchase, the Conversion Price shall be decreased
      by
      multiplying the Conversion Price in effect immediately prior to the announcement
      of such repurchase by a fraction, of which: (A) the numerator shall be (x)
      the
      total number of shares of Common Stock outstanding on the date immediately
      prior
      to the announcement of such repurchase multiplied by the VWAP as of such date,
      minus (y) the aggregate consideration paid in connection with such repurchase;
      and (B) the denominator shall be the number of shares of Common Stock
      outstanding on the date immediately prior to the announcement of such
      repurchase, minus the total number of shares of Common Stock
      repurchased.

     

    e) Subsequent
      Financing.
      If the
      Company consummates a Subsequent Financing, the Conversion Price shall equal
      the
      lesser of the Original Conversion Price (as adjusted pursuant to this Section
      5)
      and 15% less than the per share purchase price of the Common Stock issued or
      deemed issued in such Subsequent Financing.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    f) Pro
      Rata Distributions.
      If the
      Company, at any time while this Note is outstanding, distributes to all holders
      of Common Stock (and not to the Holders) evidences of its indebtedness, Options
      or any other securities or other assets (other than stock dividends described
      in
      Section 5(a), Common Stock Equivalents described in Section 5(b) and dividends
      and distributions paid exclusively in cash described in Section 5(c)) then
      in
      each such case the Conversion Price shall be decreased by multiplying such
      Conversion Price in effect immediately prior to the record date fixed for
      determination of stockholders entitled to receive such distribution by a
      fraction of which the denominator shall be the VWAP determined as of the record
      date mentioned above, and of which the numerator shall be such VWAP on such
      record date less the then fair market value at such record date of the portion
      of such assets or evidence of indebtedness so distributed applicable to one
      (1)
      outstanding share of the Common Stock as determined by the Board of Directors
      of
      the Company in good faith. Such adjustment shall be made whenever any such
      distribution is made and shall become effective immediately after the record
      date mentioned above. Notwithstanding the foregoing, in cases where (a) the
      fair
      market value per share of the distributed evidence of indebtedness, options,
      securities or other assets equals or exceeds the VWAP on the record date for
      the
      determination of shareholders entitled to such distribution, or (b) the VWAP
      on
      such record exceeds the fair market value per share of the distributed evidence
      of indebtedness, Options, securities or other assets by less than US$1.00,
      in
      lieu of the foregoing adjustment, the Holder shall have the right to receive
      upon conversion, in addition to the Conversion Shares, the amount and type
      of
      distributed evidence of indebtedness, Options, securities or other assets,
      the
      Holder would have received if it had converted this Note immediately prior
      to
      such record date.

    

    g) Fundamental
      Transaction.
      If, at
      any time while this Note is outstanding, (A) the Company effects any merger
      or
      consolidation of the Company with or into another Person other than to change
      the state of incorporation of the Company, (B) the Company effects any sale
      of
      all or substantially all of its assets in one transaction or a series of related
      transactions, (C) any tender offer or exchange offer (whether by the Company
      or
      another Person) is completed pursuant to which holders of Common Stock are
      permitted to tender or exchange their shares for other securities, cash or
      property, or (D) 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”),
      then,
      upon any subsequent conversion of this Note, the Holder shall have the right
      to
      receive, for each Conversion Share that would have been issuable upon such
      conversion immediately prior to the occurrence of such Fundamental Transaction,
      the same kind and amount of securities, cash or property as it would have been
      entitled to receive upon the occurrence of such Fundamental Transaction if
      it
      had been, immediately prior to such Fundamental Transaction, the holder of
      one
      (1) share of Common Stock (the “Alternate
      Consideration”).
      For
      purposes of any such conversion, the determination of the Conversion Price
      shall
      be appropriately adjusted to apply to such Alternate Consideration based on
      the
      amount of Alternate Consideration issuable in respect of one (1) share of Common
      Stock in such Fundamental Transaction, and the Company shall apportion the
      Conversion Price among the Alternate Consideration in a reasonable manner
      reflecting the relative value of any different components of the Alternate
      Consideration. If holders of Common Stock are given any choice as to the
      securities, cash or property to be received in a Fundamental Transaction, then
      the Holder shall be given the same choice as to the Alternate Consideration
      it
      receives upon any conversion of this Note following such Fundamental
      Transaction. To the extent necessary to effectuate the foregoing provisions,
      any
      successor to the Company or surviving entity in such Fundamental Transaction
      shall issue to the Holder a new note consistent with this Note and evidencing
      the Holder’s right to convert such note into Alternate Consideration. The terms
      of any agreement pursuant to which a Fundamental Transaction is effected shall
      include, without limitation, terms requiring any such successor or surviving
      entity to comply with the provisions of this Section 5 and insuring that this
      Note (or any such replacement security) will be similarly adjusted upon any
      subsequent transaction analogous to the transactions set forth in this Section
      5.

     

    
      
        
        

      

      
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    Section
      5.1 VWAP
      Adjustments.
      On June
      30, 2008 (the “VWAP
      Adjustment Date”),
      and
      as of the last day of each calendar quarter thereafter while this Note remains
      outstanding, the Conversion Price shall automatically adjust, downward but
      not
      upward, to a price equal to the average VWAP for the thirty Trading Days prior
      to such adjustment date; provided, however, that if the after-tax net income
      of
      the Company for the fiscal year ended December 31, 2007 as reported on the
      Company’s Form 10-K or Form 10-KSB, as applicable (the “2007
      Annual Report”)
      is
      less than $16,000,000 or if the 2007 Annual Report contains an adverse opinion
      of the Company’s auditors in respect of the Company’s financial statements, such
      automatic adjustments to the Conversion Price shall commence on the thirtieth
      Trading Day after the filing of such 2007 Annual Report (except that if the
      filing of the 2007 Annual Report is after the VWAP Adjustment Date, the
      automatic adjustment to the Conversion Price shall commence as of the VWAP
      Adjustment Date); provided further, however, that if the Company files any
      restatement to the Company’s Form 10-K or Form 10-KSB, as applicable (the
“Restatement”),
      that
      causes the after-tax net income of the Company for the fiscal year ended
      December 31, 2007 to be below $16,000,000, the Conversion Price shall
      automatically adjust, downward but not upward, to a price equal to the average
      VWAP for the thirty Trading Days following the date that the Restatement is
      filed with the Commission.

    

    Section
      5.2 

    

    a) Calculations.
      All
      calculations under Section 5 and Section 5.1 shall be made to the nearest cent
      or the nearest 1/100th of a share, as the case may be. For purposes of Section
      5
      and Section 5.1, the number of shares of Common Stock deemed to be issued and
      outstanding as of a given date shall be the sum of the number of shares of
      Common Stock (excluding any treasury shares of the Company) issued and
      outstanding.

    

    b) Notice
      to the Holder.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    

    i. Adjustment
      to Conversion Price.
      Whenever the Conversion Price is adjusted pursuant to any provision of Section
      5
      or Section 5.1, the Company shall promptly mail to each Holder a notice setting
      forth the Conversion Price after such adjustment and setting forth a brief
      statement of the facts requiring such adjustment. 

     

    ii. Notice
      to Allow Conversion by Holder.
      Subject
      to the requirements of applicable law, including, but not limited to, Regulation
      FD, if (A) the Company shall declare a dividend (or any other distribution
      in
      whatever form) on the Common Stock, (B) the Company shall declare a special
      nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
      Company shall authorize the granting to all holders of the Common Stock of
      rights or warrants to subscribe for or purchase any shares of capital stock
      of
      any class or of any rights, (D) the approval of any stockholders of the Company
      shall be required in connection with any reclassification of the Common Stock,
      any consolidation or merger to which the Company is a party, any sale or
      transfer of all or substantially all of the assets of the Company, of any
      compulsory share exchange whereby the Common Stock is converted into other
      securities, cash or property or (E) the
      Company shall authorize the voluntary or involuntary dissolution, liquidation
      or
      winding up of the affairs of the Company, then, in each case, the Company shall
      cause to be filed at each office or agency maintained for the purpose of
      conversion of this Note, and shall cause to be delivered
      to the Holder at its last address as it shall appear upon the Note Register,
      at
      least 20 calendar days prior to the applicable record or effective date
      hereinafter specified, a notice stating (x)
      the
      date on which a record is to be taken for the purpose of such dividend,
      distribution, redemption, rights or warrants, or if a record is not to be taken,
      the date as of which the holders of the Common Stock of record to be entitled
      to
      such dividend, distributions, redemption, rights or warrants are to be
      determined or (y) the date on which such reclassification, consolidation,
      merger, sale, transfer or share exchange is expected to become effective or
      close, and the date as of which it is expected that holders of the Common Stock
      of record shall be entitled to exchange their shares of the Common Stock for
      securities, cash or other property deliverable upon such reclassification,
      consolidation, merger, sale, transfer or share exchange, provided that the
      failure to deliver such notice or any defect therein or in the delivery thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. The Holder is entitled to convert this Note during the 20-day
      period commencing on the date of such notice through the effective date of
      the
      event triggering such notice. 

    

    Section
      6. Redemption;
      Put Right.
      

    

    a) Redemption.
      Upon
      the consummation of a Subsequent Financing, the Company shall have the right
      to
      redeem an amount of this Note as shall equal fifty percent (50%) of the
      principal amount of this Note outstanding as of the Original Issue Date, for
      an
      amount in cash equal to 120% of the principal amount of this Note to be
      redeemed. In addition, on or after the one year anniversary of the Original
      Issue Date, the Company shall have the right to redeem in cash (subject to
      applicable restrictions under Nevada law) all or any portion of this Note for
      an
      amount equal to 120% of the then outstanding principal amount of this Note
      being
      redeemed, plus accrued but unpaid interest. Any election by the Company to
      redeem this Note shall be submitted in writing to the Holder not less than
      20
      calendar days prior to the date selected for such redemption. Any
      call
      for redemption of any portion of this Note by the Company pursuant to this
      Section 6(a) shall be made on a pro rata basis with the other
      outstanding 5% Secured Convertible Notes. The
      Holder may elect to convert the outstanding principal amount of the Note
      pursuant to Section 4 prior to actual payment in cash for any redemption under
      this Section 6 by the delivery of a Notice of Conversion to the
      Company. 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

    

    b) Put
      Right.
      

    

    i. Majority
      Holders.
      On or
      after the one year anniversary of the Original Issue Date, the Holders of a
      majority of the then outstanding principal amount of Notes (the “Majority
      Holders”)
      shall
      have the right to require the Company to redeem in cash (subject to applicable
      restrictions under Nevada law) all or any portion of the Notes held by such
      Majority Holders for an amount equal to 120% of the then outstanding principal
      amount of Notes being redeemed, plus accrued but unpaid interest; provided,
      however, that any such election to redeem shall be submitted in writing by
      the
      Majority Holders to the Company not less than 20 calendar days prior to the
      date
      selected by the Majority Holders for such redemption (the “Redemption
      Date”).
      

    

    ii. Minority
      Holders.
      If the
      Holders of a Majority of the then outstanding principal amount of Notes elect
      to
      exercise their right to require the Company to redeem in cash all or a portion
      of the Notes held by such Holders in accordance with this Section, then the
      Company shall immediately notify all remaining Note Holders (the “Minority
      Holders”)
      that
      such election has been made and of the Redemption Date. The Minority Holders
      shall have the right to require the Company to redeem in cash (subject to
      applicable restrictions under Nevada law), on the Redemption Date, all or any
      portion of the Notes held by such Minority Holders for an amount equal to 120%
      of the then outstanding principal amount of Notes being redeemed, plus accrued
      but unpaid interest; provided, however, that any such election to redeem shall
      be submitted in writing by the Minority Holders to the Company 5 calendar days
      prior to the Redemption Date. 

    

    Section
      7. Negative
      Covenants.
      As long
      as any portion of this Note remains outstanding, the Company shall not, and
      shall not permit any of its Subsidiaries, in each case without the consent
      of
      the holders of a majority in aggregate principal amount outstanding of the
      Notes
      to, directly or indirectly:

    

    
      	 	
              a)

            	
              other
                than Permitted Indebtedness, enter into, create, incur, assume, guarantee
                or suffer to exist any indebtedness for borrowed money of any kind,
                including but not limited to, a guarantee, on or with respect to
                any of
                its property or assets now owned or hereafter acquired or any interest
                therein or any income or profits
                therefrom;

            

    

     

    
      
        
        

      

      
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              b)

            	
              other
                than Permitted Liens, enter into, create, incur, assume or suffer
                to exist
                any Liens of any kind, on or with respect to any of its property
                or assets
                now owned or hereafter acquired or any interest therein, any equity
                interest of the Company or any of its Subsidiaries, or any income,
                profits
                or royalties therefrom;

            

    

    

    
      	 	
              c)

            	
              amend
                its charter documents, including without limitation, the certificate
                of
                incorporation and bylaws, in any manner that materially and adversely
                affects any rights of the Holder;

            

    

    

    
      	 	
              d)

            	
              repay,
                repurchase or offer to repay, repurchase or otherwise acquire any
                shares
                of its Common Stock or Common Stock Equivalents other than as to
                (a) the
                Conversion Shares as permitted or required under the Transaction
                Documents, (b) the redemption or put of the Notes as provided for
                in
                Section 6, (c) payments of Liquidated Damages as set forth in Section
                8,
                and (d) repurchases of Common Stock or Common Stock Equivalents of
                departing officers and directors of the Company, provided that such
                repurchases shall not exceed an aggregate of $100,000 for all officers
                and
                directors during the term of this Note;

            

    

    

    
      	 	
              e)

            	
              enter
                into any agreement with respect to any of the foregoing;
                or

            

    

    

    
      	 	
              f)

            	
              pay
                cash dividends or distributions on any equity securities of the
                Company.

            

    

    

    Section
      8. Subordination.

    

    Notwithstanding
      any provision of this Note or any other instruments or agreements now or
      hereafter evidencing or relating to the indebtedness hereunder to the contrary,
      the Company covenants and agrees, and the Holder by acceptance of this Note
      likewise covenants and agrees, that all amounts payable under this Note as
      a
      result of an acceleration of the outstanding principal amount of this Note
      due
      to an Event of Default arising under Section 9(a)(vii)(A) or Section
      9(a)(xi)(but only if such monetary judgment, writ or similar final process
      resulted from a suit to enforce liquidated damages under Section 4.15 of the
      Securities Purchase Agreement (the "May 2007 Securities Purchase Agrement")
      ,
      dated as of May 31, 2007, among the Company and the investors named therein
      (the
      "May Investors") ) shall be subordinated to the payment of any liquidated
      damages (the "Liquidated Damages") required to be paid by the Company pursuant
      to 4.15 of the May 2007 Securities Purchase Agreement . The provisions of this
      Section 8 are made for the benefit of all of the May Investors (and their
      successors and assigns), and shall be enforceable by them directly against
      the
      Holder.

    

    Nothing
      contained in any provision of this Note or any other instrument or agreements
      now or hereafter evidencing or relating to the indebtedness hereunder (i) shall
      impair, as between the Company and the Holder, the obligations of the Company,
      which are absolute and unconditional, to pay to the Holder all amounts payable
      in respect of this Note as and when the same shall become due and payable in
      accordance with the terms hereof, (ii) is intended to or shall affect the
      relative rights of the Holder and the creditors of the Company, (iii) shall
      prevent the Holder from exercising all rights, powers and remedies otherwise
      permitted by applicable law or upon a default or Event of Default (as defined
      below) under this Note as set forth in these subordination provisions, or (iv)
      impair the rights of the Holder or the collateral agent under any of the Pledge
      Agreements or require the Holder or the collateral agent to pay over, deliver
      or
      otherwise transfer any cash, securities or other assets received by such Holder
      or collateral agent upon the realization of any collateral pursuant to any
      of
      the Pledge Agreements.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    

    If
      the
      Holder shall have received any payment or distribution under or in respect
      of
      this Note in violations of the terms of this Section, then such payment shall
      be
      received and held in trust for the May Investors and shall be forthwith paid
      over or delivered (duly endorsed, if appropriate) to the May Investors until
      such time as the Liquidated Damages have been paid in full.

    

    The
      provisions of this Section 8 may not be amended or modified unless in a writing
      executed by The Pinnacle Fund, L.P.

    

    Section
      9. Events
      of Default.
      

    

    a) “Event
      of Default”
means,
      wherever used herein, any of the following events (whatever the reason for
      such
      event and whether such event shall be voluntary or involuntary or effected
      by
      operation of law or pursuant to any judgment, decree or order of any court,
      or
      any order, rule or regulation of any administrative or governmental
      body):

    

    i. any
      default in the payment of (A) the principal amount of any Note or (B) interest,
      liquidated damages and other amounts owing to a Holder on any Note, as and
      when
      the same shall become due and payable (whether on a Conversion Date or the
      Maturity Date or by acceleration or otherwise) which default, solely in the
      case
      of an interest payment or other default under clause (B) above, is not cured
      within five (5) Trading Days;

     

    ii. the
      Company shall fail to observe or perform any other covenant or agreement
      contained in the Notes (other than a breach by the Company of its obligations
      to
      deliver shares of Common Stock to the Holder upon conversion, which breach
      is
      addressed in clause (xi) below) which failure is not cured, if possible to
      cure,
      within the earlier to occur
      of
(A)
      five
      (5) Trading
      Days after notice of such failure sent by the Holder to
      the
      Company and (B) ten (10) Trading Days after the Company has become aware of
      such
      failure;

    

    iii. a
      default
      or event of default (subject to any grace or cure period provided in the
      applicable agreement, document or instrument) shall occur under any of the
      Transaction Documents;

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    

    iv. any
      representation
      or warranty made in this Note, any other Transaction Documents, any written
      statement pursuant hereto or thereto or any other report, financial statement
      or
      certificate made or delivered to the Holder or any other Holder shall
      be
      untrue or incorrect in any material respect as of the date when made or deemed
      made;

    

    v. the
      Company or any Significant Subsidiary shall be subject to a Bankruptcy
      Event;

     

    vi. the
      Company or any Subsidiary shall default on any of its obligations under any
      mortgage, credit agreement or other facility, indenture agreement, factoring
      agreement or other instrument under which there may be issued, or by which
      there
      may be secured or evidenced, any indebtedness for borrowed money or money due
      under any long term leasing or factoring arrangement that (a) involves an
      obligation greater than $150,000, whether such indebtedness now exists or shall
      hereafter be created, and (b) results in such indebtedness becoming or being
      declared due and payable prior to the date on which it would otherwise become
      due and payable; 

    

    vii. the
      occurrence of any event or events that would require the Company to pay
      liquidated damages pursuant to (A) Section 4.15 or (B) Section 4.17 of the
      May
      2007 Securities Purchase Agreement;

    

    viii. the
      Common Stock shall not be eligible for listing or quotation for trading on
      a
      Trading Market and shall not be eligible to resume listing or quotation for
      trading thereon within five (5) Trading Days;

    

    ix. the
      Company shall be a party to any Change of Control Transaction or Fundamental
      Transaction or shall agree to sell or dispose of all or in excess of 50% of
      its
      assets in one transaction or a series of related transactions (whether or not
      such sale would constitute a Change of Control Transaction);

    

    x. the
      Company shall fail for any reason to deliver certificates to a Holder prior
      to
      the fifth (5th) Trading Day after a Conversion Date pursuant to Section 4(d)
      or
      the Company shall provide at any time notice to the Holder, including by way
      of
      public announcement, of the Company’s intention to not honor requests for
      conversions of any Notes in accordance with the terms hereof; or

    

    xi. any
      monetary judgment, writ or similar final process shall be entered or filed
      against the Company, any Subsidiary or any of their respective property or
      other
      assets for more than $250,000, and such judgment, writ or similar final process
      shall remain unvacated, unbonded or unstayed for a period of 45 calendar
      days.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    

    b) Remedies
      Upon Event of Default.
      If any
      Event of Default occurs, the outstanding principal amount of this Note, plus
      accrued but unpaid interest, liquidated damages and other amounts owing in
      respect thereof through the date of acceleration, shall become, at the election
      of holder(s) of a majority of the then outstanding principal amount of the
      5%
      Secured Convertible Notes, immediately due and payable in cash at the Mandatory
      Default Amount. Commencing on the date of any Event of Default that results
      in
      the eventual acceleration of this Note, the interest rate on this Note shall
      accrue at an interest rate equal to the lesser of 15% per annum or the maximum
      rate permitted under applicable law. Upon the payment in full of the Mandatory
      Default Amount, the Holder shall promptly surrender this Note to or as directed
      by the Company. In connection with such acceleration described herein, the
      Holders need not provide, and the Company hereby waives, any presentment,
      demand, protest or other notice of any kind, and the Holder may immediately
      and
      without expiration of any grace period enforce any and all of its rights and
      remedies hereunder and all other remedies available to it under applicable
      law.
      Such acceleration may be rescinded and annulled by the holders of a majority
      of
      the then outstanding principal amount of the 5% Secured Convertible Notes at
      any
      time prior to payment hereunder and the Holder shall have all rights as a holder
      of this Note until such time, if any, as the Holder receives full payment
      pursuant to this Section 9(b). No such rescission or annulment shall affect
      any
      subsequent Event of Default or impair any right consequent thereon.

    

    Section
      10. Miscellaneous.

    

    a) Notices.
      Any and
      all notices or other communications or deliveries to be provided by the Holder
      hereunder, including, without limitation, any Notice of Conversion, shall be
      in
      writing and delivered personally, by facsimile, or sent by a nationally
      recognized overnight courier service, addressed to the Company, at the address
      set forth above, facsimile number (852)2620-6528, Attn: Xu Hong Bin,
      or
      such
      other facsimile number or address as the Company may specify for such purpose
      by
      notice to the Holder delivered in accordance with this Section 10. Any and
      all
      notices or other communications or deliveries to be provided by the Company
      hereunder shall be in writing and delivered personally, by facsimile, or sent
      by
      a nationally recognized overnight courier service addressed to each Holder
      at
      the facsimile number or address of such Holder appearing on the books of the
      Company, or if no such facsimile number or address appears, at the principal
      place of business of the Holder. Any notice or other communication or deliveries
      hereunder shall be deemed given and effective on the earliest of (i) the date
      of
      transmission, if such notice or communication is delivered via facsimile at
      the
      facsimile number specified in this Section 10 prior to 5:30 p.m. (New York
      City
      time), (ii) the date immediately following the date of transmission, if such
      notice or communication is delivered via facsimile at the facsimile number
      specified in this Section 10 between 5:30 p.m. (New York City time) and 11:59
      p.m. (New York City time) on any date, (iii) the second Business Day following
      the date of mailing, if sent by nationally recognized overnight courier service,
      or (iv) upon actual receipt by the party to whom such notice is required to
      be
      given.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

     

    b) Absolute
      Obligation.
      Except
      as expressly provided herein, no provision of this Note shall alter or impair
      the obligation of the Company, which is absolute and unconditional, to pay the
      principal of, liquidated damages and accrued interest, as applicable, on this
      Note at the time, place, and rate, and in the coin or currency, herein
      prescribed. This Note is a direct debt obligation of the Company. This Note
      ranks pari passu
      with all
      other Notes now or hereafter issued under the terms set forth
      herein.

     

    c) Lost
      or Mutilated Note.
      If this
      Note shall be mutilated, lost, stolen or destroyed, the Company shall execute
      and deliver, in exchange and substitution for and upon cancellation of a
      mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed
      Note, a new Note for the principal amount of this Note so mutilated, lost,
      stolen or destroyed, but only upon receipt of evidence of such loss, theft
      or
      destruction of such Note, and of the ownership hereof, reasonably satisfactory
      to the Company.

    

    d) Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Note shall be governed by and construed and enforced in accordance
      with
      the internal laws of the State of New York, without regard to the principles
      of
      conflict of laws thereof. Each party agrees that all legal proceedings
      concerning the interpretation, enforcement and defense of the transactions
      contemplated by any of the Transaction Documents (whether brought against a
      party hereto or its respective Affiliates (as defined in Rule 12b-2 of the
      Exchange Act), directors, officers, shareholders, employees or agents) shall
      be
      commenced in the state and federal courts sitting in the City of New York,
      Borough of Manhattan (the “New
      York Courts”).
      Each
      party hereto hereby irrevocably submits to the exclusive jurisdiction of the
      New
      York Courts for the adjudication of any dispute hereunder or in connection
      herewith or with any transaction contemplated hereby or discussed herein
      (including with respect to the enforcement of any of the Transaction Documents),
      and hereby irrevocably waives, and agrees not to assert in any suit, action
      or
      proceeding, any claim that it is not personally subject to the jurisdiction
      of
      such New York Courts, or such New York Courts are improper or inconvenient
      venue
      for such proceeding. Each party hereby irrevocably waives personal service
      of
      process and consents to process being served in any such suit, action or
      proceeding by mailing a copy thereof via registered or certified mail or
      overnight delivery (with evidence of delivery) to such party at the address
      in
      effect for notices to it under this Note and agrees that such service shall
      constitute good and sufficient service of process and notice thereof. Nothing
      contained herein shall be deemed to limit in any way any right to serve process
      in any other manner permitted by applicable law. Each party hereto hereby
      irrevocably waives, to the fullest extent permitted by applicable law, any
      and
      all right to trial by jury in any legal proceeding arising out of or relating
      to
      this Note or the transactions contemplated hereby. If either party shall
      commence an action or proceeding to enforce any provisions of this Note, then
      the prevailing party in such action or proceeding shall be reimbursed by the
      other party for its attorneys fees and other costs and expenses incurred in
      the
      investigation, preparation and prosecution of such action or
      proceeding.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    

    e) Waiver.
      Any
      provision of this Note may be amended or waived by the written consent of the
      Company and the holders of a majority of the outstanding principal amount of
      the
      5% Secured Convertible Notes, except that, notwithstanding the foregoing, (a)
      neither this sentence nor the provisions of Section 8 of this Note may be waived
      or amended unless in a writing executed by The Pinnacle Fund, L.P., the Company
      and the Holders of a majority of the outstanding principal amount of the 5%
      Secured Convertible Notes; and (b) neither this sentence nor the restrictions
      set forth in Section 4(a) and Section (b) limiting conversion of the Note to
      the
      extent such conversion would result in the Holder and its affiliates
      beneficially owning more than 9.9% of the Company's outstanding shares of Common
      Stock may be waived, modified or amended under any circumstances. Any waiver
      by
      the Company or a holder of a breach of any provision of this Note shall not
      operate as or be construed to be a waiver of any other breach of such provision
      or of any breach of any other provision of this Note. The failure of the Company
      or the Holder to insist upon strict adherence to any term of this Note on one
      or
      more occasions shall not be considered a waiver or deprive that party of the
      right thereafter to insist upon strict adherence to that term or any other
      term
      of this Note. Any waiver by the Company or the Holder must be in
      writing.

     

    f) Severability.
      If any
      provision of this Note is invalid, illegal or unenforceable, the balance of
      this
      Note shall remain in effect, and if any provision is inapplicable to any Person
      or circumstance, it shall nevertheless remain applicable to all other Persons
      and circumstances. If it shall be found that any interest or other amount deemed
      interest due hereunder violates the applicable law governing usury, the
      applicable rate of interest due hereunder shall automatically be lowered to
      equal the maximum rate of interest permitted under applicable law. The Company
      covenants (to the extent that it may lawfully do so) that it shall not at any
      time insist upon, plead, or in any manner whatsoever claim or take the benefit
      or advantage of, any stay, extension or usury law or other law which would
      prohibit or forgive the Company from paying all or any portion of the principal
      of or interest on this Note as contemplated herein, wherever enacted, now or
      at
      any time hereafter in force, or which may affect the covenants or the
      performance of this indenture, and the Company (to the extent it may lawfully
      do
      so) hereby expressly waives all benefits or advantage of any such law, and
      covenants that it will not, by resort to any such law, hinder, delay or impeded
      the execution of any power herein granted to the Holder, but will suffer and
      permit the execution of every such as though no such law has been
      enacted.

     

    g) Next
      Business Day.
      Whenever any payment or other obligation hereunder shall be due on a day other
      than a Business Day, such payment shall be made on the next succeeding Business
      Day.

    

    h) Headings.
      The
      headings contained herein are for convenience only, do not constitute a part
      of
      this Note and shall not be deemed to limit or affect any of the provisions
      hereof.

    

    i) Assumption. 
      Any successor to the Company or any surviving entity in a Fundamental
      Transaction shall (i) assume, prior to such Fundamental Transaction, all of
      the
      obligations of the Company under this Note and the other Transaction Documents
      pursuant to written agreements in form and substance satisfactory to the Holder
      (such approval not to be unreasonably withheld or delayed) and (ii) issue to
      the
      Holder a new note of such successor entity evidenced by a written instrument
      substantially similar in form and substance to this Note, including, without
      limitation, having a principal amount and interest rate equal to the principal
      amount and the interest rate of this Note and having similar ranking to this
      Note, which shall be satisfactory to the Holder (any such approval not to be
      unreasonably withheld or delayed).  The provisions of this Section 10(i)
      shall apply similarly and equally to successive Fundamental Transactions and
      shall be applied without regard to any limitations of this Note.

    

    *********************

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Note to be duly executed by a
      duly
      authorized officer as of the date first above indicated.

    

      
        	 	
                CHINA
                  WATER & DRINKS, INC.

              
	 	 	 
	 	 	 
	 	
                By: 

              	   

	 	
                Name:

              	 
	 	
                Title:
                  President

              

      

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    ANNEX
      A

     

    NOTICE
      OF CONVERSION

    

    The
      undersigned hereby elects to convert principal under the 5% Secured Convertible
      Note of China Water & Drinks, Inc., a Nevada corporation (the “Company”),
      due
      on [January  ,
      2011],
      into shares of common stock, par value $.001 per share (the “Common
      Stock”),
      of
      the Company according to the conditions hereof, as of the date written below.
      If
      shares are to be issued in the name of a person other than the undersigned,
      the
      undersigned will pay all transfer taxes payable with respect thereto and is
      delivering herewith such certificates and opinions as reasonably requested
      by
      the Company in accordance therewith. No fee will be charged to the holder for
      any conversion, except for such transfer taxes, if any.

    

    The
      undersigned agrees to comply with the prospectus delivery requirements under
      the
      applicable securities laws in connection with any transfer of the aforesaid
      shares of Common Stock. 

    

      
        	
                Conversion
                  calculations:

              	 
	 	
                Date
                  to Effect Conversion:

              
	 	 
	 	
                Principal
                  Amount of Note to be Converted:

              
	 	 
	 	
                Number
                  of shares of Common Stock to be issued:

              
	 	 
	 	 
	 	
                Signature:

              
	 	 
	 	
                Name:

              
	 	 
	 	
                Address:

              

      

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    Schedule
      1

    

    CONVERSION
      SCHEDULE

    

    The
      5%
      Secured Convertible Notes due on [January  ,
      2011],
      in the aggregate principal amount of $____________ issued by China Water &
Drinks, Inc. This Conversion Schedule reflects conversions made under Section
      4
      of the above referenced Note.

    

    Dated:
      

     

    
      	
              Date
                of Conversion

              (or
                for first entry, Original Issue Date)

            	
              Amount
                of Conversion

            	
              Aggregate
                Principal Amount Remaining Subsequent to Conversion

              (or
                Original Principal Amount)

            	
              Company
                Attest

            
	
               

               

            	 	 	 
	
               

               

            	 	 	 
	
               

               

            	 	 	 
	
               

               

            	 	 	 
	
               

               

            	 	 	 
	
               

               

            	 	 	 
	
               

               

            	 	 	 
	
               

               

            	 	 	 
	
               

               

            	 	 	 

    

    

    
      
        
        

      

      
        25

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