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Exhibit 10.3
GUARANTY
GUARANTY, dated as of December 26, 2006 made by
each of the undersigned (each a " Guarantor
", and collectively, the "
Guarantors "), in favor of
GOTTBETTER CAPITAL MASTER, LTD., a company organized under the laws
of the Cayman Islands (the " Investor
") for the "Buyers" (as defined below) party to the
Securities Purchase Agreement, dated as of even date herewith (as
amended, restated or otherwise modified from time to time, the
" Securities Purchase Agreement ").
WITNESSETH :
WHEREAS, Pure Vanilla eXchange, Inc., a Nevada
corporation (the " Parent "), and each party listed as a "Buyer" on the Schedule of
Buyers attached thereto (each a " Buyer
", and collectively, the "
Buyers ") are parties to the
Securities Purchase Agreement;
WHEREAS, it is a condition precedent to the
Buyers purchasing the Notes (as defined below) that the Guarantors
execute and deliver to the Investor a guaranty guaranteeing all of
the obligations of the Parent under the Securities Purchase
Agreement, the Notes and the Transaction Documents (as defined in
the Securities Purchase Agreement, the " Transaction
Documents "); and
WHEREAS, each Guarantor has determined that the
execution, delivery and performance of this Guaranty directly
benefits, and is in the best interest of, such
Guarantor;
NOW, THEREFORE, in consideration of the premises
and the agreements herein and in order to induce the Buyers to
perform under the Securities Purchase Agreement, each Guarantor
hereby agrees with each Buyer as follows:
SECTION 1. Definitions . Reference is hereby made to the Securities
Purchase Agreement and the "Notes" (as defined therein) issued
pursuant thereto (as such Notes may be amended, restated, replaced
or otherwise modified from time to time in accordance with the
terms thereof, collectively, the " Notes
") for a statement of the terms thereof. All terms
used in this Guaranty, which are defined in the Securities Purchase
Agreement or the Notes and not otherwise defined herein, shall have
the same meanings herein as set forth therein.
SECTION 2. Guaranty . The Guarantors, jointly and severally, hereby
unconditionally and irrevocably, guaranty the punctual payment, as
and when due and payable, by stated maturity or otherwise, of all
Obligations (as defined in the Security Agreement) of the Parent
from time to time owing by it in respect of the Securities Purchase
Agreement, the Notes and the other Transaction Documents,
including, without limitation, all interest that accrues after the
commencement of any Insolvency Proceeding (as defined in the
Security Agreement) of the Parent or any Guarantor, whether or not
the payment of such interest is unenforceable or is not allowable
due to the existence of such Insolvency Proceeding, and all fees,
commissions, expense reimbursements, indemnifications and all other
amounts due or to become due under any of the Transaction Documents
(such obligations, to the extent not paid by the Parent, being the
" Guaranteed Obligations "),
and agrees to pay any and all expenses (including reasonable
counsel fees and expenses) reasonably incurred by the Investor in
enforcing any rights under this Guaranty. Without limiting the
generality of the foregoing, each Guarantor's liability hereunder
shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by the Parent to the Investor under
the Securities Purchase Agreement and the Notes but for the fact
that they are unenforceable or not allowable due to the existence
of an Insolvency Proceeding involving any Guarantor or the Parent
(each, a " Transaction Party ").
SECTION 3. Guaranty Absolute; Continuing Guaranty; Assignments
.
(a) The Guarantors, jointly and severally,
guaranty that the Guaranteed Obligations will be paid strictly in
accordance with the terms of the Transaction Documents, regardless
of any law, regulation or order now or hereafter in effect in any
jurisdiction affecting any of such terms or the rights of the
Investor with respect thereto. The obligations of each Guarantor
under this Guaranty are independent of the Guaranteed Obligations,
and a separate action or actions may be brought and prosecuted
against any Guarantor to enforce such obligations, irrespective of
whether any action is brought against any Transaction Party or
whether any Transaction Party is joined in any such action or
actions. The liability of any Guarantor under this Guaranty shall
be irrevocable, absolute and unconditional irrespective of, and
each Guarantor hereby irrevocably waives, to the extent permitted
by law, any defenses it may now or hereafter have in any way
relating to, any or all of the following:
(i) any lack of validity or enforceability of any
Transaction Document or any agreement or instrument relating
thereto;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Guaranteed
Obligations, or any other amendment or waiver of or any consent to
departure from any Transaction Document, including, without
limitation, any increase in the Guaranteed Obligations resulting
from the extension of additional credit to any Transaction Party or
otherwise;
(iii) any taking, exchange, release or
non-perfection of any Collateral (as defined in the Security
Documents), or any taking, release or amendment or waiver of or
consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations;
(iv)any change, restructuring or termination of
the corporate, limited liability company or partnership structure
or existence of any Transaction Party; or
(v)any other circumstance (including any statute
of limitations) or any existence of or reliance on any
representation by the Investor that might otherwise constitute a
defense available to, or a discharge of, any Transaction Party or
any other guarantor or surety.
This Guaranty shall continue to be effective or
be reinstated, as the case may be, if at any time any payment of
any of the Guaranteed Obligations is rescinded or must otherwise be
returned by the Investor or any other Person upon the insolvency,
bankruptcy or reorganization of any Transaction Party or otherwise,
all as though such payment had not been made.
(b) This Guaranty is a continuing guaranty and
shall (i) remain in full force and effect until the indefeasible
cash payment in full of the Guaranteed Obligations (other than
inchoate indemnity obligations) and/or complete conversion of all
of the Company's obligations under the Notes to equity securities
of the Company and payment of all other amounts payable under this
Guaranty (other than inchoate indemnity obligations) and shall not
terminate for any reason prior to the respective Maturity Date of
each Note (other than payment in full of the Notes and/or complete
conversion of all of the Company's obligations under the Notes to
equity securities of the Company) and (ii) be binding upon each
Guarantor and its respective successors and assigns. This Guaranty
shall inure to the benefit of and be enforceable by the Investor
and its successors, and permitted pledgees, transferees and
assigns. Without limiting the generality of the foregoing sentence,
the Investor or any Buyer may pledge, assign or otherwise transfer
all or any portion of its rights and obligations under and subject
to the terms of any Transaction Document to any other Person, and
such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such Buyer herein or
otherwise, in each case as provided in the Securities Purchase
Agreement or such Transaction Document.
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SECTION 4. Waivers . To the extent permitted by applicable law,
each Guarantor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and any requirement that
the Investor exhaust any right or take any action against any
Transaction Party or any other Person or any Collateral. The
Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated herein and
that the waiver set forth in this Section 4 is knowingly made in
contemplation of such benefits. The Guarantors hereby waive any
right to revoke this Guaranty, and acknowledges that this Guaranty
is continuing in nature and applies to all Guaranteed Obligations,
whether existing now or in the future.
SECTION 5. Subrogation . No Guarantor may exercise any rights that
it may now or hereafter acquire against any Transaction Party or
any other guarantor that arise from the existence, payment,
performance or enforcement of any Guarantor's obligations under
this Guaranty, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or remedy
of the Investor against any Transaction Party or any other
guarantor or any Collateral, whether or not such claim, remedy or
right arises in equity or under contract, statute or common law,
including, without limitation, the right to take or receive from
any Transaction Party or any other guarantor, directly or
indirectly, in cash or other property or by set-off or in any other
manner, payment or security solely on account of such claim, remedy
or right, unless and until all of the Guaranteed Obligations (other
than inchoate indemnity obligations) and all other amounts payable
under this Guaranty (other than inchoate indemnity obligations)
shall have indefeasibly been paid in full in cash. If any amount
shall be paid to the Guarantor in violation of the immediately
preceding sentence at any time prior to the later of the payment in
full in cash of the Guaranteed Obligations and all other amounts
payable under this Guaranty, such amount shall be held in trust for
the benefit of the Investor and shall forthwith be paid to the
Investor to be credited and applied to the Guaranteed Obligations
and all other amounts payable under this Guaranty, whether matured
or unmatured, in accordance with the terms of the Transaction
Document, or to be held as Collateral for any Guaranteed
Obligations or other amounts payable under this Guaranty thereafter
arising. If (a) any Guarantor shall make payment to the
Investor of all or any part of the Guaranteed Obligations, and
(b) all of the Guaranteed Obligations (other than inchoate
indemnity obligations) and all other amounts payable under this
Guaranty (other than inchoate indemnity obligations) shall
indefeasibly be paid in full in cash, the Investor will, at such
Guarantor's request and expense, execute and deliver to such
Guarantor appropriate documents, without recourse and without
representation or warranty, necessary to evidence the transfer by
subrogation to such Guarantor of an interest in the Guaranteed
Obligations resulting from such payment by such Guarantor.
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SECTION 6. Representations, Warranties and Covenants .
(a) Each Guarantor
hereby represents and warrants as of the date first written above
as follows:
(i) The Guarantor
(A) is a corporation, limited liability company or limited
partnership duly organized, validly exist
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