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GUARANTY
GUARANTY, dated as of December ___, 2007 made by
each of the undersigned (each a " Guarantor ", and
collectively, the " Guarantors "), in favor of the
Collateral Agent and the "Noteholders" (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 ").
W I T N E
S S E T H :
WHEREAS, China VoIP & Digital Telecom Inc.,
a Nevada corporation (the " Company "), and each
party listed as a "Buyer" on the Schedule of Buyers attached to
the Securities Purchase Agreement (each a " Buyer ", and
collectively, the " Buyers " and together with their
successors and assigns and each other holder of a Note, each a "
Noteholder " and collectively the " Noteholders ")
are parties to the Securities Purchase Agreement;
WHEREAS, the Securities Purchase Agreement
requires that the Guarantors execute and deliver to the
Collateral Agent, (i) a guaranty guaranteeing all of the
obligations of the Company under the Securities Purchase
Agreement, the Notes (as defined below) and the "Transaction
Documents" (as defined in the Securities Purchase Agreement, the
"Transaction Documents" ); and (ii) a Security Agreement
dated the date hereof granting to _________________________, in
its capacity as collateral agent (in such capacity, the "
Collateral Agent ") a lien in all of their personal
property (the "Security Agreement" ); 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) in
and issued pursuant to the Securities Purchase Agreement and (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 Company 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 Company
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
Company, being the " Guaranteed Obligations "), and
agrees to pay any and all expenses (including reasonable counsel
fees and expenses) reasonably incurred by the Collateral Agent
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
Company to the Collateral Agent 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 Company
(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 Collateral Agent 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 Agreement), 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 Collateral Agent 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 Collateral Agent 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
Maturity Date of the Notes (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 Collateral Agent and its
successors, and permitted pledgees, transferees and assigns.
Without limiting the generality of the foregoing sentence,
the Collateral Agent 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 Collateral Agent or Buyer herein or otherwise,
in each case as provided in the Securities Purchase Agreement or
such Transaction Document. Notwithstanding the foregoing
and for the avoidance of doubt, this Guaranty will expire and
each Guarantor will be released from its obligation hereunder
upon the earlier of payment in full and/or complete conversion
of the Obligations to equity securities of the Company.
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 Collateral Agent exhaust any right or take any action
against any Transaction Party or any other Person or any
Collateral. Each 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 acknowledge 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 Collateral Agent 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 a 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 Collateral Agent and shall forthwith be
paid to the Collateral Agent 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 Collateral Agent 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 Collateral Agent 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.
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
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