NON-RECOURSE GUARANTY
THIS
CONTINUING NON-RECOURSE GUARANTY,
dated
as of August 31, 2007 (this "Guaranty"),
is
made by GAH-CDC Holdings, LLC, a Delaware limited liability company having
an
office address at c/o Golden Autumn Holdings Inc., 00000 Xxxxxx Xxxx,
0xx
Xxxxx,
Xxxxxx, Xxxxx 00000 (the "Guarantor"),
in
favor of each of the persons defined as Buyers in that certain Securities
Purchase Agreement dated of even date herewith (the “SPA”) among GOLDEN AUTUMN
HOLDINGS, INC., a Nevada corporation (the “Company”),
and
the Buyers. Terms that are capitalized in this Guaranty and not otherwise
defined herein shall have the respective meanings given to such terms in the
SPA.
WHEREAS,
the Buyers and the Company have entered into SPA (together with all other
documents, instruments and agreements executed or delivered by the Company
in
connection therewith (collectively, the “Documents”), pursuant to which the
Buyers have purchased, among other securities, senior secured convertible
promissory notes of the Buyer in the aggregate principal amount of $1,000,000
(the “Notes”);
and
WHEREAS,
the Guarantor is a substantial stockholder of the Company; and
WHEREAS,
Guarantor will benefit from the execution and delivery of the SPA and the
purchase by the Buyers of the Notes thereunder; and
WHEREAS,
as a condition to the closing of the SPA the Guarantor is required to enter
into
this Guaranty of the obligations of the Company under the Notes (the
“Obligations”); and
WHEREAS,
Guarantor desires to satisfy the condition described in the preceding paragraph
and therefore is willing to enter into this Guaranty of payment of all
Obligations.
NOW,
THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the
Guarantor hereby agrees as follows:
SECTION
1. Guaranty. The
Guarantor hereby unconditionally guarantees the punctual payment and performance
when due, whether at stated maturity, by acceleration or otherwise, of all
Obligations and agrees to pay in, in addition, all reasonable out-of-pocket
costs and expenses (including reasonable attorneys' fees and related expenses)
incurred by the Buyers in enforcing their rights under this Guaranty.
SECTION
2. Guaranty
Absolute.
The
Guarantor guarantees that the Obligations will be paid and performed strictly
in
accordance with the terms of the SPA and the Notes or any other agreement
evidencing or governing such Obligations 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 Buyers with respect thereto. The Guarantor agrees that
this
Guaranty constitutes a guarantee of payment when due and not of collection.
Subject to the terms of this Guaranty, the liability of the Guarantor under
this
Guaranty shall be absolute and unconditional irrespective of:
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(a) any
lack
of validity or enforceability of the the SPA or Notes, or any other document,
agreement or instrument relating to the Obligations;
(b) any
change in the time, manner or place of payment of, or in any other term of,
all
or any of the Obligations, or any amendment or waiver of any term of or any
consent to departure from the SPA or Notes, or any other document, agreement
or
instrument related to the Obligations;
(c) any
exchange, release, non-perfection or impairment of any collateral, or any
release, amendment or waiver of any term of, or consent to departure from,
any
other guaranty for all or any of the Obligations;
(d) any
failure on the part of the Buyers or any other person, firm or entity (“Person”)
to exercise, or any delay in exercising, any right under the SPA, Notes or
any
other agreement or instrument relating to the Obligations; or
(e) any
other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Company or a guarantor with respect to the Obligations
(including, without limitation, all defenses based on suretyship or impairment
of collateral, and all defenses which the Company may assert on the underlying
debt, including failure of consideration, breach of warranty, fraud, payment,
statute of frauds, bankruptcy, lack of legal capacity, statute of limitations,
lender liability, accord and satisfaction, and usury) or that might otherwise
constitute a defense to this Guaranty and the obligations of the Guarantor
under
this Guaranty.
The
Guarantor hereby agrees that if the Company is the subject of any insolvency,
reorganization, assignment for the benefit of creditors, moratorium, bankruptcy
or similar proceeding under the laws of any applicable jurisdiction, the
Guarantor will not assert the pendency of such proceeding or any order entered
therein as a defense to (i) the timely payment of the Obligations or the
Guarantor's obligations hereunder, or (ii) the Guarantor's guaranty of any
interest on any portion of the Obligations that accrues after the commencement
of any such proceeding (or, if interest on any portion of the Obligations ceases
to accrue by operation of law by reason of the commencement of said proceeding,
such interest as would have accrued on such portion of such Obligations if
said
proceedings had not been commenced). This Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time any payment
of
any of such Obligations is rescinded or must otherwise be returned by the Buyers
upon the insolvency, bankruptcy or reorganization of the Company or otherwise,
all as though such payment had not been made.
SECTION
3. Waiver.
The
Guarantor hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Obligations and this Guaranty and any
requirement that the Buyer protect, secure, perfect or insure any security
interest or lien or any property subject thereto or exhaust any right to take
any action against the Companyor any other Person or any Collateral. The
Guarantor further waives any and all right to assert any set-off, counterclaim
or cross-claim against the Buyers of any nature whatsoever with respect to
this
Guaranty or the obligations of the Guarantor under this Guaranty, in any action
or proceeding brought by the Buyers to enforce the obligations of the Guarantor
under this Guaranty. The Guarantor acknowledges that no oral or other
agreements, understandings, representations or warranties exist with respect
to
this Guaranty or with respect to the obligations of the Guarantor under this
Guaranty, except as specifically set forth in this Guaranty.
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SECTION
4. Subrogation.
So long
as any Obligations remain outstanding and unpaid, the Guarantor hereby
irrevocably waives, to the fullest extent permitted by law, any and all claims,
rights or remedies that the Guarantor may now have or hereafter acquire against
the Company that arise hereunder or from the performance by the Guarantor
hereunder, including, without limitation, any claims, rights or remedies of
subrogation, reimbursement, exoneration, contribution, indemnification or
participation in any claims, rights or remedies of the Buyers against the
Company or in any security that the Buyers now have or hereafter acquire,
whether or not such claims, rights or remedies arise in equity, under contract,
by statute, under common law or otherwise.
SECTION
5.
Security.
The
obligations of Guarantor under this Guaranty are secured by a pledge by the
Guarantor to Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP, as agent for the Buyers,
of
3,000,000 shares of the Company’s common stock, par value $.001 per share, of
the Company (the “Shares”). It
is
acknowledged that as of the day hereof the Collateral Agent has received a
certificate for 5,366,613
shares of the Company’s common stock owned by GAH-CDC Holdings, LLC
(“Certificate No. 1”) and that upon the receipt of a stock certificate for
3,000,000 of the Company’s common stock owned by either BJP-GAH Holdings LLC or
Li Guanglong or a combination of the two (“Certificate No. 2”), the Collateral
Agent may release and deliver Certificate No. 1 to the Pledgor and shall hold
Certificate No. 2 pursuant to the SPA.
SECTION
6. Non-Recourse.
Notwithstanding anything to the contrary contained in this Guaranty, except
as
expressly hereinafter set forth, the recourse of the Buyers with respect to
the
Obligations evidenced by this Guaranty shall be solely to the Shares, and all
other collateral pledged by Guarantor to secure this Guaranty. Notwithstanding
anything to the contrary contained in this Guaranty, nothing shall be deemed
in
any way to impair, limit or prejudice the rights of the Buyer (a) in foreclosure
proceedings or in any ancillary proceedings brought to facilitate the Buyers’
foreclosure on the Shares or any portion thereof; (b) to recover from Guarantor
damages or costs (including, without limitation, reasonable attorneys' fees)
incurred by the Buyers in such foreclosure proceedings.
SECTION
7. Representations
and Warranties.
The
Guarantor hereby represents and warrants as follows:
(a) Non-Contravention,
Etc.
The
execution, delivery and performance by the Guarantor of this Guaranty (i) is
enforceable against Guarantor in accordance with its terms, and (ii) does not
and will not (A) require any consent or approval of any creditors of the
Guarantor, (B) contravene any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or any material contractual
restriction binding on or affecting the Guarantor or any of his properties,
(C)
result in or require the creation or imposition of any mortgage, deed of trust,
pledge, lien, security interest or other charge or encumbrance of any nature
(other than pursuant hereto) upon or with respect to any of the Guarantor's
properties, and (D) result in a breach or violation of any agreement, instrument
or document to which the Guarantor is a party or by which he or his property
may
be bound. The Guarantor is not in default under any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award or any such
contractual restriction, which default would have a materially adverse effect
on
the business, condition (financial or otherwise), operations, properties,
performance or prospects of the Guarantor.
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(b) Government
Consents.
No
authorization, consent, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for
the
due execution, delivery or performance by the Guarantor of this
Guaranty.
(c) Legal,
Valid and Binding Nature.
This
Guaranty is the legal, valid and binding obligation of the Guarantor enforceable
against the Guarantor in accordance with its terms, except that enforceability
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium
or
similar laws affecting the enforcement of creditors' rights generally and by
general principles of equity and the discretion of the court before which any
proceedings therefor may be brought.
(d) Guarantor's
Relationship to the Company.
The
Buyers agreements to purchase securities of the Company is of substantial and
material benefit to the Guarantor, and the Guarantor has reviewed and approved
copies of the SPA, the Notes, the other Documents and the other documents
executed or delivered in connection with the SPA. The Guarantor is fully
informed of the remedies the Buyers may pursue upon the occurrence of an Event
of Default under the Notes or such other documents.
SECTION
8. Amendments,
Etc.
No
amendment or waiver of any provision of this Guaranty or consent to any
departure by the Guarantor therefrom shall in any event be effective unless
the
same shall be in writing and signed by each of the Buyers, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION
9. Addresses
for Notices.
All
notices and other communications provided for hereunder shall be in writing
(including by telecopier) and, if to the Guarantor, mailed or delivered to
the
Guarantor at the address specified on the first page of this Guaranty, if to
any
Buyer, mailed or delivered to it at the address specified in the SPA, or as
to
each party at such other address as shall be designated by such party in a
written notice to the other party. All such notices and
other communications shall, if mailed, be effective when deposited in the
mail addressed as aforesaid.
SECTION
10. No
Waiver; Remedies.
No
failure on the part of any Buyer to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof. No single or partial exercise
of any right hereunder shall preclude any other or further exercise thereof
or
the exercise of any other right. The remedies herein provided are cumulative
and
not exclusive of any remedies provided by law.
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SECTION
11. Continuing
Guaranty; Assignments.
This
Guaranty is a continuing guaranty and shall (a) remain in full force and effect
until the indefeasible payment in full of the Obligations of all other amounts
payable under this Guaranty, (b) be binding upon the Guarantor and his
successors and assigns, and (c) inure to the benefit of and be enforceable
by
the Buyers and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), the Buyers may assign
or
otherwise transfer any of the Obligations to any other Person in accordance
with
the terms of the SPA and Notes, and such other Person shall thereupon become
vested with all the rights in respect thereof granted to the Buyers herein
or
otherwise.
SECTION
12. GOVERNING
LAW.
THIS
GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO CONFLICTS
OF
LAW PRINCIPLES THEREOF.
SECTION
13. CONSENT
TO JURISDICTION.
THE
GUARANTOR HEREBY CONSENTS AND AGREES THAT THE SUPREME COURT OF NEW YORK, NEW
YORK COUNTY, OR, AT IRI'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE GUARANTOR AND THE BUYERS PERTAINING
TO THIS GUARANTY OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS GUARANTY.
THE GUARANTOR SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION
OR SUIT COMMENCED IN ANY SUCH COURT, AND THE GUARANTOR HEREBY WAIVES ANY
OBJECTION WHICH GUARANTOR MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS
AND
HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE
BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO GUARANTOR AT THE ADDRESS SPECIFIED
ON
THE FIRST PAGE OF THIS GUARANTY, AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF THE GUARANTOR'S ACTUAL RECEIPT THEREOF OR THREE
(3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN
THIS GUARANTY SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF IRI TO SERVE
LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT
BY
IRI OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION
UNDER THIS GUARANTY TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM OR
JURISDICTION.
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SECTION
14. JURY
TRIAL WAIVER.
THE
GUARANTOR AND THE BUYERS HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING IN ANY COURT RELATING TO, IN CONNECTION WITH OR ARISING UNDER
THIS
GUARANTY OR THE SPA OR NOTES.
SECTION
15. Entire
Agreement; Severability.
This
Guaranty represents the entire understanding and agreement between the
Guarantor, on the one hand, and the Buyers, on the other hand, with respect
to
the subject matter contained herein, and there are no other existing agreements
or understandings, whether oral or written, between or among such parties as
to
such subject matter. Wherever possible, each provision of this Guaranty shall
be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Guaranty.
SECTION
16.
This
Agreement shall terminate upon the final satisfaction
in full of the Note either by way of payment in full of the principal, interest
and premium, if any, due on the Note or by way of conversion of the Note into
the shares of the common stock of the Company
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IN
WITNESS WHEREOF,
Guarantor has executed this Guaranty as of the date first above
written.
| GAH-CDC HOLDINGS, LLC | |||
| By: | /s/Xxxxxxx Xx | ||
| Name: Xxxxxxx Xx | |||
| Title: President | |||
BUYER:
Agreed and acknowledged Only as to Section 16
Strategic
Alliance Fund, L.P.
| /s/Xxxxxx X. Xxxxxxx | |
| Name: Xxxxxx X. Xxxxxxx | |
| Title: Manager |
BUYER:
Agreed and acknowledged Only as to Section 16
Strategic
Alliance Fund II, L.P.
| /s/Xxxxxx X. Xxxxxxx | |
| Name: Xxxxxx X. Xxxxxxx | |
| Title: Manager |
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