Document:

cics8k810ex10-10.htm

PLEDGE AND ESCROW AGREEMENT

 

(in favor of YA Global Investments, L.P.)

 

PLEDGE AND ESCROW AGREEMENT (the “Agreement”) dated as of August 17, 2010, by 4 Sea-Sons LLC a Delaware limited liability company (the “Preferred Shareholder”), Westport Energy, Acquisition, Inc., a Delaware corporation (the “Acquisition Sub”), Carbonics Capital Corporation, a Delaware corporation (the “Parent”) and each subsidiary, direct and indirect, of the Parent or Acquisition Sub listed on Schedule I attached hereto or joined to this agreement in the future (the “Subsidiary Pledgors,” collectively with the Parent, the Acquisition Sub and the Preferred Shareholder, the “Pledgors”) in favor of YA Global Investments, L.P., an exempt Cayman Islands limited partnership (the “Pledgee”).

 

RECITALS:

 

A.           The Pledgee is the holder of certain secured convertible debetnures issued by the Parent payable to the Pledgee, including without limitation those listed on Schedule II attached hereto (collectively, the “Carbonics Debentures”).

 

B.           The Parent and the Pledgee, among others, entered into the following (collectively, as each may be amended and in effect, the “Collateral Agreements”): (i) Global Security Agreement, dated as of January 11, 2008, (ii) Global Guaranty Agreement, dated as of January 11, 2008, (iii) Global Pledge and Escrow Agreement, dated as of January 11, 2008, and (iv) Intellectual Property Security Agreement, dated as of January 11, 2008.

 

C.           Pursuant to the Collateral Agreements, the Pledgee has a perfected first priority security interest in all assets of the Company.

 

D.           The Parent and the Pledgee, among others, entered into that certain Ratification and Amendment Agreement dated as of the date hereof (as may be amended and supplemented from time to time, the “Ratification Agreement”).

 

E.           The Ratification Agreement provides that the Carbonics Obligations (as defined in the Ratification Agreement) are no longer cross-collateralized and cross-defaulted with the other obligations under the Collateral Agreements and confirms that the Pledgee shall continue to have a perfected first priority security interest in all assets of the Company pursuant to this Agreement.

 

F.           Pursuant to the terms of the Ratification Agreement, certain of the Pledgors executed and delivered to the pledge a certain Guaranty Agreement of even date herewith (the “Guaranty”).

 

G.           It is a condition to the effectiveness of the Ratification Agreement that the Parent and its Subsidiaries execute and deliver this Agreement to the Pledgee to evidence the Pledgee’s continuing security interest in and to the Collateral (as defined below) to secure all of the Obligations (as defined below).

 

H.           The Preferred Shareholder has obtaining certain shares of Series C Preferred Shares of the Parent (the “Preferred Shares”) which are subject to a security interest in favor of the Pledgee pursuant to the Collateral Agreement.

 

I.           As a condition to the consent of the Pledgee to the transfer of the Series C Shares, the Pledgee shall maintain a continuous first priority security interest in the Preferred Shares pursuant to this Agreement.

 

J.           The parties to this Agreement desire to appoint DAVID GONZALEZ, ESQ., as escrow agent (the “Escrow Agent”) to hold in escrow the certificates, documents and other property related to the Pledged Securities (as defined below) pursuant to the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants, agreements, warranties, and representations herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

TERMS AND CONDITIONS

 

1. Pledge and Security Interest.

(a) As collateral security for the prompt payment and performance in full of the Obligations (as defined below) and subject to the terms and provisions of that certain Intercreditor Agreement dated as of the date hereof between Pledgee and New EarthShell Corporation (the “Intercreditor Agreement”), each Pledgor hereby delivers, pledges and grants to the Pledgee, its successors and assigns, an irrevocable, first priority security interest in (i) all the securities, membership, partnership or other ownership interests or rights to purchase set forth on Schedule III attached hereto, and (ii) all securities, membership, partnership or other ownership interests obtained in the future by a Pledgor (collectively, the “Pledged Securities”), including, without limitation: (A) all of the Pledgors’ interests in respect of the Pledged Securities and Pledgors’ interests in all profits and distributions to which the Pledgors shall at any time be entitled in respect of such Pledged Securities and (B) to the extent not otherwise included, all proceeds, dividends, warrants, options, rights, instruments, and other property from time to time received or otherwise distributable in respect of or in exchange of any or all of the foregoing (collectively, the “Pledged Collateral”).

(b) The term “Obligations” shall mean and include (i) any and all debts, liabilities, obligations, covenants and duties owing by any Pledgor (except for the Preferred Shareholder) to the Pledgee, including without limitation, pursuant to this Agreement or the Guaranty, and (ii) with respect to the Preferred Shareholder all amounts owed by the Parent to the Pledgee under the Debentures, in each case, now existing or hereafter arising of every nature, type, and description, whether liquidated, unliquidated, primary, secondary, secured, unsecured, direct, indirect, absolute, or contingent, and whether or not evidenced by a note, guaranty or other instrument, and any amendments, extensions, renewals or increases thereof, and including any interest accruing thereon after insolvency, reorganization or like proceeding relating to the Pledgors, whether or not a claim for post-petition interest is allowed in such proceeding, and all costs and expenses of the Pledgee incurred in the enforcement, collection or otherwise in connection with any of the foregoing, including, but not limited to, reasonable attorneys’ fees and expenses and all obligations of the Pledgors to the Pledgee to perform acts or refrain from taking any action.

2. Delivery of Pledged Securities.

(a) Simultaneously with the execution of this Agreement, each Pledgor shall deliver to the Escrow Agent, and the Escrow Agent shall hold in escrow pursuant to the terms of this Agreement, stock certificates, membership interest certificates or other certificated securities made out in favor of such Pledgor representing the Pledged Securities together with stock powers or membership interest powers duly executed in blank and with medallion bank guarantees or other instruments and documents as the Pledgee may reasonably request the (“Transfer Documents”).

(b) After the execution of this Agreement, promptly upon any Pledgor acquiring any Pledged Securities, and any original certificates or other instruments or documents representing such Pledged Securities, such Pledgor shall deliver or cause to be delivered to the Escrow Agent the Pledged Securities and related Transfer Documents.

(c) Each delivery of Pledged Securities shall be accompanied by a schedule describing the Pledged Securities theretofore and then being pledged hereunder, which schedule shall be attached hereto as Schedule II and made a part hereof.  Each schedule so delivered shall supplement any prior schedules so delivered.

(d) If a Pledgor receives, or become entitled to receive any other property (whether by reclassification, readjustment, or other change in the capital structure of such Pledgor, or in any other manner), such additional or other property shall constitute Pledged Collateral, and such additional interest shall be recorded in the name of the Pledgee and delivered directly to the Escrow Agent to be held as Pledged Collateral.  If, notwithstanding the foregoing, a Pledgor receives any distribution or other property which should have been paid or delivered directly to the Pledgee or which was paid to such Pledgor in violation of this Section 2, such Pledgor shall receive the distribution or property in trust for the benefit of the Pledgee, shall segregate such distribution or property form the other property or funds of such Pledgor, and deliver it immediately to the Escrow Agent in the form received (with any necessary endorsement).

(e) Such stock certificates, membership interest certificates, other property and Transfer Documents shall be held by the Escrow Agent until the satisfaction in full of all the Obligations.

3. Voting Rights Relating to Pledged Securities. During the term of this Agreement, so long as no Event of Default shall have occurred, each Pledgor shall have the right to vote the Pledged Securities, to the extent such right exists, on all questions for all purposes not inconsistent with the terms of this Agreement.  Upon the occurrence of an Event of Default, the Pledgee shall thereafter have, at its discretion, the option to exercise all voting and/or other consensual rights and powers pertaining to the Pledged Securities, subject to the Ownership Limitation set forth below.

4. Dividends and Other Income.  All cash and non-cash distributions and dividends related to the Pledged Securities shall be delivered to the Escrow Agent.  Upon the occurrence of an Event of Default, the Pledgee shall be entitled to receive dividends and other distributions (cash or non-cash) related to the Pledged Securities.

5. 

5. Release of Pledged Securities from Pledge. Upon the indefeasible payment or satisfaction in full of all the Obligations, the parties hereto shall notify the Escrow Agent to such effect in writing. Promptly upon receipt of such written notice (and subject to the terms and provisions of the Intercreditor Agreement), the Escrow Agent shall return to each Pledgor the Transfer Documents and the certificates representing the Pledged Securities (collectively the “Pledged Materials”), whereupon any and all rights of the Pledgee in the Pledged Materials shall be terminated.

6. Event of Default. An “Event of Default” shall be deemed to have occurred under this Agreement upon an Event of Default under any of the Transaction Documents.

7. Remedies.

a. Upon and anytime after the occurrence of an Event of Default, the Pledgee shall have the right to require the Escrow Agent to deliver the Pledged Securities to the Pledgee in accordance with the following procedure: (a) the Pledgee shall provide written notice of such Event of Default (the “Default Notice”) to the Escrow Agent, with a copy to the Pledgors; (b) in a Default Notice the Pledgee shall specify the number of Pledged Securities to be delivered to the Pledgee (subject to the Ownership Limitation set forth below); and (c) as soon as practicable after receipt of a Default Notice, the Escrow Agent shall deliver the Pledged Securities along with the applicable Transfer Documents to the Pledgee.

b. Whenever an Event of Default occurs, the Pledgee shall have, and may exercise with respect to the Pledged Collateral, in such order and manner as it determines, all rights and remedies of a secured party under the Uniform Commercial Code as in effect in the State of New Jersey (the “UCC”) and under any other applicable law, as the same may from time to time be in effect, as well as those rights granted herein, under the Security Agreement and any other agreement now or hereafter in effect between the Pledgee and the Pledgors.  Without limiting the generality of the foregoing, whenever an Event of Default exists, the Pledgee may sell or otherwise dispose of all or part of the Pledged Collateral upon prior notice to the Pledgors, by public or private sale, in one or more transactions, and in such order as the Pledgee determines. Proceeds realized from such sales and dispositions shall be applied first to the Pledgee’s costs and expenses in connection therewith and then to the Obligations in such order as the Pledgee determines.

c. Pledgors recognize that the Pledgee may be unable to effect a public sale of all or a part of the Pledged Collateral by reason of certain provisions contained in the Securities Act of 1933, as amended (the “Securities Act”) and the securities laws of various states, and may be compelled to resort to one or more private sales to a restricted group of purchasers who will be obliged to agree, among other things, to acquire the Pledged Collateral for their own account, for investment and without a view to the distribution or resale thereof.  The Pledgors understand that private sales so made may be at prices and other terms less favorable than if the Pledged Collateral were sold at public sales, and agree that the Pledgee has no obligation to delay the sale of the Pledged Collateral for the period of time necessary to permit the Pledgee to register the Pledged Collateral for sale under the Securities Act or such state laws.  Pledgors agree that private sales under the foregoing circumstances shall be deemed to have been made in a commercially reasonable manner.

d. At any public (or, to the extent permitted by applicable law, private) sale made pursuant to this Section 7, the Pledgee may bid for or purchase, free from any right of redemption, stay or appraisal on the part of any Pledgor (all said rights being also hereby waived and released), the Pledged Collateral or any part thereof offered for sale and may make payment on account thereof by using any claim then due and payable to it from such Pledgor as a credit against the purchase price, and it may, upon compliance with the terms of sale, hold, retain and dispose of such property without further accountability to such Pledgor therefor.  As an alternative to exercising the power of sale herein conferred upon it, the Pledgee may proceed by a suit or suits at law or in equity to foreclose upon the Pledged Collateral and to sell the Pledged Collateral or any portion thereof pursuant to a judgment or decree of a court or courts having competent jurisdiction or pursuant to a proceeding by a court-appointed receiver.  Any sale pursuant to the provisions of this Section 7 shall be deemed to conform to the commercially reasonable standards as provided in Section 9-627 of the UCC.

e. To the extent that the net proceeds received by the Pledgee are insufficient to satisfy the Obligations in full, the Pledgee shall be entitled to a deficiency judgment against each Pledgor for such amount.  The Pledgee shall have the absolute right to sell or dispose of the Pledged Securities in any manner it sees fit and shall have no liability to any Pledgor or any other party for selling or disposing of such Pledged Securities even if other methods of sales or dispositions would or allegedly would result in greater proceeds than the method actually used.  Each Pledgor shall remain liable for shortfalls, if any, that may exist after the Pledgee has exhausted all remedies hereunder.

f. Each right, power and remedy of the Pledgee provided for in this Agreement, any Loan Instruments or any Other Loan Documents shall be cumulative and concurrent and shall be in addition to every other such right, power or remedy. The exercise or beginning of the exercise by the Pledgee of any one or more of the rights, powers or remedies provided for in this Agreement, any Loan Instrument or any Other Loan Document or now or hereafter existing at law or in equity or by statute or otherwise shall not preclude the simultaneous or later exercise by the Pledgee of all such other rights, powers or remedies, and no failure or delay on the part of the Pledgee to exercise any such right, power or remedy shall operate as a waiver thereof.  No notice to or demand on any Pledgor in any case shall entitle any Pledgor to any other or further notice or demand in similar or other circumstances or constitute a waiver of any of the rights of the Pledgee to any other further action in any circumstances without demand or notice.  The Pledgee shall have the full power to enforce or to assign or contract its rights under this Agreement to a third party.

g. All costs and expenses incurred by the Pledgee in enforcing this Agreement, in realizing upon or protecting any Pledged Collateral and in enforcing and collecting any Obligations or any guaranty thereof (including, without limitation, if the Pledgee retains counsel for advice, suit, appeal, insolvency or other proceedings under the Bankruptcy Code (11 U.S.C. §§ 101 et seq.) or otherwise, or for any of the above purposes, the actual attorneys’ fees incurred by Pledgee), shall constitute part of the Obligations, and all such costs and expenses are secured by the Pledged Collateral, as well as by all other property serving as security for the Obligations.

h. Notwithstanding anything to the contrary, in no event shall the Pledgee have the right to acquire, vote, or receive from the Escrow Agent such number of Pledged Securities which would cause the Pledgee, together with its affiliates, to beneficially own or have the right to convert into (as determined in accordance with Section 13(d) of the Securities Exchange Act of 1934 and the rules promulgated thereunder (the “Exchange Act”) in excess of 4.99% of any class of equity securities registered pursuant to Section 12 of the Exchange Act (the “Ownership Limitation”) unless the Pledgee waives such limitation by providing 65 days’ advance written notice.

8. Representations, Warranties and Covenants.  Each Pledgor represents, warrants and covenants that:

(a) each Pledgor (i) is and will at all times continue to be the legal, beneficial and record owner of, the Pledged Securities indicated on Schedule II; (ii) has good and valid title to all Pledged Securities pledged by it hereunder, except for the prior pledges and liens set forth on Schedule 4.2 of the Security Agreement, subject to no pledge, lien, mortgage, hypothecation, security interest, charge, option or other encumbrance whatsoever (collectively, the “Liens”); and (iii) will make no assignment, pledge, hypothecation or transfer of, or create or permit to exist any security interest in or other Lien on, the Pledged Collateral, other than pursuant hereto.

(b) Each Pledgor has full power, authority and legal right to pledge all the Pledged Collateral pledged pursuant to this Agreement.

(c) all the Pledged Securities have been duly authorized and validly issued, are fully paid and (to the extent representing the capital stock of a corporation) non-assessable and are subject to no options to purchase or similar rights.

(d) Each Pledgor covenants and agrees to take all reasonable steps to defend the Pledgee’s right, title and security interest in and to the Pledged Securities and the proceeds thereof against the claims and demands of all persons whomsoever (other than the Pledgee and the Escrow Agent); and each Pledgor covenants and agrees that it will have like title to and right to pledge any other property at any time hereafter pledged to the Pledgee as collateral hereunder and will likewise take all reasonable steps to defend the right thereto and security interest therein of the Pledgee.

(e) Each Pledgor covenants and agrees to take no action which would violate or be inconsistent with any of the terms of this Agreement, any Loan Instruments or any Other Loan Documents, or which would have the effect of impairing the position or interests of the Pledgee under this Agreement, any Loan Instruments or any Other Loan Documents.

(f) The Pledgors will, promptly upon request, provide to the Pledgee all information and evidence it may reasonably request concerning the Pledged Collateral to enable the Pledgee to enforce the provisions of this Agreement.

(g) Upon the filing of all appropriate financing statements under the UCC, all steps necessary to create and perfect the security interest created by this Agreement as a valid and continuing first lien on and first perfected security interest in the Pledged Collateral in favor of the Pledgee prior to all other Liens will have been taken. With respect to membership interests, each Pledgor represents and warrants that such issuer Pledgor has opted into Article 8 of the UCC; provided, however, that the membership interests hereunder shall be deemed “securities” for purposes of UCC compliance only and Pledgor acknowledges and agrees that the act of opting into Article 8 of the UCC alone does not categorize said interests as “securities” under any federal investment company laws or federal or state securities laws.

9. Concerning the Escrow Agent.

a. The Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no implied duties or obligations shall be read into this Agreement against the Escrow Agent.

b. Subject to the terms and conditions of this Agreement with respect to delivering the Pledged Collateral to the Pledgee, the Escrow Agent agrees to hold the Pledged Collateral that are in its “possession” or “control” (as defined in the UCC) (or in the possession or control of its agents or bailees) as agent or as bailee, as the case may be, and on behalf of and for the Pledgee for the purpose of perfecting the security interest granted to the Pledgee in such Pledged Collateral by possession or control.

c. The Escrow Agent may act in reliance upon any writing or instrument or signature which it, in good faith, believes to be genuine, may assume the validity and accuracy of any statement or assertion contained in such a writing or instrument, and may assume that any person purporting to give any writing, notice, advice or instructions in connection with the provisions hereof has been duly authorized to do so. The Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to form, manner, and execution, or validity of any instrument deposited in this escrow, nor as to the identity, authority, or right of any person executing the same; and its duties hereunder shall be limited to the safekeeping of such certificates, monies, instruments, or other document received by it as such escrow holder, and for the disposition of the same in accordance with the written instruments accepted by it in the escrow.

d. The Pledgee and the Pledgors hereby agree, to defend and indemnify the Escrow Agent and hold it harmless from any and all claims, liabilities, losses, actions, suits, or proceedings at law or in equity, or any other expenses, fees, or charges of any character or nature which it may incur or with which it may be threatened by reason of its acting as Escrow Agent under this Agreement; and in connection therewith, to indemnify the Escrow Agent against any and all expenses, including attorneys’ fees and costs of defending any action, suit, or proceeding or resisting any claim in connection with this Agreement.  The Escrow Agent shall be vested with a lien on all property deposited hereunder, for indemnification of attorneys’ fees and court costs regarding any suit, proceeding or otherwise, or any other expenses, fees, or charges of any character or nature, which may be incurred by the Escrow Agent by reason of disputes arising between the makers of this escrow as to the correct interpretation of this Agreement and instructions given to the Escrow Agent hereunder, or otherwise, with the right of the Escrow Agent, regardless of the instructions aforesaid, to hold said property until and unless said additional expenses, fees, and charges shall be fully paid. Any fees and costs charged by the Escrow Agent for serving hereunder shall be paid by the Pledgors.

e. If any of the parties shall be in disagreement about the interpretation of this Agreement, or about the rights and obligations, or the propriety of any action contemplated by the Escrow Agent hereunder, the Escrow Agent may, at its sole discretion deposit the Pledged Materials with the Clerk of the United States District Court of New Jersey, sitting in Newark, New Jersey, and, upon notifying all parties concerned of such action, all liability on the part of the Escrow Agent shall fully cease and terminate. The Escrow Agent shall be indemnified by the Pledgors, and the Pledgee for all costs, including reasonable attorneys’ fees in connection with the aforesaid proceeding, and shall be fully protected in suspending all or a part of its activities under this Agreement until a final decision or other settlement in the proceeding is received.

f. The Escrow Agent may consult with counsel of its own choice (and the costs of such counsel shall be paid by the Pledgors and the Pledgee) and shall have full and complete authorization and protection for any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel. The Escrow Agent shall not be liable for any mistakes of fact or error of judgment, or for any actions or omissions of any kind, unless caused by its willful misconduct or gross negligence.

g. The Escrow Agent may resign upon ten (10) days’ written notice to the parties in this Agreement. If a successor Escrow Agent is not appointed within this ten (10) day period, the Escrow Agent may petition a court of competent jurisdiction to name a successor.

10. Conflict Waiver. Each Pledgor hereby acknowledges that the Escrow Agent is general counsel to the Pledgee and its parent company, a partner in the general partner of the parent of the Pledgee, and counsel to the Pledgee in connection with the transactions contemplated and referred herein. The Pledgors agree that in the event of any dispute arising in connection with this Agreement or otherwise in connection with any transaction or agreement contemplated and referred herein, the Escrow Agent shall be permitted to continue to represent the Pledgee and the Pledgors will not seek to disqualify such counsel and waives any objection the Pledgors might have with respect to the Escrow Agent acting as the Escrow Agent pursuant to this Agreement.

11. Appointed Attorney-in-Fact.  Each Pledgor hereby appoints the Pledgee and any other officer or agent thereof as the true and lawful attorney-in-fact of such Pledgor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that Pledgee may deem reasonably necessary or advisable (in its reasonable judgment) to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest.  Without limiting the generality of the foregoing, the Pledgee shall have the right, (i) upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in any Pledgee’s name or in the name of such Pledgor, to endorse checks, drafts, orders and other instruments for the payment of money payable to a Pledgor representing any interest or dividend or other distribution payable in respect of the Pledged Collateral or any part thereof or on account thereof and to give full discharge for the same; and (ii) upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Pledgee’s name or in the name of such Pledgor, to ask for, demand, sue for, collect, receive and give acquittance for any and all moneys due or to become due under and by virtue of any Pledged Collateral, to settle, compromise, prosecute or defend any action, claim or proceeding with respect thereto, and to sell, assign, endorse, pledge, transfer and to make any agreement respecting, or otherwise deal with, the same.

12. Additional Pledgors. Pursuant to Section 6.12 of the Security Agreement, each subsidiary of the Pledgors that was not in existence or not a subsidiary on the date of the Security Agreement is required to become a Pledgor and to enter in this Agreement as a Pledgor upon becoming a subsidiary. Such subsidiary shall become a Pledgor hereunder with the same force and effect as if originally named as a Pledgor herein.  The rights and obligations of each Pledgor hereunder shall remain in full force and effect notwithstanding the addition of any new Pledgor as a party to this Agreement.

13. Notices. Unless otherwise provided herein, all demands, notices, consents, service of process, requests and other communications hereunder shall be in writing and shall be delivered in person or by overnight courier service, or mailed by certified mail, return receipt requested, addressed:

	
If to the Pledgee:

	
YA Global Investments, L.P.

101 Hudson Street-Suite 3700

Jersey City, New Jersey 07302

Attention: Mark Angelo

Portfolio Manager

Telephone:  (201) 985-8300

Facsimile:  (201) 985-8266

 

	
With a copy to:

 

 

 

 

 

	
David Gonzalez, Esq.

Yorkville Advisors, LLC

101 Hudson Street, Suite 3700

Jersey City, NJ 07302

Telephone:  (201) 985-8300

Facsimile:  (201) 985-8744

 

	
And if to any Pledgor:

	
c/o Carbonics Capital Corporation

One Penn Plaza, Suite 1612

New York, New York 10119

Attention:   Chief Executive Officer

Telephone: (212) 994-5374

Facsimile:   (646) 572-6336

 

Any such notice shall be effective (a) when delivered, if delivered by hand delivery or overnight courier service, or (b) five (5) days after deposit in the United States mail, as applicable.

 

14. Binding Effect. All of the covenants and obligations contained herein shall be binding upon and shall inure to the benefit of the respective parties, their successors and assigns.

15. Governing Law; Venue; Service of Process. The validity, interpretation and performance of this Agreement shall be determined in accordance with the laws of the State of New Jersey without regard to the principles of conflict of laws. The parties further agree that any action between them shall be heard in Hudson County, New Jersey or Federal district courts located in Newark, New Jersey, and expressly consent to the jurisdiction and venue of the Superior Court of New Jersey, sitting in Hudson County and the United States District Court for the District of New Jersey sitting in Newark, New Jersey for the adjudication of any civil action asserted pursuant to this Paragraph, provided, however, that nothing herein shall prevent the Pledgee from enforcing its rights and remedies (including, without limitation, by filing a civil action) with respect to the Collateral and/or the Pledgors in any other jurisdiction in which the Collateral and/or the Pledgors may be located.  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 to such party at the address for such notices to it under this Agreement 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.

16. JURY TRIAL. AS A MATERIAL INDUCEMENT FOR THE PLEDGEE TO MAKE FINANCIAL ACCOMMODATIONS TO ANY PLEDGOR, EACH PLEDGOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS TRANSACTION.

17. Enforcement Costs. If any legal action or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default or misrepresentation in connection with any provisions of this Agreement, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys’ fees, court costs and all expenses even if not taxable as court costs (including, without limitation, all such fees, costs and expenses incident to appeals), incurred in that action or proceeding, in addition to any other relief to which such party or parties may be entitled.

18. No Penalties. No provision of this Agreement is to be interpreted as a penalty upon any party to this Agreement.

19. Remedies Cumulative. No remedy herein conferred upon any party is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity, by statute, or otherwise. No single or partial exercise by any party of any right, power or remedy hereunder shall preclude any other or further exercise thereof.

20. Severability. If any provision of this Agreement is, for any reason, invalid or unenforceable, the remaining provisions of this Agreement will nevertheless be valid and enforceable and will remain in full force and effect.  Any provision of this Agreement that is held invalid or unenforceable by a court of competent jurisdiction will be deemed modified to the extent necessary to make it valid and enforceable and as so modified will remain in full force and effect.

21. Amendment and Waiver. This Agreement may be amended, or any provision of this Agreement may be waived, provided that any such amendment or waiver will be binding on a party hereto only if such amendment or waiver is set forth in a writing executed by the parties hereto. The waiver by any such party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other breach.  The Pledgee’s failure to exercise any right, remedy or option under this Agreement or other agreement between the Pledgee and the Pledgors or delay by Pledgee in exercising the same will not operate as a waiver.  No waiver by Pledgee shall affect its right to require strict performance of this Agreement.

22. Further Assurances. Each party will execute all documents and take such other actions as the other parties may reasonably request in order to consummate the transactions provided for herein and to accomplish the purposes of this Agreement.

23. Liability of Pledgors.  Notwithstanding any provision herein, the Pledgors, and each of them, are and shall be jointly and severally liable for any and all Obligations (whether any such Obligation is specified as an obligation of the Pledgors or of any of them).

24. Entire Agreement. This Agreement and the other documents or agreements delivered in connection herewith set forth the entire understanding of the parties with respect to the subject matter hereof, and shall not be modified or affected by any offer, proposal, statement or representation, oral or written, made by or for any party in connection with the negotiation of the terms hereof, and may be modified only by instruments signed by all of the parties hereto.

25. Counterparts. This Agreement may be executed and delivered by exchange of facsimile signatures of the Pledgee and the Pledgors, and those signatures need not be affixed to the same copy.  This Agreement may be executed in any number of counterparts.

26. Pledged Collateral Under Security Agreement.  This Agreement is supplemental to, and not in limitation of, the Security Agreement. In the event of a conflict between the terms of this Agreement and of the Security Agreement related to the Pledged Collateral, the terms of this Agreement shall control.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

 

  

  

  

  

IN WITNESS WHEREOF, each Pledgor has caused this Pledge and Escrow Agreement to be executed by its respective duly authorized officer, as of the date first above written.

 

 

CARBONICS CAPITAL CORPORATION

 

By:_/s/ Stephen Schoepfer______________

Name:  Stephen Schoepfer

Title:    Chief Executive Officer

 

 

WESTPORT ACQUISITION, INC.

 

By:_/s/ Stephen Schoepfer______________

Name:  Stephen Schoepfer

Title:    Chief Executive Officer

 

 

WESTPORT ENERGY, LLC

 

By:_/s/ Stephen Schoepfer______________

Name:  Stephen Schoepfer

Title:    Manager

 

 

4 SEA-SONS LLC

 

By:_/s/ Stephen Schoepfer______________

Name:  Stephen Schoepfer

Title:    President

 

 

 

 

 

  

  

  

  

IN WITNESS WHEREOF, the undersigned acknowledge and agree to the terms and conditions of this Pledge and Escrow Agreement as of the date first above written.

 

	  	
 

YA GLOBAL INVESTMENTS, L.P.

By Yorkville Advisors, LLC,

Its Investment Manager

 

 

By:_/s/ Troy Rillo   ___________________

Name:  Troy Rillo

Title:    Senior Managing Director

 

	  	  
	  	
ESCROW AGENT

By:_/s/ David Gonzalez, Esq. ___________

Name:  David Gonzalez, Esq.

  

  

  

  

SCHEDULE I

(Subsidiary Pledgors)

Westport Energy, LLC, a Delaware limited liability company

  

  

  

  

SCHEDULE II

(Convertible Debentures)

Secured Convertible Debenture No. CCP-3 dated October 12, 2005 issued by Carbonics to the Secured Party in the original principal amount of $1,475,000.

 

Secured Convertible Debenture No. CCP-4 dated February 8, 2006 issued by Carbonics to the Secured Party in the original principal amount of $3,050,369.

 

Secured Convertible Debenture No. GSHF-3-1 dated June 26, 2007 issued by Carbonics to the Secured Party in the original principal amount of $570,000.

 

Secured Convertible Debenture No. CICS-5 dated June 30, 2009 issued by Carbonics to the Secured Party in the original principal amount of $4,000,000.

 

Secured Convertible Debenture No. CICS-7 dated August 17, 2010 issued by Carbonics to the Secured Party in the original principal amount of $650,000.

 

  

  

  

  

SCHEDULE III

(Pledged Securities)

Pledged by 4 Sea-Sons LLC:

972,032 Series C Preferred Shares of Carbonics Capital Corporation.

Pledged by Carbonics Capital Corporation:

1,000 shares of common stock representing 100% of the issued and outstanding capital stock of Westport Energy Acquisition, Inc. (Certificate Number WEA 001)

Pledged by Westport Energy Acquisition, Inc.:

100 LLC membership interests representing 100% of the issued and outstanding membership interests in Westport Energy, LLC.  (Certificate Number 1)

  

  

  

  

SCHEDULE III

(Disclosure Schedule)

[to attach]ex101.htm

    
       

       

    

    STOCK PURCHASE
AGREEMENT

    

    

    THIS STOCK PURCHASE AGREEMENT
(the “Agreement”) is dated the 15th day
of July, 2010 by and among Ms. Sun Jing (the “Buyer”), CHINA VOIP & DIGITAL
TELECOM INC. a Nevada Corporation (the “Company”).

    

    WHEREAS, the Company desire to
sell its common stock to Buyer, and Buyer desires to buy five hundred thousand
(500,000) shares of the Company’s common stock for the consideration and upon
the terms and subject to the conditions hereinafter set forth.

    

    NOW, THEREFORE, in
consideration of the premises, the provisions and the respective agreements
hereinafter set forth, the parties hereto hereby agree as follows

    

    
      	
              1.  

            	
              Purchase and Sale of
      Stock.

            

    

    

    1.1           Agreement to Purchase and
Sell.  Upon the terms and subject to the conditions set forth
in this Agreement and upon the representations and warranties made herein by
each of the parties to the other, on the Closing Date (as such term is
hereinafter defined), Company shall deliver five hundred thousand (500,000)
shares of common stock to Buyer, and Buyer shall pay $135,000 US DOLLAR
(Purchase Amount) to the Company.

    

    1.2             Purchase
Price.  Upon the terms and subject to the conditions set forth
in this Agreement, in reliance upon the representations, warranties, covenants
and agreements made by the Company contained herein, both the Buyer and the
Company agree that the Purchase Price is $ 0.27 per share.

    

    1.3             Payment of Purchase
Amount.  The Purchase Amount shall be payable on the Closing
Date by wire transfer of immediately available funds in accordance with the
Company's written wire instructions.

    

    1.4                         Closing.  The
closing of the transaction contemplated herein (the "Closing") will be at the
office of Buyer on or before ___________, 2010 or at such other place or at such
other date and time as the Company and Buyer may mutually agree.  Such
date and time of Closing is herein referred to as the "Closing
Date."

    

    
      	
              2.  

            	
              Representations and
      Warranties of the Company.  The Company, represents and
      warrants to Buyer as follows:

            

    

    

    2.1           Existence and Good
Standing.  The Company is a limited liability Company duly
registered, validly existing and in good standing under the laws of the State of
Nevada.  The Company is duly licensed or qualified to do business and
is in good standing under the laws of all other jurisdictions in which the
character of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary.

    

    2.2           Corporate
Authority.    The Company has all requisite corporate
power and authority to own its properties and carry on its business as now
conducted.

    

    2.3           Compliance with
Law.  The Company is not in default with respect to any order
of any court, governmental authority or arbitration board or tribunal to which
the Company is a party or is subject, and the Company is not in violation of any
laws, ordinances, governmental rules or regulations to which it is
subject.  The Company has obtained all licenses, permits and other
authorizations and has taken all actions required by applicable laws or
governmental regulations in connection with its business as now
conducted.

    

    2.4           Validity and Effect of
Agreements.  This Agreement constitutes, and all agreements and
documents contemplated hereby when executed and delivered pursuant hereto will
constitute, the valid and legally binding obligations of the Company and
Shareholders enforceable in accordance with their terms, except that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws of general
application now or hereafter in effect relating to the enforcement of creditors'
rights generally and except that the remedies of specific performance,
injunction and other forms of equitable relief are subject to certain tests of
equity jurisdiction, equitable defenses and the discretion of the court before
which any proceeding therefore may be brought.

    

    2.5   Acknowledgment Regarding
Buyer's Purchase of Stock. The Company acknowledges and agrees that the
Buyer is acting in the capacity of arm's length purchaser with respect to the
Agreement and the transactions contemplated hereby and thereby and that no Buyer
is (i) an officer or director of the Company, (ii) an "affiliate" of the Company
or any of its Subsidiaries (as defined in Rule 144) or (iii) to the knowledge of
the Company, a "beneficial owner" of more than 10% of the shares of Common Stock
(as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended (the "1934 Act")).  The Company further acknowledges that
no Buyer is acting as a financial advisor or fiduciary of the Company or any of
its Subsidiaries (or in any similar capacity) with respect to the Agreement and
the transactions contemplated hereby and thereby, and any advice given by the
Buyer or any of its representatives or agents in connection with the Agreement
and the transactions contemplated hereby and thereby is merely incidental to the
Buyer's purchase of the stock.  The Company further represents to the
Buyer that the Company's decision to enter into the Agreement has been based
solely on the independent evaluation by the Company and its
representatives.

    

    2.6    No General Solicitation;
Placement Agent's Fees.  Neither the Company, nor any of its
Subsidiaries or affiliates, nor any Person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with the offer or sale of the
Securities.  The Company shall be responsible for the payment of any
placement agent's fees, financial advisory fees, or brokers' commissions (other
than for persons engaged by any Buyer or its investment advisor) relating to or
arising out of the transactions contemplated hereby.  The Company
shall pay, and hold the Buyer harmless against, any liability, loss or expense
(including, without limitation, attorney's fees and out-of-pocket expenses)
arising in connection with any such claim.

    

    2.7           SEC Documents; Financial
Statements.  During the two (2) years prior to the date hereof,
the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the 1934 Act (all of the foregoing filed prior to the date
hereof and all exhibits included therein and financial statements, notes and
schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the "SEC Documents").  The Company has
delivered to the Buyer or their respective representatives true, correct and
complete copies of the SEC Documents not available on the EDGAR
system.  As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

    

    2.8           Undisclosed
Liabilities.  The Company has no liabilities or obligations
whatsoever, whether accrued, absolute, contingent or otherwise, which are not
reflected or provided for in the Financial Statements.

    

    2.9           Absence of Certain Changes
or Events Since the Date of the Audited Balance Sheet.  Since
the date of the Financial Statements, the Company has not:

    

    (A)           incurred
any liability whatsoever, whether accrued, absolute, contingent or otherwise,
except those liabilities and obligations referred to in Section 2.8 above, and
except in connection with this Agreement and the transactions contemplated
hereby;

    

    (B)           discharged
or satisfied any lien, security interest or encumbrance or paid any obligation
or liability (fixed or contingent), other than in the ordinary course of
business and consistent with past practice;

    

    (C)               mortgaged,
pledged or subjected to any lien, security interest or other encumbrance any of
its assets or properties;

    

    (D)           transferred,
leased or otherwise disposed of any of its assets or properties except for a
fair consideration in the ordinary course of business and consistent with past
practice or, except in the ordinary course of business and consistent with past
practice, acquired any assets or properties;

    

    (E)           canceled
or compromised any debt or claim, except in the ordinary course of business and
consistent with past practice;

    

    (F)           waived
or released any rights of material value;

    

    (G)           made
or granted any wage or salary increase applicable to any group or classification
of employees generally, entered into any employment contract with, or made any
loan to, or entered into any material transaction of any other nature with, any
officer or employee of the Company;

    

    (H)           suffered
any casualty loss or damage (whether or not such loss or damage shall have been
covered by insurance) which affects in any material respect its ability to
conduct business, or suffered any casualty loss or damage in excess of
$25,000.00 and which is not covered by insurance; or

    

    (I)           declared
any dividends or bonuses, or authorized or affected any amendment or restatement
of the articles of incorporation or by-laws of the Company or taken any steps
looking toward the dissolution or liquidation of the Company.

    

    Between
the date of this Agreement and the Closing, the Company will not, without prior
written notice to Buyer, do any of the things listed in sub-paragraphs (A)
through (I) above.

    

    2.10           
Taxes.  The
Company (i) has duly and timely filed or caused to be filed all federal, state,
local and foreign tax returns (including, without limitation, consolidated
and/or combined tax returns) required to be filed by it prior to the date of
this Agreement which relate to the Company or with respect to which the Company
or the assets or properties of the Company are liable or otherwise in any way
subject, (ii) has paid or fully accrued for all taxes shown to be due and
payable on such returns (which taxes are all the taxes due and payable under the
laws and regulations pursuant to which such returns were filed), and (iii) has
properly accrued for all such taxes accrued in respect of the Company or the
assets and properties of the Company for periods subsequent to the periods
covered by such returns.  No deficiency in payment of taxes for any
period has been asserted by any taxing body and remains unsettled at the date of
this Agreement.  Copies of all federal, state, local and foreign tax
returns of the Company have been made available for inspection by
Buyer.

    

    2.11              Title to Company
Shares.  The Company Shares are duly authorized, validly
issued, fully paid and non-assessable and are owned by Shareholders free and
clear of all liens, encumbrances, charges, assessments and adverse
claims.  The Company Shares are subject to no restrictions with
respect to transferability to Buyer in accordance with the terms of this
Agreement.  Upon transfer of the Company Shares by Shareholders, Buyer
will, as a result, receive good and marketable title to all of the Company
Shares, free and clear of all security interests, liens, encumbrances, charges,
assessments, restrictions and adverse claims.

    

    2.12           Title to Property and
Assets.  The Company has good and marketable title to all of
the properties and assets reflected in the Balance Sheets.  None of
such properties or assets is, except as disclosed in said Balance Sheets hereto,
subject to a contract of sale not in the ordinary course of business, or subject
to security interests, mortgages, encumbrances, liens or charges of any kind or
character.

    

    2.13           Business Property
Rights.  The property referred herein, together with (i) all
designs, methods, inventions and know-how related thereto and (ii) all
trademarks, trade names, service marks, and copyrights claimed or used by the
Company which have not been registered (collectively "Business Property
Rights"), constitute all such proprietary rights owned or held by the
Company.  The Company owns or has valid rights to use all such
Business Property Rights without conflict with the rights of
others.  Except as set forth herein, no person or corporation has made
or, to the knowledge of the Company, threatened to make any claims that the
operation of the business of the Company is in violation of or infringes any
Business Property Rights or any other proprietary or trade rights of any third
party.  To the knowledge of the Company, no third party is in
violation of or is infringing upon any Business Property Rights.

    

    2.14           No Breach or
Default.  The Company is not in default under any contract to
which it is a party or by which it is bound, nor has any event occurred which,
after the giving of notice or the passage of time or both, would constitute a
default under any such contract.  Shareholders have no reason to
believe that the parties to such contracts will not fulfill their obligations
under such contracts in all material respects or are threatened with
insolvency.

    

    2.15           Labor
Controversies.  The Company is not a party to any collective
bargaining agreement.  There are not any controversies between the
Company and any of its employees which might reasonably be expected to
materially adversely affect the conduct of its business, or any unresolved labor
union grievances or unfair labor practice or labor arbitration proceedings
pending or threatened relating to its business, and there are not any
organizational efforts presently being made or threatened involving any of the
Company's employees.  The Company has not received notice of any claim
that the Company has not complied with any laws relating to the employment of
labor, including any provisions thereof relating to wages, hours, collective
bargaining, the payment of social security and similar taxes, equal employment
opportunity, employment discrimination and employment safety, or that the
Company is liable for any arrears of wages or any taxes or penalties for failure
to comply with any of the foregoing.

    

    2.16           Litigation.  Except
as set forth herein, there are no actions, suits or proceedings with respect to
the Company involving claims by or against Shareholders or the Company which are
pending or threatened against Shareholders or the Company, at law or in equity,
or before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality.  No basis for
any action, suit or proceeding exists, and there are no orders, judgments,
injunctions or decrees of any court or governmental agency with respect to which
Shareholders or the Company has been named or to which Shareholders or the
Company is a party, which apply, in whole or in part, to the business of the
Company, or to any of the assets or properties of the Company or the Company
Shares or which would result in any material adverse change in the business or
prospects of the Company.

    

    2.17             Bank
Information.  The wire shall be sent to the Company’s Bank
according to the information below:

    

    
      	
               
      

            	
              China
      VoIP & Digital Telecom Inc.

            

    

    
      	
               
      

            	
              ADD:
      2470 Saint Rose PKWY STE 304 Henderson N.V
  89074-7775

            

    

    
      	
               
      

            	
              Bank
      of America, N.A.

            

    

    
      	
               
      

            	
              ADD:
      10459N 28th Drive Phoenix AZ
85051-1597

            

    

    
      	
               
      

            	
              ACC
      #: 004682127161

            

    

    
      	
               
      

            	
              SWIFT:
      BOFAUS3N

            

    

    

    

    2.18           Powers of
Attorney.  There are no persons holding powers of attorney from
the Company.

    

    2.19           No Misrepresentation or
Omission.  No representation or warranty by Shareholders in
this Article 2 or in any other Article or Section of this Agreement, or in any
certificate or other document furnished or to be furnished by Shareholders
pursuant hereto, contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained therein not misleading or will omit to state a material
fact necessary in order to provide Buyer with accurate information as to the
Company.

    

    3.           Representations and
Warranties of Buyer.  Buyer represents and warrants to the
Company as follows:

    

    

    3.1           Existence and Good
Standing.  Buyer is a corporation duly incorporated, validly
existing and in good standing under the laws of People’s Republic of
China.  Buyer is duly licensed or qualified to do business as
a  corporation and is in good standing under the laws of all other
jurisdictions in which the character of the properties owned or leased by it
therein or in which the transaction of its business makes such qualification
necessary.

    

    3.2           Corporate
Authority.  Buyer has all requisite corporate power and
authority to own its properties and carry on its business as now
conducted.

    

    3.3           Compliance with
Law.  Buyer is not in default with respect to any order of any
court, governmental authority or arbitration board or tribunal to which Buyer is
a party or is subject, and Buyer is not in violation of any laws, ordinances,
governmental rules or regulations to which it is subject.  Buyer has
obtained all licenses, permits or other authorizations and has taken all actions
required by applicable laws or governmental regulations in connection with its
business as now conducted.

    

    3.4           Authorization; Validity and
Effect of Agreements.  The execution and delivery of this
Agreement and all agreements and documents contemplated hereby by Buyer, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized by all requisite corporate action.  This Agreement
constitutes, and all agreements and documents contemplated hereby when executed
and delivered pursuant hereto will constitute, the valid and legally binding
obligations of Buyer enforceable in accordance with their terms, except that
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or other similar laws of general
application now or hereafter in effect relating to the enforcement of creditors'
rights generally and except that the remedies of specific performance,
injunction and other forms of equitable relief are subject to certain tests of
equity jurisdiction, equitable defenses and the discretion of the court before
which any proceeding therefore may be brought.  The execution and
delivery of this Agreement by Buyer does not and the consummation of the
transactions contemplated hereby will not (i) require the consent of any third
party, (ii) result in the breach of any term or provision of, or constitute a
default under, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice or the lapse of time or both) any
obligation under, or result in the creation or imposition of any lien, charge,
pledge, security interest or other encumbrance upon any part of the property of
the Company pursuant to any provision of, any order, judgment, arbitration
award, injunction, decree, indenture, mortgage, lease, license, lien, or other
agreement or instrument to which Buyer is a party or by which it is bound, and
(iii) violate or conflict with any provision of the by-laws or articles of
incorporation of Buyer as amended to the date of this Agreement.

    

    3.5           Absence of undisclosed
liabilities.  The Buyer has not had nor does it have any
indebtedness, loss or liability of any nature whatsoever (other than those
occurred in the normal course of business) whether accrued, absolute or
contingent.

     
 

                3.6    Accredited Investor
Status.  Such Buyer is an "accredited investor" as that term is
defined in Rule 501(a) of Regulation D.

    

    4.           Other Covenants and
Agreements.

    

    4.1           Company
Cooperation.    Subject to the terms and conditions
of this Agreement, the Company will use its best efforts to cause its officers,
directors, employees, accountants, consultants, advisors and agents, to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate the transactions contemplated by
this Agreement.

    

    4.2           Public
Announcements.  Neither the Companys nor Buyer will at any
time, without the prior written consent of the other, make any announcement,
issue any press release or make any statement with respect to this Agreement or
any of the terms or conditions hereof except as may be necessary to comply with
any law, regulation or order and then only after written notice to the other
party of the timing, context and content of such announcement, press release or
statement; provided, however, that subsequent to the Closing the Company may
disclose the consummation of the transaction herein contemplated without the
consent of the Buyer.

    

    5.           Conditions of
Closing.

    

    5.1           Buyer’s Conditions of
Closing.    The obligation of Buyer to purchase and
pay for the Company Shares shall be subject to and conditioned upon the
satisfaction (or waiver by Buyer) at the Closing of each of the following
conditions:

    

                      (A)                                All
representations and warranties of the Company contained in this Agreement shall
be true and correct at and as of the Closing Date, the Company shall have
performed all agreements and covenants and satisfied all conditions on its part
to be performed or satisfied by the Closing Date pursuant to the terms of this
Agreement.

    

    (B)                      There
shall have been no material adverse change since the date of the Audited Balance
Sheet in the financial condition, business or affairs of the Company, and the
Company shall not have suffered any material loss (whether or not insured) by
reason of physical damage caused by fire, earthquake, accident or other calamity
which materially affects the value of its assets, properties or
business.

    

    (C)                      Neither
any investigation of the Company by Buyer, nor any supplement or other document
delivered to Buyer as contemplated by this Agreement, shall have revealed any
facts or circumstances which, in the sole and exclusive judgment of Buyer and
regardless of the cause thereof, reflect in an adverse way on the Company or its
financial condition, assets, liabilities (absolute, accrued, contingent or
otherwise), reserves, business, operations or prospects.

    

    (D)           No
suit, action, investigation, inquiry or other proceeding by any governmental
body or other person or legal or administrative proceeding shall have been
instituted or threatened which questions the validity or legality of the
transactions contemplated hereby.

    

    (E)                      As
of the Closing, there shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as so provided or imposing any conditions on the consummation
of the transactions contemplated hereby, which is unduly burdensome on
Buyer.

    

                            (F)                                As
of the Closing, there shall have been no material adverse change in the amount
of issued and outstanding common stock of the Company.

    

    5.2           The Company’s Conditions of
Closing.  The obligation of the Company to sell its Shares
shall be subject to and conditioned upon the satisfaction (or waiver by the
Company) at the Closing of each of the following conditions:

    

    (A)                      All
representations and warranties of Buyer contained in this Agreement shall be
true and correct at and as of the Closing Date and Buyer shall have performed
all agreements and covenants and satisfied all conditions on its part to the
performed or satisfied by the Closing Date pursuant to the terms of this
Agreement.

    

    (B)                      Buyer
shall have effected payment of the Purchase Amount in accordance with Section
1.3 of this Agreement and according to the bank wire information stipulated in
Section 2.17, by providing the Company a bank confirmation of the
wire.

    

          (C)                                Resolutions
of its Board of Directors authorizing execution of this Agreement and the
execution, performance and delivery of all agreements, documents and
transactions contemplated hereby; and

    

          (D)                                The
incumbency of its officers executing this Agreement and all agreements and
documents contemplated hereby.

    

          (E)                                 No
suit, action, investigation, inquiry or other proceeding by any governmental
body or other person or legal or administrative proceeding shall have been
instituted or threatened which questions the validity or legality of the
transactions contemplated hereby.

    

          (F)                      As
of the Closing, there shall be no effective injunction, writ, preliminary
restraining order or any order of any nature issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as so provided or imposing any conditions on the consummation
of the transactions contemplated hereby, which is unduly burdensome on the
Company.

    

    6.           Termination.

    

    6.1           Methods of
Termination.   The transactions contemplated herein may be
terminated and/or abandoned at any time before or after approval thereof by the
Company and Buyer, but not later than the Closing:

    

    6.1.1           By
mutual consent of Buyer and the Company, or

    

    6.1.2           By
Buyer, if any of the conditions provided for in Section 5.1 hereof shall not
have been met or waived in writing by Buyer at or prior to Closing;
or

    

    6.1.3           By
the Company, if any of the conditions provided for in Section 5.2 hereof shall
not have been met or waived in writing by the Company at or prior to
Closing.

    

    6.2           Procedure Upon
Termination.  In the event of termination by Buyer or the
Company, as applicable, pursuant to Section 6.1 hereof, written notice thereof
shall forthwith be given to the other party and the transactions contemplated by
this Agreement shall be terminated without further action by Buyer or the
Company.  If the transactions contemplated by this Agreement are so
terminated:

    

    6.2.1           Each
party will redeliver all documents, work papers and other material of any other
party relating to the transactions contemplated hereby, whether so obtained
before or after the execution of this Agreement, to the party furnishing the
same.

    

    7.           Miscellaneous.

    

    

    7.1           Notice.  Any
notice required or permitted hereunder shall be in writing and shall be
sufficiently given if personally delivered or mailed by certified or registered
mail, return receipt requested.

    

    
      	
              If
      to the Company: China VoIP & Digital Telecom
  Inc.

            

    

    

    Address: 11/F No.11 Building, Shuntai
Square, No.2000

    Shunhua Rd,High-tech Industrial
Development

    Zone, Jinan, 250101

                                        ATTN:    Kunwu
Li

    

    

    (or to
such other address as any party shall specify by written notice so given), and
shall be deemed to have been delivered as of the date so personally delivered or
mailed.

    

    

    7.2           Execution of Additional
Documents.  The parties hereto will at any time, and from time
to time after the Closing Date, upon request of the other party, execute,
acknowledge and deliver all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and assurances as may be reasonably required to
carry out the intent of this Agreement, and to transfer and vest title to any
Company Shares being transferred hereunder, and to protect the right, title and
interest in and enjoyment of all of the Company Shares sold, granted, assigned,
transferred, delivered and conveyed pursuant to this Agreement; provided,
however, that this Agreement shall be effective regardless of whether any such
additional documents are executed.

    

    7.3           Binding Effect;
Benefits.  This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs, successors,
executors, administrators and assigns.  Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.

    

    7.4             Entire
Agreement.  This Agreement, together with the Exhibits,
Schedules and other documents contemplated hereby, constitute the final written
expression of all of the agreements between the parties, and is a complete and
exclusive statement of those terms.  It supersedes all understandings
and negotiations concerning the matters specified herein.  Any
representations, promises, warranties or statements made by either party that
differ in any way from the terms of this written Agreement and the Exhibits,
Schedules and other documents contemplated hereby, shall be given no force or
effect.  The parties specifically represent, each to the other, that
there are no additional or supplemental agreements between them related in any
way to the matters herein contained unless specifically included or referred to
herein.  No addition to or modification of any provision of this
Agreement shall be binding upon any party unless made in writing and signed by
all parties.

    

    7.5           Governing
Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Nevada exclusive of the conflict of law
provisions thereof.

    

    7.6           Survival.  All
of the terms, conditions, warranties and representations contained in this
Agreement shall survive the Closing.

    

    7.7           Counterparts.   This
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
instrument.

    

    7.8           Headings.  Headings
of the Articles and Sections of this Agreement are for the convenience of the
parties only, and shall be given no substantive or interpretive effect
whatsoever.

    

    7.9           Waivers.  Either
Buyer or the Company may, by written notice to the other, (i) extend the time
for the performance of any of the obligations or other actions of the other
under this Agreement; (ii) waive any inaccuracies in the representations or
warranties of the other contained in this Agreement or in any document delivered
pursuant to this Agreement; (iii) waive compliance with any of the conditions or
covenants of the other contained in this Agreement; or (iv) waive performance of
any of the obligations of the other under this Agreement.  Except as
provided in the preceding sentence, no action taken pursuant to this Agreement,
including without limitation any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained in this Agreement.  The waiver by any party hereto of a
breach of any provision hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision
hereunder.

    

    7.10           Merger of
Documents.  This Agreement and all agreements and documents
contemplated hereby constitute one agreement and are interdependent upon each
other in all respects.

    

    7.11    Incorporation of Exhibits
and Schedules.  All Exhibits and Schedules
attached   hereto are by this reference incorporated herein and
made a part hereof for all purposes as if fully set forth herein.

    

    7.12     Severability.  If
for any reason whatsoever, any one or more of the provisions of this Agreement
shall be held or deemed to be inoperative, unenforceable or invalid as applied
to any particular case or in all cases, such circumstances shall not have the
effect of rendering such provision invalid in any other case or of rendering any
of the other provisions of this Agreement inoperative, unenforceable or
invalid.

    

    7.13 Assignability.  Neither
this Agreement nor any of the parties' rights hereunder shall be assignable by
any party hereto without the prior written consent of the other parties
hereto.

    

               7.14   Inconsistent
with both Chinese and English Version of the Agreement, its English version
shall prevail.

    

    IN WITNESS WHEREOF, the
parties have executed this Agreement and caused the same to be duly delivered on
their behalf on the day and year first above written.

    

    

    COMPANY:

    

    China
VoIP & Digital Telecom Inc.

    

    By:  /s/ Li
Kunwu

           Li
Kunwu

           President
and Chief Executive Officer

    

    BUYER:

    

    By:  /s/ Ms. Sun
Jing

           Ms.
Sun Jing

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}]]