Continuing Guarantee - SkyMall Inc., Durham & Co. and Imperial Bank
CONTINUING GUARANTEE
TO: IMPERIAL BANK, a California banking corporation
1. For valuable consideration, the undersigned (hereinafter called
"Guarantor"), whose address is set forth after Guarantor's signature below,
jointly and severally, and unconditionally, guarantees and promises to pay to
IMPERIAL BANK, a California banking corporation (hereinafter called "Lender"),
or order, on demand, in lawful money of the United States, any and all
indebtedness of SKYMALL, INC., a Nevada corporation, skymall.com, inc., a Nevada
corporation and DURHAM & COMPANY, a Utah corporation (hereinafter, severally and
collectively, called "Borrower"), to Lender pursuant to that certain Credit and
Security Agreement dated June 30, 1999, as amended by that certain Modification
Agreement of even date herewith, by and between Borrower and Lender
(hereinafter, severally and collectively, called "Credit Agreement")
attributable to the Maximum Guaranteed Loan Amount (as defined in the Credit
Agreement) and not to the Maximum Adjusted Cash Flow Loan Amount (as defined in
the Credit Agreement). If more than one Borrower is named herein, or if this
Guarantee is executed by more than one Guarantor, the word "Borrower" and the
word "Guarantor" respectively shall mean all and any one or more of them,
severally and collectively. The word "indebtedness" is used in its most
comprehensive sense and includes any and all advances, debts, obligations and
liabilities of Borrower heretofore, now or hereafter made, incurred or created,
with or without notice to Guarantor, whether voluntary or involuntary and
however arising, whether due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined, and whether Borrower is liable
individually or jointly with others, or whether recovery upon such indebtedness
may be or hereafter become barred by any statute of limitations, or whether such
indebtedness may be or hereafter become otherwise unenforceable, exclusive,
however, of any indebtedness of Borrower to Lender presently covered by existing
guaranties executed by Guarantor, but without derogation to such existing
guaranties, if any, which are hereby ratified and reaffirmed.
2. The liability of Guarantor hereunder shall not exceed at any one
time the sum of FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00) for principal,
plus all interest thereon and all attorneys' fees and other costs and expenses
incurred by Lender in collecting, compromising or enforcing the indebtedness or
in protecting or preserving any security for the indebtedness. Lender may permit
the indebtedness of Borrower to exceed such maximum liability without impairing
the obligation of Guarantor hereunder. Any payment by Guarantor shall not reduce
Guarantor's maximum obligation hereunder, unless written notice to that effect
is actually received by Lender at or prior to the time of such payment. Any
payment by or recovery from Borrower, any other guarantor or any security shall
be credited first to that portion of the indebtedness which exceeds the maximum
obligation of Guarantor hereunder. Notwithstanding any other provision in this
Guarantee to the contrary, Guarantor shall be totally released from any
liability for the payment of the indebtedness from and after the date that
Borrower satisfies the Invested Capital Condition (as defined in the Credit
Agreement).
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3. This is a continuing guarantee that shall remain in full force and
effect and includes all indebtedness arising under future transactions or under
successive transactions which either continue then existing indebtedness or from
time to time renew it after it has been satisfied, but shall not apply to any
indebtedness created after actual receipt by Lender of written notice of the
revocation of this Guarantee as to future transactions. Any such revocation of
this Guarantee at any time by any Guarantor as to future transactions shall not
affect the liability of any other guarantor for indebtedness of Borrower and
shall not affect the liability of that Guarantor or any other guarantor for
indebtedness incurred or credit committed by Lender to Borrower prior to the
effective time of that revocation; this Guarantee shall remain in full force and
effect as to all such indebtedness. The death of any Guarantor shall not operate
as a revocation of liability hereunder of the estate of that Guarantor for
indebtedness created or incurred or credit committed by Lender to Borrower
subsequent to such death until actual receipt by Lender of written notice of the
death of that Guarantor. Guarantor waives notice of revocation given by any
other guarantor.
4. Guarantor is providing this Guarantee at the instance and request of
Borrower to induce Lender to extend or continue financial accommodations to
Borrower. Guarantor hereby represents and warrants that Guarantor is and will
continue to be fully informed about all aspects of the financial condition and
business affairs of Borrower that Guarantor deems relevant to the obligations of
Guarantor hereunder and hereby waives and fully discharges Lender from any and
all obligations to communicate to Guarantor any information whatsoever regarding
Borrower or Borrower's financial condition or business affairs.
5. Guarantor authorizes Lender, without notice or demand and without
affecting Guarantor's liability hereunder, from time to time, to: (a) renew,
modify, compromise, extend, accelerate or otherwise change the time for payment
of, or otherwise change the terms of the indebtedness or any part thereof,
including increasing or decreasing the rate of interest thereon; (b) release,
substitute or add any one or more endorsers, Guarantor or other guarantors.
6. Upon the occurrence of an Event of Default (as defined in the Credit
Agreement) or at any time thereafter Lender may (a) take and hold security for
the payment of this Guarantee or the indebtedness, and enforce, exchange,
substitute, subordinate, waive or release any such security; (b) proceed against
such security and direct the order or manner of sale of such security as Lender
in its discretion may determine; and (c) apply any and all payments from
Borrower, Guarantor or any other guarantor, or recoveries from such security, in
such order or manner as Lender in its discretion may determine.
7. Guarantor waives and agrees not to assert: (a) any right to require
Lender to proceed against Borrower or any other guarantor, to proceed against or
exhaust any security for the indebtedness, to pursue any other remedy available
to Lender, or to pursue any remedy in any particular order or manner; (b) the
benefit of any statute of limitations affecting Guarantor's liability hereunder
or the enforcement hereof; (c) demand, diligence, presentment for payment,
protest and demand, and notice of extension, dishonor, protest, demand,
nonpayment and acceptance of this Guarantee; (d) notice of the existence,
creation or incurring of new or additional indebtedness of Borrower to Lender;
(e) the benefits of any statutory provision limiting the liability of a surety,
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including without limitation the provisions of A.R.S. Sections 12-1641, et seq.,
to the extent applicable; (f) any defense arising by reason of any disability or
other defense of Borrower or by reason of the cessation from any cause
whatsoever (other than payment in full) of the liability of Borrower for the
indebtedness; (g) any defense based upon an election of remedies by Lender,
including, without limitation, any election to proceed by judicial or
nonjudicial foreclosure of any security, whether real property or personal
property security, or by deed in lieu thereof, and whether or not every aspect
of any foreclosure sale is commercially reasonable, or any election of remedies,
including but not limited to, remedies relating to real property or personal
property security, which destroys or otherwise impairs the subrogation rights of
Guarantor or the rights of Guarantor to proceed against Borrower or any
guarantor for reimbursement, or both; (h) to the extent permitted by applicable
law, the benefits of any statutory provision limiting the right of Lender to
recover a deficiency judgment, or to otherwise proceed against any person or
entity obligated for payment of the indebtedness, after any foreclosure or
trustee's sale of any security for the indebtedness; and (i) without limiting
the generality of the foregoing or any other provision hereof, any rights and
benefits which might otherwise be available to Guarantor under California Civil
Code Sections 2809, 2810, 2819, 2839, 2845, 2848, 2849, 2850, 2899 and 3433, or
any successor sections, to the extent applicable. Guarantor hereby expressly
consents to any impairment of collateral, including, but not limited to, failure
to perfect a security interest and release collateral and any such impairment or
release shall not affect Guarantor's obligations hereunder. Until payment in
full of the indebtedness, Guarantor shall have no right of subrogation and
hereby waives any right to enforce any remedy which Lender now has, or may
hereafter have, against Borrower, and waives any benefit of, and any right to
participate in, any security now or hereafter held by Lender. Guarantor
understands and acknowledges that if Lender forecloses judicially or
nonjudicially against any real property security for the indebtedness, that
foreclosure could impair or destroy any ability that Guarantor may have to seek
reimbursement, contribution or indemnification from Borrower or others based on
any right Guarantor may have of subrogation, reimbursement, contribution or
indemnification for any amounts paid by Guarantor under this Guarantee.
Guarantor further understands and acknowledges that in the absence of this
Paragraph 7, such potential impairment or destruction of Guarantor's rights, if
any, may entitle Guarantor to assert a defense to this Guarantee based on
Section 580d of the California Code of Civil Procedure as interpreted in Union
Bank v. Gradsky, 265 Cal. App. 2d 40 (1968), to the extent applicable. By
executing this Guarantee, Guarantor freely, irrevocably and unconditionally: (i)
waives and relinquishes that defense and agrees that Guarantor will be fully
liable under this Guarantee even though Lender may foreclose judicially or
nonjudicially against any real property security for the indebtedness; (ii)
agrees that Guarantor will not assert that defense in any action or proceeding
which Lender may commence to enforce this Guarantee; and (iii) acknowledges and
agrees that Lender is relying on this waiver in making the loans evidenced by
the Note, and that this waiver is a material part of the consideration which
Lender is receiving for making such Loans. Guarantor waives all rights and
defenses arising out of an election of remedies by Lender, even though that
election of remedies, such as a nonjudicial foreclosure with respect to security
for a guaranteed obligation, has destroyed the guarantor's rights of subrogation
and reimbursement against the principal by the operation of Section 580d of the
Code of Civil Procedure or otherwise.
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Guarantor waives all rights and defenses that Guarantor may have
because the indebtedness is secured by real property. This means, among other
things:
(a) Lender may collect from Guarantor without first
foreclosing on any real or personal property collateral pledged by
Borrower.
(b) If Lender forecloses on any real property collateral
pledged by Borrower:
(i) The indebtedness may be reduced only by the price
for which that collateral is sold at the foreclosure sale,
even if the collateral is worth more than the sale price.
(ii) Lender may collect from Guarantor even if Lender,
by foreclosing on the real property collateral, has destroyed
any right Guarantor may have to collect from Borrower.
This is an unconditional and irrevocable waiver of any rights and
defenses Guarantor may have because the indebtedness is secured by real
property. These rights and defenses include, but are not limited to, any rights
or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code
of Civil Procedure or Section 2848 of the California Civil Code.
8. All existing and future indebtedness of Borrower to Guarantor is
hereby subordinated to the indebtedness of Borrower to Lender and such
indebtedness of Borrower to Guarantor, if Lender so requests, shall be
collected, enforced and received by Guarantor as trustee for Lender and shall be
paid over to Lender on account of the indebtedness of Borrower to Lender, but
without reducing or affecting in any manner the liability of Guarantor under the
other provisions of this Guarantee.
9. In addition to all liens upon, and rights of setoff against, the
monies, securities or other property of Guarantor given to Lender by law, Lender
shall have a lien and a right of setoff against, and Guarantor hereby grants to
Lender a security interest in, all monies, securities and other property of
Guarantor now and hereafter in the possession of or on deposit with Lender,
whether held in a general or special account or deposit, or for safekeeping or
otherwise; every such lien and right of setoff may be exercised without demand
upon or notice to Guarantor. No lien or right of setoff shall be deemed to have
been waived by any act or conduct on the part of Lender, by any neglect to
exercise such right of setoff or to enforce such lien, or by any delay in so
doing.
10. If Borrower is a corporation or partnership, it is not necessary
for Lender to inquire into the powers of Borrower or the officers, directors,
partners or agents acting or purporting to act on its behalf, and any
indebtedness made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
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11. Guarantor agrees to deliver to Lender financial statements, income
tax returns and other financial information in form and level of detail, and
containing certifications, as and to the extent required pursuant to the Credit
Agreement.
12. All financial statements, income tax returns and other financial
information previously or hereafter given to Lender by or on behalf of Guarantor
are and shall be true, complete and correct as of the date thereof.
13. Guarantor agrees to pay all attorneys' fees and all other costs and
expenses which may be incurred by Lender in enforcing this Guarantee.
14. The obligations of Guarantor hereunder are joint and several if
Guarantor is more than one person or entity, are separate and independent of the
obligations of Borrower and of any other guarantor, and a separate action or
actions may be brought and prosecuted against Guarantor whether action is
brought against Borrower or any other guarantor or whether Borrower or any other
guarantor is joined in any action or actions. The obligations of Guarantor
hereunder shall survive and continue in full force and effect until payment in
full of the indebtedness is actually received by Lender, notwithstanding any
release or termination of Borrower's liability by express or implied agreement
with Lender or by operation of law and notwithstanding that the indebtedness or
any part thereof is deemed to have been paid or discharged by operation of law
or by some act or agreement of Lender. For purposes of this Guarantee, the
indebtedness shall be deemed to be paid only to the extent that Lender actually
receives immediately available funds and to the extent of any credit bid by
Lender at any foreclosure or trustee's sale of any security for the
indebtedness.
15. This Guarantee sets forth the entire agreement of Guarantor and
Lender with respect to the subject matter hereof and supersedes all prior oral
and written agreements and representations by Lender to Guarantor. No
modification or waiver of any provision of this Guarantee or any right of Lender
hereunder and no release of Guarantor from any obligation hereunder shall be
effective unless in a writing executed by an authorized officer of Lender. There
are no conditions, oral or otherwise, on the effectiveness of this Guarantee.
16. This Guarantee shall inure to the benefit of Lender and its
successors and assigns and shall be binding upon Guarantor and its heirs,
personal representatives, successors and assigns. Lender may assign this
Guarantee in whole or in part without notice.
17. Guarantor agrees that to the extent Borrower or Guarantor makes any
payment to Lender in connection with the indebtedness, and all or any part of
such payment is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid by Lender or paid over to a
trustee, receiver or any other entity, whether under any bankruptcy act or
otherwise (any such payment is hereinafter referred to as a "Preferential
Payment"), then this Guarantee shall continue to be effective or shall be
reinstated, as the case may be, and, to the extent of such payment or repayment
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by Lender, the indebtedness or part thereof intended to be satisfied by such
Preferential Payment shall be revived and continued in full force and effect as
if said Preferential Payment had not been made.
18. Guarantor represents and warrants to Lender that: (a) (if Guarantor
is not a natural person) it is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization; (b) Guarantor
has full capacity and authority to execute, deliver and perform this Guarantee,
and the execution, delivery and performance of this Guarantee will not (i)
violate any law or regulation, (ii) (if Guarantor is not a natural person)
violate any provision of Guarantor's organizational documents, (iii) violate or
constitute (with due notice or lapse of time or both) a default under any
indenture, agreement, license or other instrument to which Guarantor is a party
or by which Guarantor or any of Guarantor's properties may be bound, (iv)
violate any order of any court, tribunal or governmental agency binding on
Guarantor or any of Guarantor's properties, (v) result in the creation or
imposition of any lien of any nature whatsoever on any of Guarantor's properties
or assets, (vi) render Guarantor insolvent under generally accepted accounting
principles, (vii) leave Guarantor with remaining assets which constitute
unreasonably small capital given the nature of its business, or (viii) result in
the incurrence of debts (whether matured or unmatured, liquidated or
unliquidated, absolute, fixed or contingent) beyond Guarantor's ability to pay
them when and as they become due; (c) no approval or consent of, or filing or
registration with, any federal, state or local regulatory authority is required
in connection with the execution, delivery and performance of this Guarantee;
and (d) this Guarantee constitutes the legal, valid and binding obligation of
Guarantor, enforceable against Guarantor in accordance with its terms. These
representations and warranties shall survive the execution of this Guarantee. As
used in this paragraph, "insolvent" means the present fair saleable value of
assets is less than the probable amount required to be paid on existing debts
when and as they mature.
19. Reference Provision.
(a) Each controversy, dispute or claim ("Claim") between the
parties arising out of or relating to this Guarantee and/or any of the
Loan Documents (as defined in the Credit Agreement), which is not
settled in writing within ten days after the "Claim Date" (defined as
the date on which a party gives written notice to all other parties
that a controversy, dispute or claim exists), will be settled by a
reference proceeding in Los Angeles, California, in accordance with the
provisions of Section 638, et seq., of the California Code of Civil
Procedure, or their successor section ("CCP"), which shall constitute
the exclusive remedy for the settlement of any Claim, including whether
such Claim is subject to the reference proceeding and the parties waive
their rights to initiate any legal proceedings against each other in
any court or jurisdiction other than the Superior Court of Los Angeles
(the "Court"). The referee shall be a retired Judge selected by mutual
agreement of the parties, and if they cannot so agree with in thirty
days (30) after the Claim Date, the referee shall be selected by the
Presiding Judge of the Court. The referee shall be appointed to sit as
a temporary judge, as authorized by law. The referee shall (a) be
requested to set the matter for hearing within sixty (60) days after
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the Claim Date and (b) try any and all issues of law or fact and report
a statement of decision upon them, if possible, within ninety (90) days
of the Claim Date. Any decision rendered by the referee will be final,
binding and conclusive and judgment shall be entered pursuant to CCP
644 in the Court. All discovery permitted by this Guarantee shall be
completed no later than fifteen (15) days before the first hearing date
established by the referee. The referee may extend such period in the
event of a party's refusal to provide requested discovery for any
reason whatsoever, including, without limitation, legal objections
raised to such discovery or unavailability of a witness due to absence
or illness. No party shall be entitled to "priority" in conducing
discovery. Depositions may be taken by either party upon seven (7) days
written notice, and, request for production of inspection of documents
shall be responded to within ten (10) days after service. All disputes
relating to discovery which cannot be resolved by the parties shall be
submitted to the referee whose decision shall be final and binding upon
the parties.
(b) The referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the State
of California. The rules of evidence applicable to proceedings at law
in the State of California will be applicable to the reference
proceeding. The referee shall be empowered to enter equitable as well
as legal relief, to provide all temporary and/or provisional remedies
and to enter equitable orders that will be binding upon the parties.
The referee shall issue a single judgment at the close of the reference
proceeding which shall dispose of all of the claims of the parties that
are the subject to the reference. The parties hereto expressly reserve
the right to contest or appeal from the final judgment or any
appealable order or appealable judgment entered by the referee. The
parties expressly reserve the right to findings of fact, conclusions of
law, a written statement of decision, and the right to move for a new
trial or a different judgment, which new trial, if granted, is also to
be a reference proceeding under this provision.
(c) No provision of Paragraphs (a) or (b) of this Section 18
however, shall limit the right of Lender to bring action for possession
of any collateral in any jurisdiction, wherever located, in accordance
with the provisions of the Loan Documents.
20. Notwithstanding any waiver of or references to Arizona Revised
Statutes contained in Paragraph 6 hereof, this Guarantee shall be governed by
and construed in accordance with the substantive laws (other than conflict laws)
of the State of California, except to the extent Lender has greater rights or
remedies under Federal law, whether as a national bank or otherwise, in which
case such choice of California law shall not be deemed to deprive Lender of any
such rights and remedies as may be available under Federal law. Subject to the
provisions of Section 18 hereof, each party consents to the personal
jurisdiction and venue of the state courts located in Los Angeles, State of
California in connection with any controversy related to this Guarantee, waives
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any argument that venue in any such forum is not convenient and agrees that any
litigation initiated by any of them in connection with this Guarantee shall be
venued in the Superior Court of Los Angeles County, California. The parties
waive any right to trial by jury in any action or proceeding based on or
pertaining to this Guarantee.
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IN WITNESS WHEREOF, these presents are executed as of the 1st day
of September, 1999.
GUARANTOR:
/s/ Robert M. Worsley
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ROBERT M. WORSLEY
/s/ Christi M. Worsley
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CHRISTI M. WORSLEY
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