Exhibit 10.10
SUBSIDIARY GUARANTY
New York, New York November 29, 2004
FOR VALUE RECEIVED, and in consideration of note purchases from, loans made or
to be made or credit otherwise extended or to be extended by Laurus Master Fund,
Ltd. ("Laurus") to or for the account of Digital Lifestyles Group, Inc., a
Delaware corporation ("Debtor"), from time to time and at any time and for other
good and valuable consideration and to induce Xxxxxx, in its discretion, to
purchase such notes, make such loans or extensions of credit and to make or
grant such renewals, extensions, releases of collateral or relinquishments of
legal rights as Xxxxxx may deem advisable, each of the undersigned (and each of
them if more than one, the liability under this Guaranty being joint and
several) (jointly and severally referred to as "Guarantors" or "the
undersigned") unconditionally guaranties to Laurus, its successors, endorsees
and assigns the prompt payment when due (whether by acceleration or otherwise)
of all present and future obligations and liabilities of any and all kinds of
Debtor to Laurus and of all instruments of any nature evidencing or relating to
any such obligations and liabilities upon which Debtor or one or more parties
and Debtor is or may become liable to Laurus, whether incurred by Debtor as
maker, endorser, drawer, acceptor, guarantors, accommodation party or otherwise,
and whether due or to become due, secured or unsecured, absolute or contingent,
joint or several, and however or whenever acquired by Laurus, whether arising
under, out of, or in connection with (i) that certain Security Agreement dated
as of the date hereof by and between the Debtor and Laurus (the "Security
Agreement") and (ii) each Ancillary Agreement referred to in the Security
Agreement (the Security Agreement and each Ancillary Agreement, as each may be
amended, modified, restated or supplemented from time to time, are collectively
referred to herein as the "Documents"), or any documents, instruments or
agreements relating to or executed in connection with the Documents or any
documents, instruments or agreements referred to therein or otherwise, or any
other indebtedness, obligations or liabilities of the Debtor to Laurus, whether
now existing or hereafter arising, direct or indirect, liquidated or
unliquidated, absolute or contingent, due or not due and whether under, pursuant
to or evidenced by a note, agreement, guaranty, instrument or otherwise (all of
which are herein collectively referred to as the "Obligations"), and
irrespective of the genuineness, validity, regularity or enforceability of such
Obligations, or of any instrument evidencing any of the Obligations or of any
collateral therefor or of the existence or extent of such collateral, and
irrespective of the allowability, allowance or disallowance of any or all of the
Obligations in any case commenced by or against Debtor under Title 11, United
States Code, including, without limitation, obligations or indebtedness ofDebtor
for post-petition interest, fees, costs and charges that would have accrued or
been added to the Obligations but for the commencement of such case. Terms not
otherwise defined herein shall have the meaning assigned such terms in the
Security Agreement. In furtherance of the foregoing, the undersigned xxxxxx
agrees as follows:
1. No Impairment. Laurus may at any time and from time to time, either before
or after the maturity thereof, without notice to or further consent of the
undersigned, extend the time of payment of, exchange or surrender any
collateral for, renew or extend any of the Obligations or increase or
decrease the interest rate thereon, or any other agreement with Debtor or
with any other party to or person liable on any of the Obligations, or
interested therein, for the extension, renewal, payment, compromise,
discharge or release thereof, in whole or in part, or for any modification
of the terms thereof or of any agreement between Laurus and Debtor or any
such other party or person, or make any election of rights Laurus may deem
desirable under the United States Bankruptcy Code, as amended, or any other
federal or state bankruptcy, reorganization, moratorium or insolvency law
relating to or affecting the enforcement of creditors' rights generally
(any of the foregoing, an "Insolvency Law") without in any way impairing or
affecting this Guaranty. This instrument shall be effective regardless of
the subsequent incorporation, merger or consolidation of Debtor, or any
change in the composition, nature, personnel or location of Debtor and
shall extend to any successor entity to Debtor, including a debtor in
possession or the like under any Insolvency Law.
2. Guaranty Absolute. Subject to Sections 5(c) and 22 hereof, each of the
undersigned jointly and severally guarantees that the Obligations will be
paid strictly in accordance with the terms of the Documents and/or any
other document, instrument or agreement creating or evidencing the
Obligations, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of
Debtor with respect thereto. Guarantors hereby knowingly accept the full
range of risk encompassed within a contract of "continuing guaranty" which
risk includes the possibility that Debtor will contract additional
indebtedness for which Guarantors may be liable hereunder after Xxxxxx's
financial condition or ability to pay its lawful debts when they fall due
has deteriorated, whether or not Debtor has properly authorized incurring
such additional indebtedness. The undersigned acknowledge that (i) no oral
representations, including any representations to extend credit or provide
other financial accommodations to Debtor, have been made by Xxxxxx to
induce the undersigned to enter into this Guaranty and (ii) any extension
of credit to the Debtor shall be governed solely by the provisions of the
Documents. The liability of each of the undersigned under this Guaranty
shall be absolute and unconditional, in accordance with its terms, and
shall remain in full force and effect without regard to, and shall not be
released, suspended, discharged, terminated or otherwise affected by, any
circumstance or occurrence whatsoever, including,
without limitation: (a) any waiver, indulgence, renewal, extension,
amendment or modification of or addition, consent or supplement to or
deletion from or any other action or inaction under or in respect of the
Documents or any other instruments or agreements relating to the
Obligations or any assignment or transfer of any thereof, (b) any lack of
validity or enforceability of any Document or other documents, instruments
or agreements relating to the Obligations or any assignment or transfer of
any thereof, (c) any furnishing of any additional security to Laurus or its
assignees or any acceptance thereof or any release of any security by
Laurus or its assignees, (d) any limitation on any party's liability or
obligation under the Documents or any other documents, instruments or
agreements relating to the Obligations or any assignment or transfer of any
thereof or any invalidity or unenforceability, in whole or in part, of any
such document, instrument or agreement or any term thereof, (e) any
bankruptcy, insolvency, reorganization, composition, adjustment,
dissolution, liquidation or other like proceeding relating to Debtor, or
any action taken with respect to this Guaranty by any trustee or receiver,
or by any court, in any such proceeding, whether or not the undersigned
shall have notice or knowledge of any of the foregoing, (f) any exchange,
releaseor nonperfection of any collateral, or any release, or amendment or
waiver of or consent to departure from any guaranty or security, for all or
any of the Obligations or (g) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the undersigned. Any
amounts due from the undersigned to Laurus shall bear interest until such
amounts are paid in full at the highest rate then applicable to the
Obligations. Obligations include post-petition interest whether or not
allowed or allowable
3. Waivers.
(a) This Guaranty is a guaranty of payment and not of collection. Laurus
shall be under no obligation to institute suit, exercise rights or
remedies or take any other action against Debtor or any other person
liable with respect to any of the Obligations or resort to any
collateral security held by it to secure any of the Obligations as a
condition precedent to the undersigned being obligated to perform as
agreed herein and each of the Guarantors hereby waives any and all
rights which it may have by statute or otherwise which would require
Laurus to do any of the foregoing. Each of the Guarantors further
consents and agrees that Xxxxxx shall be under no obligation to
marshal any assets in favor of Guarantors, or against or in payment of
any or all of the Obligations. The undersigned hereby waives all
suretyship defenses and any rights to interpose any defense,
counterclaim or offset of any nature and description which the
undersigned may have or which may exist between and among Laurus,
Debtor and/or the undersigned with respect to the undersigned's
obligations under this Guaranty, or which Debtor may assert on the
underlying debt, including but not limited to failure of
consideration, breach of warranty, fraud, payment (other than cash
payment in full of the Obligations), statute of frauds, bankruptcy,
infancy, statute of limitations, accord and satisfaction, and usury.
(b) Each of the undersigned further waives (i) notice of the acceptance of
this Guaranty, of the making of any such loans or extensions of
credit, and of all notices and demands of any kind to which the
undersigned may be entitled, including, without limitation, notice of
adverse change in Debtor's financial condition or of any other fact
which might materially increase the risk of the undersigned and (ii)
presentment to or demand of payment from anyone whomsoever liable upon
any of the Obligations, protest, notices of presentment, non-payment
or protest and notice of any sale of collateral security or any
default of any sort.
(c) Notwithstanding any payment or payments made by the undersigned
hereunder, or any setoff or application of funds of the undersigned by
Xxxxxx, the undersigned shall not be entitled to be subrogated to any
of the rights of Xxxxxx against Debtor or against any collateral or
guarantee or right of offset held by Xxxxxx for the payment of the
Obligations, nor shall the undersigned seek or be entitled to seek any
contribution or reimbursement from Debtor in respect of payments made
by the undersigned hereunder, until all amounts owing to Laurus by
Debtor on account of the Obligations are paid in full and Laurus'
obligation to extend credit pursuant to the Documents have been
terminated. If, notwithstanding the foregoing, any amount shall be
paid to the undersigned on account of such subrogation rights at any
time when all of the Obligations shall not have been paid in full and
Laurus' obligation to extend credit pursuant to the Documents shall
not have been terminated, such amount shall be held by the undersigned
in trust for Laurus, segregated from other funds of the undersigned,
and shall forthwith upon, and in any event within two (2) business
days of, receipt by the undersigned, be turned over to Laurus in the
exact form received by the undersigned (duly endorsed by the
undersigned to Laurus, if required), to be applied against the
Obligations, whether matured or unmatured, in such order as Laurus may
determine, subject to the provisions of the Documents. Any and all
present and future debts and obligations of Debtor to any of the
undersigned are hereby waived and postponed in favor of, and
subordinated to the full payment and performance of, all present and
future debts and Obligations of Debtor to Xxxxxx.
4. Security. All sums at any time to the credit of the undersigned and any
property of the undersigned in Laurus' possession or in the possession of
any bank, financial institution or other entity that directly or
indirectly, through one or more intermediaries, controls or is controlled
by, or is under common control with, Laurus (each such entity, an
"Affiliate") shall be deemed held by Laurus or such Affiliate, as the case
may be, as security for any and all of the undersigned's
obligations to Laurus and to any Affiliate of Laurus, no matter how or when
arising and whether under this or any other instrument, agreement or
otherwise.
5. Representations and Warranties. Each of the undersigned respectively,
hereby jointly and severally represents and warrants (all of which
representations and warranties shall survive until all Obligations are
indefeasibly satisfied in full and the Documents have been irrevocably
terminated), that:
(a) Corporate Status. It is a corporation, partnership or limited
liability company, as the case may be, duly organized, validly
existing and in good standing under the laws of its jurisdiction of
organization indicated on the signature page hereof and has full
power, authority and legal right to own its property and assets and to
transact the business in which it is engaged.
(b) Authority and Execution. It has full power, authority and legal right
to execute and deliver, and to perform its obligations under, this
Guaranty and has taken all necessary corporate, partnership or limited
liability company, as the case may be, action to authorize the
execution, delivery and performance of this Guaranty.
(c) Legal, Xxxxx and Binding Character. This Guaranty constitutes its
legal, valid and binding obligation enforceable in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of
general application affecting the enforcement of creditor's rights and
general principles of equity that restrict the availability of
equitable or legal remedies.
(d) Violations. The execution, delivery and performance of this Guaranty
will not violate any requirement of law applicable to it or any
contract, agreement or instrument to which it is a party or by which
it or any of its property is bound or result in the creation or
imposition of any mortgage, lien or other encumbrance other than to
Laurus on any of its property or assets pursuant to the provisions of
any of the foregoing, which, in any of the foregoing cases, could
reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.
(e) Consents or Approvals. No consent of any other person or entity
(including, without limitation, any creditor of the undersigned) and
no consent, license, permit, approval or authorization of, exemption
by, notice or report to, or registration, filing or declaration with,
any governmental authority is required in connection with the
execution, delivery, performance, validity or enforceability of this
Guaranty by it, except to the extent that the failure to obtain any of
the foregoing could not reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect.
(f) Litigation. No litigation, arbitration, investigation or
administrative proceeding of or before any court, arbitrator or
governmental authority, bureau or agency is currently pending or, to
the best of its knowledge, threatened (i) with respect to this
Guaranty or any of the transactions contemplated by this Guaranty or
(ii) against or affecting it, or any of its property or assets, which,
in each of the foregoing cases, if adversely determined, could
reasonably be expected to have a Material Adverse Effect.
(g) Financial Benefit. It has derived or expects to derive a financial or
other advantage from each and every loan, advance or extension of
credit made under the Documents or other Obligation incurred by the
Debtor to Laurus.
6. Acceleration.
(a) If any Event of Default (as defined in the Security Agreement) or
other event of default shall occur and be continuing under any
agreement made by Debtor or any of the undersigned to Laurus, or
either Debtor or any of the undersigned should at any time become
insolvent, or make a general assignment, or if a proceeding in or
under any Insolvency Law shall be filed or commenced by, or in respect
of, any of the undersigned, or if a notice of any lien, levy, or
assessment is filed of record with respect to any assets of any of the
undersigned by the United States of America or any department, agency,
or instrumentality thereof, or if any taxes or debts owing at any time
or times hereafter to any one of them becomes a lien or encumbrance
upon any assets of the undersigned in Laurus' possession, or
otherwise, any and all Obligations shall for purposes hereof, at
Laurus' option, be deemed due and payable without notice
notwithstanding that any such Obligation is not then due and payable
by Debtor.
(b) Each of the undersigned will promptly notify Laurus of any default by
such undersigned in its respective performance or observance of any
term or condition of any agreement to which the undersigned is a party
if the effect of such default is to cause, or permit the holder of any
obligation under such agreement to cause, such obligation to become
due prior to its stated maturity and, if such an event occurs, Xxxxxx
shall have the right to accelerate such undersigned's obligations
hereunder.
7. Payments from Guarantors. Laurus, in its sole and absolute discretion, with
or without notice to the undersigned, may apply on account of the
Obligations any payment from the undersigned or any other guarantors, or
amounts realized from any security for the Obligations, or may deposit any
and all such amounts realized in a non-interest bearing cash collateral
deposit account to be maintained as security for the Obligations.
8. Costs. The undersigned shall pay on demand, all reasonable costs, fees and
expenses (including reasonable expenses for legal services of every kind)
relating or incidental to the enforcement or protection of the rights of
Laurus hereunder or under any of the Obligations.
9. No Termination. This is a continuing irrevocable guaranty and shall remain
in full force and effect and be binding upon the undersigned, and each of
the undersigned's successors and assigns, until all of the Obligations have
been paid in full and Laurus' obligation to extend credit pursuant to the
Documents has been irrevocably terminated. If any of the present or future
Obligations are guarantied by persons, partnerships or corporations in
addition to the undersigned, the death, release or discharge in whole or in
part or the bankruptcy, merger, consolidation, incorporation, liquidation
or dissolution of one or more of them shall not discharge or affect the
liabilities of any undersigned under this Guaranty.
10. Recapture. Anything in this Guaranty to the contrary notwithstanding, if
Xxxxxx receives any payment or payments on account of the liabilities
guaranteed hereby, which payment or payments or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver, or any other
party under any Insolvency Law, common law or equitable doctrine, then to
the extent of any sum not finally retained by Xxxxxx, the undersigned's
obligations to Xxxxxx shall be reinstated and this Guaranty shall remain in
full force and effect (or be reinstated) until payment shall have been made
to Laurus, which payment shall be due on demand.
11. Books and Records. The books and records of Xxxxxx showing the account
between Xxxxxx and Debtor shall be admissible in evidence in any action or
proceeding, shall be binding upon the undersigned for the purpose of
establishing the items therein set forth and shall constitute prima facie
proof thereof.
12. No Waiver. No failure on the part of Laurus to exercise, and no delay in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by Xxxxxx of any right,
remedy or power hereunder preclude any other or future exercise of any
other legal right, remedy or power. Each and every right, remedy and power
hereby granted to Laurus or allowed it by law or other agreement shall be
cumulative and not exclusive of any other, and may be exercised by Xxxxxx
at any time and from time to time.
13. Waiver of Jury Trial. EACH OF THE UNDERSIGNED DOES HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING BASED ON OR WITH RESPECT TO THIS GUARANTY OR ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR RELATING OR INCIDENTAL HERETO. THE
UNDERSIGNED DOES HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF XXXXXX
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT LAURUS WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL
PROVISION.
14. Governing Law; Jurisdiction; Amendments. THIS INSTRUMENT CANNOT BE CHANGED
OR TERMINATED ORALLY, AND SHALL BE GOVERNED, CONSTRUED AND INTERPRETED AS
TO VALIDITY, ENFORCEMENT AND IN ALL OTHER RESPECTS IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT HAVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS. EACH OF THE UNDERSIGNED EXPRESSLY CONSENTS TO THE
JURISDICTION AND VENUE OF THE SUPREME COURT OF THE STATE OF NEW YORK,
COUNTY OF NEW YORK, AND OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK FOR ALL PURPOSES IN CONNECTION HEREWITH. ANY
JUDICIAL PROCEEDING BY THE UNDERSIGNED AGAINST LAURUS INVOLVING, DIRECTLY
OR INDIRECTLY ANY MATTER OR CLAIM IN ANY WAY ARISING OUT OF, RELATED TO OR
CONNECTED HEREWITH SHALL BE BROUGHT ONLY IN THE SUPREME COURT OF THE STATE
OF NEW YORK, COUNTY OF NEW YORK OR THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK. THE UNDERSIGNED FURTHER CONSENTS THAT ANY
SUMMONS, SUBPOENA OR OTHER PROCESS OR PAPERS (INCLUDING, WITHOUT
LIMITATION, ANY NOTICE OR MOTION OR OTHER APPLICATION TO EITHER OF THE
AFOREMENTIONED COURTS OR A JUDGE THEREOF) OR ANY NOTICE IN CONNECTION WITH
ANY PROCEEDINGS HEREUNDER, MAY BE SERVED INSIDE OR OUTSIDE OF THE STATE OF
NEW YORK OR THE SOUTHERN DISTRICT OF NEW YORK BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, OR BY PERSONAL SERVICE PROVIDED A
REASONABLE TIME FOR APPEARANCE IS PERMITTED, OR IN SUCH OTHER MANNER AS MAY
BE PERMISSIBLE UNDER THE RULES OF SAID COURTS. EACH OF THE UNDERSIGNED
WAIVES ANY
OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED HEREON AND
SHALL NOT ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE OR
BASED UPON FORUM NON CONVENIENS.
15. Severability. To the extent permitted by applicable law, any provision of
this Guaranty which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
16. Amendments, Waivers. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by the undersigned therefrom shall in
any event be effective unless the same shall be in writing executed by each
of the undersigned directly affected by such amendment and/or waiver and
Xxxxxx.
17. Notice. All notices, requests and demands to or upon the undersigned, shall
be in writing and shall be deemed to have been duly given or made (a) when
delivered, if by hand, (b) three (3) days after being sent, postage
prepaid, if by registered or certified mail, (c) when confirmed
electronically, if by facsimile, or (d) when delivered, if by a recognized
overnight delivery service in each event, to the numbers and/or address set
forth beneath the signature of the undersigned.
18. Successors. Laurus may, from time to time, without notice to the
undersigned, sell, assign, transfer or otherwise dispose of all or any part
of the Obligations and/or rights under this Guaranty. Without limiting the
generality of the foregoing, Laurus may assign, or grant participations to,
one or more banks, financial institutions or other entities all or any part
of any of the Obligations. In each such event, Laurus, its Affiliates and
each and every immediate and successive purchaser, assignee, transferee or
holder of all or any part of the Obligations shall have the right to
enforce this Guaranty, by legal action or otherwise, for its own benefit as
fully as if such purchaser, assignee, transferee or holder were herein by
name specifically given such right. Laurus shall have an unimpaired right
to enforce this Guaranty for its benefit with respect to that portion of
the Obligations which Xxxxxx has not disposed of, sold, assigned, or
otherwise transferred.
19. It is understood and agreed that any person or entity that desires to
become a Guarantor hereunder, or is required to execute a counterpart of
this Guaranty after the date hereof pursuant to the requirements of any
Document, shall become Guarantor hereunder by (x) executing a Joinder
Agreement in form and substance satisfactory to Laurus, (y) delivering
supplements to such exhibits and annexes to such Documents as Laurus shall
reasonably request and (z) taking all actions as specified in this Guaranty
as would have been taken by such such Guarantor had it been an original
party to this Guaranty, in each case with all documents required above to
be delivered to Laurus and with all documents and actions required above to
be taken to the reasonable satisfaction of Xxxxxx.
20. Release. Nothing except cash payment in full of the Obligations shall
release any of the undersigned from liability under this Guaranty.
21. Limitation of Obligations under this Guaranty. Each Guarantor and Laurus
(by its acceptance of the benefits of this Guaranty) hereby confirms that
it is its intention that this Guaranty not constitute a fraudulent transfer
or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent
Conveyance Act of any similar Federal or state law. To effectuate the
foregoing intention, each Guarantor and Laurus (by its acceptance of the
benefits of this Guaranty) hereby irrevocably agrees that the Obligations
guaranteed by such Guarantor shall be limited to such amount as will, after
giving effect to such maximum amount and all other (contingent or
otherwise) liabilities of such Guarantor that are relevant under such laws
and after giving effect to any rights to contribution pursuant to any
agreement providing for an equitable contribution among such Guarantor and
the other Guarantors (including this Guaranty), result in the Obligations
of such Guarantor under this Guaranty in respect of such maximum amount not
constituting a fraudulent transfer or conveyance.
[REMAINDER OF THIS PAGE IS BLANK.
SIGNATURE PAGE IMMEDIATELY FOLLOWS]
IN WITNESS WHEREOF, this Guaranty has been executed by the undersigned this 29th
day of November, 2004.
HIP-E OPERATING COMPANY, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
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Name: Xxxxxxxx X. Xxxxxx
Title: Chief Financial Officer
Address: 0000 X. Xxxxxxx xx Xxxxx Xxx, Xxxx X,
Xxxxxx, XX 00000
Jurisdiction of incorporation: Delaware
NORTHGATE OPERATING COMPANY, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Chief Financial Officer
Address: 0000 X. Xxxxxxx xx Xxxxx Xxx, Xxxx X,
Xxxxxx, XX 00000
Jurisdiction of incorporation: California
