Exhibit 10.1
 
 
COMMERCIAL LOAN AGREEMENT
 
LENDER:                                                                                                BORROWER:
Applejack Art Partners,
Inc.                                                                                                           a21,
Inc.
P.O. Box
1527                                                                                                7660
Centurion Parkway
Manchester Center,
VT 05255                                                                                                           Jacksonville,
FL 32256
 

This Commercial Loan Agreement (the “Agreement”) contemplates an advance draw
loan with the principal balance of all such draws not to exceed $500,000.00
(collectively, the “Loan”). The Loan is for business purposes.
Applejack Art Partners, Inc. (Lender) agrees to make the Loan to a21, Inc.
(“Borrower”), subject to the following terms and conditions, to which Borrower
hereby agrees:
 
 
1.
The Loan shall be advanced in multiple disbursements. As a condition precedent
to any obligation of Lender to make any disbursement of the Loan, there shall
not, at the proposed funding date, exist an Event of Default (as defined in
paragraph 7).

 
 
2.
The Loan shall be evidenced by the Commercial Loan Agreement, a Promissory Note
(Note), a Security Agreement, and an Intercreditor Agreement in form acceptable
to Lender (together referred to as the “Loan Documents”). The principal amount
of the Loan and interest thereon shall be calculated and be payable as set forth
more particularly in the Note.

 
 
3.
To induce Lender to make the Loan, Borrower hereby warrants and represents to
Lender that as of the date hereof:

 
 
a.
Borrower has the authority, and has completed all proceedings and obtained all
approvals and consents necessary, to execute, deliver, and perform this
Agreement and the Note, and the transactions contemplated hereby and thereby.

 
 
b.
Such execution, delivery, and performance will not contravene, or constitute a
default under or result in a lien upon assets of Borrower pursuant to any
applicable law or regulation, any contract, agreement, judgment, order, decree,
or other instrument binding upon or affecting Borrower or its properties.

 
 
c.
This Agreement, the Note and Security Agreement constitute the legal, valid, and
binding obligations of Borrower enforceable in accordance with their respective
terms except as such enforcement may be limited by bankruptcy, insolvency and
other similar laws affecting creditors’ rights generally.

 
 
d.
Except as previously disclosed to Lender in writing, there is no action, suit,
or proceeding pending or threatened against Borrower or its properties that
might adversely affect Borrower in any material respect.

 
 
e.
Borrower has furnished Lender with financial information as requested by Lender
that accurately and fairly presents the financial position of Borrower in all
material respects.

 
 
f.
Borrower has marketable title to its properties reflected in such disclosed
financial information, subject to no mortgage, lien, or security interest other
than those heretofore disclosed in writing to Lender and other Permitted
Encumbrances (as hereinafter defined), and to the best of Borrower’s knowledge,
no event has occurred since the date of such financial statements that could
materially adversely affect the Borrower’s ability to perform

 
 

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its obligations under this Agreement.  For purposes of this Agreement,
“Permitted Encumbrances” shall mean following encumbrances:  (i) liens for taxes
or assessments or other governmental charges or levies, either not yet due and
payable; (ii) pledges or deposits securing obligations under worker’s
compensation, unemployment insurance, social security or public liability laws
or similar legislation; (iii) pledges or deposits securing bids, tenders,
contracts (other than contracts for the payment of money) or leases to which any
Credit Party is a party as lessee made in the ordinary course of business; (iv)
deposits securing public or statutory obligations of Borrower; (v) inchoate and
unperfected workers’, mechanics’, or similar liens arising in the ordinary
course of business; (vi) carriers’, warehouseman’s’, suppliers’ or other similar
possessory liens arising in the ordinary course of business and securing
indebtedness not yet due and payable; (vii) deposits of money securing, or in
lieu of, surety, appeal or customs bonds in proceedings to which Borrower is a
party; (viii) zoning restrictions, easements, licenses, or other restrictions on
the use of real property or other minor irregularities in title (including
leasehold title) thereto; (ix) liens upon any fixed assets that secures the
purchase money indebtedness related thereto; (x) liens in favor of Lender and
(xi) liens disclosed in filings made by the Borrower in its filings with the
Securities and Exchange Commission.
 
 
g.
All tax returns required of Borrower have been filed, there is no proposed
material tax assessment or liability against Borrower or its property, and no
extension of time for the assessment of any tax of Borrower is in effect or has
been requested, except as disclosed in financial statements previously furnished
to Lender.

 
 
h.
The proceeds of the Loan shall be used by Borrower solely for business purposes.

 

 
 
4.
So long as any part of the indebtedness contemplated hereby shall remain unpaid,
Borrower will:

 
 
a.
Maintain accurate books and records in accordance with generally accepted
accounting principles, and during business hours and upon reasonable advance
notice permit inspection of same and any properties of Borrower by Lender at
Lender’s request and permit Lender to make abstracts and copies of Borrower’s
books and records; provided, however, that so long as no Event of Default has
occurred such inspections shall be limited to twice in any fiscal year

 
 
b.
Furnish to Lender financial statements and information, including an income and
expense statement, rent roll, balance sheet and cash flow statement in
accordance with generally accepted accounting principals, to be submitted within
120 days after fiscal year end.

 
 
c.
Maintain in form, with companies and with loss payable reasonably acceptable to
Lender, adequate insurance(s) of a type and in amounts customarily carried by
others engaged in a like or similar business and such additional insurance as
Lender from time to time may reasonably require, and upon demand, deliver to
Lender the policies concerned or a schedule of all insurance in force.

 
 
d.
Pay all liens, taxes, assessments, and other governmental charges; provided,
however, that nothing herein contained shall require Borrower to pay any tax or
other lien so long as its validity is contested in good faith and adequate
provision, acceptable to Lender, has been made therefore.

 
 
e.
Promptly notify Lender in writing of the occurrence of an Event of Default or of
any event that might materially adversely affect Borrower or its ability to
repay the Loan.

 
 
5.
Advances under this Promissory Note (Note) may be taken for three (3) months,
and shall be used for business purposes. Advances shall be made at the written
request of an officer or director of Borrower who is authorized to request
advances and direct the disposition of such advances, until

 
 

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written notice of the revocation of such authority is received by Lender at
Lender’s principal office set forth above. Advance requests must be made in
writing to Lender, and shall detail the reasons for the requested
advance.  Advance requests must be approved by Lender, which approval shall not
be unreasonably withheld.  Any advance shall be conclusively presumed to have
been made to or for the benefit of the undersigned when made in accordance with
such requests.  Advances may be made at no greater frequency than one (1) time
each week, and shall not be made within five (5) business days of the previous
request.  No individual advance shall exceed $150,000.  Lender shall make each
Loan within two (2) business days of each advance request by Borrower.  No
request for an advance will be honored if a “default” hereunder shall have
occurred and exists, or if the amount requested, when added to the total of all
amounts previously advanced hereunder, would exceed the sum of Five Hundred
Thousand Dollars ($500,000.00).  In the event Lender fails to advance funds
hereunder, Borrower may terminate this agreement, and the obligations and
restrictions hereunder, by giving Lender five (5) days written notice of such
position. Borrower shall thereafter pay the entire outstanding principal balance
and accumulated interest in full on or before November 1, 2008 or, if earlier,
the date the Borrower, after the thirty (30) day period referred to in Paragraph
6(c) below, executes a binding letter of intent with any person, other than the
Lender, to convey, lease, or sell all or substantially all of its assets to any
person or entity, whether in one transaction or a series of related
transactions.
 
6.
So long as any part of the indebtedness contemplated hereby shall remain unpaid,
Borrower will not, directly or indirectly, without the prior written consent of
Lender:

 
 
a.
Create or permit to exist against Borrower’s assets, pledged as collateral for
this loan now or hereinafter acquired as part of the loan collateral, any lien
other than liens heretofore disclosed to Lender and approved by in writing and
Permitted Encumbrances.

 
 
b.
Purchase or acquire all or substantially all of the assets of any person or
entity except in the ordinary course of business.

 
 
c.
Notwithstanding the time period referred to in the opening sentence of this
Paragraph 6, until the earlier to occur of (i) thirty (30) days after the date
hereof, or (ii) the date the Lender fails to advance funds hereunder for any
reason or no reason, engage in discussions and/or negotiations with any party
other than Lender to convey, lease, or sell all or substantially all of its
assets to any person or entity, whether in one transaction or a series of
related transactions –;

 
 
d.
Sell, assign, transfer, or dispose of any of its accounts receivable or any
substantial portion of its other assets;

 
 
e.
Make loans to others;

 
 
f.
Become liable in any manner for the debts or obligations of others, except in
the ordinary course of business as currently conducted.

 
7.
Upon the occurrence of any of the following (an Event of Default):

 
 
a.
Failure by Borrower to make any payment of principal or interest on the Note
within ten (10) days of due date;

 
 
b.
Failure by Borrower to observe or perform any other term or provision of this
Agreement, the Note, or the Security Agreement, within ten (10) days of written
notice by Lender;

 
 
c.
Any material default under any other material agreement between the Borrower and
the Lender, or any material default in any of the obligations of the Borrower to
others for borrowed money which, in the opinion of the Lender acting in good
faith, impairs its security or increases the likelihood that Borrower will be
unable to repay the Loan.

 
 

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d.
Any material representation made or information furnished to Lender by or on
behalf of Borrower shall be inaccurate or incomplete in any material respect;

 
 
e.
Borrower shall admit in writing its inability to pay its debts as they become
due (however evidenced) or there shall be commenced any bankruptcy, insolvency,
arrangement, reorganization, or other debtor-relief proceedings by or against,
or the death, dissolution, termination of existence or insolvency of, Borrower;

 
 
f.
The happening of any event under any agreement involving the borrowing of money
by, or advance of credit to, Borrower, which gives to the holder of such
obligation the right to accelerate its maturity, whether or not such right is
exercised;

 
 
g.
Entry of any judgment against Borrower in excess of $50,000, unless satisfaction
or appeal of such judgment, or provision for satisfaction acceptable to Lender,
is effected within thirty (30) days from the date of entry;

 
 
h.
The occurrence of any “reportable event” under the Employee Retirement Income
Security Act of 1974 (ERISA) which Lender in good faith determines constitutes
grounds for the imposition of liability against Borrower under part IV, subtitle
D of ERISA;

 
 
THEN, Lender may, at its election and without demand or notice of any kind,
which are hereby waived, declare the unpaid balance of the Note, and accrued
interest thereon, immediately due and payable, refuse to make additional
advances hereunder, proceed to collect same, and exercise any and all other
rights, powers and remedies given it by this Agreement, the Note and Security
Agreement or otherwise at law or in equity.

 
8.
The representations and warranties of Borrower contained herein shall survive
the making of the Loan and shall remain effective until all indebtedness
contemplated hereby shall have been paid by Borrower in full.

 
9.
This Agreement shall be governed by and construed in accordance with the laws of
Vermont. Any forbearance, failure, or delay by Lender in exercising any right,
power, or remedy shall not preclude the further exercise thereof, and all of
Lender’s rights, powers, and remedies shall continue in full force and effect
until specifically waived in writing by Lender.

 
 

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ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT
ARE NOT ENFORCEABLE, REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED TO
PROTECT YOU (BORROWER) AND US (LENDER) FROM MISUNDERSTANDING OR DISAPPOINTMENT,
ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING,
WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US,
EXCEPT AS WE MAY LATER AGREE IN WRITING TO MODIFY IT. BY SIGNING THIS AGREEMENT,
THE PARTIES AFFIRM THAT NO UNWRITTEN ORAL AGREEMENT EXISTS BETWEEN THEM.

Dated this ___ day of July, 2008.
a21, Inc.

By:____________________________________
     Its Duly Authorized Agent

Applejack Art Partners, Inc.

By: ___________________________

Print Name: ____________________