Exhibit 10.4
 
SUBORDINATION AND INTERCREDITOR AGREEMENT
 
SUBORDINATION AND INTERCREDITOR AGREEMENT (this “Agreement”), dated as of
September 18, 2013, among JPMorgan Chase Bank, N.A. (together with its
successors and assigns, the “Bank”) (also referred to herein as the “Senior
Secured Party”), SMXE Lending, LLC, a Delaware limited liability company (the
“Subordinated Secured Party”), and SkyMall, LLC (the “Borrower”).
 
R E C I T A L S
 
A.  
Bank, Borrower and certain affiliates of Borrower entered into the following
agreements, each dated as of May 10, 2013:

 
1.  
Credit Agreement, between Bank and Borrower (the “Chase Credit Agreement”) (also
referred to herein as the “Senior Secured Party Credit Agreement”) (references
to such agreement include all amendments in effect from time to time, including
any replacement agreement therefor).

 
2.  
Line of Credit Note, payable by Borrower to Bank in the initial principal amount
of $7,650,000.

 
3.  
Assignment of Deposit Account, between Innovative Brands, LLC, a Delaware
limited liability company (“Innovative Brands”), and Bank.

 
4.  
Guaranty, in favor of Bank by Innovative Brands, LLC.

 
5.  
Guaranty, in favor of Bank by SHC Parent Corp.

 
6.  
Guaranty, in favor of Bank by SkyMall Interests, LLC, a Delaware limited
liability company.

 
7.  
Guaranty, in favor of Bank by SkyMall Ventures, LLC.

 
8.  
Continuing Security Agreement, granting a security interest in certain
collateral to Bank by SkyMall, LLC (the “SkyMall Security Agreement”).

 
9.  
Continuing Security Agreement, granting a security interest in certain
collateral to Bank by SkyMall Interests, LLC (the “SkyMall Interests Security
Agreement”).

 
10.  
Continuing Security Agreement, granting a security interest in certain
collateral to Bank by SkyMall Ventures, LLC (the “SkyMall Ventures Security
Agreement”).

 
11.  
Continuing Security Agreement, granting a security interest in certain
collateral to Bank by SHC Parent Corp. (the “SHC Parent Security Agreement”).

 
B.  
Bank, Borrower and certain affiliates of Borrower entered into the following
agreements, each dated as of May 14, 2013:

 
1.  
Consent and Limited Waiver, between Bank and Borrower relating to the Chase
Credit Agreement.

 
2.  
Continuing Guaranty, in favor of Bank by Xhibit Corp, a Nevada corporation.

 
3.  
Continuing Guaranty, in favor of Bank by Xhibit Interactive, LLC, a Nevada
limited liability company.

 
4.  
Continuing Guaranty, in favor of Bank by FlyReply Corp, a Nevada corporation.

 
 
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5.  
Continuing Guaranty, in favor of Bank by SpyFire Interactive, LLC, a Nevada
limited liability company.

 
6.  
Continuing Guaranty, in favor of Bank by Stacked Digital, LLC, a Nevada limited
liability company.

 
7.  
Continuing Security Agreement, granting a security interest in certain
collateral to Bank by Xhibit Corp, a Nevada corporation (the “Xhibit Security
Agreement”).

 
8.  
Continuing Security Agreement, granting a security interest in certain
collateral to Bank by Xhibit Interactive, LLC, a Nevada limited liability
company (the “Xhibit Interactive Security Agreement”).

 
9.  
Continuing Security Agreement, granting a security interest in certain
collateral to Bank by FlyReply Corp, a Nevada corporation (the “FlyReply
Security Agreement”).

 
10.  
Continuing Security Agreement, granting a security interest in certain
collateral to Bank by SpyFire Interactive, LLC, a Nevada limited liability
company (the “SpyFire Security Agreement”).

 
11.  
Continuing Security Agreement, granting a security interest in certain
collateral to Bank by Stacked Digital, LLC, a Washington limited liability
company (the “Stacked Security Agreement”).

 
The SkyMall Security Agreement, SkyMall Ventures Security Agreement, SHC Parent
Security Agreement, Xhibit Security Agreement, Xhibit Interactive Security
Agreement, FlyReply Security Agreement, SpyFire Security Agreement and Stacked
Security Agreement shall be referred to collectively as the “Borrower Parties
Security Agreements” and the collateral described therein shall be referred to
collectively as the “Borrower Parties Collateral.”
 
C.  
Pursuant to the Senior Secured Party Credit Agreement, the Senior Secured Party
made a loan to the Borrower secured by, among other things, the Borrower Parties
Security Agreements, which prohibits liens on the Borrower Parties Collateral
described therein in favor of anyone except Senior Secured Party.

 
D.  
The Subordinated Secured Party wishes to make a loan to the Borrower pursuant to
a credit agreement dated as of September 18, 2013 (as amended and in effect from
time to time, the “Subordinated Credit Agreement”), between the Subordinated
Secured Party and the Borrower, evidenced by one or more promissory notes
(collectively, the “Subordinated Note”), secured by a second lien in the
Borrower Parties Collateral.

 
E.  
In order to induce the Senior Secured Party to consent to a junior lien in the
Borrower Parties Collateral pursuant to the Subordinated Credit Agreement and to
grant to Subordinated Secured Party a right to purchase the indebtedness under
the Senior Secured Party Credit Agreement and the first lien on the Borrower
Parties Collateral, as reflected in the Waiver and Limited Consent Agreement
dated September 18, 2013 between Borrower and Senior Secured Party (the
“Consent”), the Borrower and the Subordinated Secured Party have agreed to enter
into this Agreement with the Senior Secured Party.

 
NOW, THEREFORE, in consideration of the foregoing, the mutual agreements herein
contained and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:
 
 
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1. Definitions.  All terms defined in the Uniform Commercial Code of Arizona and
used herein shall have the same definitions as specified therein.  However, if a
term is defined in Article 9 of the Uniform Commercial Code of Arizona
differently than in another Article of the Uniform Commercial Code of Arizona,
the term has the meaning specified in Article 9.  The term “control,” as used in
Section 4, has the meaning specified in Section 9-104, 9-105, 9-106 or 9-107, as
applicable, of the Uniform Commercial Code of Arizona.  In addition, all
capitalized terms used but not otherwise defined herein have the meanings given
to them in the Senior Credit Agreement (as amended and in effect from time to
time), and the following terms shall have the following meanings in this
Agreement:
 
1.1 “Bankruptcy Code” shall mean Title 11 of the United States Code, as amended
from time to time and any successor statute and all rules and regulations
promulgated thereunder.
 
1.2 “Business Day” shall mean any day that is not a Saturday, a Sunday, or a day
on which banks are required or permitted to be closed in the State of Arizona.
 
1.3 “Distribution” shall mean, with respect to any indebtedness, obligation or
security, (a) any payment or distribution by any Person of cash, securities or
other property, by set-off or otherwise, on account of such indebtedness,
obligation or security, (b) any redemption, purchase or other acquisition of
such indebtedness, obligation or security by any Person or (c) the granting of
any lien or security interest to or for the benefit of the holders of such
indebtedness, obligation or security in or upon any property of any Person.
 
1.4 “Enforcement Action” shall mean (a) to take from or for the account of the
Borrower or any guarantor of the Subordinated Secured Party Debt, by set-off or
in any other manner, the whole or any part of any moneys which may now or
hereafter be owing by the Borrower or any such guarantor with respect to the
Subordinated Secured Party Debt, (b) to sue for payment of, or to initiate or
participate with others in any suit, action or proceeding against the Borrower
or any such guarantor to (i) enforce payment of or to collect the whole or any
part of the Subordinated Secured Party Debt or (ii) commence judicial
enforcement of any of the rights and remedies under the Subordinated Secured
Party Documents or applicable law with respect to the Subordinated Secured Party
Debt, (c) to accelerate the Subordinated Secured Party Debt or (d) to exercise
any put option or to cause the Borrower or any such guarantor to honor any
redemption or mandatory prepayment obligation under any Subordinated Secured
Party Documents.
 
1.5 “Intercreditor Termination Date” shall mean the earliest to occur of: (a)
payment in full in cash of the Senior Secured Party Debt (which payment shall be
final and not avoidable) and expiration, termination or reduction of all
commitments under the Senior Secured Party Credit Agreement to zero and the
termination of all obligations of Senior Secured Party under the Senior Secured
Party Documents, (b) the total liquidation and collection of the Joint
Collateral and application of the net proceeds thereof to the Senior Secured
Party Debt and any surplus therefrom to the Subordinated Secured Party Debt, and
(c) the release by the Senior Secured Party of its Liens in all of the Joint
Collateral.
 
1.6 “Joint Collateral” shall mean all assets of the Borrower in which the
Borrower has at the time of reference granted a Lien (a) to the Senior Secured
Party to secure the Senior Secured Party Debt, and (b) to the Subordinated
Secured Party to secure the Subordinated Secured Party Debt. The term includes,
in each case, any and all proceeds and products of the collateral subject to
such Lien.
 
1.7 “Lien” shall mean any consensual mortgage, security deed, deed of trust,
pledge, lien, security interest or other voluntary lien, whether now existing or
hereafter created, acquired or arising.  The term does not include any real
property not within the scope of Article 9 of the Uniform Commercial Code of the
state in which the real property is located.
 
1.8 "Permitted Subordinated Secured Party Debt Payments" shall mean (a)
scheduled payments of interest on the Subordinated Secured Party Debt, and (b) a
single payment of the outstanding principal amount of the Subordinated Note on
or after September 18, 2014 provided that, in each case, only if each of the
following conditions are satisfied both prior to and after giving effect to any
such payment: (i) no Senior Default exists, and (ii) each of the payments set
forth in clauses (a) and (b) are paid on a non-accelerated basis in accordance
with the terms of the Subordinated Secured Party Documents as in effect on the
date hereof or as modified in accordance with the terms of this Agreement
 
 
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1.9 “Person” shall mean any individual, partnership, limited liability company,
corporation, trust, joint venture, joint stock company, association,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
 
1.10 “Proceeding” shall mean any voluntary or involuntary insolvency,
bankruptcy, receivership, custodianship, liquidation, dissolution,
reorganization, assignment for the benefit of creditors, appointment of a
custodian, receiver, trustee or other officer with similar powers or any other
proceeding for the liquidation, dissolution or other winding up of a Person.
 
1.11 “Senior Default” shall mean any “Event of Default” under the Senior Secured
Party Documents, or any condition or event that, after notice or lapse of time
or both, would constitute such an Event of Default if that condition or event
were not cured or removed within any applicable grace or cure period set forth
therein.
 
1.12 “Senior Secured Party Debt” shall mean (a) all principal, interest, fees,
costs, enforcement expenses (including legal fees and disbursements), collateral
protection expenses and other reimbursement or indemnity obligations created or
evidenced by the Senior Secured Party Credit Agreement or any of the other
Senior Secured Party Documents or any prior, concurrent, or subsequent notes,
instruments or agreements of indebtedness, liabilities, claims or obligations of
any type or form whatsoever relating thereto in favor of the Senior Secured
Party, including any of the foregoing resulting in or from any refinancing of
any liabilities or obligations under the Senior Secured Party Documents, any
amendments, restatements, modifications, renewals or extensions thereof to the
extent not prohibited by the terms of this Agreement, and (b) any interest
accruing thereon after the commencement of a Proceeding, without regard to
whether or not such interest is an allowed claim.
 
1.13 “Senior Secured Party Documents” shall mean collectively, the Senior
Secured Party Credit Agreement, any promissory notes executed in connection
therewith and any and all guaranties and Liens directly or indirectly
guarantying or securing any of the Senior Secured Party Debt, and any and all
other documents or instruments evidencing or further guarantying or securing
directly or indirectly any of the Senior Secured Party Debt, whether now
existing or hereafter created, including any financing documentation which
replaces the Senior Secured Party Documents and pursuant to which the Senior
Secured Party Debt under the Senior Secured Party Documents is refinanced, as
such financing documentation may be amended, restated, supplemented or otherwise
modified from time to time in compliance with this Agreement.
 
1.14 “Subordinated Secured Party Debt” shall mean all principal, interest, fees,
costs, enforcement expenses (including, without limitation, legal fees and
disbursements), collateral protection expenses and other reimbursement and
indemnity obligations created or evidenced by the Subordinated Credit Agreement
or any of the other Subordinated Secured Party Documents or any prior,
concurrent or subsequent notes, instruments or agreements of indebtedness,
liabilities, claims or obligations of any type or form whatsoever relating
thereto in favor of the Subordinated Secured Party including any amendments,
restatements, modifications, renewals or extensions thereof to the extent not
prohibited by the terms of this Agreement.
 
1.15 “Subordinated Secured Party Documents” shall mean collectively, the
Subordinated Credit Agreement, any promissory notes executed in connection
therewith and any and all security agreements, guaranties and Liens directly or
indirectly guarantying or securing any of the Subordinated Secured Party Debt,
and any and all other documents or instruments evidencing or further guarantying
or securing directly or indirectly any of the Subordinated Secured Party Debt,
whether now existing or hereafter created.
 
 
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2. Conditions to Effectiveness.  This Agreement shall not be effective unless
and until all conditions set forth in Section 1 of the Consent are satisfied in
the sole discretion of Senior Secured Party’s and all representations and
warranties set forth therein are true and correct.
 
3. Subordination of Debt.
 
3.1 Subordination of Subordinated Secured Party Debt to Senior Secured Party
Debt. The Subordinated Secured Party covenants and agrees, notwithstanding
anything to the contrary contained in any of the Subordinated Secured Party
Documents, that the payment of any and all of the Subordinated Secured Party
Debt shall be subordinate and subject in right and time of payment, to the
extent and in the manner hereinafter set forth, to the prior indefeasible
payment in full in cash of all Senior Secured Party Debt. Each holder of Senior
Secured Party Debt, whether such Senior Secured Party Debt is now outstanding or
hereafter created, incurred, assumed or guaranteed, shall be deemed to have
acquired Senior Secured Party Debt in reliance upon the provisions contained in
this Agreement.
 
3.2 Liquidation, Dissolution, Bankruptcy. In the event of any Proceeding
involving the Subordinated Borrower:
 
(a)           Until a date that is after the Senior Secured Party Debt is
indefeasibly paid in full in cash and all commitments to lend under the Senior
Secured Party Documents shall have been terminated, no Distribution shall be
made to the Subordinated Secured Party on account of any Subordinated Secured
Party Debt.
 
(b)           Any Distribution which would otherwise, but for the terms hereof,
be payable or deliverable in respect of the Subordinated Secured Party Debt
shall be paid or delivered directly to the Borrower (to be held and/or applied
by the Borrower in accordance with the terms of the Senior Secured Party
Documents) until a date that is after the Senior Secured Party Debt is
indefeasibly paid in full in cash and all commitments to lend under the Senior
Secured Party Documents shall have been terminated. The Subordinated Secured
Party irrevocably authorizes, empowers and directs any debtor, debtor in
possession, receiver, trustee, liquidator, custodian, conservator or other
Person having authority, to pay or otherwise deliver all such Distributions to
the Borrower. The Subordinated Secured Party also irrevocably authorizes and
empowers the Borrower, in the name of the Subordinated Secured Party, to demand,
sue for, collect and receive any and all such Distributions.
 
(c)           The Subordinated Secured Party agrees not to initiate, prosecute
or participate in any claim, action or other proceeding challenging the
enforceability, validity, perfection or priority of the Senior Secured Party
Debt, this Agreement, or any liens and security interests securing the Senior
Secured Party Debt.
 
(d)           The Subordinated Secured Party agrees to execute, verify, deliver
and file any proofs of claim in respect of the Subordinated Secured Party Debt
requested by the Borrower in connection with any such Proceeding and hereby
irrevocably authorizes, empowers and appoints the Borrower its agent and
attorney-in-fact to (i) execute, verify, deliver and file such proofs of claim
upon the failure of the Subordinated Secured Party promptly to do so prior to
thirty (30) days before the expiration of the time to file any such proof of
claim and (ii) vote such claim in any such Proceeding upon the failure of the
Subordinated Secured Party to do so prior to fifteen (15) days before the
expiration of the time to vote any such claim; provided the Borrower shall have
no obligation to execute, verify, deliver, file and/or vote any such proof of
claim. In the event that the Borrower votes any claim in accordance with the
authority granted hereby, the Subordinated Secured Party shall not be entitled
to change or withdraw such vote.
 
(e)           The Senior Secured Party Debt shall continue to be treated as
Senior Secured Party Debt and the provisions of this Agreement shall continue to
govern the relative rights and priorities of the Senior Secured Party and the
Subordinated Secured Party even if all or part of the Senior Secured Party Debt
or the security interests securing the Senior Secured Party Debt are
subordinated, set aside, avoided, invalidated or disallowed in connection with
any such Proceeding, and this Agreement shall be reinstated if at any time any
payment of any of the Senior Secured Party Debt is rescinded or must otherwise
be returned by any holder of Senior Secured Party Debt or any representative of
such holder.
 
 
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3.3 Subordinated Secured Party Debt Payment Restrictions.  Notwithstanding the
terms of the Subordinated Secured Party Documents, the Borrower hereby agrees
that it may not make, and the Subordinated Secured Party hereby agrees that it
will not accept, any Distribution with respect to the Subordinated Secured Party
Debt until after the Senior Secured Party Debt is indefeasibly paid in full in
cash and all commitments to lend under the Senior Secured Party Documents have
terminated; provided, however, that the Borrower may make, and the Subordinated
Secured Party may accept, Permitted Subordinated Secured Party Debt Payments if
the conditions precedent set forth in the definition of “Permitted Subordinated
Secured Party Debt Payments” have been satisfied; and provided, further, that
interest may accrue on the Subordinated Secured Party Debt in the form of
payment in kind notes, or by the capitalization of interest as principal on the
Subordinated Secured Party Debt, in each case in accordance with the terms of
the Subordinated Secured Party Documents as in effect on the date hereof or as
modified in accordance with the terms of this Agreement.  Except as expressly
set forth in the preceding sentence, no Distribution may be made with respect to
the Subordinated Secured Party Debt in cash until after the Senior Secured Party
Debt is indefeasibly paid in full in cash and all commitments to lend under the
Senior Secured Party Documents have terminated.  No Senior Default shall be
deemed to have been waived for purposes of this Section 3.3 unless and until the
Subordinated Secured Party has received a written waiver from the Borrower and
the Senior Secured Party.  For the avoidance of doubt, the Subordinated Secured
Party hereby agrees that if the Borrower is not permitted to repay the
outstanding principal amount of the Subordinated Note on September 18, 2014 in
accordance with the Senior Secured Party Credit Agreement and this Agreement,
then the Borrower may not repay any principal amount of the Subordinated Note
until a date that is after the Senior Secured Party Debt is indefeasibly paid in
full in cash and all commitments to lend under the Senior Secured Party
Documents have terminated.
 
3.4 Subordinated Secured Party Debt Standstill Provisions.  Until a date that is
after the Senior Secured Party Debt is indefeasibly paid in full in cash and all
commitments to lend under the Senior Secured Party Documents are terminated, the
Subordinated Secured Party shall not, without the prior written consent of the
Borrower and the Senior Secured Party, take any Enforcement Action with respect
to the Subordinated Secured Party Debt. Notwithstanding the foregoing, the
Subordinated Secured Party may file proofs of claim against the Borrower in any
Proceeding involving the Borrower.  Any Distributions or other proceeds of any
Enforcement Action obtained by the Subordinated Secured Party in violation of
the foregoing prohibition shall be held in trust by it for the benefit of the
Senior Secured Party and promptly paid or delivered to the Borrower in the form
received until a date that is after the Senior Secured Party Debt is
indefeasibly paid in full in cash and all commitments to lend under the Senior
Secured Party Documents shall have been terminated.
 
3.5 Incorrect Payments. If any Distribution on account of the Subordinated
Secured Party Debt not permitted to be made by the Borrower or accepted by the
Subordinated Secured Party under this Agreement is made and received by the
Subordinated Secured Party, such Distribution shall not be commingled with any
of the assets of the Subordinated Secured Party, shall be held in trust by the
Subordinated Secured Party for the benefit of the Senior Creditors and shall be
promptly paid over to the Borrower for application (in accordance with the
Senior Secured Party Documents ) to the payment of the Senior Secured Party Debt
then remaining unpaid, until a date that is after the Senior Secured Party Debt
is indefeasibly paid in full in cash and all commitments to lend under the
Senior Secured Party Documents shall have been terminated.
 
3.6 Sale, Transfer or other Disposition of Subordinated Secured Party Debt.
 
(a)           The Subordinated Secured Party shall not sell, assign, pledge,
dispose of or otherwise transfer all or any portion of the Subordinated Secured
Party Debt or any Subordinated Secured Party Document.
 
(b)           Notwithstanding the foregoing, the subordination effected hereby
shall survive any sale, assignment, pledge, disposition or other transfer of all
or any portion of the Subordinated Secured Party Debt in violation of the
foregoing prohibition, and the terms of this Agreement shall be binding upon the
successors and assigns of the Subordinated Secured Party, as provided in
Sections 8 and 20 hereof.
 
 
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3.7 Legends. Until the termination of this Agreement in accordance with Section
18 hereof, the Subordinated Secured Party will cause to be clearly,
conspicuously and prominently inserted on the face of each Subordinated Note and
any other Subordinated Secured Party Document, as well as any renewals or
replacements thereof, the following legend:
 
“This instrument and the rights and obligations evidenced hereby (the
“Subordinated Indebtedness”) are subordinate in the manner and to the extent set
forth in that certain Subordination and Intercreditor Agreement (the
“Subordination Agreement”) dated as of September 18, 2013 among SMXE Lending,
LLC, a Delaware limited liability company (the “Subordinated Secured Party”);
Skymall, LLC, a Delaware limited liability company (the “Borrower”) and JP
Morgan Chase Bank, N.A. (the “Senior Secured Party”), to the indebtedness
(including interest) owed by the Borrower and its subsidiaries (the “Senior
Indebtedness”) pursuant to that certain Credit Agreement dated as of May 10,
2013 among the Borrower and Senior Secured Party, as such Credit Agreement has
been and hereafter may be amended, supplemented or otherwise modified from time
to time and to indebtedness refinancing the indebtedness under that agreement as
contemplated by the Subordination Agreement; and each holder of this instrument,
by its acceptance hereof, irrevocably agrees to be bound by the provisions of
the Subordination Agreement.”
 
3.8 Modifications to Senior Secured Party Documents. The Senior Secured Party
may at any time and from time to time without the consent of the Subordinated
Secured Party, without incurring liability to the Subordinated Secured Party and
without impairing or releasing the obligations of the Subordinated Secured Party
under this Agreement, change the manner or place of payment or extend the time
of payment of or renew or alter any of the terms of the Senior Secured Party
Debt, or amend in any manner any Secured Party Document. The Senior Secured
Party agrees to give notice to the Subordinated Secured Party of any amendment
to any Senior Secured Party Document or any change in the terms of the Senior
Secured Party Debt within 10 Business Days after such amendment or change.
 
3.9 Modifications to Subordinated Secured Party Documents. Until a date that is
after the Senior Secured Party Debt is indefeasibly paid in full in cash and all
commitments to lend under the Senior Secured Party Documents shall have been
terminated, and notwithstanding anything to the contrary contained in the
Subordinated Secured Party Documents, the Subordinated Secured Party shall not,
without the prior written consent of the Senior Secured Party, agree to any
amendment, modification or supplement to the Subordinated Secured Party
Documents.
 
4. Subordination of Liens.  It is the intent of the parties hereto that, except
as provided in Section 3.3, the Senior Secured Party Debt shall be paid in full
in cash and that the commitments represented by the Senior Secured Party Credit
Agreement shall have expired or been reduced to zero or terminated before any of
the Subordinated Secured Party Debt is paid from the Joint
Collateral.  Regardless of the time or order of attachment or the time, order or
manner of perfection or the time or order of filing financing statements,
mortgages or other security agreements or documents, or anything in the
Subordinated Credit Agreement or any of the other Subordinated Secured Party
Documents to the contrary, the Liens in the Joint Collateral in favor of the
Senior Secured Party pursuant to the Senior Secured Party Credit Agreement and
the other Senior Secured Party Documents shall in all respects be first and
senior Liens to secure payment of the Senior Secured Party Debt and shall be
superior to any Liens in the Joint Collateral in favor of the Subordinated
Secured Party.  The Subordinated Secured Party hereby agrees, upon request of
the Senior Secured Party at any time and from time to time, to execute such
other documents or instruments as may be requested by the Senior Secured Party
further to evidence of public record or otherwise the senior priority of the
Liens over the Joint Collateral and securing the Senior Secured Party Debt as
contemplated hereby.
 
4.1 Enforcement of Liens.  Notwithstanding anything in any other agreement or
document to the contrary, the Subordinated Secured Party shall not, prior to the
occurrence of the Intercreditor Termination Date, assert or attempt to enforce
or avail itself of any Liens or any other pre-judgment or post-judgment liens or
assert any rights in or claims against the Joint Collateral or otherwise
foreclose or realize upon the Joint Collateral or any part thereof.
 
 
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4.2 Appointment of Senior Secured Party as Agent.  The Subordinated Secured
Party hereby appoints the Senior Secured Party as its agent to perfect by
possession or control its Lien in any of the Joint Collateral (a) which Lien is
capable of being perfected by possession or control and (b) that is, at any
time, delivered to and in the possession, or is under the control, of the Senior
Secured Party, subject always to the rights of the Senior Secured Party as prior
Lien holder.  The Senior Secured Party acknowledges that it holds such Joint
Collateral for the benefit of the Subordinated Secured Party upon and subject to
the terms contained in this Agreement.
 
4.3 Senior Secured Party's Actions Concerning Senior Secured Party Debt.  The
Senior Secured Party may, at its option, take or omit to take any action or
assert any claim with respect to the Senior Secured Party Debt or any person or
entity primarily or secondarily liable thereunder or to foreclose or realize
upon or enforce any of its rights with respect to the Joint Collateral without
any consent or approval by the Subordinated Secured Party.  However, as a
condition to the exercise of any Senior Secured Party’s rights pursuant to
Section 7.2(d) and Section 7.2(e) of the Senior Secured Credit Agreement, Senior
Secured Party shall provide notice of default to Borrower, to Subordinated
Secured Party and to Innovative Brands, LLC ten (10) Business Days prior to such
exercise.  The Senior Secured Party hereby acknowledges that the provisions of
this Agreement nevertheless constitute notice from the Subordinated Secured
Party of its junior security interest in the Joint Collateral for purposes of
the provisions of Sections 9-608(a)(1)(C), 9-615(a)(3)(A), and 9-621(a)(1) of
the Uniform Commercial Code of the State of Arizona.
 
4.4 Proceeds of Joint Collateral.  Any and all cash amounts constituting
proceeds of or otherwise constituting Joint Collateral, including, without
limitation, any net proceeds received by the Senior Secured Party or the
Subordinated Secured Party in connection with any sale, exchange, destruction,
condemnation, foreclosure or other disposition of any of the Joint Collateral,
and, if applicable, any sum received pursuant to Section 507(b) of the
Bankruptcy Code in any case in which the Borrower is a debtor, shall, except as
provided in Section 3.3, be applied first, to satisfy the Senior Secured Party
Debt in full, and second, to satisfy the Subordinated Secured Party Debt, with
the Borrower, the Senior Secured Party and the Subordinated Secured Party hereby
agreeing to make such transfers between themselves with respect to such cash
amounts so as to effectuate such application.  In the event of any casualty or
other insured loss with respect to any part of the Joint Collateral which is
covered by casualty insurance, the Borrower, the Senior Secured Party and the
Subordinated Secured Party agree that, prior to the Intercreditor Termination
Date, the Senior Secured Party shall, to the extent not prohibited by the Senior
Secured Party Documents, have the exclusive right to adjust, compromise, or
settle any such loss with the applicable casualty insurer, to collect and
receive the proceeds of such casualty insurance with respect to such loss, and
to apply such proceeds in accordance with the priorities set forth herein.  Any
non-cash Distributions or proceeds in respect of the Joint Collateral shall
constitute Joint Collateral upon the terms of this Agreement, the Senior Secured
Party Documents and the Subordinated Secured Party Documents until converted to
cash and distributed in accordance with this Section 4.4.
 
4.5 Actions of Senior Secured Party at Intercreditor Termination Date.  Upon the
occurrence of the Intercreditor Termination Date, and, to the extent permitted
by applicable law, to the extent the Subordinated Secured Party retains a Lien
in such Joint Collateral and to the extent that such Joint Collateral has not
been applied to satisfy the Senior Secured Party Debt secured thereby, the
Senior Secured Party shall deliver to the Subordinated Secured Party any
certificated securities, instruments or chattel paper comprising Joint
Collateral then in the Senior Secured Party's possession.  The Senior Secured
Party shall have no obligation to transfer to the Subordinated Secured Party any
other Joint Collateral under the Senior Secured Party’s control.
 
 
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5. Defense to Enforcement, etc.  If the Subordinated Secured Party, in
contravention of the terms of this Agreement, shall commence, prosecute or
participate in any suit, action or proceeding against the Borrower or initiate
any foreclosure sale or proceeding or any other action to enforce its Lien on
any of the Joint Collateral, then the Borrower may interpose as a defense or
plea the making of this Agreement, and the Senior Secured Party may intervene
and interpose such defense or plea in its name or in the name of the
Borrower.  If the Subordinated Secured Party, in contravention of the terms of
this Agreement, shall attempt to enforce any remedies prohibited by this
Agreement, then the Senior Secured Party or the Borrower may, by virtue of this
Agreement, restrain the enforcement thereof in the name of the Senior Secured
Party or in the name of the Borrower.  If the Subordinated Secured Party, in
contravention of the terms of this Agreement, obtains any assets of the Borrower
constituting Joint Collateral, or proceeds therefrom, as a result of any
administrative, legal or equitable actions, or otherwise, the Subordinated
Secured Party agrees forthwith to pay, deliver and assign to the Senior Secured
Party, with appropriate endorsements, any such assets or proceeds thereof as
collateral for the Senior Secured Party Debt.  Until such time as the provisions
of the immediately preceding sentence have been complied with, the Subordinated
Secured Party shall be deemed to hold such Joint Collateral and proceeds in
trust for the Senior Secured Party.
 
6. Release of Joint Collateral.  Without limiting any of the rights of the
Senior Secured Party under the Senior Secured Party Credit Agreement, the other
Senior Secured Party Documents or applicable law, in the event that the Senior
Secured Party releases or discharges any Liens upon any Joint Collateral in
connection with the sale or other disposition of such Joint Collateral by the
Borrower, such Joint Collateral shall thereupon be deemed to have been released
from all such Liens in favor of the Subordinated Secured Party, and the Borrower
shall take such actions as are required by the Subordinated Credit Agreement to
cause and/or permit the release of any Liens of the Subordinated Secured Party
upon such Joint Collateral.  The Subordinated Secured Party hereby authorizes
the Senior Secured Party to file any amendments to any Uniform Commercial Code
financing statements filed by the Subordinated Secured Party against the
Borrower and, without limitation on such authorization, the Subordinated Secured
Party agrees that, within ten (10) days following the Senior Secured Party's
written request therefor, the Subordinated Secured Party will execute, deliver
and file any and all such mortgage discharges, lien releases and other
agreements and instruments as the Senior Secured Party reasonably deems
necessary or appropriate, in each case in order to give effect to the preceding
sentence.  The Subordinated Secured Party hereby irrevocably authorizes the
Senior Secured Party to make, and appoints the Senior Secured Party, and its
successors and assigns, and their respective officers, with full power of
substitution, the true and lawful attorney(s) of the Subordinated Secured Party
for the purpose of effecting, any such executions, deliveries and filings if and
to the extent that the Subordinated Secured Party shall have failed to perform
such obligations pursuant to the foregoing provisions of this Section 6 within
such ten (10) day period.  The provisions of this Section 6 shall be applicable
to and binding upon the Subordinated Secured Party notwithstanding any
provisions or requirements to the contrary in any agreement between the
Subordinated Secured Party and the Borrower.
 
7. Senior Secured Party’s Freedom of Dealing.  The Subordinated Secured Party
agrees, with respect to the Senior Secured Party Debt and any and all Joint
Collateral therefor or guaranties thereof, that the Borrower and the Senior
Secured Party may agree to increase the amount of the Senior Secured Party Debt
or otherwise modify the terms of any of the Senior Secured Party Debt, and the
Senior Secured Party may grant extensions of the time of payment or performance
to and make compromises, including releases of collateral or guaranties, and
settlements with the Borrower and all other persons, in each case without notice
to or the consent of the Subordinated Secured Party and without affecting the
agreements of the Subordinated Secured Party contained in this Agreement, the
Subordinated Secured Party hereby generally waiving any and all suretyship
defenses that might otherwise be applicable.  The Subordinated Secured Party
further waives any and all rights to require the Senior Secured Party to marshal
any assets or otherwise to take any actions with respect to marshaling.
 
8. Sale of the Subordinated Secured Party Debt.  The Subordinated Secured Party
will not, at any time while this Agreement is in effect, sell, transfer, pledge,
assign, hypothecate or otherwise dispose of any or all of the Subordinated
Secured Party Debt to any person or entity other than a person or entity who or
which agrees in a writing, satisfactory in form and substance to the Senior
Secured Party, to become a party hereto and to succeed to the rights and to be
bound by all of the obligations of the Subordinated Secured Party hereunder.  In
the case of any such disposition by the Subordinated Secured Party, the
Subordinated Secured Party will notify the Senior Secured Party at least (10)
ten days prior to the date of any of such intended disposition.
 
 
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9. Borrower's Obligations Absolute.  The provisions of this Agreement set forth
the relative rights and obligations of the Senior Secured Party and the
Subordinated Secured Party with respect to the Joint Collateral.  Nothing
contained in this Agreement shall impair, as between the Borrower and the
Subordinated Secured Party, the obligation of the Borrower to pay to the
Subordinated Secured Party all amounts payable in respect of the Subordinated
Secured Party Debt as and when the same shall become due and payable in
accordance with the terms thereof, or prevent the Subordinated Secured Party
(except as expressly otherwise provided in this Agreement) from exercising all
rights, powers and remedies otherwise permitted by Subordinated Secured Party
Documents and by applicable law upon a default in the payment of the
Subordinated Secured Party Debt or under any Subordinated Secured Party
Document.
 
10. Representations and Warranties.  Each of the Senior Secured Party, the
Subordinated Secured Party and the Borrower represents and warrants to the other
parties hereto that:
 
(a) the execution, delivery and performance of this Agreement (i) have been duly
authorized by all requisite corporate action on its part, and (ii) do not
conflict with or result in any breach or contravention of any provision of law,
statute, rule or regulation to which it is subject or any judgment, order, writ,
injunction, license or permit applicable to it and will not conflict with any
provision of its corporate charter or by laws or any agreement or other
instrument binding upon it except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and by equitable
principles; and
 
(b) this Agreement has been duly executed and delivered by it and constitutes
its legal, valid and binding obligation, enforceable in accordance with its
terms.
 
11. Modification.  Subject to Section 3, any modification or waiver of any
provision of this Agreement, or any consent to any departure by any party from
the terms hereof, shall not be effective in any event unless the same is in
writing and signed by the Borrower, the Subordinated Secured Party, and the
Senior Secured Party and then such modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose given;
provided that to the extent any such modification, waiver or consent increases
the obligations of the Borrower and/or its subsidiaries hereunder, the same
shall not be effective in any event unless it is in writing and signed by the
Borrower (and then shall be effective only in the specific instance and for the
specific purpose given).  Any notice to or demand on any party hereto in any
event not specifically required hereunder shall not entitle the party receiving
such notice or demand to any other or further notice or demand in the same,
similar or other circumstances unless specifically required hereunder.
 
12. Conflict. In the event of any conflict between any term, covenant or
condition of this Agreement and any term, covenant or condition of any of the
Subordinated Secured Party Documents, the provisions of this Agreement shall
control and govern.
 
13. Severability. In the event that any provision of this Agreement is deemed to
be invalid, illegal or unenforceable by reason of the operation of any law or by
reason of the interpretation placed thereon by any court or governmental
authority, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not in any way be affected or impaired thereby, and the
affected provision shall be modified to the minimum extent permitted by law so
as most fully to achieve the intention of this Agreement.
 
14. Further Assurances.  Each of the Senior Secured Party, the Subordinated
Secured Party and the Borrower agrees to execute and deliver such other
documents and instruments, and shall take such other action, at the sole cost
and expense of the Borrower, to effectuate and carry out the provisions of this
Agreement.
 
 
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15. Termination of Subordination.  This Agreement shall continue in full force
and effect until the occurrence of the Intercreditor Termination Date.  The
occurrence of the Intercreditor Termination Date shall not affect any then
unsatisfied right or unperformed obligation of the Senior Secured Party or the
Subordinated Secured Party arising before the Intercreditor Termination
Date.  In addition, if at any time any payment made or value received with
respect to any Senior Secured Party Debt is rescinded or must otherwise be
returned by the Senior Secured Party upon the insolvency, bankruptcy, or
reorganization of the Borrower, then (a) to the extent necessary to repay in
full in cash the Senior Secured Party Debt, the Subordinated Secured Party will
deliver to the Senior Secured Party any amounts previously received and held by
the Subordinated Secured Party on account of or in any way relating to the Joint
Collateral, and (b) to the extent previously terminated, the Senior Secured
Party’s Liens in the Joint Collateral created by the Senior Secured Party Senior
Secured Party Documents and the right of the Senior Secured Party to receive
amounts pursuant to this Agreement and the other rights and priorities of the
Senior Secured Party hereunder shall be reinstated.
 
16. Notices.  All notices and other communications which are required or may be
given pursuant to the terms of this Agreement shall be in writing and shall be
sufficient and effective in all respects if given in writing, delivered or
mailed by registered or certified mail, return receipt requested, postage
prepaid, as follows:
 

If to the Senior Secured Party:
 
201 N. Central Ave., 21st Floor, AZ1-1178
Phoenix, Arizona  85004
Attention:  Mike Pickerd
 
If to the Subordinated Secured Party:
 
SMXE Lending, LLC
2525 East Camelback Road
Suite 850
Phoenix, Arizona 85016
 
 
Attention:  Tina Rhodes-Hall
 

 
If to the Borrower:
 
1520 E. Pima Street
Phoenix, Arizona 85034-4639
 
Attention:

 
or such other address or addresses as any party hereto shall have designated by
written notice to the other parties hereto.  Notices shall be deemed given and
effective upon the earlier to occur of (a) the third day following deposit
thereof in the U.S. mail or (b) receipt or refusal by the party to whom such
notice is directed.
 
17. Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ARIZONA AND SHALL BE A SEALED
INSTRUMENT UNDER SUCH LAWS.
 
18. Waiver of Jury Trial.  EACH PARTY HERETO HEREBY WAIVES ITS RIGHT TO A JURY
TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS EXCEPT AS PROHIBITED BY LAW, EACH
PARTY HERETO HEREBY WAIVES ANY RIGHT WHICH IT MAY HAVE TO CLAIM OR RECOVER IN
ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES.  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS AND (B) ACKNOWLEDGES THAT SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED
HEREIN.
 
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19. Miscellaneous.  This Agreement may be executed in several counterparts and
by each party on a separate counterpart, each of which when so executed and
delivered shall be an original, and all of which together shall constitute one
instrument.  In proving this Agreement, it shall not be necessary to produce or
account for more than one such counterpart signed by the party against which
enforcement is sought.  The Senior Secured Party may, in its sole and absolute
discretion, waive any provisions of this Agreement benefiting the Senior Secured
Party; provided, however, that such waiver shall be effective only if in writing
and signed by the Senior Secured Party and shall be limited to the specific
provision or provisions expressly so waived.  This Agreement shall be binding
upon the successors and assigns of the Subordinated Secured Party and the
Borrower and shall inure to the benefit of the Senior Secured Party, the Senior
Secured Party's successors and assigns, any lender or lenders refunding or
refinancing any of the Senior Secured Party Debt and their respective successors
and assigns, but shall not otherwise create any rights or benefits for any third
party.  In the event that any lender or lenders refund or refinance any of the
Senior Secured Party Debt, the terms “Senior Secured Party Credit Agreement,”
“Senior Secured Party Documents,” “Event of Default” and the like shall refer
mutatis mutandis to the agreements and instruments in favor of such lender or
lenders and to the related definitions contained therein.
 

[SIGNATURES APPEAR ON NEXT PAGE]
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
 
SENIOR SECURED PARTY:
 
JP Morgan Chase Bank, N.A.
 
 
By: /s/ Jeffrey M. Hoyt
       Name:  Jeffrey M. Hoyt

 
       Title:  SVP

 
SUBORDINATED SECURED PARTY:
 
SMXE Lending, LLC
 
 
By: SMXE Lending Holdings, LLC, its sole Member

 
 
By:  /s/ Tina Rhodes-Hall
        Name: Tina Rhodes-Hall
        Title: Authorized Officer

                  
BORROWER:
 
SkyMall, LLC
 
 
 
By: /s/ Scott Wiley
       Name: Scott Wiley

 
       Title: CFO