ex_10-4intercreditoragrmnt.htm


    Exhibit
10.4

     

    


     

    INTERCREDITOR
AGREEMENT

     

    THIS
INTERCREDITOR AGREEMENT (this “Agreement”) dated as of July 14, 2008 by and
among a21, Inc, a Delaware corporation (“Company”), Applejack
Art Partners, Inc. (“Senior Lienholder”),
and AHAB International LTD / AHAB Partners LP (“AHAB”) as agent for itself and
the other holders of $15,500,000 of the Company’s convertible term notes, and
those purchasers (the “Purchasers”) of Notes set forth on Schedule A annexed
hereto and Udi Toledano as administrative and collateral agent for the holders
of such Notes (collectively, AHAB, the Purchasers and Udi Tolendano as
administrative and collateral agent, are hereinafter referred to as the “Subordinate
Lienholders”).

     

    RECITALS

     

    
      	
              A.  

            	
              Senior
      Lienholder has agreed to provide Company with financial accommodations to
      support Company’s working capital needs.  In connection
      therewith, Company has granted Senior Lienholder a security interest in
      all of Company’s now owned or hereafter acquired assets (the “Collateral”).

            


    

     

    
      	
              B.  

            	
              AHAB
      and the Purchasers have provided Company and/or its affiliates from time
      to time with financial accommodations to support Company’s and/or its
      affiliate’s working capital needs. In connection therewith, Company and/or
      its affiliates have granted certain of the Subordinate Lienholders
      security interests in the
Collateral.

            


    

     

    
      	
              C.  

            	
              It
      is a condition precedent to Senior Lienholder providing and continuing to
      provide financial accommodations to Company that Senior Lienholder and
      Subordinate Lienholders enter into this Agreement by which the parties
      shall establish certain of their respective rights, priorities and duties
      as respects the Collateral.

            


    

     

    NOW,
THEREFORE, the parties hereto agree as follows:

     

    1. Priority of Liens on
Collateral.  Notwithstanding the date, manner or order of
perfection of the security interests and liens granted to Senior Lienholder and
Subordinate Lienholders, and notwithstanding any provisions of the Uniform
Commercial Code, or any applicable law or decision or the agreements between
Senior Lienholder and Company or the agreements between Subordinate Lienholders
and Company, or whether either Senior Lienholder or Subordinate Lienholders
holds possession of all or any part of the Collateral, as between Senior
Lienholder, on the one hand, and Subordinate Lienholders, on the other hand,
Senior Lienholder shall have a first and prior security interest in the
Collateral and Subordinate Lienholders shall have a second and subordinate
security interest in the Collateral. As between AHAB, on the one hand, and the
Purchasers and Udi Toledano as administrative and collateral agent for the
holders of such Notes, on the other hand, that certain intercreditor agreement
dated May 15, 2006 (the “Subordinate Intercreditor Agreement”) shall govern
their relationship and the priority of their respective security interests in
the Collateral.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

     

    2. Enforcement
Actions.

     

    (a) Until all
the obligations and liabilities owing by Company to Senior Lienholder which for
purposes of this Agreement shall not exceed $500,000 (the “Senior Lienholder
Obligations”) are paid in full, neither AHAB nor any Purchaser nor Udi
Toledano as administrative and collateral agent for the holders of such Notes
shall (i) take, or support any other person or entity in taking, any Enforcement
Action (as defined below) with respect to the Collateral or (ii) contest,
protest or object, or support any other person or entity in contesting,
protesting or objecting, to any Enforcement Action brought by or otherwise taken
by the Senior Lienholder with respect to the Senior Lienholder Obligations
and/or the Collateral.  As used in this Agreement, “Enforcement Action”
shall mean any demand for payment or acceleration of the obligations and
liabilities owing by Company to AHAB or any Purchaser or Udi Toledano as
administrative and collateral agent for the holders of such Notes, the exercise
of any rights and remedies with respect to any Collateral securing such
obligations and liabilities or the commencement or prosecution or enforcement of
any of the rights and remedies under any agreement made by Company with or in
favor of AHAB or any Purchaser.

     

    (b) After the
occurrence of an Event of Default by Company under that certain commercial loan
agreement of even date herewith between Senior Lienholder and Company (the “Loan
Agreement”), Senior Lienholder’s rights with respect to the Collateral shall
include the right to release any or all of the Collateral from its security
interest therein and the security interest of Subordinate Lienholders therein
(without any further action on the part of Subordinate Lienholders) in
connection with any sale or other disposition of the
Collateral.  Without limiting the foregoing, if Senior Lienholder
shall determine, in connection with any sale or other disposition of any
Collateral that the release of the security interest of Senior Lienholder on any
such Collateral in connection with any such sale or other disposition is
necessary or advisable, Subordinate Lienholders shall execute and deliver such
release documents and instruments and shall take such further actions as Senior
Lienholder shall request.  Subordinate Lienholders hereby appoint
Senior Lienholder and any officer or duly authorized person of Senior
Lienholder, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power of attorney in the place and stead
of Subordinate Lienholders, and in the name of Subordinate Lienholders or in
Senior Lienholder’s own name, from time to time, in Senior Lienholder’s
discretion, for the purposes of carrying out the terms of this subsection, to
take any and all appropriate action and to execute and deliver any and all
documents and instruments as may be necessary or desirable to accomplish the
purposes of this paragraph, including, without limitation, any financing
statements, endorsements, assignments or other documents or instruments of
transfer (which appointment, being coupled with an interest, is
irrevocable).  Subordinate Lienholders hereby ratify all that said
attorneys shall do or cause to be done under this subsection.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     

    


     

    3. Distribution of Proceeds of
Collateral.

     

    (a) All
proceeds of Collateral resulting from the sale or other disposition of
Collateral, whether or not in connection with or resulting from any Enforcement
Action or any proceeding or other action under any law relating to bankruptcy,
insolvency, reorganization, or relief of debtors, shall be distributed first to
Senior Lienholder until all the Senior Lienholder Obligations shall have been
paid in full and the balance, if any, to AHAB for application to the obligations
and liabilities owing by Company to AHAB and the Purchasers and Udi Toledano as
administrative and collateral agent for the holders of such Notes in accordance
with the provisions of, and the priorities set forth in, the Subordinate
Intercreditor Agreement.

     

    (b) Until all
the Senior Lienholder Obligations are paid in full, any proceeds constituting
Collateral which may be received by AHAB or any Purchaser shall be segregated
and held in trust and promptly paid over to Senior Lienholder, in the same form
as received, with any necessary endorsements.  If Subordinate
Lienholders fails to make any such endorsement or assignment, Senior Lienholder
is authorized to make the same as agent for Subordinate Lienholders (which
authorization, being coupled with an interest, is irrevocable).

     

    (c) The
provisions of this Section 3 are solely for the benefit of Senior Lienholder, on
the one hand, and AHAB and the Purchasers, on the other hand, and not for the
benefit of any other person or entity.

     

    4. Bailee for
Perfection.  Each of Senior Lienholder, on the one hand, and
Subordinate Lienholders, on the other hand, acknowledges and agrees that to the
extent that it (or its agent) retains physical possession or control of any of
the Collateral, it (or its agent) shall hold such Collateral on behalf of the
other so that for purposes of perfecting any security interest or lien in any
Collateral it acts and holds such Collateral on behalf of Senior Lienholder and
Subordinate Lienholders.  Nothing in this Section 4 shall affect the
relative priorities in and to the Collateral, all of which shall be governed by
Section 1 of this Agreement.

     

    5. Consent to Security
Interest.  Senior Lienholder agrees that, notwithstanding any
contrary provision in any agreement between Company and Senior Lienholder,
Company may grant a security interest to any Subordinate Lienholder in the
Collateral and agrees that the grant of such security interest shall not
constitute a default or event of default by Company under any agreement between
Company and Senior Lienholder.  Subordinate Lienholders agree that
notwithstanding any contrary provision in any agreement between Company and any
Subordinate Lienholder, Company may grant a security interest to Senior
Lienholder in the Collateral and agrees that the grant of such security interest
shall not constitute a default or event of default by Company under any
agreement between Company and any Subordinate Lienholder.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     

    


     

    6. Extensions and
Renewals.  Senior Lienholder hereby consents to and waives
notice of any and all extensions and renewals of Company’s obligations to
Subordinate Lienholder, any or all of which, at Subordinate Lienholder’s option,
may be for a period longer than the period of the renewed or extended
obligation.

     

    7. No
Obligation.  This Agreement shall not be construed to give rise
to any obligation on the part of any Subordinate Lienholder to assume or pay any
indebtedness of Company to Senior Lienholder, nor shall this Agreement be
construed to give rise to any obligation on the part of AHAB or any Purchaser to
provide to Company any amount or enter into other financing arrangement with
Company.  This Agreement shall not be construed to give rise to any
obligation on the part of Senior Lienholder to assume or pay any indebtedness of
Company to AHAB or any Purchaser, nor shall this Agreement be construed to give
rise to any obligation on the part of Senior Lienholder to provide to Company
any amount or enter into other financing arrangement with Company.

     

    8. Insolvency.  If
Company shall make a general assignment for the benefit of creditors or if any
proceeding or other action under any law relating to bankruptcy, insolvency,
reorganization, or relief of debtors or seeking appointment of a receiver,
trustee, custodian, or similar official for Company or any part of the
Collateral shall be commenced by or against Company, this Agreement shall remain
in full force and effect.

     

    9. No
Waiver.  Nothing contained in this Agreement and no act,
inaction or action taken or done by Senior Lienholder or any Subordinate
Lienholder pursuant to the powers and rights granted hereunder or under any
document executed in connection herewith shall be deemed to be a waiver by
Senior Lienholder or any Subordinate Lienholder of any of its rights and
remedies against Company under applicable law or under any agreements and/or
documents executed with or in favor of Senior Lienholder or any Subordinate
Lienholder, or in respect of, any of the obligations owing by Company to Senior
Lienholder or AHAB or any Purchaser.

     

    10. Severability.  If any provision
of this Agreement or the application thereof to any person or circumstances
shall be invalid or unenforceable to any extent, the remainder of this Agreement
and the application of such provisions to other persons or circumstances shall
not be affected thereby and shall be enforced to the greatest extent permitted
by law.

     

    11. Headings.  All
headings used herein are for convenience of reference only and do not constitute
a substantive part of this Agreement and shall not effect its
interpretation.

     

    12. Amendment.  This
Agreement may not be amended or changed in any respect or in any manner other
than by a writing signed by the parties hereto.

     

    13. Effectiveness.  Notice
of acceptance hereof is waived.  The provisions of this Agreement are
effective upon execution of this Agreement.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     

    


     

    14. Assignment.  This
Agreement shall be binding upon and shall inure to the benefit of the parties
and their respective successors and assigns.

     

    15. Governing
Law.  This Agreement shall be construed in accordance with,
without giving effect to principles of conflicting laws governed by the State of
New York.

     

    16. Signatures.  This
Agreement may be executed by the parties hereto in one or more counterparts,
each of which shall be deemed an original and all of which when taken together
shall constitute one and the same agreement.  Any signature delivered
by a party by facsimile or electronic transmission shall be deemed to be an
original signature hereto.

     

    


     

    [Signature
Page to Follow]


    
      
         


      

      
         


        
          

        

      

      
         


      

    


     

    IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
set forth above.

     

    


    
      	
              APPLEJACK
      ART PARTNERS, INC.

            	
              AHAB
      International LTD / AHAB Partners LP

               

            
	
              By:                                                                

              Name:                                                                

              Title.:                                                                

            	
              By:                                                                

              Name:                                                                

              Title.:                                                                 

            
	 
      	
              a21,
      INC.

            
	 
      	
              By:                                                                

              Name:                                                                

              Title.:                                                                

            


    

    


    Okoboji
Trust

    


    


    By:_____________________________

    James Willenborg, Trustee

    


    


    


    _____________________________

    James Willenborg

    


    


    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    Millennium
3 Opportunity Fund, LLC

    


    


    By:_____________________________

    Udi Toledano, Member
Manager

    


    


    


    


    ________________________________

    Gerald Katcher

    


    


    


    


    


    Entrust
Capital Frontier Fund, LP

    


    BY:  Bantry
Bay Partners, LLC

    


    BY:
_____________________________

    Eric Zachs, Managing
Member

    


    


    


    Udi
Tolendano, as administrative and collateral agent:

    


    


    


    _______________________________

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    


    SCHEDULE
A

    


    ART SELECT Note
Holders

    


    


    


    Okoboji
Trust

    


    Millennium
3 Opportunity Fund, LLC

    


    Gerald
Katcher

    


    Entrust
Capital Frontier Fund, LP