GUARANTY
I. RECITALS
Reference
is made to those certain Promissory Notes dated as of May 15, 2006 collectively,
(the “Notes”) in the aggregate principal amount of $2,350,000 (as such principal
amount may be increased or decreased pursuant to the Merger Agreement dated
as
of May 15, 2006 by and among a21, Inc., a Texas corporation (the “Guarantor”),
AE Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary
of
the Guarantor, ArtSelect, Inc., a Delaware corporation (“Borrower”), the
noteholders set forth on Exhibit
A
attached
hereto (each, a “Lender” and collectively the “Lenders”), and Xxx Xxxxxxxx, as
stockholder representative), made by Borrower in favor of the Lenders. Xxx
Xxxxxxxx acts as administrative and collateral agent for Lenders under the
terms
of the Notes (in such capacity “Administrative Agent”).
As
one of
the conditions for accepting the Notes, the Lenders have required that the
undersigned Guarantor guaranty the obligations of Borrower to the Lenders
arising under the Notes as herein provided.
Guarantor
is the sole shareholder of Borrower and will receive substantial direct and
indirect benefit by reason of Lenders accepting the Notes, and Guarantor has
determined that its execution, delivery and performance of this Guaranty are
in
the best interests of Guarantor.
Capitalized
terms used and not otherwise defined herein shall have the respective meanings
provided for in the Notes.
II. GUARANTY
Therefore,
for value received, and in consideration of the financial accommodations under
the Notes, Guarantor hereby unconditionally guaranties the full and prompt
payment when due in accordance with the terms and conditions of the Notes,
whether at maturity or earlier, by reason of acceleration or otherwise, and
at
all times thereafter, of all of obligations, liabilities and indebtedness of
every kind, nature and description owing by the Borrower to Lenders or the
Administrative Agent evidenced by or arising under the Notes, whether direct
or
indirect, absolute or contingent, joint or several, due or not due, primary
or
secondary, liquidated or unliquidated, including principal, interest, charges,
fees, costs, indemnities and expenses, however evidenced, whether as principal,
surety, endorser, guarantor or otherwise, whether now existing or hereafter
arising, whether arising before, during or after the initial or any renewal
term
of the Notes, whether arising before, during or after the commencement of any
insolvency proceeding with respect to the Borrower (and including the payment
of
interest, fees, costs, expenses and other amounts which would accrue and become
due but for the commencement of such insolvency proceeding, whether or not
such
interest is allowed or allowable in whole or in part in any such insolvency
proceeding) (collectively, the “Obligations”).
Guarantor
hereby agrees that this Guaranty is a present and continuing guaranty of payment
and not of collection and that its obligations hereunder shall be
unconditional.
Guarantor
hereby agrees to pay any and all reasonable expenses (including reasonable
attorney’s fees and expenses) which may be incurred by Lenders and/or the
Administrative Agent in enforcing their rights under this Guaranty.
Notwithstanding
any provision of this Guaranty to the contrary, it is intended that this
Guaranty, not constitute a “Fraudulent Conveyance” (as defined below).
Consequently, Guarantor agrees that if this Guaranty, would, but for the
application of this sentence, constitute a Fraudulent Conveyance, this Guaranty
shall be valid and enforceable only to the maximum extent that would not cause
this Guaranty to constitute a Fraudulent Conveyance, and this Guaranty shall
automatically be deemed to have been amended accordingly at all relevant times.
For purposes hereof, “Fraudulent Conveyance” means a fraudulent conveyance or
fraudulent transfer under Section 548 of Chapter 11 of Title 11 of the United
States Code (11 U.S.C. Section 101 et seq.), as amended or a fraudulent
conveyance or fraudulent transfer under the provisions of any applicable
fraudulent conveyance or fraudulent transfer law or similar law of any state,
nation or other governmental unit, as in effect from time to time.
No
payment made by or for the account or benefit of Guarantor pursuant to this
Guaranty shall entitle Guarantor, by subrogation or otherwise, to any payment
by
Borrower or from or out of any property of Borrower.
Guarantor
hereby waives diligence, presentment, demand of payment, filing of claims with
a
court in the event of any bankruptcy proceeding (or other insolvency proceeding)
of Borrower, protest or notice with respect to the Obligations and all demands
whatsoever, and covenants that this Guaranty will not be discharged, except
by
complete and irrevocable payment and performance of all the obligations and
liabilities contained herein. No notice to Guarantor or any other party shall
be
required for Administrative Agent, on behalf of Administrative Agent or any
Lender, to make demand hereunder. Upon the occurrence and during the continuance
of any Event of Default, Administrative Agent may, at its sole election, proceed
directly and at once, without notice, against any Guarantor to collect and
recover the full amount or any portion of the Obligations, without first
proceeding against Borrower, any other individual or entity or any security
or
collateral for the Obligations. Administrative Agent shall have the exclusive
right to determine the application of payments and credits, if any, from
Guarantor, Borrower, any other individual or entity, or any security or
collateral for the Obligations, on account of the Obligations or of any other
liability of Guarantor to Administrative Agent and Lenders arising
hereunder.
Guarantor
hereby assumes responsibility for keeping itself informed of the financial
condition of Borrower, and any and all endorsers and other guarantors of all
or
any part of the Obligations and of all other circumstances bearing upon the
risk
of nonpayment of the Obligations or any part thereof that diligent inquiry
would
reveal, and Guarantor hereby agrees that neither Administrative Agent nor any
Lender shall have any duty to advise Guarantor of information known to such
Administrative Agent or Lender regarding such condition or any such
circumstances. Guarantor hereby acknowledges familiarity with Borrower’s
financial condition and that it has not relied on any statements by
Administrative Agent or any Lender in obtaining such information. In the event
Administrative Agent or any Lender, in its reasonable discretion, undertakes
at
any time or from time to time to provide any such information to Guarantor,
neither Administrative Agent nor any Lender shall be under any obligation (i)
to
undertake any investigation with respect thereto, (ii) to disclose any
information which, pursuant to accepted or reasonable commercial finance
practices, Administrative Agent or such Lender wishes to maintain confidential
or (iii) to make any other or future disclosures of such information, or any
other information, to such Guarantor.
2
Guarantor
consents and agrees that neither Administrative Agent nor any Lender shall
be
under any obligation to marshal any assets in favor of Guarantor or against
or
in payment of any or all of the Obligations. Guarantor further agrees that,
to
the extent that Borrower makes a payment or payments to Administrative Agent
or
any Lender, or Administrative Agent or any Lender receives any proceeds of
Collateral, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
to
be repaid to Borrower, its estate, trustee, receiver or any other party,
including without limitation Guarantor, under any bankruptcy law, state or
federal law, common law or equitable cause, then to the extent of such payment
or repayment, the Obligations or the part thereof which has been paid, reduced
or satisfied by such amount shall be reinstated and continued in full force
and
effect as of the date such initial payment, reduction or satisfaction occurred,
and this Guaranty shall continue to be in existence and in full force and
effect, irrespective of whether any evidence of indebtedness has been
surrendered or cancelled.
Guarantor
also waives all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices
of acceptance of this Guaranty.
Notwithstanding
any provision of this Guaranty to the contrary, any payment made by Guarantor
to
Administrative Agent or any Lender in respect of this Guaranty prior to all
of
the Notes being released from escrow pursuant to the terms and conditions of
that certain Escrow Agreement (as the same my be amended, restated, modified
or
supplemented from time to time, the (“Escrow Agreement”) dated as of the date
hereof by and among Loeb & Loeb LLP, as escrow agent ("Escrow Agent"),
Gurantor, AE Acquisition Corp., a Delaware corporation, Borrower and
Administrative Agent, shall be made to Escrow Agent to be held by Escrow Agent
in accordance with and subject to the terms and conditions of the Escrow
Agreement.
III. MISCELLANEOUS
Guarantor
hereby represents and warrants to Administrative Agent and Lenders that (i)
it
is duly organized, validly existing and in good standing under the laws of
the
jurisdiction of its organization, (ii) the execution, delivery and performance
by Guarantor of this Guaranty is within its powers, have been duly authorized
by
all necessary action pursuant to its charter and by-laws, require no further
action by or in respect of, or filing with, any governmental body, agency or
official and do not violate, conflict with or cause a breach or a default under
any provision of applicable law or regulation, of its charter and by-laws or
any
agreement, judgment, injunction, order, decree or other instrument binding
upon
it and (iii) this Guaranty, constitutes a valid and binding agreement or
instrument of Guarantor, enforceable against Guarantor in accordance with its
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency or other similar laws relating to the enforcement of
creditors’ rights generally and by general equitable
principles.
3
This
Guaranty shall be binding upon Guarantor and its successors and assigns, except
that Guarantor may not assign its obligations hereunder without the written
consent of Administrative Agent. All notices, approvals, requests, demands
and
other communications hereunder shall be given in accordance with the notice
provision of the Notes.
THIS
GUARANTY SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF NEW YORK AND
IRREVOCABLY AGREES THAT, SUBJECT TO AGENT’S ELECTION, ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS GUARANTY SHALL BE LITIGATED IN SUCH COURTS.
GUARANTOR EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS.
GUARANTOR
AND ADMINISTRATIVE AGENT HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY
JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY AND AGREES THAT ANY SUCH ACTION
OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY.
This
Guaranty may be signed in any number of counterparts, each of which shall be
an
original, with the same effect as if the signatures thereto and hereto were
upon
the same instrument.
4
IN
WITNESS WHEREOF, this Guaranty has been duly executed by each Guarantor this
15
day of May, 2006.
GUARANTOR: | ||
a21, INC. | ||
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By: | ||
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Its: | ||
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XXX XXXXXXXX, as Agent | ||
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By: | ||
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Its: | ||
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GUARANTY
EXHIBIT
A
NOTEHOLDERS