THIS INTERCREDITOR AGREEMENT, dated as of
May 4, 2005, (this “Agreement”), is entered into
by and between VESTIN MORTGAGE, INC., a Nevada corporation
(“Vestin Mortgage”), VESTIN FUND I, LLC, a Nevada
limited liability company (“Vestin Fund I”)
and VESTIN FUND II, LLC, a Nevada limited liability company
(“Vestin Fund II”) whose principal place of
business and post office address is 8379 West Sunset Road, Las
Vegas, Nevada 89113, (individually, “Lead Lender, or
collectively, “Lead Lenders” and OWENS FINANCIAL GROUP,
INC., a California corporation (“Owens Financial”) and
Owens Mortgage Investment Fund, a California Limited Partnership
(“Owens Mortgage Investment Fund”) whose principal
place of business and post office address is 2221 Olympic
Boulevard, Walnut Creek, California 94595, (individually, a
“Lender”, or collectively,
“Lenders”)
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Vestin Fund I is an SEC
registered direct participation program that provides financing
secured by deeds of trust or mortgages on real property.
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Vestin Fund II is a SEC
registered direct participation program that provides financing
secured by deeds of trust or mortgages on real property.
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Vestin Mortgage is the Manager for
Vestin Fund I and Vestin Fund II.
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Owens Mortgage Investment Fund is a
SEC registered public partnership that provides financing and owns
notes secured by deeds of trust or mortgages on real
property.
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Owens Financial is the General
Partner of Owens Mortgage Investment Fund.
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Owens Financial and Owens Mortgage
Investment Fund have agreed to fund a $5,000,000.00 portion of a
$20,800,000.000 loan to Desert Land Holdings, LLC, a California
limited liability company, a loan originated by Vestin Mortgage,
Inc.
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The
Lead Lenders and Lenders enter into this Agreement to, among other
things, further define their respective rights, duties, authorities
and responsibilities regarding their proposed shared interests in
the and to define the priority of payment for all of the proceeds
from the assigned participation in the loan.
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NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, and based upon the foregoing Recitals which are an
integral part of this Agreement, as well as the mutual covenants
and promises contained herein, Vestin Mortgage, Vestin Fund I,
Vestin Fund II, Owens Financial, and Owens Mortgage Investment
Fund hereby agree as follows:
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Section 1.1
Definitions . All capitalized terms used in this Agreement
shall have the meanings assigned to them below in this
Section 1 or in the provisions of this Agreement referred to
below:
“Agreement”
shall mean this Intercreditor Agreement as amended, modified or
restated in accordance with the terms hereof.
“Assignment”
shall mean the actual recorded assignment of a specific percentage
interest in a “Loan”.
“Bankruptcy
Proceeding” shall mean, with respect to any Person, a general
assignment by such Person for the benefit of its creditors, or the
institution by or against such Person of any proceeding seeking its
relief as debtor, or seeking to adjudicate such Person as bankrupt
or insolvent, or seeking reorganization, arrangement, adjustment or
composition of such Person or its debts, under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors, or
seeking appointment of a receiver, trustee, custodian or other
similar official for such Person or for any substantial part of its
property.
“Borrowers”
shall mean any person or entity that obligates itself or its
property as security for a “Loan”.
“Collateral”
shall mean all the real and personal property collateral under the
Loan Documents.
“Default”
shall mean any event or condition, the occurrence of which would,
with the lapse of time or the giving of notice, or both, pursuant
to the “Loan Documents” constitute an Event of
Default.
“Interest
Rate” shall mean the rate of interest paid to Owens Financial
or Owens Mortgage Investment Fund for their “Participation
Interest” in the “Loan”. This rate shall be a
fixed rate for the duration of the “Loan” at 14.0%.
Interest shall be paid at the rate of 10.0%, with the remaining
4.0% to be paid upon the maturity of the Loan.
“Late
Charges” shall mean the late charges and or default rate
charged to Borrowers in the event of default or late payments under
the “Loan Documents”.
“Lead Lender
and Lead Lenders” shall mean Vestin Mortgage, Vestin
Fund I, Vestin Fund II or any successor lead
lender.
“Lender and
Lenders” shall mean Owens Financial or Owens Mortgage
Investment Fund or their assignee.
“Loan Documents” shall mean all of the various notes,
deeds of trusts, guarantees, title policies, security agreements,
loan agreements, assignment of rents and profits, and whatever
documents are in existence to protect and secure the repayment of
the Borrowers obligations under the note.
“Loan” shall mean the note, and all of the documents
and agreements that evidence and secure the debt of the
“Borrowers”.
“Priority of Payment” shall mean the order in which
payments are made to the “Lead Lender” and to the
“Lender”.
“Participation Interest” shall signify amount in
dollars of the “Assignment” owned by Owens Financial
and Owens Mortgage Investment Fund in the
“Loan”.
1.2 Effectiveness of this
Agreement . The effectiveness of this Agreement is conditioned
upon (a) the execution and delivery of this Agreement by the
Lead Lenders and the Lenders, (b) the execution, delivery and
effectiveness of the Loan Documents by the Lead Lenders, and the
payment of the Participation Interest by Lenders to the Lead
Lenders.
SECTION 2. RELATIONSHIP AMONG
LENDERS
2.1 Restrictions on Actions .
Lead Lenders agree that, so long as any portion of a Loan is
outstanding or unpaid they shall, for the benefit of Lenders,
except as permitted under this Agreement:
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(a)
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Notify Lenders
before taking or filing any action, judicial or otherwise, to
enforce any rights or pursue any remedy under the Loan Documents,
except for delivering notices hereunder.
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(b)
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Refrain from
(1) selling any portion of the Loan to the Borrowers or any
affiliate of the Borrowers and (2) accepting any substitute
guaranty or any other security for, the Loan from the Borrowers or
any Affiliate of the Borrowers, without Lenders consent. In the
event Lender refuses to consent to such requested action, Lead
Lenders shall be entitled to either repurchase Lenders
Participation Interest for the amount of principal and accrued
interest outstanding or offer the Lenders a Substitution of
Security.
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2.2 Representations and
Warranties . Lead Lenders and Lenders represent and warrant to
each other that:
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(a) It (i) is a legal entity duly
organized, existing and in good standing under the laws and
governmental authority of the jurisdiction of its domicile, and
(ii) has all requisite corporate power to own its property and
conduct its business as now conducted and as presently
contemplated.
(b) The execution, delivery and
performance by such Lead Lenders or Lenders of this Agreement has
been authorized by all necessary proceedings (corporate or
otherwise) and does not and will not contravene any provision of
law, its charter or by-laws or operating agreement or any amendment
thereof, or of any indenture, agreement, instrument or undertaking
binding upon such Lead Lenders or Lenders.
(c) The execution, delivery and
performance by such Lead Lenders or Lenders of this Agreement will
result in a valid and legally binding obligation of such Lead
Lenders or Lenders enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance and
similar laws affecting creditors’ rights generally, and
general principles of equity (regardless of whether the application
of such principles is considered in a proceeding in equity or at
law).
(d) It has received and approved, as to
form and content, sample copies of the Loan Documents and
Assignments, however, such approval shall not operate as a warranty
or representation of the adequacy, validity or binding effect of
any of the Loan Documents or Assignments.
2.3 Cooperation; Accountings .
Lead Lenders will, upon the reasonable request of Lenders, from
time to time execute and deliver or cause to be executed and
delivered in a timely fashion such further instruments, and do and
cause to be done such further acts as may be necessary or proper to
carry out more effectively the provisions of this Agreement. The
Lead Lenders agree to provide to Lenders upon reasonable request,
but in no event more frequently than once a month, a statement of
all payments received in respect of the Loan.
2.4 Reliance on Lead Lenders . The
Lead Lenders shall promptly provide to Lenders a copy of all
financial statements and reports of operating results and other
documents and information received by the Lead Lenders in its
capacity as such pursuant to the Loan Documents. The Lead Lenders
shall have a duty and responsibility to provide Lenders with any
credit or other information concerning the affairs, financial
condition or business of the Borrowers which may come into the
possession of the Lead Lenders, including financial statements,
credit reports and any other documents and information.
2.5 Limitation on Lead Lender’s
Liability .
(a) In addition to the Lead Lender’s
failure to comply with the terms
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of this Agreement, including the
Priority of Payment, the Lenders shall have full recourse against
Lead Lenders for the amounts payable by the terms of this
agreement. Lead Lenders obligation with respect to such payments
shall be to remit to the Lenders a monthly payment based on the
agreed Interest Rate calculated on the Participation Interest and
the principal amount of the Participation Interest when a Loan pays
off or matures in accordance with this Agreement.
(b) Although Lead Lenders will exercise the same care in
administering the Loan as if the Loan were made entirely for Lead
Lenders’ own account, Lead Lenders liability shall be limited
to the Lenders Participation Interest and the amount payable on
that at the Interest Rate, except for a loss due to Lead
Lenders’ own gross negligence, willful acts or
misconduct.
(c) Lead Lenders shall be entitled to rely upon any
certification, notice or other communication (including any thereof
by telephone, telex, telegram, cable or telecopy) believed by it to
be genuine and correct and to have been signed or sent by or on
behalf of the Lenders. Should approval of any action, any inaction
or any proposed course of conduct in administering the Loan (either
before or after the occurrence of an Event of Default) be requested
in writing by the Lead Lenders from Lenders, such Lenders shall
approve or deny such request in writing and shall deliver the
writing to the Lead Lenders within ten (10) calendar days
after the Lenders’ receipt of the Lead Lender’s
request. Any Lenders’ failure to respond within the
ten (10) calendar days shall be deemed consent by such Lender
to such request.
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