<PAGE>
EXHIBIT 10.4
INTERCREDITOR AGREEMENT
THIS
INTERCREDITOR AGREEMENT, dated as of January 17, 2003 (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 2901 El Camino Avenue,
Suite 206, Las Vegas, Nevada 89102,
(individually, "LEAD LENDER, or
collectively, "LEAD LENDERS" and WESTERN UNITED
LIFE ASSURANCE COMPANY, a Washington
corporation ("WESTERN") whose principal
place of business and post office address
is W. 601 1st Avenue, Spokane, WA
99201, ("LENDER")
RECITALS:
A. Vestin Fund I is an SEC
registered direct participation program that
provides financing secured by deeds of
trust or mortgages on real property.
Vestin Fund I contains loans in the
approximate amount of $100,000,000.
B. Vestin Fund II is a SEC
registered direct participation program that
provides financing secured by deeds of
trust or mortgages on real property.
Vestin Fund II contains loans in the
approximately amount of $210,000,000.
C. Vestin Mortgage is the
Manager for Vestin Fund I and Vestin Fund II.
D. Western intends to purchase
a portion of some of the loans held by
Vestin Fund I and Vestin Fund II as
hereinafter set forth in Exhibit "A".
G. Vestin Mortgage wishes to
sell by assignment a portion of some of the
loans held by Vestin Fund I and Vestin Fund
II, as hereinafter set forth in
Exhibit "A".
H. The Lead Lenders and Lender
enter into this Agreement to, among other
things, further define their respective
rights, duties, authorities and
responsibilities regarding their proposed
shared interests in the various loans
which make up the portfolio of Vestin I and
Vestin II and to define the priority
of payment for all of the proceeds from the
assigned participation in those
loans.
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, and Western hereby agree as
follows:
1
<PAGE>
SECTION 1. DEFINITIONS
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.
"Borrower" 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 a fixed rate of interest equivalent
to
twelve percent (12%) per annum to be paid
to Lender in accordance with this
Agreement for its "Participation Interest"
in the "Loans" assigned by Vestin
Mortgage and Vestin Fund I and Vestin Fund
II.
"Late Charges" shall mean the late charges and or default rate
charged
to Borrower 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 Western or their assignee.
2
<PAGE>
"Loan Documents"
shall mean of all 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 Borrower's
obligations under the "Loan".
"Loan" shall
mean the note, and all of the documents and agreements that
evidence and secure the debt of the
"Borrower", owned by Vestin I and Vestin II.
"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 Lender in the
"Loan".
"Participation
Pool" shall mean those "Loans" identified on Exhibit "A"
attached hereto in which "Lenders" shall
acquire "Participation Interests", as
such Participation Pool may be periodically
modified in accordance with this
Agreement.
"Substitution of
Security" shall mean the exchange of one "Participation
Interest" in a "Loan" for a "Participation
Interest" in a different "Loan" of
an equal amount.
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 Assignments and
the Loan Documents by the Lead
Lenders, and (c) the payment of the
Participation Interest by Lenders to the
Lead Lenders, which payment shall be made
by Lenders to Lead Lenders as Loans
are funded in the Participation Pool.
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:
(a) 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.
(b) Refrain from (1)
selling (but shall be permitted to accept the
payoff of) any portion of the Loan to the Borrowers or any
affiliate of the Borrowers and (2) accepting any substitute
guaranty or substituting any other security for the Loan from
the Borrowers or any Affiliate of the Borrowers, without
Lender's consent. In the event Lender refuses to
3
<PAGE>
consent to such requested action, Lead Lenders shall be
entitled to either repurchase Lender's Participation
Interest for the amount of principal and accrued interest
outstanding or offer the Lenders a Substitution of
Security.
2.2 Representations
and Warranties. Lead
Lenders and Lender represent
and arrant to each other that:
(a)
It 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.
(e)
Lead Lender represents that none of the Loans are in
default at the time of the Assignment to
Lender, and that, to the knowledge of
Lead Lenders, none of the Borrowers or
their assignees have notified Lead
Lenders of any claims or offsets under the
Loan Documents.
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 Loans
Assigned.
4
<PAGE>
2.4 Reliance on Lead Lenders. Lenders
agree that it has independently
made its own analysis of the Loans and the
decision to enter into this
Agreement based upon such documents and
information as it has deemed
appropriate. 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
upon the reasonable request of Lenders.
2.5 Limitation on Lead Lender's
Liability.
(a) Lead Lender's
obligation with respect to interest payments shall
be to remit to the Lenders a monthly
payment based on the 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) 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 Lend
