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EXHIBIT 10.5
INTERCREDITOR AGREEMENT
This Intercreditor Agreement, dated as of April 22, 2004
this
"Agreement"), is entered into by and between VESTIN MORTGAGE,
INC., a Nevada
corporation ("Vestin Mortgage"), whose principal place of
business and post
office address is 2901 El Camino Avenue, Suite 206, Las Vegas,
Nevada 89102,
("Lead Lender") 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, ("Lender") hereinafter collectively referred
to as the
"Lenders",
RECITALS:
A. The Lenders have concurrently herewith entered into that
certain Loan Agreement, dated as of April 22, 2004 (the
"Loan
Agreement"), with Mesquite Real Estate Partners, LLC, a
Nevada
limited liability company (the "Borrower") and Christopher
A.
Villareale and James A. Slinker, (collectively "the
Guarantors").
B. The Lenders have severally agreed to make the Loan to the
Borrowers in the aggregate principal amount of
$20,000,000.00
of which each Lender's commitment is set forth in Section
2.1
of this Agreement.
C. The Lenders enter into this Agreement to, among other
things,
further define the rights, duties, authority and
responsibilities of the Lenders and the relationship among
the
Lenders regarding their interests in the Loan Documents and
collateral which secures the Loan.
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 and
Owens Mortgage
Investment Fund hereby agree as follows:
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
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accordance with the terms hereof.
"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 or 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 Owens Mortgage Investment
Fund in
accordance with this Agreement for their "Participation
Interest" in the
"Loan" assigned by Vestin Mortgage.
"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" shall mean Vestin Mortgage or any successor lead
lender.
"Lender" shall mean Owens Mortgage Investment Fund or their
assignee.
"Loan Documents" shall mean the note, deed of trust, guaranty,
title
policy, security agreement, loan agreement, assignment of rents
and profits,
and whatever documents are in existence to protect and secure
the repayment of
the Borrowers 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".
"Loan Agreement" shall have the meaning assigned thereto in the
Recitals
hereof, and shall include such agreements as amended or modified
in accordance
with their respective rights.
"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 owned
by Owens
Mortgage
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Investment Fund in the "Loan".
1.2 Effectiveness of the Agreement. The effectiveness of this
Agreement
is conditioned upon (a) the execution and delivery of this
Agreement by the
Lenders, (b) the execution, delivery and effectiveness of the
Loan Agreement and
the Loan Documents by the parties hereto.
SECTION 2. PRORATA SHARE; LOAN FEES
2.1 Advance of Loan Funds; Pro Rata Share. Each of the Lenders
shall
advance their respective amounts of the Loan to the Borrower at
Closing, and
have a "Pro Rata Share" as indicated on the following
schedule:
<Table>
<Caption>
Lender Amount Pro Rata Share
------ ------ --------------
<S> <C> <C>
Vestin Mortgage Inc. $13,000,000.00 65.00%
Owens Mortgage Investment Fund $7,000,000.00 35.00%
-------------- ------
Totals $20,000,000.00 100.00%
</Table>
2.2 Allocation of Loan Fees. In respect of the Loan, the
Borrower has
paid or will pay loan fees in the aggregate amount of
$1,000,000.00 (5% of the
face amount of the note), which fees shall be allocated among
the Lenders as
follows:
<Table>
<S> <C> <C>
Owens Mortgage Investment Fund $210,000.00 (3% based on its
participation Interest)
Vestin Mortgage, Inc. $790,000.00 (remaining balance of the loan
fee)
</Table>
SECTION 3. RELATIONSHIP AMONG LENDERS
3.1 Restrictions on Actions. Lead Lender agrees that, so long as
any
portion of the Loan is outstanding or unpaid the provisions of
this Agreement
shall provide the exclusive method by which either Lender may
exercise rights
and remedies under the Loan Documents. Therefore, each Lender
shall, for the
benefit of all Lenders, except as permitted under this
Agreement.
(a) Refrain from 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; and
(b) Refrain from (1) selling any portion of the Loan to the
Borrower
or any affiliate of the Borrower and (2) accepting any guaranty
(other that the
guarantees contemplated by the Loan Agreement) of, or any other
security for,
the Loan from the Borrowers or any Affiliate of the Borrowers,
except any
guaranty or security granted to the Lenders for the benefit of
all Lenders; and
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(c) Refrain from exercising any rights or remedies under the
Loan
Documents which have or may have arisen or which may arise as a
result of a
Default or Event of Default or otherwise provided, however, that
nothing
contained in subsections (a) through (c) above, shall prevent
any Lender from
imposing a default rate of interest in accordance with the Loan
Agreement, or
prevent a Lender from raising any defenses in any action in
which it has been
made a party defendant or has been joined as a third party,
except that Lead
Lender may, but shall not be obligated to, direct and control
any defense
directly relating to the Real Property and/or the Collateral or
any one or more
of the Loan Documents, which shall be governed by the provisions
of this
Agreement.
3.2 Representations and Warranties. Each of the Lenders
represent and
warrant to each other that:
(a) It (i) is a legal entity duly organized, existing and in
good
standing under the laws 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 Lender
or
Lender 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
Lender or Lender.
(c) The execution, delivery and performance by such Lead Lender
or
Lender of this Agreement will result in a valid and legally
binding obligation
of such Lead Lender or Lender 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 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.
3.3 Cooperation: Accountings. Lead Lender will, upon the
reasonable request
of Lender, 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 Lender
agrees to provide
to Lender upon reasonable request, but in no event more
frequently than once a
month, a statement of all payments received in respect of the
Loan.
3.4 Reliance on Lead Lender. Lender agrees that it has
independently made
its own analysis of the Loan and the decision to enter into this
Agreement based
on such documents and
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information as it has deemed appropriate. The Lead Lender shall
promptly provide
to Lender a copy of all financial statements and reports of
operating results
and other documents and information received by the Lead Lender
in its capacity
as such pursuant to the Loan Documents. The Lead Lender shall
have a duty and
responsibility to provide Lender with any credit or other
information concerning
the affairs, financial condition or business of the Borrower
which may come into
the possession of the Lead Lender, including financial
statements, credit
reports and any other documents and information upon the
reasonable request of
Lender.
3.5 Limitation on Lead Lender's Liability.
(a) In addition to the Lead Lender's failure to comply with the
terms
of this Agreement, including the Priority of Payment, the Lender
shall have
recourse against Lead Lender for the amounts payable by the
terms of this
Agreement. Lead Lender's obligation with respect to such
payments shall be to
remit to the Lender 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) Although Lead Lender will exercise the same care in
administering
the Loan as if the Loan were made entirely for Lead Lender's own
account, Lead
Lender's liability shall be limited to Lenders Participation
Interest and the
amount payable on that at the Interest Rate, except for a loss
due to Lead
Lender's own gross negligence, willful acts of willful
misconduct.
(c) Lead Lender 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 Lender. Should
approval of any
action, any inaction or any proposed course of conduct in
administering the Loan
(either before or after the occurrence of a Default) be
requested in writing by
the Lead Lender from Lender, such Lender shall approve or deny
such request in
writing and shall deliver the writing to the Lead Lender within
ten (10)
calendar days after the Lender's receipt of the Lead Lender's
request. Lender's
failure to respond within the ten (10) calendar days shall be
deemed consent by
such Lender to such request
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