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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:
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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.
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"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
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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.
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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 Lender
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