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EXHIBIT 10.3
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.
(d)
