INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT, dated
as of June ____, 2008 (this "Agreement"), is entered into by and between VESTIN
MORTGAGE, INC., a Nevada corporation (“Vestin”), VESTIN ORIGINATIONS, INC., a
Nevada corporation (“Originations”) and VESTIN REALTY MORTGAGE II, Inc., a
Maryland corporation (“VRM
II”) whose principal
place of business and post office address is 0000 X. Xxxxxxx Xxxx.,
Xxx Xxxxx, Xxxxxx 00000, (individually, “Lead Lender, or collectively,
“Lead Lenders” and XXXXX FINANCIAL GROUP, INC., a California corporation (“Xxxxx
Financial”) and XXXXX MORTGAGE INVESTMENT FUND, a California Limited Partnership
(“Xxxxx Mortgage Investment Fund”) whose principal place of business and post
office address is 0000 Xxxxxxx Xxxxxxxxx, Xxxxxx Xxxxx,
Xxxxxxxxxx 00000, (individually, a “Lender”, or collectively,
“Lenders”)
RECITALS:
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A.
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VRM
II is a publicly traded Mortgage REIT that provides financing secured by
deeds of trust or mortgages on real
property.
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B.
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VESTIN
is a duly formed Nevada corporation, and is responsible for the daily
operations of VRM II.
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C.
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Originations
is a licensed Mortgage Broker that arranges loans for the benefit of VRM
I, VRM II, VF III and other commercial real estate
lenders.
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X.
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Xxxxx
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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X.
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Xxxxx
Financial is the General Partner of Xxxxx Mortgage Investment
Fund.
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X.
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Xxxxx
Financial and Xxxxx Mortgage Investment Fund have agreed to
fund a $2,500,000.00 portion of a $9,375,000.00 loan to Village Business
Park, LLC, a Nevada limited liability company, a loan originated by
Originations.
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H.
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The
Lead Lenders and Lenders enter into this Agreement to,
among
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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, Originations, Vestin, VRM II, Xxxxx Financial, and Xxxxx
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 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 Xxxxx Financial or Xxxxx Mortgage
Investment Fund for their “Participation Interest” in the
“Loan”. This rate shall be a fixed rate of Eleven Percent (11.0%) for
the duration of the Loan.
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“Interest
Reserve” shall mean the amount of $137,500.00, representing six (6) months of
pre-paid interest based on the above stated Interest Rate. The
Interest Reserve shall be held by the Lender and shall be used solely to: a)
provide for the payment of interest to the Lender during the final six (6)
months of the Loan; or b) provide payment of interest in the event Lead Lender
fails to make monthly payments of interest to the Lender under the terms of the
Loan Documents and this Agreement.
“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 Originations, Vestin, VRM II, or any
successor lead lender.
"Lender
and Lenders" shall mean Xxxxx Financial or Xxxxx Mortgage Investment Fund or
their assignee.
“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 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”.
“Loan
Fee” shall mean the fee paid to Xxxxx Financial or Xxxxx Mortgage Investment
Fund for their agreement to participate in the Loan. The Loan Fee
shall be Four Percent (4.0%) of the Participation Interest in the
“Loan”. Upon the funding of the Participation Interest by Xxxxx
Mortgage Investment Fund, the Loan Fee shall be considered earned.
“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 Xxxxx Financial and Xxxxx
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.
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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 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.
2.2 Representations and
Warranties. Lead Lenders and 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 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.
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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 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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(d) Lead
Lenders do not assume and shall have no responsibility or liability, express or
implied, for (i) the collectibility of the Loan made to Borrowers under, or
the enforceability of, any of the Loan Documents, or (ii) the financial
condition or creditworthiness of the Borrowers, or (iii) any credit or
other information furnished by the Borrowers to Lead Lenders, or (iv) the
value of any collateral for the Loan.
2.6 Lead Lender Rights as
Lender. The Lead Lender in its capacity as a lender hereunder
shall have the same rights, powers and obligations hereunder as all other
Lenders and may exercise the same as though it were not acting as the Lead
Lender.
SECTION
3. ADMINISTRATION OF LOAN
3.1 Administration and Servicing
of Loan. In administering and servicing the Loan, Lead Lenders
shall act in its own behalf as to its interest in the Loan and shall act as an
independent contractor (and not as an agent or trustee) for the Lenders with
respect to their respective interests in the Loan. The Lenders hereby
appoint and authorize Lead Lenders to act for and on behalf of the Lenders with
regard to the Loan, subject to the restrictions set forth in this
Agreement. Lead Lenders shall utilize its own facilities and
equipment and its own employees and other persons authorized under the Loan
Documents in the administering and servicing of the Loans, all without cost to
the Lenders.
In
its administering and servicing of the Loan, Lead Lenders shall perform the
following duties (the enumeration of said duties not being intended to limit the
duties to be performed by Lead Lenders in accordance with the foregoing
paragraph) and shall be subject to the following restrictions and shall have the
following rights:
(a) Possession of Loan
Documents. For the benefit of the Lenders, Lead Lenders shall
hold in its possession at its principal office executed originals of all the
Loan Documents for each Loan assigned and shall deliver conformed copies of each
thereof to the Lenders.
(b) Expenses/Losses. In
the event that any reasonable legal expenses or other expenses for the
preservation of the collateral for the Loan or for the enforcement of the Loan
are incurred by Lead Lenders in connection with the Loan or on or after or in
connection with the occurrence of an Event of Default or the enforcement of any
of the Loan Documents (including fees of counsel and other expenses), Lead
Lenders shall bear and advance all such costs. Upon receipt of reimbursement for
such expenses from Borrowers or any other person, Lead Lenders shall be entitled
to retain such reimbursement.
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(c) Collections. Lead
Lenders shall use reasonable efforts to collect all payments of principal,
interest and fees due from the Borrowers under the Loan Documents and shall
remit to the Lenders on a monthly basis a payment calculated at the agreed
Interest Rate based on the outstanding balance of the Participation
Interest. The Lenders shall have the right to an accounting for all
monies received by Lead Lenders in connection with each Loan that has a
Participation Interest by Lenders.
(d) Payment
Returns. If any payment received by Lead Lenders and
distributed or credited to the Lenders is later rescinded or is otherwise
required to be returned by Lead Lenders to the Borrowers for whatever reason
(including, without limitation, settlement of an alleged claim), the Lenders
shall be entitled to retain any payment received. The covenant
contained in this paragraph shall survive the termination of this
Agreement.
(e) Records. Lead
Lenders shall maintain such books and records relating to the Loan as it would
were the Loan made solely by Lead Lenders, which books and records shall be made
available to the Lenders at Lead Lender's main branch in Las Vegas, Nevada at
all reasonable times for purposes of inspection, examination and audit upon no
less than forty-eight (48) hours prior notice.
(f) Information. During
the term of this Agreement, Lead Lenders shall provide to the Lenders complete
and current information as to the accrual status of the Loan and the status of
principal and interest payments, and all information supplied by Borrowers in
connection with the Loan. The Lenders will treat all such information
as confidential, except that disclosure thereof may be made if required by law
or the order of a court having jurisdiction.
(g) Administrative
Decisions. Lead Lenders shall not, without written consent of Lenders,
(1) release, or agree to the substitution of other security for any portion of
the Real Property, Leasehold Rights and/or Collateral securing the Loans, (2)
grant any release in favor of the Borrowers under the Loan Documents, or waive
the Lenders’ rights to enforce the obligations of the Borrowers, (3) agree to
the revision, modification or amendment of any of the Loan Documents, or (4)
consent to or accept the cancellation or termination of any of the Loan
Documents, except upon payment in full of each Loan. Subject to the foregoing
limitations, and until the occurrence and declaration of an Event of Default
under the Loan Documents and Borrowers failure to cure within twenty (20) days,
Lead Lenders shall have the right to make decisions in connection with the
day-to-day administration and servicing of the Loan, relating to inspections,
review of financial data, and other matters of an ordinary nature involved in
the administration and servicing of the Loan, without the Lenders' prior review
or approval.
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(h) Reasonable
Efforts. If any Event of Default shall occur under any of the
Loans, Lead Lenders shall use reasonable efforts in accordance with the Loan
Documents to cause the Borrowers, Guarantors and/or Limited Guarantors to remedy
the default.
(i) Hazard Insurance and
Condemnation Awards. If Lead Lenders becomes aware of any
damage to or actual or potential condemnation affecting any material portion of
the Real Property, Leasehold Rights and/or Collateral securing the Loans, Lead
Lenders will promptly notify Lenders thereof. The proceeds of any
insurance recovery or condemnation award received by Lead Lenders and not
immediately disbursed or applied to the repayment of the Loan or not otherwise
distributed by Lead Lenders shall be deposited in an interest-bearing account,
in trust for all lenders, and the income, if any, received by Lead Lenders from
such account and not payable to others shall be shared with the Lenders in
accordance with terms of this Agreement.
3.2 Payment Priorities Between
Lead Lenders and Lenders.
(a) Lead
Lenders and Lenders agree that all payment and/or prepayment of principal due on
the Loan, received by the Lead Lenders, shall be for held for the account of the
Lenders and Lead Lenders as their respective interests may appear, and such
payment shall be applied in the following order of priority: (i) first to the
payment of that portion of principal of the Loan provided by Xxxxx Financial and
Xxxxx Mortgage Investment Fund (ii) next to pay any accrued or outstanding
interest due Lenders at the agreed Interest Rate (iii) next to that portion of
the principal of the Loan provided by Originations, and VRM II. In
the event of default under the Loan Documents: (i) Originations and VRM II agree
to purchase the Participation Interest of Xxxxx Financial and Xxxxx Mortgage
Investment Fund for the outstanding balance of that Participation Interest plus
any accrued interest; and (ii) Originations, and VRM II shall not be entitled to
receive any payment of their Pro Rata Share of the principal of the Loan in
question until Xxxxx Financial and Xxxxx Mortgage Investment Fund has received
payment of its Participation Interest of the principal of the Loan and all
accrued interest, late charges, default interest, and any other charges payable
to Lenders under this Agreement.
(b) Each
payment of interest on the Loan, received by the Lead Lender, shall be for the
account of the Lenders and Lead Lenders as their respective interests may
appear, and such payment shall be applied first to the payment of agreed
Interest Rate due on the Participation Interest of the Loan assigned to Xxxxx
Financial or Xxxxx Mortgage Investment Fund for such period that the interest is
due.
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(c) As
an example, assume Lenders fund a 26.67% Participation Interest in a
$9,375,000.00 Loan. The Loan carries an interest rate of 11.0% and
pays monthly interest only payments. Lenders and Lead Lenders would
receive the following, provided however, that any reduction of the principal
balance of the Loan through partial payoffs shall reduce proportionately the
amounts shown in the examples below.
Example 1: Borrowers
make a monthly payment of $82,031.25. Lenders are paid their full
share of interest on $2,500,000.00 or $22,916.67. Lead Lenders
receive $59,114.58 or the balance of the interest paid.
Example 2: Borrowers
make a monthly payment of $50,000.00. Lenders are paid their full
share of interest on $2,500,000.00 or $22,916.67. Lead Lenders
receive $27,083.33, or the balance of the interest paid.
Example 3: Borrowers
do not make a monthly payment, default, declare bankruptcy or withhold payments
for any reason then, Lead Lenders pay to Lenders interest at the rate of 11% per
annum on $2,500,000.00 or $22,916.67 per month. At this point Lead
Lender may buy Lender out of the loan for $2,500,000.00, plus any accrued
interest.
Example 4: Borrowers
payoff a portion of the Loan. Lenders are paid their Pro Rata Share
of the principal balance of the Participation Interest and interest at 11% per
annum to the date of the partial payoff.
Example 5: Borrowers
pay off the Loan. Lenders are paid their full Pro Rata Share of the
Loan equal to their Participation Interest plus interest at 11% per annum to the
date of pay off.
3.3 Defaults Under Loan
Documents; Enforcement of Remedies. If foreclosure or similar proceedings
are commenced under the Loan Documents, Lead Lenders shall buy out the
Participation Interest of Xxxxx Financial or Xxxxx Mortgage Investment Fund at
the sole an absolute discretion of Lenders.
3.4 Notices under Collateral
Documents. Lead Lenders shall deliver to the Lenders, promptly
upon receipt thereof, duplicates or copies of all notices, requests and other
instruments received by it from any other party under or pursuant to any of the
Loan Documents, if not previously furnished to the Lenders.
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SECTION
4. RESIGNATION OR REMOVAL OF LEAD LENDER
Lead
Lenders will repurchase the Participation Interests of Lenders at Lenders sole
and absolute discretion at any time “for cause”. The term “for cause”
shall be limited to Lead Lenders’ (i) material breach of the terms of this
Agreement, or (ii) fraud committed against Borrowers or Lenders, or (iii)
criminal acts committed against Borrowers or Lenders. Upon any such
removal, the Lenders shall have the right to appoint a successor Lead
Lender.
SECTION
5. TERMINATION OF AGREEMENT
Upon
final payment in full of the Loan or all obligations owing to Lenders, such
Lenders shall cease to be a party to this Agreement; provided, however, if all
or any part of any payments to such Lenders are invalidated or set aside or
required to be repaid to any Person in any Bankruptcy Proceeding or otherwise,
then this Agreement shall be renewed as of such date and shall thereafter
continue in full force and effect to the extent of the Loan so invalidated, set
aside or repaid. If any portion of this agreement is declared to be
invalid or unenforceable then the remaining portions of the Agreement shall
remain in full force and effect.
SECTION
6. INDEMNIFICATION OF LENDER
Originations,
Vestin, and VRM II indemnifies Xxxxx Financial and Xxxxx Mortgage Investment
Fund for all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against them in any
way relating to or arising out of this Agreement or by their participation in
any Loan or by any action brought by any Borrower including all claims relating
to the origination of the Loans, except for the gross negligence or willful
misconduct of Lenders or the breach by Lenders of the terms of this
Agreement.
SECTION
7. NOT A JOINT VENTURE
Neither
the execution of this Agreement nor the Lenders' several ownership of interests
in Loans, nor any agreement to share in profits or losses arising as a result of
the Loans, is intended to be, nor shall it be construed to
be: (a) the formation of a partnership or joint venture between
the Lead Lenders and Lenders, or (b) the creation of a loan transaction
between the Lead Lenders, as lender, and Lender, as borrower. Vestin
Mortgage, in its capacity as Lead Lender, shall not be deemed to be a trustee
for the Lenders in connection with the Loans or their interests
therein. Vestin Mortgage, in its capacity as Lead Lender, shall owe
to the Lenders no duty except as specifically set forth in this Agreement, and
no lender shall be liable to any other person for the liability of any other
lender arising in connection with the Loans or any transaction related to the
Loans, except as may be expressly set forth in this Agreement.
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SECTION
8. MISCELLANEOUS
8.1 Amendment. Neither
this Agreement nor any provision hereof may be amended, waived, discharged or
terminated orally, but only by an instrument in writing signed by all parties
hereto.
8.2 Headings. The
headings in this Agreement are for convenience of reference only and shall not
define or limit the provisions hereof.
8.3 Applicable
Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Nevada.
8.4 Parties in Interest;
Decisions by Majority Lenders. All of the terms, covenants and
conditions contained in this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their permitted successors and assigns.
There shall be no third-party beneficiaries of this Agreement.
8.5 Further Sale, Pledge,
etc. Lead Lender may not sell, pledge, assign or otherwise
transfer all or any part of its interest in any Loan without the prior written
consent of Lenders, which consent shall not be unreasonably
withheld. In the event all or any part of Lead Lenders interest in
any Loan is sold, pledged, assigned or otherwise transferred, Lead Lenders
obligations under this Agreement will not be relieved.
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8.6 Notices. Notices
under this Agreement shall be in writing and personally delivered or sent by
certified or registered U.S. mail, or a recognized air courier service, return
receipt requested, or by telecopy, acknowledgment of receipt requested, to the
parties at their addresses specified in the first paragraph of this
Agreement. Such addresses may be changed from time to time by the
addressee by serving notice as provided above.
8.7 Counterpart
Execution. This Agreement may be executed in any number of
counterparts with the same effect as if all parties had signed the same
document. All counterparts shall be construed together and shall
constitute one agreement.
8.8 Attorney’s
Clause. If legal action is instituted to enforce the terms of
this Agreement, the prevailing parties shall be entitled to recover from the
losing parties, all costs of collection and enforcement, including reasonable
attorney's fees. For purposes of this section, the award and recovery
of attorney's fees shall survive the entry of any judgment thereon and shall
include, without limitation, fees incurred in the following: (1) Post
Judgment Motions; (2) Contempt Proceedings; (3) Garnishment, levy, debtor and
third party examinations; (4) Discovery; (5) Bankruptcy proceedings or other
litigation; and (6) appeals.
[END
OF TEXT, CONTINUED ON NEXT PAGE]
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IN
WITNESS WHEREOF, the Lenders have caused this instrument to be duly executed as
of the day and year first above written.
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VESTIN
ORIGINATIONS, INC.,
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VESTIN
MORTGAGE, INC.,
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a
Nevada corporation
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a
Nevada corporation
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By:
_________________________
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By:
________________________
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Xxxxxx
X. Xxxxxx,
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Xxxxxx
X. Xxxxxx,
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Senior
Vice President
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Senior
Vice President
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a
Maryland corporation
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By:
________________________
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Xxxxxxx
X. Xxxxxxx, CEO
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XXXXX
FINANCIAL GROUP, INC.,
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a
California corporation
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By:
_______________________________
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XXXXX
MORTGAGE INVESTMENT FUND,
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a
California Limited Partnership
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By:
Xxxxx Financial Group, Inc.,
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a
California corporation, General Partner
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By:
_______________________________
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August 8,
2008
Xx.
Xxxxxxx Xxxxxxx
Chief
Executive Officer
Vestin
Realty Mortgage I1 Inc.
0000
Xxxxx Xxxxxxx
Xxx
Xxxxx, XX 891
18
Re: OMIF
loans 51171, 51173, 51175, 51176, 51177
Dear
Xxxx:
I am
writing to clarify our understanding regarding our willingness to accept
replacement security in the event the above referenced loans are paid in part or
in full. Should any of the loans indicated be paid in part, or in
full, prior to the two year anniversary of the Intercreditor Agreement
associated with these loans, Lead Lender may request, in writing, that Lender
enter into a replacement loan.
Lender
may, at its complete and absolute discretion, select a loan in Lead Lender's
portfolio (the "Replacement Loan") as replacement security for the loan which
has been paid in full or in part, though Lender is under no obligation or
requirement to do so. The replacement amount may be in an amount up
to the amount of Lender's Participation Interest in the paid loan (the
"Replacement Right").
In
connection with the Replacement Right, Lead Lender shall provide Lender with
complete access to Lead Lender's loan portfolio and any documentation requested
by Lender in connection with its review of said portfolio or individual loans
within said portfolio. Lead Lender shall provide access to the
requested documentation within two (2) business days of Lender's
request.
If Lender
elects to exercise its Replacement Right, the parties shall, as to the
Replacement Loan, enter into a new Intercreditor Agreement substantially in the
form of the agreement in place for the paid loan. The parties may
also elect to amend the existing agreement in a manner which is acceptable to
both Lender and Lead Lender.
Please
call me if you have any questions concerning this matter.
Sincerely,
______________
Xxxxxxx
X. Xxxxx
Senior
Vice President
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