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INTERCREDITOR AGREEMENT
This Intercreditor Agreement is made effective as of the
_____ day of ___________, 1997, by and between Venture Lending & Leasing, Inc.,
and Venture Lending & Leasing II, Inc., both Maryland corporations (referred to
herein jointly as "Lenders", and individually as a "Lender").
Recitals
A. Each Lender has entered into a separate Loan Agreement of
even date herewith (each, a "Loan Agreement") with _____________________, a
______________ corporation ("Borrower"), pursuant to which each Lender has
agreed, severally and not jointly, to make secured, term loans to Borrower up
to the amount of such Lender's Commitment. Pursuant to the Loan Agreements,
Borrower has executed or will execute for each Lender's benefit one or more
written security agreements, collateral assignments, pledge agreements and/or
chattel mortgages (collectively, the "Security Documents"), pursuant to which
Borrower grants to each Lender a security interest in certain now owned and
hereafter acquired personal property collateral described on Exhibit "A" to
this Agreement, as such Exhibit may be amended or supplemented from time to
time (the "Collateral"). Borrower has also executed or will execute one or more
Uniform Commercial Code financing statements in favor of each Lender, which
have been filed or will be filed with the Secretary of State of ___________ and
in other jurisdictions or offices.
B. This Agreement sets forth certain rights and duties of the
parties with respect to the Collateral, the parity of each Lender's security
interest in the Collateral and the products and proceeds thereof, and other
rights and obligations among the parties.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants contained herein the parties agree as follows:
1. Definitions. Unless otherwise defined herein, each capitalized
term used in this Agreement has the meaning ascribed thereto in the Loan
Agreements. "Pro Rata" means, as to any Lender at any time, the percentage
equivalent at such time of such Lender's aggregate unpaid principal amount of
Loans, divided by the combined aggregate unpaid principal amount of all Loans
of both Lenders.
2. Priority of Security Interests. Notwithstanding any contrary
priority established by (a) the filing dates of their respective financing
statements, (b) the recording dates of any other security perfection documents,
or (c) which Lender has possession of any of the Collateral, the parties agree
that the Lien of each Lender in the Collateral perfected or to be perfected by
such Lender's Security Documents and financing statements shall be of equal
rank and priority to each other Lender's Lien in the same Collateral, and the
Lien of each Lender in the Collateral shall be deemed an undivided Pro Rata
security interest in all items of Collateral. The equality in priority and pari
passu nature of the Lenders' Liens specified in this Agreement are applicable
irrespective of: the time or order of attachment or perfection of security
interests; the time or order of filing of any Security Documents; or the time
of giving or failure to give notice of the acquisition or expected acquisition
of purchase money or other security interests. This Agreement applies only to
Liens held by Lenders to secure Loans and other advances made under the Loan
Agreements.
3. Effect of Lender's Nonperfection. The agreement herein as to
the equality in priority of Lenders' Liens is expressly conditioned upon the
perfection and nonavoidability of the Lien of each Lender. If the Lien of any
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Lender is (i) determined by a court of competent jurisdiction to be avoidable
for any reason, or (ii) such Lender fails to timely perfect its Lien with
respect to all or any portion of the Collateral (or such perfection is not
maintained without lapse) and as a result thereof the priority of such Lender's
Lien becomes subordinate or junior to a perfected Lien in favor of a third
party under the Uniform Commercial Code or other applicable law, (such Lender
being referred to as an "Affected Lender"), then all losses by Affected Lender
from the Collateral (a "Loss") resulting from such failure to timely perfect or
maintain perfection or from such avoidability shall be borne solely by the
Affected Lender. In the event of any dispute between the Lenders as to the
amount of the Loss, the amount determined by the perfected Lender shall be
presumed correct unless and until rebutted by competent evidence presented by
the Affected Lender. The Affected Lender shall bear the burden of persuasion.
Notwithstanding anything to the contrary in this Section 3, if both Lenders'
Liens are perfected as to particular Collateral on the same day, then the
agreement herein as to the equality in priority of their Liens shall apply to
such Collateral.
4. Notices of Equal Priority. Any Security Document under the
Loan Agreement naming an individual Lender as secured party, collateral
assignee or mortgagee shall contain an unqualified statement in substantially
the following form:
"The security interests of [one Lender] and its successors
and assigns described herein are subject to a certain
Intercreditor Agreement dated ___________, 199_, among
Borrower, [Lender] and [the other Lender]."
Each Lender agrees to execute any and all financing statements, financing
statement amendments, notices and other documents reasonably deemed necessary
by any other Lender to establish and maintain the relative priority agreement
made herein as a matter of public record. Any financing statement in favor of
an individual Lender with respect to the Collateral shall include a statement
substantially as follows:
"Secured Party's security interest in the collateral covered
by this financing statement is subject to an Intercreditor
Agreement dated __________, 199_, among Debtor, Secured Party
and [other Lender]."
5. Lender as Bailee. Each Lender agrees that any time it receives
or otherwise is in possession of any Collateral, whether through foreclosure,
bankruptcy, insolvency proceedings or otherwise, such Collateral and any
proceeds thereof shall be received or held by such Lender as a bailee for the
other Lender for purposes of: maintaining the perfection of Lenders' security
interests in such Collateral; Pro Rata distribution between the Lenders; and
application to their respective claims against Borrower as provided herein and
in any other Loan Document.
6. Unanimity in Enforcement.
6.1 Lenders' Standstill. Without the prior written consent of
the other Lender, which consent shall not be withheld unreasonably (and which
withholding shall be deemed unreasonable if it would prevent the other Lender
from taking action which such Lender or its counsel deems commercially
reasonable under the Uniform Commercial Code or other applicable law), no
Lender shall collect, take possession of, foreclose upon, or exercise any
rights or remedies with respect to the Collateral or Borrower, judicially or
non-judicially, in order to satisfy or collect any Obligations owed in
connection with such Lender's Loan Agreement or attempt to do any of the
foregoing. Except as expressly limited by this Section 6, each Lender may
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unilaterally exercise any rights and remedies under its Loan Documents,
including without limiting the generality of the foregoing, the cessation of
any future Loans to Borrower and the acceleration of then outstanding Loans
upon the occurrence of an Event of Default.
6.2 Enforcement Action. Upon default and acceleration of the
Loans by a Lender under applicable provisions of its Loan Agreement, such
Lender (the "Enforcing Lender") may, with the consent of the other Lender (as
required under Section 6.1), proceed with the enforcement of Lenders' rights
against the Collateral for the benefit of Lenders under the Loan Documents. Any
repossession, sale or distribution of proceeds of Collateral shall be
accomplished as required by this Agreement, the Loan Documents, and applicable
law. Effective upon receipt of such consent, the Enforcing Lender is authorized
to exercise all rights and remedies of Lenders under the Loan Documents (an
"Enforcement Action"). Unless the Enforcing Lender shall request further
guidance or consents, any direction by the other Lender to begin Enforcement
Action shall only state that the Enforcing Lender shall begin enforcement, and
shall not specify the manner in which enforcement should proceed. Once the
Enforcing Lender receives an enforcement direction from the other Lender, all
decisions as to how to proceed to enforce the Lenders' rights and remedies,
including, without limitation, the methods and timing of proceeding, may be
made by the Enforcing Lender in its good faith business judgment, with such
consultation with other Lender as Enforcing Lender in its sole discretion deems
reasonable under the circumstances. In the event of one or more foreclosure
sales, Enforcing Lender shall have the right to credit bid on behalf of all
Lenders in respect of their Loans and all other Obligations of Borrower under
the Loan Documents.
6.3 Acquisition of Collateral. If Collateral is acquired by a
Lender by foreclosure sale or otherwise, at the option of such Lender, title
may be taken in the name of such Lender or in the name of a corporation
affiliated with such Lender or other nominee designated by such Lender, in any
case, for the ratable benefit of both Lenders subject to the terms of this
Agreement. Each Lender shall consult with the other Lender as to the general
operation and disposition of any Collateral for which title has been acquired
through foreclosure or otherwise. Neither Lender shall withhold its consent
unreasonably in matters and decisions by the other Lender relating to the
management, operation, or repair of the Collateral so acquired.
6.4 Costs. The costs of repossession, sale, possession and
management (including, without limitation, any costs of holding any Collateral
the title to which is acquired by one Lender on behalf of the Lenders), and
distribution shall be borne Pro Rata by Lenders until repaid by Borrower. Each
Lender shall reimburse the other Lender, as applicable, for its Pro Rata share
of all such costs promptly upon demand. Without limiting any obligations of one
Lender to reimburse the other as contained herein, in the event of Borrower's
failure to pay taxes, assessments, insurance premiums, claims against the
Collateral or any other amount required to be paid by Borrower pursuant to any
Loan Documents, either Lender may (but shall not be obligated to) advance
amounts necessary to pay the same, and the other Lender agrees to reimburse
such Lender promptly upon demand for its Pro Rata share of any such payments.
6.5 Monitoring of Collateral, Risks and Standard of Care.
Whenever a Lender is acting as an Enforcing Lender it shall be acting for the
other Lender for purposes of convenience in enforcing the rights and remedies
of the Lenders arising after an Event of Default and, although such Enforcing
Lender shall have the right, it shall have no obligation to inspect or monitor
any Collateral or to determine whether any Default or Event of Default has
occurred under the other Lender's Loan Documents. The Enforcing Lender shall
not be responsible for the performance or observance of any term, covenant or
condition on the part of Borrower under the other Lender's Loan Documents.
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Each Lender shall undertake such inspections or other monitoring of the
Collateral and Borrower's observance of the terms of such Lender's Loan
Documents as such Lender deems appropriate for its own purposes, and agrees
that it shall not be relying upon the other Lender for the same.
6.6 Relationship of Lenders. Neither the making of their
respective Commitments to Borrower, the execution of this Agreement, the Loan
Agreements or the other Loan Documents, nor any agreement to share any proceeds
or Collateral, nor any Lender acting as an Enforcing Lender is intended to be,
nor shall it be construed to be, the formation of a partnership or joint
venture between the Lenders or the creation of any express, implied or
constructive trust relationship between them. Lenders agree that neither is
acting as a trustee for the other.
6.7 Lender Cooperation. If either Lender obtains possession
of any Collateral (other than cash collateral received in payment of a Loan in
the ordinary course), such Lender shall hold such Collateral for the Pro Rata
benefit of both Lenders. Each Lender agrees to cooperate with each other Lender
in its efforts to realize upon Collateral and to exercise the rights of Lenders
under the Security Documents, including the execution of such instruments,
powers of attorney or other documents as an Enforcing Lender may require to
perform in such capacity.
6.8 Pro Rata Treatment. If at any time after the Loans shall
have been declared due and payable pursuant to the terms of the Loan
Agreements, either Lender shall obtain any payment (whether voluntary,
involuntary, by foreclosure, by application of setoff, or otherwise) of any
principal of or interest on its Loans in excess of its Pro Rata share of
payments ("Excess Payment") received by both Lenders on principal of and
interest on their Loans, then the Lender receiving such Excess Payment shall
make payments ("Sharing Payments") to the other Lender as shall result in both
Lenders receiving their Pro Rata share of payments; provided, however, that if
all or any portion of the Excess Payment is thereafter recovered from the
Lender who received it, then the Sharing Payments theretofore made by the
Lender to the other Lender shall be rescinded and returned to the extent
necessary so the Lenders shall have received the Pro Rata shares to which they
are entitled under the Loan Agreements and this Agreement. References to "Pro
Rata" in this Agreement shall mean "Pro Rata" after any adjustment required
under this Section.
7. Demand for Satisfaction Deemed Given. By executing this
Agreement, each Lender hereby demands of the other Lender satisfaction of its
indebtedness, if such demand is required under Section 9504(1)(c) of the
California UCC. The rights and duties of Lenders in any foreclosure situation
not addressed in this Agreement shall be determined by the provisions of
applicable California law.
8. Consents Under Security Documents. Without the prior written
consent of the other Lender, no Lender will consent to any material
modification, supplement or waiver under any of the Security Documents, or
release any Collateral or otherwise terminate any Lien under any of the
Security Documents, except that no such consent shall be required to release
any Lien covering property which is the subject of a disposition of property
permitted under both of the Loan Agreements.
9. Other Indebtedness of Borrower to Either Lender. Lenders agree
that the Security Documents and financing statements executed in connection
therewith shall provide and perfect security interests and liens in the
Collateral only to secure the Indebtedness of Borrower to Lenders as
contemplated under the Loan Documents even though Borrower may be indebted to
one or both Lenders on account of obligations existing prior to the execution
of the Loan Documents; and each Lender agrees not to make, after the date of
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this Agreement, any secured loans to Borrower which are not contemplated by the
Loan Agreements in their form as of the date hereof (without amendment or
modification thereof) without the prior written consent of the other Lender. In
addition, notwithstanding any provision of this Agreement to the contrary, this
Agreement is not intended to affect the priority of either Lender's security
interests in any specified items of Borrower's equipment which such Lender has
financed prior to the date of such party's Loan Documents. In furtherance, and
not by way of limitation, of the foregoing, such Lender will not share its
priority position or any proceeds of such equipment collateral with any other
Lender or any other party as a result of this Agreement.
10. General Provisions.
10.1 Binding Effect; Assigns. This Agreement shall be binding
on and inure to the benefit of the parties' respective successors and assigns,
each of whom shall have the right to assign and otherwise transfer all or any
portion of this Agreement or the benefits thereof; provided, that neither party
shall delegate or transfer any of its obligations or duties hereunder for any
reason (except as collateral security for a Lender's obligations for borrowed
money), without the prior written approval of the other party, which will not
be unreasonably withheld.
10.2 Entire Agreement. This Agreement represents the entire
understanding and agreement between the parties with respect to the subject
matter hereof, and supersedes and replaces all other agreements and
understandings, oral or written.
10.3 Notices. All notices, requests, consents and other
communications required or permitted under this Agreement shall be given in the
manner set forth in the Loan Agreements.
10.4 Validity. If any provision of this Agreement is contrary
to, prohibited by or deemed invalid under applicable law or regulation, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated
thereby and shall be given full force and effect so far as possible, provided
that no such severability of provisions shall be effective if it materially
changes the economic benefit of this Agreement to any party.
10.5 Governing Law; Captions. This Agreement shall in all
respects be governed, interpreted and construed by the laws of the State of
California[, excluding its conflict of law rule]. Captions where used herein
are solely for convenience and shall not be deemed to affect in any manner the
meaning or intent of this Agreement or any provision hereof.
10.6 Amendments. This Agreement (including any schedule or
exhibit hereto) may be modified or amended only by a writing signed by both
Lenders.
10.7 Attorneys' Fees. If the services of an attorney are
engaged by any party to secure the payment or performance of this Agreement or
otherwise upon the breach or default of another party to this Agreement, or if
any judicial remedy or arbitration is necessary to enforce or interpret any
provision of this Agreement or the rights and duties of any person in relation
thereto, the prevailing party shall be entitled to reasonable attorneys' fees,
costs and other expenses, in addition to any other relief to which such party
may be entitled. The "prevailing party" shall be determined based upon an
assessment by the court or arbitrator of which party's major arguments made or
positions taken in the action or proceedings fairly could be said to have
prevailed over the other party's major arguments or positions on major disputed
issues in the decision or award. Any award of damages following judicial remedy
or arbitration as a result of the breach of this Agreement or
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any of its provisions shall include an award of prejudgment interest from the
date of the breach at the lower of 10% per annum or the maximum amount of
interest allowed by law.
10.8 Counterparts. This Agreement may be executed in any
number of counterparts and by facsimile with the same effect as if the parties
had all signed the same document in ink. All counterparts shall be construed
together and shall constitute one agreement.
10.9 No Third Party Benefit. This Agreement is not intended
to and shall not confer upon any third party any rights or benefits, and is
made solely for the benefit of Lenders.
IN WITNESS WHEREOF, the parties have executed this
Intercreditor Agreement as of the date first above written.
LENDERS:
VENTURE LENDING & LEASING, INC.
By:
---------------------------------
Its:
---------------------------------
VENTURE LENDING & LEASING II, INC.
By:
---------------------------------
Its:
---------------------------------
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Consent of Borrower
Borrower hereby approves of, agrees and consents to all of
the terms and provisions of the foregoing Intercreditor Agreement, agrees to be
bound thereby, and further agrees that any default or event of default by
Borrower under any present or future instrument or agreement between Borrower
and one Lender (which is not waived in writing by such Lender) shall constitute
an immediate default and event of default under all present and future
instruments and agreements between Borrower and the other Lender. Borrower
further agrees that the foregoing Agreement, in and of itself, shall not give
Borrower any rights against any Lender individually or in its capacity as
bailee or collateral agent for the other Lender, and, at any time and from time
to time, the foregoing Agreement may be altered, modified or amended by Lenders
without notice to or the consent of Borrower.
[BORROWER]
By:
--------------------------
Name:
------------------------
Title:
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