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Exhibit 10.2
FORM OF
INTERCREDITOR AGREEMENT
([NAME OF BORROWER])
This Intercreditor Agreement is made effective as of the _____
day of ___________, 2000, by and between Venture Lending & Leasing III, 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 and
Security 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 granted 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") [OR DESCRIBE EACH LENDER'S COLLATERAL IF
OVERLAPS BUT NOT IDENTICAL]. 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, and has executed or will execute such
additional collateral assignments, pledge agreements, and mortgages as Lenders
may request (collectively, with the Loan Agreements, the "Security Documents").
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 shall be of equal rank and priority to the
other Lender's Liens in the same Collateral, and the Lien of each Lender in the
Collateral shall be deemed an
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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
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. At the request of any Lender, each
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_, between 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
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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 or its assignee, which consent shall not be withheld
unreasonably (and which withholding shall be deemed unreasonable if it would
prevent the other Lender or its assignee from taking action which such Lender,
its assignee or its respective counsel deems commercially reasonable under the
Uniform Commercial Code or other applicable law), no Lender or its assignee (the
"Enforcing 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. In any event, such consent shall be deemed given if such other Lender
or its assignee has not objected in writing within 30 days after receipt of
notice from the Enforcing Lender of its intention to take any such action.
Except as expressly limited by this Section 6, each Lender (or its assignee) may
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 an Enforcing Lender under applicable provisions of its Loan
Agreement, such 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
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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. 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
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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 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
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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. 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. Each Lender agrees that if the assignee of either Lender is a creditor
of such Lender to whom such Lender has granted a security interest in this
Agreement, then following the occurrence of an event of default (however
defined) under or with respect to the indebtedness held by such assignee or the
occurrence of an event which with the giving of notice or the passage of time or
both would constitute such an event of default, the written consent of such
assignee, rather than of such assignor Lender, shall be required for any
modification or amendment to this Agreement.
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 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.
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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.
10.10 Assignee Rights. Each Lender agrees that if the
assignee of either Lender is a creditor of such Lender to whom such Lender has
granted a security interest in this Agreement, then following the occurrence of
an event of default (however defined) under or with respect to the indebtedness
held by such assignee or the occurrence of an event which with the giving of
notice or the passage of time or both would constitute such an event of default,
all rights (but not the obligations) of the assignor Lender under this Agreement
shall thereafter be exercisable solely by such assignee except to the extent
such assignee may otherwise consent in writing.
IN WITNESS WHEREOF, the parties have executed this
Intercreditor Agreement as of the date first above written.
LENDERS:
VENTURE LENDING & LEASING III, INC.
By:
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Its:
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VENTURE LENDING & LEASING II, INC.
By:
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Its:
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Exhibit 10.2
Borrower's Acknowledgment of Intercreditor Agreement
The undersigned, as Borrower, has entered into [TWO SEPARATE
BUT LIKE LOAN AND SECURITY AGREEMENTS DATED AS OF __________________] (each, a
"Loan Agreement"), one with Venture Lending & Leasing III, Inc., and the other
with Venture Lending & Leasing II, Inc., as lenders (each, a "Lender"), pursuant
to which each Lender has agreed, severally and not jointly, to make secured
loans to Borrower up to a certain committed amount.
Pursuant to the Loan Agreements, Borrower grants to each
Lender a security interest in certain now owned and hereafter acquired personal
property defined therein as "Collateral". Borrower has also executed or will
execute one or more Uniform Commercial Code financing statements in favor of
each Lender covering the Collateral.
The Lenders have represented to Borrower that the Lenders have
entered into an Intercreditor Agreement which, among other things, establishes
the parity of each Lender's security interest in the Collateral.
Borrower acknowledges that each Lender's security interests in
the Collateral, as perfected or to be perfected by such Lender's Security
Documents and financing statements, shall be of equal rank and priority to the
other Lender's security interests in the same Collateral, and the security
interest of each Lender in the Collateral is an undivided, pro rata security
interest in all items of Collateral based upon the ratio of each Lender's
aggregate unpaid principal amount of Loans, to the combined aggregate unpaid
principal amount of all Loans of both Lenders.
Borrower further agrees that neither the Lenders' making of
their respective Commitments to Borrower nor any agreement between them to share
any proceeds or Collateral shall be construed as a partnership or joint venture
between the Lenders or the creation of any trust relationship between them.
[BORROWER]
By:
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Name:
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Title:
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Dated:
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