Exhibit 10.7

 

INTERCREDITOR AGREEMENT

 

This INTERCREDITOR AGREEMENT, dated as of 25th day of April, 2016 (this
“Agreement”), is among Worldwide Stock Transfer, LLC (the “Indenture Trustee”)
and Webster Business Credit Corporation (“Webster”).

 

RECITALS

 

A.           Webster made loans and may from time to time make additional loans
(collectively, the “Loans”) to Manhattan Bridge Capital, Inc. (“Manhattan
Bridge”), in an aggregate outstanding principal amount up to $14,000,000,
pursuant to that certain Credit and Security Agreement dated as of February 27,
2015 (as amended, supplemented or otherwise modified from time to time in
accordance with the terms of this Agreement, the “Credit Agreement”) between
Manhattan Bridge and Webster, which Loans are and will be secured by all assets
of Manhattan Bridge and DAG Funding Solutions, Inc. (“DAG Funding”), other than
the Pledged Collateral (as defined below) (the “Webster Collateral”).

 

B.           MBC Funding II Corp. (the “Issuer”) is issuing up to $9,990,000
principal amount of its Senior Secured Notes (the “Notes”) pursuant to that
certain Indenture dated as of the date hereof (as amended, supplemented or
otherwise modified from time to time in accordance with the terms of this
Agreement, the “Indenture”) among the Issuer, Manhattan Bridge (as Guarantor)
and the Indenture Trustee, which Notes and the Issuer’s obligations thereunder
and under the Indenture and the other documents entered into in connection
therewith will be secured by all assets of the Issuer (the “Indenture
Collateral”).

 

C.           Concurrently with the issuance of the Notes, the Issuer is
executing and delivering to Webster that certain Guaranty dated as of the date
hereof (as amended, supplemented or otherwise modified from time to time in
accordance with the terms of this Agreement, the “the Issuer Guaranty”; the
Issuer Guaranty and the Credit Agreement, collectively, the “Loan Documents”)
pursuant to which the Issuer will guarantee the payment and performance of
Manhattan Bridge’s obligations to Webster under the Credit Agreement and the
documents entered into in connection therewith.

 

D.           Concurrently with the issuance of the Notes, Manhattan Bridge is
executing and delivering to the Indenture Trustee that certain Guaranty dated as
of the date hereof (as amended, supplemented or otherwise modified from time to
time in accordance with the terms of this Agreement, the “MBC Guaranty”)
pursuant to which Manhattan Bridge will guarantee the payment and performance of
the Issuer’s obligations to the Indenture Trustee and the holders of the Notes
from time to time (the “Noteholders”) under the Indenture, the Notes and the
other documents entered into in connection therewith (such obligations of the
Issuer, the “the Issuer’s Obligations”).

 

E.           Concurrently with the execution and delivery by Manhattan Bridge of
the MBC Guaranty, Manhattan Bridge is executing and delivering to the Indenture
Trustee that certain Pledge Agreement made by Manhattan Bridge in favor of the
Indenture Trustee (as amended, supplemented or otherwise modified from time to
time in accordance with the terms of this Agreement, the “Pledge Agreement”; the
Pledge Agreement, the MBC Guaranty, the Notes, the Indenture and the other
documents entered into in connection therewith, collectively, the “Indenture
Documents”) pursuant to which Manhattan Bridge will pledge to the Indenture
Trustee, for the benefit of the Indenture Trustee and the Noteholders, 100% of
the equity of the Issuer as more particularly describe in the Pledge Agreement
(the “Pledged Collateral”).

 

 

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F.           The Indenture Trustee and Webster (collectively, the “Secured
Parties” and each a “Secured Party”) are entering into this Agreement to set
forth their rights with respect to the MBC Guaranty, the Pledge Agreement, the
Issuer Guaranty and the respective collateral held by the Indenture Trustee and
Webster.

 

NOW, THEREFORE, in consideration of the premises, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:

 

AGREEMENT

 

1.Security Interests.

 

(a)           Notwithstanding the terms or provisions of any agreement or
arrangement which either the Indenture Trustee or Webster may now or hereafter
have with Manhattan Bridge, the Issuer or any other party or any rule of law,
and irrespective of the time, order, or method of attachment or perfection of
any security interest or the recordation or other filing in any public record,
the Indenture Trustee and Webster hereby agree that (i) Webster does not have a
security interest in any assets securing the Issuer’s obligations under the
Notes and the other Indenture Documents or Manhattan Bridge’s obligations under
the MBC Guaranty or the Pledge Agreement and (ii) the Indenture Trustee does not
have a security interest in any assets securing Manhattan Bridge’s obligations
under the Loans or the Loan Documents, and, in either case, if any such security
interest shall exist, Webster or the Indenture Trustee, as the case may be,
shall execute and deliver to the other party such documents as such other party
may reasonably request to terminate or release any such security interest at the
sole cost and expenses of the releasing party.

 

(b)           The Indenture Trustee, for itself and on behalf of each holder of
Notes, and Webster, for itself and on behalf of each holder of the Loans, agrees
that it shall not (and hereby waives any right to) contest or support any other
person in contesting, in any proceeding (including any proceeding under Debtor
Relief Laws (as herein defined)), the validity, extent, perfection, priority or
enforceability of any lien or security interest held by or on behalf of Webster
in the Webster Collateral or by or on behalf of the Indenture Trustee in the
Indenture Collateral, respectively.

 

(c)           Webster agrees to, as promptly as practicable, turn or pay over to
the Indenture Trustee any amounts that may come into its possession that derive
from Indenture Collateral. The Indenture Trustee agrees to, as promptly as
practicable, turn or pay over to Webster any amounts that may come into its
possession that derive from Webster Collateral. Except as set forth herein, no
Secured Party shall have any other duty or obligation of any other nature,
including with respect to the attachment or creation of any other party’s
security interest or any credit decisions of such other party with respect to
Manhattan Bridge, the Issuer or any other obligor under the Credit Agreement or
the Notes.

 

 

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2.           Enforcement Rights. Each of the Indenture Trustee and Webster
hereby agree that (a) until the Issuer’s Obligations shall have been paid in
full in cash, Webster shall not take any Enforcement Action (as defined below)
with respect to the Issuer Guaranty and (b) until the MBC Obligations shall have
been paid in full in cash and all commitments to lend under the Credit Agreement
have irrevocable terminated, the Indenture Trustee shall not take any
Enforcement Action with respect to the MBC Guaranty, provided, however, that
prior to the payment in full in cash of the MBC Obligations, the Indenture
Trustee shall be permitted to demand payment under the MBC Guaranty to the
extent necessary for the Indenture Trustee to exercise its rights and remedies
under the Pledge Agreement to foreclose on its security interest in the Pledged
Collateral, it being understood and agreed that until the payment in full in
cash of the MBC Obligations and the irrevocable termination of Webster’s
commitments to lend under the Credit Agreement, the Indenture Trustee and the
Noteholders shall have no recourse to Manhattan Bridge other than the Pledged
Collateral. For purposes of this Agreement, “Enforcement Action” means, the
commencement or prosecution of enforcement of any of the rights and remedies
under the Issuer Guaranty or the MBC Guaranty, as applicable, or applicable law,
the exercise of any rights of set-off or recoupment, and the exercise of any
rights or remedies under the United States Bankruptcy Code or any other
liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally (collectively, the “Debtor Relief Laws”). For purposes of this
Agreement, “MBC Obligations” shall mean all Loans and other indebtedness and
liabilities under the Credit Agreement, including all principal, interest
accruing thereon, charges, expenses and fees thereunder (including all interest,
charges, expenses and fees accruing after commencement of any case, proceeding
or other action relating to the bankruptcy, insolvency or reorganization of any
obligor thereunder), it being agreed that the foregoing shall continue to
constitute MBC Obligations notwithstanding the fact that such MBC Obligations or
any claim for such MBC Obligations is subordinated, avoided or disallowed under
applicable Debtor Relief Laws or other applicable law.

 

3.           Nature of Obligations. The Indenture Trustee, on behalf of itself
and the holders of the Notes, acknowledges that the terms of the Credit
Agreement may be amended, supplemented, modified, increased, restated,
refinanced or replaced from time to time without affecting the provisions
hereof, provided that such amendment, supplement, modification, restatement,
refinancing or replacement may not contravene the provisions of this Agreement.
Webster, on behalf of itself and the other holders of the Loans, acknowledges
that the terms of the Indenture Documents may be amended, supplemented,
modified, restated, refinanced or replaced from time to time without affecting
the provisions hereof, provided that such amendment, supplement, modification,
restatement, refinancing or replacement may not contravene the provisions of
this Agreement. Notwithstanding the foregoing, no such modification, supplement,
extension or amendment of the Loan Documents or the Indenture Documents shall
alter or otherwise affect the liens and security interests granted to the
Indenture Trustee or Webster or the terms of this Agreement.

 

4.Covenants and Warranties.

 

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(a)           Webster represents and warrants that it is the holder of the liens
which secure or will secure the MBC Obligations. Indenture Trustee represents
and warrants that it is the holder of the liens which secure or will secure the
Issuer’s Obligations

 

(b)           Each Secured Party represents and warrants that it is authorized
to enter into this Agreement and, to the extent such Secured Party is an agent
or trustee for other parties, that this Agreement shall fully bind all such
other parties. Each Secured Party further represents and warrants that this
Agreement (i) has been duly executed and delivered on its behalf by an
authorized officer or other authorized signer and (ii) constitutes the valid and
binding obligation of such Secured Party in accordance with its terms, except as
enforcement hereof may be limited by applicable bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium or similar laws affecting the
enforcement of creditor’s rights, generally and by general principles of equity
(regardless of whether enforcement is considered in a proceeding in law or
equity).

 

(c)           Webster not will sell, transfer, pledge, assign, hypothecate, or
otherwise dispose of any or all of the Webster Loans except to an assignee or
transferee which agrees in a written joinder agreement satisfactory to the
Indenture Trustee to become a party to this Agreement and to be bound by the
terms hereof.

 

5.Reliance; Waivers; etc.

 

(a)           Each of Webster and the Indenture Trustee acknowledges and agrees
that neither Indenture Trustee nor Webster has made any representation or
warranty with respect to the execution, validity, legality, completeness,
collectability or enforceability of the Loan Documents or the Indenture
Documents.

 

(b)           No right or benefit of any party hereunder shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
such party or any other party hereto or by any noncompliance by Manhattan Bridge
or the Issuer with the terms and conditions of any of the Loan Documents or the
Indenture Documents.

 

6.           Information Concerning Financial Condition of Manhattan Bridge and
the Issuer. The Indenture Trustee and Webster hereby assume responsibility for
keeping themselves informed of the financial condition of Manhattan Bridge and
the Issuer and all other circumstances bearing upon the risk of nonpayment of
the Loans or the Notes. The Indenture Trustee and Webster hereby agree that no
party shall have any duty to advise any other party of information known to it
regarding such condition or any such circumstances. Other than as required by
this Agreement, in the event the Indenture Trustee or Webster, each in its sole
discretion, respectively, undertakes at any time or from time to time to provide
any information to any other party to this Agreement, it shall be under no
obligation (a) to provide any such information to such other party or any other
party on any subsequent occasion, (b) to undertake any investigation not a part
of its regular business routine, or (c) to disclose any other information.

 

7.           Effect of Bankruptcy. This Agreement shall remain in full force and
effect notwithstanding the filing of a petition for relief by or against
Manhattan Bridge or the Issuer under the Debtor Relief Laws.

 

 

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8.           Waiver of Marshaling. Each party hereto irrevocably waives any
right to compel the other party hereto to marshal assets of the Issuer or
Manhattan Bridge, as applicable, or any other obligor or guarantor with respect
to the Issuer’s Obligations or the MBC Obligations.

 

9.           Amendment and Waiver. This Agreement may be amended only by a
writing signed by Webster and the Indenture Trustee. No failure to exercise and
no delay in exercising any right hereunder shall impair any such right which
either Webster or the Indenture Trustee may have, nor shall any waiver by
Webster or the Indenture Trustee hereunder be deemed a waiver of any default or
breach subsequently occurring. Webster’s and the Indenture Trustee’s rights and
remedies hereunder are cumulative and not exclusive of each other or of any
rights or remedies that Webster or the Indenture Trustee would otherwise have.

 

10.           Construction. This Agreement and all agreements relating to the
subject matter hereof is the product of negotiation and preparation by and among
each party and its attorneys.

 

11.           Benefits of This Agreement. This Agreement is solely for the
benefit of and shall bind Webster and the Indenture Trustee and their respective
successors and assigns and no other entity shall have any right, benefit,
priority, or interest hereunder.

 

12.           Representations and Warranties of Indenture Trustee. Indenture
Trustee represents and warrants that pursuant to the terms of the Indenture: (a)
Indenture Trustee is authorized to enter into this Agreement and bind each
holder of the Issuer’s Obligations, including each original Noteholder and each
transferee Noteholder; and (b) each holder of the Issuer’s Obligations,
including each original Noteholder and each transferee Noteholder, shall assume
such Issuer’s Obligations subject to the rights and obligations of this
Agreement.

 

13.           Term. This Agreement shall continue until the first date on which
either the MBC Obligations or the Issuer’s Obligations are indefeasibly paid in
full in cash and Webster’s commitments to lend under the Credit Agreement have
irrevocably terminated.

 

14.           Notice. Unless otherwise specifically provided herein, any notice
or other communication herein required or permitted to be given shall be in
writing and may be personally served, telecopied, or sent by overnight express
courier service or United States mail and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of a telecopy or
five (5) days after deposit in the United States mail (certified, with postage
prepaid and properly addressed). For the purposes hereof, the addresses of the
parties hereto (until notice of a change thereof is delivered as provided in
this Section) shall be as set forth below, or, as to each party, at such other
address as may be designated by such party in a written notice to the other
party.

 

If to the Indenture Trustee: Worldwide Stock Transfer, LLC   One University
Plaza, Suite 505   Hackensack, New Jersey 07601   Attention: Jonathan Gellis  
Fax: (201) 755-2597

 

 

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If to Webster: Webster Business Credit Corporation   360 Lexington Avenue   New
York, New York 10017   Attn: Account Executive – Manhattan Bridge Capital, Inc.
  Fax: (212) 806-4530

 

15.           Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401
OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT OTHERWISE WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES).

 

16.Submission to Jurisdiction; Waivers.

 

(a)           Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the non-exclusive jurisdiction of any
United States Federal Court sitting in the State of New York or New York state
court, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such United States Federal Court
or New York state court. Each of the parties hereto agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement shall affect any right that any party hereto may
otherwise have to bring any action or proceeding relating to this Agreement, the
MBC Obligations or the Issuer’s Obligations or any related documents against any
of MBC, the Issuer or any other obligors with respect to thereto or any party to
such related documents or their respective properties in the courts with subject
matter jurisdiction of any other jurisdiction.

 

(b)           Each of the parties hereto hereby irrevocably and unconditionally
waive, to the fullest extent they may legally and effectively do so any
objection they may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any court
referred to in subsection (a) above and the defense of an inconvenient forum to
the maintenance of such action or proceeding.

 

(c)           Each of the parties hereto hereby irrevocably consent to service
of process in the manner provided for notices in Section 13. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

 

(d)           EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. None of the parties hereto shall seek to
consolidate, by counterclaim or otherwise, any such action in which a jury trial
has been waived with any other action in which a jury trial cannot be or has not
been waived. These provisions shall not be deemed to have been modified in any
respect or relinquished by any of the parties hereto except by a written
instrument executed by all of them.

 

 

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17.           Specific Performance. Webster and the Indenture Trustee may demand
specific performance of this Agreement. Webster and the Indenture Trustee each
hereby irrevocably waive any defense based on the adequacy of a remedy at law
and any other defense which might be asserted to bar the remedy of specific
performance in any action which may be brought by the other party.

 

18.           Limited Obligations of Manhattan Bridge and the Issuer.
Notwithstanding the acknowledgment to this Agreement, neither Manhattan Bridge
nor the Issuer shall be deemed to be a party to this Agreement or have any
duties or obligations hereunder to the Indenture Trustee or Webster, other than
the obligation to not make any payments under their respective guarantees if
making such payments would contravene the provisions of this Agreement.

 

19.           Headings. Section headings used herein are for convenience of
reference only, are not part of this Agreement and shall not affect the
construction of, or be taken into consideration in interpreting this Agreement.

 

20.           Severability. Any provision of this Agreement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

 

21.           Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if all
signatures were upon the same instrument. Delivery of an executed counterpart of
the signature page to this Agreement by facsimile or other electronic
transmission shall be effective as delivery of a manually executed counterpart
of this Agreement, and any party delivering such an executed counterpart of the
signature page to this Agreement by facsimile or other electronic transmission
to any other party shall thereafter also promptly deliver a manually executed
counterpart of this Agreement to such other party, provided that the failure to
deliver such manually executed counterpart shall not affect the validity,
enforceability, or binding effect of this Agreement.

 

[Signature Page Follows]

 

 

 

IN WITNESS WHEREOF, the parties hereby acknowledge and agree to the terms of
this Agreement, which is duly executed and delivered by their respective
officers who are duly authorized as of the date of execution hereof.

 

  WORLDWIDE STOCK TRANSFER, LLC             By: /s/ Yonah J. Kopstick      
Name: Yonah J. Kopstick     Title: SVP               WEBSTER BUSINESS CREDIT
CORPORATION             By: /s/ Leo Goldstein     Name: Leo Goldstein   Title:
Vice President

 

 

ACKNOWLEDGED AND AGREED AS PER SECTION 17:

  

MANHATTAN BRIDGE CAPITAL, INC.

 

 

By: /s/ Assaf Ran     Assaf Ran   Chief Executive Officer

 

MBC FUNDING II CORP.

 

 

By: /s/ Assaf Ran     Assaf Ran   Chief Executive Officer

 

 

 

 

[Signature Page to Intercreditor Agreement]