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Read Microsoft Word - McNearney - Intercreditor Agreements and Mezzanine Financing.doc
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INTERCREDITOR AGREEMENT RIGHTS AND REMEDIES; ONE SIZE DOES NOT FIT ALL
John P. McNearney Husch Blackwell Sanders LLP 720 Olive Street, 24th Floor Saint Louis, Missouri 63101 (314) 345-6000 [email protected]
Introduction Today's financing arrangements come in a myriad of shapes and sizes. There are
conventional portfolio lenders who intend to originate and hold their mortgage investments. There are securitized lenders who intend to sell their loans on the secondary markets. There are highly-regulated federal banks and life companies and less-regulated investment and hedge funds. These different lenders face different degrees of regulatory and ratings agency
requirements and demands on the conduct of their business. Lenders' appetites for risk vary. Some lenders insist on blanket liens and prohibit any other indebtedness to the borrower or its equity owners. Other lenders recognize the need for an ongoing business operation to have multiple financing sources. Lenders' views of the level of subordination needed in exchange for their consent to additional financing sources range from pure lien subordination to various levels of payment subordination. Borrower types vary from the husband and wife, to the single purpose entity to the tenancy-in-common. The lender who forecloses his lien on one type of borrower faces different challenges than if he foreclosed his lien on others. Collateral types differ. Some collateral is subject to speedy decline in value and others less so. Some collateral can be successfully severed and removed from the remaining borrower assets that compose the business, some cannot. Allocating the risks between multiple lenders with interests in the same borrower or business venture, defining the scope of each of their collateral pools, and successfully navigating which lender can reach which collateral pool and when is a very difficult task. This article will: (a) explore the relationships between just two samples of intercreditor arrangements: (1)
mezzanine financing versus first mortgage financing; and (2) agricultural land financing versus
agricultural operating lenders; and (b) explore current caselaw treatment of intercreditor agreements. II. Mezzanine Financing versus First Mortgage Financing Many real estate transactions involve only a senior, first lien, mortgage in favor of a &quot;Mortgage Lender&quot;. However, it is not uncommon for a borrower to grant a second mortgage on its property to obtain more loan proceeds. The use of subordinate mortgages presents two issues for the first lien Mortgage Lender: (i) the foreclosure of its lien on the property can be complicated and delayed by the presence of a second mortgagee, and (ii) the borrower may become over-leveraged and unable to support the debt of the two loans. Furthermore, as more transactions are potentially subject to securitization, rating agencies have been concerned about the risks posed by subordinate mortgages. As a result, &quot;Mezzanine Financing&quot; has developed in the real estate capital markets. Mezzanine financing can be described as junior financing secured by the direct or indirect ownership interest in the entity owning the property, rather than the property itself, in favor of a &quot;Mezzanine Lender&quot;. For example, in a typical Mezzanine Loan, the property owning borrower (the &quot;Mortgage Borrower&quot;) would be a single member limited liability company which owns the applicable property (the &quot;Mortgaged Property&quot;). The mezzanine borrower (the
&quot;Mezzanine Borrower&quot;) would be the single member of the Mortgage Borrower and would pledge its interest in the Mortgage Borrower as security for the Mezzanine Loan. The
Mezzanine Lender would have a claim against the equity interest in the Mortgage Borrower, but not against the Mortgaged Property or Mortgage Borrower even in the context of a first mortgage foreclosure. Upon an equity foreclosure of the Mezzanine Loan or exercise of other remedies, the Mezzanine Lender could become the controlling equity holder of the Mortgage Borrower;
therefore, a Mortgage Lender may want to pre-approve the Mezzanine Lender. The mortgage debt and mezzanine debt may be initiated simultaneously or in sequence with either debt coming first. If the Mezzanine Loan is to come later, the Mortgage Borrower will have to negotiate to have the option for subsequent debt with agreed upon parameters set forth in the mortgage financing documents. A. Mortgage Financing Documentation
Transactions involving senior mortgage financing typically involve the following set of loan documents: a note setting forth the indebtedness and payment terms; a first mortgage lien on the property involved in the transaction and securing the note; an assignment of leases and rents; a guaranty; an environmental indemnity agreement; and a loan agreement that sets forth the terms of the loan (sometimes omitted where the loan terms are set out sufficiently in the note and mortgage). The mortgage or loan agreement for mortgage financing will typically include an acknowledgment that (i) the existence of the Mezzanine Loan does not violate the transfer and encumbrance covenant of the mortgage financing documents and (ii) any foreclosure of the Mezzanine Lender under its pledge agreement will not require the Mortgage Lender's consent or violate the transfer restrictions. The mortgage financing loan documents should include an acknowledgment that the Mezzanine Loan constitutes permitted indebtedness under the Mortgage Loan. Mortgage Lenders will also typically include a provision in their loan documents that allows the lender to terminate the property manager if the debt service coverage ratio falls below a specified level and reserves the lender's right to approve any replacement manager. This is because Mortgage Lenders are often concerned about the performance of the property manager as well as the equity owners of the Mortgage Borrower. The debt service coverage ratio is a common gauge of managerial performance. By having the right to terminate the property
manager, Mortgage Lenders retain significant control over the loan without declaring a loan in default. B. Mezzanine Financing Documentation
The loan documents for mezzanine financing parallel those used for Mortgage Loans. The terms of the loan are set forth in a loan agreement, and the indebtedness is evidenced by a junior note, which is secured pursuant to a pledge agreement. The pledge agreement pledges the equity interest of the Mezzanine Borrower in the Mortgage Borrower as collateral to secure the note. A Uniform Commercial Code (&quot;UCC&quot;) financing statement is filed to perfect the
Mezzanine Lender's security interest. Additionally, a guaranty of the Mezzanine Borrower's obligations could be required. Typically, the Mezzanine Loan agreement will include provisions that strictly prohibit any additional indebtedness secured by the Mortgaged Property or at the Mortgage Borrower level. The Mezzanine Lender will also generally prohibit any transfer of the Mortgaged Property without his consent. The mezzanine financing documents should also include an obligation by the Mezzanine Borrower to comply with the terms of the Mortgage Loan and state that a default under the Mortgage Loan constitutes a default under the Mezzanine Loan. The Mezzanine Lender must be able to gain control of the Mortgage Borrower if there are problems at the level of the Mortgage Loan so that the Mezzanine Lender, having exercised its remedies, can address the cure of the Mortgage Loan defaults. Furthermore, a Mezzanine Lender will want to have a provision that allows her to review decisions made with respect to the Mortgaged Property. This is because the Mezzanine Lender's interests (e.g., to keep cash flow high and reinvestments in the business low) conflict with the Mortgage Lender's interests (e.g., to reinvest excess cash flow into the Mortgaged Property and protect its collateral, while providing sufficient cash flow to service the mortgage debt). This
tension between the interests of the Mezzanine Lender and Mortgage Lender may arise in the context of a determination to make a capital improvement. For example, a Mortgage Lender may approve a capital expenditure as it will enhance the collateral, whereas the Mezzanine Lender would disapprove of the capital expenditure that would increEase the value of the collateral but diminish the excess cash flow to her. C. Intercreditor Agreement
The terms between the Mezzanine Lender and Mortgage Lender are typically set out in a stand-alone agreement known as the &quot;Intercreditor Agreement.&quot; The Intercreditor Agreement attached as Exhibit A is illustrative. This agreement may include broad rights and remedies for the Mezzanine Lender, including veto rights on major decisions, rights to purchase the Mortgage Loan after its acceleration, or more limited rights if the Mezzanine Lender is an affiliate of the Mortgage Borrower or if the Mortgage Lender is more conservative in its approach to mezzanine financing. The key terms of an Intercreditor Agreement should: (i) identify each lender's collateral; (ii) provide clear subordination of the Mezzanine Loan to the Mortgage Loan; (iii) grant the Mezzanine Lender notice and cure rights under the mortgage financing documents; (iv) provide for the Mortgage Lender to stand still during the Mezzanine Lender cure period; (v) permit the Mezzanine Lender to foreclose on its equity pledge without creating an event of default on the Mortgage Loan; (vi) address relative rights in a Mortgage Borrower bankruptcy; and (vii) restrict changes in loan documents on both loans. The Intercreditor Agreement attached as Exhibit A provides that, in instances where the Mezzanine Borrower has defaulted on the Mezzanine Loan, the Mezzanine Lender must provide notice of default to the Mortgage Lender. Exhibit A, § 6. Also, the Mezzanine Lender's right to succeed the Ownership Interest in the Mortgage Borrower is subject to several restrictions in
favor of the Mortgage Lender. Exhibit A, § 8(C). Those restrictions include: (1) providing the Mortgage Lender with advance written notice; (2) payment to the Mortgage Lender of a processing fee and (3) providing the Mortgage Lender with copies of all modifications, amendments, extension, consolidations, spreaders, restatements, alterations, changes or revisions to any one or more of the Mezzanine Loan Documents within a reasonable time after execution. Exhibit A, § 8(C). The Intercreditor Agreement further provides that the Mezzanine Lender must retain a third party property manager and leasing manager, and the Mortgage Lender must approve of the written property management and leasing management agreement governing their actions towards the property. Exhibit A, § 7(A). The Intercreditor Agreement also provides guidance if the Mortgage Borrower defaults on the Mortgage Loan. In that circumstance, the Mortgage Lender only has the obligation to provide notice of default to the Mezzanine Lender. Exhibit A, § 6. Such notice may then
trigger the Mezzanine Lender's option to cure the default on the Mortgage Loan (either monetary or non-monetary) within a specified period of time. Exhibit A, § 8(A). D. Mezzanine Financing and Securitization
If a mezzanine financing transaction is subject to future securitization, rating agencies will impose certain requirements on the Mortgage Borrower and the Mezzanine Borrower. First, the Mortgage Borrower must be a newly formed, special purpose entity that has no assets other than the Mortgaged Property and no debts other than the Mortgage Loan. Due to the rating agencies' concerns with the equity holders of the Mortgage Borrower and the potential risk that the Mezzanine Lender could become an equity owner of the Mortgage Borrower, upon an event of default of the Mezzanine Loan, rating agencies may require approval of the Mezzanine Lender and the control rights of the Mezzanine Lender.
Additionally, a securitized loan typically has a term of seven to ten years, whereas most Mezzanine Loans have a term of five to eight years. As a result, a Mezzanine Lender's attempt to collect on its loan prior to the Mortgage Loan maturity date could trigger bankruptcy of the Mortgage Borrower even if the filing is unjustified. To reduce such refinancing risks, rating agencies may require that the Mezzanine Loan have a term of at least a few years longer than the term of the Mortgage Loan or require a Mezzanine Loan term extension conditioned on a favorable debt service coverage ratio, which should correlate to a lower refinancing risk. Another option is for the Mortgage Lender to require a hyperamortization of its loan. Under hyperamortization, the mortgage loan has an initial term of typically five to ten years. If the mortgage loan is not repaid in that time and other conditions are met (e.g., there is no default of the Mortgage Borrower, the debt service coverage ratio is satisfactory, and no there has been no material adverse change), then the interest rate is increased substantially during an extension period and all of the Mortgage Borrower's net cash flow is applied to the reduction of principal. As a result of the increased interest and increased payment of principal, the Mortgage Borrower would be encouraged to seek refinancing.
Agricultural Financing ­ Long Term versus Operating Debt The agricultural finance market in the United States is composed of a variety of capital
sources whose collateral appetites are very specific. Some agricultural lenders prefer to advance funds on a long-term basis primarily secured by real estate, others function as operating lenders whose loans are secured by farm products and proceeds, while others prefer specific collateral types such as wineries, ranches, dairies or grain mills. It is common in the agricultural finance market for a single farming operation to obtain credit from more than one source, making intercreditor agreements both necessary and typical.
Agricultural collateral may include a lien on property which is of unclear character.
example, irrigation equipment may be a fixture or it may be personal property depending on the jurisdiction and how it is installed. Because of the nature of certain equipment and/or property common to farming, the characterization of property as &quot;personal&quot; or &quot;real&quot; property is often open to interpretation. There are a wide variety of types or classes of collateral involved in agricultural financing. Common kinds of security include: i. Water Company Stock: These stock certificates represent equity in the respective water company and rights to receive a specified amount or proportion of water. Water
companies are typically private companies, not affiliated with the typical agricultural borrower. A pledge of water company stock is typically obtained by delivery to the Lender of properly assigned stock certificates and any necessary Security Agreement and Financing Statements or other stock pledge documents. In many cases, the mortgage shall also contain specific reference to the water company stock. ii. Water Rights: Agricultural lenders often require a lien on, or assignment of, water rights other than water company stock (e.g., appropriative or permitted rights). If so, the procedures followed and the instruments executed for obtaining such assignments and/or liens must be such that the rights, interests, privileges or licenses will, to the extent possible, inure to the Lender and its successors in interest in the event of foreclosure or voluntary sale in lieu of foreclosure. To the extent possible under applicable law or practice, the lender will secure evidence from the appropriate governmental office that a valid lease, permit, license or privilege is held by the borrower regarding such water rights, and that the assignment or lien is allowed by and valid under applicable law.
iii. Grazing Privileges: Agricultural lenders in western states often require a lien in all of the borrower's rights, interests, privileges, leases or licenses relating to grazing privileges, including: National Forest lands; lands administered under the Taylor Grazing Act; state land leases; state grazing district land; and leases or contracts on privately owned lands or of any royalties resulting therefrom, secured or unsecured and similar interests. The procedures followed and the instruments executed for obtaining such assignments must be such that the rights, interests, privileges or licenses will to the extent possible inure to the lender and its successors in the interest in the event of foreclosure or voluntary sale in lieu of foreclosure. To the extent possible under applicable law or practice, the lender must also secure, with regard to the governmental leases, evidence from the appropriate governmental office that a valid lease, permit, license or privilege is held by the Applicant, and that the assignment is approved by, and will be recognized by, such governmental office. iv. Patents, Trade Names, Trademarks and Copyrighted Materials: In recent years, patented crops have begun to be important in many farming operations. In addition, various kinds of products are sold under &quot;brand names&quot; (e.g., wines, grapes, and certain other kinds of produce). Instruments executed for obtaining such assignments must be such that the rights, interests, or privileges associated with such patents, trade names, labels, trademarks, copyrights and other similarly protected materials will, to the extent possible, inure to the lender and its successors in interest in the event of foreclosure or voluntary sale in lieu of foreclosure. If appropriate, and to the extent possible under applicable law or practice, the lender should also secure evidence from the appropriate governmental
office that a valid patent, copyright or trademark is held by the borrower, and that the assignment is approved by such governmental office. v. Crops: Many agricultural lenders are underwriting on the basis of the long-term value of the real estate, and are not in the business of annual crop lending. Therefore, while the mortgage will usually create a lien on crops, the first Mortgage Lender will usually not require the filing of a Financing Statement in order to perfect his interests in each year's crops. In most cases, therefore, the lender will rely on the unperfected lien on crops and the clause of the mortgage covering the &quot;rents, issues and profits&quot; of the real estate, or other assignment of rents clauses, which will allow an unrelated operating lender or other purchaser at foreclosure to farm the property within one crop year of the foreclosure (as soon as the existing crop subject to any perfected liens has been removed). vi. Permanent Plantings: In the case of permanent plantings (e.g., orchard trees, grape vines, timber), it is essential that the collateral description include the permanent plantings, and the crops (e.g., the collateral description must include the land, the orange trees, and the growing or &quot;to be grown&quot; oranges). If there is any question that the permanent plantings might not be considered &quot;real property&quot; for purposes of perfection of liens, the lender must prepare and file all appropriate Financing Statements on the permanent plantings as well as covering them as real property. In some cases involving lands planted to
permanent plantings, the next crop may come into existence (e. g., &quot;blossom&quot;) before the current crop year ends. Generally, for permanent plantings, the first lien Mortgage Lender will require that its mortgage or other document provide that a borrower may place a crop lien on the growing crops for a period not to exceed the current crop year. Assuming the borrower complies with this restriction, the borrower's crop lender will
automatically have a superior lien on the currently growing crops, but will not be entitled to more than one crop year's crops in the event of a later foreclosure or bankruptcy. An Intercreditor Agreement between the crop lender and the first Mortgage Lender will often be adequate to set out the interests of the parties in the crops and permanent plantings. A. Mortgage Financing and Operating Lender Documentation
First mortgage loan transactions involving agricultural financing involve the typical set of loan documents: a note setting forth the indebtedness, which is secured by a first mortgage lien on the property involved in the transaction; and an assignment of leases and rents, guaranty, an environmental indemnity agreement, and a loan agreement that sets forth the terms of the loan (unless sufficiently set out in the note and mortgage). As in the situation where the mortgage loan contemplates mezzanine financing, the real estate agricultural loan agreement or mortgage will typically include an acknowledgment that (i) the existence of the operating loan does not violate the transfer and encumbrance covenant and (ii) any foreclosure of the operating lender under its loan documents will not require the Mortgage Lender's consent or violate the transfer restrictions. Furthermore, the mortgage financing loan documents should include an
acknowledgment that the operating loan constitutes permitted indebtedness under the Mortgage Loan. Operating Lender documentation, like mezzanine finance documentation, will focus on personal property as collateral. It will typically include a loan agreement, note, security
agreement and a UCC Financing Statement. The personal property description will depend on the nature of the personal property being pledged as collateral. B. Intercreditor Agreement
The terms between the operating lender and Mortgage Lender may be incorporated into the loan documents or in an &quot;Intercreditor Agreement&quot;. The key terms of an Intercreditor Agreement in the agricultural context should (i) identify each lender's collateral, (ii) provide clear priority of loans on each lender's respective collateral, (iii) provide for the operating lender's release of liens on collateral to be sold or discharged by the Mortgage Lender, (iv) provide for the Mortgage Lender's release of liens on collateral to be sold or discharged by the operating lender, and (v) provide for the operating lender's right to protect its collateral in the event of foreclosure (e.g., right of entry on land to cultivate and harvest existing crops). The Master Subordination and Intercreditor Agreement, attached as Exhibit B, is an illustrative example of an intercreditor agreement in the agriculture land/operating lender context. This agreement carefully defines the collateral upon which each lender has a lien, and then sets out the priorities of each lender to that collateral in the event of default. While the Operating Lenders are given senior priority to the Operating Lenders' Collateral, as that term is defined in the Agreement, the Term Lenders are similarly given senior priority to the Term Lenders' Collateral, also defined in the Agreement. Exhibit B, § 4(s), (t). For existing crops, the Agreement provides that the Operating Lenders generally have senior priority. Exhibit B, § 4(u). Upon the occurrence of a foreclosure, the Operating Lenders are granted a non-exclusive right to enter and use the land to cultivate and/or harvest the existing crops to ensure a return on their senior priority lien. Exhibit B, § 4(v). The Operating Lenders' senior priority lien extends only to existing crops and not to permanent plantings or future crops, and the Operating Lenders' right to the existing crops ends at the end of the crop year, as that term is defined in the Agreement. Id.
The Agreement also provides that if either lender seeks to sell or dispose of collateral where both a senior and junior lien are present, the junior lien holder must cooperate to sell the collateral by releasing its lien on the collateral. Exhibit B, § 7. This is encouraged by allowing for the junior's lien to attach to the proceeds of such sale or disposition in the same order of priority as before. Id.
Intercreditor Agreement Default and Remedy Provisions ­ the Courts Generally Enforce the Contract One of the key purposes of an Intercreditor Agreement is to provide clarification of each
party's rights in the event a default on the applicable loan should occur. The drafter of these agreements needs to be very clear as to these provisions. By their nature, Intercreditor
Agreements are likely to be between two sophisticated parties, each likely represented by counsel. The courts, in interpreting Intercreditor Agreements, have predominantly enforced their terms as written. Courts have addressed intercreditor agreements both within the context of a bankrupt borrower and a defaulted loan. Specifically, in the context of a defaulted loan, a 2002 Delaware court ruled against a borrower who was claiming that because the Mortgage Lender had offered an extension, the Mezzanine Lender had an obligation to match that extension. Vornado PS, L.L.C. v. Primestone Inv. Partners, L.P., 821 A.2d 296, 313 (Del. Ch. 2002). In finding that the Mezzanine Lender had no such obligation within the terms of the Intercreditor Agreement, the court also affirmed the right of the Mortgage Lender to exercise its remedies against the borrower when the borrower defaulted on the Mezzanine Loan, through enforcement of a crossdefault provision. Id. Additionally, the court upheld a provision against enforcement by third
parties and ruled that there was no fiduciary duty owed to the borrower by the Mezzanine Llender. Id. at 312. Within the context of a bankrupt borrower, significant issues regarding enforcement of intercreditor agreements may arise. Specifically, the enforceability of intercreditor agreement provisions assigning a junior lender's bankruptcy voting rights to the senior lender is in question. In In re 203 N. LaSalle St. P'ship, 246 B.R. 325 (Bankr. N.D. Ill. 2000), the U.S. Bankruptcy Court for the Northern District of Illinois would not enforce an intercreditor agreement to effect the transfer of the voting rights of the subordinated lender to the first Mortgage Lender. The court reasoned that while the language of the subordination agreement governs the outcome of the senior lender's right to repayment, the Bankruptcy Code governs the determination of voting rights. The court turned to Section 1126(a) of the Bankruptcy Code, which provides that the holder of a claim may vote to accept or reject a plan under Chapter 11. The court found that the junior lender was entitled to vote its claim event though the intercreditor agreement provided that the senior lender could vote its claim. On the other hand, in a bankruptcy action where a creditor filed a motion requesting declaratory judgment of his voting rights, valuation of collateral, and ballot casting allowances, the U.S. Bankruptcy Court for the Northern District of Georgia held that, by the express terms of the Agreement, the lender had the right to vote on the creditor's claims. See In re Aerosol Packaging, LLC, 362 B.R. 43 (Bankr. N.D. Ga. 2006). The Aerosol Packaging Court analyzed the N. LaSalle St. P'ship Court decision and disagreed. The Aerosol Packaging Court found that the subordination agreement effectively transferred the subordinate creditor's voting rights to the Mortgage Lender pursuant to Section 510(a) of the Bankruptcy Code, which provides that a &quot;subordination agreement is enforceable in a case under this title to the same extent that such agreement is enforceable under applicable nonbankruptcy law.&quot; The
Aerosol Packaging Court stated that although &quot;Section 1126(a) grants a right to vote to a holder of a claim, it does not expressly prevent that right from being delegated or bargained away by such holder.&quot; Id. at 45. In a recent 2008 case, a Montana district court granted defendants' motion to dismiss two counts of plaintiffs' complaint, and defendants' motion to strike portions of the Second Amended Complaint due to provisions in the Intercreditor Agreement that clearly covered the issues in dispute. See Smith v. Bull Mountain Coal Properties, Inc., No. CV-06-169-BLG-RFC-CSO, 2008 WL 1736047, at *11 (D. Montana Mar. 7, 2008) (enforcing the Intercreditor Agreement and holding that the &quot;express terms&quot; of the Intercreditor agreement precluded the equitable subordination and marshaling the plaintiffs were suing over, and that the Intercreditor Agreement dictated the lien priorities, thereby making plaintiffs claims on that issue irrelevant to the current lawsuit). The United States District Court for the Eastern District of Pennsylvania upheld and enforced an Intercreditor Agreement in the context of a bank seeking declaratory relief and damages because a financial corporation with which it had dealings was refusing to comply with the express terms of the parties' Intercreditor Agreement. See The Marian Bank v. Pan
American Financial Corporation, No. 85-0850, 1986 WL 15002, at *1 (E.D. Penn. Dec. 31, 1986). Pan American Financial Corporation argued that its Intercreditor Agreement with Marian Bank should not be enforced because it was entered into without consideration, and because it relied on a material misrepresentation by Marian. The court rejected both arguments and held: 1. because each party compromised its claim, the Agreement had adequate consideration; and 2. any misrepresentation made by Marian did not induce Pan American to enter into the
Agreement, so it should be enforced in accordance with its terms. The Marian Bank, 1986 WL 15002, at *1-2. And, in an action brought by a minority lender to compel majority lenders to exercise acceleration and foreclosure under a syndicated loan agreement, the United States District Court for the Southern District of New York held that the Credit Agreement was unambiguous in its terms, and would be enforced as written. See New Bank of New England, N.A., v. The TorontoDominion Bank, 768 F.Supp. 1017 (S.D. New York, 1991). The agreement in this case expressly stated that the creditors have no liability to each other beyond what was provided for in the loan agreement, so the court held that the minority lender could not sue on theories of breach of fiduciary duty, negligence, willful misconduct or implied covenant of good faith and fair dealing. Id. at 1021. Unambiguous Credit Agreements, like any other contract, will be accepted by courts on their face.
Conclusion Today's capital markets present a wide variety financing vehicles and collateral types. It
is more and more common for borrowers and business operations to secure financing from multiple capital sources. These lenders frequently look to different types of collateral, have different appetites for risk and view protection of their positions differently from each other. The drafter of an intercreditor agreement needs to understand the business of the borrower and the risk appetite of the lenders involved. The intercreditor agreement needs to carefully parse out the collateral pool, the rights of each lender in the event of default and the best interests of each lender in maximizing their recovery. Courts will generally enforce what the drafter has written. While that power is good to have, it is easy to abuse.
EXHIBIT &quot;A&quot; INTERCREDITOR, RECOGNITION AND SUBORDINATION AGREEMENT THIS INTERCREDITOR, RECOGNITION AND SUBORDINATION AGREEMENT (&quot;Agreement&quot;), dated as of ________________, 2005, is entered into by and between _______________, a ___________ limited liability company (&quot;Mortgage Lender&quot;), and _______________, a __________ Corporation (&quot;Mezzanine Lender&quot;). RECITALS A. __________, a __________ limited liability company (&quot;Mortgage Borrower&quot;) is the owner of that certain real property located in the City of __________, County of __________, ____________________, more fully described in Exhibit A attached hereto and made a part hereof (the &quot;Land&quot;). The Land and the improvements located on the Land (the &quot;Improvements&quot;) are collectively referred to herein as the &quot;Premises&quot;. B. Pursuant to the terms, provisions and conditions set forth in that certain Loan Agreement dated ___________________, 2005, between Mortgage Borrower and Mortgage Lender, Mortgage Lender has made or has agreed to make a loan to Mortgage Borrower in an amount of up to $__________ (the &quot;Mortgage Loan&quot;). The Mortgage Loan is evidenced by a Secured Promissory Note dated________________, 2005, made by Mortgage Borrower, payable to Mortgage Lender in the face principal amount of the Mortgage Loan (the &quot;Primary Note&quot;). The Primary Note is secured by, among other documents, a (i) Mortgage and Security Agreement (the &quot;Mortgage&quot;) and (ii) Assignment of Leases and Rents (the &quot;Assignment&quot;) each dated ____________, 2005, and each made by Mortgage Borrower for the benefit of Mortgage Lender and encumbering the Premises (the Mortgage and Assignment are together referred to herein as the &quot;Primary Security Instrument&quot;). The Mortgage Loan is guaranteed by that certain Guaranty dated ___________________, 2005, made by _________________ (&quot;Primary Guarantor&quot;) in favor of Mortgage Lender (the &quot;Primary Guaranty&quot;). The Primary Note, Primary Security Instrument, the Primary Guaranty, and any other document executed by Mortgage Borrower or any guarantor to evidence, govern or secure the Mortgage Loan are hereinafter collectively referred to as the &quot;Mortgage Loan Documents&quot;.
C. Mezzanine Lender has agreed to make a loan in the amount of $___________ (the &quot;Mezzanine Loan&quot;) to ___________________, a _____________________( &quot;Mezzanine Borrower&quot;), which Mezzanine Borrower owns 100% of Mortgage Borrower, pursuant to that certain Mezzanine Loan Agreement dated ____________, 200_ among Mezzanine Borrower and Mezzanine Lender (the &quot;Mezzanine Loan Agreement&quot;). The Mezzanine Loan is evidenced by a Promissory Note dated ____________, 200_, made by Mezzanine Borrower and payable to the order of Mezzanine Lender in the face amount of the Mezzanine Loan (the &quot;Mezzanine Note&quot;). The Mezzanine Loan will be guaranteed with respect to certain indemnity and recourse obligations by that certain Limited Joinder dated _________, __________, made by A-18
_____________ (the &quot;Mezzanine Principal&quot;) in favor of Mezzanine Lender (the &quot;Limited Joinder&quot;). The Mezzanine Loan is secured by those certain Assignments of Membership Interests made by Mezzanine Borrower for the benefit of Mezzanine Lender (the &quot;Mezzanine Pledge Agreement&quot;), granting Mezzanine Lender a security interest in such Mezzanine Borrower's ownership interests in Mortgage Borrower (the &quot;Ownership Interests&quot;). The Mezzanine Loan Agreement, Mezzanine Note, the Limited Joinder and the Mezzanine Pledge Agreement and the other documents executed in connection with the Mezzanine Loan are sometimes referred to herein collectively as the &quot;Mezzanine Loan Documents&quot;. D. Mortgage Lender, as a condition to its consent to the Mezzanine Loan, has required that Mezzanine Lender enter into this Agreement. NOW, THEREFORE, in consideration of the covenants and agreements herein contained and to induce Mortgage Lender to consent to the Mezzanine Loan and to induce Mezzanine Lender to make the Mezzanine Loan and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Subordination. Mezzanine Lender hereby acknowledges and agrees that the Mezzanine Loan (and any further extensions of credit by Mezzanine Lender to Mezzanine Borrower) is not and will not be a direct or indirect obligation of Mortgage Borrower and is not and will not be secured by a lien on the Premises or any of the other collateral securing the Mortgage Loan, and Mezzanine Lender hereby intentionally and unconditionally subordinates the lien, security interests or charge, now or hereafter created (including, without limitation, any judgment which may be obtained on any of the indebtedness or obligations described in the Mezzanine Loan Documents), of the Mezzanine Loan Documents (and any amendments, modifications, renewals, extensions or substitutions thereto) in favor of the lien or charge upon the Premises and such other collateral described in the Mortgage Loan Documents and any permitted amendments, modifications, renewals or extensions thereof and the additional advances contemplated by Mortgage Loan Documents. Except as specifically provided in Section 8 hereof, and notwithstanding anything to the contrary set forth in the Mezzanine Loan Documents, no payment shall be made by or on behalf of Mezzanine Borrower for or on account of the Mezzanine Loan, and Mezzanine Lender shall not take or receive from Mortgage Borrower, Mezzanine Borrower, any Mezzanine Guarantor or any other party, directly or indirectly, in cash or other property or by setoff or in any other manner, including, without limitation, from or by way of collateral, payment of all or any portion of the Mezzanine Loan, unless and until the Mortgage Loan has been indefeasibly paid in full. In the event Mezzanine Lender receives a lien or charge upon the Premises or any of the other collateral for the Mortgage Loan or receives any payments prohibited by this Section 1, Mezzanine Lender agrees that any such lien or charge and any such payments received by Mezzanine Lender will be held by Mezzanine Lender in trust solely for the benefit of Mortgage Lender. Mezzanine Lender further agrees to assign and/or pay over to Mortgage Lender the lien or charge and payments so held in trust within five (5) days of Mezzanine Lender's receipt thereof.
2. Mezzanine Lender Representations and Covenants. Mezzanine Lender hereby represents, warrants and certifies to Mortgage Lender that, as of the date of this Agreement: (i) the documents described on Exhibit B attached hereto are all of the Mezzanine Loan Documents, true, correct and complete copies of which have been delivered to Mortgage Lender and (ii) the
Mezzanine Loan Documents have not been modified, amended or terminated. Mezzanine Lender hereby covenants that, without the prior written consent of Mortgage Lender which consent will not be unreasonably withheld, delayed or conditioned, it shall not modify or amend any of the terms or provisions of the Mezzanine Loan Documents. Mezzanine Lender hereby covenants that, without the prior written consent of Mortgage Lender, it shall not modify or amend any of the terms or provisions of the Mezzanine Loan Documents if such modification or amendment would (a) increase the principal amount or interest rate of or on the Mezzanine Loan as set forth in the Mezzanine Loan Documents, other than (I) increases in the principal amount equal to the amount of any protective advances made pursuant to the Mezzanine Loan Documents and of any advances made to cure defaults under the Mezzanine Loan in accordance with this Agreement and (II) interest on any such advances at the rate then applicable under the Mezzanine Note, (b) shorten any notice, grace or cure period, (c) shorten the term of the Mezzanine Loan, (d) amend the terms of the Mezzanine Loan concerning the application of proceeds upon the occurrence of a casualty or condemnation affecting the Premises, (e) increase the amounts of deposits required to be made into reserve accounts (other than increases due to increases or estimated increases in the third party costs (e.g., taxes or insurance premiums) to which such reserve accounts relate) or (f) increase the regularly scheduled monthly payments under the Mezzanine Loan. The restrictions in this Section 2 apply to amendments of the documents and not to the exercise of any rights or remedies (e.g. making protective advances) or taking effect of any provisions (e.g., imposition of default rates of interest) set forth in the Mezzanine Loan Documents. Mezzanine Lender hereby specifically acknowledges and agrees that Mezzanine Lender's failure to get Mortgage Lender's prior written consent to any modification of the Mezzanine Loan Documents will constitute an Event of Default under the Mortgage Loan Documents. 3. Mortgage Lender Representations and Covenants. Mortgage Lender hereby represents, warrants and certifies to Mezzanine Lender that, as of the date of this Agreement: (i) the documents described on Exhibit C attached hereto are all of the Mortgage Loan Documents, and (ii) the Mortgage Loan Documents have not been modified, amended or terminated. Mortgage Lender hereby covenants that, without the prior written consent of Mezzanine Lender, it shall not modify or amend any of the terms or provisions of the Mortgage Loan Documents if such modification or amendment would (a) increase the principal amount or interest rate of or on the Mortgage Loan as set forth in the Mortgage Loan Documents, other than (I) increases in the principal amount equal to the amount of any protective advances made pursuant to the Mortgage Loan Documents and of any advances made to cure defaults under the Mezzanine Loan in accordance with this Agreement and (II) interest on any such advances at the rate then applicable under the Primary Note, (b) shorten any notice, grace or cure period, (c) shorten the term of the Mortgage Loan, (d) amend the terms of the Mortgage Loan concerning the application of proceeds upon the occurrence of a casualty or condemnation affecting the Premises, (e) increase the amounts of deposits required to be made into reserve accounts (other than increases due to increases or estimated increases in the third party costs (e.g., taxes or insurance premiums) to which such reserve accounts relate) or (f) increase the regularly scheduled monthly payments under the Mortgage Loan. The restrictions in this Section 3 apply to amendments of the documents and not to the exercise of any rights or remedies (e.g. making protective advances) or taking effect of any provisions (e.g., imposition of default rates of interest) set forth in the Mortgage Loan Documents. Mortgage Lender hereby specifically acknowledges and agrees that Mortgage Lender's failure to get Mezzanine Lender's prior written consent to any modification of
the Mortgage Loan Documents, to the extent required by this Section 3, will constitute an Event of Default under the Mezzanine Loan Documents. Mortgage Lender hereby acknowledges and agrees that it has no lien on the membership interest in Mortgage Borrower. 4. Mortgage Loan Documents. Mezzanine Lender has reviewed the Mortgage Loan Documents identified on Exhibit C attached hereto and incorporated herein by this reference and hereby approves of and consents to the Mortgage Loan and such Mortgage Loan Documents. Mezzanine Lender further agrees that, if and to the extent that Mortgage Lender releases or consents to the release of insurance or condemnation proceeds pursuant to the Mortgage Loan Documents for the purpose of restoring the Premises, such funds will be utilized solely for the purpose of such restoration in accordance with the terms of the Mortgage Loan Documents. 5. Cross-Default. Mezzanine Lender covenants that the Mezzanine Loan is not and will not be cross-defaulted with any loan or indebtedness other than the Mortgage Loan. Mortgage Lender covenants that the Mortgage Loan is not and will not be cross-defaulted or cross-collateralized with any loan or indebtedness. 6. Notice of Default. At the time Mezzanine Lender gives written notice to Mezzanine Borrower of (a) any breach or default by Mezzanine Borrower under the Mezzanine Loan Documents, or (b) of any election by Mezzanine Lender to accelerate the Mezzanine Loan or (c) any election by Mezzanine Lender to avail itself of any remedy under the Mezzanine Loan Documents, Mezzanine Lender shall send a copy of such notice to Mortgage Lender. At the time Mortgage Lender gives written notice to Mortgage Borrower of any breach or default by Mortgage Borrower under the Mortgage Loan Documents, or of any election by Mortgage Lender to accelerate the Mortgage Loan or to avail itself of any remedy under the Mortgage Loan Documents, Mortgage Lender shall send a copy of such notice to Mezzanine Lender. 7. Mezzanine Loan Documents.
A. Mortgage Lender has reviewed the Mezzanine Loan Documents identified on Exhibit B attached hereto and incorporated herein by this reference and hereby approves of and consents to the Mezzanine Loan and such Mezzanine Loan Documents, including, without limitation, the pledge by Mezzanine Borrower to Mezzanine Lender of Mezzanine Borrower's Ownership Interests in Mortgage Borrower, and agrees that the pledge of such Ownership Interests pursuant to the terms of the Mezzanine Pledge Agreement shall not constitute a default under the Mortgage Loan Documents or result in the acceleration of the Mortgage Loan; provided, however, that the waiver hereunder of the default or right of acceleration that would otherwise exist under the Mortgage Loan Documents as a result of the pledge of Ownership Interests in Mortgage Borrower pursuant to the Mezzanine Loan Documents extends solely to the pledge of such Ownership Interests to Mezzanine Lender and shall in no event constitute a waiver of any other default under the Mortgage Loan Documents or a waiver of any other right to accelerate the Mortgage Loan in accordance with the Mortgage Loan Documents; and further provided, however, that any event under or in connection with the Mezzanine Loan or the exercise of any remedy by Mezzanine Lender which results in Mezzanine Lender or an affiliate or wholly owned subsidiary of Mezzanine Lender (&quot;Permitted Transferees&quot;) or a third party purchaser, who must be an institutional lender, at a UCC foreclosure sale, becoming the record A-21
owner or the beneficial or economic owner of all of the Ownership Interests in Mortgage Borrower shall not constitute a default as a result of the limitations on transfers set forth in Section 2(f) of the Mortgage, or the other provisions of the Mortgage Loan Documents (and Mortgage Lender shall not require an assumption of the Mortgage Loan or the Primary Guaranty in connection with Mezzanine Lender's exercise of its remedies under the Mezzanine Loan Documents), so long as (i) Mezzanine Lender has provided to Mortgage Lender the notices required by this Agreement, (ii) Mezzanine Lender or Permitted Transferee has retained, upon taking control of Mortgage Borrower, third party professional property management and leasing management of the Premises by a property manager and leasing manager, and subject to written property management and leasing management agreements that are approved by Mortgage Lender in its reasonable discretion, and (iii) Mezzanine Lender complies with the proviso contained in (A), (B) and (C) of Section 8(C) below. B. Mortgage Lender further agrees that a default under the Mezzanine Loan Documents shall not in and of itself constitute a default under the Mortgage Loan Documents; provided, however, that the foregoing restriction contained in this Section 7(B) shall not affect Mortgage Lender's right to declare a default or pursue any remedies under the Mortgage Loan Documents or otherwise as the result of the occurrence of any event (other than a default under the Mezzanine Loan Documents) which is expressly a default under the Mortgage Loan Documents even though such event is also, or is not, a default under the Mezzanine Loan Documents. 8. Right to Cure; Limitation on Mezzanine Lender Rights.
bweaver 8/7/08 10:42 AM
Comment: John, does this read as you intended it to? There are no sections (A), (B), and (C) within Section 8(C). It seems like it should just reference 8(C) or reference 8(A), (B), and (C).
A. Mezzanine Lender shall have the right (but not the obligation) to cure any monetary default under the Mortgage Loan Documents within five (5) calendar days after the later of (i) Mezzanine Lender receives written notice of such default and (ii) after expiration of any applicable cure period for the Mortgage Borrower. Mezzanine Lender shall also have the right (but not the obligation) to cure any non-monetary default under the Mortgage Loan Documents within thirty (30) days after Mezzanine Lender receives written notice of such default, provided that if such default cannot be cured within the thirty (30) day cure period, this cure period shall be extended for an additional ninety (90) days so long as Mezzanine Lender takes steps to cure the non-monetary default within the initial thirty (30) day cure period and thereafter diligently pursues such cure; provided, however, if such non-monetary default is susceptible of cure but cannot reasonably be cured within such period and if curative action was promptly commenced and is being continuously and diligently pursued by Mezzanine Lender, Mezzanine Lender shall be given an additional period of time as is reasonably necessary for Mezzanine Lender in the exercise of due diligence to cure such non-monetary default for so long as (i) Mezzanine Lender makes or causes to be made timely payment of Borrower's regularly scheduled monthly principal and/or interest payments under the Senior Loan and any other amounts due under the Senior Loan Documents, (ii) such additional period of time does not exceed thirty (30) days, unless such non-monetary default is of a nature that can not be cured within such thirty (30) days, in which case, Mezzanine Lender shall have such additional time as is reasonably necessary to cure such non-monetary default, (iii) such default is not caused by a bankruptcy, insolvency or assignment for the benefit of creditors of Borrower and (iv) during such non-monetary cure period, there is no material impairment to the value, use or operation of
the Premises. Any additional cure period granted to the Mezzanine Lender hereunder shall automatically terminate upon the bankruptcy (or similar insolvency) of the Borrower. B. Notwithstanding Mezzanine Lender's rights under applicable law or any provision of the Mezzanine Loan Documents to the contrary, the Mezzanine Lender hereby acknowledges and agrees that, except as specifically set forth in Section 8(C), it shall not take any Enforcement Action (as hereafter defined), until, in any such case, ninety-one (91) days following the satisfaction in full of the Mortgage Loan. Mezzanine Lender hereby waives any right it may have to require that Mortgage Lender marshal any assets of Mortgage Borrower in favor of the Mezzanine Lender and the Mezzanine Lender agrees that it shall not until the Mortgage Loan is paid in full acquire, by subrogation or otherwise, any lien, estate, right or other interest in any of the Premises or the proceeds therefrom that is or may be prior to any of the Mortgage Loan Documents. For purposes of this Agreement, &quot;Enforcement Action&quot; means the commencement of the exercise of any remedies against Mortgage Borrower or against the Premises, including, without limitation, the commencement of any litigation or proceeding, including the commencement of any foreclosure proceeding, the exercise of any power of sale, the sale by advertisement, the taking of a deed or assignment in lieu of foreclosure, the obtaining of a receiver or the taking of any other enforcement action against, or the taking of possession or control of, any of the Premises, but specifically excludes (x) requests and demands made upon Mezzanine Borrower by delivery of notices to Mezzanine Borrower, (y) assertion or enforcement of any right of Mezzanine Lender to receive payment from proceeds of a foreclosure sale of any property incident to foreclosure of the liens or security interests of the Mortgage Loan Documents which may remain after payment of costs and expenses of such foreclosure and payment and satisfaction in full of the Mortgage Loan, and (z) the filing of claims in any Insolvency Proceeding (as hereafter defined) concerning Mortgage Borrower as may be required to protect and preserve the right of Mezzanine Lender to participate in such Insolvency Proceeding as a creditor of Mezzanine Borrower and to participate in distributions of assets of Mortgage Borrower in said Insolvency Proceeding with respect to Mezzanine Borrower after payment and satisfaction in full of the Mortgage Loan, but subject in all respects to the rights of Mortgage Lender under and as provided in this Agreement and without in any way impairing or affecting the right of Mortgage Lender to require performance and observance by Mezzanine Lender of or the obligations of Mezzanine Lender to perform and observe the covenants, undertakings and agreements of Mezzanine Lender under and as provided in this Agreement. For purposes of this Agreement, &quot;Insolvency Proceeding&quot; means any proceeding under Title 11 of the United States Code (11 U.S.C. Sec. 101 et. seq.) or any other insolvency, liquidation, reorganization or other similar proceeding concerning Mortgage Borrower, any action for the dissolution of Mortgage Borrower, any proceeding (judicial or otherwise) concerning the application of the assets of Mortgage Borrower, for the benefit of its creditors, the appointment of or any proceeding seeking the appointment of a trustee, receiver or other similar custodian for all or any substantial part of the assets of Mortgage Borrower or any other action concerning the adjustment of the debts of Mortgage Borrower, the cessation of business by Mortgage Borrower, except following a sale, transfer or other disposition of all or substantially all of the assets of Mortgage Borrower in a transaction permitted under the Mortgage Loan Documents, if any. Nothing contained in this paragraph shall limit or restrict the right of Mezzanine Lender to exercise its rights and remedies in law or equity, or otherwise, in order to realize on any Ownership Interests.
C. Subject to the other provisions of this Section 8, Mortgage Lender agrees that upon the occurrence of an Event of Default under the Mezzanine Loan Documents Mezzanine Lender shall have the right, without such actions causing a default under the Mortgage Loan Documents or creating a right of acceleration in favor of Mortgage Lender, at its option, to (i) accelerate payment of the Mezzanine Loan and exercise its rights under the Mezzanine Pledge Agreement and succeed or cause or permit a Permitted Transferee to succeed to the Ownership Interests in Mortgage Borrower notwithstanding any provision in the Mortgage Loan Documents limiting or restricting transfers of the Ownership Interests, and (ii) accept or cause or permit a Permitted Transferee to accept an assignment of Ownership Interests in lieu of foreclosure; provided however, that Mezzanine Lender must first (a) provide Mortgage Lender with advance written notice of 8C(i) and/or 8C(ii), (b) pay Mortgage Lender a reasonable processing fee not to exceed $2,500 in connection therewith, and (c) provide Mortgage Lender with copies of all modifications, amendments, extensions, consolidations, spreaders, restatements, alterations, changes or revisions to any one or more of the Mezzanine Loan Documents within a reasonable time after such documents have been executed by Mezzanine Lender as relates to Mezzanine Lender's actions under this Section. Mezzanine Lender acknowledges and agrees that, in the event that Mezzanine Lender or a Permitted Transferee succeeds to any of the Ownership Interests in Mortgage Borrower, the Mortgage Loan shall continue to be an obligation of Mortgage Borrower pursuant to the terms of the Mortgage Loan Documents. D. Until ninety-one (91) days following the satisfaction in full of the Mortgage Loan, the Mezzanine Lender hereby covenants and agrees that it will not acquiesce, petition or otherwise invoke or cause any other individual, corporation, trust, trustee, partnership, unincorporated association, government, governmental agency, or court or other authority, including without limitation, any officer appointed by any court or other authority (each, a &quot;Person&quot;), to invoke the process of the United States of America, any state or other political subdivision thereof or any other jurisdiction, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government for the purpose of commencing or sustaining a case against Mortgage Borrower, under a Federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Mortgage Borrower or all or any part of its property or assets or ordering the winding-up or liquidation of the affairs of Mortgage Borrower. E. Except to the extent specifically permitted by Section 8(C) above, until ninety-one (91) days following satisfaction in full of the Mortgage Loan, the Mezzanine Lender shall not institute or exercise any remedies (including, without limitation, any judicial or administrative proceeding) against Mortgage Borrower, or the Premises or Mortgage Lender which directly or indirectly would interfere with or delay the exercise by Mortgage Lender of its rights and remedies in respect of the Premises or any part thereof or under the Mortgage Loan Documents or this Agreement (other than a proceeding concerning a dispute under this Agreement). Without limiting the generality of the foregoing, in the event of a bankruptcy or insolvency of Mortgage Borrower, the Mezzanine Lender shall not object to or oppose any efforts by Mortgage Lender to obtain relief from the automatic stay under Section 362 of the United States Bankruptcy Code or to seek to cause such entity's bankruptcy estate to abandon the Premises (or any portion thereof) that is subject to the Primary Security Instrument.
F. Notwithstanding any provision contained herein or in the Mezzanine Loan Documents to the contrary, as long as no Event of Default has occurred and is then continuing under the Primary Security Instrument or other Mortgage Loan Documents (and so long as Mortgage Lender has not given Mezzanine Lender written notice of such Event of Default and has not instructed Mezzanine Lender not to receive payments from Mezzanine Borrower), and as long as Mezzanine Lender has fully complied with its obligations under Section 2 hereof, Mezzanine Borrower may make, and Mezzanine Lender may receive and retain from Mezzanine Borrower, monthly payments on the Mezzanine Loan pursuant to the Section 2.7 of the Mezzanine Loan Agreement together with any accrued interest and payments due and owing Mezzanine Lender that were not paid as called for under the Mezzanine Loan Documents, provided, however, that the amount of such payment shall not exceed the net excess cash flow from the Premises for the immediately preceding month after payment of all sums due and owing under the Mortgage Loan Documents, the determination of which shall be in accordance with the Mortgage Loan Documents or otherwise as reasonably approved by Mortgage Lender; and in the event of a Distribution Event as defined in Section 2.10 of the Mezzanine Loan Agreement, which is permitted under the Senior Loan Documents, Net Proceeds (as defined in said Mezzanine Loan Agreement may be paid in accordance with said Section 2.10 of the Mezzanine Loan Agreement. 9. Notices. Any notice or other communication required or permitted to be given shall be in writing addressed to the respective party as set forth below and may be personally served, telecopied or sent by overnight courier or U.S. Mail and shall be deemed given: (a) if served in person, when served; (b) if telecopied, on the date of transmission if before 5:00 p.m. (__________, _____ time); provided that a hard copy of such notice is also concurrently sent pursuant to clause (c) or (d) below; (c) if by overnight courier, on the first business day after delivery to the courier; or (d) if by U.S. Mail, on the fourth day after deposit in the mail, postage prepaid, certified mail, return receipt requested. Notices Lender: to Senior ____________________________ ____________________________ ____________________________ Notices to Mezzanine ____________________________ Lender: ____________________________ ____________________________ ____________________________
10. No Assignment by Mezzanine Lender. Mezzanine Lender shall not sell the Mezzanine Loan, or pledge, hypothecate, convey or assign any of its rights under this Agreement or the Mezzanine Loan Documents without Mortgage Lender's prior written consent; provided however, Mezzanine Lender may, without Mortgage Lender's consent sell, transfer or participate the Mezzanine Lender or any portion thereof to any Affiliate of Mezzanine Lender or any acquirer of all or substantially all of Mezzanine Lender's assets or an institutional lender. In the event Mortgage Lender consents to the transfer of any Ownership Interest to Mezzanine Lender or a Permitted Transferee in accordance with the terms of this Agreement, any such transfer of A-25
such Ownership Interest thereafter by Mezzanine Lender or a Permitted Transferee shall be subject to all of the terms and conditions of this Agreement and the Mortgage Loan Documents. 11. Successors and Assigns. Without limitation upon Section 10 above, the terms, covenants and conditions contained herein shall bind and inure to the benefit of the parties hereto and their respective successors and assigns. 12. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts taken together shall constitute but one and the same instrument. Signature and acknowledgment pages may be detached from the counterparts and attached to a single copy of this Agreement to physically form one document. 13. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the state where the Premises is located. 14. Attorneys' Fees. If any lawsuit or other proceeding is commenced which arises out of, under or in connection with, or which relates to, this Agreement, including, without limitation, any alleged tort action, the prevailing party shall be entitled to recover from each other party to such lawsuit or proceeding such sums as the court or other party presiding over such lawsuit or proceeding may adjudge to be reasonable attorneys' fees and costs in the lawsuit or proceeding, in addition to costs and expenses otherwise allowed by law. As used herein, &quot;attorneys' fees and costs&quot; means the reasonable fees and expenses of counsel to the applicable party, which may include, without limitation, printing, photostating, duplicating and other expenses, air freight charges, and fees billed for law clerks, paralegals, librarians and others not admitted to the bar but performing services under the supervision of an attorney. The terms &quot;attorneys' fees&quot; or &quot;attorneys' fees and costs&quot; shall also include, without limitation, all such reasonable fees and expenses incurred with respect to appeals, arbitrations, bankruptcy proceedings and any post-judgment proceedings to collect any judgment, and whether or not any action or proceeding is brought with respect to the matter for which such fees and expenses were incurred. The provisions allowing for the recovery of post-judgment fees, costs and expenses are separate and several and shall survive the merger of this Agreement into any judgment. 15. WAIVER OF JURY TRIAL. MORTGAGE LENDER AND MEZZANINE LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY CONTROVERSY OR CLAIM, WHETHER ARISING IN TORT OR CONTRACT OR BY STATUTE OR LAW, BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, THE VALIDITY, INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF), OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY IN CONNECTION HEREWITH. EACH PARTY ACKNOWLEDGES AND AGREES THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY PERSON TO INDUCE THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR MORTGAGE LENDER'S AND MEZZANINE LENDER'S ENTERING INTO THIS AGREEMENT AND THE PARTIES WOULD NOT
HAVE ENTERED INTO THIS AGREEMENT WITHOUT THIS WAIVER. MORTGAGE LENDER AND MEZZANINE LENDER ARE EACH HEREBY AUTHORIZED TO FILE A COPY OF THIS SECTION 15 IN ANY PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER OF JURY TRIAL. 16. Continuing Agreement. This Agreement is a continuing agreement and shall remain in full force and effect until the earliest of (a) payment in full of the Senior Loan, (b) transfer of the Premises by foreclosure of the Senior Mortgage or the exercise of the power of sale contained therein or by deed-in-lieu of foreclosure, (c) transfer of title to the Mezzanine Lender of the Ownership Interests or (d) payment in full of the Mezzanine Loan; provided, however, that any rights or remedies of either party hereto arising out of Paragraph 8A hereof or out of any breach of any provision hereof occurring prior to such date of termination shall survive such termination.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto under seal, the date and year first above written. MORTGAGE LENDER: By: Name: Title:
MEZZANINE LENDER: By: Name: Title:
EXHIBIT B DESCRIPTION OF MEZZANINE LOAN DOCUMENTS
EXHIBIT C DESCRIPTION OF MORTGAGE LOAN DOCUMENTS
EXHIBIT &quot;B&quot; MASTER SUBORDINATION AND INTERCREDITOR AGREEMENT THIS MASTER SUBORDINATION AND INTERCREDITOR AGREEMENT (this &quot;Agreement&quot;) is dated as of ________ ___, 2006 by and between (i) ____________________________, a ____________________________corporation (&quot;________________&quot;), (ii) ____________________________ (&quot;____________&quot;), (iii) ____________________________ (&quot;_____&quot;) (_____________________, ________________ and __________________shall hereinafter be referred to as &quot;Term Lenders&quot;) and (a) ____________________________, a ______________ corporation (&quot;___&quot;), (b) ______ (&quot;___&quot;) and (c) ____________________________, (&quot;______________&quot;) (____, ____ and __________ shall hereinafter be referred to as &quot;Operating Lenders&quot;), as follows: WHEREAS, one of the Term Lenders has made, or intends to make, a loan (each, a &quot;Term Loan&quot;) to each Person identified as a &quot;Borrower&quot; in each certificate (each, a &quot;Borrower&quot;) executed by the parties hereto in the form of Exhibit A attached hereto (each, a &quot;Certificate&quot;), which Term Loan is or will be secured by a deed of trust or mortgage (as applicable) (such deed of trust or mortgage, a &quot;Security Instrument&quot;) recorded in the applicable recording office and encumbering the real property (the &quot;Land&quot;) and personal property described therein. Each Security Instrument encumbers, among other collateral, the Land, Fixtures, Crops, Permanent plantings, and Irrigation Equipment and may also encumber as set forth in the Security Instrument the Inventory, Farm Supplies, water rights associated with the Land and Water Stock and other kinds of equipment or other collateral all owned by the applicable Mortgagor, Trustor, Debtor or similar person identified in the Security Instrument, and the products and proceeds of any thereof. WHEREAS, Operating Lenders have made, or intends to make, a loan (each, an &quot;Operating Loan&quot;) to each Borrower identified in a Certificate, which is or will be secured by, among other collateral, a security interest in favor of Operating Lenders in the Crops, Inventory and Farm Supplies and other collateral owned by the applicable Debtor or similar person identified in the Operating Lenders' loan documents, and the products and proceeds thereof. WHEREAS, Term Lenders and Operating Lenders desire to enter into this Agreement in order to establish the priorities and rights between the applicable Term Lenders and Operating Lenders with respect to the Operating Lender's Collateral and Term Lender's Collateral owned by each Borrower, and the products and proceeds thereof. NOW, THEREFORE, in consideration of the covenants in this Agreement, Term Lenders and Operating Lenders agree as follows: 1. Definitions. In addition to the words defined in the foregoing Recital of Facts, for purposes of this Agreement, the following words shall have the definitions set forth below: (a) &quot;Applicable State&quot; shall mean, (i) with respect to any real estate collateral, the State in which such Borrower's Land is located. In the event that the Borrower's Land is
located in more than one state, the law of the state where each parcel of Land is located as applicable and (ii) with respect to collateral which is not real estate or fixtures, the law of the State of the location of the owner of such collateral as defined under the Uniform Commercial Code, but also including any state laws of the state where the collateral is located that are applicable to such collateral (e.g., a requirement to file an Effective Financing Statement in a state which is not the location of the applicable owner of the Farm Products; election of the law of another state, etc.). (b) &quot;Crops&quot; shall mean, with respect to any Land, all crops now or hereafter grown, growing or to be grown on such Land and all products and proceeds of such crops; excluding, however, any and all Permanent plantings. (c) &quot;Crop Year&quot; shall mean , in most cases, each period of time beginning on October 1 and ending on the ensuing September 30 of each calendar year or, if inapplicable, such other period as is customarily deemed to be the growing season for the applicable crop by reasonable agricultural industry practice. (d) &quot;Existing Crops&quot; shall mean, with respect to any Land, all Crops that are produced on such Land prior to a Foreclosure, or which are Growing at the time of a Foreclosure, and all products and proceeds of such Crops. (e) &quot;Farm Products&quot; shall have the meaning defined under the provisions of the Uniform Commercial Code adopted under applicable law, but shall in all events include all Crops. (f) &quot;Farm Supplies&quot; shall mean, with respect to any Borrower, all supplies used or produced in farming operations carried out by such Borrower on the Land. (g) &quot;Fixtures&quot; shall mean, with respect to any Borrower, such Borrower's fixtures (as defined in the Uniform Commercial Code as adopted in such Borrower's Applicable State), associated with such Borrower's Land. (h) &quot;Foreclosure&quot; shall mean, with respect to any Land, the transfer to any of the Term Lenders of either possession of such Land (including transfer to a receiver) or title to such Land, whichever occurs first, in connection with or pursuant to (i) the judicial or nonjudicial foreclosure of the Security Instrument encumbering such land, (ii) execution and delivery of a deed pursuant to an order of the court in a bankruptcy proceeding, (iii) execution and delivery of a deed to such Land to any of the Term Lenders or one of its subsidiaries or affiliates in satisfaction or partial satisfaction of debt. (i) &quot;Future Crops&quot; shall mean, with respect to any Land, the Crops that begin Growing on such Land during any Crop Year following a Crop Year in which a Foreclosure with respect to such Land occurs, and in every Crop Year thereafter, and all products and proceeds of such Future Crops. (j) &quot;Growing&quot; shall mean, with respect to any Land, (i) in the case of annual Crops, the seed or seedlings for such Crops has been planted or transplanted on such Land; and
(ii) in the case of Crops grown on Permanent plantings, if buds have formed on the Permanent Planting. (k) &quot;Inventory&quot; shall mean, with respect to any Borrower, all of such Borrower's inventory (as defined in the Uniform Commercial Code as adopted in such Borrower's Applicable State) associated with such Borrower's Land, and all products and proceeds thereof. (l) &quot;Irrigation Equipment&quot; shall mean, with respect to any Land, all irrigation equipment located on such Land and used or usable in conjunction with the production of Crops on such Land, including, without limitation, all watering and irrigation apparatus, machinery, pumps, motors, generators, pipes and sprinklers, provided, however, that irrigation equipment which constitutes portable personal property shall not be deemed to be &quot;irrigation equipment&quot; unless the applicable Term Lender has attempted and/or succeeded in describing such personal property in the Term Lender's loan documents. (m) &quot;Lender&quot; shall mean any of the Term Lenders or Operating Lenders, as the context may require. (n) &quot;Operating Lenders' Collateral&quot; shall mean all collateral descried in Operating Lenders' Loan documents. (o) &quot;Permanent plantings&quot; shall mean all trees, vines or bushes upon which Crops are produced without annual replanting . (p) &quot;Person&quot; shall mean any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, government or political subdivision or agency thereof, or any other entity. (q) &quot;Term Lenders' Collateral&quot; shall mean Land, Fixtures, Permanent plantings and Irrigation Equipment water rights and Water Stock and other collateral described in the Security Instrument. (r) &quot;Water Stock&quot; shall mean capital stock issued by a water company which also represents the right to receive water for agricultural purposes. 2. Loans Governed by this Agreement. If at any time (i) any of the Term Lenders shall make a loan to any Person with regard to ownership or operation of substantially the same Land with respect to which an Operating Loan is then outstanding to such Person, (ii) Operating Lenders shall make a loan to any Person with regard to ownership or operation of substantially the same Land with respect to which a Term Loan is then outstanding to such Person, or (iii) any of the Term Lenders and Operating Lenders shall make a loan to any Person at substantially the same time with regard to ownership or operation of substantially the same Land, then each applicable Term Lender and Operating Lenders hereby agree (x) to complete and execute a Certificate and (y) that upon the execution of such Certificate by each applicable Term Lender and Operating Lenders, the relative priority of the security interests in the collateral securing each applicable Term Loan and Operating Loan shall be determined in accordance with this Agreement. Each Term Lender hereby agrees that in the case of clause (i) above, it shall not
make the proposed loan to the applicable Borrower until both it and Operating Lenders have executed a Certificate with respect to such Borrower. Operating Lenders hereby agree that in the case of clause (ii) above, it shall not make the proposed loan to the applicable Borrower until both it and the applicable Term Lender have completed and executed a Certificate with respect to such Borrower. Each of the parties hereto hereby agrees that in the case of clause (iii) above, neither any of the Term Lenders nor any Operating Lenders shall make the proposed loan to the applicable borrower until each of the applicable Term Lenders and Operating Lenders have executed a Certificate with respect to such Borrower. 3. Separate Agreement by Mutual Consent. Notwithstanding anything else herein to the contrary, Term Lenders and Operating Lenders may agree in the case of certain kinds of special purpose collateral (e.g., wineries, potato storage facilities, greenhouses, etc.) that this agreement or designated portions hereof shall not apply in such situations. In addition, Lenders may separately negotiate a separate subordination and intercreditor agreement with regard to such collateral which may replace all or designated portions of this Agreement or which may supplement this agreement with additional terms applicable to such special purpose collateral. 4. Security Interest Priority. With respect to each Borrower, the rights of the applicable Term Lender and Operating Lenders, respectively, in and to the collateral securing the loans made by each of the applicable Term Lender and Operating Lenders to such Borrower shall be determined in accordance with this Section. (s) The security interest of any of the Term Lenders in and to the applicable Borrower's Term Lenders' Collateral shall be senior in all respects to any security interest of Operating Lenders in and to such Term Lenders' Collateral and Operating Lenders hereby subordinates any security interest that Operating Lenders now has or may hereafter acquire in such Term Lenders' Collateral to the security interest that Term Lenders now have or may hereafter acquire in such Land, Fixtures, Permanent plantings and Irrigation Equipment. (t) The security interest of Operating Lenders in and to Operating Lenders' Collateral EXCEPT the Term Lenders' Collateral, shall be senior in all respects to the security interest of Term Lenders in and to such Operating Lenders' Collateral, and Term Lenders hereby subordinate the applicable Security Instrument and the security interest that Term Lenders now have or may hereafter acquire in such Operating Lenders' Collateral EXCEPT any part thereof that is Term Lenders' Collateral to the security interest that Operating Lenders now has or may hereafter acquire in such Operating Lenders' Collateral. (u) Except as otherwise set forth in this Agreement, the security interest of Operating Lenders in and to the Existing Crops grown on the Land owned by the applicable Borrower shall be senior in all respects to the security interest of Term Lenders in and to such Existing Crops, and Term Lenders hereby subordinate the applicable Security Instrument and the security interest that Term Lenders now have or may hereafter acquire in such Existing Crops to the security interest that Operating Lenders now has or may hereafter acquire in such Existing Crops. (v) Upon the occurrence of a Foreclosure with respect to the Land owned by the applicable Borrower, any remaining security or other interest of Term Lenders in the Existing
Crops grown on such Land shall continue, as the case may be, to be subject or subordinate to the security interest of Operating Lenders in such Existing Crops. Operating Lenders shall have the non-exclusive right, exercisable in its sole discretion upon delivery of prior written notice to applicable Term Lender (such notice, the &quot;License Notice&quot;), during the Crop Year in which the applicable Foreclosure occurs, to enter upon and utilize the Land owned by the applicable Borrower, and all Fixtures and Irrigation Equipment related thereto to the extent necessary and/or appropriate for the purpose of cultivating, harvesting and/or taking possession, custody and control of previously Existing Crops and/or previously harvested Existing Crops (the rights described in this sentence are hereinafter referred to as the &quot;Operating License&quot;). Operating Lenders' Operating License described herein shall include any associated rights to water for purposes of irrigating the Existing Crops. All cultivation and harvesting activities by Operating Lenders (including, without limitation, all irrigation, fertilization, and pruning) shall be carried out in a good and husband like manner in accordance with reasonable sound farming practices. Operating Lenders shall pay all costs associated with such cultivation and harvesting activities, including, without limitation, water and electricity charges; provided, however, that such costs paid by Operating Lenders may be added to the indebtedness secured by Operating Lenders' security interest in such Existing Crops. Operating Lenders shall comply with all applicable laws relating to the activities undertaken by Operating Lenders pursuant to the Operating License. Operating Lenders shall indemnify and defend Term Lenders against and hold Term Lenders harmless from all claims, demands, liabilities, losses, damages, costs and expenses, including, without limitation, reasonable attorneys' fees and disbursements, arising out of or resulting from the use of the Land by Operating Lenders, except to the extent caused by the negligence or willful misconduct of any of the Term Lenders, their employees, officers, agents, or subcontractors. Operating Lenders shall procure and maintain comprehensive general liability insurance with commercially reasonable limits for personal injury and property damage and name any of the Term Lenders as an additional insured before Operating Lenders enters upon or uses the Land after a Foreclosure occurs, PROVIDED, HOWEVER, that (i) so long as ____________________________ is one of the Operating Lenders under this agreement and (ii) ____________________________is providing the indemnity set forth above and (iii) so long as ____________________________continues to be rated &quot;AA&quot; or better by Standard and Poors or equivalent rating service acceptable to Term Lenders, the insurance requirement stated in this sentence shall be waived. If applicable, upon request by Term Lenders, Operating Lenders shall furnish to the Term Lenders written evidence that such liability insurance is in full force and effect. The Operating License described herein shall terminate as of the end of the Crop Year during which a Foreclosure with respect to the applicable Land occurred; provided that if such Foreclosure occurs within ninety (90) days of the end of such Crop Year, then the Operating License shall expire on the date which is ninety (90) days following the end of such Crop Year. (w) Operating Lenders shall have no right, title or interest in or to the Permanent plantings or any Future Crops. (x) The subordination of security interests of Term Lenders and Operating Lenders pursuant to this paragraph shall be effective without regard to the time or order of attachment or perfection of the security interests or lack thereof. 5. Release of Liens in Existing Crops. With respect to each Borrower and without limiting any other waivers set forth in this Agreement, Operating Lenders hereby agrees that all
of its security interest in the Operating Lenders' Collateral, specifically including Existing Crops growing or to be grown on the Land will automatically cease and terminate, effective on and as of the earlier to occur of (i) forty-five (45) days following the date on which a Foreclosure occurs with respect to the Land owned by such Borrower if Operating Lenders fails to deliver to Term Lenders a License Notice during such forty-five (45) day period, and (ii) the date on which the Operating License relating to the Land owned by such Borrower terminates in accordance with this Agreement. 6. Payments Over and Application of Proceeds. Any collateral or proceeds thereof (or amounts in respect thereof) received by either Lender holding a junior lien therein in connection with the exercise of any right or remedy (including set-off) relating to such collateral in contravention of this Agreement shall be segregated and held in trust and forthwith paid over to the Lender holding the senior lien therein. 7. Effect of Dispositions of Collateral on Junior Liens. To the extent reasonably requested by either Lender (the &quot;Requesting Lender&quot;), the other Lender (the &quot;Responding Lender&quot;) will cooperate in providing any necessary or appropriate releases to the Requesting Lender with respect to any collateral in which the Requesting Lender has a first priority lien (the &quot;Senior Collateral&quot;) to permit a collection, sale or other disposition of such Senior Collateral by the Requesting Lender free and clear of the Responding Lender's junior priority lien, provided that the junior liens of the Responding Lender in such collateral shall attach to the proceeds of such sale or other disposition remaining after payment of the indebtedness and other obligations of the applicable Borrower to the Requesting Lender that was secured by the Senior Collateral, if any, and the provisions of this Agreement shall be otherwise applicable to such proceeds (including any provisions applicable with respect to priority of liens in such proceeds, or application thereof to the Loan). In the event of a sale or other disposition of collateral by a Borrower with the consent of the applicable Lender holding the senior priority lien therein (the &quot;Mortgage Lender&quot;), and if such Mortgage Lender is releasing its senior lien in connection therewith, the Lender holding a junior priority lien therein, upon the request of the Mortgage Lender, shall release the same so as to facilitate such sale or other disposition, provided that the junior liens of the Lender in such collateral shall attach to the proceeds of such sale or other disposition remaining after payment of the indebtedness and other obligations of the applicable Borrower to the Mortgage Lender, if any, and the provisions of this Agreement shall be otherwise applicable to such proceeds (including any provisions applicable with respect to priority of liens in such proceeds, or application thereof to the applicable Loan). 8. Termination of Servicing of Term Lenders' Loans. The parties hereto hereby agree that if at any time each of the Term Lenders and Operating Lenders have made a loan to the same Person and with regard to ownership or operation of substantially the same Land, then effective as of the date on which (i) A Term Lender makes a loan to such Person, in the event Operating Lenders' loan was made first, (ii) Operating Lenders makes a loan to such Person, in the event the applicable Term Lender's loan was made first, or (iii) both Term Lenders and Operating Lenders make loans to such Person, in the event both loans are made at substantially the same time, (x) Operating Lenders shall automatically cease to be the servicer in respect of the Term Loan made to such Person and its appointment as such pursuant to that certain Real Estate Investment Advisory Agreement (General Account ­ Agricultural) dated as of _______ as
amended, shall be revoked, and (y) any and all delegations of authority granted to Operating Lenders by Term Lenders with respect to the Term Loan made to such Person shall be revoked. 9. Attorney's Fees. If there is any legal action or proceeding between any of the Term Lenders and Operating Lenders arising from or based on this Agreement, the unsuccessful party to such action or proceeding shall pay to the prevailing party all costs and expenses, including, without limitation, reasonable attorney's fees and disbursements, incurred by such prevailing party in such action or proceeding and in any appeal in connection therewith. If such prevailing party recovers a judgment in any such action, proceeding or appeal, such costs, expenses and attorney's fees shall be included in and as a part of such judgment. 10. Terms Generally. The defined terms in this Agreement shall apply equally to both the singular and the plural forms of the defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. References to &quot;security interest&quot; shall include any lien, charge or security interest created by any deed of trust, security agreement or other security instrument. 11. Further Assurances. From and after the date of this Agreement, Term Lenders and Operating Lenders agree to do such things, perform such acts, and make, execute, acknowledge and deliver such documents as may be reasonably necessary or proper and usual to accomplish the purposes of this Agreement in accordance with this Agreement. 12. No Third Party Beneficiaries. None of the provisions of this Agreement shall inure to the benefit of any Person other than the Lenders; consequently, only the Lenders shall be entitled to rely upon or raise as a defense, in any manner whatsoever, the failure of any Lender to comply with the provisions of this Agreement. No Lender shall incur any liability to any Person for any act or omission of the Lenders. 13. Due Authorization. Each Lender represents and warrants to the other Lender that it has the power and authority to enter into this Agreement and to perform the same and that the representatives of such Lender executing this Agreement on its behalf are duly authorized to do so. Each Lender, at the request of the other Lender, will furnish to the Lender requesting such information a certificate of incumbency for the officer executing this Agreement. 14. Notices. All notices, demands, requests and other communications pursuant to this Agreement shall be deemed to have been properly given, when made in writing, (i) upon receipt, when delivered personally, (ii) three (3) business days after being sent through United States Postal Service prepaid, registered or certified mail with return receipt requested, or (iii) one business day after being sent by overnight mail (such as Airborne, Federal Express, Purolator or similar service) at the expense of the sender, addressed to the Lender to receive such notice at the following address or at such other address as may hereafter be specified by written notice given as set forth in this section: If to Term Lenders: ____________________________ ____________________________ ____________________________
If to Operating Lenders: ____________________________ ____________________________ ____________________________ 18. Modification and Waiver. This Agreement may be modified, amended or cancelled and compliance with any of its provisions waived only by an instrument in writing executed by both Lenders. No failure by any Lender hereto to enforce compliance with any provision hereof at any time shall affect the right at a later time to enforce its compliance. No waiver of compliance with any provision hereof in any instance by any Lender shall, except as otherwise provided in the instrument granting such waiver, operate as or be construed as a further or continuing waiver of compliance with such provision or other provision. 19. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Missouri, without giving effect to principles of conflict of law. 20. Binding Effect. This Agreement shall inure to the benefit of, and be binding on, the parties hereto and their respective successors and permitted assigns. 21. Entire Agreement. This Agreement sets forth the entire agreement and understanding of the Lenders hereto with respect to the transactions contemplated hereby and the subject matter hereof and supersedes all prior agreements or understandings relating thereto. 22. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the Lenders waive any provision of law which prohibits or renders unenforceable any provision hereof. 23. Counterparts. This Agreement may be executed in counterpart, each of which shall be deemed an original and all of which, when taken together, shall constitute one and the same instrument, binding on the Lenders, and the signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart.
IN WITNESS WHEREOF, Term Lenders and Operating Lenders have executed this Agreement intending that it be effective as of the date first above written. TERM LENDERS: ____________________________, _____________ corporation By: Name: Title: ____________________________, _______________ corporation By: Name: Title: OPERATING LENDERS: ____________________________, _______________ corporation By: Name: Title: a a a
____________________________, _______________ corporation By: Name: Title:
EXHIBIT A FORM OF CERTIFICATE TO INTERCREDITOR AGREEMENT dated ___________, 20__ Reference is hereby made to that certain Master Subordination and Intercreditor Agreement dated as of _________ ________, 20__ (the &quot;Intercreditor Agreement&quot;) by and between ____________________________, a _______________ corporation (&quot;__________&quot;) ___________________ (&quot;____&quot;), _________________________ (&quot;____&quot;) and ____________________________, a ____________ corporation (&quot;___&quot;), (b) _____________ (&quot;___&quot;) and (c) ____________________________ (&quot;___________&quot;) (____, ____ and _______ shall hereinafter be referred to as &quot;Operating Lenders&quot;). Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Intercreditor Agreement. Each of the undersigned hereby certifies that it has made or will make a loan to the Person identified below (the &quot;Borrower&quot;) and that such loan will be secured by collateral with respect to which each Lender has or will have a security interest. Each Lender, by its execution of this Certificate, intends that their respective rights in the collateral securing the loans identified below shall be determined in accordance with the Intercreditor Agreement. Borrower: Property: Term Loan: Lender Name: Initial aggregate principal amount: Loan Number: Date Loan was or will be made: Operating Loan: Initial aggregate principal amount: Loan Number: Date Loan was or will be made:
IN WITNESS WHEREOF, Term Lender and Operating Lender have executed this Certificate as of the date first above written. TERM LENDER: ____________________________, _____________ corporation By: Name: Title: OPERATING LENDER: ____________________________, _____________ corporation By: Name: Title: a a
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