Exhibit 10.5
--------------------------------------------------------------------------------
THIS INSTRUMENT PREPARED BY/RECORD AND RETURN TO: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.,
Tarragon South Development Corp., ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------------------------------------------
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT ("Agreement") is made and entered into as
of the _____ day of ______________, 2005, by and among ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, in her
capacity as Trustee of LAKES HOLDING TRUST under agreement dated July 27, 2001
(hereinafter referred to as "First Lender"), ▇▇▇▇▇▇▇▇ Entertainment Company, a
Delaware limited liability company (hereinafter referred to as "Second Lender")
(First Lender and Second Lender are collectively hereinafter referred to as,
"Senior Lenders"), Tarragon South Development Corp., a Nevada corporation
(hereinafter referred to as "Junior Lender"), and is agreed to, accepted and
acknowledged by AGU Entertainment Corp., a Delaware corporation (hereinafter
referred to as "Mortgagor").
W I T N E S S E T H:
WHEREAS, First Lender is the owner and holder of that certain Mortgage
Deed and Security Agreement securing indebtedness in the amount of Seven Million
and 00/100 Dollars ($7,000,000.00) executed by Mortgagor in favor of First
Lender, dated December 20, 2004 and recorded in the Public Records of Broward
County, Florida, in Official Records Book 38764 Page 1973 (the "First Mortgage")
encumbering certain real property and improvements, the legal description of
which is set forth on Exhibit "A" hereto (the "Property" or "Mortgaged
Property"), which secures that certain Promissory Note dated December 20, 2004
in the principal amount of Seven Million and 00/100 Dollars ($7,000,000.00) (the
"First Note"), executed by Mortgagor in favor of Senior Lender, and other
obligations of Mortgagor to First Lender (collectively the "First Loan
Obligations"), as set forth in all of the mortgage related loan documents (the
First Mortgage, the First Note and such other mortgage related loan documents,
collectively, the "First Loan Documents") in favor of the First Lender being set
forth on Exhibit "C" hereto; and
WHEREAS, Second Lender is the owner and holder of that certain Mortgage
executed by Mortgagor in favor of Second Lender dated December 20, 2004 and
recorded in Official Records Book 38765, Page 127 of the Public Records of
Broward County, Florida (the "Second Mortgage") (the First Mortgage and the
Second Mortgage are collectively hereinafter referred to as the "Senior
Mortgages") encumbering the Property, which secures that certain Promissory Note
dated December 20, 2004, in the principal amount of Three Million and 00/100
Dollars ($3,000,000.00) (the "Second Note") (the First Note and the Second Note
1
are collectively hereinafter referred to as the "Senior Notes") executed by
Mortgagor in favor of Second Lender and other obligations of Mortgagor to Second
Lender respecting the Mortgaged Property (collectively, the "Second Loan
Obligations") (the First Loan Obligations and the Second Loan Obligations are
collectively hereinafter referred to as the "Senior Obligations"), as set forth
in all of the mortgage related loan documents (the Second Mortgage, the Second
Note and such other mortgage related loan documents, collectively, the "Second
Loan Documents") in favor of the Second Lender being set forth on Exhibit "D"
hereto (the First Loan Documents and the Second Loan Documents are collectively
hereinafter referred to as the "Senior Loan Documents"); and
WHEREAS, First Lender and Second Lender are parties to that certain
Subordination Agreement respecting the Senior Obligations having an effective
date of December 20, 2004 ("Senior Lenders' Subordination Agreement"); and
WHEREAS, Junior Lender is the owner and holder of that certain Third
Mortgage Deed and Security Agreement securing indebtedness in the amount of Two
Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00) (the "Junior
Note") executed by Mortgagor in favor of Junior Lender, dated even date herewith
and recorded in the Public Records of Broward County, Florida, prior to the
recordation of this Agreement (the "Junior Mortgage") encumbering the Property,
which secures that certain Promissory Note dated even date herewith in the
principal amount of Two Million Five Hundred Thousand and 00/100 Dollars
($2,500,000.00) executed by Mortgagor in favor of Junior Lender, and other
obligations of Mortgagor to Junior Lender (collectively the "Junior
Obligations"); and
WHEREAS, Senior Lenders and Junior Lender desire to set forth their
Agreement with regard to the subordination of the Junior Mortgage and the Junior
Obligations as more specifically set forth herein.
NOW THEREFORE, in consideration of the sum of Ten ($10.00) Dollars and
other good and valuable consideration, from one to the other paid, the receipt
and sufficiency whereof is hereby acknowledged, the parties do hereby agree as
follows:
1. Recitals: The Recitals set forth are true and correct and are made a
part hereof.
2. Subordination: The lien of the Junior Mortgage and the Junior
Obligations are now and shall forever hereafter be subordinate and inferior to
the liens of the Senior Mortgages and the Senior Obligations, including without
limitation, any and all sums at any time due and owing under any and all
promissory notes secured by the Senior Mortgages, any principal and any interest
thereon, any other amount or amounts that may be added to the mortgage
indebtedness under the terms of this instrument for protective advances, and any
interest thereon, and all costs, payments advanced, taxes and expenses hereafter
advanced to insure the Property, to prevent waste, to protect the collateral
thereunder or collect said debt, and all other expenses, costs and reasonable
attorneys' fees incurred by either or both Senior Lenders in connection with the
Senior Mortgages and/or the Senior Obligations. Further, the terms of the Junior
Mortgage and the Junior Note, and all rights and remedies of Junior Lender
available thereunder, including but not limited to, the right to claim or
receive any insurance or condemnation awards or proceeds, are hereby expressly
2
subordinated to the terms of the Senior Mortgages, the Senior Obligations and
the rights and remedies of both Senior Lenders under the Senior Mortgages.
Junior Lender and Mortgagor acknowledge and agree that no payments of interest
or principal shall be made or accepted under the Junior Note following the
occurrence of a default after applicable notice and/or grace period, under
either or both Senior Mortgages until such Senior Mortgage(s) has(ve) been
repaid in full.
3. Costs and Enforcement: Should suit be brought to enforce the
provisions of this Agreement, the prevailing party shall be entitled to recover
its attorneys' fees incurred both at trial and on appeal.
4. Notices/Right to Cure: A default by Mortgagor under any Junior
Obligation or the purchase and sale agreement ("Purchase Agreement") respecting
the Property between Mortgagor and Junior Lender shall be deemed a default by
Mortgagor under both Senior Mortgages. Junior Lender will send to each Senior
Lender a copy of any notice of default under the Junior Mortgage and/or Purchase
Agreement, and shall accept cure by either Senior Lender within the permitted
cure period set forth in the Junior Mortgage or Purchase Agreement, as
applicable. Whenever a default notice has been provided pursuant to this
provision and referenced in this Agreement, the same shall be referred to as the
"Default Notice". Senior Lenders will give Junior Lender notice of any default,
and shall accept cure by Junior Lender within the permitted cure period set
forth in the applicable Senior Mortgage. If Junior Lender pays both Senior
Lenders in full, each Senior Lender will assign the Senior Loan Documents to
Junior Lender. First Lender may not assign any of its rights respecting the
First Loan Obligations to Junior Lender unless all Second Loan Obligations,
matured and unmatured, have been fully satisfied. Neither Senior Lenders nor
Junior Lender shall be obligated to cure any default by Mortgagor under any
obligation of Mortgagor.
5. Foreclosure: In the event of a foreclosure action instituted by a
Senior Lender, Junior Lender shall not impose any cross claims against Mortgagor
in such action and any such claims shall be brought in a separate action by
Junior Lender, and Junior Lender shall further agree to waive any and all
defenses to foreclosure instituted by either or both Senior Lender(s) under its
Senior Mortgage, but this shall not be construed to waive any provision of this
Agreement or the right to receive any overage in net proceeds in the event of a
foreclosure sale. Under all circumstances and in all events, Senior Lenders
understand, acknowledge and agree that in the event that Mortgagor shall default
under any of the Junior Loan Documents (as hereinafter defined) at any time and
from time to time, Junior Lender shall have the option to exercise, and realize
upon, any and all remedies available to Junior Lender, provided, that in
connection with such exercise of, and realization upon, such remedies, the
Senior Loan Obligations shall be paid in full and Senior Lenders shall have
received in full in good funds representing any and all monies owed under the
Senior Loan Documents. Upon receipt of such monies by both Senior Lenders,
Senior Lenders agree as set forth in Section 4 above, to assign the Senior Loan
Documents to Junior Lender. Notwithstanding the foregoing, in the event Senior
Lenders (a) receive payment in full of the principal and other sums due under
their respective Mortgages, and/or (b) assign their rights under the Senior Loan
Documents to Junior Lender, Junior Lender and Mortgagor expressly acknowledge
and agree that any indemnities and other obligations which under the terms of
the Senior Loan Documents survive the payment of such obligations ("Surviving
3
Obligations") shall not be released, satisfied or assigned or deemed released,
satisfied or assigned, and shall continue to survive in favor of Senior Lenders.
In such event, the Surviving Obligations shall be deemed to benefit and accrue
against Mortgagor and in favor of Senior Lenders and also, Junior Lender. Junior
Lender shall not be liable to Senior Lenders for the Surviving Obligations.
Moreover, after both Senior Lenders have received payment in full of the
principal and other sums due under the First Mortgage and the Second Mortgage,
Senior Lender shall not be able to enforce the Surviving Obligations by
realizing upon the Mortgaged Property under and as defined in each of the First
Mortgage, the Second Mortgage and the Junior Mortgage, it being understood that
in such event, the Surviving Obligations are unsecured by such Mortgaged
Property.
6. Insurance, Condemnation: In the event of partial or total
destruction of the Mortgaged Property which results in the payment of insurance
proceeds, or in the event of a condemnation or similar proceeding which results
in the payment of an award, the proceeds or award shall be applied in accordance
with the relevant provisions of the Senior Mortgages. Subject to any contrary
provision in the Senior Loan Documents or this Agreement, Junior Lender shall
share in the excess proceeds, if any, in accordance with the terms of the Junior
Mortgage.
7. Superior Liens: Junior Lender agrees that it shall not acquire, by
subordination, subrogation or otherwise, any lien, estate, right or other
interest in the Mortgaged Property that is, or may be, prior in right to the
lien of the Senior Mortgages. In the event that Junior Lender cures any default
of Mortgagor under the Senior Mortgages or under the Junior Mortgage by the
payment of money, including, for example, but not limited to, the payment of
taxes or insurance premiums, Junior Lender agrees that such payment shall be
deemed to be additional indebtedness of the Mortgagor to be secured by the lien
of the Junior Mortgage, which shall be subordinate to the lien of the Senior
Mortgages and such amounts shall not create a lien on parity with or superior to
the Senior Mortgages and shall not give Junior Lender the right of subrogation
with respect to such amounts.
8. Bankruptcy of Mortgagor: Junior Lender hereby agrees that so long as
any sum evidenced or secured by a Senior Mortgage remains outstanding:
(a) Junior Lender shall not, without the prior written consent
of both Senior Lenders, in their sole discretion, commence, cause the
Mortgagor to commence, consent to Mortgagor commencing, or join with
any other creditor in commencing, any proceeding under the United
States Bankruptcy Code or any similar federal or state law (a
"Bankruptcy Proceeding") or any proceeding under any federal or state
fraudulent conveyance law, whether statutory or any common law, with
respect to the Mortgagor or any portion of the real and personal
property which, together, comprises the collateral for the Senior
Obligations (the "Senior Obligations Collateral"), or any other
property of Mortgagor, including any property which is collateral for
the Junior Obligations.
(b) In addition to any other rights given to Junior Lender
under applicable laws (but subject to the limitations set forth in this
paragraph 8), it is agreed that Junior Lender shall have the right (i)
to file a proof of claim with respect to the Junior Obligations, (ii)
to deliver to both Senior Lenders a copy thereof, together with
evidence of the filing with the appropriate court or other authority,
and (iii) to defend any objection filed to said proof of claim.
4
(c) Junior Lender agrees that it will not oppose: (i) any
motion by a Senior Lender for relief from the automatic stay in order
for such Senior Lender to exercise its rights under its Senior
Mortgage, (ii) any motion by a Senior Lender for adequate protection,
(iii) any motion by a Senior Lender to dismiss the Bankruptcy
Proceeding, (iv) any motion by a Senior Lender to appoint a bankruptcy
trustee or examiner or (v) any motion by a Senior Lender to convert the
Bankruptcy Proceeding to any other Chapter of the Bankruptcy Code.
9. Representations, Warranties and Covenants: Senior Lenders
acknowledge the following (collectively, "Stated Facts"): (1) that certain
action pending in the Circuit Court of Broward County, Florida under Case No.
0513076, styled as ▇▇▇ ▇▇▇▇▇▇ et al vs. AGU Entertainment Corp., (2) that
certain easement recorded in Official Record Book 40246, at Page 1631, among the
Public Records of Broward County, Florida, and (3) those certain Notices of
Violation issued by the Broward County Sheriff's Office under Case No.
0509-0014, 0509-2036 and 0509-2037, 0509-2063, 0509-2062 and 0509-2064 [Item (3)
may be referenced as the "Known Violations"].
Senior Lenders consent to the Junior Obligations and the entering into of the
Junior Mortgage (and the recording of the same) and the other documents
(collectively, the "Junior Loan Documents") executed in connection therewith as
listed on Exhibit "B" attached hereto and made a part hereof, and as submitted
to and approved by Senior Lenders.
(a) First Lender represents to Second Lender and Junior Lender (but NOT
to Mortgagor) that: (i) First Lender is the sole owner and holder of the First
Note and the First Mortgage and the First Loan Documents; (ii) First Lender has
the power and authority to execute and deliver this Agreement and perform its
obligations hereunder; (iii) the aggregate outstanding principal amount of the
First Note, as of the date hereof equals $6,750,000; (iv) Mortgagor is not in
default with respect to the payment of principal or interest under the First
Note; and (v) to the best of its knowledge, but without any inquiry (and except
for the Stated Facts), (a) there is no monetary or other material default
existing under the First Mortgage, and (b) no event has occurred which with
notice or the passage of time or both would constitute an event of default under
the First Mortgage. The representations contained in this Section are given
solely for the benefit of Second Lender and Junior Lender, and Mortgagor shall
NOT be entitled to rely on them in any way.
Moreover, based upon the facts currently known to First Lender (which
include the Stated Facts), First Lender agrees not to foreclose the First
Mortgage so long as there are no defaults hereafter arising or hereafter
becoming known to First Lender; provided however, that (1) simultaneously
herewith, Mortgagor or Junior Lender pays, on behalf of Mortgagor (a) the
$145,000 payment due First Lender on or about September 23, 2005, and (b) all
fines and other sums due under the Known Violations, if any, (2) no governmental
entity imposes further fines or takes any further action with respect to the
Known Violations, and (3) if there is any default after the expiration of
applicable notice and/or grace periods under the First Mortgage, Second Mortgage
or Junior Mortgage which hereafter arises or which hereafter becomes known to
First Lender and/or, with respect to the Known Violations, if any governmental
entity imposes any further fine and/or takes any further action, First Lender
expressly reserves the right to foreclose and pursue any and all other rights
and remedies available to First Lender.
5
(b) Second Lender represents to First Lender and Junior Lender (but NOT
to Mortgagor) that: (i) Second Lender is the sole owner and holder of the Second
Note and the Second Mortgage and the Second Loan Documents; (ii) Second Lender
has the power and authority to execute and deliver this Agreement and perform
its obligations hereunder; (iii) the aggregate outstanding principal amount of
the Second Note, as of the date hereof equals $3,000,000; (iv) Mortgagor is not
in default with respect to the payment of principal or interest under the Second
Note (except for the Stated Facts and the defaulted interest payment [i.e.
$45,000.00] to be paid by Junior Lender to Second Lender from the proceeds of
the Junior Mortgage); and (v) to the best of its knowledge, but without any
inquiry (and except for the Stated Facts and the defaulted interest payment
[i.e. $45,000.00] to be paid by Junior Lender to Second Lender from the proceeds
of the Junior Mortgage), (a) there is no monetary or other material default
existing under the Second Mortgage, and (b) no event has occurred which with
notice or the passage of time or both would constitute an event of default under
the Second Mortgage. The representations contained in this Section are given
solely for the benefit of First Lender and Junior Lender, and Mortgagor shall
NOT be entitled to rely on them in any way.
Moreover, based upon the facts currently known to Second Lender (which
include the Stated Facts), Second Lender agrees not to foreclose the Second
Mortgage so long as there are no defaults hereafter arising or hereafter
becoming known to Second Lender; provided however, that (1) simultaneously
herewith, Mortgagor or Junior Lender pays (a) the $145,000 payment due First
Lender on or about September 23, 2005, all interest payments due under the
Senior Notes as reflected on the closing statement approved by Second Lender and
all legal fees due First Lender and Second Lender in the amounts reflected on
the closing statement approved by Second Lender, and (b) all fines and other
sums due under the Known Violations, if any (2) no governmental entity imposes
further fines or takes any further action with respect to the Known Violations,
and (3) if there is any default after the expiration of applicable notice and/or
grace periods under the First Mortgage, Second Mortgage or Junior Mortgage which
hereafter arises or which hereafter becomes known to Second Lender and/or, with
respect to the Known Violations, if any governmental entity imposes any further
fine and/or takes any further action, Second Lender expressly reserves the
right, to foreclose and pursue any and all other rights and remedies available
to Second Lender.
(c) Mortgagor represents to First Lender and Second Lender that (i) the
unpaid principal amount under the First Note is $6,750,000, and such sum is due
without setoff, deduction or demand; (ii) the unpaid principal amount under the
Second Note is $3,000,000, and such sum is due without setoff, deduction or
demand; and (iii) Mortgagor does not have and at no prior time had any defense
(including, without limitation, the defense of usury), claim, counterclaim,
cross-action or equity, or right of rescission, set-off, abatement or diminution
of any kind or nature against either First Lender and Second Lender with respect
to the Senior Mortgages; and/or any and all of the same are hereby expressly
waived by Mortgagor.
6
The representations contained in this Section 9 shall lapse upon the
indefeasible payment in full of all of the Senior Obligations.
10. Representations, Warranties and Covenants of Junior Lender: Junior
Lender represents and warrants to Senior Lenders that:
a. Junior Lender is the sole owner and holder of the Junior Note
and the Junior Mortgage.
b. To the best of its knowledge, as of the date hereof, there is
no default or event which by notice or the passage of time
would constitute an event of default under the Junior Note
and/or the Junior Mortgage.
c. Junior Lender has the power and authority to execute and
deliver this Agreement and perform its obligations hereunder.
d. The property encumbered by the Junior Loan Documents does
not extend beyond the property encumbered by the First Loan
Documents.
11. Amount Secured: Without the prior written consent of both Senior
Lenders, which consent may be withheld in their sole discretion, Junior Lender
shall not permit any increases in the principal amount secured by the Junior
Mortgage (as may have been reduced by the repayment of any principal by
Mortgagor), except for protective advances, and any interest thereon, and all
costs, payments advanced, taxes and expenses hereafter advanced to insure the
Property, to prevent waste, to protect the collateral thereunder as contemplated
in Florida Statutes or collect said debt, and all expenses, costs and attorneys'
fees incurred by Junior Lender in connection with the foregoing actions relating
to the Junior Mortgage and/or the Junior Obligations. In the absence of consent
by both Senior Lenders, any such increases shall constitute a default under the
Senior Mortgages.
12. Continuing Agreement: The obligations of Senior Lenders and Junior
Lender hereunder shall be absolute and unconditional and this Agreement shall be
a continuing agreement and shall continue notwithstanding the dissolution or
reorganization of a Senior Lender or of Junior Lender. Either or both Senior
Lender(s), without affecting the subordination herein provided and with notice
to Junior Lender, (i) may release any security for its respective notes,
including part of the property encumbered by its mortgage or retain or obtain a
security interest in other property to secure the obligations of the Mortgagor
to Senior Lender, or (ii) may extend, alter, exchange, substitute or modify its
note(s) or its mortgage or release, compromise, alter or exchange any obligation
held by it as security for its note(s), so long as there is no increase in
principal or in the other mortgaged obligation of Mortgagor and otherwise is
subject to the terms of this Agreement. None of such actions shall affect the
subordination herein provided, and Junior Lender expressly waives any rights,
including any defense in the nature of a suretyship defense, otherwise arising
out of such action. Each Senior Lender's respective senior security position
hereunder shall not be prejudiced by any action omitted or undertaken by it with
respect to its Senior Obligations or any indebtedness secured by its Senior
Mortgages provided any such action shall be in conformity with the terms of this
Agreement.
7
13. Notices: All notices hereunder shall be in writing and shall be
deemed to have been sufficiently given or served for all purposes when presented
personally or one (1) day after when sent by actual hand-delivery commercial
overnight courier (i.e., Federal Express), to the addresses set forth below:
to First Lender: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as Trustee of
Lakes Holding Trust under agreement
Dated July 27, 2001
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to: Mombach, ▇▇▇▇▇ & ▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
to Second Lender: ▇▇▇▇▇▇▇▇ Entertainment Company
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Katz, Barron, Squitero Law Firm
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
to Junior Lender: Tarragon South Development Corp.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
With copy to: Tarragon South Development Corp.
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
to Mortgagor: AGU Entertainment Corp.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Blank Rome LLP
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
8
or any such other address of which a party shall have notified the party giving
such notice in writing.
14. No Waiver: The giving of consent by Senior Lenders to the Junior
Mortgage is not and shall not be deemed a waiver of either Senior Lender's
rights to prohibit any other junior mortgage of the Mortgaged Property. No delay
on the part of a Senior Lender or Junior Lender in the exercise of any right or
remedy hereunder or under the Senior Mortgages or Junior Mortgage, respectively,
shall operate as a waiver of any right hereunder.
15. Counterparts: The parties hereto agree that this Subordination
Agreement may be executed in two (2) or more counterparts, each of which shall
be an original, but all of which shall constitute one and the same instrument.
16. Estoppel Certificates: At the written request of a Senior Lender,
Junior Lender shall deliver to each Senior Lender a certificate stating that, to
the best of its knowledge, no default has occurred under the Junior Note or the
Junior Mortgage which default is continuing, and that Junior Lender is not aware
of any event which after notice or lapse of time or both would constitute a
default or, if any such event or default had occurred and is continuing, Junior
Lender shall specify the nature and period of existence thereof. At the written
request of Junior Lender, each Senior Lender shall deliver to Junior Lender and
the other Senior Lender a certificate stating, to the best of its knowledge,
that no default has occurred under its Senior Note or its Senior Mortgage which
default is continuing, and that such Senior Lender is not aware of any event
which after notice or lapse of time or both would constitute a default or, if
any such event or default had occurred and is continuing, such Senior Lender
shall specify the nature and period of existence thereof.
17. Paragraph Headings: The headings of the various paragraphs of this
Agreement have been inserted only for the purpose of convenience, and are not
part of this Agreement and shall not be deemed in any manner to modify, explain
or restrict any of the provisions of this Agreement.
18. Choice of Law: This Agreement shall be construed, interpreted,
enforced and governed by and in accordance with the laws of the State of
Florida, excluding the principles thereof governing conflicts of law. If any
provision shall be held prohibited or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
without invalidating any other provision of this Agreement.
19 Venue: The parties agree that Broward County, Florida is the sole
proper venue for any and all legal proceedings arising out of this Subordination
Agreement and any associated loan documents.
20. Binding Effect: This Agreement shall be binding upon and inure to
the benefit of the Mortgagor, Senior Lenders and Junior Lender and their
respective heirs, successors and assigns.
9
21. Ratification of Senior Lenders' Subordination Agreement: This
Agreement shall not impair or otherwise affect the Senior Lenders' Subordination
Agreement. The Senior Lenders' Subordination Agreement is hereby ratified and
re-affirmed and shall be and remain in full force and effect, enforceable in
accordance with its terms. Mortgagor is indebted to Senior Lenders pursuant to
obligations that do not involve the Mortgaged Property. Such obligations are not
included within the defined term "Senior Obligations", and are not affected by
this Agreement.
22. Special Provision: All of the parties hereto acknowledge and agree,
notwithstanding the other provisions of this Agreement: (1) First Lender has
made a $250,000 advance ("$250,000 Advance") to Mortgagor as evidenced by a
Promissory Note in the original amount of $250,000 dated as of even date
herewith, (2) the $250,000 Advance shall be treated as a future advance under
the First Mortgage, subject, however, to the provisions of this paragraph, (3)
the $250,000 Advance shall be subject to, inferior and subordinate to the Second
Mortgage, and (4) the $250,000 Advance shall be superior to the Third Mortgage.
Notwithstanding the foregoing, in the event of a foreclosure of the Mortgaged
Property: (a) the First Loan Obligations shall be superior to the Second Loan
Obligations and the Junior Obligations, and (b) the $250,000 Advance shall be
subject to, inferior and subordinate to the Second Loan Obligations and superior
to the Junior Obligations.
23. Termination: Upon repayment in full of the Senior Obligations, the parties
hereto agree to execute and deliver, each to the other, an agreement, in
recordable form, mutually acceptable to all parties hereto, acting reasonably,
terminating of this Agreement.
24. NEITHER FIRST LENDER, SECOND LENDER, JUNIOR LENDER, MORTGAGOR NOR
ANY OTHER PERSON LIABLE FOR THE OBLIGATIONS, COVENANTS, WARRANTIES AND
REPRESENTATIONS HEREIN, NOR ANY ASSIGNEE, SUCCESSOR, HEIR OR PERSONAL
REPRESENTATIVE OF SENIOR LENDERS, JUNIOR LENDER, MORTGAGOR OR ANY SUCH OTHER
PERSON OR ENTITY SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING,
COUNTERCLAIM OR ANY OTHER LITIGATION PROCEDURE BASED UPON OR ARISING OUT OF THIS
AGREEMENT. NEITHER SENIOR LENDER, JUNIOR LENDER, MORTGAGOR NOR ANY SUCH PERSON
OR ENTITY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS
BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT
BEEN WAIVED. THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN FULLY DISCUSSED BY THE
PARTIES, HERETO AND THE PROVISIONS HEREOF SHALL BE SUBJECT TO NO EXCEPTIONS.
[THE BALANCE OF THE PAGE INTENTIONALLY HAS BEEN LEFT BLANK]
10
IN WITNESS WHEREOF, we have hereunto set our hands and seals on the day
and year first above written.
Signed, sealed and FIRST LENDER:
delivered in the presence of:
____________________________________________ __________________________________
Print Name:_________________________________ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, in her capacity as
Trustee of Lakes Holding Trust
under agreement dated
July 27, 2001
____________________________________________
Print Name:_________________________________
SECOND LENDER:
▇▇▇▇▇▇▇▇ ENTERTAINMENT
COMPANY, a Delaware limited
liability company
____________________________________________ By:_______________________________
Print Name:_________________________________ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:_________________________
____________________________________________
Print Name:_________________________________
JUNIOR LENDER:
TARRAGON SOUTH DEVELOPMENT
CORP., a Nevada corporation
____________________________________________ By:_______________________________
Name:_______________________________________ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Executive Vice President
Print Name:_________________________________
11
AGREED TO, accepted and acknowledged by the undersigned Mortgagor this
_____ day of , 2005.
AGU ENTERTAINMENT CORP.
____________________________________________
Print Name:_________________________________ By:_______________________________
▇▇▇▇▇ ▇▇▇▇
President
____________________________________________
Print Name:_________________________________
STATE OF __________ )
COUNTY OF________________ )
The foregoing instrument was acknowledged before me this _____ day of ,
2005 by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, in her capacity as Trustee of Lakes Holding Trust under
agreement dated July 27, 2001, who ? is personally known to me or ? has produced
his/her driver's license as identification and who did take an oath.
__________________________________
Notary Public - State of Florida
Print Name: ______________________
My Commission Expires: ___________
Commission Number: _______________
STATE OF CALIFORNIA )
COUNTY OF_____________ )
The foregoing instrument was acknowledged before me this _____ day of ,
2005 by ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as and on behalf of ▇▇▇▇▇▇▇▇ Entertainment
Company, a Delaware limited liability company, who ? is personally known to me
or ? has produced his/her driver's license as identification and who did take an
oath.
___________________________________
Notary Public - State of California
Print Name: _______________________
My Commission Expires: ____________
Commission Number: ________________
12
STATE OF FLORIDA )
COUNTY OF______________ )
The foregoing instrument was acknowledged before me this _____ day of
__________________, 2005 by _____________________, as __________________, and on
behalf of Tarragon South Development Corp., a Nevada corporation, who ? is
personally known to me or ? has produced his driver's license as identification
and who did take an oath.
__________________________________
Notary Public - State of Florida
Print Name: ______________________
My Commission Expires: ___________
Commission Number: _________________
STATE OF FLORIDA )
COUNTY OF______________ )
The foregoing instrument was acknowledged before me this _____ day of ,
2005 by ▇▇▇▇▇ ▇▇▇▇, as President, and on behalf of AGU Entertainment Corp., a
Delaware corporation, who ? is personally known to me or ? has produced his
driver's license as identification and who did take an oath.
__________________________________
Notary Public - State of Florida
Print Name: ______________________
My Commission Expires: ___________
Commission Number: _________________
13
EXHIBIT "A"
DESCRIPTION OF PROPERTY
EXHIBIT B
DOCUMENTS RELATED TO JUNIOR MORTGAGE
1. Promissory Note
2. Notice of Limitation on Mortgage Future Advance
3. Third Assignment of Rents, Leases and Deposits
4. UCC-1 (Broward County, Florida)
5. UCC-1 (Delaware)
6. Third Mortgage Deed and Security Agreement
7. Flood Insurance Information & Insurance Acknowledgement
8. Mortgagor's Affidavit
9. This Subordination Agreement
10. Tri-Party Agreement
11. Side letter regarding sewer easement
12. Affidavit regarding material agreements
EXHIBIT C
MORTGAGE LOAN DOCUMENTS RELATED TO FIRST LENDER
Promissory Note from the Mortgagor to the First Lender, dated December
20, 2004 (the "Note").
Mortgage Deed and Security Agreement from Mortgagor to the First
Lender, dated December 20, 2004 (the "Mortgage")
Assignment of Rents, Leases and Profits from Mortgagor to the First
Lender, dated December 20, 2004 (the "Assignment of Rents").
UCC-1 Financing Statements, State and Local from the Mortgagor as
Debtor to the First Lender as Secured Party.
Subordination Agreement between the First Lender and the Second Lender,
dated December 20, 2004.
Mortgagor's Affidavit dated December 20, 2004.
Non-Foreign Certificate and Affidavit dated December 20, 2004.
Notice of Limitation of Future Advances by the Mortgagor, dated
December 20, 2004.
This Subordination Agreement
Mortgage Modification of even date herewith concerning $250,000 advance
and $250,000 promissory note evidencing such advance
EXHIBIT D
MORTGAGE LOAN DOCUMENTS RELATED TO SECOND LENDER
Secured Convertible Term Note from the Mortgagor to the Second Lender,
dated December 20, 2004 (the "Note").
Mortgage and Security Agreement from Mortgagor to the Second Lender,
dated December 20, 2004 (the "Mortgage")
Assignment of Rents, Leases and Profits from Mortgagor to the Second
Lender, dated December 20, 2004 (the "Assignment of Rents").
UCC-1 Financing Statements, State and Local from the Mortgagors as
Debtor to the Second Lender as Secured Party.
Master Security Agreement between the Mortgagor and the Second Lender,
dated December 20, 2004.
Environmental Indemnity Agreement between the Mortgagor and the Second
Lender, dated December 20, 2004.
Notice of Limitation of Future Advances by the Mortgagor, dated
December 20, 2004.
Subordination Agreement between the First Lender and the Second Lender,
dated December 20, 2004.
Letters dated April 14, 2005, April 29, 2005 and August 11, 2005
This Subordination Agreement