Sample Cash Collateral Agreement

To avoid litigation over the value of the secured lender's collateral and to avoid damage to the debtor's business operation from lack of cash, the debtor and its secured lender will often enter into an agreement for continued use of the secured lender's cash collateral (that is, the cash generated by the debtor's business operations). The debtor's use of cash collateral during the bankruptcy case is typically conditioned on giving the secured lender "adequate protection" of its secured position. In the case from which this sample is taken—the reorganization of the historic office building in Chicago, the Rookery Building—adequate protection was given by granting the lender "replacement liens" on new cash generated during the bankruptcy case by the debtor's building and periodic payments of interest. Usually the Stipulated Order will contain an extensive description of the secured lender's loan documents and security instruments. Note that the Stipulated Order contains a budget, by expense categories, as an attached exhibit. In this case, the operating budget is done quarterly, although it can be done monthly or, in extreme cases, weekly. Finally, this order was entered as an interim order on negative notice.

Sample Cash Collateral Agreement

UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

DEBTOR'S USE OF CASH COLLATERAL

This Stipulated Final Order Authorizing Debtor's Use of Cash Collateral (the "Stipulated Order") is agreed to by ING Bank N.V. ("ING Bank"), formerly known as NMB Postbank Groep N.V. ("Postbank"), on its own behalf and that of certain of its branches, subsidiaries, and affiliates, including NMB Vastgoedprojekt I B.V. ("Vastgoedprojekt"), as secured creditors and parties-in-interest, (collectively, the "ING Group"), and THE Rookery, l.l.C., above-captioned debtor and debtor-in-possession (the "Debtor"), in response to the Debtor's Motion to Approve Stipulated Interim Order Authorizing Debtor's Use of Cash Collateral, dated October 9, 1998 (the "Motion"). Attached as Exhibit A to the Motion was a proposed Stipulated Interim Order Authorizing Debtor's Use of Cash Collateral (the "Interim Order"). In light of the foregoing, and good cause appearing therefor,

THIS COURT FINDS AND CONCLUDES only with respect to paragraphs A, B, C, D, E, F, G, H, I, K, M, and Q, R, S, U, V, and it is hereby stipulated only between the Debtor and ING Group as follows:

A. The Chapter 11 Case. On October 8, 1998 (the "Petition Date"), the Debtor filed its voluntary petition for relief under Chapter 11 of 11 U.S.C. §§ 101-1330 (the "Bankruptcy Code"). The Debtor continues to operate its business and manage its properties as debtor-in-possession under Bankruptcy Code sections 1107 and 1108. No official committee of unsecured creditors has yet been appointed, nor any trustee appointed.

B. Jurisdiction. This Court has jurisdiction over this case and these parties under 28 U.S.C. §§ 157 and 1334. This is a core proceeding under 28 U.S.C. §157(b) and Bankruptcy Code sections 363(c) and (e).

C. Need for Cash Collateral Use. The Debtor has an immediate need for funds in this Chapter 11 case in order to pay operating expenses, continue operations, and maintain and preserve the Debtor's sole significant asset, the Rookery Building, located at 209 S. LaSalle Street, Chicago, Illinois (the "Building"). Without the Court's immediate and ongoing au

Executive Guide to Corporate Bankruptcy

thorization to use cash collateral, the Debtor's existing and future business operations will be jeopardized, resulting in immediate and irreparable harm to the Debtor, the Debtor's bankruptcy estate and creditors.

D. Debtor's Submission. In support of the Motion, the Debtor filed an Appendix of Exhibits concurrently with the Motion and a Supplemental Appendix on October 13, 1998 (collectively, the "Appendices"). The Appendices contain a number of loan documents held by the ING Group, including certified copies of certain of the loan documents which had been recorded with the Cook County Recorder of Deeds, various financing statements, and a Title Report for the Building issued in December, 1997.

E. Initial Hearing and Entry of Stipulated Interim Order. The Court conducted an initial hearing on the Motion on October 14, 1998 (the "Initial Hearing"). At the Initial Hearing, the Court heard and considered statements of counsel present. As a result of statements name by various counsel, including Steve Wolfe from the Office of the United States Trustee, and concerns raised by the Court at the Initial Hearing, subsequent thereto counsel for the Debtor revised the Interim Order (the "Revised Interim Order"). The Revised Interim Order was circulated to counsel present at the Initial Hearing. The Revised Interim Order was thereafter executed and submitted to the Court for entry on October 22, 1998. The Court entered the Revised Interim Order or October 28, 1998. The Revised Interim Order scheduled a final hearing on the Motion for November 3, 1998 at 10:30 a.m. before this Court (the "Final Hearing").

F. Notice of Final Hearing. The Revised Interim Order directed the Debtor to send notice of the Final Hearing to the Debtor's twenty largest unsecured creditors, all secured creditors, the United States Trustee, and counsel for any official committee of unsecured creditors appoint in this case by no later than October 22, 1998. The Debtor sent notice of the Final Hearing to the parties directed by the Court on October 22, 1998 as evidenced by that certain Certificate of Service filed on October 23, 1998. The Debtor filed an additional Certificate of Service on October 27, 1998.

G. Stipulated Final Order. On October 30, 1998, counsel for the Debtor circulated a proposed Stipulated Final Order Authorizing the Debtor's Use of Cash Collateral to counsel present at the Final Hearing (the "Final Order"). The Debtor filed the Final Order with the Court on November 2, 1998.

H. LSREH Objection. On Objection 30, 1998, LaSalle Street Real Estate Holdings, Inc. ("LSREH") filed an objection to the Final Order (the "LSREH Objection"). The Debtor disputes the matters raised in the LSREH Objection.

I. Final Hearing. At the Final Hearing, the Court heard and considered statements of counsel present. The Court also considered the offer of proof of Jordan Kroop, counsel for the ING Group, who summarized the out

Sample Cash Collateral Agreement

standing indebtedness under the ING Bank Senior Loan and the Vastgoedprojekt Junior Loan. Mr. Kroop advised the Court that the source of the figures was Cormack McKenna for the ING Bank Senior Loan and Robert Blair for the Vastgoedprojekt Junior Loan. The Court directed Mr. Kroop to file affidavits from Mr. McKenna and Mr. Blair in further support of the amounts claimed. The Court also reviewed the following documents contained in the Appendices and more fully described in paragraph L of this Stipulated Order.

1. Promissory Note, dated January 7, 1991 (App. #2);

2. Construction Loan Mortgage and Security Agreement,

dated as of January 7, 1991 (App. #3);
3. Assignment of Leases and Rent, dated as of January 7,

1991(App. #4);
4. Loan Agreement, dated September 27, 1991 (the

"Vastgoedprojekt Junior Loan, (App. #15);
5. Mortgage, dated September 27, 1991 (App. #16);

6. Initial Loan Promissory Note, dated September 27, 1991

(App. #17);
7. Primary Project Expense Note, dated September 27, 1991 (App. #18);

8. Assignment of Leases, dated September 27, 1991 (App.

#20).
Counsel for the Debtor and the ING Group requested that the Court take judicial notice of the Illinois Conveyance Act 765 ILCS 5/1 et seq. in connection with the recordation of certain of the loan documents identified above as evidencing the perfection of the first lien asserted by ING Group on the Building and the rents and income generated thereby and the second lien asserted by Vastgoedprojekt on the Building and the rents and income generated by the leases for the Building.

J. Necessity for Stipulation. This Stipulated Order is necessary because the ING Group retains a senior secured interest in the Building and the rents and other icome generated by the Building, which constitutes "cash collateral," as defined in Bankruptcy Code Section 363(a) (the "Cash Collateral") and asserts a senior secured interest in nearly all other assets derived from or related to the Building.

K. The ING Group Debt. The Debtor acknowledges that it remains indebted to the ING Group under two separate loan facilities, which the Debtor further acknowledges are both currently in default, as set forth below:

1. ING Bank Senior Loan _ the Debtor's current obligations under the ING Bank Senior Loan (more specifically defined below) are comprised

Executive Guide to Corporate Bankruptcy

of outstanding principal of $77,000,000, accrued interest as of July 31, 1998 of approximately $16,345,589.24, exclusive of attorneys' fees and costs due under the ING Bank Senior Loan. As of the Petition Date, the Debtor continued to incur liability for accrued interest at a rate of approximately $46,649.47 per day, plus accrued and accruing attorneys' fees and costs. The ING Bank Senior Loan is secured by, inter alia, a first, valid, perfected and enforceable lien on, and security interest in, the Building and all improvements, furniture, fixtures, equipment, easements, rents, income, leases, intangible assets, and all after acquired property located in or on or used or intended to be used in connection with the Building, as set forth with specificity in the loan and security documents described in paragraph L, below. The ING Bank Senior Loan is fully matured, due and payable at this time.

2. Vastgoedprojekt Junior Loan _ the Debtor's current obligations under separate notes issued under the Vastgoedprojekt Junior Loan (more specifically defined below) are comprised of outstanding aggregate principal of $18,458,642, aggregate accrued interest as of July 31, 1998 of $14,161,088, exclusive of attorneys' fees and costs due under the Vastgoedprojekt Junior Loan. As of the Petition Date, the Debtor continued to accrue interest at a rate of approximately $8,537.88 per day, plus accrued and accruing attorneys' fees and costs. The Vastgoedprojekt Junior Loan is secured by, inter alia, a valid, perfected and enforceable lien on, and security interest in, the Building and all improvements, furniture, fixtures, equipment, easements, rents, income, leases, intangible assets, and all after acquired property located in or on or used or intended to be used in connection with the Building, as set forth in the loan and security documents described in paragraph L, below, which lien is junior only to the ING Bank Senior Loan set forth above. The Vastgoedprojekt Junior Loan is fully matured, due and payable at this time.

L. The Loan and Security Documents. The ING Group asserts that the Debtor's obligations to the ING Group are governed by the following loan instruments (the "Prepetition Loan Documents"), the validity and enforceability of which the Debtor does not dispute:¹

¹ The Prepetition Loan Documents governing the Debtor's obligations to the ING Group and the various forms of collateral pledged to secure those obligations appear in the separately-bound Appendix to the Revised Interim Order (the "Appendix") (references to which are "App. #__"), all such instruments being incorporated into this Stipulated Order by this reference. The Appendix was filed simultaneously with the Motion. A Supplemental Appendix was also filed on October 13, 1998. Due to their volume, the Appendix and Supplemental Appendix were not circulated to the Service List, but were made available upon request.

Sample Cash Collateral Agreement

ING Bank Senior Loan

1. Building Loan Agreement, dated as of January 7, 1991 (the "ING Bank Senior Loan," App. #1), by and among Postbank,² the Debtor and LaSalle National Trust, N.A. (the "LaSalle Trustee"), as successor Trustee to LaSalle National Bank, under the Trust Agreement, dated December 12, 1988 (the "LaSalle Trust");

2. Promissory Note, dated January 7, 1991 (the "ING Bank Senior Note," App. #2), in the amount of $77,000,000, made by the Debtor and the LaSalle Trustee payable to Postbank, which provides for, among other things, the applicable interest rates on outstanding principal advanced under the ING Bank Senior Loan;

3. Construction Loan Mortgage and Security Agreement, dated as of January 7, 1991 (the "First Mortgage," App. #3), given in the Building (including the land at 209 S. LaSalle Street, all improvements, easements, rents, leases, profits, and other rights appurtenant to the Building, collectively, the "Mortgaged Property") by the Debtor and the LaSalle Trustee to Postbank;

4. Assignment of Leases and Rents, dated as of January 7, 1991 (the "First Assignment of Leases," App. #4), granted as security for the ING Bank Senior Note by the Debtor and the LaSalle Trustee to Postbank, covering all present and future leases in the Building and all rents and profits arising under such leases;

5. Assignment of Contracts, Warranties and Permits, dated as of January 7, 1997 (the "First Assignment of Contracts," App. #5), granted as security for the ING Bank Senior Note by the Debtor and the LaSalle Trustee to Postbank, covering all contracts, warranties and permits affecting or relating to the Building or relating to the operation, management, maintenance, construction or sale of the Building;

6. Collateral Assignment of Partnership Interest, dated as of January 7, 1991 (the "First Assignment of Interest," App. #6), granted to Postbank a continuing first priority security interest in all present and future right, title and interest of T. Baldwin Development Co. and Baldwin Real Estate Holdings, Inc. (two of the general partners in the Debtor as of the date of the ING Bank Senior Loan)³ as security for the ING Bank Senior Note;

² ING Bank has succeeded to the interests of Postbank with respect to all relevant transactions. Descriptions of the various loan documents in this Stipulated Order will continue to refer to Postbank for the sake of clarity.

³ Both T. Baldwin Development Co. and Baldwin Real Estate Holdings, Inc. were controlled by L. Thomas Baldwin, III ("Baldwin"). As part of the Debtor's debt restructuring in September 1991, T. Baldwin Development Co. withdrew from the Debtor as general partner, and Baldwin Real Estate Holdings, Inc., of which Baldwin is the sole shareholder, changed its name to LaSalle Street Real Estate Holdings, Inc. ("LSREH").

Executive Guide to Corporate Bankruptcy

7. Collateral Assignment of Beneficial Interest, dated as of January 7, 1991 (the "First Assignment of Beneficial Interest," App. #7), granting to Postbank all beneficial rights held by the Debtor in the LaSalle Trust and all property held by the LaSalle Trust as security for the ING Bank Senior Note;

8. Development Cost Overrun Guaranty Agreement, dated January 7, 1991 (the "Baldwin Guaranty," App. #8), providing, among other things, that Baldwin guarantees the payment by the original general partners of the Debtor of all "Development Cost Overruns" pertaining to the "Guaranteed Development Cost Budget Line Items Schedule," as those terms are defined in the ING Bank Senior Loan;

9. Second Amendment to Building Loan Agreement, dated as of August 16, 1993 (App. #9), providing for, among other things, the extension of the maturity date of the loans extended under the ING Bank Senior Loan to December 31, 1997 and incorporating a new Operating Budget for the Building;

10. Commitment Letter from ING Fonds to the Debtor dated August 16, 1993 (the "Standby Commitment," App. #10), under which ING Fonds provides to the Debtor a standby credit facility for all outstanding principal, interest, expenses and other amounts under the ING Bank Senior Note, for the purpose of financing the repayment of the Debtor's debt obligations to Postbank (by then, ING Bank) under the ING Bank Senior Loan, to be drawn on only if Postbank (now ING Bank) were to refuse to extend the maturity date of the loans under the ING Bank Senior Note beyond December 31, 1997, provided that none such loans were in default;

11. First Note Modification and Extension Agreement, dated as of August 16, 1993 (App. #11), amending the ING Bank Senior Note to reflect the new December 31, 1997 maturity date of loans made under the ING Bank Senior Loan and adjusting certain definitions and formulae used to calculate interest and additional financial terms in the ING Bank Senior Note;

12. First Amendment to Construction Loan Mortgage and Security Agreement, dated as of August 16, 1993 (App. #12), amending the non-financial terms of the First Mortgage to reflect the amended and modified loan documents also executed as of August 16, 1993 listed above;

13. Amendment to Assignment of Leases and Rents and Other Loan Documents, dated as of August 16, 1993 (App. #13), amending certain non-financial terms of the Assignment of Leases and related loan documents listed above to reflect the amended and modified loan documents also executed as of August 16, 1993 listed above;

14. Subordination and Standstill Agreement, dated as of August 16, 1993 (the "Second Subordination Agreement," App. #14), providing that,

Sample Cash Collateral Agreement

among other things, all debt obligations of the Debtor to LaSalle Street Real Estate Holdings, Inc. are continually subordinated to all debt obligations of the Debtor to ING Bank (successor to Postbank) under the ING Bank Senior Loan;

Vastgoedprojekt Junior Loan

15. Loan Agreement, dated September 27, 1991 (the "Vastgoedprojekt Junior Loan," App. #15), between the Debtor and the LaSalle Trustee as borrower and Vastgoedprojekt as lender, providing for, among other things, loans advanced from time to time up to a total of $25,000,000 to fund 70% of certain cost overruns, operating deficits, and other costs arising from the Debtor's rehabilitation and operation of the Building, the other 30% of such expenses coming from subordinated, parallel loans from Baldwin;

16. Mortgage, dated September 27, 1991 (the "Second Mortgage," App. #16), granting Vastgoedprojekt a mortgage and security interest in the Mortgaged Property, subordinate only to the interest retained by Postbank (later ING Bank) under the First Mortgage, as security for all obligations under the Vastgoedprojekt Junior Loan;

17. Initial Loan Promissory Note, dated September 27, 1991 (the "Vastgoedprojekt Junior Note," App. #17), made by the Debtor and the LaSalle Trustee payable to Vastgoedprojekt in accordance with the Second Loan Agreement, in the principal sum of $9,800,000, payable on September 27, 2016, unless called on in the event of default;

18. Primary Project Expense Note, dated September 27, 1991 (App. #18), made by the Debtor and the LaSalle Trustee payable to Vastgoedprojekt in accordance with the Vastgoedprojekt Junior Loan, in the principal sum of $4,258,025, payable on September 27, 2016, unless called on in the event of default;

19. Assignment of Contracts, dated September 27, 1991 (the "Second Assignment of Contracts," App. #19), granting Vastgoedprojekt virtually the same rights as those granted to Postbank in the First Assignment of Contracts, except in a secondary position, as security for the obligations under the Vastgoedprojekt Junior Loan;

20. Assignment of Leases, dated September 27, 1991 (the "Second Assignment of Leases," App. #20), granting Vastgoedprojekt essentially the same rights as those granted to Postbank in the First Assignment of Leases, except in a secondary position, as security for the obligations under the Vastgoedprojekt Junior Loan;

21. Collateral Assignment of Beneficial Interest, dated September 27, 1991 (the "Second Assignment of Beneficial Interest," App. #21), granting Vastgoedprojekt essentially the same rights as those granted to Postbank in the First Assignment of Interest, except in a secondary position, as security for the obligations under the Vastgoedprojekt Junior Loan;

Executive Guide to Corporate Bankruptcy

22. Collateral Assignment of Notes, dated as of September 27, 1991 (the "Assignment of Notes," App. #22), assigning Vastgoedprojekt's interest in the Primary Project Expense Note, as well as LSREH's interest in a separate note in the principal amount of $1,824,868, to Postbank;

23. LaSalle Street Real Estate Holdings, Inc. Partnership Interest Pledge Agreement, dated September 27, 1991 (the "Pledge Agreement," App. #23), under which LSREH, the sole general partner in the Debtor, pledges its partnership interest in the Debtor to Vastgoedprojekt as security for the obligations under the Vastgoedprojekt Junior Loan;

24. First Amendment to Building Loan Agreement and Other Loan Documents, dated as of September 27, 1991 (App. #24), amending certain provisions of the ING Bank Senior Loan and related loan documents to reflect and accommodate changes in the ownership structure of the Debtor and setting forth Postbank's consent to the Third Amended and Restated Partnership Agreement governing the Debtor (which provided that Projekt' had withdrawn as limited partner in the Debtor and that Chevron Corp. remained sole limited partner);

25. Foreclosure Subordination Agreement, dated as of September 27, 1991 (the "Subordination Agreement," App. #25), affirming the arms-length nature of the loan transactions between Vastgoedprojekt and the Debtor and establishing that Vastgoedprojekt retains all rights to distribution of assets from a sale of its collateral senior to any rights of the Debtor or LSREH in such collateral;

26. Subordination and Standstill Agreement, dated as of September 27, 1991 (the "First Subordination Agreement," App. #26), providing that, among other things, the Debtor's debt obligations to Vastgoedprojekt with respect to the Vastgoedprojekt Junior Loan are subordinated to the Debtor's debt obligations to Postbank with respect to the ING Bank Senior Loan.

M. Perfection of Liens. All liens in the Building, and the rents and income generated thereby created by the Prepetition Loan Documents have been and remain duly perfected in the State of Illinois .

N. Default by Debtor. The ING Group has met all its obligations under the Prepetition Loan Documents, and has delivered to the Debtor sufficient notices of default (App. #27 and #28) under both the ING Bank Senior Loan and the Vastgoedprojekt Junior Loan, including sufficient notice of the maturity of all obligations under the Prepetition Loan Documents under their own terms. The Debtor remains in default under the Prepetition Loan Documents and has to date made no attempt to cure such defaults, nor is the Debtor able to effect such cure.

O. Unpaid Real Property Taxes. The Debtor acknowledges there are unpaid real property taxes, which, including accrued penalties as of the Petition Date, total approximately $2,698,571.

Sample Cash Collateral Agreement

P. Lack of Equity. The Debtor acknowledges that for purposes of the proposed use of Cash Collateral and the accompanying adequate protection being provided to the ING Group, the Debtor has no equity in any of the property constituting the collateral securing the ING Groups loans to the Debtor, including the Building, the Cash Collateral, all rents collected from the Building's tenants, the income and profits generated by the Building, the Debtor's contracts with third parties, and the balance of the assets assigned to the ING Group under the Prepetition Loan Documents to secure the Debtor's obligations under the Prepetition Loan Documents.

Q. Need for Adequate Protection. Absent an order of this Court, and given the necessities attending a Chapter 11 proceeding, the Debtor's use and disposition of some or all of the collateral may result in the diminution in value of the ING Group's interests in the Debtor's property.

R. Inability to Obtain Postpetition Financing. As a result of the Debtor's current financial condition, the Debtor is unable, in the ordinary course of business or otherwise, to obtain significant unsecured credit in accordance with Bankruptcy Code sections 364(a) or (b), as allowable under Bankruptcy Code section 503(b)(1) as an administrative expense.

S. Consent to Use of Cash Collateral. The ING Group consents to the use of cash collateral in accordance with Bankruptcy Code section 363, but only subject to the terms and conditions set forth below.

T. Arms' Length Negotiations. The terms and conditions of this Stipulated Order were negotiated at arms' length and in good faith, with all parties represented by counsel, are fair and reasonable under the circumstances, and reflect the Debtor's prudent business judgment consistent with its fiduciary duties.

U. Notice. Notice of the Motion has provided to all secured creditors, the Debtor's twenty largest unsecured creditors, and the United States Trustee. Such notice constitutes due and sufficient notice of the hearing to consider the Motion and this Stipulated Order.

V. Good Cause Shown. In consideration of the foregoing and all relevant evidence in the record before the Court, good cause has been shown for the relief granted in this Stipulated Order.

ACCORDINGLY, IT IS HEREBY ORDERED as follows:

1. Motion Granted. The Motion shall be, and hereby is, GRANTED in all respects in accordance with the restrictions and conditions set forth below.

2. Use of Cash Collateral. The Debtor shall be, and hereby is, authorized to use Cash Collateral on an interim basis in accordance with the following restrictions, terms, and conditions:

a) All expenditures of cash (or cash equivalents) in any amount

Executive Guide to Corporate Bankruptcy

during the pendency of this Chapter 11 case must conform in every respect to the most recently-approved Operating Budget (the "Budget"), annexed to this Stipulated Order as Exhibit A;

b) Any proposed expenditure of cash (or its equivalent) in excess of $500 not within the guidelines set forth in the Budget must be approved in writing by an authorized officer of ING Bank before the Debtor makes such expenditure, ING Bank being entitled to withhold its approval of such expenditure unilaterally, with or without cause;

c) The Debtor may not sell, lease, or otherwise dispose of any collateral unless expressly provided for in the Budget;

d) Any sale, lease, or other disposition of any collateral with a value in excess of $500 not within the guidelines set forth in the Budget must be approved in writing by an authorized officer of ING Bank before the Debtor makes such expenditure, ING Bank being entitled to withhold its approval of such expenditure unilaterally, with or without cause;

e) The Debtor may not enter into any new tenant lease or terminate any current tenant lease without the ING Group's advance written approval (of both the financial terms of the lease and the form of such lease) or an order of this Court obtained after express notice to the ING Group;

f) The John Buck Company (the "Independent Manager") appointed receiver of the Building pursuant to the Order appointing receiver entered by the United States District Court for the Northern District of Illinois in matter 98 C 2570 on May 28, 1998, or a successor approved in writing by the ING Group in advance, must remain as manager of the Building for the duration of the Chapter 11 case;

g) Absent additional written agreement between the ING Group and the Debtor or further Order of the Court, interim use of Cash Collateral, and the relief granted in this Stipulated Order, expires at the earliest of:

(1) the close of business on November 30, 1998;

(2) the occurrence of a change in the identity of the managing member of the Debtor;

(3) the appointment of a trustee or examiner in this case;

(4) confirmation of a plan of reorganization under Bankruptcy Code section 1129; and

(5) the granting of a lien on any property of the Debtor constituting all or part of the ING Group's collateral either senior

Sample Cash Collateral Agreement

to, junior to, or pari passu with, the ING Group's interest in such collateral.

3. Breaches of Stipulated Order. If, for any reason, the Debtor initiates any action prohibited, or fails to perform any act required, under the restrictions and conditions set forth in paragraph 2(a) through (g) above, the Debtor's authority to use any Cash Collateral in accordance with this Stipulated Order will immediately cease without further Order of the Court, provided, however, that nothing in this Stipulated Order precludes the Debtor from seeking leave of the Court to use cash collateral under Bankruptcy Code section 363(c)(2)(A). By way of example and not limitation, if for any reason: (a) the Independent Manager is removed as manager of the Building during this Chapter 11 case, or (b) there is a change in the identity of the managing member of the Debtor during this Chapter 11 case, then the Debtor's authority to use any Cash Collateral in accordance with this Stipulated Order will immediately cease without further Order of the Court, provided, however, that nothing in this Stipulated Order precludes the Debtor from seeking leave of the Court to use cash collateral under Bankruptcy Code section 363(c)(2)(A).

4. Adequate Protection _ Replacement Liens. In addition to the restrictions set forth in paragraph 2, above, as replacement security and adequate protection for the Debtor's use of the ING Group's Cash Collateral, the ING Group is granted: (a) a first priority lien and replacement lien on all assets (including all rents, issues, profits, and proceeds of such assets) of the Debtor and its estate existing on the Petition Date or arising thereafter to the same extent and with the same priority as was held by the ING Group immediately before the Petition Date subject only to the valid, perfected, and unavoidable security interests and liens existing as of the Petition Date, if any, held by parties other than the ING Group; and (b) with respect to assets that are subject to superior prepetition liens, a junior priority lien in such assets subject only to those superior prepetition liens (so long as and to the extent that such liens are and remain outstanding) to the extent of any diminution in the ING Group's prepetition secured interest resulting from the Debtor's use of cash collateral in accordance with this Stipulated Order (collectively, the "Postpetition Liens"). Notwithstanding the foregoing, neither this Stipulated Order nor any of its provisions are to be deemed an adjudication that the ING Group is adequately protected for purposes other than for purposes of the use of Cash Collateral under the express terms and provisions of this Stipulated Order (including the restrictions set forth in paragraph 2, above).

5. Adequate Protection _ Periodic Payments. As further adequate protection of the ING Group's interest in the cash collateral, the Debtor must make monthly payments to the ING Group equal to the net cash flow generated by the Building after payment of all authorized expenditures in accordance with the Budget annexed as Exhibit A, up to the amount of the

Executive Guide to Corporate Bankruptcy

monthly principal, interest, and fees otherwise due under the Prepetition Loan Documents.

6. Perfection of Postpetition Liens. The Postpetition Liens are valid, enforceable, attached, and perfected as of the Petition Date without any further act and without regard to any other federal, state, or local requirement or law requiring notice, filing, registration, recording, or possession of the Postpetition Collateral or other act. If the ING Group elects for any reason to file, record, or otherwise perform any act to perfect the Postpetition Liens, such act is deemed to have been accomplished as of the Petition Date, notwithstanding the actual date and time performed. A filing or recording of a certified copy of this Stipulated Order is tantamount to an act of perfection. Should the ING Group elect to file, record or perform an act of perfection, no defect or failure in connection with such act in any way limits, waives, or alters the validity, enforceability, attachment, or perfection of the Postpetition Liens.

7. Seniority of Postpetition Liens. Except for the subordination to administrative expenses specifically delineated in paragraph 8, below, the Postpetition Liens will remain senior to, and may not be subordinated or made equal to any lien, security interest, mortgage, or any other interest in favor of any party other than the ING Group by any order of the Court unless: (a) the ING Group has given its express prior written consent, which may not be implied from any other action, inaction, or acquiescence by the ING Group; or (b) the order providing for such lien, interest, or subordination is conditioned on prior full satisfaction of the Postpetition Liens and all obligations arising under the Prepetition Loan Documents, provided however, nothing contained in this paragraph 7 shall be deemed a waiver or release of the rights of any person under Section 506(c) of the Bankruptcy Code.

8. Carveout. All obligations under the Postpetition Liens, the ING Bank Senior Loan and the Vastgoedprojekt Junior Loan have the superpriority in payment afforded by Bankruptcy Code section 507(b), except for: (a) statutory fees payable to the United States Trustee under 28 U.S.C. § 1930; and (b) aggregate fees and expenses of $75,000 actually and reasonably incurred by counsel for the Debtor retained by order of the Court under Bankruptcy Code section 327(a).

9. Limited Stay Relief. Without further notice, motion, application, hearing, or order, all stays and injunctions, including without limitation, the automatic stay under Bankruptcy Code section 362 or any injunction imposed under Bankruptcy Code section 105, Bankruptcy Rule 7065, or otherwise, existing now or arising at any time in the future, are lifted and absolved in favor of the ING Group to permit the ING Group: (a) to implement the terms of this Stipulated Order; and (b) if relief from the automatic stay is granted in favor of a party other than the ING Group with respect to all or a portion of the assets comprising the ING Group's collateral, to exercise all

Sample Cash Collateral Agreement

rights with respect to such collateral.

10. Consent to Expedited Consideration of Emergency Motions. If, for any reason, the Debtor initiates any action prohibited, or fails to perform any act required, by the terms and conditions of this Stipulated Order, the ING Group will be entitled in its sole discretion to move this Court for an order lifting or modifying the automatic stay under Bankruptcy Code section 362(d) with respect to some or all of the ING Group's collateral. Should the ING Group so move, the Debtor consents to this Court's expedited consideration of such motion to the fullest extent that the Court's calendar and rules permit.

11. Reporting. At all times during the pendency of this case, the Debtor, the Independent Manager, or any trustee or examiner appointed in this case must grant the ING Group access to all books, records, electronic data, or any other information relevant or related to the Debtor's operation or the Building upon twenty four (24) hours notice, during regular business hours. The ING Group's availing itself of such access to any extent and at any time will not constitute a violation of the automatic stay under Bankruptcy Code section 362.

12. Additional Documents. The Debtor is authorized and instructed to execute any additional documents necessary to perfect any of the ING Group's interests created by, or set forth in, this Stipulated Order.

13. Mootness. No order of any court reversing or modifying the relief granted in this Stipulated Order will impair or diminish the validity of any priority, liens, or other relief granted in the ING Group's favor under the terms of this Stipulated Order.

14. Effective Date. Except with respect to the stipulations between the Debtor and the ING Group and except as hereinafter provided, all provisions of this Stipulated Order and all relief granted in this Stipulated Order are deemed effective and binding on all parties.

15. Right to Contest. Neither the stipulations of the Debtor, not the provisions of this Order shall constitute a waiver of, or prejudice to the rights of, any claimant, interest holder or other party in interest in this estate (excluding only the Debtor to the extent of the stipulations contained herein) or committee of creditors appointed in this case, to the extent permitted by the Bankruptcy Code and applicable law, to contest or object to the validity, perfection or enforceability of any liens, security interests or encumbrances of ING Group provided, however, that any claimant or committee of creditors appointed in this case must assert by applicable pleading such objection on or before December 15, 1998, with five (5) business days written notice to the ING Group, or be forever barred.

16. Preservation of Rights and Withdrawal of LSREH Objection. The entry of this Stipulated Order shall be without prejudice to the right of

Executive Guide to Corporate Bankruptcy

LSREH to raise the matters set forth in the LSREH Objection, and the Debtor's right to contest such matters, in a subsequent proceeding before this Court. All such rights are expressly preserved. Based upon the preservation of rights as provided herein, the LSREH Objection is hereby withdrawn.

DATED: December 7, 1998

/s/ Susan Pierson Sonderby UNITED STATES BANKRUPTCY JUDGE

AGREED AND CONSENTED TO: