GREENFIELDS FUNDING CORP.
and
DMB/REMEDIATION LLC
_______________________
SUBORDINATED LOAN AGREEMENT
_______________________
March 11, 1997
TABLE OF CONTENTS
BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1 DEFINITIONS.. . . . . . . . . . . . . . . . . . . . . . . 2
2 THE LOAN; FUNDING CONDITIONS. . . . . . . . . . . . . . . 19
2.1 Approval, Advances and Funding Conditions. . . . . . 19
2.2 Amount of Subordinated Loan Advances.. . . . . . . . 19
2.3 Release Shortfall Advances.. . . . . . . . . . . . . 20
2.4 Required Equity Contribution.. . . . . . . . . . . . 20
2.5 Additional Prov. Relating to Subordinated Loan Adv . 20
2.6 Purpose of Funding Conditions. . . . . . . . . . . . 20
2.7 Repayment. . . . . . . . . . . . . . . . . . . . . . 21
2.8 Fiduciary Obligation.. . . . . . . . . . . . . . . . 21
2.9 Subordinated Loan Interest.. . . . . . . . . . . . . 21
2.10 Maturity Date.. . . . . . . . . . . . . . . . . . . 22
2.11 Effect of Upcoming Maturity.. . . . . . . . . . . . 22
2.12 Security and Priority.. . . . . . . . . . . . . . . 22
2.13 Certain Excluded Expenditures.. . . . . . . . . . . 22
3 LOAN APPLICATIONS.. . . . . . . . . . . . . . . . . . . . 23
3.1 Required Contents. . . . . . . . . . . . . . . . . . 23
3.2 Criteria to Be Satisfied.. . . . . . . . . . . . . . 24
3.3 Noncompliance. . . . . . . . . . . . . . . . . . . . 25
3.4 Time Periods and Approval. . . . . . . . . . . . . . 25
3.5 Multiple Disapprovals. . . . . . . . . . . . . . . . 26
4 COVENANTS.. . . . . . . . . . . . . . . . . . . . . . . . 26
4.1 Acquisition and Remediation. . . . . . . . . . . . . 26
4.2 Compliance with Law. . . . . . . . . . . . . . . . . 27
4.3 Site Conditions. . . . . . . . . . . . . . . . . . . 27
4.4 Delays in Mortgage Acquisitions. . . . . . . . . . . 27
4.5 GMP Agreements.. . . . . . . . . . . . . . . . . . . 28
4.6 Use of Funds.. . . . . . . . . . . . . . . . . . . . 28
4.7 Real Estate Operations.. . . . . . . . . . . . . . . 28
4.8 Leasing. . . . . . . . . . . . . . . . . . . . . . . 29
4.9 Notices. . . . . . . . . . . . . . . . . . . . . . . 29
4.10 Environmental Reports.. . . . . . . . . . . . . . . 29
4.11 Access. . . . . . . . . . . . . . . . . . . . . . . 29
4.12 Contracts.. . . . . . . . . . . . . . . . . . . . . 29
4.13 Communications. . . . . . . . . . . . . . . . . . . 30
4.14 Budgets.. . . . . . . . . . . . . . . . . . . . . . 30
4.15 Notification of Certain Events. . . . . . . . . . . 30
4.16 No Conveyance.. . . . . . . . . . . . . . . . . . . 30
4.17 Other Business of DMB.. . . . . . . . . . . . . . . 30
4.18 Administrative Expenses Budgets.. . . . . . . . . . 31
4.19 Documentation.. . . . . . . . . . . . . . . . . . . 31
4.20 Disposition Agreements. . . . . . . . . . . . . . . 31
4.21 Replace. of Cleanup Contractor or Good Faith Guar 31
4.22 DMB Affiliated Financing. . . . . . . . . . . . . . 32
4.23 Financial Statements. . . . . . . . . . . . . . . . 32
4.24 Transfers of Interests in Borrower or any Subsid. . 33
4.25 Subordinated Pledge Agreement.. . . . . . . . . . . 34
5 GMP AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . 34
5.1 Cost Overruns. . . . . . . . . . . . . . . . . . . . 34
5.2 On-Site Operations.. . . . . . . . . . . . . . . . . 34
6 OPERATING AGREEMENTS. . . . . . . . . . . . . . . . . . . 35
6.1 Operating Agreements.. . . . . . . . . . . . . . . . 35
6.2 Approvals and Consents.. . . . . . . . . . . . . . . 35
6.3 Delivery of Information. . . . . . . . . . . . . . . 35
6.4 Meetings.. . . . . . . . . . . . . . . . . . . . . . 35
6.5 Enforcement of Borrower Operating Agreement. . . . . 35
6.6 No Amendments. . . . . . . . . . . . . . . . . . . . 36
6.7 No Member Loans. . . . . . . . . . . . . . . . . . . 36
6.8 DMB's Failure to Provide Funds.. . . . . . . . . . . 36
6.9 Subordinated Lender's Failure to Provide Funds.. . . 37
6.10 Withdrawing Member. . . . . . . . . . . . . . . . . 39
6.11 Copies of Notices.. . . . . . . . . . . . . . . . . 39
6.12 Other DMB Entities. . . . . . . . . . . . . . . . . 39
7 BORROWER'S SUBSIDIARIES.. . . . . . . . . . . . . . . . . 39
7.1 Loan Obligations.. . . . . . . . . . . . . . . . . . 39
7.2 Structuring. . . . . . . . . . . . . . . . . . . . . 39
7.3 Conduct of Business. . . . . . . . . . . . . . . . . 41
8 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 41
8.1 Loan Applications. . . . . . . . . . . . . . . . . . 41
8.2 Operating Agreements.. . . . . . . . . . . . . . . . 41
8.3 Subsidiaries.. . . . . . . . . . . . . . . . . . . . 41
8.4 Qualification, Etc.. . . . . . . . . . . . . . . . . 41
8.5 Authorization and Enforceability.. . . . . . . . . . 41
8.6 No Material Litigation.. . . . . . . . . . . . . . . 42
8.7 Compliance with Law. . . . . . . . . . . . . . . . . 42
8.8 No Conflict. . . . . . . . . . . . . . . . . . . . . 42
8.9 Ownership. . . . . . . . . . . . . . . . . . . . . . 42
8.10 Place of Business.. . . . . . . . . . . . . . . . . 42
8.11 Financial Statements. . . . . . . . . . . . . . . . 43
8.12 Accurate and Complete.. . . . . . . . . . . . . . . 43
8.13 No Fraud. . . . . . . . . . . . . . . . . . . . . . 43
8.14 ERISA.. . . . . . . . . . . . . . . . . . . . . . . 43
8.15 No Contracts. . . . . . . . . . . . . . . . . . . . 43
8.16 GMP Agreements. . . . . . . . . . . . . . . . . . . 43
8.17 Margin Regulations. . . . . . . . . . . . . . . . . 44
8.18 Taxes; Elections. . . . . . . . . . . . . . . . . . 44
8.19 Opinion(s) of Counsel.. . . . . . . . . . . . . . . 44
8.20 No Default. . . . . . . . . . . . . . . . . . . . . 44
9 REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . 44
9.1 Termination of Advances. . . . . . . . . . . . . . . 45
9.2 Default Interest.. . . . . . . . . . . . . . . . . . 45
9.3 Loan Termination Option. . . . . . . . . . . . . . . 45
9.4 Cure.. . . . . . . . . . . . . . . . . . . . . . . . 47
9.5 Completion of Remediation. . . . . . . . . . . . . . 47
9.6 Management.. . . . . . . . . . . . . . . . . . . . . 47
9.7 Costs of Collection. . . . . . . . . . . . . . . . . 47
10 EXCLUSIVITY.. . . . . . . . . . . . . . . . . . . . . . . 48
10.1 Subordinated Lender's New Loan Opportunities. . . . 48
10.2 Subordinated Lender Exclusivity.. . . . . . . . . . 48
10.3 Other Environmentally Contaminated Real Property. . 48
11 MISCELLANEOUS.. . . . . . . . . . . . . . . . . . . . . . 49
11.1 Subordinated Lender's Approval. . . . . . . . . . . 49
11.2 Status of Subordinated Lender.. . . . . . . . . . . 49
11.3 Affiliation with Senior Lender. . . . . . . . . . . 49
11.4 Borrower's Waiver of Claims . . . . . . . . . . . . 50
11.5 Subordinated Lender's Waiver of Claims. . . . . . . 50
11.6 Usury; Maximum Rate . . . . . . . . . . . . . . . . 50
11.7 Relationship of Parties . . . . . . . . . . . . . . 51
11.8 Further Assurances. . . . . . . . . . . . . . . . . 51
11.9 Separability. . . . . . . . . . . . . . . . . . . . 51
11.10 Notices. . . . . . . . . . . . . . . . . . . . . . 51
11.11 Authority of Attorneys.. . . . . . . . . . . . . . 51
11.12 Interpretation; Governing Law. . . . . . . . . . . 51
11.13 Amendments.. . . . . . . . . . . . . . . . . . . . 52
11.14 Successors and Assigns.. . . . . . . . . . . . . . 52
11.15 Assignment by Subordinated Lender. . . . . . . . . 52
11.16 Survival.. . . . . . . . . . . . . . . . . . . . . 52
11.17 Jury Trial Waiver. . . . . . . . . . . . . . . . . 52
11.18 Counterparts . . . . . . . . . . . . . . . . . . . 53
11.19 Subordinated Lender Waivers. . . . . . . . . . . . 53
INDEX OF DEFINED TERMS . . . . . . . . . . . . . . . . . . . . 56
EXHIBITS
Exhibit "A" - Administrative Expenses Budget
Exhibit "B" - Description of Remediation Profiles
Exhibit "C" - Example of Percentage Adjustment
Exhibit "D" - Waterfall
Exhibit "E" - Environmental Insurance Policy
Exhibit "F" - Subordinated Pledge Agreement
SUBORDINATED LOAN AGREEMENT
THIS SUBORDINATED LOAN AGREEMENT (the "Agreement") is made and
entered into as of March 11, 1997 (the "Closing Date"), by and between
GREENFIELDS FUNDING CORP., a Delaware corporation, whose address is Eleven
Madison Avenue, New York, New York 10010 ("Subordinated Lender"), and
DMB/REMEDIATION LLC, a Delaware limited liability company, whose address is
501 Madison Avenue, 19th Floor, New York, New York 10022 ("Borrower"). No
other parties, including, but not limited to, any Subsidiaries, are parties
to this Agreement. This Agreement is made solely and exclusively for the
benefit of Subordinated Lender and Borrower. Certain terms used in this
Agreement are defined on the pages in this Agreement referenced in the Index
of Defined Terms that follows the signatures. Terms can be used before they
are defined.
BACKGROUND
A. Borrower, a wholly owned subsidiary of Dames & Moore / Brookhill,
L.L.C., a Delaware limited liability company ("DMB") was formed pursuant to
an Operating Agreement entered into as of the Closing Date (the "Borrower
Operating Agreement," as amended from time to time with Subordinated
Lender's consent).
B. DMB, the only member of Borrower pursuant to the Borrower
Operating Agreement, was formed pursuant to an Operating Agreement entered
into on March 29, 1996 (the "DMB Operating Agreement").
C. On the Closing Date, Borrower and PPA FUNDING CORP., a Delaware
corporation, whose address is Eleven Madison Avenue, New York, New York
10010 ("Senior Lender") are entering into a Senior Loan Agreement (the
"Senior Loan Agreement"). To the extent that any capitalized term used in
this Agreement without definition is defined in the Senior Loan Agreement,
such definition shall also apply here.
D. Borrower desires to obtain from Subordinated Lender, and
Subordinated Lender desires to make available to Borrower, certain financing
pursuant to this Agreement (the "Loan" or the "Subordinated Loan") for the
acquisition (or Mortgage Acquisition with respect to), Remediation and/or
Development of Environmentally Contaminated real property (each such
parcel of real property, a "Property") in accordance with Loan Applications
to be submitted by Borrower pursuant to this Agreement.
NOW, THEREFORE, Borrower and Subordinated Lender agree:
1 DEFINITIONS.
The terms listed in this Article shall have the definitions set
forth below.
"Administrative Expense Disbursements" shall have the meaning set
forth in the Waterfall.
"Administrative Expenses" shall mean all reasonable fees, charges
and other expenses incurred by Subordinated Lender in connection with the
closing of the Subordinated Loan, all reasonable and necessary administrative
expenses of Borrower, such as attorneys' fees, organizational and entity
maintenance expenses, minimum franchise taxes, and all other expenses
of Borrower not attributable to any specific Approved Property, provided
that such Administrative Expenses are substantially consistent with the
Administrative Expenses Budget. Administrative Expenses shall also include
all costs and expenses for the processing of requests for Subordinated Loan
Advances and the making of Subordinated Loan Advances, including the
fees of any inspecting or supervising adviser or consultant retained by
Subordinated Lender, Subordinated Lender's legal fees, title company charges,
search charges, survey expenses, and other similar expenses, if any, and any
and all other costs and expenses of any kind incurred by Subordinated Lender
in administering the Loan or advancing funds pursuant to the Loan.
Administrative Expenses shall also include the Structuring Fee payable to
Senior Lender and any Lender's attorneys' fees including attorneys' fees
relating to the initial closing of the Loans. However, attorneys' fees
specific to any closings relating to Approved Properties shall constitute
Approved Investment as to the affected Approved Property. Administrative
Expenses shall not include any internal administrative, overhead or
out-of-pocket costs incurred by Borrower or DMB with respect to its
participation in Borrower, such as salaries and benefits of personnel, or
any fee for Borrower's or DMB's services. Administrative Expenses shall not
include any payments: (a) on account of any DMB Affiliated Financing; or (b)
made by DMB, Borrower or any of its Subsidiaries or affiliates to indemnify
Subordinated Lender as required by any Loan Documents, or otherwise.
"Administrative Expenses Budget" shall mean the budget attached as
Exhibit "A" or such modified budget as Subordinated Lender shall have approved.
"Affiliate" means, with respect to any Person, any other Person (i)
that owns more than 10% of the voting interests in such Person; or (ii) in
which such Person owns more than 10% of the voting interests; or (iii) in
which more than 10% of the voting interests are owned by a Person that has a
relationship with such Person as described in clause "i" or "ii" above or
that otherwise controls, is controlled by, or is under common control with,
such Person. For purposes of this definition, the term "controls," "is
controlled by," or "is under common control with" shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a person or entity, whether through the ownership
of voting securities, by contract or otherwise.
"Approved Investment" means the entire amount of any expenditure by
Borrower or a Subsidiary for an Approved Property or Mortgage Acquisition,
including any expenditure for pre-acquisition Remediation, acquisition costs
(in connection with acquisition of the Approved Property or the making of a
Mortgage Acquisition by a Subsidiary), Hard Costs and Soft Costs of
Remediation and Development, Administrative Expenses, and carrying costs,
provided that each such expenditure is consistent with the Loan Application
for such Approved Property or Mortgage Acquisition, regardless of the source
from which such Approved Investment is funded.
"Approved Property" shall mean a Property as to which Subordinated
Lender has approved a Loan Application, subject in all cases to the terms,
conditions and limitations of any such Loan Application and Subordinated
Lender's approval thereof.
"Bankruptcy Proceeding" shall mean, with respect to any Person, any
bankruptcy, insolvency, reorganization, composition, assignment for the
benefit of creditors, appointment of trustee, or any similar action or
proceeding affecting such Person or any of its property that is either (a)
initiated by such Person or by any Affiliate of such Person or (b) if not
described in clause "a," then not dismissed within 90 days after commencement.
"Basic Return Disbursements" shall have the meaning set forth in
the Waterfall.
"Borrower Cash" shall mean any Cash Flow or Net Proceeds from Sales
or Refinancings of any Approved Property received or held by Borrower, or
any Subsidiary.
"Cash Equivalent" shall mean cash or its equivalent.
"Cash Flow" shall mean (either as an aggregate term or with reference
to particular approved Property(ies), as the context shall reflect) all cash
funds and Cash Equivalents derived from operations of Borrower and
Subsidiaries of Borrower (but not Net Proceeds from Sales or Refinancings of
any Approved Properties, even if in the ordinary course of business)
including but not limited to, the net cash proceeds from all renting,
leasing, or any other use of property from any entity in which Borrower or
any Subsidiary has an economic interest, less any portion thereof used to pay
or establish reasonable reserves consistent with this Agreement for future
expenses or liabilities, Senior Loan Payments, capital improvements,
replacements and contingencies, all as determined by Borrower's Board of
Managers with Subordinated Lender's approval. Cash Flow shall include all
interest payments with respect to any note or other obligation received by
Borrower in connection with sales and other dispositions of property, as
well as any Cash Equivalents of such interest payments. Cash Flow shall not
be reduced by depreciation, amortization (other than loan amortization), cost
recovery deductions, or similar allowances, but shall be increased by any
reductions of reserves previously established pursuant to the first sentence
of this paragraph, provided, however, that:
o Cash Flow shall be calculated without taking any deduction for
Administrative Expenses or for payments made or to be made on
account of the Subordinated Loan (principal or interest).
o Cash Flow shall include the receipts and disbursements of
Subsidiaries when distributed to Borrower, or when they would
have been distributed to Borrower if Borrower had complied with
this Agreement as to the making of such distributions.
o Any payments with respect to any DMB Affiliated Financing
shall not be deducted in calculating Cash Flow.
"Cash Outlay" shall mean the total amount (100%, regardless of the
source or timing of funding) of: (a) any Administrative Expense to be paid or
incurred by Borrower or a Subsidiary or (b) all amounts paid or to be paid
(previously, presently, or in the future) by Borrower or a Subsidiary on
account of an Approved Investment, as set forth in a Loan Application. Where
an Approved Investment is to be made over time or in installments, "Cash
Outlay" shall refer to the total of such installments (as opposed to "Current
Cash Outlay," which refers to each such installment).
"Cleanup Contractor" shall mean Dames & Moore, Inc., a Delaware
corporation having an address at 911 Wilshire Boulevard, Los Angeles,
California 90017. To the extent that Borrower replaces Cleanup Contractor
with a Satisfactory Replacement Cleanup Contractor (as to any one or more
Approved Property(ies)), such Satisfactory Replacement Cleanup Contractor
shall then constitute "Cleanup Contractor" as to the affected Approved
Properties.
"Clearance" shall mean, with respect to any Remediation, the
completion of such Remediation in accordance with the requirements of all
applicable Governmental Authorities as set forth in the applicable Loan
Application, (and subject to changes in Law) as evidenced by the issuance of
all applicable written confirmations, approvals, clearances, releases,
covenants not to sue, prospective purchaser agreements, and other similar
documentation, including any land use restriction agreements or covenants
required by such Governmental Authority.
"Cure Period" shall mean, with respect to any default, the
following period after written notice from Subordinated Lender: (a) ten days,
in the case of any monetary default other than failure to pay Subordinated
Loan Interest, or principal of the Subordinated Loan, when due; (b)
three business days in the case of a nonmonetary default relating to failure
to provide insurance; and (c) thirty days, in the case of any other
nonmonetary default. Such thirty-day period shall be extended as to curable
nonmonetary defaults (other than failure to provide insurance), but only so
long as the party in default is, with diligence and continuity, endeavoring
to cure such nonmonetary default. There shall be no Cure Period as to
failure to pay Subordinated Loan Interest or principal on the Subordinated
Loan if, when, and as such interest or principal may become due and payable
pursuant to this Agreement from time to time, to the extent that the amount
required to be paid has been determined.
"Current Cash Outlay" shall mean only the amount of any Cash Outlay
presently due and payable by Borrower or a Subsidiary at a particular time.
"Damages" shall mean all damages, and includes punitive damages,
liabilities, costs, losses, diminutions in value, fines, penalties, demands,
claims, cost recovery actions, lawsuits, administrative proceedings, orders,
response action costs, compliance costs, investigation expenses, consultant
fees, attorneys' and paralegals' fees and litigation expenses.
"Default Interest" shall mean interest at the rate of twenty-four
percent (24%) per annum.
"Develop," and any derivative thereof such as Development, as to
any real property, shall mean without limitation develop, alter, operate,
renovate and redevelop such real property, including site work, filing of any
necessary applications for building permits, zoning approvals, and other
permits and approvals not related to Remediation, and any demolition of
existing improvements contemplated by a Loan Application. Costs of
Development shall also include reasonable and customary carrying costs and
operating losses incurred during Development.
"Disbursement Request" shall mean Borrower's written request that
Subordinated Lender make a Subordinated Loan Advance, which request shall be
in such form, and be accompanied by such documentation and deliveries, as
Subordinated Lender shall reasonably request.
"DMB Affiliated Financing" shall mean unsecured loans obtained from
time to time by Borrower from DMB or any Affiliate of DMB, provided that:
o Permitted Amount. The amount of any such loan shall not
exceed, and the proceeds of any such loan shall be applied
only in lieu of and in substitution for, DMB's share of any
additional Capital Contribution to Borrower required because
costs of Remediation or Development exceed those set forth in a
Loan Application.
o Subordination. The lender providing such loan shall have
unconditionally subordinated all of its rights with respect to
such loan (including as to timing, right, and priority of
payment) to the prior payment in full of the Subordinated
Loan, all pursuant to documentation satisfactory to
Subordinated Lender in its sole and absolute discretion.
o Loan Status. No Event of Default shall have occurred and is
continuing.
o Compliance. Borrower shall have complied with all covenants,
requirements and conditions of this Agreement with respect to
such DMB Affiliated Financing.
"DMB Parties" shall mean Borrower, DMB, all Subsidiaries, and the
Good Faith Guarantors.
"Environmental Claim" shall mean, with respect to any Approved
Property, any investigation, notice, violation, demand, allegation, action,
suit, injunction, judgment, order, consent decree, penalty, fine, lien,
proceeding or claim (whether administrative, judicial or private in nature),
arising (a) pursuant to, or in connection with an actual or alleged
violation of, any Environmental Law, by Borrower, any Subsidiary, DMB, or
Cleanup Contractor, (b) in connection with any Hazardous Material or actual
or alleged Hazardous Material Activity, or (c) from any abatement, removal,
remedial, corrective or other response action in connection with a
Hazardous Material, Environmental Law or other order of a Governmental
Authority, including the actions or omissions of Cleanup Contractor,
Borrower, any Subsidiary, and DMB.
"Environmental Insurance Policy" shall mean for each Approved
Property one or more insurance policy(ies) (or certificates or other
evidences of insurance, issued pursuant to a master policy, with a specific
amount of coverage reserved for such Approved Property), to be purchased
by Borrower, in substantially the form of Exhibit "E" (or as otherwise
approved by Subordinated Lender pursuant to a Loan Application), providing
insurance protection against all Latent Environmental Risks of such Property.
Any Environmental Insurance Policy shall contain a waiver of any right of
subrogation against all DMB Parties and Subordinated Lender. Any
Environmental Insurance Policy shall identify Subordinated Lender as an
additional insured and shall be issued in favor of Borrower.
"Environmental Indemnitors" shall mean DMB and Borrower.
"Environmental Law" shall mean any Law pertaining to (a) the
protection of health, safety and the indoor or outdoor environment, (b) the
conservation, management or use of natural resources and wildlife, (c) the
protection or use of surface water and groundwater, (d) the management,
manufacture, possession, presence, use, generation, transportation, treatment,
storage, disposal, Hazardous Material Release, threatened Hazardous Material
Release, abatement, removal, Remediation or handling of, or exposure to, any
Hazardous Material or (e) pollution. "Environmental Law" includes the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. Section 9601 et seq., Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. Section 6901 et seq., Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. Section
1251 et seq., Clean Air Act of 1966, as amended, 42 U.S.C. Section 7401 et
seq., Toxic Substances Control Act of 1976, 15 U.S.C. Section 2601 et seq.,
Hazardous Materials Transportation Act, 49 U.S.C. App. Section 1801 et seq.,
Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. Section
651 et seq., Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.,
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.
Section 11001 et seq., National Environmental Policy Act of 1969, 42 U.S.C.
Section 4321 et seq., Safe Drinking Water Act of 1974, as amended, 42 U.S.C.
Section 300(f) et seq., any similar, implementing or successor law, and any
amendment, rule, regulation, order or directive issued or enacted by any
applicable Governmental Authority.
"Environmental Risks" shall mean any Damages suffered that may be
suffered by a Person as a result of any Environmental Claim, relating to an
Approved Property, or any condition or circumstance that may give rise to an
Environmental Claim, or potential Damages to any Person as a result of any
actual or potential Environmental Claim relating to or arising from an Approved
Property. Sums payable to Cleanup Contractor to perform Remediation as
required by a GMP Agreement shall not constitute Environmental Risks.
"Environmentally Contaminated," as to any real property, means that
the projected cost of Remediation of such real property equals or exceeds 10%
of the combined projected cost of acquisition, Remediation and Development
of such real property.
"Event of Default" shall mean the occurrence of any of the
following, including the passage of only such notice or cure periods as may
be provided for below.
o Failure of Borrower to pay Subordinated Loan Interest, or
principal of the Subordinated Loan, when and as required by
this Agreement, to the extent that the amount payable shall
have been determined.
o Failure of Borrower or any Subsidiary to perform and comply
with any other covenant or obligation under this Agreement,
which failure: (a) either (i) relates solely to one Approved
Property and would have a Material Adverse Effect as to
such Approved Property or (ii) relates to more than one
Approved Property, whether or not it has a Material Adverse
Effect; and (b) in all cases (regardless of the number of
Approved Properties affected, if any), is not cured within the
Cure Period.
o The making by any member of Borrower or DMB of any transfer of
its membership interest in Borrower or DMB, or the admission
of any new member of Borrower or DMB, without prior written
consent by Subordinated Lender, except as expressly permitted
pursuant to this Agreement.
o The inaccuracy of any warranty or representation in this
Agreement when made or deemed made, which inaccuracy has a
Material Adverse Effect and is either not curable or is not
cured within thirty (30) days after written notice from
Subordinated Lender.
o DMB's withdrawal of any capital, or the taking of any loan,
from Borrower, except for distributions made to DMB in
compliance with the Waterfall.
o A Bankruptcy Proceeding in which any DMB Party is debtor.
o A Bankruptcy Proceeding in which Cleanup Contractor is debtor
unless within thirty days after the initial commencement
(whether voluntary or involuntary, and without regard to the
90-day period provided for in the definition of Bankruptcy
Proceeding) of such Bankruptcy Proceeding, Borrower has procured
a Satisfactory Replacement Cleanup Contractor.
o A Bankruptcy Proceeding in which a Good Faith Guarantor is
debtor, unless within forty-five (45) days after the initial
commencement (whether voluntary or involuntary, and without
regard to the 90-day period provided for in the definition
of Bankruptcy Proceeding) of such Bankruptcy Proceeding,
Borrower has procured a Satisfactory Good Faith Guarantor.
o The assertion, in writing, against Borrower or DMB, of any
Environmental Claim affecting an Approved Property and arising
from the acts or omissions of any Subsidiary, unless within
thirty days after the assertion of such claim: (a) such
claim has been withdrawn as against Borrower and DMB; or (b)
an insurance carrier has confirmed in writing that such carrier
without qualification or limitation is obligated to and shall
defend and pay such claim; or (c) Borrower has obtained
and delivered to Subordinated Lender a bond or other security
or indemnity satisfactory to Subordinated Lender with respect
to such Environmental Claim; or (d) Borrower has commenced to
(and shall thereafter continue at all times to) actively and
diligently contest such Environmental Claim provided that, in
Subordinated Lender's discretion, such contest and the
prosecution thereof shall not have a Material Adverse Effect.
o Failure of Cleanup Contractor to perform any obligation under
a GMP Agreement, which failure is reasonably likely (in
Subordinated Lender's reasonable judgment) to have a Material
Adverse Effect and is not cured within the Cure Period.
o If any Good Faith Guarantor fails to perform any obligation
under the Good Faith Guaranty and fails to cure such
nonperformance within the Cure Period; asserts in writing that
the Good Faith Guaranty is unenforceable or invalid in whole or
in part, which assertion is not withdrawn in writing within ten
days after written notice from Subordinated Lender; or seeks
in writing to revoke, limit, or terminate such Person's
liability, in whole or in part, under the Good Faith Guaranty.
o If any DMB Party or any Affiliate of a DMB Party enters into an
agreement, or takes any other action(s), in pursuance of a New
Loan Opportunity without complying with the applicable
requirements of this Agreement.
o If Borrower or any Subsidiary incurs any Outside Financing in
violation of this Agreement.
o If a Subsidiary misapplies the proceeds of any Subordinated
Loan Advance and, provided that such misapplication was
unintentional, fails to correct same within five business days
after written notice from Subordinated Lender.
"Exit Date" shall mean, as to any Approved Property, the date when
Borrower shall have completed all Remediation and Development, and shall
have disposed, of such Approved Property.
"Force Majeure" shall mean any circumstance beyond Borrower's
reasonable control, provided that:
o Such circumstance cannot reasonably be cured by the payment of
money;
o Borrower provides Subordinated Lender with reasonably prompt
notice of such circumstance; and
o Borrower endeavors with reasonable diligence and continuity to
proceed with the performance of Borrower's obligations
hereunder notwithstanding such circumstance, to the extent
reasonably possible under the circumstances.
"Funding Certificate" shall mean a certificate to be issued by the
Subordinated Lender confirming that subject to the requirements of this
Agreement, including but not limited to satisfaction of the Funding
Conditions, Subordinated Lender has approved a Loan Application and is
prepared, ready, willing and able to make, Subordinated Loan Advances as
contemplated by such Loan Application and this Agreement.
"Funding Conditions," as to any Subordinated Loan Advance, shall
mean the Initial Funding Conditions and/or the General Funding Conditions,
as applicable.
"General Funding Conditions" shall mean the satisfaction and/or
continued satisfaction of the following conditions, all of which are
cumulative, prior to or simultaneously with the making of any Subordinated
Loan Advance (whether an Initial Property Funding or a Subsequent Property
Funding or on account of Administrative Expenses):
o Maximum Amount. The maximum total amount of Subordinated Loan
Advances in the aggregate shall not exceed Forty Million
Dollars ($40,000,000). For purposes of calculating the
aggregate Subordinated Loan Advances in the preceding sentence,
except to the extent that Subordinated Lender may agree
otherwise in writing: (a) any repayments of principal of the
Subordinated Loan shall not be subtracted; (b) sums repaid on
account of the Subordinated Loan may not be reborrowed; and (c)
the Subordinated Loan shall not be a revolving loan.
o Defaults, Etc. No uncured Event of Default exists under any
Loan Document.
o Potential Defaults. No event has occurred that would, with the
passage of time or the giving of notice, constitute an Event of
Default, unless such event: (a) does not relate to the Approved
Property for which the Subordinated Loan Advance is being
requested; (b) is not monetary; (c) is being diligently cured
by Borrower; and (d) is not material.
o Loan Application. Each Current Cash Outlay for an Approved
Property shall be consistent with the Loan Application as
approved, including as to Clearances, cost (subject to
contingencies included in the Loan Application), and timing.
o Senior Loan Approval and Commitment. If and only if the Cash
Outlay relates to an Approved Investment in an Approved
Property, then at the same time that Subordinated Lender makes
the Subordinated Loan Advance, and with respect to the same
Cash Outlay, Senior Lender shall have confirmed in writing
that Senior Lender shall advance to or for the benefit of
Borrower an amount equal to 75% of the entire amount of such
Cash Outlay, provided only that (i) DMB shall have contributed
to Borrower 5% of the Cash Outlay, and (ii) other normal and
customary funding conditions in the Senior Loan Documents shall
have been satisfied. This Funding Condition shall not apply to
the extent that Senior Lender is not obligated to advance funds
only because (a) the Senior Loan is Out of Balance or (b) the
Current Cash Outlay relates to expenditures of a type as to
which Senior Lender otherwise is categorically (because of
circumstances not relating to Borrower's default) not obligated
to make Senior Loan Advances or (c) Borrower has, with
Subordinated Lender's consent (including consent to Outside
Financing pursuant to Subordinated Lender's approval of a Loan
Application), determined not to seek funds from Senior Lender.
o Representations and Warranties. All representations and
warranties made by Borrower in all Loan Documents are true and
correct in all material respects.
o Environmental Insurance Policy. If provided for in the Loan
Application, Borrower shall have obtained a fully paid
Environmental Insurance Policy.
o Disbursement Request. Borrower shall have submitted to
Subordinated Lender a Disbursement Request.
o Application of Prior Advances. Borrower shall have delivered
to Subordinated Lender documentation, satisfactory to
Subordinated Lender, demonstrating the proper application and
disbursement of all previous Subordinated Loan Advances.
o Approval of Administrative Expense. If the Cash Outlay relates
to an Administrative Expense, then such Administrative Expense
shall have been approved by Subordinated Lender, including
pursuant to approval of a budget (including the Administrative
Expenses Budget annexed hereto as Exhibit "A"), revised budget,
or Loan Application.
o No Material Adverse Event. No fact or circumstance (except as
disclosed in the Loan Application) shall exist that would have
a Material Adverse Effect.
"GMP Agreement" shall mean an agreement between Cleanup Contractor
and a Subsidiary by which Cleanup Contractor agrees to Remediate all
Environmental Risks to the extent provided in the Loan Application (as
approved by Subordinated Lender) for the Property affected by such GMP
Agreement, and specifically agrees to Remediate all Identified Environmental
Risks (to the extent such Remediation is necessary to obtain Clearances), as
provided for in the Loan Application, which agreement and plan provide for a
guaranteed maximum price, a scheduled completion date (but no liquidated
damages for delay), and other terms and conditions approved by Subordinated
Lender, and is in substantially the form annexed to the Borrower Operating
Agreement.
"Good Faith Guarantors" shall mean Mr. Ronald Bruder, an individual
having an address at 501 Madison Avenue, 18th Floor, New York, New York
10022 and Dames & Moore, Inc., a Delaware corporation having an address at
911 Wilshire Boulevard, Los Angeles, California 90017.
"Good Faith Guaranty" shall mean that certain so-called "Good Faith
Guaranty" dated on or about the Closing Date executed by the Good Faith
Guarantors.
"Governmental Approval" shall mean any permit, license, variance,
certificate, consent, letter, Clearance, closure, exemption, decision or
action or approval of a Governmental Authority, having proper and full
jurisdiction to issue such approval.
"Governmental Authority" shall mean any federal, state, regional,
county, local or other person or body having governmental or quasi-
governmental authority or subdivision thereof, including a court.
"Hard Costs" shall mean all costs of on-site physical activity in
connection with Remediation or Development (as applicable), including without
limitation excavation, construction, site protection, plumbing, paving,
landscaping, fences, alterations, utilities, lighting, grading and filling,
and other activities on an Approved Property, including all labor and
materials in connection therewith.
"Hazardous Material" shall mean any substance, chemical, compound,
product, solid, gas, liquid, waste, byproduct, pollutant, contaminant or
material that is hazardous or toxic, and includes (a) asbestos,
polychlorinated biphenyls and petroleum (including crude oil or any fraction
thereof) and (b) any such material classified or regulated as "hazardous" or
"toxic" pursuant to any Environmental Law.
"Hazardous Material Activity" shall mean any activity, event or
occurrence involving a Hazardous Material, including the manufacture,
possession, presence, use, generation, transportation, treatment, storage,
disposal, Hazardous Material Release, threatened Hazardous Material Release,
abatement, removal, Remediation, handling of or corrective or response action
to any Hazardous Material.
"Hazardous Material Release" means any release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment of Hazardous
Material (including, without limitation, the movement of Hazardous Material
through ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata).
"Highest Lawful Rate" shall mean the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged, or received, between parties of the character of
Borrower and Subordinated Lender, with respect to the Subordinated Loan (a)
under the laws of any jurisdiction whose laws shall apply mandatorily,
notwithstanding other provisions of the Subordinated Loan Documents, (b)
under applicable federal laws that are presently in effect, or (c) to the
extent that law allows, under such applicable federal or state law as may
allow a higher maximum nonusurious interest rate than under clause "a," in
any case after taking into account, to the extent that applicable law
permits, any and all relevant payments or charges under the Subordinated Loan
Documents.
"Identifiable Environmental Risks" shall mean all Environmental
Risks or potential Environmental Risks (including the correct magnitude
thereof) that Cleanup Contractor or any comparable environmental consulting
organization of comparable quality and expertise, exercising normal standards
and diligence of professional environmental consulting specialists, should have
detected and should have disclosed in the environmental assessment submitted
with a Loan Application, whether or not such Environmental Risks or potential
Environmental Risks were actually so identified and disclosed. All
Identified Environmental Risks are automatically also deemed Identifiable
Environmental Risks.
"Identified Environmental Risks" shall mean any Environmental
Risks or potential Environmental Risks arising from any environmental matter
or condition affecting an Approved Property, to the extent that such matter
or condition and its Environmental Risks and potential Environmental Risks,
were fully and accurately disclosed, with clarity and specificity, in a Loan
Application as approved by Subordinated Lender. Any cost overruns incurred
and payable by Cleanup Contractor under a GMP Agreement shall not constitute
Identified Environmental Risks.
"Initial Property Funding" shall mean for each Approved Property the
first Subordinated Loan Advance as to such Approved Property.
"Initial Property Funding Conditions" shall mean satisfaction of
the following conditions (all of which are cumulative) as to a particular
Approved Property, prior to or simultaneously with Subordinated Lender's
making the Initial Property Funding for a particular Approved Property, all
to the reasonable satisfaction of Subordinated Lender:
o Loan Application. Subordinated Lender shall have approved the
Loan Application.
o GMP Agreement. Cleanup Contractor and the applicable
Subsidiary shall have entered into a GMP Agreement consistent
with the Loan Application.
o Governmental Approvals. To the extent reasonably obtainable at
the time, a PPA shall have been obtained and issued, and shall
be in full force and effect and shall not have been revoked,
nor shall any Governmental Authority have given any notice of
revocation or withdrawal of any PPA, in whole or in part, or in
the alternative, all necessary or appropriate Governmental
Approvals with respect to commencement or continuation of
Remediation shall have been obtained and issued, and shall be
in full force and effect and shall not have been revoked, nor
shall any Governmental Authority have given any notice of
revocation or withdrawal of any Governmental Approval, in whole
or in part.
o Subsidiary Formation. Borrower shall have duly formed the
Subsidiary for such Approved Property.
o Subsidiary Capitalization. After Senior Lender and
Subordinated Lender have committed to making advances but
before they have made advances, Borrower shall contribute to
the capital of the Subsidiary an amount equal to Twenty-Five
Percent (25%) of the total amount to be advanced by
Subordinated Lender (i.e., 5% of the total Cash Outlay) for the
Approved Property. Upon receiving each Subordinated Loan
Advance, Borrower shall contribute the entire proceeds of
such Subordinated Loan Advance to the capital of such Subsidiary.
o Ownership of Approved Property. If the Loan Application
contemplates that a Subsidiary shall own the Approved Property
at the time of such Approved Investment, then such Subsidiary
shall have acquired the Approved Property and Borrower shall
have provided Subordinated Lender with a copy of the Subsidiary's
policy of title insurance or marked commitment (as to which all
title premiums or commitment fees have been paid) evidencing
such ownership, or an update thereof, subject in each case only
to exceptions to title satisfactory to Borrower and
Subordinated Lender.
o Remediation Before Acquisition of Approved Property. If the
Loan Application contemplates that a Subsidiary shall commence
Remediation before acquiring title (including pursuant to a
Mortgage Acquisition), then such Subsidiary shall have entered
into contracts with respect to the Remediation and acquisition
and obtained security (e.g., a mortgage securing the
obligations of the seller), all as set forth in the Loan
Application.
o Property-Related Information. Borrower shall have provided
Subordinated Lender with such title, survey, ownership, copies
of leases and service contracts, third-party reports, and other
property-related documentation as Subordinated Lender shall
have requested.
o Opinion of Counsel. Borrower shall have delivered to
Subordinated Lender an opinion of Local Counsel, directed to
Subordinated Lender, confirming such matters as Subordinated
Lender shall require, including status of the Subsidiary;
nonviolation of usury law; Subordinated Lender's compliance
with local licensing requirements; and similar matters of local
law. (To the extent that under the circumstances such opinion
is not obtainable because of particular requirements of
local law, the parties shall reasonably consider such measures
as Local Counsel may recommend. Neither party shall be
obligated to agree to any such measures. If no such agreement
is reached, than the condition in this paragraph shall be
deemed to have not been satisfied.)
"Interest Rate" shall mean a rate of interest equal to Twenty
Percent (20%) per annum, calculated by Subordinated Lender based on actual
days elapsed divided by 360, and compounded monthly.
"Latent Environmental Risks" shall mean: (a) any Environmental Risks
that are not Identifiable Environmental Risks; and (b) any increase in
Environmental Risks resulting from a change in Law after the date of a Loan
Application.
"Law" shall mean any current or future treaty, convention, statute,
law, regulation, ordinance, Governmental Approval, injunction, judgment,
order, consent decree or other requirement of any Governmental Authority.
"Leasing Guidelines" shall mean the guidelines (including economic
terms) for leasing of any vacant space that may exist from time to time at a
Property, as set forth in the Loan Application for such Property.
"Lender" shall mean Subordinated Lender and/or Senior Lender, as
applicable.
"Liquidating Event" shall mean a "Liquidating Event" as defined in
the Borrower Operating Agreement.
"Loan Agreements" shall mean the Senior Loan Agreement and the
Subordinated Loan Agreement.
"Loan Application" shall mean Borrower's written proposal to invest
in a Subsidiary that would acquire, Remediate and/or Develop a specific
Property or undertake a Mortgage Acquisition, which Loan Application shall
contain all Required Information and satisfy all Loan Criteria. Where the
term "Loan Application" is used with reference to any activities or
expenditures of a Subsidiary or Borrower, Cash Outlay, Approved Property,
Approved Investment, or Subordinated Loan Advance, such term shall mean a
Loan Application that Subordinated Lender has approved in writing, together
with any conditions or modifications required by Subordinated Lender in
connection with such approval.
"Loan Documents" shall mean the Senior Loan Documents and the
Subordinated Loan Documents.
"Loan Recovery Shortfall" shall mean the sum of the following from
time to time: (a) the extent to which, upon disposition(s) of Approved
Property(ies), Borrower Cash from such disposition(s) has been and is in the
aggregate insufficient to pay Basic Subordinated Loan Interest or principal
of the Subordinated Loan remaining unpaid on Subordinated Loan Advances
relating to such Approved Property(ies); (b) the principal amount of any
Release Shortfall Advances made by Subordinated Lender; plus (c) interest on
the foregoing at the Interest Rate.
"Local Counsel" shall mean counsel licensed to practice in the state
where an Approved Property is located and approved by Subordinated Lender in
Lender's sole and absolute discretion.
"Material Adverse Effect" as to any matter shall mean that in
Subordinated Lender's reasonable judgment such matter is reasonably likely to
materially adversely affect Borrower, Subordinated Lender, any Property, the
expense or scheduling of any Remediation, Development, compliance with any
Law, or Borrower's compliance with any Loan Application or Loan Document.
Any matter that would or is reasonably likely to materially increase the cost
of, or delay, any Remediation or Development, or limit or impair in any
material respect the usability, value, or utility of an Approved Property, or
that would materially impair, limit or delay the effectiveness of any
Governmental Approval, shall be deemed to have a Material Adverse Effect.
"Maturity Date" shall mean, with respect to the portion of the Loan
allocable to each Approved Property, the latest of (a) December 31, 1999; (b)
as to Subordinated Loan Advances for individual Approved Properties, the
Maturity Date applicable to such individual Approved Properties under the
Senior Loan; and (c) as to Subordinated Loan Advances for individual
Approved Properties, the Exit Date set forth in the Loan Application for
such Approved Property.
"Member" shall mean a member of Borrower. As of the Closing Date,
the only Member of Borrower is DMB.
"Mortgage Acquisition" shall mean the acquisition of a mortgage
encumbering a Property in lieu of acquiring the Property itself, and
thereafter Remediating such Property and obtaining title to such Property
pursuant to exercise of remedies (or acceptance of a deed in lieu thereof)
pursuant to the acquired mortgage, all in accordance with a Loan Application.
"Net Property Profit" shall have the meaning set forth in the
Waterfall.
"Net Proceeds from Sales or Refinancings" shall mean without
duplication (i) the sum of: (a) the net cash proceeds from all sales and
other dispositions (including sales and dispositions of a Subsidiary's or
Borrower's real property in the ordinary course of business and the proceeds
from any casualty or condemnation affecting real property), (b) the net cash
proceeds from all sales and other dispositions of property distributed to
Borrower from any entity in which Borrower has an interest, including any
Subsidiary, and (c) the net cash proceeds from all refinancings of property
by Borrower or any entity in which Borrower has an economic interest,
including any Subsidiary, to the extent distributed to Borrower, minus (ii)
any portion thereof used to establish commercially reasonable reserves (or,
in the case of a casualty or condemnation, applied or reserved to pay for
commercially reasonable costs of adjustment, collection, and restoration),
all as determined by Borrower's Board of Managers with Subordinated Lender's
consent. The term "net cash proceeds" means gross proceeds less reasonable
and customary transaction costs. "Net Proceeds from Sales or Refinancings"
shall include all principal payments received by Borrower with respect to any
note or other obligation taken back in connection with any sale or other
disposition of property. In calculating "Net Proceeds from Sales or
Refinancings," any Senior Loan Payments payable on account of the particular
transaction or property being sold or refinanced (but not any payments made
or payable on account of DMB Affiliated Financing) shall be subtracted out as
a deduction.
"New Loan Opportunity" shall mean any opportunity to acquire or
invest in any real property (or make any Mortgage Acquisition affecting real
property) that is Environmentally Contaminated, which opportunity may be
appropriate for Borrower to pursue, whether or not such opportunity complies
with the Loan Criteria. The term "New Loan Opportunity" shall not include
any opportunity: (a) of DMB or any Affiliate of DMB to Remediate real
property on a bona-fide fee-for-service basis for a third-party client, or
(b) of any party to participate in Development of, or otherwise acquire or
invest in, any real property that is not Environmentally Contaminated.
"Operating Agreements" shall mean, together, the Borrower Operating
Agreement and the DMB Operating Agreement.
"Out of Balance" shall mean, with respect to the Senior Loan, that
at the time of determination, Senior Lender is not obligated to make a
further Senior Loan Advance for a particular Approved Property because if
Senior Lender were to make such Senior Loan Advance the resulting amount of
the Senior Loan would fail to comply with an applicable ratio or financial
test set forth in the Senior Loan Agreement.
"Outside Financing" shall mean a Subsidiary's or Borrower's
borrowing of any money (including purchase-money financing from the seller of
any Approved Property), other than trade payables, the Loans, and DMB
Affiliated Financing.
"Payment Date" shall mean the last business day of each calendar month.
"Permitted Sponsor" shall mean the Subsidiary that owns the
applicable Approved Property or Cleanup Contractor. Neither Borrower nor
DMB is a Permitted Sponsor.
"Person" shall mean any natural person or legal entity.
"PPA" shall mean a "Prospective Purchase Agreement" issued by the
United States Environmental Protection Agency or comparable agreement issued
by a state Governmental Authority.
"Release Shortfall" shall mean the "Release Shortfall" as determined
pursuant to the Senior Loan Agreement.
"Remediation" shall mean environmental clean-up and remediation of
an Approved Property by Cleanup Contractor, acting on behalf of the
applicable Subsidiary, all in compliance with a Loan Application and Law,
including Environmental Law. Any reference to "completion" of Remediation
shall mean completion of Remediation to a degree such that all Clearances
contemplated by the applicable Loan Application shall have been issued.
Remediation shall include physical on-site Remediation activities and the
making of all necessary filings and applications with Governmental
Authorities in connection therewith, and all other activities necessary or
appropriate to obtain Clearances.
"Retained Earnings Reserve" shall mean the "Retained Earnings
Reserve" provided for under the Senior Loan Agreement.
"Satisfactory Replacement Cleanup Contractor" shall mean a
contractor fully qualified and licensed to perform all Remediation that was
to have been performed by Cleanup Contractor (as to all Approved Properties
or specific Approved Properties only), provided that Senior Lender approved
such replacement pursuant to a Loan Application, or such replacement: (a) is
reasonably satisfactory to Subordinated Lender; (b) is, in Subordinated
Lender's reasonable judgment, creditworthy and capable to the degree
necessary or appropriate to reliably perform as Cleanup Contractor; (c) has,
in a manner reasonably satisfactory to Subordinated Lender, entered into
documentation substantially equivalent to all those previously entered into
by Cleanup Contractor; (d) has at least the same insurance coverage as the
Cleanup Contractor as originally defined in this Agreement; and (e) does not,
in Senior Lender's judgment, impair any coverage provided by the
Environmental Insurance Policy.
"Satisfactory Replacement Guarantor" shall mean a Person that is,
in Subordinated Lender's sole, absolute and unreviewable discretion, an
adequate and satisfactory replacement for any Good Faith Guarantor (as
initially defined herein), provided that such Person has entered into
documentation similar to all documentation creating or evidencing the Good
Faith Guaranty previously entered into and delivered by the Good Faith
Guarantor being replaced.
"Senior Loan Advance" shall mean an advance of funds by Senior
Lender to or for the benefit of Borrower, made pursuant to the Senior Loan
Agreement.
"Senior Loan Documents" shall mean the Senior Loan Agreement, the
Senior Note, that certain Structuring Fee Letter dated the Closing Date
between Borrower and Senior Lender, and any and all other documents delivered
to Senior Lender by or on behalf of any DMB Party from time to time in
connection with the foregoing or the making of any Senior Loan Advances.
"Senior Loan Payments" shall mean all payments actually made by
Borrower on account of the Senior Loan, whether for principal, interest,
escrow deposits (to the extent required by the Senior Loan Documents), other
charges, or reimbursement of Senior Lender's expenses (including attorneys'
fees, appraisal costs, and other costs incurred by Senior Lender and
reimbursable by Borrower pursuant to the Senior Loan Documents).
"Soft Costs" shall mean all costs of Remediation or Development,
including payment of real estate taxes, insurance premiums and other
carrying costs during the period of any actual Remediation or Development;
consultants' fees; legal fees; "general conditions" charges; construction
management fees; contractor's overhead and profit charges; marketing
expenses; but excluding Hard Costs, costs of acquisition, and carrying costs
except during the period of any actual Remediation or Development.
"Sponsor" shall mean, as to any Remediation, the "owner" and
"operator" of the Approved Property where such Remediation occurs; the
"arranger" and "transporter" in connection with such Remediation; and the
Person otherwise responsible under Environmental Laws for or with respect to
such Remediation and any related Hazardous Material Activity. Lower-case
terms in quotes used in this definition shall have the meanings set forth in
applicable Environmental Laws.
"Subordinated Loan Advance" shall mean an advance of funds by
Subordinated Lender to or for the benefit of Borrower, made pursuant to this
Agreement.
"Subordinated Loan Documents" shall mean the Subordinated Loan
Agreement, the Subordinated Note, the Good Faith Guaranty, the Subordinated
Pledge Agreement and any other documents delivered to Subordinated Lender by
or on behalf of any DMB Party from time to time to evidence, secure or
guarantee the foregoing or relating to the making of any Subordinated
Loan Advance.
"Subordinated Note" shall mean that certain Subordinated Promissory
Note being executed and delivered by Borrower to Subordinated Lender on the
Closing Date, evidencing Borrower's obligation to repay the Subordinated Loan
Advances together with Subordinated Loan Interest.
"Subordinated Pledge Agreement" shall mean, subject and subordinate
to the terms and provisions of, and the rights and security interest granted
to Senior Lender under the Pledge Agreement, a subordinated pledge agreement
with respect to each Subsidiary executed by Borrower, as pledgor, in favor of
Subordinated Lender, of all of Borrower's right, title and interest in and to
such Subsidiary (together with the consent of the applicable Subsidiary
thereto), all in the form attached hereto as Exhibit "F."
"Subsequent Property Funding" shall mean for each Approved Property
any Subordinated Loan Advance after the Initial Property Funding.
"Subsidiary" shall mean a corporation, limited partnership, or
limited liability company that, at all times until the Subordinated Loan has
been repaid in full: (a) is wholly owned by Borrower; (b) is a single-purpose
entity whose sole purpose shall be acquisition, Remediation, Development,
and/or disposition, of an Approved Property (and/or the making of a Mortgage
Acquisition) in all cases in conformity with a Loan Application; (c) has no
assets other than its Approved Property (or as contemplated by a Mortgage
Acquisition) and as contemplated by the related Loan Application; (d) has
no liabilities other than (i) its allocable portion of the Senior Loan, (ii)
as contemplated by the applicable Loan Application and (iii) routine trade
payables; (e) is duly organized, validly existing and in good standing under
the laws of one of the states of the United States of America; (e) is
engaged in no business whatsoever other than its Approved Investment in its
Approved Property (or Mortgage Acquisition), consistent with the applicable
Loan Application; (h) is not itself a partner, member or other constituent
or principal of any other entity; and (i) is an entity legally separate and
distinct from Borrower.
"Subsidiary Cash Reserve" shall mean (unless the parties agree
otherwise in a Loan Application as to a particular Subsidiary) a cash
reserve, to be retained by a Subsidiary, in an amount equal to the product of
(a) Five Percent (5%) times (b) the total remaining projected Cash Outlay for
such Subsidiary's Approved Property. The term "Subsidiary Cash Reserve"
shall also include, as to each Subsidiary, any further reserves provided for
pursuant to the applicable Loan Application.
"Supplemental Return Disbursements" shall have the meaning set
forth in the Waterfall.
"Waterfall" shall mean the priorities, procedures, covenants, and
obligations of Borrower relating to the application of Borrower Cash set
forth in Exhibit "D."
2 THE LOAN; FUNDING CONDITIONS.
2.1 Approval, Advances and Funding Conditions. Subordinated Lender
agrees to make the Subordinated Loan to Borrower, provided in each case that
all applicable Loan Criteria, Funding Conditions, and other requirements of
this Agreement are satisfied. Subordinated Lender agrees to make the Initial
Property Funding for each Approved Property provided in each case that all
General Funding Conditions and all Initial Property Funding Conditions for
such Approved Property shall have been or simultaneously are satisfied.
Subordinated Lender agrees to make Subsequent Property Fundings for each
Approved Property, and Subordinated Loan Advances to pay for Administrative
Expenses, provided in each case that all General Funding Conditions shall
have been or simultaneously are satisfied.
2.2 Amount of Subordinated Loan Advances. Total Subordinated Loan
Advances with respect to any Cash Outlay (other than for Administrative
Expenses) shall equal twenty percent (20%) of such Cash Outlay. Total
Subordinated Loan Advances with respect to any Cash Outlay for Administrative
Expenses shall equal eighty percent (80%) of such Administrative Expenses.
Subordinated Lender shall have no obligation to make Subordinated Loan
Advances other than on account of a Loan Application or an Administrative
Expense, in each case approved by Subordinated Lender, including pursuant to
Subordinated Lender's approval of a budget submitted by Borrower or attached
as an exhibit to this Agreement.
2.3 Release Shortfall Advances. Provided that no Event of Default
shall have occurred and be continuing, at the same time that Borrower makes
any payment to Senior Lender on account of Borrower's Release Shortfall
Obligation, or Senior Lender applies any funds in the Retained Earnings
Reserve on account of Borrower's Release Shortfall Obligation, Subordinated
Lender shall make a Subordinated Loan Advance (a "Release Shortfall
Advance"), directly to Senior Lender, in an amount equal to such payment or
application of funds by or on behalf of Borrower. Each Release Shortfall
Advance shall automatically be added to the Loan Recovery Shortfall when made.
2.4 Required Equity Contribution. For each Approved Investment,
Borrower shall contribute to the equity of the applicable Subsidiary at
least Five Percent (5%) of the Cash Outlay for such Approved Investment
before Subordinated Lender shall be obligated to make the Initial Property
Funding for such Approved Investment. Thereafter, assuming Borrower
continues to comply with the applicable Loan Application, further funds for
such Approved Investment are anticipated to be provided: (a) Five Percent
(5%) by application from time to time of Borrower's equity contribution to
the affected Subsidiary; (b) Twenty Percent (20%) from Subordinated Loan
Advances; and (c) Seventy Five Percent (75%) from Senior Loan Advances.
2.5 Additional Provisions Relating to Subordinated Loan Advances.
All requests for Subordinated Loan Advances shall be made in writing and,
notwithstanding any other provision of this Agreement, be provided to
Subordinated Lender at least 10 days before the proposed date of such
Subordinated Loan Advance. Each request for a Subordinated Loan Advance
shall contain Borrower's representation and warranty that all Funding
Conditions regarding the Property for which such Subordinated Loan Advance is
requested have been fully satisfied. If a Funding Condition cannot be
satisfied except simultaneously with the Subordinated Loan Advance, the
request for Subordinated Loan Advance shall specify such conditions and
Borrower shall represent and warrant that such conditions shall be satisfied
simultaneously with the Subordinated Loan Advance being made. If
Subordinated Lender waives any Funding Condition as to any Subordinated Loan
Advance, then such waiver shall apply only to such Subordinated Loan
Advance, and not to any future Subordinated Loan Advances. Borrower shall
apply all Subordinated Loan Advances solely to (a) pay Administrative
Expenses consistent with Borrower's requisition; or (b) make a contribution
to the capital of the applicable Subsidiary. In the latter case, Borrower
shall apply the proceeds of such capital contribution solely on account of
the Current Cash Outlay for which the Subordinated Loan Advance was
requisitioned.
2.6 Purpose of Funding Conditions. All Funding Conditions are
imposed solely and exclusively for Subordinated Lender's benefit. No other
person shall have standing to require satisfaction of any Funding Conditions
or be entitled to assume that Subordinated Lender shall refuse to make
Subordinated Loan Advances without strict compliance with any or all Funding
Conditions. No person other than Borrower and Subordinated Lender,
including, but not limited to, any Subsidiary, shall, under any
circumstances, be deemed to be a beneficiary of any Funding Conditions, any
or all of which may be freely waived in whole or in part by Subordinated Lender
at any time if in its sole discretion it deems it advisable to do so.
Subordinated Lender is under no obligation to waive any Funding Conditions or
other requirements of this Agreement.
2.7 Repayment. Borrower shall repay the Subordinated Loan Advances
pursuant to the Waterfall and, upon occurrence of an Event of Default, as
provided for in this Agreement. Subordinated Loan Interest is intended to
compensate Subordinated Lender for making and holding the Subordinated Loan,
and shall not be credited against principal. Borrower shall have no right or
option to prepay any portion of the Subordinated Loan, other than by
application of Net Proceeds from Sales or Refinancings in accordance with the
Waterfall.
2.8 Fiduciary Obligation. To the extent that Borrower or any
Subsidiary from time to time receives any Borrower Cash, Borrower or such
Subsidiary shall hold such Borrower Cash in trust, to be applied (after any
payments on account of the Senior Loan) to the extent required by the
Waterfall, first to the payment of any Subordinated Loan Interest and then
to other sums payable to Subordinated Lender.
2.9 Subordinated Loan Interest. Borrower shall pay interest on
the Subordinated Loan (the "Subordinated Loan Interest") as follows.
2.9.1 Basic Subordinated Loan Interest. Basic interest shall
accrue monthly on the principal balance of the Subordinated Loan outstanding
from time to time, at the Interest Rate ("Basic Subordinated Loan Interest"),
but payable only in accordance with the priorities and procedures set forth
in the Waterfall. Borrower shall pay Basic Subordinated Loan Interest
monthly on each Payment Date, when, as, and to the extent provided for in
the Waterfall. If them amount of any Basic Subordinated Loan Interest is
disputed in good faith, Borrower shall not be obligated to pay the disputed
portion of the Basic Subordinated Loan Interest until the actual amount owed
has been determined; Borrower shall, however, on the Payment Date pay the
undisputed amount of the Basic Subordinated Loan Interest, as to which
Borrower shall not be entitled to any Cure Period. Any dispute as to the
amount of Subordinated Loan Interest owing shall be resolved by expedited
arbitration in accordance with the expedited arbitration rules of the
American Arbitration Association. TO THE FULLEST EXTENT PERMITTED BY LAW,
SUBORDINATED LENDER AND BORROWER HEREBY IRREVOCABLY WAIVE A
TRIAL BY JURY AS TO ANY DISPUTE ARISING FROM THIS PARAGRAPH OR
ANY OTHER PROVISION OF THIS AGREEMENT.
2.9.2 Accrual of Basic Interest. To the extent that the
Waterfall does not require Borrower to currently pay Basic Subordinated Loan
Interest, such failure to pay shall not constitute a default or give rise to
an Event of Default under this Agreement. The unpaid Basic Subordinated Loan
Interest shall accrue and be compounded annually every January 1 and shall
continue to be payable when and as provided for in the Waterfall.
2.9.3 Loan Recovery Shortfalls. To the extent that a
Subsidiary disposes of an Approved Property and the Borrower Cash from such
Approved Property has been and is in the aggregate insufficient to provide
Borrower with a sufficient amount to pay any Basic Subordinated Loan Interest
or principal of the Subordinated Loan remaining unpaid as to Subordinated
Loan Advances relating to that Approved Property (the "Property Shortfall"),
Borrower's failure to pay the Property Shortfall shall not constitute a
default or Event of Default under this Agreement. The Loan Recovery
Shortfall shall be increased by an amount equal to the Property Shortfall.
2.9.4 Contingent Interest. Borrower shall pay Subordinated
Lender contingent interest in an amount equal to Fifty Percent (50%) of Net
Property Profit, payable when and as provided for in the Waterfall (the
"Contingent Subordinated Loan Interest").
2.10 Maturity Date. Borrower shall repay the entire Subordinated
Loan on the Maturity Date, except to the extent that, as to Subordinated Loan
Advances relating to individual Approved Property(ies): (a) Subordinated
Lender has agreed in writing, in its sole and absolute discretion, to extend
the Maturity Date; or (b) the Maturity Date under the Senior Loan has been
extended in accordance with the terms of the Senior Loan Documents.
2.11 Effect of Upcoming Maturity. If, as of October 1, 1999,
Borrower holds any Approved Property(ies) with respect to which: (a) Senior
Lender has not approved Borrower's exercise of the Extension Option; and (b)
in Subordinated Lender's reasonable judgment, Borrower will more likely than
not fail to achieve an Exit Date on or before December 31, 1999, then without
thereby limiting any other rights or remedies of Subordinated Lender,
Subordinated Lender may deliver a Hypothetical Liquidation Notice to Borrower
and the parties shall thereupon have the same rights and remedies as if
Subordinated Lender had delivered a Hypothetical Liquidation Notice to
Borrower upon occurrence of an Event of Default.
2.12 Security and Priority. Subject to the Senior Lender's rights
under the Pledge Agreement, the Subordinated Loan shall be secured solely by
the Subordinated Pledge Agreement. The Subordinated Loan shall be at all
times subordinate and junior, as to timing and priority of payment, to the
Senior Loan.
2.13 Certain Excluded Expenditures. Notwithstanding anything to
the contrary in this Agreement, and without limiting any other restriction on
Subordinated Loan Advances, Subordinated Lender shall have no obligation to
contribute to, or to make any Subordinated Loan Advances to pay (in whole or
in part), any Cash Outlays arising from:
2.13.1 Unapproved Items. Any Cash Outlay that has not been
approved by Subordinated Lender, or that arises from any matter not approved
by Subordinated Lender;
2.13.2 Cleanup Contractor's Costs. Any costs, including cost
overruns, incurred by Cleanup Contractor, but this shall not limit the
availability of Subordinated Loan Advances on account of payments required
under GMP Agreements;
2.13.3 Unapproved Loan Applications. Any costs and expenses
(including preparation, staff time, administrative, and out-of-pocket costs)
incurred in connection with any Loan Application not approved by Subordinated
Lender; or
2.13.4 DMB Affiliated Financing. Any payments due on account
of any DMB Affiliated Financing.
3 LOAN APPLICATIONS.
3.1 Required Contents. Borrower shall provide the following
information in each Loan Application with respect to the affected Property
and its Remediation and/or Development (the "Required Information").
3.1.1 Property; Overall Strategy. Identification of Property
or mortgage to be acquired, Remediated, and/or Developed, and overall
strategy for same.
3.1.2 Environmental Concerns. All Identified Environmental
Risks.
3.1.3 Valuation. Written estimates of value, prepared on
such basis as Subordinated Lender shall require (including, if so required
by Senior Lender, as a full Financial Institutions Reform, Recovery and
Enforcement Act (FIRREA) appraisal prepared by a third-party appraiser
satisfactory to Subordinated Lender) both "as contaminated" and "as cleaned
up."
3.1.4 Plan. An acquisition, Remediation, Development, and
disposition plan with a reasonably detailed budget (including a "contingency"
of 10% [or such higher percentage as Subordinated Lender shall approve in its
sole and absolute discretion] as to all Hard Costs and Soft Costs of
Remediation and Development) and timeline, for the Remediation of all
Identified Environmental Risks and all Development.
3.1.5 GMP Agreement. A GMP Agreement that requires Cleanup
Contractor to Remediate all Identified Environmental Risks.
3.1.6 Clearances. All Clearances that may be necessary or
appropriate with respect to Remediation, and when, how, and whether such
Subsidiary will obtain each such Clearance.
3.1.7 Projections. Reasonable financial projections regarding
acquisition, Remediation, Development and disposition.
3.1.8 Existing Owners/Sellers. All contracts and security
arrangements existing or contemplated with existing owners or sellers.
3.1.9 Outside Financing. Any Outside Financing that any
Subsidiary or Borrower proposes to obtain, and the arrangements, including
interest rate adjustments, that such Subsidiary or Borrower proposes to make
with the Lenders as a result of such Outside Financing (it being understood,
however, that Subordinated Lender is under no obligation to agree to or
approve any Outside Financing).
3.1.10 Leasing Guidelines. Proposed Leasing Guidelines for
the Property.
3.1.11 Disposition Strategy. Borrower's proposed strategy
for disposition of the Property, including a projected selling price or
range of projected selling prices.
3.1.12 Environmental Insurance. All environmental insurance
coverage, including, but not limited to the Environmental Insurance Policy
(including amount of maximum cap being proposed thereunder), as well as all
other environmental insurance, anticipated to be purchased both before and
after Remediation, and the cost of such insurance (which cost shall be
included in the Property budget).
3.1.13 Environmental Assessment. Full written environmental
assessment (Phase I and Phase II as applicable) addressed to Subordinated
Lender, prepared by Cleanup Contractor.
3.1.14 Indemnifications. Any indemnifications in place from
any Person or Governmental Authority.
3.1.15 Property Problems. Description of: (a) any real
property problems, such as pending condemnation, access problems, survey
issues, flood hazards, or lack of any utility service(s), and (b) any other
matters that may have a Material Adverse Effect.
3.1.16 Other. All other material terms and conditions of the
proposed transaction.
3.2 Criteria to Be Satisfied. Each Loan Application made by
Borrower shall satisfy the following criteria as to the proposed Property
and its Remediation and Development (the "Loan Criteria").
3.2.1 Projected Return. Projections should demonstrate that
Borrower should achieve a leveraged return on its Approved Investment of at
least 25% per annum on the amounts advanced under the Subordinated Loan
Agreement, unless otherwise expressly approved in writing by Subordinated
Lender.
3.2.2 Total Costs. Total acquisition, Remediation,
Development and disposition costs of between $2,500,000 and $20,000,000.
3.2.3 Risk Profile. The proposed Property in the substantial
majority of cases shall meet the criteria of either "Category II - Moderate
Risk" or "Category III - Low Risk" as defined in "Table 1" (the "PROPERTY
TARGETING CRITERIA") attached to that certain "Business Plan for Dames &
Moore/Brookhill, LLC," a copy of which table is attached as Exhibit "B."
3.2.4 Timing. The Loan Application shall reasonably project
that Remediation shall commence, or acquisition shall close, on or before
September 1, 1998, with the Exit Date reasonably projected to occur by
December 31, 1999. (Borrower may propose in a Loan Application an Exit Date
later than December 31, 1999 as to the affected Property. If Subordinated
Lender disapproves such Loan Application solely because such Exit Date is later
than December 31, 1999, then such Loan Application shall, though disapproved,
nevertheless be deemed to have complied with the Loan Criteria for purposes
of a New Loan Termination.)
3.2.5 GMP Agreement. Each GMP Agreement shall provide for
Remediation of all Identified Environmental Risks. Each GMP Agreement shall
require Cleanup Contractor to provide a warranty and indemnity as to such
Remediation to: (a) the applicable Subsidiary, Borrower, and Subordinated
Lender; and (b) where possible without incurring substantial additional
expense, the first purchaser of the Approved Property from the applicable
Subsidiary. (Borrower may propose in a Loan Application a Satisfactory
Replacement Cleanup Contractor as to the affected Property. If Subordinated
Lender disapproves such Loan Application solely because Subordinated Lender
disapproves the proposed Satisfactory Replacement Cleanup Contractor, then
such Loan Application shall, though disapproved, nevertheless be deemed to
have complied with the Loan Criteria for purposes of a New Loan Termination.)
3.2.6 Acquisition of Title. A Subsidiary shall not acquire
title unless either (a) Remediation has been completed; or (b) before
Remediation commences, such Subsidiary has obtained a conditional or actual
Clearance acceptable to Subordinated Lender pursuant to Federal CERCLA or a
state law that provides "PPA" or similar mechanisms to issue conditional
Clearances (a "brownfields" state). Such Clearance may be subject to the
completion of Remediation in the manner, and to the extent, described in the
Loan Application.
3.2.7 Security Arrangements. For pre-acquisition Remediation,
Subsidiary shall obtain reasonable security arrangements with existing
Property owners or sellers.
3.3 Noncompliance. To the extent that any Loan Application fails
to include any Required Information or comply with the Loan Criteria,
Subsidiary shall identify and describe such nonconformity in the Loan
Application. If Subordinated Lender nevertheless approves the Loan
Application, then Subordinated Lender shall be deemed to have waived such
nonconformity for all purposes of the Subordinated Loan Documents.
3.4 Time Periods and Approval. Subordinated Lender shall reasonably
endeavor to consider and respond to Loan Applications within fifteen days
after receipt. If Subordinated Lender has failed to respond to a Loan
Application within such period, then such Subsidiary shall so notify
Subordinated Lender in writing (a "Reminder Notice"). Subordinated Lender
shall then, within five business days, do any one of the following as
determined by Subordinated Lender (in Subordinated Lender's sole and absolute
discretion): (a) approve the Loan Application; (b) disapprove the Loan
Application; (c) reasonably request additional information regarding the
Loan Application; or (d) extend by up to ten more days Subordinated Lender's
period in which to respond to the Reminder Notice. If Subordinated Lender
reasonably requests additional information, then Borrower shall promptly
provide it. When Subordinated Lender has received such additional information,
such delivery shall be deemed to constitute another Reminder Notice, except
that Subordinated Lender's options shall be limited to "a," "b," and "c." If
Subordinated Lender fails to respond to a Reminder Notice within the period
available to Subordinated Lender pursuant to this paragraph, then
Subordinated Lender shall be deemed to have disapproved the applicable Loan
Application. Under no circumstance shall Subordinated Lender be deemed to
have approved any Loan Application unless Subordinated Lender has actually
approved such Loan Application in writing. Upon any such approval,
Subordinated Lender shall issue a Funding Certificate to Borrower. If
Subordinated Lender approves a Loan Application but subject only to
material additional conditions that are inconsistent with material economic
terms in this Agreement (and after reasonable efforts the parties cannot
resolve such additional conditions), then such conditional approval shall be
deemed disapproval.
3.5 Multiple Disapprovals. If Subordinated Lender disapproves (or
is deemed to have disapproved) three consecutive Loan Applications that
contain all Required Information and comply with all Loan Criteria, then at
any time until Subordinated Lender has approved a subsequently submitted Loan
Application, either Borrower or Subordinated Lender shall have the right to
unilaterally notify the other that such party elects to require the following
to occur (a "New Loan Termination"):
3.5.1 No New Loan Applications. Borrower shall not be
required to submit any further Loan Applications to Subordinated Lender.
3.5.2 Completion of Existing Projects. Borrower shall, with
diligence and continuity, continue to perform all of Borrower's obligations
with respect to Loan Applications previously approved. Borrower shall
continue, and DMB shall cause Cleanup Contractor to continue, to allocate
to such activities at least the same level of staffing and other resources
(as determined by Subordinated Lender in Subordinated Lender's reasonable
judgment) as were allocated thereto before the New Loan Termination.
Subordinated Lender shall continue to make Subordinated Loan Advances
pursuant to Loan Applications previously approved, in accordance with the
terms and conditions of this Agreement.
3.5.3 No Exclusivity. To the extent that this Agreement
requires any DMB Party or Subordinated Lender to submit to one another any
possible Property(ies) (including possible Mortgage Acquisitions) before
engaging in any transaction with a third party relating to such
Property(ies), or to refrain from conducting other specified business
activities, such restrictions and obligations shall be terminated and of no
force or effect.
4 COVENANTS.
4.1 Acquisition and Remediation. Borrower shall acquire,
Remediate, Develop and/or dispose of each Approved Property only in
compliance with the applicable Loan Application. Borrower shall not acquire,
Remediate, Develop, or otherwise invest (other than Borrower's investment in
Subsidiaries as contemplated by Loan Applications) in any real or personal
property. Borrower shall cause Cleanup Contractor to prosecute all
Remediation with diligence and continuity and without material interruption
or suspension of work, except as required by Law or as a result of Force
Majeure. Neither Borrower nor any Subsidiary shall conduct any business of
any kind other than the business contemplated by this Agreement.
4.2 Compliance with Law. Borrower shall at all times comply with
all applicable Law. Borrower shall perform all Remediation in compliance
with all Environmental Law. Borrower shall timely obtain, and thereafter
comply with and maintain in full force and effect, all Governmental Approvals
necessary or appropriate for such Remediation.
4.3 Site Conditions. If and when Borrower or any Subsidiary
becomes aware of any site condition or other circumstance affecting any
Approved Property that will or is reasonably likely to have a Material
Adverse Effect, then Borrower shall promptly notify Subordinated Lender
thereof, in reasonable detail, and thereafter provide Subordinated Lender
with such additional information relating thereto as Subordinated Lender
shall reasonably request. Borrower shall with reasonable promptness develop
a written plan to respond to such site condition or other circumstance, and
provide Subordinated Lender with a copy of such written plan and any updates
thereof.
4.4 Delays in Mortgage Acquisitions.
4.4.1 Initial Disposition Plan. If (a) pursuant to a Loan
Application, a Subsidiary undertakes any Mortgage Acquisition and (b) because
of litigation or bankruptcy, such Subsidiary's activities with respect to
such Mortgage Acquisition are delayed by more than three (3) months beyond
the timeline provided for in the Loan Application, then Borrower shall have
thirty (30) days within which to present to Subordinated Lender a complete,
detailed, specific and reasonable plan for disposition of the Mortgage
Acquisition.
4.4.2 Discontinuation of Mortgage Acquisition. If, after such
thirty (30) day period, in Subordinated Lender's sole and absolute discretion
the plan is not satisfactory and there still has been no disposition pursuant
to the Loan Application, Subordinated Lender shall have the right to require
Borrower, within thirty (30) days after Subordinated Lender's written
request, to (i) discontinue and terminate such Mortgage Acquisition and
dispose of such Mortgage Acquisition by sale to an outside third-party
purchaser, but not to a purchaser that is an Affiliate of Subordinated
Lender, in accordance with the terms and conditions of this Section 4.4, and
(ii) require Borrower to repay all Subordinated Loan Advances made for such
Mortgage Acquisition. Borrower shall repay such Subordinated Loan Advances
with, and only to the extent of, Borrower Cash realized from the disposition
and termination of such Mortgage Acquisition. To the extent that Borrower
Cash realized from such disposition and termination has been and is in
the aggregate insufficient to repay all Subordinated Loan Advances made for
such Mortgage Acquisition, the amount of such insufficiency shall be added to
the Loan Recovery Shortfall.
4.4.3 Required Purchase Plan. Within thirty (30) days after
Subordinated Lender notifies Borrower and DMB that Borrower's plan for
disposition of the Mortgage Acquisition is not satisfactory, DMB shall
submit a proposal in writing (together with the proposed purchase price and
other material economic terms) to Subordinated Lender for the purchase of such
Mortgage Acquisition from the applicable Subsidiary (the "DMB Mortgage
Proposal"). Upon receipt of the DMB Mortgage Proposal, Subordinated Lender
shall have the option to either (A) approve such DMB Mortgage Proposal, in
which event Borrower shall sell such Mortgage Acquisition as set forth in the
DMB Mortgage Proposal, which sale shall be consummated within thirty (30)
days after Subordinated Lender notifies Borrower and DMB of its approval of
the DMB Mortgage Proposal, or (B) require that such offer be kept open for a
period of ninety (90) days after the date when Subordinated Lender receives
such DMB Mortgage Proposal and during such period Borrower shall use its best
efforts to market (in such manner as Subordinated Lender shall direct) the
Mortgage Acquisition in order to obtain a higher purchase price (and more
attractive terms and conditions) for such Mortgage Acquisition than the price
set forth in the DMB Mortgage Proposal. If, during such ninety-day period,
an offer is obtained from a third-party purchaser (the "Third Party Mortgage
Proposal") for such Mortgage Acquisition on terms that are identical to, or
in Subordinated Lender's judgment more favorable than the DMB Mortgage
Proposal, which Third Party Mortgage Proposal is approved by Subordinated
Lender, then Borrower shall dispose of such Mortgage Acquisition to such
third-party purchaser pursuant to the terms of such Third Party Mortgage
Proposal within thirty (30) days of receipt of Subordinated Lender's notice
of approval of the Third Party Mortgage Proposal.
4.5 GMP Agreements. Borrower shall diligently enforce, in all
material respects, all GMP Agreements. Borrower shall diligently seek to
achieve timely and cost-effective performance by Cleanup Contractor under
each GMP Agreement. Borrower shall diligently pursue the prevailing
professional standards of quality, performance and timeliness that Cleanup
Contractor would normally deliver for its third-party clients. GMP
Agreements shall be negotiated at arm's length on substantially the same
terms that a non-affiliated party would obtain. Borrower shall not waive,
modify, amend, terminate or release Cleanup Contractor's obligations under
any GMP Agreement, or to replace Cleanup Contractor, without Subordinated
Lender's consent. Subordinated Lender shall not unreasonably withhold
consent to reasonable changes necessitated by field conditions, provided that
the GMP Agreement continues to substantially comply with the applicable Loan
Application and the guaranteed maximum price is not increased. Borrower shall
not terminate Cleanup Contractor unless Cleanup Contractor is simultaneously
replaced with a Satisfactory Replacement Cleanup Contractor.
4.6 Use of Funds. Borrower and each Subsidiary shall hold in
trust all Loan Advances and Borrower Cash, and shall apply same first to pay
Borrower's third-party obligations consistent with Loan Applications and
Administrative Expenses Budgets, and shall thereafter apply all Borrower Cash
in accordance with the Waterfall.
4.7 Real Estate Operations. So long as a Subsidiary owns an
Approved Property, Borrower shall: (a) cause such Approved Property to be
maintained in good repair and safe condition and in compliance with all
applicable Law (except as to noncompliance expected to be corrected through
Remediation); and (b) provide and maintain for it all insurance required by the
Senior Loan Documents and such additional insurance as Subordinated Lender
may reasonably require. Subordinated Lender shall not require environmental
insurance beyond that provided for in the affected Loan Application. In the
event of a casualty or condemnation affecting an Approved Property, any
determination of Borrower to restore the improvements located on such
Approved Property shall require Subordinated Lender's prior written approval.
4.8 Leasing. With respect to each Approved Property, all leases
and other rental arrangements, and all modifications thereof, shall comply in
all respects with the Leasing Guidelines set forth in the applicable Loan
Application. If a lease complies with the Leasing Guidelines, then
Subordinated Lender's approval of such lease shall not be required; otherwise
Subordinate Lender's approval shall be required. Any modifications from the
Leasing Guidelines in the applicable Loan Application shall be subject to
Subordinate Lender's prior written approval in its sole and absolute
discretion. Subordinate Lender shall endeavor to approve or disapprove
all Leases and modifications subject to its approval that are submitted to
Subordinate Lender within five (5) Business Days after receipt of all
necessary documentation in connection therewith. Subordinate Lender's
failure to respond within such period shall be deemed disapproval.
4.9 Notices. Borrower and DMB shall simultaneously provide
Subordinated Lender with a copy of any written notice regarding any matter(s)
that would, or is/are reasonably likely to, have a Material Adverse Effect,
given to or received from Cleanup Contractor, any Governmental Authority, or
any third party (including the owner of any Property as to which Remediation is
occurring or contemplated or as to which a Mortgage Acquisition has been
made or is contemplated, and including any other creditor of Borrower or any
Subsidiary, other than a Lender), which notice relates to any Approved
Property, any Remediation or Development, Borrower's business or Borrower's
ability to perform its obligations under this Agreement.
4.10 Environmental Reports. Upon Subordinated Lender's reasonable
request, made no more than at a reasonable frequency (in the exercise of
Subordinated Lender's reasonable business judgment), Borrower shall provide
Subordinated Lender with updated environmental assessments and tests relating
to the Approved Properties, all in such detail and covering such matters as
Subordinated Lender shall from time to time request based on the written
advice or recommendations of Subordinated Lender's third-party consultants or
advisers.
4.11 Access. Subordinated Lender and any of its officers,
employees and/or agents shall have the right, subject to the rights of
tenants, to inspect any Approved Property(ies) as frequently as Subordinated
Lender determines to be appropriate, (i) at any time without notice if
(x) an Event of Default exists, (y) there may be an imminent material
violation of this Agreement (which violation could have a Material Adverse
Effect) relating to the Approved Property to be inspected, in Subordinated
Lender's reasonable judgment, or (z) there is an emergency currently
existing at the Approved Property to be inspected, in Subordinated Lender's
judgment, and (ii) during normal business hours (or at such other times as
may reasonably be requested by Subordinated Lender) upon reasonable notice,
otherwise.
4.12 Contracts. Borrower shall deliver to Subordinated Lender, on
demand, copies (certified by Borrower as being true and correct) of those
specified contracts, bills of sale, statements, or receipted vouchers or
agreements under which Cleanup Contractor or any Subsidiary has contracted
for any services or purchased any materials with respect to, otherwise
relating to, any Remediation or Development.
4.13 Communications. Borrower, on its own behalf, authorizes
Subordinated Lender to communicate directly with Cleanup Contractor and, if
either (a) an uncured Event of Default has occurred or (b) Subordinated
Lender has notified Borrower that Subordinated Lender is not satisfied with
Borrower's responsiveness to Subordinated Lender's inquiries to Borrower,
then any contractor, subcontractor, Governmental Authorities, any tenant(s)
of an Approved Property, and any other person having a substantial interest
in an Approved Property or any Remediation or Development. So long as no
continuing Event of Default has occurred and no emergency exists,
Subordinated Lender shall give Borrower reasonable prior notice (which may
be oral or telephonic) of any such communication and shall provide Borrower
with an opportunity to participate in any meetings. Borrower has requested,
and Subordinated Lender agrees, that Subordinated Lender shall reasonably
endeavor to conduct any communications with third parties in a manner that
will minimize any disruption or confusion with respect to Borrower's existing
lines of communications with third parties.
4.14 Budgets. Borrower shall deliver to Subordinated Lender copies
of its respective annual budgets and all Subsidiaries' annual budgets, as
they shall be updated from time to time. If any event or circumstance has
occurred that would or is reasonably likely to have a Material Adverse Effect
on any Remediation, Development, physical condition, or on-site conditions
affecting any Approved Property, or any Subsidiary's or Borrower's compliance
with any Loan Application, Borrower shall upon request deliver within ten
(10) Business Days updated budgets for the completion of any Remediation and
Development or otherwise relating to such Approved Property.
4.15 Notification of Certain Events. Borrower shall, within ten
(10) calendar days, notify Subordinated Lender in writing of and provide any
reasonably requested documents upon receiving notice of any of the following
affecting any Approved Property: (1) any material liability or potential
liability of Borrower or any Subsidiary for response or corrective action,
natural resource damage or other harm pursuant to any Environmental Law; (2)
any Environmental Claim; (3) any violation of an Environmental Law or
material Hazardous Material Release, threatened Hazardous Material Release or
disposal of a Hazardous Material; or (4) the existence of any other condition
or circumstance that is reasonably likely to have a Material Adverse Effect.
4.16 No Conveyance. Except as contemplated in an approved Loan
Application, neither Borrower nor any Subsidiary shall under any
circumstances convey, transfer or grant any Approved Property, or any
interest therein, to Subordinated Lender or to any Affiliate of Subordinated
Lender, or to any other Person, without Subordinated Lender's prior written
consent. Compliance with the preceding sentence is guarantied by the Good
Faith Guarantors pursuant to the Good Faith Guaranty.
4.17 Other Business of DMB. To the extent that DMB conducts any
business, makes any investments, or acquires any assets other than its
membership interest in Borrower pursuant to the Borrower Operating Agreement
(collectively, "Other DMB Activities"), DMB shall not conduct any such Other
DMB Activities in its own name or as direct activities of DMB. DMB shall
instead establish one or more subsidiaries or other entities (which need not
be wholly owned by DMB) ("Other DMB Entities"), in which the Other DMB
Activities shall be conducted, all upon such terms and conditions as DMB
shall see fit, provided such terms and conditions do not limit or impair
DMB's ability to perform its obligations under the Borrower Operating
Agreement and the Loan Documents. No Other DMB Entity shall have or perform
any obligations under the Subordinated Loan Documents or with respect to the
Approved Properties.
4.18 Administrative Expenses Budgets. All Administrative Expenses
Budgets shall include line items for contingencies and overruns in amounts
satisfactory to Subordinated Lender.
4.19 Documentation. Borrower and DMB shall, from time to time,
upon Subordinated Lender's reasonable request, provide Subordinated Lender
with copies of all material documentation and other material written
information related to the activities of Borrower as reasonably requested by
Subordinated Lender.
4.20 Disposition Agreements. All dispositions and refinancings of
Approved Properties shall be entered into at arm's length. Borrower shall
disclose to Subordinated Lender in writing any affiliation or relationship
between any DMB Party and any purchaser or lender with respect to any
Approved Property. The terms of disposition or refinancing shall include
the following unless Subordinated Lender agrees otherwise (including pursuant
to approval of a Loan Application): (a) disposition agreement shall be in
substantially the form of Exhibit "K" of the Senior Loan Agreement, or, at
Borrower's option, more favorable to the seller; (b) sale entirely for cash;
and (c) selling price to be no lower than the lowest selling price projected
in the Loan Application, provided that: (i) a sale at such price is
commercially reasonable under the circumstances; and (ii) Borrower has
provided Subordinated Lender with at least ten days prior notice of the
proposed selling price. If Borrower suffers a loss as a result of any
indemnification provided by Borrower under any disposition agreement, then
Subordinated Lender shall not be required to bear any portion of such loss,
except to the extent that such loss arises from Identified Environmental
Risks, and except to such extent in no event shall Subordinated Lender be
required to make any Subordinated Loan Advances whatsoever to cover any part
of such liability or loss. Regardless of whether Borrower assumes such
personal liability, in absolutely no event shall Subordinated Lender have
any such liability whatsoever. Nothing in the preceding restrictions shall
prevent Cleanup Contractor from providing any purchaser with such indemnities
and assurances as may have been provided for in the Loan Application or GMP
Agreement, provided that Borrower shall have no liability in connection
therewith.
4.21 Replacement of Cleanup Contractor or Good Faith Guarantor. If
any Cleanup Contractor or Good Faith Guarantor is the debtor in a Bankruptcy
Proceeding (whether voluntary or involuntary, and without regard to the
90-day period provided for in the definition of Bankruptcy Proceeding), then
within thirty days (forty-five days in the case of a Good Faith Guarantor)
after the initial commencement thereof Borrower shall replace such Cleanup
Contractor or Good Faith Guarantor with a Satisfactory Replacement Cleanup
Contractor or Satisfactory Replacement Good Faith Guarantor, as applicable.
4.22 DMB Affiliated Financing. Borrower shall promptly notify
Subordinated Lender of the amount and terms of any DMB Affiliated Financing
obtained by Borrower, and shall provide Subordinated Lender with copies of
all documentation related thereto. Borrower shall not enter into any DMB
Affiliated Financing unless the lender has entered into a subordination
agreement satisfactory to Subordinated Lender in Subordinated Lender's sole
and absolute discretion, and containing such terms and conditions as
Subordinated Lender shall require in its sole and absolute discretion. For
purposes of the Waterfall, the principal amount of DMB Affiliated Financing
shall be treated as Capital Contributions by DMB to Borrower with respect to
the affected Approved Property, and not as a loan.
4.23 Financial Statements. Borrower shall furnish to Lender:
4.23.1 Monthly Reports. Within 20 days after the end of each
month, a report of all Cash Flow, Net Proceeds from Sales or Refinancings
and deductions made in calculating the foregoing during such month.
4.23.2 Quarterly Financials. Within 45 days after the end of
each fiscal quarter of Borrower, including the fourth fiscal quarter of every
fiscal year, a copy of financial statements of Borrower, each Approved
Property and every Subsidiary, including balance sheets and profit and loss
statements, as of the end of each such quarter and for the corresponding
quarter of the preceding year and detailed statements of operations for the
year to date and for the corresponding period of the preceding year, all
certified by Borrower's chief financial officer.
4.23.3 Annual Financials. Within 120 days after the end of
each fiscal year of Borrower, a copy of the financial statements, consisting
of consolidated balance sheets, income statements and cash flow statements as
of the end of such fiscal year and consolidated statements of stockholders'
(or partners' or members') equity for such fiscal year for Borrower and each
Subsidiary, all in reasonable detail and prepared in accordance with
generally accepted accounting principles and audited by an independent
certified public accountant approved by Subordinated Lender, which approval
shall not be unreasonably withheld.
4.23.4 Accountants' Reports. Promptly upon receipt thereof
by Borrower, a copy of each report (including reports commenting on
Borrower's internal bookkeeping, accounting or financial procedures)
submitted to Borrower by the accountants that prepared, or the accountants
(if any) that audited, Borrower's financial statements.
4.23.5 Asset Markdowns. Notice of any "markdown" or
adjustment in book value or carrying value of any asset of Borrower or any
Subsidiary, promptly upon taking such markdown or adjustment.
4.23.6 Other Information. Promptly upon request, such other
information as Subordinated Lender may reasonably request with respect to the
business, affairs or condition (financial or otherwise) of Borrower or the
Subsidiaries.
4.24 Transfers of Interests in Borrower or any Subsidiary.
4.24.1 Prohibition. Except for the Subordinated Pledge
Agreement and as otherwise expressly permitted under this Agreement, without
the prior written consent of Subordinated Lender:
(i) neither Borrower nor any Subsidiary shall (ii)
directly or indirectly sell, transfer, convey, mortgage, pledge, or assign
any direct or indirect interest in any Property or any part thereof
(including any partnership, membership or any other ownership interest in
Borrower or any Subsidiary or any partner or member thereof);
(iii) no new general partner, member, or limited partner
having the ability to control the affairs of Borrower shall be admitted to or
created in Borrower or any Subsidiary (nor shall any existing general partner
or member or controlling limited partner withdraw from Borrower or such
Subsidiary, as applicable), and no change in Borrower's or any Subsidiary's
organizational documents relating to control over Borrower or such
Subsidiary, as applicable, and/or any Property shall be effected; and
(iv) no transfer shall be permitted of the beneficial
interest in Borrower, any of its constituent members, any Subsidiary or any
of the Properties (except as contemplated by the applicable Loan Application);
4.24.2 Definition: "Transfer." The term "transfer" shall
include the sale, transfer, conveyance, mortgage, pledge, or assignment of
the legal or beneficial ownership of (i) any Property, (ii) any partnership
interest in any member in Borrower that is a partnership, (iii) any voting
stock in any member of Borrower that is a corporation, and (iv) any
membership interest in any member of Borrower that is a limited liability
company; "transfer" shall not include the leasing of individual units within
any Property so long as Borrower complies with the provisions of the
Senior Loan Documents relating to such leasing activity or the transfers of
limited partner interests in Borrower so long as the requirements of this
Agreement are satisfied. Subordinated Lender shall endeavor to respond to
any written request for approval of a transfer within fifteen (15) days of
its receipt of notice of such proposed transfer together with all
documentation in connection therewith that Subordinated Lender may reasonably
request.
4.24.3 Certain Permitted Transfers. Notwithstanding anything
to the contrary contained in the foregoing, any holder of a direct or
indirect ownership interest in Borrower as of the date of this Agreement (an
"Interest Holder") shall have the right to transfer its ownership interest
without Subordinated Lender's prior consent, provided, that, (A) after taking
into account any prior transfers and the current transfer pursuant to this
paragraph, whether to the proposed transferee or otherwise, no such transfer
or series of transfers shall result in (I) the proposed transferee (together
with any other transferees pursuant to this paragraph) owning (directly or
indirectly, or beneficially) more than forty-nine percent (49%) of the direct
or indirect ownership interests in Borrower, or (II) a transfer of more than
forty-nine percent (49%) of the direct or indirect ownership interests in
Borrower; (B) no Event of Default has occurred and remains uncured; (C) no
change of control affecting Borrower shall occur as a result of such
transfer; (D) such transferee shall be a reputable entity or person of good
character, creditworthy and with sufficient financial net worth; (E) such
transferee and all transferees in the aggregate under this paragraph shall
have no voting rights and shall not possess the power to, directly or
indirectly, direct the management and policies of Borrower in any way,
whether through the ownership of voting securities, by contract or otherwise;
(F) any provisions in any of the organizational documents of either Borrower
or any Subsidiary that require the unanimous affirmative vote or consent of
all the holders of ownership interests in Borrower or any Subsidiary, as
applicable, or any other applicable voting threshold, shall not require or
include the vote or consent of such proposed transferee or transferees; and
(G) no transferee shall be an investment bank, securities firm, institutional
lender, or other significant competitor of Credit Suisse First Boston in any
substantial line of business of Credit Suisse First Boston, or an officer,
director, or employee of any of the foregoing.
4.25 Subordinated Pledge Agreement. Subject to the terms and
provisions of any applicable grace, notice and cure periods, Borrower shall
perform all of its obligations under the Subordinated Pledge Agreement.
5 GMP AGREEMENTS.
5.1 Cost Overruns. Notwithstanding anything to the contrary in
this Agreement, any cost overruns or obligations incurred by Cleanup
Contractor under any GMP Agreement shall be borne entirely by Cleanup
Contractor without contribution by Borrower, Subsidiary, or Subordinated
Lender.
5.2 On-Site Operations. Subordinated Lender shall have no right or
obligation to direct, manage, control, or participate in any Remediation. At
all times, Permitted Sponsor(s) shall constitute the Sponsor of, and shall
control, any and all Remediation, all in full compliance with all applicable
Law. Upon request, Borrower shall promptly cause a Permitted Sponsor to
confirm in writing to Subordinated Lender that such party is Sponsor as to
any Approved Property(ies) or Remediation designated by Subordinated Lender.
Subordinated Lender shall have neither the right nor the obligation to: (a)
take any action, make any decision or otherwise participate in management of
Borrower or any Subsidiary in any way if such action, decision or participation
would or could, in Subordinated Lender's judgment, cause Subordinated Lender
to be deemed a Sponsor of any Remediation; or (b) exercise decision making
control over any environmental compliance or hazardous substance handling or
disposal. Nothing in this paragraph shall limit any right or remedy of
Subordinated Lender upon the occurrence of an Event of Default.
6 OPERATING AGREEMENTS.
To protect Lender's interests as a creditor of Borrower and keep
Subordinated Lender fully informed of Borrower's and the Subsidiaries'
activities, Subordinated Lender shall have the following rights with respect
to the Operating Agreements, notwithstanding anything to the contrary in the
Operating Agreements.
6.1 Operating Agreements. DMB and the Members of DMB shall perform
their obligations under and comply with the Operating Agreements, including
their obligations to make Capital Contributions when and as required under
the Operating Agreements.
6.2 Approvals and Consents. To the extent that the Borrower
Operating Agreement provides that approval, consent or affirmative vote by
any Member(s) or eighty percent (80%) of Borrower's Board of Managers is
required as to any matter (the "Required Borrower Vote"), or that such matter
is required to be satisfactory to (or shall be agreed upon or established by)
the Required Borrower Vote, such matter shall also require express written
approval and agreement by Subordinated Lender in accordance with this
Agreement, subject however to the same limitations, conditions, restrictions
and qualifications (including any relating to, for example, "materiality")
that may apply to a Member's exercise of its rights under the Borrower
Operating Agreement (the "Operating Agreement Qualifications"). To the
extent that the Borrower Operating Agreement permits any Member or the Board
of Managers to require Borrower or any Member to take any action,
Subordinated Lender shall, subject to the Operating Agreement Qualifications,
also be entitled to require Borrower or any Member or the Board of Managers
of Borrower to take such action.
6.3 Delivery of Information. Subject to the Operating Agreement
Qualifications, Borrower shall provide Subordinated Lender with copies of all
Loan Applications, financial statements, reports, documents, and all written
communications and information of any kind provided to any Member pursuant to
the Borrower Operating Agreement, in each case at the same time and by the
same means provided to such Member pursuant to the Borrower Operating
Agreement. Borrower shall also provide Subordinated Lender with such further
written or oral information and documentation relating to the Borrower
Operating Agreement, Remediation, or any matter contemplated by the Borrower
Operating Agreement or this Agreement, as Subordinated Lender shall request
from time to time, subject to the Operating Agreement Qualifications.
6.4 Meetings. DMB shall notify Subordinated Lender of any meeting
of the Members or Board of Managers of Borrower to be held pursuant to the
Borrower Operating Agreement. Such notice shall be given to Subordinated
Lender at the same time, and by the same means, as it is given to the Members
and/or the Board of Managers. Subordinated Lender shall be entitled to
attend any meeting of the Members or the Board of Managers held pursuant to
the Borrower Operating Agreement.
6.5 Enforcement of Borrower Operating Agreement. Subordinated
Lender is an intended third-party beneficiary of the Borrower Operating
Agreement and shall have the right to enforce against each Member and the
Board of Managers all obligations of such Member and the Board of Managers
under the Borrower Operating Agreement. If a Liquidating Event occurs, then
Subordinated Lender shall have the right to require a liquidation of Borrower
in accordance with the terms of the Borrower Operating Agreement.
6.6 No Amendments. No Member or Board of Managers of Borrower
shall amend, modify, or waive any requirements of the Borrower Operating
Agreement without Subordinated Lender's consent. Any such amendment,
modification or waiver made without Subordinated Lender's consent shall be
void and of no force or effect. The DMB Operating Agreement shall
not be modified in any manner that would make any representation or warranty
in any Loan Document inaccurate. Modifications made by DMB or its members in
violation of the preceding sentence shall be deemed Borrower's breach of this
Agreement, as to which the Cure Period shall apply.
6.7 No Member Loans. No Member shall make loan(s) to Borrower
pursuant to Section 3.3.4 of the Borrower Operating Agreement or otherwise,
unless such loans are specifically permitted by this Agreement (such as DMB
Affiliated Financing made in compliance with this Agreement) or have been
approved by Subordinated Lender in writing.
6.8 DMB's Failure to Provide Funds. To the extent that DMB fails
to make a Capital Contribution under the Borrower Operating Agreement to pay
DMB's 5% share of any Cash Outlay (the "DMB Shortfall"), then (as to the
affected Approved Property, if the DMB Shortfall relates to a particular
Approved Property), Subordinated Lender may, at its option, but shall not
be obligated to, make an additional Subordinated Loan Advance to Borrower
(a "Shortfall Advance") to cover part or all of the DMB Shortfall, upon the
following terms (which shall apply separately as to the affected Approved
Property, if the DMB Shortfall relates only to a particular Approved Property):
6.8.1 Amount. The amount of the Shortfall Advance shall equal
all or any portion of the DMB Shortfall.
6.8.2 Subordinated Loan Amount. The outstanding balance of
the Subordinated Loan, and the Subordinated Loan Advances, shall be deemed to
have been increased by an amount equal to the sum of (a) the Shortfall
Advance plus (b) an amount (the "Shortfall Adjustment") equal to Twenty-Five
Percent (25%) (the "Shortfall Adjustment Percentage") of "a."
6.8.3 Capital Contributions. DMB's Capital Account within
Borrower (and Approved Investment as to the Approved Property, if applicable)
shall be deemed, but only for purposes of future Waterfall distributions (and
without thereby limiting or reducing DMB's obligation to make Capital
Contributions under the Borrower Operating Agreement) to have been reduced by
an amount equal to the Shortfall Adjustment.
6.8.4 Nonresidual Percentage Adjustment. For purposes of the
Waterfall only (but only as to the affected Approved Property, if the DMB
Shortfall relates to a particular Approved Property), wherever Subordinated
Lender would otherwise be entitled to receive only eighty percent (80%) of
any distribution, Subordinated Lender shall instead be entitled to receive
a percentage equal to 100 times (a) total Subordinated Loan Advances to date,
including the Shortfall Adjustment (allocable to the particular Approved
Property, if applicable) divided by (b) the sum of "a" plus DMB's Capital
Account in Borrower (and Approved Investment, if applicable) as to the
Approved Property. (The resulting increase in amounts disbursable to
Subordinated Lender, expressed as incremental percentage points to be
disbursed to Subordinated Lender, is referred to as the "Percentage
Adjustment.")
6.8.5 Residual Percentage Adjustment. Wherever Subordinated
Lender would otherwise be entitled to receive only Fifty Percent (50%) of a
particular distribution, Subordinated Lender shall instead be entitled to
receive a percentage equal to the sum of (a) Fifty Percent (50%) plus (b) 2.5
times the Percentage Adjustment. The remainder of such distribution shall be
payable to Borrower.
6.8.6 Subsequent Cash Outlays. If thereafter further Current
Cash Outlays arise, then the otherwise applicable provisions of the Borrower
Operating Agreement shall continue to apply without regard to any Percentage
Adjustment. For purposes of the Waterfall, however, but not for purposes of
future Capital Contributions or Subordinated Loan Advances, the Percentage
Adjustments shall be recalculated from time to time based on total funds
advanced from time to time by DMB and Subordinated Lender. Any Percentage
Adjustment shall not decrease the obligations of DMB or Borrower under this
Agreement, to the extent they exist under this Agreement, to make Capital
Contributions or increase the amount of any Subordinated Loan Advance.
6.8.7 Example. An example of the foregoing Percentage
Adjustment, and the effect thereof, is set forth on Exhibit "C."
6.8.8 Acknowledgment by Parties. Borrower and Subordinated
Lender acknowledge that although the Percentage Adjustment mechanism may
cause substantial changes in the distribution of Borrower Cash pursuant to
the Waterfall, such changes are reasonable, necessary and appropriate to
fully compensate Subordinated Lender for the incremental risk assumed by
Subordinated Lender as a result of making extra Subordinated Loan Advances to
cover any DMB Shortfall. The Percentage Adjustment mechanism was fully
negotiated between the parties and Borrower acknowledges that Subordinated
Lender would not have entered into this Agreement in the absence of such
Percentage Adjustment mechanism.
6.9 Subordinated Lender's Failure to Provide Funds. To the extent
that Subordinated Lender fails to make a Subordinated Loan Advance under this
Agreement, at a time when all conditions to the making of such Subordinated
Loan Advance have been satisfied, to pay Subordinated Lender's 80% share of
any Cash Outlay (the "Subordinated Lender Shortfall"), then (as to the
affected Approved Property, if the Subordinated Lender Shortfall relates to
a particular Approved Property), Borrower may, at its option, but shall not
be obligated to, make an additional Capital Contribution to Borrower (also, a
"Shortfall Advance") to cover part or all of the Subordinated Lender
Shortfall, upon the following terms (which shall apply separately as to
the affected Approved Property, if the Subordinated Lender Shortfall relates
only to a particular Approved Property):
6.9.1 Amount. The amount of Borrower's Shortfall Advance
shall equal all or any portion of the Subordinated Lender Shortfall.
6.9.2 Capital Account Adjustment. The outstanding balance of
DMB's Capital Contributions within Borrower shall be deemed to have been
increased by an amount equal to the sum of (a) the Shortfall Advance plus
(b) an amount (also, a "Shortfall Adjustment") equal to the Shortfall
Adjustment Percentage times "a."
6.9.3 Subordinated Loan Balance. The balance of the
Subordinated Loan Advances (and Approved Investment as to the Approved
Property, if applicable) shall be deemed, but only for purposes of future
Waterfall distributions (and without thereby limiting or reducing
Subordinated Lender's obligation to make future Subordinated Loan Advances
under this Agreement) to have been reduced by an amount equal to the
Shortfall Adjustment.
6.9.4 Nonresidual Percentage Adjustment. For purposes of the
Waterfall only (but only as to the affected Approved Property, if the
Subordinated Lender Shortfall relates to a particular Approved Property),
wherever DMB would otherwise be entitled to receive twenty percent (20%) of
any distribution, DMB shall instead be entitled to receive a percentage equal
to 100 times (a) total Capital Contributions by DMB to date, including the
Shortfall Adjustment (allocable to the particular Approved Property, if
applicable) divided by (b) the sum of "a" plus the Subordinated Loan
principal balance (and Approved Investment, if applicable) as to the Approved
Property. (The resulting increase in amounts disbursable to DMB, expressed as
incremental percentage points to be disbursed to DMB, is also referred to as
a "Percentage Adjustment.")
6.9.5 Residual Percentage Adjustment. Wherever DMB would
otherwise be entitled to receive Fifty Percent (50%) of a particular
distribution, DMB shall instead be entitled to receive a percentage equal to
the sum of (a) Fifty Percent (50%) plus (b) .625 times the Percentage
Adjustment. The remainder of such distribution shall be payable to
Subordinated Lender.
6.9.6 Subsequent Cash Outlays. If thereafter further Current
Cash Outlays arise, then the otherwise applicable provisions of this
Agreement shall continue to apply without regard to any Percentage
Adjustment. For purposes of the Waterfall, however, but not for purposes of
future Capital Contributions or Subordinated Loan Advances, the Percentage
Adjustments shall be recalculated from time to time based on total funds
advanced from time to time by DMB and Subordinated Lender. Any Percentage
Adjustment shall not decrease the obligations of Subordinated Lender under
this Agreement, to the extent they exist under this Agreement, to make
Subordinated Loan Advances or increase the amount of any Subordinated Loan
Advance.
6.9.7 Acknowledgment by Parties. Borrower and Subordinated
Lender acknowledge that although the Percentage Adjustment mechanism may
cause substantial changes in the distribution of Borrower Cash pursuant to
the Waterfall, such changes are reasonable, necessary and appropriate to
fully compensate DMB for the incremental risk assumed by DMB as a result of
making extra Capital Contributions to cover any Subordinated Lender
Shortfall. The Percentage Adjustment mechanism was fully negotiated between
the parties and Subordinated Lender acknowledges that Borrower would not have
entered into this Agreement in the absence of such Percentage Adjustment
mechanism.
6.10 Withdrawing Member. Notwithstanding anything to the contrary
in Section 6.10.3 of the Borrower Operating Agreement, any transfer of a
Withdrawing Member's Membership Interest to a third party shall require
Subordinated Lender's approval.
6.11 Copies of Notices. Any Member that sends a notice pursuant
to Section 10.3 of the Borrower Operating Agreement shall at the same time
and by the same means send a copy of such notice to Subordinated Lender.
6.12 Other DMB Entities. The Other DMB Entities shall be
adequately capitalized. DMB shall operate the Other DMB Entities as separate
entity(ies) and in compliance with the Subsidiary Structuring Covenants.
7 BORROWER'S SUBSIDIARIES.
7.1 Loan Obligations. Each Subsidiary shall:
7.1.1 Borrower's Loan Obligations. Perform and comply with
all obligations under this Agreement; and
7.1.2 Transfer Funds. By the close of the business day
following receipt, transfer to Borrower all Net Proceeds from Sales or
Refinancings. Each Subsidiary on the business day before every Payment Date
shall distribute to Borrower all other Borrower Cash held by such Subsidiary,
except the Subsidiary Cash Reserve.
7.2 Structuring. Each and every Subsidiary shall comply with the
following (the "Subsidiary Structuring Conditions"):
7.2.1 Structure. Each Subsidiary shall comply with the
definition of "Subsidiary" set forth in this Agreement;
7.2.2 Legally Separate. Remain a legally separate entity,
independent of Borrower. Without limiting the generality of the foregoing,
and, without limiting the foregoing, take such actions as shall be reasonably
required in order that:
(i) Shared Expenses. No Subsidiary shall incur any
material indirect or overhead expenses for items shared between such
Subsidiary and other Subsidiaries and/or Borrower, other than shared items of
expenses such as legal, auditing and other professional services, all of
which shall be allocated to the extent practical on the basis of actual use
or the value of services rendered, and otherwise on a basis reasonably
related to the actual use or the value of services rendered, it being
understood that Borrower shall pay all expenses owing by such Subsidiary or
Borrower relating to the preparation, negotiation, execution and delivery of
the Loan Documents (and any amendments, modifications or supplements
thereto), including, without limitation, legal, commitment, agency and other
fees.
(ii) Accounting and Management of Liabilities. Each
Subsidiary shall account for and manage its liabilities separately from
those of Borrower and every other Subsidiary, including payment of all
payroll and administrative expenses and taxes (other than taxes that are
determined or required to be determined on a consolidated or combined basis)
from its own assets.
(iii) Corporate Records. Each Subsidiary shall maintain
corporate records, books of account and stationery separate from those of
Borrower and every other Subsidiary.
(iv) Assets. Each Subsidiary's assets shall be
maintained in a manner that facilitates their identification and segregation
from those of Borrower or any other Subsidiary.
(v) Transaction Terms. Any transaction between a
Subsidiary and Borrower or any other Subsidiary shall be the type of
transaction that would be entered into by a prudent Person in the position of
such Subsidiary and shall be on terms that are at least as favorable as may
be obtained from a Person that is not Borrower or any other Subsidiary (it
being understood and agreed that the transactions contemplated in the Loan
Documents and approved by the Subordinated Lender meet the requirements of
this clause).
(vi) Debts. Except to the extent specified by the Loan
Documents and to the extent required by law, no Subsidiary shall be, nor
shall it hold itself out to be, responsible for the debts of Borrower or any
other Subsidiary.
(vii) Management. No Subsidiary shall participate in
remediation, disposition, or other activity related to the management of any
other entity;
(viii) Collateral. No Subsidiary shall provide any of
its assets as collateral for the benefit of any other Subsidiary or Borrower;
nor shall any Subsidiary allow any lien to be taken on any of its assets for
the benefit of any other Subsidiary or Borrower.
7.2.3 Independent Director. Have at least one independent
director, whose affirmative vote shall be required for the Subsidiary to
voluntarily commence any Bankruptcy Proceeding;
7.2.4 Use of Funds. Use its funds solely for its own
corporate purposes, and use only its own funds (including contributed capital
and loan proceeds) for such purposes, and maintain its own separate bank
accounts and employment relationships;
7.2.5 Dealings With Affiliates. Deal with Borrower, DMB and
Borrower's Affiliates solely on an arm's length basis, and provide services
to and obtain services from (and transact any other business with) any such
Affiliates based only on written agreements in its own name; and
7.2.6 Subsidiary Cash Reserve. Maintain a cash reserve equal
to the Subsidiary Cash Reserve.
7.3 Conduct of Business. Borrower shall not enter into contracts
relating to any Property(ies), or otherwise conduct business relating to any
Property(ies), in Borrower's name. Any such contracts shall be entered into,
and business shall be conducted, solely by the applicable Subsidiary, and
only in its own name.
8 REPRESENTATIONS AND WARRANTIES.
Borrower and DMB each represents and warrants as follows as of the
Closing Date and as of the date of each Subordinated Loan Advance:
8.1 Loan Applications. All Loan Applications reflect the best
information reasonably available to Borrower at the time of preparation of
such Loan Applications. To the best of Borrower's and DMB's knowledge, no
Loan Application omits any information necessary to make such Loan
Application, or any component thereof, not materially misleading. Except as
disclosed with particularity and specificity in a Loan Application, such Loan
Application complies with all the Loan Criteria.
8.2 Operating Agreements. The Operating Agreements are in full
force and effect and have not been amended, modified or waived. No Member is
in default under either Operating Agreement. No notice of any such default
has been given or received. All representations and warranties in Article 8
of the Borrower Operating Agreement are true and correct.
8.3 Subsidiaries. Each Subsidiary complies with the definition of
the term "Subsidiary."
8.4 Qualification, Etc. Borrower and/or Subsidiary as required:
(i) is authorized to do business in all jurisdictions in which qualification
is necessary, (ii) has all requisite power and authority to own its property
and conduct its business as conducted and as contemplated hereunder and to
enter into and perform its obligations under this Agreement and all other
documents and instruments contemplated hereby, and (iii) holds all material
licenses, certificates and permits from all governmental authorities
necessary for the conduct of business as contemplated hereby.
8.5 Authorization and Enforceability. The execution and delivery
of the Subordinated Loan Documents, and the performance of all obligations
hereunder and thereunder, and Borrower's making of any Approved Investments,
(i) have been duly authorized by all necessary action of Borrower and
Subsidiary as required, and (ii) do not and shall not require any consent or
approval of, notice to or any action by, any person or, if required, such
consents or approvals have been obtained in writing and delivered to
Subordinated Lender at closing. The Subordinated Loan Documents, when
executed and delivered, shall (and to the extent already executed and
delivered, do) constitute legal, valid and binding obligations of Borrower
and Subsidiary as required, enforceable against Borrower and Subsidiary as
required in accordance with their terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
8.6 No Material Litigation. No material litigation affecting
Borrower, DMB or any Subsidiary is pending, or to the knowledge of Borrower
or any Subsidiary presently threatened, at law or in equity, or before or by
any tribunal of any kind, including any federal, state, municipal or
other governmental department, commission, board, agency or instrumentality.
8.7 Compliance with Law. No DMB Party is in violation of or in
default under any applicable Law affecting any Approved Property, except to
the extent that a valid PPA (or conditional Clearance) has been obtained that
specifically allows such activity. To the best of the DMB Parties' knowledge
no DMB Party is in violation or default under any order, writ, injunction,
demand or decree of any court or any other Governmental Authority. No DMB
Party is in violation or default in any material respect under any indenture,
agreement or other instrument to which it is a party or by which its
properties are bound.
8.8 No Conflict. The DMB Parties' execution and delivery of the
Subordinated Loan Documents, and performance of their obligations thereunder:
(i) do not and shall not violate or result in a breach of, or constitute a
default under, or conflict with, or cause any acceleration of, any obligation
with respect to any provision or restriction of any indenture, deed of trust,
document, agreement or instrument to which any DMB Party is a party or by
which it or its property may be bound; (ii) do not and shall not violate (A)
the charter document or by-laws of any DMB Party or (B) any provision of
applicable law, regulation or order, including the provisions of any federal
or state tax or securities laws and any applicable rule, regulation, order,
writ, injunction or decree of any Governmental Authority; or (iii) result in
the creation or imposition of any lien or encumbrance of any nature
whatsoever upon any property or assets of Borrower or any Subsidiary.
8.9 Ownership. Each Subsidiary is the sole owner and holder of
its Approved Property, subject only to matters approved by Subordinated
Lender. There are no security interests, liens or other encumbrances
securing the payment of money affecting any Approved Property, other than
in favor of Senior Lender.
8.10 Place of Business. Borrower's principal place of business is
located at its address listed in the opening paragraph of this Agreement.
Borrower keeps its books and records at such address.
8.11 Financial Statements. All financial statements that any DMB
Party has submitted to Subordinated Lender or submits to Subordinated Lender
after the Closing Date were or shall be (as applicable) true and correct in
all material respects and as of the respective dates of such financial
statements, fairly present the respective financial conditions and results of
operations of the entities to which they, including notes thereto, relate, as
of the dates indicated and the results of operations and changes in financial
position, if any, for the periods therein specified, and are correct and
complete. All such financial statements were prepared in accordance with
proper accounting practices. Except as disclosed in writing to Subordinated
Lender, after the respective dates of such financial statements and
information, the applicable DMB Party has not incurred any material
liabilities or obligations, direct or contingent (including any DMB
Affiliated Financing), or entered into any material transactions not in the
ordinary course of business, nor has there occurred any event that would
have a Material Adverse Effect, or any development involving a prospective
event that would have a Material Adverse Effect, in the condition (financial
or otherwise), business prospects, net worth or results of operations of
such DMB Party. No DMB Party is the subject of any Bankruptcy Proceeding.
(The preceding sentence shall not be deemed to have been breached as to a
future Bankruptcy Proceeding affecting Cleanup Contractor or a Good Faith
Guarantor if the period permitted under this Agreement for replacement of
such Person has not expired.)
8.12 Accurate and Complete. This Agreement and all deliveries in
connection with or in furtherance of this Agreement and the Subordinated
Loan, to Borrower's and each Subsidiary's best knowledge, fully and fairly
state(d) the matters with which they purported to deal, and neither knowingly
misstated any material fact nor, separately or in the aggregate, omitted or
failed to state any material fact necessary to make the statements made
therein not misleading.
8.13 No Fraud. No fraud by any DMB Party or its Affiliate has
occurred in the negotiation of this Agreement or other documents related to
the consummation of the transactions contemplated by this Agreement.
8.14 ERISA. Borrower is not a party to (or subject to any claim or
lien by reason of) any employee benefit plan defined and regulated under the
Employee Retirement Income Security Act of 1974 and the regulations
promulgated thereunder.
8.15 No Contracts. Except as fully identified in the applicable
approved Loan Application, neither Borrower, nor any Subsidiary, owns or
holds, or is obligated under or a party to, any purchase option, right of
first refusal to purchase or any other contractual right to purchase,
acquire, sell, assign or dispose of any Approved Property or any portion
thereof, other than contracts approved by Subordinated Lender pursuant to
Loan Applications or otherwise.
8.16 GMP Agreements. Every GMP Agreement has been duly authorized
and executed by all parties thereto; is in full force and effect; and has not
been amended or waived. No party is in default under any such agreement.
8.17 Margin Regulations. Borrower does not own any "margin
security," as that term is defined in Regulations G and U of the Board of
Governors of the Federal Reserve System (the "Federal Reserve Board"), and
the proceeds of the Subordinated Loan shall be used only for the purposes
contemplated hereunder. The Subordinated Loan shall not be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security,
for the purpose of reducing or retiring any indebtedness that was originally
incurred to purchase or carry any margin security or for any other purpose
that might cause any of the loans under this Agreement to be considered a
"purpose credit" within the meaning of Regulations G,T, U or X of the Federal
Reserve Board. Borrower and the Subsidiaries shall not take or permit any
agent acting on its behalf to take any action that might cause this Agreement
or any document or instrument delivered pursuant hereto to violate any
regulation of the Federal Reserve Board.
8.18 Taxes; Elections. All federal, state and local tax returns,
reports and statements required to be filed by Borrower and/or any Subsidiary
have been filed with the appropriate governmental agencies in all
jurisdictions in which such returns, reports and statements are required to
be filed, and all taxes and other impositions shown to be due and payable
have been timely paid prior to the date on which any fine, penalty, interest,
late charge or loss may be added thereto for non-payment thereof. No DMB
Party has granted or been requested to grant a waiver of any statute of
limitations relating to the payment of federal, state or local taxes.
8.19 Opinion(s) of Counsel. Borrower represents and warrants that
it has authorized and requested its counsel to prepare and deliver an opinion
letter(s) to Subordinated Lender, which Subordinated Lender is entitled to
rely on, with respect to the matters contemplated by this Agreement or as
otherwise addressed in any such opinion letter. Borrower acknowledges that (a)
the preparation of such an opinion constitutes, or might be construed to
constitute, representation of Subordinated Lender by Borrower's counsel and
that such representation is in conflict with such counsel's representation of
Borrower and that such representation might result in a loss of
confidentiality with respect to information and knowledge of or about
Borrower and (b) the consequences of any loss of confidentiality as a result
of the preparation and delivery of such an opinion have been fully disclosed
to it. Borrower hereby waives its attorney-client privilege with respect to
the limited matters set forth in such opinion letter.
8.20 No Default. Borrower is not in default under any Subordinated
Loan Document, nor has any event occurred that would, with the passage of
time or the giving of notice, constitute an Event of Default.
9 REMEDIES.
Upon the occurrence of any Event of Default, Subordinated Lender
shall have the following rights and remedies, all of which shall be
cumulative and may be exercised (and the exercise of which may be suspended
without prejudice) from time to time in Subordinated Lender's sole and
absolute discretion.
9.1 Termination of Advances. Subordinated Lender shall have no
further obligation to make any Subordinated Loan Advances.
9.2 Default Interest. To the extent that the amount thereof has
been determined, any Subordinated Loan Interest not paid when due and payable
under the Waterfall shall bear interest at the Default Rate.
9.3 Loan Termination Option.
9.3.1 Definitions. The following definitions shall apply:
(i) "Hypothetical Distribution" means the payment of the
entire Borrower Cash that would result from a hypothetical all-cash
liquidation of the Hypothetically Liquidated Assets, at the Hypothetical
Value, in accordance with the Waterfall.
(ii) "Hypothetical Liquidation Notice" means a written
notice from Subordinated Lender to Borrower pursuant to which Subordinated
Lender designates the Hypothetically Liquidated Assets and the Hypothetical
Value.
(iii) "Hypothetical Value" means the fair market value of
the Hypothetically Liquidated Assets as specified by Subordinated Lender in
its sole discretion.
(iv) "Hypothetically Liquidated Assets" means all of
Borrower's assets (including the proceeds of any sale or disposition of any
such assets between the Valuation Date and the closing) or such assets as may
be designated by Subordinated Lender in its sole discretion in the
Hypothetical Liquidation Notice.
(v) "Valuation Date" means the date that Subordinated
Lender transmits the Hypothetical Liquidation Notice.
9.3.2 Required Election. Subordinated Lender may deliver a
Hypothetical Liquidation Notice to Borrower. Within thirty (30) days after
Subordinated Lender's notice of the Hypothetical Liquidation Notice becomes
effective pursuant to this Agreement, Borrower shall elect by notice to
Subordinated Lender (the "Borrower's Buy/Sell Election") to either:
(i) Payment of Loan Option. Pay Subordinated Lender, in
full satisfaction of the Subordinated Loan, an amount equal to the
Hypothetical Distribution that Subordinated Lender would receive, pursuant to
the Waterfall, if the Hypothetically Liquidated Assets were liquidated at a
cash liquidation price equal to the Hypothetical Value, plus interest thereon
at the Interest Rate from the Valuation Date to the date of payment, and
simultaneously repay to Senior Lender the entire Senior Loan (the "Payment of
Loan Option"); or
(ii) Buyout of Borrower. Transfer, convey and assign to
Subordinated Lender all the Hypothetically Liquidated Assets, subject to the
Senior Loan Documents and all liens arising thereunder, in exchange for
payment by Subordinated Lender of an amount equal to the Hypothetical
Distribution that Borrower would receive if the Hypothetically Liquidated
Assets were liquidated at a cash liquidation price equal to the Hypothetical
Value and the proceeds distributed pursuant to the Waterfall (the "Borrower
Buyout Option").
9.3.3 Failure to Elect. If Borrower fails to timely deliver a
Borrower's Buy/Sell Election, then for a period of thirty days thereafter
Subordinated Lender shall have the right to elect, by notice to Borrower, to
withdraw the Hypothetical Liquidation Notice or to deem Borrower to have
elected, at Subordinated Lender's option, either the Payment of Loan Option or
the Borrower Buyout Option.
9.3.4 Timing.
(i) Payment of Loan Closing. If Borrower elects (or is
deemed to have elected) the Payment of Loan Option, then the closing of such
transaction (the "Payment of Loan Closing") shall occur within sixty (60)
days after the date Borrower gave Subordinated Lender the Borrower's Buy/Sell
Election. If Borrower's Event of Default based on which Subordinated
Lender delivered a Hypothetical Liquidation Notice was nonmonetary and arose
from acts or omissions of Borrower that did not involve fraud,
misappropriation or criminal acts, the foregoing sixty-day period shall be
extended: (a) by an additional sixty (60) days; and (b) by a further sixty
(60) days if, within 120 days after the date Borrower gave Subordinated Lender
the Borrower's Buy/Sell Election, Borrower shall have delivered to
Subordinated Lender written evidence, satisfactory to Subordinated Lender,
that Borrower has arranged: (a) noncontingent financing for at least 100% of
the total payments to be made by Borrower to any Lender at the Payment of
Loan Closing, which financing shall have been obtained from either or both
(i) an institutional lender (including a conduit lending program) or (ii) a
Person having a net worth of at least One Hundred Million Dollars
($100,000,000), provided that in either case in Subordinated Lender's
reasonable judgment such lender or other Person is credible, reputable, and
highly likely to perform its obligations; and/or (b) available cash equity
(as evidenced by a letter of credit and/or other similar assurances
satisfactory to Subordinated Lender in its reasonable judgment).
(ii) Borrower Buyout Closing. If Borrower elects (or is
deemed to have elected) the Buyout of Borrower Option, then the closing of
such transaction shall occur within ten (10) days after the date of such
election (the "Borrower Buyout Closing").
9.3.5 Remedies. If Borrower elects (or is deemed to have
elected) the Payment of Loan Option and fails to close when required, then:
(a) Borrower shall be automatically deemed to have elected the Borrower
Buyout Option, but any Hypothetical Distributions otherwise payable to
Borrower shall be reduced by ten percent (10%) to reasonably compensate
Subordinated Lender for the incremental delay, cost, and exposure to risk
resulting from Borrower's default (which ten percent (10%) reduction the
parties acknowledge constitutes a reasonable estimate of the damage to be
suffered by Subordinated Lender on account of such default, which damage the
parties acknowledge would otherwise be difficult or impossible to estimate);
or, at Subordinated Lender's option, (b) Subordinated Lender may withdraw the
Hypothetical Liquidation Notice and exercise any and all other rights and
remedies available to Subordinated Lender.
9.3.6 Effect. From and after the Payment of Loan Closing or
Borrower Buyout Closing, as applicable, the Subordinated Loan shall be deemed
to have been paid in full, and neither Borrower nor Subordinated Lender shall
have any further obligations under this Subordinated Loan Agreement, other
than as to any indemnities against claims made by third parties.
9.3.7 Other Distributions. A final distribution of Cash Flow,
in accordance with the Waterfall, shall be made immediately prior to the
Payment of Loan Closing or Borrower Buyout Closing, as applicable. To the
extent that after the Valuation Date Borrower disposes of any assets and
receives Net Proceeds from Sales or Refinancings, such proceeds shall be held
and not distributed by Borrower until after the Payment of Loan Closing or
Borrower Buyout Closing, as applicable.
9.4 Cure. Subordinated Lender may advance such sums as may be
appropriate in Subordinated Lender's judgment to cure the Event of Default.
All such advances shall be deemed Subordinated Loan Advances and shall be
repayable upon demand together with Default Interest, directly as a first-
priority application of Borrower Cash under the Borrower Operating Agreement
and the Waterfall.
9.5 Completion of Remediation. Subordinated Lender may engage
third-party environmental contractor(s) to complete any Remediation not
completed, and may complete any Development not completed. Remediation shall
be completed in substantially the manner contemplated by the applicable Loan
Application or in such other manner as such third-party environmental
contractor(s) shall recommend. Development shall be completed in such manner
as Subordinated Lender shall reasonably determine. Subordinated Lender may
pay, settle or compromise all existing bills and claims relating to any
Remediation or Development. Subordinated Lender's third-party environmental
contractor(s) may execute all applications and certificates in the name of
Borrower that may be required by Law with respect to any Remediation or
Development. Borrower hereby grants Subordinated Lender and its third-party
environmental contractor(s) a power of attorney for purposes of the
foregoing. This power of attorney shall be deemed to be a power coupled with
an interest, which cannot be revoked. All sums expended by Subordinated
Lender pursuant to this paragraph shall be deemed expenditures made to cure
Borrower's Event of Default.
9.6 Management. Subordinated Lender shall have the right, but not
the obligation, to require DMB to delegate any or all of its management
rights and responsibilities under the Borrower Operating Agreement to any
replacement manager designated and directed by Subordinated Lender.
9.7 Costs of Collection. Borrower shall reimburse all costs of
collection and enforcement incurred by Subordinated Lender, whether or not
suit is brought, including all courts costs and reasonable attorneys' fees.
10 EXCLUSIVITY.
10.1 Subordinated Lender's New Loan Opportunities. To the extent
that Subordinated Lender or the Principal Transactions Group of Credit Suisse
First Boston (the "Principal Transactions Group") becomes aware of any New
Loan Opportunity (but excluding (a) one-time or occasional opportunity(ies)
brought to either of them by third-party customer(s) or client(s) (but not
broker(s)) for the purpose of possibly investing in, or providing financing
for, such opportunity; and (b) an opportunity to invest in, or provide
financing for, any Environmentally Contaminated property that is part of a
pool of properties, which pool is not categorically identified as
environmentally distressed or having environmental issues), Subordinated Lender
shall exercise reasonable efforts to refer any such New Loan Opportunity to
Borrower, provided that none of the following conditions exists: (a) a New
Loan Termination; (b) an Event of Default; (c) any material Potential
Default; or (d) the occurrence of August 31, 1998. The making of a
loan secured by Environmentally Contaminated real property with a return that
does not depend on cash flow, appreciation, or profitability would not be
deemed a breach of the preceding sentence. If Borrower determines not to
pursue any such New Loan Opportunity referred by Subordinated Lender, then
Borrower shall not pursue such New Loan Opportunity and shall preserve the
confidentiality of such New Loan Opportunity, Borrower shall not disclose it
to third parties, and Subordinated Lender and the Principal Transactions
Group shall be free to pursue it with any other party(ies). Any New Loan
Opportunity referred to Borrower pursuant to this paragraph and pursued by
Borrower shall be subject to the same terms, conditions and procedures
set forth in this Agreement with respect to any Property.
10.2 Subordinated Lender Exclusivity. If at any time on or
before August 31, 1998, Andrew Stone ceases to be a senior officer of the
Principal Transactions Group, then Subordinated Lender shall promptly so
notify Borrower. In that case, unless a New Loan Termination has occurred,
Subordinated Lender shall either: (a) agree that from and after such
date Subordinated Lender shall not become involved (whether as an equity
investor or as a lender with a "participation" interest in net cash flow or
appreciation) in any new ventures (in which Subordinated Lender did not
previously participate) to invest in or remediate Environmentally
Contaminated real property (but the making of a secured loan with a return
that does not depend on cash flow, appreciation, or profitability would not
be deemed a breach of the foregoing restriction); or (b) offer Borrower a
one-time opportunity to implement a New Loan Termination. If Subordinated
Lender exercises option "b," then within fifteen (15) days after receipt of
Subordinated Lender's notice, Borrower shall have the right to elect to
implement a New Loan Termination. If Borrower so elects within such period,
then the parties shall take all actions reasonably necessary to implement a
New Loan Termination in accordance with this Agreement. If Borrower fails to
so elect, then Borrower's right to make such election shall expire, and
Subordinated Lender shall not be bound by the agreement described in the
preceding clause "a."
10.3 Other Environmentally Contaminated Real Property. So long as
no New Loan Termination has occurred, neither any DMB Party nor any Affiliate
of a DMB Party shall, at any time before September 1, 1998, participate in
any opportunity to invest as an equity owner in, or provide financing for,
any Property or Mortgage Acquisition that would otherwise constitute a
New Loan Opportunity (not including third-party Remediation work on a bona
fide fee-for-service basis) unless either (a) Subordinated Lender has
confirmed in writing that such Property or Mortgage Acquisition is not
appropriate for Borrower to pursue; or (b) Subordinated Lender has
disapproved, or been deemed to have disapproved, a Loan Application relating
to such Property or Mortgage Acquisition. If "a" or "b" has occurred as to a
New Loan Opportunity presented by Borrower, then Borrower shall be free to
pursue such New Loan Opportunity free of any claim by Subordinated Lender and
Subordinated Lender shall not pursue any such New Loan Opportunity referred
by Borrower and shall preserve the confidentiality of such New Loan
Opportunity, Subordinated Lender shall not disclose it to third parties, and
Borrower and DMB shall be free to pursue it with any other party(ies). Any
New Loan Opportunity referred to Subordinated Lender pursuant to this
paragraph and pursued by Borrower shall be subject to the same terms,
conditions and procedures set forth in this Agreement with respect to any
Property. Nothing in this paragraph shall restrict any party's activities
with respect to a Property as to which Subordinated Lender has rejected
(or deemed to have rejected) a Loan Application.
11 MISCELLANEOUS.
11.1 Subordinated Lender's Approval. Wherever this Agreement
refers to Subordinated Lender's approval or consent as to any matter, such
reference shall mean Subordinated Lender's prior written approval or consent
to such matter, which approval or consent Subordinated Lender may withhold
for any reason or no reason (and Subordinated Lender shall accordingly have no
obligation to be "reasonable"), except where expressly stated otherwise in
this Agreement. Without limiting the generality of the foregoing,
Subordinated Lender may disapprove any matter (other than any matter
consistent with an approved Loan Application) that would or could lead to
a Cash Outlay if Subordinated Lender has determined, in its sole and
unreviewable discretion, that Subordinated Lender no longer desires to make
Subordinated Loan Advances. Under no circumstances shall Subordinated Lender
be under any obligation to approve, or not to unreasonably disapprove, any
matter, except where expressly so provided in this Agreement. To the extent
that Subordinated Lender has the right under this Agreement to approve,
consent to, or withhold approval or consent to, any matter, which matter has
been approved or consented to by Senior Lender in writing, Subordinated
Lender shall be bound by Senior Lender's approval and may not disapprove such
matter for purposes of this Agreement.
11.2 Status of Subordinated Lender. Unless Subordinated Lender
elects otherwise, Subordinated Lender shall not exercise any of its rights
or remedies under this Agreement in any way that would or could cause
Subordinated Lender to be a Sponsor of any Remediation.
11.3 Affiliation with Senior Lender. Borrower acknowledges that
Subordinated Lender and Senior Lender are Affiliates. Notwithstanding such
affiliation, Subordinated Lender's rights, remedies and obligations under
this Agreement, and Subordinated Lender's exercise and performance thereof,
shall at all times be determined and interpreted as if no affiliation existed
between Subordinated Lender and Senior Lender. The preceding shall not be
deemed to impose any obligation on Subordinated Lender, or to limit or restrict
in any way Subordinated Lender's exercise of its rights and remedies under
the Subordinated Loan Documents. Subordinated Lender shall have no
obligation to require Senior Lender to act or not act in any particular
manner, and no liability, directly or indirectly, on account of any acts or
omissions of Senior Lender.
11.4 Borrower's Waiver of Claims. Borrower waives, releases, and
agrees not to sue upon, any claim against Subordinated Lender (whether
sounding in tort or otherwise), except a claim based upon breach of this
Agreement, gross negligence, willful misconduct, or knowing violations of
law. Whether or not such damages are related to a claim that is subject to
the waiver effected above, and whether or not such waiver is effective,
Subordinated Lender shall have no liability with respect to (and Borrower
waives, releases, and agrees not to sue upon any claim for) any special,
indirect, consequential, or punitive damages that Borrower suffers in
connection with, arising out of, or in any way related to, (a) the
transactions contemplated or the relationship established by this Agreement
or any of the other Subordinated Loan Documents, or (b) any act, omission, or
event occurring in connection with such transactions or relationship or
otherwise, unless a binding, final judgment of a court determines that such
damages resulted from breach of this Agreement, gross negligence, willful
misconduct or knowing violations of law.
11.5 Subordinated Lender's Waiver of Claims. Subordinated Lender
waives, releases, and agrees not to sue upon, any claim against Borrower, any
Subsidiary, or any of the Good Faith Guarantors (whether sounding in tort or
otherwise), except a claim based upon breach of any of the Subordinated Loan
Documents, gross negligence, willful misconduct, fraud, or knowing violations
of law. Whether or not such damages are related to a claim that is subject
to the waiver effected above, and whether or not such waiver is effective,
Borrower shall have no liability with respect to (and Subordinated Lender
waives, releases, and agrees not to sue upon any claim for) any special,
indirect, consequential, or punitive damages that Subordinated Lender suffers
in connection with, arising out of, or in any way related to, (a) the
transactions contemplated or the relationship established by this Agreement
or any of the other Subordinated Loan Documents, or (b) any act, omission, or
event occurring in connection with such transactions or relationship or
otherwise, unless a binding, final judgment of a court determines that such
damages resulted from breach of this Agreement, gross negligence, willful
misconduct, fraud or knowing violations of law.
11.6 Usury; Maximum Rate. Notwithstanding anything to the contrary
in any Subordinated Loan Document, Borrower and Subordinated Lender agree
that all agreements among them under any Subordinated Loan Documents are
limited expressly so that in no contingency or event whatsoever shall the
amount paid, or agreed to be paid, for the use, forbearance, or detention of
the money loaned to Borrower constituting the Subordinated Loan, or for the
performance or payment of any covenant or obligation contained in any of the
Subordinated Loan Documents, exceed the Highest Lawful Rate. If, due to any
circumstance whatsoever, fulfillment of any provision of any Subordinated
Loan Document (at the time performance of such provision is due) exceeds the
maximum amount of interest permitted by applicable law, then, automatically,
the obligation shall be modified or reduced so as to limit such interest to
the maximum amount permitted by applicable law. If at any time no Highest
Lawful Rate exists, then this paragraph shall be of no force or effect.
Borrower acknowledges that because the total anticipated amount of the
Subordinated Loan Advances would exceed $2,500,000, the Subordinated Loan is
not subject to any usury restrictions under New York law.
11.7 Relationship of Parties. The relationship between Borrower
and Subordinated Lender is that of borrower and lender only. Neither
Borrower nor Subordinated Lender is, nor shall either hold itself out to be,
the agent, employee, joint venturer, or partner of the other. Subordinated
Lender is not a partner, member, or agent of Borrower. Subordinated Lender
does not have, and shall not be deemed to have, any fiduciary relationship
with Borrower or fiduciary obligations to Borrower. Nothing in this
paragraph shall be deemed or construed to limit any of Borrower's obligations
to Subordinated Lender.
11.8 Further Assurances. Each party shall take such further
actions as shall be reasonably necessary from time to time to implement and
effectuate the intentions of the parties as expressed in this Agreement.
11.9 Separability. If all or any portion of any provision of this
Agreement is held to be invalid, illegal, or unenforceable in any respect,
then such invalidity, illegality, or unenforceability shall not affect any
other provision of this Agreement.
11.10 Notices. All notices or other communications required or
permitted under this Agreement shall be given by personal delivery or by
Federal Express or other nationally recognized overnight courier service.
Notices shall be effective when actually received or when delivery has been
unsuccessfully attempted twice as evidenced by a certificate by the third-party
delivery service. The parties' addresses are as set forth in the opening
paragraph of this Agreement. Each party may change its address to another
address within the United States by notice in accordance with this paragraph.
A copy of any notice shall be delivered at the same time, and by the same
means, to the recipient's attorneys, at the following addresses (or any
subsequent address designated by notice in accordance with this paragraph).
11.10.1 Borrower. Graham & James, 885 Third Avenue, 24th
Floor, New York, New York 10022-4802, Attention: Michael Zukerman, Esq. and
Koren Blair, Esq.
11.10.2 Subordinated Lender. Latham & Watkins, 885 Third
Avenue, Suite 1000, New York, New York 10022-4802, Attention: Geoff Hurley,
Esq., and Joshua Stein, Esq.
11.11 Authority of Attorneys. Any written notice, consent, waiver,
or extension of time given by an attorney actually representing a party to
this Agreement shall be effective as if given by such party.
11.12 Interpretation; Governing Law. The interpretation, validity
and enforcement of this Agreement shall be governed by and construed under
the laws of the State of New York notwithstanding the location of any
Approved Property. Terms such as "including," "include," and "such as,"
shall be interpreted in each case as if followed by the words "without
limitation" unless the context clearly requires otherwise. Words of
masculine, feminine, or neuter gender shall mean and include the correlative
words of the other genders. If a word is defined in the singular, the same
definition (modified to refer to the plural) shall be deemed to apply when such
word is used in the plural, and vice versa. All Exhibits and Schedules
attached to this Agreement are hereby incorporated by reference and made a
part of this Agreement as if set forth in full in the text of this Agreement.
Wherever any party's consent is not to be unreasonably withheld, such
consent shall not be unreasonably delayed or conditioned.
11.13 Amendments. This Agreement may be amended, discharged or
terminated only by a written instrument executed by Borrower and Subordinated
Lender.
11.14 Successors and Assigns. This Agreement shall bind and
benefit the parties and their successors, assigns, and legal representatives.
11.15 Assignment by Subordinated Lender. Subordinated Lender shall
be free at any time or from time to time to: (a) assign the Subordinated Loan
Documents to any Person wholly owned by Credit Suisse First Boston, whether
completely or only as they relate to any specific Approved Property(ies);
and/or (b) provided that Subordinated Lender continues to remain "lead"
lender, allow other Persons to participate in the Subordinated Loan as
participants. In addition, if Subordinated Lender obtains Borrower's
consent, which consent shall not be unreasonably withheld or delayed, then
Subordinated Lender may freely assign the Subordinated Loan Documents in
whole or in part to any Person. If Subordinated Lender from time to time
desires to make any assignment in compliance with this paragraph, complete or
partial, then Borrower shall provide such certificates, deliveries, and other
documents as Subordinated Lender shall reasonably require in connection
therewith, including amendments to the Subordinated Loan Documents to sever
the Subordinated Loan Documents as to particular Approved Property(ies)
or into two or more separate loans with multiple priorities, as requested by
Subordinated Lender, or as otherwise reasonably requested by Subordinated
Lender to facilitate any such transfer or assignment, provided that the
foregoing shall not increase Borrower's aggregate obligations. Borrower
shall have no obligation to reimburse any costs or expenses, including
attorneys' fees, incurred by Subordinated Lender as a result of the foregoing.
To the extent that any actual or potential assignee of the Loan or an
interest therein incurs any expenses (such as attorneys' and consultants'
fees, "due diligence" costs, and other transaction costs), which expenses
would not have been incurred but for such actual or potential assignment,
Borrower shall have no obligation to pay or contribute to such expenses.
11.16 Survival. All obligations, covenants, and indemnities made
by Borrower in this Agreement shall survive repayment of the Subordinated
Loan and all Subordinated Loan Interest.
11.17 Jury Trial Waiver. The parties waive jury trial in any
dispute related to arising from the Subordinated Loan Documents or the
Subordinated Loan, and in any action to enforce the Subordinated Loan
Documents or the Subordinated Loan.
11.18 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which shall
constitute a single agreement.
11.19 Subordinated Lender Waivers. Subordinated Lender may at any
time and from time to time waive one or more of the conditions of this
Agreement but any such waiver shall be deemed to have been made pursuant to
and not in modification of this Agreement. Any such waiver in any one
instance or under any particular circumstance shall not be considered a waiver
of any such condition in any other instance or under any other circumstance.
IN WITNESS WHEREOF, Borrower, Subordinated Lender, and DMB have
executed this Agreement as of the Closing Date.
SUBORDINATED LENDER BORROWER
GREENFIELDS FUNDING CORP. DMB/REMEDIATION LLC
By: Alan Baum By: Bruce S. Reshen
______________________ _____________________
Name: Alan Baum Name: Bruce S. Reshen
Title: President Title: President
DMB
DAMES & MOORE / BROOKHILL,
L.L.C.
By: DAMES & MOORE
VENTURES
By: Alan Krusi
________________________
Name: Alan Krusi
Title: President
By: BROOKHILL
HOLDINGS E-I, L.L.C.
By: Ronald B. Bruder
________________________
Name: Ronald B. Bruder
Title: President
Subordinated Lender is an intended third-party beneficiary of Sections 6.1.2
and 6.1.3 of the DMB Operating Agreement, and entitled to enforce such
Sections directly against the undersigned.
DAMES & MOORE, INC. BROOKHILL CAPITAL RESOURCES
INC.
By: Mark A. Snell By: Ronald B. Bruder
_______________________ _________________________
Name: Mark A. Snell Name: Ronald B. Bruder
Title: Chief Financial Officer Title: President
INDEX OF DEFINED TERMS
Administrative Expense Disbursements . . . . . . . . . . . . . . 2
Administrative Expenses. . . . . . . . . . . . . . . . . . . . . 2
Administrative Expenses Budget . . . . . . . . . . . . . . . . . 2
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Approved Investment. . . . . . . . . . . . . . . . . . . . . . . 2
Approved Property. . . . . . . . . . . . . . . . . . . . . . . . 3
Bankruptcy Proceeding. . . . . . . . . . . . . . . . . . . . . . 3
Basic Return Disbursements . . . . . . . . . . . . . . . . . . . 3
Basic Subordinated Loan Interest . . . . . . . . . . . . . . . .21
Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Borrower Buyout Option . . . . . . . . . . . . . . . . . . . . .46
Borrower Cash. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Borrower Operating Agreement . . . . . . . . . . . . . . . . . . 1
Borrower's Buy/Sell Election . . . . . . . . . . . . . . . . . .45
Buyout Closing . . . . . . . . . . . . . . . . . . . . . . . . .46
Cash Equivalent. . . . . . . . . . . . . . . . . . . . . . . . . 3
Cash Flow. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Cash Outlay. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Certificate of Approval. . . . . . . . . . . . . . . . . . . . . 9
Cleanup Contractor . . . . . . . . . . . . . . . . . . . . . . . 4
Clearance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Contingent Subordinated Loan Interest. . . . . . . . . . . . . .22
Cure Period. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Current Cash Outlay. . . . . . . . . . . . . . . . . . . . . . . 4
Damages. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Default Interest . . . . . . . . . . . . . . . . . . . . . . . . 5
Develop. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Disbursement Request . . . . . . . . . . . . . . . . . . . . . . 5
DMB. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DMB Affiliated Financing . . . . . . . . . . . . . . . . . . . . 5
DMB Operating Agreement. . . . . . . . . . . . . . . . . . . . . 1
DMB Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
DMB Shortfall. . . . . . . . . . . . . . . . . . . . . . . . . .36
Environmental Claim. . . . . . . . . . . . . . . . . . . . . . . 6
Environmental Indemnitors. . . . . . . . . . . . . . . . . . . . 6
Environmental Insurance Policy . . . . . . . . . . . . . . . . . 6
Environmental Law. . . . . . . . . . . . . . . . . . . . . . . . 6
Environmental Risks. . . . . . . . . . . . . . . . . . . . . . . 7
Environmentally Contaminated . . . . . . . . . . . . . . . . . . 7
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . 7
Exit Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . .44
Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . 9
Funding Conditions . . . . . . . . . . . . . . . . . . . . . . . 9
GMP Agreement. . . . . . . . . . . . . . . . . . . . . . . . . .10
Good Faith Guarantor(s). . . . . . . . . . . . . . . . . . . . .11
Good Faith Guaranty. . . . . . . . . . . . . . . . . . . . . . .11
Governmental Approval. . . . . . . . . . . . . . . . . . . . . .11
Governmental Authority . . . . . . . . . . . . . . . . . . . . .11
Hard Costs . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Hazardous Material . . . . . . . . . . . . . . . . . . . . . . .11
Hazardous Material Activity. . . . . . . . . . . . . . . . . . .11
Hazardous Material Release . . . . . . . . . . . . . . . . . . .11
Highest Lawful Rate. . . . . . . . . . . . . . . . . . . . . . .12
Identifiable Environmental Risks . . . . . . . . . . . . . . . .12
Identified Environmental Risks . . . . . . . . . . . . . . . . .12
Include. . . . . . . . . . . . . . . . . . . . . . . . . . .51, 52
Initial Property Funding . . . . . . . . . . . . . . . . . . . .12
Initial Property Funding Conditions. . . . . . . . . . . . . . .12
Interest Holder. . . . . . . . . . . . . . . . . . . . . . . . .33
Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . .14
Latent Environmental Risks . . . . . . . . . . . . . . . . . . .14
Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Leasing Guidelines . . . . . . . . . . . . . . . . . . . . . . .14
Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Liquidating Event. . . . . . . . . . . . . . . . . . . . . . . .14
Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Loan Agreements. . . . . . . . . . . . . . . . . . . . . . . . .14
Loan Application . . . . . . . . . . . . . . . . . . . . . . . .14
Loan Criteria. . . . . . . . . . . . . . . . . . . . . . . . . .24
Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . .14
Loan Recovery Shortfall. . . . . . . . . . . . . . . . . . . . .14
Local Counsel. . . . . . . . . . . . . . . . . . . . . . . . . .15
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . .15
Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . .15
Member . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Mortgage Acquisition . . . . . . . . . . . . . . . . . . . . . .15
Net Proceeds from Sales or Refinancings. . . . . . . . . . . . .15
Net Property Profit. . . . . . . . . . . . . . . . . . . . . . .15
New Loan Opportunity . . . . . . . . . . . . . . . . . . . . . .16
New Loan Termination . . . . . . . . . . . . . . . . . . . . . .26
Operating Agreement Qualifications . . . . . . . . . . . . . . .35
Operating Agreements . . . . . . . . . . . . . . . . . . . . . .16
Other DMB Activities . . . . . . . . . . . . . . . . . . . . . .30
Other DMB Entities . . . . . . . . . . . . . . . . . . . . . . .31
Out of Balance . . . . . . . . . . . . . . . . . . . . . . . . .16
Outside Financing. . . . . . . . . . . . . . . . . . . . . . . .16
Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . .16
Payment of Loan Option . . . . . . . . . . . . . . . . . . . . .45
Percentage Adjustment. . . . . . . . . . . . . . . . . . . .37, 38
Permitted Sponsor. . . . . . . . . . . . . . . . . . . . . . . .16
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
PPA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Property Shortfall . . . . . . . . . . . . . . . . . . . . . . .22
Release Shortfall. . . . . . . . . . . . . . . . . . . . . . . .17
Release Shortfall Advance. . . . . . . . . . . . . . . . . . . .20
Remediation. . . . . . . . . . . . . . . . . . . . . . . . . . .17
Reminder Notice. . . . . . . . . . . . . . . . . . . . . . . . .25
Required Borrower Vote . . . . . . . . . . . . . . . . . . . . .35
Required Information . . . . . . . . . . . . . . . . . . . . . .23
Retained Earnings Reserve. . . . . . . . . . . . . . . . . . . .17
Satisfactory Replacement Cleanup
Contractor . . . . . . . . . . . . . . . . . . . . . . . .17
Senior Lender. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Senior Loan Agreement. . . . . . . . . . . . . . . . . . . . . . 1
Senior Loan Documents. . . . . . . . . . . . . . . . . . . . . .17
Senior Loan Payments . . . . . . . . . . . . . . . . . . . . . .17
Shortfall Adjustment . . . . . . . . . . . . . . . . . . . .36, 38
Shortfall Adjustment Percentage. . . . . . . . . . . . . . . . .36
Shortfall Advance. . . . . . . . . . . . . . . . . . . . . .36, 37
Soft Costs . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Sponsor. . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Subordinated Lender. . . . . . . . . . . . . . . . . . . . . . . 1
Subordinated Lender Shortfall. . . . . . . . . . . . . . . . . .37
Subordinated Loan. . . . . . . . . . . . . . . . . . . . . . . . 1
Subordinated Loan Advance. . . . . . . . . . . . . . . . . .17, 18
Subordinated Loan Documents. . . . . . . . . . . . . . . . . . .18
Subordinated Loan Interest . . . . . . . . . . . . . . . . . . .21
Subordinated Note. . . . . . . . . . . . . . . . . . . . . . . .18
Subsequent Property Funding. . . . . . . . . . . . . . . . . . .18
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Subsidiary Cash Reserve. . . . . . . . . . . . . . . . . . . . .19
Subsidiary Structuring Covenants . . . . . . . . . . . . . . . .39
Such as. . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Supplemental Return Disbursements. . . . . . . . . . . . . . . .19
Third Party Mortgage Proposal. . . . . . . . . . . . . . . . . .28
Waterfall. . . . . . . . . . . . . . . . . . . . . . . . . . . .19
_________________________
EXHIBIT "A"
ADMINISTRATIVE EXPENSES BUDGET
Has Not Been Received
EXHIBIT "B"
DESCRIPTION OF REMEDIATION PROFILES
TABLE 1
PROPERTY TARGETING CRITERIA
Category I - High Risk - Unsuitable
o Drinking water source impact likely or existing
o Pending/active litigation involving site contamination
o NPL/Superfund site
o Existing or likely health risk
o Radioactive waste
o Adjacent properties impacted
o Residential Neighborhood
o High Profile
Category II - Moderate Risk
o Acquisition price FMVd < $20M
o Remediation cost Less than 40% of FMVc
o Project term Less than 3 years
o Remedial plan approval process Normal
o Indemnifications Not likely
o Contamination Soil impact with water impact,
possible unknown or questionable
Geology, higher risk contaminants
o Existing use Non-productive
o Availability of data Some data but more required
o Title transfer Before remediation
Category III - Low Risk
o Acquisition price FMVd <$10M
o Remediation cost Less than 25% of FMV
o Project term Less than 24 months
o Remedial plan approval process Expedited
o Indemnifications Possible
o Contamination Soil impact only, favorable
geology, hydrocarbon, or other easily
treatable materials
o Existing use Productive
o Availability of Data Good
o Title transfer After remediation possible
- ---------------------------------------------------------------------------
FMVd - Fair Market Value of the property in a contaminated condition
FMVc - Fair Market Value of the property in a clean condition
EXHIBIT "C"
EXAMPLE OF PERCENTAGE ADJUSTMENT
Starting Point. As a starting point, assume Borrower has incurred to date
Cash Outlays in the amount of $1,000. Those were funded 75% ($750) with
Senior Loan Advances, and the balance 20% ($200) by Subordinated Loan
Advances and 5% ($50) by Capital Contributions made by DMB to Borrower.
The relative positions of Borrower and Subordinated Lender are as follows:
=========================================================================
Description Combined DMB's Capital Subordinated
Fundings by DMB Account within Loan
and Subordinated Borrower Advances
Lender
- -------------------------------------------------------------------------
Starting Point $250 $50 $200
=========================================================================
Additional Cash Outlay Required. After the foregoing, assume Borrower needs
to incur additional Cash Outlays in the amount of $500 (the "Second
Tranche"). To fund the Second Tranche, Senior Lender makes Senior Loan
Advances in the amount of $375, leaving $125 to be covered: (a) Borrower,
$25; and (b) Subordinated Lender, $100. Borrower fails to advance its $25;
Subordinated Lender fully funds its $100. The following calculations and
adjustments will be made:
=======================================================================
Initial Second Tranche $350 $0 $100
Subordinated Loan Advance
- -----------------------------------------------------------------------
Additional Subordinated Loan $375 $0 $25
Advance to Cover DMB Shortfall
- -----------------------------------------------------------------------
Shortfall Adjustment $375 ($6.25) $6.25
(25% x $25 Shortfall)
- -----------------------------------------------------------------------
New Balances $375 $43.75 $331.25
(Aggregate)
- -----------------------------------------------------------------------
New Percentage for Previously 43.75 / 375 331.25 / 375
"80%" Distributions = 11.66% 88.33%
- -----------------------------------------------------------------------
New Percentage for Previously 50% - (8.33% 50% + (8.33%
"50%" Distributions (Adjusted by x 2.5) = x 2.5) =
(8.33% x 2.5)) 50% - 20.82% 50% + 20.82%
= 28.18% = 70.82%
=======================================================================
Summary: As a result of the foregoing, DMB has contributed only 2/3 of
the Capital Contribution to Borrower it was required to contribute;
Subordinated Lender covered that DMB Shortfall; and DMB's participation in
"80%" distributions and "50%" distributions were both reduced to compensate
Subordinated Lender for the incremental risk assumed by Subordinated Lender
as a result of making Subordinated Loan Advances not originally contemplated.
EXHIBIT "D"
WATERFALL
Notwithstanding anything to the contrary in the Borrower Operating
Agreement (including Sections 4.1, 4.2 and 4.3), all Borrower Cash shall
be allocated and applied as follows.
1 Applications of Property-Specific Borrower Cash.
To the extent attributable to or arising from specific Approved
Property(ies) (including the operations and dispositions thereof), Borrower
Cash for each calendar month of Borrower shall be applied and disbursed on
each Payment Date as follows (provided, however, that all sums otherwise
payable to DMB shall be subject to any provisions of the Senior Loan
Documents that require such sums to be applied or used instead in a
particular manner, such as on account of Release Shortfalls or to fund the
Retained Earnings Reserve):
1.1 First: to reimburse Subordinated Lender in full for any Subordinated
Loan Advances made by Subordinated Lender to cure any Event of Default by
Borrower;
1.2 Second, (a) eighty percent (80%) to Subordinated Lender on account
of Basic Subordinated Loan Interest attributable to Subordinated Loan
Advances relating to such Property and (b) twenty percent (20%) to DMB; but
only until such time as DMB has received (taking into account the current and
all prior Basic Return Disbursements and Supplemental Return Disbursements) a
cumulative annual return of ten percent (10%) per annum (calculated based on
actual days elapsed divided by 360) as to its Approved Investment in such
Approved Property(ies) (and Subordinated Lender has received Basic
Subordinated Loan Interest proportionate thereto) (the "Basic Return
Disbursements" payable to DMB);
1.3 Third, to pay Administrative Expenses and to repay any Capital
Contributions previously made by DMB to Borrower, or Subordinated Loan
Advances previously made by Subordinated Lender, to pay Administrative
Expenses, in proportion to such Capital Contributions and Subordinated Loan
Advances (the "Administrative Expense Disbursements");
1.4 Fourth, (a) eighty percent (80%) to Subordinated Lender on account
of Basic Subordinated Loan Interest and (b) twenty percent (20%) to DMB; but
only until all accrued Subordinated Loan Interest has been paid (and DMB has
received return on equity proportionate thereto) (the "Supplemental Return
Disbursements" payable to DMB);
1.5 Fifth, eighty percent (80%) to Subordinated Lender on account of
Subordinated Loan Advances attributable to such Approved Property and twenty
percent (20%) to DMB, to be applied against DMB's Capital Contributions on
account of Approved Investments with respect to such Approved Property, until
such time as the principal balance of the Subordinated Loan allocable to such
Approved Property, and DMB's Capital Contribution with respect to such
Approved Investments in such Approved Property, has each been reduced to
zero;
1.6 Sixth, Eighty percent (80%) to Subordinated Lender and twenty percent
(20%) to DMB, until the Loan Recovery Shortfall has been reduced to zero;
1.7 Seventh, the total remaining amount (the "Net Property Profit")
shall be paid fifty percent (50%) to DMB as additional return on its equity
investment in Borrower and fifty percent (50%) to Subordinated Lender as
Contingent Subordinated Loan Interest.
2 Disagreements Regarding Amount of Borrower Cash.
If at any time, pursuant to a good faith dispute, Borrower and
Subordinated Lender fail to agree as to the amount of Borrower Cash available
for distribution pursuant to the Waterfall, then pending resolution of such
disagreement, the Waterfall shall apply only as to the amount of Borrower
Cash that is not in dispute.
3 Other Cash.
To the extent that Borrower at any time holds any Borrower Cash, other
than Borrower Cash to be disbursed pursuant to "Applications of Property-
Specific Borrower Cash" above, such sums shall be disbursed and applied
pursuant to the following numbered paragraphs (above) in the following order:
1.3; 1.4; 1.6; and 1.7. Notwithstanding anything to the contrary in this
paragraph, any sums disbursable to DMB pursuant to this paragraph shall be
subject to the applicable restrictions and covenants set forth in the Senior
Loan Agreement, including requirements as to funding of the Retained Earnings
Reserve.
EXHIBIT "E"
ENVIRONMENTAL INSURANCE POLICY
Has Not Been Received
EXHIBIT "F"
SUBORDINATED PLEDGE AGREEMENT
Has Not Been included