Exhibit 10.12

MEZZANINE PLEDGE AND SECURITY AGREEMENT

THIS MEZZANINE PLEDGE AND SECURITY AGREEMENT (this “Pledge Agreement”) is
entered into in as of May 3, 2017, between INLAND RESIDENTIAL OPERATING
PARTNERSHIP, L.P., a Delaware limited partnership, having its principal place of
business at 2901 Butterfield Road, Oak Brook, Illinois 60523 (referred to herein
as “Pledgor”) and Parkway Bank and Trust Company, an Illinois banking
corporation, having an address at 4800 N. Harlem Avenue, Harwood Heights,
Illinois 60706 (“Lender”).

Pledgor is the owner of one hundred percent (100%) of the membership interests
in IRESI Vernon Hills Commons, L.L.C., a Delaware limited liability company
(“Borrower”).

Borrower is borrowing the sum of Nine Million Two Hundred Thousand and no/100
Dollars ($9,200,000.00) from Lender pursuant to the terms of that certain
Mezzanine Promissory Note (the “Note”) of even date herewith executed by
Borrower and made payable to Lender, which Note is to be secured by this Pledge
Agreement and by other instruments (the “Other Security Documents”). The loan
represented by the Note shall be referred to herein as the “Loan.”

Pledgor expects to derive economic benefit from the Loan.

To induce Lender to make the Loan, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Pledgor and Lender agree as follows:

1.            Defined Terms. As used in this Pledge Agreement, the following
terms shall have the following meanings

“Business Day” shall mean a day on which commercial banks are not authorized or
required by law to close in the State of Illinois.

“Collateral” shall have the meaning assigned to it in Section 2 of this Pledge
Agreement.

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“Event of Default” shall mean the occurrence of any of the following: (a) any
principal amount of, or interest on, the Note shall not be paid when due; or (b)
Pledgor shall breach any representation hereunder, or shall fail to perform any
covenant, agreement or other obligation under this Pledge Agreement or under any
of the Other Security Documents and such failure shall continue beyond any
applicable grace or cure period; or (c) Pledgor shall commence a voluntary case
under Title 11 of the United States Code entitled “Bankruptcy” as now or
hereafter in effect, or any successor thereto (the “Bankruptcy Code”); or an
involuntary case is commenced against the Pledgor under the Bankruptcy Code and
relief shall be ordered against the Pledgor or the petition is controverted but
is not dismissed within sixty (60) days after the commencement of the case; or
Pledgor shall be not generally paying its debts as such debts become due; or a
custodian (as defined in the Bankruptcy Code) shall be appointed for, or take
charge of, all or substantially all of the property of the Pledgor; or the
Pledgor shall commence any other proceeding under any reorganization,
arrangement, readjustment of debt, relief or debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to Pledgor or there shall be commenced against the Pledgor any
such proceeding which remains undismissed for a period of sixty (60) days or the
Pledgor shall be adjudicated insolvent or bankrupt; or the Pledgor shall fail to
controvert in a timely manner any such case under the Bankruptcy Code or any
such proceeding, or any order of relief or other order approving any such case
or proceeding is entered; or the Pledgor by any act or failure to act indicates
its consent to, approval of, or acquiescence in any such case or proceeding or
in the appointment of any custodian, or the like of, or for it, or any
substantial part of its property or shall suffer any such appointment to
continue undischarged or unstayed for a period of sixty (60) days; or the
Pledgor makes a general assignment for the benefit of creditors; or any action
is taken by the Pledgor for the purpose of affecting any of the foregoing; (d)
any provision of the Note, this Pledge Agreement or any other document delivered
by or on behalf of Pledgor in connection with the Loan, shall at any time for
any reason fail or cease to be valid and binding on Pledgor, respectively or
shall fail or cease to create a valid and perfected first priority security
interest in any of the Collateral, or Pledgor shall so state in writing, or the
validity or enforceability thereof shall be contested by Pledgor or a proceeding
shall be commenced by any governmental agency or authority having jurisdiction
over Pledgor seeking to establish the invalidity or unenforceability thereof, or
Pledgor shall deny that they have any or further liability or obligations under
the instrument delivered by each in connection with the Loan; or (e) an Event of
Default by the Borrower shall have occurred under, and not have been cured in
accordance with, any mortgage loan documents executed by Borrower and
encumbering the Property (the “Mortgage Loan Documents”).

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“Interests” shall mean membership interests in Borrower, together with all
proceeds, rents, income, increases, profits and related rights, all sums or
distributions (whether made in cash, tangible or intangible property of any kind
or character, or otherwise) due or to become due to Pledgor including all
profits and income, and the accounts thereof, all surplus and capital, and the
accounts thereof, all rights in specific property, including the right to
participate in the management and administration of the Borrower’s business and
affairs, to require any information and account of transactions and all other
matters relating to the business and financial condition of Borrower, to inspect
the books and records, including federal, state and local income tax returns,
and to receive all allocations of loss, deduction, credit and other tax benefits
allocable to Pledgor from the Borrower, and any and all other rights, title and
interest of Pledgor in the Borrower, whether now existing or hereafter acquired
or created, together with all products, proceeds, substitutions and additions of
or to any of the foregoing.

“Note” shall mean that certain Mezzanine Promissory Note of even date herewith
in the principal amount of Nine Million Two Hundred Thousand and no/100 Dollars
($9,200,000.00), made by Borrower payable to Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.

“Obligations” shall mean (a) all of the unpaid principal amount of, and accrued
interest on, the Note, and (b) all other indebtedness, liabilities and
obligations of Borrower to Lender, whether now existing or hereafter incurred,
created under, arising out of or in connection with the Loan, the Note, this
Pledge Agreement or the Other Security Documents, including all costs and
expenses incurred by Lender in the collection of any of the obligations of
indebtedness described in (a) and (b) above, including without limitation
reasonable attorney’s fees and legal expenses.

“Operating Agreement” shall mean that certain Limited Liability Company
Agreement of Borrower, dated as of February 27, 2017 (as the foregoing may have
been amended or may hereafter be amended from time to time).

“Proceeds” shall mean “proceeds,” as such term is defined in the UCC (as
hereinafter defined) and also, to the extent not included in the foregoing, (a)
any and all distributions of cash or property from the Borrower to Pledgor or
otherwise when Interests are sold, exchanged, collected or otherwise disposed
of, both cash and non-cash, and all payments or distributions paid or payable on
account of the Interests; and (ii) any and all other amounts from time to time
payable to Pledgor under or in connection with any of the Collateral.

“Property” shall mean that certain property commonly known as 1255 Town Center
Road, Vernon Hills, Illinois, in which Borrower owns or will own, a 100%
undivided fee interest.

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“Special Purpose Entity” shall mean an entity formed for the sole purpose of
owning the Property, and whose organizational documents prohibit it from (a)
engaging in any activity other than owning the Property and matters related
thereto, (b) incurring no debt other than the Obligations and trade payables in
the ordinary course of business not to exceed two percent (2%) of the amount of
the Loan which are not evidenced by a note, are not secured, and are paid when
due.

2.            Grant of Security Interest. As security for the prompt and
complete payment and performance when due of all the Obligations and to induce
Lender to make the Loan, Pledgor hereby grants, pledges, hypothecates and
assigns to Lender a first priority security interest in all of Pledgor’s right,
title and interest in, to, and under, whether now existing or hereafter arising
and agrees to deliver and pledge to Lender pursuant to this Pledge Agreement,
the following (all of which being herein collectively called the “Collateral”):

(a)One hundred percent (100%) of the Pledgor’s Interests in Borrower; and

(b)all Proceeds of the foregoing.

This Pledge Agreement shall constitute a Security Agreement under the Uniform
Commercial Code of the State of Delaware (the “UCC”), and Pledgor hereby
authorizes Lender to file UCC-1 financing statements with respect to the
Collateral. Pledgor may not further assign, pledge, transfer, hypothecate,
distribute or sell any of the Collateral without Lender’s prior written consent
first had and obtained other than as more particularly set forth in Section 8
below. Pledgor shall be entitled to obtain a partial release of the security
interest created hereby in connection with any partial sales of the Collateral
as more particularly set forth in Section 8 below.

3.            Distributions, Net Sale Proceeds. (a) If during the time this
Pledge Agreement is effective Pledgor, by reason of its ownership of the
Interests, shall become entitled to receive, or shall receive, any distributions
of cash or property directly or indirectly from the Borrower, or any cash or
property as the result of the sale or other transfer of all or any portion of
its transfer of the Interests or any portion thereof, Pledgor agrees that it
shall accept the same as Lender’s agent and hold the same in trust for Lender
until all of the Obligations have been repaid in full. Any sums or property paid
upon or with respect to the Interests upon the reorganization, liquidation, or
dissolution of the Borrower shall immediately be paid over to Lender to be held
by Lender as additional collateral security for the Obligations. Pledgor agrees
to give Lender immediate notice of any such distribution upon the
reorganization, liquidation, or dissolution of the Borrower.

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(b)       Upon any sale of all or any of the Interests by Pledgor as permitted
pursuant to this Agreement, Pledgor shall pay to Lender all of the Net Sale
Proceeds, which shall be applied first to all accrued but unpaid interest and
any other sums then due hereunder, then to the outstanding principal balance of
the Note.

“Net Sales Proceeds” shall mean the value, as determined by Lender in its good
faith discretion, of any and all consideration received by Borrower in
connection with the sale or other transfer of any or all of the Borrower’s
membership interests in the Pledged Entity, less the following costs and
expenses to the extent actually incurred by Borrower in connection with such
sale: (a) reasonable and customary brokerage commissions; (b) documentary
transfer taxes, sales taxes and recording fees, if any (c) reasonable escrow
fees; and (d) other reasonable closing costs and expenses.

4.            Representations and Warranties. Pledgor hereby represents,
warrants and agrees that:

(a)          Each of the Recitals in this Pledge Agreement is true, correct and
complete in all material respects.

(b)          Pledgor’s exact name is as set forth above. Pledgor is a valid and
subsisting limited partnership, and is duly organized and existing under the
laws of the State of Delaware, that the Limited Partnership Agreement is and
remains in full force and effect, and that a true and correct copy of the
Limited Partnership Agreement has been delivered to Lender.

(c)          Pledgor has full power and authority to execute, deliver and
perform its covenants, agreements and obligations under this Pledge Agreement.
All necessary actions have been taken and all necessary consents and approvals
received so that upon the execution and delivery to Lender of this Pledge
Agreement by Pledgor, the execution, delivery and performance of this Pledge
Agreement will have been duly authorized.

(d)          Pledgor’s principal place of business and the place where its
records concerning the Collateral are kept is 2901 Butterfield Road, Oak Brook,
Illinois 60523, and Pledgor will promptly notify Lender of any change of such
principal place of business and at request of Lender take such action as is
necessary to cause the security interest of Lender in the Collateral to continue
to be perfected.

(e)          Pledgor is the legal record and beneficial owner of the Interests
and is entitled to the Proceeds, having good and marketable title thereto, free
and clear of any and all liens except the security interest granted to Lender
under this Pledge Agreement.

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(f)           No security agreement, financing statement, equivalent security or
lien instrument, or continuation statement covering any of the Interests is on
file or of record in any public office.

(g)          There is no agreement in effect with respect to either Pledgor or
Borrower, other than any agreement with Lender, which would in any manner impair
or prohibit the terms of this Pledge Agreement or the assignment of the
Collateral as provided hereunder.

(h)          Neither the execution or the delivery of this Pledge Agreement nor
compliance with the terms and provisions hereof on the part of Pledgor will
violate any statute, license or regulation of any governmental authority or will
breach, conflict with or result in a breach of any of the terms, conditions or
provisions of any agreement or instrument, other than any agreement with Lender,
to which Pledgor or Borrower is or may be bound, or constitute a default
thereunder, or result in the creation or imposition of any lien, charge or
encumbrance of any nature whatsoever upon or give to others any interest or
rights, including rights of termination or cancellation, in or with respect to,
any of Pledgor’s or Borrower’s property, assets, contracts, licenses or
business.

(i)            Pledgor owns, directly or indirectly, a 100% undivided interest
in the membership interests in the Borrower, and the Borrower owns an 100%
undivided fee interest in the Premises (as defined in the Mortgage, Security
Agreement, Assignment of Rents and Fixture Filing of even date herewith made by
the Borrower in favor of the Lender in connection with the Property) as of the
date hereof.

(j)            Pledgor hereby represents and warrants that as of the date hereof
there exist no certificates, instruments or writings representing the
Collateral, provided, however, if in the future there exists any such
certificates, instruments or writings, Pledgor shall deliver all such
certificates, instruments or writings to Lender.

(k)          Upon the filing of UCC-1 financing statements in proper form with
the Delaware Secretary of State, the security interest granted pursuant to this
Pledge Agreement will constitute a valid, perfected first priority security
interest in the Collateral, enforceable as such against all creditors of Pledgor
and any Persons purporting to purchase any Collateral from Pledgor.

The representations and warranties set forth in this Section 4 shall survive the
execution, delivery and performance of this Pledge Agreement.

5.            Covenants. Pledgor covenants and agrees with Lender that from and
after the date of this Pledge Agreement and until the Obligations are fully
satisfied:

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(a)          Pledgor will take all acts reasonably requested by Lender to allow
Lender to perfect and maintain its perfected security interest in the
Collateral, including delivery, upon receipt, of any certificates evidencing
ownership of any the Interests. Pledgor shall record the pledge reflected herein
on the books and records of the Borrower.

(b)          Pledgor will not create, permit or suffer to exist, and will defend
the Collateral against and take such other action as is necessary to remove, any
lien on the Collateral (other than liens in favor of Lender) and will defend the
right, title and interest of Lender in and to any of Pledgor’s right, title and
interest in and to the Collateral and to any Proceeds thereof against the claims
and demands of all other persons whomsoever.

(c)          At any time and from time to time, upon the written request of
Lender, and at the sole expense of Pledgor, Pledgor will promptly and duly
execute and deliver any and all such further instruments and documents and take
such further actions as Lender may reasonably deem necessary to obtain the full
benefits of this Pledge Agreement and of the rights and powers herein granted.

(d)          Pledgor shall keep accurate and complete books and records
concerning the Collateral owned by it in accordance with generally accepted
accounting principles or other accounting standards acceptable to Lender,
consistently applied, and upon request, shall furnish to Lender copies of such
financial reports as Lender shall reasonably request.

(e)          Lender shall have the right to review the books and records of
Pledgor pertaining to the Collateral and to copy the same and make excerpts
therefrom all at such reasonable times and as often as Lender may reasonably
request.

(f)           Pledgor shall maintain and keep its principal place of business at
2901 Butterfield Road, Oak Brook, Illinois 60523, and at no other location
without giving Lender thirty (30) days prior written notice of any address
change.

(g)          Prior to the occurrence of any Event of Default, Pledgor shall have
the right to exercise all voting and other rights under or pertaining to the
Collateral so long as such rights and privileges are exercised in a manner which
does not cause a violation of or default hereunder, or the Other Security
Documents.

(h)          Intentionally Deleted.

(i)            Pledgor shall not permit, without the prior written consent of
Lender, any transaction which would have the effect of diluting Pledgor’s
Interest. Pledgor shall at all times own 100% of the direct or indirect
membership interests in Borrower except as otherwise set forth in Section 8
hereof. Any violation of the terms hereof shall, at the option of Lender,
constitute a default hereunder, and Lender shall have no obligation to allege or
show any impairment of its security thereby and may pursue any legal or
equitable remedies for default without such allegation or showing.

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(j)            Pledgor will not, without the prior written consent of Lender,
(i) borrow against the Collateral from any person, fine or corporation other
than Lender, (ii) create, incur, assume or suffer to exist any mortgage, lien,
charge or encumbrances on, or security interest in, or pledge of conditional
sale or other title retention agreement with respect to any of the Collateral,
except the security interest created hereunder, or sell or transfer any of the
Collateral other than as set forth in Section 8 hereof, (iii) permit any levy or
attachment to be made against any of the Collateral except any levy or
attachment relating to the Pledge Agreement, (iv) permit any financing statement
to be on file with respect to any of the Collateral, except financing statements
in favor of Lender, or (v) transfer or convey, or permit a transfer or
conveyance of, any interest in the Collateral other than as set forth in Section
8 hereof.

6.            Lender’s Appointment as Attorney-in-Fact.

(a)          Upon the occurrence and continuance of any Event of Default,
Pledgor hereby irrevocably constitutes and appoints Lender and any officer or
agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of Pledgor and in the name of Pledgor or in its own name, from time to
time in Lender’s discretion, for the purpose of carrying out the terms of this
Pledge Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to accomplish
the purposes of this Pledge Agreement. Without limiting the generality of the
foregoing, Pledgor hereby gives Lender and any officer or agent thereof, as such
attorney-in-fact, the power and right, on behalf of Pledgor, without notice to
or assent by Pledgor, to do the following: (i) to direct any party liable for
any payment under any of the Collateral to make payment of any and all monies
due and to become due thereunder directly to Lender or as Lender shall direct;
(ii) to receive payment of and receipt for any and all monies, claims and other
amounts due and to become due at any time in respect of or arising out of any
Collateral; (iii) to endorse and collect any checks, drafts, notes, acceptances
or other instruments for the payment of monies due under any Collateral; (iv) to
commence and prosecute any suits, actions or proceedings at law or in equity in
any court of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of the Collateral; (v) to
defend any suit, action or proceeding brought against Pledgor with respect to
any Collateral; (vi) to pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against the Collateral;
(vii) to settle, compromise or adjust any suit, action or proceeding described
above and, in connection therewith, to give such discharges or releases as
Lender may deem appropriate; and (viii) generally to sell, transfer, pledge,
vote, make any agreement with respect to or otherwise deal with any of the
Collateral, in accordance with Section 9 hereof, as fully and completely as
though Lender were the absolute owner thereof for all purposes, and to do, at
Lender’s option and Pledgor’s expense, at any time, or from time to time, all
acts and things which Lender reasonably deems necessary to protect, preserve or
realize upon the Collateral and Lender’s security interest therein, in order to
effect the intent of this Pledge Agreement, all as fully and effectively as
Pledgor might do.

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          Any and all such amounts received by Lender as attorney-in-fact for
Pledgor shall be held by Lender as Collateral pursuant to this Pledge Agreement
or, at Lender’s election shall be applied to the reduction of any Obligation
then outstanding, in such order as Lender may elect. Pledgor hereby ratifies, to
the extent permitted by law, all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.

(b)          The powers conferred on Lender hereunder are solely to protect
Lender’s interests in the Collateral and shall not impose any duty upon it to
exercise any such powers. Lender shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers and neither it nor
any of its officers, directors, employees or agents shall be responsible to
Pledgor for any act or failure to act, except for its own gross negligence or
willful misconduct.

(c)          Pledgor also authorizes Lender, at any time and from time to time
upon the occurrence and during the continuance of any Event of Default, to
execute, in connection with the sale provided for in Section 9 of this Pledge
Agreement, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.

7.            Performance by Lender of Pledgor’s Obligations. If Pledgor fails
to perform or comply with any of its agreements contained herein and Lender, as
provided for by the terms of this Pledge Agreement, shall itself perform or
comply, or otherwise cause performance or compliance, with such agreement, the
reasonable expenses of Lender incurred in connection with such performance or
compliance, together with interest thereon at the Default Rate shall be payable
by Pledgor to Lender on demand and shall constitute Obligations secured hereby.

8.            Permitted Sale of Interests in the Borrower.

(a)       Notwithstanding anything herein or in the Note to the contrary,
Pledgor may sell all or any portion of its Interests to the extent permitted by,
and is strict conformance with, the Mortgage Loan Documents; provided, however,
upon such sale of any such Interests, all Net Sale Proceeds (as defined in the
Pledge Agreement) shall be paid to Lender for application against the
Obligations as provided in the Note.

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(b)       Upon the receipt by Bank of all or any portion of the unpaid principal
amount of the Note (whether resulting from the sale or transfer of any Interests
by Pledgor or otherwise), Bank shall, prior to the next Payment Date (as defined
in the Note), release its lien on the Collateral consisting of Interests to the
extent of such principal reduction.  That portion of the Interests to be
released in connection with any such payment shall be determined by dividing (a)
the amount of principal received by Bank by (b) the original principal amount of
the Note, and multiplying the result thereof by the Interest originally pledged
by the Borrower to the Bank hereunder.  Upon payment in full of all of the
Borrower’s obligations under the Note, the Bank will release all of its liens on
all such remaining membership interests. Pledgor shall pay all of Lender’s
reasonable costs and expenses in connection with any such release.

9.            Remedies, Rights Upon Default.

(a)          If any Event of Default shall occur and be continuing, Lender may
exercise, in addition to all other rights and remedies granted to it in this
Pledge Agreement and in any other instrument or agreement securing, evidencing
or relating to the Obligations, all rights and remedies of a secured party under
the UCC. Without limiting the generality of the foregoing, Pledgor expressly
agrees, to the extent permitted by law, that in any such event Lender, upon ten
(10) Business Days prior written notice to Pledgor may forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give option or options to purchase, or
sell or otherwise dispose of and deliver said Collateral (or contract to do so),
or any part thereof, in one or more parcels at public or private sale or sales,
at any of Lender’s offices or elsewhere at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
Lender shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, as provided in Section 9(d) hereof, and only
after so paying over such net proceeds and after the payment by Lender of any
other amount required by any provision of law, including Section 9¬504 (1)(c) of
the UCC, need Lender account for the surplus, if any, to Pledgor. To the extent
permitted by applicable law, Pledgor waives all claims, damages, and demands
against Lender arising out of the repossession, retention or sale of the
Collateral except such as arise out of the gross negligence or willful
misconduct of Lender. Pledgor agrees that Lender need not give more than ten
(10) Business Days’ notice of the time and place of any public sale or of the
time after which a private sale may take place and that such notice is
reasonable notification of such matters. Notice of a potential sale or
disposition of the Collateral under this Section 9(a) may be combined with a
notice of default in which case the notice period shall be concurrent with and
not in additional to any applicable grace period. Pledgor agrees that the sale
of the Collateral by either a public or private sale shall be deemed
commercially reasonable. LENDER MAY ENFORCE ITS RIGHTS HEREUNDER WITHOUT RESORT
TO PRIOR JUDICIAL PROCESS OR JUDICIAL HEARING AND PLEDGOR EXPRESSLY WAIVES,
RENOUNCES, AND KNOWINGLY RELINQUISHES ANY LEGAL RIGHT WHICH MIGHT OTHERWISE
REQUIRE LENDER TO ENFORCE ITS

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RIGHTS BY JUDICIAL PROCESS. IN SO PROVIDING FOR A NONJUDICIAL REMEDY, PLEDGOR
REPRESENTS THAT SUCH A REMEDY IS RESPONSIVE TO COMMERCIAL NECESSITY AND IS THE
RESULT OF BARGAIN AT ARM’S LENGTH. NOTHING HEREIN IS INTENDED TO PREVENT LENDER
FROM RESORTING TO JUDICIAL PROCESS AT SUCH PARTY’S OPTION.

(b)          Pledgor agrees to pay all costs of Lender, including reasonable
attorneys’ fees and expenses, incurred with respect to the collection of any of
the Obligations and the enforcement of any of Lender’s rights hereunder.

(c)          Pledgor hereby waives presentment, demand, protest or any notice
(to the extent permitted by applicable law) of any kind in connection with this
Pledge Agreement or any Collateral except as provided in Section 9(a) of this
Pledge Agreement.

(d)          The proceeds of any sale, disposition or other realization upon all
or any part of the Collateral shall be distributed by Lender in the following
order of priorities:

first, to Lender in an amount sufficient to pay in full the expenses of Lender
in connection with such sale, disposition or other realization, incurred or made
by Lender in connection therewith, including reasonable attorneys’ fees;

second, to Lender in an amount equal to any late charges or other fees and
charges due on the Obligations;

third, to Lender in an amount equal to the then accrued and unpaid interest, if
any, on the Obligations (with such amount being first applied to interest
determined at the Default Rate, as defined in the Note);

fourth, to Lender in an amount equal to any other Obligations which are then
unpaid;

fifth, to Lender in an amount equal to the then unpaid principal of the
Obligations; and,

finally, upon payment in full of all of the Obligations, to Pledgor, or its
representative or as a court of competent jurisdiction may direct, any surplus
then remaining from such proceeds.

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(e)          Pledgor agrees that in any sale of any of the Interests hereunder,
Lender is authorized to comply with any limitation or restriction in connection
with such sale which it is advised by its counsel is appropriate (i) in order to
avoid violation of applicable law, including, without limitation, procedures
restricting the number of prospective bidders and purchasers, requiring that
prospective bidders and purchasers have certain qualifications, and restricting
prospective bidders and purchasers to persons who will represent and agree that
they are purchasing for their own account for investment and not with a view to
the distribution or resale of any Interests they purchase, or (ii) in order to
obtain any required approval of such sale or of a purchaser at such sale by any
governmental regulatory authority or official. Pledgor further agrees that such
compliance shall not result in any such sale being deemed not to have been made
in a commercially reasonable manner, nor shall Lender be liable or accountable
to Pledgor for any discount allowed by reason of the fact that any Interests are
sold in compliance with any such limitation or restriction.

(f)           The remedies of Lender hereunder are cumulative and the exercise
of any one or more of the remedies provided for herein or under the UCC shall
not be construed as a waiver of any of the other remedies of Lender. Amongst its
remedies, Lender has the right to require specific performance of the terms and
provisions of this Pledge Agreement and may obtain injunctive relief from any
court of competent jurisdiction.

(g)          It is agreed that no waiver by Lender of any Event of Default shall
operate as a waiver of any other default or of the same default on a future
occasion. All the rights of Lender hereunder shall inure to the benefit of its
successors and assigns and all obligations of Pledgor shall bind its successors
and assigns.

(h)          Pledgor agrees to indemnify and hold harmless Lender, its
directors, officers, employees, agents and parent and subsidiary corporations,
and each of them, from and against any and all liabilities, obligations, claims,
damages, or expenses incurred by any of them arising out of or by reason of
entering into this Pledge Agreement or the consummation of the transactions
contemplated by this Pledge Agreement (unless caused solely by the gross
negligence or willful misconduct of such indemnified parties) and to pay or
reimburse Lender for the reasonable fees and disbursements of counsel incurred
in connection with any investigation, litigation or other proceedings (whether
or not Lender is a party thereto) arising out of or by reason of any of the
aforesaid. Lender will promptly give Pledgor written notice of the assertion of
any claim which it believes is subject to the indemnity set forth in this
Section 9 and will upon the request of Pledgor promptly furnish Pledgor with all
material in its possession relating to such claim or the defense thereof to the
extent that the Lender may do so without breach of duty to others. Any amounts
properly due under this Section 9 shall be payable to Lender immediately upon
demand.

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10.         Limitations on Lender’s Obligations Under the Operating Agreement.
Pledgor acknowledges and agrees that this Pledge Agreement shall not in any way
obligate Lender or any of its successors and assigns to perform any of the now
existing or hereafter accruing, or any of its successors and assigns to perform
any of the now existing or hereafter accruing, obligations of Pledgor under the
operating agreement of Borrower and Pledgor agrees to perform any and all
obligations (including the payment of any and all liabilities or assessments) of
Pledgor under the operating agreement of Borrower, whether heretofore or
hereafter accruing or arising, all with the same effect as though this Pledge
Agreement had not been executed or delivered by Pledgor.

11.         Limitation on Lender’s Duty in Respect of Collateral. Lender shall
use reasonable care with respect to the Collateral in its possession or under
its control. Upon request of Pledgor, Lender shall account for any money
received by it in respect of any foreclosure on or disposition of the
Collateral.

12.         Notices. Each notice, consent, request, report or other
communication hereunder (each, a “Notice”) that any party hereto may desire or
be required to give to the other shall be deemed to be an adequate and
sufficient notice if given in writing and service is made by either (i) personal
delivery; or (ii) nationally recognized overnight air courier, next day
delivery, prepaid, in which case such notice shall be deemed to have been
received 1 business day following delivery to such nationally recognized
overnight air courier. All Notices shall be addressed as follows:

If to Pledgor:

 

Inland Residential Operating Partnership, L.P.

2901 Butterfield Road

Oak Brook, IL 60523

Attention: President

 

With a copy to:

 

The Inland Real Estate Group, Inc./Law Department

2901 Butterfield Road

Oak Brook, IL 60523

Attention: General Counsel

If to Lender:

 

Parkway Bank & Trust Company
4800 N. Harlem Avenue
Harwood Heights, IL 60706
Attention: Gregory T. Bear, Executive Vice President

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with a copy to:    

Latimer LeVay Fyock LLC
55 W. Monroe Street, Suite 1100
Chicago, IL 60603
Attention: Sheryl Fyock, Esq.

or to such other place as any party may by written notice to the other parties
hereafter designate as a place for service of notice. Pledgor shall not be
permitted to designate more than one place for service of Notice concurrently.

13.         Severability. Upon payment in full or other satisfaction of the
Obligations, this Pledge Agreement shall terminate and be of no further force or
effect; provided, however, that any indemnity provided hereunder shall survive
such payment. Until such time, however, this Pledge Agreement shall remain in
full force and effect as security for all of the Obligations and shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. The satisfaction, or discharge, of any part of the
Obligations hereby secured shall not in any way satisfy or discharge this Pledge
Agreement. Any provision of this Pledge Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

14.         No Waiver-Cumulative Remedies. Lender shall not by any act, delay,
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder, and no waiver shall be valid unless in writing, signed by Lender, and
then only to the extent therein set forth. A waiver by Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which Lender would otherwise have had on any future occasion. No
failure to exercise nor any delay in exercising on the part of Lender any right,
power or privilege hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or future exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies hereunder provided are cumulative and may
be exercised singly or concurrently and not exclusive of any rights and remedies
provided by law. None of the terms or provisions of this Pledge Agreement may be
waived, altered, modified or amended except by an instrument in writing, duly
executed by Pledgor and Lender.

15.         Successor and Assigns. This Pledge Agreement and all obligations of
Pledgor hereunder shall be binding upon the respective heirs, personal
representatives, successors and assigns of Pledgor (subject to any release given
by Lender pursuant to Section 8 above) and shall together with the rights and
remedies of Lender hereunder, inure to the benefit of Lender and its successors
and assigns.

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16.         Governing Law, Consent to Jurisdiction and Venue, Waiver of Jury
Trial. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND BE CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS, OF THE STATE OF ILLINOIS. ANY LEGAL
SUIT, ACTION OR PROCEEDING AGAINST LENDER OR PLEDGOR ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY AT LENDER’S OPTION BE
INSTITUTED in any court of competent jurisdiction in the State of Illinois or in
the District Court of the United States in the Northern District of Illinois AND
PLEDGOR WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED ON VENUE
AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND PLEDGOR
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY SUIT,
ACTION OR PROCEEDING. PLEDGOR AND, BY ITS ACCEPTANCE HEREOF, LENDER HEREBY
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS PLEDGE AGREEMENT.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, each of the parties hereto has executed and delivered this
Mezzanine Pledge and Security Agreement as of the date first set forth above.

PLEDGOR:

Inland Residential Operating Partnership, L.P.,
a Delaware limited partnership

 

By:Inland Residential Properties Trust, Inc., a Maryland corporation, its
general partner

 

By:        /s/ David Z. Lichterman

Name:  David Z. Lichterman

Its:        Chief Accounting Officer,

             Treasurer and Vice President

 

 

 

PLEDGEE:

Parkway Bank and Trust Company,

an Illinois banking corporation

 

By:          /s/ Marianne L. Wagener        

Name:    Marianne L. Wagener

Its:          Senior Vice President

 

 

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