Document:

Exhibit 10.116

 

Prepared By
And 

After
Recording Return To:

 

Lawrence C. Adams, Esq.

Jenkens & Gilchrist, A
Professional Corporation

1445 Ross Avenue, Suite 3200

Dallas, Texas 75202

 

ATTENTION: 
COUNTY CLERK--THIS INSTRUMENT COVERS GOODS THAT
ARE OR ARE TO BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN AND IS TO
BE FILED FOR RECORD IN THE RECORDS WHERE MORTGAGES ON REAL ESTATE ARE
RECORDED.  ADDITIONALLY, THIS INSTRUMENT
SHOULD BE APPROPRIATELY INDEXED, NOT ONLY AS A MORTGAGE, BUT ALSO AS A
FINANCING STATEMENT COVERING GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE
REAL PROPERTY DESCRIBED HEREIN.  THE
MAILING ADDRESSES OF THE MORTGAGOR (DEBTOR) AND MORTGAGEE (SECURED PARTY) ARE
SET FORTH IN THIS INSTRUMENT.

 

MORTGAGE, SECURITY
AGREEMENT,

AND

ASSIGNMENT OF LEASES
AND RENTS

 

This MORTAGE,
SECURITY AGREEMENT AND ASSIGNMENT OF LEASES AND RENTS (hereinafter referred to
as this “Mortgage”) is executed by HUNTLEY DEVELOPMENT LIMITED PARTNERSHIP, an
Illinois limited partnership (“Mortgagor”), whose address for notice hereunder
is 77 West Wacker Drive, Suite  4200,
Chicago, Illinois 60601, Attn:  Gary J.
Skoien, to and in favor of BEAL BANK, S.S.B., a savings bank organized under the
laws of the State of Texas (“Mortgagee”), whose address for notice hereunder is
6000 Legacy Drive, 4 East, Plano, Texas 75024, Attn: William T. Saurenmann:

 

1

 

W  I  T  N  E  S
S  E  T  H:

 

ARTICLE I

 

DEFINITIONS

 

1.1                                 As
used herein, the following terms shall have the following meanings:

 

(a)                                  Applicable
Environmental Laws:  All Legal Requirements now or hereafter
applicable to the use, treatment, processing, disposal, transportation, storage
or handling of hazardous or toxic wastes or substances, including, without
limitation, the Resource Conservation and Recovery Act of 1987 (42 U.S.C.
Section 6901 et  seq.), as amended from time to time, and
regulations promulgated thereunder or pursuant thereto, and the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C.
Section 9601 et  seq.), as amended from time to time, and
regulations promulgated thereunder or pursuant thereto.

 

(b)                                 Debtor
Relief Laws:  Any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization or similar
laws, whether federal or state or of a country other than the United States of
America, affecting the rights or remedies of creditors generally, as in effect
from time to time.

 

(c)                                  Escrowed
Funds:  The amounts paid by Mortgagor to Mortgagee pursuant to
Paragraph 12.4 hereof to be held by Mortgagee in a fund for the payment of the
Impositions, subject to the provisions of such Paragraph 12.4.

 

(d)                                 Event
of Default:  Any happening or occurrence described in
Article VI herein.

 

(e)                                  Fixtures:  All
right, title and interest of Mortgagor in and to all materials, supplies,
equipment, apparatus and other items now or hereafter attached to, installed on
or in the Land or the Improvements, or which in some fashion are deemed to be
fixtures to the Land or Improvements under the laws of the State of Illinois,
including the Illinois Uniform Commercial Code.  The term “Fixtures” shall include, without limitation, all items
of personalty to the extent that the same may be deemed Fixtures under
applicable law.

 

(f)                                    Governmental
Authority:  Any and all courts, boards, agencies, commissions,
offices or authorities of any nature whatsoever for any governmental unit
(federal, state, county, district, municipal, city or otherwise) whether now or
hereafter in existence.

 

(g)                                 Guarantors
(whether one or more):   Horizon
Group Properties, Inc., a Maryland corporation, Horizon Group Properties, L.P.,
a Delaware limited partnership, and Prime Retail, L.P., a Delaware limited
partnership.

 

(h)                                 Guaranty:   That certain Guaranty Agreement, dated
July 10, 2002, executed by the Guarantors in favor of Mortgagee, by which
the Guarantors jointly and severally guaranty the payment and performance
of  Maker’s obligations in regard to the
Loan and under the Loan Documents.

 

2

 

(i)                                     Impositions:  The Insurance Premiums, water, gas, sewer,
electricity and other utility rates and charges; all rentals charged under any
ground lease covering all or any part of the Mortgaged Property; all charges imposed
pursuant to any subdivision, planned unit development or condominium
declaration or restrictions; all charges for any easement, license or agreement
maintained for the benefit of the Mortgaged Property, and all other costs,
expenses, taxes, charges and assessments, and any interest or penalties with
respect thereto, of any kind and nature whatsoever which at any time prior to
or after the execution hereof may be assessed, levied or imposed upon the
Mortgaged Property or upon the ownership, operation, use, occupancy or
enjoyment thereof, or which are related in any way to the transactions
contemplated under the Loan Documents.

 

(j)                                     Improvements:  All right, title and interest of Mortgagor
in and to any and all buildings, structures, open parking areas, roadways,
utility lines and facilities, land development activity and other improvements,
and any and all accessions, additions, replacements, substitutions or
alterations thereof or appurtenances thereto, now or at any time hereafter
situated, placed or constructed upon the Land or any part thereof.

 

(k)                                  Indebtedness:  The principal of, interest on and all other
amounts and payments due under or secured by the Note, this Mortgage or any
other Loan Document, and all renewals, extensions and modifications of any
thereof, together with all funds hereafter advanced by Mortgagee to or for the
benefit of Mortgagor or Maker as contemplated by any covenant or provision
herein or therein contained or for any other purpose, and all other currently
existing indebtedness or obligation of whatever kind or character, direct or
indirect, absolute or contingent, owing or which may hereafter become owing by
Mortgagor or Maker to Mortgagee, whether such indebtedness or obligation is
evidenced by note, net profits agreement, open account, overdraft, endorsement,
surety agreement, guaranty or otherwise.

 

(l)                                     Insurance
Premiums:  The premiums payable by
Mortgagor under each of the policies of insurance which Mortgagor is required
to maintain pursuant to the terms of this Mortgage.

 

(m)                               Land:  The real estate or any interest therein
described in Exhibit “A” attached hereto and made a part hereof,
together with all Improvements and Fixtures and all rights, titles and
interests appurtenant thereto.

 

(n)                                 Leases:  All right, title and interest of Mortgagor
in and to any and all leases, subleases, licenses, concessions or other
agreements (written or verbal, now or hereafter in effect) which now or
hereafter grant a possessory interest in and to, or the right to extract, mine,
reside in, operate in, sell or use the Mortgaged Property.

 

(o)                                 Legal
Requirements:  (i) Any and all
present and future judicial decisions, statutes, rulings, rules, regulations,
permits, certificates or ordinances of any Governmental Authority in any way
applicable to Maker, Mortgagor or the Mortgaged Property, including, but not
limited to, those regarding the ownership, use, construction, occupancy,
possession, operation, maintenance, alteration, repair or reconstruction of the
Mortgaged Property, (ii) any and all Leases and other contracts (written or
oral) of any nature to which Mortgagor may be bound and (iii) any and all

 

3

 

restrictions,
reservations, conditions, easements or other covenants or agreements of record
affecting the Mortgaged Property.

 

(p)                                 Loan:  The loan by Mortgagee to Maker, in an amount
not to exceed the principal sum of the Note.

 

(q)                                 Loan
Documents:  The Note, this
Mortgage,  the Guaranty and any and all
other documents heretofore, now or hereafter executed by Maker, Mortgagor or
any Guarantor to evidence or secure the payment of the Indebtedness or the
performance and discharge of the Obligations, and any and all other documents
executed by Maker, Mortgagor, any Guarantor or any other  person or entity in connection with the
Loan.

 

(r)                                    Maker:   Monroe Outlet Center, LLC, a Michigan
limited liability company.

 

(s)                                  Mortgaged
Property:  The Land, Improvements,
Fixtures, Personalty, Leases and Rents, together with:

 

(i)                                     all
rights, privileges, tenements, hereditaments, rights-of-way, easements,
appendages and appurtenances in anywise appertaining thereto, and all right,
title and interest of Mortgagor in and to any streets, ways, alleys, strips or
gores of land adjoining the Land or any part thereof, which Mortgagor now owns
or at any time hereafter acquires;

 

(ii)                                  all
betterments, accessions, additions, appurtenances, substitutions, replacements
and revisions thereof and thereto and all reversions and remainders therein;

 

(iii)                               all
of Mortgagor’s right, title and interest in and to any award, remuneration,
settlement or compensation heretofore made or hereafter to be made by any
Governmental Authority to Mortgagor, including those for any vacation of, or
change of grade in, any streets affecting the Land or the Improvements;

 

(iv)                              all
right, title and interest of Mortgagor in and to the following: all plans and
specifications for the Improvements; all contracts and subcontracts relating to
the Land, Improvements, Fixtures, Personalty, Leases and Rents, all deposits
(including tenant’s security deposits), funds, accounts, contract rights
(including, without limitation, those relating to the Annexation Agreement to
which reference is made on Exhibit “B” attached hereto), instruments,
documents, general intangibles (including trademarks, service marks, trade
names and symbols used in connection therewith), and notes or chattel paper
arising from or by virtue of any transactions related to the property described
herein; all commissions and fees that may be due to Mortgagor in regard to the
sale of any portion of the Mortgaged Property; all right, title and interest of
Mortgagor in regard to any municipal utility district, tax district, road
district and/or planned improvement district 
relating to all or any part of the Land, including, without limitation,
all rights to payments and/or reimbursement from any thereof; all permits,
licenses, franchises, certificates, and other rights and privileges obtained in
connection with the property described herein; all proceeds arising from or by
virtue of the sale, lease or other disposition of all or any part of the
Mortgaged Property (consent to same not granted or to

 

4

 

be implied
hereby); all proceeds (including premium refunds) payable or to be payable
under each policy of insurance relating to the Mortgaged Property;

 

(v)                                 all
other interest of every kind and character which Mortgagor now has or at any
time hereafter acquires in and to all or any part of the above described real
and personal property and all property which is used or useful in connection
therewith, including rights of ingress and egress, easements, licenses, and all
reversionary rights or interests of Mortgagor with respect to such property.  To the extent permitted by law, all of the
foregoing personal property and Fixtures are to be deemed and held to be a part
of and affixed to the Land.  In the
event the estate of the Mortgagor in and to any of the Land and Improvements is
a leasehold estate, this conveyance shall include, and the lien, security
interest and assignment created hereby shall encumber and extend to, all other,
further or additional titles, estates, interest or rights which may exist now
or at any time be acquired by Mortgagor in or to the property demised under the
lease creating such leasehold estate and including Mortgagor’s rights, if any,
to purchase the property demised under such lease and, if fee simple title to
any of such property shall ever become vested in Mortgagor, such fee simple
interest shall be encumbered by this Mortgage in the same manner as if
Mortgagor had fee simple title to such property as of the date of execution
hereof without the necessity of any further act by Mortgagor, Mortgagee or any
third party; and

 

(vi)                              any
and all other security and collateral of any nature whatsoever, now or
hereafter given for the repayment of the Indebtedness or the performance and
discharge of the Obligations.

 

As used in this Mortgage, the
term “Mortgaged Property” is expressly defined as meaning all or, where the
context permits or requires, any portion of the above and all or, where the
context permits or requires, any interest therein.

 

(t)                                    Mortgagee:   Beal Bank, S.S.B., and the subsequent
holder or holders, from time to time, of the Note.

 

(u)                                 Mortgagor:   Huntley Development Limited Partnership,
and any and all subsequent owners of all or any portion of the Mortgaged
Property (consent to any transfer of any such title by Huntley Development
Limited Partnership not hereby given or implied).

 

(v)                                 Note:   Those certain Promissory Notes, each dated
July 10, 2002, each executed by Maker, each payable to the order of
Mortgagee, Promissory Note I being in the principal sum of $3,000,000.00 and
Promissory Note II being in the principal sum of $4,000,000.00, each bearing
interest and being payable as provided therein, becoming finally due and
payable on July 10, 2005, subject to 
acceleration of such maturity date as provided in the Note , and any and
all renewals and/or modifications and/or extensions thereof.

 

(w)                               Obligations:  Any and all of the covenants, warranties,
representations and other obligations (other than to repay the Indebtedness)
relating to the Loan and/or the Prior Indebtedness made or undertaken by Maker
or Mortgagor to Mortgagee or others as set forth in the Loan Documents.

 

5

 

(x)                                   Permitted
Encumbrances:  The outstanding
easements, building lines, restrictions and other matters (if any) as set forth
on Exhibit “B” attached hereto and made a part hereof, together with any
other encumbrances on the title to any of the Land hereafter expressly approved
or consented to by Mortgagee in writing, which approval or consent may be
granted or withheld at the sole discretion of Mortgagee.

 

(y)                                 Personalty:  All of the right, title and interest of
Mortgagor in and to all tangible and intangible personal property, including
all accounts, equipment, consumer goods, chattel paper, goods, inventory,
instruments, money, general intangibles, documents, minerals, crops and timber
(as those terms are defined in the Illinois Uniform Commercial Code) which are
attached to, installed on or placed or used on, in connection with or which are
acquired for such attachment, installation, placement or use, or which arise
out of the development, improvement, financing, leasing, operation, use or
maintenance of, the Land, the Improvements, the Fixtures or other goods located
on the Land or Improvements, or from or out of any business operated in or from
the Land or the Improvements, together with all additions, accessions,
accessories, amendments and modifications thereto, extensions, renewals,
enlargements and proceeds thereof, substitutions therefor, and income and
profits therefrom.  All right, title and
interest of Mortgagor in and to the following are included, without limitation,
in the definition of Personalty: 
furnishings, building materials, supplies, machines, engines, boilers,
stokers, pumps, fans, vents, blowers, dynamos, furnaces, elevators, ducts,
shafts, pipes, furniture, cabinets, shades, blinds, screens; plumbing, heating,
air conditioning, lighting, lifting, ventilating, refrigerating, cooking,
medical, laundry and incinerating equipment, partitions, drapes, carpets, rugs
and other floor coverings, awnings, call and sprinkler systems, fire prevention
and extinguishing apparatus and equipment, water tanks, swimming pools,
compressors, vacuum cleaning systems, disposals, dishwashers, ranges, ovens,
kitchen equipment, cafeteria equipment, recreational equipment, lawn and
landscaping equipment and supplies, loan commitments, management agreements,
maintenance and service agreements, utility contracts, financing arrangements,
bonds, construction contracts, leases, licenses, permits, sales contracts,
insurance policies and the proceeds therefrom, plans and specifications,
surveys, rent rolls, books and records, funds, bank deposits and all other
intangible personal property.

 

(z)                                   Prior
Indebtedness: The indebtedness and obligations evidenced and/or secured by
the Prior Indebtedness Documents.

 

(aa)                            Prior
Indebtedness Documents: The documents listed on Exhibit “C” attached
hereto which evidence, secure and/or otherwise relate to the Prior Indebtedness
therein described, which encumber some or all of the Mortgaged Property as more
particularly described on Exhibit “C” hereto.

 

(bb)                          Rents:  All right, title and interest of Mortgagor
in and to all the rents, revenues, income, proceeds, royalties, profits and
other benefits now or hereafter paid or payable for using, leasing, licensing,
possessing, operating from or in, residing in, selling, mining, extracting or
otherwise enjoying or using all or any part of the Mortgaged Property, if any,
including, without limitation, all damages received following any default under
any of the Leases and all proceeds payable under any policy of insurance
covering loss of rents.

 

6

 

(cc)                            Taxes:  All real estate and personal property taxes
and assessments payable with respect to the ownership, use or operation of the
Mortgaged Property including, without limitation, all ad valorem taxes levied
or assessed against the Mortgaged Property.

 

ARTICLE II

 

GRANT

 

To secure the
full and timely payment of the Indebtedness and the full and timely performance
and discharge of the Obligations, Mortgagor has GRANTED, SOLD, ASSIGNED,
RELEASED, ALIENED, TRANSFERRED, REMISED, CONVEYED and MORTGAGED,  and by these presents does GRANT, SELL,
ASSIGN, RELEASE, ALIEN, TRANSFER, REMISE, CONVEY and MORTGAGE unto Mortgagee,
and grant to Mortgagee a security interest in, the Mortgaged Property, subject,
however, to the Permitted Encumbrances, TO HAVE AND TO HOLD the Mortgaged
Property unto Mortgagee, its successors and assigns forever, and Mortgagor does
hereby bind itself, its successors and assigns to warrant and forever defend
the title to the Mortgaged Property unto Mortgagee against every person
whomsoever lawfully claiming or to claim the same or any part thereof, subject
only to the Permitted Encumbrances; provided, however, that if Maker and/or
Mortgagor shall pay in full the Indebtedness and shall fully perform and
discharge the Obligations, then the titles, liens, security interests, estates
and rights granted by the Loan Documents shall terminate; otherwise, the same
shall remain in full force and effect.

 

ARTICLE III

 

WARRANTIES AND REPRESENTATIONS

 

Mortgagor
hereby unconditionally warrants and represents to Mortgagee as follows:

 

3.1.                              Organization.  Mortgagor is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Illinois.  Mortgagor is duly qualified
to transact business and is in good standing in the State of Illinois.
Mortgagor and Maker are affiliated in that the owners (either direct or indirect)
of Mortgagor are also the owners (either direct or indirect) of Maker.  The execution and delivery of the Loan
Documents have been duly authorized under the terms of Mortgagor’s  Agreement of Limited Partnership and
authorized by Mortgagor’s partners. 
Mortgagor has all requisite authority, licenses and permits to own,
operate and encumber the Mortgaged Property. 
No proceeding or action is pending, planned or threatened for the
dissolution, termination or annulment of Mortgagor.

 

3.2.                              Validity
of Documents.  The execution,
delivery and performance by Mortgagor of the Loan Documents and the borrowing
evidenced by the Note, (i) have received all (if any) requisite prior
governmental approval in order to be legally binding and enforceable in
accordance with the terms thereof, and (ii) will not violate, be in conflict
with, result in a breach of or constitute (with due notice or lapse of time, or
both) a default under any mortgage, indenture, agreement, commitment or
instrument to which Mortgagor is a party or by which any of its assets are
bound, or any Legal Requirement or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of Mortgagor’s
property or assets, except as contemplated by the provisions of the Loan
Documents. To the

 

7

 

best of Mortgagor’s knowledge,
after reasonable investigation and inquiry, 
this Mortgage constitutes  the
legal, valid and binding obligation of Mortgagor and  is enforceable against Mortgagor in accordance with   its terms, except as such enforceability
may be limited by applicable Debtor Relief Laws.  Mortgagor has full and lawful authority to bargain, grant, sell,
mortgage, assign, transfer and convey to Mortgagee all of the Mortgaged
Property as set forth herein.

 

3.3.                              Information.  To the best of Mortgagor’s knowledge, after
reasonable investigation and inquiry, all information, reports, papers and data
given by or on behalf of Maker, Mortgagor or 
any Guarantor to Mortgagee with respect 
to Maker,  Mortgagor,  any Guarantor and/or the Mortgaged Property
and/or otherwise in regard to the Loan are accurate, complete and correct in
all material respects and do not omit any fact necessary to prevent the facts
contained therein from being materially misleading.  All information material to the transactions contemplated herein
and known to Mortgagor has been expressly disclosed in writing by Mortgagor to
Mortgagee.

 

3.4.                              Title
to Mortgaged Property and Lien of this Instrument.  Mortgagor has good and indefeasible title to
the Land and the Improvements in fee simple, and good and indefeasible title to
the Fixtures, the Personalty, the Leases and the Rents, free and clear of any
liens, charges, encumbrances, security interests and adverse claims whatsoever
except the Permitted Encumbrances.  This
Mortgage constitutes a valid, subsisting Mortgage of and on the Land, the
Improvements, and the Fixtures and a valid, subsisting security interest in and
to the Personalty, Leases and Rents, all in accordance with the terms hereof,
subject to only the Permitted Encumbrances. 
To Mortgagor’s knowledge, none of the Personalty has been acquired by
Mortgagor in violation of any applicable bulk sale law.  No tenant or other party has any rights or
interests of any kind with respect to the Mortgaged Property.  The only other liens and security interests
encumbering any of the Mortgaged Property are those liens and security
interests described on Exhibit “B” attached hereto.

 

3.5.                              Taxes
and Other Payments.  Mortgagor has
filed all federal, state, county, municipal and city income, franchise and
other tax returns which are required to have been filed by Mortgagor, and
Mortgagor has paid all taxes which have become due pursuant to such returns or
pursuant to any assessments received by Mortgagor, and Mortgagor knows of no
basis for any additional assessment in respect of any such taxes.  Mortgagor has paid or will pay in full
(except for such retainages as may be permitted or required by any Legal Requirements
to be withheld by Mortgagor pending completion of the Improvements) all sums
owing or claimed for labor, material, supplies, personal property (whether or
not constituting a Fixture hereunder) and services of every kind and character
used, furnished or installed in the Mortgaged Property, and no claim for any of
the same currently exists and no valid claim will be permitted to become past
due.

 

3.6.                              Litigation.  There are no actions, suits or proceedings
pending or, to the knowledge of Mortgagor, threatened against or affecting
Maker, Mortgagor, the Guarantor or any of the Mortgaged Property with respect
to which an adverse decision is reasonably likely which would materially
adversely affect the ability of Mortgagor to perform its obligations under the
Loan Documents or which involve the validity or enforceability of this Mortgage
or any other Loan Document or the priority of the lien and security interest
hereof, and no event has occurred (including specifically Mortgagor’s execution
of the Loan Documents and the consummation of the Loan) which will violate, be
in conflict with, result in the breach of or constitute (with due notice or
lapse of time, or both) a default under, any Legal Requirement or result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of Mortgagor’s property other than the liens and security
interests created by the Loan Documents.

 

8

 

3.7.                              The
Financial Statements.  The financial
statements of Mortgagor  heretofore
delivered to Mortgagee are true, complete and correct in all material respects,
have been prepared in accordance with generally accepted accounting principles
consistently applied, and fairly present the financial condition of the
Mortgagor  as of the dates thereof.  No materially adverse change in
Mortgagor’s  financial condition has
occurred since the dates thereof, and no borrowings have been made by
Mortgagor  since the dates thereof other
than the borrowings contemplated hereby or other borrowings approved in writing
by Mortgagee.   Mortgagor  has 
no liabilities, direct or contingent (including, without limitation, any
liability for taxes or any forward or long-term commitments), which are not
disclosed or shown to be reserved against in its current financial statement
delivered to Mortgagee.

 

3.8.                              No
Defaults.  Mortgagor is not in
default under any of the Loan Documents or any of the Prior Indebtedness
Documents, and no event has occurred which by notice, the passage of time or
otherwise would constitute an event of default under any of the Loan Documents
or any of the Prior Indebtedness Documents. 
Mortgagor is not in default in the payment of any indebtedness for
borrowed money or under the terms and provisions of any agreement or instrument
evidencing any such indebtedness.  To
Mortgagor’s knowledge, it is not in default with respect to any order, writ,
injunction, decree or demand of any court or of any other requirement of any
Governmental Authority.

 

3.9.                              Access
and Utilities.  The Mortgaged
Property has adequate rights of access to public ways and has access to all
water, sanitary sewer and storm drain facilities and other utility services
which are necessary for the use of the Mortgaged Property and Improvements for
their intended purposes.  All public
utilities necessary to the full use and enjoyment of the Mortgaged Property as
permitted by applicable zoning  are now
available at the boundaries of the Mortgaged Property to serve the Mortgaged
Property and Improvements.  All roads
necessary for the utilization of the Mortgaged Property and Improvements for
their intended purposes as permitted by applicable zoning have been completed
and provide  uninterrupted, continuous
and adequate paved access to the Mortgaged Property and the Improvements in
accordance with all Legal Requirements.

 

3.10.                        Licenses;
Permits.  Mortgagor has obtained
from each Governmental Authority and from each beneficiary of each restrictive
covenant encumbering the Mortgaged Property (if any) all licenses, permits,
authorizations, consents and approvals necessary for the operation, use and
occupancy of the Improvements.

 

3.11.                        Lien
Potential.  Mortgagor has not taken,
suffered or permitted any action, the effect of which would be to establish or
cause the inception or priority of any mechanics’ or materialman’s lien,
statutory or otherwise, or any other lien, charge, or encumbrance upon the
Mortgaged Property (or any part thereof) to be prior or superior to the lien
and security interest of this Mortgage. 
Each contractor, subcontractor, mechanic and materialman which has at
any time supplied labor or  materials to
the Mortgaged Property for or on behalf of Mortgagor has been paid in full, and
Mortgagor has not received any lien affidavit with respect to the Mortgaged
Property.

 

3.12.                        Dangerous
Conditions.  Mortgagor has no actual
knowledge of any dangerous condition affecting any portion of the Mortgaged
Property.

 

3.13.                        Environmental
Matters.  To the best of Mortgagor’s
knowledge, after reasonable investigation and inquiry, the Mortgaged Property
is not in violation of any Applicable Environmental

 

9

 

Laws and is not subject to any
existing, pending or threatened investigation or inquiry by any Governmental
Authority or to any remedial obligations under any Applicable Environmental
Laws.  Mortgagor has no knowledge that
any flammable explosives, radioactive materials, hazardous or toxic wastes,
hazardous or toxic substances or related materials have been used, generated,
manufactured, stored, spilled, released, or disposed of on, under, from, about
or onto the Mortgaged Property in violation of Applicable Environmental
Laws.  In addition, Mortgagor has no
knowledge of any presence, disposal, spill, use or release of any hazardous or
toxic wastes, hazardous or toxic substances or related materials on, under,
from, about or onto the Mortgaged Property prior to Mortgagor’s acquisition of
title to the Mortgaged Property.  To the
best of Mortgagor’s knowledge, after reasonable investigation and inquiry, no
asbestos or asbestos-containing materials have been installed, used,
incorporated into or disposed of in the Improvements or on the Land at any time
in violation of Applicable Environmental Laws. 
To the best of  Mortgagor’s
knowledge, after reasonable investigation and inquiry, no underground tanks or
containers of any  nature are located on
the Mortgaged Property, or were located on the Mortgaged Property and
subsequently moved or filled in violation of Applicable Environmental
Laws.  To the best of Mortgagor’s
knowledge, after reasonable investigation and inquiry, there are no
polychlorinated byphenyls (PCBs) located upon or in the Mortgaged Property,
including but not limited to any electrical transformers, flares and light
fixtures,  or any other similar
equipment or device of any nature in violation of Applicable Environmental
Laws.  To the best of Mortgagor’s
knowledge, after reasonable investigation and inquiry, there are no conditions
likely to exist during the term of this Mortgage, or in the foreseeable future,
which would require or are likely to require clean up, removal, remedial
action, or other responsive action pursuant to any Applicable Environmental
Laws by Mortgagor, or which would subject Mortgagor to damages, penalties,
injunctive relief or clean up costs under any Applicable Environmental
Laws.  To the best of Mortgagor’s
knowledge, after reasonable investigation and inquiry, no permits, licenses or
approvals are required under any Applicable Environmental Laws relative to the
Mortgaged Property.  To the best of
Mortgagor’s knowledge, after reasonable investigation and inquiry, neither the
Mortgaged Property nor Mortgagor are subject to any judgment, decree, order or
citation which relates to or arises out of a violation of any Applicable
Environmental Law, or that requires Mortgagor to clean up, remove or take
remedial action or other responsive action pursuant to any Applicable
Environmental Law.  To the best of
Mortgagor’s knowledge, after reasonable investigation and inquiry, there are
not now, nor to Mortgagor’s knowledge after reasonable investigation, have
there ever been any substances classified as hazardous or toxic under any
Applicable Environmental Law, stored, deposited, treated, recycled or disposed
of on, under, or at the Mortgaged Property in violation of Applicable
Environmental Laws.  Mortgagor will
fully comply with all Applicable Environmental Laws relative to the Mortgaged
Property at all times in the future.

 

Mortgagor has disclosed
to all applicable Governmental Authorities all facts, conditions and
circumstances, if any, pertaining to the Mortgaged Property which are required
to be disclosed under Applicable Environmental Laws.

 

ARTICLE IV

 

AFFIRMATIVE COVENANTS

 

Mortgagor
hereby unconditionally covenants and agrees with Mortgagee as follows:

 

4.1.                              Payment
and Performance.  Mortgagor will
fully perform all of the Obligations for which it

 

10

 

has liability on or before the
dates they are to be performed.

 

4.2.                              Existence.  Mortgagor will preserve and keep in full
force and effect its existence, rights, franchises and trade names, and all
licenses and permits necessary for the development and operation of the
Mortgaged Property for its intended use as permitted by applicable zoning
ordinances.

 

4.3.                              Compliance
with Legal Requirements.  Mortgagor
will promptly and faithfully comply with, conform to and obey all present and
future Legal Requirements, whether or not the same shall necessitate structural
changes in, improvements to, or interfere with the use or enjoyment of, the
Mortgaged Property.

 

4.4.                              Payment
of Impositions.  Subject to the
provisions of Paragraph 12.4 herein, Mortgagor will duly pay and discharge, or
cause to be paid and discharged, the Impositions not later than the date upon
which the Impositions become due; provided, however, that Mortgagor may, if
permitted by law and if installment 
payments would not create or permit the filing of a lien against the
Mortgaged Property, pay the Impositions in installments, whether or not
interest shall accrue on the unpaid balance of such Impositions.  Within fifteen (15) days following the due
date of any of the Insurance Premiums (or any installment thereof), Mortgagor,
if paying such Impositions directly pursuant to the terms of this Mortgage,
shall furnish Mortgagee with evidence satisfactory to Mortgagee of the payment
thereof.

 

4.5.                              Condition
of Property.  Mortgagor will keep
the Mortgaged Property in the good order, condition and appearance,  and will make all repairs, replacements,
renewals, additions, betterments, improvements and alterations thereof and
thereto, interior and exterior, structural and nonstructural, ordinary and extraordinary,
foreseen and unforeseen, which are necessary or reasonably appropriate to keep
same in such order,  condition and
appearance.  Mortgagor will also use its
best efforts to prevent any act or occurrence which might materially impair the
value or usefulness of the Mortgaged Property for its intended usage as set
forth in any plans and specifications for the Improvements submitted to
Mortgagee or in the Loan Documents.  In
instances where repairs, replacements, renewals, additions, betterments, improvements
or alterations are required in and to the Mortgaged Property on an emergency
basis to prevent loss, damage, waste or destruction thereof, Mortgagor shall
proceed to construct same, or cause same to be constructed, notwithstanding
anything to the contrary contained in Paragraph 5.2 hereinbelow; provided,
however, that in instances where such emergency measures are to be taken,
Mortgagor will promptly notify Mortgagee in writing of the commencement of same
and the measures to be taken, and when same are completed, the completion date
and the measures actually taken.

 

4.6                                 Repairs.  Mortgagor shall not make any material
improvements to the Mortgaged Property unless consented to in writing by
Mortgagee, which consent will not be unreasonably withheld.  Upon receipt of Mortgagee’s consent to the
plans for the Improvements in question (the “Plans”), Mortgagor shall construct
its proposed Improvements strictly in accordance with such Plans diligently,
without delay and to final completion in a good and workmanlike manner, free
from construction defects and in accordance with the Loan Documents.  In no event shall Mortgagee have any
liability or responsibility whatsoever with respect to any improvements made to
the Mortgaged Property by Mortgagor, and as a condition to the commencement of
construction, Mortgagor shall cause all 
contractors, subcontractors and other persons engaged by or on behalf of
Mortgagor with respect to the work to procure and maintain insurance coverage
against such risks, in such amounts and with such companies as Mortgagee may
reasonably require fully insuring and protecting Mortgagee in connection with
the completion of Mortgagor’s improvements. 
Mortgagee, by approving the Plans for the construction of Improvements
to the Mortgaged Property, is not thereby consenting to the imposition of any
mechanic’s or materialmen’s or other lien upon any of the Mortgaged Property as
a result of the furnishing of any materials, furnishings or

 

11

 

equipment or the performance of
any labor or services, and in no event shall this Mortgage be deemed to have
been subordinated to any such lien or claim.

 

4.7.                              Insurance.  Mortgagor shall obtain and maintain the
following types of insurance upon and relating to the Mortgaged Property:

 

(a)                                  When
and if required by the Mortgagee, and to the extent available, “All Risk”
property and fire insurance (with extended coverage endorsement) in an amount
not less than the full replacement value of the Improvements (with a deductible
not to exceed $25,000.00 and with co-insurance limited to a maximum of 10% of
the amount of the policy), naming Mortgagee under a standard mortgagee clause
(438 BFU) and including agreed amount, inflation guard, replacement cost and
waiver of subrogation endorsements;

 

(b)                                 Comprehensive
general liability insurance in an amount not less than $2,000,000 insuring
against personal injury, death and property damage and naming Mortgagee as
additional insured;  and

 

(c)                                  Such
other types of insurance as may be reasonably required from time to time by
Mortgagee.

 

Upon the
request of Mortgagee, Mortgagor shall increase the coverages under any of the
insurance policies required to be maintained hereunder or otherwise modify such
policies in accordance with Mortgagee’s request.  All of the insurance policies required hereunder shall be issued
by corporate insurers licensed to do business in the State of  Illinois rated A or better by A.M. Best
Company and shall be in form acceptable to Mortgagee.  If and to the extent that the Mortgaged Property is located
within an area that has been or is hereafter designated or identified as an
area having special flood hazards by the Department of Housing and Urban
Development or by such other official as shall from time to time be authorized
by federal or state law to make such designation pursuant to any national or
state program of flood insurance, Mortgagor shall carry flood insurance with
respect to the Mortgaged Property in amounts not less than the maximum limit of
coverage then available with respect to the Mortgaged Property or the amount of
the Indebtedness, whichever is less. 
Certificates of all insurance required to be maintained hereunder shall
be delivered to Mortgagee, along with evidence of the payment in full of all
premiums required thereunder, concurrently with Mortgagor’s execution of this
Mortgage.  All such certificates shall
be in form acceptable to Mortgagee. 
Certificates evidencing all renewal and substitute policies of insurance
shall be delivered to Mortgagee, along with evidence of the payment in full of
all premiums required thereunder, at least 15 days before termination of the
policies being renewed or substituted. 
If any loss shall occur at any time when Mortgagor shall be in default
hereunder, Mortgagee shall be entitled to the benefit of all insurance policies
held  or maintained by Mortgagor, to the
same extent as if same had been made payable to Mortgagee, and upon foreclosure
hereunder, Mortgagee shall become the owner thereof.  Mortgagee shall have the right, but not the obligation, to make
premium payments, at Mortgagor’s expense, to prevent any cancellation,
endorsement, alteration or reissuance of any policy of insurance maintained by
Mortgagor, and such payments shall be accepted by the insurer to prevent same.

 

4.8.                              Restoration
Following Casualty.  If any act or
occurrence of any kind or nature (including any casualty for which insurance
was not obtained or obtainable) shall result in damage to or destruction of the
Mortgaged Property (such event being called a “Loss”), Mortgagor will give
prompt written notice thereof to Mortgagee. 
All insurance proceeds paid or payable in connection with such Loss
shall be paid

 

12

 

to Mortgagee.  Mortgagee shall have the right either (a) to
place all insurance proceeds received in connection with such Loss in a
separate account for the benefit of Mortgagee and Mortgagor to be used to
restore, repair or replace and rebuild the Mortgaged Property as nearly as
possible to its value, condition and character immediately prior to such Loss
or (b) to apply all insurance proceeds in connection with such Loss to the
payment of the Indebtedness in such order as Mortgagee may elect; provided,
however, that if no Event of Default has occurred and is continuing hereunder
at the time of such Loss, if Mortgagee determines that Mortgagor will be able
to pay all amounts becoming due under the Note during the pendency of any
restoration or repairs to or replacement of the Mortgaged Property and if the
available insurance proceeds are sufficient, in Mortgagee’s reasonable
judgment, to fully and completely restore, repair or replace the Mortgaged
Property, or if such proceeds are insufficient for such purposes, if Mortgagor
provides additional sums (the “Additional Sums”) to Mortgagee’s reasonable
satisfaction so that the aggregate of such proceeds and such Additional Sums
will be sufficient for such purpose, then all of the insurance proceeds payable
with respect thereto, together with any Additional Sums provided by Mortgagor,
shall be placed in a separate account for the benefit of Mortgagee and
Mortgagor to be used to fully and completely restore, repair or replace the
Mortgaged Property as nearly as possible to its value, condition and character
immediately prior to such loss.  
Mortgagor hereby covenants to diligently prosecute any restoration,
repairs or replacement of the Mortgaged Property undertaken by or on behalf of
Mortgagor pursuant to this Paragraph 4.8, and agrees that all such work shall
be conducted pursuant to written contracts approved by Mortgagee in
writing.  In the event any insurance
proceeds and/or Additional Sums remain following the restoration, repair or
replacement of the Mortgaged Property, so long as no Event of Default or event
or condition which, with the giving of notice, the passage of time or both,
could mature into an Event of Default, then exists, such amounts may be
retained by Mortgagor.

 

4.9.                              Inspection.  Mortgagor will permit Mortgagee, and its
agents, representatives and employees, to inspect the Mortgaged Property at all
reasonable times upon reasonable advance notice.

 

4.10.                      Defense of
Actions.  If the interest of
Mortgagee in the Mortgaged Property, or any part thereof,  or the respective rights and obligations of
Mortgagor and Mortgagee pursuant to this Mortgage, shall be endangered or shall
be attacked, directly or indirectly, Mortgagor hereby authorizes Mortgagee, at
Mortgagor’s expense, to take all necessary and proper steps for the defense of
such title or interest, including the employment of counsel, the prosecution or
defense of litigation and the compromise or discharge of claims made against
such title or interest in the Mortgaged Property.  Mortgagor will indemnify and hold Mortgagee harmless from and
against any and all loss, cost, damage, liability or expense incurred by
Mortgagee in protecting its interests hereunder in such an event (including all
court costs and reasonable attorneys’ fees) unless the litigation is between
Mortgagor and Mortgagee and Mortgagor finally prevails in such litigation.

 

4.11.                        Future
Impositions.  If at any time any law
shall be enacted imposing or authorizing the imposition of any tax upon this
Mortgage or upon any rights, titles, liens or security interests created hereby
or upon the Note, or any part thereof, Mortgagor shall immediately pay all such
taxes; provided, however, that in the alternative,  Maker may, in the event of the enactment of such a law, and must,
if it is unlawful for Mortgagor to pay such taxes, prepay the Note in full
within one hundred twenty (120) days after demand therefor by Mortgagee.

 

4.12.                      Books and
Records.  Mortgagor will maintain
full and accurate books of account and other records reflecting the results of
its operations and will furnish or cause to be furnished to Mortgagee, on or
before forty-five (45) days following the end of each calendar year:  (i) annual balance sheet and profit

 

13

 

and loss statements with
respect to Mortgagor and the Mortgaged Property prepared in accordance with
generally accepted accounting principles consistently applied and certified by
Mortgagor’s  chief financial officer,
(ii) an annual operating statement, together with a complete sales report and
other supporting data reflecting all material information with respect to the
operation of the Mortgaged Property, and (iii) all other financial information
and reports with respect to Mortgagor, Maker, the Guarantors and the Mortgaged
Property which Mortgagee may reasonably request, including, without limitation,
copies of the most recent federal income tax returns of Maker, Mortgagor and
the Guarantor.  Within fifteen (15) days
after the end of each calendar month during the term of the Loan, Mortgagor
shall also deliver to Mortgagee on a monthly basis a monthly operating
statement, any other financial statements generated on a monthly basis
concerning the Mortgaged Property, a complete sales report, and all other
supporting data reflecting all material information with respect to the
operation of the Mortgaged Property. 
All of the above-referenced financial statements shall be in such detail
as Mortgagee may reasonably require and shall be certified by the subjects
thereof as being true, correct and complete for the period covered
thereby.  At any time, and from time to
time, Mortgagor shall deliver to Mortgagee such other financial statements and
data as Mortgagee shall reasonably request with respect to Mortgagor and/or the
ownership, maintenance, use and operation of the Mortgaged Property, and
Mortgagee shall have the right, at reasonable times and upon reasonable notice,
to audit Mortgagor’s books of account and records and the books of account and
records relating to the Mortgaged Property, all of which  shall be maintained and made available to
Mortgagee and Mortgagee’s representatives for such purposes on the Mortgaged
Property or at such other location as Mortgagee may approve.

 

4.13.                        Late
Charge.  At the option of the
Mortgagee, as provided in the Note, 
Maker will pay a “late charge” not exceeding five percent (5%) of any
installment on the Note when paid more than ten (10) days after the due date
thereof, to cover the extra expenses involved in handling delinquent payments,
subject to the limitations of Paragraph 12.10 hereof.

 

4.14.                      Expenses.  Mortgagor and/or Maker shall pay all
reasonable costs and expenses incurred by Mortgagee from time to time in
connection with the Mortgaged Property, the Loan, the Loan Documents, any
amendments or modifications to any of the Loan Documents, any waiver of any
provisions of the Loan Documents and any other matter related to the Loan
including, without limitation, the reasonable costs and expenses of the
preparation of this Mortgage and of any other documents or instruments
Mortgagee considers necessary or appropriate with respect to the Loan, the
reasonable costs and expenses of or incident to the enforcement or performance
of and compliance with any of the provisions of this Mortgage or any of the
other Loan Documents and any other reasonable costs and expenses of any kind or
nature whatsoever which at any time prior to or after the execution hereof are
payable with respect to the Mortgaged Property, or the ownership, operation,
use, occupancy or enjoyment thereof, or which are related in any way to the
transactions contemplated under this Mortgage.

 

4.15.                        Additional
Acts.  In addition to the acts
recited herein and contemplated to be performed, executed and/or delivered by
Mortgagor, Maker and Mortgagor hereby agree, at any time, and from time to time
upon the request of  Mortgagee, to
perform, execute, acknowledge, deliver, record and/or file such further
instruments, do such further acts and give such further assurances as Mortgagee
may reasonably determine to be necessary or proper to (a) promptly implement
the intent of Maker, Mortgagor and Mortgagee under the Loan Documents ; (b)
promptly correct any defect, error or omission which may be discovered in this
Mortgage or any other Loan Document, and execute any and all additional documents,
as may be requested by Mortgagee to correct such defect, error or omission or
to identify any additional properties which are or become subject to this
Mortgage; (c) assure Mortgagee a valid and direct lien and

 

14

 

perfected security interest,
subject only to the applicable Permitted Encumbrances, under the Loan Documents
or any of them on the Mortgaged Property; (d) create, perfect, preserve,
maintain and protect the liens and security interests created or intended to be
created by the Loan Documents; and (e) provide the rights and remedies to
Mortgagee granted or provided for by the Loan Documents.  Maker and Mortgagor, upon request of
Mortgagee, will execute, acknowledge, deliver and record and/or file such
further instruments and do such further acts as Mortgagee may reasonably
determine to be necessary, desirable or proper to carry out more effectively
the purposes of the Loan Documents, to subject to the liens and security
interests thereof any property intended by the terms thereof to be covered
thereby, including specifically, without limitation, any renewals, additions,
substitutions, replacements or appurtenances to the Mortgaged Property, and to
complete, execute, record and file any document or instrument necessary to
place third parties on notice of the liens and security interests granted under
the Loan Documents.  Mortgagor hereby
irrevocably appoints Mortgagee as its agent and attorney-in-fact, at the option
of Mortgagee,  to execute, acknowledge
and deliver all such instruments and additionally to record and file any of the
same as may be necessary, if Mortgagor fails to do so within ten (10) business
days after Mortgagee’s written request therefor.

 

4.16.                        Notices
by Governmental Authority, Fire and Casualty Losses, Etc.  Mortgagor shall timely comply with and
promptly furnish to Mortgagee true and complete copies of any official notice
or claim by any Governmental Authority pertaining to any of the Mortgaged
Property.  Mortgagor shall promptly
notify Mortgagee of any fire or other casualty or any notice of taking or
eminent domain action or proceeding affecting any of the Mortgaged Property.

 

4.17.                        Notice
of Certain Events.  Mortgagor shall
promptly notify Mortgagee if Mortgagor learns of the occurrence of (a) any
event which constitutes an Event of Default, together with a detailed statement
by Mortgagor of the steps being taken to cure such Event of Default (however,
this shall not affect any of the obligations or liabilities of Mortgagor or any
of the rights or remedies of Mortgagee), 
(b) the receipt of any notice from, or the taking of any other action
by, the holder of any promissory note, debenture or other evidence of
indebtedness of Mortgagor  (specifically
including, without limitation, those secured by the Prior Indebtedness
Documents) with respect to a claimed default, together with a detailed
statement by Mortgagor specifying the notice given or other action taken by
such holder and the nature of the claimed default and what action Mortgagor is
taking or proposes to take with respect thereto, (c) any legal, judicial or
regulatory proceedings affecting Mortgagor or any of its properties in which
the amount involved is material and is not covered by insurance, or with
respect to which an adverse decision is reasonably likely which would have a
material adverse effect upon Mortgagor or any of the Mortgaged Property, or (d)
any other event or condition having a material adverse effect on Mortgagor or
the Mortgaged Property.

 

4.18.                        Certificates
of Compliance.  Within ten (10) days
following Mortgagor’s receipt of a request from Mortgagee, Mortgagor will
furnish or cause to be furnished to Mortgagee certificates of compliance signed
by  Mortgagor, (i) stating that a review
of the activities of Mortgagor has been made to determine whether Mortgagor has
fulfilled all of its obligations under the Loan Documents; (ii) stating that to
the best of Mortgagor’s knowledge, after reasonable investigation and inquiry,
Mortgagor has fulfilled all of its obligations under the Loan Documents and
that all representations made herein continue to be true and correct (or
specifying the nature of any change), or if an Event of Default shall have
occurred, specifying the Event of Default and the nature and status thereof;
(iii) to the extent requested from time to time by Mortgagee, specifically
affirming compliance of Mortgagor with any of its representations or
obligations under the Loan Documents; and (iv) containing or accompanied by
such financial or other details,

 

15

 

information and material as
Mortgagee may reasonably request to evidence such compliance.

 

4.19.                        Restriction
on Distribution.  Mortgagor shall
not use any proceeds of the Loan to pay fees, commissions, salaries, or other
compensation, or otherwise receive or accept or agree to receive or accept any
compensation, “kickbacks”, rebates or other payments from any parties with
respect to the Property, of any kind, whether directly or indirectly, to Mortgagor  or any agent or employee or affiliate of
Mortgagor without the prior written consent of Mortgagee, which consent may be
given or withheld in Mortgagee’s sole and absolute discretion.

 

4.20.                        No
Conditional Sale Contracts, Etc. 
Without the prior written consent of Mortgagee, which consent may be
granted or withheld at the sole discretion of Mortgagee, no materials,
equipment, or fixtures shall be supplied, purchased, or installed for the
operation of the Improvements pursuant to security agreements, conditional sale
contracts, lease agreements, or other arrangements or understandings whereby a
security interest or title is retained by any party or the right is reserved or
accrues to any party to remove or repossess any such materials, equipment, or fixtures
intended to be utilized in the operation of the Improvements.

 

4.21.                        Indemnification.  Mortgagor agrees to indemnify Mortgagee and
to hold Mortgagee harmless from and against any and all claims, demands, causes
of action, losses, damages, liabilities, costs and expenses (including, without
limitation, reasonable  attorneys’ fees
and court costs) at any time asserted against or incurred by Mortgagee by
reason of, arising out of or in connection with any violation or breach by
Mortgagor of any of the terms and provisions of the Loan Documents including,
without limitation, any breach or violation of any Applicable Environmental
Laws, except to the extent caused solely by the gross negligence or willful
misconduct of Mortgagee.  In addition,
Mortgagor agrees to indemnify Mortgagee and to hold Mortgagee harmless from and
against any and all costs, expenses, damages, losses or liabilities incurred or
suffered by Mortgagee as a result of any removal or remedial obligations
imposed with respect to the Mortgaged Property under any Applicable
Environmental Laws, except to the extent caused solely by the gross negligence
or willful misconduct of Mortgagee.

 

4.22.                        Compliance
with Applicable Environmental Laws. 
Mortgagor will not cause or knowingly permit the Mortgaged Property to
be in violation of any Applicable Environmental Law, or do or knowingly permit
anything to be done which will subject the Mortgaged Property to any remedial
obligations under any Applicable Environmental Law.  Mortgagor will promptly notify Mortgagee in writing of any
existing, pending or threatened investigation by any Governmental Authority
under or in connection with any Applicable Environmental Law.  Mortgagor will not use the Mortgaged
Property in a manner which will result in the disposal or release of any
hazardous substances or solid waste on, from or to the Mortgaged Property in
violation of any Applicable Environmental Laws, and shall at all times keep the
Mortgaged Property free of all hazardous substances and wastes, the presence of
which would be a violation of any Applicable Environmental Law.  If at any time during the existence of this
Mortgage, Mortgagee receives information leading Mortgagee to believe that the
Mortgaged Property is not free of hazardous substances or wastes, the presence
of which would be a violation of any Applicable Environmental Law, then
Mortgagor shall provide to Mortgagee, at Mortgagor’s sole cost and expense and
within a reasonable period of time as designated by Mortgagee following
Mortgagee’s request therefor, a current report by an environmental engineer
acceptable to Mortgagee and covering such matters with respect to the Mortgaged
Property as may be required by Mortgagee. 
If Mortgagor fails to provide Mortgagee with such report within such
reasonable period of time designated by Mortgagee following Mortgagee’s request
therefor, Mortgagee shall have the right to obtain such report at

 

16

 

Mortgagor’s cost, and the same
shall be a demand obligation owing by Mortgagor to Mortgagee and shall be a
part of the Indebtedness.  Mortgagor
covenants to operate the Mortgaged Property (whether or not such property
constitutes a “Facility” as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (“CERCLA”)),
so that no cleanup or other obligation arises in respect of CERCLA or other
applicable Environmental Law which would constitute a lien or charge on the
Mortgaged Property prior to that of this Mortgage.  If any such claim be made or any obligation should nevertheless
arise hereafter, Mortgagor agrees that it will, at its own expense, (a)
promptly cure same and (b) indemnify Mortgagee from any liability,
responsibility or obligation in respect thereof or in respect of any cleanup or
other liability as successor, secured party or otherwise (regardless of whether
or not Mortgagee may be deemed to be an “owner or operator” under CERCLA) for
any reason including, but not limited to, the enforcement of Mortgagee’s rights
as a secured party under this Mortgage or any obligation of law, except to the
extent caused solely by the gross negligence or willful misconduct of
Mortgagee.

 

4.23.                        Maintenance
of Rights of Way, Easements and Licenses. 
Mortgagor will maintain, preserve and renew all contract rights, rights
of way, easements, grants, privileges, licenses and franchises reasonably
necessary for the use of the Mortgaged Property from time to time and will not,
without the prior written consent of Mortgagee (which consent may be granted or
withheld at the sole discretion of Mortgagee), initiate, join in or consent to
any private restrictive covenant or other public or private restriction as to
the use of the Mortgaged Property.  Mortgagor
shall, however, comply with all restrictive covenants which may at any time
affect the Mortgaged Property, zoning ordinances and other public or private
restrictions as to the use of the Mortgaged Property.

 

4.24.                        Performance
of Obligations in Regard to the Prior Indebtedness.   Mortgagor will fully and timely pay and
perform all of its obligations under the Prior Indebtedness Documents and in
regard to the indebtedness and obligations evidenced and/or secured thereby and
will not commit or allow a default to occur under any thereof or in regard to
any of the Prior Indebtedness.  Promptly
upon Mortgagor’s receipt thereof, Mortgagor will provide to Mortgagee copies of
all notices Mortgagor receives or gives in regard to any of the Prior
Indebtedness.

 

ARTICLE V

 

NEGATIVE COVENANTS

 

Mortgagor hereby
covenants and agrees with Mortgagee that until the entire Indebtedness shall
have been paid in full and all of the Obligations shall have been fully
performed and discharged:

 

5.1.                              Use
Violations.  Mortgagor will not use,
maintain, operate or occupy, or allow the use, maintenance, operation or
occupancy of the Mortgaged Property in a manner which (a) violates any Legal
Requirement, (b) may be dangerous unless safeguarded as required by law, (c)
constitutes a public or private nuisance or (d) makes void, voidable or
cancelable, or materially increases the premium of, any insurance then in force
with respect thereto.

 

5.2.                              Alterations.  Mortgagor will not commit or knowingly
permit any waste of the Mortgaged Property and will not (subject to the
provisions of Paragraphs 4.5 and 4.7 herein), without the prior written consent
of Mortgagee, which may be granted or withheld at the sole discretion of
Mortgagee,

 

17

 

make or permit to be made any
alterations or additions to the Mortgaged Property of a material nature.

 

5.3.                              Replacement
of Fixtures and Personalty. 
Mortgagor will not, without the prior written consent of Mortgagee,
which may be granted or withheld at the sole discretion of Mortgagee, permit
any of the Fixtures or Personalty to be removed at any time from the Land or
Improvements unless the removed item is removed temporarily for maintenance or
repair or, if removed permanently, is replaced by an item of equal suitability
and value, owned by Mortgagor free and clear of any lien or security interest
except such as may be first approved in writing by Mortgagee.

 

5.4.                              No
Further Encumbrances.  Mortgagor
will not, without the prior written consent of Mortgagee, which may be granted
or withheld at the sole discretion of Mortgagee, create, place, suffer or
permit to be created or placed or, through any act or failure to act, acquiesce
in the placing of or allow to remain, any mortgage, pledge, lien (statutory,
constitutional or contractual), security interest, encumbrance or charge on any
of the Mortgaged Property, or enter into any conditional sale or other title
retention agreement with respect to any of the Mortgaged Property, regardless
of whether same are expressly subordinate to the liens of the Loan Documents.  Notwithstanding the foregoing, Mortgagor
shall have the right to contest in good faith by appropriate proceedings any of
the foregoing encumbrances which are inferior and subordinate to the lien of
this Mortgage; provided, that as a condition thereto Mortgagor shall furnish to
Mortgagee a  surety bond or other
security satisfactory to Mortgagee in its reasonable discretion fully
protecting Mortgagee from the adverse consequences of any such contest.

 

5.5.                              Prohibition
on Transfer.  Mortgagor shall not
sell, transfer, convey, pledge, assign, hypothecate or encumber any of its
rights or interests in the Mortgaged Property, or any part thereof or interest
therein, or agree to do any of the foregoing either directly, by operation of
law or otherwise without the prior written consent of Mortgagee, which may be
granted or withheld at the sole discretion of Mortgagee.  Upon any pledge, assignment, hypothecation
or encumbrance, or sale, transfer or conveyance in violation of this Paragraph,
and without impairing any remedies or rights of Mortgagee on account of such
pledge, assignment, hypothecation or encumbrance, or sale, transfer or
conveyance, Mortgagee shall have the right at its election to declare the
entire Indebtedness secured hereby to be immediately due and payable and to
pursue all of its rights and remedies as a result of an Event of Default under
Article VI hereof.  A transfer or
transfers of a partnership interest or interests in Mortgagor or any capital
stock or other ownership interest in any partner in Mortgagor without
Mortgagee’s prior written consent, which may be granted or withheld at the sole
discretion of Mortgagee, shall constitute a violation of this Paragraph 5.5.

 

Mortgagee
shall have the right to condition its consent to any of the transactions
described in this Paragraph 5.5  upon,
among other things, the payment by Mortgagor of a transfer fee or an increase
in the rate of interest applicable to the Loan.

 

5.6.                              Restrictions,
Zoning and Annexation.  Mortgagor
shall not without the prior written consent of Mortgagee, which may be granted
or withheld at the sole discretion of Mortgagee, (i) impose any restrictive
covenants or encumbrances upon the any of Mortgaged Property, (ii) execute or
file any subdivision plat affecting any of the Mortgaged Property, (iii)
subject any portion of the Mortgaged Property to any zoning restrictions or
classifications,  (iv) consent to the
annexation of any of the Mortgaged Property to any city or (v) amend, modify,
terminate or allow to be terminated any contract right (specifically including,
without limitation, the Annexation Agreement referenced above) or

 

18

 

easement.

 

5.7                                 No
Amendments to Prior Indebtedness.  
Without the prior written consent of Mortgagee, which may be granted or
withheld at the sole discretion of Mortgagee, Mortgagor will not amend or
modify any of the Prior Indebtedness Documents or any of the terms of the Prior
Indebtedness.

 

ARTICLE VI

 

EVENTS OF DEFAULT

 

The term
“Event of Default,” as used herein and in the Loan Documents, shall mean the
occurrence or happening, at any time and from time to time, of any one or more
of the following:

 

6.1.                              Payment
of Indebtedness.  If  Maker shall fail, refuse or neglect to pay,
in full, all of the Indebtedness on the maturity date thereof or any
installment or portion of the Indebtedness as and when the same shall become
due and payable, whether at the due date thereof stipulated in the Loan
Documents or at a date fixed for prepayment or by acceleration or otherwise and
such failure, refusal or neglect continues upon the expiration of any cure
period, if any, applicable thereto as set forth in the Note.

 

6.2.                              Performance
of Obligations.  If Maker or
Mortgagor shall fail, refuse or neglect to perform and discharge fully and
timely any of the Obligations as and when required under the Loan Documents and
such failure continues for thirty (30) days following the receipt by Maker and
Mortgagor of written notice thereof from Mortgagee.

 

6.3.                              False
Representation.  If any
representation or warranty made by Maker, Mortgagor or  any Guarantor  in, under or pursuant to any of the Loan Documents or any other
documents executed in connection therewith shall be false, erroneous or
misleading in any material respect.

 

6.4.                              Judgment.  If any final money judgment in an amount in
excess of $250,000.00 shall be rendered against Maker, Mortgagor or  any Guarantor and the same shall not be paid
or execution on the same shall not be stayed by perfection of an appeal or other
appropriate action.

 

6.5.                              Voluntary
Bankruptcy.  If Maker, Mortgagor
or  any Guarantor shall (a) seek entry
of an order for relief as a debtor in a proceeding under the Federal Bankruptcy
Code, (b) seek, consent to or not contest the appointment of a receiver,
trustee, conservator or liquidator for itself or himself or for all or any part
of the Mortgaged Property,  any of
Mortgagor’s other property or any property of the Maker or any Guarantor, (c)
file a petition seeking relief under the bankruptcy, arrangement,
reorganization or other debtor relief laws of the United States or of any state
or other jurisdiction or answer admitting the material allegations of a
petition against it, (d) make a general assignment for the benefit of its
creditors or (e) admit in writing its inability to pay its debts as they
mature.

 

6.6.                              Involuntary
Bankruptcy.  If (a) a petition is
filed against Maker, Mortgagor or  any
Guarantor seeking relief under the bankruptcy, arrangement, reorganization or
other debtor relief laws of the United States or any state or other
jurisdiction, or approving a petition seeking reorganization or an arrangement
of its or his debts, or (b) a court enters an order, judgment or decree
appointing, without the consent of Maker, Mortgagor or  any Guarantor, as the case may be, a
receiver, trustee, conservator or

 

19

 

liquidator for it, or for all
or any part of the Mortgaged Property or any of Mortgagor’s other property or
any property of the Maker or any Guarantor, and such petition or order shall
not be and remain discharged or stayed within a period of sixty (60) days after
its entry.

 

6.7.                              Foreclosure
of Other Liens.  If the holder of
any lien or security interest on any of the Mortgaged Property (without
implying Mortgagee’s consent to the existence, placing, creating or permitting
of any such lien or security interest), specifically including, without
limitation, any of the Prior Indebtedness Documents, institutes foreclosure or
other proceedings for the enforcement of its remedies thereunder.

 

6.8.                              Sale,
Lease or Other Transfer.  Any sale,
lease, exchange, assignment, conveyance, transfer of possession or other
disposition of the Mortgaged Property (or any part thereof or interest therein)
by Mortgagor whether directly, by operation of law or otherwise, or any sale,
transfer, conveyance or assignment of any interest in Maker or Mortgagor (or in
any  owner of an interest in Maker or
Mortgagor) without in each case the prior written consent of Mortgagee, which
consent may be granted or withheld in Mortgagee’s sole discretion.

 

6.9.                              Title
and Lien Priority.  If the title of
Mortgagor to any or all of the Mortgaged Property or the status of this
Mortgage as a lien and security interest on the Mortgaged Property subject only
to the applicable Permitted Encumbrances shall be challenged or endangered by
any person or entity whatsoever, and Mortgagor shall fail to (a) immediately
commence and thereafter continue diligent efforts to cure the same or (b) provide
Mortgagee with a bond or other security which is satisfactory to Mortgagee in
its sole discretion.

 

6.10.                        Termination.  The dissolution or termination of Maker,
Mortgagor or any Guarantor.

 

6.11.                        Levy on
Assets.  A levy on the assets of
Maker, Mortgagor or  any Guarantor which
is not stayed, vacated or set aside within forty-five (45) days.

 

6.12.                        Enforceability
of Loan Documents.  If the validity
or enforceability of this Mortgage or the Note, the  Guaranty or any other Loan Document shall be contested by or on
behalf of Maker, Mortgagor or  any
Guarantor or if Maker, Mortgagor or  any
Guarantor shall wrongfully deny that it 
has any or further liability or obligation hereunder or thereunder.

 

6.13.                        Default
under Prior Indebtedness Documents :  
If any default or event of default shall occur under any of the Prior
Indebtedness Documents.

 

ARTICLE VII

 

DEFAULT AND FORECLOSURE

 

If an Event of
Default shall exist, Mortgagee may, at Mortgagee’s election, exercise any or
all of the following rights, remedies and recourses, in addition to any other
remedy at law or in equity which Mortgagee may have:

 

7.1.                              Acceleration
and Future Advances.  Mortgagee may
declare the entire Indebtedness,

 

20

 

including the then unpaid
principal balance on the Note, the accrued but unpaid interest thereon, court
costs and reasonable attorney’s fees incurred in regard to the Loan immediately
due and payable, without notice, presentment, protest, demand or action of any
nature whatsoever (each of which hereby is expressly waived by Mortgagor),
whereupon the same shall become immediately due and payable.  Additionally, Mortgagee shall not be
required to make any further advances on the Note or other Loan Documents upon
the occurrence of an Event of Default or an event or condition which, with the
giving of notice, passage of time, or both, would constitute an Event of
Default.

 

7.2.                              Entry
on Mortgaged Property.  Mortgagee
may enter upon the Mortgaged Property and take exclusive possession thereof and
of all books, records and accounts relating thereto without notice and without
being guilty of trespass.  If Mortgagor
remains in possession of all or any part of the Mortgaged Property after an
Event of Default and without Mortgagee’s prior written consent thereto,
Mortgagee may, without notice to Mortgagor, invoke any and all legal remedies
to dispossess Mortgagor, including specifically one or more actions for
forcible entry and detainer, trespass to try title and writ of restitution.  Nothing contained in the foregoing sentence
shall, however, be construed to impose any greater obligation or any
prerequisites to acquiring possession of the Mortgaged Property after an Event
of Default than would have existed in the absence of such sentence.

 

7.3.                              Operation
of Mortgaged Property.  Mortgagee
may hold, lease, manage, operate or otherwise use or permit the use of the
Mortgaged Property, either itself or by other persons, firms or entities, in
such manner, for such time and upon such other terms as Mortgagee may deem to
be prudent and reasonable under the circumstances (making such repairs,
alterations, additions and improvements thereto and taking any and all other
action with reference thereto, from time to time, as Mortgagee shall deem
necessary or desirable), and apply all Rents and other amounts collected by or
on behalf of Mortgagee  in connection
therewith in accordance with the provisions of Paragraph 7.16 herein.  Mortgagor hereby irrevocably appoints
Mortgagee as the agent and attorney-in-fact of Mortgagor, with full power of
substitution, and in the name of Mortgagor, if Mortgagee elects to do so,
following the occurrence and during the continuance of an Event of Default, to
(a) endorse the name of Mortgagor on any checks or drafts representing proceeds
of the insurance policies, or other checks or instruments payable to Mortgagor
with respect to the Mortgaged Property, (b) prosecute or defend any action or
proceeding incident to the Mortgaged Property, and (c) take any action with
respect to the Mortgaged Property that Mortgagee may at any time and from time
to time deem necessary or appropriate.  
Mortgagee shall have no obligation to undertake any of the foregoing
actions, and if Mortgagee should do so, it shall have no liability to Mortgagor
for the sufficiency or adequacy of any such actions taken by Mortgagee.

 

7.4.                              Foreclosure
and Sale.

 

(a)                                  Mortgagee
may sell or offer for sale the Mortgaged Property in such portions, order and
parcels as Mortgagee may determine, with or without having first taken
possession of same, all in accordance with applicable Legal Requirements,
including, without limitation, the Illinois Mortgage Foreclosure Law (the
“Foreclosure Law”) .

 

(b)                                 Mortgagee
may, at its option, accomplish all or any of the aforesaid in such manner as
permitted or required by applicable 
Legal Requirements therefor, including, to the extent there relevant,
the Uniform Commercial Code there in effect. 
Nothing contained in this Paragraph shall be construed to limit in any
way Mortgagee’s right to sell the Mortgaged Property by private sale if, and to
the extent that, such private sale is permitted under the laws of the state

 

21

 

where the
Mortgaged Property (or that portion thereof to be sold) is located or by public
or private sale after entry of a judgment by any court of competent
jurisdiction ordering same.  At any such
sale:

 

(i)                           whether made under the power
herein contained any other Legal Requirement or by virtue of any judicial
proceedings or any other legal right, remedy or recourse, it shall not be
necessary for Mortgagee to have physically present, or to have constructive
possession of, the Mortgaged Property (Mortgagor shall deliver to Mortgagee any
portion of the Mortgaged Property not actually or constructively possessed by
Mortgagee immediately upon demand by Mortgagee), and the title to and right of
possession of any such property shall pass to the purchaser thereof as
completely as if the same had been actually present and delivered to purchaser
at such sale;

 

(ii)                        each instrument of conveyance
executed by or on behalf of Mortgagee shall contain a general warranty of
title, subject only to the Permitted Encumbrances, binding upon Mortgagor;

 

(iii)                     each and every recital contained
in any instrument of conveyance made by or on behalf of Mortgagee shall
presumptively establish the truth and accuracy of the matters recited therein,
including, without limitation, nonpayment of the Indebtedness, advertisement
and conduct of such sale in the manner provided herein and otherwise by law;

 

(iv)                    any and all prerequisites to the
validity thereof shall be presumed to have been performed;

 

(v)                       the receipt by Mortgagee or of
such other party or officer making the sale of the full amount of the purchase
money shall be sufficient to discharge the purchaser or purchasers from any
further obligation for the payment thereof, and no such purchaser or
purchasers, or his or their assigns or personal representatives, shall
thereafter be obligated to see to the application of such purchase money or be
in any way answerable for any loss, misapplication or nonapplication thereof;

 

(vi)                    to the fullest extent permitted by
law, Mortgagor shall be completely and irrevocably divested of all of its
right, title, interest, claim and demand whatsoever, either at law or in
equity, in and to the property sold, and such sale shall be a perpetual bar,
both at law and in equity, against Mortgagor and against all other persons
claiming or to claim the property sold or to any part thereof by, through or
under Mortgagor; and

 

(vii)                 to the extent and under such
circumstances as are permitted by law, Mortgagee may be a purchaser at any such
sale.

 

7.5.                              Divestment
of Rights; Tenant at Sufferance. 
After sale of the Mortgaged Property, or any portion thereof, Mortgagor
will be divested of any and all interest and claim thereto, including any
interest or claim to all insurance policies, bonds, loan commitments and other
intangible property covered hereby. 
Additionally, with respect to the Land, Improvements, Fixtures and
Personalty, after a sale of all or any portion thereof, Mortgagor will be
considered a tenant at sufferance of the purchaser of the same,

 

22

 

and said purchaser shall be
entitled to immediate possession thereof, and if Mortgagor shall fail to vacate
the Mortgaged Property immediately, the purchaser may and shall  have the right, without further notice to
Mortgagor, to go into any justice court in any precinct or county in which the
Mortgaged Property is located and file an action in forcible entry and
detainer, which action shall lie against Mortgagor or its assigns or legal
representatives, as a tenant at sufferance. 
This remedy is cumulative of any and all remedies the purchaser may have
hereunder or otherwise.

 

7.6.                              Mortgagee
or Receiver.  Upon, or at any time
after, commencement of foreclosure of the lien and security interest provided
for herein or any legal proceedings hereunder, and as permitted by the
Foreclosure Law, Mortgagee may make application to a court of competent
jurisdiction, as a matter of strict right and without notice to Mortgagor or
regard to the adequacy of the Mortgaged Property for the repayment of the
Indebtedness and/or for appointment of a receiver of the Mortgaged Property,
and Mortgagor does hereby irrevocably consent to such appointment.  Any such receiver shall have all the usual
powers and duties of receivers in similar cases, including the full power to
rent, maintain and otherwise operate the Mortgaged Property upon such terms as
may be approved by the court, and shall apply such Rents in accordance with the
provisions of Paragraph 7.16 herein. 
The right to the appointment of a receiver shall apply regardless of
whether Mortgagee has commenced procedures for the foreclosure of the liens and
security interests created herein, or has commenced any other legal proceedings
to enforce payment of the Indebtedness or performance or discharge of the
Obligations, and shall also apply upon the actual or threatened waste to any
part of the Mortgaged Property.

 

7.7.                              Separate
Sales.  Mortgagee may sell all or
any portion of the Mortgaged Property together or in lots or parcels and in
such manner and order as Mortgagee, in its sole discretion, may elect.  The sale or sales by Mortgagee of less than
the whole of the Mortgaged Property shall not exhaust the power of sale herein
granted, and Mortgagee is specifically empowered to make successive sale or
sales under such power until the whole of the Mortgaged Property shall be sold;
and if the proceeds of such sale or sales of less than the whole of such
Mortgaged Property shall be less than the aggregate of the Indebtedness and the
expense of enforcing Mortgagee’s rights under the Loan Documents, this Mortgage
and the lien, security interest and assignment hereof shall remain in full
force and effect as to the unsold portion of the Mortgaged Property just as
though no sale or sales had been made; provided, however, that Mortgagor shall
never have any right to require the sale or sales of less than the whole of the
Mortgaged Property, but Mortgagee shall have the right, at its sole election,
to sell less than the whole of the Mortgaged Property.  As among the various counties in which items
of the Mortgaged Property may be situated, sales in such counties may be
conducted in any order that Mortgagee may deem expedient; and any one or more
of such sales may be conducted in the same month, or in successive or different
months, as the Mortgagee may deem expedient.  If an Event of Default exists hereunder, the holder of the
Indebtedness or any part thereof on which the payment is delinquent shall have
the option to proceed as if under a full foreclosure, conducting the sale as
herein provided without declaring the entire Indebtedness due, and if sale is
made because of default of an installment, or a part of an installment, such
sale may be made subject to the unmatured part of the Note and the
Indebtedness; and such sale, if so made, shall not in any manner affect the
unmatured part of the Indebtedness but as to such unmatured part, this Mortgage
shall remain in full force and effect as though no sale had been made under the
provisions of this paragraph.  Any
number of sales may be made hereunder without exhausting the right of sale for
any unmatured part of the Indebtedness secured hereby.

 

7.8                                 Foreclosure
for Installments.  Mortgagee shall
have the option to proceed with foreclosure and satisfaction of any
installments of the Indebtedness which have not been paid when due, either

 

23

 

through the courts or by
proceeding with foreclosure and satisfaction of the matured but unpaid portion
of the Indebtedness as if under a full foreclosure, conducting the sale as
herein provided without declaring the entire Indebtedness due; such sale may be
made subject to the unmatured portion of the Indebtedness, and any such sale
shall not in any manner affect the unmatured portion of the Indebtedness, but
as to such unmatured portion of the Indebtedness this Mortgage shall remain in
full force and effect just as though no sale had been made hereunder.  It is further agreed that several sales may
be made hereunder without exhausting the right of sale for any unmatured
portion of the Indebtedness, it being the purpose hereof to provide for
foreclosure and sale of the security for any matured portion of the
Indebtedness without exhausting the power to foreclose and sell the Mortgaged
Property for any subsequently maturing portion of the Indebtedness.

 

7.9.                              Other.  Mortgagee may exercise any and all other
rights, remedies and recourses granted under the Loan Documents or now or
hereafter existing in equity, at law, by virtue of statute or otherwise.

 

7.10.                        Remedies
Cumulative, Concurrent and Nonexclusive. 
Mortgagee and Mortgagee shall have all rights, remedies and recourses
granted in the Loan Documents and available at law or equity (including
specifically those granted by the Uniform Commercial Code in effect and
applicable to the Mortgaged Property or any portion thereof) and same (a) shall
be cumulative and concurrent; (b) may be pursued separately, successively or
concurrently against Mortgagor and/or others obligated under the Note, or
against the Mortgaged Property, or against any one or more of them at the sole
discretion of Mortgagee; (c) may be exercised as often as occasion therefor
shall arise, it being agreed by Mortgagor that the exercise or failure to
exercise any of the same shall in no event be construed as a waiver or release
thereof or of any other right, remedy or recourse; and (d) are intended to be,
and shall be, nonexclusive.

 

7.11.                        No
Conditions Precedent to Exercise of Remedies.  Neither Maker  nor any
other person now or hereafter obligated for payment of all or any part of the
Indebtedness or fulfillment of all or any of the Obligations shall be relieved
of such obligation by reason of (a) the failure of the Mortgagee or any other
person or entity to comply with any request of Mortgagor Maker or any other
person so obligated to foreclosure the lien of this Mortgage or to enforce any
provisions of the other Loan Documents; (b) the release, regardless of
consideration, of the Mortgaged Property or any portion thereof or the addition
of any other property to the Mortgaged Property; (c) any agreement or
stipulation between any subsequent owner of the Mortgaged Property and
Mortgagee extending, renewing, rearranging, or in any other way modifying the
terms of the Loan Documents without first having obtained the consent of, given
notice to or paid any consideration to Mortgagor or such other person, and in
such event, Maker, Mortgagor and all such other persons shall continue to be
liable to make payment according to the terms of any such extension or
modification agreement unless expressly released and discharged in writing by
Mortgagee (notwithstanding anything contained herein to the contrary, Mortgagee
is under no obligation to give notice to or pay any consideration to Mortgagor
or any other such person for any modifications, extensions, renewals or
rearrangements of the Loan Documents); or (d) by any other act save and except
the complete payment of the Indebtedness and the complete fulfillment of all of
the Obligations.

 

7.12.                        Release
of and Resort to Collateral.  Any
part of the Mortgaged Property may be released by Mortgagee without affecting,
subordinating or releasing the lien, security interest and assignment hereof
against the remainder.  The lien,
security interest and other rights granted hereby shall not affect or be
affected by any other security taken for the same indebtedness or any part
thereof.  The taking of additional
security, or the rearrangement, extension or renewal of the Indebtedness, or
any part thereof,

 

24

 

shall not release or impair the
lien, security interest and other rights granted hereby or affect the liability
of Mortgagor or of any endorser, guarantor or surety, or improve the right of
any permitted junior lienholder; and this Mortgage, as well as any instrument
given to secure any rearrangement, renewal or extension of the Indebtedness
secured hereby, or any part thereof, shall be and remain a perfected lien
(subject only to the Permitted Encumbrances) on all of the Mortgaged Property
not expressly released until the Indebtedness 
and Obligations are completely paid and performed.  For payment of the Indebtedness, Mortgagee
may resort to any other security therefor held by Mortgagee, in such order and
manner as Mortgagee may elect.

 

7.13.                        Waiver
of Redemption, Notice and Marshalling of Assets.  To the fullest extent permitted by law, Mortgagor hereby
irrevocably and unconditionally waives and releases (a) all benefits that might
accrue to Mortgagor by any present or future laws exempting the Mortgaged
Property from attachment, levy or sale on execution or providing for any
appraisement, valuation, stay of execution, exemption from civil process,
redemption or extension of time for payment; (b) all notices of any Event of
Default (except as may be specifically provided for under the terms of the Loan
Documents), presentment, demand, notice of intent to accelerate, notice of
acceleration and any other notice of Mortgagee’s or Mortgagee’s election to
exercise or the actual exercise of any right, remedy or recourse provided for
under the Loan Documents; (c) any right to appraisal or marshalling of assets
or a sale in inverse order of alienation; (d) the exemption of homestead; and
(e) the administration of estates of decedents, or other matter to defeat, reduce
or affect the right of Mortgagee under the terms of this Mortgage to sell the
Mortgaged Property for the collection of the Indebtedness secured hereby
(without any prior or different resort for collection) or the right of
Mortgagee, under the terms of this Mortgage, to the payment of the Indebtedness
out of the proceeds of sale of the Mortgaged Property in preference to every
other person and claimant whatever (only reasonable expenses of such sale being
first deducted).  The Mortgagor hereby
covenants and agrees that it will not at any time insist upon or plead, or in
any manner whatever claim or take any advantage of, any stay, exemption or
extension law or any so-called “Moratorium Law” now or at any time hereafter in
force, nor claim, take or insist upon any benefit or advantage of or from any
law now or hereafter in force providing for the valuation or appraisement of
the Mortgaged Property, or any part thereof, prior to any sale or sales thereof
to be made pursuant to any provisions herein contained, or to decree, judgment
or order of any court of competent jurisdiction; or after such sale or sales
claim or exercise any rights under any statute now or hereafter in force to
redeems the property so sold, or any part thereof, or relating to the marshaling
thereof, upon foreclosure sale or other enforcement hereof.  THE MORTGAGOR HEREBY EXPRESSLY WAIVES ANY
AND ALL RIGHTS OF REDEMPTION FROM SALE UNDER ANY ORDER OR DECREE OF FORECLOSURE
OF THIS MORTGAGE, ON ITS OWN BEHALF AND ON BEHALF OF ALL OTHER PERSONS CLAIMING
OR HAVING AN INTEREST (DIRECT OR INDIRECT) BY, THROUGH OR UNDER MORTGAGOR, AND
ON BEHALF OF EACH AND EVERY PERSON ACQUIRING ANY INTEREST IN OR TITLE TO THE
PREMISES SUBSEQUENT TO THE DATE HEREOF, IT BEING THE INTENT HEREOF THAT ANY AND
ALL SUCH RIGHTS OF REDEMPTION OF THE MORTGAGOR AND OF ALL OTHER PERSONS ARE AND
SHALL BE DEEMED TO BE HEREBY WAIVED TO THE FULL EXTENT PERMITTED BY THE
PROVISIONS OF CHAPTER 735, SECTION 5/15-1601 OF THE ILLINOIS COMPILED STATUTES
OR OTHER APPLICABLE LAW OR REPLACEMENT STATUTES.  The Mortgagor will not invoke or utilize any such law or laws or
otherwise hinder, delay or impede the execution of any right, power or remedy
herein or otherwise granted or delegated to the Mortgagee, but will suffer and
permit the execution of every such right, power and remedy as though no such
law or laws had been made or enacted.

 

7.14.                        Discontinuance
of Proceedings.  In case Mortgagee
shall have proceeded to invoke any right,

 

25

 

remedy or recourse permitted
under the Loan Documents and shall thereafter elect to discontinue or abandon
the same for any reason, Mortgagee shall have the unqualified right so to do
and, in such event, Maker, Mortgagor, Guarantors  and Mortgagee shall be restored to their former positions with
respect to the Indebtedness, the Obligations, the Loan Documents, the Mortgaged
Property and otherwise, and the rights, remedies, recourses and power of
Mortgagee shall continue as if the same had never been invoked.

 

7.15.                        Form
and Substance.  All documents,
certificates, insurance policies, and other items required under this Mortgage
to be executed and/or delivered to Mortgagee shall be in form and substance
satisfactory to Mortgagee.

 

7.16.                        Application
of Proceeds; Deficiency Obligation. 
The proceeds of any sale of, and the Rents and other income generated by
the holding, leasing, operating or other use of the Mortgaged Property shall be
applied by Mortgagee (or the receiver, if one is appointed) to the extent that
funds are so available therefrom in the following orders of priority:  (a) first, to the payment of the costs and
expenses of taking possession of the Mortgaged Property and of holding, using,
leasing, maintaining, repairing, improving and selling the same, including,
without limitation, (i) costs of advertisement; (ii) reasonable attorneys’ and
accountants’ fees; and (iii) court costs, if any; (b) second, to the payment of
all amounts, other than the principal amount and accrued but unpaid interest on
the Note which may be due to Mortgagee under the Loan Documents, including all
Indebtedness and Obligations, together with interest thereon as provided
therein, in such order and manner as Mortgagee may determine; (c) third, to the
payment of all accrued but unpaid interest due on the Note in such order and
manner as Mortgagee may determine; (d) fourth, to the payment of the principal
amount outstanding on the Note in such order and manner as Mortgagee may
determine and all other Indebtedness and Obligations; and (e) fifth, to
Mortgagor or as otherwise required by law or agreement.  Subject to the foregoing, the proceeds of
any sale of, and the Rents and other income generated by the holding, leasing,
operating or other use of the Mortgaged Property, shall be applied by Mortgagee
(or the receiver, if one is appointed) to the extent that funds are so
available therefrom:  (1) first, to
reduce that portion of the Indebtedness then remaining unpaid for which
Mortgagor is not personally liable and (2) second, to reduce that portion of
the Indebtedness then remaining unpaid for which Mortgagor is personally
liable.  Maker and any other party
liable on the Indebtedness and the Obligations shall be liable for any
deficiency remaining in the Indebtedness and Obligations subsequent to the sale
referenced in this Paragraph 7.16.

 

7.17.                        Purchase
by Mortgagee.  To the extent not
expressly prohibited by applicable law, Mortgagee shall have the right to
become the purchaser at any sale of the Mortgaged Property hereunder and shall
have the right to be credited on the amount of its bid therefor all (or such
portion as is necessary to satisfy such bid) of the Indebtedness and
Obligations due and owing as of the date of such sale.

 

7.18.                        Prepayment.  Prepayment of the Note is restricted as
provided in each Note.

 

7.19.                        Disaffirmation
of Contracts.  The purchaser at any
foreclosure sale hereunder may disaffirm any easement granted, or rental, lease
or other contract made in violation of any provisions of this Mortgage and may
take immediate possession of the Mortgaged Property free from, and despite the
terms of, any such grant of easement, rental, lease or other contract.

 

7.20.                        Acceleration
Following Certain Events. 
Notwithstanding anything to the contrary contained herein or inferable from
any provision hereof, upon the occurrence of an Event of Default as described
in Paragraph 6.5 or Paragraph 6.6 hereinabove, the Indebtedness, including
without limitation the unpaid

 

26

 

accrued interest under the Note
and any other accrued but unpaid portion of the Indebtedness, shall be
automatically and immediately due and payable in full without the necessity of
any action on the part of Mortgagee or Mortgagee.

 

7.21.                        Jury
Waiver.  TO THE MAXIMUM EXTENT
PERMITTED BY LAW, EACH OF MORTGAGOR AND MORTGAGEE HEREBY EXPRESSLY WAIVES ANY
RIGHT TO TRIAL BY JURY OF ANY ACTION, CAUSE OF ACTION, CLAIM, DEMAND, OR
PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS MORTGAGE, OR IN ANY WAY
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE DEALINGS OF MORTGAGOR AND
MORTGAGEE WITH RESPECT TO THIS MORTGAGE, OR THE TRANSACTIONS RELATED HERETO, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE.  TO THE
MAXIMUM EXTENT PERMITTED BY LAW, EACH OF MORTGAGOR AND MORTGAGEE HEREBY AGREES
THAT ANY SUCH ACTION, CAUSE OF ACTION, CLAIM, DEMAND OR PROCEEDING SHALL BE
DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT MORTGAGOR OR MORTGAGEE
MAY FILE A COPY OF THIS MORTGAGE WITH ANY COURT OR OTHER TRIBUNAL AS
WRITTEN EVIDENCE OF THE CONSENT OF EACH OF MORTGAGOR AND MORTGAGEE TO THE
WAIVER OF ITS RIGHT TO TRIAL BY JURY.

 

ARTICLE VIII

 

CONDEMNATION

 

8.1.                              Application
of Proceeds.  If the Mortgaged
Property, or any part thereof, shall be condemned or otherwise taken for public
or quasi-public use under the power of eminent domain, or be transferred in
lieu thereof, all damages or other amounts awarded for the taking of, or injury
to, the Mortgaged Property shall be paid to Mortgagee who shall have the right,
in its sole and absolute discretion, to apply the amounts so received against
(a) the reasonable costs and expenses of Mortgagee, including reasonable
attorneys’ fees incurred in connection with collection of such amounts and (b)
the balance against the Indebtedness and Obligations; provided, however, that
if (i) no Event of Default shall have occurred and be continuing hereunder,
(ii) Mortgagor provides evidence satisfactory to Mortgagee of its ability to
pay all amounts becoming due under the Note during the pendency of any
restoration or repairs to or replacement of the Mortgaged Property and (iii)
Mortgagee determines, in its sole discretion, that the proceeds of such award
are sufficient to restore, repair, replace and rebuild the Mortgaged Property
as nearly as possible to its value, condition and character immediately prior
to such taking, or, if the proceeds of such award are insufficient for such
purpose, if Mortgagor provides additional sums to Mortgagee’s satisfaction so
that the aggregate of such sums and the proceeds of such award will be
sufficient for such purpose, the proceeds of such award, together with
additional sums provided by Mortgagor, shall be placed in a separate account
for the benefit of Mortgagee and Mortgagor to be used to restore, repair,
replace and rebuild the Mortgaged Property as nearly as possible to its value,
condition and character immediately prior to such taking.  All work to be performed in connection
therewith shall be pursuant to a written contract therefor, which contract
shall be subject to the prior written consent of Mortgagee.  To the extent that any funds remain after
the Mortgaged Property has been so restored and repaired, the same shall be
applied against the Indebtedness in such order as Mortgagee may elect.  To enforce its rights hereunder, Mortgagee
shall be entitled to participate in and control any condemnation proceedings
and to be represented therein by counsel of its own choice, and Mortgagor will
deliver, or

 

27

 

cause to be delivered, to
Mortgagee such instruments as may be requested by it from time to time to
permit such participation. The foregoing is subject to the provisions of the
Prior Indebtedness Documents, to the extent they are applicable.

 

ARTICLE IX

 

SECURITY AGREEMENT

 

9.1.                              Security
Interest.  This Mortgage shall be
construed as a Mortgage on real property, and it shall also constitute and
serve as a security agreement on personal property within the meaning of, and
shall constitute until the grant of this Mortgage shall terminate as provided
in Article II hereof, a pledge, assignment and a  security interest, subject only to the applicable Permitted
Encumbrances, including the applicable security interests created by the Prior
Indebtedness Documents, under the Illinois Uniform Commercial Code with respect
to the Personalty, Fixtures, Leases and Rents. 
Mortgagor has granted, bargained, conveyed, assigned, transferred and
set over, and by these presents does grant, bargain, convey, assign, transfer
and set over unto Mortgagee a security interest in and to all of Mortgagor’s
right, title and interest in, to and under the Personalty, Fixtures, Leases and
Rents, subject only to the applicable Permitted Encumbrances, including the applicable
security interests created by the Prior Indebtedness Documents,  to secure the full and timely payment of the
Indebtedness and the full and timely performance and discharge of the
Obligations.  Upon the occurrence of and
during the existence of an Event of Default, Mortgagor shall gather all of the
Mortgaged Property which is Personalty at a location designated by Mortgagee
for sale pursuant to the terms hereof. Within ten (10) days following
Mortgagor’s receipt of a written request from Mortgagee, Mortgagor shall
prepare and deliver to Mortgagee a written inventory specifically listing all
of the Personalty and Fixtures, which inventory shall be certified by an
authorized partner of Mortgagor as being true, correct and complete.

 

9.2.                              Financing
Statements.  Mortgagor shall execute
and deliver to Mortgagee, in form and substance satisfactory to Mortgagee, such
financing statements and such further assurances as Mortgagee may, from time to
time, consider reasonably necessary to create, perfect and preserve Mortgagee’s
security interest herein granted, and Mortgagee may cause such statements and
assurances to be recorded and filed at such times and places as may be required
or permitted by law to so create, perfect and preserve such security interest.  Pursuant to the Illinois Uniform Commercial
Code, this Mortgage shall be effective as a Financing Statement filed as a
fixture filing from the date of its filing for record covering the Fixtures and
Personalty.  The address of Mortgagor,
as Debtor, and Mortgagee, as Secured Party, are as set forth herein.  The above described goods are or are to
become fixtures related to the Land and Improvements of which Mortgagor is the
record title owner.

 

9.3.                              Uniform
Commercial Code Remedies.  Mortgagee
shall have all the rights, remedies and recourses with respect to the
Personalty, Fixtures, Leases and Rents afforded a secured party by the
aforesaid Illinois Uniform Commercial Code in addition to, and not in
limitation of, the other rights, remedies and recourses afforded by the Loan
Documents and at law.

 

9.4.                              No
Obligation of Mortgagee.  The
assignment and security interest herein granted shall not be deemed to cause
Mortgagee to be a Mortgagee in possession of the Mortgaged Property, to
obligate Mortgagee to operate the Mortgaged Property or attempt to do the same,
or take any action, incur expenses or perform or discharge any obligation, duty
or liability whatsoever under any of the Leases or

 

28

 

otherwise.

 

9.5.                              Remedies.  If an Event of Default shall exist,
Mortgagee may elect, in addition to exercising any and all other rights,
remedies and recourses set forth in Article 7 or referred to in Paragraph
9.3 hereinabove, to collect and receive all of the Rents and to proceed in the
manner set forth in Section 9.501(d) of Chapter 9 of the Illinois Uniform
Commercial Code relating to the procedure to be followed when a security
agreement covers both real and personal property.  Except as otherwise set forth in this Paragraph 9.5, at any
foreclosure sale as described in Paragraph 7.4 hereinabove, it shall be deemed
that the Mortgagee proceeded under such Section 9.501(d) and that such
sale passed title to all of the Mortgaged Property and other property described
herein to the purchaser thereat, including without limitation, the Personalty,
Leases and Rents.  Mortgagee, acting
itself or by and through any representative, may elect either prior to or at
such sale not to proceed under such Section 9.501(d) by notifying Mortgagor
of the manner in which Mortgagee intends to proceed with regard to the
Personalty, Leases and Rents.

 

ARTICLE X

 

ASSIGNMENT OF RENTS AND LEASES

 

10.1.                        Assignment
of Rents, Profits, etc.  All of the
Rents are hereby absolutely and unconditionally assigned to Mortgagee, to be
applied by Mortgagee in payment of the Indebtedness.  Notwithstanding any provision of this Mortgage or any other Loan
Document which might be construed to the contrary, the assignment in this
Paragraph 10.1 is an absolute assignment and not merely a security
interest.  However, Mortgagee’s rights
as to the assignment shall be exercised only upon the occurrence and during the
continuance of an Event of Default. 
Prior to the occurrence of an Event of Default, Mortgagor shall have a
license to collect and receive all Rents as Mortgagee for the benefit of
Mortgagee and Mortgagor, and Mortgagor shall apply the funds so collected first
to the payment of the Indebtedness then due and thereafter to the account of
Mortgagor.  Notwithstanding anything
contained herein to the contrary, no part of the Property will be leased
without the prior written consent of the Mortgagee, which consent may be
granted or withheld in the sole discretion of the Mortgagee.  This assignment is subject to the rights
created by the Prior Indebtedness Documents in regard to the Rents and Leases.

 

10.2                           Assignment
of Leases.  Mortgagor hereby assigns
the Leases to Mortgagee.  Mortgagor
hereby further assigns to Mortgagee all guaranties of tenants’ performance
under the Leases.

 

10.3.                        Warranties
Concerning Leases and Rents. 
Mortgagor represents and warrants to Mortgagee that:

 

(a)                                  no
Leases currently exist, except any listed in Exhibit “D” attached
hereto;

 

(b)                                 no
Rents have been previously assigned, mortgaged or pledged except pursuant to
the Prior Indebtedness Documents;

 

(c)                                  no
Rents have been or will be anticipated, waived, released, discounted, set off
or compromised; and

 

29

 

(d)                                 Mortgagor
has not received any funds or deposits from any tenant for advance rentals
(other than the rentals payable for the month in which this Mortgage is
executed and the next following month).

 

10.4.                        Mortgagor’s
Covenants of Performance.  Mortgagor
covenants to:

 

(a)                                  duly
and punctually perform all of its material obligations under the Leases and
give prompt notice to Mortgagee of any failure to do so;

 

(b)                                 give
immediate notice to Mortgagee of any notice Mortgagor receives from any tenant
or subtenant under any Lease, specifying any claimed default by any party under
such Lease;

 

(c)                                  not
enter into any Lease and not voluntarily terminate or cancel any Lease or
waive, modify or amend any material provision of any Lease without the prior
written consent of Mortgagee;

 

(d)                                 enforce
the tenants’ obligations under the Leases except in the exercise of reasonable
management discretion in the ordinary course of business;

 

(e)                                  defend,
at Mortgagor’s expense, any proceeding pertaining to the Leases, including, if
Mortgagee so requests, any such proceeding to which Mortgagee is a party; and

 

(f)                                    except
as currently effected pursuant to the Prior Indebtedness Documents, neither
create nor permit any encumbrance upon its interest as lessor under the Leases
nor further assign, pledge or encumber the Rents.

 

10.5.                        Prior
Approval for Actions Affecting Leases. 
Mortgagor shall not, without the prior written consent of Mortgagee:

 

(a)                                  enter
into any new lease agreement covering all or any portion of the Mortgaged
Property without Mortgagee’s prior written consent, which may be granted or
withheld at the sole discretion of Mortgagee;

 

(b)                                 receive
or collect Rents more than one month in advance;

 

(c)                                  waive
or release any obligation of any tenant under the Leases except in the exercise
of reasonable management discretion in the ordinary course of business;

 

(d)                                 cancel,
terminate or modify any of the Leases, cause or permit any cancellation,
termination or surrender of any of the Leases, or commence any proceedings for
dispossession of any tenant under any of the Leases, except upon default by the
tenant thereunder or in the exercise of reasonable management discretion in the
ordinary course of business;

 

(e)                                  renew
or extend any of the Leases, except pursuant to terms set forth in existing
Leases; or

 

30

 

(f)                                    permit
any assignment of the Leases by tenants.

 

10.6.                        Mortgagee
in Possession.  Mortgagee’s
acceptance of this assignment shall not, prior to entry upon and taking
possession of the Mortgaged Property by Mortgagee, be deemed to constitute
Mortgagee a “mortgagee in possession”, nor obligate Mortgagee to appear in or
defend any proceeding relating to any of the Leases or to the Mortgaged
Property, to take any action hereunder, expend any money, incur any expenses,
or perform any obligation or liability under the Leases, or assume any
obligation for any deposits delivered to Mortgagor by any lessee and not
delivered to Mortgagee.  Mortgagee shall
not be liable for any injury or damage to person or property in or about the Mortgaged
Property, except such damage or injury caused solely by Mortgagee’s gross
negligence or willful misconduct.

 

10.7.                        Appointment
of Attorney.  Mortgagor hereby
appoints Mortgagee its attorney-in-fact, coupled with an interest, empowering
Mortgagee to subordinate any Leases to this Mortgage to the extent permissible
under the Leases.

 

10.8.                        Indemnification.  Mortgagor hereby indemnifies and holds
Mortgagee harmless from all costs, damages, expenses, liabilities and losses
incurred by Mortgagee arising from or in connection with any claims under the
Leases, including, without limitation, claims by tenants for security deposits
or for rental payments more than one (1) month in advance and not
delivered to Mortgagee, except to the extent caused solely by the gross
negligence or willful misconduct of Mortgagee. 
All amounts indemnified against hereunder, including reasonable
attorneys’ fees, if paid by Mortgagee shall bear interest at the Default Rate,
as defined in the Note, and shall be payable by Mortgagor immediately upon
demand and shall be secured hereby.

 

10.9.                        Records.  Upon request by Mortgagee, Mortgagor shall
deliver to Mortgagee executed originals of all Leases and copies of all records
relating thereto.

 

10.10.                  Merger.  There shall be no merger of the leasehold
estates, created by the Leases, with the fee estate of the Land without the
prior written consent of Mortgagee.

 

10.11.                  Right to Rely.  Mortgagor hereby authorizes and directs the
tenants under the Leases to pay Rents to Mortgagee upon written demand by
Mortgagee to Mortgagor, without further consent of Mortgagor, and the tenants
may rely upon any written statement delivered by Mortgagee to the tenants.  Any such payment to Mortgagee shall
constitute payment to Mortgagor under the Leases.

 

ARTICLE XI

 

INTENTIONALLY DELETED

 

 

ARTICLE XII

 

MISCELLANEOUS

 

12.1.                        Survival
of Obligations.  Each and all of the
Obligations shall survive the execution and

 

31

 

delivery of the Loan Documents
and the consummation of the loan called for therein and shall continue in full
force and effect until the Indebtedness shall have been paid in full.

 

12.2.                        Recording
and Filing.  Mortgagor will cause
the Loan Documents and all amendments and supplements thereto and substitutions
therefor to be recorded, filed, re-recorded and refiled in such manner and in
such places as Mortgagee shall reasonably request and will pay all such
recording, filing, re-recording and refiling taxes, fees and other charges.

 

12.3.                        Notices.  All notices or other communications required
or permitted to be given pursuant to this Mortgage shall be in writing and
shall be given and considered as properly given and received if given as
provided below; provided, however, that notice regarding any proposed
foreclosure sale shall be given pursuant to applicable Legal Requirements, if
different from the provisions below. 
Notice given pursuant to  this
Mortgage shall be effective on the earlier to occur of (a) receipt by the
addressee or (b) (i) two (2) business days following the deposit thereof in a
post office or other official depository under the regular care and custody of
the United States Postal Service, with postage prepaid and properly addressed,
if sent by registered or certified United States mail, or (ii) the business day
following the day such notice, properly addressed and with delivery charges
prepaid, is deposited with a nationally recognized overnight delivery service
with delivery instructions for next day delivery.  For purposes of notice, the addresses of the parties shall be as
set forth in the opening recital herein; provided, however, that Mortgagor and
Mortgagee shall have the right to change their address for notice hereunder to
any other location within the continental United States by the giving of 30
days’ notice to the other party in the manner set forth hereinabove.  A copy of any notice given by or on behalf
of Mortgagor to Mortgagee of an Event of Default or event or condition which may
mature into an Event of Default, shall be sent to  David A. Grossberg, Esq., Schiff, Hardin & Waite, 6600 Sears
Tower, Chicago, Illinois 60606-6473.

 

12.4.                        Real
Estate Taxes; Impositions.  If
required by Mortgagee, by giving Mortgagor at least thirty (30) days prior
written notice, or if an Event of Default shall be in existence, Mortgagor
shall pay to Mortgagee, in advance, on the first day of each calendar month
during the term of the Note, an amount equal to one-twelfth of the annual real
estate taxes relating to the Mortgaged Property estimated by Mortgagee to be
due for each calendar year during the term of the Note.  Thereafter, Mortgagor, at Mortgagee’s
request, shall also pay to Mortgagee, in advance, on the first day of each
calendar month commencing with the calendar month immediately following the
month in which Mortgagee’s request is made the Escrowed Funds in an amount
equal to the sum of one-twelfth of the annual Impositions (estimated wherever
necessary) to become due with respect to the Mortgaged Property for the year
during which such payment is so requested; provided, however, that Mortgagee
shall have the right to increase the amount of monthly payments of the
Impositions if such increase is necessary to provide for the full payment of
the Impositions.  In addition, if
Mortgagee determines that any amounts theretofore paid by Mortgagor are
insufficient for the payment in full of the Impositions, Mortgagee shall notify
Mortgagor of the increased amounts required to provide a sufficient fund for
the payment thereof, whereupon Mortgagor shall pay to Mortgagee within 10 days
thereafter the additional amount so stated in Mortgagee’s notice.  Upon any assignment of this Mortgage,
Mortgagee shall have the right to pay over the balance of the Escrowed Funds
then in its possession to its assignee, whereupon the Mortgagee shall then
become completely released from all liability with respect thereto.  Upon payment of the Indebtedness and
performance of the Obligations, or at such earlier time as Mortgagee may elect,
the balance of the Escrowed Funds in its possession may be paid over to
Mortgagor, and no other party shall have any right or claim thereto.  Upon the occurrence of an Event of Default,
Mortgagee shall have the right to apply the Escrowed Funds to the payment of
the Indebtedness without notice to Mortgagor, and

 

32

 

Mortgagee shall thereafter have
the right to require Mortgagor, within 10 days after Mortgagor’s receipt of
demand  therefor from Mortgagee, to
deposit with Mortgagee the amount of the Escrowed Funds so applied.  The Escrowed Funds may, at the option of
Mortgagee, be repaid to Mortgagor in sufficient time to allow Mortgagor to
satisfy Mortgagor’s obligations under the Loan Documents to pay the Impositions
or may be paid by Mortgagee directly to the person or entities entitled
thereto.  Notwithstanding anything to
the contrary contained in this Paragraph 12.4 or elsewhere in this Mortgage,
Mortgagee hereby reserves the right to waive the payment by Mortgagor to
Mortgagee of the Escrowed Funds and, in the event Mortgagee does so waive such
payment, it shall be without prejudice to Mortgagee’s right to insist, at any
subsequent time or times, that such payments be made in accordance herewith
provided an Event of Default has occurred and is continuing.

 

12.5.                        No
Waiver.  Any failure by Mortgagee to
insist, or any election by Mortgagee not to insist, upon strict performance by
Mortgagor of any of the terms, provisions or conditions of the Loan Documents
shall not be deemed to be a waiver of the same or of any other term, provision
or condition thereof, and Mortgagee shall have the right at any time, from time
to time thereafter, to insist upon strict performance by Mortgagor of any and
all of such terms, provisions and conditions.

 

12.6.                        Mortgagee’s
Right to Pay Indebtedness and Perform Obligations.  If Maker, Mortgagor or any other party shall
fail, refuse or neglect to make any required payment of the Indebtedness or
perform any of the Obligations required by the Loan Documents, then at any time
thereafter and without notice or demand upon Mortgagor or any other party, and
without waiving or releasing any other right, remedy or recourse Mortgagee may
have because of the same, Mortgagee may (but shall not be obligated to) make
such payment or perform such act for the account of and at the expense of
Mortgagor and shall have the right to enter upon the Mortgaged Property for
such purpose and to take all such action thereon with respect to the Mortgaged
Property as it may deem necessary or appropriate.  Mortgagor shall be obligated to repay Mortgagee for all sums
advanced by it pursuant to this Paragraph 12.6 and shall indemnify and hold
Mortgagee harmless from and against any and all loss, cost, expense, liability,
damage, claim and cause of action, including reasonable attorneys’ fees,
incurred or accruing by any acts performed by Mortgagee pursuant to the
provisions of this Paragraph 12.6 or by reason of any other provision of the
Loan Documents, except to the extent caused solely by the gross negligence or
willful misconduct of Mortgagee.  All
sums paid by Mortgagee pursuant to this Paragraph 12.6 and all other sums
extended by Mortgagee to which it shall be entitled to be indemnified, together
with interest thereon at the Default Rate of interest set forth in the Note
from the date of such payment or expenditure shall constitute additions to the
Indebtedness and Obligations, shall be secured by the Loan Documents and shall
be paid by Mortgagor to Mortgagee upon demand.

 

12.7.                        Covenants
Running with the Land.  All
obligations contained in the Loan Documents are intended by the parties to be
and shall be construed as covenants running with the Mortgaged Property.  All of the representations, warranties,
covenants and agreements of Mortgagor set forth herein (including, without
limitation, all of the agreements by Mortgagor to indemnify Mortgagee) shall
survive the execution and delivery of this Mortgage, any foreclosure of the
lien of this Mortgage and any other acquisition of title to the Mortgaged
Property by Mortgagee.

 

12.8.                        Successors
and Assigns.  This Mortgage is for
the sole benefit of Mortgagee, its successors and assigns, and Mortgagor, its
permitted successors and assigns, and is not for the benefit of any third
party.  All of the terms of the
Loan  Documents shall apply to, be
binding upon and inure to the benefit of the parties thereto, their respective
successors, assigns, heirs and legal representatives and all other

 

33

 

persons claiming by, through or
under them.

 

12.9.                        Severability.  The Loan Documents are intended to be
performed in accordance with, and only to the extent permitted by, all
applicable Legal Requirements.  If any
provision of any of the Loan Documents or the application thereof to any person
or circumstance shall, for any reason and to any extent, be invalid or
unenforceable, neither the remainder of the instrument in which such provision
is contained nor the application of such provision to other persons or circumstances
or other instruments referred to hereinabove shall be affected thereby, but
rather, the same shall be enforced to the greatest extent permitted by law.

 

12.10.      Controlling Agreement.  All agreements between Maker and/or
Mortgagor and Mortgagee, whether now existing or hereafter arising and whether
written or oral, are hereby limited so that in no contingency, whether by
reason of demand or acceleration of the maturity of the Note or otherwise,
shall the interest contracted for, charged, received, paid or agreed to be paid
to Mortgagee exceed the maximum amount permissible under applicable law.  If, from any circumstance whatsoever,
interest would otherwise be payable to Mortgagee in excess of the maximum lawful
amount, the interest payable to Mortgagee shall be reduced to the maximum
amount permitted under applicable law; and if from any circumstance Mortgagee
shall ever receive anything of value deemed interest by applicable law in
excess of the maximum lawful amount, an amount equal to any excessive interest
shall be applied to the reduction of the principal of the Indebtedness and not
to the payment of interest, or if such excessive interest exceeds the unpaid
balance of principal of the Indebtedness, such excess shall be refunded to
Mortgagor.  All interest paid or agreed
to be paid to Mortgagee shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full period until
payment in full of the principal so that the interest on the Indebtedness for
such full period shall not exceed the maximum amount permitted by applicable
law.  Mortgagee hereby expressly
disclaims any intent to contract for, charge or receive interest in an amount
which exceeds the maximum amount of interest permitted by applicable law.  This Paragraph shall control all agreements
between Mortgagor and Mortgagee.

 

12.11.      Entire Agreement and Modification.  The Loan Documents contain the entire
agreements between the parties relating to the subject matter hereof and
thereof, and all prior agreements relative thereto which are not contained
herein or therein are terminated.  The
Loan Documents may be amended, revised, waived, discharged, released or
terminated only by a written instrument or instruments executed by the party
against which enforcement of the amendment, revision, waiver, discharge,
release or termination is asserted.  Any
alleged amendment, revision, waiver, discharge, release or termination which is
not so documented shall not be effective as to any party.

 

12.12.      Counterparts.  This Mortgage may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute but one instrument.

 

12.13.      Applicable Law and Uniform Commercial
Code.   This Mortgage, to the extent
it applies to property located in the State of Illinois, shall be governed by
the laws of the State of Illinois and the laws of the United States applicable
to transactions in the State of Illinois.

 

12.14.      Headings and General Application.  The article, paragraph and subparagraph
entitlements hereof are inserted for convenience of reference only and shall in
no way affect, modify or define, or be used in construing, the text of such
article, paragraph or subparagraph.  If
the text requires, words used in

 

34

 

the singular shall be read as
including the plural, and pronouns of any gender shall include all genders.

 

12.15.      Sole Benefit.  This instrument and the other Loan Documents
have been executed for the sole benefit of Maker, Mortgagor and Mortgagee and
the heirs, successors, assigns and legal representatives of Mortgagee.  No other party shall have rights thereunder
nor be entitled to assume that the parties thereto will insist upon strict
performance of their mutual obligations hereunder, any of which may be waived
from time to time.  Neither Maker nor
Mortgagor shall have  any right to
assign to any person or entity whatsoever, any of its rights under the Loan
Documents, including, without limitation, the right to receive advances under
the Note or otherwise.

 

12.16.      Subrogation.  If any or all of the proceeds of the
Indebtedness or the Obligations have been used to extinguish, extend or renew
any indebtedness heretofore existing against the Mortgaged Property or to
satisfy any indebtedness or obligation secured by a lien or encumbrance of any
kind (including liens securing the payment of any Impositions), such proceeds
have been advanced by Mortgagee at Mortgagor’s request, and, to the extent of
such funds so used, the Indebtedness and Obligations in this Mortgage shall be
subrogated to and extend to all of the rights, claims, liens, titles and
interests heretofore existing against the Mortgaged Property to secure the
indebtedness or obligation so extinguished, paid, extended or renewed, and the
former rights, claims, liens, titles and interests, if any, shall not be waived
but rather shall be continued in full force and effect and in favor of
Mortgagee and shall be merged with the lien and security interest created
herein as cumulative security for the repayment of the Indebtedness and
satisfaction of the Obligations.

 

12.17.      Business or Commercial Purpose.  Mortgagor warrants that the extension of
credit evidenced by the Note secured hereby is solely for business or
commercial purposes, other than agricultural purposes.

 

12.18.      Jurisdiction and Venue.  Courts within the State of Texas shall have
jurisdiction over any and all disputes between Maker and/or Mortgagor and
Mortgagee, whether at law or in equity, and the proper venue for any such
dispute shall be either the state or federal courts located in  Collin County, Texas.; provided, however, as
to matters relating to portions of the Mortgaged Property located in the State
of Illinois, courts within the State of Illinois shall have jurisdiction and
the proper venue therefor shall be the state or federal courts located in Kane
County , Illinois.

 

12.19.      Performance at Maker’s and/or
Mortgagor’s Expense.  The cost and
expense of performing or complying with any and all of the Obligations shall be
borne solely by Maker and/or Mortgagor, and no portion of such cost and expense
shall be in any way or to any extent credited against any installment on or
portion of the Indebtedness.

 

12.20.      No Partnership.  Nothing contained in the Loan Documents is
intended to, or shall be construed as, creating to any extent or in any manner
whatsoever, any partnership, joint venture or association between Maker and/or
Mortgagor, on the one hand,  and  Mortgagee, on the other hand, or in any way
make Mortgagee a co-principal with Maker and/or Mortgagor with reference to the
Mortgaged Property or otherwise, and any inferences to the contrary are hereby
expressly negated.

 

12.21.      Agents.  Any right, remedy, privilege, duty or action available to or to
be performed by Mortgagee under the Loan Documents, if and to the extent
determined by Mortgagee, may be exercised or performed by any agent, attorney,
correspondent or other representative of Mortgagee.

 

35

 

12.22.      Credit Reports.  Maker and Mortgagor hereby authorize
Mortgagee to obtain from time to time credit reports through reputable credit
reporting agencies relating to Maker and Mortgagor and any of the owners of
interests in Maker and/or Mortgagor.

 

12.23.      Disposition of Mortgaged Property,
Leases, or Beneficial Interest in Mortgagor.  Except as otherwise expressly provided herein, upon the sale,
exchange, assignment, conveyance or other disposition (herein collectively
called “Disposition”) of all or any portion of the Mortgaged Property (or any
interest therein), or of all or any part of the beneficial ownership interest
in Mortgagor, an Event of Default shall be deemed to have occurred and
Mortgagee may, at Mortgagee’s option, enforce any and all of Mortgagee’s
rights, remedies and recourses available upon the occurrence of an Event of
Default; provided, however, Mortgagee shall not enforce such rights, remedies
and recourses if Mortgagee consents in writing to the Disposition in question.  It is expressly agreed that in connection
with determining whether to grant or withhold such consent to each such
Disposition, Mortgagee may, inter alia, (a) consider (based upon
Mortgagee’s then current criteria for approving borrowers for mortgage loans
similar to the Loan) the financial strength and experience of the party to whom
such Disposition will be made and its management ability with respect to the
Mortgaged Property, (b) consider whether or not the security for payment of the
Indebtedness and the performance of the Obligations, or Mortgagee’s ability to
enforce its rights, remedies and recourses with respect to such security, will
be impaired in any way by the proposed Disposition, (c) require as a condition
to granting such consent, an increase in the rate of interest payable under the
Note (subject to the provisions of Paragraph 12.10 hereof), (d) require that
Mortgagee be reimbursed for all reasonable costs and expenses incurred by
Mortgagee in investigating the financial strength, experience and management
ability of the party to whom such Disposition will be made and in determining
whether Mortgagee’s security will be impaired by the proposed Disposition, (e)
require the payment to Mortgagee of a transfer fee to cover the reasonable cost
of documenting the Disposition in its records on the date of closing of such
Disposition (subject to the provisions of Paragraph 12.10 hereof), (f) require
the payment of its reasonable attorney’s fees in connection with such
Disposition, (g) require the express assumption of payment of the Indebtedness
and performance of the Obligations by the party to whom such Disposition will
be made (with or without the release  of
Mortgagor from liability for such Indebtedness and Obligations), (h) require
the execution of assumption agreements, modification agreements, supplemental
security documents and financing statements satisfactory in form and substance
to Mortgagee, (i) require endorsements (to the extent available under
applicable law) to any existing mortgage title insurance policies insuring
Mortgagee’s liens and security interests covering the Mortgaged Property or new
mortgage title policies, (j) require additional security for the payment of the
Indebtedness and performance of the Obligations, and (k) shorten the stated
term of the Note or otherwise rearrange the payment terms of the Note.

 

12.24.      Environmental Matters.

 

(a)                                              Mortgagee
shall have the right, at any time so long as any part of the Note shall remain
unpaid, to inspect the Mortgaged Property or any part thereof during reasonable
hours and upon reasonable notice to Mortgagor to determine if any environmental
hazard is present or is threatening to be created which will impair the value
of the Mortgaged Property.  Mortgagee
may conduct any test or investigation, or collect any samples of materials from
on, about, or under the Mortgaged Property reasonably necessary to determine
whether such hazards might exist so long as it uses reasonable efforts not to
interfere with Mortgagor’s use of Mortgaged Property.

 

36

 

(b)                                             So
long as any part of the Note remains unpaid, Mortgagor shall not knowingly
allow any activity to be conducted on the Mortgaged Property or any use to be
made of the Mortgaged Property which presents a high risk of environmental
contamination in violation of any Applicable Environmental Law, including but
not limited to:

 

(1)                                  Chemical
manufacturing or storage;

 

(2)                                  Operation
of any hazardous waste handling or recycling facility; and

 

(3)                                  Underground
storage of petroleum products.

 

12.25.      Joint and Several Liability.  If Maker or Mortgagor consists of more than
one party, the Obligations and the obligation to repay the Indebtedness as
contained herein shall be the joint and several obligations of each of such
parties.

 

12.26.      Sole Agreement.  THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.  THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF.

 

12.27.      Partial Releases. If Mortgagee
consents to the sale of any portion of the Mortgaged Property, which consent
may be granted or withheld at the sole discretion of Mortgagee,  the portion of the Mortgaged Property so
sold will be released from the lien of this Mortgage, at the expense of
Mortgagor, upon a sale thereof upon the following terms and conditions:

 

(a)                                  Mortgagor
shall be obligated to provide to Mortgagee substitute collateral (for both the
Loan and the Prior Indebtedness) acceptable to Mortgagee in its sole discretion
(such as, without limitation, a certificate(s) of deposit issued by a bank or
banks and on terms acceptable to Mortgagee which would be pledged  to Mortgagee (and as to which Mortgagee will
be granted a first priority and the only security interest) by documents as
required by Mortgagee) as security for the Indebtedness and Obligations, which
substitute collateral must have a value, as determined by Mortgagee in its sole
discretion, equal to one hundred percent (100%) of the net sales proceeds for
the portion of the Mortgaged Property being so sold, with such net sales
proceeds being equal to the gross sales price (as such gross sales price is
consented to by Mortgagee in its sole discretion) for such portion of the
Mortgaged Property so sold less only (i) reasonable and normal closing costs
paid to unrelated third parties, as reasonably consented to by Mortgagee,  (ii) bona fide real estate commissions paid
to persons or entity not affiliated with Mortgagor or any direct or indirect
owner of an interest in Mortgagor, not exceeding six percent (6%) of the first
$500,000.00 of the purchase price paid and three percent (3%) of the balance of
such purchase price in excess of $500,000.00 and (iii) the amount of the Prior
Indebtedness secured by the portion of the Mortgaged Property so sold which is
required by the holder of such Prior Indebtedness to be paid to such holder as
a result of such sale; provided, however, that Mortgagee will not require
Mortgagor to so provide substitute collateral to the extent all such substitute
collateral then held by Mortgagee has a value, as determined by Mortgagee, in
excess of the then unpaid principal balance of the Loan and the Prior
Indebtedness, all then accrued and unpaid

 

37

 

interest
thereon, all interest thereafter to accrue thereon up to the maturity date(s)
of the Loan and the Prior Indebtedness, as such maturity date(s) may be
extended as provided in the Loan Documents or the documents relating to the
Prior Indebtedness, plus an additional amount as reasonably determined by
Mortgagee to cover other costs that may be or become due in regard to the Loan
and interest that will accrue subsequent to such maturity date, as it may be so
extended, if the Loan is not paid as it comes due.

 

12.28       Business Loan.   It is understood and agreed that the Loan
evidenced by the Note and secured hereby is a business loan within the purview
of Section 205/4 of Chapter 815 of Illinois Complied Statutes (or any
substitute, amended, or replacement statutes) transacted solely for the purpose
of carrying on or acquiring the business of the Mortgagor or, if the Mortgagor
is a trustee, for the purpose of carrying on or acquiring the business of the
beneficiaries of the Mortgagor as contemplated by said Section.

 

12.29       Maximum Indebtedness Hereby Secured
and Future Advances.   In no event
shall the Indebtedness hereby secured exceed two times the stated principal
amount of the Note.  This Mortgage
secures the repayment of all advances that Mortgagee may extend to Maker and/or
Mortgagor under the Note, and secures not only existing indebtedness, but also
secures future advances, with interest thereon, whether such advances are
obligatory or to be made at the option of Mortgagee, to the same extent as if
such future advances were made on the date of the execution of this Mortgage,
and although there may be no indebtedness outstanding at the time any advance
is made.

 

EXECUTED
by the undersigned on the date acknowledged, to be effective as of the  19th day of August, 2003.

 

	
   

  	
  MORTGAGOR:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HUNTLEY DEVELOPMENT LIMITED PARTNERSHIP,

  
	
   

  	
  an Illinois
  limited partnership

  	
   

  
	
   

  	
  By:

  	
  Horizon
  Huntley, LLC, its

  Managing General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Horizon
  Group Properties, L.P., its

  Sole Managing Member

  
	
   

  	
  By:

  	
  Horizon
  Group Properties, Inc., its

  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name: 

  	
   

  
	
   

  	
  Title:

  	
   

  
										

 

38

 

JOINDER

 

Monroe Outlet
Center, LLC is joining herein to evidence its agreement with the terms hereof.

 

	
   

  	
  MONROE
  OUTLET CENTER, LLC

  
	
   

  	
  By:  Horizon
  Group Properties, L.P., its Manager

  
	
   

  	
  By:  Horizon
  Group Properties, Inc., its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title: 

  	
   

  	
   

  
							

 

39

 

EXHIBIT “A”

 

Property Description

 

40

 

EXHIBIT “B”

 

Permitted Encumbrances

 

41

 

EXHIBIT “C”

 

Prior Indebtedness Documents

 

42

 

EXHIBIT “D”

 

Existing Leases

 

43Exhibit 10.117

 

ASSIGNMENT OF ACCOUNT
AND SECURITY AGREEMENT

 

This
ASSIGNMENT OF ACCOUNT AND SECURITY AGREEMENT (the “Agreement”) is made and
entered into this 19th day of August, 2003, by and among BEAL BANK,
S.S.B., a savings bank organized under the laws of the State of Texas (the
“Lender”), MONROE OUTLET CENTER, LLC, a Michigan limited liability company
(“Monroe”), and HUNTLEY DEVELOPMENT LIMITED PARTNERSHIP (“HDLP”), an Illinois
limited partnership (the “Borrower”).

 

WITNESSETH:

 

A.            Lender has heretofore made a loan
(the “HDLP Loan”) to HDLP, in the maximum principal amount of
$11,712,177.00.  The HDLP Loan is
evidenced by that certain Amended, Restated and Increased Promissory Note,
dated January 30, 2002, in the stated principal amount of $11,712,177.00,
executed by HDLP and payable to the order of the Lender.  The HDLP Loan is secured by, among other
things, that certain Adjustable Rate Mortgage, Security Agreement and
Assignment of Leases and Rents (as previously modified and extended, the “First
HDLP Mortgage”), dated as of October 27, 1999, executed and delivered by HDLP
for the benefit of Lender, which encumbers, among other things, certain real
property located in Kane County, Illinois and more particularly described in
the Mortgage and all improvements and fixtures thereon, and which has been
recorded as Document No. 1999K103679 in the Records of Kane County, Illinois.

 

B.            Lender has also heretofore made a
loan (the “Monroe Loan”) to Monroe, which Monroe Loan is in the maximum
principal amount of $7,000,000.00.  The
Monroe Loan is evidenced by that certain Promissory Note I, in the stated
principal amount of $3,000,000.00, and that certain Promissory Note II, in the
stated principal amount of $4,000,000.00, each dated July 10, 2002, each
executed by Monroe and each payable to the order of Lender.  The Monroe Loan is secured by, among other
things, those certain Commercial Mortgages, each dated July 10, 2002, each
executed by Monroe and each for the benefit of Lender, one of which has been
recorded in Liber 2254, beginning at Page 83 in the Register of Deeds of Monroe
County, Michigan, and the other is recorded in Liber 3457, beginning at Page
506 in the Register of Deeds of Muskegon County, Michigan (the “Monroe
Mortgages”).

 

C.            HDLP and Monroe are affiliated in
that the owners (whether direct or indirect) of HDLP are also the owners
(whether direct or indirect) of Monroe.

 

D.            Monroe has requested that Lender
agree to release from the Monroe Mortgages certain property encumbered thereby
(the property to be so released by Lender is referred to herein as the
“Released Property”).  Lender has agreed
to so release such property provided certain conditions are satisfied.  Among the conditions to be so satisfied are
that (i) HDLP grant to Lender a subordinate lien Mortgage, Security Agreement
and Assignment of Leases and Rents (the “Second HDLP Mortgage”, the First HDLP
Mortgage and the Second HDLP Mortgage are herein referred to collectively as
the “HDLP Mortgages”) encumbering the property encumbered by the First HDLP
Mortgage as security for the Monroe Loan and (ii) Monroe deposit $3,000,000.00
of the proceeds from the sale of the Released Property into the Account, as
hereinafter defined, and pledge such Account and all proceeds therein and
rights relating thereto to Lender as collateral for the obligations owed by
HDLP and Monroe to Lender in regard to the HDLP Loan and the Monroe Loan.  The parties hereto desire to enter into this
Agreement to effect the pledge of and grant of a security interest in the Account
and such other rights to Lender as hereinafter provided.

 

NOW,
THEREFORE, for and in consideration of the premises, the mutual covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and confessed by each
of the parties hereto, and as additional collateral for the HDLP Loan and the
Monroe Loan

 

1

 

and with the understanding that
Lender would not agree to release the Released Property from the Lender’s liens
and security interests or agree to grant HDLP an additional option to extend
the term of the HDLP Loan but for the execution and delivery hereof, the
parties hereto hereby agree as follows:

 

1.                                       
Monroe does hereby assign, transfer and pledge to Lender and grant to Lender a
first priority and the only security interest in all right, title and interest
of Monroe in and to the account identified as follows, together with all
instruments, documents and other writings evidencing the same, all funds now or
hereafter deposited therein and all rights relating thereto (collectively, the
“Account”):

 

	
  Identifying
  Number

  of Account:

  	
   

  	
  Name of
  Account:

  	
   

  	
  Name and
  Address of Institution

  holding the Account (the “Institution”):

  
	
   

  	
   

  	
  Monroe
  Outlet Center/

  	
   

  	
  Beal Bank,
  S.S.B.

  
	
  Acct. #

  	
   

  	
   

  	
   

  	
  Beal Bank
  Pledged Account

  	
   

  	
  6000 Legacy
  Drive, 4 East

  
	
   

  	
   

  	
   

  	
   

  	
  Plano,
  Texas  75024

  
							

 

2.                                       This
Assignment is made as and shall constitute collateral security for any and all
Indebtedness and Obligations, as each such term is defined in the HDLP
Mortgages, and all Indebtedness, as such term is defined in the Monroe
Mortgages, of any kind and nature of HDLP and/or Monroe to Lender, howsoever
evidenced, whether now existing or hereafter arising, direct or indirect,
absolute, contingent, joint, several or joint and several (collectively, the
“Obligation”).  Each party to this
Agreement hereby confirms that this Agreement shall constitute an
“authenticated record” and that the arrangements established under this Agreement
shall constitute “control” of the Account as contemplated by Section 9-104 of
the Uniform Commercial Code (as adopted in the State where the Account is
located).

 

3.                                       Monroe
and HDLP represent and warrant to Lender and agrees with Lender that (i) each
of Monroe and HDLP has full power, right and authority to execute and deliver
this Agreement, (ii) Monroe is the sole owner of all aspects and components of
the Account free and clear of all liens and encumbrances of any nature
whatsoever, other than those created hereby, (iii) Monroe will not, until the
security interest and assignment created hereby terminate, create any security
interest or lien in or on or further assign or pledge the Account or any part
thereof or interest thereon, (iv) Monroe will cause the Institution to provide
to Lender duplicate copies of the monthly statements issued in regard to the
Account, which duplicate copies will be sent to the Lender at the time such
Account statements are sent to Monroe, and (v) Monroe has deposited into the
Account the sum of $3,000,000.00 and the balance in the Account is currently
not less than $3,000,000.00.

 

4.                                       Upon
the occurrence of any Event of Default (herein so called), as such term is
defined or referred to in any of the HDLP Mortgages (including, without
limitation, any Event of Default arising as a result of an Event of Default in
regard to the Monroe Loan), Lender is hereby authorized to withdraw any and all
funds in the Account and apply such funds to the payment of the Obligation, in
such order and manner as lender shall elect.

 

5.                                       Monroe
hereby constitutes and appoints Lender the true and lawful attorney-in-fact of
Monroe with full power of substitution, to ask, demand, collect, receive,
receipt for, sue for, compound and give acquittance for any and all amounts
which may be or become due or payable under or in regard to the Account, to
execute any and all checks, withdrawal receipts or other orders for the payment
of money drawn on the Account and to endorse the name of Monroe on all commercial
paper given in payment or in part payment thereof, and in its discretion to
file any claim or take any other action or proceeding, either in its own name
or in the name of Monroe or otherwise, which Lender may deem necessary or
appropriate to protect and preserve the right, title and interest of Lender
hereunder or otherwise in regard to the Account.  Without limitation of its other rights hereunder, upon the
occurrence and during the continuance of an Event of Default, Lender shall have
and is

 

2

 

hereby given full power and authority to transfer the Account into the
name of Lender or its nominee.

 

6.                                       Monroe
covenants and agrees with Lender that Monroe will deliver to Lender, promptly
following Monroe’s receipt thereof, each Account Book, Passbook and/or
Certificate evidencing the Account, if any; and that Monroe will not withdraw
any money from the Account, except as permitted below.

 

7.                                       So
long as no Event of Default and no event or condition which, with the giving of
notice, the passage of time, or both, could mature into an Event of Default
then exists, up to $750,000.00 of the proceeds in the Account may be used to
pay a portion of the interest hereafter becoming due and payable on the HDLP
Loan and the balance of the proceeds in the Account may be used to pay costs
which are hereafter incurred by HDLP in designing and constructing improvements
on the HDLP property and other third party expenses that enhance the value of
the HDLP property, provided all such costs are approved in writing by Monroe
and Lender, which approval by Lender may be granted or withheld at the sole
discretion of Lender (all such costs so approved by Lender and Monroe are
referred to herein collectively as the “Approved Costs”).  Withdrawals of proceeds in the Account to
pay interest accrued on the HDLP Loan and/or Approved Costs may be made no more
frequently than once per month.  If HDLP
desires to use proceeds in the Account to pay interest accrued on the HDLP Loan
or Approved Costs, HDLP will provide to Lender a written request along with a
written consent of Monroe to the proposed withdrawal of funds from the Account
to pay such interest and/or Approved Costs. 
Such written request will specify the amounts to be so withdrawn from
the Account, the uses to which such withdrawn proceeds of the Account are to be
used and the person or entity who is to receive any of such proceeds.  In addition, HDLP will provide to Lender
such other information concerning the withdrawal being requested as Lender may
require.  Lender will review the
materials so provided by HDLP and upon its completion of such review, will
notify HDLP and Monroe of Lender’s approval or disapproval thereof.  If Lender disapproves any thereof, Lender
will also advise HDLP and Monroe of the reason for its disapproval.  If Lender approves the withdrawal of any
proceeds from the Account as provided herein, Lender, HDLP and Monroe will
jointly instruct the Institution in writing as to the amount to be withdrawn
from the Account and how such withdrawn funds are to be paid and/or wire
transferred.

 

8.                                       Without
limitation or other rights and remedies of Lender, if an Event of Default
exists, Lender shall have the right to execute (and the Institution will honor)
withdrawal/wire transfer requests on or in regard to the Account on behalf of
Monroe pursuant to the limited power of attorney hereinabove contained.

 

9.                                       Except
as otherwise provided herein, the the available funds (i.e., collected balance
less returned items) outstanding to the credit of the Account from time to time
may not be withdrawn or applied or offset by the Institution for any claim that
the Institution may have other than the Obligations and the Institution hereby
waives all liens and all rights of offset and recoupment except for application
to the Obligations as to any funds at any time in the Account.

 

10.                                 All
fees for the services to be provided by the Institution, including any charges
by the Institution in respect of items returned for insufficient funds, shall
be paid by Monroe (and the Institution shall look solely to Monroe for such
payment).  The Institution may not draw
on or offset against funds in the Account for payment of any such fees.

 

11.                                 (a)
The Institution may resign its duties under this Agreement at any time upon not
less than ten (10) days prior written notice to Lender, Monroe and HDLP.  Monroe and Lender may, by providing not less
than ten (10) days prior written notice to HDLP and the Institution, at any
time

 

3

 

require that
another bank selected by Monroe and approved by Lender in its sole discretion
be the depository of the Account and the Institution.  Notwithstanding the foregoing, if Monroe shall fail to cause a
commercial bank selected by Monroe and approved by Lender to assume, within
fifteen (15) days following receipt of such notice, all obligations of the
Institution arising hereunder from and after the effective date of resignation
by or removal of the Institution, Lender shall have the right to engage another
bank to establish and hold the Account and perform the duties of the
Institution described herein or to establish and hold the Account itself.  Upon any such resignation or removal and assumption,
Monroe, HDLP, Lender and the new Institution will enter into such documents as
Lender may require to evidence such change of the Institution and to preserve
and protect Lender’s rights hereunder and otherwise in regard to the Account.

 

(b)           Lender, Monroe and HDLP may terminate
this Agreement at any time upon thirty (30) days joint written notice to the
Institution, or upon two (2) business days joint written notice if the
termination is for gross negligence, willful misconduct or breach of this
Agreement on the part of the Institution.

 

12.                                 Lender
shall have all rights and remedies available to a secured party under the
Uniform Commercial Code as is applicable in the State of Texas (the “Code”),
and Monroe and HDLP shall have all duties and obligations of a debtor under the
Code in regard to the Account and this Agreement.  To the extent required by the Code, Lender, Monroe and  HDLP agree that notices given at least ten
(10) days prior to the date any action is proposed to be taken pursuant to the
Code will be deemed reasonable notice.

 

13.                                 Notices
to be given to the parties hereto in regard to this Agreement shall be given to
the parties as provided in the HDLP Mortgage and at the addresses set forth
below:

 

	
  If to
  Lender:

  	
   

  	
  Beal Bank,
  S.S.B.

  
	
   

  	
   

  	
  6000 Legacy
  Drive, 4 East

  
	
   

  	
   

  	
  Plano, Texas
  75024

  
	
   

  	
   

  	
  Attn:  William T. Saurenmann

  
	
   

  	
   

  	
   

  
	
  If to
  Monroe:

  	
   

  	
  Monroe
  Outlet Center, LLC

  
	
   

  	
   

  	
  77 W. Wacker
  Drive, Suite 4200

  
	
   

  	
   

  	
  Chicago,
  Illinois  60601

  
	
   

  	
   

  	
  Attn:  Gary Skoien

  
	
   

  	
   

  	
   

  
	
  If to HDLP:

  	
   

  	
  Huntley
  Development Limited Partnership

  
	
   

  	
   

  	
  77 W. Wacker
  Drive, Suite 4200

  
	
   

  	
   

  	
  Chicago,
  Illinois  60601

  
	
   

  	
   

  	
  Attn:  Gary Skoien

  

 

14.                                 This
Agreement constitutes the complete and final agreement of the parties hereto in
regard to the subject matter hereof, and any and all prior or contemporaneous
agreements, whether written or oral, relating to the subject matter hereof, are
merged herein and superseded hereby.

 

15.                                 Unless
otherwise agreed by Lender in writing, within thirty (30) days following the
date hereof, Monroe will (subject to obtaining the approval of Lender to the
hereinafter described replacement bank, which approval may be granted or
withheld in Lender’s sole discretion) select a bank other than Beal Bank,
S.S.B. to act as the Institution, and will execute and deliver and cause such
other bank to execute and deliver to Lender, at Lender’s option, either an
amendment hereto by which such other bank will become the Institution or an
Assignment of Account and Security Agreement as required by Lender and the
funds in the Account will be transferred to such other Bank and be

 

4

 

held therein
subject to the pledge and security interest of Lender.

 

EXECUTED as of the day and year first above written.

 

	
   

  	
   

  	
  MONROE:

  
	
   

  
	
   

  	
   

  	
  MONROE OUTLET CENTER, LLC

  
	
   

  	
   

  	
  By:

  	
  Horizon
  Group Properties, L.P.,

  
	
   

  	
   

  	
   

  	
  its Manager

  
	
   

  	
   

  	
   

  	
  By:

  	
  Horizon
  Group Properties, Inc.,

  
	
   

  	
   

  	
   

  	
   

  	
  its General
  Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

5

 

	
   

  	
   

  	
  HDLP:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HUNTLEY DEVELOPMENT LIMITED PARTNERSHIP

  
	
   

  	
   

  	
  By:

  	
  Horizon Huntley,
  LLC, its General Partner

  
	
   

  	
   

  	
   

  	
  By:

  	
  Horizon
  Group Properties, L.P.,

  
	
   

  	
   

  	
   

  	
   

  	
  its sole
  Managing Member

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  Horizon
  Group Properties, Inc.,

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  its General
  Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BEAL BANK, S.S.B.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  William T.
  Saurenmann

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice
  President

  
									

 

6

 

ACKNOWLEDGMENT AND
AGREEMENT

 

The Institution hereby
acknowledges and agrees with the terms and provisions of the foregoing
Agreement, acknowledges the pledge of, and granting of a security interest in,
the Account by Monroe to Lender and agrees not to honor any drafts, withdrawal
or wire transfer requests or checks drawn on the Account unless such draft,
withdrawal or wire transfer request or check has been executed on behalf of
Lender as described above or is payable to Lender as described in paragraph 8
above.  The Institution hereby (i)
waives and releases any and all rights of set-off (for obligations other than
the Obligations) against any and all sums in or credited to the Account and
(ii) except for the security interest granted to Lender hereby, agrees the
undersigned, in its capacity as the Institution, has no claims, security
interests or liens on or against the Account or any of the funds in the
Account.

 

 

	
   

  	
  INSTITUTION:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BEAL BANK,
  S.S.B.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: 
  William T. Saurenmann

  
	
   

  	
   

  	
  Title:
     Senior Vice President

  

 

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00055-of-00352.parquet"}]]