Document:

Exhibit 10.103

 

THIS DOCUMENT WAS
PREPARED BY

AND AFTER RECORDING RETURN TO:

Jenkens & Gilchrist, a Professional Corporation

1445 Ross Avenue. Suite 3200

Dallas. Texas 75202

Attention:                                         Lawrence
C. Adams

 

FIRST
AMENDMENT TO

MORTGAGE, SECURITY AGREEMENT AND

ASSIGNMENT OF LEASES AND RENTS AND RELATED DOCUMENTS

 

THIS FIRST
AMENDMENT TO MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES AND RENTS
AND RELATED DOCUMENTS (the “Amendment”) is made and entered into this 29th
day of December, 1999, by and among HUNTLEY DEVELOPMENT LIMITED PARTNERSHIP, an
Illinois limited partnership (“Borrower”), THE PRIME GROUP, INC., an Illinois
corporation (“Guarantor”), and BEAL BANK, S.S.B., a savings bank organized
under the laws of the State of Texas (“Lender”).

 

W I T N E S S E T H:

 

A.                                    Borrower
has heretofore obtained from Lender a loan (the “Loan”) in the principal amount
of Ten Million Dollars ($10,000,000.00). 
The Loan is evidenced by that certain Mortgage Note, dated
October 27, 1999, in the stated principal amount of Ten Million Dollars
($10,000,000.00), executed by Borrower and payable to the order of Lender (the
“Note”). The Loan and the Note are secured by, among other things, that certain
Mortgage, Security Agreement and Assignment of Leases and Rents, dated October 27,
1999, executed by Borrower for the benefit of Lender and which has been
recorded in Kane County, Illinois under Document No. 1999K103679 (the
“Mortgage”).  The Mortgage encumbers
certain property as therein described, including the real property described in
Exhibit “A” attached hereto (all property covered by the Mortgage as of
the date hereof is herein referred to as the “Mortgaged Property”).

 

B.                                      As
additional security for the Loan, Borrower executed and delivered to Lender
that certain Collateral Assignment of Sales Contract, dated October 27,
1999, which has been recorded in Kane County, Illinois under Document No.
1999K103680 (the “Collateral Assignment”) which encumbers the real property
described on Exhibit “A” hereto and certain contracts and rights related
thereto as described in such Collateral Assignment.

 

C.                                      In
connection with the Loan, the Guarantor, which is affiliated with Borrower, has
executed and delivered to Lender that certain Guaranty Agreement, dated
October 27, 1999 (the “Guaranty”).

 

D.                                     A
condition to Lender’s agreement to fund the remaining $6,000,000.00 of unfunded

 

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proceeds of the Loan is that the Borrower must grant to Lender a second
priority mortgage on, and, collateral assignment of contracts relating to, the
real property described on Exhibit “B” attached hereto, all improvements
thereon and all rights, hereditaments and appurtenances relating thereto,
including, without limitation, refunds of funds held as security for certain
bonds, including, without limitation, the Series B Bonds, as such term is
defined in the First Lien Mortgage, as hereinafter defined (such real property,
improvements, rights. hereditaments and appurtenances, and all proceeds of any
thereof, together with all other property. if any, encumbered by the First Lien
Mortgage, are referred to herein collectively as the “Additional Property”).

 

E.                                       The
real property described on Exhibit “B” attached hereto plus certain
other portions of the Additional Property are encumbered by that certain
Amended and Restated Mortgage and Security Agreement, dated as of
December 14, 1999, executed by Borrower, for the benefit of U.S. Bank
Trust National Association and which is being recorded in Kane County, Illinois
(the “First Lien Mortgage”).

 

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 all of which are hereby acknowledged and confessed by
each of the parties hereto, the parties hereto hereby agree as follows:

 

1.                                        The
Mortgage and the Collateral Assignment are hereby amended to provide that the
Additional Property is hereby subjected to the Mortgage and the Collateral
Assignment and is encumbered thereby. Borrower hereby GRANTS, SELLS, ASSIGNS,
RELEASES, ALIENS, TRANSFERS, REMISES, CONVEYS AND MORTGAGES the Additional
Property to Lender and grants to Lender a security interest in the Additional
Property, subject to the exceptions to title listed on Exhibit “C”
attached hereto (the “Additional Property Permitted Encumbrances”), to HAVE AND
TO HOLD the Additional Property unto Lender, its successors and assigns
forever, and Borrower does hereby bind itself, its successors and assigns to warrant
and forever defend the title to the Additional Property unto Lender against
every person whomsoever lawfully claiming or to claim the same or any part
thereof, subject only to the Additional Property Permitted Encumbrances;
provided, however, that if Borrower shall pay in full the Indebtedness, as
defined in
the Mortgage, and shall fully perform and discharge the Obligations,
as defined in the Mortgage, then the titles, liens, security interests, estates
and rights granted by the Loan Documents, as defined in the Mortgage, shall
terminate; otherwise, the same shall remain in full force and effect. The
Mortgage is further amended to provide that the Land, as defined in the
Mortgage, now also includes the Additional Property. The Collateral Assignment
is further amended to provide that the Property, as defined in the Collateral
Assignment, now also includes the Additional Property.

 

2.                                        Borrower
covenants and agrees with Lender that the liens and security interests created
and granted by the Mortgage and the Collateral Assignment, as amended hereby,
in regard to the Additional Property, constitute second priority liens and
security interests in regard to all the Additional Property, subject to the
First Lien Mortgage and the other Additional Property Permitted Encumbrances,
and that the liens and security interests created and granted by the Mortgage
and the Collateral Assignment, as amended hereby, in regard to the remainder of
the Mortgaged Property or the Property, as the case may be, other than the Additional
Property, constitute valid, perfected first priority liens and security
interests subject only to the Permitted Encumbrances, as defined in the
Mortgage.

 

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3.                                        The
Mortgage is further modified to add the following provisions:

 

(i)                                     The
Borrower agrees with the Lender to fully and timely perform all obligations of
the Borrower under that First Lien Mortgage and the documents secured thereby
and to not allow a Default, as such term is defined in the First Lien Mortgage,
to occur;

 

(ii)                               The
Borrower agrees with the Lender not to amend or modify the First Lien Mortgage
or any of the documents secured thereby without the prior written consent of
the Lender, which consent may be granted or withheld at the sole discretion of
the Lender;

 

(iii)                               The Borrower agrees with
the Lender to promptly deliver to Lender true, correct and complete copies of
any and all notices the Borrower gives or receives in regard to the First Lien
Mortgage or any of the obligations and indebtedness secured thereby;

 

(iv)                              The
Borrower and the Lender agree that the occurrence of a Default, as defined in
the First Lien Mortgage, shall constitute an Event of Default, as defined in
the Mortgage; and

 

(v)                              The
Borrower and the Lender agree that any and all funds held in escrow in regard
to the Series B Bonds, as such term is defined in the First Lien Mortgage, are
encumbered by the Mortgage and the Borrower hereby grants to the Lender a
pledge of and security interest in all such funds, as collateral for the
Indebtedness and Obligations secured by the Mortgage, which pledge of and
security interest in all such funds is subject to the rights of the owner of
the First Lien Mortgage in regard to such funds. As and when any such funds are
released from escrow, such funds shall be immediately delivered to Lender for
application to the Indebtedness held by Lender or, if such Indebtedness cannot
be prepaid at the time such funds are released from escrow, such funds, and a
security agreement and other documents as required by Lender, will be delivered
to Lender and held by Lender as collateral for the Indebtedness and
Obligations.

 

4.                                        Lender
has not waived, and is not hereby waiving, any of the duties or obligations of
Borrower or the Guarantor under any of the Loan Documents, as such term is
defined in the Mortgage.

 

5.                                        As
an additional material inducement to Lender to enter into this Amendment,
Borrower and the Guarantor hereby affirm, confirm, ratify, renew and extend the
debts, duties, obligations, liabilities, representations, warranties, rights,
titles, security interests, liens, powers and privileges existing by virtue of
the Loan Documents, as modified hereby.

 

6.                                        Notwithstanding
anything contained herein to the contrary, and as an additional material
inducement to Lender to enter into this Amendment, Borrower and the Guarantor
hereby agree that Lender is not hereby releasing, forgiving, discharging,
impairing, waiving or relinquishing any rights, titles, interests, liens,
security interests, collateral, parties, remedies or any other matter with
respect to the Loan Documents, as modified hereby, but rather Lender is
expressly retaining and

 

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reserving
the same to their fullest extent.

 

7.                                        As
an additional material inducement to Lender to enter into this Amendment,
Borrower, on behalf of itself and its successors, assigns, legal
representatives and constituents (whether or not a party hereto), and
Guarantor, on behalf of itself its successors, legal representatives, assigns
and constituents (whether or not a party hereto) (collectively and
individually, ‘Obligors, et al”), hereby fully, finally and completely release
and forever discharge Lender and its successors, assigns, affiliates,
subsidiaries, parents, officers, shareholders, directors, employees, attorneys
and agents, past, present and future, and their respective heirs, successors  and
assigns (collectively and individually, “Lender, et al”) of and from any and
all claims, controversies, disputes, liabilities, obligations, demands,
damages, debts, liens, actions and causes of action of any and every nature
whatsoever, and waive and release any defense, right of counterclaim, right of
set-off or deduction to the payment and/or performance of the Indebtedness
and/or Obligations evidenced by the Loan Documents, which Obligors, et al now
have or may claim to have against Lender, et al arising out of, connected with
or relating to any and all acts, omissions or events occurring prior the
execution of this Amendment.

 

8.                                       As
an additional material inducement to Lender to enter into this Amendment,
Guarantor hereby represent and warrant to Lender that:

 

(a)                                  the
Loan Documents, as modified hereby, are in full force and effect, and neither
Borrower nor Guarantor has any defense, counterclaim or offset to the
performance of the obligations evidenced by the Loan Documents, as modified
hereby;

 

(b)                                 the
representations and warranties of Borrower and the Guarantor set forth in the
Loan Documents are true and correct in all material respects as of the date
hereof and are hereby reaffirmed as if such representations and warranties have
been made on the date hereof, and shall continue in full force and effect; and

 

(c)                                  this
Amendment and the Loan Documents, as modified hereby, constitute the legal,
valid and binding obligations of Borrower and the Guarantor, enforceable
against Borrower and the Guarantor in accordance with their terms.

 

The representations and warranties of Borrower and the
Guarantor contained in this Amendment shall survive the consummation of the
transactions contemplated by this Amendment.

 

9.                                        Promptly
after the execution hereof, Borrower shall cause Chicago Title Insurance
Company (the Title Company”) to issue to Lender an endorsement, in form
acceptable to Lender, to that certain Loan Policy (the ‘Original Policy”),
dated October 29, 1999 (Policy No. 1410000469123KA) issued by the Title
Company to Lender in regard to the Mortgage and being in the face amount of Ten
Million Dollars ($10,000,000.00), which endorsement will confirm that the liens
and security interests created by the Mortgage continue as valid liens in
regard to all of the Mortgaged Property, including the Additional Property, of
the priority required by the Mortgage, as modified hereby, subject only to, as
applicable, the exceptions to title contained in the Original Policy and the
Additional Property Permitted Encumbrances. On demand, Borrower shall pay all
costs and expenses incurred by Lender in connection with this Amendment and the
transactions contemplated hereby, including, without limitation, all premiums
and other costs and expenses relating to the endorsement described above, and
all of Lender’s reasonable attorneys fees and

 

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expenses.

 

10.                                  Except
as expressly provided herein, all of the terms, provisions, debts, duties,
obligations, liabilities, representations and warranties, rights, titles,
security interests, liens, powers and privileges existing by virtue of the Loan
Documents, as amended hereby, shall be and continue in full force and effect
and are hereby acknowledged by Borrower and the Guarantor to be legal, valid,
binding and enforceable in accordance with their terms. Without limitation of
the foregoing, the Guarantor covenants and agrees with Lender that neither the
entering into of this Amendment or any other document by the Lender nor the
effecting of the transactions contemplated hereby or thereby has limited or
otherwise affected the obligations of the Guarantor under the Guaranty, and the
Guarantor remains fully liable thereunder.

 

11.                                  This
Amendment shall be governed by and construed and enforced in accordance with
the laws of the State of Illinois and the laws of the United States applicable
to transactions within Illinois.

 

12.                                  This
Amendment shall be binding upon the parties hereto and their respective
successors and assigns. Nothing contained herein shall act to amend or modify
any of the provisions of the Loan Documents which restrict or prohibit
assignment or transfer. Neither this Amendment nor any of the Loan Documents
may be waived, modified or amended except by an instrument in writing signed by
the party against which the enforcement of such waiver, modification or
amendment is sought, and then only to the extent set forth in such instrument.

 

13.                                  In
addition to the documents, instruments and acts described in this Amendment
which are to be executed and/or delivered and/or taken pursuant to this
Amendment, Borrower and the Guarantor agree to execute and deliver from time to
time upon request by Lender such other documents and instruments and take such
other action as Lender may reasonably request or require to more fully and
completely evidence and carry out the transaction contemplated by this
Amendment. Without limitation of the foregoing, Borrower and the Guarantor will
cause their legal counsel to issue to Lender an opinion, in form and substance
satisfactory to Lender, confirming the existence and authority of Borrower and
Guarantor, the due execution and delivery by Borrower and Guarantor of this
Amendment and of the other documents being entered into in connection with the
transaction contemplated hereby and/or described herein and the validity,
enforceability and binding effect of all such documents and the Loan Documents,
as modified hereby.

 

14.                                  This
Amendment and the Loan Documents, embody and constitute the entire
understanding between Lender, Borrower and the Guarantor with respect to the
transactions contemplated in and/or described in this Amendment and all prior
or  contemporaneous agreements,
understandings, representations and statements, oral or written, with respect
to such transactions, are merged into this Amendment.

 

15.                                 This
Amendment may be executed in a number of identical counterparts, each of which
for all purposes is deemed an original, and all of which constitute
collectively one agreement; but for the making of proof of this Amendment, it
shall not be necessary to produce or account for more than one such
counterpart.

 

EXECUTED
as of the day and year first above written.

 

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  BORROWER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HUNTLEY
  DEVELOPMENT LIMITED

  PARTNERSHIP, an  Illinois limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Huntley
  Development Company,

  Managing General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Gary J. Skoien

  
	
   

  	
   

  	
   

  	
  Title:  Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GUARANTOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE
  PRIME GROUP, INC.,

  an Illinois corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Gary J. Skoien

  
	
   

  	
   

  	
   

  	
  Title: 
  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  BEAL
  BANK, S.S.B.,

  a state savings bank

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: William T. Saurenmann

  
	
   

  	
   

  	
   

  	
  Title: 
  Senior Vice President

  

 

6Exhibit 10.104

 

AMENDED
AND RESTATED AGREEMENT

AND ASSIGNMENT OF NET PROFITS INTEREST

 

	
  STATE
  OF ILLINOIS

  	
  §

  	
   

  
	
   

  	
  §

  	
  KNOW
  ALL MEN BY THESE PRESENTS:

  
	
  COUNTIES
  OF

  	
  §

  	
   

  
	
  McHENRY
  AND KANE

  	
  §

  	
   

  

 

THIS
AMENDED AND RESTATED AGREEMENT AND ASSIGNMENT OF NET PROFITS INTEREST (this
“Agreement”) is made and executed this 27th day of October, 1999, by
HUNTLEY DEVELOPMENT LIMITED PARTNERSHIP, an Illinois limited partnership
(“HDLP”), and HUNTLEY MEADOWS RESIDENTIAL VENTURE, an Illinois partnership
(“HMRV;” HDLP and HMRV are herein referred to collectively as “Owner”),
transferring, conveying and assigning unto BEAL BANK, S.S.B., a Texas state
savings bank (“Beal”), the Net Profits Interest (as hereinafter defined) under
the terms and conditions hereinafter set forth.

 

W I T N E S S E T H:

 

WHEREAS,
Beal has heretofore made a $16,500,000.00 loan (the “Original Beal Loan”) to
HDLP, which Original Beal Loan was evidenced by that certain Promissory Note
(the “Note”), dated December 18, 1995, in the stated principal amount of
$16,500,000.00 issued by HDLP, and payable to Beal. The Original Beal Loan and
the Note were secured by, among other things, liens and security interests
covering certain land and any improvements now or hereafter situated thereon
located in McHenry and Kane Counties, Illinois, such land being more
particularly described in Exhibit “A” attached to the Original Agreement, as
hereinafter defined.

 

WHEREAS,
as additional interest on the Original Beal Loan, HDLP has granted Beal an
interest in Net Profits, as more fully set forth in that certain Agreement and
Assignment of Net Profits Interest, dated December 18, 1995, by and
between HDLP and Beal (the “Original Agreement”).

 

WHEREAS, pursuant
to the Original Agreement, without limitation of the provisions thereof, Owner
granted Beal an interest in Net Profits arising from, among other things, (i)
the land described on Exhibit “A” to the Original Agreement, and all
improvements thereon, and (ii) the ownership interests of HDLP and any of its
affiliates in HMRV.

 

WHEREAS, affiliates
of HDLP have now acquired, and continue to own, all ownership interests in HMRV
and, accordingly, all such ownership interests are subject to the Original
Agreement.

 

WHEREAS, certain of
the land covered by the Original Agreement, as well as certain land owned by
HMRV (either beneficially or of record), has been sold with the consent of
Beal, such consent being required by the Original Agreement and the documents
securing the Original Beal

 

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Loan as a condition to the right of HDLP and HMRV to sell such land
and, as a result of such sales, the Original Beal Loan has been repaid.

 

WHEREAS,
notwithstanding the repayment of the Original Beal Loan, the Net Profits
Interest, as defined in the Original Agreement, remains in full force and
effect.

 

WHEREAS, Owner and
Beal have agreed to amend and modify the Original Agreement in certain
respects, and to effect such amendment and modification, Owner and Beal desire
to amend and restate the Original Agreement in its entirety to more accurately
reflect their agreements.

 

WHEREAS, one of the
amendments to the Original Agreement that Owner and Beal have agreed upon is
that the Original Agreement will no longer apply to the ownership interests in
HMRV, but will instead apply to the real property owned by HMRV (either
beneficially or of record). Title to some or all of such real property owned by
HMRV is held by American National Bank and Trust Company of Chicago, as trustee
under that certain Agreement, dated March 1, 1990, known as Trust
No.110482-04 (the “Trustee”), for the benefit of HMRV. Accordingly, HMRV will
cause the Trustee to join herein to confirm and agree that all of the Property,
as hereinafter defined, which is owned of record by the Trustee for the benefit
of HMRV is subject to the Net Profits Interest of Beal pursuant to this
Agreement.

 

WHEREAS,
the Original Agreement, as amended and restated hereby, now covers and
encumbers the real property described on Exhibit “A” hereto
(being all of the real property originally encumbered by the Original Agreement
and which has not previously been released therefrom by Beal), all improvements
thereon and all appurtenances thereto (collectively, the “Property”), as well
as the other properties and/or interests therein as more particularly described
hereinafter.

 

NOW,
THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Original Agreement is
hereby amended and restated in its entirety by this Agreement. In this regard,
to the maximum extent permitted by applicable law, the Owner has sold,
transferred and conveyed, and by the Original Agreement, as amended and
restated by this Agreement, does hereby sell, transfer and convey, as
additional interest earned in regard to the Original Beal Loan, the Net Profits
Interest, as hereinafter defined, to Beal in accordance with the following
terms and conditions which amend and restate the terms and conditions of the
Original Agreement in their entirety:

 

1.                                      Assignment
of Net Profits Interest. Owner does hereby confirm and ratify the
assignment made by the Original Agreement to Beal, as additional interest
earned in regard to the Original Beal Loan, of an interest in Net Profits, as
hereinafter defined, of thirty-five percent (35%) from the effective date of
the Original Agreement (being December 18, 1995). The interest of Beal in
the Net Profits, as such interest exists from time to time, is herein referred
to as the “Net Profits Interest”. As used in this Agreement, the term “Net
Profits” shall mean the following:

 

(a)                                  With
respect to a sale, transfer, assignment or conveyance of all or any portion of
the Property other than as provided in subparagraphs (b), (c) or (d) of this
Section 1 (a “Sale”), the gross Sale price paid for the Property or portion
thereof, less the following: (i) real estate or brokerage commissions, if any,
paid by Owner to a bona fide, independent third-party real
estate agent or broker not to exceed the then existing market rate (the “Market
Rate”) (and Owner must satisfy Beal, in the

 

2

 

exercise of its
reasonable business judgment, that the commission in question is at the then
Market Rate); (ii) reasonable and normal closing costs and other expenses paid
to independent third parties by Owner or disbursed out of the proceeds of the
Sale, including, without limitation, escrow fees, recording fees, attorneys’
fees, title insurance premiums and surveyors’ fees and such prorations as are
customary in connection with the sale of real property such as the Property;
(iii) the establishment of reasonable reserves for approved capital costs
related to the portion of the Property which is the subject of such Sale, (iv)
the outstanding principal balance of the Loan, as hereinafter defined, if any
then exists, together with all accrued but unpaid interest thereon, to the
extent the proceeds of such Sale are used to pay such Loan or are reserved and
set aside, in an amount and a manner approved by Beal in writing, for the
payment of such Loan (the amounts so set aside and reserved with the written
approval of Beal as provided herein are referred to herein as the “Loan Reserve
Amounts”); (v) the amount of the Approved Contributions as of
September 30, 1999, as set forth in Section 1(i) hereafter (subject to
adjustment as provided in such Section 1(i)) and any capital contributions made
by Owner from and after October 1, 1999, to the extent such capital
contributions are approved by Beal, in the exercise of its reasonable business
judgment, which, as of the date the calculation of Net Profits in question is
being made, have not previously been paid or returned to Owner and (x) are used
to make or maintain improvements to the Property pursuant to a capital improvement/maintenance
budget approved by Beal in writing, (y) are used to cover deficiencies in the
Owner’s operating budget for the Property approved by Beal in writing, or (z)
are utilized for any other purpose agreed to in writing by Beal (such capital
contributions so made by Owner from and after October 1, 1999, as
described in clauses x, y and z and which have not been paid or returned to
Owner [including the amount of Approved Contributions as of September 30,
1999 described in Section 1(i) hereafter, subject to adjustment as provided in
such Section 1(i)], are referred to in this Agreement as the “Approved
Contributions”); and (vi) an annual return on such Approved Contributions
calculated on the basis of a fluctuating interest rate (the “Interest Rate”) equal
to the prime rate of interest for commercial borrowings published from time to
time in the Wall Street Journal in its “Money Rates” column, plus one percent
(1%), from the later of January 1, 1999 or the date such Approved
Contributions are actually paid by Owner until repaid to Owner.

 

(b)                                 With
respect to a loan secured by liens on all or any portion of the Property (any
such loan hereinafter obtained by Owner, with the written consent of Beal, as
hereinafter described, including any loan which results from a refinancing of
all or any part of any such Loan , which is in existence at the time in
question is referred to herein as a “Loan”), the gross proceeds of such Loan,
less the following: (i) reasonable fees, including commitment fees, brokerage
fees and finance charges, paid to independent third parties by Owner or
disbursed out of the proceeds of such Loan in connection with the Loan in
question; (ii) reasonable and normal closing costs and other expenses paid to
independent third parties by Owner including, without limitation, title
insurance premiums, appraisal fees, escrow fees, recording fees and attorney’s
fees incurred in connection with the Loan in question; (iii) in regard to a
refinancing of a Loan, the outstanding principal balance of the Loan being
refinanced, together with all accrued but unpaid interest thereon, to the
extent the proceeds of such refinancing are used to pay any such Loan; (v) the
Approved Contributions made by

 

3

 

Owner, together with an
annual return on such Approved Contributions calculated on the basis of the
Interest Rate from the later of January 1, 1999 or the date such Approved
Contributions are actually paid by Owner until repaid to Owner.

 

(c)                                  With
respect to an exchange of all or any portion of the Property for property of
any kind (an “Exchange”), the gross fair market value of the Property at the
time of the Exchange as determined as provided in Section 12 hereof (but in no
event less than the gross fair market value of the Property as specified in the
agreement of Exchange), less the following: (i) real estate or brokerage
commissions, if any, paid by Owner in connection with such Exchange to a bonafide, independent
third-party real estate agent or broker not to exceed the Market Rate; (ii)
reasonable and normal closing costs and other expenses paid to independent
third parties by Owner in connection with such Exchange, including, without
limitation, escrow fees, recording fees, attorneys’ fees, title insurance premiums
and surveyors fees and such prorations as are customary in connection with the
conveyance of real property such as the Property; (iii) the outstanding
principal balance of the Loan, if any then exists, together with all accrued
and unpaid interest thereon, to the extent the amount of such Loan is reduced
as an encumbrance on the portions of the Property remaining covered hereby
subsequent to such Exchange as a result of such Exchange; (iv) the amount, if
any, by which the outstanding principal balance and accrued interest on
indebtedness then encumbering the property received by Owner as a result of
such Exchange exceeds the amount determined pursuant to clause (iii) above; and
(v) the Approved Contributions made by Owner, together with an annual return on
such Approved Contributions calculated on the basis of the Interest Rate from
the later of January 1, 1999 or the date such Approved Contributions are
actually paid by Owner until repaid to Owner.

 

(d)                                 With
respect to a condemnation or taking of all or any portion of the Property as a
result of the exercise of the power of eminent domain, including a voluntary
sale either under the threat of condemnation or while an action or proceeding
is pending for the purpose of such taking (a “Condemnation”), the gross
proceeds paid by the condemning authority as a result of the Condemnation, less
the following: (i) all reasonable and normal costs and expenses paid to
independent third parties by Owner in connection with the Condemnation,
including reasonable attorneys’ fees, appraisal fees, court costs and expert
witness fees; (ii) the reasonable and necessary costs and expenses paid by
Owner (either out of its own funds or out of the Condemnation proceeds or
award, however, if Owner has provided its own funds for this purpose, Owner
shall be entitled to recover such funds only one time) in restoring and/or
repairing the Property following the Condemnation; (iii) in the event of a sale
in lieu of condemnation, the reasonable closing costs paid to independent third
parties by Owner including, without limitation, escrow fees, recording fees,
attorneys’ fees and title insurance premiums; (iv) as applicable, the
outstanding principal balance of the Loan, if any then exists, together with
all accrued but unpaid interest thereon, to the extent the proceeds of such
Condemnation are used to pay such Loan, or the Loan Reserve Amounts arising
from such Condemnation; (v) the Approved Contributions made by Owner, together
with an annual return on such Approved Contributions calculated on the basis of
the Interest Rate from the later of January 1, 1999 or the date such
Approved Contributions are actually paid by Owner until repaid to Owner.

 

4

 

(e)                                  With
respect to a sale by Owner (a “Bond Sale”) of any or all of those certain
$14,000,000 Tax Increment Allocation Revenue Bonds (Huntley Redevelopment
Project), Series B-1995 and $24,405,000 Tax Increment Allocation Revenue Bonds
(Huntley Redevelopment Project) Series C-1995 (collectively, the “Bonds”), the
gross proceeds of such Bond Sale, less (i) reasonable fees, including
commitment fees, brokerage fees and finance charges, paid to independent third
parties by Owner or disbursed out to the proceeds of such Bond Sale in
connection with the Bond Sale; (ii) reasonable and normal closing costs and
other expenses paid to independent third parties by Owner including, without
limitation, title insurance premiums, appraisal fees, escrow fees, recording
fees and attorney’s fees; (iii) as applicable the outstanding principal balance
of the Loan, if any then exists, together with all accrued but unpaid interest
thereon, to the extent the proceeds of such Bond Sale are used to pay such
Loan, or the Loan Reserve Amounts arising from such Bond Sale; and (iv) the
Approved Contributions made by Owner, together with an annual return on such
Approved Contributions calculated on the basis of the Interest Rate from the
later of January 1, 1999 or the date such Approved Contributions are
actually paid by Owner until repaid to Owner.

 

(f)                                    With
respect to a sale (an “Issuance of Additional Bonds”) of any tax increment
financing bonds (other than the Bonds) hereafter issued with respect to any of
the Property, the gross proceeds received by Owner out of such Issuance of
Additional Bonds less (i) the amount of qualified project costs, as determined
by or defined in the bond ordinance and documents relating to such Issuance of
Additional Bonds, paid from such gross proceeds, (ii) all reasonable and normal
costs paid by Owner to unrelated third parties in connection with the Issuance
of Additional Bonds and (iii) the Approved Contributions made by Owner,
together with an annual return on such Approved Contributions calculated on the
basis of the Interest Rate from the later of January 1, 1999 or the date
such Approved Contributions are actually paid by Owner until repaid to Owner.

 

(g)                                 With
respect to all other income from the Property (including, without limitation,
any refund of any sums deposited or placed in escrow in connection with any
Bonds, including, without limitation, any of the $2,940,000.00 which has been
paid in regard to the Series B-1995 Bonds referenced in (e) above and any
reimbursement to Owner of costs incurred in connection with any of the Property
from the proceeds of any Bonds or Bond Sale or from any tax increment), the
excess of Net Cash Flow, as hereinafter defined, over all sums then currently
due and paid on the Loan, if any then exists, and amounts thereof paid to Owner
in return of the Approved Contributions and the return thereon as provided
above. As used in this Agreement, the term “Net Cash Flow” shall mean the gross
cash receipts of any kind or description from the Property (excluding the
proceeds of a Sale, Loan, Exchange, Condemnation, Bond Sale or Issuance of
Additional Bonds and the proceeds of insurance policies covering the Property
to the extent such insurance proceeds are made available to and are used to
restore or rebuild the Property), less:

 

(i)                                     all
costs of repairing (in excess of the proceeds of insurance policies covering
the Property to the extent such insurance proceeds are made available to and

 

5

 

are used to cover the costs of such repair,
restoration or rebuilding), operating (including wages and salaries paid by
Owner which are direct Property expenses and which are included on Owner’s
annual operating budget to the extent such operating budgets are approved by
Beal and no others, insurance costs, utility charges, taxes, but no payments on
promissory notes of Owner relating to the Property or secured by liens covering
any portion of the Property), maintaining, replacing, and preserving the
Property to the extent paid in cash during such period, and working capital and
capital improvement/maintenance reserves as approved by Beal; provided,
however, that to the extent any such expenses are paid out of escrows or
reserves which had previously been established, the amounts paid from such
escrows or reserves shall not be deducted in computing Net Cash Flow so long as
and to the extent the amounts in such escrows or reserves were previously
deducted from gross cash receipts in computing Net Cash Flow or were previously
deducted in any other calculation of Net Profits pursuant to this Agreement;
and

 

(ii)                                  amounts
paid by Owner into escrow or otherwise for insurance and taxes.

 

In computing Net
Cash Flow, no deduction shall be made for depreciation or amortization as such
terms are used for accounting or federal income tax purposes, or any other
non-cash expenditure.

 

(h)                                 The
term “Net Profits in Appraised Value” shall mean the gross fair market value of
the Property (including all improvements constructed thereon) and the Bonds
(assuming an Owner then owns any of the Bonds), determined in accordance with
Section 12 hereof, less (i) the outstanding principal balance of the Loan, if
any then exists, together with accrued and unpaid interest thereon; (ii) the
reasonable fees and expenses of any appraisers referenced in Section 12 hereinbelow;
and (iii) the Approved Contributions, together with a return on such Approved
Contributions calculated on the basis of the Interest Rate from the later of
January 1, 1999 or the date such Approved Contributions are paid by Owner
until repaid to Owner.

 

 (i)                                  Provided
Owner substantiates to Beal’s satisfaction, Additional Contributions made and
amounts paid in return thereof for the period from January 1, 1999, to and
including September 30, 1999, Owner and Beal hereby agree that the amount
of Approved Contributions of Owner is $1,502,614.50 as of September 30,
1999, and such amount includes the amounts paid for or in connection with the
purchase of the partnership interests in HMRV from Huntley Meadows Residential
Limited Partnership and also includes interest (calculated on the basis of the
Interest Rate) accrued thereon through December 31, 1998, as permitted by
this Agreement. On request by either Owner or Beal made from time to time,
Owner will provide to Beal access to Owner’s records concerning the Property to
enable Beal to review and/or audit such records to determine the amount of
Approved Contributions of Owner subsequent to and up to the date specified in
the request in question. In such case, Owner and Beal will use reasonable
efforts to reach an agreement on the amount of Approved Contributions incurred
subsequent to September 30, 1999 and up to the date specified in the
request in question within thirty (30) days following the date of

 

6

 

the request
from Owner or Beal for such determination and Beal’s receipt from Owner of all
information Beal reasonably requests in connection therewith. Owner will not
make any capital contributions which it will request Beal approve as an
Approved Contribution any earlier than reasonably necessary and Owner will
notify Beal in writing, promptly following the making of each such capital
contribution, of the date such capital contribution is made and the reasons and
uses therefor.

 

(j)                                     In
determining Net Profits in accordance with the terms of this Agreement, Owner
shall provide to Beal by the 20th day following the end of each calendar
quarter during the term hereof a quarterly itemization and schedule of the
amount of all gross receipts received and the reasonable costs and expenses
paid by Owner in the immediately preceding quarter and which Owner believes can
be deducted in the calculation of Net Profits pursuant to this Agreement. The
quarterly itemization and schedule shall be in writing and shall be evidenced
by such certificates, affidavits, bills and invoices as Beal may reasonably
require. Notwithstanding anything to the contrary contained herein, in the
event of dispute as to whether any item of income, cost or expense should be
included or excluded on such itemization as a proper item of income, cost or
expense, the reasonable determination of Beal to include or exclude such
item(s) shall be binding and conclusive on Owner.

 

(k)                                  Notwithstanding
anything to the contrary contained in this Section 1 or elsewhere in this
Agreement (except as provided below in this paragraph), it is understood and
agreed that neither Owner nor Beal shall be entitled to receive, nor shall
either receive, payment of Net Profits, if any, unless and until (i) first, any
Loan held by Beal, including all accrued but unpaid interest thereon, is fully
paid and any amounts which might otherwise constitute Net Profits shall be paid
in reduction of such Loan (such amounts applied first to accrued but unpaid
interest and then to the principal balance thereof), and (ii) second, Owner has
received the return of the Approved Contributions, together with an annual
return thereon calculated on the basis of the Interest Rate as provided above.
If (x) all Loans held by Beal, including all accrued but unpaid interest
thereon, is/are fully paid and (y) Owner has received the return of the
Approved Contributions, together with an annual return thereon calculated as
provided above, then Owner and Beal shall be entitled to receive payment of Net
Profits. The foregoing shall not apply to any Net Profits to be paid to Beal
pursuant to item (a) of Section 6 hereof.

 

(1)                                  Notwithstanding
anything contained herein to the contrary, Owner and Beal agree that the loan
(the “New Beal Loan”), in the maximum principal amount of $10,000,000.00, which
is being made by Beal to Owner concurrently with the execution hereof, will not
be considered a Loan, and the proceeds of such New Beal Loan will not be
considered in calculating Net Cash Flow, for the purposes of this Agreement,
even though such New Beal Loan is being secured by liens on the Property.
Proceeds of such New Beal Loan may be utilized by Owner to make capital
contributions which Owner may seek to have designated as Approved Contributions
as provided herein.

 

2.                                      Reduction
in Net Profits Interest.  Notwithstanding the foregoing, Beal may elect, in its sole
discretion, to accept a Net Profits Interest of less than the maximum amount
which Beal is

 

7

 

entitled to as outlined
in Section 1 hereof.

 

3.                                      Bank
Account. Owner shall maintain all of its accounts relating to the
Property and the Bonds, including, but not limited to, savings, checking and
operating accounts, in a financial institution or institutions selected by
Owner but as to which Owner notifies Beal in writing. No funds shall be
deposited in such accounts except funds of Owner relating to the Property or
the Bonds.

 

4.                                       Payment
of Net Profits Interest.

 

(a)                                  In
the event of a Sale, Owner shall pay to Beal on the date of the closing of such
Sale an amount equal to the Net Profits from such Sale multiplied by the Net
Profits Interest of Beal, unless such Sale is made (subject to Beal’s approval
as hereinafter specified), partially or wholly, by means of the taking back by
Owner of a purchase money note, in which case Beal’s Net Profits Interest shall
apply to all sums, including interest, received and shall be paid as received.
In such event Owner shall endorse, execute and deliver to Beal such documents
and instruments, including, without limitation, the purchase money note
(endorsed as reasonably required by Beal) and a collateral transfer of note and
lien, as Beal may reasonably require, to evidence and secure its Net Profits
Interest in regard to such purchase money note and otherwise. It is understood
and agreed that a sale of the Property by Owner which will involve the issuance
of a purchase money note must first be approved in writing by Beal in its sole
discretion. Nothing herein contained will limit or otherwise affect any of
Beal’s rights under the Mortgages, as hereinafter defined, securing the
obligations of Owner hereunder.

 

(b)                                 Upon
each Loan closing, Owner shall pay to Beal on the date of the closing of such
Loan, an amount equal to the Net Profits from such Loan multiplied by the Net
Profits Interest of Beal. Owner may not obtain a Loan, other than refinancing
of an existing Loan, without first obtaining the written consent of Beal, which
may be granted or withheld at the sole discretion of Beal. If a Loan is so
obtained by Owner with such consent of Beal, Owner may elect from time to time
to refinance such Loan without obtaining the prior written consent of Beal,
provided (i) Owner shall give Beal thirty (30) days prior written notice of
Owner’s intent to refinance the Loan; (ii) concurrently with the closing of
such refinancing Owner shall pay the outstanding principal balance of the Loan
being refinanced and accrued and unpaid interest thereon and other costs, due
in regard thereto; (iii) on the date of the closing of such refinancing any
default or event or condition which, with the giving of notice, the passage of
time, or both, could mature into a default hereunder or under any Mortgage
shall have been cured; (iv) this Agreement shall not terminate but shall
continue in full force and effect until otherwise terminated as provided in
Section 6 hereof; and (v) Beal is paid its share of Net Profits from such
refinancing Loan.

 

(c)                                  In
the event of an Exchange, Owner shall pay to Beal in cash on the date of the
closing of such Exchange, an amount equal to the Net Profits calculated in
accordance with the provisions of Section 1(c) hereof multiplied by the Net
Profits Interest of Beal.

 

(d)                                 In
the event of a Condemnation, after application of the Condemnation award
pursuant to the terms of the documents securing any then existing Loan, Owner
shall pay to Beal on the date such Condemnation award is paid or on the date of
the closing of a sale under threat of taking, an amount equal to the Net
Profits from such Condemnation multiplied by the Net Profits Interest of Beal.

 

8

 

(e)                                  In
addition to all other payments due to Beal hereunder, Owner shall pay to Beal
on the twenty-fifth (25th) day of each month during the term of this Agreement
an amount equal to Net Cash Flow realized during the immediately preceding
calendar month multiplied by the Net Profits Interest of Beal.

 

(f)                                    Subject
to the terms and conditions of this Agreement, Owner shall act in good faith in
entering into a Sale, Loan, Refinancing, Exchange, Condemnation, Bond Sale or
Issuance of Additional Bonds and not with the intent to deprive Beal of its
interest in Net Profits and shall not effect any such transaction with any
person or entity affiliated directly or indirectly with any Owner unless such
transaction is consented to by Beal in writing, which consent may be granted or
withheld at the sole discretion of Beal. Owner shall make full disclosure to
Beal of all facts respecting the Sale, Refinancing, Exchange, Condemnation,
Bond Sale or Issuance of Additional Bonds prior to the closing thereof.

 

(g)                                 Owner
shall also pay to Beal an amount equal to the Net Profits in Appraised Value on
the applicable dates set forth in Section 6(a) hereinbelow.

 

(h)                                 In
the event of an Issuance of Additional Bonds, Owner shall pay to Beal an amount
equal to the Net Profits from the Issuance of Additional Bonds multiplied by
the Net Profits Interest of Beal concurrently with Owner’s receipt of such Net
Profits.

 

(i)                                     In
the event of a Bond Sale, Owner shall pay to Beal on the date of the closing of
such Bond Sale the Net Profits of such Bond Sale multiplied by the Net Profits
Interest of Beal.

 

5.                                      Release
of Lien.  Upon payment to Beal
of (a) its Net Profits Interest pursuant to Section 4 hereof upon a Sale, Loan,
Exchange or Condemnation with respect to some or all of the Property and (b)
all sums required to be paid in regard to any Loan then held by Beal (including
the principal balance thereof and all accrued unpaid interest thereon), Beal
shall release that portion of the Property for which payment is made from the
lien of that certain Mortgage, Security Agreement, Assignment of Leases and
Rents, and Financing Statement (as previously amended, the “HDLP Mortgage”), dated
December 18, 1995 and recorded as Instrument No. 95K078402 in the Records
of Kane County, Illinois, and as Document No. 95R057507 in the Records of
McHenry County, Illinois, and that certain Mortgage (the “HMRV Mortgage;” the
HDLP Mortgage and the HMRV Mortgage are referred to herein collectively as the
“Mortgages”), dated December 1, 1997 and record as Document No. 97K086255
in the Records of Kane County, Illinois, securing, among other things, the
obligations of Owner hereunder; provided, however in regard to any such Loan,
Beal will subordinate (rather than release) the applicable Mortgage to the
documents securing such Loan provided the conditions specified in Section 6 are
satisfied. Nothing contained in this Section shall be deemed to relieve the Owner
of its obligations under Sections 6 and 7 hereof or to require Beal to permit
partial releases of portions of the Property from either Mortgage, except to
the extent specifically provided in the Mortgages. In connection with any Bond
Sale as permitted hereby, provided all sums due to Beal as a result thereof are
paid, Beal will release its liens and security interests in regard to the Bonds
which are the subject of such Bond Sale.

 

6.                                      Term
and Termination of Net Profits Interest. Beal’s Net Profits Interest
shall survive the payment in full of all Loan(s) held by Beal and shall only
terminate on the earliest to occur of (a) December 18, 2000; provided,
however, if the term of the New Beal Loan is extended to

 

9

 

mature on October 31, 2001, the foregoing date
shall also be considered extended to October 31, 2001, when Owner shall
pay to Beal the Net Profits in Appraised Value determined as of such time
multiplied by the Net Profits Interest of Beal, (b) the payment to Beal of its
Net Profits Interest arising out of a Sale or series of Sales of portions of
the Property resulting in all of the Property being sold, Exchange or total
Condemnation as provided in Section 4; however, this Agreement shall continue to
apply to the Bonds (to the extent an Owner has an interest in the Bonds) and
the Issuance of Additional Bonds (to the extent an Owner is entitled to any
benefit from the Issuance of Additional Bonds), or (c) in accordance with the
Buy/Sell provisions of Section 13; provided, however, and notwithstanding
anything to the contrary contained herein, in no event shall the Net Profits
Interest of Beal terminate until Beal has received payment in full of its
interest in Net Profits pursuant to the provisions of Section 4 hereinabove or
as provided below in this Section 6. Owner shall not be entitled to a release
from the Mortgages securing the Net Profits Interest of Beal, except as
provided in Section 5, until the termination of this Agreement. However, if
Beal no longer holds any Loan and this Agreement has not been terminated as
otherwise provided herein, Beal shall agree to subordinate the Mortgages to the
lien of the mortgage securing the new Loan sq long as (a) such holder shall
agree to give Beal (i) notice of any default by the Owner under such loan, (ii)
ten days to cure any default or failure of Owner to perform, without the
obligation on Beal to cure such default or failure to perform, and (iii) an
option to purchase the note held by the lender in the event of a default
thereunder by Owner for a purchase price equal to the then principal balance
thereof plus all accrued and unpaid interest thereon and all unreimbursed
reasonable costs and expenses incurred by the lender as a result of such
default and which would otherwise be due from Owner to such lender, (b) such
new Loan shall be obtained by Owner in accordance with the provisions of this
Agreement and (c) the loan documents for such new loan do not conflict with the
provisions or conditions of this Agreement or either Mortgage and are approved
by Beal, which approval will not be unreasonably withheld or delayed.

 

7.                                      Approval
by Beal.  Notwithstanding
anything to the contrary contained in this Section or elsewhere in this
Agreement, Owner shall not enter into an agreement for Sale of all or part of
the Property, or an Exchange of all or part of the Property or any agreement
concerning the sale or other transfer or encumbrancing of the Bonds, unless the
proposed form and substance of such agreement shall have been previously
submitted to and approved in writing by Beal in its sole reasonable discretion;
provided, however, if the transaction in question involves any person or entity
directly or indirectly related to an Owner, Beal may grant or withhold its consent
in Beal’s sole discretion. Each agreement for an Exchange shall set forth the
gross fair market value of the Property. Beal shall have fifteen (15) days from
the date of such submission within which to approve or disapprove the form and
substance of any such agreement and if no notice is given by Beal then such
agreement shall be deemed to have been approved. In addition to the foregoing,
Beal shall have the prior right to approve the terms and substance of any
agreement entered into by Owner with a condemning authority in connection with
a Condemnation. Notwithstanding anything contained in this Agreement to the
contrary, (i) Owner may not elect to sell the Property or any portion thereof,
or all or any portion of the Bonds, on a basis in which Owner, as seller, will
receive a promissory note in partial payment of the purchase price therefor or
on a basis in which as a result of such sale any Loan held by Beal is not paid
in full without first obtaining Beal’s prior written consent thereto, which may
be granted or withheld at the sole discretion of Beal and (ii) if Owner does
effect a Sale or Exchange without obtaining Beal’s prior written consent
thereto, without limitation of any other rights of Beal, Beal shall be paid as
a result thereof the greater of the amount it would otherwise receive as a
result of such Sale or Exchange or its share of Net Profits in Appraised Value
of the portion of the Property which was the subject of such Sale or Exchange
as of the date of such Sale or Exchange.

 

10

 

8.                                      No
Guarantees. Beal and Owner acknowledge and agree that the Owner does
not warrant or guarantee that there will be any Net Profits of any kind with
respect to the Property, nor has Beal required that any fixed amount of Net
Profits be paid to Beal in connection with this Agreement, and that whether
there will be any Net Profits is extremely speculative and contingent on
events, circumstances and factors beyond the control of Owner and Beal.

 

9.                                      Rights
in Property. Except to the extent granted by the Mortgages and the
other documents which secure the obligations of Owner hereunder, Beal does not
have, and nothing contained in this Agreement shall be construed to grant or to
vest in Beal, title in or to the Property or the Bonds.

 

10.                               Covenants
of Owner. Owner represents, warrants, covenants, and undertakes that so
long as Beal has a Net Profits Interest in the Property Owner shall:

 

(a)                                  observe
and perform each and every provision of any mortgage (including, without
limitation, the Mortgages) or other security instrument which relates to the
Property, or any part thereof, and will promptly notify Beal in writing if
Owner receives a notice of default or a notice which gives Owner an opportunity
to cure a default or failure to perform under or pursuant to such mortgage or
other security instrument, and Owner agrees to cure any default or failure to
perform under such mortgage or other security instrument within the time
periods required therein;

 

(b)                                 allow
Beal, at Beal’s election and in its discretion, to cure any default or failure
to perform under any mortgage, other security instrument or note secured by the
lien created thereunder covering the Property or the Bonds (but Beal shall have
no obligation to do so); provided, however, if any grace period exists in
regard to the subject default, Owner may first seek to cure such default itself
but if such default is not cured by no less than ten (10) days prior to the
expiration of such cure period, Beal shall have the right, but not the
obligation, to attempt to cure such default. Any advances made by Beal to cure
any default or failure to perform shall bear interest from the date of such
advance at a rate of interest equal to the lesser of;

 

(i)                                     fifteen
percent (15%) per annum, or

 

(ii)                                  the
highest rate permitted by applicable law,

 

and shall be repayable by Owner to Beal upon demand by Beal;

 

(c)                                  not
take any action or fail to take any action that would cause the Property or the
Bonds to decrease in value; provided, however, Owner will not be liable for bona fide errors
in business judgement made by Owner in good faith;

 

(d)                                with
respect to any Loan, give to Beal a copy of the commitment for such Loan;

 

(e)                                 give
Beal written notice that Condemnation proceedings have been commenced or the
threat of Condemnation has been asserted within five (5) days after Owner has

 

11

 

been notified thereof;

 

(f)                                    maintain
insurance upon and relating to the Property in accordance with the Mortgages;

 

(g)                                not
encumber the Property or the Bonds in any manner without the written consent of
Beal, except with respect to a refinancing of a Loan otherwise satisfying the
requirements of Section 4(b) hereof, which refinancing shall not require the
written consent of Beal;

 

(h)                                except
as herein provided, not sell, transfer, convey, refinance, exchange, or
otherwise dispose of the Property or the Bonds, or any part of any thereof or
any interest therein, without the prior written consent of Beal;

 

 (i)                                  not
collect or receive any fee or commission in connection with a Sale or an
Exchange of any of the Property, any Loan, or any sale, transfer or
encumbrancing of the Bonds;

 

(j)                                     at
any time hereafter, upon reasonable advance notice, permit Beal or its authorized
representatives, from time to time, during business hours to inspect, audit,
review, and make copies of all contracts, invoices, canceled checks, and all
books and records of Owner pertaining to the acquisition, refurbishing,
operation, and construction of the Property, or pertaining to the Bonds;

 

(k)                                  represent
and warrant that (i) Owner is duly authorized to execute and deliver this
Agreement, and all other documents executed in connection herewith and is and
will continue to be authorized to perform its obligations under this Agreement
and such other agreements, (ii) that no additional consent, approval,
authorization or order of any court or governmental authority or third party is
required in connection with the execution and delivery by Owner of this
Agreement, and the other documents executed in connection herewith, or to
consummate the transactions contemplated hereby or thereby, and (iii) that this
Agreement, the Mortgages, and the other documents executed or to be executed in
connection herewith, are the legal, valid and binding obligations of Owner,
enforceable in accordance with their respective terms, except as limited by
bankruptcy, insolvency or other laws of general application relating to the
enforcement of creditors’ rights.

 

11.                               Additional
Distributions.  Owner shall not
receive, except as provided by this Agreement, any asset, cash, property,
profits or capital arising from the Property or the Bonds or relating to the
Property or the Bonds prior to the termination of this Agreement unless all
obligations of Owner, including Owner’s obligations to Beal under the Mortgages
and this Agreement have been paid.

 

12.                               Determination
of Fair Market Value.  For
purposes of this Agreement, the fair market value of the Property and/or the
Bonds (to the extent any Bonds are owned by either Owner) shall be agreed upon
by Beal and Owner, provided that, if Beal and Owner are unable to agree as to
such fair market value within ten (10) days of a request by either party to
reach such agreement, either Beal or Owner may select an appraiser and shall
notify the other party in writing of the identity

 

12

 

of such appraiser; provided, however, no appraiser
that has performed appraisal services for either Owner or Beal in regard to the
Property may act as an appraiser pursuant to this Section unless each of Owner
and Beal, each acting in its sole discretion, consents thereto in writing. If
the other party fails, within twenty (20) days after the date such written notice
is delivered, to select an additional appraiser, the appraiser of the party
giving such notice shall act as the sole appraiser in determining the fair
market value of the property in question. If the other party, within such
twenty (20) day period, selects a second appraiser, the two appraisers shall
determine the fair market value of the property in question. If within twenty
(20) days after the selection of the second appraiser, the two appraisers fail
to agree on the fair market value of the property in question, and if the
higher appraisal submitted by the two appraisers is less than five percent (5%)
greater than the lower appraisal submitted, the two appraisals shall be
averaged and such average shall be deemed the fair market value of the property
in question. If such higher appraisal is five percent (5%) or more greater than
such lower appraisal, the two appraisers shall select a third appraiser within
thirty (30) days after the selection of the second appraiser (which third
appraiser shall be an appraiser who has not previously provided appraisal
services for either Owner or Beal), and the appraisals of all three appraisers
shall be averaged and such average shall be deemed the fair market value of the
property in question. If such third appraiser cannot be agreed upon by the
other two appraisers within such thirty (30) day period, the third appraiser
shall be selected by the Senior Judge of the United States District Court for
the Northern District of Illinois. Each appraiser thus selected shall be a
member of the American Institute of Real Estate Appraisers (or any successor
association or body of comparable standing if such Institute is not then in
existence), shall be disinterested and shall be qualified to appraise real
estate and other property of the type covered by this Agreement situated in the
vicinity of the Property, and shall have been actively engaged in the appraisal
of similar real estate and other property situated in the vicinity of the
Property for a period of not less than five (5) years immediately preceding his
appointment. The decisions of the appraiser(s) as to fair market value of the
property in question shall be binding upon Beal and Owner and their respective
successors and assigns. The appraiser(s) shall deliver a written report of such
appraisal to the Owner and Beal. The reasonable fees and expenses of the
appraisers making such appraisal shall be an item of expense to be utilized in
the calculation of Net Profits in Appraised Value as set forth in Section 1(h)
hereinabove.

 

13.                               Buy/Sell.
At any time after the date hereof, the Owner or Beal may make an offer (any
such offer is referred to herein as the “Call”) to the other party to purchase
the other party’s entire interest in the Property and the Bonds (to the extent
any Bonds are owned by either Owner) to the extent this Agreement still applies
to any thereof (collectively, the “Total Property”) or, in regard to Beal, its
Net Profits Interest, and, if applicable, repay all Loan(s) held by Beal, if
any, including, without limitation, all accrued and unpaid interest thereon in
full (the offering party shall be termed the “Offeror” and the party to whom
the Call is made shall be termed the “Offeree”). A Call shall state a cash
price to be paid for the Total Property. The Offeree shall have fifteen (15)  days
from the date of such Call in which to decide to purchase the Total Property,
or, as appropriate, the Net Profits Interest of the Offeror, and repay all
Loan(s) held by Beal, if any, and all accrued interest in full, on the same
terms as the Call, it being understood that the purchasing party under a Call
will be obligated to pay the selling party the amount the selling party would
receive pursuant to this Agreement if a sale of the Total Property was effected
for the price and on the terms specified in the Call. Should the Offeree within
said period fail to notify the Offeror of its intent to purchase the Total
Property, or, as appropriate, the Offeror’s Net Profits Interest, on said terms
and repay all Loan(s) held by Beal, if any, and all accrued interest in full,
the Offeree shall be conclusively presumed to have accepted the Call and shall
be bound to sell the Total Property, or, as appropriate,

 

13

 

its Net Profits Interest,
to the Offeror on said terms and conditions. The purchasing party shall make a
twenty-five thousand dollar ($25,000.00) earnest money deposit with the selling
party and have six (6) months from the later of (i) the receipt of notice of
acceptance of the Call or (ii) the end of the above described fifteen (15) day
period in which to consummate said purchase and, if applicable, repay all
Loan(s) held by Beal, if any, and all accrued interest in full. Should the
purchasing party fail to consummate the purchase of the Total Property, or, as
appropriate, the selling party’s Net Profits Interest, and repay all Loan(s)
held by Beal, if any, and all accrued interest in full, then the selling party
shall retain the twenty-five thousand dollar ($25,000.00) earnest money deposit
and shall at its option have the right to (i) purchase the Total Property, or,
as appropriate, the selling party’s Net Profits Interest, on the same terms and
conditions as the Call and repay all Loan(s) held by Beal, if any,  and all accrued interest, provided said
purchase and Loan repayment is consummated within six (6) months after the
original purchasing party’s failure to consummate the purchase, (ii) continue
with all Loan(s) held by Beal, if any, and this Agreement or, (iii) enforce specific
performance of the obligations of the defaulting party.

 

14.                               Assignment.
Beal may not assign or encumber all or any part of its rights under this
Agreement without obtaining Owner’s consent thereto; provided, however, Beal
shall have the right to assign any or all of its rights under this Agreement
without obtaining Owner’s consent to any entity that is owned or controlled by
or affiliated with Beal or if Beal is required to assign its rights by any
regulatory authority having jurisdiction over Beal. Owner shall not assign its
rights or obligations under this Agreement or in regard to any of the Total
Property without the prior written consent of Beal, which consent may be
granted or withheld at the sole discretion of Beal.

 

15.                               No
Partnership.  Nothing contained
in this Agreement is intended, nor shall it be construed, to create a
partnership or joint venture between the parties hereto or to render either of
the parties liable or responsible for the debts or obligations of the other,
including, but not limited to, interest, taxes, losses, or any other liability.

 

16.                               Specific
Performance.  Upon any default
by Owner hereunder, in addition to any other remedies which Beal may have at
law or in equity or under any document evidencing or securing this Agreement,
including, but not limited to the Mortgages, Beal shall have the right to bring
a suit for specific performance against Owner.

 

17.                            Binding
Effect.  This Agreement shall be
binding upon and shall inure to the benefit of Owner and Beal and their respective
successors and assigns, subject to the above contained limitations and
prohibitions on assignment.

 

18.                               Notice.  All notices required or permitted hereunder
shall be in writing and shall be delivered by certified mail, return receipt
requested or by Federal Express or other reputable overnight carrier, and shall
be deemed to be delivered when delivered to and actually received by the party
to whom such notice is directed at its address set forth below or at such other
address as such party may have specified theretofore by notice in writing
actually received by the other party:

 

	
   

  	
  If to Beal:

  	
  Beal Bank, S.S.B.

  
	
   

  	
   

  	
  15770 N. Dallas Parkway, Suite 300

  
	
   

  	
   

  	
  Dallas, Texas 75248

  
	
   

  	
   

  	
  Attention: William T. Saurenmann

  

 

14

 

	
   

  	
  With a copy to:

  	
  Jenkens & Gilchrist,

  
	
   

  	
   

  	
  a Professional Corporation

  
	
   

  	
   

  	
  1445 Ross Avenue, Suite 3200

  
	
   

  	
   

  	
  Dallas, Texas 75202

  
	
   

  	
   

  	
  Attention:       Lawrence
  C. Adams, Esq.

  
	
   

  	
   

  	
   

  
	
   

  	
  If to the Owner:

  	
  Huntley Development Limited Partnership

  
	
   

  	
   

  	
  Huntley Meadows Residential Venture

  
	
   

  	
   

  	
  c/o The Prime Group, Inc.

  
	
   

  	
   

  	
  77
  West Wacker Drive, Suite 4200

  
	
   

  	
   

  	
  Chicago, Illinois 60601

  
	
   

  	
   

  	
  Attention:       Gary
  Skoien

  
	
   

  	
   

  	
   

  
	
   

  	
  And a copy to:

  	
  Huntley Development Limited Partnership

  
	
   

  	
   

  	
  Huntley Meadows Residential Venture

  
	
   

  	
   

  	
  c/o The Prime Group, Inc.

  
	
   

  	
   

  	
  77 West Wacker Drive, Suite 4200

  
	
   

  	
   

  	
  Chicago, Illinois 60601

  
	
   

  	
   

  	
  Attention:       Robert
  Rudnik, Esq.

  

 

19.                                      Governing
Law and Venue.  The laws of the
State of Illinois and applicable federal law shall govern the validity,
enforcement and interpretation of this Agreement. The obligations of the
parties are performable and venue for any legal action arising out of this
Agreement shall lie in Cook County, Illinois.

 

20.                                      Integration,
Modification and Waiver.  This
Agreement constitutes the complete and final expression of the agreement of the
parties relating to the subject matter hereof, and supersedes all previous
contracts, agreements and understandings of the parties, either oral or
written, relating to such subject matter and specifically supersedes the
Original Agreement. This Agreement cannot be modified, nor may any of the terms
hereof be waived, except by an instrument in writing (referring specifically to
this Agreement) executed by the party against whom enforcement of the modification
or waiver is sought.

 

21.                               Headings.  The headings which have been used throughout
this Agreement have been inserted for convenience of reference only and do not
constitute matter to be construed in interpreting this Agreement.

 

22.                               Invalid
Provisions.  If any one or more
of the provisions of this Agreement, or the applicability of any such provision
to a specific situation, shall be held invalid or unenforceable, such provision
shall be modified to the minimum extent necessary to make it or its application
valid and enforceable, and the validity and enforceability of all other
provisions of this Agreement and all other applications of any such provision
shall not be affected thereby.

 

23.                               Savings
Clause.  Notwithstanding
anything to the contrary contained herein or in any other agreement entered
into in connection with any Loan(s) held by Beal, it is agreed that the
aggregate of all interest and any other charges constituting interest or
adjudicated as constituting interest under applicable laws and contracted for,
chargeable or receivable under or otherwise in

 

15

 

connection with any such Loan shall under no circumstances exceed the
maximum amount of interest permitted by applicable law (including, without
limitation, Section 501 of the Depository Institutions Deregulation and
Monetary Control Act of 1980, Public Law No.96-221), and any excess shall be
deemed a mistake by all parties and canceled automatically, and if theretofore
paid shall be refunded to Owner or credited to the principal amount owing
thereon. All sums paid or agreed to be paid to Beal for the use, forbearance or
detention of the indebtedness of the borrower under any Loan(s) held by Beal
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such indebtedness until
payment in full so that the actual rate of interest on account of such
indebtedness is uniform throughout the actual term of the Loan or does not
exceed the maximum lawful rate throughout the entire term of such Loan, as
appropriate. The terms and provisions of this paragraph shall control and
supersede every other provision of all agreements between the borrower under
the Loan and the holder(s) thereof.

 

24.                               Financial
Statements.  Notwithstanding
anything to the contrary contained elsewhere herein, it is agreed and
understood that, in the event that a Sale, Exchange, or any other transaction
occurs so that Net Profits are created, Owner shall prepare financial statements
setting forth the Net Profits which have been realized by Owner and Beal,
together with the calculations and itemized figures utilized in determining
said Net Profits, which financial statements shall be delivered to Beal and be
subject to Beal’s approval.

 

25.                               Guaranty.  Owner  has caused Michael W.
Reschke and certain entities related to or affiliated with Owner (collectively,
the “Guarantors”) to irrevocably and unconditionally, individually, jointly and
severally, guarantee the obligations of Owner under the Original Agreement
pursuant to a guaranty in form and substance acceptable to Beal, and Owner will
cause such Guarantors to confirm that their respective guaranties apply to this
Agreement and the obligations of Owner hereunder.

 

26.                               Continued
Security.  The parties hereto
hereby agree that the Mortgages, as previously amended, will continue to act as
security for this Agreement, encumbering all of the Property.

 

16

 

EXECUTED as of the date first above
written.

 

	
   

  	
  OWNER:

  
	
   

  	
  HUNTLEY
  DEVELOPMENT LIMITED

  PARTNERSHIP

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Huntley Development Company,

  
	
   

  	
   

  	
  its Managing General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Gary Skoien

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HUNTLEY MEADOWS RESIDENTIAL

  VENTURE

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Prime/Huntley Meadows Residential, Inc.,

  Managing Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Gary Skoien

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BEAL:

  
	
   

  	
   

  
	
   

  	
  BEAL
  BANK, S.S.B.,

  
	
   

  	
  a state savings
  bank

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  William T.
  Saurenmann

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
						

 

17

 

CONFIRMATION BY GUARANTORS

 

The undersigned, each of which has guaranteed the
payment and performance of the obligations of the Owner under the Original
Agreement, hereby consent to and approve the entering into of this Agreement
and agree that their respective guaranties of the Original Agreement apply to
this Agreement and all of the obligations of either Owner hereunder. Each of
the undersigned confirms, affirms and ratifies its unconditional, joint and
several guaranty of the obligations of each Owner under the Original Agreement,
as such Original Agreement as amended and restated by this Agreement.

 

	
   

  	
  GUARANTORS;

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Michael W. Reschke

  
				

 

 

	
   

  	
  PRIME GROUP LIMITED PARTNERSHIP,

  
	
   

  	
  an  Illinois
  limited partnership

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  Michael
  W. Reschke

  
	
   

  	
   

  	
  Title: Managing General Partner

  

 

 

	
   

  	
  PRIME GROUP II, L.P.,

  
	
   

  	
  an Illinois
  limited partnership

  
	
   

  	
  By: PGLP, Inc.,
  Managing General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:  Gary
  Skoien

  
	
   

  	
   

  	
  Title: Vice President

  

 

 

	
   

  	
  PRIME GROUP III, L.P.,

  
	
   

  	
  an Illinois
  limited partnership

  
	
   

  	
  By: PGLP, Inc.,
  Managing General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:
      Gary Skoien

  
	
   

  	
   

  	
  Title:     Vice President

  

 

18

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