INTEREST RATE CAP SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT

This INTEREST RATE CAP SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT (this
“Agreement”), dated as of April 28, 2009, is by and among (a) SUN SECURED
FINANCING LLC, a Michigan limited liability company, ASPEN-FT. COLLINS LIMITED
PARTNERSHIP, a Michigan limited partnership, SUN SECURED FINANCING HOUSTON
LIMITED PARTNERSHIP, a Michigan limited partnership, SUN COMMUNITIES FINANCE,
LLC, a Michigan limited liability company, SUN HOLLY FOREST LLC, a Michigan
limited liability company, and SUN SADDLE OAK LLC, a Michigan limited liability
company (individually and collectively, the “Grantor”), and (b) PNC ARCS LLC, a
Delaware limited liability company, successor-in-interest to ARCS COMMERCIAL
MORTGAGE CO., L.P., a California limited partnership (“Lender”).

RECITALS:

A.     Grantor and Lender are party to that certain Amended and Restated Master
Credit Facility Agreement dated as of April 28, 2004 (such agreement, as the
same may be amended, supplemented or otherwise modified or amended and restated,
from time to time, the “Master Agreement”), pursuant to which Lender has agreed
to provide Loans in accordance with and subject to the terms of the Master
Agreement. As set forth in Section 1.2 of this Agreement, all capitalized terms
not otherwise defined herein shall have their respective meanings set forth in
the Master Agreement.

B.         As permitted by the Master Agreement, the Grantor has made
arrangements for the acquisition of a Cap or Caps pursuant to certain documents
attached as Exhibit A to this Agreement (the “Cap Documents”).

C.         As security for the Grantor’s obligations under the Master Agreement
and the Note, the Grantor and the Lender are entering into this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and undertakings set
forth in this Agreement and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Grantor and the Lender
agree as follows:

 

1.

Incorporation of Recitals; Definitions; Interpretation; Reference Materials.

1.1       Incorporation of Recitals. The recitals set forth in this Agreement
are, by this reference, incorporated into and deemed a part of this Agreement.

1.2       Definitions. Capitalized terms used in this Agreement shall have the
meanings given to those terms in this Agreement. Capitalized terms used in this
Agreement and not defined in this Agreement, but defined in the Master
Agreement, shall have the meanings given to those terms in the Master Agreement.

1.3       Interpretation. Words importing any gender include all genders. The
singular form of any word used in this Agreement shall include the plural, and
vice versa, unless the context otherwise requires. Words importing persons
include natural persons, firms, associations, partnerships and corporations. The
parties hereto acknowledge that each party and their respective counsel have
participated in the drafting and revision of this Agreement. Accordingly, the
parties agree that any rule of construction which disfavors the drafting party
shall not apply in the interpretation of this Agreement or any statement or
supplement or exhibit hereto.

1.4       Reference Materials. Sections mentioned by number only are the
respective sections of this Agreement so numbered. Reference to “this section”
or “this subsection” shall refer to the particular section or subsection in
which such reference appears. Any captions, titles or headings preceding the
text of any section and any table of contents or index attached to this
Agreement are solely for convenience of reference and shall not constitute part
of this Agreement or affect its meaning, construction or effect.

 

 

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2.        Collateral and Obligations; Further Assurances.

2.1       Security Interest in Collateral. To secure the Grantor’s obligations
under the Master Agreement, the Note and the other Loan Documents (the
“Obligations”), the Grantor hereby assigns, pledges and grants a security
interest to the Lender in and to all of the Grantor’s right, title and interest
in and to the following (collectively, the “Collateral”):

 

i.

the Cap and the Cap Documents;

ii.         any and all moneys (collectively, “Payments”) payable to the
Grantor, from time to time, pursuant to the Cap Documents by the counterparty
under the Cap Documents (the “Counterparty”);

iii.        all rights of the Grantor under any of the foregoing, including all
rights of the Grantor to the Payments, contract rights and general intangibles
now existing or hereafter arising with respect to any or all of the foregoing;

iv.        all rights, liens and security interests or guarantees now existing
or hereafter granted by the Counterparty or any other person to secure or
guaranty payment of the Payments due pursuant to the Cap Documents;

v.         all documents, writings, books, files, records and other documents
arising from or relating to any of the foregoing, whether now existing or
hereafter arising;

vi.        all extensions, renewals and replacements of the foregoing; and

vii.       all cash and non-cash proceeds and products of any of the foregoing,
including, without limitation, interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed or
distributable in respect of or in exchange for any or all of the other
Collateral.

 

3.

Delivery of Cap Documents.

3.1       Acquisition of Cap; Delivery of Cap Documents. The Grantor has, on or
before the date of this Agreement, executed and delivered the Cap Documents to
the Counterparty and has delivered to the Lender fully executed originals of
such Cap Documents. True, complete and correct copies of the Cap Documents and
all amendments thereto, fully executed by all parties, are attached as Exhibit A
hereto. The Grantor hereby represents and warrants to the Lender that there is
no additional security for or any other arrangements or agreements relating to
the Cap Documents.

3.2       Obligations Remain Absolute. Nothing contained herein shall relieve
the Grantor of its primary obligation to pay all amounts due in respect of its
obligations under the Master Agreement, the Note or the Other Loan Documents.

 

 

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4.        Representations and Warranties.

4.1       Representations and Warranties of the Grantor. The Grantor represents
and warrants to the Lender on the Closing Date that:

(i)        it has all requisite power and authority to enter into this Agreement
and to carry out its obligations under this Agreement; the execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary action
on the part of the Grantor; this Agreement has been duly executed and delivered
by it and is the valid and binding obligation of the Grantor, enforceable
against it in accordance with its terms; and

(ii)        it is the legal and beneficial owner of, and has good and marketable
title to (and full right and authority to assign), the Collateral, free and
clear of all Liens.

 

5.

Maintenance, Administration of Cap.

5.1       Compliance with Reimbursement Agreement. The Grantor agrees to comply
with the provisions of the Master Agreement related to obtaining and maintaining
at all applicable times a Cap which satisfies the requirements of the Master
Agreement.

5.2       Event of Default. Upon the occurrence and during the continuance of
any “Event of Default” under the Master Agreement, the Lender shall have and may
exercise the same rights, powers, and remedies with respect to the Collateral
that the Grantor may exercise, which rights, powers, and remedies are
incorporated herein by this reference for all purposes. In furtherance and not
in limitation of the foregoing, the Lender shall have all rights, remedies and
recourses with respect to the Collateral granted in the Master Agreement and any
other instrument executed in connection therewith, or existing at common law or
equity (including specifically those granted by the Uniform Commercial Code as
adopted in the District of Columbia), the right of offset, the right to sell the
Collateral at public or private sale, and the right to receive distributions to
Grantor, and such rights and remedies (i) shall be cumulative and concurrent,
(ii) may be pursued separately, successively or concurrently against the Grantor
and any other party obligated under the Obligations, or against the Collateral,
or any other security for the Obligations, at the sole discretion of the Lender,
(iii) may be exercised as often as occasion therefor shall arise, it being
agreed by Grantor that the exercise or failure to exercise any of same shall in
no event be construed as a waiver or release thereof or of any other right,
remedy or recourse, and (iv) are intended to be and shall be, non-exclusive.

If the proceeds of sale, collection or other realization of or upon the
Collateral are insufficient to cover the costs and expenses of such realization
and the payment in full of the Obligations, the Grantor shall remain liable for
any deficiency (subject to the applicable non-recourse provisions of the Master
Agreement).

Upon the occurrence and continuance of an “Event of Default” under the Master
Agreement, in case of any sale by the Lender of any of the Collateral, which may
be elected at the option and in the complete discretion of the Lender, the
Collateral so sold may be retained by the Lender until the selling price is paid
by the purchaser, but the Lender shall not incur any liability in case of
failure of the purchaser to take up and pay for the Collateral so sold. In case
of any such failure, such Collateral so sold may be again similarly sold. After
deducting all costs or expenses of every kind (including, without limitation,
the reasonable attorneys’ fees and legal expenses incurred by the Lender), the
Lender shall apply the residue of the proceeds of any sale or sales in such
manner as the Lender may deem advisable.

 

 

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6.        Miscellaneous Provisions.

6.1       Termination. This Agreement shall terminate upon the date which is
ninety-one (91) days after the date on which all amounts due under the Master
Agreement, the Note and the other Loan Documents have been paid in full,
provided that during such ninety-one (91) day period no Act of Bankruptcy (as
defined below) shall have occurred. “Act of Bankruptcy” means the filing of a
petition in bankruptcy or other commencement of a bankruptcy or similar
proceeding by or against the Grantor under any applicable bankruptcy,
insolvency, reorganization or similar law now in effect or any such proceeding
by or against the Grantor under any applicable bankruptcy, insolvency,
reorganization or similar law in effect after the date of this Agreement. Upon
termination of this Agreement, all Collateral shall be reassigned to the Grantor
without recourse, representation or warranty.

6.2       Attorney-In-Fact. Without limiting any rights or powers granted by
this Agreement to the Lender, upon the occurrence and during the continuance of
any “Event of Default” under the Master Agreement, the Lender is hereby
appointed the attorney-in-fact of the Grantor for the purpose of carrying out
the provisions of this Agreement and taking any action and executing any
instruments which the Lender may deem necessary or advisable to accomplish the
purposes hereof, which appointment as attorney-in-fact is irrevocable and
coupled with an interest. Without limiting the generality of the foregoing, the
Lender shall have the right and power to receive, endorse and collect all checks
made payable to the order of the Grantor representing any dividend, payment or
other distribution in respect of the Collateral or any part thereof and to give
full discharge for the same.

6.3       Further Assurances. At any time and from time to time, at the expense
of the Grantor, the Grantor shall promptly execute and deliver to Lender all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that Lender may request, in order to carry out the
intent and purposes of this Agreement or to enable Lender to exercise and
enforce its rights and remedies under this Agreement all at the sole expense of
the Grantor and so long as the obligations of the Grantor are not materially
increased or the rights of Grantor are not materially decreased thereby.

6.4       Expenses. The Grantor agrees to pay to Lender all reasonable
out-of-pocket expenses (including reasonable expenses for legal services of
every kind) of, or incident to, the preservation of rights under or enforcement
of any of the provisions of this Agreement or performance by Lender of any
obligations of the Grantor in respect of the Collateral which Grantor has failed
or refused to perform, or any actual or attempted sale, or any exchange,
enforcement, collection, compromise or settlement in Collateral and defending or
asserting rights and claims of Lender in respect thereof, by litigation or
otherwise, including expenses of insurance, and all such expenses shall be
Obligations hereby secured.

6.5           No Deemed Waiver. No failure on the part of Lender or any of its
agents to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by Lender or any of its agents
of any right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The remedies herein
are cumulative and are not exclusive of any remedies provided by law.

6.6       Entire Agreement. This Agreement constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties to this Agreement with respect to the subject matter of this
Agreement. This Agreement may not be amended, changed, waived or modified except
by a writing executed by each party hereto.

6.7       Successors and Assigns. This Agreement shall inure to the benefit of,
and be enforceable by, the Grantor and Lender and their respective successors
and permitted assigns, and nothing herein expressed or implied shall be
construed to give any other person any legal or equitable rights under this
Agreement.

6.8       Notices. The provisions of Section 17.08 of the Master Agreement
(entitled “Notices”) are hereby incorporated into this Agreement by this
reference to the fullest extent as if the text of such provisions were set forth
in their entirety herein.

 

 

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6.9       Governing Law. The provisions of Section 17.06 of the Master Agreement
(entitled “Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial”) are
hereby incorporated into this Agreement by this reference to the fullest extent
as if the text of such provisions were set forth in their entirety herein.

6.10      Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party.

6.11      Multiple Counterparts. This Agreement may be simultaneously executed
in multiple counterparts, all of which shall constitute one and the same
instrument and each of which shall be, and shall be deemed to be, an original.

6.12      Grantor’s Liability. Grantor’s liability and the liability of any
general partner of Grantor hereunder shall be limited to the extent provided in
Section 15.01 of the Master Agreement (entitled “Personal Liability of the
Borrower”).

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The Grantor and Lender have caused this Agreement to be signed as an instrument
under seal, on the date first written above, by their respective officers duly
authorized.

Grantor

 

SUN SECURED FINANCING LLC,

a Michigan limited liability company

 

By:

Sun Communities Operating Limited Partnership,

a Michigan limited partnership, its sole member

 

 

By:

Sun Communities, Inc., a Maryland

Corporation, its general partner

 

 

By:

/s/ Jonathan M. Colman

 

 

Name:

Jonathan M. Colman

 

 

Title:

Executive Vice President – Acquisitions

 

 

 

ASPEN – FT. COLLINS LIMITED PARTNERSHIP,

a Michigan limited partnership

 

By:

Sun GP L.L.C., a Michigan limited liability company, its general partner

 

 

By:

Sun Communities, Inc., a Maryland

Corporation, its manager

 

 

By:

/s/ Jonathan M. Colman

 

 

Name:

Jonathan M. Colman

 

 

Title:

Executive Vice President – Acquisitions

 

 

 

SUN SECURED FINANCING HOUSTON LIMITED PARTNERSHIP,

a Michigan limited partnership

 

By:

Sun Secured Financing GP, Inc.,

a Michigan corporation, its general partner

 

By:

/s/ Jonathan M. Colman

 

Name:

Jonathan M. Colman

 

Title:

Executive Vice President – Acquisitions

 

 

 

 

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SUN COMMUNITIES FINANCE, LLC,

a Michigan limited liability company

 

By:

Sun Communities Operating Limited Partnership,

a Michigan limited partnership, its managing member

 

 

By:

Sun Communities, Inc., a Maryland

Corporation, its general partner

 

 

By:

/s/ Jonathan M. Colman

 

 

Name:

Jonathan M. Colman

 

 

Title:

Executive Vice President – Acquisitions

 

 

SUN HOLLY FOREST LLC,

a Michigan limited liability company

 

By:

Sun Communities Operating Limited Partnership,

a Michigan limited partnership, its managing member

 

 

By:

Sun Communities, Inc., a Maryland

Corporation, its general partner

 

 

By:

/s/ Jonathan M. Colman

 

 

Name:

Jonathan M. Colman

 

 

Title:

Executive Vice President – Acquisitions

 

 

SUN SADDLE OAK LLC,

a Michigan limited liability company

 

By:

Sun Communities Operating Limited Partnership,

a Michigan limited partnership, its managing member

 

 

By:

Sun Communities, Inc., a Maryland

Corporation, its general partner

 

 

By:

/s/ Jonathan M. Colman

 

 

Name:

Jonathan M. Colman

 

 

Title:

Executive Vice President – Acquisitions

 

 

 

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LENDER:

 

PNC ARCS LLC,

a Delaware limited liability company

By:

/s/ Tim White

Name:

Tim White

Title:

President

 

 

 

 

 

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EXHIBIT A

Cap Documents

(See Attached)