LOAN AGREEMENT
 
 
Dated as of March 1, 2011
 
 
Between
 
 
THE ENTITIES SET FORTH ON SCHEDULE I
 
ATTACHED HERETO,
 
collectively, as Borrower
 
and
 
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
as Lender
 

 
 

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TABLE OF CONTENTS
 
Page

 
ARTICLE I - DEFINITIONS; PRINCIPLES OF
CONSTRUCTION...................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
 1

 
 
Section 1.1
Definitions.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
1

 
 
Section 1.2
Principles of
Construction..............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
27

 
 
ARTICLE II - GENERAL
TERMS.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
27

 
 
Section 2.1
Loan Commitment; Disbursement to
Borrower......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
27

 
 
Section 2.2
Interest
Rate...................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
27

 
 
Section 2.3
Loan
Payment.................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
28

 
 
Section 2.4
Prepayments......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
29

 
 
Section 2.5
[Intentionally
Omitted].................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
30

 
 
Section 2.6
Release of
Property.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
30

 
 
Section 2.7
Lockbox Account/Cash
Management........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
32

 
 
ARTICLE III - CONDITIONS
PRECEDENT........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
 35

 
 
Section 3.1
Conditions Precedent to
Closing.................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. 
35

 
 
ARTICLE IV - REPRESENTATIONS AND
WARRANTIES............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
 35

 
 
Section 4.1
Borrower
Representations............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. 
35

 
 
Section 4.2
Survival of
Representations........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
45

 
 
ARTICLE V - BORROWER
COVENANTS.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
45

 
 
Section 5.1
Affirmative
Covenants.................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
45

 
 
Section 5.2
Negative
Covenants.........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
56

 
 
ARTICLE VI - INSURANCE; CASUALTY;
CONDEMNATION....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................  
61

 
 
Section 6.1
Insurance.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
61

 
 
Section 6.2
Casualty............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
66

 
 
Section 6.3
Condemnation.................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. 
66

 
 
Section 6.4
Restoration. .....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
67

 
 
ARTICLE VII - RESERVE
FUNDS........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
 70

 
 
Section 7.1
Required
Repairs............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ 
70

 
 
Section 7.2
Tax and Insurance Escrow
Fund................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
71

 
 
Section 7.3
Replacements and Replacement
Reserve................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
71

 
 
Section 7.4
............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
77

 
 
Section 7.5
Excess Cash Flow Reserve
Fund..................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
77

 
 
Section 7.6
Reserve Funds,
Generally............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. 
77

 
 
(i)

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ARTICLE VIII - DEFAULTS
.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. 78
 
 
Section 8.1
Event of
Default............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. 
78

 
 
Section 8.2
Remedies........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ 
78

 
 
Section 8.3
Remedies Cumulative;
Waivers.................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
80

 
 
ARTICLE IX - SPECIAL
PROVISIONS............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ 82

 
 
Section 9.1
Securitization............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
82

 
 
Section 9.2
[Intentionally
Omitted]................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................ 
82

 
 
Section 9.3
Exculpation...................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
84

 
 
Section 9.4
Matters Concerning
Manager.................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. 
86

 
 
Section 9.5
Servicer........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
86

 
 
ARTICLE X -
MISCELLANEOUS................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
87

 
 
Section 10.1
Survival.........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
87

 
 
Section 10.2
Lender’s
Discretion.................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 
87

 
 
Section 10.3
Governing
Law.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
87

 
 
Section 10.4
Modification, Waiver in
Writing..............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
89

 
 
Section 10.5
Delay Not a
Waiver.....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
89

 
 
Section 10.6
Notices..........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
89

 
 
Section 10.7
Trial by
Jury................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
91

 
 
Section 10.8
Headings.......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
91

 
 
Section 10.9
Severability..................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
91

 
 
Section 10.10
Preferences.................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
91

 
 
Section 10.11
Waiver of
Notice.........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
91

 
 
Section 10.12
Remedies of
Borrower...............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
91

 
 
Section 10.13
Expenses;
Indemnity...................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
92

 
 
Section 10.14
Schedules
Incorporated.............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
93

 
 
Section 10.15
Offsets, Counterclaims and
Defenses....................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
93

 
 
Section 10.16
No Joint Venture or Partnership; No Third Party
Beneficiaries.....................................................................................................................................................................................................................................................................................................................................................................................................................................................
93

 
 
Section 10.17
Publicity......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
94

 
 
Section 10.18
Waiver of Marshalling of
Assets............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
94

 
 
Section 10.19
Waiver of
Counterclaim............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
94

 
 
Section 10.20
Conflict; Construction of Documents;
Reliance...................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
94

 
 
Section 10.21
Brokers and Financial
Advisors..............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
95

 

 
 
(ii)

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Section 10.22
Prior
Agreements......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
95

 
 
Section 10.23
Joint and Several
Liability........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
95

 
 
Section 10.24
Certain Additional Rights of Lender
(VCOC)......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
95

 
 
Section 10.25
Contributions and
Waivers......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................
96

 
 
Section 10.26
Lender’s Right to Unwind
Cross-Collateralization/Cross-Default.................................................................................................................................................................................................................................................................................................................................................................................................................................................
99

 

 

 
 
(iii)

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LOAN AGREEMENT
 
THIS LOAN AGREEMENT, dated as of March 1, 2011 (as amended, restated, replaced,
supplemented or otherwise modified from time to time, this “Agreement”), between
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a banking association chartered under
the laws of the United States of America, having an address at 383 Madison
Avenue, New York, New York 10179 (“Lender”) and THE ENTITIES SET FORTH ON
SCHEDULE I ATTACHED HERETO, each having an address at c/o Sun Communities, Inc.,
27777 Franklin Road, Suite 200, Southfield, Michigan 48034 (each, an “Individual
Borrower” and, collectively, “Borrower”).
 
W I T N E S S E T H:
 
WHEREAS, Borrower desires to obtain the Loan (as hereinafter defined) from
Lender; and
 
WHEREAS, Lender is willing to make the Loan to Borrower, subject to and in
accordance with the terms of this Agreement and the other Loan Documents (as
hereinafter defined).
 
NOW THEREFORE, in consideration of the making of the Loan by Lender and the
covenants, agreements, representations and warranties set forth in this
Agreement, the parties hereto hereby covenant, agree, represent and warrant as
follows:
 
ARTICLE I - DEFINITIONS; PRINCIPLES OF CONSTRUCTION
 
Section 1.1 Definitions.  For all purposes of this Agreement, except as
otherwise expressly required or unless the context clearly indicates a contrary
intent:
 
“Accrual Period” shall mean the period commencing on and including the first
(1st) day of each calendar month during the term of the Loan and ending on and
including the final calendar date of such calendar month; however, the initial
Accrual Period shall commence on and include the Closing Date and shall end on
and include the final calendar date of the calendar month in which the Closing
Date occurs.
 
“Additional Insolvency Opinion” shall mean any subsequent Insolvency Opinion.
 
“Adjusted Release Amount” shall mean, for each Individual Property, the sum of
(a) the Release Amount for such Individual Property and either (b) fifteen
percent (15%) of the Release Amount for such Individual Property (excluding the
Pheasant Ridge Property and the Siesta Bay Property) released pursuant to
Section 2.6.2 hereof or (c) twenty percent (20%) of the Release Amount for the
Pheasant Ridge Property and the Siesta Property released pursuant to Section
2.6.2 hereof.
 
“Affiliate” shall mean, as to any Person, any other Person that, directly or
indirectly, is in Control of, is Controlled by or is under common Control with
such Person or is a director or officer of such Person or of an Affiliate of
such Person.
 

 
 

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“Affiliated Manager” shall mean any Manager in which Borrower, Principal, or
Guarantor has, directly or indirectly, any legal, beneficial or economic
interest.
 
“Agent” shall mean Wells Fargo Bank, N.A., or any successor Eligible Institution
acting as Agent under the Cash Management Agreement.
 
“Annual Budget” shall mean the operating budget, including all planned Capital
Expenditures, for each Individual Property prepared by Borrower in accordance
with Section 5.1.11.(d) hereof for the applicable Fiscal Year or other period.
 
“Approved Annual Budget” shall have the meaning set forth in Section 5.1.11(d)
hereof.
 
“Assignment of Management Agreement” shall mean with respect to each Individual
Property, that certain Assignment of Management Agreement and Subordination of
Management Fees dated as of the Closing Date among Lender, the related
Individual Borrower and Manager, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
 
“Award” shall mean any compensation paid by any Governmental Authority in
connection with a Condemnation in respect of all or any part of any Individual
Property.
 
“Bankruptcy Action” shall mean with respect to any Person (a) such Person filing
a voluntary petition under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law; (b) the filing of an involuntary petition against
such Person under the Bankruptcy Code or any other Federal or state bankruptcy
or insolvency law; provided, however, if such Person does not collude with, or
otherwise assist or solicit or cause to be solicited petitioning creditors or
any involuntary petition against such Person, then such involuntary petition
shall not be considered a Bankruptcy Action if it shall be dismissed within
thirty (30) days after filing; (c) such Person filing an answer consenting to or
otherwise acquiescing in or joining in any involuntary petition filed against
it, by any other Person under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law; (d) such Person consenting to or acquiescing in or
joining in an application for the appointment of a custodian, receiver, trustee,
or examiner for such Person or any portion of any Individual Property; or
(e) such Person making an assignment for the benefit of creditors, or admitting,
in writing or in any legal proceeding, its insolvency or inability to pay its
debts as they become due.
 
“Bankruptcy Code” shall mean Title 11 of the United States Code, 11 U.S.C. §101,
et seq., as the same may be amended from time to time, and any successor statute
or statutes and all rules and regulations from time to time promulgated
thereunder, and any comparable foreign laws relating to bankruptcy, insolvency
or creditors’ rights or any other Federal or state bankruptcy or insolvency law.
 
“Bankruptcy Trigger Event” shall mean a Bankruptcy Action shall have occurred
with respect to Borrower or Manager.
 
“Borrower” shall have the meaning set forth in the introductory paragraph
hereto, together with its successors and permitted assigns.
 

 
2

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“Business Day” shall mean any day other than a Saturday, Sunday or any other day
on which national banks in New York, New York, or the place of business of the
trustee under a Securitization (or, if no Securitization has occurred, Lender),
or any Servicer or the financial institution that maintains any collection
account for or on behalf of any Servicer or any Reserve Funds or the New York
Stock Exchange or the Federal Reserve Bank of New York is not open for business.
 
“Capital Expenditures” shall mean, for any period, the amount expended for items
capitalized under GAAP (including expenditures for building improvements or
major repairs, leasing commissions and tenant improvements).
 
“Cash Management Account” shall have the meaning set forth in Section 2.7.2
hereof.
 
“Cash Management Agreement” shall mean a Cash Management Agreement dated as of
the date hereof, by and among Borrower, Manager, Lender and Agent, as the same
may be amended, restated, replaced, supplemented or otherwise modified from time
to time.
 
“Cash Sweep Event” shall mean the occurrence of: (a) an Event of Default; (b) a
Bankruptcy Trigger Event; or (c) a DSCR Trigger Event.
 
“Cash Sweep Event Cure” shall mean (a) if the Cash Sweep Event is caused solely
by the occurrence of a DSCR Trigger Event, the achievement of a Debt Service
Coverage Ratio of 1.20 to 1.00 or greater for two (2) consecutive calendar
quarters based upon the trailing two (2) calendar quarter period immediately
preceding the date of determination (a “DSCR Cure Event”), (b) if the Cash Sweep
Event is caused by an Event of Default, the acceptance by Lender of a cure of
such Event of Default (which cure Lender is not obligated to accept and may
reject or accept in its sole and absolute discretion), or (c) if the Cash Sweep
Event is caused by a Bankruptcy Action of Manager, if Borrower replaces the
Manager with a Qualified Manager under a Replacement Management Agreement or the
dismissal of any such Bankruptcy Action without any adverse consequences to the
Loan or any Individual Property; provided, however, that, such Cash Sweep Event
Cure set forth in this definition shall be subject to the following conditions,
(i) no Event of Default shall have occurred and be continuing under this
Agreement or any of the other Loan Documents, (ii) a Cash Sweep Event Cure may
occur no more than a total of five (5) times in the aggregate during the term of
the Loan, and (iii) Borrower shall have paid all of Lender’s reasonable expenses
incurred in connection with such Cash Sweep Event Cure including, reasonable
attorney’s fees and expenses.  Borrower shall have no right to cure a Cash Sweep
Event caused by a Bankruptcy Action of Borrower.
 
“Cash Sweep Period” shall mean each period commencing on the occurrence of a
Cash Sweep Event and continuing until the earlier of (a) the Payment Date next
occurring following the related Cash Sweep Event Cure, or (b) until payment in
full of all principal and interest on the Loan and all other amounts payable
under the Loan Documents in accordance with the terms and provisions of the Loan
Documents.
 
“Casualty” shall have the meaning set forth in Section 6.2 hereof.
 
“Casualty Consultant” shall have the meaning set forth in Section 6.4(b)(iii)
hereof.
 

 
3

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“Casualty Retainage” shall have the meaning set forth in Section 6.4(b)(iv)
hereof.
 
“Closing Date” shall mean the date of the funding of the Loan.
 
“Code” shall mean the Internal Revenue Code of 1986, as amended, as it may be
further amended from time to time, and any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
 
“Condemnation” shall mean a temporary or permanent taking by any Governmental
Authority as the result or in lieu or in anticipation of the exercise of the
right of condemnation or eminent domain, of all or any part of any Individual
Property, or any interest therein or right accruing thereto, including any right
of access thereto or any change of grade affecting such Individual Property or
any part thereof.
 
“Condemnation Proceeds” shall have the meaning set forth in Section 6.4(b).
 
“Control” shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of management, policies or activities of a Person,
whether through ownership of voting securities, by contract or
otherwise.  “Controlled” and “Controlling” shall have correlative meanings.
 
“Debt” shall mean the outstanding principal amount set forth in, and evidenced
by, this Agreement and the Note together with all interest accrued and unpaid
thereon and all other sums (including any Yield Maintenance Premium and any
Yield Maintenance Default Premium) due to Lender in respect of the Loan under
the Note, this Agreement, each Mortgage or any other Loan Document.
 
“Debt Service” shall mean, with respect to any particular period of time, the
scheduled principal and interest payments due under this Agreement and the Note.
 
“Debt Service Coverage Ratio” shall mean a ratio for the applicable period in
which:
 
(a) the numerator is the Net Operating Income (excluding interest on credit
accounts and using annualized operating expenses for any recurring expenses not
paid monthly (e.g., Taxes and Insurance Premiums)) for such period as set forth
in the statements required hereunder, without deduction for (i) actual
management fees incurred in connection with the operation of the Properties for
such period, or (ii) amounts paid to the Reserve Funds for such period, less,
with respect to such period, (A) management fees equal to the greater of
(1) assumed management fees of 4.0% of Gross Income from Operations and (2) the
actual management fees incurred, and (B) Replacement Reserve Fund contributions
equal to $201,350 per year; and
 
(b) the denominator is the aggregate amount of Debt Service for such period.
 
“Default” shall mean the occurrence of any event hereunder or under any other
Loan Document which, but for the giving of notice or passage of time, or both,
would be an Event of Default.
 

 
4

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“Default Rate” shall mean, with respect to the Loan, a rate per annum equal to
the lesser of (a) the Maximum Legal Rate or (b) five percent (5%) above the
Interest Rate.
 
“Disclosure Documents” shall have the meaning set forth in Section 9.1.1(b)
hereof.
 
“DSCR Trigger Event” shall mean, that as of the date of determination, the Debt
Service Coverage Ratio based on the trailing three (3) month period immediately
preceding the date of such determination is less than 1.15 to 1.00.
 
“Eligible Account” shall mean a separate and identifiable account from all other
funds held by the holding institution that is either (a) an account or accounts
maintained with a federal or state-chartered depository institution or trust
company which complies with the definition of Eligible Institution or (b) a
segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity which, in the case of a state chartered depository institution or trust
company, is subject to regulations substantially similar to 12 C.F.R. §9.10(b),
having in either case a combined capital and surplus of at least $50,000,000.00
and subject to supervision or examination by federal and state authority.  An
Eligible Account will not be evidenced by a certificate of deposit, passbook or
other instrument.
 
“Eligible Institution” shall mean JPMorgan Chase Bank, National Association or a
depository institution or trust company insured by the Federal Deposit Insurance
Corporation, the short term unsecured debt obligations or commercial paper of
which are rated at least “A-1+” by S&P, “P-1” by Moody’s and “F-1+” by Fitch in
the case of accounts in which funds are held for thirty (30) days or less (or,
in the case of accounts in which funds are held for more than thirty (30) days,
the long-term unsecured debt obligations of which are rated at least “AA-” by
Fitch and S&P and “Aa3” by Moody’s).
 
“Embargoed Person” shall mean any person, entity or government subject to trade
restrictions under U.S. law, including, but not limited to, The USA PATRIOT Act
(including the anti-terrorism provisions thereof), the International Emergency
Economic Powers Act, 50 U.S.C. §§ 1701, et seq., The Trading with the Enemy Act,
50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated
thereunder including those related to Specially Designated Nationals and
Specially Designated Global Terrorists, with the result that the investment in
Borrower, Principal or Guarantor, as applicable (whether directly or
indirectly), is prohibited by law or the Loan made by the Lender is in violation
of law.
 
“Environmental Indemnity” shall mean that certain Environmental Indemnity
Agreement, dated as of the date hereof, executed by Borrower and Guarantor in
connection with the Loan for the benefit of Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
 
“Environmental Law” means any present and future federal, state and local laws,
statutes, ordinances, rules, regulations and the like, as well as common law,
relating to protection of human health or the environment, relating to Hazardous
Substances, relating to liability for or costs of Remediation or prevention of
Releases of Hazardous Substances or relating to liability for or costs of other
actual or threatened danger to human health or the environment.
 

 
5

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Environmental Law includes, but is not limited to, the following statutes, as
amended, any successor thereto, and any regulations promulgated pursuant
thereto, and any state or local statutes, ordinances, rules, regulations and the
like addressing similar issues:  the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and Community
Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource
Conservation and Recovery Act (including but not limited to Subtitle I relating
to underground storage tanks); the Solid Waste Disposal Act; the Clean Water
Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking
Water Act; the Occupational Safety and Health Act; the Federal Water Pollution
Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the
Endangered Species Act; the National Environmental Policy Act; and the River and
Harbors Appropriation Act.  Environmental Law also includes, but is not limited
to, any present and future federal, state and local laws, statutes, ordinances,
rules, regulations and the like, as well as common law:  conditioning transfer
of property upon a negative declaration or other approval of a governmental
authority of the environmental condition of the Property; requiring notification
or disclosure of Releases of Hazardous Substances or other environmental
condition of the Property to any governmental authority or other Person, whether
or not in connection with transfer of title to or interest in property; imposing
conditions or requirements in connection with permits or other authorization for
lawful activity related to Hazardous Substances; relating to nuisance, trespass
or other causes of action related to Hazardous Substances and the Property; or
relating to wrongful death, personal injury, or property or other damage in
connection with any physical condition or use of the Property involving
Hazardous Substances.
 
“Environmental Liens” shall have the meaning set forth in Section 5.1.19 hereof.
 
“Environmental Report” shall have the meaning set forth in Section 4.1.37
hereof.
 
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder.
 
“Event of Default” shall have the meaning set forth in Section 8.1(a) hereof.
 
“Excess Cash Flow” shall have the meaning set forth in the Cash Management
Agreement.
 
“Excess Cash Flow Reserve Account” shall have the meaning set forth in
Section 7.5 hereof.
 
“Excess Cash Flow Reserve Fund” shall have the meaning set forth in Section 7.5
hereof.
 
“Extraordinary Expense” shall have the meaning set forth in Section 5.1.11(e)
hereof.
 
“Fiscal Year” shall mean each twelve (12) month period commencing on January 1
and ending on December 31 during each year of the term of the Loan.
 
“Fitch” shall mean Fitch, Inc.
 

 
6

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“GAAP” shall mean generally accepted accounting principles in the United States
of America as of the date of the applicable financial report.
 
“GL Deductible Difference” shall have the meaning set forth in Section 6.1(g)
hereof.
 
“Governmental Authority” shall mean any court, board, agency, commission, office
or other authority of any nature whatsoever for any governmental unit (foreign,
federal, state, county, district, municipal, city or otherwise) whether now or
hereafter in existence.
 
“Gross Income from Operations” shall mean, during any period, all sustainable
income as reported on the financial statements delivered by Borrower in
accordance with this Agreement, computed in accordance with GAAP, derived from
the ownership and operation of the Properties from whatever source during such
period, including, but not limited to, (i) Rents from Tenants that are in
occupancy and paying rent without right of offset or credit, (ii) utility
charges, (iii) escalations, (iv) forfeited security deposits used to pay the
rent following the expiration or termination of a Lease, (v) interest on credit
accounts, (vi) service fees or charges, (vii) license fees, (viii) parking fees,
(ix) rent concessions or credits, (x) income from vending machines, (xi)
business interruption or other loss of income or rental insurance proceeds,
(xii) other required pass-throughs and (xii) interest on Reserve Accounts, if
any, but excluding (i) Rents from Tenants during a free-rent period, or Tenants
that are included in any Bankruptcy Action, (ii) sales, use and occupancy or
other taxes on receipts required to be accounted for by Borrower to any
Governmental Authority, (iii) refunds and uncollectible accounts, (iv) sales of
furniture, fixtures and equipment, (v) Insurance Proceeds (other than business
interruption or other loss of income or rental insurance), (vi) Awards,
(vii) unforfeited security deposits and forfeited security deposits to the
extent not used to pay the rent following the expiration or termination of a
Lease, (viii) utility and other similar deposits and (ix) any disbursements to
any Individual Borrower from the Reserve Funds, if any.  Gross income shall not
be diminished as a result of the Mortgages or the creation of any intervening
estate or interest in the Properties or any part thereof.
 
“Guarantor” shall mean Sun Communities Operating Limited Partnership, a Michigan
limited partnership.
 
“Guaranty” shall mean that certain Guaranty Agreement, dated as of the date
hereof, executed and delivered by Guarantor in connection with the Loan to and
for the benefit of Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
 
“Hard Lockbox Event” shall mean the occurrence of any of the following
events:  (i) if any Individual Property is not managed by Manager or a Qualified
Manager; or (ii) if there shall be an assumption of the Loan pursuant to Section
5.2.10(e) hereof.
 
“Hazardous Substances” include but are not limited to any and all substances
(whether solid, liquid or gas) defined, listed, or otherwise classified as
pollutants, hazardous wastes, hazardous substances, hazardous materials,
extremely hazardous wastes, or words of similar meaning or regulatory effect
under any present or future Environmental Laws or that may have a negative
impact on human health or the environment, including but not limited to
petroleum and
 

 
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petroleum products, asbestos and asbestos-containing materials, polychlorinated
biphenyls, lead, radon, radioactive materials, flammables, explosives, mold,
mycotoxins, microbial matter and airborne pathogens (naturally occurring or
otherwise), but excluding substances of kinds and in amounts ordinarily and
customarily used or stored in similar properties for the purpose of cleaning or
other maintenance or operations and otherwise in compliance with all
Environmental Laws.
 
“Improvements” shall have the meaning set forth in the granting clause of the
related Mortgage with respect to each Individual Property; provided, however,
Improvements shall not include manufactured homes, mobile homes or recreational
vehicles not owned by Borrower.
 
“Indebtedness” of a Person, at a particular date, shall mean the sum (without
duplication) at such date of (a) all indebtedness or liability of such Person
(including, without limitation, amounts for borrowed money and indebtedness in
the form of mezzanine debt or preferred equity); (b) obligations evidenced by
bonds, debentures, notes, or other similar instruments; (c) obligations for the
deferred purchase price of property or services (including trade obligations);
(d) obligations under letters of credit; (e) obligations under acceptance
facilities; (f) all guaranties, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds, to invest in any Person
or entity, or otherwise to assure a creditor against loss; and (g) obligations
secured by any Liens, whether or not the obligations have been assumed (other
than the Permitted Encumbrances).
 
“Indemnified Liabilities” shall have the meaning set forth in Section 10.13(b)
hereof.
 
“Indemnified Parties” shall mean Lender and, its designee, (whether or not it is
the Lender), any Affiliate of Lender that has filed any registration statement
relating to the Securitization or has acted as the sponsor or depositor in
connection with the Securitization, any Affiliate of Lender that acts as an
underwriter, placement agent or initial purchaser of Securities issued in the
Securitization, any other co underwriters, co placement agents or co initial
purchasers of Securities issued in the Securitization, and each of their
respective officers, directors, partners, employees, representatives, agents and
Affiliates and each Person or entity who Controls any such Person within the
meaning of Section 15 of the Securities Act of 1933 as amended or Section 20 of
the Security Exchange Act of 1934 as amended, any Person who is or will have
been involved in the origination of the Loan, any Person who is or will have
been involved in the servicing of the Loan secured hereby, any Person in whose
name the encumbrance created by the Mortgage is or will have been recorded, any
Person who may hold or acquire or will have held a full or partial interest in
the Loan secured hereby (including, but not limited to, investors or prospective
investors in the Securities, as well as custodians, trustees and other
fiduciaries who hold or have held a full or partial interest in the Loan secured
hereby for the benefit of third parties) as well as the respective directors,
officers, shareholders, partners, employees, agents, servants, representatives,
contractors, subcontractors, affiliates, subsidiaries, participants, successors
and assigns of any and all of the foregoing (including, but not limited to, any
other Person who holds or acquires or will have held a participation or other
full or partial interest in the Loan, whether during the term of the Loan or as
a part of or following a foreclosure of the Loan and including, but not limited
to any successors by merger, consolidation or acquisition of all or a
substantial portion of Lender’s assets and business).
 

 
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“Independent Director” shall mean a natural Person who (a) is not at the time of
initial appointment, or at any time while serving in such capacity, and is not,
and has never been, and will not while serving as Independent Director be: (i) a
stockholder, director (with the exception of serving as the Independent Director
of Borrower), officer, employee, partner, member (other than a “special member”
or “springing member”), manager, attorney or counsel of Borrower, equity owners
of Borrower or Guarantor or any Affiliate of Borrower or Guarantor, other than a
holder of interests in a nationally recognized “mutual fund”, or other
nationally recognized professionally managed fund of stocks, bonds, options,
commodities, money market securities or other investments that pools the assets
of individuals and/or organizations and is registered (if required) with the
Securities and Exchange Commission, which may hold shares of Manager, a publicly
traded real estate investment trust; (ii) a customer, supplier or other person
who derives any of its purchases or revenues from its activities with Borrower
or Guarantor, equity owners of Borrower or Guarantor or any Affiliate of
Borrower or Guarantor; (iii) a Person Controlling or under common Control with
any such stockholder, director, officer, employee, partner, member, manager,
attorney, counsel, equity owner, customer, supplier or other Person; or (iv) a
member of the immediate family of any such stockholder, director, officer,
employee, partner, member, manager, attorney, counsel, equity owner, customer,
supplier or other Person and (b) has (i) prior experience as an independent
director or independent manager for a corporation, a trust or limited liability
company whose charter documents required the unanimous consent of all
independent directors or independent managers thereof before such corporation,
trust or limited liability company could consent to the institution of
bankruptcy or insolvency proceedings against it or could file a petition seeking
relief under any applicable federal or state law relating to bankruptcy and
(ii) at least three years of employment experience with one or more
nationally-recognized companies that provides, inter alia, professional
independent directors or independent managers in the ordinary course of their
respective business to issuers of securitization or structured finance
instruments, agreements or securities or lenders originating commercial real
estate loans for inclusion in securitization or structured finance instruments,
agreements or securities (a “Professional Independent Director”) and is at all
times during his or her service as an Independent Director of Borrower an
employee of such a company or companies.  A natural Person who satisfies the
foregoing definition except for being (or having been) the independent director
or independent manager of a “special purpose entity” affiliated with Borrower
(provided such affiliate does not or did not own a direct or indirect equity
interest in an Borrower) shall not be disqualified from serving as an
Independent Director, provided that such natural Person satisfies all other
criteria set forth above and that the fees such individual earns from serving as
independent director or independent manager of affiliates of Borrower or in any
given year constitute in the aggregate less than five percent (5%) of such
individual’s annual income for that year.  A natural Person who satisfies the
foregoing definition other than subparagraph (a)(ii) shall not be disqualified
from serving as an Independent Director of Borrower if such individual is a
Professional Independent Director and such individual complies with the
requirements of the previous sentence.
 
“Insolvency Opinion” shall mean that certain non-consolidation opinion letter
dated the date hereof delivered by Jaffe Raitt Heuer & Weiss, P.C. in connection
with the Loan.
 
“Individual Borrower” shall have the meaning set forth in the introductory
paragraph hereto, together with its successors and permitted assigns.
 

 
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“Individual Property” shall mean each parcel of real property, the Improvements
thereon and all personal property owned by an Individual Borrower and encumbered
by a Mortgage, together with all rights pertaining to such property and
Improvements, as more particularly described in the granting clauses of the
related Mortgage and referred to therein as the “Property”.
 
“Individual Property Release Yield Maintenance Premium” shall mean an amount
equal to the greater of (a) one percent (1%) of the Adjusted Release Amount for
the Individual Property and (b) the excess, if any, of (i) the sum of the
present values of all then-scheduled payments of principal and interest under
the Loan with respect to a principal amount equal to the Adjusted Release Amount
for the Individual Property, assuming that all scheduled payments are made
timely and that the remaining outstanding principal and interest on the Loan
with respect to a principal amount equal to the Adjusted Release Amount for the
Individual Property is paid on the Permitted Par Prepayment Date (with each such
payment and assumed payment discounted to its present value at the date of
prepayment at the rate which, when compounded monthly, is equivalent to the
Prepayment Rate when compounded semi-annually and deducting from the sum of such
present values any short-term interest paid from the date of prepayment to the
next succeeding Payment Date in the event that such payment is not made on a
Payment Date), over (ii) the principal amount equal to the Adjusted Release
Amount for the Individual Property.
 
“Insurance Premiums” shall have the meaning set forth in Section 6.1(b) hereof.
 
“Insurance Proceeds” shall have the meaning set forth in Section 6.4(b) hereof.
 
“Interest Rate” shall mean a rate of five and 837/1000 percent (5.837%) per
annum.
 
“Lease” shall mean any lease, sublease or subsublease, letting, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any Person is granted a possessory
interest in, or right to use or occupy all or any portion of any space in or at
the Property by or on behalf of Borrower, and (a) every modification, amendment
or other agreement relating to such lease, sublease, subsublease, or other
agreement entered into in connection with such lease, sublease, subsublease, or
other agreement and (b) every guarantee of the performance and observance of the
covenants, conditions and agreements to be performed and observed by the other
party thereto; provided, however, “Lease” shall not include any lease or
sublease to a Person of a manufactured home, mobile home or recreational vehicle
not owned by Borrower.
 
“Legal Requirements” shall mean, all federal, state, county, municipal and other
governmental statutes, laws, rules, orders, regulations, ordinances, judgments,
decrees and injunctions of Governmental Authorities affecting any Individual
Property or any part thereof, or the construction, use, alteration or operation
thereof, or any part thereof, whether now or hereafter enacted and in force, and
all permits, licenses and authorizations and regulations relating thereto, and
all covenants, agreements, restrictions and encumbrances contained in any
instruments, either of record or known to an Individual Borrower, at any time in
force affecting an Individual Borrower, the Individual Property or any part
thereof, including, without
 

 
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limitation, any which may (a) require repairs, modifications or alterations in
or to the Individual Property or any part thereof, or (b) in any way limit the
use and enjoyment thereof.
 
“Lender” shall have the meaning set forth in the introductory paragraph hereto,
together with its successors and assigns.
 
“Letter of Credit” shall have the meaning set forth in Section 7.3.6 hereof.
 
“Lien” shall mean, with respect to each Individual Property, any mortgage, deed
of trust, deed to secure debt, indemnity deed of trust, lien, pledge,
hypothecation, assignment, security interest, or any other encumbrance, charge
or transfer of, on or affecting any Individual Borrower or any Individual
Property, any portion thereof or any interest therein, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, the filing of any financing statement, and mechanic’s, materialmen’s
and other similar liens and encumbrances.
 
“Loan” shall mean the loan made by Lender to Borrower pursuant to this
Agreement.
 
“Loan Documents” shall mean, collectively, this Agreement, the Note, each
Mortgage, the Environmental Indemnity, the Assignment of Management Agreement,
the Guaranty, the Lockbox Agreement, the Cash Management Agreement, and all
other documents executed and/or delivered in connection with the Loan.
 
“Loan to Value Ratio” shall mean, as of the date of its calculation, the ratio
of (i) the sum of the outstanding principal amount of the Loan as of the date of
such calculation to (ii) the fair market value of the Properties, as determined,
in Lender’s sole discretion, by any commercially reasonable method permitted to
a REMIC Trust.
 
“Lockbox Account” shall have the meaning set forth in Section 2.7.1 hereof.
 
“Lockbox Agreement” shall mean that certain Deposit Account Control Agreement
dated the date hereof among Borrower, Lender, Manager and Lockbox Bank, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time, relating to funds deposited in the Lockbox Account.
 
“Lockbox Bank” shall mean the clearing bank which establishes, maintains and
holds the Lockbox Account, which shall be an Eligible Institution.
 
“Management Agreement” shall mean, collectively, each Community Operations
Agreement entered into by and between each Individual Borrower and Manager,
pursuant to which Manager is to provide management and other services with
respect to the Individual Property, or, if the context requires, a Qualified
Manager who is managing the Individual Property in accordance with the terms and
provisions of this Agreement pursuant to a Replacement Management Agreement.
 
“Manager” shall mean Sun or, if the context requires, a Qualified Manager who is
managing any Individual Property in accordance with the terms and provisions of
this Agreement pursuant to a Replacement Management Agreement.
 

 
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“Material Action” means, with respect to any Person, to file any insolvency or
reorganization case or proceeding, to institute proceedings to have such Person
be adjudicated bankrupt or insolvent, to institute proceedings under any
applicable insolvency law, to seek any relief under any law relating to relief
from debts or the protection of debtors, to consent to the filing or institution
of bankruptcy or insolvency proceedings against such Person, to file a petition
seeking, or consent to, reorganization or relief with respect to such Person
under any applicable federal or state law relating to bankruptcy or insolvency,
to seek or consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator, custodian, or any similar official of or for such Person
or a substantial part of its property, to make any assignment for the benefit of
creditors of such Person, to admit in writing such Person’s inability to pay its
debts generally as they become due, or to take action in furtherance of any of
the foregoing.
 
“Maturity Date” shall mean March 1, 2021, or such other date on which the final
payment of principal of the Note becomes due and payable as therein or herein
provided, whether at such stated maturity date, by declaration of acceleration,
or otherwise.
 
“Maximum Legal Rate” shall mean the maximum nonusurious interest rate, if any,
that at any time or from time to time may be contracted for, taken, reserved,
charged or received on the indebtedness evidenced by the Note and as provided
for herein or the other Loan Documents, under the laws of such state or states
whose laws are held by any court of competent jurisdiction to govern the
interest rate provisions of the Loan.
 
“Monthly Debt Service Payment Amount” shall mean a constant monthly payment of
$677,478.04.
 
“Moody’s” shall mean Moody’s Investors Service, Inc.
 
“Mortgage” or “Mortgages” shall mean with respect to each Individual Property,
that certain first priority Deed of Trust, Assignment of Leases and Rents and
Security Agreement and/or Mortgage, Assignment of Leases and Rents and Security
Agreement, dated as of the Closing Date, executed and delivered by the related
Individual Borrower to (or for the benefit of) Lender, as security for the Loan
and encumbering the related Individual Property, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to time.
 
“Net Operating Income” shall mean the amount obtained by subtracting Operating
Expenses from Gross Income from Operations.
 
“Net Proceeds” shall have the meaning set forth in Section 6.4(b) hereof.
 
“Net Proceeds Deficiency” shall have the meaning set forth in Section 6.4(b)(vi)
hereof.
 
“Notice of Non-Extension” shall have the meaning set forth in Section 7.3.6
hereof.
 
“Note” shall mean that certain Promissory Note, dated the date hereof, in the
principal amount of $115,000,000.00, made by Borrower in favor of Lender, as the
same may be amended, restated, replaced, supplemented or otherwise modified from
time to time.
 
“O&M Program” shall have the meaning set forth in Section 5.1.19 hereof.
 

 
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“Officer’s Certificate” shall mean a certificate delivered to Lender by Borrower
which is signed by an authorized officer of Borrower or the general partner,
managing member or sole member of Borrower, as applicable.
 
“Operating Expenses” shall mean the total of all expenditures, computed in
accordance with GAAP, of whatever kind relating to the operation, maintenance
and management of the Properties that are incurred on a regular monthly or other
periodic basis, including without limitation, bad debt, utilities, ordinary
repairs and maintenance, insurance, license fees, property taxes and
assessments, advertising expenses, management fees, payroll and related taxes,
computer processing charges, operational equipment or other lease payments as
approved by Lender, and other similar costs, but excluding non-cash items (e.g.,
depreciation and amortization), Debt Service, Capital Expenditures and
contributions to the Reserve Funds.
 
“Other Charges” shall mean all ground rents, maintenance charges, impositions
other than Taxes, and any other charges, including, without limitation, vault
charges and license fees for the use of vaults, chutes and similar areas
adjoining any Individual Property, now or hereafter levied or assessed or
imposed against such Individual Property or any part thereof.
 
“Other Obligations” shall have the meaning as set forth in the Mortgage.
 
“Payment Date” shall mean the first (1st) day of each calendar month during the
term of the Loan.
 
“Permitted Encumbrances” shall mean, with respect to an Individual Property,
collectively, (a) the Liens and security interests created by the Loan
Documents, (b) all Liens, encumbrances and other matters disclosed in each Title
Insurance Policy relating to such Individual Property or any part thereof, (c)
Liens, if any, for Taxes imposed by any Governmental Authority not yet due or
delinquent, and (d) such other title and survey exceptions as Lender has
approved or may approve in writing in Lender’s sole discretion, which Permitted
Encumbrances in the aggregate do not materially adversely affect the value or
use of the applicable Individual Property or Borrower’s ability to repay the
Loan.
 
“Permitted Investments” shall mean any one or more of the following obligations
or securities acquired at a purchase price of not greater than par, including
those issued by Servicer, the trustee under any Securitization or any of their
respective Affiliates, payable on demand or having a maturity date not later
than the Business Day immediately prior to the first Payment Date following the
date of acquiring such investment and meeting one of the appropriate standards
set forth below:
 
(i) obligations of, or obligations fully guaranteed as to payment of principal
and interest by, the United States or any agency or instrumentality thereof
provided such obligations are backed by the full faith and credit of the United
States of America including, without limitation, obligations of:  the U.S.
Treasury (all direct or fully guaranteed obligations), the Farmers Home
Administration (certificates of beneficial ownership), the General Services
Administration (participation certificates), the U.S. Maritime Administration
(guaranteed Title XI financing), the Small Business Administration (guaranteed
participation certificates and guaranteed pool certificates),
 
 
 
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the U.S. Department of Housing and Urban Development (local authority bonds) and
the Washington Metropolitan Area Transit Authority (guaranteed transit bonds);
provided, however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an “r” highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments must not
be subject to liquidation prior to their maturity;
 
(ii) Federal Housing Administration debentures;
 
(iii) obligations of the following United States government sponsored
agencies:  Federal Home Loan Mortgage Corp. (debt obligations), the Farm Credit
System (consolidated systemwide bonds and notes), the Federal Home Loan Banks
(consolidated debt obligations), the Federal National Mortgage Association (debt
obligations), the Financing Corp. (debt obligations), and the Resolution Funding
Corp. (debt obligations); provided, however, that the investments described in
this clause must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have an “r”
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;
 
(iv) federal funds, unsecured certificates of deposit, time deposits, bankers’
acceptances and repurchase agreements with maturities of not more than 365 days
of any bank, the short term obligations of which at all times are rated in the
highest short term rating category by each Rating Agency (or, if not rated by
all Rating Agencies, rated by at least one Rating Agency in the highest short
term rating category and otherwise acceptable to each other Rating Agency, as
confirmed in writing that such investment would not, in and of itself, result in
a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities); provided, however, that the
investments described in this clause must (A) have a predetermined fixed dollar
of principal due at maturity that cannot vary or change, (B) if rated by S&P,
must not have an “r” highlighter affixed to their rating, (C) if such
investments have a variable rate of interest, such interest rate must be tied to
a single interest rate index plus a fixed spread (if any) and must move
proportionately with that index, and (D) such investments must not be subject to
liquidation prior to their maturity;
 
(v) fully Federal Deposit Insurance Corporation-insured demand and time deposits
in, or certificates of deposit of, or bankers’ acceptances issued by, any bank
or trust company, savings and loan association or savings bank, the short term
obligations of which at all times are rated in the highest short term rating
category by each Rating Agency (or, if not rated by all Rating Agencies, rated
by at least one Rating Agency in the highest short term rating category and
otherwise acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
 
 
 
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assigned to the Securities); provided, however, that the investments described
in this clause must (A) have a predetermined fixed dollar of principal due at
maturity that cannot vary or change, (B) if rated by S&P, must not have an “r”
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;
 
(vi) debt obligations with maturities of not more than 365 days and at all times
rated by each Rating Agency (or, if not rated by all Rating Agencies, rated by
at least one Rating Agency and otherwise acceptable to each other Rating Agency,
as confirmed in writing that such investment would not, in and of itself, result
in a downgrade, qualification or withdrawal of the initial, or, if higher, then
current ratings assigned to the Securities) in its highest long-term unsecured
rating category; provided, however, that the investments described in this
clause must (A) have a predetermined fixed dollar of principal due at maturity
that cannot vary or change, (B) if rated by S&P, must not have an “r”
highlighter affixed to their rating, (C) if such investments have a variable
rate of interest, such interest rate must be tied to a single interest rate
index plus a fixed spread (if any) and must move proportionately with that
index, and (D) such investments must not be subject to liquidation prior to
their maturity;
 
(vii) commercial paper (including both non-interest-bearing discount obligations
and interest-bearing obligations payable on demand or on a specified date not
more than one year after the date of issuance thereof) with maturities of not
more than 365 days and that at all times is rated by each Rating Agency (or, if
not rated by all Rating Agencies, rated by at least one Rating Agency and
otherwise acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities) in its highest short-term unsecured debt rating;
provided, however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary or
change, (B) if rated by S&P, must not have an “r” highlighter affixed to their
rating, (C) if such investments have a variable rate of interest, such interest
rate must be tied to a single interest rate index plus a fixed spread (if any)
and must move proportionately with that index, and (D) such investments must not
be subject to liquidation prior to their maturity;
 
(viii) units of taxable money market funds, which funds are regulated investment
companies, seek to maintain a constant net asset value per share and invest
solely in obligations backed by the full faith and credit of the United States,
which funds have the highest rating available from each Rating Agency (or, if
not rated by all Rating Agencies, rated by at least one Rating Agency and
otherwise acceptable to each other Rating Agency, as confirmed in writing that
such investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the initial, or, if higher, then current ratings
assigned to the Securities) for money market funds; and
 
(ix) any other security, obligation or investment which has been approved as a
Permitted Investment in writing by (a) Lender and (b) each Rating Agency, as
evidenced

 
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        by a written confirmation that the designation of such security,
obligation or investment as a Permitted Investment will not, in and of itself,
result in a downgrade, qualification or withdrawal of the initial, or, if
higher, then current ratings assigned to the Securities by such Rating Agency;
 
provided, however, that no obligation or security shall be a Permitted
Investment if (A) such obligation or security evidences a right to receive only
interest payments or (B) the right to receive principal and interest payments on
such obligation or security are derived from an underlying investment that
provides a yield to maturity in excess of 120% of the yield to maturity at par
of such underlying investment.
 
“Permitted Par Prepayment Date” shall mean the Payment Date which is three (3)
months prior to the Maturity Date.
 
“Permitted Prepayment Date” shall mean the second (2nd) anniversary of the first
Payment Date.
 
“Permitted Transfer” shall mean any of the following:
 
(a)           any Transfer, directly as a result of the death of a natural
person, of stock, membership interests, partnership interests or other ownership
interests previously held by the decedent in question to the Person or Persons
lawfully entitled thereto;
 
(b)           any Transfer, directly as a result of the legal incapacity of a
natural person, of stock, membership interests, partnership interests or other
ownership interests previously held by such natural person to the Person or
Persons lawfully entitled thereto;
 
(c)           any Transfer, issuance or redemption of shares of stock of Sun by
any Person (including a Restricted Party), or any Transfer, issuance or
redemption by any Person (including a Restricted Party) of the stock, membership
interests, partnership interests or other ownership interests of any
shareholder, partner, member, manager or trust who is a direct or indirect legal
or beneficial owner of any shares of stock of Sun; or
 
(d)           any Transfer, issuance or redemption of the limited partnership
interests of Guarantor by any Person (including a Restricted Party) or any
Transfer, issuance or redemption of the stock, membership interests, partnership
interests or other ownership interests of any shareholder, partner, member,
manager or trust who is a direct or indirect legal or beneficial owner of a
limited partnership interest in Guarantor.
 
“Person” shall mean any individual, corporation, partnership, joint venture,
limited liability company, estate, trust, unincorporated association, any
federal, state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf of any of the
foregoing.
 
“Personal Property” shall have the meaning set forth in the granting clause of
the Mortgage with respect to each Individual Property.
 

 
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“Pheasant Ridge Property” shall mean the Individual Property located in
Lancaster, Pennsylvania and referred to as Pheasant Ridge on Schedule III
attached hereto.
 
“Policies” shall have the meaning specified in Section 6.1(b) hereof.
 
“Policy” shall have the meaning specified in Section 6.1(b) hereof.
 
“Prepayment Rate” shall mean the bond equivalent yield (in the secondary market)
on the United States Treasury Security that as of the Prepayment Rate
Determination Date has a remaining term to maturity closest to, but not
exceeding, the remaining term to the Permitted Par Prepayment Date as most
recently published in “Statistical Release H.15 (519), Selected Interest Rates,”
or any successor publication, published by the Board of Governors of the Federal
Reserve System, or on the basis of such other publication or statistical guide
as Lender may reasonably select.
 
“Prepayment Rate Determination Date” shall mean the date which is five (5)
Business Days prior to the date that such prepayment shall be applied in
accordance with the terms and provisions of Section 2.4.1 hereof.
 
“Principal” shall mean the Special Purpose Entity that is the general partner of
an Individual Borrower, if such Individual  Borrower is a limited partnership,
or managing member of an Individual Borrower, if such Individual Borrower is a
limited liability company.
 
“Property” or “Properties” shall mean, collectively, each and every Individual
Property which is subject to the terms of this Agreement.
 
“Provided Information” shall mean any and all financial and other information
provided at any time prepared by, or on behalf of, Borrower, Principal,
Guarantor and/or Manager.
 
“Qualified Manager” shall mean either (a) Manager; (b) Guarantor or (c) in the
reasonable judgment of Lender, a reputable and experienced management
organization (which may be an Affiliate of Borrower) possessing experience in
managing properties similar in size, scope, use and value as the applicable
Individual Property, provided, that, if required by Lender, Borrower shall have
obtained (i) prior written confirmation from the applicable Rating Agencies that
management of such Individual Property by such entity will not cause a
downgrade, withdrawal or qualification of the then current ratings of the
Securities or any class thereof and (ii) if such entity is an Affiliate of
Borrower, an Additional Insolvency Opinion.
 
“Rating Agencies” shall mean each of S&P, Moody’s, Fitch, and Realpoint or any
other nationally recognized statistical rating agency which has been approved by
Lender and designated by Lender to assign a rating to the Securities.
 
“Realpoint” shall mean Realpoint, LLC, a Pennsylvania limited liability company.
 
“Related Entities” shall have the meaning set forth in Section 5.2.10(e) hereof.
 

 
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“Release” of any Hazardous Substance includes but is not limited to any release,
deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting,
pumping, pouring, emptying, escaping, dumping, disposing or other movement of
Hazardous Substances.
 
“Release Amount” shall mean for an Individual Property the amount set forth on
Schedule III hereto.
 
“Release Debt Service Coverage Ratio” shall mean the product of 1.44 multiplied
by a fraction of which (a) the numerator is the sum of the Release Amounts of
all Properties subject to the Liens of the Mortgages (including the Individual
Property to be released), and (b) the denominator is the sum of the then-current
outstanding principal amount of the Loan.
 
“Remediation” includes but is not limited to any response, remedial, removal, or
corrective action, any activity to cleanup, detoxify, decontaminate, contain or
otherwise remediate any Hazardous Substance, any actions to prevent, cure or
mitigate any Release of any Hazardous Substance, any action to comply with any
Environmental Laws or with any permits issued pursuant thereto, any inspection,
investigation, study, monitoring, assessment, audit, sampling and testing,
laboratory or other analysis, or evaluation relating to any Hazardous
Substances.
 
“REMIC Trust” shall mean a “real estate mortgage investment conduit” within the
meaning of Section 860D of the Code that holds the Note or a portion thereof.
 
“Rents” shall mean, with respect to each Individual Property, all rents
(including percentage rents), rent equivalents, moneys payable as damages or in
lieu of rent or rent equivalents, royalties (including, without limitation, all
oil and gas or other mineral royalties and bonuses), income, receivables,
receipts, revenues, deposits (including, without limitation, security, utility
and other deposits), accounts, cash, issues, profits, charges for services
rendered, all other amounts payable to Borrower as rent under any Lease or other
agreement relating to the Property, including, without limitation, charges for
electricity, oil, gas, water, steam, heat, ventilation, air-conditioning and any
other energy, telecommunication, telephone, utility or similar items or time use
charges, HVAC equipment charges, sprinkler charges, escalation charges, license
fees, maintenance fees, charges for Taxes, operating expenses or other
reimbursables payable to any Individual Borrower (or to the Manager for the
account of such Individual Borrower) under any Lease, and other consideration of
whatever form or nature received by or paid to or for the account of or benefit
of Borrower from any and all sources arising from or attributable to the
Individual Property; provided, however, “Rents” shall not include rents from any
lease or sublease of a manufactured home, mobile home or recreational vehicle
not owned by Borrower.
 
“Replacement Management Agreement” shall mean, collectively, (a) either (i) a
management agreement with a Qualified Manager substantially in the same form and
substance as the Management Agreement, or (ii) a management agreement with a
Qualified Manager, which management agreement shall be reasonably acceptable to
Lender in form and substance, provided, with respect to this subclause (ii),
Lender, at its option, may require that Borrower shall have obtained prior
written confirmation from the applicable Rating Agencies that such

 
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management agreement will not cause a downgrade, withdrawal or qualification of
the then current rating of the Securities or any class thereof and (b) an
assignment of management agreement and subordination of management fees
substantially in the form then used by Lender (or of such other form and
substance reasonably acceptable to Lender), executed and delivered to Lender by
the related Individual Borrower and such Qualified Manager at Borrower’s
expense.
 
“Replacement Reserve Account” shall have the meaning set forth in Section 7.3.1
hereof.
 
“Replacement Reserve Fund” shall have the meaning set forth in Section 7.3.1
hereof.
 
“Replacement Reserve Monthly Deposit” shall have the meaning set forth in
Section 7.3.1 hereof.
 
“Replacements” shall have the meaning set forth in Section 7.3.1 hereof.
 
“Required Repairs” shall have the meaning set forth in Section 7.1.1 hereof.
 
“Reserve Funds” shall mean, collectively, the Tax and Insurance Escrow Fund, the
Replacement Reserve Fund, the Excess Cash Flow Reserve Fund and any other escrow
fund established by the Loan Documents.
 
“Restoration” shall mean the repair and restoration of an Individual Property
after a Casualty or Condemnation as nearly as possible to the condition the
Individual Property was in immediately prior to such Casualty or Condemnation,
with such alterations as may be reasonably approved by Lender.
 
“Restricted Party” shall mean collectively, (a) Borrower, Principal, any
Guarantor, and any Affiliated Manager and (b) any shareholder, partner, member,
non-member manager, any direct or indirect legal or beneficial owner of,
Borrower, Principal, any Guarantor, any Affiliated Manager or any non-member
manager.
 
“S&P” shall mean Standard & Poor’s Ratings Group, a division of the McGraw-Hill
Companies.
 
“Sale or Pledge” shall mean a voluntary or involuntary sale, conveyance,
assignment, transfer, encumbrance, pledge, grant of option or other transfer or
disposal of a legal or beneficial interest, whether direct or indirect.
 
“Securities” shall have the meaning set forth in Section 9.1 hereof.
 
“Securitization” shall have the meaning set forth in Section 9.1 hereof.
 
“Servicer” shall have the meaning set forth in Section 9.5 hereof.
 
“Severed Loan Documents” shall have the meaning set forth in Section 8.2(c)
hereof.
 

 
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“Siesta Bay Property” shall mean the Individual Property located in Ft. Myers,
Florida and referred to as Siesta Bay on Schedule III attached hereto.
 
“Special Purpose Entity” shall mean a corporation, limited partnership or
limited liability company that, since the date of its formation and at all times
on and after the date thereof, has complied with and shall at all times comply
with the following requirements unless it has received either prior consent to
do otherwise from Lender or a permitted administrative agent thereof, or, while
the Loan is securitized, confirmation from each of the applicable Rating
Agencies that such noncompliance would not result in the requalification,
withdrawal, or downgrade of the ratings of any Securities or any class thereof:
 
(i) is and shall be organized solely for the purpose of (A) with respect to each
Individual Borrower acquiring, developing, owning, holding, selling, leasing,
transferring, exchanging, managing and operating the related Individual
Property, entering into and performing its obligations under the Loan Documents
with Lender, refinancing the related Individual Property in connection with a
permitted repayment of the Loan, and transacting lawful business that is
incident, necessary and appropriate to accomplish the foregoing; or (B) in the
case of a Principal, acting as a general partner of the limited partnership that
owns the related Individual Property or as managing member of the limited
liability company that owns the related Individual Property and transacting
lawful business that is incident, necessary and appropriate to accomplish the
foregoing;
 
(ii) has not engaged and shall not engage in any business unrelated to (A) the
acquisition, development, ownership, management, leasing or operation of each
Individual Property and all matters incidental thereto, or (B) in the case of a
Principal, acting as general partner of the limited partnership that owns the
related Individual Property or acting as a managing member of the limited
liability company that owns the related Individual Property, as applicable;
 
(iii) has not owned and shall not own any real property other than, in the case
of any Individual Borrower, the Individual Property;
 
(iv) does not have, shall not have and at no time had any assets other than
(A) with respect to each Individual Borrower, the related Individual Property
and personal property necessary or incidental to its ownership and operation of
the related Individual Property or (B) in the case of a Principal, its
partnership interest in the limited partnership or the member interest in the
limited liability company that owns the related Individual Property and personal
property necessary or incidental to its ownership of such interests or its role
as general partner or managing member of an Individual Borrower;
 
(v) has not engaged in, sought, consented or permitted to and shall not engage
in, seek, consent to or permit (A) any dissolution, winding up, liquidation,
consolidation or merger, (B) any sale or other transfer of all or substantially
all of its assets or any sale of assets outside the ordinary course of its
business, except as permitted by the Loan Documents, or (C) in the case of a
Principal, any transfer of its partnership or membership interests in violation
of the Loan Documents;

 
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(vi) shall not cause, consent to or permit any amendment of its limited
partnership agreement, articles of incorporation, articles of organization,
certificate of formation, operating agreement or other formation document or
organizational document (as applicable) contrary to the matters set forth in
this definition;
 
(vii) if such entity is a limited partnership, has and shall have at least one
general partner and has and shall have, as its only general partners, Special
Purpose Entities each of which (A) is a corporation or single member Delaware
limited liability company, (B) has two (2) Independent Directors, and (C) holds
a direct interest as general partner in the limited partnership of not less than
0.5%;
 
(viii) if such entity is a corporation, has and shall have at least two (2)
Independent Directors, and shall not cause or permit the board of directors of
such entity to take any Material Action either with respect to itself or, if the
corporation is a Principal, with respect to Borrower unless two (2) Independent
Directors shall have participated in such vote and shall have voted in favor of
such Material Action;
 
(ix) if such entity is a limited liability company (other than a limited
liability company meeting all of the requirements applicable to a single-member
limited liability company set forth in this definition of “Special Purpose
Entity”), has and shall have at least one (1) member that is a Special Purpose
Entity, that is a corporation, that has at least two (2) Independent Directors
and that directly owns at least one-half-of-one percent (0.5%) of the equity of
the limited liability company;
 
(x) if such entity is a single-member limited liability company, (A) is and
shall be a Delaware limited liability company, (B) has and shall have at least
two (2) Independent Directors serving as managers of such company, (C) shall not
take any Material Action and shall not cause or permit the members or managers
of such entity to take any Material Action, either with respect to itself or, if
the company is a Principal, with respect to Borrower, in each case unless two
(2) Independent Directors then serving as managers of the company shall have
participated and consented in writing to such action, and (D) has and shall have
either (1) a member which owns no economic interest in the company, has signed
the company’s limited liability company agreement and has no obligation to make
capital contributions to the company, or (2) two natural persons or one entity
that is not a member of the company, that has signed its limited liability
company agreement and that, under the terms of such limited liability company
agreement becomes a member of the company immediately prior to the withdrawal or
dissolution of the last remaining member of the company;
 
(xi) has not and shall not (and, if such entity is (a) a limited liability
company, has and shall have a limited liability agreement or an operating
agreement, as applicable, (b) a limited partnership, has a limited partnership
agreement, or (c) a corporation, has a certificate of incorporation or articles
that, in each case, provide that such entity shall not) (1) dissolve, merge,
liquidate, consolidate; (2) sell all or substantially all of its assets except
in compliance with the terms and conditions of this Agreement; (3) amend its
organizational documents contrary to the matters set forth in this definition
without the consent of Lender; or (4) take any Material Action without the
affirmative vote of two (2)
 
 
 
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        Independent Directors of itself or the consent of a Principal that is a
member or general partner in it;
  
(xii) has at all times been and shall at all times remain solvent and has paid
and shall pay its debts and liabilities (including, a fairly-allocated portion
of any personnel and overhead expenses that it shares with any Affiliate) from
its assets as the same shall become due, and has maintained and shall maintain
adequate capital for the normal obligations reasonably foreseeable in a business
of its size and character and in light of its contemplated business operations;
provided, however, in each of the foregoing cases, there exists sufficient cash
flow from the operation of each applicable Individual Property to do so, and in
no event shall the members or partners of any Individual Borrower or its
constituent owners have any obligation to make capital contributions or advances
to any Individual Borrower for such purpose;
 
(xiii) has not failed and shall not fail to correct any known misunderstanding
regarding the separate identity of such entity and has not identified and shall
not identify itself as a division of any other Person;
 
(xiv) has maintained and shall maintain its bank accounts, books of account,
books and records separate from those of any other Person and, to the extent
that it is required to file tax returns under applicable law, has filed and
shall file its own tax returns, except to the extent that it is required by law
to file consolidated tax returns and, if it is a corporation, has not filed and
shall not file a consolidated federal income tax return with any other
corporation, except to the extent that it is required by law to file
consolidated tax returns;
 
(xv) has maintained and shall maintain its own records, books, resolutions and
agreements;
 
(xvi) has not commingled and shall not commingle its funds or assets with those
of any other Person and has not participated and shall not participate in any
cash management system with any other Person, except for the Cash Management
Agreement and any cash management agreement entered into in connection with
prior mortgage loans secured by any or all of the Properties, which prior
mortgage loans have been satisfied in full or will be satisfied and paid in full
from the proceeds of the Loan;
 
(xvii) has held and shall hold its assets in its own name;
 
(xviii) has conducted and shall conduct its business in its name or in a name
franchised or licensed to it by an entity other than an Affiliate of itself or
of Borrower, except for business conducted on behalf of itself by another Person
(including Manager or Qualified Manager) under a business management services
agreement that is on commercially-reasonable terms, so long as the manager, or
equivalent thereof, under such business management services agreement holds
itself out as an agent of Borrower;
 
(xix) (A) has maintained and shall maintain its financial statements, accounting
records and other entity documents separate from those of any other Person; (B)
has shown and shall show, in its financial statements, its asset and liabilities
separate and
 
 
 
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apart from those of any other Person; and (C) has not permitted and shall not
permit its assets to be listed as assets on the financial statement of any of
its Affiliates except as required by GAAP; provided, however, that any such
consolidated financial statement contains a note indicating that the Special
Purpose Entity’s separate assets and credit are not available to pay the debts
of such Affiliate and that the Special Purpose Entity’s liabilities do
not  constitute obligations of the consolidated entity;
 
(xx) has paid and shall pay its own liabilities and expenses, including the
salaries of its own employees, out of its own funds and assets, and has
maintained and shall maintain a sufficient number of employees in light of its
contemplated business operations; provided, however, Lender acknowledges that
the Borrower does not, and is not required, to have employees;
 
(xxi) has observed and shall observe all partnership, corporate or limited
liability company formalities, as applicable;
 
(xxii) has not incurred any Indebtedness other than (i) financing secured by the
Property; financing with respect to construction and renovation or alteration of
the Improvements and certain off-site improvements required by municipal and
other authorities as conditions to the construction of the Improvements; and
first mortgage financings secured by the Property; and Indebtedness pursuant to
letters of credit, guaranties, interest rate protection agreements and other
similar instruments executed and delivered in connection with such financings,
(ii) unsecured trade payables and operational debt not evidenced by a note, and
(iii) Indebtedness incurred in the financing of equipment and other personal
property used on the Property;
 
(xxiii) shall have no Indebtedness other than (i) the Loan, (ii) liabilities
incurred in the ordinary course of business relating to the ownership,
operation, leasing and management of the related Individual Property and the
routine administration of the related Individual Borrower (including, without
limitation, property management fees, real estate taxes, financing leases,
purchase money indebtedness relating to personal property, tenant improvements
and Capital Expenditures), in amounts not to exceed 3% of the amount of the Loan
which liabilities are not more than sixty (60) days past the date incurred, are
not evidenced by a note and are paid when due, and which amounts are normal and
reasonable under the circumstances, and (iii) such other liabilities that are
permitted pursuant to this Agreement;
 
(xxiv) except for the Loan and any prior mortgage loans secured by any or all of
the Properties, which prior mortgage loans have been satisfied and paid in full
or will be satisfied and paid in full from the proceeds of the Loan, has not
assumed, guaranteed or become obligated and shall not assume or guarantee or
become obligated for the debts of any other Person, has not held out and shall
not hold out its credit as being available to satisfy the obligations of any
other Person or has not pledged and shall not pledge its assets for the benefit
of any other Person, in each case except as permitted pursuant to this
Agreement;
 

 
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(xxv) has not acquired and shall not acquire obligations or securities of its
partners, members or shareholders or any other owner or Affiliate;
 
(xxvi) has allocated and shall allocate fairly and reasonably any overhead
expenses that are shared with any of its Affiliates, constituents, or owners, or
any guarantors of any of their respective obligations, or any Affiliate of any
of the foregoing, including, but not limited to, paying for shared office space
and for services performed by any employee of an Affiliate;
 
(xxvii) has maintained and used and shall maintain and use separate stationery,
invoices and checks bearing its name and not bearing the name of any other
entity unless such entity is clearly designated as being the Special Purpose
Entity’s agent;
 
(xxviii) has not pledged and shall not pledge its assets to or for the benefit
of any other Person other than with respect to loans secured by the Property and
no such pledge remains outstanding except to Lender to secure the Loan;
 
(xxix) has held itself out and identified itself and shall hold itself out and
identify itself as a separate and distinct entity under its own name or in a
name franchised or licensed to it by an entity other than an Affiliate of
Borrower and not as a division or part of any other Person;
 
(xxx) has maintained and shall maintain its assets in such a manner that it
shall not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any other Person;
 
(xxxi) has not made and shall not make loans to any Person and has not held and
shall not hold evidence of indebtedness issued by any other Person or entity
(other than cash and investment-grade securities issued by an entity that is not
an Affiliate of or subject to common ownership with such entity);
 
(xxxii) has not identified and shall not identify its partners, members or
shareholders, or any Affiliate of any of them, as a division or part of it, and
has not identified itself and shall not identify itself as a division of any
other Person;
 
(xxxiii) other than the Management Agreement and capital contributions and
distributions permitted under the terms of its organizational documents, has not
entered into or been a party to, and shall not enter into or be a party to, any
transaction with any of its partners, members, shareholders or Affiliates except
in the ordinary course of its business and on terms which are commercially
reasonable terms comparable to those of an arm’s-length transaction with an
unrelated third party;
 
(xxxiv) has not had and shall not have any obligation to, and has not
indemnified and shall not indemnify its partners, officers, directors or
members, as the case may be, in each case unless such an obligation or
indemnification is fully subordinated to the Debt and shall not constitute a
claim against it in the event that its cash flow is insufficient to pay the
Debt;
 

 
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(xxxv) if such entity is a corporation, has considered and shall consider the
interests of its creditors in connection with all corporate actions;
 
(xxxvi) has not had and shall not have any of its obligations guaranteed by any
Affiliate except as provided by the Loan Documents and except for any prior
mortgage loans secured by any or all of the Properties, which prior mortgage
loans have been satisfied and paid in full or will be satisfied and paid in full
from the proceeds of the Loan;
 
(xxxvii) has not formed, acquired or held and shall not form, acquire or hold
any subsidiary, except that a Principal may acquire and hold its interest in
Borrower;
 
(xxxviii) has complied and shall comply with all of the terms and provisions
contained in its organizational documents.
 
(xxxvix) has conducted and shall conduct its business so that each of the
assumptions made about it and each of the facts stated about it in the
Insolvency Opinion are true;
 
(xl) except for Manager, has not permitted and shall not permit any Affiliate or
constituent party independent access to its bank accounts; and
 
(xli) is, has always been and shall continue to be duly formed, validly
existing, and in good standing in the state of its incorporation or formation
and in all other jurisdictions where it is qualified to do business.
 
“State” shall mean, with respect to an Individual Property, the State or
Commonwealth in which such Individual Property or any part thereof is located.
 
“Sun” shall mean Sun Communities, Inc., a Maryland corporation.
 
“Survey” shall mean a survey of the Individual Property prepared by a surveyor
licensed in the State and satisfactory to Lender and the company or companies
issuing the Title Insurance Policy, and containing a certification of such
surveyor satisfactory to Lender.
 
“Tax and Insurance Escrow Fund” shall have the meaning set forth in Section 7.2
hereof.
 
“Taxes” shall mean all real estate and personal property taxes, assessments,
water rates or sewer rents, now or hereafter levied or assessed or imposed
against any Individual Property or part thereof.
 
“Tenant” means the lessee of all or a portion of an Individual Property under a
Lease.
 
“Tenant Direction Letters” shall have the meaning set forth in the Cash
Management Agreement.
 
“Threshold Amount” shall have the meaning set forth in Section 5.1.21 hereof.
 

 
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“Title Insurance Policy” shall mean, with respect to each Individual Property,
an ALTA mortgagee title insurance policy in the form (acceptable to Lender) (or,
if an Individual Property is in a State which does not permit the issuance of
such ALTA policy, such form as shall be
 
“Title Insurance Policy” shall mean, with respect to each Individual Property,
an ALTA mortgagee title insurance policy in the form (acceptable to Lender) (or,
if an Individual Property is in a State which does not permit the issuance of
such ALTA policy, such form as shall be permitted in such State and acceptable
to Lender) issued with respect to such Individual Property and insuring the lien
of the Mortgage encumbering such Individual Property.
 
“Transfer” shall have the meaning set forth in Section 5.2.10(b) hereof.
 
“Transferee” shall have the meaning set forth in Section 5.2.10(e)(iii) hereof.
 
“Transferee’s Principals” shall mean collectively, (A) Transferee’s managing
members, general partners or principal shareholders, as applicable, and (B) such
other members, partners or shareholders, as applicable, which directly or
indirectly shall own a fifty-one percent (51%) or greater economic and voting
interest in Transferee.
 
“UCC” or “Uniform Commercial Code” shall mean the Uniform Commercial Code as in
effect in the State in which an Individual Property is located.
 
“U.S. Obligations” shall mean non-redeemable securities evidencing an obligation
to timely pay principal and/or interest in a full and timely manner that are
(a) direct obligations of the United States of America for the payment of which
its full faith and credit is pledged, or (b) to the extent acceptable to the
Rating Agencies, other “government securities” within the meaning of
Section 2(a)(16) of the Investment Company Act of 1940, as amended.
 
“Yield Maintenance Default Premium” shall mean an amount equal to the greater of
(a) five percent (5%) of the outstanding principal balance of the Loan to be
prepaid or satisfied and (b) the excess, if any, of (i) the sum of the present
values of all then-scheduled payments of principal and interest under the Note
assuming that all scheduled payments are made timely and that the remaining
outstanding principal and interest on the Loan is paid on the Permitted Par
Prepayment Date (with each such payment and assumed payment discounted to its
present value at the date of prepayment at the rate which, when compounded
monthly, is equivalent to the Prepayment Rate when compounded semi-annually and
deducting from the sum of such present values any short-term interest paid from
the date of prepayment to the next succeeding Payment Date in the event such
payment is not made on a Payment Date), over (ii) the principal amount being
prepaid.
 
“Yield Maintenance Premium” shall mean an amount equal to the greater of (a) one
percent (1%) of the outstanding principal of the Loan to be prepaid or satisfied
and (b) the excess, if any, of (i) the sum of the present values of all
then-scheduled payments of principal and interest under the Note assuming that
all scheduled payments are made timely and that the remaining outstanding
principal and interest on the Loan is paid on the Permitted Par Prepayment Date
(with each such payment and assumed payment discounted to its present value at
the date of prepayment at the rate which, when compounded monthly, is equivalent
to the Prepayment Rate when compounded semi-annually and deducting from the sum
of such present values any short-term interest paid from the date of prepayment
to the next succeeding Payment Date in the event such payment is not made on a
Payment Date), over (ii) the principal amount being prepaid.
 
 
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Section 1.2 Principles of Construction.  All references to sections and
schedules are to sections and schedules in or to this Agreement unless otherwise
specified.  All uses of the word “including” shall mean “including, without
limitation” unless the context shall indicate otherwise.  Unless otherwise
specified, the words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement.  Unless otherwise specified,
all meanings attributed to defined terms herein shall be equally applicable to
both the singular and plural forms of the terms so defined.
 
ARTICLE II  - GENERAL TERMS
 
Section 2.1 Loan Commitment; Disbursement to Borrower.
 
2.1.1 Agreement to Lend and Borrow.  Subject to and upon the terms and
conditions set forth herein, Lender hereby agrees to make and Borrower hereby
agrees to accept the Loan on the Closing Date.
 
2.1.2 Single Disbursement to Borrower.  Borrower may request and receive only
one (1) borrowing hereunder in respect of the Loan and any amount borrowed and
repaid hereunder in respect of the Loan may not be reborrowed.  Borrower
acknowledges and agrees that the Loan has been fully funded as of the Closing
Date.
 
2.1.3 The Note, Mortgage and Loan Documents.  The Loan shall be evidenced by the
Note and secured by the Mortgages and the other Loan Documents.
 
2.1.4 Use of Proceeds.  Borrower shall use the proceeds of the Loan to (a)
acquire the Properties or repay and discharge any existing loans relating to the
Properties, (b) pay all past-due basic carrying costs, if any, with respect to
the Properties, (c) make deposits into the Reserve Funds on the Closing Date in
the amounts provided herein, (d) pay costs and expenses incurred in connection
with the closing of the Loan, as approved by Lender, (e) fund any working
capital requirements of the Properties and (f) distribute the balance, if any,
to Borrower and its partners and/or members.
 
Section 2.2 Interest Rate.
 
2.2.1 Interest Rate.  Interest on the outstanding principal balance of the Loan
shall accrue at the Interest Rate or as otherwise set forth in this Agreement
from (and including) the Closing Date to but excluding the Maturity Date.
 
2.2.2 Interest Calculation.  Interest on the outstanding principal balance of
the Loan shall be calculated by multiplying (a) the actual number of days
elapsed in the relevant Accrual Period by (b) a daily rate based on the Interest
Rate and a three hundred sixty (360) day year by (c) the outstanding principal
balance of the Loan.
 
2.2.3 Default Rate.  In the event that, and for so long as, any Event of Default
shall have occurred and be continuing, the outstanding principal balance of the
Loan and, to the extent permitted by law, all accrued and unpaid interest in
respect of the Loan and any other amounts due pursuant to the Loan Documents,
shall accrue interest at the Default Rate,
 
 
 
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calculated from the date such payment was due without regard to any grace or
cure periods contained herein.
 
2.2.4 Usury Savings.  This Agreement, the Note and the other Loan Documents are
subject to the express condition that at no time shall Borrower be obligated or
required to pay interest on the principal balance of the Loan at a rate which
could subject Lender to either civil or criminal liability as a result of being
in excess of the Maximum Legal Rate.  If, by the terms of this Agreement or the
other Loan Documents, Borrower is at any time required or obligated to pay
interest on the principal balance due hereunder at a rate in excess of the
Maximum Legal Rate, the Interest Rate or the Default Rate, as the case may be,
shall be deemed to be immediately reduced to the Maximum Legal Rate and all
previous payments in excess of the Maximum Legal Rate shall be deemed to have
been payments in reduction of principal and not on account of the interest due
hereunder.  All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the sums due under the Loan, shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full so that the
rate or amount of interest on account of the Loan does not exceed the Maximum
Legal Rate of interest from time to time in effect and applicable to the Loan
for so long as the Loan is outstanding.
 
Section 2.3 Loan Payment.
 
2.3.1 Monthly Debt Service Payments.  Borrower shall pay to Lender (a) on the
Closing Date, an amount equal to interest only on the outstanding principal
balance of the Loan for the initial Accrual Period and (b) on April 1, 2011 and
on each Payment Date thereafter up to and including the Maturity Date, the
Monthly Debt Service Payment Amount, which payments shall be applied first to
accrued and unpaid interest and the balance to principal.
 
2.3.2 Payments Generally.  For purposes of making payments hereunder, but not
for purposes of calculating Accrual Periods, if the day on which such payment is
due is not a Business Day, then amounts due on such date shall be due on the
immediately preceding Business Day and with respect to payments of principal due
on the Maturity Date, interest shall be payable at the Interest Rate or the
Default Rate, as the case may be, through and including the day immediately
preceding such Maturity Date.  All amounts due under this Agreement and the
other Loan Documents shall be payable without setoff, counterclaim, defense or
any other deduction whatsoever.
 
2.3.3 Payment on Maturity Date.  Borrower shall pay to Lender on the Maturity
Date the outstanding principal balance of the Loan, all accrued and unpaid
interest and all other amounts due hereunder and under the Note, the Mortgages
and the other Loan Documents.
 
2.3.4 Late Payment Charge.  If any principal, interest or any other sums due
under the Loan Documents (excluding the amounts due on the Maturity Date) are
not paid by Borrower on or prior to the date on which it is due, Borrower shall
pay to Lender upon demand an amount equal to the lesser of five percent (5%) of
such unpaid sum and the Maximum Legal Rate in order to defray the expense
incurred by Lender in handling and processing such delinquent payment and to
compensate Lender for the loss of the use of such delinquent
 
 
 
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payment.  Any such amount shall be secured by the Mortgages and the other Loan
Documents to the extent permitted by applicable law.
 
2.3.5 Method and Place of Payment.  Except as otherwise specifically provided
herein, all payments and prepayments under this Agreement and the Note shall be
made to Lender not later than 11:00 A.M., New York City time, on the date when
due and shall be made in lawful money of the United States of America in
immediately available funds at Lender’s office or as otherwise directed by
Lender, and any funds received by Lender after such time shall, for all purposes
hereof, be deemed to have been paid on the next succeeding Business Day.
 
Section 2.4 Prepayments.
 
2.4.1 Voluntary Prepayments.
 
(a) Except as otherwise expressly provided in this Section 2.4, Borrower shall
not have the right to prepay the Loan in whole or in part prior to the Maturity
Date.
 
(b) On the Permitted Prepayment Date, and on any Business Day thereafter through
the Maturity Date, Borrower may, at its option, prepay the Debt in full (but not
in part, except as permitted by Section 2.6.2 hereof), provided that (i) no
Event of Default then exists, (ii) Borrower submits a notice to Lender setting
forth the projected date of prepayment, which date shall be no less than
thirty (30) days from the date of such notice, (iii) Borrower pays to Lender (A)
the unpaid principal amount of the Note, (B) all interest accrued and unpaid on
the principal balance of the Note to and including the date of prepayment, (C)
all other sums due under the Note, this Agreement and the other Loan Documents,
(D) if such prepayment occurs prior to the Permitted Par Prepayment Date, the
Yield Maintenance Premium, and (E) if such prepayment is not paid on a regularly
scheduled Payment Date, interest for the full Accrual Period during which the
prepayment occurs.
 
2.4.2 Mandatory Prepayments.  On the next occurring Payment Date following the
date on which Lender actually receives any Net Proceeds, if Lender is not
obligated to make such Net Proceeds available to Borrower for the Restoration of
the Property or otherwise remit such Net Proceeds to Borrower pursuant to
Section 6.4 hereof, Borrower authorizes Lender, at Lender’s option, to apply Net
Proceeds as a prepayment of all or a portion of the outstanding principal
balance of the Loan together with accrued interest and any other sums due
hereunder in an amount equal to one hundred percent (100%) of such Net Proceeds;
provided, however, if an Event of Default has occurred and is continuing, Lender
may apply such Net Proceeds to the Debt (until paid in full) in any order or
priority in its sole discretion.  Other than following an Event of Default, no
Yield Maintenance Premium or other premium shall be due in connection with any
prepayment made pursuant to this Section 2.4.2.
 
2.4.3 Prepayments After Default.  If following an Event of Default which occurs
prior to the Permitted Par Prepayment Date, payment of all or any part of the
Debt is tendered by Borrower or otherwise recovered by Lender, such tender or
recovery shall be (a) made on the next occurring Payment Date together with the
Monthly Debt Service Payment and (b) deemed a voluntary prepayment by Borrower
in violation of the prohibition against
 
 
 
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prepayment set forth in Section 2.4.1 hereof, and Borrower shall pay, in
addition to the Debt, an amount equal to the Yield Maintenance Default Premium
which can be applied by Lender in such order and priority as Lender shall
determine in its sole and absolute discretion.
 
2.4.4 [Intentionally Omitted].
 
Section 2.5 [Intentionally Omitted].
 
Section 2.6 Release of Property.  Except as set forth in this Section 2.6, no
repayment or prepayment of all or any portion of the Loan shall cause, give rise
to a right to require, or otherwise result in, the release of the Lien of the
Mortgage on the Property.
 
2.6.1 Release of All Properties.
 
(a) If Borrower has the right to and has elected to prepay the entire Loan and
the requirements of Section 2.4, and this Section 2.6.1 have been satisfied, all
of the Properties shall be released from the Liens of their respective
Mortgages.
 
(b) In connection with the release of the Mortgages, Borrower shall submit to
Lender, not less than ten (10) days prior to the date of prepayment, a release
of Lien (and related Loan Documents) for each Individual Property for execution
by Lender.  Each such release shall be in a form appropriate in each
jurisdiction in which each Individual Property is located and that would be
satisfactory to a prudent lender and contains standard provisions, if any,
protecting the rights of the releasing lender.  In addition, Borrower shall
provide all other documentation Lender reasonably requires to be delivered by
Borrower in connection with such releases, together with an Officer’s
Certificate certifying that such documentation (i) is in compliance with all
Legal Requirements, and (ii) will effect such releases in accordance with the
terms of this Agreement.  Borrower shall reimburse Lender and Servicer for any
reasonable costs and expenses Lender and Servicer incur arising from such
release (including reasonable attorneys’ fees and expenses) and Borrower shall
pay, in connection with such release, (i) all recording charges, filing fees,
taxes or other expenses payable in connection therewith, and (ii) to any
Servicer, the current fee being assessed by such Servicer to effect such
release, but such fee being assessed pursuant to this subsection (ii) shall be
customary and reasonable and shall not exceed the then current fee being
assessed by Servicer to other borrowers to effect a similar release.
 
2.6.2 Release of Individual Property.  On the Permitted Prepayment Date, and on
any Business Day thereafter through the Maturity Date, Borrower may obtain the
release of one or more Properties from the Lien of the Mortgage thereon (and
related Loan Documents) and the release of the related Individual Borrower’s
obligations under the Loan Documents with respect to such Individual Property
(other than those expressly stated to survive), upon the satisfaction of each of
the following conditions:
 
(a) Borrower shall pay Lender the Adjusted Release Amount for the applicable
Individual Property together with the Individual Property Release Yield
Maintenance Premium;
 
 
 
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(b) No Event of Default shall have occurred and be continuing, nor shall have
there occurred any event which would, with the giving of notice or passage of
time, or both, constitute an Event of Default;
 
(c) Borrower shall, if available, provide an endorsement to each Title Insurance
Policy then insuring the lien created by each remaining Mortgage (x) extending
the effective date of each such Title Insurance Policy to the effective date of
the release and (y) confirming no change in the priority of each unreleased
Mortgage on the remainder of the Property;
 
(d) Subsequent to such release, each remaining Individual Borrower shall
continue to be a Special Purpose Entity pursuant to, and in accordance with,
Section 4.1.30 hereof and, upon a request by Lender, the remaining Individual
Borrowers shall appoint a new Principal to the extent that any existing
Principal, following such release, does not satisfy the requirements of Section
4.1.30(a) hereof.;
 
(e) Borrower shall deliver to Lender and the Rating Agencies, if required by
Lender, an Additional Insolvency Opinion or an update of the Insolvency Opinion
indicating that the release does not affect the opinion set forth therein;
 
(f) Borrower shall deliver an opinion of tax counsel that would be acceptable to
a prudent lender acting reasonably, prepared and delivered at Borrower’s
expense, stating that as a result of such release of the applicable Individual
Property any REMIC Trust that has acquired the Loan (i) will not fail to
maintain its status as a REMIC Trust, (ii) will not be subject to tax on any
“prohibited transactions” or “prohibited contributions” and (iii) will not
constitute a “significant modification” under applicable REMIC regulations;
 
(g) Borrower shall submit to Lender, not less than ten (10) days prior to the
date of prepayment, a release of Lien (and related Loan Documents) for such
Individual Property for execution by Lender.  Such release shall be in a form
appropriate in each jurisdiction in which the Individual Property is located and
that would be satisfactory to a prudent lender and contains standard provisions,
if any, protecting the rights of the releasing lender.  In addition, Borrower
shall provide all other documentation Lender reasonably requires to be delivered
by Borrower in connection with such release, together with an Officer’s
Certificate certifying that such documentation (i) is in compliance with all
Legal Requirements, and (ii) will effect such release in accordance with the
terms of this Agreement, and (iii) will not impair or otherwise adversely affect
the Liens, security interests and other rights of Lender under the Loan
Documents not being released (or as to the parties to the Loan Documents and
Properties subject to the Loan Documents not being released);
 
(h) After giving effect to the release of the applicable Individual Borrower and
Individual Property, the Debt Service Coverage Ratio for the Properties then
remaining subject to the Liens of the Mortgages based on the trailing twelve
(12) month period immediately preceding the release of the applicable Individual
Property shall be equal to or greater than the greater of (i) the Release Debt
Service Coverage Ratio, and (ii) the Debt Service Coverage Ratio for all of the
Properties then remaining subject to the Liens of the Mortgages (including the
Individual Property requested to be released) immediately preceding the release
of the applicable Individual Property based on the trailing twelve (12) month
period immediately preceding the
 
 
 
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release of the applicable Individual Property; provided, however, if Borrower
shall be unable to satisfy the requirements of this Subsection (h), Borrower
shall have the right to deposit with Lender cash or a Letter of Credit in an
amount, if used to reduce the outstanding principal balance of the Loan, would
otherwise cause the requirements of this Subsection (h) to be satisfied, and any
such cash or Letter of Credit so deposited shall be held by Lender in accordance
with Section 7.4 hereof;
 
(i) Borrower shall reimburse Lender and Servicer for any reasonable costs and
expenses Lender and Servicer incur arising from such release (including
reasonable attorneys’ fees and expenses) and Borrower shall have paid, in
connection with such release, (i) all recording charges, filing fees, taxes or
other expenses payable in connection therewith, (ii)  all costs and expenses of
the Rating Agencies incurred with respect to such release, and (iii) to any
Servicer, the then current fee being assessed by such Servicer to effect such
release, but any such fee pursuant to this subsection (iii) shall not exceed
$15,000;
 
(j) Notwithstanding the foregoing provisions of this Section 2.6.2, if the Loan
is included in a REMIC Trust and the Loan to Value Ratio (as determined by
Lender in its sole discretion using any commercially reasonable method permitted
to a REMIC Trust) exceeds 125% immediately after the release of the applicable
Individual Property, no release will be permitted unless the principal balance
of the Loan is paid down by the greater of (i) the Adjusted Release Price or
(ii) the least of one of the following amounts:  (A) only if the released
Individual Property is sold, the net proceeds of an arm’s length sale of the
released Individual Property to an unrelated Person, (B) the fair market value
of the released Individual Property at the time of the release, or (C) an amount
such that the Loan to Value Ratio (as so determined by Lender) after the release
of the applicable Individual Property is not greater than the Loan to Value
Ratio of the Properties immediately prior to such release, unless the Lender
receives an opinion of counsel that, if (ii) is not followed, the Securitization
will not fail to maintain its status as a REMIC Trust as a result of the release
of the applicable Individual Property; and
 
(k) Payment of the Adjusted Release Amount shall be applied to the outstanding
principal balance of the Note, and the Monthly Debt Service Payment Amount shall
be recalculated based upon (i) the unpaid principal balance effective as of the
day following the next occurring Payment Date, (ii) the Interest Rate and (iii)
an amortization period equal to the sum of 360 months minus the number of months
elapsed from March 1, 2011 through and including either (A) the next occurring
Payment Date if the Adjusted Release Amount is not applied to prepay the Loan on
a Payment Date or (B) on the Payment Date the Adjusted Release Amount is applied
to prepay the Loan if the Adjusted Release Amount is applied on a Payment Date.
 
Section 2.7 Lockbox Account/Cash Management.
 
(a) During the term of the Loan, each Individual Borrower shall establish and
maintain an account (whether one or more, the “Lockbox Account”) with Lockbox
Bank in trust for the benefit of Lender, which Lockbox Account shall be under
the sole dominion and control of Lender.  The Lockbox Account shall be entitled
“Sun Siesta Bay LLC, Sun Pheasant Ridge Limited Partnership, Sun/York L.L.C.,
Sun Richmond LLC, Sun Groves LLC, Sun Lake Juliana LLC, Sun Lake San Marino LLC,
Sun Candlelight Village LLC, Sun Southfork LLC, Sun Four
 
 
 
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Seasons LLC, and Sun Lafayette Place LLC”, as Borrower and JPMorgan Chase Bank,
National Association, as Lender, pursuant to Loan Agreement dated as of March 1,
2011 – Lockbox Account”.  Borrower hereby grants to Lender a first-priority
security interest in the Lockbox Account and all deposits at any time contained
therein and the proceeds thereof and will take all actions necessary to maintain
in favor of Lender a perfected first priority security interest in the Lockbox
Account, including, without limitation, UCC-1 Financing Statements and
continuations thereof.  Lender and Servicer shall have the sole right to make
withdrawals from the Lockbox Account in accordance with the terms and conditions
of this Agreement and the Lockbox Agreement and all costs and expenses for
establishing and maintaining the Lockbox Account shall be paid by Borrower.  All
monies now or hereafter deposited into the Lockbox Account shall be deemed
additional security for the Debt.  The Lockbox Agreement and Lockbox Account
shall remain in effect until the Loan has been repaid.
 
(b) Borrower shall, or shall cause Manager to, comply with Section 3.1(c) and
(d) of the Cash Management Agreement with respect to Tenant Directions Letters
and Mailing Labels (as defined therein).
 
(c) Borrower shall, and shall cause Manager to, deposit all amounts received by
Borrower or Manager constituting Rents into the Lockbox Account within one (1)
Business Day after receipt thereof.
 
(d) Upon the occurrence of a Cash Sweep Event and continuing until the
occurrence of a Cash Sweep Event Cure, Borrower shall obtain from Lockbox Bank
its agreement to transfer to the Cash Management Account in immediately
available funds by federal wire transfer all amounts on deposit in the Lockbox
Account once every Business Day throughout the term of the Loan.
 
(e) Upon the occurrence of an Event of Default, Lender may, in addition to any
and all other rights and remedies available to Lender, apply any sums then
present in the Lockbox Account to the payment of the Debt in any order in its
sole discretion.
 
(f) The Lockbox Account shall not be commingled with other monies held by
Borrower, Manager or Lockbox Bank.
 
(g) Borrower shall not further pledge, assign or grant any security interest in
the Lockbox Account or the monies deposited therein or permit any lien or
encumbrance to attach thereto, or any levy to be made thereon, or any UCC-1
Financing Statements, except those naming Lender as the secured party, to be
filed with respect thereto.
 
(h) Borrower shall indemnify Lender and hold Lender harmless from and against
any and all actions, suits, claims, demands, liabilities, losses, damages,
obligations and costs and expenses (including litigation costs and reasonable
attorneys’ fees and expenses) arising from or in any way connected with the
Lockbox Account and/or the Lockbox Agreement (unless arising from the gross
negligence or willful misconduct of Lender) or the performance of the
obligations for which the Lockbox Account was established.
 
 
 
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2.7.2 Cash Management Account.
 
(a) During the term of the Loan, Borrower shall establish and maintain a
segregated Eligible Account (the “Cash Management Account”) to be held by Agent
in trust and for the benefit of Lender, which Cash Management Account shall be
under the sole dominion and control of Lender.  The Cash Management Account
shall be entitled “Sun Siesta Bay LLC, Sun Pheasant Ridge Limited Partnership,
Sun/York L.L.C., Sun Richmond LLC, Sun Groves LLC, Sun Lake Juliana LLC, Sun
Lake San Marino LLC, Sun Candlelight Village LLC, Sun Southfork LLC, Sun Four
Seasons LLC, and Sun Lafayette Place LLC, as Borrower and JPMorgan Chase Bank,
National Association, as Lender, pursuant to Loan Agreement dated as of March 1,
2011 - Cash Management Account.”  Borrower hereby grants to Lender a first
priority security interest in the Cash Management Account and all deposits at
any time contained therein and the proceeds thereof and will take all actions
necessary to maintain in favor of Lender a perfected first priority security
interest in the Cash Management Account, including, without limitation, filing
UCC-1 Financing Statements and continuations thereof.  Borrower will not in any
way alter or modify the Cash Management Account and will notify Lender of the
account number thereof.  Lender and Servicer shall have the sole right to make
withdrawals from the Cash Management Account in accordance with the terms hereof
and all costs and expenses for establishing and maintaining the Cash Management
Account shall be paid by Borrower.
 
(b) The insufficiency of funds on deposit in the Cash Management Account shall
not relieve Borrower from the obligation to make any payments, as and when due
pursuant to this Agreement and the other Loan Documents, and such obligations
shall be separate and independent, and not conditioned on any event or
circumstance whatsoever.
 
(c) All funds on deposit in the Cash Management Account following the occurrence
of an Event of Default may be applied by Lender in such order and priority as
Lender shall determine.
 
(d) Borrower hereby agrees that Lender may modify the Cash Management Agreement
for the purpose of establishing additional sub-accounts in connection with any
payments otherwise required under this Agreement and the other Loan Documents
and Lender shall provide notice thereof to Borrower.
 
(e) Upon the occurrence of a Cash Sweep Event Cure, Borrower and Lender shall
comply with Section 3.7 of the Cash Management Agreement.
 
(f) Anything contained herein or in the Cash Management Agreement to the
contrary notwithstanding, Lender shall have the right, in its sole and absolute
discretion, upon the occurrence of a Hard Lockbox Event, to require that all
funds deposited into the Lockbox Account be swept daily to the Cash Management
Account and disbursed in a manner consistent with Section 3.6 of the Cash
Management Agreement.
 
2.7.3 Payments Received under the Cash Management Agreement.  Notwithstanding
anything to the contrary contained in this Agreement or the other Loan
Documents, and provided no Event of Default has occurred and is continuing,
Borrower’s obligations with respect to the payment of the Monthly Debt Service
Payment Amount and
 
 
 
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amounts required to be deposited into the Reserve Funds, if any, shall be deemed
satisfied to the extent sufficient amounts are deposited in the Cash Management
Account to satisfy such obligations pursuant to this Agreement on the dates each
such payment is required, regardless of whether any of such amounts are so
applied by Lender.
 
ARTICLE III - CONDITIONS PRECEDENT
 
Section 3.1 Conditions Precedent to Closing.  The obligation of Lender to make
the Loan hereunder is subject to the fulfillment by Borrower or waiver by Lender
of all of the conditions precedent to closing set forth in the application or
term sheet for the Loan delivered by Borrower to Lender and the commitment or
commitment rider, if any, to the application or term sheet for the Loan issued
by Lender.
 
ARTICLE IV- REPRESENTATIONS AND WARRANTIES
 
Section 4.1 Borrower Representations.  Each Individual Borrower represents and
warrants as of the date hereof and as of the Closing Date for itself and with
respect to its Individual Property, and not on behalf of any other Individual
Borrower or other Individual Property that:
 
4.1.1 Organization.  Each Individual Borrower has been duly organized and is
validly existing and in good standing with requisite power and authority to own
its Properties and to transact the businesses in which it is now
engaged.  Borrower is duly qualified to do business and is in good standing in
each jurisdiction where it is required to be so qualified in connection with its
Properties, businesses and operations.  Borrower possesses all rights, licenses,
permits and authorizations, governmental or otherwise, necessary to entitle it
to own the Properties and to transact the businesses in which Borrower is now
engaged, and the sole business of each Individual Borrower is the ownership,
management and operation of the related Individual Property.  The ownership
interests in Borrower are as set forth on the organizational chart attached
hereto as Schedule IV.
 
4.1.2 Proceedings.  Borrower has taken all necessary action to authorize the
execution, delivery and performance of this Agreement and the other Loan
Documents.  This Agreement and such other Loan Documents have been duly executed
and delivered by or on behalf of Borrower and constitute legal, valid and
binding obligations of Borrower enforceable against Borrower in accordance with
their respective terms, subject only to applicable bankruptcy, insolvency and
similar laws affecting rights of creditors generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
 
4.1.3 No Conflicts.  The execution, delivery and performance of this Agreement
and the other Loan Documents by Borrower will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance (other
than pursuant to the Loan Documents) upon any of the property or assets of
Borrower pursuant to the terms of any indenture, mortgage, deed of trust, loan
agreement, partnership agreement, management agreement or other agreement or
instrument to which Borrower is a party or by which any of the Property or
Borrower’s assets is subject, nor
 
 
 
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will such action result in any violation of the provisions of any statute or any
order, rule or regulation of any Governmental Authority having jurisdiction over
Borrower or any of Borrower’s properties or assets, and any consent, approval,
authorization, order, registration or qualification of or with any court or any
such Governmental Authority required for the execution, delivery and performance
by Borrower of this Agreement or any other Loan Documents has been obtained and
is in full force and effect.
 
4.1.4 Litigation.  There are no actions, suits or proceedings at law or in
equity by or before any Governmental Authority or other agency now pending or,
to Borrower’s knowledge, threatened against or affecting Borrower, Guarantor,
Principal or any Individual Property, which actions, suits or proceedings, if
determined through a final, non-appealable judgment or settlement against
Borrower, Guarantor, Principal or any Individual Property, is likely to
materially adversely affect the condition (financial or otherwise) or business
of Borrower, Guarantor, Principal or the condition or ownership of any
Individual Property.
 
4.1.5 Agreements.  Borrower is not a party to any agreement or instrument or
subject to any restriction which is likely to materially and adversely affect
Borrower or any Individual Property, or Borrower’s business, properties or
assets, operations or condition, financial or otherwise.  Borrower is not in
default in any material respect in the performance, observance or fulfillment of
any of the obligations, covenants or conditions contained in any agreement or
instrument to which it is a party or by which Borrower or the Property is bound,
which default is likely to materially and adversely affect Borrower, any
Individual Property or Borrower’s business, properties or assets, operations or
condition, financial or otherwise.  Borrower has no material financial
obligation under any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which Borrower is a party or by which Borrower or any
Individual Property is otherwise bound, other than (a) obligations incurred in
the ordinary course of the operation of any Individual Property as permitted
pursuant to clause (xxiii) of the definition of “Special Purpose Entity” set
forth in Section 1.1 hereof, (b) obligations under the Loan Documents, (c) the
Management Agreement and (d) obligations under any Permitted Encumbrance.
 
4.1.6 Title.  Each Individual Borrower has good, marketable and insurable fee
simple title to the real property comprising part of each Individual Property
and good title to the balance of such Individual Property, free and clear of all
Liens whatsoever except the Permitted Encumbrances, such other Liens as are
permitted pursuant to the Loan Documents and the Liens created by the Loan
Documents.  The Permitted Encumbrances in the aggregate do not materially and
adversely affect the value, operation or use of the applicable Individual
Property (as currently used) or Borrower’s ability to repay the Loan.  Each
Mortgage, when properly recorded in the appropriate records, together with any
Uniform Commercial Code financing statements required to be filed in connection
therewith, will create (a) a valid, perfected first priority lien on the
applicable Individual Property, subject only to Permitted Encumbrances and the
Liens created by the Loan Documents and (b) perfected security interests in and
to, and perfected collateral assignments of, all personalty (including the
Leases), all in accordance with the terms thereof, in each case subject only to
any applicable Permitted Encumbrances, such other Liens as are permitted
pursuant to the Loan Documents and the Liens created by the Loan
Documents.  There are no claims for payment for work, labor or materials
affecting the
 
 
 
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Properties which are or may become a Lien prior to, or of equal priority with,
the Liens created by the Loan Documents.
 
4.1.7 Solvency.  Borrower has (a) not entered into this transaction or executed
the Note, this Agreement or any other Loan Documents with the actual intent to
hinder, delay or defraud any creditor and (b) received reasonably equivalent
value in exchange for its obligations under such Loan Documents.  Giving effect
to the Loan, the fair saleable value of Borrower’s assets exceeds and will,
immediately following the making of the Loan, exceed Borrower’s total
liabilities, including, without limitation, subordinated, unliquidated, disputed
and contingent liabilities.  The fair saleable value of Borrower’s assets is and
will, immediately following the making of the Loan, be greater than Borrower’s
probable liabilities, including the maximum amount of its contingent liabilities
on its debts as such debts become absolute and matured.  Borrower’s assets do
not and, immediately following the making of the Loan will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted.  Borrower does not intend to, and does not believe that it
will, incur debt and liabilities (including contingent liabilities and other
commitments) beyond its ability to pay such debt and liabilities as they mature
(taking into account the timing and amounts of cash to be received by Borrower
and the amounts to be payable on or in respect of obligations of Borrower).  No
petition in bankruptcy has been filed against Borrower, Principal, Guarantor or
Sun in the last seven (7) years, and none of Borrower, Principal, Guarantor or
Sun in the last seven (7) years has ever made an assignment for the benefit of
creditors or taken advantage of any insolvency act for the benefit of
debtors.  None of Borrower, Principal, Guarantor or Sun are contemplating either
the filing of a petition by it under any state or federal bankruptcy or
insolvency laws or the liquidation of all or a major portion of the assets or
property of Borrower, Principal, Guarantor or Sun, and Borrower has no knowledge
of any Person contemplating the filing of any such petition against it or
against Principal, Guarantor or Sun.
 
4.1.8 Full and Accurate Disclosure.  No statement of fact made by Borrower in
this Agreement or in any of the other Loan Documents contains any untrue
statement of a material fact or omits to state any material fact necessary to
make statements contained herein or therein not misleading.  There is no
material fact presently known to Borrower which has not been disclosed to Lender
which materially and adversely affects, nor as far as Borrower can foresee, is
likely to materially and adversely affect, any Individual Property or the
business, operations or condition (financial or otherwise) of Borrower.
 
4.1.9 No Plan Assets.  Borrower does not sponsor, is not obligated to contribute
to, and is not itself an “employee benefit plan,” as defined in Section 3(3) of
ERISA, subject to Title I of ERISA or Section 4975 of the Code, and none of the
assets of Borrower constitutes or will constitute “plan assets” of one or more
such plans within the meaning of 29 C.F.R. Section 2510.3-101.  In addition,
(a) Borrower is not a “governmental plan” within the meaning of Section 3(32) of
ERISA and (b) transactions by or with Borrower are not subject to any state or
other statute , regulation or other restriction regulating investments of, or
fiduciary obligations with respect to, governmental plans within the meaning of
Section 3(32) of ERISA which is similar to the provisions of Section 406 of
ERISA or Section 4975 of the Code and which prohibit or otherwise restrict the
transactions contemplated by this Agreement, including but not limited to the
exercise by Lender of any of its rights under the Loan Documents.
 
 
 
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4.1.10 Compliance.  Except as disclosed in writing to Lender by or on behalf of
Borrowers or in third party reports provided to Lender, Borrower and each
Individual Property and the use thereof comply in all material respects with all
applicable Legal Requirements, including, without limitation, building and
zoning ordinances and codes.  Borrower is not in default or violation of any
order, writ, injunction, decree or demand of any Governmental Authority.  There
has not been committed by Borrower or any other Person in occupancy of or
involved with the operation or use of any Individual Property any act or
omission affording the federal government or any other Governmental Authority
the right of forfeiture as against any Individual Property or any part thereof
or any monies paid in performance of Borrower’s obligations under any of the
Loan Documents.  Except as disclosed in writing to Lender by or on behalf of
Borrower or in third party reports provided to Lender, on the Closing Date, the
Improvements at each Individual Property were in material compliance with
applicable law.
 
4.1.11 Financial Information.  All financial data, including, without
limitation, the statements of cash flow and income and operating expense, that
have been delivered to Lender in connection with the Loan (a) are true, complete
and correct in all material respects, (b) accurately represent the financial
condition of Borrower and each Individual Property, as applicable, as of the
date of such reports, and (c) to the extent prepared or audited by an
independent certified public accounting firm, have been prepared in accordance
with GAAP throughout the periods covered, except as disclosed therein.  Except
for Permitted Encumbrances, Borrower does not have any contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments that are known to Borrower
and reasonably likely to have a material adverse effect on any Individual
Property or the current operation thereof, except as referred to or reflected in
said financial statements.  Since the date of such financial statements, there
has been no material adverse change in the financial condition, operations or
business of Borrower from that set forth in said financial statements.
 
4.1.12 Condemnation.  No Condemnation or other similar proceeding has been
commenced or, to Borrower’s best knowledge, is threatened or contemplated with
respect to all or any portion of any Individual Property or for the relocation
of roadways providing access to any Individual Property.
 
4.1.13 Federal Reserve Regulations.  No part of the proceeds of the Loan will be
used for the purpose of purchasing or acquiring any “margin stock” within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
or for any other purpose which would be inconsistent with such Regulation U or
any other Regulations of such Board of Governors, or for any purposes prohibited
by Legal Requirements or by the terms and conditions of this Agreement or the
other Loan Documents.
 
4.1.14 Utilities and Public Access.  Except as disclosed in the Survey, Title
Insurance Policy or any third party reports provided to Lender, each Individual
Property has rights of access to public ways and is served by water, sewer,
sanitary sewer and storm drain facilities adequate to service such Individual
Property for its respective intended uses.  Except as disclosed in the Survey,
Title Insurance Policy or any third party reports provided to Lender, all public
utilities necessary or convenient to the full use and enjoyment of each
Individual Property are located either in the public right of way abutting each
such Individual Property (which are
 
 
 
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connected so as to serve each such Individual Property without passing over
other property) or in recorded easements serving each such Individual Property
and such easements are set forth in and insured by the related Title Insurance
Policy.  All roads necessary for the use of each Individual Property for their
current respective purposes have been completed and dedicated to public use and
accepted by all Governmental Authorities, or are provided through easements in
favor of such Individual Property.
 
4.1.15 Not a Foreign Person.  Borrower is not a “foreign person” within the
meaning of §1445(f)(3) of the Code.
 
4.1.16 Separate Lots.  Except as disclosed in the Survey or Title Insurance
Policy, each Individual Property is comprised of one (1) or more parcels which
constitute a separate tax lot or lots and does not constitute a portion of any
other tax lot not a part of such Individual Property.
 
4.1.17 Assessments.  To Borrower’s knowledge, there are no pending or proposed
special or other assessments for public improvements or otherwise affecting any
Individual Property, nor are there any contemplated improvements to any
Individual Property that may result in such special or other assessments.
 
4.1.18 Enforceability.  The Loan Documents are enforceable by Lender (or any
subsequent holder thereof) in accordance with their respective terms, subject to
principles of equity and bankruptcy, insolvency and other laws generally
applicable to creditors’ rights and the enforcement of debtors’
obligations.  The Loan Documents are not subject to any right of rescission,
set-off, counterclaim or defense by Borrower or Guarantor, including the defense
of usury, nor would the operation of any of the terms of the Loan Documents, or
the exercise of any right thereunder, render the Loan Documents unenforceable
(subject to principles of equity and bankruptcy, insolvency and other laws
generally affecting creditors’ rights and the enforcement of debtors’
obligations), and neither Borrower nor Guarantor has asserted any right of
rescission, set-off, counterclaim or defense with respect thereto.
 
4.1.19 No Prior Assignment.  There are no prior assignments of the Leases or any
portion of the Rents due and payable or to become due and payable which are
presently outstanding.
 
4.1.20 Insurance.  Borrower has obtained and has delivered to Lender
Certificates of Insurance reflecting the insurance coverages, amounts and other
requirements set forth in this Agreement.  Except as set forth in Schedule
4.1.20 attached hereto, no claims have been made or are currently pending,
outstanding or otherwise remain unsatisfied under any such Policy or if any such
claims are currently pending, outstanding or otherwise remain unsatisfied, any
liability arising from such claims are not likely to materially and adversely
affect Borrower or any Individual Property, or Borrower’s business, properties
or assets, operations or condition, financial or otherwise.  Neither Borrower
nor any other Person has done, by act or omission, anything which would impair
the coverage of any such Policy.
 
 
 
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4.1.21 Use of Property.  Each Individual Property is used exclusively as a
mobile home park, manufactured housing community and/or recreational vehicle
park and other appurtenant and related uses.
 
4.1.22 Certificate of Occupancy; Licenses.  Except as disclosed in third party
reports delivered to Lender, all certifications, permits, licenses and approvals
required for the legal use, occupancy and operation of each Individual Property
as now operated have been obtained and are in full force and effect.
 
4.1.23 Flood Zone.  Except as shown on the Survey of each Individual Property,
none of the Improvements on any Individual Property are located in an area as
identified by the Federal Emergency Management Agency as an area having special
flood hazards, or, if so located, the flood insurance required pursuant to
Section 6.1(a)(i) is in full force and effect with respect to such Individual
Property.
 
4.1.24 Physical Condition.  Except as disclosed in third party reports delivered
to Lender, each Individual Property, including, without limitation, all
buildings, improvements, parking facilities, sidewalks, storm drainage systems,
equipment, landscaping, irrigation systems and all structural components, are in
good condition, order and repair in all material respects; to the best of
Borrower’s knowledge, there exists no structural or other material defects or
damages in any Individual Property, whether latent or otherwise, and Borrower
has not received notice from any insurance company or bonding company of any
defects or inadequacies in any Individual Property, or any part thereof, which
would adversely affect the insurability of the same or cause the imposition of
extraordinary premiums or charges thereon or of any termination or threatened
termination of any policy of insurance or bond.
 
4.1.25 Boundaries.  Except as shown on the Survey of each Individual Property or
reflected on the Title Insurance Policy, all of the improvements which were
included in determining the appraised value of each Individual Property lie
wholly within the boundaries and building restriction lines of such Individual
Property, and no improvements on adjoining properties encroach upon any
Individual Property, and no easements or other encumbrances upon any Individual
Property encroach upon any of the Improvements, so as to affect the value or
marketability of applicable Individual Property.
 
4.1.26 Leases.  The mobile home and recreational vehicle sites within the
Properties are not subject to any leases other than the Leases described in the
rent rolls attached hereto as Schedule V and made a part hereof, which rent
rolls are true, complete and accurate in all respects as of the respective dates
set forth on such rent rolls.  Borrower is the owner and lessor of landlord’s
interest in the Leases.  No Person has any possessory interest in the mobile
home and recreational vehicle sites within the Property or right to occupy the
same except under and pursuant to the provisions of the Leases.  The current
Leases are in full force and effect and, except as set forth on the rent rolls
attached hereto as Schedule V, there are no defaults thereunder by either party
and there are no conditions that, with the passage of time or the giving of
notice, or both, would constitute defaults thereunder.  Except for prepaid Rent
that does not exceed, at any one time, more than ten percent (10%) of the gross
annual Rent from all of the Properties in the aggregate, no Rent has been paid
more than one (1) month in advance of its due date.  All security deposits are
held by Borrower in accordance with applicable law.  All work to
 
 
 
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be performed by Borrower under each Lease has been performed as required and has
been accepted by the applicable Tenant, and, except as set forth on the rent
rolls attached hereto as Schedule V, any payments, free rent, partial rent,
rebate of rent or other payments, credits, allowances or abatements required to
be given by Borrower to any Tenant has already been received by such
Tenant.  There has been no prior sale, transfer or assignment, hypothecation or
pledge of any Lease or of the Rents received therein which is outstanding.  No
Tenant under any Lease has a right or option pursuant to such Lease or otherwise
to purchase all or any part of the leased premises or the building of which the
leased premises are a part. No Tenant under any Lease has any right or option
for additional space in the Improvements.
 
4.1.27 Survey.  To Borrower’s knowledge, the Survey for each Individual Property
delivered to Lender in connection with this Agreement does not fail to reflect
any material matter affecting such Individual Property or the title thereto.
 
4.1.28 Inventory.  To the extent any of the items defined in the Mortgage as
Equipment, Fixtures and Personal Property exist at the Property and except for
Equipment, Fixtures and Personal Property (as such terms are defined in the
Mortgages) owned by Persons other than Borrower, Borrower is the owner of all
such Equipment, Fixtures and Personal Property located on or at each Individual
Property.  All of the Equipment, Fixtures and Personal Property are sufficient
to operate the Properties in the manner required hereunder and in the manner in
which they are currently operated.
 
4.1.29 Filing and Recording Taxes.  All transfer taxes, deed stamps, intangible
taxes or other amounts in the nature of transfer taxes required to be paid in
connection with the Borrower’s ownership of the Properties by any Person under
applicable Legal Requirements have been paid.  All mortgage, mortgage recording,
stamp, intangible or other similar tax required to be paid by any Person under
applicable Legal Requirements currently in effect in connection with the
execution, delivery, recordation, filing, registration, perfection or
enforcement of any of the Loan Documents, including, without limitation, the
Mortgages, have been paid.
 
4.1.30 Special Purpose Entity/Separateness.
 
(a) Until the Debt has been paid in full, each Individual Borrower hereby
represents, warrants and covenants that (i) each Individual Borrower is, shall
be and shall continue to be a Special Purpose Entity and (ii) Principal is,
shall be and shall continue to be a Special Purpose Entity.
 
(b) The representations, warranties and covenants set forth in Section 4.1.30(a)
shall survive for so long as any amount remains payable to Lender under this
Agreement or any other Loan Document.
 
(c) Any and all of the stated facts and assumptions made in any Insolvency
Opinion, including, but not limited to, any exhibits attached thereto, will have
been and shall be true and correct in all respects, and Borrower and Principal
will have complied and will comply with all of the stated facts and assumptions
made with respect to it in any Insolvency Opinion.  Each entity other than
Borrower and Principal with respect to which an assumption is made or a fact
 
 
 
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stated in any Insolvency Opinion will have complied and will comply with all of
the assumptions made and facts stated with respect to it in any such Insolvency
Opinion.  Borrower covenants that in connection with any Additional Insolvency
Opinion delivered in connection with this Agreement it shall provide an updated
certification regarding compliance with the facts and assumptions made therein.
 
(d) Borrower covenants and agrees that Borrower shall provide Lender with (i)
thirty (30) days’ prior written notice prior to the removal by Borrower or any
Affiliate of Borrower of an Independent Director of any of Borrower and/or
Principal and (ii) prompt written notice immediately following the resignation,
death or disability of any Independent Director of any of Borrower and/or
Principal.
 
(e) Notwithstanding the definition of “Special Purpose Entity” or this Section
4.1.30, the following activities of the Borrower, Principal and their respective
Affiliates shall not be considered a violation of any of the covenants and
prohibitions set forth herein with respect to Special Purpose Entities,
including, without limitation, this Section 4.1.30:
 
(i) treating the Property for all purposes as part of and within the portfolio
of manufactured housing communities owned by Guarantor or any Affiliate, for
marketing, promotion and providing information and reports to the public,
including a common website or, or as required by applicable law; provided,
however, that the Borrower shall conduct its business in its own name; and
 
(ii) obtaining the Loan and entering into the Loan Documents with the other
Individual Borrowers.  Additionally, the operations and activities of the
Borrower and its Affiliates, as performed by Manager or a Qualified Manager as
set forth in the Management Agreement or a Replacement Management Agreement, and
as such management activities may have been performed prior to the date hereof
by Borrower, Sun, Guarantor, and their Affiliates, shall not be a violation of
this Section 4.1.30 or Section 4.1.39 below.
 
4.1.31 Management Agreement.  The Management Agreement is in full force and
effect and there is no default thereunder by any party thereto and no event has
occurred that, with the passage of time and/or the giving of notice would
constitute a default thereunder.  The Management Agreement was entered into on
commercially reasonable terms.
 
4.1.32 Illegal Activity.  No portion of any Individual Property has been or will
be purchased with proceeds of any illegal activity.
 
4.1.33 No Change in Facts or Circumstances; Disclosure.  All information
submitted by and on behalf of Borrower to Lender and in all financial
statements, rent rolls (including the Rent Rolls attached hereto as Schedule V),
reports, certificates and other documents submitted by or on behalf of Borrower
in connection with the Loan or in satisfaction of the terms thereof and all
statements of fact made by Borrower in this Agreement or in any other Loan
Document, are true, complete and correct in all material respects when
made.  There has been no material adverse change in any condition, fact,
circumstance or event that would make any such information inaccurate,
incomplete or otherwise misleading in any material
 
 
 
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respect or that otherwise materially and adversely affects or is likely to
materially and adversely affect the use, operation or value of any Individual
Property or the business operations or the financial condition of
Borrower.  Borrower has disclosed to Lender all material facts and has not
failed to disclose any material fact known to Borrower that could cause any
Provided Information or representation or warranty made herein to be materially
misleading.
 
4.1.34 Investment Company Act.  Borrower is not (a) an “investment company” or a
company “controlled” by an “investment company,” within the meaning of the
Investment Company Act of 1940, as amended; (b) a “holding company” or a
“subsidiary company” of a “holding company” or an “affiliate” of either a
“holding company” or a “subsidiary company” within the meaning of the Public
Utility Holding Company Act of 1935, as amended; or (c) subject to any other
federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.
 
4.1.35 Embargoed Person.  As of the date hereof and at all times throughout the
term of the Loan, including after giving effect to any Transfers permitted
pursuant to the Loan Documents, (a) none of the funds or other assets of
Borrower and Guarantor constitute property of, or are beneficially owned,
directly or indirectly, by any Embargoed Person; (b) no Embargoed Person has any
interest of any nature whatsoever in Borrower or Guarantor, as applicable, with
the result that the investment in Borrower or Guarantor, as applicable (whether
directly or indirectly), is prohibited by law or the Loan is in violation of
law; and (c) none of the funds of Borrower or Guarantor, as applicable, have
been derived from any unlawful activity with the result that the investment in
Borrower or Guarantor, as applicable (whether directly or indirectly), is
prohibited by law or the Loan is in violation of law.
 
4.1.36 Principal Place of Business; State of Organization.  Borrower’s principal
place of business as of the date hereof is the address set forth in the
introductory paragraph of this Agreement.  The Borrower’s place of organization
and organizational identification number are as set forth in Schedule I.
 
4.1.37 Environmental Representations and Warranties.  Except as otherwise
disclosed by that certain Phase I environmental report (or Phase II
environmental report, if required) delivered to Lender by Borrower in connection
with the origination of the Loan (such report is referred to below as the
“Environmental Report”), (a) there are no Hazardous Substances or underground
storage tanks in, on, or under the Property, except those that are (i) in
compliance with Environmental Laws and with permits issued pursuant thereto (to
the extent such permits are required under Environmental Law), (ii) de-minimis
amounts necessary to operate the Property for the purposes set forth in the Loan
Agreement which will not result in an environmental condition in, on or under
the Property and which are otherwise permitted under and used in compliance with
Environmental Law and (iii) fully disclosed to Lender in writing pursuant to the
Environmental Report; (b) there are no past, present or threatened Releases of
Hazardous Substances in, on, under or from the Property which have not been
fully remediated in accordance with Environmental Law; (c) to the best of
Borrower’s knowledge, there is no threat of any Release of Hazardous Substances
migrating to the Property; (d) there is no past or present non-compliance with
Environmental Laws, or with permits issued pursuant thereto, in connection with
the Property which has not been fully remediated in accordance with
Environmental Law; (e) Borrower does not know of, and has not received, any
written or oral
 
 
 
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notice or other communication from any Person (including but not limited to a
Governmental Authority) relating to Hazardous Substances or Remediation thereof,
of possible liability of any Person pursuant to any Environmental Law, other
environmental conditions in connection with the Property, or any actual or
potential administrative or judicial proceedings in connection with any of the
foregoing; and (f) Borrower has truthfully and fully disclosed to Lender, in
writing, any and all information relating to environmental conditions in, on,
under or from the Property that is material and known to Borrower and has
provided to Lender all material information that is contained in Borrower’s
files and records, including, but not limited to, any reports relating to the
existence of Hazardous Substances in, on, under or from the Property and/or to
the environmental condition of the Property.
 
4.1.38 Cash Management Account.  Borrower hereby represents and warrants to
Lender that:
 
(a) This Agreement, together with the other Loan Documents, create a valid and
continuing security interest (as defined in the Uniform Commercial Code of the
State of New York) in the Lockbox Account and Cash Management Account in favor
of Lender, which security interest is prior to all other Liens, other than
Permitted Encumbrances, and is enforceable as such against creditors of and
purchasers from Borrower.  Other than in connection with the Loan Documents and
except for Permitted Encumbrances, Borrower has not sold, pledged, transferred
or otherwise conveyed the Lockbox Account and Cash Management Account;
 
(b) Each of the Lockbox Account and Cash Management Account constitutes “deposit
accounts” and/or “securities accounts” within the meaning of the Uniform
Commercial Code of the State of New York;
 
(c) Pursuant and subject to the terms hereof and the other applicable Loan
Documents, the Lockbox Bank and Agent have agreed to comply with all
instructions originated by Lender, without further consent by Borrower,
directing disposition of the Lockbox Account and Cash Management Account and all
sums at any time held, deposited or invested therein, together with any interest
or other earnings thereon, and all proceeds thereof (including proceeds of sales
and other dispositions), whether accounts, general intangibles, chattel paper,
deposit accounts, instruments, documents or securities;
 
(d) The Lockbox Account and Cash Management Account are not in the name of any
Person other than Borrower, as pledgor, or Lender, as pledgee.  Borrower has not
consented to the Lockbox Bank and Agent complying with instructions with respect
to the Lockbox Account and Cash Management Account from any Person other than
Lender; and
 
(e) None of the Properties are subject to any cash management system (other than
pursuant to the Loan Documents and pursuant to any cash management agreement
entered into in connection with prior mortgage loans secured by any or all of
the Properties, which prior mortgage loans have been satisfied in full or will
be satisfied and paid in full from the proceeds of the Loan), and any and all
existing tenant instruction letters issued in connection with any previous
financing have been duly terminated prior to the date hereof.
 
 
 
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4.1.39 Past Acts Of Borrower.  Each of Borrower and Principal represents and
warrants to Lender that it:
 
(a) is, has always been and shall continue to be duly formed, validly existing,
and in good standing in the state of its incorporation or formation and in all
other jurisdictions where it is qualified to do business;
 
(b) has paid all taxes which it owes and is not currently involved in any
dispute with any taxing authority other than contesting the amount of Taxes
assessed or levied against the Properties after payment of such Taxes;
 
(c) is not now, nor has ever been, party to any lawsuit, arbitration, summons,
or legal proceeding that resulted in a judgment against it that has not been
paid in full;
 
(d) has no judgments or Liens of any nature against it except for tax liens not
yet due and the Permitted Encumbrances;
 
(e) has provided Lender with complete financial statements that reflect a fair
and accurate view of the entity's financial condition; and
 
(f) has no material contingent or actual obligations not related to the Property
except as may have been disclosed in the financial information furnished to
Lender.
 
Section 4.2 Survival of Representations.  Borrower agrees that all of the
representations and warranties of Borrower set forth in Section 4.1 hereof and
elsewhere in this Agreement and in the other Loan Documents shall survive for so
long as any amount remains owing to Lender under this Agreement or any of the
other Loan Documents by Borrower.  All representations, warranties, covenants
and agreements made in this Agreement or in the other Loan Documents by Borrower
shall be deemed to have been relied upon by Lender notwithstanding any
investigation heretofore or hereafter made by Lender or on its behalf.
 
ARTICLE V - BORROWER COVENANTS
 
Section 5.1 Affirmative Covenants.  From the date hereof and until payment and
performance in full of all obligations of Borrower under the Loan Documents or
the earlier release of the Lien of the Mortgages encumbering the Properties (and
all related obligations) in accordance with the terms of this Agreement and the
other Loan Documents, Borrower hereby covenants and agrees with Lender that:
 
5.1.1 Existence; Compliance with Legal Requirements.  Borrower shall do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its existence, rights, licenses, permits and franchises and comply with
all Legal Requirements applicable to Borrower and/or the Properties (and the
Improvements thereon and the use thereof), including, without limitation,
building and zoning codes and certificates of occupancy.  There shall never be
committed by Borrower, and Borrower shall never permit any other Person in
occupancy of or involved with the operation or use of any Individual Property to
commit any act or omission affording the federal government or any state or
local government the right of forfeiture against any Individual Property or any
part thereof or any monies paid in performance
 
 
 
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of Borrower’s obligations under any of the Loan Documents.  Borrower hereby
covenants and agrees not to commit, permit or suffer to exist any act or
omission affording such right of forfeiture.  Borrower shall at all times
maintain, preserve and protect all franchises and trade names and preserve all
the remainder of its property used or useful in the conduct of its business and
shall keep the Properties in good working order and repair, and from time to
time make, or cause to be made, all reasonably necessary repairs, renewals,
replacements, betterments and improvements thereto all as more fully provided in
the Loan Documents.  Borrower shall keep the Properties insured at all times by
financially sound and reputable insurers, to such extent and against such risks,
and maintain liability and such other insurance, as is more fully provided in
this Agreement.  After prior written notice to Lender, Borrower, at its own
expense, may contest by appropriate legal proceeding promptly initiated and
conducted in good faith and with due diligence, the validity of any Legal
Requirement, the applicability of any Legal Requirement to Borrower or any
Individual Property or any alleged violation of any Legal Requirement, provided
that (i) no Default or Event of Default has occurred and remains uncured; (ii)
such proceeding shall be permitted under and be conducted in accordance with the
provisions of any instrument to which Borrower is subject and shall not
constitute a default thereunder and such proceeding shall be conducted in
accordance with all applicable statutes, laws and ordinances; (iii) no
Individual Property nor any part thereof or interest therein will be in danger
of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower shall
promptly upon final determination thereof comply with any such Legal Requirement
determined to be valid or applicable or cure any violation of any Legal
Requirement; (v) such proceeding shall suspend the enforcement of the contested
Legal Requirement against Borrower or any Individual Property or Borrower is
otherwise complying with the contested Legal Requirement during the pendency of
any such proceeding; and (vi) if any such proceeding shall result in a Lien that
is superior to the lien of the Mortgage or if any Individual Property shall be
in danger of being sold, forfeited, terminated, cancelled or lost, Borrower
shall furnish such security as may be required in the proceeding, or as may be
requested by Lender, to insure compliance with such Legal Requirement, together
with all interest and penalties payable in connection therewith.  Lender may
apply any such security, as necessary to cause compliance with such Legal
Requirement at any time when, in the reasonable judgment of Lender, the
validity, applicability or violation of such Legal Requirement is finally
established or any Individual Property (or any part thereof or interest therein)
shall be in danger of being sold, forfeited, terminated, cancelled or lost.
 
5.1.2 Taxes and Other Charges.  Borrower shall pay all Taxes and Other Charges
now or hereafter levied or assessed or imposed against the Properties or any
part thereof before the same shall become delinquent; provided, however,
Borrower’s obligation to directly pay Taxes shall be suspended for so long as
Borrower complies with the terms and provisions of Section 7.2 hereof.  Borrower
will deliver to Lender receipts for payment or other evidence satisfactory to
Lender that the Taxes and Other Charges have been so paid or are not then
delinquent no later than ten (10) days prior to the date on which the Taxes
and/or Other Charges would otherwise be delinquent if not paid.  Borrower shall
furnish to Lender receipts for the payment of the Taxes and the Other Charges
prior to the date the same shall become delinquent (provided, however, Borrower
is not required to furnish such receipts for payment of Taxes in the event that
such Taxes have been paid by Lender pursuant to Section 7.2 hereof and Lender
has received receipts from the relevant taxing authority).  Borrower shall not
suffer and shall promptly cause to be paid and discharged any Lien or charge
whatsoever which may be or become a Lien or charge against any Individual
Property which is not a Permitted Encumbrance,
 
 
 
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and shall promptly pay for all utility services provided to the Properties that
are the obligation of Borrower.  After prior written notice to Lender, Borrower,
at its own expense, may contest by appropriate legal proceeding, promptly
initiated and conducted in good faith and with due diligence, the amount or
validity or application in whole or in part of any Taxes or Other Charges,
provided that (i) no Default or Event of Default has occurred and remains
uncured; (ii) such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to which Borrower is
subject and shall not constitute a default thereunder and such proceeding shall
be conducted in accordance with all applicable statutes, laws and ordinances;
(iii) no Individual Property nor any part thereof or interest therein will be in
danger of being sold, forfeited, terminated, cancelled or lost; (iv) Borrower
shall promptly upon final determination thereof pay the amount of any such Taxes
or Other Charges, together with all costs, interest and penalties which may be
payable in connection therewith; (v) such proceeding shall suspend the
collection of such contested Taxes or Other Charges from the applicable
Individual Property or such Taxes or Other Charges shall have been paid; and
(vi) Borrower shall furnish such security as may be required in the proceeding,
or as may be reasonably requested by Lender to insure the payment of any such
Taxes or Other Charges, together with all interest and penalties thereon;
provided, however, Lender shall not require such security if the amount on
deposit in the Tax and Insurance Escrow Fund shall equal or exceed the amount
necessary to pay all such Taxes or Other Charges, including, without limitation,
penalties and interest thereon.  Lender may pay over any such cash deposit or
part thereof held by Lender to the claimant entitled thereto at any time when,
in the judgment of Lender, the entitlement of such claimant is established or
any Individual Property (or part thereof or interest therein) shall be in danger
of being sold, forfeited, terminated, cancelled or lost or there shall be any
danger of the Lien of any Mortgage being primed by any related Lien.
 
5.1.3 Litigation.  Borrower shall give prompt written notice to Lender of any
litigation or governmental proceedings pending or threatened in writing against
Borrower and/or Guarantor which is likely to materially and adversely affect
Borrower’s or Guarantor’s condition (financial or otherwise) or business or any
Individual Property.
 
5.1.4 Access to Properties.  Borrower shall permit agents, representatives and
employees of Lender to inspect the Properties or any part thereof at reasonable
hours upon reasonable advance notice.
 
5.1.5 Notice of Default.  Borrower shall promptly advise Lender of any material
adverse change in Borrower’s or Guarantor’s condition, financial or otherwise,
or of the occurrence of any Default or Event of Default of which Borrower has
knowledge.
 
5.1.6 Cooperate in Legal Proceedings.  Borrower shall cooperate fully with
Lender with respect to any proceedings before any court, board or other
Governmental Authority which may in any way affect the rights of Lender
hereunder or any rights obtained by Lender under any of the other Loan Documents
and, in connection therewith, permit Lender, at its election, to participate in
any such proceedings.
 
5.1.7 Perform Loan Documents.  Borrower shall observe, perform and satisfy all
the terms, provisions, covenants and conditions of, and shall pay when due all
costs, fees and
 
 
 
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expenses to the extent required under the Loan Documents executed and delivered
by, or applicable to, Borrower.
 
5.1.8 Award and Insurance Benefits.  Borrower shall cooperate with Lender in
obtaining for Lender the benefits of any Awards or Insurance Proceeds lawfully
or equitably payable in connection with the Property, and Lender shall be
reimbursed for any expenses incurred in connection therewith (including
reasonable attorneys’ fees and disbursements, and the payment by Borrower of the
expense of an appraisal on behalf of Lender in case of Casualty or Condemnation
affecting the Property or any part thereof) out of such Insurance Proceeds.
 
5.1.9 Further Assurances.  Borrower shall, at Borrower’s sole cost and expense:
 
(a) furnish to Lender all instruments, documents, boundary surveys, footing or
foundation surveys, certificates, plans and specifications, appraisals, title
and other insurance reports and agreements, and each and every other document,
certificate, agreement and instrument required to be furnished by Borrower
pursuant to the terms of the Loan Documents or which are reasonably requested by
Lender in connection therewith;
 
(b) execute and deliver to Lender such documents, instruments, certificates,
assignments and other writings, and do such other acts necessary or desirable,
to evidence, preserve and/or protect the collateral at any time securing or
intended to secure the obligations of Borrower under the Loan Documents, as
Lender may reasonably require; and
 
(c) do and execute all and such further lawful and reasonable acts, conveyances
and assurances for the better and more effective carrying out of the intents and
purposes of this Agreement and the other Loan Documents, as Lender shall
reasonably require from time to time.
 
5.1.10 Principal Place of Business, State of Organization.  Borrower will not
cause or permit any change to be made in its name, identity (including its trade
name or names), place of organization or formation (as set forth in Section
4.1.36 hereof) or Borrower’s corporate or partnership or other structure unless
Borrower shall have first notified Lender in writing of such change at least
thirty (30) days prior to the effective date of such change, and shall have
first taken all action required by Lender for the purpose of perfecting or
protecting the lien and security interests of Lender pursuant to this Agreement,
and the other Loan Documents and, in the case of a change in Borrower’s
structure, without first obtaining the prior written consent of Lender, which
consent may given or denied in Lender’s sole discretion.  Upon Lender’s request,
Borrower shall, at Borrower’s sole cost and expense, execute and deliver
additional security agreements and other instruments which may be necessary to
effectively evidence or perfect Lender’s security interest in the Properties as
a result of such change of principal place of business or place of
organization.  Borrower’s principal place of business and chief executive
office, and the place where Borrower keeps its books and records, including
recorded data of any kind or nature, regardless of the medium or recording,
including software, writings, plans, specifications and schematics, has been for
the preceding four months (or, if less, the entire period of the existence of
Borrower) and will continue to be the address of Borrower set forth at the
introductory paragraph of this Agreement (unless Borrower notifies Lender in
writing at least thirty (30) days prior to the date of such change).  Borrower
shall promptly notify Lender of any
 
 
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change in its organizational identification number.  If Borrower does not now
have an organizational identification number and later obtains one, Borrower
promptly shall notify Lender of such organizational identification number.
 
5.1.11 Financial Reporting.
 
(a) Borrower will keep and maintain or will cause to be kept and maintained on a
Fiscal Year basis, in accordance with the requirements for a Special Purpose
Entity set forth herein and GAAP (or such other accounting basis acceptable to
Lender), proper and accurate books, records and accounts reflecting all of the
financial affairs of Borrower and all items of income and expense in connection
with the operation of the Properties.  Lender shall have the right from time to
time at all times during normal business hours upon reasonable notice to examine
such books, records and accounts at the office of Borrower or any other Person
maintaining such books, records and accounts and to make such copies or extracts
thereof as Lender shall desire.  After the occurrence of an Event of Default,
Borrower shall pay any costs and expenses incurred by Lender to examine
Borrower’s accounting records with respect to the Properties, as Lender shall
determine to be necessary or appropriate in the protection of Lender’s interest.
 
(b) Borrower will furnish to Lender annually, within one hundred twenty (120)
days following the end of each Fiscal Year of Borrower, a complete copy of
Borrower’s annual financial statements audited by an independent certified
public accountant acceptable to Lender (it being agreed that so long as Sun is a
publicly traded company on any nationally recognized stock exchange, Sun’s
independent certified public accountants shall be deemed acceptable to Lender),
in accordance with GAAP (or such other accounting basis acceptable to Lender)
covering each Individual Property for such Fiscal Year and containing statements
of profit and loss for Borrower and the Properties and a balance sheet for
Borrower.  Such statements shall set forth the financial condition and the
results of operations for each Individual Property for such Fiscal Year, and
shall include, but not be limited to, amounts representing annual net operating
income, net cash flow, gross income, and operating expenses.
 
(c) Borrower will furnish, or cause to be furnished, to Lender on or before
thirty (30) days after the end of each calendar quarter the following items,
accompanied by an Officer’s Certificate stating that such items are true,
correct, accurate, and complete and fairly present (subject to year end
adjustments in accordance with GAAP) the financial condition and results of the
operations of Borrower and the Property (subject to normal year-end adjustments)
as applicable:  (i) a rent roll for the subject quarter; (ii) quarterly and
year-to-date operating statements (including Capital Expenditures) prepared for
each calendar quarter, noting net operating income, gross income, and operating
expenses (not including any contributions to the Replacement Reserve Fund), and
other information necessary and sufficient to fairly represent the financial
position and results of operation of the Properties during such calendar
quarter, and containing a comparison of budgeted income and expenses and the
actual income and expenses; and (iii) a calculation reflecting the annual Debt
Service Coverage Ratio for the immediately preceding three (3), six (6), and
twelve (12) month periods as of the last day of such quarter.  In addition, such
certificate shall also be accompanied by an Officer’s Certificate stating that
the representations and warranties of Borrower set forth in Section 4.1.30 are
true and correct as of the date of such certificate.
 
 
 
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(d) For the partial year period commencing on the date hereof, and for each
Fiscal Year thereafter, Borrower shall submit to Lender an Annual Budget not
later than thirty (30) days prior to the commencement of such period or Fiscal
Year in form reasonably satisfactory to Lender.  During a Cash Sweep Period, the
Annual Budget shall be subject to Lender’s written approval (each such Annual
Budget, an “Approved Annual Budget”).  During a Cash Sweep Period, (i) in the
event that Lender objects to a proposed Annual Budget submitted by Borrower,
Lender shall advise Borrower of such objections within fifteen (15) days after
receipt thereof (and deliver to Borrower a reasonably detailed description of
such objections) and Borrower shall promptly revise such Annual Budget and
resubmit the same to Lender, (ii) Lender shall advise Borrower of any objections
to such revised Annual Budget within ten (10) days after receipt thereof (and
deliver to Borrower a reasonably detailed description of such objections) and
Borrower shall promptly revise the same in accordance with the process described
in this subsection until Lender approves the Annual Budget, and (iii) until such
time that Lender approves a proposed Annual Budget, the most recently Approved
Annual Budget shall apply; provided that, such Approved Annual Budget shall be
adjusted to reflect actual increases in Taxes, Insurance Premiums and Other
Charges.
 
(e) If, at anytime following a Cash Sweep Period and prior to a Cash Sweep Event
Cure, Borrower must incur an extraordinary operating expense or capital expense
not set forth in the Approved Annual Budget (each an “Extraordinary Expense”),
then Borrower shall promptly deliver to Lender a reasonably detailed explanation
of such proposed Extraordinary Expense for Lender’s approval, which may be given
or denied in Lender’s sole discretion.
 
(f) Borrower shall furnish to Lender, (i) prompt notice (containing reasonable
detail) of any material changes in the financial condition of any Individual
Property, as reasonably determined by Borrower and (ii) within ten (10) Business
Days after request (or as soon thereafter as may be reasonably possible), such
further detailed information with respect to the operation of the Properties and
the financial affairs of Borrower (or any Individual Borrower) as may be
reasonably requested by Lender.
 
(g) Anything contained herein to the contrary notwithstanding, prior to
Securitization, Borrower will furnish, or cause to be furnished to Lender the
financial reports required by Section 5.1.11(c) on or before thirty (30) days
after the end of each calendar month.
 
(h) Borrower will cause Guarantor to furnish to Lender annually, within ninety
(90) days following the end of each Fiscal Year of Guarantor, financial
statements audited by an independent certified public accountant, which shall
include an annual balance sheet and profit and loss statement of Guarantor, in
the form reasonably required by Lender; provided, however, receipt by Lender of
financial statements of Sun that have been audited by an independent certified
public accountant shall satisfy the provisions of this Section 5.1.11(h) so long
as the financial statements of Guarantor are consolidated with the financial
statements of Sun in such audited statements.
 
(i) Any reports, statements or other information required to be delivered under
this Agreement shall be delivered (i) in paper form, (ii) on a diskette, and
(iii) if requested by Lender and within the capabilities of Borrower’s data
systems without change or modification thereto, in electronic form and prepared
using Microsoft Word for Windows files (which files may be
 
 
 
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prepared using a spreadsheet program and saved as word processing files).
Borrower agrees that Lender may disclose information regarding the Properties
and Borrower that is provided to Lender pursuant to this Section 5.1.11 in
connection with the Securitization to such parties requesting such information
in connection with such Securitization.
 
5.1.12 Business and Operations.  Borrower will continue to engage in the
businesses presently conducted by it as and to the extent the same are necessary
for the ownership, maintenance, management and operation of the
Properties.  Borrower will qualify to do business and will remain in good
standing under the laws of the jurisdiction of its formation as and to the
extent the same are required for the ownership, maintenance, management and
operation of the Properties. Borrower shall at all times during the term of the
Loan, continue to own all of Equipment, Fixtures and Personal Property which are
necessary to operate the Properties in the manner required hereunder and in the
manner in which it is currently operated.
 
5.1.13 Title to the Properties.  Borrower will warrant and defend (a) the title
to the Property and every part thereof, subject only to Liens permitted
hereunder (including Permitted Encumbrances) and (b) the validity and priority
of the Lien of the Mortgages on the Properties, subject only to Liens permitted
hereunder (including Permitted Encumbrances), in each case against the claims of
all Persons whomsoever.  Borrower shall reimburse Lender for any losses, costs,
damages or expenses (including reasonable attorneys’ fees and expenses) incurred
by Lender if an interest in any Individual Property, other than as permitted
hereunder, is claimed by another Person.
 
5.1.14 Costs of Enforcement.  In the event (a) that the Mortgage encumbering any
Individual Property is foreclosed in whole or in part or that the Mortgage is
put into the hands of an attorney for collection, suit, action or foreclosure,
(b) of the foreclosure of any mortgage encumbering any Individual Property prior
to or subsequent to the Mortgage in which proceeding Lender is made a party, or
(c) of the bankruptcy, insolvency, rehabilitation or other similar proceeding in
respect of Borrower or any of its constituent Persons or an assignment by
Borrower or any of its constituent Persons for the benefit of its creditors,
Borrower, its successors or assigns, shall be chargeable with and agrees to pay
all costs of collection and defense, including reasonable attorneys’ fees and
expenses, incurred by Lender or Borrower in connection therewith and in
connection with any appellate proceeding or post-judgment action involved
therein, together with all required service or use taxes.
 
5.1.15 Estoppel Statement.  After request by Lender, Borrower shall within ten
(10) days furnish Lender with a statement, duly acknowledged and certified,
setting forth (i)  the original principal amount of the Note, (ii) the unpaid
principal amount of the Note, (iii) the Interest Rate of the Note, (iv) the date
installments of interest and/or principal were last paid, (v) any offsets or
defenses to the payment of the Debt, if any, claimed by Borrower, and (vi) that
the Note, this Agreement, the Mortgages and the other Loan Documents are valid,
legal and binding obligations and have not been modified or if modified, giving
particulars of such modification.
 
5.1.16 Loan Proceeds.  Borrower shall use the proceeds of the Loan received by
it on the Closing Date only for the purposes set forth in Section 2.1.4 hereof.
 
 
 
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5.1.17 Performance by Borrower.  Borrower shall in a timely manner observe,
perform and fulfill each and every covenant, term and provision of each Loan
Document executed and delivered by, or applicable to, Borrower, and shall not
enter into or otherwise suffer or permit any amendment, waiver, supplement,
termination or other modification of any Loan Document executed and delivered
by, or applicable to, Borrower without the prior written consent of Lender.
 
5.1.18 Confirmation of Representations.  Borrower shall deliver, in connection
with any Securitization, (a) one (1) or more Officer’s Certificates certifying,
if true, as to the accuracy of all representations made by Borrower in the Loan
Documents as of the date of the closing of such Securitization in all relevant
jurisdictions, and (b) certificates of the relevant Governmental Authorities in
all relevant jurisdictions indicating the good standing and qualification of
Borrower, Principal and Guarantor as of the date of the Securitization.
 
5.1.19 Environmental Covenants.
 
(a) Borrower covenants and agrees that:  (i) all uses and operations on or of
the Properties, whether by Borrower or any other Person, shall be in compliance
with all Environmental Laws and permits issued pursuant thereto; (ii) there
shall be no Releases of Hazardous Substances in, on, under or from the
Properties; (iii) there shall be no Hazardous Substances in, on, or under the
Properties, except those that are (A) in compliance with all Environmental Laws
and with permits issued pursuant thereto (to the extent such permits are
required by Environmental Law), (B) de-minimis amounts necessary to operate each
Individual Property for the purposes set forth in the Loan Agreement which will
not result in an environmental condition in, on or under the Properties and
which are otherwise permitted under and used in compliance with Environmental
Law and (C) fully disclosed to Lender in writing; (iv) Borrower shall keep each
Individual Property free and clear of all liens and other encumbrances imposed
pursuant to any Environmental Law, whether due to any act or omission of
Borrower or any other Person (the “Environmental Liens”); (v) Borrower shall, at
its sole cost and expense, fully and expeditiously cooperate in all activities
pursuant to subsection (b) below, including but not limited to providing all
relevant information and making knowledgeable persons available for interviews;
(vi) Borrower shall, at its sole cost and expense, perform any environmental
site assessment or other investigation of environmental conditions in connection
with each Individual Property, pursuant to any reasonable written request of
Lender made in the event that Lender has reason to believe that a Hazardous
Substance exists on each Individual Property (including but not limited to
sampling, testing and analysis of soil, water, air, building materials and other
materials and substances whether solid, liquid or gas), and share with Lender
the reports and other results thereof, and Lender and other Indemnified Parties
shall be entitled to rely on such reports and other results thereof;
(vii) Borrower shall, at its sole cost and expense, comply with all reasonable
written requests of Lender made in the event that Lender has reason to believe
that a Hazardous Substance exists on each Individual Property (A) reasonably
effectuate Remediation of any condition (including but not limited to a Release
of a Hazardous Substance) in, on, under or from each Individual Property;
(B) comply with any Environmental Law; (C) comply with any directive from any
Governmental Authority; and (D) take any other reasonable action necessary or
appropriate for protection of human health or the environment; (viii) Borrower
shall not do or allow any Tenant or other user of each Individual Property to do
any act relating to Hazardous Substances that (A) materially increases the
dangers to human
 
 
 
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health or the environment, (B) poses an unreasonable risk of harm to any Person
(whether on or off the Properties), (C) impairs or may impair the value of each
Individual Property, (D) is contrary to any requirement of any insurer, (E)
constitutes a public or private nuisance, (F) constitutes waste, or (G) violates
any covenant, condition, agreement or easement applicable to each Individual
Property; and (ix) Borrower shall immediately notify Lender in writing of
(A) any presence or Releases or threatened Releases of Hazardous Substances in,
on, under, from or migrating towards the Properties; (B) any non-compliance with
any Environmental Laws related in any way to the Properties; (C) any actual or
potential Environmental Lien; (D) any required or proposed Remediation of
environmental conditions relating to each Individual Property; and (E) any
written or oral notice or other communication of which Borrower becomes aware
from any source whatsoever (including but not limited to a governmental entity)
relating in any way to the release or potential release of Hazardous Substances
or Remediation thereof, likely to result in liability of any Person pursuant to
any Environmental Law, other environmental conditions in connection with each
Individual Property, or any actual or potential administrative or judicial
proceedings in connection with anything referred to in this Section.
 
(b) In the event that Lender has reason to believe that a Hazardous Substance
exists on any Individual Property that may, in Lender’s sole discretion,
endanger any Tenants or other occupants of such Individual Property or their
guests or the general public or may materially and adversely affect the value of
such Individual Property, upon reasonable notice from Lender, Borrower shall, at
Borrower’s expense, promptly cause an engineer or consultant satisfactory to
Lender to conduct an environmental assessment or audit (the scope of which shall
be determined in Lender’s sole and absolute discretion) and take any samples of
soil, groundwater or other water, air, or building materials or any other
invasive testing requested by Lender and promptly deliver the results of any
such assessment, audit, sampling or other testing; provided, however, if such
results are not delivered to Lender within a reasonable period or if Lender has
reason to believe that a Hazardous Substance exists on an Individual Property
that, in Lender’s sole judgment, endangers any Tenant or other occupant of such
Individual Property or their guests or the general public or is likely to
materially and adversely affect the value of such Individual Property, upon
reasonable notice to Borrower, Lender and any other Person designated by Lender,
including but not limited to any receiver, any representative of a governmental
entity, and any environmental consultant, shall have the right, but not the
obligation, to enter upon any Individual Property at all reasonable times to
assess any and all aspects of the environmental condition of such Individual
Property and its use, including but not limited to conducting any environmental
assessment or audit (the scope of which shall be determined in Lender’s sole and
absolute discretion) and taking samples of soil, groundwater or other water,
air, or building materials, and reasonably conducting other invasive
testing.  Borrower shall cooperate with and provide Lender and any such Person
designated by Lender with access to such Individual Property.
 
(c) Borrower hereby represents and warrants that attached hereto as Exhibit A is
a true and complete copy of the Asbestos Operations and Maintenance Plans for
the Individual Property known as Richmond Place located in Richmond, Michigan
and the Individual Property known as Candlelight Village located in Sauk
Village, Illinois (whether one or more, the “O&M Program”), and (b) Borrower has
as of the date hereof complied in all respects with the O&M Program.  Borrower
hereby covenants and agrees that, during the term of the Loan, including any
 
 
 
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extension or renewal thereof, Borrower shall comply in all respects with the
terms and conditions of the O&M Program.
 
5.1.20 Leasing Matters.  Any Leases with respect to mobile home and recreational
vehicles sites within each Individual Property written after the date hereof,
shall, if in writing, be written on a form of lease substantially similar to the
form of lease provided to Lender for such Individual Property prior to the date
hereof, subject to changes required by law.  Upon request, Borrower shall
provide Lender with access to executed copies of all Leases, at Borrower’s sole
cost and expense.  All renewals of Leases and all proposed Leases shall provide
for rental rates comparable to existing local market rates.  All proposed Leases
shall be on commercially reasonable terms.  Borrower (i) shall observe and
perform the obligations imposed upon the lessor under the Leases in a
commercially reasonable manner; (ii) shall enforce and may amend or terminate
the terms, covenants and conditions contained in the Leases upon the part of the
lessee thereunder to be observed or performed in a commercially reasonable
manner and in a manner not to impair the value of any Individual Property
involved; (iii) shall not collect any of the rents more than one (1) month in
advance (other than security deposits); provided, however, Borrower shall have
the right to collect, at any one time, not more than ten percent (10%) of the
gross annual Rent in the aggregate for all Properties in advance; (iv) shall not
execute any other assignment of lessor’s interest in the Leases or the Rents
(except as contemplated by the Loan Documents); (v) shall not alter, modify or
change the terms of the Leases in a manner inconsistent with the provisions of
the Loan Documents; and (vi) shall execute and deliver at the request of Lender
all such further assurances, confirmations and assignments in connection with
the Leases as Lender shall from time to time reasonably
require.  Notwithstanding anything to the contrary contained herein, Borrower
shall not enter into a lease of all or substantially all of any Individual
Property without Lender’s prior written consent.  Notwithstanding anything to
the contrary contained herein, all new Leases and all amendments, modifications,
extensions, and renewals of existing Leases with Tenants that are Affiliates of
Borrower (other than with individuals who are employees of Borrower, Manager or
Guarantor and provide services to the Properties) shall be subject to the prior
written consent of Lender.
 
5.1.21 Alterations.  Borrower shall obtain Lender’s prior written consent to any
alterations to any Improvements, which consent shall not be unreasonably
withheld or delayed except with respect to alterations that may have a material
adverse effect on Borrower’s financial condition, the value of the Property or
the Property’s Net Operating Income.  Notwithstanding the foregoing, Lender’s
consent shall not be required in connection with any alterations that will not
have a material adverse effect on Borrower’s financial condition, the value of
the Property or the Property’s Net Operating Income, provided that such
alterations (a) do not, at any one time, exceed $100,000.00 per Individual
Property, or (b) are made in connection with the Restoration of the Property
after the occurrence of a Casualty or Condemnation in accordance with the terms
and provisions of this Agreement.  If the total unpaid amounts due and payable
with respect to alterations to the Improvements at any Individual Property shall
at any time exceed $100,000.00 (the “Threshold Amount”), Borrower shall promptly
deliver to Lender as security for the payment of such amounts and as additional
security for Borrower’s obligations under the Loan Documents any of the
following:  (A) cash, (B) U.S. Obligations, (C) other securities having a rating
acceptable to Lender and that, at Lender’s option, the applicable Rating
Agencies have confirmed in writing will not, in and of itself, result in a
downgrade, withdrawal or qualification of the initial, or, if higher, then
current ratings assigned to any Securities or any class thereof in
 
 
 
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connection with any Securitization or (D) a completion and performance bond or
an irrevocable letter of credit (payable on sight draft only) issued by a
financial institution having a rating by S&P of not less than “A-1+” if the term
of such bond or letter of credit is no longer than three (3) months or, if such
term is in excess of three (3) months, issued by a financial institution having
a rating that is acceptable to Lender and that, at Lender’s option, the
applicable Rating Agencies have confirmed in writing will not, in and of itself,
result in a downgrade, withdrawal or qualification of the initial, or, if
higher, then current ratings assigned to any Securities or class thereof in
connection with any Securitization.  Such security shall be in an amount equal
to the excess of the total unpaid amounts with respect to alterations to the
Improvements on the Property (other than such amounts to be paid or reimbursed
by Tenants under the Leases) over the Threshold Amount and Lender may apply such
security from time to time at the option of Lender to pay for such
alterations.  Anything contained in this Section 5.1.21 to the contrary
notwithstanding, (i) this Section 5.1.21 shall not apply to Replacements, (ii)
the Threshold Amount shall not include amounts expended for Replacements, and
(iii) resurfacing of existing interior roads on any of the Properties and
replacing existing utility lines at any of Properties (including, without
limitation, sewer, water, electric, cable, gas or telephone) shall not
constitute alterations within the meaning of this Section 5.1.21.
 
5.1.22 Operation of Property.
 
(a) Borrower shall cause the Properties to be operated, in all material
respects, in accordance with the Management Agreement (or Replacement Management
Agreement) as applicable.  In the event that the Management Agreement expires or
is terminated (without limiting any obligation of Borrower to obtain Lender’s
consent to any termination or modification of the Management Agreement in
accordance with the terms and provisions of this Agreement), Borrower shall
promptly enter into a Replacement Management Agreement with Manager or another
Qualified Manager, as applicable.
 
(b) Borrower shall:  (i) promptly perform and/or observe, in all material
respects, all of the covenants and agreements required to be performed and
observed by it under the Management Agreement and do all things necessary to
preserve and to keep unimpaired its material rights thereunder; (ii) promptly
notify Lender of any material default under the Management Agreement  of which
it is aware; (iii) promptly deliver to Lender a copy of each financial
statement, business plan, capital expenditures plan, notice, report and estimate
received by it under the Management Agreement; and (iv) enforce the performance
and observance of all of the covenants and agreements required to be performed
and/or observed by Manager under the Management Agreement, in a commercially
reasonable manner.
 
5.1.23 Embargoed Person.  Borrower has performed and shall perform reasonable
due diligence to insure that at all times throughout the term of the Loan,
including after giving effect to any Transfers permitted pursuant to the Loan
Documents, (a) none of the funds or other assets of Borrower, Principal and
Guarantor constitute property of, or are beneficially owned, directly or
indirectly, by any Embargoed Person; (b) no Embargoed Person has any interest of
any nature whatsoever in Borrower, Principal or Guarantor, as applicable, with
the result that the investment in Borrower, Principal or Guarantor, as
applicable (whether directly or indirectly), is prohibited by law or the Loan is
in violation of law; and (c) none of the funds of Borrower, Principal or
Guarantor, as applicable, have been derived from, or are the
 
 
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proceeds of, any unlawful activity, including money laundering, terrorism or
terrorism activities, with the result that the investment in Borrower, Principal
or Guarantor, as applicable (whether directly or indirectly), is prohibited by
law or the Loan is in violation of law, or may cause any Individual Property to
be subject to forfeiture or seizure.
 
Section 5.2 Negative Covenants.  From the date hereof until payment and
performance in full of all obligations of Borrower under the Loan Documents or
the earlier release of the Lien of the Mortgages and any other collateral in
accordance with the terms of this Agreement and the other Loan Documents,
Borrower covenants and agrees with Lender that it will not do, directly or
indirectly, any of the following:
 
5.2.1 Operation of Property.
 
(a) Borrower shall not, without Lender’s prior written consent (which consent
shall not be unreasonably withheld): (i) surrender, terminate, cancel, amend or
modify the Management Agreement; provided, that Borrower may, without Lender’s
consent, replace the Manager so long as the replacement manager is a Qualified
Manager pursuant to a Replacement Management Agreement; (ii) reduce or consent
to the reduction of the term of the Management Agreement; (iii) increase or
consent to the increase of the amount of any charges under the Management
Agreement, or (iv) otherwise modify, change, supplement, alter or amend, or
waive or release any of its rights and remedies under, the Management Agreement
in any material respect.
 
(b) Following the occurrence and during the continuance of an Event of Default,
Borrower shall not exercise any rights, make any decisions, grant any approvals
or otherwise take any action under the Management Agreement without the prior
written consent of Lender, which consent may be granted, conditioned or withheld
in Lender’s sole discretion.
 
5.2.2 Liens.  Subject to Borrower's right to contest certain Liens as set forth
herein or in the Mortgages, Borrower shall not create, incur, assume or suffer
to exist any Lien on any portion of any Individual Property or permit any such
action to be taken, except for Permitted Encumbrances.
 
5.2.3 Dissolution.  Borrower shall not (a) engage in any dissolution,
liquidation or consolidation or merger with or into any other business entity,
(b) engage in any business activity not related to the ownership and operation
of the Properties, (c) transfer, lease or sell, in one transaction or any
combination of transactions, the assets or all or substantially all of the
properties or assets of Borrower except to the extent permitted by the Loan
Documents, (d) modify, amend, waive or terminate its organizational documents in
a manner that would result in a violation of any provision of this Agreement, or
its qualification and good standing in any jurisdiction or (e) cause the
Principal to (i) dissolve, wind up or liquidate or take any action, or omit to
take an action, as a result of which the Principal would be dissolved, wound up
or liquidated in whole or in part, or (ii) amend, modify, waive or terminate the
organizational documents of the Principal in a manner that would result in a
violation of any provision of this Agreement, in each case, without obtaining
the prior written consent of Lender or Lender’s designee.
 
 
 
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5.2.4 Change In Business.  Borrower shall not enter into any line of business
other than the ownership and operation of the applicable Individual Property, or
make any material change in the scope or nature of its business objectives,
purposes or operations, or undertake or participate in activities other than the
continuance of its present business.  Nothing contained in this Section 5.2.4 is
intended to expand the rights of Borrower contained in Section 5.2.10(d) hereof.
 
5.2.5 Debt Cancellation.  Borrower shall not cancel or otherwise forgive or
release any claim or debt (other than termination of Leases in accordance
herewith) owed to Borrower by any Person, except for adequate consideration and
in the ordinary course of Borrower’s business.
 
5.2.6 Zoning.  Borrower shall not initiate or consent to any zoning
reclassification of any portion of any Individual Property or seek any variance
under any existing zoning ordinance or use or permit the use of any portion of
any Individual Property in any manner that could result in such use becoming a
non-conforming use under any zoning ordinance or any other applicable land use
law, rule or regulation, without the prior written consent of Lender.
 
5.2.7 No Joint Assessment.  Borrower shall not suffer, permit or initiate the
joint assessment of any Individual Property (a) with any other real property
constituting a tax lot separate from such Individual Property, and (b) which
constitutes real property with any portion of such Individual Property which may
be deemed to constitute personal property, or any other procedure whereby the
lien of any taxes which may be levied against such personal property shall be
assessed or levied or charged to such real property portion of such Individual
Property.
 
5.2.8 [Intentionally Omitted].
 
5.2.9 ERISA.
 
(a) Borrower shall not engage in any transaction which would cause any
obligation, or action taken or to be taken, hereunder (or the exercise by Lender
of any of its rights under the Note, this Agreement or the other Loan Documents)
to be a non-exempt (under a statutory or administrative class exemption)
prohibited transaction under ERISA.
 
(b) Borrower further covenants and agrees to deliver to Lender such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Lender in its sole discretion, that (A) Borrower is not
and does not maintain an “employee benefit plan” as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, or a “governmental plan” within the
meaning of Section 3(32) of ERISA; (B) Borrower is not subject to any state
statute regulating investment of, or fiduciary obligations with respect to
governmental plans and (C) one or more of the following circumstances is true:
 
(i) Equity interests in Borrower are publicly offered securities, within the
meaning of 29 C.F.R. §2510.3-101(b)(2);
 
 
 
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(ii) Less than twenty-five percent (25%) of each outstanding class of equity
interests in Borrower are held by “benefit plan investors” within the meaning of
29 C.F.R. §2510.3-101(f)(2); or
 
(iii) Borrower qualifies as an “operating company” or a “real estate operating
company” within the meaning of 29 C.F.R. §2510.3-101(c) or (e).
 
5.2.10 Transfers.
 
(a) Borrower acknowledges that Lender has examined and relied on the experience
of Borrower, Guarantor and Sun in owning and operating properties such as any
Individual Property in agreeing to make the Loan, and will continue to rely on
Borrower’s ownership of any Individual Property as a means of maintaining the
value of the Property as security for repayment of the Debt and the performance
of the Other Obligations.  Borrower acknowledges that Lender has a valid
interest in maintaining the value of any Individual Property so as to ensure
that, should Borrower default in the repayment of the Debt or the performance of
the Other Obligations, Lender can recover the Debt by a sale of any Individual
Property.
 
(b) Except for Permitted Transfers, Alternative Permitted Transfers described in
Section 5.2.10(d) and a sale of the Property to the extent permitted under
Section 5.2.10(e), without the prior written consent of Lender, Borrower shall
not, and shall not permit any Restricted Party to do any of the following
(collectively, a “Transfer”): (i) sell, convey, mortgage, grant, bargain,
encumber, pledge, assign, grant options with respect to, or otherwise transfer
or dispose of (directly or indirectly, voluntarily or involuntarily, by
operation of law or otherwise, and whether or not for consideration or of
record) the Property or any part thereof or any legal or beneficial interest
therein or (ii) permit a Sale or Pledge of an interest in any Restricted Party,
other than pursuant to Leases of space in the Improvements to Tenants in
accordance with the provisions of Section 5.1.20.  For the avoidance of doubt,
prior notice to Lender and Lender’s consent shall not be required for any
Permitted Transfer.
 
(c) A Transfer shall include, but not be limited to, (i) an installment sales
agreement wherein Borrower agrees to sell the Property or any part thereof for a
price to be paid in installments; (ii) an agreement by Borrower leasing all or a
substantial part of the Property for other than actual occupancy by a space
Tenant thereunder or a sale, assignment or other transfer of, or the grant of a
security interest in, Borrower’s right, title and interest in and to any Leases
or any Rents; (iii) if a Restricted Party is a corporation, any merger,
consolidation or Sale or Pledge of such corporation’s stock or the creation or
issuance of new stock, although Permitted Transfers thereof are not restricted;
(iv) if a Restricted Party is a limited or general partnership or joint venture,
any merger or consolidation or the change, removal, resignation or addition of a
general partner or the Sale or Pledge of the partnership interest of any general
partner or any profits or proceeds relating to such partnership interest, or the
Sale or Pledge of limited partnership interests or any profits or proceeds
relating to such limited partnership interest or the creation or issuance of new
limited partnership interests, although Permitted Transfers thereof are not
restricted; (v) if a Restricted Party is a limited liability company, any merger
or consolidation or the change, removal, resignation or addition of a managing
member or non-member manager (or if no managing member, any member) or the Sale
or Pledge of the membership interest of a managing member (or if no managing
member, any member) or any
 
 
 
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profits or proceeds relating to such membership interest, or the Sale or Pledge
of non-managing membership interests or the creation or issuance of new
non-managing membership interests, although Permitted Transfers thereof are not
restricted; (vi) if a Restricted Party is a trust or nominee trust, any merger,
consolidation or the Sale or Pledge of the legal or beneficial interest in a
Restricted Party or the creation or issuance of new legal or beneficial
interests, although Permitted Transfers thereof are not restricted; or (vii) the
removal or the resignation of the managing agent (including, without limitation,
an Affiliated Manager) other than in accordance with Section 5.1.22 hereof.
 
(d) In addition to Permitted Transfers which do not require notice to, or the
consent of, Lender, Lender’s consent shall not be required in connection with
one or a series of Transfers, of not more than forty-nine percent (49%) of the
stock, the limited partnership interests or non-managing membership interests
(as the case may be) in a Restricted Party (an “Alternative Permitted
Transfer”); provided, however, no such Alternative Permitted Transfer which does
not otherwise qualify as a Permitted Transfer shall result in the change of
Control in a Restricted Party, and as a condition to each such Alternative
Permitted Transfer which does not otherwise qualify as a Permitted Transfer,
Lender shall receive not less than thirty (30) days prior written notice of such
proposed Alternative Permitted Transfer.  If after giving effect to any such
Alternative Permitted Transfer which does not otherwise qualify as a Permitted
Transfer, more than forty-nine percent (49%) in the aggregate of direct or
indirect interests in a Restricted Party are owned by any Person and its
Affiliates that owned less than forty-nine percent (49%) direct or indirect
interest in such Restricted Party as of the Closing Date, Borrower shall, no
less than thirty (30) days prior to the effective date of any such Alternative
Permitted Transfer, deliver to Lender an Additional Insolvency Opinion
acceptable to Lender and the Rating Agencies.  Anything contained herein to the
contrary notwithstanding, at all times, (i) Guarantor must continue to own,
directly or indirectly, at least a 99.5% legal and beneficial interest in each
Individual Borrower and (ii) Sun must continue to Control Guarantor, each
Principal and each Individual Borrower (through its ownership of each
Principal), and own, directly or indirectly, at least a 51% legal and beneficial
interest in Guarantor and a 100% legal and beneficial interest in each
Principal.  For the avoidance of doubt, any Transfer which qualifies as both a
Permitted Transfer and Alternative Permitted Transfer shall be deemed to be a
Permitted Transfer and not require prior notice to, or the consent of,
Lender.  Upon request from Lender, Borrower shall provide to Lender a list of
the direct owners of the limited partnership interests of Guarantor and, to the
extent known or available to Borrower, the indirect owners of the limited
partnership interests of Guarantor.
 
(e) No Transfer of the Property and assumption of the Loan shall occur during
the period that is sixty (60) days prior to and sixty (60) days after a
Securitization.  Otherwise, Lender’s consent to a Transfer of the Properties and
assumption of the Loan shall not be unreasonably withheld provided that Lender
receives sixty (60) days prior written notice of such Transfer and no Event of
Default has occurred and is continuing, and further provided that the following
additional requirements are satisfied:
 
(i) Borrower or Transferee shall pay Lender a transfer fee equal to one-quarter
of one percent (0.25%) of the outstanding principal balance of the Loan at the
time of such transfer;
 
 
 
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(ii) Borrower shall pay any and all reasonable out-of-pocket costs incurred in
connection with such Transfer (including, without limitation, Lender’s counsel
fees and disbursements and all recording fees, title insurance premiums and
mortgage and intangible taxes and the fees and expenses of the Rating Agencies
pursuant to clause (x) below);
 
(iii) The proposed transferee (the “Transferee”) or Transferee’s Principals must
have demonstrated expertise in owning and operating properties similar in
location, size, class and operation to the Properties, which expertise shall be
reasonably determined by Lender;
 
(iv) Transferee and Transferee’s Principals shall, as of the date of such
transfer, have an aggregate net worth and liquidity reasonably acceptable to
Lender;
 
(v) Transferee, Transferee’s Principals and all other entities which may be
owned or Controlled directly or indirectly by Transferee’s Principals (“Related
Entities”) must not have been party to any bankruptcy proceedings, voluntary or
involuntary, made an assignment for the benefit of creditors or taken advantage
of any insolvency act, or any act for the benefit of debtors within seven (7)
years prior to the date of the proposed Transfer;
 
(vi) Transferee shall assume all of the obligations of Borrower under the Loan
Documents from and after the date of such Transfer in a manner satisfactory to
Lender in all respects, including, without limitation, by entering into an
assumption agreement in form and substance satisfactory to Lender;
 
(vii) There shall be no material litigation or regulatory action pending or
threatened against Transferee, Transferee’s Principals or Related Entities which
is not reasonably acceptable to Lender;
 
(viii) Transferee, Transferee’s Principals and Related Entities shall not have
defaulted under its or their obligations with respect to any other Indebtedness
in a manner which is not reasonably acceptable to Lender;
 
(ix) Transferee and Transferee’s Principals must be able to satisfy all the
representations and covenants set forth in Sections 4.1.30, 4.1.35, 5.1.23 and
5.2.9 of this Agreement, no Default or Event of Default shall otherwise occur as
a result of such Transfer, and Transferee and Transferee’s Principals shall
deliver (A) all organizational documentation reasonably requested by Lender,
which shall be reasonably satisfactory to Lender and (B) all certificates,
agreements, covenants and legal opinions reasonably required by Lender;
 
(x) If required by Lender, Transferee shall be approved by the Rating Agencies
selected by Lender, which approval, if required by Lender, shall take the form
of a confirmation in writing from such Rating Agencies to the effect that such
Transfer will not result in a requalification, reduction, downgrade or
withdrawal of the ratings in effect immediately prior to such assumption or
transfer for the Securities or any class thereof issued in connection with a
Securitization which are then outstanding;
 
 
 
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(xi) Prior to any release of Guarantor, one (1) or more substitute guarantors
reasonably acceptable to Lender shall have assumed all of the liabilities and
obligations of Guarantor under the Guaranty and Environmental Indemnity executed
by Guarantor or execute a replacement guaranty and environmental indemnity
reasonably satisfactory to Lender;
 
(xii) Borrower or Transferee shall deliver, at its sole cost and expense, an
endorsement to the Title Insurance Policy, as modified by the assumption
agreement, as a valid first lien on the related Individual Property and naming
the Transferee as owner of such Individual Property, which endorsement shall
insure that, as of the date of the recording of the assumption agreement, such
Individual Property shall not be subject to any additional exceptions or liens
other than those contained in the Title Policy issued on the date hereof and the
Permitted Encumbrances;
 
(xiii) Each Individual Property shall be managed by Qualified Manager pursuant
to a Replacement Management Agreement; and
 
(xiv) Borrower or Transferee, at its sole cost and expense, shall deliver to
Lender an Additional Insolvency Opinion reflecting such Transfer satisfactory in
form and substance to Lender.
 
Immediately upon a Transfer to such Transferee and the satisfaction of all of
the above requirements, the named Borrower and Guarantor herein shall be
released from all liability under this Agreement, the Note, the Mortgages and
the other Loan Documents accruing after such Transfer.  The foregoing release
shall be effective upon the date of such Transfer, but Lender agrees to provide
written evidence thereof reasonably requested by Borrower.
 
(f) Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default hereunder in order to declare the Debt
immediately due and payable upon Borrower’s Transfer without Lender’s consent in
violation of the terms of this Agreement.  This provision shall apply to every
Transfer regardless of whether voluntary or not, or whether or not Lender has
consented to any previous Transfer.
 
ARTICLE VI - INSURANCE; CASUALTY; CONDEMNATION
 
Section 6.1 Insurance.
 
(a) Borrower shall obtain and maintain, or cause to be maintained, insurance for
Borrower and each Individual Property providing at least the following
coverages:
 
(i) comprehensive all risk “special form” insurance including, but not limited
to, loss caused by any type of windstorm or hail on the Improvements and the
Personal Property, (A) in an amount equal to one hundred percent (100%) of the
“Full Replacement Cost,” which for purposes of this Agreement shall mean actual
replacement value (exclusive of costs of excavations, foundations, underground
utilities and footings) with a waiver of depreciation; (B) containing an agreed
amount endorsement with respect to the Improvements and Personal Property
waiving all co-insurance provisions or to be written on a no co-insurance form;
(C) providing for no deductible in excess of
 
 
 
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$25,000.00 for all such insurance coverage; provided however with respect to
windstorm and earthquake coverage, providing for a deductible satisfactory to
Lender in its sole discretion, which permitted deductible shall in no event be
greater than 5% of the insured value of each Individual Property, subject to a
minimum deductible of $100,000.00 for each Individual Property located in Tier I
Wind Areas and $25,000.00 for all other Properties and, with respect to flood
insurance, providing for a deductible not to exceed $10,000; and (D)  if any of
the Improvements or the use of the applicable Individual Property shall at any
time constitute legal non-conforming structures or uses, coverage for loss due
to operation of law in an amount equal to the full Replacement Cost, coverage
for demolition costs and coverage for increased costs of construction.  In
addition, Borrower shall obtain: (y) if any portion of the Improvements is
currently or at any time in the future located in a federally designated
“special flood hazard area”, flood hazard insurance in an amount equal to the
lesser of (1) the Release Amount with respect to such Improvements, or (2) the
maximum amount of such insurance available, with respect to such Improvements,
under the National Flood Insurance Act of 1968, the Flood Disaster Protection
Act of 1973 or the National Flood Insurance Reform Act of 1994, as each may be
amended or such greater amount, not to exceed $5,000,000, as Lender shall
require, and (z) earthquake insurance in an amount of not less than $5,000,000
in the event an Individual Property is located in an area with a high degree of
seismic activity; provided that the insurance pursuant to clauses (y) and (z)
hereof shall be on terms consistent with the comprehensive all risk insurance
policy required under this subsection (i);
 
 
(ii) business income or rental loss insurance (A) with loss payable to Lender;
(B) covering all risks required to be covered by the insurance provided for in
subsection (i) above; (C) in an amount equal to one hundred percent (100%) of
the projected gross revenues from the operation of the Properties (as reduced to
reflect expenses not incurred during a period of Restoration) for a period of at
least twelve (12) months after the date of the Casualty; and (D) containing an
extended period of indemnity endorsement which provides that after the physical
loss to the Improvements and Personal Property has been repaired, the continued
loss of income will be insured until such income either returns to the same
level it was at prior to the loss, or the expiration of six (6) months from the
date that the Property is repaired or replaced and operations are resumed,
whichever first occurs, and notwithstanding that the policy may expire prior to
the end of such period.  The amount of such business income or rental loss
insurance shall be determined prior to the date hereof and at least once each
year thereafter based on Borrower’s reasonable estimate of the gross revenues
from the Property for the succeeding twelve (12) month period.  All proceeds
payable to Lender pursuant to this subsection shall be held by Lender and shall
be deposited into the Lockbox Account for the applicable Individual Property at
which such loss occurred; provided, however, that nothing herein contained shall
be deemed to relieve Borrower of its obligations to pay the obligations secured
by the Loan Documents on the respective dates of payment provided for in this
Agreement and the other Loan Documents except to the extent such amounts are
actually paid out of the proceeds of such business income insurance;
 
 
 
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(iii) at all times during which structural construction, repairs or alterations
are being made with respect to the Improvements, and only if the Individual
Property coverage form does not otherwise apply, (A) owner’s contingent or
protective liability insurance, otherwise known as Owner Contractor’s Protective
Liability, covering claims not covered by or under the terms or provisions of
the above mentioned commercial general liability insurance policy and (B) the
insurance provided for in subsection (i) above written in a so-called builder’s
risk completed value form (1) on a non-reporting basis, (2) against all risks
insured against pursuant to subsection (i) above, (3) including permission to
occupy the such Individual Property, (4) with an agreed amount endorsement
waiving co-insurance provisions and (C) providing for no deductible in excess of
$25,000 for such insurance coverage;
 
(iv) comprehensive boiler and machinery insurance, if steam boilers or other
pressure-fixed vessels are in operation, in amounts as shall be reasonably
required by Lender on terms consistent with the commercial property insurance
policy required under subsection (i) above;
 
(v) commercial general liability insurance against claims for personal injury,
bodily injury, death or property damage occurring upon, in or about the
Property, such insurance (A) to be on the so-called “occurrence” form with a
combined limit of not less than $2,000,000.00 in the aggregate and $1,000,000.00
per occurrence; (B) to continue at not less than the aforesaid limit until
required to be changed by Lender in writing by reason of changed economic
conditions making such protection inadequate for property similar to the
Individual Property located in or around the region in which such Individual
Property is located; (C) to cover at least the following hazards: (1) premises
and operations; (2) products and completed operations on an “if any” basis;
(3) independent contractors; (4) blanket contractual liability for all written
contracts and (5) contractual liability covering the indemnities contained in
Article 9 of the Mortgage to the extent the same is available and (D) to provide
for no deductible in excess of $10,000.00 for such insurance coverage;
 
(vi) automobile liability coverage for all owned and non-owned vehicles,
including rented and leased vehicles containing minimum limits per occurrence of
$1,000,000.00;
 
(vii) worker’s compensation and employee’s liability subject to the worker’s
compensation laws of the applicable state;
 
(viii) umbrella and excess liability insurance in an amount not less than
$50,000,000.00 per occurrence on terms consistent with the commercial general
liability insurance policy required under subsection (v) above, including, but
not limited to, supplemental coverage for employer liability and automobile
liability, which umbrella liability coverage shall apply in excess of the
automobile liability coverage in clause (vi) above;
 
(ix) the insurance required under this Section 6.1(a) above shall cover perils
of terrorism and acts of terrorism and Borrower shall maintain insurance for
loss resulting
 
 
 
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        from perils and acts of terrorism on terms (including amounts)
consistent with those required under Section 6.1(a) above at all times during
the term of the Loan; and
 
(x) upon sixty (60) days written notice, such other reasonable insurance,
including, but not limited to, sinkhole or land subsidence insurance, and in
such reasonable amounts as Lender from time to time may reasonably request
against such other insurable hazards which at the time are commonly insured
against for property similar to the Individual Property located in or around the
region in which such Individual Property is located.
 
(b) All insurance provided for in Section 6.1(a) hereof, shall be obtained under
valid and enforceable policies (collectively, the “Policies” or in the singular,
the “Policy”), and shall be subject to the approval of Lender as to insurance
companies, amounts, deductibles, loss payees and insureds.  The Policies shall
be issued by financially sound and responsible insurance companies authorized to
do business in the State and having a rating of “A:X” or better in the current
Best’s Insurance Reports and a claims paying ability rating of “A-” or better by
S&P, and the equivalent rating by Fitch, if Fitch is rating the Securities and
rates the insurer, and the equivalent rating by Moody’s, if Moody’s is rating
the Securities and rates the insurer, provided, however, Landmark American
Insurance Company, rated “A:XII” with Best’s Insurance Reports, shall be deemed
to be an acceptable insurance company provided that it maintains its “A:XII”
rating and it does not increase its participation amounts with respect to the
Policies or provide coverage under the Policies in a more primary position than
what is currently provided.  The Policies described in Section 6.1 hereof (other
than those strictly limited to liability protection) shall designate Lender as
loss payee.  Not less than ten (10) days prior to the expiration dates of the
Policies theretofore furnished to Lender, certificates of insurance evidencing
the Policies accompanied by evidence satisfactory to Lender of payment of the
premiums due thereunder (the “Insurance Premiums”), shall be delivered by
Borrower to Lender.
 
(c) Any property Policy may be written on a overall basis so long as the overall
limit of coverage is not less than $60,000,000.00 and provided any blanket
Policy shall otherwise provide the same protection as would a separate Policy
insuring only such Individual Property in compliance with the provisions of
Section 6.1(a) hereof.
 
(d) All Policies provided for or contemplated by Section 6.1(a) hereof, except
for the Policy referenced in Section 6.1(a)(vii) of this Agreement, shall name
Borrower as the insured and Lender as the additional insured, as its interests
may appear, and in the case of property damage, boiler and machinery, flood and
earthquake insurance, shall contain a so-called New York standard
non-contributing mortgagee clause in favor of Lender providing that the loss
thereunder shall be payable to Lender.
 
(e) All Policies shall contain clauses or endorsements to the effect that:
 
(i) no act or negligence of Borrower, or failure to comply with the provisions
of any Policy, which might otherwise result in a forfeiture of the insurance or
any part thereof, shall in any way affect the validity or enforceability of the
insurance insofar as Lender is concerned;
 
 
 
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(ii) the Policy shall not be materially changed (other than to increase the
coverage provided thereby) or canceled without at least thirty (30) days written
notice to Lender and any other party named therein as an additional insured;
 
(iii) the issuers thereof shall give written notice to Lender if the Policy has
not been renewed thirty (30) days prior to its expiration; and
 
(iv) Lender shall not be liable for any Insurance Premiums thereon or subject to
any assessments thereunder.
 
(f) If at any time Lender is not in receipt of written evidence that all
insurance required hereunder is in full force and effect, Lender shall have the
right, without notice to Borrower, to take such action as Lender deems necessary
to protect its interest in the Properties, including, without limitation, the
obtaining of such insurance coverage as Lender in its sole discretion deems
appropriate after three (3) Business Days notice to Borrower if prior to the
date upon which any such coverage will lapse or at any time Lender deems
necessary (regardless of prior notice to Borrower) to avoid the lapse of any
such coverage.  All premiums incurred by Lender in connection with such action
or in obtaining such insurance and keeping it in effect shall be paid by
Borrower to Lender upon demand and, until paid, shall be secured by the
Mortgages and shall bear interest at the Default Rate.
 
(g) Anything contained in this Section 6.1 to the contrary notwithstanding, with
respect to only the commercial general liability insurance described in Section
6.1(a)(v) above, Lender shall permit a deductible in excess of $10,000.00
provided that (1) the amount of such deductible shall not exceed $250,000.00 and
(2) if Borrower shall increase such deductible above $10,000.00, Borrower shall
deliver to Lender a Letter of Credit in the stated amount equal to the sum of
the amount of such deductible minus $10,000.00 (the “GL Deductible
Difference”).  If Borrower shall deliver to Lender a Letter of Credit pursuant
to this Section 6.1(g), Lender shall have the right to draw the entire amount of
such Letter of Credit in the event that any of the following events shall have
occurred:
 
(i)           Upon the occurrence of an Event of Default; or
 
(ii)           If (aa) Lender receives a Notice of Non-Extension and Borrower
fails to provide Lender a replacement Letter of Credit at least thirty (30) days
prior to any termination date, or (bb) the minimum long-term unsecured debt
rating of the issuer of the Letter of Credit falls below AA/A2 (as issued by S&P
and Moody’s).
 
If Lender draws on the Letter of Credit pursuant to Section 6.1(g)(i) above,
Lender shall apply the funds as provided in this Agreement.  If Lender draws on
the Letter of Credit pursuant to Section 6.1(g)(ii) above, funds received from
such draw shall be held by Lender as additional collateral for the Loan;
provided, however, if Borrower shall thereafter provide Lender a replacement
Letter of Credit, Lender shall release to Borrower any such funds held by Lender
resulting from such draw.  If Borrower shall deposit a Letter of Credit in
accordance with this Section 6.1(g), such Letter of Credit (or cash resulting
from a draw thereunder) shall be deemed to be Reserve Funds.  Provided no Event
of Default has occurred and is continuing, if, after delivering a Letter of
Credit pursuant to this Section 6.1(g), Borrower shall reduce the deductible
 
 
 
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 provided for in Section 6.1(a)(v) hereof to $10,000 or less, Lender shall
release any such Letter of Credit (or cash resulting from a draw thereunder) to
Borrower and Borrower shall have the further right to a reduction of the stated
amount of any such Letter of Credit by the amount of any reduction in the GL
Deductible Difference.
 
Section 6.2 Casualty.  If any Individual Property shall be damaged or destroyed,
in whole or in part, by fire or other casualty (a “Casualty”), Borrower shall
give prompt written notice of such damage to Lender and shall promptly commence
and diligently prosecute the completion of the Restoration of such Individual
Property pursuant to Section 6.4 hereof as nearly as possible to the condition
such Individual Property was in immediately prior to such Casualty, with such
alterations as may be reasonably approved by Lender and otherwise in accordance
with Section 6.4 hereof.  Borrower shall pay all costs of such Restoration
whether or not such costs are covered by insurance.  Lender may, but shall not
be obligated to make proof of loss if not made promptly by Borrower.  In
addition, Lender may participate in any settlement discussions with any
insurance companies (and shall approve the final settlement, which approval
shall not be unreasonably withheld or delayed) with respect to any Casualty in
which the Net Proceeds or the costs of completing the Restoration are equal to
or greater than $250,000.00 and Borrower shall deliver to Lender all instruments
required by Lender to permit such participation.
 
Section 6.3 Condemnation.  Borrower shall promptly give Lender notice of the
actual or threatened commencement of any proceeding for the Condemnation of any
Individual Property and shall deliver to Lender copies of any and all papers
served in connection with such proceedings.  Lender may participate in any such
proceedings, and Borrower shall from time to time deliver to Lender all
instruments requested by it to permit such participation.  Borrower shall, at
its expense, diligently prosecute any such proceedings, and shall consult with
Lender, its attorneys and experts, and cooperate with them in the carrying on or
defense of any such proceedings.  Notwithstanding any taking by any public or
quasi-public authority through Condemnation or otherwise (including, but not
limited to, any transfer made in lieu of or in anticipation of the exercise of
such taking), Borrower shall continue to pay the Debt at the time and in the
manner provided for its payment in the Note and in this Agreement and the Debt
shall not be reduced until any Award shall have been actually received and
applied by Lender, after the deduction of expenses of collection, to the
reduction or discharge of the Debt.  Lender shall not be limited to the interest
paid on the Award by the condemning authority but shall be entitled to receive
out of the Award interest at the rate or rates provided herein or in the
Note.  If any portion of any Individual Property is taken by a condemning
authority, Borrower shall promptly commence and diligently prosecute the
Restoration of the Property pursuant to Section 6.4 hereof and otherwise comply
with the provisions of Section 6.4 hereof.  If the applicable Individual
Property is sold, through foreclosure or otherwise, prior to the receipt by
Lender of the Award, Lender shall have the right, whether or not a deficiency
judgment on the Note shall have been sought, recovered or denied, to receive the
Award, or a portion thereof sufficient to pay the Debt. Notwithstanding the
foregoing provisions of this Section 6.3, and Section 6.4 hereof, if the Loan or
any portion thereof is included in a REMIC Trust and, immediately following a
release of any portion of the Lien of the Mortgage in connection with a
Condemnation of an Individual Property (but taking into account any proposed
Restoration on the remaining portion of such Individual Property), the Loan to
Value Ratio is greater than 125% (such value to be determined, in Lender’s sole
discretion, by any commercially reasonable
 
 
 
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method permitted to a REMIC Trust), the principal balance of the Loan must be
paid down by the least of the following amounts:  (i) the net Condemnation
Proceeds, (ii) the fair market value of the released property at the time of the
release, or (iii) an amount such that the Loan to Value Ratio (as so determined
by Lender) does not increase after the release, unless the Lender receives an
opinion of counsel that if such amount is not paid, the Securitization will not
fail to maintain its status as a REMIC Trust as a result of the related release
of such portion of the Lien of the Mortgage.
 
Section 6.4 Restoration.  The following provisions shall apply in connection
with the Restoration of any Individual Property:
 
(a) If the Net Proceeds shall be less than $250,000.00 and the costs of
completing the Restoration shall be less than $250,000.00, the Net Proceeds will
be disbursed by Lender to Borrower upon receipt, provided that all of the
conditions set forth in Section 6.4(b)(i)(A), (B), (E), (F), (G), (I), (J), and
(K) hereof are met and Borrower delivers to Lender a written undertaking to
expeditiously commence and to satisfactorily complete with due diligence the
Restoration in accordance with the terms of this Agreement.
 
(b) If the Net Proceeds are equal to or greater than $250,000.00 or the costs of
completing the Restoration is equal to or greater than $250,000.00 Lender shall
make the Net Proceeds available for the Restoration in accordance with the
provisions of this Section 6.4.  The term “Net Proceeds” for purposes of this
Section 6.4 shall mean:  (i) the net amount of all insurance proceeds received
by Lender pursuant to Section 6.1 (a)(i), (iv), (ix) and (x) as a result of such
damage or destruction, after deduction of its reasonable costs and expenses
(including, but not limited to, reasonable counsel fees), if any, in collecting
same (“Insurance Proceeds”), or (ii) the net amount of the Award, after
deduction of its reasonable costs and expenses (including, but not limited to,
reasonable counsel fees), if any, in collecting same (“Condemnation Proceeds”),
whichever the case may be.
 
(i) The Net Proceeds shall be made available to Borrower for Restoration
provided that each of the following conditions are met:
 
(A) no Event of Default shall have occurred and be continuing;
 
(B) In the event the Net Proceeds are Condemnation Proceeds, less than fifteen
percent (15%) of the land constituting the Individual Property is taken, and
such land is located along the perimeter or periphery of the Individual
Property;
 
(C) [Intentionally Omitted];
 
(D) Borrower shall commence the Restoration as soon as reasonably practicable
(but in no event later than sixty (60) days after such Casualty or Condemnation,
whichever the case may be, occurs) and shall diligently pursue the same to
satisfactory completion.
 
(E) Lender shall be satisfied that any operating deficits, including all
scheduled payments of principal and interest under the Note, which will be
 
 
 
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                                incurred with respect to the Individual Property
as a result of the occurrence of any such Casualty or Condemnation, whichever
the case may be, will be covered out of (1) the Net Proceeds, (2) the insurance
coverage referred to in Section 6.1(a)(ii) hereof, if applicable, or (3) by
other funds of Borrower;
 
(F) Lender shall be satisfied that the Restoration will be completed on or
before the earliest to occur of (1) six (6) months prior to the Maturity Date,
(2) such time as may be required under all applicable Legal Requirements in
order to repair and restore the applicable Individual Property to the condition
it was in immediately prior to such Casualty or to as nearly as possible the
condition it was in immediately prior to such Condemnation, as applicable, or
(3) the expiration of the insurance coverage referred to in Section 6.1(a)(ii)
hereof;
 
(G) Lender shall be satisfied that the Individual Property and the use thereof
after the Restoration will be in compliance with and permitted under all
applicable Legal Requirements;
 
(H) the Restoration shall be done and completed by Borrower in an expeditious
and diligent fashion and in compliance with all applicable Legal Requirements;
 
(I) such Casualty or Condemnation, as applicable, does not result in the loss of
access to the related Individual Property or the Improvements;
 
(J) the Debt Service Coverage Ratio for the Individual Property, after giving
effect to the Restoration, shall be equal to or greater than 1.2 to 1.0;
 
(K) Borrower shall deliver, or cause to be delivered, to Lender a signed
detailed budget approved in writing by Borrower’s architect or engineer stating
the entire cost of completing the Restoration, which budget shall be subject to
Lender’s approval; and
 
(L) the Net Proceeds together with any cash or cash equivalent deposited by
Borrower with Lender are sufficient in Lender’s discretion to cover the cost of
the Restoration.
 
(ii) The Net Proceeds shall be held by Lender in an interest-bearing Eligible
Account and, until disbursed in accordance with the provisions of this
Section 6.4(b), shall constitute additional security for the Debt and Other
Obligations under the Loan Documents.  The Net Proceeds shall be disbursed by
Lender to, or as directed by, Borrower from time to time during the course of
the Restoration, upon receipt of evidence satisfactory to Lender that (A) all
materials installed and work and labor performed (except to the extent that they
are to be paid for out of the requested disbursement) in connection with the
Restoration have been paid for in full, and (B) there exist no notices of
pendency, stop orders, mechanic’s or materialman’s liens or notices of intention
to file same, or any other liens or encumbrances of any nature whatsoever on the
Individual Property which have not either been fully bonded to the satisfaction
of
 
 
 
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     Lender and discharged of record or in the alternative fully insured to the
satisfaction of Lender by the title company issuing the Title Insurance Policy.
 
(iii) All plans and specifications required in connection with the Restoration
shall be subject to prior review and acceptance in all respects by Lender and by
an independent consulting engineer selected by Lender (the “Casualty
Consultant”), which review and acceptance shall not be unreasonably withheld,
conditioned or delayed.  Lender shall have the use of the plans and
specifications and all permits, licenses and approvals required or obtained in
connection with the Restoration.  The identity of the contractors,
subcontractors and materialmen engaged in the Restoration, as well as the
contracts under which they have been engaged, shall be subject to prior review
and approval by Lender and the Casualty Consultant.  All costs and expenses
incurred by Lender in connection with making the Net Proceeds available for the
Restoration including, without limitation, reasonable counsel fees and
disbursements and the Casualty Consultant’s fees, shall be paid by Borrower.
 
(iv) In no event shall Lender be obligated to make disbursements of the Net
Proceeds in excess of an amount equal to the costs actually incurred from time
to time for work in place as part of the Restoration, as certified by the
Casualty Consultant, minus the Casualty Retainage.  The term “Casualty
Retainage” shall mean an amount equal to ten percent (10%) of the costs actually
incurred for work in place as part of the Restoration, as certified by the
Casualty Consultant, until the Restoration has been completed.  The Casualty
Retainage shall in no event, and notwithstanding anything to the contrary set
forth above in this Section 6.4(b), be less than the amount actually held back
by Borrower from contractors, subcontractors and materialmen engaged in the
Restoration.  The Casualty Retainage shall not be released until the Casualty
Consultant certifies to Lender that the Restoration has been completed in
accordance with the provisions of this Section 6.4(b) and that all approvals
necessary for the re-occupancy and use of the Individual Property have been
obtained from all appropriate governmental and quasi-governmental authorities,
and Lender receives evidence satisfactory to Lender that the costs of the
Restoration have been paid in full or will be paid in full out of the Casualty
Retainage; provided, however, that Lender will release the portion of the
Casualty Retainage being held with respect to any contractor, subcontractor or
materialman engaged in the Restoration as of the date upon which the Casualty
Consultant certifies to Lender that the contractor, subcontractor or materialman
has satisfactorily completed all work and has supplied all materials in
accordance with the provisions of the contractor’s, subcontractor’s or
materialman’s contract, the contractor, subcontractor or materialman delivers
the lien waivers and evidence of payment in full of all sums due to the
contractor, subcontractor or materialman as may be reasonably requested by
Lender or by the title company issuing the Title Insurance Policy, and Lender
receives an endorsement to the Title Insurance Policy insuring the continued
priority of the lien of the Mortgage and evidence of payment of any premium
payable for such endorsement.  If required by Lender, the release of any such
portion of the Casualty Retainage shall be approved by the surety company, if
any, which has issued a payment or performance bond with respect to the
contractor, subcontractor or materialman.
 
 
 
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(v) Lender shall not be obligated to make disbursements of the Net Proceeds more
frequently than once every calendar month.
 
(vi) If at any time the Net Proceeds or the undisbursed balance thereof shall
not, in the opinion of Lender in consultation with the Casualty Consultant, be
sufficient to pay in full the balance of the costs which are estimated by the
Casualty Consultant to be incurred in connection with the completion of the
Restoration, Borrower shall deposit the deficiency (the “Net Proceeds
Deficiency”) with Lender before any further disbursement of the Net Proceeds
shall be made.  The Net Proceeds Deficiency deposited with Lender shall be held
by Lender and shall be disbursed for costs actually incurred in connection with
the Restoration on the same conditions applicable to the disbursement of the Net
Proceeds, and until so disbursed pursuant to this Section 6.4(b) shall
constitute additional security for the Debt and Other Obligations under the Loan
Documents.
 
(vii) After the Casualty Consultant certifies to Lender that the Restoration has
been completed in accordance with the provisions of this Section 6.4(b), and the
receipt by Lender of evidence satisfactory to Lender that all costs incurred in
connection with the Restoration have been paid in full, (i) the excess, if any,
of the Net Proceeds deposited with Lender shall be delivered to Borrower, or, if
a Cash Sweep Event has occurred and is continuing, deposited into the Cash
Management Account to be disbursed in accordance with this Agreement and (ii)
the remaining balance, if any, of the Net Proceeds Deficiency shall be delivered
to Borrower, regardless of whether a Cash Sweet Event has occurred; provided, in
each case, no Event of Default shall have occurred and shall be continuing under
the Note, this Agreement or any of the other Loan Documents.
 
(c) All Net Proceeds not required (i) to be made available for the Restoration
or (ii) to be returned to Borrower as excess Net Proceeds pursuant to
Section 6.4(b)(vii) hereof may be retained and applied by Lender toward the
payment of the Debt in accordance with Section 2.4.2 hereof, whether or not then
due and payable in such order, priority and proportions as Lender in its sole
discretion shall deem proper, or, at the discretion of Lender, the same may be
paid, either in whole or in part, to Borrower for such purposes as Lender shall
approve, in its discretion.
 
(d) In the event of foreclosure of the Mortgage, or other transfer of title to
the Property in extinguishment in whole or in part of the Debt all right, title
and interest of Borrower in and to the Policies that are not blanket Policies
then in force concerning the Property and all proceeds payable thereunder shall
thereupon vest in the purchaser at such foreclosure or Lender or other
transferee in the event of such other transfer of title.
 
ARTICLE VII - RESERVE FUNDS
 
Section 7.1 Required Repairs. Each Borrower shall perform the repairs at its
Individual Property, as more particularly set forth on Schedule II hereto (such
repairs hereinafter referred to as “Required Repairs”).  Borrower shall complete
the Required Repairs on or before the required deadline for each repair as set
forth on Schedule II.  It shall be an Event of Default under this Agreement if
Borrower does not complete the Required Repairs at the Property by the required
deadline for each repair as set forth on Schedule II.
 
 
 
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Section 7.2 Tax and Insurance Escrow Fund.
 
(a) Borrower shall pay to Lender (a) on the Closing Date an initial deposit and
(b) on each Payment Date thereafter (i) one-twelfth (1/12) of the Taxes and
Other Charges that Lender estimates will be payable during the next ensuing
twelve (12) months in order to accumulate with Lender sufficient funds to pay
all such Taxes and Other Charges at least thirty (30) days prior to the dates
such Taxes and Other Charges become delinquent, and (ii) one-twelfth (1/12) of
the Insurance Premiums that Lender estimates will be payable for the renewal of
the coverage afforded by the Policies upon the expiration thereof in order to
accumulate with Lender sufficient funds to pay all such Insurance Premiums at
least thirty (30) days prior to the expiration of the Policies (said amounts in
(a) and (b) above hereinafter called the “Tax and Insurance Escrow
Fund”).  Lender will apply the Tax and Insurance Escrow Fund to payments of
Taxes and Insurance Premiums required to be made by Borrower pursuant to
Section 5.1.2 hereof and under the Mortgages.  In making any payment relating to
the Tax and Insurance Escrow Fund, Lender may do so according to any bill,
statement or estimate procured from the appropriate public office (with respect
to Taxes) or insurer or agent (with respect to Insurance Premiums), without
inquiry into the accuracy of such bill, statement or estimate or into the
validity of any tax, assessment, sale, forfeiture, tax lien or title or claim
thereof.  If the amount of the Tax and Insurance Escrow Fund shall exceed the
amounts due for Taxes, Other Charges and Insurance Premiums pursuant to
Section 5.1.2 hereof, Lender shall, in its sole discretion, return any excess to
Borrower or credit such excess against future payments to be made to the Tax and
Insurance Escrow Fund.  If at any time Lender reasonably determines that the Tax
and Insurance Escrow Fund is not or will not be sufficient to pay Taxes, Other
Charges and Insurance Premiums by the dates set forth in (a) and (b) above,
Lender shall notify Borrower of such determination and Borrower shall increase
its monthly payments to Lender by the amount that Lender estimates is sufficient
to make up the deficiency at least thirty (30) days prior to the dates such
Taxes and Other Charges become delinquent and/or thirty (30) days prior to
expiration of the Policies, as the case may be.  The Tax and Insurance Escrow
Fund shall be held by Lender in an interest bearing account, which interest
shall be included with amounts on deposit in the Tax and Insurance Escrow Fund
and held for the benefit of Borrower.
 
(b) Notwithstanding the provisions of Section 7.2(a) above, Borrower’s
obligation to deposit in the Tax and Insurance Escrow Fund the sums required to
pay Insurance Premiums shall be suspended provided that: (i) no Event of Default
shall have occurred or exist under the Loan Documents; (ii) Lender shall have
received evidence satisfactory to Lender that the Borrower has paid, when due,
all Insurance Premiums; and (iii) Lender shall have received evidence
satisfactory to Lender that Borrower has a blanket insurance Policy that covers
substantially all of the real property and improvements owned by Guarantor and
its subsidiaries and that otherwise complies with Section 6.1 hereof.
 
Section 7.3 Replacements and Replacement Reserve.
 
7.3.1 Replacement Reserve Fund.  Borrower shall pay to Lender (a) on the Closing
Date an initial deposit and (b) on each Payment Date thereafter $16,779.17 (the
“Replacement Reserve Monthly Deposit”) which amounts are reasonably estimated by
Lender in its sole discretion to be due for replacements and repairs required to
be made to the Properties during the calendar year (collectively, the
“Replacements”).  Amounts so deposited shall
 
 
 
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hereinafter be referred to as Borrower’s “Replacement Reserve Fund” and the
account in which such amounts are held shall hereinafter be referred to as
Borrower’s “Replacement Reserve Account”.  Notwithstanding the preceding
sentence, the amount of Replacement Reserve Funds on deposit in the Replacement
Reserve Account at any given time shall not exceed $201,350.00 in the aggregate
(the “Replacement Reserve Cap”) and, accordingly, to the extent a Replacement
Reserve Monthly Deposit would result in the aggregate amount of Replacement
Reserve Funds in the Replacement Reserve Account to exceed the Replacement
Reserve Cap, such Replacement Reserve Monthly Deposit shall be decreased by an
amount equal to such excess.
 
7.3.2 Disbursements from Replacement Reserve Account.
 
(a) Lender shall make disbursements from the Replacement Reserve Account to pay
Borrower only for the costs of the Replacements.  Lender shall not be obligated
to make disbursements from the Replacement Reserve Account to reimburse Borrower
for the costs of routine maintenance to an Individual Property or replacements
of inventory.
 
(b) Lender shall, upon written request from Borrower and satisfaction of the
requirements set forth in this Section 7.3.2, disburse to Borrower amounts from
the Replacement Reserve Account necessary to pay for the actual approved costs
of Replacements or to reimburse Borrower therefor, upon completion of such
Replacements (or, upon partial completion in the case of Replacements made
pursuant to Section 7.3.2(e) hereof) as determined by Lender.  In no event shall
Lender be obligated to disburse funds from the Replacement Reserve Account if a
Default or an Event of Default exists.
 
(c) Each request for disbursement from the Replacement Reserve Account shall be
in a form specified or approved by Lender and shall specify (i) the specific
Replacements for which the disbursement is requested, (ii) the quantity and
price of each item purchased, if the Replacement includes the purchase or
replacement of specific items, (iii) the price of all materials (grouped by type
or category) used in any Replacement other than the purchase or replacement of
specific items, and (iv) the cost of all contracted labor or other services
applicable to each Replacement for which such request for disbursement is
made.  With each request Borrower shall certify that all Replacements have been
made in accordance with all applicable Legal Requirements of any Governmental
Authority having jurisdiction over the applicable Individual Property.  Each
request for disbursement shall include copies of invoices for all items or
materials purchased and all contracted labor or services provided and, unless
Lender has agreed to issue joint checks as described below in connection with a
particular Replacement, each request shall include evidence satisfactory to
Lender of payment of all such amounts.  Except as provided in Section 7.3.2(e)
hereof, each request for disbursement from the Replacement Reserve Account shall
be made only after completion of the Replacement for which disbursement is
requested.  Borrower shall provide Lender evidence of completion of the subject
Replacement satisfactory to Lender in its reasonable judgment.
 
(d) Except as provided in Section 7.3.2(e) below, Borrower shall pay all
invoices in connection with the Replacements with respect to which a
disbursement is requested prior to submitting such request for disbursement from
the Replacement Reserve Account or, at the request of Borrower, Lender will
issue joint checks, payable to Borrower and the contractor,
 
 
 
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supplier, materialman, mechanic, subcontractor or other party to whom payment is
due in connection with a Replacement.  In the case of payments made by joint
check, Lender may require a waiver of lien from each Person receiving payment
prior to Lender’s disbursement from the Replacement Reserve Account.  In
addition, as a condition to any disbursement, Lender may require Borrower to
obtain lien waivers from each contractor, supplier, materialman, mechanic or
subcontractor who receives payment in an amount equal to or greater than
$25,000.00 for completion of its work or delivery of its materials.  Any lien
waiver delivered hereunder shall conform to the requirements of applicable law
and shall cover all work performed and materials supplied (including equipment
and fixtures) for the applicable Individual Property by that contractor,
supplier, subcontractor, mechanic or materialman through the date covered by the
current reimbursement request (or, in the event that payment to such contractor,
supplier, subcontractor, mechanic or materialmen is to be made by a joint check,
the release of lien shall be effective through the date covered by the previous
release of funds request).
 
(e) If (i) the cost of a Replacement exceeds $25,000.00, (ii) the contractor
performing such Replacement requires periodic payments pursuant to terms of a
written contract, and (iii) Lender has approved in writing in advance such
periodic payments, a request for reimbursement from the Replacement Reserve
Account may be made after completion of a portion of the work under such
contract, provided (A) such contract requires payment upon completion of such
portion of the work, (B) the materials for which the request is made are on site
at the applicable Individual Property and are properly secured or have been
installed in such Individual Property, (C) all other conditions in this
Agreement for disbursement have been satisfied, (D) funds remaining in the
Replacement Reserve Account are, in Lender’s judgment, sufficient to complete
such Replacement and other Replacements when required, and (E) if required by
Lender, each contractor or subcontractor receiving payments under such contract
shall provide a waiver of lien with respect to amounts which have been paid to
that contractor or subcontractor.
 
(f) Borrower shall not make a request for disbursement from the Replacement
Reserve Account more frequently than once in any calendar month and (except in
connection with the final disbursement) the total cost of all Replacements in
any request shall not be less than $10,000.00.
 
7.3.3 Performance of Replacements.
 
(a) Borrower shall make Replacements when required in order to keep each
Individual Property in condition and repair consistent with other comparable
properties in the same market segment in the metropolitan area in which the
respective Individual Property is located, and to keep each Individual Property
or any portion thereof from deteriorating.  Borrower shall complete all
Replacements in a good and workmanlike manner as soon as practicable following
the commencement of making each such Replacement.
 
(b) Lender reserves the right, at its option, if the cost of a Replacement, in
the aggregate, exceeds $50,000.00, to approve all contracts or work orders with
materialmen, mechanics, suppliers, subcontractors, contractors or other parties
providing labor or materials in
 
 
 
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connection with the Replacements.  Upon Lender’s request, Borrower shall assign
any contract or subcontract to Lender.
 
(c) In the event Lender determines in its reasonable discretion that any
Replacement is not being performed in a workmanlike or timely manner or that any
Replacement has not been completed in a workmanlike or timely manner, Lender
shall have the option to withhold disbursement for such unsatisfactory
Replacement and, fifteen (15) days after notice from Lender to Borrower and
Borrower's failure to cure during such period, to proceed under existing
contracts or to contract with third parties to complete such Replacement and to
apply the Replacement Reserve Fund toward the labor and materials necessary to
complete such Replacement, and to exercise any and all other remedies available
to Lender upon an Event of Default hereunder.
 
(d) In order to facilitate Lender’s completion or making of such Replacements
pursuant to Section 7.3.3(c) above, Borrower grants Lender the right to enter
onto any Individual Property and perform any and all work and labor necessary to
complete or make such Replacements and/or employ watchmen to protect such
Individual Property from damage.  All sums so expended by Lender, to the extent
not from the Replacement Reserve Fund, shall be deemed to have been advanced
under the Loan to Borrower and secured by the Mortgages.  For this purpose
Borrower constitutes and appoints Lender its true and lawful attorney-in-fact
with full power of substitution to complete or undertake such Replacements in
the name of Borrower.  Such power of attorney shall be deemed to be a power
coupled with an interest and cannot be revoked.  Borrower empowers said
attorney-in-fact as follows:  (i) to use any funds in the Replacement Reserve
Account for the purpose of making or completing such Replacements it is
permitted to make pursuant to Section 7.3.3(c); (ii) to make such additions,
changes and corrections to such Replacements as shall be necessary or desirable
to complete such Replacements; (iii) to employ such contractors, subcontractors,
agents, architects and inspectors as shall be required for such purposes; (iv)
to pay, settle or compromise all existing bills and claims which are or may
become Liens against any Individual Property, or as may be necessary or
desirable for the completion of such Replacements, or for clearance of title;
(v) to execute all applications and certificates in the name of Borrower which
may be required by any of the contract documents; (vi) to prosecute and defend
all actions or proceedings in connection with any Individual Property or the
rehabilitation and repair of any Individual Property; and (vii) to do any and
every act which Borrower might do in its own behalf to fulfill the terms of this
Agreement.
 
(e) Nothing in this Section 7.3.3 shall:  (i) make Lender responsible for making
or completing any Replacements; (ii) require Lender to expend funds in addition
to the Replacement Reserve Fund to make or complete any Replacement;
(iii) obligate Lender to proceed with any Replacements; or (iv) obligate Lender
to demand from Borrower additional sums to make or complete any Replacement.
 
(f) Borrower shall permit Lender and Lender’s agents and representatives
(including, without limitation, Lender’s engineer, architect, or inspector) or
third parties making Replacements pursuant to this Section 7.3.3 to enter onto
the Property during normal business hours (subject to the rights of Tenants
under their Leases) to inspect the progress of any Replacements and all
materials being used in connection therewith, to examine all plans and
 
 
 
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shop drawings relating to such Replacements which are or may be kept at each
Individual Property, and to complete any Replacements made pursuant to this
Section 7.3.3.  Borrower shall cause all contractors and subcontractors to
cooperate with Lender or Lender’s representatives or such other persons
described above in connection with inspections described in this
Section 7.3.3(f) or the completion of Replacements pursuant to this
Section 7.3.3.
 
(g) If the cost of any Replacement, in the aggregate, exceeds $50,000.00, Lender
may require an inspection of the Individual Property at Borrower’s expense prior
to making a monthly disbursement from the Replacement Reserve Account in order
to verify completion of the Replacements for which reimbursement is
sought.  Lender may require that such inspection be conducted by an appropriate
independent qualified professional selected by Lender and/or may require a copy
of a certificate of completion by an independent qualified professional
acceptable to Lender prior to the disbursement of any amounts from the
Replacement Reserve Account.  Borrower shall pay the expense of the inspection
as required hereunder, whether such inspection is conducted by Lender or by an
independent qualified professional.
 
(h) The Replacements and all materials, equipment, fixtures, or any other item
comprising a part of any Replacement shall be constructed, installed or
completed, as applicable, free and clear of all mechanic’s, materialmen’s or
other liens (except for those Liens existing on the date of this Agreement which
have been approved in writing by Lender).
 
(i) Before each disbursement from the Replacement Reserve Account, Lender may,
if the cost of any Replacement, in the aggregate, exceeds $50,000.00, require
Borrower to provide Lender with a search of title to the applicable Individual
Property effective to the date of the disbursement, which search shows that no
mechanic’s or materialmen’s liens or other liens of any nature have been placed
against the applicable Individual Property since the date of recordation of the
related Mortgage and that title to such Individual Property is free and clear of
all Liens (other than the lien of the related Mortgage, Permitted  Encumbrances
and any other Liens previously approved in writing by Lender, if any).
 
(j) All Replacements shall comply with all applicable Legal Requirements of all
Governmental Authorities having jurisdiction over the applicable Individual
Property and applicable insurance requirements including, without limitation,
applicable building codes, special use permits, environmental regulations, and
requirements of insurance underwriters.
 
(k) In addition to any insurance required under the Loan Documents, Borrower
shall provide or cause to be provided workmen’s compensation insurance,
builder’s risk, and public liability insurance and other insurance to the extent
required under applicable law in connection with a particular Replacement.  All
such policies shall be in form and amount reasonably satisfactory to
Lender.  All such policies which can be endorsed with standard mortgagee clauses
making loss payable to Lender or its assigns shall be so endorsed.  Certificates
evidencing such insurance, and, upon request, certified copies of such policies
shall be delivered to Lender.
 
7.3.4 Failure to Make Replacements.
 
(a) It shall be an Event of Default under this Agreement if Borrower fails to
comply with any provision of this Section 7.3 and such failure is not cured
within thirty (30) days after
 
 
 
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written notice from Lender.  Upon the occurrence of such an Event of Default,
Lender may use the Replacement Reserve Fund (or any portion thereof) for any
purpose, including but not limited to completion of the Replacements as provided
in Section 7.3.3, or for any other repair or replacement to any Individual
Property or toward payment of the Debt in such order, proportion and priority as
Lender may determine in its sole discretion.  Lender’s right to withdraw and
apply the Replacement Reserve Fund shall be in addition to all other rights and
remedies provided to Lender under this Agreement and the other Loan Documents.
 
(b) Nothing in this Agreement shall obligate Lender to apply all or any portion
of the Replacement Reserve Fund on account of an Event of Default to payment of
the Debt or in any specific order or priority.
 
7.3.5 Balance in the Replacement Reserve Account.  The insufficiency of any
balance in the Replacement Reserve Account shall not relieve Borrower from its
obligation to fulfill all preservation and maintenance covenants in the Loan
Documents.
 
7.3.6 Replacement Reserve Letter of Credit.
 
(a) In lieu of making the Replacement Reserve Monthly Deposit required by
Section 7.3.1 above, Borrower may cause to be delivered to Lender an
irrevocable, transferable letter of credit in form and substance acceptable to
Lender, from a financial institution with a minimum long-term unsecured debt
rating of AA/A2 or better issued by S&P and Moody’s in a stated amount equal to
the Replacement Reserve Cap, with an “account party” other than the Borrower,
with an initial termination date of no less than one year and providing for
automatic extensions without further amendment for successive one-year periods
unless at least sixty (60) days before any such termination date the issuer of
the Letter of Credit gives written notice (as used in this Section 7.3.6, a
“Notice of Non-Extension”) to Lender that the Letter of Credit shall not be
renewed, and providing that Borrower (and not Lender) shall pay any fee
resulting from a transfer of the Letter of Credit by Lender.  Any Letter of
Credit (including any renewal or extension thereof or replacement therefore)
required by this Agreement shall comply with the requirements of this Section
7.3.6(a)  and shall be referred to as a ”Letter of Credit.”
 
(b) Lender shall have the right to draw the entire amount of the Letter of
Credit required by this Section 7.3.6(a) in the event that any of the following
events shall have occurred;
 
(i) Upon the occurrence of an Event of Default; or
 
(ii) If (aa) Lender receives a Notice of Non-Extension and Borrower fails to
provide Lender a replacement Letter of Credit with the terms and conditions as
described in Section 7.3.6(a) above at least thirty (30) days prior to any
termination date, or (bb) the minimum long-term unsecured debt rating of the
issuer of the Letter of Credit falls below AA/A2 (as issued by S&P and Moody’s).
 
(c) If Lender draws on the Letter of Credit pursuant to Section 7.3.6(b)(i)
above, Lender shall apply the funds as provided in this Agreement.  If Lender
draws on the Letter of Credit pursuant to Section 7.3.6(b)(ii) above, funds
received from such draw shall be held by Lender in the Replacement Reserve
Account; provided, however, if Borrower shall thereafter
 
 
 
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provide Lender a replacement Letter of Credit, Lender shall release to Borrower
any such funds held by Lender resulting from such draw.
 
Section 7.4 If Borrower shall deposit cash or a Letter of Credit in accordance
with Section 2.6.2(h) hereof, such funds or Letter of Credit shall be deemed to
be Reserve Funds and such cash or Letter of Credit shall be held as additional
security for the Loan and shall be released to Borrower after the Debt has been
paid in full.
 
Section 7.5 Excess Cash Flow Reserve Fund.
 
7.5.1 Deposits to Excess Cash Flow Reserve Fund.  From and after the occurrence
of a DSCR Trigger Event (but prior to a DSCR Cure Event), Borrower shall deposit
with Lender all Excess Cash Flow in the Cash Management Account, which shall be
held by Lender as additional security for the Loan and amounts so held shall be
hereinafter referred to as the “Excess Cash Flow Reserve Fund” and the account
to which such amounts are held shall hereinafter be referred to as the “Excess
Cash Flow Reserve Account”.
 
7.5.2 Release of Excess Cash Flow Reserve Funds.  Provided no other Cash Sweep
Event has occurred, upon the occurrence of a DSCR Cure Event following the
occurrence of a DSCR Trigger Event, all Excess Cash Flow Reserve Funds shall be
disbursed to Borrower.  Any Excess Cash Flow Reserve Funds remaining after the
Debt has been paid in full shall be paid to Borrower.
 
Section 7.6 Reserve Funds, Generally.
 
(a) Borrower grants to Lender a first-priority perfected security interest in
each of the Reserve Funds and any and all monies now or hereafter deposited in
each Reserve Fund as additional security for payment of the Debt.  Until
expended or applied in accordance herewith, the Reserve Funds shall constitute
additional security for the Debt.
 
(b) Upon the occurrence of an Event of Default, Lender may, in addition to any
and all other rights and remedies available to Lender, apply any sums then
present in any or all of the Reserve Funds to the payment of the Debt in any
order in its sole discretion.
 
(c) The Reserve Funds shall not constitute trust funds and may be commingled
with other monies held by Lender.  The Reserve Funds shall be held in an
Eligible Account in Permitted Investments as directed by Lender or Lender’s
Servicer.  Unless expressly provided for in this Article VII, all interest on a
Reserve Fund shall not be added to or become a part thereof and shall be the
sole property of and shall be paid to Lender.  Borrower shall be responsible for
payment of any federal, state or local income or other tax applicable to the
interest earned on the Reserve Funds credited or paid to Borrower.
 
(d) Borrower shall not, without obtaining the prior written consent of Lender,
further pledge, assign or grant any security interest in any Reserve Fund or the
monies deposited therein or permit any lien or encumbrance to attach thereto, or
any levy to be made thereon, or any UCC-1 Financing Statements, except those
naming Lender as the secured party, to be filed with respect thereto.
 
 
 
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(e) Lender and Servicer shall not be liable for any loss sustained on the
investment of any funds constituting the Reserve Funds.  Borrower shall
indemnify Lender and Servicer and hold Lender and Servicer harmless from and
against any and all actions, suits, claims, demands, liabilities, losses,
damages, obligations and costs and expenses (including litigation costs and
reasonable attorneys’ fees and expenses) arising from or in any way connected
with the Reserve Funds or the performance of the obligations for which the
Reserve Funds were established.  Borrower shall assign to Lender all rights and
claims Borrower may have against all persons or entities supplying labor,
materials or other services which are to be paid from or secured by the Reserve
Funds; provided, however, that Lender may not pursue any such right or claim
unless an Event of Default has occurred and remains uncured.
 
(f) The required monthly deposits into the Reserve Funds and the Monthly Debt
Service Payment Amount, shall be added together and shall be paid as an
aggregate sum by Borrower to Lender.
 
(g) Any amount remaining in the Reserve Funds after the Debt has been paid in
full shall be returned to Borrower.
 
ARTICLE VIII - DEFAULTS
 
Section 8.1 Event of Default.
 
(a) Each of the following events shall constitute an event of default hereunder
(an “Event of Default”):
 
(i) if any portion of the Debt is not paid when due;
 
(ii) if any of the Taxes or Other Charges are not paid before the same become
delinquent, unless funds on deposit in the Taxes and Insurance Fund are
sufficient to pay Taxes and Other Charges and no other Event of Default exists;
 
(iii) if the Policies are not kept in full force and effect, or if certified
copies of the Policies are not delivered to Lender upon request;
 
(iv) if Borrower Transfers or otherwise encumbers any portion of any Individual
Property without Lender’s prior written consent in violation of the provisions
of this Agreement and Article 6 of each Mortgage;
 
(v) if any representation or warranty made by Borrower herein or in any other
Loan Document, or in any report, certificate, financial statement or other
instrument, agreement or document furnished to Lender shall have been false or
misleading in any material respect as of the date the representation or warranty
was made;
 
(vi) if Borrower or Principal shall make an assignment for the benefit of
creditors;
 
(vii) if a receiver, liquidator or trustee shall be appointed for Borrower or
Principal or any other guarantor under any guarantee issued in connection with
the Loan
 
 
 
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or if Borrower or Principal shall be adjudicated a bankrupt or insolvent, or if
any petition for bankruptcy, reorganization or arrangement pursuant to federal
bankruptcy law, or any similar federal or state law, shall be filed by or
against, consented to, or acquiesced in by, Borrower or Principal, or if any
proceeding for the dissolution or liquidation of Borrower or Principal shall be
instituted; provided, however, if such appointment, adjudication, petition or
proceeding was involuntary and not consented to by Borrower or Principal upon
the same not being discharged, stayed or dismissed within ninety (90) days;
 
 
(viii) if Borrower attempts to assign its rights under this Agreement or any of
the other Loan Documents or any interest herein or therein in contravention of
the Loan Documents;
 
(ix) if Guarantor or any guarantor or indemnitor under any guaranty or indemnity
issued in connection with the Loan shall make an assignment for the benefit of
creditors or if a receiver, liquidator or trustee shall be appointed for
Guarantor or any guarantor or indemnitor under any guarantee or indemnity issued
in connection with the Loan or if Guarantor or such other guarantor or
indemnitor shall be adjudicated a bankrupt or insolvent, or if any petition for
bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or
any similar federal or state law, shall be filed by or against, consented to, or
acquiesced in by, Guarantor or such other guarantor or indemnitor, or if any
proceeding for the dissolution or liquidation of Guarantor or such other
guarantor or indemnitor shall be instituted; provided, however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Guarantor or such other guarantor or indemnitor, upon the same
not being discharged, stayed or dismissed within ninety (90) days; provided,
further, however, it shall be at Lender’s option to determine whether any of the
foregoing shall be an Event of Default;
 
(x) if Borrower breaches any covenant contained in Section 4.1.30 or Section
4.1.39 hereof or any negative covenant contained in Section 5.2 hereof;
 
(xi) with respect to any term, covenant or provision set forth herein which
specifically contains a notice requirement or grace period, if Borrower shall be
in default under such term, covenant or condition after the giving of such
notice or the expiration of such grace period;
 
(xii) if any of the assumptions contained in the Insolvency Opinion delivered to
Lender in connection with the Loan, or in any Additional Insolvency Opinion
delivered subsequent to the closing of the Loan, are or shall become untrue in
any material respect;
 
(xiii) if (A) the then current Manager is not an Affiliate of Borrower and a
material default has occurred and continues beyond any applicable cure period
under the Management Agreement (or any Replacement Management Agreement) and if
such default permits the Manager thereunder to terminate or cancel the
Management Agreement (or any Replacement Management Agreement) unless a
Replacement Management Agreement is entered into in accordance with the terms
hereof within thirty (30) days after such material default or (B) the then
current Manager is an Affiliate of Borrower and a material default has occurred
and continues beyond any applicable cure
 
 
 
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                period under the Management Agreement (or any Replacement
Management Agreement) and if such default results in the termination or
cancellation of the Management Agreement (or any Replacement Management
Agreement);
 
(xiv) if Borrower shall continue to be in Default under any of the terms,
covenants or conditions of Section 9.1 hereof, or fails to cooperate with Lender
in connection with a Securitization pursuant to the provisions of Section 9.1
hereof, for three (3) Business Days after notice to Borrower from Lender; or
 
(xv) if Borrower shall continue to be in Default under any of the other terms,
covenants or conditions of this Agreement or the other Loan Documents not
specified in subsections (i) to (xiv) above, for ten (10) days after notice to
Borrower from Lender, in the case of any Default which can be cured by the
payment of a sum of money, or for thirty (30) days after notice from Lender in
the case of any other Default; provided, however, that if such non-monetary
Default is susceptible of cure but cannot reasonably be cured within such thirty
(30) day period and provided further that Borrower shall have commenced to cure
such Default within such thirty (30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty (30) day period shall be
extended for such time as is reasonably necessary for Borrower in the exercise
of due diligence to cure such Default, such additional period not to exceed
sixty (60) days; or
 
(xvi) if there shall be a default not specified in subsections (i) to (xiv)
above under any of the other Loan Documents beyond the cure periods specified in
subsection (xv) above, whether as to any Individual Borrower or any Individual
Property, or if any other such event shall occur or condition shall exist, if
the effect of such default, event or condition is to accelerate the maturity of
any portion of the Debt or to permit Lender to accelerate the maturity of all or
any portion of the Debt.
 
(b) Upon the occurrence of an Event of Default (other than an Event of Default
described in clauses (vi), (vii) or (viii) above) and at any time thereafter, in
addition to any other rights or remedies available to it pursuant to this
Agreement and the other Loan Documents or at law or in equity, Lender may take
such action, without notice or demand, that Lender deems advisable to protect
and enforce its rights against Borrower and the Property, including, without
limitation, declaring the Debt to be immediately due and payable, and Lender may
enforce or avail itself of any or all rights or remedies provided in the Loan
Documents against Borrower and any or all of the Property, including, without
limitation, all rights or remedies available at law or in equity; and upon any
Event of Default described in clauses (vi), (vii) or (viii) above, the Debt and
Other Obligations of Borrower hereunder and under the other Loan Documents shall
immediately and automatically become due and payable, without notice or demand,
and Borrower hereby expressly waives any such notice or demand, anything
contained herein or in any other Loan Document to the contrary notwithstanding.
 
Section 8.2 Remedies.
 
(a) Upon the occurrence of an Event of Default, all or any one or more of the
rights, powers, privileges and other remedies available to Lender against
Borrower under this Agreement or any of the other Loan Documents executed and
delivered by, or applicable to,
 
 
 
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Borrower or at law or in equity may be exercised by Lender at any time and from
time to time, whether or not all or any of the Debt shall be declared due and
payable, and whether or not Lender shall have commenced any foreclosure
proceeding or other action for the enforcement of its rights and remedies under
any of the Loan Documents with respect to all or any part of any Individual
Property.  Any such actions taken by Lender shall be cumulative and concurrent
and may be pursued independently, singularly, successively, together or
otherwise, at such time and in such order as Lender may determine in its sole
discretion, to the fullest extent permitted by law, without impairing or
otherwise affecting the other rights and remedies of Lender permitted by law,
equity or contract or as set forth herein or in the other Loan
Documents.  Without limiting the generality of the foregoing, Borrower agrees
that if an Event of Default is continuing (i) Lender is not subject to any “one
action” or “election of remedies” law or rule, and (ii) all liens and other
rights, remedies or privileges provided to Lender shall remain in full force and
effect until Lender has exhausted all of its remedies against the Properties and
the Mortgage has been foreclosed, sold and/or otherwise realized upon in
satisfaction of the Debt or the Debt has been paid in full.
 
(b) With respect to Borrower and the Properties, nothing contained herein or in
any other Loan Document shall be construed as requiring Lender to resort to any
Individual Property for the satisfaction of any of the Debt in any preference or
priority to any other Individual Property, and Lender may seek satisfaction out
of all of the Properties, or any part thereof, in its absolute discretion in
respect of the Debt.  In addition, Lender shall have the right from time to time
to partially foreclose the Mortgages in any manner and for any amounts secured
by the Mortgages then due and payable as determined by Lender in its sole
discretion including, without limitation, the following circumstances:  (i) in
the event Borrower defaults beyond any applicable grace period in the payment of
one or more scheduled payments of principal and interest, Lender may foreclose
one or more of the Mortgages to recover such delinquent payments, or (ii) in the
event Lender elects to accelerate less than the entire outstanding principal
balance of the Loan, Lender may foreclose one or more of the Mortgages to
recover so much of the principal balance of the Loan as Lender may accelerate
and such other sums secured by one or more of the Mortgages as Lender may
elect.  Notwithstanding one or more partial foreclosures, the Property shall
remain subject to the Mortgages to secure payment of sums secured by the
Mortgages and not previously recovered.
 
(c) Lender shall have the right from time to time to sever the Note and the
other Loan Documents into one or more separate notes, mortgages and other
security documents (the “Severed Loan Documents”) in such denominations as
Lender shall determine in its sole discretion for purposes of evidencing and
enforcing its rights and remedies provided hereunder.  Borrower shall execute
and deliver to Lender from time to time, promptly after the request of Lender, a
severance agreement and such other documents as Lender shall request in order to
effect the severance described in the preceding sentence, all in form and
substance reasonably satisfactory to Lender.  Borrower hereby absolutely and
irrevocably appoints Lender as its true and lawful attorney, coupled with an
interest, in its name and stead to make and execute all documents necessary or
desirable to effect the aforesaid severance, Borrower ratifying all that its
said attorney shall do by virtue thereof; provided, however, Lender shall not
make or execute any such documents under such power until three (3) days after
notice has been given to Borrower by Lender of Lender’s intent to exercise its
rights under such power. Borrower shall be obligated to pay any costs or
expenses incurred in connection with the preparation, execution, recording or
 
 
 
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filing of the Severed Loan Documents and the Severed Loan Documents shall not
contain any representations, warranties or covenants not contained in the Loan
Documents and any such representations and warranties contained in the Severed
Loan Documents will be given by Borrower only as of the Closing Date.
 
(d) As used in this Section 8.2, a “foreclosure” shall include, without
limitation, any sale by power of sale.
 
Section 8.3 Remedies Cumulative; Waivers.  The rights, powers and remedies of
Lender under this Agreement shall be cumulative and not exclusive of any other
right, power or remedy which Lender may have against Borrower pursuant to this
Agreement or the other Loan Documents, or existing at law or in equity or
otherwise.  Lender’s rights, powers and remedies may be pursued singularly,
concurrently or otherwise, at such time and in such order as Lender may
determine in Lender’s sole discretion.  No delay or omission to exercise any
remedy, right or power accruing upon an Event of Default shall impair any such
remedy, right or power or shall be construed as a waiver thereof, but any such
remedy, right or power may be exercised from time to time and as often as may be
deemed expedient.  A waiver of one Default or Event of Default with respect to
Borrower shall not be construed to be a waiver of any subsequent Default or
Event of Default by Borrower or to impair any remedy, right or power consequent
thereon.
 
ARTICLE IX - SPECIAL PROVISIONS
 
Section 9.1 Securitization.
 
9.1.1 Sale of Notes and Securitization.
 
(a) Borrower acknowledges and agrees that Lender may sell all or any portion of
the Loan and the Loan Documents, or issue one or more participations therein, or
consummate one or more private or public securitizations of rated single- or
multi-class securities (the “Securities”) secured by or evidencing ownership
interests in all or any portion of the Loan and the Loan Documents or a pool of
assets that include the Loan and the Loan Documents (such sales, participations
and/or securitizations, collectively, a “Securitization”).
 
(b) At the request of Lender, and to the extent not already required to be
provided by or on behalf of Borrower under this Agreement, Borrower shall use
reasonable efforts to provide information relating to the Borrower, Guarantor,
Sun and the Properties not in the possession of Lender or which may be
reasonably required by Lender or take other actions relating to the Borrower,
Guarantor, Sun and the Properties reasonably required by Lender, in each case in
order to satisfy the market standards to which Lender customarily adheres or
which may be reasonably required by prospective investors and/or the Rating
Agencies in connection with any such Securitization.  Lender shall have the
right to provide to prospective investors and the Rating Agencies any
information in its possession, including, without limitation, financial
statements relating to Borrower, Guarantors, if any, and the
Properties.  Borrower acknowledges that certain information regarding the Loan,
Borrower, Guarantor, Sun and the Properties may be included in a private
placement memorandum, prospectus or other disclosure documents.  Borrower agrees
that each of Borrower, Principal, Guarantor and their respective officers and
 
 
 
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representatives, shall, at Lender’s request, at its sole cost and expense,
cooperate with Lender’s efforts to arrange for a Securitization in accordance
with the market standards to which Lender customarily adheres and/or which may
be required by prospective investors and/or the Rating Agencies in connection
with any such Securitization.  Borrower, Principal and Guarantor agree to
review, at Lender’s written request in connection with the Securitization, the
specific sections in the disclosure documents prepared in connection with a
Securitization (the “Disclosure Documents”) to the extent such Disclosure
Documents specifically describe or relate to Borrower, Principal, Guarantor, the
Property and the Loan, including without limitation, the sections entitled “Risk
Factors,” “Special Considerations,” “Description of the Mortgage,” “Description
of the Mortgage Loan and Mortgaged Property,” “The Manager,” “The Borrower,” and
“Certain Legal Aspects of the Mortgage Loan,” and shall confirm, that the
factual statements and representations contained in such sections and such other
information in the Disclosure Documents (to the extent such information relates
to, or is based on, or includes any information regarding the Property,
Borrower, Guarantor, Manager and/or the Loan) do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in the light of the circumstances under which they
were made, not misleading.
 
(c) Borrower agrees to make upon Lender’s written request, without limitation,
all structural or other changes to the Loan (including delivery of one or more
new component notes to replace the original note or modify the original note to
reflect multiple components of the Loan and such new notes or modified note may
have different interest rates and amortization schedules), modifications to any
documents evidencing or securing the Loan, delivery of opinions of counsel
acceptable to the Rating Agencies or potential investors and addressing such
matters as the Rating Agencies or potential investors may require; provided,
however, that in creating such new notes or modified notes Borrower shall not be
required to modify (i) the weighted average interest rate payable under the
Note, except that the weighted average interest rate may thereafter increase in
connection with prepayments of the Loan by reason of casualty or condemnation or
following an Event of Default, (ii) the stated maturity of the Note, (iii) the
monthly amortization of principal of the Note based on a thirty (30) year
amortization period, except that the monthly amortization amount may thereafter
change in connection with prepayments of the Loan by reason of casualty or
condemnation or following an Event of Default, (iv) any other economic term of
the Loan other than a modification with only de-minimis effect, (v) decrease the
time periods during which Borrower is permitted to perform its obligations under
the Loan Documents, (vi) the Release Amount for any Individual Property without
Borrower’s consent, which consent shall not be unreasonably withheld,
conditioned or delayed or (vii) any other term, covenant or condition of the
Loan Documents that materially adversely impacts Borrower’s rights or increases
Borrower’s obligations other than a de-minimis effect.  In connection with the
foregoing, Borrower covenants and agrees to modify the Cash Management Agreement
to reflect the newly created component loans.
 
(d) [Intentionally Omitted].
 
(e) If requested by Lender and required in connection with a Securitization,
Borrower shall provide Lender, promptly upon request, with any financial
statements, or financial, statistical or operating information, as Lender shall
determine to be required pursuant to Regulation AB under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or any amendment, modification or replacement
 
 
 
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thereto or other legal requirements in connection with any private placement
memorandum, prospectus or other disclosure documents or any filing pursuant to
the Exchange Act in connection with the Securitization or as shall otherwise be
reasonably requested by Lender.
 
9.1.2 Securitization Costs.  All reasonable third party costs and expenses
incurred by Borrower and Guarantors in connection with Borrower’s complying with
requests made under Section 9.1(b) or (e) shall be paid by Borrower.  All
reasonable third party out-of-pocket costs and expenses incurred by Borrower and
Guarantors in connection with Borrower’s complying with requests made under
Section 9.1(c) (including, without limitation, the fees and expenses of the
Rating Agencies) shall be paid by Lender.
 
Section 9.2 [Intentionally Omitted].
 
Section 9.3 Exculpation.  Subject to the qualifications below and except for the
obligation of Guarantor as set forth in the Guaranty, Lender shall not enforce
the liability and obligation of Borrower to perform and observe the obligations
contained in the Note, this Agreement, the Mortgages or the other Loan Documents
by any action or proceeding wherein a money judgment shall be sought against
Borrower, Principal, any member, manager, partner, shareholder, officer or
director of Borrower or its constituent partners or members (“Exculpated
Parties”), except that Lender may bring a foreclosure action, an action for
specific performance or any other appropriate action or proceeding to enable
Lender to enforce and realize upon its interest under the Note, this Agreement,
the Mortgages and the other Loan Documents, or in the Properties, the Rents, or
any other collateral given to Lender pursuant to the Loan Documents; provided,
however, that, except as specifically provided herein, any judgment in any such
action or proceeding shall be enforceable against Borrower only to the extent of
Borrower’s interest in the Properties, in the Rents and in any other collateral
given to Lender, and Lender, by accepting the Note, this Agreement, the
Mortgages and the other Loan Documents, agrees that it shall not sue for, seek
or demand any deficiency judgment against Borrower or any Exculpated Parties in
any such action or proceeding under or by reason of or under or in connection
with the Note, this Agreement, the Mortgages or the other Loan Documents.  The
provisions of this Section shall not, however, (a) constitute a waiver, release
or impairment of any obligation evidenced or secured by any of the Loan
Documents; (b) impair the right of Lender to name Borrower as a party defendant
in any action or suit for foreclosure and sale under the Mortgages; (c) affect
the validity or enforceability of or any guaranty made in connection with the
Loan or any of the rights and remedies of Lender thereunder; (d) impair the
right of Lender to obtain the appointment of a receiver; (e) impair the
enforcement of any assignment of leases contained in the Mortgages;
(f) constitute a prohibition against Lender to seek a deficiency judgment
against Borrower in order to fully realize the security granted by the Mortgages
or to commence any other appropriate action or proceeding in order for Lender to
exercise its remedies against the Properties; or (g) constitute a waiver of the
right of Lender to enforce the liability and obligation of Borrower, by money
judgment or otherwise, to the extent of any loss, damage, cost, expense,
liability, claim or other obligation incurred by Lender (including reasonable
attorneys’ fees and expenses reasonably incurred) arising out of or in
connection with the following:
 
(i) fraud or intentional misrepresentation by any Individual Borrower, Principal
or Guarantor in connection with the Loan;
 
 
 
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(ii) the gross negligence or willful misconduct of any Individual Borrower,
Principal or Guarantor;
 
(iii) material physical waste of any Individual Property caused by Borrower,
Principal, Guarantor or any Person that is an Affiliate of Borrower, Principal
or Guarantor;
 
(iv) the removal or disposal of any portion of the Properties after an Event of
Default;
 
(v) the misapplication or conversion by any Individual Borrower, Principal or
Guarantor of (A) any Insurance Proceeds paid by reason of any loss, damage or
destruction to any Individual Property, (B) any Awards received in connection
with a Condemnation of all or a portion of any Individual Property, (C) any
Rents following an Event of Default, or (D) any Rents paid more than one month
in advance;
 
(vi) failure to pay charges for labor or materials or other charges or
judgments  that can create Liens on any portion of any Individual Property
(other than resulting from Lender’s failure to pay Taxes from the Tax and
Insurance Escrow Fund or to pay for Replacements from the Replacement Reserve
Fund provided that (A) no other Event of Default shall then exist, (B) Borrower
has performed all of its obligations under Sections 5.1.2, 7.2 and 7.3 hereof,
and (C) sufficient funds are then on deposit therein and such funds are
allocated for the payment of such Taxes or such Replacements, as applicable); or
 
(vii) any security deposits, advance deposits or any other deposits collected
with respect to any Individual Property which are not delivered to Lender upon a
foreclosure of such Individual Property or action in lieu thereof, except to the
extent any such security deposits were applied in accordance with the terms and
conditions of any of the Leases prior to the occurrence of the Event of Default
that gave rise to such foreclosure or action in lieu thereof;
 
(viii) any failure to comply with Section 3.1(d) of the Cash Management
Agreement or if Borrower fails to cooperate with or otherwise interferes with
Lender’s election to deliver Tenant Direction Letters pursuant to Section 3.1(e)
of the Cash Management Agreement;
 
(ix) with respect to the Individual Property known as Four Seasons located in
Elkhart, Indiana, if the License Agreement dated on or about of even date
herewith by and between Sun Secured Financing LLC and Sun Four Seasons LLC shall
be amended, modified or terminated for any reason without Lender’s prior written
consent, of if the Tenants at such Individual Property are denied the rights
granted by such License Agreement, except that such License Agreement maybe
terminated as specifically provided therein;
 
(x) if any Individual Borrower fails to permit on-site inspections of any
Individual Property, fails to provide financial information, or fails to appoint
a new
 
 
 
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                property manager upon the request of Lender made in accordance
with the terms and provisions of this Agreement;
 
(xi) if any Individual Borrower or Principal fails to maintain its status as a
Special Purpose Entity or comply with any representation, warranty or covenant
set forth in Section 4.1.30 or Section 4.1.39 hereof in accordance with the
terms and provisions of this Agreement; or
 
(xii) if applicable Legal Requirements relating to discontinuance or destruction
when the use of a property is legal nonconforming shall prohibit that portion of
the Individual Property known as Lake San Marino located in Naples, Florida,
which is currently being used as a mobile home park, from being used as a mobile
home park in the future as a result of a prior destruction or discontinuance of
use.
 
Notwithstanding anything to the contrary in this Agreement, the Note or any of
the Loan Documents, (A) Lender shall not be deemed to have waived any right
which Lender may have under Section 506(a), 506(b), 1111(b) or any other
provisions of the Bankruptcy Code to file a claim for the full amount of the
Debt secured by the Mortgages or to require that all collateral shall continue
to secure all of the Debt owing to Lender in accordance with the Loan Documents,
and (B) the Debt shall be fully recourse to Individual Borrower (i) in the event
of: (a) any Individual Borrower or Principal filing a voluntary petition under
the Bankruptcy Code or any other Federal or state bankruptcy or insolvency law;
(b) the filing of an involuntary petition against any Individual Borrower or
Principal under the Bankruptcy Code or any other Federal or state bankruptcy or
insolvency law in which such Individual Borrower, Principal or Guarantor
colludes with, or otherwise assists such Person, or solicits or causes to be
solicited petitioning creditors for any involuntary petition against such
Individual Borrower or Principal from any Person; (c) any Individual Borrower or
Principal filing an answer consenting to or otherwise acquiescing in or joining
in any involuntary petition filed against it, by any other Person under the
Bankruptcy Code or any other Federal or state bankruptcy or insolvency law;
(d) any Individual Borrower or Principal consenting to or acquiescing in or
joining in an application for the appointment of a custodian, receiver, trustee,
or examiner for such Individual Borrower or Principal or any portion of the
Individual Property; (e) any Individual Borrower or Principal making an
assignment for the benefit of creditors, or admitting, in writing or in any
legal proceeding, its insolvency or inability to pay its debts as they become
due; (ii) if the first full monthly payment of principal and interest on the
Note is not paid when due; (iii) if any Individual Borrower or Principal fails
to maintain its status as a Special Purpose Entity or comply with any
representation, warranty or covenant set forth in Section 4.1.30 or Section
4.1.39 hereof and there is a substantive consolidation of the assets and
liabilities of any such Individual Borrower or Principal with those of any
Person other than Borrower or Principal; (iv) if Individual Borrower fails to
obtain Lender’s prior written consent to any Indebtedness or voluntary Lien
encumbering the Individual Property; (v) if Individual Borrower fails to obtain
Lender’s prior written consent to any Transfer to the extent required by this
Agreement or the Mortgages.
 
Section 9.4 Matters Concerning Manager.  If (a) an Event of Default hereunder
has occurred and remains uncured, (b) Manager shall become subject to a
Bankruptcy Action, or (c) a default occurs under the Management Agreement,
Borrower shall, at the request of Lender,
 
 
 
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terminate the Management Agreement and replace the Manager with a Qualified
Manager pursuant to a Replacement Management Agreement, it being understood and
agreed that the management fee for such Qualified Manager shall not exceed then
prevailing market rates.
 
Section 9.5 Servicer.  At the option of Lender, the Loan may be serviced by a
master servicer, primary servicer, special servicer and/or trustee (any such
master servicer, primary servicer, special servicer, and trustee, together with
its agents, nominees or designees, are collectively referred to as “Servicer”)
selected by Lender and Lender may delegate all or any portion of its
responsibilities under this Agreement and the other Loan Documents to Servicer
pursuant to a pooling and servicing agreement, servicing agreement, special
servicing agreement  or other agreement providing for the servicing of one or
more mortgage loans (collectively, the “Servicing Agreement”) between Lender and
Servicer.  Borrower shall not be responsible for the initial set up fees or any
other initial costs relating to or arising under the Servicing Agreement, and
Borrower shall not be responsible for payment of the regular monthly master
servicing fee or trustee fee due to Servicer under the Servicing Agreement or
any fees or expenses required to be borne by, and not reimbursable to,
Servicer.  Notwithstanding the foregoing, Borrower shall promptly reimburse
Lender on demand for the following costs and expenses payable by Lender to
Servicer as a result of the Loan becoming specially serviced: (i) any
liquidation fees that are due and payable to Servicer under the Servicing
Agreement in connection with the exercise of any or all remedies permitted under
this Agreement, (ii) any workout fees and special servicing fees that are due
and payable to Servicer under the Servicing Agreement, which fees may be due and
payable under the Servicing Agreement on a periodic or continuing basis, and
(iii) the costs of all property inspections and/or appraisals of the Properties
(or any updates to any existing inspection or appraisal) that Servicer may be
required to obtain (other than the cost of regular annual inspections required
to be borne by Servicer under the Servicing Agreement).
 
ARTICLE X - MISCELLANEOUS
 
Section 10.1 Survival.  This Agreement and all covenants, agreements,
representations and warranties made herein and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note, and shall continue in full force and effect
so long as all or any of the Debt is outstanding and unpaid unless a longer
period is expressly set forth herein or in the other Loan Documents.  Whenever
in this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the legal representatives, successors and assigns of such
party.  All covenants, promises and agreements in this Agreement, by or on
behalf of Borrower, shall inure to the benefit of the legal representatives,
successors and assigns of Lender.
 
Section 10.2 Lender’s Discretion.  Whenever pursuant to this Agreement, Lender
exercises any right given to it to approve or disapprove, or any arrangement or
term is to be satisfactory to Lender, the decision of Lender to approve or
disapprove or to decide whether arrangements or terms are satisfactory or not
satisfactory shall (except as is otherwise specifically herein provided) be in
the sole discretion of Lender and shall be final and conclusive.
 
Section 10.3 Governing Law.  (a) THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF
NEW YORK, THE LOAN WAS MADE BY LENDER AND ACCEPTED
 
 
 
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BY BORROWER IN THE STATE OF NEW YORK, AND THE PROCEEDS OF THE LOAN DELIVERED
PURSUANT HERETO WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE
PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE
UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THE
OBLIGATIONS ARISING HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, EXCEPT THAT AT ALL
TIMES THE PROVISIONS FOR THE CREATION, PERFECTION, AND ENFORCEMENT OF THE LIEN
AND SECURITY INTEREST CREATED PURSUANT HERETO AND PURSUANT TO THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF THE STATE
IN WHICH THE PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO THE FULLEST
EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF NEW YORK
SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN DOCUMENTS
AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER.  TO THE FULLEST
EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES
ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS
AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS, AND THIS AGREEMENT, THE NOTE
AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK PURSUANT TO SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATIONS LAW.
 
(b) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST LENDER OR BORROWER ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY AT LENDER’S
OPTION BE INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK,
COUNTY OF NEW YORK, PURSUANT TO SECTION 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND BORROWER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER
HAVE BASED ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR
PROCEEDING, AND BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.  BORROWER DOES HEREBY DESIGNATE
AND APPOINT:
 
Bradley M. Dock
Fried, Frank, Harris, Shriver & Jacobson LLP
One New York Plaza
New York, NY 10004
 
 
 
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AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY
AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN
ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF
PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN NOTICE OF SAID SERVICE
MAILED OR DELIVERED TO BORROWER IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN
EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON BORROWER IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK.  BORROWER (I) SHALL GIVE PROMPT
NOTICE TO LENDER OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER,
(II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED
AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE
SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND
(III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES
TO HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A
SUCCESSOR.
 
Section 10.4 Modification, Waiver in Writing.  No modification, amendment,
extension, discharge, termination or waiver of any provision of this Agreement,
or of the Note, or of any other Loan Document, nor consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in
a writing signed by the party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for the
purpose, for which given.  Except as otherwise expressly provided herein, no
notice to, or demand on Borrower, shall entitle Borrower to any other or future
notice or demand in the same, similar or other circumstances.
 
Section 10.5 Delay Not a Waiver.  Neither any failure nor any delay on the part
of Lender in insisting upon strict performance of any term, condition, covenant
or agreement, or exercising any right, power, remedy or privilege hereunder, or
under the Note or under any other Loan Document, or any other instrument given
as security therefor, shall operate as or constitute a waiver thereof, nor shall
a single or partial exercise thereof preclude any other future exercise, or the
exercise of any other right, power, remedy or privilege.  In particular, and not
by way of limitation, by accepting payment after the due date of any amount
payable under this Agreement, the Note or any other Loan Document, Lender shall
not be deemed to have waived any right either to require prompt payment when due
of all other amounts due under this Agreement, the Note or the other Loan
Documents, or to declare a default for failure to effect prompt payment of any
such other amount.
 
Section 10.6 Notices.  All notices, consents, approvals and requests required or
permitted hereunder or under any other Loan Document shall be given in writing
and shall be effective for all purposes if hand delivered or sent by
(a) certified or registered United States mail, postage prepaid, return receipt
requested or (b) expedited prepaid delivery service, either commercial or United
States Postal Service, with proof of attempted delivery, and by telecopier (with
answer back acknowledged), addressed as follows (or at such other address and
Person as shall be designated from time to time by any party hereto, as the case
may be, in a written notice to the other parties hereto in the manner provided
for in this Section):
 
 
 
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If to Lender:
JPMorgan Chase Bank, National Association

 
383 Madison Avenue

 
New York, New York 10179

 
Attention:  Joseph E. Geoghan

 
Facsimile No.: (212) 834-6029

 
 
with a copy to:
JPMorgan Chase Bank, National Association

 
383 Madison Avenue

 
New York, New York 10179

 
Attention:  Nancy Alto

 
Facsimile No.: (212) 623-4779

 
and
 
Stites & Harbison, PLLC
400 West Market Street
Suite 1800
Louisville, Kentucky 40202
Attention:  Barry A. Hines, Esq.
Facsimile No.:  (502) 587-6391
 
 
If to Borrower:
Sun Siesta Bay LLC

 
Sun Pheasant Ridge Limited Partnership

 
Sun/York L.L.C.

 
Sun Richmond LLC

 
Sun Groves LLC

 
Sun Lake Juliana LLC

 
Sun Lake San Marino LLC

 
Sun Candlelight Village LLC

 
Sun Southfork LLC

 
Sun Four Seasons LLC

 
Sun Lafayette Place LLC

 
c/o Sun Communities, Inc.

 
27777 Franklin Road, Suite 200

 
Southfield, Michigan 48034

 
Attention:  Gary Shiffman and Jonathan Colman

 
Facsimile No.: (248) 208-2646

 
With a copy to:
Jaffe Raitt Heuer & Weiss, P.C.

 
27777 Franklin Road, Suite 2500

 
Southfield, Michigan 48034-8214

 
Attention:  Richard A. Zussman, Esq.

 
Facsimile No.: (248) 351-3082

A notice shall be deemed to have been given:  in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a Business Day; or in the case of
expedited prepaid delivery and telecopy, upon the first
 
 
 
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 attempted delivery on a Business Day; or in the case of telecopy, upon sender’s
receipt of a machine-generated confirmation of successful transmission after
advice by telephone to recipient that a telecopy notice is forthcoming.
 
Section 10.7 Trial by Jury.  BORROWER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY
OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY
FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD
TO THE LOAN DOCUMENTS, OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN
CONNECTION THEREWITH.  THIS WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY
AND VOLUNTARILY BY BORROWER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH
INSTANCE AND EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE
ACCRUE.  LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY
PROCEEDING AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER.
 
Section 10.8 Headings.  The Article and/or Section headings and the Table of
Contents in this Agreement are included herein for convenience of reference only
and shall not constitute a part of this Agreement for any other purpose.
 
Section 10.9 Severability.  Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
 
Section 10.10 Preferences.  Lender shall have the continuing and exclusive right
to apply or reverse and reapply any and all payments by Borrower to any portion
of the obligations of Borrower hereunder.  To the extent Borrower makes a
payment or payments to Lender, which payment or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds received, the obligations hereunder or
part thereof intended to be satisfied shall be revived and continue in full
force and effect, as if such payment or proceeds had not been received by
Lender.
 
Section 10.11 Waiver of Notice.  Borrower shall not be entitled to any notices
of any nature whatsoever from Lender except with respect to matters for which
this Agreement or the other Loan Documents specifically and expressly provide
for the giving of notice by Lender to Borrower and except with respect to
matters for which Borrower is not, pursuant to applicable Legal Requirements,
permitted to waive the giving of notice.  Borrower hereby expressly waives the
right to receive any notice from Lender with respect to any matter for which
this Agreement or the other Loan Documents do not specifically and expressly
provide for the giving of notice by Lender to Borrower.
 
Section 10.12 Remedies of Borrower.  In the event that a claim or adjudication
is made that Lender or its agents have acted unreasonably or unreasonably
delayed acting in any case
 
 
 
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where by law or under this Agreement or the other Loan Documents, Lender or such
agent, as the case may be, has an obligation to act reasonably or promptly,
Borrower agrees that neither Lender nor its agents shall be liable for any
monetary damages (other than those arising from Lender’s gross negligence or
willful misconduct), and Borrower’s sole remedies shall be limited to commencing
an action seeking injunctive relief or declaratory judgment.  The parties hereto
agree that any action or proceeding to determine whether Lender has acted
reasonably shall be determined by an action seeking declaratory judgment.
 
Section 10.13 Expenses; Indemnity.  (a) Borrower covenants and agrees to pay or,
if Borrower fails to pay, to reimburse, Lender upon receipt of written notice
from Lender for all  costs and expenses (including reasonable attorneys’ fees
and expenses) incurred by Lender in connection with (i) the preparation,
negotiation, execution and delivery of this Agreement and the other Loan
Documents and the consummation of the transactions contemplated hereby and
thereby and all the costs of furnishing all opinions by counsel for Borrower
(including without limitation any opinions requested by Lender as to any legal
matters arising under this Agreement or the other Loan Documents with respect to
the Properties); (ii) Borrower’s ongoing performance of and compliance with
Borrower’s respective agreements and covenants contained in this Agreement and
the other Loan Documents on its part to be performed or complied with after the
Closing Date, including, without limitation, confirming compliance with
environmental and insurance requirements; (iii) to the extent provided for this
Agreement, Lender’s ongoing performance and compliance with all agreements and
conditions contained in this Agreement and the other Loan Documents on its part
to be performed or complied with after the Closing Date; (iv) the negotiation,
preparation, execution, delivery and administration of any consents, amendments,
waivers or other modifications to this Agreement and the other Loan Documents
and any other documents or matters requested by Lender; (v) securing Borrower’s
compliance with any requests made pursuant to the provisions of this Agreement;
(vi) the filing and recording fees and expenses, title insurance and fees and
expenses of counsel for providing to Lender all required legal opinions, and
other similar expenses incurred in creating and perfecting the Lien in favor of
Lender pursuant to this Agreement and the other Loan Documents; (vii) enforcing
or preserving any rights, in response to third party claims or the prosecuting
or defending of any action or proceeding or other litigation, in each case
against, under or affecting Borrower, this Agreement, the other Loan Documents,
the Property, or any other security given for the Loan; and (viii) enforcing any
obligations of or collecting any payments due from Borrower under this
Agreement, the other Loan Documents or with respect to the Properties
(including, without limitation, any fees incurred by Servicer in connection with
the transfer of the Loan to a special servicer prior to a Default or Event of
Default) or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a “work-out” or of
any insolvency or bankruptcy proceedings; provided, however, that Borrower shall
not be liable for the payment of any such costs and expenses to the extent the
same arise by reason of the gross negligence, illegal acts, fraud or willful
misconduct of Lender.  Any cost and expenses due and payable to Lender may be
paid from any amounts in the Lockbox Account or Cash Management Account, if
applicable.
 
(b) Borrower shall indemnify, defend and hold harmless the Indemnified Parties
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, expenses and disbursements
of any kind or nature whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel in connection
 
 
 
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with any investigative, administrative or judicial proceeding commenced or
threatened, whether or not an Indemnified Party shall be designated a party
thereto), that may be imposed on, incurred by, or asserted against any
Indemnified Party in any manner relating to or arising out of (i) any breach by
Borrower of its obligations under, or any material misrepresentation by Borrower
contained in, this Agreement or the other Loan Documents, or (ii) the use or
intended use of the proceeds of the Loan (collectively, the “Indemnified
Liabilities”); provided, however, that Borrower shall not have any obligation to
any Indemnified Party hereunder to the extent that such Indemnified Liabilities
arise from the gross negligence, illegal acts, fraud or willful misconduct of
such Indemnified Party.  To the extent that the undertaking to indemnify, defend
and hold harmless set forth in the preceding sentence may be unenforceable
because it violates any law or public policy, Borrower shall pay the maximum
portion that it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnified Parties.
 
(c) To the extent this Agreement or the other Loan Documents require, or permit
Lender to require, approval, consent, waiver or confirmation from any Rating
Agency, Borrower covenants and agrees to pay for or, if Borrower fails to pay,
to reimburse Lender for, any fees and expenses incurred by any Rating Agency in
connection with any Rating Agency review of the Loan, the Loan Documents or any
transaction contemplated thereby or any consent, approval, waiver or
confirmation obtained from such Rating Agency pursuant to the terms and
conditions of this Agreement or any other Loan Document and Lender shall be
entitled to require payment of such fees and expenses as a condition precedent
to the obtaining of any such consent, approval, waiver or confirmation.
 
Section 10.14 Schedules Incorporated.  The Schedules annexed hereto are hereby
incorporated herein as a part of this Agreement with the same effect as if set
forth in the body hereof.
 
Section 10.15 Offsets, Counterclaims and Defenses.  Any assignee of Lender’s
interest in and to this Agreement, the Note and the other Loan Documents shall
take the same free and clear of all offsets, counterclaims or defenses which are
unrelated to such documents which Borrower may otherwise have against any
assignor of such documents, and no such unrelated counterclaim or defense shall
be interposed or asserted by Borrower in any action or proceeding brought by any
such assignee upon such documents and any such right to interpose or assert any
such unrelated offset, counterclaim or defense in any such action or proceeding
is hereby expressly waived by Borrower.
 
Section 10.16 No Joint Venture or Partnership; No Third Party
Beneficiaries.  (a) Borrower and Lender intend that the relationships created
hereunder and under the other Loan Documents be solely that of borrower and
lender.  Nothing herein or therein is intended to create a joint venture,
partnership, tenancy-in-common, or joint tenancy relationship between Borrower
and Lender nor to grant Lender any interest in the Properties other than that of
mortgagee, beneficiary or lender.
 
(b) This Agreement and the other Loan Documents are solely for the benefit of
Lender and Borrower and nothing contained in this Agreement or the other Loan
Documents shall be deemed to confer upon anyone other than Lender and Borrower
any right to insist upon
 
 
 
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or to enforce the performance or observance of any of the obligations contained
herein or therein.  All conditions to the obligations of Lender to make the Loan
hereunder are imposed solely and exclusively for the benefit of Lender and no
other Person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that Lender will refuse to
make the Loan in the absence of strict compliance with any or all thereof and no
other Person shall under any circumstances be deemed to be a beneficiary of such
conditions, any or all of which may be freely waived in whole or in part by
Lender if, in Lender’s sole discretion, Lender deems it advisable or desirable
to do so.
 
Section 10.17 Publicity.  All news releases, publicity or advertising by
Borrower or its Affiliates through any media intended to reach the general
public which refers to the Loan Documents or the financing evidenced by the Loan
Documents, to Lender, JPMorgan Chase Bank, National Association or any of their
Affiliates shall be subject to the prior written approval of Lender and JPMorgan
Chase Bank, National Association in their sole discretion; provided, however,
for so long as the shares of Sun are traded on any nationally recognized stock
exchange, the prior written approval of Lender and JPMorgan Chase Bank, National
Association shall not be required for any public disclosures that are required
by applicable Legal Requirements to which Sun is subject.
 
Section 10.18 Waiver of Marshalling of Assets.  To the fullest extent permitted
by law, Borrower, for itself and its successors and assigns, waives all rights
to a marshalling of the assets of Borrower, Borrower’s partners and others with
interests in Borrower, and of the Properties, and agrees not to assert any right
under any laws pertaining to the marshalling of assets, the sale in inverse
order of alienation, homestead exemption, the administration of estates of
decedents, or any other matters whatsoever to defeat, reduce or affect the right
of Lender under the Loan Documents to a sale of the Property for the collection
of the Debt without any prior or different resort for collection or of the right
of Lender to the payment of the Debt out of the net proceeds of the Property in
preference to every other claimant whatsoever.
 
Section 10.19 Waiver of Counterclaim.  Borrower hereby waives the right to
assert a counterclaim, other than a compulsory counterclaim, in any action or
proceeding brought against it by Lender or its agents.
 
Section 10.20 Conflict; Construction of Documents; Reliance.  In the event of
any conflict between the provisions of this Agreement and any of the other Loan
Documents, the provisions of this Agreement shall control.  The parties hereto
acknowledge that they were represented by competent counsel in connection with
the negotiation, drafting and execution of the Loan Documents and that such Loan
Documents shall not be subject to the principle of construing their meaning
against the party which drafted same.  Borrower acknowledges that, with respect
to the Loan, Borrower shall rely solely on its own judgment and advisors in
entering into the Loan without relying in any manner on any statements,
representations or recommendations of Lender or any parent, subsidiary or
Affiliate of Lender.  Lender shall not be subject to any limitation whatsoever
in the exercise of any rights or remedies available to it under any of the Loan
Documents or any other agreements or instruments which govern the Loan by virtue
of the ownership by it or any parent, subsidiary or Affiliate of Lender of any
equity interest any of them may acquire in Borrower, and Borrower hereby
irrevocably waives the right to raise any defense or take any action on the
basis of the foregoing with respect to Lender’s
 
 
 
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exercise of any such rights or remedies.  Borrower acknowledges that Lender
engages in the business of real estate financings and other real estate
transactions and investments which may be viewed as adverse to or competitive
with the business of Borrower or its Affiliates.
 
Section 10.21 Brokers and Financial Advisors.  Borrower hereby represents that
it has dealt with no financial advisors, brokers, underwriters, placement
agents, agents or finders in connection with the transactions contemplated by
this Agreement, except Wells Fargo Multifamily Capital (“Wells
Fargo”).  Borrower acknowledges that on the Closing Date, Lender has paid to
Wells Fargo a fee in the amount of $75,000.00 and Borrower agrees to pay to
Wells Fargo any additional costs, fees and expenses (if any) of Wells Fargo in
connection with the transactions contemplated herein.  Borrower hereby agrees to
indemnify, defend and hold Lender harmless from and against any and all claims,
liabilities, costs and expenses of any kind (including Lender’s attorneys’ fees
and expenses) in any way relating to or arising from a claim by any Person that
such Person acted on behalf of Borrower or Lender in connection with the
transactions contemplated herein.  The provisions of this Section 10.21 shall
survive the expiration and termination of this Agreement and the payment of the
Debt.
 
Section 10.22 Prior Agreements.  This Agreement and the other Loan Documents
contain the entire agreement of the parties hereto and thereto in respect of the
transactions contemplated hereby and thereby, and all prior agreements among or
between such parties, whether oral or written, between Borrower and Lender are
superseded by the terms of this Agreement and the other Loan Documents.
 
Section 10.23 Joint and Several Liability.  If Borrower consists of more than
one (1) Person the obligations and liabilities of each Person shall be joint and
several.
 
Section 10.24 Certain Additional Rights of Lender (VCOC).  Notwithstanding
anything to the contrary contained in this Agreement, Lender shall have:
 
(a) the right to routinely consult with and advise Borrower’s management
regarding the significant business activities and business and financial
developments of Borrower; provided, however, that such consultations shall not
include discussions of environmental compliance programs or disposal of
hazardous substances.  Consultation meetings should occur on a regular basis (no
less frequently than quarterly) with Lender having the right to call special
meetings at any reasonable times and upon reasonable advance notice;
 
(b) the right, in accordance with the terms of this Agreement, to examine the
books and records of Borrower at any reasonable times upon reasonable notice;
 
(c) the right, in accordance with the terms of this Agreement, including,
without limitation, Section 5.1.11 hereof, to receive monthly, quarterly and
year end financial reports, including balance sheets, statements of income,
shareholder’s equity and cash flow, a management report and schedules of
outstanding indebtedness; and
 
(d) the right, without restricting any other rights of Lender under this
Agreement (including any similar right), to approve any acquisition by Borrower
of any other significant property (other than personal property required for the
day to day operation of any Individual Property).
 
 
 
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The rights described above in this Section 10.24 may be exercised by any entity
which owns and controls, directly or indirectly, substantially all of the
interests in Lender.
 
Section 10.25 Contributions and Waivers.
 
(a) As a result of the transactions contemplated by the Loan Documents, each
Individual Borrower will benefit, directly and indirectly, from each Individual
Borrower’s obligation to pay the Debt and in consideration therefor each
Individual Borrower desires to enter into an allocation and contribution
agreement among themselves as set forth in this Section 10.25 to allocate such
benefits among themselves and to provide a fair and equitable agreement to make
contributions among each Individual Borrower in the event any payment is made by
an Individual Borrower hereunder to Lender which is in excess of the amount
attributable to that Individual Borrower or its portion of its Individual
Property (such payment being referred to herein as a “Contribution,” and for
purposes of this Section 10.25, includes any exercise of recourse by Lender
against any collateral of an Individual Borrower and application of proceeds of
such collateral in satisfaction of such Individual Borrower’s obligations to
Lender under the Loan Documents).
 
(b) Each Individual Borrower shall be liable hereunder with respect to the Debt
only for such total maximum amount (if any) that would not render its
obligations hereunder or under any of the Loan Documents subject to avoidance
under Section 548 of the Bankruptcy Code or any comparable provisions of any
State law.
 
(c) In order to provide for a fair and equitable contribution among each
Individual Borrower in the event that any Contribution is made by an Individual
Borrower (a “Funding Borrower”), such Funding Borrower shall be entitled to a
reimbursement Contribution (“Reimbursement Contribution”) from all other
Individual Borrowers for all payments, damages and expenses incurred by that
Funding Borrower in discharging any of the Debt, in the manner and to the extent
set forth in this Section 10.25.
 
(d) For purposes hereof, the “Benefit Amount” of an Individual Borrower as of
any date of determination shall be the net value of the benefits to such
Individual Borrower and its affiliates from extensions of credit made by Lender
to (a) such Individual Borrower and (b) to the other Individual Borrowers
hereunder and the Loan Documents to the extent such other Individual Borrowers
have guaranteed or mortgaged their interest in one or more of the Properties to
secure the Debt of such Individual Borrower to Lender.
 
(e) Each Individual Borrower shall be liable to a Funding Borrower in an amount
equal to the greater of (A) the (i) ratio of the Benefit Amount of such
Individual Borrower to the total amount of Debt, multiplied by (ii) the amount
of Debt paid by such Funding Borrower, or (B) ninety-five percent (95%) of the
excess of the fair saleable value of the Individual Property of such Individual
Borrower over the total liabilities of such Individual Borrower (including the
maximum amount reasonably expected to become due in respect of contingent
liabilities) determined as of the date on which the payment made by a Funding
Borrower is deemed made for purposes hereof (giving effect to all payments made
by other Funding Borrowers as of such date in a manner to maximize the amount of
such Contributions).
 
 
 
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(f) In the event that at any time there exists more than one Funding Borrower
with respect to any Contribution (in any such case, the “Applicable
Contribution”), then Reimbursement Contributions from other Borrowers pursuant
hereto shall be allocated among such Funding Borrowers in proportion to the
total amount of the Contribution made for or on account of the other Individual
Borrowers by each such Funding Borrower pursuant to the Applicable Contribution.
In the event that at any time any Individual Borrower pays an amount hereunder
in excess of the amount calculated pursuant to this Section 10.25 above, that
Individual Borrower shall be deemed to be a Funding Borrower to the extent of
such excess and shall be entitled to a Reimbursement Contribution from the other
Individual Borrowers in accordance with the provisions of this Section.
 
(g) Each Individual Borrower acknowledges that the right to Reimbursement
Contribution hereunder shall constitute an asset in favor of such Individual
Borrower to which such Reimbursement Contribution is owing.
 
(h) No Reimbursement Contribution payments payable by an Individual Borrower
pursuant to the terms of this Section 10.25 shall be paid until all amounts then
due and payable by all of the Individual Borrowers to Lender, pursuant to the
terms of the Loan Documents, are paid in full in cash.  Nothing contained in
this Section 10.25 shall limit or affect in any way the obligations of any
Individual Borrower to Lender under the Note or any other Loan Documents.
 
(i) Each Individual Borrower waives:
 
(A) any right to require Lender to proceed against any other Individual Borrower
or any other person or to proceed against or exhaust any security held by Lender
at any time or to pursue any other remedy in Lender’s power before proceeding
against such Individual Borrower;
 
(B) any defense based upon any legal disability or other defense of any other
Individual Borrower, any guarantor of any other person or by reason of the
cessation or limitation of the liability of any other Individual Borrower or any
guarantor from any cause other than full payment of all sums payable under the
Note and any of the other Loan Documents;
 
(C) any defense based upon any lack of authority of the officers, directors,
partners or agents acting or purporting to act on behalf of any other Individual
Borrower or any principal of any other Individual Borrower or any defect in the
formation of any other Individual Borrower or any principal of any other
Individual Borrower;
 
(D) any defense based upon any statute or rule of law which provides that the
obligation of a surety must be neither larger in amount nor in any other
respects more burdensome than that of a principal;
 
(E) any defense based upon any failure by Lender to obtain collateral for the
indebtedness or failure by Lender to perfect a lien on any collateral;
 
 
 
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(F) presentment, demand, protest and notice of any kind except as set forth in
the Loan Documents;
 
(G) any defense based upon any failure of Lender to give notice of sale or other
disposition any collateral to any other Individual Borrower or to any other
person or entity or any defect in any notice that may be given in connection
with any sale or disposition of any collateral;
 
(H) any defense based upon any failure of Lender to comply with applicable laws
in connection with the sale or other disposition of any collateral, including,
without limitation, any failure of Lender to conduct a commercially reasonable
sale or other disposition of any collateral;
 
(I) any defense based upon any election by Lender, in any bankruptcy proceeding,
of the application or non-application of Section 1111(6)(2) of the Bankruptcy
Code or any successor statute;
 
(J) any defense based upon any use of cash collateral under Section 363 of the
Bankruptcy Code;
 
(K) any defense based upon any agreement or stipulation entered into by Lender
with respect to the provision of adequate protection in any bankruptcy
proceeding;
 
(L) any defense based upon any borrowing or any grant of a security interest
under Section 364 of the Bankruptcy Code;
 
(M) any defense based upon the avoidance of any security interest in favor of
Lender for any reason;
 
(N) any defense based upon any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or dissolution proceeding,
including any discharge of, or bar or stay against collecting, all or any of the
obligations evidenced by the Note or owing under any of the Loan Documents; and
 
(O) any defense or benefit based upon an Individual Borrower’s, or any other
party’s, resignation of the portion of any obligation secured by the applicable
Mortgage to be satisfied by any payment from any other Individual Borrower or
any such party.
 
(j) Each Individual Borrower waives:
 
(A) all rights and defenses arising out of an election of remedies by Lender
even though the election of remedies, such as nonjudicial foreclosure with
respect to security for the Loan or any other amounts owing under the Loan
Documents, has destroyed such Individual Borrower’s rights of subrogation and
reimbursement against any other Individual Borrower;
 
 
 
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(B) all rights and defenses that such Individual Borrower may have because any
of the Debt is secured by real property.  This means, among other things: (i)
Lender may, subject to Section 9.3, collect from such Individual Borrower
without first foreclosing on any real or personal property collateral pledged by
any other Individual Borrower, (ii) if Lender forecloses on any real property
collateral pledged by any other Individual Borrower, (a) except as provided by
applicable law, the amount of the Debt may be reduced only by the price for
which that collateral is sold at the foreclosure sale, even if the collateral is
worth more than the sale price, (b) Lender may, subject to Section 9.3, collect
from such Individual Borrower even if any other Individual Borrower, by
foreclosing on the real property collateral, has destroyed any right such
Individual Borrower may have to collect from any other Individual
Borrower.  This is an unconditional and irrevocable waiver of any rights and
defenses such Individual Borrower may have because any of the Debt is secured by
real property; and
 
(C) any claim or other right which Individual Borrower might now have or
hereafter acquire against any other Individual Borrower or any other person that
arises from the existence or performance of any obligations under the Note, the
Mortgage or the other Loan Documents, including, without limitation, any of the
following: (i) any right of subrogation, reimbursement, exoneration,
contribution, or indemnification; or (ii) any right to participate in any claim
or remedy of Lender against any other Individual Borrower or any collateral
security therefor, whether or not such claim, remedy or right arises in equity
or under contract, statute or common law.
 
Section 10.26 Lender’s Right to Unwind
Cross-Collateralization/Cross-Default.  Lender shall have the right, at any time
and from time to time or in connection with a repurchase by Lender of any
portion of the Loan in connection with a Securitization, to unilaterally require
the release of any Individual Property or Individual Borrower from the
cross-defaulting and the cross-collateralization provisions effected pursuant to
the grant of the Mortgage from each Individual Borrower and secured by the lien
of the applicable Mortgage.  Borrower shall cooperate with Lender in executing
all documents as may be required in connection with splitting the Loan into two
or more loans which shall not be cross-collateralized or cross-defaulted with
each other.  Borrower shall promptly deliver or cause to be delivered to Lender
or its designee any replacement or substitute loan agreements, promissory notes,
security instruments and other loan documents, title, hazard and liability
insurance policies, opinions of counsel and other documents and instruments as
Lender may reasonably request in order to effectuate the foregoing; provided,
however, any such substitute loan agreements, promissory notes, security
instruments and other loan documents shall be substantially similar, in form and
substance, to the Loan Documents.  If, during the time Lender exercises its
rights under this Section 10.26, an Event of Default shall have occurred and be
continuing, Borrower shall reimburse Lender, upon demand, for all reasonable
third party out-of-pocket costs and expenses (including, but not limited to,
reasonable attorneys’ fees and expenses) in connection with the foregoing.  If,
during the time Lender exercises its rights pursuant to this Section 10.26, an
Event of Default shall not have occurred and be continuing, Lender shall pay for
all reasonable third party out-of-pocket costs and expenses (including, but not
limited to, reasonable attorneys’ fees and expenses) in connection with the
foregoing.
 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized representatives, all as of the day and year
first above written.
 
BORROWERS:
 
SUN SIESTA BAY LLC, a Michigan limited liability company

 
By:
SUN QRS POOL 13, INC., a Michigan corporation, its Manager

By:              /s/ Jonathan M.
Colman                                                      
Name:  Jonathan M. Colman
Title:  Executive Vice President

SUN PHEASANT RIDGE LIMITED PARTNERSHIP, a Michigan limited partnership

 
By:
SUN QRS POOL 2, INC., a Michigan corporation, its General Partner

By:              /s/ Jonathan M.
Colman                                                      
Name:  Jonathan M. Colman
Title:  Executive Vice President

SUN/YORK L.L.C., a Michigan limited liability company

 
By:
SUN QRS POOL 2, INC., a Michigan corporation, its Manager

By:              /s/ Jonathan M.
Colman                                                      
Name:  Jonathan M. Colman
Title:  Executive Vice President

Loan Agreement
 
 

--------------------------------------------------------------------------------

 

SUN RICHMOND LLC, a Michigan limited liability company

 
By:
SUN QRS POOL 2, INC., a Michigan corporation, its Manager

By:              /s/ Jonathan M.
Colman                                                      
Name:  Jonathan M. Colman
Title:  Executive Vice President

SUN GROVES LLC, a Michigan limited liability company

 
By:
SUN QRS POOL 2, INC., a Michigan corporation, its Manager

By:              /s/ Jonathan M.
Colman                                                      
Name:  Jonathan M. Colman
Title:  Executive Vice President

SUN LAKE JULIANA LLC, a Michigan limited liability company

 
By:
SUN QRS POOL 4, INC., a Michigan corporation, its Manager

By:              /s/ Jonathan M.
Colman                                                      
Name:  Jonathan M. Colman
Title:  Executive Vice President

SUN LAKE SAN MARINO LLC, a Michigan limited liability company

 
By:
SUN QRS POOL 4, INC., a Michigan corporation, its Manager

By:              /s/ Jonathan M.
Colman                                                      
Name:  Jonathan M. Colman
Title:  Executive Vice President

Loan Agreement
 
 

--------------------------------------------------------------------------------

 

    SUN CANDLELIGHT VILLAGE LLC, a Michigan limited liability company

 
By:
SUN QRS POOL 13, INC., a Michigan corporation, its Manager

By:              /s/ Jonathan M.
Colman                                                      
Name:  Jonathan M. Colman
Title:  Executive Vice President

 
SUN SOUTHFORK LLC, a Michigan limited liability company

 
By:
SUN QRS POOL 4, INC., a Michigan corporation, its Manager

By:              /s/ Jonathan M.
Colman                                                      
Name:  Jonathan M. Colman
Title:  Executive Vice President

SUN FOUR SEASONS LLC, a Michigan limited liability company

 
By:
SUN QRS POOL 4, INC., a Michigan corporation, its Manager

By:              /s/ Jonathan M.
Colman                                                      
Name:  Jonathan M. Colman
Title:  Executive Vice President

SUN LAFAYETTE PLACE LLC, a Michigan limited liability company

 
By:
SUN QRS POOL 4, INC., a Michigan corporation, its Manager

By:              /s/ Jonathan M.
Colman                                                      
Name:  Jonathan M. Colman
Title:  Executive Vice President

Loan Agreement
 
 

--------------------------------------------------------------------------------

 

    JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, a banking association chartered
under the laws of the United States of America
 
           By:           /s/ Steven
Hantz                                           
           Name:  Steven Hantz
          Title:   Executive Director
 

 

Loan Agreement
 
 

--------------------------------------------------------------------------------

 

 
SCHEDULE I
 

BORROWER
 
 

   
Individual Borrower
 
State/Commonwealth of Formation
 
Organizational Identification Number
1.
 
Sun Siesta Bay LLC
 
Michigan
 
B8366Q
2.
 
Sun Pheasant Ridge Limited Partnership
 
Michigan
 
L15796
3.
 
Sun/York L.L.C.
 
Michigan
 
B05895
4.
 
Sun Richmond LLC
 
Michigan
 
B8354Q
5.
 
Sun Groves LLC
 
Michigan
 
B1014R
6.
 
Sun Lake Juliana LLC
 
Michigan
 
B4792Q
7.
 
Sun Lake San Marino LLC
 
Michigan
 
B5972Q
8.
 
Sun Candlelight Village LLC
 
Michigan
 
B1121R
9.
 
Sun Southfork LLC
 
Michigan
 
D5362T
10.
 
Sun Four Seasons LLC
 
Michigan
 
D5362X
11.
 
Sun Lafayette Place LLC
 
Michigan
 
D53632

 
 

 
 
 
Sch. I-1

--------------------------------------------------------------------------------

 

SCHEDULE II
 

 
REQUIRED REPAIRS - DEADLINES FOR COMPLETION
 

 
 
Sch. II-1

--------------------------------------------------------------------------------

 

Required Repairs Page 1 [requiredrepairs_1.jpg]

 
 
Sch. II-2

--------------------------------------------------------------------------------

 
 
Required Repairs Page 2 [requiredrepairs_2.jpg]
 

 
 

 
 
Sch. II-3

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SCHEDULE III
 

RELEASE AMOUNTS
 

   
Individual Property
 
Release Amount
    1.  
Creekwood Meadows
4231 East Bristol Road (a/k/a 3440 Creekside Boulevard)
Burton, Michigan
  $ 3,600,000.00     2.  
Groves Resort
16175 John Morris Road
Ft. Myers, Florida
  $ 7,040,000.00     3.  
Pheasant Ridge
209 Longwood Court, West
Lancaster, Pennsylvania
  $ 24,010,000.00     4.  
Richmond Place
36401 Division Road
Richmond, Michigan
  $ 1,740,000.00     5.  
Four Seasons
1350 C.R. 3
Elkhart, Indiana
  $ 4,592,000.00     6.  
Lafayette Place
21155 Warner Avenue
Warren, Michigan
  $ 2,385,000.00     7.  
Lake Juliana
166 Juliana Boulevard
Auburndale, Florida
  $ 9,145,000.00     8.  
Lake San Marino
1000 Wiggins Pass Road
Naples, Florida
  $ 10,800,000.00     9.  
South Fork
1301 North Scott Avenue
Belton, Missouri
  $ 7,945,000.00     10.  
Candlelight Village
4 Candlelight Drive
Sauk Village, Illinois
  $ 8,323,000.00     11.  
Siesta Bay
19333 Summerline Road
Ft. Myers, Florida
  $ 35,420,000.00  

 
 
Sch. III-1

--------------------------------------------------------------------------------

 

SCHEDULE IV

ORGANIZATIONAL CHART

 

 

 
 
Sch. IV-1

--------------------------------------------------------------------------------

 

SCHEDULE V

RENT ROLLS

 
 
Sch. V-1

--------------------------------------------------------------------------------

 

EXHIBIT A

ASBESTOS OPERATIONS AND MAINTENANCE PLAN

 
 
Exh. A-1

--------------------------------------------------------------------------------

 

SCHEDULE 4.1.20

INSURANCE CLAIMS

NONE

 
 
Sch. 4.1.20-1

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