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EXHIBIT 10.26
PROMISSORY NOTE
$1,300,195.40 FARMINGTON HILLS, MICHIGAN
DUE DATE: APRIL 1, 2007 DATED: AS OF APRIL 1, 1997
FOR VALUE RECEIVED, GARY A. SHIFFMAN ("Maker") promises to pay in lawful
money of the United States of America to the order of SUN COMMUNITIES OPERATING
LIMITED PARTNERSHIP, a Michigan limited partnership ("Holder"), at 31700
Middlebelt Road, Suite 145, Farmington Hills, Michigan 48334, or such other
place as Holder may designate in writing, the principal sum of ONE MILLION
THREE HUNDRED THOUSAND ONE HUNDRED NINETY FIVE AND 40/100 DOLLARS
($1,300,195.40), plus interest as hereinafter provided.
The unpaid principal balance of this promissory note ("Note") shall bear
interest from the date hereof, computed upon the basis of a year of 365 days
for the actual number of days elapsed in a month, at a rate of interest per
annum (the "Effective Rate") equal to 1.75% in excess of six months' LIBOR (the
"Index"), as such Index shall vary from time to time, upwards or downwards, and
each such Index change shall cause an identical change in the Effective Rate to
occur effective immediately; provided, however, that the Effective Rate shall
not exceed 9% per annum and the Effective Rate shall not be lower than 6% per
annum.
The indebtedness evidenced by this Note shall be paid to Holder in
quarterly installments of interest only, beginning July 15, 1997, and
continuing on the fifteenth day following each calendar quarter thereafter
until the Due Date, upon which date the entire unpaid principal balance of this
Note, together with all accrued and unpaid interest, shall be due and payable
in full. Notwithstanding the foregoing, in the event that the current timing
of Holder's quarterly dividend payments is subsequently changed, the due date
of Maker's quarterly interest payments on this Note shall be adjusted
accordingly; provided, however, that Maker's quarterly interest payments shall
still be due under this Note even if Holder subsequently discontinues payment
of dividends.
All cash distributions and dividends paid to Maker on those certain 40,000
shares (the "Shares") of the common stock, $.01 par value, of Sun Communities,
Inc., a Maryland corporation ("Sun"), issued to Maker as of April 8, 1996
(collectively, the "Distributions") shall first be applied toward the accrued
and unpaid interest hereunder and sixty percent (60%) of the remainder of the
Distributions, if any, shall be applied toward the outstanding principal
balance of this Note. Maker hereby authorizes Holder and/or any of Holder's
representatives to apply any and all cash distributions and dividends on the
Shares in accordance with the terms of this Note.
This Note may be paid in full or in part at any time without payment of
any prepayment fee or penalty. All payments received hereunder shall, at the
option of Holder, first be applied against accrued and unpaid interest and the
balance against principal. Maker expressly assumes all risks of loss or delay
in the delivery of any payments made by mail, and no course of conduct or
dealing shall affect Maker's assumption of these risks.
Upon the occurrence of any of the following events of default ("Event of
Default"): (a) any failure by Maker to pay any installment of principal or
interest when due hereunder and such failure shall continue and shall not be
cured for a period of ten (10) days after the due date of such payment; (b)
Maker's failure generally to pay debts as they mature, or the appointment of a
receiver or custodian over a material portion of Maker's assets, which receiver
or custodian is not discharged within sixty (60) days of such appointment; (c)
any voluntary or involuntary bankruptcy or insolvency proceedings are commenced
by or against Maker, which proceedings are not set aside within sixty (60) days
from the date of institution thereof; or (d) any writ of attachment,
garnishment, execution, tax lien, or similar writ is issued against any
property of Maker; then, at the election of Holder and without notice, demand
or presentment, the entire principal balance of this Note, together with all
accrued and unpaid interest, shall become immediately due and payable. All
costs and expenses of collection, including, without limitation, reasonable
attorneys fees and expenses, shall be added to and become part of the total
indebtedness.
Upon the occurrence and during the continuance of any Event of Default,
the outstanding
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principal amount hereof shall bear interest at a rate which is two percent
(2.0%) per annum greater than the Effective Rate otherwise applicable. Maker
agrees to pay all of Holder's costs incurred in the collection of this Note,
including reasonable attorneys fees and expenses.
Acceptance by Holder of any payment in an amount less than the amount then
due shall be deemed an acceptance on account only, and Maker's failure to pay
the entire amount then due within the applicable cure period shall be and
continue to be an Event of Default. Upon the occurrence and continuance of any
Event of Default, neither the failure of Holder promptly to exercise its right
to declare the outstanding principal and accrued unpaid interest hereunder to
be immediately due and payable, nor the failure of Holder to demand strict
performance of any other obligation of Maker or any other person who may be
liable hereunder, shall constitute a waiver of any such rights, nor a waiver of
such rights in connection with any future default on the part of Maker or any
other person who may be liable hereunder.
Maker and all endorsees, sureties and guarantors hereof hereby jointly and
severally waive presentment for payment, demand, notice of non-payment, notice
of protest or protest of this Note, and Holder diligence in collection or
bringing suit, and do hereby consent to any and all extensions of time,
renewals, waivers or modifications as may be granted by Holder with respect to
payment or any other provisions of this Note.
Notwithstanding anything herein to the contrary, in no event shall Maker
be required to pay a rate of interest in excess of the Maximum Rate. The term
"Maximum Rate" shall mean the maximum non-usurious rate of interest that Holder
is allowed to contract for, charge, take, reserve or receive under the
applicable laws of any applicable state or of the United States of America
(whichever from time to time permits the highest rate for the use, forbearance
or detention of money) after taking into account, to the extent required by
applicable law, any and all relevant payments or charges hereunder, or under
any other document or instrument executed and delivered in connection therewith
and the indebtedness evidenced hereby.
In the event Holder ever receives, as interest, any amount in excess of
the Maximum Rate, such amount as would be excessive interest shall be deemed a
partial prepayment of principal, and, if the principal hereof is paid in full,
any remaining excess shall be returned to Maker. In determining whether or not
the interest paid or payable under any specified contingency exceeds the
Maximum Rate, Maker and Holder shall, to the maximum extent permitted by law,
(a) characterize any non-principal payment as an expense, fee, or premium
rather than as interest; (b) exclude voluntary prepayments and the effects
thereof; and (c) amortize, prorate, allocate and spread the total amount of
interest through the entire contemplated term of such indebtedness until
payment in full of the principal (including the period of any extension or
renewal thereof) so that the interest on account of such indebtedness shall not
exceed the Maximum Rate. If Holder shall determine that the Effective Rate
under this Note is usurious or otherwise limited by law, the unpaid balance of
this Note, with accrued interest at the Maximum Rate, shall, at the option of
Holder, become immediately due and payable.
Notwithstanding anything herein to the contrary, Maker's personal
liability on this Note is limited to all accrued and unpaid interest and fifty
percent (50%) of any deficiency after application of the proceeds from the sale
of the Shares. Upon an Event of Default and Holder's election to accelerate
the indebtedness under this Note, Maker shall be personally liable for all
accrued and unpaid interest hereunder, Holder shall apply the proceeds from the
sale of the Shares to the then outstanding principal balance on this Note and
Maker shall be personally liable for fifty percent (50%) of the deficiency, if
any. In addition, Maker, in his sole and absolute discretion, may, at any time
(whether or not an Event of Default exists), terminate his obligations
hereunder by (i) paying all accrued and unpaid interest on this Note, (ii)
assigning all of his right, title and interest in the Shares to Holder, and
(iii) after application of the proceeds from the sale of the Shares, paying
fifty percent (50%) of the deficiency, if any.
This Note is secured by that certain Stock Pledge Agreement, dated as of
April 1, 1997 (the "Pledge Agreement"). Upon a partial prepayment of this
Note, including, without limitation, the payment of outstanding principal on
this Note with 60% of the excess Distributions, if any, as provided above, a
pro rata portion of the Shares shall be released from the Pledge Agreement.
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Within one hundred twenty (120) days of the end of Holder's fiscal year,
Maker shall furnish Holder a current personal financial statement showing
Maker's net worth.
This Note shall be governed by and construed in accordance with the laws
of the State of Michigan. This Note shall be binding upon Maker and his
successors and assigns, and the benefits hereof shall inure to Holder and its
successors and assigns.
MAKER:
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GARY A. SHIFFMAN
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