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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN
PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [ ]
Filed by a party other than the registrant [x]
Check the appropriate box:
[ ] Preliminary proxy statement
[x] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SUN COMMUNITIES, INC.
(Name of registrant as specified in its charter)
Jeffrey M. Weiss
Jaffe, Raitt, Heuer & Weiss
Professional Corporation
One Woodward Ave., Ste. 2400
Detroit, Michigan 48226
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2), or
14a-6(j)(2)
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction
applies:_____________________________________________________
(2) Aggregate number of securities to which transaction applies:
_____________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
_____________________________________________________________
(4) Proposed maximum aggregate value of transaction:
____________________________________________________________
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
______________________________________
(2) Form, schedule or registration statement no.:
________________
(3) Filing party:
________________________________________________
(4) Date filed:
___________________________________________________
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SUN COMMUNITIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 23, 1996
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of Sun
Communities, Inc. (the "Company") will be held at the Radisson Plaza Hotel,
1500 Town Center, Southfield, Michigan 48075, on Tuesday, July 23, 1996, at
11:00 a.m., local time, for the following purposes:
(1) To elect two Directors to serve until the Annual Meeting of
Shareholders to be held in 1999 or until their successors shall
have been duly elected and qualified;
(2) To approve an amendment to the Company's 1993 Stock Option Plan;
(3) To approve an amendment to the Company's 1993 Non-Employee
Director Stock Option Plan; and
(4) To transact such other business as may properly come before the
meeting.
A Proxy Statement containing information relevant to the Annual Meeting
appears on the following pages.
Only holders of Common Stock of record at the close of business on
May 24, 1996, are entitled to notice of and to vote at the meeting or any
adjournments.
If you do not plan to attend the meeting and you wish to vote in
accordance with the Board of Director's recommendations, it is not necessary to
specify your choices; merely sign, date, and return the enclosed Proxy Card.
If you attend the meeting, you may withdraw your Proxy and vote your own
shares.
By Order of the Board of Directors
JEFFREY P. JORISSEN
Secretary
Dated: June 3, 1996
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
HOWEVER, TO ENSURE YOUR REPRESENTATION AT THE MEETING, YOU ARE ENCOURAGED TO
SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE
POSTAGE-PAID ENVELOPE ENCLOSED FOR THAT PURPOSE.
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SUN COMMUNITIES, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 23, 1996
PROXIES AND SOLICITATIONS
This Proxy Statement is furnished to shareholders in connection with the
solicitation of proxies by the Board of Directors (the "Board") of Sun
Communities, Inc. ("Sun" or the "Company") to be used at the Annual Meeting of
Shareholders (the "Annual Meeting") and at any adjournments. If received in
time for the Annual Meeting, the shares represented by a valid proxy will be
voted in accordance with the specifications, if any, contained in such executed
proxy. If no instructions are given, proxies will be voted: (a) for all
nominees for the Board; (b) in favor of approval of the amendment to the
Company's 1993 Stock Option Plan (the "Employee Option Plan"); and (c) in favor
of approval of the amendment to the Company's 1993 Non-Employee Director Stock
Option Plan (the "Director Option Plan"). A proxy executed in the enclosed
form may be revoked by the person signing it at any time before it is
exercised. Proxies may be revoked by filing with the Secretary of the Company,
any time prior to the time set for commencement of the Annual Meeting, a
written notice of revocation bearing a later date than the proxy, or by
attending the Annual Meeting and voting in person (although attendance at the
Annual Meeting will not in and of itself constitute revocation of a proxy).
In addition to the use of mails, proxies may be solicited by personal
interview, telephone and telegram, by directors, officers and employees of the
Company. Arrangements may also be made with brokerage houses or other
custodians, nominees and fiduciaries to forward solicitation material to the
beneficial owners of shares of the Company's common stock (the "Common Stock")
held of record by such persons, and the Company may reimburse such persons for
reasonable out-of-pocket expenses incurred in forwarding material. The Company
anticipates that fees and expenses for the foregoing parties will not exceed
$1,000. The costs of all proxy solicitation will be borne by the Company.
The executive offices of the Company are located at 31700 Middlebelt
Road, Suite 145, Farmington Hills, Michigan 48334. The approximate date of
mailing of this Proxy Statement and the enclosed Proxy materials to the
Company's shareholders is June 5, 1996.
TIME AND PLACE OF MEETING
The Annual Meeting will be held at the Radisson Plaza Hotel, 1500 Town
Center, Southfield, Michigan 48075, on Tuesday, July 23, 1996, at 11:00 a.m.,
local time.
VOTING RIGHTS AND
PRINCIPAL HOLDERS OF VOTING SECURITIES
Only shareholders of record at the close of business on May 24, 1996 are
entitled to notice of and to vote at the Annual Meeting or at any adjournments.
As of that date, the Company had 14,910,628 shares of Common Stock issued,
outstanding and entitled to vote held by 456 holders of record. Each
outstanding share entitles the record holder to one vote. Shares cannot be
voted at the Annual Meeting unless the holder is present in person or
represented by
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proxy. The presence, in person or by proxy, of shareholders entitled to vote a
majority of the voting shares that are outstanding and entitled to vote will
constitute a quorum.
Information concerning principal holders of the Common Stock is
discussed under "Security Ownership of Certain Beneficial Owners and
Management."
MATTERS TO COME BEFORE THE ANNUAL MEETING
Three matters are expected to be considered at the Annual Meeting: (a)
the election of two directors; (b) the approval of the amendment to the Employee
Option Plan; and (c) the approval of the amendment to the Director Option Plan.
ELECTION OF DIRECTORS
The first matter expected to be considered at the Annual Meeting will
be the election of two directors. It is proposed that these positions be
filled by persons nominated to the Board by management. Each director shall be
elected by a plurality of the votes cast at the Annual Meeting. Therefore, if
a quorum is present, abstentions and broker non-votes will have no effect on
the election of directors. Proxies will be tabulated by the Company's transfer
agent. The Inspector of Elections appointed at the Annual Meeting will then
combine the proxy votes with the votes cast at the Annual Meeting. Each
director elected at the Annual Meeting will serve for a term commencing on the
date of the Annual Meeting and continuing until the Annual Meeting of
Shareholders to be held in 1999 or until his successor is duly elected and
qualified. In the absence of directions to the contrary, proxies will be voted
in favor of the election of the two nominees listed below.
If any of the nominees named below are unavailable to serve for any
reason, then a valid proxy may be voted for the election of such other persons
as the person or persons voting the proxy may deem advisable in accordance with
their best judgment. Management has no present knowledge that any of the
persons named will be unavailable to serve. In any event, the enclosed proxy
can be voted for only the two nominees named in this Proxy Statement or their
substitutes.
The following list identifies each incumbent director and nominee for
election to the Board at the Annual Meeting and describes each person's
principal occupation for the past five years. Each of the directors has served
continuously from the date of his election to the present time.
<TABLE>
<CAPTION>
NAME AGE OFFICE
---- --- ------
<S> <C> <C>
Milton M. Shiffman . . . . . . . . . . . . . . 67 Chairman of the Board
Gary A. Shiffman . . . . . . . . . . . . . . . 42 Chief Executive Officer, President and
Director/Nominee
Paul D. Lapides . . . . . . . . . . . . . . . . 41 Director
Clunet R. Lewis . . . . . . . . . . . . . . . . 49 Director
Ronald L. Piasecki . . . . . . . . . . . . . . 57 Director/Nominee
Ted J. Simon . . . . . . . . . . . . . . . . . 65 Director
Carl R. Weinert . . . . . . . . . . . . . . . . 73 Director
</TABLE>
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MILTON M. SHIFFMAN is the Chairman of the Board, and has been an
executive officer of Sun since its inception. In his 17 years of experience in
the manufactured housing community industry, Mr. Shiffman has played an active
role in the financing decisions and corporate structuring of the Company. Since
1964, he has also been involved in the development, acquisition, construction
and operations of diverse real estate holdings including multi-family, community
and regional shopping centers, nursing homes and various other commercial
properties. Mr. Shiffman retired from medical practice in 1981 in order to
devote his full time to real estate activities. He is also Chairman of the
Board of Directors of Sun Home Services, Inc. ("Home Services"), Sun Management,
Inc. ("Sun Management"), Sun QRS, Inc. ("Sun QRS") and Sun Florida QRS, Inc.
("Sun Florida QRS").
GARY A. SHIFFMAN is the President and Chief Executive Officer, and has
been an executive officer of Sun since its inception. He has been actively
involved in the management, acquisition, construction and development of
manufactured housing communities and has developed an extensive network of
industry relationships over the past 12 years. He has overseen the land
acquisition, rezoning, development and marketing of numerous manufactured home
expansion projects. Mr. Shiffman is also the President and a director of Home
Services, Sun Management, Sun QRS, Sun Florida QRS and Sun Water Oak Golf, Inc.
("Sun Golf"). Gary A. Shiffman is the son of Milton M. Shiffman.
PAUL D. LAPIDES has been a director since December 1993. Mr. Lapides is
an assistant professor of management at Kennesaw State College and an adjunct
assistant professor of real estate at New York University. He is the author of
numerous articles and books on the real estate industry. Mr. Lapides is a
consultant with BDO Seidman, an international accounting and consulting firm,
where he specializes in the areas of asset management, marketing, and strategic
planning. His real estate experience includes managing a $3 billion national
portfolio of income-producing real estate consisting of 42,000 multi-family
units and 16 million square feet of commercial space.
CLUNET R. LEWIS has been a director since December 1993. Since August,
1995, Mr. Lewis has been a director of Eltrax Systems, Inc., a company that
provides patient card systems to the health care industry. From 1993 to
September 1994, Mr. Lewis was the Executive Vice President of Military
Communications Center, Inc., a company that provides long distance
telecommunication services to military personnel. From 1973 to 1993, he
practiced law with the law firm of Jaffe, Raitt, Heuer & Weiss, Professional
Corporation, which represents the Company in various matters.
RONALD L. PIASECKI has been a director since May 1996, upon completion
of the Company's acquisition of twenty-five manufactured housing communities
(the "Aspen Properties") owned by affiliates of Aspen Enterprises, Ltd.
("Aspen"). Mr. Piasecki is the executive vice president and a director of
Aspen, which he co-founded in 1973. Prior to the Company's acquisition of the
Aspen Properties, Aspen was one of the largest privately-held developers and
owners of manufactured housing communities in the U.S. Mr. Piasecki also
serves as chairman of the board of directors of Kurdziel Industries, Inc., the
world's largest producer of counter weights for the material handling industry,
and as a director of HGI Realty, Inc., a REIT that specializes in the ownership
and operation of factory outlet centers.
TED J. SIMON has been a director since December 1993. Since 1981, Mr.
Simon has served as Vice President-Real Estate of Borman's Inc., a wholly owned
subsidiary of The Great
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Atlantic & Pacific Tea Company, Inc. From 1976-1981, he was the President of
Schostak Bros. & Co., a major, full service commercial/ industrial real estate
company based in Michigan.
CARL R. WEINERT has been a director since December 1993. Mr. Weinert has
been in the banking industry since 1942. He served as a director and President
of Bank of Commerce for 25 years until its merger with Security Bank, at which
time he became a member of the Board of Directors of Security Bank. Mr. Weinert
also provided investment advice to Lutheran Fraternal Life Company as its
financial advisor until 1992.
To the best of the Company's knowledge, there are no material
proceedings to which any nominee is a party, or has a material interest, adverse
to the Company. To the best of the Company's knowledge, there have been no
events under any bankruptcy act, no criminal proceedings and no judgments or
injunctions that are material to the evaluation of the ability or integrity of
any nominee during the past five years.
BOARD OF DIRECTORS AND COMMITTEES
Pursuant to the terms of the Company's charter, the directors are
divided into three classes. The class up for election at the Annual Meeting
will hold office for a term expiring at the annual meeting of shareholders to be
held in 1999. A second class will hold office for a term expiring at the annual
meeting of shareholders to be held in 1997 and a third class will hold office
for a term expiring at the annual meeting of shareholders to be held in 1998.
Each director will hold office for the term to which he is elected and until his
successor is duly elected and qualified. Gary A. Shiffman and Ronald L.
Piasecki have terms expiring at the Annual Meeting and are nominees for the
class to hold office for a term expiring at the annual meeting of shareholders
to be held in 1999. Ted J. Simon, Carl R. Weinert and Paul D. Lapides have
terms expiring in 1997, and Milton M. Shiffman and Clunet R. Lewis have terms
expiring in 1998. At each annual meeting of the shareholders of the Company,
the successors to the class of directors whose terms expire at such meeting will
be elected to hold office for a term expiring at the annual meeting of
shareholders held in the three years following the year of their election.
The Board met four (4) times during 1995. Each of the directors on the
Board attended at least 75% of these meetings, and all committee members
attended each meeting of the relevant committee.
Several important functions of the Board may be performed by committees
that are comprised of members of the Board. The Company's Bylaws authorize the
formation of these committees and grant the Board the authority to prescribe the
functions of each committee and the standards for membership of each committee.
In addition, the Board appoints the members of each committee. The Board has
four standing committees: an Audit Committee, a Compensation Committee, an
Indemnification Committee and an Executive Committee.
The Audit Committee was established to: (i) annually recommend a firm of
independent public accountants to the Board to act as auditors of the Company;
(ii) review the scope of the annual audit with the auditors in advance of the
audit; (iii) generally review the results of the audit and the adequacy of the
Company's accounting, financial and operating controls; (iv) review the
Company's accounting and reporting principles, policies and practices; and (v)
perform such other duties as may be delegated to it by the Board. The current
members of the Audit Committee are Messrs. Paul D. Lapides and Clunet R. Lewis.
The Audit Committee held two (2) formal meetings during the fiscal year ended
December 31, 1995.
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The Compensation Committee was established to: (i) review and modify the
compensation (including salaries and bonuses) of the Company's officers as
initially set by the Company's President; (ii) administer the Employee Option
Plan; and (iii) perform such other duties as may be delegated to it by the
Board. The current members of the Compensation Committee are Messrs. Ted J.
Simon and Carl R. Weinert. The Compensation Committee held four (4) formal
meetings during the fiscal year ended December 31, 1995. See "Report of the
Compensation Committee on Executive Compensation".
The Indemnification Committee was established to: (i) perform such
duties as provided in Article XII of the Company's Bylaws; and (ii) perform such
other duties as may be delegated to it by the Board. The current members of the
Indemnification Committee are Messrs. Ted J. Simon and Clunet R. Lewis. The
Indemnification Committee was formed on April 1, 1995 and did not hold any
meetings in 1995.
The Executive Committee was established to generally manage the
day-to-day business and affairs of the Company between regular Board meetings.
In no event may the Executive Committee, without the prior approval of the Board
acting as a whole: (i) recommend to the shareholders an amendment to the
Company's Articles of Incorporation; (ii) amend the Company's Bylaws; (iii)
adopt an agreement of merger or consolidation; (iv) recommend to the
shareholders the sale, lease or exchange of all or substantially all of the
Company's property and assets; (v) recommend to the shareholders a dissolution
of the Company or a revocation of a dissolution; (vi) fill vacancies on the
Board; (vii) fix compensation of the directors for serving on the Board or on a
committee of the Board; (viii) declare dividends or authorize the issuance of
the Company's stock; (ix) approve or take any action with respect to any related
party transaction involving the Company; or (x) take any other action which is
forbidden by the Company's Bylaws. All actions taken by the Executive Committee
must be promptly reported to the Board as a whole and are subject to
ratification, revision and alteration by the Board, except that no rights of
third persons created in reliance on authorized acts of the Executive Committee
can be affected by any such revision or alteration. The current members of the
Executive Committee are Messrs. Milton M. Shiffman, Gary A. Shiffman and Ted J.
Simon. The Executive Committee did not hold any formal meetings during the
fiscal year ended December 31, 1995.
The Board does not have a standing committee responsible for nominating
individuals to become directors. The entire Board performs the function of such
a committee.
AMENDMENT TO THE 1993 STOCK OPTION PLAN
GENERAL
The second matter to be considered at the Annual Meeting will be the
approval of an amendment to the Employee Option Plan to: (a) increase the number
of shares of Common Stock which may be issued under the Employee Option Plan
from 750,000 to a number of shares equal to nine percent (9%) of the total
shares of Common Stock outstanding (i.e., 1,341,956 shares of Common Stock as of
the date of this Proxy Statement); (b) provide that the exercise price for all
options must be no less than the fair market value of the Common Stock on the
date of grant as calculated by the average closing sales prices of the Common
Stock as quoted on the New York Stock Exchange for the ten (10) business day
period immediately preceding and including the date of grant; provided, however,
that options may be issued at exercise prices of no less than 85% of the fair
market value of the Common Stock on the date of grant if such discount is
expressly granted in lieu of a reasonable amount of salary or bonus; (c)
increase the minimum
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restriction period on restricted shares from six months to three years and to
prohibit waiver of any such restriction during the initial three year period;
and (d) provide that the Company may not materially amend the Employee Option
Plan without shareholder approval. The amendment to the Employee Option Plan
will be approved if it receives the affirmative votes of the holders of a
majority of the shares of Common Stock present, or represented, and entitled to
vote at the Annual Meeting. Abstentions are treated as shares present, or
represented at the Annual Meeting, and have the practical effect of a "no"
vote. Broker non-votes are considered to be shares not present at the Annual
Meeting for this purpose, and are neither counted towards the base number (a
majority of which is required for passage) nor as a vote either affirmatively
or negatively.
The initial Employee Option Plan was adopted by the Company's Board of
Directors and approved by the shareholders on November 19, 1993. The amended
and restated Employee Option Plan was adopted by the Company's Board of
Directors on May 20, 1996, subject to shareholder approval, and will remain in
effect until all shares authorized under the terms of the Employee Option Plan
have been issued, unless earlier terminated or abandoned by action of the Board;
however, no Incentive Stock Options may be granted after November 19, 2003. The
purpose of the Employee Option Plan is to provide certain key employees of the
Company with an additional incentive to promote the Company's financial success
and to induce able persons to enter into or remain in the employment of the
Company.
The table below indicates the options which have been granted under the
Employee Option Plan as of December 31, 1995.
NEW EMPLOYEE OPTION PLAN BENEFITS TO DATE
<TABLE>
<CAPTION>
EMPLOYEE OPTION PLAN
NAME AND POSITION DOLLAR VALUE ($) NUMBER OF
UNITS
<S> <C> <C>
Gary A. Shiffman, (1) 355,430
Chief Executive Officer and President
Jeffrey P. Jorissen, (2) 55,000
Senior Vice President, Treasurer,
Chief Financial Officer and Secretary
Brian W. Fannon, (3) 45,000
Senior Vice President and Chief Operating
Officer
Jonathan M. Colman, (3) 20,000
Senior Vice President - Acquisitions
All executive officers as a group (4) 525,430
Non-executive directors as a group 0
Non-executive employees as a group (3) 70,000
</TABLE>
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(1) 305,430 options were exercisable for $21.625 per share and the
remaining options were granted at fair market value as of the date
of grant.
(2) 35,000 options are exercisable for $22 per share and the remaining
options were granted at fair market value as of the date of grant.
(3) All options were granted at fair market value as of the date of
grant.
(4) Other than the options described in (1) and (2) above, all options
were granted at fair market value as of the date of grant.
The following is a brief summary of the material features of the
Employee Option Plan, and is qualified in its entirety by reference to the
Employee Option Plan.
SHARES AUTHORIZED
Currently, up to 750,000 shares of Common Stock may be issued under the
Employee Option Plan to any one participant or to all participants in the
aggregate. If the Company's shareholders approve the amendment to the Employee
Option Plan, a number of shares equal to nine percent (9%) of the total shares
of Common Stock outstanding (i.e., 1,341,956 shares of Common Stock as of the
date of this Proxy Statement) may be issued under the Employee Option Plan to
any one participant or to all participants in the aggregate. The shares may be
newly issued by the Company or repurchased by the Company on the open market. If
any award granted under the Employee Option Plan is surrendered to the Company,
terminates or expires before having been fully exercised, or an award of stock
appreciation rights is exercised for cash, then all shares formerly subject to
that award shall become available for any award subsequently granted in
accordance with the Employee Option Plan. Options, or portions thereof, which
have been surrendered in connection with the exercise of tandem stock
appreciation rights shall not be available for subsequent awards, and shares of
Common Stock issued in payment of such stock appreciation rights shall be
charged against the number of shares of Common Stock available for the grant of
awards. Shares which are reacquired by the Company or shares issuable subject
to restricted share rights which are forfeited pursuant to forfeiture provisions
in an award agreement shall be available for subsequently granted awards only if
the forfeiting participant received no benefits of ownership (such as dividends
actually paid to the participant) other than voting rights of the forfeited
shares. Any shares of Common Stock issued by the Company pursuant to its
assumption or substitution of outstanding grants from acquired companies shall
not reduce the number of shares available for awards under the Employee Option
Plan unless issued under the Employee Option Plan. The number of shares
authorized is subject to adjustment to reflect certain recapitalizations,
reorganizations, mergers or consolidations.
EMPLOYEE OPTION PLAN ADMINISTRATION
The Employee Option Plan is administered by a committee of two or more
members of the Board who shall be elected or appointed by the Board and who
shall meet the "disinterested person" requirements of Rule 16b-3(c)(2)(i) under
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Presently, the Compensation Committee acts as the Administrator. The
Compensation Committee is currently comprised of Ted J. Simon and Carl R.
Weinert. The Administrator has full power and authority to prescribe, amend and
rescind rules and procedures governing administration of the Employee Option
Plan.
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EMPLOYEE OPTION PLAN PARTICIPANTS
The Administrator may grant awards under the Employee Option Plan to
employees of the Company or its subsidiaries, who are officers or have
managerial, supervisory or similar responsibilities or who are key
administrative employees or sales managers, and who are not covered by any
collective bargaining agreement binding on such person's employer. "Officers"
are defined as the president, vice president, treasurer, secretary, controller
and any other person performing functions corresponding to the foregoing
officers for the Company, any member of the Board, and any other participant who
is deemed to be an officer or director of the Company for purposes of Section 16
of the Exchange Act, and the rules thereunder. In addition, the Administrator
may grant awards under the Employee Option Plan to non-employees who, in the
judgment of the Administrator, render significant services to the Company. It
is currently estimated that 40 people will be eligible to receive awards under
the Employee Option Plan.
STOCK OPTIONS
The Administrator may grant options entitling the participant to
purchase shares of Common Stock from the Company in such quantity, at such
price, and on such terms and subject to such vesting periods, termination dates
and other conditions as may be established by the Administrator on or prior to
the date such option is granted. However, if the Company's shareholders approve
the amendment to the Employee Option Plan, the exercise price for all options
must be no less than the fair market value of the Common Stock on the date of
grant as calculated by the average closing sales prices of the Common Stock as
quoted on the New York Stock Exchange for the ten (10) business day period
immediately preceding and including the date of grant; provided, however, that
options may be issued at exercise prices of no less than 85% of the fair market
value of the Common Stock on the date of grant if such discount is expressly
granted in lieu of a reasonable amount of salary or bonus. Options granted to
Officers shall not be exercisable for a period of at least six months from the
date of grant. No person may be granted options which have been designated as
incentive stock options ("ISOs") under Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code") in any year entitling such person to purchase a
number of shares greater than the maximum number permitted by Section 422 of the
Code as in effect on the date of grant. The term of an ISO shall not exceed ten
years from the date of grant, and the purchase price of an ISO shall be equal to
or greater than the per share market value of the Common Stock on the date of
grant. The purchase price of a Performance Based Option ("PBO") shall be equal
to the per share market value of the Common Stock on the date of grant, and the
PBO shall contain such other terms and conditions as are deemed necessary to
prevent limitation of the Company's compensation deduction in connection with
the exercise of the option. See "Federal Income Tax Consequences Relating to
the Employee Option Plan" below.
STOCK APPRECIATION RIGHTS AWARDS
The Administrator may grant to participants the right to receive
payment from the Company of an amount (the "Incremental Value") equal to the
difference between the exercise price established by the Administrator and the
per share market value of the Common Stock on the date the right is exercised
by the participant. The Company may also grant to any participant a "Tandem
SAR." A Tandem SAR is a stock appreciation right covering a share which is at
the time of the grant also covered by an option granted to the same
participant, either prior to or simultaneously with the grant to such
participant of the Tandem SAR. A participant who holds a Tandem SAR may either
exercise the stock appreciation right portion or the option portion of
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the Tandem SAR, but not both. The Administrator may determine the number of
shares to be subject to each appreciation right or Tandem SAR, the time at
which each stock appreciation right or Tandem SAR shall be exercisable, and all
other terms and conditions governing the rights and obligations of a
participant with respect to such award. No stock appreciation right may be
exercised prior to six months from the date of grant. The exercise price
established under any Tandem SAR where the related option has been granted
earlier than the Tandem SAR shall not be less than the purchase price of the
related option.
Any payment of Incremental Value which becomes due from the Company by
reason of any exercise of any stock appreciation right or Tandem SAR may be paid
(i) in cash, (ii) all in shares of Common Stock, or (iii) in any combination of
cash and Common Stock, as determined by the Administrator. Payment of
Incremental Value may be made to Officers in cash only if the SAR is exercised
in accordance with Rule 16b-3(e) under the Exchange Act.
RESTRICTED SHARE AWARDS
The Administrator may grant to any participant an award of restricted
share rights entitling such person to receive shares of Common Stock in such
quantity, and on such terms, conditions and restrictions (whether based on
performance standards, periods of service or otherwise) as the Administrator
shall determine on or prior to the date of grant. The terms of any award of
restricted share rights granted under the Employee Option Plan shall be set
forth in an award agreement. No restricted share rights shall entitle the
holder to receive Common Stock free of all restrictions on transfer prior to the
expiration of six months (three years if the Company's shareholders approve the
amendment to the Employee Option Plan) from the date of grant.
OTHER STOCK AND STOCK BASED AWARDS
The Administrator is authorized under the terms of the Employee Option
Plan to grant other stock or stock based awards either alone or in conjunction
with options or stock appreciation rights. The terms and conditions of any such
awards, if and when made, will be set forth in an award agreement between the
Company and the participant.
EXERCISE OF AWARDS
Unless extended by the Administrator or as otherwise provided in the
award agreement, the right to exercise any award granted under the Employee
Option Plan shall terminate at whichever of the following times first occurs:
(i) 90 days after the participant's termination of employment for any reason
other than death or "for cause" (as defined in the Employee Option Plan); (ii)
immediately upon termination of employment for cause; or (iii) in the case of a
Tandem SAR, the expiration date of the related option. The right to exercise
all unexpired awards shall be accelerated and shall accrue as of the date of the
participant's death while employed. The Administrator has the right to permit
exercise of any award prior to the time such award would otherwise be
exercisable under the terms of the agreement granting the award. Similarly, the
Administrator has the right to permit any award granted under the plan (except
for an ISO) to be exercised more than 90 days after the employment termination
of the participant or after its expiration date.
The purchase price of the shares purchased upon the exercise of an
option is to be paid in full in cash by the option holder at the time of
exercise. However, the Administrator may (but is not obligated to) permit
payment to be made by delivery to the Company of either (i) shares
9
<PAGE> 12
of Common Stock (including shares issuable to the participant pursuant to the
exercise of the option, so long as Officers electing to pay with such shares do
so within the "window period" required by Rule 16b-3(e) under the Exchange
Act); (ii) any combination of cash and shares of Common Stock permitted by the
Administrator; or (iii) such other consideration as is permitted by the
Administrator. Shares of Common Stock delivered in payment of the exercise
price are valued at their market value as of the date of exercise.
Unless provided otherwise in the award agreement, if a participant dies
while an employee of the Company or one of its subsidiaries, the right to
exercise all unexpired installments of that participant's awards are accelerated
and the participant's beneficiary may exercise the award with respect to any or
all of the shares subject to the award until one year after death. If the
participant dies within the 90 day period following termination of employment,
then participant's beneficiary may, until one year after the holder's death,
exercise the award to the extent it would have been exercisable if the holder
had exercised the option immediately prior to the holder's death.
AMENDMENT
The Board has the complete power and authority to amend the Employee
Option Plan; provided, however, that the Board may not amend the Employee Option
Plan without shareholder approval if shareholder approval is required under Rule
16b-3 of the Exchange Act or the Code, unless compliance, if discretionary, is
no longer desired. If the Company's shareholders approve the amendment to the
Employee Option Plan, the Employee Option Plan may be materially amended only
with the approval of the Company's shareholders. All other amendments to the
Employee Option Plan may be approved by the Board of Directors of the Company
without approval of the shareholders.
FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE EMPLOYEE OPTION PLAN
The following discussion of certain Federal income tax considerations
with respect to options and stock appreciation rights is a summary for general
purposes only.
The Employee Option Plan is not qualified under Code Section 401(a) and
is not subject to the Employee Retirement Income Security Act of 1974.
OPTION AWARDS
Certain of the income tax consequences of the grant of an option award
depend upon whether the option qualifies as an ISO.
INCENTIVE STOCK OPTIONS
The grant of an ISO will have no income tax consequences for either the
Company or the participant. Subject to the discussion below, there will be no
regular income tax liability upon ISO exercise; however, upon the exercise of an
ISO, the excess of the fair market value of the Common Stock purchased over the
exercise price will be an item of tax preference of the participant for purposes
of the application of the alternative minimum tax. If payment of the purchase
price of an ISO consists of shares of Common Stock, the participant's basis for
an equal number of shares of the Common Stock received will be equal to his
basis for the shares exchanged therefor. Any additional shares received will
have a basis of zero.
10
<PAGE> 13
If the Common Stock acquired pursuant to an ISO is sold, exchanged
(except in certain tax-free exchanges) or otherwise disposed of (even if
pursuant to the exercise of another ISO) within either one year of the exercise
of such ISO or two years of the granting of such ISO, the participant will
recognize ordinary income at that time and the Company will be entitled to a
deduction at that time in an amount equal to the excess of the fair market value
of such Common Stock at the time of exercise over the purchase price. The
participant will also recognize capital gain or loss to the extent the amount
realized from a sale or exchange differs from the fair market value of such
Common Stock at the time of exercise.
If the Common Stock acquired pursuant to an ISO is sold or exchanged
after one year after the exercise of such ISO and two years after the granting
of such ISO, the participant will recognize long-term capital gain or loss
measured by the difference between the amount realized on such sale or exchange
and the purchase price, and the Company will not be entitled to any deduction.
NONQUALIFIED OPTIONS AND PERFORMANCE BASED OPTIONS
The grant of a nonqualified purchase option ("NQO") or a PBO will have
no income tax consequences for either the Company or the participant (unless
the NQO or PBO is freely transferable and has a readily ascertainable market
value). Upon the exercise of an NQO or PBO by a participant, the participant
will recognize ordinary income and the Company will be entitled to a deduction
in an amount equal to the excess of the fair market value of the Common Stock
purchased over the purchase price. Such ordinary income is subject to
withholding of tax by the Company. The basis of the Common Stock received upon
exercise will equal the sum of the exercise price plus the amount included in
income by the participant. If payment of the purchase price of an NQO or PBO
is made by delivering shares of Common Stock, no additional gain or loss will
be recognized by the participant by reason of that exchange, and the
participant's basis for an equal number of shares of the Common Stock received
will be equal to his basis for the shares exchanged therefor. Any additional
shares received will have a basis equal to the amount of ordinary income
includible with respect to such purchase. The subsequent sale or exchange of
the Common Stock would generally give rise to capital gain or loss.
STOCK APPRECIATION RIGHTS
The grant of stock appreciation rights will have no income tax
consequences for either the Company or the participant. Upon the exercise of a
stock appreciation right by a participant who receives cash, the participant
will recognize ordinary income and the Company will be entitled to a deduction
in an amount equal to the amount of cash received. Upon the exercise of a stock
appreciation right by a participant who receives Common Stock, the participant
will recognize ordinary income and the Company will be entitled to a deduction
in an amount equal to the fair market value of such Common Stock received. The
ordinary income described in the two preceding sentences is subject to
withholding of tax by the Company. The subsequent sale or exchange of the
Common Stock acquired pursuant to the exercise of a stock appreciation right
would generally give rise to capital gain or loss.
RESTRICTED SHARES
In the absence of an election by a participant, as explained below, the
grant of shares pursuant to an award will not result in taxable income to the
participant or a deduction to the Company in the year of the grant. The value
of the shares will be taxable to a participant in the
11
<PAGE> 14
year in which the restrictions lapse. Alternatively, (under Code Section
83(b)) a participant may elect to treat as income in the year of grant the fair
market value of the shares on the date of grant, provided the participant makes
the election within 30 days after the date of such grant. If such an election
were made, a participant would not be allowed to deduct at a later date the
amount included as taxable income if he should forfeit the shares to the
Company. The amount of ordinary income recognized by a participant is
deductible by the Company in the year the income is recognized by the
participant, provided such amount constitutes reasonable compensation to the
participant. In the absence of a Code Section 83(b) election, prior to the
lapse of restrictions, distributions paid on the shares subject to such
restrictions will be taxable to the participant as additional compensation, and
the Company will be allowed a corresponding deduction. Where a Code Section
83(b) election has been made, such distributions would be treated as dividend
income to the participant.
LIMITATION ON COMPENSATION DEDUCTIONS
In general, the Company will be entitled to a compensation deduction
equal to the income recognized by the participant with respect to a NQO, PBO,
stock appreciation right or Restricted Share Right at the time that the
participant recognizes such income. But, recent amendments to the Code will
limit the deduction which a publicly held corporation, such as the Company, may
take for compensation paid to "covered employees" to $1 million. Generally, the
Chief Executive Officer of the corporation and its four highest compensated
officers (excluding the Chief Executive Officer) will be considered to be
covered employees. However, this rule limiting the deduction does not apply to
performance-based compensation. In general, compensation resulting from the
exercise of a stock option is treated as performance-based compensation provided
that the option price was equal to or in excess of the fair market value of
stock subject to the option at the time of the grant of the option and provided
that certain other requirements are met. PBOs granted by the Company are
intended to meet these rules so that the compensation resulting from exercising
PBOs will be treated as performance-based compensation. In addition, income
resulting from the exercise of NQOs and stock appreciation rights where the
exercise price is equal or in excess of the fair market value of the stock
subject to the option at the time of the grant of the option may also be treated
as performance-based compensation. Income resulting from Restricted Share
Rights will probably not be treated as performance-based compensation and so the
deduction limitation described above may become applicable.
WITHHOLDING OF TAX
The Company is entitled to withhold, or secure payment from the
participant in lieu of withholding, the amount of any tax required by law to be
withheld or paid by the Company with respect to any amount payable or shares
issuable under a participant's award. At the election of the participant, with
respect to the exercise of a nonqualified option, PBO or a stock appreciation
right where shares of Common Stock are to be delivered to the participant, the
Company may also withhold shares of Common Stock sufficient to meet those
requirements. Unless otherwise provided by the Administrator, with respect to
Officers, the Company shall withhold shares sufficient to meet withholding
requirements.
12
<PAGE> 15
AMENDMENT TO THE 1993 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
GENERAL
The third matter to be considered at the Annual Meeting will be the
approval of an amendment to the Director Option Plan to provide that each
independent director who is not an officer or employee of the Company
("Non-Employee Director") and has continuously served the Company for the entire
fiscal year shall automatically receive (as of December 31st of such year) a
non-qualified stock option (the "Performance Option") to purchase the following
number of shares of Common Stock:
(i) if the Company's funds from operations (as defined by the
National Association of Real Estate Investment Trusts) per weighted
average number of outstanding shares of Common Stock ("Per Share FFO")
for such fiscal year, as determined by reference to the Company's
audited financial statements, increased by less than 5% as compared to
Per Share FFO for the previous fiscal year, 0 shares;
(ii) if Per Share FFO for such fiscal year increased by 5% or
more but less than 6% as compared to Per Share FFO for the previous
fiscal year, 1,000 shares;
(iii) if Per Share FFO for such fiscal year increased by 6% or
more but less than 7% as compared to Per Share FFO for the previous
fiscal year, 1,500 shares;
(iv) if Per Share FFO for such fiscal year increased by 7% or
more but less than 8% as compared to Per Share FFO for the previous
fiscal year, 2,000 shares;
(v) if Per Share FFO for such fiscal year increased by 8% or
more but less than 9% as compared to Per Share FFO for the previous
fiscal year, 2,500 shares;
(vi) if Per Share FFO for such fiscal year increased by 9% or
more but less than 10% as compared to Per Share FFO for the previous
fiscal year, 3,000 shares; or
(vii) if Per Share FFO for such fiscal year increased by 10% or
more as compared to Per Share FFO for the previous fiscal year, 3,500
shares.
The per share exercise price for the Performance Option will be the average of
the closing sales prices of the Common Stock as quoted on the New York Stock
Exchange for the ten (10) business day period immediately preceding and
including June 30th of the year for which the Performance Option was earned.
The amendment to the Director Option Plan will be approved if it
receives the affirmative votes of the holders of a majority of the shares of
Common Stock present, or represented, and entitled to vote at the Annual
Meeting. Abstentions are treated as shares present, or represented at the Annual
Meeting, and have the practical effect of a "no" vote. Broker non-votes are
considered to be shares not present at the Annual Meeting for this purpose, and
are neither counted towards the base number (a majority of which is required for
passage) nor as a vote either affirmatively or negatively.
The initial Director Option Plan was adopted by the Board, effective
December 21, 1993, and was ratified and approved by the shareholders of the
Company on May 26, 1994. The
13
<PAGE> 16
amended and restated Director Option Plan was adopted by the Company's Board of
Directors on May 20, 1996, subject to shareholder approval. The purpose of the
Director Option Plan is to enhance the Company's ability to attract and retain
the services of experienced and knowledgeable Non-Employee Directors and to
provide an additional incentive for such directors to continue to work for the
best interests of the Company and its shareholders.
The table below indicates the options which have been granted under the
Director Option Plan as of December 31, 1995 and the options which would have
been granted for the year ended December 31, 1995 if the restated Director
Option Plan was in effect.
NEW DIRECTOR OPTION PLAN BENEFITS TO DATE
<TABLE>
<CAPTION>
DIRECTOR OPTION PLAN
NAME AND POSITION DOLLAR VALUE ($) NUMBER OF UNITS
<S> <C> <C>
Gary A. Shiffman, 0
Chief Executive Officer and President
Jeffrey P. Jorissen, 0
Senior Vice President, Treasurer,
Chief Financial Officer and Secretary
Brian W. Fannon, 0
Senior Vice President and Chief Operating Officer
Jonathan M. Colman, 0
Senior Vice President - Acquisitions
All executive officers as a group 0
Non-executive directors as a group (1) 24,000
Non-executive employees as a group 0
</TABLE>
(1) The 10,000 Initial Options (as defined below) were granted at the
fair market value of the Common Stock on the date of grant and the
14,000 Performance Options would have been granted at the average
of the closing sales prices of the Common Stock as quoted on the
New York Stock Exchange for the ten (10) business day period
immediately preceding and including June 30th of the
year for which the Performance Option was earned.
The following is a summary of the material features of the Director
Option Plan, and is qualified in its entirety by reference to the Director
Option Plan.
The operation of the Director Option Plan is automatic, and awards are
granted pursuant to a formula set forth in the Director Option Plan. Beginning
with the date the Director Option Plan was adopted, each Non-Employee Director
will be granted, on the day he or she becomes a director, an option to purchase
2,500 shares of Common Stock (the "Initial Option"). Non-Employee Directors in
office as of the time of adoption of the Director Option Plan each received
14
<PAGE> 17
an option to purchase 2,500 shares of Common Stock as of the date of such
adoption. The purchase price of each share of Common Stock which may be
purchased upon exercise of Initial Options granted under the Director Option
Plan will be the fair market value on the date of grant.
If the shareholders approve the amendment to the Director Option Plan,
in addition to the Initial Option, each of the Non-Employee Directors will also
be entitled to the Performance Option described above.
The options awarded under the Director Option Plan will be in addition
to, and not in lieu of, the Non-Employee Director's annual retainer fee, meeting
fees, or other compensation payable as a result of his or her service on the
Company's Board of Directors.
No option granted under the Director Option Plan may be exercised prior
to one year from the date of grant. Each option under the Director Option Plan
will become exercisable with respect to 1/3 of the shares one year from the date
of grant, with respect to another 1/3 of the shares two years from the date of
grant and with respect to the final 1/3 of the shares three years from the date
of grant. Each option under the Director Option Plan shall terminate after ten
years from the date of grant or, if earlier, three months after the optionee
ceases to be a director of the Company, except in the case of death. If a
Non-Employee Director dies while a director, the right to exercise all
unexercised options would be accelerated and could be exercised by the
director's beneficiary within one year of the director's death. If a
Non-Employee Director dies within the three month period after he or she ceases
to be a director, the Non-Employee Director's beneficiary may exercise his or
her options, to the extent exercisable on the date of death, within one year
after the Non-Employee Director's death.
The options granted to Non-Employee Directors under the Director Option
Plan may not be assigned or transferred other than by will or the laws of
descent and distribution, or pursuant to the terms of a domestic relations order
which satisfies the requirements of Section 414(p)(1)(A) of the Code. All
rights to receive options under the Director Option Plan will terminate
immediately in the event a Non-Employee Director ceases to serve as a director.
The total number of shares of Common Stock which may be granted under
the Director Option Plan may not exceed 100,000 shares, subject to adjustments
for stock dividends, split-ups, consolidation or similar capital adjustments,
and may be authorized and unissued shares or issued shares which have been
reacquired by the Company.
The Director Option Plan will remain in effect until remaining shares
available are insufficient to grant the options provided hereunder, or until
earlier terminated by action of the Board of Directors. The Board of Directors
may amend the Director Option Plan at any time, except that the provisions of
the Director Option Plan regarding the amount, price or timing of the awards to
Non-Employee Directors may not be amended more than once every six months, other
than to comport with changes in the Code, ERISA or the rules issued thereunder.
In addition, the Board may not make any amendment for which shareholder approval
is required for compliance with Rule 16b-3 under the Exchange Act or other
applicable law, unless such compliance, if discretionary, is no longer desired.
Rule 16b-3 currently requires shareholder approval of amendments which would (i)
materially increase the benefits accruing to participants under the Director
Option Plan, (ii) materially increase the number of securities under the
Director Option Plan, or (iii) materially modify the requirements as to
eligibility for participation in the Director Option Plan.
15
<PAGE> 18
FEDERAL INCOME TAX CONSEQUENCES
The options granted under the Director Option Plan will be nonqualified
options (options which are not Incentive Stock Options within the meaning of
Section 422 of the Code) and the grant of such an option will have no income tax
consequences for either the Company or the participant (unless the option is
freely transferable and has a readily ascertainable market value). Upon the
exercise of an option by a participant, the participant will recognize ordinary
income and the Company will be entitled to a deduction in an amount equal to the
excess of the fair market value of the Common Stock purchased over the purchase
price. Such ordinary income is not subject to withholding of tax by the
Company. The subsequent sale or exchange of the Common Stock acquired pursuant
to the exercise of an option would generally give rise to capital gain or loss.
MANAGEMENT AND COMPENSATION
EXECUTIVE OFFICERS
The persons listed below are the current executive officers of the
Company. Each is annually appointed by, and serves at the pleasure of, the
Board.
<TABLE>
<CAPTION>
NAME AGE OFFICE
---- --- ------
<S> <C> <C>
Milton M. Shiffman . . . . . . . . . . . . . . 67 Chairman of the Board of Directors
Gary A. Shiffman . . . . . . . . . . . . . . . 42 Chief Executive Officer and President
Jeffrey P. Jorissen . . . . . . . . . . . . . . 51 Senior Vice President, Treasurer, Chief
Financial Officer and Secretary
Brian W. Fannon . . . . . . . . . . . . . . . . 47 Senior Vice President and Chief Operating
Officer
Jonathan M. Colman . . . . . . . . . . . . . . 40 Senior Vice President - Acquisitions
Ronald A. House . . . . . . . . . . . . . . . . 51 Senior Vice President
</TABLE>
Background information for Milton M. Shiffman and Gary A. Shiffman is
provided under "Election of Directors," above. Background information for the
other four executive officers is set forth below.
JEFFREY P. JORISSEN has been Chief Financial Officer and Secretary since
August 1993, and Senior Vice President and Treasurer since December 1993. As a
certified public accountant, he was with the international accounting firm of
Coopers & Lybrand for 16 years, including eight years as a partner. During his
tenure at Coopers & Lybrand, Mr. Jorissen specialized in real estate and
directed financial statement examinations of numerous public companies. From
1987 to 1991, he was President and Treasurer of Stoneridge Resources, Inc., the
holding entity for three public companies. Mr. Jorissen is also the Chief
Financial Officer and Secretary of Home Services, Sun Management, Sun QRS and
Sun Florida QRS, and Mr. Jorissen is also the Secretary and Treasurer of Sun
Golf.
BRIAN W. FANNON joined the Company in May 1994 as Senior Vice
President-Operations and became Chief Operating Officer in 1995. Prior to
joining the Company, he worked for Lautrec, Ltd., then the largest manufactured
housing community owner-operator in the United States, where he was responsible
for operations comprising 25,000 sites and 300 employees, and Quality Homes,
Inc., its sales and marketing division. He joined that organization in 1978 as
a
16
<PAGE> 19
regional manager and became President in 1986. Mr. Fannon was appointed by
Governor Milliken to the Michigan Mobile Home Commission in 1977, the year of
its inception. Subsequent appointments by Governors Blanchard and Engler have
enabled Mr. Fannon to serve on such commission, including serving as its
chairman from 1986 to 1994. Mr. Fannon is also the Vice President-Operations
of Sun Golf.
JONATHAN M. COLMAN joined the Company in 1994 as Vice
President-Acquisitions and became a Senior Vice President in 1995. A certified
public accountant, Mr. Colman has over 13 years of experience in the
manufactured housing community industry. He has been involved in the
acquisition, financing and management of over 75 manufactured housing
communities for two of the 10 largest manufactured housing community owners,
including Uniprop, Inc. during its syndication of over $90 million in public
limited partnerships in the late 1980s. Mr. Colman is also the Vice President
of Sun Golf.
RONALD A. HOUSE joined the Company as a Senior Vice President in May
1996, upon completion of the Company's acquisition of the Aspen Properties.
Prior to joining the Company, Mr. House was a vice president, chief operating
officer and treasurer of Aspen. Mr. House received a bachelor's degree and a
master's degree in Business Administration from the University of Michigan. Mr.
House is a certified public accountant with experience in financial management,
including five years' experience as an audit and tax senior with Touche Ross &
Co., an international public accounting firm.
To the best of the Company's knowledge, there have been no events under
any bankruptcy act, no criminal proceedings and no judgments or injunctions that
are material to the evaluation of the ability or integrity of any executive
officer during the past five years.
17
<PAGE> 20
EXECUTIVE COMPENSATION
The following table sets forth all compensation paid to the Chief
Executive Officer and each executive officer whose remuneration from the Company
exceeded $100,000 during the fiscal year ended December 31, 1995.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL LONG TERM
------ ---------
COMPENSATION COMPENSATION
------------ ------------
ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) Bonus($) OPTIONS(#) COMPENSATION($)
- - --------------------------- ---- --------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Gary A. Shiffman, 1995 $200,000 0 305,430 $177,319(1)
Chief Executive Officer and 1994 $187,150 0 0 0
President . . . . . . . . . . . . . . . 1993 0 0 50,000 0
Jeffrey P. Jorissen, 1995 $149,800 $15,000 35,000 0
Senior Vice President, Treasurer, Chief 1994 $118,654 0 0 $ 27,383(2)
Financial Officer and 1993 $ 30,769 0 20,000 0
Secretary . . . . . . . . . . . . . . .
Brian W. Fannon, 1995 $133,275 $15,000 0 0
Senior Vice President and Chief 1994 $ 65,027 0 45,000 0
Operating Officer . . . . . . . . . . .
Jonathan M. Colman, 1995 $100,000 $10,000 0 0
Senior Vice President-Acquisitions . . 1994 $ 55,192 $ 6,000 20,000 0
</TABLE>
- - --------------------
(1) On May 11, 1995, the Company issued 94,570 shares of Common Stock to Mr.
Gary Shiffman in consideration for promissory notes aggregating $2,045,076,
or $21.625 per share (the "Consideration"). The Consideration was based on
the average of the closing sales prices of the Common Stock as quoted on
the New York Stock Exchange for the ten (10) business day period
immediately preceding and including May 4, 1995, which was the date that
the proposed transaction with Mr. Gary Shiffman was presented to and
approved by the Company's Board of Directors. However, in accordance with
the rules and regulations promulgated pursuant to the Exchange Act, the
Company is required to report the difference between the Consideration
(i.e., $21.625 per share) and the fair market value of the Common Stock on
the date of issuance (i.e., $23.50 per share) as "Other Compensation" in
the Summary Compensation Table.
(2) Aggregate value of shares of Common Stock transferred from Milton M.
Shiffman, Gary A. Shiffman and Robert B. Bayer at various times in the
fiscal year ended December 31, 1994. Mr. Milton Shiffman assigned 411
shares of Common Stock to Mr. Jorissen on June 16, 1994, Mr. Gary Shiffman
assigned 411 shares of Common Stock to Mr. Jorissen on March 3, 1994 and
Mr. Bayer assigned 411 shares of Common Stock to Mr. Jorissen on January
18, 1994. The closing sales prices on June 16, 1994, March 3, 1994 and
January 18, 1994 were $23.625, $22.25 and $20.75, respectively.
18
<PAGE> 21
OPTION/SAR GRANTS TABLE
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
SHARES % OF TOTAL ANNUAL RATES OF STOCK
UNDERLYING OPTIONS/SARS PRICE APPRECIATION
OPTIONS/SARS GRANTED TO EXERCISE FOR OPTION TERM
GRANTED EMPLOYEES PRICE EXPIRATION -------------------------------------
NAME IN 1995 IN 1995 ($/SH.) DATE 0% 5% 10%
($) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Gary A. Shiffman 305,430 81.35% $21.625 7/3/05 $1,030,826 $4,848,701 $8,666,576
Jeffrey P. Jorissen 35,000 9.32% $22 5/23/05 $ 70,000 $ 490,000 $ 910,000
Brian W. Fannon 0 N/A N/A N/A N/A N/A N/A
Jonathan M. Colman 0 N/A N/A N/A N/A N/A N/A
</TABLE>
AGGREGATED OPTION/SAR EXERCISES AND
FISCAL YEAR-END OPTION/SAR VALUES TABLE
<TABLE>
<CAPTION>
NO. OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS AT
FISCAL YEAR-END FISCAL YEAR-END(1)
------------------ ----------------------------
SHARES
ACQUIRED
ON EXERCISE VALUE NOT NOT
NAME IN 1995 RECEIVED EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Gary A. Shiffman 305,430(2) $1,030,826 50,000(3) 0 $318,750 N/A
Jeffrey P. Jorissen(4) 0 N/A 31,667 23,333 $178,543 $102,082
Brian W. Fannon(5) 0 N/A 30,000 15,000 $116,250 $ 58,125
Jonathan M. Colman(5) 0 N/A 13,333 6,667 $ 51,665 $ 25,835
</TABLE>
------------------
(1) Value based on the last reported sales price on December 29, 1995
which was $26.375 per share.
(2) Stock options granted July 3, 1995 pursuant to the Employee Option
Plan. Options were exercised immediately after grant.
(3) Stock options granted December 21, 1993 pursuant to the Employee
Option Plan. Options must be exercised by December 21, 2003.
Exercise price is $20.00 per share.
(4) 20,000 stock options were granted December 1, 1993 pursuant to the
Employee Option Plan. Such options must be exercised by December 1,
2003 and the exercise price is $20.00 per share. In addition,
35,000 stock options were granted May 23, 1995 pursuant to the
Employee Option Plan. Such options must be exercised by May 23,
2005 and the exercise price is $22.00 per share.
(5) Stock options granted July 18, 1994 pursuant to the Employee Option
Plan. Options must be exercised by July 18, 2004. Exercise price
is $22.50 per share.
19
<PAGE> 22
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Policy of Executive Officer Compensation
The executive compensation program is administered by the Compensation
Committee of the Board (the "Committee") which is comprised of Non- Employee
Directors, Messrs. Ted J. Simon and Carl R. Weinert. The program supports the
Company's commitment to providing superior shareholder value. It is designed to
attract and retain high-quality executives, to encourage them to make career
commitments to the Company, and to accomplish the Company's short and long term
objectives. The Committee attempts to structure a compensation program for the
Company that will reward its top executives with bonuses and stock and option
awards upon attainment of specified goals and objectives while striving to
maintain salaries at reasonably competitive levels. The Committee reviews the
compensation (including salaries, bonuses and stock options) of the Company's
officers and performs such other duties as may be delegated to it by the Board.
The Committee held four (4) formal meetings during the fiscal year ended
December 31, 1995.
In reviewing the compensation to be paid to the Company's executive
officers during the fiscal year ended December 31, 1995, the Committee sought to
ensure that executive officers were rewarded for long term strategic management,
for increasing the Company's value for its shareholders, and for achieving
internal goals established by the Board.
The key components of executive officer compensation are salary, bonuses
and stock option awards. Salary is generally based on factors such as an
individual officer's level of responsibility, prior years' compensation,
comparison to compensation of other officers in the Company, and compensation
provided at competitive companies and companies of similar size. Bonuses and
stock option awards are intended to reward exceptional performances. Stock
option awards are also intended to increase an officer's interest in the
Company's long-term success as measured by the market and book value of its
Common Stock. Stock awards may be granted to officers and directors of the
Company and its subsidiaries and to certain employees who have managerial or
supervisory responsibilities under the Employee Option Plan. Stock awards may
be stock options, stock appreciation rights, restricted share rights or any
variation thereof. Two executive officers and seven key employees received
stock options under the Employee Option Plan during the fiscal year ended
December 31, 1995.
CEO Compensation
During the fiscal year ended December 31, 1995, Gary A. Shiffman served
in the capacity of Chief Executive Officer of the Company. Under Mr.
Shiffman's leadership, the Company's net income before minority interest
increased by more than 52% in 1995 as compared to 1994, and the Company
continued its growth by acquiring an additional eight manufactured housing
communities in 1995. See "Shareholder Return Performance Presentation."
Prior to the Company's initial public offering and the formation of the
Committee, the Company entered into an employment agreement with Mr. Shiffman
which governed the salary and bonus paid to Mr. Shiffman during the fiscal year
ended December 31, 1995. Consequently, the Committee did not establish the
compensation for Mr. Shiffman. Pursuant to this employment agreement, Mr.
Shiffman was paid a salary of $200,000 and may have been entitled to incentive
compensation on the basis of the Company's performance. However, Mr. Shiffman
requested that the Company not pay him any incentive compensation at that time
and the Committee
20
<PAGE> 23
honored this request. Based upon market studies of pay levels for chief
executive officers of REITs (conducted by the National Association of Real
Estate Investment Trusts), the Committee believes that Mr. Shiffman's salary
and bonus compensation is competitive with, if not below, the appropriate level
for his position, particularly in view of his performance. See "Certain
Transactions."
On May 4, 1995, the Board approved a proposal to issue 400,000 shares of
Common Stock to Mr. Shiffman at $21.625 per share, which was the average of the
closing sales prices of the Common Stock as quoted on the New York Stock
Exchange for the ten (10) business day period immediately preceding and
including May 4, 1995. The Company structured this transaction to provide for
the issuance of 94,570 shares of Common Stock to Mr. Shiffman and the granting
of an option to Mr. Shiffman to purchase 305,430 shares of Common Stock;
provided that Mr. Shiffman immediately exercise the option and be at risk with
respect to the performance of the underlying Common Stock. The Committee
granted this option to Mr. Shiffman on July 3, 1995 and Mr. Shiffman immediately
exercised the option. In accordance with the rules and regulations promulgated
pursuant to the Exchange Act, the Company is required to report the difference
between the exercise price of the option and the fair market value of the Common
Stock on the date the option was granted as "Other Compensation" in the Summary
Compensation Table. The Committee granted this option to Mr. Shiffman to
provide Mr. Shiffman with a greater stock ownership in the Company in order to
cause his interests to be more closely aligned with the shareholders' interest
in promoting the Company's financial success. The Committee did not grant this
option as compensation to Mr. Shiffman for services rendered the Company. See
"Management Compensation - Executive Compensation" and "Certain Transactions."
Ted J. Simon Carl R. Weinert
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Milton M.
Shiffman and Gary A. Shiffman (the "Executives") pursuant to which Milton M.
Shiffman serves as Chairman of the Board of Directors and Gary A. Shiffman as
President. Each of these employment agreements is for an initial term of
approximately three years ending December 31, 1996. Pursuant to these
employment agreements, Milton M. Shiffman was paid an initial annual base salary
of $50,000 in 1994 and Gary A. Shiffman was paid an initial annual base salary
of $200,000 in 1994. These base salaries will be increased by 5% annually
(however, Milton M. Shiffman agreed to reduce his base salary to $25,000 for
1996) and each Executive is entitled to incentive compensation consisting of an
annual bonus equal to: (i) 25% of such Executive's base salary for the
applicable year if funds from operations per share of Common Stock for the
applicable year (calculated on a fully diluted basis without including
properties acquired during such year) has increased by more than 5.0% from the
preceding year; or (ii) 50% of such Executive's base salary for the applicable
year if funds from operations per share of Common Stock for the applicable year
(calculated on a fully diluted basis without including properties acquired
during such year) has increased by more than 8.5% from the preceding year.
Incentive compensation will be paid half in cash and half in shares of Common
Stock, valued at the then current market price.
21
<PAGE> 24
Pursuant to his employment agreement, Milton M. Shiffman is required to
devote such time to the Company's affairs as is needed to fulfill his duties as
Chairman of the Board. Except for time devoted to personal investments,
projects and charitable and community activities (subject, however, to the
noncompetition clause set forth in his employment agreement and the limitation
that the amount of time devoted does not materially affect the performance of
his duties under his employment agreement), Gary A. Shiffman is required to
devote his entire time, ability and attention to the business affairs of the
Company.
In the event of an Executive's death or if the Company elects to
terminate his employment agreement if he is totally disabled for at least six
consecutive months, the Company will be required to pay additional compensation
for a period of 24 months after such termination at the rate of such Executive's
then annual base salary. If the Company terminates an Executive's employment
without cause, it will be required to pay the Executive one year's base salary.
In the event of any merger or consolidation where the Company is not the
surviving or consolidated corporation, or a transfer of all or substantially all
of the Company's assets, the Company will be required to pay each Executive two
years' base salary.
NONCOMPETITION AGREEMENTS
Each of the Executives' employment agreements includes a noncompetition
clause. Milton M. Shiffman's employment agreement prohibits him from engaging
directly or indirectly in the manufactured housing business during the period he
is an officer or director of the Company and for a period of two years following
the period he is an officer or director of the Company, but allows him to engage
in other commercial and residential activities. Gary A. Shiffman's
noncompetition agreement precludes him from engaging directly or indirectly in
the manufactured housing business during the period he is an officer or director
of the Company and for a period of two years following the period he is an
officer or director of the Company, but allows him to make passive investments
relating to real estate in general or the housing industry in particular (other
than in manufactured housing communities) during the period he is an officer or
director of the Company.
OUTSIDE DIRECTOR COMPENSATION
Directors who are not employees of the Company are entitled to an annual
retainer fee of $12,000, payable $3,000 per calendar quarter, plus a $1,000 fee
for each quarterly meeting of the Board. For services during the fiscal year
ended December 31, 1995, Ted J. Simon, Carl R. Weinert, Paul D. Lapides and
Clunet R. Lewis each earned directors' fees of $16,000.
22
<PAGE> 25
SHAREHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly percentage change
in the cumulative total shareholder return on the Common Stock against the
cumulative total return of a broad market index composed of all issuers listed
on the New York Stock Exchange and an industry index composed of publicly traded
real estate investment trusts, for the period commencing on December 9, 1993
(the date of the Company's initial public offering) and ending on December 31,
1995. This line graph assumes a $100 investment on December 9, 1993 with
dividend reinvestment.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG SUN COMMUNITIES, INC.,
NYSE BROAD MARKET INDEX AND REIT INDUSTRY INDEX
[LINE GRAPH]
<TABLE>
<CAPTION>
12/9/93 12/31/93 12/31/94 12/31/95
------- -------- -------- --------
<S> <C> <C> <C> <C>
Sun Communities, Inc. 100.00 99.76 120.56 149.33
NYSE Broad Market Index 100.00 102.97 100.97 130.92
REIT Industry Index 100.00 100.08 100.92 118.53
</TABLE>
23
<PAGE> 26
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 3, 1996, the shareholdings of:
(a) each person known to the Company to be the beneficial owner of more than
five percent (5%) of the Common Stock; (b) each director of the Company; (c)
each executive officer listed in the Summary Compensation Table; and (d) all
executive officers and directors of the Company as a group, based upon
information available to the Company.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING SHARES(1)
- - ------------------------------------ -------------------- ------------------
<S> <C> <C>
Milton M. Shiffman(2) 504,343 (3) 3.35%
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Gary A. Shiffman 775,367 (4) 5.14%
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Jeffrey P. Jorissen 66,558 (5) *
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Brian W. Fannon 40,434 (6) *
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Jonathan M. Colman 20,833 (7) *
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Ronald A. House 5,056 (8) *
2757 44th Street, S.W.
Grand Rapids, Michigan 49509
Ted J. Simon 2,667 (9) *
P.O. Box 33446
Detroit, Michigan 48232
Carl R. Weinert 1,667 (10) *
15688 Mok
Eastpointe, Michigan 48021
Paul D. Lapides 2,167 (11) *
1000 Chastain Road
Kennesaw, Georgia 30144
</TABLE>
24
<PAGE> 27
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING SHARES(1)
- - ------------------------------------ -------------------- ------------------
<S> <C> <C>
Clunet R. Lewis 3,667 (9) *
27777 Franklin Road
Suite 1356
Southfield, Michigan 48034
Ronald L. Piasecki 34,875 (12) *
78067 San Timoteo
La Quinta, California 92253
The Equitable Companies Incorporated (13) 518,000 3.47%
787 Seventh Avenue
New York, New York 10019
LaSalle Advisors Limited Partnership (14) 946,300 6.35%
11 South LaSalle Street
Chicago, Illinois 60603
All current executive officers and directors as a 1,457,634 (15) 9.47%
group (11 persons)
</TABLE>
* Less than one percent (1%) of the outstanding shares.
(1) Percentage calculations based on 14,910,628 shares of Common Stock issued
and outstanding as of May 3, 1996 plus shares of Common Stock which may be
acquired pursuant to options exercisable or limited partnership interests
in the Operating Partnership ("Common OP Units") that are convertible into
Common Stock within sixty days of May 3, 1996 by each individual or group
listed.
(2) 103,530 of the Common OP Units are held directly by Mr. Shiffman and the
remaining 38,264 Common OP Units are held by the 1995 Milton M. Shiffman
Qualified Annuity Trust, pursuant to which Milton M. Shiffman is the income
beneficiary and entitled to an annuity for the term of the trust equal to
56% of the initial fair market value of the trust.
(3) Includes 141,794 Common OP Units convertible into shares of Common Stock
and 8,333 shares of Common Stock which may be acquired pursuant to options
exercisable within sixty days of May 3, 1996. Does not include shares or
Common OP Units held by other family members as to which beneficial
ownership is disclaimed.
(4) Includes 127,794 Common OP Units convertible into shares of Common Stock
and 58,333 shares of Common Stock which may be acquired pursuant to options
exercisable within sixty days of May 3, 1996. Does not include shares or
Common OP Units held by other family members as to which beneficial
ownership is disclaimed.
(5) Includes 48,333 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of May 3, 1996. Does not include
shares held by other family members as to which beneficial ownership is
disclaimed.
(6) Includes 33,334 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of May 3, 1996.
(7) Includes 15,833 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of May 3, 1996.
25
<PAGE> 28
(8) Includes 5,056 Common OP Units convertible into shares of Common Stock.
(9) Includes 1,667 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of May 3, 1996.
(10) Includes 834 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of May 3, 1996.
(11) Includes 1,167 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of May 3, 1996.
(12) Includes 13,889 Common OP Units convertible into shares of Common Stock
held by Aspen Group, a Michigan co-partnership, which are attributable
to Mr. Piasecki because of his 25% general partnership interest in Aspen
Group. Includes 20,986 Common OP Units convertible into shares of
Common Stock held by Aspen Group-KC, a Michigan co-partnership, which
are attributable to Mr. Piasecki because of his 25% general partnership
interest in Aspen Group-KC. Mr. Piasecki does not directly own any
shares of Common Stock or Common OP Units.
(13) Includes shares held by The Equitable Life Assurance Society of the
United States, a subsidiary, which (according to the Schedule 13G filed
by this group) were acquired solely for investment purposes and shares
held by Alliance Capital Management L.P., a subsidiary, which (according
to the Schedule 13G filed by this group) were acquired solely for
investment purposes on behalf of client discretionary investment
advisory accounts. The Equitable Life Assurance Society of the United
States and Alliance Capital Management L.P. were included in a Schedule
13G filed by a group which also consisted of The Equitable Companies
Incorporated; Donaldson, Lufkin & Jenrette Securities Corporation; Wood,
Struthers & Winthrop Management Corporation; Alpha Assurances I.A.R.D.
Mutuelle; Alpha Assurances Vie Mutuelle; AXA Assurances I.A.R.D.
Mutuelle; AXA Assurances Vie Mutuelle; Uni Europe Assurance Mutuelle;
and AXA.
(14) Includes shares held by LaSalle Advisors Limited Partnership ("LaSalle")
and ABKB/LaSalle Securities Limited Partnership, which (according to the
Schedule 13G filed by this group) is a Maryland limited partnership, the
limited partner of which is LaSalle and the general partner of which is
ABKB/LaSalle Securities, Inc., a Maryland corporation, the sole
stockholder of which is LaSalle. LaSalle and ABKB/LaSalle Securities
Limited Partnership, each registered investment advisors, have different
advisory clients.
(15) Includes 309,519 Common OP Units convertible into shares of Common Stock
and 169,501 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of May 3, 1996.
The Company is required to identify each person who was an officer,
director or beneficial owner of more than 10% of the Company's registered equity
securities during the Company's most recent fiscal year and who did not file on
a timely basis reports required by Section 16(a) of the Exchange Act. Based
solely upon its review of copies of such reports received by it during or with
respect to the fiscal year ended December 31, 1995, the Company believes that
all officers, directors and beneficial owners of more than 10% of the Company's
registered equity securities timely filed all required reports, except that: (a)
Gary A. Shiffman, the Chief Executive Officer and President of the Company,
filed one late report on Form 4 regarding two transactions; (b) Jeffrey P.
Jorissen, the Company's Senior Vice President, Chief Financial Officer,
Treasurer and Secretary, filed three late reports on Form 4 regarding five
transactions, failed to file one report on Form 4 regarding one transaction and
filed one late report on Form 5 regarding such transaction; and (c) Brian W.
Fannon, the Company's Senior Vice President and Chief Operating Officer filed
three late reports on Form 4 regarding three transactions.
26
<PAGE> 29
CERTAIN TRANSACTIONS
Effective as of February 7, 1995, the Operating Partnership paid Water
Oak, Ltd., a limited partner of the Operating Partnership, $1,003,205 in cash
in lieu of the issuance of additional OP Units (valued at $1,003,205) required
to be issued to Water Oak, Ltd. on or before January 31, 1995 in accordance
with the terms of that certain Agreement to Contribute Property to Partnership,
dated as of September 22, 1993.
As of May 11, 1995, the Company issued Mr. Gary A. Shiffman, the
Company's Chief Executive Officer and President, 94,570 shares of Common Stock
(the "Issued Shares") for $2,045,076.25 (the "Purchase Price"), or $21.625 per
share (the average of the closing sales prices of the Common Stock as quoted on
the New York Stock Exchange for the ten business day period immediately
preceding and including May 4, 1995). The Purchase Price was evidenced by two
(2) separate 10-year promissory notes that each have an original principal
amount equal to half of the Purchase Price and bear interest at 9% per annum
(the "Stock Notes"). In addition, as of July 3, 1995, the Company granted Mr.
Shiffman a non- qualified stock option (the "Option") to purchase 305,430
shares of Common Stock (the "Option Shares" and together with the Issued
Shares, the "Shares") for an exercise price of $6,604,923.75 (the "Exercise
Price"), or $21.625 per share; provided that Mr. Shiffman immediately exercise
the option and be at risk with respect to the performance of the underlying
Common Stock. The Option was immediately exercised by Mr. Shiffman and the
Exercise Price was evidenced by a 10-year promissory note bearing interest at
9% per annum (the "Option Note" and together with the Stock Notes, the
"Promissory Notes"). Effective as of March 11, 1996, in lieu of paying Mr.
Shiffman additional bonuses for 1995, the interest rate on the Promissory Notes
was changed to the rate of interest per annum equal to six months' LIBOR plus
175 basis points, with a maximum interest rate of 9% per annum and a minimum
interest rate of 6% per annum. One of the Stock Notes is secured by the Issued
Shares (the "Secured Note"), and the other is unsecured but fully recourse to
Mr. Shiffman (the "Recourse Note"). The Option Note is secured by 177,636 of
the Option Shares (the "Secured Shares") and 127,794 Common OP Units (the
"Secured Units"). Mr. Shiffman's personal liability on the Secured Note and
the Option Note is limited to all accrued interest on such notes plus fifty
percent (50%) of the deficiency, if any, after application of the proceeds from
the sale of the Issued Shares or the Secured Shares and Secured Units, as
applicable, to the then outstanding principal balance of the Secured Note or
the Option Note, as applicable. Because a dividend was paid on the Shares for
the quarter ended June 30, 1995, interest on the Promissory Notes accrues from
and after April 1, 1995, the beginning of such quarter. The Promissory Notes
provide for quarterly interest only payments and provide that all cash
distributions and dividends paid to Mr. Gary Shiffman on the Issued Shares, the
Secured Shares and the Secured Units (the "Distributions") will first be
applied toward the accrued and unpaid interest under the Promissory Notes and
sixty percent (60%) of the remainder of the Distributions, if any, will be
applied toward the outstanding principal balance of the Promissory Notes. As
of May 1, 1996, the amounts outstanding on the Secured Note, the Recourse Note
and the Option Note were approximately $1,030,207.17, $1,030,207.16 and
$6,654,460.68, respectively.
On April 8, 1996, the Company completed a $122.8 million public
offering of 4.7 million shares of its Common Stock (the "Equity Offering").
Jeffrey P. Jorissen, the Company's Senior Vice President, Treasurer, Chief
Financial Officer and Secretary, Brian W. Fannon, the Company's Senior Vice
President and Chief Operating Officer, and Jonathan M. Colman, the Company's
Senior Vice President - Acquisitions, collectively, purchased 20,000 shares of
Common Stock in the Equity Offering at the public offering price of $26.125 per
share. Such
27
<PAGE> 30
purchases in the Equity Offering were financed with loans from the Operating
Partnership on terms substantially identical to the terms of the Operating
Partnership's loan to Mr. Gary Shiffman to finance the purchase of the Issued
Shares, as described above. As of May 1, 1996, the total amounts outstanding
on Mr. Jorissen's promissory notes to the Operating Partnership, Mr. Fannon's
promissory notes to the Operating Partnership and Mr. Colman's promissory notes
to the Operating Partnership were approximately $263,209.38, $157,925.62 and
$105,283.76, respectively.
On May 1, 1996, the Company acquired the Aspen Properties from
affiliates of Aspen. Of the $226.0 million purchase price for the Aspen
Properties: (i) $144.0 million was used to retire existing mortgage debt secured
by the Aspen Properties; (ii) $42.1 million was distributed to the limited and
general partners of certain partnerships affiliated with Aspen, including Mr.
Ronald L. Piasecki and Mr. Ronald A. House; (iii) $4.2 million was issued in the
form of Common OP Units in the Operating Partnership; and (iv) $35.8 million was
issued in the form of convertible preferred limited partnership interests in the
Operating Partnership ("Preferred OP Units"). Both the Common OP Units and the
Preferred OP Units were issued to affiliates of Aspen, including, either
directly or indirectly, Mr. Piasecki and Mr. House. Upon completion of the
acquisition of the Aspen Properties, Mr. Piasecki was appointed to the Board of
Directors of the Company and Mr. House was appointed a Senior Vice President of
the Company.
GENERAL INFORMATION
INDEPENDENT PUBLIC ACCOUNTANTS
The Board selected Coopers & Lybrand L.L.P. as the Company's independent
public accountants for the fiscal year ended December 31, 1995. Representatives
of Coopers & Lybrand L.L.P. are expected to be present at the Annual Meeting,
and will have the opportunity to make a statement if they desire to do so and to
respond to appropriate questions. It is expected that Coopers & Lybrand L.L.P.
will also serve the Company in the same capacity during the fiscal year ending
December 31, 1996.
SHAREHOLDERS' PROPOSALS
Any and all shareholder proposals for inclusion in the proxy materials
for the Company's next Annual Meeting of Shareholders must comply with the rules
and regulations promulgated under the Exchange Act and must be received by the
Company, at its offices at 31700 Middlebelt Road, Suite 145, Farmington Hills,
Michigan 48334, not later than February 3, 1997. Such proposals should be
addressed to the Company's Secretary.
The Company's Bylaws also contain certain provisions which affect
shareholder proposals. The Company's Bylaws provide that: (a) with respect to
an annual meeting of shareholders, nominations of persons for election to the
Board of Directors and the proposal of business to be considered by shareholders
may be made only (i) pursuant to the Company's notice of the meeting, (ii) by
the Board of Directors, or (iii) by a shareholder who is entitled to vote at the
meeting and has complied with the advance notice procedures set forth in the
Bylaws; and (b) with respect to special meetings of shareholders, only the
business specified in the Company's notice of meeting may be brought before the
meeting of shareholders, and nominations of persons for election to the Board of
Directors may be made only (i) by the Board of Directors, or (ii) provided that
the Board of Directors has determined that directors shall be elected at such
28
<PAGE> 31
meeting, by a shareholder who is entitled to vote at the meeting and has
complied with the advance notice provisions set forth in the Bylaws.
OTHER MATTERS
The Company's Annual Report for the year ended December 31, 1995 has
been mailed with this Proxy Statement or previously delivered to shareholders.
Management knows of no matters which will be presented for
consideration at the Annual Meeting other than those stated in the Notice of
Meeting. However, if any other matters do properly come before the Annual
Meeting, the person or persons named in the accompanying proxy form will vote
the proxy in accordance with their best judgment regarding such matters,
including the election of a director or directors other than those named in this
Proxy Statement should an emergency or unexpected occurrence make the use of
such discretionary authority necessary, and also regarding matters incident to
the conduct of the meeting.
Shareholders are requested to date, sign and return the enclosed proxy
in the enclosed postage-paid envelope. So that the presence, in person or by
proxy, of the holders of a majority of the shares entitled to vote at the
meeting may be assured, prompt execution and return of the proxy is requested.
By Order of the Board of Directors
JEFFREY P. JORISSEN
Secretary
Dated: June 3, 1996
29
<PAGE> 32
SUN COMMUNITIES, INC.
AMENDED AND RESTATED
1993 STOCK OPTION PLAN
ARTICLE I.
PURPOSE AND ADOPTION OF THE PLAN
1.01 PURPOSE. The purpose of the Sun Communities, Inc. Stock
Option Plan (the "Plan") is to provide certain key employees of Sun
Communities, Inc. (the "Company") with an additional incentive to promote the
Company's financial success and to provide an incentive which the Company may
use to induce able persons to enter into or remain in the employment of the
Company or a Subsidiary.
1.02 ADOPTION AND TERM. The Plan was initially approved by the
Board and the Company's shareholders and was effective as of November 19, 1993.
The Amended and Restated Plan was approved by the Board on, and is effective as
of, May 20, 1996, subject to approval of the Company's stockholders on or
before May 20, 1997, and will remain in effect until all shares authorized
under the terms of the Plan have been issued, unless earlier terminated or
abandoned by action of the Board; provided, however, that no Incentive Stock
Option may be granted after November 19, 2003.
ARTICLE II.
DEFINITIONS
2.01 ADMINISTRATOR means the group of persons having authority to
administer the Plan pursuant to Section 3.01.
2.02 AVERAGE PRICE means, on any given date, the average of the
closing sales prices of the Company Common Stock as quoted on the New York
Stock Exchange for the ten (10) business day period immediately preceding and
including the Date of Grant.
2.03 AWARD means any one or combination of Non-Qualified Stock
Options, Performance Based Options, Incentive Stock Options, Stock Appreciation
Rights, Restricted Share Rights or any other award made under the terms of the
Plan.
2.04 AWARD AGREEMENT means a written agreement between the
Company and Participant or a written acknowledgment from the Company
specifically setting forth the terms and conditions of an Award granted under
the Plan.
2.05 AWARD PERIOD means, with respect to an Award, the period of
time set forth in the Award Agreement during which specified conditions set
forth in the Award Agreement must be satisfied.
<PAGE> 33
2.06 BENEFICIARY means (a) an individual, trust or estate who or
which, by will or by operation of the laws of descent and distribution,
succeeds to the rights and obligations of the Participant under the Plan and
Award Agreement upon the Participant's death; or (b) an individual, who by
designation of the Participant, succeeds to the rights and obligations of the
Participant under the Plan and Award Agreement upon the Participant's death.
2.07 BOARD means the Board of Directors of the Company.
2.08 CHANGE OF CONTROL EVENT means (a) an event or series of
events by which any Person or other entity or group (as such term is used in
Section 13(d) and 14(d) of the Exchange Act) of Persons or other entities
acting in concert as a partnership or other group (a "Group of Persons") (other
than Persons who are, or Groups of Persons entirely made up of, (i) management
personnel of the Company or (ii) any affiliates of any such management
personnel) shall, as a result of a tender or exchange offer or offers, an open
market purchase or purchases, a privately negotiated purchase or purchases or
otherwise, become the beneficial owner (within the meaning of Rule 13d-3 under
the Exchange Act, except that a Person shall be deemed to have "beneficial
ownership" of all securities that such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of 20% or more of the combined voting power of the then
outstanding voting stock of the Company; (b) the Company consolidates with, or
merges with or into, another Person (other than a Subsidiary in a transaction
which is not otherwise a Change of Control Event), or sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of its
assets to any Person, or any Person consolidates with, or merges with or into
the Company, in any such event pursuant to a transaction in which the
outstanding voting stock of the Company is converted into or exchanged for
cash, securities or other property; (c) during any consecutive two-year period,
individuals who at the beginning of such period constituted the Board (together
with any new directors whose election by such Board or whose nomination for
election by the stockholders of the Company, was approved by a vote of 66-2/3%
of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board then in office; or (d) any liquidation or dissolution of the Company
(other than a liquidation into a Subsidiary that is not otherwise a Change of
Control Event).
2.09 CODE means the Internal Revenue Code of 1986, as amended.
References to a section of the Code shall include that section and any
comparable section or sections of any future legislation that amends,
supplements or supersedes that section.
2.10 COMPANY means Sun Communities, Inc., a Maryland corporation.
2.11 COMPANY COMMON STOCK means the Common Stock of the Company,
par value $0.01.
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2.12 DATE OF GRANT means the date designated by the Administrator
as the date as of which it grants an Award, which shall not be earlier than the
date on which the Administrator approves the granting of such Award.
2.13 DIRECTOR means a member of the Board of Directors of the
Company.
2.14 EXCHANGE ACT means the Securities Exchange Act of 1934, as
amended.
2.15 EXERCISE PRICE means, with respect to a Stock Appreciation
Right, the amount established by the Administrator, in accordance with Section
7.03 hereunder, and set forth in the Award Agreement, which is to be subtracted
from the Fair Market Value on the date of exercise in order to determine the
amount of the Incremental Value to be paid to the Participant.
2.16 EXPIRATION DATE means the date specified in an Award
Agreement as the expiration date of such Award.
2.17 FAIR MARKET VALUE means, with respect to Awards granted
coincident with the date of the closing of the Company's initial public
offering of Company Common Stock, the public offering price. Thereafter, Fair
Market Value means, on any given date, the average of the highest and lowest
selling price for the Company Common Stock as reported on the Composite Tape
for New York Stock Exchange Listed Companies, or, if there were no sales on
such date, the average of the highest and lowest selling price for the most
recent date upon which a sale was reported.
2.18 INCENTIVE STOCK OPTION means a stock option described in
Section 422 of the Code.
2.19 INCREMENTAL VALUE has the meaning given such term in Section
7.01 of the Plan.
2.20 NON-QUALIFIED STOCK OPTION means a stock option which is not
an Incentive Stock Option.
2.21 OFFICER means a president, vice president, treasurer,
secretary, controller, and any other person who performs functions
corresponding to the foregoing officers for the Company, any member of the
Board of the Company or any person performing similar functions with respect to
the Company, and any other participant who is deemed to be an officer or
director of the Company for purposes of Section 16 of the Exchange Act and the
rules thereunder, as currently in effect or as amended from time to time.
2.22 OPTIONS means all Non-Qualified Stock Options, Incentive
Stock Options and Performance Based Options granted at any time under the Plan.
2.23 PARTICIPANT shall have the meaning set forth in Article V.
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2.24 PERFORMANCE BASED OPTION means a stock option which, upon
exercise or at any other time, would not result in or give rise to "applicable
employee remuneration" within the meaning of Section 162(m) of the Code.
2.25 PLAN means the Sun Communities, Inc. Stock Option Plan, as
described herein and as it may be amended from time to time.
2.26 PURCHASE PRICE, with respect to options, shall have the
meaning set forth in Section 6.02.
2.27 RESTRICTED SHARE RIGHT means a right to receive Company
Common Stock subject to restrictions imposed under the terms of an Award
granted pursuant to Article IX.
2.28 RULE 16B-3 means Rule 16b-3 promulgated by the Securities
and Exchange Commission under Section 16 of the Exchange Act, as currently in
effect and as it may be amended from time to time, and any successor rule.
2.29 STOCK APPRECIATION RIGHT means an Award granted in
accordance with Article VII.
2.30 SUBSIDIARY shall have the meaning set forth in Section
424(f) of the Code.
2.31 TERMINATION OF EMPLOYMENT means the voluntary or involuntary
termination of a Participant's employment with the Company for any reason,
including death, disability, retirement or as the result of the divestiture of
the Participant's employer or any other similar transaction in which the
Participant's employer ceases to be the Company or a Subsidiary of the Company.
Whether an authorized leave of absence or absence on military or government
service, absence due to disability, or absence for any other reason shall
constitute Termination of Employment shall be determined in each case by the
Administrator in its sole discretion.
ARTICLE III.
ADMINISTRATION
3.01 ADMINISTRATION. The Administrator of the Plan shall be a
committee of two or more Directors with authority to act as provided in Rule
16b-3 and shall be elected or appointed by the Board. The members of the
committee shall meet the "disinterested person" requirements of Rule
16b-3(c)(2)(i) and, with respect to Awards designated as Performance Based
Options, shall also be "outside directors" within the meaning of Section 162(m)
of the Code. The Administrator shall administer the Plan in accordance with
this provision and shall have the sole discretionary authority to interpret the
Plan, to establish and modify administrative rules for the Plan, to impose such
conditions and restrictions on Awards as it determines appropriate, to cancel
Awards (including those made pursuant to other plans of the Company) and to
substitute new options (including options granted under other plans of the
Company) with the consent of the recipient, and to take such steps in
connection with the Plan and Awards granted thereunder as it may
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deem necessary or advisable. The Administrator may, with respect to
Participants who are not Officers, delegate such of its powers and authority
under the Plan as it deems appropriate to designated officers or employees of
the Company.
3.02 INDEMNIFICATION. Members of the Administrator shall be
entitled to indemnification and reimbursement from the Company for any action
or any failure to act in connection with service as Administrator to the full
extent provided for or permitted by the Company's certificate of incorporation
or bylaws or by any insurance policy or other agreement intended for the
benefit of the Company's officers, directors or employees or by any applicable
law.
ARTICLE IV.
COMPANY COMMON STOCK ISSUABLE PURSUANT TO THE PLAN
4.01 SHARES ISSUABLE. Shares to be issued under the Plan may be
authorized and unissued shares or issued shares which have been reacquired by
the Company. Except as provided in Section 4.03, the Awards granted to any
Participant and to all Participants in the aggregate under the Plan shall be
limited so that the sum of the following shall never exceed nine percent (9%)
of the total number of shares of Company Common Stock outstanding: (i) all
shares which shall be issued upon the exercise of outstanding Options or other
Awards granted under the Plan, (ii) all shares for which payment of Incremental
Value shall be made by reason of the exercise of Stock Appreciation Rights at
any time granted under the Plan, and (iii) the number of shares otherwise
issuable under an Award which are applied by the Company to payment of the
withholding or tax liability discussed in Section 11.04.
4.02 SHARES SUBJECT TO TERMINATED AWARDS. In the event that any
Award at any time granted under the Plan shall be surrendered to the Company,
be terminated or expire before it shall have been fully exercised, or an award
of Stock Appreciation Rights is exercised for cash, then all shares formerly
subject to such Award as to which such Award shall not have been exercised
shall be available for any Award subsequently granted in accordance with the
Plan. Shares of Company Common Stock subject to Options, or portions thereof,
which have been surrendered in connection with the exercise of tandem Stock
Appreciation Rights shall not be available for subsequent Awards under the
Plan, and shares of Company Common Stock issued in payment of such Stock
Appreciation Rights shall be charged against the number of shares of Company
Common Stock available for the grant of Awards. Shares which are reacquired by
the Company or shares issuable subject to Restricted Share Rights which are
forfeited pursuant to forfeiture provisions in the Award Agreement shall be
available for subsequently granted Awards only if the forfeiting Participant
received no benefits of ownership (such as dividends actually paid to the
Participant) other than voting rights of the forfeited shares. Any shares of
Company Common Stock issued by the Company pursuant to its assumption or
substitution of outstanding grants from acquired companies shall not reduce the
number of shares available for Awards under this Plan unless issued under this
Plan.
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4.03 ADJUSTMENTS TO REFLECT CAPITAL CHANGES.
(a) RECAPITALIZATION. The number and kind of shares
subject to outstanding Awards, the Purchase Price or Exercise Price
for such shares, and the number and kind of shares available for
Awards subsequently granted under the Plan shall be appropriately
adjusted to reflect any stock dividend, stock split, combination or
exchange of shares, merger, consolidation or other change in
capitalization with a similar substantive effect upon the Plan or the
Awards granted under the Plan. The Administrator shall have the power
to determine the amount of the adjustment to be made in each case.
(b) SALE OR REORGANIZATION. After any reorganization,
merger or consolidation in which the Company is a surviving
corporation, each Participant shall, at no additional cost, be
entitled upon exercise of an Award to receive (subject to any required
action by stockholders), in lieu of the number of shares of Company
Common Stock receivable or exercisable pursuant to such Award, a
number and class of shares of stock or other securities to which such
Participant would have been entitled pursuant to the terms of the
reorganization, merger or consolidation if, at the time of such
reorganization, merger or consolidation, such Participant had been the
holder of record of a number of shares of stock equal to the number of
shares receivable or exercisable pursuant to such Award. Comparable
rights shall accrue to each Participant in the event of successive
reorganizations, mergers or consolidations of the character described
above.
(c) OPTIONS TO PURCHASE STOCK OF ACQUIRED COMPANIES.
After any reorganization, merger or consolidation in which the Company
or a Subsidiary of the Company shall be a surviving corporation, the
Administrator may grant substituted Options under the provisions of
the Plan, pursuant to Section 424 of the Code, replacing old options
granted under a plan of another party to the reorganization, merger or
consolidation, where such party's stock may no longer be issued
following such merger or consolidation. The foregoing adjustments and
manner of application of the foregoing provisions shall be determined
by the Administrator in its sole discretion. Any adjustments may
provide for the elimination of any fractional shares which might
otherwise have become subject to any Awards.
ARTICLE V.
PARTICIPATION
5.01 ELIGIBLE EMPLOYEES. Participants in the Plan shall be the
Officers who are employees of the Company or a Subsidiary of the Company and
other employees of the Company or a Subsidiary having managerial, supervisory
or similar responsibilities or who are key administrative employees or sales
managers, and who are not covered by any collective bargaining agreement
binding on such persons' employer, as the Administrator, in its sole
discretion, may designate from time to time. The Administrator's designation
of a Participant in any year shall not require the Administrator to designate
such person to receive Awards in any other year. The Administrator shall
consider such
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factors as it deems pertinent in selecting Participants and in determining the
type and amount of their respective Awards.
5.02 SPECIAL PROVISIONS FOR CERTAIN NON-EMPLOYEES.
Notwithstanding any provision contained in this Plan to the contrary, the
Administrator may grant Awards under the Plan to non-employees who, in the
judgment of the Administrator, render significant services to the Company or a
Subsidiary, on such terms and conditions as the Administrator deems appropriate
and consistent with the intent of the Plan.
ARTICLE VI.
OPTION AWARDS
6.01 POWER TO GRANT OPTIONS. The Administrator may grant, to
such Participants as the Administrator may select, Options entitling the
Participant to purchase Company Common Stock from the Company at the Average
Price in such quantity and on such terms and subject to such conditions, not
inconsistent with the terms of this Plan, as may be established by the
Administrator; provided, however, that the Options may be granted at exercise
prices of no less than 85% of the Average Price if such discount is expressly
granted in lieu of a reasonable amount of salary or bonus. The terms of any
Option granted under this Plan shall be set forth in an Award Agreement.
Notwithstanding the foregoing, Options granted to Officers shall not be
exercisable for a period of at least six months from the Date of Grant.
6.02 PURCHASE PRICE OF OPTIONS. The Purchase Price of each share
of Company Common Stock which may be purchased upon exercise of any Option
granted under the Plan shall be determined in accordance with Section 6.01,
provided that the Purchase Price for shares of Company Common Stock purchased
pursuant to Stock Options designated by the Administrator as Incentive Stock
Options shall be equal to or greater than the Fair Market Value on the Date of
Grant as required under Section 422 of the Code and provided further that the
Purchase Price for shares of Company Common Stock purchased pursuant to Stock
Options designated by the Administrator as Performance Based Options shall be
equal to or greater than the Fair Market Value on the Date of Grant.
6.03 DESIGNATION OF INCENTIVE STOCK OPTIONS. Except as otherwise
expressly provided in the Plan, the Administrator may designate, at the Date of
Grant of each Option, that the Option is an Incentive Stock Option under
Section 422 of the Code.
(a) INCENTIVE STOCK OPTION SHARE LIMITATION. No
Participant may be granted Incentive Stock Options under the Plan (or
any other plans of the Company) which would result in stock with an
aggregate Fair Market Value (measured on the Date of Grant) of more
than $100,000 first becoming exercisable in any one calendar year, or
which would entitle such Participant to purchase a number of shares
greater than the maximum number permitted by Section 422 of the Code
as in effect on the Date of Grant.
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(b) OTHER INCENTIVE STOCK OPTION TERMS. Whenever
possible, each provision in the Plan and in every Option granted under
this Plan which is designated by the Administrator as an Incentive
Stock Option shall be interpreted in such a manner as to entitle the
Option to the tax treatment afforded by Section 422 of the Code. If
any provision of this Plan or any Option designated by the
Administrator as an Incentive Stock Option shall be held not to comply
with requirements necessary to entitle such Option to such tax
treatment, then (i) such provision shall be deemed to have contained
from the outset such language as shall be necessary to entitle the
Option to the tax treatment afforded under Section 422 of the Code,
and (ii) all other provisions of this Plan and the Award Agreement
shall remain in full force and effect. If any agreement covering an
Option designated by the Administrator to be an Incentive Stock Option
under this Plan shall not explicitly include any terms required to
entitle such Incentive Stock Option to the tax treatment afforded by
Section 422 of the Code, all such terms shall be deemed implicit in
the designation of such Option and the Option shall be deemed to have
been granted subject to all such terms.
6.04 DESIGNATION OF PERFORMANCE BASED OPTIONS. Except as
otherwise expressly provided in the Plan, the Administrator may designate, at
the Date of Grant of each Option, that the Option is a Performance Based
Option. A Performance Based Option shall have a Purchase Price not less than
the Fair Market Value on the Date of Grant and shall contain such other terms
and conditions as the Administrator may deem necessary so that, upon exercise
or at any other time, the Performance Based Option does not result in or give
rise to "applicable employee remuneration" within the meaning of Section 162(m)
of the Code.
6.05 RIGHTS AS A STOCKHOLDER. The Participant or any transferee
of an Option pursuant to Section 8.02 or Section 11.05 shall have no rights as
a stockholder with respect to any shares of Company Common Stock covered by an
Option until the Participant or transferee shall have become the holder of
record of any such shares, and no adjustment shall be made for dividends and
cash or other property or distributions or other rights with respect to any
such shares of Company Common Stock for which the record date is prior to the
date on which the Participant or a transferee of the Option shall have become
the holder of record of any such shares covered by the Option.
ARTICLE VII.
STOCK APPRECIATION RIGHTS
7.01 POWER TO GRANT STOCK APPRECIATION RIGHTS. The Administrator
is authorized to grant to any Participant, on such terms established by the
Administrator on or prior to the Date of Grant and subject to and not
inconsistent with the provisions of this Plan, the right to receive the payment
from the Company, payable as provided in Section 7.04, of an amount equal to
the Incremental Value of the Stock Appreciation Rights, which shall be an
amount equal to the remainder derived from subtracting (i) the Exercise Price
for the right established in the Award Agreement from (ii) the Fair Market
Value of a share of Company Common Stock on the date of exercise. The terms of
any
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Stock Appreciation Right granted under the Plan shall be set forth in an Award
Agreement.
7.02 TANDEM STOCK APPRECIATION RIGHTS. The Administrator may
grant to any Participant a Stock Appreciation Right consistent with the
provisions of this Plan covering any share of Company Common Stock which is, at
the Date of Grant of the Stock Appreciation Right, also covered by an Option
granted to the same Participant, either prior to or simultaneously with the
grant to such Participant of the Stock Appreciation Right, provided: (i) any
Option covering any share of Company Common Stock shall expire and not be
exercisable upon the exercise of any Stock Appreciation Right with respect to
the same share; (ii) any Stock Appreciation Right covering any share of Company
Common Stock shall not be exercisable upon the exercise of any related Option
with respect to the same share; and (iii) an Option and Stock Appreciation
Right covering the same share of Company Common Stock may not be exercised
simultaneously.
7.03 EXERCISE PRICE. The Exercise Price established under any
Stock Appreciation Right granted under this Plan shall be determined by the
Administrator and, in the case of a tandem Stock Appreciation Right, shall not
be less than the Purchase Price of the related Option. Upon exercise of the
Stock Appreciation Rights, the number of shares subject to exercise under a
related Option shall automatically be reduced by the number of shares of
Company Common Stock represented by the Option or portion thereof which is
surrendered as a result of the exercise of such Stock Appreciation Rights.
7.04 PAYMENT OF INCREMENTAL VALUE. Any payment which may become
due from the Company by reason of Participant's exercise of a Stock
Appreciation Right may be paid to the Participant as determined by the
Administrator (i) all in cash, (ii) all in Company Common Stock, or (iii) in
any combination of cash and Company Common Stock. In the event that all or a
portion of the payment is made in Company Common Stock, the number of shares of
the Company Common Stock delivered in satisfaction of such payment shall be
determined by dividing the amount of the payment by the Fair Market Value on
the date of exercise. The Administrator may determine whether payment upon
exercise of a Stock Appreciation Right will be made in cash or in stock, or a
combination thereof, upon or at any time prior to the exercise of such Stock
Appreciation Right. No fractional share of Company Common Stock shall be
issued to make any payment; if any fractional shares would be issuable, the mix
of cash and Company Common Stock payable to the Participant shall be adjusted
as directed by the Administrator to avoid the issuance of any fractional share.
Payment may be made in cash to Officers only if the Stock Appreciation Right is
exercised during the "window period" required under Rule 16b-3(e)(3) and
otherwise in accordance with Rule 16b-3.
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ARTICLE VIII.
TERMS OF OPTIONS AND STOCK APPRECIATION RIGHTS
8.01 DURATION OF OPTIONS AND STOCK APPRECIATION RIGHTS. Options
and Stock Appreciation Rights shall terminate after the first to occur of the
following events:
(a) Expiration Date of the Award as provided in the Award
Agreement; or
(b) Termination of the Award as provided in Section
8.02; or
(c) In the case of an Incentive Stock Option, ten years
from the Date of Grant; or
(d) Solely in the case of tandem Stock Appreciation
Rights, upon the Expiration Date of the related Option.
8.02 EXERCISE ON DEATH OR TERMINATION OF EMPLOYMENT.
(a) Unless otherwise provided in the Award Agreement,
in the event of the death of a Participant while an employee of the
Company or a Subsidiary of the Company, the right to exercise all
unexpired Awards shall be accelerated and shall accrue as of the date
of death, and the Participant's Awards may be exercised by his
Beneficiary at any time within one year after the date of the
Participant's death.
(b) Unless otherwise provided in the Award Agreement,
in the event of Participant's Termination of Employment at any time
for any reason (including disability or retirement) other than death
or for "cause", as defined in paragraph (d) below, an Award may be
exercised, but only to the extent it was otherwise exercisable, on the
date of Termination of Employment, within ninety days after the date
of Termination of Employment. In the event of the death of the
Participant within the ninety-day period following Termination of
Employment, his Award may be exercised by his Beneficiary within the
one year period provided in subparagraph (a) above.
(c) With respect to an Award which is intended to
constitute an Incentive Stock Option, upon Termination of Employment,
such Award shall be exercisable as provided in Section 422 of the
Code.
(d) In the event that a Participant's Termination of
Employment is for "cause", all Awards shall terminate immediately upon
Termination of Employment. A Participant's employment shall be deemed
to have been terminated for "cause" if such termination is determined,
in the sole discretion of the Administrator, to have resulted from an
act or omission by the Participant constituting active and deliberate
dishonesty, as established by a final judgment or actual receipt of an
improper benefit or profit in money, property or services, or from the
Participant's
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continuous failure to perform his or her duties under any employment
agreement in effect between the Participant and the Company in any
material manner (or, in the absence of such an agreement, the
consistent failure or refusal of the Participant to perform according
to reasonable expectations and standards set by the Board and/or
management consistent with Participant's title and position) after
receipt of notice of such failure from the Company specifying how the
Participant has so failed to perform.
8.03 ACCELERATION OF EXERCISE TIME. The Administrator, in its
sole discretion, shall have the right (but shall not in any case be obligated)
to permit purchase of shares under any Award prior to the time such Award would
otherwise become exercisable under the terms of the Award Agreement.
8.04 EXTENSION OF EXERCISE TIME. The Administrator, in its sole
discretion, shall have the right (but shall not in any case be obligated) to
permit any Award granted under this Plan to be exercised after its Expiration
Date or after the ninety day period following Termination of Employment,
subject, however, to the limitations described in Section 8.01 (c) and (d).
8.05 CONDITIONS FOR EXERCISE. An Award Agreement may contain
such waiting periods, exercise dates and restrictions on exercise (including,
but not limited to, periodic installments which may be cumulative) as may be
determined by the Administrator at the Date of Grant. No Stock Appreciation
Right may be exercised prior to six months from the Date of Grant.
8.06 CHANGE OF CONTROL EVENT. Unless otherwise provided in the
Award Agreement, and subject to such other terms and conditions as the
Administrator may establish in the Award Agreement, upon the occurrence of a
Change of Control Event, irrespective of whether or not an Award is then
exercisable, the Participant shall have the right to exercise in full any
unexpired Award to the extent not theretofore exercised or terminated;
provided, however, that any Stock Appreciation Right so exercised must have a
Date of Grant at least six months prior to the date of exercise.
8.07 EXERCISE PROCEDURES. Each Option and Stock Appreciation
Right granted under the Plan shall be exercised by written notice to the
Company which must be received by the officer of the Company designated in the
Award Agreement on or before the Expiration Date of the Award. The Purchase
Price of shares purchased upon exercise of an Option granted under the Plan
shall be paid in full in cash by the Participant pursuant to the Award
Agreement; provided, however, that the Administrator may (but need not) permit
payment to be made by delivery to the Company of either (a) shares of Company
Common Stock (including shares issuable to the Participant pursuant to the
exercise of the Option), or (b) any combination of cash and shares of Company
Common Stock, or (c) such other consideration as the Administrator deems
appropriate and in compliance with applicable law (including payment in
accordance with a cashless exercise program under which, if so instructed by
the Participant, shares of Company Common Stock may be issued directly to the
Participant's broker or dealer upon receipt of the Purchase Price in cash from
the broker or dealer.) In the event that
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any Company Common Stock shall be transferred to the Company to satisfy all or
any part of the Purchase Price, the part of the Purchase Price deemed to have
been satisfied by such transfer of Company Common Stock shall be equal to the
product derived by multiplying the Fair Market Value as of the date of exercise
times the number of shares transferred. The Participant may not transfer to
the Company in satisfaction of the Purchase Price (y) a number of shares which
when multiplied times the Fair Market Value as of the date of exercise would
result in a product greater than the Purchase Price or (z) any fractional share
of Company Common Stock. Any part of the Purchase Price paid in cash upon the
exercise of any Option shall be added to the general funds of the Company and
used for any proper corporate purpose. Unless the Administrator shall
otherwise determine, any Company Common Stock transferred to the Company as
payment of all or part of the Purchase Price upon the exercise of any Option
shall be held as treasury shares.
ARTICLE IX.
RESTRICTED STOCK AWARDS
9.01 RESTRICTED SHARE AWARDS. The Administrator may grant to any
Participant an Award of Restricted Share Rights entitling such person to
receive shares of Company Common Stock in such quantity, and on such terms,
conditions and restrictions (whether based on performance standards, periods of
service or otherwise) as the Administrator shall determine on or prior to the
Date of Grant. The terms of any Award of Restricted Share Rights granted under
the Plan shall be set forth in an Award Agreement.
9.02 DURATION OF RESTRICTED SHARE RIGHTS. In no event shall any
Restricted Share Rights granted entitle the holder to receive shares of Company
Common Stock free of all restrictions on transfer at any time prior to the
expiration of three years from the Date of Grant, and each Award Agreement
shall provide that the Participant shall remain employed by the Company or a
Subsidiary for that three year period (subject to the Company's or Subsidiary's
right to terminate such employment).
9.03 FORFEITURE OF RESTRICTED SHARE RIGHTS. Subject to Section
9.05, all Restricted Share Rights shall be forfeited and all Restricted Share
Awards shall terminate unless the Participant continues in the service of the
Company or a Subsidiary until the expiration of the forfeiture and satisfies
any other conditions set forth in the Award Agreement. If the Award Agreement
shall so provide, in the case of death, disability or retirement (as defined in
the Award Agreement) of the Participant, all of the shares covered by the
Restricted Share Rights shall immediately vest and any restrictions shall lapse
as of the date of such death, disability or retirement.
9.04 DELIVERY OF SHARES UPON VESTING. Upon the lapse of the
restrictions established in the Award Agreement, the Participant shall be
entitled to receive, without payment of any cash or other consideration,
certificates for the number of shares covered by the Award.
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9.05 WAIVER OR MODIFICATION OF FORFEITURE PROVISIONS. The
Administrator has full power and authority to modify or waive any or all terms,
conditions or restrictions (other than the minimum restriction period set forth
in Section 9.02) applicable to any Restricted Share Rights granted to a
Participant under the Plan; provided that no modification shall, without
consent of the Participant, adversely affect the Participant's rights
thereunder and no modification shall reduce the employment requirement to less
than three years, except in the case of death, disability or retirement.
9.06 RIGHTS AS A STOCKHOLDER. No person shall have any rights as
a stockholder with respect to any shares subject to Restricted Share Rights
until such time as the person shall have been issued a certificate for such
shares.
ARTICLE X.
OTHER STOCK BASED AWARDS
10.01 GRANT OF OTHER AWARDS. Other Awards of Company Common Stock
or other securities of the Company and other Awards that are valued in whole or
in part by reference to, or are otherwise based on, Company Common Stock
("Other Awards") may be granted either alone or in addition to or in
conjunction with Options or Stock Appreciation Rights under the Plan. Subject
to the provisions of the Plan, the Administrator shall have the sole and
complete authority to determine the persons to whom and the time or times at
which Other Awards shall be made, the number of shares of Company Common Stock
or other securities, if any, to be granted pursuant to such Other Awards, and
all other conditions of such Other Awards. Any Other Award shall be confirmed
by an Award Agreement executed by the Administrator and the Participant, which
agreement shall contain such provisions as the Administrator determines to be
necessary or appropriate to carry out the intent of this Plan with respect to
the Other Award.
10.02 TERMS OF OTHER AWARDS. In addition to the terms and
conditions specified in the Award Agreement, Other Awards made pursuant to this
Article X shall be subject to the following:
(a) Any shares of Company Common Stock subject to such
Other Awards may not be sold, assigned, transferred or otherwise
encumbered prior to the date on which the shares are issued, or, if
later, the date on which any applicable restriction, performance or
deferral period lapses; and
(b) If specified by the Administrator and the Award
Agreement, the recipient of an Other Award shall be entitled to
receive, currently or on a deferred basis, interest or dividends or
dividend equivalents with respect to the Company Common Stock or other
securities covered by the Other Award; and
(c) The Award Agreement with respect to any Other Award
shall contain provisions providing for the disposition of such Other
Award in the event of Termination of Employment prior to the exercise,
realization or payment of such
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Other Award, with such provisions to take account of the specific
nature and purpose of the Other Award.
ARTICLE XI.
TERMS APPLICABLE TO ALL AWARDS
11.01 AWARD AGREEMENT. The grant and the terms and conditions of
the Award shall be set forth in an Award Agreement between the Company and the
Participant. No person shall have any rights under any Award granted under the
Plan unless and until the Administrator and the Participant to whom the Award
is granted shall have executed and delivered an Award Agreement expressly
granting the Award to such person and setting forth the terms of the Award.
11.02 PLAN PROVISIONS CONTROL AWARD TERMS. The terms of the Plan
shall govern all Awards granted under the Plan, and in no event shall the
Administrator have the power to grant any Award under the Plan which is
contrary to any of the provisions of the Plan. In the event any provision of
any Award granted under the Plan shall conflict with any term in the Plan as
constituted on the Date of Grant of such Award, the term in the Plan as
constituted on the Date of Grant of such Award shall control. Except as
provided in Section 4.03, (i) the terms of any Award granted under the Plan may
not be changed after the granting of such Award without the express approval of
the Participant and (ii) no modification may be made to an Award granted to an
Officer except in compliance with Rule 16b-3.
11.03 MODIFICATION OF AWARD AFTER GRANT. Each Award granted under
the Plan to a Participant other than an Officer may be modified after the date
of its grant by express written agreement between the Company and the
Participant, provided that such change (i) shall not be inconsistent with the
terms of the Plan and (ii) shall be approved by the Administrator. No
modifications may be made to any Awards granted to an Officer except in
compliance with Rule 16b-3.
11.04 TAXES. The Company shall be entitled, if the Administrator
deems it necessary or desirable, to withhold (or secure payment from the
Participant in lieu of withholding) the amount of any withholding or other tax
required by law to be withheld or paid by the Company with respect to any
amount payable and/or shares issuable under such Participant's Award, or with
respect to any income recognized upon a disqualifying disposition of shares
received pursuant to the exercise of an Incentive Stock Option, and the Company
may defer payment or issuance of the cash or stock upon exercise or vesting of
an Award unless indemnified to its satisfaction against any liability for such
tax. The amount of such withholding or tax payment shall be determined by the
Administrator and, unless otherwise provided by the Administrator, shall be
payable by the Participant at the time of issuance or payment in accordance
with the following rules:
(a) A Participant, other than an Officer, shall have
the right to elect to meet his or her withholding requirement by: (1)
having the Company withhold from such Award the appropriate number of
shares of Company Common Stock, rounded out to the next whole number,
the Fair Market Value of which is equal to
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<PAGE> 46
such amount, or, in the case of the cash payment, the amount of cash,
as is determined by the Company to be sufficient to satisfy applicable
tax withholding requirements; or (2) direct payment to the Company in
cash of the amount of any taxes required to be withheld with respect
to such Award.
(b) Unless otherwise provided by the Administrator,
with respect to Officers, the Company shall withhold from such Award
the appropriate number of shares of Company Common Stock, rounded up
to the next whole number, the Fair Market Value of which is equal to
the amount, as determined by the Administrator, (or, in the case of a
cash payment, the amount of cash) required to satisfy applicable tax
withholding requirements.
(c) In the event that an Award or property received
upon exercise of an Award has already been transferred to the
Participant on the date upon which withholding requirements apply, the
Participant shall pay directly to the Company the cash amount
determined by the Company to be sufficient to satisfy applicable
federal, state or local withholding requirements. The Participant
shall provide to the Company such information as the Company shall
require to determine the amounts to be withheld and the time such
withholding requirements become applicable.
(d) If permitted under applicable federal income tax
laws, a Participant may elect to be taxed in the year in which an
Award is exercised or received, even if it would not otherwise have
become taxable to the Participant. If the Participant makes such an
election, the Participant shall promptly notify the Company in writing
and shall provide the Company with a copy of the executed election
form as filed with the Internal Revenue Service no later than thirty
days from the date of exercise or receipt. Promptly following such
notification, the Participant shall pay directly to the Company the
cash amount determined by the Company to be sufficient to satisfy
applicable federal, state or local withholding tax requirements.
11.05 LIMITATIONS ON TRANSFER. A Participant's rights and
interest under the Plan may not be assigned or transferred other than by will
or the laws of descent and distribution, or pursuant to the terms of a domestic
relations order, as defined in Section 414(p)(1)(B) of the Code, which
satisfies the requirements of Section 414(p)(1)(A) of the Code (a "Qualified
Domestic Relations Order"). During the lifetime of a Participant, only the
Participant personally (or the Participant's personal representative or
attorney-in-fact) or the alternate payee named in a Qualified Domestic
Relations Order may exercise the Participant's rights under the Plan. The
Participant's Beneficiary may exercise a Participant's rights to the extent
they are exercisable under the Plan following the death of the Participant.
11.06 SURRENDER OF AWARDS. Any Award granted under the Plan may
be surrendered to the Company for cancellation on such terms as the
Administrator and Participant approve, including, but not limited to, terms
which provide that upon such surrender the Company will pay to the Participant
cash or Company Common Stock, or a combination of cash and Company Common
Stock.
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<PAGE> 47
ARTICLE XII.
GENERAL PROVISIONS
12.01 AMENDMENT AND TERMINATION OF PLAN.
(a) AMENDMENT. The Board shall have complete power and
authority to amend the Plan at any time and to add any other stock
based Award or other incentive compensation programs to the Plan as it
deems necessary or appropriate and no approval by the stockholders of
the Company or by any other person, committee or entity of any kind
shall be required to make any amendment; provided, however, that the
Board shall not, without the requisite affirmative approval of
stockholders of the Company, (i) make any amendment which requires
stockholder approval under any applicable law, including Rule 16b-3 or
the Code; or (ii) which, unless approved by the requisite affirmative
approval of stockholders of the Company, would cause, result in or
give rise to "applicable employee remuneration" within the meaning of
Section 162(m) of the Code with respect to any Performance Based
Option. No termination or amendment of the Plan may, without the
consent of the Participant to whom any Award shall theretofore have
been granted under the Plan, adversely affect the right of such
individual under such Award. For the purposes of this section, an
amendment to the Plan shall be deemed to have the affirmative approval
of the stockholders of the Company if such amendment shall have been
submitted for a vote by the stockholders at a duly called meeting of
such stockholders at which a quorum was present and the majority of
votes cast with respect to such amendment at such meeting shall have
been cast in favor of such amendment, or if the holders of outstanding
stock having not less than a majority of the outstanding shares
consent to such amendment in writing in the manner provided under the
Company's bylaws.
(b) TERMINATION. The Board shall have the right and
the power to terminate the Plan at any time. If the Plan is not
earlier terminated, the Plan shall terminate when all shares
authorized under the Plan have been issued. No Award shall be granted
under the Plan after the termination of the Plan, but the termination
of the Plan shall not have any other effect and any Award outstanding
at the time of the termination of the Plan may be exercised after
termination of the Plan at any time prior to the expiration date of
such Award to the same extent such award would have been exercisable
if the Plan had not been terminated.
12.02 NO RIGHT TO EMPLOYMENT. No employee or other person shall
have any claim or right to be granted an Award under this Plan. Neither the
Plan nor any action taken hereunder shall be construed as giving any employee
any right to be retained in the employ of the Company or a Subsidiary of the
Company.
12.03 COMPLIANCE WITH RULE 16B-3. It is intended that the Plan be
applied and administered in compliance with Rule 16b-3. If any provision of
the Plan would be in violation of Rule 16b-3 if applied as written, such
provision shall not have effect as written and shall be given effect so as to
comply with Rule 16b-3, as determined by the Administrator. The Board is
authorized to amend the Plan and to make any such
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<PAGE> 48
modifications to Award Agreements to comply with Rule 16b-3, as it may be
amended from time to time, and to make any other such amendments or
modifications as it deems necessary or appropriate to better accomplish the
purposes of the Plan in light of any amendments made to Rule 16b-3.
12.04 SECURITIES LAW RESTRICTIONS. The shares of Company Common
Stock issuable pursuant to the terms of any Awards granted under the Plan may
not be issued by the Company without registration or qualification of such
shares under the Securities Act of 1933, as amended, or under various state
securities laws or without an exemption from such registration requirements.
Unless the shares to be issued under the Plan have been registered and/or
qualified as appropriate, the Company shall be under no obligation to issue
shares of Company Common Stock upon exercise of an Award unless and until such
time as there is an appropriate exemption available from the registration or
qualification requirements of federal or state law as determined by the
Administrator in its sole discretion. The Administrator may require any person
who is granted an award hereunder to agree with the Company to represent and
agree in writing that if such shares are issuable under an exemption from
registration requirements, the shares will be "restricted" securities which may
be resold only in compliance with applicable securities laws, and that such
person is acquiring the shares issued upon exercise of the Award for
investment, and not with the view toward distribution.
12.05 CAPTIONS. The captions (i.e., all section headings) used in
the Plan are for convenience only, do not constitute a part of the Plan, and
shall not be deemed to limit, characterize or affect in any way any provisions
of the Plan, and all provisions of the Plan shall be construed as if no
captions have been used in the Plan.
12.06 SEVERABILITY. Whenever possible, each provision in the Plan
and every Award at any time granted under the Plan shall be interpreted in such
a manner as to be effective and valid under applicable law, but if any
provision of the Plan or any Award at any time granted under the Plan shall be
held to be prohibited or invalid under applicable law, then (a) such provision
shall be deemed amended to accomplish the objectives of the provision as
originally written to the fullest extent permitted by law and (b) all other
provisions of the Plan and every other Award at any time granted under the Plan
shall remain in full force and effect.
12.07 NO STRICT CONSTRUCTION. No rule of strict construction
shall be implied against the Company, the Administrator, or any other person in
the interpretation of any of the terms of the Plan, any Award granted under the
Plan or any rule or procedure established by the Administrator.
12.08 CHOICE OF LAW. All determinations made and actions taken
pursuant to the Plan shall be governed by the laws of Michigan and construed in
accordance therewith.
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<PAGE> 49
SUN COMMUNITIES, INC.
AMENDED AND RESTATED
1993 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
ARTICLE I.
PURPOSE AND ADOPTION OF THE PLAN
1.01 PURPOSE. The purpose of the Sun Communities, Inc.
Non-Employee Director Stock Option Plan is to attract and retain the services
of experienced and knowledgeable independent directors of Sun
Communities, Inc. (the "Company") and to provide an additional incentive for
such directors to continue to work for the best interests of the Company and
its stockholders.
1.02 ADOPTION AND TERM. The Plan was initially approved by the
Board as of December 21, 1993 and ratified and approved by the Company's
stockholders on May 26, 1994. The Amended and Restated Plan was approved
by the Board on May 20, 1996, subject to approval of the Company's
stockholders on or before May 20, 1997, and will remain in effect until all
shares authorized under the terms of the Plan have been issued, unless earlier
terminated or abandoned by action of the Board.
ARTICLE II.
DEFINITIONS
2.01 AVERAGE PRICE means the average of the closing sales prices of
the Company Common Stock as quoted on the New York Stock Exchange for the
ten (10) business day period immediately preceding and including June 30th
of the year for which the Performance Option was earned.
2.01 BENEFICIARY means (a) an individual, trust or estate who or
which, by will or by operation of the laws of descent and distribution,
succeeds to the rights and obligations of the Non- Employee Director under
the Plan and Option Agreement upon the Non-Employee Director's death; or
(b) an individual, who by designation of the Non-Employee Director,
succeeds to the rights and obligations of the Non-Employee Director under the
Plan and Option Agreement upon the Non-Employee Director's death.
2.02 BOARD means the Board of Directors of the Company.
2.03 CODE means the Internal Revenue Code of 1986, as amended.
References to a section of the Code shall include that section and any
comparable section or sections of any future legislation that amends,
supplements or supersedes that section.
2.04 COMPANY means Sun Communities, Inc., a Maryland
corporation.
2.05 COMPANY COMMON STOCK means the Common Stock of the Company,
par value $0.01.
<PAGE> 50
2.06 DATE OF GRANT means: (a) with respect to Initial Options, the
date the Plan is adopted by the Board, or if later, the date an individual first
becomes a Director; and (b) with respect to Performance Options, December 31st
of the year for which the Performance Option is earned.
2.07 DIRECTOR means a member of the Board of Directors of the
Company.
2.08 EXCHANGE ACT means the Securities Exchange Act of 1934, as
amended.
2.09 EXPIRATION DATE means the date specified in an Option Agreement
as the expiration date of such Award.
2.10 FAIR MARKET VALUE means, on any given date, the average of the
highest and lowest selling price for the Company Common Stock as reported on the
Composite Tape for New York Stock Exchange Listed Companies, or, if there were
no sales on such date, the average of the highest and lowest selling price for
the most recent date upon which a sale was reported.
2.11 INITIAL OPTION has the meaning set forth in Section 5.01.
2.12 NON-EMPLOYEE DIRECTOR means a Director who is not an employee of
the Company or a Subsidiary.
2.13 NON-QUALIFIED STOCK OPTION means a stock option which is not an
Incentive Stock Option as described in Section 422 of the Code.
2.14 OPTION means a Non-Qualified Stock Option granted at any time
under the Plan.
2.15 OPTION AGREEMENT means a written agreement between the Company
and the optionholder evidencing the grant of an Option and setting forth the
terms and conditions of the Option.
2.16 PERFORMANCE OPTION has the meaning set forth in Section 5.01.
2.17 PER SHARE FFO means, with respect to any fiscal year, the
Company's funds from operations (as defined by the National Association of Real
Estate Investment Trusts) per weighted average number of outstanding shares of
Company Common Stock for such fiscal year, as determined by reference to the
Company's audited financial statements.
2.18 PLAN means the Amended and Restated Sun Communities, Inc. 1993
Non-Employee Director Stock Option Plan, as described herein and as it may be
amended from time to time.
2.19 PURCHASE PRICE, with respect to Options, has the meaning set
forth in Section 5.02.
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<PAGE> 51
2.20 RULE 16b-3 means Rule 16b-3 promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act, as currently in effect
and as it may be amended from time to time, and any successor rule.
2.21 SUBSIDIARY shall have the meaning set forth in Section 424(f) of
the Code.
ARTICLE III.
COMPANY COMMON STOCK ISSUABLE PURSUANT TO THE PLAN
3.01 SHARES ISSUABLE. Shares to be issued under the Plan may be
authorized and unissued shares or issued shares which have been reacquired by
the Company. Except as provided in Section 3.03, the Options granted under the
Plan shall be limited so that all shares which shall be issued upon the exercise
of outstanding Options granted under the Plan shall never exceed 100,000 shares
of Company Common Stock.
3.02 SHARES SUBJECT TO TERMINATED OPTIONS. In the event that any
Option at any time granted under the Plan shall be surrendered to the Company,
be terminated or expire before it shall have been fully exercised, then all
shares formerly subject to such Option as to which such Option shall not have
been exercised shall be available for any Option subsequently granted in
accordance with the Plan.
3.03 ADJUSTMENTS TO REFLECT CAPITAL CHANGES.
(a) RECAPITALIZATION. The number and kind of shares subject to
outstanding Options, the Purchase Price for such shares, and the number
and kind of shares available for Options subsequently granted under the
Plan shall be appropriately adjusted to reflect any stock dividend,
stock split, combination or exchange of shares, merger, consolidation
or other change in capitalization with a similar substantive effect
upon the Plan or the Options granted under the Plan. The Board shall
have the power to determine the amount of the adjustment to be made in
each case.
(b) SALE OR REORGANIZATION. After any reorganization, merger or
consolidation in which the Company is a surviving corporation, each
Non-Employee Director shall, at no additional cost, be entitled upon
exercise of an Option to receive (subject to any required action by
stockholders), in lieu of the number of shares of Company Common Stock
receivable or exercisable pursuant to such Option, a number and class
of shares of stock or other securities to which such Non-Employee
Director would have been entitled pursuant to the terms of the
reorganization, merger or consolidation if, at the time of such
reorganization, merger or consolidation, such Non-Employee Director had
been the holder of record of a number of shares of stock equal to the
number of shares receivable or exercisable pursuant to such Option.
Comparable rights shall accrue to each Non-Employee Director in the
event of successive reorganizations, mergers or consolidations of the
character described above.
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<PAGE> 52
ARTICLE IV.
PARTICIPATION
ELIGIBLE INDIVIDUALS. All Non-Employee Directors of the Company shall be
eligible to receive Options under the Plan.
ARTICLE V.
OPTION AWARDS
5.01 GRANT OF OPTIONS.
(a) INITIAL OPTIONS. Each of the Company's Non-Employee Directors,
on the date the Plan is adopted by the Board, shall automatically receive a
Non-Qualified Stock Option (the "Initial Option") to purchase 2,500 shares,
subject to adjustment in accordance with Section 3.03, of Company Common
Stock on the date of adoption. Thereafter, each of the Company's
Non-Employee Directors shall automatically receive the Initial Option,
subject to adjustment in accordance with Section 3.03, on the day he or she
first becomes a Director. Each Initial Option shall be evidenced by an
Option Agreement.
(b) PERFORMANCE OPTIONS. As of December 31st of each fiscal year of
the Company, each of the Company's Non-Employee Directors that has
continuously served the Company for the entire fiscal year shall
automatically receive a Non-Qualified Stock Option (the "Performance
Option") to purchase the following number of shares of Company Common
Stock, subject to adjustment in accordance with Section 3.03:
(i) if Per Share FFO for such fiscal year increased by less than 5%
as compared to Per Share FFO for the previous fiscal year, 0 shares of
Company Common Stock;
(ii) if Per Share FFO for such fiscal year increased by 5% or
more but less than 6% as compared to Per Share FFO for the previous
fiscal year, 1,000 shares of Company Common Stock;
(iii) if Per Share FFO for such fiscal year increased by 6% or more
but less than 7% as compared to Per Share FFO for the previous fiscal year,
1,500 shares of Company Common Stock;
(iv) if Per Share FFO for such fiscal year increased by 7% or more
but less than 8% as compared to Per Share FFO for the previous fiscal year,
2,000 shares of Company Common Stock;
(v) if Per Share FFO for such fiscal year increased by 8% or more
but less than 9% as compared to Per Share FFO for the previous fiscal year,
2,500 shares of Company Common Stock;
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<PAGE> 53
(vi) if Per Share FFO for such fiscal year increased by 9% or more
but less than 10% as compared to Per Share FFO for the previous fiscal
year, 3,000 shares of Company Common Stock; or
(vii) if Per Share FFO for such fiscal year increased by 10% or more
as compared to Per Share FFO for the previous fiscal year, 3,500 shares of
Company Common Stock.
The Performance Options, if any, shall be granted as soon as possible after
issuance of the Company's audited financial statements but shall be effective as
of December 31st of the year for which the Performance Option was earned. Each
Performance Option shall be evidenced by an Option Agreement.
5.02 PURCHASE PRICE OF OPTIONS. The Purchase Price of each share of
Company Common Stock which may be purchased upon exercise of any Initial Option
granted under the Plan shall be the Fair Market Value on the Date of Grant. The
Purchase Price of each share of Company Common Stock which may be purchased upon
exercise of any Performance Option granted under the Plan shall be the Average
Price.
5.03 VESTING OF OPTIONS. No Option may be exercised prior to one year
from the Date of Grant. An Option shall become exercisable with respect to
one-third (1/3) of the shares one year from the Date of Grant, with respect to
an additional one-third (1/3) of the shares two years from the Date of Grant and
with respect to the final one-third (1/3) of the shares three years from the
Date of Grant.
5.04 DURATION OF OPTIONS. Options granted under the Plan shall
terminate after the first to occur of the following events:
(a) Ten years from the Date of Grant.
(b) Three months after the Optionee ceases to be a Director,
except in the case of death, as described in (c) below.
(c) In the event of the death of a Non-Employee Director while a
Director, the right to exercise all unexpired Options shall be accelerated
and shall accrue as of the date of death, and the Non-Employee Director's
Options may be exercised by his Beneficiary at any time within one year
after the date of the Non-Employee Director's death. In the event of the
death of a Non-Employee Director within the ninety day period after he or
she ceases to be a Director, the Non-Employee Director's Beneficiary may
exercise his or her Options, to the extent exercisable on the date of
death, within one year after the date of the Non-Employee Director's death.
5.05 EXERCISE PROCEDURES. Each Option granted under the Plan may be
exercised by written notice to the Company which must be received by the
Secretary of the Company on or before the Expiration Date of the Option. The
Purchase Price of
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<PAGE> 54
shares purchased upon exercise of an Option granted under the Plan shall be
paid in full in cash by the Non-Employee Director on the date of exercise.
5.06 RIGHTS AS A STOCKHOLDER. The Non-Employee Director or any
transferee of an Option pursuant to Section 5.04(c) or Section 5.09 shall have
no rights as a stockholder with respect to any shares of Company Common Stock
covered by an Option until the Non-Employee Director or transferee shall have
become the holder of record of any such shares, and no adjustment shall be made
for dividends and cash or other property or distributions or other rights with
respect to any such shares of Company Common Stock for which the record date is
prior to the date on which the Non-Employee Director or a transferee of the
Option shall have become the holder of record of any such shares covered by the
Option.
5.07 PLAN PROVISIONS CONTROL OPTION TERMS. The terms of the Plan
shall govern all Options granted under the Plan. In the event any provision of
any Option granted under the Plan shall conflict with any term in the Plan as
constituted on the Date of Grant of such Option, the term in the Plan as
constituted on the Date of Grant of such Option shall control. Except as
provided in Section 3.03, (i) the terms of any Option granted under the Plan may
not be changed after the granting of such Option without the express approval of
the Non-Employee Director and (ii) no modification may be made to an Option
granted under the Plan except in compliance with Rule 16b-3.
5.08 TAXES. The Company shall be entitled, if the Company deems it
necessary or desirable, to withhold (or secure payment from the Non-Employee
Director in lieu of withholding) the amount of any withholding or other tax
required by law to be withheld or paid by the Company with respect to any shares
issuable upon exercise of an Option, and the Company may defer issuance of the
stock upon exercise unless indemnified to its satisfaction against any liability
for such tax.
5.09 LIMITATIONS ON TRANSFER. A Non-Employee Director's rights and
interest under the Plan may not be assigned or transferred other than by will or
the laws of descent and distribution, or pursuant to the terms of a domestic
relations order, as defined in Section 414(p)(1)(B) of the Code, which satisfies
the requirements of Section 414(p)(1)(A) of the Code (a "Qualified Domestic
Relations Order"). During the lifetime of a Non-Employee Director, only the
Non-Employee Director personally (or the Non-Employee Director's personal
representative or attorney-in-fact) or the alternate payee named in a Qualified
Domestic Relations Order may exercise the Non-Employee Director's rights under
the Plan. The Non-Employee Director's Beneficiary may exercise a Non-Employee
Director's rights to the extent they are exercisable under the Plan following
the death of the Non-Employee Director.
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<PAGE> 55
ARTICLE VI.
GENERAL PROVISIONS
6.01 AMENDMENT AND TERMINATION OF PLAN.
(a) AMENDMENT. The Board shall have complete power and
authority to amend the Plan at any time as it deems necessary or
appropriate and no approval by the stockholders of the Company or by
any other person, committee or entity of any kind shall be required to
make any amendment; provided, however, that the Board shall not,
without the requisite affirmative approval of stockholders of the
Company, make any amendment which requires stockholder approval under
any applicable law, including Rule 16b-3 or the Code, unless such
compliance, if discretionary, is no longer desired. No termination or
amendment of the Plan may, without the consent of the Non-Employee
Director to whom any Option shall theretofore have been granted under
the Plan, adversely affect the right of such individual under such
Option. For the purposes of this section, an amendment to the Plan
shall be deemed to have the affirmative approval of the stockholders of
the Company if such amendment shall have been submitted for a vote by
the stockholders at a duly called meeting of such stockholders at which
a quorum was present and the majority of votes cast with respect to
such amendment at such meeting shall have been cast in favor of such
amendment, or if the holders of outstanding stock having not less than
a majority of the outstanding shares consent to such amendment in
writing in the manner provided under the Company's bylaws.
(b) TERMINATION. The Board shall have the right and the power
to terminate the Plan at any time. If the Plan is not earlier
terminated, the Plan shall terminate when all shares authorized under
the Plan have been issued. No Option shall be granted under the Plan
after the termination of the Plan, but the termination of the Plan
shall not have any other effect and any Option outstanding at the time
of the termination of the Plan may be exercised after termination of
the Plan at any time prior to the expiration date of such Option to the
same extent such award would have been exercisable if the Plan had not
been terminated.
6.02 NO RIGHT TO CONTINUE AS DIRECTOR. Neither the Plan nor any
action taken hereunder shall be construed as giving any Non-Employee Director
any right to be retained as a Director, or to limit in any way the right of the
stockholders of the Company to remove such person as a Director.
6.03 COMPLIANCE WITH RULE 16b-3. It is intended that the Plan be
established and operated so as to qualify for the exemption from Section 16 of
the Exchange Act available under Rule 16b-3, and so that the Non-Employee
Director receiving Options hereunder will qualify as "disinterested" under Rule
16b-3 for purposes of administering other stock option plans of the Company. If
any provision of the Plan would not comply with Rule 16b-3 if applied as
written, such provision shall not have effect as written and shall be given
effect so as to comply with Rule 16b-3, as determined by the Board. The Board
is authorized to amend the Plan and to make any such modifications to Option
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<PAGE> 56
Agreements to comply with Rule 16b-3, as it may be amended from time to time,
and to make any other such amendments or modifications as it deems necessary or
appropriate to better accomplish the purposes of the Plan in light of any
amendments made to Rule 16b-3.
6.04 SECURITIES LAW RESTRICTIONS. The shares of Company Common
Stock issuable pursuant to the terms of any Options granted under the Plan may
not be issued by the Company without registration or qualification of such
shares under the Securities Act of 1933, as amended, or under various state
securities laws or without an exemption from such registration requirements.
Unless the shares to be issued under the Plan have been registered and/or
qualified as appropriate, the Company shall be under no obligation to issue
shares of Company Common Stock upon exercise of an Option unless and until such
time as there is an appropriate exemption available from the registration or
qualification requirements of federal or state law as determined by the Company
in its sole discretion. The Company may require any person who is granted an
award hereunder to agree with the Company to represent and agree in writing
that if such shares are issuable under an exemption from registration
requirements, the shares will be "restricted" securities which may be resold
only in compliance with applicable securities laws, and that such person is
acquiring the shares issued upon exercise of the Option for investment, and not
with the view toward distribution.
6.05 CAPTIONS. The captions (i.e., all section headings) used in
the Plan are for convenience only, do not constitute a part of the Plan, and
shall not be deemed to limit, characterize or affect in any way any provisions
of the Plan, and all provisions of the Plan shall be construed as if no
captions have been used in the Plan.
6.06 SEVERABILITY. Whenever possible, each provision in the Plan
and every Option at any time granted under the Plan shall be interpreted in
such a manner as to be effective and valid under applicable law, but if any
provision of the Plan or any Option at any time granted under the Plan shall be
held to be prohibited or invalid under applicable law, then (a) such provision
shall be deemed amended to accomplish the objectives of the provision as
originally written to the fullest extent permitted by law and (b) all other
provisions of the Plan and every other Option at any time granted under the
Plan shall remain in full force and effect.
6.07 CHOICE OF LAW. All determinations made and actions taken
pursuant to the Plan shall be governed by the laws of Michigan and
construed in accordance therewith.
-8-
<PAGE> 57
<TABLE>
<S><C>
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
WITH- FOR ALL
FOR HOLD EXCEPT FOR AGAINST ABSTAIN
1. Election of Directors. / / / / / / 2. Approval of the Amendment to / / / / / /
the Company's 1993 Stock
Options Plan.
GARY A. SHIFFMAN AND RONALD L. PIASECKI 3. Approval of the Amendment to FOR AGAINST ABSTAIN
the Company's 1993 Non- / / / / / /
NOTE: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR Employee Director Stock
NOMINEE, MARK THE "FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH Option Plan.
THAT NOMINEES NAME. YOUR SHARES SHALL BE VOTED FOR THE REMAINING
NOMINEES.
RECORD DATE SHARES: 4. The above-appointed proxies
are authorized to vote upon all
matters incidental to the
conduct of the Annual Meeting
and such other business as
may properly come before the
Annual Meeting in accordance
with their best judgement.
Please be sure to sign and date this Proxy____________ Date_______ Mark box at right if comments or address
change have been noted on the reverse side / /
of this card.
____Shareholder sign here________________Co-owner sign here________
</TABLE>
DETACH CARD
SUN COMMUNITIES, INC.
Dear Shareholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Corporation that require your immediate attention and approval. These are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your rights to
vote your shares.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it an return your proxy vote in the enclosed
postage paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Sun Communities, Inc.
SUN COMMUNITIES, INC.
31700 MIDDLEBELT ROAD, SUITE 145
FARMINGTON HILLS, MICHIGAN 48334
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS ON JULY 23, 1996.
The undersigned hereby appoints Milton M. Shiffman and Gary A. Shiffman, or
either of them, as attorneys and proxies of the undersigned shareholder, with
full power of substitution, to vote on behalf of the undersigned and in his or
her name and stead, all shares of the common stock of Sun Communities, Inc.,
(the "Company") which the undersigned would be entitled to vote if personally
present at the Company's Annual Meeting of Shareholders to be held at the
Radisson Plaza Hotel, 1500 Town Center, Southfield, Michigan 48075, on Tuesday,
July 23, 1996, and at any adjournments thereof.
The undersigned shareholder acknowledges receipt of the notice of Annual
Meeting and Proxy Statement dated June 3, 1996.
The giving of the Proxy does not affect the right of the undersigned
shareholder to vote in person should the undersigned shareholder attend the
Annual Meeting. This Proxy may be revoked at any time before it is voted.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH
PROPOSAL.
PLEASE MARK, DATE, SIGN, AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES OF
AMERICA.
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