<PAGE> 1
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 (Amendment No. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[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)
SUN COMMUNITIES, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] 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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<PAGE> 2
SUN COMMUNITIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 10, 1999
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of Sun
Communities, Inc. (the "Company") will be held at the Novi Hilton, 21111
Haggerty Road, Novi, Michigan 48375, on Thursday, June 10, 1999, at 11:00 a.m.,
local time, for the following purposes:
(1) To elect three Directors to serve until the Annual Meeting of
Shareholders to be held in 2002 or until their successors
shall have been duly elected and qualified;
(2) To consider and vote upon the adoption of the Company's Second
Amended and Restated 1993 Stock Option Plan, which increases
the number of shares of Common Stock available under the Plan
and amends certain other technical provisions of the Plan; and
(3) 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
April 13, 1999, 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: April 20, 1999
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.
<PAGE> 3
SUN COMMUNITIES, INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 10, 1999
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 election of the three
nominees for the Board; (b) FOR the adoption of the Company's Second Amended and
Restated 1993 Stock Option Plan; and (c) at the discretion of Milton M. Shiffman
and Gary A. Shiffman, the Board's designated representatives for the Annual
Meeting, with respect to such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof. 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 April 30, 1999.
TIME AND PLACE OF MEETING
The Annual Meeting will be held at the Novi Hilton, 21111 Haggerty
Road, Novi, Michigan 48375, on Thursday, June 10, 1999, 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 April 13, 1999
are entitled to notice of and to vote at the Annual Meeting or at any
adjournments. As of that date, the Company had 17,304,305 shares of Common Stock
issued, outstanding and entitled to vote held by 1,208 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
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."
<PAGE> 4
INCORPORATION BY REFERENCE
To the extent this Proxy Statement has been or will be specifically
incorporated by reference into any filing by the Company under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the
sections of this Proxy Statement entitled "Report of the Compensation Committee
on Executive Compensation" and "Shareholder Return Performance Presentation"
shall not be deemed to be so incorporated unless specifically otherwise provided
in any such filing.
ANNUAL REPORT
Shareholders are concurrently being furnished with a copy of the
Company's 1998 Annual Report which contains its audited financial statements as
of December 31, 1998. In addition, copies of the Company's Annual Report on Form
10-K for the year ended December 31, 1998, as filed with the Securities and
Exchange Commission (the "SEC"), will be sent to any shareholder, without
charge, upon written request to Sun Communities Investor Services, 31700
Middlebelt Road, Suite 145, Farmington Hills, Michigan 48334.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The first matter expected to be considered at the Annual Meeting will
be the election of three 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 2002 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 BOARD RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES NAMED BELOW.
PROXIES SOLICITED BY THE BOARD WILL BE VOTED "FOR" THE NOMINEES UNLESS
INSTRUCTIONS TO WITHHOLD OR TO THE CONTRARY ARE GIVEN.
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............................... 70 Chairman of the Board
Gary A. Shiffman................................. 44 Chief Executive Officer, President and
Director (Nominee)
Paul D. Lapides.................................. 44 Director
Clunet R. Lewis.................................. 52 Director
Ronald L. Piasecki............................... 60 Director (Nominee)
Ted J. Simon..................................... 68 Director
Arthur A. Weiss.................................. 50 Director (Nominee)
</TABLE>
2
<PAGE> 5
MILTON M. SHIFFMAN is the Chairman of the Board, and has been an
executive officer of Sun since its inception. In his 20 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 15 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. Mr. Shiffman is
a Chairman of the Board and Secretary of Bingham Financial Services Corporation
("Bingham"), which is a specialized financial services company providing
financing for manufactured homes. Bingham was initially formed as an affiliate
of Sun but became publicly held in November 1997.
PAUL D. LAPIDES has been a director since December 1993. Mr. Lapides is
Director of the Corporate Governance Center in the Coles College of Business at
Kennesaw State University, where he is a professor of management and
entrepreneurship. He is the author of more than 80 articles and books on real
estate and management. 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. ("Eltrax"), an
international provider of information technology services supporting internet
and private network E-commerce applications. Mr. Lewis currently serves as
Secretary and General Counsel of Eltrax. 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.
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 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.
TED J. SIMON has been a director since December 1993. Since February
1999, Mr. Simon has been a principal in Grand Sakwa Simon Properties LLC, a
commercial real estate development company located in Farmington Hills,
Michigan. From 1981 until January 1999, Mr. Simon was the Vice President-Real
Estate (Midwest Group) of The Great Atlantic & Pacific Tea Company, Inc. and Mr.
Simon was a Vice President-Real Estate and a director of Borman's Inc., a wholly
owned subsidiary of The Great Atlantic & Pacific Tea Company, Inc. Mr. Simon is
also a director of Clarkston State Bank, a wholly-owned subsidiary of Clarkston
Financial Corporation.
ARTHUR A. WEISS has been a director since October 1996. Since 1976, Mr.
Weiss has practiced law with the law firm of Jaffe, Raitt, Heuer & Weiss,
Professional Corporation
3
<PAGE> 6
("JRH&W"), which represents the Company in various matters. Mr. Weiss is
currently a shareholder, director and Vice President of JRH&W. Mr. Weiss is also
a director of Bingham.
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 2002. A second class will hold office for a term expiring at the annual
meeting of shareholders to be held in 2000 and a third class will hold office
for a term expiring at the annual meeting of shareholders to be held in 2001.
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, Ronald L. Piasecki
and Arthur A. Weiss 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 2002. Ted J. Simon and Paul D. Lapides have terms
expiring in 2000 and Milton M. Shiffman and Clunet R. Lewis have terms expiring
in 2001. 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 third year following the year of their election.
The Board met four (4) times during 1998 and took various actions
pursuant to resolutions adopted by unanimous written consent. All directors
attended at least 75% of the meetings of the Board and each committee on which
they served, except that Milton M. Shiffman only attended 50% of the meetings of
the Board.
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, Clunet R. Lewis and
Arthur A. Weiss. The Audit Committee held two (2) formal meetings during the
fiscal year ended December 31, 1998.
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 Company's 1993
Stock Option Plan (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 Ronald L. Piasecki. During
the fiscal year ended December 31, 1998, the Compensation Committee held one (1)
formal meeting and took various actions pursuant to resolutions adopted by
unanimous written consent. 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 did not hold any formal meetings in 1998.
4
<PAGE> 7
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 Charter; (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, 1998 but did
take various actions pursuant to resolutions adopted by unanimous written
consent.
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.
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............................... 70 Chairman of the Board of Directors
Gary A. Shiffman................................. 44 Chief Executive Officer and President
Jeffrey P. Jorissen.............................. 54 Senior Vice President, Treasurer, Chief
Financial Officer and Secretary
Brian W. Fannon.................................. 50 Senior Vice President and Chief Operating
Officer
Jonathan M. Colman............................... 43 Senior Vice President - Acquisitions
</TABLE>
Background information for Milton M. Shiffman and Gary A. Shiffman is
provided under "Election of Directors," above. Background information for the
other three 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 sixteen 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. 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. Mr. Jorissen is the interim President and Chief
Financial Officer of Bingham.
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
regional manager and became President in 1986. Mr. Fannon was
5
<PAGE> 8
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, and Mr. Fannon has again been serving as the
chairman of the Michigan Mobile Home Commission since 1998. 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 sixteen 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.
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.
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 $100,000 during the fiscal year ended December 31, 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
------
COMPENSATION
------------
LONG TERM COMPENSATION
----------------------
RESTRICTED
STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) AWARDS($) COMPENSATION($)
- --------------------------- ---- --------- -------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Gary A. Shiffman, 1998 $350,000 $175,000 25,000 $2,559,375(1) $29,412(2)
Chief Executive Officer and President.... 1997 $250,000 $175,000 0 0 $17,588(2)
1996 $210,000 $50,000 300,000 0 0
Jeffrey P. Jorissen, 1998 $199,500 $99,750 20,000 $1,706,250(3) $19,608(2)
Senior Vice President, Treasurer, Chief 1997 $190,000 $95,000 0 0 $11,702(2)
Financial Officer and 1996 $160,125 $35,000 37,500 0 0
Secretary................................
Brian W. Fannon, 1998 $210,000 $170,000 5,000 $853,125(4) 0
Senior Vice President and Chief Operating 1997 $250,000 $150,000 0 0 0
Officer.................................. 1996 $160,225 $50,000 15,000 0 0
Jonathan M. Colman, 1998 $122,000 $40,000 7,500 $511,875(5) 0
Senior Vice President-Acquisitions....... 1997 $112,000 $45,000 0 0 0
1996 $105,000 $12,000 12,500 0 0
</TABLE>
- --------------------------
(1) On June 5, 1998, the Company granted Mr. Shiffman 75,000 shares of
Common Stock, which are subject to the terms and conditions of a
Restricted Stock Award Agreement. As of December 31, 1998, the value of
such restricted shares (as determined in accordance with the rules
promulgated by the Securities and Exchange Commission) was $2,610,938.
Mr. Shiffman receives any dividends paid on such restricted shares.
(2) Distribution from Sun Home Services, Inc.
(3) On June 5, 1998, the Company granted Mr. Jorissen 50,000 shares of
Common Stock , which are subject to the terms and conditions of a
Restricted Stock Award Agreement. As of December 31, 1998, the value of
such restricted shares (as determined in accordance with the rules
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<PAGE> 9
promulgated by the Securities and Exchange Commission) was $1,740,625.
Mr. Jorissen receives any dividends paid on such restricted shares.
(4) On June 5, 1998, the Company granted Mr. Fannon 25,000 shares of Common
Stock, which are subject to the terms and conditions of a Restricted
Stock Award Agreement. As of December 31, 1998, the value of such
restricted shares (as determined in accordance with the rules
promulgated by the Securities and Exchange Commission) was $870,313.
Mr. Fannon receives any dividends paid on such restricted shares.
(5) On June 5, 1998, the Company granted Mr. Colman 15,000 shares of Common
Stock, which are subject to the terms and conditions of a Restricted
Stock Award Agreement. As of December 31, 1998, the value of such
restricted shares (as determined in accordance with the rules
promulgated by the Securities and Exchange Commission) was $522,188.
Mr. Colman receives any dividends paid on such restricted shares.
OPTION/SAR GRANTS TABLE
<TABLE>
<CAPTION>
===============================================================================================================================
SHARES % OF TOTAL POTENTIAL REALIZABLE VALUE AT
UNDERLYING OPTIONS/SARS EXERCISE ASSUMED ANNUAL RATES OF
OPTIONS/SARS GRANTED TO PRICE EXPIRATION STOCK PRICE APPRECIATION FOR
GRANTED EMPLOYEES ($/SH.) DATE OPTION TERM
NAME IN 1998 IN 1998
--------------------------------------
5% 10%
($) ($)
================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Gary A. Shiffman 25,000 20.83% $33.75 1/14/08 $531,500 $1,341,500
- --------------------------------------------------------------------------------------------------------------------------------
Jeffrey P. Jorissen 20,000 16.67% $33.75 1/14/08 $425,200 $1,073,200
- --------------------------------------------------------------------------------------------------------------------------------
Brian W. Fannon 5,000 4.17% $33.75 1/14/08 $106,300 $268,300
- --------------------------------------------------------------------------------------------------------------------------------
Jonathan M. Colman 7,500 6.25% $33.75 1/14/08 $159,450 $402,450
================================================================================================================================
</TABLE>
AGGREGATED OPTION/SAR EXERCISES AND
FISCAL YEAR-END OPTION/SAR VALUES TABLE
<TABLE>
<CAPTION>
==================================================================================================================================
NO. OF UNEXERCISED OPTIONS/SARS VALUE OF UNEXERCISED
AT IN-THE-MONEY OPTIONS/SARS AT
FISCAL YEAR-END FISCAL YEAR-END(1)
--------------------------------------------------------------------
SHARES
ACQUIRED
ON EXERCISE VALUE NOT
NAME IN 1998 RECEIVED EXERCISABLE NOT EXERCISABLE EXERCISABLE EXERCISABLE
==================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Gary A. Shiffman(2) 0 N/A 258,333 116,667 $2,034,792 $635,209
- ----------------------------------------------------------------------------------------------------------------------------------
Jeffrey P. Jorissen(3) 0 N/A 99,166 13,334 $1,007,897 $14,167
- ----------------------------------------------------------------------------------------------------------------------------------
Brian W. Fannon(4) 30,000 $337,500(6) 31,666 3,334 $299,001 $3,542
- ----------------------------------------------------------------------------------------------------------------------------------
Jonathan M. Colman(5) 0 N/A 35,000 5,000 $338,375 $5,313
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Assumes a value equal to the difference between the closing sales price
on December 31, 1998, which was $34.8125 per share, and the exercise
price of in-the-money options.
(2) Includes: (a) 50,000 stock options granted December 21, 1993 pursuant
to the Employee Option Plan with an exercise price of $20.00 per share,
which options must be exercised by December 21, 2003; (b) 25,000 stock
options granted March 11, 1996 pursuant to the Employee Option Plan
with an exercise price of $26.625 per share, which options must be
exercised by March 11, 2006; (c) 275,000 stock options granted October
28, 1996 pursuant to the Employee Option Plan with an exercise price of
$28.6375 per share, which options must be exercised by October 28,
2006;
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<PAGE> 10
and (d) 25,000 stock options granted January 14, 1998 pursuant to the
Employee Option Plan with an exercise price of $33.75 per share, which
options must be exercised by January 14, 2008.
(3) Includes: (a) 20,000 stock options granted December 1, 1993 pursuant to
the Employee Option Plan with an exercise price of $20.00 per share,
which options must be exercised by December 1, 2003; (b) 35,000 stock
options granted May 23, 1995 pursuant to the Employee Option Plan with
an exercise price of $22.00 per share, which options must be exercised
by May 23, 2005; (c) 15,000 stock options granted February 26, 1996
pursuant to the Employee Option Plan with an exercise price of $27.00
per share, which options must be exercised by February 26, 2006; (d)
22,500 stock options granted October 28, 1996 pursuant to the Employee
Option Plan with an exercise price of $28.6375 per share, which options
must be exercised by October 28, 2006; and (e) 20,000 stock options
granted January 14, 1998 pursuant to the Employee Option Plan with an
exercise price of $33.75 per share, which options must be exercised by
January 14, 2008.
(4) Includes: (a) 15,000 stock options granted July 18, 1994 pursuant to
the Employee Option Plan with an exercise price of $22.50 per share,
which options must be exercised by July 18, 2004; (b) 10,000 stock
options granted February 26, 1996 pursuant to the Employee Option Plan
with an exercise price of $27.00 per share, which options must be
exercised by February 26, 2006; (c) 5,000 stock options granted October
28, 1996 pursuant to the Employee Option Plan with an exercise price of
$28.6375 per share, which options must be exercised by October 28,
2006; and (d) 5,000 stock options granted January 14, 1998 pursuant to
the Employee Option Plan with an exercise price of $33.75 per share,
which options must be exercised by January 14, 2008.
(5) Includes: (a) 20,000 stock options granted July 18, 1994 pursuant to
the Employee Option Plan with an exercise price of $22.50 per share,
which options must be exercised by July 18, 2004; (b) 7,500 stock
options granted February 26, 1996 pursuant to the Employee Option Plan
with an exercise price of $27.00 per share, which options must be
exercised by February 26, 2006; (c) 5,000 stock options granted October
28, 1996 pursuant to the Employee Option Plan with an exercise price of
$28.6375 per share, which options must be exercised by October 28,
2006; and (d) 7,500 stock options granted January 14, 1998 pursuant to
the Employee Option Plan with an exercise price of $33.75 per share,
which options must be exercised by January 14, 2008.
(6) Assumes a value equal to the difference between the closing sales price
on June 2, 1998 (i.e., the date the option was exercised), which was
$33.75 per share, and the exercise price of the options
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 Ronald L. Piasecki. 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 one (1) formal meeting during the fiscal year ended December
31, 1998 and took various actions pursuant to resolutions adopted by unanimous
written consent.
In reviewing the compensation to be paid to the Company's executive
officers during the fiscal year ended December 31, 1998, 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, restricted stock awards 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, restricted stock awards and stock option awards are
intended to reward exceptional performances. Benchmarks for determining base
salary and bonus levels include targeted funds from operations levels, strength
of the balance
8
<PAGE> 11
sheet and creation of shareholder value. Restricted stock awards and 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. Four executive officers received restricted stock awards
under the Employee Option Plan in 1998.
CEO Compensation
During the fiscal year ended December 31, 1998, 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 extraordinary item and minority
interest increased by more than 12% in 1998 as compared to 1997, and the Company
continued its growth by acquiring an additional 10 manufactured housing
communities in 1998. See "Shareholder Return Performance Presentation."
As of December 31, 1996, 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, 1998. Pursuant to this
employment agreement, Mr. Shiffman was paid a salary of $350,000 and received
incentive compensation of $175,000 on the basis of the Company's performance. In
addition, Mr. Shiffman received a restricted stock award of 75,000 shares of
Common Stock on June 5, 1998. Based upon market studies of pay levels for chief
executive officers of publicly traded REITs (conducted by the National
Association of Real Estate Investment Trusts), the Committee believes that Mr.
Shiffman's total compensation in 1998 was competitive with the appropriate level
for his position, particularly in view of his performance. See "Certain
Transactions."
Respectfully submitted,
Ted J. Simon
Ronald L. Piasecki
EMPLOYMENT AGREEMENTS
Gary A. Shiffman
The Company has entered into an employment agreement with Gary A.
Shiffman pursuant to which Mr. Shiffman serves as Chief Executive Officer and
President of the Company. Mr. Shiffman's employment agreement is for an initial
term of five years ending December 31, 2001. Pursuant to his employment
agreement, Mr. Shiffman is paid an annual base salary of $350,000, which will be
increased by an annual cost of living adjustment beginning with calendar year
1999. In addition to his base salary and in accordance with the terms of his
employment agreement, Mr. Shiffman is entitled to incentive compensation of up
to 50% of his then base salary in accordance with the incentive compensation
formula set forth in the employment agreement. A copy of Mr. Shiffman's
employment agreement is attached as an exhibit to the Company's periodic filings
under the Exchange Act.
The non-competition clauses of Mr. Shiffman's employment agreement
preclude him from engaging, directly or indirectly: (a) in the real estate
business or any ancillary business of the Company during the period he is
employed by the Company; and (b) in the manufactured housing community business
or any ancillary business of the Company for a period of eighteen months
following the period he is employed by the Company. However, Mr. Shiffman's
employment agreement does allow 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 employed by the
Company.
Jeffrey P. Jorissen
The Company has entered into an employment agreement with Jeffrey P.
Jorissen pursuant to which Mr. Jorissen serves as Senior Vice President, Chief
Financial Officer, Treasurer and Secretary of the Company. Mr. Jorissen's
employment agreement is for an
9
<PAGE> 12
initial term of five years ending December 31, 2003. Pursuant to his employment
agreement, Mr. Jorissen must devote his entire productive time, ability and
attention to the Company and, in consideration for his services, Mr. Jorissen
will be paid an annual base salary of $240,000, which will be increased by an
annual cost of living adjustment beginning with calendar year 2000. In addition
to this base salary, Mr. Jorissen is entitled to incentive compensation of up to
50% of his then base salary in accordance with the incentive compensation
formula set forth in the employment agreement. A copy of Mr. Jorissen's
employment agreement is attached as an exhibit to the Company's periodic filings
under the Exchange Act.
The non-competition clauses of Mr. Jorissen's employment agreement
preclude him from engaging, directly or indirectly, in the real estate business
or any ancillary business of the Company during the period he is employed by the
Company and for a period of eighteen months thereafter.
Brian W. Fannon
The Company has entered into an employment agreement with Brian W.
Fannon pursuant to which Mr. Fannon serves as Chief Operating Officer of the
Company and Sun Home Services, Inc. has entered into an employment with Brian W.
Fannon pursuant to which Mr. Fannon serves as Chief Executive Officer of Home
Services. Each of Mr. Fannon's employment agreements is for an initial term of
three years ending December 31, 2001. Pursuant to his employment agreements, Mr.
Fannon must devote his entire productive time, ability and attention to the
Company and Home Services. In consideration for his services, Mr. Fannon will be
paid an annual base salary of $100,000 from the Company and Mr. Fannon will be
paid an annual base salary of $225,000 from Home Services, each of which will be
increased by 5% per year beginning with calendar year 2000. In addition to this
base salary, Mr. Fannon may be entitled to incentive compensation of up to 50%
of his then base salary in accordance with an executive bonus plan to be
established by the Company. Copies of Mr. Fannon's employment agreements are
attached as exhibits to the Company's periodic filings under the Exchange Act.
The non-competition clauses of Mr. Fannon's employment agreements
preclude him from engaging, directly or indirectly, in the real estate business
or any ancillary business of the Company during the period he is employed by the
Company and for a period of twelve months thereafter.
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, 1998, Ted J. Simon, Paul D. Lapides, Clunet R.
Lewis and Ronald L. Piasecki each earned directors' fees of $15,000. Although
Arthur A. Weiss earned director's fees of $15,000 for services during the fiscal
year ended December 31, 1998, he declined such fees.
10
<PAGE> 13
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 38 publicly
traded real estate investment trusts, for the five (5) year period ending on
December 31, 1998. This line graph assumes a $100 investment on January 1, 1994,
a reinvestment of dividends and actual increase of the market value of the
Company's Common Stock relative to an initial investment of $100. The
comparisons in this table are required by the SEC and are not intended to
forecast or be indicative of possible future performance of the Company's Common
Stock.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
----- ----- ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C>
SUN COMMUNITIES 100.00 120.85 149.69 209.33 230.46 239.48
REIT INDUSTRY INDEX 100.00 93.48 109.15 143.84 161.47 140.14
NYSE MARKET INDEX 100.00 98.06 127.15 153.16 201.50 239.77
</TABLE>
11
<PAGE> 14
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors, executive officers and beneficial owners of
more than 10% of the Company's capital stock to file reports of ownership and
changes of ownership with the SEC and the New York Stock Exchange. Based solely
on its review of the copies of such reports received by it, and written
representations from certain reporting persons, the Company believes, that
during the year ended December 31, 1998, its directors, executive officers and
beneficial owners of more than 10% of the Company's Common Stock have complied
with all filing requirements applicable to them, except that Paul Lapides, a
director of the Company, was ten (10) days late in filing a Form 5.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1999, 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 782,042(2) 4.44%
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Gary A. Shiffman 1,237,523(3) 6.92%
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Jeffrey P. Jorissen 274,578(4) 1.57%
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Brian W. Fannon 122,744(5) *
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Jonathan M. Colman 64,500(6) *
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Ted J. Simon 7,166(7) *
32000 Northwestern Highway
Farmington Hills, Michigan 48334
Paul D. Lapides 7,166(8) *
1000 Chastain Road
Kennesaw, Georgia 30144
Clunet R. Lewis 23,166(9) *
2000 Town Center
Suite 690
Southfield, Michigan 48075
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
=================================================================================================================
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING SHARES(1)
- ------------------------------------ -------------------- ---------------------
<S> <C> <C>
Ronald L. Piasecki 54,927(10) *
4927 Stariha Drive
Muskegon, Michigan 49441
Arthur A. Weiss 52,832(11) *
One Woodward Avenue
Suite 2400
Detroit, Michigan 48226
LaSalle Advisors Capital Management, Inc. (12) 1,310,600 7.58%
200 East Randolph Drive
Chicago, Illinois 60601
European Investors Inc. (13) 1,585,630 9.17%
All current executive officers and directors as a 2,626,644(14) 14.08%
group (10 persons)
=================================================================================================================
</TABLE>
* Less than one percent (1%) of the outstanding shares.
(1) In accordance with SEC regulations, the percentage calculations are
based on 17,299,305 shares of Common Stock issued and outstanding as of
March 31, 1999 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 March 31, 1999 by each individual or
group listed.
(2) Includes 311,794 Common OP Units convertible into shares of Common
Stock and 18,666 shares of Common Stock which may be acquired pursuant
to options exercisable within sixty days of March 31, 1999. Does not
include shares or Common OP Units held by other family members as to
which beneficial ownership is disclaimed.
(3) Includes 306,617 Common OP Units convertible into shares of Common
Stock and 266,666 shares of Common Stock which may be acquired pursuant
to options exercisable within sixty days of March 31, 1999. Does not
include shares or Common OP Units held by other family members as to
which beneficial ownership is disclaimed.
(4) Includes 100,000 Common OP Units convertible into shares of Common
Stock and 105,833 shares of Common Stock which may be acquired pursuant
to options exercisable within sixty days of March 31, 1999. Does not
include shares held by other family members as to which beneficial
ownership is disclaimed.
(5) Includes 30,000 Common OP Units convertible into shares of Common Stock
and 33,333 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 1999.
(6) Includes 7,500 Common OP Units convertible into shares of Common Stock
and 37,500 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 1999.
(7) Includes 4,666 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 1999.
(8) Includes 3,666 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 1999.
(9) Includes 20,000 Common OP Units convertible into shares of Common Stock
and 3,166 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 1999.
13
<PAGE> 16
(10) Includes 17,000 Common OP Units convertible into shares of Common Stock
and 2,832 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 1999. 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.
(11) Includes 50,000 Common OP Units convertible into shares of Common Stock
and 2,832 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 1999.
(12) According to the Schedule 13G filed with the SEC for calendar year
1998, this ownership includes shares held by LaSalle Advisors Capital
Management, Inc. ("LaSalle") and ABKB/LaSalle Securities Limited
Partnership ("ABKB"), which 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, each registered
investment advisors, have different advisory clients. According to the
Schedule 13G filed by this group, (a) LaSalle has the: (i) sole power
to vote or direct the vote of 196,350 shares of Common Stock,(ii)
shared power to vote or to direct the vote of 22,950 shares of Common
Stock, (iii) sole power to dispose or to direct the disposition of
196,350 shares of Common Stock, and (iv) shared power to dispose or to
direct the disposition of 223,950 shares of Common Stock; and (b) ABKB
has the: (i) sole power to vote or direct the vote of 231,500 shares of
Common Stock, (ii) shared power to vote or to direct the vote of
613,270 shares of Common Stock, (iii) sole power to dispose or to
direct the disposition of 209,700 shares of Common Stock; and (iv)
shared power to dispose or to direct the disposition of 680,600 shares
of Common Stock.
(13) According to the Schedule 13G filed with the SEC for calendar year
1998, (a) European Investors Inc. has: (i) the sole power to vote or
direct the vote of 190,130 shares of Common Stock, (ii) shared power to
vote or to direct the vote of 225,500 shares of Common Stock, (iii)
sole power to dispose or to direct the disposition of 251,630 shares of
Common Stock, and (iv) shared power to dispose or to direct the
disposition of 161,000 shares of Common Stock; and (b) EII Realty
Securities Inc., a wholly-owned subsidiary of European Investors Inc.,
has the sole power to vote or direct the vote of 991,300 shares of
Common Stock and sole power to dispose or to direct the disposition of
1,173,000 shares of Common Stock. Such Schedule 13G did not include a
business address for European Investors Inc.
(14) Includes 877,786 Common OP Units convertible into shares of Common
Stock and 479,160 shares of Common Stock which may be acquired pursuant
to options exercisable within sixty days of March 31, 1999.
CERTAIN TRANSACTIONS
On December 15, 1998, certain directors, employees and consultants of
the Company purchased approximately $25.5 million of newly issued shares of
common stock of the Company and common OP Units in Sun Communities Operating
Limited Partnership at a price of $31.75 per share/OP Unit in accordance with
the Company's 1998 Stock Purchase Plan (the "Purchase Plan"). These purchases
were financed by 5-year personal loans from Bank One Corporation, as agent, and
participants in the Purchase Plan are personally responsible for repayment of
their respective loans. In order to facilitate purchases under the Purchase
Plan, the Company guaranteed repayment of all of the loans and the participants
have agreed to fully indemnify the Company against all liabilities arising under
such guaranty. The following executive officers and/or directors of the Company
purchased the following number of OP Units under the Purchase Plan:
<TABLE>
<CAPTION>
NAME NO. OF OP UNITS PURCHASE PRICE
---- --------------- --------------
<S> <C> <C>
Milton M. Shiffman 170,000 $5,397,500
Gary A. Shiffman 170,000 $5,397,500
Clunet R. Lewis 20,000 $635,000
Ronald L. Piasecki 17,000 $539,750
Arthur A. Weiss 50,000 $1,587,500
Jeffrey P. Jorissen 100,000 $3,175,000
Brian W. Fannon 30,000 $952,500
Jonathan M. Colman 7,500 $238,125
</TABLE>
14
<PAGE> 17
During 1998, the law firm of Jaffe, Raitt, Heuer & Weiss, P.C. acted as
general counsel to the Company and represented the Company in various matters.
Arthur A. Weiss, a director of the Company, is a shareholder of such firm.
In 1995, the Company issued Mr. Gary A. Shiffman, the Company's Chief
Executive Officer and President, 400,000 shares of Common Stock for $8,650,000
(the "Purchase Price"). The Purchase Price is evidenced by three (3) separate
10-year promissory notes that bear interest at a rate 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 (the "Promissory Notes"). Two of the
Promissory Notes are secured by shares of Common Stock (the "Secured Shares")
and/or OP Units (the "Secured Units") and the last Promissory Note is unsecured
but fully recourse to Mr. Shiffman. Mr. Shiffman's personal liability on the
secured Promissory Notes 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 Secured Shares and/or the Secured Units to the then
outstanding principal balance of the Promissory Notes. The Promissory Notes
provide for quarterly interest only payments and provide that all cash
distributions and dividends paid to Mr. Gary Shiffman on 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.
In April 1997, the Operating Partnership loaned Mr. Shiffman an
additional $2,600,391 on terms substantially identical to the terms of the other
loan to Mr. Shiffman, as described above, and such loan is secured by 80,000
shares of Common Stock (the promissory notes evidencing this loan, together with
the Promissory Notes, are hereinafter referred to as the "Shiffman Notes"). The
largest aggregate indebtedness outstanding under the Shiffman Notes since
January 1, 1998 was $11,458,078. As of March 1, 1999, the amount outstanding
under the Shiffman Notes was approximately $11,208,798. Copies of the Shiffman
Notes have been filed as exhibits to the Company's periodic filings under the
Exchange Act.
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 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 described above. The largest
aggregate indebtedness outstanding under 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 since
January 1, 1998 were $266,147, $159,688 and $106,459, respectively. As of March
1, 1999, the total amounts outstanding under 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 $264,166, $158,479 and $105,666, respectively.
Certain officers and directors of the Company are also officers and/or
directors of Bingham: Gary A. Shiffman is a director and officer of Bingham,
Arthur A. Weiss is a director of Bingham, and Jeffrey P. Jorissen is an officer
of Bingham. The Company provides financial assistance to Bingham pursuant to a
subordinated debt facility consisting of a $4 million term loan (the "Term
Loan") and a $6 million five year revolving credit facility (the "Line of
Credit", and together with the Term Loan, the "Subordinated Debt Facility") as
well as a $12 million demand line of credit (the "Demand Line of Credit"). The
Term Loan matures on September 30, 2004 and bears interest at the rate of 9.75%
per annum. Anytime after September 30, 2000, the Term Loan may be paid in full
or in part without payment of any prepayment fee or penalty. The Line of Credit
will terminate, unless extended by the Company and Bingham, on September 30,
2002 (the "Line of Credit Due Date") and the Line of Credit bears interest at
the
15
<PAGE> 18
per annum rate equal to the prime rate of interest plus 125 basis points. The
Demand Line of Credit bears interest at a rate of 140 basis points over LIBOR.
In connection with the Subordinated Debt Facility, Bingham issued
common stock purchase warrants to the Company to purchase up to 400,000 shares
of Bingham common stock at its initial public offering price of $10 per share.
The Company also entered into an arrangement with Bingham whereby the Company
offers Bingham as the only preferred financing source to home purchasers and
home owners in the Company's manufactured housing communities. For its services,
the Company receives an annual fee based on average loan balances, which fee was
$100,585 for the year ended December 31, 1998, and Bingham granted the Company
options to purchase 330,000 shares of Bingham common stock, which options vest
in eight equal annual amounts beginning in January 2001. Bingham paid the
Company a fee of $75,000 for the year ended December 31, 1998 as reimbursement
for general and administrative expenses.
APPROVAL OF THE SECOND AMENDED AND
RESTATED 1993 STOCK OPTION PLAN
(PROPOSAL 2)
The second matter to be considered at the Annual Meeting will be the
approval of the Second Amended and Restated 1993 Stock Option Plan (the
"Restated Plan") which, in addition to minor technical changes, increases the
number of shares of Common Stock which may be issued under the Restated Plan
from nine percent (9%) of the aggregate number of shares of Common Stock
outstanding (i.e., 1,557,387 shares of Common Stock as of the date of this Proxy
Statement) to ten percent (10%) of the aggregate number of shares of Common
Stock outstanding (assuming the conversion into shares of Common Stock of all
Common OP Units in Sun Communities Operating Limited Partnership held by limited
partners) (i.e., 2,010,784 shares of Common Stock as of the date of this Proxy
Statement). The Restated Plan is set forth in Exhibit A attached to this Proxy
Statement.
The Restated 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 1993 Stock Option Plan was adopted by the Board and approved by the
shareholders on November 19, 1993. The amended and restated 1993 Stock Option
Plan was adopted by the Board on May 20, 1996 and approved by the shareholders
on July 23, 1996. The Restated Plan was adopted by the Board on March 19, 1999,
subject to shareholder approval, and will remain in effect until all shares
authorized under the terms of the Restated 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 Restated Plan
is to provide certain of the Company's key employees and consultants 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 following is a brief summary of the material features of the
Restated Plan, and is qualified in its entirety by reference to the Restated
Plan.
GENERAL
Pursuant to the Restated Plan, eligible participants may be awarded,
among other stock based awards: (a) options to acquire shares of Common Stock;
(b) stock appreciation rights; and/or (c) shares of Common Stock, subject to
certain restrictions. On April 13, 1999, the closing sales price of the Common
Stock was $32.125.
16
<PAGE> 19
ADMINISTRATION
The Restated Plan is administered by the Committee. The Administrator
has full power and authority to prescribe, amend and rescind rules and
procedures governing administration of the Restated Plan.
ELIGIBLE PARTICIPANTS
The Administrator may grant awards under the Restated 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. In addition, the Administrator may
grant awards under the Restated Plan to non-employees who, in the judgment of
the Administrator, render significant services to the Company. At present, there
are approximately 100 persons who are eligible to participate in the Restated
Plan. It is not possible to estimate the number of additional persons who will
become eligible to participate in the Restated Plan.
STOCK OPTION AWARDS
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. Notwithstanding the foregoing, the exercise
price for all options must be no less than the fair market value of the Common
Stock on the date of grant, except that the exercise price can be 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
awarded under the Restated Plan may be either non-qualified stock options
("NQOs") or incentive stock options ("ISOs"). 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 Restated 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 the Tandem SAR, but not both.
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 Restated 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
three years from the date of grant.
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OTHER STOCK AND STOCK BASED AWARDS
The Administrator is authorized under the terms of the Restated 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 Restated 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 Restated 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 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 Restated Plan
(except for an ISO) to be exercised more than 90 days after the employment
termination of the participant or after its expiration date.
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.
NEW PLAN BENEFITS
The grant of awards under the Restated Plan is subject to the
discretion of the Administrator. The Administrator has not granted any awards
under the Restated Plan since the Board approved the Restated Plan on March 19,
1999. Accordingly, the Company cannot currently determine the number of shares
of Common Stock that may be subject to awards under the Restated Plan in the
future.
FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE RESTATED 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 Restated Plan is not qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended (the "Code") 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.
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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 exercise 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 exercise price, and the Company will not be entitled to any deduction.
NONQUALIFIED OPTIONS AND PERFORMANCE BASED OPTIONS
The grant of an 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 exercise 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 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
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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, Section 162(m) of the Code limits 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.
THE BOARD RECOMMENDS A VOTE "FOR" THE RESTATED PLAN. PROXIES SOLICITED
BY THE BOARD WILL BE VOTED "FOR" THE RESTATED PLAN UNLESS INSTRUCTIONS TO
WITHHOLD OR TO THE CONTRARY ARE GIVEN.
GENERAL INFORMATION
INDEPENDENT PUBLIC ACCOUNTANTS
The Board selected PricewaterhouseCoopers LLP. as the Company's
independent public accountants for the fiscal year ended December 31, 1998.
Representatives of PricewaterhouseCoopers LLP 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
PricewaterhouseCoopers LLP will also serve the Company in the same capacity
during the fiscal year ending December 31, 1999.
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 December 28, 1999. 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
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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 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
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: April 20, 1999
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EXHIBIT A
SUN COMMUNITIES, INC.
SECOND 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 May 20, 1996 and by the
Company's stockholders on July 23, 1996. The Second Amended and Restated Plan
was adopted by the Board on, and is effective as of, March 19, 1999, subject to
approval of the Company's stockholders on or before March 19, 2000, 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.
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)
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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.
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.
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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.
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 deem necessary or advisable. The Administrator may,
with
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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 ten percent (10%) of
the total number of shares of Company Common Stock outstanding from time to time
(assuming the conversion into shares of Company Common Stock of all Common OP
Units in Sun Communities Operating Limited Partnership held by limited
partners): (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;
provided, however, that, in no event, shall the number of shares of Company
Common Stock which may be issued upon the exercise of Incentive Stock Options
exceed 1,000,000 shares, subject to adjustment in accordance with Section 4.03.
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.
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
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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 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
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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.
(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 Stock
Appreciation Right granted under the Plan shall be set forth in an Award
Agreement.
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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.
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.
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(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 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
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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 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.
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.
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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 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.
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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 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. Except as otherwise provided in this
Section 11.05, 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. Notwithstanding the foregoing, or any other provision of this Plan,
a Participant who holds Non-Qualified Stock Options may transfer such Options to
his or her spouse, lineal ascendants, lineal descendants, or to a duly
established trust for the benefit of one or more of these individuals. Options
so transferred may thereafter be transferred only to the Participant who
originally received the Options or to an individual or trust to whom the
Participant could have initially transferred the Option pursuant to this Section
11.05. Options which are
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transferred pursuant to this Section 11.05 shall be exercisable by the
transferee according to the same terms and conditions as applied to the
Participant.
11.06 GENERAL RESTRICTION. Notwithstanding anything to the contrary
herein, the Company shall have no obligation or liability to deliver any shares
of Company Common Stock under the Plan or to make any other distribution of
benefits under the Plan unless such delivery or distribution would comply with
all applicable laws, rules and regulations, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act and the rules and
regulations of the New York Stock Exchange.
11.07 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.
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
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authorized to amend the Plan and to make any such 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.
A-13
<PAGE> 37
SUN COMMUNITIES, INC.
31700 Middlebelt Road, Suite 146
Farmington Hills, Michigan 48334
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS ON JUNE 10, 1999
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 Novi
Hilton, 21111 Haggerty Road, Novi, Michigan 48375 on Thursday, June 10, 1999,
and at any adjournments thereof.
The undersigned shareholder acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement dated April 20, 1999.
The giving of this 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.
THE 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 VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES OF AMERICA.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
<PAGE> 38
<TABLE>
<S><C>
- ------------------------------------- 1. Election of Directors. For All With- For All
SUN COMMUNITIES, INC. Nominees hold Except
- ------------------------------------- GARY A. SHIFFMAN [ ] [ ] [ ]
RONALD L. PIASECKI
ARTHUR A. WEISS
NOTE: If you do not wish your shares voted "FOR" a particular nominee,
mark the "For All Except" box and strike a line through that nominee's name.
Your shares will be voted "For" the remaining nominees.
CONTROL NUMBER:
RECORD DATE SHARES: For Against Abstain
2. Approval of the Second Amended and Restated [ ] [ ] [ ]
1993 Stock Option Plan.
3. 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 an address change or comment has been [ ]
- --------------------------------------------------- noted on the reverse side of this card.
- --------------------------------------------------
Shareholder sign here Co-owner sign here
DETACH CARD DETACH CARD
</TABLE>
SUN COMMUNITIES, INC.
Dear Shareholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are issues related to the management and operation of the 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 right to
vote your shares.
Please mark the boxes on the proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Shareholders, June
10, 1999.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Sun Communities, Inc.
