<PAGE> 1
FORM 10-K/A
(AMENDMENT NO. 1)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 1-12616
SUN COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)
STATE OF MARYLAND 38-2730780
State of Incorporation I.R.S. Employer I.D. No.
31700 MIDDLEBELT ROAD
SUITE 145
FARMINGTON HILLS, MICHIGAN 48334
(248) 932-3100
(Address of principal executive offices and telephone number)
Securities Registered Pursuant to Section 12(b) of the Act:
COMMON STOCK, PAR VALUE $.01 PER SHARE
Securities Registered Pursuant to Section 12(g) of the Act:
NONE
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
[X]
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
X Yes No
--- ---
As of March 6, 2000, the aggregate market value of the Registrant's
voting stock held by non-affiliates of the Registrant was approximately
$482,828,018 based on the closing sales price of $29.00 on such date using
beneficial ownership of stock rules adopted pursuant to Section 13 of the
Securities Exchange Act of 1934 to exclude voting stock owned by directors and
officers of the Registrant, some of whom may not be held to be affiliates upon
judicial determination.
As of March 6, 2000, there were 17,467,417 shares of the Registrant's
common stock issued and outstanding.
<PAGE> 2
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors, executive officers and other key employees of Sun
Communities, Inc. (the "Company"), their ages and their positions and offices
are set forth in the following table.
<TABLE>
<CAPTION>
NAME AGE OFFICE
- ---- --- ------
<S> <C> <C>
Gary A. Shiffman................................. 45 Chief Executive Officer, President and Director
Paul D. Lapides.................................. 45 Director
Clunet R. Lewis.................................. 53 Director
Ronald L. Piasecki............................... 61 Director
Ted J. Simon..................................... 69 Director
Arthur A. Weiss.................................. 51 Director
</TABLE>
GARY A. SHIFFMAN is the President and Chief Executive Officer, and has
been an executive officer of the Company 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 16 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 Sun
Home Services, Inc. ("Home Services"), Sun Management, Inc. ("Sun Management"),
Sun QRS, Inc. ("Sun QRS"), Sun Florida QRS, Inc. ("Sun Florida QRS"), and Sun
Water Oak Golf, Inc. ("Sun Golf"). Mr. Shiffman is the 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 the Company 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 served in various capacities, including as 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 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 ("JRH&W"), which represents the Company in various
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<PAGE> 3
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.
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>
Gary A. Shiffman................................. 45 Chief Executive Officer and President
Jeffrey P. Jorissen.............................. 55 Senior Vice President, Treasurer, Chief Financial
Officer and Secretary
Brian W. Fannon.................................. 51 Senior Vice President and Chief Operating
Officer
Jonathan M. Colman............................... 44 Senior Vice President - Acquisitions
</TABLE>
Background information for 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.
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 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 and the Chief Executive Officer of
Home Services.
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.
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<PAGE> 4
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, 1999, 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.
ITEM 11. 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 $100,000 during the fiscal year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL
------
COMPENSATION LONG TERM COMPENSATION
------------ ----------------------
RESTRICTED
STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) AWARDS($) COMPENSATION($)
- --------------------------- ---- --------- -------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Gary A. Shiffman, 1999 $355,666 $175,000 25,000 0 $5,552(2)
Chief Executive Officer and 1998 $350,000 $175,000 25,000 $2,559,375(1) $29,412(2)
President................................ 1997 $250,000 $175,000 0 0 $17,588(2)
Jeffrey P. Jorissen,
Senior Vice President, Treasurer, 1999 $240,000 $120,000 10,000 0 $3,664(2)
Chief Financial Officer and 1998 $199,500 $99,750 20,000 $1,706,250(3) $19,608(2)
Secretary................................ 1997 $190,000 $95,000 0 0 $11,702(2)
Brian W. Fannon, 1999 $325,000 $162,500 0 0 0
Senior Vice President and Chief 1998 $210,000 $170,000 5,000 $853,125(4) 0
Operating Officer........................ 1997 $250,000 $150,000 0 0 0
1999 $130,000 $30,000 5,000 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
</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, 1999, the value of
such restricted shares (as determined in accordance with the rules
promulgated by the Securities and Exchange Commission) was
$2,414,062.50. Mr. Shiffman receives any dividends paid on such
restricted shares.
(2) Dividend 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, 1999, the value of
such restricted shares (as determined in accordance with the rules
promulgated by the Securities and Exchange Commission) was
$1,609,375.00. Mr. Jorissen receives any dividends paid on such
restricted shares.
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<PAGE> 5
(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, 1999, the value of such
restricted shares (as determined in accordance with the rules
promulgated by the Securities and Exchange Commission) was $804,687.50.
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, 1999, the value of such
restricted shares (as determined in accordance with the rules
promulgated by the Securities and Exchange Commission) was $482,812.50.
Mr. Colman receives any dividends paid on such restricted shares.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS TABLE
===================================================================================================================================
SHARES % OF TOTAL
UNDERLYING OPTIONS/SARS
OPTIONS/SARS GRANTED TO EXERCISE POTENTIAL REALIZABLE VALUE AT
GRANTED EMPLOYEES PRICE EXPIRATION ASSUMED ANNUAL RATES OF STOCK PRICE
NAME IN 1999 IN 1999 ($/SH.) DATE APPRECIATION FOR OPTION TERM
-----------------------------------------
5% 10%
($) ($)
===================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Gary A. Shiffman 25,000 29.59% $30.03 12/15/09 $472,147 $1,196,470
===================================================================================================================================
Jeffrey P. Jorissen 10,000 11.83% $30.03 12/15/09 $188,859 $478,588
===================================================================================================================================
Brian W. Fannon 0 N/A N/A N/A N/A N/A
===================================================================================================================================
Jonathan M. Colman 5,000 5.92% $30.03 12/15/09 $94,429 $239,294
===================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES AND
FISCAL YEAR-END OPTION/SAR VALUES TABLE
====================================================================================================================================
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
IN 1999 VALUE NOT NOT
NAME RECEIVED EXERCISABLE EXERCISABLE EXERCISABLE EXERCISABLE
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Gary A. Shiffman(2) 0 N/A 325,000 75,000 $1,565,168 $213,457
====================================================================================================================================
Jeffrey P. Jorissen(3) 0 N/A 109,167 13,333 $765,193 $14,381
====================================================================================================================================
Brian W. Fannon(4) 0 N/A 33,333 1,667 $214,937 $0
====================================================================================================================================
Jonathan M. Colman(5) 0 N/A 39,167 5,833 $250,406 $7,191
====================================================================================================================================
</TABLE>
(1) Assumes a value equal to the difference between the closing sales price
on December 31, 1999, which was $32.1875 per share, and the exercise
price of in-the-money options.
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<PAGE> 6
(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; (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; and (e) 25,000 stock
options granted December 15, 1999 pursuant to the Employee Option Plan
with an exercise price of $30.03 per share, which options must be
exercised by December 15, 2009.
(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; (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; and (f) 10,000 stock options granted December 15, 1999
pursuant to the Employee Option Plan with an exercise price of $30.03
per share, which options must be exercised by December 15, 2009.
(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; (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; (e) 5,000 stock options
granted December 15, 1999 pursuant to the Employee Option Plan with an
exercise price of $30.03 per share, which options must be exercised by
December 15, 2009.
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, 1999 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, 1999, the Committee sought to
ensure that executive officers were rewarded for long term strategic
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<PAGE> 7
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 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.
CEO Compensation
During the fiscal year ended December 31, 1999, Gary A. Shiffman served
in the capacity of Chief Executive Officer of the Company. Under Mr. Shiffman's
leadership, the Company's funds from operations increased by more than 14.1% in
1999 as compared to 1998, and the Company continued its growth by acquiring an
additional nine (9) 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, 1999. Pursuant to this
employment agreement, Mr. Shiffman was paid a salary of $355,666 and received
incentive compensation of $175,000 on the basis of the Company's performance.
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 1999
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 initial term of five years ending December 31,
2003. Pursuant to his employment
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<PAGE> 8
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, 1999, Ted J. Simon, Paul D. Lapides, Clunet R.
Lewis and Ronald L. Piasecki each earned directors' fees of $16,000. Although
Arthur A. Weiss earned director's fees of $16,000 for services during the fiscal
year ended December 31, 1999, he declined such fees.
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<PAGE> 9
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, 1999. This line graph assumes a $100 investment on December 31,
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.
[LINE CHART]
-SUN COMMUNITIES, INC. -REIT INDUSTRY INDEX -NYSE MARKET INDEX
<TABLE>
<CAPTION>
Fiscal Year Ending: 1994 1995 1996 1997 1998 1999
----- ----- ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C>
Sun Communities 100.00 123.86 173.21 190.69 198.16 191.98
REIT Industry Index 100.00 116.76 153.87 172.72 149.90 165.05
NYSE Market Index 100.00 129.66 156.20 205.49 244.52 267.75
</TABLE>
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<PAGE> 10
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 2000, 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>
Gary A. Shiffman 1,324,191(2) 7.29%
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Jeffrey P. Jorissen 284,723.5(3) 1.61%
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Brian W. Fannon 104,474.25(4) *
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Jonathan M. Colman 68,667(5) *
31700 Middlebelt Road
Suite 145
Farmington Hills, Michigan 48334
Ted J. Simon 9,999(6) *
32000 Northwestern Highway
Farmington Hills, Michigan 48334
Paul D. Lapides 10,499(7) *
1000 Chastain Road
Kennesaw, Georgia 30144
Clunet R. Lewis 26,499(8) *
2000 Town Center
Suite 690
Southfield, Michigan 48075
Ronald L. Piasecki 58,094(9) *
4927 Stariha Drive
Muskegon, Michigan 49441
Arthur A. Weiss 35,999(10) *
One Woodward Avenue
Suite 2400
Detroit, Michigan 48226
LaSalle Advisors Capital Management, Inc. (11) 1,222,690 6.99%
200 East Randolph Drive
Chicago, Illinois 60601
European Investors Inc. (12) 1,889,329 10.80%
</TABLE>
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<PAGE> 11
<TABLE>
<CAPTION>
===============================================================================================================
AMOUNT AND NATURE OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OUTSTANDING SHARES(1)
- ------------------------------------ -------------------- ---------------------
<S> <C> <C>
FMR Corp. 984,100 5.62%
82 Devonshire Street
Boston, MA 02109(13)
1,087,200 6.21%
Wellington Management Company, LLP
75 State Street
Boston, MA 02109 (14)
===============================================================================================================
All current executive officers and directors as a 1,923,145.75(15) 10.33%
group (9 persons)
===============================================================================================================
</TABLE>
* Less than one percent (1%) of the outstanding shares.
(1) In accordance with SEC regulations, the percentage calculations are
based on 17,497,677 shares of Common Stock issued and outstanding as of
March 31, 2000 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, 2000 by each individual or
group listed.
(2) Includes 326,617 Common OP Units convertible into shares of Common
Stock and 333,334 shares of Common Stock which may be acquired pursuant
to options exercisable within sixty days of March 31, 2000. Does not
include shares or Common OP Units held by other family members as to
which beneficial ownership is disclaimed.
(3) Includes 100,000 Common OP Units convertible into shares of Common
Stock and 115,834 shares of Common Stock which may be acquired pursuant
to options exercisable within sixty days of March 31, 2000. Does not
include shares held by other family members as to which beneficial
ownership is disclaimed.
(4) Includes 30,000 Common OP Units convertible into shares of Common Stock
and 35,000 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 2000.
(5) Includes 7,500 Common OP Units convertible into shares of Common Stock
and 41,667 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 2000.
(6) Includes 7,499 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 2000.
(7) Includes 6,999 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 2000.
(8) Includes 20,000 Common OP Units convertible into shares of Common Stock
and 6,499 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 2000.
(9) Includes 17,000 Common OP Units convertible into shares of Common Stock
and 5,999 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 2000. Includes
13,889 Common OP Units convertible into shares of Common Stock held by
Aspen Group, a Michigan co-partnership, which are attributable to Mr.
Piasecki because of his 25% general partnership interest in Aspen
Group. Includes 20,986 Common OP Units convertible into shares of
Common Stock held by Aspen Group-KC, a Michigan co-partnership, which
are attributable to Mr. Piasecki because of his 25% general partnership
interest in Aspen Group-KC.
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<PAGE> 12
(10) Includes 30,000 Common OP Units convertible into shares of Common Stock
and 5,999 shares of Common Stock which may be acquired pursuant to
options exercisable within sixty days of March 31, 2000.
(11) According to the Schedule 13G filed with the SEC for Calendar year
1999, this ownership includes shares held by LaSalle Investment
Management, Inc. ("LaSalle") and LaSalle Investment Management
(Securities) Limited Partnership ("LIMS"), which is a Maryland limited
partnership, the limited partner of which is LaSalle and the general
partner of which is LaSalle Investment Management (Securities), Inc., a
Maryland corporation, the sole stockholder of which is LaSalle. LaSalle
and LIMS, 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 158,850 shares of
Common Stock,(ii) shared power to vote or to direct the vote of 0
shares of Common Stock, (iii) sole power to dispose or to direct the
disposition of 158,850 shares of Common Stock, and (iv) shared power to
dispose or to direct the disposition of 201,400 shares of Common Stock;
and (b) LIMS has the: (i) sole power to vote or direct the vote of
230,000 shares of Common Stock, (ii) shared power to vote or to direct
the vote of 593,310 shares of Common Stock, (iii) sole power to dispose
or to direct the disposition of 208,200 shares of Common Stock; and
(iv) shared power to dispose or to direct the disposition of 654,240
shares of Common Stock.
(12) According to the Schedule 13G filed with the SEC for calendar year
1999, (a) European Investors Inc. has: (i) the sole power to vote or
direct the vote of 278,730 shares of Common Stock, (ii) shared power to
vote or to direct the vote of 151,500 shares of Common Stock, (iii)
sole power to dispose or to direct the disposition of 340,229 shares of
Common Stock, and (iv) shared power to dispose or to direct the
disposition of 102,300 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 1,290,899 shares of
Common Stock and sole power to dispose or to direct the disposition of
1,446,800 shares of Common Stock. Such Schedule 13G did not include a
business address for European Investors Inc.
(13) According to the Schedule 13G filed with the SEC for calendar year
1999, FMR Corp. has the sole power to vote or direct the vote of
515,800 shares of Common Stock and the sole power to dispose or to
direct the disposition of 984,100 shares of Common Stock.
(14) According to the Schedule 13G filed with the SEC for calendar year
1999, Wellington Management company, LLP has the sole power to vote or
direct the vote of 216,100 shares of Common Stock and the sole power to
dispose or to direct the disposition of 1,087,200 shares of Common
Stock.
(15) Includes 565,992 Common OP Units convertible into shares of Common
Stock and 558,830 shares of Common Stock which may be acquired pursuant
to options exercisable within sixty days of March 31, 2000.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1999, 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.
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>
Gary A. Shiffman 170,000 $5,397,500
Clunet R. Lewis 20,000 $635,000
Ronald L. Piasecki 17,000 $539,750
</TABLE>
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<PAGE> 13
<TABLE>
<S> <C> <C>
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>
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, 1999 was $11,523,753. As of March 31, 2000, the amount outstanding
under the Shiffman Notes was approximately $11,126,382. 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, 1999 were $266,349, $159,419 and $106,540, respectively. As of March
31, 2000, 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 $266,296, $0 and $106,518, 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, and
Arthur A. Weiss is a director of Bingham. The Company provides financing to
Bingham pursuant to a subordinated debt facility consisting of a $4 million term
loan, bearing interest at the rate of 9.75% per annum (the "Term Loan"), and a
$28 million demand line of credit, bearing interest at a rate of 235 basis
points over LIBOR (the "Line of Credit" and, together with the Term Loan, the
"Subordinated Debt Facility"). In the discretion of the Company, the Line of
Credit can bulge up to $50 million for a limited period of time. The Term Loan
matures on September 30, 2004 and, at 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 Company has a subordinated security interest in all of the assets
of Bingham to secure the Line of Credit.
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 a preferred financing source to home purchasers and home
owners in the Company's manufactured housing communities. This arrangement was
modified in April 1999 to provide that the Company shall receive a fee of 1% of
the loans originated in
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<PAGE> 14
the Company's manufactured home communities rather than their original
arrangement which was to receive an annual fee based on average loan balances.
In connection with this arrangement, the Company received $243,354 for the year
ended December 31, 1999. Furthermore, 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 $37,500 for the year ended December 31, 1999 as reimbursement for general and
administrative expenses.
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: April 28, 2000
SUN COMMUNITIES, INC.
By /s/ Gary A. Shiffman
---------------------------
Gary A. Shiffman, President
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