1
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Manufactured Home Communities, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(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)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11(1):
- --------------------------------------------------------------------------------
(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:
- --------------------------------------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
2
MANUFACTURED HOME COMMUNITIES, INC.
TWO NORTH RIVERSIDE PLAZA
CHICAGO, IL 60606
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 13, 1997
------------------
You are cordially invited to attend the 1997 Annual Meeting of Stockholders
("Meeting") of MANUFACTURED HOME COMMUNITIES, INC., a Maryland corporation (the
"Company"), to be held at One North Franklin Street, Third Floor, Chicago,
Illinois, on Tuesday, May 13, 1997, at 10:00 A.M. Central Daylight Time, for the
following purposes:
(1) To elect four (4) directors of the Board of Directors to terms expiring
in 2000;
(2) To consider and vote upon the adoption of the Company's 1997
Non-Qualified Employee Stock Purchase Plan; and
(3) To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
Only stockholders of record at the close of business on March 19, 1997,
will be entitled to vote at the Meeting or any adjournment thereof.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING IN PERSON, PLEASE
SIGN AND DATE THE ENCLOSED PROXY WHICH IS BEING SOLICITED BY THE BOARD OF
DIRECTORS, AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
SUSAN OBUCHOWSKI
SUSAN OBUCHOWSKI, Secretary
3
MANUFACTURED HOME COMMUNITIES, INC.
TWO NORTH RIVERSIDE PLAZA
CHICAGO, IL 60606
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors (the "Board") of Manufactured Home Communities, Inc.
("MHC" or the "Company") of proxies to be voted at the Annual Meeting of
Stockholders (the "Meeting") to be held on Tuesday, May 13, 1997, and any
adjournment or postponement thereof, the cost of which is anticipated to be
nominal and will be borne by the Company. In addition to solicitation by mail,
employees of the Company may solicit proxies by telegraph, telephone, telecopy
and personal interviews. Brokers and other nominees who held stock of the
Company on March 19, 1997, will be asked to contact the beneficial owners of the
shares which they hold.
This Proxy Statement and accompanying proxy are being mailed to
stockholders commencing on or about March 28, 1997. The proxy, if properly
executed and returned, will be voted according to your instructions, but it may
be revoked at any time before it is exercised by giving notice of revocation in
writing to the Secretary of the Company, by duly executing and delivering a
later dated proxy or by voting in person at the Meeting. The mere presence at
the Meeting of a stockholder who appointed a representative does not itself
revoke the appointment.
Only stockholders of record at the close of business on March 19, 1997 (the
"Record Date") will be entitled to vote at the Meeting. On such date 25,006,944
shares of common stock, par value $.01 ("Common Stock"), were outstanding. Each
share of Common Stock outstanding on the Record Date entitles the holder thereof
to one vote upon each matter to be voted upon at the Meeting. The presence in
person or by proxy of stockholders entitled to cast a majority of all the votes
entitled to be cast at the Meeting shall constitute a quorum. Abstentions and
broker non-votes are counted for purposes of determining the presence or absence
of a quorum for the transaction of business. If, however, there is not a quorum
at the Meeting, the stockholders entitled to vote at the Meeting, whether
present in person or represented by proxy, shall only have the power to adjourn
the Meeting until such time as there is a quorum. At such time as there is a
quorum, the Meeting will reconvene without notice to stockholders, other than an
announcement at the prior adjournment of the Meeting, unless the adjournment is
for more than 120 days after the original Record Date or a new record date has
been set.
If a proxy in the form enclosed is duly executed and returned, the shares
of Common Stock represented thereby will be voted in accordance with the
specifications made thereon by the stockholder. If no such specifications are
made, such proxy will be voted (i) for election of the four nominees for
directors to terms expiring in 2000; (ii) for the adoption of the Company's 1997
Non-Qualified Employee Stock Purchase Plan; and (iii) at the discretion of
Samuel Zell and David A. Helfand, the Board's designated representatives for the
Meeting, with respect to such other business as may properly come before the
Meeting or any adjournment thereof.
1996 ANNUAL REPORT
Stockholders are concurrently being furnished with a copy of the Company's
1996 Annual Report which contains its audited financial statements as of
December 31, 1996. Additional copies of the Annual Report and of the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, as filed with
the Securities and Exchange Commission (the "SEC"), may be obtained by
contacting Cynthia McHugh, Senior Vice President -- Investor Relations of the
Company, at
1
4
Two North Riverside Plaza, Suite 800, Chicago, IL 60606, 312-474-1122, and it
will be furnished promptly at no additional expense.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Board consists of ten members. The charter of the Company provides that
the directors of the Company shall be divided into three classes, as nearly
equal in number as possible, with each class having a term of three years. The
Board has nominated Timothy H. Callahan, Donald S. Chisholm, Thomas E. Dobrowski
and John F. Podjasek, Jr. for election to serve as directors of the Company
until the 2000 Meeting and/or until their successors are duly elected and
qualified. Biographical information for each of the nominees is set forth under
the caption "Management." The affirmative vote of a plurality of all votes cast
at the Meeting, if a quorum is present, shall be sufficient to elect the four
directors. Abstentions will have no effect on the outcome of the election of
directors.
Each nominee has consented to be named in this proxy statement and to serve
if elected. All nominees are currently directors. In the event that any nominee
should become unable to serve as a director (which is not anticipated), the
persons designated as representatives will cast votes for the remaining nominees
and for such other person or persons as the Board may recommend.
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.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers and directors of the Company as of March 14, 1997.
NAME AGE POSITION
- ------------------------- --- ------------------------------------------------------------
Samuel Zell 55 Chairman of the Board of Directors (term expires in 1999)
President, Chief Executive Officer and Director (term
David A. Helfand 32 expires in 1999)
Executive Vice President, General Counsel and Assistant
Ellen Kelleher 36 Secretary
Executive Vice President, Chief Financial Officer and
Thomas P. Heneghan 33 Treasurer
Gary W. Powell 56 Executive Vice President -- Operations
President of Realty Systems, Inc., an affiliate of the
Howard Walker 57 Company
Timothy H. Callahan 46 Director (term expires in 1997)
Donald S. Chisholm 62 Director (term expires in 1997)
Thomas E. Dobrowski 53 Director (term expires in 1997)
Louis H. Masotti, Ph.D. 62 Director (term expires in 1998)
John F. Podjasek, Jr. 55 Director (term expires in 1997)
Sheli Z. Rosenberg 55 Director (term expires in 1998)
Michael A. Torres 36 Director (term expires in 1999)
Gary L. Waterman 55 Director (term expires in 1998)
The following is a biographical summary of the experience of the executive
officers and directors of the Company. For information concerning membership on
committees of the Board, see "Committees of the Board of Directors; Meetings"
below.
SAMUEL ZELL has been Chairman of the Board since March 31, 1995 and had
been Chief Executive Officer from March 31, 1995 until August 1996. Mr. Zell had
been Co-Chairman of the Board of the Company from its formation until March 31,
1995. Mr. Zell was a director of Mobile Home Communities, Inc. ("MH Inc."), the
former manager of the Company's manufactured home
2
5
communities, from 1983 until its dissolution in 1993. Mr. Zell is chairman of
the board of directors of Equity Group Investments, Inc. ("EGI"), an investment
company, Equity Financial and Management Company ("EF&M"), a real estate
investment company; American Classic Voyages Co. ("American Classics"), a
provider of overnight cruises in the United States; and Anixter International
Inc. ("Anixter"), a distributor of electrical and cable products. Mr. Zell is
chairman of the board of directors and chief executive officer of Capsure
Holding Corp. ("Capsure"), a specialty property and casualty insurance company.
He is Co-Chairman of the board of directors of Revco D.S., Inc. ("Revco"), owner
of retail drug-stores, and chairman of the board of trustees of Equity
Residential Properties Trust ("Equity Residential"), an equity REIT focused
solely on multifamily residential properties. He is a director of Chart House
Enterprises, Inc., an owner and operator of restaurants; Sealy Corporation
("Sealy"), a manufacturer of mattresses; Quality Food Centers, Inc. ("Quality
Food"), an owner and operator of grocery stores; and TeleTech Holdings, Inc., a
provider of customer care solutions.
DAVID A. HELFAND has been a director of the Company since May 1995;
President of the Company since January 1995; and Chief Executive Officer since
August 1996. Mr. Helfand is also a member of the Company's management committee,
which was created in 1995 and is comprised of the Company's senior executives.
He had been Chief Financial Officer of the Company from December 1992 until
February 1995 and Senior Vice President from March 1994 until January 1995. Mr.
Helfand had been Vice President of the Company from December 1992 until March
1994. Mr. Helfand had been employed by EGI or its subsidiaries from June 1989
until December 1992, most recently as assistant vice president of Equity Asset
Management, Inc. ("EAM"), a real estate services company.
ELLEN KELLEHER has been Executive Vice President and General Counsel of the
Company since March 1997. Ms. Kelleher is also a member of the Company's
management committee. She had been Senior Vice President and General Counsel of
the Company from March 1994 until March 1997. Ms. Kelleher had been a vice
president of the law firm, Rosenberg & Liebentritt, P.C., from January 1993
until December 1995 and is currently Of Counsel to the firm. Ms. Kelleher had
been an associate of Rosenberg & Liebentritt, P.C. from October 1990 until
January 1993.
THOMAS P. HENEGHAN has been Executive Vice President, Chief Financial
Officer and Treasurer of the Company since March 1997. Mr. Heneghan is also a
member of the Company's management committee. Mr. Heneghan had been Vice
President, Chief Financial Officer and Treasurer from February 1995 until March
1997. Mr. Heneghan had been a member of the accounting firm of Greenberg &
Pociask, Ltd. from January 1994 until February 1995. Mr. Heneghan had been vice
president of Capsure from May 1983 until June 1994 and controller of Capsure
from January 1993 until November 1993. Mr. Heneghan had been vice president and
controller of Great American Management and Investment, Inc. ("GAMI") from
December 1993 until December 1994; controller of GAMI from January 1993 until
November 1993 and director of accounting of GAMI from August 1990 until December
1992.
GARY W. POWELL has been Executive Vice President -- Operations of the
Company since May 1995. Mr. Powell is also a member of the Company's management
committee. Mr. Powell had been President -- Northern Division of the Company
from August 1994 until May 1995. Mr. Powell had been President and Chief
Operating Officer of the Company from its formation until August 1994. Mr.
Powell had been with MH Inc. or its predecessors from 1971, serving as president
from 1984. Mr. Powell was a director of the Company from its formation until May
1994.
HOWARD WALKER has been President of Realty Systems, Inc. since March 30,
1995. Realty Systems, Inc. is an affiliate of the Company. Mr. Walker is also a
member of the Company's management committee. Mr. Walker had been a Vice
President of the Company from January 16, 1995 until March 30, 1995. From August
1994 until January 1995, Mr. Walker had been the principal of Walker Realty Co.,
a full-service real estate company. From January 1989 until July 1994, Mr.
Walker had been a principal and partner in The Markin Group, a full-service real
estate company.
3
6
TIMOTHY H. CALLAHAN has been a director of the Company since May 1995. Mr.
Callahan has been chief executive officer of Equity Office Holdings, L.L.C.
since August 1996. Mr. Callahan had been an executive vice president of EGI from
January 1994 until August 1996, and chief financial officer of EGI from November
1994 until August 1996. Mr. Callahan had been an executive vice president --
finance of EAM, from January 1994 until August 1996. He had been senior vice
president -- finance of EAM from July 1992 until January 1994. Mr. Callahan had
been employed by The Edward J. DeBartolo Corporation, a real estate investment
company, from July 1988 until July 1992, most recently serving as vice president
- -- finance.
DONALD S. CHISHOLM has been a director of the Company since March 1993. Mr.
Chisholm is president of Vernon Development Co., the developer of a 650-acre
golf course community, and of Ann Arbor Associates Inc., a real estate
development and management company.
THOMAS E. DOBROWSKI has been a director of the Company since March 1993.
Mr. Dobrowski is the managing director of real estate and alternative
investments of General Motors Investment Management Corporation ("GMIMCo."). Mr.
Dobrowski is a director of Red Roof Inns, Inc., an owner and operator of hotels.
Mr. Dobrowski serves on the partnership committee of Taubman Realty Group
Limited Partnership, the operating partnership of Taubman Centers, Inc., an
equity REIT focused on regional shopping centers.
LOUIS H. MASOTTI, Ph.D., has been a director of the Company since March
1993. Dr. Masotti is professor of management and urban development and director
of the program in real estate management for the Graduate School of Management
of the University of California at Irvine. He is a professor emeritus of
Northwestern University's Kellogg Graduate School of Management.
JOHN F. PODJASEK, JR. has been a director of the Company since March 1994.
Mr. Podjasek is retired. Mr. Podjasek had been employed by Allstate Insurance
Company from 1966 until November 1995, most recently serving as vice president
- -- venture capital and real estate.
SHELI Z. ROSENBERG has been a director of the Company since August 1996.
Mrs. Rosenberg has been chief executive officer and president of EGI since
November 1994. She is a principal in the law firm of Rosenberg & Liebentritt
P.C. Mrs. Rosenberg has been a director of Jacor Communications, Inc., an owner
of radio stations, since 1994 and has been the chairman of its board of
directors since February 1996. Mrs. Rosenberg is a director of Capsure; Falcon
Building Products, Inc., a manufacturer and supplier of building products;
American Classic; Anixter; Quality Food; Sealy; and Revco. She is a trustee of
Equity Residential. Mrs. Rosenberg was a vice president of First Capital Benefit
Administrators, Inc., which filed a petition under the federal bankruptcy laws
on January 3, 1995, which resulted in its liquidation on November 15, 1995.
MICHAEL A. TORRES has been a director of the Company since March 1993. Mr.
Torres has been a principal of ERE Rosen Real Estate Securities, L.L.C., an
investment management firm, since February 1995. Mr. Torres had been employed by
Wilshire Associates Incorporated, an investment consulting firm, from June 1990
until February 1995, most recently serving as a vice president directing real
estate consulting services for its institutional investors.
GARY L. WATERMAN has been a director of the Company since March 1993. Since
1989, Mr. Waterman has been president of Waterman Limited, a real estate service
and investment company that he founded.
COMMITTEES OF THE BOARD OF DIRECTORS; MEETINGS
Meetings: During the year ended December 31, 1996, the Board held 12
meetings. Each of the present directors attended over 75% of the total number of
the meetings of the Board held during the period he or she was a director and of
its committees on which he or she served.
Executive Committee: The Executive Committee of the Board is composed of
Messrs. Zell, Helfand and Chisholm. The Executive Committee has the authority,
within certain parameters set by the Board, to acquire, dispose of and finance
investments for the Company (including the issuance of
4
7
additional limited partnership interests of MHC Operating Limited Partnership
("OP Units")) and execute contracts and agreements, including those related to
the borrowing of money by the Company, and generally exercise all other powers
of the Board except as prohibited by law. During the year ended December 31,
1996, the Executive Committee held one meeting and took various actions pursuant
to resolutions adopted by unanimous written consent.
Compensation Committee: The Compensation Committee of the Board is
composed of Messrs. Chisholm, Masotti and Waterman. The Compensation Committee
determines compensation for the Company's executive officers and it exercises
all powers of the Board in connection with compensation matters, including
incentive compensation and benefit plans. The Compensation Committee also has
the authority to grant stock options, stock appreciation rights and restricted
stock awards in accordance with the 1992 Amended and Restated Stock Option and
Stock Award Plan to the management of the Company and its subsidiaries, other
key employees and consultants. During the year ended December 31, 1996, the
Compensation Committee held one meeting and took various actions pursuant to
resolutions adopted by unanimous written consent.
Audit Committee: The Audit Committee of the Board is composed of Messrs.
Dobrowski, Podjasek and Torres. The Audit Committee makes recommendations
concerning the engagement of independent public accountants, reviews with the
independent public accountants the plans and results of the audit engagement,
approves professional services provided by the Company's independent public
accountants, reviews the independence of the Company's independent public
accountants, considers the range of audit and non-audit fees and reviews the
adequacy of the Company's internal accounting controls. During the year ended
December 31, 1996, the Audit Committee held three meetings.
The Company does not have a Nominating Committee.
5
8
EXECUTIVE COMPENSATION
The following tables show information with respect to the annual
compensation (including option grants) for services rendered to the Company for
the fiscal years ended December 31, 1996, December 31, 1995 and December 31,
1994 by those persons holding the office of chief executive officer and those
persons who were, at December 31, 1996, the other four most highly compensated
executive officers of the Company.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
-------------------------
AWARDS
-------------------------
SECURITIES
ANNUAL COMPENSATION RESTRICTED UNDERLYING
NAME AND ----------------------------- STOCK AWARDS OPTIONS ALL OTHER
PRINCIPAL OCCUPATION(1) YEAR SALARY ($) BONUS ($) ($)(2) GRANTED(#) COMPENSATION(3)
----------------------- ---- ---------- --------- ------------ ---------- ---------------
Samuel Zell.................... 1996 0 0 0 60,000(5) 0
Chairman and Chief 1995 0 0 0 60,000(5) 0
Executive Officer (4) 1994 0 0 0 10,000 0
David A. Helfand............... 1996 250,000 61,252 1,337,248 10,000 9,000
President, Chief Executive 1995 201,021 57,511 57,489 10,000 9,000
Officer and Member of 1994 121,635 16,883 16,868 36,000 5,541
Management Committee (4)
Thomas P. Heneghan............. 1996 200,000 41,014 1,008,986 0 9,000
Executive Vice President, 1995 100,917 47,502 47,498 15,000 9,000
Chief Financial Officer, 1994 0 0 0 6,000 0
Treasurer and Member of
Management Committee
Ellen Kelleher................. 1996 200,000 41,014 744,986 0 9,000
Executive Vice President, 1995 151,104 47,502 47,498 0 9,000
General Counsel and Member 1994 135,000 18,268 18,233 15,000 9,000
of Management Committee
Gary W. Powell................. 1996 200,000 41,014 744,986 0 9,000
Executive Vice President -- 1995 177,917 47,502 47,498 0 9,000
Operations and Member 1994 172,344 13,300 13,299 20,000 6,000
of Management Committee
Howard Walker.................. 1996 200,000 41,014 744,986 0 9,000
President of Realty 1995 140,192 47,502 47,498 15,000 9,000
Systems, Inc. and Member of 1994 0 0 0 0 0
Management Committee
- ---------------
(1) Except for Mr. Zell, positions held as of December 31, 1996.
(2) The total number of shares of Restricted Common Stock held by each named
executive officer and the value of such shares at December 31, 1996, the
last trading date of the year, was as follows:
NUMBER OF SHARES VALUE AT 12/31/96
---------------- -----------------
Samuel Zell.......... 0 $ 0
David A. Helfand..... 64,242 1,493,627
Thomas P. Heneghan... 48,720 1,132,740
Ellen Kelleher....... 36,720 853,740
Gary W. Powell....... 36,720 853,740
Howard Walker........ 36,720 853,740
6
9
The number of shares of Restricted Stock Awards awarded in 1996, which will
vest in their entirety on December 13, 1998 are as follows:
Samuel Zell................................. 0
David A. Helfand............................ 2,784
Thomas P. Heneghan.......................... 1,863
Ellen Kelleher.............................. 1,863
Gary W. Powell.............................. 1,863
Howard Walker............................... 1,863
The number of shares of Restricted Stock Awards awarded in 1996 which will
vest 60% on December 31, 1998, 20% on December 31, 1999, and 20% on December
31, 2000 are as follows:
Samuel Zell................................ 0
David A. Helfand........................... 58,000
Thomas P. Heneghan......................... 44,000
Ellen Kelleher............................. 32,000
Gary W. Powell............................. 32,000
Howard Walker.............................. 32,000
The number of shares of Restricted Stock Awards awarded in 1995, which will
vest in their entirety on December 15, 1997 are as follows:
Samuel Zell................................. 0
David A. Helfand............................ 3,458
Thomas P. Heneghan.......................... 2,857
Ellen Kelleher.............................. 2,857
Gary W. Powell.............................. 2,857
Howard Walker............................... 2,857
The number of Restricted Stock Awards awarded in 1994 which vested in their
entirety on December 16, 1996 are as follows:
Samuel Zell.................................. 0
David A. Helfand............................. 865
Thomas P. Heneghan........................... 0
Ellen Kelleher............................... 935
Gary W. Powell............................... 682
Howard Walker................................ 0
All holders of Restricted Stock receive any dividends paid on such shares.
(3) Includes employer matching contributions and/or profit sharing contributions
to the MHC Advantage Retirement Plan or affiliated company's 401(k) plans.
(4) Mr. Zell was Chief Executive Officer until August 1996 at which time Mr.
Helfand became Chief Executive Officer.
(5) Includes options to purchase 50,000 shares granted to Mr. Zell in lieu of
cash compensation in his capacity as Chairman of the Board and options to
purchase 10,000 shares which are granted to all directors annually.
7
10
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED TO APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OR OPTION TERM
OPTIONS IN FISCAL BASE PRICE EXPIRATION -------------------------
NAME GRANTED(#)(1) YEAR(2) ($/SH) DATE 5% ($)(3) 10% ($)(4)
---- ------------- ---------- ----------- ---------- --------- ----------
Samuel Zell........... 10,000 4.9 18.625 5/07/06 117,132 296,835
50,000 24.5 22.000 12/13/06 691,784 1,753,117
David A. Helfand...... 10,000 4.9 18.625 5/07/06 117,132 296,835
Thomas P. Heneghan.... 0 0 0 -- 0 0
Ellen Kelleher........ 0 0 0 -- 0 0
Gary W. Powell........ 0 0 0 -- 0 0
Howard Walker......... 0 0 0 -- 0 0
- ---------------
(1) One-third of the options granted on May 7, 1996, are exercisable six months
after initial grant, one-third are exercisable one year following such grant
date and one-third are exercisable two years following such grant date.
One-third of the options granted on December 13, 1996, are exercisable one
year after initial grant, one-third are exercisable two years after such
grant date, and one-third are exercisable three years after such grant date.
(2) Does not include options granted to non-employee directors and consultants.
If such grants are included the percentages would be:
Samuel Zell...........................3.2%
16.2%
David A. Helfand......................3.2%
Thomas P. Heneghan...................0.00%
Ellen Kelleher.......................0.00%
Gary W. Powell.......................0.00%
Howard Walker........................0.00%
(3) Assumes stock prices of $30.34 for options expiring May 7, 2006 and $35.84
for options expiring December 13, 2006.
(4) Assumes stock prices of $48.31 for options expiring May 7, 2006 and $57.06
for options expiring December 13, 2006.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
VALUE OF
NUMBER OF UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT OPTIONS AT
ON VALUE FY-END(#) FY-END($)(1)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
---- -------- -------- ------------- -------------
Samuel Zell............................ 0 0 46,665/93,335 274,573/310,427
David A. Helfand....................... 0 0 99,999/22,001 521,493/ 96,757
Thomas P. Heneghan..................... 0 0 21,000/12,000 123,750/ 81,750
Ellen Kelleher......................... 0 0 16,000/ 5,000 44,250/ 16,875
Gary W. Powell......................... 4,000 35,500 60,666/ 3,334 487,748/ 11,252
Howard Walker.......................... 0 0 5,000/10,000 37,500/ 75,000
- ---------------
(1) Assumes a value equal to the year-end stock price of $23.25 less the
exercise price of in-the-money options.
8
11
COMPENSATION OF DIRECTORS
The Company paid each of its non-employee directors an annual fee of
$12,000 in 1996. In addition, directors who serve on the Audit Committee,
Executive Committee or Compensation Committee receive an additional $1,000 per
annum for each committee on which they serve. Committee chairs receive an
additional $500 per annum. Directors who are employees of the Company are not
paid any directors' fees or committee fees. In addition, the Company reimburses
the directors for travel expenses incurred in connection with their activities
on behalf of the Company. Additionally, on the date of the first Board meeting
after each Annual Meeting of Stockholders, each director then in office will
receive a grant of options to purchase 10,000 shares of Common Stock at the
then-current market price.
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
The Compensation Committee members are Messrs. Chisholm, Masotti and
Waterman.
No Compensation Committee interlocking relationships existed during 1996.
Messrs. Zell and Callahan and Mrs. Rosenberg serve as members of the board
of directors of numerous non-public companies owned in whole or in part by Mr.
Zell or his affiliates which do not have compensation committees, and in many
cases, the executive officers of those companies include Messrs. Zell and
Callahan, and Mrs. Rosenberg.
For a description of certain transactions with Board members or their
affiliates, see "Certain Relationships and Related Transactions."
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended, that might incorporate future filings, including this
Proxy Statement, in whole or in part, the Compensation Committee Report on
Executive Compensation presented below and the Performance Graph following such
report shall not be incorporated by reference into any such filings.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board determines the compensation of the
Company's executive officers, including those named in the Summary Compensation
Table. The Compensation Committee believes that the compensation of the
Company's Chief Executive Officer and all of the Company's executive officers
should be both competitive and based on individual and Company performance.
The Company's compensation policy takes into account a review of local and
national peer group salary surveys focusing primarily on the SNL Executive
Compensation Review 1996 for REITs ("SNL Survey") and the National Association
of Real Estate Investment Trusts 1995 Executive Compensation Survey ("NAREIT
Survey"). The SNL Survey and NAREIT Survey contain detailed compensation and
performance data on publicly traded REITs. The Company believes the SNL Survey
and NAREIT Survey provide comparable salary data for the Company. The Company
believes that its compensation levels compare favorably to its peer groups
described in the surveys and targets median to high compensation levels for its
executive officers.
During the fiscal year ended December 31, 1996, there were three major
components of executive compensation: base salary, bonuses, and restricted
stock. This salary structure is designed to attract and retain highly qualified
executives. This is accomplished by providing competitive base salaries and
meaningful incentives, including short-term, mid-term and long-term incentives,
intended to reward performance. Benchmarks for determining base salary and bonus
levels include targeted funds from
9
12
operations ("FFO") levels, strength of the balance sheet, and creation of
stockholder value. Each performance measure carries equal weight.
The Company's overall salary structure is reviewed annually by the
Compensation Committee using the SNL Survey and NAREIT Survey for guidance.
Where salary information is unavailable for a particular position, other
positions having similar responsibilities either within the Company or in
companies of comparable size are used. Salary increases are based both upon each
executive's performance and contribution to the Company.
Further short-term and mid-term incentives for executive officers are
accomplished through the Company's management-by-objective ("MBO") bonus plan.
The MBO bonus plan involves the Company and the executive officer setting goals
for such executive officer at the beginning of each year. The Compensation
Committee established the following bonus ranges for its executive officers
based on salary for 1996:
President and Chief Executive Officer 0 -- 50%
Senior Vice Presidents and Executive Vice
Presidents 0 -- 40%
Vice Presidents 0 -- 30%
In determining the amount of the bonuses for 1996, the following criteria
were taken into account: achieving targeted FFO levels; the strength of the
balance sheet; and creation of stockholder value. The achievement of targeted
FFO levels included gains achieved through reduction of expenses, and increases
in revenue achieved through increases in rental rates and increases in occupancy
at the Company's communities. The strength of the balance sheet included
maintenance of appropriate debt-to-equity levels and maintaining and improving
asset value. Increases in stockholder value included improving the performance
of the Common Stock in the long term and maintaining and improving the dividend
yield on the Common Stock. The Compensation Committee believes such goals were
met or exceeded during 1996. As a result, an additional bonus pool was made
available to acknowledge employees' contribution to the overall performance of
the Company. All executive officers received an additional bonus.
It is the Compensation Committee's intention to tie executive officers',
including the Chief Executive Officer's, performance to the continued
performance of the Company. The Company accomplishes this by awarding each
executive officer 50% of his MBO bonus in restricted Common Stock. Requiring
executive officers to "invest" 50% of their bonuses in Common Stock facilitates
better alignment of such executive officer's compensation with the Common
Stock's performance. These restricted stock awards accomplish the Company's
objective of mid-term incentives.
To provide long-term incentives for executive officers and as a means to
retain qualified executives, the Company created the 1996 Restricted Stock Award
Program (the "1996 Awards"). The 1996 Awards of restricted stock to executive
officers are subject to 10-15 year restrictions unless certain performance
benchmarks are achieved by the Company. Should the Company have FFO growth
exceeding a targeted compounded annual growth rate over a five-(5) year period
through December 31, 2000, the restrictions are subject to release at the end of
such 5 years. Should the performance benchmark not be achieved at the end of 5
years, the awards will remain restricted for an additional 5 to 10 years
depending upon when the performance benchmarks are achieved. In addition to the
restrictions, executive officers could vest in 60% of their respective 1996
Awards on December 31, 1998, and an additional 20% on December 31, 1999 and on
December 31, 2000, respectively. The Compensation Committee recognizes that
while the MBO bonus program provides rewards for positive short-term and
mid-term performance, the interests of stockholders are best served by giving
key employees the opportunity to participate in the appreciation of the
Company's Common Stock over the long term.
10
13
At the end of 1996, the Compensation Committee granted options to purchase
Common Stock to many of the Company's employees. The executive officers of the
Company, except for Mr. Zell, Chairman of the Board, were not granted options.
During 1996 Mr. Zell, the Chairman of the Board from March 31, 1995 until
August 1996, was granted options to purchase 50,000 shares which was determined
to be fair and competitive based on local and national surveys and given the
fact that he took no salary. Mr. Zell and Mr. Helfand also were granted options
to purchase 10,000 shares each in their capacities as directors as were all
other directors of the Company.
The Compensation Committee believes that the compensation program properly
rewards its executive officers for achieving improvements in the Company's
performance and serving the interest of its stockholders.
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Code"),
generally disallows a Federal income tax deduction for compensation in excess of
$1 million paid in any year to any of the Company's executive officers listed in
the Summary Compensation Table who are employed by the Company on the last day
of a taxable year. Section 162(m), however, does allow a deduction for payments
of "performance based" compensation, the material terms of which have been
approved by stockholders. Awards under the Company's MBO bonus plan may, but
need not, satisfy the requirements of Section 162(m). The Company believes that
because it qualifies as a REIT under the Code and therefore is not subject to
Federal income taxes, the payment of compensation that does not satisfy the
requirements of Section 162(m) will not affect the Company's taxable income,
although to the extent that compensation does not qualify for deduction under
Section 162(m), a larger portion of stockholder distributions may be subject to
Federal income taxation as dividend income rather that return of capital. The
Company does not believe that Section 162(m) will materially affect the
taxability of stockholders' distributions, although no assurance can be given in
this regard due to the variety of factors that affect the tax position of
individual stockholders.
Respectfully submitted,
Donald S. Chisholm
Louis H. Masotti
Gary L. Waterman
11
14
PERFORMANCE GRAPH
The following performance graph compares total stockholders' return on the
Common Stock since February 24, 1993, the date of commencement of the Company's
initial public offering ("IPO"), with the Standard and Poors ("S&P") 500 Stock
Index and the index of equity REITs prepared by NAREIT. The Common Stock price
performance graph assumes an investment of $100 in the Company on February 24,
1993 and an investment of $100 in the two indexes on February 24, 1993 and
further assumes the reinvestment of all dividends. Equity REITs are defined as
those REITs which derive more than 75% of their income from equity investments
in real estate assets. The NAREIT equity index includes all tax qualified REITs
listed on the New York Stock Exchange, the American Stock Exchange or the NASDAQ
Stock Market. Common Stock price performance presented for the period from
February 24, 1993 through December 31, 1996 is not necessarily indicative of
future results.
MEASUREMENT PERIOD MHC S&P 500 STOCK NAREIT EQUITY
(FISCAL YEAR COVERED) INDEX INDEX
FEBRUARY 1993 100 100 100
1993 174.04 109.17 106.70
1994 170.05 110.61 110.10
1995 160.85 152.18 142.46
1996 227.51 187.12 171.65
12
15
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Under the rules of the SEC, the Company is required to report, based on its
review of reports to the SEC about transactions in its Common Stock furnished to
the Company and written representations of its directors, executive officers and
10% stockholders, that for 1996: 1) David A. Helfand filed a Form 4 late for
January 1996 on February 29, 1996 which reported the acquisition of 50,000
shares; 2) Thomas P. Heneghan filed a Form 4 late for January 1996 on February
29, 1996 which reported the acquisition of 50,000 shares; 3) Ellen Kelleher
filed a Form 4 late for a January 1996 on February 29, 1996 which reported the
acquisition of 50,000 shares; 4) Gary W. Powell filed a Form 4 late for January
1996 on February 29, 1996 which reported the acquisition of 50,000 shares; 5)
Louis H. Masotti filed a Form 4 late for December 1996 on February 13, 1997
which reported the exercise of options to purchase 16,666 shares and the sale of
16,666 shares; and 6) Gary W. Powell filed a Form 4 late for December 1996 on
February 13, 1997 which reported the exercise of options to purchase 4,000
shares and the sale of 4,000 shares.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of March 14, 1997 (except as
noted), with respect to each person who is known by the management of the
Company to be the beneficial owner of more than 5% of the outstanding shares of
Common Stock.
AMOUNT AND NATURE OF
NAME AND BUSINESS ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
------------------------- -------------------- ----------
Samuel Zell and partnerships................................ 2,858,730 10.5%
controlled by Samuel Zell(2)(3)
Two North Riverside Plaza
Chicago, Illinois 60606
General Motors Hourly-Rate Employes......................... 2,271,198 9.1%
Pension Trust and
General Motors Salaried
Employes Pension Trust(4)
c/o General Motors Investment
Management Corporation
767 Fifth Avenue
New York, New York 10153
The Allstate Corporation(5)................................. 1,817,631 7.3%
2775 Sanders Road
Northbrook, Illinois 60062
The Prudential Insurance Company of America(6).............. 1,668,000 6.7%
751 Broad Street
Newark, New Jersey 07102
- ---------------
(1) The amounts of Common Stock beneficially owned is reported on the basis of
regulations of the SEC governing the determination of beneficial ownership
of securities. The percentage of Common Stock beneficially owned by a person
assumes that all OP Units held by the person are exchanged for Common Stock,
that none of the OP Units held by other persons are so exchanged, that all
options exercisable within 60 days of March 14, 1997 to acquire Common Stock
held by the person are exercised and that no options to acquire Common Stock
held by other persons are exercised.
13
16
(2) Includes Common Stock, OP Units which are exchangeable on a one-for-one
basis into shares of Common Stock, and options to purchase Common Stock
which are currently exercisable or exercisable within 60 days as follows:
a) 2,201,460 OP Units, which are exchangeable at the holder's option into
2,201,460 shares of Common Stock, beneficially owned by PN Associates
Limited Partnership ("PN Associates"), an Illinois limited partnership
whose sole general partner is Samuel Zell as Trustee of the Samuel Zell
Revocable Trust ("Zell Trust"). The limited partners of PN Associates
are trusts created for the benefit of Mr. Zell and his family, trusts
created for the benefit of the family of Robert Lurie, a deceased
partner of Mr. Zell, and corporations whose stockholders are trusts
created for the benefit of Mr. Zell and his family and Mr. Lurie's
family.
b) 600,272 shares of Common Stock beneficially owned by EGI-MHC Limited
Partnership, an Illinois limited partnership ("EGI-MHC"). EGI-MHC's sole
general partner is Zell General Partnership, Inc. The sole stockholder
of the general partner is the Zell Trust. The limited partners of
EGI-MHC are the Zell Trust and Ann Lurie as Trustee of the Ann Lurie
Revocable Trust.
c) 7,000 shares of Common Stock beneficially owned by Samuel Zell as
Trustee of the Donald S. Chisholm Trust. Mr. Zell disclaims beneficial
ownership of the 7,000 shares of Common Stock.
d) Options to purchase 49,998 shares of Common Stock which are currently
exercisable or exercisable within 60 days by Mr. Zell.
(3) Includes 2,201,460 OP Units (exchangeable into 2,201,460 shares of Common
Stock) and 600,272 shares of Common Stock which are pledged as collateral
for loans to three financial institutions. Under the loan agreements, the
institutions cannot vote (assuming exchange of the OP Units for Common
Stock) or exercise ownership rights relating to the pledged OP Units or
Common Stock unless there is an event of default.
(4) The shares reported herein are held of record by Mellon Bank, N.A. acting as
the trustee (the "Trustee") for the General Motors Hourly-Rate Employes
Pension Plan and the General Motors Salaried Employes Pension Plan
(collectively, the "GM Trusts"). The GM Trusts are trusts under and for the
benefit of certain employee benefit plans of General Motors Corporation
("GM") and its subsidiaries. These shares may be deemed to be owned
beneficially by GMIMCo, a wholly owned subsidiary of GM. GMIMCo's principal
business is providing investment advice and investment management services
with respect to the assets of certain employee benefit plans of GM and its
subsidiaries and associated entities. GMIMCo is serving as the GM Trusts'
investment manager with respect to these shares and in that capacity it has
the sole power to direct the Trustee as to the voting and disposition of
these shares. Because of the Trustee's limited role, beneficial ownership of
the shares by the Trustee is disclaimed.
(5) Pursuant to a Schedule 13G filed with the SEC for calendar 1996, includes
1,488,201 shares of Common Stock owned by Allstate Insurance Company, a
wholly owned subsidiary of The Allstate Corporation; 148,065 shares of
Common Stock owned by Agents Pension Plan; and 181,365 shares owned by
Allstate Retirement Plan.
(6) Pursuant to a Schedule 13G filed with the SEC for calendar 1996, Prudential
may have direct or indirect voting and/or investment discretion over
1,668,000 shares of Common Stock which are held for the benefit of its
clients by its separate accounts, externally managed accounts, registered
investment companies, subsidiaries and/or affiliates. Prudential reported
the combined holdings of these entities for the purpose of administrative
convenience.
14
17
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 14, 1997, certain information
with respect to the Common Stock that may be deemed to be beneficially owned by
each director of MHC, the five executive officers named in the Summary
Compensation Table and by all directors and executive officers as a group:
SHARES OF SHARES UPON PERCENT
COMMON EXERCISE OF OF
NAME OF BENEFICIAL HOLDER STOCK(1) OPTIONS(2) TOTAL(1) CLASS
------------------------- --------- ----------- -------- -------
Timothy H. Callahan............................. 0 50,665 50,665 *
Donald S. Chisholm.............................. 7,000(3) 33,332 40,332 *
Thomas E. Dobrowski............................. 0 33,332 33,332 *
David A. Helfand................................ 135,107 103,332 238,439 *
Thomas P. Heneghan.............................. 98,720 21,000 119,720 *
Ellen Kelleher.................................. 87,935 16,000 103,935 *
Louis H. Masotti................................ 0 16,666 16,666 *
John F. Podjasek, Jr............................ 1,000 23,332 24,332 *
Gary W. Powell.................................. 237,402 60,666 298,068 1.2%
Sheli Z. Rosenberg.............................. 20,106(4) 46,666 66,772 *
Michael A. Torres............................... 1,700 33,332 35,032 *
Howard Walker................................... 86,720 5,000 91,720 *
Gary L. Waterman................................ 0 33,332 33,332 *
Samuel Zell..................................... 2,808,732(3)(5) 49,998 2,858,730 10.5%
All directors and executive officers as a group
(14 persons) including the above-named
persons....................................... 3,477,422 526,653 4,004,075 14.4%
- ---------------
* Less than 1%
(1) The amounts of Common Stock beneficially owned is reported on the basis of
regulations of the SEC governing the determination of beneficial ownership
of securities. The percentage of Common Stock beneficially owned by a person
assumes that all OP Units held by the person are exchanged for Common Stock,
that none of the OP Units held by other persons are so exchanged, that all
options exercisable within 60 days of March 14, 1997 to acquire Common Stock
held by the person are exercised and that no options to acquire Common Stock
held by other persons are exercised.
(2) The amounts shown in this column reflect shares of Common Stock subject to
options granted under the Company's 1992 Amended and Restated Stock Option
and Stock Award Plan which are currently exercisable or exercisable within
60 days of the date of this table.
(3) Includes 7,000 shares owned by the Donald S. Chisholm Trust, Samuel Zell,
Trustee. Under the regulations of the SEC, Mr. Zell may be deemed to be the
beneficial owner of all the shares which are beneficially owned by the
Donald S. Chisholm Trust. Mr. Zell disclaims beneficial ownership of the
shares owned by the Donald S. Chisholm Trust.
(4) Includes 11,530 OP Units beneficially owned by Mrs. Rosenberg which are
exchangeable into 11,530 shares of Common Stock.
(5) Includes 2,201,460 OP units which are exchangeable into 2,201,460 shares of
Common Stock owned by PN Associates. Also includes 600,272 shares of Common
Stock beneficially owned by EGI-MHC. See "Security Ownership of Certain
Beneficial Owners." Mr. Zell disclaims beneficial ownership of 818,428 OP
units owned by PN Associates which are exchangeable into 818,428 shares of
Common Stock and 300,136 shares of Common Stock owned by Equity-MHC.
15
18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company occupies office space owned by an affiliate of EGI, an entity
controlled by Mr. Zell, at Two North Riverside Plaza, Chicago, Illinois 60606.
In addition, pursuant to an administrative services agreement, EGI or certain of
its affiliates provides the Company and its subsidiaries with office space and
certain administrative, office facility and other services with respect to
certain aspects of the Company's business, including, but not limited to,
financial and accounting services, tax services, investor relations, corporate
secretarial, computer and support services and other services. Amounts incurred
for these services amounted to approximately $708,000 for the year ended
December 31, 1996. Amounts due to these affiliates at December 31, 1996 were
$31,000. Other affiliates of Mr. Zell provided insurance brokerage services
(excluding reimbursements for insurance premiums paid to third parties), tax and
accounting services and computer services to the Company. Amounts incurred for
these services amounted to approximately $142,000 for the year ended December
31, 1996. Amounts due to these affiliates at December 31, 1996 were $38,000.
Rosenberg & Liebentritt, P.C., a law firm in which Mrs. Rosenberg is a
principal, performs legal services to the Company. Amounts incurred for these
services amounted to approximately $385,000 for the year ended December 31,
1996. Amounts due to Rosenberg & Liebentritt, P.C. at December 31, 1996 were
$36,000.
The independent members of the Board annually review and approve the rates
charged by EGI and its affiliates for services rendered to the Company and its
subsidiaries. Additionally, the budget for such services are submitted, reviewed
and approved by the Audit Committee of the Company.
The executive officers listed below are indebted to the Company as a result
of purchasing stock from the Company. The loans accrue interest, payable
quarterly in arrears at the applicable federal rate, as defined in the Code in
effect at the time the loans were made. The loans are recourse to the respective
individuals; are collateralized by a pledge of the shares of Common Stock
purchased; and are due and payable of the first to occur of the employee leaving
the Company or March 3, 2003 for the loans being interest at 6.77% and January
2, 2005 for the loans bearing interest at 5.91%. All dividends paid on pledged
shares in excess of the then marginal tax rate are used to pay interest and
principal on the loans.
LARGEST AGGREGATE BALANCE AS OF
NAME AMOUNT OWED IN 1996 DECEMBER 31, 1996 INTEREST RATE
---- ------------------- ----------------- -------------
David A. Helfand............................. $131,950 $124,522 6.77%
David A. Helfand............................. 889,898 889,898 5.91%
Thomas P. Heneghan........................... 883,801 879,354 5.91%
Ellen Kelleher............................... 883,520 874,137 5.91%
Gary W. Powell............................... 999,692 948,440 6.77%
Gary W. Powell............................... 883,801 881,691 5.91%
Howard Walker................................ 883,520 879,063 5.91%
16
19
PROPOSAL 2
APPROVAL OF THE COMPANY'S
1997 NON-QUALIFIED EMPLOYEE
STOCK PURCHASE PLAN
The Company seeks stockholder approval of the Company's 1997 Non-Qualified
Employee Stock Purchase Plan ("Purchase Plan"). The Board adopted the Purchase
Plan on March 12, 1997 and recommended that it be submitted to the stockholders
of the Company for approval. If the stockholders approve the Purchase Plan at
the Meeting, the Purchase Plan will become effective no earlier than July 1,
1997.
The purpose of the Purchase Plan is to provide a method for eligible
employees of the Company and its subsidiaries and partnerships, and for
directors of the Board, to acquire an interest in the Company through the
purchase of shares of Common Stock from the Company at a discount from fair
market value. A total of 1,000,000 shares of Common Stock (subject to adjustment
for stock splits, stock dividends, recapitalizations or other corporate
restructurings) have been authorized for issuance under the Purchase Plan. The
Common Stock closed at $22.375 on the New York Stock Exchange on March 21, 1997.
As of March 1, 1997, there were approximately 550 individuals who were eligible
to participate in the Purchase Plan. The full text of the Purchase Plan is set
forth in Exhibit A to this Proxy Statement. The following description of the
Purchase Plan is qualified in its entirety by reference to the text of the
Purchase Plan.
DESCRIPTION OF THE PURCHASE PLAN
General. Shares of Common Stock will be offered under the Purchase Plan in
quarterly offering periods (each an "Offering"). Eligible employees and
directors who elect to participate in the Purchase Plan ("Participants") will be
able to use funds accumulated through cash contributions or payroll deductions
to purchase shares of Common Stock at a price less than the fair market value of
the Common Stock on the date of purchase.
Eligibility. The Purchase Plan is open to employees of the Company and its
subsidiaries and partnerships who (i) have been employed for six full calendar
months at the beginning of an Offering and (ii) are otherwise eligible for
normal employee benefits. The Purchase Plan is also open to directors of the
Board who have served on the Board for at least six full calendar months at the
beginning of an Offering.
Administration. The Compensation Committee ("Committee") of the Board has
responsibility for the general operation of the Purchase Plan, but intends to
appoint an agent (the "Plan Agent") to handle the day-to-day operations of the
Purchase Plan and administer the recordkeeping for each Participant.
Participation. After a Participant's enrollment in the Purchase Plan is
effective, the amount deducted from a Participant's payroll check (in the case
of an employee) and retainer or fees (in the case of a director) as well as
amounts otherwise contributed in cash by the Participant will be allocated to
such Participant's account. At the end of each quarterly Offering, a Participant
shall be deemed to have purchased from the Company such number of full shares of
Common Stock as his or her accumulated deductions and contributions on such date
will allow at the purchase price to be determined as described below. Unless a
Participant elects otherwise, the Company will carry over the remaining balance
in such Participant's Account to the next Offering. No interest will be paid or
allowed on any money in the accounts of the Participant. The maximum
contributions which a Participant may make shall not exceed $100,000 in any
calendar year.
Purchase Price. The purchase price per share of Common Stock for each
Offering will be the price set by the Committee but not below 85% of the lesser
of: a) the fair market value of the Common Stock on the last business day of the
Offering; and b) the fair market value of the Common Stock on the first business
day of the Offering.
17
20
Withdrawal. A Participant may withdraw from the Purchase Plan by delivering
a withdrawal notice to the Plan Agent at least 15 days prior to the end of such
Offering. In such event, the Plan Agent will direct the Company to refund the
entire balance of his or her account as soon as practicable thereafter. To
re-enter the Purchase Plan, a Participant who has previously withdrawn must
re-enroll in the Purchase Plan.
Disposition of the Shares of Common Stock. No disposition may be made of
any shares of Common Stock purchased under the Purchase Plan until the first
anniversary of such purchase. If a Participant who owns shares of Common Stock
subject to the foregoing restriction is determined by the Plan Agent to have a
serious financial need for the proceeds of the sale of the Common Stock, the
Plan Agent may allow a disposition to the extent necessary to satisfy the
serious financial need.
Expenses. Fees and expenses incurred in connection with the administration
of the Purchase Plan will be paid by the Company. The expenses of any sale,
however, will be borne by the Participant.
Terminations and Amendments. The Purchase Plan may be terminated at any
time by the Board. It will terminate in any case on the date on which all or
substantially all of the unissued shares of Common Stock reserved for its
purpose have been purchased. The Board also reserves the right to amend the
Purchase Plan from time to time in any respect, provided, however, that no
amendment shall become effective without prior approval of the Company's
stockholders: (i) to the extent such approval is required under the laws of the
State of Maryland; and (ii) to the extent such approval is required to meet
security holder approval requirements under any requirement applicable to the
Company.
Approval of Stockholders. The Purchase Plan shall not take effect until
approved by the holders of a majority of the shares of Common Stock present, or
represented, and entitled to vote at the Meeting. Abstentions will have the same
effect as votes against the approval of the Purchase Plan. Broker non-votes will
not be counted as shares of Common Stock entitled to vote on the matter and will
have no effect on the vote.
Federal Income Tax Consequences. Amounts deducted from a Participant's
payroll check or retainer or fees under the Purchase Plan shall continue to be
taxable income to the Participant in the year such amounts are earned. As the
Purchase Plan will not qualify as an "employee stock purchase plan" within the
meaning of Section 423 of the Code, Participants will also recognize additional
taxable income equivalent to the amount of the discount when shares of Common
Stock are purchased under the Purchase Plan. The Company will be entitled to a
corresponding deduction. Participants are urged to consult with their own tax
advisors to determine the particular tax consequences that may result from
participation in the Purchase Plan and the subsequent disposal of Common Stock
purchased pursuant to the Purchase Plan.
THE BOARD RECOMMENDS A VOTE "FOR" THE PURCHASE PLAN. PROXIES SOLICITED BY
THE BOARD WILL BE VOTED "FOR" THE PURCHASE PLAN UNLESS INSTRUCTIONS TO WITHHOLD
OR TO THE CONTRARY ARE GIVEN.
AUDITORS
Ernst & Young LLP served as the Company's auditors for the year ended
December 31, 1996. The Audit Committee intends to make a future recommendation
to the Board concerning the selection of the Company's auditors for the current
fiscal year which began January 1, 1997. There have been no disagreements
between the Company and its auditors relating to accounting procedures,
financial statement disclosures, or related items. Representatives of Ernst &
Young LLP are expected to be available at the Meeting and will have an
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions.
18
21
STOCKHOLDER PROPOSALS
Under regulations adopted by the SEC, stockholder proposals intended to be
presented at the 1998 Annual Meeting of Stockholders must be received by the
Secretary of the Company no later than November 29, 1997, in order to be
considered for inclusion in the proxy statement and on the proxy card that will
be solicited by the Board in connection with the 1998 Meeting.
In addition, the Bylaws of the Company provide that in order for a
stockholder to nominate a candidate for election as a director at a Meeting or
propose business for consideration at such Meeting, notice must generally be
given to the Secretary of the Company no more than 90 days nor less than 60 days
prior to the first anniversary of the preceding year's Meeting. The fact that
the Company may not insist upon compliance with these requirements should not be
construed as a waiver by the Company of its right to do so at any time in the
future.
OTHER MATTERS
The Board is not aware of any business which will be presented at the
Meeting other than those matters set forth in the accompanying Notice of Annual
Meeting of Stockholders. If any other matters are properly presented at the
Meeting for action, it is intended that the persons named in the accompanying
Proxy and acting thereunder will vote in accordance with their best judgment on
such matters.
By Order of the Board of Directors
SUSAN OBUCHOWSKI
Susan Obuchowski
Secretary
March 28, 1997
Chicago, Illinois
19
22
EXHIBIT A
MANUFACTURED HOME COMMUNITIES, INC.
AND REALTY SYSTEMS, INC.
1997 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
23
TABLE OF CONTENTS
SECTION PAGE
------- ----
1. Purpose..................................................... A-1
2. Definitions................................................. A-1
2.1 Account............................................... A-1
2.2 Beneficiary........................................... A-1
2.3 Board................................................. A-1
2.4 Closing Price......................................... A-1
2.5 Committee............................................. A-1
2.6 Election Form......................................... A-1
2.7 Eligible Director..................................... A-1
2.8 Eligible Employee..................................... A-1
2.9 MHC................................................... A-1
2.10 MLP................................................... A-1
2.11 Participant........................................... A-1
2.12 Participating Employer................................ A-2
2.13 Pay................................................... A-2
2.14 Pay Day............................................... A-2
2.15 Plan.................................................. A-2
2.16 Plan Administrator.................................... A-2
2.17 Purchase Period....................................... A-2
2.18 Purchase Price........................................ A-2
2.19 Rule 16b-3............................................ A-2
2.20 RSI................................................... A-2
2.21 Stock................................................. A-2
3. Administration.............................................. A-2
4. Participation............................................... A-2
5. Contributions............................................... A-3
6. Purchase of Stock........................................... A-3
7. Delivery.................................................... A-4
8. Designation of Beneficiary.................................. A-4
9. Transferability and Dispositions............................ A-4
10. Securities Registration..................................... A-5
11. Compliance with Rule 16b-3.................................. A-5
12. Amendment or Termination.................................... A-5
13. Notices..................................................... A-5
14. Employment.................................................. A-5
15. Employment Transfers........................................ A-6
16. Approval of Shareholders.................................... A-6
17. Changes in Capital Structure................................ A-6
18. Headings, References and Construction....................... A-6
24
1. Purpose
The primary purpose of this Plan is to encourage Stock ownership by each
Eligible Employee and each Eligible Director in the belief that such stock
ownership will increase his or her interest in the success of MHC so that they
may share in the results of MHC's operations.
2. Definitions
2.1 The term "Account" shall mean the separate bookkeeping account which
shall be established and maintained by the Plan Administrator for each
Participant for each Purchase Period to record the contributions made on his or
her behalf to purchase Stock under this Plan.
2.2 The term "Beneficiary" shall mean the person designated as such in
accordance with Section 8.
2.3 The term "Board" shall mean the Board of Directors of MHC.
2.4 The term "Closing Price" (a) for the first day of any Purchase Period
shall mean the closing price for a share of Stock as reported for such day in
The Wall Street Journal or in any successor to The Wall Street Journal or, if
there is no such successor, in any trade publication selected by the Committee
or, if no such closing price is so reported for such day, the first closing
price which is so reported after such day or, if no such closing price is so
reported during the two week period which begins on the first day of such
Purchase Period, the fair market value of a share of Stock as determined as of
the first day of such Purchase Period by the Committee and (b) for the last day
of a Purchase Period shall mean the closing price for a share of Stock as
reported for such day in The Wall Street Journal or in any successor to The Wall
Street Journal or, if there is no such successor, in any trade publication
selected by the Committee or, if no such closing price is so reported for such
day, the last such closing price which is so reported before such day or, if no
such closing price is so reported during the two week period which ends on the
last day of such Purchase Period, the fair market value of a share of Stock as
determined as of the last day of such Purchase Period by the Committee.
2.5 The term "Committee" shall mean the Compensation Committee of the
Board.
2.6 The term "Election Form" shall mean the form which an Eligible Director
or Eligible Employee shall be required to properly complete in writing and
timely file at least 15 days prior to the commencement of any Purchase Period in
order to make any of the elections available to an Eligible Director or Eligible
Employee under this Plan.
2.7 The term "Eligible Director" shall mean a person (other than an officer
or employee of MHC or a Participating Employer) who has been a member of the
Board for at least six full calendar months at the beginning of a Purchase
Period.
2.8 The term "Eligible Employee" shall mean each officer or employee of MHC
or a Participating Employer:
(a) who is shown on the payroll records of MHC or a Participating
Employer as eligible for normal employee benefits, and
(b) who has completed at least six full calendar months of employment
with MHC or a Participating Employer at the beginning of a Purchase Period.
2.9 The term "MHC" shall mean Manufactured Home Communities, Inc., a
Maryland corporation, and any successor to MHC.
2.10 The term "MLP" shall mean MHC Management Limited Partnership.
2.11 The term "Participant" shall mean (a) for each Purchase Period an
Eligible Director or Eligible Employee who has elected to purchase Stock in
accordance with Section 4 in such Purchase Period and (b) for any period any
person for whom Stock is held pending delivery under Section 7.
A-1
25
2.12 The term "Participating Employer" shall mean RSI, MLP and any other
organization owned in whole or in part, directly or indirectly, by MHC which is
designated as such by the Committee.
2.13 The term "Pay" shall mean (i) in the case of an Eligible Employee, all
cash compensation paid to him or her for services to MHC or a Participating
Employer including regular straight time earnings or draw, overtime,
commissions, and bonuses, but excluding amounts paid as living allowance or
reimbursement of expenses and other similar payments; and (ii) in the case of an
Eligible Director, all retainers and meeting and other service fees paid to him
or her by MHC.
2.14 The term "Pay Day" shall mean the day as of which Pay is paid to an
Eligible Employee.
2.15 The term "Plan" shall mean this Manufactured Home Communities, Inc.
and Realty Systems, Inc. Non-Qualified Employee Stock Purchase Plan as effective
as of July 1, 1997, and as thereafter amended from time to time.
2.16 The term "Plan Administrator" shall mean MHC or MHC's delegate.
2.17 The term "Purchase Period" shall mean a period set by the Committee
and which shall run for no more than a year. Unless changed by the Committee,
the initial Purchase Period shall mean a period which shall begin on the first
day of a calendar quarter and end on the last day of such calendar quarter. The
first Purchase Period shall commence no earlier than on July 1, 1997 and
terminate on September 30, 1997.
2.18 The term "Purchase Price" for each Purchase Period shall mean a
percentage set by the Committee before the beginning of the Purchase Period (not
less than 85%) of the lesser of (a) the Closing Price for a share of Stock on
the first day of such Purchase Period; or (b) the Closing Price for a share of
Stock on the last day of such Purchase Period.
2.19 The term "Rule 16b-3" shall mean Rule 16b-3 to Section 16(b) of the
Securities Exchange Act of 1934, as amended, or any successor to such rule.
2.20 The term "RSI" shall mean Realty Systems, Inc. a Delaware corporation.
2.21 The term "Stock" shall mean the $.01 par value common stock of MHC.
The aggregate number of shares of Stock available under this Plan shall not
exceed 1,000,000, subject to adjustment pursuant to Section 17 hereof. Shares of
Stock subject to the Plan may be either authorized but unissued shares, shares
now held in the treasury of MHC, or shares hereafter acquired by MHC.
3. Administration
Except for the exercise of those powers expressly granted to the Committee
to determine the Closing Price and who is a Participating Employer and to set
the Purchase Period and the Purchase Price, the Plan Administrator shall be
responsible for the administration of this Plan and shall have the power in
connection with such administration to interpret the Plan and to take such other
action in connection with such administration as the Plan Administrator deems
necessary or equitable under the circumstances. The Plan Administrator also
shall have the power to delegate the duty to perform such administrative
functions as the Plan Administrator deems appropriate under the circumstances.
Any person to whom the duty to perform an administrative function is delegated
shall act on behalf of and shall be responsible to the Plan Administrator for
such function. Any action or inaction by or on behalf of the Plan Administrator
under this Plan shall be final and binding on each Eligible Director, each
Eligible Employee, each Participant and on each other person who makes a claim
under this Plan based on the rights, if any, of any such Eligible Director,
Eligible Employee or Participant under this Plan.
4. Participation
Each person who is an Eligible Director or an Eligible Employee shall be a
Participant in this Plan for the related Purchase Period if he or she properly
completes and timely files an Election Form with
A-2
26
the Plan Administrator to elect to participate in this Plan. An Election Form
may require an Eligible Employee to provide such information and to agree to
take such action (in addition to the action required under Section 5) as the
Plan Administrator deems necessary or appropriate in light of the purpose of
this Plan or for the orderly administration of this Plan.
5. Contributions
(a) Initial Contributions. Each Participant's Election Form under Section 4
shall specify the contributions which he or she proposes to make for the related
Purchase Period. Such contributions shall be expressed as a specific dollar
amount which the Participant proposes to contribute in cash, or a percentage of
the Participant's Pay that MHC or the Participant's Participating Employer is
authorized to deduct from his or her Pay each Pay Day during the Purchase Period
(or as a combination of such cash and such payroll deduction contributions),
provided, however:
(1) the minimum payroll deduction for a Participant for each Pay Day
for purposes under this Plan shall be $10.00, and
(2) the maximum contribution which a Participant may make for purposes
under this Plan for any calendar year shall be 100% of his or her Pay, not
to exceed $100,000.
(b) Changes in Contributions and Withdrawals. A Participant shall have the
right to amend his or her Election Form at any time to reduce or to stop his or
her contributions, and such election shall be effective immediately for cash
contributions and as soon as practicable after the Plan Administrator actually
receives such amended Election Form for payroll deductions. A Participant also
shall have the right at any time on or before fifteen days prior to the last day
of a Purchase Period (i) to withdraw (without interest) all or any part of the
contributions credited to his or her Account for such purchase; or (ii) to
increase his or her cash contributions for such purchase, by delivering an
amended Election Form (and for purposes of clause (ii), a check for such
contributions) to the Plan Administrator at least fifteen days prior to the last
day of such Purchase Period.
(c) Account Credits, General Assets and Taxes. All payroll deductions made
for a Participant shall be credited to his or her Account as of the Pay Day as
of which the deduction is made (or as of the date the check described in Section
5(b)(ii) is delivered). All contributions made by a Participant under this Plan,
whether in cash or through payroll deductions, shall be held by MHC or by such
Participant's Participating Employer, as agent for MHC. All such contributions
shall be held as part of the general assets of MHC and shall not be held in
trust or otherwise segregated from MHC's general assets. No interest shall be
paid or accrued on any such contributions. Each Participant's right to the
contributions credited to his or her Account shall be that of a general and
unsecured creditor of MHC. MHC and each Participating Employer shall have the
right to make such provisions as it deems necessary or appropriate to satisfy
any tax laws with respect to purchases of Stock made under this Plan. If a
Participant elects to withdraw all of his or her Account under this Section
5(c), his or her status as a Participant shall terminate as of the date the Plan
Administrator receives such election.
(d) Automatic Refunds. The balance credited to the Account of an Eligible
Director automatically shall be refunded in full (without interest) if his or
her status as a member of the Board terminates for any reason whatsoever during
a Purchase Period, and the balance credited to the Account of an Eligible
Employee automatically shall be refunded in full (without interest) if his or
her status as an employee of MHC or a Participating Employer terminates for any
reason whatsoever during a Purchase Period. Such refunds shall be made as soon
as practicable after the Plan Administrator has actual notice of any such
termination. A person's status as a Participant under this Plan shall terminate
at the same time as his or her status as an Eligible Director or Eligible
Employee terminates.
A-3
27
6. Purchase of Stock
(a) If a Participant is an Eligible Director or an Eligible Employee
through the end of a Purchase Period, the balance that remains credited to his
or her Account at the end of such Purchase Period, up to a maximum of $100,000
for any calendar year, automatically shall be applied to purchase Stock at the
Purchase Price for such Stock for such Purchase Period. Such Stock shall be
purchased on behalf of the Participant by operation of this Plan in whole shares
and any cash remaining in the Participant's Account shall be carried over to the
next Offering unless the Participant directs otherwise.
(b) Except as specifically provided herein, all Eligible Employees and
Eligible Directors shall have the same rights and privileges under the Plan. All
rules and determinations of the Board in the administration of the Plan shall be
uniformly and consistently applied to all persons in similar circumstances.
(c) If the total shares of Stock to be purchased on any date in accordance
with Section 6(a) exceeds the shares of Stock then available under the Plan
(after deduction of all Stock that has been purchased under Section 6(a)), the
Participating Employer shall make a pro rata allocation of the Stock remaining
available in as nearly a uniform manner as shall be practical and as it shall
determine to be equitable.
7. Delivery
A stock certificate representing any shares of Stock purchased under this
Plan shall be held for or, at a Participant's election made on an Election Form,
delivered to a Participant registered in his or her name or, if the Participant
so elects on such Election Form and if permissible under applicable law, in the
names of the Participant and one such other person as may be designated by the
Participant, as joint tenants with rights of survivorship. Such certificate may
contain a legend as determined by the Plan Administrator in connection with the
restrictions described in Section 9(b). The Plan Administrator shall have the
right to charge a Participant for registering Stock in the name of the
Participant and any other person. No Participant (or any person who makes a
claim for, on behalf of, or in place of a Participant) shall have any interest
in any shares of Stock under this Plan until they have been purchased pursuant
to the terms of the Plan.
8. Designation of Beneficiary
A Participant may designate on his or her Election Form a Beneficiary (a)
who shall receive the balance credited to his or her Account if the Participant
dies before the end of a Purchase Period and (b) who shall receive the Stock, if
any, purchased for the Participant under this Plan if the Participant dies after
the end of a Purchase Period but before either the certificate representing such
shares of Stock has been delivered to the Participant or before such Stock has
been credited to a brokerage account maintained for the Participant. Such
designation may be revised in writing at any time by the Participant by filing
an amended Election Form, and his or her revised designation shall be effective
at such time as the Plan Administrator receives such amended Election Form. If a
deceased Participant fails to designate a Beneficiary or, if no person so
designated survives a Participant or, if after checking his or her last known
mailing address, the whereabouts of the person so designated are unknown, then
the Participant's estate shall be treated as his designated Beneficiary under
this Section 8.
9. Transferability and Dispositions
(a) Neither the balance credited to a Participant's Account nor any rights
to receive shares of Stock under this Plan may be assigned, encumbered,
alienated, transferred, pledged, or otherwise disposed of in any way by a
Participant during his or her lifetime or by his or her Beneficiary or by any
other person during his or her lifetime, and any attempt to do so shall be
without effect. Notwithstanding the foregoing, a Participant may assign his or
her rights to purchase Shares hereunder to the Manufactured Home Communities,
Inc. and Realty Systems, Inc. Supplemental Retirement Savings Trust, subject to
and in accordance with such procedures as are established by the Plan
Administrator.
A-4
28
(b) Except as provided in the next sentence, no "disposition" (as that term
is defined in Section 424(c) of the Code) may be made of any Stock purchased
under the Plan until the first anniversary of such purchase. Notwithstanding the
foregoing, if a Participant who owns Stock subject to the foregoing restriction
is determined by the Plan Administrator in its discretion to have a serious
financial need for the proceeds of the sale of such Stock, then upon application
made by the Participant, the Plan Administrator shall consent to a disposition
of such Stock to the extent necessary to satisfy the serious financial need, and
shall give instructions to the transfer agent to register such disposition on
the stock records of MHC.
10. Securities Registration
If MHC shall deem it necessary to register under the Securities Act of
1933, as amended, or any other applicable statutes any shares of Stock purchased
under this Plan or to qualify any such shares of Stock for an exemption from any
such statutes, MHC shall take such action at its own expense before delivery of
the certificate representing such shares of Stock. If shares of Stock are listed
on any national securities exchange at the time shares of Stock are purchased
under this Plan, MHC whenever required shall make prompt application for the
listing on such national securities exchange of such shares, at the expense of
MHC.
11. Compliance with Rule 16b-3
If any provision of this Plan or administrative guidelines under this Plan
or any act or omission with respect to this Plan (including any act or omission
by an Eligible Director or an Eligible Employee) fails to satisfy an exemptive
condition under Rule 16b-3 or otherwise is inconsistent with such condition,
such provision, guidelines or act or omission shall be deemed null and void.
12. Amendment or Termination
This Plan may be amended by the Board from time to time to the extent that
the Board deems necessary or appropriate, and any such amendment shall be
subject to the approval of MHC's shareholders to the extent such approval is
required under the laws of the State of Maryland or to the extent such approval
is required to meet the security holder approval requirements under any legal
requirement applicable to MHC; provided, however, no amendment shall be
retroactive unless the Board in its discretion determines that such amendment is
in the best interest of MHC or such amendment is required by applicable law to
be retroactive. The Board also may terminate this Plan and any Purchase Period
at any time (together with any related contribution elections) or may terminate
any Purchase Period (together with any related contribution elections) at any
time; provided, however, no such termination shall be retroactive unless the
Board determines that applicable law requires a retroactive termination of this
Plan.
13. Notices
All Election Forms and other communications from a Participant to the Plan
Administrator under, or in connection with, this Plan shall be deemed to have
been filed with the Plan Administrator when actually received in the form
specified by the Plan Administrator at the location, or by the person,
designated by the Plan Administrator for the receipt of any such Election Form
and communications.
14. Service
The right to elect to participate in this Plan shall not constitute an
offer of employment or membership on the Board, and no election to participate
in this Plan shall constitute an employment agreement for an Eligible Employee
or an agreement with respect to Board membership for an Eligible Director. Any
such right or election shall have no bearing whatsoever on the employment
relationship between an Eligible Employee and any other person or on an Eligible
Director's status as a member of the Board. Finally, no Eligible Director or
Eligible Employee shall be induced to participate in this
A-5
29
Plan, or shall participate in this Plan, with the expectation that such
participation will lead to employment or continued employment, and no Eligible
Director shall be induced to participate in this Plan, or shall participate in
this Plan, with the expectation that such participation will lead to continued
membership on the Board.
15. Employment Transfers
No Eligible Employee's employment shall be treated as terminated under this
Plan as a result of a transfer between, or among, MHC or any other Participating
Employer.
16. Approval of Shareholders
The Plan shall not take effect until approved by the shareholders of MHC.
17. Changes in Capital Structure
(a) In the event that the outstanding shares of Stock of MHC are hereafter
increased or decreased or changed into or exchanged for a different number or
kind of shares or other securities of MHC or of another corporation, by reason
of any reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares, or dividend payable in
shares, appropriate adjustment shall be made by the Board in the number of
shares available under this Plan, and in the number or kind of shares as to
which a right to purchase Stock of MHC under this Plan shall be exercisable, to
the end that the applicable Participant's proportionate interest shall be
maintained as before the occurrence of such event. Any such adjustment made by
the Board shall be consistent with Section 424(a) of the Code and shall be
conclusive.
(b) If MHC is not the surviving or resulting corporation in any
reorganization, merger, consolidation or recapitalization, each right to
purchase Stock of MHC under this Plan shall be assumed by the surviving or
resulting corporation and each such right shall continue in full force and
effect, and shall apply to the same number and class of securities of the
surviving corporation as a holder of the number of shares of Stock subject to
such right would have received in such consolidation or recapitalization.
18. Headings, References and Construction
The headings to sections in this Plan have been included for convenience of
reference only. This Plan shall be interpreted and construed in accordance with
the laws of the State of Maryland.
MANUFACTURED HOME COMMUNITIES, INC.
By:
--------------------------------------
Title:
--------------------------------------
REALTY SYSTEMS, INC.
By:
--------------------------------------
Title:
--------------------------------------
A-6
30
MANUFACTURED HOME COMMUNITIES, INC.
TWO NORTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Manufactured Home Communities, Inc., a
Maryland corporation (the "Company"), hereby appoints SAMUEL ZELL and DAVID A.
HELFAND, or either of them, with full power of substitution in each of them, to
attend the Annual Meeting of Stockholders of the Company to be held on Tuesday,
May 13, 1997, at 10:00 a.m., Chicago time, and any adjournment or postponement
thereof, to cast on behalf of the undersigned all votes that the undersigned is
entitled to cast at such meeting and otherwise to represent the undersigned at
the meeting with all powers possessed by the undersigned if personally present
at the meeting. The undersigned hereby acknowledges receipt of the Notice of
the Annual Meeting of Stockholders and of the accompanying Proxy Statement and
revokes any proxy heretofore given with respect to such meeting.
The votes entitled to be cast by the undersigned will be cast as
instructed below. If this proxy is executed but no instruction is given, the
votes entitled to be cast by the undersigned will be cast "for" each of the
nominees for director and "for" each of the other proposals as described in the
Proxy Statement and in the discretion of the proxy holder on any other matter
that may properly come before the meeting or any adjournment or postponement
thereof.
- ---------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENTS/ADDRESS BOX ON REVERSE SIDE
(Continued and to be signed on other side)
31
- ----------------------------- PLEASE MARK [X]
COMMON YOUR VOTES
THIS WAY
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1 AND PROPOSAL 2.
WITHHELD
FOR FOR ALL I PLAN TO ATTEND MEETING [ ]
Proposal 1 - ELECTION OF DIRECTORS [ ] [ ]
Nominees: Timothy H. Callahan,
Donald S. Chisholm, Thomas E. Dobrowski
and John F. Podjasek, Jr.
COMMENTS/ADDRESS CHANGE [ ]
WITHHELD FOR (Write name of nominee/s in Please mark this box if
space provided below). you have any written comments
address change on the reverse side.
- -----------------------------
FOR AGAINST ABSTAIN
Proposal 2 - ADOPTION OF THE COMPANY'S [ ] [ ] [ ]
1997 NON-QUALIFIED EMPLOYEE
STOCK OPTION PLAN
And on any other matter which may properly come before the meeting or any adjournment or postponement thereof in the discretion of
the Proxy holder.
Signature(s) Date
----------------------------------------------------------- ------------------------------------------------------
NOTE: Please sign as name appears heron. Joint owners should each sign. When signing as attorney, executor, administrator,
trustee, guardian or officer, please give full title under signature.
