Document:

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                                                                    Exhibit 10.7

                                  VOLCOM, INC.

                            2005 INCENTIVE AWARD PLAN

                          STOCK OPTION GRANT NOTICE AND
                             STOCK OPTION AGREEMENT

      Volcom, Inc., a Delaware corporation (the "COMPANY"), pursuant to its 2005
Incentive Award Plan (the "PLAN"), hereby grants to the holder listed below
("PARTICIPANT"), an option to purchase the number of shares of the Company's
common stock, par value $0.001 ("STOCK"), set forth below (the "OPTION"). This
Option is subject to all of the terms and conditions set forth herein and in the
Stock Option Agreement attached hereto as Exhibit A (the "STOCK OPTION
AGREEMENT") and the Plan, which are incorporated herein by reference. Unless
otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Grant Notice and the Stock Option Agreement.

PARTICIPANT:
                           ----------------------------------------------------
GRANT DATE:
                           ----------------------------------------------------
EXERCISE PRICE PER SHARE:  $
                           ----------------------------------------------------
TOTAL EXERCISE PRICE:      $
                           ----------------------------------------------------
TOTAL NUMBER OF SHARES
SUBJECT TO THE OPTION:                                                   shares
                           ----------------------------------------------------
EXPIRATION DATE:
                           ----------------------------------------------------

TYPE OF OPTION:    [ ] Incentive Stock Option    [ ] Non-Qualified Stock Option

VESTING SCHEDULE:  [To be specified in individual agreements]

      By his or her signature, Participant agrees to be bound by the terms and
conditions of the Plan, the Stock Option Agreement and this Grant Notice.
Participant has reviewed the Stock Option Agreement, the Plan and this Grant
Notice in their entirety, has had an opportunity to obtain the advice of counsel
prior to executing this Grant Notice and fully understands all provisions of
this Grant Notice, the Stock Option Agreement and the Plan. Participant hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator of the Plan upon any questions arising
under the Plan or relating to the Option.

VOLCOM, INC.                               PARTICIPANT

By: _________________________________     By: _________________________________

Print Name: _________________________     Print Name: _________________________

Title: ______________________________

Address:  1740 Monrovia Avenue            Address: ____________________________
          Costa Mesa, CA 92627                     ____________________________

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                                    EXHIBIT A

                          TO STOCK OPTION GRANT NOTICE

                             STOCK OPTION AGREEMENT

      Pursuant to the Stock Option Grant Notice (the "GRANT NOTICE") to which
this Stock Option Agreement (this "AGREEMENT") is attached, Volcom, Inc., a
Delaware corporation (the "COMPANY"), has granted to Participant an option under
the Company's 2005 Incentive Award Plan (the "PLAN") to purchase the number of
shares of Stock indicated in the Grant Notice.

                                   ARTICLE I

                                     GENERAL

      1.1 Defined Terms. Capitalized terms not specifically defined herein shall
have the meanings specified in the Plan and the Grant Notice.

      1.2 Incorporation of Terms of Plan. The Option is subject to the terms and
conditions of the Plan which are incorporated herein by reference.

                                   ARTICLE II

                                 GRANT OF OPTION

      2.1 Grant of Option. In consideration of Participant's past and/or
continued employment with or service to the Company or a Parent or Subsidiary
and for other good and valuable consideration, effective as of the Grant Date
set forth in the Grant Notice (the "GRANT DATE"), the Company irrevocably grants
to Participant the Option to purchase any part or all of an aggregate of the
number of shares of Stock set forth in the Grant Notice, upon the terms and
conditions set forth in the Plan and this Agreement. Unless designated as a
Non-Qualified Stock Option in the Grant Notice, the Option shall be an Incentive
Stock Option to the maximum extent permitted by law.

      2.2 Exercise Price. The exercise price of the shares of Stock subject to
the Option shall be as set forth in the Grant Notice, without commission or
other charge; provided, however, that the price per share of the shares subject
to the Option shall not be less than 100% of the Fair Market Value of a share of
Stock on the Grant Date. Notwithstanding the foregoing, if this Option is
designated as an Incentive Stock Option and Participant owns (within the meaning
of Section 424(d) of the Code) more than 10% of the total combined voting power
of all classes of stock of the Company or any "subsidiary corporation" of the
Company or any "parent corporation" of the Company (each within the meaning of
Section 424 of the Code), the price per share of the shares subject to the
Option shall not be less than 110% of the Fair Market Value of a share of Stock
on the Grant Date.

      2.3 Consideration to the Company. In consideration of the grant of the
Option by the Company, Participant agrees to render faithful and efficient
services to the Company or any Parent or Subsidiary. Nothing in the Plan or this
Agreement shall confer upon Participant any right to continue in the employ or
service of the Company or any Parent or Subsidiary or shall interfere with or
restrict in any way the rights of the Company and its Parents and Subsidiaries,
which rights are hereby expressly reserved, to discharge or terminate the
services of Participant at any time for any reason whatsoever, with or without
Cause, except to the extent expressly provided otherwise in a written agreement
between the Company, a Parent or a Subsidiary and Participant.

                                      A-1
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                                  ARTICLE III

                            PERIOD OF EXERCISABILITY

      3.1 Commencement of Exercisability.

            (a) Subject to Sections 3.3, 5.8 and 5.10, the Option shall become
vested and exercisable in such amounts and at such times as are set forth in the
Grant Notice.

            (b) No portion of the Option which has not become vested and
exercisable at the date of Participant's Termination of Employment, Termination
of Directorship or Termination of Consultancy shall thereafter become vested and
exercisable, except as may be otherwise provided by the Administrator or as set
forth in a written agreement between the Company and Participant.

      3.2 Duration of Exercisability. The installments provided for in the
vesting schedule set forth in the Grant Notice are cumulative. Each such
installment which becomes vested and exercisable pursuant to the vesting
schedule set forth in the Grant Notice shall remain vested and exercisable until
it becomes unexercisable under Section 3.3.

      3.3 Expiration of Option. The Option may not be exercised to any extent by
anyone after the first to occur of the following events:

            (a) The expiration of ten years from the Grant Date;

            (b) If this Option is designated as an Incentive Stock Option and
Participant owned (within the meaning of Section 424(d) of the Code), at the
time the Option was granted, more than 10% of the total combined voting power of
all classes of stock of the Company or any "subsidiary corporation" of the
Company or any "parent corporation" of the Company (each within the meaning of
Section 424 of the Code), the expiration of five years from the Grant Date;

            (c) The expiration of three months from the date of Participant's
Termination of Employment, Termination of Directorship or Termination of
Consultancy, unless such termination occurs by reason of Participant's death,
Disability or Participant's discharge for Cause;

            (d) The expiration of one year from the date of Participant's
Termination of Employment, Termination of Directorship or Termination of
Consultancy by reason of Participant's death or Disability; or

            (e) The date of Participant's Termination of Employment, Termination
of Directorship or Termination of Consultancy by the Company or any Parent or
Subsidiary by reason of Participant's discharge for Cause.

      Participant acknowledges that an Incentive Stock Option exercised more
than three months after Participant's Termination of Employment, other than by
reason of death or Disability, will be taxed as a Non-Qualified Stock Option.

      3.4 Special Tax Consequences. Participant acknowledges that, to the extent
that the aggregate Fair Market Value (determined as of the time the Option is
granted) of all shares of Stock with respect to which Incentive Stock Options,
including the Option, are exercisable for the first time by Participant in any
calendar year exceeds $100,000, the Option and such other options shall be
Non-Qualified Stock Options to the extent necessary to comply with the
limitations imposed by Section 422(d)

                                      A-2

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of the Code. Participant further acknowledges that the rule set forth in the
preceding sentence shall be applied by taking the Option and other "incentive
stock options" into account in the order in which they were granted, as
determined under Section 422(d) of the Code and the Treasury Regulations
thereunder.

                                   ARTICLE IV

                               EXERCISE OF OPTION

      4.1 Person Eligible to Exercise. Except as provided in Sections 5.2(b) and
5.2(c), during the lifetime of Participant, only Participant may exercise the
Option or any portion thereof. After the death of Participant, any exercisable
portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by Participant's personal
representative or by any person empowered to do so under the deceased
Participant's will or under the then applicable laws of descent and
distribution.

      4.2 Partial Exercise. Any exercisable portion of the Option or the entire
Option, if then wholly exercisable, may be exercised in whole or in part at any
time prior to the time when the Option or portion thereof becomes unexercisable
under Section 3.3.

      4.3 Manner of Exercise. The Option, or any exercisable portion thereof,
may be exercised solely by delivery to the Secretary of the Company or the
Secretary's office of all of the following prior to the time when the Option or
such portion thereof becomes unexercisable under Section 3.3:

            (a) An Exercise Notice in writing signed by Participant or any other
person then entitled to exercise the Option or portion thereof, stating that the
Option or portion thereof is thereby exercised, such notice complying with all
applicable rules established by the Administrator. Such notice shall be
substantially in the form attached as Exhibit B to the Grant Notice (or such
other form as is prescribed by the Administrator);

            (b) The receipt by the Company of full payment for the shares with
respect to which the Option or portion thereof is exercised, including payment
of any applicable withholding tax, which may be in one or more of the forms of
consideration permitted under Section 4.4;

            (c) A bona fide written representation and agreement, in such form
as is prescribed by the Administrator, signed by Participant or the other person
then entitled to exercise such Option or portion thereof, stating that the
shares of Stock are being acquired for Participant's own account, for investment
and without any present intention of distributing or reselling said shares or
any of them except as may be permitted under the Securities Act and then
applicable rules and regulations thereunder and any other applicable law, and
that Participant or other person then entitled to exercise such Option or
portion thereof will indemnify the Company against and hold it free and harmless
from any loss, damage, expense or liability resulting to the Company if any sale
or distribution of the shares by such person is contrary to the representation
and agreement referred to above. The Administrator may, in its absolute
discretion, take whatever additional actions it deems appropriate to ensure the
observance and performance of such representation and agreement and to effect
compliance with the Securities Act and any other federal or state securities
laws or regulations and any other applicable law. Without limiting the
generality of the foregoing, the Administrator may require an opinion of counsel
acceptable to it to the effect that any subsequent transfer of shares acquired
on an Option exercise does not violate the Securities Act, and may issue
stop-transfer orders covering such shares. Share certificates evidencing Stock
issued on exercise of the Option shall bear an appropriate legend referring to
the provisions of this subsection (c) and the agreements herein. The written
representation and agreement referred to in the first sentence of this
subsection (c) shall, however, not be required if the shares to be issued
pursuant to such exercise have

                                      A-3

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been registered under the Securities Act, and such registration is then
effective in respect of such shares; and

            (d) In the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than Participant,
appropriate proof of the right of such person or persons to exercise the Option.

      4.4 Method of Payment. Payment of the exercise price shall be by any of
the following, or a combination thereof, at the election of the Participant:

            (a) cash;

            (b) check;

            (c) with the consent of the Administrator, delivery of a notice that
the Participant has placed a market sell order with a broker with respect to
shares of Stock then issuable upon exercise of the Option, and that the broker
has been directed to pay a sufficient portion of the net proceeds of the sale to
the Company in satisfaction of the aggregate exercise price; provided, that
payment of such proceeds is then made to the Company upon settlement of such
sale;

            (d) with the consent of the Administrator, surrender of other shares
of Stock which (A) in the case of shares of Stock acquired from the Company,
have been owned by the Participant for more than six (6) months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the shares with respect to which the Option or
portion thereof is being exercised;

            (e) with the consent of the Administrator, surrendered shares of
Stock issuable upon the exercise of the Option having a Fair Market Value on the
date of exercise equal to the aggregate exercise price of the shares with
respect to which the Option or portion thereof is being exercised; or

            (f) with the consent of the Administrator, property of any kind
which constitutes good and valuable consideration.

      4.5 Conditions to Issuance of Stock Certificates. The shares of Stock
deliverable upon the exercise of the Option, or any portion thereof, may be
either previously authorized but unissued shares or issued shares which have
then been reacquired by the Company. Such shares shall be fully paid and
nonassessable. The Company shall not be required to issue or deliver any shares
of Stock purchased upon the exercise of the Option or portion thereof prior to
fulfillment of all of the following conditions:

            (a) The admission of such shares to listing on all stock exchanges
on which such Stock is then listed;

            (b) The completion of any registration or other qualification of
such shares under any state or federal law or under rulings or regulations of
the Securities and Exchange Commission or of any other governmental regulatory
body, which the Administrator shall, in its absolute discretion, deem necessary
or advisable;

            (c) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Administrator shall, in its absolute
discretion, determine to be necessary or advisable;

                                      A-4
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            (d) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax, which may be in one or more
of the forms of consideration permitted under Section 4.4; and

            (e) The lapse of such reasonable period of time following the
exercise of the Option as the Administrator may from time to time establish for
reasons of administrative convenience.

      4.6 Rights as Stockholder. The holder of the Option shall not be, nor have
any of the rights or privileges of, a stockholder of the Company in respect of
any shares purchasable upon the exercise of any part of the Option unless and
until such shares shall have been issued by the Company to such holder (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
shares are issued, except as provided in Section 11.1 of the Plan.

                                   ARTICLE V

                                OTHER PROVISIONS

      5.1 Administration. The Administrator shall have the power to interpret
the Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret, amend or revoke any such rules. All actions taken and all
interpretations and determinations made by the Administrator in good faith shall
be final and binding upon Participant, the Company and all other interested
persons. No member of the Administrator shall be personally liable for any
action, determination or interpretation made in good faith with respect to the
Plan, this Agreement or the Option. In its absolute discretion, the Board may at
any time and from time to time exercise any and all rights and duties of the
Administrator under the Plan and this Agreement.

      5.2 Option Not Transferable.

            (a) Subject to Section 5.2(b), the Option may not be sold, pledged,
assigned or transferred in any manner other than by will or the laws of descent
and distribution, unless and until the shares underlying the Option have been
issued, and all restrictions applicable to such shares have lapsed. Neither the
Option nor any interest or right therein shall be liable for the debts,
contracts or engagements of Participant or his or her successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.

            (b) Notwithstanding any other provision in this Agreement, with the
consent of the Administrator and to the extent the Option is not intended to
qualify as an Incentive Stock Option, the Option may be transferred to one or
more Permitted Transferees, subject to the terms and conditions set forth in
Section 10.3 of the Plan.

            (c) Unless transferred to a Permitted Transferee in accordance with
Section 5.2(b), during the lifetime of Participant, only Participant may
exercise the Option or any portion thereof. Subject to such conditions and
procedures as the Administrator may require, a Permitted Transferee may exercise
the Option or any portion thereof during Participant's lifetime. After the death
of Participant, any exercisable portion of the Option may, prior to the time
when the Option becomes unexercisable under Section 3.3, be exercised by
Participant's personal representative or by any person empowered to do so under
the deceased Participant's will or under the then applicable laws of descent and
distribution.

                                      A-5
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      5.3 Restrictive Legends and Stop-Transfer Orders.

            (a) The share certificate or certificates evidencing the shares of
Stock purchased hereunder shall be endorsed with any legends that may be
required by state or federal securities laws.

            (b) Participant agrees that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate "stop
transfer" instructions to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.

            (c) The Company shall not be required: (i) to transfer on its books
any shares of Stock that have been sold or otherwise transferred in violation of
any of the provisions of this Agreement, or (ii) to treat as owner of such
shares of Stock or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such shares shall have been so transferred.

      5.4 Shares to Be Reserved. The Company shall at all times during the term
of the Option reserve and keep available such number of shares of Stock as will
be sufficient to satisfy the requirements of this Agreement.

      5.5 Notices. Any notice to be given under the terms of this Agreement to
the Company shall be addressed to the Company in care of the Secretary of the
Company at the address given beneath the signature of the Company's authorized
officer on the Grant Notice, and any notice to be given to Participant shall be
addressed to Participant at the address given beneath Participant's signature on
the Grant Notice. By a notice given pursuant to this Section 5.5, either party
may hereafter designate a different address for notices to be given to that
party. Any notice which is required to be given to Participant shall, if
Participant is then deceased, be given to the person entitled to exercise his or
her Option pursuant to Section 4.1 by written notice under this Section 5.5. Any
notice shall be deemed duly given when sent via email or when sent by certified
mail (return receipt requested) and deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service.

      5.6 Titles. Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of this Agreement.

      5.7 Stockholder Approval. The Plan will be submitted for approval by the
Company's stockholders within twelve months after the date the Plan was
initially adopted by the Board. The Option may not be exercised to any extent by
anyone prior to the time when the Plan is approved by the stockholders, and if
such approval has not been obtained by the end of said twelve month period, the
Option shall thereupon be canceled and become null and void.

      5.8 Governing Law; Severability. This Agreement shall be administered,
interpreted and enforced under the laws of the State of Delaware, without regard
to the conflicts of law principles thereof. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.

      5.9 Conformity to Securities Laws. Participant acknowledges that the Plan
is intended to conform to the extent necessary with all provisions of the
Securities Act and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, and state
securities laws and regulations. Notwithstanding anything herein to the
contrary, the Plan shall be administered, and the Option is granted and may be
exercised, only in such a manner as to conform to

                                      A-6

<PAGE>

such laws, rules and regulations. To the extent permitted by applicable law, the
Plan and this Agreement shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.

      5.10 Amendments. This Agreement may not be modified, amended or terminated
except by an instrument in writing, signed by Participant or such other person
as may be permitted to exercise the Option pursuant to Section 4.1 and by a duly
authorized representative of the Company.

      5.11 Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth in Section 5.2, this Agreement
shall be binding upon Participant and his or her heirs, executors,
administrators, successors and assigns.

      5.12 Notification of Disposition. If this Option is designated as an
Incentive Stock Option, Participant shall give prompt notice to the Company of
any disposition or other transfer of any shares of Stock acquired under this
Agreement if such disposition or transfer is made (a) within two years from the
Grant Date with respect to such shares or (b) within one year after the transfer
of such shares to him. Such notice shall specify the date of such disposition or
other transfer and the amount realized, in cash, other property, assumption of
indebtedness or other consideration, by Participant in such disposition or other
transfer.

      5.13 Limitations Applicable to Section 16 Persons. Notwithstanding any
other provision of the Plan or this Agreement, if Participant is subject to
Section 16 of the Exchange Act, the Plan, the Option and this Agreement shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, this Agreement shall be deemed
amended to the extent necessary to conform to such applicable exemptive rule.

      5.14 Entire Agreement. The Plan and this Agreement (including all Exhibits
hereto) constitute the entire agreement of the parties and supersede in their
entirety all prior undertakings and agreements of the Company and Participant
with respect to the subject matter hereof.

                                      A-7
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                                    EXHIBIT B

                          TO STOCK OPTION GRANT NOTICE

                             FORM OF EXERCISE NOTICE

      Effective as of today, ________________ ___, 20___, the undersigned
("PARTICIPANT") hereby elects to exercise Participant's option to purchase the
number of shares of common stock specified below (the "SHARES") of Volcom, Inc.,
a Delaware corporation (the "COMPANY"), under and pursuant to the Volcom, Inc.
2005 Incentive Award Plan (the "PLAN") and the Stock Option Grant Notice and
Stock Option Agreement dated as of (the "OPTION AGREEMENT"). Capitalized terms
used herein without definition shall have the meanings given in the Plan and, if
not defined in the Plan, the Option Agreement.

GRANT DATE:
                                                  -----------------------------
NUMBER OF SHARES AS TO WHICH OPTION IS EXERCISED:
                                                  -----------------------------
EXERCISE PRICE PER SHARE:                         $
                                                  -----------------------------
TOTAL EXERCISE PRICE:                             $
                                                  -----------------------------
CERTIFICATE TO BE ISSUED IN NAME OF:
                                                  -----------------------------
PAYMENT DELIVERED HEREWITH:                       $______________ (Representing
                                                  the full exercise price for
                                                  the Shares, as well as any
                                                  applicable withholding tax)

                                                  Form of Payment: ____________
                                                                (Please specify)

TYPE OF OPTION:   [ ] Incentive Stock Option     [ ] Non-Qualified Stock Option

      Participant acknowledges that Participant has received, read and
understood the Plan and the Option Agreement. Participant agrees to abide by and
be bound by their terms and conditions. Participant understands that Participant
may suffer adverse tax consequences as a result of Participant's purchase or
disposition of the Shares. Participant represents that Participant has consulted
with any tax consultants Participant deems advisable in connection with the
purchase or disposition of the Shares and that Participant is not relying on the
Company for any tax advice. The Plan and Option Agreement are incorporated
herein by reference. This Agreement, the Plan and the Option Agreement
constitute the entire agreement of the parties and supersede in their entirety
all prior undertakings and agreements of the Company and Participant with
respect to the subject matter hereof.

ACCEPTED BY:                               SUBMITTED BY:
VOLCOM, INC.

By: _________________________________      By: ________________________________

Print Name: _________________________      Print Name: ________________________

Title: ______________________________
                                           Address: ___________________________

                                                    ___________________________<PAGE>

                                                                     EXHIBIT 4.1

MHC Operating Limited Partnership
c/o Manufactured Home Communities, Inc.
Two North Riverside Plaza, Suite 800
Chicago, Illinois 60606

Ladies and Gentlemen:

      Reference is made to that certain Purchase Contract dated as of January
22, 2004, as modified by a letter agreement dated March 5, 2004, and by an
Amendment to Purchase Contract dated as of April 21, 2004 (as so modified the
"Purchase Agreement") by and between the undersigned Monte Vista, LLC and MHC
Operating Limited Partnership ("MHC"), a limited partnership formed under the
Illinois Revised Uniform Limited Partnership Act, of which MHC Trust, a Maryland
real estate investment trust, is the sole general partner (the "General
Partner"). Pursuant to the Purchase Agreement, the undersigned is contributing
the "Property" as defined in the Purchase Contract (the "Contributed Assets") to
MHC. MHC intends to operate in accordance with the Second Amended and Restated
Partnership Agreement dated as of March 15, 1996 (as amended from time to time
in accordance with the terms thereof, the "Partnership Agreement").

      The undersigned has been furnished certain publicly filed documents
(collectively, the "Information Statement") of Manufactured Home Communities,
Inc., a Maryland corporation ("Parent"), which are being provided in connection
with the offering (the "Offering") of partnership interests ("OP Units") in MHC.
The OP Units are to be issued in exchange for the contribution to MHC of the
Contributed Assets.

                                   Section 1.

      1.1 Subscription. The undersigned hereby subscribes for OP Units as
indicated on the counterpart signature page hereof. In respect of this
subscription, the undersigned herewith delivers to MHC (i) two executed original
signature pages of this Subscription Agreement, and (ii) a fully completed
Investor Information Sheet, Account Information Sheet, and Accredited Investor
Questionnaire, attached as EXHIBITS A, B AND C, respectively.

      1.2 Acceptance or Rejection of Subscription. MHC reserves the right to
reject this subscription, in whole but not in part, in the sole discretion of
MHC, if MHC determines that the offer or sale of OP Units to the undersigned
will be made under circumstances that would cause the exemption referred to in
Section 2.3(a) below to be lost. In the event such a determination is made, the
undersigned acknowledges and agrees that MHC may reject this subscription even
if it accepts other subscriptions by other investors. With respect to persons
being offered OP Units, if MHC rejects this subscription pursuant to this
Section 1.2, the undersigned understands and agrees that he will receive cash in
lieu of OP Units and neither the General Partner nor MHC shall have any further
obligation hereunder. Subject to the foregoing and compliance by the undersigned
with all of the terms and provisions hereof, this subscription will be accepted
by MHC if the "Closing" occurs under the Offering.

      1.3 Issuance of OP Units. MHC agrees (i) to issue at the Closing a
certificate to the undersigned whereby MHC shall represent and warrant that the
OP Units issued to the undersigned at such Closing are duly authorized and duly
issued and (ii) that the OP Units issued at such Closing to the undersigned
shall be certificated.

                                      -1-
<PAGE>

                                   Section 2.

      2.1 Investor Representations and Warranties. The undersigned hereby
acknowledges, represents and warrants to, and agrees with MHC as follows, which
acknowledgments will be true and correct as of the closing of the transaction
whereby MHC acquires the Contributed Assets (the "Closing Date"):

            (a) Authorization. This Subscription Agreement constitutes a valid
and legally binding obligation on the part of the undersigned, enforceable in
accordance with its terms except as affected by (i) bankruptcy law, and (ii)
equitable principles. The undersigned represents that he, she or it has full
power and authority to enter into this Subscription Agreement.

            (b) Accredited Investor; No Advertisement or Solicitation:

                  (i) The undersigned is an "accredited investor" as that term
      is defined in Rule 501(a) of Regulation D promulgated under the Securities
      Act of 1933, as amended (the "Securities Act"), and further represents and
      warrants that the information provided by the undersigned in the
      Accredited Investor Questionnaire attached as Exhibit C is true and
      correct as of the date hereof.

                  (ii) The undersigned acknowledges that the offer and sale of
      the OP Units to him, her or it has not been accomplished by any form of
      general solicitation or general advertising, including, but not limited
      to, (i) any advertisement, article, notice or other communication
      published in any newspaper, magazine or similar media, or broadcast over
      television or radio and (ii) any seminar or meeting whose attendees have
      been invited by any general solicitation or general advertising.

            (c) Restrictions on Transfer.

                  (i) The undersigned understands and acknowledges that the OP
      Units have not been registered under the Securities Act, by reason of a
      specific exemption from the registration provisions thereof which
      exemption depends upon, among other things, the bona fide nature of the
      investment intent of the undersigned as expressed herein and the other
      representations of the undersigned set forth herein.

                  (ii) The undersigned understands and acknowledges that none of
      the OP Units or the securities into which OP Units may be exchanged have
      been registered under the Securities Act or registered or qualified under
      the securities laws of any state and none may be sold, transferred,
      assigned, pledged or hypothecated absent an effective registration thereof
      under such Securities Act or an opinion of counsel, which opinion is
      satisfactory in form and substance to MHC and its counsel, to the effect
      that such registration is not required under said Securities Act or such
      states or that such transaction complies with the rules promulgated by the
      Securities and Exchange Commission under said Securities Act or such
      states. The undersigned understands and acknowledges that he, she or it
      must bear the economic risks of this investment resulting from such
      limitations.

                                      -2-
<PAGE>

                  (iii) The undersigned understands and acknowledges that the
      sale, transfer or other disposition of the OP Units is further restricted
      by the provisions of this Agreement, the Partnership Agreement and that
      certain Registration Rights and Lock-Up Agreement (the "Registration
      Rights Agreement") dated as of the date hereof between the undersigned,
      MHC and the General Partner.

                  (iv) In accordance with the Partnership Agreement, OP Units
      may be exchanged for common shares of Parent, $.01 par value per Share
      ("Common Shares"). Common Shares also will not have been registered under
      the Securities Act (unless the Common Shares are registered pursuant to
      the terms of the Registration Rights Agreement or if Parent otherwise
      elects to register the Common Shares) and the General Partner and Parent
      will also rely upon the representations of the undersigned as to
      investment intent and otherwise with respect to the issuance of any Common
      Shares. The restrictions referred to as being applicable to unregistered
      OP Units in paragraphs (a) through (c) of this Section 2 will also apply
      to any unregistered Common Shares.

                  (v) The undersigned is aware of the provisions of Rule 144
      promulgated under the Securities Act, pursuant to which the undersigned
      may be able to sell Common Shares, subject to certain exceptions, one year
      after they receive such Common Shares so long as certain current public
      information is available about the issuer, the sale is through a broker in
      an unsolicited "broker's transaction" and that the undersigned does not
      sell, in any three-month period, more than the greater of 1% of the
      outstanding Common Shares or the average weekly trading volume of Common
      Shares for the four-week period preceding the sale. The undersigned
      generally will be able to sell the Common Shares without regard to any
      volume or other limitations discussed above beginning two years after they
      receive the Common Shares, unless they are affiliates of the Company
      (i.e., a person controlling, controlled by or under common control with
      the Company). Affiliates of the Company will continue to be subject to the
      volume limitations on unregistered sales following the expiration of the
      two-year period. The one and two-year periods are measured from the date
      Common Shares are received, not from the date OP Units are received. The
      preceding description is a general summary of the restrictions of Rule
      144, and the undersigned should consult with his or her own legal advisor
      to ensure compliance with all of the requirements of applicable federal
      and state securities laws and regulations. In this connection, the
      undersigned understands Rule 144 may or may not be available for the
      resale of the OP Units and the undersigned should consult an attorney with
      regard to the availability of Rule 144. Common Shares are subject to the
      reporting requirements under the Securities Exchange Act of 1934 and upon
      notice of issuance have been listed for trading on the New York Stock
      Exchange. The undersigned further understands and acknowledges that, with
      respect to Common Shares, while the General Partner believes that Parent
      satisfies the conditions of Rule 144 on the date it accepts this
      subscription, there can be no assurance that it will meet such conditions
      one year following the issuance of Common Shares (the first date when
      sales under this rule would be permitted). In the event not all of the
      requirements of Rule 144 are met, registration under the Securities Act or
      some other registration exemption will be required for any disposition of
      Common Shares. The undersigned understands that although Rule 144 is not
      exclusive, the Securities and Exchange Commission (the "Commission") has
      expressed its opinion that persons proposing to sell restricted

                                      -3-
<PAGE>

      securities received in an offering other than a registered offering or
      pursuant to Rule 144 will have a substantial burden of proof in
      establishing that an exemption from registration is available for such
      offers or sales that such persons and the brokers who participate in the
      transactions do so at their own risk.

            (d) Disclosure of Information. The undersigned and/or the
undersigned's purchaser representative or personal advisor, as the case may be:

                  (i) has been furnished the Information Statement and any
      documents which may have been made available upon request, has carefully
      read the public documents constituting the Information Statement and
      understands and has evaluated the risks of an investment in the OP Units,
      and has relied solely (except as indicated in subsections (ii) and (iii)
      below) on the information contained in the public documents constituting
      the Information Statement;

                  (ii) has been provided an opportunity to obtain any additional
      information requested concerning the OP Units, MHC, the General Partner
      and Parent;

                  (iii) has been given the opportunity to ask questions of, and
      receive answers from, the General Partner and MHC concerning the terms and
      conditions of this subscription, the Partnership Agreement, and other
      matters pertaining to this investment, and has been given the opportunity
      to obtain such additional information necessary to verify the accuracy of
      the information contained in the public documents constituting the
      Information Statement or that which was otherwise provided in order for
      him, her or it to evaluate the merits and risks of an investment in MHC to
      the extent the General Partner or MHC possesses such information or can
      acquire it without unreasonable effort or expense, and has not been
      furnished any other offering literature or prospectus on which they are
      entitled to rely except as mentioned herein or in the public documents
      constituting the Information Statement; and

                  (iv) has determined that the OP Units are a suitable
      investment for him, her or it and that at this time he, she or it could
      bear the economic risk of the investment.

            (e) Investment Experience. The undersigned represents that he, she
or it has such knowledge and experience in financial and business matters as to
be capable of evaluating alone, or together with his, her or its purchaser
representative or personal advisor, the merits and risks of an investment in the
OP Units and protecting his, her or its own interests in connection with the
investment and has obtained, in his, her or its judgment, alone, or together
with his, her or its purchaser representative or personal advisor sufficient
information from the General Partner or MHC to evaluate the merits and risks of
an investment in the OP Units. The undersigned has not utilized any person as
his, her or its purchaser representative or professional advisor in connection
with evaluating such risks and merits. The undersigned acknowledges that he, she
or it has the financial ability to bear the economic risk of his, her or its
investment in MHC (including his, her or its possible loss), has adequate means
for providing for his, her or its current needs and personal contingencies and
has no need for liquidity with respect to the investment in MHC. If other than
an individual, the undersigned also represents it has not been organized solely
for the purpose of acquiring the OP Units.

                                      -4-
<PAGE>

            (f) Purchase Entirely for Own Account. This Subscription Agreement
is made with the undersigned solely in reliance upon his, her or its
representation to MHC, which by the undersigned's execution of this Subscription
Agreement he, she or it hereby confirms, that the OP Units to be received by the
undersigned will be acquired for investment for the undersigned's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that he, she or it has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Subscription Agreement, the undersigned further represents that he, she or
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or to any third
person, with respect to any of the OP Units.

            (g) Further Limitations on Disposition. Without in any way limiting
the representations set forth above, the undersigned further agrees not to (A)
make any disposition of all or any portion of the OP Units owned by the
undersigned, except for the exchange of OP Units for Common Shares:

                  (i) unless and until there is then in effect a registration
      statement under the Securities Act covering such proposed disposition and
      such disposition is made in accordance with such registration statement;

                  (ii) unless and until (A) the undersigned shall have notified
      MHC of the proposed disposition and shall have furnished MHC with a
      detailed statement of the circumstances surrounding the proposed
      disposition and (B) if requested by MHC, the undersigned shall have
      furnished MHC with an opinion of securities counsel, satisfactory to MHC
      and its counsel, that such disposition will not require registration of
      such securities under the Securities Act; or

      (B) sell, transfer or otherwise dispose of any OP Units to any person or
entity whom the General Partner determines in its sole discretion, is not an
"accredited investor" within the meaning of Regulation D of the Securities Act.

            (h) Legends. To the extent applicable, any certificate issued in
respect of any OP Units or Common Shares issued in exchange for OP Units, shall
be endorsed with the legends substantially in the form set forth below, and the
undersigned covenants that, except to the extent such restrictions are waived by
MHC, the undersigned shall not transfer any OP Units or Common Shares received
in exchange therefor without complying with the restrictions on transfer
described in such legends:

                  (i) "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
            REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
            AMENDED, OR REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY
            STATES AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR
            HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT
            OR AN OPINION OF COUNSEL, WHICH OPINION IS SATISFACTORY IN FORM AND
            SUBSTANCE TO THE PARTNERSHIP, AND ITS COUNSEL, TO THE EFFECT THAT
            SUCH REGISTRATION IS NOT REQUIRED UNDER SAID

                                      -5-
<PAGE>

            ACT OR SUCH STATES OR THAT SUCH TRANSACTION COMPLIES WITH THE RULES
            PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION UNDER SAID ACT
            OR SUCH STATES."

                  (ii) "THE SECURITIES HEREBY REPRESENTED ARE SUBJECT TO, AND
            MAY NOT BE TRANSFERRED WITHOUT COMPLYING WITH, CERTAIN RESTRICTIONS
            ON TRANSFER CONTAINED IN THE PARTNERSHIP AGREEMENT. A COPY OF SAID
            AGREEMENT MAY BE INSPECTED AT THE OFFICES OF THE PARTNERSHIP."

                  (iii) Any legend required by any applicable state securities
            law, or the several agreements for the acquisition of the
            Contributed Assets by MHC to be entered into between the General
            Partner, MHC, and the undersigned at or about the Closing Date.

            (i) Investor Awareness. The undersigned acknowledges, agrees and is
aware that:

                  (i) MHC's financial and operating history is limited to the
      period since March 3, 1993;

                  (ii) no federal or state agency has passed upon the OP Units
      or the Common Shares or made any finding or determination as to the
      fairness of this investment;

                  (iii) there are substantial risks of loss of investment
      incidental to the purchase of the OP Units;

                  (iv) the investment in MHC or the Common Shares is an illiquid
      investment and the undersigned must bear the economic risk of investment
      in the OP Units, or the Common Shares for an indefinite period of time;

                  (v) this Agreement and the Partnership Agreement contain
      substantial restrictions on transferability of the OP Units and Common
      Shares;

                  (vi) neither the General Partner, MHC, nor any of their
      affiliates or representatives has provided the undersigned with any
      investment, tax, legal, regulatory or accounting advice with respect to
      the investment in or ownership of OP Units or Common Shares; and

                  (vii) the representations, warranties, agreements,
      undertakings and acknowledgments made by the undersigned in this
      Subscription Agreement (including without limitation the exhibits thereto)
      are made with the intent that they be relied upon by MHC and the General
      Partner in determining the undersigned's suitability as a purchaser of the
      OP Units, and shall survive its admission as a limited partner in MHC. In
      addition, the undersigned undertakes to notify the General Partner
      immediately of any change in any representation, warranty or other
      information relating to the undersigned set forth herein.

                                      -6-
<PAGE>

                                   Section 3.

      3.1 Modification. Neither this Subscription Agreement nor any provisions
hereof shall be waived, modified, discharged or terminated except by an
instrument in writing signed by the party against whom any waiver, change,
discharge or termination is sought.

      3.2 Notices. All notices, payments, demands or other communications given
hereunder shall be deemed to have been duly given and received (i) upon personal
delivery or (ii) in the case of notices sent within, and for delivery within,
the United States, as of the date shown on the return receipt after mailing by
registered or certified mail, return receipt requested, postage prepaid, or
(iii) the second succeeding business day after deposit with Federal Express or
other equivalent air courier delivery service, unless the notice is held or
retained by the customs service, in which case the date shall be the fifth
succeeding business day after such deposit, and addressed as follows:

         If to the undersigned:

                         MONTE VISTA, LLC
                         c/o Homefree Village Resorts
                         3030 East Second Avenue
                         Suite 104
                         Denver, Colorado  80206
                         Telephone: (303) 377-7124
                         Telecopy: (303) 377-7125
                         Attention: Craig M. Bollman, President

             With a copy to:

                         Bingham McCutchen
                         150 Federal Street
                         23rd Floor
                         Boston, Massachusetts 02110
                         Telephone: (617) 951-8723
                         Telecopy: (617) 951-8736
                         Attention: Edward A. Saxe, Esq.

         If to MHC or General Partner:

                         c/o Manufactured Home Communities, Inc.
                         Suite 800
                         Two North Riverside Plaza
                         Chicago, Illinois  60606
                         Telephone: (312) 279-1400
                         Telecopy: (312) 279-1715
                         Attention: General Counsel

             With a copy to:

                                      -7-
<PAGE>

                         Katten Muchin Zavis Rosenman
                         525 West Monroe Street
                         Suite 1600
                         Chicago, Illinois  60661
                         Telephone: (312) 902-5532
                         Telecopy: (312) 577-8668
                         Attention: Daniel J. Perlman, Esq.

      3.3 Binding Effect. Except as otherwise provided herein, this Subscription
Agreement shall be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal representatives and
permitted assigns. If the undersigned is more than one person, the obligation of
the undersigned shall be joint and several and the agreements, representations,
warranties and acknowledgments herein contained shall be deemed to be made by
and be binding upon each such person and his heirs, executors, administrators
and successors.

      3.4 Entire Agreement. This Subscription Agreement, the Registration Rights
Agreement and the Partnership Agreement, contain the entire agreement of the
parties with respect to this subscription, and there are no representations,
covenants or other agreements except as stated or referred to herein or therein.

      3.5 Assignability. This Subscription Agreement is not transferable or
assignable by the undersigned, except that the Subscription Agreement may be
assigned to any bona fide pledgee of OP Units pursuant to any transfer of such
OP Units to the pledgee pursuant to foreclosure, transfer-in-lieu of
foreclosure, or otherwise, and subsequent transfer of such OP Units following or
in connection with any such transfer to the pledgee or foreclosure or
transfer-in-lieu thereof.

      3.6 Applicable Law. This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois applicable to
contracts made and to be performed entirely within such State.

      3.7 Gender. All pronouns contained herein and any variations thereof shall
be deemed to refer to the masculine, feminine or neuter, singular or plural, as
the identity of the parties hereto may require.

      3.8 Counterparts. This Subscription Agreement may be executed through the
use of separate signature pages or in counterparts, and each of such
counterparts shall, for all purposes, constitute one agreement binding on the
parties hereto, notwithstanding that the parties hereto are not signatories to
the same counterpart.

      3.9 Further Assurances. The undersigned will, from time to time, execute
and deliver to the General Partner or MHC all such other and further instruments
and documents and take or cause to be taken all such other and further action as
the General Partner or MHC may reasonably request in order to effect the
transactions contemplated by this Agreement.

                                      -8-
<PAGE>

                        MHC OPERATING LIMITED PARTNERSHIP

                             SUBSCRIPTION AGREEMENT
                           COUNTERPART SIGNATURE PAGE

      The undersigned, desiring to enter into this Subscription Agreement for
the subscription of the number of OP Units indicated below, hereby agrees to all
of the terms and provisions of this Subscription Agreement and agrees to be
bound by all such terms and provisions.

      The undersigned has executed this Subscription Agreement as of the 13th
day of May, 2004.

With respect to OP Units:
Number of OP Units being Subscribed: 1,058,721 The Number of OP Units determined
                                               in accordance with the Purchase
                                               Contract.

      MONTE VISTA, LLC, an Arizona
      limited liability company

      By: Homefree Village Resorts, Inc.
          Manager of Monte Vista, LLC

      By: /s/ Craig M. Bollman, Jr.
          ---------------------------
      Name: Craig M. Bollman, Jr.
      Title: President

Agreed and Accepted this 13 day of May, 2004.

MHC OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership

By: MHC TRUST, a Maryland real estate
investment trust, its General Partner

By: /s/ David W. Fell
    ---------------------------
Name: David W. Fell
Title: Vice President

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