As filed with the Securities and Exchange Commission on September 29, 1998
================================================================================
Registration No. 333-_______________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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APPLE RESIDENTIAL INCOME TRUST, INC.
(Exact name of registrant as specified in its charter)
Virginia 54-1816010
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
306 East Main Street, Richmond, Virginia 23219
(Address of principal executive offices) (Zip Code)
APPLE RESIDENTIAL INCOME TRUST, INC.
1996 INCENTIVE PLAN
(Full title of the plan)
Glade M. Knight Copy to: Martin B. Richards, Esq.
306 East Main Street McGuire, Woods, Battle & Boothe, LLP
Richmond, Virginia 23219 One James Center
Telephone: (804) 643-1761 Richmond, Virginia 23219
(Name, address and telephone number, Telephone: (804) 775-1029
including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
============================================================================================================
Title of Proposed Maximum Proposed Maximum
Securities to Amount to be Offering Aggregate Amount of
be Registered Registered Price Per Share (1) Offering Price (1) Registration Fee
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common
Shares 2,214,542 shares $10 $22,145,420 $6532.90
============================================================================================================
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee and
based, pursuant to Rule 457(a) under the Securities Act of 1933, on the most
recent price at which shares were sold to the public.
<PAGE>
PROSPECTUS
APPLE RESIDENTIAL INCOME TRUST, INC.
1996 INCENTIVE PLAN
----------------
This document provides information about the 1996 Incentive Plan of
Apple Residential Income Trust, Inc. (the "Company"), pursuant to which up to
2,214,542 shares of the Company's common stock, no par value (the "Common
Stock"), may be issued to eligible employees of the Company.
----------------
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS
COVERING SECURITIES THAT HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
-----------------
No person is authorized to give any information or make any
representation in connection with the offer contained in this Prospectus, other
than those contained herein. Any information or representation not contained
herein must not be relied upon as having been so authorized. This Prospectus
does not constitute an offer to sell, or a solicitation of an offer to buy, the
securities covered by this Prospectus in any State or other jurisdiction in
which, or to any person to whom, it is unlawful to make such an offer or
solicitation. Neither the delivery of this Prospectus nor any sales or
solicitations hereunder shall under any circumstances create any implication
that there has been no change in the affairs of the Company since the date
hereof.
The date of this Prospectus is September 29, 1998.
<PAGE>
TABLE OF CONTENTS
PAGE
GENERAL INFORMATION............................................................3
SHARES AVAILABLE FOR ISSUANCE..................................................3
ELIGIBILITY....................................................................3
TERMS OF INCENTIVE AWARDS......................................................4
Restricted Stock......................................................4
Options............................................................. 4
Transferability of Incentive Awards...................................4
Change of Control.....................................................5
FEDERAL INCOME TAX CONSEQUENCES................................................5
For Participants......................................................5
For the Company.......................................................6
RESTRICTIONS ON RESALE.........................................................6
ADDITIONAL INFORMATION.........................................................7
2
<PAGE>
GENERAL INFORMATION
The Board of Directors (the "Board") of the Company has adopted the
1996 Incentive Plan, as amended and restated (the "Plan"), which became
effective on October 17, 1996. The Plan is intended to further the long term
stability and financial success of the Company by attracting and retaining key
employees of the Company and its affiliates through the use of stock incentives.
Incentive awards under the Plan may be in the form of restricted stock or stock
options. The Plan will terminate on October 17, 2006 unless earlier terminated
upon the adoption of a resolution by the Board.
The Plan is administered by a Committee (the "Committee") of not less
than two members appointed by the Board. The Board has the power at any time to
fill vacancies in the Committee, and may appoint members previously appointed.
Insofar as it is necessary to satisfy Rule 16b-3 under the Securities Exchange
Act of 1934 ("Rule 16b-3"), all members of the Committee are non-employee
directors of the Company. The Committee has the power and complete discretion to
determine when to grant incentive awards, which eligible employees will receive
awards, whether the award will be an option or restricted stock, and the number
of shares attached to each incentive award. The Committee may impose conditions
on the exercise of options, and may impose such other restrictions and
requirements as it may deem appropriate with respect to grants made to eligible
employees. The Board may suspend or discontinue the Plan or revise or amend the
Plan in any manner, except that without approval of the shareholders of the
Company, no revision or amendment may increase the number of shares subject to
the Plan, materially modify the requirements as to eligibility for participation
in the Plan, or materially increase the benefits accruing to participants under
the Plan.
The Plan is not subject to any provisions of the Employee Retirement
Income Security Act of 1974 nor is the Plan qualified under Section 401(a) of
the Internal Revenue Code (the "Tax Code").
Statements contained in this Prospectus as to the provisions of the
Plan are intended to be general in nature and may not in every instance be
complete. Reference is made to the Plan, a copy of which will be provided,
without charge, upon written or oral request to the Company's Chief Financial
Officer. (See "Additional Information.") The statements in this Prospectus are
qualified in all respects by reference to the Plan.
SHARES AVAILABLE FOR ISSUANCE
A total of up to 2,214,542 shares of Common Stock is reserved for
issuance under the Plan. Shares allocable to options that expire or otherwise
terminate unexercised may again be subjected to an award. The number of shares
available for an award under the Plan will include the number of shares
surrendered by an optionee or retained by the Company in payment of applicable
withholding taxes. Incentive awards may be granted under the Plan conditioned
upon the surrender for cancellation of an option granted under an existing
incentive award. In the event of a stock dividend, stock split or combination of
shares, recapitalization, merger or other similar change, appropriate
adjustments will be made in the number and kind of shares issuable under the
Plan, the number and kind of shares to be issued under outstanding awards, the
exercise price of options and other relevant provisions.
ELIGIBILITY
Options and restricted stock may be granted under the Plan to Company
employees who are determined by the Committee to hold positions with management
responsibilities with the Company (or any parent or subsidiary of the Company).
3
<PAGE>
TERMS OF INCENTIVE AWARDS
RESTRICTED STOCK
Restricted stock issued pursuant to the Plan is subject to the
following general restrictions: (i) none of such shares may be sold, assigned or
transferred within a six-month period beginning on the date of grant, nor may
they be pledged or hypothecated within that six-month period if such action
would be treated as a sale under Rule 16b-3, (ii) none of such shares may be
sold, assigned, transferred, pledged or hypothecated or otherwise encumbered or
disposed of until the restrictions on such shares shall have lapsed or been
removed under the provisions of the Plan, and (iii) if a holder of restricted
stock ceases to be employed by the Company or a parent or subsidiary thereof, he
will forfeit any shares of restricted stock on which the restrictions have not
lapsed or been otherwise removed.
The Committee will establish as to each share of restricted stock
issued under the Plan the terms and conditions upon which the restrictions on
such shares shall lapse. Such terms and conditions may include, without
limitation, the lapsing of such restrictions at the end of a specified period of
time, as a result of the disability, death or retirement of the participant or
as a result of the occurrence of a Change in Control. In addition, the Committee
may at any time, in its sole discretion, accelerate the time at which any or all
restrictions will lapse or remove any and all such restrictions.
Restricted stock may be awarded by the Committee in its discretion
without cash consideration. During the period of restriction, participants
holding shares of restricted stock may exercise full voting rights with respect
to those shares and are entitled to receive all dividends and other
distributions paid with respect to those shares.
OPTIONS
Options to purchase Common Stock granted to employees under the Plan
shall be nonstatutory stock options, which do not qualify for favorable tax
treatment under Section 422 of the Tax Code. The exercise price of shares of
Company Stock covered by an option may not be less than 100% of the fair market
value of such shares on the date of grant.
Options may be exercised in whole or in part at such times as may be
determined by the Committee and specified in the option agreements, except that
no option may be exercised earlier than six months after the date of grant
(except in case of death or disability), and no option may be exercised after
the first to occur of (i) 10 years from the date of grant, (ii) 60 days
following the optionee's termination of employment with the Company for reasons
other than death or disability, or (iii) 180 days following the optionee's death
or disability.
The participant does not pay any monetary consideration for the
granting of the options. The Plan provides that the exercise price of shares
covered by an option shall be not less than the fair market value of such shares
on the date of grant. The exercise price of an option may be paid in cash or, if
the terms of the option so permit, (i) by delivery to the Company of shares of
Common Stock (valued at fair market value on the date of exercise) in the amount
necessary to pay the exercise price, or (ii) by delivery of an exercise notice
together with irrevocable instructions to a broker to promptly deliver to the
Company the amount necessary to pay the exercise price (and, if required by the
Committee, applicable withholding taxes) out of the proceeds from the sale of
option shares or a loan secured by such option shares, or (iii) by delivery of
an interest bearing recourse promissory note. At the time of exercise, an
optionee must make arrangements satisfactory to the Company for the payment of
all applicable withholding taxes. If the option agreement so provides, an
optionee may elect to deliver or have withheld a sufficient number of shares of
Common Stock to satisfy the Company's tax withholding obligations subject to
such procedural requirements as may be necessary to comply with Rule 16b-3 under
the Exchange Act. The Committee has sole discretion to approve or disapprove any
such election. No fees, commissions or other charges are incurred upon exercise
of an option.
4
<PAGE>
TRANSFERABILITY OF INCENTIVE AWARDS
Options are not transferable except by will or by the laws of descent
and distribution or, if permitted by Rule 16b-3, pursuant to a Qualified
Domestic Relations Order (as defined in Tax Code Section 414(p)), and generally
are exercisable during the lifetime of the optionee only by such optionee, or
his guardian or legal representative. No shares of restricted stock may be
assigned, transferred, pledged or hypothecated until the restrictions on such
shares have lapsed or been removed by the Committee. Upon the death of a
participant, his personal representative or beneficiary may exercise his rights
under the Plan. The Plan contains no provision that permits participants to
withdraw from the Plan and terminate their interests therein.
CHANGE OF CONTROL
The Committee may, in its discretion, provide that stock options
granted to employees under the Plan become fully exercisable upon a Change of
Control, notwithstanding other conditions on exercisability in the stock option
agreement. For purposes of the Plan, a "Change of Control" occurs: (i) when a
person (or group of persons acting in concert) acquires 20% or more of the
outstanding Common Stock of the Company, (ii) when there is a change in the
composition of a majority of the Board when compared with those who are
currently serving and any new members whose nomination or election is approved
by a majority of the current Board, or (iii) when the shareholders of the
Company approve a reorganization, merger or consolidation or other transaction
which results in the shareholders of the Company prior to such transaction
owning 50% or less of the corporation resulting from the transaction, or a
liquidation or dissolution of the Company. Exceptions are made to the first
change of control definition when (i) the acquiror obtains its shares directly
from the Company, (ii) the acquiror is the Company, a Company subsidiary or a
Company benefit plan, or (iii) the acquiror is a corporation more than 50% of
which immediately after such acquisition is owned by persons who were formerly
the shareholders of the Company and such persons hold shares in the acquiror in
substantially the same proportion as they previously held in the Company.
The Plan also permits the Committee to take such other actions with
respect to outstanding incentive awards as the Committee deems appropriate in
the event of a Change of Control.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the Federal income tax consequences to
the Company and participants under the Plan. It is general and does not purport
to be complete. There may also be applicable state and local taxes. In addition,
in some cases it may be important to consider the effect, if any, of gift,
estate and inheritance taxes.
NO REPRESENTATION RESPECTING THE TAX TREATMENT OF ANY INCENTIVE AWARD
HAS BEEN MADE TO A PLAN PARTICIPANT. PLAN PARTICIPANTS ARE URGED TO CONSULT
THEIR COUNSEL, ACCOUNTANTS, OR OTHER TAX ADVISORS REGARDING THE TAX CONSEQUENCES
OF RESTRICTED STOCK OR OPTIONS GRANTED TO THEM IN RELATION TO THEIR OWN
PARTICULAR TAX SITUATION.
FOR PARTICIPANTS
RESTRICTED STOCK. In general, an employee who has received shares of
restricted stock will include in gross income as compensation income an amount
equal to the fair market value of the shares of restricted stock at the time the
restrictions lapse or are removed. Such amount will be included in the tax year
in which such event occurs.
NONSTATUTORY STOCK OPTIONS. All options granted under the Plan shall be
nonstatutory in nature and shall not be entitled to special tax treatment under
Tax Code Section 422. Under present Federal income tax law and existing and
temporary regulations subject to change at any time:
5
<PAGE>
(1) Generally, no taxable income will be realized by a
participant upon the grant of nonstatutory stock options under the
Plan.
(2) Upon the exercise of nonstatutory stock options, a
participant will incur ordinary income in the year of exercise to the
extent that the fair market value of the Common Stock on the date of
exercise exceeds the option price.
EXERCISE OF AN OPTION WITH COMMON STOCK. Subject to certain
limitations, a participant may pay any or all of the purchase price on the
exercise of a stock option by the delivery of Common Stock. Usually when a
participant delivers shares of Common Stock in satisfaction of all, or any part,
of the purchase price, no taxable gain is recognized on any appreciation in
value of the previously held Common Stock. In other words, even though the
delivered shares are valued at their fair market value for purposes of paying
all or part of the option price, the participant is generally not taxed on the
difference between the fair market value and the tax basis of the shares.
TAX BASIS OF COMMON STOCK RECEIVED UPON EXERCISE. Ordinary income
recognized upon receipt of Common Stock under the Plan will increase the
participant's tax basis for the purpose of determining gain or loss on the
subsequent sale or exchange of the Common Stock. Special rules apply to
determine the basis of shares of Common Stock received upon the exercise of a
stock option by the delivery of shares of previously owned Common Stock.
FOR THE COMPANY
The Company usually will be entitled to a business expense deduction at
the time and in the amount that the participant recognizes ordinary income in
connection with an incentive award. This usually occurs upon the lapse or
removal of the restrictions on restricted stock or upon the exercise of
nonstatutory options. In some cases, such as the exercise of a nonstatutory
option, the Company's deduction is contingent upon the Company's meeting tax
withholding requirements.
There can be circumstances in which the Company may not be entitled to
a deduction for certain transfers of Common Stock or payments to a participant
upon the exercise of an incentive award that has been accelerated as a result of
a Change of Control. The Tax Code generally imposes a $1,000,000 limitation on
the annual compensation deduction allowable to a publicly held corporation in
respect of its chief executive officer and its other four most highly paid
officers (including any deduction with respect to the exercise of a nonstatutory
stock option). An exception is provided for certain performance-based
compensation if certain shareholder approval and outside director requirements
are satisfied.
RESTRICTIONS ON RESALE
All shares of restricted stock issued pursuant to the Plan will be
subject to restrictions on resale as discussed above.
The Plan contains no restrictions on the resale of Common Stock
received upon exercise of a stock option. However, officer optionees should be
aware that they may be insiders under Section 16(b) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), in which case they must pay to the
Company any profit made from a purchase and sale, or a sale and purchase, of
Common Stock within a six-month period. Transactions subject to Section 16(b)
may include the award, receipt and vesting of restricted stock and the receipt,
vesting and exercise of stock options, the delivery or retention of Common Stock
to pay the exercise price of options or to satisfy tax withholding obligations,
and the resale of Common Stock received from the Company. Transactions between
the participant and the Company, in which no third parties are involved, may be
eligible for exemption pursuant to Rule 16b-3 under the Exchange Act.
Participants who have questions regarding the applicability of Section 16 are
encouraged to contact the Company's Chief Financial Officer.
6
<PAGE>
Also, the securities laws impose certain limitations on sales by
persons who are affiliates of the Company, as defined in Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"). An affiliate may
resell such Common Stock only pursuant to an effective registration statement
under the Securities Act or an exemption from such registration, such as the
exemption provided by Rule 144 under the Securities Act. The Company has no
obligation to register for resale any shares of Common Stock acquired by
participants and this Prospectus is not available to a participant for reoffers
or resales.
PLAN PARTICIPANTS ARE URGED TO CONSULT WITH THEIR BROKERS, FINANCIAL
ADVISERS, AND SECURITIES COUNSEL TO DETERMINE THEIR PARTICULAR STATUS UNDER THE
SECURITIES LAWS BEFORE EFFECTING ANY RESALES OF THE COMPANY'S COMMON STOCK
RECEIVED PURSUANT TO THE PLAN.
ADDITIONAL INFORMATION
The Company hereby incorporates by reference the following documents
filed or to be filed with the Securities and Exchange Commission (the
"Commission");
(a) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1997;
(b) all other reports filed with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act, since December 31,
1997, including: the Company's Quarterly Reports on Form 10-Q
filed May 14, 1998 and August 14, 1998, and the Company's
Reports of Current Events on Form 8-K or 8-K/A filed on
January 30, 1998, February, 18, 1998, February 23, 1998, April
15, 1998, April 17, 1998, April 22, 1998, May 13, 1998, May
22, 1998, June 10, 1998, July 7, 1998, July 16 , 1998, August
3, 1998, and August 4, 1998;
(c) the Company's Registration Statement on Form 8-A under the
Exchange Act filed on April 3, 1998 with the Commission; and
(d) from the date of filing such documents, all documents
subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all
such securities then remaining unsold.
Upon oral or written request, the Company will provide to a
participant, without charge, copies of (i) any and all of the information that
has been incorporated by reference in this document, (ii) the Company's most
recent annual report to shareholders, and (iii) if the participant is not
otherwise receiving such material, all reports, proxy statements and other
communications distributed by the Company to its shareholders generally. Such
requests should be directed to the Company's Chief Financial Officer at the
Company's business address: 306 East Main Street, Richmond, Virginia, 23219,
telephone number (804) 643-1761.
Participants may contact the Company's Chief Financial Officer at the
address and telephone number listed above to obtain additional information about
the Plan and its administrators.
The Company may distribute from time to time to participants reports
showing the status of their grants under the Plan.
7
<PAGE>
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Apple Residential Income Trust, Inc. (the "Company") hereby
incorporates by reference into this Registration Statement the following
documents which have been filed with the Securities and Exchange Commission (the
"Commission"):
(a) the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(b) all other reports filed with the Commission pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since December 31, 1997, including: the Company's Quarterly Reports on
Form 10-Q filed May 14, 1998 and August 14, 1998, and the Company's Reports of
Current Events on Form 8-K or 8-K/A filed on January 30, 1998, February 18,
1998, February 23, 1998, April 15, 1998, April 17, 1998, April 22, 1998, May 13,
1998, May 22, 1998, June 10, 1998, July 7, 1998, July 16, 1998, August 3, 1998,
and August 4, 1998; and
(c) the description of the Company's Common Shares appearing in its
Registration Statement on Form 8-A filed with the Commission on April 3, 1993
(No. 0-23983).
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all such securities then remaining unsold, shall
be deemed to be incorporated by reference in this Registration Statement and to
be part hereof from the respective dates of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 10 of the Virginia Stock Corporation Act (the "Act") allows, in
general, for indemnification, in certain circumstances, by a corporation of any
person threatened with or made a party to any action, suit or proceeding by
reason of the fact that he or she is, or was, a director, officer, employee or
agent of such corporation. Indemnification is also authorized with respect to a
criminal act or proceeding where the person had no reasonable cause to believe
that his or her conduct was unlawful. Article 9 of the Act provides limitations
on damages payable by officers and directors, except in cases of willful
misconduct or knowing violation of criminal law or any federal or state
securities laws.
Article VI of the Company's Articles of Incorporation (the "Articles")
provides that in every instance in which the Act, and any amendments thereto,
permits the limitation or elimination of liability of directors or officers of a
corporation to the corporation or its shareholders, the directors and officers
of the Company shall not be liable to the Company or its shareholders.
The Articles provide for mandatory indemnification of any individual
who is, was or is threatened to be made a party to a proceeding (including a
proceeding by or in the right of the Company or by or on behalf of its
shareholders) because such individual is or was a director or officer of the
Company or of any legal entity controlled by the company or because such
individual is or was a fiduciary of any employee benefit plan established at the
direction of the Company, against all liabilities and reasonable expenses
incurred on account of the proceeding, provided that the directors of the
Company (excluding the indemnified party) determine in good faith that the
II-1
<PAGE>
director's or officer's course of conduct which caused the loss or liability was
undertaken in good faith within what he reasonably believed to be the scope of
his authority and for a purpose which he reasonably believed to be in the best
interests of the Company or its shareholders, except such liabilities and
expenses as are incurred because of such individual's willful misconduct, bad
faith, negligence, reckless disregard of duties or violation of the criminal
law.
The Company maintains a standard policy of officers' and directors'
liability insurance. The Company is authorized to purchase and maintain
insurance against any liability it may have under the indemnification provisions
of the Articles or to protect any of the persons named above against any
liability arising from their service to the Company or any other legal entity at
the request of the Company, regardless of the Company's power to indemnify
against such liability.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
Exhibit
Number Description
4.1 Articles of Incorporation of Apple Residential Income Trust,
Inc. (Incorporated by reference to Exhibits 3.1, 3.3 and 3.4
included in the Registrant's Registration Statement on Form
S-11; File No. 333-10635).
4.2 Amended and Restated Bylaws of Apple Residential Income Trust,
Inc. (Incorporated by reference to Exhibit 3.5 included in the
Registrant's Registration Statement on Form S-11; File No.
333-10635).
5 Opinion of McGuire, Woods, Battle & Boothe LLP as to the
legality of the securities being registered.
23.1 Consent of McGuire, Woods, Battle & Boothe LLP (included as
part of Exhibit 5).
23.2 Consent of Ernst & Young LLP.
23.3 Consent of L.P. Martin & Company, P.C.
24.1 Power of Attorney of Glade M. Knight.
24.2 Power of Attorney of Stanley J. Olander, Jr.
24.3 Power of Attorney of Lisa B. Kern.
24.4 Power of Attorney of Penelope W. Kyle.
24.5 Power of Attorney of Bruce H. Matson
99 Apple Residential Income Trust, Inc. 1996 Incentive Plan.
ITEM 9. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
II-2
<PAGE>
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or Section
15(d) of the Exchange Act that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Richmond, Commonwealth of Virginia, on September 29,
1998.
APPLE RESIDENTIAL INCOME TRUST, INC.
By: /s/ Glade M. Knight
--------------------------------------------
Glade M. Knight, Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated.
Signature Capacities Date
--------- ---------- ----
/s/* Glade M. Knight Director, President, and September 29, 1998
- ----------------------------- Chief Executive Officer
Glade M. Knight
/s/* Vice President, September 29, 1998
- ----------------------------- Secretary and Chief
Stanley J. Olander, Jr. Financial Officer
/s/* Director September 29, 1998
- -----------------------------
Lisa B. Kern
/s/* Director September 29, 1998
- -----------------------------
Penelope W. Kyle
Director September 29, 1998
- -----------------------------
Bruce H. Matson
*By: /s/ Glade M. Knight
- -------------------------------------------
Glade M. Knight,
Attorney-in-Fact for the above-named persons
II-4
<PAGE>
EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered
- ------ ----------- Page
------------
4.1 Articles of Incorporation of Apple
Residential Income Trust, Inc.
(Incorporated by reference to Exhibits 3.1,
3.3 and 3.4 included in the Registrant's
Registration Statement on Form S-11; File
No. 333-10635).
4.2 Bylaws of Apple Residential Income Trust,
Inc. (Incorporated by reference to Exhibit
3.5 included in the Registrant's
Registration Statement on Form S-11; File
No. 333-10635).
5 Opinion of McGuire, Woods, Battle & Boothe
LLP as to the legality of the securities
being registered.
23.1 Consent of McGuire, Woods, Battle & Boothe
LLP (included as part of Exhibit 5).
23.2 Consent of Ernst & Young LLP.
23.3 Consent of L.P. Martin & Company, P.C.
24.1 Power of Attorney of Glade M. Knight.
24.2 Power of Attorney of Stanley J. Olander,
Jr.
24.3 Power of Attorney of Lisa B. Kern.
24.4 Power of Attorney of Penelope W. Kyle.
24.5 Power of Attorney of Bruce H. Matson
99 Apple Residential Income Trust, Inc. 1996
Incentive Plan.
II-5
EXHIBIT 5
September 29, 1998
Board of Directors
Apple Residential Income Trust, Inc.
306 East Main Street
Richmond, Virginia 23219
Dear Sirs:
We have acted as counsel to Apple Residential Income Trust, Inc. (the
"Company"), a Virginia corporation, in connection with the preparation of the
registration statement on Form S-8, pertaining to the Apple Residential Income
Trust, Inc. 1996 Incentive Plan, to which this opinion is an exhibit (the
"Registration Statement"), which is being filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Act"), for the
registration under the Act of the Common Shares of the Company described in such
Registration Statement. Terms not otherwise defined herein shall have the
meanings assigned to them in the Registration Statement.
We have reviewed originals or copies of (i) the Articles of
Incorporation, as amended, Bylaws and other corporate documents of the Company,
(ii) certain resolutions of the Board of Directors of the Company, and (iii) the
Registration Statement and the prospectus included therein (the "Prospectus").
In addition, we have reviewed such other documents and have made such legal and
factual inquiries as we have deemed necessary or advisable for purposes of
rendering the opinions set forth below.
Based upon and subject to the foregoing we are of the opinion that:
1. The Company is duly organized and validly existing under the laws
of the Commonwealth of Virginia; and
2. The Common Shares registered under the Registration Statement
have been duly authorized and, when issued and paid for as described in the
Registration Statement, will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required by Section 7 of the Act, or
the rules and regulations promulgated thereunder by the Securities and Exchange
Commission.
Very truly yours,
/s/ McGuire, Woods, Battle & Boothe LLP
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333-00000) pertaining to the 1996 Incentive Plan of Apple Residential
Income Trust, Inc. of our report dated February 13, 1998, with respect to the
consolidated financial statements and schedule of Apple Residential Income
Trust, Inc. included in its Annual Report (Form 10-K) for the year ended
December 31, 1997, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Richmond, Virginia
September 28, 1998
EXHIBIT 23.3
L.P. MARTIN & COMPANY, P.C.
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: 804-346-2626
FAX: 804-346-9311
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Apple Residential Income Trust, Inc.
Richmond, Virginia
We hereby consent to the incorporation by reference of the following
reports prepared by us in two Registration Statements on Form S-8 of Apple
Residential Income Trust, Inc. filed with the Securities and Exchange Commission
by Apple Residential Income Trust, Inc., and in the Prospectus (including
supplements thereto) included therein and to the references to us under
"Experts" therein:
(1) Our report dated December 16, 1997 with respect to the statement of
income and direct operating expenses exclusive of items not comparable to the
proposed future operations of the property Copper Crossing Apartments for the
twelve-month period ended October 31, 1997, (2) our report dated March 25, 1998
with respect to the statement of income and direct operating expenses exclusive
of items not comparable to the proposed future operations of the property Main
Park Apartments for the twelve-month period ended December 31, 1997, (3) our
report dated April 6, 1998 with respect to the statement of income and direct
operating expenses exclusive of items not comparable to the proposed future
operations of the property Timberglen Apartments for the twelve-month period
ended December 31, 1997, (4) our report dated April 14, 1998 with respect to the
statement of income and direct operating expenses exclusive of items not
comparable to the proposed future operations of the property Copper Ridge
Apartments for the twelve-month period ended February 28, 1998, (5) our report
dated May 14, 1998 with respect to the statement of income and direct operating
expenses exclusive of items not comparable to the proposed future operations of
the property Bitter Creek Apartments for the twelve-month period ended March 31,
1998, (6) our report dated July 16, 1998 with respect to the statement of income
and direct operating expenses exclusive of items not comparable to the proposed
future operations of the property Summer Tree Apartments for the twelve-month
period ended May 31, 1998, (7) our report dated July 17, 1998 with respect to
the statement of income and direct operating expenses exclusive of items not
comparable to the proposed future operations of the property Park Village
Apartments for the twelve-month period ended May 31, 1998, (8) our report dated
July 21, 1998 with respect to the statement of income and direct operating
expenses exclusive of items not comparable to the proposed future operations of
the property Cottonwood Crossing Apartments for the twelve-month period ended
May 31, 1998, (9) our report dated May 14, 1998 with respect to the statement of
income and direct operating expenses exclusive of items not comparable to the
proposed future operations of the property Pace's Point Apartments for the
twelve-month period ended March 31, 1998, (10) our report dated May 14, 1998
with respect to the statement of income and direct operating expenses exclusive
of items not comparable to the proposed future operations of the property Pepper
Square Apartments for the twelve-month period ended March 31, 1998, (11) our
report dated May 14, 1998 with respect to the statement of income and direct
operating expenses exclusive of items not comparable to the proposed future
operations of the property Emerald Oaks Apartments for the twelve-month period
ended March 31, 1998, (12) our report dated May 14, 1998 with respect to the
statement of income and direct operating expenses exclusive of items not
comparable to the proposed future operations of the property Hayden's Crossing
Apartments for the twelve-month period ended March 31, 1998, (13) our report
dated May 14, 1998 with respect to the statement of income and direct operating
expenses exclusive of items not comparable to the proposed future operations of
the property Newport Apartments for the twelve-month period ended March 31,
1998, and (14) our report dated July 15, 1998 with respect to the statement of
income and direct operating expenses exclusive of items not comparable to the
proposed future operations of the property Estrada Oaks Apartments for the
twelve-month period ended June 30, 1998.
Richmond, Virginia
September 29, 1998 /s/ L. P. Martin & Co., P.C.
Exhibit 24.1
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Stanley J. Olander, Jr.
his attorney-in-fact, to execute on his behalf, individually and in each
capacity stated below, and to file, any documents referred to below relating to
the registration of all of the common shares of Apple Residential Income Trust,
Inc. (the "Company") issuable under or pursuant to the Company's 1996 Incentive
Plan and options granted thereunder, such documents being: a Registration
Statement to be filed with the Securities and Exchange Commission; such
statements with, or applications to, the regulatory authorities of any state in
the United States as may be necessary to permit such shares to be offered and
sold in such states; and any and all amendments to any of the foregoing, with
all exhibits and documents required to be filed in connection therewith. The
undersigned further grants unto said attorney full power and authority to
perform each and every act necessary to be done in order to accomplish the
foregoing registrations as fully as he himself might do.
IN WITNESS WHEREOF, the undersigned has signed this power of attorney
as of the 29th day of September, 1998.
/s/ Glade M. Knight
--------------------------
Glade M. Knight, Director,
President and Chief Executive Officer of the Company
Exhibit 24.2
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints Glade M. Knight his
attorney-in-fact, to execute on his behalf, individually and in each capacity
stated below, and to file, any documents referred to below relating to the
registration of all of the common shares of Apple Residential Income Trust, Inc.
(the "Company") issuable under or pursuant to the Company's 1996 Incentive Plan
and options granted thereunder, such documents being: a Registration Statement
to be filed with the Securities and Exchange Commission; such statements with,
or applications to, the regulatory authorities of any state in the United States
as may be necessary to permit such shares to be offered and sold in such states;
and any and all amendments to any of the foregoing, with all exhibits and
documents required to be filed in connection therewith. The undersigned further
grants unto said attorney full power and authority to perform each and every act
necessary to be done in order to accomplish the foregoing registrations as fully
as he himself might do.
IN WITNESS WHEREOF, the undersigned has signed this power of attorney
as of the 29th day of September, 1998.
/s/ Stanley J. Olander, Jr.
-------------------------------------------------
Stanley J. Olander, Jr., Chief Financial Officer
of the Company
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints each of Glade M. Knight
and Stanley J. Olander, Jr., either of whom may act as her attorney-in-fact, to
execute on her behalf, individually and in each capacity stated below, and to
file, any documents referred to below relating to the registration of all of the
common shares of Apple Residential Income Trust, Inc. (the "Company") issuable
under or pursuant to the Company's 1996 Incentive Plan and options granted
thereunder, such documents being: a Registration Statement to be filed with the
Securities and Exchange Commission; such statements with, or applications to,
the regulatory authorities of any state in the United States as may be necessary
to permit such shares to be offered and sold in such states; and any and all
amendments to any of the foregoing, with all exhibits and documents required to
be filed in connection therewith. The undersigned further grants unto said
attorneys and each of them full power and authority to perform each and every
act necessary to be done in order to accomplish the foregoing registrations as
fully as she herself might do.
IN WITNESS WHEREOF, the undersigned has signed this power of attorney
as of the 28th day of September, 1998.
/s/ Lisa B. Kern
-------------------------
Lisa B. Kern, Director
of the Company
Exhibit 24.4
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints each of Glade M. Knight
and Stanley J. Olander, Jr., either of whom may act as her attorney-in-fact, to
execute on her behalf, individually and in each capacity stated below, and to
file, any documents referred to below relating to the registration of all of the
common shares of Apple Residential Income Trust, Inc. (the "Company") issuable
under or pursuant to the Company's 1996 Incentive Plan and options granted
thereunder, such documents being: a Registration Statement to be filed with the
Securities and Exchange Commission; such statements with, or applications to,
the regulatory authorities of any state in the United States as may be necessary
to permit such shares to be offered and sold in such states; and any and all
amendments to any of the foregoing, with all exhibits and documents required to
be filed in connection therewith. The undersigned further grants unto said
attorneys and each of them full power and authority to perform each and every
act necessary to be done in order to accomplish the foregoing registrations as
fully as she herself might do.
IN WITNESS WHEREOF, the undersigned has signed this power of attorney
as of the 28th day of September, 1998.
/s/ Penelope W. Kyle
--------------------------
Penelope W. Kyle, Director
of the Company
Exhibit 24.5
POWER OF ATTORNEY
The undersigned hereby constitutes and appoints each of Glade M. Knight
and Stanley J. Olander, Jr., either of whom may act as his attorney-in-fact, to
execute on his behalf, individually and in each capacity stated below, and to
file, any documents referred to below relating to the registration of all of the
common shares of Apple Residential Income Trust, Inc. (the "Company") issuable
under or pursuant to the Company's 1996 Incentive Plan and options granted
thereunder, such documents being: a Registration Statement to be filed with the
Securities and Exchange Commission; such statements with, or applications to,
the regulatory authorities of any state in the United States as may be necessary
to permit such shares to be offered and sold in such states; and any and all
amendments to any of the foregoing, with all exhibits and documents required to
be filed in connection therewith. The undersigned further grants unto said
attorneys and each of them full power and authority to perform each and every
act necessary to be done in order to accomplish the foregoing registrations as
fully as he himself might do.
IN WITNESS WHEREOF, the undersigned has signed this power of attorney
as of the _____ day of _____________, 1998.
-------------------------
Bruce H. Matson, Director
of the Company
Exhibit 99
APPLE RESIDENTIAL INCOME TRUST, INC.
1996 INCENTIVE PLAN
Effective October 17, 1996
<PAGE>
APPLE RESIDENTIAL INCOME TRUST, INC.
1996 INCENTIVE PLAN
1. PURPOSE. The purpose of this Apple Residential Income Trust, Inc.
1996 Incentive Plan (the "Plan") is to further the long term stability and
financial success of Apple Residential Income Trust, Inc. (the "Company") by
attracting and retaining key employees of the Company and its affiliates through
the use of stock incentives. It is believed that ownership of Company Stock will
stimulate the efforts of those employees of the Company and its affiliates upon
whose judgment and interest the Company is and will be largely dependent for the
successful conduct of its business. It is also believed that Incentive Awards
granted to such employees under this Plan will strengthen their desire to remain
with the Company and its affiliates and will further the identification of those
employees' interests with those of the Company's shareholders. The Plan is
intended to conform to the provisions of Securities and Exchange Commission Rule
16b-3.
2
<PAGE>
2. DEFINITIONS. As used in the Plan, the following terms have the
meanings indicated:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Applicable Withholding Taxes" means the aggregate amount of
federal, state and local incomeand payroll taxes that the Employer is
required to withhold in connection with any exercise of an Option or
any lapse of restrictions on Restricted Stock.
(c) "Board" means the board of directors of the Company.
(d) "Change of Control" means:
(i) The acquisition, other than from the Company, by any
individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Act), of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Act) of 20% or
more of either the then outstanding shares of common stock of the
Company or the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors, but excluding for this purpose, any such
acquisition by the Company or any of its subsidiaries, or any
employee benefit plan (or related trust) of the Company or its
subsidiaries, or any corporation with respect to which, following
such acquisition, more than 50% of, respectively, the then
3
<PAGE>
outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of
such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
the individuals and entities who were the beneficial owners,
respectively, of the common stock and voting securities of the
Company immediately prior to such acquisition in substantially the
same proportion as their ownership, immediately prior to such
acquisition, of the then outstanding shares of common stock of the
Company or the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors, as the case may be; or
(ii) Individuals who, as of the date hereof, constitute the
Board (as of the date hereof the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided
that any individual becoming a director subsequent to the date
hereof whose election or nomination for election by the Company's
shareholders was approved by a vote of at least a majority of the
directors comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office is in connection with an actual or threatened
4
<PAGE>
election contest relating to the election of the Directors of the
Company (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Act); or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with
respect to which the individuals and entities who were the
respective beneficial owners of the common stock and voting
securities of the Company immediately prior to such
reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 50% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such reorganization, merger or
consolidation, or a complete liquidation or dissolution of the
Company or a sale or other disposition of all or substantially all
of the assets of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Committee" means the committee appointed by the Board as
described under Section 13.
(g) "Company" means Apple Residential Income Trust, Inc., a
Virginia corporation.
5
<PAGE>
(h) "Company Stock" means common stock, no par value, of the
Company. If the par value of the Company Stock is changed, or in the
event of a change in the capital structure of the Company (as
provided in Section 12), the shares resulting from such a change
shall be deemed to be Company Stock within the meaning of the Plan.
(i) "Date of Grant" means the date on which an Incentive Award is
granted by the Committee.
(j) "Disability" or "Disabled" means a physical or mental
condition that prevents the Participant from performing his
customary duties with the Employer. The Committee shall determine
whether a Disability exists on the basis of competent medical
evidence, and such determination shall be conclusive.
(k) "Employer" means the Company, Apple Residential Advisors,
Inc., Apple Residential Management Group, Inc., and Apple Realty
Group, Inc.
(l) "Fair Market Value" means, on any given date, (i) if the
Company Stock is traded on an exchange, the closing registered sales
prices of the Company Stock on such day on the exchange on which it
generally has the greatest trading volume, (ii) if the Company Stock
is traded on the over-the-counter market, the average between the
closing bid and asked prices on such day as reported by NASDAQ, or
(iii) if the Company Stock is not traded on any exchange or
over-the-
6
<PAGE>
counter market, the fair market value shall be determined by the
Committee using any reasonable method in good faith.
(m) "Incentive Award" means, collectively, the award of an Option
or Restricted Stock under the Plan.
(n) "Initial Closing" means the first closing of the Offering that
will occur after the Minimum Offering is achieved.
(o) "Insider" means a person subject to Section 16(b) of the Act.
(p) "Minimum Offering" means the sale of the first $15,000,000 in
shares of Company Stock pursuant to the Offering.
(q) "Nonstatutory Stock Option" means an Option that does not meet
the requirements of Code section 422, or, even if meeting the
requirements of Code section 422, is not intended to be an incentive
stock option and is so designated.
(r) "Offering" means, collectively, (1) the sale of up to
$250,000,000 in shares of Company Stock to the public and the
registration of such shares with the Securities and Exchange
Commission, as authorized by resolutions of the Board dated August
22, 1996 (the "Initial Offering"), and (2) the sale of any
additional shares of Company Stock to the public and the
registration of such shares with the Securities and Exchange
Commission, as authorized by resolutions of the Board from time to
time, which sales
7
<PAGE>
occur before the expiration of five years from November 1, 1996
(the "Additional Offerings").
(s) "Option" means a right to purchase Company Stock granted under
the Plan, at a price determined in accordance with the Plan.
(t) "Participant" means any employee of the Employer who receives
an Incentive Award under the Plan. (u) "Restricted Stock" means
Company Stock awarded upon the terms and subject to the restrictions
set forth in Section 6.
(v) "Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission promulgated under the Act. A reference in the Plan to
Rule 16b-3 shall include a reference to any corresponding rule (or
number redesignation) of any amendments to Rule 16b-3 enacted after
the effective date of the Plan's adoption.
(w) "Window Period" means the period beginning on the third
business day and ending on the twelfth business day following the
release for publication of quarterly or annual summary statements of
the Company's sales and earnings. The release for publication shall
be deemed to have occurred if the specified financial data (i)
appears on a wire service, (ii) appears in a financial news service,
(iii) appears in a newspaper of general circulation, or (iv) is
otherwise made publicly available.
8
<PAGE>
3. GENERAL. The following types of Incentive Awards may be
granted under the Plan: Options and Restricted Stock. Options granted under the
Plan shall be Nonstatutory Stock Options.
4. STOCK. Subject to Section 12 of the Plan, there shall be
reserved for issuance under the Plan an aggregate of (1) 35,000 shares of
Company Stock plus (2) 4.625% of the number of shares of Company Stock sold in
the Initial Offering in excess of the Minimum Offering plus (3) 4.4% of the
total number of shares of Company Stock sold in the Additional Offerings, which
shall be authorized, but unissued shares. Shares allocable to Options or
portions thereof granted under the Plan that expire or otherwise terminate
unexercised may again be subjected to an Option under the Plan. The Committee is
expressly authorized to make an Incentive Award to a Participant conditioned
upon the surrender for cancellation of an option granted under an existing
Incentive Award. For purposes of determining the number of shares that are
available for Incentive Awards under the Plan, such number shall, to the extent
permissible under Rule 16b-3, include the number of shares surrendered by an
optionee or retained by the Company in payment of Applicable Withholding Taxes.
5. ELIGIBILITY.
(a) All present and future employees of the Employer who hold
positions with management responsibilities with the Employer (or any parent or
subsidiary of the Company, whether now
9
<PAGE>
existing or hereafter created or acquired) shall be eligible to receive
Incentive Awards under the Plan. The Committee shall have the power and complete
discretion, as provided in Section 13, to select eligible employees to receive
Incentive Awards and to determine for each employee the terms and conditions,
the nature of the award and the number of shares to be allocated to each
employee as part of each Incentive Award.
(b) The grant of an Incentive Award shall not obligate the
Employer or any parent or subsidiary of the Company to pay an employee any
particular amount of remuneration, to continue the employment of the employee
after the grant or to make further grants to the employee at any time
thereafter.
6. RESTRICTED STOCK AWARDS.
(a) Whenever the Committee deems it appropriate to grant
Restricted Stock, notice shall be given to the Participant stating the number of
shares of Restricted Stock granted and the terms and conditions to which the
Restricted Stock is subject. This notice, when accepted in writing by the
Participant shall become an award agreement between the Company and the
Participant and certificates representing the shares shall be issued and
delivered to the Participant. Restricted Stock may be awarded by the Committee
in its discretion without cash consideration.
(b) Restricted Stock issued pursuant to the Plan shall be
subject to the following restrictions:
(i) No shares of Restricted Stock may be sold, assigned,
transferred or disposed of by an Insider within a
10
<PAGE>
six-month period beginning on the Date of Grant, and Restricted
Stock may not be pledged, hypothecated or otherwise encumbered
within a six-month period beginning on the Date of Grant if such
action would be treated as a sale or disposition under Rule 16b-3.
(ii) No shares of Restricted Stock may be sold, assigned,
transferred, pledged, hypothecated, or otherwise encumbered or
disposed of until the restrictions on such shares as set forth in
the Participant's award agreement have lapsed or been removed
pursuant to paragraph (d) or (e) below.
(iii)If a Participant ceases to be employed by the Employer or a
parent or subsidiary of the Company, the Participant shall forfeit
to the Company any shares of Restricted Stock on which the
restrictions have not lapsed or been removed pursuant to paragraph
(d) or (e) below on the date such Participant shall cease to be so
employed.
(c) Upon the acceptance by a Participant of an award of
Restricted Stock, such Participant shall, subject to the restrictions set forth
in paragraph (b) above, have all the rights of a shareholder with respect to
such shares of Restricted Stock, including, but not limited to, the right to
vote such shares of Restricted Stock and the right to receive all dividends and
other distributions paid thereon. Certificates representing Restricted Stock
shall bear a legend referring to the
11
<PAGE>
restrictions set forth in the Plan and the Participant's award agreement.
(d) The Committee shall establish as to each award of Restricted
Stock the terms and conditions upon which the restrictions set forth in
paragraph (b) above shall lapse. Such terms and conditions may include, without
limitation, the lapsing of such restrictions as a result of the Disability,
death or retirement of the Participant or the occurrence of a Change of Control.
(e) Notwithstanding the provisions of paragraphs (b)(ii) and
(iii) above, the Committee may at any time, in its sole discretion, accelerate
the time at which any or all restrictions will lapse or remove any and all such
restrictions.
(f) Each Participant shall agree at the time his Restricted
Stock is granted, and as a condition thereof, to pay to the Company, or make
arrangements satisfactory to the Company regarding the payment to the Company
of, Applicable Withholding Taxes. Until such amount has been paid or
arrangements satisfactory to the Company have been made, no stock certificate
free of a legend reflecting the restrictions set forth in paragraph (b) above
shall be issued to such Participant.
7. STOCK OPTIONS.
(a) Whenever the Committee deems it appropriate to grant Options,
notice shall be given to the Participant stating the number of shares for which
Options are granted, the Option price per share, and the conditions to which the
grant and
12
<PAGE>
exercise of the Options are subject. This notice, when duly accepted in writing
by the Participant, shall become a stock option agreement between the Company
and the Participant.
(b) The exercise price of shares of Company Stock covered by an
Option shall be not less than 100% of the Fair Market Value of such shares on
the Date of Grant.
(c) Options may be exercised in whole or in part at such times
as may be specified by the Committee in the Participant's stock option
agreement; provided that, the exercise provisions for Options shall in all
events not be more liberal than the following provisions:
(i) No Option may be exercised after ten years from the Date
of Grant.
(ii) Except as otherwise provided in this paragraph, no Option
may be exercised unless the Participant is employed by the
Employer or a parent or subsidiary of the Company at the time of
the exercise and has been so employed at all times since the Date
of Grant. If a Participant's employment is terminated other than
by reason of his Disability or death at a time when the
Participant holds an Option that is exercisable (in whole or in
part), the Participant may exercise any or all of the exercisable
portion of the Option (to the extent exercisable on the date of
termination) within 60 days after the Participant's termination
of employment. If a Participant's employment is terminated by
reason of his Disability at a time when the
13
<PAGE>
Participant holds an Option that is exercisable (in whole or in part),
the Participant may exercise any or all of the exercisable portion of
the Option (to the extent exercisable on the date of Disability)
within 180 days after the Participant's termination of employment. If
a Participant's employment is terminated by reason of his death at a
time when the Participant holds an Option that is exercisable (in
whole or in part), the Option may be exercised (to the extent
exercisable on the date of death) within 180 days after the
Participant's death by the person to whom the Participant's rights
under the Option shall have passed by will or by the laws of descent
and distribution.
(d) Notwithstanding the foregoing, no Option shall be
exercisable by an Insider within the first six months after it is granted
(as determined under Rule 16b-3); provided that, this restriction shall not
apply if the Participant becomes Disabled or dies during the six-month
period.
(e) The Committee may, in its discretion, grant Options that
by their terms become fully exercisable upon a Change of Control,
notwithstanding other conditions on exercisability in the stock option
agreement.
8. METHOD OF EXERCISE OF OPTIONS.
(a) Options may be exercised by the Participant giving written
notice of the exercise to the Company, stating the number of shares the
Participant has elected to purchase under the Option. Such notice shall be
effective only if accompanied by
14
<PAGE>
the exercise price in full in cash; provided that, if the terms of an
Option so permit, the Participant may (i) deliver shares of Company Stock
(valued at their Fair Market Value on the date of exercise) in satisfaction
of all or any part of the exercise price, (ii) deliver a properly executed
exercise notice together with irrevocable instructions to a broker to
deliver promptly to the Company, from the sale or loan proceeds with
respect to the sale of Company Stock or a loan secured by Company Stock,
the amount necessary to pay the exercise price and, if required by the
Committee, Applicable Withholding Taxes, or (iii) deliver an interest
bearing promissory note, payable to the Company, in payment of all or part
of the exercise price together with such collateral as may be required by
the Committee at the time of exercise. The interest rate under any such
promissory note shall be established by the Committee and shall be at least
equal to the minimum interest rate required at the time to avoid imputed
interest under the Code.
(b) The Company may place on any certificate representing Company
Stock issued upon the exercise of an Option any legend deemed desirable by
the Company's counsel to comply with federal or state securities laws, and
the Company may require a customary written indication of the Participant's
investment intent. Until the Participant has made any required payment,
including any Applicable Withholding Taxes, and has had issued a certificate
for the shares of Company Stock acquired, he shall possess no shareholder
rights with respect to the shares.
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(c) As an alternative to making a cash payment to the Company to
satisfy Applicable Withholding Taxes, if the Option so provides, the
Participant may, subject to the provisions set forth below, elect to (i)
deliver shares of already owned Company Stock or (ii) have the Company
retain that number of shares of Company Stock that would satisfy all or a
specified portion of the Applicable Withholding Taxes. The Committee shall
have sole discretion to approve or disapprove any such election. If the
Participant is an Insider, the following provisions apply to elections to
satisfy Applicable Withholding Taxes, to the extent required by Rule 16b-3:
(i) The Participant's election to have the Company retain from
the shares of Company Stock to be issued upon exercise of an Option the
number of shares of Company Stock that would satisfy Applicable
Withholding Taxes must be made at least six months after the Option was
granted and either:
(x) during a Window Period; or
(y) at least six months before the amount of
Applicable Withholding Taxes is calculated.
(ii) The Participant's election must be irrevocable.
(iii) Notwithstanding any of the foregoing provisions, the
manner and timing of elections may be varied from those provided, and
elections previously made as irrevocable may be revoked, if such
variance or revocation is permissible under Rule 16b-3.
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(d) Notwithstanding anything herein to the contrary, Options
shall always be granted and exercised in such a manner as to conform to the
provisions of Rule 16b-3.
9. NONTRANSFERABILITY OF OPTIONS. Options by their terms shall not
be transferable except by will or by the laws of descent and distribution or, if
permitted by Rule 16b-3, pursuant to a qualified domestic relations order (as
defined in Code section 414(p)) ("QDRO") and shall be exercisable, during the
Participant's lifetime, only by the Participant or, if permitted by Rule 16b-3,
an alternate payee under a QDRO, or by his guardian, duly authorized
attorney-in-fact or other legal representative.
10. EFFECTIVE DATE OF THE PLAN. This Plan is effective on October
17, 1996, having been approved by the shareholders of the Company on such date.
Until the requirements of any applicable state or federal securities laws have
been met, no Option shall be exercisable.
11. TERMINATION, MODIFICATION, CHANGE. If not sooner terminated by
the Board, this Plan, as amended and restated, shall terminate at the close of
business on October 17, 2006. No Incentive Awards shall be made under the Plan
after its termination. The Board may terminate the Plan or may amend the Plan in
such respects as it shall deem advisable; provided that, if and to the extent
required by Rule 16b-3, no change shall be made that increases the total number
of shares of Company Stock
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reserved for issuance pursuant to Incentive Awards granted under the Plan
(except pursuant to Section 12), materially modifies the requirements as to
eligibility for participation in the Plan, or materially increases the benefits
accruing to Participants under the Plan, unless such change is authorized by the
shareholders of the Company. Notwithstanding the foregoing, the Board may
unilaterally amend the Plan and Incentive Awards as it deems appropriate to
ensure compliance with Rule 16b-3. Except as provided in the preceding sentence,
a termination or amendment of the Plan shall not, without the consent of the
Participant, adversely affect the Participant's rights under an Incentive Award
previously granted to him.
12. CHANGE IN CAPITAL STRUCTURE.
(a) In the event of a stock dividend, stock split or
combination of shares, recapitalization or merger in which the Company is the
surviving corporation or other change in the Company's capital stock (including,
but not limited to, the creation or issuance to shareholders generally of
rights, options or warrants for the purchase of common stock or preferred stock
of the Company), the number and kind of shares of stock or securities of the
Company to be subject to the Plan and to Options then outstanding or to be
granted thereunder, the maximum number of shares or securities which may be
delivered under the Plan, the exercise price and other relevant provisions shall
be appropriately adjusted by the Committee, whose determination shall be binding
on all persons. If the adjustment would produce
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fractional shares with respect to any unexercised Option, the Committee may
adjust appropriately the number of shares covered by the Option so as to
eliminate the fractional shares.
(b) If the Company is a party to a consolidation or a merger in
which the Company is not the surviving corporation, a transaction that results
in the acquisition of substantially all of the Company's outstanding stock by a
single person or entity, or a sale or transfer of substantially all of the
Company's assets, the Committee may take such actions with respect to
outstanding Incentive Awards as the Committee deems appropriate.
(c) Notwithstanding anything in the Plan to the contrary, the
Committee may take the foregoing actions without the consent of any Participant,
and the Committee's determination shall be conclusive and binding on all persons
for all purposes.
13. ADMINISTRATION OF THE PLAN. The Plan shall be administered by
the Committee, which shall consist of not less than two members of the Board,
who shall be appointed by the Board. The Committee shall have general authority
to impose any limitation or condition upon an Incentive Award the Committee
deems appropriate to achieve the objectives of the Incentive Award and the Plan
and, without limitation and in addition to powers set forth elsewhere in the
Plan, shall have the following specific authority:
(a) The Committee shall have the power and complete discretion
to determine (i) which eligible employees shall receive Incentive
Awards and the nature of each Incentive
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Award, (ii) the number of shares of Company Stock to be covered by each
Incentive Award, (iii) the Fair Market Value of Company Stock, (iv) the
time or times when an Incentive Award shall be granted, (v) whether an
Incentive Award shall become vested over a period of time and when it
shall be fully vested, (vi) when Options may be exercised, (vii)
whether a Disability exists, (viii) the manner in which payment will be
made upon the exercise of Options, (ix) conditions relating to the
length of time before disposition of Company Stock received upon the
exercise of Options is permitted, (x) whether to approve a
Participant's elections under the Plan, (xi) notice provisions relating
to the sale of Company Stock acquired under the Plan, and (xii) any
additional requirements relating to Incentive Awards that the Committee
deems appropriate. The Committee shall have the power to amend the
terms of previously granted Incentive Awards so long as the terms as
amended are consistent with the terms of the Plan and provided that the
consent of the Participant is obtained with respect to any amendment
that would be detrimental to him, except that such consent will not be
required if such amendment is for the purpose of complying with Rule
16b-3.
(b) The Committee may adopt rules and regulations for carrying
out the Plan. The interpretation and construction of any provision of
the Plan by the Committee shall be final and conclusive. The Committee
may consult with counsel, who
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may be counsel to the Company, and shall not incur any liability for
any action taken in good faith in reliance upon the advice of counsel.
(c) A majority of the members of the Committee shall constitute
a quorum, and all actions of the Committee shall be taken by a majority
of the members present. Any action may be taken by a written instrument
signed by all of the members, and any action so taken shall be fully
effective as if it had been taken at a meeting.
(d) The Board from time to time may appoint members previously
appointed and may fill vacancies, however caused, in the Committee.
Insofar as it is necessary to satisfy the requirements of Section 16(b)
of the Act, no member of the Committee shall be eligible to participate
in the Plan or in any other plan of the Company or any parent or
subsidiary of the Company that entitles participants to acquire stock,
stock options or stock appreciation rights of the Company or any parent
or subsidiary of the Company, and no person shall become a member of
the Committee if, within the preceding one-year period, the person
shall have been eligible to participate in such a plan (other than a
"safe harbor plan" permitted under Rule 16b-3(c)(2)(i) and (ii)).
14. NOTICE. All notices and other communications required or
permitted to be given under this Plan shall be in writing and shall be deemed to
have been duly given if delivered personally or mailed first class, postage
prepaid, as follows (a) if to the
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Company - at its principal business address to the attention of the President;
(b) if to any Participant - at the last address of the Participant known to the
sender at the time the notice or other communication is sent.
15. GOVERNING LAW. The terms of this Plan shall be governed by the
laws of the Commonwealth of Virginia.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed
this 17th day of October, 1996.
APPLE RESIDENTIAL INCOME
TRUST, INC.
By /s/ Glade M. Knight
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Glade M. Knight,
Chairman of the Board
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