SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14 (a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by Registrant { x }
Filed by a Party other than the Registrant { } Check the appropriate box:
{ } Preliminary Proxy Statement
{ x } Definitive Proxy Statement
{ } Definitive Additional Materials
{ } Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
AMREP CORPORATION
--------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
{ x } $125 per Exchange Act Rules 0-11(c) (1) (ii), 14a-6(i) (1),
or 14a-6(j) (2).
{ } $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i) (3).
{ } Fee computed on table below per Exchange Act Rules 14a (6) (i) (4)
and 0-11.
1) Title of each class of securities to which transaction
applies:
-----------------------------------------------------
2) Aggregate number of securities to which transaction
applies:
-----------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:1
-----------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state
how it was determined.
{ } Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11 (a) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount Previously Paid:
------------------------------------------------------
2) Form, Schedule or Registration Statement No:
------------------------------------------------------
3) Filing Party:
------------------------------------------------------
4) Date Filed:
------------------------------------------------------
<PAGE>
AMREP CORPORATION
(An Oklahoma corporation)
-------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
September 18, 1996
NOTICE IS HEREBY GIVEN that the 1996 Annual Meeting of Shareholders of
AMREP CORPORATION (the "Company") will be held at the Hotel Inter-Continental,
Whitney Room, 111 East 48th Street, New York, New York 10017 on September 18,
1996 at 9:00 A.M. for the following purposes:
(1) To elect three directors, each to serve for a term of three
years;
(2) To consider and act upon a proposal to amend the AMREP
Corporation Non-Employee Directors Option Plan (i) to increase by
35,000 the number of shares of Common Stock which may be issued
on exercise of options granted thereunder and (ii) to extend by
ten (10) years the period during which options may be granted
thereunder; and
(3) To consider and act upon such other business as may properly come
before the meeting.
In accordance with the By-Laws, the Board of Directors has fixed the
close of business on August 20, 1996 as the record date for the determination of
shareholders of the Company entitled to notice of and to vote at the meeting and
any adjournment thereof. The list of such shareholders will be available for
inspection by shareholders during the ten days prior to the meeting at the
offices of the Company, 641 Lexington Avenue, New York, New York 10022.
Whether or not you expect to be present at the meeting, please mark,
date and sign the enclosed proxy and return it to the Company in the
self-addressed envelope enclosed for that purpose. The proxy is revocable and
will not affect your right to vote in person in the event you attend the
meeting.
By Order of the Board of Directors
Valerie Asciutto, Secretary
Dated: August 9, 1996
New York, New York
<PAGE>
AMREP CORPORATION
641 Lexington Avenue
New York, New York 10022
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF SHAREHOLDERS
To be Held 9:00 A.M. September 18, 1996
This statement is furnished in connection with the solicitation of
proxies by the Board of Directors of AMREP CORPORATION (the "Company") for use
at the Annual Meeting of Shareholders of the Company to be held on September 18,
1996, and at any adjournment thereof. Anyone giving a proxy may revoke it at any
time before it is exercised by giving the Secretary of the Company written
notice of the revocation, by submitting a proxy bearing a later date or by
attending the meeting and voting. This statement, the accompanying notice of
meeting and proxy form of the Board of Directors have been first sent to
shareholders on or about August 19, 1996.
All properly executed, unrevoked proxies in the enclosed form which are
received in time will be voted in accordance with the shareholder's directions
and, unless contrary directions are given, will be voted for the election as
directors of the nominees named below and for the proposal to amend the AMREP
Corporation Non-Employee Directors Option Plan (the "Plan"). The presence, in
person or by proxy, of the holders of a majority of the outstanding shares of
Common Stock authorized to vote will constitute a quorum for the transaction of
business at the Annual Meeting and any continuation or adjournment thereof.
Abstentions and broker non-votes will be counted in determining whether a quorum
is present at the Annual Meeting.
Directors are elected by a plurality of the votes of the shares present
in person or represented by proxy at the meeting and entitled to vote on the
election of directors. The proposal to amend the Plan must be approved by the
vote of the holders of a majority of the shares of the Company present in person
or represented by proxy and entitled to vote at the Annual Meeting. In
determining whether such proposal has been approved, abstentions (including
broker non-votes) will have the effect of negative votes.
A copy of the 1996 Annual Report of the Company for the fiscal year ended
April 30, 1996, including financial statements, accompanies this Proxy
Statement. Such Annual Report does not constitute a part of the proxy
solicitation material.
VOTING SECURITIES
Only shareholders of record at the close of business on August 20, 1996,
the date fixed by the Board of Directors in accordance with the By-Laws, are
entitled to vote at the meeting and any adjournment thereof. As of July 31,
1996, the Company had issued and outstanding 7,368,650 shares of Common Stock,
par value $.10 per share. Each share of Common Stock is entitled to one vote on
matters to come before the meeting. It is not presently anticipated that the
number of issued and outstanding shares of Common Stock will significantly
change between July 31, 1996 and the record date.
<PAGE>
Set forth below is information concerning the ownership as of July 31,
1996 of the Common Stock of the Company by the persons who, to the knowledge of
the Board of Directors, own beneficially more than 5% of the outstanding shares:
Name and Address of Amount Owned % of
Beneficial Owner Beneficially (1) Class
------------------- ---------------- -----
Nicholas G. Karabots 2,769,593(2) 37.6%
P.O. Box 736
Fort Washington, PA 19034
Albert Russo(3) 1,064,720 14.4%
Lena Russo
Clifton Russo
Lawrence Russo
c/o American Simlex Company
401 Broadway
Suite 1712
New York, New York 10013
- ------------------
(1) Except as set forth in Footnote 3, the beneficial owners have
sole voting and investment power over the shares owned.
(2) Includes 1,500 shares which Mr. Karabots has the right to
acquire pursuant to currently exercisable options.
(3) In a Schedule 13D under the Securities Exchange Act of 1934
filed jointly by Albert Russo, Lena Russo, Clifton Russo and
Lawrence Russo, the filing persons reported that they share
voting power as to 1,064,720 shares representing 14.4% of the
outstanding Common Stock of the Company and that Albert Russo,
Lena Russo, Clifton Russo and Lawrence Russo have sole
dispositive power as to 480,241, 58,740, 270,617, and 255,122
shares, respectively, of that Common Stock representing 6.5%,
0.8%, 3.7%, and 3.4% of the outstanding Common Stock.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of July 31, 1996, certain
information regarding the beneficial ownership, or the right to acquire
beneficial ownership, of the Common Stock of the Company of each director, each
nominee for election as a director, each executive officer named in the Summary
Compensation Table and all directors and executive officers of the Company as a
group. Unless otherwise indicated, each person has sole voting and dispositive
power with respect to the shares beneficially owned:
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Class
- ------------------------ -------------------- ----------
Jerome Belson 45,000(1) *
Edward B. Cloues II 3,000(2) *
David N. Dinkins 1,000(2) *
Harvey I. Freeman 5,000(2)(3) *
Daniel Friedman 43,924(4)(5) *
Nicholas G. Karabots 2,769,593(6) 37.6%
Albert Russo 1,064,720(7) 14.4%
Samuel N. Seidman 10,190(1) *
Mohan Vachani 5,500(8) *
James Wall 16,507(9)(10) *
Harvey W. Schultz 4,000(11) *
Directors and
Executive Officers
as a Group (11 persons) 2,907,714(12) 39.3%
- ----------------------
* Indicates less than 1%
(1) Includes 2,000 shares which the individual has the right to acquire
pursuant to currently exercisable options.
(2) Includes 1,000 shares which the individual has the right to acquire
pursuant to currently exercisable options.
(3) 4,000 of the shares are jointly owned with Mr. Freeman's wife.
(4) Includes 314 shares of Common Stock held in the Company's Savings and
Salary Deferral Plan allocated to the account of Mr. Friedman.
(5) Includes 5,000 shares which Mr. Friedman has the right to acquire
pursuant to currently exercisable options.
(6) Includes 1,500 shares which Mr. Karabots has the right to acquire
pursuant to currently exercisable options.
(7) In a Schedule 13D under the Securities Exchange Act of 1934 filed
jointly by Albert Russo, Lena Russo, Clifton Russo and Lawrence Russo,
the filing persons reported that they share voting power as to 1,064,720
shares representing 14.4% of the outstanding Common Stock of the Company
and that Albert Russo, Lena Russo, Clifton Russo and Lawrence Russo have
sole dispositive power as to 480,241, 58,740, 270,617, and 255,122
shares, respectively, of that Common Stock representing 6.5%, 0.8%,
3.7%, and 3.4% of the outstanding Common Stock.
(8) Includes 5,000 shares which Mr. Vachani has the right to acquire
pursuant to currently exercisable options.
(9) Includes 5,000 shares which Mr. Wall has the right to acquire pursuant
to currently exercisable options.
(10) Includes 287 shares of Common Stock held in the Company's Savings and
Salary Deferral Plan allocated to the account of Mr. Wall.
(11) Includes 4,000 shares which Mr. Schultz has the right to acquire
pursuant to currently exercisable options.
(12) Includes 4,000 shares which an executive other than those named has the
right to acquire pursuant to currently exercisable options.
1. ELECTION OF DIRECTORS
The Board of Directors of the Company is a classified board divided into
three classes - Class I consisting of four directors, Class II consisting of
three directors and Class III consisting of three directors. Each class of
directors serves for a term of three years. At this Annual Meeting three Class
III directors will be elected to serve until the 1999 Annual Meeting and until
their successors are elected and qualified. Although the Board of Directors does
not expect that any of the persons named will be unable to serve as a director,
should any of them become unavailable for election it is intended that the
shares represented by proxies in the accompanying form will be voted for the
election of a substitute nominee or nominees selected by the Board.
<PAGE>
The following table sets forth information regarding the nominees of the
Board of Directors for election and the directors whose terms of office do not
expire this year.
Year First
Elected As Principal Occupation
Name Age A Director For Past Five Years
Nominees to serve until the 1999 Annual Meeting (Class III)
<TABLE>
<S> <C> <C> <C>
Jerome Belson 70 1967 Chairman of the Board of Jerome
Belson Associates, Inc., a real
estate management company operating
in excess of 10,000 high rise
multi-family residential apartments
in New York; President of Associated
Builders and Owners of Greater New
York, Inc.; Chairman Emeritus of
Waterhouse Investor Services, Inc.
Nicholas G. Karabots* 63 1993 Chairman of the Board and Chief
Executive Officer of Spartan
Organization, Inc.; KPG, Inc., the
general partner of Kappa Printing
Group, L.P.; Kappa Publishing Group,
Inc.; Geopedior, Inc. as well as
other affiliated entities, which
companies are engaged primarily in
the fields of printing, publishing
and real estate.
*See "Compensation Committee Interlocks and Insider Participation" section for information
concerning agreement to nominate Mr. Karabots.
Year First
Elected As Principal Occupation
Name Age A Director For Past Five Years
Albert Russo 52 -- Managing Partner, Russo Associates,
Pioneer Realty, 401 Broadway Realty
Co. and related real estate entities;
Partner, American Simlex Co. and Vice
President, Russ Export Corp.,
importing and exporting of textiles.
Directors continuing in office until the l998 Annual Meeting (Class II)
Daniel Friedman 61 1972 Chief Executive Officer of Kable
News Company, Inc., a wholly-owned
subsidiary of the Company; Senior
Vice President of the Company.
Samuel N. Seidman 62 1977 President of Seidman & Co., Inc.,
investment bankers.
Mohan Vachani 54 1990 Senior Vice President - Chief
Financial Officer of the Company,
since June 1993; Consultant to the
Company, from September 1992 to June
1993; Vice President-Chief Financial
Officer of Bedford Properties, Inc.,
real estate management and
development, from prior to 1991 to
June 1993.
</TABLE>
<PAGE>
Year First
Elected As Principal Occupation
Name Age A Director For Past Five Years
Directors continuing in office until the 1997 Annual Meeting (Class I)
<TABLE>
<S> <C> <C> <C>
Edward B. Cloues II 48 1994 Partner in the law firm of Morgan,
Lewis & Bockius LLP.
David N. Dinkins 69 1994 Professor, Columbia University
School of International
and Public Affairs since
January 1994; Mayor of
the City of New York
from prior to 1991 to
December 1993.
Harvey I. Freeman 58 1994 Attorney and Real Estate Con-
sultant since August 1991; Executive
Vice President of the Trump Organization,
real estate development, from
prior to 1991 to July 1991.
James Wall 59 1991 Chief Executive Officer of AMREP
Southwest Inc., a wholly owned
subsidiary of the Company, since January
1991; General Manager of Southwest
Operations, since prior to 1991; Senior
Vice President of the Company, since
September 1991.
</TABLE>
Each of the directors other than Mr.Friedman has served continuously
since the year in which he was first elected. Mr.Friedman served continuously
from 1972 to January 1977, when he resigned. He was reelected as director in
September 1980 and has served continuously since.
Mr. Cloues' law firm represents Mr. Karabots and various corporations
owned by him. He was nominated in 1994 for election as a director at the
recommendation of Mr. Karabots.
The Board of Directors and its Committees
The Board held nine meetings during the last fiscal year. Anthony B.
Gliedman, who resigned as a director effective July 15, 1996, became disabled in
July 1995. He attended less than 75% of the meetings of the Board of Directors
and of each Committee of which he was a member during the last fiscal year.
The Board has an Executive Committee which meets as needed and has the
power to act generally between meetings of the Board. It met seven times during
the last fiscal year. Until September l995 the Committee members were Messrs.
Friedman, Vachani, Wall and Gliedman. Mr. Gliedman became disabled in July 1995
and ceased being a Committee member in November 1995. In September 1995 Messrs.
Belson and Cloues were added to the Committee, Mr. Cloues was made the Chairman,
and the Committee was charged with the oversight of the Company's business. Mr.
Cloues is being compensated for his services as Committee Chairman at the rate
of $l25,000 per year, and Mr. Belson is being compensated for his services as a
Committee member at the rate of $25,000 per year, such amounts being in addition
to the fees paid them as directors and members of other Committees.
The Board also has an Audit and Examining Committee, a Human Resources
Committee and a Stock Option Committee. The Human Resources Committee acts as a
compensation committee. The Board does not have a nominating committee. The
members of the Audit and Examining Committee receive $750 for each committee
meeting attended. The members of the Human Resources Committee receive $500 for
each committee meeting attended.
The Audit and Examining Committee recommends to the Board the engagement
of the auditors, reviews the scope and results of the yearly audit by the
independent auditors, reviews the Company's system of internal controls and
procedures, and investigates where necessary matters relating to the audit
functions. It reports regularly to the Board concerning its activities. The
current members of this Committee are Messrs. Freeman (Chairman), Belson,
Karabots and Seidman. The Committee held four meetings during the last fiscal
year.
The Human Resources Committee makes recommendations to the Board
concerning compensation and other matters relating to employees. The current
members of the Committee are Messrs. Karabots (Chairman), Belson, Cloues and
Dinkins. The Committee held one meeting during the last fiscal year.
The Stock Option Committee grants options under, and administers, the
1992 Stock Option Plan. The current members of the Committee are Messrs. Seidman
(Chairman), Cloues, Dinkins and Freeman. The Committee did not meet during the
last fiscal year.
Functioning as a Committee of the whole, the Board meets as a Strategy
Committee. This Committee makes recommendations concerning possible new
opportunities for the growth of the Company and actions that should be
considered to meet changing times and conditions.
The Committee held one meeting during the last fiscal year.
In April 1996, the Board established a Special Committee consisting of
Messrs. Freeman (Chairman), Belson, Dinkins and Seidman for the purpose of
representing the interests of disinterested shareholders in connection with the
possible acquisition or disposition by the Company of businesses or other
assets. For the first six months of the Committee's existence, Mr. Freeman as
Chairman of the Independent Committee is to receive $25,000 plus $1,000 for each
meeting of the Committee attended and each of Messrs. Belson, Dinkins and
Seidman is to receive $15,000 plus $750 for each meeting attended, such amounts
being in addition to the fees paid them as directors and members of other
Committees.
Each director of the Company except those directors who are employees is
paid a fee of $22,500 per annum in addition to fees paid them as members of
Committees. In addition, under the Plan, each non-employee director receives on
the first business day following the Company's Annual Meeting of Shareholders an
option covering 500 shares of common stock of the Company. The price per share
payable upon exercise of such option is either (i) the mean between the highest
and lowest reported sale price of the common stock on the date of grant on the
New York Stock Exchange, or (ii) the price of the last sale of common stock on
that date as quoted on the New York Stock Exchange, whichever is higher. For the
options granted following the 1995 Annual Meeting the exercise price is $5.875.
Each option becomes exercisable as to all or any portion of the shares covered
thereby one year after the date of grant and expires five years after the date
of grant.
The various directors and nominees hold other directorships of public
companies as follows:
Name Director of
Jerome Belson Waterhouse Investor Services, Inc.
Edward B. Cloues II K-Tron International, Inc.
David N. Dinkins Carver Federal Savings Bank
New World Communications Group, Inc.
Transderm Laboratories Corp.
WSIS Series Trust
Samuel N. Seidman Productivity Technologies Corp.
EXECUTIVE COMPENSATION
Executive Compensation
The Summary Compensation Table below sets forth individual compensation
information for each of the Company's last three fiscal years of its Chief
Executive Officer ("CEO") and the four other most highly paid executive
officers.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation
Compensation Awards
<TABLE>
<S> <C> <C> <C> <C> <C>
Securities
Name and Underlying
Principal Options/ All Other
Position Year Salary($) Bonus($)(1) SAR's (#) Compensation($)(2)(3)
Anthony B. Gliedman 1996 360,083 $54,000 -0- $1,815
CEO, Chairman and 1995 366,183 15,000 10,000 1,498
President until 1994 332,300 15,000 -0- 1,540
February 1, 1996(4)
Long Term
Annual Compensation
Compensation Awards
Securities
Name and Underlying
Principal Options/ All Other
Position Year Salary($) Bonus($)(1) SAR's (#) Compensation($)(2)(3)
Daniel Friedman 1996 266,516 -0- -0- $1,519
Senior Vice 1995 260,066 9,000 5,000 1,521
President and 1994 249,850 9,000 -0- 1,540
CEO of Kable News
Company, Inc.
Mohan Vachani 1996 247,117 -0- -0- $1,235
Senior Vice 1995 240,583 8,000 5,000 1,904
President-Chief 1994 214,625 8,000 15,000 -0-
Financial
Officer(5)
James Wall 1996 224,567 -0- -0- $1,517
Senior Vice 1995 218,675 9,000 5,000 1,519
President and 1994 202,625 9,000 -0- 1,540
CEO of AMREP Southwest Inc.
Harvey W. Schultz 1996 193,200 -0- -0- $1,514
Senior Vice 1995 188,150 5,000 4,000 1,516
President and 1994 178,208 6,000 -0- 1,540
CEO of AMREP Solutions, Inc.
</TABLE>
(1) 1995 bonus amounts consist of cash paid in 1996 in respect of 1995
performance, and 1994 bonus amounts include cash paid in 1995 in respect
of 1994 performance.
(2) Includes amounts contributed by the Company to the Company's Savings and
Salary Deferral Plan.
(3) Other compensation in the form of personal benefits to the named persons
has been omitted because it does not exceed the lesser of $50,000 or 10% of
the total annual salary and bonus as to each.
(4) Mr. Gliedman became permanently disabled during fiscal 1996 and he ceased
to be CEO effective February 1, 1996. No successor has yet been designated.
The information set forth for fiscal 1996 above includes all compensation
paid to Mr. Gliedman during fiscal 1996.
(5) Mr. Vachani became Senior Vice President in June 1993.
<PAGE>
Option Table
The following table sets forth the fiscal year end option values with
respect to the former CEO and each of the executive officers named in the
Summary Compensation Table based on the market price of the Common Stock of the
Company at April 30, 1996. No stock options were granted to the former CEO or
any of the executive officers named in the Summary Compensation Table during the
fiscal year ended April 30, 1996. No stock options were exercised by the former
CEO or any executive officers named in the Summary Compensation Table during the
fiscal year ended April 30, 1996.
April 30, 1996 Option Values
-----------------------------------------------------------
Values of
Number of Unexercised
Unexercised In-the-money
Options at Options at
04/30/96 04/30/96(1)
---------- ------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Anthony B. Gliedman -0- -0- -0- -0-
Daniel Friedman 2,500 2,500 -0- -0-
Mohan Vachani 17,500 2,500 -0- -0-
James Wall 2,500 2,500 -0- -0-
Harvey W. Schultz 2,000 2,000 -0- -0-
- -----------------
(1) The market price of the Company's Common Stock at April 30, 1996 was $4.91
per share. The exercise prices of all exercisable and unexercisable
options to purchase shares held by the named officers were in excess of
such market price.
Human Resources Committee Executive Compensation Report
The Human Resources Committee ("HRC"), consisting entirely of
non-employee directors, is the Company's Compensation Committee. Its current
members are Messrs. Belson, Cloues, Dinkins and Karabots, but until November 1,
1995 former director Joseph Cohen also was a member. The HRC's recommendations
regarding executive compensation other than stock option grants must be approved
by the entire Board. The Stock Option Committee, also consisting of non-employee
directors, has sole authority to award options. Its current members are Messrs.
Cloues, Dinkins, Freeman and Seidman.
Compensation Policy for Executive Officers
------------------------------------------
The HRC's policy is that the Company's executive officers should be paid
a salary commensurate with their responsibilities, should receive short-term
incentive compensation in the form of a bonus determined in accordance with the
Bonus Plan referred to below which takes into account both the Company's profits
for a year and the executive's performance during the year, and should receive
long-term incentive compensation in the form of stock options.
Until the disability of former Chief Executive Officer ("CEO") Anthony
B. Gliedman*, the policy with respect to salaries of executive officers other
than the CEO was that they should be in amounts recommended by the CEO, and the
current salaries are in amounts so recommended. The salaries for Messrs.
Friedman, Schultz, Vachani and Wall are incorporated in employment agreements
which were effective October 1, 1993 and originally were for terms ending
September 30, 1995. In May 1995, pursuant to a recommendation by the CEO, the
HRC recommended and the Board approved an extension of the term of each
- ---------------
*Mr. Gliedman became permanently disabled during fiscal 1996 and ceased
to be the CEO effective February 1, 1996. No successor has yet been designated.
agreement to September 30, 1996, and in December 1995, the HRC recommended
and the Board approved a further extension of the terms of the agreements with
Messrs. Friedman, Vachani and Wall to September 30, 1997, with no change in
compensation except for an annual cost of living adjustment. The
considerations entering into the determination by Mr. Gliedman of the salaries
for the named executives which he recommended to the HRC in 1993 were the
salaries payable immediately prior to the effective date of the
employment agreements, his subjective evaluation of the abilities and past
performances of the respective executives and his judgment of their potential
for enhancing the profitability of the Company. Mr. Gliedman had advised the HRC
that, in his subjective judgment based on his experience and knowledge of the
marketplace, such salaries were reasonable and proper in light of the respective
duties and responsibilities of the executives.
On the recommendation of the HRC, the Board in September l993 adopted
the Company's Bonus Plan for Executives and Key Employees pursuant to which in
each year that the Company's earnings exceed a formula amount, a percentage of
the excess becomes a Bonus Pool. Under this Plan (which is described in detail
under the caption "Employment Contracts with Executives") each executive officer
other than the CEO is to receive from the Bonus Pool an amount equal to such
percentage thereof as the CEO determines, but the bonus amount to any such
executive officer may not exceed his or her salary for the applicable year. Mr.
Gliedman had informed the HRC that his determinations of awards from the Bonus
Pool would be based on his subjective evaluation of the performance of each
executive during the applicable year, which would include the executive's
contribution to the Company's profitability for the year, the success of the
executive in resolving problems and the extent to which the executive had been
effective in laying the ground work for increased future profitability of the
Company. The earnings in fiscal 1996 were insufficient to fund the Bonus Pool.
The Stock Option Committee has informed the HRC that its policy
generally is to grant options to executives only under the Company's l992 Stock
Option Plan ("Plan") and in amounts not exceeding the amounts recommended by the
CEO. Mr. Gliedman had advised that his recommendations for option grants would
reflect his subjective judgment of the performances of employees and the
potential benefit to the Company from the grant of this form of incentive
compensation. In recommending option grants Mr. Gliedman, among other things,
considered the amounts and terms of options granted in the past. No options were
granted under the Plan in fiscal l996.
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1,000,000
paid to each of the Company's Chief Executive Officer and the four other most
highly compensated executive officers. The HRC has not established any policy
regarding annual compensation to such executive officers in excess of
$1,000,000.
Bases for Chief Executive Officer's Compensation
------------------------------------------------
Anthony B. Gliedman was employed in late l990 as Executive Vice
President with the expectation that he would become the CEO within a year upon
the anticipated retirement of the then CEO. Mr. Gliedman's initial annual salary
was $275,000 and until October 1, l993 it was increased only by a percentage
equal to the percentage increase in the cost-of-living.
In fiscal l992, the year in which Mr. Gliedman became CEO, the Company
had an after-tax loss of nearly $7 million, and in fiscal l993 the Company had a
small profit. Based upon this improvement and the expectation that it would
continue under Mr. Gliedman's leadership, the HRC recommended (i) that his
salary be increased to $360,000 and (ii) the adoption of the Bonus Plan with Mr.
Gliedman to receive 25% of the Bonus Pool up to an amount equal to his salary.
Before the HRC made its recommendation, one of its members had analyzed several
published surveys of CEO compensation and reported to it that, in his judgment
based on such analysis, the recommended compensation was within a reasonable
range.
On October 1, l993 the Company entered into an employment contract with
Mr. Gliedman which incorporated the compensation recommendations of the HRC and
which is described under the caption "Employment Contracts with Executives".
Because of Mr. Gliedman's disability, his employment was terminated effective
February 1, l996. As noted above, the earnings in fiscal l996 were insufficient
to fund the Bonus Pool. However, on January 18, 1996, the Board awarded Mr.
Gliedman a bonus of $54,000 in recognition of his years of service to the
Company.
Nicholas G. Karabots,Chairman
Jerome Belson
Edward B. Cloues II
David N. Dinkins
Human Resources Committee
<PAGE>
Compensation Committee Interlocks and Insider Participation
Joseph Cohen, a director until November 1, 1995 is an independent
management consultant, whose engagement expires October 31, 1996. He is retained
by the Company as a management consultant and was paid $77,142 as consulting
fees in the fiscal year ended April 30, 1996. During the year, he consulted in
connection with various matters for the Company and its Kable News Company, Inc.
subsidiary.
On August 4, 1993, pursuant to an agreement with Nicholas G.
Karabots and two corporations he then owned, the Company acquired for its Kable
News Company subsidiary ("Kable") various rights to distribute magazines, and in
payment issued a total of 575,593 shares of the Company's common stock. The
distribution rights cover various magazines published by unaffiliated publishers
as well as magazines published by publishers controlled by Mr. Karabots. In the
case of the publishers controlled by Mr. Karabots, the distribution arrangements
generally were for terms of seven years with provision for extension for a
further three years. As distributor under these distribution agreements, Kable
purchases magazines from publishing companies owned or controlled by Mr.
Karabots, and during the fiscal year ended April 30, 1996 paid such companies a
total of approximately $22,200,000 for magazines. Kable continues as distributor
for such companies.
As part of its agreement with Mr. Karabots, the Company proposed him for
election to the Board of Directors at the 1993 Annual Meeting and agreed,
subject to certain exceptions, that so long as he owns at least one-half of the
common stock issued in the transaction the Company would propose him for
election at each shareholders meeting for the election of directors until July
2003, unless he is already in a Class of the Board whose term continues beyond
such meeting. Mr. Karabots' initial term expires at the time of the 1996 Annual
Meeting of Shareholders and he has been nominated by the Board for reelection.
Mr. Karabots is a member of the Human Resources Committee.
Performance Graph
The graph below compares the cumulative total shareholder return on the
Company's common stock with the cumulative total return of the Standard & Poor's
500 Index and the Standards & Poor's Homebuilding Index for the five years
beginning April 30, 1991 and ending April 30, 1996 (assuming the investment of
$100 in the Company's stock, the S&P 500 Index and the S&P Homebuilding Index on
April 30, 1991, and the reinvestment of all dividends).
[GRAPH]
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
AMREP CORP 100.00 136.84 123.68 163.16 131.58 102.63
S&P 500 INDEX 100.00 114.03 124.56 131.19 154.10 200.66
HOMEBUILDING INDEX 100.00 121.12 141.90 144.08 116.21 134.79
<PAGE>
Employment Contracts with Executives
The Company has employment agreements with Messrs. Friedman, Wall,
Vachani and Schultz. The employment term of the agreement with Mr. Schultz ends
September 30, 1996, while the employment term of the other agreements, as
amended, ends September 30, 1997. The current compensation provided by the
agreements is an annual salary in the following amounts:
Daniel Friedman $249,100
James Wall 226,900
Mohan Vachani 249,700
Harvey W. Schultz 195,200
Messrs. Friedman, Vachani and Wall will receive a cost of living increase on
October 1, 1996.
Mr. Friedman was paid in fiscal 1996 an additional $20,000 to compensate him for
the reduction in the pension which will be payable to him under the Company's
retirement plan resulting from a change in the tax law, and the Company
currently is paying him such additional amount.
The agreements provide that each of the executives is to receive such
percentage of the Bonus Pool as the CEO determines but the bonus amount to the
executive may not exceed his earnings for the applicable year.
The Bonus Pool for a fiscal year is 15% of the Bonus Pool Earnings (if
any) for that year. The Bonus Pool Earnings for a fiscal year is determined by
(A) deducting from the Company's after-tax income for the year the following:
(a) an inflation adjustment consisting of (x) the shareholders' equity
at the beginning of the year times (y) the percentage increase in
the cost of living during the year, and
(b) a return on equity, consisting of 5.1% of the shareholders' equity
at the beginning of the year,
and (B) dividing the resultant amount by the reciprocal of the effective income
tax rate applicable to the Company for such year.*
In the event there is a "Change in Control" of the Company, each of the
executives will have the option to have an amount equal to the bonus paid or
payable to him for the fiscal year immediately preceding the date of exercise of
such option frozen into his salary and, if such option is exercised, will also
have the option to terminate his employment and become a consultant to the
Company until the end of his employment term.
As a consultant, the executive will be paid 57-1/2% of his salary at the time of
termination of the employment period (plus a cost of living adjustment). There
will be a "Change in Control" of the Company if, among other things, 20% or more
of the Company's Common Stock is acquired by a person or a group and such person
or group, by its filing on Schedule 13D under the Securities Exchange Act of
1934 or otherwise, indicates the intention of seeking or exercising control of
the Company or reserves the right to do so.
The employment agreements with Messrs. Wall and Friedman provide that
during the employment term each shall be included in the management slate for
election as a director and shall be elected to the respective offices presently
held by him. The employment agreements with Messrs. Vachani and Schultz provide
that during the employment term each shall be elected to the respective offices
presently held by him.
Each of the employment agreements provide for certain continuing payments
in the event of the death or disability of the executive.
- -------------------------
* For example, if the amount determined by (A) for a year were $620,000 and
the effective tax rate for the year were 38%, the Bonus Pool Earnings for
that year would be $620,000 divided by 0.62, or $1,000,000.
<PAGE>
Retirement Benefits
The following table sets out estimated annual retirement benefits payable under
the life annuity form of pension to a person retiring at age 65, for specified
earnings and years of service, estimated as of January 1, 1996. The table does
not reflect use of the maximum earnings currently permitted to be taken into
account under applicable law ($150,000).
Pension Plan Table
Average
Annual Pay (a) Years of Credited Service
- -------------------------------------------------------------------------------
15 Years 20 Years 25 Years 30 Years 35 Years
---------- -------- -------- -------- --------
$100,000 $19,398 $25,864 $32,330 $38,795 $45,261
125,000 25,023 33,364 41,705 50,045 58,386
150,000 30,648 40,864 51,080 61,295 71,511
175,000 36,273 48,364 60,455 72,545 84,636
200,000 41,898 55,864 69,830 83,795 97,761
225,000 47,523 63,364 79,205 95,045 110,886
(a) The highest average annual earnings in any period of 60 consecutive months.
Mr. Friedman has twenty-five years of credited service, Mr. Wall has twenty-five
years of credited service, Mr. Schultz has three years of credited service, and
Mr. Vachani has two years of credited service. Assuming (i) these individuals
continue to be employed until age 65, (ii) their annual salaries continue to be
at least at current levels, (iii) annual increases of 5% in the maximum earnings
of $150,000 currently permitted to be taken into account under applicable law
and in the Social Security taxable wage base which is taken into account in
calculating retirement benefits under the Company's pension plan, and (iv) the
individuals elect life annuity form of pension, their annual retirement benefits
would be as set forth below:
Estimated
Benefit
---------
Daniel Friedman $79,200*
Mohan Vachani $40,900
James Wall $73,900
Harvey W. Schultz $37,000
- ----------------------
* Mr. Friedman's estimated benefit includes amounts "grandfathered" under the
law.
Certain Transactions
In September 1993, the Human Resources Committee ("HRC") recommended
that the Company from time to time loan to Anthony B. Gliedman (who was the
Chairman of the Board and Chief Executive Officer until February 1, 1996), up to
$360,000 with the proceeds to be used solely to purchase shares of the Company's
common stock, the loans to carry interest at the average rate paid by the
Company, 10% of the loan to be repaid annually and the unpaid balance of each
advance to be repaid on the fifth anniversary of the borrowing. The HRC made the
recommendation because it believed it would be in the Company's best interest
for Mr. Gliedman to have a meaningful equity interest in the Company. The Board
approved such loan and in December 1993 Mr. Gliedman borrowed $150,500 from the
Company and applied the proceeds to the purchase of 20,000 shares of the
Company's common stock from the Company at a price of $7.625 per share, the then
market price, and in December 1994 Mr. Gliedman borrowed $39,625 from the
Company and applied the proceeds to purchase 10,000 shares of Common Stock from
the Company at a price of $4.0625 per share upon exercise of an option granted
to him in December 1991. On December 7, 1995 the Company repurchased from Mr.
Gliedman the 30,000 shares owned by him at a price of $6.00 per share, the then
market price. The entire loan was repaid with interest on December 7, 1995. The
largest amount of his indebtedness outstanding since May 1, 1995 was $190,125.
Because of his disability, Mr. Gliedman's employment was terminated effective
February 1, 1996. Pursuant to the Employment Agreement dated October 1, 1993
between the Company and Mr. Gliedman, the Company is paying Mr. Gliedman an
amount equal to his salary at the date of termination of his employment because
of his disability, for twelve months after February 1, 1996 plus an amount at
the rate of one-half of such annual salary from February 1, 1997 until September
30, 1997, in each case plus a cost of living adjustment each October 1. Mr.
Gliedman's salary at February 1, 1996 was $370,600 per annum.
See "Compensation Committee Interlocks and Insider Participation" for
information concerning consulting fees paid Joseph Cohen, and transactions with
Nicholas G. Karabots.
2. PROPOSAL TO INCREASE NUMBER OF SHARES AUTHORIZED FOR
ISSUANCE UNDER THE COMPANY'S NON-EMPLOYEE
DIRECTORS OPTION PLAN AND TO EXTEND THE PLAN
In 1992 the shareholders approved the Company's Non-Employee Director
("NED") Option Plan pursuant to which each individual elected, reelected or
continuing as a Non-Employee Director will automatically receive an NED option
covering 500 shares of Common Stock. A total of 15,000 shares were reserved for
issuance under the Plan. The number of shares covered by the Plan are subject to
adjustment in the event of reorganization, recapitalization, stock split, stock
dividend, stock combination, exchange of shares, or other changes in the
Company's corporate structure or shares or of a merger, consolidation or sale of
assets. As of July 31, 1996, 12,500 shares were subject to NED options granted
and only 2,500 shares were available for the further grant of NED options. The
Plan provides that no NED options may be granted under the Plan after December
31, 1996. The Board of Directors considers it desirable to amend the Plan to
increase the number of shares available for the issuance of NED options by
35,000 shares and to extend the period during which NED options may be granted
to December 31, 2006. The shareholders are being asked to approve such
amendments to the Plan.
Stock Option Grant
The Plan provides that each year on the first business day following
the Company's Annual Meeting of Shareholders each individual elected, reelected
or continuing as a Non-Employee Director will automatically receive a NED option
covering 500 shares of Common Stock. The price per share payable upon exercise
of a NED option shall be either (i) the mean between the highest and lowest
reported sale price of the Common Stock on the date of grant on the New York
Stock Exchange, or (ii) the price of the last sale of Common Stock on that date
as quoted on the New York Stock Exchange, whichever is higher. Each NED option
shall become exercisable as to all or any portion of the shares covered thereby
one year after the date of grant and shall expire five years after the date of
grant. The exercise price must be paid in cash. If on the first business day
following the Annual Meeting of Shareholders, the General Counsel of the Company
determines in his/her sole discretion that the Company is in possession of
material, undisclosed information about the Company then the annual grant of NED
options shall be suspended until the third day after public dissemination of
such information. The price, exercisability, date of grant and option period
shall then be determined by reference to such later date.
The last sale price of the Common Stock of the Company reported on the
New York Stock Exchange composite tape on July 22, 1996 was $4.375 per share.
Eligibility
Participation in the Plan is limited to members of the Board of
Directors who are not current or former employees (since 1987) of the Company or
any of its subsidiaries ("Non-Employee Directors"). Each Non-Employee Director
in office immediately following an Annual Meeting will receive a NED option
covering 500 shares of Common Stock on the first business day following the
Meeting.
Cessation of Service
Upon cessation of service as a Non-Employee Director, only those NED
options immediately exercisable at the date of cessation of service shall be
exercisable by the optionee. Such NED options must be exercised within three
months of cessation of service.
Other Information
The Plan is administered by the Board of Directors of the Company and
may be terminated or amended by the Board of Directors if they deem advisable.
However, an amendment revising the price, date of exercisability, option period
or amount of shares under a NED option shall not be made more frequently than
once every six months unless necessary to comply with the Internal Revenue Code
of 1986 or with the Employee Retirement Income Security Act of 1974. No
amendment may revoke or alter in any manner unfavorable to the optionee any NED
options then outstanding.
Non-Employee Directors presently are compensated for their services as
directors. For a description of such compensation see pages 7-8 of this Proxy
Statement.
Federal Income Tax Consequences
Upon a grant of a NED Option, no income will be realized by the
optionee. Upon exercise, ordinary income will generally be realized by the
optionee in an amount equal to the difference between the fair market value of
the shares on the date of exercise and the option price, and the Company will be
entitled to a corresponding tax deduction. Upon disposition of the shares in a
taxable transaction, appreciation or depreciation after the date of exercise
will be treated as short-term or long-term capital gain or loss to the optionee,
depending upon how long the shares have been held.
Approval of the Amendments to the Plan
The affirmative vote of the holders of a majority of the shares of
Common Stock present and entitled to vote at the meeting is necessary for the
approval of the amendment of the Plan.
AUDITORS
The consolidated financial statements of the Company and its subsidiaries
included in the Annual Report to Shareholders for the fiscal years ended April
30, 1996 and 1995 have been examined by Arthur Andersen LLP, independent public
accountants. A representative of Arthur Andersen LLP is expected to attend the
meeting with the opportunity to make a statement if the representative desires,
and it is expected such representative will be available to respond to
appropriate questions from shareholders. The Board of Directors has not yet
acted with respect to the selection of auditors for fiscal 1997.
OTHER MATTERS
The Board of Directors knows of no matters which will be presented for
consideration at the meeting other than the matters referred to in this
statement. Should any other matters properly come before the meeting, it is the
intention of the persons named in the accompanying proxy to vote such proxy in
accordance with their best judgment.
SOLICITATION OF PROXIES
The Company will bear the cost of this solicitation of proxies. In addition
to solicitation of proxies by mail, the Company may reimburse brokers and other
nominees for the expense of forwarding proxy materials to the beneficial owners
of stock held in their names. Directors, officers and employees of the Company
may solicit proxies on behalf of the Board of Directors but will not receive any
additional compensation therefor.
SHAREHOLDER PROPOSALS
From time to time shareholders present proposals which may be proper
subjects for inclusion in the Proxy Statement and for consideration at the
annual meetings. To be considered, proposals must be submitted on a timely
basis. Proposals for the 1997 meeting must be received by the Company no later
than April 2, 1997.
By Order of the Board of Directors
Valerie Asciutto, Secretary
Dated: August 9, 1996
Upon the written request of any shareholder of the Company, the
Company will provide to such shareholder a copy of the Company's Annual Report
on Form 10-K for 1996, including the financial statements and the schedules
thereto, filed with the Securities and Exchange Commission. Any request should
be directed to Valerie Asciutto, Secretary, AMREP Corporation, 641 Lexington
Avenue, New York, New York 10022. There will be no charge for such report unless
one or more exhibits thereto are requested, in which case the Company's
reasonable expenses of furnishing exhibits may be charged.
<PAGE>
APPENDIX
TO
PROXY STATEMENT
OF
AMREP CORPORATION
Dated August 9, 1996
The substantive information conveyed by the Performance Graph
on Page 12 of the Proxy Statement is contained in the table which
appears at the bottom of Page 12.
<PAGE>
PROXY AMREP CORPORATION PROXY
SOLICITED BY BOARD OF DIRECTORS FOR
ANNUAL MEETING OF SHAREHOLDERS
Hotel Inter-Continental, 111 East 48th Street, New York, NY 10017
September 18, 1996, 9:00 A.M. Local Time
The undersigned hereby appoints Valerie Asciutto and Peter M. Pizza,
and each of them acting alone, with full power of substitution, proxies to vote
the Common Stock of the undersigned at the 1996 Annual Meeting of Shareholders
of AMREP Corporation, and any adjournment thereof, for the election of directors
as set forth in the Proxy Statement of the Board of Directors dated August 9,
1996, upon the proposal listed in Item 2 below, which proposal is described in
such Proxy Statement, and upon all other matters which come before said meeting
or any adjournment thereof.
Receipt of the Notice of Annual Meeting of Shareholders and
accompanying Proxy Statement of the Board of Directors is acknowledged.
Unless otherwise specified, this proxy will be voted FOR the election
of directors and FOR Item 2 as set forth in the Proxy Statement.
(Continued and to be dated and signed on
reverse side.)
AMREP CORPORATION
P.O. BOX 11493
NEW YORK, N.Y. 10203-0493
A vote FOR ITEMS 1 and 2 is recommended
by the Board of Directors.
1. FOR ELECTION OF THREE (3) DIRECTORS AS DESCRIBED IN THE PROXY STATEMENT OF
THE BOARD OF DIRECTORS.
FOR all nominees { } WITHHOLD AUTHORITY to vote { } *EXCEPTIONS { }
listed below: for all nominees listed below:
Nominees: Jerome Belson, Nicholas G. Karabots, Albert Russo.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
mark the "Exceptions" box and write that nominee's name in the space
provided below.)
*Exceptions _____________________________________________________________
2. Proposal to amend the AMREP Corporation Non-Employee Directors Option Plan
(i) to increase by 35,000 the number of shares which may be issued on
exercise of options granted thereunder and (ii) to extend by ten (10) years
the period during which options may be granted thereunder.
FOR { } AGAINST { } ABSTAIN { }
Change of
Address Mark Here { }
If stock is held in the name of more than one
person, all holders should sign. Sign exactly
as name or names appear at left. Persons
signing in a fiduciary capacity should
include their title as such.
Dated: _________________________________, 1996
---------------------------------------
(Signature)
---------------------------------------
(Signature)
Votes MUST be indicated (x)in Black or Blue ink.
PLEASE MARK, DATE, SIGN AND MAIL YOUR PROXY PROMPTLY IN THE ENVELOPE PROVIDED.
AMREP CORPORATION
NON-EMPLOYEE DIRECTORS OPTION PLAN
1. PURPOSE
-------
This Plan is intended to attract, retain and compensate for services
as members of the Board of Directors of AMREP Corporation highly qualified
individuals who are not, and since 1987 have not been, employees of the
Corporation by granting them options to purchase shares of the Corporation's
Common Stock. The Plan will be beneficial to the Corporation and its
shareholders since it will allow such directors to have a greater financial
stake in the Corporation through ownership of its Common Stock, in addition to
reinforcing their commonality of interest with the Corporation's shareholders in
increasing the value of the Common Stock.
2. DEFINITIONS
-----------
For purposes of this Plan, except where the context otherwise
indicates, the following terms shall have the meanings set forth:
(a) "Common Stock" shall mean the Common Stock of the Corporation
having a par value of $0.10 per share.
(b) "Corporation" shall mean AMREP Corporation, an Oklahoma
corporation.
(c) "Non-Employee Director" shall mean a member of the Corporation's
Board of Directors who is not, and since 1987 has not been, an employee of the
Corporation or any of its subsidiaries.
(d) "NED Option" shall mean a right to purchase a stated number of
shares of Common Stock granted pursuant to this Plan.
3. SHARE LIMITS
------------
The total number of shares of Common Stock which may be issued on
exercise of NED Options shall not exceed 50,000 shares, subject to adjustment as
set forth below. Shares issued under this Plan may be authorized but unissued or
treasury shares of Common Stock. In the event a reorganization,
recapitalization, stock split, stock dividend, stock combination, exchange of
shares or any other change in the corporate structure or shares of the
Corporation, or of a merger, consolidation or sale of assets, adjustments in the
number and kind of shares authorized by this Plan, in the number and kind of
shares covered by, and in the option price of, outstanding NED Options, shall be
made if, and in the same manner as, such adjustments are made to Options granted
under the Corporation's 1992 Stock Option Plan.
4. ANNUAL GRANT OF NED OPTIONS
---------------------------
Each year on the first business day following the Corporation's
Annual Meeting of Shareholders, each individual elected, reelected or continuing
as a Non-Employee Director shall automatically receive a NED Option covering 500
shares of Common Stock. Notwithstanding the foregoing, if, on such first
business day the General Counsel of the Corporation determines, in his/her sole
discretion, that the Corporation is in possession of material, undisclosed
information about the Corporation, then the annual grant of NED Options shall be
suspended until the third day after public dissemination of such information and
the price, exercisability, date of grant and option period shall then be
determined by reference to such later date. If Common Stock is not traded on a
principal national stock exchange on which the Common Stock is listed
("Exchange") on any date a grant would otherwise be awarded, then the grant
shall be made the next day thereafter on which Common Stock is so traded.
5. EXERCISE PRICE
--------------
The price per share payable upon exercise of a NED Option ("Exercise
Price") shall be either (1) the mean between the highest and lowest reported
sale price of the Common Stock on the date of the grant on the Exchange, or (2)
the price of the last sale of Common Stock on that date as quoted by the
Exchange, whichever is higher.
6. OPTION PERIOD
-------------
Each NED Option shall become exercisable as to all or any portion of
the shares covered thereby one year after the date of grant and shall expire
five years after the date of grant ("Option Period").
7. PAYMENT
-------
The Exercise Price shall be paid in cash in U.S. dollars at the time
of the NED Option is exercised.
8. CESSATION OF SERVICE
--------------------
Upon cessation of service as a Non-Employee Director, only those NED
Options immediately exercisable at the date of cessation of service shall be
exercisable by the grantee. Such NED Options must be exercised within three
months of cessation of service. In no event shall a NED Option be exercised
after the expiration of the Option Period.
9. ADMINISTRATION AND AMENDMENT OF THE PLAN
----------------------------------------
This Plan shall be administered by the Board of Directors of the
Corporation. This Plan may be terminated or amended by the Board of Directors as
they deem advisable. However, an amendment revising the price, date of
exercisability, option period of, or amount of shares under a NED Option shall
not be made more frequently than once every six months unless necessary to
comply with the Internal Revenue Code of 1986, as amended, or with the Employee
Retirement Income Security Act of 1974, as amended. No amendment may revoke or
alter in a manner unfavorable to the grantees any NED Option then outstanding,
nor may the Board amend this Plan without shareholder approval where the absence
of such approval would cause this Plan to fail to comply with Rule 16b-3 under
the Securities Exchange Act of 1934 (the "Act") or any other requirement of
applicable law or regulation. A NED Option may not be granted under this Plan
after December 31, 2006 but each NED Option granted prior to that date shall
continue to become exercisable and may be exercised according to its terms.
10. NONTRANSFERABILITY
------------------
No NED Option granted under this Plan is transferable other than by
will or the laws of descent and distribution. During the grantee's lifetime, a
NED Option may only be exercised by the grantee or the grantee's guardian or
legal representative.
<PAGE>
11. COMPLIANCE WITH SEC REGULATIONS
-------------------------------
It is the Corporation's intent that this Plan comply in all respects
with Rule 16b-3 under the Act and any other Rules promulgated thereunder so that
grants of NED Options are exempt from Section 16(b) of the Act. If any provision
of this plan is later found not to be in compliance with such Rule or Rules, the
provision shall be deemed null and void. All grants and exercises of NED Options
under this Plan shall be executed in accordance with the requirements of Section
16 of the Act, as amended, and any Rules promulgated thereunder.
12. MISCELLANEOUS
-------------
Except as provided in this Plan, no Non-Employee Director shall have
any claim or right to be granted a NED Option under this Plan. Neither this Plan
nor any action hereunder shall be construed as giving any director any right to
be retained in the service of the Corporation.
13. EFFECTIVE DATE
--------------
This Plan shall be effective September 24, 1992 or such later date as
shareholder approval is obtained.
