SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant /x/
Filed by a party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to <section> 240.14a-11(c) or
<section> 240.14a-12
HOME PROPERTIES OF NEW YORK, INC.
(Name of Registrant as Specified in Its Charter)
HOME PROPERTIES OF NEW YORK, INC.
(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:*
4) Proposed maximum aggregate value of transaction:
* 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)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
Suite 850
Clinton Square
Rochester, New York 14604
March 25, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders
of Home Properties of New York, Inc. The Annual Meeting will be held on
Tuesday, May 6, 1997 at 2:00 p.m. at The Strong Museum, One Manhattan
Square, Rochester, New York 14607.
A Notice of Annual Meeting and a Proxy Statement are enclosed. They
describe the matters to be acted upon at the Annual Meeting. Your vote on
these matters is very important. Please sign, date and return the enclosed
proxy card in the envelope provided. This will insure that your shares are
represented at the meeting, whether or not you plan to attend in person.
We look forward to seeing you at the meeting.
Norman P. Leenhouts
CHAIRMAN AND CO-CHIEF EXECUTIVE OFFICER
Nelson B. Leenhouts
PRESIDENT AND CO-CHIEF EXECUTIVE OFFICER
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
Suite 850
Clinton Square
Rochester, New York 14604
_______________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 6, 1997
_______________________________________
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders of
Home Properties of New York, Inc. (the "Company") will be held on Tuesday,
May 6, 1997 at 2:00 p.m. at The Strong Museum, One Manhattan Square, Rochester,
New York 14607 for the following purposes:
1. To elect eleven directors of the Company to serve until the
1998 Annual Meeting of Stockholders and until their respective
successors are elected ;
2. To ratify the Board of Director's appointment of Coopers &
Lybrand as the Company's independent auditors for 1997;
3. To consider the approval of certain amendments to the Company's
Stock Benefit Plan, including increasing the number of authorized shares
of Common Stock for options to independent directors;
4. To consider the approval, pursuant to the rules of the New York
Stock Exchange, of the issuance of up to 5,000,000 additional shares of
the Company's Common Stock from time to time in one or more privately
negotiated transactions or public offerings; and
4. To consider and act upon any other matters that are properly
brought before the Annual Meeting and at any adjournments or
postponements thereof.
The Board of Directors set the close of business on March 25, 1997 as
the record date. Only stockholders whose names appear on the stock register of
the Company at the close of business on the record date will be entitled to
notice of and to vote at the Annual Meeting and at any adjournments or
postponements. (If you hold your stock in the name of a brokerage firm, bank or
other nominee, only that entity can vote your shares. Please give instructions
for your shares to be voted to the person responsible for your account.)
Please complete and sign the enclosed proxy card. The proxy
represented by this card is solicited by the Board of Directors of the Company.
Please mail the card promptly in the enclosed postage-prepaid envelope. You
may change the votes on any proxy by sending a written notice to Ann M.
McCormick, Secretary of the Company at 850 Clinton Square, Rochester, New York
14604 before the Annual Meeting, by sending a different proxy card with a later
date before the Annual Meeting or by voting in person by ballot at the Annual
Meeting. Stockholders of record who attend the Annual Meeting may vote in
person, even if they have previously delivered a signed proxy.
Rochester, New York By Order of the Board of Directors
March 25, 1997
Ann M. McCormick
Secretary
EVEN IF YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY CARD. IF YOU ATTEND THE ANNUAL MEETING, YOU
MAY VOTE IN PERSON IF YOU WISH, EVEN IF YOU HAVE PREVIOUSLY RETURNED YOUR PROXY
CARD.
<PAGE>
PRELIMINARY PROXY STATEMENT
HOME PROPERTIES OF NEW YORK, INC.
Suite 850
Clinton Square
Rochester, New York 14604
_______________________________________
PROXY STATEMENT
_______________________________________
FOR 1997 ANNUAL MEETING OF STOCKHOLDERS
To Be Held on May 6, 1997
March 25, 1997
This Proxy Statement is delivered to you in connection with the
solicitation of proxies by the Board of Directors of Home Properties of New
York, Inc. (the "Company") for use at the 1997 Annual Meeting of Stockholders
of the Company, (the "Annual Meeting"). The Annual Meeting will be held on
Tuesday, May 6, 1997 at 2:00 p.m. at The Strong Museum, One Manhattan Square,
Rochester, New York 14607.
This Proxy Statement is first being sent to stockholders on or about
March 25, 1997. The Board of Directors set the close of business on March 25,
1997 as the record date for determining which stockholders are entitled to
notice of and to vote at the Annual Meeting (including any adjournments or
postponements). Only holders of the Company's Common Stock ("Common Stock")
whose names appear on the stock registers of the Company at the close of
business on the record date will be entitled to notice of and to vote at the
Annual Meeting. As of the Record Date, there were [ ] shares
of Common Stock outstanding and entitled to vote at the Annual Meeting.
Shareholder are entitled to one vote for each share of Common Stock they hold.
Please complete, sign, date and promptly return the accompanying Proxy
Card. An envelope with prepaid postage is enclosed. The persons named on the
Proxy Card will vote the shares of Common Stock as directed on properly
executed cards if they are received before the vote at the Annual Meeting and
not revoked. If a proxy is submitted without any instructions, the proxy will
be voted FOR Proposal 1 for the election of the eleven nominees for directors
of the Company named in this Proxy Statement; FOR Proposal 2 to ratify the
appointment of Coopers & Lybrand as independent auditors; FOR Proposal 3
regarding the changes to the Stock Benefit Plan; and FOR Proposal 4 regarding
the issuance of up to 5,000,000 shares of the Company's Common Stock from time
to time in one or more privately negotiated transactions or public offerings.
The Company does not expect any matters which are not described in this Proxy
Statement to be presented at the Annual Meeting. If other matters are
presented, proxies will be voted in accordance with the discretion of the proxy
holders.
For the Company to be able to act on the listed matters at the Annual
Meeting, at least a majority of the total number of outstanding shares of
Common Stock entitled to vote must be present, either in person or by proxy.
Under Maryland law, if a stockholder abstains on a vote, the abstention does
not constitute a vote "for" or "against" a matter. Thus, abstentions are
disregarded in determining the "votes cast" for purposes of electing directors.
With respect to certain matters, brokers and certain other nominees are
entitled to vote in their discretion if the beneficial owner or person entitled
to vote does not give the broker or nominee instructions on how to vote. If,
however, the brokers or nominees do not receive instructions from the
beneficial owner or other person entitled to vote such shares on Proposal 3
regarding the changes to the Stock Benefit Plan and on Proposal 4 regarding
issuing shares in private placements or public offerings, they may not vote on
those proposals and their "non-votes" will be treated like abstentions. Under
the rules of the New York Stock Exchange, Proposals 3 and 4 must be approved by
a majority of the votes cast so long as the total of votes cast on the proposal
is more than 50% of the total number of shares entitled to vote.
A stockholder of record who submits a proxy may revoke it at any time
before the vote at the Annual Meeting: (i) by giving a written revocation to
Ann M. McCormick, the Secretary of the Company, at 850
<PAGE>
Clinton Square, Rochester, New York 14604; (ii) by filing another properly
executed proxy with a later date; or (iii) by attending the Annual Meeting in
person and voting by ballot. Any stockholder of record as of the Record Date
who attends the Annual Meeting may vote in person even if he has previously
sent in a proxy card. If a stockholder attends the Annual Meeting but does not
complete a ballot his shares of Common Stock will be voted in accordance with
his previously given proxy.
The Company is mailing its 1997 Annual Report to Stockholders, including
its financial statements for the fiscal year ended December 31, 1996, at the
same time this Proxy Statement is being mailed to stockholders. Portions of the
Annual Report are incorporated in this Proxy Statement by reference. A
stockholder may also obtain a copy of the Company's Form 10-K Annual Report
filed with the Securities and Exchange Commission by writing Home Properties
of New York, Inc., Stockholder Services, 850 Clinton Square, Rochester, New
York 14604.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, eleven individuals will be elected to serve as
directors until the 1998 Annual Meeting and until their successors are
elected. The Board of Directors has nominated Norman P. Leenhouts, Nelson B.
Leenhouts, Richard J. Crossed, Amy L. Tait, Burton S. August, Sr., William
Balderston, III, Alan L. Gosule, Leonard F. Helbig, III, Roger W. Kober,
Clifford W. Smith, Jr., and Paul L. Smith to serve as directors (the
"Nominees"). Each of the Nominees is currently serving as a director of the
Company. The Board of Directors anticipates that each of the Nominees will
serve as a director if elected. If any person nominated by the Board of
Directors is unable to accept election, the proxies will be voted for the
election of another person recommended by the Board of Directors.
As of December 30, 1996, the Board of Directors increased the number of
its members from ten to eleven and elected Alan L. Gosule, as provide by the
terms of the agreements entered into by the Company and Home Properties of New
York, L.P. (the "Operating Partnership") in connection with the investment by
the State Treasurer of the State of Michigan on behalf of certain of its
retirement funds of $35 million in Class A limited partnership interest in the
Operating Partnership. The right of the State Treasurer to nominate a director
of the Company (or more than one, up to four, in the event of breaches of
certain obligations of the Company or the Operating Partnership under the
agreements) continues until the value of the investment falls below $35 million
or 8% of the Company's equity capitalization for 30 consecutive days.
The favorable vote of the holders of a majority of the shares of Common
Stock cast at the Annual Meeting is required for the election of the nominees
as directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES.
INFORMATION REGARDING NOMINEES FOR DIRECTOR
Brief biographical descriptions of the Nominees follows. The information
was furnished to the Company by the Nominees. The information is up to date
through March 15, 1997.
Norman P. Leenhouts, 61, has served as Chairman of the Board of
Directors, Co-Chief Executive Officer and a director of the Company since its
inception in 1993. He has also served as Chairman of the Board of Home
Properties Management, Inc. ("HP Management") and as a director of Conifer
Realty Corporation ("Conifer Realty") since their formation. Norman Leenhouts
is a co-owner, together with Nelson Leenhouts, of Home Leasing Corporation, the
Company's predecessor ("Home Leasing"), and served as Chairman of Home Leasing
since 1971. He is a director of Hauser Corporation and Rochester Downtown
Development Corporation. He also serves as a trustee of Roberts Wesleyan
College and the University of Rochester. His is a graduate of the University
of Rochester and is a certified public accountant. He is the twin brother of
Nelson Leenhouts.
- 2 -
<PAGE>
Nelson B. Leenhouts, 61, has served as President, co-Chief Executive
Officer and a director of the Company since its inception in 1993. He has also
served as President and Chief Executive Officer of HP Management and as a
director of Conifer Realty since their formation. Nelson Leenhouts was the
founder, and a co-owner, together with Norman Leenhouts, of Home Leasing, and
served as President of Home Leasing since 1967. He is a director of Hauser
Corporation. Nelson Leenhouts is a graduate of the University of Rochester.
He is the twin brother of Norman Leenhouts.
Richard J. Crossed, 57, has served as Executive Vice President and a
director of the Company and as a director, President and Chief Executive
Officer of Conifer Realty since January 1, 1996. He served as President and
Chief Executive Officer of Conifer Development, Inc. and C.O.F. (formerly
Conifer Realty, Inc.) (collectively, "Conifer") from 1985. Before becoming
President of Conifer, he served as Director of Development for Conifer. Mr.
Crossed is a director of the St. Joseph's Villa and is active in many housing
organizations. He has served on the New York State Housing Turnkey Task force
and New York State Low-Income Housing Tax Credit Task Force. Mr. Crossed is a
graduate of Bellarmine College.
Amy L. Tait, 38, has served as Executive Vice President and a director of
the Company since its inception in 1993. She has also served as a director of
HP Management since its formation. Mrs. Tait joined Home Leasing in 1983 and
has had several positions, including Senior and Executive Vice President and
Chief Operating Officer. She currently serves on the M & T Bank Advisory
Board and the boards of the United Way of Rochester and GeVa Theatre.
Mrs. Tait is a graduate of Princeton University and hold a Masters degree in
Business Administration from the William E. Simon Graduate School of Business
Administration of the University of Rochester. She is the daughter of Norman
Leenhouts.
Burton S. August, Sr., 81, has been a director of the Company since
August, 1994. Mr. August is currently a director of Monro Muffler Brake, Inc.,
a publicly traded company where Mr. August served as Vice President from 1969
until he retired in 1980. Mr. August is also a trustee emeritus of Rochester
Institute of Technology, a trustee of Strong Museum and a trustee of the
Otetiana Council Boy Scouts of America.
William Balderston, III, 69, has been a director of the Company since
August, 1994. From 1991 to the end of 1992 was an Executive Vice President of
The Chase Manhattan Bank, N.A. From 1986 to 1991, he was President and Chief
Executive Officer of Chase Lincoln First Bank, N.A., which was merged into The
Chase Manhattan Bank, N.A. He is a director of Bausch & Lomb Incorporated and
Rochester Gas and Electric Corporation, as well as a Trustee of the University
of Rochester. Mr. Balderston is a graduate of Dartmouth College.
Alan L. Gosule, 56, has been a director of the Company since December,
1996. Mr. Gosule has been a partner in the law firm of Roger & Wells, New
York, New York, since August, 1991 and prior to that time was a partner in the
law firm of Gaston & Snow. He serves as Chairman of the Rogers & Wells Tax
Department and Real Estate Securities practice group. Mr. Gosule is a
graduate of Boston University and its Law School and received a LL.M. from
Georgetown University. Mr. Gosule also serves on the Boards of Directors of
15 funds of the Northstar Mutual Funds, the Simpson Housing Limited Partnership
and F.L. Putnam Investment Management Company. Rogers & Wells acted as counsel
to Coopers & Lybrand LLP in its capacity as advisor to the State Treasurer of
the State of Michigan in connection with its investment of retirement funds in
the Operating Partnership and Mr. Gosule was the nominee of the State Treasurer
under the terms of the investment agreements described above.
Leonard F. Helbig, III, 51, has been a director of the Company since
August, 1994. Mr. Helbig has served as Executive Managing Director of the
Financial Services Group and a Director of Cushman & Wakefield since 1984. He
joined Cushman & Wakefield in 1980 and is also a member of that firm's
Executive and National Management Committees. Mr. Helbig is a member of the
Urban Land Institute, the Pension Real Estate Association and the International
Council of Shopping Centers. Mr. Helbig is a graduate of LaSalle University
and holds MAI and SRPA appraisal qualifications of the American Institute of
Real Estate Appraisers.
- 3 -
<PAGE>
Roger W. Kober, 63, has been a director of the Company since August,
1994. Mr. Kober is the Chairman of the Board and Chief Executive Officer of
Rochester Gas and Electric Corporation where he has been employed since 1965.
He is also a member of the Board of Trustees of Rochester Institute of
Technology and a director of the Association of Edison Illuminating Companies,
the Chase Upstate Advisory Council, the Greater Rochester Metro Chamber of
Commerce and the United Way of Greater Rochester, Inc. Mr. Kober is a
graduate of Clarkson College and holds a Masters Degree in Engineering from
Rochester Institute of Technology.
Clifford W. Smith, Jr., 50, has been a director of the Company since
August, 1994. Mr. Smith has been the Clarey Professor of Finance of the
William E. Simon Graduate School of Business Administration of the University
of Rochester since 1988. He has written numerous books, monographs, articles
and papers on a variety of financial, capital markets, risk management and
accounting topics and has held a variety of editorial positions on a number of
journals. Mr. Smith is a graduate of Emory University and holds a Doctor of
Economics from the University of North Carolina at Chapel Hill.
Paul L. Smith, 61, has been a director of the Company since August, 1994.
Mr. Smith was a director, Senior Vice President and the Chief Financial Officer
of the Eastman Kodak Company from 1983 until he retired in 1993. He is
currently a director of Performance Technology, Inc., Rochester General
Hospital and GeVa Theatre and is Chairman of the Board of Trustees of the
George Eastman House. Mr. Smith is a graduate of Ohio Wesleyan University and
holds an MBA Degree in finance from Northwestern University
THE BOARD OF DIRECTORS AND ITS COMMITTEES
BOARD OF DIRECTORS. The Company is managed by a Board of Directors
composed of eleven members, a majority of whom are independent of the Company's
management (the "Independent Directors"). The Board of Directors met six times
in 1996. Each of the directors attended at least 75% of the meetings of the
Board of Directors and any committees of which the director served during 1996.
AUDIT COMMITTEE. Paul Smith, Roger Kober and Leonard Helbig form the
Audit Committee of the Board of Directors. Alan Gosule joined the Committee at
the beginning of 1997. The Audit Committee recommends the engagement of
independent public accountants, reviews the scope of the audit engagement and
any other services, reviews the independent public accountants' letter of
comments and management's responses to those comments, approves other
professional services provided by the independent public accountants, reviews
the independence of the independent public accountants, reviews any major
accounting changes made or contemplated, reviews the adequacy of the Company's
internal accounting controls. The Audit Committee consists solely of
Independent Directors. It met twice during 1996.
COMPENSATION COMMITTEE. Burton August, William Balderston and Clifford
Smith form the Compensation Committee of the Board of Directors. Alan Gosule
joined the Committee at the beginning of 1997. The Compensation Committee
establishes remuneration levels for officers of the Company, reviews
significant employee benefit programs and establishes and administers executive
compensation programs, including bonus plans, stock option and other
equity-based programs, deferred compensation plans and any other cash or stock
incentive programs. The Compensation Committee consists solely of Independent
Directors and met four times during 1996.
The Board of Directors does not have a standing nominating committee.
The entire Board of Directors considers Board composition and nominees,
performing the function of a nominating committee.
COMPENSATION OF DIRECTORS
In 1996, the Company paid its directors who are not employees of the
Company annual compensation of $9,000 plus $1,000 per day for attendance (in
person or by telephone) at Board and committee meetings. Effective January 1,
1997, the annual director fee was increased to $10,000 per year. Directors of
the Company who are employees of the Company do not receive any compensation
for their services as directors. All
- 4 -
<PAGE>
directors are reimbursed for their expenses incurred in attending directors'
meetings. Pursuant to the Company's Stock Benefit Plan, each non-employee
director (other than Mr. Gosule) was granted options to purchase 3,000 shares
of Common Stock immediately following the annual meeting of stockholders in
1996. The options have an exercise price equal to the fair market value of
the Company's Common Stock on the date of grant. The Stock Benefit Plan does
not have additional options available for awards to directors. Subject to
stockholder approval of the changes to the Stock Benefit Plan described in
Proposal 3, the Board has approved additional awards to each director of
options to purchase 3,500 shares of Common Stock immediately following the
annual meeting of stockholders in each of 1997, 1998 and 1999 at an exercise
price equal to the fair market value of the Company's Common Stock on the date
of grant. In addition, stockholder approval of the proposed changes to the
Stock Benefit Plan would ratify the grants of options to purchase 4,554 shares
of Common Stock in August 1996 in connection with the Executive and Director
Stock Purchase and Loan Program described below. Please also review Proposal 3.
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid during 1994,
1995 and 1996 to the Company's Co-Chief Executive Officers and other most
highly compensated executive officers. Except for the Co-Chief Executive
Officers, no executive officer's annual salary and bonus exceeded $100,000 on
an annualized basis during the fiscal years ending December 31, 1994 and 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual AWARDS
COMPENSATION Shares
Underlying
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS
- --------------------------- ---- ------ ----- ------------
<S> <C> <C> <C> <C>
Norman P. Leenhouts
Chairman and Co-Chief
Executive Officer 1994(1) $ 50,000 $14,556 88,000 sh.
1995 132,000 0 0
1996 145,200 59,702 7,338 sh.(3)
Nelson B. Leenhouts
President and Co-Chief
Executive Officer 1994(1) $ 50,000 $14,556 88,000 sh.
1995 132,000 0 0
1996 145,200 59,702 7,338 sh.(3)
Richard J. Crossed 1996(2) $145,200 $59,702 7,338 sh.(3)
Executive Vice President
Amy L. Tait 1994(1) $ 33,333 $16,495 88,000 sh.
Executive Vice President 1995 87,917 0 0
and Chief
Operating Officer 1996 103,000 42,351 5,206 sh.(3)
</TABLE>
________________
(1) Amounts reported reflect actual base salary earned during the Company's
period of operations from August 4, 1994 through December 31, 1994. The
annual base salary of each of Norman and Nelson Leenhouts for 1994 was
$120,000 and for Amy Tait was $80,000..
(2) Mr. Crossed was not employed by the Company in 1994 and 1995.
(3) These options were granted under the Company's Stock Benefit Plan in
connection with the purchase of the Company's common stock under the
Executive and Director Stock Purchase and Loan Program described below. The
options are exercisable for ten years at $20.50 per share and vest over
five years.
- 5 -
<PAGE>
OPTION GRANTS IN FISCAL YEAR 1996
The following table sets forth certain information relating to the
options granted with respect to fiscal year ended December 31, 1996. The
columns labelled "Potential Realizable Value" are based on hypothetical 5% and
10% growth assumptions in accordance with the rules of the Securities and
Exchange Commission. The Company cannot predict the actual growth rate of the
Common Stock.
OPTION GRANTS IN LAST FISCAL YEAR{*}
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
Percent of Potential Realizable Value
Number of Total Options at Assumed Annual Rates of
Shares Granted to Stock Price Appreciation For
Underlying Employees in Exercise or Base Expiration OPTION TERM
NAME Options ---------------------------
Granted Fiscal Price DATE 5% 10%
Year ($/SH)
- ------------------- -------- ------- -------- ------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Norman P. Leenhouts 7,338 (1) $20.50 8/12/2006 $ 94,587 $ 239,732
Nelson B. Leenhouts 7,338 (1) $20.50 8/12/2006 $ 94,587 $ 239,732
Richard J. Crossed 88,000 (2) $19.00 1/2/2006 $1,051,600 $2,664,640
7,338 (1) $20.50 8/12/2006 $ 94,587 $ 239,732
Amy L. Tait 5,206 (1) $20.50 8/12/2006 $ 67,105 $ 170,080
</TABLE>
____________
* Stock appreciation rights were not granted in 1996.
(1) These stock options were granted in connection with the purchase by the
named individuals of shares of Common Stock under the Executive and
Director Stock Purchase and Loan Program described below. An option to
purchase .25 shares of Common Stock was granted, with an exercise price
equal to fair market value on the date of grant, for each share purchased.
(2) Issued in connection with the Conifer Transaction (described below).
- 6 -
<PAGE>
OPTION EXERCISES AND YEAR-END OPTION VALUES
No options were exercised in 1996. The following table sets forth the value
of options held at the end of 1996 by the Company's named Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES{(1)}
<TABLE>
<CAPTION>
Number of Shares
Number of Underlying Unexercised Value of Unexercised in-
Shares OPTIONS AT FISCAL YEAR-END the-
Acquired on Value Money Options at
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ---------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Norman P. Leenhouts 0 0 88,000 sh. 7,338 sh. $308,000 $ 14,676
Nelson B. Leenhouts 0 0 88,000 sh. 7,338 sh. $308,000 $ 14,676
Richard J. Crossed 0 0 88,000 sh. 7,338 sh. $308,000 $ 14,676
Amy L. Tait 0 0 35,200 sh. 58,006 sh. $123,200 $195,212
</TABLE>
(1) Stock appreciation rights were not granted in 1996.
(2) Based on the last reported sale price of the Common Stock on the NYSE on
December 31, 1996 of $22.50 less the per Share exercise price of the
options.
EMPLOYMENT AGREEMENTS
Norman and Nelson Leenhouts entered into employment agreements with the
Company prior to its initial public offering providing for an initial term of
five years commencing August 4, 1994. The agreements provide for the
employment of Norman P. Leenhouts as Chairman of the Board and Co-Chief
Executive Officer of the Company at an annual base salary of $120,000 and
Nelson B. Leenhouts as President and Co-Chief Executive Officer of the Company
and President and Chief Executive Officer of HP Management at an annual base
salary of $120,000. The base salaries under each employment agreement
automatically increase by 10% each year starting January 1, 1995. Although
their employment agreements provide for a specific formula for the payment of
incentive compensation to each of Norman and Nelson Leenhouts, they have
voluntarily agreed to waive application of that formula and instead receive
incentive compensation pursuant to the Company's Incentive Compensation Plan as
it may be revised by the Compensation Committee from time to time. The
employment agreements also provide that if employment is terminated by the
Company or not renewed without cause, or terminated by the executive for good
reason at any time, then the executive is entitled to receive a severance
payment equal to the executive's annual base salary and incentive compensation
for the preceding year multiplied by two or the number of years remaining of
the initial term, whichever is greater.
Pursuant to their respective employment agreements with the Company,
Norman and Nelson Leenhouts are each subject to a covenant not to compete with
the Company during the term of his employment and, if either is terminated by
the Company for cause or resigns without good reason, for two years thereafter.
The covenants prohibit Norman and Nelson Leenhouts from participating in the
management, operation or control of any multifamily residential business which
is competitive with the business of the Company, except that they,
- 7 -
<PAGE>
individually and through Home Leasing and its affiliates, may continue to own
and develop the properties managed by HP Management. The Leenhoutses have also
agreed that any commercial property which may be developed by them will be
managed by HP Management subject to the approval of the outside members of the
Board of Directors.
Richard J. Crossed also entered into and Employment Agreement with the
Company, effective January 1, 1996. The terms of that agreement are
substantially the same as the employment agreements entered into by Norman and
Nelson Leenhouts as described above. The initial term is for five years and
identical termination provisions are provided. In his employment agreement,
Mr. Crossed has agreed not to compete with the Company during the term of his
employment and, if he is terminated by the Company for cause or resigns without
good reason, for three years thereafter.
INCENTIVE COMPENSATION PLAN
The Company's incentive compensation plan (the "Incentive Plan") for
officers and key employees of the Company was amended for 1996 to provide that
eligible officer and key employees may earn a cash bonus ranging from 5% to 50%
of base salary based on increases in the Company's Funds from Operations per
Share ("FFO"). The 1996 Incentive Plan provides for a bonus pool to be
established as follows:
PERCENT OF GROWTH
GROWTH IN FFO/SHARE CONTRIBUTED TO BONUS POOL
First 2% 0%
Next 1% 20%
Next 1% 30%
Next 1% 40%
Growth Over 5% 50%
A factor is applied to each eligible participant's salary, ranging from
1% to 10%, to determine the split of the bonus pool. The factor applied to the
salaries of Norman and Nelson Leenhouts, Richard Crossed and Amy Tait is 10%,
with the maximum bonus payable to them being 50% of their base salary.
EXECUTIVE AND DIRECTOR STOCK PURCHASE AND LOAN PROGRAM
In August 1996, the Board of Directors approved an Executive and Director
Stock Purchase and Loan Program. Pursuant to the program, each officer and
director of the Company was eligible to receive loans for the purchase of
Common Stock under the Company's Dividend Reinvestment, Stock Purchase,
Resident Stock Purchase and Employee Stock Purchase Plan ("Dividend
Reinvestment Plan") and receive options to purchase Common Stock under the
Company's Stock Benefit Plan. The one-time program provided for loans up to a
formula amount for each officer based on salary and bonus category and up to
$60,000 for each independent director. The Company loaned approximately 50% of
the purchase price and arranged loans from a commercial bank, guaranteed by the
Company, for the balance. The program also provided for the issuance of stock
options to purchase .25 shares of Common Stock at the fair market value on the
date of issuance ($20.50) for each share of Common Stock purchased. In the
aggregate, eighteen officers purchased 190,345 shares of Common Stock and
received 47,592 options to purchase Common Stock at an exercise price of $20.50
vesting over five years. The six independent directors purchased an aggregate
of 18,198 shares of Common Stock and received options to purchase 4,554 shares
of Common Stock for $20.50 per share vesting over five years. The Company
loaned the directors and officers an aggregate of $2,063,469 maturing on August
31, 2016 with simple interest at 7% and guaranteed bank loans totalling
$2,033,180 repayable from the quarterly dividends on the stock and the proceeds
of any sale of the stock.
- 8 -
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative return on the Company's
Common Stock since its initial public offering in August 1994 through December
31, 1996 to the cumulative return of the NAREIT All Equity REIT Index and the
Standard and Poor's 500 Index for the same period. The total return assumes
that dividends were reinvested quarterly and is based on a $100 investment on
August 1, 1994. Stockholders should note that the period covered by the graph
is very short and that past performance does not predict future results.
[GRAPH APPEARS HERE]
8/4/94 12/31/94 12/31/95 12/31/96
Company Common Stock $100 $104.65 $100.25 $143.32
NAREIT All Equity REIT Index 100 98.45 113.49 153.51
S&P 500 Index 100 101.53 139.54 171.58
- 9 -
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors establishes
performance criteria, reviews and administers compensation and benefits for
executive officers of the Company and broad-based compensation plans for the
other officers and employees generally. The Compensation Committee consists
only of Independent Directors. The objectives of the Company's compensation
program as adopted by the Compensation Committee are as follows: to enhance
stockholder value by attracting and retaining highly capable employees who are
motivated to reach the Company's operating and financial goals, to encourage
ownership of the Company's stock and to link compensation to the performance of
the Company and to total shareholder returns in order to align interests of
executives and other employees with those of its stockholders. The
compensation program for the Company's executive officers has three components:
base salary, annual incentive compensation under the Incentive Plan, and awards
under the Company's Stock Benefit Plan. In evaluating compensation, the
Compensation Committee looks at both the performance of the Company and
shareholder returns, taking into account such factors as general market
conditions. It is the Committee's policy that executive compensation should be
deductible to the Company for federal income tax purposes. The Committee will
annually consider compensation decisions in light of the limit on deductibility
under Section 162(m) of the Internal Revenue Code and related regulations.
SALARY. For the five-year period beginning on August 4, 1994 and ending
August 4, 1999, the base salaries for the Company's Co-Chief Executive
Officers, Norman and Nelson Leenhouts were established in employment agreements
("Employment Agreements"), dated August 4, 1994, with base salaries starting at
an annual level of $120,000 for 1994 and increasing by 10% annually over the
preceding year. Effective on his joining the Company on January 1, 1996,
Richard Crossed entered into an employment agreement on essentially the same
terms as those of the Leenhoutses Employment Agreements.
The Committee reviewed the recommendations of the Co-Chief Executive
Officers for proposed salaries for the other executive officers for 1997 in
light of the responsibilities and personal performance of such officers and the
compensation of persons with similar responsibilities in other entities located
in the geographic regions in which the Company operates. The Committee expects
to make an annual review of salaries of the other executive officers in light
of those factors and others relevant to the compensation objectives of the
Company at the time of review.
The 1996 salaries of certain officers of the Company who were formerly
officers of Conifer Realty, Inc. were set forth in the Contribution Agreement
entered into between Home Properties of New York, L.P. and Conifer and certain
of its affiliates (the "Contribution Agreement"). The Contribution Agreement
related to the acquisition by Home Properties of New York, L.P. (the "Operating
Partnership") of Conifer and its affiliates. The full Board of Directors
approved the terms of the Contribution Agreement, including the salaries of
those officers.
INCENTIVE COMPENSATION. The Incentive Plan provides cash bonuses based
on increases in the Company's FFO. The Incentive Plan, originally adopted in
1994 was amended for 1995. The Leenhoutses voluntarily agreed to accept their
incentive compensation pursuant to the Incentive Plan rather than as provided
in their Employment Agreements. The formula contained in their Employment
Agreements would have resulted in higher bonuses. The Compensation Committee
determined that the two Co-Chief Executive Officers were entitled to have the
maximum factor of 10% applied to their salaries for purposes of determining
their share of the bonus pool, with the maximum bonus payable to them under the
Plan being 50% of base salary. One-half of the Co-Chief Executive Officers'
bonus was made nondiscretionary and one-half payable in the discretion of the
Committee.
The Committee expects to continually review the Plan as it applies to
1997 and future years. Some changes to the Plan, as well as to awards for
1997, may result.
- 10 -
<PAGE>
STOCK COMPENSATION. Initial awards of stock options under the Company's
Stock Benefit Plan were made at the time of the Company's initial public
offering. All of the initial stock options were granted with an exercise price
of $19.00, the initial public offering price of the Company's Common Stock.
Norman and Nelson Leenhouts were each granted immediately exercisable options
to purchase 88,000 shares of Common Stock. Amy Tait was awarded options to
purchase 88,000 shares of Common Stock, vesting over five years. The balance
of the awards, to executive officers and other employees, vest 20% per year.
Pursuant to the Contribution Agreement, Richard J. Crossed was granted
immediately exercisable options to purchase 88,000 shares of Common Stock at an
exercise price of $19.00 per share under the Stock Benefit Plan.
The Compensation Committee reviewed the number of options granted to the
Co-Chief Executive Officers and other executive officers in light of the other
elements of their compensation and their overall equity interest in the
Company's business, principally through ownership of units of limited
partnership interest in the Operating Partnership, and determined to encourage
officers to acquire additional Common Stock and options through a one-time
Executive and Director Stock Purchase and Loan Program. The Compensation
Committee believes that such ownership ties the interests of senior executives
closely with those of shareholders to provide them greater incentive to manage
the Company to increase shareholder returns.
The Board of Directors adopted the Executive and Director Stock Purchase
and Loan Program which, among other things, provided for loans up to a formula
amount for each officer, including executive officers, based on salary and
bonus category. The Company loaned approximately 50% of the purchase price and
arranged loans from a commercial bank, guaranteed by the Company, for the
balance. The program also provided for the issuance of stock options to
purchase .25 shares of Common Stock at the fair market value on the date of
issuance ($20.50) for each share of Common Stock purchased. Pursuant to the
program, each of the named executive officers purchased the maximum number of
shares available with the provided loans, 29,352 shares for $580,817 for each
of the Co-Chief Executive Officers and Mr. Crossed) and received options to
purchase additional shares (options to purchase 7,338 shares at $20.50 per
share for each of the Co-Chief Executive Officers and Mr. Crossed).
Respectfully submitted,
THE COMPENSATION COMMITTEE
Burton S. August, Sr.
William Balderston, III
Clifford W. Smith, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During the fiscal year 1996, the Compensation Committee was comprised of
Burton S. August, Sr., William Balderston, III and Clifford W. Smith, Jr. None
of them have ever been an officer of the Company or any of its subsidiaries.
Alan L. Gosule joined the Committee at the beginning of 1997. Each of the
Compensation Committee members other than Mr. Gosule, as well as each of the
other independent directors, participated in the Company's Executive and
Director Stock Purchase and Loan Program on August 12, 1996 and purchased 3,033
shares of Common Stock through the Company's Dividend Reinvestment and Stock
Purchase Plan for $19.788 per share (3% below the five-day average market value
as provided in that Plan) and received options to purchase 759 shares of Common
Stock at the fair market value on that date of $20.50 per share. The purchases
were financed 50% by a loan from the Company due August 31, 2016 bearing simple
interest at 7% per annum and 50% by a loan from a commercial bank arranged by
and guaranteed by the Company. Mr. August also had an interest in the
transactions consummated in January 1996 because he and members of his
immediate family had interests in a limited partnership merged into the
Operating Partnership as
- 11 -
<PAGE>
part of the Conifer Transaction. In connection with such merger, Mr. August
received 4,246 Units in the Operating Partnership, and his immediate family
members received 5,404 Units in the Operating Partnership, as merger
consideration.
STOCK BENEFIT PLAN
GENERAL
The Company adopted its 1994 Stock Benefit Plan (the "Stock Benefit
Plan") for the purpose of providing persons responsible for the future success
of Home Properties, including directors, officers, regional managers and on-
site property managers, with increased motivation and incentives to exert their
best efforts on behalf of the Company by enlarging their personal stake in its
success. The number of employees participating in the Stock Benefit Plan is
approximately 64. Certain amendments to the Stock Benefit Pan are proposed;
see Proposal 3. The Stock Benefit Plan limits the number of shares of Common
Stock issuable pursuant to the Plan, as increased in 1996, to 1,000,000 shares,
of which options to purchase 649,224 shares were granted to employees and
54,000 options were granted to non-employee directors (3,000 each at initial
election to the Board and after each annual meeting of stockholders). An
additional 4,554 options were granted to directors (subject to shareholder
approval of the increase in option shares available for directors under
Proposal 3) on August 12, 1996 in connection with their purchases of Common
Stock pursuant to the Executive and Director Stock Purchase and Loan Program
described above The number of shares reserved under the Stock Benefit Plan is
subject to adjustment upon certain recapitalizations and other corporate
transactions. The following summary of the Stock Benefit Plan is qualified in
its entirety by reference to the full text of the Stock Benefit Plan, and the
proposed amended and restated text of the Stock Benefit Plan incorporating the
changes described in Proposal 3, copies of which may be obtained from the
Secretary of the Company.
The Board of Directors may amend, suspend or discontinue the Stock
Benefit Plan at any time except that certain specified amendments must be
approved (at a meeting held within twelve months before or after the date of
such amendment) by the holders of a majority of the issued and outstanding
shares of capital stock of the Company entitled to vote. The proposed
amendments to the Stock Benefit Plan allow the Board of Directors to amend the
Stock Benefit Plan unless the Board determines that applicable laws or rules of
governmental entities or regulations of the New York Stock Exchange or similar
bodies require shareholder approval for such amendments to preserve the
benefits of the Plan for the Company and the participants. The proposed
amendments would permit the Board of Directors to increase the benefits
available under the Stock Benefit Plan and change the allocation of benefits
between employees and non-employee directors. The Stock Benefit Plan may not
be amended to adversely affect awards outstanding prior to the amendment.
EMPLOYEE AWARDS
The Stock Benefit Plan provides for the grant of "incentive stock
options" within the meaning of Section 422 of the Code, non-statutory stock
options, stock appreciation rights and restricted stock awards to employees of
the Company. The Stock Benefit Plan is administered by the Compensation
Committee of the Board of Directors, none of the members of which will
participate in employee awards under the Stock Benefit Plan. The Compensation
Committee determines the persons to be granted options, the number of shares
subject to each option, whether or not such option is a non-statutory or
incentive stock option, the exercise price and exercise schedule, the manner in
which payment may be made and whether such persons will have the right to
receive cash or shares in lieu of exercising their options. The exercise price
may not be less than 100% of the fair market value of the Company's Common
Stock on the date of grant. The Compensation Committee may grant an option
holder the right to elect to receive cash or shares in an amount equal to the
excess of the fair market value of the shares subject to an incentive or non-
statutory option over the exercise price for such shares, which right can be
exercised instead of (but not in addition to) its related incentive or non-
statutory option (a stock appreciation right). There is no limit on the number
of non-statutory options that may be granted to any one individual under the
Plan, provided that the grant of the options may not cause the Company to fail
to qualify as a REIT for federal income tax purposes. An optionee may, with
the consent of the
- 12 -
<PAGE>
Compensation Committee, elect to pay for the shares to be received upon
exercise of his or her options in cash, shares (including shares issuable upon
exercise of an option) or any combination thereof. Options may not be
exercisable for more than a ten-year period. Options generally terminate three
months after the optionee's termination of employment from the Company for any
reason other than death or disability, and are not transferable by the optionee
other than by will or the laws of descent and distribution.
Awards of restricted stock will consist of shares of Common Stock which
may be subject to forfeiture and restrictions on transfer as determined by the
Compensation Committee. In general, a participant who has been granted
restricted stock will have the benefits of ownership in respect of such shares,
including the right to vote such shares and to receive dividends and other
distributions thereon from the date of grant, subject to the restrictions
imposed in the grant or as set forth in the Stock Benefit Plan.
DIRECTOR'S OPTIONS
Under the Stock Benefit Plan, the initial non-employee directors of the
Company were granted a non-statutory option to purchase 3,000 shares in
connection with their initial election to the Board and received grants of
options to purchase 3,000 shares immediately following the stockholders'
meetings in 1995 and 1996. The exercise price for each option grant is 100% of
the fair market value of the Company's Common Stock on the date of grant. Each
director's option has a five-year term. Subject to stockholder approval of
the changes to the Stock Benefit Plan described in Proposal 3, the Board has
approved additional awards to each director of options to purchase 3,500 shares
of Common Stock immediately following the annual meeting of stockholders in
each of 1997, 1998 and 1999 at an exercise price equal to the fair market value
of the Company's Common Stock on the date of grant. In addition, subject to
shareholder approval of Proposal 3, the directors (other than Mr. Gosule) were
each issued options to purchase 759 shares of Common Stock at $20.50 on August
12, 1996 in connection with their purchases of Common Stock under the Executive
and Director Stock Purchase and Loan Program.
FEDERAL TAX CONSEQUENCES
NON-STATUTORY OPTIONS. No income is recognized by a participant at the
time of grant of a non-statutory option, nor is the Company entitled to a tax
deduction at that time. The rules for recognizing income upon exercise of a
non-statutory option depend on whether or not the participant is an "insider",
I.E., the participant's sale or purchase of Common Stock may give rise to suit
under Section 16(b) of the Securities Exchange Act of 1934, as amended
("Section 16(b)"). In the case of a non-insider, ordinary income will be
recognized by the participant on the date he or she exercises a non-statutory
option in an amount equal to the excess of the fair market value of the shares
on the date of exercise over the exercise price. The holding period for
capital gain and loss purposes will begin on the date of exercise. In the case
of an insider, ordinary income will be recognized by the participant on the
first day on which a sale of the Common Stock at a profit would not expose the
participant to Section 16(b) liability (the "date of taxation") in an amount
equal to the excess of the fair market value of the shares on the date of
taxation over the exercise price. The holding period for capital gain and loss
purposes will begin on the date of taxation. An insider may elect to be taxed
according to the rules applicable to non-insiders by filing an election with
the Internal Revenue Service under Section 83(b) of the Internal Revenue Code
within 30 days from the date of exercise. The Company will be entitled to a
deduction at the time the participant is required to recognize income from the
exercise of the non-statutory option. The deduction will be equal to the
amount which is taxable to the participant as ordinary income as a result of
the exercise.
If the exercise price of a non-statutory option is paid by surrendering
Common Stock of the Company, the participant will recognize no gain or loss on
the shares that he or she surrenders to pay the exercise price (the
"surrendered shares"). The number of shares that the participant receives upon
exercise of the option in excess of the surrendered shares are considered
"additional shares." The participant will recognize ordinary income upon the
exercise equal to the fair market value of the additional shares on the date of
exercise, less any cash paid towards the exercise price. The basis of the
additional shares will be equal to their fair market value
- 13 -
<PAGE>
on the date of exercise, and their holding period will begin on that date. The
shares that the participant receives upon exercise equal to the surrendered
shares will have a basis and holding period equal to that of the surrendered
shares.
The basis of shares acquired pursuant to the exercise of a non-statutory
option will be the amount included in ordinary income due to receipt of those
shares. When the participant disposes of shares acquired pursuant to a non-
statutory option, any amount realized in excess of the basis of the shares will
be treated as long-term or short-term capital gain, depending on the holding
period of the shares. If the amount realized is less than the basis of the
shares, the loss will be treated as a long-term or short-term capital loss,
depending on the holding period of the shares.
INCENTIVE STOCK OPTIONS. A participant receiving an incentive stock
option will not be subject to income tax upon either the grant of the incentive
stock option or its subsequent exercise. The spread between the exercise price
and the fair market value on the date of exercise will, however, be included in
the participant's alternative minimum taxable income for purposes of
determining the participant's liability, if any, for the alternative minimum
tax. If the participant holds the shares acquired upon exercise for more than
one year after exercise (and two years after grant), then the difference
between the amount realized on a subsequent sale or other taxable disposition
of the shares and the exercise price will constitute long-term capital gain or
loss at the time of sale. The Company will not be entitled to a federal income
tax deduction with respect to the grant or exercise of an incentive stock
option. If the options cease to be incentive stock options for any reason,
they will be treated as non-statutory options. For example, if the participant
sells the shares before the expiration of the requisite holding periods, he or
she will be deemed to have made a "disqualifying disposition" of the shares and
will realize ordinary income in the year of the disposition. In the event of a
disqualifying disposition, the Company will be entitled to a federal income tax
deduction in the year of disposition of the shares in the amount of the
ordinary income realized by the participant.
If the exercise price of an incentive stock option is paid by
surrendering Common Stock of the Company, the Internal Revenue Service treats
such exchange as if there were two transactions. The first transaction is
treated as a non-taxable exchange of the previously-acquired Common Stock for
an equal number of shares of new Common Stock, both having the same market
value. The basis of the new shares will be the same basis as the shares
surrendered and the holding period will include the holding period of the
shares surrendered. The second transaction concerns the additional shares that
a participant will receive pursuant to the exercise. This exchange also
results in no gain or loss being recognized at the time of the exchange.
However, the basis of these additional shares will equal zero (I.E., the
participant is treated as having paid nothing for these shares). The holding
period for the additional shares begins on the date of the exchange.
STOCK APPRECIATION RIGHTS. A participant will be subject to tax, at
ordinary income rates, on the amount of cash received upon the exercise of any
Stock Appreciation Rights, and the Company will be entitled to a tax deduction
equal to such amount.
- 14 -
<PAGE>
NEW PLAN BENEFITS
The following table sets forth the information relating to all options
made or which will be made pursuant to the proposed amendments to the Stock
Benefit Plan. Additional awards may be made from time to time under the Stock
Benefit Plan to directors, executive officers and other employees in the
discretion of the Compensation Committee.
Stock Benefit Plan - New Plan Benefits under Proposed Amendments
Dollar Number
Name and Position Value($) of Shares
- ------------------------------- ---------- ----------
Norman P. Leenhouts
Chairman and Co-Chief Executive Officer $0 (1)
Nelson B. Leenhouts
President and Co-Chief Executive Officer $0 (1)
Richard J. Crossed
Executive Vice President $0 (1)
Amy L. Tait
Executive Vice President and Chief
Operating Officer $0 (1)
Executive Officers as a Group $0 (1)
Non-Employee Directors as a Group $17,647(2 ) 4,554 sh.(3)
Other Employees as a Group $0 (1)
____________
(1) The proposed amendments do not increase the number of shares available for
awards to employees and the Company cannot anticipate the number of
additional awards which may be made to executive officers or other
employees.
(2) The options are exercisable at $20.50 per share, based on the closing price
of the Common Stock on August 12, 1996, the date of the grant. The closing
price of the Common Stock on March 5, 1997 was $24.375. The options may be
exercised for ten years and vest over five years.
(3) In addition, each non-employee director who continues to serve will receive
awards of 3,500 options exercisable for five years at the fair market value
on the date of grant after the annual meeting of shareholders in each of
1997, 1998 and 1999.
- 15 -
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of February 24, 1997 regarding
the beneficial ownership of shares of Common Stock by (i) directors, nominees
and certain executive officers of Home Properties, and (ii) directors, nominees
and executive officers of Home Properties as a group, and (iii) each person
known by the Company to be the beneficial owner of more than a 5% interest in
the Company. The table also includes information relating to the number and
percentage of shares of Common Stock and partnership units of the Operating
Partnership ("Units") beneficially owned by the persons included in (i) and
(ii) above (such Units are exchangeable into shares, or cash at the election of
the independent directors of the Company. In preparing this table, the Company
has relied on information supplied by its officers, directors, Nominees and
certain stockholders, and upon information contained in filings with the SEC.
<TABLE>
<CAPTION>
Name and Address Number of Shares Percentage of Number of Shares/ Percentage of
of Beneficial Owner Beneficially Owned Outstanding
Shares(2) Units Owned Shares/Units
- --------------------- ----------------- ------------- ---------------- --------------
<S> <C> <C> <C> <C>
Norman P. Leenhouts 118,353 (1) 1.9% 387,513 (1)(3) 4.1% (4)
Nelson B. Leenhouts 117,453 (1) 1.8% 386,365 (1)(3) 4.1% (4)
Richard J. Crossed 118,852 (5) 1.9% 313,816 (5) 3.3%
Amy L. Tait 59,268 (6) * 73,011 (6) *
Burton S. August, Sr. 30,533 (8) * 34,779 (7)(8) *
William Balderston, III 13,533 (7) * 13,533 (7) *
Alan L. Gosule 0 * 0 *
Leonard Helbig, III 13,206 (7) * 13,206 (7) *
Roger W. Kober 13,220 (7) * 13,220 (7) *
Clifford W. Smith, Jr..... 16,935 (7) * 16,935 (7) *
Paul L. Smith 14,033 (7) * 14,033 (7) *
All executive officers and
directors as a group
(13 persons) 554,571 (9) 8.3% (10) 1,303,141(3)(9) 17.9% (11)
</TABLE>
- 16 -
<PAGE>
Name and Address Number of Shares Percentage of
of Beneficial Owner Beneficially Owned Outstanding Shares
- ------------------------- ------------------ ------------------
Capital Growth Management 317,000 (12) 5.42%
Limited Partnership
One International Place
Boston, MA 02110
Miller Anderson & Sherrerd 512,200 (13) 8.81%
One Tower Bridge
West Conshohocken, PA 19428
and
Morgan Stanley Group Inc.
1585 Broadway
New York, NY 10036
Palisade Capital Management L.L.C. 502,000 (14) 8.2%
1 Bridge Plaza, Suite 695
Fort Lee, NJ 07024
State Treasurer, State of
Michigan 1,666,667 (15) 26.76%
Bureau of Investments
Department of Treasury
Treasury Building, Box 15128
Lansing, MI 48901
__________
* Less than 1%
(1) Includes 88,000 shares which may be acquired upon the exercise of currently
exercisable options by each of Norman and Nelson Leenhouts.
(2) Assumes that all options included with respect to the person have been
exercised. The total number of shares outstanding used in calculating the
percentage assumes that none of the options held by any other person have
been exercised.
(3) Includes Units owned by Home Leasing and Leenhouts Ventures. Norman
Leenhouts and Nelson Leenhouts are each directors, officers and 50%
stockholders of Home Leasing and each owns 50% of Leenhouts Ventures.
Includes 50,000 Units owned by the respective spouses of each of Norman and
Nelson Leenhouts as to which they disclaim beneficial ownership.
(4) Assumes that all options included with respect to the person have been
exercised and all Units included with respect to the person have been
exchanged for shares of Common Stock. The total number of shares
outstanding used in calculating the percentage assumes that none of the
options held by any other person have been exercised and that none of the
Units held by any other person have been exchanged for shares.
(5) Includes 88,000 shares which may be acquired upon the exercise of currently
exercisable options. Also includes Mr. Crossed's proportionate share of
Units owned by Conifer and its affiliates.
(6) Includes 35,200 shares which may be acquired upon the exercise of currently
exercisable options. Also includes 3,246 shares owned by Mrs. Tait's
spouse as to which she disclaims beneficial ownership. Mrs. Tait shares
voting and dispositive power with respect to 2,548 Units with her spouse.
(7) Includes 9,000 shares which may be acquired upon the exercise of currently
exercisable options.
(8) Includes 12,500 shares owned by immediate family members of Mr. August as
to which he disclaims beneficial ownership.
(9) Includes 406,000 shares which may be acquired upon the exercise of
immediately exercisable options.
(10)Assumes that all exercisable options included with respect to all listed
persons have been exercised.
(11)Assumes that all exercisable options included with respect to all listed
persons have been exercised and that all Units included with respect to all
listed persons have been exchanged for shares of Common Stock.
(12)Based on a report on Schedule 13G, dated February 11, 1997, reflecting that
Capital Growth Management Limited Partnership has shared dispositive and
sole voting power with respect to shares held in client accounts, as to
which Capital Growth disclaims beneficial ownership.
(13)Based on a report on Schedule 13G, dated February 14, 1997, filed jointly
on behalf of Miller Anderson & Sherrerd and Morgan Stanley Group Inc.,
reflecting that the two Investment Advisors have shared voting and
dispositive power with respect to 515,200 shares.
(14)Based on a report in Schedule 13G, dated February 1, 1997, reflecting that
Palisade Capital Management, L.L.C. holds the shares on behalf of clients
in accounts over which Palisade has sole voting and dispositive power.
(15)Based on a report on Form 13D, dated January 6, 1997, reflecting that the
State Treasurer, State of Michigan and the individual members of the
Michigan Department of Treasury's Bureau of Investments, which manages the
investments for four state-sponsored retirement systems: Public School
Retirement System, State Employees' Retirement System, Michigan State
Police Retirement System and Judges' Retirement System acquired a Class A
Limited Partnership Interest in the Operating Partnership which is
convertible, at the option of the State of Michigan, into 1,666,667 shares
of common stock, subject to adjustment, over which the State Treasurer
would have sole voting and dispositive power.
- 17 -
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"Exchange Act") requires the Company's executive officers and directors, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the New York Stock Exchange. Officers,
directors and greater than 10% shareholders are required to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its executive officers,
directors and greater than 10% beneficial owners were satisfied, except as
follows. Amy Tait's Form 4 for August 1996 with respect to her acquisition of
shares of Common Stock and options under the Company's Executive and Director
Stock Purchase and Loan Program did not reflect the acquisition of shares and
options by her husband, Robert Tait, a Vice President of the Company. The Form
4 was subsequently amended to reflect this omission. Burton August's interest
in 4,246 units in the Operating Partnership received in connection with the
Conifer Transaction were reported in the proxy statement for the 1996 Annual
Meeting of Shareholders and the Company's Annual Report on Form 10-K for 1995
but were not reflected on a Form 4 for January 1996. A Form 4 reflecting the
units was subsequently filed.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Certain directors and an executive officer of the Company (or entities
controlled by them or members of their immediate families) had direct or
indirect interests in transactions which were consummated in connection with
the acquisition of Conifer Realty, Inc. and certain affiliates on January 1,
1996 (the "Conifer Transaction"). The following persons received Units in
connection with the Conifer Transaction, and certain indebtedness was or will
be repaid by the Company:
Units Indebtedness
Name Received Repaid
---------------------------- --------- ------------
Burton August Sr. 4,246 0
Immediate family members of
Burton S. August, Sr. 5,404 0
Richard J. Crossed 68,021 0
Conifer Development, Inc. (1) 20,738 $1,433,190
C.O.F., Inc. (2) 285,403 0
Tamarack II Associates (3) 2,027 0
_______________
(1) Richard J. Crossed owns a 40.6% interest in Conifer Development, Inc.
(2) Formerly Conifer Realty, Inc. Richard J. Crossed owns a 40.6% interest in
C.O.F., Inc.
(3) Conifer Development, Inc. owns a 5% interest in Tamarack II Associates.
Mr. Crossed is a 2% General Partner of a partnership comprised of his
family members that owns a 39% interest in Tamarack II Associates.
In connection with the Conifer Transaction, the Company became the general
partner of St. Paul Genesee Associates, L.P. In May, 1996,Huntington Associates
L.P., a partnership in which the Operating Partnership serves as general
partner, purchased the property owned by St. Paul Genesee Associates at a
purchase price determined by the Board of Directors of the Company which was
paid in cash and by a promissory note. Mr. Crossed and Mr. August are partners
of St. Paul Genesee Associates and received or have an interest in $75,580 and
$18,965, respectively, of the cash and payments on the promissory note received
by St. Paul Genesee Associates. They abstained from the action of the Board
setting the purchase price for the property. It is anticipated that the
limited partnership interests in Huntington Associates L.P. will be sold in a
tax credit transaction and that substantially all of the Company's investment
will be returned.
- 18 -
<PAGE>
Directors and executive officers of the Company received loans from the
Company of 50% of the purchase price of shares of Common Stock purchased by
them in connection with the Company's Executive and Director Stock Purchase and
Loan Program described above and commercial bank loans for the balance,
guaranteed by the Company. The indebtedness to the Company of each of the
named executive officers is: each of Messrs. Leenhouts and Crossed - $290,408
and Mrs. Tait - $206,000.
Home Leasing, in consideration of a portion of the Units and cash received
by it in connection with the formation of the Company, assigned to HP
Management certain management contracts between it and certain entities of
which it is a general partner. As a general partner of those entities, Home
Leasing Corporation (and, indirectly, Norman and Nelson Leenhouts) has an
ongoing interest in such management contracts. Pursuant to the Contribution
Agreement, Conifer assigned to the Company and its affiliates certain
management contracts between Conifer and entities in which it is the general
partner. As a general partner, Conifer (and indirectly, Richard Crossed) has
an ongoing interest in such management contracts.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Audit Committee, has
appointed the accounting firm of Coopers & Lybrand LLP to serve as independent
auditors of the Company for the fiscal year ending December 31, 1997. Coopers
& Lybrand LLP has served as the Company's independent auditors since its
commencement of operations and is considered by the management of the Company
to be well qualified. A representative of Coopers & Lybrand LLP will be
present at the Annual Meeting, will be given the opportunity to make a
statement if he so desires and will be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
APPOINTMENT OF COOPERS & LYBRAND LLP AS INDEPENDENT AUDITORS OF THE COMPANY FOR
THE 1997 FISCAL YEAR.
PROPOSAL 3
APPROVAL OF AMENDMENTS TO THE COMPANY'S
STOCK BENEFIT PLAN
TO INCREASE THE NUMBER OF SHARES ISSUABLE
THEREUNDER TO INDEPENDENT DIRECTORS BY 100,000 SHARES,
AND
MAKE ADDITIONAL CHANGES
The Board of Directors of the Company has approved an amendment to the
Company's Stock Benefit Plan to increase the number of shares issuable
thereunder to non-employee directors by 100,000 and to make additional changes
in light of changes in Rule 16b-3 promulgated by the Securities and Exchange
Commission. The Stock Benefit Plan requires shareholder approval for such
amendments and the rules of the New York Stock Exchange require shareholder
approval for stock option or similar plans pursuant to which stock may be
acquired by officers and directors.
Subject to stockholder approval of the changes to the Stock Benefit Plan,
the Board has approved additional awards to each director of options to
purchase 3,500 shares of Common Stock immediately following the annual meeting
of stockholders in each of 1997, 1998 and 1999 at an exercise price equal to
the fair market value of the Company's Common Stock on the date of grant. In
addition, stockholder approval of the proposed changes
- 19 -
<PAGE>
to the Stock Benefit Plan would ratify the grants of options to purchase 4,554
shares of Common Stock in August 1996 in connection with the Executive and
Director Stock Purchase and Loan Program described above. The remaining
additional options will be used from time to time to further the objectives of
the Company through the Stock Benefit Plan. No other specific option grants
have been approved at this time.
In August 1996, the Securities and Exchange Commission amended Rule 16b-3
which exempts certain transactions between a company and its officers and
directors from the short-swing trading prohibition of Section 16(b) of the
Securities Exchange Act of 1934. These proposed changes to the Stock Benefit
Plan are intended to conform the Plan to amended Rule 16b-3 and provide the
Board of Directors and the Compensation Committee with more flexibility to
administer the Stock Benefit Plan to provide incentives to key individuals
whose contributions are important to the continued success of the Company. The
proposed changes amend the provisions governing composition of the committee
administering the Stock Benefit Plan to conform with regulatory requirements
under Rule 16b-3, and other applicable requirements (for example, Section
162(m) under the Internal Revenue Code). As amended, the plan would be
administered by a committee of at least two non-employee directors who qualify
under the applicable rules. The Stock Benefit Plan would also be amended to
allow the Board of Directors to amend the Plan from time to time unless
shareholder approval was required, in the determination of the Board of
Directors of the Company, in order to preserve the intended benefits of the
Stock Benefit Plan to the Company and the participants under applicable laws,
rules or regulations of any governmental authorities, stock exchange or other
body.
The Stock Benefit Plan is described in more detail above. Copies of the
Stock Benefit Plan and the proposed amended and restated text of the Stock
Benefit Plan incorporating the changes described above may be obtained from the
Secretary of the Company.
The affirmative vote of a majority of the shares of Common Stock represented
at the Annual Meeting in person or by proxy is required for the approval of the
proposed amendments to the Stock Benefit Plan.
provided that the total vote cast on the proposal represents over 50% of all
votes entitled to be cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND THE
COMPANY'S STOCK BENEFIT PLAN TO INCREASE THE NUMBER OF SHARES ISSUABLE
THEREUNDER TO DIRECTORS BY 100,000 SHARES AND TO MAKE OTHER CHANGES DESCRIBED
ABOVE.
PROPOSAL 4
APPROVAL OF THE ISSUANCE OF UP TO 5,000,000 SHARES OF THE
COMPANY'S COMMON STOCK FROM TIME TO TIME IN ONE OR MORE
PRIVATELY NEGOTIATED TRANSACTIONS OR PUBLIC OFFERINGS
The Board of Directors of the Company has approved the issuance of up to
5,000,000 shares of Common Stock in one or more private placements or public
offerings upon such terms and conditions as may be approved from time to time
by the Board of Directors. New York Stock Exchange rules require than when
more than 20% of the number of shares outstanding are to be issued in a private
placement or series of related transactions, shareholder approval of the
issuance is required prior to listing such shares on the Exchange. The Company
has sufficient authorized and unissued shares for these purposes under its
articles of incorporation and if the proposal is not approved by a sufficient
vote of stockholders, the Company may limit the number of shares which it
issues and seeks to list on the Exchange to a number which falls below the
Exchange's threshold.
At the 1995 Annual Meeting, shareholders approved the issuance of up to
2,630,000 shares of Common Stock in one or more privately negotiated
transactions or public offerings. The Class A limited partnership interest
issued by the Operating Partnership to the State Treasurer of the State of
Michigan for $35,000,000 is exchangeable for 1,666,667 shares of the Company's
Common Stock at the option of the holder. That exchange
- 20 -
<PAGE>
alone would use more than half of the existing authorization. The Company has
sold or expects to sell substantially all of the remaining shares in privately
negotiated transactions at prices close to the market price. The Company
believes these sales allow it to raise equity economically and quickly when the
opportunity arises.
The Company has no current arrangements for the sale of the additional
shares of Common Stock for which approval is sought in Proposal 4, but
management believes that it may have the opportunity during the next year to
sell shares to one or more investors in one or a series of privately negotiated
transactions or in a combination of privately negotiated transactions and
public offerings or to issue units in the Operating Partnership for cash or in
exchange for one or more multifamily properties which will be convertible at
the option of the holder or the Company. The shares might be sold through
underwriters or dealers, directly to one or more investors, or through agents.
In order to provide investors with flexibility and avoid price discounts for
lack of marketability, the Company desires to register and list on the Exchange
any additional shares that it issues.
The net proceeds of any sale of shares of Common Stock for cash would be
added to the Company's general funds to be used for general corporate purposes,
including financing of possible future acquisitions of multifamily properties,
capital expenditures, working capital, or repayment of short and long-term
indebtedness. Funds not required immediately would be invested in short term
marketable securities. The Company cannot predict the price at which such
shares may be priced in connection with the issuance of Operating Partnership
units for multifamily properties or the price at which shares issued for cash
may be sold, but in each case the terms of the issuance would be approved by
the Board of Directors of the Company prior to the issuance.
The affirmative vote of a majority of the shares of Common Stock represented
at the Annual Meeting in person or by proxy is required for the approval of the
proposed issuance of additional shares of Common Stock provided that the total
vote cast on the proposal represents over 50% of all votes entitled to be cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
ISSUANCE OF UP TO 5,000,000 SHARES OF THE COMPANY'S COMMON STOCK FROM TIME TO
TIME IN ONE OR MORE PRIVATELY NEGOTIATED TRANSACTIONS OR PUBLIC OFFERINGS.
OTHER MATTERS
SOLICITATION OF PROXIES
The cost of solicitation of proxies in the form enclosed herewith will be
paid by the Company. In addition to the solicitation of proxies by mail, the
directors, officers and employees of the Company may also solicit proxies
personally or by telephone without additional compensation for such activities.
The Company will also request persons, firms and corporations holding shares in
their names or in the names of their nominees, which are beneficially owned by
others, to send proxy materials to and obtain proxies from such beneficial
owners. The Company will reimburse such holders for their reasonable expenses.
STOCKHOLDER PROPOSALS
A stockholder proposal submitted pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, as amended, for inclusion in the Company's proxy
statement and form of proxy for the 1998 annual meeting of stockholders must be
received by the Company by November 26, 1997. Such a proposal must comply with
the requirements as to form and substance established by the Securities and
Exchange Commission for such a proposal to be included in the proxy statement
and form of proxy, and the proponent or a representative of the proponent must
attend the Annual Meeting.
- 21 -
<PAGE>
INCORPORATION BY REFERENCE
The Company's financial statements for the years ended December 31,1996 and
1995, the supplemental financial information and management's discussion and
analysis of financial condition and results of operations contained in the
Company's Annual Report on Form 10-K (File No. 1-13136) filed with the
Securities and Exchange Commission are incorporated herein by reference.
Copies may be obtained from Rebecca Fountain, Home Properties of New York, Inc.
850 Clinton Square, Rochester, New York 14604 or from the Securities and
Exchange Commission over the Internet at its Web site (http:\\www.sec.gov).
OTHER MATTERS
The Board of Directors does not know of any matters other than those
described in this Proxy Statement which will be presented for action at the
Annual Meeting. If other matters are presented, proxies will be voted in
accordance with the best judgment of the proxy holders.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE
COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY
CARD TODAY.
- 22 -
<PAGE>
PRELIMINARY PROXY
HOME PROPERTIES OF NEW YORK, INC.
REVOCABLE PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS MAY 6, 1997
The undersigned hereby appoints Norman P. Leenhouts and Nelson B.
Leenhouts, or each of them, as Proxies with full power of substitution to
represent the undersigned and to vote all Common Stock of Home Properties of
New York, Inc. which the undersigned would be entitled to vote at the 1997
Annual Meeting of Stockholders of the Company to be held on May 6, 1997 and any
adjournment thereof.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
____________________________________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR":
PROPOSAL ONE - To elect the following persons as
directors to serve until the next annual meeting
of stockholders and until their successors have
been elected and have qualified: Norman P.
Leenhouts, Nelson B. Leenhouts, Richard J.
Crossed, Amy L. Tait, Burton S. August, Sr.,
William Balderston, III, Alan L. Gosule,
Leonard F. Helbig, III, Roger W. Kober,
Clifford W. Smith, Jr. and Paul L. Smith.
FOR all nominees WITHHOLD AUTHORITY
listed (except as to vote for all nominees
marked to the listed / /
contrary) / /
(Instruction: To withhold authority to vote for
any individual nominee, write that nominee's
name on the space provided below.)
________________________________________________
PROPOSAL TWO - To ratify the appointment of
Coopers & Lybrand, LLP as independent auditors
for 1997.
For / / Against / / Abstain / /
PROPOSAL THREE - To approve certain amendments
to the Company's Stock Benefit Plan, including
increasing the number of authorized shares of
Common Stock for options to independent
directors.
For / / Against / / Abstain / /
PROPOSAL FOUR - To approve, pursuant to the
rules of the New York Stock Exchange, the
issuance of up to 5,000,000 shares of the
Company's Common Stock from time to time in one
or more privately negotiated transactions or
public offerings.
For / / Against / / Abstain / /
This proxy, when properly executed, will be
voted in the manner directed hereon. If no
direction is made, it will be voted "FOR"
proposals 1, 2, 3 and 4. In their discretion,
the Proxies are authorized to vote upon such
other business as may properly come before the
meeting or any adjournment thereof, including
the election of a person designated by the Board
of Directors as a director in the place of a
nominee who is unable to serve.
Mark here for address change / /
Please mark, sign, date and return this proxy
card using the enclosed envelope.
Dated: ____________ , 1997
Signature:__________________________________________
Signature:__________________________________________
(Please sign as name appears at left. Joint
owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such.)
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
AMENDED AND RESTATED
STOCK BENEFIT PLAN
This Amended and Restated Stock Benefit Plan amends and restates
the Home Properties of New York, Inc. 1994 Stock Benefit Plan in its
entirety, subject to shareholder approval of certain provisions at the 1997
Annual Meeting of Shareholders of Home Properties of New York, Inc.
1. PURPOSES OF THE PLAN
The purposes of this Stock Benefit Plan, as amended
(the "Plan") are to enable Home Properties of New York, Inc. (the
"Company") and its Subsidiaries to attract and retain the services of key
employees and persons with managerial, professional or supervisory
responsibilities, including, but not limited to, members of the Board of
Directors, responsible for the future success of the Company, and to
provide them with increased motivation and incentive to exert their best
efforts on behalf of the Company by enlarging their personal stake in its
success.
2. GENERAL PROVISIONS
2.1 Definitions
As used in the Plan:
(a) "Award" means a grant of a Stock Option, Restricted Stock
or SAR.
(b) "Board of Directors" means the Board of Directors of the
Company.
(c) "Code" means the Internal Revenue Code of 1986, including
any and all amendments thereto.
(d) "Committee" means the committee appointed by the Board of
Directors from time to time to administer the Plan
pursuant to Section 2.2.
(e) "Common Stock" means the Company's Common Stock, $.01 par
value.
(f) "Company" means Home Properties of New York, Inc. and any
of its predecessors, subsidiaries or successors.
(g) "Eligible Director" means a member of the Company's Board
of Directors who is not otherwise an employee of the
Company or any Subsidiary.
(h) "Director's Option" means an option grant made to an
Eligible Director pursuant to Section 4.2.
<PAGE>
- 2 -
(i) "Fair Market Value" means, with respect to a specific
date, (a) if the Common Stock is listed or admitted to
trading on any securities exchange or the
NASDAQ - National Market System, the closing price on such
day, or if no sale takes place on such day, the average of
the closing bid and asked prices on such day, or (b) if
the Common Stock is not listed or admitted to trading on
any securities exchange or the NASDAQ - National Market
System, the last reported sale price on such day or, if no
sale takes place on such day, the average of the closing
bid and asked prices on such day, as reported by a
reliable quotation source designated by the Plan
Administrator, or if no such last reported sale price or
closing bid and asked prices are available, the average of
the reported high bid and low asked prices on such day, as
reported by a reliable quotation source designated by the
Plan Administrator, or if there shall be no bid and asked
prices on such day, the average of the high bid and low
asked prices, as so reported, on the most recent day (not
more than ten days prior to the date in question) for
which prices have been so reported; provided that if there
are no bid and asked prices reported during the ten days
prior to the date in question, the Fair Market Value of
the Common Stock shall be determined by the Plan
Administrator acting in good faith on the basis of such
quotations and other information as it considers, in its
reasonable judgment, appropriate.
(j) "Incentive Stock Option" means an option granted under the
Plan which is intended to qualify as an incentive stock
option under Section 422 of the Code.
(k) "Non-Qualified Stock Option" means an option granted under
the Plan which is not an Incentive Stock Option.
(l) "Participant" means a person to whom an Award has been
granted under the Plan.
(m) "Plan Administrator" means the Board of Directors prior to
consummation of the Company's initial public offering of
its Common Stock, and the Committee thereafter.
(n) "Restricted Stock" means shares of Common Stock awarded to
a Participant subject to such conditions on vesting,
transferability and other restrictions as are established
by the Plan Administrator.
(o) "Rule 16b-3" means Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended from time to
time, or any successor rule.
<PAGE>
- 3 -
(p) "Stock Appreciation Right" means the right to receive a
number of shares of Common Stock, an amount of cash, or a
combination of shares and cash, the aggregate value of
which is determined by reference to a change in the Fair
Market Value of the Common Stock (referred to herein also
as "SARs").
(q) "Stock Option" means an Incentive Stock Option or a
Non-Qualified Stock Option granted under the Plan.
(r) "Subsidiary" means Home Properties of New York, L.P., Home
Properties Management, Inc., any partnership of which the
Company is general partner and holder of a majority of
interests or any corporation (other than the Company) in
an unbroken chain of corporations beginning with the
Company if, at the time of the granting of the Stock
Option, each of the corporations other than the last
corporation in the unbroken chain owns 50% or more of the
total voting power of all classes of stock in one of the
other corporations in such chain.
2.2 Administration of the Plan
(a) The Plan shall be administered by the Plan Administrator
which shall be the Board of Directors prior to consummation of
the Company's initial public offering and by the Committee
thereafter which shall at all times consist of two (2) or more
persons, each of whom shall be members of the Board of
Directors. Each member of the Committee shall be
eligible to serve under Rule 16b-3 and such other rules as
the Board of Directors may deem appropriate . The Board of
Directors may from time to time remove members from, or add
members to, the Committee. Vacancies on the Committee,
howsoever caused, shall be filled by the Board of Directors.
The Plan Administrator shall select one of its members as
Chairman, and shall hold meetings at such times and places as
it may determine.
(b) The Plan Administrator shall have the full power, subject
to and within the limits of the Plan, to: (i) interpret and
administer the Plan, and any Awards made under it; (ii) make
and interpret rules and regulations for the administration of
the Plan and to make changes in and revoke such rules and
regulations (and in the exercise of this power, shall
generally determine all questions of policy and expediency
that may arise and may correct any defect, omission, or
inconsistency in the Plan or any agreement evidencing the
grant of any Award in a manner and to the extent it shall deem
necessary to make the Plan fully effective); (iii) determine
those persons to whom Awards and Director's Options shall be
granted and the number of Awards or Director's
Options and the nature of the Awards to be granted to any
person subject to any limitations imposed by applicable law or
regulations or resolutions of the Board of Directors of the
<PAGE>
- 4 -
Company ; (iv) determine the terms of Awards granted
under the Plan, consistent with the provisions of the Plan;
and (v) generally, exercise such powers and perform such acts
in connection with the Plan as are deemed necessary or
expedient to promote the best interests of the Company. The
interpretation and construction by the Plan Administrator of
any provisions of the Plan or of any Award shall be final,
binding and conclusive.
(c) The Committee may act only by a majority of its members
then in office; however, the Plan Administrator may authorize
any one or more of its members or any officer of the Company
to execute and deliver documents on behalf of the Plan
Administrator.
(d) No member of the Plan Administrator shall be liable for
any action taken or omitted to be taken or for any
determination made by him or her in good faith with respect to
the Plan, and the Company shall indemnify and hold harmless
each member of the Plan Administrator against any cost or
expense (including counsel fees) or liability (including any
sum paid in settlement of a claim with the approval of the
Plan Administrator) arising out of any act or omission in
connection with the administration or interpretation of the
Plan, unless arising out of such person's own fraud or bad
faith.
2.3 Effective Date
The Plan became effective upon its
adoption by the Board of Directors of the
Company on May 10, 1994 and the shareholders of the Company on
May 23, 1994 and was amended by action of the Board of
Directors on February 6, 1996 and the shareholders of the
Company on May 7, 1996. This Amended and Restated Plan was
approved by the Board of Directors of the Company on February
__, 1997 subject to the approval of shareholders of the
Company on May 6, 1997 .
2.4 Duration
If approved by the shareholders of the Company, as provided in
Section 2.3, unless sooner terminated by the Board of
Directors, the Plan shall remain in effect for a period of ten
(10) years following its adoption by the Board of Directors.
<PAGE>
- 5 -
2.5 Shares Subject to the Plan
The maximum number of shares of Common Stock which may be
subject to Awards granted under the Plan shall be 1,000,000,
and the number of such shares which shall be available for
issuance pursuant to Director's Options made to Eligible
Directors under the Plan shall be 154,000 .
The Awards shall be subject to adjustment in accordance with
Section 7.1, and shares to be issued upon exercise of Awards
may be either authorized and unissued shares of Common Stock
or authorized and issued shares of Common Stock purchased or
acquired by the Company for any purpose. If an Award or
portion thereof shall expire or is terminated, cancelled or
surrendered for any reason without being exercised in full,
the unpurchased shares of Common Stock which were subject to
such Award or portion thereof shall be available for future
grants of Awards under the Plan.
2.6 Amendments
The Plan may be suspended, terminated or reinstated, in whole
or in part, at any time by the Board of Directors. The Board
of Directors may from time to time make such amendments to the
Plan as it may deem advisable, including
amendments deemed necessary or desirable to comply with
Section 422 of the Code with respect to Incentive Stock
Options and Rule 16b-3 or any successor or replacement
provisions and any regulations issued thereunder;
provided, however, that no amendment shall be
made without the approval of the Company's shareholders
if such approval is required in the determination of the
Board of Directors in order to preserve the intended benefits
of the Plan to the Company and the Participants under
applicable laws, rules or regulations of any governmental
authorities, stock exchange or other body .
Except as otherwise provided herein, termination or amendment
of the Plan shall not, without the consent of a Participant,
affect such Participant's rights under any Award previously
granted to such Participant.
2.7 Participants and Grants
Awards, other than Director's Options, may be granted by the
Plan Administrator to those persons other than Eligible
Directors who the Plan Administrator determines have the
capacity to make a substantial contribution to the success of
the Company. The Plan Administrator may grant Stock Options
other than Director's Options to purchase such number of
shares of Common Stock (subject to the limitations of Section
2.5) as the Plan Administrator may, in its sole discretion,
determine. In granting Stock Options other than Director's
Options under the Plan, the Plan Administrator, on an
individual basis, may vary the number of Incentive Stock
Options or Non-Qualified Stock Options as between Participants
and
<PAGE>
- 6 -
may grant Incentive Stock Options and/or Non-Qualified Stock
Options to a Participant in such amounts as the Plan
Administrator may determine in its sole discretion.
3. STOCK OPTIONS
3.1 General
All Stock Options granted under the Plan shall be evidenced by
written agreements executed by the Company and the Participant
to whom granted, which agreement shall state the number of
shares of Common Stock which may be purchased upon the
exercise thereof and shall contain such investment
representations and other terms and conditions as the Plan
Administrator may from time to time determine, or, in the case
of Incentive Stock Options, as may be required by Section 422
of the Code, or any other applicable law.
3.2 Price
Subject to the provision of Sections 3.6(d) and 7.1, the
exercise price per share of Common Stock subject to a Stock
Option shall, in no case, be less than one hundred percent
(100%) of the Fair Market Value of a share of Common Stock on
the date the Stock Option is granted.
3.3 Period
The duration or term of each Stock Option granted under the
Plan shall be for such period as the Plan Administrator shall
determine but in no event more than ten (10) years from the
date of grant thereof.
3.4 Exercise
Stock Options other than Director's Options may be exercisable
immediately upon granting of the Stock Option or at such other
time or times as the Plan Administrator shall specify when
granting the Stock Option. Once exercisable, a Stock Option
shall be exercisable, in whole or in part, until the
expiration or termination of their terms by giving a written
notice of exercise, signed by the person exercising the Stock
Option, to the Secretary of the Company at the principal
office of the Company specifying the number of shares of
Common Stock as to which the Stock Option is then being
exercised together with payment of the full exercise price for
the number of shares being purchased. The date both such
notice and payment are received by the office of the Corporate
Secretary of the Company shall be the date of exercise of the
Stock Option as to such number of shares. Notwithstanding any
provision to the
<PAGE>
- 7 -
contrary, no Stock Option may at any time be exercised with
respect to a fractional share.
3.5 Payment of Exercise Price
The exercise price for shares of Common Stock as to which a
Stock Option other than a Director's Option has been exercised
and any amount required to be withheld, as contemplated by
Section 7.3, may be paid:
(a) in cash, or by check, bank draft or money order payable in
United States dollars to the order of the Company; or
(b) by the delivery by the Participant to the Company of whole
shares of Common Stock having an aggregate Fair Market Value
on the date of exercise equal to the aggregate of the exercise
price of Common Stock as to which the Stock Option is then
being exercised; or
(c) by the delivery of instructions to the Company to withhold
from the shares of Common Stock that would otherwise be issued
on the exercise that number of whole shares of Common Stock
having a Fair Market Value equal to the exercise price; or
(d) by any combination of (a), (b) or (c) above.
The Plan Administrator may, in its discretion, impose
limitations, conditions and prohibitions on the use by a
Participant of shares of Common Stock to pay the exercise
price payable by such Participant upon the exercise of a Stock
Option.
3.6 Special Rules for Incentive Stock Options
Notwithstanding any other provision of the Plan, the following
provisions shall apply to Incentive Stock Options granted
under the Plan:
(a) Incentive Stock Options shall only be granted to
Participants who are employees of the Company or its
Subsidiaries.
(b) To the extent that the aggregate Fair Market Value of
Common Stock, with respect to which Incentive Stock Options
are exercisable for the first time by a Participant during any
calendar year under this Plan and any other Plan of the
Company or a Subsidiary, exceeds $100,000, such Stock Options
shall be treated as Non-Qualified Stock Options.
(c) Any Participant who disposes of shares of Common Stock
acquired upon the exercise of an Incentive Stock Option by
sale or exchange either within two (2) years after the date of
the grant of the Incentive Stock
<PAGE>
- 8 -
Option under which the shares were acquired or within one (1)
year of the acquisition of such shares, shall promptly notify
the Secretary of the Company at the principal office of the
Company of such disposition, the amount realized, the exercise
price per share paid upon exercise and the date of
disposition.
(d) No Incentive Stock Option shall be granted to a
Participant who, at the time of the grant, owns stock
representing more than ten percent (10%) of the total combined
voting power of all classes of stock either of the Company or
any parent or Subsidiary of the Company, unless the purchase
price of the shares of Common Stock purchasable upon exercise
of such Incentive Stock Option is at least one hundred ten
percent (110%) of the Fair Market Value (at the time the
Incentive Stock Option is granted) of the Common Stock and the
Incentive Stock Option is not exercisable more than five (5)
years from the date it is granted.
3.7 Termination of Employment
(a) In the event a Participant's employment by, or
relationship with, the Company shall terminate for any reason
other than those reasons specified in Sections 3.7(b), (c),(d)
or (e) hereof while such Participant holds Stock Options
granted under the Plan, then all rights of any kind under any
outstanding Option held by such Participant which shall not
have previously lapsed or terminated shall expire immediately.
(b) If a Participant's employment by, or relationship with,
the Company or its Subsidiaries shall terminate as a result of
such Participant's total disability, each Stock Option held by
such Participant (which has not previously lapsed or
terminated) shall immediately become fully exercisable as to
the total number of shares of Common Stock subject thereto
(whether or not exercisable to that extent at the time of such
termination) and shall remain so exercisable by such
Participant for a period of one (1) year after termination
unless such Stock Option expires earlier by its terms. For
purposes of the foregoing sentence, "total disability" shall
mean permanent mental or physical disability as determined by
the Plan Administrator.
(c) In the event of the death of a Participant, each Stock
Option held by such Participant (which has not previously
lapsed or terminated) shall immediately become fully
exercisable as to the total number of shares of Common Stock
subject thereto (whether or not exercisable to that extent at
the time of death) by the executor or administrator of the
Participant's estate or by the person or persons to whom the
deceased Participant's rights thereunder shall have passed by
will or by the laws of descent or distribution, and shall
remain so exercisable for a period of one (1) year after such
Participant's death unless such Stock Option expires earlier
by its terms.
<PAGE>
- 9 -
(d) If a Participant's employment by the Company shall
terminate by reason of such Participant's retirement in
accordance with Company policies, each Stock Option held by
such Participant at the date of termination (which has not
previously lapsed or terminated) shall immediately become
fully exercisable as to the total number of shares of Common
Stock subject hereto (whether or not exercisable to that
extent at the time of such termination) and shall remain so
exercisable by such Participant for a period of three (3)
months after termination, unless the Stock Option expires
earlier by its terms.
(e) In the event the Company terminates the employment of a
Participant who at the time of such termination was an officer
of the Company and had been continuously employed by the
Company during the five (5) year period immediately preceding
such termination, for any reason except "good cause"
(hereafter defined) and except upon such Participant's death,
total disability or retirement in accordance with Company
policies, each Stock Option held by such Participant (which
has not previously lapsed or terminated and which has been
held by such Participant for more than six (6) months prior to
such termination) shall immediately become fully exercisable
as to the total number of shares of Common Stock subject
thereto (whether or not exercisable to that extent at the time
of such termination) and shall remain so exercisable for a
period of three (3) months after such termination unless such
Stock Option expires earlier by its terms. A termination for
"good cause" shall have occurred only if the Participant in
question is terminated, by written notice (i) because of his
or her conviction of a felony for a crime involving an act of
fraud or dishonesty, (ii) intentional acts or omissions on
such Participant's part causing material injury to the
property or business of the Company, or (iii) because such
Participant shall have breached any material term of any
employment agreement in place between such Participant and the
Company and shall have failed to correct such breach within
any grace period provided for in such agreement. "Good cause"
for termination shall not include bad judgment or any act or
omission reasonably believed by such Participant, in good
faith, to have been in, or not opposed to, the best interests
of the Company.
<PAGE>
- 10 -
3.8 Effect of Leaves of Absence
It shall not be considered a termination of employment when a
Participant is on military or sick leave or such other type of
leave of absence which is considered by the Plan Administrator
as a continuing of the employment relationship of the
Participant with the Company or any of its Subsidiaries. In
case of such leave of absence, the employment relationship
shall be deemed to have continued until the later of (i) the
date when such leave shall have been ninety (90) days in
duration, or (ii) the date as of which the Participant's right
to re-employment shall have no longer been guaranteed either
by statute or contract.
4. DIRECTOR'S OPTIONS
4.1 General
Each Director's Option granted under the Plan shall be
evidenced by an agreement (an "Agreement") duly executed on
behalf of the Company and by the Eligible Director to whom
such Director's Option is granted and dated as of the
applicable date of grant. Each Agreement shall be signed on
behalf of the Company by an officer or officers delegated such
authority by the Plan Administrator using manual signature.
Each Agreement shall comply with and be subject to the terms
and conditions of the Plan. Any Agreement may contain such
other terms, provisions and conditions not inconsistent with
the Plan or this Section 4 as may be determined by the Plan
Administrator. All Director's Options granted under the Plan
shall be Non-Qualified Stock Options.
4.2 Director's Options
Subject to the limitation in Section 4.10 ,
an option to purchase 3,000 shares of Common Stock (as
adjusted pursuant to Section 7.1) shall be granted upon the
effective date of the election of each member of the Company's
Board of Directors (each, a "Director") and an option to
purchase an additional 3,000 shares of Common Stock (as
adjusted pursuant to Section 7.1) shall be granted
automatically in each of the years 1995 and 1996, immediately
following the annual meeting the Company's shareholders, who
is an Eligible Director at such time immediately following
such annual meeting beginning with the annual meeting of the
shareholders at which the shareholders approve the Plan.
An option to
<PAGE>
- 11 -
purchase 759 shares of Common Stock shall have been granted
to each Director on August 12, 1996. An option to purchase an
additional 3,500 shares of Common Stock (as adjusted pursuant
to Section 7.1) shall be granted automatically in each of the
years 1997, 1998 and 1999, immediately following the annual
meeting the Company's shareholders, who is an Eligible
Director at such time immediately following such annual
meeting. Such additional options shall be granted to Eligible
Directors from time to time as may be determined by the Plan
Administrator.
4.3 Director's Option Exercise Price
The exercise price per share for a Director's Option shall be
the Fair Market Value determined in accordance with Section
2.1(i) on the date of grant or, in the case of options granted
on the effective date of the Company's initial public offering
of its Common Stock, the initial public offering price.
4.4 Exercise
Director's Options shall be exercisable immediately upon grant
and are exercisable in whole or in part, at any time from time
to time, until the expiration or termination of their term in
accordance with Section 4.6 by giving written notice of
exercise, signed by the person exercising the Director's
Option, to the Secretary of the Company at the principal
office of the Company specifying the number of shares of
Common Stock as to which the Director's Option is then being
exercised together with payment of the full exercise price for
the number of shares of Common Stock to be purchased. The
date both such notice and payment are received by the office
of the Corporate Secretary of the Company shall be the date of
exercise of the Director's Option as to such number of shares.
Notwithstanding any provision to the contrary, no Director's
Option may at any time be exercised with respect to a
fractional share.
4.5 Payment of Exercise Price
The exercise price for may be paid:
(a) in cash, or by check, bank draft or money order payable in
United States dollars to the order of the Company; or
(b) by the delivery by the Director to the Company of whole
shares of Common Stock having an aggregate Fair Market
Value on the date of exercise equal to the aggregate
exercise price of the Common Stock as to which the Stock
Option is then being exercised; or
<PAGE>
- 12 -
(c) delivery of instructions to the Company to withhold from
the shares of Common Stock that would otherwise be issued
on the exercise that number of whole shares having a Fair
Market Value equal to the exercise price; or
(d) by any combination of (a), (b) or (c) above.
4.6 Term of Director's Options
Each Director's Option shall expire five (5) years from its
date of grant, but shall be subject to earlier termination as
follows:
(a) In the event of the termination of a Director's Option
holder's service as a Director, by reason of his or her
removal as Director (by the shareholders, the Board of
Directors or otherwise), the then-outstanding Director's
Options of such holder (whether or not then exercisable) shall
automatically expire on (and may not be exercised on) the
effective date of such termination.
(b) In the event of the termination of a Director's Option
holder's service as a Director by reason of retirement or
total and permanent disability, the then-outstanding
Director's Options of such holder shall become exercisable, to
the full extent of the number of shares of Common Stock
remaining covered by such Director's Options, regardless of
whether such Director's Options were previously exercisable,
and each such Director's Option shall expire one (1) year
after the date of such termination or on the stated expiration
date, whichever is earlier. For purposes of this Section 4.7,
the phrase "by reason of retirement" means (a) mandatory
retirement pursuant to Board policy or (b) termination of
service by deciding not to stand for re-election.
(c) In the event of the death of a Director's Option holder
while such holder is a Director, the then-outstanding
Director's Options of such holder shall become exercisable, to
the full extent of the number of shares of Common Stock
remaining covered by such Director's Options, regardless of
whether such Director's Options were previously exercisable,
and each such Director's Option shall expire one (1) year
after the date of death of such optionee or on the stated
grant expiration date, whichever is earlier.
Exercise of a deceased holder's Director's Options that are
still exercisable shall be by the estate of such holder or by
the person or persons to whom the holder's rights have passed
by will or the laws of descent and distribution.
(d) In the event of the termination of a Director's Option
holder's service as a Director for any reason other than as
described in Sections
<PAGE>
- 13 -
4.7(a)-(c), including without limitation, expiration of the
Director's term in office (without renomination or reelection)
or by resignation, the then outstanding Director's Options of
such holder shall become exercisable, to the full extent of
the number of shares of Common Stock remaining covered by such
Director's Options, regardless of whether such Director's
Options were previously exercisable, and each such Director's
Option shall expire three(3) months after the effective date
of such termination.
4.7 Limitation of Rights
Neither the recipient of a Director's Option under the Plan
nor the recipient's successor or successors in interest shall
have any rights as a shareholder of the Company with respect
to any shares of Common Stock subject to a Director's Option
granted to such person until the date of issuance of a stock
certificate for such shares of Common Stock.
4.8 Limitation as to Directorship
Neither the Plan, nor the granting of a Director's Option, nor
any other action taken pursuant to the Plan shall constitute
or be evidence of any agreement or understanding, express or
implied, that an Eligible Director has a right to continue as
a Director for any period of time or at any particular rate of
compensation.
4.9 Limit on Awards to Eligible Directors
Notwithstanding any provision to the contrary, an Eligible
Director shall not be entitled to receive or participate in
any Award under the Plan other than Director's Options which
are granted to such Eligible Director pursuant to Section 4.2
and meet all of the requirements of Section 4 applicable
thereto.
4.10 Termination of Director's Options
Notwithstanding any provision to the contrary, no Director's
Option shall be granted pursuant to Section 4.2 on a date when
the number of shares of Common Stock authorized for issuance
pursuant to the Plan and then available for issuance pursuant
to new Director's Options is less than the aggregate number of
such shares which would be issuable pursuant to Director's
Options otherwise required to be granted on such date.
4.11 Conflicting Provisions
In the event of any conflict between a provision of this
Section 4 and a provision in any other paragraph of the Plan
with respect to Director's Options, such provision of this
Section 4 shall be deemed to control.
<PAGE>
- 14 -
Except in the case of conflict, however, provisions in other
sections are applicable.
5. STOCK APPRECIATION RIGHTS
5.1 Stock Appreciation Rights
In conjunction with the granting of Stock Options, the Plan
Administrator may, in its discretion, award SARs to an officer
or employee which entitle such individual to receive payment
from the Company in accordance with this section and upon such
terms and conditions as the Plan Administrator shall determine
from time to time.
5.2 Grant of SAR
A SAR granted under this Section may be made part of a Stock
Option at the time such Stock Option is granted or at any time
thereafter until the option expires.
5.3 Amount Payable Upon Election
A SAR shall entitle the Participant to elect to receive, in
lieu of exercising the Stock Option to which it relates, an
amount (payable, in the sole discretion of the Plan
Administrator, in cash, Common Stock, or a combination
thereof) equal to 100 percent of the excess of:
(a) the Fair Market Value per share of the Company's
Common Stock on the date such SAR is exercised, multiplied
by the number of shares with respect to which such SAR is
being exercised, over
(b) the aggregate option exercise price (under the stock
option agreement to which the SAR relates) for such number
of shares of Common Stock.
5.4 Exercise of SAR
A SAR shall be exercisable only to the extent that it has a
positive value and the Stock Option to which it relates is
exercisable, except that no SAR shall be exercisable during
the first six (6) months after the date of its grant.
Further, in the case of an officer of the Company subject to
the provisions of Section 16 of the Securities Exchange Act of
1934, the SAR must be exercised during the period beginning on
the third business day following the date of release for
publication by the Company of financial data specified under
Rule 16b-3(e)(1)(ii) under the Securities Exchange Act of 1934
and ending on the twelfth business day following such date.
<PAGE>
- 15 -
5.5 Effect on Related Stock Option
Upon the exercise of a SAR, the related Stock Option (or the
appropriate portion thereof) with respect to which such SAR is
exercised shall be automatically cancelled and shall not
thereafter be exercisable.
5.6 Effect on Stock Subject to Plan
For purposes of determining the number of shares available
under the Plan, all shares of Common Stock with respect to
which a SAR is exercised shall no longer be available.
6. RESTRICTED STOCK AWARDS
6.1 Grants
The Plan Administrator may, in its discretion, grant one or
more Restricted Stock Awards to any eligible employee. Each
Restricted Stock Award Document shall specify the number of
shares of Common Stock to be issued to the Participant, the
date of such issuance, the consideration for such shares, if
any, by the Participant, the restrictions imposed on such
shares, and the conditions of release or lapse of such
restrictions. Stock certificates evidencing shares of
Restricted Stock subject to restrictions shall be held by the
Company until the restrictions on such shares shall have
lapsed and the shares shall have vested in accordance with the
provisions of the Award. Promptly after the lapse of
restrictions, a certificate or certificates evidencing the
number of shares of Common Stock as to which the restrictions
have lapsed shall be delivered to the Participant. The
Participant shall deliver to the Corporation such further
assurance and documents as the Plan Administrator may require.
6.2 Restrictions
(a) Pre-Vesting Restraints. Shares of Common Stock
comprising any Restricted Stock Award may not be sold,
assigned, transferred, pledged or otherwise disposed of or
encumbered, either voluntarily or involuntarily, until the
restrictions have lapsed.
(b) Dividend and Voting Rights. Unless otherwise provided in
the applicable Award Document, a Participant receiving a
Restricted Stock Award shall be entitled to cash dividend and
voting rights for all shares of Common Stock issued even
though they are not vested, provided that such rights shall
terminate immediately as to any Restricted Stock that ceases
to be eligible for vesting.
<PAGE>
- 16 -
(c) Accelerated Vesting. Unless otherwise provided by the
Plan Administrator, the restrictions on Restricted Stock shall
lapse upon the Participant's termination of employment with
the Corporation by reason of Retirement, Total Disability or
death.
(d) Forfeiture. Unless otherwise specified by the Plan
Administrator, Restricted Stock as to which the restrictions
have not lapsed in accordance with the provisions of the Award
or pursuant to Section 6.2(c) shall be forfeited upon a
Participant's termination of employment. Upon the occurrence
of any forfeiture of shares of Restricted Stock, such
forfeited shares shall be automatically transferred to the
Company without payment of any consideration by the Company
and without any action by the Participant.
7. MISCELLANEOUS PROVISIONS
7.1 Adjustments Upon Changes in Capitalization
In the event of changes to the outstanding shares of Common
Stock of the Company through reorganization, merger,
consolidation, recapitalization, reclassification, stock
split-up, stock dividend, stock consolidation or otherwise, or
in the event of a sale of all or substantially all of the
assets of the Company, an appropriate and proportionate
adjustment shall be made in the number and kind of shares as
to which Awards or Director's Options may be granted. A
corresponding adjustment changing the number or kind of shares
and/or the purchase price per share of unexercised Stock
Options or portions thereof which shall have been granted
prior to any such change shall likewise be made.
Notwithstanding the foregoing, in the case of a
reorganization, merger or consolidation, or sale of all or
substantially all of the assets of the Company, in lieu of
adjustments as aforesaid, the Plan Administrator may in its
discretion accelerate the date of vesting of an Award or the
date after which an Award may or may not be exercised or the
stated expiration date thereof. Adjustments or changes under
this Section shall be made by the Plan Administrator, whose
determination as to what adjustments or changes shall be made,
and the extent thereof, shall be final, binding and
conclusive.
7.2 Non-Transferability
No Award or Director's Option shall be transferable except by
will or the laws of descent and distribution, nor shall any
Award or Director's Option be exercisable during the
Participant's lifetime by any person other than the
Participant or his guardian or legal representative, except
pursuant to a qualified domestic relations order. Any
purported transfer contrary to this provision will be null and
void and without effect.
<PAGE>
- 17 -
7.3 Withholding
The Company's obligations under this Plan shall be subject to
applicable federal, state and local tax withholding
requirements. Federal, state and local withholding tax due at
the time of a grant or upon the exercise of any Award may, in
the discretion of the Plan Administrator, be paid in shares of
Common Stock already owned by the Participant or through the
withholding of shares otherwise issuable to such Participant,
upon such terms and conditions as the Plan Administrator shall
determine. If the Participant shall fail to pay, or make
arrangements satisfactory to the Plan Administrator for the
payment, to the Company of all such federal, state and local
taxes required to be withheld by the Company, then the Company
shall, to the extent permitted br law, have the right to
deduct from any payment of any kind otherwise due to such
Participant an amount equal to any federal, state or local
taxes of any kind required to be withheld by the Company.
7.4 Compliance with Law and Approval of Regulatory Bodies
No Award or Director's Option shall be exercisable and no
shares will be delivered under the Plan except in compliance
with all applicable federal and state laws and regulations
including, without limitation, compliance with all federal and
state securities laws and withholding tax requirements and
with the rules of all domestic stock exchanges on which the
Common Stock may be listed. Any share certificate issued to
evidence shares for which an Award or Director's Option is
exercised may bear legends and statements the Plan
Administrator shall deem advisable to assure compliance with
federal and state laws and regulations. No Stock Option shall
be exercisable and no shares will be delivered under the Plan,
until the Company has obtained consent or approval from
regulatory bodies, federal or state, having jurisdiction over
such matters as the Plan Administrator may deem advisable. In
the case of the exercise of a Stock Option by a person or
estate acquiring the right to exercise the Stock Option as a
result of the death of the Participant, the Plan Administrator
may require reasonable evidence as to the ownership of the
Stock Option and may require consents and releases of taxing
authorities that it may deem advisable.
7.5 No Right to Employment
Neither the adoption of the Plan nor its operation, nor any
document describing or referring to the Plan, or any part
thereof, nor the granting of any Award hereunder, shall confer
upon any Participant under the Plan any right to continue in
the employ of the Company or any Subsidiary, or shall in any
way affect the right and power of the Company or any
Subsidiary to terminate the employment of any Participant at
any time with or without
<PAGE>
- 18 -
assigning a reason therefor, to the same extent as might have
been done if the Plan had not been adopted.
7.6 Exclusion from Pension Computations
By acceptance of any Award under the Plan, the recipient shall
be deemed to agree that any income realized upon the receipt
or exercise thereof or upon the disposition of the shares
received upon exercise will not be taken into account as "base
remuneration", "wages", "salary" or "compensation" in
determining the amount of any contribution to or payment or
any other benefit under any pension, retirement, incentive,
profit-sharing or deferred compensation plan of the Company or
any Subsidiary.
7.7 Abandonment of Options
A Participant may at any time abandon a Stock Option prior to
its expiration date. The abandonment shall be evidenced in
writing, in such form as the Plan Administrator may from time
to time prescribe. A Participant shall have no further rights
with respect to any Stock Option so abandoned.
7.8 Severability
If any of the terms of provisions of the Plan conflict with
the requirements of Rule 16b-3, then such terms or provisions
shall be deemed inoperative as to directors and officers to
the extent they so conflict with the requirements of Rule
16b-3.
7.9 Interpretation of the Plan
Headings are given to the Sections of the Plan solely as a
convenience to facilitate reference, such headings, numbering
and paragraphing shall not in any case be deemed in any way
material or relevant to the construction of the Plan or any
provision hereof. The use of the masculine gender shall also
include within its meaning the feminine. The use of the
singular shall also include within its meaning the plural and
vice versa.
<PAGE>
- 19 -
7.10 Use of Proceeds
Funds received by the Company upon the exercise of Stock
Options shall be used for the general corporate purposes of
the Company.
7.11 Construction of Plan
The place of administration of the Plan shall be in the State
of New York, and the validity, construction, interpretation,
administration and effect of the Plan and of its rules and
regulations, and rights relating to the Plan, shall be
determined solely in accordance with the laws of the State of
New York.
