PROPOSAL NUMBER 2
APPROVAL OF THE ADOPTION
OF THE AMREP CORPORATION 2016 EQUITY
COMPENSATION PLAN
On June 21, 2016, the
Board adopted the AMREP Corporation 2016 Equity Compensation Plan (the “Plan”), subject to shareholder approval. The
Board has directed that the proposal to approve its adoption of the Plan be submitted to the Company’s shareholders at the
Annual Meeting. Shareholder approval is being sought (i) in order for the shares covered by the Plan to meet the listing requirements
of the New York Stock Exchange, (ii) so that compensation attributable to certain grants under the Plan may qualify for an exemption
from the $1 million deduction limit under section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”)
and (iii) in order for any incentive stock options granted thereunder to meet the requirements of the Code.
The Company’s
only existing equity compensation plan is the AMREP Corporation 2006 Equity Compensation Plan, which is not affected by the adoption
of the Plan. However, the AMREP Corporation 2006 Equity Compensation Plan expires by its terms on September 19, 2016. If approved
by the shareholders, the Plan will become effective on September 20, 2016 or, if later, the date of such approval.
Given below is a summary
of the material provisions of the Plan. A copy of the Plan is attached to this Proxy Statement as Appendix A. Because the description
is a summary, it does not contain all of the information about the Plan that may be important to you. For details of the terms
of the Plan, you should refer to the full text of the Plan, which is hereby incorporated by reference into this Proxy Statement.
General
The Company is the
sponsor of the Plan. The Plan is not subject to the provisions of the Employee Retirement Income Security Act of 1974 or qualified
under Section 401(a) of the Code. All expenses associated with the Plan are borne by the Company.
Purpose
The purpose of the
Plan is to attract employees, directors, officers, advisors, consultants and other personnel and to induce them to remain with
the Company and its subsidiaries and encourage them to increase their efforts to make the Company’s business more successful,
whether directly or through the Company’s subsidiaries or other affiliates. In furtherance of these objectives, the Plan
is designed to provide equity-based incentives to such persons in the form of options, restricted stock, restricted stock units,
deferred stock units, stock appreciation rights, dividend equivalent rights and other forms of equity-based awards as contemplated
by the Plan (collectively, “Awards”), with eligibility for such Awards determined by the Board’s Compensation
and Human Resources Committee or a subcommittee thereof (the “Plan Administration Committee”).
Effective Date and Termination of the
Plan
If approved by the
shareholders, the Plan will become effective on September 20, 2016 or, if later, the date of such approval. The Plan terminates
on, and no Award will be granted under the Plan on or after, September 19, 2026; provided, however, that the Board may, at any
time prior to that date, terminate the Plan. Notwithstanding the foregoing, a termination of the Plan that occurs after an Award
is made will not materially impair the rights of a participant under the Plan (each a “Participant”) unless the Participant
consents. Further, the termination of the Plan will not impair the power and authority of the Plan Administration Committee with
respect to any outstanding Award.
Administration
Except as described
below, the Plan is administered by the Plan Administration Committee, which consists of two or more non-employee directors, each
of whom is intended to be, to the extent required by Rule 16b-3 under the Securities Exchange Act of 1934, as amended, a “non-employee
director” under Rule 16b-3 and qualify as an outside director under Section 162(m) of the Code. If, at any time during the
term of the Plan, the Plan Administration Committee does not exist, the functions of the Plan Administration Committee will be
exercised by the Board. No member of the Plan Administration Committee may act as to matters under the Plan specifically relating
to such member, and grants of Awards to a member of the Board will be made and administered by the Board rather than the Plan Administration
Committee. Where this summary of the Plan hereafter refers to the “Plan Administration Committee,” it is intended to
refer to the Board in those instances where the Board rather than the Plan Administration Committee is responsible for the administration
of the Plan.
The Plan Administration
Committee has the full authority to administer and interpret the Plan, to determine the terms, provisions and conditions of Award
agreements (provided that such terms, provisions and conditions are not inconsistent with the Plan), to determine the eligibility
of eligible Participants to receive an Award, to authorize the granting of Awards to eligible Participants and to determine the
number of shares (“Shares”) of Common Stock to be covered under any Award agreement, considering the position and responsibilities
of the eligible Participant, the nature and value to the Company of the eligible Participant’s present and potential contribution
to the success of the Company whether directly or through the Company’s subsidiaries or affiliates and such other factors
as the Plan Administration Committee may deem relevant.
The Plan Administration
Committee, in its discretion, may in the case of Awards (including, in particular, Awards other than options) intended to qualify
for an exception from the limitations imposed by Section 162(m) of the Code, (i) establish one or more performance goals (“Performance
Goals”) as a precondition to the issuance or vesting of Awards, and (ii) provide, in connection with the establishment of
the Performance Goals, for predetermined Awards to those Participants (who continue to meet all applicable eligibility requirements)
with respect to whom the applicable Performance Goals are satisfied. The Performance Goals will be based upon the criteria set
forth in Exhibit A to the Plan. The Performance Goals will be established in a timely fashion such that they are considered pre-established
for purposes of the rules governing performance-based compensation under Section 162(m) of the Code. Prior to the award or vesting,
as applicable, of affected Awards under the Plan, the Plan Administration Committee is required to certify that any applicable
Performance Goals, and other material terms of the Award, have been satisfied. Performance Goals which do not satisfy the foregoing
may be established by the Plan Administration Committee with respect to Awards not intended to qualify for an exception from the
limitations imposed by Section 162(m) of the Code.
Eligibility and Types of Awards
The following persons
are eligible to be granted Awards under the Plan: (i) employees, directors, officers, advisors, consultants and other personnel
of the Company or any of its subsidiaries or other persons who are expected to provide significant services to the Company or its
subsidiaries, and (ii) any joint venture affiliates of the Company and other entities designated in the discretion of the Plan
Administration Committee, or officers, directors, employees, members, or managers of the foregoing. Grants of Awards under the
Plan are determined by the Plan Administration Committee.
As previously noted,
all directors and employees of the Company or its affiliates are eligible to receive awards under the Plan, including the Company’s
named executive officers, Messrs. Burke, Martin and Vitale. As of July 27, 2016, all of the Company’s directors (four persons),
executive officers (three persons) and employees of the Company and its affiliates (approximately 450 persons) were eligible to
participate in the Plan.
New Plan Benefits
See “Compensation
of Directors” below for anticipated equity awards to be made from the Plan to the Company’s directors if the Plan is
approved by shareholders. The table below presents the number of deferred common share units of the Company approved for issuance
by the Board on the last trading day of calendar year 2016 to each non-employee member of the Board if the Plan is approved by
the Company’s shareholders:
Name
|
|
Dollar Value of Deferred
Common Share Units
|
|
|
Number of Deferred
Common Share Units
|
|
Non-executive director group
|
|
$
|
60,000
|
(1)
|
|
|
10,619
|
(2)
|
_____________________________
|
(1)
|
Assumes that there will be four non-employee members
of the Board through the last trading day of calendar year 2016.
|
|
(2)
|
The number of deferred common share units in the table is based on the closing price per Share
of Common Stock of $5.65 on July 27, 2016, as reported on the New York Stock Exchange. The actual number of deferred common share
units to be issued to the non-employee members of the Board will be determined on the last trading day of calendar year 2016 based
on the closing price per Share of Common Stock, as reported on the New York Stock Exchange, on such date.
|
The number and types
of Awards that will be granted in the future under the Plan are not determinable, as the Plan Administration Committee will make
these determinations in its sole discretion. Accordingly, other than as described above, it is not possible to determine the benefits
that will be received by eligible Participants if the Plan is approved by the Company’s shareholders. The closing price per
Share of Common Stock as reported on the New York Stock Exchange on July 27, 2016 was $5.65.
Available Shares
Subject to adjustment
upon certain corporate transactions or events, the total number of Shares subject to Awards granted under the Plan (including securities
convertible into or exchangeable for Shares), in the aggregate, may not exceed 500,000 Shares, each of which may be issued as incentive
stock options. The maximum number of Shares that may underlie options granted in any calendar year to any eligible Participant,
other than any non-employee director of the Company or its subsidiaries (each a “Director”), may not exceed 50,000
Shares. The maximum number of Shares that may underlie Awards, other than options, granted in any calendar year to any eligible
Participant, other than any Director, may not exceed 30,000 Shares. The maximum number of Shares that may underlie options granted
in any calendar year to any Director may not exceed 25,000 Shares. The maximum number of Shares that may underlie Awards, other
than options, granted in any calendar year to any Director, may not exceed 15,000 Shares. Shares distributed under the Plan may
be treasury Shares or authorized but unissued Shares. Any Shares that have been granted as restricted stock or that have been reserved
for distribution in payment for options, restricted stock units, deferred stock units, or other equity-based Awards but are later
forfeited or for any other reason are not payable under the Plan may again be made the subject of Awards under the Plan. Unless
earlier terminated by the Board, no new Award may be granted under the Plan after September 19, 2026.
Awards Under the Plan
Stock Options
An option is the right
to purchase, at a price and for the term fixed by the Plan Administration Committee in accordance with the Plan, a number of Shares
determined by the Plan Administration Committee. The terms of specific options, including whether options constitute “incentive
stock options” for purposes of Section 422(b) of the Code, will be determined by the Plan Administration Committee.
The exercise price of an option will also be determined by the Plan Administration Committee and reflected in the applicable Award
agreement. The exercise price for each option will be not less than 100% of the Fair Market Value (as defined in the Plan) of a
Share on the day the option is granted. In the case of an incentive stock option granted to a more than 10% shareholder, the exercise
price may not be lower than 110% of the Fair Market Value of a Share on the day the option is granted. Options will be exercisable
at such times and subject to such terms as determined by the Plan Administration Committee. Each option will be exercisable after
the period or periods specified in the applicable Award agreement, which will generally not exceed ten years from the date of grant
(or five years in the case of an incentive stock option granted to a more than 10% shareholder, if permitted under the Plan). An
option must be exercised by the holder thereof by written notice (in the form prescribed by the Plan Administration Committee)
to the Company or its designee specifying the number of Shares subject to such exercise.
Except as may otherwise
be provided in the applicable Award agreement, if a Participant’s employment is terminated by the Company without cause or
because of the Participant’s death or disability, the Plan provides for limited periods of time in which certain options
may be exercised and any options that are not exercised will be forfeited. Subject to the provisions of the applicable Award agreement,
if the Participant’s employment is terminated for cause, all the Participant’s vested and unvested options will immediately
be forfeited.
Each option granted
under the Plan is nontransferable by the optionee except by will or the laws of descent and distribution of the state wherein the
optionee is domiciled at the time of the optionee’s death; provided, however, that the Plan Administration Committee may
(but need not) permit other transfers, where it concludes that such transferability (i) does not result in accelerated U.S. federal
income taxation, (ii) does not cause any option intended to be an incentive stock option to fail to be described in Section 422(b)
of the Code, (iii) complies with applicable law, including securities laws, and (iv) is otherwise appropriate and desirable. The
Plan Administration Committee may also grant “stock appreciation rights” as part of (or as the exclusive way to exercise)
an option.
The Plan Administration
Committee will determine the time or times at which an option may be exercised in whole or in part, and the method or methods by
which, and the form or forms in which, payment of the option price with respect thereto may be made or deemed to have been made.
An individual who holds an option granted under the Plan will have none of the rights of a shareholder with respect to the Shares
which are the subject of that option unless and until those Shares are issued and outstanding as a result of the exercise of the
option.
Restricted Stock
A restricted stock
award is an award of Common Stock that is subject to restrictions on sale, transferability and such other restrictions, if any,
as the Plan Administration Committee may impose at the date of grant. Grants of restricted stock will be subject to vesting schedules
as determined by the Plan Administration Committee. Restrictions on the Shares will lapse in accordance with the terms of the applicable
Award agreement, as determined by the Plan Administration Committee. The restrictions on the Shares may lapse separately or in
combination at such times, under such circumstances, including, without limitation, a specified period of employment or the satisfaction
of pre-established criteria, in such installments or otherwise, as the Plan Administration Committee may determine. Except to the
extent restricted under the Award agreement relating to the restricted stock, a participant granted restricted stock has all of
the rights of a shareholder, including, without limitation, the right to vote and the right to receive dividends on the restricted
stock. Cash dividends on Shares of restricted stock will, unless otherwise provided by the Plan Administration Committee, be held
by the Company until the period of forfeiture in relation to the Shares has lapsed. Such dividends will be forfeited if the underlying
Shares are forfeited. If the Shares are not forfeited, the dividends will be paid over to the Participant as soon as practicable
after the period of forfeiture has lapsed.
Except as may otherwise
be provided in the provisions of the applicable Award agreement, if, during the forfeiture period in relation to a Participant’s
restricted stock, the Participant’s employment is terminated by the Company without cause, or because of the death or disability
of the Participant, or in the event of a change in control of the Company, the restrictions on all the Participant’s restricted
stock will immediately lapse. Except as may otherwise be provided in the provisions of the applicable Award agreement, if the Participant’s
employment is terminated for cause, or the Participant terminates his or her employment, all the Participant’s restricted
stock that is still subject to restrictions will immediately be forfeited and, if the Participant paid any purchase price for the
restricted stock, the Company will pay the Participant the lower of that price or the then Fair Market Value of the stock on the
date of termination.
Subject to the other
terms of the Plan, the Plan Administration Committee may provide a specified purchase price for, determine the restrictions applicable
to, and determine or impose other conditions to the grant of, any restricted stock awarded under the Plan as it may deem appropriate.
Restricted Stock
Units
A restricted stock
unit represents a future right to receive the Fair Market Value of a Share, or, if provided by the Plan Administration Committee,
the right to receive the Fair Market Value of a Share in excess of a base value established by the Plan Administration Committee
at the time of grant. Each restricted stock unit will generally be settled by the transfer of one Share. Restricted stock units
will vest as provided in the applicable Award agreement. The Plan Administration Committee may allow the Company, or the Participant,
to elect that restricted stock units be settled by the transfer of cash or Shares. Generally, the settlement date for restricted
stock units will be the first day of the month following the month in which the restricted stock units vest. The Plan Administration
Committee may, in its discretion and under certain circumstances, permit a Participant to receive, as settlement of restricted
stock units, installments over a period not to exceed 10 years. In addition, the Plan Administration Committee may establish a
program under which distributions with respect to restricted stock units may be deferred for additional periods, with any such
deferrals being subject to Section 409A of the Code.
Rights to payments
with respect to restricted stock units are generally not subject to alienation, transfer, assignment, pledge, garnishment, levy,
execution, or other legal or equitable process. Restricted stock units do not give the holder thereof any rights with respect to
Common Stock or any ownership interest in the Company. Except as may be provided in accordance with the Plan, the holder of a restricted
stock unit will not have any voting, dividend or derivative or other similar rights with respect to the restricted stock unit.
Deferred Stock
Units
A deferred stock unit
represents a future right to receive Shares upon the lapse of any applicable vesting requirements.
Each deferred stock
unit will be settled by the transfer of one Share. Deferred stock units will vest as provided in the applicable Award agreement.
Generally, the settlement date for deferred stock units will be the first day of the month following the grantee’s termination
of service. The Plan Administration Committee may, in its discretion and under certain circumstances, permit a Participant to receive,
as settlement of deferred stock units, installments over a period not to exceed 10 years. In addition, the Plan Administration
Committee may establish a program under which distributions with respect to deferred stock units may be deferred for additional
periods, with any such deferrals being subject to Section 409A of the Code.
Rights to payments
with respect to deferred stock units are generally not subject to alienation, transfer, assignment, pledge, garnishment, levy,
execution, or other legal or equitable process. Deferred stock units do not give the holder thereof any rights with respect to
Common Stock or any ownership interest in the Company. Except as may be provided in accordance with the Plan, the holder of a deferred
stock unit will not have any voting, dividend or derivative or other similar rights with respect to the deferred stock unit.
Dividend Equivalent
Rights
A dividend equivalent
right is a right to receive (or have credited) the equivalent value of regular cash dividends declared on Common Stock otherwise
subject to an Award. The Plan Administration Committee may provide that amounts payable with respect to dividend equivalents will
be converted into cash or additional Common Stock or a combination of the two. The Plan Administration Committee will establish
all other limitations and conditions of awards of dividend equivalents as it deems appropriate. Dividend equivalents granted in
relation to options that are intended to qualify as performance-based compensation for purposes of Section 162(m) of the Code will
be payable regardless of whether the related option is exercised. The Plan Administration Committee may establish a program under
which amounts payable in respect of dividend equivalents may be deferred.
Stock Appreciation
Rights
A stock appreciation
right provides the holder with a right to the monetary equivalent of the increase in the value of a specified number of Shares
over a specified period of time.
The Plan Administration
Committee may grant stock appreciation rights to eligible Participants separately or in tandem with any option (for all or a portion
of the applicable option). The Plan Administration Committee will establish the base amount of the stock appreciation right at
the time it is granted, which base amount will be equal to the per Share exercise price of the related option or, if there is no
related option, an amount equal to or greater than the Fair Market Value of a Share on the day the stock appreciation right is
granted.
In the case of tandem
stock appreciation rights, the number of stock appreciation rights granted may not exceed the number of Shares underlying the related
option. Upon the exercise of an option, the stock appreciation rights relating to the Common Stock covered by such exercise will
terminate. Upon the exercise of stock appreciation rights, the related option will terminate to the extent of an equal number of
Shares.
A stock appreciation
right will be exercisable during the period specified by the Plan Administration Committee in the applicable Award agreement and
will vest as provided in such Award agreement. When a grantee exercises stock appreciation rights, the grantee will receive in
settlement of such stock appreciation rights an amount equal to the amount by which the Fair Market Value of the underlying Common
Stock on the date of exercise exceeds the base amount of the stock appreciation right at the time it is granted. The appreciation
in a stock appreciation right may be paid in Shares or cash.
Other Equity-Based
Awards
The Plan authorizes
the granting of other Awards based upon the Common Stock of the Company (including the grant of securities convertible into Common
Stock) and interests (which may be expressed as units or otherwise) in subsidiaries, as applicable.
Special Rules Upon Reorganizations,
Changes in Control, Etc.
If the Company is involved
in a merger, consolidation, dissolution, liquidation, reorganization, exchange of Shares, sale of all or substantially all of the
assets or stock of the Company or a transaction similar thereto, or upon certain changes in capital structure and other similar
events, the Plan Administration Committee may make related adjustments in its discretion to outstanding Awards and various Plan
provisions (including, without limitation, to the number and kind of Shares available under the Plan).
Without limiting the
foregoing, upon a “Change in Control” (as defined in the Plan) of the Company, the Plan Administration Committee may
make such adjustments as it, in its discretion, determines are necessary or appropriate in light of the Change in Control, but
only if the Plan Administration Committee determines that the adjustments do not have an adverse economic impact on the Participants
(as determined at the time of the adjustments).
Rights of Award Recipients
Nothing in the Plan
or in any grant made pursuant to the Plan confers to the recipient of an Award any right to continue in the employ or other service
of the Company, its subsidiaries or affiliates or interfere in any way with the right of the Company, its subsidiaries or affiliates
and their shareholders, members, directors, managers or officers to terminate the individual’s employment or other service
at any time.
Amendment and Termination
The Board may amend
the Plan as it deems advisable, except that it may not amend the Plan in any way that would adversely affect a Participant with
respect to an Award previously granted unless the amendment is required in order to comply with applicable laws; provided, however,
that the Plan may not be amended without shareholder approval in any case in which amendment in the absence of shareholder approval
would cause the Plan to fail to comply with any applicable legal requirement or applicable exchange or similar rule.
Governing Law
The Plan is governed
by and will be construed in accordance with the laws of the State of New Jersey without regard to any principles of conflicts of
laws which could cause the application of the laws of any jurisdiction other than the State of New Jersey.
Certain U.S. Federal Income Tax Consequences
THIS DISCUSSION OF
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES IS INTENDED ONLY AS A SUMMARY OF SOME OF THE MORE GENERALLY APPLICABLE U.S. FEDERAL
INCOME TAX RULES. NO ATTEMPT HAS BEEN MADE TO DISCUSS SPECIAL PROVISIONS THAT MIGHT BE APPLICABLE IN A PARTICULAR SITUATION. THIS
DISCUSSION DOES NOT ADDRESS STATE, CITY OR LOCAL TAX ISSUES. THIS DISCUSSION IS INTENDED FOR THE INFORMATION OF SHAREHOLDERS CONSIDERING
HOW TO VOTE AT THE ANNUAL MEETING AND NOT AS TAX GUIDANCE TO GRANTEES, AS THE CONSEQUENCES MAY VARY WITH THE TYPES OF GRANTS MADE,
THE IDENTITY OF THE GRANTEES AND THE METHOD OF PAYMENT OR SETTLEMENT.
Non-Qualified
Stock Options
No income will be recognized
by an option holder at the time a non-qualified stock option is granted. Ordinary income will generally be recognized by an option
holder, however, at the time a non-qualified stock option is exercised in an amount equal to the excess of the Fair Market Value
of the underlying Common Stock on the exercise date over the exercise price. This amount of income will be subject to income tax
withholding and employment taxes. The Company will generally be entitled to a deduction for U.S. federal income tax purposes in
the same amount as the amount included in ordinary income by the option holder with respect to his or her non-qualified stock option.
Gain or loss on a subsequent sale or other disposition of the Shares acquired upon the exercise of a non-qualified stock option
will be measured by the difference between the amount realized on the disposition and the tax basis of such Shares, and will generally
be long-term or short-term capital gain depending on the holding period involved. The tax basis of the Shares acquired upon the
exercise of any non-qualified stock option will be equal to the sum of the exercise price of the non-qualified stock option and
the amount included in income with respect to the option. Notwithstanding the foregoing, in the event that exercise of the option
is permitted other than by cash payment of the exercise price, various special tax rules may apply.
Incentive Stock
Options
In general, neither
the grant nor the exercise of an incentive stock option will result in taxable income to an option holder or a deduction for the
Company. If an option holder disposes of the Shares acquired upon the exercise of the incentive stock option on or after the later
of (i) two years after the incentive stock option is granted and (ii) one year after the transfer of the Shares to the option holder
pursuant to exercise of the option, the difference between the amount realized on such disposition and the option holder’s
basis in the Shares will be taxed as capital gain or loss. The Company will not be entitled to a tax deduction. In addition, the
option holder must be an employee of the Company or a qualified subsidiary at all times between the date of grant and the date
three months (one year in the case of disability) before exercise of the option. Special rules apply in the case of the death of
the option holder. However, the exercise of an incentive stock option (if the holding period rules described in this paragraph
are satisfied) may subject the optionee to the alternative minimum tax.
If the holding period
rules noted above are not satisfied, gain recognized on the disposition of the Shares acquired upon the exercise of an incentive
stock option will be characterized as ordinary income. This gain will be equal to the difference between the exercise price and
the Fair Market Value of the Shares at the time of exercise (special rules may apply to disqualifying dispositions where the amount
realized is less than the value at exercise). The Company will generally be entitled to a deduction equal to the amount of such
gain included by an option holder as ordinary income. Any excess of the amount realized upon such disposition over the Fair Market
Value at exercise will generally be long-term or short-term capital gain depending on the holding period involved. Notwithstanding
the foregoing, if exercise of the option is permitted other than by cash payment of the exercise price, various special tax rules
may apply. The current position of the Internal Revenue Service is that income tax withholding and employment taxes do not apply
upon the exercise of an incentive stock option or upon any subsequent disposition, including a disqualifying disposition, of Shares
acquired pursuant to the exercise of the incentive stock option.
Restricted Stock
Unless a holder of
restricted stock makes an “83(b) election” (as discussed below), there generally will be no tax consequences as a result
of the grant of restricted stock until the restricted stock is no longer subject to a substantial risk of forfeiture or is transferable
(free of the risk). Dividends paid on unvested Shares, if retained by the grantee, will generally be treated as compensation income
for U.S. federal income tax purposes (unless an 83(b) election has been made, as discussed below). Generally, when the restrictions
are lifted, the holder will recognize ordinary income, and the Company will be entitled to a deduction equal to the difference
between the Fair Market Value of the stock at that time and the amount, if any, paid by the holder for the restricted stock. This
amount of income will be subject to income tax withholding and employment taxes. Subsequently realized changes in the value of
the stock generally will be treated as long-term or short-term capital gain or loss, depending on the length of time the Shares
are held prior to disposition of the Shares. In general terms, if a holder makes an 83(b) election (under Section 83(b) of the
Code) upon the award of restricted stock, the holder will recognize ordinary income on the date of the award of restricted stock,
and the Company will be entitled to a deduction equal to (i) the Fair Market Value of the restricted stock as though the stock
were (A) not subject to a substantial risk of forfeiture or (B) transferable, minus (ii) the amount, if any, paid for the restricted
stock. If an 83(b) election is made, there will generally be no tax consequences to the holder upon the lifting of restrictions,
and all subsequent appreciation in the restricted stock generally would be eligible for capital gains treatment. In the event of
a forfeiture after an 83(b) election is made, no deduction or loss will be available, other than with respect to amounts actually
paid for the stock.
Restricted Stock
Units
In general, a grantee
of restricted stock units is not taxed at the time of the grant. Instead, the holder is taxed at the time in which there is no
longer a substantial risk of forfeiture (i.e., at the time the restricted stock units have vested). Generally, when the restrictions
are lifted, the holder must recognize ordinary income, and the Company will be entitled to a deduction, equal to the difference
between the Fair Market Value of the grant at that time, minus the amount paid for the grant (if any). This amount of income will
be subject to income tax withholding and employment taxes. For grants that are settled in actual Shares, the employee’s tax
holding period begins at the time of distribution (which may or may not coincide with vesting), and the holder’s tax basis
is equal to the amount paid for the stock plus the amount included as ordinary income. Subsequently realized changes in the value
of the stock generally will be treated as long-term or short-term capital gain or loss, depending on the length of time the Shares
are held prior to disposition of the Shares.
Deferred Stock
Units
In general, a grantee
of deferred stock units is not taxed at the time of the grant. Instead, the holder is taxed at the time in which there is no longer
a substantial risk of forfeiture (i.e., at the time of settlement of the deferred stock units). Generally, when there is no longer
a substantial risk of forfeiture, the holder must recognize ordinary income, and the Company will be entitled to a deduction equal
to the difference between the Fair Market Value of the grant at that time, minus the amount paid for the grant (if any). This amount
of income will be subject to income tax withholding and employment taxes. For grants that are settled in actual Shares, the employee’s
tax holding period begins at the time of distribution, and the holder’s tax basis is equal to the amount paid for the stock
plus the amount included as ordinary income. Subsequently realized changes in the value of the stock generally will be treated
as long-term or short-term capital gain or loss, depending on the length of time the Shares are held prior to disposition of the
Shares.
Dividend Equivalent
Rights
There generally will
be no tax consequences as a result of the award of a dividend equivalent right. When payment is made, the holder of the dividend
equivalent generally will recognize ordinary income, and the Company will be entitled to a deduction, equal to the amount received
in respect of the dividend equivalent right. This amount of income will be subject to income tax withholding and employment taxes.
Stock Appreciation
Rights
There generally will
be no tax consequences as a result of the award of a stock appreciation right. Upon the exercise of a stock appreciation right,
the holder generally will recognize ordinary income in an amount equal to the excess of the Fair Market Value of the underlying
Common Stock on the exercise date over the exercise price. This amount of income will be subject to income tax withholding and
employment taxes. The Company will generally be entitled to a deduction for U.S. federal income tax purposes in the same amount
as the amount included in ordinary income by the holder of the stock appreciation right with respect to his or her stock appreciation
right.
Securities Exchange
Act of 1934
Additional special
tax rules may apply to those Award holders who are subject to the rules set forth in Section 16 of the Securities Exchange
Act of 1934, as amended.
Section 409A
of the Internal Revenue Code
To the extent applicable,
it is intended that the Plan and any awards granted under the Plan comply with the requirements of Section 409A of the Code.
PROPOSAL NUMBER 3
ADVISORY VOTE ON THE COMPENSATION
PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS
Under the Dodd-Frank
Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and Section 14A of the Securities Exchange
Act of 1934, as amended, the Company’s shareholders are entitled to vote to approve, on an advisory basis, the compensation
paid to the Company’s named executive officers as disclosed in this Proxy Statement in accordance with the rules of the Securities
and Exchange Commission. The compensation paid to the Company’s named executive officers subject to the vote is disclosed
in the compensation table and related narrative disclosure contained in this Proxy Statement.
The Board is asking
the shareholders to indicate their support for the compensation paid to the Company’s named executive officers as described
in this Proxy Statement by casting a non-binding advisory vote “FOR” the following resolution:
“RESOLVED
, that the
shareholders of AMREP Corporation hereby APPROVE, on a nonbinding advisory basis, the compensation paid to the Company’s
named executive officers, as disclosed in the Company’s proxy statement for the 2016 Annual Meeting of Shareholders pursuant
to the compensation disclosure rules of the Securities and Exchange Commission, including the executive compensation table and
narrative discussion disclosed therein.”
Because the vote is
advisory, it is not binding on the Board or the Company. In accordance with the Dodd-Frank Act, the vote to approve the compensation
of the Company’s named executive officers shall not be construed: (i) as overruling any decision by the Company or the Board;
(ii) to create or imply any change in the fiduciary duties of the Company or the Board; or (iii) to create or imply any additional
fiduciary duties for the Company or the Board. Nevertheless, the views expressed by the shareholders, whether through this vote
or otherwise, are important to management and the Board and, accordingly, the Board and the Compensation and Human Resources Committee
intend to consider the results of this vote in making determinations in the future regarding executive compensation arrangements.
At the most recent
annual meeting of shareholders held on September 10, 2015, the Company’s shareholders voted to approve, on an advisory basis,
the compensation paid to the Company's named executive officers as disclosed in the proxy statement for that meeting dated August
8, 2015. Nevertheless, the Company did receive a significant number of votes against approving this compensation, including from
the Company's largest beneficial shareholder whose vote constituted a substantial majority of the votes cast against approving
such compensation. The Chairman of the Compensation and Human Resources Committee, who is also the Chairman of the Board, reached
out to this major shareholder to receive feedback and better understand the reasons for the negative vote. This shareholder did
not identify any specific objections to executive compensation but instead said that his vote was more intended to send a message
that he was not satisfied with the general direction of the Company and its results.
Advisory approval of
this proposal requires the affirmative vote of the holders of a majority of the shares present in person or represented by
proxy and entitled to vote at the Annual Meeting.
THE BOARD UNANIMOUSLY
RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE OFFICERS AS DISCLOSED
IN THIS PROXY STATEMENT.
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Governance Standards
The Company’s
Common Stock is listed on the New York Stock Exchange, and the Company is subject to the New York Stock Exchange’s Corporate
Governance Standards (the “Governance Standards”). The Governance Standards, among other things, generally require
a listed company to have independent directors within the meaning of the Governance Standards as a majority of its board of directors
and for the board to have an audit committee, a nominating/corporate governance committee and a compensation committee, each composed
entirely of independent directors.
Based principally on
their responses to questions to these persons regarding the relationships addressed by the Governance Standards and discussions
with them, the Board has determined that other than his service as a director, each of Edward B. Cloues, II, Lonnie A. Coombs,
Robert E. Robotti and Albert V. Russo has no material relationship with the Company, either directly or as a partner, shareholder
or officer of an organization that has a relationship with the Company, and, therefore, meets the director independence requirements
of the Governance Standards. The Board was informed that Mr. Coombs, who is a certified public accountant, (i) for many years has
provided, and expects to continue to provide, business and tax consulting services to certain companies owned by Nicholas G. Karabots,
a beneficial owner of approximately 26% of the outstanding shares of the Company, including a company that is a customer of the
Company’s subscription fulfillment services business, (ii) the revenues from such business and tax consulting services for
the Company’s last three fiscal years have accounted for from 1.2% to 4.2% of Mr. Coombs’ professional service revenues
over those periods and (iii) Mr. Coombs is also a director of two private companies controlled by Mr. Karabots and in the past
has served as a director of other such companies. However, the Board concluded that Mr. Coombs’ relationships with Mr. Karabots
and his companies is as an independent contractor, and not as an employee, partner, shareholder or officer, and would not interfere
with Mr. Coombs’ independence from the Company’s management.
As required by the
Governance Standards, the Board has adopted Corporate Governance Guidelines (the “Guidelines”) that address various
matters involving the Board and the conduct of its business. The Board has also adopted a Code of Business Conduct and Ethics setting
forth principles of business conduct applicable to the directors, officers and employees of the Company. The Guidelines and Code
of Business Conduct and Ethics, as well as the charters of the Board’s Nominating and Corporate Governance Committee, Audit
Committee and Compensation and Human Resources Committee, may be viewed under “Corporate Governance” on the Company’s
website at
www.amrepcorp.com
, and written copies will be provided to any shareholder upon written request to the Company
at AMREP Corporation, 300 Alexander Park, Suite 204, Princeton, New Jersey 08540, Attention: Corporate Secretary. The Company intends
to disclose on its website any amendment to or waiver of any provision of the Code of Business Conduct and Ethics that applies
to its principal executive officer, principal financial officer, principal accounting officer or controller or persons performing
similar functions.
Directors are expected
to attend Annual Meetings of Shareholders, and all of the directors attended last year’s Annual Meeting. The Board held six
meetings during the last fiscal year. All of the directors attended at least 75% of the total number of meetings held during the
last fiscal year of the Board and its Committees of which they were members. Pursuant to the Guidelines, the Board has established
a policy that the non-management directors meet in executive session at least twice per year and that the independent directors
also meet in executive session at least twice per year. The Chairman of the Board (currently, Edward B. Cloues, II), if in attendance,
will be the presiding director at each such executive session; otherwise, those attending may select a presiding director. Since
December 31, 2010, no member of management has been a director.
Any shareholder or
other interested person wishing to communicate with the Board or any of the directors may send a letter addressed to the member
or members of the Board to whom the communication is directed in care of AMREP Corporation, 300 Alexander Park, Suite 204, Princeton,
New Jersey 08540, Attention: Corporate Secretary. All such communications will be forwarded to the specified addressee(s).
Board Leadership Structure
Since the Company has
no chief executive officer, the Board is charged with the oversight of the Company’s business. While it is unusual for a
company not to have a chief executive officer, the Company believes that its leadership structure is appropriate and works well
for it since the membership of the Board includes Mr. Cloues who is an experienced public company chief executive officer, Mr.
Coombs who is experienced with financial and accounting matters, Mr. Gaasche who is the former chief executive officer of the Company
and Mr. Russo who is one of the major shareholders of the Company. The Board previously had an Executive Committee, which was disbanded
in September 2015 in light of the reduction in the size of the Board to four directors, three of whom were on the Executive Committee.
Nominating and Corporate Governance
Committee
The Board has a Nominating
and Corporate Governance Committee that operates under a written charter adopted by the Board. Each member of the Nominating and
Corporate Governance Committee is required to be an independent director, as defined by the Governance Standards. The members of
this Committee are Messrs. Cloues (Chairman), Coombs and Russo, each of whom has been determined by the Board to be an independent
director within the meaning of the Governance Standards. This Committee reports regularly to the Board concerning its activities.
The Nominating and Corporate Governance Committee held three meetings during the last fiscal year.
The duties of the Nominating
and Corporate Governance Committee include identifying individuals the Committee considers qualified to be elected Board members
consistent with criteria approved by the Board, and recommending persons to be nominated by the Board for election by the shareholders.
When considering a nominee for election as a director, the Committee considers the experience, skills and knowledge of business
and management practices a candidate may possess and the perspective he or she may bring to the Board, and employs criteria calling
for, among other things, the person’s personal and professional integrity, good judgment, high level of ability and business
acumen, and experience in the Company’s industries, as well as the ability of the nominee to devote sufficient time to performing
his or her duties on the Board in an effective manner. Although the Committee has no specific policy regarding the diversity of
the membership of the Board, it is the objective of the Committee that the Board be comprised of persons of diverse backgrounds
such that as a unit the members of the Board will possess the necessary skills to appropriately discharge their responsibilities
as the Company’s directors. The Committee is also responsible for periodically reviewing and recommending changes to the
Guidelines and for overseeing the Company’s corporate governance practices.
The Nominating and
Corporate Governance Committee will consider candidates for director recommended by shareholders on the same basis as any other
proposed nominees. Any shareholder desiring to propose a candidate for selection as a nominee of the Board for election at the
2017 Annual Meeting of Shareholders may do so by sending a written communication no later than May 1, 2017 to the Nominating and
Corporate Governance Committee, AMREP Corporation, 300 Alexander Park, Suite 204, Princeton, New Jersey 08540, Attention: Corporate
Secretary, identifying the proposing shareholder, specifying the number of shares of Common Stock held by such shareholder and
stating the name and address of the proposed nominee and the information concerning such person that the regulations of the Securities
and Exchange Commission require be included in a proxy statement relating to such person’s proposed election as a director.
Audit Committee
The Board has an Audit
Committee that operates under a written charter adopted by the Board. Each member of the Audit Committee is required to be an independent
director, as defined by the Governance Standards. The members of this Committee are Messrs. Coombs (Chairman), Cloues and Russo,
each of whom has been determined by the Board to be an independent director within the meaning of the Governance Standards. The
Board has also determined that Mr. Coombs, who is a certified public accountant, qualifies as an audit committee financial expert
within the meaning of Securities and Exchange Commission regulations. This Committee reports regularly to the Board concerning
its activities. The Audit Committee held seven meetings during the last fiscal year.
The duties of the Audit
Committee include (i) appointing the Company’s independent registered public accounting firm, approving the services to be
provided by that firm and its compensation and reviewing that firm’s independence and performance of services, (ii) reviewing
the scope and results of the yearly audit by the independent registered public accounting firm, (iii) reviewing the Company’s
system of internal controls and procedures, (iv) reviewing with management and the independent registered public accounting firm
the Company’s annual and quarterly financial statements, (v) reviewing the Company’s financial reporting and accounting
standards and principles and (vi) overseeing the administration and enforcement of the Company’s Code of Business Conduct
and Ethics. In addition to the Audit Committee’s responsibilities set forth above, the Audit Committee has, pursuant to its
charter, primary responsibility for the oversight of risks that could affect the Company.
Compensation and Human Resources Committee
The Board has a Compensation
and Human Resources Committee that operates under a written charter adopted by the Board. Each member of the Compensation and Human
Resources Committee is required to be an independent director, as defined by the Governance Standards. The members of this Committee
are Messrs. Cloues (Chairman), Coombs and Russo, each of whom has been determined by the Board to be an independent director within
the meaning of the Governance Standards. This Committee reports regularly to the Board concerning its activities. During the last
fiscal year, the Compensation and Human Resources Committee held four meetings on a formal basis and met periodically on an informal
basis. In addition, a subcommittee of the Compensation and Human Resources Committee held one meeting during the last fiscal year
to consider and approve certain equity compensation awards.
The Compensation and
Human Resources Committee is responsible for reviewing and approving the corporate goals and objectives applicable to the Company’s
chief executive officer, if any, and determining his compensation and that of the Company’s other executive officers, establishing
overall compensation and benefit levels and fixing bonus pools for other employees, and making recommendations to the Board concerning
other matters relating to employee and director compensation. With respect to salaries, bonuses and other compensation and benefits,
the decisions and recommendations of the Compensation and Human Resources Committee are subjective and are not based on any list
of specific criteria. In the past, factors influencing the Committee’s decisions regarding executive salaries have included
the Committee’s assessment of the executive’s performance and any changes in functional responsibility. In determining
the salary to be paid to a particular individual, the Committee applies these and other criteria, while also using its best judgment
of compensation applicable to other executives holding comparable positions both within the Company and at other companies. Additionally,
the Committee in developing its recommendations regarding director compensation looks to director compensation at other public
companies of the Company’s size. Executive officers of the Company do not play a role in determining their compensation.
Neither the Board nor the Committee has engaged compensation consultants for the purposes of determining or advising upon executive
or director compensation.
Risk Oversight
The Board is actively
involved in risk oversight and management of risk. The Board has ultimate responsibility for the oversight of risks facing the
Company and for the management of those risks, with the Audit Committee conducting preliminary evaluations of risk and addressing
risk prior to review by the Board. The Audit Committee considers and reviews with management the Company’s internal control
processes. The Audit Committee also considers and reviews with the Company’s independent registered public accounting firm
the adequacy of the Company’s internal controls, including the processes for identifying significant risks or exposures,
and elicits recommendations for the improvement of such procedures where needed. In addition to the Audit Committee’s role,
the full Board is involved in the oversight and administration of risk and risk management practices by overseeing members of senior
management in their risk management capacities. Members of the Company’s senior management have day-to-day responsibility
for risk management and establishing risk management practices, and members of management are expected to report matters relating
specifically to the Audit Committee directly thereto, and to report all other matters directly to the Chairman of the Board or
the Board as a whole. Members of the Company’s senior management have an open line of communication to the Chairman of the
Board and the Board as a whole and have the discretion to raise issues from time-to-time in any manner they deem appropriate, and
management’s reporting on issues relating to risk management typically occurs through direct communication with directors,
the Chairman of the Board or the Audit Committee as matters requiring attention arise.
In furtherance of its
risk oversight responsibilities, the Board has evaluated the Company’s overall compensation policies and practices for its
employees to determine whether such policies and practices create incentives that could reasonably be expected to affect the risks
faced by the Company and its management, has further assessed whether any risks arising from these policies and practices are reasonably
likely to have a material adverse effect on the Company, and has concluded that the risks arising from the Company’s policies
and practices are not reasonably likely to have a material adverse effect on the Company.
EXECUTIVE OFFICERS
For information with
respect to executive officers, see “Executive Officers of the Registrant” in Part I of the Company’s Annual Report
on Form 10-K for the year ended April 30, 2016, filed pursuant to the Securities Exchange Act of 1934, as amended.
COMPENSATION OF EXECUTIVE OFFICERS
The following table
contains summary information regarding the compensation of the Company’s executive officers as required by Item 402(n) of
Regulation S-K.
Summary Compensation Table
Name
and Principal Position
|
|
Year
(1)
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
(2)
($)
|
|
|
All
Other
Compensation
(3)
($)
|
|
|
Total
($)
|
|
CHRISTOPHER V. VITALE
|
|
2016
|
|
|
238,462
|
|
|
|
-
|
|
|
|
15,660
|
|
|
|
1,097
|
|
|
|
255,219
|
|
Executive Vice President,
Chief Administrative Office, General Counsel and Secretary of the Company
|
|
2015
|
|
|
227,079
|
|
|
|
-
|
|
|
|
41,400
|
|
|
|
2,076
|
|
|
|
270,555
|
|
RORY BURKE
|
|
2016
|
|
|
288,600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,160
|
|
|
|
289,760
|
|
President and Chief Executive Officer of Palm Coast
Data LLC
|
|
2015
|
|
|
288,177
|
|
|
|
-
|
|
|
|
-
|
|
|
|
17,576
|
|
|
|
305,753
|
|
PETER
M. PIZZA
(4)
|
|
2016
|
|
|
205,600
|
|
|
|
-
|
|
|
|
-
|
|
|
|
810
|
|
|
|
206,410
|
|
Former Vice President and Chief Financial Officer
of the Company
|
|
2015
|
|
|
205,097
|
|
|
|
-
|
|
|
|
20,700
|
|
|
|
2,076
|
|
|
|
227,873
|
|
_____________________________
|
(1)
|
The year references are to the fiscal years ended
April 30.
|
|
(2)
|
The amounts indicated represent the grant date fair value related to awards of restricted stock
granted during fiscal years 2016 and 2015 computed in accordance with stock-based accounting rules (FASB ASC Topic 718).
The determination of this value is based on the methodology set forth in Note 13 to the Company’s audited financial statements
included in the Company’s Annual Report on Form 10-K for the year ended April 30, 2016.
|
|
(3)
|
The amounts reported include payment of life insurance premiums and, additionally, in the case
of Mr. Burke, relocation expenses of $15,000 for 2015.
|
|
(4)
|
Mr. Pizza ceased being an officer effective April 30, 2016, and his employment with the Company
ended on August 1, 2016.
|
Clifford R. Martin was appointed as Vice
President and Chief Financial Officer of the Company effective as of May 1, 2016, which is the beginning of the Company’s
2017 fiscal year.
Outstanding Equity Awards at April 30,
2016
|
|
Stock Awards
|
|
Name
|
|
Equity Incentive Plan Awards:
Number of Unearned Shares,
Units or Other Rights that
have not Vested
(#)
|
|
|
Equity Incentive Plan Awards:
Market or Payout Value of Unearned
Shares, Units or other Rights that have
not Vested
($)
(1)
|
|
CHRISTOPHER V. VITALE
|
|
|
10,000
|
(2)
|
|
$
|
44,500
|
|
RORY BURKE
|
|
|
2,000
|
(3)
|
|
$
|
8,900
|
|
PETER M. PIZZA
|
|
|
4,000
|
(4)
|
|
$
|
17,800
|
|
_____________________________
|
(1)
|
Value is based on the closing price per share of Common Stock of $4.45 on April 29, 2016,
as reported on the New York Stock Exchange.
|
|
(2)
|
2,000 restricted shares of Common Stock vested on July 8, 2016, 1,000 restricted shares of Common
Stock vested on July 13, 2016 and 3,000 restricted shares of Common Stock vested on August 1, 2016. 2,000 restricted shares of
Common Stock will vest on July 8, 2017 and 2,000 restricted shares of Common Stock will vest one-half on July 13, 2017 and one-half
on July 13, 2018, subject in each case to the continued employment of Mr. Vitale on each vesting date.
|
|
(3)
|
The restricted shares of Common Stock will vest on March 5, 2017, subject to the continued employment
of Mr. Burke on the vesting date.
|
|
(4)
|
1,000 restricted shares of Common Stock vested on July 8, 2016 and 2,000 restricted shares of Common
Stock vested on August 1, 2016. 1,000 restricted shares of Common Stock that would have vested on July 8, 2017 have been forfeited
as a result of Mr. Pizza’s termination of employment on August 1, 2016.
|
On June 21, 2016, Mr.
Vitale was awarded 7,500 restricted shares of Common Stock, which will vest one-third on June 21, 2017, one-third on June
21, 2018 and one-third on June 21, 2019, subject to the continued employment of Mr. Vitale on each vesting date.
Mr. Pizza participated
in the Company’s Retirement Plan for Employees (the “Retirement Plan”), which was amended effective January 1,
1998 to change it into a cash balance defined benefit plan. The Retirement Plan was subsequently frozen effective March 1, 2004,
so that in the determination of the benefit payable, a participant’s compensation from and after March 1, 2004 is not taken
into account. A participant’s benefit under the amended Retirement Plan is now comprised of (a) the participant’s cash
balance as of February 29, 2004, plus interest on the cash balance (currently credited annually at the 30-year Treasury Rate for
December of the previous year as published by the Board of Governors of the Federal Reserve System), and (b) the participant’s
periodic pension benefit under the Retirement Plan as at December 31, 1997 had the participant been at normal retirement age at
that date. Assuming that Mr. Pizza elects the life annuity form of pension, his annual retirement benefits are estimated to be
$5,229.
Other than as described
below, the Company’s executive officers are not subject to agreements or other arrangements that provide for payments upon
a change in control of the Company and the Company’s policies for severance payments upon termination of employment apply
to the executive officers on the same basis as the Company’s other salaried employees. The Compensation and Human Resources
Committee retains the discretion to enter into severance agreements with individual executive officers on terms satisfactory to
it.
Effective as of March 5, 2014, Palm Coast Data LLC entered into a change of control agreement
(the “COC Agreement”) with Mr. Burke. The COC Agreement provides for certain rights and benefits in the
event Palm Coast Data LLC terminates Mr. Burke’s employment without cause or Mr. Burke terminates his employment with Palm
Coast Data LLC for good reason (as each of those terms are defined in the COC Agreement), and in each case in connection with a
change in control of the Company or Palm Coast Data LLC (a “double-trigger”), including severance payable to Mr. Burke
equal to one times his annual base salary and continued health and medical insurance to Mr. Burke for one year. In addition,
if the change of control is solely with respect to Palm Coast Data LLC, the COC Agreement provides that any vesting, restrictions
or conditions on the exercisability or the sale of equity awards granted by the Company or its affiliates to Mr. Burke shall lapse
or otherwise be deemed fully vested, accelerated or otherwise satisfied. These rights and benefits are subject to certain
customary non-competition and non-solicitation obligations and are contingent upon the execution of a release.
In 2006, the Board
adopted, and the shareholders approved, the AMREP Corporation 2006 Equity Compensation Plan, which authorizes stock-based awards
of various kinds to employees covering up to a total of 400,000 shares of Common Stock. Under the terms of the AMREP Corporation
2006 Equity Compensation Plan, its administrator has the discretion to accelerate the vesting of, or otherwise remove restrictions
on, awards under the AMREP Corporation 2006 Equity Compensation Plan upon a change in control of the Company.
SHAREHOLDER PROPOSALS
From time to time,
shareholders present proposals that may be proper subjects for inclusion in the Proxy Statement and for consideration at an annual
meeting. Shareholders who intend to present proposals at the 2017 Annual Meeting of Shareholders and who wish to have such proposals
included in the Company’s Proxy Statement for the 2017 Annual Meeting of Shareholders must be certain that such proposals
are received by the Company’s Secretary at the Company’s executive offices, 300 Alexander Park, Suite 204, Princeton,
New Jersey 08450, not later than April 7, 2017. Such proposals must meet the requirements set forth in the rules and regulations
of the Securities and Exchange Commission in order to be eligible for inclusion in the Proxy Statement. For any proposal that is
not submitted for inclusion in next year’s Proxy Statement but is, instead, sought to be presented directly at the 2017 Annual
Meeting of Shareholders, Securities and Exchange Commission rules permit management to vote proxies in its discretion if the Company
does not receive notice of the proposal prior to the close of business on June 21, 2017.
HOUSEHOLDING OF PROXY MATERIALS
The Securities and
Exchange Commission has adopted rules that permit companies and intermediaries to satisfy delivery requirements for proxy statements
and annual reports to shareholders and, if applicable, notices of Internet availability of proxy materials, with respect to two
or more shareholders sharing the same address by delivering a single copy of the material addressed to those shareholders. This
process, commonly referred to as “householding,” is designed to reduce duplicate printing and postage costs. The Company
and some brokers may household notices of Internet availability of proxy materials, annual reports to shareholders and proxy materials,
by delivering a single copy of the material to multiple shareholders sharing the same address unless contrary instructions have
been received from the affected shareholders.
If a shareholder wishes
to receive a separate notice of Internet availability of proxy materials, the annual report to shareholders or proxy statement,
or if a shareholder received multiple copies of some or all of these materials and would prefer to receive a single copy in the
future, the shareholder should submit a request by phone or in writing to the shareholder’s broker if the shares are held
in a brokerage account or, if the shares are registered in the name of the shareholder, to the Company’s transfer agent,
Computershare, 211 Quality Circle, Suite 210, College Station, Texas 77845, (800) 368-5948.
By Order of the Board of Directors
Christopher V. Vitale,
Secretary
Dated: August 5, 2016
APPENDIX A
AMREP CORPORATION
2016 EQUITY COMPENSATION PLAN
AMREP Corporation,
an Oklahoma corporation, wishes to attract employees, Directors, officers, advisors and consultants to the Company and Subsidiaries,
and induce employees, Directors, officers, advisors, consultants and other personnel to remain with the Company and Subsidiaries
and encourage them to increase their efforts to make the Company’s business more successful whether directly or through Subsidiaries
or other Affiliates. In furtherance thereof, the AMREP Corporation 2016 Equity Compensation Plan (the “Plan”) is designed
to provide equity-based incentives to certain Eligible Persons. Awards under the Plan may be made to Eligible Persons in the form
of Options (including Stock Appreciation Rights), Restricted Stock, Deferred Stock Units, Restricted Stock Units, Dividend Equivalent
Rights and other forms of equity based Awards as contemplated herein.
Whenever used herein,
the following terms shall have the meanings set forth below:
“Affiliate”
means any entity other than a Subsidiary that is controlled by or under common control with the Company that is designated as an
“Affiliate” by the Committee in its discretion.
“Award”
except where referring to a particular category of grant under the Plan, shall include Options, Restricted Stock, RSUs, DSUs, Dividend
Equivalent Rights and other equity-based Awards as contemplated herein.
“Award Agreement”
means a written agreement in a form approved by the Committee, as provided in Section 3. An Award Agreement may be, without
limitation, an employment or other similar agreement containing provisions governing grants hereunder, if approved by the Committee
for use under the Plan.
“Board”
means the Board of Directors of the Company.
“Cause”
means, unless otherwise provided in the Participant’s Award Agreement a finding by the Committee that the Grantee (i) has
breached his or her employment or service contract with the Company, a Subsidiary or an Affiliate, (ii) has engaged in disloyalty
to the Company, a Subsidiary or an Affiliate, including, without limitation, fraud, embezzlement, theft, commission of a felony
or proven dishonesty, (iii) has disclosed trade secrets or confidential information of the Company, a Subsidiary or an Affiliate
to persons not entitled to receive such information, (iv) has breached any written non-competition, non-solicitation or confidentiality
agreement between the Grantee and the Company, a Subsidiary or an Affiliate or (v) has engaged in such other behavior detrimental
to the interests of the Company, a Subsidiary or an Affiliate as the Committee determines; provided, however, that, if at any particular
time the Participant is subject to an effective employment agreement with the Company, a Subsidiary or an Affiliate, then, in lieu
of the foregoing definition, “Cause” shall at that time have such meaning as may be specified in such employment agreement.
“Change in Control”
means the happening of any of the following:
(i) any
“person,” including a “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act,
but excluding the Key Shareholders, the Company, any entity or person controlling, controlled by or under common control with the
Key Shareholders, the Company, any employee benefit plan of the Company, or any such entity, and any “group” (as such
term is used in Section 13(d)(3) of the Exchange Act) of which any of the foregoing persons or entities is a member), is or becomes
the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing 50% or more of either (A) the combined voting power of the Company’s then outstanding securities
or (B) the then outstanding Common Stock (in either such case other than as a result of an acquisition of securities directly from
the Company or any of its Subsidiaries); provided, however, that, in no event shall a Change in Control be deemed to have occurred
upon an initial public offering or a subsequent public offering of the Common Stock under the Securities Act;
(ii) any
consolidation or merger of the Company where the shareholders of the Company, immediately prior to the consolidation or merger,
would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, shares representing in the aggregate 50% or more of the combined voting power of the securities of
the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any);
(iii) there
shall occur (A) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged
by any party as a single plan) of all or substantially all of the assets of the Company, other than a sale or disposition by the
Company of all or substantially all of the Company’s assets to an entity, at least 50% of the combined voting power of the
voting securities of which are owned by any “person,” including a “group” (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act), in substantially the same proportion as their ownership of the Company immediately prior
to such sale or (B) the approval by shareholders of the Company of any plan or proposal for the liquidation or dissolution of the
Company; or
(iv) the
members of the Board at the beginning of any consecutive 24-calendar-month period (the “Incumbent Directors”) cease
for any reason other than due to death to constitute at least a majority of the members of the Board; provided that any director
whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least two-thirds of
the members of the Board then still in office who were members of the Board at the beginning of such 24-calendar-month period,
shall be deemed to be an Incumbent Director.
Notwithstanding the
foregoing, if at any time any Key Shareholder, any entity or person controlling, controlled by or under common control with a Key
Shareholder, or any “group” (as such term is used in Section 13(d)(3) of the Exchange Act) of which any of the foregoing
persons or entities is a member, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 50% or more of either (A) the combined voting power of
the Company’s then outstanding securities or (B) the then outstanding Common Stock (in either such case other than as a result
of an acquisition of securities directly from the Company or any of its Subsidiaries), then the Committee may, in its sole discretion,
deem that a Change in Control has occurred; provided, however, that, in no event shall a Change in Control be deemed to have occurred
upon an initial public offering or a subsequent public offering of the Common Stock under the Securities Act.
Notwithstanding the
foregoing, if at any time the Participant is subject to an effective employment agreement with the Company, a Subsidiary or an
Affiliate which expressly provides for the definition of a change in control of the Company, then, in lieu of the foregoing definition,
“Change in Control” shall at that time have such meaning as may be specified in such employment agreement with respect
to the Company.
Notwithstanding the
foregoing, if an event constitutes a Change in Control as described above but does not constitute a “change in the ownership,”
“change in effective control” or “change in the ownership of a substantial portion of the assets” of the
Company, as such terms are defined in Treasury Regulations §1.409A-3 (or other applicable guidance issued under Section 409A
of the Code), then such event shall not be deemed a Change in Control to the extent that it would result in the imposition of the
20% excise tax as set forth in Section 409A(a)(1)(B) of the Code. Such event may however, continue to constitute a Change in Control
to the extent possible (e.g., vesting without an acceleration of distribution) without causing the imposition of such 20% tax.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Committee”
means the Compensation and Human Resources Committee of the Board, or any sub-committee of the Compensation and Human Resources
Committee of the Board to which the Compensation and Human Resources Committee of the Board may delegate any powers, duties or
obligations of the “Committee” under this Plan.
“Common Stock”
means the Company’s Common Stock, par value $.10 per share, either currently existing or authorized hereafter.
“Company”
means AMREP Corporation, an Oklahoma corporation.
“Deferred Stock
Unit” or “DSU” means a deferred award of Shares that are subject to restrictions hereunder.
“Director”
means a non-employee director of the Company or Subsidiary that is not an employee of the Company or a Subsidiary.
“Disability”
means, unless otherwise provided by the Committee in the Participant’s Award Agreement, a disability which renders the Participant
incapable of performing all of his or her duties for a period of at least 180 consecutive or non-consecutive days during any consecutive
twelve-month period.
“Dividend Equivalent
Right” means a right awarded under Section 9 to receive (or have credited) the equivalent value of dividends paid on
Common Stock.
“Eligible Person”
means (i) an employee, Director, officer, advisor, consultant or other personnel of the Company or any of its Subsidiaries
or other person expected to provide significant services (of a type expressly approved by the Committee as covered services for
these purposes) to the Company or Subsidiaries or (ii) joint venture affiliates of the Company or other entities designated
in the discretion of the Committee, or officers, directors, employees, members, or managers of the foregoing. In the case of grants
directly or indirectly to employees of entities described in clause (ii) of the foregoing sentence, the Committee may make
arrangements with such entities as it may consider appropriate in its discretion, in light of tax and other considerations.
“Exchange Act”
means the Securities Exchange Act of 1934, as amended.
“Fair Market
Value” per Share as of a particular date means (i) if Shares are then listed on a national securities exchange, the
closing sales price per Share on the exchange for the last preceding date on which there was a sale of Shares on such exchange,
as determined by the Committee, (ii) if Shares are not then listed on a national securities exchange but are then traded on
an over-the-counter market, the average of the closing bid and asked prices for the Shares in such over-the-counter market for
the last preceding date on which there was a sale of such Shares in such market, as determined by the Committee, or (iii) if
Shares are not then listed on a national securities exchange or traded on an over-the-counter market, such value as the Committee
in its discretion may in good faith determine; provided that, where the Shares are so listed or traded, the Committee may make
such discretionary determinations where the Shares have not been traded for 10 consecutive trading days.
“Grantee”
means an Eligible Person granted Restricted Stock, RSUs, DSUs, Dividend Equivalent Rights, SARs or such other equity-based Awards
(other than an Option) as may be granted pursuant to Section 11.
“Incentive Stock
Option” means an “incentive stock option” within the meaning of Section 422(b) of the Code.
“Key Shareholder”
means any “person,” including a “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange
Act), who is as of the date of the adoption of this Plan by the Board, the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company representing 10% or more of either (A) the combined
voting power of the Company’s then outstanding securities or (B) the then outstanding Common Stock.
“Non-Qualified
Stock Option” means an Option which is not an Incentive Stock Option.
“Option”
means the right to purchase, at a price and for the term fixed by the Committee in accordance with the Plan, and subject to such
other limitations and restrictions in the Plan and the applicable Award Agreement, a number of Shares determined by the Committee.
“Optionee”
means an Eligible Person to whom an Option is granted, or the Successors of the Optionee, as the context so requires.
“Option Price”
means the price per Share, determined by the Board or the Committee, at which an Option may be exercised.
“Participant”
means a Grantee or Optionee.
“Performance
Goals” has the meaning set forth in Section 12.
“Plan”
means the Company’s 2016 Equity Compensation Plan, as set forth herein and as the same may from time to time be amended.
“Restricted Stock”
means an award of Shares that are subject to restrictions hereunder.
“Restricted Stock
Unit” or “RSU” means a right, pursuant to the Plan, of the Grantee to payment of the RSU Value.
“RSU Value,”
per RSU, means the Fair Market Value of a Share or, if so provided by the Committee, such Fair Market Value to the extent in excess
of a base value established by the Committee at the time of grant.
“Securities Act”
means the Securities Act of 1933, as amended.
“Settlement Date”
means the date determined under Section 7.4(c).
“Shares”
means shares of Common Stock of the Company.
“Stock Appreciation
Right” or “SAR” means a stock appreciation right with respect to a share of Common Stock.
“Subsidiary”
means any corporation, limited liability company, partnership or other entity of which at least 50% of the economic interest in
the equity is owned (directly or indirectly) by the Company or by another subsidiary. In the event the Company becomes such a subsidiary
of another company (directly or indirectly), the provisions hereof applicable to subsidiaries shall, unless otherwise determined
by the Committee, also be applicable to such parent company.
“Successor of
the Optionee” means the legal representative of the estate of a deceased Optionee or the person or persons who shall acquire
the right to exercise an Option by bequest or inheritance or by reason of the death of the Optionee.
“Termination
of Service” means a Participant’s termination of employment or other service (as a Director, consultant or otherwise),
as applicable, with the Company, Subsidiaries and Affiliates.
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2.
|
EFFECTIVE DATE AND TERMINATION OF PLAN
|
The effective date
of the Plan is September 20, 2016 or, if later the date of the approval of the Plan by the shareholders of the Company. The Plan
shall terminate on, and no Award shall be granted hereunder on or after, September 19, 2026; provided, however, that the Board
may at any time prior to that date terminate the Plan. Notwithstanding the foregoing, a termination of the Plan that occurs after
an Award is made shall not materially impair the rights of a Participant unless the Participant consents. The termination of the
Plan shall not impair the power and authority of the Committee with respect to any outstanding Award.
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3.
|
ADMINISTRATION OF PLAN
|
(a)
The
Plan shall be administered by the Committee. The Committee, upon and after such time as it is subject to Section 16 of the
Exchange Act, shall consist of at least two individuals each of whom shall be a “nonemployee director” as defined in
Rule 16b-3 as promulgated by the Securities and Exchange Commission (“Rule 16b-3”) under the Exchange Act and shall,
at such times as the Company is subject to Section 162(m) of the Code (to the extent relief from the limitation of Section 162(m)
of the Code is sought with respect to Awards), qualify as “outside directors” for purposes of Section 162(m) of
the Code; provided that no action taken by the Committee (including, without limitation, grants) shall be invalidated because any
or all of the members of the Committee fails to satisfy the foregoing requirements of this sentence. The acts of a majority of
the members present at any meeting of the Committee at which a quorum is present, or acts approved in writing by a majority of
the entire Committee, shall be the acts of the Committee for purposes of the Plan. If and to the extent applicable, no member of
the Committee may act as to matters under the Plan specifically relating to such member. Notwithstanding the other foregoing provisions
of this Section 3(a), any Award under the Plan to a person who is a member of the Board shall be made and administered by
the Board. If no Committee is designated by the Board to act for these purposes, the Board shall have the rights and responsibilities
of the Committee hereunder and under the Award Agreements.
(b)
Subject
to the provisions of the Plan, the Committee shall in its discretion as reflected by the terms of the Award Agreements (i) determine
the eligibility of Eligible Persons to receive an Award, (ii) authorize the granting of Awards to Eligible Persons and (iii) determine
the number of Shares to be covered under any Award Agreement, considering the position and responsibilities of the Eligible Person,
the nature and value to the Company of the Eligible Person’s present and potential contribution to the success of the Company
whether directly or through Subsidiaries or Affiliates and such other factors as the Committee may deem relevant.
(c)
The
Award Agreement shall contain such other terms, provisions and conditions not inconsistent herewith as shall be determined by the
Committee. In the event that any Award Agreement or other agreement hereunder provides (without regard to this sentence) for the
obligation of the Company, Subsidiaries or Affiliates to purchase or repurchase Shares from a Participant or any other person,
then, notwithstanding the provisions of the Award Agreement or such other agreement, such obligation shall not apply to the extent
that the purchase or repurchase would not be permitted under applicable law. The Participant shall take whatever additional actions
and execute whatever additional documents the Committee may in its reasonable judgment deem necessary or advisable in order to
carry out or effect one or more of the obligations or restrictions imposed on the Participant pursuant to the express provisions
of the Plan and the Award Agreement.
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4.
|
SHARES AND UNITS SUBJECT TO THE PLAN
|
(a)
Subject
to adjustments as provided in Section 16, the total number of Shares subject to Awards granted under the Plan (including securities
convertible into or exchangeable for Shares), in the aggregate, may not exceed five hundred thousand (500,000) Shares, each of
which may be issued as Incentive Stock Options. The maximum number of Shares that may underlie Options granted in any calendar
year to any Eligible Person other than any Director, shall not exceed fifty thousand (50,000) Shares. The maximum number of Shares
that may underlie Awards, other than Options, granted in any calendar year to any Eligible Person other than any Director, shall
not exceed thirty thousand (30,000) Shares. The maximum number of Shares that may underlie Options granted in any calendar year
to any Director, shall not exceed twenty five thousand (25,000). The maximum number of Shares that may underlie Awards, other than
Options, granted in any calendar year to any Director, shall not exceed fifteen thousand (15,000) Shares. Shares distributed under
the Plan may be treasury Shares or authorized but unissued Shares. Any Shares that have been granted as Restricted Stock or that
have been reserved for distribution in payment for Options, RSUs, DSUs or other equity-based Awards but are later forfeited or
for any other reason are not payable under the Plan may again be made the subject of Awards under the Plan.
(b)
Shares
subject to Dividend Equivalent Rights, other than Dividend Equivalent Rights based directly on the dividends payable with respect
to Shares subject to Options or the dividends payable on a number of Shares corresponding to the number of RSUs or DSUs awarded,
shall be subject to the limitation of Section 4.1(a). Notwithstanding Section 4.1(a), except in the case of Awards intended
to qualify for relief from the limitations of Section 162(m) of the Code, there shall be no limit on the number of RSUs or
Dividend Equivalent Rights to the extent they are paid out in cash that may be granted under the Plan. If any RSUs, Dividend Equivalent
Rights or other equity-based Awards under Section 11 are paid out in cash, then, notwithstanding the first sentence of Section 4.1(a)
above (but subject to the second sentence thereof) the underlying Shares may again be made the subject of Awards under the Plan.
(c)
The
certificates for Shares issued hereunder may include any legend which the Committee deems appropriate to reflect any rights of
first refusal or restrictions on transfer hereunder or under the Award Agreement, or as the Committee may otherwise deem appropriate.
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5.
|
PROVISIONS APPLICABLE TO STOCK OPTIONS
|
Subject to the other
terms of the Plan, the Committee may, in its discretion as reflected by the terms of the applicable Award Agreement: (i) determine
and designate from time to time those Eligible Persons to whom Options are to be granted and the number of Shares to be optioned
to each Eligible Person; (ii) determine whether to grant Options intended to be Incentive Stock Options, or to grant Non-Qualified
Stock Options, or both; provided that Incentive Stock Options may only be granted to employees of the Company, Subsidiaries or
Affiliates; (iii) determine the time or times when and the manner and condition in which each Option shall be exercisable
and the duration of the exercise period; (iv) designate each Option as one intended to be an Incentive Stock Option or as
a Non-Qualified Stock Option; and (v) determine or impose other conditions to the grant or exercise of Options under the Plan
as it may deem appropriate. Notwithstanding anything to the contrary in this Plan, to the extent that any Option does not qualify
as an Incentive Stock Option, it shall constitute a separate Non-Qualified Stock Option.
The Option Price shall
be determined by the Committee on the date the Option is granted and reflected in the Award Agreement, as the same may be amended
from time to time. Any particular Award Agreement may provide for different Option Prices for specified amounts of Shares subject
to the Option; provided that the Option Price shall not be less than 100% of the Fair Market Value of a Share on the day the Option
is granted.
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5.3
|
Period of Option and Vesting.
|
(a)
Unless
earlier expired, forfeited or otherwise terminated, each Option shall expire in its entirety upon the 10th anniversary of the date
of grant or shall have such other term as is set forth in the applicable Award Agreement. The Option shall also expire, be forfeited
and terminate at such times and in such circumstances as otherwise provided hereunder or under the Award Agreement.
(b)
Each
Option, to the extent that the Optionee has not had a Termination of Service and the Option has not otherwise lapsed, expired,
terminated or been forfeited, shall first become exercisable according to the terms and conditions set forth in the Award Agreement,
as determined by the Committee at the time of grant. Unless otherwise provided in the Plan or the Award Agreement, no Option (or
portion thereof) shall ever be exercisable if the Optionee has a Termination of Service before the time at which such Option (or
portion thereof) would otherwise have become exercisable, and any Option that would otherwise become exercisable after such Termination
of Service shall not become exercisable and shall be forfeited upon such termination. Notwithstanding the foregoing provisions
of this Section 5.3(b), Options exercisable pursuant to the schedule set forth by the Committee at the time of the grant may
be fully or more rapidly exercisable or otherwise vested at any time in the discretion of the Committee. Upon and after the death
of an Optionee, such Optionee’s Options, if and to the extent otherwise exercisable hereunder or under the applicable Award
Agreement after the Optionee’s death, may be exercised by the Successors of the Optionee.
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5.4
|
Exercisability Upon and After Termination of Optionee.
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(a)
Subject
to provisions of the Award Agreement, if an Optionee has a Termination of Service other than by the Company or Subsidiaries for
Cause, or other than by reason of death or Disability, then no exercise of an Option may occur after the expiration of the three-month
period to follow the termination, or if earlier, the expiration of the term of the Option as provided under Section 5.3(a);
provided that, if the Optionee should die after the Termination of Service, but while the Option is still in effect, the Option
(if and to the extent otherwise exercisable by the Optionee at the time of death) may be exercised until the earlier of (i) one
year from the date of the Termination of Service of the Optionee, or (ii) the date on which the term of the Option expires
in accordance with Section 5.3(a).
(b)
Subject
to provisions of the Award Agreement, in the event the Optionee has a Termination of Service on account of death or Disability,
the Option (whether or not otherwise exercisable) may be exercised until the earlier of (i) one year from the date of the
Termination of Service of the Optionee, or (ii) the date on which the term of the Option expires in accordance with Section 5.3.
(c)
Notwithstanding
any other provision hereof, unless otherwise provided in the Award Agreement, if the Optionee has a Termination of Service for
Cause, the Optionee’s Options, to the extent then unexercised, shall thereupon cease to be exercisable and shall be forfeited
forthwith.
(a)
Subject
to vesting, restrictions on exercisability and other restrictions provided for hereunder or otherwise imposed in accordance herewith,
an Option may be exercised, and payment in full of the aggregate Option Price made, by an Optionee only by written notice (in the
form prescribed by the Committee) to the Company or its designee specifying the number of Shares to be purchased.
(b)
Without
limiting the scope of the Committee’s discretion hereunder, the Committee may impose such other restrictions on the exercise
of Options (whether or not in the nature of the foregoing restrictions) as it may deem necessary or appropriate.
(a)
The
aggregate Option Price shall be paid in full upon the exercise of the Option. Payment must be made by one of the following methods:
(i)
certified
or bank cashier’s check;
(ii)
subject
to Section 14(e), the proceeds of a Company loan program or third-party sale program or a notice acceptable to the Committee
given as consideration under such a program, in each case if permitted by the Committee in its discretion, if such a program has
been established and the Optionee is eligible to participate therein;
(iii)
if
approved by the Committee in its discretion, Shares of previously owned Common Stock, which have been previously owned for more
than six months, having an aggregate Fair Market Value on the date of exercise equal to the aggregate Option Price; or
(iv)
if
approved by the Committee in its discretion, through the written election of the Optionee to have Shares withheld by the Company
from the Shares otherwise to be received, with such withheld Shares having an aggregate Fair Market Value on the date of exercise
equal to the aggregate Option Price; or
(v)
by
any combination of such methods of payment or any other method acceptable to the Committee in its discretion.
(b)
Except
in the case of Options exercised by certified or bank cashier’s check, the Committee may impose limitations and prohibitions
on the exercise of Options as it deems appropriate, including, without limitation, any limitation or prohibition designed to avoid
accounting consequences which may result from the use of Common Stock as payment upon exercise of an Option.
(c)
The
Committee may provide that no Option may be exercised with respect to any fractional Share. Any fractional Shares resulting from
an Optionee’s exercise that is accepted by the Company shall in the discretion of the Committee be paid in cash.
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5.7
|
Exercise by Successors.
|
An Option may be exercised,
and payment in full of the aggregate Option Price made, by the Successors of the Optionee only by written notice (in the form prescribed
by the Committee) to the Company specifying the number of Shares to be purchased. Such notice shall state that the aggregate Option
Price will be paid in full, or that the Option will be exercised as otherwise provided hereunder, in the discretion of the Company
or the Committee, if and as applicable.
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5.8
|
Nontransferability of Option.
|
Each Option granted
under the Plan shall be nontransferable by the Optionee except by will or the laws of descent and distribution of the state wherein
the Optionee is domiciled at the time of his death; provided, however, that the Committee may (but need not) permit other transfers,
where the Committee concludes that such transferability (i) does not result in accelerated U.S. federal income taxation, (ii) does
not cause any Option intended to be an Incentive Stock Option to fail to be described in Section 422(b) of the Code, (iii) complies
with applicable law, including securities laws, and (iv) is otherwise appropriate and desirable. In no event may an Option
be transferred by an Optionee for consideration without the prior approval of the Company’s shareholders.
The Committee (taking
into account, without limitation, the possible application of Section 409A of the Code, as the Committee may deem appropriate)
may establish a program under which Participants will have RSUs subject to Section 7 credited upon their exercise of Options,
rather than receiving Shares at that time.
|
5.10
|
Certain Incentive Stock Option Provisions.
|
(a)
In
no event may an Incentive Stock Option be granted other than to employees of the Company or a “subsidiary corporation”
or a “parent corporation,” as each is defined in Section 424(f) of the Code, with respect to the Company. The
aggregate Fair Market Value, determined as of the date an Option is granted, of the Common Stock for which any Optionee may be
awarded Incentive Stock Options which are first exercisable by the Optionee during any calendar year under the Plan (or any other
stock option plan required to be taken into account under Section 422(d) of the Code) shall not exceed $100,000. To the extent
the $100,000 limit referred to in the preceding sentence is exceeded, an Option will be treated as a Non-Qualified Stock Option.
(b)
If
Shares acquired upon exercise of an Incentive Stock Option are disposed of in a disqualifying disposition within the meaning of
Section 422 of the Code by an Optionee prior to the expiration of either two years from the date of grant of such Option or
one year from the transfer of Shares to the Optionee pursuant to the exercise of such Option, or in any other disqualifying disposition
within the meaning of Section 422 of the Code, such Optionee shall notify the Company in writing as soon as practicable thereafter
of the date and terms of such disposition and, if the Company (or an Affiliate) thereupon has a tax-withholding obligation, shall
pay to the Company (or such Affiliate) an amount equal to any withholding tax the Company (or Affiliate) is required to pay as
a result of the disqualifying disposition.
(c)
The
Option Price with respect to each Incentive Stock Option shall not be less than 100%, or 110% in the case of an individual described
in Section 422(b)(6) of the Code (relating to certain 10% owners), of the Fair Market Value of a Share on the day the Option
is granted. Also, in the case of such an individual who is granted an Incentive Stock Option, the term of such Option shall be
no more than five years from the date of grant.
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6.
|
PROVISIONS APPLICABLE TO RESTRICTED STOCK
|
|
6.1
|
Grant of Restricted Stock.
|
(a)
In
connection with the grant of Restricted Stock, whether or not performance goals (as provided for under Section 12) apply thereto,
the Committee shall establish one or more vesting periods with respect to the shares of Restricted Stock granted, the length of
which shall be determined in the discretion of the Committee. Subject to the provisions of this Section 6, the applicable
Award Agreement and the other provisions of the Plan, restrictions on Restricted Stock shall lapse if the Grantee satisfies all
applicable employment or other service requirements through the end of the applicable vesting period.
(b)
Subject
to the other terms of the Plan, the Committee may, in its discretion as reflected by the terms of the applicable Award Agreement:
(i) authorize the granting of Restricted Stock to Eligible Persons; (ii) provide a specified purchase price for the Restricted
Stock (whether or not the payment of a purchase price is required by any state law applicable to the Company); (iii) determine
the restrictions applicable to Restricted Stock and (iv) determine or impose other conditions, including any applicable Performance
Goals, to the grant of Restricted Stock under the Plan as it may deem appropriate.
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6.2
|
Certificates/Book Entry.
|
(a)
Unless
otherwise provided by the Committee, a “book entry” (by computerized or manual entry) shall be made in the records
of the Company (or, if applicable, the Company’s transfer agent) to evidence an award of Shares of Restricted Stock.
(b)
If
the Shares of Restricted Stock are not evidenced in “book entry” form in accordance with Section 6.2(a), each
Grantee of Restricted Stock shall be issued a stock certificate in respect of Shares of Restricted Stock awarded under the Plan.
Each such certificate shall be registered in the name of the Grantee. Without limiting the generality of Section 4.1(c), the
certificates for Shares of Restricted Stock issued hereunder may include any legend which the Committee deems appropriate to reflect
any restrictions on transfer hereunder or under the Award Agreement, or as the Committee may otherwise deem appropriate, and, without
limiting the generality of the foregoing, shall bear a legend referring to the terms, conditions, and restrictions applicable to
such Award, substantially in the following form:
THE TRANSFERABILITY OF
THIS CERTIFICATE AND THE SHARES OF STOCK REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) OF THE
AMREP CORPORATION 2016 EQUITY COMPENSATION PLAN AND AN AWARD AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER AND AMREP CORPORATION.
COPIES OF SUCH PLAN AND AWARD AGREEMENT ARE ON FILE IN THE OFFICES OF AMREP CORPORATION.
(c)
The
Committee shall require that any stock certificates evidencing such Shares be held in custody by the Company or its designee until
the restrictions hereunder shall have lapsed, and that, as a condition of any Award of Restricted Stock, the Committee may require
that the Grantee deliver to the Company or its designee a stock power, endorsed in blank, relating to the stock covered by such
Award. If and when such restrictions so lapse, the stock certificates shall be delivered by the Company to the Grantee or his or
her designee as provided in Section 6.3 (and if applicable, the stock power shall cease to be of effect).
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6.3
|
Restrictions and Conditions.
|
Unless otherwise provided
by the Committee, the Shares of Restricted Stock awarded pursuant to the Plan shall be subject to the following restrictions and
conditions:
(i)
Subject
to the provisions of the Plan and the Award Agreements, during a period commencing with the date of such Award and ending on the
date the period of forfeiture with respect to such Shares lapses, the Grantee shall not be permitted voluntarily or involuntarily
to sell, transfer, pledge, anticipate, alienate, encumber or assign Shares of Restricted Stock awarded under the Plan (or have
such Shares attached or garnished). Subject to the provisions of the Award Agreements and clause (iii) below, the period of
forfeiture with respect to Shares granted hereunder shall lapse as provided in the applicable Award Agreement. Notwithstanding
the foregoing, unless otherwise expressly provided by the Committee, the period of forfeiture with respect to such Shares shall
only lapse as to whole Shares.
(ii)
Except
as provided in the foregoing clause (i), below in this clause (ii), or as otherwise provided in the applicable Award Agreement,
the Grantee shall have, in respect of the Shares of Restricted Stock, all of the rights of a shareholder of the Company, including
the right to vote the Shares and the right to receive any cash dividends as and when such dividends are declared and paid by the
Company (or as soon as practicable thereafter); provided, however, that cash dividends on such Shares shall, unless otherwise provided
by the Committee, be held by the Company (unsegregated as a part of its general assets) until the period of forfeiture lapses (and
forfeited if the underlying Shares are forfeited), and paid over to the Grantee (without interest) as soon as practicable after
such period lapses (if not forfeited). Certificates for Shares (not subject to restrictions) shall be delivered to the Grantee
or his or her designee promptly after, and only after, the period of forfeiture shall lapse without forfeiture in respect of such
Shares of Restricted Stock.
(iii)
Except
as otherwise provided in the applicable Award Agreement, and subject to clause (iv) below, if the Grantee has a Termination
of Service by the Company and Subsidiaries (or, if applicable, Affiliates) for Cause, or by the Grantee for any reason during the
applicable period of forfeiture, then (A) all Shares still subject to restriction shall thereupon, and with no further action,
be forfeited by the Grantee, and (B) the Company shall pay to the Grantee as soon as practicable (and in no event more than
30 days) after such termination an amount, equal to the lesser of (x) the amount paid by the Grantee for such forfeited Restricted
Stock as contemplated by Section 6.1, and (y) the Fair Market Value on the date of termination of the forfeited Restricted
Stock.
(iv)
Subject
to the provisions of the Award Agreement, in the event the Grantee has a Termination of Service on account of death or Disability,
or the Grantee has a Termination of Service by the Company and Subsidiaries for any reason other than Cause, or in the event of
a Change in Control (regardless of whether a termination follows thereafter), during the applicable period of forfeiture, then
restrictions under the Plan will immediately lapse on all Restricted Stock granted to the applicable Grantee.
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7.
|
PROVISIONS APPLICABLE TO RESTRICTED STOCK UNITS
|
Subject to the other
terms of the Plan, the Committee may, in its discretion as reflected by the terms of the applicable Award Agreement: (i) authorize
the granting of RSUs to Eligible Persons and (ii) determine or impose other conditions to the grant of RSUs under the Plan
as it may deem appropriate.
The Committee may provide
in an Award Agreement that any particular RSU shall expire at the end of a specified term.
RSUs shall vest as
provided in the applicable Award Agreement.
(a)
Each
vested and outstanding RSU shall be settled by the transfer to the Grantee of one Share; provided that, the Committee at the time
of grant (or, in the appropriate case, as determined by the Committee, thereafter) may provide that, after consideration of possible
accounting issues, an RSU may be settled (i) in cash at the applicable RSU Value, (ii) in cash or by transfer of Shares
as elected by the Grantee in accordance with procedures established by the Committee or (iii) in cash or by transfer of Shares
as elected by the Company.
(b)
Payment
(whether of cash or Shares) in respect of RSUs shall be made in a single sum by the Company; provided that, with respect to RSUs
of a Grantee which have a common Settlement Date, the Committee may permit the Grantee to elect in accordance with procedures established
by the Committee (taking into account, without limitation, Section 409A of the Code, as the Committee may deem appropriate)
to receive installment payments over a period not to exceed 10 years, rather than a single-sum payment.
(c)
Unless
otherwise provided in the applicable Award Agreement, the “Settlement Date” with respect to an RSU is the first day
of the month to follow the date on which the RSU vests; provided that a Grantee may elect, in accordance with procedures to be
established by the Committee, that such Settlement Date will be deferred as elected by the Grantee to the first day of the month
to follow the Grantee’s Termination of Service, or such other time as may be permitted by the Committee. Unless otherwise
determined by the Committee, elections under this Section 7.4(c) must, except as may otherwise be permitted under the rules
applicable under Section 409A of the Code, (A) be effective at least one year after they are made, or, in the case of
payments to commence at a specific time, be made at least one year before the first scheduled payment and (B) defer the commencement
of distributions (and each affected distribution) for at least five years.
(i)
Notwithstanding
Section 7.4(c), the Committee may provide that distributions of RSUs can be elected at any time in those cases in which the
RSU Value is determined by reference to Fair Market Value to the extent in excess of a base value, rather than by reference to
unreduced Fair Market Value.
(ii)
Notwithstanding
the foregoing, and unless otherwise provided in the applicable Award Agreement, the Settlement Date, if not earlier pursuant to
this Section 7.4(c), is the date of the Grantee’s death.
(d)
Notwithstanding
the other provisions of this Section 7, and unless otherwise provided in the applicable Award Agreement, in the event of a
Change in Control, the Settlement Date shall be the date of such Change in Control and all amounts due with respect to RSUs to
a Grantee hereunder shall be paid as soon as practicable (but in no event more than 30 days) after such Change in Control, unless
such Grantee elects otherwise in accordance with procedures established by the Committee.
(e)
Notwithstanding
any other provision of the Plan, a Grantee may receive any amounts to be paid in installments as provided in Section 7.4(b)
or deferred by the Grantee as provided in Section 7.4(c) in the event of an “Unforeseeable Emergency.” For these
purposes, an “Unforeseeable Emergency,” as determined by the Committee in its sole discretion, is a severe financial
hardship to the Grantee resulting from a sudden and unexpected illness or accident of the Grantee or “dependent,” as
defined in Section 152(a) of the Code, of the Grantee, loss of the Grantee’s property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Grantee. The circumstances
that will constitute an Unforeseeable Emergency will depend upon the facts of each case, but, in any case, payment may not be made
to the extent that such hardship is or may be relieved: (i) through reimbursement or compensation by insurance or otherwise; (ii)
by liquidation of the Grantee’s assets, to the extent the liquidation of such assets would not itself cause severe financial
hardship; or (iii) by future cessation of the making of additional deferrals under Section 7.4(b) and (c).
Without limitation,
the need to send a Grantee’s child to college or the desire to purchase a home shall not constitute an Unforeseeable Emergency.
Distributions of amounts because of an Unforeseeable Emergency shall be permitted to the extent reasonably needed to satisfy the
emergency need.
|
7.5
|
Other RSUs Provisions.
|
(a)
Rights
to payments with respect to RSUs granted under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, garnishment, levy, execution, or other legal or equitable process, either voluntary
or involuntary; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, attach or garnish, or levy or
execute on any right to payments or other benefits payable hereunder, shall be void.
(b)
A
Grantee may designate in writing, on forms to be prescribed by the Committee, a beneficiary or beneficiaries to receive any payments
payable after his or her death and may amend or revoke such designation at any time. If no beneficiary designation is in effect
at the time of a Grantee’s death, payments hereunder (if any) shall be made to the Grantee’s estate. If a Grantee with
a vested RSU dies, such RSU shall be settled and the RSU Value in respect of such RSUs paid, and any payments deferred pursuant
to an election under Section 7.4(c) shall be accelerated and paid, as soon as practicable (but no later than 60 days) after
the date of death to such Grantee’s beneficiary or estate, as applicable.
(c)
The
Committee may establish a program under which distributions with respect to RSUs may be deferred for periods in addition to those
otherwise contemplated by foregoing provisions of this Section 7. Such program may include, without limitation, provisions
for the crediting of earnings and losses on unpaid amounts, and, if permitted by the Committee, provisions under which Participants
may select from among hypothetical investment alternatives for such deferred amounts in accordance with procedures established
by the Committee.
(d)
Notwithstanding
any other provision of this Section 7, any fractional RSU will be paid out in cash at the RSU Value as of the Settlement Date.
(e)
No
RSU shall be construed to give any Grantee any rights with respect to Shares or any ownership interest in the Company. Except as
may be provided in accordance with Section 9, no provision of the Plan shall be interpreted to confer upon any Grantee any
voting, dividend or derivative or other similar rights with respect to any RSU.
|
8.
|
PROVISIONS APPLICABLE TO DEFERRED STOCK UNITS
|
Subject to the other
terms of the Plan, the Committee may, in its discretion as reflected by the terms of the applicable Award Agreement: (i) authorize
the granting of DSUs to Eligible Persons and (ii) determine or impose other conditions to the grant of DSUs under the Plan
as it may deem appropriate.
The Committee may provide
in an Award Agreement that any particular DSU shall expire at the end of a specified term.
DSUs shall vest as
provided in the applicable Award Agreement.
(a)
Each
vested and outstanding DSU shall be settled by the transfer to the Grantee of one Share.
(b)
Payment
in respect of DSUs shall be made in a single sum by the Company; provided that, with respect to DSUs of a Grantee which have a
common Settlement Date, the Committee may permit the Grantee to elect in accordance with procedures established by the Committee
(taking into account, without limitation, Section 409A of the Code, as the Committee may deem appropriate) to receive installment
payments over a period not to exceed 10 years, rather than a single-sum payment.
(c)
Unless
otherwise provided in the applicable Award Agreement, the “Settlement Date” with respect to a DSU is the first day
of the month to follow the Grantee’s Termination of Service; provided that a Grantee may elect, in accordance with procedures
to be established by the Committee, that such Settlement Date will be deferred as elected by the Grantee to such later time as
may be permitted by the Committee. Unless otherwise determined by the Committee, elections under this Section 8.4(c) must,
except as may otherwise be permitted under the rules applicable under Section 409A of the Code, (A) be effective at least
one year after they are made, or, in the case of payments to commence at a specific time, be made at least one year before the
first scheduled payment and (B) defer the commencement of distributions (and each affected distribution) for at least five
years. Notwithstanding the foregoing, and unless otherwise provided in the applicable Award Agreement, the Settlement Date, if
not earlier pursuant to this Section 8.4(c), is the date of the Grantee’s death.
(d)
Notwithstanding
the other provisions of this Section 8, and unless otherwise provided in the applicable Award Agreement, in the event of a
Change in Control, the Settlement Date shall be the date of such Change in Control and all amounts due with respect to DSUs to
a Grantee hereunder shall be paid as soon as practicable (but in no event more than 30 days) after such Change in Control, unless
such Grantee elects otherwise in accordance with procedures established by the Committee.
|
8.5
|
Other DSUs Provisions.
|
(a)
Rights
to payments with respect to DSUs granted under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, garnishment, levy, execution, or other legal or equitable process, either voluntary
or involuntary; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, attach or garnish, or levy or
execute on any right to payments or other benefits payable hereunder, shall be void.
(b)
A
Grantee may designate in writing, on forms to be prescribed by the Committee, a beneficiary or beneficiaries to receive any payments
payable after his or her death and may amend or revoke such designation at any time. If no beneficiary designation is in effect
at the time of a Grantee’s death, payments hereunder (if any) shall be made to the Grantee’s estate. If a Grantee with
a vested DSU dies, such DSU shall be settled and paid, and any payments deferred pursuant to an election under Section 8.4(c)
shall be accelerated and paid, as soon as practicable (but no later than 60 days) after the date of death to such Grantee’s
beneficiary or estate, as applicable.
(c)
The
Committee may establish a program under which distributions with respect to DSUs may be deferred for periods in addition to those
otherwise contemplated by foregoing provisions of this Section 8.
(d)
No
DSU shall be construed to give any Grantee any rights with respect to Shares or any ownership interest in the Company. Except as
may be provided in accordance with Section 9, no provision of the Plan shall be interpreted to confer upon any Grantee any
voting, dividend or derivative or other similar rights with respect to any DSU.
|
9.
|
PROVISIONS APPLICABLE TO DIVIDEND EQUIVALENT RIGHTS
|
|
9.1
|
Grant of Dividend Equivalent Rights.
|
Subject to the other
terms of the Plan, the Committee may, in its discretion as reflected by the terms of the Award Agreements, authorize the granting
of Dividend Equivalent Rights to Eligible Persons based on the regular cash dividends declared on Common Stock, to be credited
as of the dividend payment dates, during the period between the date an Award is granted, and the date such Award is exercised,
vests or expires, as determined by the Committee. Such Dividend Equivalent Rights shall be converted to cash or additional Shares
by such formula and at such time and subject to such limitation as may be determined by the Committee. With respect to Dividend
Equivalent Rights granted with respect to Options intended to be qualified performance-based compensation for purposes of Section 162(m)
of the Code, such Dividend Equivalent Rights shall be payable regardless of whether such Option is exercised. If a Dividend Equivalent
Right is granted in respect of another Award hereunder, then, unless otherwise stated in the Award Agreement, in no event shall
the Dividend Equivalent Right be in effect for a period beyond the time during which the applicable portion of the underlying Award
is in effect.
(a)
The
term of a Dividend Equivalent Right shall be set by the Committee in its discretion.
(b)
Unless
otherwise determined by the Committee, except as contemplated by Section 9.4, a Dividend Equivalent Right is exercisable or
payable only while the Participant is an Eligible Person.
(c)
Payment
of the amount determined in accordance with Section 9.1 shall be in cash, in Common Stock or a combination of the two, as
determined by the Committee.
(d)
The
Committee may impose such employment-related conditions on the grant of a Dividend Equivalent Right as it deems appropriate in
its discretion.
|
9.3
|
Other Types of Dividend Equivalent Rights.
|
The Committee may establish
a program under which Dividend Equivalent Rights of a type whether or not described in the foregoing provisions of this Section 9
may be granted to Participants. For example, and without limitation, the Committee may grant a dividend equivalent right in respect
of each Share subject to an Option or with respect to an RSU, which right would consist of the right (subject to Section 9.4)
to receive a cash payment in an amount equal to the dividend distributions paid on a Share from time to time.
The Committee may establish
a program (taking into account, without limitation, the possible application of Section 409A of the Code, as the Committee
may deem appropriate) under which Participants (i) will have RSUs credited, subject to the terms of Sections 7.4 and 7.5 as
though directly applicable with respect thereto, upon the granting of Dividend Equivalent Rights, or (ii) will have payments
with respect to Dividend Equivalent Rights deferred. In the case of the foregoing clause (ii), such program may include, without
limitation, provisions for the crediting of earnings and losses on unpaid amounts, and, if permitted by the Committee, provisions
under which Participants may select from among hypothetical investment alternatives for such deferred amounts in accordance with
procedures established by the Committee.
|
10.
|
Stock Appreciation
Rights
|
|
10.1
|
General Requirements
.
|
The Committee may grant
SARs to Eligible Persons separately or in tandem with any Option (for all or a portion of the applicable Option). Tandem SARs may
be granted either at the time the Option is granted or at any time thereafter while the Option remains outstanding; provided, however,
that, in the case of an Incentive Stock Option, SARs may be granted only at the time of the Grant of the Incentive Stock Option.
The Committee shall establish the base amount of the SAR at the time the SAR is granted. The base amount of each SAR shall be equal
to the per share Exercise Price of the related Option or, if there is no related Option, an amount equal to or greater than the
Fair Market Value of a share of Common Stock as of the date of Grant of the SAR.
In the case of tandem
SARs, the number of SARs granted to a Grantee that shall be exercisable during a specified period shall not exceed the number of
shares of Common Stock that the Grantee may purchase upon the exercise of the related Option during such period. Upon the exercise
of an Option, the SARs relating to the Common Stock covered by such exercise shall terminate. Upon the exercise of SARs, the related
Option shall terminate to the extent of an equal number of shares of Common Stock.
A SAR shall be exercisable
during the period specified by the Committee in the Award Agreement and shall be subject to such vesting and other restrictions
as may be specified in the Award Agreement. The Committee may accelerate the exercisability of any or all outstanding SARs at any
time for any reason. SARs may only be exercised while the Grantee is employed by, or providing service to, the Company, a Subsidiary
or an Affiliate or during the applicable period after termination of employment or service as described in Section 5.5 above. A
tandem SAR shall be exercisable only during the period when the Option to which it is related is also exercisable.
When a Grantee exercises
SARs, the Grantee shall receive in settlement of such SARs an amount equal to the value of the stock appreciation for the number
of SARs exercised. The stock appreciation for an SAR is the amount by which the Fair Market Value of the underlying Common Stock
on the date of exercise of the SAR exceeds the base amount of the SAR as described in Section 10.1.
The appreciation in
an SAR shall be paid in shares of Common Stock, cash or any combination of the foregoing, as the Committee shall determine. For
purposes of calculating the number of shares of Common Stock to be received, shares of Common Stock shall be valued at their Fair
Market Value on the date of exercise of the SAR.
|
11.
|
OTHER EQUITY-BASED AWARDS
|
The Committee shall
have the right to grant (i) other Awards based upon the Common Stock having such terms and conditions as the Committee may
determine, including, without limitation, the grant of Shares based upon certain conditions, the grant of securities convertible
into Common Stock and the grant of Stock Appreciation Rights and (ii) interests (which may be expressed as units or otherwise)
in Subsidiaries, as applicable.
The Committee, in its
discretion, may in the case of Awards (including, in particular, Awards other than Options) intended to qualify for an exception
from the limitation imposed by Section 162(m) of the Code (“Performance-Based Awards”), (i) establish one
or more performance goals (“Performance Goals”) as a precondition to the issuance or vesting of Awards, and (ii) provide,
in connection with the establishment of the Performance Goals, for predetermined Awards to those Participants (who continue to
meet all applicable eligibility requirements) with respect to whom the applicable Performance Goals are satisfied. The Performance
Goals shall be based upon the criteria set forth in Exhibit A hereto which is hereby incorporated herein by reference as though
set forth in full. The Performance Goals shall be established in a timely fashion such that they are considered preestablished
for purposes of the rules governing performance-based compensation under Section 162(m) of the Code. Prior to the award or
vesting, as applicable, of affected Awards hereunder, the Committee shall have certified that any applicable Performance Goals,
and other material terms of the Award, have been satisfied. Performance Goals which do not satisfy the foregoing provisions of
this Section 12 may be established by the Committee with respect to Awards not intended to qualify for an exception from the
limitations imposed by Section 162(m) of the Code.
The Company shall be
entitled to withhold from any payments or deemed payments any amount of tax withholding determined by the Committee to be required
by law. Without limiting the generality of the foregoing, the Committee may, in its discretion, require the Participant to pay
to the Company at such time as the Committee determines the amount that the Committee deems necessary to satisfy the Company’s
obligation to withhold federal, state or local income or other taxes incurred by reason of (i) the exercise of any Option,
(ii) the lapsing of any restrictions applicable to any Restricted Stock, (iii) the receipt of a distribution in respect
of RSUs, DSUs or Dividend Equivalent Rights or (iv) any other applicable income-recognition event (for example, an election
under Section 83(b) of the Code).
(a)
Upon
exercise of an Option, the Optionee may, if approved by the Company in its discretion, make a written election to have Shares then
issued withheld by the Company from the Shares otherwise to be received, or to deliver previously owned Shares, in order to satisfy
the liability for such withholding taxes. In the event that the Optionee makes, and the Company permits, such an election, the
number of Shares so withheld or delivered shall have an aggregate Fair Market Value on the date of exercise sufficient to satisfy
the applicable withholding taxes. Where the exercise of an Option does not give rise to an obligation by the Company to withhold
federal, state or local income or other taxes on the date of exercise, but may give rise to such an obligation in the future, the
Company may, in its discretion, make such arrangements and impose such requirements as it deems necessary or appropriate.
(b)
Upon
lapsing of restrictions on Restricted Stock (or other income-recognition event), the Grantee may, if approved by the Company in
its discretion, make a written election to have Shares withheld by the Company from the Shares otherwise to be released from restriction,
or to deliver previously owned Shares (not subject to restrictions hereunder), in order to satisfy the liability for such withholding
taxes. In the event that the Grantee makes, and the Company permits, such an election, the number of Shares so withheld or delivered
shall have an aggregate Fair Market Value on the date of exercise sufficient to satisfy the applicable withholding taxes.
(c)
Upon
the making of a distribution in respect of RSUs, DSUs, SARs or Dividend Equivalent Rights, the Grantee may, if approved by the
Company in its discretion, make a written election to have amounts (which may include Shares) withheld by the Company from the
distribution otherwise to be made, or to deliver previously owned Shares (not subject to restrictions hereunder), in order to satisfy
the liability for such withholding taxes. In the event that the Grantee makes, and the Company permits, such an election, any Shares
so withheld or delivered shall have an aggregate Fair Market Value on the date of exercise sufficient to satisfy the applicable
withholding taxes.
|
13.3
|
Withholding Required.
|
Notwithstanding anything
contained in the Plan or the Award Agreement to the contrary, the Participant’s satisfaction of any tax-withholding requirements
imposed by the Committee shall be a condition precedent to the Company’s obligation as may otherwise be provided hereunder
to provide Shares to the Participant and to the release of any restrictions as may otherwise be provided hereunder, as applicable;
and the applicable Option, Restricted Stock, RSUs, DSUs, SARs or Dividend Equivalent Rights shall be forfeited upon the failure
of the Participant to satisfy such requirements with respect to, as applicable, (i) the exercise of the Option or a SAR, (ii) the
lapsing of restrictions on the Restricted Stock (or other income-recognition event) or (iii) distributions in respect of any
RSU, DSU or Dividend Equivalent Right.
|
14.
|
REGULATIONS AND APPROVALS
|
(a)
The
obligation of the Company to issue Shares with respect to an Award granted under the Plan shall be subject to all applicable laws,
rules and regulations, including all applicable federal and state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
(b)
The
Committee may make such changes to the Plan as may be necessary or appropriate to comply with the rules and regulations of any
government authority or to obtain tax benefits applicable to an Award.
(c)
Each
grant of Options, Restricted Stock, RSU, DSUs, SARs or Dividend Equivalent Rights (or issuance of Shares in respect of those Awards),
or other Award under Section 11 (or issuance of Shares in respect thereof), is subject to the requirement that, if at any
time the Committee determines, in its discretion, that the listing, registration or qualification of Shares issuable pursuant to
the Plan is required by any securities exchange or under any state or federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection with, the issuance of Options, Shares of Restricted
Stock, RSUs, DSUs, SARs, Dividend Equivalent Rights, other Awards or other Shares, no payment shall be made, or RSUs, DSUs, SARs
or Shares issued or grant of Restricted Stock or other Award made, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions in a manner acceptable to the Committee.
(d)
In
the event that the disposition of stock acquired pursuant to the Plan is not covered by a then current registration statement under
the Securities Act, and is not otherwise exempt from such registration, such Shares shall be restricted against transfer to the
extent required under the Securities Act, and the Committee may require any individual receiving Shares pursuant to the Plan, as
a condition precedent to receipt of such Shares, to represent to the Company in writing that such Shares are acquired for investment
only and not with a view to distribution and that such Shares will be disposed of only if registered for sale under the Securities
Act or if there is an available exemption for such disposition.
(e)
Notwithstanding
any other provision of the Plan, the Company shall not be required to take or permit any action under the Plan or any Award Agreement
which, in the good-faith determination of the Company, would result in a material risk of a violation by the Company of Section 13(k)
of the Exchange Act.
|
15.
|
INTERPRETATION AND AMENDMENTS; OTHER RULES
|
The Committee may make
such rules and regulations and establish such procedures for the administration of the Plan as it deems appropriate. Without limiting
the generality of the foregoing, the Committee may (i) determine the extent, if any, to which Options, RSUs, DSUs, SARs or
Shares (whether or not Shares of Restricted Stock) or Dividend Equivalent Rights shall be forfeited (whether or not such forfeiture
is expressly contemplated hereunder); (ii) interpret the Plan and the Award Agreements hereunder, with such interpretations
to be conclusive and binding on all persons and otherwise accorded the maximum deference permitted by law, provided that the Committee’s
interpretation shall not be entitled to deference on and after a Change in Control except to the extent that such interpretations
are made exclusively by members of the Committee who are individuals who served as Committee members before the Change in Control;
and (iii) take any other actions and make any other determinations or decisions that it deems necessary or appropriate in
connection with the Plan or the administration or interpretation thereof. In the event of any dispute or disagreement as to the
interpretation of the Plan or of any rule, regulation or procedure, or as to any question, right or obligation arising from or
related to the Plan, the decision of the Committee, except as provided in clause (ii) of the foregoing sentence, shall be
final and binding upon all persons. Unless otherwise expressly provided hereunder, the Committee, with respect to any grant, may
exercise its discretion hereunder at the time of the Award or thereafter. The Board may amend the Plan as it shall deem advisable,
except that no amendment may adversely affect a Participant with respect to an Award previously granted without such Participant’s
written consent unless such amendments are required in order to comply with applicable laws; provided, however, that the Plan may
not be amended without shareholder approval in any case in which amendment in the absence of shareholder approval would cause the
Plan to fail to comply with any applicable legal requirement or applicable exchange or similar rule.
|
16.
|
CHANGES IN CAPITAL STRUCTURE
|
(a)
If
(i) the Company or Subsidiaries shall at any time be involved in a merger, consolidation, dissolution, liquidation, reorganization,
exchange of shares, sale of all or substantially all of the assets or stock of the Company or Subsidiaries or a transaction similar
thereto, (ii) any stock dividend, stock split, reverse stock split, stock combination, reclassification, recapitalization
or other similar change in the capital structure of the Company or Subsidiaries, or any distribution to holders of Common Stock
other than cash dividends, shall occur or (iii) any other event shall occur which in the judgment of the Committee necessitates
action by way of adjusting the terms of the outstanding Awards, then:
(i) the
maximum aggregate number and kind of Shares which may be made subject to Options and Dividend Equivalent Rights under the Plan,
the maximum aggregate number and kind of Shares of Restricted Stock that may be granted under the Plan, the maximum aggregate number
of RSUs, DSUs and other Awards which may be granted under the Plan may be appropriately adjusted by the Committee in its discretion;
and
(b)
the
Committee may take any such action as in its discretion shall be necessary to maintain each Participants’ rights hereunder
(including under their Award Agreements) so that they are, in their respective Options, RSUs, DSUs, SARs and Dividend Equivalent
Rights, substantially proportionate to the rights existing in such Options, RSUs, DSUs, SARs and Dividend Equivalent Rights prior
to such event, including, without limitation, adjustments in (A) the number of Options, RSUs, DSUs, SARs and Dividend Equivalent
Rights (and other Awards under Section 11) granted, (B) the number and kind of shares or other property to be distributed
in respect of Options, RSUs, DSUs, SARs and Dividend Equivalent Rights (and other Awards under Section 11 as applicable),
(C) the Option Price, the base amount of a SAR and RSU Value, and (D) performance-based criteria established in connection
with Awards (to the extent consistent with Section 162(m) of the Code, as applicable); provided that, in the discretion of
the Committee, the foregoing clause (D) may also be applied in the case of any event relating to a Subsidiary if the event
would have been covered under this Section 16(a) had the event related to the Company.
To the extent that
such action shall include an increase or decrease in the number of Shares (or units of other property then available) subject to
all outstanding Awards, the number of Shares (or units) available under Section 4 shall be increased or decreased, as the
case may be, proportionately, as may be determined by the Committee in its discretion.
(c)
Any
Shares or other securities distributed to a Grantee with respect to Restricted Stock or otherwise issued in substitution of Restricted
Stock shall be subject to the restrictions and requirements imposed by Section 6, including depositing the certificates therefor
with the Company together with a stock power, if applicable, and bearing a legend as provided in Section 6.2(c).
(d)
If
the Company shall be consolidated or merged with another corporation or other entity, each Grantee who has received Restricted
Stock that is then subject to restrictions imposed by Section 6.3 may be required to deposit with the successor corporation
the certificates, if any, for the stock or securities, or the other property, that the Grantee is entitled to receive by reason
of ownership of Restricted Stock in a manner consistent with Section 6.2(c), and such stock, securities or other property
shall become subject to the restrictions and requirements imposed by Section 6.3, and the certificates therefor or other evidence
thereof shall bear a legend similar in form and substance to the legend set forth in Section 6.2(c).
(e)
If
a Change in Control shall occur, then the Committee, as constituted immediately before the Change in Control, may make such adjustments
as it, in its discretion, determines are necessary or appropriate in light of the Change in Control, provided that the Committee
determines that such adjustments do not have an adverse economic impact on the Participant as determined at the time of the adjustments.
(f)
The
judgment of the Committee with respect to any matter referred to in this Section 16 shall be conclusive and binding upon each
Participant without the need for any amendment to the Plan.
(g)
Except
as otherwise permitted under this Section 16, without the prior approval of the Company’s shareholders: (i) the
Option Price, with respect to an Option, or grant price, with respect to a Stock Appreciation Right, may not be reduced below the
price established at the time of grant thereof and (ii) an outstanding Option or Stock Appreciation Right may not be cancelled
and replaced with a new Award with a lower exercise or grant price.
|
17.1
|
No Rights to Employment or Other Service.
|
Nothing in the Plan
or in any grant made pursuant to the Plan shall confer on any individual any right to continue in the employ or other service of
the Company, the Subsidiaries or Affiliates or interfere in any way with the right of the Company, the Subsidiaries or Affiliates
and their shareholders, members, directors, managers or officers to terminate the individual’s employment or other service
at any time.
|
17.2
|
Right of First Refusal; Right of Repurchase.
|
At the time of grant,
the Committee may provide in connection with any grant made under the Plan that Shares received hereunder shall be subject to a
right of first refusal pursuant to which the Company shall be entitled to purchase such Shares in the event of a prospective sale
of the Shares, subject to such terms and conditions as the Committee may specify at the time of grant or (if permitted by the Award
Agreement) thereafter, and to a right of repurchase, pursuant to which the Company shall be entitled to purchase such Shares at
a price determined by, or under a formula set by, the Committee at the time of grant or (if permitted by the Award Agreement) thereafter.
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17.3
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No Fiduciary Relationship.
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Nothing contained in
the Plan (including without limitation Sections 7.5(c) and 9.4), and no action taken pursuant to the provisions of the Plan, shall
create or shall be construed to create a trust of any kind, or a fiduciary relationship between the Company or Subsidiaries, or
their, officers or the Committee, on the one hand, and the Participant or any other person, on the other hand.
This Plan is intended
to comply and shall be administered in a manner that is intended to comply with the requirement of Section 409A of the Code
(including the Treasury Department guidance and regulations issued thereunder), and shall be construed and interpreted in accordance
with such intent. If the Committee determines that an Award, Award document, payment, transaction or any other action or arrangement
contemplated by the provisions of this Plan would, if undertaken, cause a Participant to become subject to any additional taxes
or other penalties under Section 409A of the Code, then unless the Committee specifically provides otherwise, such Award,
Award document, payment, transaction or other Award documents will be deemed modified or, if necessary, suspended in order to comply
with the requirements of Section 409A of the Code to the extent determined appropriate by the Committee, in each case without
the consent of the Participant.
(a)
To
the extent that the Plan is determined by the Committee to be subject to the Employee Retirement Income Security Act of 1974, as
amended, the Grantee, or his beneficiary hereunder or authorized representative, may file a claim for payments with respect to
RSUs and/or DSUs under the Plan by written communication to the Committee or its designee. A claim is not considered filed until
such communication is actually received. Within 90 days (or, if special circumstances require an extension of time for processing,
180 days, in which case notice of such special circumstances should be provided within the initial 90-day period) after the filing
of the claim, the Committee will either:
(i)
approve
the claim and take appropriate steps for satisfaction of the claim; or
(ii)
if
the claim is wholly or partially denied, advise the claimant of such denial by furnishing to him a written notice of such denial
setting forth (A) the specific reason or reasons for the denial; (B) specific reference to pertinent provisions of the
Plan on which the denial is based and, if the denial is based in whole or in part on any rule of construction or interpretation
adopted by the Committee, a reference to such rule, a copy of which shall be provided to the claimant; (C) a description of
any additional material or information necessary for the claimant to perfect the claim and an explanation of the reasons why such
material or information is necessary; and (D) a reference to this Section 17.5 as the provision setting forth the claims
procedure under the Plan.
(b)
The
claimant may request a review of any denial of such claim by written application to the Committee within 60 days after receipt
of the notice of denial of such claim. Within 60 days (or, if special circumstances require an extension of time for processing,
120 days, in which case notice of such special circumstances should be provided within the initial 60-day period) after receipt
of written application for review, the Committee will provide the claimant with its decision in writing, including, if the claimant’s
claim is not approved, specific reasons for the decision and specific references to the Plan provisions on which the decision is
based.
Any and all payments
hereunder to any Grantee shall be made from the general funds of the Company, no special or separate fund shall be established
or other segregation of assets made to assure such payments, and the RSUs (including for purposes of this Section 17.6 any
accounts established to facilitate the implementation of Section 7.4(c)), DSUs (including for purposes of this Section 17.6
any accounts established to facilitate the implementation of Section 8.4(c)) and any other similar devices issued hereunder
to account for Plan obligations do not constitute Common Stock and shall not be treated as (or as giving rise to) property or as
a trust fund of any kind; provided, however, that the Company may establish a mere bookkeeping reserve to meet its obligations
hereunder or a trust or other funding vehicle that would not cause the Plan to be deemed to be funded for tax purposes or for purposes
of Title I of the Employee Retirement Income Security Act of 1974, as amended. The obligations of the Company under the Plan are
unsecured and constitute a mere promise by the Company to make benefit payments in the future and, to the extent that any person
acquires a right to receive payments under the Plan from the Company, such right shall be no greater than the right of a general
unsecured creditor of the Company. (If any Affiliate is or is made responsible with respect to any Awards, the foregoing sentence
shall apply with respect to such Affiliate.) Without limiting the foregoing, RSUs, DSUs and any other similar devices issued hereunder
to account for Plan obligations are solely a device for the measurement and determination of the amounts to be paid to a Grantee
under the Plan, and each Grantee’s right in the RSUs, DSUs and any such other devices is limited to the right to receive
payment, if any, as may herein be provided.
All notices under the
Plan shall be in writing, and if to the Company, shall be delivered to the Board or mailed to its principal office, addressed to
the attention of the Board; and if to the Participant, shall be delivered personally, sent by facsimile transmission or mailed
to the Participant at the address appearing in the records of the Company. Such addresses may be changed at any time by written
notice to the other party given in accordance with this Section 17.7.
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17.8
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Exculpation and Indemnification.
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The Company shall indemnify
and hold harmless the members of the Board and the members of the Committee from and against any and all liabilities, costs and
expenses incurred by such persons as a result of any act or omission to act in connection with the performance of such person’s
duties, responsibilities and obligations under the Plan, to the maximum extent permitted by law, other than such liabilities, costs
and expenses as may result from the gross negligence, bad faith, willful misconduct or criminal acts of such persons.
The use of captions
in this Plan is for convenience. The captions are not intended to provide substantive rights.
THE PLAN SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAW WHICH
COULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW JERSEY.
EXHIBIT A
PERFORMANCE CRITERIA
Performance-Based Awards
intended to qualify as “performance based” compensation under Section 162(m) of the Code, may be payable upon
the attainment of objective performance goals that are established by the Committee and relate to one or more Performance Criteria,
in each case on one or more specified dates or over any period, up to 10 years, as determined by the Committee. Performance Criteria
may (but need not) be based on the achievement of the specified levels of performance under one or more of the measures set out
below relative to the performance of one or more other enterprises or indices.
Performance Goals shall
be based on one or more of the following business criteria (which may be determined for these purposes either by reference to the
Company as a whole or by reference to any one or more of its subsidiaries, operating divisions or other operating units): stock
price, revenues, pretax income, operating income, cash flow, earnings per share, return on equity, return on invested capital or
assets, cost reductions and savings, return on revenues, productivity, level of managed assets and near or long-term earnings potential,
or any variation or combination of the preceding business criteria.
The foregoing Performance
Goals may be stated in absolute terms or may be expressed relative to performance in a specified prior period or to the performance
of other specified enterprises. In addition, the Committee may utilize as an additional performance measure (to the extent consistent
with the Performance-Based Compensation Rules (as defined below)) the attainment by a Participant of one or more personal objectives
and/or goals that the Committee deems appropriate, including, but not limited to, implementation of Company policies, negotiation
of significant corporate transactions, development of long-term business goals or strategic plans for the Company, or the exercise
of specific areas of managerial responsibility. “Performance-Based Compensation Rules” shall mean those provisions
of Section 162(m) of the Code and regulations promulgated thereunder that provide the rules pursuant to which compensation
that is paid to executives on the basis of performance is exempt from the limitations on deductibility applicable to certain compensation
paid to executives in excess of $1,000,000. The measurement of the Company’s or a Participant’s achievement of any
of such goals must be objectively determinable and shall be determined, to the extent applicable, according to generally accepted
accounting principles as in existence on the date on which the Performance Goals for the performance period is established. In
all cases, the Committee shall establish the Performance Goal for each performance period no later than 90 days after the beginning
of the performance period (or no later than the end of the first 25% of the performance period if the performance period is less
than a full year), and shall establish such Performance Goals in a manner that is consistent with the Performance-Based Compensation
Rules. In the event a Performance Goal is not established for a performance period for a Participant for whom a Performance Goal
was in effect for the preceding performance period, the Performance Goal for such Participant for the preceding performance period
shall be treated as the Performance Goal for such Participant for the current performance period. To the extent specified by the
Committee in an Award or by other action taken by the Committee at the time Performance Goals for a performance period are established,
the measurement of specified performance goals may be subject to adjustment to exclude items of gain, loss or expense that are
determined to be extraordinary or unusual in nature, infrequent in occurrence, related to transactions among Subsidiaries or Affiliates,
related to a corporate transaction (including, without limitation, a disposition or acquisition) or related to a change in accounting
principles, all as determined in accordance with standards published by the Financial Accounting Standards Board (or any predecessor
or successor body) from time to time. In addition, equitable adjustments will be made to any performance goal related to Company
stock (e.g., earnings per share) to reflect changes in corporate capitalization, including, without limitation, stock splits and
reorganizations.