Exhibit 10.1

 

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.

 

1.          DEFINITIONS

 

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.

 

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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.

 

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“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.

 

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“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.

 

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

 

4.1           In General.

 

(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.

 

5.          PROVISIONS APPLICABLE TO STOCK OPTIONS

 

5.1           Grant of Option.

 

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.

 

5.2           Option Price.

 

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.

 

5.4           Exercisability Upon and After Termination of Optionee.

 

(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.

 

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5.5           Exercise of Options.

 

(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.

 

5.6           Payment.

 

(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.

 

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.

 

5.9           Deferral.

 

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.

 

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(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.

 

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.

 

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.

 

A-11 

 

  

(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).

 

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.

 

A-12 

 

  

(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.

 

7.          PROVISIONS APPLICABLE TO RESTRICTED STOCK UNITS

 

7.1           Grant of RSUs.

 

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.

 

7.2           Term.

 

The Committee may provide in an Award Agreement that any particular RSU shall
expire at the end of a specified term.

 

7.3           Vesting.

 

RSUs shall vest as provided in the applicable Award Agreement.

 

7.4           Settlement of RSUs.

 

(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.

 

A-13 

 

  

(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.

 

A-14 

 

  

(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

 

8.1           Grant of DSUs.

 

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.

 

8.2           Term.

 

The Committee may provide in an Award Agreement that any particular DSU shall
expire at the end of a specified term.

 

8.3           Vesting.

 

DSUs shall vest as provided in the applicable Award Agreement.

 

8.4           Settlement of DSUs.

 

(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.

 

A-15 

 

  

(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.

 

A-16 

 

  

(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.

 

9.2           Certain Terms.

 

(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.

 

A-17 

 

  

9.4           Deferral.

 

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.

 

10.2         Tandem SARs.

 

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.

 

10.3         Exercisability.

 

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.

 

A-18 

 

  

10.4         Value of SARs.

 

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.

 

10.5         Form of Payment.

 

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.

 

12.         PERFORMANCE GOALS

 

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.

 

13.         TAX WITHHOLDING

 

13.1         In General.

 

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-19 

 

  

13.2         Share Withholding.

 

(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.

 

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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.

 

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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.

 

A-22 

 

  

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.         MISCELLANEOUS

 

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.

 

A-23 

 

  

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.

 

17.3         No Fiduciary Relationship.

 

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.

 

17.4         Section 409A.

 

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.

 

17.5         Claims Procedures.

 

(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.

 

A-24 

 

  

(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.

 

17.6         No Fund Created.

 

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.

 

17.7         Notices.

 

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         Exculpation and Indemnification.

 

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.

 

17.9         Captions.

 

The use of captions in this Plan is for convenience. The captions are not
intended to provide substantive rights.

 

17.10         Governing Law.

 

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.

 

A-26 

 

  

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.