Document:

hme2008stockbenefitplan.htm

    Exhibit 10.1

    
 

    HOME
PROPERTIES, INC.

    2008
STOCK BENEFIT PLAN

    

    

     

    1.           PURPOSES
OF THE PLAN

     

    
      	
               
      

            	
              The
      purposes of this 2008 Stock Benefit Plan (the "Plan") are to enable Home
      Properties, Inc. (the "Company") and its Subsidiaries to attract and
      retain the services of individuals who are important to the future success
      of the Company, including key employees, as well as members of the Board
      of Directors and to provide them with increased motivation and incentive
      to exert their best efforts to enhance the long term value of the Company
      by enlarging their personal stake in its
  success.

            

    

     

    2.           GENERAL
PROVISIONS

     

    2.1           Definitions.

     

    As used in the Plan:

     

    
      	
               
      

            	
              (a)

            	
              "Award"
      means a grant of a Stock Option or Restricted
  Stock.

            

    

     

    
      	
               
      

            	
              (b)

            	
              "Board
      of Directors" means the Board of Directors of the
  Company

            

    

     

    
      	
               
      

            	
              (c)

            	
              “Business
      Day” means any day other than a Saturday, Sunday or a day on which state
      or federally chartered banking institutions in New York City, New York are
      not required to be open.

            

    

     

    
      	
               
      

            	
              (d)

            	
              “Business
      Combination” means a reorganization, merger or consolidation or sale or
      other disposition of all or substantially all of the assets of the
      Company.

            

    

     

    
      	
               
      

            	
              (e)

            	
              “Change
      of Control” means an event that is “a change in the ownership or effective
      control of the corporation, or in the ownership of a substantial portion
      of the assets of the corporation” within the meaning of Code Section 409A
      and that also falls within one of the following
    circumstances:

            

    

     

    
      	
               
      

            	
              (i)

            	
              a
      change of a nature that would be required to be reported in response to
      Item 6(e) of Schedule 14A of Regulation 14A or to Item 5.01 of Form 8-K
      promulgated under the Securities Exchange Act of 1934, as amended;
      or

            

    

     

    
      	
               
      

            	
              (ii)

            	
              any
      “person” (as such term is used in Sections 13(d) and 14(d)(2) of such Act)
      is or becomes the beneficial owner, directly or indirectly, of securities
      of the Company representing 30% or more of the combined voting power of
      the Company’s then outstanding securities;
or

            

    

     

    
      	
               
      

            	
              (iii)

            	
              during
      any period of twenty-four (24) consecutive months, individuals who at the
      beginning of such period constitute the Board of Directors of the Company
      cease for any reason to constitute at least a majority thereof unless the
      election, or the nomination for election by the Company’s shareholders, of
      each new director was approved by a vote of at least two-thirds of the
      directors then still in office who were directors at the beginning of the
      period.

            

    

     

    

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (f)

            	
              "Code"
      means the Internal Revenue Code of 1986, including any and all amendments
      thereto.

            

    

     

    
      	
               
      

            	
              (g)

            	
              "Committee"
      means the committee appointed by the Board of Directors from time to time
      to administer the Plan pursuant to Section 2.2.  Until changed
      by the Board of Directors, the Committee shall be the Compensation
      Committee of the Board of
Directors.

            

    

     

    
      	
               
      

            	
              (h)

            	
              "Common
      Stock" means the Company's Common Stock, $.01 par
  value.

            

    

     

    
      	
               
      

            	
              (i)

            	
              "Company"
      means Home Properties, Inc. and any of its predecessors, subsidiaries or
      successors.

            

    

     

    
      	
               
      

            	
              (j)

            	
              "Eligible
      Director" means a member of the Company's Board of Directors who is not
      otherwise an employee of the Company or any
  Subsidiary.

            

    

     

    
      	
               
      

            	
              (k)

            	
              “Exchange
      Act” means the Exchange Act of 1934, including any and all amendments
      thereto.

            

    

     

    
      	
               
      

            	
              (l)

            	
              “Executive
      Officer” means each officer of the Company who is subject to the reporting
      provisions and trading restrictions of Section 16 of the Exchange
      Act.

            

    

     

    
      	
               
      

            	
              (m)

            	
              “Exercise
      Date” means the date that the notice of exercise and payment are received
      by the office of the Corporate Secretary of the Company or its designee as
      to the number of shares as to which the option is then being
      exercised.

            

    

     

    
      	
               
      

            	
              (n)

            	
              "Fair
      Market Value" on any given date means the last reported sale price at
      which a share of Common Stock is traded on such date or, if no shares of
      Common Stock are traded on such date, the most recent date on which a
      share of Common Stock was traded, as reflected on the New York Stock
      Exchange or, if applicable, any other national stock exchange on which the
      Common Stock is traded.

            

    

     

    
      	
               
      

            	
              (o)

            	
              “Good
      Cause” means that a Participant’s employment by, relationship with or
      service as an Eligible Director of the Company has been terminated by
      written notice because: (i) of his or her conviction of a felony for
      a crime involving an act of fraud or dishonesty, (ii) of intentional acts
      or omissions on such Participant's part causing material injury to the
      property or business of the Company, or (iii) such Participant shall have
      breached any material term of any employment agreement in place between
      such Participant and the Company and shall have failed to correct such
      breach within any grace period provided for in such agreement or an
      employee shall have breached any material condition of employment and
      shall have failed to correct that breach within a reasonable period of
      time.  "Good cause" for termination shall not include bad
      judgment or any act or omission reasonably believed by such Participant,
      in good faith, to have been in, or not opposed to, the best interests of
      the Company.

            

    

     

    
      	
               
      

            	
              (p)

            	
              "Incentive
      Stock Option" means an option granted under the Plan that is intended to
      qualify as an incentive stock option under Section 422 of the
      Code.

            

    

     

    
      	
               
      

            	
              (q)

            	
              “Merger
      Price” means the value (as determined by the Committee) of the
      consideration payable for shares of Common Stock pursuant to a Business
      Combination.

            

    

     

    
      	
               
      

            	
              (r)

            	
              "Non-Qualified
      Stock Option" means an option granted under the Plan that is not an
      Incentive Stock Option.

            

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (s)

            	
              “Option
      Value” means the value of a Stock Option which shall be calculated by
      multiplying the number of shares of Common Stock that are subject to the
      Stock Option by 12.5% of the Fair Market Value of a share of Common Stock
      on the grant date of the Stock
Option.

            

    

     

    
      	
               
      

            	
              (t)

            	
              "Participant"
      means a person to whom an Award has been granted under the
      Plan.

            

    

     

    
      	
               
      

            	
              (u)

            	
              “Person”
      means any individual, entity or
group.

            

    

     

    
      	
               
      

            	
              (v)

            	
              "Restricted
      Stock" means shares of Common Stock awarded to a Participant subject to
      such conditions on vesting, transferability and other restrictions as are
      provided in Sections 4.1 and 4.2 of this Plan or as otherwise established
      by the Committee.

            

    

     

    
      	
               
      

            	
              (w)

            	
              “Restricted
      Stock Value” means the value of shares of Restricted Stock which shall be
      calculated by multiplying the number of shares of Restricted Stock times
      the Fair Market Value of a share of Common Stock on the issue date of the
      Restricted Stock.

            

    

     

    
      	
               
      

            	
              (x)

            	
              “Retirement”
      means with respect to an employee Participant a retirement pursuant to the
      Company’s policies and with respect to an Eligible Director means
      mandatory retirement pursuant to Board
policy.

            

    

     

    
      	
               
      

            	
              (y)

            	
              "Rule
      16b-3" means Rule 16b-3 promulgated under the Exchange Act, or any
      successor rule.

            

    

     

    
      	
               
      

            	
              (z)

            	
              "Stock
      Option" means an Incentive Stock Option or a Non-Qualified Stock Option
      granted under the Plan.

            

    

     

    
      	
               
      

            	
              (aa)

            	
              "Subsidiary"
      means Home Properties, L.P., Home Properties Resident Services, Inc., or
      any partnership of which the Company is general partner and holder of a
      majority of interests or any other entity in which the Company, directly
      or indirectly owns 50% or more of the voting stock or other equity or
      holds interests with the right to elect the governing body of such
      entity.

            

    

     

    
      	
               
      

            	
              (bb)

            	
              “Total
      Disability” means total and permanent mental or physical disability as
      determined by the Committee.

            

    

     

    
      	
               
      

            	
              (cc)

            	
              “Transaction”
      shall have the meaning given to it in Section
  5.2.

            

    

     

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              2.2

            	
              Administration
      of the Plan.

            

    

     

    
      	
               
      

            	
              (a)

            	
              The
      Plan shall be administered by the Committee appointed by the Board of
      Directors which shall at all times consist of three (3) or more persons,
      each of whom shall be members of the Board of Directors and shall qualify
      as an “independent director” within the meaning of the New York Stock
      Exchange Listed Company Manual, as amended from time to time and any
      successor thereto, as an “outside director” within the meaning of Section
      162(m) of the Code and as a “non-employee director” within the meaning of
      Rule 16b-3 promulgated under the Exchange Act. The Board of Directors may
      from time to time remove members from, or add members to, the
      Committee.  Vacancies on the Committee, howsoever caused, shall
      be filled by the Board of Directors.  The Committee shall select
      one of its members as Chairman, and shall hold meetings at such times and
      places as it may determine.

            

    

     

    
      	
               
      

            	
              (b)

            	
              The
      Committee shall have the full power, subject to and within the limits of
      the Plan, to: (i) interpret and administer the Plan, and any Awards
      made under it; (ii) make and interpret rules and regulations for the
      administration of the Plan and to make changes in and revoke such rules
      and regulations (and in the exercise of this power, shall generally
      determine all questions of policy and expediency that may arise and may
      correct any defect, omission, or inconsistency in the Plan or any
      agreement evidencing the grant of any Award in a manner and to the extent
      it shall deem necessary to make the Plan fully effective); (iii) determine
      those persons to whom Awards shall be granted and the number of Awards and
      the nature of the Awards to be granted to any person subject to any
      limitations imposed by applicable law or regulations or resolutions of the
      Board of Directors of the Company; (iv) determine the terms of Awards
      granted under the Plan, consistent with the provisions of the Plan; and
      (v) generally, exercise such powers and perform such acts in connection
      with the Plan as are deemed necessary or expedient to promote the best
      interests of the Company.  The interpretation and construction
      by the Committee of any provisions of the Plan or of any Award shall be
      final, binding and conclusive.

            

    

     

    
      	
               
      

            	
              (c)

            	
              The
      Committee may act only by a majority of its members then in office;
      however, the Committee may authorize any one or more of its members or any
      officer of the Company to execute and deliver documents on behalf of the
      Committee.

            

    

     

    
      	
               
      

            	
              (d)

            	
              The
      Committee, in its discretion, may delegate to the Chief Executive Officer
      of the Company all or part of the Committee’s authority and duties with
      respect to Awards, including the granting thereof, to individuals who are
      not Executive Officers of the Company.  The Committee may revoke
      or amend the terms of a delegation at any time but such action shall not
      invalidate any prior actions of the Committee’s delegate or delegates that
      were consistent with the terms of the
Plan.

            

    

     

    
      	
               
      

            	
              (e)

            	
              No
      member of the Committee shall be liable for any action taken or omitted to
      be taken or for any determination made by him or her in good faith with
      respect to the Plan, and the Company shall indemnify and hold harmless
      each member of the Committee against any cost or expense (including
      counsel fees) or liability (includ­ing any sum paid in settlement of a
      claim with the approval of the Committee) arising out of any act or
      omission in connection with the administration or interpretation of the
      Plan, unless arising out of such person's own fraud or bad
      faith.

            

    

     

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              2.3

            	
              Effective
      Date.

            

    

     

    
      	
               
      

            	
              This
      2008 Stock Benefit Plan has been adopted by the Board of Directors and
      shall be effective upon approval by the Company’s
      stockholders.

            

    

     

    
      	
               
      

            	
              2.4

            	
              Duration.

            

    

     

    
      	
               
      

            	
              The
      Plan shall remain in effect until the later of:  (a) latest
      exercise date of any Stock Option awarded under the Plan and (b) the last
      vesting date of any Restricted Stock Award under the Plan.  No
      Awards shall be granted under this Plan after May 1,
  2018.

            

    

     

    
      	
               
      

            	
              2.5

            	
              Shares
      Subject to the Plan.

            

    

     

    
      	
               
      

            	
              The
      maximum number of shares of Common Stock which may be subject to Awards
      granted under the Plan shall be Two Million Four Hundred Fifty Thousand
      (2,450,000).  Stock Options awarded shall reduce the number of
      shares available for Awards by one share for every one share
      granted.  Awards of Restricted Stock shall reduce the number of
      shares available for Award by one share for every one share awarded, up to
      250,000 shares; beyond that, Restricted Stock shall reduce the number of
      shares available for Award by 3.5 shares for every one share
      awarded.

            

    

     

    
      	
               
      

            	
              The
      Awards shall be subject to adjustment in accordance with Section 5.1
      and shares to be issued upon exercise of Awards may be either authorized
      and unissued shares of Common Stock or authorized and issued shares of
      Common Stock purchased or acquired by the Company for any
      purpose.

            

    

     

    
      	
               
      

            	
              If
      any shares of Common Stock subject to an Award are forfeited, cancelled,
      exchanged or surrendered or if an Award terminates or expires without a
      distribution of shares of Common Stock to the Participant, to the extent
      of any such forfeiture, cancellation, exchange, surrender, termination or
      expiration, such shares shall again be available for Awards under the
      Plan.  If shares of Common Stock are surrendered or withheld as
      payment of either the exercise price of an Award and/or withholding taxes
      in respect of such an Award, such shares of Common Stock shall not be
      returned to the Plan and shall not be available for future awards under
      the Plan.

            

    

     

    
      	
               
      

            	
              2.6

            	
              Amendments.

            

    

     

    
      	
               
      

            	
              The
      Plan may be suspended, terminated or reinstated, in whole or in part, at
      any time by the Board of Directors.  This Plan may be amended
      only with the approval of the holders of a majority of the shares of
      Common Stock eligible to vote.  Notwithstanding the prior
      sentence, the Board of Directors may from time to time make amendments to
      the Plan without shareholder consent if such amendments are made
      to:  (i) reflect a change that is of an immaterial nature or to
      cure any ambiguity; (ii) comply with Section 422 of the Code with respect
      to Incentive Stock Options, Rule 16b-3 and the rules of the New York Stock
      Exchange or any successor or replacement provisions and any regulations
      issued thereunder; (iii) satisfy any requests, conditions or guidelines
      contained in any order, direction, opinion, ruling or regulation of a
      federal or state agency or contained in federal or state law; and (iv)
      comply with Section 409A of the
Code.

            

    

     

    
      	
               
      

            	
              Except
      as otherwise provided herein, termination or amendment of the Plan shall
      not, without the consent of a Participant, affect such Participant's
      rights under any Award previously granted to such
    Participant.

            

    

     

    
      	
               
      

            	
              Subject
      to the restrictions contained in Section 3.3 of this Plan, the Committee
      may also amend or modify the grant of any outstanding Award in any manner
      to the extent that the Committee would have had the authority to make such
      Award as so modified or
amended.

            

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              2.7

            	
              Participants
      and Grants.

            

    

     

    
      	
               
      

            	
              Awards
      may be granted by the Committee to Eligible Directors and to those
      employees of the Company who the Committee determines have the capacity to
      make a substantial contribution to the success of the
      Company.  The Committee may grant Stock Options to purchase such
      number of shares of Common Stock (subject to the limitations of Sections
      2.5 and 3.2) as the Committee may, in its sole discretion,
      determine.   The Committee also may grant Restricted Stock
      (subject to the limitations in Sections 2.5 and 4.2) as the Committee may,
      in its discretion determine.  Notwithstanding the foregoing, the
      maximum number of shares of Common Stock covered by all Awards granted in
      any calendar year to any Participant may not exceed 200,000
      shares.

            

    

     

    
      	
              3.

            	
              STOCK
      OPTIONS

            

    

     

    
      	
               
      

            	
              3.1

            	
              General.

            

    

     

    
      	
               
      

            	
              Incentive
      Stock Options may be granted only to employees of the Company or any
      Subsidiary that is a “subsidiary corporation” within the meaning of
      Section 424(f) of the Code.  To the extent that any option does
      not qualify as an Incentive Stock Option, it shall constitute a
      Non-Qualified Stock Option.

            

    

     

    
      	
               
      

            	
              All
      Stock Options granted under the Plan shall be evidenced by a notice to the
      Participant, or at the election of the Committee, by written agreements
      executed by the Company and the Participant to whom granted, which notice
      or agreement shall state the number of shares of Common Stock which may be
      purchased upon the exercise thereof and shall contain such investment
      representations and other terms and conditions as the Committee may from
      time to time determine, or, in the case of Incentive Stock Options, as may
      be required by Section 422 of the Code, or any other applicable
      law.

            

    

     

    
      	
               
      

            	
              3.2

            	
              Grant
      of Options to Eligible Directors.

            

    

     

    
      	
               
      

            	
              An
      option to purchase the following number of shares of Common Stock (subject
      to adjustment as provided in Section 5.1) shall be granted in each of the
      following years on the date of the annual meeting of the Company's
      stockholders, to each member of the Company’s Board of Directors who is an
      Eligible Director at such time immediately following such annual
      meeting.

            

    

     

    
      	
               
      

            	
              (a)

            	
              2008
      – that number of shares having an Option Value equal to
      $26,000

            

    

     

    
      	
               
      

            	
              (b)

            	
              2009
      – up to 6,000 shares

            

    

     

    
      	
               
      

            	
              (c)

            	
              2010
      – up to 6,000 shares

            

    

     

    
      	
               
      

            	
              For
      2009 and 2010, the Committee shall determine the number of Stock Options
      to be granted to each of the Eligible Directors (not to exceed 6,000
      shares for each year) based on an analysis of the amount and type of
      compensation paid to the members of the boards of directors of the
      Company’s peer group, as well as other factors as may reasonably be
      considered by the Committee.

            

    

     

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              3.3

            	
              Exercise
      Price.

            

    

     

    
      	
               
      

            	
              Subject
      to the provisions of Sections 3.8(d) and 5.1, the exercise price per share
      of Common Stock subject to a Stock Option shall in no case be less than
      one hundred percent (100%) of the Fair Market Value of a share of Common
      Stock on the date the Stock Option is granted.  Notwithstanding
      anything to the contrary herein other than any adjustments pursuant to
      Section 5.1, the exercise price per share of Common Stock subject to a
      Stock Option may not be reduced after the Stock Option is
      granted.  No outstanding Stock Option may be surrendered as
      consideration for the grant of a new Stock Option with a lower exercise
      price.

            

    

     

    
      	
               
      

            	
              3.4

            	
              Term.

            

    

     

    
      	
               
      

            	
              Subject
      to the provisions of Section 3.8(d), the duration or term of each Stock
      Option granted under the Plan shall be for such period as the Committee
      shall determine but in no event more than ten (10) years from the date of
      grant thereof.

            

    

     

    
      	
               
      

            	
              3.5

            	
              Exercise.

            

    

     

    
      	
               
      

            	
              Stock
      Options shall be exercisable at such time or times as the Committee shall
      specify when granting the Stock Option, except that the vesting schedule
      for any Stock Options shall not be any shorter than 33.34 percent of such
      Stock Option on each of the first three (3) anniversaries of the date of
      grant, subject to acceleration of the vesting period upon the occurrence
      of certain events as provided herein.  Once exercisable, a Stock
      Option shall be exercisable, in whole or in part, until the expiration or
      termination of its term by giving a notice of exercise by the Person
      exercising the Stock Option, to the Secretary of the Company at the
      principal office of the Company or to such other Person and address as
      specified by the corporate Secretary specifying the number of shares of
      Common Stock as to which the Stock Option is then being exercised together
      with payment of the full exercise price for the number of shares being
      purchased.  The date both such notice and payment are received
      by the office of the corporate Secretary of the Company or the corporate
      Secretary’s designee shall be the date of exercise of the Stock Option as
      to such number of shares.  Notwithstanding any provision to the
      contrary, no Stock Option may at any time be exercised with respect to a
      fractional share.

            

    

     

    
      	
               
      

            	
              3.6

            	
              Payment
      of Exercise Price.

            

    

     

    
      	
               
      

            	
              The
      exercise price for shares of Common Stock as to which a Stock Option has
      been exercised and any amount required to be withheld, as
      contem­plated by Section 5.6, may be
paid:

            

    

     

    
      	
               
      

            	
              (a)

            	
              in
      cash, or by check, bank draft or money order payable in United States
      dollars to the order of the Company;
or

            

    

     

    
      	
               
      

            	
              (b)

            	
              by
      the delivery (or attestation to the ownership) by the Participant to the
      Company or its designee of whole shares of Common Stock already owned by
      the Participant for at least six months (and in the case of delivery of
      shares acquired by exercise of an Incentive Stock Option, for at least one
      year) having an aggregate Fair Market Value on the Business Day prior to
      the Exercise Date equal to the aggregate of the exercise price of Common
      Stock as to which the Stock Option is then being exercised;
    or

            

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (c)

            	
              so
      long as not prohibited by law, by delivery by the Participant of a
      properly executed exercise notice to the Company or its designee, together
      with a copy of irrevocable instructions to a broker to deliver promptly to
      the Company the amount necessary to pay the exercise price, and, if
      requested, any applicable withholding taxes and commissions provided that
      in the event the Participant chooses to pay the purchase price as so
      provided, the Participant and the broker shall comply with such procedures
      and enter into such agreements of indemnity and other agreements as the
      Committee shall prescribe as a condition of such payment
      procedure.

            

    

     

    
      	
               
      

            	
              (d)

            	
              by
      any combination of (a), (b) or (c)
above.

            

    

     

    
      	
               
      

            	
              The
      Committee may, in its discretion, impose limitations, conditions and
      prohibitions on the use by a Participant of shares of Common Stock to pay
      the exercise price payable by such Participant upon the exercise of a
      Stock Option.

            

    

     

    
      	
               
      

            	
              To
      facilitate the payment alternative described in paragraph (c) above, the
      Company may enter into agreements for coordinated procedures with one or
      more brokerage firms.  The issuance of shares of Common Stock to
      be purchased pursuant to the exercise of a Stock Option will be contingent
      upon receipt from the Participant (or a purchaser acting in their stead in
      accordance with the provisions of the Stock Option) by the Company or its
      designee of the full purchase price for such shares and the fulfillment of
      any other requirements contained in the Stock Option or applicable
      provisions of laws.  In the event a Participant chooses to pay
      the purchase price by previously-owned shares of Common Stock through the
      attestation method, the shares of Common Stock transferred to the
      Participant upon the exercise of the Stock Option shall be net of the
      number of shares attested to.

            

    

     

    
      	
               
      

            	
              3.7

            	
              Limitation
      of Rights.

            

    

     

    
      	
               
      

            	
              Neither
      the recipient of an Option under the Plan nor the recipient's successor or
      successors in interest shall have any rights as a shareholder of the
      Company with respect to any shares of Common Stock subject to an Option
      granted to such person until the date of issuance of such shares of Common
      Stock.

            

    

     

    
      	
               
      

            	
              3.8

            	
              Special
      Rules for Incentive Stock Options.

            

    

     

    
      	
               
      

            	
              Notwithstanding
      any other provision of the Plan, the following provisions shall apply to
      Incentive Stock Options granted under the
Plan:

            

    

     

    
      	
               
      

            	
              (a)

            	
              Incentive
      Stock Options shall only be granted to Participants who are employees of
      the Company or its Subsidiaries.

            

    

     

    
      	
               
      

            	
              (b)

            	
              To
      the extent that the aggregate Fair Market Value of Common Stock, with
      respect to which Incentive Stock Options are exercisable for the first
      time by a Participant during any calendar year under this Plan and any
      other Plan of the Company or a Subsidiary, exceeds $100,000 (determined by
      using the Fair Market Value as of the grant date), such Stock Options
      shall be treated as Non-Qualified Stock
Options.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Any
      Participant who disposes of shares of Common Stock acquired upon the
      exercise of an Incentive Stock Option by sale or exchange either within
      two (2) years after the date of the grant of the Incentive Stock Option
      under which the shares were acquired or within one (1) year of the
      acquisition of such shares, shall promptly notify the Secretary of the
      Company at the principal office of the Company of such disposition, the
      amount realized, the exercise price per share paid upon exercise and the
      date of disposition.

            

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (d)

            	
              No
      Incentive Stock Option shall be granted to a Participant who, at the time
      of the grant, owns stock representing more than ten percent (10%) of the
      total combined voting power of all classes of stock either of the Company
      or any parent or Subsidiary of the Company, unless the purchase price of
      the shares of Common Stock purchasable upon exercise of such Incentive
      Stock Option is at least one hundred ten percent (110%) of the Fair Market
      Value (at the time the Incentive Stock Option is granted) of the Common
      Stock and the Incentive Stock Option is not exercisable more than five (5)
      years from the date it is granted.

            

    

     

    
      	
               
      

            	
              3.9

            	
              Termination.

            

    

     

    
      	
               
      

            	
              (a)

            	
              If
      a Participant’s employment by the Company shall terminate but the
      Participant remains or becomes an Eligible Director then the Participant’s
      relationship with the Company shall be deemed to have continued and
      notwithstanding anything to the contrary contained herein, all rights
      under any outstanding Stock Option held by such Participant which shall
      not have previously lapsed or terminated shall continue in full force and
      effect as granted, except this service continuation sole shall not apply
      to any Stock Option that is intended to be an Incentive Stock Option or
      except as required by the Code. If subsequent to a Participant’s
      termination of employment by, relationship with or service as an Eligible
      Director of the Company, but prior to the exercise of a Stock Option, the
      Board of Directors determines that, either prior or subsequent to the
      Participant’s termination, the Participant engaged in conduct which would
      constitute “Good Cause”, then any outstanding Stock Option held by such
      Participant which shall not have previously lapsed or terminated shall
      expire immediately, whether or not such Stock Option is vested or
      otherwise exercisable.

            

    

     

    
      	
               
      

            	
              (b)

            	
              If
      a Participant's employment by, relationship with or service as an Eligible
      Director of the Company or its Subsidiar­ies shall terminate as a
      result of such Participant's Total Disability, each Stock Option held by
      such Participant (which has not previously lapsed or terminated) shall
      immediately become fully exercisable as to the total number of shares of
      Common Stock subject thereto (whether or not exercisable to that extent at
      the time of such termination) and shall remain so exercisable by such
      Participant for a period of one (1) year after termination unless such
      Stock Option expires earlier by its
terms.

            

    

     

    
      	
               
      

            	
              (c)

            	
              In
      the event of the death of a Participant, each Stock Option held by such
      Participant (which has not previously lapsed or terminated) shall
      immediately become fully exercisable as to the total number of shares of
      Common Stock subject thereto (whether or not exercisable to that extent at
      the time of death) by the executor or administrator of the Participant's
      estate or by the person or persons to whom the deceased Participant's
      rights thereunder shall have passed by will or by the laws of descent or
      distribution, and shall remain so exercisable for a period of one (1) year
      after such Participant's death unless such Stock Option expires earlier by
      its terms.

            

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              (d)

            	
              If
      an employee Participant's employment by the Company shall terminate by
      reason of such Participant's Retirement, each Stock Option held by such
      employee Participant at the date of termination (which has not previously
      lapsed or terminated) shall immediately become fully exercisable as to the
      total number of shares of Common Stock subject thereto (whether or not
      exercisable to that extent at the time of such termination) and shall
      remain so exercisable by such Participant for a period of one (1) year
      after termination, unless the Stock Option expires earlier by its
      terms.  Notwithstanding the above, if a Participant as described
      in the preceding sentence is an Executive Officer of the Company at the
      time of his or her Retirement, then each Stock Option held by such
      Participant at the date of Retirement (which has not previously lapsed or
      terminated) shall continue to be exercisable at such time or times as the
      Committee shall have specified when granting the Stock Option, except as
      otherwise required by the Code.  In the event of the termination
      of an Eligible Director’s service as a member of the Board of Directors by
      reason of Retirement, each Stock Option held by such Eligible Director at
      the date of termination (which had not previously lapsed or terminated)
      shall continue to be exercisable at such time or times as shall have been
      specified when the Stock Option was granted, except as otherwise required
      by the Code.

            

    

     

    
      	
               
      

            	
              (e)

            	
              In
      the event the Company terminates the employment of an employee Participant
      for any reason except "Good Cause" and except upon such Participant's
      death, Total Disability or Retirement, each Stock Option, which has been
      held by such Participant for more than one year prior to such termination,
      shall immediately become fully exercisable as to the total number of
      shares of Common Stock subject thereto (whether or not exercisable as to
      that extent at the time of such termination) and shall remain exercisable
      for a period of one (1) year after such termination unless such Stock
      Option expires earlier by its terms.  Any Stock Option held by
      an employee Participant for less than one year shall expire
      immediately.  Any Stock Option held by an Employee Participant
      whose employment is terminated for Good Cause or whose employment
      terminates as a result of resignation shall expire immediately, whether or
      not such Stock Option is vested or otherwise
  exercisable.

            

    

     

    
      	
               
      

            	
              (f)

            	
              In
      the event of the termination of an Eligible Director’s service as a member
      of the Board of Directors for any reason except “Good Cause” and except
      upon such Eligible Director’s Death, Total Disability or Retirement, each
      Stock Option which has been held by such Eligible Director for more than
      one year prior to such termination shall continue to be exercisable at
      such time or times as shall have been specified when the Stock Option was
      granted, except as otherwise required by the Code.  Any Stock
      Options held by an Eligible Director for less than one year prior to such
      termination shall expire immediately.  Any Stock Option held by
      an Eligible Director whose service as a member of the Board of Directors
      is terminated for Good Cause shall expire immediately, whether or not such
      Stock Option is vested or otherwise
exercisable.

            

    

     

    
      	
               
      

            	
              (g)

            	
              Notwithstanding
      the foregoing provisions of this Section 3.9, if a Stock Option is
      intended to be an Incentive Stock Option, in no event may the time for
      exercise be later than three (3) months after the Participant’s
      termination of employment; provided, however, in the case of a
      Participant’s Total Disability or death within three (3) months after the
      termination of employment, the Stock Option may be exercised within one
      (1) year after the date of the Participant’s termination of employment,
      but in no event after the date of expiration of the term of the Stock
      Option.

            

    

     

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              3.10

            	
              Effect
      of Leaves of Absence.

            

    

     

    
      	
               
      

            	
              It
      shall not be considered a termination of employment when a Participant is
      on an approved leave of absence for military service or sickness, or for
      any other purpose approved by the Company, if the employee’s right to
      re-employment (or other business relationship) is guaranteed either by a
      statute or by contract or under the policy pursuant to which the leave of
      absence was granted or if the Committee otherwise so provides in
      writing.

            

    

     

    
      	
               
      

            	
              3.11

            	
              Additional
      Restrictions on Executive Officers and Eligible
  Directors.

            

    

     

    
      	
               
      

            	
              As
      a condition to exercising a Stock Option issued pursuant to this Plan,
      each Executive Officer and Eligible Director shall be deemed to have
      agreed that not notwithstanding anything to the contrary in this
      Plan:  (a) such Participant will not exercise such Stock Option
      or any part thereof in such a manner that such Participant will realize an
      immediate cash payment in connection with such exercise except that such
      Participant may direct that the number of shares of Common Stock as to
      which the Stock Option is then being exercised may be sold to pay the
      exercise price, as well as to pay a related commission to a third party on
      such Participant’s behalf and, in the case of Executive Officers, the
      amount necessary to pay any withholding taxes to the Company; and (b) such
      Participant shall retain for a period of no less than one calendar year
      following the exercise of the Stock Option or any part thereof beneficial
      ownership of no fewer than the same number of shares of the Company’s
      Common Stock (or share equivalent, including limited partnership units in
      Home Properties, L.P.) as was received by such Participant upon the
      exercise of that Stock Option or any part thereof.  An Eligible
      Directors also may receive cash to be used to pay applicable taxes due
      with respect to any taxable gain realized on the exercise of that Stock
      Option or any part thereof provided that the cash received shall not
      exceed 35% (thirty-five percent) of that gain.  The Committee
      may waive the requirements of this Section 3.11 with respect to any
      Participant if they determine such waiver to be appropriate in their sole
      discretion.

            

    

     

    
      	
              4.

            	
              RESTRICTED
      STOCK AWARDS

            

    

     

    
      	
               
      

            	
              4.1

            	
              General.

            

    

     

    
      	
               
      

            	
              The
      Committee may, in its discretion, grant one or more Restricted Stock
      Awards to any eligible employee.

            

    

     

    
      	
               
      

            	
              Each
      grant of Restricted Stock shall be evidenced by a notice to the
      Participant of the Restricted Stock Award, which shall specify the number
      of shares of Common Stock to be issued to the Participant, the date of
      such issuance and such other information as shall be deemed
      appropriate.  The restrictions imposed on any grant of
      Restricted Stock Awards shall not lapse and the shares shall not vest
      fewer than three (3) years after the date of grant, subject to
      acceleration of the vesting period upon the occurrence of certain events
      provided herein.   Shares of Restricted Stock subject to
      restrictions shall be held by the Company until the restrictions on such
      shares shall have lapsed and the shares shall have vested in accordance
      with the provisions of the Award.  Promptly after the lapse of
      restrictions,  the number of shares of Common Stock as to which
      the restrictions have lapsed shall be delivered to the
      Participant.  The Participant shall deliver to the Company such
      further assurance and documents as the Committee may require as a
      condition to delivery of the
shares.

            

    

     

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              4.2

            	
              Grants
      of Restricted Stock to Eligible
Directors.

            

    

     

    
      	
               
      

            	
              A
      grant of the following number of shares of Restricted Stock (as adjusted
      pursuant to Section 5.1) shall be granted on the indicated dates, to each
      member of the Company’s Board of Directors who is an Eligible Director at
      such time.

            

    

     

    
      	
               
      

            	
              (a)

            	
              May
      9, 2008 – that number of shares having a Restricted Stock Value equal to
      $55,000

            

    

     

    
      	
               
      

            	
              (b)

            	
              On
      the date of and immediately following the Annual Meeting of the Company’s
      Stockholders in 2009 and 2010 - up to 2,000 shares on each
      date

            

    

     

    
      	
               
      

            	
              For
      2009 and 2010, the Committee shall determine the number of shares of
      Restricted Stock to be issued to each of the Eligible Directors (not to
      exceed 2,000 shares) based on an analysis of the amount and type of
      compensation paid to the members of the boards of directors of the
      Company’s peer group, as well as other factors as may reasonably be
      considered by the Committee.

            

    

     

    
      	
               
      

            	
              4.3

            	
              Restrictions.

            

    

     

    
      	
               
      

            	
              (a)

            	
              Pre-Vesting
      Restraints.  Shares of Common Stock comprising any Restricted
      Stock Award may not be sold, assigned, transferred, pledged or otherwise
      disposed of or encumbered, either voluntarily or involuntarily, until the
      restrictions have lapsed.

            

    

     

    
      	
               
      

            	
              (b)

            	
              Dividend
      and Voting Rights.  Unless otherwise provided in the applicable
      notice of the Restricted Stock Award, a Participant receiving a Restricted
      Stock Award shall be entitled to cash dividend and voting rights for all
      shares of Common Stock issued even though they are not vested, provided
      that such rights shall terminate immediately as to any Restricted Stock
      that ceases to be eligible for
vesting.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Accelerated
      Vesting. The restrictions on Restricted Stock shall lapse upon the
      Participant’s termination of service as an employee or as an Eligible
      Director of the Company, as applicable, by reason of Total Disability or
      death.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Continued
      Vesting.  In the event of the Retirement of an employee
      Participant or if an Eligible Director’s services as a member of the Board
      of Directors terminates by reason of Retirement, expiration of the
      director’s term in office (without re-nomination or re-election) or by
      voluntary resignation, the restrictions on the Restricted Stock held by
      such Participant shall not lapse but shall continue as specified when the
      Restricted Stock was awarded, provided however that any restriction
      related to continued employment, with respect to an employee Participant,
      or continued service as a member of the Board of Directors, with respect
      to an Eligible Director, shall no longer be
  applicable.

            

    

     

    
      	
               
      

            	
              (e)

            	
              Forfeiture.  Except
      as provided in Sections 4.3(c) and 4.3(d), Restricted Stock as to which
      the restrictions have not lapsed in accordance with the provisions of the
      Award or pursuant to Section 4.3(c) shall be forfeited upon a
      Participant’s termination of service as an employee or as an Eligible
      Director, including but not limited to by reason of voluntary resignation
      by an employee, or termination of the services of an employee or Eligible
      Director for Good Cause.  Upon the occurrence of any forfeiture
      of shares of Restricted Stock, such forfeited shares shall be
      automatically transferred to the Company without payment of any
      consideration by the Company and without any action by the Participant and
      shall be available for future grants of Restricted Stock under the
      Plan.

            

    

     

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              4.4

            	
              Section
      83(b) Election.

            

    

     

    
      	
               
      

            	
              Pursuant
      to Section 83(b) of the Internal Revenue Code, a Participant may elect
      within 30 days of the date of grant to include in his or her gross income
      the fair market value of the Restricted Stock covered by an Award in the
      taxable year of grant.  The election must be made by filing the
      appropriate notice with the Internal Revenue Service within 30 days of the
      date of grant.  If the Participant makes this election, the
      Participant shall promptly notify the Company by submitting to the
      Committee a copy of the election notice filed with the Internal Revenue
      Service.

            

    

     

    
      	
              5.

            	
              MISCELLANEOUS
      PROVISIONS

            

    

     

    
      	
               
      

            	
              5.1

            	
              Recapitalizations.

            

    

     

    
      	
               
      

            	
              If,
      through or as a result of any Business Combination, reorganization,
      recapitalization, reclassification, stock dividend, stock split, reverse
      stock split or other similar transaction, the outstanding shares of Common
      Stock are increased or decreased or are exchanged for a different number
      or kind of shares or other securities of the Company, or additional shares
      or new or different shares or other securities of the Company or other
      non-cash assets are distributed with respect to such shares of Common
      Stock or other securities, the Committee shall make an appropriate or
      proportionate adjustment in:  (i) the maximum number of shares
      reserved for issuance under the Plan; (ii) the number of Stock Options or
      shares of Restricted Stock that can be granted to any one individual
      participant; (iii) the number and kind of shares or other securities
      subject to any then outstanding Awards under the Plan; and (iv) the price
      for each share subject to any then outstanding Stock Options under the
      Plan, without changing the aggregate exercise price (i.e., the exercise
      price multiplied by the number of Stock Options) as to which such Stock
      Options remain exercisable.  The adjustment by the Committee
      shall be final, binding and conclusive.  No fractional shares of
      Common Stock shall be issued under the Plan resulting from any such
      adjustment, but the Committee in its discretion may make a cash payment in
      lieu of fractional shares.

            

    

     

    
      	
               
      

            	
              5.2

            	
              Mergers.

            

    

     

    
      	
               
      

            	
              Upon
      consummation of a Business Combination in which outstanding shares of
      Common Stock are exchanged for securities, cash or other property of an
      unrelated corporation or business entity or in the event of a liquidation
      of the Company (in each case, a “Transaction”), the Committee may, in its
      discretion, take any one or more of the following actions, as to
      outstanding Stock Options:  (i) provide that such Stock Options
      shall be assumed, or equivalent options shall be substituted, by the
      acquiring or succeeding corporation (or an affiliate thereof), (ii) upon
      written notice to the optionees, provide that all unexercised Stock
      Options will terminate immediately prior to the consummation of the
      Transaction unless exercised by the optionee within a specified period
      following the date of such notice, and/or (iii) in the event of a Business
      Combination under the terms of which holders of the Common Stock of the
      Company will receive upon consummation thereof a cash payment for each
      share surrendered in the Business Combination, make or provide for a cash
      payment to the optionees equal to the difference between (a) the Merger
      Price times the number of shares of Common Stock subject to such
      outstanding Stock Options (to the extent then exercisable at prices not in
      excess of the Merger Price) and (b) the aggregate exercise price of all
      such outstanding Stock Options in exchange for the termination of such
      Stock Options.  In the event Stock Options will terminate upon
      the consummation of the Transaction as provided in clause (ii), each
      optionee shall be permitted, within a specified period determined by the
      Committee, to exercise all non-vested Stock Options, subject to the
      consummation of the Transaction.

            

    

     

    

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              5.3

            	
              Substitute
      Awards.

            

    

     

    
      	
               
      

            	
              The
      Committee may grant Awards under the Plan in substitution for stock and
      stock based awards held by employees of another corporation who
      concurrently become employees of the Company or a Subsidiary as the result
      of a merger or consolidation of the employing corporation with the Company
      or a Subsidiary or the acquisition by the Company or a Subsidiary of
      property or stock of the employing corporation.  The Committee
      may direct that the substitute awards be granted on such terms and
      conditions as the Committee considers appropriate in the
      circumstances.  Any substitute awards granted under this Plan
      shall not count against the share limitation set forth in Section
      2.5.

            

    

     

    
      	
               
      

            	
              5.4

            	
              Change
      of Control.

            

    

     

    
      	
               
      

            	
              Notwithstanding
      any other provision of this Plan to the contrary, unless the Committee
      shall determine otherwise at the time of grant with respect to a
      particular Award, in the event of a Change of
  Control:

            

    

     

    
      	
               
      

            	
              (a)

            	
              All
      Stock Options shall automatically become fully exercisable and vested;
      and

            

    

     

    
      	
               
      

            	
              (b)

            	
              Any
      restrictions applicable to any Restricted Stock shall lapse and such
      Restricted Stock shall become free of all restrictions and limitations and
      become fully vested and
transferable.

            

    

     

    
      	
               
      

            	
              5.5

            	
              Non-Transferability.

            

    

     

    
      	
               
      

            	
              No
      Award shall be transferable except by will or the laws of descent and
      distribution, nor shall any Award be exercisable during the Participant's
      lifetime by any person other than the Participant or their guardian or
      legal representative.  Any purported transfer contrary to this
      provision will be null and void and without
  effect.

            

    

     

    
      	
               
      

            	
              5.6

            	
              Withholding.

            

    

     

    
      	
               
      

            	
              The
      Company's obligations under this Plan are subject to applicable federal,
      state and local tax withholding requirements. Unless otherwise provided by
      the Committee in the notice of Award, a Participant may elect to have such
      tax withholding obligation satisfied, in whole or in part, by (i)
      authorizing the Company to withhold from shares of Common stock to be
      issued pursuant to any Award a number of shares with an aggregate Fair
      Market Value (as of the date the withholding is effected) that would
      satisfy the withholding amount due, (ii) transferring to the Company
      shares of Common Stock owned by the Participant with an aggregate Fair
      Market Value (as of the date the withholding is effected) that would
      satisfy the withholding amount due, or (iii) in a combination of (i) and
      (ii).  If the Participant shall fail to pay, or make
      arrangements satisfactory to the Committee for the payment, to the Company
      of all such federal, state and local taxes required to be withheld by the
      Company, then the Company shall, to the extent permitted by law, have the
      right to deduct from any payment of any kind otherwise due to such
      Participant an amount equal to (or shares of Common Stock having a value
      equal to) any federal, state or local taxes of any kind required to be
      withheld by the Company.

            

    

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              5.7

            	
              Compliance
      with Law and Approval of Regulatory
Bodies.

            

    

     

    
      	
               
      

            	
              No
      Award shall be exercisable and no shares will be delivered under the Plan
      except in compliance with all applicable federal and state laws and
      regulations including, without limitation, compliance with all federal and
      state securities laws and withholding tax requirements and with the rules
      of all domestic stock exchanges on which the Common Stock may be
      listed.  Any share certificate issued, or any notice of issuance
      of uncertificated shares to evidence shares for which an Award or
      Director's Option is exercised may bear legends and statements the
      Committee shall deem advisable to assure compliance with federal and state
      laws and regulations.  No Stock Option shall be exercisable and
      no shares will be delivered under the Plan, until the Company has obtained
      consent or approval from regulatory bodies, federal or state, having
      jurisdiction over such matters as the Committee may deem
      advisable.  In the case of the exercise of a Stock Option by a
      person or estate acquiring the right to exercise the Stock Option as a
      result of the death of the Participant, the Committee may require
      reasonable evidence as to the ownership of the Stock Option and may
      require consents and releases of taxing authorities that it may deem
      advisable.

            

    

     

    
      	
               
      

            	
              5.8

            	
              Compliance
      with Code Section 409A.

            

    

     

    
      	
               
      

            	
              No
      Award shall provide for deferral of compensation that does not comply with
      Section 409A of the Code, unless the Committee, at the time of grant,
      specifically provides that the Award is not intended to comply with
      Section 409A of the Code.  The Committee shall exercise its
      powers under this Plan in a manner that is consistent with this intent and
      all applicable requirements under Code Section
      409A.  Notwithstanding any other provision of the Plan, the
      Committee may in its discretion amend the Plan or any Award so as to
      comply with applicable requirements of Section 409A of the
      Code.

            

    

     

    
      	
               
      

            	
              5.9

            	
              No
      Right to Employment or
Directorship.

            

    

     

    
      	
               
      

            	
              Neither
      the adoption of the Plan nor its operation, nor any document describing or
      referring to the Plan, or any part thereof, nor the granting of any Award
      hereunder, shall confer upon any Participant under the Plan any right to
      continue in the employ or as a director of the Company or any Subsidiary,
      or shall in any way affect the right and power of the Company or any
      Subsidiary to terminate the employment or directorship of any Participant
      at any time with or without assigning a reason therefore, to the same
      extent as might have been done if the Plan had not been
      adopted.

            

    

     

    
      	
               
      

            	
              5.10

            	
              Exclusion
      from Pension Computations.

            

    

     

    
      	
               
      

            	
              By
      acceptance of any Award under the Plan, the Participant shall be deemed to
      agree that any income realized upon the receipt or exercise thereof or
      upon the disposition of the shares received upon exercise will not be
      taken into account as "base remuneration", "wages", "salary" or
      "compensation" in determining the amount of any contribution to or payment
      or any other benefit under any pension, retirement, incentive,
      profit-sharing or deferred compensation plan of the Company or any
      Subsidiary.

            

    

     

    
      	
               
      

            	
              5.11

            	
              Abandonment
      of Options.

            

    

     

    
      	
               
      

            	
              A
      Participant may at any time abandon a Stock Option prior to its expiration
      date.  The abandonment shall be evidenced in writing, in such
      form as the Committee may from time to time prescribe.  A
      Participant shall have no further rights with respect to any Stock Option
      so abandoned.

            

    

     

    

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              5.12

            	
              Severability.

            

    

     

    
      	
               
      

            	
              If
      any of the terms of provisions of the Plan conflict with the requirements
      of Rule 16b-3, then such terms or provisions shall be deemed inoperative
      as to directors and Executive Officers to the extent they so conflict with
      the requirements of Rule 16b-3.

            

    

     

    
      	
               
      

            	
              5.13

            	
              Interpretation
      of the Plan.

            

    

     

    
      	
               
      

            	
              Headings
      are given to the Sections of the Plan solely as a convenience to
      facilitate reference; such headings, numbering and paragraphing shall not
      in any case be deemed in any way material or relevant to the construction
      of the Plan or any provision hereof.  The use of the masculine
      gender shall also include within its meaning the feminine.  The
      use of the singular shall also include within its meaning the plural and
      vice versa.

            

    

     

    
      	
               
      

            	
              5.14

            	
              Use
      of Proceeds.

            

    

     

    
      	
               
      

            	
              Funds
      received by the Company upon the exercise of Stock Options shall be used
      for the general corporate purposes of the
  Company.

            

    

     

    
      	
               
      

            	
              5.15

            	
              Construction
      of Plan.

            

    

     

    
      	
               
      

            	
              The
      place of administration of this Plan shall be in the State of New York,
      and the validity, construction, interpretation, administration and effect
      of this Plan and of its rules and regulations, and rights relating to this
      Plan, shall be determined solely in accordance with the laws of the State
      of New York.

            

    

     

    

     

    

    
      
         

      

      
        16Exhibit 10.1

 

Exhibit 10.1

CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.

AMENDMENT NO. 1 TO

CO-PROMOTION AGREEMENT

     This Amendment No. 1 to Co-Promotion Agreement (“Amendment”) is entered into as of the 6th day
of May, 2008, by and between C.B. Fleet Company, Incorporated, a Virginia corporation, and its
subsidiary, C.B. Fleet Investment Corporation, a Delaware corporation (collectively, “Fleet”), and
Santarus, Inc., a Delaware corporation (“Santarus”).

BACKGROUND

     A. Fleet and Santarus are parties to that certain Co-Promotion Agreement dated August 24, 2007
(the “Agreement”).

     B. The parties desire to amend the Agreement as set forth herein.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing and the mutual promises herein contained,
Fleet and Santarus hereby agree as follows:

1. Capitalized terms not defined in this Amendment shall have the meanings given in the Agreement.

2. The parties acknowledge that the Promotion Commencement Date occurred on October 1, 2007.
Therefore, the Term shall expire on October 1, 2008 unless earlier terminated pursuant to the
Agreement, as amended by this Amendment.

3. The Maximum Number of Details in Section 2.3 of the Agreement shall be increased from [***]
Calls to [***] Calls.

4. Fleet shall not be required to pay Santarus a Co-Promotion Fee with respect to any Calls in
excess of [***] Calls in any calendar month beginning January 2008. Any such excess Calls by the
Santarus Sales Force shall not apply towards the Maximum Number of Details under Section 2.3 of the
Agreement.

5. The parties acknowledge that the increase in the Maximum Number of Details under this Amendment
results in an increase in the maximum aggregate Co-Promotion Fee that can be paid to Santarus under
the Agreement by $[***] (the “Maximum Co-Promotion Fee Increase”). In the event Fleet terminates
the Agreement prior to the end of the Term, except for termination for Santarus breach or
insolvency pursuant to Section 10.2(i) or 10.2(ii), respectively, Fleet shall be required to pay
Santarus, within [***] days

 

			
	***	 	Certain information on this page has been omitted and filed separately with the Securities
and Exchange Commission. Confidential treatment has been requested with respect to the omitted
portions.

 

 

after termination of the Agreement, a termination fee equal to the amount, if any, of the
Maximum Co-Promotion Fee Increase not already paid to Santarus.

6. The notice period for termination under Sections 10.2(v) and 10.3(v) is hereby decreased from
120 days to 45 days.

7. Notwithstanding Section 3.2 of the Agreement, once the Maximum Number of Details has been
reached, the Bonus Payment will not be pro-rated even if the Agreement is terminated prior to the
completion of a Bonus Period.

8. This Amendment may be executed in several counterparts, each of which shall be deemed an
original. This Amendment shall be construed and governed in all aspects under and in accordance
with the law of the State of New York (excluding its or any other jurisdiction’s choice of law
principles).

     IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and delivered by
their undersigned duly authorized representatives as of the date first set forth above.

	 	 	 	 	 	 	 	 	 	 	 
	SANTARUS, INC.	 	 	 	C.B. FLEET COMPANY, INCORPORATED	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Gerald T. Proehl
 

	 	 
	 	By:
	 	/s/ R. Bruce Montgomery, Jr.
 

	 	 
	Name: Gerald T. Proehl	 	 	 	Name: R. Bruce Montgomery, Jr.	 	 
	Title: President and CEO	 	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	C.B. FLEET INVESTMENT 
CORPORATION	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Robert A. Lemon
 

	 	 
	 	 	 	 	 	 	Name: Robert A. Lemon	 	 
	 	 	 	 	 	 	Title: President

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