8-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                    FORM 8-K

                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                Date of Report (Date of earliest event reported):
                                   May 6, 2005

                              HOME PROPERTIES, INC.
             (Exact name of Registrant as specified in its Charter)



MARYLAND                               1-13136                 16-1455126
(State or other jurisdiction         (Commission              (IRS Employer
of incorporation)                   File Number)         Identification Number)


                  850 Clinton Square, Rochester, New York 14604
                             www.homeproperties.com
           (Address of principal executive offices and internet site)

                                 (585) 546-4900
              (Registrant's telephone number, including area code)

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)

[ ] Soliciting  material  pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))




ITEM 1.01.   ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

     The stockholders of Home Properties,  Inc., (the "Company") at their annual
meeting held on May 6, 2005  approved the  Company's  Amended and Restated  2003
Stock  Benefit  Plan under which the  directors,  executive  officers  and other
employees of the Company have been and will be issued stock awards.  At the same
time,  the  stockholders  approved  the  Company's  Second  Amended and Restated
Director Deferred Compensation Plan. Both plans are attached as exhibits.


ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS.

            c. Exhibits

                Exhibit 4.1   Amended and Restated Home Properties, Inc.
                                  2003 Stock Benefit Plan

                Exhibit 4.2   Home Properties, Inc. Second Amended and Restated
                                 Director Deferred Compensation Plan


                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

Dated:   May 10, 2005        HOME PROPERTIES, INC.
                             (Registrant)



                             By      /s/ David P. Gardner
                                   David P. Gardner, Executive Vice President
                                   and Chief Financial Officer

EX-4

                                                                 EXHIBIT 4.1

                              AMENDED AND RESTATED
                              HOME PROPERTIES, INC.
                             2003 STOCK BENEFIT PLAN


1.   PURPOSES OF THE PLAN

     The  purposes of this  Amended and  Restated  2003 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:

                    (i) The  acquisition  by any Person  within  the  meaning of
                    Section   13(d)(3)  or  14(d)(2)  of  the  Exchange  Act  of
                    beneficial  ownership  (within  the  meaning  of Rule  13d-3
                    promulgated  under  the  Exchange  Act)  of 25% or  more  of
                    either:   (y)  the  Outstanding   Company  Equity,   or  (z)
                    Outstanding  Company Voting Securities;  provided,  however,
                    that for  purposes of this  subsection  (i),  the  following
                    acquisitions  shall not constitute a Change of Control:  (A)
                    any   acquisition   directly   from  the   Company  or  Home
                    Properties,  L.P., (B) any  acquisition by the Company,  (C)
                    any  acquisition  by any  employee  benefit plan (or related
                    trust)  sponsored or maintained by the Company or any Person
                    controlled  by the Company,  or (D) the  acquisition  by any
                    Person pursuant to a transaction which complies with clauses
                    (y) and (z) of subparagraph (iii) below; or

                    (ii)  Individuals  who constitute the Incumbent  Board cease
                    for any  reason to  constitute  at least a  majority  of the
                    Board of Directors;  provided,  however, that any individual
                    becoming  a  director   subsequent  to  May  6,  2003  whose
                    election,  or  nomination  for  election  by  the  Company's
                    stockholders,  was approved by a vote of at least two-thirds
                    of the directors then  comprising the Incumbent  Board shall
                    be considered as though such individual were a member of the
                    Incumbent  Board,  provided,  however,  any individual whose
                    initial  assumption  of  office  occurs  as a  result  of an
                    acquisition  of any  equity  interest  in the  Company or an
                    actual or  threatened  election  contest with respect to the
                    election  or  removal  of   directors  or  other  actual  or
                    threatened  solicitation  of  proxies or  consents  by or on
                    behalf of a Person other than the Incumbent  Board shall not
                    be deemed a member of the Incumbent Board; or

                    (iii) consummation of a Business Combination,  in each case,
                    unless:  (y) following such Business Combination, (A) all or
                    substantially  all of the  individuals and entities who were
                    the  beneficial  owners,  respectively,  of the  Outstanding
                    Company Equity and  Outstanding  Company  Voting  Securities
                    immediately prior to such Business Combination  beneficially
                    own, directly or indirectly, more than 50% of, respectively,
                    the then outstanding  shares of common stock or other equity
                    and the combined voting power of the then outstanding voting
                    securities  entitled to vote  generally  in the  election of
                    directors,  as the case may be, of the entity resulting from
                    such Business Combination (including, without limitation, an
                    entity  which  as a  result  of such  transaction  owns  the
                    Company or all or substantially  all of the Company's assets
                    either  directly  or through  one or more  subsidiaries)  in
                    substantially  the  same  proportions  as  their  ownership,
                    immediately  prior  to  such  Business  Combination  of  the
                    Outstanding  Company Equity and  Outstanding  Company Voting
                    Securities, as the case may be, (B) no Person (excluding any
                    entity  resulting  from  such  Business  Combination  or any
                    employee  benefit plan (or related  trust) of the Company or
                    such  entity  resulting  from  such  Business   Combination)
                    beneficially owns,  directly or indirectly,  25% or more of,
                    respectively, the then outstanding shares of common stock or
                    other equity of the entity or similar  voting control of the
                    entity  resulting  from such  Business  Combination,  or the
                    combined  voting  power  of  the  then  outstanding   voting
                    securities  of such  entity  except to the extent  that such
                    ownership existed prior to the Business Combination, and (C)
                    at least a majority of the members of the board of directors
                    of the entity resulting from such Business  Combination were
                    members of the Incumbent  Board at the time of the execution
                    of the initial  agreement,  or of the action of the Board of
                    Directors,  providing for such Business Combination,  or (z)
                    prior to such  Business  Combination,  the  Incumbent  Board
                    determines in good faith and in the  reasonable  exercise of
                    its  discretion,   by  the  affirmative  vote  of  at  least
                    two-thirds of its members,  that the Business Combination is
                    not a  transaction  which was  intended  to be a "Change  of
                    Control" for purposes of this Plan; or

                    (iv)  Approval  by  the  stockholders  of the  Company  of a
                    complete liquidation or dissolution of the Company or by the
                    partners of Home Properties,  L.P. of a complete liquidation
                    of Home Properties,  L.P., provided that such liquidation or
                    dissolution is not abandoned by the Board of Directors.

               (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)  Director's Option" means an option grant made to an Eligible
                    Director pursuant to Section 4.2.

               (l)  "Exchange Act" means the Exchange Act of 1934, including any
                    and all amendments thereto.

               (m)  "Executive Officer" means each officer of the Company who is
                    subject to the reporting provisions and trading restrictions
                    of Section 16 of the Securities Exchange Act of 1934.

               (n)  "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.

               (o)  "Fair Market Value" means,  with respect to a specific date,
                    (a) if the Common  Stock is listed or admitted to trading on
                    any  securities  exchange  or the  NASDAQ - National  Market
                    System,  the closing  price on such day, or if no sale takes
                    place on such day,  the average of the closing bid and asked
                    prices on such day, or (b) if the Common Stock is not listed
                    or  admitted  to trading on any  securities  exchange or the
                    NASDAQ - National  Market  System,  the last  reported  sale
                    price on such day or,  if no sale  takes  place on such day,
                    the average of the closing bid and asked prices on such day,
                    as reported by a reliable quotation source designated by the
                    Committee, or if no such last reported sale price or closing
                    bid and asked  prices  are  available,  the  average  of the
                    reported  high bid and low  asked  prices  on such  day,  as
                    reported by a reliable  quotation  source  designated by the
                    Committee,  or if there shall be no bid and asked  prices on
                    such day, the average of the high bid and low asked  prices,
                    as so  reported,  on the  most  recent  day (not  more  than
                    ten days  prior to the date in  question)  for which  prices
                    have been so reported; provided that if there are no bid and
                    asked prices  reported during the ten days prior to the date
                    in question, the Fair Market Value of the Common Stock shall
                    be determined  by the Committee  acting in good faith on the
                    basis  of  such  quotations  and  other  information  as  it
                    considers, in its reasonable judgment, appropriate.

               (p)  "Good Cause" means that a  Participant's  employment  by 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.  "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.

               (q)  "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.

               (r)  "Incumbent  Board" means the  individuals  who, as of May 6,
                    2003, constitute the Board of Directors.

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

               (t)  "Outstanding   Company   Equity"   means   either  the  then
                    outstanding  shares  of  Common  Stock  of  the  Company  or
                    interests in Home Properties, L.P.

               (u)  "Outstanding  Company Voting  Securities" means the combined
                    voting power of the  outstanding  voting  securities  of the
                    Company  entitled  to  vote  generally  in the  election  of
                    directors.

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

               (w)  "Person" means any individual, entity or group.

               (x)  "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  5.1,  5.2  and 5.3 of  this  Plan or as  otherwise
                    established by the Committee.

               (y)  "Retirement" means with respect to an employee Participant a
                    retirement  pursuant  to the  Company's  policies  and  with
                    respect  to  an  Eligible   Director  means:  (i)  mandatory
                    retirement  pursuant to Board policy; or (ii) termination of
                    services by deciding not to stand to re-election.

               (z)  "Rule  16b-3"  means  Rule  16b-3   promulgated   under  the
                    Securities  Exchange  Act of 1934,  as amended  from time to
                    time, or any successor rule.

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

               (bb) "Subsidiary"  means Home  Properties,  L.P., Home Properties
                    Management,  Inc., Home Properties Resident Services,  Inc.,
                    any  partnership of which the Company is general partner and
                    holder of a majority of interests or any corporation  (other
                    than the  Company)  in an  unbroken  chain  of  corporations
                    beginning  with the Company if, at the time of the  granting
                    of the Stock Option, each of the corporations other than the
                    last  corporation  in the unbroken chain owns 50% or more of
                    the total voting power of all classes of stock in one of the
                    other corporations in such chain.

               (cc) "Total   Disability"  means  permanent  mental  or  physical
                    disability as determined by the Committee.

         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)  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.

         2.3        Effective Date

                    This Amended and Restated  2003 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) last
                    expiration  date of any Stock Option  awarded under the Plan
                    and (b) the last vesting date of any Restricted  Stock Award
                    under the Plan.

         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 2,859,475,
                    which shall be available for issuance as follows:

                    Stock Options to employees                   2,500,000
                    Restricted Stock to employees                  110,000
                    Director Options to Eligible Directors         220,000
                    Restricted Stock to Eligible Directors          29,475

                    The Awards shall be subject to adjustment in accordance with
                    Section 6.1, and shares to be issued upon exercise of Awards
                    may be either authorized and unissued shares of Common Stock
                    or authorized and issued shares of Common Stock purchased or
                    acquired  by the  Company  for any  purpose.  If an Award or
                    portion thereof shall expire or is terminated,  cancelled or
                    surrendered  for any reason without being exercised in full,
                    the unpurchased shares of Common Stock which were subject to
                    such Award or portion  thereof shall be available for future
                    grants of Awards under the Plan.

         2.6        Amendments

                    The Plan may be  suspended,  terminated  or  reinstated,  in
                    whole or in part,  at any  time by the  Board of  Directors.
                    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; and (iii) to 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.

                    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 3.2 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.

         2.7        Participants and Grants

                    Awards, other than Director's Options, may be granted by the
                    Committee  to  those   employees  of  the  Company  who  the
                    Committee determines have the capacity to make a substantial
                    contribution   to  the  success  of  the  Company  with  the
                    intention that Awards will be granted to a broad base of the
                    Company's employees.  The Committee may grant Stock Options,
                    other than  Director's  Options,  to purchase such number of
                    shares  of  Common  Stock  (subject  to the  limitations  of
                    Section 2.5) as the Committee  may, in its sole  discretion,
                    determine.  In granting Stock Options, other than Director's
                    Options,  under the Plan,  the  Committee,  on an individual
                    basis,  may vary the number of  Incentive  Stock  Options or
                    Non-Qualified Stock Options as between  Participants and may
                    grant  Incentive  Stock Options and/or  Non-Qualified  Stock
                    Options to a  Participant  in such amounts as the  Committee
                    may determine in its sole  discretion.  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

                    All Stock Options  granted under the Plan shall be evidenced
                    by  written  agreements  executed  by the  Company  and  the
                    Participant to whom granted, which agreement shall state the
                    number of shares of Common Stock which may be purchased upon
                    the  exercise  thereof  and shall  contain  such  investment
                    representations  and  other  terms  and  conditions  as  the
                    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        Price

                    Subject to the  provisions  of Sections  3.6(d) and 6.1, 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,  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.

         3.3        Period

                    Subject to the  provisions of Section 3.6(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.

         3.4        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.   Once   exercisable,   a  Stock   Option   shall  be
                    exercisable,  in whole or in part,  until the  expiration or
                    termination  of its  terms by  giving a  written  notice  of
                    exercise,  signed by the Person exercising the Stock Option,
                    to the Secretary of the Company at the  principal  office of
                    the Company 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.

         3.5        Payment of Exercise Price

                    The exercise  price for shares of Common Stock as to which a
                    Stock  Option  other  than  a  Director's  Option  has  been
                    exercised  and  any  amount  required  to  be  withheld,  as
                    contemplated by Section 6.3, may be paid:

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

                    (b)  by the  delivery by the  Participant  to the Company of
                         whole  shares  of  Common  Stock  already  owned by the
                         Participant for at least six months 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

                    (c)  so long as not  prohibited  by law,  by delivery by the
                         Participant of a properly  executed  exercise notice to
                         the  Company,  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; or

                    (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. In
                    all events,  no shares of Common Stock shall be delivered by
                    the Company until full payment therefore has been made.

         3.6        Special Rules for Incentive Stock Options

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

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

                    (b)  To the extent that the  aggregate  Fair Market Value of
                         Common  Stock,  with respect to which  Incentive  Stock
                         Options  are  exercisable  for  the  first  time  by  a
                         Participant  during any  calendar  year under this Plan
                         and any  other  Plan of the  Company  or a  Subsidiary,
                         exceeds  $100,000  (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.

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

         3.7         Termination of Employment

                    (a)  In  the  event  a   Participant's   employment  by,  or
                         relationship  with, the Company shall terminate for any
                         reason other than those  reasons  specified in Sections
                         3.7(b),  (c),(d) or (e) hereof  while such  Participant
                         holds Stock Options  granted  under the Plan,  then all
                         rights of any kind under any  outstanding  Stock Option
                         held  by  such   Participant   which   shall  not  have
                         previously    lapsed   or   terminated   shall   expire
                         immediately.  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 as required by
                         the Code.

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

                    (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.

                    (d)  If a  Participant's  employment  by the  Company  shall
                         terminate by reason of such  Participant's  Retirement,
                         each Stock Option held by such  Participant at the date
                         of  termination  (which  has not  previously  lapsed or
                         terminated) shall immediately  become fully exercisable
                         as to the  total  number  of  shares  of  Common  Stock
                         subject  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
                         termination   (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 required by
                         the Code.

                    (e)  In the event the Company terminates the employment of a
                         Participant   for  any  reason   except   "good  cause"
                         (hereafter  defined) and except upon such Participant's
                         death,  Total  Disability  or  Retirement,  each  Stock
                         Option,  which  has been held by such  Participant  for
                         more  than six (6)  months  prior to such  termination,
                         shall  immediately  become fully  exercisable as to the
                         total number of shares of Common Stock subject  thereto
                         (whether  or not  exercisable  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.

         3.8        Effect of Leaves of Absence

                    It shall not be considered a termination of employment  when
                    a  Participant  is on  military  or sick leave or such other
                    type  of  leave  of  absence  which  is  considered  by  the
                    Committee as a continuing of the employment  relationship of
                    the Participant with the Company or any of its Subsidiaries.

         3.9        Additional Restrictions on Executive Officers

                    By  accepting a grant of a Stock Option  issued  pursuant to
                    this Plan,  each  Executive  Officer shall be deemed to have
                    agreed that not notwithstanding  anything to the contrary in
                    this Plan: (a) such Executive Officer will not exercise such
                    Stock  Option or any part thereof in such a manner that such
                    Executive  Officer will realize an immediate cash payment in
                    connection  with such  exercise  except that such  Executive
                    Officer 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 and any related  withholding
                    taxes to the Company as well as to pay a related  commission
                    to a third party on such  Executive  Officer's  behalf ; and
                    (b) such  Executive  Officer 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
                    less than the same number of shares of the Company's  Common
                    Stock as was  received by such  Executive  Officer  upon the
                    exercise  of that  Stock  Option  or any part  thereof.  The
                    Committee  may waive the  requirements  of this  Section 3.9
                    with respect to any Executive Officer if they determine such
                    waiver to be appropriate in their sole discretion.

4.        DIRECTOR'S OPTIONS

         4.1        General

                    Each  Director's  Option  granted  under  the Plan  shall be
                    evidenced  by an  agreement  duly  executed on behalf of the
                    Company and by the Eligible Director to whom such Director's
                    Option is  granted  and dated as of the  applicable  date of
                    grant.  Each  agreement  shall be  signed  on  behalf of the
                    Company by an officer or officers  delegated  such authority
                    by the  Committee  using manual  signature.  Each  agreement
                    shall comply with and be subject to the terms and conditions
                    of the Plan.  Any  agreement  may contain  such other terms,
                    provisions and conditions not inconsistent  with the Plan or
                    this Section 4 as may be  determined by the  Committee.  All
                    Director's   Options   granted   under  the  Plan  shall  be
                    Non-Qualified Stock Options.

         4.2        Director's Options

                    Subject  to the  limitation  in  Section  4.1,  an option to
                    purchase the following  number of shares of Common Stock (as
                    adjusted pursuant to Section 6.1 shall be granted in each of
                    the following years immediately following the annual meeting
                    the Company's shareholders,  to each member of the Company's
                    Board of Directors who is an Eligible  Director at such time
                    immediately following such annual meeting.

                              (a)   2005 - 4,000 shares
                              (b)   2006 - up to 4,000 shares
                              (c)   2007 - up to 4,000 shares

                    For the years 2006 and 2007, the Committee  shall  determine
                    the  number of  Director's  Options to be granted to each of
                    the Eligible  Directors (not to exceed 4,000 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.

         4.3        Director's Option Exercise Price

                    The exercise  price per share for a Director's  Option shall
                    be  the  Fair   Market   Value   on  the   date  of   grant.
                    Notwithstanding   anything  to  the  contrary  herein,   the
                    exercise  price  per  share of  Common  Stock  subject  to a
                    Director's  Option may not be reduced  after the  Director's
                    Option is granted.  No outstanding  Director's Option may be
                    surrendered  as  consideration   for  the  grant  of  a  new
                    Director's Option with a lower exercise price.

         4.4        Exercise

                    Director's  Options shall be exercisable twenty (20) percent
                    per year on each of the first five (5)  anniversaries of the
                    grant date. Once  exercisable,  a Director's Option shall be
                    exercisable  in whole or in part,  until the  expiration  or
                    termination  of its term in  accordance  with Section 4.6 by
                    giving  written  notice of  exercise,  signed by the  Person
                    exercising  the Director's  Option,  to the Secretary of the
                    Company at the  principal  office of the  Company or to such
                    other  Person  or  entity  as  specified  by  the  corporate
                    Secretary specifying the number of shares of Common Stock as
                    to which  the  Director's  Option  is then  being  exercised
                    together  with  payment of the full  exercise  price for the
                    number of shares of Common Stock to be  purchased.  The date
                    both such notice and  payment are  received by the office of
                    the  corporate  Secretary  of the  Company or the  corporate
                    Secretary's  designee  shall be the date of  exercise of the
                    Director's   Option   as   to   such   number   of   shares.
                    Notwithstanding any provision to the contrary, no Director's
                    Option  may at any  time  be  exercised  with  respect  to a
                    fractional share.

         4.5        Payment of Exercise Price

                    The exercise price may be paid:

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

                    (b)  by the delivery by the Director to the Company of whole
                         shares of Common  Stock  already  owned by the Eligible
                         Director  for at least six months  having an  aggregate
                         Fair  Market  Value on the  Business  Day  prior to the
                         Exercise Date equal to the aggregate  exercise price of
                         the Common  Stock as to which the Stock  Option is then
                         being exercised; or

                    (c)  so long as not  prohibited  by law,  by delivery by the
                         Eligible  Director  of  a  properly  executed  exercise
                         notice  to  the  Company,   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
                         commission; or

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

                    To facilitate the payment alternative described in paragraph
                    (c)  above,  the  Company  may enter into an  agreement  for
                    coordinated  procedures with one or more brokerage firms. In
                    all events,  no shares of Common Stock shall be delivered by
                    the Company until full payment therefore has been made.

         4.6        Term of Director's Options

                    Each Director's  Option shall expire ten (10) years from its
                    date of grant,  but shall be subject to earlier  termination
                    as follows:

                    (a) In the event of the  termination of a Director's  Option
                    holder's  service as a member of the Board of Directors,  by
                    reason  of his or her  removal  as a member  of the Board of
                    Directors  (by the  shareholders,  the Board of Directors or
                    otherwise), the then-outstanding  Director's Options of such
                    holder (whether or not then exercisable) shall automatically
                    expire on (and may not be exercised on) the  effective  date
                    of such termination.

                    (b) In the event of the  termination of a Director's  Option
                    holder's  service as a member of the Board of  Directors  by
                    reason of Total Disability, the then-outstanding  Director's
                    Options of such holder shall become exercisable, to the full
                    extent of the  number of  shares of Common  Stock  remaining
                    covered by such  Director's  Options,  regardless of whether
                    such  Director's  Options were previously  exercisable,  and
                    each such Director's  Option shall expire one (1) year after
                    the date of such  termination  or on the  stated  expiration
                    date, whichever is earlier.

                    (c) In the event of the death of a Director's  Option holder
                    while such holder is a member of the Board of Directors, the
                    then-outstanding  Director's  Options of such  holder  shall
                    become  exercisable,  to the full  extent  of the  number of
                    shares of Common Stock remaining  covered by such Director's
                    Options,  regardless of whether such Director's Options were
                    previously  exercisable,  and each  such  Director's  Option
                    shall  expire  one (1) year  after the date of death of such
                    optionee or on the stated grant expiration  date,  whichever
                    is earlier.

                    Exercise of a deceased holder's  Director's Options that are
                    still  exercisable  shall be by the estate of such holder or
                    by the person or persons to whom the  holder's  rights  have
                    passed by will or the laws of descent and distribution.

                    (d) In the event of the  termination of a Director's  Option
                    holder's,  services as a member of the Board of Directors by
                    reason of Retirement, the then outstanding Directors Options
                    of such holder  (which shall not have  previously  lapsed or
                    terminated) shall continue to be exercisable at such time or
                    times as  shall  have  been  specified  when the  Director's
                    Option was granted.

                    (e) In the event of the  termination of a Director's  Option
                    holder's  service as a member of the Board of Directors  for
                    any reason other than as  described in Sections  4.6(a)-(d),
                    including without  limitation,  expiration of the director's
                    term in office  (without  renomination  or reelection) or by
                    resignation, the then outstanding Director's Options of such
                    holder shall become  exercisable,  to the full extent of the
                    number of shares of Common Stock  remaining  covered by such
                    Director's  Options,  regardless of whether such  Director's
                    Options   were   previously   exercisable,   and  each  such
                    Director's  Option  shall  expire  one (1)  year  after  the
                    effective date of such termination.

         4.7        Limitation of Rights

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

         4.8        Limitation as to Directorship

                    Neither the Plan,  nor the granting of a Director's  Option,
                    nor any  other  action  taken  pursuant  to the  Plan  shall
                    constitute or be evidence of any agreement or understanding,
                    express or implied, that an Eligible Director has a right to
                    continue  as a  member  of the  Board of  Directors  for any
                    period of time or at any particular rate of compensation.

         4.9        Limit on Awards to Eligible Directors

                    Notwithstanding  any provision to the contrary,  an Eligible
                    Director  shall not be entitled to receive or participate in
                    any Award under the Plan other than:  (a) Director's Options
                    which are  granted to such  Eligible  Director  pursuant  to
                    Section  4.2 and meet all of the  requirements  of Section 4
                    applicable thereto;  and (b) Restricted Stock Awards granted
                    to such Eligible  Director  pursuant to Section 5.1 and meet
                    all the requirements of Section 5 applicable thereto.

         4.10       Termination of Director's Options

                    Notwithstanding any provision to the contrary, no Director's
                    Option  shall be granted  pursuant  to Section 4.2 on a date
                    when the  number of shares of Common  Stock  authorized  for
                    issuance  pursuant  to  the  Plan  and  then  available  for
                    issuance pursuant to new Director's Options is less than the
                    aggregate  number of such  shares  which  would be  issuable
                    pursuant  to  Director's  Options  otherwise  required to be
                    granted on such date.

         4.11       Conflicting Provisions

                    In the event of any  conflict  between a  provision  of this
                    Section 4 and a provision in any other paragraph of the Plan
                    with respect to Director's  Options,  such provision of this
                    Section 4 shall be deemed to control.  Except in the case of
                    conflict,   however,   provisions  in  other   sections  are
                    applicable.

         4.12       Additional Restrictions on Directors

                    By accepting a grant of a Director's  Option issued pursuant
                    to this Plan, each Eligible Director shall be deemed to have
                    agreed that notwithstanding anything to the contrary in this
                    Plan:  (a) such  Eligible  Director  will not exercise  such
                    Director's  Option or any part thereof in such a manner that
                    such  Eligible  Director  will  receive  an  immediate  cash
                    payment in connection  with such exercise  except that:  (i)
                    such Eligible  Director may direct that the number of shares
                    of Common  Stock as to which the  Director's  Option is then
                    being exercised may be sold to pay the exercise price to the
                    Company  as well as to pay a related  commission  to a third
                    party  on  such  Eligible  Director's  behalf;  and  (ii) an
                    Eligible  Director  may  receive  cash  to be  used  to  pay
                    applicable  taxes  due  with  respect  to any  taxable  gain
                    realized on the  exercise of that  Director's  Option or any
                    part  thereof  provided  that the cash  received  shall  not
                    exceed 35% (thirty-five  percent) of that gain; and (b) such
                    Eligible  Director shall retain for a period of no less than
                    one calendar year  following the exercise of the  Director's
                    Option or any part thereof  beneficial  ownership of no less
                    than the same number of shares of the Company's Common Stock
                    as was received by such  Eligible  Director upon exercise of
                    that  Director's  Option or any part thereof.  The Committee
                    may waive the requirements of this Section 4.12 with respect
                    to any Eligible Director if they determine such waiver to be
                    appropriate in their sole discretion.

5.       RESTRICTED STOCK AWARDS

         5.1        Grants to Eligible Directors

                    Each of the  Eligible  Directors  will be issued up to 1,000
                    shares of  Restricted  Stock in each of 2006 and 2007,  such
                    Restricted  Stock to be issued on the first dividend payment
                    date with  respect to the  Common  Stock to occur in each of
                    2006 and 2007.

                    The  Committee  shall  determine  the  number  of  shares of
                    Restricted  Stock  to be  issued  to  each  of the  Eligible
                    Directors  (not to exceed  1,000 shares for each of 2006 and
                    2007)  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.  Each grant of
                    Restricted  Stock shall be evidenced  by a Restricted  Stock
                    Award document,  which shall specify the number of shares of
                    Common Stock to be issued to the Eligible Director, the date
                    of such issuance, the consideration for such shares, if any,
                    by the Eligible Director,  the restrictions  imposed on such
                    shares,  and the  conditions  of  release  or  lapse of such
                    restrictions.  Notwithstanding  the above,  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. Stock certificates evidencing
                    shares of Restricted Stock subject to restrictions  shall be
                    held by the Company  until the  restrictions  on such shares
                    shall  have  lapsed  and the  shares  shall  have  vested in
                    accordance with the provisions of the Award.  Promptly after
                    the lapse of  restrictions,  a certificate  or  certificates
                    evidencing  the number of shares of Common Stock as to which
                    the  restrictions  have  lapsed  shall be  delivered  to the
                    Eligible  Director  unless the Eligible  Director shall have
                    elected to defer  receipt of those shares for an  additional
                    period   pursuant  to  the   Company's   Director   Deferred
                    Compensation  Plan.  The Eligible  Director shall deliver to
                    the Corporation such further  assurance and documents as the
                    Committee may require.

         5.2        Grants to Employees

                    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 Restricted Stock
                    Award document,  which shall specify the number of shares of
                    Common Stock to be issued to the employee,  the date of such
                    issuance,   the  consideration  for  such  shares,  and  the
                    conditions of release or lapse of such  restrictions.  Stock
                    certificates  evidencing  shares of Restricted Stock subject
                    to  restrictions  shall  be held by the  Company  until  the
                    restrictions on such shares shall have lapsed and the shares
                    shall have vested in accordance  with the  provisions of the
                    Award.   Promptly  after  the  lapse  of   restrictions,   a
                    certificate or certificates  evidencing the number of shares
                    of Common  Stock as to which the  restrictions  have  lapsed
                    shall be  delivered  to the  employee.  The  employee  shall
                    deliver  to  the  Corporation  such  further  assurance  and
                    documents as the Committee may require.

         5.3        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  Award  Document,  a Participant  receiving a
                    Restricted  Stock Award  shall be entitled to cash  dividend
                    and voting rights for all shares of Common Stock issued even
                    though they are not vested,  provided that such rights shall
                    terminate immediately as to any Restricted Stock that ceases
                    to be eligible for vesting.

                    (c) Accelerated  Vesting.  Unless otherwise  provided by the
                    Committee,  the restrictions on Restricted Stock shall lapse
                    upon the Participant's termination of service as an employee
                    or a Director of the Company,  as  applicable,  by reason of
                    Total Disability or death. In the event of the Retirement of
                    a Participant the  restrictions on the Restricted Stock held
                    by them shall not lapse but shall continue as specified when
                    the Restricted Stock was awarded.

                    (d) Forfeiture.  Unless otherwise specified by the Committee
                    or as  provided  in the last  sentence  of  Section  5.2(c),
                    Restricted  Stock  as to  which  the  restrictions  have not
                    lapsed in  accordance  with the  provisions  of the Award or
                    pursuant  to  Section 5.2(c)   shall  be  forfeited  upon  a
                    Participant's  termination of service as an employee or as a
                    member  of  the  Company's  Board  of  Directors.  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.

6.        MISCELLANEOUS PROVISIONS

          6.1       Adjustments Upon Changes in Capitalization

                    In the event of changes to the outstanding  shares of Common
                    Stock  of  the  Company  through  a  Business   Combination,
                    recapitalization,  reclassification,  stock split-up,  stock
                    dividend,  stock consolidation or otherwise,  an appropriate
                    and proportionate adjustment shall be made in the number and
                    kind of shares as to which Awards or Director's  Options may
                    be granted. A corresponding  adjustment  changing the number
                    or kind of shares  and/or  the  purchase  price per share of
                    unexercised  Stock  Options or portions  thereof which shall
                    have been granted prior to any such change shall likewise be
                    made.  Adjustments  or changes  under this Section  shall be
                    made  by  the  Committee,  whose  determination  as to  what
                    adjustments  or  changes  shall  be  made,  and  the  extent
                    thereof, shall be final, binding and conclusive.

         6.2        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)  Any  Stock  Options  outstanding  as of the  date  such
                         Change  of  Control  occurs,  and  which  are not  then
                         exercisable and vested,  shall become fully exercisable
                         and vested; and

                    (b)  Any  restrictions  applicable to any  Restricted  Stock
                         outstanding  as of the  date  such  Change  of  Control
                         occurs  shall  lapse and such  Restricted  Stock  shall
                         become free of all  restrictions  and  limitations  and
                         become fully vested and transferable.

         6.3        Non-Transferability

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

         6.4        Withholding

                    The Company's  obligations  under this Plan shall be subject
                    to  applicable  federal,  state and  local  tax  withholding
                    requirements.  Federal,  state and local withholding tax due
                    at the  time of a grant or upon the  exercise  of any  Award
                    may, in the discretion of the  Committee,  be paid in shares
                    of Common Stock already owned by the  Participant or through
                    the  withholding  of  shares  otherwise   issuable  to  such
                    Participant, upon such terms and conditions as the Committee
                    shall  determine.  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 any federal, state or
                    local  taxes  of any kind  required  to be  withheld  by the
                    Company.

         6.5        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 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.

         6.6        No Right to Employment

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

         6.7        Exclusion from Pension Computations

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

         6.8        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.

         6.9        Severability

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

         6.10       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.

         6.11       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.

         6.12       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.

EX-4

                                                               EXHIBIT 4.2

                              HOME PROPERTIES, INC.
                           SECOND AMENDED AND RESTATED
                       DIRECTOR DEFERRED COMPENSATION PLAN


1.        Purpose

     Home Properties,  Inc. (the "Company")  adopted its Home  Properties,  Inc.
Director  Deferred  Compensation  Plan effective January 1, 1999 (the "Plan") to
assist  its  independent  directors  with  their  individual  tax and  financial
planning  and to permit the  Company to remain  competitive  in  attracting  and
retaining its  independent  directors.  The Plan permits  eligible  directors to
defer the receipt of annual  compensation  which they may be entitled to receive
from the  Company  and,  with  respect  to cash  compensation,  the  Company  to
contribute  matching  contributions on their behalf.  The Company has elected to
amend  and  restate  the Plan in order to make  the  following  changes:  (i) to
increase  the number of shares of Company  Common  Stock  available  and (ii) to
conform certain  provisions to the requirements of Internal Revenue Code Section
409(A).

2.        Eligibility

     Any member of the Board of Directors of the Company who is not otherwise an
employee of the Company or any  subsidiary  is eligible to  participate  in this
Plan.

3.        Contributions

         (a)       Participant Contributions.

               (1)  Amount of Deferral. A participant may elect to defer receipt
                    of any whole  percent  (100  percent  maximum) of his or her
                    annual  compensation  otherwise  payable  or, in the case of
                    restricted stock,  granted to the participant by the Company
                    during a calendar year.

               (2)  Time for Electing  Deferral.  An initial  election to make a
                    deferral  shall  be made  within  30 days  of the  time  the
                    participant first becomes eligible to participate. All other
                    deferral  elections  shall be made prior to the beginning of
                    the  year  in  which  the  services  to  which  any  of  the
                    compensation  to be deferred are performed.  Any election to
                    defer shall be made in accordance with subsection 3 below.

               (3)  Manner of Electing  Deferral.  A  participant  shall elect a
                    deferral by giving  written  notice to the Company in a form
                    prescribed by the Committee  established pursuant to Section
                    9 (the  "Committee").  The notice shall include (1) the year
                    to which the deferral  relates;  (2) the percentage and type
                    of compensation to be deferred;  (3) the period with respect
                    to which the  deferral  relates;  and (4) the  length of the
                    deferral  period.  A  participant  may  designate a deferral
                    period of three,  five or ten years for cash deferrals and a
                    deferral  period of five or ten years for  restricted  stock
                    deferrals.  Payment of cash  deferrals and issuance of stock
                    for  restricted  stock  deferrals  will be made on the first
                    dividend  payment date with respect to the Company's  Common
                    Stock "Dividend  Payment Date" occuring after the applicable
                    anniversary  date of the  latest  date any  compensation  is
                    deferred in any applicable year. For example,  a participant
                    may  elect  in  December  2005  to  defer  for  three  years
                    compensation  payable in 2006 with respect to 2006 services.
                    If a portion of the  compensation  is  otherwise  payable in
                    cash in May 2006,  it will be deferred and actually  paid in
                    2009 on the first Dividend  Payment Date occurring after the
                    anniversary  date of the  latest  compensation  deferred  in
                    2006.   Notwithstanding  the  foregoing  in  the  event  the
                    participant  retires or  otherwise  ceases to be a member of
                    the Board of Directors,  vested  benefits  payments shall be
                    paid  within  60  days  of  retirement  or  such   cessation
                    notwithstanding    any   later   date   specified   in   the
                    participant's election form.


         (b)       Company Matching Contributions.

          The  Company  shall  contribute  10  percent of the cash  amount  each
          participant defers. The Company's contribution shall be made as of the
          same date as the participant's  deferral to which it relates and shall
          be  deferred  to the  same  payment  date as the  related  participant
          deferral. The Company shall not contribute any additional amounts with
          respect to any  participant's  election  to defer the  recognition  of
          income on restricted  stock. In the event that the stockholders do not
          approve this Second Amended and Restated Plan, the Committee may elect
          to eliminate the Company's  matching  contribution,  which is the only
          feature  of the Plan  that  constitutes  an equity  compensation  plan
          requiring stockholder approval.

4.        Participant Accounts

     For each participant there shall be established a participant  account (the
"Account").  A participant's Account shall be valued as of each day there occurs
a transaction  affecting the Account. Each cash deferral or Company contribution
shall be reflected by crediting the Account with the number of shares of Company
Common  Stock that could be  purchased  at the Common  Stock's  then fair market
value with the  amounts  deferred  by the  participant,  or  contributed  by the
Company  on  behalf  of a  participant.  With  respect  to the  deferral  of the
recognition  of income on restricted  stock,  a  participant's  Account shall be
credited  with the same  number  of shares of the  Company  Common  Stock as the
number of shares of restricted stock the recognition of income on which has been
deferred. For purposes of making these credits: (a) the participant's  quarterly
compensation  and meeting  fees will be deemed to have been made on the Dividend
Payment Date  occurring  during the quarter for which the  quarterly  payment is
made and during which the meeting  date(s)  occurred;  and (b) restricted  stock
will be deemed to have been granted on the first  Dividend  Payment Date of each
calendar  year.  In addition,  each Account will be credited  with the number of
shares of  Company  Common  Stock  that  could be  purchased  with  hypothetical
dividends that would be paid with respect to all shares previously  allocated to
the Account on the same date and at the same price that shares are purchased for
participants  in the dividend  reinvestment  feature of the  Company's  Dividend
Reinvestment and Direct Stock Purchase Plan.  Distributions  from, or forfeiture
of,  the  Account  shall  be  recorded  as of the day of such  distributions  or
forfeitures.  The  Account  shall  also  be  adjusted  as of  the  date  of  any
transaction  requiring additions to or distributions from the Account to reflect
any gains (or losses) in the fair market  value of Company  Common Stock held in
the Account.  Three subaccounts shall be established within the Account to track
separately  participant  cash  contributions,  Company  cash  contributions  and
participant restricted stock contributions and the earnings and distributions on
each.  The Common  Stock's  fair market  value shall be the closing  price for a
share of the Company's  Common Stock as listed on the New York Stock Exchange on
the date before the transaction occurs.

     All amounts credited to participant cash contribution  subaccounts shall be
fully  vested at all times.  Except  for the  possible  claims of the  Company's
general  creditors,  they shall not be subject to  forfeiture  on account of any
action  by a  participant  or by  the  Company,  including  termination  of  the
participant's  directorship.  Amounts  credited to a participant's  Company cash
contribution  subaccount shall become fully vested on the first Dividend Payment
Date  occurring  after the third  anniversary  of the date first credited to the
subaccount if the  participant has  continuously  been a director of the Company
through the third  anniversary of the  contribution  date, or if the participant
ceases to be a director on account of disability,  death or retirement or upon a
change in control as hereinafter provided. For this purpose,  "disability" shall
mean the participant is unable to engage in any substantial  gainful activity by
reason of any medically  determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a  continuous  period
of not less than 12 months A participant's  restricted  stock  subaccount  shall
become vested in accordance with the vesting  provisions of the restricted stock
grant.  Amounts  payable  under this Plan shall be paid only to the  participant
provided that in the event of his or her death  payments shall be made to his or
her estate.

     If a participant's Company subaccount becomes forfeitable,  he or she shall
forfeit both Company contributions and the earnings thereon.

     The  maintenance  of  individual  participant  Accounts is for  bookkeeping
purposes only. The Company is not obligated to make actual contributions to fund
this Plan or to acquire or set aside any particular  assets for the discharge of
its  obligations,  nor is any  participant  to have any  property  rights in any
particular  assets held by the  Company,  whether or not held for the purpose of
funding the Company's obligations hereunder.

5.        Payment of Deferred Amounts

     No  withdrawal  may be made  from an  Account  except as  provided  in this
section 5. Payments of vested  amounts from an Account shall normally be made in
a lump sum amount on the first  Dividend  Payment Date  following the applicable
anniversary  date  of the  latest  date  any  compensation  is  deferred  in any
applicable  year and  within 60 days of the  participant's  retirement  or other
termination  as a  director  of  the  Company.  In  the  case  of  unforeseeable
emergency,  the  Committee,  shall  distribute  all or a portion  of the  vested
portion of an Account  before an elected  anniversary  date or  termination as a
director but the amount of the,  distribution shall not exceed the amount needed
to  relieve  the   unforeseeable   emergency.   For  this   purpose,   the  term
"unforeseeable  emergency" means a severe financial  hardship to the participant
resulting  from an illness or accident  of the  participant,  the  participant's
spouse,  or a  dependent  (as  defined in Code  Section  152(a) of the  Internal
Revenue  Code) of the  participant,  loss of the  participant's  property due to
casualty, or other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the participant.

     Payments for any reason  other than a change in control  shall be made only
in stock  provided that any  fractional  shares from an Account shall be paid in
cash.  In the event of a change in control,  all account  balances  shall become
fully  and  immediately  vested  and  shall  be  paid,  in cash or  stock as the
Committee in its sole  discretion may determine,  within five days of the change
in control.  For this purpose,  the term "change in control" means a change that
is both (1) a change in the  ownership,  a change in the effective  control or a
change in the ownership of a  substantial  portion of the assets of the Company,
all as defined in Internal Revenue Service  regulations under Code Section 409A,
and (2) 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,  provided
that, without  limitation,  a change in control shall be deemed to have occurred
if (i) 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 (ii) 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.

     An  aggregate  of  100,000  shares of  Company  Common  Stock  (subject  to
substitution  or  adjustment  as provided  below) shall be  available  for stock
payments under this Plan.  Such shares may be authorized and unissued  shares or
may be treasury  shares.  In the event of any change in the Common  Stock of the
Company  by  reason  of any stock  dividend,  recapitalization,  reorganization,
merger, consolidation,  split-up,  combination, or exchange of shares, or rights
offering to purchase  Common  Stock at a price  substantially  below fair market
value, or of any similar change  affecting the Common Stock, the number and kind
of shares which thereafter are available for stock payments under the Plan shall
be  appropriately  adjusted  consistent  with such  change in such manner as the
Committee may deem equitable to prevent  substantial  dilution or enlargement of
the rights granted to, or available for, participants in the Plan.

6.        Participant's Rights Unsecured

     The right of any participant or, if applicable,  the participant's  estate,
to receive  benefits  under the  provisions  of this Plan shall be an  unsecured
claim against the general assets of the Company. Any amounts held in an Account,
including  amounts  that may be set  aside by the  Company  for the  purpose  of
meeting its  obligations  under this Plan,  are a part of the Company's  general
assets and shall be reachable by the general creditors of the Company.

7.        Statement of Account

     Statements  will be sent to  participants  no less frequently than annually
setting forth the value of their Accounts.

8.       Transferability

     The rights of a participant under this Plan shall not be transferable other
than by will or by the laws of  descent  and  distribution  and are  exercisable
during the participant's  lifetime only by the participant or by his guardian or
legal representative.

9.        Plan Administrator

     The  administrator  of this  Plan  shall  be a  Committee  of the  Board of
Directors  of the  Company  from  time  to time  designated  by the  Board.  The
Committee's  members shall not be employees of the Company.  The Committee shall
have the authority to adopt rules and  regulations for carrying out the Plan and
to interpret,  construe and implement the  provisions of the Plan. The Committee
may  delegate  some or all of its  functions  to  another  person as it may deem
appropriate. The Board of Directors has designated the Compensation Committee of
the Board of Directors as administrator of the Plan until further notice.

10.      Amendment

     This  Plan may at any time or from  time to time be  amended,  modified  or
terminated by the Company's  Board of  Directors.,  provided that no such action
shall  accelerate  the time or schedule of payment of any Plan benefit except as
may be permitted  under  Internal  Revenue  Code  Section  409A and  regulations
thereunder. No amendment, modification or termination shall, without the consent
of a participant,  adversely  affect such  participant's  accruals in his or her
Account.

11.      Dividend Payment Date.

     In the event that the Company  does not pay a dividend on the Common  Stock
in any calendar quarter,  the Dividend Payment Date in that quarter for purposes
of this  Plan  shall be deemed to be the last day of  February,  May,  August or
November in the  relevant  quarter,  or if such date is not a business  day, the
next succeeding business day.

12.      Governing Law

     This Plan and any participant  elections hereunder shall be interpreted and
enforced in accordance with the laws of the State of New York.

13.      Effective Date

     The  effective  date of  this  Amended  and  Restated  Plan is May 6,  2005
provided that the effective date of provisions governed by Internal Revenue Code
Section 409A concerning the time of deferral elections and the time and schedule
of payments, along with related definitions,  is January 1,  2005, for deferrals
which are made or which vest on and after this date.