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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________
FORM 10/A
Amendment No. 2
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934
Wellsford Real Properties, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Maryland 13-3926898
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
610 Fifth Avenue, New York, New York 10020
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 333-2300
------------------
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
------------------- ------------------------------
Common Stock, $.01 par American Stock Exchange
value per share
---------------------- ------------------------------
Securities to be registered pursuant to Section 12(g) of the Act:
None
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(Title of Class)
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WELLSFORD REAL PROPERTIES, INC.
Note: Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended (each, Application of Safe
Harbor for Forward-Looking Statements), do not apply to this Registration
Statement on Form 10.
Form 10 Item No. and Heading
1. Business............... Incorporated herein by reference to Exhibit
10.35 pages 2, 17-23, 101-115 and 121-134.
2. Financial Information
Financial information for year ended December 31, 1996 is incorporated
herein by reference to Exhibit 10.35, pages 22-23 and 121.
WELLSFORD REAL PROPERTIES, INC. (PREDECESSOR)
SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following tables set forth the summary unaudited pro forma combined
financial data for Wellsford Real Properties, Inc. (Predecessor) as a combined
entity, giving effect to the Merger, Contribution and Distribution as if they
had occurred on the dates indicated herein, after giving effect to the pro
forma adjustments described in the notes to the unaudited pro forma combined
financial statements included elsewhere in this Registration Statement on Form
10.
The summary unaudited pro forma combined operating data are presented as
if the Merger, Contribution and Distribution had been consummated on January 1,
1997. In addition to the Merger, Contribution and Distribution, the pro forma
combined operating data gives effect to certain material events which occurred
between January 1, 1997 and April 30, 1997, as if they had occurred on January
1, 1997. See the notes to the unaudited Pro Forma Combined Income Statement
for the three months ended March 31, 1997 included elsewhere in this
Registration Statement on Form 10.
The summary unaudited pro forma combined balance sheet data are presented
as if the Merger, Contribution and Distribution had occurred on March 31, 1997.
In addition to the Merger, Contribution and Distribution, the pro forma
combined balance sheet data gives effect to certain material events set forth
in the previous paragraph which occurred between April 1, 1997 and April 30,
1997 as if they had occurred on March 31, 1997. See the notes to the unaudited
Pro Forma Combined Balance Sheet at March 31, 1997 included elsewhere in this
Registration Statement on Form 10. In the opinion of management, all necessary
adjustments necessary to reflect the effects of the Merger, Contribution and
Distribution have been made.
The summary unaudited pro forma financial data should be read in
conjunction with, and is qualified in its entirety by, the historical financial
statements and notes thereto of Wellsford Real Properties, Inc. (Predecessor)
included in this Registration Statement on Form 10.
The summary unaudited pro forma operating and balance sheet data are
presented for comparative purposes only and are not necessarily indicative of
what the actual combined results of Wellsford Real Properties, Inc.
(Predecessor) would have been for the period and as of the date presented, nor
does such data purport to represent the results of future periods.
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Wellsford Real Properties, Inc. (Predecessor)
Summary Unaudited Combined Financial Data
Pro Forma Historical
Three Months Three Months
Ended March 31, 1997 Ended March 31, 1997
___________________ _________________
(Unaudited) (Unaudited)
(In thousands except per share data)
OPERATING DATA:
Revenues:
Rental income $762
Other income 40
Interest income 989 $401
_____ ___
1,791 401
_____ ___
Expenses:
Property operating and maintenance 211
Real estate taxes 107
Interest 388
General and administrative 438
Depreciation 128
Property management 34
_____ ___
1,306 0
_____ ___
Income before income taxes 485 401
Provision for income taxes 198
_____ ____
Net income $287 $401
===== ====
Net income per common share $0.06
Weighted average common shares
outstanding 4,877
Pro Forma Historical
March 31, 1997 March 31, 1997
______________ _______________
(Unaudited) (Unaudited)
(In thousands)
BALANCE SHEET DATA:
Real estate (prior to depreciation) $71,506 $47,806
Mortgage notes and interest receivable $37,934 $17,934
Cash and cash equivalents $1,743 $0
Restricted cash $3,198 $3,198
Total assets $114,381 $68,938
Total debt $62,755 $36,366
Total equity $49,185 $32,572
OTHER DATA:
Funds from Operations(2) $415 $401
EBITDA(1)(2) $1,001 $401
Cash flows from operating activities $2,609 $2,723
Cash flows from investing activities ($70,200) ($26,500)
Cash flows from financing activities $69,220 $23,777
- ----------
(1) EBITDA represents earnings before interest, taxes, depreciation and
amortization.
(2) Neither Funds from Operations nor EBITDA represents cash generated from
operating activities in accordance with GAAP and therefore should not be
considered alternatives to net income as indicators of the Company's
operating performance or as alternatives to cash flow as a measure of
liquidity and are not necessarily indicative of cash available to fund cash
needs.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
OF WELLSFORD REAL PROPERTIES, INC. (PREDECESSOR)
Overview
The following discussion should be read in conjunction with the Wellsford
Real Properties Inc. (Predecessor) (the "Company") financial statements
contained herein.
Results of Operations
The Company's operations during the three months ended March 31, 1997
consisted of owning a mortgage note receivable, upon which the Company earned
$401,000 of interest income, and developing two multifamily communities located
in a suburb of Denver, Colorado with a total of 760 units under development.
In addition, the Company purchased four commercial office properties, all of
which are currently vacant and undergoing renovations.
Liquidity and Capital Resources
The Company expects to meet its short-term liquidity requirements
generally through its working capital and cash flow provided by operations.
The Company considers its ability to generate cash to be adequate and expects
it to continue to be adequate to meet operating requirements both in the short
and long terms.
The Company expects to meet its long-term liquidity requirements such as
refinancing mortgages, financing acquisitions and development, and financing
capital improvements and debt and equity investments in real estate companies
by long-term borrowings, through the issuance of debt and the offering of
additional debt and equity securities.
The Company has received a commitment from the Bank of Boston and Morgan
Guaranty that they will provide a $50 million credit facility, subject to
customary conditions, which would be available to fund acquisitions, debt and
equity investments, development, capital expenditures, repayment of
indebtedness and related expenditures. The Company expects to obtain this
credit facility concurrently with the closing of the Merger and Distribution.
The commitment received is subject to customary conditions and documentation.
In December 1995, the Company marketed and sold $14.8 million of tax-
exempt bonds to fund construction at Palomino Park. The bonds have a variable
rate of interest and a term of 40 years. At March 31, 1997, $3.2 million of
the bond proceeds were being held in escrow pending their use for the funding
of development.
In July 1996, the Company originated the Sonterra Loan. The Sonterra Loan
bears interest at 9% per annum and matures in July 1999. The Company also has
the exclusive option to purchase the community for $20.5 million through
December 1997 and for $21 million during 1998.
Funds from Operations
The Company and industry analysts generally consider funds from operations
("FFO) to be one appropriate measure of the performance of real estate companies
because it is predicated on a cash flow analysis, as opposed to a measure
predicated on generally accepted accounting principles ("GAAP"), which gives
effect to non-cash items such as depreciation. Funds from operations as defined
by the National Association of Real Estate Investment Trusts ("NAREIT")
represents net income (loss) (computed in accordance with GAAP), excluding
gains (or losses) from debt restructuring and sales of property, plus
depreciation and amortization, and after adjustments for unconsolidated
partnerships and joint ventures. Adjustments for unconsolidated partnerships
and joint ventures are calculated to reflect funds from operations on the same
basis. Funds from operations does not represent cash generated from operating
activities in accordance with GAAP and therefore should not be considered an
alternative to net income as an indicator of the Company's operating performance
or as an alternative to cash flow as a measure of liquidity and is not
necessarily indicative of cash available to fund cash needs.
SUMMARY STATEMENTS OF OPERATING DATA
Pro Forma Historical
Three Months Ended Three Months Ended
March 31, 1997 March 31, 1997
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Revenues $1,791 $401
Expenses 1,306 0
Taxes 198 0
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Net Income 287 401
Add:
Depreciation 128 0
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Funds from Operations $415 $401
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3. Properties.............. Incorporated herein by reference to Exhibit
10.35, pages 20-21 and 105-110.
4. Security Ownership of
Certain Beneficial
Owners and Management........ Incorporated herein by reference to Exhibit
<PAGE>
10.35, page 120.
5. Directors and Executive
Officers..................... Incorporated herein by reference to Exhibit
10.35, pages 17-19 and 116-117.
6. Executive Compensation....... Incorporated herein by reference to Exhibit
10.35, pages 117-119.
7. Certain Relationships and
Related Transactions......... Incorporated herein by reference to Exhibit
10.35, page 121.
8. Legal Proceedings............ Incorporated herein by reference to Exhibit
10.35, page 110.
9. Market Price of and Dividends
on the Registrant's Common
Equity and Related Stockholder
Matters...................... Incorporated herein by reference to Exhibit
10.35, pages 105, 135 and 143.
10. Recent Sales of Unregistered Securities
The following table is a summary of certain information relating to all
securities of the Company sold by the Company within the past three years that
were not registered under the Securities Act (the "Private Placement"):
Persons or Class
Type of Date Amount of of Persons to
Securities of Securities Whom Securities
Sold Sale Sold Sold Consideration
- ---------- ---- ---------- ------------------- -------------
Common Stock 2/28/97 (1) Wellsford Commercial (1)
Properties, L.L.C.
(1) The contracts to purchase Chatham, the Point View office complex and
Greenbrook were transferred to the Company by Wellsford Commercial
Properties, L.L.C. ("Wellsford Commercial") for shares of Common Stock
having an aggregate value of approximately $2.25 million and the Company's
agreement to repay a $1.0 million advance used for the down payment on the
Point View office complex. The number of shares of Common Stock issued to
Wellsford Commercial upon consummation of the Distribution and Merger will
be approximately 215,000, subject to adjustment based upon an issuance
price per share equal to the book value per share of the Common Stock on
date of closing of the Merger. The members of Wellsford Commercial
include Jeffrey H. Lynford, Edward Lowenthal and the wife of Mark Germain
who will be a director of the Company who hold 16.4%, 16.4% and 13.8%,
respectively, of the ownership interests in Wellsford Commercial.
The Company conducted the Private Placement pursuant to Section 4(2) of
the Securities Act. There was no underwriter involved in the Private
Placement.
11. Description of Registrant's
Securities to be Registered.. Incorporated herein by reference to Exhibit
10.35, pages 135-143.
12. Indemnification of Directors
and Officers................ Incorporated herein by reference to Exhibit
10.35, pages 142-143.
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13. Financial Statements and Supplementary Data
Financial statements and supplementary data for year ended December 31, 1996
are incorporated herein by reference to Exhibit 10.35, pages 122-134.
Wellsford Real Properties, Inc. (Predecessor)
Combined Balance Sheet
(In thousands)
March 31,
1997
_________
(Unaudited)
ASSETS
Real estate assets, at cost:
Land $ 3,159
Buildings and improvements 17,902
___________
21,061
Construction in process 23,945
___________
45,006
Property held for sale 2,800
___________
47,806
Restricted cash 3,198
Mortgage note and interest receivable 17,934
___________
Total Assets $68,938
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LIABILITIES AND EQUITY
Tax exempt mortgage note payable $14,755
Note payable to Wellsford 21,611
___________
Total Liabilities 36,366
___________
Commitments and contingencies --
Common stock, $.01 par value per share,
100 shares issued and outstanding 1
Paid in capital in excess of
par value 30,321
Common stock to be issued 2,250
___________
Total Equity 32,572
___________
Total Liabilities and Equity $68,938
===========
See accompanying notes.
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Wellsford Real Properties, Inc. (Predecessor)
Combined Statement of Income and Equity
(In thousands)
Three Months
Ended
March 31,
1997
_____
(Unaudited)
Interest income $401
_______
Net income $401
_______
Equity, January 1, 1997 $30,005
Contributions 2,166
_______
Equity, March 31, 1997 $32,572
=======
See accompanying notes.
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Wellsford Real Properties, Inc. (Predecessor)
Combined Statement of Cash Flow
(In thousands)
Three Months
Ended
March 31,
1997
____
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $401
Adjustments to reconcile net income to net cash
provided by operating activities:
Decrease (increase) in assets:
Debt service reserve 2,322
_______
Net cash provided by operating activities 2,723
_______
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in real estate assets (26,500)
_______
Net cash (used) in investing activities (26,500)
_______
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of note payable to Wellsford 21,611
Equity contributions 2,166
_______
Net cash provided by financing activities 23,777
_______
Net increase (decrease) in cash and cash
equivalents 0
Cash and cash equivalents, beginning of period 0
_______
Cash and cash equivalents, end of period $0
_______
Cash paid during the period for interest $343
=======
See accompanying notes.
<PAGE>
WELLSFORD REAL PROPERTIES, INC. (PREDECESSOR)
NOTES TO COMBINED FINANCIAL STATEMENTS
(Unaudited)
(1) Organization and Basis of Presentation
Wellsford Real Properties, Inc. ("WRP Newco"), a C corporation formed on
January 8, 1997, is a subsidiary of Wellsford Residential Property Trust
("Wellsford"). On January 16, 1997 Wellsford announced its intention to
merge with Equity Residential Properties Trust ("EQR"). Immediately prior
to the Merger, Wellsford intends to contribute certain of its assets to
WRP Newco and have WRP Newco assume certain liabilities of Wellsford.
Immediately after the contribution of assets to WRP Newco and immediately
prior to the Merger, Wellsford intends to distribute to its common
shareholders all the outstanding shares of WRP Newco owned by Wellsford.
The common shareholders of Wellsford will receive .25 of a common share of
WRP Newco for each one common share of Wellsford owned.
The accompanying combined financial statements of the predecessor of WRP
Newco (the "Company") include approximately $45 million and $14.8 million
of Wellsford's assets and liabilities, respectively, to be contributed to
and assumed by WRP Newco, immediately prior to the Merger. These assets
and liabilities include the restricted cash (Note 3), the Sonterra
Mortgage (Note 4), the Development Communities (Note 4), and the tax
exempt mortgage notes payable (Note 5). Such financial statements have
been prepared using the historical basis of the assets and liabilities and
historical results of operations related to such assets and liabilities.
(2) Summary of Significant Accounting Policies
Principles of Combination. All significant intercompany transactions
between Wellsford and the subsidiaries relating to the assets and
liabilities that are to be contributed or assumed by WRP Newco have been
eliminated in combination.
Income Recognition. Residential communities are leased under operating
leases with terms generally one year or less; rental revenue is recognized
monthly as it is earned. Commercial properties are leased under operating
leases; rental revenue is recognized on a straight-line basis over the
terms of the leases.
Cash and Cash Equivalents. The Company considers all demand and money
market accounts and short term investments in government funds with an
original maturity of three months or less to be cash and cash equivalents.
Real Estate and Depreciation. Costs directly related to the acquisition
and improvement of real estate are capitalized, including interest expense
incurred during and related to construction and including all improvements
identified during the underwriting of a property acquisition.
Depreciation is computed over the expected useful lives of depreciable
property on a straight line basis, principally 40 years for buildings and
improvements and 5 to 12 years for furnishings and equipment.
The Company has adopted Statement of Financial Accounting Standard
("SFAS") 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of" which requires that long-lived assets
<PAGE>
to be held and used be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable and that long-lived assets to be disposed of be measured at
the lower of carrying amount or net realizable value. The adoption of
SFAS 121 has not had an impact on the Company's combined financial
position or results of operations.
Mortgage Note Receivable Impairment. The Company considers a note
impaired if, based on current information and events, it is probable that
all amounts due under the note agreement are not collectable. Impairment
is measured based upon the fair value of the underlying collateral. No
impairment has been recorded through March 31, 1997.
Financing Costs. Financing and refinancing costs are capitalized and
amortized over the term of the related loan under the interest method.
Credit facility fees are capitalized and amortized over the term of the
commitment on a straight-line basis.
Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
(3) Restricted Cash
Restricted cash primarily consists of the remaining proceeds from the
Palomino Park tax-exempt mortgage note (Note 5) which are restricted in
their use to construction costs and capitalized interest related to the
Palomino Park development project (Note 4).
(4) Real Estate Assets, Mortgage Note Receivable and Note Payable
The Company holds a $17.8 million mortgage on a 344 unit, newly
constructed community in Tucson, Arizona known as Sonterra at Williams
Centre (the "Sonterra Mortgage"). The Sonterra Mortgage was originated in
July 1996, bears interest at 9% per annum and matures in July 1999. The
Company also has the exclusive option to purchase the community for $20.5
million through December 1997 and $21 million during 1998. Interest
receivable of $0.1 million is included in the March 31, 1997 balance. The
fair market value of the Company's mortgage note receivable, estimated by
using a discounted cash flow analysis, approximates the carrying amount.
The Company currently has two multifamily projects under development in a
suburb of Denver, Colorado, totaling 760 apartment units (collectively,
the "Development Communities"). The Development Communities are the first
of five communities at Palomino Park, a 1,880 unit master-planned,
security controlled apartment/townhome community. The Company has
exercised its option to purchase the land underlying phase three and has
the option to develop phases four and five, but is not obligated to do so.
The 181.8 acre master site surrounds an amenity-filled, 24 acre park and
an approximately 29,000 square foot recreational center to be shared by
all phases. The Development Communities are being constructed pursuant to
fixed-price contracts, with a local developer, and are estimated to cost
approximately $76.1 million in total, including certain development and
incentive fees payable to the developer. The Company is committed to
<PAGE>
purchase 100% of the Development Communities upon completion and the
achievement of certain occupancy levels. At March 31, 1997 the Company
had invested $24 million related to the land for the Development
Communities, the recreation center and general infrastructure work. A
portion of such infrastructure will become the property of certain local
governmental entities at the date of completion and retirement of the tax-
exempt mortgage note payable described in Note 5. In addition,
approximately $26.5 million was outstanding at March 31, 1997 on a
construction loan to the developer, which the Company would repay upon
purchase assuming completion and achievement of certain occupancy levels.
During the period ended March 31, 1997, the Company capitalized $0.3
million of interest to the Development Communities. The Company expects
to fund the construction of its Development Communities from its working
capital and with proceeds from a credit facility and a $14.8 million tax-
exempt mortgage note (Note 5).
The Company has entered into contracts on five commercial office
properties for $47.6 million in aggregate, and has closed on four of the
properties during the first quarter of 1997. The purchase prices for
these commercial properties include approximately $2.25 million in value
of shares of WRP Newco Common to be issued to an entity in consideration
for the assignment of the purchase contracts entered into by such entity.
This amount has been classified as Common Stock to be Issued at March 31,
1997. Upon liquidation of such entity, each of the Chairman of the Board
and President of Wellsford, Messrs. Lynford and Lowenthal, will receive
approximately 16.4% of such shares, and the wife of Mark Germain, a
trustee of Wellsford, will receive approximately 13.8% of such shares.
Each are owners of such entity. The cash portion of the purchase prices
for these commercial properties was funded with a loan from Wellsford
which bears interest at LIBOR plus 1.50% and is expected to be repaid on
the date of the Merger.
Greenbrook Corporate Center ($23.7 million) is a Class A, three-story
office building with a 35 foot atrium, located in Fairfield, NJ, and
comprising approximately 190,000 rentable square feet. It is situated on
a 20 acre developed site with 7 acres of additional, contiguous
undeveloped land.
Point View ($15.8 million) consists of 194 acres containing two office
buildings, totaling approximately 560,000 square feet, an adjacent 10-acre
undeveloped site, and a central utility plant located in Wayne, NJ. The
site is currently undergoing a major renovation. The purchase of this
building was closed in February 1997.
1700 Valley Road ($1.0 million) is a Class B+, two-story vacant office
building located in Wayne, NJ and comprising approximately 70,600 square
feet. It is situated on a nine acre site. The purchase of this building
was closed in February 1997.
1800 Valley Road ($2.0 million) is a Class B+, two-story vacant office
building located in Wayne, NJ and comprising approximately 54,800 square
feet. It is situated on a 14 acre site. The purchase of this building
was closed in February 1997.
The Chatham Building ($5.1 million) is a three-story office building
located in Chatham, NJ and comprising approximately 65,000 square feet.
The site is currently undergoing a major renovation. The purchase of this
building was closed in January 1997.
<PAGE>
(5) Tax Exempt Mortgage Notes Payable
At March 31, 1997, the Company had $14.8 million of tax exempt mortgage
notes payable outstanding. The Company's tax exempt mortgage note payable
is secured by certain infrastructure at the Company's Palomino Park
development and bears interest-only payments at a variable rate (which
approximates the Standard & Poor's / J.J. Kenney index for short-term high
grade tax-exempt bonds, currently 3.65 %) until it matures in December
2035.
The tax-exempt mortgage note payable is security for tax-exempt bonds
which are backed by a letter of credit from a AAA rated financial
institution. Wellsford has guaranteed the reimbursement of the financial
institution in the event that the letter of credit is drawn upon. It is
anticipated that as a result of the Merger, this guaranty will be replaced
by the guarantees of WRP Newco and EQR. These bonds require the Company
to obtain the approval of both the trustee, as defined in the bond
documents, and the above mentioned financial institution for transactions
such as those anticipated in connection with the Merger and Distribution.
The Company expects to receive such approvals.
The fair market value of the variable rate tax exempt mortgage note is
considered to be the carrying amount.
(6) Commitments and Contingencies
WRP Newco will enter into employment agreements with certain of its
officers. Such agreements will be for terms which expire between 1999 and
2002, and will provide for aggregate annual base salaries of $0.8
million, $0.8 million and $0.6 million in 1997, 1998 and 1999 through
2002, respectively. The Company is obligated under an operating lease
covering its corporate headquarters for $0.2 million in 1997, $0.2 million
in 1998, and $0.2 million in 1999, plus certain operating expense
escalations.
As a commercial real estate owner, the Company is subject to potential
environmental costs. The Company's Point View site contains asbestos
containing materials ("ACMs"); the Company is proceeding with the removal
of all ACMs in such property which is anticipated to cost $3.5 million. At
this point in time, management of the Company is not aware of any
environmental concerns that would have a material adverse effect on the
Company's financial position or future results of operations except as
just described.
In 1997 WRP Newco will adopt a defined contribution savings plan pursuant
to Section 401 of the Internal Revenue Code. Under such a plan there are
no prior service costs. All employees will be eligible to participate in
the plan after one year of service. Employer contributions will be made
based on a discretionary amount determined by WRP Newco's management.
Employer contributions, if any, will be based upon the amount contributed
by an employee.
Subsequent to March 31, 1997, the Company has lent $20 million of an $80
million secured subordinated mezzanine loan to an entity which owns
substantially all of the equity interest (the "Equity Interests") in the
owner of a 52-story, approximately 1.75 million sq.ft. Class A office
building located at 277 Park Avenue, New York City (the "277 Park Loan").
The loan will be secured primarily by a pledge of the Equity Interests.
The 277 Park Loan will be due in April 2007 and will bear interest at the
rate of approximately 12% per annum.
<PAGE>
Wellsford Real Properties, Inc. (Predecessor)
Pro Forma Combined Income Statement
For the Three Months Ended March 31, 1997
(In Thousands Except Per Share Data)
(Unaudited)
During the period from January 1, 1997 to April 30, 1997, Wellsford Real
Properties, Inc. (Predecessor) (the "Company") originated a real estate note
receivable and purchased five commercial office properties. One of the
commercial office properties, the Greenbrook Corporate Center, is currently
occupied.
This unaudited Pro Forma Combined Income Statement is presented as if the
Company's transactions, each as referred to above, and the Merger and
Distribution had been consummated on January 1, 1997. All of the pro forma
adjustments shown are solely attributed to the transactions described. In the
opinion of the Company's management, all adjustments necessary to reflect the
effects of these transactions have been made.
This unaudited Pro Forma Combined Income Statement is presented for
comparative purposes only, and is not necessarily indicative of what the actual
results of operations of the Company would have been for the period presented;
nor does it purport to represent the results for future periods. This
unaudited Pro Forma Combined Income Statement should be read in conjunction
with, and is qualified in its entirety by, the historical financial statements
and notes thereto of the Company included in this Registration Statement on
Form 10.
<PAGE>
Wellsford Real Properties, Inc. (Predecessor)
Pro Forma Combined Income Statement
Three Months Ended March 31, 1997
(In thousands)
(Unaudited)
Pro Forma
Merger
Historical Adjustments Pro Forma
___________ ___________ __________
REVENUE
Rental income $ 762 (A) $ 762
Other income 40 (A) 40
Interest income $ 401 588 (B) 989
_________ ________ _______
Total Revenue 401 1,390 1,791
_________ ________ _______
EXPENSES
Property operating and maintenance 211 (A) 211
Real estate taxes 107 (A) 107
Interest 388 (C) 388
General and administrative 438 (D) 438
Depreciation 128 (E) 128
Property management 34 (A) 34
_________ ________ _______
Total Expenses 0 1,306 1,306
_________ ________ _______
Income before income taxes $ 401 $ 84 485
========= ========
Provision for income taxes 198 (F)
_______
Net Income $ 287
=======
Net income per common share $ 0.06 (G)
=======
Weighted average common
shares outstanding 4,877 (G)
=====
<PAGE>
Wellsford Real Properties, Inc. (Predecessor)
Notes to Unaudited Pro Forma Combined Income Statement
March 31, 1997
(A) Represents historical operating revenues and expenses of Greenbrook
Corporate Center, which was acquired in April 1997, for the three
months ended March 31, 1997. The Company's other four commercial
properties are currently vacant.
(B) Represents interest income from the 277 Park Loan for three months
($20 million at approximately 12%).
(C) Represents interest expense on the $20 million credit facility draw
used to fund the 277 Park Loan, at 7.75%.
(D) Represents the estimated general and administrative costs of WRP
Newco for three months.
(E) Represents depreciation on Greenbrook Corporate Center for the three
months ended March 31, 1997 utilizing a 40 year estimated useful
life.
(F) Represents provision for federal and state income taxes at rates of
35% and 9%, respectively.
(G) Represents the aggregate of the shares of WRP Newco Common issued in
connection with the Distribution (.25 of a share for every one share
of Wellsford Common), the approximately 215,000 shares to be issued
in connection with the acquisition of the commercial properties, and
335,000 shares (estimated) of WRP Newco Class A Common to be
purchased by ERP Operating Partnership for $3.5 million.
<PAGE>
Wellsford Real Properties, Inc. (Predecessor)
Pro Forma Combined Balance Sheet
March 31, 1997
(In Thousands)
(Unaudited)
This unaudited Pro Forma Combined Balance Sheet is presented as if the
Merger, Contribution and Distribution and the proposed credit facility
agreement with Bank of Boston and Morgan Guaranty had been consummated on March
31, 1997, the real estate note receivable had been originated on March 31, 1997
and the commercial office properties purchased by Wellsford Real Properties,
Inc. (Predecessor) (the "Company") had been purchased on March 31, 1997,
utilizing proceeds from the Merger and Contribution and a draw from the credit
facility. All of the assets and liabilities of the Company which are being
transferred to the Company in connection with the Merger, Contribution and
Distribution are recorded at their respective historical costs.
This unaudited Pro Forma Combined Balance Sheet is presented for
comparative purposes only, and is not necessarily indicative of what the actual
financial position of the Company would have been at March 31, 1997; nor does
it purport to represent the future financial position of the Company. This
unaudited Pro Forma Combined Balance Sheet should be read in conjunction with,
and is qualified in its entirety by, the historical financial statements and
notes thereto of the Company included in this Registration Statement on Form
10.
<PAGE>
Wellsford Real Properties, Inc. (Predecessor)
Pro Forma Combined Balance Sheet
March 31, 1997
(In thousands)
(Unaudited)
Pro Forma
Merger
Historical Adjustments Pro Forma
__________ ___________ __________
ASSETS
Real estate assets, at cost:
Land $ 3,159 $ 3,555 $ 6,714
Buildings and improvements 17,902 20,145 38,047
________ ________ _______
21,061 23,700 44,761
Construction in process 23,945 23,945
________ ________ _______
45,006 23,700 68,706
Property held for sale 2,800 2,800
________ ________ ________
47,806 23,700 (A) 71,506
Cash and cash equivalents 0 1,743 (B) 1,743
Restricted cash 3,198 3,198
Mortgage notes and
interest receivable 17,934 20,000 (C) 37,934
________ ________ ________
Total Assets $ 68,938 $ 45,443 $114,381
======== ======== ========
LIABILITIES AND EQUITY
Liabilities:
Tax exempt mortgage note payable $ 14,755 $ 14,755
Credit facility 48,000 (D) 48,000
Note payable to Wellsford 21,611 ($21,611)(E) 0
________ ________ ________
Total Liabilities 36,366 26,389 62,755
________ ________ ________
Commitments and contingencies -- -- --
Minority interest 2,441 (F) 2,441
Equity:
Common stock, $.01 par value
per share, 4,877,066 shares
issued and outstanding
as adjusted 1 48 49
Paid in capital in excess of
par value 30,321 18,815 49,136
Common stock to be issued 2,250 (2,250) 0
________ ________ ________
Total Equity 32,572 16,613 (G) 49,185
________ ________ ________
Total Liabilities and Equity $ 68,938 $ 45,443 $114,381
======== ======== ========
<PAGE>
Wellsford Real Properties, Inc. (Predecessor)
Notes to Unaudited Pro Forma Combined Balance Sheet
March 31, 1997
(A) Reflects the acquisition of one commercial office property as follows:
Purchase
Square Purchase Price Per
Name Location Footage Price Sq. Foot
---- -------- ------- ----- --------
Greenbrook Corp. Ctr Fairfield, NJ 190,000 $23.7 million $125
Purchase
Price & Actual/
Planned Planned Impr. Scheduled
Name Improvements Per Sq. Foot Closing Date
---- ------------ ------------ ------------
Greenbrook Corp. Ctr $0.5 million $127 April 1997
Greenbrook Corporate Center is currently in operation. The Company's
other four commercial properties are currently vacant. The purchase price
is being funded with proceeds from the credit facility.
(B) Reflects the net cash effect of the following transactions (in thousands):
. Cash contribution to WRP Newco at Contribution $15,554
. ERP Operating Partnership's purchase of
WRP Newco Common 3,500
. Repayment of note payable to Wellsford (17,311)
_______
$ 1,743
=======
(C) Represents the 277 Park Loan, a $20 million portion of an $80 million
subordinated mezzanine loan bearing interest at approximately 12% per
annum.
(D) Represents draws on the credit facility to fund the acquisition of
Greenbrook Corporate Center and the 277 Park Loan and to repay the note
payable to Wellsford.
(E) Represents the repayment of the note payable to Wellsford which was used
to fund the acquisition of the commercial office properties other than
Greenbrook Corporate Center, utilizing cash on hand ($17.3 million) and
proceeds from the credit facility ($4.3 million).
(F) Represents ERP Operating Partnership's 20% minority interest in Palomino
Park, which has been combined in the Company's Pro Forma Combined Balance
Sheet.
(G) Represents the aggregate of the shares of WRP Newco Common issued in
connection with the Distribution (.25 of a share for every one share of
Wellsford Common), the approximately 215,000 shares to be issued in
connection with the acquisition of the commercial properties, and the
335,000 shares (estimated) of WRP Newco Class A Common to be purchased by
ERP Operating Partnership for $3.5 million.
<PAGE>
14. Changes in and Disagreements
With Accountants on
Accounting and Financial Disclosure.... Not Applicable.
15. Financial Statements and Exhibits
(a) HISTORICAL
Report of Independent Auditors
Combined Balance Sheets at December 31, 1995, December 31, 1996
and March 31, 1997 (Unaudited)
Combined Statements of Income and Equity For the Year Ended December 31,
1996 and For the Three Months Ended March 31, 1997 (Unaudited)
Combined Statements of Cash Flow For the Period From March 22, 1995 to
December 31, 1995, For the Year Ended December 31, 1996 and For the Three
Months Ended March 31, 1997 (Unaudited)
Notes to Combined Financial Statements
PRO FORMA
Combined Income Statements For the Year Ended December 31, 1996
(Unaudited) and For the Three Months Ended March 31, 1997 (Unaudited)
Notes to Unaudited Combined Income Statements
Combined Balance Sheets For the Year Ended December 31, 1996 (Unaudited)
and For the Three Months Ended March 31, 1997 (Unaudited)
Notes to Unaudited Combined Balance Sheets
(b) See Exhibits listed below.
Exhibit No. Description***
3.1 Form of Articles of Amendment and Restatement of the Company.
3.2 Form of Articles Supplementary Classifying 335,000 Shares of Common
Stock as Class A Common Stock.
3.3 Form of Articles Supplementary Classifying 2,000,000 Shares of Common
Stock as Series A 8% Convertible Redeemable Preferred Stock.
3.4 Form of Bylaws of the Company.
4.1 Specimen certificate for Common Stock.
10.1 $17.8 million Loan Agreement, dated as of June 28, 1996, by and
between Wellsford Residential Property Trust, as lender, and
Specified Properties VIII, L.P., as borrower, relating to Sonterra.*
10.2 Option Agreement between Wellsford Residential Property Trust, as
purchaser, and Specified Properties VIII, as seller, dated as of June
28, 1996, relating to Sonterra.*
10.3 Operating Agreement of Park at Highlands LLC, dated as of April 27,
1995, between Wellsford Park Highlands Corp. and Al Feld.**
10.4 First Amendment to Operating Agreement of Park at Highlands LLC,
dated as of December 29, 1995, between Wellsford Park Highlands Corp.
and Al Feld.*
10.5 Tri-Party Agreement by and among Park at Highlands LLC, NationsBank
of Texas, N.A., Wellsford Park Highlands Corp., Wellsford Residential
Property Trust and Al Feld dated December 29, 1995, relating to Blue
Ridge.*
10.6 Operating Agreement of Red Canyon at Palomino Park LLC between
Wellsford Park Highlands Corp. and Al Feld, dated as of April 17,
1996, relating to Red Canyon.*
<PAGE>
10.7 Second Amended and Restated Vacant Land Purchase and Sale Agreement
between Mission Viejo Company and The Feld Company dated March 23,
1995, as amended by First Amendment, dated May 1, 1996, relating to
the land underlying Palomino Park.*
10.8 Trust Indenture, dated as of December 1, 1995, between Palomino Park
Public Improvements Corporation ("PPPIC") and United States Trust
Company of New York, as trustee, securing Wellsford Residential
Property Trust's Assessment Lien Revenue Bonds Series 1995 -
$14,755,000.**
10.9 Letter of Credit Reimbursement Agreement, dated as of December 1,
1995, between PPPIC, Wellsford Residential Property Trust and
Dresdner Bank AG, New York Branch.**
10.10 Purchase and Sale Agreement, dated as of November 21, 1996, between
Wellsford Commercial Properties, L.L.C. and American Cyanamid Company
relating to Point View office complex, as amended by Amendment dated
January 13, 1997, Second Amendment dated February 13, 1997 and Third
Amendment dated February 28, 1997, and Indemnification and Stock
Transfer Agreement, dated February 28, 1997, between American
Cyanamid Company and Wellsford Wayne Corp.*
10.11 Agreement of Sale, dated December 2, 1996, between Wellsford
Commercial Properties, L.L.C. and Barlax, relating to Chatham, as
amended by Amendment dated December 23, 1996 and Second Amendment
dated April 1, 1997.*
10.12 Agreement of Sale, dated December 23, 1996, between Wellsford
Commercial Properties, L.L.C. and N.J. Greenbrook Partners, L.P,
relating to Greenbrook.*
10.13 Credit Agreement, dated as of April 25, 1997, between Park Avenue
Financing Company LLC, PAMC Co-Manager Inc., PAFC Management, Inc.,
Stanley Stahl, The First National Bank of Boston, the Company, Other
Banks that may become parties to the Agreement and The First National
Bank of Boston, as Agent, relating to 277 Park Avenue.**
10.14 Assignment of Member's Interest, dated as of April 25, 1997, by PAFC
Management, Inc. and Stanley Stahl to The First National Bank of
Boston, relating to 277 Park Avenue (relating to interests in the
Park Avenue Financing Company, LLC).**
10.15 Assignment of Member's Interest, dated as of April 25, 1997, by PAMC
Co-Manager Inc. and Park Avenue Financing Company, LLC to The First
National Bank of Boston, relating to 277 Park Avenue (relating to
interests in 277 Park Avenue, LLC).**
10.16 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley Stahl
to The First National Bank of Boston, relating to 277 Park Avenue
(relating to stock in Park Avenue Management Corporation).**
10.17 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley Stahl
to The First National Bank of Boston, relating to 277 Park Avenue
(relating to stock in PAMC Co-Manager Inc.).**
10.18 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley Stahl
to The First National Bank of Boston, relating to 277 Park Avenue
(relating to stock in PAFC Management, Inc.).**
10.19 Conditional Guaranty of Payment and Performance, dated as of April
25, 1997, by Stanley Stahl, relating to 277 Park Avenue.**
10.20 Cash Collateral Account Security, Pledge and Assignment Agreement,
dated as of April 25, 1997, between 277 Park Avenue, LLC, Park Avenue
Management Corporation, Park Avenue Financing Company LLC, PAMC Co-
Manager Inc., Stanley Stahl and The First National Bank of Boston,
relating to 277 Park Avenue.**
10.21 Recognition Agreement, dated as of April 25, 1997, between The First
National Bank of Boston, the Company, Column Financial, Inc., Park
Avenue Financing Company LLC, PAMC Co-Manager, Inc. and 277 Park
<PAGE>
Avenue, LLC, relating to 277 Park Avenue.**
10.22 Intercreditor Agreement, dated as of April 25, 1997, between the
Company and The First National Bank of Boston, as Agent, relating to
277 Park Avenue.**
10.23 Form of Contribution and Distribution Agreement by and between
Wellsford Residential Property Trust and the Company.*
10.24 Form of Common Stock and Preferred Stock Purchase Agreement by and
between the Company and ERP Operating Limited Partnership.*
10.25 Form of Registration Rights Agreement by and between the Company and
ERP Operating Limited Partnership.*
10.26 Form of Agreement Regarding Palomino Park by and between the Company
and ERP Operating Limited Partnership.*
10.27 Form of Credit Enhancement Agreement by and between the Company and
ERP Operating Limited Partnership, relating to Palomino Park.*
10.28 Form of Sonterra Agreement by and between the Company and ERP
Operating Partnership.*
10.29 Form of 1997 Management Incentive Plan of the Company.**
10.30 Form of Rollover Stock Option Plan of the Company.**
10.31 Form of Employment Agreement between the Company and Jeffrey H.
Lynford.
10.32 Form of Employment Agreement between the Company and Edward
Lowenthal.
10.33 Form of Employment Agreement between the Company and Gregory F.
Hughes.
10.34 Form of Employment Agreement between the Company and David M. Strong.
10.35 Joint Proxy Statement/Prospectus/Information Statement of Wellsford
Residential Property Trust, Equity Residential Properties Trust
("EQR") and the Company, included in EQR's Registration Statement on
Form S-4 declared effective on April 24, 1997.**
21.1 Subsidiaries of the Registrant.**
27.1 Financial Data Schedule.**
______________________________
* Previously filed as an exhibit to the Form 10 filed on April 23,
1997.
** Previously filed as an exhibit to the Form 10/A Amendment No. 1 filed
on May 21, 1997.
*** The Company acquired its interest in a number of these documents by
assignment.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
WELLSFORD REAL PROPERTIES, INC.
By:/s/ Edward Lowenthal
---------------------------------------
Edward Lowenthal
President and Chief Executive Officer
Dated: May 28, 1997
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Document***
3.1 Form of Articles of Amendment and Restatement of the Company.
3.2 Form of Articles Supplementary Classifying 335,000 Shares of Common
Stock as Class A Common Stock.
3.3 Form of Articles Supplementary Classifying 2,000,000 Shares of Common
Stock as Series A 8% Convertible Redeemable Preferred Stock.
3.4 Form of Bylaws of the Company.
4.1 Specimen certificate for Common Stock.
10.1 $17.8 million Loan Agreement, dated as of June 28, 1996, by and
between Wellsford Residential Property Trust, as lender, and
Specified Properties VIII, L.P., as borrower, relating to Sonterra.*
10.2 Option Agreement between Wellsford Residential Property Trust, as
purchaser, and Specified Properties VIII, as seller, dated as of June
28, 1996, relating to Sonterra.*
10.3 Operating Agreement of Park at Highlands LLC, dated as of April 27,
1995, between Wellsford Park Highlands Corp. and Al Feld.**
10.4 First Amendment to Operating Agreement of Park at Highlands LLC,
dated as of December 29, 1995, between Wellsford Park Highlands Corp.
and Al Feld.*
10.5 Tri-Party Agreement by and among Park at Highlands LLC, NationsBank
of Texas, N.A., Wellsford Park Highlands Corp., Wellsford Residential
Property Trust and Al Feld dated December 29, 1995, relating to Blue
Ridge.*
10.6 Operating Agreement of Red Canyon at Palomino Park LLC between
Wellsford Park Highlands Corp. and Al Feld, dated as of April 17,
1996, relating to Red Canyon.*
10.7 Second Amended and Restated Vacant Land Purchase and Sale Agreement
between Mission Viejo Company and The Feld Company dated March 23,
1995, as amended by First Amendment, dated May 1, 1996, relating to
the land underlying Palomino Park.*
10.8 Trust Indenture, dated as of December 1, 1995, between Palomino Park
Public Improvements Corporation ("PPPIC") and United States Trust
Company of New York, as trustee, securing Wellsford Residential
Property Trust's Assessment Lien Revenue Bonds Series 1995 -
$14,755,000.**
10.9 Letter of Credit Reimbursement Agreement, dated as of December 1,
1995, between PPPIC, Wellsford Residential Property Trust and
Dresdner Bank AG, New York Branch.**
10.10 Purchase and Sale Agreement, dated as of November 21, 1996, between
<PAGE>
Wellsford Commercial Properties, L.L.C. and American Cyanamid Company
relating to Point View office complex, as amended by Amendment dated
January 13, 1997, Second Amendment dated February 13, 1997 and Third
Amendment dated February 28, 1997 and Indemnification and Stock
Transfer Agreement, dated February 28, 1997, between American
Cyanamid Company and Wellsford Wayne Corp.*
10.11 Agreement of Sale, dated December 2, 1996, between Wellsford
Commercial Properties, L.L.C. and Barlax, relating to Chatham, as
amended by Amendment dated December 23, 1996 and Second Amendment
dated April 1, 1997.*
10.12 Agreement of Sale, dated December 23, 1996, between Wellsford
Commercial Properties, L.L.C. and N.J. Greenbrook Partners, L.P,
relating to Greenbrook.*
10.13 Credit Agreement, dated as of April 25, 1997, between Park Avenue
Financing Company LLC, PAMC Co-Manager Inc., PAFC Management, Inc.,
Stanley Stahl, The First National Bank of Boston, the Company, Other
Banks that may become parties to the Agreement and The First National
Bank of Boston, as Agent, relating to 277 Park Avenue.**
10.14 Assignment of Member's Interest, dated as of April 25, 1997, by PAFC
Management, Inc. and Stanley Stahl to The First National Bank of
Boston, relating to 277 Park Avenue (relating to interests in the
Park Avenue Financing Company, LLC).**
10.15 Assignment of Member's Interest, dated as of April 25, 1997, by PAMC
Co-Manager Inc. and Park Avenue Financing, LLC to The First National
Bank of Boston, relating to 277 Park Avenue (relating to interests in
277 Park Avenue, LLC).**
10.16 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley Stahl
to The First National Bank of Boston, relating to 277 Park Avenue
(relating to stock in Park Avenue Management Corporation).**
10.17 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley Stahl
to The First National Bank of Boston, relating to 277 Park Avenue
(relating to stock in PAMC Co-Manager Inc.).**
10.18 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley Stahl
to The First National Bank of Boston, relating to 277 Park Avenue
(relating to stock in PAFC Management, Inc.).**
10.19 Conditional Guaranty of Payment and Performance, dated as of April
25, 1997, by Stanley Stahl, relating to 277 Park Avenue.**
10.20 Cash Collateral Account Security, Pledge and Assignment Agreement,
dated as of April 25, 1997, between 277 Park Avenue, LLC, Park Avenue
Management Corporation, Park Avenue Financing Company LLC, PAMC Co-
Manager Inc., Stanley Stahl and The First National Bank of Boston,
relating to 277 Park Avenue.**
10.21 Recognition Agreement, dated as of April 25, 1997, between The First
National Bank of Boston, the Company, Column Financial, Inc., Park
Avenue Financing Company LLC, PAMC Co-Manager, Inc. and 277 Park
Avenue, LLC, relating to 277 Park Avenue.**
<PAGE>
10.22 Intercreditor Agreement, dated as of April 25, 1997, between the
Company and The First National Bank of Boston, as Agent, relating to
277 Park Avenue.**
10.23 Form of Contribution and Distribution Agreement by and between
Wellsford Residential Property Trust and the Company.*
10.24 Form of Common Stock and Preferred Stock Purchase Agreement by and
between the Company and ERP Operating Limited Partnership.*
10.25 Form of Registration Rights Agreement by and between the Company and
ERP Operating Limited Partnership.*
10.26 Form of Agreement Regarding Palomino Park by and between the Company
and ERP Operating Limited Partnership.*
10.27 Form of Credit Enhancement Agreement by and between the Company and
ERP Operating Limited Partnership, relating to Palomino Park.*
10.28 Form of Sonterra Agreement by and between the Company and ERP
Operating Partnership.*
10.29 Form of 1997 Management Incentive Plan of the Company.**
10.30 Form of Rollover Stock Option Plan of the Company.**
10.31 Form of Employment Agreement between the Company and Jeffrey H.
Lynford.
10.32 Form of Employment Agreement between the Company and Edward
Lowenthal.
10.33 Form of Employment Agreement between the Company and Gregory F.
Hughes.
10.34 Form of Employment Agreement between the Company and David M. Strong.
10.35 Joint Proxy Statement/Prospectus/Information Statement of Wellsford
Residential Property Trust, Equity Residential Properties Trust
("EQR") and the Company, included in EQR's Registration Statement on
Form S-4 declared effective on April 24, 1997.**
21.1 Subsidiaries of the Registrant.**
27.1 Financial Data Schedule.**
______________________________
* Previously filed as an exhibit to the Form 10 filed on April 23,
1997.
** Previously filed as an exhibit to the Form 10/A Amendment No. 1 filed
on May 21, 1997.
*** The Company acquired its interest in a number of these documents by
assignment.
<PAGE>
EXHIBIT 3.1
WELLSFORD REAL PROPERTIES, INC.
ARTICLES OF AMENDMENT AND RESTATEMENT
FIRST: Wellsford Real Properties, Inc., a Maryland
corporation (the "Corporation"), desires to amend and restate its
charter as currently in effect and as hereinafter amended.
SECOND: The following provisions are all the
provisions of the charter currently in effect and as hereinafter
amended:
ARTICLE I
INCORPORATOR
The undersigned, Tracy A. Bacigalupo, whose address is
c/o Ballard Spahr Andrews & Ingersoll, 300 East Lombard Street,
Baltimore, Maryland 21202, being at least 18 years of age, does
hereby form a corporation under the general laws of the State of
Maryland.
ARTICLE II
NAME
The name of the corporation (the "Corporation") is:
Wellsford Real Properties, Inc.
ARTICLE III
PURPOSE
The purposes for which the Corporation is formed are to
engage in any lawful act or activity for which corporations may
be organized under the general laws of the State of Maryland as
now or hereafter in force.
ARTICLE IV
PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT
The address of the principal office of the Corporation
in the State of Maryland is c/o Ballard Spahr Andrews &
Ingersoll, 300 East Lombard Street, Baltimore, Maryland 21202,
Attention: James J. Hanks, Jr. The name of the resident agent of
the Corporation in the State of Maryland is James J. Hanks, Jr.,
whose post address is c/o Ballard Spahr Andrews & Ingersoll, 300
East Lombard Street, Baltimore, Maryland 21202. The resident
agent is a citizen of and resides in the State of Maryland.
ARTICLE V
PROVISIONS FOR DEFINING, LIMITING
AND REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS
Section 5.1 Number and Classification of Directors.
The business and affairs of the Corporation shall be managed
under the direction of the Board of Directors. The number of
directors of the Corporation initially shall be six, which number
may be increased or decreased pursuant to the Bylaws, but shall
never be less than the minimum number required by the Maryland
General Corporation Law. The names of the directors who shall
serve until the first annual meeting of stockholders and until
their successors are duly elected and qualify and the class of
directors to which each is assigned are:
Name Class
Jeffrey H. Lynford I
<PAGE>
Mark S. Germain I
Frank J. Hoenemeyer II
Frank J. Sixt II
Edward Lowenthal III
Rodney F. DuBois III
These directors may increase the number of directors and may fill
any vacancy, whether resulting from an increase in the number of
directors or otherwise, on the Board of Directors occurring
before the first annual meeting of stockholders in the manner
provided in the Bylaws.
The directors (other than any director elected solely
by holders of one or more classes or series of Preferred Stock)
shall be classified, with respect to the terms for which they
severally hold office, into three classes, the Class I directors
to hold office initially for a term expiring at the annual
meeting of stockholders in 1998, the Class II directors to hold
office initially for a term expiring at the annual meeting of
stockholders in 1999 and the Class III directors to hold office
initially for a term expiring at the annual meeting of
stockholders in 2000, with the members of each class to hold
office until their successors are duly elected and qualify. At
each annual meeting of the stockholders, the successors to the
class of directors whose term expires at such meeting shall be
elected to hold office for a term expiring at the annual meeting
of stockholders held in the third year following the year of
their election.
Section 5.2 Mergers, Consolidations and Share
Exchanges. Notwithstanding any provision of law permitting or
requiring such action to be taken or authorized by the
affirmative vote of the holders of shares entitled to cast a
greater number of votes, a consolidation or share exchange or a
merger in which the Corporation is the successor need be approved
only by the affirmative vote of holders of shares entitled to
cast a majority of all the votes entitled to be cast on the
matter.
Section 5.3 Authorization by Board of Stock Issuance.
The Board of Directors may authorize the issuance from time to
time of shares of stock of the Corporation of any class or
series, whether now or hereafter authorized, or securities or
rights convertible into shares of its stock of any class or
series, whether now or hereafter authorized, for such
consideration as the Board of Directors may deem advisable (or
without consideration in the case of a stock split or stock
dividend), subject to such restrictions or limitations, if any,
as may be set forth in the charter or the Bylaws.
Section 5.4 Preemptive Rights. Except as may be
provided by contract or by the Board of Directors in setting the
terms of classified or reclassified shares of stock pursuant to
Section 6.2, no holder of shares of stock of the Corporation
shall, as such holder, have any preemptive right to purchase or
subscribe for any additional shares of stock of the Corporation
or any other security of the Corporation which it may issue or
sell.
Section 5.5 Removal of Directors. Subject to the
rights of holders of one or more classes or series of stock to
elect one or more directors, any director, or the entire Board of
Directors, may be removed, but only for cause and then only by
<PAGE>
the affirmative vote of the holders of at least two thirds of the
votes entitled to be cast in the election of directors. For the
purpose of this Section 5.5, "cause" shall mean with respect to
any particular director a final judgment of a court of competent
jurisdiction holding that such director caused demonstrable,
material harm to the Corporation through bad faith or active and
deliberate dishonesty.
Section 5.6 Transactions Between the Corporation and
its Directors, Officers, Employees and Agents. Subject to any
express restrictions in this charter or adopted by the Directors
in the Bylaws or by resolution, the Corporation may enter into
any contract or transaction of any kind (including, without
limitation, for the purchase or sale of property or for any type
of services, including those in connection with underwriting the
offer or sale of securities of the Corporation) with any person
or entity, including any director, officer, employee or agent of
the Corporation or any person or entity affiliated with a
director, officer, employee or agent of the Corporation, whether
or not any of them has a financial interest in such transaction.
Section 5.7 Ambiguity. In case of any ambiguity in
any provision of this charter, the Board of Directors of the
Corporation shall have the power to determine the application of
such provision with respect to any situation based on the facts
known to the Board and such determination shall be final and
conclusive.
ARTICLE VI
STOCK
Section 6.1 Authorized Shares. The Corporation has
authority to issue 200,000,000 shares of Common Stock, $.01 par
value per share ("Common Stock"). The aggregate par value of all
authorized shares of stock having par value is $2,000,000.
Section 6.2 Reclassified Shares. The Board of Directors
may reclassify any unissued shares of stock from time to time in one
or more classes or series of stock. Prior to issuance of
reclassified shares of any class or series, the Board of Directors
by resolution shall: (a) designate that class or series to
distinguish it from all other classes and series of stock of the
Corporation; (b) specify the number of shares to be included in the
class or series; (c) set or change, subject to the express terms of
any class or series of stock of the Corporation outstanding at the
time, the preferences, conversion or other rights, voting powers,
restrictions, limitations as to dividends or other distributions,
qualifications and terms and conditions of redemption for each class
or series; and (d) cause the Corporation to file articles
supplementary with the State Department of Assessments and Taxation
of Maryland ("SDAT"). Any of the terms of any class or series of
stock set or changed pursuant to clause (c) of this Section 6.2 may
be made dependent upon facts or events ascertainable outside the
charter (including determinations by the Board of Directors or other
facts or events within the control of the Corporation) and may vary
among holders thereof, provided that the manner in which such facts,
events or variations shall operate upon the terms of such class or
series of stock is clearly and expressly set forth in the articles
supplementary filed with the SDAT.
Section 6.3 Charter and Bylaws. All persons who shall
acquire stock in the Corporation shall acquire the same subject to
the provisions of the charter and the Bylaws.
ARTICLE VII
<PAGE>
INDEMNIFICATION AND ADVANCE OF EXPENSES
The Corporation shall have the power, to the maximum extent
permitted by Maryland law in effect from time to time, to obligate
itself to indemnify, and to pay or reimburse reasonable expenses in
advance of final disposition of a proceeding to, (a) any individual
who is a present or former director or officer of the Corporation or
(b) any individual who, while a director of the Corporation and at
the request of the Corporation, serves or has served as a director,
officer, partner, trustee, manager or member of another corporation,
partnership, joint venture, trust, employee benefit plan, limited
liability company or any other enterprise from and against any claim
or liability to which such person may become subject or which such
person may incur by reason of his status as a present or former
director or officer of the Corporation. The Corporation shall have
the power, with the approval of the Board of Directors, to provide
such indemnification and advancement of expenses to a person who
served a predecessor of the Corporation in any of the capacities
described in (a) or (b) above and to any employee or agent of the
Corporation or a predecessor of the Corporation.
ARTICLE VIII
AMENDMENTS
The Corporation reserves the right from time to time to
make any amendment to its charter, now or hereafter authorized by
law, including any amendment altering the terms or contract rights,
as expressly set forth in this charter, of any shares of outstanding
stock. All rights and powers conferred by the charter on
stockholders, directors and officers are granted subject to this
reservation. Except as set forth in the following sentence, any
amendment to the charter shall be valid only if approved by the
affirmative vote of a majority of all the votes entitled to be cast
on the matter. Any amendment to Section 5.1, Section 5.5 or this
sentence of the charter or any amendment to the charter providing
that the stockholders of the Corporation may approve an action by a
lesser percentage of votes than that required by law shall be valid
only if approved by the affirmative vote of two thirds of all the
votes entitled to be cast on the matter.
ARTICLE IX
LIMITATION OF LIABILITY
To the maximum extent that Maryland law in effect from time
to time permits limitation of the liability of directors and
officers of a corporation, no director or officer of the Corporation
shall be liable to the Corporation or its stockholders for money
damages. Neither the amendment nor repeal of this Article IX, nor
the adoption or amendment of any other provision of the charter or
Bylaws inconsistent with this Article IX, shall apply to or affect
in any respect the applicability of the preceding sentence with
respect to any act or failure to act which occurred prior to such
amendment, repeal or adoption.
THIRD: The amendment to and restatement of the charter as
hereinabove set forth has been duly advised by the Board of
Directors and approved by the stockholders of the Corporation as
required by law.
FOURTH: The current address of the principal office of the
Corporation is as set forth in Article IV of the foregoing amendment
and restatement of the charter.
FIFTH: The name and address of the Corporation's current
resident agent is as set forth in Article IV of the foregoing
amendment and restatement of the charter.
<PAGE>
SIXTH: The number of directors of the Corporation and the
names of those currently in office are as set forth in Article V of
the foregoing amendment and restatement of the charter.
SEVENTH: The total number of shares of stock which the
Corporation had authority to issue immediately prior to this
amendment and restatement was 10,000 shares, $.01 par value per
share. The aggregate par value of all shares of stock having par
value was $100.00.
EIGHTH: The total number of shares of stock which the
Corporation has authority to issue pursuant to the foregoing
amendment and restatement of the charter is 200,000,000, consisting
of 200,000,000 shares of Common Stock, $.01 par value per share.
The aggregate par value of all authorized shares of stock having par
value is $2,000,000.
NINTH: The undersigned President acknowledges these
Articles of Amendment and Restatement to be the corporate act of the
Corporation and as to all matters or facts required to be verified
under oath, the undersigned President acknowledges that to the best
of his knowledge, information and belief, these matters and facts
are true in all material respects and that this statement is made
under the penalties for perjury.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these
Articles of Amendment and Restatement to be signed in its name and
on its behalf by its President and attested to by its Secretary on
this _____ day of ____________, 1997.
ATTEST: WELLSFORD REAL PROPERTIES, INC.
__________________________ By:_________________________(SEAL)
Secretary President
<PAGE>
EXHIBIT 3.2
WELLSFORD REAL PROPERTIES, INC.
ARTICLES SUPPLEMENTARY
___________ SHARES
CLASS A COMMON STOCK
Wellsford Real Properties, Inc, a Maryland corporation (the
"Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: Under a power contained in Section 6.2 of the
charter of the Corporation (the "Charter"), the Board of
Directors of the Corporation (the "Board of Directors"), by
[resolution duly adopted at a meeting duly called and held on]
[unanimous written consent dated] ___________, 1997, reclassified
and designated ______________ shares (the "Shares") of Common
Stock (as defined in the Charter) as shares of Class A Common
Stock, $.01 par value per share (the "Class A Common Stock"),
with the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends and other
distributions, qualifications and terms and conditions of
redemption as set forth as follows, which, upon any restatement
of the Charter shall be made part of Article VI, with any
necessary or appropriate changes to the enumeration or lettering
of sections or subsections hereof.
CLASS A COMMON STOCK
Section 1. Certain Definitions. For purposes of the
terms of the Class A Common Stock the following terms have the
following meanings:
"Affiliate" shall mean, when used with respect to a
specified Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by
or is under common Control with the Person specified.
"Beneficial Ownership" shall mean ownership of stock by a
REIT who would be treated as an owner of such shares of stock
under Section 856(c)(5) of the Code. The terms "Beneficial
Owner," "Beneficially Owns" and "Beneficially Owned" shall have
correlative meanings.
"Business Day" shall mean any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which
banking institutions in New York City are authorized or required
by law, regulation or executive order to close.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
<PAGE>
"Common Stock" shall mean the common stock, $.01 par value
per share, of the Corporation.
"Class A Common Stock" shall mean the Class A common stock,
$.01 par value per share, of the Corporation.
"Closing Date" shall mean [May 30, 1997].
"Control" including the terms "Controlling", "Controlled by"
and "under common Control with", shall mean the possession,
direct or indirect, of the power to direct or cause the direction
of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Corporation" shall mean Wellsford Real Properties, Inc.
"Liquidation Value," when used in connection with Series A
8% Convertible Redeemable Preferred Stock, shall mean $25.00 per
share.
"Person" shall mean any natural person, corporation,
business or real estate investment trust, joint venture,
association, company, partnership, or government, or any agency
or political subdivision thereof.
"Preferred Stock" shall mean all shares of stock of the
Corporation having a preference in the payment of dividends or
any distribution of assets upon liquidation, dissolution or
winding-up of the Corporation to the Common Stock or Class A
Common Stock.
"REIT" shall mean a real estate investment trust under
Section 856 of the Code.
"REIT Ownership Limit" shall initially mean nine and nine-
tenths percent (9.9%) of the value of the outstanding Voting
Stock of the Corporation.
"Responsible Officer" of any corporation shall mean any
executive officer of such corporation, and any other officer or
similar official thereof responsible for the administration of
the obligations of such corporation in respect of the terms of
the Class A Common Stock.
"Transfer" shall mean any sale, transfer, redemption, gift,
hypothecation, pledge, assignment, devise or other disposition of
Voting Stock, whether voluntary or involuntary, whether of
record, constructively or beneficially and whether by operation
of law or otherwise.
"Triggering Event" shall mean any event undertaken or caused
by the Corporation, which would result in ERP Operating Limited
Partnership ("ERP Operating Partnership"), Equity Residential
Properties Trust or any Affiliate of either of them collectively
to Beneficially Own outstanding shares of Class A Common Stock in
excess of the REIT Ownership Limit.
<PAGE>
"Voting Stock" shall mean the Class A Common Stock, the
Common Stock and any other outstanding shares of stock of the
Corporation entitled to vote generally in the election of
directors.
Section 2. Rights. The holders of Class A Common Stock
shall have all rights, including, but not limited to, voting,
dividend, distribution, liquidation and other rights of holders
of shares of Common Stock; provided, however, holders of Class A
Common Stock shall have such additional rights as provided
herein.
Section 3. Voting Rights. The holders of the Class A
Common Stock, voting separately as a class, shall be entitled to
elect one member (the "Class A Director") of the Board of
Directors of the Corporation so long as (i) ERP Operating
Partnership is obligated to purchase Preferred Stock pursuant to
that certain Common Stock and Preferred Stock Purchase Agreement
dated as of , 1997 between ERP Operating
Partnership and the Corporation; (ii) ERP Operating Partnership
has obligations pursuant to that certain Agreement Regarding
Palomino Park dated as of , 1997 between ERP
Operating Partnership and the Corporation; (iii) ERP Operating
Partnership has obligations pursuant to that certain Credit
Enhancement Agreement dated as of , 1997 between
ERP Operating Partnership and the Corporation; or (iv) the
aggregate Liquidation Value of the shares of Series A 8%
Convertible Redeemable Preferred Stock of the Corporation owned
by ERP Operating Partnership is greater than $10,000,000;
provided, however, in no event shall the period during which the
holders of the Class A Common Stock are entitled to elect the
Class A Director be less than two years from the Closing Date.
The Class A Director may be removed without cause, only by the
affirmative vote of the holders of a majority of the outstanding
shares of Class A Common Stock.
Section 4. Optional Conversion.
(a) Holders of Class A Common Stock shall have the
right, exercisable at any time and from time to time to
convert all or any shares of Class A Common Stock into
shares of Common Stock at a conversion rate of one share of
Common Stock for each share of Class A Common Stock, subject
to adjustment (the "Conversion Rate"). Upon conversion, no
adjustment or payment will be made for distributions, but if
any holder surrenders Class A Common Stock for conversion
after the close of business on the record date for the
payment of a dividend or distribution and prior to the
opening of business on the related payment date of such
dividend or distribution then, notwithstanding such
conversion, the dividend or distribution payable on such
payment date will be paid to the registered holder of such
shares on such record date.
(b) Any holder of one or more shares of Class A Common
Stock electing to convert such share or shares shall deliver
the certificate or certificates therefor to the principal
office of any transfer agent for the Common Stock, with the
<PAGE>
form of notice of election to convert as the Corporation
shall prescribe fully completed and duly executed and (if so
required by the Corporation or any conversion agent)
accompanied by instruments of transfer in form satisfactory
to the Corporation and to any conversion agent, duly
executed by the registered holder or his duly authorized
attorney, and transfer taxes, stamps or funds therefor or
evidence of payment thereof. The conversion right with
respect to any such shares shall be deemed to have been
exercised at the date upon which the certificates therefor
accompanied by such duly executed notice of election and
instruments of transfer and such taxes, stamps, funds or
evidence of payment shall have been so delivered, and the
person or persons entitled to receive the shares of the
Common Stock issuable upon such conversion shall be treated
for all purposes as the record holder or holders of such
shares of the Common Stock upon said date.
(c) If a holder converts shares of Class A Common
Stock, the Corporation shall pay any documentary, stamp or
similar issue or transfer tax due on the issuance of shares
of Common Stock upon the conversion. The holder, however,
shall pay to the Corporation the amount of any tax which is
due (or shall establish to the satisfaction of the
Corporation payment thereof) if the shares are to be issued
in a name other than the name of such holder and shall pay
to the Corporation any amount required by the last sentence
of Section 4(a) hereof.
(d) The Corporation shall reserve and shall at all
times have reserved out of its authorized but unissued
shares of Common Stock a sufficient number of shares of
Common Stock to permit the conversion of the then
outstanding shares of Class A Common Stock. All shares of
Common Stock which may be issued upon conversion of shares
of Class A Common Stock shall be validly issued, fully paid
and nonassessable, and not subject to preemptive or other
similar rights. In order that the Corporation may issue
shares of Common Stock upon conversion of shares of Class A
Common Stock, the Corporation will endeavor to comply with
all applicable federal and state securities laws and will
endeavor to list such Common Stock to be issued upon
conversion on each securities exchange on which the Common
Stock is listed.
(e) The Conversion Rate in effect at any time shall be
subject to adjustment from time to time as follows:
(i) If the Corporation shall (1) reclassify
the outstanding shares of Common Stock into shares
of some other class or series of stock of the
Corporation, (2) subdivide the outstanding shares
of Common Stock into a greater number of shares of
Common Stock or (3) combine the outstanding shares
of Common Stock into a smaller number of shares of
Common Stock, the conversion rate immediately
prior to such action shall be adjusted so that the
holder of any shares of Class A Common Stock
<PAGE>
thereafter surrendered for conversion shall be
entitled to receive the number of shares of Common
Stock which he would have owned immediately
following such action had such shares of Class A
Common Stock been converted immediately prior
thereto. An adjustment made pursuant to this
Section 4(e)(i) shall become effective immediately
after the effective date of a subdivision,
combination or reclassification.
(ii) The Market Price per share of the Common
Stock on any date shall be deemed to be the
average of the daily closing prices for 30
consecutive trading days commencing 45 trading
days before the date in question. The closing
price for each day shall be the last reported
sales price or, in case no such reported sale
takes place on such date, the average of the
reported closing bid and asked prices, regular
way, in either case on the New York Stock
Exchange, or if the Common Stock is not listed or
admitted to trading on such Exchange, on the
principal national securities exchange on which
the Common Stock is listed or admitted to trading
or, if not listed or admitted to trading on any
national securities exchange, the closing sale
price of the Common Stock or, in case no reported
sale takes place, the average of the closing bid
and asked prices, on NASDAQ or any comparable
system, or if the Common Stock is not quoted on
NASDAQ or any comparable system, the closing sale
price or, in case no reported sale takes place,
the average of the closing bid and asked prices,
as furnished by any two members of the National
Association of Securities Dealers, Inc. selected
from time to time by the Corporation for that
purpose.
(iii) In any case in which this Section 4
shall require that an adjustment be made
immediately following a record date, the
Corporation may elect to defer (but only until
five Business Days following the mailing of the
notice described in Section 4(j)) issuing to the
holder of any Class A Common Stock converted after
such record date the Common Stock and other shares
of stock of the Corporation issuable upon such
conversion over and above the Common Stock and
other shares of stock of the Corporation issuable
upon such conversion only on the basis of the
conversion rate prior to adjustment; and, in lieu
of the shares the issuance of which is so
deferred, the Corporation shall issue or cause its
transfer agents to issue appropriate evidence of
the right to receive such shares.
(f) No adjustment in the Conversion Rate shall be
required until cumulative adjustments result in a
<PAGE>
change of 1% or more of the conversion price as in
effect prior to the last adjustment of the Conversion
Rate; provided, however, that any adjustment which by
reason of this Section 4(f) is not required to be made
shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this
Section 4 shall be made to the nearest cent ($.01) or
the nearest one-hundredth (1/100) of a share, as the
case may be.
(g) If, as a result of an adjustment made
pursuant to Section 4(e), the holder of any Class A
Common Stock thereafter surrendered for conversion
shall become entitled to receive any shares of stock of
the Corporation other than Common Stock, thereafter the
number of such other shares so receivable upon
conversion of any Class A Common Stock shall be subject
to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained
in this Section 4.
(h) The Corporation may make such increases in
the Conversion Rate, in addition to those required by
Section 4(e), as is considered to be advisable in order
that any event treated for federal income tax purposes
as a distribution of shares or share rights shall not
be taxable to the recipients thereof.
(i) Whenever the Conversion Rate is adjusted, the
Corporation shall promptly mail to all holders of
record of Class A Common Stock a notice of the
adjustment and shall cause to be prepared a certificate
signed by the principal financial officer of the
Corporation setting forth the adjusted Conversion Rate
and a brief statement of the facts requiring such
adjustment and the computation thereof; such
certificate shall forthwith be filed with each transfer
agent for the Class A Common Stock.
(j) If:
(i) the Corporation takes any action which
would require an adjustment in the
Conversion Rate, or
(ii) the Corporation consolidates or merges
with, or transfers all or substantially
all of its assets to, another
corporation and shareholders of the
Corporation must approve the
transaction,
the Corporation shall mail to holders of shares of
Class A Common Stock a notice stating the proposed
record or effective date of the transaction, as the
case may be. The Corporation shall mail the notice at
least 10 days before such date; however, failure to
<PAGE>
mail such notice or any defect therein shall not affect
the validity of any transaction referred to in clauses
(i) or (ii) of this Section 4(j).
(k) If any of the following shall occur, namely:
(i) any reclassification or change of outstanding
shares of Common Stock issuable upon conversion of
Class A Common Stock (other than a change in par value,
or from par value to no par value, or from no par value
to par value, or as a result of a subdivision or
combination), (ii) any consolidation or merger to which
the Corporation is a party other than a consolidation
or merger in which the Corporation is the continuing
corporation and which does not result in any
reclassification of, or change (other than a change in
name, or par value, or from par value to no par value,
or from no par value to par value, or as a result of a
subdivision or combination) in, outstanding shares of
Common Stock or (iii) any sale, transfer or lease of
all or substantially all of the property or business of
the Corporation as an entirety, then the Corporation,
or such successor or purchasing corporation, as the
case may be, shall, as a condition precedent to such
reclassification, change, consolidation, merger, sale,
transfer or lease, provide in its charter that each
share of Class A Common Stock shall be convertible into
the kind and amount of shares of stock and other
securities and property (including cash) receivable
upon such reclassification, change, consolidation,
merger, sale, transfer or lease by a holder of the
number of shares of Common Stock deliverable upon
conversion of such shares of Class A Common Stock
immediately prior to such reclassification, change,
consolidation, merger, sale, transfer or lease. Such
provision in the charter document shall provide for
adjustments which shall be as nearly equivalent as may
be practicable to the adjustments provided for in this
Section 4. If, in the case of any such
reclassification, change, consolidation, merger, sale,
transfer or lease, the shares of stock or other
securities and property (including cash) receivable
thereupon by a holder of the Common Stock includes
shares of stock or beneficial interest or other
securities and property of a corporation or other
entity other than the successor or purchasing
corporation, as the case may be, in such
reclassification, change, consolidation, merger, sale,
transfer or lease, then the charter of such other
corporation, as a condition precedent to such
transaction, shall contain such additional provisions
to protect the interests of the holders of Class A
Common Stock as the Board of Directors shall reasonably
consider necessary by reason of the foregoing. The
provisions of this Section 4(k) shall similarly apply
to successive consolidations, mergers, sales, transfers
or leases.
No holder of Class A Common Stock will possess any
<PAGE>
preemptive rights to subscribe for or acquire any
unissued shares of the Corporation (whether now or
hereafter authorized) or securities of the Corporation
convertible into or carrying a right to subscribe to or
acquire shares of stock of the Corporation.
Section 5. Automatic Conversion. Any outstanding
shares of Class A Common Stock shall automatically convert, at
the Conversion Rate, into shares of Common Stock upon the
Transfer of such shares of Class A Common Stock to any Person
other than an Affiliate of Equity Residential Properties Trust or
ERP Operating Partnership. Such automatic conversion shall be
deemed to have occurred on the date of such Transfer.
Section 6. Purchase of Shares of Voting Stock in
Excess of REIT Ownership Limit. If, notwithstanding the other
provisions contained in the terms of the Class A Common Stock, a
Triggering Event shall occur, then the Corporation shall (i)
immediately deliver written notice of such Triggering Event to
each of Equity Residential Properties Trust and ERP Operating
Partnership and (ii) purchase such shares of Class A Common Stock
in excess of the REIT Ownership Limit at a price per share equal
to the Market Price per share of the Common Stock no later than
25 days following the date of the Triggering Event which resulted
in the REIT Beneficially Owning shares of Class A Common Stock in
excess of the REIT Ownership Limit.
SECOND: The Shares have been classified and designated
by the Board of Directors under the authority contained in the
Charter.
THIRD: These Articles Supplementary have been approved
by the Board of Directors in the manner and by the vote required
by law.
FOURTH: The undersigned President of the Corporation
acknowledges these Articles Supplementary to be the corporate act
of the Corporation and, as to all matters or facts required to be
verified under oath, the undersigned President acknowledges that
to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this
statement is made under the penalties for perjury.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these
Articles Supplementary to be executed under seal in its name and
on its behalf by its President and attested to by its Secretary
on this ___ of May, 1997.
ATTEST: WELLSFORD REAL PROPERTIES, INC
_____________________________ By: (SEAL)
Jeffrey H. Lynford, Secretary ----------------------------
Edward Lowenthal, President
<PAGE>
EXHIBIT 3.3
WELLSFORD REAL PROPERTIES, INC.
ARTICLES SUPPLEMENTARY
2,000,000 SHARES
SERIES A 8% CONVERTIBLE REDEEMABLE PREFERRED STOCK
Wellsford Real Properties, Inc, a Maryland corporation
(the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland that:
FIRST: Under a power contained in Section 6.2 of the
charter of the Corporation (the "Charter"), the Board of
Directors of the Corporation (the "Board of Directors"), by
[resolution duly adopted at a meeting duly called and held on]
[unanimous written consent dated] ___________, 1997, reclassified
and designated 2,000,000 shares (the "Shares") of Common Stock
(as defined in the Charter) as shares of Series A 8% Convertible
Redeemable Preferred Stock, $.01 par value per share (the "Series
A Preferred Stock"), with the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends
and other distributions, qualifications and terms and conditions
of redemption as set forth as follows, which upon any restatement
of the Charter shall be made part of Article VI, with any
necessary or appropriate changes to the enumeration or lettering
of sections or subsections hereof.
SERIES A PREFERRED STOCK
Section 1. Certain Definitions
Unless the context otherwise requires, the terms
defined in this Section 1 shall have, for all purposes of
determining the terms of the Series A Preferred Shares, the
meanings herein specified (with terms defined in the singular
having comparable meanings when used in the plural).
"Business Day" shall mean any day, other than a
Saturday or Sunday, that is neither a legal holiday nor a day on
which banking institutions in New York City are authorized or
required by law, regulation or executive order to close.
"Closing Date" shall mean [May 30, 1997].
"Code" shall mean the Internal Revenue Code of
1986, as amended.
"Common Stock" shall mean the common stock, $.01
par value per share, of the Corporation.
"Class A Common Stock" shall mean the Class A
common stock, $.01 par value per share, of the Corporation.
<PAGE>
"Dividend Period" shall have the meaning set forth
in Section 4 below.
"Event of Default" shall mean (i) the non-payment
of any dividend on the Quarterly Dividend Date applicable to such
dividend for three (3) Dividend Periods which need not be
consecutive; or (ii) the failure to comply with any term,
condition or obligation or failure to provide any right under the
terms of the Series A Preferred Shares.
"Gross Sales Price of a Share of Common Stock"
shall mean (a) the gross proceeds from all sales of Common Stock
to institutional purchasers taking place on or prior to the
Closing Date and subject to written commitments to purchase from
institutional purchasers received on or prior to the Closing
Date, divided by (b) the aggregate number of shares so sold and
subject to such commitments.
"Junior Shares" shall have the meaning set forth
in Section 3 below.
"Person" shall mean any natural person,
corporation, business trust, joint venture, association, company,
partnership, or government, or any agency or political
subdivision thereof.
"Liquidation Value" shall have the meaning set
forth in Section 5 below.
"Net Book Value Per Share of Common Stock" shall
mean the stockholders' equity of the Corporation determined in
accordance with generally accepted accounting principles as
adjusted for all liabilities, including all costs related to the
formation of the Corporation, as set forth in the financial
statements of the Corporation, less the Liquidation Value of all
outstanding Preferred Stock including Series A Preferred Stock,
divided by the number of shares of Common Stock of the
Corporation outstanding on such date, excluding the shares of
Class A Common Stock being purchased by ERP Operating Limited
Partnership on the Closing Date. Net Book Value Per Share of
Common Stock shall be determined in accordance with the
provisions in Section 2.1 of that certain Common Stock and
Preferred Stock Purchase Agreement dated as of ,
1997 between ERP Operating Limited Partnership and the
Corporation.
"Preferred Stock" shall mean all shares of stock
having a preference in any manner to the Common Stock or Class A
Common Stock.
"Quarterly Dividend Date" shall have the meaning
set forth in Section 4 below.
"Record Date" shall have the meaning set forth in
Section 4 below.
"Redemption Date" shall have the meaning set forth
in Section 6 below.
<PAGE>
"Redemption Price" shall have the meaning set
forth in Section 6 below.
"Responsible Officer" of any corporation shall
mean any executive officer of such corporation, and any other
officer or similar official thereof responsible for the
administration of the obligations of such corporation in respect
of the terms of the Series A Preferred Shares.
"Series A Preferred Stock" shall mean the Series A
8% Convertible Redeemable Preferred Stock, $.01 par value per
share, of the Corporation.
Section 2. Number. The maximum number of
authorized shares of Series A Preferred Stock shall be 2,000,000.
Section 3. Relative Seniority. In respect of
rights to receive dividends and to participate in distributions
or payments in the event of any liquidation, dissolution or
winding up of the Corporation, the Series A Preferred Stock shall
rank (i) junior to any other Preferred Stock of the Corporation
ranking, as to dividends and upon liquidation, prior to the
Series A Preferred Stock, (ii) pari passu with any other
Preferred Stock of the Corporation ranking, as to dividends and
upon liquidation, on parity with the Series A Preferred Stock,
and (iii) senior to the Common Stock and any other class or
series of shares of stock of the Corporation ranking, as to
dividends and upon liquidation, junior to the Series A Preferred
Stock (collectively, "Junior Shares"). Notwithstanding the
foregoing, the Corporation may make distributions or pay
dividends in shares of Common Stock or in any other shares of the
Corporation ranking junior to the Series A Preferred Stock as to
distribution rights and liquidation preference at any time;
provided, however, the Corporation may make distributions or pay
dividends on the Series A Preferred Stock in shares of the
Corporation only as provided herein.
Section 4. Dividends. The holders of the then
outstanding Series A Preferred Stock shall be entitled to
receive, when and as declared by the Board of Directors of the
Corporation out of any funds legally available therefor,
dividends at the rate of $2.00 per share per year, payable in
cash, except as provided below, in equal amounts quarterly on the
fifteenth day, or if not a Business Day, the next succeeding
Business Day, of January, April, July and October in each year,
beginning , 1997 (each such day being hereinafter
called a "Quarterly Dividend Date" and each period ending on a
Quarterly Dividend Date being hereinafter called a "Dividend
Period"), to shareholders of record at the close of business on
such date as shall be fixed by the Board of Directors of the
Corporation at the time of authorization of the dividend (the
"Record Date"), which shall be not fewer than 10 nor more than 30
days preceding the Quarterly Dividend Date. The amount of any
dividend payable for the initial Dividend Period and for any
other Dividend Period shorter than a full Dividend Period shall
be prorated and computed on the basis of a 360-day year of twelve
30-day months. Dividends paid on the Series A Preferred Stock in
<PAGE>
an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro
rata on a per share basis among all such shares at the time
outstanding.
Notwithstanding the foregoing, for any twelve
Dividend Periods the Company shall have the right to pay the
dividend in additional shares of Series A Preferred Stock
determined by dividing the total amount of the dividend to be
paid in shares of Series A Preferred Stock by the Liquidation
Value (as defined herein) per share of Series A Preferred Stock.
The issuance of additional shares of Series A Preferred Stock
pursuant to this Section 4 shall be evidenced by a stock
certificate representing such shares issued on the related
Quarterly Dividend Date and delivered on or immediately
thereafter. Notwithstanding any other provision hereof, no
fractional shares of the Corporation shall be issued in
connection with the payment of any dividend on Series A Preferred
Stock in additional shares of Series A Preferred Stock. Instead,
any holder of outstanding Series A Preferred Stock having a
fractional interest arising upon the payment of a dividend in
additional shares of Series A Preferred Stock shall, on the
related Quarterly Dividend Date, be paid an amount in cash equal
to the Liquidation Value times the fraction of a share of Series
A Preferred Stock to which such holder would otherwise be
entitled.
In the event the Company fails to pay any dividend
on the Series A Preferred Stock on any Quarterly Dividend Date,
the Company shall not pay any dividends on any other class of
stock of the Company (other than (i) pro rata with other
securities of the Company ranking pari passu with the Series A
Preferred Stock or (ii) with Junior Shares) until such dividend
on the Series A Preferred Stock has been paid.
Except as provided in the terms of the Series A
Preferred Stock, the Series A Preferred Stock shall not be
entitled to participate in the earnings or assets of the
Corporation.
Section 5. Liquidation Rights
(a) Upon the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation, the
holders of shares of the Series A Preferred Stock then
outstanding shall be entitled to receive and to be paid out of
the assets of the Corporation available for distribution to its
shareholders, before any payment or distribution shall be made on
any Junior Shares, the amount of $25.00 per share of Series A
Preferred Stock ("Liquidation Value"), plus any accrued and
unpaid dividends thereon.
(b) After the payment to the holders of the
Series A Preferred Stock of the full preferential amounts
provided for in this Section 5, the holders of shares of the
Series A Preferred Stock as such shall have no right or claim to
any of the remaining assets of the Corporation.
<PAGE>
(c) If, upon any voluntary or involuntary
dissolution, liquidation, or winding up the Corporation, the
amounts payable to the holders of shares of the Series A
Preferred Stock pursuant to this Section 5 and holders of any
other shares of stock of the Corporation ranking as to any such
distribution on a parity with the Series A Preferred Stock are
not paid in full, the holders of the Series A Preferred Stock and
of such other shares will share ratably in any such distribution
of assets of the Corporation in proportion to the full respective
preference amounts to which they are entitled.
(d) Neither the sale of all or substantially
all the property or business of the Corporation, nor the merger
or consolidation of the Corporation into or with any other entity
or the merger or consolidation of any other entity into or with
the Corporation, nor any dissolution, liquidation, winding up or
reorganization of the Corporation immediately followed by the
incorporation of another corporation to which the Corporation's
assets are distributed shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the
purposes of the terms of the Series A Preferred Stock.
(e) In determining whether a distribution by
dividend, redemption or other acquisition of shares of the
Corporation or otherwise is permitted under Maryland law, no
effect shall be given to amounts that would be needed, if the
Corporation were to be dissolved at the time of the distribution,
to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights on dissolution are
superior to those receiving the distribution.
Section 6. Redemption
(a) Optional Redemption. On and after
, 2002, the Corporation may, at its option, redeem at
any time all of the outstanding Series A Preferred Stock or a
part of the outstanding Series A Preferred Stock at a price per
share (the "Redemption Price"), equal to $25.00 per share of
Series A Preferred Stock, together with all accrued and unpaid
dividends to and including the date fixed for redemption (the
"Redemption Date"); provided, however, that no partial redemption
of the Series A Preferred Stock may be effected if after giving
effect thereto the aggregate Liquidation Value of the Series A
Preferred Stock outstanding is less than $10,000,000. The
Redemption Price and all accrued and unpaid dividends shall be
paid in cash; provided, however, that if (a) a holder of Series A
Preferred Stock desires to convert any of its Series A Preferred
Stock called for redemption but such conversion would cause any
direct or indirect holder which is classified as a real estate
investment trust ("REIT") under Section 856 of the Code to own,
directly or indirectly, more than 9.9% of the outstanding voting
stock of the Corporation or would otherwise cause any direct or
indirect holder of such outstanding voting stock to lose its
status as a REIT under the Code, and (b) such holder has so
notified the Corporation in writing prior to the Redemption Date,
stating the number of shares of Series A Preferred Stock which
have been called for redemption which such holder is unable to
convert for such reason (such shares being referred to as the
<PAGE>
"Unconvertible Shares"), then the Corporation shall pay, in cash,
the Redemption Price plus all accrued and unpaid dividends for
each Unconvertible Share and shall issue to such holder a warrant
to purchase the number of shares of Common Stock equal to (i) the
fair market value of a share of Common Stock on the Redemption
Date over the Redemption Price, multiplied by (ii) the number of
shares of Common Stock into which the Unconvertible Shares
redeemed from such holder were convertible immediately prior to
such redemption, and divided by (iii) the fair market value of a
share of Common Stock on the Redemption Date. Such warrant shall
be exercisable without cost to the holder thereof at any time and
from time to time for a period of ten (10) years from the date of
issuance of such warrant. The warrant shall be on such terms and
conditions as are customarily contained in like warrants,
including provisions to protect the holder of the warrant from
dilution. The Corporation shall have the right, at any time, to
redeem such warrant at a price equal to the fair market value of
such warrant on the date of any such redemption. The fair market
value of a share of Common Stock on the Redemption Date shall be
deemed to be the average of the daily closing prices of the
Common Stock for 30 consecutive trading days commencing 45
trading days before the Redemption Date. The closing price for
each day shall be the last reported sales price or, in case no
such reported sale takes place on such date, the average of the
reported closing bid and asked prices regular way, in either case
on the New York Stock Exchange, or if the Common Stock is not
listed or admitted to trading on such Exchange, on the principal
national securities exchange on which the Common Stock is listed
or admitted to trading or, if not listed or admitted to trading
on any national securities exchange, the closing sale price of
the Common Stock or, in case no reported sale takes place, the
average of the closing bid and asked prices, on Nasdaq or any
comparable system, or if the Common Stock is not quoted on Nasdaq
or any comparable system, the closing sale price or, in case no
reported sale takes place, the average of the closing bid and
asked prices, as furnished by any two members of the National
Association of Securities Dealers, Inc. selected from time to
time by the Corporation for that purpose.
(b) Procedures for Redemption
(i) Notice of any redemption will be
mailed by the Corporation, postage prepaid, not less than 30 nor
more than 90 days prior to the Redemption Date, addressed to the
holders of record of the Series A Preferred Stock to be redeemed
at their addresses as they appear on the share transfer records
of the Corporation. No failure to give such notice or any defect
therein or in the mailing thereof shall affect the validity of
the proceedings for the redemption of any Series A Preferred
Stock except as to the holder to whom the Corporation has failed
to give notice or except as to the holder to whom notice was
defective. In addition to any information required by law or by
the applicable rules of any exchange upon which Series A
Preferred Stock may be listed or admitted to trading, such notice
shall state: (a) the Redemption Date; (b) the Redemption Price;
(c) the number of shares of Series A Preferred Stock to be
redeemed; (d) the place or places where certificates for such
shares are to be surrendered for payment of the Redemption Price;
<PAGE>
(e) the date on which conversion rights shall expire, the
conversion price and the place or places where certificates for
such shares are to be surrendered for conversion; and (f) the
number of shares of Common Stock of the Corporation outstanding
on the date of such notice.
(ii) If notice has been mailed in accordance
with Section 6(b)(i) above and provided that on or before the
Redemption Date specified in such notice all funds necessary for
such redemption shall have been irrevocably set aside by the
Corporation, separate and apart from its other funds, in trust
for the pro rata benefit of the holders of the Series A Preferred
Stock so called for redemption, so as to be, and to continue to
be available therefor, then, from and after the Redemption Date,
distributions shall no longer accrue on said shares and said
shares shall no longer be deemed to be outstanding and shall not
have the status of Series A Preferred Stock and all rights of the
holders thereof as shareholders of the Corporation (except the
right to receive the Redemption Price) shall cease. Upon
surrender, in accordance with said notice, of the certificates
for any shares of Series A Preferred Stock so redeemed (properly
endorsed or assigned for transfer, if the Corporation shall so
require and the notice shall so state), such shares of Series A
Preferred Stock shall be redeemed by the Corporation at the
Redemption Price. In case fewer than all the Series A Preferred
Stock represented by any such certificate are redeemed, a new
certificate or certificates shall be issued representing the
unredeemed Series A Preferred Stock without cost to the holder
thereof.
(iii) Any funds deposited with a bank or
trust company for the purpose of redeeming shares of Series A
Preferred Stock shall be irrevocable except that:
(A) the Corporation shall be
entitled to receive from such bank or trust company the interest
or other earnings, if any, earned on any money so deposited in
trust, and the holders of any shares redeemed shall have no claim
to such interest or other earnings;
(B) any balance of monies so
deposited by the Corporation and unclaimed by the holders of the
Series A Preferred Stock entitled thereto at the expiration of
one year from the applicable Redemption Date shall be repaid,
together with any interest or other earnings earned thereon, to
the Corporation, and after any such repayment, the holders of the
shares entitled to the funds so repaid to the Corporation shall
look only to the Corporation for payment without interest or
other earnings; and
(C) any funds set aside to redeem
Series A Preferred Stock that is converted into Common Stock
prior to the Redemption Date shall be immediately delivered to
the Corporation.
(iv) No Series A Preferred Stock may be
redeemed except with funds legally available for the payment of
the Redemption Price.
<PAGE>
(v) Unless a sum sufficient for the
payment of the then current dividend due for the then current
Dividend Period is set apart, no shares of Series A Preferred
Stock shall be redeemed (unless all outstanding shares of Series
A Preferred Stock are simultaneously redeemed) or purchased or
otherwise acquired directly or indirectly (except by conversion
into or exchange for shares of the Corporation ranking junior to
the shares of Series A Preferred Stock as to dividends and upon
liquidation); provided, however, that the foregoing shall not
prevent the purchase or acquisition of Series A Preferred Stock
pursuant to a purchase or exchange offer made on the same terms
to holders of all outstanding shares of Series A Preferred Stock.
(vi) If the Redemption Date is after a
Record Date and before the related Quarterly Dividend Date, the
dividend payable on such Quarterly Dividend Date shall be paid to
the holder in whose name the Series A Preferred Stock to be
redeemed are registered at the close of business on such Record
Date notwithstanding the redemption thereof between such Record
Date and the related Quarterly Dividend Date or the Corporation's
default in the payment of the dividend due.
(vii) In case of redemption of less than
all of the shares of Series A Preferred Stock at the time
outstanding, the shares of Series A Preferred Stock to be
redeemed shall be selected pro rata from the holders of record of
such shares in proportion to the number of shares of Series A
Preferred Stock held by such holders (with adjustments to avoid
redemption of fractional shares) or by any other equitable method
determined by the Corporation.
(c) Required Redemption. Upon the
occurrence of an Event of Default or on and after
, 2012, whichever comes first, the holder of any shares of Series
A Preferred Stock may, at its option, cause the Corporation to
redeem at any time all of the Series A Preferred Stock held by
such holder at the Redemption Price, payable in cash, together
with all accrued and unpaid dividends to and including the
Redemption Date. Notwithstanding the provisions of this
subsection (c), provided an Event of Default has not occurred,
the Corporation shall have the right to extend the date during
which a required redemption is not permitted under this
subsection (c) for three separate additional five (5) year
periods if the dividend rate on the Series A Preferred Stock is
changed to the then market rate of comparable preferred stock
(the "Market Rate") on the first day of each such additional five
year period; provided, however, in no event shall the dividend be
reduced to less than $2.00 per share of Series A Preferred Stock.
The Market Rate shall be determined ten (10) days prior to the
first Business Day of each such additional five (5) year period
by mutual agreement of the holders of Series A Preferred Stock
and the Corporation. In the event the holders of Series A
Preferred Stock and the Corporation cannot agree on such
determination prior to the first Business Day of such additional
five (5) year period, the Market Rate shall be determined as of
the first Business Day of each such additional five (5) year
period as follows: (i) a majority of the holders of the Series A
<PAGE>
Preferred Stock then outstanding shall choose an investment
banking firm of nationally recognized status and the Corporation
shall choose an investment banking firm of nationally recognized
status; (ii) the investment banking firms chosen by a majority of
the holders of the Series A Preferred Stock then outstanding and
the Corporation shall mutually choose a third investment banking
firm of nationally recognized status (the "Independent Investment
Banker"); (iii) the Independent Investment Banker shall then
determine, in its sole discretion, the Market Rate and shall
advise the holders of Series A Preferred Stock and the
Corporation of its determination; and (iv) the fees of the
Independent Investment Banker for making such determination shall
be borne fifty percent (50%) by the holders of Series A Preferred
Stock and fifty percent (50%) by the Corporation.
(d) Procedures for Required Redemption
(i) Notice of any required redemption
shall be mailed by the holder of the Series A Preferred Stock
requesting redemption, postage prepaid, not less than 30 nor more
than 90 days prior to the Redemption Date, addressed to the
Corporation. In addition to any information required by law or
by the applicable rules of any exchange upon which Series A
Preferred Stock may be listed or admitted to trading, such notice
shall state: (a) the Redemption Date; (b) the Redemption Price;
and (c) the number of shares of Series A Preferred Stock to be
redeemed.
(ii) If notice has been mailed in
accordance with Section 6(d)(i) above on or before the Redemption
Date specified in such notice all funds necessary for such
redemption shall have been irrevocably set aside by the
Corporation, separate and apart from its other funds in trust for
the pro rata benefit of the holders of the Series A Preferred
Stock requesting redemption, so as to be, and to continue to be
available therefor, then, from and after the Redemption Date,
said shares shall no longer be deemed to be outstanding and shall
not have the status of Series A Preferred Stock and all rights of
the holders thereof as shareholders of the Corporation (except
the right to receive the Redemption Price) shall cease. Upon
surrender, in accordance with said notice, of the certificates
for any shares of Series A Preferred Stock so redeemed, such
shares of Series A Preferred Stock shall be redeemed by the
Corporation at the Redemption Price. In case fewer than all the
Series A Preferred Stock represented by any such certificate are
redeemed, a new certificate or certificates shall be issued
representing the unredeemed Series A Preferred Stock without cost
to the holder thereof.
(iii) Any funds deposited with a bank or
trust company for the purpose of redeeming shares of Series A
Preferred Stock shall be irrevocable except that:
(A) the Corporation shall be
entitled to receive from such bank or trust company the interest
or other earnings, if any, earned on any money so deposited in
trust, and the holders of any shares redeemed shall have no claim
to such interest or other earnings; and
<PAGE>
(B) any balance of monies so
deposited by the Corporation and unclaimed by the holders of the
Series A Preferred Stock entitled thereto at the expiration of
one year from the applicable Redemption Date shall be repaid,
together with any interest or other earnings earned thereon, to
the Corporation, and after any such repayment, the holders of the
shares entitled to the funds so repaid to the Corporation shall
look only to the Corporation for payment without interest or
other earnings.
(iv) No Series A Preferred Stock may be
redeemed except with funds legally available for the payment of
the Redemption Price.
(v) If the Redemption Date is after a
Record Date and before the related Quarterly Dividend Date, the
dividend payable on such Quarterly Dividend Date shall be paid to
the holder in whose name the Series A Preferred Stock to be
redeemed are registered at the close of business on such Record
Date notwithstanding the redemption thereof between such Record
Date and the related Quarterly Dividend Date or the Corporation's
default in the payment of the dividend due.
(e) The Series A Preferred Stock redeemed,
repurchased or retired pursuant to the provisions of this Section
6(b) or surrendered to the Corporation upon conversion shall
thereupon be retired and may not be reissued as Series A
Preferred Stock but shall thereafter have the status of
authorized but unissued shares of the Corporation.
Section 7. Voting Rights. The holders of Series A
Preferred Stock shall not be entitled to vote on any matter
except as provided below; provided, however, the holders of
Series A Preferred Stock shall not have any voting rights to the
extent such rights will cause any holder of a Series A Preferred
Stock to own more than 9.9 % of the outstanding voting stock of
the Corporation or otherwise cause any holder of Series A
Preferred Stock that is classified as a REIT under Section 856 of
the Code to lose its status as a REIT under the Code.
(a) So long as any shares of Series A
Preferred Stock remain outstanding, the Corporation will not,
without the affirmative vote or consent of the holders of at
least two-thirds of the shares of Series A Preferred Stock
outstanding at the time, given in person or by proxy, either in
writing or at a meeting (such series voting separately as a
class), (i) authorize, create or issue, or increase the
authorized or issued amount of, any class or series of shares of
stock ranking prior to the Series A Preferred Stock with respect
to the payment of dividends or the distribution of assets upon
liquidation, dissolution or winding up or reclassify any
authorized shares of stock of the Corporation into such shares,
or create, authorize or issue any obligation or security
convertible into or evidencing the right to purchase any such
shares; or (ii) amend, alter or repeal the provisions of the
Charter or the terms of the Series A Preferred Stock, whether by
merger, consolidation or otherwise (an "Event"), so as to
<PAGE>
materially and adversely affect any right, preference, privilege
or voting power of the Series A Preferred Stock or the holders
thereof; provided, however, with respect to the occurrence of any
of the Events set forth in (ii) above, so long as the shares of
Series A Preferred Stock remain outstanding with the terms
thereof materially unchanged, even if upon the occurrence of an
Event the Corporation may not be the surviving entity, the
occurrence of any such Event shall not be deemed to materially
and adversely affect such rights, preferences, privileges or
voting power of holders of Series A Preferred Stock and provided
further that (x) any increase in the amount of the authorized or
issued shares of Preferred Stock or the creation or issuance of
any other Preferred Stock, or (y) any increase in the amount of
authorized or issued Series A Preferred Stock or any other
Preferred Stock, in each case ranking on a parity with or junior
to the Series A Preferred Stock with respect to payment of
dividends or the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting
powers.
Nothing herein contained shall require such a
vote or consent (i) in connection with any increase in the total
number of authorized or issued shares of Common Stock, or (ii) in
connection with the authorization or issuance of any class or
series of shares of stock ranking, as to distribution rights and
the liquidation preference, on a parity with or junior to the
Series A Preferred Stock.
The foregoing voting provisions will not
apply if, at or prior to the time when the act with respect to
which such vote would otherwise be required shall be effected,
all outstanding shares of Series A Preferred Stock shall have
been redeemed or called for redemption and sufficient funds shall
have been deposited in trust to effect such redemption.
Section 8. Conversion
(a) Holders of Series A Preferred Stock
shall have the right, exercisable at any time and from time to
time, except in the case of Series A Preferred Stock called for
redemption as set forth in Section 6 hereof, to convert all or
any of such Series A Preferred Stock into Common Stock at a
conversion price per share of Common Stock equal to (i) the Net
Book Value Per Share of Common Stock on the Closing Date or (ii)
in the event any sales of Common Stock to any institutional
purchasers have taken place on or prior to the Closing Date or
are subject to a commitment to purchase from an institutional
purchaser made on or prior to the Closing Date, the Gross Sales
Price of a Share of Common Stock; multiplied by 1.08 (the
"Conversion Price"). In the case of Series A Preferred Stock
called for redemption, conversion rights will expire at the close
of business on the last Business Day preceding the Redemption
Date. Notice of redemption at the option of the Corporation must
be mailed not less than 60 days and not more than 90 days prior
to the Redemption Date as provided in Section 6(b) hereof. Upon
conversion, no adjustment or payment will be made for
distributions, but if any holder surrenders Class A Preferred
Stock for conversion after the close of business on the Record
<PAGE>
Date for the payment of a distribution and prior to the opening
of business on the related Quarterly Dividend Date, then,
notwithstanding such conversion, the distribution payable on such
Quarterly Dividend Date will be paid to the registered holder of
such shares on such Record Date. In such event, such shares,
when surrendered for conversion during the period between the
close of business on any Record Date and the opening of business
on the corresponding Quarterly Dividend Date, must be accompanied
by payment of an amount equal to the distribution payable on such
Quarterly Dividend Date on the shares so converted (unless such
shares were converted after the issuance of a notice of
redemption with respect to such shares, in which event such
shares shall be entitled to the distribution payable thereon on
such Quarterly Dividend Date without making such payment).
(b) Any holder of one or more shares of
Series A Preferred Stock electing to convert such share or shares
shall deliver the certificate or certificates therefor to the
principal office of any transfer agent for the Common Stock, with
the form of notice of election to convert as the Corporation
shall prescribe fully completed and duly executed and (if so
required by the Corporation or any conversion agent) accompanied
by instruments of transfer in form satisfactory to the
Corporation and to any conversion agent, duly executed by the
registered holder or his duly authorized attorney, and transfer
taxes, stamps or funds therefor or evidence of payment thereof.
The conversion right with respect to any such shares shall be
deemed to have been exercised at the date upon which the
certificates therefor accompanied by such duly executed notice of
election and instruments of transfer and such taxes, stamps,
funds or evidence of payment shall have been so delivered, and
the person or persons entitled to receive the shares of the
Common Stock issuable upon such conversion shall be treated for
all purposes as the record holder or holders of such shares of
the Common Stock upon said date.
(c) No fractional shares of Common Stock or
scrip representing a fractional share shall be issued upon
conversion of Series A Preferred Stock. If more than one share
of Series A Preferred Stock shall be surrendered for conversion
at one time by the same holder, the number of full shares of
Common Stock which shall be issuable upon conversion thereof
shall be computed on the basis of the aggregate number of shares
of Series A Preferred Stock so surrendered. Instead of any
fractional shares of Common Stock which would otherwise be
issuable upon conversion of any shares of Series A Preferred
Stock, the Corporation shall pay a cash adjustment in respect of
such fraction in an amount equal to the same fraction of the
closing price for the Common Stock on the last trading day
preceding the date of conversion. The closing price for such day
shall be the last reported sales price regular way or, in case no
such reported sale takes place on such date, the average of the
reported closing bid and asked prices regular way, in either case
on the New York Stock Exchange, or if the Common Stock is not
listed or admitted to trading on such Exchange, on the principal
national securities exchange on which the Common Stock is listed
or admitted to trading or, if not listed or admitted to trading
on any national securities exchange, the closing sale price of
<PAGE>
the Common Stock or in case no reported sale takes place, the
average of the closing bid and asked prices, on Nasdaq or any
comparable system. If the Common Stock is not quoted on Nasdaq
or any comparable system, the Board of Directors shall in good
faith determine the current market price on the basis of such
quotation as it considers appropriate.
(d) If a holder converts shares of Series A
Preferred Stock, the Corporation shall pay any documentary, stamp
or similar issue or transfer tax due on the issuance of shares of
Common Stock upon the conversion. The holder, however, shall pay
to the Corporation the amount of any tax which is due (or shall
establish to the satisfaction of the Corporation payment thereof)
if the shares are to be issued in a name other than the name of
such holder and shall pay to the Corporation any amount required
by the last sentence of Section 8(a) hereof.
(e) The Corporation shall reserve and shall
at all times have reserved out of its authorized but unissued
Common Stock a sufficient number of shares of Common Stock to
permit the conversion of the then outstanding Series A Preferred
Stock. All Common Stock which may be issued upon conversion of
Series A Preferred Stock shall be validly issued, fully paid and
nonassessable, and not subject to preemptive or other similar
rights. In order that the Corporation may issue Common Stock
upon conversion of Series A Preferred Stock, the Corporation will
endeavor to comply with all applicable federal and state
securities laws and will endeavor to list such Common Stock to be
issued upon conversion on each securities exchange on which the
Common Stock is listed.
(f) The conversion rate in effect at any
time shall be subject to adjustment from time to time as follows:
(i) In case the Corporation shall (1)
pay or make a distribution in shares of Common Stock to holders
of the Common Stock, (2) reclassify the outstanding Common Stock
into shares of some other class or series of shares, (3)
subdivide the outstanding Common Stock into a greater number of
shares of Common Stock or (4) combine the outstanding Common
Stock into a smaller number of shares of Common Stock, the
conversion rate immediately prior to such action shall be
adjusted so that the holder of any shares of Series A Preferred
Stock thereafter surrendered for conversion shall be entitled to
receive the number of shares of Common Stock which he would have
owned immediately following such action had such Series A
Preferred Stock been converted immediately prior thereto. An
adjustment made pursuant to this Section 8(f)(i) shall become
effective immediately after the record date in the case of a
distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
reclassification.
(ii) In case the Corporation shall
issue rights, options or warrants to all holders of the Common
Stock entitling them to subscribe for or purchase Common Stock
(or securities convertible into Common Stock) at a price per
share less than the current market price (as determined pursuant
<PAGE>
to Section 8(f)(iv)) of the Common Stock on such record date, the
number of shares of Common Stock into which each share of Series
A Preferred Stock shall be convertible shall be adjusted so that
the same shall be equal to the number determined by multiplying
the number of shares of Common Stock into which such share of
Series A Preferred Stock was convertible immediately prior to
such record date by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding on such record
date plus the number of additional shares of Common Stock offered
(or into which the convertible securities so offered are
convertible), and of which the denominator shall be the number of
shares of Common Stock outstanding on such record date, plus the
number of shares of Common Stock which the aggregate offering
price of the additional shares of Common Stock offered (or into
which the convertible securities so offered are convertible)
would purchase at such current market price. Such adjustments
shall become effective immediately after such record date for the
determination of the holders of the Common Stock entitled to
receive such distribution. For purposes of this subsection (ii),
the number of shares of Common Stock at any time outstanding
shall not include shares of Common Stock held in the treasury of
the Corporation.
(iii) In case the Corporation shall
distribute to all holders of the Common Stock any class of shares
of stock other than Common Stock, evidences of indebtedness or
assets of the Corporation (other than cash distributions out of
current or retained earnings), or shall distribute to all holders
of the Common Stock rights or warrants to subscribe for
securities (other than those referred to in Section 8(f)(ii),
then in each such case the number of Common Stock into which each
share of Series A Preferred Stock shall be convertible shall be
adjusted so that the same shall equal the number determined by
multiplying the number of shares of Common Stock into which such
share of Series A Preferred Stock was convertible immediately
prior to the date of such distribution by a fraction of which the
numerator shall be the current market price (determined as
provided in Section 8(f)(iv) of the Common Stock on the record
date mentioned below, and of which the denominator shall be such
current market price of the Common Stock, less the then fair
market value (as determined by the Board of Directors, whose
determination shall be conclusive evidence of such fair market
value) of the portion of the securities or assets so distributed
or of such subscription rights or warrants applicable to one
share of Common Stock. Such adjustment shall become effective
immediately after the record date for the determination of the
holders of the Common Stock entitled to receive such
distribution. Notwithstanding the foregoing, in the event that
the Corporation shall distribute rights or warrants (other than
those referred to in Section 8(f)(ii)) ("Rights") pro rata to
holders of the Common Stock, the Corporation may, in lieu of
making any adjustment pursuant to this Section 8(f)(iii), make
proper provision so that each holder of a share of Series A
Preferred Stock who converts such share after the record date for
such distribution and prior to the expiration or redemption of
the Rights shall be entitled to receive upon such conversion, in
addition to the Common Stock issuable upon such conversion (the
"Conversion Shares"), a number of Rights to be determined as
<PAGE>
follows: (1) if such conversion occurs on or prior to the date
for the distribution to the holders of Rights of separate
certificates evidencing such Rights (the "Distribution Date"),
the same number of Rights to which a holder of a number of shares
of Common Stock equal to the number of Conversion Shares is
entitled at the time of such conversion in accordance with the
terms and provisions of and applicable to the Rights; and (2) if
such conversion occurs after the Distribution Date, the same
number of Rights to which a holder of the number of shares of
Common Stock into which a share of Series A Preferred Stock so
converted was convertible immediately prior to the Distribution
Date would have been entitled on the Distribution Date in
accordance with the terms and provisions of and applicable to the
Rights.
(iv) The current market price per share
of the Common Stock on any date shall be deemed to be the average
of the daily closing prices for thirty consecutive trading days
commencing forty-five (45) trading days before the date in
question. The closing price for each day shall be the last
reported sales price or, in case no such reported sale takes
place on such date, the average of the reported closing bid and
asked prices regular way, in either case on the New York Stock
Exchange, or if the Common Stock is not listed or admitted to
trading on such Exchange, on the principal national securities
exchange on which the Common Stock is listed or admitted to
trading or, if not listed or admitted to trading on any national
securities exchange, the closing sale price of the Common Stock
or, in case no reported sale takes place, the average of the
closing bid and asked prices, on Nasdaq or any comparable system,
or if the Common Stock is not quoted on Nasdaq or any comparable
system, the closing sale price or, in case no reported sale takes
place, the average of the closing bid and asked prices, as
furnished by any two members of the National Association of
Securities Dealers, Inc. selected from time to time by the
Corporation for that purpose.
(v) In any case in which this Section
8 shall require that an adjustment be made immediately following
a record date, the Corporation may elect to defer (but only until
five Business Days following the mailing of the notice described
in Section 8(j)) issuing to the holder of any Series A Preferred
Stock converted after such record date the Common Stock and other
shares of stock of the Corporation issuable upon such conversion
over and above the Common Stock and other shares of stock of the
Corporation issuable upon such conversion only on the basis of
the conversion rate prior to adjustment; and, in lieu of the
shares the issuance of which is so deferred, the Corporation
shall issue or cause its transfer agents to issue appropriate
evidence of the right to receive such shares.
(g) No adjustment in the conversion rate
shall be required until cumulative adjustments result in a change
of 1% or more of the conversion price as in effect prior to the
last adjustment of the conversion rate; provided, however, that
any adjustment which by reason of this Section 8(g) is not
required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under
<PAGE>
this Section 8 shall be made to the nearest cent ($.01) or the
nearest one-hundredth (1/100) of a share, as the case may be. No
adjustment to the conversion rate shall be made for cash
dividends.
(h) In the event that, as a result of an
adjustment made pursuant to Section 8(f), the holder of any
Series A Preferred Stock thereafter surrendered for conversion
shall become entitled to receive any shares of stock of the
Corporation other than Common Stock, thereafter the number of
such other shares so receivable upon conversion of any Series A
Preferred Stock shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Common Stock contained in this
Section 8.
(i) The Corporation may make such increases
in the conversion rate, in addition to those required by Sections
8(f)(i), (ii) and (iii), as is considered to be advisable in
order that any event treated for federal income tax purposes as a
distribution of shares or share rights shall not be taxable to
the recipients thereof.
(j) Whenever the conversion rate is
adjusted, the Corporation shall promptly mail to all holders of
record of Series A Preferred Stock a notice of the adjustment and
shall cause to be prepared a certificate signed by a principal
financial officer of the Corporation setting forth the adjusted
conversion rate and a brief statement of the facts requiring such
adjustment and the computation thereof; such certificate shall
forthwith be filed with each transfer agent for the Series A
Preferred Stock.
(k) In the event that:
(i) the Corporation takes any action
which would require an adjustment in the conversion rate,
(ii) the Corporation consolidates or
merges with, or transfers all or substantially all of its assets
to, another corporation and shareholders of the Corporation must
approve the transaction, or
(iii) there is a dissolution, winding up
or liquidation of the Corporation,
a holder of Series A Preferred Stock may wish to convert some or
all of such shares into Common Stock prior to the record date
for, or the effective date of, the transaction so that he may
receive the rights, warrants, securities or assets which a holder
of Common Stock on that date may receive. Therefore, the
Corporation shall mail to holders of Series A Preferred Stock a
notice stating the proposed record or effective date of the
transaction, as the case may be. The Corporation shall mail the
notice at least 10 days before such date; however, failure to
mail such notice or any defect therein shall not affect the
validity of any transaction referred to in clauses (i), (ii) or
(iii) of this Section 8(k).
<PAGE>
(l) If any of the following shall occur,
namely: (i) any reclassification or change of outstanding Common
Stock issuable upon conversion of Series A Preferred Stock (other
than a change in par value, or from par value to no par value, or
from no par value to par value, or as a result of a subdivision
or combination), (ii) any consolidation or merger to which the
Corporation is a party other than a consolidation or merger in
which the Corporation is the continuing corporation and which
does not result in any reclassification of, or change (other than
a change in name, or par value, or from par value to no par
value, or from no par value to par value, or as a result of a
subdivision or combination) in, outstanding Common Stock or (iii)
any sale, transfer or lease of all or substantially all of the
property or business of the Corporation as an entirety, then the
Corporation, or such successor or purchasing corporation, as the
case may be, shall, as a condition precedent to such
reclassification, change, consolidation, merger, sale, transfer
or lease, provide in its charter document that each share of
Series A Preferred Stock shall be convertible into the kind and
amount of shares of stock and other securities and property
(including cash) receivable upon such reclassification, change,
consolidation, merger, sale, transfer or lease by a holder of the
number of shares of Common Stock deliverable upon conversion of
such shares of Series A Preferred Stock immediately prior to such
reclassification, change, consolidation, merger, sale, transfer
or lease. Such charter document shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 8. The foregoing,
however, shall not in any way affect the right that a holder of
Series A Preferred Stock may otherwise have, pursuant to clause
(2) of the last sentence of Section 8(f)(iii), to receive Rights
upon conversion of Series A Preferred Stock. If, in the case of
any such reclassification, change, consolidation, merger, sale,
transfer or lease, the shares of stock or other securities and
property (including cash) receivable thereupon by a holder of the
Common Stock includes shares of stock or beneficial interest or
other securities and property of a corporation or other entity
other than the successor or purchasing corporation, as the case
may be, in such reclassification, change, consolidation, merger,
sale, transfer or lease, then the charter document of such other
corporation shall contain such additional provisions to protect
the interests of the holders of Series A Preferred Stock as the
Board of Directors shall reasonably consider necessary by reason
of the foregoing. The provisions of this Section 8(l) shall
similarly apply to successive consolidations, mergers, sales,
transfers or leases.
No holder of Series A Convertible Preferred
Stock will possess any preemptive rights to subscribe for or
acquire any unissued shares of the Corporation (whether now or
hereafter authorized) or securities of the Corporation
convertible into or carrying a right to subscribe to or acquire
shares of the Corporation.
Section 9. So long as any Series A Preferred
Stock is outstanding, the Corporation shall not issue any options
to purchase shares of the Corporation ("Employee Stock Options")
<PAGE>
to officers, directors or employees of, or consultants to, the
Corporation, whether pursuant to employee stock option or
purchase plans of the Corporation or employment or consulting
agreements or otherwise for an exercise price which is less than
the fair market value of such shares on the date of grant. In
the event the number of shares of Common Stock subject to
Employee Stock Options excluding, any Employee Stock Options
[reload/rollover], at any time exceeds, in the aggregate, 10% of
the Common Stock outstanding at such time, all Employee Stock
Options outstanding at such time in excess of such 10%, shall be
deemed for purposes of Section 8 hereof to have an exercise price
per share equal to 20% of the average fair market value of a
share of Common Stock on the date of grant of those shares
subject to Employee Stock Options most recently granted in excess
of such 10%.
Section 10. Exclusion of Other Rights. The Series A
Preferred Stock shall not have any voting powers, preferences and
relative, participating, optional or other special rights, other
than those specifically set forth in the terms of the Series A
Preferred Stock (as such terms may be amended from time to time)
or in the charter of the Corporation. The Series A Preferred
Stock shall have no preemptive or subscription rights.
Section 11. Headings of Subdivisions. The headings
of the various subdivisions hereof are for convenience of
reference only and shall not affect the interpretation of any of
the provisions hereof.
Section 12. Severability of Provisions. If any
voting powers, preferences and relative, participating, optional
and other special rights of the Series A Preferred Stock and
qualifications, limitations and restrictions thereof set forth in
the terms of the Series A Preferred Stock (as such terms may be
amended from time to time) is invalid, unlawful or incapable of
being enforced by reason of any rule of law or public policy, all
other voting powers, preferences and relative, participating,
optional and other special rights of Series A Preferred Stock and
qualifications, limitations and restrictions thereof set forth in
the terms of the Series A Preferred Stock (as so amended) which
can be given effect without the invalid, unlawful or
unenforceable voting powers, preferences and relative,
participating, optional or other special rights of Series A
Preferred Stock and qualifications, limitations and restrictions
thereof herein set forth shall not be deemed dependent upon any
other such voting powers, preferences and relative,
participating, optional or other special right of Series A
Preferred Stock and qualifications, limitations and restrictions
thereof unless so expressed herein.
SECOND: The Shares have been classified and designated
by the Board of Directors under the authority contained in the
Charter.
THIRD: These Articles Supplementary have been approved
by the Board of Directors in the manner and by the vote required
by law.
<PAGE>
FOURTH: The undersigned President of the Corporation
acknowledges these Articles Supplementary to be the corporate act
of the Corporation and, as to all matters or facts required to be
verified under oath, the undersigned President acknowledges that
to the best of his knowledge, information and belief, these
matters and facts are true in all material respects and that this
statement is made under the penalties for perjury.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused these
Articles Supplementary to be executed under seal in its name and
on its behalf by its President and attested to by its Secretary
on this ___ of May, 1997.
ATTEST: WELLSFORD REAL PROPERTIES, INC
_____________________________ By: (SEAL)
Jeffrey H. Lynford, Secretary -------------------------
Edward Lowenthal, President
<PAGE>
EXHIBIT 3.4
WELLSFORD REAL PROPERTIES, INC.
BYLAWS
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of
the Corporation shall be located at such place or places as the
Board of Directors may designate.
Section 2. ADDITIONAL OFFICES. The Corporation may have
additional offices at such places as the Board of Directors may
from time to time determine or the business of the Corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. PLACE. All meetings of stockholders shall be
held at the principal office of the Corporation or at such other
place within the United States as shall be stated in the notice
of the meeting.
Section 2. ANNUAL MEETING. An annual meeting of the
stockholders for the election of directors and the transaction of
any business within the powers of the Corporation shall be held
on a date and at the time set by the Board of Directors during
the month of May in each year.
Section 3. SPECIAL MEETINGS. The chairman of the board,
president, chief executive officer or Board of Directors may call
special meetings of the stockholders. Special meetings of
stockholders shall also be called by the secretary of the
Corporation upon the written request of the holders of shares
entitled to cast not less than a majority of all the votes
entitled to be cast at such meeting. Such request shall state
the purpose of such meeting and the matters proposed to be acted
on at such meeting. The secretary shall inform such stockholders
of the reasonably estimated cost of preparing and mailing notice
of the meeting and, upon payment to the Corporation by such
stockholders of such costs, the secretary shall give notice to
each stockholder entitled to notice of the meeting.
Section 4. NOTICE. Not less than ten nor more than 90
days before each meeting of stockholders, the secretary shall
give to each stockholder entitled to vote at such meeting and to
each stockholder not entitled to vote who is entitled to notice
of the meeting written or printed notice stating the time and
place of the meeting and, in the case of a special meeting or as
otherwise may be required by any statute, the purpose for which
the meeting is called, either by mail or by presenting it to such
stockholder personally or by leaving it at his residence or usual
<PAGE>
place of business. If mailed, such notice shall be deemed to be
given when deposited in the United States mail addressed to the
stockholder at his post office address as it appears on the
records of the Corporation, with postage thereon prepaid.
Section 5. SCOPE OF NOTICE. Any business of the
Corporation may be transacted at an annual meeting of
stockholders without being specifically designated in the notice,
except such business as is required by any statute to be stated
in such notice. No business shall be transacted at a special
meeting of stockholders except as specifically designated in the
notice.
Section 6. ORGANIZATION. At every meeting of
stockholders, the chairman of the board, if there be one, shall
conduct the meeting or, in the case of vacancy in office or
absence of the chairman of the board, one of the following
officers present shall conduct the meeting in the order stated:
the vice chairman of the board, if there be one, the president,
the vice presidents in their order of rank and seniority, or a
chairman chosen by the stockholders entitled to cast a majority
of the votes which all stockholders present in person or by proxy
are entitled to cast, shall act as chairman, and the secretary,
or, in his absence, an assistant secretary, or in the absence of
both the secretary and assistant secretaries, a person appointed
by the chairman shall act as secretary.
Section 7. QUORUM. At any meeting of stockholders, the
presence in person or by proxy of stockholders entitled to cast a
majority of all the votes entitled to be cast at such meeting
shall constitute a quorum; but this section shall not affect any
requirement under any statute or the charter of the Corporation
for the vote necessary for the adoption of any measure. If,
however, such quorum shall not be present at any meeting of the
stockholders, the stockholders entitled to vote at such meeting,
present in person or by proxy, shall have the power to adjourn
the meeting from time to time to a date not more than 120 days
after the original record date without notice other than
announcement at the meeting. At such adjourned meeting at which
a quorum shall be present, any business may be transacted which
might have been transacted at the meeting as originally notified.
Section 8. VOTING. Unless otherwise provided in the
charter, a plurality of all the votes cast at a meeting of
stockholders duly called and at which a quorum is present shall
be sufficient to elect a director. Each share may be voted for
as many individuals as there are directors to be elected and for
whose election the share is entitled to be voted. A majority of
the votes cast at a meeting of stockholders duly called and at
which a quorum is present shall be sufficient to approve any
other matter which may properly come before the meeting, unless
more than a majority of the votes cast is required by statute or
by the charter of the Corporation. Unless otherwise provided in
the charter, each outstanding share, regardless of class, shall
be entitled to one vote on each matter submitted to a vote at a
meeting of stockholders.
Section 9. PROXIES. A stockholder may cast the votes
<PAGE>
entitled to be cast by the shares of the stock owned of record by
him either in person or by proxy executed in writing by the
stockholder or by his duly authorized attorney in fact. Such
proxy shall be filed with the secretary of the Corporation before
or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise
provided in the proxy.
Section 10. VOTING OF STOCK BY CERTAIN HOLDERS. Stock of
the Corporation registered in the name of a corporation,
partnership, trust or other entity, if entitled to be voted, may
be voted by the president or a vice president, a general partner
or trustee thereof, as the case may be, or a proxy appointed by
any of the foregoing individuals, unless some other person who
has been appointed to vote such stock pursuant to a bylaw or a
resolution of the governing body of such corporation or other
entity or agreement of the partners of a partnership presents a
certified copy of such bylaw, resolution or agreement, in which
case such person may vote such stock. Any director or other
fiduciary may vote stock registered in his name as such
fiduciary, either in person or by proxy.
Shares of stock of the Corporation directly or indirectly
owned by it shall not be voted at any meeting and shall not be
counted in determining the total number of outstanding shares
entitled to be voted at any given time, unless they are held by
it in a fiduciary capacity, in which case they may be voted and
shall
be counted in determining the total number of outstanding shares
at any given time.
The Board of Directors may adopt by resolution a procedure
by which a stockholder may certify in writing to the Corporation
that any shares of stock registered in the name of the
stockholder are held for the account of a specified person other
than the stockholder. The resolution shall set forth the class
of stockholders who may make the certification, the purpose for
which the certification may be made, the form of certification
and the information to be contained in it; if the certification
is with respect to a record date or closing of the stock transfer
books, the time after the record date or closing of the stock
transfer books within which the certification must be received by
the Corporation; and any other provisions with respect to the
procedure which the Board of Directors considers necessary or
desirable. On receipt of such certification, the person
specified in the certification shall be regarded as, for the
purposes set forth in the certification, the stockholder of
record of the specified stock in place of the stockholder who
makes the certification.
Notwithstanding any other provision of the charter of the
Corporation or these Bylaws, Title 3, Subtitle 7 of the
Corporations and Associations Article of the Annotated Code of
Maryland (or any successor statute) shall not apply to any
acquisition by any person of shares of stock of the Corporation.
This section may be repealed, in whole or in part, at any time,
whether before or after an acquisition of control shares and,
upon such repeal, may, to the extent provided by any successor
<PAGE>
bylaw, apply to any prior or subsequent control share
acquisition.
Section 11. INSPECTORS. At any meeting of stockholders,
the chairman of the meeting may appoint one or more persons as
inspectors for such meeting. Such inspectors shall ascertain and
report the number of shares represented at the meeting based upon
their determination of the validity and effect of proxies, count
all votes, report the results and perform such other acts as are
proper to conduct the election and voting with impartiality and
fairness to all the stockholders.
Each report of an inspector shall be in writing and signed
by him or by a majority of them if there is more than one
inspector acting at such meeting. If there is more than one
inspector, the report of a majority shall be the report of the
inspectors. The report of the inspector or inspectors on the
number of shares represented at the meeting and the results of
the voting shall be prima facie evidence thereof.
Section 12. NOMINATIONS AND PROPOSALS BY STOCKHOLDERS.
(a) Annual Meetings of Stockholders. (1) Nominations of
persons for election to the Board of Directors and the proposal
of business to be considered by the stockholders may be made at
an annual meeting of stockholders (i) pursuant to the
Corporation's notice of meeting, (ii) by or at the direction of
the Board of Directors or (iii) by any stockholder of the
Corporation who was a stockholder of record both at the time of
giving of notice provided for in this Section 12(a) and at the
time of the annual meeting, who is entitled to vote at the
meeting and who complied with the notice procedures set forth in
this Section 12(a).
(2) For nominations or other business to be properly
brought before an annual meeting by a stockholder pursuant to
clause (iii) of paragraph (a)(1) of this Section 12, the
stockholder must have given timely notice thereof in writing to
the secretary of the Corporation and such other business must
otherwise be a proper matter for action by stockholders. To be
timely, a stockholder's notice shall be delivered to the
secretary at the principal executive offices of the Corporation
not later than the close of business on the 60th day nor earlier
than the close of business on the 90th day prior to the first
anniversary of the preceding year's annual meeting; provided,
however, that in the event that the date of the annual meeting is
advanced by more than 30 days or delayed by more than 60 days
from such anniversary date or if the Corporation has not
previously held an annual meeting, notice by the stockholder to
be timely must be so delivered not earlier than the close of
business on the 90th day prior to such annual meeting and not
later than the close of business on the later of the 60th day
prior to such annual meeting or the tenth day following the day
on which public announcement of the date of such meeting is first
made by the Corporation. In no event shall the public
announcement of a postponement or adjournment of an annual
meeting to a later date or time commence a new time period for
the giving of a stockholder's notice as described above. Such
<PAGE>
stockholder's notice shall set forth (i) as to each person whom
the stockholder proposes to nominate for election or reelection
as a director all information relating to such person that is
required to be disclosed in solicitations of proxies for election
of directors in an election contest, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (including
such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected);
(ii) as to any other business that the stockholder proposes to
bring before the meeting, a brief description of the business
desired to be brought before the meeting, the reasons for
conducting such business at the meeting and any material interest
in such business of such stockholder and of the beneficial owner,
if any, on whose behalf the proposal is made; and (iii) as to the
stockholder giving the notice and the beneficial owner, if any,
on whose behalf the nomination or proposal is made, (x) the name
and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner and (y) the
number of shares of each class of stock of the Corporation which
are owned beneficially and of record by such stockholder and such
beneficial owner.
(3) Notwithstanding anything in the second sentence
of paragraph (a)(2) of this Section 12 to the contrary, in the
event that the number of directors to be elected to the Board of
Directors is increased and there is no public announcement by the
Corporation naming all of the nominees for director or specifying
the size of the increased Board of Directors at least 70 days
prior to the first anniversary of the preceding year's annual
meeting, a stockholder's notice required by this Section 12(a)
shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it
shall be delivered to the secretary at the principal executive
offices of the Corporation not later than the close of business
on the tenth day following the day on which such public
announcement is first made by the Corporation.
(b) Special Meetings of Stockholders. Only such business
shall be conducted at a special meeting of stockholders as shall
have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for
election to the Board of Directors may be made at a special
meeting of stockholders at which directors are to be elected
(i) pursuant to the Corporation's notice of meeting, (ii) by or
at the direction of the Board of Directors or (iii) provided that
the Board of Directors has determined that directors shall be
elected at such special meeting, by any stockholder of the
Corporation who is a stockholder of record both at the time of
giving of notice provided for in this Section 12(b) and at the
time of the special meeting, who is entitled to vote at the
meeting and who complied with the notice procedures set forth in
this Section 12(b). In the event the Corporation calls a special
meeting of stockholders for the purpose of electing one or more
directors to the Board of Directors, any such stockholder may
nominate a person or persons (as the case may be) for election to
such position as specified in the Corporation's notice of
meeting, if the stockholder's notice containing the information
<PAGE>
required by paragraph (a)(2) of this Section 12 shall be
delivered to the secretary at the principal executive offices of
the Corporation not earlier than the close of business on the
90th day prior to such special meeting and not later than the
close of business on the later of the 60th day prior to such
special meeting or the tenth day following the day on which
public announcement is first made of the date of the special
meeting and of the nominees proposed by the Board of Directors to
be elected at such meeting. In no event shall the public
announcement of a postponement or adjournment of a special
meeting to a later date or time commence a new time period for
the giving of a stockholder's notice as described above.
(c) General. (1) Only such persons who are nominated in
accordance with the procedures set forth in this Section 12 shall
be eligible to serve as directors and only such business shall be
conducted at a meeting of stockholders as shall have been brought
before the meeting in accordance with the procedures set forth in
this Section 12. The chairman of the meeting shall have the
power and duty to determine whether a nomination or any business
proposed to be brought before the meeting was made or proposed,
as the case may be, in accordance with the procedures set forth
in this Section 12 and, if any proposed nomination or business is
not in compliance with this Section 12, to declare that such
nomination or proposal shall be disregarded.
(2) For purposes of this Section 12, "public
announcement" shall mean disclosure in a press release reported
by the Dow Jones News Service, Associated Press or comparable
news service or in a document publicly filed by the Corporation
with the Securities and Exchange Commission pursuant to Section
13, 14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this
Section 12, a stockholder shall also comply with all applicable
requirements of state law and of the Exchange Act and the rules
and regulations thereunder with respect to the matters set forth
in this Section 12. Nothing in this Section 12 shall be deemed
to affect any rights of stockholders to request inclusion of
proposals in, nor the rights of the Corporation to omit a
proposal from, the Corporation's proxy statement pursuant to Rule
14a-8 under the Exchange Act.
Section 13. VOTING BY BALLOT. Voting on any question
or in any election may be viva voce unless the presiding officer
shall order or any stockholder shall demand that voting be by
ballot.
ARTICLE III
DIRECTORS
Section 1. GENERAL POWERS. The business and affairs
of the Corporation shall be managed under the direction of its
Board of Directors.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. At any
regular meeting or at any special meeting called for that
<PAGE>
purpose, a majority of the entire Board of Directors may
establish, increase or decrease the number of directors, provided
that the number thereof shall never be less than the minimum
number required by the Maryland General Corporation Law, nor more
than 15, and further provided that the tenure of office of a
director shall not be affected by any decrease in the number of
directors.
Section 3. ANNUAL AND REGULAR MEETINGS. An annual
meeting of the Board of Directors shall be held immediately after
and at the same place as the annual meeting of stockholders, no
notice other than this Bylaw being necessary. The Board of
Directors may provide, by resolution, the time and place, either
within or without the State of Maryland, for the holding of
regular meetings of the Board of Directors without other notice
than such resolution.
Section 4. SPECIAL MEETINGS. Special meetings of the
Board of Directors may be called by or at the request of the
chairman of the board, president or by a majority of the
directors then in office. The person or persons authorized to
call special meetings of the Board of Directors may fix any
place, either within or without the State of Maryland, as the
place for holding any special meeting of the Board of Directors
called by them.
Section 5. NOTICE. Notice of any special meeting of
the Board of Directors shall be delivered personally or by
telephone, facsimile transmission, United States mail or courier
to each director at his business or residence address. Notice by
personal delivery, by telephone or a facsimile transmission shall
be given at least two days prior to the meeting. Notice by mail
shall be given at least five days prior to the meeting and shall
be deemed to be given when deposited in the United States mail
properly addressed, with postage thereon prepaid. Telephone
notice shall be deemed to be given when the director is
personally given such notice in a telephone call to which he is a
party. Facsimile transmission notice shall be deemed to be given
upon completion of the transmission of the message to the number
given to the Corporation by the director and receipt of a
completed answer-back indicating receipt. Neither the business to
be transacted at, nor the purpose of, any annual, regular or
special meeting of the Board of Directors need be stated in the
notice, unless specifically required by statute or these Bylaws.
Section 6. QUORUM. A majority of the directors shall
constitute a quorum for transaction of business at any meeting of
the Board of Directors, provided that, if less than a majority of
such directors are present at said meeting, a majority of the
directors present may adjourn the meeting from time to time
without further notice, and provided further that if, pursuant to
the charter of the Corporation or these Bylaws, the vote of a
majority of a particular group of directors is required for
action, a quorum must also include a majority of such group.
The directors present at a meeting which has been duly
called and convened may continue to transact business until
adjournment, notwithstanding the withdrawal of enough directors
<PAGE>
to leave less than a quorum.
Section 7. VOTING. The action of the majority of the
directors present at a meeting at which a quorum is present shall
be the action of the Board of Directors, unless the concurrence
of a greater proportion is required for such action by applicable
statute.
Section 8. TELEPHONE MEETINGS. Directors may
participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in
the meeting can hear each other at the same time. Participation
in a meeting by these means shall constitute presence in person
at the meeting.
Section 9. INFORMAL ACTION BY DIRECTORS. Any action
required or permitted to be taken at any meeting of the Board of
Directors may be taken without a meeting, if a consent in writing
to such action is signed by each director and such written
consent is filed with the minutes of proceedings of the Board of
Directors.
Section 10. VACANCIES. If for any reason any or all
the directors cease to be directors, such event shall not
terminate the Corporation or affect these Bylaws or the powers of
the remaining directors hereunder (even if fewer than three
directors remain). Any vacancy on the Board of Directors for any
cause other than an increase in the number of directors shall be
filled by a majority of the remaining directors, although such
majority is less than a quorum. Any vacancy in the number of
directors created by an increase in the number of directors may
be filled by a majority vote of the entire Board of Directors.
Any individual so elected as director shall hold office until the
next annual meeting of stockholders and until his successor is
elected and qualifies.
Section 11. COMPENSATION. Directors shall not receive
any stated salary for their services as directors but, by
resolution of the Board of Directors, may receive compensation
per year and/or per meeting and/or per visit to real property or
other facilities owned or leased by the Corporation and for any
service or activity they performed or engaged in as directors.
Directors may be reimbursed for expenses of attendance, if any,
at each annual, regular or special meeting of the Board of
Directors or of any committee thereof and for their expenses, if
any, in connection with each property visit and any other service
or activity they performed or engaged in as directors; but
nothing herein contained shall be construed to preclude any
directors from serving the Corporation in any other capacity and
receiving compensation therefor.
Section 12. LOSS OF DEPOSITS. No director shall be
liable for any loss which may occur by reason of the failure of
the bank, trust company, savings and loan association, or other
institution with whom moneys or stock have been deposited.
Section 13. SURETY BONDS. Unless required by law, no
director shall be obligated to give any bond or surety or other
<PAGE>
security for the performance of any of his duties.
Section 14. RELIANCE. Each director, officer, employee
and agent of the Corporation shall, in the performance of his
duties with respect to the Corporation, be fully justified and
protected with regard to any act or failure to act in reliance in
good faith upon the books of account or other records of the
Corporation, upon an opinion of counsel or upon reports made to
the Corporation by any of its officers or employees or by the
adviser, accountants, appraisers or other experts or consultants
selected by the Board of Directors or officers of the
Corporation, regardless of whether such counsel or expert may
also be a director.
Section 15. CERTAIN RIGHTS OF DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS. The directors shall have no responsibility
to devote their full time to the affairs of the Corporation. Any
director or officer, employee or agent of the Corporation, in his
personal capacity or in a capacity as an affiliate, employee, or
agent of any other person, or otherwise, may have business
interests and engage in business activities similar to or in
addition to or in competition with those of or relating to the
Corporation.
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The
Board of Directors may appoint from among its members an
Executive Committee, an Audit Committee, a Compensation Committee
and other committees, composed of one or more directors, to serve
at the pleasure of the Board of Directors.
Section 2. POWERS. The Board of Directors may
delegate to committees appointed under Section 1 of this Article
any of the powers of the Board of Directors, except as prohibited
by law.
Section 3. MEETINGS. Notice of committee meetings
shall be given in the same manner as notice for special meetings
of the Board of Directors. A majority of the members of the
committee shall constitute a quorum for the transaction of
business at any meeting of the committee. The act of a majority
of the committee members present at a meeting shall be the act of
such committee. The Board of Directors may designate a chairman
of any committee, and such chairman or any two members of any
committee may fix the time and place of its meeting unless the
Board shall otherwise provide. In the absence of any member of
any such committee, the members thereof present at any meeting,
whether or not they constitute a quorum, may appoint another
director to act in the place of such absent member. Each
committee shall keep minutes of its proceedings.
Section 4. TELEPHONE MEETINGS. Members of a committee
of the Board of Directors may participate in a meeting by means
of a conference telephone or similar communications equipment if
all persons participating in the meeting can hear each other at
<PAGE>
the same time. Participation in a meeting by these means shall
constitute presence in person at the meeting.
Section 5. INFORMAL ACTION BY COMMITTEES. Any action
required or permitted to be taken at any meeting of a committee
of the Board of Directors may be taken without a meeting, if a
consent in writing to such action is signed by each member of the
committee and such written consent is filed with the minutes of
proceedings of such committee.
Section 6. VACANCIES. Subject to the provisions
hereof, the Board of Directors shall have the power at any time
to change the membership of any committee, to fill all vacancies,
to designate alternate members to replace any absent or
disqualified member or to dissolve any such committee.
<PAGE>
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the
Corporation shall include a chief executive officer, a president,
a secretary and a treasurer and may include a chairman of the
board, a vice chairman of the board, one or more vice presidents,
a chief operating officer, a chief financial officer, one or more
assistant secretaries and one or more assistant treasurers. In
addition, the Board of Directors may from time to time appoint
such other officers with such powers and duties as they shall
deem necessary or desirable. The officers of the Corporation
shall be elected annually by the Board of Directors at the first
meeting of the Board of Directors held after each annual meeting
of stockholders, except that the chief executive officer may
appoint one or more vice presidents, assistant secretaries and
assistant treasurers. If the election of officers shall not be
held at such meeting, such election shall be held as soon
thereafter as may be convenient. Each officer shall hold office
until his successor is elected and qualifies or until his death,
resignation or removal in the manner hereinafter provided. Any
two or more offices except president and vice president may be
held by the same person. In its discretion, the Board of
Directors may leave unfilled any office except that of president,
treasurer and secretary. Election of an officer or agent shall
not of itself create contract rights between the Corporation and
such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or
agent of the Corporation may be removed by the Board of Directors
if in its judgment the best interests of the Corporation would be
served thereby, but such removal shall be without prejudice to
the contract rights, if any, of the person so removed. Any
officer of the Corporation may resign at any time by giving
written notice of his resignation to the Board of Directors, the
chairman of the board, the president or the secretary. Any
resignation shall take effect at any time subsequent to the time
specified therein or, if the time when it shall become effective
is not specified therein, immediately upon its receipt. The
acceptance of a resignation shall not be necessary to make it
effective unless otherwise stated in the resignation. Such
resignation shall be without prejudice to the contract rights, if
any, of the Corporation.
Section 3. VACANCIES. A vacancy in any office may be
filled by the Board of Directors for the balance of the term.
Section 4. CHIEF EXECUTIVE OFFICER. The Board of
Directors may designate a chief executive officer. The chief
executive officer shall have general responsibility for
implementation of the policies of the Corporation, as determined
by the Board of Directors, and for the management of the business
and affairs of the Corporation.
Section 5. CHIEF OPERATING OFFICER. The Board of
Directors may designate a chief operating officer. The chief
<PAGE>
operating officer shall have the responsibilities and duties as
set forth by the Board of Directors or the chief executive
officer.
Section 6. CHIEF FINANCIAL OFFICER. The Board of
Directors may designate a chief financial officer. The chief
financial officer shall have the responsibilities and duties as
set forth by the Board of Directors or the chief executive
officer.
Section 7. CHAIRMAN OF THE BOARD. The Board of
Directors shall designate a chairman of the board. The chairman
of the board shall preside over the meetings of the Board of
Directors and of the stockholders at which he shall be present
and shall in general oversee all of the business and affairs of
the Corporation. The Chairman of the Board may execute any deed,
mortgage, bond, contract or other instrument, except in cases
where the execution thereof shall be expressly delegated by the
directors or these Bylaws to some other officer of the
Corporation or shall be required by law to be otherwise executed.
The chairman of the board shall perform such other duties as may
be assigned to him or them by the Board of Directors.
Section 8. PRESIDENT. The president or chief
executive officer, as the case may be, shall in general supervise
and control all of the business and affairs of the Corporation.
In the absence of a designation of a chief operating officer by
the Board of Directors, the president shall be the chief
operating officer. He may execute any deed, mortgage, bond,
contract or other instrument, except in cases where the execution
thereof shall be expressly delegated by the Board of Directors or
by these Bylaws to some other officer or agent of the Corporation
or shall be required by law to be otherwise executed; and in
general shall perform all duties incident to the office of
president and such other duties as may be prescribed by the Board
of Directors from time to time.
Section 9. VICE PRESIDENTS. In the absence of the
president or in the event of a vacancy in such office, the vice
president (or in the event there be more than one vice president,
the vice presidents in the order designated at the time of their
election or, in the absence of any designation, then in the order
of their election) shall perform the duties of the president and
when so acting shall have all the powers of and be subject to all
the restrictions upon the president; and shall perform such other
duties as from time to time may be assigned to him by the
chairman of the board, the president or the Board of Directors.
The Board of Directors may designate one or more vice presidents
as executive vice president or as vice president for particular
areas of responsibility.
Section 10. SECRETARY. The secretary shall (a) keep
the minutes of the proceedings of the stockholders, the Board of
Directors and committees of the Board of Directors in one or more
books provided for that purpose; (b) see that all notices are
duly given in accordance with the provisions of these Bylaws or
as required by law; (c) be custodian of the corporate records and
of the seal of the Corporation; (d) keep a register of the post
<PAGE>
office address of each stockholder which shall be furnished to
the secretary by such stockholder; (e) have general charge of the
share transfer books of the Corporation; and (f) in general
perform such other duties as from time to time may be assigned to
him by the chief executive officer, the president or by the Board
of Directors.
Section 11. TREASURER. The treasurer shall have the
custody of the funds and securities of the Corporation and shall
keep full and accurate accounts of receipts and disbursements in
books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the
Board of Directors. In the absence of a designation of a chief
financial officer by the Board of Directors, the treasurer shall
be the chief financial officer of the Corporation.
The treasurer shall disburse the funds of the Corporation
as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the
president and Board of Directors, at the regular meetings of the
Board of Directors or whenever it may so require, an account of
all his transactions as treasurer and of the financial condition
of the Corporation.
If required by the Board of Directors, the treasurer shall
give the Corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the
restoration to the Corporation, in case of his death,
resignation, retirement or removal from office, of all books,
papers, vouchers, moneys and other property of whatever kind in
his possession or under his control belonging to the Corporation.
Section 12. ASSISTANT SECRETARIES AND ASSISTANT
TREASURERS. The assistant secretaries and assistant treasurers,
in general, shall perform such duties as shall be assigned to
them by the secretary or treasurer, respectively, or by the
chairman of the board, the president or the Board of Directors.
The assistant treasurers shall, if required by the Board of
Directors, give bonds for the faithful performance of their
duties in such sums and with such surety or sureties as shall be
satisfactory to the Board of Directors.
Section 13. SALARIES. The salaries and other
compensation of the officers shall be fixed from time to time by
the Board of Directors and no officer shall be prevented from
receiving such salary or other compensation by reason of the fact
that he is also a director.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Board of Directors may
authorize any officer or agent to enter into any contract or to
execute and deliver any instrument in the name of and on behalf
of the Corporation and such authority may be general or confined
<PAGE>
to specific instances. Any agreement, deed, mortgage, lease or
other document executed by one or more of the directors or by an
authorized person shall be valid and binding upon the Board of
Directors and upon the Corporation when authorized or ratified by
action of the Board of Directors.
Section 2. CHECKS AND DRAFTS. All checks, drafts or
other orders for the payment of money, notes or other evidences
of indebtedness issued in the name of the Corporation shall be
signed by such officer or agent of the Corporation in such manner
as shall from time to time be determined by the Board of
Directors.
Section 3. DEPOSITS. All funds of the Corporation not
otherwise employed shall be deposited from time to time to the
credit of the Corporation in such banks, trust companies or other
depositories as the Board of Directors may designate.
ARTICLE VII
STOCK
Section 1. CERTIFICATES. Each stockholder shall be
entitled to a certificate or certificates which shall represent
and certify the number of shares of each class of stock held by
him in the Corporation. Each certificate shall be signed by the
chief executive officer, the president or a vice president and
countersigned by the secretary or an assistant secretary or the
treasurer or an assistant treasurer and may be sealed with the
seal, if any, of the Corporation. The signatures may be either
manual or facsimile. Certificates shall be consecutively
numbered; and if the Corporation shall, from time to time, issue
several classes of stock, each class may have its own number
series. A certificate is valid and may be issued whether or not
an officer who signed it is still an officer when it is issued.
Each certificate representing shares which are restricted as to
their transferability or voting powers, which are preferred or
limited as to their dividends or as to their allocable portion of
the assets upon liquidation or which are redeemable at the option
of the Corporation, shall have a statement of such restriction,
limitation, preference or redemption provision, or a summary
thereof, plainly stated on the certificate. If the Corporation
has authority to issue stock of more than one class, the
certificate shall contain on the face or back a full statement or
summary of the designations and any preferences, conversion and
other rights, voting powers, restrictions, limitations as to
dividends and other distributions, qualifications and terms and
conditions of redemption of each class of stock and, if the
Corporation is authorized to issue any preferred or special class
in series, the differences in the relative rights and preferences
between the shares of each series to the extent they have been
set and the authority of the Board of Directors to set the
relative rights and preferences of subsequent series. In lieu of
such statement or summary, the certificate may state that the
Corporation will furnish a full statement of such information to
any stockholder upon request and without charge. If any class of
stock is restricted by the Corporation as to transferability, the
certificate shall contain a full statement of the restriction or
<PAGE>
state that the Corporation will furnish information about the
restrictions to the stockholder on request and without charge.
Section 2. TRANSFERS. Upon surrender to the
Corporation or the transfer agent of the Corporation of a stock
certificate duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, the Corporation
shall issue a new certificate to the person entitled thereto,
cancel the old certificate and record the transaction upon its
books.
The Corporation shall be entitled to treat the holder of
record of any share of stock as the holder in fact thereof and,
accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such share or on the part of any
other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the
State of Maryland.
Notwithstanding the foregoing, transfers of shares of any
class of stock will be subject in all respects to the charter of
the Corporation and all of the terms and conditions contained
therein.
Section 3. REPLACEMENT CERTIFICATE. Any officer
designated by the Board of Directors may direct a new certificate
to be issued in place of any certificate previously issued by the
Corporation alleged to have been lost, stolen or destroyed upon
the making of an affidavit of that fact by the person claiming
the certificate to be lost, stolen or destroyed. When
authorizing the issuance of a new certificate, an officer
designated by the Board of Directors may, in his discretion and
as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or the
owner's legal representative to advertise the same in such manner
as he shall require and/or to give bond, with sufficient surety,
to the Corporation to indemnify it against any loss or claim
which may arise as a result of the issuance of a new certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF
RECORD DATE. The Board of Directors may set, in advance, a
record date for the purpose of determining stockholders entitled
to notice of or to vote at any meeting of stockholders or
determining stockholders entitled to receive payment of any
dividend or the allotment of any other rights, or in order to
make a determination of stockholders for any other proper
purpose. Such date, in any case, shall not be prior to the close
of business on the day the record date is fixed and shall be not
more than 90 days and, in the case of a meeting of stockholders,
not less than ten days, before the date on which the meeting or
particular action requiring such determination of stockholders of
record is to be held or taken.
In lieu of fixing a record date, the Board of Directors
may provide that the stock transfer books shall be closed for a
stated period but not longer than 20 days. If the stock transfer
books are closed for the purpose of determining stockholders
<PAGE>
entitled to notice of or to vote at a meeting of stockholders,
such books shall be closed for at least ten days before the date
of such meeting.
If no record date is fixed and the stock transfer books
are not closed for the determination of stockholders, (a) the
record date for the determination of stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at
the close of business on the day on which the notice of meeting
is mailed or the 30th day before the meeting, whichever is the
closer date to the meeting; and (b) the record date for the
determination of stockholders entitled to receive payment of a
dividend or an allotment of any other rights shall be the close
of business on the day on which the resolution of the directors,
declaring the dividend or allotment of rights, is adopted.
When a determination of stockholders entitled to vote at
any meeting of stockholders has been made as provided in this
section, such determination shall apply to any adjournment
thereof, except when (i) the determination has been made through
the closing of the transfer books and the stated period of
closing has expired or (ii) the meeting is adjourned to a date
more than 120 days after the record date fixed for the original
meeting, in either of which case a new record date shall be
determined as set forth herein.
Section 5. STOCK LEDGER. The Corporation shall
maintain at its principal office or at the office of its counsel,
accountants or transfer agent, an original or duplicate share
ledger containing the name and address of each stockholder and
the number of shares of each class held by such stockholder.
Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The
Board of Directors may issue fractional stock or provide for the
issuance of scrip, all on such terms and under such conditions as
they may determine. Notwithstanding any other provision of the
charter or these Bylaws, the Board of Directors may issue units
consisting of different securities of the Corporation. Any
security issued in a unit shall have the same characteristics as
any identical securities issued by the Corporation, except that
the Board of Directors may provide that for a specified period
securities of the Corporation issued in such unit may be
transferred on the books of the Corporation only in such unit.
ARTICLE VIII
ACCOUNTING YEAR
The Board of Directors shall have the power, from time to
time, to fix the fiscal year of the Corporation by a duly adopted
resolution.
ARTICLE IX
DISTRIBUTIONS
Section 1. AUTHORIZATION. Dividends and other
distributions upon the stock of the Corporation may be authorized
<PAGE>
and declared by the Board of Directors, subject to the provisions
of law and the charter of the Corporation. Dividends and other
distributions may be paid in cash, property or stock of the
Corporation, subject to the provisions of law and the charter.
Section 2. CONTINGENCIES. Before payment of any
dividends or other distributions, there may be set aside out of any
assets of the Corporation available for dividends or other
distributions such sum or sums as the Board of Directors may from
time to time, in its absolute discretion, think proper as a reserve
fund for contingencies, for equalizing dividends or other
distributions, for repairing or maintaining any property of the
Corporation or for such other purpose as the Board of Directors
shall determine to be in the best interest of the Corporation, and
the Board of Directors may modify or abolish any such reserve in
the manner in which it was created.
ARTICLE X
INVESTMENT POLICY
Subject to the provisions of the charter of the Corporation,
the Board of Directors may from time to time adopt, amend, revise
or terminate any policy or policies with respect to investments by
the Corporation as it shall deem appropriate in its sole
discretion.
ARTICLE XI
SEAL
Section 1. SEAL. The Board of Directors may authorize the
adoption of a seal by the Corporation. The seal shall contain the
name of the Corporation and the year of its incorporation and the
words "Incorporated Maryland." The Board of Directors may
authorize one or more duplicate seals and provide for the custody
thereof.
Section 2. AFFIXING SEAL. Whenever the Corporation is
permitted or required to affix its seal to a document, it shall be
sufficient to meet the requirements of any law, rule or regulation
relating to a seal to place the word "(SEAL)" adjacent to the
signature of the person authorized to execute the document on
behalf
of the Corporation.
ARTICLE XII
INDEMNIFICATION AND ADVANCE OF EXPENSES
To the maximum extent permitted by Maryland law in effect
from time to time, the Corporation shall indemnify and, without
requiring a preliminary determination of the ultimate entitlement
to indemnification, shall pay or reimburse reasonable expenses in
<PAGE>
advance of final disposition of a proceeding to (a) any individual
who is a present or former director or officer of the Corporation
and who is made a party to the proceeding by reason of his service
in that capacity or (b) any individual who, while a director of the
Corporation and at the request of the Corporation, serves or has
served another corporation, partnership, joint venture, trust,
employee benefit plan, limited liability company or any other
enterprise as a director, officer, partner, trustee, manager or
member of such corporation, partnership, joint venture, trust,
employee benefit plan, limited liability company or other
enterprise and who is made a party to the proceeding by reason of
his service in that capacity. The Corporation may, with the
approval of its Board of Directors, provide such indemnification
and advance for expenses to a person who served a predecessor of
the Corporation in any of the capacities described in (a) or (b)
above and to any employee or agent of the Corporation or a
predecessor of the Corporation.
Neither the amendment nor repeal of this Article, nor the
adoption or amendment of any other provision of the Bylaws or
charter of the Corporation inconsistent with this Article, shall
apply to or affect in any respect the applicability of the
preceding paragraph with respect to any act or failure to act which
occurred prior to such amendment, repeal or adoption.
ARTICLE XIII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the
charter of the Corporation or these Bylaws or pursuant to
applicable law, a waiver thereof in writing, signed by the person
or persons entitled to such notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of
such notice. Neither the business to be transacted at nor the
purpose of any meeting need be set forth in the waiver of notice,
unless specifically required by statute. The attendance of any
person at any meeting shall constitute a waiver of notice of such
meeting, except where such person attends a meeting for the express
purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
ARTICLE XIV
AMENDMENT OF BYLAWS
The Board of Directors shall have the exclusive power to
adopt, alter or repeal any provision of these Bylaws and to make
new Bylaws.
<PAGE>
EXHIBIT 4.1
NUMBER WRP SHARES
L
WELLSFORD REAL PROPERTIES, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
COMMON STOCK SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 950240 10 1
THIS CERTIFIES THAT
IS THE OWNER OF
FULLY-PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK, $.01 PAR
VALUE PER SHARE, OF
Wellsford Real Properties, Inc. (the "Corporation"), transferable
in person or by duly authorized attorney upon surrender of this
certificate properly endorsed. This certificate and the shares
represented hereby are issued and shall be subject to all of the
provisions of the charter of the Corporation (the "Charter"), the
Bylaws of the Corporation, and all amendments thereof and
thereto, copies of which are available at the headquarters of the
Corporation, and to all of which the holder by acceptance hereof
assents. This certificate is not valid unless countersigned by
the Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
/s/ Jeffrey H. Lynford /s/ Edward Lowenthal
-------------------------- --------------------
CHAIRMAN OF THE BOARD AND SECRETARY PRESIDENT AND CHIEF
EXECUTIVE OFFICER
<PAGE>
The Corporation will furnish to any stockholder, on request
and without charge, a full statement of the information required
by Section 2-211(b) of the Corporations and Associations Article
of the Annotated Code of Maryland with respect to the
designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends and
other distributions, qualifications, and terms and conditions of
redemption of the stock of each class which the Corporation has
authority to issue and, if the Corporation is authorized to issue
any preferred or special class in series (i) the differences in
the relative rights and preferences between the shares for each
series to the extent set, and (ii) the authority of the Board of
Directors to set such rights and preferences of subsequent
series. The foregoing summary does not purport to be complete
and is subject to and qualified in its entirety by reference to
the charter of the Corporation (the "Charter"), a copy of which
will be sent without charge to each stockholder who so requests.
Such request must be made to the Secretary of the Corporation at
its principal office or to the Transfer Agent.
The following abbreviations, when used in the inscription on
the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations:
TEN COM -- as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT--_________ Custodian_______
(Cust) (Minor)
under Union Gifts to Minors
Act_______________________
(State)
Additional abbreviations may also be used though not in the above
list.
For value received, _________________________________ hereby
sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_______________________________
| |
|_____________________________|
_________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP
CODE OF ASSIGNEE)
_________________________________________________________________
<PAGE>
_________________________________________________________________
___________________________________________________________Shares
of the Common Stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint
______________________________________________________Attorney to
transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.
Dated_________________________________
Notice:________________________________________________________
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE
NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED ________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM, PURSUANT TO
S.E.C. RULE 17 Ad-15.
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST,
STOLEN, MUTILATED OR DESTROYED, THE CORPORATION WILL REQUIRE
A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A
REPLACEMENT CERTIFICATE.
<PAGE>
EXHIBIT 10.31
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 30, 1997, between WELLSFORD
REAL PROPERTIES, INC., a Maryland corporation with offices at 610
Fifth Avenue, New York, New York 10020 (the "Company"), and JEFFREY
H. LYNFORD, an individual residing at 10 Holly Branch Road,
Katonah, New York 10536 (the "Executive").
WHEREAS, the Executive is an executive of Wellsford
Residential Property Trust, a Maryland real estate investment trust
("Wellsford Residential");
WHEREAS, Equity Residential Properties Trust, a Maryland
real estate investment trust ("EQR"), is merging with and into
Wellsford Residential as of the date hereof (the "Merger");
WHEREAS, immediately prior to the Merger, Wellsford
Residential is distributing to its common shareholders, pro rata,
all of the shares of common stock that it owns in the Company (the
"Distribution"); and
WHEREAS, the Company desires to employ the Executive, and
the Executive desires to be employed by the Company.
IT IS AGREED:
1. Duties. (a) During the term of the Executive's
employment hereunder the Executive shall serve and the Company
shall employ the Executive as Chairman of the Board to perform such
executive or administrative services for the Company consistent
with those of a Chairman of the Board as may be assigned to the
Executive by the directors of the Company. The Executive hereby
accepts such employment and agrees to perform such services.
(b) The Executive shall devote such time, attention and
energies during business hours to the performance of his duties
hereunder as is necessary to properly carry out the
responsibilities of his office.
(c) The Executive shall cooperate with the Company,
including taking such medical examinations as the Company
reasonably shall deem necessary, if the Company shall desire to
obtain medical, disability or life insurance with respect to the
Executive. Where reasonably possible, the Company shall cooperate
with the Executive's request to have such examinations performed by
the Executive's personal physician or another physician reasonably
acceptable to the Executive.
(d) The Executive shall not be required to relocate or
conduct the Company's business outside the New York, New York area
in order to perform his duties under this Agreement but shall
undertake such reasonable business travel as may be necessary to
perform said duties (for which the Executive shall be reimbursed
<PAGE>
pursuant to Section 4 below for costs and expenses incurred in
connection therewith).
2. Employment Term. This Agreement shall commence on
May 30, 1997 and shall continue in effect through December 31,
2002; provided, however, that, on January 1, 2003 and on each
January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year beyond such
January 1 unless, not later than June 30 of the preceding year,
either the Executive or the Company shall have given notice to the
other not to extend this Agreement.
3. Compensation. For all services rendered by the
Executive pursuant to this Agreement:
(a) The Company shall pay to the Executive an annual
base salary at the following rates:
(i) for the period from May 30, 1997 through
December 31, 1997 - $275,000;
(ii) for the period from January 1, 1998 through
December 31, 1998 - $283,250;
(iii) for the period from January 1, 1999 through
December 31, 1999 - $291,748;
(iv) for the period from January 1, 2000 through
December 31, 2000 - $300,500;
(v) for the period from January 1, 2001 through
December 31, 2001 - $309,515;
(vi) for the period from January 1, 2002 through
December 31, 2002 - $318,800; and
(vii) for each additional year thereafter, the
annual base salary for the immediately
preceding year plus 3% of such annual base
salary.
All such compensation shall be paid bi-weekly or at such other
regular intervals, not less frequently than monthly, as the Company
may establish from time to time for executive employees of the
Company.
(b) In addition to the compensation set forth in
subsection 3(a) above, the Executive shall be awarded such bonus
for each calendar year or partial calendar year of his employment
hereunder as the directors of the Company shall determine in their
sole discretion. In determining such bonus, the Executive
understands that the directors will consider, without limitation,
the following factors with respect to the applicable calendar year
or partial calendar year: the Company's financial performance,
business performance and growth during such period; Executive's
responsibilities as an officer of the Company (including his
participation in transactions of particular financial or business
significance to the Company) during such period; the total
<PAGE>
compensation package paid to executive officers having similar
responsibilities as the Executive who are employed by entities
which are similar to the Company; and such other factors as the
directors may deem appropriate in their sole discretion. Such
bonus may consist of cash; grants of shares ("Shares") of Common
Stock of the Company; options to purchase Shares; loans to purchase
Shares; share appreciation rights (whether independent of or in
conjunction with awards of options); and such other awards as the
directors in their sole discretion may deem appropriate and which
they believe are in furtherance of the growth of long-term
stockholder value of the Company.
4. Expenses. (a) The Company shall pay for all legal
and accounting fees and expenses incurred by the Executive in
connection with the structuring, negotiation and preparation of
this Agreement. The Company shall reimburse the Executive for all
out-of-pocket expenses actually and necessarily incurred by him in
the conduct of the business of the Company against reasonable
substantiation submitted with respect thereto.
(b) Unless the provisions of subsection 4(c) below shall
apply, the Company shall reimburse the Executive for all legal fees
and related expenses (including the costs of experts, evidence and
counsel) paid by the Executive as a result of (i) the termination
of Executive's employment (including all such fees and expenses, if
any, incurred in contesting or disputing any such termination of
employment), (ii) the Executive seeking to obtain or enforce any
right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Company under which the Executive is
or may be entitled to receive benefits, (iii) the Executive's
hearing before the directors as contemplated in subsection 6(c) of
this Agreement or (iv) any action taken by the Company against the
Executive; provided, however, that the Company shall reimburse the
legal fees and related expenses described in this subsection 4(b)
only if and when a final judgement has been rendered in favor of
the Executive and all appeals related to any such action have been
exhausted.
(c) The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel)
incurred by the Executive as they become due as a result of (i) the
termination of Executive's employment (including all such fees and
expenses, if any, incurred in contesting or disputing any such
termination of employment), (ii) the Executive seeking to obtain or
enforce any right or benefit provided by this Agreement or by any
other plan or arrangement maintained by the Company under which the
Executive is or may be entitled to receive benefits, (iii) the
Executive's hearing before the directors as contemplated in
subsection 6(c) of this Agreement or (iv) any action taken by the
Company against the Executive, unless and until such time that a
final judgement has been rendered in favor of the Company and all
appeals related to any such action have been exhausted; provided,
however, that the circumstances set forth above occurred on or
after a change in control of the Company.
(d) For purposes of this Agreement, a "change in control
of the Company" shall be deemed to occur if:
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(i) there shall have occurred a change in control
of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect on the date hereof, whether or not the Company is then
subject to such reporting requirement, provided, however, that
there shall not be deemed to be a "change in control" of the
Company if immediately prior to the occurrence of what would
otherwise be a "change in control" of the Company (a) the Executive
is the other party to the transaction (a "Control Event") that
would otherwise result in a "change in control" of the Company or
(b) the Executive is an executive officer, trustee, director or
more than 5% equity holder of the other party to the Control Event
or of any entity, directly or indirectly, controlling such other
party,
(ii) the Company merges or consolidates with, or
sells all or substantially all of its assets to, another company
(each, a "Transaction"), provided, however, that a Transaction
shall not be deemed to result in a "change in control" of the
Company if (a) immediately prior thereto the circumstances in
(i)(a) or (i)(b) above exist, or (b) (1) the shareholders of the
Company, immediately before such Transaction own, directly or
indirectly, immediately following such Transaction in excess of
fifty percent (50%) of the combined voting power of the outstanding
voting securities of the corporation or other entity resulting from
such Transaction (the "Surviving Corporation") in substantially the
same proportion as their ownership of the voting securities of the
Company immediately before such Transaction and (2) the individuals
who were members of the Company's Board of Directors immediately
prior to the execution of the agreement providing for such
Transaction constitute at least a majority of the members of the
board of directors or the board of trustees, as the case may be, of
the Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Surviving Corporation, or
(iii) the Company acquires assets of another
company or a subsidiary of the Company merges or consolidates with
another company (each, an "Other Transaction") and (a) the
shareholders of the Company, immediately before such Other
Transaction own, directly or indirectly, immediately following such
Other Transaction 50% or less of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Other Transaction (the "Other Surviving
Corporation") in substantially the same proportion as their
ownership of the voting securities of the Company immediately
before such Other Transaction or (b) the individuals who were
members of the Company's Board of Directors immediately prior to
the execution of the agreement providing for such Other Transaction
constitute less than a majority of the members of the board of
directors or the board of trustees, as the case may be, of the
Other Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Other Surviving Corporation,
provided, however, that an Other Transaction shall not be deemed to
result in a "change in control" of the Company if immediately prior
thereto the circumstances in (i)(a) or (i)(b) above exist.
<PAGE>
5. Benefits. The Executive shall be entitled to six
weeks of paid vacation each year and such other medical and other
benefits as are afforded from time to time to all executive
employees of the Company. The Company shall indemnify the
Executive in the performance of his duties pursuant to the bylaws
of the Company and to the fullest extent allowed by applicable law,
including, without limitation, legal fees.
6. Earlier Termination. (a) If the Executive shall
fail, because of illness or incapacity, to render the services
contemplated by this Agreement for six successive months or for
shorter periods aggregating nine months in any calendar year, the
directors of the Company may determine, on the basis of medical
evidence satisfactory to the Company, in the Company's sole
discretion, that the Executive has become disabled. If within
thirty (30) days after the date on which written notice of such
determination is given to the Executive, the Executive shall not
have returned to the full-time performance of his duties hereunder,
this Agreement and the employment of the Executive hereunder shall
be deemed terminated in accordance with Section 8 hereof.
(b) Except as otherwise provided in this Agreement, if
the Executive shall die during the term of this Agreement, this
Agreement shall be deemed to have been terminated as of the date of
death of the Executive.
(c) The Company, by notice to the Executive, may
terminate this Agreement for proper cause. As used herein, "proper
cause" shall mean (i) the willful and continued failure by the
Executive to substantially perform his duties with the Company
(other than any such failure resulting from the Executive's
incapacity due to physical or mental illness or any such actual or
anticipated failure resulting from termination by the Executive for
Good Reason (as defined below)) after a written demand for
substantial performance is delivered to the Executive by the
directors of the Company, which demand specifically identifies the
manner in which the directors believe that the Executive has not
substantially performed his duties, or (ii) the willful engaging by
the Executive in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise. For purposes of
this subsection 6(c), no act, or failure to act, on the Executive's
part shall be deemed "willful" unless done, or omitted to be done,
by the Executive otherwise than in good faith and in a manner that
the Executive reasonably believed was in or not opposed to the best
interests of the Company and its shareholders. Notwithstanding the
foregoing, the Executive shall not be deemed to have been
terminated for proper cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters (3/4) of all
of the directors of the Company at a meeting of the directors
called and held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with
counsel of his choosing, to be heard before the directors not less
than 10 business days after the giving of such notice), finding
that in the good faith opinion of the directors, the Executive
conducted himself as set forth above in clause (i) or (ii) of the
first sentence of this subsection 6(c) and specifying the
<PAGE>
particulars of such conduct in detail.
(d) The Executive may terminate this Agreement for "Good
Reason" if any of the following events occurs:
(i) the assignment to the Executive of any duties
materially inconsistent with his status as a senior
executive officer of the Company or a substantial
alteration in the nature or status of his
responsibilities;
(ii) the Company's breach of any of its agreements
or obligations under this Agreement;
(iii) the failure by the Company to pay the
Executive any annual installment of a previous award
under any bonus or incentive compensation arrangement;
(iv) the failure of the Company to obtain a
satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in
Section 14 hereof;
(v) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination (defined below) satisfying the requirements
of Section 7 below; or
(vi) any change in control of the Company.
7. Notice of Termination. Any purported termination of
the Executive's employment by the Company or by the Executive shall
be communicated by a written Notice of Termination to the other
party hereto in accordance with Section 16 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
8. Date of Termination, Etc. "Date of Termination"
shall mean (a) if the Executive's employment is terminated for
disability, thirty (30) days after Notice of Termination is given
(provided that the Executive shall not have returned to the full-
time performance of his duties during such thirty (30) day period),
and (b) if the Executive's employment is terminated pursuant to
subsection 6(c) or 6(d) above or for any other reason (other than
disability), the date specified in the Notice of Termination
(which, in the case of a termination pursuant to subsection 6(c)
above shall not be less than thirty (30) days, and in the case of
a termination pursuant to subsection 6(d) above shall not be less
than thirty (30) nor more than sixty (60) days, respectively, from
the date such Notice of Termination is given); provided, however,
if within thirty (30) days after any Notice of Termination is given
the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally
resolved, either by mutual written agreement of the parties, by a
<PAGE>
binding arbitration award, or by a final judgment, order or decree
of a court of competent jurisdiction (which is not appealable or
the time for appeal therefrom having expired and no appeal having
been perfected), except that with respect to a termination of this
Agreement by reason of expiration of its term as provided in
Section 2, the Date of Termination shall be the date the term
hereof expires pursuant to Section 2, regardless of whether a
dispute exists with respect thereto; provided, further, that the
Date of Termination shall be extended by a notice of dispute only
if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive his full compensation in
effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary and installments under
any bonus or incentive compensation plan) and continue the
Executive as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice
giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this Section. Amounts paid under this
Section 8 are in addition to all other amounts due under this
Agreement and shall not be offset against or reduce any other
amounts due under this Agreement. If it is finally determined by
a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not
appealable or the time for appeal therefrom having expired and no
appeal having been perfected), that the Executive was terminated
for proper cause, the Executive shall promptly remit to the Company
the amount of any cash payments and the value of any non-cash
benefits paid pursuant to this Section 8 to which the Executive
would not otherwise have been entitled.
9. Compensation Upon Termination or During Disability.
Upon termination of the Executive's employment or during a period
of disability the Executive shall be entitled to the following
compensation and benefits:
(a) During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to
physical or mental illness, the Executive shall continue to receive
his base salary at the rate in effect at the commencement of any
such period until his employment is terminated pursuant to
subsection 6(a) hereof, together with any bonus that may be payable
pursuant to subsection 3(b). Thereafter, the compensation provided
in Section 3 hereof shall continue to be paid to the Executive for
the longer of (i) a period of 36 months after such termination and
(ii) the remaining term of this Agreement pursuant to Section 2
hereof, in either case at the annual base salary in effect at the
time his employment is terminated, and the Executive shall continue
to be covered by the Company's health, dental and life insurance
benefits for such period.
(b) If the Executive's employment shall be terminated,
at any time prior to a change in control of the Company, for proper
cause or by him other than for Good Reason, the Executive shall be
paid the Executive's full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination
is given and the Company shall thereafter have no further
<PAGE>
obligations to the Executive under this Agreement.
(c) If the Executive's employment shall be terminated by
reason of the Executive's death, the compensation provided in
subsection 3(a) hereof shall be paid to the person designated from
time to time in writing by the Executive and, if not so designated,
to the Executive's estate for the longer of (i) a period of 36
months following such termination and (ii) the remaining term of
this Agreement pursuant to Section 2 hereof, in either case at the
annual base salary in effect at the time of his death. The person
designated by the Executive and, if not so designated, the
Executive's estate shall also receive (i) any bonus awarded
pursuant to subsection 3(b) and not yet paid and (ii) with respect
to the year in which the Executive dies (in the event the directors
of the Company have not yet determined whether to award the
Executive a bonus for such calendar year), a bonus equal to the
product of (x) the annual base salary payable to the Executive
pursuant to subsection 3(a) from January 1 of the year in which the
Executive shall have died through the last day of the month during
which the Executive shall have died and (y) the Deemed Bonus
Fraction (as defined in subsection 9(d) below).
(d) If the Executive's employment shall be terminated
(I) by the Company other than for proper cause or disability or
(II) by the Executive for Good Reason, then the Executive shall be
entitled to the benefits provided below:
(i) the Company shall pay as severance pay to the
Executive, not later than the Date of Termination, a lump
sum severance payment (the "Severance Payment") equal to
(A) the aggregate of all compensation due to the
Executive hereunder had his employment not been so
terminated, including, without limitation, all bonus
payments which would have been due to the Executive
pursuant to subsection 3(b), assuming that the Executive
would have received a bonus for each calendar year equal
to the product of (x) the annual base salary that would
be payable to the Executive pursuant to subsection 3(a)
for such calendar year and (y) the greater of (i) 1/2 or
(ii) the percentage of the Executive's base salary for
the immediately preceding fiscal year that was paid to
the Executive as a bonus for the immediately preceding
fiscal year, expressed as a fraction (the greater of
clauses (i) and (ii) being herein referred to as the
"Deemed Bonus Fraction"), through the expiration of this
Agreement, plus (B) the greater of (x) the aggregate of
all compensation due to the Executive hereunder had his
employment not been so terminated, including, without
limitation, all bonus payments which would have been due
to the Executive pursuant to subsection 3(b), assuming
that the Executive would have received a bonus for each
calendar year equal to the product of (i) the annual base
salary that would be payable to the Executive pursuant to
subsection 3(a) for such calendar year and (ii) the
Deemed Bonus Fraction, through the expiration of this
Agreement (assuming, solely for purposes of this
subsection 9(d)(i)(B)(x), that this Agreement expires on
the last day of the thirty-sixth month following the end
<PAGE>
of the calendar year in which the Date of Termination
occurs), or (y) 2.99 times the "base amount" within the
meaning of Sections 280G(b)(3) and 280G(d) of the
Internal Revenue Code of 1986, as amended (the "Code"),
and any applicable temporary or final regulations
promulgated thereunder, or its equivalent as provided in
any successor statute or regulation; provided, however,
if the Executive's employment shall be terminated other
than pursuant to subsection 6(d)(vi), the Severance
Payment shall equal only the greatest of the amounts set
forth in subsection 9(d)(i)(A), 9(d)(i)(B)(x) or
9(d)(i)(B)(y) above. If Section 280G of the Code (and
any successor provisions thereto) shall be repealed or
otherwise be inapplicable, then the Severance Payment
under clause (i)(B)(y) above shall equal 2.99 times the
average of the Executive's annual compensation (from the
Company or from Wellsford Residential, as the case may)
during the three calendar year period preceding the
calendar year in which the Date of Termination occurs.
For purposes of determining annual compensation in the
preceding sentence, compensation payable to the Executive
by the Company or by Wellsford Residential shall include
every type and form of compensation includible in the
Executive's gross income in respect of his employment by
the Company or by Wellsford Residential (including,
without limitation, all income reported on an Internal
Revenue Service Form W-2), compensation income recognized
as a result of the Executive's exercise of stock options
or sale of the stock so acquired and including, without
limitation, any annual bonus payments previously paid to
such Executive. For purposes of calculating the "base
amount" within the meaning of Sections 280G(b)(3) and
280G(d) of the Code and annual compensation in the second
preceding sentence, any income of the Executive that
constitutes a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code shall not be taken into
account in making such calculations; and
(ii) an amount equal to the Additional Amount
pursuant to Section 10 below.
(e) If the Executive's employment shall be terminated,
at any time following a change in control of the Company, for
proper cause, the Company shall pay the Executive his full base
salary through the Date of Termination at the higher of the rate in
effect at the time Notice of Termination is given and the rate in
effect immediately prior to the change in control of the Company
and the Company shall have no further obligations to the Executive
under this Agreement.
(f) In addition to all other amounts payable to the
Executive under this Section 9, the Executive shall be entitled to
receive all benefits payable to him under the Company's Pension
Plans applicable to him and any other plan or agreement relating to
retirement benefits as in effect upon the occurrence of a change in
control.
(g) The Executive shall not be required to mitigate the
<PAGE>
amount of any payment provided for in this Section 9 by seeking
other employment or otherwise, nor shall the amount of any payment
or benefit provided for in this Section 9 be reduced by any
compensation earned by him as the result of employment by another
employer or by retirement benefits after the Date of Termination,
or otherwise, except as specifically provided in this Section 9.
10. Additional Amount. Whether or not Section 9 is
applicable, if in the opinion of tax counsel selected by the
Executive and reasonably acceptable to the Company, the Executive
has or will receive any compensation or recognize any income
(whether or not pursuant to this Agreement or any plan or other
arrangement of the Company and whether or not the Executive's
employment with the Company has terminated) which constitute an
"excess parachute payment" within the meaning of Section 280G(b)(1)
of the Code (or for which a tax is otherwise payable under Section
4999 of the Code), then the Company shall pay the Executive an
additional amount (the "Additional Amount") equal to the sum of (i)
all taxes payable by the Executive under Section 4999 of the Code
with respect to (a) all such excess parachute payments (or
otherwise), and (b) the Additional Amount, plus (ii) all federal,
state and local income taxes payable by Executive with respect to
the Additional Amount. The amounts payable pursuant to this
Section 10 shall be paid by the Company to the Executive within 30
days of the written request therefor made by the Executive, but in
all events (whether or not there has been a written request by the
Executive) not later than the date of the "change in control of the
Company", unless otherwise agreed to in writing by the Executive.
11. Income Tax Payment. Whether or not Section 9 is
applicable, if (i) the Executive has or will receive any
compensation or recognize any income (whether or not pursuant to
this Agreement or any plan or other arrangement of the Company and
whether or not the Executive's employment with the Company has
terminated) in connection with a "change in control" of the Company
(as that term may be interpreted in this Agreement and any plan or
other arrangement of the Company), and (ii) such compensation or
income represents non-cash compensation or income, then the Company
shall pay the Executive in cash an amount (the "Income Tax
Payment") equal to all federal, state and local income taxes
payable by Executive with respect to such non-cash compensation or
income. The Income Tax Payment shall be paid by the Company to the
Executive not later than the date of the "change in control of the
Company", unless otherwise agreed to in writing by the Executive.
12. Indemnification. The Company shall indemnify and
hold harmless the Executive for and against, and shall pay to the
Executive an amount (the "Indemnified Amount") equal to, the sum of
(i) all taxes payable by the Executive under Section 4999 of the
Code with respect to (a) any compensation received and any income
recognized by the Executive in connection with the Merger and
Distribution as described in the Joint Proxy Statement/
Prospectus/Information Statement, dated April 25, 1997, of
Wellsford Residential and EQR and (b) the Indemnified Amount, plus
(ii) all federal, state and local income taxes payable by Executive
with respect to the Indemnified Amount; provided, however, that the
Company shall have no obligations under this Section 12 with
respect to items comprising the Indemnified Amount to the extent
<PAGE>
already paid on behalf of the Executive by Wellsford Residential or
the surviving trust in the Merger.
13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
14. Entire Agreement. This Agreement sets forth the
entire agreement of the parties and is intended to supersede all
prior employment negotiations, understandings and agreements. No
provision of this Agreement may be waived or changed, except by a
writing signed by the party to be charged with such waiver or
change.
15. Successors; Binding Agreement. (a) This Agreement
shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would still be payable to him
hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee or
other designee or, if there is no such designee, to the Executive's
estate.
(b) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree in writing to
perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain and
deliver to Executive such assumption and agreement prior to (but
effective only upon) such succession shall be a breach of this
Agreement, except that for purposes of implementing the foregoing,
the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Com-
pany" shall mean the Company as hereinbefore defined and any suc-
cessor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement, expressly, by operation of law,
or otherwise.
16. Notices. All notices provided for in this Agreement
shall be in writing, and shall be deemed to have been duly given
when delivered personally to the party to receive the same, when
given by telex, telegram or mailgram, or when mailed first class
postage prepaid, by registered or certified mail, return receipt
requested, addressed to the party to receive the same at his or its
address above set forth, or such other address as the party to
receive the same shall have specified by written notice given in
the manner provided for in this Section 16. All notices shall be
deemed to have been given as of the date of personal delivery,
transmittal or mailing thereof.
<PAGE>
17. Severability. If any provision in this Agreement is
determined to be invalid, it shall not affect the validity or
enforceability of any of the other remaining provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
___________________________________
Name: Edward Lowenthal
Title: President
EXECUTIVE:
/s/ Jeffrey H. Lynford
___________________________________
Jeffrey H. Lynford
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EXHIBIT 10.32
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 30, 1997, between WELLSFORD
REAL PROPERTIES, INC., a Maryland corporation with offices at 610
Fifth Avenue, New York, New York 10020 (the "Company"), and EDWARD
LOWENTHAL, an individual residing at 201 Hamilton Road, Ridgewood,
New Jersey 07450 (the "Executive").
WHEREAS, the Executive is an executive of Wellsford
Residential Property Trust, a Maryland real estate investment trust
("Wellsford Residential");
WHEREAS, Equity Residential Properties Trust, a Maryland
real estate investment trust ("EQR"), is merging with and into
Wellsford Residential as of the date hereof (the "Merger");
WHEREAS, immediately prior to the Merger, Wellsford
Residential is distributing to its common shareholders, pro rata,
all of the shares of common stock that it owns in the Company (the
"Distribution"); and
WHEREAS, the Company desires to employ the Executive, and
the Executive desires to be employed by the Company.
IT IS AGREED:
1. Duties. (a) During the term of the Executive's
employment hereunder the Executive shall serve and the Company
shall employ the Executive as Chairman of the Board to perform such
executive or administrative services for the Company consistent
with those of a Chairman of the Board as may be assigned to the
Executive by the directors of the Company. The Executive hereby
accepts such employment and agrees to perform such services.
(b) The Executive shall devote such time, attention and
energies during business hours to the performance of his duties
hereunder as is necessary to properly carry out the
responsibilities of his office.
(c) The Executive shall cooperate with the Company,
including taking such medical examinations as the Company
reasonably shall deem necessary, if the Company shall desire to
obtain medical, disability or life insurance with respect to the
Executive. Where reasonably possible, the Company shall cooperate
with the Executive's request to have such examinations performed by
the Executive's personal physician or another physician reasonably
acceptable to the Executive.
(d) The Executive shall not be required to relocate or
conduct the Company's business outside the New York, New York area
in order to perform his duties under this Agreement but shall
undertake such reasonable business travel as may be necessary to
perform said duties (for which the Executive shall be reimbursed
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pursuant to Section 4 below for costs and expenses incurred in
connection therewith).
2. Employment Term. This Agreement shall commence on
May 30, 1997 and shall continue in effect through December 31,
2002; provided, however, that, on January 1, 2003 and on each
January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year beyond such
January 1 unless, not later than June 30 of the preceding year,
either the Executive or the Company shall have given notice to the
other not to extend this Agreement.
3. Compensation. For all services rendered by the
Executive pursuant to this Agreement:
(a) The Company shall pay to the Executive an annual
base salary at the following rates:
(i) for the period from May 30, 1997 through
December 31, 1997 - $275,000;
(ii) for the period from January 1, 1998 through
December 31, 1998 - $283,250;
(iii) for the period from January 1, 1999 through
December 31, 1999 - $291,748;
(iv) for the period from January 1, 2000 through
December 31, 2000 - $300,500;
(v) for the period from January 1, 2001 through
December 31, 2001 - $309,515;
(vi) for the period from January 1, 2002 through
December 31, 2002 - $318,800; and
(vii) for each additional year thereafter, the
annual base salary for the immediately
preceding year plus 3% of such annual base
salary.
All such compensation shall be paid bi-weekly or at such other
regular intervals, not less frequently than monthly, as the Company
may establish from time to time for executive employees of the
Company.
(b) In addition to the compensation set forth in
subsection 3(a) above, the Executive shall be awarded such bonus
for each calendar year or partial calendar year of his employment
hereunder as the directors of the Company shall determine in their
sole discretion. In determining such bonus, the Executive
understands that the directors will consider, without limitation,
the following factors with respect to the applicable calendar year
or partial calendar year: the Company's financial performance,
business performance and growth during such period; Executive's
responsibilities as an officer of the Company (including his
participation in transactions of particular financial or business
significance to the Company) during such period; the total
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compensation package paid to executive officers having similar
responsibilities as the Executive who are employed by entities
which are similar to the Company; and such other factors as the
directors may deem appropriate in their sole discretion. Such
bonus may consist of cash; grants of shares ("Shares") of Common
Stock of the Company; options to purchase Shares; loans to purchase
Shares; share appreciation rights (whether independent of or in
conjunction with awards of options); and such other awards as the
directors in their sole discretion may deem appropriate and which
they believe are in furtherance of the growth of long-term
stockholder value of the Company.
4. Expenses. (a) The Company shall pay for all legal
and accounting fees and expenses incurred by the Executive in
connection with the structuring, negotiation and preparation of
this Agreement. The Company shall reimburse the Executive for all
out-of-pocket expenses actually and necessarily incurred by him in
the conduct of the business of the Company against reasonable
substantiation submitted with respect thereto.
(b) Unless the provisions of subsection 4(c) below shall
apply, the Company shall reimburse the Executive for all legal fees
and related expenses (including the costs of experts, evidence and
counsel) paid by the Executive as a result of (i) the termination
of Executive's employment (including all such fees and expenses, if
any, incurred in contesting or disputing any such termination of
employment), (ii) the Executive seeking to obtain or enforce any
right or benefit provided by this Agreement or by any other plan or
arrangement maintained by the Company under which the Executive is
or may be entitled to receive benefits, (iii) the Executive's
hearing before the directors as contemplated in subsection 6(c) of
this Agreement or (iv) any action taken by the Company against the
Executive; provided, however, that the Company shall reimburse the
legal fees and related expenses described in this subsection 4(b)
only if and when a final judgement has been rendered in favor of
the Executive and all appeals related to any such action have been
exhausted.
(c) The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel)
incurred by the Executive as they become due as a result of (i) the
termination of Executive's employment (including all such fees and
expenses, if any, incurred in contesting or disputing any such
termination of employment), (ii) the Executive seeking to obtain or
enforce any right or benefit provided by this Agreement or by any
other plan or arrangement maintained by the Company under which the
Executive is or may be entitled to receive benefits, (iii) the
Executive's hearing before the directors as contemplated in
subsection 6(c) of this Agreement or (iv) any action taken by the
Company against the Executive, unless and until such time that a
final judgement has been rendered in favor of the Company and all
appeals related to any such action have been exhausted; provided,
however, that the circumstances set forth above occurred on or
after a change in control of the Company.
(d) For purposes of this Agreement, a "change in control
of the Company" shall be deemed to occur if:
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(i) there shall have occurred a change in control
of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as in effect on the date hereof, whether or not the Company is then
subject to such reporting requirement, provided, however, that
there shall not be deemed to be a "change in control" of the
Company if immediately prior to the occurrence of what would
otherwise be a "change in control" of the Company (a) the Executive
is the other party to the transaction (a "Control Event") that
would otherwise result in a "change in control" of the Company or
(b) the Executive is an executive officer, trustee, director or
more than 5% equity holder of the other party to the Control Event
or of any entity, directly or indirectly, controlling such other
party,
(ii) the Company merges or consolidates with, or
sells all or substantially all of its assets to, another company
(each, a "Transaction"), provided, however, that a Transaction
shall not be deemed to result in a "change in control" of the
Company if (a) immediately prior thereto the circumstances in
(i)(a) or (i)(b) above exist, or (b) (1) the shareholders of the
Company, immediately before such Transaction own, directly or
indirectly, immediately following such Transaction in excess of
fifty percent (50%) of the combined voting power of the outstanding
voting securities of the corporation or other entity resulting from
such Transaction (the "Surviving Corporation") in substantially the
same proportion as their ownership of the voting securities of the
Company immediately before such Transaction and (2) the individuals
who were members of the Company's Board of Directors immediately
prior to the execution of the agreement providing for such
Transaction constitute at least a majority of the members of the
board of directors or the board of trustees, as the case may be, of
the Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Surviving Corporation, or
(iii) the Company acquires assets of another
company or a subsidiary of the Company merges or consolidates with
another company (each, an "Other Transaction") and (a) the
shareholders of the Company, immediately before such Other
Transaction own, directly or indirectly, immediately following such
Other Transaction 50% or less of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Other Transaction (the "Other Surviving
Corporation") in substantially the same proportion as their
ownership of the voting securities of the Company immediately
before such Other Transaction or (b) the individuals who were
members of the Company's Board of Directors immediately prior to
the execution of the agreement providing for such Other Transaction
constitute less than a majority of the members of the board of
directors or the board of trustees, as the case may be, of the
Other Surviving Corporation, or of a corporation or other entity
beneficially directly or indirectly owning a majority of the
outstanding voting securities of the Other Surviving Corporation,
provided, however, that an Other Transaction shall not be deemed to
result in a "change in control" of the Company if immediately prior
thereto the circumstances in (i)(a) or (i)(b) above exist.
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5. Benefits. The Executive shall be entitled to six
weeks of paid vacation each year and such other medical and other
benefits as are afforded from time to time to all executive
employees of the Company. The Company shall indemnify the
Executive in the performance of his duties pursuant to the bylaws
of the Company and to the fullest extent allowed by applicable law,
including, without limitation, legal fees.
6. Earlier Termination. (a) If the Executive shall
fail, because of illness or incapacity, to render the services
contemplated by this Agreement for six successive months or for
shorter periods aggregating nine months in any calendar year, the
directors of the Company may determine, on the basis of medical
evidence satisfactory to the Company, in the Company's sole
discretion, that the Executive has become disabled. If within
thirty (30) days after the date on which written notice of such
determination is given to the Executive, the Executive shall not
have returned to the full-time performance of his duties hereunder,
this Agreement and the employment of the Executive hereunder shall
be deemed terminated in accordance with Section 8 hereof.
(b) Except as otherwise provided in this Agreement, if
the Executive shall die during the term of this Agreement, this
Agreement shall be deemed to have been terminated as of the date of
death of the Executive.
(c) The Company, by notice to the Executive, may
terminate this Agreement for proper cause. As used herein, "proper
cause" shall mean (i) the willful and continued failure by the
Executive to substantially perform his duties with the Company
(other than any such failure resulting from the Executive's
incapacity due to physical or mental illness or any such actual or
anticipated failure resulting from termination by the Executive for
Good Reason (as defined below)) after a written demand for
substantial performance is delivered to the Executive by the
directors of the Company, which demand specifically identifies the
manner in which the directors believe that the Executive has not
substantially performed his duties, or (ii) the willful engaging by
the Executive in conduct which is demonstrably and materially
injurious to the Company, monetarily or otherwise. For purposes of
this subsection 6(c), no act, or failure to act, on the Executive's
part shall be deemed "willful" unless done, or omitted to be done,
by the Executive otherwise than in good faith and in a manner that
the Executive reasonably believed was in or not opposed to the best
interests of the Company and its shareholders. Notwithstanding the
foregoing, the Executive shall not be deemed to have been
terminated for proper cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of not less than three-quarters (3/4) of all
of the directors of the Company at a meeting of the directors
called and held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with
counsel of his choosing, to be heard before the directors not less
than 10 business days after the giving of such notice), finding
that in the good faith opinion of the directors, the Executive
conducted himself as set forth above in clause (i) or (ii) of the
first sentence of this subsection 6(c) and specifying the
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particulars of such conduct in detail.
(d) The Executive may terminate this Agreement for "Good
Reason" if any of the following events occurs:
(i) the assignment to the Executive of any duties
materially inconsistent with his status as a senior
executive officer of the Company or a substantial
alteration in the nature or status of his
responsibilities;
(ii) the Company's breach of any of its agreements
or obligations under this Agreement;
(iii) the failure by the Company to pay the
Executive any annual installment of a previous award
under any bonus or incentive compensation arrangement;
(iv) the failure of the Company to obtain a
satisfactory agreement from any successor to assume and
agree to perform this Agreement, as contemplated in
Section 14 hereof;
(v) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination (defined below) satisfying the requirements
of Section 7 below; or
(vi) any change in control of the Company.
7. Notice of Termination. Any purported termination of
the Executive's employment by the Company or by the Executive shall
be communicated by a written Notice of Termination to the other
party hereto in accordance with Section 16 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
8. Date of Termination, Etc. "Date of Termination"
shall mean (a) if the Executive's employment is terminated for
disability, thirty (30) days after Notice of Termination is given
(provided that the Executive shall not have returned to the full-
time performance of his duties during such thirty (30) day period),
and (b) if the Executive's employment is terminated pursuant to
subsection 6(c) or 6(d) above or for any other reason (other than
disability), the date specified in the Notice of Termination
(which, in the case of a termination pursuant to subsection 6(c)
above shall not be less than thirty (30) days, and in the case of
a termination pursuant to subsection 6(d) above shall not be less
than thirty (30) nor more than sixty (60) days, respectively, from
the date such Notice of Termination is given); provided, however,
if within thirty (30) days after any Notice of Termination is given
the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally
resolved, either by mutual written agreement of the parties, by a
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binding arbitration award, or by a final judgment, order or decree
of a court of competent jurisdiction (which is not appealable or
the time for appeal therefrom having expired and no appeal having
been perfected), except that with respect to a termination of this
Agreement by reason of expiration of its term as provided in
Section 2, the Date of Termination shall be the date the term
hereof expires pursuant to Section 2, regardless of whether a
dispute exists with respect thereto; provided, further, that the
Date of Termination shall be extended by a notice of dispute only
if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable
diligence. Notwithstanding the pendency of any such dispute, the
Company will continue to pay the Executive his full compensation in
effect when the notice giving rise to the dispute was given
(including, but not limited to, base salary and installments under
any bonus or incentive compensation plan) and continue the
Executive as a participant in all compensation, benefit and
insurance plans in which he was participating when the notice
giving rise to the dispute was given, until the dispute is finally
resolved in accordance with this Section. Amounts paid under this
Section 8 are in addition to all other amounts due under this
Agreement and shall not be offset against or reduce any other
amounts due under this Agreement. If it is finally determined by
a binding arbitration award, or by a final judgment, order or
decree of a court of competent jurisdiction (which is not
appealable or the time for appeal therefrom having expired and no
appeal having been perfected), that the Executive was terminated
for proper cause, the Executive shall promptly remit to the Company
the amount of any cash payments and the value of any non-cash
benefits paid pursuant to this Section 8 to which the Executive
would not otherwise have been entitled.
9. Compensation Upon Termination or During Disability.
Upon termination of the Executive's employment or during a period
of disability the Executive shall be entitled to the following
compensation and benefits:
(a) During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to
physical or mental illness, the Executive shall continue to receive
his base salary at the rate in effect at the commencement of any
such period until his employment is terminated pursuant to
subsection 6(a) hereof, together with any bonus that may be payable
pursuant to subsection 3(b). Thereafter, the compensation provided
in Section 3 hereof shall continue to be paid to the Executive for
the longer of (i) a period of 36 months after such termination and
(ii) the remaining term of this Agreement pursuant to Section 2
hereof, in either case at the annual base salary in effect at the
time his employment is terminated, and the Executive shall continue
to be covered by the Company's health, dental and life insurance
benefits for such period.
(b) If the Executive's employment shall be terminated,
at any time prior to a change in control of the Company, for proper
cause or by him other than for Good Reason, the Executive shall be
paid the Executive's full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination
is given and the Company shall thereafter have no further
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obligations to the Executive under this Agreement.
(c) If the Executive's employment shall be terminated by
reason of the Executive's death, the compensation provided in
subsection 3(a) hereof shall be paid to the person designated from
time to time in writing by the Executive and, if not so designated,
to the Executive's estate for the longer of (i) a period of 36
months following such termination and (ii) the remaining term of
this Agreement pursuant to Section 2 hereof, in either case at the
annual base salary in effect at the time of his death. The person
designated by the Executive and, if not so designated, the
Executive's estate shall also receive (i) any bonus awarded
pursuant to subsection 3(b) and not yet paid and (ii) with respect
to the year in which the Executive dies (in the event the directors
of the Company have not yet determined whether to award the
Executive a bonus for such calendar year), a bonus equal to the
product of (x) the annual base salary payable to the Executive
pursuant to subsection 3(a) from January 1 of the year in which the
Executive shall have died through the last day of the month during
which the Executive shall have died and (y) the Deemed Bonus
Fraction (as defined in subsection 9(d) below).
(d) If the Executive's employment shall be terminated
(I) by the Company other than for proper cause or disability or
(II) by the Executive for Good Reason, then the Executive shall be
entitled to the benefits provided below:
(i) the Company shall pay as severance pay to the
Executive, not later than the Date of Termination, a lump
sum severance payment (the "Severance Payment") equal to
(A) the aggregate of all compensation due to the
Executive hereunder had his employment not been so
terminated, including, without limitation, all bonus
payments which would have been due to the Executive
pursuant to subsection 3(b), assuming that the Executive
would have received a bonus for each calendar year equal
to the product of (x) the annual base salary that would
be payable to the Executive pursuant to subsection 3(a)
for such calendar year and (y) the greater of (i) 1/2 or
(ii) the percentage of the Executive's base salary for
the immediately preceding fiscal year that was paid to
the Executive as a bonus for the immediately preceding
fiscal year, expressed as a fraction (the greater of
clauses (i) and (ii) being herein referred to as the
"Deemed Bonus Fraction"), through the expiration of this
Agreement, plus (B) the greater of (x) the aggregate of
all compensation due to the Executive hereunder had his
employment not been so terminated, including, without
limitation, all bonus payments which would have been due
to the Executive pursuant to subsection 3(b), assuming
that the Executive would have received a bonus for each
calendar year equal to the product of (i) the annual base
salary that would be payable to the Executive pursuant to
subsection 3(a) for such calendar year and (ii) the
Deemed Bonus Fraction, through the expiration of this
Agreement (assuming, solely for purposes of this
subsection 9(d)(i)(B)(x), that this Agreement expires on
the last day of the thirty-sixth month following the end
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of the calendar year in which the Date of Termination
occurs), or (y) 2.99 times the "base amount" within the
meaning of Sections 280G(b)(3) and 280G(d) of the
Internal Revenue Code of 1986, as amended (the "Code"),
and any applicable temporary or final regulations
promulgated thereunder, or its equivalent as provided in
any successor statute or regulation; provided, however,
if the Executive's employment shall be terminated other
than pursuant to subsection 6(d)(vi), the Severance
Payment shall equal only the greatest of the amounts set
forth in subsection 9(d)(i)(A), 9(d)(i)(B)(x) or
9(d)(i)(B)(y) above. If Section 280G of the Code (and
any successor provisions thereto) shall be repealed or
otherwise be inapplicable, then the Severance Payment
under clause (i)(B)(y) above shall equal 2.99 times the
average of the Executive's annual compensation (from the
Company or from Wellsford Residential, as the case may)
during the three calendar year period preceding the
calendar year in which the Date of Termination occurs.
For purposes of determining annual compensation in the
preceding sentence, compensation payable to the Executive
by the Company or by Wellsford Residential shall include
every type and form of compensation includible in the
Executive's gross income in respect of his employment by
the Company or by Wellsford Residential (including,
without limitation, all income reported on an Internal
Revenue Service Form W-2), compensation income recognized
as a result of the Executive's exercise of stock options
or sale of the stock so acquired and including, without
limitation, any annual bonus payments previously paid to
such Executive. For purposes of calculating the "base
amount" within the meaning of Sections 280G(b)(3) and
280G(d) of the Code and annual compensation in the second
preceding sentence, any income of the Executive that
constitutes a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code shall not be taken into
account in making such calculations; and
(ii) an amount equal to the Additional Amount
pursuant to Section 10 below.
(e) If the Executive's employment shall be terminated,
at any time following a change in control of the Company, for
proper cause, the Company shall pay the Executive his full base
salary through the Date of Termination at the higher of the rate in
effect at the time Notice of Termination is given and the rate in
effect immediately prior to the change in control of the Company
and the Company shall have no further obligations to the Executive
under this Agreement.
(f) In addition to all other amounts payable to the
Executive under this Section 9, the Executive shall be entitled to
receive all benefits payable to him under the Company's Pension
Plans applicable to him and any other plan or agreement relating to
retirement benefits as in effect upon the occurrence of a change in
control.
(g) The Executive shall not be required to mitigate the
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amount of any payment provided for in this Section 9 by seeking
other employment or otherwise, nor shall the amount of any payment
or benefit provided for in this Section 9 be reduced by any
compensation earned by him as the result of employment by another
employer or by retirement benefits after the Date of Termination,
or otherwise, except as specifically provided in this Section 9.
10. Additional Amount. Whether or not Section 9 is
applicable, if in the opinion of tax counsel selected by the
Executive and reasonably acceptable to the Company, the Executive
has or will receive any compensation or recognize any income
(whether or not pursuant to this Agreement or any plan or other
arrangement of the Company and whether or not the Executive's
employment with the Company has terminated) which constitute an
"excess parachute payment" within the meaning of Section 280G(b)(1)
of the Code (or for which a tax is otherwise payable under Section
4999 of the Code), then the Company shall pay the Executive an
additional amount (the "Additional Amount") equal to the sum of (i)
all taxes payable by the Executive under Section 4999 of the Code
with respect to (a) all such excess parachute payments (or
otherwise), and (b) the Additional Amount, plus (ii) all federal,
state and local income taxes payable by Executive with respect to
the Additional Amount. The amounts payable pursuant to this
Section 10 shall be paid by the Company to the Executive within 30
days of the written request therefor made by the Executive, but in
all events (whether or not there has been a written request by the
Executive) not later than the date of the "change in control of the
Company", unless otherwise agreed to in writing by the Executive.
11. Income Tax Payment. Whether or not Section 9 is
applicable, if (i) the Executive has or will receive any
compensation or recognize any income (whether or not pursuant to
this Agreement or any plan or other arrangement of the Company and
whether or not the Executive's employment with the Company has
terminated) in connection with a "change in control" of the Company
(as that term may be interpreted in this Agreement and any plan or
other arrangement of the Company), and (ii) such compensation or
income represents non-cash compensation or income, then the Company
shall pay the Executive in cash an amount (the "Income Tax
Payment") equal to all federal, state and local income taxes
payable by Executive with respect to such non-cash compensation or
income. The Income Tax Payment shall be paid by the Company to the
Executive not later than the date of the "change in control of the
Company", unless otherwise agreed to in writing by the Executive.
12. Indemnification. The Company shall indemnify and
hold harmless the Executive for and against, and shall pay to the
Executive an amount (the "Indemnified Amount") equal to, the sum of
(i) all taxes payable by the Executive under Section 4999 of the
Code with respect to (a) any compensation received and any income
recognized by the Executive in connection with the Merger and
Distribution as described in the Joint Proxy Statement/
Prospectus/Information Statement, dated April 25, 1997, of
Wellsford Residential and EQR and (b) the Indemnified Amount, plus
(ii) all federal, state and local income taxes payable by Executive
with respect to the Indemnified Amount; provided, however, that the
Company shall have no obligations under this Section 12 with
respect to items comprising the Indemnified Amount to the extent
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already paid on behalf of the Executive by Wellsford Residential or
the surviving trust in the Merger.
13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
14. Entire Agreement. This Agreement sets forth the
entire agreement of the parties and is intended to supersede all
prior employment negotiations, understandings and agreements. No
provision of this Agreement may be waived or changed, except by a
writing signed by the party to be charged with such waiver or
change.
15. Successors; Binding Agreement. (a) This Agreement
shall inure to the benefit of and be enforceable by the Executive's
personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would still be payable to him
hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Executive's devisee, legatee or
other designee or, if there is no such designee, to the Executive's
estate.
(b) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to expressly assume and agree in writing to
perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain and
deliver to Executive such assumption and agreement prior to (but
effective only upon) such succession shall be a breach of this
Agreement, except that for purposes of implementing the foregoing,
the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Com-
pany" shall mean the Company as hereinbefore defined and any suc-
cessor to its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement, expressly, by operation of law,
or otherwise.
16. Notices. All notices provided for in this Agreement
shall be in writing, and shall be deemed to have been duly given
when delivered personally to the party to receive the same, when
given by telex, telegram or mailgram, or when mailed first class
postage prepaid, by registered or certified mail, return receipt
requested, addressed to the party to receive the same at his or its
address above set forth, or such other address as the party to
receive the same shall have specified by written notice given in
the manner provided for in this Section 16. All notices shall be
deemed to have been given as of the date of personal delivery,
transmittal or mailing thereof.
17. Severability. If any provision in this Agreement is
determined to be invalid, it shall not affect the validity or
enforceability of any of the other remaining provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Jeffrey H. Lynford
----------------------------
Name: Jeffrey H. Lynford
Title: Chairman of the Board
EXECUTIVE:
/s/ Edward Lowenthal
- -----------------------------
Edward Lowenthal
<PAGE>
EXHIBIT 10.33
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 30, 1997, between WELLSFORD
REAL PROPERTIES, INC., a Maryland corporation with offices at 610
Fifth Avenue, New York, New York 10020 (the "Company"), and
Gregory F. Hughes, an individual residing at 5 Somerset Avenue,
Garden City, New York 11530 ("Executive").
WHEREAS, the Executive is an executive of Wellsford
Residential Property Trust, a Maryland real estate investment
trust ("Wellsford Residential");
WHEREAS, Equity Residential Properties Trust, a
Maryland real estate investment trust, is merging with and into
Wellsford Residential as of the date hereof (the "Merger");
WHEREAS, immediately prior to the Merger, Wellsford
Residential is distributing to its common shareholders, pro rata,
all of the shares of common stock that it owns in the Company;
and
WHEREAS, the Company desires to employ the Executive,
and the Executive desires to be employed by the Company.
IT IS AGREED:
1. Duties. (a) During the term of the Executive's
employment hereunder the Executive shall serve and the Company
shall employ the Executive as Chief Financial Officer to perform
such executive or administrative services for the Company consis-
tent with those of a Chief Financial Officer as may be assigned
to the Executive by the directors, Chairman of the Board or
President of the Company. The Executive hereby accepts such
employment and agrees to perform such services.
(b) The Executive shall devote substantially all
of his time, attention and energies during business hours to the
performance of his duties hereunder. The Executive shall give
advance written notice to the Chairman of the Board and President
of any intended active involvement in any other business
enterprise.
(c) The Executive shall cooperate with the
Company, including taking such medical examinations as the
Company reasonably shall deem necessary, if the Company shall
desire to obtain medical, disability or life insurance with
respect to the Executive.
(d) The Executive shall not be required to
relocate or conduct the Company's business outside the New York,
New York area in order to perform his duties under this Agreement
but shall undertake such reasonable business travel as may be
necessary to perform said duties (for which the Executive shall
<PAGE>
be reimbursed pursuant to Section 4 below for costs and expenses
incurred in connection therewith).
2. Employment Term. This Agreement shall commence on
May 30, 1997 and shall continue in effect through May 29, 1999;
provided, however, that, on May 30, 1999 and on each May 30
thereafter, the term of this Agreement shall automatically be
extended for one additional year beyond such May 30 unless, not
later than the immediately preceding February 28, either the
Executive or the Company shall have given notice to the other not
to extend this Agreement.
3. Compensation. For all services rendered by the
Executive pursuant to this Agreement:
(a) The Company shall pay to the Executive an annual
base salary at the following rates:
(i) for the period from May 30, 1997 through
May 29, 1998 - $200,000;
(ii) for the period from May 30, 1998 through
May 29, 1999 - $206,000; and
(iii) for each additional year thereafter, the
annual base salary for the immediately
preceding year plus three percent (3%) of
such annual base salary.
All such compensation shall be paid bi-weekly or at such other
regular intervals, not less frequently than monthly, as the
Company may establish from time to time for executive officers of
the Company.
(b) In addition to the compensation set forth in
subsection 3(a) above, during the term of this Agreement, the
Executive shall be entitled to a cash bonus after the end of each
calendar year (and after the end of any partial calendar year in
which this Agreement shall expire pursuant to Section 2) equal to
at least 50% of the base salary paid to the Executive for such
calendar year (including, in the case of calendar year 1997, the
base salary paid to the Executive by Wellsford Residential) or
partial calendar year pursuant to subsection 3(a). The
determination of the amount of the bonus shall be made by the
Compensation Committee based upon the Executive's and the
Company's performance during such calendar year or partial
calendar year, as the case may be. The Company shall announce to
the Executive the amount of his bonus for each year during
December of such year (or during the month in which this
Agreement shall expire, if applicable) and pay such bonus during
the following January (or during the month following expiration
of this Agreement, as the case may be), unless otherwise agreed
to by the Executive and the Company.
4. Expenses. (a) The Company shall reimburse the
Executive for all out-of-pocket expenses actually and necessarily
incurred by him in the conduct of the business of the Company
against reasonable substantiation submitted with respect thereto.
<PAGE>
(b) Unless the provisions of subsection 4(c) below
shall apply, the Company shall reimburse the Executive for all
legal fees and related expenses (including the costs of experts,
evidence and counsel) paid by the Executive as a result of (i)
the termination of Executive's employment (including all such
fees and expenses, if any, incurred in contesting or disputing
any such termination of employment), (ii) the Executive seeking
to obtain or enforce any right or benefit provided by this
Agreement or by any other plan or arrangement maintained by the
Company under which the Executive is or may be entitled to
receive benefits or (iii) any action taken by the Company against
the Executive; provided, however, that the Company shall
reimburse the legal fees and related expenses described in this
subsection 4(b) only if and when a final judgement has been
rendered in favor of the Executive and all appeals related to any
such action have been exhausted.
(c) The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel)
incurred by the Executive as they become due as a result of (i)
the termination of Executive's employment (including all such
fees and expenses, if any, incurred in contesting or disputing
any such termination of employment), (ii) the Executive seeking
to obtain or enforce any right or benefit provided by this
Agreement or by any other plan or arrangement maintained by the
Company under which the Executive is or may be entitled to
receive benefits or (iii) any action taken by the Company against
the Executive, unless and until such time that a final judgement
has been rendered in favor of the Company and all appeals related
to any such action have been exhausted; provided, however, that
the circumstances set forth above occurred on or after a change
in control of the Company.
(d) For purposes of this Agreement, a "change in
control of the Company" shall be deemed to occur if:
(i) there shall have occurred a change in
control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as in effect on the date hereof, whether or
not the Company is then subject to such reporting requirement,
provided, however, that there shall not be deemed to be a "change
in control" of the Company if immediately prior to the occurrence
of what would otherwise be a "change in control" of the Company
(a) the Executive is the other party to the transaction (a
"Control Event") that would otherwise result in a "change in
control" of the Company or (b) the Executive is an executive
officer, trustee, director or more than 5% equity holder of the
other party to the Control Event or of any entity, directly or
indirectly, controlling such other party,
(ii) the Company merges or consolidates with, or
sells all or substantially all of its assets to, another company
(each, a "Transaction"), provided, however, that a Transaction
shall not be deemed to result in a "change in control" of the
Company if (a) immediately prior thereto the circumstances in
<PAGE>
(i)(a) or (i)(b) above exist, or (b) (1) the shareholders of the
Company, immediately before such Transaction own, directly or
indirectly, immediately following such Transaction in excess of
fifty percent (50%) of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Transaction (the "Surviving Corporation") in
substantially the same proportion as their ownership of the
voting securities of the Company immediately before such
Transaction and (2) the individuals who were members of the
Company's Board of Trustees immediately prior to the execution of
the agreement providing for such Transaction constitute at least
a majority of the members of the board of directors or the board
of trustees, as the case may be, of the Surviving Corporation, or
of a corporation or other entity beneficially directly or
indirectly owning a majority of the outstanding voting securities
of the Surviving Corporation, or
(iii) the Company acquires assets of another
company or a subsidiary of the Company merges or consolidates
with another company (each, an "Other Transaction") and (a) the
shareholders of the Company, immediately before such Other
Transaction own, directly or indirectly, immediately following
such Other Transaction 50% or less of the combined voting power
of the outstanding voting securities of the corporation or other
entity resulting from such Other Transaction (the "Other
Surviving Corporation") in substantially the same proportion as
their ownership of the voting securities of the Company
immediately before such Other Transaction or (b) the individuals
who were members of the Company's Board of Trustees immediately
prior to the execution of the agreement providing for such Other
Transaction constitute less than a majority of the members of the
board of directors or the board of trustees, as the case may be,
of the Other Surviving Corporation, or of a corporation or other
entity beneficially directly or indirectly owning a majority of
the outstanding voting securities of the Other Surviving
Corporation, provided, however, that an Other Transaction shall
not be deemed to result in a "change in control" of the Company
if immediately prior thereto the circumstances in (i)(a) or
(i)(b) above exist.
5. Benefits. The Executive shall be entitled to such
paid vacation time each year and such other medical benefits as
are afforded from time to time to all executive officers of the
Company (other than the Chairman of the Board and the President).
The Company shall indemnify the Executive in the performance of
his duties pursuant to the bylaws of the Company and to the
fullest extent allowed by applicable law, including, without
limitation, legal fees.
6. Earlier Termination. (a) If the Executive shall
die during the term of this Agreement, this Agreement shall be
deemed to have been terminated as of the date of the Executive's
death, and the Company shall pay to the legal representative of
the Executive's estate all monies due hereunder prorated through
the last day of the month during which the Executive shall have
died, as well as a bonus equal to the product of (x) the base
salary payable to the Executive pursuant to subsection 3(a) from
January 1 of the year in which the Executive shall have died
<PAGE>
through the last day of the month during which the Executive
shall have died and (y) the greater of (i) 1/2 or (ii) the
percentage of the Executive's base salary for the immediately
preceding fiscal year that was paid to the Executive as a bonus
for the immediately preceding fiscal year, expressed as a
fraction (the greater of clauses (i) and (ii) being herein
referred to as the "Deemed Bonus Fraction").
(b) If the Executive shall fail, because of illness or
incapacity, to render the services contemplated by this Agreement
for six consecutive months or for shorter periods aggregating
nine months in any calendar year, the Company may determine (as
set forth in subsection (d) below) that the Executive has become
disabled. If within thirty (30) days after the date on which
written notice of such determination is given to the Executive,
the Executive shall not have returned to the continuing full-time
performance of his duties hereunder, this Agreement and the
employment of the Executive hereunder shall be deemed terminated
and the Company shall pay to the Executive all monies due
hereunder prorated through the last day of the month during which
such termination shall occur, as well as a bonus equal to the
product of (x) the base salary payable to the Executive pursuant
to subsection 3(a) from January 1 of the year in which this
Agreement is terminated through the last day of the month during
which this Agreement is terminated and (y) the Deemed Bonus
Fraction.
(c) The Company, by written notice to the Executive
specifying the reason therefor, may terminate this Agreement for
Cause as determined pursuant to subsection (d) below. As used
herein, "Cause" shall be defined as actions by the Executive
which constitute malfeasance. Malfeasance includes, but is not
limited to, the Executive engaging in fraud, dishonest conduct or
other criminal conduct.
(d) A determination of disability or Cause shall be
made in the reasonable and sole discretion of the Company's
Chairman of the Board of the Company. The Company's Board of
Directors shall, upon request of the Executive, review the
decision of whether the Executive has become disabled or has been
discharged, released or terminated for Cause and the Board of
Directors shall confirm, modify or reverse such determination in
its sole discretion.
(e) The Executive may terminate this Agreement if any
change in control of the Company occurs.
7. Compensation Upon Termination Upon a Change in
Control. (a) If after a change in control of the Company the
Executive's employment shall be terminated (I) by the Company
other than for Cause or (II) by the Executive, then the Executive
shall be entitled to the benefits provided below:
(i) the Company shall pay the Executive, not
later than the date of termination, (x) his full base
salary through the date of termination, (y)
compensation for accrued vacation time, plus (z) a pro
rata portion of the Executive's annual bonus for the
<PAGE>
calendar year in which the termination occurs, assuming
that the Executive would have received a bonus for such
full calendar year equal to the product of (A) the base
salary that would be payable to the Executive pursuant
to subsection 3(a) for such full calendar year and (B)
the Deemed Bonus Fraction;
(ii) the Company shall pay as severance pay to
the Executive, not later than the date of termination,
a lump sum severance payment (the "Severance Payment")
equal to the greater of (x) the aggregate of all
compensation due to the Executive hereunder had his
employment not been so terminated (without duplication
of subsection 7(a)(i) above), including, without
limitation, all bonus payments which would have been
due to the Executive pursuant to subsection 3(b),
through the expiration of this Agreement assuming that
the Executive would have received a bonus for each
calendar year through the expiration of this Agreement
equal to the product of (A) the base salary payable to
the Executive pursuant to subsection 3(a) for each such
calendar year and (B) the Deemed Bonus Fraction, or
(y) 2 times the "base amount" within the meaning of
Sections 280G(b)(3) and 280G(d) of the Internal Revenue
Code of 1986, as amended (the "Code"), and any
applicable temporary or final regulations promulgated
thereunder, or its equivalent as provided in any
successor statute or regulation. If Section 280G of
the Code (and any successor provisions thereto) shall
be repealed or otherwise be inapplicable, then the
Severance Payment under clause (ii)(y) above shall
equal 2 times the average of the Executive's annual
compensation during the three calendar year period
preceding the calendar year in which the date of
termination occurs. For purposes of determining annual
compensation in the preceding sentence, compensation
payable to the Executive by the Company (including
Wellsford Residential) shall include every type and
form of compensation includible in the Executive's
gross income in respect of his employment by the
Company (including Wellsford Residential) (including,
without limitation, all income reported on an Internal
Revenue Service Form W-2), compensation income
recognized as a result of the Executive's exercise of
stock options or sale of the stock so acquired and
including, without limitation, any annual bonus
payments previously paid to such Executive. For
purposes of calculating the "base amount" within the
meaning of Sections 280G(b)(3) and 280G(d) of the Code
and annual compensation in the second preceding
sentence, any income of the Executive that constitutes
a "parachute payment" within the meaning of Section
280G(b)(2) of the Code shall not be taken into account
in making such calculations; and
(iii) an amount equal to the Additional Amount
pursuant to Section 8 below.
<PAGE>
(b) The Executive shall not be required to mitigate
the amount of any payment provided for in this Section 7 by
seeking other employment or otherwise, nor shall the amount of
any payment or benefit provided for in this Section 7 be reduced
by any compensation earned by him as the result of employment by
another employer or by retirement benefits after the date of
termination, or otherwise, except as specifically provided in
this Section 7.
8. Additional Amount. Whether or not Section 7 is
applicable, if in the opinion of tax counsel selected by the
Executive and reasonably acceptable to the Company, the Executive
has or will receive any compensation or recognize any income
(whether or not pursuant to this Agreement or any plan or other
arrangement of the Company and whether or not the Executive's
employment with the Company has terminated) which constitute an
"excess parachute payment" within the meaning of Section
280G(b)(1) of the Code (or for which a tax is otherwise payable
under Section 4999 of the Code), then the Company shall pay the
Executive an additional amount (the "Additional Amount") equal to
the sum of (i) all taxes payable by the Executive under Section
4999 of the Code with respect to all such excess parachute
payments (or otherwise) and the Additional Amount, plus (ii) all
federal, state and local income taxes payable by Executive with
respect to the Additional Amount. The amounts payable pursuant
to this Section 8 shall be paid by the Company to the Executive
within 30 days of the written request therefor made by the
Executive.
9. Protection of Confidential Information; Non-
Competition.
(a) The Executive acknowledges that (i) the
Company will suffer substantial damage which will be difficult to
compute if the Executive violates any of the provisions of this
Section 9, and (ii) the provisions of this Agreement are
reasonable and necessary for the protection of the business of
the Company.
(b) The Executive agrees that he will not at
any time, either during the term of this Agreement or thereafter,
divulge to any person, firm or corporation any material
information obtained or learned by him during the course of his
employment with the Company, with regard to the operational,
financial, business or other affairs of the Company, its officers
or directors, except (i) in the course of performing his duties
hereunder, (ii) with the Chairman of the Board's or President's
express written consent; (iii) to the extent that any such
information is in the public domain other than as a result of the
Executive's breach of any of his obligations hereunder; or (iv)
where required to be disclosed by court order, subpoena or other
government process.
(c) Upon termination of his employment with the
Company, or any time the Company may so request, the Executive
will promptly deliver to the Company all memoranda, notes,
records, reports, manuals, drawings, blueprints, software and
<PAGE>
other documents (and all copies thereof) relating to the business
of the Company and all property associated therewith, which he
may then possess or have under his control.
(d) During the term of this Agreement and any
renewal hereof (including any remaining portion of the stated
term of this Agreement or any renewal term hereof following the
termination of the Executive's employment by the Executive unless
such termination occurs after a change in control of the
Company), and provided the Executive's employment has not been
terminated by the Company with or without Cause, the Executive
without the prior written permission of the Chairman of the Board
or President shall not in the United States, its territories or
possessions, directly or indirectly, (i) enter into the employ of
or render any services to any person, firm or corporation engaged
in any competitive business; (ii) engage in any competitive
business for his own account; (iii) become associated with or
interested in any competitive business as an individual, partner,
shareholder, creditor, director, officer, principal, agent,
employee, director, consultant, advisor or in any other
relationship or capacity; (iv) employ or retain, or have or cause
any other person or entity to employ or retain, any person who
was employed or retained by the Company while the Executive was
employed by the Company; or (v) solicit, interfere with, or
endeavor to entice away from the Company any of its customers or
sources of supply. However, nothing in this Agreement shall
preclude the Executive from investing his personal assets in the
securities of any corporation or other business entity which is
engaged in a competitive business if such securities are traded
on a national stock exchange or in the over-the-counter market
and if such investment does not result in his beneficially
owning, at any time, more than 1% of the publicly-traded equity
securities of such competitor. A competitive business shall not
include (i) any privately owned enterprise or (ii) any publicly
owned enterprise engaged in such a business outside of the
geographic regions and states in which the Company operates at
the time of the termination of this Agreement.
(e) If the Executive commits a breach of any of
the provisions of subsection (b) or (d) above, the Company shall
have the right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity juris-
diction, it being acknowledged and agreed by the Executive that
the services being rendered hereunder to the Company are of a
special, unique and extraordinary character and that any such
breach or threatened breach will cause irreparable injury to the
Company and that money damages will not provide an adequate
remedy to the Company. Each of the rights and remedies
enumerated in this subsection (e) shall be independent of the
other, and shall be severally enforceable, and such rights and
remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
(f) If any provision of subsection (b) or (d)
is held to be unenforceable because of the scope, duration or
area of its applicability, the tribunal making such determination
shall have the power to modify such scope, duration, or area, or
all of them, and such provision or provisions shall then be
<PAGE>
applicable in such modified form.
10. Governing Law; Arbitration. This Agreement shall
be governed by, and construed in accordance with, the internal
laws of the State of New York, without regard to New York's
conflicts of law principles. Any dispute or controversy arising
under this Agreement, or out of the interpretation hereof, or
based upon the breach hereof, shall be resolved by arbitration
held at the offices of the American Arbitration Association in
the City of New York in accordance with the rules and regulations
of such association prevailing at the time of the demand for
arbitration by either party hereto, and the decision of the
arbitrator or arbitrators shall be final and binding upon both
parties hereto, provided, however, that the arbitrator or
arbitrators shall only have the power and authority to interpret,
and not to modify or amend, the terms and provisions hereof.
Judgment upon an award rendered by the arbitrator or arbitrators
may be entered in any court having jurisdiction thereof.
Notwithstanding anything contained in this Section 10, either
party shall have the right to seek preliminary injunctive relief
in any court in the City of New York in aid of, and pending the
final decision in, the arbitration proceeding.
11. Entire Agreement. This Agreement sets forth the
entire agreement of the parties and is intended to supersede all
prior employment negotiations, understandings and agreements. No
provision of this Agreement may be waived or changed, except by a
writing signed by the party to be charged with such waiver or
change.
12. Successors; Binding Agreement. This Agreement
shall inure to the benefit of and be enforceable by the Execu-
tive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees.
13. Notices. All notices provided for in this Agree-
ment shall be in writing, and shall be deemed to have been duly
given when delivered personally to the party to receive the same,
when given by telex, telegram or mailgram, or when mailed first
class postage prepaid, by registered or certified mail, return
receipt requested, addressed to the party to receive the same at
his or its address above set forth, or such other address as the
party to receive the same shall have specified by written notice
given in the manner provided for in this Section 13. All notices
shall be deemed to have been given as of the date of personal
delivery, transmittal or mailing thereof.
<PAGE>
14. Severability. If any provision in this Agreement
is determined to be invalid, it shall not affect the validity or
enforceability of any of the other remaining provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Jeffrey H. Lynford
----------------------------
Name: Jeffrey H. Lynford
Title: Chairman of the Board
EXECUTIVE:
/s/ Gregory F. Hughes
- -----------------------------
Gregory F. Hughes
<PAGE>
EXHIBIT 10.34
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 30, 1997, between WELLSFORD
REAL PROPERTIES, INC., a Maryland corporation with offices at 610
Fifth Avenue, New York, New York 10020 (the "Company"), and
David M. Strong, an individual residing at 1450 Wynkoop, Apt. 5B,
Denver, Colorado 80202 ("Executive").
WHEREAS, the Executive is an executive of Wellsford
Residential Property Trust, a Maryland real estate investment
trust ("Wellsford Residential");
WHEREAS, Equity Residential Properties Trust, a
Maryland real estate investment trust, is merging with and into
Wellsford Residential as of the date hereof (the "Merger");
WHEREAS, immediately prior to the Merger, Wellsford
Residential is distributing to its common shareholders, pro rata,
all of the shares of common stock that it owns in the Company;
and
WHEREAS, the Company desires to employ the Executive,
and the Executive desires to be employed by the Company.
IT IS AGREED:
1. Duties. (a) During the term of the Executive's
employment hereunder the Executive shall serve and the Company
shall employ the Executive as Vice President for Development to
perform such executive or administrative services for the Company
consistent with those of a Vice President as may be assigned to
the Executive by the directors, Chairman of the Board or
President of the Company. The Executive hereby accepts such
employment and agrees to perform such services.
(b) The Executive shall devote substantially all
of his time, attention and energies during business hours to the
performance of his duties hereunder. The Executive shall give
advance written notice to the Chairman of the Board and President
of any intended active involvement in any other business
enterprise.
(c) The Executive shall cooperate with the
Company, including taking such medical examinations as the
Company reasonably shall deem necessary, if the Company shall
desire to obtain medical, disability or life insurance with
respect to the Executive.
(d) The Executive shall not be required to
relocate or conduct the Company's business outside the Denver,
Colorado area in order to perform his duties under this Agreement
but shall undertake such reasonable business travel as may be
necessary to perform said duties (for which the Executive shall
be reimbursed pursuant to Section 4 below for costs and expenses
<PAGE>
incurred in connection therewith).
2. Employment Term. This Agreement shall commence on
May 30, 1997 and shall continue in effect through May 29, 1999;
provided, however, that, on May 30, 1999 and on each May 30
thereafter, the term of this Agreement shall automatically be
extended for one additional year beyond such May 30 unless, not
later than the immediately preceding February 28, either the
Executive or the Company shall have given notice to the other not
to extend this Agreement.
3. Compensation. For all services rendered by the
Executive pursuant to this Agreement:
(a) The Company shall pay to the Executive an annual
base salary at the following rates:
(i) for the period from May 30, 1997 through
May 29, 1998 - $145,000;
(ii) for the period from May 30, 1998 through
May 29, 1999 - $149,350; and
(iii) for each additional year thereafter, the
annual base salary for the immediately
preceding year plus three percent (3%) of
such annual base salary.
All such compensation shall be paid bi-weekly or at such other
regular intervals, not less frequently than monthly, as the
Company may establish from time to time for executive officers of
the Company.
(b) In addition to the compensation set forth in
subsection 3(a) above, during the term of this Agreement, the
Executive may be entitled to a cash bonus after the end of each
calendar year based upon the Executive's and the Company's
performance during such calendar year, as may be determined by
the Compensation Committee. The Company shall announce to the
Executive the amount of his bonus for each year during December
of such year (or during the month in which this Agreement shall
expire, if applicable) and pay such bonus during the following
January (or during the month following expiration of this
Agreement, as the case may be), unless otherwise agreed to by the
Executive and the Company.
4. Expenses. (a) The Company shall reimburse the
Executive for all out-of-pocket expenses actually and necessarily
incurred by him in the conduct of the business of the Company
against reasonable substantiation submitted with respect thereto.
(b) Unless the provisions of subsection 4(c) below
shall apply, the Company shall reimburse the Executive for all
legal fees and related expenses (including the costs of experts,
evidence and counsel) paid by the Executive as a result of (i)
the termination of Executive's employment (including all such
fees and expenses, if any, incurred in contesting or disputing
any such termination of employment), (ii) the Executive seeking
<PAGE>
to obtain or enforce any right or benefit provided by this
Agreement or by any other plan or arrangement maintained by the
Company under which the Executive is or may be entitled to
receive benefits or (iii) any action taken by the Company against
the Executive; provided, however, that the Company shall
reimburse the legal fees and related expenses described in this
subsection 4(b) only if and when a final judgement has been
rendered in favor of the Executive and all appeals related to any
such action have been exhausted.
(c) The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel)
incurred by the Executive as they become due as a result of (i)
the termination of Executive's employment (including all such
fees and expenses, if any, incurred in contesting or disputing
any such termination of employment), (ii) the Executive seeking
to obtain or enforce any right or benefit provided by this
Agreement or by any other plan or arrangement maintained by the
Company under which the Executive is or may be entitled to
receive benefits or (iii) any action taken by the Company against
the Executive, unless and until such time that a final judgement
has been rendered in favor of the Company and all appeals related
to any such action have been exhausted; provided, however, that
the circumstances set forth above occurred on or after a change
in control of the Company.
(d) For purposes of this Agreement, a "change in
control of the Company" shall be deemed to occur if:
(i) there shall have occurred a change in
control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as in effect on the date hereof, whether or
not the Company is then subject to such reporting requirement,
provided, however, that there shall not be deemed to be a "change
in control" of the Company if immediately prior to the occurrence
of what would otherwise be a "change in control" of the Company
(a) the Executive is the other party to the transaction (a
"Control Event") that would otherwise result in a "change in
control" of the Company or (b) the Executive is an executive
officer, trustee, director or more than 5% equity holder of the
other party to the Control Event or of any entity, directly or
indirectly, controlling such other party,
(ii) the Company merges or consolidates with, or
sells all or substantially all of its assets to, another company
(each, a "Transaction"), provided, however, that a Transaction
shall not be deemed to result in a "change in control" of the
Company if (a) immediately prior thereto the circumstances in
(i)(a) or (i)(b) above exist, or (b) (1) the shareholders of the
Company, immediately before such Transaction own, directly or
indirectly, immediately following such Transaction in excess of
fifty percent (50%) of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Transaction (the "Surviving Corporation") in
substantially the same proportion as their ownership of the
voting securities of the Company immediately before such
<PAGE>
Transaction and (2) the individuals who were members of the
Company's Board of Trustees immediately prior to the execution of
the agreement providing for such Transaction constitute at least
a majority of the members of the board of directors or the board
of trustees, as the case may be, of the Surviving Corporation, or
of a corporation or other entity beneficially directly or
indirectly owning a majority of the outstanding voting securities
of the Surviving Corporation, or
(iii) the Company acquires assets of another
company or a subsidiary of the Company merges or consolidates
with another company (each, an "Other Transaction") and (a) the
shareholders of the Company, immediately before such Other
Transaction own, directly or indirectly, immediately following
such Other Transaction 50% or less of the combined voting power
of the outstanding voting securities of the corporation or other
entity resulting from such Other Transaction (the "Other
Surviving Corporation") in substantially the same proportion as
their ownership of the voting securities of the Company
immediately before such Other Transaction or (b) the individuals
who were members of the Company's Board of Trustees immediately
prior to the execution of the agreement providing for such Other
Transaction constitute less than a majority of the members of the
board of directors or the board of trustees, as the case may be,
of the Other Surviving Corporation, or of a corporation or other
entity beneficially directly or indirectly owning a majority of
the outstanding voting securities of the Other Surviving
Corporation, provided, however, that an Other Transaction shall
not be deemed to result in a "change in control" of the Company
if immediately prior thereto the circumstances in (i)(a) or
(i)(b) above exist.
5. Benefits. The Executive shall be entitled to such
paid vacation time each year and such other medical benefits as
are afforded from time to time to all executive officers of the
Company (other than the Chairman of the Board and the President).
The Company shall indemnify the Executive in the performance of
his duties pursuant to the bylaws of the Company and to the
fullest extent allowed by applicable law, including, without
limitation, legal fees.
6. Earlier Termination. (a) If the Executive shall
die during the term of this Agreement, this Agreement shall be
deemed to have been terminated as of the date of the Executive's
death, and the Company shall pay to the legal representative of
the Executive's estate all monies due hereunder prorated through
the last day of the month during which the Executive shall have
died, as well as a bonus equal to the product of (x) the base
salary payable to the Executive pursuant to subsection 3(a) from
January 1 of the year in which the Executive shall have died
through the last day of the month during which the Executive
shall have died and (y) the greater of (i) 1/2 or (ii) the
percentage of the Executive's base salary for the immediately
preceding fiscal year that was paid to the Executive as a bonus
for the immediately preceding fiscal year, expressed as a
fraction (the greater of clauses (i) and (ii) being herein
referred to as the "Deemed Bonus Fraction").
<PAGE>
(b) If the Executive shall fail, because of illness or
incapacity, to render the services contemplated by this Agreement
for six consecutive months or for shorter periods aggregating
nine months in any calendar year, the Company may determine (as
set forth in subsection (d) below) that the Executive has become
disabled. If within thirty (30) days after the date on which
written notice of such determination is given to the Executive,
the Executive shall not have returned to the continuing full-time
performance of his duties hereunder, this Agreement and the
employment of the Executive hereunder shall be deemed terminated
and the Company shall pay to the Executive all monies due
hereunder prorated through the last day of the month during which
such termination shall occur, as well as a bonus equal to the
product of (x) the base salary payable to the Executive pursuant
to subsection 3(a) from January 1 of the year in which this
Agreement is terminated through the last day of the month during
which this Agreement is terminated and (y) the Deemed Bonus
Fraction.
(c) The Company, by written notice to the Executive
specifying the reason therefor, may terminate this Agreement for
Cause as determined pursuant to subsection (d) below. As used
herein, "Cause" shall be defined as actions by the Executive
which constitute malfeasance. Malfeasance includes, but is not
limited to, the Executive engaging in fraud, dishonest conduct or
other criminal conduct.
(d) A determination of disability or Cause shall be
made in the reasonable and sole discretion of the Company's
Chairman of the Board of the Company. The Company's Board of
Directors shall, upon request of the Executive, review the
decision of whether the Executive has become disabled or has been
discharged, released or terminated for Cause and the Board of
Directors shall confirm, modify or reverse such determination in
its sole discretion.
(e) The Executive may terminate this Agreement if any
change in control of the Company occurs.
7. Compensation Upon Termination Upon a Change in
Control. (a) If after a change in control of the Company the
Executive's employment shall be terminated (I) by the Company
other than for Cause or (II) by the Executive, then the Executive
shall be entitled to the benefits provided below:
(i) the Company shall pay the Executive, not
later than the date of termination, (x) his full base
salary through the date of termination, (y)
compensation for accrued vacation time, plus (z) a pro
rata portion of the Executive's annual bonus for the
calendar year in which the termination occurs, assuming
that the Executive would have received a bonus for such
full calendar year equal to the product of (A) the base
salary that would be payable to the Executive pursuant
to subsection 3(a) for such full calendar year and (B)
the Deemed Bonus Fraction;
(ii) the Company shall pay as severance pay to
<PAGE>
the Executive, not later than the date of termination,
a lump sum severance payment (the "Severance Payment")
equal to the greater of (x) the aggregate of all
compensation due to the Executive hereunder had his
employment not been so terminated (without duplication
of subsection 7(a)(i) above), including, without
limitation, all bonus payments which would have been
due to the Executive pursuant to subsection 3(b),
through the expiration of this Agreement assuming that
the Executive would have received a bonus for each
calendar year through the expiration of this Agreement
equal to the product of (A) the base salary payable to
the Executive pursuant to subsection 3(a) for each such
calendar year and (B) the Deemed Bonus Fraction, or
(y) 2 times the "base amount" within the meaning of
Sections 280G(b)(3) and 280G(d) of the Internal Revenue
Code of 1986, as amended (the "Code"), and any
applicable temporary or final regulations promulgated
thereunder, or its equivalent as provided in any
successor statute or regulation. If Section 280G of
the Code (and any successor provisions thereto) shall
be repealed or otherwise be inapplicable, then the
Severance Payment under clause (ii)(y) above shall
equal 2 times the average of the Executive's annual
compensation during the three calendar year period
preceding the calendar year in which the date of
termination occurs. For purposes of determining annual
compensation in the preceding sentence, compensation
payable to the Executive by the Company (including
Wellsford Residential) shall include every type and
form of compensation includible in the Executive's
gross income in respect of his employment by the
Company (including Wellsford Residential) (including,
without limitation, all income reported on an Internal
Revenue Service Form W-2), compensation income
recognized as a result of the Executive's exercise of
stock options or sale of the stock so acquired and
including, without limitation, any annual bonus
payments previously paid to such Executive. For
purposes of calculating the "base amount" within the
meaning of Sections 280G(b)(3) and 280G(d) of the Code
and annual compensation in the second preceding
sentence, any income of the Executive that constitutes
a "parachute payment" within the meaning of Section
280G(b)(2) of the Code shall not be taken into account
in making such calculations; and
(iii) an amount equal to the Additional Amount
pursuant to Section 8 below.
(b) The Executive shall not be required to mitigate
the amount of any payment provided for in this Section 7 by
seeking other employment or otherwise, nor shall the amount of
any payment or benefit provided for in this Section 7 be reduced
by any compensation earned by him as the result of employment by
another employer or by retirement benefits after the date of
termination, or otherwise, except as specifically provided in
this Section 7.
<PAGE>
8. Additional Amount. Whether or not Section 7 is
applicable, if in the opinion of tax counsel selected by the
Executive and reasonably acceptable to the Company, the Executive
has or will receive any compensation or recognize any income
(whether or not pursuant to this Agreement or any plan or other
arrangement of the Company and whether or not the Executive's
employment with the Company has terminated) which constitute an
"excess parachute payment" within the meaning of Section
280G(b)(1) of the Code (or for which a tax is otherwise payable
under Section 4999 of the Code), then the Company shall pay the
Executive an additional amount (the "Additional Amount") equal to
the sum of (i) all taxes payable by the Executive under Section
4999 of the Code with respect to all such excess parachute
payments (or otherwise) and the Additional Amount, plus (ii) all
federal, state and local income taxes payable by Executive with
respect to the Additional Amount. The amounts payable pursuant
to this Section 8 shall be paid by the Company to the Executive
within 30 days of the written request therefor made by the
Executive.
9. Protection of Confidential Information; Non-
Competition.
(a) The Executive acknowledges that (i) the
Company will suffer substantial damage which will be difficult to
compute if the Executive violates any of the provisions of this
Section 9, and (ii) the provisions of this Agreement are
reasonable and necessary for the protection of the business of
the Company.
(b) The Executive agrees that he will not at
any time, either during the term of this Agreement or thereafter,
divulge to any person, firm or corporation any material
information obtained or learned by him during the course of his
employment with the Company, with regard to the operational,
financial, business or other affairs of the Company, its officers
or directors, except (i) in the course of performing his duties
hereunder, (ii) with the Chairman of the Board's or President's
express written consent; (iii) to the extent that any such
information is in the public domain other than as a result of the
Executive's breach of any of his obligations hereunder; or (iv)
where required to be disclosed by court order, subpoena or other
government process.
(c) Upon termination of his employment with the
Company, or any time the Company may so request, the Executive
will promptly deliver to the Company all memoranda, notes,
records, reports, manuals, drawings, blueprints, software and
other documents (and all copies thereof) relating to the business
of the Company and all property associated therewith, which he
may then possess or have under his control.
(d) During the term of this Agreement and any
renewal hereof (including any remaining portion of the stated
term of this Agreement or any renewal term hereof following the
termination of the Executive's employment by the Executive unless
such termination occurs after a change in control of the
<PAGE>
Company), and provided the Executive's employment has not been
terminated by the Company with or without Cause, the Executive
without the prior written permission of the Chairman of the Board
or President shall not in the United States, its territories or
possessions, directly or indirectly, (i) enter into the employ of
or render any services to any person, firm or corporation engaged
in any competitive business; (ii) engage in any competitive
business for his own account; (iii) become associated with or
interested in any competitive business as an individual, partner,
shareholder, creditor, director, officer, principal, agent,
employee, director, consultant, advisor or in any other
relationship or capacity; (iv) employ or retain, or have or cause
any other person or entity to employ or retain, any person who
was employed or retained by the Company while the Executive was
employed by the Company; or (v) solicit, interfere with, or
endeavor to entice away from the Company any of its customers or
sources of supply. However, nothing in this Agreement shall
preclude the Executive from investing his personal assets in the
securities of any corporation or other business entity which is
engaged in a competitive business if such securities are traded
on a national stock exchange or in the over-the-counter market
and if such investment does not result in his beneficially
owning, at any time, more than 1% of the publicly-traded equity
securities of such competitor. A competitive business shall not
include (i) any privately owned enterprise or (ii) any publicly
owned enterprise engaged in such a business outside of the
geographic regions and states in which the Company operates at
the time of the termination of this Agreement.
(e) If the Executive commits a breach of any of
the provisions of subsection (b) or (d) above, the Company shall
have the right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity juris-
diction, it being acknowledged and agreed by the Executive that
the services being rendered hereunder to the Company are of a
special, unique and extraordinary character and that any such
breach or threatened breach will cause irreparable injury to the
Company and that money damages will not provide an adequate
remedy to the Company. Each of the rights and remedies
enumerated in this subsection (e) shall be independent of the
other, and shall be severally enforceable, and such rights and
remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
(f) If any provision of subsection (b) or (d)
is held to be unenforceable because of the scope, duration or
area of its applicability, the tribunal making such determination
shall have the power to modify such scope, duration, or area, or
all of them, and such provision or provisions shall then be
applicable in such modified form.
10. Governing Law; Arbitration. This Agreement shall
be governed by, and construed in accordance with, the internal
laws of the State of New York, without regard to New York's
conflicts of law principles. Any dispute or controversy arising
under this Agreement, or out of the interpretation hereof, or
based upon the breach hereof, shall be resolved by arbitration
held at the offices of the American Arbitration Association in
<PAGE>
the City of New York in accordance with the rules and regulations
of such association prevailing at the time of the demand for
arbitration by either party hereto, and the decision of the
arbitrator or arbitrators shall be final and binding upon both
parties hereto, provided, however, that the arbitrator or
arbitrators shall only have the power and authority to interpret,
and not to modify or amend, the terms and provisions hereof.
Judgment upon an award rendered by the arbitrator or arbitrators
may be entered in any court having jurisdiction thereof.
Notwithstanding anything contained in this Section 10, either
party shall have the right to seek preliminary injunctive relief
in any court in the City of New York in aid of, and pending the
final decision in, the arbitration proceeding.
11. Entire Agreement. This Agreement sets forth the
entire agreement of the parties and is intended to supersede all
prior employment negotiations, understandings and agreements. No
provision of this Agreement may be waived or changed, except by a
writing signed by the party to be charged with such waiver or
change.
12. Successors; Binding Agreement. This Agreement
shall inure to the benefit of and be enforceable by the Execu-
tive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees.
13. Notices. All notices provided for in this Agree-
ment shall be in writing, and shall be deemed to have been duly
given when delivered personally to the party to receive the same,
when given by telex, telegram or mailgram, or when mailed first
class postage prepaid, by registered or certified mail, return
receipt requested, addressed to the party to receive the same at
his or its address above set forth, or such other address as the
party to receive the same shall have specified by written notice
given in the manner provided for in this Section 13. All notices
shall be deemed to have been given as of the date of personal
delivery, transmittal or mailing thereof.
<PAGE>
14. Severability. If any provision in this Agreement
is determined to be invalid, it shall not affect the validity or
enforceability of any of the other remaining provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Edward Lowenthal
----------------------------
Edward Lowenthal
President
EXECUTIVE:
/s/ David M. Strong
- -----------------------------
David M. Strong
