THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated as of October 19,
2004, between Wellsford Real Properties, Inc., a Maryland corporation with
offices at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and
Xxxxx X. Xxxxxx, an individual residing at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx
00000 ("Executive").
WHEREAS, the Company and the Executive are party to a Second Amended and
Restated Employment Agreement, dated as of June 25, 2002 (the "Second Amended
and Restated Agreement");
WHEREAS, the Company and the Executive desire to amend and restate the
Second Amended and Restated Agreement (the "Third Amended and Restated
Agreement");
NOW, THEREFORE for good and valuable consideration received by the parties
hereto.
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 Senior 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) Except as hereinafter set forth, 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 Third Amended and
Restated 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 incurred in
connection therewith).
2. Employment Term. The term of employment shall continue in effect through
December 30, 2006; provided, however, that, on January 1, 2007 and on each
January 1 thereafter, the term of this Third Amended and Restated Agreement
shall automatically be extended for one additional year beyond such January 1
unless, not later than the immediately preceding September 30, either the
Executive or the Company shall have given notice to the other not to extend this
Third Amended and Restated Agreement.
3. Compensation. For all services rendered by the Executive pursuant to
this Third Amended and Restated Agreement:
(a) Base Salary. The Company shall pay to the Executive an annual base
salary at the following rates:
(i) $199,465 for the period ending December 31, 2004; and
(ii) 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) Annual Bonus. In addition to the compensation set forth in Section
3(a) above, during the term of this Third Amended and Restated 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 (the "Bonus Year"), as may be determined by the
Company's Compensation Committee. The Company shall announce to the
Executive the amount of his bonus for each Bonus Year during December of
such year (or during the month in which this Third Amended and Restated
Agreement shall expire, if applicable) and pay such bonus during the
following January (or during the month following expiration of this Third
Amended and Restated Agreement, as the case may be), unless otherwise
agreed to by the Executive and the Company. In no event shall the amount of
any cash bonus paid to the Executive pursuant to this Section 3(b) be less
than 75% of the Executive's annual base salary for the Bonus Year.
(c) Palomino Project Special Bonus. (i) In addition to the base salary
set forth in Section 3(a) above and any bonus to which he may be entitled
pursuant to Section 3(b) above and 3(g) below, the Executive shall also be
entitled to receive a one-time bonus (the "Special Bonus"), subject to the
provisions of this Section 3(c) and Section 3 (d), in the event of and
subject to the disposition by the Company of at least 90% of its entire
interest in the Palomino Project. Such disposition shall be deemed to have
occurred at such time as the Company and any of its Affiliates, as defined
in Section 3(f) hereof, collectively, have an ownership interest (currently
owned or hereafter acquired) of 10% or less in the Palomino Project either
by the ownership of assets or an equity interest in any entity now existing
or hereinafter organized, which has an ownership interest in the Palomino
Project. Any interest in the Palomino Project or Wellsford Park Highlands
Corp. ("WPHC") acquired by the Company and/or their Affiliates from Equity
Residential Properties Trust ("EQR") or its Affiliates shall be included in
the Company's aggregate ownership interest in the Palomino Project in
determining whether it has disposed of any specified percentage of its
interest in the Palomino Project. Executive acknowledges that the Company
has not made any representation or warranty to him regarding the
possibility or timing of a sale of the Palomino Project. The Special Bonus
will be determined for the first time immediately after the disposition of
the interest in the Palomino Project resulting in the Company disposing of
at least 90% of its interest (currently owned or hereafter acquired) in the
Palomino Project and calculated as the sum of the following:
(A) $250,000 if the Company has received the return of 100% of all monies
it has invested or expended in connection with the Palomino Project and it has
achieved an Internal Rate of Return (as defined in Section 3(f)) of at least 10%
and less than 11%;
(B) An additional $50,000 if the Company has received the return of 100% of
all monies it has invested or expended in connection with the Palomino Project
and it has achieved an Internal Rate of Return of at least 11%;
(C) An additional $50,000 if the Company has received the return of 100% of
all monies it has invested or expended in connection with the Palomino Project
and it has achieved an Internal Rate of Return of at least 12%;
(D) An additional $50,000 if the Company has received the return of 100% of
all monies it has invested or expended in connection with the Palomino Project
and it has achieved an Internal Rate of Return of at least 13%;
(E) An additional $50,000 if the Company has received the return of 100% of
all monies it has invested or expended in connection with the Palomino Project
and it has achieved an Internal Rate of Return of at least 14%; and
(F) An additional $50,000 if the Company has received the return of 100% of
all monies it has invested in or expended in connection with the Palomino
Project and it has achieved a 15% Internal Rate of Return.
An additional amount, not to exceed $500,000 if the Internal Rate of Return
achieved by the Company is greater than 15%, which shall be equal to the product
of $500,000 and a fraction, the numerator of which is the amount by which the
Internal Rate of Return exceeds 15% and the denominator of which is 15%.
For purposes of calculating any Internal Rate of Return and any Special
Bonus, (x) there shall be included in monies invested or expended by the Company
in connection with the Palomino Project any amounts paid or payable by the
Company or its Affiliates to acquire all or any part of the interest of EQR and
its Affiliates in the Company or the Palomino Project and (y) if all of EQR's
interests have not been purchased under (x) there shall be excluded from amounts
received by the Company from the Palomino Project any portion thereof paid or
still payable to EQR as a result of its ownership interest in WPHC at the time
of payment to EQR or at the time of calculation of the Special Bonus, as the
case may be.
Any Special Bonus vested and earned will be paid within 120 days after the
Company has disposed of 90% of its entire interest in the Palomino Project;
(ii) If after disposition by the Company of 90% of its interest
in the Palomino Project, Executive has not received a Special Bonus of
$1,000,000, then the Internal Rate of Return, as defined in Section
3(f), shall be recalculated immediately after such time as the Company
has disposed of at least 95% of its entire interest in the Palomino
Project. After the Internal Rate of Return, as defined in Section
3(f), is recalculated, the Special Bonus shall be recalculated and
there shall be paid to Executive an amount equal to the amount by
which the recalculated Special Bonus exceeds any Special Bonus
previously paid to Executive. Any additional Special Bonus vested and
earned by Executive at such time will be paid within 60 days after the
Company has disposed of 95% of its entire interest in the Palomino
Project;
(iii) If after disposition by the Company of 95% of its entire
interest in the Palomino Project Executive has not received a Special
Bonus of $1,000,000, then the Internal Rate of Return, as defined in
Section 3(f), shall be recalculated immediately after such time as the
Company has disposed of its entire interest in the Palomino Project.
After the Internal Rate of Return, as defined in Section 3(f), is
recalculated, the Special Bonus shall be recalculated and there shall
be paid to Executive an amount equal to the amount by which the
recalculated Special Bonus exceeds any Special Bonus previously paid
to Executive. Any additional Special Bonus vested and earned by
Executive at such time will be paid within 60 days after the Company
has disposed of its entire interest in the Palomino Project.
(d) Executive's right to receive the Special Bonus will vest on the
sooner of the disposition by the Company of 90% of its entire interest in
the Palomino Project and January 1, 2005. In the event of the death of
Executive during the term of this Third Amended and Restated Agreement or
if the Company has determined that the Executive is disabled pursuant to
Section 6(b) (a "Termination Event") at the time of such death or
determination of disability, as the case may be, 20% of the Special Bonus
shall be deemed to have vested with respect to each full calendar year of
the term hereof expiring after December 31, 1999 and prior to such
Termination Event up to a maximum of 60% of such Special Bonus.
(e) If a Change of Control of the Company, as defined in paragraph
6(f), occurs prior to the expiration of the term of this Third Amended and
Restated Agreement and prior to the disposition by the Company of its
entire interest in the Palomino Project, the entire Special Bonus will vest
if Executive's employment is terminated by the Company other than for Cause
and prior to January 1, 2005. Notwithstanding any vesting of the Special
Bonus pursuant to Sections 3(c), 3(d) and 3(e) payment of such Special
Bonus shall be subject to the Company's disposition of 90%, 95% or 100%, as
the case may be, of its entire interest in the Palomino Project as provided
for in Sections 3(c)(i), 3(c)(ii) and 3(c)(iii), respectively, and such
Special Bonus will not be paid until 60 days after each said disposition.
(f) For purposes of this Third Amended and Restated Agreement, the
following terms shall have the meanings set forth in this Section 3(f):
(i) An "Affiliate" of, or a person "Affiliated" with, a specified
person, is a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, the person specified. Based on the foregoing, WPHC shall
be an Affiliate of the Company and notwithstanding the foregoing, EQR
shall not be an Affiliate of the Company.
(ii) The term "control" (including the terms "controlling,"
"controlled by" and "under common control with") means 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.
(iii) "Internal Rate of Return" shall mean, that the Company has
achieved an internal rate of return of a specified percentage per
annum for the period commencing on May 30, 1997 and ending at the end
of the day prior to the date that the calculation is made, which shall
occur when an amount equal to the total amount of monies directly or
indirectly expended or invested by the Company or any of its
Affiliates, including, without limitation, monies expended or invested
by the Company or its predecessor in interest or any of their
Affiliates (e.g. Wellsford Residential Property Trust and its
Affiliates (other than any portion of such expenditures or investments
made by any other partner, shareholder, member or venturer who is not
otherwise Affiliated with the Company) from time to time with respect
to the Palomino Project (including, for these purposes only, any Gold
Peak bonus payable by the Company) are returned to the Company and its
Affiliates (other than any portion thereof returned to any other
partner, shareholder, member or venturer who is not otherwise
Affiliated with the Company) as a result of the disposition by the
Company and its Affiliates of any portion of their respective
interests in the Palomino Project together with an annual return equal
to such specified percentage calculated commencing on the date each of
such expenditure or investment are or were made, compounded annually,
taking into account the timing and amounts of all expenditures and
investments by the Company and its Affiliates (other than any portion
of such expenditures or investments made by any other partner,
shareholder, member or venturer who is not otherwise Affiliated with
the Company) and all cash receipts (regardless of how these expenses,
investments and receipts are characterized by the Company and its
Affiliates) (other than any portion of such receipts received by any
other partner, shareholder, member or venturer who is not otherwise
Affiliated with the Company) as a result of the operation and
disposition of the Palomino Project. For purposes of computing such
Internal Rate of Return, any expenditures or investments made by the
Company and its Affiliates (including for these purposes only any Gold
Peak Bonus payable by the Company) (other than any portion of such
expenditures or investments made by any other partners, shareholder,
member or venturer who is not otherwise Affiliated with the Company)
and any funds received by the Company and its Affiliates (other than
any portion thereof received by any other partner, shareholder, member
or venturer who is not otherwise Affiliated with the Company) at any
time during a month shall be deemed to be made or received on the
first day of such month and there shall be included in expenditures
and investments by the Company or its Affiliates (other than any
portion of such expenditures or investments made by any other partner,
shareholder, member or venturer who is not otherwise Affiliated with
the Company) with respect to the Palomino Project any portion of an
expenditure made for any purpose attributable to the Palomino Project
except that the only portion of the general and administrative
expenses of the Company that shall be included in calculating
expenditures shall be that portion of any payments made to Executive
under this Third Amendment and Restated Agreement, its predecessors or
otherwise which the Company allocates to the Palomino Project and any
portion of any expenditure related to the staff, rent, supplies and
other costs of the Denver, Colorado office of the Company as
reasonably determined by the Company's Chief Accounting Officer to
relate to the Palomino Project. In each case, the Internal Rate of
Return shall be calculated without regard to any income taxes paid or
payable by the Company or WPHC, interest payable by the Company to
WPHC or interest received by the Company from WPHC.
(iv) "Palomino Project" shall mean the Company's residential
development located in Highlands Ranch, Colorado known as Palomino
Park at Highlands Ranch, including without limitation, all land
(whether or not developed), buildings and improvements comprising each
of the five phases of such development known as Blue Ridge, Red
Canyon, Silver Mesa, Green River and Gold Peak and all common and
recreational facilities contiguous to all or any part of, or related
to or used in connection with, the foregoing, and any non-cash assets,
including, without limitation, other properties, promissory notes,
debt instruments and interests in any entity, received in connection
with the sale, transfer, exchange or other disposition of any of the
foregoing.
(g) Gold Peak Bonus. In the event that the Gold Peak Project (as
hereinafter defined) (i) has been fully constructed as a condominium
project with related recreational facilities and other amenities in
accordance with plans and, specifications approved by the Company, as same
may be modified from time to time, in the Company's sole discretion, (ii)
all condominium units have been sold and (iii) the Company shall have
derived a Profit, as hereinafter defined, of at least $8 million from the
construction and sale of the condominium units comprising the Gold Peak
Project, Executive shall be entitled to receive the following additional
compensation (the "Gold Peak Bonus"):
(A) $1,000 for each condominium unit sold; and
(B) an amount equal to 5% of Profit in excess of $8,259,000 of Profit.
(h) For purposes of this Third Amended and Restated Agreement, the
following terms shall have the meanings set forth in this Section 3(h):
(i) "Gold Peak Project" shall mean the Gold Peak development
phase of the Palomino Project which the Company currently intends to
consist of the construction and sale of condominium units.
(ii) "Profit" shall mean the profit derived by the Company from
the construction and sale of the condominium units comprising the Gold
Peak Project as determined by the Company. Capitalized interest from
and after September 1, 2004 on the cost of land shall not be a
deduction in determining Profit
(i) Profit shall be calculated by the Company within 120 days after
the sale of all of the condominium units constructed (the "Sale Completion
Date"). A written calculation of any Profit shall be delivered to Executive
within 130 days after the Sale Completion Date and shall be accompanied by
a check to the order of Executive representing payment of any Gold Peak
Bonus payable to him.
(j) No Obligation to Complete Gold Peak Project. For the avoidance of
doubt, the Executive hereby acknowledges that (i) the Company has not made
any representations or warranties to him with respect to the proposed Gold
Peak Project, (ii) the Company may modify its current plans for the Gold
Peak Project and (iii) the Company shall have no obligation to commence the
construction of, or complete the construction of, the Gold Peak Project.
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 or in connection with a relocation requested by
the Company pursuant to Section 1(d) 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 Third Amended
and Restated 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
judgment 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 Third Amended and Restated 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, as defined in Section 6(f).
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 Third Amended and Restated Agreement, this Third Amended and Restated
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 or into the Wellsford Real Properties, Inc. Deferred Compensation Plan
as a bonus on his behalf 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 Third Amended and Restated
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 Third Amended and Restated 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 Third Amended and
Restated Agreement is terminated through the last day of the month during
which this Third Amended and Restated 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 Third Amended and Restated 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 shall have the right to terminate this Third Amended
and Restated Agreement if any Change in Control of the Company occurs upon
notice to the Company within 90 days after the Change of Control of the
Company.
(f) For purposes of this Third Amended and Restated Agreement, a
"Change in Control of the Company" shall be deemed to occur if:
A. (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 any 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; and
B. If Xxxxxxx X. Xxxxxxx is the Chairman of the Board, President,
Chief Executive Officer or Chief Operating Officer of the Company, the
Surviving Corporation or the Other Surviving Corporation, immediately
following a Control Event, Transaction or Other Transaction, as the case
may be, then notwithstanding A.(i), A.(ii) and A.(iii) above, no Change in
Control of the Company will be deemed to have occurred.
7. Compensation Upon Termination Upon a Change in Control of the Company.
(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
pursuant to Section 6(e), then the Executive shall be entitled to receive from
the Company, as severance pay, not later than the date of termination an amount
equal to the greater of:
(i) an amount equal to his full base salary through the then
expiration date of the term of this Third Amended and Restated Agreement,
compensation for accrued vacation time as well as a bonus equal to the
product of (a) the aggregate base salary payable to the Executive pursuant
to subsection 3(a) from January 1 of the year in which the Change in
Control occurs through the then expiration date of the term of this Third
Amended and Restated Agreement and (b) the greater of (A)1/2 or (B) the
percentage of the Executive's base salary for the immediately preceding
fiscal year that was paid to the Executive or into the Wellsford Real
Properties, Inc. Deferred Compensation Plan as a bonus on his behalf for
the immediately preceding fiscal year, expressed as a fraction; or
(ii) an amount (the "Severance Payment") equal to two 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 shall
include every type and form of compensation includible in the Executive's
gross income in respect of his employment by the Company (including,
without limitation, all income reported on an Internal Revenue Service Form
W-2), and including, without limitation, any annual bonus payments
previously paid to such Executive or deferred under the Wellsford Real
Properties, Inc. Deferred Compensation Plan, on his behalf and specifically
excluding (a) any Special Bonus or Gold Peak Bonus paid to Executive, (b)
any income of the Executive that constitutes a "parachute payment" within
the meaning of Section 280G(b)(2) of the Code and (c) compensation income
recognized as a result of the Executives exercise of stock options; and (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. 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 8, and (ii) the provisions
of this Third Amended and Restated 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 Third Amended and Restated 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 Third Amended and Restated Agreement and
any renewal hereof (including any remaining portion of the stated term of
this Third Amended and Restated 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 Third Amended and Restated
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 Third Amended and Restated 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 Third Amended and Restated Agreement
specifically enforced by any court having equity jurisdiction, 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.
9. Governing Law; Arbitration. This Third Amended and Restated 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 Third Amended and Restated 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
9, 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.
10. Entire Agreement. This Third Amended and Restated 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
Third Amended and Restated Agreement may be waived or changed, except by a
writing signed by the party to be charged with such waiver or change.
11. Successors; Binding Agreement. This Third Amended and Restated
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.
12. Notices. All notices provided for in this Third Amended and Restated
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 12. All notices shall be deemed to have been
given as of the date of personal delivery, transmittal or mailing thereof.
13. Severability. If any provision in this Third Amended and Restated
Agreement is determined to be invalid, it shall not affect the validity or
enforceability of any of the other remaining provisions hereof.
14. Counterparts. This Third Amended and Restated Agreement may be executed
in counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Third Amended and
Restated Agreement as of the date first above written.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxx
President
EXECUTIVE:
/s/ Xxxxx X. Xxxxxx
-----------------------------
Xxxxx X. Xxxxxx
