-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CMq7Nbya38aCHC6r7oi07q6iL2XcuJxSsrvCl3B2fQsXog0iODQw9zH38pid29D4 d2AE66tb2zgOdtVTEJiKBw== 0001038222-01-500021.txt : 20020412 0001038222-01-500021.hdr.sgml : 20020412 ACCESSION NUMBER: 0001038222-01-500021 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20011210 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20011210 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WELLSFORD REAL PROPERTIES INC CENTRAL INDEX KEY: 0001038222 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 133926898 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12917 FILM NUMBER: 1810241 BUSINESS ADDRESS: STREET 1: 535 MADISON AVENUE STREET 2: 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2128383400 MAIL ADDRESS: STREET 1: 535 MADISON AVENUE STREET 2: 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 8-K 1 body8k_120701.txt SENIOR MANAGEMENT CHANGES 12/07/2001 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported) December 10, 2001 (December 7, 2001) ------------------------------------ WELLSFORD REAL PROPERTIES, INC. ------------------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) Maryland 1-12917 13-3926898 - -------------------------------------------------------------------------------- (STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.) 535 Madison Avenue, New York, New York 10022 - -------------------------------------------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) Registrant's telephone number, including area code (212) 838-3400 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) - -------------------------------------------------------------------------------- -1- ITEM 5. OTHER EVENTS. Wellsford Real Properties, Inc. (the "Company") announced on December 7, 2001 that Edward Lowenthal, its co-founder, Chief Executive Officer and President, and Rodney Du Bois, its Vice Chairman, will retire on March 31, 2002 and December 31, 2001, respectively. Jeffrey H. Lynford, currently Chairman of the Board, will also assume the positions and duties of Chief Executive Officer and President upon Mr. Lowenthal's retirement. Mr. Lynford's employment agreement has been modified and extended through December 31, 2004. Messrs. Lowenthal and Du Bois will continue as members of the Board of Directors of the Company. Additionally, Mr. Lowenthal will, subsequent to his retirement, be available to provide services at the request of the Company through 2004. In connection with his retirement, Mr. Lowenthal and the Company entered into an Employment Separation Agreement which, among other benefits, provides for (a) a severance payment to him on March 31, 2002 of $1,650,000, (b) the Company's repurchase of 284,551 of his stock options on March 31, 2002 for $2.3827 per option, or an aggregate of $678,000, and (c) the Company's repurchase, at Mr. Lowenthal's option, of his remaining 284,551 stock options on or after January 2, 2003, for the same amount as the initial stock option repurchase. The 569,102 options had an average remaining term of six years and a Black-Scholes valuation of approximately $3,300,000. For the services to be performed by Mr. Lowenthal after his retirement, he will receive payments at the rate of $100,000 per year. In connection with these arrangements and other anticipated events, the Company expects to record a non-recurring charge of approximately $3,800,000 in the fourth quarter of 2001. Mr. Lynford's employment arrangement has been modified pursuant to an Amended and Restated Employment Agreement (the "Restated Agreement") and provides, among other things, for the maintenance of his current base salary of $318,000 per year throughout the term of the agreement and an annual minimum bonus of $325,000. In addition, Mr. Lynford will be entitled to receive a severance payment of $1,929,000 in the event (a) he terminates his employment by reason of a change in control of the Company (as defined in the Restated Agreement) (b) the Company terminates his employment other than for proper cause (as defined in the Restated Agreement) or (c) his employment is terminated by reason of his death or disability. The provisions in the prior employment agreement providing for the reimbursement to Mr. Lynford of excise and certain income taxes with respect to the severance payments have been eliminated. The Company has also agreed to issue to Mr. Lynford, on December 31, 2001, $1,356,000 of restricted shares of the Company's common stock, one third of which are to vest on each of December 31, 2001, June 30, 2002 and January 1, 2003. Assuming a price of $18.50 per share, approximately 73,300 shares will be issued. Mr. Lynford has also agreed to the cancellation of 290,000 of the 569,102 options to acquire the Company's common stock held by him. The 290,000 options had a Black-Scholes valuation of approximately $1,400,000. Certain statements in this Form 8-K may constitute "forward-looking statements" under federal securities laws and involve known and unknown risks, uncertainties and other factors, which may cause the actual results to be materially different from any future results implied by such forward-looking statements. Such factors include, among others the ultimate amount of the charges in connection with the announced management changes and the completion of contemplated events under the arrangements. -2- ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits 10.122 Employment Separation Agreement dated as of December 7, 2001 by and between Wellsford Real Properties, Inc. and Edward Lowenthal. 10.123 Amended and Restated Employment Agreement dated as of December 7, 2001 by and between Wellsford Real Properties, Inc. and Jeffrey H. Lynford. -3- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: December 10, 2001 WELLSFORD REAL PROPERTIES, INC. By: /s/ James J. Burns ---------------------------------------------- James J. Burns Senior Vice President, Chief Financial Officer -4- EX-10.122 3 ex10122.txt LOWENTHAL SEPARATION 12/07/2001 EMPLOYMENT SEPARATION AGREEMENT EMPLOYMENT SEPARATION AGREEMENT (the "Agreement") is made as of December 7, 2001, by and between Wellsford Real Properties, Inc. (the "Company") and Edward Lowenthal (the "Executive"). W I T N E S S E T H ------------------- WHEREAS, the Executive is employed by the Company pursuant to that certain Employment Agreement dated as of May 30, 1997 (the "Employment Agreement"); WHEREAS, the Employment Agreement provides for, among other things, the payment of significant sums to the Executive in certain events; WHEREAS, the Company and Executive have mutually agreed to the termination of Executive's Employment Agreement prior to the expiration of its term and to the payment to Executive of certain sums which are in a lesser amount than those payable to Executive under the Employment Agreement; WHEREAS, the Company and Executive have agreed to modify certain provisions of the Employment Agreement from and after the date hereof; and WHEREAS, the Company desires to retain Executive to provide consulting services to the Company upon the termination of his employment by the Company. NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements of the parties herein contained, the parties hereto, intending to be legally bound hereby, agree as follows: 1. Employment Term. Section 2 of the Employment Agreement is hereby deleted and the following is substituted in lieu thereof: "The Company and Executive agree that the term of the Employment Agreement shall terminate at 11:59 p.m. on March 31, 2002." 2. Bonus. The following is hereby added to Section 3(b) of the Employment Agreement: "In no event shall Executive's cash bonus be less than (i) $325,000 for 2001 and (ii) $81,250 for that portion of the term of the Employment Agreement in 2002. The 2001 bonus shall be payable on or prior to January 31, 2002 and the 2002 bonus shall be payable on or prior to April 30, 2002." 3. Compensation Upon Executive's Death. Section 9(c) of the Employment Agreement is hereby deleted and the following is substituted in lieu thereof: "If the Executive's employment shall be terminated by reason of the Executive's death, the base salary at the annual rate then in effect 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 remaining term of this Agreement. If the Executive dies during the year 2001 his estate shall, nevertheless, receive from the Company the entire bonus payable to him for such year pursuant to Section 3(b) hereof. If the Executive dies on or after January, 2002 and on or prior to March 31, 2002, the Company shall pay to his estate a prorated portion of the annual bonus payable to Executive pursuant to Section 3(b) hereof for the year 2002, which shall be an amount equal to the product of the amount of such annual bonus and a fraction, the numerator of which is the number of days elapsed in the year 2002 prior to such termination and the denominator of which is 90." 4. Survival and Modification of Employment Agreement. (a) The Employment Agreement shall remain in full force and effect until March 31, 2002 without modification except as specifically set forth in this Agreement. (b) The following Sections of the Employment Agreement are hereby deleted therefrom and shall be of no further force or effect from and after the date hereof: Section 9(d), Section 10, Section 11 and Section 12. 5. Assignment of Life Insurance Policies The Company and Executive agree that within 30 days after Executive's employment is terminated for any reason, including by reason of the expiration of this Agreement, the Company shall assign to Executive or his designee, without the payment of any consideration by the Executive, all of the Company's right, title and interest in and to that certain Split Dollar Life Insurance Agreement dated November 18, 1993 between Wellsford Residential Property Trust and Edward Lowenthal, as modified by the Split Dollar Life Insurance Agreement dated December 11, 1995 and the related insurance policies referred to therein, and in connection therewith the Company shall be deemed to have automatically waived repayment of any paid or accrued premiums with respect to such policy. 6. Payments to Executive Upon Termination. (a) Executive shall be entitled to the following additional compensation and benefits: (i) The Company will pay Executive in cash, by wire transfer of available funds, the sum of $1,650,000 on March 31, 2002, or within 30 days after such earlier time as Executive's employment under the Employment Agreement shall terminate for any reason whatsoever; and (ii) On the date hereof, Executive holds 569,102 options to acquire the Company's common stock, as set forth on Schedule A hereto. The Company agrees to acquire such options (to the extent such options have not been exercised or otherwise disposed of by Executive prior to the time they are to be acquired), for $2.3827 per option or an aggregate purchase price of $1,355,999.34, such amount being equal to Executive's aggregate investment in such options. The Company will acquire from Executive 284,551 of those options as designated on Schedule A on March 31, 2002 or within 30 days after such earlier time as Executive's employment under the Employment Agreement shall terminate for any reason whatsoever for $2.3827 per option, or an aggregate of $677,999.67. Executive shall have the option on or after January 2, 2003, on 10 days prior written notice, to have the Company acquire the remaining 284,551 options then held by Executive for $2.3827 per option, or an aggregate of $677,999.67. Executive's option hereunder shall expire on February 15, 2003. To the extent any of the foregoing options have been exercised prior to the date of purchase by the Company, the aggregate purchase price shall be reduced by an amount equal to $2.3827 multiplied by the number of options exercised prior to such purchase. (b) Executive shall have the right to defer receipt of all payments to be made pursuant to subsection a(i) above, and to have such amounts placed into the trust under the Company's non-qualified deferred compensation plan. (c) The Company and Executive agree that on March 31, 2002, or within 30 days after such earlier time as Executive's employment under the Employment Agreement shall terminate for any reason whatsoever, all unvested restricted stock and other awards issued to Executive pursuant to the Company's Incentive Plans shall immediately vest. (d) Section 9(f) of the Employment Agreement is hereby deleted and the following is substituted in lieu thereof: "In addition to all other amounts payable to the Executive under this Section 6, 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, including, without limitation, any deferred compensation arrangements, but subject to any then existing deferral elections of Executive." (e) The Executive shall not be required to mitigate the amount of any payment provided for in this Section 6 or elsewhere in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 6 or elsewhere in this Agreement be reduced by any compensation earned by him as the result of employment by another employer or by retirement benefits after the termination of his employment hereunder. (f) The Company and Executive agree that from and after March 31, 2002, or such earlier time as Executive's employment under the Employment Agreement shall terminate for any reason whatsoever (i), the Company will continue, at its own cost and expense, to provide Executive with health, dental and life insurance benefits through December 31, 2004 (ii) Executive will be entitled to continue to participate in the Company's cafeteria plan through December 31, 2004 to the extent he remains eligible thereunder and (iii) to the extent he remains eligible (provided Executive may at any time supplement any cost necessary to allow for continued eligibility as provided under the terms of the applicable policy), Executive may continue participation in the Company's long-term disability plan on the same basis as provided prior to his termination of employment, at his own cost and expense, through December 31, 2004. 7. Services Arrangement and Other Matters. (a) The Company and Executive agree that from and after March 31, 2002, or such earlier time as Executive's employment under the Employment Agreement shall terminate for any reason whatsoever, and through December 31, 2004 (the "Services Period"), Executive shall, at the request of the Chairman of the Board of the Company, perform certain services for the Company as set forth in subsection (b) below at such times as are mutually agreeable to Executive and the Company. However, in no event shall Executive be required to spend more than 30 hours each calendar quarter in performing such services. (b) The services requested by the Company pursuant to this Section 7 shall relate to the business and activities of the Company and be of the type of services that would normally be performed by a senior executive officer. (c) For any and all services rendered by Executive to the Company pursuant to this Section 7 and whether or not the Company requests Executive to render services, the Company shall pay to Executive compensation at the rate of $100,000 per year payable in quarterly installments of $25,000 each on the first day of each calendar quarter during the term of the services arrangement commencing on April 1, 2002 or such earlier date as Executive's employment terminates) to and including October 1, 2004. The compensation payable to Executive shall be payable to him notwithstanding his death or disability or the termination of his services arrangement for any reason whatsoever. (d) Executive shall not be required to perform services pursuant to this Section 7 outside the New York, New York area but shall undertake reasonable business travel as agreed to by Executive and the Company. (e) (i) Executive shall be reimbursed for all costs and expenses incurred by him in the performance of services pursuant to this Section 7 upon reasonable substantiation thereof. (ii) 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: (A) the termination of Executive's services arrangement under this Section 7 (including all such fees and expenses, if any, incurred in contesting or disputing any such termination), (B) the Executive seeking to obtain or enforce any right or benefit provided anywhere in 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, including, without limitation, the Company's deferred compensation plan or (C) any action taken by the Company against the Executive; unless and until a final judgment has been rendered in favor of the Company and all appeals related to any such action have been exhausted or the time within which to appeal has expired. (f) During the Services Period, the Company shall indemnify the Executive in the performance of his services to the fullest extent permitted under the Company's charter or by-laws as in effect on the day immediately prior to the first day of the Services Period. In addition, Executive shall continue as a named beneficiary under any liability insurance policies maintained for directors and/or officers of the Company as in effect on the day immediately prior to the first day of the Services Period, for so long as Executive shall remain a director of the Company. Furthermore, Executive shall become, and continue as, a named beneficiary under any liability insurance policies maintained by the Company after a change in control of the Company for persons who were directors or officers prior to a change in control of the Company to the extent they provide coverage for events prior to the change in control of the Company. The Company agrees to maintain the coverage provided in the first three sentences of this subsection (f) unless, in each case, any modification in indemnification and insurance coverage applies uniformly to all consultants and to officers and directors of the Company, as the case may be. (g) Nothing contained herein shall be deemed to prohibit or restrict Executive, during the term of the services arrangement set forth in this Section 7, from performing services, or engaging in activities, of any kind or nature for any person or entity even if such services, activities, person or entity is competitive to the business and activities of the Company. 8. 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. 9. 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. 10. 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 or otherwise, 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, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement, expressly, by operation of law, or otherwise. 11. 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 10. All notices shall be deemed to have been given as of the date of personal delivery, transmittal or mailing thereof. 12. 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/ Edward Lowenthal -------------------- Edward Lowenthal
SCHEDULE A ---------- Number of Options Options to be Acquired Options to be Acquired Granted (Date) Exercise Price March 31, 2002 on or After January 2, 2003 -------------- -------------- -------------- --------------------------- 12,585 (5/30/97) $ 15.84 6,292 6,293 213,767 (5/30/97) $ 20.60 106,884 106,883 4,884 (5/30/97) $ 20.60 2,442 2,442 37,865 (5/30/97) $ 20.60 18,932 18,933 6,350 (12/05/97) $ 31.50 3,175 3,175 193,651 (12/05/97) $ 31.50 96,826 96,825 2,857 (03/11/98) $ 35.00 1,429 1,428 47,143 (03/11/98) $ 35.00 23,571 23,572 25,000 (03/11/98) $ 40.00 12,500 12,500 20,000 (12/10/99) $ 16.30 10,000 10,000 5,000 (12/10/99) $ 16.30 2,500 2,500
EX-10.123 4 ex10123.txt LYNFORD AMENDED EMPLOYMENT 12/07/2001 AMENDED AND RESTATED EMPLOYMENT AGREEMENT AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement"), dated as of December 7, 2001, between WELLSFORD REAL PROPERTIES, INC., a Maryland corporation with offices at 535 Madison Avenue, New York, New York 10022 (the "Company"), and JEFFREY H. LYNFORD, an individual residing at 10 Holly Branch Road, Katonah, NY 10536 (the "Executive"). WHEREAS, the Company and the Executive are party to an Employment Agreement dated as of May 30, 1997 (the "Original Agreement"); WHEREAS, the Company desires to ensure the services of the Executive beyond the term of employment provided for in the Original Agreement; WHEREAS, the Company and the Executive have agreed to modify the employment benefits to be received by the Executive in the event his employment is terminated as a result of, or in connection with, a change in control of the Company, as hereinafter defined, and to provide the Executive with certain other benefits whether or not the Executive's employment is terminated. WHEREAS, the Company and the Executive desire to amend and restate the Original 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 Chairman of the Board and from and after April 1, 2002, as Chairman of the Board, Chief Executive Officer and President to perform such executive or administrative services for the Company consistent with those of a Chairman of the Board, and from and after April 1, 2002, a Chief Executive Officer and President as may be assigned to the Executive by the Board of Directors of the Company (the "Board"). 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 foregoing shall not be construed to prevent Executive from devoting time during business hours to charitable and civic endeavors. (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 pursuant to Section 4 below for costs and expenses incurred in connection therewith). 2. Employment Term. This Agreement shall commence on December 7, 2001 and shall continue in effect through December 31, 2004. 3. Compensation. (a) For all services rendered by the Executive pursuant to this Agreement the Company shall pay to the Executive a base salary at the annual rate of $318,000 for the period from the date of this Agreement through December 31, 2004. All such compensation shall be paid semi-monthly 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 Section 3 hereof, the Executive shall be awarded such bonus for each calendar year or partial calendar year of his employment hereunder as the Board shall determine in its sole discretion. In determining such bonus, the Executive understands that the Board 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 (including his participation in transactions of particular financial or business significance to the Company) during such period; and such other factors as the Board may deem appropriate in their sole discretion. Such bonus may consist of cash; grants of shares of common stock of the Company ("Shares"); 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 Board in its sole discretion may deem appropriate and which it believes is in furtherance of the growth of stockholder value of the Company. In no event shall such bonus be less than $325,000 for each of the years 2001 through 2004, with each such bonus to be payable in cash within 30 days after the expiration of each such year. 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) hereof 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, including, without limitation, the Company's deferred compensation plan (iii) the Executive's hearing before the Board as contemplated in subsection 6(c) hereof 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, order or decree of a court of competent jurisdiction has been rendered in favor of the Executive and the time for appeal therefrom has expired and no appeal has been perfected. (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 Board as contemplated in subsection 6(c) hereof or (iv) any action taken by the Company against the Executive, until such time as a final judgement, order or decree of a court of competent jurisdiction has been rendered in favor of the Company and the time for appeal therefrom has expired and no appeal has been perfected; provided, however, that the circumstances set forth above occurred on or after a change in control of the Company, as defined in subsection 6(e). In no event shall the Executive be required to reimburse the Company for any legal fees or related expenses paid by the Company pursuant to this subsection 4(c). 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, and shall continue to maintain the Executive as a named beneficiary under any liability insurance policies maintained for directors and/or officers of the Company for so long as Executive shall remain a director or officer of the Company. In addition, Executive shall become, and continue as, a named beneficiary under any liability insurance policies maintained by the Company after a change in control of the Company for persons who were directors or officers prior to a change in control of the Company to the extent they provide coverage for events prior to the change in control of the Company. The Company agrees to maintain the coverages referred to above unless, in each case, any modification in indemnification and insurance coverage applies uniformly to all officers and directors of the Company, as the case may be. 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 Board may determine, on the basis of medical evidence satisfactory to the Board, in the Board'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 on such 30th day 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 Board, which demand specifically identifies the manner in which the Board believes 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 Stockholders. 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 of the members of the Board at a meeting of the Board 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 Board not less than 10 business days after the giving of such notice), finding that in the good faith opinion of the Board, 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 particulars of such conduct in detail. Notwithstanding anything contained in this Agreement to the contrary, no failure to perform by the Executive after a Notice of Termination is given by the Executive shall constitute proper cause for purposes of this Agreement. (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 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 13 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 hereof; or (vi) any change in control of the Company, as defined in subsection 6(e). (e) 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, or (ii) the Company engages in a merger, consolidation or reorganization or sells all or substantially all of the Company's assets to a "Person" (as such term is used for purposes of Section 13(d) or 14(d) of the Exchange Act (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 subsection 6(e)(i)(A) or subsection 6(e)(i)(B) above exist, or (B) (1) the Stockholders immediately before such Transaction own, directly or indirectly, immediately following such Transaction in excess of 69% 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 Board 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 the assets of another company or a subsidiary of the Company merges, consolidates or reorganizes with another company (each, an "Other Transaction") and (A) the Stockholders immediately before such Other Transaction own, directly or indirectly, immediately following such Other Transaction 69% 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 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 subsection 6(e)(i)(A) or subsection 6(e)(i)(B) above exist, or (iv) adoption by the Board and approval by the Stockholders of a liquidation or dissolution of the Company; (v) any Person or group of affiliated Persons owns at any time 30% or more of the outstanding voting securities of the Company, provided that such Person or group shall not be deemed to own 30% or more of the outstanding voting securities of the Company if the last event or transaction which results in such ownership is (a) the issuance of such securities in connection with the sale by the Company of less than all or substantially all of its assets or (b) the acquisition by the Company of any such voting securities; provided, however, that if a Person owns 30% or more of the outstanding voting securities of the Company as a result of the acquisition by the Company of any such voting securities and after such acquisition by the Company, such Person becomes the owner of any additional voting securities of the Company than a change in control of the Company shall occur; or (vi) the rejection by the Stockholders of the entire slate of directors that the Board proposes at a single election of directors; and (vii) the rejection by the Stockholders of one-half or more of the directors that the Board proposes over any two or more consecutive elections of directors. (f) Notwithstanding anything contained in this Agreement to the contrary, if the Executive's employment is terminated prior to a change in control of the Company and the Executive reasonably demonstrates that such termination: (i) was at the request of a third party who has indicated an intention or taken steps reasonably calculated to effect a change in control and who effectuates a change in control of the Company or (ii) otherwise occurred in connection with, or in anticipation of, a change in control of the Company which actually occurs, then for all purposes of this Agreement, the date of a change in control of the Company with respect to the Executive shall mean the date immediately prior to the date of such termination of the Executive's employment. 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 15 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) hereof 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) hereof shall not be less than thirty (30) days, and in the case of a termination pursuant to subsection 6(d) hereof 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 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 hereof, the Date of Termination shall be the date the term hereof expires pursuant to Section 2 hereof, 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 8. 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 annual rate in effect at the commencement of any such period until his employment is terminated pursuant to subsection 6(a) hereof. The Company shall also pay Executive for the year in which he is terminated as a result of his disability a prorated portion of the annual bonus payable to Executive pursuant to subsection 3(b) hereof for the year in which Executive's employment is terminated, which shall be an amount equal to the product of the amount of such annual bonus and a fraction, the numerator of which is the number of days elapsed in the year in which the Executive's employment terminated prior to such termination and the denominator of which is 365. (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 base salary payable pursuant to subsection 3(b) hereof through the Date of Termination. (c) If the Executive's employment shall be terminated by reason of the Executive's death, the base salary at the annual rate then in effect 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 period up to and including the date of Executive's death. The Company shall also pay to such person or the estate, as the case may be, a prorated portion of the annual bonus payable to Executive pursuant to subsection 3(b) hereof for the year in which Executive's employment is terminated, which shall be an amount equal to the product of the amount of such annual bonus and a fraction, the numerator of which is the number of days elapsed in the year in which the Executive's employment terminated prior to such termination and the denominator of which is 365. (d) If the Executive's employment shall be terminated (i) by reason of his death or disability, (ii) by the Company other than for proper cause or (iii) 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 a lump sum severance payment equal to $1,929,000 which shall be paid to him no later than 30 days after the Date of Termination. (ii) Executive shall have the right to defer receipt of all payments to be made pursuant to subdivision (d)(i) hereof, and to have such amounts placed into the trust under the Company's non-qualified deferred compensation plan. (iii) Notwithstanding the foregoing, to the extent any of the payments payable under this Section 9(d) would constitute an "excess" parachute payment under Section 280G of the Internal Revenue Code of 1986, as amended (the "Code") and by reason of such excess parachute payment Executive would be subject to an excise tax under Section 4999(a) of the Code (as determined by Executive's tax advisor), then the payments shall be reduced to the largest amount that can be received by Executive without incurring an excise tax under Section 4999(a) of the Code (as determined by Executive's tax advisor); provided, however, that such reduction shall occur only if the after-tax value of the benefits to Executive calculated with the foregoing reduction exceed those calculated without the foregoing reduction. All amounts not paid to Executive by reason of a reduction hereunder shall be paid by the Company directly to a public charity qualified under Section 501(c)(3) of the Code, as determined by the Board; provided that such charity's annual contributions for the preceding year were in excess of $1 million and that Executive is not a director or trustee of such charity. (iv) If the Executive's employment is terminated for any reason whatsoever (other than by the Company for proper cause), including by reason of expiration of its term, the Company shall assign to Executive, without the payment of any consideration by the Executive, all of the Company's right, title and interest in and to that certain Split Dollar Life Insurance Agreement dated November 18, 1993 between Wellsford Residential Property Trust and Jeffrey H. Lynford, as modified by the Split Dollar Life Insurance Agreement dated December 11, 1995 and the related insurance policies referred to therein, and in connection therewith the Company shall be deemed to have automatically waived repayment of any paid or accrued premiums with respect to such policy and in connection therewith the Company shall be deemed to have automatically waived repayment of any paid or accrued premiums with respect to such policy. (e) If the Executive's employment is terminated for any reason whatsoever (other than by the Company for proper cause), all theretofore unvested stock options, restricted options, restricted stock and other awards issued to Executive pursuant to the Company's Incentive Plans shall immediately vest. (f) If the Executive's employment is 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. (g) 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 including, without limitation, any deferred compensation arrangements (but subject to any then existing deferral elections of Executive), as in effect upon the occurrence of a change in control of the Company or the Executive's employment with the Company being terminated for any reason whatsoever (other than by the Company for proper cause), including by reason of expiration of its term. (h) The Executive shall not be required to mitigate the amount of any payment provided for in this Section 9 or elsewhere in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 9 or elsewhere in this Agreement 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 as a result of services performed by him as permitted under Section 10 hereof, or otherwise, except as specifically provided in this Section 9. (i) In the event the Executive's employment hereunder is terminated for any reason whatsoever (except by the Company for proper cause), the Company agrees to continue, at its own cost and expense, the health, dental and life insurance benefits available to Executive at the time his employment is terminated through December 31, 2004 and to the extent he remains eligible (provided Executive may at any time supplement any cost necessary to allow for continued eligibility as provided under the terms of the applicable policy), Executive may continue participation in the Company's long-term disability plan on the same basis as provided prior to his termination of employment, at his own cost and expense, through December 31, 2004. 10. Issuance of Restricted Shares. The Company agrees to issue into Executive's deferred compensation account, on December 31, 2001, an aggregate number of restricted common shares equal to the quotient of $1,356,000 divided by the average of the high and low prices of the shares of common stock of the Company on the American Stock Exchange on December 28, 2001. Such restricted shares shall be issued under the Company's 1998 Management Incentive Plan and vest as follows: 1/3 shall vest on each of December 31, 2001, June 30, 2002 and January 1, 2003. 11. Performance of Other Services. From and after such time as the assets of the Company are distributed to a Liquidating Trust, the Executive shall be allowed to perform services for and engage in business activities with other persons so long as such services and activities do not prevent Executive from fulfilling his fiduciary responsibilities to the Company. 12. 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. 13. 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. 14. 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, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement, expressly, by operation of law, or otherwise. 15. 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 15. All notices shall be deemed to have been given as of the date of personal delivery, transmittal or mailing thereof. 16. 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 -----END PRIVACY-ENHANCED MESSAGE-----