EXHIBIT 10.34
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 30, 1997, between WELLSFORD
REAL PROPERTIES, INC., a Maryland corporation with offices at 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "Company"), and
Xxxxx X. Xxxxxx, an individual residing at 0000 Xxxxxxx, Xxx. 0X,
Xxxxxx, Xxxxxxxx 00000 ("Executive").
WHEREAS, the Executive is an executive of Wellsford
Residential Property Trust, a Maryland real estate investment
trust ("Wellsford Residential");
WHEREAS, Equity Residential Properties Trust, a
Maryland real estate investment trust, is merging with and into
Wellsford Residential as of the date hereof (the "Merger");
WHEREAS, immediately prior to the Merger, Wellsford
Residential is distributing to its common shareholders, pro rata,
all of the shares of common stock that it owns in the Company;
and
WHEREAS, the Company desires to employ the Executive,
and the Executive desires to be employed by the Company.
IT IS AGREED:
1. Duties. (a) During the term of the Executive's
employment hereunder the Executive shall serve and the Company
shall employ the Executive as Vice President for Development to
perform such executive or administrative services for the Company
consistent with those of a Vice President as may be assigned to
the Executive by the directors, Chairman of the Board or
President of the Company. The Executive hereby accepts such
employment and agrees to perform such services.
(b) The Executive shall devote substantially all
of his time, attention and energies during business hours to the
performance of his duties hereunder. The Executive shall give
advance written notice to the Chairman of the Board and President
of any intended active involvement in any other business
enterprise.
(c) The Executive shall cooperate with the
Company, including taking such medical examinations as the
Company reasonably shall deem necessary, if the Company shall
desire to obtain medical, disability or life insurance with
respect to the Executive.
(d) The Executive shall not be required to
relocate or conduct the Company's business outside the Denver,
Colorado area in order to perform his duties under this Agreement
but shall undertake such reasonable business travel as may be
necessary to perform said duties (for which the Executive shall
be reimbursed pursuant to Section 4 below for costs and expenses
incurred in connection therewith).
2. Employment Term. This Agreement shall commence on
May 30, 1997 and shall continue in effect through May 29, 1999;
provided, however, that, on May 30, 1999 and on each May 30
thereafter, the term of this Agreement shall automatically be
extended for one additional year beyond such May 30 unless, not
later than the immediately preceding February 28, either the
Executive or the Company shall have given notice to the other not
to extend this Agreement.
3. Compensation. For all services rendered by the
Executive pursuant to this Agreement:
(a) The Company shall pay to the Executive an annual
base salary at the following rates:
(i) for the period from May 30, 1997 through
May 29, 1998 - $145,000;
(ii) for the period from May 30, 1998 through
May 29, 1999 - $149,350; and
(iii) for each additional year thereafter, the
annual base salary for the immediately
preceding year plus three percent (3%) of
such annual base salary.
All such compensation shall be paid bi-weekly or at such other
regular intervals, not less frequently than monthly, as the
Company may establish from time to time for executive officers of
the Company.
(b) In addition to the compensation set forth in
subsection 3(a) above, during the term of this Agreement, the
Executive may be entitled to a cash bonus after the end of each
calendar year based upon the Executive's and the Company's
performance during such calendar year, as may be determined by
the Compensation Committee. The Company shall announce to the
Executive the amount of his bonus for each year during December
of such year (or during the month in which this Agreement shall
expire, if applicable) and pay such bonus during the following
January (or during the month following expiration of this
Agreement, as the case may be), unless otherwise agreed to by the
Executive and the Company.
4. Expenses. (a) The Company shall reimburse the
Executive for all out-of-pocket expenses actually and necessarily
incurred by him in the conduct of the business of the Company
against reasonable substantiation submitted with respect thereto.
(b) Unless the provisions of subsection 4(c) below
shall apply, the Company shall reimburse the Executive for all
legal fees and related expenses (including the costs of experts,
evidence and counsel) paid by the Executive as a result of (i)
the termination of Executive's employment (including all such
fees and expenses, if any, incurred in contesting or disputing
any such termination of employment), (ii) the Executive seeking
to obtain or enforce any right or benefit provided by this
Agreement or by any other plan or arrangement maintained by the
Company under which the Executive is or may be entitled to
receive benefits or (iii) any action taken by the Company against
the Executive; provided, however, that the Company shall
reimburse the legal fees and related expenses described in this
subsection 4(b) only if and when a final judgement has been
rendered in favor of the Executive and all appeals related to any
such action have been exhausted.
(c) The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel)
incurred by the Executive as they become due as a result of (i)
the termination of Executive's employment (including all such
fees and expenses, if any, incurred in contesting or disputing
any such termination of employment), (ii) the Executive seeking
to obtain or enforce any right or benefit provided by this
Agreement or by any other plan or arrangement maintained by the
Company under which the Executive is or may be entitled to
receive benefits or (iii) any action taken by the Company against
the Executive, unless and until such time that a final judgement
has been rendered in favor of the Company and all appeals related
to any such action have been exhausted; provided, however, that
the circumstances set forth above occurred on or after a change
in control of the Company.
(d) For purposes of this Agreement, a "change in
control of the Company" shall be deemed to occur if:
(i) there shall have occurred a change in
control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as in effect on the date hereof, whether or
not the Company is then subject to such reporting requirement,
provided, however, that there shall not be deemed to be a "change
in control" of the Company if immediately prior to the occurrence
of what would otherwise be a "change in control" of the Company
(a) the Executive is the other party to the transaction (a
"Control Event") that would otherwise result in a "change in
control" of the Company or (b) the Executive is an executive
officer, trustee, director or more than 5% equity holder of the
other party to the Control Event or of any entity, directly or
indirectly, controlling such other party,
(ii) the Company merges or consolidates with, or
sells all or substantially all of its assets to, another company
(each, a "Transaction"), provided, however, that a Transaction
shall not be deemed to result in a "change in control" of the
Company if (a) immediately prior thereto the circumstances in
(i)(a) or (i)(b) above exist, or (b) (1) the shareholders of the
Company, immediately before such Transaction own, directly or
indirectly, immediately following such Transaction in excess of
fifty percent (50%) of the combined voting power of the
outstanding voting securities of the corporation or other entity
resulting from such Transaction (the "Surviving Corporation") in
substantially the same proportion as their ownership of the
voting securities of the Company immediately before such
Transaction and (2) the individuals who were members of the
Company's Board of Trustees immediately prior to the execution of
the agreement providing for such Transaction constitute at least
a majority of the members of the board of directors or the board
of trustees, as the case may be, of the Surviving Corporation, or
of a corporation or other entity beneficially directly or
indirectly owning a majority of the outstanding voting securities
of the Surviving Corporation, or
(iii) the Company acquires assets of another
company or a subsidiary of the Company merges or consolidates
with another company (each, an "Other Transaction") and (a) the
shareholders of the Company, immediately before such Other
Transaction own, directly or indirectly, immediately following
such Other Transaction 50% or less of the combined voting power
of the outstanding voting securities of the corporation or other
entity resulting from such Other Transaction (the "Other
Surviving Corporation") in substantially the same proportion as
their ownership of the voting securities of the Company
immediately before such Other Transaction or (b) the individuals
who were members of the Company's Board of Trustees immediately
prior to the execution of the agreement providing for such Other
Transaction constitute less than a majority of the members of the
board of directors or the board of trustees, as the case may be,
of the Other Surviving Corporation, or of a corporation or other
entity beneficially directly or indirectly owning a majority of
the outstanding voting securities of the Other Surviving
Corporation, provided, however, that an Other Transaction shall
not be deemed to result in a "change in control" of the Company
if immediately prior thereto the circumstances in (i)(a) or
(i)(b) above exist.
5. Benefits. The Executive shall be entitled to such
paid vacation time each year and such other medical benefits as
are afforded from time to time to all executive officers of the
Company (other than the Chairman of the Board and the President).
The Company shall indemnify the Executive in the performance of
his duties pursuant to the bylaws of the Company and to the
fullest extent allowed by applicable law, including, without
limitation, legal fees.
6. Earlier Termination. (a) If the Executive shall
die during the term of this Agreement, this Agreement shall be
deemed to have been terminated as of the date of the Executive's
death, and the Company shall pay to the legal representative of
the Executive's estate all monies due hereunder prorated through
the last day of the month during which the Executive shall have
died, as well as a bonus equal to the product of (x) the base
salary payable to the Executive pursuant to subsection 3(a) from
January 1 of the year in which the Executive shall have died
through the last day of the month during which the Executive
shall have died and (y) the greater of (i) 1/2 or (ii) the
percentage of the Executive's base salary for the immediately
preceding fiscal year that was paid to the Executive as a bonus
for the immediately preceding fiscal year, expressed as a
fraction (the greater of clauses (i) and (ii) being herein
referred to as the "Deemed Bonus Fraction").
(b) If the Executive shall fail, because of illness or
incapacity, to render the services contemplated by this Agreement
for six consecutive months or for shorter periods aggregating
nine months in any calendar year, the Company may determine (as
set forth in subsection (d) below) that the Executive has become
disabled. If within thirty (30) days after the date on which
written notice of such determination is given to the Executive,
the Executive shall not have returned to the continuing full-time
performance of his duties hereunder, this Agreement and the
employment of the Executive hereunder shall be deemed terminated
and the Company shall pay to the Executive all monies due
hereunder prorated through the last day of the month during which
such termination shall occur, as well as a bonus equal to the
product of (x) the base salary payable to the Executive pursuant
to subsection 3(a) from January 1 of the year in which this
Agreement is terminated through the last day of the month during
which this Agreement is terminated and (y) the Deemed Bonus
Fraction.
(c) The Company, by written notice to the Executive
specifying the reason therefor, may terminate this Agreement for
Cause as determined pursuant to subsection (d) below. As used
herein, "Cause" shall be defined as actions by the Executive
which constitute malfeasance. Malfeasance includes, but is not
limited to, the Executive engaging in fraud, dishonest conduct or
other criminal conduct.
(d) A determination of disability or Cause shall be
made in the reasonable and sole discretion of the Company's
Chairman of the Board of the Company. The Company's Board of
Directors shall, upon request of the Executive, review the
decision of whether the Executive has become disabled or has been
discharged, released or terminated for Cause and the Board of
Directors shall confirm, modify or reverse such determination in
its sole discretion.
(e) The Executive may terminate this Agreement if any
change in control of the Company occurs.
7. Compensation Upon Termination Upon a Change in
Control. (a) If after a change in control of the Company the
Executive's employment shall be terminated (I) by the Company
other than for Cause or (II) by the Executive, then the Executive
shall be entitled to the benefits provided below:
(i) the Company shall pay the Executive, not
later than the date of termination, (x) his full base
salary through the date of termination, (y)
compensation for accrued vacation time, plus (z) a pro
rata portion of the Executive's annual bonus for the
calendar year in which the termination occurs, assuming
that the Executive would have received a bonus for such
full calendar year equal to the product of (A) the base
salary that would be payable to the Executive pursuant
to subsection 3(a) for such full calendar year and (B)
the Deemed Bonus Fraction;
(ii) the Company shall pay as severance pay to
the Executive, not later than the date of termination,
a lump sum severance payment (the "Severance Payment")
equal to the greater of (x) the aggregate of all
compensation due to the Executive hereunder had his
employment not been so terminated (without duplication
of subsection 7(a)(i) above), including, without
limitation, all bonus payments which would have been
due to the Executive pursuant to subsection 3(b),
through the expiration of this Agreement assuming that
the Executive would have received a bonus for each
calendar year through the expiration of this Agreement
equal to the product of (A) the base salary payable to
the Executive pursuant to subsection 3(a) for each such
calendar year and (B) the Deemed Bonus Fraction, or
(y) 2 times the "base amount" within the meaning of
Sections 280G(b)(3) and 280G(d) of the Internal Revenue
Code of 1986, as amended (the "Code"), and any
applicable temporary or final regulations promulgated
thereunder, or its equivalent as provided in any
successor statute or regulation. If Section 280G of
the Code (and any successor provisions thereto) shall
be repealed or otherwise be inapplicable, then the
Severance Payment under clause (ii)(y) above shall
equal 2 times the average of the Executive's annual
compensation during the three calendar year period
preceding the calendar year in which the date of
termination occurs. For purposes of determining annual
compensation in the preceding sentence, compensation
payable to the Executive by the Company (including
Wellsford Residential) shall include every type and
form of compensation includible in the Executive's
gross income in respect of his employment by the
Company (including Wellsford Residential) (including,
without limitation, all income reported on an Internal
Revenue Service Form W-2), compensation income
recognized as a result of the Executive's exercise of
stock options or sale of the stock so acquired and
including, without limitation, any annual bonus
payments previously paid to such Executive. For
purposes of calculating the "base amount" within the
meaning of Sections 280G(b)(3) and 280G(d) of the Code
and annual compensation in the second preceding
sentence, any income of the Executive that constitutes
a "parachute payment" within the meaning of Section
280G(b)(2) of the Code shall not be taken into account
in making such calculations; and
(iii) an amount equal to the Additional Amount
pursuant to Section 8 below.
(b) The Executive shall not be required to mitigate
the amount of any payment provided for in this Section 7 by
seeking other employment or otherwise, nor shall the amount of
any payment or benefit provided for in this Section 7 be reduced
by any compensation earned by him as the result of employment by
another employer or by retirement benefits after the date of
termination, or otherwise, except as specifically provided in
this Section 7.
8. Additional Amount. Whether or not Section 7 is
applicable, if in the opinion of tax counsel selected by the
Executive and reasonably acceptable to the Company, the Executive
has or will receive any compensation or recognize any income
(whether or not pursuant to this Agreement or any plan or other
arrangement of the Company and whether or not the Executive's
employment with the Company has terminated) which constitute an
"excess parachute payment" within the meaning of Section
280G(b)(1) of the Code (or for which a tax is otherwise payable
under Section 4999 of the Code), then the Company shall pay the
Executive an additional amount (the "Additional Amount") equal to
the sum of (i) all taxes payable by the Executive under Section
4999 of the Code with respect to all such excess parachute
payments (or otherwise) and the Additional Amount, plus (ii) all
federal, state and local income taxes payable by Executive with
respect to the Additional Amount. The amounts payable pursuant
to this Section 8 shall be paid by the Company to the Executive
within 30 days of the written request therefor made by the
Executive.
9. Protection of Confidential Information; Non-
Competition.
(a) The Executive acknowledges that (i) the
Company will suffer substantial damage which will be difficult to
compute if the Executive violates any of the provisions of this
Section 9, and (ii) the provisions of this Agreement are
reasonable and necessary for the protection of the business of
the Company.
(b) The Executive agrees that he will not at
any time, either during the term of this Agreement or thereafter,
divulge to any person, firm or corporation any material
information obtained or learned by him during the course of his
employment with the Company, with regard to the operational,
financial, business or other affairs of the Company, its officers
or directors, except (i) in the course of performing his duties
hereunder, (ii) with the Chairman of the Board's or President's
express written consent; (iii) to the extent that any such
information is in the public domain other than as a result of the
Executive's breach of any of his obligations hereunder; or (iv)
where required to be disclosed by court order, subpoena or other
government process.
(c) Upon termination of his employment with the
Company, or any time the Company may so request, the Executive
will promptly deliver to the Company all memoranda, notes,
records, reports, manuals, drawings, blueprints, software and
other documents (and all copies thereof) relating to the business
of the Company and all property associated therewith, which he
may then possess or have under his control.
(d) During the term of this Agreement and any
renewal hereof (including any remaining portion of the stated
term of this Agreement or any renewal term hereof following the
termination of the Executive's employment by the Executive unless
such termination occurs after a change in control of the
Company), and provided the Executive's employment has not been
terminated by the Company with or without Cause, the Executive
without the prior written permission of the Chairman of the Board
or President shall not in the United States, its territories or
possessions, directly or indirectly, (i) enter into the employ of
or render any services to any person, firm or corporation engaged
in any competitive business; (ii) engage in any competitive
business for his own account; (iii) become associated with or
interested in any competitive business as an individual, partner,
shareholder, creditor, director, officer, principal, agent,
employee, director, consultant, advisor or in any other
relationship or capacity; (iv) employ or retain, or have or cause
any other person or entity to employ or retain, any person who
was employed or retained by the Company while the Executive was
employed by the Company; or (v) solicit, interfere with, or
endeavor to entice away from the Company any of its customers or
sources of supply. However, nothing in this Agreement shall
preclude the Executive from investing his personal assets in the
securities of any corporation or other business entity which is
engaged in a competitive business if such securities are traded
on a national stock exchange or in the over-the-counter market
and if such investment does not result in his beneficially
owning, at any time, more than 1% of the publicly-traded equity
securities of such competitor. A competitive business shall not
include (i) any privately owned enterprise or (ii) any publicly
owned enterprise engaged in such a business outside of the
geographic regions and states in which the Company operates at
the time of the termination of this Agreement.
(e) If the Executive commits a breach of any of
the provisions of subsection (b) or (d) above, the Company shall
have the right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity juris-
diction, it being acknowledged and agreed by the Executive that
the services being rendered hereunder to the Company are of a
special, unique and extraordinary character and that any such
breach or threatened breach will cause irreparable injury to the
Company and that money damages will not provide an adequate
remedy to the Company. Each of the rights and remedies
enumerated in this subsection (e) shall be independent of the
other, and shall be severally enforceable, and such rights and
remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company under law or equity.
(f) If any provision of subsection (b) or (d)
is held to be unenforceable because of the scope, duration or
area of its applicability, the tribunal making such determination
shall have the power to modify such scope, duration, or area, or
all of them, and such provision or provisions shall then be
applicable in such modified form.
10. Governing Law; Arbitration. This Agreement shall
be governed by, and construed in accordance with, the internal
laws of the State of New York, without regard to New York's
conflicts of law principles. Any dispute or controversy arising
under this Agreement, or out of the interpretation hereof, or
based upon the breach hereof, shall be resolved by arbitration
held at the offices of the American Arbitration Association in
the City of New York in accordance with the rules and regulations
of such association prevailing at the time of the demand for
arbitration by either party hereto, and the decision of the
arbitrator or arbitrators shall be final and binding upon both
parties hereto, provided, however, that the arbitrator or
arbitrators shall only have the power and authority to interpret,
and not to modify or amend, the terms and provisions hereof.
Judgment upon an award rendered by the arbitrator or arbitrators
may be entered in any court having jurisdiction thereof.
Notwithstanding anything contained in this Section 10, either
party shall have the right to seek preliminary injunctive relief
in any court in the City of New York in aid of, and pending the
final decision in, the arbitration proceeding.
11. Entire Agreement. This Agreement sets forth the
entire agreement of the parties and is intended to supersede all
prior employment negotiations, understandings and agreements. No
provision of this Agreement may be waived or changed, except by a
writing signed by the party to be charged with such waiver or
change.
12. Successors; Binding Agreement. This Agreement
shall inure to the benefit of and be enforceable by the Execu-
tive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees.
13. Notices. All notices provided for in this Agree-
ment shall be in writing, and shall be deemed to have been duly
given when delivered personally to the party to receive the same,
when given by telex, telegram or mailgram, or when mailed first
class postage prepaid, by registered or certified mail, return
receipt requested, addressed to the party to receive the same at
his or its address above set forth, or such other address as the
party to receive the same shall have specified by written notice
given in the manner provided for in this Section 13. All notices
shall be deemed to have been given as of the date of personal
delivery, transmittal or mailing thereof.
14. Severability. If any provision in this Agreement
is determined to be invalid, it shall not affect the validity or
enforceability of any of the other remaining provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date first above written.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------
Xxxxxx Xxxxxxxxx
President
EXECUTIVE:
/s/ Xxxxx X. Xxxxxx
-----------------------------
Xxxxx X. Xxxxxx
