EMPLOYMENT AGREEMENT
AGREEMENT, dated as of May 3, 1999, between WELLSFORD REAL PROPERTIES,
INC., a Maryland corporation with offices at 535 Madison Avenue, New York, New
York 10022 (the "Company"), and RODNEY F. DU BOIS, an individual residing at 32
Rip Road, Hanover, New Hampshire 03755 (the "Executive").
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
Chairman of the Board and Chief Operating Officer to perform (i) such executive
or administrative services for the Company consistent with those of a Vice
Chairman of the Board as may be assigned to the Executive by the Chairman of the
Board and the directors of the Company and (ii) such services consistent with
those of a Chief Operating Officer for companies engaged in similar activities
in the real estate business, as may reasonably be assigned to the Executive by
the Chairman of the Board, President or Chief Executive Officer of the Company.
The Executive hereby accepts such employment and agrees to perform such
services.
(b) The Executive shall devote such time, attention and energies during
business hours to the performance of his duties hereunder as is necessary to
properly carry out the responsibilities of his office, provided, however, that
the amount of time devoted to his duties shall not exceed 140 days per annum.
(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 work out of the Company's business offices located
in Hanover, New Hampshire but shall undertake such reasonable business travel as
may be necessary to perform his duties under this Agreement, including without
limitation, traveling to the Company's New York offices (for which the Executive
shall be reimbursed pursuant to Section 4 below for costs and expenses incurred
in connection therewith); provided, that the Executive's business travel shall
not, in the aggregate, exceed10 days in any given month.
2. Employment Term. This Agreement shall commence on May 3, 1999 and
shall continue in effect through May 2, 2001.
Exhibit 10.87 Page 1
3. Compensation. For all services rendered by the Executive pursuant to
this Agreement:
(a) The Company shall pay to the Executive (i) an annual base salary
consisting of $200,000 per annum ("Cash Compensation") and (ii) 20,000
restricted shares ("Restricted Shares") of common stock, $.01 par value per
share, of the Company, to be issued to the Executive on the date hereof,
provided that one-eighth of such Shares shall vest quarterly on the second day
of each August, November, February and May during the term of this Agreement and
the Shares shall be subject to the other terms and conditions set forth in that
certain Restricted Share Grant Letter Agreement (the "Restricted Share
Agreement") entered into between Executive and the Company as of the date
hereof. All Cash Compensation shall be paid bi- weekly or at such other regular
intervals, not less frequently than monthly, as the Company may establish from
time to time for executive employees of the Company.
(b) In addition to the compensation set forth in subsection 3(a) above, the
Executive shall be awarded such bonus for each calendar year or partial calendar
year of his employment hereunder as the Board of Directors of the Company shall
determine in their sole discretion. In determining such bonus, the Executive
understands that the directors will consider, without limitation, the following
factors with respect to the applicable calendar year or partial calendar year:
the Company's financial performance, business performance and growth during such
period; Executive's responsibilities as an officer of the Company (including his
participation in transactions of particular financial or business significance
to the Company) during such period; the total compensation package paid to
executive officers having similar responsibilities as the Executive who are
employed by entities which are similar to the Company; and such other factors as
the directors may deem appropriate in their sole discretion. Such bonus may
consist of cash; grants of Shares; options to purchase Shares; loans to purchase
Shares; share appreciation rights (whether independent of or in conjunction with
awards of options); and such other awards as the directors in their sole
discretion may deem appropriate and which they believe are in furtherance of the
growth of long-term stockholder value of the Company.
Exhibit 10.87 Page 2
(c) As of the date hereof, the Executive shall be granted options (the
"Options") to purchase 100,000 Shares. Options with respect to 50,000 Shares
shall vest on each of December 15, 1999 and December 15, 2000. The Options shall
have an exercise price of $10.06 per share and other terms and conditions
substantially similar to those set forth in the options then most recently
granted generally to executive officers of the Company, as more specifically set
forth in those certain Share Option Agreements (the "Share Option Agreements")
to be entered into between the Executive and the Company as of the date hereof.
To the greatest extent reasonably possible, the Company shall use its best
efforts to ensure that the options granted to the Executive qualify as incentive
stock options. Consistent with the qualification of the Options as incentive
stock options, the Options shall have an exercise period equal to the shorter of
10 years from the date hereof or 90 days after the date of termination of
Executive's employment with the Company. Notwithstanding the foregoing, in the
event that (i) the Executive's employment with the Company is terminated for
reasons other than for Cause (as defined below), (ii) the Executive continues to
serve as a member of the Company's Board of Directors and (iii) the Executive
does not exercise all of the Options within 90 days of such termination, all
unexercised Options shall automatically, without any action, be converted into
non-qualified stock options generally having the same terms and conditions as
are set forth in the Share Option Agreements except that such Options shall be
exercisable by the Executive during the remainder of the period that ends on the
shorter of 10 years from the date hereof or 5 years from the date that the
Executive ceases to serve as a director.
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, (iii) the Executive's hearing before the directors as
contemplated in subsection 6(c) of this Agreement or (iv) any action taken by
the Company against the Executive; provided, however, that the Company shall
reimburse the legal fees and related expenses described in this subsection 4(b)
only if and when a final judgement has been rendered in favor of the Executive
and all appeals related to any such action have been exhausted.
(c) The Company shall pay all legal fees and related expenses (including
the costs of experts, evidence and counsel) incurred by the Executive as they
become due as a result of (i) the termination of Executive's employment
(including all such fees and expenses, if any, incurred in contesting or
disputing any such termination of employment), (ii) the Executive seeking to
obtain or enforce any right or benefit provided by this Agreement or by any
other plan or arrangement maintained by the Company under which the Executive is
or may be entitled to
Exhibit 10.87 Page 3
receive benefits, (iii) the Executive's hearing before the directors as
contemplated in subsection 6(c) of this Agreement or (iv) any action taken by
the Company against the Executive, unless and until such time that a final
judgement has been rendered in favor of the Company and all appeals related to
any such action have been exhausted; provided, however, that the circumstances
set forth above occurred on or after a change in control of the Company.
(d) For purposes of this Agreement, a "change in control of the Company"
shall be deemed to occur if:
(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") 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
Exhibit 10.87 Page 4
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 and other benefits as are afforded from time to
time to all executive employees of the Company. The Company shall indemnify the
Executive in the performance of his duties pursuant to the bylaws of the Company
and to the fullest extent allowed by applicable law, including, without
limitation, legal fees.
6. Earlier Termination. (a) If the Executive shall 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.
(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.
(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 (i) fraud, illegal or willful misconduct or dishonest
conduct, (ii) a breach of any duties, responsibilities or obligations hereunder
or (iii) habitual abuse of drugs or alcohol. In such event, the Executive shall
be paid the Executive's full base salary through the date of termination at the
rate in effect at the time notice of termination is given and the Company shall
thereafter have no further obligations to this Executive under this Agreement.
(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 Company or Executive may terminate this Agreement if any change in
control of the Company occurs.
Exhibit 10.87 Page 5
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 (w) the
Company shall pay the Executive, not later than the date of termination, all
Cash Compensation payable to the Executive under this Agreement through the
Termination Date, including compensation for accrued vacation time, (x) the
Company shall pay the Executive 2.99 times the "base amount" (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, (y) all Restricted Shares granted to the
Executive hereunder shall immediately vest in accordance with the terms and
conditions of the Restricted Share Agreement and (z) all Options granted to the
Executive hereunder shall immediately vest and be exercisable in accordance with
the terms of the Share Option Agreements dated as of the date hereof. If Section
280G of the Code (and any successor provisions thereto) shall be repealed or
otherwise be inapplicable, then the Base Amount payable under clause (x) above
shall equal 2.99 times the average of the Executive's annual compensation during
the term of this Agreement. 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 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),
compensation 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 290G(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.
(b) To the extent any benefits to be granted to the Executive hereunder
constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the
Code, and the Executive would otherwise be liable for an excise tax pursuant to
Code Section 4999, there shall be a reduction in the benefits payable or
available to the Executive hereunder such that the total parachute payments will
be less than three (3) times the Executive's Base Amount with the result that
the excise tax under Code Section 4999 will not be payable; provided, however,
that such reduction shall occur only if the Executive shall realize a greater
after tax economic benefit by making such reduction than if no reduction were
made.
(c) 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.
Exhibit 10.87 Page 6
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 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) For the longer of (i) 1 year from the date hereof or (ii) the term of
this Agreement (including any remaining portion of the stated term of this
Agreement following the termination of the Executive's employment by the
Executive or by the Company for Cause, 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 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 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.
Exhibit 10.87 Page 7
(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 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 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 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 Agreement sets forth the entire agreement of the
parties and is intended to supersede all prior employment negotiations,
understandings and agree ments. 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.
11. Successors; Binding Agreement. 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.
12. 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
Exhibit 10.87 Page 8
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 Agreement is determined to be
invalid, it shall not affect the validity or enforceability of any of the other
remaining provisions hereof.
Exhibit 10.87 Page 9
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
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Name: Edward Lowenthal
Title: President
EXECUTIVE:
/s/ Rodney F. Du Bois
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Rodney F. Du Bois
Exhibit 10.87 Page 10