-----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, UP10PTPnI6CJm7gjLrTBfK3YFQa+omFgDbFfEZd6jSxyCI/NJ6W338BDBIXfkIUC aba0jCORIsPvUkOFUl4O6A== 0000950130-97-002622.txt : 19970529 0000950130-97-002622.hdr.sgml : 19970529 ACCESSION NUMBER: 0000950130-97-002622 CONFORMED SUBMISSION TYPE: 10-12B/A PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19970528 SROS: NYSE 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: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-12B/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-12917 FILM NUMBER: 97615356 BUSINESS ADDRESS: STREET 1: 610 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 2123332300 10-12B/A 1 AMENDMENT #2 TO FORM 10 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ________________ FORM 10/A Amendment No. 2 GENERAL FORM FOR REGISTRATION OF SECURITIES PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 Wellsford Real Properties, Inc. - ----------------------------------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Maryland 13-3926898 - --------------------------------------------- ------------------ (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 610 Fifth Avenue, New York, New York 10020 - --------------------------------------------- ------------------ (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (212) 333-2300 ------------------ Securities to be registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which to be so Registered Each Class is to be Registered ------------------- ------------------------------ Common Stock, $.01 par American Stock Exchange value per share ---------------------- ------------------------------ Securities to be registered pursuant to Section 12(g) of the Act: None - ----------------------------------------------------------------------------- (Title of Class) WELLSFORD REAL PROPERTIES, INC. Note: Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (each, Application of Safe Harbor for Forward-Looking Statements), do not apply to this Registration Statement on Form 10. Form 10 Item No. and Heading 1. Business............... Incorporated herein by reference to Exhibit 10.35 pages 2, 17-23, 101-115 and 121-134. 2. Financial Information Financial information for year ended December 31, 1996 is incorporated herein by reference to Exhibit 10.35, pages 22-23 and 121. WELLSFORD REAL PROPERTIES, INC. (PREDECESSOR) SUMMARY UNAUDITED PRO FORMA COMBINED FINANCIAL DATA The following tables set forth the summary unaudited pro forma combined financial data for Wellsford Real Properties, Inc. (Predecessor) as a combined entity, giving effect to the Merger, Contribution and Distribution as if they had occurred on the dates indicated herein, after giving effect to the pro forma adjustments described in the notes to the unaudited pro forma combined financial statements included elsewhere in this Registration Statement on Form 10. The summary unaudited pro forma combined operating data are presented as if the Merger, Contribution and Distribution had been consummated on January 1, 1997. In addition to the Merger, Contribution and Distribution, the pro forma combined operating data gives effect to certain material events which occurred between January 1, 1997 and April 30, 1997, as if they had occurred on January 1, 1997. See the notes to the unaudited Pro Forma Combined Income Statement for the three months ended March 31, 1997 included elsewhere in this Registration Statement on Form 10. The summary unaudited pro forma combined balance sheet data are presented as if the Merger, Contribution and Distribution had occurred on March 31, 1997. In addition to the Merger, Contribution and Distribution, the pro forma combined balance sheet data gives effect to certain material events set forth in the previous paragraph which occurred between April 1, 1997 and April 30, 1997 as if they had occurred on March 31, 1997. See the notes to the unaudited Pro Forma Combined Balance Sheet at March 31, 1997 included elsewhere in this Registration Statement on Form 10. In the opinion of management, all necessary adjustments necessary to reflect the effects of the Merger, Contribution and Distribution have been made. The summary unaudited pro forma financial data should be read in conjunction with, and is qualified in its entirety by, the historical financial statements and notes thereto of Wellsford Real Properties, Inc. (Predecessor) included in this Registration Statement on Form 10. The summary unaudited pro forma operating and balance sheet data are presented for comparative purposes only and are not necessarily indicative of what the actual combined results of Wellsford Real Properties, Inc. (Predecessor) would have been for the period and as of the date presented, nor does such data purport to represent the results of future periods. Wellsford Real Properties, Inc. (Predecessor) Summary Unaudited Combined Financial Data Pro Forma Historical Three Months Three Months Ended March 31, 1997 Ended March 31, 1997 ___________________ _________________ (Unaudited) (Unaudited) (In thousands except per share data) OPERATING DATA: Revenues: Rental income $762 Other income 40 Interest income 989 $401 _____ ___ 1,791 401 _____ ___ Expenses: Property operating and maintenance 211 Real estate taxes 107 Interest 388 General and administrative 438 Depreciation 128 Property management 34 _____ ___ 1,306 0 _____ ___ Income before income taxes 485 401 Provision for income taxes 198 _____ ____ Net income $287 $401 ===== ==== Net income per common share $0.06 Weighted average common shares outstanding 4,877 Pro Forma Historical March 31, 1997 March 31, 1997 ______________ _______________ (Unaudited) (Unaudited) (In thousands) BALANCE SHEET DATA: Real estate (prior to depreciation) $71,506 $47,806 Mortgage notes and interest receivable $37,934 $17,934 Cash and cash equivalents $1,743 $0 Restricted cash $3,198 $3,198 Total assets $114,381 $68,938 Total debt $62,755 $36,366 Total equity $49,185 $32,572 OTHER DATA: Funds from Operations(2) $415 $401 EBITDA(1)(2) $1,001 $401 Cash flows from operating activities $2,609 $2,723 Cash flows from investing activities ($70,200) ($26,500) Cash flows from financing activities $69,220 $23,777 - ---------- (1) EBITDA represents earnings before interest, taxes, depreciation and amortization. (2) Neither Funds from Operations nor EBITDA represents cash generated from operating activities in accordance with GAAP and therefore should not be considered alternatives to net income as indicators of the Company's operating performance or as alternatives to cash flow as a measure of liquidity and are not necessarily indicative of cash available to fund cash needs. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION OF WELLSFORD REAL PROPERTIES, INC. (PREDECESSOR) Overview The following discussion should be read in conjunction with the Wellsford Real Properties Inc. (Predecessor) (the "Company") financial statements contained herein. Results of Operations The Company's operations during the three months ended March 31, 1997 consisted of owning a mortgage note receivable, upon which the Company earned $401,000 of interest income, and developing two multifamily communities located in a suburb of Denver, Colorado with a total of 760 units under development. In addition, the Company purchased four commercial office properties, all of which are currently vacant and undergoing renovations. Liquidity and Capital Resources The Company expects to meet its short-term liquidity requirements generally through its working capital and cash flow provided by operations. The Company considers its ability to generate cash to be adequate and expects it to continue to be adequate to meet operating requirements both in the short and long terms. The Company expects to meet its long-term liquidity requirements such as refinancing mortgages, financing acquisitions and development, and financing capital improvements and debt and equity investments in real estate companies by long-term borrowings, through the issuance of debt and the offering of additional debt and equity securities. The Company has received a commitment from the Bank of Boston and Morgan Guaranty that they will provide a $50 million credit facility, subject to customary conditions, which would be available to fund acquisitions, debt and equity investments, development, capital expenditures, repayment of indebtedness and related expenditures. The Company expects to obtain this credit facility concurrently with the closing of the Merger and Distribution. The commitment received is subject to customary conditions and documentation. In December 1995, the Company marketed and sold $14.8 million of tax- exempt bonds to fund construction at Palomino Park. The bonds have a variable rate of interest and a term of 40 years. At March 31, 1997, $3.2 million of the bond proceeds were being held in escrow pending their use for the funding of development. In July 1996, the Company originated the Sonterra Loan. The Sonterra Loan bears interest at 9% per annum and matures in July 1999. The Company also has the exclusive option to purchase the community for $20.5 million through December 1997 and for $21 million during 1998. Funds from Operations The Company and industry analysts generally consider funds from operations ("FFO) to be one appropriate measure of the performance of real estate companies because it is predicated on a cash flow analysis, as opposed to a measure predicated on generally accepted accounting principles ("GAAP"), which gives effect to non-cash items such as depreciation. Funds from operations as defined by the National Association of Real Estate Investment Trusts ("NAREIT") represents net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from debt restructuring and sales of property, plus depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect funds from operations on the same basis. Funds from operations does not represent cash generated from operating activities in accordance with GAAP and therefore should not be considered an alternative to net income as an indicator of the Company's operating performance or as an alternative to cash flow as a measure of liquidity and is not necessarily indicative of cash available to fund cash needs. SUMMARY STATEMENTS OF OPERATING DATA Pro Forma Historical Three Months Ended Three Months Ended March 31, 1997 March 31, 1997 ------------------ ------------------ Revenues $1,791 $401 Expenses 1,306 0 Taxes 198 0 ------ ---- Net Income 287 401 Add: Depreciation 128 0 ------ ---- Funds from Operations $415 $401 ====== ==== 3. Properties.............. Incorporated herein by reference to Exhibit 10.35, pages 20-21 and 105-110. 4. Security Ownership of Certain Beneficial Owners and Management........ Incorporated herein by reference to Exhibit 10.35, page 120. 5. Directors and Executive Officers..................... Incorporated herein by reference to Exhibit 10.35, pages 17-19 and 116-117. 6. Executive Compensation....... Incorporated herein by reference to Exhibit 10.35, pages 117-119. 7. Certain Relationships and Related Transactions......... Incorporated herein by reference to Exhibit 10.35, page 121. 8. Legal Proceedings............ Incorporated herein by reference to Exhibit 10.35, page 110. 9. Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters...................... Incorporated herein by reference to Exhibit 10.35, pages 105, 135 and 143. 10. Recent Sales of Unregistered Securities The following table is a summary of certain information relating to all securities of the Company sold by the Company within the past three years that were not registered under the Securities Act (the "Private Placement"): Persons or Class Type of Date Amount of of Persons to Securities of Securities Whom Securities Sold Sale Sold Sold Consideration - ---------- ---- ---------- ------------------- ------------- Common Stock 2/28/97 (1) Wellsford Commercial (1) Properties, L.L.C. (1) The contracts to purchase Chatham, the Point View office complex and Greenbrook were transferred to the Company by Wellsford Commercial Properties, L.L.C. ("Wellsford Commercial") for shares of Common Stock having an aggregate value of approximately $2.25 million and the Company's agreement to repay a $1.0 million advance used for the down payment on the Point View office complex. The number of shares of Common Stock issued to Wellsford Commercial upon consummation of the Distribution and Merger will be approximately 215,000, subject to adjustment based upon an issuance price per share equal to the book value per share of the Common Stock on date of closing of the Merger. The members of Wellsford Commercial include Jeffrey H. Lynford, Edward Lowenthal and the wife of Mark Germain who will be a director of the Company who hold 16.4%, 16.4% and 13.8%, respectively, of the ownership interests in Wellsford Commercial. The Company conducted the Private Placement pursuant to Section 4(2) of the Securities Act. There was no underwriter involved in the Private Placement. 11. Description of Registrant's Securities to be Registered.. Incorporated herein by reference to Exhibit 10.35, pages 135-143. 12. Indemnification of Directors and Officers................ Incorporated herein by reference to Exhibit 10.35, pages 142-143. 13. Financial Statements and Supplementary Data Financial statements and supplementary data for year ended December 31, 1996 are incorporated herein by reference to Exhibit 10.35, pages 122-134. Wellsford Real Properties, Inc. (Predecessor) Combined Balance Sheet (In thousands) March 31, 1997 _________ (Unaudited) ASSETS Real estate assets, at cost: Land $ 3,159 Buildings and improvements 17,902 ___________ 21,061 Construction in process 23,945 ___________ 45,006 Property held for sale 2,800 ___________ 47,806 Restricted cash 3,198 Mortgage note and interest receivable 17,934 ___________ Total Assets $68,938 =========== LIABILITIES AND EQUITY Tax exempt mortgage note payable $14,755 Note payable to Wellsford 21,611 ___________ Total Liabilities 36,366 ___________ Commitments and contingencies -- Common stock, $.01 par value per share, 100 shares issued and outstanding 1 Paid in capital in excess of par value 30,321 Common stock to be issued 2,250 ___________ Total Equity 32,572 ___________ Total Liabilities and Equity $68,938 =========== See accompanying notes. Wellsford Real Properties, Inc. (Predecessor) Combined Statement of Income and Equity (In thousands) Three Months Ended March 31, 1997 _____ (Unaudited) Interest income $401 _______ Net income $401 _______ Equity, January 1, 1997 $30,005 Contributions 2,166 _______ Equity, March 31, 1997 $32,572 ======= See accompanying notes. Wellsford Real Properties, Inc. (Predecessor) Combined Statement of Cash Flow (In thousands) Three Months Ended March 31, 1997 ____ (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $401 Adjustments to reconcile net income to net cash provided by operating activities: Decrease (increase) in assets: Debt service reserve 2,322 _______ Net cash provided by operating activities 2,723 _______ CASH FLOWS FROM INVESTING ACTIVITIES: Investments in real estate assets (26,500) _______ Net cash (used) in investing activities (26,500) _______ CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of note payable to Wellsford 21,611 Equity contributions 2,166 _______ Net cash provided by financing activities 23,777 _______ Net increase (decrease) in cash and cash equivalents 0 Cash and cash equivalents, beginning of period 0 _______ Cash and cash equivalents, end of period $0 _______ Cash paid during the period for interest $343 ======= See accompanying notes. WELLSFORD REAL PROPERTIES, INC. (PREDECESSOR) NOTES TO COMBINED FINANCIAL STATEMENTS (Unaudited) (1) Organization and Basis of Presentation Wellsford Real Properties, Inc. ("WRP Newco"), a C corporation formed on January 8, 1997, is a subsidiary of Wellsford Residential Property Trust ("Wellsford"). On January 16, 1997 Wellsford announced its intention to merge with Equity Residential Properties Trust ("EQR"). Immediately prior to the Merger, Wellsford intends to contribute certain of its assets to WRP Newco and have WRP Newco assume certain liabilities of Wellsford. Immediately after the contribution of assets to WRP Newco and immediately prior to the Merger, Wellsford intends to distribute to its common shareholders all the outstanding shares of WRP Newco owned by Wellsford. The common shareholders of Wellsford will receive .25 of a common share of WRP Newco for each one common share of Wellsford owned. The accompanying combined financial statements of the predecessor of WRP Newco (the "Company") include approximately $45 million and $14.8 million of Wellsford's assets and liabilities, respectively, to be contributed to and assumed by WRP Newco, immediately prior to the Merger. These assets and liabilities include the restricted cash (Note 3), the Sonterra Mortgage (Note 4), the Development Communities (Note 4), and the tax exempt mortgage notes payable (Note 5). Such financial statements have been prepared using the historical basis of the assets and liabilities and historical results of operations related to such assets and liabilities. (2) Summary of Significant Accounting Policies Principles of Combination. All significant intercompany transactions between Wellsford and the subsidiaries relating to the assets and liabilities that are to be contributed or assumed by WRP Newco have been eliminated in combination. Income Recognition. Residential communities are leased under operating leases with terms generally one year or less; rental revenue is recognized monthly as it is earned. Commercial properties are leased under operating leases; rental revenue is recognized on a straight-line basis over the terms of the leases. Cash and Cash Equivalents. The Company considers all demand and money market accounts and short term investments in government funds with an original maturity of three months or less to be cash and cash equivalents. Real Estate and Depreciation. Costs directly related to the acquisition and improvement of real estate are capitalized, including interest expense incurred during and related to construction and including all improvements identified during the underwriting of a property acquisition. Depreciation is computed over the expected useful lives of depreciable property on a straight line basis, principally 40 years for buildings and improvements and 5 to 12 years for furnishings and equipment. The Company has adopted Statement of Financial Accounting Standard ("SFAS") 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of" which requires that long-lived assets to be held and used be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and that long-lived assets to be disposed of be measured at the lower of carrying amount or net realizable value. The adoption of SFAS 121 has not had an impact on the Company's combined financial position or results of operations. Mortgage Note Receivable Impairment. The Company considers a note impaired if, based on current information and events, it is probable that all amounts due under the note agreement are not collectable. Impairment is measured based upon the fair value of the underlying collateral. No impairment has been recorded through March 31, 1997. Financing Costs. Financing and refinancing costs are capitalized and amortized over the term of the related loan under the interest method. Credit facility fees are capitalized and amortized over the term of the commitment on a straight-line basis. Estimates. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. (3) Restricted Cash Restricted cash primarily consists of the remaining proceeds from the Palomino Park tax-exempt mortgage note (Note 5) which are restricted in their use to construction costs and capitalized interest related to the Palomino Park development project (Note 4). (4) Real Estate Assets, Mortgage Note Receivable and Note Payable The Company holds a $17.8 million mortgage on a 344 unit, newly constructed community in Tucson, Arizona known as Sonterra at Williams Centre (the "Sonterra Mortgage"). The Sonterra Mortgage was originated in July 1996, bears interest at 9% per annum and matures in July 1999. The Company also has the exclusive option to purchase the community for $20.5 million through December 1997 and $21 million during 1998. Interest receivable of $0.1 million is included in the March 31, 1997 balance. The fair market value of the Company's mortgage note receivable, estimated by using a discounted cash flow analysis, approximates the carrying amount. The Company currently has two multifamily projects under development in a suburb of Denver, Colorado, totaling 760 apartment units (collectively, the "Development Communities"). The Development Communities are the first of five communities at Palomino Park, a 1,880 unit master-planned, security controlled apartment/townhome community. The Company has exercised its option to purchase the land underlying phase three and has the option to develop phases four and five, but is not obligated to do so. The 181.8 acre master site surrounds an amenity-filled, 24 acre park and an approximately 29,000 square foot recreational center to be shared by all phases. The Development Communities are being constructed pursuant to fixed-price contracts, with a local developer, and are estimated to cost approximately $76.1 million in total, including certain development and incentive fees payable to the developer. The Company is committed to purchase 100% of the Development Communities upon completion and the achievement of certain occupancy levels. At March 31, 1997 the Company had invested $24 million related to the land for the Development Communities, the recreation center and general infrastructure work. A portion of such infrastructure will become the property of certain local governmental entities at the date of completion and retirement of the tax- exempt mortgage note payable described in Note 5. In addition, approximately $26.5 million was outstanding at March 31, 1997 on a construction loan to the developer, which the Company would repay upon purchase assuming completion and achievement of certain occupancy levels. During the period ended March 31, 1997, the Company capitalized $0.3 million of interest to the Development Communities. The Company expects to fund the construction of its Development Communities from its working capital and with proceeds from a credit facility and a $14.8 million tax- exempt mortgage note (Note 5). The Company has entered into contracts on five commercial office properties for $47.6 million in aggregate, and has closed on four of the properties during the first quarter of 1997. The purchase prices for these commercial properties include approximately $2.25 million in value of shares of WRP Newco Common to be issued to an entity in consideration for the assignment of the purchase contracts entered into by such entity. This amount has been classified as Common Stock to be Issued at March 31, 1997. Upon liquidation of such entity, each of the Chairman of the Board and President of Wellsford, Messrs. Lynford and Lowenthal, will receive approximately 16.4% of such shares, and the wife of Mark Germain, a trustee of Wellsford, will receive approximately 13.8% of such shares. Each are owners of such entity. The cash portion of the purchase prices for these commercial properties was funded with a loan from Wellsford which bears interest at LIBOR plus 1.50% and is expected to be repaid on the date of the Merger. Greenbrook Corporate Center ($23.7 million) is a Class A, three-story office building with a 35 foot atrium, located in Fairfield, NJ, and comprising approximately 190,000 rentable square feet. It is situated on a 20 acre developed site with 7 acres of additional, contiguous undeveloped land. Point View ($15.8 million) consists of 194 acres containing two office buildings, totaling approximately 560,000 square feet, an adjacent 10-acre undeveloped site, and a central utility plant located in Wayne, NJ. The site is currently undergoing a major renovation. The purchase of this building was closed in February 1997. 1700 Valley Road ($1.0 million) is a Class B+, two-story vacant office building located in Wayne, NJ and comprising approximately 70,600 square feet. It is situated on a nine acre site. The purchase of this building was closed in February 1997. 1800 Valley Road ($2.0 million) is a Class B+, two-story vacant office building located in Wayne, NJ and comprising approximately 54,800 square feet. It is situated on a 14 acre site. The purchase of this building was closed in February 1997. The Chatham Building ($5.1 million) is a three-story office building located in Chatham, NJ and comprising approximately 65,000 square feet. The site is currently undergoing a major renovation. The purchase of this building was closed in January 1997. (5) Tax Exempt Mortgage Notes Payable At March 31, 1997, the Company had $14.8 million of tax exempt mortgage notes payable outstanding. The Company's tax exempt mortgage note payable is secured by certain infrastructure at the Company's Palomino Park development and bears interest-only payments at a variable rate (which approximates the Standard & Poor's / J.J. Kenney index for short-term high grade tax-exempt bonds, currently 3.65 %) until it matures in December 2035. The tax-exempt mortgage note payable is security for tax-exempt bonds which are backed by a letter of credit from a AAA rated financial institution. Wellsford has guaranteed the reimbursement of the financial institution in the event that the letter of credit is drawn upon. It is anticipated that as a result of the Merger, this guaranty will be replaced by the guarantees of WRP Newco and EQR. These bonds require the Company to obtain the approval of both the trustee, as defined in the bond documents, and the above mentioned financial institution for transactions such as those anticipated in connection with the Merger and Distribution. The Company expects to receive such approvals. The fair market value of the variable rate tax exempt mortgage note is considered to be the carrying amount. (6) Commitments and Contingencies WRP Newco will enter into employment agreements with certain of its officers. Such agreements will be for terms which expire between 1999 and 2002, and will provide for aggregate annual base salaries of $0.8 million, $0.8 million and $0.6 million in 1997, 1998 and 1999 through 2002, respectively. The Company is obligated under an operating lease covering its corporate headquarters for $0.2 million in 1997, $0.2 million in 1998, and $0.2 million in 1999, plus certain operating expense escalations. As a commercial real estate owner, the Company is subject to potential environmental costs. The Company's Point View site contains asbestos containing materials ("ACMs"); the Company is proceeding with the removal of all ACMs in such property which is anticipated to cost $3.5 million. At this point in time, management of the Company is not aware of any environmental concerns that would have a material adverse effect on the Company's financial position or future results of operations except as just described. In 1997 WRP Newco will adopt a defined contribution savings plan pursuant to Section 401 of the Internal Revenue Code. Under such a plan there are no prior service costs. All employees will be eligible to participate in the plan after one year of service. Employer contributions will be made based on a discretionary amount determined by WRP Newco's management. Employer contributions, if any, will be based upon the amount contributed by an employee. Subsequent to March 31, 1997, the Company has lent $20 million of an $80 million secured subordinated mezzanine loan to an entity which owns substantially all of the equity interest (the "Equity Interests") in the owner of a 52-story, approximately 1.75 million sq.ft. Class A office building located at 277 Park Avenue, New York City (the "277 Park Loan"). The loan will be secured primarily by a pledge of the Equity Interests. The 277 Park Loan will be due in April 2007 and will bear interest at the rate of approximately 12% per annum. Wellsford Real Properties, Inc. (Predecessor) Pro Forma Combined Income Statement For the Three Months Ended March 31, 1997 (In Thousands Except Per Share Data) (Unaudited) During the period from January 1, 1997 to April 30, 1997, Wellsford Real Properties, Inc. (Predecessor) (the "Company") originated a real estate note receivable and purchased five commercial office properties. One of the commercial office properties, the Greenbrook Corporate Center, is currently occupied. This unaudited Pro Forma Combined Income Statement is presented as if the Company's transactions, each as referred to above, and the Merger and Distribution had been consummated on January 1, 1997. All of the pro forma adjustments shown are solely attributed to the transactions described. In the opinion of the Company's management, all adjustments necessary to reflect the effects of these transactions have been made. This unaudited Pro Forma Combined Income Statement is presented for comparative purposes only, and is not necessarily indicative of what the actual results of operations of the Company would have been for the period presented; nor does it purport to represent the results for future periods. This unaudited Pro Forma Combined Income Statement should be read in conjunction with, and is qualified in its entirety by, the historical financial statements and notes thereto of the Company included in this Registration Statement on Form 10. Wellsford Real Properties, Inc. (Predecessor) Pro Forma Combined Income Statement Three Months Ended March 31, 1997 (In thousands) (Unaudited) Pro Forma Merger Historical Adjustments Pro Forma ___________ ___________ __________ REVENUE Rental income $ 762 (A) $ 762 Other income 40 (A) 40 Interest income $ 401 588 (B) 989 _________ ________ _______ Total Revenue 401 1,390 1,791 _________ ________ _______ EXPENSES Property operating and maintenance 211 (A) 211 Real estate taxes 107 (A) 107 Interest 388 (C) 388 General and administrative 438 (D) 438 Depreciation 128 (E) 128 Property management 34 (A) 34 _________ ________ _______ Total Expenses 0 1,306 1,306 _________ ________ _______ Income before income taxes $ 401 $ 84 485 ========= ======== Provision for income taxes 198 (F) _______ Net Income $ 287 ======= Net income per common share $ 0.06 (G) ======= Weighted average common shares outstanding 4,877 (G) ===== Wellsford Real Properties, Inc. (Predecessor) Notes to Unaudited Pro Forma Combined Income Statement March 31, 1997 (A) Represents historical operating revenues and expenses of Greenbrook Corporate Center, which was acquired in April 1997, for the three months ended March 31, 1997. The Company's other four commercial properties are currently vacant. (B) Represents interest income from the 277 Park Loan for three months ($20 million at approximately 12%). (C) Represents interest expense on the $20 million credit facility draw used to fund the 277 Park Loan, at 7.75%. (D) Represents the estimated general and administrative costs of WRP Newco for three months. (E) Represents depreciation on Greenbrook Corporate Center for the three months ended March 31, 1997 utilizing a 40 year estimated useful life. (F) Represents provision for federal and state income taxes at rates of 35% and 9%, respectively. (G) Represents the aggregate of the shares of WRP Newco Common issued in connection with the Distribution (.25 of a share for every one share of Wellsford Common), the approximately 215,000 shares to be issued in connection with the acquisition of the commercial properties, and 335,000 shares (estimated) of WRP Newco Class A Common to be purchased by ERP Operating Partnership for $3.5 million. Wellsford Real Properties, Inc. (Predecessor) Pro Forma Combined Balance Sheet March 31, 1997 (In Thousands) (Unaudited) This unaudited Pro Forma Combined Balance Sheet is presented as if the Merger, Contribution and Distribution and the proposed credit facility agreement with Bank of Boston and Morgan Guaranty had been consummated on March 31, 1997, the real estate note receivable had been originated on March 31, 1997 and the commercial office properties purchased by Wellsford Real Properties, Inc. (Predecessor) (the "Company") had been purchased on March 31, 1997, utilizing proceeds from the Merger and Contribution and a draw from the credit facility. All of the assets and liabilities of the Company which are being transferred to the Company in connection with the Merger, Contribution and Distribution are recorded at their respective historical costs. This unaudited Pro Forma Combined Balance Sheet is presented for comparative purposes only, and is not necessarily indicative of what the actual financial position of the Company would have been at March 31, 1997; nor does it purport to represent the future financial position of the Company. This unaudited Pro Forma Combined Balance Sheet should be read in conjunction with, and is qualified in its entirety by, the historical financial statements and notes thereto of the Company included in this Registration Statement on Form 10. Wellsford Real Properties, Inc. (Predecessor) Pro Forma Combined Balance Sheet March 31, 1997 (In thousands) (Unaudited) Pro Forma Merger Historical Adjustments Pro Forma __________ ___________ __________ ASSETS Real estate assets, at cost: Land $ 3,159 $ 3,555 $ 6,714 Buildings and improvements 17,902 20,145 38,047 ________ ________ _______ 21,061 23,700 44,761 Construction in process 23,945 23,945 ________ ________ _______ 45,006 23,700 68,706 Property held for sale 2,800 2,800 ________ ________ ________ 47,806 23,700 (A) 71,506 Cash and cash equivalents 0 1,743 (B) 1,743 Restricted cash 3,198 3,198 Mortgage notes and interest receivable 17,934 20,000 (C) 37,934 ________ ________ ________ Total Assets $ 68,938 $ 45,443 $114,381 ======== ======== ======== LIABILITIES AND EQUITY Liabilities: Tax exempt mortgage note payable $ 14,755 $ 14,755 Credit facility 48,000 (D) 48,000 Note payable to Wellsford 21,611 ($21,611)(E) 0 ________ ________ ________ Total Liabilities 36,366 26,389 62,755 ________ ________ ________ Commitments and contingencies -- -- -- Minority interest 2,441 (F) 2,441 Equity: Common stock, $.01 par value per share, 4,877,066 shares issued and outstanding as adjusted 1 48 49 Paid in capital in excess of par value 30,321 18,815 49,136 Common stock to be issued 2,250 (2,250) 0 ________ ________ ________ Total Equity 32,572 16,613 (G) 49,185 ________ ________ ________ Total Liabilities and Equity $ 68,938 $ 45,443 $114,381 ======== ======== ======== Wellsford Real Properties, Inc. (Predecessor) Notes to Unaudited Pro Forma Combined Balance Sheet March 31, 1997 (A) Reflects the acquisition of one commercial office property as follows: Purchase Square Purchase Price Per Name Location Footage Price Sq. Foot ---- -------- ------- ----- -------- Greenbrook Corp. Ctr Fairfield, NJ 190,000 $23.7 million $125 Purchase Price & Actual/ Planned Planned Impr. Scheduled Name Improvements Per Sq. Foot Closing Date ---- ------------ ------------ ------------ Greenbrook Corp. Ctr $0.5 million $127 April 1997 Greenbrook Corporate Center is currently in operation. The Company's other four commercial properties are currently vacant. The purchase price is being funded with proceeds from the credit facility. (B) Reflects the net cash effect of the following transactions (in thousands): . Cash contribution to WRP Newco at Contribution $15,554 . ERP Operating Partnership's purchase of WRP Newco Common 3,500 . Repayment of note payable to Wellsford (17,311) _______ $ 1,743 ======= (C) Represents the 277 Park Loan, a $20 million portion of an $80 million subordinated mezzanine loan bearing interest at approximately 12% per annum. (D) Represents draws on the credit facility to fund the acquisition of Greenbrook Corporate Center and the 277 Park Loan and to repay the note payable to Wellsford. (E) Represents the repayment of the note payable to Wellsford which was used to fund the acquisition of the commercial office properties other than Greenbrook Corporate Center, utilizing cash on hand ($17.3 million) and proceeds from the credit facility ($4.3 million). (F) Represents ERP Operating Partnership's 20% minority interest in Palomino Park, which has been combined in the Company's Pro Forma Combined Balance Sheet. (G) Represents the aggregate of the shares of WRP Newco Common issued in connection with the Distribution (.25 of a share for every one share of Wellsford Common), the approximately 215,000 shares to be issued in connection with the acquisition of the commercial properties, and the 335,000 shares (estimated) of WRP Newco Class A Common to be purchased by ERP Operating Partnership for $3.5 million. 14. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.... Not Applicable. 15. Financial Statements and Exhibits (a) HISTORICAL Report of Independent Auditors Combined Balance Sheets at December 31, 1995, December 31, 1996 and March 31, 1997 (Unaudited) Combined Statements of Income and Equity For the Year Ended December 31, 1996 and For the Three Months Ended March 31, 1997 (Unaudited) Combined Statements of Cash Flow For the Period From March 22, 1995 to December 31, 1995, For the Year Ended December 31, 1996 and For the Three Months Ended March 31, 1997 (Unaudited) Notes to Combined Financial Statements PRO FORMA Combined Income Statements For the Year Ended December 31, 1996 (Unaudited) and For the Three Months Ended March 31, 1997 (Unaudited) Notes to Unaudited Combined Income Statements Combined Balance Sheets For the Year Ended December 31, 1996 (Unaudited) and For the Three Months Ended March 31, 1997 (Unaudited) Notes to Unaudited Combined Balance Sheets (b) See Exhibits listed below. Exhibit No. Description*** 3.1 Form of Articles of Amendment and Restatement of the Company. 3.2 Form of Articles Supplementary Classifying 335,000 Shares of Common Stock as Class A Common Stock. 3.3 Form of Articles Supplementary Classifying 2,000,000 Shares of Common Stock as Series A 8% Convertible Redeemable Preferred Stock. 3.4 Form of Bylaws of the Company. 4.1 Specimen certificate for Common Stock. 10.1 $17.8 million Loan Agreement, dated as of June 28, 1996, by and between Wellsford Residential Property Trust, as lender, and Specified Properties VIII, L.P., as borrower, relating to Sonterra.* 10.2 Option Agreement between Wellsford Residential Property Trust, as purchaser, and Specified Properties VIII, as seller, dated as of June 28, 1996, relating to Sonterra.* 10.3 Operating Agreement of Park at Highlands LLC, dated as of April 27, 1995, between Wellsford Park Highlands Corp. and Al Feld.** 10.4 First Amendment to Operating Agreement of Park at Highlands LLC, dated as of December 29, 1995, between Wellsford Park Highlands Corp. and Al Feld.* 10.5 Tri-Party Agreement by and among Park at Highlands LLC, NationsBank of Texas, N.A., Wellsford Park Highlands Corp., Wellsford Residential Property Trust and Al Feld dated December 29, 1995, relating to Blue Ridge.* 10.6 Operating Agreement of Red Canyon at Palomino Park LLC between Wellsford Park Highlands Corp. and Al Feld, dated as of April 17, 1996, relating to Red Canyon.* 10.7 Second Amended and Restated Vacant Land Purchase and Sale Agreement between Mission Viejo Company and The Feld Company dated March 23, 1995, as amended by First Amendment, dated May 1, 1996, relating to the land underlying Palomino Park.* 10.8 Trust Indenture, dated as of December 1, 1995, between Palomino Park Public Improvements Corporation ("PPPIC") and United States Trust Company of New York, as trustee, securing Wellsford Residential Property Trust's Assessment Lien Revenue Bonds Series 1995 - $14,755,000.** 10.9 Letter of Credit Reimbursement Agreement, dated as of December 1, 1995, between PPPIC, Wellsford Residential Property Trust and Dresdner Bank AG, New York Branch.** 10.10 Purchase and Sale Agreement, dated as of November 21, 1996, between Wellsford Commercial Properties, L.L.C. and American Cyanamid Company relating to Point View office complex, as amended by Amendment dated January 13, 1997, Second Amendment dated February 13, 1997 and Third Amendment dated February 28, 1997, and Indemnification and Stock Transfer Agreement, dated February 28, 1997, between American Cyanamid Company and Wellsford Wayne Corp.* 10.11 Agreement of Sale, dated December 2, 1996, between Wellsford Commercial Properties, L.L.C. and Barlax, relating to Chatham, as amended by Amendment dated December 23, 1996 and Second Amendment dated April 1, 1997.* 10.12 Agreement of Sale, dated December 23, 1996, between Wellsford Commercial Properties, L.L.C. and N.J. Greenbrook Partners, L.P, relating to Greenbrook.* 10.13 Credit Agreement, dated as of April 25, 1997, between Park Avenue Financing Company LLC, PAMC Co-Manager Inc., PAFC Management, Inc., Stanley Stahl, The First National Bank of Boston, the Company, Other Banks that may become parties to the Agreement and The First National Bank of Boston, as Agent, relating to 277 Park Avenue.** 10.14 Assignment of Member's Interest, dated as of April 25, 1997, by PAFC Management, Inc. and Stanley Stahl to The First National Bank of Boston, relating to 277 Park Avenue (relating to interests in the Park Avenue Financing Company, LLC).** 10.15 Assignment of Member's Interest, dated as of April 25, 1997, by PAMC Co-Manager Inc. and Park Avenue Financing Company, LLC to The First National Bank of Boston, relating to 277 Park Avenue (relating to interests in 277 Park Avenue, LLC).** 10.16 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley Stahl to The First National Bank of Boston, relating to 277 Park Avenue (relating to stock in Park Avenue Management Corporation).** 10.17 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley Stahl to The First National Bank of Boston, relating to 277 Park Avenue (relating to stock in PAMC Co-Manager Inc.).** 10.18 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley Stahl to The First National Bank of Boston, relating to 277 Park Avenue (relating to stock in PAFC Management, Inc.).** 10.19 Conditional Guaranty of Payment and Performance, dated as of April 25, 1997, by Stanley Stahl, relating to 277 Park Avenue.** 10.20 Cash Collateral Account Security, Pledge and Assignment Agreement, dated as of April 25, 1997, between 277 Park Avenue, LLC, Park Avenue Management Corporation, Park Avenue Financing Company LLC, PAMC Co- Manager Inc., Stanley Stahl and The First National Bank of Boston, relating to 277 Park Avenue.** 10.21 Recognition Agreement, dated as of April 25, 1997, between The First National Bank of Boston, the Company, Column Financial, Inc., Park Avenue Financing Company LLC, PAMC Co-Manager, Inc. and 277 Park Avenue, LLC, relating to 277 Park Avenue.** 10.22 Intercreditor Agreement, dated as of April 25, 1997, between the Company and The First National Bank of Boston, as Agent, relating to 277 Park Avenue.** 10.23 Form of Contribution and Distribution Agreement by and between Wellsford Residential Property Trust and the Company.* 10.24 Form of Common Stock and Preferred Stock Purchase Agreement by and between the Company and ERP Operating Limited Partnership.* 10.25 Form of Registration Rights Agreement by and between the Company and ERP Operating Limited Partnership.* 10.26 Form of Agreement Regarding Palomino Park by and between the Company and ERP Operating Limited Partnership.* 10.27 Form of Credit Enhancement Agreement by and between the Company and ERP Operating Limited Partnership, relating to Palomino Park.* 10.28 Form of Sonterra Agreement by and between the Company and ERP Operating Partnership.* 10.29 Form of 1997 Management Incentive Plan of the Company.** 10.30 Form of Rollover Stock Option Plan of the Company.** 10.31 Form of Employment Agreement between the Company and Jeffrey H. Lynford. 10.32 Form of Employment Agreement between the Company and Edward Lowenthal. 10.33 Form of Employment Agreement between the Company and Gregory F. Hughes. 10.34 Form of Employment Agreement between the Company and David M. Strong. 10.35 Joint Proxy Statement/Prospectus/Information Statement of Wellsford Residential Property Trust, Equity Residential Properties Trust ("EQR") and the Company, included in EQR's Registration Statement on Form S-4 declared effective on April 24, 1997.** 21.1 Subsidiaries of the Registrant.** 27.1 Financial Data Schedule.** ______________________________ * Previously filed as an exhibit to the Form 10 filed on April 23, 1997. ** Previously filed as an exhibit to the Form 10/A Amendment No. 1 filed on May 21, 1997. *** The Company acquired its interest in a number of these documents by assignment. SIGNATURES Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized. WELLSFORD REAL PROPERTIES, INC. By:/s/ Edward Lowenthal --------------------------------------- Edward Lowenthal President and Chief Executive Officer Dated: May 28, 1997 EXHIBIT INDEX Exhibit Number Description of Document*** 3.1 Form of Articles of Amendment and Restatement of the Company. 3.2 Form of Articles Supplementary Classifying 335,000 Shares of Common Stock as Class A Common Stock. 3.3 Form of Articles Supplementary Classifying 2,000,000 Shares of Common Stock as Series A 8% Convertible Redeemable Preferred Stock. 3.4 Form of Bylaws of the Company. 4.1 Specimen certificate for Common Stock. 10.1 $17.8 million Loan Agreement, dated as of June 28, 1996, by and between Wellsford Residential Property Trust, as lender, and Specified Properties VIII, L.P., as borrower, relating to Sonterra.* 10.2 Option Agreement between Wellsford Residential Property Trust, as purchaser, and Specified Properties VIII, as seller, dated as of June 28, 1996, relating to Sonterra.* 10.3 Operating Agreement of Park at Highlands LLC, dated as of April 27, 1995, between Wellsford Park Highlands Corp. and Al Feld.** 10.4 First Amendment to Operating Agreement of Park at Highlands LLC, dated as of December 29, 1995, between Wellsford Park Highlands Corp. and Al Feld.* 10.5 Tri-Party Agreement by and among Park at Highlands LLC, NationsBank of Texas, N.A., Wellsford Park Highlands Corp., Wellsford Residential Property Trust and Al Feld dated December 29, 1995, relating to Blue Ridge.* 10.6 Operating Agreement of Red Canyon at Palomino Park LLC between Wellsford Park Highlands Corp. and Al Feld, dated as of April 17, 1996, relating to Red Canyon.* 10.7 Second Amended and Restated Vacant Land Purchase and Sale Agreement between Mission Viejo Company and The Feld Company dated March 23, 1995, as amended by First Amendment, dated May 1, 1996, relating to the land underlying Palomino Park.* 10.8 Trust Indenture, dated as of December 1, 1995, between Palomino Park Public Improvements Corporation ("PPPIC") and United States Trust Company of New York, as trustee, securing Wellsford Residential Property Trust's Assessment Lien Revenue Bonds Series 1995 - $14,755,000.** 10.9 Letter of Credit Reimbursement Agreement, dated as of December 1, 1995, between PPPIC, Wellsford Residential Property Trust and Dresdner Bank AG, New York Branch.** 10.10 Purchase and Sale Agreement, dated as of November 21, 1996, between Wellsford Commercial Properties, L.L.C. and American Cyanamid Company relating to Point View office complex, as amended by Amendment dated January 13, 1997, Second Amendment dated February 13, 1997 and Third Amendment dated February 28, 1997 and Indemnification and Stock Transfer Agreement, dated February 28, 1997, between American Cyanamid Company and Wellsford Wayne Corp.* 10.11 Agreement of Sale, dated December 2, 1996, between Wellsford Commercial Properties, L.L.C. and Barlax, relating to Chatham, as amended by Amendment dated December 23, 1996 and Second Amendment dated April 1, 1997.* 10.12 Agreement of Sale, dated December 23, 1996, between Wellsford Commercial Properties, L.L.C. and N.J. Greenbrook Partners, L.P, relating to Greenbrook.* 10.13 Credit Agreement, dated as of April 25, 1997, between Park Avenue Financing Company LLC, PAMC Co-Manager Inc., PAFC Management, Inc., Stanley Stahl, The First National Bank of Boston, the Company, Other Banks that may become parties to the Agreement and The First National Bank of Boston, as Agent, relating to 277 Park Avenue.** 10.14 Assignment of Member's Interest, dated as of April 25, 1997, by PAFC Management, Inc. and Stanley Stahl to The First National Bank of Boston, relating to 277 Park Avenue (relating to interests in the Park Avenue Financing Company, LLC).** 10.15 Assignment of Member's Interest, dated as of April 25, 1997, by PAMC Co-Manager Inc. and Park Avenue Financing, LLC to The First National Bank of Boston, relating to 277 Park Avenue (relating to interests in 277 Park Avenue, LLC).** 10.16 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley Stahl to The First National Bank of Boston, relating to 277 Park Avenue (relating to stock in Park Avenue Management Corporation).** 10.17 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley Stahl to The First National Bank of Boston, relating to 277 Park Avenue (relating to stock in PAMC Co-Manager Inc.).** 10.18 Stock Pledge Agreement, dated as of April 25, 1997, by Stanley Stahl to The First National Bank of Boston, relating to 277 Park Avenue (relating to stock in PAFC Management, Inc.).** 10.19 Conditional Guaranty of Payment and Performance, dated as of April 25, 1997, by Stanley Stahl, relating to 277 Park Avenue.** 10.20 Cash Collateral Account Security, Pledge and Assignment Agreement, dated as of April 25, 1997, between 277 Park Avenue, LLC, Park Avenue Management Corporation, Park Avenue Financing Company LLC, PAMC Co- Manager Inc., Stanley Stahl and The First National Bank of Boston, relating to 277 Park Avenue.** 10.21 Recognition Agreement, dated as of April 25, 1997, between The First National Bank of Boston, the Company, Column Financial, Inc., Park Avenue Financing Company LLC, PAMC Co-Manager, Inc. and 277 Park Avenue, LLC, relating to 277 Park Avenue.** 10.22 Intercreditor Agreement, dated as of April 25, 1997, between the Company and The First National Bank of Boston, as Agent, relating to 277 Park Avenue.** 10.23 Form of Contribution and Distribution Agreement by and between Wellsford Residential Property Trust and the Company.* 10.24 Form of Common Stock and Preferred Stock Purchase Agreement by and between the Company and ERP Operating Limited Partnership.* 10.25 Form of Registration Rights Agreement by and between the Company and ERP Operating Limited Partnership.* 10.26 Form of Agreement Regarding Palomino Park by and between the Company and ERP Operating Limited Partnership.* 10.27 Form of Credit Enhancement Agreement by and between the Company and ERP Operating Limited Partnership, relating to Palomino Park.* 10.28 Form of Sonterra Agreement by and between the Company and ERP Operating Partnership.* 10.29 Form of 1997 Management Incentive Plan of the Company.** 10.30 Form of Rollover Stock Option Plan of the Company.** 10.31 Form of Employment Agreement between the Company and Jeffrey H. Lynford. 10.32 Form of Employment Agreement between the Company and Edward Lowenthal. 10.33 Form of Employment Agreement between the Company and Gregory F. Hughes. 10.34 Form of Employment Agreement between the Company and David M. Strong. 10.35 Joint Proxy Statement/Prospectus/Information Statement of Wellsford Residential Property Trust, Equity Residential Properties Trust ("EQR") and the Company, included in EQR's Registration Statement on Form S-4 declared effective on April 24, 1997.** 21.1 Subsidiaries of the Registrant.** 27.1 Financial Data Schedule.** ______________________________ * Previously filed as an exhibit to the Form 10 filed on April 23, 1997. ** Previously filed as an exhibit to the Form 10/A Amendment No. 1 filed on May 21, 1997. *** The Company acquired its interest in a number of these documents by assignment. EX-3.1 2 ARTICLES OF AMENDMENT AND RESTATEMENT EXHIBIT 3.1 WELLSFORD REAL PROPERTIES, INC. ARTICLES OF AMENDMENT AND RESTATEMENT FIRST: Wellsford Real Properties, Inc., a Maryland corporation (the "Corporation"), desires to amend and restate its charter as currently in effect and as hereinafter amended. SECOND: The following provisions are all the provisions of the charter currently in effect and as hereinafter amended: ARTICLE I INCORPORATOR The undersigned, Tracy A. Bacigalupo, whose address is c/o Ballard Spahr Andrews & Ingersoll, 300 East Lombard Street, Baltimore, Maryland 21202, being at least 18 years of age, does hereby form a corporation under the general laws of the State of Maryland. ARTICLE II NAME The name of the corporation (the "Corporation") is: Wellsford Real Properties, Inc. ARTICLE III PURPOSE The purposes for which the Corporation is formed are to engage in any lawful act or activity for which corporations may be organized under the general laws of the State of Maryland as now or hereafter in force. ARTICLE IV PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT The address of the principal office of the Corporation in the State of Maryland is c/o Ballard Spahr Andrews & Ingersoll, 300 East Lombard Street, Baltimore, Maryland 21202, Attention: James J. Hanks, Jr. The name of the resident agent of the Corporation in the State of Maryland is James J. Hanks, Jr., whose post address is c/o Ballard Spahr Andrews & Ingersoll, 300 East Lombard Street, Baltimore, Maryland 21202. The resident agent is a citizen of and resides in the State of Maryland. ARTICLE V PROVISIONS FOR DEFINING, LIMITING AND REGULATING CERTAIN POWERS OF THE CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS Section 5.1 Number and Classification of Directors. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. The number of directors of the Corporation initially shall be six, which number may be increased or decreased pursuant to the Bylaws, but shall never be less than the minimum number required by the Maryland General Corporation Law. The names of the directors who shall serve until the first annual meeting of stockholders and until their successors are duly elected and qualify and the class of directors to which each is assigned are: Name Class Jeffrey H. Lynford I Mark S. Germain I Frank J. Hoenemeyer II Frank J. Sixt II Edward Lowenthal III Rodney F. DuBois III These directors may increase the number of directors and may fill any vacancy, whether resulting from an increase in the number of directors or otherwise, on the Board of Directors occurring before the first annual meeting of stockholders in the manner provided in the Bylaws. The directors (other than any director elected solely by holders of one or more classes or series of Preferred Stock) shall be classified, with respect to the terms for which they severally hold office, into three classes, the Class I directors to hold office initially for a term expiring at the annual meeting of stockholders in 1998, the Class II directors to hold office initially for a term expiring at the annual meeting of stockholders in 1999 and the Class III directors to hold office initially for a term expiring at the annual meeting of stockholders in 2000, with the members of each class to hold office until their successors are duly elected and qualify. At each annual meeting of the stockholders, the successors to the class of directors whose term expires at such meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election. Section 5.2 Mergers, Consolidations and Share Exchanges. Notwithstanding any provision of law permitting or requiring such action to be taken or authorized by the affirmative vote of the holders of shares entitled to cast a greater number of votes, a consolidation or share exchange or a merger in which the Corporation is the successor need be approved only by the affirmative vote of holders of shares entitled to cast a majority of all the votes entitled to be cast on the matter. Section 5.3 Authorization by Board of Stock Issuance. The Board of Directors may authorize the issuance from time to time of shares of stock of the Corporation of any class or series, whether now or hereafter authorized, or securities or rights convertible into shares of its stock of any class or series, whether now or hereafter authorized, for such consideration as the Board of Directors may deem advisable (or without consideration in the case of a stock split or stock dividend), subject to such restrictions or limitations, if any, as may be set forth in the charter or the Bylaws. Section 5.4 Preemptive Rights. Except as may be provided by contract or by the Board of Directors in setting the terms of classified or reclassified shares of stock pursuant to Section 6.2, no holder of shares of stock of the Corporation shall, as such holder, have any preemptive right to purchase or subscribe for any additional shares of stock of the Corporation or any other security of the Corporation which it may issue or sell. Section 5.5 Removal of Directors. Subject to the rights of holders of one or more classes or series of stock to elect one or more directors, any director, or the entire Board of Directors, may be removed, but only for cause and then only by the affirmative vote of the holders of at least two thirds of the votes entitled to be cast in the election of directors. For the purpose of this Section 5.5, "cause" shall mean with respect to any particular director a final judgment of a court of competent jurisdiction holding that such director caused demonstrable, material harm to the Corporation through bad faith or active and deliberate dishonesty. Section 5.6 Transactions Between the Corporation and its Directors, Officers, Employees and Agents. Subject to any express restrictions in this charter or adopted by the Directors in the Bylaws or by resolution, the Corporation may enter into any contract or transaction of any kind (including, without limitation, for the purchase or sale of property or for any type of services, including those in connection with underwriting the offer or sale of securities of the Corporation) with any person or entity, including any director, officer, employee or agent of the Corporation or any person or entity affiliated with a director, officer, employee or agent of the Corporation, whether or not any of them has a financial interest in such transaction. Section 5.7 Ambiguity. In case of any ambiguity in any provision of this charter, the Board of Directors of the Corporation shall have the power to determine the application of such provision with respect to any situation based on the facts known to the Board and such determination shall be final and conclusive. ARTICLE VI STOCK Section 6.1 Authorized Shares. The Corporation has authority to issue 200,000,000 shares of Common Stock, $.01 par value per share ("Common Stock"). The aggregate par value of all authorized shares of stock having par value is $2,000,000. Section 6.2 Reclassified Shares. The Board of Directors may reclassify any unissued shares of stock from time to time in one or more classes or series of stock. Prior to issuance of reclassified shares of any class or series, the Board of Directors by resolution shall: (a) designate that class or series to distinguish it from all other classes and series of stock of the Corporation; (b) specify the number of shares to be included in the class or series; (c) set or change, subject to the express terms of any class or series of stock of the Corporation outstanding at the time, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for each class or series; and (d) cause the Corporation to file articles supplementary with the State Department of Assessments and Taxation of Maryland ("SDAT"). Any of the terms of any class or series of stock set or changed pursuant to clause (c) of this Section 6.2 may be made dependent upon facts or events ascertainable outside the charter (including determinations by the Board of Directors or other facts or events within the control of the Corporation) and may vary among holders thereof, provided that the manner in which such facts, events or variations shall operate upon the terms of such class or series of stock is clearly and expressly set forth in the articles supplementary filed with the SDAT. Section 6.3 Charter and Bylaws. All persons who shall acquire stock in the Corporation shall acquire the same subject to the provisions of the charter and the Bylaws. ARTICLE VII INDEMNIFICATION AND ADVANCE OF EXPENSES The Corporation shall have the power, to the maximum extent permitted by Maryland law in effect from time to time, to obligate itself to indemnify, and to pay or reimburse reasonable expenses in advance of final disposition of a proceeding to, (a) any individual who is a present or former director or officer of the Corporation or (b) any individual who, while a director of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner, trustee, manager or member of another corporation, partnership, joint venture, trust, employee benefit plan, limited liability company or any other enterprise from and against any claim or liability to which such person may become subject or which such person may incur by reason of his status as a present or former director or officer of the Corporation. The Corporation shall have the power, with the approval of the Board of Directors, to provide such indemnification and advancement of expenses to a person who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation. ARTICLE VIII AMENDMENTS The Corporation reserves the right from time to time to make any amendment to its charter, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in this charter, of any shares of outstanding stock. All rights and powers conferred by the charter on stockholders, directors and officers are granted subject to this reservation. Except as set forth in the following sentence, any amendment to the charter shall be valid only if approved by the affirmative vote of a majority of all the votes entitled to be cast on the matter. Any amendment to Section 5.1, Section 5.5 or this sentence of the charter or any amendment to the charter providing that the stockholders of the Corporation may approve an action by a lesser percentage of votes than that required by law shall be valid only if approved by the affirmative vote of two thirds of all the votes entitled to be cast on the matter. ARTICLE IX LIMITATION OF LIABILITY To the maximum extent that Maryland law in effect from time to time permits limitation of the liability of directors and officers of a corporation, no director or officer of the Corporation shall be liable to the Corporation or its stockholders for money damages. Neither the amendment nor repeal of this Article IX, nor the adoption or amendment of any other provision of the charter or Bylaws inconsistent with this Article IX, shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption. THIRD: The amendment to and restatement of the charter as hereinabove set forth has been duly advised by the Board of Directors and approved by the stockholders of the Corporation as required by law. FOURTH: The current address of the principal office of the Corporation is as set forth in Article IV of the foregoing amendment and restatement of the charter. FIFTH: The name and address of the Corporation's current resident agent is as set forth in Article IV of the foregoing amendment and restatement of the charter. SIXTH: The number of directors of the Corporation and the names of those currently in office are as set forth in Article V of the foregoing amendment and restatement of the charter. SEVENTH: The total number of shares of stock which the Corporation had authority to issue immediately prior to this amendment and restatement was 10,000 shares, $.01 par value per share. The aggregate par value of all shares of stock having par value was $100.00. EIGHTH: The total number of shares of stock which the Corporation has authority to issue pursuant to the foregoing amendment and restatement of the charter is 200,000,000, consisting of 200,000,000 shares of Common Stock, $.01 par value per share. The aggregate par value of all authorized shares of stock having par value is $2,000,000. NINTH: The undersigned President acknowledges these Articles of Amendment and Restatement to be the corporate act of the Corporation and as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury. IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment and Restatement to be signed in its name and on its behalf by its President and attested to by its Secretary on this _____ day of ____________, 1997. ATTEST: WELLSFORD REAL PROPERTIES, INC. __________________________ By:_________________________(SEAL) Secretary President EX-3.2 3 SUPPLEMENTARY ARTICLES EXHIBIT 3.2 WELLSFORD REAL PROPERTIES, INC. ARTICLES SUPPLEMENTARY ___________ SHARES CLASS A COMMON STOCK Wellsford Real Properties, Inc, a Maryland corporation (the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: Under a power contained in Section 6.2 of the charter of the Corporation (the "Charter"), the Board of Directors of the Corporation (the "Board of Directors"), by [resolution duly adopted at a meeting duly called and held on] [unanimous written consent dated] ___________, 1997, reclassified and designated ______________ shares (the "Shares") of Common Stock (as defined in the Charter) as shares of Class A Common Stock, $.01 par value per share (the "Class A Common Stock"), with the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption as set forth as follows, which, upon any restatement of the Charter shall be made part of Article VI, with any necessary or appropriate changes to the enumeration or lettering of sections or subsections hereof. CLASS A COMMON STOCK Section 1. Certain Definitions. For purposes of the terms of the Class A Common Stock the following terms have the following meanings: "Affiliate" shall mean, when used with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified. "Beneficial Ownership" shall mean ownership of stock by a REIT who would be treated as an owner of such shares of stock under Section 856(c)(5) of the Code. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have correlative meanings. "Business Day" shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York City are authorized or required by law, regulation or executive order to close. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Common Stock" shall mean the common stock, $.01 par value per share, of the Corporation. "Class A Common Stock" shall mean the Class A common stock, $.01 par value per share, of the Corporation. "Closing Date" shall mean [May 30, 1997]. "Control" including the terms "Controlling", "Controlled by" and "under common Control with", shall mean the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Corporation" shall mean Wellsford Real Properties, Inc. "Liquidation Value," when used in connection with Series A 8% Convertible Redeemable Preferred Stock, shall mean $25.00 per share. "Person" shall mean any natural person, corporation, business or real estate investment trust, joint venture, association, company, partnership, or government, or any agency or political subdivision thereof. "Preferred Stock" shall mean all shares of stock of the Corporation having a preference in the payment of dividends or any distribution of assets upon liquidation, dissolution or winding-up of the Corporation to the Common Stock or Class A Common Stock. "REIT" shall mean a real estate investment trust under Section 856 of the Code. "REIT Ownership Limit" shall initially mean nine and nine- tenths percent (9.9%) of the value of the outstanding Voting Stock of the Corporation. "Responsible Officer" of any corporation shall mean any executive officer of such corporation, and any other officer or similar official thereof responsible for the administration of the obligations of such corporation in respect of the terms of the Class A Common Stock. "Transfer" shall mean any sale, transfer, redemption, gift, hypothecation, pledge, assignment, devise or other disposition of Voting Stock, whether voluntary or involuntary, whether of record, constructively or beneficially and whether by operation of law or otherwise. "Triggering Event" shall mean any event undertaken or caused by the Corporation, which would result in ERP Operating Limited Partnership ("ERP Operating Partnership"), Equity Residential Properties Trust or any Affiliate of either of them collectively to Beneficially Own outstanding shares of Class A Common Stock in excess of the REIT Ownership Limit. "Voting Stock" shall mean the Class A Common Stock, the Common Stock and any other outstanding shares of stock of the Corporation entitled to vote generally in the election of directors. Section 2. Rights. The holders of Class A Common Stock shall have all rights, including, but not limited to, voting, dividend, distribution, liquidation and other rights of holders of shares of Common Stock; provided, however, holders of Class A Common Stock shall have such additional rights as provided herein. Section 3. Voting Rights. The holders of the Class A Common Stock, voting separately as a class, shall be entitled to elect one member (the "Class A Director") of the Board of Directors of the Corporation so long as (i) ERP Operating Partnership is obligated to purchase Preferred Stock pursuant to that certain Common Stock and Preferred Stock Purchase Agreement dated as of , 1997 between ERP Operating Partnership and the Corporation; (ii) ERP Operating Partnership has obligations pursuant to that certain Agreement Regarding Palomino Park dated as of , 1997 between ERP Operating Partnership and the Corporation; (iii) ERP Operating Partnership has obligations pursuant to that certain Credit Enhancement Agreement dated as of , 1997 between ERP Operating Partnership and the Corporation; or (iv) the aggregate Liquidation Value of the shares of Series A 8% Convertible Redeemable Preferred Stock of the Corporation owned by ERP Operating Partnership is greater than $10,000,000; provided, however, in no event shall the period during which the holders of the Class A Common Stock are entitled to elect the Class A Director be less than two years from the Closing Date. The Class A Director may be removed without cause, only by the affirmative vote of the holders of a majority of the outstanding shares of Class A Common Stock. Section 4. Optional Conversion. (a) Holders of Class A Common Stock shall have the right, exercisable at any time and from time to time to convert all or any shares of Class A Common Stock into shares of Common Stock at a conversion rate of one share of Common Stock for each share of Class A Common Stock, subject to adjustment (the "Conversion Rate"). Upon conversion, no adjustment or payment will be made for distributions, but if any holder surrenders Class A Common Stock for conversion after the close of business on the record date for the payment of a dividend or distribution and prior to the opening of business on the related payment date of such dividend or distribution then, notwithstanding such conversion, the dividend or distribution payable on such payment date will be paid to the registered holder of such shares on such record date. (b) Any holder of one or more shares of Class A Common Stock electing to convert such share or shares shall deliver the certificate or certificates therefor to the principal office of any transfer agent for the Common Stock, with the form of notice of election to convert as the Corporation shall prescribe fully completed and duly executed and (if so required by the Corporation or any conversion agent) accompanied by instruments of transfer in form satisfactory to the Corporation and to any conversion agent, duly executed by the registered holder or his duly authorized attorney, and transfer taxes, stamps or funds therefor or evidence of payment thereof. The conversion right with respect to any such shares shall be deemed to have been exercised at the date upon which the certificates therefor accompanied by such duly executed notice of election and instruments of transfer and such taxes, stamps, funds or evidence of payment shall have been so delivered, and the person or persons entitled to receive the shares of the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of the Common Stock upon said date. (c) If a holder converts shares of Class A Common Stock, the Corporation shall pay any documentary, stamp or similar issue or transfer tax due on the issuance of shares of Common Stock upon the conversion. The holder, however, shall pay to the Corporation the amount of any tax which is due (or shall establish to the satisfaction of the Corporation payment thereof) if the shares are to be issued in a name other than the name of such holder and shall pay to the Corporation any amount required by the last sentence of Section 4(a) hereof. (d) The Corporation shall reserve and shall at all times have reserved out of its authorized but unissued shares of Common Stock a sufficient number of shares of Common Stock to permit the conversion of the then outstanding shares of Class A Common Stock. All shares of Common Stock which may be issued upon conversion of shares of Class A Common Stock shall be validly issued, fully paid and nonassessable, and not subject to preemptive or other similar rights. In order that the Corporation may issue shares of Common Stock upon conversion of shares of Class A Common Stock, the Corporation will endeavor to comply with all applicable federal and state securities laws and will endeavor to list such Common Stock to be issued upon conversion on each securities exchange on which the Common Stock is listed. (e) The Conversion Rate in effect at any time shall be subject to adjustment from time to time as follows: (i) If the Corporation shall (1) reclassify the outstanding shares of Common Stock into shares of some other class or series of stock of the Corporation, (2) subdivide the outstanding shares of Common Stock into a greater number of shares of Common Stock or (3) combine the outstanding shares of Common Stock into a smaller number of shares of Common Stock, the conversion rate immediately prior to such action shall be adjusted so that the holder of any shares of Class A Common Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock which he would have owned immediately following such action had such shares of Class A Common Stock been converted immediately prior thereto. An adjustment made pursuant to this Section 4(e)(i) shall become effective immediately after the effective date of a subdivision, combination or reclassification. (ii) The Market Price per share of the Common Stock on any date shall be deemed to be the average of the daily closing prices for 30 consecutive trading days commencing 45 trading days before the date in question. The closing price for each day shall be the last reported sales price or, in case no such reported sale takes place on such date, the average of the reported closing bid and asked prices, regular way, in either case on the New York Stock Exchange, or if the Common Stock is not listed or admitted to trading on such Exchange, on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, the closing sale price of the Common Stock or, in case no reported sale takes place, the average of the closing bid and asked prices, on NASDAQ or any comparable system, or if the Common Stock is not quoted on NASDAQ or any comparable system, the closing sale price or, in case no reported sale takes place, the average of the closing bid and asked prices, as furnished by any two members of the National Association of Securities Dealers, Inc. selected from time to time by the Corporation for that purpose. (iii) In any case in which this Section 4 shall require that an adjustment be made immediately following a record date, the Corporation may elect to defer (but only until five Business Days following the mailing of the notice described in Section 4(j)) issuing to the holder of any Class A Common Stock converted after such record date the Common Stock and other shares of stock of the Corporation issuable upon such conversion over and above the Common Stock and other shares of stock of the Corporation issuable upon such conversion only on the basis of the conversion rate prior to adjustment; and, in lieu of the shares the issuance of which is so deferred, the Corporation shall issue or cause its transfer agents to issue appropriate evidence of the right to receive such shares. (f) No adjustment in the Conversion Rate shall be required until cumulative adjustments result in a change of 1% or more of the conversion price as in effect prior to the last adjustment of the Conversion Rate; provided, however, that any adjustment which by reason of this Section 4(f) is not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 4 shall be made to the nearest cent ($.01) or the nearest one-hundredth (1/100) of a share, as the case may be. (g) If, as a result of an adjustment made pursuant to Section 4(e), the holder of any Class A Common Stock thereafter surrendered for conversion shall become entitled to receive any shares of stock of the Corporation other than Common Stock, thereafter the number of such other shares so receivable upon conversion of any Class A Common Stock shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in this Section 4. (h) The Corporation may make such increases in the Conversion Rate, in addition to those required by Section 4(e), as is considered to be advisable in order that any event treated for federal income tax purposes as a distribution of shares or share rights shall not be taxable to the recipients thereof. (i) Whenever the Conversion Rate is adjusted, the Corporation shall promptly mail to all holders of record of Class A Common Stock a notice of the adjustment and shall cause to be prepared a certificate signed by the principal financial officer of the Corporation setting forth the adjusted Conversion Rate and a brief statement of the facts requiring such adjustment and the computation thereof; such certificate shall forthwith be filed with each transfer agent for the Class A Common Stock. (j) If: (i) the Corporation takes any action which would require an adjustment in the Conversion Rate, or (ii) the Corporation consolidates or merges with, or transfers all or substantially all of its assets to, another corporation and shareholders of the Corporation must approve the transaction, the Corporation shall mail to holders of shares of Class A Common Stock a notice stating the proposed record or effective date of the transaction, as the case may be. The Corporation shall mail the notice at least 10 days before such date; however, failure to mail such notice or any defect therein shall not affect the validity of any transaction referred to in clauses (i) or (ii) of this Section 4(j). (k) If any of the following shall occur, namely: (i) any reclassification or change of outstanding shares of Common Stock issuable upon conversion of Class A Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), (ii) any consolidation or merger to which the Corporation is a party other than a consolidation or merger in which the Corporation is the continuing corporation and which does not result in any reclassification of, or change (other than a change in name, or par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination) in, outstanding shares of Common Stock or (iii) any sale, transfer or lease of all or substantially all of the property or business of the Corporation as an entirety, then the Corporation, or such successor or purchasing corporation, as the case may be, shall, as a condition precedent to such reclassification, change, consolidation, merger, sale, transfer or lease, provide in its charter that each share of Class A Common Stock shall be convertible into the kind and amount of shares of stock and other securities and property (including cash) receivable upon such reclassification, change, consolidation, merger, sale, transfer or lease by a holder of the number of shares of Common Stock deliverable upon conversion of such shares of Class A Common Stock immediately prior to such reclassification, change, consolidation, merger, sale, transfer or lease. Such provision in the charter document shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 4. If, in the case of any such reclassification, change, consolidation, merger, sale, transfer or lease, the shares of stock or other securities and property (including cash) receivable thereupon by a holder of the Common Stock includes shares of stock or beneficial interest or other securities and property of a corporation or other entity other than the successor or purchasing corporation, as the case may be, in such reclassification, change, consolidation, merger, sale, transfer or lease, then the charter of such other corporation, as a condition precedent to such transaction, shall contain such additional provisions to protect the interests of the holders of Class A Common Stock as the Board of Directors shall reasonably consider necessary by reason of the foregoing. The provisions of this Section 4(k) shall similarly apply to successive consolidations, mergers, sales, transfers or leases. No holder of Class A Common Stock will possess any preemptive rights to subscribe for or acquire any unissued shares of the Corporation (whether now or hereafter authorized) or securities of the Corporation convertible into or carrying a right to subscribe to or acquire shares of stock of the Corporation. Section 5. Automatic Conversion. Any outstanding shares of Class A Common Stock shall automatically convert, at the Conversion Rate, into shares of Common Stock upon the Transfer of such shares of Class A Common Stock to any Person other than an Affiliate of Equity Residential Properties Trust or ERP Operating Partnership. Such automatic conversion shall be deemed to have occurred on the date of such Transfer. Section 6. Purchase of Shares of Voting Stock in Excess of REIT Ownership Limit. If, notwithstanding the other provisions contained in the terms of the Class A Common Stock, a Triggering Event shall occur, then the Corporation shall (i) immediately deliver written notice of such Triggering Event to each of Equity Residential Properties Trust and ERP Operating Partnership and (ii) purchase such shares of Class A Common Stock in excess of the REIT Ownership Limit at a price per share equal to the Market Price per share of the Common Stock no later than 25 days following the date of the Triggering Event which resulted in the REIT Beneficially Owning shares of Class A Common Stock in excess of the REIT Ownership Limit. SECOND: The Shares have been classified and designated by the Board of Directors under the authority contained in the Charter. THIRD: These Articles Supplementary have been approved by the Board of Directors in the manner and by the vote required by law. FOURTH: The undersigned President of the Corporation acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury. IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be executed under seal in its name and on its behalf by its President and attested to by its Secretary on this ___ of May, 1997. ATTEST: WELLSFORD REAL PROPERTIES, INC _____________________________ By: (SEAL) Jeffrey H. Lynford, Secretary ---------------------------- Edward Lowenthal, President EX-3.3 4 SERIES A 8% CONVERT REDEEMABLE PREFERRED STOCK EXHIBIT 3.3 WELLSFORD REAL PROPERTIES, INC. ARTICLES SUPPLEMENTARY 2,000,000 SHARES SERIES A 8% CONVERTIBLE REDEEMABLE PREFERRED STOCK Wellsford Real Properties, Inc, a Maryland corporation (the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: Under a power contained in Section 6.2 of the charter of the Corporation (the "Charter"), the Board of Directors of the Corporation (the "Board of Directors"), by [resolution duly adopted at a meeting duly called and held on] [unanimous written consent dated] ___________, 1997, reclassified and designated 2,000,000 shares (the "Shares") of Common Stock (as defined in the Charter) as shares of Series A 8% Convertible Redeemable Preferred Stock, $.01 par value per share (the "Series A Preferred Stock"), with the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption as set forth as follows, which upon any restatement of the Charter shall be made part of Article VI, with any necessary or appropriate changes to the enumeration or lettering of sections or subsections hereof. SERIES A PREFERRED STOCK Section 1. Certain Definitions Unless the context otherwise requires, the terms defined in this Section 1 shall have, for all purposes of determining the terms of the Series A Preferred Shares, the meanings herein specified (with terms defined in the singular having comparable meanings when used in the plural). "Business Day" shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York City are authorized or required by law, regulation or executive order to close. "Closing Date" shall mean [May 30, 1997]. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Common Stock" shall mean the common stock, $.01 par value per share, of the Corporation. "Class A Common Stock" shall mean the Class A common stock, $.01 par value per share, of the Corporation. "Dividend Period" shall have the meaning set forth in Section 4 below. "Event of Default" shall mean (i) the non-payment of any dividend on the Quarterly Dividend Date applicable to such dividend for three (3) Dividend Periods which need not be consecutive; or (ii) the failure to comply with any term, condition or obligation or failure to provide any right under the terms of the Series A Preferred Shares. "Gross Sales Price of a Share of Common Stock" shall mean (a) the gross proceeds from all sales of Common Stock to institutional purchasers taking place on or prior to the Closing Date and subject to written commitments to purchase from institutional purchasers received on or prior to the Closing Date, divided by (b) the aggregate number of shares so sold and subject to such commitments. "Junior Shares" shall have the meaning set forth in Section 3 below. "Person" shall mean any natural person, corporation, business trust, joint venture, association, company, partnership, or government, or any agency or political subdivision thereof. "Liquidation Value" shall have the meaning set forth in Section 5 below. "Net Book Value Per Share of Common Stock" shall mean the stockholders' equity of the Corporation determined in accordance with generally accepted accounting principles as adjusted for all liabilities, including all costs related to the formation of the Corporation, as set forth in the financial statements of the Corporation, less the Liquidation Value of all outstanding Preferred Stock including Series A Preferred Stock, divided by the number of shares of Common Stock of the Corporation outstanding on such date, excluding the shares of Class A Common Stock being purchased by ERP Operating Limited Partnership on the Closing Date. Net Book Value Per Share of Common Stock shall be determined in accordance with the provisions in Section 2.1 of that certain Common Stock and Preferred Stock Purchase Agreement dated as of , 1997 between ERP Operating Limited Partnership and the Corporation. "Preferred Stock" shall mean all shares of stock having a preference in any manner to the Common Stock or Class A Common Stock. "Quarterly Dividend Date" shall have the meaning set forth in Section 4 below. "Record Date" shall have the meaning set forth in Section 4 below. "Redemption Date" shall have the meaning set forth in Section 6 below. "Redemption Price" shall have the meaning set forth in Section 6 below. "Responsible Officer" of any corporation shall mean any executive officer of such corporation, and any other officer or similar official thereof responsible for the administration of the obligations of such corporation in respect of the terms of the Series A Preferred Shares. "Series A Preferred Stock" shall mean the Series A 8% Convertible Redeemable Preferred Stock, $.01 par value per share, of the Corporation. Section 2. Number. The maximum number of authorized shares of Series A Preferred Stock shall be 2,000,000. Section 3. Relative Seniority. In respect of rights to receive dividends and to participate in distributions or payments in the event of any liquidation, dissolution or winding up of the Corporation, the Series A Preferred Stock shall rank (i) junior to any other Preferred Stock of the Corporation ranking, as to dividends and upon liquidation, prior to the Series A Preferred Stock, (ii) pari passu with any other Preferred Stock of the Corporation ranking, as to dividends and upon liquidation, on parity with the Series A Preferred Stock, and (iii) senior to the Common Stock and any other class or series of shares of stock of the Corporation ranking, as to dividends and upon liquidation, junior to the Series A Preferred Stock (collectively, "Junior Shares"). Notwithstanding the foregoing, the Corporation may make distributions or pay dividends in shares of Common Stock or in any other shares of the Corporation ranking junior to the Series A Preferred Stock as to distribution rights and liquidation preference at any time; provided, however, the Corporation may make distributions or pay dividends on the Series A Preferred Stock in shares of the Corporation only as provided herein. Section 4. Dividends. The holders of the then outstanding Series A Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors of the Corporation out of any funds legally available therefor, dividends at the rate of $2.00 per share per year, payable in cash, except as provided below, in equal amounts quarterly on the fifteenth day, or if not a Business Day, the next succeeding Business Day, of January, April, July and October in each year, beginning , 1997 (each such day being hereinafter called a "Quarterly Dividend Date" and each period ending on a Quarterly Dividend Date being hereinafter called a "Dividend Period"), to shareholders of record at the close of business on such date as shall be fixed by the Board of Directors of the Corporation at the time of authorization of the dividend (the "Record Date"), which shall be not fewer than 10 nor more than 30 days preceding the Quarterly Dividend Date. The amount of any dividend payable for the initial Dividend Period and for any other Dividend Period shorter than a full Dividend Period shall be prorated and computed on the basis of a 360-day year of twelve 30-day months. Dividends paid on the Series A Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a per share basis among all such shares at the time outstanding. Notwithstanding the foregoing, for any twelve Dividend Periods the Company shall have the right to pay the dividend in additional shares of Series A Preferred Stock determined by dividing the total amount of the dividend to be paid in shares of Series A Preferred Stock by the Liquidation Value (as defined herein) per share of Series A Preferred Stock. The issuance of additional shares of Series A Preferred Stock pursuant to this Section 4 shall be evidenced by a stock certificate representing such shares issued on the related Quarterly Dividend Date and delivered on or immediately thereafter. Notwithstanding any other provision hereof, no fractional shares of the Corporation shall be issued in connection with the payment of any dividend on Series A Preferred Stock in additional shares of Series A Preferred Stock. Instead, any holder of outstanding Series A Preferred Stock having a fractional interest arising upon the payment of a dividend in additional shares of Series A Preferred Stock shall, on the related Quarterly Dividend Date, be paid an amount in cash equal to the Liquidation Value times the fraction of a share of Series A Preferred Stock to which such holder would otherwise be entitled. In the event the Company fails to pay any dividend on the Series A Preferred Stock on any Quarterly Dividend Date, the Company shall not pay any dividends on any other class of stock of the Company (other than (i) pro rata with other securities of the Company ranking pari passu with the Series A Preferred Stock or (ii) with Junior Shares) until such dividend on the Series A Preferred Stock has been paid. Except as provided in the terms of the Series A Preferred Stock, the Series A Preferred Stock shall not be entitled to participate in the earnings or assets of the Corporation. Section 5. Liquidation Rights (a) Upon the voluntary or involuntary dissolution, liquidation or winding up of the Corporation, the holders of shares of the Series A Preferred Stock then outstanding shall be entitled to receive and to be paid out of the assets of the Corporation available for distribution to its shareholders, before any payment or distribution shall be made on any Junior Shares, the amount of $25.00 per share of Series A Preferred Stock ("Liquidation Value"), plus any accrued and unpaid dividends thereon. (b) After the payment to the holders of the Series A Preferred Stock of the full preferential amounts provided for in this Section 5, the holders of shares of the Series A Preferred Stock as such shall have no right or claim to any of the remaining assets of the Corporation. (c) If, upon any voluntary or involuntary dissolution, liquidation, or winding up the Corporation, the amounts payable to the holders of shares of the Series A Preferred Stock pursuant to this Section 5 and holders of any other shares of stock of the Corporation ranking as to any such distribution on a parity with the Series A Preferred Stock are not paid in full, the holders of the Series A Preferred Stock and of such other shares will share ratably in any such distribution of assets of the Corporation in proportion to the full respective preference amounts to which they are entitled. (d) Neither the sale of all or substantially all the property or business of the Corporation, nor the merger or consolidation of the Corporation into or with any other entity or the merger or consolidation of any other entity into or with the Corporation, nor any dissolution, liquidation, winding up or reorganization of the Corporation immediately followed by the incorporation of another corporation to which the Corporation's assets are distributed shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purposes of the terms of the Series A Preferred Stock. (e) In determining whether a distribution by dividend, redemption or other acquisition of shares of the Corporation or otherwise is permitted under Maryland law, no effect shall be given to amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights on dissolution are superior to those receiving the distribution. Section 6. Redemption (a) Optional Redemption. On and after , 2002, the Corporation may, at its option, redeem at any time all of the outstanding Series A Preferred Stock or a part of the outstanding Series A Preferred Stock at a price per share (the "Redemption Price"), equal to $25.00 per share of Series A Preferred Stock, together with all accrued and unpaid dividends to and including the date fixed for redemption (the "Redemption Date"); provided, however, that no partial redemption of the Series A Preferred Stock may be effected if after giving effect thereto the aggregate Liquidation Value of the Series A Preferred Stock outstanding is less than $10,000,000. The Redemption Price and all accrued and unpaid dividends shall be paid in cash; provided, however, that if (a) a holder of Series A Preferred Stock desires to convert any of its Series A Preferred Stock called for redemption but such conversion would cause any direct or indirect holder which is classified as a real estate investment trust ("REIT") under Section 856 of the Code to own, directly or indirectly, more than 9.9% of the outstanding voting stock of the Corporation or would otherwise cause any direct or indirect holder of such outstanding voting stock to lose its status as a REIT under the Code, and (b) such holder has so notified the Corporation in writing prior to the Redemption Date, stating the number of shares of Series A Preferred Stock which have been called for redemption which such holder is unable to convert for such reason (such shares being referred to as the "Unconvertible Shares"), then the Corporation shall pay, in cash, the Redemption Price plus all accrued and unpaid dividends for each Unconvertible Share and shall issue to such holder a warrant to purchase the number of shares of Common Stock equal to (i) the fair market value of a share of Common Stock on the Redemption Date over the Redemption Price, multiplied by (ii) the number of shares of Common Stock into which the Unconvertible Shares redeemed from such holder were convertible immediately prior to such redemption, and divided by (iii) the fair market value of a share of Common Stock on the Redemption Date. Such warrant shall be exercisable without cost to the holder thereof at any time and from time to time for a period of ten (10) years from the date of issuance of such warrant. The warrant shall be on such terms and conditions as are customarily contained in like warrants, including provisions to protect the holder of the warrant from dilution. The Corporation shall have the right, at any time, to redeem such warrant at a price equal to the fair market value of such warrant on the date of any such redemption. The fair market value of a share of Common Stock on the Redemption Date shall be deemed to be the average of the daily closing prices of the Common Stock for 30 consecutive trading days commencing 45 trading days before the Redemption Date. The closing price for each day shall be the last reported sales price or, in case no such reported sale takes place on such date, the average of the reported closing bid and asked prices regular way, in either case on the New York Stock Exchange, or if the Common Stock is not listed or admitted to trading on such Exchange, on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, the closing sale price of the Common Stock or, in case no reported sale takes place, the average of the closing bid and asked prices, on Nasdaq or any comparable system, or if the Common Stock is not quoted on Nasdaq or any comparable system, the closing sale price or, in case no reported sale takes place, the average of the closing bid and asked prices, as furnished by any two members of the National Association of Securities Dealers, Inc. selected from time to time by the Corporation for that purpose. (b) Procedures for Redemption (i) Notice of any redemption will be mailed by the Corporation, postage prepaid, not less than 30 nor more than 90 days prior to the Redemption Date, addressed to the holders of record of the Series A Preferred Stock to be redeemed at their addresses as they appear on the share transfer records of the Corporation. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any Series A Preferred Stock except as to the holder to whom the Corporation has failed to give notice or except as to the holder to whom notice was defective. In addition to any information required by law or by the applicable rules of any exchange upon which Series A Preferred Stock may be listed or admitted to trading, such notice shall state: (a) the Redemption Date; (b) the Redemption Price; (c) the number of shares of Series A Preferred Stock to be redeemed; (d) the place or places where certificates for such shares are to be surrendered for payment of the Redemption Price; (e) the date on which conversion rights shall expire, the conversion price and the place or places where certificates for such shares are to be surrendered for conversion; and (f) the number of shares of Common Stock of the Corporation outstanding on the date of such notice. (ii) If notice has been mailed in accordance with Section 6(b)(i) above and provided that on or before the Redemption Date specified in such notice all funds necessary for such redemption shall have been irrevocably set aside by the Corporation, separate and apart from its other funds, in trust for the pro rata benefit of the holders of the Series A Preferred Stock so called for redemption, so as to be, and to continue to be available therefor, then, from and after the Redemption Date, distributions shall no longer accrue on said shares and said shares shall no longer be deemed to be outstanding and shall not have the status of Series A Preferred Stock and all rights of the holders thereof as shareholders of the Corporation (except the right to receive the Redemption Price) shall cease. Upon surrender, in accordance with said notice, of the certificates for any shares of Series A Preferred Stock so redeemed (properly endorsed or assigned for transfer, if the Corporation shall so require and the notice shall so state), such shares of Series A Preferred Stock shall be redeemed by the Corporation at the Redemption Price. In case fewer than all the Series A Preferred Stock represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed Series A Preferred Stock without cost to the holder thereof. (iii) Any funds deposited with a bank or trust company for the purpose of redeeming shares of Series A Preferred Stock shall be irrevocable except that: (A) the Corporation shall be entitled to receive from such bank or trust company the interest or other earnings, if any, earned on any money so deposited in trust, and the holders of any shares redeemed shall have no claim to such interest or other earnings; (B) any balance of monies so deposited by the Corporation and unclaimed by the holders of the Series A Preferred Stock entitled thereto at the expiration of one year from the applicable Redemption Date shall be repaid, together with any interest or other earnings earned thereon, to the Corporation, and after any such repayment, the holders of the shares entitled to the funds so repaid to the Corporation shall look only to the Corporation for payment without interest or other earnings; and (C) any funds set aside to redeem Series A Preferred Stock that is converted into Common Stock prior to the Redemption Date shall be immediately delivered to the Corporation. (iv) No Series A Preferred Stock may be redeemed except with funds legally available for the payment of the Redemption Price. (v) Unless a sum sufficient for the payment of the then current dividend due for the then current Dividend Period is set apart, no shares of Series A Preferred Stock shall be redeemed (unless all outstanding shares of Series A Preferred Stock are simultaneously redeemed) or purchased or otherwise acquired directly or indirectly (except by conversion into or exchange for shares of the Corporation ranking junior to the shares of Series A Preferred Stock as to dividends and upon liquidation); provided, however, that the foregoing shall not prevent the purchase or acquisition of Series A Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series A Preferred Stock. (vi) If the Redemption Date is after a Record Date and before the related Quarterly Dividend Date, the dividend payable on such Quarterly Dividend Date shall be paid to the holder in whose name the Series A Preferred Stock to be redeemed are registered at the close of business on such Record Date notwithstanding the redemption thereof between such Record Date and the related Quarterly Dividend Date or the Corporation's default in the payment of the dividend due. (vii) In case of redemption of less than all of the shares of Series A Preferred Stock at the time outstanding, the shares of Series A Preferred Stock to be redeemed shall be selected pro rata from the holders of record of such shares in proportion to the number of shares of Series A Preferred Stock held by such holders (with adjustments to avoid redemption of fractional shares) or by any other equitable method determined by the Corporation. (c) Required Redemption. Upon the occurrence of an Event of Default or on and after , 2012, whichever comes first, the holder of any shares of Series A Preferred Stock may, at its option, cause the Corporation to redeem at any time all of the Series A Preferred Stock held by such holder at the Redemption Price, payable in cash, together with all accrued and unpaid dividends to and including the Redemption Date. Notwithstanding the provisions of this subsection (c), provided an Event of Default has not occurred, the Corporation shall have the right to extend the date during which a required redemption is not permitted under this subsection (c) for three separate additional five (5) year periods if the dividend rate on the Series A Preferred Stock is changed to the then market rate of comparable preferred stock (the "Market Rate") on the first day of each such additional five year period; provided, however, in no event shall the dividend be reduced to less than $2.00 per share of Series A Preferred Stock. The Market Rate shall be determined ten (10) days prior to the first Business Day of each such additional five (5) year period by mutual agreement of the holders of Series A Preferred Stock and the Corporation. In the event the holders of Series A Preferred Stock and the Corporation cannot agree on such determination prior to the first Business Day of such additional five (5) year period, the Market Rate shall be determined as of the first Business Day of each such additional five (5) year period as follows: (i) a majority of the holders of the Series A Preferred Stock then outstanding shall choose an investment banking firm of nationally recognized status and the Corporation shall choose an investment banking firm of nationally recognized status; (ii) the investment banking firms chosen by a majority of the holders of the Series A Preferred Stock then outstanding and the Corporation shall mutually choose a third investment banking firm of nationally recognized status (the "Independent Investment Banker"); (iii) the Independent Investment Banker shall then determine, in its sole discretion, the Market Rate and shall advise the holders of Series A Preferred Stock and the Corporation of its determination; and (iv) the fees of the Independent Investment Banker for making such determination shall be borne fifty percent (50%) by the holders of Series A Preferred Stock and fifty percent (50%) by the Corporation. (d) Procedures for Required Redemption (i) Notice of any required redemption shall be mailed by the holder of the Series A Preferred Stock requesting redemption, postage prepaid, not less than 30 nor more than 90 days prior to the Redemption Date, addressed to the Corporation. In addition to any information required by law or by the applicable rules of any exchange upon which Series A Preferred Stock may be listed or admitted to trading, such notice shall state: (a) the Redemption Date; (b) the Redemption Price; and (c) the number of shares of Series A Preferred Stock to be redeemed. (ii) If notice has been mailed in accordance with Section 6(d)(i) above on or before the Redemption Date specified in such notice all funds necessary for such redemption shall have been irrevocably set aside by the Corporation, separate and apart from its other funds in trust for the pro rata benefit of the holders of the Series A Preferred Stock requesting redemption, so as to be, and to continue to be available therefor, then, from and after the Redemption Date, said shares shall no longer be deemed to be outstanding and shall not have the status of Series A Preferred Stock and all rights of the holders thereof as shareholders of the Corporation (except the right to receive the Redemption Price) shall cease. Upon surrender, in accordance with said notice, of the certificates for any shares of Series A Preferred Stock so redeemed, such shares of Series A Preferred Stock shall be redeemed by the Corporation at the Redemption Price. In case fewer than all the Series A Preferred Stock represented by any such certificate are redeemed, a new certificate or certificates shall be issued representing the unredeemed Series A Preferred Stock without cost to the holder thereof. (iii) Any funds deposited with a bank or trust company for the purpose of redeeming shares of Series A Preferred Stock shall be irrevocable except that: (A) the Corporation shall be entitled to receive from such bank or trust company the interest or other earnings, if any, earned on any money so deposited in trust, and the holders of any shares redeemed shall have no claim to such interest or other earnings; and (B) any balance of monies so deposited by the Corporation and unclaimed by the holders of the Series A Preferred Stock entitled thereto at the expiration of one year from the applicable Redemption Date shall be repaid, together with any interest or other earnings earned thereon, to the Corporation, and after any such repayment, the holders of the shares entitled to the funds so repaid to the Corporation shall look only to the Corporation for payment without interest or other earnings. (iv) No Series A Preferred Stock may be redeemed except with funds legally available for the payment of the Redemption Price. (v) If the Redemption Date is after a Record Date and before the related Quarterly Dividend Date, the dividend payable on such Quarterly Dividend Date shall be paid to the holder in whose name the Series A Preferred Stock to be redeemed are registered at the close of business on such Record Date notwithstanding the redemption thereof between such Record Date and the related Quarterly Dividend Date or the Corporation's default in the payment of the dividend due. (e) The Series A Preferred Stock redeemed, repurchased or retired pursuant to the provisions of this Section 6(b) or surrendered to the Corporation upon conversion shall thereupon be retired and may not be reissued as Series A Preferred Stock but shall thereafter have the status of authorized but unissued shares of the Corporation. Section 7. Voting Rights. The holders of Series A Preferred Stock shall not be entitled to vote on any matter except as provided below; provided, however, the holders of Series A Preferred Stock shall not have any voting rights to the extent such rights will cause any holder of a Series A Preferred Stock to own more than 9.9 % of the outstanding voting stock of the Corporation or otherwise cause any holder of Series A Preferred Stock that is classified as a REIT under Section 856 of the Code to lose its status as a REIT under the Code. (a) So long as any shares of Series A Preferred Stock remain outstanding, the Corporation will not, without the affirmative vote or consent of the holders of at least two-thirds of the shares of Series A Preferred Stock outstanding at the time, given in person or by proxy, either in writing or at a meeting (such series voting separately as a class), (i) authorize, create or issue, or increase the authorized or issued amount of, any class or series of shares of stock ranking prior to the Series A Preferred Stock with respect to the payment of dividends or the distribution of assets upon liquidation, dissolution or winding up or reclassify any authorized shares of stock of the Corporation into such shares, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such shares; or (ii) amend, alter or repeal the provisions of the Charter or the terms of the Series A Preferred Stock, whether by merger, consolidation or otherwise (an "Event"), so as to materially and adversely affect any right, preference, privilege or voting power of the Series A Preferred Stock or the holders thereof; provided, however, with respect to the occurrence of any of the Events set forth in (ii) above, so long as the shares of Series A Preferred Stock remain outstanding with the terms thereof materially unchanged, even if upon the occurrence of an Event the Corporation may not be the surviving entity, the occurrence of any such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting power of holders of Series A Preferred Stock and provided further that (x) any increase in the amount of the authorized or issued shares of Preferred Stock or the creation or issuance of any other Preferred Stock, or (y) any increase in the amount of authorized or issued Series A Preferred Stock or any other Preferred Stock, in each case ranking on a parity with or junior to the Series A Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers. Nothing herein contained shall require such a vote or consent (i) in connection with any increase in the total number of authorized or issued shares of Common Stock, or (ii) in connection with the authorization or issuance of any class or series of shares of stock ranking, as to distribution rights and the liquidation preference, on a parity with or junior to the Series A Preferred Stock. The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding shares of Series A Preferred Stock shall have been redeemed or called for redemption and sufficient funds shall have been deposited in trust to effect such redemption. Section 8. Conversion (a) Holders of Series A Preferred Stock shall have the right, exercisable at any time and from time to time, except in the case of Series A Preferred Stock called for redemption as set forth in Section 6 hereof, to convert all or any of such Series A Preferred Stock into Common Stock at a conversion price per share of Common Stock equal to (i) the Net Book Value Per Share of Common Stock on the Closing Date or (ii) in the event any sales of Common Stock to any institutional purchasers have taken place on or prior to the Closing Date or are subject to a commitment to purchase from an institutional purchaser made on or prior to the Closing Date, the Gross Sales Price of a Share of Common Stock; multiplied by 1.08 (the "Conversion Price"). In the case of Series A Preferred Stock called for redemption, conversion rights will expire at the close of business on the last Business Day preceding the Redemption Date. Notice of redemption at the option of the Corporation must be mailed not less than 60 days and not more than 90 days prior to the Redemption Date as provided in Section 6(b) hereof. Upon conversion, no adjustment or payment will be made for distributions, but if any holder surrenders Class A Preferred Stock for conversion after the close of business on the Record Date for the payment of a distribution and prior to the opening of business on the related Quarterly Dividend Date, then, notwithstanding such conversion, the distribution payable on such Quarterly Dividend Date will be paid to the registered holder of such shares on such Record Date. In such event, such shares, when surrendered for conversion during the period between the close of business on any Record Date and the opening of business on the corresponding Quarterly Dividend Date, must be accompanied by payment of an amount equal to the distribution payable on such Quarterly Dividend Date on the shares so converted (unless such shares were converted after the issuance of a notice of redemption with respect to such shares, in which event such shares shall be entitled to the distribution payable thereon on such Quarterly Dividend Date without making such payment). (b) Any holder of one or more shares of Series A Preferred Stock electing to convert such share or shares shall deliver the certificate or certificates therefor to the principal office of any transfer agent for the Common Stock, with the form of notice of election to convert as the Corporation shall prescribe fully completed and duly executed and (if so required by the Corporation or any conversion agent) accompanied by instruments of transfer in form satisfactory to the Corporation and to any conversion agent, duly executed by the registered holder or his duly authorized attorney, and transfer taxes, stamps or funds therefor or evidence of payment thereof. The conversion right with respect to any such shares shall be deemed to have been exercised at the date upon which the certificates therefor accompanied by such duly executed notice of election and instruments of transfer and such taxes, stamps, funds or evidence of payment shall have been so delivered, and the person or persons entitled to receive the shares of the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of the Common Stock upon said date. (c) No fractional shares of Common Stock or scrip representing a fractional share shall be issued upon conversion of Series A Preferred Stock. If more than one share of Series A Preferred Stock shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock which shall be issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Series A Preferred Stock so surrendered. Instead of any fractional shares of Common Stock which would otherwise be issuable upon conversion of any shares of Series A Preferred Stock, the Corporation shall pay a cash adjustment in respect of such fraction in an amount equal to the same fraction of the closing price for the Common Stock on the last trading day preceding the date of conversion. The closing price for such day shall be the last reported sales price regular way or, in case no such reported sale takes place on such date, the average of the reported closing bid and asked prices regular way, in either case on the New York Stock Exchange, or if the Common Stock is not listed or admitted to trading on such Exchange, on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, the closing sale price of the Common Stock or in case no reported sale takes place, the average of the closing bid and asked prices, on Nasdaq or any comparable system. If the Common Stock is not quoted on Nasdaq or any comparable system, the Board of Directors shall in good faith determine the current market price on the basis of such quotation as it considers appropriate. (d) If a holder converts shares of Series A Preferred Stock, the Corporation shall pay any documentary, stamp or similar issue or transfer tax due on the issuance of shares of Common Stock upon the conversion. The holder, however, shall pay to the Corporation the amount of any tax which is due (or shall establish to the satisfaction of the Corporation payment thereof) if the shares are to be issued in a name other than the name of such holder and shall pay to the Corporation any amount required by the last sentence of Section 8(a) hereof. (e) The Corporation shall reserve and shall at all times have reserved out of its authorized but unissued Common Stock a sufficient number of shares of Common Stock to permit the conversion of the then outstanding Series A Preferred Stock. All Common Stock which may be issued upon conversion of Series A Preferred Stock shall be validly issued, fully paid and nonassessable, and not subject to preemptive or other similar rights. In order that the Corporation may issue Common Stock upon conversion of Series A Preferred Stock, the Corporation will endeavor to comply with all applicable federal and state securities laws and will endeavor to list such Common Stock to be issued upon conversion on each securities exchange on which the Common Stock is listed. (f) The conversion rate in effect at any time shall be subject to adjustment from time to time as follows: (i) In case the Corporation shall (1) pay or make a distribution in shares of Common Stock to holders of the Common Stock, (2) reclassify the outstanding Common Stock into shares of some other class or series of shares, (3) subdivide the outstanding Common Stock into a greater number of shares of Common Stock or (4) combine the outstanding Common Stock into a smaller number of shares of Common Stock, the conversion rate immediately prior to such action shall be adjusted so that the holder of any shares of Series A Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock which he would have owned immediately following such action had such Series A Preferred Stock been converted immediately prior thereto. An adjustment made pursuant to this Section 8(f)(i) shall become effective immediately after the record date in the case of a distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification. (ii) In case the Corporation shall issue rights, options or warrants to all holders of the Common Stock entitling them to subscribe for or purchase Common Stock (or securities convertible into Common Stock) at a price per share less than the current market price (as determined pursuant to Section 8(f)(iv)) of the Common Stock on such record date, the number of shares of Common Stock into which each share of Series A Preferred Stock shall be convertible shall be adjusted so that the same shall be equal to the number determined by multiplying the number of shares of Common Stock into which such share of Series A Preferred Stock was convertible immediately prior to such record date by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock offered (or into which the convertible securities so offered are convertible), and of which the denominator shall be the number of shares of Common Stock outstanding on such record date, plus the number of shares of Common Stock which the aggregate offering price of the additional shares of Common Stock offered (or into which the convertible securities so offered are convertible) would purchase at such current market price. Such adjustments shall become effective immediately after such record date for the determination of the holders of the Common Stock entitled to receive such distribution. For purposes of this subsection (ii), the number of shares of Common Stock at any time outstanding shall not include shares of Common Stock held in the treasury of the Corporation. (iii) In case the Corporation shall distribute to all holders of the Common Stock any class of shares of stock other than Common Stock, evidences of indebtedness or assets of the Corporation (other than cash distributions out of current or retained earnings), or shall distribute to all holders of the Common Stock rights or warrants to subscribe for securities (other than those referred to in Section 8(f)(ii), then in each such case the number of Common Stock into which each share of Series A Preferred Stock shall be convertible shall be adjusted so that the same shall equal the number determined by multiplying the number of shares of Common Stock into which such share of Series A Preferred Stock was convertible immediately prior to the date of such distribution by a fraction of which the numerator shall be the current market price (determined as provided in Section 8(f)(iv) of the Common Stock on the record date mentioned below, and of which the denominator shall be such current market price of the Common Stock, less the then fair market value (as determined by the Board of Directors, whose determination shall be conclusive evidence of such fair market value) of the portion of the securities or assets so distributed or of such subscription rights or warrants applicable to one share of Common Stock. Such adjustment shall become effective immediately after the record date for the determination of the holders of the Common Stock entitled to receive such distribution. Notwithstanding the foregoing, in the event that the Corporation shall distribute rights or warrants (other than those referred to in Section 8(f)(ii)) ("Rights") pro rata to holders of the Common Stock, the Corporation may, in lieu of making any adjustment pursuant to this Section 8(f)(iii), make proper provision so that each holder of a share of Series A Preferred Stock who converts such share after the record date for such distribution and prior to the expiration or redemption of the Rights shall be entitled to receive upon such conversion, in addition to the Common Stock issuable upon such conversion (the "Conversion Shares"), a number of Rights to be determined as follows: (1) if such conversion occurs on or prior to the date for the distribution to the holders of Rights of separate certificates evidencing such Rights (the "Distribution Date"), the same number of Rights to which a holder of a number of shares of Common Stock equal to the number of Conversion Shares is entitled at the time of such conversion in accordance with the terms and provisions of and applicable to the Rights; and (2) if such conversion occurs after the Distribution Date, the same number of Rights to which a holder of the number of shares of Common Stock into which a share of Series A Preferred Stock so converted was convertible immediately prior to the Distribution Date would have been entitled on the Distribution Date in accordance with the terms and provisions of and applicable to the Rights. (iv) The current market price per share of the Common Stock on any date shall be deemed to be the average of the daily closing prices for thirty consecutive trading days commencing forty-five (45) trading days before the date in question. The closing price for each day shall be the last reported sales price or, in case no such reported sale takes place on such date, the average of the reported closing bid and asked prices regular way, in either case on the New York Stock Exchange, or if the Common Stock is not listed or admitted to trading on such Exchange, on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on any national securities exchange, the closing sale price of the Common Stock or, in case no reported sale takes place, the average of the closing bid and asked prices, on Nasdaq or any comparable system, or if the Common Stock is not quoted on Nasdaq or any comparable system, the closing sale price or, in case no reported sale takes place, the average of the closing bid and asked prices, as furnished by any two members of the National Association of Securities Dealers, Inc. selected from time to time by the Corporation for that purpose. (v) In any case in which this Section 8 shall require that an adjustment be made immediately following a record date, the Corporation may elect to defer (but only until five Business Days following the mailing of the notice described in Section 8(j)) issuing to the holder of any Series A Preferred Stock converted after such record date the Common Stock and other shares of stock of the Corporation issuable upon such conversion over and above the Common Stock and other shares of stock of the Corporation issuable upon such conversion only on the basis of the conversion rate prior to adjustment; and, in lieu of the shares the issuance of which is so deferred, the Corporation shall issue or cause its transfer agents to issue appropriate evidence of the right to receive such shares. (g) No adjustment in the conversion rate shall be required until cumulative adjustments result in a change of 1% or more of the conversion price as in effect prior to the last adjustment of the conversion rate; provided, however, that any adjustment which by reason of this Section 8(g) is not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 8 shall be made to the nearest cent ($.01) or the nearest one-hundredth (1/100) of a share, as the case may be. No adjustment to the conversion rate shall be made for cash dividends. (h) In the event that, as a result of an adjustment made pursuant to Section 8(f), the holder of any Series A Preferred Stock thereafter surrendered for conversion shall become entitled to receive any shares of stock of the Corporation other than Common Stock, thereafter the number of such other shares so receivable upon conversion of any Series A Preferred Stock shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in this Section 8. (i) The Corporation may make such increases in the conversion rate, in addition to those required by Sections 8(f)(i), (ii) and (iii), as is considered to be advisable in order that any event treated for federal income tax purposes as a distribution of shares or share rights shall not be taxable to the recipients thereof. (j) Whenever the conversion rate is adjusted, the Corporation shall promptly mail to all holders of record of Series A Preferred Stock a notice of the adjustment and shall cause to be prepared a certificate signed by a principal financial officer of the Corporation setting forth the adjusted conversion rate and a brief statement of the facts requiring such adjustment and the computation thereof; such certificate shall forthwith be filed with each transfer agent for the Series A Preferred Stock. (k) In the event that: (i) the Corporation takes any action which would require an adjustment in the conversion rate, (ii) the Corporation consolidates or merges with, or transfers all or substantially all of its assets to, another corporation and shareholders of the Corporation must approve the transaction, or (iii) there is a dissolution, winding up or liquidation of the Corporation, a holder of Series A Preferred Stock may wish to convert some or all of such shares into Common Stock prior to the record date for, or the effective date of, the transaction so that he may receive the rights, warrants, securities or assets which a holder of Common Stock on that date may receive. Therefore, the Corporation shall mail to holders of Series A Preferred Stock a notice stating the proposed record or effective date of the transaction, as the case may be. The Corporation shall mail the notice at least 10 days before such date; however, failure to mail such notice or any defect therein shall not affect the validity of any transaction referred to in clauses (i), (ii) or (iii) of this Section 8(k). (l) If any of the following shall occur, namely: (i) any reclassification or change of outstanding Common Stock issuable upon conversion of Series A Preferred Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), (ii) any consolidation or merger to which the Corporation is a party other than a consolidation or merger in which the Corporation is the continuing corporation and which does not result in any reclassification of, or change (other than a change in name, or par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination) in, outstanding Common Stock or (iii) any sale, transfer or lease of all or substantially all of the property or business of the Corporation as an entirety, then the Corporation, or such successor or purchasing corporation, as the case may be, shall, as a condition precedent to such reclassification, change, consolidation, merger, sale, transfer or lease, provide in its charter document that each share of Series A Preferred Stock shall be convertible into the kind and amount of shares of stock and other securities and property (including cash) receivable upon such reclassification, change, consolidation, merger, sale, transfer or lease by a holder of the number of shares of Common Stock deliverable upon conversion of such shares of Series A Preferred Stock immediately prior to such reclassification, change, consolidation, merger, sale, transfer or lease. Such charter document shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 8. The foregoing, however, shall not in any way affect the right that a holder of Series A Preferred Stock may otherwise have, pursuant to clause (2) of the last sentence of Section 8(f)(iii), to receive Rights upon conversion of Series A Preferred Stock. If, in the case of any such reclassification, change, consolidation, merger, sale, transfer or lease, the shares of stock or other securities and property (including cash) receivable thereupon by a holder of the Common Stock includes shares of stock or beneficial interest or other securities and property of a corporation or other entity other than the successor or purchasing corporation, as the case may be, in such reclassification, change, consolidation, merger, sale, transfer or lease, then the charter document of such other corporation shall contain such additional provisions to protect the interests of the holders of Series A Preferred Stock as the Board of Directors shall reasonably consider necessary by reason of the foregoing. The provisions of this Section 8(l) shall similarly apply to successive consolidations, mergers, sales, transfers or leases. No holder of Series A Convertible Preferred Stock will possess any preemptive rights to subscribe for or acquire any unissued shares of the Corporation (whether now or hereafter authorized) or securities of the Corporation convertible into or carrying a right to subscribe to or acquire shares of the Corporation. Section 9. So long as any Series A Preferred Stock is outstanding, the Corporation shall not issue any options to purchase shares of the Corporation ("Employee Stock Options") to officers, directors or employees of, or consultants to, the Corporation, whether pursuant to employee stock option or purchase plans of the Corporation or employment or consulting agreements or otherwise for an exercise price which is less than the fair market value of such shares on the date of grant. In the event the number of shares of Common Stock subject to Employee Stock Options excluding, any Employee Stock Options [reload/rollover], at any time exceeds, in the aggregate, 10% of the Common Stock outstanding at such time, all Employee Stock Options outstanding at such time in excess of such 10%, shall be deemed for purposes of Section 8 hereof to have an exercise price per share equal to 20% of the average fair market value of a share of Common Stock on the date of grant of those shares subject to Employee Stock Options most recently granted in excess of such 10%. Section 10. Exclusion of Other Rights. The Series A Preferred Stock shall not have any voting powers, preferences and relative, participating, optional or other special rights, other than those specifically set forth in the terms of the Series A Preferred Stock (as such terms may be amended from time to time) or in the charter of the Corporation. The Series A Preferred Stock shall have no preemptive or subscription rights. Section 11. Headings of Subdivisions. The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof. Section 12. Severability of Provisions. If any voting powers, preferences and relative, participating, optional and other special rights of the Series A Preferred Stock and qualifications, limitations and restrictions thereof set forth in the terms of the Series A Preferred Stock (as such terms may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of Series A Preferred Stock and qualifications, limitations and restrictions thereof set forth in the terms of the Series A Preferred Stock (as so amended) which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences and relative, participating, optional or other special rights of Series A Preferred Stock and qualifications, limitations and restrictions thereof herein set forth shall not be deemed dependent upon any other such voting powers, preferences and relative, participating, optional or other special right of Series A Preferred Stock and qualifications, limitations and restrictions thereof unless so expressed herein. SECOND: The Shares have been classified and designated by the Board of Directors under the authority contained in the Charter. THIRD: These Articles Supplementary have been approved by the Board of Directors in the manner and by the vote required by law. FOURTH: The undersigned President of the Corporation acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned President acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury. IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be executed under seal in its name and on its behalf by its President and attested to by its Secretary on this ___ of May, 1997. ATTEST: WELLSFORD REAL PROPERTIES, INC _____________________________ By: (SEAL) Jeffrey H. Lynford, Secretary ------------------------- Edward Lowenthal, President EX-3.4 5 BYLAWS EXHIBIT 3.4 WELLSFORD REAL PROPERTIES, INC. BYLAWS ARTICLE I OFFICES Section 1. PRINCIPAL OFFICE. The principal office of the Corporation shall be located at such place or places as the Board of Directors may designate. Section 2. ADDITIONAL OFFICES. The Corporation may have additional offices at such places as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. PLACE. All meetings of stockholders shall be held at the principal office of the Corporation or at such other place within the United States as shall be stated in the notice of the meeting. Section 2. ANNUAL MEETING. An annual meeting of the stockholders for the election of directors and the transaction of any business within the powers of the Corporation shall be held on a date and at the time set by the Board of Directors during the month of May in each year. Section 3. SPECIAL MEETINGS. The chairman of the board, president, chief executive officer or Board of Directors may call special meetings of the stockholders. Special meetings of stockholders shall also be called by the secretary of the Corporation upon the written request of the holders of shares entitled to cast not less than a majority of all the votes entitled to be cast at such meeting. Such request shall state the purpose of such meeting and the matters proposed to be acted on at such meeting. The secretary shall inform such stockholders of the reasonably estimated cost of preparing and mailing notice of the meeting and, upon payment to the Corporation by such stockholders of such costs, the secretary shall give notice to each stockholder entitled to notice of the meeting. Section 4. NOTICE. Not less than ten nor more than 90 days before each meeting of stockholders, the secretary shall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting written or printed notice stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, either by mail or by presenting it to such stockholder personally or by leaving it at his residence or usual place of business. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at his post office address as it appears on the records of the Corporation, with postage thereon prepaid. Section 5. SCOPE OF NOTICE. Any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice. Section 6. ORGANIZATION. At every meeting of stockholders, the chairman of the board, if there be one, shall conduct the meeting or, in the case of vacancy in office or absence of the chairman of the board, one of the following officers present shall conduct the meeting in the order stated: the vice chairman of the board, if there be one, the president, the vice presidents in their order of rank and seniority, or a chairman chosen by the stockholders entitled to cast a majority of the votes which all stockholders present in person or by proxy are entitled to cast, shall act as chairman, and the secretary, or, in his absence, an assistant secretary, or in the absence of both the secretary and assistant secretaries, a person appointed by the chairman shall act as secretary. Section 7. QUORUM. At any meeting of stockholders, the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting shall constitute a quorum; but this section shall not affect any requirement under any statute or the charter of the Corporation for the vote necessary for the adoption of any measure. If, however, such quorum shall not be present at any meeting of the stockholders, the stockholders entitled to vote at such meeting, present in person or by proxy, shall have the power to adjourn the meeting from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. Section 8. VOTING. Unless otherwise provided in the charter, a plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to elect a director. Each share may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted. A majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by statute or by the charter of the Corporation. Unless otherwise provided in the charter, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders. Section 9. PROXIES. A stockholder may cast the votes entitled to be cast by the shares of the stock owned of record by him either in person or by proxy executed in writing by the stockholder or by his duly authorized attorney in fact. Such proxy shall be filed with the secretary of the Corporation before or at the time of the meeting. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. Section 10. VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the Corporation registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a general partner or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock. Any director or other fiduciary may vote stock registered in his name as such fiduciary, either in person or by proxy. Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding shares at any given time. The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date or closing of the stock transfer books, the time after the record date or closing of the stock transfer books within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable. On receipt of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the stockholder of record of the specified stock in place of the stockholder who makes the certification. Notwithstanding any other provision of the charter of the Corporation or these Bylaws, Title 3, Subtitle 7 of the Corporations and Associations Article of the Annotated Code of Maryland (or any successor statute) shall not apply to any acquisition by any person of shares of stock of the Corporation. This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition. Section 11. INSPECTORS. At any meeting of stockholders, the chairman of the meeting may appoint one or more persons as inspectors for such meeting. Such inspectors shall ascertain and report the number of shares represented at the meeting based upon their determination of the validity and effect of proxies, count all votes, report the results and perform such other acts as are proper to conduct the election and voting with impartiality and fairness to all the stockholders. Each report of an inspector shall be in writing and signed by him or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof. Section 12. NOMINATIONS AND PROPOSALS BY STOCKHOLDERS. (a) Annual Meetings of Stockholders. (1) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders (i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) by any stockholder of the Corporation who was a stockholder of record both at the time of giving of notice provided for in this Section 12(a) and at the time of the annual meeting, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Section 12(a). (2) For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a)(1) of this Section 12, the stockholder must have given timely notice thereof in writing to the secretary of the Corporation and such other business must otherwise be a proper matter for action by stockholders. To be timely, a stockholder's notice shall be delivered to the secretary at the principal executive offices of the Corporation not later than the close of business on the 60th day nor earlier than the close of business on the 90th day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date or if the Corporation has not previously held an annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 90th day prior to such annual meeting and not later than the close of business on the later of the 60th day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of a postponement or adjournment of an annual meeting to a later date or time commence a new time period for the giving of a stockholder's notice as described above. Such stockholder's notice shall set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (ii) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and of the beneficial owner, if any, on whose behalf the proposal is made; and (iii) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made, (x) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner and (y) the number of shares of each class of stock of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner. (3) Notwithstanding anything in the second sentence of paragraph (a)(2) of this Section 12 to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least 70 days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this Section 12(a) shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the secretary at the principal executive offices of the Corporation not later than the close of business on the tenth day following the day on which such public announcement is first made by the Corporation. (b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected (i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) provided that the Board of Directors has determined that directors shall be elected at such special meeting, by any stockholder of the Corporation who is a stockholder of record both at the time of giving of notice provided for in this Section 12(b) and at the time of the special meeting, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Section 12(b). In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be) for election to such position as specified in the Corporation's notice of meeting, if the stockholder's notice containing the information required by paragraph (a)(2) of this Section 12 shall be delivered to the secretary at the principal executive offices of the Corporation not earlier than the close of business on the 90th day prior to such special meeting and not later than the close of business on the later of the 60th day prior to such special meeting or the tenth day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of a postponement or adjournment of a special meeting to a later date or time commence a new time period for the giving of a stockholder's notice as described above. (c) General. (1) Only such persons who are nominated in accordance with the procedures set forth in this Section 12 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 12. The chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 12 and, if any proposed nomination or business is not in compliance with this Section 12, to declare that such nomination or proposal shall be disregarded. (2) For purposes of this Section 12, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. (3) Notwithstanding the foregoing provisions of this Section 12, a stockholder shall also comply with all applicable requirements of state law and of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 12. Nothing in this Section 12 shall be deemed to affect any rights of stockholders to request inclusion of proposals in, nor the rights of the Corporation to omit a proposal from, the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act. Section 13. VOTING BY BALLOT. Voting on any question or in any election may be viva voce unless the presiding officer shall order or any stockholder shall demand that voting be by ballot. ARTICLE III DIRECTORS Section 1. GENERAL POWERS. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors. Section 2. NUMBER, TENURE AND QUALIFICATIONS. At any regular meeting or at any special meeting called for that purpose, a majority of the entire Board of Directors may establish, increase or decrease the number of directors, provided that the number thereof shall never be less than the minimum number required by the Maryland General Corporation Law, nor more than 15, and further provided that the tenure of office of a director shall not be affected by any decrease in the number of directors. Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of Directors shall be held immediately after and at the same place as the annual meeting of stockholders, no notice other than this Bylaw being necessary. The Board of Directors may provide, by resolution, the time and place, either within or without the State of Maryland, for the holding of regular meetings of the Board of Directors without other notice than such resolution. Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the chairman of the board, president or by a majority of the directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix any place, either within or without the State of Maryland, as the place for holding any special meeting of the Board of Directors called by them. Section 5. NOTICE. Notice of any special meeting of the Board of Directors shall be delivered personally or by telephone, facsimile transmission, United States mail or courier to each director at his business or residence address. Notice by personal delivery, by telephone or a facsimile transmission shall be given at least two days prior to the meeting. Notice by mail shall be given at least five days prior to the meeting and shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid. Telephone notice shall be deemed to be given when the director is personally given such notice in a telephone call to which he is a party. Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given to the Corporation by the director and receipt of a completed answer-back indicating receipt. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be stated in the notice, unless specifically required by statute or these Bylaws. Section 6. QUORUM. A majority of the directors shall constitute a quorum for transaction of business at any meeting of the Board of Directors, provided that, if less than a majority of such directors are present at said meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to the charter of the Corporation or these Bylaws, the vote of a majority of a particular group of directors is required for action, a quorum must also include a majority of such group. The directors present at a meeting which has been duly called and convened may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum. Section 7. VOTING. The action of the majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable statute. Section 8. TELEPHONE MEETINGS. Directors may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting. Section 9. INFORMAL ACTION BY DIRECTORS. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in writing to such action is signed by each director and such written consent is filed with the minutes of proceedings of the Board of Directors. Section 10. VACANCIES. If for any reason any or all the directors cease to be directors, such event shall not terminate the Corporation or affect these Bylaws or the powers of the remaining directors hereunder (even if fewer than three directors remain). Any vacancy on the Board of Directors for any cause other than an increase in the number of directors shall be filled by a majority of the remaining directors, although such majority is less than a quorum. Any vacancy in the number of directors created by an increase in the number of directors may be filled by a majority vote of the entire Board of Directors. Any individual so elected as director shall hold office until the next annual meeting of stockholders and until his successor is elected and qualifies. Section 11. COMPENSATION. Directors shall not receive any stated salary for their services as directors but, by resolution of the Board of Directors, may receive compensation per year and/or per meeting and/or per visit to real property or other facilities owned or leased by the Corporation and for any service or activity they performed or engaged in as directors. Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Directors or of any committee thereof and for their expenses, if any, in connection with each property visit and any other service or activity they performed or engaged in as directors; but nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receiving compensation therefor. Section 12. LOSS OF DEPOSITS. No director shall be liable for any loss which may occur by reason of the failure of the bank, trust company, savings and loan association, or other institution with whom moneys or stock have been deposited. Section 13. SURETY BONDS. Unless required by law, no director shall be obligated to give any bond or surety or other security for the performance of any of his duties. Section 14. RELIANCE. Each director, officer, employee and agent of the Corporation shall, in the performance of his duties with respect to the Corporation, be fully justified and protected with regard to any act or failure to act in reliance in good faith upon the books of account or other records of the Corporation, upon an opinion of counsel or upon reports made to the Corporation by any of its officers or employees or by the adviser, accountants, appraisers or other experts or consultants selected by the Board of Directors or officers of the Corporation, regardless of whether such counsel or expert may also be a director. Section 15. CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS. The directors shall have no responsibility to devote their full time to the affairs of the Corporation. Any director or officer, employee or agent of the Corporation, in his personal capacity or in a capacity as an affiliate, employee, or agent of any other person, or otherwise, may have business interests and engage in business activities similar to or in addition to or in competition with those of or relating to the Corporation. ARTICLE IV COMMITTEES Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors may appoint from among its members an Executive Committee, an Audit Committee, a Compensation Committee and other committees, composed of one or more directors, to serve at the pleasure of the Board of Directors. Section 2. POWERS. The Board of Directors may delegate to committees appointed under Section 1 of this Article any of the powers of the Board of Directors, except as prohibited by law. Section 3. MEETINGS. Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Directors. A majority of the members of the committee shall constitute a quorum for the transaction of business at any meeting of the committee. The act of a majority of the committee members present at a meeting shall be the act of such committee. The Board of Directors may designate a chairman of any committee, and such chairman or any two members of any committee may fix the time and place of its meeting unless the Board shall otherwise provide. In the absence of any member of any such committee, the members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member. Each committee shall keep minutes of its proceedings. Section 4. TELEPHONE MEETINGS. Members of a committee of the Board of Directors may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting. Section 5. INFORMAL ACTION BY COMMITTEES. Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent in writing to such action is signed by each member of the committee and such written consent is filed with the minutes of proceedings of such committee. Section 6. VACANCIES. Subject to the provisions hereof, the Board of Directors shall have the power at any time to change the membership of any committee, to fill all vacancies, to designate alternate members to replace any absent or disqualified member or to dissolve any such committee. ARTICLE V OFFICERS Section 1. GENERAL PROVISIONS. The officers of the Corporation shall include a chief executive officer, a president, a secretary and a treasurer and may include a chairman of the board, a vice chairman of the board, one or more vice presidents, a chief operating officer, a chief financial officer, one or more assistant secretaries and one or more assistant treasurers. In addition, the Board of Directors may from time to time appoint such other officers with such powers and duties as they shall deem necessary or desirable. The officers of the Corporation shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of stockholders, except that the chief executive officer may appoint one or more vice presidents, assistant secretaries and assistant treasurers. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as may be convenient. Each officer shall hold office until his successor is elected and qualifies or until his death, resignation or removal in the manner hereinafter provided. Any two or more offices except president and vice president may be held by the same person. In its discretion, the Board of Directors may leave unfilled any office except that of president, treasurer and secretary. Election of an officer or agent shall not of itself create contract rights between the Corporation and such officer or agent. Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Corporation may be removed by the Board of Directors if in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer of the Corporation may resign at any time by giving written notice of his resignation to the Board of Directors, the chairman of the board, the president or the secretary. Any resignation shall take effect at any time subsequent to the time specified therein or, if the time when it shall become effective is not specified therein, immediately upon its receipt. The acceptance of a resignation shall not be necessary to make it effective unless otherwise stated in the resignation. Such resignation shall be without prejudice to the contract rights, if any, of the Corporation. Section 3. VACANCIES. A vacancy in any office may be filled by the Board of Directors for the balance of the term. Section 4. CHIEF EXECUTIVE OFFICER. The Board of Directors may designate a chief executive officer. The chief executive officer shall have general responsibility for implementation of the policies of the Corporation, as determined by the Board of Directors, and for the management of the business and affairs of the Corporation. Section 5. CHIEF OPERATING OFFICER. The Board of Directors may designate a chief operating officer. The chief operating officer shall have the responsibilities and duties as set forth by the Board of Directors or the chief executive officer. Section 6. CHIEF FINANCIAL OFFICER. The Board of Directors may designate a chief financial officer. The chief financial officer shall have the responsibilities and duties as set forth by the Board of Directors or the chief executive officer. Section 7. CHAIRMAN OF THE BOARD. The Board of Directors shall designate a chairman of the board. The chairman of the board shall preside over the meetings of the Board of Directors and of the stockholders at which he shall be present and shall in general oversee all of the business and affairs of the Corporation. The Chairman of the Board may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the directors or these Bylaws to some other officer of the Corporation or shall be required by law to be otherwise executed. The chairman of the board shall perform such other duties as may be assigned to him or them by the Board of Directors. Section 8. PRESIDENT. The president or chief executive officer, as the case may be, shall in general supervise and control all of the business and affairs of the Corporation. In the absence of a designation of a chief operating officer by the Board of Directors, the president shall be the chief operating officer. He may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the Board of Directors from time to time. Section 9. VICE PRESIDENTS. In the absence of the president or in the event of a vacancy in such office, the vice president (or in the event there be more than one vice president, the vice presidents in the order designated at the time of their election or, in the absence of any designation, then in the order of their election) shall perform the duties of the president and when so acting shall have all the powers of and be subject to all the restrictions upon the president; and shall perform such other duties as from time to time may be assigned to him by the chairman of the board, the president or the Board of Directors. The Board of Directors may designate one or more vice presidents as executive vice president or as vice president for particular areas of responsibility. Section 10. SECRETARY. The secretary shall (a) keep the minutes of the proceedings of the stockholders, the Board of Directors and committees of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation; (d) keep a register of the post office address of each stockholder which shall be furnished to the secretary by such stockholder; (e) have general charge of the share transfer books of the Corporation; and (f) in general perform such other duties as from time to time may be assigned to him by the chief executive officer, the president or by the Board of Directors. Section 11. TREASURER. The treasurer shall have the custody of the funds and securities of the Corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. In the absence of a designation of a chief financial officer by the Board of Directors, the treasurer shall be the chief financial officer of the Corporation. The treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and Board of Directors, at the regular meetings of the Board of Directors or whenever it may so require, an account of all his transactions as treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, moneys and other property of whatever kind in his possession or under his control belonging to the Corporation. Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by the chairman of the board, the president or the Board of Directors. The assistant treasurers shall, if required by the Board of Directors, give bonds for the faithful performance of their duties in such sums and with such surety or sureties as shall be satisfactory to the Board of Directors. Section 13. SALARIES. The salaries and other compensation of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary or other compensation by reason of the fact that he is also a director. ARTICLE VI CONTRACTS, LOANS, CHECKS AND DEPOSITS Section 1. CONTRACTS. The Board of Directors may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances. Any agreement, deed, mortgage, lease or other document executed by one or more of the directors or by an authorized person shall be valid and binding upon the Board of Directors and upon the Corporation when authorized or ratified by action of the Board of Directors. Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation in such manner as shall from time to time be determined by the Board of Directors. Section 3. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board of Directors may designate. ARTICLE VII STOCK Section 1. CERTIFICATES. Each stockholder shall be entitled to a certificate or certificates which shall represent and certify the number of shares of each class of stock held by him in the Corporation. Each certificate shall be signed by the chief executive officer, the president or a vice president and countersigned by the secretary or an assistant secretary or the treasurer or an assistant treasurer and may be sealed with the seal, if any, of the Corporation. The signatures may be either manual or facsimile. Certificates shall be consecutively numbered; and if the Corporation shall, from time to time, issue several classes of stock, each class may have its own number series. A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued. Each certificate representing shares which are restricted as to their transferability or voting powers, which are preferred or limited as to their dividends or as to their allocable portion of the assets upon liquidation or which are redeemable at the option of the Corporation, shall have a statement of such restriction, limitation, preference or redemption provision, or a summary thereof, plainly stated on the certificate. If the Corporation has authority to issue stock of more than one class, the certificate shall contain on the face or back a full statement or summary of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption of each class of stock and, if the Corporation is authorized to issue any preferred or special class in series, the differences in the relative rights and preferences between the shares of each series to the extent they have been set and the authority of the Board of Directors to set the relative rights and preferences of subsequent series. In lieu of such statement or summary, the certificate may state that the Corporation will furnish a full statement of such information to any stockholder upon request and without charge. If any class of stock is restricted by the Corporation as to transferability, the certificate shall contain a full statement of the restriction or state that the Corporation will furnish information about the restrictions to the stockholder on request and without charge. Section 2. TRANSFERS. Upon surrender to the Corporation or the transfer agent of the Corporation of a stock certificate duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the Corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Maryland. Notwithstanding the foregoing, transfers of shares of any class of stock will be subject in all respects to the charter of the Corporation and all of the terms and conditions contained therein. Section 3. REPLACEMENT CERTIFICATE. Any officer designated by the Board of Directors may direct a new certificate to be issued in place of any certificate previously issued by the Corporation alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing the issuance of a new certificate, an officer designated by the Board of Directors may, in his discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or the owner's legal representative to advertise the same in such manner as he shall require and/or to give bond, with sufficient surety, to the Corporation to indemnify it against any loss or claim which may arise as a result of the issuance of a new certificate. Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The Board of Directors may set, in advance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or determining stockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of stockholders for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days and, in the case of a meeting of stockholders, not less than ten days, before the date on which the meeting or particular action requiring such determination of stockholders of record is to be held or taken. In lieu of fixing a record date, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not longer than 20 days. If the stock transfer books are closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for at least ten days before the date of such meeting. If no record date is fixed and the stock transfer books are not closed for the determination of stockholders, (a) the record date for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day on which the notice of meeting is mailed or the 30th day before the meeting, whichever is the closer date to the meeting; and (b) the record date for the determination of stockholders entitled to receive payment of a dividend or an allotment of any other rights shall be the close of business on the day on which the resolution of the directors, declaring the dividend or allotment of rights, is adopted. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof, except when (i) the determination has been made through the closing of the transfer books and the stated period of closing has expired or (ii) the meeting is adjourned to a date more than 120 days after the record date fixed for the original meeting, in either of which case a new record date shall be determined as set forth herein. Section 5. STOCK LEDGER. The Corporation shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate share ledger containing the name and address of each stockholder and the number of shares of each class held by such stockholder. Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors may issue fractional stock or provide for the issuance of scrip, all on such terms and under such conditions as they may determine. Notwithstanding any other provision of the charter or these Bylaws, the Board of Directors may issue units consisting of different securities of the Corporation. Any security issued in a unit shall have the same characteristics as any identical securities issued by the Corporation, except that the Board of Directors may provide that for a specified period securities of the Corporation issued in such unit may be transferred on the books of the Corporation only in such unit. ARTICLE VIII ACCOUNTING YEAR The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution. ARTICLE IX DISTRIBUTIONS Section 1. AUTHORIZATION. Dividends and other distributions upon the stock of the Corporation may be authorized and declared by the Board of Directors, subject to the provisions of law and the charter of the Corporation. Dividends and other distributions may be paid in cash, property or stock of the Corporation, subject to the provisions of law and the charter. Section 2. CONTINGENCIES. Before payment of any dividends or other distributions, there may be set aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may from time to time, in its absolute discretion, think proper as a reserve fund for contingencies, for equalizing dividends or other distributions, for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine to be in the best interest of the Corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created. ARTICLE X INVESTMENT POLICY Subject to the provisions of the charter of the Corporation, the Board of Directors may from time to time adopt, amend, revise or terminate any policy or policies with respect to investments by the Corporation as it shall deem appropriate in its sole discretion. ARTICLE XI SEAL Section 1. SEAL. The Board of Directors may authorize the adoption of a seal by the Corporation. The seal shall contain the name of the Corporation and the year of its incorporation and the words "Incorporated Maryland." The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. Section 2. AFFIXING SEAL. Whenever the Corporation is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word "(SEAL)" adjacent to the signature of the person authorized to execute the document on behalf of the Corporation. ARTICLE XII INDEMNIFICATION AND ADVANCE OF EXPENSES To the maximum extent permitted by Maryland law in effect from time to time, the Corporation shall indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, shall pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (a) any individual who is a present or former director or officer of the Corporation and who is made a party to the proceeding by reason of his service in that capacity or (b) any individual who, while a director of the Corporation and at the request of the Corporation, serves or has served another corporation, partnership, joint venture, trust, employee benefit plan, limited liability company or any other enterprise as a director, officer, partner, trustee, manager or member of such corporation, partnership, joint venture, trust, employee benefit plan, limited liability company or other enterprise and who is made a party to the proceeding by reason of his service in that capacity. The Corporation may, with the approval of its Board of Directors, provide such indemnification and advance for expenses to a person who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation. Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of the Bylaws or charter of the Corporation inconsistent with this Article, shall apply to or affect in any respect the applicability of the preceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption. ARTICLE XIII WAIVER OF NOTICE Whenever any notice is required to be given pursuant to the charter of the Corporation or these Bylaws or pursuant to applicable law, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. ARTICLE XIV AMENDMENT OF BYLAWS The Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws. EX-4.1 6 SPECIMEN CERTIFICATE EXHIBIT 4.1 NUMBER WRP SHARES L WELLSFORD REAL PROPERTIES, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND COMMON STOCK SEE REVERSE FOR CERTAIN DEFINITIONS CUSIP 950240 10 1 THIS CERTIFIES THAT IS THE OWNER OF FULLY-PAID AND NONASSESSABLE SHARES OF THE COMMON STOCK, $.01 PAR VALUE PER SHARE, OF Wellsford Real Properties, Inc. (the "Corporation"), transferable in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificate and the shares represented hereby are issued and shall be subject to all of the provisions of the charter of the Corporation (the "Charter"), the Bylaws of the Corporation, and all amendments thereof and thereto, copies of which are available at the headquarters of the Corporation, and to all of which the holder by acceptance hereof assents. This certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar. Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers. Dated: /s/ Jeffrey H. Lynford /s/ Edward Lowenthal -------------------------- -------------------- CHAIRMAN OF THE BOARD AND SECRETARY PRESIDENT AND CHIEF EXECUTIVE OFFICER The Corporation will furnish to any stockholder, on request and without charge, a full statement of the information required by Section 2-211(b) of the Corporations and Associations Article of the Annotated Code of Maryland with respect to the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption of the stock of each class which the Corporation has authority to issue and, if the Corporation is authorized to issue any preferred or special class in series (i) the differences in the relative rights and preferences between the shares for each series to the extent set, and (ii) the authority of the Board of Directors to set such rights and preferences of subsequent series. The foregoing summary does not purport to be complete and is subject to and qualified in its entirety by reference to the charter of the Corporation (the "Charter"), a copy of which will be sent without charge to each stockholder who so requests. Such request must be made to the Secretary of the Corporation at its principal office or to the Transfer Agent. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -- as tenants in common TEN ENT - as tenants by the entireties JT TEN - as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT--_________ Custodian_______ (Cust) (Minor) under Union Gifts to Minors Act_______________________ (State) Additional abbreviations may also be used though not in the above list. For value received, _________________________________ hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE _______________________________ | | |_____________________________| _________________________________________________________________ (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE) _________________________________________________________________ _________________________________________________________________ ___________________________________________________________Shares of the Common Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint ______________________________________________________Attorney to transfer the said stock on the books of the within-named Corporation with full power of substitution in the premises. Dated_________________________________ Notice:________________________________________________________ THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. SIGNATURE(S) GUARANTEED ________________________________________ THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17 Ad-15. KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A REPLACEMENT CERTIFICATE. EX-10.31 7 FORM OF EMPLOYMENT AGT - LYNFORD EXHIBIT 10.31 EMPLOYMENT AGREEMENT AGREEMENT, dated as of May 30, 1997, between WELLSFORD REAL PROPERTIES, INC., a Maryland corporation with offices at 610 Fifth Avenue, New York, New York 10020 (the "Company"), and JEFFREY H. LYNFORD, an individual residing at 10 Holly Branch Road, Katonah, New York 10536 (the "Executive"). WHEREAS, the Executive is an executive of Wellsford Residential Property Trust, a Maryland real estate investment trust ("Wellsford Residential"); WHEREAS, Equity Residential Properties Trust, a Maryland real estate investment trust ("EQR"), is merging with and into Wellsford Residential as of the date hereof (the "Merger"); WHEREAS, immediately prior to the Merger, Wellsford Residential is distributing to its common shareholders, pro rata, all of the shares of common stock that it owns in the Company (the "Distribution"); and WHEREAS, the Company desires to employ the Executive, and the Executive desires to be employed by the Company. IT IS AGREED: 1. Duties. (a) During the term of the Executive's employment hereunder the Executive shall serve and the Company shall employ the Executive as Chairman of the Board to perform such executive or administrative services for the Company consistent with those of a Chairman of the Board as may be assigned to the Executive by the directors of the Company. The Executive hereby accepts such employment and agrees to perform such services. (b) The Executive shall devote such time, attention and energies during business hours to the performance of his duties hereunder as is necessary to properly carry out the responsibilities of his office. (c) The Executive shall cooperate with the Company, including taking such medical examinations as the Company reasonably shall deem necessary, if the Company shall desire to obtain medical, disability or life insurance with respect to the Executive. Where reasonably possible, the Company shall cooperate with the Executive's request to have such examinations performed by the Executive's personal physician or another physician reasonably acceptable to the Executive. (d) The Executive shall not be required to relocate or conduct the Company's business outside the New York, New York area in order to perform his duties under this Agreement but shall undertake such reasonable business travel as may be necessary to perform said duties (for which the Executive shall be reimbursed pursuant to Section 4 below for costs and expenses incurred in connection therewith). 2. Employment Term. This Agreement shall commence on May 30, 1997 and shall continue in effect through December 31, 2002; provided, however, that, on January 1, 2003 and on each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year beyond such January 1 unless, not later than June 30 of the preceding year, either the Executive or the Company shall have given notice to the other not to extend this Agreement. 3. Compensation. For all services rendered by the Executive pursuant to this Agreement: (a) The Company shall pay to the Executive an annual base salary at the following rates: (i) for the period from May 30, 1997 through December 31, 1997 - $275,000; (ii) for the period from January 1, 1998 through December 31, 1998 - $283,250; (iii) for the period from January 1, 1999 through December 31, 1999 - $291,748; (iv) for the period from January 1, 2000 through December 31, 2000 - $300,500; (v) for the period from January 1, 2001 through December 31, 2001 - $309,515; (vi) for the period from January 1, 2002 through December 31, 2002 - $318,800; and (vii) for each additional year thereafter, the annual base salary for the immediately preceding year plus 3% of such annual base salary. All such compensation shall be paid bi-weekly or at such other regular intervals, not less frequently than monthly, as the Company may establish from time to time for executive employees of the Company. (b) In addition to the compensation set forth in subsection 3(a) above, the Executive shall be awarded such bonus for each calendar year or partial calendar year of his employment hereunder as the directors of the Company shall determine in their sole discretion. In determining such bonus, the Executive understands that the directors will consider, without limitation, the following factors with respect to the applicable calendar year or partial calendar year: the Company's financial performance, business performance and growth during such period; Executive's responsibilities as an officer of the Company (including his participation in transactions of particular financial or business significance to the Company) during such period; the total compensation package paid to executive officers having similar responsibilities as the Executive who are employed by entities which are similar to the Company; and such other factors as the directors may deem appropriate in their sole discretion. Such bonus may consist of cash; grants of shares ("Shares") of Common Stock of the Company; options to purchase Shares; loans to purchase Shares; share appreciation rights (whether independent of or in conjunction with awards of options); and such other awards as the directors in their sole discretion may deem appropriate and which they believe are in furtherance of the growth of long-term stockholder value of the Company. 4. Expenses. (a) The Company shall pay for all legal and accounting fees and expenses incurred by the Executive in connection with the structuring, negotiation and preparation of this Agreement. The Company shall reimburse the Executive for all out-of-pocket expenses actually and necessarily incurred by him in the conduct of the business of the Company against reasonable substantiation submitted with respect thereto. (b) Unless the provisions of subsection 4(c) below shall apply, the Company shall reimburse the Executive for all legal fees and related expenses (including the costs of experts, evidence and counsel) paid by the Executive as a result of (i) the termination of Executive's employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), (ii) the Executive seeking to obtain or enforce any right or benefit provided by this Agreement or by any other plan or arrangement maintained by the Company under which the Executive is or may be entitled to receive benefits, (iii) the Executive's hearing before the directors as contemplated in subsection 6(c) of this Agreement or (iv) any action taken by the Company against the Executive; provided, however, that the Company shall reimburse the legal fees and related expenses described in this subsection 4(b) only if and when a final judgement has been rendered in favor of the Executive and all appeals related to any such action have been exhausted. (c) The Company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) incurred by the Executive as they become due as a result of (i) the termination of Executive's employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), (ii) the Executive seeking to obtain or enforce any right or benefit provided by this Agreement or by any other plan or arrangement maintained by the Company under which the Executive is or may be entitled to receive benefits, (iii) the Executive's hearing before the directors as contemplated in subsection 6(c) of this Agreement or (iv) any action taken by the Company against the Executive, unless and until such time that a final judgement has been rendered in favor of the Company and all appeals related to any such action have been exhausted; provided, however, that the circumstances set forth above occurred on or after a change in control of the Company. (d) For purposes of this Agreement, a "change in control of the Company" shall be deemed to occur if: (i) there shall have occurred a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on the date hereof, whether or not the Company is then subject to such reporting requirement, provided, however, that there shall not be deemed to be a "change in control" of the Company if immediately prior to the occurrence of what would otherwise be a "change in control" of the Company (a) the Executive is the other party to the transaction (a "Control Event") that would otherwise result in a "change in control" of the Company or (b) the Executive is an executive officer, trustee, director or more than 5% equity holder of the other party to the Control Event or of any entity, directly or indirectly, controlling such other party, (ii) the Company merges or consolidates with, or sells all or substantially all of its assets to, another company (each, a "Transaction"), provided, however, that a Transaction shall not be deemed to result in a "change in control" of the Company if (a) immediately prior thereto the circumstances in (i)(a) or (i)(b) above exist, or (b) (1) the shareholders of the Company, immediately before such Transaction own, directly or indirectly, immediately following such Transaction in excess of fifty percent (50%) of the combined voting power of the outstanding voting securities of the corporation or other entity resulting from such Transaction (the "Surviving Corporation") in substantially the same proportion as their ownership of the voting securities of the Company immediately before such Transaction and (2) the individuals who were members of the Company's Board of Directors immediately prior to the execution of the agreement providing for such Transaction constitute at least a majority of the members of the board of directors or the board of trustees, as the case may be, of the Surviving Corporation, or of a corporation or other entity beneficially directly or indirectly owning a majority of the outstanding voting securities of the Surviving Corporation, or (iii) the Company acquires assets of another company or a subsidiary of the Company merges or consolidates with another company (each, an "Other Transaction") and (a) the shareholders of the Company, immediately before such Other Transaction own, directly or indirectly, immediately following such Other Transaction 50% or less of the combined voting power of the outstanding voting securities of the corporation or other entity resulting from such Other Transaction (the "Other Surviving Corporation") in substantially the same proportion as their ownership of the voting securities of the Company immediately before such Other Transaction or (b) the individuals who were members of the Company's Board of Directors immediately prior to the execution of the agreement providing for such Other Transaction constitute less than a majority of the members of the board of directors or the board of trustees, as the case may be, of the Other Surviving Corporation, or of a corporation or other entity beneficially directly or indirectly owning a majority of the outstanding voting securities of the Other Surviving Corporation, provided, however, that an Other Transaction shall not be deemed to result in a "change in control" of the Company if immediately prior thereto the circumstances in (i)(a) or (i)(b) above exist. 5. Benefits. The Executive shall be entitled to six weeks of paid vacation each year and such other medical and other benefits as are afforded from time to time to all executive employees of the Company. The Company shall indemnify the Executive in the performance of his duties pursuant to the bylaws of the Company and to the fullest extent allowed by applicable law, including, without limitation, legal fees. 6. Earlier Termination. (a) If the Executive shall fail, because of illness or incapacity, to render the services contemplated by this Agreement for six successive months or for shorter periods aggregating nine months in any calendar year, the directors of the Company may determine, on the basis of medical evidence satisfactory to the Company, in the Company's sole discretion, that the Executive has become disabled. If within thirty (30) days after the date on which written notice of such determination is given to the Executive, the Executive shall not have returned to the full-time performance of his duties hereunder, this Agreement and the employment of the Executive hereunder shall be deemed terminated in accordance with Section 8 hereof. (b) Except as otherwise provided in this Agreement, if the Executive shall die during the term of this Agreement, this Agreement shall be deemed to have been terminated as of the date of death of the Executive. (c) The Company, by notice to the Executive, may terminate this Agreement for proper cause. As used herein, "proper cause" shall mean (i) the willful and continued failure by the Executive to substantially perform his duties with the Company (other than any such failure resulting from the Executive's incapacity due to physical or mental illness or any such actual or anticipated failure resulting from termination by the Executive for Good Reason (as defined below)) after a written demand for substantial performance is delivered to the Executive by the directors of the Company, which demand specifically identifies the manner in which the directors believe that the Executive has not substantially performed his duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes of this subsection 6(c), no act, or failure to act, on the Executive's part shall be deemed "willful" unless done, or omitted to be done, by the Executive otherwise than in good faith and in a manner that the Executive reasonably believed was in or not opposed to the best interests of the Company and its shareholders. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for proper cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of all of the directors of the Company at a meeting of the directors called and held for such purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with counsel of his choosing, to be heard before the directors not less than 10 business days after the giving of such notice), finding that in the good faith opinion of the directors, the Executive conducted himself as set forth above in clause (i) or (ii) of the first sentence of this subsection 6(c) and specifying the particulars of such conduct in detail. (d) The Executive may terminate this Agreement for "Good Reason" if any of the following events occurs: (i) the assignment to the Executive of any duties materially inconsistent with his status as a senior executive officer of the Company or a substantial alteration in the nature or status of his responsibilities; (ii) the Company's breach of any of its agreements or obligations under this Agreement; (iii) the failure by the Company to pay the Executive any annual installment of a previous award under any bonus or incentive compensation arrangement; (iv) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 14 hereof; (v) any purported termination of the Executive's employment which is not effected pursuant to a Notice of Termination (defined below) satisfying the requirements of Section 7 below; or (vi) any change in control of the Company. 7. Notice of Termination. Any purported termination of the Executive's employment by the Company or by the Executive shall be communicated by a written Notice of Termination to the other party hereto in accordance with Section 16 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. 8. Date of Termination, Etc. "Date of Termination" shall mean (a) if the Executive's employment is terminated for disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full- time performance of his duties during such thirty (30) day period), and (b) if the Executive's employment is terminated pursuant to subsection 6(c) or 6(d) above or for any other reason (other than disability), the date specified in the Notice of Termination (which, in the case of a termination pursuant to subsection 6(c) above shall not be less than thirty (30) days, and in the case of a termination pursuant to subsection 6(d) above shall not be less than thirty (30) nor more than sixty (60) days, respectively, from the date such Notice of Termination is given); provided, however, if within thirty (30) days after any Notice of Termination is given the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally resolved, either by mutual written agreement of the parties, by a binding arbitration award, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or the time for appeal therefrom having expired and no appeal having been perfected), except that with respect to a termination of this Agreement by reason of expiration of its term as provided in Section 2, the Date of Termination shall be the date the term hereof expires pursuant to Section 2, regardless of whether a dispute exists with respect thereto; provided, further, that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. Notwithstanding the pendency of any such dispute, the Company will continue to pay the Executive his full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, base salary and installments under any bonus or incentive compensation plan) and continue the Executive as a participant in all compensation, benefit and insurance plans in which he was participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with this Section. Amounts paid under this Section 8 are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts due under this Agreement. If it is finally determined by a binding arbitration award, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or the time for appeal therefrom having expired and no appeal having been perfected), that the Executive was terminated for proper cause, the Executive shall promptly remit to the Company the amount of any cash payments and the value of any non-cash benefits paid pursuant to this Section 8 to which the Executive would not otherwise have been entitled. 9. Compensation Upon Termination or During Disability. Upon termination of the Executive's employment or during a period of disability the Executive shall be entitled to the following compensation and benefits: (a) During any period that the Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness, the Executive shall continue to receive his base salary at the rate in effect at the commencement of any such period until his employment is terminated pursuant to subsection 6(a) hereof, together with any bonus that may be payable pursuant to subsection 3(b). Thereafter, the compensation provided in Section 3 hereof shall continue to be paid to the Executive for the longer of (i) a period of 36 months after such termination and (ii) the remaining term of this Agreement pursuant to Section 2 hereof, in either case at the annual base salary in effect at the time his employment is terminated, and the Executive shall continue to be covered by the Company's health, dental and life insurance benefits for such period. (b) If the Executive's employment shall be terminated, at any time prior to a change in control of the Company, for proper cause or by him other than for Good Reason, the Executive shall be paid the Executive's full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and the Company shall thereafter have no further obligations to the Executive under this Agreement. (c) If the Executive's employment shall be terminated by reason of the Executive's death, the compensation provided in subsection 3(a) hereof shall be paid to the person designated from time to time in writing by the Executive and, if not so designated, to the Executive's estate for the longer of (i) a period of 36 months following such termination and (ii) the remaining term of this Agreement pursuant to Section 2 hereof, in either case at the annual base salary in effect at the time of his death. The person designated by the Executive and, if not so designated, the Executive's estate shall also receive (i) any bonus awarded pursuant to subsection 3(b) and not yet paid and (ii) with respect to the year in which the Executive dies (in the event the directors of the Company have not yet determined whether to award the Executive a bonus for such calendar year), a bonus equal to the product of (x) the annual base salary payable to the Executive pursuant to subsection 3(a) from January 1 of the year in which the Executive shall have died through the last day of the month during which the Executive shall have died and (y) the Deemed Bonus Fraction (as defined in subsection 9(d) below). (d) If the Executive's employment shall be terminated (I) by the Company other than for proper cause or disability or (II) by the Executive for Good Reason, then the Executive shall be entitled to the benefits provided below: (i) the Company shall pay as severance pay to the Executive, not later than the Date of Termination, a lump sum severance payment (the "Severance Payment") equal to (A) the aggregate of all compensation due to the Executive hereunder had his employment not been so terminated, including, without limitation, all bonus payments which would have been due to the Executive pursuant to subsection 3(b), assuming that the Executive would have received a bonus for each calendar year equal to the product of (x) the annual base salary that would be payable to the Executive pursuant to subsection 3(a) for such calendar year and (y) the greater of (i) 1/2 or (ii) the percentage of the Executive's base salary for the immediately preceding fiscal year that was paid to the Executive as a bonus for the immediately preceding fiscal year, expressed as a fraction (the greater of clauses (i) and (ii) being herein referred to as the "Deemed Bonus Fraction"), through the expiration of this Agreement, plus (B) the greater of (x) the aggregate of all compensation due to the Executive hereunder had his employment not been so terminated, including, without limitation, all bonus payments which would have been due to the Executive pursuant to subsection 3(b), assuming that the Executive would have received a bonus for each calendar year equal to the product of (i) the annual base salary that would be payable to the Executive pursuant to subsection 3(a) for such calendar year and (ii) the Deemed Bonus Fraction, through the expiration of this Agreement (assuming, solely for purposes of this subsection 9(d)(i)(B)(x), that this Agreement expires on the last day of the thirty-sixth month following the end of the calendar year in which the Date of Termination occurs), or (y) 2.99 times the "base amount" within the meaning of Sections 280G(b)(3) and 280G(d) of the Internal Revenue Code of 1986, as amended (the "Code"), and any applicable temporary or final regulations promulgated thereunder, or its equivalent as provided in any successor statute or regulation; provided, however, if the Executive's employment shall be terminated other than pursuant to subsection 6(d)(vi), the Severance Payment shall equal only the greatest of the amounts set forth in subsection 9(d)(i)(A), 9(d)(i)(B)(x) or 9(d)(i)(B)(y) above. If Section 280G of the Code (and any successor provisions thereto) shall be repealed or otherwise be inapplicable, then the Severance Payment under clause (i)(B)(y) above shall equal 2.99 times the average of the Executive's annual compensation (from the Company or from Wellsford Residential, as the case may) during the three calendar year period preceding the calendar year in which the Date of Termination occurs. For purposes of determining annual compensation in the preceding sentence, compensation payable to the Executive by the Company or by Wellsford Residential shall include every type and form of compensation includible in the Executive's gross income in respect of his employment by the Company or by Wellsford Residential (including, without limitation, all income reported on an Internal Revenue Service Form W-2), compensation income recognized as a result of the Executive's exercise of stock options or sale of the stock so acquired and including, without limitation, any annual bonus payments previously paid to such Executive. For purposes of calculating the "base amount" within the meaning of Sections 280G(b)(3) and 280G(d) of the Code and annual compensation in the second preceding sentence, any income of the Executive that constitutes a "parachute payment" within the meaning of Section 280G(b)(2) of the Code shall not be taken into account in making such calculations; and (ii) an amount equal to the Additional Amount pursuant to Section 10 below. (e) If the Executive's employment shall be terminated, at any time following a change in control of the Company, for proper cause, the Company shall pay the Executive his full base salary through the Date of Termination at the higher of the rate in effect at the time Notice of Termination is given and the rate in effect immediately prior to the change in control of the Company and the Company shall have no further obligations to the Executive under this Agreement. (f) In addition to all other amounts payable to the Executive under this Section 9, the Executive shall be entitled to receive all benefits payable to him under the Company's Pension Plans applicable to him and any other plan or agreement relating to retirement benefits as in effect upon the occurrence of a change in control. (g) The Executive shall not be required to mitigate the amount of any payment provided for in this Section 9 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 9 be reduced by any compensation earned by him as the result of employment by another employer or by retirement benefits after the Date of Termination, or otherwise, except as specifically provided in this Section 9. 10. Additional Amount. Whether or not Section 9 is applicable, if in the opinion of tax counsel selected by the Executive and reasonably acceptable to the Company, the Executive has or will receive any compensation or recognize any income (whether or not pursuant to this Agreement or any plan or other arrangement of the Company and whether or not the Executive's employment with the Company has terminated) which constitute an "excess parachute payment" within the meaning of Section 280G(b)(1) of the Code (or for which a tax is otherwise payable under Section 4999 of the Code), then the Company shall pay the Executive an additional amount (the "Additional Amount") equal to the sum of (i) all taxes payable by the Executive under Section 4999 of the Code with respect to (a) all such excess parachute payments (or otherwise), and (b) the Additional Amount, plus (ii) all federal, state and local income taxes payable by Executive with respect to the Additional Amount. The amounts payable pursuant to this Section 10 shall be paid by the Company to the Executive within 30 days of the written request therefor made by the Executive, but in all events (whether or not there has been a written request by the Executive) not later than the date of the "change in control of the Company", unless otherwise agreed to in writing by the Executive. 11. Income Tax Payment. Whether or not Section 9 is applicable, if (i) the Executive has or will receive any compensation or recognize any income (whether or not pursuant to this Agreement or any plan or other arrangement of the Company and whether or not the Executive's employment with the Company has terminated) in connection with a "change in control" of the Company (as that term may be interpreted in this Agreement and any plan or other arrangement of the Company), and (ii) such compensation or income represents non-cash compensation or income, then the Company shall pay the Executive in cash an amount (the "Income Tax Payment") equal to all federal, state and local income taxes payable by Executive with respect to such non-cash compensation or income. The Income Tax Payment shall be paid by the Company to the Executive not later than the date of the "change in control of the Company", unless otherwise agreed to in writing by the Executive. 12. Indemnification. The Company shall indemnify and hold harmless the Executive for and against, and shall pay to the Executive an amount (the "Indemnified Amount") equal to, the sum of (i) all taxes payable by the Executive under Section 4999 of the Code with respect to (a) any compensation received and any income recognized by the Executive in connection with the Merger and Distribution as described in the Joint Proxy Statement/ Prospectus/Information Statement, dated April 25, 1997, of Wellsford Residential and EQR and (b) the Indemnified Amount, plus (ii) all federal, state and local income taxes payable by Executive with respect to the Indemnified Amount; provided, however, that the Company shall have no obligations under this Section 12 with respect to items comprising the Indemnified Amount to the extent already paid on behalf of the Executive by Wellsford Residential or the surviving trust in the Merger. 13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES. 14. Entire Agreement. This Agreement sets forth the entire agreement of the parties and is intended to supersede all prior employment negotiations, understandings and agreements. No provision of this Agreement may be waived or changed, except by a writing signed by the party to be charged with such waiver or change. 15. Successors; Binding Agreement. (a) This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amount would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee or other designee or, if there is no such designee, to the Executive's estate. (b) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree in writing to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain and deliver to Executive such assumption and agreement prior to (but effective only upon) such succession shall be a breach of this Agreement, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Com- pany" shall mean the Company as hereinbefore defined and any suc- cessor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement, expressly, by operation of law, or otherwise. 16. Notices. All notices provided for in this Agreement shall be in writing, and shall be deemed to have been duly given when delivered personally to the party to receive the same, when given by telex, telegram or mailgram, or when mailed first class postage prepaid, by registered or certified mail, return receipt requested, addressed to the party to receive the same at his or its address above set forth, or such other address as the party to receive the same shall have specified by written notice given in the manner provided for in this Section 16. All notices shall be deemed to have been given as of the date of personal delivery, transmittal or mailing thereof. 17. Severability. If any provision in this Agreement is determined to be invalid, it shall not affect the validity or enforceability of any of the other remaining provisions hereof. 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 EX-10.32 8 EMPLOYMENT AGT - LOWENTHAL EXHIBIT 10.32 EMPLOYMENT AGREEMENT AGREEMENT, dated as of May 30, 1997, between WELLSFORD REAL PROPERTIES, INC., a Maryland corporation with offices at 610 Fifth Avenue, New York, New York 10020 (the "Company"), and EDWARD LOWENTHAL, an individual residing at 201 Hamilton Road, Ridgewood, New Jersey 07450 (the "Executive"). WHEREAS, the Executive is an executive of Wellsford Residential Property Trust, a Maryland real estate investment trust ("Wellsford Residential"); WHEREAS, Equity Residential Properties Trust, a Maryland real estate investment trust ("EQR"), is merging with and into Wellsford Residential as of the date hereof (the "Merger"); WHEREAS, immediately prior to the Merger, Wellsford Residential is distributing to its common shareholders, pro rata, all of the shares of common stock that it owns in the Company (the "Distribution"); and WHEREAS, the Company desires to employ the Executive, and the Executive desires to be employed by the Company. IT IS AGREED: 1. Duties. (a) During the term of the Executive's employment hereunder the Executive shall serve and the Company shall employ the Executive as Chairman of the Board to perform such executive or administrative services for the Company consistent with those of a Chairman of the Board as may be assigned to the Executive by the directors of the Company. The Executive hereby accepts such employment and agrees to perform such services. (b) The Executive shall devote such time, attention and energies during business hours to the performance of his duties hereunder as is necessary to properly carry out the responsibilities of his office. (c) The Executive shall cooperate with the Company, including taking such medical examinations as the Company reasonably shall deem necessary, if the Company shall desire to obtain medical, disability or life insurance with respect to the Executive. Where reasonably possible, the Company shall cooperate with the Executive's request to have such examinations performed by the Executive's personal physician or another physician reasonably acceptable to the Executive. (d) The Executive shall not be required to relocate or conduct the Company's business outside the New York, New York area in order to perform his duties under this Agreement but shall undertake such reasonable business travel as may be necessary to perform said duties (for which the Executive shall be reimbursed pursuant to Section 4 below for costs and expenses incurred in connection therewith). 2. Employment Term. This Agreement shall commence on May 30, 1997 and shall continue in effect through December 31, 2002; provided, however, that, on January 1, 2003 and on each January 1 thereafter, the term of this Agreement shall automatically be extended for one additional year beyond such January 1 unless, not later than June 30 of the preceding year, either the Executive or the Company shall have given notice to the other not to extend this Agreement. 3. Compensation. For all services rendered by the Executive pursuant to this Agreement: (a) The Company shall pay to the Executive an annual base salary at the following rates: (i) for the period from May 30, 1997 through December 31, 1997 - $275,000; (ii) for the period from January 1, 1998 through December 31, 1998 - $283,250; (iii) for the period from January 1, 1999 through December 31, 1999 - $291,748; (iv) for the period from January 1, 2000 through December 31, 2000 - $300,500; (v) for the period from January 1, 2001 through December 31, 2001 - $309,515; (vi) for the period from January 1, 2002 through December 31, 2002 - $318,800; and (vii) for each additional year thereafter, the annual base salary for the immediately preceding year plus 3% of such annual base salary. All such compensation shall be paid bi-weekly or at such other regular intervals, not less frequently than monthly, as the Company may establish from time to time for executive employees of the Company. (b) In addition to the compensation set forth in subsection 3(a) above, the Executive shall be awarded such bonus for each calendar year or partial calendar year of his employment hereunder as the directors of the Company shall determine in their sole discretion. In determining such bonus, the Executive understands that the directors will consider, without limitation, the following factors with respect to the applicable calendar year or partial calendar year: the Company's financial performance, business performance and growth during such period; Executive's responsibilities as an officer of the Company (including his participation in transactions of particular financial or business significance to the Company) during such period; the total compensation package paid to executive officers having similar responsibilities as the Executive who are employed by entities which are similar to the Company; and such other factors as the directors may deem appropriate in their sole discretion. Such bonus may consist of cash; grants of shares ("Shares") of Common Stock of the Company; options to purchase Shares; loans to purchase Shares; share appreciation rights (whether independent of or in conjunction with awards of options); and such other awards as the directors in their sole discretion may deem appropriate and which they believe are in furtherance of the growth of long-term stockholder value of the Company. 4. Expenses. (a) The Company shall pay for all legal and accounting fees and expenses incurred by the Executive in connection with the structuring, negotiation and preparation of this Agreement. The Company shall reimburse the Executive for all out-of-pocket expenses actually and necessarily incurred by him in the conduct of the business of the Company against reasonable substantiation submitted with respect thereto. (b) Unless the provisions of subsection 4(c) below shall apply, the Company shall reimburse the Executive for all legal fees and related expenses (including the costs of experts, evidence and counsel) paid by the Executive as a result of (i) the termination of Executive's employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), (ii) the Executive seeking to obtain or enforce any right or benefit provided by this Agreement or by any other plan or arrangement maintained by the Company under which the Executive is or may be entitled to receive benefits, (iii) the Executive's hearing before the directors as contemplated in subsection 6(c) of this Agreement or (iv) any action taken by the Company against the Executive; provided, however, that the Company shall reimburse the legal fees and related expenses described in this subsection 4(b) only if and when a final judgement has been rendered in favor of the Executive and all appeals related to any such action have been exhausted. (c) The Company shall pay all legal fees and related expenses (including the costs of experts, evidence and counsel) incurred by the Executive as they become due as a result of (i) the termination of Executive's employment (including all such fees and expenses, if any, incurred in contesting or disputing any such termination of employment), (ii) the Executive seeking to obtain or enforce any right or benefit provided by this Agreement or by any other plan or arrangement maintained by the Company under which the Executive is or may be entitled to receive benefits, (iii) the Executive's hearing before the directors as contemplated in subsection 6(c) of this Agreement or (iv) any action taken by the Company against the Executive, unless and until such time that a final judgement has been rendered in favor of the Company and all appeals related to any such action have been exhausted; provided, however, that the circumstances set forth above occurred on or after a change in control of the Company. (d) For purposes of this Agreement, a "change in control of the Company" shall be deemed to occur if: (i) there shall have occurred a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on the date hereof, whether or not the Company is then subject to such reporting requirement, provided, however, that there shall not be deemed to be a "change in control" of the Company if immediately prior to the occurrence of what would otherwise be a "change in control" of the Company (a) the Executive is the other party to the transaction (a "Control Event") that would otherwise result in a "change in control" of the Company or (b) the Executive is an executive officer, trustee, director or more than 5% equity holder of the other party to the Control Event or of any entity, directly or indirectly, controlling such other party, (ii) the Company merges or consolidates with, or sells all or substantially all of its assets to, another company (each, a "Transaction"), provided, however, that a Transaction shall not be deemed to result in a "change in control" of the Company if (a) immediately prior thereto the circumstances in (i)(a) or (i)(b) above exist, or (b) (1) the shareholders of the Company, immediately before such Transaction own, directly or indirectly, immediately following such Transaction in excess of fifty percent (50%) of the combined voting power of the outstanding voting securities of the corporation or other entity resulting from such Transaction (the "Surviving Corporation") in substantially the same proportion as their ownership of the voting securities of the Company immediately before such Transaction and (2) the individuals who were members of the Company's Board of Directors immediately prior to the execution of the agreement providing for such Transaction constitute at least a majority of the members of the board of directors or the board of trustees, as the case may be, of the Surviving Corporation, or of a corporation or other entity beneficially directly or indirectly owning a majority of the outstanding voting securities of the Surviving Corporation, or (iii) the Company acquires assets of another company or a subsidiary of the Company merges or consolidates with another company (each, an "Other Transaction") and (a) the shareholders of the Company, immediately before such Other Transaction own, directly or indirectly, immediately following such Other Transaction 50% or less of the combined voting power of the outstanding voting securities of the corporation or other entity resulting from such Other Transaction (the "Other Surviving Corporation") in substantially the same proportion as their ownership of the voting securities of the Company immediately before such Other Transaction or (b) the individuals who were members of the Company's Board of Directors immediately prior to the execution of the agreement providing for such Other Transaction constitute less than a majority of the members of the board of directors or the board of trustees, as the case may be, of the Other Surviving Corporation, or of a corporation or other entity beneficially directly or indirectly owning a majority of the outstanding voting securities of the Other Surviving Corporation, provided, however, that an Other Transaction shall not be deemed to result in a "change in control" of the Company if immediately prior thereto the circumstances in (i)(a) or (i)(b) above exist. 5. Benefits. The Executive shall be entitled to six weeks of paid vacation each year and such other medical and other benefits as are afforded from time to time to all executive employees of the Company. The Company shall indemnify the Executive in the performance of his duties pursuant to the bylaws of the Company and to the fullest extent allowed by applicable law, including, without limitation, legal fees. 6. Earlier Termination. (a) If the Executive shall fail, because of illness or incapacity, to render the services contemplated by this Agreement for six successive months or for shorter periods aggregating nine months in any calendar year, the directors of the Company may determine, on the basis of medical evidence satisfactory to the Company, in the Company's sole discretion, that the Executive has become disabled. If within thirty (30) days after the date on which written notice of such determination is given to the Executive, the Executive shall not have returned to the full-time performance of his duties hereunder, this Agreement and the employment of the Executive hereunder shall be deemed terminated in accordance with Section 8 hereof. (b) Except as otherwise provided in this Agreement, if the Executive shall die during the term of this Agreement, this Agreement shall be deemed to have been terminated as of the date of death of the Executive. (c) The Company, by notice to the Executive, may terminate this Agreement for proper cause. As used herein, "proper cause" shall mean (i) the willful and continued failure by the Executive to substantially perform his duties with the Company (other than any such failure resulting from the Executive's incapacity due to physical or mental illness or any such actual or anticipated failure resulting from termination by the Executive for Good Reason (as defined below)) after a written demand for substantial performance is delivered to the Executive by the directors of the Company, which demand specifically identifies the manner in which the directors believe that the Executive has not substantially performed his duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes of this subsection 6(c), no act, or failure to act, on the Executive's part shall be deemed "willful" unless done, or omitted to be done, by the Executive otherwise than in good faith and in a manner that the Executive reasonably believed was in or not opposed to the best interests of the Company and its shareholders. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for proper cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of all of the directors of the Company at a meeting of the directors called and held for such purpose (after reasonable notice to the Executive and an opportunity for the Executive, together with counsel of his choosing, to be heard before the directors not less than 10 business days after the giving of such notice), finding that in the good faith opinion of the directors, the Executive conducted himself as set forth above in clause (i) or (ii) of the first sentence of this subsection 6(c) and specifying the particulars of such conduct in detail. (d) The Executive may terminate this Agreement for "Good Reason" if any of the following events occurs: (i) the assignment to the Executive of any duties materially inconsistent with his status as a senior executive officer of the Company or a substantial alteration in the nature or status of his responsibilities; (ii) the Company's breach of any of its agreements or obligations under this Agreement; (iii) the failure by the Company to pay the Executive any annual installment of a previous award under any bonus or incentive compensation arrangement; (iv) the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 14 hereof; (v) any purported termination of the Executive's employment which is not effected pursuant to a Notice of Termination (defined below) satisfying the requirements of Section 7 below; or (vi) any change in control of the Company. 7. Notice of Termination. Any purported termination of the Executive's employment by the Company or by the Executive shall be communicated by a written Notice of Termination to the other party hereto in accordance with Section 16 hereof. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. 8. Date of Termination, Etc. "Date of Termination" shall mean (a) if the Executive's employment is terminated for disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full- time performance of his duties during such thirty (30) day period), and (b) if the Executive's employment is terminated pursuant to subsection 6(c) or 6(d) above or for any other reason (other than disability), the date specified in the Notice of Termination (which, in the case of a termination pursuant to subsection 6(c) above shall not be less than thirty (30) days, and in the case of a termination pursuant to subsection 6(d) above shall not be less than thirty (30) nor more than sixty (60) days, respectively, from the date such Notice of Termination is given); provided, however, if within thirty (30) days after any Notice of Termination is given the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally resolved, either by mutual written agreement of the parties, by a binding arbitration award, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or the time for appeal therefrom having expired and no appeal having been perfected), except that with respect to a termination of this Agreement by reason of expiration of its term as provided in Section 2, the Date of Termination shall be the date the term hereof expires pursuant to Section 2, regardless of whether a dispute exists with respect thereto; provided, further, that the Date of Termination shall be extended by a notice of dispute only if such notice is given in good faith and the party giving such notice pursues the resolution of such dispute with reasonable diligence. Notwithstanding the pendency of any such dispute, the Company will continue to pay the Executive his full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, base salary and installments under any bonus or incentive compensation plan) and continue the Executive as a participant in all compensation, benefit and insurance plans in which he was participating when the notice giving rise to the dispute was given, until the dispute is finally resolved in accordance with this Section. Amounts paid under this Section 8 are in addition to all other amounts due under this Agreement and shall not be offset against or reduce any other amounts due under this Agreement. If it is finally determined by a binding arbitration award, or by a final judgment, order or decree of a court of competent jurisdiction (which is not appealable or the time for appeal therefrom having expired and no appeal having been perfected), that the Executive was terminated for proper cause, the Executive shall promptly remit to the Company the amount of any cash payments and the value of any non-cash benefits paid pursuant to this Section 8 to which the Executive would not otherwise have been entitled. 9. Compensation Upon Termination or During Disability. Upon termination of the Executive's employment or during a period of disability the Executive shall be entitled to the following compensation and benefits: (a) During any period that the Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness, the Executive shall continue to receive his base salary at the rate in effect at the commencement of any such period until his employment is terminated pursuant to subsection 6(a) hereof, together with any bonus that may be payable pursuant to subsection 3(b). Thereafter, the compensation provided in Section 3 hereof shall continue to be paid to the Executive for the longer of (i) a period of 36 months after such termination and (ii) the remaining term of this Agreement pursuant to Section 2 hereof, in either case at the annual base salary in effect at the time his employment is terminated, and the Executive shall continue to be covered by the Company's health, dental and life insurance benefits for such period. (b) If the Executive's employment shall be terminated, at any time prior to a change in control of the Company, for proper cause or by him other than for Good Reason, the Executive shall be paid the Executive's full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and the Company shall thereafter have no further obligations to the Executive under this Agreement. (c) If the Executive's employment shall be terminated by reason of the Executive's death, the compensation provided in subsection 3(a) hereof shall be paid to the person designated from time to time in writing by the Executive and, if not so designated, to the Executive's estate for the longer of (i) a period of 36 months following such termination and (ii) the remaining term of this Agreement pursuant to Section 2 hereof, in either case at the annual base salary in effect at the time of his death. The person designated by the Executive and, if not so designated, the Executive's estate shall also receive (i) any bonus awarded pursuant to subsection 3(b) and not yet paid and (ii) with respect to the year in which the Executive dies (in the event the directors of the Company have not yet determined whether to award the Executive a bonus for such calendar year), a bonus equal to the product of (x) the annual base salary payable to the Executive pursuant to subsection 3(a) from January 1 of the year in which the Executive shall have died through the last day of the month during which the Executive shall have died and (y) the Deemed Bonus Fraction (as defined in subsection 9(d) below). (d) If the Executive's employment shall be terminated (I) by the Company other than for proper cause or disability or (II) by the Executive for Good Reason, then the Executive shall be entitled to the benefits provided below: (i) the Company shall pay as severance pay to the Executive, not later than the Date of Termination, a lump sum severance payment (the "Severance Payment") equal to (A) the aggregate of all compensation due to the Executive hereunder had his employment not been so terminated, including, without limitation, all bonus payments which would have been due to the Executive pursuant to subsection 3(b), assuming that the Executive would have received a bonus for each calendar year equal to the product of (x) the annual base salary that would be payable to the Executive pursuant to subsection 3(a) for such calendar year and (y) the greater of (i) 1/2 or (ii) the percentage of the Executive's base salary for the immediately preceding fiscal year that was paid to the Executive as a bonus for the immediately preceding fiscal year, expressed as a fraction (the greater of clauses (i) and (ii) being herein referred to as the "Deemed Bonus Fraction"), through the expiration of this Agreement, plus (B) the greater of (x) the aggregate of all compensation due to the Executive hereunder had his employment not been so terminated, including, without limitation, all bonus payments which would have been due to the Executive pursuant to subsection 3(b), assuming that the Executive would have received a bonus for each calendar year equal to the product of (i) the annual base salary that would be payable to the Executive pursuant to subsection 3(a) for such calendar year and (ii) the Deemed Bonus Fraction, through the expiration of this Agreement (assuming, solely for purposes of this subsection 9(d)(i)(B)(x), that this Agreement expires on the last day of the thirty-sixth month following the end of the calendar year in which the Date of Termination occurs), or (y) 2.99 times the "base amount" within the meaning of Sections 280G(b)(3) and 280G(d) of the Internal Revenue Code of 1986, as amended (the "Code"), and any applicable temporary or final regulations promulgated thereunder, or its equivalent as provided in any successor statute or regulation; provided, however, if the Executive's employment shall be terminated other than pursuant to subsection 6(d)(vi), the Severance Payment shall equal only the greatest of the amounts set forth in subsection 9(d)(i)(A), 9(d)(i)(B)(x) or 9(d)(i)(B)(y) above. If Section 280G of the Code (and any successor provisions thereto) shall be repealed or otherwise be inapplicable, then the Severance Payment under clause (i)(B)(y) above shall equal 2.99 times the average of the Executive's annual compensation (from the Company or from Wellsford Residential, as the case may) during the three calendar year period preceding the calendar year in which the Date of Termination occurs. For purposes of determining annual compensation in the preceding sentence, compensation payable to the Executive by the Company or by Wellsford Residential shall include every type and form of compensation includible in the Executive's gross income in respect of his employment by the Company or by Wellsford Residential (including, without limitation, all income reported on an Internal Revenue Service Form W-2), compensation income recognized as a result of the Executive's exercise of stock options or sale of the stock so acquired and including, without limitation, any annual bonus payments previously paid to such Executive. For purposes of calculating the "base amount" within the meaning of Sections 280G(b)(3) and 280G(d) of the Code and annual compensation in the second preceding sentence, any income of the Executive that constitutes a "parachute payment" within the meaning of Section 280G(b)(2) of the Code shall not be taken into account in making such calculations; and (ii) an amount equal to the Additional Amount pursuant to Section 10 below. (e) If the Executive's employment shall be terminated, at any time following a change in control of the Company, for proper cause, the Company shall pay the Executive his full base salary through the Date of Termination at the higher of the rate in effect at the time Notice of Termination is given and the rate in effect immediately prior to the change in control of the Company and the Company shall have no further obligations to the Executive under this Agreement. (f) In addition to all other amounts payable to the Executive under this Section 9, the Executive shall be entitled to receive all benefits payable to him under the Company's Pension Plans applicable to him and any other plan or agreement relating to retirement benefits as in effect upon the occurrence of a change in control. (g) The Executive shall not be required to mitigate the amount of any payment provided for in this Section 9 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 9 be reduced by any compensation earned by him as the result of employment by another employer or by retirement benefits after the Date of Termination, or otherwise, except as specifically provided in this Section 9. 10. Additional Amount. Whether or not Section 9 is applicable, if in the opinion of tax counsel selected by the Executive and reasonably acceptable to the Company, the Executive has or will receive any compensation or recognize any income (whether or not pursuant to this Agreement or any plan or other arrangement of the Company and whether or not the Executive's employment with the Company has terminated) which constitute an "excess parachute payment" within the meaning of Section 280G(b)(1) of the Code (or for which a tax is otherwise payable under Section 4999 of the Code), then the Company shall pay the Executive an additional amount (the "Additional Amount") equal to the sum of (i) all taxes payable by the Executive under Section 4999 of the Code with respect to (a) all such excess parachute payments (or otherwise), and (b) the Additional Amount, plus (ii) all federal, state and local income taxes payable by Executive with respect to the Additional Amount. The amounts payable pursuant to this Section 10 shall be paid by the Company to the Executive within 30 days of the written request therefor made by the Executive, but in all events (whether or not there has been a written request by the Executive) not later than the date of the "change in control of the Company", unless otherwise agreed to in writing by the Executive. 11. Income Tax Payment. Whether or not Section 9 is applicable, if (i) the Executive has or will receive any compensation or recognize any income (whether or not pursuant to this Agreement or any plan or other arrangement of the Company and whether or not the Executive's employment with the Company has terminated) in connection with a "change in control" of the Company (as that term may be interpreted in this Agreement and any plan or other arrangement of the Company), and (ii) such compensation or income represents non-cash compensation or income, then the Company shall pay the Executive in cash an amount (the "Income Tax Payment") equal to all federal, state and local income taxes payable by Executive with respect to such non-cash compensation or income. The Income Tax Payment shall be paid by the Company to the Executive not later than the date of the "change in control of the Company", unless otherwise agreed to in writing by the Executive. 12. Indemnification. The Company shall indemnify and hold harmless the Executive for and against, and shall pay to the Executive an amount (the "Indemnified Amount") equal to, the sum of (i) all taxes payable by the Executive under Section 4999 of the Code with respect to (a) any compensation received and any income recognized by the Executive in connection with the Merger and Distribution as described in the Joint Proxy Statement/ Prospectus/Information Statement, dated April 25, 1997, of Wellsford Residential and EQR and (b) the Indemnified Amount, plus (ii) all federal, state and local income taxes payable by Executive with respect to the Indemnified Amount; provided, however, that the Company shall have no obligations under this Section 12 with respect to items comprising the Indemnified Amount to the extent already paid on behalf of the Executive by Wellsford Residential or the surviving trust in the Merger. 13. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES. 14. Entire Agreement. This Agreement sets forth the entire agreement of the parties and is intended to supersede all prior employment negotiations, understandings and agreements. No provision of this Agreement may be waived or changed, except by a writing signed by the party to be charged with such waiver or change. 15. Successors; Binding Agreement. (a) This Agreement shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amount would still be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee or other designee or, if there is no such designee, to the Executive's estate. (b) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree in writing to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain and deliver to Executive such assumption and agreement prior to (but effective only upon) such succession shall be a breach of this Agreement, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Com- pany" shall mean the Company as hereinbefore defined and any suc- cessor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement, expressly, by operation of law, or otherwise. 16. Notices. All notices provided for in this Agreement shall be in writing, and shall be deemed to have been duly given when delivered personally to the party to receive the same, when given by telex, telegram or mailgram, or when mailed first class postage prepaid, by registered or certified mail, return receipt requested, addressed to the party to receive the same at his or its address above set forth, or such other address as the party to receive the same shall have specified by written notice given in the manner provided for in this Section 16. All notices shall be deemed to have been given as of the date of personal delivery, transmittal or mailing thereof. 17. Severability. If any provision in this Agreement is determined to be invalid, it shall not affect the validity or enforceability of any of the other remaining provisions hereof. 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 EX-10.33 9 FORM OF EMPLOYMENT AGT - HUGHES EXHIBIT 10.33 EMPLOYMENT AGREEMENT AGREEMENT, dated as of May 30, 1997, between WELLSFORD REAL PROPERTIES, INC., a Maryland corporation with offices at 610 Fifth Avenue, New York, New York 10020 (the "Company"), and Gregory F. Hughes, an individual residing at 5 Somerset Avenue, Garden City, New York 11530 ("Executive"). WHEREAS, the Executive is an executive of Wellsford Residential Property Trust, a Maryland real estate investment trust ("Wellsford Residential"); WHEREAS, Equity Residential Properties Trust, a Maryland real estate investment trust, is merging with and into Wellsford Residential as of the date hereof (the "Merger"); WHEREAS, immediately prior to the Merger, Wellsford Residential is distributing to its common shareholders, pro rata, all of the shares of common stock that it owns in the Company; and WHEREAS, the Company desires to employ the Executive, and the Executive desires to be employed by the Company. IT IS AGREED: 1. Duties. (a) During the term of the Executive's employment hereunder the Executive shall serve and the Company shall employ the Executive as Chief Financial Officer to perform such executive or administrative services for the Company consis- tent with those of a Chief Financial Officer as may be assigned to the Executive by the directors, Chairman of the Board or President of the Company. The Executive hereby accepts such employment and agrees to perform such services. (b) The Executive shall devote substantially all of his time, attention and energies during business hours to the performance of his duties hereunder. The Executive shall give advance written notice to the Chairman of the Board and President of any intended active involvement in any other business enterprise. (c) The Executive shall cooperate with the Company, including taking such medical examinations as the Company reasonably shall deem necessary, if the Company shall desire to obtain medical, disability or life insurance with respect to the Executive. (d) The Executive shall not be required to relocate or conduct the Company's business outside the New York, New York area in order to perform his duties under this Agreement but shall undertake such reasonable business travel as may be necessary to perform said duties (for which the Executive shall be reimbursed pursuant to Section 4 below for costs and expenses incurred in connection therewith). 2. Employment Term. This Agreement shall commence on May 30, 1997 and shall continue in effect through May 29, 1999; provided, however, that, on May 30, 1999 and on each May 30 thereafter, the term of this Agreement shall automatically be extended for one additional year beyond such May 30 unless, not later than the immediately preceding February 28, either the Executive or the Company shall have given notice to the other not to extend this Agreement. 3. Compensation. For all services rendered by the Executive pursuant to this Agreement: (a) The Company shall pay to the Executive an annual base salary at the following rates: (i) for the period from May 30, 1997 through May 29, 1998 - $200,000; (ii) for the period from May 30, 1998 through May 29, 1999 - $206,000; and (iii) for each additional year thereafter, the annual base salary for the immediately preceding year plus three percent (3%) of such annual base salary. All such compensation shall be paid bi-weekly or at such other regular intervals, not less frequently than monthly, as the Company may establish from time to time for executive officers of the Company. (b) In addition to the compensation set forth in subsection 3(a) above, during the term of this Agreement, the Executive shall be entitled to a cash bonus after the end of each calendar year (and after the end of any partial calendar year in which this Agreement shall expire pursuant to Section 2) equal to at least 50% of the base salary paid to the Executive for such calendar year (including, in the case of calendar year 1997, the base salary paid to the Executive by Wellsford Residential) or partial calendar year pursuant to subsection 3(a). The determination of the amount of the bonus shall be made by the Compensation Committee based upon the Executive's and the Company's performance during such calendar year or partial calendar year, as the case may be. The Company shall announce to the Executive the amount of his bonus for each year during December of such year (or during the month in which this Agreement shall expire, if applicable) and pay such bonus during the following January (or during the month following expiration of this Agreement, as the case may be), unless otherwise agreed to by the Executive and the Company. 4. Expenses. (a) The Company shall reimburse the Executive for all out-of-pocket expenses actually and necessarily incurred by him in the conduct of the business of the Company against reasonable substantiation submitted with respect thereto. (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/ Jeffrey H. Lynford ---------------------------- Name: Jeffrey H. Lynford Title: Chairman of the Board EXECUTIVE: /s/ Gregory F. Hughes - ----------------------------- Gregory F. Hughes EX-10.34 10 FORM OF EMPLOYMENT AGT - STRONG EXHIBIT 10.34 EMPLOYMENT AGREEMENT AGREEMENT, dated as of May 30, 1997, between WELLSFORD REAL PROPERTIES, INC., a Maryland corporation with offices at 610 Fifth Avenue, New York, New York 10020 (the "Company"), and David M. Strong, an individual residing at 1450 Wynkoop, Apt. 5B, Denver, Colorado 80202 ("Executive"). WHEREAS, the Executive is an executive of Wellsford Residential Property Trust, a Maryland real estate investment trust ("Wellsford Residential"); WHEREAS, Equity Residential Properties Trust, a Maryland real estate investment trust, is merging with and into Wellsford Residential as of the date hereof (the "Merger"); WHEREAS, immediately prior to the Merger, Wellsford Residential is distributing to its common shareholders, pro rata, all of the shares of common stock that it owns in the Company; and WHEREAS, the Company desires to employ the Executive, and the Executive desires to be employed by the Company. IT IS AGREED: 1. Duties. (a) During the term of the Executive's employment hereunder the Executive shall serve and the Company shall employ the Executive as Vice President for Development to perform such executive or administrative services for the Company consistent with those of a Vice President as may be assigned to the Executive by the directors, Chairman of the Board or President of the Company. The Executive hereby accepts such employment and agrees to perform such services. (b) The Executive shall devote substantially all of his time, attention and energies during business hours to the performance of his duties hereunder. The Executive shall give advance written notice to the Chairman of the Board and President of any intended active involvement in any other business enterprise. (c) The Executive shall cooperate with the Company, including taking such medical examinations as the Company reasonably shall deem necessary, if the Company shall desire to obtain medical, disability or life insurance with respect to the Executive. (d) The Executive shall not be required to relocate or conduct the Company's business outside the Denver, Colorado area in order to perform his duties under this Agreement but shall undertake such reasonable business travel as may be necessary to perform said duties (for which the Executive shall be reimbursed pursuant to Section 4 below for costs and expenses 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/ Edward Lowenthal ---------------------------- Edward Lowenthal President EXECUTIVE: /s/ David M. Strong - ----------------------------- David M. Strong -----END PRIVACY-ENHANCED MESSAGE-----