EMPLOYMENT AGREEMENT
This Employment Agreement, made as of January 1, 2000, by and between
Jeffrey F. Joseph, residing at 19 Stillman Lane, Pleasantville, New York 10570
("Executive") and PRESIDENTIAL REALTY CORPORATION, a Delaware corporation having
offices at 180 South Broadway, White Plains, New York 10605 ("Employer" or the
"Company");
W I T N E S S E T H:
WHEREAS, Employer is desirous of employing Executive as its President;
and
WHEREAS, Executive desires to render such services to Employer.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties hereto agree as follows:
1. Employment. Employer hereby employs Executive as its President, and
Executive hereby accepts such employment, upon the terms and conditions
hereinafter set forth.
2. Duties.
(a) In his capacity as President of Employer, Executive shall perform
for Employer the executive, administrative and technical duties customarily
associated with such position, as well as such other duties reasonably
consistent therewith as may be reasonably assigned to Executive from time to
time by the Board of Directors of Employer; provided, however, that the duties
assigned shall be of a character and dignity appropriate to a senior executive
of a corporation and consistent with Executive's experience, education and
background.
(b) Except as otherwise set forth in this paragraph, (i) Executive
shall devote his full time and efforts during normal business days and hours to
the performance of this Employment Agreement and (ii) Executive shall not engage
in the real estate business or in any other business which conflicts with or
competes in any material way with the business of Employer. Notwithstanding the
foregoing, Executive may devote such time and efforts to winding up the business
of Ivy Properties Ltd. and its affiliates (collectively, "Ivy") as Executive
deems reasonably necessary; so long as the devotion of such time and effort does
not conflict (without independent committee review) or interfere with
Executive's performance of his duties as President of Presidential and in fact
Executive does diligently perform his duties as President of Presidential to the
satisfaction of the Board of Directors of Employer.
3. Term.
(a) This Employment Agreement shall commence on the date hereof and
shall continue until December 31, 2002, unless terminated earlier in accordance
with this Employment Agreement.
(b) This Employment Agreement may be terminated at any time by Employer
for "cause," as defined herein. For the purpose of this Employment Agreement,
termination of Executive's employment shall be deemed to have been for "cause"
only if termination of his employment shall have been the result of (i) the
conviction of Executive of any crime constituting a felony or any other crime
involving moral turpitude, (ii) Executive's willful refusal to follow a
direction of the Board of Directors of Employer after written notice that such
continued refusal shall result in termination of his employment for cause, or
(iii) Executive's failure to fulfill his duties hereunder as is required by
Section 2(b) above after written notice that such continued failure shall result
in termination of his employment for cause.
(c) This Employment Agreement may also be terminated by Employer
as set forth in Section 11 below.
4. Compensation. Employer shall pay to Executive in
consideration of the services to be rendered hereunder
compensation in the form of a salary:
(a) for the period beginning on the date hereof and ending on December
31, 2000, at the annual rate of Two Hundred
Sixty Two Thousand Five Hundred Eighty-four and no/100 ($262,584.00) Dollars
times the Cost of Living Adjustment Factor (as hereinafter defined);
(b) for the calendar year beginning on January 1, 2001 and ending on
December 31, 2001, in an amount equal to the salary paid for the calendar year
beginning January 1, 2000 and ending on December 31, 2000 times the lesser of
(i) 1.05 and (ii) the Cost of Living Adjustment Factor; and
(c) for the calendar year beginning on January 1, 2002 and ending on
December 31, 2002, in an amount equal to the salary paid for the calendar year
beginning on January 1, 2001 and ending on December 31, 2001 times the lesser of
(i) 1.05 and (ii) the Cost of Living Adjustment Factor.
The salary for all such periods shall be paid less appropriate
deductions, if any, for federal, state and city income taxes, FICA
contributions, N.Y.S. disability and any other deductions required by law.
The Cost of Living Adjustment Factor as it is applied in calculating
compensation payable to Executive for any period referred to above (and
retirement compensation payable to Executive for any period described in Section
12 below) shall be the sum of (x) one (1) plus (y) a fraction (A) which has as
its numerator the amount, if any, by which the Revised Consumer Price Index for
Urban Wage Earners and Clerical Workers for the New York-Northern New Jersey
area, published by the U.S. Department of Labor Statistics (the "Index") for the
last calendar month preceding the commence-ment of such period (which will be
December in each case of annual salary described in this Section 4) (the
"Increase Index Month") exceeds the Index for the calendar month occurring one
year prior to the Increase Index Month (the "Base Index Month"), and (B) which
has as its denominator the Index for the Base Index Month.
In the event that the Index is converted to a different standard
reference base or otherwise revised, the determination of increased compensation
under this Section 4 and/or retirement compensation under Section 12 shall be
made with the use of such conversion factor, formula or table for converting the
Index as may be published by the Bureau of Labor Statistics or, if said Bureau
shall not publish the same, then with the use of such conversion factor, formula
or table as may be published by Prentice-Hall, Inc., or any other nationally
recognized publisher of similar statistical information. If the Index ceases to
be published, and there is no successor thereto, such other index as Executive
and Employer shall agree upon in writing shall be substituted for the Index. If
Executive and Employer are unable to agree as to such substituted index, such
substituted index shall be that determined by arbitration in accordance with the
procedures of the American Arbitration Association.
In the event that the Index is not available for any month provided for
above, the next available Index shall be used instead, and if the next available
Index is available following a payment for which an adjustment should have been,
then a retroactive adjustment shall also be made.
(b) Executive's compensation shall be payable in equal installments in
arrears, in the same frequency as other senior officers of Employer are paid,
but in any event not less frequent than twenty-six (26) bi-weekly installments.
5. Indemnification. The Indemnification Agreements previously executed
by Executive and Employer shall remain in full force and effect during the term
of this Employment Agreement.
6. Vacations. Executive shall be entitled, during the term of this
Employment Agreement to four weeks' vacation annually at full compensation.
7. Fringe Benefits. Executive shall be entitled, at Employer's expense,
during the term of this Employment Agreement to participate in (a) the following
benefit programs which Employer now maintains for its employees: (i) its Defined
Benefit Pension Plan, (ii) its Section 125 cafeteria plan, (iii) its Section
401(k) plan if any, (iv) its health insurance plan for employees only, (v) its
disability insurance plan and (vi) its group life insurance plan; and (b) all
benefit programs that Employer hereafter establishes and makes available to
either employees in general or to other senior executive management (without
intending to provide duplicate coverage to Executive if Employer makes such
available to both employees in general and to senior executive management). If
obtainable, at Executive's option and, if exercised, at Executive's sole cost
and expense, Employer shall include Executive's spouse and children under the
health insurance plan maintained by Employer for Executive. In addition, during
the term of this Employment Agreement, (i) Employer shall also pay for the
premiums on Executive's existing life insurance policy up to a maximum of
$12,750 per annum and (ii) Employer shall pay and be responsible for all costs
of ownership attributable to the automobile which Employer currently owns and
provides Executive for its use, and for any replacement automobile leased or
purchased by Employer pursuant to Section 9 below. In addition, subject to
Executive providing proper documentation, Employer shall reimburse Executive for
reasonable travel, entertainment and other expenses incurred by Executive in
providing services hereunder on behalf of Employer. Following any termination of
Executive's employment by Employer, to the extent permitted by law and the party
providing such benefits, Executive may, at his sole cost and expense, continue
any fringe benefits, if obtainable, then being provided to Executive.
8. Bonus. (a) Subject to paragraph (b) of this Section 8, in addition
to the compensation set forth above, Executive shall be entitled to a bonus
payable with respect to each of calendar years 2000, 2001 and 2002 (each a
"Bonus Year") in an amount equal to 10% of the product of (i) the amount by
which the Per Share Net Cash From Operations (as hereinafter defined) for such
Bonus Year exceeds $.53 per share and (ii) the number of shares outstanding at
the end of such Bonus Year. Notwithstanding the foregoing, the bonus in any
Bonus Year shall not exceed 33-1/3% of the salary compensation set forth in
Section 4 for such year (prorated if any partial year is involved). The term Per
Share Net Cash from operations shall mean the Net Income for such Bonus Year (as
shown on the Company's Audited Financial Statements) with the following
adjustments:
(i) the addition back of any extraordinary deductions to income;
(ii) the addition back of depreciation of non-rental property,
depreciation on rental real estate and amortization of mortgage and organization
costs;
(iii) with respect to the sales of property and investments, including
foreclosed property, recognized in any Bonus Year (x) there shall be deducted
from net gain any discount or deferred gain, and (y) any depreciation taken on
the sold property during the period that it was owned by Employer shall be added
back before calculating the amount of the net loss or net gain.
(iv) the subtraction of all "amortization of discounts on notes and
fees" which are included in Net Income.
The Compensation Committee of Employer shall calculate the Per Share
Net Cash from Operations in accordance with the formula set forth above, subject
to such adjustments for extraordinary or unforeseen transactions, including but
not limited to capital gains transactions, as in the reasonable judgment of the
Compensation Committee are fair and equitable to Employer and Executive. Said
calculations shall be made with respect to any Bonus Year without regard to the
bonus payable in accordance with this Agreement (or any other employment or
similar Agreement with senior management) attributable to said year and/or
attributable to a prior year or years but paid in said year.
The bonus for any Bonus Year shall be paid on or before March 30th of
the next following year; provided however that if by March 30th of any year the
bonus for the prior Bonus Year has not been finally determined, then the bonus
shall be estimated and an amount equal to the estimated bonus will be paid to
Executive on March 30th and as soon as the actual bonus is finally determined,
the parties will make an appropriate adjustment.
Notwithstanding any other provisions of this Agreement, in the event of
any changes in the Company's outstanding common stock by reason of a stock
dividend, recapitalization, merger, consolidation, reorganization, split up,
extraordinary dividend, combination or exchange of shares, or the like, the
Employer and Executive shall, if applicable, attempt in good faith to agree on
appropriate adjustments to the bonus calculations referred to in this paragraph
so as to substantially carry out the intention of this Agreement.
(b) Notwithstanding anything in this Agreement to the contrary (i)
Executive shall not be entitled to a bonus on account of any Bonus Year in which
his employment terminates pursuant to Section 11(e) below or in which his his
employment is terminated for cause, or any Bonus Year thereafter occurring, and
(ii) if this Agreement is terminated pursuant to paragraph (b) of Section 11
below, Executive's bonus for the Bonus Year in which such termination occurs
shall be prorated as of the date on which compensation is no longer payable
under said Section 11(b). In calculating Per Share Net Cash from Operations to
any such date (if it is not the last day of a calendar year) the parties shall
adjust (by projection to said date or as of said date, as the case may be) based
on the Net Income for the period ending on March 31, June 30, September 30 or
December 31 of such Bonus Year, whichever of said dates is closest to the date
with respect to which the Bonus is calculated.
9. Purchase of Replacement Automobile. Upon the request of Executive
made subsequent to April 1, 2000 but prior to December 31, 2001, Employer shall
make available to Executive a new automobile for Executive's use, said
automobile to be of a make and model reasonably acceptable to Executive. Said
automobile shall, at Employer's option, be either leased by Employer or
purchased by Employer (title to remain in Employer's name). The purchase price
of said automobile (exclusive of taxes), regardless of whether said automobile
is purchased or leased by Employer, shall not exceed $43,000; provided, however,
that Executive may select a car costing more than $43,000 if Executive pays for
the increased costs to purchase or lease such automobile. Employer shall be
responsible for all costs of ownership attributable to said vehicle, including
but not limited to insurance, gas, oil, maintenance, repairs, etc. On the
termination of Executive's employment, if Employer has purchased the vehicle,
Executive may at any time within three (3) weeks following the effective date of
termination purchase the vehicle from Employer at a price equal to the then
"blue book" value of the vehicle times a fraction, the numerator of which is the
amount paid for said vehicle by Employer, including sales tax, "dealer prep",
etc., but excluding any contributions made by Executive, and the denominator of
which is the amount (the "Total Purchase Price") paid for said vehicle,
including sales tax, "dealer prep" etc. and any contributions made by Executive.
In the event Executive does not timely purchase the vehicle and Executive has
made any contribution towards the purchase thereof, if Employer desires to
retain ownership of the vehicle Employer shall, within three weeks following the
earlier of (i) the expiration of the aforementioned three (3) week period, or
(ii) receipt of notice from Executive that he shall not purchase said vehicle,
pay to Executive the "blue book value" of the vehicle, times a fraction, the
numerator of which is the amount contributed towards the purchase of said
vehicle by Executive and the denominator of which is the Total Purchase Price.
If (i) Executive does not timely purchase the vehicle, and (ii) Employer does
not desire to retain ownership and Executive has contributed towards the
purchase thereof, Employer shall promptly sell the vehicle and the parties shall
divide the actual net sales proceeds (after sales taxes and advertising costs,
if any), with Executive receiving a fraction (being the same fraction described
in the immediately preceding sentence) thereof and Employer receiving the
balance. Employer agrees that the automobile presently owned or leased by the
Company and utilized by Executive, and for which Employer pays the expenses
pursuant to Section 7 above, may be retained or sold by Employer and Executive
shall have no interest therein.
10. Stock Options. The stock options granted by Employer to Executive
pursuant to Executive's Employment Agreement dated as of January 1, 1997 (the
"Existing Stock Options") shall remain in full force and effect on the terms set
forth in said Employment Agreement. In addition, Employer agrees that from time
to time to the extent that any Existing Stock Options are either (i) exercised
by Executive or (ii) lapse, if at the time of any such exercise or lapse
Executive is employed by Employer, Employer shall (as of the date of such
exercise or lapse) grant new stock options to Executive (the "New Stock
Options") to purchase a number of shares of Employer's Class B common stock
equal to the number of shares covered by the Existing Stock Options which have
been exercised or have lapsed. Any New Stock Options so granted by Employer
shall be subject to the terms and conditions of the existing Stock Option Plan
dated January 1, 1999 (the "Stock Option Plan") and on the following terms and
conditions:
(a) the exercise price for each New Stock Option granted shall be a
price equal to the closing price of the Class B common stock of Employer on the
date the option is granted;
(b) each New Stock Option granted pursuant to the terms of this Section
10 shall be exercisable for a period of six years from the date such option is
granted, subject to earlier termination pursuant to the terms of the Stock
Option Plan.
(c) upon termination of Executive's employment for any reason
whatsoever, the Existing Stock Options and any New Stock Options granted
pursuant to the terms hereof shall terminate immediately except as provided for
in the Stock Option Plan.
11. Employment Termination; Termination Benefits. The term of
employment hereunder shall be terminated upon the first to occur of the
following:
(a) The expiration of the term of employment purusant to Section 3(a)
of this Agreement.
(b) Executive's death or permanent disability. "Permanent Disability"
shall mean physical or mental incapacity of a nature which prevents Executive,
or will prevent Executive, in the reasonable determination of the Board of
Directors of Employer, from performing his duties under this Agreement for a
continuous period of four months or any aggregate period of six months in any 12
month period. Permanent Disability shall be deemed to have occurred as of said
determination. If the term of employment is terminated because of Executive's
Permanent Disability, the Employer shall pay, when the same would otherwise have
been payable in accordance with this Agreement, to Executive or his
representative, (i) Executive's salary described in Section 4 above, as then in
effect, less any disability benefits payable to Executive from policies
maintained by Employer, (ii) the bonus described in Section 8 above, subject to
paragraph (b) thereof, plus (iii) Executive's fringe benefits as described in
Section 7 only (but not as described in Section 9 if the automobile in question
had not yet been delivered to Executive as of the date of determination by the
Board), until (again subject to paragraph (b) of Section 8 with respect to any
payment pursuant to Section 8) the later to occur of (A) that day which is
twenty-four (24) months after the date of determination of Executive's Permanent
Disability and (B) December 31, 2002; provided however that subsequent to that
day which is six (6) months after the date of determination of Executive's
Permanent Disability, the payments set forth in subparagraphs (i) and (ii) above
shall be reduced to 50% of such amounts, less 100% of any disability payments
payable to Executive from policies maintained by Employer.
If the term of employment is terminated because of Executive's death,
the Employer shall pay, when the same would otherwise have been payable in
accordance with this Agreement, to Executive's beneficiary or beneficiaries
designated in writing to the Company, or to Executive's estate in the absence or
lapse of such designation, (i) Executive's salary described in Section 4 above,
as then in effect and (ii) the bonus described in Section 8 above, (again
subject to paragraph (b) of Section 8 with respect to any payment pursuant to
said Section 8), in each case for a period of six months following Executive's
death, whether or not the term of employment would have terminated pursuant to
Section 3(a) prior to the end of such six month period.
(c) Executive's employment being terminated by the Board "for cause"
pursuant to Section 3(b) of this Agreement. If Executive's employment is
terminated for cause, the Company's only obligation to Executive shall be
payment of Executive's salary as described in Section 4 above and fringe
benefits as described in Section 7 above (but not the bonus compensation set
forth in Section 8 above for any period in the year in which such termination
occurs), as in effect at the date of termination, through the date of such
termination. Any termination of Executive's employment under this Section 11(c)
shall not affect Employer's obligation to make the retirement payments set forth
in Section 12(b) below.
(d) Executive's employment being terminated by the Board "without
cause". Termination "without cause" shall mean termination of the term of
employment on any basis other than those provided in paragraphs (a), (b), (c) or
(e) of this Section 11. If the term of employment is terminated without cause,
the Board shall give 10 days notice thereof to Executive and Executive shall be
entitled to receive Executive's salary per Section 4 above, fringe benefits per
Section 7 above but not per Section 9 above (unless the automobile described in
said Section 9 was delivered to Executive prior to said termination without
cause), and, subject to paragraph (c) of Section 10 above, all other
compensation (including the bonus compensation set forth in Section 8 above,
without regard to the provisions of Section 8(b) above) which he would have
received hereunder but for such termination in respect of the unexpired portion
of the term of employment (in the amounts and at the times provided in Sections
4 and 8 hereof in the case of compensation pursuant to said Sections). Any
termination of Executive's employment "without cause" shall not affect the
Employer's obligation to make the retirement payments set forth in Section 12(b)
below.
(e) Upon Executive voluntarily resigning his employment hereunder. If
Executive's employment is terminated because Executive voluntarily resigns his
employment hereunder, the Company's only obligation to Executive shall be the
payment of Executive's salary pursuant to Section 4 above and fringe benefits
pursuant to Section 7 above (but not the bonus provided by Section 8 above) as
in effect at the date of such termination through the effective date of such
termination. Any termination resulting from Executive's voluntary resignation
from his employment hereunder shall not affect Employer's obligation to make the
retirement payments set forth in Section 12(b) below.
12. The Retirement Period.
(a) The Retirement Period shall commence on the first day of the first
calendar month occurring after Executive's sixty-fifth (65th) birthday, but may
be postponed by mutual agreement between Executive and Employer. The Retirement
Period shall end on the day of Executive's death. The commencement and
continuance of the Retirement Period shall not depend in any way upon the
existence of an active period of employment relationship between Executive and
Employer immediately prior to the commencement of the Retirement Period.
(b) During the Retirement Period, the Employer agrees to pay to
Executive each year, in equal monthly installments, the sum of $29,000;
provided, however, that the $29,000 annual payment shall be increased annually
after the first year of the Retirement Period to the product derived by
multiplying the payment in what is then the immediately preceding year by the
lesser of (i) one (1) plus 50% of the "fraction" forming a part of the
definition of the Cost of Living Adjustment Factor (as heretofore defined) for
the period in question, and (ii) 1.05.
(c) Executive's right to receive the payments provided for in this
Section 12 (i) shall not be contestable by Employer for any reason whatsoever
and (ii) shall be in lieu of any right of Executive to receive retirement
payments under any previous employment agreement with Employer, and Executive
hereby waives and relinquishes any such rights.
(d) Furthermore, provided that Executive continuously remains an
employee of Employer from the date of this Employment Agreement through
Executive's 65th birthday, unless otherwise agreed by the parties, during the
Retirement Period the Employer shall maintain in full force and effect, Group
Life policies and Major Medical and/or "medigap" policies, which (together with
Medicare or other benefits which may otherwise then be available to Executive
without cost to Executive), shall provide Executive with benefits substantially
similar to those existing for senior employees of the Company at the time of
Executive's retirement. Executive shall continue to be responsible for any and
all premiums attributable to Executive's spouse and children.
13. Entire Agreement; Amendment. This Employment Agreement contains the
entire agreement between the parties hereto with respect to the subject matter
contained herein. This Employment Agreement may be amended, modified or
supplemented only by written agreement of Employer and Executive expressly to
that effect.
14. Waiver of Compliance. Any failure of either party to comply with
any obligation, covenant, agreement or condition on its part contained herein
may be expressly waived in writing by the other party, but such waiver or
failure to insist upon strict compliance shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure. Whenever this
Employment Agreement requires or permits consent by or on behalf of any party,
such consent shall be given in writing.
15. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed given if
delivered by hand or five days after having been mailed, certified or registered
mail with postage prepaid:
(a) if to Employer, to:
Presidential Realty Corporation 180 South Broadway
White Plains, New York 10605
Attention: Chairman of the Board of Directors
with a copy to:
Chairman, Compensation Committee
(b) if to Executive, to:
Jeffrey F. Joseph
19 Stillman Lane
Pleasantville, New York 10570
16. Assignment. This Employment Agreement shall inure to the benefit of
Executive and Employer and be binding upon the uccessors and general assigns of
Employer. Except as expressly provided herein, this Employment Agreement and
Executive's duties hereunder shall not be assigned or delegated.
17. Invalid Provisions. If any provision hereof is held to be illegal,
invalid or unenforceable under present or future laws effective during the term
hereof, such provision shall be fully severable; this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision
had never comprised a part hereof; and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. In lieu of such
illegal, invalid or unenforceable provision there shall be added automatically
as a part hereof a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
18. Applicable Law. This Employment Agreement shall be construed and
enforced in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the day and year first above written.
EMPLOYER:
PRESIDENTIAL REALTY CORPORATION
BY: Robert E. Shapiro
-----------------
Robert E. Shapiro, Chairman
of the Board of Directors
EXECUTIVE:
Jeffrey F. Joseph
-----------------
Jeffrey F. Joseph