EMPLOYMENT AGREEMENT
This Employment Agreement, made as of January 1, 1997, by and
between Xxxxxxx X. Xxxxxx, residing at 00 Xxxxxxxx Xxxx,
Xxxxxxxxxxxxx, Xxx Xxxx 00000 ("Executive") and PRESIDENTIAL REALTY
CORPORATION, a Delaware corporation having offices at 000 Xxxxx
Xxxxxxxx, Xxxxx Xxxxxx, Xxx Xxxx 00000 ("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, 1999, 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, 1997, at the annual rate of Two Hundred
Fifty Three Thousand Eight Hundred Seventy-nine and no/100
($253,879.00) Dollars;
(b) for the calendar year beginning on January 1, 1998 and
ending on December 31, 1998, in an amount equal to the lesser of
(i) $266,573 and (ii) $253,879 times the Cost of Living Adjustment
Factor (as hereinafter defined); and
(c) for the calendar year beginning on January 1, 1999 and
ending on December 31, 1999, in an amount equal to the salary paid
for the calendar year beginning on January 1, 1998 and ending on
December 31, 1998 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
Xxxxxxxx-Xxxx, 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
1997, 1998 and 1999 (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 $.50 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 December 31, 1996 but prior to
December 31, 1998, 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
$37,500; provided, however, that Executive may select a car
costing more than $37,500 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 November 14, 1993 (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 on November 17, 1999, 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 November 17, 1993 (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, 1999; 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 000 Xxxxx Xxxxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Chairman of the Board of Directors
with a copy to:
Chairman, Compensation Committee
and
Milbank, Tweed, Xxxxxx & XxXxxx
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
(b) if to Executive, to:
Xxxxxxx X. Xxxxxx
00 Xxxxxxxx Xxxx
Xxxxxxxxxxxxx, Xxx Xxxx 00000
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: /s/ Xxxxxx X. Xxxxxxx
________________________________
Xxxxxx X. Xxxxxxx, Chairman
of the Board of Directors
EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxx
___________________________________
Xxxxxxx X. Xxxxxx
