-----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, NAKon6/I/L0KxWP1AiE4DziUvTQVGziK+A0yw0KmKAm/gweWaLR1uEHIjp9wZV5F hR2DOIrLIrjgNQATlLg7wQ== 0000731245-00-000006.txt : 20000515 0000731245-00-000006.hdr.sgml : 20000515 ACCESSION NUMBER: 0000731245-00-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRESIDENTIAL REALTY CORP/DE/ CENTRAL INDEX KEY: 0000731245 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 131954619 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08594 FILM NUMBER: 627513 BUSINESS ADDRESS: STREET 1: 180 S BROADWAY CITY: WHITE PLAINS STATE: NY ZIP: 10605 BUSINESS PHONE: 9149481300 MAIL ADDRESS: STREET 1: 180 SOUTH BROADWAY CITY: WHITE PLAINS STATE: NY ZIP: 10605 10-Q 1 QUARTERLY REPORT FOR PRESIDENTIAL REALTY CORP. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 ---------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-8594 ------- PRESIDENTIAL REALTY CORPORATION ------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-1954619 --------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 180 South Broadway, White Plains, New York 10605 ------------------------------------------ ------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, indicating area code 914-948-1300 ------------ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ------ ------ The number of shares outstanding of each of the issuer's classes of common stock as of the close of business on May 8, 2000 was 478,940 shares of Class A common and 3,217,773 shares of Class B common. PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES Index to Form 10-Q For the Three Months Ended March 31, 2000 Part I - Financial Information (Unaudited) Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Management's Discussion and Analysis of Financial Condition and Results of Operations Part II - Other Information Item 6. Exhibits and Reports on Form 8-K PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
Assets March 31, December 31, 2000 1999 -------------------- ------------------- Real estate (Note 2) $62,978,704 $35,647,633 Less: accumulated depreciation 8,501,203 8,231,480 -------------------- ------------------- Net real estate 54,477,501 27,416,153 -------------------- ------------------- Mortgage portfolio (Note 3): Sold properties 28,456,200 28,481,797 Related parties 1,558,025 1,574,028 -------------------- ------------------- Total mortgage portfolio 30,014,225 30,055,825 -------------------- ------------------- Less discounts: Sold properties 1,783,490 1,837,722 Related parties 129,633 132,073 -------------------- ------------------- Total discounts 1,913,123 1,969,795 -------------------- ------------------- Less deferred gains: Sold properties 11,320,373 11,320,373 Related parties 902,568 908,343 -------------------- ------------------- Total deferred gains 12,222,941 12,228,716 -------------------- ------------------- Net mortgage portfolio (of which $123,872 in 2000 and $127,803 in 1999 are due within one year) 15,878,161 15,857,314 -------------------- ------------------- Minority partners' interest (Note 4) 7,869,541 7,904,533 Prepaid expenses and deposits in escrow 1,930,383 1,434,079 Other receivables (net of valuation allowance of $80,317 in 2000 and $139,822 in 1999) 604,691 494,220 Securities available for sale (Note 5) 1,049,528 2,299,494 Cash and cash equivalents 1,965,788 7,014,542 Other assets 1,942,162 1,641,095 -------------------- ------------------- Total Assets $85,717,755 $64,061,430 ==================== =================== See notes to consolidated financial statements.
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
Liabilities and Stockholders' Equity March 31, December 31, 2000 1999 ------------------ ------------------ Liabilities: Mortgage debt (of which $1,487,011 in 2000 and $1,338,491 in 1999 are due within one year) (Note 6) $61,168,868 $39,379,458 Executive pension plan liability 1,492,776 1,479,185 Accrued liabilities 1,638,112 1,637,069 Accrued taxes payable 220,500 Accrued postretirement costs 530,132 538,398 Deferred income 94,196 46,533 Accounts payable 360,572 414,195 Other liabilities 882,291 799,490 ------------------ ------------------ Total Liabilities 66,166,947 44,514,828 ------------------ ------------------ Stockholders' Equity: Common stock; par value $.10 per share Class A, authorized 700,000 shares, issued and outstanding 478,940 shares 47,894 47,894 Class B March 31, 2000 December 31, 1999 321,896 321,240 ----------- ------------------ ------------------ Authorized: 10,000,000 10,000,000 Issued: 3,218,957 3,212,402 Treasury: 1,258 1,258 Additional paid-in capital 2,611,864 2,573,281 Retained earnings 17,090,255 17,209,589 Net unrealized loss on securities available for sale (Notes 5 and 8) (136,773) (221,074) Class B, treasury stock (at cost) (16,828) (16,828) Notes receivable for exercise of stock options (367,500) (367,500) ------------------ ------------------ Total Stockholders' Equity 19,550,808 19,546,602 ------------------ ------------------ Total Liabilities and Stockholders' Equity $85,717,755 $64,061,430 ================== ================== See notes to consolidated financial statements.
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
THREE MONTHS ENDED MARCH 31, --------------------------------------- 2000 1999 -------------- -------------- Income: Rental $2,880,532 $2,603,761 Interest on mortgages - sold properties 744,165 841,053 Interest on wrap mortgages 299,387 Interest on mortgages - related parties 45,209 55,452 Investment income 126,753 111,407 Other 20,314 10,698 -------------- -------------- Total 3,816,973 3,921,758 -------------- -------------- Costs and Expenses: General and administrative 721,169 666,867 Interest on note payable and other 185,849 Interest on wrap mortgage debt 31,322 Amortization of loan acquisition costs 3,128 Depreciation on non-rental property 5,675 6,255 Rental property: Operating expenses 1,158,270 1,168,759 Interest on mortgages 766,049 746,305 Real estate taxes 247,392 221,575 Depreciation on real estate 270,584 243,441 Amortization of mortgage costs 20,741 221,771 Minority interest share of partnership income 168,195 128,653 -------------- -------------- Total 3,358,075 3,623,925 -------------- -------------- Income before net gain from sales of properties, notes and securities 458,898 297,833 Net gain from sales of properties, notes and securities (includes a provision for Federal and State taxes of $1,566,474 in 1999) 12,703 6,718,968 -------------- -------------- Net Income $471,601 $7,016,801 ============== ============== Earnings per Common Share (basic and diluted) (Note 1-C): Income before net gain from sales of properties, notes and securities $0.13 $0.08 Net gain from sales of properties, notes and securities 0.00 1.86 -------------- -------------- Net Income per Common Share $0.13 $1.94 ============== ============== Cash Distributions per Common Share $0.16 $0.16 ============== ============== Weighted Average Number of Shares Outstanding 3,692,081 3,608,628 ============== ============== See notes to consolidated financial statements.
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
THREE MONTHS ENDED MARCH 31, -------------------------------------------- 2000 1999 ---------------- ---------------- Cash Flows from Operating Activities: Cash received from rental properties $2,997,647 $2,674,090 Interest received 800,259 1,119,661 Miscellaneous income 19,690 10,074 Interest paid on rental property mortgages (766,652) (751,264) Interest paid on wrap mortgage debt (31,322) Interest paid on note payable and other (199,983) Cash disbursed for rental property operations (1,849,318) (1,052,703) Cash disbursed for general and administrative costs (812,906) (392,859) ---------------- ---------------- Net cash provided by operating activities 388,720 1,375,694 ---------------- ---------------- Cash Flows from Investing Activities: Payments received on notes receivable 41,600 790,446 Proceeds from sale of notes receivable 20,331,599 Payments of taxes payable on gain from sale of notes (220,500) Deposit received on contract of sale of property 87,300 Payments disbursed for additions and improvements (69,212) (267,844) Purchase of property (27,275,886) Proceeds from sale of property 69,979 Purchases of securities (3,120,231) Proceeds from sales of securities 1,280,355 ---------------- ---------------- Net cash (used in) provided by investing activities (26,173,664) 17,821,270 ---------------- ---------------- Cash Flows from Financing Activities: Principal payments on mortgage debt: Properties owned (110,590) (105,600) Wrap mortgage debt on sold properties (98,723) Mortgage debt payment from proceeds of mortgage refinancing (3,120,190) Mortgage proceeds 21,900,000 3,195,500 Mortgage costs (350,096) (82,824) Principal payments on note payable (10,395,361) Cash distributions on common stock (590,935) (576,651) Proceeds from dividend reinvestment and share purchase plan 21,014 24,969 Distributions to minority partners (133,203) (270,670) ---------------- ---------------- Net cash provided by (used in) financing activities 20,736,190 (11,429,550) ---------------- ---------------- Net Increase (Decrease) in Cash and Cash Equivalents (5,048,754) 7,767,414 Cash and Cash Equivalents, Beginning of Period 7,014,542 1,764,465 ---------------- ---------------- Cash and Cash Equivalents, End of Period $1,965,788 $9,531,879 ================ ================ See notes to consolidated financial statements.
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
THREE MONTHS ENDED MARCH 31, -------------------------------------------- 2000 1999 ---------------- ---------------- Reconciliation of Net Income to Net Cash Provided by Operating Activities Net Income $471,601 $7,016,801 ---------------- ---------------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 297,000 474,595 Gain from sales of properties, notes and securities (12,703) (6,718,968) Issuance of treasury stock for fees and expenses 5,378 Amortization of discounts on notes and fees (92,562) (296,829) Minority share of partnership income 168,195 128,653 Changes in assets and liabilities: Decrease (increase) in accounts receivable (74,580) 137,674 Increase (decrease) in accounts payable and accrued liabilities (47,255) 456,109 Increase (decrease) in deferred income 47,663 (2,515) Decrease (increase) in prepaid expenses, deposits in escrow and deferred charges (454,619) 173,077 Increase in security deposit liabilities 82,046 2,601 Other 3,934 (882) ---------------- ---------------- Total adjustments (82,881) (5,641,107) ---------------- ---------------- Net cash provided by operating activities $388,720 $1,375,694 ================ ================ See notes to consolidated financial statements.
PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2000 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. General - Presidential Realty Corporation ("Presidential" or the "Company"), a Real Estate Investment Trust ("REIT"), is engaged principally in the holding of notes and mortgages secured by real estate and in the ownership of income producing real estate. Presidential operates in a single business segment, investments in real estate related assets. B. Principles of Consolidation - The consolidated financial statements include the accounts of Presidential Realty Corporation and its wholly owned subsidiaries. Additionally, the consolidated financial statements include 100% of the account balances of UTB Associates and PDL, Inc. and Associates Limited Co-Partnership ("Home Mortgage Partnership"), partnerships in which Presidential or PDL, Inc., a wholly owned subsidiary of Presidential, is the General Partner. All significant intercompany balances and transactions have been eliminated. C. Net Income Per Share - Basic net income per share data is computed by dividing the net income by the weighted average number of shares of Class A and Class B common stock outstanding during each period. Basic net income per share and diluted income per share are the same for the three months ended March 31, 2000 and 1999. The dilutive effect of stock options is calculated using the treasury stock method. D. Basis of Presentation - The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation of the results for the respective periods have been reflected. These financial statements and accompanying notes should be read in conjunction with the Company's Form 10-K for the year ended December 31, 1999. E. Management Estimates - In preparing the consolidated financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated balance sheets and the reported amounts of income and expense for the reporting period. Actual results could differ from those estimates. 2. REAL ESTATE Real estate is comprised of the following: March 31, December 31, 2000 1999 ----------- ----------- Land $ 9,599,970 $ 5,461,173 Buildings and leaseholds 53,074,148 29,909,205 Furniture and equipment 304,586 277,255 ----------- ----------- Total real estate $62,978,704 $35,647,633 =========== =========== In March, 2000, the Company purchased two apartment properties, Farrington Apartments, a 224 unit garden apartment property in Clearwater, Florida and Preston Lake Apartments, a 320 unit garden apartment property in Tucker, Georgia. The purchase price for the Farrington Apartments property was $9,630,950 and the purchase price for the Preston Lake Apartments property was $17,450,000. In connection with the purchase of these two apartment properties, the Company obtained first mortgage loans of $7,900,000 and $14,000,000, respectively. The following pro forma consolidated results of operations are presented as if the acquisitions of Farrington Apartments and Preston Lake Apartments had occurred on January 1, 2000. Three Months Ended March 31, 2000 ---------------------------------- As Reported Pro Forma ----------- ---------- Income: Rental $2,880,532 $3,872,137 Other 936,441 936,441 ---------- ---------- Total 3,816,973 4,808,578 ---------- ---------- Costs and Expenses: Rental property: Operating expenses 1,158,270 1,503,693 Interest on mortgages 766,049 1,183,744 Real estate taxes 247,392 322,071 Depreciation and amortization 291,325 452,936 Other 895,039 895,039 ---------- ---------- Total 3,358,075 4,357,483 ---------- ---------- Income before net gain from sales of properties, notes and securities 458,898 451,095 Net gain from sales of properties, notes and securities 12,703 12,703 ---------- ---------- Net Income $ 471,601 $ 463,798 ========== ========== Net Income per Common Share (basic and diluted) $0.13 $0.13 ========== ========== The pro forma consolidated results of operations include the actual operating results of the acquired properties from January 1, 2000 to the date of acquisition, plus adjustments to give effect to revised property management fees, interest expense on acquisition debt, depreciation expense on the acquired properties and amortization of mortgage costs. The pro forma information is not necessarily indicative of the results of operations that would have occurred had the acquisitions been made at the beginning of 2000 or the results of operations for future periods. 3. MORTGAGE PORTFOLIO The Company's mortgage portfolio includes notes receivable - sold properties and notes receivable - related parties. Notes receivable - sold properties consist of: (1) Long-term purchase money notes from sales of properties previously owned by the Company or notes purchased by the Company. These purchase money notes have varying interest rates with balloon payments due at maturity. (2) Notes receivable from sales of cooperative apartment units. These notes generally have market interest rates and the majority of these notes amortize monthly with balloon payments due at maturity. Notes receivable - related parties are all due from Ivy Properties, Ltd. or its affiliates (collectively "Ivy") and consist of: (1) Purchase money notes resulting from sales of property or partnership interests to Ivy. (2) Notes receivable relating to loans made by the Company to Ivy in connection with Ivy's cooperative conversion business. At March 31, 2000, all of the notes in the Company's mortgage portfolio are current with the exception of the Mark Terrace mortgage note, which is secured by 172 unsold cooperative apartment units at Mark Terrace Apartments, Bronx, New York. The annual interest on the Mark Terrace note is due in advance in February of each year. The 2000 interest payment of $140,084 has not been received and the Company has accrued interest income of $36,423 for the period. The outstanding principal balance of the note is $2,244,000 and the net carrying value of the note is $1,685,750 after deducting a deferred gain of $558,250. The Company anticipates that the annual interest payment will be received in the second quarter of 2000. 4. MINORITY PARTNERS' INTEREST Presidential is the General Partner of UTB Associates and PDL, Inc., a wholly owned subsidiary of Presidential, is the General Partner of Home Mortgage Partnership. Presidential has a 66-2/3% interest in UTB Associates, and Presidential and PDL, Inc. have an aggregate 26% interest in Home Mortgage Partnership. As the General Partner of these partnerships, Presidential and PDL, Inc., respectively, exercise effective control over the business of these partnerships, and, accordingly, Presidential consolidates these partnerships in the accompanying financial statements. The minority partners' interest reflects the minority partners' equity in the partnerships. The minority partners' interest in the Home Mortgage Partnership is a negative interest and therefore, minority partners' interest is a net asset on the Company's financial statements. The negative basis for each partner's interest in the Home Mortgage Partnership is due to the refinancing of the mortgage on the property and the distribution of the proceeds to the partners. The mortgage debt, which is included in the Company's financial statements, is substantially in excess of the net carrying amount of the property, but the estimated fair value of the property is significantly greater than the mortgage debt. Thus, the asset recorded as minority partners' interest should be realized upon sale of the property. Minority partners' interest is comprised of the following: March 31, December 31, 2000 1999 ---------- ------------ Home Mortgage Partnership $8,092,494 $8,112,127 UTB Associates (222,953) (207,594) ---------- ------------ Total minority partners' interest $7,869,541 $7,904,533 ========== ============ 5. SECURITIES AVAILABLE FOR SALE The cost and fair value of securities available for sale are as follows: March 31, December 31, 2000 1999 ---------- ----------- Cost $1,186,301 $2,520,568 Gross unrealized gains 1,590 1,824 Gross unrealized losses (138,363) (222,898) ---------- ----------- Fair value $1,049,528 $2,299,494 ========== =========== During the three months ended March 31, 2000, the Company sold securities available for sale for gross proceeds of $1,285,263 and a net loss of $53,911. This net loss was composed of a gross loss of $56,217 and a gross gain of $2,306. During the three months ended March 31, 1999, there were no sales of securities available for sale. 6. MORTGAGE DEBT In connection with the purchase of Farrington Apartments and Preston Lake Apartments in March, 2000, the Company obtained first mortgage loans secured by the properties as follows: Mortgage Interest Monthly Maturity Balloon Property Loan Rate Payment Date Payment - -------- -------- -------- ------- -------- ------- Farrington Apartments $ 7,900,000 8.25% $ 59,350 5/1/2010 $ 7,106,299 Preston Lake Apartments 14,000,000 8.15% 104,195 5/1/2010 12,564,077 7. INCOME TAXES Presidential has elected to qualify as a Real Estate Investment Trust under the Internal Revenue Code. A REIT which distributes at least 95% of its real estate investment trust taxable income to its shareholders each year by the end of the following year and which meets certain other conditions will not be taxed on that portion of its taxable income which is distributed to its shareholders. For the year ended December 31, 1999, the Company had taxable income (before distributions to stockholders) of approximately $3,711,000 ($1.01 per share), which included approximately $2,836,000 ($.77 per share) of capital gains. The $3,711,000 was reduced by the $630,000 ($.17 per share) of undistributed capital gains designated as paid under Section 857(b)(3)(D). At December 31, 1999, the Company accrued $220,500 for income taxes on the $630,000 undistributed capital gain, which tax was subsequently paid in January, 2000. The $3,081,000 balance of taxable income will be reduced by the $801,000 ($.22 per share) of its 1999 distributions that were not utilized in reducing the Company's 1998 taxable income. In addition, the Company may elect to apply any eligible year 2000 distributions to reduce its 1999 taxable income. As previously stated, in order to retain REIT status, Presidential is required to distribute 95% of its REIT taxable income (exclusive of capital gains). As of March 31, 2000, Presidential has distributed all of the required 95% ($.23 per share) of its 1999 REIT taxable income. In addition, although no assurances can be given, it is the Company's present intention to distribute all of its 1999 taxable income (after the $630,000 retained capital gain) and therefore, no provision for income taxes was made for the $3,081,000 of taxable income at December 31, 1999. Furthermore, the Company had taxable income (before distributions to stockholders) for the three months ended March 31, 2000 of approximately $235,000 ($.06 per share), which included approximately $13,000 ($.00 per share) of capital gains. This amount will be reduced by 2000 distributions that were not utilized in reducing the Company's 1999 taxable income and by any eligible 2001 distributions that the Company may elect to utilize as a reduction of its 2000 taxable income. Presidential intends to continue to maintain its REIT status. Presidential has, for tax purposes, reported the gain from the sale of certain of its properties using the installment method. 8. COMPREHENSIVE INCOME The Company's only element of other comprehensive income is the change in the unrealized gain (loss) on the Company's securities available for sale. Thus, comprehensive income, which consists of net income plus or minus other comprehensive income, for the three months ended March 31, 2000 and 1999 was $555,902 and $6,951,889, respectively. 9. COMMITMENTS AND CONTINGENCIES Presidential is not a party to any material legal proceedings except as noted below. UTB Associates, a partnership in which the Company holds a 66-2/3% interest, is a tenant under a lease (the "Professional Space Lease") of 24,400 square feet of professional office space at University Towers, a cooperative apartment building in New Haven, Connecticut. UTB Associates sublets the professional space to unrelated parties. In June, 1999, University Towers Owners Corp., the cooperative corporation, filed a petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Connecticut, New Haven division. As part of the bankruptcy proceedings, in July, 1999 the cooperative corporation filed an Adversary Proceeding against UTB Associates for termination of the Professional Space Lease and damages primarily based on claims arising under Connecticut law. The Company has been advised by its litigation counsel that there are meritorious defenses to the claim raised by the cooperative corporation and that if these defenses are successful, it is unlikely that the Professional Space Lease will be terminated or that any damages will be assessed against UTB Associates. However, in light of the uncertainties of litigation, no assurances can be given as to the outcome of the litigation. The Company's financial statements reflect approximately $19,000 of income from the Professional Space Lease for each of the quarters ended March 31, 2000 and 1999. In addition, the Company may be a party to routine litigation incidental to the ordinary course of its business. In the opinion of management, all of the Company's properties are adequately covered by insurance in accordance with normal insurance practices. The Company is not aware of any environmental issues at any of its properties, with the exception of the environmental expenses incurred in prior years at its Mapletree Industrial Center property in Palmer, Massachusetts. The presence, with or without the Company's knowledge, of hazardous substances at any of its properties could have an adverse effect on the Company's operating results and financial condition. PRESIDENTIAL REALTY CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999 Results of Operations Financial Information for the three months ended March 31, 2000 and 1999: - ---------------------------------------------------------------------------- Revenue decreased by $104,785 primarily as a result of decreases in interest on wrap mortgages and mortgages-sold properties. These decreases were offset by increases in rental income. Rental income increased by $276,771 primarily as a result of the purchase of Farrington Apartments on March 15, 2000, which increased rental income by $86,043. In addition, rental income increased by $71,807 at the Home Mortgage Plaza property and by $118,921 at all other properties. The Farrington Apartments and the Preston Lake Apartments properties were purchased late in the first quarter of 2000 and did not significantly impact results of operations. Interest on wrap mortgages decreased by $299,387 as a result of the modification of the New Haven wraparound mortgage notes in 1999 and the sale of the Grant House wraparound mortgage note in 1999. As a result of these transactions, the Company no longer holds any wraparound mortgage notes. Interest on mortgages-sold properties decreased by $96,888 primarily due to the $240,795 decrease in amortization of discounts on notes. The majority of the discounts on the notes held by Presidential were entirely amortized as the notes matured, or when a particular note was paid off or sold. This decrease was partially offset by the $145,746 increase in interest as a result of rate increases and modifications. Costs and expenses decreased by $265,850 primarily due to decreases in interest on note payable and other and decreases in amortization of mortgage costs. These decreases were offset by increases in general and administrative expenses, real estate tax expenses and minority interest share of partnership income. Interest on note payable and other decreased by $185,849 as a result of the repayment of the note payable in February, 1999. Amortization of mortgage costs decreased by $201,030 primarily as a result of the write-off in 1999 of unamortized mortgage costs of $166,756 and the $31,200 prepayment penalty fee associated with the prior mortgage on the Cambridge Green property which was refinanced in 1999. General and administrative expenses increased by $54,302 primarily as a result of increases in salary expense of $22,743 and increases in executive pension plan and employee pension plan expenses of $19,052 and $21,851, respectively. Real estate tax expenses increased by $25,817 primarily as a result of property tax rate increases and assessment increases. Minority interest share of partnership income increased by $39,542 as a result of an increase in partnership income on the Home Mortgage Plaza property. Net gain from sales of properties, notes and securities are sporadic (as they depend on the timing of sales or the receipt of installments or prepayments on purchase money notes). In 2000, the net gain from sales of properties, notes and securities was $12,703 compared with $6,718,968 in 1999: Gain from sales recognized at March 31, 2000 1999 ---- ---- Sales of mortgage notes: Fairfield Towers First and Second Mortgages (net of taxes of $1,566,474) sold in 1999 $6,050,740 Grant House wraparound mortgage note sold in 1999 425,000 Deferred gains recognized upon receipt of principal payments on notes: Pinewood - $317,662 principal prepayment received in 1999 218,534 Overlook $ 5,775 5,228 Fairfield Towers Second Mortgage 19,466 Sale of property: Broad Park Lodge 60,839 Sales of securities (53,911) ------- ---------- $12,703 $6,718,968 ======= ========== Balance Sheet Real estate increased by $27,331,071 as a result of the purchase of Farrington Apartments and Preston Lake Apartments in March, 2000. The capitalized costs for Farrington Apartments, a 224 unit garden apartment property in Clearwater, Florida was $1,900,000 for land and $7,896,421 for buildings and improvements. The capitalized costs for Preston Lake Apartments, a 320 unit garden apartment property in Tucker, Georgia, was $2,240,000 for land and $15,239,465 for buildings and improvements. In addition, additions and improvements to other properties were $65,185. Prepaid expenses and deposits in escrow increased by $496,304 as a result of the purchase of Farrington Apartments and Preston Lake Apartments in March of 2000. Securities available for sale decreased by $1,249,966 as a result of the sale of $1,334,267 in marketable equity securities, primarily interest-bearing corporate preferred stocks, offset by an $84,301 increase in the fair value of securities available for sale. Cash and cash equivalents decreased by $5,048,754 primarily as a result of the cash utilized for the purchase of Farrington Apartments and Preston Lake Apartments. Mortgage debt increased by $21,789,410 primarily due to the $7,900,000 mortgage on Farrington Apartments and the $14,000,000 mortgage on Preston Lake Apartments. Deferred income increased by $47,663 primarily as a result of an increase of $42,213 in prepaid rents. In March, 2000, three directors of the Company were each given 1,000 shares of the Company's Class B common stock as partial payment for directors fees for the 2000 year. The average market value for the previous month of the Class B common stock, on which the fees were based, was $6.075 per share. As a result of this transaction, the Company recorded $18,225 in prepaid directors fees (to be amortized during 2000) based on the average market value of the stock. The Company recorded additions to the Company's Class B common stock of $300 at par value of $.10 per share and $17,925 to additional paid-in capital. Net unrealized loss on securities available for sale decreased by $84,301 as a result of the increase in the fair value of securities available for sale. Forward-Looking Statements Certain statements made in this report may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include statements regarding the intent, belief or current expectations of the Company and its management and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, the following: general economic and business conditions, which will, among other things affect the demand for apartments or commercial space, availability and creditworthiness of prospective tenants, lease rents and the terms and availability of financing; adverse changes in the real estate markets including, among other things, competition with other companies; risks of real estate development and acquisition; governmental actions and initiatives; and environment/safety requirements. Liquidity and Capital Resources Management believes that the Company has sufficient liquidity and capital resources to carry on its existing business and, barring any unforeseen circumstances, to pay the dividends required to maintain REIT status in the foreseeable future. During the quarter ended March 31, 2000, the Company purchased two new properties and utilized a substantial portion of its available funds, as well as obtaining mortgage financing for the purchase of these properties. Except as discussed herein, management is not aware of any other trends, events, commitments or uncertainties that will have a significant effect on liquidity. Presidential obtains funds for working capital and investment from its available cash and cash equivalents, from securities available for sale, from operating activities, from refinancing of mortgage loans on its real estate equities, and from the sales of or repayments on its mortgage portfolio. The Company also has at its disposal a $250,000 unsecured line of credit from a lending institution. At March 31, 2000, Presidential had $1,965,788 in available cash and cash equivalents, a decrease of $5,048,754 from the $7,014,542 at December 31, 1999. This decrease in cash and cash equivalents was due to cash provided by operating activities of $388,720 and financing activities of $20,736,190, offset by cash used in investing activities of $26,173,664. Operating Activities Presidential's principal source of cash from operating activities is from interest on its mortgage portfolio, which was $800,259 in 2000. In 2000, net cash received from rental property operations was $248,474, which is net of distributions from partnership operations to minority partners but before additions and improvements and mortgage amortization. Investing Activities Presidential holds a portfolio of mortgage notes receivable, which consist primarily of notes arising from sales of real properties previously owned by the Company. During 2000, the Company received principal payments of $41,600 on its mortgage portfolio of which $4,866 represented prepayments, which are sporadic and cannot be relied upon as a regular source of liquidity. In March, 2000, the Company purchased Farrington Apartments and Preston Lake Apartments for a purchase price of $9,630,950 and $17,450,000, respectively. The Company obtained first mortgage loans of $7,900,000 and $14,000,000, respectively, which are secured by the properties. (See Balance Sheet above and Financing Activities below). During 2000, the Company invested $69,212 in additions and improvements to its properties. The Company also holds a portfolio of marketable equitable securities which decreased by $1,249,966, primarily as a result of the $1,334,267 sale of corporate preferred stocks, offset by an increase in the fair value of securities of $84,301. Financing Activities The Company's indebtedness at March 31, 2000, consisted of $61,168,868 of mortgage debt. The mortgage debt, which is secured by individual properties, is nonrecourse to the Company with the exception of the $255,541 Mapletree Industrial Center mortgage, which is secured by the property and a guarantee of repayment by Presidential. In addition, some of the Company's mortgages provide for personal liability for damages resulting from specified acts or circumstances, such as for environmental liabilities and fraud. Generally, mortgage debt repayment is serviced with cash flow from the operations of the individual properties. During 2000, the Company made $110,590 of principal payments on mortgage debt. In connection with the purchase of Farrington Apartments and Preston Lake Apartments in March, 2000, the Company obtained first mortgage loans secured by the properties as follows: Mortgage Interest Monthly Maturity Balloon Property Loan Rate Payment Date Payment - -------- ---------- -------- -------- --------- ---------- Farrington Apartments $ 7,900,000 8.25% $ 59,350 5/1/2010 $ 7,106,299 Preston Lake Apartments 14,000,000 8.15% 104,195 5/1/2010 12,564,077 In addition, the Company paid mortgage costs of $350,096 for the mortgages obtained for the new properties. These mortgage costs were capitalized to other assets and will be amortized over the life of the mortgages applying the interest method. The mortgages on the Company's properties are at fixed rates of interest. The majority of the mortgages have balloon payments due at maturity with the exception of four mortgages which are self-liquidating. During 2000, Presidential declared and paid cash distributions of $590,935 to its shareholders and received proceeds from its dividend reinvestment and share purchase plan of $21,014. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 10.12 Employment Agreement dated January 1, 2000 between the Company and Jeffrey F. Joseph. 10.13 Employment Agreement dated January 1, 2000 between the Company and Steven Baruch. 10.14 Employment Agreement dated January 1, 2000 between the Company and Thomas Viertel. 27. Financial Data Schedule. (b) During the calendar quarter ended March 31, 2000, the Company filed two Form 8-K's dated March 27, 2000, and April 10, 2000 which disclosed under Item 2 - Acquisition or Disposition of Assets the purchase of Farrington Apartments and the purchase of Preston Lake Apartments, respectively. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PRESIDENTIAL REALTY CORPORATION (Registrant) DATE: May 12, 2000 By: /s/ Jeffrey F. Joseph --------------------- Jeffrey F. Joseph President DATE: May 12, 2000 By: /s/ Elizabeth Delgado --------------------- Elizabeth Delgado Treasurer EX-10.12 2 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 EX-10.13 3 EMPLOYMENT AGREEMENT This Employment Agreement, made as of January 1, 2000, by and between Steven Baruch, residing at One Pondview West, Purchase, New York 10577 ("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 Executive Vice 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 Executive Vice President, and Executive hereby accepts such employment, upon the terms and conditions hereinafter set forth. 2. Duties. (a) In his capacity as Executive Vice 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 President or 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, (x) Executive may devote reasonable time and efforts during normal business days and hours to the business of Scorpio Entertainment, Inc. and Scorpio Ventures, Inc. (collectively "Scorpio") pursuant to the Option/Shareholders Agreement dated November 14, 1991 among Employer, Scorpio, Steven Baruch, Thomas Viertel and Jeffrey F. Joseph, as modified by certain agreements dated as of August 1, 1996 between such parties (the "Option Agreement") and the Employment Agreement between Executive and Scorpio executed pursuant to the Option Agreement and (y) 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, in either case, the devotion of such time and effort does not conflict (without independent committee review) or interfere with Executive's performance of his duties as Executive Vice President of Presidential and in fact Executive does diligently perform his duties as Executive Vice President of Presidential to the satisfaction of the Board of Directors of Employer. During the term of this Employment Agreement, Employer will permit Executive, at no cost to Executive, to utilize his office space to carry on the business of Scorpio to the extent permitted by this paragraph (b), provided however that Executive and/or Scorpio will pay, or reimburse Employer for, the direct costs for duplicating, telecopying, telephone and other business expenses used by Scorpio in a manner reasonably satisfactory to 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 One Hundred Seventy Six Thousand Four Hundred Fifty and no/100 ($176,450.00) 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 $10,500 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 7.5% 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(f) 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 paragraphs (b) or (d) of Section 11 below, Executive's bonus for the Bonus Year in which such termination occurs shall be prorated (x) in the case of a termination pursuant to Section 11(b), as of the date on which compensation is no longer payable under said Section 11(b) and (y) in the case of termination pursuant to Section 11(d) below, as of the end of the calendar year in which notice of termination is given. 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) Year end termination. Executive's employment may be terminated by the Company at December 31, 2000 or at December 31, 2001 upon written notice to Executive given at any time prior to such dates if the Board of the Directors of the Company in its sole discretion determines in good faith that Executive has not diligently performed his duties as Executive Vice-President of the Company to the satisfaction of the Board of Directors. If Executive's employment is terminated pursuant to this paragraph (d) of Section 11, Executive shall be entitled to receive Executive's salary per Section 4 above and 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), which he would but for such termination have received hereunder during or with respect to the period ending ninety (90) days after the end of the calendar year in which Executive's employment is terminated pursuant to this Section 11 (d) (and at the times provided in Section 4 hereof in the case of compensation pursuant to said Section). Any termination of Executive's employment under this Section 11 (d) shall not affect the Employer's obligation to make the retirement payments set forth in Section 12(b) below. (e) 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), (d) or (f) 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. (f) 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: Steven Baruch One Pondview West Purchase, New York 10577 16. Assignment. This Employment Agreement shall inure to the benefit of Executive and Employer and be binding upon the successors 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: Steven Baruch ------------- Steven Baruch EX-10.14 4 EMPLOYMENT AGREEMENT This Employment Agreement, made as of January 1, 2000, by and between Thomas Viertel, residing at 333 West 56th Street, New York, New York 10019 ("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 Executive Vice 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 Executive Vice President, and Executive hereby accepts such employment, upon the terms and conditions hereinafter set forth. 2. Duties. (a) In his capacity as Executive Vice 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 President or 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, (x) Executive may devote reasonable time and efforts during normal business days and hours to the business of Scorpio Entertainment, Inc. and Scorpio Ventures, Inc. (collectively "Scorpio") pursuant to the Option/Shareholders Agreement dated November 14, 1991 among Employer, Scorpio, Steven Baruch, Thomas Viertel and Jeffrey F. Joseph, as modified by certain agreements dated as of August 1, 1996 between such parties (the "Option Agreement") and the Employment Agreement between Executive and Scorpio executed pursuant to the Option Agreement and (y) 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, in either case, the devotion of such time and effort does not conflict (without independent committee review) or interfere with Executive's performance of his duties as Executive Vice President of Presidential and in fact Executive does diligently perform his duties as Executive Vice President of Presidential to the satisfaction of the Board of Directors of Employer. During the term of this Employment Agreement, Employer will permit Executive, at no cost to Executive, to utilize his office space to carry on the business of Scorpio to the extent permitted by this paragraph (b), provided however that Executive and/or Scorpio will pay, or reimburse Employer for, the direct costs for duplicating, telecopying, telephone and other business expenses used by Scorpio in a manner reasonably satisfactory to 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 One Hundred Seventy Six Thousand Four Hundred Fifty and no/100 ($176,450.00) 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 $10,500 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 7.5% 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(f) 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 paragraphs (b) or (d) of Section 11 below, Executive's bonus for the Bonus Year in which such termination occurs shall be prorated (x) in the case of a termination pursuant to Section 11(b), as of the date on which compensation is no longer payable under said Section 11(b) and (y) in the case of termination pursuant to Section 11(d) below, as of the end of the calendar year in which notice of termination is given. 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) Year end termination. Executive's employment may be terminated by the Company at December 31, 2000 or at December 31, 2001 upon written notice to Executive given at any time prior to such dates if the Board of the Directors of the Company in its sole discretion determines in good faith that Executive has not diligently performed his duties as Executive Vice-President of the Company to the satisfaction of the Board of Directors. If Executive's employment is terminated pursuant to this paragraph (d) of Section 11, Executive shall be entitled to receive Executive's salary per Section 4 above and 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), which he would but for such termination have received hereunder during or with respect to the period ending ninety (90) days after the end of the calendar year in which Executive's employment is terminated pursuant to this Section 11 (d) (and at the times provided in Section 4 hereof in the case of compensation pursuant to said Section). Any termination of Executive's employment under this Section 11 (d) shall not affect the Employer's obligation to make the retirement payments set forth in Section 12(b) below. (e) 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), (d) or (f) 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. (f) 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: Thomas Viertel 333 West 56th Street New York, New York 10019 16. Assignment. This Employment Agreement shall inure to the benefit of Executive and Employer and be binding upon the successors 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: Thomas Viertel -------------- Thomas Viertel EX-27 5 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-2000 MAR-31-2000 1,965,788 1,049,528 16,563,169 80,317 0 5,674,262 62,978,704 8,501,203 85,717,755 3,579,891 59,681,857 0 0 369,790 19,181,018 85,717,755 0 3,816,973 0 1,865,182 0 0 766,049 471,601 0 471,601 0 0 0 471,601 0.13 0.13
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