AMENDMENT NO. 2 TO
AMENDED AND RESTATED
EMPLOYMENT AND NONCOMPETITION AGREEMENT
September 1, 1998
Xxxxxxxx Xxxxxxxxx
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Re: Amendment No. 2 to Amended and Restated Employment and Noncompetition
Agreement dated March 1, 1996, as amended and restated on April -,
1997, and as amended on January 2, 1998, among BRI OP Limited
Partnership, Berkshire Realty Company, Inc. and Xxxxxxxx Xxxxxxxxx
(the "Agreement").
Dear Xx. Xxxxxxxxx:
The Board of Directors of Berkshire Realty Company, Inc. (the
"Company") is pleased to inform you that in consideration of the services that
you have rendered to the Company, the above-captioned Agreement is amended as
set forth below to, among other things, (a) increase your change in control
severance compensation to twenty-four months, and (b) provide for a compulsory
payment to you of a pro rata bonus in the event of termination under certain
circumstances.
The introductory sentence to Section 4 and subsection 4(a) of the
Agreement are amended in their entirety to read as follows:
4. Term of Employment; Termination. The term of Employee's employment
hereunder shall commence on March 1, 1996 ("Commencement Date"), and
shall continue until December 31, 1998 unless terminated prior
thereto by the first to occur of the following (the "Employment
Termination Date"):
a. the delivery by the Company to Employee of written
notice of termination without "cause" (as defined in subsection (b)
below). If a Change in Control of the Company (as hereinafter
defined) occurs and (i) Employee is relocated to an office over fifty
(50) miles from the Company's current headquarters at 000 Xxxxxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000; or (ii) Employee's duties and
responsibilities are changed so that Employee does not have duties
and responsibilities of a scope substantially equivalent to or
greater than the scope of Employee's duties and responsibilities
immediately prior to such Change in Control, at the election of
Employee within thirty (30) days of such change, such change shall
also be deemed a termination by the Company without cause pursuant to
this Section 4(a) (a "Constructive Termination"). For
purposes of this Agreement, a "Change in Control" of the Company
shall mean (i) the acquisition by any person (other than Employee),
corporation, partnership or other person or entity, including a
"person" within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), of 25% or more
beneficial ownership (as defined in Rule 13d in effect as of such
date under the Exchange Act) of the outstanding voting stock of the
Company; (ii) the merger or consolidation of the Company and any
other corporation or entity, other than a merger or consolidation in
which holders of the outstanding voting stock of the Company
immediately prior to such merger or consolidation hold greater than
50% of the outstanding voting stock of the surviving entity
immediately after such merger or consolidation; or (iii) the sale of
all or substantially all of the assets of the Company, other than
pursuant to a plan of liquidation adopted in accordance with Section
3 of the Company's Restated Certificate of Incorporation, as amended.
The Company and Employee agree that no Change in Control shall be
deemed to have occurred prior to September 1, 1998;"
Section 5 of the Agreement is amended in its entirety to read as
follows:
5. Base Salary; Bonus; Severance Compensation.
a. From September 1, 1998 through the Employment
Termination Date, the Company shall pay Employee a base salary (the
"Base Salary") at an annual rate of not less than $185,000 payable in
equal bi-weekly payments. During the term hereof the Base Salary may
be increased by the Board of Directors in its sole discretion based
upon its review of the performance of both Employee and the Company.
b. During the term of this Agreement, Employee shall
participate in a bonus plan comparable to the Annual Threshold Target
Maximum Bonus Plan under her prior employment with comparable targets
established. Other than the pro rata bonus described in the following
sentence, the terms and conditions of the Bonus Plan and payments
thereunder, if any, are at the sole discretion of the Board of
Directors. In the event of the termination of Employee's employment
pursuant to subsection 4(a), 4(d) or 4(e) hereof, the Company shall
pay a bonus to Employee, within thirty (30) days of the date of
termination, on a pro rata basis (based on the target bonus for such
year) for the period of the calendar year prior to the Employment
Termination Date.
c. If Employee's employment hereunder is terminated
pursuant to subsection 4(a) hereof or if the term hereunder is not
renewed by the Company pursuant to Section 23 hereof, the Company
shall pay Employee severance
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compensation in nine (9) monthly payments, each consisting of
one-twelfth of the Base Salary in effect at the Employment
Termination Date and one-twelfth of the Employee's target bonus for
the year in which the Employment Termination Date occurs (the
"Monthly Severance Payment"); provided, however, if such termination
or nonrenewal occurs during the period commencing on the date of a
Change in Control and ending two (2) years following the date of a
Change in Control, the Company shall pay Employee a lump-sum
severance compensation payment, within thirty (30) days of the
Employment Termination Date, equal to the Monthly Severance Payment
multiplied by twenty-four (24) (the "Change in Control Payment");
provided, further, that if such termination or nonrenewal by the
Company occurs during the six-month period preceding the date of a
Change in Control, the Company shall pay Employee a lump-sum
severance compensation payment, within thirty (30) days following the
date of a Change in Control, equal to (i) the Change in Control
Payment, less (ii) the aggregate Monthly Severance Payments paid to
Employee through the date of payment. In addition, if Employee's
employment hereunder is terminated pursuant to subsection 4(a) hereof
or if the term hereunder is not renewed by the Company pursuant to
Section 23 hereof, the Company shall pay Employee, within thirty (30)
days of the Employment Termination Date, $10,000 for outplacement
costs or financial planning services.
d. Notwithstanding any other provision of this Agreement,
in the event that the Company undergoes a "Change in Ownership or
Control" (as defined below), a portion of any "Contingent
Compensation Payments" (as defined below) that Employee would
otherwise be entitled to receive shall be eliminated to the extent
necessary to eliminate any Contingent Compensation Payments
constituting a "parachute payment" (as defined in Section 280G(b)(2)
of the Internal Revenue Code of 1986, as amended (the "Code")) for
Employee. For purposes of this Section 5, the Contingent Compensation
Payments so eliminated shall be referred to as the "Eliminated
Payments" and the aggregate amount (determined in accordance with
Proposed Treasury Regulation Section 1.280G-1, Q/A-30 or any
successor provision) of the Contingent Compensation Payments so
eliminated shall be referred to as the "Eliminated Amount."
e. Notwithstanding the provisions of subsection 5(d), no
such reduction in payments or benefits shall be made if (i) the
Eliminated Amount (computed without regard to this sentence) exceeds
(ii) the aggregate present value (determined in accordance with
Proposed Treasury Regulation Section 1.280G-1, Q/A-31 and Q/A-32 or
any successor provisions) of the amount of any additional taxes that
would be incurred by Employee if the Eliminated Payments (determined
without regard to this sentence) were paid to her (including, state
and federal income taxes on the Eliminated Payments, the
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excise tax imposed by Section 4999 of the Code payable with respect
to all of the Contingent Compensation Payments, and any withholding
taxes or the Eliminated Payments). The override of such reduction in
payments or benefits pursuant to this subsection 5(e) shall be
referred to as a "Subsection 5(e) Override." For purposes of the
preceding sentence, if any federal or state income taxes would be
attributable to the receipt of any Eliminated Payment, the amount of
such taxes shall be computed by multiplying the amount of the
Eliminated Payment by the maximum combined federal and state income
tax rate provided by law.
f. For purposes of this Section 5 the following terms shall
have the following respective meanings:
(i) "Change in Ownership or Control" shall mean a
change in the ownership or effective control of the Company or in the
ownership of a substantial portion of the assets of the Company
determined in accordance with Section 280G(b)(2) of the Code.
(ii) "Contingent Compensation Payment" shall mean
any payment (or benefit) in the nature of compensation that is made
or supplied to a "disqualified individual" (as defined in Section
280G(c) of the Code) and that is contingent (within the meaning of
Section 280G(b)(2)(A)(i) of the Code) on a Change in Ownership or
Control of the Company.
g. Notwithstanding any other provision of this Agreement,
any payments or other benefits otherwise due to Employee following a
Change in Ownership or Control that could reasonably be characterized
(as determined by the Company) as Contingent Compensation Payments
(the "Potential Payments") shall not be made until the dates provided
for in this subsection 5(g). Within thirty (30) days after the date
of such Change in Ownership or Control, the Company shall determine
and notify Employee (with reasonable detail regarding the basis for
its determinations) (i) which Potential Payments constitute
Contingent Compensation Payments, (ii) the Eliminated Amount and
(iii) whether the Subsection 5(e) Override is applicable. Within
thirty (30) days after delivery of such notice to Employee, Employee
shall deliver a response to the Company (the "Employee Response")
stating either (A) that she agrees with the Company's determination
pursuant to the preceding sentence, in which case she shall indicate,
if applicable, which Contingent Compensation Payments, or portions
thereof (the aggregate amount of which, determined in accordance with
Proposed Treasury Regulation Section 1.280G-1, QA-30 or any successor
provision, shall be equal to the Eliminated Amount), shall be treated
as Eliminated Payments or (B) that she disagrees with such
determination, in which
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case she shall indicate which Potential Payments should be
characterized as Contingent Compensation Payments, the Eliminated
Amount, whether the Subsection 5(e) Override is applicable, and,
which (if any) Contingent Compensation Payments, or portions thereof
(the aggregate amount of which, determined in accordance with
Proposed Treasury Regulation Section 1.280G-1, QA-30 or any successor
provision, shall be equal to the Eliminated Amount, if any), shall be
treated as Eliminated Payments. In the event that Employee fails to
deliver an Employee Response on or before the required date, the
Company's initial determination shall be final and the Contingent
Compensation Payments that shall be treated as Eliminated Payments
shall be determined by the Company in its absolute discretion. If
Employee states in the Employee Response that she agrees with the
Company's determination, the Company shall make the Potential
Payments to Employee within three (3) business days following
delivery to the Company of the Employee Response (except for any
Potential Payments which are not due to be made until after such
date, which Potential Payments shall be made on the date on which
they are due). If Employee states in the Employee Response that he
disagrees with the Company's determination, then, for a period of
sixty (60) days following delivery of the Employee Response, the
Employee and the Company shall use good faith efforts to resolve such
dispute. If such dispute is not resolved within such 60-day period,
such dispute shall be submitted to arbitration in accordance with the
provisions of Section 24 hereof. The Company shall, within three (3)
business days following delivery to the Company of the Employee
Response, make to Employee those Potential Payments as to which there
is no dispute between the Company and Employee regarding whether they
should be made (except for any such Potential Payments which are not
due to be made until after such date, which Potential Payments shall
be made on the date on which they are due). The balance of the
Potential Payments shall be made within three (3) business days
following the resolution of such dispute. The amount of any payments
to be made to Employee following the resolution of such dispute shall
be increased by the amount of the accrued interest thereon computed
at the prime rate as published from time to time in the Wall Street
Journal, compounded monthly from the date that such payments
originally were due.
h. Employee will be eligible to participate in the
Berkshire Realty Company, Inc. Amended and Restated Stock Option Plan
to the extent determined by the Board of Directors in its discretion.
i. The Company shall deduct from payments of the Base
Salary, bonus and severance amounts sufficient to cover applicable
federal, state and local income tax withholdings, social security and
any other amounts which the Company is required to withhold by
applicable law."
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The following is hereby added as Section 7A of the Agreement:
7A. Employee Benefits. From the Commencement Date through the
Employment Termination Date, the Company shall provide health and
welfare benefits including group life insurance, group health and
accident insurance, group long-term disability insurance and a
Section 401(k) retirement plan substantially similar to those
received by Employee pursuant to her employment prior to the
Commencement Date. In addition, in the event of termination of
Employee's employment with the Company pursuant to Sections 4(a) or
4(e) hereof or if the term hereunder is not renewed pursuant to
Section 23 hereof, Employee shall be entitled to a continuation of
health insurance benefits under the Company's group health insurance
program for so long as is permitted under such program. Thereafter,
Employee shall be eligible for continuation of health benefits
pursuant to applicable federal law commonly known as "COBRA" and, for
a period of twenty-four (24) months in the case of a termination or
nonrenewal by the Company occurring during the period commencing six
(6) months preceding the date of a Change in Control and ending two
(2) years following the date of a Change in Control and for a period
of nine (9) months in the case of any other termination pursuant to
Section 4(a) or 4(e) or nonrenewal, the Company shall pay to Employee
the difference between the payments required to be made by Employee
under COBRA and any payments Employee was required to make under the
Company's group health insurance program prior to Employee's
eligibility for COBRA continuation benefits. Employee shall continue
to receive continued health benefits until (i) Employee is no longer
eligible for COBRA continuation benefits or (ii) Employee is eligible
to participate in a group health insurance plan with another
employer, whichever comes first, at which time the Company's
obligations under this Section 7A shall terminate."
Subsection 11(a) of the Agreement is amended in its entirety to read
as follows:
11. Noncompetition.
a. Employee agrees that during the term of this Agreement
and for one (1) year after the Employment Termination Date (except
that in the event of termination or nonrenewal by the Company during
the period commencing six (6) months preceding the date of a Change
in Control and ending two (2) years following the date of a Change in
Control, neither clause (i) of this Section 11(a) nor Section 11(b)
shall apply to Employee), Employee shall not (i) directly or
indirectly solicit any person (natural or otherwise) to develop,
construct, purchase or sell any multifamily or retail real estate or
a mortgage loan financing such type of real estate if the person
being solicited is or had been a developer or contractor with, or
purchaser from or seller to, the Company of such type of property
during the twelve (12) months prior to the Employment Termination
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Date or (ii) recruit or otherwise solicit or induce any person who is
at the time an employee or consultant of the Company to terminate his
employment with, or otherwise cease his relationship with, the
Company, or hire any such employee or consultant who has left the
employ of the Company within one (1) year after termination of such
employee's employment or consultant's relationship with the Company,
provided, however, that Employee may recruit any former employee of
the Company whose employment has been terminated by the Company and,
provided further, that if Employee has terminated her employment of
her own volition, this restriction upon recruiting employees or
consultants shall run for two (2) years after the Employment
Termination Date.
For example, if the term hereunder is not renewed pursuant
to Section 23 hereof, then for a one-year period following the date
of such nonrenewal, Employee shall be subject to this Section 11(a)
and Section 11(b) hereof; provided, however, that if a Change in
Control occurs during the six-month period following the date of such
nonrenewal (and such nonrenewal has been at the election of the
Company), Employee shall not be subject to clause (i) of this Section
11(a) or Section 11(b) hereof from and after the date of such Change
in Control. By way of additional example, if a Change in Control
occurs and an Employment Termination Date occurs (other than an
Employment Termination Date occurring as a result of Employee's
election not to renew this Agreement) during the two-year period
commencing on the date of the Change in Control, Employee shall not
be subject to clause (i) of this Section 11(a) or Section 11(b)
hereof from and after the Employment Termination Date."
Section 22 of the Agreement is amended in its entirety to read as
follows:
22. Survival. The provisions of Sections 5, 6, 7A and 8 insofar as
they provide for payments to be made to Employee after termination or
nonrenewal of this Agreement and Sections 9 through 12 hereof shall
survive the termination or nonrenewal of this Agreement by Employee
or the Company, whether voluntary or involuntary, or with or without
cause."
The following is hereby added as Section 23 of the Agreement:
23. Renewal. This Agreement will renew for a period of one year if
Notice of intent to modify or terminate is not given by either party
to the other no later than thirty (30) days prior to December 31,
1998 or any subsequent December 31 thereafter. Such notice shall be
in the form and to the address as prescribed by Section 19 of this
Agreement."
The following is hereby added as Section 24 of the Agreement:
24. Arbitration. If the Employee's employment is terminated or if the
term hereunder is not renewed by the Company pursuant to Section 23
hereof, during
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the period commencing six (6) months preceding the date of a Change
in Control and ending two (2) years following the date of a Change in
Control, and a dispute arises between the Employee, on the one hand,
and the Company or its successor-in-interest, on the other hand, with
respect to the Company's obligations under Section 5, Section 6,
Section 7A or Section 11 hereof, either the Employee or the Company
may submit any such disputed matter to arbitration by notifying the
other party in writing. Within ten (10) days after receipt of such
notice, the Employee and the Company shall designate in writing one
arbitrator (the "Arbitrator") to resolve the dispute; provided that
if the parties hereto cannot agree on an arbitrator within such
ten-day period, the Arbitrator shall be selected by the Boston,
Massachusetts office of the American Arbitration Association. The
Arbitrator so designated shall not be an affiliate, employee,
consultant, officer, director or stockholder of the Company or its
successor-in-interest. Within fifteen (15) days after the designation
of the Arbitrator, the Employee, representatives of the Company and
the Arbitrator shall meet at which time the Employee and the Company
shall be required to set forth in writing all disputed issues and a
proposed ruling on each such issue. The Arbitrator shall set a date
for hearing, which shall be no later than thirty (30) days after the
submission of written proposals pursuant to the preceding sentence,
to discuss each of the issues identified by the Employee and the
Company. Each such party shall have the right to be represented by
counsel. Except as may be specifically set forth herein, the
arbitration shall be governed by the Commercial Arbitrations Rules of
the American Arbitration Association; provided, however, that the
Federal Rules of Evidence shall govern the admissibility of evidence.
The Arbitrator shall use his or her best efforts to rule on each
disputed issue within thirty (30) days after the completion of such
hearings. In the absence of fraud, the determination of the
Arbitrator to the resolution of any dispute shall be binding and
conclusive upon all parties hereto. All rulings of the arbitrator
shall be in writing and shall be delivered to the parties. If the
Employee prevails in the arbitration, the Arbitrator shall award
payment to the Employee of the Employee's costs and expenses of the
arbitration, including attorneys fees. Any arbitration pursuant
hereto shall be conducted in Boston, Massachusetts. Any arbitration
award may be entered in and enforced by any court having jurisdiction
thereover and shall be final and binding upon the parties. Any
references to the "Company" in this Section 24 shall include its
successor-in-interest.
For example, in the event that (i) the term hereunder is
not renewed by the Company pursuant to Section 23 hereof; (ii) a
dispute arises with respect to the Company's obligations under
Section 5, Section 6, Section 7A or Section 11 hereof; (iii)
litigation is commenced; and (iv) a Change in Control occurs in the
six-month period following the date of such nonrenewal by the
Company, if either Employee or the Company then elects to submit the
disputed matter to arbitration, the litigation previously commenced
shall be stayed and the matter shall be resolved in accordance with
this Section 24."
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In all other respects, the Agreement is hereby ratified and
confirmed.
The foregoing amendments shall be effective as of September 1, 1998.
Please indicate your agreement with this Amendment No. 2 to the
Agreement by signing this amendment and returning it to the Chairman of the
Compensation Committee.
Very truly yours,
BRI OP LIMITED PARTNERSHIP BERKSHIRE REALTY COMPANY, INC.
By: Berkshire Apartments, Inc.
Its General Partner
By:____________________________ By:_________________________________
Its: Chairman of the Its: Chairman of the
Compensation Committee Compensation Committee
EMPLOYEE:
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Xxxxxxxx Xxxxxxxxx
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