AMENDMENT NO. 1 TO
EMPLOYMENT AND NONCOMPETITION AGREEMENT
January 2, 1998
Xxxxx Xxxxx
00 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Re: Amendment No. 1 to Employment and Noncompetition Agreement dated
March 1, 1997 among BRI OP Limited Partnership, Berkshire Realty
Company, Inc. and Xxxxx Xxxxx (the "Agreement").
Dear Xx. Xxxxx:
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 (a) reflect your election by the Board of Directors as
Executive Vice President and Chief Investment Officer of the Company effective
as of January 2, 1998, and (b) to make a loan with a forgiveness feature
available to you on the terms and conditions described below.
Section 2 of the Agreement is amended in its entirety to read as
follows:
"Section 2. Capacity and Duties. Employee shall serve the Company as
Executive Vice President and Chief Investment Officer, and his duties
and responsibilities shall be those consistent with those positions,
subject to the direction and control of the Board of Directors of the
Company (the "Board of Directors"). Employee shall report directly to
the Chief Executive Officer or such individual as may be designated
from time to time by the Board of Directors.
Section 7 of the Agreement is amended in its entirety to read as
follows:
"Section 7. Stock Purchase Loan with Forgiveness Feature. The Company
shall make a stock purchase loan with a forgiveness feature to the
Employee on the following terms and conditions (the "Loan"):
(a) The principal amount of the Loan shall be $500,000.00. The loan
proceeds will be used solely to finance the simultaneous purchase of
shares of common stock of the Company (the "Common Stock").
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(b) The term of the Loan shall be twenty years. In addition, the Loan
will terminate and shall be due and payable when the Employee's
employment hereunder terminates for any reason, with or without
cause. Upon termination of Employee's employment, any outstanding
principal amount of the Loan, and any unpaid interest through the
date of payment, shall be due and payable on the date six months from
the date of termination. However, in the event of a Change of Control
to owners other than members of The Berkshire Group of companies or
the Xxxxxx or Xxxxxxx Xxxxx families, the entire outstanding
principal amount and any interest then due or accrued shall be
forgiven.
(c) The interest rate on the Loan shall be 7.873% per annum. Interest
shall be payable quarterly in arrears on March 15, June 15, September
15 and December 15, such payments to be reduced by the amounts offset
against them pursuant to subparagraph (b) above.
(d) The Loan shall be recourse to the Employee and shall be
unsecured. The Loan shall be evidenced by a promissory note in
substantially the form of Appendix 1 hereto executed by the Employee.
(e) The Common Stock purchased with Loan proceeds will be
unregistered treasury shares or newly issued shares. The purchase
price for the shares of Common Stock will be the closing price per
share on the New York Stock Exchange on the day of the purchase.
Employee is hereby granted a one-time piggy-back registration right
for the Common Stock purchased with Loan proceeds at the first
opportunity that the Company has to provide such registration of
Employee's shares subject to the sole, reasonable discretion, and at
the expense, of the Company. The certificates representing the
unregistered shares of Common Stock shall bear the following legend:
"The shares of common stock represented by this instrument
have not been registered under the Securities Act of 1933,
as amended, and may not be offered, sold or otherwise
transferred, pledged or hypothecated unless and until such
shares are registered under such Act or an opinion of
counsel satisfactory to the Company is obtained to the
effect that such registration is not required."
(f) Beginning with January 1, 1999 and on each January 1 thereafter
on which the Employee remains employed by the Company, five percent
of the original principal amount of the Loan shall be forgiven in
recognition of Employee's continued employment as Executive Vice
President and Chief Investment Officer by the Company.
(g) Beginning with the fiscal year ended on January 1, 1999 and on
each January 1 thereafter on which the Employee remains employed by
the Company, an additional percentage in the amount noted below of
the original principal amount of the Loan shall be forgiven if the
Total Shareholder Return (as defined below) for the fiscal year ended
on the immediately preceding December 31 exceeds certain levels as
follows:
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Annual Loan Forgiveness Based on Performance
Total Shareholder Additional Percent
Return Requirement of Loan Forgiven
0 - 13.49% 0 %
13.5 - 14.99% 1.0%
15.0 - 16.99% 2.0%
17.0 - 19.99% 3.5%
20.0% or over 5.0%
Note: For purposes of the calculation of annual Loan forgiveness
based on performance, Total Shareholder Return shall be
defined as the sum of (i) the percentage increase during
the fiscal year of the price for a share of Common Stock on
the New York Stock Exchange measured from the closing price
on December 31 of the prior fiscal year to the closing
price on December 31 of the fiscal year just ended, and
(ii) the percentage of the closing price on December 31 of
the prior fiscal year represented by the aggregate of
dividends paid on a share of Common Stock during the fiscal
year just ended.
(h) The maximum annual forgiveness in outstanding principal amount of
the Loan which can be forgiven in any one year pursuant to
subparagraphs (f) and (g) above is 10%. If the Employee is terminated
during the course of a year, the forgiveness of principal amount
pursuant to subparagraph (f) above shall be prorated. If Employee is
terminated after March 31, the forgiveness of principal amount
pursuant to subparagraph (g) shall be prorated with the Total
Shareholder Return Requirement measured on an annualized basis.
Please indicate your agreement with this Amendment No. 1 to the
Agreement and your acceptance of the terms and conditions of the Loan set forth
herein 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:_____________________________
Its: Chairman of the
Compensation Committee
By:_______________________________
Its: Chairman of the
Compensation Committee
Employee:
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XXXXX XXXXX
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