AMENDMENT NO. 1 TO
EMPLOYMENT AND NONCOMPETITION AGREEMENT
February 28, 1997
Xxxxx X. Xxxxxxxx
President and Chief Executive Officer
Berkshire Realty Company, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Re: Amendment No. 1 to Employment and Noncompetition Agreement dated
March 1, 1996 among BRI OP Limited Partnership, Berkshire Realty
Company, Inc. and Xxxxx X. Xxxxxxxx (the "Agreement").
Dear Xx. Xxxxxxxx:
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
President and Chief Executive Officer of the Company effective as of February
28, 1997, 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
President and Chief Executive 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 Executive Committee except for such matters that are reserved for
the Board of Directors by the Company's Certificate of Incorporation,
its By-Laws or Delaware law, with respect to which he will report to
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 $1,000,000.00. The loan
proceeds will be used solely to finance the simultaneous purchase of
shares of common stock of the Company (the "Common Stock.
(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. Upon payment of the
outstanding principal amount and interest due on the Loan after
termination or pursuant to prepayment by the Employee, the Company
shall pay the Employee $108,434.00 plus interest on that amount at 7.8%
per annum payable quarterly on March 15, June 15, September 15 and
December 15, which interest payments shall be offset against the
interest payable on the Loan on the same dates pursuant to subparagraph
(c) below.
(c) The interest rate on the Loan shall be 7.8% 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 before 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."
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(f) Beginning with January 1, 1998 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 Chief Executive Officer by the
Company.
(g) Beginning with the fiscal year ended on January 1, 1998 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:
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.
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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 Realty Company, Inc.
Its General Partner
By: /s/ J. Xxxx Xxxxxxxx
_____________________________
Its: Chairman of the
Compensation Committee
By: /s/ J. Xxxx Xxxxxxxx
_______________________________
Its: Chairman of the
Compensation Committee
Employee:
/s/ Xxxxx X. Xxxxxxxx
--------------------------------
XXXXX X. XXXXXXXX
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PROMISSORY NOTE
$1,000,000.00 March 4, 1997
FOR VALUE RECEIVED, Xxxxx X. Xxxxxxxx ("Borrower") promises to pay to the order
of BERKSHIRE REALTY COMPANY, INC. ("Payee") at 000 Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, or at such other place as the holder hereof may from time
to time designate in writing, in lawful money of the United States of America,
the principal sum of One Million Dollars and No Cents ($1,000,000.00) together
with interest as described below on the principal balance hereof from time to
time outstanding, all in accordance with the following terms and provisions:
1. Stock Purchase Loan Award. This promissory note (as the same may be
amended, modified or supplemented from time to time, the "Note")
represents the Loan referred to in the Employment and Noncompetition
Agreement dated Xxxxx 0, 0000 xxxxx Xxxxx, XX OP Limited Partnership and
Borrower, as amended by Amendment No. 1 thereto dated February 28, 1997
(as amended, modified or supplemented from time to time, "the Agreement").
Terms defined in the Agreement shall have the same meanings when such
terms are used in this Note. This Note evidences a recourse, unsecured
loan made by Payee to Borrower to enable Borrower to purchase shares of
Payee's common stock ("Shares") pursuant to Borrower's Stock Purchase Loan
Award issued under the Agreement.
2. Interest. The unpaid principal balance of this Note, outstanding from time
to time, shall bear Interest of 7.8% per annum and shall be due and
payable quarterly in arrears on March 15, June 15, September 15 and
December 15, or, if the payment date is a business holiday, on the next
business day.
3. Principal Payments.
(a) Payee shall forgive the repayment of five percent (5%) of the original
principal amount of this Note on the 1st day of January 1998 and each
succeeding January 1st thereafter, so long as Borrower continues in the
employment of Payee.
(b) In addition to the forgiveness of principal amount pursuant to
subparagraph 3(a) above, beginning with January 1, 1998 and on each
January 1 thereafter, the repayment of (i) one percent (1%) of the
original principal amount of this Note shall be forgiven if the Total
Shareholder Return (as defined below) equals at least 13.5% and is less
than 15%, or (ii) two percent (2%) shall be forgiven if the Total
Shareholder Return equals at least 15.0% and is less than 17%, or (iii)
three and one-half percent (3.5%) shall be forgiven if the Total
Shareholder Return equals at least 17% and is less than 20%, or (iv) five
percent (5%) shall be forgiven if the Total Shareholder Return equals or
exceeds 20%.
In no event shall the total forgiveness of original principal amount of
the Note pursuant to subparagraphs 3(a) and 3(b) above exceed ten percent
(10%) in any fiscal year. If the Employee is terminated during the course
of a year, the forgiveness of
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principal amount of the Note pursuant to subparagraph 3(a) shall be
prorated. If Employee is terminated after March 31, the forgiveness of
principal amount pursuant to subparagraph 3(b) shall be prorated with the
Total Shareholder Return Requirement measured on an annualized basis.
For purposes of this paragraph 3, "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.
(c) Unless due earlier in accordance with paragraphs 4 and 6 of this Note,
the balance of the Note that is not forgiven in accordance with the
schedule set forth in this paragraph 3, shall be due and payable on
February 28, 2017.
4. Termination of Employment. In the event there is a Termination of
Employment of Borrower for any reason, with or without cause, the
outstanding balance of the Note and any accrued but unpaid Interest
thereon shall be due and payable on the date six (6) months after the date
of Borrower's Termination of Employment. However, in the event of a Change
of Control to owners other than members of The Berkshire Group or the
Xxxxxx or Xxxxxxx Xxxxx families, the entire outstanding balance of the
Note and any accrued but unpaid Interest thereon shall be forgiven.
5. Prepayment. This Note may be prepaid in whole or in part at any time, and
from time to time, without penalty. All partial prepayments shall be
applied to the outstanding principal balance of the Note.
6. Default. An Event of Default shall occur hereunder if the Borrower shall
fail to repay the balance of the Note and any accrued but unpaid Interest
thereon within the applicable time periods set forth in the foregoing
paragraphs 2, 3 and 4 hereof and such failure shall continue for a period
of ten (10) days after written notice thereof has been given to the
Borrower by the Payee. Upon the occurrence of an Event of Default, the
outstanding balance of this Note and any accrued but unpaid Interest
thereon shall become immediately due and payable at the option of the
Payee. Any delay by the Payee in exercising, or any failure of the Payee
to exercise, the aforesaid option to accelerate with respect to an Event
of Default shall not constitute a waiver of its right to exercise such an
option with respect to that or any subsequent Event of Default.
7. Waiver; Extension. The Borrower hereby waives presentment, demand, notice,
protest and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note and assents to
extensions of time of payment or forebearance or other indulgence without
notice thereof.
8. Notices. All notices, requests, demands and other communications with
respect to this Note shall be in writing and shall be delivered by hand or
sent by the United States mail, certified, postage prepaid, return receipt
requested, to the following addresses:
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If to the Payee: Berkshire Realty Company, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Chairman
with a copy to: Xxxxxxxxx X. Xxxxxx, Xx., Esquire
Peabody & Xxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
If to the Borrower: Xxxxx X. Xxxxxxxx
00 Xxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Any notice, request, demand or other communication delivered or sent in
the manner aforesaid shall be deemed given or made (as the case may be)
upon the date it is actually received if it is delivered by hand or on the
third business day after the day on which it is deposited in the United
States mail. The Borrower or Payee may change its address by notifying the
other party of the new address in any manner permitted by this paragraph
8.
9. Severability. If any provision of this Note, or the application thereof to
any person or circumstance, shall to any extent be invalid or
unenforceable, the remainder of the provisions of this Note, or the
application of such provision to other persons or circumstances shall not
be affected thereby, and each provision of this Note shall be valid and
enforceable to the fullest extent permitted by law.
10. Successors and Assigns. This Note shall be binding upon and inure to the
benefit of Borrower and Payee and their respective heirs, administrators,
personal representatives, successors and assigns, provided, however, that
the Borrower may not assign or delegate his obligations hereunder without
the prior written consent of Payee.
11. Governing Law. This Note shall be governed by and construed in accordance
with the laws (other than the conflict of laws rules) of The Commonwealth
of Massachusetts.
IN WITNESS WHEREOF, the Borrower has executed this Note.
/s/Xxxxx X. Xxxxxxxx
_________________________
Xxxxx X. Xxxxxxxx
Borrower
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