UNITED STATES
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 September 30, 1998
------------------------------------------------
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 1-10660
----------------------------------------
Berkshire Realty Company, Inc.
- - -------------------------------------------------------------------------------
Delaware 04-3086485
- - -------------------------------------------------------------------------------
(State or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
470 Atlantic Avenue, Boston, Massachusetts 02210
- - -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(617) 423-2233
- - -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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
----- -----
As of October 31, 1998 there were 36,711,488 shares of the registrant's common
stock outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
-------------
<TABLE>
<CAPTION>
ASSETS
September 30, December 31,
1998 1997
-------------- ------------
(Unaudited)
<S> <C> <C>
Real estate assets: (Note 3)
Multifamily apartment complexes, net of
accumulated depreciation $920,895,134 $715,696,151
Investments in unconsolidated joint ventures 92,992 15,618,657
Mortgage loan, net of purchase discounts 2,362,991 2,323,285
Land and construction-in-progress 11,277,072 15,185,969
Land held for future development 5,523,638 5,818,105
Retail centers held for sale, net of
accumulated depreciation - 14,404,782
-------------- ------------
Total real estate assets 940,151,827 769,046,949
Cash and cash equivalents 11,905,910 9,859,110
Mortgage-backed securities, net ("MBS") 5,419,432 7,511,789
Note receivable 7,500,000 7,500,000
Escrows 16,962,504 15,088,587
Deferred charges and other assets 19,955,094 14,932,272
Workforce and other intangible assets,
net of accumulated amortization 12,707,078 22,481,224
-------------- ------------
Total assets $1,014,601,845 $846,419,931
============== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Credit agreements (Note 4) $123,100,000 $ 12,000,000
Construction loan (Note 4) 10,041,330 316,786
Mortgage notes payable (Note 4) 427,323,133 368,810,004
Deposits and prepaid rents 7,473,480 4,888,022
Accrued real estate taxes, insurance, other
liabilities and accounts payable 26,593,559 17,073,179
-------------- ------------
Total liabilities 594,531,502 403,087,991
-------------- ------------
Minority interest in operating partnership 84,837,938 75,137,066
Commitments and contingencies (Notes 1, 3 and 8)
Shareholders' equity:
Preferred stock ("Preferred Shares"),
$0.01 par value; 60,000,000 shares
authorized, 2,737,000 shares issued 27,370 27,370
Common stock ("Shares"), $0.01 par value;
140,000,000 Shares authorized and 37,217,985
and 36,841,098 Shares issued, respectively 372,180 368,411
Additional paid-in capital 372,450,906 394,838,797
Accumulated deficit (33,569,765) (24,396,629)
Loans receivable - officers (Note 5) (2,305,211) (900,000)
Less common stock in treasury, at cost
(506,497 Shares) (1,743,075) (1,743,075)
-------------- ------------
Total shareholders' equity 335,232,405 368,194,874
-------------- ------------
Total liabilities and shareholders' equity $1,014,601,845 $846,419,931
============== ============
</TABLE>
The accompanying notes are an integral
part of the Consolidated Financial Statements.
2
<PAGE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
--------------------
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
--------------------------------- ----------------------------------
1998 1997 1998 1997
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Revenue:
Rental $46,848,029 $26,785,357 $128,481,108 $76,493,968
Interest from mortgage loan
and note receivable 298,393 84,076 891,851 252,579
Interest income from MBS 127,287 187,879 454,226 592,910
Management fees and reimbursements 894,532 940,321 2,785,786 2,208,725
Other interest income 292,774 418,575 974,953 955,918
----------- ----------- ------------ -----------
Total revenue 48,461,015 28,416,208 133,587,924 80,504,100
----------- ----------- ------------ -----------
Expenses:
Property operating 11,622,214 6,616,841 30,121,838 18,545,668
Repairs and maintenance 3,671,956 2,034,623 8,947,659 5,531,085
Real estate taxes 4,383,133 2,445,342 12,494,972 7,163,713
Property management fees to
an affiliate - 47,466 15,304 866,771
Property management operations 1,881,259 1,463,113 5,789,549 3,618,844
General and administrative 1,158,371 1,170,175 4,128,036 3,321,934
State and corporate franchise taxes 69,000 80,137 207,000 249,139
Professional fees 94,033 51,712 351,656 156,710
Interest (Note 4) 10,680,732 5,975,959 27,848,140 17,461,212
Costs associated with
advisor transaction - - - 1,200,000
Amortization of acquired
workforce and intangible assets 3,258,049 3,258,049 9,774,146 4,784,506
Depreciation and amortization 15,458,356 8,500,562 41,585,125 24,079,513
Provision for losses on real
estate investments - 1,850,000 - 1,850,000
----------- ----------- ------------ -----------
Total expenses 52,277,103 33,493,979 141,263,425 88,829,095
----------- ----------- ------------ -----------
Loss from operations before joint
venture income (loss), gains on
sales of assets, minority
interest and extraordinary items (3,816,088) (5,077,771) (7,675,501) (8,324,995)
Joint venture income (loss) - 130,860 132,454 (377,012)
Gains on sales of assets (21,333) - 1,365,914 6,503,463
Minority interest in
Operating Partnership 1,076,768 896,211 2,100,240 417,584
----------- ----------- ------------ -----------
Loss before extraordinary items (2,760,653) (4,050,700) (4,076,893) (1,780,960)
Extraordinary items, net of
minority interest (382,942) (90,191) (477,555) (90,191)
----------- ----------- ------------ -----------
Net loss (3,143,595) (4,140,891) (4,554,448) (1,871,151)
Income allocated to
preferred shareholders (1,522,456) (85,531) (4,618,688) (85,531)
----------- ----------- ------------ -----------
Net loss allocated
to common shareholders $(4,666,051) $(4,226,422) $(9,173,136) $(1,956,682)
=========== =========== ============ ===========
Earnings per common share (basic and diluted):
Loss before extraordinary items $ (.12) $ (.16) $ (.24) $ (.07)
=========== =========== ============ ===========
Extraordinary items, net of
minority interest $ (.01) $ - $ (.01) $ -
=========== =========== ============ ===========
Net loss per common share $ (.13) $ (.16) $ (.25) $ (.08)
=========== =========== ============ ===========
Weighted average shares 36,707,533 25,738,248 36,676,053 25,547,631
=========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral
part of the Consolidated Financial Statements.
3
<PAGE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
For the Nine Months Ended September 30, 1998
(Unaudited)
---------------------
<TABLE>
<CAPTION>
Series 1997-A Convertible
Preferred Stock at par Common Stock at par Additional
---------------------- ------------------------- Paid-in
Shares Amount Shares Amount Capital
--------- ------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C>
Balance,
December 31, 1997 2,737,000 $27,370 36,334,601 $368,411 $394,838,797
Net Loss - - - - -
Preferred dividends - - - - -
Stock issuance costs - - - - (314,033)
Conversion of Units
to Common Shares - - 51,975 520 521,578
Shares issued in
satisfaction of note
payable (Note 7) - - 189,332 1,893 2,128,107
Stock purchase loans
(Note 5) - - 126,984 1,270 1,498,730
Stock purchase loans -
forgiveness - - - - -
Exercise of stock
warrants - - 8,596 86 101,261
Common dividends - - - - (26,323,534)
--------- ------- ---------- -------- ------------
Balance,
September 30, 1998 2,737,000 $27,370 36,711,488 $372,180 $372,450,906
========= ======= ========== ======== ============
<CAPTION>
Loans Treasury
Accumulated Receivable- Stock
Deficit Officers at cost Total
------------ ---------- ----------- ------------
<S> <C> <C> <C> <C>
Balance,
December 31, 1997 $(24,396,629) $ (900,000) $(1,743,075) $368,194,874
Net Loss (4,554,448) - - (4,554,448)
Preferred dividends (4,618,688) - - (4,618,688)
Stock issuance costs - - - (314,033)
Conversion of Units
to Common Shares - - - 522,098
Shares issued in
satisfaction of note
payable (Note 7) - - - 2,130,000
Stock purchase loans
(Note 5) - (1,500,000) - -
Stock purchase loans -
forgiveness - 94,789 - 94,789
Exercise of stock
warrants - - - 101,347
Common dividends - - - (26,323,534)
------------ ---------- ----------- ------------
Balance,
September 30, 1998 $(33,569,765) $(2,305,211) $(1,743,075) $335,232,405
============ =========== =========== ============
</TABLE>
The accompanying notes are an integral
part of the Consolidated Financial Statements.
4
<PAGE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
---------------
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
----------------------------------
1998 1997
----------- -----------
<S> <C> <C>
Operating activities:
Net loss $(4,554,448) $(1,871,151)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 41,585,125 24,079,513
Amortization of workforce and
intangible assets 9,774,146 5,984,506
Provision for losses on real estate investments - 1,850,000
Joint venture (income) loss (132,454) 377,012
Gains on sales of assets (1,365,914) (6,503,463)
Non-employee stock option plan - 16,938
Stock purchase loan forgiveness 94,789 35,001
Amortization of purchase discounts (118,647) (111,764)
Minority interest in operating partnership (2,100,240) (417,584)
Amortization of deferred financing costs 1,134,670 1,114,021
Write-off of deferred financing costs 422,490 36,512
Increase in operating escrows
and other assets (3,896,110) (1,918,207)
Increase in accrued real estate taxes,
insurance, other liabilities and
accounts payable 11,650,380 1,967,200
Increase in deposits and prepaid rents 2,585,458 1,133,473
----------- -----------
Net cash provided by operating activities 55,079,245 25,772,007
----------- -----------
Investing activities:
Cost to acquire properties (104,757,636) (69,954,881)
Proceeds from sale of properties 17,187,783 38,757,165
Recurring capital expenditures (6,263,637) (3,577,568)
Rehabilitation and non-recurring
capital expenditures (22,671,996) (9,688,021)
Land acquisition and construction in progress (12,764,665) (7,332,131)
Distributions received from joint venture
in excess of earnings 774,151 1,481,560
Distribution from sale of joint venture asset, net 14,883,968 7,980,345
Contributions to joint venture - (2,584,561)
Principal collections on MBS 2,109,984 1,250,097
Principal collections on mortgage loans 61,314 1,883,198
Escrows established at acquisition of properties (2,512,774) (372,692)
Cost to acquire workforce and other
intangible assets - (559,239)
----------- -----------
Net cash used for investing activities (113,953,508) (42,716,728)
----------- -----------
</TABLE>
Continued
5
<PAGE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
--------------------------------------
1998 1997
------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C>
Financing activities:
Proceeds from the issuance of
preferred stock, net $ - $ 65,853,000
Advances under credit agreements 111,100,000 7,400,000
Advances under construction loan 9,724,544 316,786
Repayment on credit agreements - (25,050,000)
Payment on repurchase agreement - (1,300,000)
Payment of financing costs (2,347,418) (354,509)
Costs associated with issuance of stock (314,033) -
Dividends paid to preferred stockholders (4,618,688) -
Principal payments on mortgage notes payable (3,056,191) (7,059,652)
Payoff of mortgage notes payable (17,433,697) -
Proceeds from the exercise of stock warrants 101,347 8,466
Common dividends (26,323,534) (17,444,728)
Distributions to minority interest (5,911,267) (3,381,361)
------------- -------------
Net cash provided by financing activities 60,921,063 18,988,002
------------- -------------
Net increase in cash and cash equivalents 2,046,800 2,043,281
Cash and cash equivalents, beginning of period 9,859,110 7,015,953
------------- -------------
Cash and cash equivalents, end of period $ 11,905,910 $ 9,059,234
============= =============
Supplemental cash flow disclosure:
Cash paid for interest during period $ 28,919,346 $ 17,981,882
============= =============
Interest capitalized during period $ 1,207,015 $ 545,086
============= =============
Supplemental disclosure of non-cash investing
and financing activities:
Property acquisitions $(202,101,131) $(125,467,566)
Debt assumed in property acquisitions 79,003,017 36,881,974
Units issued for property acquisitions 18,340,478 10,399,948
Joint venture distribution of property, net - 8,230,763
------------- -------------
Cash to acquire property $(104,757,636) $ (69,954,881)
============= =============
Conversion of Units to Shares $ 522,098 $ 4,128,833
============= =============
Shares issued in satisfaction of note payable $ 2,130,000 $ -
============= =============
Shares issued for stock purchase loans $ 1,500,000 $ -
============= =============
Units issued for intangible assets acquired $ - $ 18,837,500
============= =============
Reclassification of construction in progress
to multifamily apartment complexes $ 16,200,064 $ 1,812,855
============= =============
</TABLE>
The accompanying notes are an integral
part of the Consolidated Financial Statements.
6
<PAGE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
------------------------
1. Organization
Berkshire Realty Company, Inc. (together with its subsidiaries and BRI OP
Limited Partnership, the "Company") was formed on April 26, 1990 as an
equity real estate investment trust ("REIT") and commenced operations on
June 27, 1991. The Company has an infinite life; however, the Company's
Restated Certificate of Incorporation, as amended, requires the Company's
Board of Directors (the "Board") to prepare and submit on or before
December 31, 1998, a Plan of Liquidation (the "Plan") to the
shareholders, together with the Board's recommendation whether to adopt
or reject the Plan. The Company has engaged two investment banking firms,
Lazard Freres & Co. LLC and Lehman Brothers Inc., to assist the Company
in the exploration and evaluation of strategic alternatives. These
alternatives include (but are not limited to) potential sale or merger of
the Company or the adoption of a Plan of Liquidation.
2. Significant Accounting Policies
These financial statements reflect the consolidated financial position,
results of operations, changes in shareholders' equity and cash flows of
the Company, using the historical cost of assets, liabilities and results
of operations.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted in this report on
Form 10-Q pursuant to the Rules and Regulations of the Securities and
Exchange Commission. In the opinion of management, the disclosures
contained in this report are adequate to make the information presented
not misleading. See Notes to the Financial Statements included in the
Company's Annual Report on Form 10-K/A for the year ended December 31,
1997 for additional information relevant to significant accounting
policies followed by the Company.
In the opinion of management, the accompanying unaudited financial
statements reflect all adjustments necessary to present fairly the
Company's financial position as of September 30, 1998 and the results of
its operations for the three and nine months ended September 30, 1998 and
1997 and cash flows for the nine months ended September 30, 1998 and
1997.
The results of operations for the nine months ended September 30, 1998
are not necessarily indicative of the results which may be expected for
the full year. See Management's Discussion and Analysis of Financial
Condition and Results of Operations included in this report.
Continued
7
<PAGE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
-----------------------------
3. Multifamily and Retail Property
As of September 30, 1998, the Company had investments in 81 apartment
communities in eight states totaling 24,075 units. The Company was also
engaged in the development of apartment communities and currently has
1,372 units under construction.
The following summarizes the carrying value of the Company's multifamily
apartment complexes and retail centers held for sale (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
---------- ---------
<S> <C> <C>
Land $ 150,811 $108,593
Buildings and improvements 758,081 625,748
Appliances, carpeting and equipment 165,767 125,040
---------- ---------
Total multifamily and retail property 1,074,659 859,381
Accumulated depreciation (153,764) (129,280)
---------- ---------
$ 920,895 $730,101
========== =========
</TABLE>
Acquisitions
On January 21, 1998, the Company acquired Countrywood Apartments, a
208-unit apartment community located in Dallas, Texas, for $6.75 million.
The Company paid cash of $2.0 million, assumed debt of $4.0 million and
issued $720,000 of Operating Partnership Units. The debt agreement
requires monthly principal and interest payments based on an interest
rate of 7.875% along with monthly funding of real estate tax escrows.
On February 4, and April 9, 1998, the Company acquired six apartment
communities for approximately $81.2 million. The Company paid cash of
approximately $58.9 million, issued $8.0 million of Operating Partnership
Units and assumed debt of $14.3 million. The debt agreements require
monthly principal and interest payments based on interest rates of 8.51%
along with monthly funding of real estate tax escrows. The apartment
communities acquired are summarized as follows:
<TABLE>
<CAPTION>
Number
Property Name Location of Units
------------- -------- --------
<S> <C> <C>
The Bluffs Austin, TX 382
Pinto Ridge Austin, TX 238
Carlyle Place San Antonio, TX 184
Yorktown Houston, TX 563
6200 Gessner Houston, TX 659
The Lodge Houston, TX 240
-----
2,266
=====
</TABLE>
On February 12, 1998, the Company acquired Olde Forge, a 144-unit
townhome community located in Baltimore, Maryland, for $7.3 million. The
Company assumed bond debt of approximately $5.8 million and issued $1.5
million of Operating Partnership Units. The debt agreement requires
monthly principal and interest payments based on an all inclusive fixed
interest rate of 7.055% along with monthly funding of real estate tax
escrows.
On February 26, 1998, the Company acquired Seven Winds Apartments, a
232-unit garden style apartment community located in Tamarac, Florida,
for $9.6 million. The Company paid cash of $7.8 million and issued $1.8
million of Operating Partnership Units.
Continued
8
<PAGE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
--------------------
3. Multifamily and Retail Property - Continued
On March 14, 1998, the Company acquired Lynn Lake Apartments, an 809-unit
apartment property located in St. Petersburg, Florida which consists of
688 garden-style apartments and 121 townhomes, for $23.0 million. The
Company paid cash of $2.4 million, assumed tax-exempt bond debt of $14.4
million and issued $6.2 million of Operating Partnership Units. One of
the bond agreements requires monthly principal and interest payments
based on a fixed interest rate of 7.0% along with monthly funding of real
estate tax escrows. The other bond agreement requires interest only
payments at an all inclusive variable rate of 5.303% as of June 30, 1998.
On June 18, 1998, the Company acquired Oaks of Marymount, a 319-unit
apartment community located in San Antonio, Texas, for $11.4 million in
cash.
On July 8, 1998, the Company acquired four apartment communities for
approximately $59.7 million. The Company assumed $40.4 million of first
mortgage debt and paid cash of $19.3 million. The debt agreements require
monthly principal and interest payments based on interest rates ranging
from 8.04% to 8.60% along with the monthly funding of real estate tax
escrows. The apartment communities acquired are summarized as follows:
<TABLE>
<CAPTION>
Number
Property Name Location of Units
------------- -------- --------
<S> <C> <C>
Essex House Atlanta, GA 120
Highlands at Atlanta, GA 140
Briarcliff
Pines at Dunwoody Atlanta, GA 389
River Parkway Atlanta, GA 427
-----
1,076
=====
</TABLE>
Development
In the fourth quarter of 1996, the Company began construction of
Berkshires at Crooked Creek, a 296-unit apartment community in Durham,
North Carolina. The project is currently estimated to cost approximately
$20.2 million. As of September 30, 1998, the project has incurred $19.3
million of construction costs and 248 units have been completed. The cost
of the completed units has been transferred to multifamily apartment
communities on the Consolidated Balance Sheet as of September 30, 1998.
In December, 1997, the Company purchased a 60 acre parcel of land in
Atlanta, Georgia for approximately $5.8 million for the development of
Berkshires at Deerfield, a 478 unit apartment community. Construction
began in the third quarter of 1998.
On April 29, 1998, the Company acquired 12.6 acres located near Clemson,
South Carolina for approximately $571,000. Construction of Berkshire
Commons, a 177-unit student housing development, began in the third
quarter of 1998 on this site.
The Company also owns two other parcels of land located in Greenville,
South Carolina. Development plans are under consideration for these
sites.
The Company is obligated, upon satisfaction of certain conditions, to
acquire three additional newly-developed properties totaling 669 units
for an approximate value of $67 million from an affiliate of an officer
of the Company. The properties were in various stages of development as
of September 30, 1998 and are expected to be acquired between the fourth
quarter of 1998 and the fourth quarter of 1999.
Continued
9
<PAGE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
------------------
Dispositions
On January 5, 1998, the Company sold Tara Crossing, a 235,781 square foot
retail center located in Jonesboro, Georgia, for approximately $9.5
million. The property had a depreciated cost basis of approximately $9.2
million which, after closing costs, resulted in a loss on sale of
approximately $9,000.
On January 30, 1998, the Company sold College Plaza, an 83,962 square
foot retail center in Fort Myers, Florida, for approximately $6 million.
The property had a depreciated cost basis of approximately $5.2 million
which, after closing costs, resulted in a gain on sale of approximately
$522,000. Also on January 30, 1998, the Company and its joint venture
partner sold Spring Valley Marketplace, a 320,686 square foot retail
center located in Spring Valley, New York, for approximately $29.6
million. The Company's share of the gain on the sale totaled
approximately $50,000.
On May 13, 1998, the Company sold a parcel of land located in Dallas,
Texas, for approximately $2 million which resulted in a gain of
approximately $564,000.
4. Debt Agreements
As of September 30, 1998, the Company had two lines of credit to provide
for future acquisitions, development and general business obligations.
On January 30, 1998, the Company replaced its existing credit agreement
with a $130 million unsecured revolving line of credit with a group of
participating commercial banks, generally at interest rates which range
between 120 and 130 basis points over LIBOR ("Revolving Credit
Agreement"). On August 7, 1998, the commitment on the Company's Revolving
Credit Agreement was increased by the banks from $130 million to $180
million. The following summarizes the Company's borrowings on the
Revolving Credit Agreement as of September 30, 1998:
<TABLE>
<CAPTION>
Contract Contract
Borrowings Start Date End Date Interest Rate Amount
---------- ---------- -------- ------------- ------------
<S> <C> <C> <C> <C>
LIBOR contract 9/14/98 10/14/98 6.9250% $ 24,100,000
LIBOR contract 9/8/98 10/8/98 6.9250% 99,000,000
------------
$123,100,000
============
</TABLE>
Subsequent to September 30, 1998, the Company borrowed an additional
$12.0 million and repriced all borrowings on the Revolving Credit
Agreement at interest rates that ranged from 6.5813% to 6.6125% with
contract end dates of December 9, 1998 and December 14, 1998.
The Company has a construction loan commitment of $13.1 million with two
commercial banks to fund the development of Crooked Creek ("Construction
Loan"). The agreement requires monthly interest payments at a variable
rate set at 150 basis points over LIBOR. The outstanding principal
balance will be due June 30, 1999. As of September 30, 1998, the
Company's borrowings on the Construction Loan totaled $10,041,330 and had
interest rates that ranged from 7.0938% to 7.1875% with contract end
dates of October 30, 1998 and November 10, 1998.
Continued
10
<PAGE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
---------------------
4. Debt Agreements - Continued
Subsequent to September 30, 1998, the Company repriced the borrowings on
the Construction Loan at interest rates that ranged from 6.750% to
6.7813% with contract end dates of November 30, 1998.
The Company also had borrowings on the fixed portion of its Master Credit
Facility with the Federal National Mortgage Association which totaled
$63,345,000 as of September 30, 1998. On August 7, 1998, the Company
terminated the $36,655,000 variable portion of the Master Credit
Facility. Following the termination, eight multifamily assets remain as
collateral for the borrowings on the fixed portion of the Master Credit
Facility. The Company has reclassified its borrowings on the fixed
portion of the Master Credit Facility from credit agreements to mortgage
notes payable for the periods ended September 30, 1998 and 1997.
5. Stock Purchase Loans
On January 2, 1998, the Board of Directors approved three Stock Purchase
Loans, each in the amount of $500,000, for three executive officers of
the Company. On January 2, 1998, the officers purchased 126,984 aggregate
shares of common stock at $11.81 per share using the loan proceeds.
The terms of the loans provide for, among other things, interest rates of
7.873% per year payable quarterly and an annual forgiveness feature of 5%
of the original principal so long as the individual is employed by the
Company. Additional annual forgiveness of up to another 5% may be
recognized if certain Company performance measures are met. The maximum
forgiveness in any one year is 10%. If the individuals terminate their
employment, the outstanding balance of the loans is due and payable six
months from the date of termination. However, in the event of a change of
control, as defined, any then outstanding principal and interest due will
be forgiven.
6. Earnings Per Share
In accordance with Financial Accounting Standards Board Statement No.
128, "Earnings Per Share", the Company has presented basic and diluted
net income per share on the Consolidated Statement of Operations. The net
income and weighted average shares used in the calculations are presented
below:
<TABLE>
<CAPTION>
Nine Months Ended
----------------------------------
September 30, September 30,
1998 1997
------------- -------------
<S> <C> <C>
Earnings per common share (basic and diluted):
Net loss allocated to
common shareholders (Numerator) $(9,173,136) $(1,956,682)
=========== ===========
Weighted average shares (Denominator) 36,676,053 25,547,631
=========== ===========
</TABLE>
Options, warrants, preferred stock and Operating Partnership Units
outstanding at September 30, 1998 and September 30, 1997 were not
included in the computation of diluted earnings per share for the periods
ended September 30, 1998 and 1997 because the effects of these securities
were antidilutive in the computations.
Continued
11
<PAGE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
-----------------------------
7. Note Payable
The Company issued 189,332 shares of common stock in full satisfaction of
a $2,130,000 note payable which was assumed in the third quarter of 1997
in conjunction with the acquisition of certain properties.
8. Subsequent Events
On November 12, 1998, the Company declared a quarterly dividend of $.2425
per share payable on February 15, 1999 to shareholders of record on
February 1, 1999.
9. Pro-Forma Results (Unaudited)
The following unaudited pro-forma operating results for the Company have
been prepared as if the 1998 and 1997 property acquisitions, dispositions
and equity offerings had occurred on January 1, 1997. Unaudited pro-forma
financial information is presented for informational purposes only and
may not be indicative of what the actual results of operations of the
Company would have been had the events occurred as of January 1, 1997,
nor does it purport to represent the results of operations for future
periods. (Dollars in thousands except per share amounts).
<TABLE>
<CAPTION>
For the Nine Months Ended
-------------------------------------
September 30, September 30,
1998 1997
------------- -------------
<S> <C> <C>
Revenue $142,985 $137,496
======== ========
Expenses including depreciation $155,003 $150,946
======== ========
Net loss allocated to
common shareholders $(12,018) $(13,450)
======== ========
Net loss per weighted
average share $(.33) $(.37)
===== =====
</TABLE>
12
<PAGE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
A. Overview:
The following discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto included elsewhere
herein and the Company's Annual Report on Form 10-K/A for the year ended
December 31, 1997. Capitalized terms used herein and not otherwise
defined have the meanings ascribed to them in the Notes to the
Consolidated Financial Statements included elsewhere herein.
The Company is a real estate investment trust ("REIT") whose operations
consist primarily of the acquisition, renovation, rehabilitation,
development and operation of apartment communities located in Florida,
Texas, the Mid-Atlantic and Southeast regions of the United States. As of
September 30, 1998, the Company owned 81 apartment communities consisting
of 24,075 units. The Company has also planned or begun construction on
approximately 703 multifamily units and owns two parcels of land for
future development. The Company has also contracted to acquire three
additional newly-developed properties from an affiliate of an officer of
the Company representing another 669 apartment homes. The Company also
entered into a Development Acquisition Agreement with an affiliate of an
officer of the Company which grants the Company an exclusive right to
acquire all apartment projects developed in the Mid-Atlantic Region by
affiliates of the Questar Partner which meet the Company's acquisition
and development criteria.
Company Strategy:
Since the organization of the Company in 1990, the Company's Certificate
of Incorporation, as amended, has required the Board of Directors to
submit a Plan of Liquidation (the "Plan") to the stockholders prior to
the end of 1998, together with the Board's recommendation whether to
adopt or reject the Plan. As a result, the Company engaged two investment
banking firms to assist in the exploration and evaluation of strategic
alternatives. Among others, these alternatives include the potential sale
or merger of the Company or the adoption of a Plan of Liquidation. In
addition, the Company also adopted severance and retention programs and
amended certain employment agreements designed to encourage the continued
employment of key personnel during the exploration and evaluation of
these alternatives.
UPREIT Reorganization:
The Company reorganized as an Umbrella Partnership ("UPREIT") on May 1,
1995 when the Company contributed substantially all of its assets subject
to all liabilities to BRI OP Limited Partnership ("Operating
Partnership"). The Company, in its capacity as the Special Limited
Partner and through its ownership of Berkshire Apartments, Inc. as
General Partner, holds 80.35% of the Operating Partnership interests as
of September 30, 1998. The purpose of becoming an UPREIT was to allow the
Company to offer Operating Partnership Units ("Units") in the underlying
Operating Partnership in exchange for assets from tax-motivated sellers.
Under certain circumstances, the exchange of Units for a seller's assets
will defer the tax liability associated with the sale. This structure
allows the Company to use Units instead of stock or cash to acquire
properties, which provides an advantage over non-UPREIT entities.
Advisor Transaction:
Until early 1996, the Company was advised by Berkshire Realty Advisors
("Advisor"), an affiliate of certain directors and officers of the
Company. The Board of Directors determined that it was in the best
interest of the shareholders to become self-advised.
Therefore, on February 28, 1996, the Board, acting on the recommendation
of a Special Committee comprised of the independent members of the Board
("Independent Directors"), approved the acquisition, via contribution of
the workforce and other assets of the
13
<PAGE>
Overview: - Continued
Advisor, in exchange for 1.3 million Units which were valued at $13
million (the "Advisor Transaction"). The acquisition price together with
related costs, was recorded as an intangible asset associated with the
workforce acquired. The contribution was completed on March 1, 1996. As
of that date, all charges and expenses associated with the Advisory
Services Agreement ceased and the Company became a self-administered
REIT.
In conjunction with the Advisor Transaction, additional Units, up to a
total of $7.2 million in value, may be issued to the former Advisor
during a six year period if certain share price benchmarks are achieved.
As of September 30, 1998, 209,091 additional Units have been issued as a
result of achieving the $11.00 and $12.00 share price benchmarks. The
value of the issued Units was recorded on the consolidated statements of
operations as additional costs associated with the Advisor Transaction.
Property Manager Transaction:
On February 13, 1997, a Special Committee of the Board of Directors
comprised of the Independent Directors approved the acquisition of the
workforce and other assets of an affiliate which provided multifamily
property management services to the Company (the "Property Manager"). The
Property Manager was contributed on February 28, 1997 in exchange for 1.7
million Units or approximately $17.6 million in consideration as of the
pricing date (the "Property Manager Transaction").
On the date of the transaction, the Property Manager managed 57 apartment
communities, including 35 assets then owned by the Company, and employed
approximately 85 professionals, excluding site employees. As a result of
this transaction, the Company was no longer required to pay management
fees and reimbursements for the management operations of its multifamily
portfolio. In addition, the Company receives management fees and
reimbursements of certain expenses associated with 22 third-party
management contracts primarily with partnerships affiliated with certain
directors and officers of the Company.
The value of the Units issued has been recorded on the balance sheet as
an intangible asset associated with the acquisition of a workforce and
third-party property management contracts.
B. Results of Operations:
The results of operations from period to period are impacted by
acquisition and disposition activity within the portfolio. Comparisons
will be made with respect to the overall portfolio and constant
properties. The following analysis compares the results of operations for
the three and nine month periods ended September 30, 1998 and 1997.
Net loss for the three months ended September 30, 1998 decreased
approximately $1.0 million compared to the same period in 1997 as a
result of a decrease in loss from operations. Net loss for the nine
months ended September 30, 1998 increased by approximately $2.7 million
when compared to the same period in 1997 primarily as a result of a gain
of $6.5 million recorded on the sale of a multifamily asset in 1997 which
was offset by the gains of $1.4 million recorded on the sales of three
retail assets and one parcel of land in 1998 and a decrease in minority
interest expense of $1.7 million in 1998.
Income and Expenses:
Rental income and property operating expenses, including repairs and
maintenance and real estate taxes, increased for the three and nine month
periods ended September 30, 1998 primarily due to increased weighted
average apartment units. Rental revenues for the three and nine month
periods ended September 30, 1998 increased $20.0 million or 75% and $52.0
million or 68%, respectively, over the prior year periods, and property
operating expenses increased $8.6 million or 77% and $20.3 million or
65%, respectively, for the same periods. Average apartment units
increased 72% for the nine month period ended September 30, 1998 over the
prior year.
14
<PAGE>
B. Results of Operations:- Continued
Detail of the Company's apartment unit growth for the nine months ended
September 30 is set forth below:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Apartments Units:
Beginning of period 18,773 12,435
Acquired 5,054 2,807
Sold - (348)
Completed development units 248 96
------ ------
End of period 24,075 14,990
====== ======
Weighted average apartment units 22,187 12,871
for period
Percent increase over same period 72% 21%
of prior year
</TABLE>
Management fees and reimbursements remained stable for the three months
ended September 30, 1998 when compared to the same period in 1997 but
increased $577,000 for the nine month period ended September 30, 1998
compared to the same period in 1997. Revenue generated from third-party
management contracts is reflected for only seven months in 1997 beginning
with the acquisition of the Property Manager on February 28, 1997.
Property management fees paid to an affiliate decreased for the three and
nine month periods ended September 30, 1998 compared to the same periods
in 1997 as a result of the Property Manager Transaction and sales of the
retail assets in January, 1998.
Property management operations increased $418,000 for the three months
ended September 30, 1998 and $2.2 million for the nine month period ended
September 30, 1998 compared to the same periods in 1997 as a result of
increased operating costs in the Mid-Atlantic and Texas regions due to an
increase in properties in those regions. Also contributing to the
increase was the Property Manager Transaction on February 28, 1997 as
nine months of expenses were incurred in 1998 compared to seven months in
1997. These costs were offset by the decrease in property management fees
paid to an affiliate and the increase in management fees and
reimbursements received from third-party management contracts.
General and administrative expenses, remained stable for the three months
ended September 30, 1998 when compared to the same period in 1997, but
increased $806,000 for the nine month period ended September 30, 1998
compared to the same period in 1997 primarily due to increased employee
salaries, benefits, administrative and office related expenses incurred
as a result of the acquisition of the Questar Partner in November, 1997.
Interest Expense
Interest expense has increased for the three and nine month periods ended
September 30, 1998 compared to the same periods in 1997 primarily from
increased average borrowings. The following is an analysis of weighted
average debt outstanding and interest rates for the three and nine months
ended September 30 (dollars in thousands).
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
------------------------------- -------------------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Weighted Average
Debt Outstanding
Fixed Rate $393,032 $220,694 $417,106 $223,211
Variable Rate 92,435 72,805 141,242 66,456
-------- -------- -------- --------
Total $485,467 $293,499 $558,348 $289,667
======== ======== ======== ========
Weighted Average
Interest Rates
Fixed Rate 7.69% 7.70% 7.64% 7.60%
Variable Rate 6.84% 6.61% 6.85% 6.59%
</TABLE>
15
<PAGE>
B. Results of Operations:- Continued
Weighted average fixed rate debt increased approximately $172 million for
the nine months ended September 30, 1998 compared to the same period in
1997 primarily due to mortgages which were assumed in connection with the
acquisitions of apartment communities.
Costs associated with Advisor Transaction were incurred in 1997 as the
Company achieved the $11.00 share price benchmark and issued $1.2 million
of Operating Partnership Units.
Depreciation and amortization increased for the three and nine month
periods ended September 30, 1998 compared to the same periods in 1997 due
to an increased property asset base.
Provision for losses on real estate investments decreased for the three
and nine month periods ended September 30, 1998 as the Company recorded
valuation provisions on its retail assets in the prior year periods which
represented the difference between carrying value and estimated fair
value less costs to sell.
Amortization of acquired workforce and intangible assets associated with
the Advisor Transaction in 1996 and Property Manager Transaction in 1997
remained stable for the three month period ended September 30, 1998 when
compared to the same period in 1997, but increased $5.0 million for the
nine month period ended September 30, 1998 compared to the same period in
1997. The increase was primarily due to nine months of amortization
expense incurred in 1998 compared to seven months in 1997.
Gains on sales of assets remained relatively stable for the three month
period ended September 30, 1998 compared to the same period in 1997, but
decreased $5.1 million for the nine month period ended September 30, 1998
compared to the same period in 1997 as the gain on the sale of a
multifamily asset in 1997 exceeded the gains on the sales of three retail
assets and one parcel of land sold in 1998. The carrying values of the
Company's retail assets were adjusted in 1997 to reflect their estimated
market values.
Extraordinary items represent costs associated with the retirement of
debt and increased for the three and nine month periods ended September
30, 1998 primarily as a result of the termination of the variable portion
of the Company's Master Credit Facility.
C. Funds from Operations (FFO):
Industry analysts generally consider Funds from Operations, FFO, to be an
appropriate measure of the performance of an equity REIT because, along
with cash flows from operating activities, financing activities and
investing activities, it provides investors with an understanding of the
ability of the Company to incur and service debt and make capital
expenditures. However, FFO should not be considered by the reader as a
substitute to net income as an indicator of the Company's operating
performance or to cash flows as a measure of liquidity. The Company
believes that in order to facilitate a clear understanding of the
operating results of the Company, FFO should be analyzed in conjunction
with net income as presented in the Consolidated Financial Statements and
information presented elsewhere.
FFO is determined in accordance with a resolution adopted by the Board of
Governors of the National Association of Real Estate Investment Trusts,
and is defined as net income (loss) (computed in accordance with
generally accepted accounting principles), excluding gains (or losses)
from debt restructuring and sales of property, plus depreciation and
amortization on real estate assets, and after adjustments for
unconsolidated partnerships and joint ventures. The methodology used by
the Company when calculating FFO may differ from that of other equity
REIT's and, therefore, may not be comparable to such other REIT's. In
addition, FFO does not represent amounts available for management's
discretionary use because of needed capital replacement or expansion,
debt service obligations or other commitments. FFO per share is
calculated using weighted average Shares and Operating Partnership Units
for the periods presented as follows:
16
<PAGE>
C. Funds from Operations (FFO): - Continued
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
------------------------------ ------------------------------
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Loss from operations before
joint venture income (loss),
gains on sales of assets,
minority interest and
extraordinary items $ (3,816,088) $ (5,077,771) $ (7,675,501) $ (8,324,995)
Joint venture net operating
income - 431,861 82,018 1,840,677
Amortization of
intangible assets 3,258,049 3,258,049 9,774,146 4,784,506
Costs associated with
Advisor Transaction - - - 1,200,000
Depreciation 15,383,538 8,492,659 41,388,722 24,054,732
Provision for losses - 1,850,000 - 1,850,000
Income allocated to
preferred shareholders (1,522,456) (85,531) (4,618,688) (85,531)
------------- ------------- ------------- -------------
Funds from Operations (basic) $ 13,303,043 $ 8,869,267 $ 38,950,697 $ 25,319,389
============= ============= ============= =============
Weighted Average (basic):
Shares 36,707,533 25,738,248 36,676,053 25,547,631
Units 8,979,502 6,080,590 8,659,231 5,630,483
------------- ------------- ------------- -------------
45,687,035 31,818,838 45,335,284 31,178,114
============= ============= ============= =============
Funds from Operations (diluted)
(Note 1) $ 14,825,481 $ 8,954,798 $ 43,569,367 $ 25,404,920
============= ============= ============= =============
Weighted Average (diluted)
(Note 1):
Shares 42,434,714 26,200,904 42,462,436 25,734,565
Units 9,687,840 6,230,590 9,363,943 5,780,483
------------- ------------- ------------- -------------
52,122,554 32,431,494 51,826,379 31,515,048
============= ============= ============= =============
Cash flows provided by (used for):
Operating activities 18,916,000 10,029,000 55,079,000 25,772,000
Investing activities (35,861,000) (62,672,000) (113,954,000) (42,717,000)
Financing activities 14,972,000 53,471,000 60,921,000 18,988,000
</TABLE>
Note 1 - Funds from Operations (diluted) and weighted average shares/units
(diluted) assume the conversion of preferred stock, stock options and
warrants into common shares and the issuance of deferred Operating
Partnership Units where the impact is dilutive.
Same-store Multifamily Communities
The Company defines same-store apartment communities as those assets that
were owned and operated in each of the two most recent years. The Net
Operating Income ("NOI") of the 35 communities aggregating 12,528 units
which are considered same-store is summarized below (dollars in
thousands).
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
----------------------------------------- ------------------------------------------
1998 1997 % Change 1998 1997 % Change
------- ------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues $25,638 $24,428 5.0% $75,442 $71,303 5.8%
Expenses 10,612 10,400 2.0% 29,949 29,744 0.7%
------- ------- ------- -------
Net operating income $15,026 $14,028 7.1% $45,493 $41,559 9.5%
======= ======= ======= =======
Average monthly rent $701 $678 $694 $672
per unit
Average physical 96.1% 95.1% 95.5% 93.7%
occupancy
</TABLE>
17
<PAGE>
C. Funds from Operations (FFO): - Continued
NOI for the same-store communities increased 7.1% for the three months
ended September 30, 1998 compared to the same period in 1997. Growth in
same-store multifamily revenues was 5.0% for the three months ended
September 30, 1998 compared to the prior year period. Rent increases
accounted for 3.4% of the increase and the remaining revenue gain was
generated from increased occupancy.
D. Liquidity and Capital Resources:
The Company's net cash with respect to investing activities decreased
approximately $71.2 million for the nine month period ended September 30,
1998 compared to the same period in 1997 primarily due to an increase in
investment in multifamily properties of $55.9 million, which included
acquisitions, capital expenditures and development, and a decrease in
proceeds from sales of properties of $21.6 million. The Company's net
cash with respect to financing activities increased approximately $41.9
million for the nine month period ended September 30, 1998 compared to
the same period in 1997 primarily due to increased net advances of
approximately $138.2 million under the credit agreements and construction
loan which were partially offset by increased payments on mortgage notes
payable of $13.4 million, increased dividends and distributions of $16.0
million and proceeds from the issuance of preferred stock of $65.9
million in 1997.
The Company has employed operations, debt financing, sales of assets,
issuance of Units and issuance of preferred and common stock as the
sources of liquidity. In 1997, the Company raised additional capital
through a private placement of preferred stock and a public offering of
common stock, the proceeds of which were used to acquire multifamily
properties and to pay down variable rate debt. In addition, since 1995,
the Company has issued Units for the acquisition of 39 multifamily
communities and has raised approximately $78.6 million of private equity.
Operating cash flows are earmarked for the payment of dividends as well
as capital expenditures of a recurring nature. Debt financing, proceeds
from asset sales and equity offerings have been used to finance the
acquisition, renovation, rehabilitation and development of apartment
communities.
In each of the previous three years, the Company has paid between 83% and
88% of FFO in dividends, retaining the rest for recurring capital
expenditures and working capital. The Company expects to increase both
FFO and dividends in the future but will strive to gradually reduce the
payout ratio so as to utilize some internally generated funds for growth.
On November 12, 1998, the Board approved a dividend of $.2425 per share
of common stock payable on February 15, 1999 to the shareholders of
record on February 1, 1999.
The Company has a policy to maintain leverage at or below 50% of the
reasonably estimated value of assets. By employing moderate leverage
ratios, the Company expects it can continue to generate sufficient cash
flows to operate its business as well as sustain dividends to
shareholders.
The Company conservatively manages both interest rate risk and maturity
risk. Through the use of a swap, the Company has hedged interest rate
risk on $40 million of its outstanding variable rate debt as of September
30, 1998. Additionally, the Company has spread its maturities on
long-term debt and has weighted average maturities of approximately 14
years.
The Company will utilize equity capital, whether publicly or privately
raised, when the Company identifies the opportunities to invest the
proceeds in assets that the Company expects would increase shareholder
returns.
The Company has adequate sources of liquidity to meet its current cash
flow requirements, including dividends and debt service. The Company
currently has sufficient unadvanced commitments under credit facilities
to fund ongoing renovation, rehabilitation and development activities.
18
<PAGE>
E. Business Conditions/Risks:
The Company believes that favorable economic conditions exist in
substantially all of its real estate markets. For the Company's
same-store apartment communities, physical occupancy was 96.1% as of
September 30, 1998 which generally represents current market occupancies.
In addition, the Company has generated competitive rental rates at its
properties. The Company expects to produce consistent performance from
its real estate assets; however, no assurances can be made in this
regard.
The Company's real estate investments are subject to some seasonal
fluctuations resulting from changes in utility consumption and seasonal
maintenance expenditures. Future performance of the Company may be
impacted by unpredictable factors which include general and local
economic and real estate market conditions, variable interest rates,
environmental concerns, energy costs, government regulations and federal
and state income tax laws. The requirements for compliance with federal,
state and local regulations to date have not had an adverse effect on the
Company's operations, and no adverse effects are anticipated in the
future.
The Company is also involved in certain legal actions and claims in the
ordinary course of its business. It is the opinion of management and its
legal counsel that such litigation and claims should be resolved without
material effect on the Company's financial position.
F. Year 2000
The Year 2000 compliance issue concerns the inability of computerized
information systems to accurately calculate, store or use a date after
1999. This could result in a system failure or miscalculations causing
disruptions of operations. The Year 2000 issue affects virtually all
companies and all organizations. The Company has conducted an assessment
of its core internal and external computer information systems and has
taken the further necessary steps to understand the nature and extent of
the work required to make its systems, in those situations in which the
Company is required to do so, Year 2000 compliant.
In this regard, the Company, with certain affiliates of a director, began
a computer systems project in 1997 to significantly upgrade its existing
hardware and software. The Company completed the testing and conversion
of the financial accounting and property operating systems in February,
1998. As a result, the Company has generated operating efficiencies and
believes it has remedied the programming issues associated with the Year
2000. The Company incurred hardware costs as well as consulting and other
expenses related to infrastructure and facilities enhancements necessary
to complete the upgrade and prepare for the Year 2000. The Company's
share of the cost of the systems conversion was approximately $600,000
and has been capitalized and is being amortized over five years.
The Company is currently in the process of identifying, evaluating and
remedying its Year 2000 compliance issues with respect to its non-IT
systems, such as computer controlled elevators, boilers, chillers or
other miscellaneous systems. The Company has completed its Year 2000
compliance initiatives at some of its properties and is in the process of
completing these initiatives at others. Based on its identification and
assessment efforts to date, the Company believes that certain of the
computer equipment and software it currently uses will require
modification or replacement. However, the Company does not believe that
the future efforts to achieve its Year 2000 compliance initiatives will
result in material cost to the Company or significantly interrupt
services or operations.
The Company is in the process of evaluating the potential adverse impact
that could result from the failure of material third-party service
providers (including but not limited to its banks and telecommunications
providers) and significant vendors to be Year 2000 compliant. No estimate
can be made at this time as to the impact of the readiness of such third
parties. However, if any of the third party service providers ceases to
conduct business due to Year 2000 related problems, we except to be able
to contract with alternate providers without experiencing any material
adverse effect on the Company's financial condition and results of
operations.
Management does not believe that the Year 2000 problems will have a
material adverse effect on the Company's financial condition or results
of operations. Such belief is based on our analysis of the risks to the
Company related to its potential Year 2000 problems and its assessment of
the Year 2000 problems of our third party service providers. In any
event, the Company expects to perform an analysis of the operational
problems and costs (including loss of revenues) that would be reasonably
likely to result, in a worst case scenario, from the failure by the
Company and certain third party service providers to achieve Year 2000
compliance on a timely basis. To date, a contingency plan has not been
developed for dealing with the most reasonably likely worse case
scenario, however, the Company currently plans to complete such analysis
and contingency planning by June 30, 1999.
G. Recently Issued Accounting Standards
Financial Accounting Standards Board Statement No. 129 ("FAS 129")
"Disclosure of Information about Capital Structure" is effective for
financial statements issued for periods ending after December 31, 1997.
FAS 129 establishes standards for disclosure of information about
securities, liquidation preference of preferred stock and redeemable
stock. Financial Accounting Standards Board Statement No. 130 ("FAS 130")
"Reporting Comprehensive Income" is effective for fiscal years beginning
after December 31, 1997, although earlier application is permitted. FAS
130 establishes standards for reporting and display of comprehensive
income and its components in financial statements. Financial Accounting
Standards Board Statement No. 131 ("FAS 131") "Disclosures about Segments
of an Enterprise and Related Information" establishes standards for
disclosing measures for profit or loss and total assets for each
reportable
19
<PAGE>
G. Recently Issued Accounting Standards - Continued
segment. FAS 131 is effective for fiscal years beginning after December
15, 1997. Financial Accounting Standards Board Statement No. 132 ("FAS
132") "Employers' Capital Disclosures about Pensions and Other
Postretirement Benefits" is effective for fiscal years beginning after
December 15, 1997, although earlier application is encouraged. FAS 132
establishes standards related to the disclosure requirements for pensions
and other postretirement benefits. Financial Accounting Standards Board
Statement No. 133 ("FAS 133") "Accounting for Derivatives" is effective
for fiscal years beginning after December 15, 1997. FAS 133 establishes
standards related to the accounting and disclosure requirements of
derivative financial instruments. Statement of Position 97-1 ("SOP 97-1")
"Accounting by Participating Mortgage Loan Borrowers" is effective for
fiscal years beginning after June 30, 1998. SOP 97-1 establishes
standards related to the accounting and disclosure requirements of
participating mortgage loans by borrowers.
Effective March 19, 1998, the Company has adopted the Emerging Issues
Task Force ruling 97-11 ("EITF 97-11") entitled "Accounting for Real
Estate Property Acquisitions". EITF 97-11 provides that real estate
companies must expense, as incurred, the internal costs of identifying
and acquiring operating property.
The Company does not believe that the accounting standards and disclosure
requirements resulting from the implementation of FAS 133, SOP 97-1 and
EITF 97-11 will have a material impact on the Company's financial
statements. Additionally, the Company does not believe that the
disclosure requirements resulting from the implementation of FAS 129, FAS
130, FAS 131 or FAS 132 will have a material impact on the Company's
financial statements.
H. Forward-Looking Statements
The Company's Annual Report and this Form 10-Q contain forward-looking
statements, estimates or plans within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). For this purpose, any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "believes",
"anticipates", "plans", "expects", and similar expressions are intended
to identify forward-looking statements. There are a number of factors
that could cause the Company's actual results to differ materially from
those indicated by such forward-looking statements. These factors include
the matters set forth under the caption "Risk Factors" on pages 9 through
20 of the Company's Registration Statement on Form S-3, which was filed
with the Securities and Exchange Commission on September 29, 1998 and
which pages are incorporated herein by reference. Any statements
contained in such filing shall be deemed to be superseded or modified for
purposes of the Quarterly Report to the extent that a statement contained
herein modifies or supersedes such statement. In light of the significant
uncertainties inherent in the forward-looking statements included herein,
the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and
plans of the Company will be achieved.
20
<PAGE>
BERKSHIRE REALTY COMPANY, INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
---------------
Item 1. Legal proceedings
Response: None
Item 2. Change in securities
Response: None
Item 3. Defaults upon senior securities
Response: None
Item 4. Submission of matters to a vote of security holders
Response: None
Item 5. Other information
Response: None
Item 6. Exhibits and reports on Form 8-K:
Exhibits:
--------
10.1 Amendment No. 2 to Employment and Non Competition
Agreement -- David F. Marshall +
10.2 Amendment No. 2 to Employment and Non Competition
Agreement -- Marianne Pritchard +
10.3 Amendment No. 2 to Employment and Non Competition
Agreement -- David Olney +
10.4 Amendment No. 2 to Employment and Non Competition
Agreement -- Ridge Frew +
10.5 Amendment No. 1 to Employment and Non Competition
Agreement -- Dennis Suarez +
10.6 Employment and Non Competition Agreement -- James W.
Jackson +
10.7 Severance Benefits Plan +
10.8 Amendment No. 1 to Employment and Non Competition
Agreement -- Marianne Pritchard +
10.9 Amendment No. 1 to Employment and Non Competition
Agreement -- David Olney +
10.10 Amendment No. 1 to Employment and Non Competition
Agreement -- Ridge Frew +
10.11 Amendment No. 1 to Employment and Non Competition
Agreement -- David F. Marshall +
10.12 Employment and Non Competition Agreement -- David F.
Marshall +
10.13 Employment and Non Competition Agreement -- Marianne
Pritchard +
10.14 Employment and Non Competition Agreement -- David Olney +
10.15 Employment and Non Competition Agreement -- Ridge Frew +
10.16 Employment and Non Competition Agreement -- Dennis
Suarez +
10.17 Severance Benefit Plan -- Exempt Employees +
10.18 Severance Benefit Plan -- Non-Exempt Employees +
10.19 Severance Benefit Plan -- Vice Presidents or Higher in
Acquisitions +
10.20 Severance Benefit Plan -- Vice Presidents or Higher in
Administrative or Property Management Departments +
27.1 Financial Data Schedule -- September 30, 1998 +
27.2 Financial Data Schedule -- September 30, 1997 +
99.1 Documents incorporated by reference - "Risk Factors" from
pages 9 through 20 of the Company's Registration Statement
on Form S-3, which was filed with the SEC on September 29,
1998, setting forth the information under the caption
"Risk Factors" +
Reports on Form 8-K
-------------------
<TABLE>
<CAPTION>
Date Event Reported Financial Statements
---- -------------- --------------------
<S> <C> <C>
October 30, 1998 Acquisition of Yes
Intercapital and
Cooper Portfolios
</TABLE>
+ Filed herein.
21
<PAGE>
SIGNATURE
---------
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.
Berkshire Realty Company, Inc.
------------------------------
(Registrant)
BY: /s/Marianne Pritchard
------------------------------------
Marianne Pritchard, Executive Vice President
and Chief Financial Officer of
Berkshire Realty Company, Inc.
(Principal Financial Officer)
BY: /s/David F. Marshall
------------------------------------
David F. Marshall, President,
CEO and Director of
Berkshire Realty Company, Inc.
DATE: November 16, 1998
22
AMENDMENT NO. 2 TO
EMPLOYMENT AND NONCOMPETITION AGREEMENT
September 1, 1998
David F. Marshall
17 High Rock Road
Wayland, MA 01778
Re: Amendment No. 2 to Employment and Noncompetition Agreement dated
March 1, 1997, as amended on February 28, 1997, among BRI OP Limited
Partnership, Berkshire Realty Company, Inc. and David F. Marshall
(the "Agreement").
Dear Mr. Marshall:
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 thirty-six 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 470 Atlantic
Avenue, Boston, Massachusetts 02210; 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
<PAGE>
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 $331,500 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 his 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 24 hereof, the Company
shall pay Employee severance compensation in eighteen (18) 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 by the Company 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
-2-
<PAGE>
Employment Termination Date, equal to the Monthly Severance Payment
multiplied by thirty-six (36) (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 24 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 him (including, state
and federal income taxes on the Eliminated Payments, the 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.
-3-
<PAGE>
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 he agrees with the Company's determination
pursuant to the preceding sentence, in which case he 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 he disagrees with such
determination, in which case he 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
he agrees with the Company's determination, the Company shall make
the Potential Payments to Employee within three (3) business days
-4-
<PAGE>
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 25 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."
Section 8 of the Agreement is amended in its entirety to read as
follows:
8. 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 his 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 24 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 thirty-six (36) 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 eighteen (18) 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
-5-
<PAGE>
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 8 shall terminate."
Subsection 12(a) of the Agreement is amended in its entirety to read
as follows:
12. Noncompetition.
a. Employee agrees that during the term of this Agreement
and for one 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 12(a) nor Section 12(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
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 his employment of
his 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 24 hereof, then for a one-year period following the date
of such nonrenewal, Employee shall be subject to this Section 12(a)
and Section 12(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
12(a) or Section 12(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
-6-
<PAGE>
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 12(a) or Section 12(b) hereof from and
after the Employment Termination Date."
Section 23 of the Agreement is amended in its entirety to read as
follows:
23. Survival. The provisions of Sections 5, 6, 8 and 9 insofar as
they provide for payments to be made to Employee after termination or
nonrenewal of this Agreement and Sections 10 through 13 hereof shall
survive the termination or nonrenewal of this Agreement by Employee
or the Company, whether voluntary or involuntary, or with or without
cause."
Section 24 of the Agreement is amended in its entirety to read as
follows:
24. 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 20 of this
Agreement."
The following is hereby added as Section 25 of the Agreement:
25. Arbitration. If the Employee's employment is terminated or if the
term hereunder is not renewed by the Company pursuant to Section 24
hereof, 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 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 8 or
Section 12 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)
-7-
<PAGE>
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 25 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 24 hereof; (ii) a
dispute arises with respect to the Company's obligations under
Section 5, Section 6, Section 8 or Section 12 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 25."
In all other respects, the Agreement is hereby ratified and
confirmed.
The foregoing amendments shall be effective as of September 1, 1998.
-8-
<PAGE>
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:
----------------------------------
David F. Marshall
-9-
AMENDMENT NO. 2 TO
AMENDED AND RESTATED
EMPLOYMENT AND NONCOMPETITION AGREEMENT
September 1, 1998
Marianne Pritchard
128 Reed Street
Lexington, MA 02173
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 Marianne Pritchard
(the "Agreement").
Dear Ms. Pritchard:
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 470 Atlantic
Avenue, Boston, Massachusetts 02210; 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
<PAGE>
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
-2-
<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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:
----------------------------------------
Marianne Pritchard
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AMENDMENT NO. 2 TO
EMPLOYMENT AND NONCOMPETITION AGREEMENT
September 1, 1998
David Olney
19 Carriage Drive
Lincoln, RI 02865
Re: Amendment No. 2 to Employment and Noncompetition Agreement dated
March 1, 1997, as amended on January 2, 1998, among BRI OP Limited
Partnership, Berkshire Realty Company, Inc. and David Olney (the
"Agreement").
Dear Mr. Olney:
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, 1997 ("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 470 Atlantic
Avenue, Boston, Massachusetts 02210; 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
<PAGE>
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;"
The last two (2) lines of subsection 4(e) of the Agreement are
amended in their entirety to read as follows:
"Section 8 hereof with respect to non-disclosure, Section 9 hereof
with respect to the return of Company property, or Section 10 hereof
with respect to noncompetition."
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 $153,000 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 the Acquisition/Disposition Bonus Pool. Other than the
pro rata bonus described in the following sentence, the terms and
conditions of the Bonus Pool 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 a full year bonus in the amount of $84,000 (the
"Target Bonus")) 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 22 hereof, the Company
shall pay Employee severance 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
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<PAGE>
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 by the Company 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 22 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 him (including, state
and federal income taxes on the Eliminated Payments, the 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
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<PAGE>
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 he agrees with the Company's determination
pursuant to the preceding sentence, in which case he 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 he disagrees with such
determination, in which case he 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
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<PAGE>
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 he 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 23 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."
Section 6 of the Agreement is amended in its entirety to read as
follows:
6. 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. 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 22 hereof, Employee shall be entitled to a
continuation of health insurance benefits under the Company's group
health
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<PAGE>
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 6
shall terminate."
Subsection 10(a) of the Agreement is amended in its entirety to read
as follows:
10. 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 10(a) nor Section 10(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
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 his employment of
his 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 22 hereof, then for a one-year period following the date
of such nonrenewal,
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<PAGE>
Employee shall be subject to this Section 10(a) and Section 10(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 10(a) or Section 10(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 10(a) or Section 10(b) hereof from and after the
Employment Termination Date."
The first sentence of Section 11 of the Agreement is amended in its
entirety to read as follows:
"Employee acknowledges that the Company would not have an adequate
remedy at law for money damages if the covenants contained in
Sections 8 (Non-Disclosure), 9 (Return of Company Property) or 10
(Noncompetition) were not complied with in accordance with their
terms, and that any breach or threatened breach thereof would result
in immediate and irreparable injury to the Company."
Section 21 of the Agreement is amended in its entirety to read as
follows:
21. Survival. The provisions of Sections 5, 6 and 25 insofar as they
provide for payments to be made to Employee after termination or
nonrenewal of this Agreement and Sections 8 through 11 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 22 of the Agreement:
22. 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 any subsequent December 31 thereafter. Such notice shall be in
the form and to the address as prescribed by Section 24 of this
Agreement."
The following is hereby added as Section 23 of the Agreement:
23. Arbitration. If the Employee's employment is terminated or if the
term hereunder is not renewed by the Company pursuant to Section 22
hereof, 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 a dispute arises between the
Employee, on the one hand, and the Company or its
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<PAGE>
successor-in-interest, on the other hand, with respect to the
Company's obligations under Section 5, Section 6 or Section 10
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 23 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 22 hereof; (ii) a
dispute arises with respect to the Company's obligations under
Section 5, Section 6 or Section 10 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 23."
The following is hereby added as Section 24 of the Agreement:
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<PAGE>
24. Notice. All notices, demands or other communications hereunder
shall be in writing and shall be deemed to have been duly given if
delivered in person, by United States mail, certified or registered,
with return receipt requested, or by telefax, telegram or telex:
a. If to Employee, to:
David Olney
19 Carriage Drive
Lincoln, RI 02865
Telefax number: (617) 556-1507
b. If to the Company, to:
BRI OP Limited Partnership
Berkshire Realty Company, Inc.
Harbor Plaza
470 Atlantic Avenue
Boston, MA 02210
Attention: David F. Marshall
Telefax number: (617) 556-1507
With a copy to :
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention: David E. Redlick, Esq.
Telefax number: (617) 526-5000
or to such other addresses or telefax numbers as the parties may have
furnished to each other by notice pursuant to the provisions of this
Section 24. Any such notice, demand or other communication shall be
deemed to have been given on the date actually delivered to the
address to which it is directed."
The following is hereby added as Section 25 of the Agreement:
25. Expense Reimbursement. Employee shall be entitled to
reimbursement from the Company for the reasonable business costs and
expenses which he incurs in connection with the performance of his
duties and obligations under this Agreement provided that the nature
and amount of such expenses are incurred and approved in accordance
with the Company's business expense reimbursement policy in effect
from time to time as approved by the Board of Directors.
Reimbursement shall be conditioned upon presentation of expense
statements or vouchers or such other supporting information as the
Company
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<PAGE>
may from time to time require."
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:
----------------------------------
David Olney
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AMENDMENT NO. 2 TO
EMPLOYMENT AND NONCOMPETITION AGREEMENT
September 1, 1998
Ridge Frew
791 Willow Creek Drive
Atlanta, GA 30328
Re: Amendment No. 2 to Employment and Noncompetition Agreement dated
March 1, 1997, as amended on January 2, 1998, among BRI OP Limited
Partnership, Berkshire Realty Company, Inc. and Ridge Frew (the
"Agreement").
Dear Mr. Frew:
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, 1997 ("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 office at 1000 Parkwood
Circle-Suite 900, Atlanta 30339; 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
<PAGE>
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;"
The last two (2) lines of subsection 4(e) of the Agreement are
amended in their entirety as follows:
"Section 8 hereof with respect to non-disclosure, Section 9 hereof
with respect to the return of Company property, or Section 10 hereof
with respect to noncompetition."
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 $188,700 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 the Annual Threshold Target Maximum Bonus Plan. 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 22 hereof, the Company
shall pay Employee severance 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
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<PAGE>
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 by the Company 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 22 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 him (including, state
and federal income taxes on the Eliminated Payments, the 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
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<PAGE>
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 he agrees with the Company's determination
pursuant to the preceding sentence, in which case he 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 he disagrees with such
determination, in which case he 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
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<PAGE>
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 he 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 23 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."
Section 6 of the Agreement is amended in its entirety to read as
follows:
6. 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. 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 22 hereof, Employee shall be entitled to a
continuation of health insurance benefits under the Company's group
health
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<PAGE>
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 6
shall terminate."
Subsection 10(a) of the Agreement is amended in its entirety to read
as follows:
10. 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 10(a) nor Section 10(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
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 his employment of
his 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 22 hereof, then for a one-year period following the date
of such nonrenewal,
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<PAGE>
Employee shall be subject to this Section 10(a) and Section 10(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 10(a) or Section 10(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 10(a) or Section 10(b) hereof from and after the
Employment Termination Date."
The first sentence of Section 11 of the Agreement is amended in its
entirety to read as follows:
"Employee acknowledges that the Company would not have an adequate
remedy at law for money damages if the covenants contained in
Sections 8 (Non- Disclosure), 9 (Return of Company Property) or 10
(Noncompetition) were not complied with in accordance with their
terms, and that any breach or threatened breach thereof would result
in immediate and irreparable injury to the Company."
Section 22 of the Agreement is amended in its entirety to read as
follows:
22. 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 24 of this
Agreement."
The following is hereby added as Section 23 of the Agreement:
23. Arbitration. If the Employee's employment is terminated or if the
term hereunder is not renewed by the Company pursuant to Section 22
hereof, 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 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 or Section 10
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
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<PAGE>
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 23 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 22 hereof; (ii) a
dispute arises with respect to the Company's obligations under
Section 5, Section 6 or Section 10 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 23."
The following is hereby added as Section 24 of the Agreement:
24. Notice. All notices, demands or other communications hereunder
shall be in writing and shall be deemed to have been duly given if
delivered in person, by United States mail, certified or registered,
with return receipt requested, or by telefax, telegram or telex:
a. If to Employee, to:
Ridge Frew
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<PAGE>
791 Willow Creek Drive
Atlanta, GA 30328
Telefax number: (617) 556-1507
b. If to the Company, to:
BRI OP Limited Partnership
Berkshire Realty Company, Inc.
Harbor Plaza
470 Atlantic Avenue
Boston, MA 02210
Attention: David F. Marshall
Telefax number: (617) 556-1507
With a copy to :
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention: David E. Redlick, Esq.
Telefax number: (617) 526-5000
or to such other addresses or telefax numbers as the parties may have
furnished to each other by notice pursuant to the provisions of this
Section 24. Any such notice, demand or other communication shall be
deemed to have been given on the date actually delivered to the
address to which it is directed."
The following is hereby added as Section 25 of the Agreement:
25. Expense Reimbursement. Employee shall be entitled to
reimbursement from the Company for the reasonable business costs and
expenses which he incurs in connection with the performance of his
duties and obligations under this Agreement provided that the nature
and amount of such expenses are incurred and approved in accordance
with the Company's business expense reimbursement policy in effect
from time to time as approved by the Board of Directors.
Reimbursement shall be conditioned upon presentation of expense
statements or vouchers or such other supporting information as the
Company may from time to time require."
The following is hereby added as Section 26 of the Agreement:
26. Survival. The provisions of Sections 5, 6 and 25 insofar as they
provide for payments to be made to Employee after termination or
nonrenewal of this Agreement and Sections 8 through 11 hereof shall
survive the termination or
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<PAGE>
nonrenewal of this Agreement by Employee or the Company, whether
voluntary or involuntary, or with or without cause."
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:
----------------------------------
Ridge Frew
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AMENDMENT NO. 1 TO
EMPLOYMENT AND NONCOMPETITION AGREEMENT
September 1, 1998
Dennis Suarez
441 Bottesford Drive
Kennesaw, GA 30144
Re: Amendment No. 1 to Employment and Noncompetition Agreement dated as
of March 1, 1997, among BRI OP Limited Partnership, Berkshire Realty
Company, Inc. and Dennis Suarez (the "Agreement").
Dear Mr. Suarez:
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, 1997 ("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 office at 1000 Parkwood
Circle-Suite 900, Atlanta, Georgia 30339; 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
<PAGE>
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 $162,240 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 the Development Group Bonus Pool. 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 a full year bonus in the amount of $77,000 (the
"Target Bonus")) 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 22 hereof, the Company
shall pay Employee severance 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 (the "Monthly Severance Payment"); provided, however, if
such termination or nonrenewal by the Company occurs during the
period commencing on the date of a Change in Control and ending four
(4) 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
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<PAGE>
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 22 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 him (including, state
and federal income taxes on the Eliminated Payments, the 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.
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<PAGE>
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 he agrees with the Company's determination
pursuant to the preceding sentence, in which case he 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 he disagrees with such
determination, in which case he 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
he agrees with the Company's determination, the Company shall make
the Potential Payments to Employee within three (3) business days
-4-
<PAGE>
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 23 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."
Section 6 of the Agreement is amended in its entirety to read as
follows:
6. 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. 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 22 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
-5-
<PAGE>
date of a Change in Control and ending four (4) 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 6
shall terminate."
Subsection 10(a) of the Agreement is amended in its entirety to read
as follows:
10. 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 four (4) years following the date of a Change
in Control, neither clause (i) of this Section 10(a) nor Section
10(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
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 his employment of
his 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 22 hereof, then for a one-year period following the date
of such nonrenewal, Employee shall be subject to this Section 10(a)
and Section 10(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
10(a) or Section 10(b) hereof from and after the date of such Change
in
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<PAGE>
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 10(a) or Section 10(b) hereof from and
after the Employment Termination Date."
Section 21 of the Agreement is amended in its entirety to read as
follows:
21. Survival. The provisions of Sections 5, 6 and 7 insofar as they
provide for payments to be made to Employee after termination or
nonrenewal of this Agreement and Sections 8 through 11 hereof shall
survive the termination or nonrenewal of this Agreement by Employee
or the Company, whether voluntary or involuntary, or with or without
cause."
Section 22 of the Agreement is amended in its entirety to read as
follows:
22. 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 18 of this
Agreement."
The following is hereby added as Section 23 of the Agreement:
23. Arbitration. If the Employee's employment is terminated or if the
term hereunder is not renewed by the Company pursuant to Section 22
hereof, during the period commencing six (6) months preceding the
date of a Change in Control and ending four (4) 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 or Section 10
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)
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<PAGE>
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 23 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 22 hereof; (ii) a
dispute arises with respect to the Company's obligations under
Section 5, Section 6 or Section 10 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 23."
In all other respects, the Agreement is hereby ratified and
confirmed.
The foregoing amendments shall be effective as of September 1, 1998.
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<PAGE>
Please indicate your agreement with this Amendment No. 1 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:
----------------------------------
Dennis Suarez
-9-
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of September 1,
1998, is made by and among BRI OP Limited Partnership ("BRI OP"), its Special
Limited Partner, Berkshire Realty Company, Inc., a Delaware corporation (the
"Special Limited Partner"), and JAMES W. JACKSON, an individual ("Employee").
WITNESSETH THAT:
---------------
WHEREAS, the Special Limited Partner owns more than 50% of the
beneficial interest in BRI OP;
WHEREAS, a subsidiary of the Special Limited Partner is the sole
general partner of BRI OP;
WHEREAS, the Special Limited Partner is managed by its Board of
Directors;
WHEREAS, the Compensation Committee of the Board of Directors is
responsible for negotiating employment contracts with senior management and
staff of the Special Limited Partner subject to approval by the Board;
WHEREAS, the Special Limited Partner and BRI OP should for
management, business and accountability reasons have the same senior executives;
WHEREAS, BRI OP and the Special Limited Partner shall be referred to
herein collectively as the "Company";
WHEREAS, all payments and health and welfare benefits payable
hereunder to Employee will be paid for or provided by BRI OP;
WHEREAS, the Company's principal business is the ownership and
operation of high quality multi-family properties and community and regional
shopping centers;
WHEREAS, BRI OP and the Special Limited Partner desire to retain the
Employee as Vice President of Human Resources of BRI OP and the Special Limited
Partner, respectively, on the terms hereinafter set forth; and
WHEREAS, the Employee wishes to be employed by BRI OP and the Special
Limited Partner as their Vice President of Human Resources on the terms
hereinafter set forth which terms shall supersede any prior understanding or
agreement between the
<PAGE>
Employee and the Special Limited Partner or BRI OP with respect to the subject
matter hereof;
NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, BRI OP, the Special Limited
Partner and the Employee hereby agree as follows:
1. Employment. The Company will employ Employee, and Employee will
accept such employment, upon the terms and subject to the conditions set forth
in this Agreement.
2. Capacity and Duties. Employee shall serve the Company as its Vice
President of Human Resources, and his duties and responsibilities shall be those
consistent with this position, subject to the direction and control of the Board
of Directors of the Special Limited Partner (the "Board of Directors"). Employee
shall report directly to the Chief Executive Officer or such other individual as
may be designated from time to time by the Board of Directors.
3. Obligations of Employee. During the term of his employment under
this Agreement:
a. Employee shall devote all of his business time and
efforts to the business of the Company and use faithful and diligent efforts to
promote the business interests of the Company and its subsidiaries and
affiliates over which Employee has management responsibility.
b. Employee shall not, without the prior written consent of
the Board of Directors in each instance, whether as an employee, consultant,
independent contractor or otherwise, be engaged in any other business activities
on behalf of any other person, firm, corporation, partnership, proprietorship or
other entity.
4. Term of Employment; Termination. The term of Employee's employment
hereunder shall commence as of September 1, 1998 ("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 470 Atlantic Avenue, Boston, Massachusetts 02210; or
(ii) Employee's duties and responsibilities are
2
<PAGE>
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;
b. the delivery by the Company to Employee of written
notice of termination for "cause." The term "cause" means any termination by the
Company by reason of (i) persistent and willful neglect of material duties by
Employee after written notice and an opportunity to immediately cure such
neglect to the satisfaction of the Board of Directors; (ii) the entry against
Employee of a guilty plea, or a conviction, judgment or order in any proceeding
of which Employee had notice and the opportunity to defend himself before any
court relating to (y) a willful violation of any material law, rule or
regulation applicable to the business of the Company or its subsidiaries or
affiliates, unless such breach arises out of and is consistent with the express
written direction of the Board of Directors or is undertaken with the express
prior written consent of the Board of Directors, or (z) a violation of any law
involving fraud, deceit or criminal misrepresentation; (iii) the entry against
Employee of a guilty plea, or a conviction or judgment in any proceeding of
which Employee had notice and the opportunity to defend himself before any court
relating to any charge which would constitute a felony if convicted; (iv)
Employee engaging in any act involving moral turpitude, which act is, or could
reasonably be expected to be, injurious to the financial interests or reputation
of the Company or any of its subsidiaries or affiliates in any material respect;
(v) Employee willfully misappropriating substantial assets of the Company or any
of its subsidiaries or affiliates; (vi) Employee engaging in gross misconduct
which is, or which could reasonably be expected to be, injurious to the Company
or any of its subsidiaries or affiliates in any material respect; or (vii)
3
<PAGE>
Employee breaching any provisions of this Agreement and such breach has a
material adverse effect on the Company after written notice and an opportunity
to immediately cure such breach to the satisfaction of the Board of Directors,
unless such breach arises out of and is consistent with the express written
direction of the Board of Directors or is undertaken with the express prior
written consent of the Board of Directors;
c. the date one month after the date of the delivery by
Employee to the Company of written notice of termination; provided, however,
that if the Company receives such notice from Employee, the Company shall have
the right, exercisable by written notice to Employee, to accelerate the
Employment Termination Date to such date on or after the date of the Company's
notice to Employee as the Company shall determine in its discretion;
d. the death of Employee;
e. the delivery to Employee of written notice of
termination by the Company if Employee shall suffer a physical or mental
disability which renders Employee, (i) in the reasonable judgment of the carrier
if a long-term disability policy covering the Employee provided by the Company
is in force or, (ii) if no such policy is in force, in the reasonable judgment
of the Board of Directors, unable to perform his duties and obligations under
this Agreement for 90 consecutive days or 120 days in any period of 180
consecutive days; provided, however, that no termination of Employee's
employment under this Agreement shall diminish or affect in any way Employee's
rights to payments provided for hereunder which have accrued to and including
the Employment Termination Date, and provided, further, that no termination of
Employee's employment under this Agreement for cause or otherwise (whether such
termination is voluntary or involuntary) shall diminish or affect the Company's
obligations to Employee, or Employee's obligations to the Company, under Section
8 hereof with respect to non-disclosure, Section 9 hereof with respect to the
return of Company property, or Section 10 hereof with respect to noncompetition.
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 $138,985 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 Discretionary Bonus Plan. Other than the pro rata bonus
described in the following sentence, the terms and conditions of the Bonus Plan
and payments thereunder, if any,
4
<PAGE>
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 a full year bonus in the
amount of $25,000 (the "Target Bonus")) 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 22 hereof, the Company shall pay Employee
severance 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 (the "Monthly Severance Payment");
provided, however, if such termination or nonrenewal by the Company 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 22 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."
5
<PAGE>
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 him
(including, state and federal income taxes on the Eliminated Payments, the
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 he agrees with the
Company's determination pursuant to the preceding sentence, in which case
6
<PAGE>
he 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 he disagrees with such determination, in which case he
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 he 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 23 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
7
<PAGE>
income tax withholdings, social security and any other amounts which the Company
is required to withhold by applicable law.
6. 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. 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 22 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 6 shall terminate.
7. Expense Reimbursement. Employee shall be entitled to reimbursement
from the Company for the reasonable business costs and expenses which he incurs
in connection with the performance of his duties and obligations under this
Agreement provided that the nature and amount of such expenses are incurred and
approved in accordance with the Company's business expense reimbursement policy
in effect from time to time as approved by the Board of Directors. Reimbursement
shall be conditioned upon presentation of expense statements or vouchers or such
other supporting information as the Company may from time to time require.
8. Non-Disclosure. Employee acknowledges that as a result of
Employee's employment by the Company, Employee has and will become informed of,
and have access to, valuable and confidential information of the Company or
information which is not generally known to those outside of the Company (the
"Confidential Information"), including but not limited to trade secrets, ways of
business, technical information, know-how, plans, projections, business
opportunities, proposed acquisitions, proposed dispositions, specifications, and
the identity of partners and
8
<PAGE>
stockholders and that this Confidential Information, even though it may be
contributed, developed or acquired by Employee, is the exclusive property of the
Company to be held by Employee in trust and solely for the Company's benefit.
Accordingly, Employee shall not at any time during or subsequent to his
employment by the Company reveal, report, publish, transfer or otherwise
disclose to any person, corporation or other entity, any of the Confidential
Information without the prior written consent of the Board of Directors, except
to responsible officers and employees of the Company and other responsible
persons whom the Board of Directors agrees in writing are in a contractual or
fiduciary relationship with the Company or who have a need for this information
for purposes that are in the best interests of the Company. These provisions
shall not prohibit Employee from disclosing information which legally is or
becomes of general public knowledge from authorized sources other than Employee.
9. Return of Company Property. Upon the termination of this
Agreement, Employee shall promptly deliver to the Company all property of the
Company including, without limitation, lists, drawings, manuals, letters, notes,
notebooks, reports and copies thereof and all other materials, including those
of a secret or confidential nature, relating to the Company's business that are
in Employee's possession or control. Employee agrees that, upon the request of
the Company, he will represent to the Company that he has complied with the
provisions of this Section at the time he ceases to be an employee of the
Company.
10. 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 10(a) nor Section 10(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 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
9
<PAGE>
further, that if Employee has terminated his employment of his 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
22 hereof, then for a one-year period following the date of such nonrenewal,
Employee shall be subject to this Section 10(a) and Section 10(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 10(a) or Section 10(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 10(a) or Section
10(b) hereof from and after the Employment Termination Date.
b. During any period that Employee is entitled to receive
and is paid severance compensation in accordance with Section 5 hereof, if
Employee shall become an employee, officer, director, shareholder, principal,
agent, partner or consultant or otherwise be engaged in or have a financial or
other interest in any business which competes with the Company, or its
subsidiaries or affiliates or providers under contract of development,
construction, property management or administrative services, equipment or
facilities (which activity by the Employee is not prohibited by this Agreement),
any base salary received from such activities shall be set off against any
severance pay which he is entitled to receive from the Company. Notwithstanding
the foregoing, Employee may make personal investments in the equity securities
of any publicly traded company provided that any such investment does not exceed
one percent (1%) of the market capitalization of the class of securities of the
company in which his investment is made.
c. The restrictions against activities set forth in Section
10(a) and (b) above are considered by the parties to be reasonable for the
purposes of protecting the business of the Company. If any restriction is found
by a court of competent jurisdiction to be unenforceable because it extends for
too long a period of time, over too broad a range of activities or in too large
a geographic area, that restriction shall be interpreted to extend only over the
maximum period of time, range of activities or geographic area as to which it
may be enforceable.
11. Remedies. Employee acknowledges that the Company would not have
an adequate remedy at law for money damages if the covenants contained in
Sections 9, 10 or 11 were not complied with in accordance with their terms, and
that any breach or
10
<PAGE>
threatened breach thereof would result in immediate and irreparable injury to
the Company. Therefore, Employee agrees that in the event of a threatened or
anticipated breach or actual breach by Employee of any of the provisions of
Section 8, 9 or 10, the Company shall be entitled (a) to inform in writing all
potential or new employers, partners, shareholders, officers, directors or
borrowers of Employee of the terms of this Agreement and (b) to an injunction
restraining Employee from violating Sections 8, 9 or 10. Employee covenants and
agrees that if he violates any of the covenants and agreements in Section 8, 9
or 10, the Company shall be entitled to an accounting and repayment of all
profits, compensation, commissions, remuneration or benefits which Employee
directly or indirectly realizes or may realize as a result of or in connection
with any such violation. In addition to any remedies set forth in this Section,
the Company may pursue all other legal or equitable remedies that may be
available to it for a breach or threatened breach, including the recovery of
damages.
12. Successors and Assigns. The Agreement shall be binding on and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, that Employee's duties and obligations hereunder may not be
delegated or assigned by him in any manner.
13. Counterparts. This Agreement may be executed in two or more
counterparts, all of which, when taken together, shall constitute one and the
same Agreement.
14. Governing Law. This Agreement, and the validity and
interpretation hereof and the performance by the parties hereto of their
respective duties and obligations hereunder, shall be governed by the laws of
The Commonwealth of Massachusetts without regard to principles of conflicts of
laws. Jurisdiction and venue over any legal action by either party under this
Agreement shall be Boston, Massachusetts.
15. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to make the provision valid and
enforceable under the applicable law, but if any provision of this Agreement
shall be or become invalid or prohibited under any applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
only, without thereby invalidating the remainder of such provisions or the
remaining provisions of this Agreement.
16. Amendments and Modifications. No modification, extension, or
waiver of any provisions hereof or any release of any right hereunder shall be
valid, unless the same is in writing and is consented to by all parties hereto.
11
<PAGE>
17. Entire Agreement. This Agreement embodies the entire
understanding and agreement of the parties hereto relating to the subject matter
hereof.
18. Notices. All notices, demands or other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered in
person, by United States mail, certified or registered, with return receipt
requested, or by telefax, telegram or telex:
a. If to the Employee, to:
James W. Jackson
34-2 Pleasant Street
Wellesley, MA 02181
b. If to the Company, to:
BRI OP Limited Partnership
Berkshire Realty Company, Inc.
Harbor Plaza
470 Atlantic Avenue
Boston, MA 02210
Attention: David F. Marshall
Telefax number: (617) 556-1507
With a copy to:
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Attention: David E. Redlick, Esq.
Telefax number: (617) 526-5000
or to such other addresses or telefax numbers as the parties may have furnished
to each other by notice pursuant to the provisions of this Section. Any such
notice, demand or other communication shall be deemed to have been given on the
date actually delivered to the address to which it is directed.
12
<PAGE>
19. Captions. Captions and paragraph headings used herein are for
convenience only and are not a part of this Agreement and shall not be used in
construing or interpreting any provision contained herein.
20. Gender. Whenever the singular is used herein and where required
by the context, the same shall include the plural, and the neuter gender shall
include the masculine and feminine genders.
21. Survival. The provisions of Sections 5, 6 and 7 insofar as they
provide for payments to be made to Employee after termination or nonrenewal of
this Agreement and Sections 8 through 11 hereof shall survive the termination or
nonrenewal of this Agreement by Employee or the Company, whether voluntary or
involuntary, or with or without cause.
22. 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 18 of this Agreement.
23. Arbitration. If the Employee's employment is terminated or if the
term hereunder is not renewed by the Company pursuant to Section 22 hereof,
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
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 or Section 10 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
13
<PAGE>
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 23
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 22 hereof; (ii) a dispute arises with respect
to the Company's obligations under Section 5, Section 6 or Section 10 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 23.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal effective on the date first above set forth.
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:
_____________________________________
JAMES W. JACKSON
14
BERKSHIRE REALTY COMPANY, INC.
SEVERANCE BENEFITS PLAN
-----------------------
Effective May 26, 1998
1. Establishment of the Plan. Berkshire Realty Company, Inc. (the
"Company") and BRI OP Limited Partnership (the "Partnership") hereby establish
an unfunded "Severance Benefits Plan" (the "Plan") that is intended to be a
welfare benefit plan within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") . The Plan is in
effect for covered employees of the Company or the Partnership whose employment
is terminated after a Change in Control (as defined below) and prior to the
termination of this Plan (the "Protection Period"). This Plan is a special plan
for severance benefits in the event of a Change in Control. The severance
benefits before a Change in Control or after the Protection Period ends are
provided only in the discretion of the Company; the Company does not maintain
any other plan which provides severance benefits. For purposes of this Plan, a
"Change in Control" of the Company shall mean (i) the acquisition by any
individual, corporation, partnership or other entity of 25% or more beneficial
ownership (as defined in Rule 13d in effect as of such date under the Securities
& Exchange Act of 1934, as amended) of the outstanding voting stock of the
Company; (ii) the merger or consolidation of the Company and any other
corporation or entity in a merger where holders of the outstanding stock of the
Company prior to the merger do not own more than 50% of the outstanding stock of
the surviving Company; or (iii) the sale of all or substantially all of the
assets of the Company other than pursuant of a plan of liquidation adopted
pursuant to the Company Charter.
2. Purpose. The purpose of the Plan is to establish the conditions
under which covered employees will receive severance benefits if their
employment with the Company or Partnership is terminated during the Protection
Period. The severance benefits paid under the
<PAGE>
Plan are intended to assist employees in making a transition to new employment
and are not intended to be a reward for prior service with the Company or the
Partnership.
3. Coverage. Coverage of the Plan is limited to employees (both exempt
and non-exempt) whose employment with the Company or Partnership is terminated
during the Protection Period without cause or because of resignation for Good
Reason (as defined below) other than (a) employees who have separate written
agreements with the Company, (b) employees designated by the Company as
temporary employees and (c) employees designated by the Company as property
level employees. Employees not meeting the above criteria are not covered by the
Plan. The Plan Administrator shall be responsible for determining in a uniform
and nondiscriminatory manner whether employees meet the above criteria.
4. Eligibility for Severance Benefits. In all cases involving
termination of employment occurring outside the Protection Period, the payment
of severance benefits is fully discretionary with the Company and employees do
not have a right to receive any severance benefits.
To receive severance benefits under the Plan, a covered employee must
have been specifically identified as eligible to receive severance benefits by
receipt of a written notice from the Plan Administrator. Eligibility may be
established pursuant to a currently effective summary plan description. The
following employees ordinarily will not be eligible for severance benefits: (1)
an employee who voluntarily terminates his or her employment other than for Good
Reason; (2) an employee who retires; (3) an employee who is terminated for
"cause" (as defined below); (4) an employee who is covered under a written
employment agreement; and (5) an employee who is employed on a temporary basis.
For the purpose of this Plan and this Plan only, unless "Good Reason"
is defined otherwise in a currently effective Summary Plan Description, "Good
Reason" is defined as any
-2-
<PAGE>
involuntary reduction in base salary occurring after a Change in Control or the
relocation of an employee's workplace to a workplace that is more that 50 miles
(one way) from the facility where the employee worked at the occurrence of the
Change in Control.
For the purpose of this Plan and this Plan only, "cause" is defined as
(a) any act or omission by the employee that may have a material adverse effect
on the Company's business or on the employee's ability to perform services for
the Company, including, without limitation, the commission of any crime (other
than ordinary traffic violations) or (b) misconduct or neglect of duties by the
employee in connection with the business or affairs of the Company, including,
but not limited to, excessive absenteeism or tardiness, which has not been
corrected within the time period specified in a written notice to the employee
which sets forth such misconduct or neglect of duties.
5. Amount of Severance Benefits. The following provisions specify the
amount of severance benefits to be paid to an employee who the Company has
identified as eligible to receive severance benefits under the Plan.
The basic severance benefits package consists of severance pay at the
employee's base rate of pay (as in effect immediately before termination and
exclusive of any bonuses, commissions, overtime pay, or other extra forms of
compensation) for a period of time as specified in a currently effective summary
plan description. The employee may elect to receive severance benefits in a lump
sum. Separate benefit levels may be established for separate classes of
employees by separate summary plan descriptions. The severance pay shall not
terminate in the event of the employee's death during the period of severance
pay. If the employee begins new employment during the period of severance pay,
the employee's right to severance pay shall continue even though the new
employment has begun and the employee shall have no obligation
-3-
<PAGE>
to repay to the Company any severance pay paid to the employee after the
employee begins the new employment.
A terminated employee generally shall be entitled to any benefits
payable after or on account of termination of employment under any employee
pension or welfare benefit plans, stock option plans, or other plans or programs
or policies of the Company in accordance with their terms and conditions.
Except as otherwise provided in the severance benefits package provided
by the Company to an employee, the employee's coverage and participation in the
plans and programs of the Company generally shall end at termination of
employment. After termination of employment, the employee (1) shall not be
eligible for continued disability, life insurance, or medical or dental
coverage, provided the employee will have the normal rights of a terminated
employee to elect continued medical and dental coverage (or conversion to
individual coverage) where applicable; (2) shall not continue to accrue
seniority for any purpose, including, but not limited to, pension purposes; (3)
shall not be eligible to contribute or to receive Company contributions to a
Company 401(k) plan; and (4) shall not be eligible for any bonus plan. An
Employee who elects to receive continued medical and dental coverage will be
charged the same amount for such coverage as would be charged to a similarly
situated active employee for the period of salary continuation or the maximum
period of continued coverage, whichever is shorter, except that if the employee
requests and receives a lump sum payment of his or her severance benefit, the
employee shall bear the entire cost of the continued medical and dental
coverage.
6. Severance Agreement. An employee must sign a Severance Agreement
that contains a release of claims against the Company and an agreement not to
solicit the employment of employees of the Company as a condition to receiving
any benefits pursuant to this Plan.
-4-
<PAGE>
Each employee participating in the Plan will receive an original and a duplicate
Severance Agreement. Employees are entitled and advised to consult an attorney
of their own choosing prior to signing the Severance Agreement.
The Severance Agreement must be signed and returned to the Company
within ten (10) days from the date it is received. Exceptions to this
requirement are:
o Employees 40 or older on the date the Severance Agreement is received shall
have twenty-one (21) days to review and sign the Severance Agreement.
o Employees 40 or older on the date the Severance Agreement is received who
are terminated pursuant to a group layoff are provided with a forty-five
(45) day period in which to review and sign the Severance Agreement.
o Employees 40 or older on the date the Severance Agreement is received shall
have seven (7) days to revoke the Severance Agreement after it has been
signed by the employee. If the employee does not revoke the Severance
Agreement within seven (7) days, the Severance Agreement shall become
irrevocable. Revocations must be in writing and delivered to the General
Counsel of the Company.
7. Funding. The Plan is unfunded and all payments under the Plan shall
be made from the Company's general assets.
8. Duration of Plan. The Plan is effective May 26, 1998 and shall
continue in force until the date that is 15 months after the date of occurrence
of a Change of Control that occurs on or before June 30, 1999. If a Change in
Control does not occur on or before June 30, 1999, the Plan shall terminate on
June 30, 1999.
-5-
<PAGE>
9. Plan Administration. David Marshall (or his designee) shall be the
Plan Administrator. The general administration of the Plan and the
responsibility for carrying out its provisions shall be vested in the Plan
Administrator. The Plan Administrator shall be the "administrator" within the
meaning of Section 3(16) of ERISA and shall have all the responsibilities and
duties contained therein.
The Plan Administrator shall discharge his duties with respect to the
Plan solely in the interest of the participants and their beneficiaries, with
the care, skill, prudence and diligence under the circumstances then prevailing
that a prudent person acting in a like capacity and familiar with such matters
would use in the conduct of an enterprise of a like character and with like
objectives.
The Plan Administrator shall have such powers as are necessary to
discharge his duties, including, but not limited to, interpretation and
construction of the Plan, the determination of all questions of eligibility,
participation and benefits and all other related or incidental matters, and such
duties and powers of plan administration which are not assumed from time to time
by any other appropriate entity, individual or institution. The Plan
Administrator shall decide all such questions in accordance with the terms of
the controlling legal documents and applicable law, and his good faith decision
will be binding on the participant, the participant's spouse or other dependent
or beneficiary and all other interested parties.
The Plan Administrator may adopt rules and regulations of uniform
applicability in his interpretation and implementation of the Plan.
The Plan Administrator may require each participant to submit, in such
form as it shall deem reasonable and acceptable, proof of any information which
the Plan Administrator finds necessary or desirable for the proper
administration of the Plan.
-6-
<PAGE>
The Plan Administrator shall maintain such records as are necessary to
carry out the provisions of the Plan. The Plan Administrator shall also make all
disclosures which are required by ERISA and any subsequent amendments thereto.
If there has been a mistake in the amount of a participant's benefits
paid under the Plan, the mistake may be corrected by the Plan Administrator when
the mistake is discovered. The mistake may be corrected in any reasonable manner
authorized by the Plan Administrator (e.g., by offset against payments remaining
to be paid or by payments between the participant and the Company). In
appropriate circumstances (e.g., where a mistake is not timely discovered), the
Plan Administrator may waive the making of any correction.
10. Claims Procedure. Ordinarily, severance benefits will be paid to
eligible employees without their having to file a claim or take any action other
than signing a Severance Agreement. Any participant who believes he is entitled
to severance benefits under the Plan which are not being paid may submit a
written claim for payment to the Plan Administrator. Any claim for benefits
shall be in writing, addressed to the Plan Administrator and shall be sufficient
to notify the Administrator of the benefit claimed. If the claim of a
participant is denied, the Plan Administrator shall within a reasonable period
of time provide a written notice of denial to the participant. The notice will
include the specific reasons for denial, the provisions of the Plan on which the
denial is based, and the procedure for a review of the denied claim. Where
appropriate, it will also include a description of any additional material or
information necessary to complete or perfect the claim and an explanation of why
that material or information is necessary. The participant may request in
writing a review of a claim denied by the Plan Administrator and may review
pertinent documents and submit issues and comments in writing to the
Administrator. The Plan Administrator shall provide to the participant a written
-7-
<PAGE>
decision upon such request for review of a denied claim. The decision of the
Plan Administrator upon such review shall be final.
11. Income Tax Withholding, Payroll Taxes, and Other Deductions. The
Company may withhold from any payment under the Plan (1) any federal, state, or
local income or payroll taxes required by law to be withheld with respect to
such payment and (2) such other amounts as appropriately may be withheld under
the Company's payroll policies and procedures from time to time in effect.
12. Agent for Service of Legal Process. Legal process with respect to
claims under the Plan may be served on the General Counsel of the Company.
13. Expenses. All costs and expenses incurred in administering the
Plan, including the expenses of the Plan Administrator, shall be borne by the
Company.
14. Plan Not an Employment Contract. The Plan is not a contract between
the Company and any employee, nor is it a condition of employment of any
employee. Nothing contained in the Plan gives, or is intended to give, any
employee the right to be retained in the service of the Company, or to interfere
with the right of the Company to discharge or terminate the employment of any
employee at any time and for any reason. No employee shall have the right or
claim to benefits beyond those expressly provided in this Plan, if any. All
rights and claims are limited as set forth in the Plan.
15. Indemnification. To the extent permitted by law, the Plan
Administrator and all employees, officers, directors, agents and representatives
of the Plan Administrator shall be indemnified by the Company and held harmless
against any claim and the expenses of defending against such claims, resulting
from any action or conduct relating to the administration of the Plan except to
the extent that such claims arise from gross negligence, willful neglect, or
willful misconduct.
-8-
<PAGE>
16. Separability. In case any one or more of the provisions of this
Plan (or part thereof) shall be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
the other provisions hereof, and this Plan shall be construed as if such
invalid, illegal or unenforceable provisions (or part thereof) never had been
contained herein.
17. Non-Assignability. No right or interest of any participant in the
Plan shall be assignable or transferable in whole or in part either directly or
by operation of law or otherwise, including, but not limited to, execution,
levy, garnishment, attachment, pledge or bankruptcy, provided, however, that
this provision shall not be applicable in the case of obligations of a
participant to the Company.
-9-
<PAGE>
18. Amendment or Termination. The Plan may be amended, modified or
terminated at any time by the Company. However, in no event shall such
amendment, modification or termination reduce or diminish any severance benefits
owing under the Plan to an employee who has been notified of his or her
eligibility for benefits under the plan without the consent of the participant
to whom the benefits are owed.
19. Integration with Other Pay or Benefits Requirements. The severance
benefits provided for in the Plan are the maximum benefits that the Company will
pay. To the extent that the Company owes any amounts in the nature of severance
benefits under any other program, policy or plan of the Company, or to the
extent that any federal, state or local law, including, without limitation,
so-called "plant closing" laws, requires the Company to give advance notice or
make a payment of any kind to an employee because of that employee's involuntary
termination due to a layoff, reduction in force, plant or facility closing, sale
of business, or similar event, the benefits provided under this Plan or the
other arrangement shall either be reduced or eliminated to avoid any duplication
of payment. The Company intends for the benefits provided under this Plan to
satisfy any and all statutory obligations which may arise out of an employee's
involuntary termination for the foregoing reasons and the Plan Administrator
shall so construe and implement the terms of the Plan.
20. Governing Law. The Plan and the rights of all persons under the
Plan shall be construed in accordance with and under applicable provisions of
ERISA, and the regulations thereunder, and the laws of the Commonwealth of
Massachusetts to the extent not preempted by federal law.
-10-
<PAGE>
21. Gender and Number. Except where otherwise indicated by the context,
any masculine gender used herein shall also include the feminine and vice versa,
and the definition of any term herein in the singular shall also include the
plural, and vice versa.
IN WITNESS WEREROF, the undersigned have executed this Plan document
this 27th day of August, 1998.
BRI OP LIMITED PARTNERSHIP BERKSHIRE REALTY COMPANY, INC.
By: /s/ James W. Jackson By: /s/ James W. Jackson
------------------------- -----------------------------
Its: V.P., Human Resources Its: V.P., Human Resources
-11-
AMENDMENT NO. 1 TO
AMENDED AND RESTATED
EMPLOYMENT AND NONCOMPETITION AGREEMENT
January 2, 1998
Marianne Pritchard
128 Reed Street
Lexington, MA 02173
Re: Amendment No. 1 to Amended and Restated Employment and Noncompetition
Agreement dated March 1, 1996, as amended and restated on April -,
1997 among BRI OP Limited Partnership, Berkshire Realty Company, Inc.
and Marianne Pritchard (the "Agreement").
Dear Ms. Pritchard:
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 Financial 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 Financial Officer, and her 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").
(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
<PAGE>
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 George or Douglas Krupp 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 Financial 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:
2
<PAGE>
Annual Loan Forgiveness Based on Performance
<TABLE>
<CAPTION>
Total Shareholder Additional Percent
Return Requirement of Loan Forgiven
<S> <C>
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%
</TABLE>
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:
--------------------------------
MARIANNE PRITCHARD
3
AMENDMENT NO. 1 TO
EMPLOYMENT AND NONCOMPETITION AGREEMENT
January 2, 1998
David Olney
19 Carriage Drive
Lincoln, RI 02865
Re: Amendment No. 1 to Employment and Noncompetition Agreement dated
March 1, 1997 among BRI OP Limited Partnership, Berkshire Realty
Company, Inc. and David Olney (the "Agreement").
Dear Mr. Olney:
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").
1
<PAGE>
(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 George or Douglas Krupp 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:
2
<PAGE>
Annual Loan Forgiveness Based on Performance
<TABLE>
<CAPTION>
Total Shareholder Additional Percent
Return Requirement of Loan Forgiven
<S> <C>
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%
</TABLE>
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:
--------------------------------
DAVID OLNEY
3
AMENDMENT NO. 1 TO
EMPLOYMENT AND NONCOMPETITION AGREEMENT
January 2, 1998
Ridge Frew
791 Willow Creek Drive
Atlanta, GA 30328
Re: Amendment No. 1 to Employment and Noncompetition Agreement dated
March 1, 1997 among BRI OP Limited Partnership, Berkshire Realty
Company, Inc. and Ridge Frew (the "Agreement").
Dear Mr. Frew:
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 Operating 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 Operating 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 other 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").
1
<PAGE>
(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 George or Douglas Krupp 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 Operating 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:
2
<PAGE>
Annual Loan Forgiveness Based on Performance
<TABLE>
<CAPTION>
Total Shareholder Additional Percent
Return Requirement of Loan Forgiven
<S> <C>
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%
</TABLE>
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:
--------------------------------
RIDGE FREW
3
AMENDMENT NO. 1 TO
EMPLOYMENT AND NONCOMPETITION AGREEMENT
February 28, 1997
David F. Marshall
President and Chief Executive Officer
Berkshire Realty Company, Inc.
470 Atlantic Avenue
Boston, Massachusetts 02210
Re: Amendment No. 1 to Employment and Noncompetition Agreement dated
March 1, 1996 among BRI OP Limited Partnership, Berkshire Realty
Company, Inc. and David F. Marshall (the "Agreement").
Dear Mr. Marshall:
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"):
<PAGE>
(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 George or
Douglas Krupp 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."
-2-
<PAGE>
(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
<TABLE>
<CAPTION>
Total Shareholder Additional Percent
Return Requirement of Loan Forgiven
<S> <C>
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%
</TABLE>
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.
-3-
<PAGE>
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. Paul Finnegan
_____________________________
Its: Chairman of the
Compensation Committee
By: /s/ J. Paul Finnegan
_______________________________
Its: Chairman of the
Compensation Committee
Employee:
/s/ David F. Marshall
--------------------------------
DAVID F. MARSHALL
-4-
<PAGE>
PROMISSORY NOTE
$1,000,000.00 March 4, 1997
FOR VALUE RECEIVED, David F. Marshall ("Borrower") promises to pay to the order
of BERKSHIRE REALTY COMPANY, INC. ("Payee") at 470 Atlantic Avenue, Boston,
Massachusetts 02210, 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 March 1, 1996 among Payee, BP 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
Page 1 of 3
<PAGE>
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
George or Douglas Krupp 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:
Page 2 of 3
<PAGE>
If to the Payee: Berkshire Realty Company, Inc.
470 Atlantic Avenue
Boston, MA 02210
Attention: Chairman
with a copy to: Alexander J. Jordan, Jr., Esquire
Peabody & Brown
101 Federal Street
Boston, MA 02110-1832
If to the Borrower: David F. Marshall
17 High Rock Road
Wayland, MA 01778
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/David F. Marshall
_________________________
David F. Marshall
Borrower
Page 3 of 3
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") dated March 1, 1996, is
made by and among BRI OP Limited Partnership ("BRI OP"), its General Partner,
Berkshire Realty Company, Inc., a Delaware corporation (the "General Partner"),
and DAVID F. MARSHALL, an individual ("Employee").
WITNESSETH THAT:
---------------
WHEREAS, BRI OP has acquired the advisory services business of Berkshire
Companies Limited Partnership;
WHEREAS, the General Partner manages BRI OP;
WHEREAS, the General Partner is managed by its Board of Directors;
WHEREAS, the Compensation Committee of the Board of Directors is
responsible for negotiating employment contracts with senior management and
staff of the General Partner subject to approval by the Board;
WHEREAS, the General Partner and BRI OP should for management, business
and accountability reasons have the same senior executives;
WHEREAS, BRI OP and the General Partner shall be referred to herein
collectively as the "Company";
WHEREAS, all payments and health and welfare benefits payable hereunder
to Employee will be paid for or provided by BRI OP;
WHEREAS, the Company's principal business is the ownership and operation
of high quality multi-family properties and community and regional shopping
centers;
WHEREAS, BRI OP and the General Partner desire to employ the Employee as
President and Chief Operating Officer of BRI OP and the General Partner,
respectively, on the terms hereinafter set forth; and
WHEREAS, the Employee wishes to be employed by BRI OP and the General
Partner as their President and Chief Operating Officer on the terms hereinafter
set forth;
NOW, THEREFORE, in consideration of the mutual covenants and promises set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby
<PAGE>
acknowledged, BRI OP, the General Partner and the Employee hereby agree as
follows:
1. Employment. The Company will employ Employee, and Employee will
accept such employment, upon the terms and subject to the conditions set forth
in this Agreement.
2. Capacity and Duties. Employee shall serve the Company as its
President and Chief Operating Officer, and his duties and responsibilities shall
be those consistent with these 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 other individual as
may be designated from time to time by the Board of Directors.
3. Obligations of Employee. During the term of his employment under this
Agreement:
(a) Employee shall devote all of his business time and efforts to the
business of the Company and use faithful and diligent efforts to promote the
business interests of the Company and its subsidiaries and affiliates over which
Employee has management responsibility.
(b) Employee shall not, without the prior written consent of the Board of
Directors in each instance, whether as an employee, consultant, independent
contractor or otherwise, be engaged in any other business activities on behalf
of any other person, firm, corporation, partnership, proprietorship or other
entity.
4. Term of Employment; Termination. The term of Employee's employment
hereunder shall commence as of 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). Any
termination of this Agreement within two years of a Change in Control of the
Company (as herein defined) also shall be deemed a termination by the Company.
For purposes of this Agreement, a "Change in Control" of the Company shall mean
(i) the acquisition by any person (other than the Employee), corporation,
partnership or other person or entity of 10% or more beneficial ownership (as
defined in Rule 13d in effect as of such date under the Securities Exchange Act
of 1934) of the outstanding voting stock of the Company; (ii) the merger or
consolidation of the Company and any other corporation or entity; or (iii) the
sale of all or substantially all of the assets of the Company.
-2-
<PAGE>
(b) delivery by the Company to Employee of written notice of termination
for "cause". The term "cause" means any termination by the Company by reason of
(i) persistent and willful neglect of material duties by Employee after written
notice and an opportunity to immediately cure such neglect to the satisfaction
of the Board of Directors; (ii) the entry against Employee of a guilty plea, or
a conviction, judgment or order in any proceeding of which Employee had notice
and the opportunity to defend himself before any court relating to (y) a willful
violation of any material law, rule or regulation applicable to the business of
the Company or its subsidiaries or affiliates, unless such breach arises out of
and is consistent with the express written direction of the Board of Directors
or is undertaken with the express prior written consent of the Board of
Directors, or (z) a violation of any law involving fraud, deceit or criminal
misrepresentation; (iii) the entry against Employee of a guilty plea, or a
conviction or judgment in any proceeding of which Employee had notice and the
opportunity to defend himself before any court relating to any charge which
would constitute a felony (other than negligent vehicular homicide) if
convicted; (iv) Employee engaging in any act involving moral turpitude, which
act is, or could reasonably be expected to be, injurious to the financial
interests or reputation of the Company or any of its subsidiaries or affiliates
in any material respect; (v) Employee willfully misappropriating substantial
assets of the Company or any of its subsidiaries or affiliates; (vi) Employee
engaging in gross misconduct which is, or which could reasonably be expected to
be, injurious to the Company or any of its subsidiaries or affiliates in any
material respect; or (vii) Employee breaching any provisions of this Agreement
and such breach has a material adverse effect on the Company after written
notice and an opportunity to immediately cure such breach to the satisfaction of
the Board of Directors, unless such breach arises out of and is consistent with
the express written direction of the Board of Directors or is undertaken with
the express prior written consent of the Board of Directors.
(c) the date one month after the date of the delivery by Employee to the
Company of written notice of termination; provided, however, that if the Company
receives such notice from Employee, the Company shall have the right,
exercisable by written notice to Employee, to accelerate the Employment
Termination Date to such date on or after the date of the Employee's notice to
Company as the Company shall determine in its discretion.
(d) the death of Employee;
-3-
<PAGE>
(e) the delivery to Employee of written notice of termination by the
Company if Employee shall suffer a physical or mental disability which renders
Employee, (i) in the reasonable judgment of the carrier if a long-term
disability policy covering the Employee provided by the Company is in force or,
(ii) if no such policy is in force, in the reasonable judgment of the Board of
Directors, unable to perform his duties and obligations under this Agreement for
90 consecutive days or 120 days in any period of 180 consecutive days;
provided, however, that no termination of Employee's employment under this
Agreement shall diminish or affect in any way Employee's rights to payments
provided for hereunder which have accrued to and including the Employment
Termination Date, and provided further, that no termination of Employee's
employment under this Agreement for cause or otherwise (whether such termination
is voluntary or involuntary) shall diminish or affect the Company's obligations
to Employee, or Employee's obligations to the Company, under Section 10 hereof
with respect to Non-Disclosure, Section 11 hereof with respect to the return of
Company property, or Section 12 hereof with respect to Noncompetition.
5. Base Salary; Bonus; Severance Compensation. From the Commencement
Date through the Employment Termination Date, the Company shall pay Employee a
base salary (the "Base Salary") at an annual rate of not less than $325,000
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.
During the term of this Agreement Employee shall participate in a bonus
plan comparable to the Annual Threshold Target Maximum Bonus Plan under his
prior employment with comparable targets established. 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 Board of Directors will
consider whether in their sole discretion to make a bonus award to Employee on a
pro rata basis for the period of the calendar year prior to the Employment
Termination Date. For calendar year 1996 the Employee's bonus earned will be
prorated with his prior employer and the Company will be responsible for the
payment of Employee's bonus, if any, prorated from March 1, 1996 to year end.
If Employee's employment hereunder is terminated pursuant to subsection
4(a) hereof, the Company shall pay Employee severance compensation in eighteen
(18) monthly payments at the same rate as the Base Salary in effect at the
Employment Termination Date.
-4-
<PAGE>
The Company shall deduct from payments of the Base Salary and bonus
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.
6. Stock Options. The Company, as an inducement to Employee to enter
into this Agreement at the Commencement Date shall grant Employee options to
purchase 200,000 shares of the Company's common stock exercisable no later than
ten years following the Commencement Date all as set forth in the Berkshire
Realty Company, Inc. Stock Option Agreement and Non-Qualified Stock Option
Agreement both dated March 1, 1996 (collectively, the "Option Agreement").
Should Employee's employment be terminated for "cause" or for "misconduct" as
those terms are used in the Option Agreement, said Option Agreement provides
that the option must be exercised within thirty days of the Employment
Termination Date. Should Employee's termination occur for other reasons, under
the terms of the Option Agreement, said Option may be exercisable on Employee's
behalf for a period of three (3) years from the Employment Termination Date.
7. Promotion to Chief Executive Officer. If at the sole discretion of the
Board of Directors, the Employee's Capacity and Duties are not changed to that
of Chief Executive Officer of the Company within two years of the Commencement
Date, Employee shall have the right to terminate this Agreement with thirty days
notice as prescribed by Section 20 hereof. If Employee gives said notice,
Employee will have the right to elect (i) to leave the Company's employ and
receive severance compensation in six (6) monthly payments at the same rate as
the Base Salary in effect at the Employment Termination Date, or (ii) to
continue in the capacity of Chief Operating Officer until the shareholder vote
on the Plan of Liquidation required to be presented to the shareholders by
December 31, 1998 pursuant to the General Partner's Restated Certificate of
Incorporation, as amended, and receive his Base Salary and benefits as then in
effect and, in addition, severance compensation in eighteen (18) monthly
payments at the same rate as the Base Salary then in effect.
8. 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 his employment
prior to the Commencement Date. In addition, Employee shall be entitled to a
continuation of health insurance benefits under the Company's group health
insurance program or COBRA, as the case may be, until any severance payments due
Employee hereunder have been paid or the Employee is eligible to participate in
a group health insurance plan with another employer, whichever comes first.
-5-
<PAGE>
9. Expense Reimbursement. Employee shall be entitled to reimbursement
from the Company for the reasonable business costs and expenses which he incurs
in connection with the performance of his duties and obligations under this
Agreement provided that the nature and amount of such expenses are incurred and
approved in accordance with the Company's business expense reimbursement policy
in effect from time to time as approved by the Board of Directors.
10. Non-Disclosure. Employee acknowledges that as a result of Employee's
employment by the Company, Employee has and will become informed of, and have
access to, valuable and confidential information of the Company or information
which is not generally known to those outside of the Company (the "Confidential
Information"), including but not limited to trade secrets, ways of business,
technical information, know-how, plans, projections, business opportunities,
proposed acquisitions, proposed dispositions, specifications, and the identity
of partners and stockholders and that this Confidential Information, even though
it may be contributed, developed or acquired by Employee, is the exclusive
property of the Company to be held by Employee in trust and solely for the
Company's benefit. Accordingly, Employee shall not at any time during or
subsequent to his employment by the Company reveal, report, publish, transfer or
otherwise disclose to any person, corporation or other entity, any of the
Confidential Information without the prior written consent of the Board of
Directors, except to responsible officers and employees of the Company and other
responsible persons whom the Board of Directors agrees in writing are in a
contractual or fiduciary relationship with the Company or who have a need for
this information for purposes that are in the best interests of the Company.
These provisions shall not prohibit Employee from disclosing information which
legally is or becomes of general public knowledge from authorized sources other
than Employee.
11. Return of Company Property. Upon the termination of this Agreement,
Employee shall promptly deliver to the Company all property of the Company
including, without limitation, lists, drawings, manuals, letters, notes,
notebooks, reports and copies thereof and all other materials, including those
of a secret or confidential nature, relating to the Company's business that are
in Employee's possession or control. Employee agrees that, upon the request of
the Company, he will represent to the Company that he has complied with the
provisions of this Section at the time he ceases to be an employee of the
Company.
12. Noncompetition.
(a) Employee agrees that during the term of this Agreement and for
one year after the Employment Termination Date, Employee shall not (i) directly
or indirectly solicit any person
-6-
<PAGE>
(natural or otherwise) to 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 purchaser from or seller to the Company of such type
of property during the twelve (12) months prior to the Employment Termination
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 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 his employment of his own volition,
other than pursuant to Section 7 above, this restriction upon recruiting
employees or consultants shall run for two (2) years after the Employment
Termination Date.
(b) During any period that Employee is entitled to receive and is
paid severance compensation in accordance with Section 5 or 7 hereof, if
Employee shall become an employee, officer, director, shareholder, principal,
agent, partner or consultant or otherwise be engaged in or have a financial or
other interest in any business which competes with the Company, or their
respective subsidiaries or affiliates or providers under contract of property
management or administrative services, equipment or facilities (which activity
by the Employee is not prohibited by this Agreement), any base salary received
from such activities shall be set off against any severance pay which he is
entitled to receive from the Company. Notwithstanding the foregoing, Employee
may make personal investments in the equity securities of any publicly traded
company provided that any such investment does not exceed one percent (1%) of
the market capitalization of the class of securities of the company in which his
investment is made.
(c) The restrictions against activities set forth in Section 12(a)
and (b) above are considered by the parties to be reasonable for the purposes of
protecting the business of the Company. If any restriction is found by a court
of competent jurisdiction to be unenforceable because it extends for too long a
period of time, over too broad a range of activities or in too large a
geographic area, that restriction shall be interpreted to extend only over the
maximum period of time, range of activities or geographic area as to which it
may be enforceable.
13. Remedies. Employee acknowledges that the Company would not have an
adequate remedy at law for money damages if the covenants contained in Sections
10, 11 or 12 were not complied with in accordance with their terms, and that any
breach or threatened breach thereof would result in immediate and irrepar-
-7-
<PAGE>
able injury to the Company. Therefore, Employee agrees that in the event of a
threatened or anticipated breach or actual breach by Employee of any of the
provisions of Section 10, 11 or 12, the Company shall be entitled (a) to inform
in writing all potential or new employers, partners, shareholders, officers,
directors or borrowers of Employee of the terms of this Agreement and (b) to an
injunction restraining Employee from violating Sections 10, 11 or 12. Employee
covenants and agrees that if he violates any of the covenants and agreements in
Section 10, 11 or 12, the Company shall be entitled to an accounting and
repayment of all profits, compensation, commissions, remuneration or benefits
which Employee directly or indirectly realizes or may realize as a result of or
in connection with any such violation. In addition to any remedies set forth in
this Section, the Company may pursue all other legal or equitable remedies that
may be available to it for a breach or threatened breach, including the recovery
of damages.
14. Successors and Assigns. The Agreement shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, that Employee's duties and obligations hereunder may not be
delegated or assigned by him in any manner.
15. Counterparts. This Agreement may be executed in two or more
counterparts, all of which, when taken together, shall constitute one and the
same Agreement.
16. Governing Law. This Agreement, and the validity and interpretation
hereof and the performance by the parties hereto of their respective duties and
obligations hereunder, shall be governed by the laws of The Commonwealth of
Massachusetts without regard to principles of conflicts of laws. Jurisdiction
and venue over any legal action by either party under this Agreement shall be
Boston, Massachusetts.
17. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to make the provision valid and
enforceable under the applicable law, but if any provision of this Agreement
shall be or become invalid or prohibited under any applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
only, without thereby invalidating the remainder of such provisions or the
remaining provisions of this Agreement.
18. Amendments and Modifications. No modification, extension, or waiver
of any provisions hereof or any release of any right hereunder shall be valid,
unless the same is in writing and is consented to by all parties hereto.
19. Entire Agreement. This Agreement and the Exhibit hereto embody the
entire understanding and agreement of the parties hereto relating to the subject
matter hereof.
-8-
<PAGE>
20. Notice. All notices, demands or other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered in
person, by United States mail, certified or registered, with return receipt
requested, or by telefax, telegram or telex:
(a) If to the Employee, to:
David F. Marshall
17 High Rock Road
Wayland, MA 01778
Telefax number: (617) 556-1507
(b) If to the Company, to:
BRI OP Limited Partnership
Berkshire Realty Company, Inc.
Harbor Plaza
470 Atlantic Avenue
Boston, MA 02210
Attention: Laurence Gerber
Telefax number: (617) 423-8916
With a copy to:
Peabody & Brown
101 Federal Street
Boston, MA 02110-1832
Attention: Alexander J. Jordan, Esq.
Telefax number: (617) 345-1300
or to such other addresses or telefax numbers as the parties may have furnished
to each other by notice pursuant to the provisions of this Section. Any such
notice, demand or other communication shall be deemed to have been given on the
date actually delivered to the address to which it is directed.
21. Captions. Captions and paragraph headings used herein are for
convenience only and are not a part of this Agreement and shall not be used in
construing or interpreting any provision contained herein.
22. Gender. Whenever the singular is used herein and where required by
the context, the same shall include the plural, and the neuter gender shall
include the masculine and feminine genders.
23. Survival. The provisions of Sections 5, 6 and 7, 8 and 9 insofar as
they provide for payments to be made to Employee after termination of this
Agreement and Sections 10 through 13 hereof shall survive the termination of
this Agreement by Employee or
-9-
<PAGE>
the Company, whether voluntary of involuntary, or with or without cause.
24. 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 20 of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal effective on the date first above set forth.
BRI OP LIMITED PARTNERSHIP BERKSHIRE REALTY COMPANY, INC.
By: Berkshire Realty Company, Inc.
Its General Partner
By: /s/ J. Paul Finnegan
_____________________________
Its: Chairman of the
Compensation Committee
By: /s/ J. Paul Finnegan
_______________________________
Its: Chairman of the
Compensation Committee
Employee:
/s/ David F. Marshall
-------------------------------
DAVID F. MARSHALL
-10-
AMENDED AND RESTATED EMPLOYMENT AND
NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AGREEMENT dated March 1, 1996, as amended and restated
on April -, 1997 (the "Agreement"), is made by and among BRI OP Limited
Partnership ("BRI OP"), its General Partner, Berkshire Realty Company, Inc., a
Delaware corporation (the "Company"), and Marianne Pritchard, an individual
("Employee").
WITNESSETH THAT:
---------------
WHEREAS, the General Partner manages BRI OP;
WHEREAS, the General Partner is managed by its Board of Directors;
WHEREAS, the Compensation Committee of the Board of Directors is
responsible for negotiating employment contracts with senior management and
staff of the General Partner subject to approval by the Board;
WHEREAS, the General Partner and BRI OP should for management, business
and accountability reasons have the same senior executives;
WHEREAS, BRI OP and the General Partner shall be referred to herein
collectively as the "Company";
WHEREAS, all payments and health and welfare benefits payable hereunder
to Employee will be paid for or provided by BRI OP;
WHEREAS, the Company's principal business is the ownership and
operation of high quality multi-family properties and community and regional
shopping centers;
WHEREAS, BRI OP and the General Partner desire to retain the Employee
as Senior Vice President, Chief Financial Officer and Treasurer of BRI OP and
the General Partner, respectively, on the terms hereinafter set forth; and
WHEREAS, the Employee wishes to be employed by BRI OP and the General
Partner as their Senior Vice President, Chief Financial Officer and Treasurer on
the terms hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, BRI OP, the General Partner and
the Employee hereby agree as follows:
1. Employment. The Company will employ Employee, and Employee will
accept such employment, upon the terms and subject to the conditions set forth
in this Agreement.
<PAGE>
2. Capacity and Duties. Employee shall serve the Company as its Senior
Vice President, Chief Financial Officer and Treasurer, and her duties and
responsibilities shall be those consistent with this position, 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 Operating Officer or
such other individual as may be designated from time to time by the Board of
Directors.
3. Obligations of Employee. During the term of her employment under
this Agreement:
(a) Employee shall devote all of her business time and efforts to the
business of the Company and use faithful and diligent efforts to promote the
business interests of the Company and its subsidiaries and affiliates over which
Employee has management responsibility.
(b) Employee shall not, without the prior written consent of the Board
of Directors in each instance, whether as an employee, consultant, independent
contractor or otherwise, be engaged in any other business activities on behalf
of any other person, firm, corporation, partnership, proprietorship or other
entity.
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). Any
termination of this Agreement within two years of a Change in Control of the
Company (as herein defined) also shall be deemed a termination by the Company.
For purposes of this Agreement, a "Change in Control" of the Company shall mean
(i) the acquisition by any person (other than the Employee), corporation,
partnership or other person or entity of 10% or more beneficial ownership (as
defined in Rule 13d in effect as of such date under the Securities Exchange Act
of 1934) of the outstanding voting stock of the Company; (ii) the merger or
consolidation of the Company and any other corporation or entity; or (iii) the
sale of all or substantially all of the assets of the Company;
(b) the delivery by the Company to Employee of written notice of
termination for "cause". The term "cause" means any termination by the Company
by reason of (i) persistent and willful neglect of material duties by Employee
after written notice and an opportunity to immediately cure such neglect to the
satisfaction of the Board of Directors; (ii) the entry against Employee of a
guilty plea, or a conviction, judgment or order in any proceeding of which
Employee had notice and the opportunity to defend herself before any court
relating to (y) a willful violation of any material law, rule or regulation
applicable to the business of the Company or its subsidiaries or affiliates,
unless such breach arises out of and is consistent with the express written
direction of the Board of Directors or is undertaken with the express prior
written consent of the Board of Directors, or (z) a violation of any law
involving fraud, deceit or criminal misrepresentation; (iii) the entry against
Employee of a guilty plea, or a conviction or judgment in any proceeding of
which Employee had notice and the opportunity to defend herself before any court
relating to any charge which would constitute a felony
-2-
<PAGE>
(other than negligent vehicular homicide) if convicted; (iv) Employee engaging
in any act involving moral turpitude, which act is, or could reasonably be
expected to be, injurious to the financial interests or reputation of the
Company or any of its subsidiaries or affiliates in any material respect; (v)
Employee willfully misappropriating substantial assets of the Company or any of
its subsidiaries or affiliates; (vi) Employee engaging in gross misconduct which
is, or which could reasonably be expected to be, injurious to the Company or any
of its subsidiaries or affiliates in any material respect; or (vii) Employee
breaching any provisions of this Agreement and such breach has a material
adverse effect on the Company after written notice and an opportunity to
immediately cure such breach to the satisfaction of the Board of Directors,
unless such breach arises out of and is consistent with the express written
direction of the Board of Directors or is undertaken with the express prior
written consent of the Board of Directors;
(c) the date one month after the date of the delivery by Employee to
the Company of written notice of termination; provided, however, that if the
Company receives such notice from Employee, the Company shall have the right,
exercisable by written notice to Employee, to accelerate the Employment
Termination Date to such date on or after the date of the Company's notice to
Employee as the Company shall determine in its discretion;
(d) the death of Employee;
(e) the delivery to Employee of written notice of termination by the
Company if Employee shall suffer a physical or mental disability which renders
Employee, (i) in the reasonable judgment of the carrier if a long-term
disability policy covering the Employee provided by the Company is in force or,
(ii) if no such policy is in force, in the reasonable judgment of the Board of
Directors, unable to perform her duties and obligations under this Agreement for
90 consecutive days or 120 days in any period of 180 consecutive days;
provided, however, that no termination of Employee's employment under this
Agreement shall diminish or affect in any way Employee's rights to payments
provided for hereunder which have accrued to and including the Employment
Termination Date, and provided further, that no termination of Employee's
employment under this Agreement for cause or otherwise (whether such termination
is voluntary or involuntary) shall diminish or affect the Company's obligations
to Employee, or Employee's obligations to the Company, under Section 9 hereof
with respect to non-disclosure, Section 10 hereof with respect to the return of
Company property, or Section 11 hereof with respect to Noncompetition.
5. Base Salary; Bonus; Severance Compensation. From the Commencement
Date through the Employment Termination Date, the Company shall pay Employee a
base salary (the "Base Salary") at an annual rate of not less than $157,000
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.
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. 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 Board of
-3-
<PAGE>
Directors will consider whether in their sole discretion to make a bonus award
to Employee on a pro rata basis for the period of the calendar year prior to the
Employment Termination Date. For calendar year 1996 the Employee's bonus earned
will be prorated with her prior employer, and the Company will be responsible
for the payment of Employee's bonus, if any, prorated from March 1, 1996 to year
end.
If Employee's employment hereunder is terminated pursuant to
subsection 4(a) hereof, the Company shall pay Employee severance compensation in
nine monthly payments at the same rate as the Base Salary in effect at the
Employment Termination Date, provided, however, if such termination is as a
result of a Change of Control (as defined in subsection 4(a)), the Company shall
pay Employee severance compensation for fifteen months.
The Company shall deduct from payments of the Base Salary and
bonus 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.
6. Stock Options. The Company, as an inducement to Employee to enter
into this Agreement at the Commencement Date shall grant Employee the option to
purchase 40,000 shares of the Company's common stock exercisable no later than
ten years following the Commencement Date all as set forth in the Berkshire
Realty Company, Inc. Stock Option Agreement and Non-Qualified Stock Option
Agreement both dated March 1, 1996 (collectively, the "Option Agreement").
Should Employee's employment be terminated for "cause" or for "misconduct" as
those terms are used in the Option Agreement, said Option Agreement provides
that the option must be exercised within thirty days of the Employment
Termination Date. Should Employee's termination occur for other reasons, under
the terms of the Option Agreement, said Option may be exercisable on Employee's
behalf for a period of one year from the Employment Termination Date.
In addition, Employee will be eligible to participate in the
Berkshire Realty Company, Inc. 1996 Stock Option Plan to the extent determined
by the Board of Directors in its discretion.
7. 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, Employee shall be entitled to a
continuation of health insurance benefits under the Company's group health
insurance program or COBRA, as the case may be, until any severance payments due
Employee hereunder have been paid or the Employee is eligible to participate in
a group health insurance plan with another employer, whichever comes first.
8. Expense Reimbursement. Employee shall be entitled to reimbursement
from the Company for the reasonable business costs and expenses which she incurs
in connection with the performance of her duties and obligations under this
Agreement provided that the nature and amount of such expenses are incurred and
approved in accordance with the Company's business expense reimbursement policy
in effect from time to time as approved by the Board of Directors. Reimbursement
shall be conditioned upon presentation of expense
-4-
<PAGE>
statements or vouchers or such other supporting information as the Company may
from time to time require.
9. Non-Disclosure. Employee acknowledges that as a result of Employee's
employment by the Company, Employee has and will become informed of, and have
access to, valuable and confidential information of the Company or information
which is not generally known to those outside of the Company (the "Confidential
Information"), including but not limited to trade secrets, ways of business,
technical information, know-how, plans, projections, business opportunities,
proposed acquisitions, proposed dispositions, specifications, and the identity
of partners and stockholders and that this Confidential Information, even though
it may be contributed, developed or acquired by Employee, is the exclusive
property of the Company to be held by Employee in trust and solely for the
Company's benefit. Accordingly, Employee shall not at any time during or
subsequent to her employment by the Company reveal, report, publish, transfer or
otherwise disclose to any person, corporation or other entity, any of the
Confidential Information without the prior written consent of the Board of
Directors, except to responsible officers and employees of the Company and other
responsible persons whom the Board of Directors agrees in writing are in a
contractual or fiduciary relationship with the Company or who have a need for
this information for purposes that are in the best interests of the Company.
These provisions shall not prohibit Employee from disclosing information which
legally is or becomes of general public knowledge from authorized sources other
than Employee.
10. Return of Company Property. Upon the termination of this Agreement,
Employee shall promptly deliver to the Company all property of the Company
including, without limitation, lists, drawings, manuals, letters, notes,
notebooks, reports and copies thereof and all other materials, including those
of a secret or confidential nature, relating to the Company's business that are
in Employee's possession or control. Employee agrees that, upon the request of
the Company, she will represent to the Company that she has complied with the
provisions of this Section at the time she ceases to be an employee of the
Company.
11. Noncompetition.
(a) Employee agrees that during the term of this Agreement and
for nine (9) months after the Employment Termination Date (except that in the
event of termination due to a Change of Control, as defined in subsection 4(a)
hereof, this Section 11 shall not apply to Employee), Employee shall not (i)
directly or indirectly solicit any person (natural or otherwise) to 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 purchaser
from or seller to the Company of such type of property during the twelve (12)
months prior to the Employment Termination 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 or her employment with, or otherwise cease his or her
relationship with, the Company, or hire any such employee or consultant who has
left the employ of the Company within one 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.
-5-
<PAGE>
(b) During any period that Employee is entitled to receive and
is paid severance compensation in accordance with Section 5 hereof, if Employee
shall become an employee, officer, director, shareholder, principal, agent,
partner or consultant or otherwise be engaged in or have a financial or other
interest in any business which competes with the Company, or its subsidiaries or
affiliates or providers under contract of property management or administrative
services, equipment or facilities (which activity by the Employee is not
prohibited by this Agreement), any base salary received from such activities
shall be set off against any severance pay which she is entitled to receive from
the Company. Notwithstanding the foregoing, Employee may make personal
investments in the equity securities of any publicly traded company provided
that any such investment does not exceed one percent (1%) of the market
capitalization of the class of securities of the company in which her investment
is made.
(c) The restrictions against activities set forth in Section
11(a) and (b) above are considered by the parties to be reasonable for the
purposes of protecting the business of the Company. If any restriction is found
by a court of competent jurisdiction to be unenforceable because it extends for
too long a period of time, over too broad a range of activities or in too large
a geographic area, that restriction shall be interpreted to extend only over the
maximum period of time, range of activities or geographic area as to which it
may be enforceable.
12. Remedies. Employee acknowledges that the Company would not have an
adequate remedy at law for money damages if the covenants contained in Sections
9, 10 or 11 were not complied with in accordance with their terms, and that any
breach or threatened breach thereof would result in immediate and irreparable
injury to the Company. Therefore, Employee agrees that in the event of a
threatened or anticipated breach or actual breach by Employee of any of the
provisions of Section 9, 10 or 11, the Company shall be entitled (a) to inform
in writing all potential or new employers, partners, shareholders, officers,
directors or borrowers of Employee of the terms of this Agreement and (b) to an
injunction restraining Employee from violating Sections 9, 10 or 11. Employee
covenants and agrees that if she violates any of the covenants and agreements in
Section 9, 10 or 11, the Company shall be entitled to an accounting and
repayment of all profits, compensation, commissions, remuneration or benefits
which Employee directly or indirectly realizes or may realize as a result of or
in connection with any such violation. In addition to any remedies set forth in
this Section, the Company may pursue all other legal or equitable remedies that
may be available to it for a breach or threatened breach, including the recovery
of damages.
13. Successors and Assigns. The Agreement shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, that Employee's duties and obligations hereunder may not be
delegated or assigned by her in any manner.
14. Counterparts. This Agreement may be executed in two or more
counterparts, all of which, when taken together, shall constitute one and the
same Agreement.
15. Governing Law. This Agreement, and the validity and interpretation
hereof and the performance by the parties hereto of their respective duties and
obligations hereunder, shall be governed by the laws of The Commonwealth of
Massachusetts without regard to
-6-
<PAGE>
principles of conflicts of laws. Jurisdiction and venue over any legal action by
either party under this Agreement shall be Boston, Massachusetts.
16. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to make the provision valid and
enforceable under the applicable law, but if any provision of this Agreement
shall be or become invalid or prohibited under any applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
only, without thereby invalidating the remainder of such provisions or the
remaining provisions of this Agreement.
17. Amendments and Modifications. No modification, extension, or waiver
of any provisions hereof or any release of any right hereunder shall be valid,
unless the same is in writing and is consented to by all parties hereto.
18. Entire Agreement. This Agreement embodies the entire understanding
and agreement of the parties hereto relating to the subject matter hereof.
19. Notice. All notices, demands or other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered in
person, by United States mail, certified or registered, with return receipt
requested, or by telefax, telegram or telex:
(a) If to the Employee, to:
Marianne Pritchard
128 Reed Street
Lexington, MA 02173
Telefax number: (617) 556-1507
(b) If to the Company, to:
BRI OP Limited Partnership
Berkshire Realty Company, Inc.
Harbor Plaza
470 Atlantic Avenue
Boston, MA 02210
Attention: David F. Marshall
Telefax number: (617) 556-1507
With a copy to:
Peabody & Brown
101 Federal Street
Boston, MA 02110-1832
Attention: Alexander J. Jordan, Esq.
Telefax number: (617) 345-1300
or to such other addresses or telefax numbers as the parties may have furnished
to each other by notice pursuant to the provisions of this Section. Any such
notice, demand or other
-7-
<PAGE>
communication shall be deemed to have been given on the date actually delivered
to the address to which it is directed.
20. Captions. Captions and paragraph headings used herein are for
convenience only and are not a part of this Agreement and shall not be used in
construing or interpreting any provision contained herein.
21. Gender. Whenever the singular is used herein and where required by
the context, the same shall include the plural, and the neuter gender shall
include the masculine and feminine genders.
22. Survival. The provisions of Sections 5, 6, 7 and 8 insofar as they
provide for payments to be made to Employee after termination of this Agreement
and Sections 9 through 12 hereof shall survive the termination of this Agreement
by Employee or the Company, whether voluntary of involuntary, or with or without
cause.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal effective on the date first above set forth.
BRI OP LIMITED PARTNERSHIP BERKSHIRE REALTY COMPANY, INC.
By: Berkshire Realty Company, Inc.
Its General Partner
By: /s/ J. Paul Finnegan
_____________________________
Its: Chairman of the
Compensation Committee
By: /s/ J. Paul Finnegan
_______________________________
Its: Chairman of the
Compensation Committee
Employee:
-------------------------------
MARIANNE PRITCHARD
- 8 -
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of March 1, 1997, is
made by and among BRI OP Limited Partnership ("BRI OP"), its General Partner,
Berkshire Realty Company, Inc., a Delaware corporation (the "Company"), and
DAVID OLNEY, an individual ("Employee").
WITNESSETH THAT:
---------------
WHEREAS, the General Partner manages BRI OP;
WHEREAS, the General Partner is managed by its Board of Directors;
WHEREAS, the Compensation Committee of the Board of Directors is
responsible for negotiating employment contracts with senior management and
staff of the General Partner subject to approval by the Board;
WHEREAS, the General Partner and BRI OP should for management, business
and accountability reasons have the same senior executives;
WHEREAS, BRI OP and the General Partner shall be referred to herein
collectively as the "Company";
WHEREAS, all payments and health and welfare benefits payable hereunder
to Employee will be paid for or provided by BRI OP;
WHEREAS, the Company's principal business is the ownership and operation
of high quality multi-family properties and community and regional shopping
centers;
WHEREAS, BRI OP and the General Partner desire to retain the Employee as
Senior Vice President - Acquisitions of BRI OP and the General Partner,
respectively, on the terms hereinafter set forth; and
WHEREAS, the Employee wishes to be employed by BRI OP and the General
Partner as their Senior Vice President - Acquisitions on the terms hereinafter
set forth;
NOW, THEREFORE, in consideration of the mutual covenants and promises set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, BRI OP, the General Partner and
the Employee hereby agree as follows:
1. Employment. The Company will employ Employee, and Employee will
accept such employment, upon the terms and subject to the conditions set forth
in this Agreement.
<PAGE>
2. Capacity and Duties. Employee shall serve the Company as its Senior
Vice President - Acquisitions, and his duties and responsibilities shall be
those consistent with this position, 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 other individual as may
be designated from time to time by the Board of Directors.
3. Obligations of Employee. During the term of his employment under this
Agreement:
(a) Employee shall devote all of his business time and efforts to the
business of the Company and use faithful and diligent efforts to promote the
business interests of the Company and its subsidiaries and affiliates over which
Employee has management responsibility.
(b) Employee shall not, without the prior written consent of the Board of
Directors in each instance, whether as an employee, consultant, independent
contractor or otherwise, be engaged in any other business activities on behalf
of any other person, firm, corporation, partnership, proprietorship or other
entity; however, this provision shall not prohibit passive investment
activities.
4. Term of Employment; Termination. The term of Employee's employment
hereunder shall commence as of March 1, 1997 ("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). Any
termination of this Agreement within two years of a Change in Control of the
Company (as herein defined) also shall be deemed a termination by the Company.
For purposes of this Agreement, a "Change in Control" of the Company shall mean
(i) the acquisition by any person (other than the Employee), corporation,
partnership or other person or entity of 10% or more beneficial ownership (as
defined in Rule 13d in effect as of such date under the Securities Exchange Act
of 1934) of the outstanding voting stock of the Company; (ii) the merger or
consolidation of the Company and any other corporation or entity; or (iii) the
sale of all or substantially all of the assets of the Company;
(b) delivery by the Company to Employee of written notice of termination
for "cause". The term "cause" means any termination by the Company by reason of
(i) persistent and willful neglect of material duties by Employee after written
notice and an opportunity to immediately cure such neglect to the satisfaction
of the Board of Directors; (ii) the entry against Employee of a guilty plea, or
a conviction, judgment or order in any proceeding of which Employee had notice
and the opportunity to defend himself before any court relating to (y) a willful
violation of any material law, rule or regulation applicable to the business of
the Company or its subsidiaries or affiliates, unless such breach arises out of
and is consistent with the express written direction of the Board of Directors
or is undertaken with the express prior written consent of the Board of
Directors, or (z) a violation of any law involving fraud, deceit or criminal
misrepresentation; (iii) the entry
-2-
<PAGE>
against Employee of a guilty plea, or a conviction or judgment in any proceeding
of which Employee had notice and the opportunity to defend himself before any
court relating to any charge which would constitute a felony (other than
negligent vehicular homicide) if convicted; (iv) Employee engaging in any act
involving moral turpitude, which act is, or could reasonably be expected to be,
injurious to the financial interests or reputation of the Company or any of its
subsidiaries or affiliates in any material respect; (v) Employee willfully
misappropriating substantial assets of the Company or any of its subsidiaries or
affiliates; (vi) Employee engaging in gross misconduct which is, or which could
reasonably be expected to be, injurious to the Company or any of its
subsidiaries or affiliates in any material respect; or (vii) Employee breaching
any provisions of this Agreement and such breach has a material adverse effect
on the Company after written notice and an opportunity to immediately cure such
breach to the satisfaction of the Board of Directors, unless such breach arises
out of and is consistent with the express written direction of the Board of
Directors or is undertaken with the express prior written consent of the Board
of Directors;
(c) the date one month after the date of the delivery by Employee to the
Company of written notice of termination; provided, however, that if the Company
receives such notice from Employee, the Company shall have the right,
exercisable by written notice to Employee, to accelerate the Employment
Termination Date to such date on or after the date of the Company's notice to
Employee as the Company shall determine in its discretion;
(d) the death of Employee;
(e) the delivery to Employee of written notice of termination by the
Company if Employee shall suffer a physical or mental disability which renders
Employee, (i) in the reasonable judgment of the carrier if a long-term
disability policy covering the Employee provided by the Company is in force or,
(ii) if no such policy is in force, in the reasonable judgment of the Board of
Directors, unable to perform his duties and obligations under this Agreement for
90 consecutive days or 120 days in any period of 180 consecutive days;
provided, however, that no termination of Employee's employment under this
Agreement shall diminish or affect in any way Employee's rights to payments
provided for hereunder which have accrued to and including the Employment
Termination Date, and provided further, that no termination of Employee's
employment under this Agreement for cause or otherwise (whether such termination
is voluntary or involuntary) shall diminish or affect the Company's obligations
to Employee, or Employee's obligations to the Company, under Section 9 hereof
with respect to non-disclosure, Section 10 hereof with respect to the return of
Company property, or Section 11 hereof with respect to Noncompetition.
5. Base Salary; Bonus; Severance Compensation. From the Commencement
Date through the Employment Termination Date, the Company shall pay Employee a
base salary (the "Base Salary") at an annual rate of not less than $150,000
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.
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<PAGE>
During the term of this Agreement Employee shall participate in
the Acquisition/Disposition Bonus Pool. The terms and conditions of the Bonus
Pool 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 Board of Directors will consider
whether in their sole discretion to make a bonus award to Employee on a pro rata
basis for the period of the calendar year prior to the Employment Termination
Date.
Employee will be eligible to participate in the Berkshire Realty
Company, Inc. 1996 Stock Option Plan to the extent determined by the Board of
Directors in its discretion.
If Employee's employment hereunder is terminated pursuant to
subsection 4(a) hereof, the Company shall pay Employee severance compensation in
nine monthly payments at the same rate as the Base Salary in effect at the
Employment Termination Date, provided, however, if such termination is as a
result of a Change of Control (as defined in subsection 4(a)), the Company shall
pay Employee severance compensation for fifteen months.
The Company shall deduct from payments of the Base Salary and
bonus 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.
6. 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. In
addition, Employee shall be entitled to a continuation of health insurance
benefits under the Company's group health insurance program or COBRA, as the
case may be, until any severance payments due Employee hereunder have been paid
or the Employee is eligible to participate in a group health insurance plan with
another employer, whichever comes first.
7. Expense Reimbursement. Employee shall be entitled to reimbursement
from the Company for the reasonable business costs and expenses which he incurs
in connection with the performance of his duties and obligations under this
Agreement provided that the nature and amount of such expenses are incurred and
approved in accordance with the Company's business expense reimbursement policy
in effect from time to time as approved by the Board of Directors. Reimbursement
shall be conditioned upon presentation of expense statements or vouchers or such
other supporting information as the Company may from time to time require.
8. Non-Disclosure. Employee acknowledges that as a result of Employee's
employment by the Company, Employee has and will become informed of, and have
access to, valuable and confidential information of the Company or information
which is not generally known to those outside of the Company (the "Confidential
Information"), including but not limited to trade secrets, ways of business,
technical information, know-how, plans, projections, business opportunities,
proposed acquisitions, proposed
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<PAGE>
dispositions, specifications, and the identity of partners and stockholders and
that this Confidential Information, even though it may be contributed, developed
or acquired by Employee, is the exclusive property of the Company to be held by
Employee in trust and solely for the Company's benefit. Accordingly, Employee
shall not at any time during or subsequent to his employment by the Company
reveal, report, publish, transfer or otherwise disclose to any person,
corporation or other entity, any of the Confidential Information without the
prior written consent of the Board of Directors, except to responsible officers
and employees of the Company and other responsible persons whom the Board of
Directors agrees in writing are in a contractual or fiduciary relationship with
the Company or who have a need for this information for purposes that are in the
best interests of the Company. These provisions shall not prohibit Employee from
disclosing information which legally is or becomes of general public knowledge
from authorized sources other than Employee.
9. Return of Company Property. Upon the termination of this Agreement,
Employee shall promptly deliver to the Company all property of the Company
including, without limitation, lists, drawings, manuals, letters, notes,
notebooks, reports and copies thereof and all other materials, including those
of a secret or confidential nature, relating to the Company's business that are
in Employee's possession or control. Employee agrees that, upon the request of
the Company, he will represent to the Company that he has complied with the
provisions of this Section at the time he ceases to be an employee of the
Company.
10. Noncompetition.
(a) Employee agrees that during the term of this Agreement and for
nine (9) months after the Employment Termination Date (except that in the event
of termination due to a Change of Control, as defined in subsection 4(a) hereof,
this Section 10 shall not apply to Employee), Employee shall not (i) directly or
indirectly solicit any person (natural or otherwise) to 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 purchaser from or seller
to the Company of such type of property during the twelve (12) months prior to
the Employment Termination 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 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 his
employment of his own volition, this restriction upon recruiting employees or
consultants shall run for two (2) years after the Employment Termination Date.
(b) During any period that Employee is entitled to receive and is
paid severance compensation in accordance with Section 5 hereof, if Employee
shall become an employee, officer, director, shareholder, principal, agent,
partner or consultant or otherwise be engaged in or have a financial or other
interest in any business which competes with the Company, or its subsidiaries or
affiliates or providers under contract of
-5-
<PAGE>
property management or administrative services, equipment or facilities (which
activity by the Employee is not prohibited by this Agreement), any base salary
received from such activities shall be set off against any severance pay which
he is entitled to receive from the Company. Notwithstanding the foregoing,
Employee may make personal investments in the equity securities of any publicly
traded company provided that any such investment does not exceed one percent
(1%) of the market capitalization of the class of securities of the company in
which his investment is made.
(c) The restrictions against activities set forth in Section 10(a)
and (b) above are considered by the parties to be reasonable for the purposes of
protecting the business of the Company. If any restriction is found by a court
of competent jurisdiction to be unenforceable because it extends for too long a
period of time, over too broad a range of activities or in too large a
geographic area, that restriction shall be interpreted to extend only over the
maximum period of time, range of activities or geographic area as to which it
may be enforceable.
11. Remedies. Employee acknowledges that the Company would not have an
adequate remedy at law for money damages if the covenants contained in Sections
9, 10 or 11 were not complied with in accordance with their terms, and that any
breach or threatened breach thereof would result in immediate and irreparable
injury to the Company. Therefore, Employee agrees that in the event of a
threatened or anticipated breach or actual breach by Employee of any of the
provisions of Section 8, 9 or 10, the Company shall be entitled (a) to inform in
writing all potential or new employers, partners, shareholders, officers,
directors or borrowers of Employee of the terms of this Agreement and (b) to an
injunction restraining Employee from violating Sections 8, 9 or 10. Employee
covenants and agrees that if he violates any of the covenants and agreements in
Section 8, 9 or 10, the Company shall be entitled to an accounting and repayment
of all profits, compensation, commissions, remuneration or benefits which
Employee directly or indirectly realizes or may realize as a result of or in
connection with any such violation. In addition to any remedies set forth in
this Section, the Company may pursue all other legal or equitable remedies that
may be available to it for a breach or threatened breach, including the recovery
of damages.
12. Successors and Assigns. The Agreement shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, that Employee's duties and obligations hereunder may not be
delegated or assigned by him in any manner.
13. Counterparts. This Agreement may be executed in two or more
counterparts, all of which, when taken together, shall constitute one and the
same Agreement.
14. Governing Law. This Agreement, and the validity and interpretation
hereof and the performance by the parties hereto of their respective duties and
obligations hereunder, shall be governed by the laws of The Commonwealth of
Massachusetts without regard to principles of conflicts of laws. Jurisdiction
and venue over any legal action by either party under this Agreement shall be
Boston, Massachusetts.
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<PAGE>
15. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to make the provision valid and
enforceable under the applicable law, but if any provision of this Agreement
shall be or become invalid or prohibited under any applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
only, without thereby invalidating the remainder of such provisions or the
remaining provisions of this Agreement.
16. Amendments and Modifications. No modification, extension, or waiver
of any provisions hereof or any release of any right hereunder shall be valid,
unless the same is in writing and is consented to by all parties hereto.
17. Entire Agreement. This Agreement embodies the entire understanding
and agreement of the parties hereto relating to the subject matter hereof.
18. Notice. All notices, demands or other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered in
person, by United States mail, certified or registered, with return receipt
requested, or by telefax, telegram or telex:
(a) If to the Employee, to:
David Olney
19 Carriage Road
Lincoln, RI 02865
Telefax number: (617) 423-8903
(b) If to the Company, to:
BRI OP Limited Partnership
Berkshire Realty Company, Inc.
Harbor Plaza
470 Atlantic Avenue
Boston, MA 02210
Attention: David F. Marshall
Telefax number: (617) 556-1507
With a copy to:
Peabody & Brown
101 Federal Street
Boston, MA 02110-1832
Attention: Alexander J. Jordan, Esq.
Telefax number: (617) 345-1300
or to such other addresses or telefax numbers as the parties may have furnished
to each other by notice pursuant to the provisions of this Section. Any such
notice, demand or other communication shall be deemed to have been given on the
date actually delivered to the address to which it is directed.
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<PAGE>
19. Captions. Captions and paragraph headings used herein are for
convenience only and are not a part of this Agreement and shall not be used in
construing or interpreting any provision contained herein.
20. Gender. Whenever the singular is used herein and where required by
the context, the same shall include the plural, and the neuter gender shall
include the masculine and feminine genders.
21. Survival. The provisions of Sections 5, 6 and 7 insofar as they
provide for payments to be made to Employee after termination of this Agreement
and Sections 8 through 11 hereof shall survive the termination of this Agreement
by Employee or the Company, whether voluntary of involuntary, or with or without
cause.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal effective on the date first above set forth.
BRI OP LIMITED PARTNERSHIP BERKSHIRE REALTY COMPANY, INC.
By: Berkshire Realty Company, Inc.
Its General Partner
By: _____________________________
Its: Chairman of the
Compensation Committee
By: _______________________________
Its: Chairman of the
Compensation Committee
Employee:
-------------------------------
DAVID OLNEY
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EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated March 1, 1997, is
made by and among BRI OP Limited Partnership ("BRI OP"), its General Partner,
Berkshire Realty Company, Inc., a Delaware corporation (the "Company"), and
RIDGE FREW, an individual ("Employee").
WITNESSETH THAT:
---------------
WHEREAS, the General Partner manages BRI OP;
WHEREAS, the General Partner is managed by its Board of Directors;
WHEREAS, the Compensation Committee of the Board of Directors is
responsible for negotiating employment contracts with senior management and
staff of the General Partner subject to approval by the Board;
WHEREAS, the General Partner and BRI OP should for management, business
and accountability reasons have the same senior executives;
WHEREAS, BRI OP and the General Partner shall be referred to herein
collectively as the "Company";
WHEREAS, all payments and health and welfare benefits payable hereunder
to Employee will be paid for or provided by BRI OP;
WHEREAS, the Company's principal business is the ownership and
operation of high quality multi-family properties and community and regional
shopping centers;
WHEREAS, BRI OP and the General Partner desire to retain the Employee
as Executive Vice President - Property Operations of BRI OP and the General
Partner, respectively, on the terms hereinafter set forth; and
WHEREAS, the Employee wishes to be employed by BRI OP and the General
Partner as their Executive Vice President - Property Operations on the terms
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, BRI OP, the General Partner and
the Employee hereby agree as follows:
1. Employment. The Company will employ Employee, and Employee will
accept such employment, upon the terms and subject to the conditions set forth
in this Agreement.
<PAGE>
2. Capacity and Duties. Employee shall serve the Company as its
Executive Vice President - Property Operations, and his duties and
responsibilities shall be those consistent with this position, 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 other individual as may be designated from time to time by the Board of
Directors.
3. Obligations of Employee. During the term of his employment under
this Agreement:
(a) Employee shall devote all of his business time and efforts to the
business of the Company and use faithful and diligent efforts to promote the
business interests of the Company and its subsidiaries and affiliates over which
Employee has management responsibility.
(b) Employee shall not, without the prior written consent of the Board
of Directors in each instance, whether as an employee, consultant, independent
contractor or otherwise, be engaged in any other business activities on behalf
of any other person, firm, corporation, partnership, proprietorship or other
entity.
4. Term of Employment; Termination. The term of Employee's employment
hereunder shall commence on March 1, 1997 ("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). Any
termination of this Agreement within two years of a Change in Control of the
Company (as herein defined) also shall be deemed a termination by the Company.
For purposes of this Agreement, a "Change in Control" of the Company shall mean
(i) the acquisition by any person (other than the Employee), corporation,
partnership or other person or entity of 10% or more beneficial ownership (as
defined in Rule 13d in effect as of such date under the Securities Exchange Act
of 1934) of the outstanding voting stock of the Company; (ii) the merger or
consolidation of the Company and any other corporation or entity; or (iii) the
sale of all or substantially all of the assets of the Company.
(b) the delivery by the Company to Employee of written notice of
termination for "cause". The term "cause" means any termination by the Company
by reason of (i) persistent and willful neglect of material duties by Employee
after written notice and an opportunity to immediately cure such neglect to the
satisfaction of the Board of Directors; (ii) the entry against Employee of a
guilty plea, or a conviction, judgment or order in any proceeding of which
Employee had notice and the opportunity to defend himself before any court
relating to (y) a willful violation of any material law, rule or regulation
applicable to the business of the Company or its subsidiaries or affiliates,
unless such breach arises out of and is consistent with the express written
direction of the Board of Directors or is undertaken with the express prior
written consent of the Board of Directors, or (z) a violation of any law
involving fraud, deceit or criminal misrepresentation; (iii) the entry against
Employee of a guilty plea, or a conviction or judgment in any proceeding of
which Employee had notice and the opportunity to defend himself before any court
relating to any charge which would constitute a felony if
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<PAGE>
convicted; (iv) Employee engaging in any act involving moral turpitude, which
act is, or could reasonably be expected to be, injurious to the financial
interests or reputation of the Company or any of its subsidiaries or affiliates
in any material respect; (v) Employee willfully misappropriating substantial
assets of the Company or any of its subsidiaries or affiliates; (vi) Employee
engaging in gross misconduct which is, or which could reasonably be expected to
be, injurious to the Company or any of its subsidiaries or affiliates in any
material respect; or (vii) Employee breaching any provisions of this Agreement
and such breach has a material adverse effect on the Company after written
notice and an opportunity to immediately cure such breach to the satisfaction of
the Board of Directors, unless such breach arises out of and is consistent with
the express written direction of the Board of Directors or is undertaken with
the express prior written consent of the Board of Directors.
(c) the date one month after the date of the delivery by Employee to
the Company of written notice of termination; provided, however, that if the
Company receives such notice from Employee, the Company shall have the right,
exercisable by written notice to Employee, to accelerate the Employment
Termination Date to such date on or after the date of the Company's notice to
Employee as the Company shall determine in its discretion.
(d) the death of Employee;
(e) the delivery to Employee of written notice of termination by the
Company if Employee shall suffer a physical or mental disability which renders
Employee, (i) in the reasonable judgment of the carrier if a long-term
disability policy covering the Employee provided by the Company is in force or,
(ii) if no such policy is in force, in the reasonable judgment of the Board of
Directors, unable to perform his duties and obligations under this Agreement for
90 consecutive days or 120 days in any period of 180 consecutive days.
provided, however, that no termination of Employee's employment under this
Agreement shall diminish or affect in any way Employee's rights to payments
provided for hereunder which have accrued to and including the Employment
Termination Date, and provided further, that no termination of Employee's
employment under this Agreement for cause or otherwise (whether such termination
is voluntary or involuntary) shall diminish or affect the Company's obligations
to Employee, or Employee's obligations to the Company, under Section 9 hereof
with respect to non-disclosure, Section 10 hereof with respect to the return of
Company property, or Section 11 hereof with respect to Noncompetition.
5. Base Salary; Bonus; Severance Compensation. From the Commencement
Date 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.
During the term of this Agreement Employee shall participate
in the Annual Threshold Target Maximum Bonus Plan. 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 Board of Directors will
consider whether in their sole discretion to make a bonus award to
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<PAGE>
Employee on a pro rata basis for the period of the calendar year prior to the
Employment Termination Date.
Employee will be eligible to participate in the Berkshire
Realty Company, Inc. 1996 Stock Option Plan to the extent determined by the
Board of Directors in its discretion.
If Employee's employment hereunder is terminated pursuant to
subsection 4(a) hereof, the Company shall pay Employee severance compensation in
nine monthly payments at the same rate as the Base Salary in effect at the
Employment Termination Date, provided, however, if such termination is as a
result of a Change of Control (as defined in subsection 4(a)), the Company shall
pay Employee severance compensation for fifteen (15) months.
The Company shall deduct from payments of the Base Salary and
bonus 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.
6. 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. In
addition, Employee shall be entitled to a continuation of health insurance
benefits under the Company's group health insurance program or COBRA, as the
case may be, until any severance payments due Employee hereunder have been paid
or the Employee is eligible to participate in a group health insurance plan with
another employer, whichever comes first.
7. Expense Reimbursement. Employee shall be entitled to reimbursement
from the Company for the reasonable business costs and expenses which he incurs
in connection with the performance of his duties and obligations under this
Agreement provided that the nature and amount of such expenses are incurred and
approved in accordance with the Company's business expense reimbursement policy
in effect from time to time as approved by the Board of Directors. Reimbursement
shall be conditioned upon presentation of expense statements or vouchers or such
other supporting information as the Company may from time to time require.
8. Non-Disclosure. Employee acknowledges that as a result of Employee's
employment by the Company, Employee has and will become informed of, and have
access to, valuable and confidential information of the Company or information
which is not generally known to those outside of the Company (the "Confidential
Information"), including but not limited to trade secrets, ways of business,
technical information, know-how, plans, projections, business opportunities,
proposed acquisitions, proposed dispositions, specifications, and the identity
of partners and stockholders and that this Confidential Information, even though
it may be contributed, developed or acquired by Employee, is the exclusive
property of the Company to be held by Employee in trust and solely for the
Company's benefit. Accordingly, Employee shall not at any time during or
subsequent to his employment by the Company reveal, report, publish, transfer or
otherwise disclose to any person, corporation or other entity, any of the
Confidential Information without the prior written consent of the Board of
Directors, except to responsible officers and employees of the Company and other
responsible persons whom the Board of Directors agrees in writing are in a
contractual or fiduciary relationship with the Company or who have a need for
this
-4-
<PAGE>
information for purposes that are in the best interests of the Company. These
provisions shall not prohibit Employee from disclosing information which legally
is or becomes of general public knowledge from authorized sources other than
Employee.
9. Return of Company Property. Upon the termination of this Agreement,
Employee shall promptly deliver to the Company all property of the Company
including, without limitation, lists, drawings, manuals, letters, notes,
notebooks, reports and copies thereof and all other materials, including those
of a secret or confidential nature, relating to the Company's business that are
in Employee's possession or control. Employee agrees that, upon the request of
the Company, he will represent to the Company that he has complied with the
provisions of this Section at the time he ceases to be an employee of the
Company.
10. Noncompetition.
(a) Employee agrees that during the term of this Agreement and
for nine (9) months after the Employment Termination Date (except that in the
event of termination due to a Change of Control, as defined in subsection 4(a)
hereof, this Section 10 shall not apply to Employee), Employee shall not (i)
directly or indirectly solicit any person (natural or otherwise) to 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 purchaser
from or seller to the Company of such type of property during the twelve (12)
months prior to the Employment Termination 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 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 his employment of his own volition, this restriction upon recruiting
employees or consultants shall run for two (2) years after the Employment
Termination Date.
(b) During any period that Employee is entitled to receive and
is paid severance compensation in accordance with Section 5 hereof, if Employee
shall become an employee, officer, director, shareholder, principal, agent,
partner or consultant or otherwise be engaged in or have a financial or other
interest in any business which competes with the Company, or its subsidiaries or
affiliates or providers under contract of property management or administrative
services, equipment or facilities (which activity by the Employee is not
prohibited by this Agreement), any base salary received from such activities
shall be set off against any severance pay which he is entitled to receive from
the Company. Notwithstanding the foregoing, Employee may make personal
investments in the equity securities of any publicly traded company provided
that any such investment does not exceed one percent (1%) of the market
capitalization of the class of securities of the company in which his investment
is made.
(c) The restrictions against activities set forth in Section
10(a) and (b) above are considered by the parties to be reasonable for the
purposes of protecting the business of the Company. If any restriction is found
by a court of competent jurisdiction to be unenforceable because it extends for
too long a period of time, over too broad a range of activities or in too large
a geographic area, that restriction shall be interpreted to extend only
-5-
<PAGE>
over the maximum period of time, range of activities or geographic area as to
which it may be enforceable.
11. Remedies. Employee acknowledges that the Company would not have an
adequate remedy at law for money damages if the covenants contained in Sections
9, 10 or 11 were not complied with in accordance with their terms, and that any
breach or threatened breach thereof would result in immediate and irreparable
injury to the Company. Therefore, Employee agrees that in the event of a
threatened or anticipated breach or actual breach by Employee of any of the
provisions of Section 8, 9 or 10, the Company shall be entitled (a) to inform in
writing all potential or new employers, partners, shareholders, officers,
directors or borrowers of Employee of the terms of this Agreement and (b) to an
injunction restraining Employee from violating Sections 8, 9 or 10. Employee
covenants and agrees that if he violates any of the covenants and agreements in
Section 8, 9 or 10, the Company shall be entitled to an accounting and repayment
of all profits, compensation, commissions, remuneration or benefits which
Employee directly or indirectly realizes or may realize as a result of or in
connection with any such violation. In addition to any remedies set forth in
this Section, the Company may pursue all other legal or equitable remedies that
may be available to it for a breach or threatened breach, including the recovery
of damages.
12. Successors and Assigns. The Agreement shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, that Employee's duties and obligations hereunder may not be
delegated or assigned by him in any manner.
13. Counterparts. This Agreement may be executed in two or more
counterparts, all of which, when taken together, shall constitute one and the
same Agreement.
14. Governing Law. This Agreement, and the validity and interpretation
hereof and the performance by the parties hereto of their respective duties and
obligations hereunder, shall be governed by the laws of The Commonwealth of
Massachusetts without regard to principles of conflicts of laws. Jurisdiction
and venue over any legal action by either party under this Agreement shall be
Boston, Massachusetts.
15. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to make the provision valid and
enforceable under the applicable law, but if any provision of this Agreement
shall be or become invalid or prohibited under any applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
only, without thereby invalidating the remainder of such provisions or the
remaining provisions of this Agreement.
16. Amendments and Modifications. No modification, extension, or waiver
of any provisions hereof or any release of any right hereunder shall be valid,
unless the same is in writing and is consented to by all parties hereto.
17. Entire Agreement. This Agreement embodies the entire understanding
and agreement of the parties hereto relating to the subject matter hereof.
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<PAGE>
18. Notice. All notices, demands or other communications hereunder
shall be in writing and shall be deemed to have been duly given if delivered in
person, by United States mail, certified or registered, with return receipt
requested, or by telefax, telegram or telex:
(a) If to the Employee, to:
Ridge Frew
791 Willowcreek Drive
Atlanta, GA 30328
Telefax number: (770) 955-9559
(b) If to the Company, to:
BRI OP Limited Partnership
Berkshire Realty Company, Inc.
Harbor Plaza
470 Atlantic Avenue
Boston, MA 02210
Attention: David F. Marshall
Telefax number: (617) 556-1507
With a copy to:
Peabody & Brown
101 Federal Street
Boston, MA 02110-1832
Attention: Alexander J. Jordan, Esq.
Telefax number: (617) 345-1300
or to such other addresses or telefax numbers as the parties may have furnished
to each other by notice pursuant to the provisions of this Section. Any such
notice, demand or other communication shall be deemed to have been given on the
date actually delivered to the address to which it is directed.
19. Captions. Captions and paragraph headings used herein are for
convenience only and are not a part of this Agreement and shall not be used in
construing or interpreting any provision contained herein.
20. Gender. Whenever the singular is used herein and where required by
the context, the same shall include the plural, and the neuter gender shall
include the masculine and feminine genders.
21. Survival. The provisions of Sections 5, 6 and 7 insofar as they
provide for payments to be made to Employee after termination of this Agreement
and Sections 8 through 11 hereof shall survive the termination of this Agreement
by Employee or the Company, whether voluntary of involuntary, or with or without
cause.
-7-
<PAGE>
22. 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 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 18 of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal effective on the date first above set forth.
BRI OP LIMITED PARTNERSHIP BERKSHIRE REALTY COMPANY, INC.
By: Berkshire Realty Company, Inc.
Its General Partner
By: /s/ J. Paul Finnegan
_____________________________
Its: Chairman of the
Compensation Committee
By: /s/ J. Paul Finnegan
_______________________________
Its: Chairman of the
Compensation Committee
Employee:
/s/ Ridge Frew
-------------------------------
RIDGE FREW
-8-
EMPLOYMENT AND NONCOMPETITION AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of March 1, 1997, is
made by and among BRI OP Limited Partnership ("BRI OP"), its General Partner,
Berkshire Realty Company, Inc., a Delaware corporation (the "Company"), and
DENNIS SUAREZ, an individual ("Employee").
WITNESSETH THAT:
---------------
WHEREAS, the General Partner manages BRI OP;
WHEREAS, the General Partner is managed by its Board of Directors;
WHEREAS, the Compensation Committee of the Board of Directors is
responsible for negotiating employment contracts with senior management and
staff of the General Partner subject to approval by the Board;
WHEREAS, the General Partner and BRI OP should for management, business
and accountability reasons have the same senior executives;
WHEREAS, BRI OP and the General Partner shall be referred to herein
collectively as the "Company";
WHEREAS, all payments and health and welfare benefits payable hereunder
to Employee will be paid for or provided by BRI OP;
WHEREAS, the Company's principal business is the ownership and operation
of high quality multi-family properties and community and regional shopping
centers;
WHEREAS, BRI OP and the General Partner desire to retain the Employee as
Senior Vice President - Development of BRI OP and the General Partner,
respectively, on the terms hereinafter set forth; and
WHEREAS, the Employee wishes to be employed by BRI OP and the General
Partner as their Senior Vice President - Development on the terms hereinafter
set forth which terms shall supersede the terms and agreements set forth in a
memorandum entitled "Special Notice" dated October 29, 1996 between David
Marshall, President of the General Partner, and the Employee;
NOW, THEREFORE, in consideration of the mutual covenants and promises set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, BRI OP, the General Partner and
the Employee hereby agree as follows:
<PAGE>
1. Employment. The Company will employ Employee, and Employee will
accept such employment, upon the terms and subject to the conditions set forth
in this Agreement.
2. Capacity and Duties. Employee shall serve the Company as its Senior
Vice President - Development, and his duties and responsibilities shall be those
consistent with this position, 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 other individual as may be
designated from time to time by the Board of Directors.
3. Obligations of Employee. During the term of his employment under this
Agreement:
(a) Employee shall devote all of his business time and efforts to
the business of the Company and use faithful and diligent efforts to promote the
business interests of the Company and its subsidiaries and affiliates over which
Employee has management responsibility.
(b) Employee shall not, without the prior written consent of the
Board of Directors in each instance, whether as an employee, consultant,
independent contractor or otherwise, be engaged in any other business activities
on behalf of any other person, firm, corporation, partnership, proprietorship or
other entity.
4. Term of Employment; Termination. The term of Employee's employment
hereunder shall commence as of March 1, 1997 ("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). Any
termination of this Agreement within two years of a Change in Control of the
Company (as herein defined) also shall be deemed a termination by the Company.
For purposes of this Agreement, a "Change in Control" of the Company shall mean
(i) the acquisition by any person (other than the Employee), corporation,
partnership or other person or entity of 10% or more beneficial ownership (as
defined in Rule 13d in effect as of such date under the Securities Exchange Act
of 1934) of the outstanding voting stock of the Company; (ii) the merger or
consolidation of the Company and any other corporation or entity; or (iii) the
sale of all or substantially all of the assets of the Company;
(b) the delivery by the Company to Employee of written notice of
termination for "cause". The term "cause" means any termination by the Company
by reason of (i) persistent and willful neglect of material duties by Employee
after written notice and an opportunity to immediately cure such neglect to the
satisfaction of the Board of Directors; (ii) the entry against Employee of a
guilty plea, or a conviction, judgment or order in any proceeding of which
Employee had notice and the opportunity to defend himself before any court
relating to (y) a willful violation of any material law, rule or regulation
applicable to the business of the Company or its subsidiaries or affiliates,
unless such breach arises out of and is consistent with the express written
direction of the Board of Directors or is undertaken with the express prior
written consent of the Board of Directors, or (z) a violation of any law
involving fraud, deceit or criminal misrepresentation; (iii) the entry against
Employee of a guilty plea, or a
-2-
<PAGE>
conviction or judgment in any proceeding of which Employee had notice and the
opportunity to defend himself before any court relating to any charge which
would constitute a felony if convicted; (iv) Employee engaging in any act
involving moral turpitude, which act is, or could reasonably be expected to be,
injurious to the financial interests or reputation of the Company or any of its
subsidiaries or affiliates in any material respect; (v) Employee willfully
misappropriating substantial assets of the Company or any of its subsidiaries or
affiliates; (vi) Employee engaging in gross misconduct which is, or which could
reasonably be expected to be, injurious to the Company or any of its
subsidiaries or affiliates in any material respect; or (vii) Employee breaching
any provisions of this Agreement and such breach has a material adverse effect
on the Company after written notice and an opportunity to immediately cure such
breach to the satisfaction of the Board of Directors, unless such breach arises
out of and is consistent with the express written direction of the Board of
Directors or is undertaken with the express prior written consent of the Board
of Directors;
(c) the date one month after the date of the delivery by Employee
to the Company of written notice of termination; provided, however, that if the
Company receives such notice from Employee, the Company shall have the right,
exercisable by written notice to Employee, to accelerate the Employment
Termination Date to such date on or after the date of the Company's notice to
Employee as the Company shall determine in its discretion;
(d) the death of Employee;
(e) the delivery to Employee of written notice of termination by
the Company if Employee shall suffer a physical or mental disability which
renders Employee, (i) in the reasonable judgment of the carrier if a long-term
disability policy covering the Employee provided by the Company is in force or,
(ii) if no such policy is in force, in the reasonable judgment of the Board of
Directors, unable to perform his duties and obligations under this Agreement for
90 consecutive days or 120 days in any period of 180 consecutive days;
provided, however, that no termination of Employee's employment under this
Agreement shall diminish or affect in any way Employee's rights to payments
provided for hereunder which have accrued to and including the Employment
Termination Date, and provided further, that no termination of Employee's
employment under this Agreement for cause or otherwise (whether such termination
is voluntary or involuntary) shall diminish or affect the Company's obligations
to Employee, or Employee's obligations to the Company, under Section 9 hereof
with respect to non-disclosure, Section 10 hereof with respect to the return of
Company property, or Section 11 hereof with respect to Noncompetition.
5. Base Salary; Bonus; Severance Compensation. From the Commencement
Date through the Employment Termination Date, the Company shall pay Employee a
base salary (the "Base Salary") at an annual rate of not less than $150,000
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.
During the term of this Agreement Employee shall participate in
the Development Group Bonus Pool. 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 Board of
-3-
<PAGE>
Directors will consider whether in their sole discretion to make a bonus award
to Employee on a pro rata basis for the period of the calendar year prior to the
Employment Termination Date.
Employee will be eligible to participate in the Berkshire Realty
Company, Inc. 1996 Stock Option Plan to the extent determined by the Board of
Directors in its discretion.
If Employee's employment hereunder is terminated pursuant to
subsection 4(a) hereof, the Company shall pay Employee severance compensation in
nine monthly payments at the same rate as the Base Salary in effect at the
Employment Termination Date, provided, however, if such termination is as a
result of a Change of Control (as defined in subsection 4(a)), the Company shall
pay Employee severance compensation for fifteen months.
The Company shall deduct from payments of the Base Salary and
bonus 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.
6. 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. In
addition, Employee shall be entitled to a continuation of health insurance
benefits under the Company's group health insurance program or COBRA, as the
case may be, until any severance payments due Employee hereunder have been paid
or the Employee is eligible to participate in a group health insurance plan with
another employer, whichever comes first.
7. Expense Reimbursement. Employee shall be entitled to reimbursement
from the Company for the reasonable business costs and expenses which he incurs
in connection with the performance of his duties and obligations under this
Agreement provided that the nature and amount of such expenses are incurred and
approved in accordance with the Company's business expense reimbursement policy
in effect from time to time as approved by the Board of Directors. Reimbursement
shall be conditioned upon presentation of expense statements or vouchers or such
other supporting information as the Company may from time to time require.
8. Non-Disclosure. Employee acknowledges that as a result of Employee's
employment by the Company, Employee has and will become informed of, and have
access to, valuable and confidential information of the Company or information
which is not generally known to those outside of the Company (the "Confidential
Information"), including but not limited to trade secrets, ways of business,
technical information, know-how, plans, projections, business opportunities,
proposed acquisitions, proposed dispositions, specifications, and the identity
of partners and stockholders and that this Confidential Information, even though
it may be contributed, developed or acquired by Employee, is the exclusive
property of the Company to be held by Employee in trust and solely for the
Company's benefit. Accordingly, Employee shall not at any time during or
subsequent to his employment by the Company reveal, report, publish, transfer or
otherwise disclose to any person, corporation or other entity, any of the
Confidential Information without the prior written consent of the Board of
Directors, except to responsible officers and employees of the Company and other
responsible persons whom the Board of Directors agrees in writing are in
-4-
<PAGE>
a contractual or fiduciary relationship with the Company or who have a need for
this information for purposes that are in the best interests of the Company.
These provisions shall not prohibit Employee from disclosing information which
legally is or becomes of general public knowledge from authorized sources other
than Employee.
9. Return of Company Property. Upon the termination of this Agreement,
Employee shall promptly deliver to the Company all property of the Company
including, without limitation, lists, drawings, manuals, letters, notes,
notebooks, reports and copies thereof and all other materials, including those
of a secret or confidential nature, relating to the Company's business that are
in Employee's possession or control. Employee agrees that, upon the request of
the Company, he will represent to the Company that he has complied with the
provisions of this Section at the time he ceases to be an employee of the
Company.
10. Noncompetition.
(a) Employee agrees that during the term of this Agreement and for
nine (9) months after the Employment Termination Date (except that in the event
of termination due to a Change of Control, as defined in subsection 4(a) hereof,
this Section 10 shall not 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 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 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 his employment of
his own volition, this restriction upon recruiting employees or consultants
shall run for two (2) years after the Employment Termination Date.
(b) During any period that Employee is entitled to receive and is
paid severance compensation in accordance with Section 5 hereof, if Employee
shall become an employee, officer, director, shareholder, principal, agent,
partner or consultant or otherwise be engaged in or have a financial or other
interest in any business which competes with the Company, or its subsidiaries or
affiliates or providers under contract of development, construction, property
management or administrative services, equipment or facilities (which activity
by the Employee is not prohibited by this Agreement), any base salary received
from such activities shall be set off against any severance pay which he is
entitled to receive from the Company. Notwithstanding the foregoing, Employee
may make personal investments in the equity securities of any publicly traded
company provided that any such investment does not exceed one percent (1%) of
the market capitalization of the class of securities of the company in which his
investment is made.
(c) The restrictions against activities set forth in Section 10(a)
and (b) above are considered by the parties to be reasonable for the purposes of
protecting the business of the Company. If any restriction is found by a court
of competent jurisdiction to be unenforceable
-5-
<PAGE>
because it extends for too long a period of time, over too broad a range of
activities or in too large a geographic area, that restriction shall be
interpreted to extend only over the maximum period of time, range of activities
or geographic area as to which it may be enforceable.
11. Remedies. Employee acknowledges that the Company would not have an
adequate remedy at law for money damages if the covenants contained in Sections
9, 10 or 11 were not complied with in accordance with their terms, and that any
breach or threatened breach thereof would result in immediate and irreparable
injury to the Company. Therefore, Employee agrees that in the event of a
threatened or anticipated breach or actual breach by Employee of any of the
provisions of Section 8, 9 or 10, the Company shall be entitled (a) to inform in
writing all potential or new employers, partners, shareholders, officers,
directors or borrowers of Employee of the terms of this Agreement and (b) to an
injunction restraining Employee from violating Sections 8, 9 or 10. Employee
covenants and agrees that if he violates any of the covenants and agreements in
Section 8, 9 or 10, the Company shall be entitled to an accounting and repayment
of all profits, compensation, commissions, remuneration or benefits which
Employee directly or indirectly realizes or may realize as a result of or in
connection with any such violation. In addition to any remedies set forth in
this Section, the Company may pursue all other legal or equitable remedies that
may be available to it for a breach or threatened breach, including the recovery
of damages.
12. Successors and Assigns. The Agreement shall be binding on and inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, that Employee's duties and obligations hereunder may not be
delegated or assigned by him in any manner.
13. Counterparts. This Agreement may be executed in two or more
counterparts, all of which, when taken together, shall constitute one and the
same Agreement.
14. Governing Law. This Agreement, and the validity and interpretation
hereof and the performance by the parties hereto of their respective duties and
obligations hereunder, shall be governed by the laws of The Commonwealth of
Massachusetts without regard to principles of conflicts of laws. Jurisdiction
and venue over any legal action by either party under this Agreement shall be
Boston, Massachusetts.
15. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to make the provision valid and
enforceable under the applicable law, but if any provision of this Agreement
shall be or become invalid or prohibited under any applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity
only, without thereby invalidating the remainder of such provisions or the
remaining provisions of this Agreement.
16. Amendments and Modifications. No modification, extension, or waiver
of any provisions hereof or any release of any right hereunder shall be valid,
unless the same is in writing and is consented to by all parties hereto.
17. Entire Agreement. This Agreement embodies the entire understanding
and agreement of the parties hereto relating to the subject matter hereof.
-6-
<PAGE>
18. Notice. All notices, demands or other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered in
person, by United States mail, certified or registered, with return receipt
requested, or by telefax, telegram or telex:
(a) If to the Employee, to:
Dennis Suarez
441 Bottesford Drive
Kennesaw, GA 30144
Telefax number: (770) 955-9559
(b) If to the Company, to:
BRI OP Limited Partnership
Berkshire Realty Company, Inc.
Harbor Plaza
470 Atlantic Avenue
Boston, MA 02210
Attention: David F. Marshall
Telefax number: (617) 556-1507
With a copy to:
Peabody & Brown
101 Federal Street
Boston, MA 02110-1832
Attention: Alexander J. Jordan, Esq.
Telefax number: (617) 345-1300
or to such other addresses or telefax numbers as the parties may have furnished
to each other by notice pursuant to the provisions of this Section. Any such
notice, demand or other communication shall be deemed to have been given on the
date actually delivered to the address to which it is directed.
19. Captions. Captions and paragraph headings used herein are for
convenience only and are not a part of this Agreement and shall not be used in
construing or interpreting any provision contained herein.
20. Gender. Whenever the singular is used herein and where required by
the context, the same shall include the plural, and the neuter gender shall
include the masculine and feminine genders.
21. Survival. The provisions of Sections 5, 6 and 7 insofar as they
provide for payments to be made to Employee after termination of this Agreement
and Sections 8 through 11 hereof shall survive the termination of this Agreement
by Employee or the Company, whether voluntary of involuntary, or with or without
cause.
-7-
<PAGE>
22. 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 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 18 of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement under
seal effective on the date first above set forth.
BRI OP LIMITED PARTNERSHIP BERKSHIRE REALTY COMPANY, INC.
By: Berkshire Realty Company, Inc.
Its General Partner
By: _____________________________
Its: Chairman of the
Compensation Committee
By: _______________________________
Its: Chairman of the
Compensation Committee
Employee:
-------------------------------
DENNIS SUAREZ
-8-
BERKSHIRE REALTY COMPANY, INC.
SEVERANCE BENEFIT PLAN
Summary Plan Description
------------------------
EXEMPT EMPLOYEES
INTRODUCTION
------------
The Berkshire Realty Company, Inc. Severance Benefit Plan (the "Plan")
was established by the Berkshire Realty Company, Inc. (the "Company") and BRI OP
Limited Partnership (the "Partnership") to provide severance benefits to
eligible employees. This is a summary of the Plan and the benefits you may
receive under it. This is a summary, so it does not contain all the details of
the Plan which are contained in the Plan document. If there should be any
disagreement between this description and the Plan document, then the Plan
document will prevail. A copy of the Plan document will be provided to you upon
request.
<PAGE>
Who is covered?
- - ---------------
Employees of the Company or the Partnership at the Atlanta, Boston, and
regional offices who receive a "Notice of Participation" and are employed at the
time of a change in control consummated by June 30, 1999. Different benefits are
provided for various groups of employees. This summary plan description
describes the benefits for exempt employees.
Who receives a "Notice of Participation"?
- - -----------------------------------------
All those exempt employees except those assigned at a property,
temporary employees, and those covered by other written agreements, and
participants in the plans covering Vice Presidents or higher.
When does the Protection Period end?
- - ------------------------------------
It ends 15 months following a change in control consummated by June 30,
1999. If there is not a change of control consummated by June 30, 1999, the plan
ends June 30, 1999.
What happens if after the change in control I am involuntarily terminated during
- - --------------------------------------------------------------------------------
the protection period?
- - ----------------------
If it is without "cause", you receive the severance benefit. For the
purposes of this plan and this plan only, "cause" is (a) an act or omission by
the employee that may adversely effect the business or the employee's ability to
perform services for the company, including, without limitation, the commission
of any crime (other than ordinary traffic violations) or (b)misconduct or
neglect of duties in connection with the business or affairs of the company,
including, but not limited to, excessive absenteeism or tardiness, which has not
been corrected within the time period specified in a written notice to the
employee which sets forth such misconduct or neglect of duties.
<PAGE>
What happens if after the change of control I have an involuntary reduction in
- - ------------------------------------------------------------------------------
base salary or am asked to relocate greater than 50 miles (one-way) from my
- - ---------------------------------------------------------------------------
workplace during the protection period?
- - ---------------------------------------
This is a "good reason" and you may resign and receive the severance
benefit.
What is a change in control?
- - ----------------------------
This is defined in the Plan. It basically means a change in control
occurs if an individual, corporation, partnership or other entity acquires 25%
or more of the beneficial ownership of the outstanding voting stock of the
Company. A change in control will also occur if the Company is merged with any
other corporation or entity in a merger where the holders of the outstanding
stock of the Company prior to the merger do not own more than 50% of the
outstanding stock of the surviving Company. A change in control will also occur
if substantially all of the assets of the Company are sold other than pursuant
of a plan of liquidation adopted pursuant to the Company Charter.
How is the severance benefit paid?
- - ----------------------------------
At your election in a lump sum or salary continuation. Such payments
will be made as soon as practical after all administration issues are resolved.
If you elect a lump sum, medical and dental coverage will be COBRA rates. If you
elect salary continuation, you will be on COBRA but the medical and dental
coverage will be at amounts charged to active employees. The Company will pay
the balance while on salary continuation.
What if I elect salary continuation and then obtain new employment?
- - -------------------------------------------------------------------
The severance benefits continue until fully paid. The medical and
dental rates to continue under COBRA will remain at amounts charged to active
employees while on salary continuation. When salary continuation ends, the full
COBRA rates apply.
<PAGE>
Does everyone receive dental and medical coverage?
- - --------------------------------------------------
No. Only those that had such coverage at the time of termination and
elect to continue it by so notifying the company.
Will the coverage be the same?
- - ------------------------------
If our current dental and medical coverage is continued after the
change in control, yes. If a new plan is offered it will be that plan.
May I elect salary continuance and then change to lump sum on the balance at a
- - ------------------------------------------------------------------------------
later date?
- - -----------
Yes.
Does vacation accrue while on salary continuance?
- - -------------------------------------------------
No. Vacation accrual ends on the last day worked.
Are there any other conditions?
- - -------------------------------
Yes. To receive the severance payments you are required to sign a
release of claims against the Company. You will be provided sufficient time to
review the release prior to signing. A copy of such release will be made
available for you to review as soon as practical after any change in control
occurs. (For pay through last day worked and earned unused vacation no release
is required).
What are my continuing obligations if I receive payment under this plan?
- - ------------------------------------------------------------------------
If you receive a benefit payment you may not solicit those who remained
employed until 15 months after your termination.
What is my benefit?
- - -------------------
The formula is 26 weeks base salary plus 1 week for each year of
service at time of closing (prorated for partial years).
<PAGE>
Give me an example:
-------------------
Your employment date is 1/1/96. On 6/30/99 there is a change in control
consummated. Therefore you have 26 weeks + 3 1/2 weeks or a total of
29 1/2 weeks.
What is the source of benefits under the Plan?
- - ----------------------------------------------
Benefits under the Plan are provided from the general assets of the
Company.
Who interprets the plan?
- - ------------------------
The interpretation of the plan, this summary, plan description, and any
claim under this program will be in the sole discretion of David Marshall or his
designee and binding on all participants and any successor company.
Can I lose my benefits during the Protection Period?
- - ----------------------------------------------------
Yes. You will receive no benefits if you quit (other than for good
reason) or retire or if you are terminated for cause.
Does this plan cover benefits on terminations before or after the Protection
- - ----------------------------------------------------------------------------
Period?
- - -------
No. The benefits apply only to terminations during the protection
period. If you quit (for any reason), retire, or you are terminated outside the
protection period these plan benefits do not apply.
What is expected from me while the plan is in effect?
- - -----------------------------------------------------
The best thing you can do is to continue to perform your duties in an
acceptable manner and to maintain a positive work environment. We also expect
your cooperation with any assignment related to consummating a change in
control. It is extremely important that we demonstrate business as usual and
maintain a high level of performance.
<PAGE>
PLAN ADMINISTRATOR
------------------
The Plan Administrator is Mr. David Marshall, Chief Executive Officer,
President of Berkshire Realty Company, Inc. or his designee. The Plan
Administrator has general authority to control, manage and interpret the Plan.
PLAN AMENDMENT OR TERMINATION
-----------------------------
Berkshire Realty Company, Inc. intends to continue the Plan in the
future. It reserves, however, the right to amend or terminate the Plan at any
time. However, if you have received a notice of participation, the Company
cannot reduce your benefits under the Plan without your consent. Neither the
Plan nor this Summary constitutes a contract of employment. They do not
interfere with your right to leave the Employer nor with the Employer's right to
terminate your service.
CLAIM FOR BENEFITS
------------------
The Plan Administrator has general authority to manage this Plan. If
you are not satisfied with a decision as to your benefits under this Plan, you
can file a claim for benefits, in writing, with the Plan Administrator at the
following address:
Mr. David Marshall
Berkshire Realty Company, Inc.
470 Atlantic Avenue
Boston, MA 02210
(617) 423-2233
Generally, if your claim is denied you will receive a letter from the
Plan Administrator giving you the reasons and making reference to the Plan
provisions which apply to your case. It will also tell you how to appeal the
decision and what information is necessary to prove your claim and why. However,
if you do not hear from the Plan Administrator within 30 days after filing your
claim, your claim has been denied. Here is how you appeal:
<PAGE>
1. Within 60 days after receiving the denial you can send a written
request for further review to the Plan Administrator. The Plan Administrator may
but need not, appoint other persons to review your claim. You may state your
reasons for appeal and any information to support your claim or have a
spokesperson represent you. You have a right to review documents which may
affect your case.
2. Within 60 days of receiving your request the Plan Administrator will
notify you of the Plan Administrator's final decision with reasons. In special
cases (for example, if a hearing is necessary) the Plan Administrator has 120
days to notify you of the Plan Administrator's decision.
RIGHTS AND PROTECTIONS UNDER ERISA
----------------------------------
As a Participant in the Berkshire Realty Company, Inc. Severance
Benefits Plan, you are entitled to certain rights and protections under the
Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all
plan participants shall be entitled to:
o Examine, without charge, at the Plan Administrator's office, all Plan
documents and copies of all documents filed by or on behalf of the
Plan with the U.S. Department of Labor.
o Obtain copies of all Plan documents and other Plan information upon
written request to the Plan Administrator. The administrator may make
a reasonable charge for the copies.
o Obtain a statement telling you the amount paid on your behalf. This
statement must be requested in writing and is not required to be given
more than once a year. The Plan must provide the statement free of
charge.
<PAGE>
In addition to creating rights for plan participants, ERISA imposes
duties upon the people who are responsible for the operation of the Plan. The
people who operate your Plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan participants. No one,
including your employer or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining a benefit or
exercising your rights under ERISA. If your claim for a benefit is denied in
whole or in part you must receive a written explanation of the reason for the
denial. You have the right to have the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the Plan and do not receive them within
30 days, you may file suit in a federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay you up to $100 a
day until you receive the materials, unless the materials were not sent because
of reasons beyond the control of the Administrator. If you have a claim for
benefits which is denied or ignored, in whole or in part, you may file suit in a
state or federal court. If you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of Labor, or you may
file suit in a federal court. The court will decide who should pay court costs
and legal fees. If you are successful the court may order the person you have
sued to pay these costs and fees. If you lose, the court may order you to pay
these costs and fees, for example, if it finds your claim is frivolous. If you
have any questions about your Plan, you should contact the Plan Administrator.
If you have any questions about this statement or about rights under ERISA, you
should contact the nearest Area Office of the U.S. Labor-Management Services
Administration, Department of Labor.
<PAGE>
OTHER INFORMATION
- - -----------------
Plan Sponsors Berkshire Realty Company, Inc. (the "Company")
470 Atlantic Avenue
Boston, MA 02110
(617) 423-2233
Employer ID Number: 04-3086485
BRI OP Limited Partnership (the "Partnership")
470 Atlantic Avenue
Boston, MA 02110
(617) 423-2233
Employer ID Number: 04-3267483
Plan Number: 510
Plan Administrator: Mr. David Marshall
Chief Executive Officer
Berkshire Realty Company, Inc.
470 Atlantic Avenue
Boston, MA 02110
(617) 423-2233
Person Designated to
Receive Service of Legal
Process: General Counsel
Berkshire Realty Company, Inc.
470 Atlantic Avenue
Boston, MA 02110
(617) 423-2233
Type of Plan: Welfare plan providing severance benefits
Plan Year End: December 31
BERKSHIRE REALTY COMPANY, INC.
SEVERANCE BENEFIT PLAN
Summary Plan Description
------------------------
NON-EXEMPT EMPLOYEES
INTRODUCTION
------------
The Berkshire Realty Company, Inc. Severance Benefit Plan (the "Plan")
was established by the Berkshire Realty Company, Inc. (the "Company") and BRI OP
Limited Partnership (the "Partnership") to provide severance benefits to
eligible employees. This is a summary of the Plan and the benefits you may
receive under it. This is a summary, so it does not contain all the details of
the Plan which are contained in the Plan document. If there should be any
disagreement between this description and the Plan document, then the Plan
document will prevail. A copy of the Plan document will be provided to you upon
request.
<PAGE>
Who is covered?
- - --------------
Employees of the Company or the Partnership at the Atlanta, Boston, and
regional offices who receive a "Notice of Participation" and are employed at the
time of a change in control consummated by June 30, 1999. Different benefits are
provided for various groups of employees. This summary plan description
describes the benefits for non-exempt employees.
Who receives a "Notice of Participation"?
- - -----------------------------------------
All those non-exempt employees except those assigned at a property,
temporary employees, and those covered by other written agreements.
When does the Protection Period end?
- - ------------------------------------
It ends 15 months following a change in control consummated by June 30,
1999. If there is not a change of control consummated by June 30, 1999, the plan
ends June 30, 1999.
What happens if after the change in control I am involuntarily terminated during
- - --------------------------------------------------------------------------------
the protection period?
- - ----------------------
If it is without "cause", you receive the severance benefit. For the
purposes of this plan and this plan only, "cause" is (a) an act or omission by
the employee that may adversely effect the business or the employee's ability to
perform services for the company, including, without limitation, the commission
of any crime (other than ordinary traffic violations) or (b) misconduct or
neglect of duties in connection with the business or affairs of the company,
including, but not limited to, excessive absenteeism or tardiness, which has not
been corrected within the time period specified in a written notice to the
employee which sets forth such misconduct or neglect of duties.
What happens if after the change of control I have an involuntary reduction in
- - ------------------------------------------------------------------------------
base salary or am asked to relocate greater than 50 miles (one-way) from my
- - ---------------------------------------------------------------------------
workplace during the protection period?
- - ---------------------------------------
This is a "good reason" and you may resign and receive the severance
benefit.
<PAGE>
What is a change in control?
- - ----------------------------
This is defined in the Plan. It basically means a change in control
occurs if an individual, corporation, partnership or other entity acquires 25%
or more of the beneficial ownership of the outstanding voting stock of the
Company. A change in control will also occur if the Company is merged with any
other corporation or entity in a merger where the holders of the outstanding
stock of the Company prior to the merger do not own more than 50% of the
outstanding stock of the surviving Company. A change in control will also occur
if substantially all of the assets of the Company are sold other than pursuant
of a plan of liquidation adopted pursuant to the Company Charter.
How is the severance benefit paid?
- - ----------------------------------
At your election in a lump sum or salary continuation. Such payments
will be made as soon as practical after all administration issues are resolved.
If you elect a lump sum, medical and dental coverage will be COBRA rates. If you
elect salary continuation, you will be on COBRA but the medical and dental
coverage will be at amounts charged to active employees. The Company will pay
the balance while on salary continuation.
What if I elect salary continuation and then obtain new employment?
- - -------------------------------------------------------------------
The severance benefits continue until fully paid. The medical and
dental rates to continue under COBRA will remain at amounts charged to active
employees while on salary continuation. When salary continuation ends, the full
COBRA rates apply.
Does everyone receive dental and medical coverage?
- - --------------------------------------------------
No. Only those that had such coverage at the time of termination and
elect to continue it by so notifying the company.
<PAGE>
Will the coverage be the same?
- - ------------------------------
If our current dental and medical coverage is continued after the
change in control, yes. If a new plan is offered it will be that plan.
May I elect salary continuance and then change to lump sum on the balance at a
- - ------------------------------------------------------------------------------
later date?
- - -----------
Yes.
Does vacation accrue while on salary continuance?
- - -------------------------------------------------
No. Vacation accrual ends on the last day worked.
Are there any other conditions?
- - -------------------------------
Yes. To receive the severance payments you are required to sign a
release of claims against the Company. You will be provided sufficient time to
review the release prior to signing. A copy of such release will be made
available for you to review as soon as practical after any change in control
occurs. (For pay through last day worked and earned unused vacation no release
is required).
What are my continuing obligations if I receive payment under the plan?
- - -----------------------------------------------------------------------
If you receive a benefit payment you may not solicit those who remained
employed until 15 months after your termination.
What is my benefit?
- - -------------------
The formula is 13 weeks base salary plus 2 weeks for each year of service at
time of closing (prorated for partial years).
Give me an example:
-------------------
Your employment date is 1/1/96. On 6/30/99 there is a change in control
consummated. Therefore you have 13 weeks + 7 weeks or a total of 20
weeks.
What is the source of benefits under the Plan?
- - ----------------------------------------------
Benefits under the Plan are provided from the general assets of the
Company.
<PAGE>
Who interprets the plan?
- - ------------------------
The interpretation of the plan, this summary, plan description, and any
claim under this program will be in the sole discretion of David Marshall or his
designee and binding on all participants and any successor company.
Can I lose my benefits during the Protection Period?
- - ----------------------------------------------------
Yes. You will receive no benefits if you quit (other than for good
reason) or retire or if you are terminated for cause.
Does this plan cover benefits on terminations before or after the Protection
- - ----------------------------------------------------------------------------
Period?
- - -------
No. The benefits apply only to terminations during the protection
period. If you quit (for any reason), retire, or you are terminated outside the
protection period these plan benefits do not apply.
What is expected from me while the plan is in effect?
- - -----------------------------------------------------
The best thing you can do is to continue to perform your duties in an
acceptable manner and to maintain a positive work environment. We also expect
your cooperation with any assignment related to consummating a change in
control. It is extremely important that we demonstrate business as usual and
maintain a high level of performance.
<PAGE>
PLAN ADMINISTRATOR
------------------
The Plan Administrator is Mr. David Marshall, Chief Executive Officer,
President of Berkshire Realty Company, Inc. or his designee. The Plan
Administrator has general authority to control, manage and interpret the Plan.
PLAN AMENDMENT OR TERMINATION
-----------------------------
Berkshire Realty Company, Inc. intends to continue the Plan in the
future. It reserves, however, the right to amend or terminate the Plan at any
time. However, if you have received a notice of participation, the Company
cannot reduce your benefits under the Plan without your consent. Neither the
Plan nor this Summary constitutes a contract of employment. They do not
interfere with your right to leave the Employer nor with the Employer's right to
terminate your service.
CLAIM FOR BENEFITS
------------------
The Plan Administrator has general authority to manage this Plan. If
you are not satisfied with a decision as to your benefits under this Plan, you
can file a claim for benefits, in writing, with the Plan Administrator at the
following address:
Mr. David Marshall
Berkshire Realty Company, Inc.
470 Atlantic Avenue
Boston, MA 02210
(617) 423-2233
Generally, if your claim is denied you will receive a letter from the
Plan Administrator giving you the reasons and making reference to the Plan
provisions which apply to your case. It will also tell you how to appeal the
decision and what information is necessary to prove your claim and why. However,
if you do not hear from the Plan Administrator within 30 days after filing your
claim, your claim has been denied. Here is how you appeal:
<PAGE>
1. Within 60 days after receiving the denial you can send a written
request for further review to the Plan Administrator. The Plan Administrator may
but need not, appoint other persons to review your claim. You may state your
reasons for appeal and any information to support your claim or have a
spokesperson represent you. You have a right to review documents which may
affect your case.
2. Within 60 days of receiving your request the Plan Administrator will
notify you of the Plan Administrator's final decision with reasons. In special
cases (for example, if a hearing is necessary) the Plan Administrator has 120
days to notify you of the Plan Administrator's decision.
RIGHTS AND PROTECTIONS UNDER ERISA
----------------------------------
As a Participant in the Berkshire Realty Company, Inc. Severance
Benefits Plan, you are entitled to certain rights and protections under the
Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all
plan participants shall be entitled to:
o Examine, without charge, at the Plan Administrator's office, all Plan
documents and copies of all documents filed by or on behalf of the
Plan with the U.S. Department of Labor.
o Obtain copies of all Plan documents and other Plan information upon
written request to the Plan Administrator. The administrator may make
a reasonable charge for the copies.
o Obtain a statement telling you the amount paid on your behalf. This
statement must be requested in writing and is not required to be given
more than once a year. The Plan must provide the statement free of
charge.
<PAGE>
In addition to creating rights for plan participants, ERISA imposes
duties upon the people who are responsible for the operation of the Plan. The
people who operate your Plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan participants. No one,
including your employer or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining a benefit or
exercising your rights under ERISA. If your claim for a benefit is denied in
whole or in part you must receive a written explanation of the reason for the
denial. You have the right to have the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the Plan and do not receive them within
30 days, you may file suit in a federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay you up to $100 a
day until you receive the materials, unless the materials were not sent because
of reasons beyond the control of the Administrator. If you have a claim for
benefits which is denied or ignored, in whole or in part, you may file suit in a
state or federal court. If you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of Labor, or you may
file suit in a federal court. The court will decide who should pay court costs
and legal fees. If you are successful the court may order the person you have
sued to pay these costs and fees. If you lose, the court may order you to pay
these costs and fees, for example, if it finds your claim is frivolous. If you
have any questions about your Plan, you should contact the Plan Administrator.
If you have any questions about this statement or about rights under ERISA, you
should contact the nearest Area Office of the U.S. Labor-Management Services
Administration, Department of Labor.
<PAGE>
OTHER INFORMATION
- - -----------------
Plan Sponsors Berkshire Realty Company, Inc. (the "Company")
470 Atlantic Avenue
Boston, MA 02110
(617) 423-2233
Employer ID Number: 04-3086485
BRI OP Limited Partnership (the "Partnership")
470 Atlantic Avenue
Boston, MA 02110
(617) 423-2233
Employer ID Number: 04-3267483
Plan Number: 510
Plan Administrator: Mr. David Marshall
Chief Executive Officer
Berkshire Realty Company, Inc.
470 Atlantic Avenue
Boston, MA 02110
(617) 423-2233
Person Designated to
Receive Service of Legal
Process: General Counsel
Berkshire Realty Company, Inc.
470 Atlantic Avenue
Boston, MA 02110
(617) 423-2233
Type of Plan: Welfare plan providing severance benefits
Plan Year End: December 31
BERKSHIRE REALTY COMPANY, INC.
SEVERANCE BENEFIT PLAN
Summary Plan Description
------------------------
VICE PRESIDENTS OR HIGHER
IN ACQUISITIONS
INTRODUCTION
------------
The Berkshire Realty Company, Inc. Severance Benefit Plan (the "Plan")
was established by the Berkshire Realty Company, Inc. (the "Company") and BRI OP
Limited Partnership (the "Partnership") to provide severance benefits to
eligible employees. This is a summary of the Plan and the benefits you may
receive under it. This is a summary, so it does not contain all the details of
the Plan which are contained in the Plan document. If there should be any
disagreement between this description and the Plan document, then the Plan
document will prevail. A copy of the Plan document will be provided to you upon
request.
<PAGE>
Who is covered?
- - ---------------
Employees of the Company or the Partnership at the Atlanta, Boston, and
regional offices who receive a "Notice of Participation" and are employed at the
time of a change in control consummated by June 30, 1999. Different benefits are
provided for various groups of employees. This summary plan description
describes the benefits for Vice Presidents or higher in Acquisitions.
Who receives a "Notice of Participation"?
- - -----------------------------------------
All Vice Presidents or higher in Acquisitions except temporary
employees, those hired by the Company or the Partnership after May 26, 1997, and
those covered by other written agreements.
When does the Protection Period end?
- - ------------------------------------
It ends 15 months following a change in control consummated by June 30,
1999. If there is not a change of control consummated by June 30, 1999, the plan
ends June 30, 1999.
What happens if after the change in control I am involuntarily terminated during
- - --------------------------------------------------------------------------------
the protection period?
- - ----------------------
If it is without "cause", you receive the severance benefit. For the
purposes of this plan and this plan only, "cause" is (a) an act or omission by
the employee that may adversely effect the business or the employee's ability to
perform services for the company, including, without limitation, the commission
of any crime (other than ordinary traffic violations) or (b) misconduct or
neglect of duties in connection with the business or affairs of the company,
including, but not limited to, excessive absenteeism or tardiness, which has not
been corrected within the time period specified in a written notice to the
employee which sets forth such misconduct or neglect of duties.
<PAGE>
What happens if after the change of control I have an involuntary reduction in
- - ------------------------------------------------------------------------------
compensation or am asked to relocate greater than 50 miles (one-way) from my
- - ----------------------------------------------------------------------------
workplace during the protection period?
- - ---------------------------------------
This is a "good reason" and you may resign and receive the severance
benefit. For the purposes of "good reason" and "good reason" only compensation
means base rate of pay and commission or bonus opportunity currently in effect
at the time of a change in control consummated by June 30, 1999.
What is a change in control?
- - ----------------------------
This is defined in the Plan. It basically means a change in control
occurs if an individual, corporation, partnership or other entity acquires 25%
or more of the beneficial ownership of the outstanding voting stock of the
Company. A change in control will also occur if the Company is merged with any
other corporation or entity in a merger where the holders of the outstanding
stock of the Company prior to the merger do not own more than 50% of the
outstanding stock of the surviving Company. A change in control will also occur
if substantially all of the assets of the Company are sold other than pursuant
of a plan of liquidation adopted pursuant to the Company Charter.
How is the severance benefit paid?
- - ----------------------------------
At your election in a lump sum or salary continuation. Such payments
will be made as soon as practical after all administration issues are resolved.
If you elect a lump sum, medical and dental coverage will be COBRA rates. If you
elect salary continuation, you will be on COBRA but the medical and dental
coverage will be at amounts charged to active employees. The Company will pay
the balance while on salary continuation.
<PAGE>
What if I elect salary continuation and then obtain new employment?
- - -------------------------------------------------------------------
The severance benefits continue until fully paid. The medical and
dental rates to continue under COBRA will remain at amounts charged to active
employees while on salary continuation. When salary continuation ends, the full
COBRA rates apply.
Does everyone receive dental and medical coverage?
- - --------------------------------------------------
No. Only those that had such coverage at the time of termination and
elect to continue it by so notifying the company.
Will the coverage be the same?
- - ------------------------------
If our current dental and medical coverage is continued after the
change in control, yes. If a new plan is offered it will be that plan.
May I elect salary continuance and then change to lump sum on the balance at a
- - ------------------------------------------------------------------------------
later date?
- - -----------
Yes.
Does vacation accrue while on salary continuance?
- - -------------------------------------------------
No. Vacation accrual ends on the last day worked.
Are there any other conditions?
- - -------------------------------
Yes. To receive the severance payments you are required to sign a
release of claims against the Company. You will be provided sufficient time to
review the release prior to signing. A copy of such release will be made
available for you to review as soon as practical after any change in control
occurs. (For pay through last day worked and earned unused vacation no release
is required).
What are my continuing obligations if I receive payment under the plan?
- - -----------------------------------------------------------------------
If you receive a benefit payment you may not solicit those who remained
employed until 15 months after your termination.
<PAGE>
What is my benefit?
- - -------------------
The formula is 52 weeks base salary plus 1 week for each year of
service at time of closing (prorated for partial years), plus a supplemental
payment of $50,000.
Give me an example:
-------------------
Your employment date is 1/1/96. On 6/30/99 there is a change in control
consummated. Therefore you have 52 weeks + 3 1/2 weeks or a total of
55 1/2 weeks, plus $50,000.
What is the source of benefits under the Plan?
- - ----------------------------------------------
Benefits under the Plan are provided from the general assets of the
Company.
Who interprets the plan?
- - ------------------------
The interpretation of the plan, this summary, plan description, and any
claim under this program will be in the sole discretion of David Marshall or his
designee and binding on all participants and any successor company.
Can I lose my benefits during the Protection Period?
- - ----------------------------------------------------
Yes. You will receive no benefits if you quit (other than for good
reason) or retire or if you are terminated for cause.
Does this plan cover benefits on terminations before or after the Protection
- - ----------------------------------------------------------------------------
Period?
- - -------
No. The benefits apply only to terminations during the protection
period. If you quit (for any reason), retire, or you are terminated outside the
protection period these plan benefits do not apply.
What is expected from me while the plan is in effect?
- - -----------------------------------------------------
The best thing you can do is to continue to perform your duties in an
acceptable manner and to maintain a positive work environment. We also expect
your cooperation with any assignment related to consummating a change in
control. It is extremely Important that we demonstrate business as usual and
maintain a high level of performance.
<PAGE>
PLAN ADMINISTRATOR
------------------
The Plan Administrator is Mr. David Marshall, Chief Executive Officer,
President of Berkshire Realty Company, Inc. or his designee. The Plan
Administrator has general authority to control, manage and interpret the Plan.
PLAN AMENDMENT OR TERMINATION
-----------------------------
Berkshire Realty Company, Inc. intends to continue the Plan in the
future. It reserves, however, the right to amend or terminate the Plan at any
time. However, if you have received a notice of participation, the Company
cannot reduce your benefits under the Plan without your consent. Neither the
Plan nor this Summary constitutes a contract of employment. They do not
interfere with your right to leave the Employer nor with the Employer's right to
terminate your service.
CLAIM FOR BENEFITS
------------------
The Plan Administrator has general authority to manage this Plan.
If you are not satisfied with a decision as to your benefits under this
Plan, you can file a claim for benefits, in writing, with the Plan Administrator
at the following address:
Mr. David Marshall
Berkshire Realty Company, Inc.
470 Atlantic Avenue
Boston, MA 02210
(617) 423-2233
Generally, if your claim is denied you will receive a letter from the
Plan Administrator giving you the reasons and making reference to the Plan
provisions which apply to your case. It will also tell you how to appeal the
decision and what information is necessary to prove your claim and why. However,
if you do not hear from the Plan Administrator within 30 days after filing your
claim, your claim has been denied. Here is how you appeal:
<PAGE>
1. Within 60 days after receiving the denial you can send a written
request for further review to the Plan Administrator. The Plan Administrator may
but need not, appoint other persons to review your claim. You may state your
reasons for appeal and any information to support your claim or have a
spokesperson represent you. You have a right to review documents which may
affect your case.
2. Within 60 days of receiving your request the Plan Administrator will
notify you of the Plan Administrator's final decision with reasons. In special
cases (for example, if a hearing is necessary) the Plan Administrator has 120
days to notify you of the Plan Administrator's decision.
RIGHTS AND PROTECTIONS UNDER ERISA
----------------------------------
As a Participant in the Berkshire Realty Company, Inc. Severance
Benefits Plan, you are entitled to certain rights and protections under the
Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all
plan participants shall be entitled to:
o Examine, without charge, at the Plan Administrator's office, all
Plan documents and copies of all documents filed by or on behalf
of the Plan with the U.S. Department of Labor.
o Obtain copies of all Plan documents and other Plan information
upon written request to the Plan Administrator. The administrator
may make a reasonable charge for the copies.
o Obtain a statement telling you the amount paid on your behalf.
This statement must be requested in writing and is not required
to be given more than once a year. The Plan must provide the
statement free of charge.
<PAGE>
In addition to creating rights for plan participants, ERISA imposes
duties upon the people who are responsible for the operation of the Plan. The
people who operate your Plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan participants. No one,
including your employer or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining a benefit or
exercising your rights under ERISA. If your claim for a benefit is denied in
whole or in part you must receive a written explanation of the reason for the
denial. You have the right to have the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the Plan and do not receive them within
30 days, you may file suit in a federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay you up to $100 a
day until you receive the materials, unless the materials were not sent because
of reasons beyond the control of the Administrator. If you have a claim for
benefits which is denied or ignored, in whole or in part, you may file suit in a
state or federal court. If you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of Labor, or you may
file suit in a federal court. The court will decide who should pay court costs
and legal fees. If you are successful the court may order the person you have
sued to pay these costs and fees. If you lose, the court may order you to pay
these costs and fees, for example, if it finds your claim is frivolous. If you
have any questions about your Plan, you should contact the Plan Administrator.
If you have any questions about this statement or about rights under ERISA, you
should contact the nearest Area Office of the U.S. Labor-Management Services
Administration, Department of Labor.
<PAGE>
OTHER INFORMATION
- - -----------------
Plan Sponsors Berkshire Realty Company, Inc. (the "Company")
470 Atlantic Avenue
Boston, MA 02110
(617) 423-2233
Employer ID Number: 04-3086485
BRI OP Limited Partnership (the "Partnership")
470 Atlantic Avenue
Boston, MA 02110
(617) 423-2233
Employer ID Number: 04-3267483
Plan Number: 510
Plan Administrator: Mr. David Marshall
Chief Executive Officer
Berkshire Realty Company, Inc.
470 Atlantic Avenue
Boston, MA 02110
(617) 423-2233
Person Designated to
Receive Service of Legal
Process: General Counsel
Berkshire Realty Company, Inc.
470 Atlantic Avenue
Boston, MA 02110
(617) 423-2233
Type of Plan: Welfare plan providing severance benefits
Plan Year End: December 31
BERKSHIRE REALTY COMPANY, INC.
SEVERANCE BENEFIT PLAN
Summary Plan Description
------------------------
VICE PRESIDENTS OR HIGHER
IN ADMINISTRATIVE OR PROPERTY MANAGEMENT DEPARTMENTS
INTRODUCTION
------------
The Berkshire Realty Company, Inc. Severance Benefit Plan (the "Plan")
was established by the Berkshire Realty Company, Inc. (the "Company") and BRI OP
Limited Partnership (the "Partnership") to provide severance benefits to
eligible employees. This is a summary of the Plan and the benefits you may
receive under it. This is a summary, so it does not contain all the details of
the Plan which are contained in the Plan document. If there should be any
disagreement between this description and the Plan document, then the Plan
document will prevail. A copy of the Plan document will be provided to you upon
request.
<PAGE>
Who is covered?
- - ---------------
Employees of the Company or the Partnership at the Atlanta, Boston, and
regional offices who receive a "Notice of Participation" and are employed at the
time of a change in control consummated by June 30, 1999. Different benefits are
provided for various groups of employees. This summary plan description
describes the benefits for Vice Presidents or higher in Administrative or
Property Management departments.
Who receives a "Notice of Participation"?
- - -----------------------------------------
All Vice Presidents or higher in Administrative or Property Management
departments except temporary employees, those hired by the Company or the
Partnership after May 26, 1997, and those covered by other written agreements.
When does the Protection Period end?
- - ------------------------------------
It ends 15 months following a change in control consummated by June 30,
1999. If there is not a change of control consummated by June 30, 1999, the plan
ends June 30, 1999.
What happens if after the change in control I am involuntarily terminated during
- - --------------------------------------------------------------------------------
the protection period?
- - ----------------------
If it is without "cause", you receive the severance benefit. For the
purposes of this plan and this plan only, "cause" is (a) an act or omission by
the employee that may adversely effect the business or the employee's ability to
perform services for the company, including, without limitation, the commission
of any crime (other than ordinary traffic violations) or (b) misconduct or
neglect of duties in connection with the business or affairs of the company,
including, but not limited to, excessive absenteeism or tardiness, which has not
been corrected within the time period specified in a written notice to the
employee which sets forth such misconduct or neglect of duties.
<PAGE>
What happens if after the change of control I have an involuntary reduction in
- - ------------------------------------------------------------------------------
base salary or am asked to relocate greater than 50 miles (one-way) from my
- - ---------------------------------------------------------------------------
workplace during the protection period?
- - ---------------------------------------
This is a "good reason" and you may resign and receive the severance
benefit.
What is a change in control?
- - ----------------------------
This is defined in the Plan. It basically means a change in control
occurs if an individual, corporation, partnership or other entity acquires 25%
or more of the beneficial ownership of the outstanding voting stock of the
Company. A change in control will also occur if the Company is merged with any
other corporation or entity in a merger where the holders of the outstanding
stock of the Company prior to the merger do not own more than 50% of the
outstanding stock of the surviving Company. A change in control will also occur
if substantially all of the assets of the Company are sold other than pursuant
of a plan of liquidation adopted pursuant to the Company Charter.
How is the severance benefit paid?
- - ----------------------------------
At your election in a lump sum or salary continuation. Such payments
will be made as soon as practical after all administration issues are resolved.
If you elect a lump sum, medical and dental coverage will be COBRA rates. If you
elect salary continuation, you will be on COBRA but the medical and dental
coverage will be at amounts charged to active employees. The Company will pay
the balance while on salary continuation.
What if I elect salary continuation and then obtain new employment?
- - -------------------------------------------------------------------
The severance benefits continue until fully paid. The medical and
dental rates to continue under COBRA will remain at amounts charged to active
employees while on salary continuation. When salary continuation ends, the full
COBRA rates apply.
<PAGE>
Does everyone receive dental and medical coverage?
- - --------------------------------------------------
No. Only those that had such coverage at the time of termination and
elect to continue it by so notifying the company.
Will the coverage be the same?
- - ------------------------------
If our current dental and medical coverage is continued after the
change in control, yes. If a new plan is offered it will be that plan.
May I elect salary continuance and then change to lump sum on the balance at a
- - ------------------------------------------------------------------------------
later date?
- - -----------
Yes.
Does vacation accrue while on salary continuance?
- - -------------------------------------------------
No. Vacation accrual ends on the last day worked.
Are there any other conditions?
- - -------------------------------
Yes. To receive the severance payments you are required to sign a
release of claims against the Company. You will be provided sufficient time to
review the release prior to signing. A copy of such release will be made
available for you to review as soon as practical after any change in control
occurs. (For pay through last day worked and earned unused vacation no release
is required).
What are my continuing obligations if I receive payment under the plan?
- - -----------------------------------------------------------------------
If you receive a benefit payment you may not solicit those who remained
employed until 15 months after your termination.
What is my benefit?
- - -------------------
The formula is 52 weeks base salary plus 1 week for each year of
service at time of closing (prorated for partial years).
<PAGE>
Give me an example:
-------------------
Your employment date is 1/1/96. On 6/30/99 there is a change in control
consummated. Therefore you have 52 weeks + 3 1/2 weeks or a total of
55 1/2 weeks.
What is the source of benefits under the Plan?
- - ----------------------------------------------
Benefits under the Plan are provided from the general assets of the
Company.
Who interprets the plan?
- - ------------------------
The interpretation of the plan, this summary, plan description, and any
claim under this program will be in the sole discretion of David Marshall or his
designee and binding on all participants and any successor company.
Can I lose my benefits during the Protection Period?
- - ----------------------------------------------------
Yes. You will receive no benefits if you quit (other than for good
reason) or retire or if you are terminated for cause.
Does this plan cover benefits on terminations before or after the Protection
- - ----------------------------------------------------------------------------
Period?
- - -------
No. The benefits apply only to terminations during the protection
period. If you quit (for any reason), retire, or you are terminated outside the
protection period these plan benefits do not apply.
What is expected from me while the plan is in effect?
- - -----------------------------------------------------
The best thing you can do is to continue to perform your duties in an
acceptable manner and to maintain a positive work environment. We also expect
your cooperation with any assignment related to consummating a change in
control. It is extremely important that we demonstrate business as usual and
maintain a high level of performance.
<PAGE>
PLAN ADMINISTRATOR
------------------
The Plan Administrator is Mr. David Marshall, Chief Executive Officer,
President of Berkshire Realty Company, Inc. or his designee. The Plan
Administrator has general authority to control, manage and interpret the Plan.
PLAN AMENDMENT OR TERMINATION
-----------------------------
Berkshire Realty Company, Inc. intends to continue the Plan in the
future. It reserves, however, the right to amend or terminate the Plan at any
time. However, if you have received a notice of participation, the Company
cannot reduce your benefits under the Plan without your consent. Neither the
Plan nor this Summary constitutes a contract of employment. They do not
interfere with your right to leave the Employer nor with the Employer's right to
terminate your service.
CLAIM FOR BENEFITS
------------------
The Plan Administrator has general authority to manage this Plan.
If you are not satisfied with a decision as to your benefits under this
Plan, you can file a claim for benefits, in writing, with the Plan Administrator
at the following address:
Mr. David Marshall
Berkshire Realty Company, Inc.
470 Atlantic Avenue
Boston, MA 02210
(617) 423-2233
Generally, if your claim is denied you will receive a letter from the
Plan Administrator giving you the reasons and making reference to the Plan
provisions which apply to your case. It will also tell you how to appeal the
decision and what information is necessary to prove your claim and why. However,
if you do not hear from the Plan Administrator within 30 days after filing your
claim, your claim has been denied. Here is how you appeal:
<PAGE>
1. Within 60 days after receiving the denial you can send a written
request for further review to the Plan Administrator. The Plan Administrator may
but need not, appoint other persons to review your claim. You may state your
reasons for appeal and any information to support your claim or have a
spokesperson represent you. You have a right to review documents which may
affect your case.
2. Within 60 days of receiving your request the Plan Administrator will
notify you of the Plan Administrator's final decision with reasons. In special
cases (for example, if a hearing is necessary) the Plan Administrator has 120
days to notify you of the Plan Administrator's decision.
RIGHTS AND PROTECTIONS UNDER ERISA
----------------------------------
As a Participant in the Berkshire Realty Company, Inc. Severance
Benefits Plan, you are entitled to certain rights and protections under the
Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all
plan participants shall be entitled to:
o Examine, without charge, at the Plan Administrator's office, all
Plan documents and copies of all documents filed by or on behalf
of the Plan with the U.S. Department of Labor.
o Obtain copies of all Plan documents and other Plan information
upon written request to the Plan Administrator. The administrator
may make a reasonable charge for the copies.
o Obtain a statement telling you the amount paid on your behalf.
This statement must be requested in writing and is not required
to be given more than once a year. The Plan must provide the
statement free of charge.
<PAGE>
In addition to creating rights for plan participants, ERISA imposes
duties upon the people who are responsible for the operation of the Plan. The
people who operate your Plan, called "fiduciaries" of the Plan, have a duty to
do so prudently and in the interest of you and other Plan participants. No one,
including your employer or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining a benefit or
exercising your rights under ERISA. If your claim for a benefit is denied in
whole or in part you must receive a written explanation of the reason for the
denial. You have the right to have the Plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the Plan and do not receive them within
30 days, you may file suit in a federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay you up to $100 a
day until you receive the materials, unless the materials were not sent because
of reasons beyond the control of the Administrator. If you have a claim for
benefits which is denied or ignored, in whole or in part, you may file suit in a
state or federal court. If you are discriminated against for asserting your
rights, you may seek assistance from the U.S. Department of Labor, or you may
file suit in a federal court. The court will decide who should pay court costs
and legal fees. If you are successful the court may order the person you have
sued to pay these costs and fees. If you lose, the court may order you to pay
these costs and fees, for example, if it finds your claim is frivolous. If you
have any questions about your Plan, you should contact the Plan Administrator.
If you have any questions about this statement or about rights under ERISA, you
should contact the nearest Area Office of the U.S. Labor-Management Services
Administration, Department of Labor.
<PAGE>
OTHER INFORMATION
- - -----------------
Plan Sponsors Berkshire Realty Company, Inc. (the "Company")
470 Atlantic Avenue
Boston, MA 02110
(617) 423-2233
Employer ID Number: 04-3086485
BRI OP Limited Partnership (the "Partnership")
470 Atlantic Avenue
Boston, MA 02110
(617) 423-2233
Employer ID Number: 04-3267483
Plan Number: 510
Plan Administrator: Mr. David Marshall
Chief Executive Officer
Berkshire Realty Company, Inc.
470 Atlantic Avenue
Boston, MA 02110
(617) 423-2233
Person Designated to
Receive Service of Legal
Process: General Counsel
Berkshire Realty Company, Inc.
470 Atlantic Avenue
Boston, MA 02110
(617) 423-2233
Type of Plan: Welfare plan providing severance benefits
Plan Year End: December 31
RISK FACTORS
An investment in the Common Stock involves various risks. Prospective
purchasers of Redemption Shares and the Unitholders should carefully consider
the following information in conjunction with the other information set forth or
incorporated by reference in this Prospectus before making an investment
decision regarding the Redemption Shares.
Tax Consequences to Unitholders of Exchange of Units
Tax Consequences of Exchange of Units. In the event that a Unitholder
exercises his or her rights to convert Units into cash or Redemption Shares, the
Company's acquisition of such Units will be treated for tax purposes as a sale
of the Units. Such a sale will be fully taxable to the Unitholder and the
Unitholder will be treated as realizing for tax purposes an amount equal to the
sum of the cash received or the value of the Redemption Shares received, as the
case may be, plus the amount of any Operating Partnership liabilities allocable
to such Units at the time of disposition. It is possible that the amount of gain
recognized or even the tax liability resulting from such gain could exceed the
amount of cash or the value of the Redemption Shares received upon such
disposition. See "Description of Units and Redemption of Units -- Tax
Consequences of Conversion." In addition, the ability of the Unitholder to sell
a substantial number of Redemption Shares in order to raise cash to pay tax
liabilities associated with the conversion of Units may be limited as a result
of fluctuations in the market price of the Common Stock, and the price the
Unitholder receives for such shares may not equal the value of the Units at the
time of the election to convert.
Potential Change in Investment Upon Redemption of Units. If a
Unitholder exercises his or her right to require the conversion of all or a
portion of his or her Units, the Unitholder may receive, at the discretion of
the Operating Partnership, Redemption Shares or cash. If the Unitholder receives
cash, the Unitholder will not have any interest in the Company or the Operating
Partnership (except to the extent that he or she has not elected to convert
Units) and will not benefit from any subsequent increases in the value of Common
Stock and will not receive any future distributions from the Company or the
Operating Partnership (unless the Unitholder retains or acquires in the future
additional Common Stock or Units). If the Unitholder receives Common Stock, the
Unitholder will become a shareholder of the Company rather than a holder of
Units in the Operating Partnership. See "Description of Units and Conversion of
Units -- Comparison of Ownership of Units and Common Stock."
Development and Acquisition Risks
Acquisition Risks. The Company regularly evaluates many potential
acquisitions, the process of which involves costs which are non-recoverable.
There
-9-
<PAGE>
can be no assurance that properties which are acquired will perform in
accordance with expectations or that cost estimates for improvements to the
acquired properties in order to bring them up to the Company's standards will be
accurate. In connection with acquisitions in which the sellers received Units,
the Company has agreed to certain restrictions on its ability to sell (subject
to like-kind exchanges), refinance or pay down indebtedness (subject to
refinancing on terms which would not affect the tax basis of such Unit
recipient(s)) on such properties for various periods of time extending beyond a
year. These restrictions may impair the ability of the Company to take actions
during the period such restrictions apply that would otherwise be in the best
interests of the Company's shareholders and, therefore, may have an adverse
effect on the Company's results of operations, financial condition and ability
to make expected distributions to shareholders. The Company anticipates that it
may agree to similar restrictions in connection with future acquisitions.
Development Risks. The Company also intends to continue the development
and expansion of apartment communities in accordance with the Company's
development and underwriting policies as opportunities arise in the future.
Risks associated with such development and construction activities include the
following: (i) the Company may abandon development opportunities after expending
resources to determine a project's feasibility; (ii) construction costs of a
project may exceed original estimates; (iii) occupancy rates and rents at a
newly completed property may not be sufficient to make the property profitable;
(iv) financing may not be available on favorable terms for development of a
property; and (v) construction and lease-up may not be completed on schedule,
resulting in increased debt service expense and construction costs. Development
activities are also subject to risks relating to the inability to obtain, or
delays in obtaining, all necessary zoning, land-use, building, occupancy and
other required governmental permits and authorizations. If any of the foregoing
occurs, the Company's results of operations, financial condition and ability to
make expected distributions to shareholders could be adversely affected. In
addition, new development activities, regardless of whether they are ultimately
successful, typically require a substantial portion of management's time and
attention.
The Company anticipates that future development will be financed, in
whole or in part, through additional equity offerings or through the Company's
lines of credit or other forms of secured or unsecured construction financing
that will result in the risk that, upon completion of construction, permanent
financing for newly developed properties may not be available or may be
available only on disadvantageous terms.
Risks Associated with Growth. The Company is currently experiencing a
period of rapid growth. During 1997 and the first six months of 1998, the
Company acquired 46 apartment communities containing an aggregate of
approximately 11,600 units. The integration of the recent acquisitions into
existing management and operating structures presents a management challenge.
Although the Company believes it has sufficient management depth to lead the
Company through this period
-10-
<PAGE>
of rapid growth, there can be no assurance that the Company will be able to
assimilate these recent acquisitions or any further acquisitions into its
portfolio without certain operating disruptions and unanticipated costs. The
failure to successfully integrate acquisitions could have an adverse effect on
the Company's results of operations, financial condition and ability to pay
expected distributions to shareholders.
Vote Regarding Continuation of the Company
The Restated Certificate of Incorporation of the Company, as amended
(the "Certificate"), requires that the Board of Directors of the Company prepare
and submit to the shareholders, on or before December 31, 1998, a proposal to
liquidate the Company's assets and distribute the net proceeds of such
liquidation. The liquidation proposal will become effective only if approved by
shareholders holding a majority of the shares then outstanding. If the Company
were liquidated, there would be no assurance that the proceeds of the
liquidation per share of Common Stock would equal the value of a Redemption
Share at the time of a Unitholder's election to convert his or her Units or the
market value of such a Redemption Share at any particular time. In the event the
Company solicits such shareholder vote, the Company will incur costs associated
with the appraisal of the Company's real estate assets and the shareholder
solicitation regardless of the outcome of such vote.
General Real Estate Risks
The ownership of real estate presents a variety of risks, including the
risks described below:
General. The Company invests in apartment communities and as such will
be subject to varying degrees of risk generally incident to the ownership and
development of real property. The underlying value of the Company's real estate
investments and the Company's financial condition and ability to make expected
distributions to its shareholders will be dependent upon its ability to operate
and develop its properties in a manner that will maintain or increase revenues
and to generate sufficient income in excess of operating expenses. Income from
the properties may be adversely affected by changes in national and local
economic conditions such as oversupply of apartment units or a reduction in
demand for apartment units in the Company's markets, the attractiveness of the
properties to tenants, changes in interest rates and in the availability, cost
and terms of mortgage financings, the ongoing need for capital improvements,
particularly in older structures, changes in real estate tax rates and other
operating expenses, adverse changes in governmental rules and fiscal policies,
adverse changes in zoning laws, civil unrest, acts of God, including natural
disasters (which may result in uninsured losses), acts of war and other factors
which are beyond the control of the Company. If the Company were unable to
promptly renew or relet the leases for a significant number of apartment units,
or, if the rental rates upon such renewal or reletting were
-11-
<PAGE>
significantly lower than expected rates, the Company's results of operations,
financial condition and ability to make expected distributions to shareholders
might be adversely affected. In addition, certain expenditures associated with
each apartment community (such as real estate taxes and maintenance costs) are
generally not reduced when circumstances cause a reduction in income from such
property.
Dependence on Primary Markets. Substantially all of the communities
owned by the Company are located in Florida, Texas and the Mid-Atlantic and
Southeastern United States and, therefore, the Company's results of operations,
financial condition and ability to make expected distributions to shareholders
will be linked to the economic conditions in these markets as well as the market
for apartment communities generally. To the extent that these conditions affect
the market for apartment communities, they could have an adverse effect on the
Company's results of operations, financial condition and ability to make
expected distributions to shareholders.
Regulatory Risks. Real estate is governed by a wide variety of federal,
state and local zoning, subdivision, planning, building, environmental and other
land use laws and regulations. Such laws may place significant restrictions on
the Company's ability to develop real estate or to improve real estate which it
owns, and even unintentional violations of such laws and regulations by the
Company or its tenants may result in forced corrective action and substantial
monetary penalties. In addition, as to multifamily residential apartment
properties, various federal, state and local laws and regulations may restrict
the amount and process by which rents may increase, as well as the Company's
right to convert a property to other uses, such as condominiums or cooperatives.
Further, increases in real estate taxes and income, service or other taxes
generally are not passed through to tenants under the Company's leases and may
adversely affect the Company's results of operations, financial condition and
ability to make expected distributions to shareholders.
Risks of Liability and Loss. The development and ownership of real
estate may result in liability to third parties, due to conditions existing on a
property which result in injury. Such liability may be uninsurable in some
circumstances or may exceed the limits of insurance maintained at typical
amounts for the type and condition of such property. In addition, real estate
may suffer a loss in value due to casualties such as fire or hurricane. Such
loss may be uninsurable in some circumstances or may exceed the limits of
insurance maintained at typical amounts for the type and condition of the
property. Real estate may also be taken, in whole or in part, by public
authorities for public purposes in eminent domain proceedings. Awards resulting
from such proceedings may not adequately compensate the Company for the value
lost.
Value and Illiquidity of Real Estate. Real estate investments are
relatively illiquid. The Company's ability to vary its portfolio in response to
changes in economic and other conditions will therefore be limited. If the
Company must sell an
-12-
<PAGE>
investment, there can be no assurance that it will be able to dispose of the
investment in the time period it desires or that the sales price of the
investment will recoup or exceed the amount of the Company's cost for the
investment.
Potential Adverse Effect on Results of Operations Due to Operating
Risks. The Company's properties are subject to operating risks common to real
estate in general, any and all of which may adversely affect occupancy or rental
rates. The Company's properties are subject to increases in operating expenses
such as cleaning, electricity, heating, ventilation and air conditioning,
elevator repair and maintenance; insurance and administrative costs; and other
general costs associated with security, landscaping, repairs and maintenance. If
operating expenses increase, the local rental market may limit the extent to
which rents may be increased to meet such increased expenses without decreasing
occupancy rates. While the Company implements cost-saving incentive measures at
each of its properties, if such expenses increase faster than rental rates, the
Company's results of operations, financial condition and ability to pay
distributions to shareholders could be adversely affected.
Competition. All of the Company's properties are located in developed
areas that include other multifamily residential properties. The number of
competitive properties in a particular area could have a material adverse effect
on the Company's ability to lease apartment units or the rents charged for such
units. The Company may be competing with other entities that have greater
resources than the Company and whose executives have more experience than the
Company's officers and directors. In addition, other forms of housing, including
manufactured housing community properties and single-family housing provide
alternatives to potential residents of multifamily residential properties.
Cost of Compliance with Fair Housing Amendments Act and Americans with
Disabilities Act. The Fair Housing Amendments Act (the "FHA") imposes certain
requirements related to access by physically handicapped persons on multifamily
properties first occupied after March 13, 1991 or for which construction permits
were obtained after June 15, 1990. Noncompliance with the FHA could result in
the imposition of fines or the award of damages to private litigants. The
Company believes that its properties that are subject to the FHA are in
compliance with such law.
All of the Company's properties must comply with the Americans with
Disabilities Act (the "ADA") to the extent such properties are "public
accommodations" or "commercial facilities," as defined by the ADA. The ADA
requires that facilities, including leasing offices, open to the general public
be made accessible to people with disabilities. Individual apartment units are
not considered "public accommodations" for purposes of the ADA. Compliance with
the ADA requirements could require removal of access barriers and other capital
improvements to the public areas of the Company's properties. Noncompliance
could result in imposition of fines by the U.S. government or an award of
damages to
-13-
<PAGE>
private litigants. The Company does not believe that any material changes to the
properties are currently required by the ADA. If changes are subsequently
required involving material expenditures, the Company's results of operation,
financial condition and ability to make expected distributions to shareholders
could be adversely affected.
Uninsured Loss. The Company maintains comprehensive liability, fire,
flood (where appropriate), extended coverage and rental loss insurance with
respect to the Company's properties with policy specifications, limits and
deductibles customarily carried for similar properties. Certain types of losses,
however, may be either uninsurable or not economically insurable, such as losses
due to earthquakes, riots or acts of war. Should an uninsured loss occur, the
Company could lose both its investment in and anticipated profits and cash flow
from a property.
Risks of Joint Ventures. The investment by the Company in a joint
venture partnership which owns property, instead of investing directly in the
property itself, may, under certain circumstances, involve risks which would not
otherwise be present. For example, the Company's joint venture partner may
experience financial difficulties and such partner may at any time have economic
or business interests or goals which are inconsistent with the business
interests and goals of the Company or contrary to the Company's policies or
objectives. Actions by (or litigation involving) such a partner might have the
result of subjecting the property owned by the joint venture to liabilities in
excess of those contemplated by the terms of the joint venture agreement. In
addition, there is a risk of impasse between the parties since either party may
disagree with a proposed transaction involving the property owned by the joint
venture and impede any proposed action. The Company may own additional
properties through joint venture partnerships between the Company and the
sellers of the properties or other third party partners.
Risk of Adverse Effect on Company from Debt Servicing and Refinancing,
Financial Covenants, Absence of Limitations on Debt and Increases in Interest
Rates
General. If the Company were unable to refinance its indebtedness on
acceptable terms, or at all, the Company might be forced to dispose of one or
more of its properties on disadvantageous terms, which might result in losses to
the Company and might adversely affect the Company's results of operations,
financial condition and ability to make expected distributions to shareholders.
If interest rates or other factors at the time of the refinancing result in
higher interest rates upon refinancing, the Company's interest expense would
increase, which would adversely affect the Company's results of operations,
financial condition and ability to make expected distributions to shareholders.
Furthermore, if a property is mortgaged to secure payment of indebtedness and
the Company is unable to meet mortgage payments, the mortgagee could foreclose
upon the property, appoint a receiver and receive an assignment of rents and
leases or pursue other remedies, all with a consequent loss of
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<PAGE>
income and asset value to the Company. Even with respect to nonrecourse
indebtedness, the lender may have the right to recover deficiencies from the
Company in certain circumstances, including fraud and environmental liabilities.
Foreclosures could also create taxable income without accompanying cash
proceeds, thereby reducing the Company's cash available for distribution and
hindering the Company's ability to meet the REIT distribution requirements of
the Internal Revenue Code of 1986, as amended (the "Code"). The Company is
subject to risks normally associated with debt financing including the
possibility that the Company will have insufficient cash flow to meet required
principal and interest payments, be unable to satisfy financial covenants in its
debt financing agreements, existing indebtedness (which in most cases will not
be fully amortized at maturity) or secure favorable refinancing terms.
Additionally, in connection with the acquisition of certain properties in
exchange for Units, the Company has agreed to maintain certain levels of
non-recourse debt on the properties in order to minimize the tax consequences of
these acquisitions to the Unit recipients.
Absence of Debt Limitation. The Company currently has a policy of
incurring debt only if upon such incurrence the ratio of the Company's debt to
the value of its assets would be 50% or less. Although the Company has adopted
this policy, the Certificate and the Company's By-Laws, as amended
(collectively, the "Organizational Documents"), do not contain any limitation on
the amount of indebtedness the Company may incur. Accordingly, the Board of
Directors could alter or eliminate this policy and would do so, for example, if
it were necessary in order for the Company to continue to qualify as a REIT.
Increase in Market Interest Rates on Variable Interest Rates.
Outstanding advances under certain of the Company's credit facilities bear
interest at a variable rate. The Company may incur additional variable rate
indebtedness in the future. Accordingly, increases in interest rates could
increase the Company's interest expense, which could adversely affect the
Company's results of operations, financial condition and ability to pay expected
distributions to shareholders. An increase in interest expense could also cause
the Company to be in default under certain covenants of the credit facilities.
Potential Environmental Liability
Under various Federal, state and local environmental laws, ordinances
and regulations, an owner or operator of real estate may be liable for the costs
of removal or remediation of certain hazardous or toxic substances on such
property. These laws often impose environmental liability without regard to
whether the owner or operator knew of, or was responsible for, the presence of
such hazardous or toxic substances. The presence of such substances, or the
failure to properly remediate such substances, may adversely affect the owner's
or operator's ability to sell or rent the property or to borrow using the
property as collateral. Persons who arrange for the disposal or treatment of
hazardous or toxic substances may also be liable for the
-15-
<PAGE>
costs of removal or remediation of such substances at a disposal or treatment
facility, whether or not such facility is owned or operated by such person.
Certain third parties may seek recovery from owners or operators of such
properties or persons who arranged for the disposal or treatment of hazardous or
toxic substances and, therefore, are potentially liable for removal or
remediation costs, as well as certain other related costs, including
governmental fines and injuries to persons and property.
All of the properties have been the subject of a Phase I or similar
environmental assessment (which involves general inspections without soil
sampling or ground water analysis and generally without radon testing) completed
by qualified independent environmental consultant companies. These environmental
assessments have not revealed any environmental liability that would have a
material adverse effect on the Company's results of operations, financial
condition and ability to make expected distributions to shareholders, and the
Company is not aware of any such environmental liability.
Dilution
The interest of the Company's shareholders may be subject to dilution
in the future since the Company has the ability to raise additional equity by
offering shares for sale. The authorized but unissued capital stock of the
Company (including additional authorized preferred stock, senior to the Common
Stock) may be issued for any corporate purpose, including acquisitions of other
entities which invest in or hold real estate investments, issuances of
additional Common Stock pursuant to the Company's Amended and Restated Stock
Option Plan and issuances which would make more difficult, and therefore less
likely, changes in control of the Company. Any such issuance of additional stock
could have the effect of diluting the earnings per share, book value per share,
voting power of existing shares of Common Stock and ownership of persons seeking
to obtain control of the Company. See "-- Anti-Takeover Provisions." The
issuance by the Operating Partnership of additional Units convertible into
shares of Common Stock in exchange for real property or other assets may also
have a substantially similar dilutive effect.
The Company also has an outstanding security convertible into Common
Stock, Series 1997-A Convertible Preferred Stock ("Series 1997-A Preferred").
The conversion price of the Series 1997-A Preferred is subject to adjustment in
certain events to provide anti-dilution protection to the holders of such stock.
See "Description of the Capital Stock of the Company -- Preferred Stock."
-16-
<PAGE>
Anti-Takeover Provisions
In order to facilitate compliance with REIT requirements for tax
purposes, the Organizational Documents place restrictions on the accumulation of
shares in excess of 9.8% of the number of outstanding shares of Common Stock,
subject to certain exceptions permitted with the approval of the Board of
Directors to allow (i) underwritten offerings, or (ii) the sale of equity
securities in circumstances where the Board of Directors determines the
Company's REIT federal tax status will not be jeopardized. This ownership
limitation may discourage a change in control of the Company and may also (i)
deter tender offers for the Common Stock, which offers may be advantageous to
shareholders and (ii) limit the opportunity for shareholders to receive a
premium for their shares of Common Stock that might otherwise exist if an
investor were attempting to assemble a block of Common Stock in excess of 9.8%
of the outstanding shares of Common Stock or otherwise to effect a change in
control of the Company.
The Company's Organizational Documents contain certain provisions which
may discourage a change in control of the Company. In particular, under the
Company's Certificate, the election of Directors is staggered such that
approximately one-third of the Directors are elected to three-year terms each
year and a supermajority vote is required in order to amend those portions of
the Organizational Documents which concern (1) the definition of
"supermajority"; (2) the requirements for amending the Organizational Documents;
(3) the requirements regarding Excess Share ownership (i.e., ownership of shares
in excess of 9.8% of the outstanding shares of Common Stock as described above);
(4) the actions which require a supermajority vote; and (5) the requirements
regarding business combinations. Certain additional provisions restrict the
shareholders' ability to nominate candidates for election as Directors and to
alter, amend and adopt provisions inconsistent with, or to repeal certain
provisions of, the Organizational Documents. In addition, the Company is subject
to Section 203 of the Delaware General Corporation Law, which restricts business
combinations between the Company and its shareholders. The foregoing provisions
may have the effect of delaying, deferring or preventing a transaction or change
in control of the Company that might involve a premium price for the shares of
Common Stock or that otherwise might be in the best interest of the Company's
shareholders.
The Company has an authorized class of 60,000,000 shares of preferred
stock. Currently the Company has approximately 2.7 million shares of its 1997
Series-A Preferred outstanding. The remaining 57.3 million shares may be issued
by the Board of Directors on such terms and with such rights, preferences and
designations as the Board may determine. Issuance of such preferred stock,
depending on the rights, preferences, and designations thereof, may have the
effect of delaying, deterring, or preventing a change in control of the Company.
-17-
<PAGE>
Tax Risks
Risk of Termination of REIT Status. The Company was organized and
intends to continue to conduct its operations to enable it to qualify as a REIT
under the Code. To maintain its status as a REIT, the Company must continually
meet certain criteria concerning, among other things, its Common Stock
ownership, the nature of its assets, the sources of its income, and the amount
of its distributions to shareholders. If the Company fails to qualify, the
Company would be taxed on its income at regular corporate tax rates. The payment
of such tax by the Company would substantially reduce the funds available for
distribution to shareholders or for reinvestment and, to the extent that
distributions had been made in anticipation of the Company's qualification as a
REIT, the Company might be required to borrow additional funds or to liquidate
certain of its investments in order to pay the applicable tax. Moreover, should
the Company's election to be taxed as a REIT be terminated, the Company may not
be able to elect to be treated as a REIT for the following five-year period. The
Company also might be required to borrow funds or to liquidate certain of its
investments to maintain REIT status. See "Certain Federal Income Tax
Considerations."
REIT Minimum Distribution Requirements; Possible Incurrence of
Additional Debt. In order to qualify as a REIT, the Company generally will be
required each year to distribute to its shareholders at least 95% of its taxable
income (excluding any net capital gain). In addition, the Company will be
subject to a 4% nondeductible excise tax on the amount, if any, by which certain
distributions paid by it with respect to any calendar year are less than the sum
of (i) 85% of its ordinary income for that year, (ii) 95% of its capital gain
net income for that year, and (iii) 100% of its undistributed taxable income
from prior years.
The Company intends to make distributions to its shareholders to comply
with the 95% distribution requirement and to avoid the nondeductible excise tax.
The. Company's income will consist primarily of its share of the income of the
Operating Partnership, and the cash available for distribution by the Company to
its shareholders will consist of its share of cash distributions from the
Operating Partnership. Differences in timing between (i) the actual receipt of
income and actual payment of deductible expenses and (ii) the inclusion of such
income and deduction of such expenses in arriving at taxable income of the
Company could require the Company, through the Operating Partnership, to borrow
funds on a short-term basis to meet the 95% distribution requirement and to
avoid the nondeductible excise tax. The requirement to distribute a substantial
portion of the Company's net taxable income could cause the Company to
distribute amounts that otherwise would be spent on future acquisitions, capital
expenditures or repayment of debt, which would require the Company to borrow
funds or to sell assets to fund the costs of such items.
-18-
<PAGE>
Failure of the Operating Partnership to be Classified as a Partnership
for Federal Income Tax Purposes; Negative Impact on REIT Status. The Company has
not requested, and does not expect to request, a ruling from the Internal
Revenue Service ("IRS") that the Operating Partnership (and each of its
noncorporate Operating Subsidiaries (as hereinafter defined) will be classified
as partnerships for federal income tax purposes. If the IRS were to successfully
challenge the tax status of the Operating Partnership (or any noncorporate
Operating Subsidiary) as a partnership for federal income tax purposes, the
Operating Partnership (or the noncorporate Subsidiary) would be taxed as a
corporation. In such event, the Company would likely cease to qualify as a REIT
for a variety of reasons. Furthermore, the imposition of a corporate income tax
on the Operating Partnership would reduce substantially the amount of cash
available for distribution from the Operating Partnership to the Company and its
shareholders. See "Certain Federal Income Tax Considerations -- Other Tax
Consequences -- Effect of Tax Status of the Operating Partnership on REIT
Qualification."
Investment by Qualified Plans Poses Additional Risks. The fiduciary of
a qualified profit-sharing, pension or other retirement plan should take into
consideration certain fiduciary responsibilities and the definition of "plan
assets" under ERISA and applicable Department of Labor regulations.
Possible Changes in Tax Law. Prospective investors should recognize
that the present federal income tax treatment of an investment in the Company
may be modified, prospectively or retroactively, by legislative, judicial or
administrative action at any time. In addition to any direct effects which such
changes might have, such changes might also indirectly affect the market value
of all real estate investments, including those of the Company and,
consequently, the ability of the Company to realize its business objectives.
Dependence on Key Personnel
The Company is dependent on the efforts of its senior executive
officers. While the Company believes that it could find replacements for these
key personnel, the loss of their services could have a temporary adverse effect
on the operations of the Company. As of January 31, 1998, the President and
Chief Executive Officer, Executive Vice President and Chief Operating Officer,
Executive Vice President and Chief Financial Officer, Executive Vice President
for Acquisitions and Chief Investment Officer, Senior Vice President of
Development and President of the Mid-Atlantic Region had entered into employment
agreements with the Company.
Risks of Mortgage Acquisitions
The Company may acquire real estate through the acquisition of
distressed mortgage loans. In such a case, the Company would succeed to the
position of the mortgage lender with the expectation of foreclosing on the
mortgaged property and
-19-
<PAGE>
taking title to it. The Company may encounter certain legal and regulatory
obstacles to foreclosure which could delay or impede the taking of title to the
property by the Company. During the time prior to foreclosure, it is possible
that the borrower of the mortgage loan may make no mortgage payments to the
Company.
Possible Adverse Impact of Market Conditions on Market Price
The market value of the Common Stock could be substantially affected by
general market conditions, including changes in interest rates, government
regulatory action and changes in tax laws. An increase in market interest rates
may lead purchasers of the Common Stock to demand a higher annual dividend yield
on the Common Stock, which could adversely affect the market price of the Common
Stock. Moreover, numerous other factors, such as government regulatory action
and changes in tax laws, could have a significant impact on the future market
price of the Common Stock or other securities.
THE COMPANY
General
The Company is a self-administered and self-managed REIT which
acquires, renovates, rehabilitates, develops and operates apartment communities.
Founded in 1991 with 15 apartment communities containing approximately 4,200
units, as of July 31, 1998 the Company owned 80 apartment communities containing
approximately 23,800 units located in Florida, Texas and the Mid-Atlantic and
Southeastern United States.
The operations of the Company are conducted primarily through the
Operating Partnership and through their other subsidiaries (the "Operating
Subsidiaries"). As of June 30, 1998, the Company held approximately 80.4% of the
partnership interests in the Operating Partnership in its capacity as a special
limited partner and through its 100% ownership of the General Partner. The
remaining approximately 19.6% of the partnership interests in the Operating
Partnership was owned by affiliated and unaffiliated third parties. Units are
convertible on a one-for-one basis into shares of Common Stock or, at the
Company's election, for cash, and holders of Units generally receive
distributions per Unit equal to the dividend per share paid in respect of the
Common Stock. The Company has agreed to select the type of currency of
conversion as directed by the Operating Partnership.
The Company's principal executive offices are located at 470 Atlantic
Avenue, Boston, Massachusetts 02210 and its telephone number is (888) 867-0100.
The Company's property management and development offices are located in
Atlanta, Georgia. In addition, the Company operates six regional offices in
Atlanta, Georgia; Baltimore and Columbia, Maryland; Greenville, South Carolina;
Dallas and Houston, Texas. The Company has approximately 1,100 employees.
-20-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Berkshire
Realty Company's Financial Statements for the year ended September 30, 1998 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000869446
<NAME> BERKSHIRE REALTY COMPANY
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<CASH> 11,905,910
<SECURITIES> 15,282,423 <F1>
<RECEIVABLES> 16,962,504 <F2>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 32,755,164 <F3>
<PP&E> 937,695,844 <F4>
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,014,601,845
<CURRENT-LIABILITIES> 34,067,039
<BONDS> 560,464,463 <F5>
84,837,938 <F6>
0
<COMMON> 339,280,691 <F7>
<OTHER-SE> (4,048,286) <F8>
<TOTAL-LIABILITY-AND-EQUITY> 1,014,601,845
<SALES> 0
<TOTAL-REVENUES> 133,587,924 <F9>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 113,415,285 <F10>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27,848,140
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,675,501)
<DISCONTINUED> (2,996,003) <F11>
<EXTRAORDINARY> 132,454 <F12>
<CHANGES> 1,365,914 <F13>
<NET-INCOME> (9,173,136)
<EPS-PRIMARY> (.25)
<EPS-DILUTED> (.25)
<FN>
<F1> Includes MBS securities, Mortgage loans and Notes receivable.
<F2> Includes escrows held.
<F3> Includes Investment in Joint Venture of 92,992; Intangible Asset and
Workforce acquired of 12,707,078 and other assets of 19,955,094.
<F4> Includes properties held less depreciation.
<F5> Includes Credit Agreements, Mortgages payable and Construction loan.
<F6> Includes Minority Interest.
<F7> Includes Preferred Stock, Common Stock, Additional Paid-In Capital and
Accumulated deficit.
<F8> Includes Loan receivable to Officer and Treasury Stock.
<F9> Includes all revenue of the Company.
<F10> Includes all expenses of the Company.
<F11> Includes Minority Interest income less Income allocated to preferred
shareholders and Extraordinary items.
<F12> Includes income on Joint Venture.
<F13> Includes Gain on Sale of properties.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Berkshire
Realty Company's Financial Statements for the year ended September 30, 1997 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000869446
<NAME> BERKSHIRE REALTY COMPANY
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<CASH> 9,059,234
<SECURITIES> 10,305,666 <F1>
<RECEIVABLES> 11,910,915 <F2>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 57,848,248 <F3>
<PP&E> 566,851,668 <F4>
<DEPRECIATION> 0
<TOTAL-ASSETS> 655,975,731
<CURRENT-LIABILITIES> 17,659,142
<BONDS> 306,037,929 <F5>
57,898,385 <F6>
0
<COMMON> 277,088,349 <F7>
<OTHER-SE> (2,708,074) <F8>
<TOTAL-LIABILITY-AND-EQUITY> 655,975,731
<SALES> 0
<TOTAL-REVENUES> 80,504,100 <F9>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 71,367,883 <F10>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,461,212
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,324,995)
<DISCONTINUED> 241,862 <F11>
<EXTRAORDINARY> (377,012) <F12>
<CHANGES> 6,503,463 <F13>
<NET-INCOME> (1,956,682)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
<FN>
<F1> Includes MBS securities, Mortgage loans and Notes receivable.
<F2> Includes escrows held.
<F3> Includes Investment in Joint Venture of 20,512,712 Intangible assets and
Workforce acquired of 25,739,272 and other assets of 11,596,264.
<F4> Includes properties held less depreciation.
<F5> Includes Credit Agreements, Mortgages payable and Repurchase Agreement
<F6> Includes Minority Interest.
<F7> Includes Preferred Stock, Common Stock, Additional Paid-In Capital and
Accumulated deficit.
<F8> Includes Loan receivable to Officer and Treasury Stock.
<F9> Includes all revenue of the Company.
<F10> Includes all expenses of the Company.
<F11> Includes Minority Interest income less Income allocated to preferred
shareholders and Extraordinary items.
<F12> Includes loss on Joint Venture.
<F13> Includes Gain on Sale of properties.
</FN>
</TABLE>
