BERKSHIRE BANK THREE YEAR CHANGE IN CONTROL AGREEMENT
Exhibit
10.17
BERKSHIRE
BANK
THREE
YEAR CHANGE IN CONTROL AGREEMENT
This
AGREEMENT is made effective as of
February 16, 2006, by and among Berkshire Bank (the
“Institution”), a state chartered
savings institution with its principal
administrative offices at 00 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000,
Berkshire Hills Bancorp,
Inc.
(the “Holding Company”), a corporation organized under the laws of the
state of Delaware, which is the stock holding company of the Institution, and
Xxxxxxx X. Xxxxxxx
(“Executive”).
WHEREAS,
the Institution recognizes the
substantial contributions Executive has made to the Institution and wishes
to
protect Executive’s position with the Institution for the period provided in
this Agreement; and
WHEREAS,
Executive has agreed to serve
in the employ of the Institution.
NOW,
THEREFORE, in consideration of the
contributions and responsibilities of Executive, and upon the other terms and
conditions hereinafter provided, the parties hereto agree as
follows:
1.
TERM OF
AGREEMENT.
The
period of this Agreement shall be
deemed to have commenced as of the date first above written and shall continue
for a period of thirty-six (36) full calendar months
thereafter. Commencing on the first anniversary date of this
Agreement, and continuing on each anniversary thereafter, the Board of Directors
(the “Board”) may act to extend the term of this Agreement for an additional
year, such that the remaining term of this Agreement would be three years,
unless Executive elects not to extend the term of this Agreement by giving
written notice to the Institution, in which case the term of this Agreement
will
expire on the third anniversary of this Agreement.
2.
CHANGE IN
CONTROL.
(a)
Upon the occurrence of a Change in Control of the Institution or the Holding
Company (as herein defined) followed at any time during the term of this
Agreement by the involuntary termination of Executive’s employment or the
voluntary termination of Executive’s employment in accordance with the terms of
this Agreement, other than for Cause, as defined in Section 2(c) of this
Agreement, the provisions of Section 3 of this Agreement shall
apply.
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(i)
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Upon
the occurrence of a Change in Control, Executive shall have the right
to
elect to voluntarily terminate his employment at any time during
the term
of this Agreement following any demotion, loss of title, office or
significant authority, reduction in annual compensation or benefits,
or
relocation of his principal place of employment by more than twenty-five
(25) miles from its location immediately prior to the Change in Control.
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(ii)
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Notwithstanding
the foregoing clause (i), in the event, however, that the Chief Executive
Officer of the Institution immediately prior to the Change in Control
is
the Chief Executive Officer of the resulting entity with similar
responsibilities and duties and Executive’s position with the resulting
entity does not result in: (A) a reduction in annual compensation
or
benefits, (B) a material change in work schedule, or (C) relocation
of his
principal place of employment by more than fifty (50) miles, then
Executive may not voluntarily terminate his employment during the
one-year
period following the Change in Control and receive any payments or
benefits under this Agreement. For the avoidance of doubt, with respect
to
the immediately foregoing limitation on voluntary termination, Executive
may voluntarily terminate employment in accordance with this Section
2(a)
effective upon the expiration of said one-year period, and for a
period of
30 days thereafter, if one of the events set forth in clause (i)
has
occurred, either at the time of the Change in Control or during the
one-year period following the time of the Change in Control. If
one of the events described in clause (i) occurs more than one year
following the date of the Change in Control, but during the remaining
term
of the Agreement, then Executive may terminate his employment in
accordance with the provisions of this Agreement, notwithstanding
this
clause (ii).
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(iii)
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Notwithstanding
any other provision of this Agreement to the contrary, Executive
may
consent in writing to any demotion, loss, reduction or relocation
and
waive his ability to voluntarily terminate his employment under the
terms
of this Agreement. The effect of any written consent of Executive
under
this Section 2(a) shall be strictly limited to the terms specified
in such
written consent.
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(b)
For purposes of this Agreement, a “Change in Control” of the Institution or
Holding Company shall mean an event of a nature that: (i) would be required
to
be reported in response to Item 1(a) of the current report on Form 8-K, as
in
effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the “Exchange Act”); or (ii) results in a Change in
Control of the Institution or the Holding Company within the meaning of the
Bank
Change in Control Act and the Rules and Regulations promulgated by the Federal
Deposit Insurance Corporation (“FDIC”) at 12 C.F.R. § 303.4(a) with respect to
the Bank and the Board of Governors of the Federal Reserve System (“FRB”) at 12
C.F.R. § 225.41(b) with respect to the Holding Company, as in effect on the date
hereof; or (iii) results in a transaction requiring prior FRB approval under
the
Bank Holding Company Act of 1956 and the regulations promulgated thereunder
by
the FRB at 12 C.F.R. § 225.11, as in effect on the date hereof except for the
Holding Company’s acquisition of the Institution; or (iv) without limitation
such a Change in Control shall be deemed to have occurred at such time as (A)
any “person” (as the term is used in Sections 13(d) and 14(d) of the Exchange
Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Institution or
the
Holding Company representing 20% or more of the Institution’s or the Holding
Company’s outstanding securities except for any securities of the Institution
purchased by the Holding Company in connection with the conversion of the
Institution to the stock form and any securities purchased by any tax-qualified
employee benefit plan of the Institution; or (B) individuals who constitute
the
Board of Directors on the date hereof (the “Incumbent Board”) cease for any
reason to constitute at least a majority thereof, provided that any person
becoming a director subsequent to the date hereof whose election was approved
by
a vote of at least three
2
quarters
(3/4) of the directors comprising the Incumbent Board, or whose nomination
for
election by the Holding Company’s stockholders was approved by the same
Nominating Committee serving under an Incumbent Board, shall be, for purposes
of
this clause (B), considered as though he were a member of the Incumbent Board;
or (C) a plan of reorganization, merger, consolidation, sale of all or
substantially all the assets of the Institution or the Holding Company or
similar transaction occurs in which the Institution or Holding Company is not
the resulting entity; or (D) solicitations of shareholders of the Holding
Company, by someone other than the current management of the Holding Company,
seeking stockholder approval of a plan of reorganization, merger or
consolidation of the Holding Company or Institution or similar transaction
with
one or more corporations as a result of which the outstanding shares of the
class of securities then subject to the plan or transaction are exchanged for
or
converted into cash or property or securities not issued by the Institution
or
the Holding Company shall be distributed; or (E) a tender offer is made for
20%
or more of the voting securities of the Institution or the
Institution.
(c)
Executive shall not have the right to receive termination benefits pursuant
to
Section 3 of this Agreement upon Termination for Cause. The term “Termination
for Cause” shall mean termination because of: (i) Executive’s personal
dishonesty, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of
any
law, rule, regulation (other than traffic violations or similar offenses),
final
cease and desist order or material breach of any provision of this Agreement
which results in a material loss to the Institution or the Holding Company,
or
(ii) Executive’s conviction of a crime or act involving moral turpitude or a
final judgment rendered against Executive based upon actions of Executive which
involve moral turpitude. For the purposes of this Section, no act, or
the failure to act, on Executive’s part shall be “willful” unless done, or
omitted to be done, not in good faith and without reasonable belief that the
action or omission was in the best interests of the Institution or its
affiliates. Notwithstanding the foregoing, Executive shall not be
deemed to have been Terminated for Cause unless and until there shall have
been
delivered to him a Notice of Termination which shall include a copy of a
resolution duly adopted by the affirmative vote of not less than a majority
of
the members of the Board at a meeting of the Board called and held for that
purpose (after reasonable notice to Executive and an opportunity for him,
together with counsel, to be heard before the Board), finding that in the good
faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in
detail. Executive shall not have the right to receive compensation or
other benefits for any period after Termination for Cause. During the
period beginning on the date of the Notice of Termination for Cause pursuant
to
Section 4 of this Agreement through the Date of Termination, stock options
granted to Executive under any stock option plan shall not be exercisable nor
shall any unvested stock awards granted to Executive under any stock-based
incentive plan of the Institution, the Holding Company or any subsidiary or
affiliate thereof vest. At the Date of Termination, such stock
options and such unvested stock awards shall become null and void and shall
not
be exercisable by or delivered to Executive at any time subsequent to such
Date
of Termination for Cause.
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3.
TERMINATION
BENEFITS.
(a)
Upon the occurrence of a Change in Control, followed at any time during the
term
of this Agreement by the involuntary termination of Executive’s employment
(other than for Termination for Cause), or voluntary termination during the
term
of this Agreement as provided by Section 2(a) of this Agreement, the Institution
shall be obligated to pay Executive, or in the event of his subsequent death,
his beneficiary or beneficiaries, or his estate, as the case may be, a sum
equal
to three (3) times Executive’s average annual compensation for the five most
recent taxable years that Executive has been employed by the Institution or
such
lesser number of years in the event that Executive shall have been employed
by
the Institution for less than five years. For this purpose, such
annual compensation shall include base salary and any other taxable income,
including, but not limited to, amounts related to the granting, vesting or
exercise of restricted stock or stock option awards, commissions, bonuses,
pension and profit sharing plan contributions or benefits (whether or not
taxable), severance payments, retirement benefits, and fringe benefits paid
or
to be paid to Executive or paid for Executive’s benefit during any such
year. At the election of Executive, which election is to be made
prior to a Change in Control, such payment shall be made in a lump sum or on
an
annual basis in approximately equal installments over a three (3) year
period.
(b)
Upon the occurrence of a Change in Control of the Institution or the Holding
Company followed at any time during the term of this Agreement by Executive’s
voluntary or involuntary termination of employment in accordance with paragraph
(a) of this Section 3, other than for Termination for Cause, the Institution
shall cause to be continued life, medical and disability coverage substantially
identical to the coverage maintained by the Institution for Executive prior
to
his severance, except to the extent such coverage may be changed in its
application to all employees on a nondiscriminatory basis. Such
coverage and payments shall cease upon the expiration of thirty-six (36) full
calendar months from the Date of Termination.
(c)
Notwithstanding the provisions
of
this Section 3, in no event shall the aggregate payments or benefits to be
made
or afforded to Executive under said paragraphs (the “Termination Benefits”)
constitute an “excess parachute payment” under Section 280G of the Internal
Revenue Code of 1986, as amended, or any successor thereto, and in order to
avoid such a result, Termination Benefits will be reduced, if necessary, to
an
amount (the “Non-Triggering Amount”), the value of which is one dollar ($1.00)
less than an amount equal to three (3) times Executive’s “base amount,” as
determined in accordance with said Section 280G. The allocation of
the reduction required hereby among the Termination Benefits shall be determined
by Executive.
4.
NOTICE OF
TERMINATION.
(a)
Any purported termination by the Institution or by Executive in connection
with
a Change in Control shall be communicated by a Notice of Termination to the
other party. For purposes of this Agreement, a “Notice of Termination” shall
mean a written notice which indicates the specific termination provision in
this
Agreement relied upon and shall set forth in
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reasonable
detail the facts and circumstances claimed to provide a basis for termination
of
Executive’s employment under the provision so indicated.
(b)
“Date of Termination” shall mean the date specified in the Notice of Termination
(which, in the instance of Termination for Cause, shall not be less than thirty
(30) days from the date such Notice of Termination is given); provided, however,
that if a dispute regarding the Executive’s termination exists, the “Date of
Termination” shall be determined in accordance with Section 4(c) of this
Agreement.
(c)
If, within thirty (30) days after any Notice of Termination is given, the party
receiving such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be the date
on
which the dispute is finally determined, either by mutual written agreement
of
the parties, by a binding arbitration award, or by a final judgment, order
or
decree of a court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected) and provided further that
the Date of Termination shall be extended by a notice of dispute only if such
notice is given in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence. Notwithstanding the
pendency of any such dispute in connection with a Change in Control, in the
event that the Executive is terminated for reasons other than Termination for
Cause, the Institution will continue to pay Executive the payments and benefits
due under this Agreement in effect when the notice giving rise to the dispute
was given (including, but not limited to, his annual salary) until the earlier
of: (i) the resolution of the dispute in accordance with this Agreement; or
(ii)
the expiration of the remaining term of this Agreement as determined as of
the
Date of Termination.
5.
SOURCE OF
PAYMENTS.
It
is intended by the parties hereto
that all payments provided in this Agreement shall be paid in cash or check
from
the general funds of the Institution. Further, the Holding Company
guarantees such payments and provision of all amounts and benefits due hereunder
to Executive and, if such amounts and benefits due from the Institution are
not
timely paid or provided by the Institution, such amounts and benefits shall
be
paid or provided by the Holding Company.
6.
EFFECT ON PRIOR
AGREEMENTS AND EXISTING BENEFIT PLANS.
This
Agreement contains the entire
understanding between the parties hereto and supersedes any prior agreement
between the Institution and Executive, except that this Agreement shall not
affect or operate to reduce any benefit or compensation inuring to Executive
of
a kind elsewhere provided. No provision of this Agreement shall be
interpreted to mean that Executive is subject to receiving fewer benefits than
those available to him without reference to this Agreement.
Nothing
in this Agreement shall confer
upon Executive the right to continue in the employ of the Institution or shall
impose on the Institution any obligation to employ or retain Executive in its
employ for any period.
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7.
NON-COMPETITION
AND
NON-DISCLOSURE.
(a)
For a period of one (1) year following the payment of termination benefits
to
Executive under this agreement, Executive agrees not to compete with the
Institution or its affiliates in any city, town or county in which Executive’s
normal business office is located and the Institution or its affiliates has
an
office or has filed an application for regulatory approval to establish an
office, determined as of the effective date of such termination, except as
agreed to pursuant to a resolution duly adopted by the Board of
Directors. Executive agrees that during such one (1) year period and
within said cities, towns and counties, Executive shall not work for or advise,
consult or otherwise serve with, directly or indirectly, any entity whose
business materially competes with the depository, lending or other business
activities of the Institution. The parties hereto, recognizing that
irreparable injury will result to the Institution, its business and property
in
the event of Executive’s breach of this Section 7(a), agree that in the event of
any such breach by Executive, the Institution will be entitled, in addition
to
any other remedies and damages available, to an injunction to restrain the
violation hereof by Executive, Executive’s partners, agents, servants, employees
and all persons acting for or under the direction of
Executive. Executive represents and admits that, in the event of the
termination of his employment following a Change in Control, Executive’s
experience and capabilities are such that Executive can obtain employment in
a
business engaged in other lines and/or of a different nature than the
Institution, and that the enforcement of a remedy by way of injunction will
not
prevent Executive from earning a livelihood. Nothing herein will be
construed as prohibiting the Institution from pursuing any other remedies
available for such breach or threatened breach, including the recovery of
damages from Executive.
(b)
Executive recognizes and acknowledges that the knowledge of the business
activities and plans for business activities of the Institution, as it may
exist
from time to time, is a valuable, special and unique asset of the business
of
the Institution. Executive will not, during or after the term of his employment,
disclose any knowledge of the past, present, planned or considered business
activities of the Institution or its affiliates to any person, firm,
corporation, or other entity for any reason or purpose whatsoever, unless
expressly authorized by the Board of Directors or required by law.
Notwithstanding the foregoing, Executive may disclose any knowledge of banking,
financial and/or economic principles, concepts or ideas which are not solely
and
exclusively derived from the business plans and activities of the Institution
or
its affiliates. In the event of a breach or threatened breach by Executive
of
the provisions of this Section 7, the Institution will be entitled to an
injunction restraining Executive from disclosing, in whole or in part, the
knowledge of the past, present, planned or considered business activities of
the
Institution or its affiliates or from rendering any services to any person,
firm, corporation or other entity to whom such knowledge, in whole or in part,
has been disclosed or is threatened to be disclosed. Nothing herein will be
construed as prohibiting the Institution from pursuing other remedies available
for such breach or threatened breach, including the recovery of damages from
Executive.
8.
NO
ATTACHMENT.
(a)
Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge,
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pledge,
or hypothecation, or to execution, attachment, levy, or similar process or
assignment by operation of law, and any attempt, voluntary or involuntary,
to
affect any such action shall be null, void, and of no effect.
(b)
This Agreement shall be binding upon, and inure to the benefit of, Executive,
the Institution and their respective successors and assigns.
9.
MODIFICATION AND
WAIVER.
(a)
This Agreement may not be modified or amended except by an instrument in writing
signed by the parties hereto.
(b)
No term or condition of this Agreement shall be deemed to have been waived,
nor
shall there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver
or
estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to
the
specific term or condition waived and shall not constitute a waiver of such
term
or condition for the future or as to any act other than that specifically
waived.
10.
REQUIRED REGULATORY
PROVISIONS.
Any
payments made to Executive pursuant
to this Agreement, or otherwise, are subject to and conditioned upon compliance
with 12 U.S.C. §1828(k) and any rules and regulations promulgated thereunder,
including 12 C.F.R. Part 359.
11.
SEVERABILITY.
If,
for any reason, any provision of
this Agreement, or any part of any provision, is held invalid, such invalidity
shall not affect any other provision of this Agreement or any part of such
provision not held so invalid, and each such other provision and part thereof
shall, to the full extent consistent with law, continue in full force and
effect.
12.
HEADINGS FOR REFERENCE
ONLY.
The
headings of sections and paragraphs
herein are included solely for convenience of reference and shall not control
the meaning or interpretation of any of the provisions of this
Agreement.
13.
GOVERNING
LAW.
The
validity, interpretation,
performance, and enforcement of this Agreement shall be governed by the laws
of
the Commonwealth of Massachusetts.
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14.
ARBITRATION.
Any
dispute or controversy arising
under or in connection with this Agreement shall be settled exclusively by
arbitration, conducted before a panel of three arbitrators sitting in a location
selected by Executive within fifty (50) miles from the location of the
Institution’s main office, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on
the arbitrator’s award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of his right to be
paid
until the Date of Termination during the pendency of any dispute or controversy
arising under or in connection with this Agreement.
15.
PAYMENT OF COSTS
AND
LEGAL FEES.
All
reasonable costs and legal fees
paid or incurred by Executive pursuant to any dispute or question of
interpretation relating to this Agreement shall be paid or reimbursed by the
Institution if Executive is successful with respect to such dispute or question
of interpretation pursuant to a legal judgment, arbitration or
settlement.
16.
INDEMNIFICATION.
The
Institution shall provide Executive
(including his heirs, executors and administrators) with coverage under a
standard directors’ and officers’ liability insurance policy at its expense and
shall indemnify Executive (and his heirs, executors and administrators) to
the
fullest extent permitted under Massachusetts law against all expenses and
liabilities reasonably incurred by him in connection with or arising out of
any
action, suit or proceeding in which he may be involved by reason of his having
been a director or officer of the Institution (whether or not he continues
to be
a director or officer at the time of incurring such expenses or liabilities);
such expenses and liabilities to include, but not to be limited to, judgments,
court costs and attorneys’ fees and the costs of reasonable
settlements.
17.
SUCCESSOR TO THE
INSTITUTION.
The
Institution shall require any
successor or assignee, whether direct or indirect, by purchase, merger,
consolidation or otherwise, to all or substantially all the business or assets
of the Institution, to expressly and unconditionally assume and agree to perform
the Institution’s obligations under this Agreement in the same manner and to the
same extent that the Institution would be required to perform such obligations
if no such succession or assignment had taken place.
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SIGNATURES
IN
WITNESS WHEREOF, Berkshire Bank and
Berkshire Hills Bancorp, Inc. have caused this Agreement to be executed by
their
duly authorized officers, and Executive has signed this Agreement, on the 16th
day of February, 2006.
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ATTEST:
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BERKSHIRE
BANK
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/s/
Xxxxx X. Xxxxxxxx
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By:
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/s/
Xxxxxxx X. Xxxx
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Xxxxxxx
X. Xxxx, President and CEO
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ATTEST:
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BERKSHIRE
HILLS BANCORP, INC.
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(Guarantor)
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/s/
Xxxxx X. Xxxxxxxx
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By:
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/s/
Xxxxxxx X. Xxxx
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Xxxxxxx
X. Xxxx, President and CEO
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SEAL
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WITNESS:
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EXECUTIVE
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/s/
Xxxxx X. Xxxxxxxx
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/s/
Xxxxxxx X. Xxxxxxx
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Xxxxxxx
X. Xxxxxxx
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