BERKSHIRE BANK THREE YEAR CHANGE IN CONTROL AGREEMENT
Exhibit
10.3
BERKSHIRE
BANK
THREE
YEAR CHANGE IN CONTROL AGREEMENT
This
AGREEMENT is made effective as of October 31, 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
Xxxx
X. Xxxxxx (“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:
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1.
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TERM
OF AGREEMENT.
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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.
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2.
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CHANGE
IN CONTROL.
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(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”)
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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 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.
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TERMINATION
BENEFITS.
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(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.
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4.
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NOTICE
OF TERMINATION.
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(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 reasonable detail the facts
and
circumstances claimed to provide a basis for termination of Executive’s
employment under the provision so indicated.
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(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.
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5.
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SOURCE
OF PAYMENTS.
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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.
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6.
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EFFECT
ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS.
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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.
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NON-COMPETITION
AND NON-DISCLOSURE.
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(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.
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8.
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NO
ATTACHMENT.
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(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.
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9.
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MODIFICATION
AND WAIVER.
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(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.
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10.
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REQUIRED
REGULATORY PROVISIONS.
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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.
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11.
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SEVERABILITY.
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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.
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12.
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HEADINGS
FOR REFERENCE ONLY.
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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.
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13.
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GOVERNING
LAW.
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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.
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ARBITRATION.
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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.
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15.
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PAYMENT
OF COSTS AND LEGAL FEES.
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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.
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16.
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INDEMNIFICATION.
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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.
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17.
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SUCCESSOR
TO THE INSTITUTION.
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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 31st day of October, 2006.
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ATTEST:
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BERKSHIRE
BANK
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| /s/ Xxxxx X. Xxxxxxxx |
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 |
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/ Xxxxxx X. Xxxxxx | /s/ Xxxx X. Xxxxxx | ||
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Xxxx
X. Xxxxxx
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