SENIOR EXECUTIVE EMPLOYMENT AGREEMENT
Exhibit
10.18
AGREEMENT
dated October 23, 2006 between BERKSHIRE INSURANCE GROUP, INC., a Massachusetts
corporation with a principal place of business in Pittsfield, Massachusetts
(“Employer”) and XXXX X. XXXXXX of Xxxxxx, Massachusetts
(“Executive”).
PRELIMINARY
STATEMENT
Employer,
an insurance agency offering a full line of insurance products, including
automobile, home, business and life insurance (the “Business”), is a
wholly-owned subsidiary of Berkshire Hills Bancorp, Inc., a Delaware corporation
(“BHLB”).
Executive
has been employed as President of MassOne Insurance Agency, Inc. (“MassOne”), a
Massachusetts insurance agency that is also engaged in the
Business.
Simultaneously
with the execution of this Agreement, Employer, BHLB and MassOne are entering into
an
Asset Purchase Agreement of even date (the “APA”) pursuant to which Employer has
agreed to acquire substantially all of the assets of MassOne (the “MassOne
Assets”).
Simultaneously
with the execution of this Agreement, Employer is also entering into Stock
Purchase Agreements for the acquisition of all of the issued and outstanding
shares of Xxxxxxxx, Xxxxxx & Xxxx, Inc. (“RB&H”), XxXxxxxxx, Xxxxx &
Xxxxx Insurance Agency, Inc. (“MS&C”) and Xxxxxxx Insurance Agency, Inc.
(“MIA”; MassOne, RB&H, MS&C and MIA are collectively referred to herein
as the “Acquired Agencies”).
Employer
desires to employ Executive as
a member of its senior executive management team with the duties and
responsibilities set forth herein.
This
Agreement sets forth the terms on which Executive shall be so
employed.
AGREEMENT
IT
IS
THEREFORE AGREED AS FOLLOWS:
1. Employment. Commencing
on the Commencement Date, Employer shall employ Executive as President and
Chief
Executive Officer, and Executive shall accept such employment to undertake
the
responsibilities set forth in Section 2.
2. Duties
and Responsibilities; Base of
Operations. Executive’s duties and responsibilities shall be
as set forth on Exhibit A attached hereto. Executive shall be based
at 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx (“Executive’s Base
Office”). Employer shall not, without the prior consent of Executive,
(a) relocate Executive’s office to a location outside of a 25-mile radius of
Executive’s Base Office, (b) significantly reduce Executive’s authority, duties
or status or (c) direct Executive to report to anyone other than the Chief
Executive Officer of
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BHLB
or
Berkshire Bank or a designee thereof holding the office of Executive Vice
President (the “BHLB CEO”).
3. Conduct
of
Executive. During the Term (as defined in Section 4),
Executive shall devote substantially all of his business time, attention
and
energies to the Business. Executive shall be entitled to engage in
such civic and charitable activities during the business day that shall be
reasonably related to the development of the Business, provided that such
activities shall not significantly interfere with Executive’s work
performance. Executive shall actively and industriously pursue his
profession in the interests of Employer, and shall carefully avoid any and
all
personal acts, habits and usages which might injure in any way, directly
or
indirectly, his professional reputation, the professional reputation of
Employer, or any employee of Employer, or which might otherwise be detrimental
to any interest of Employer and its affiliates.
4. Term
of Employment;
Termination.
4.1 Initial
Term. The initial term (the “Initial Term”) of Executive’s
employment hereunder shall commence on the date of the closing of Employer’s
purchase of the MassOne Assets (the
“Commencement Date”) and shall continue
through December 31, 2006 and for a
period of three years thereafter through December 31, 2009, unless
sooner terminated as set forth in Section 4.3 (the period from January 1,
2007
through December 31, 2007 and each successive twelve-month period is herein
referred to as an “Employment Calendar Year”).
4.2 Additional
Terms. Upon the expiration of the Initial Term, this Agreement
shall be automatically extended for additional terms of one year each (the
“Additional Terms”), subject to termination as set forth in Section 4.3 (as used
in this Agreement, “Term” shall mean the Initial Term and, if this Agreement
shall be extended, the Additional Terms).
4.3 Termination. This
Agreement may be terminated as follows:
4.3.1 By
Employer for cause (a “Cause Termination”) as follows:
4.3.1.1 Immediately
upon notice by Employer in the event that: (a) Executive shall have
committed fraud, been charged with, or convicted of, a felony (whether or
not
employment related), misappropriated or embezzled funds or engaged in other
serious misconduct; (b) Executive shall have committed a material violation
of
any policy or procedure of Employer or BHLB, including, without limitation,
those set forth in the Berkshire Hills Bancorp, Inc. Code of Business Conduct
now or hereafter in effect; (c) any license or registration issued to Executive
by any federal, state or other regulatory agency for the sale of insurance
shall
have been suspended (unless such license or registration shall be reinstated
within 30 days after the date of suspension), withdrawn or revoked because
of
unprofessional or unethical or improper conduct; (d) Executive shall have
been
found guilty of unprofessional or unethical conduct by any professional
organization having jurisdiction over Executive; or (e) Executive shall have
committed a substantial breach of any of the provisions contained in Section
9
(a “Section 9 Breach”).
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4.3.1.2 30
days after notice by Employer in the event that Executive shall have committed
a
substantial breach of this Agreement (other than a Section 9 Breach), which
notice shall make specific reference to this Section 4.3.1.2 and set forth
the
details of such breach, unless such breach shall be remedied within said
30-day
period.
4.3.2 30
days after notice by Executive that Employer shall have committed a substantial
breach of this Agreement, which notice shall make specific reference to this
Section 4.3.2 and set forth the details of such breach, unless such breach
shall
be remedied within said 30-day period.
4.3.3 By
either party for any reason upon 90 days’ prior notice to the other party;
provided, however, that in the case of termination by Executive, no such
notice
may be given during the first 90 days of the Initial Term.
4.3.4 Immediately
upon (a) notice by Employer in the event that Executive shall have become
Permanently Disabled (as defined in Section 7.2), or (b) the death of
Executive.
4.4 Resignation. In
the event of termination of this Agreement for any reason, Executive shall
be
deemed to have resigned from all positions held at Employer or any parent,
subsidiary or affiliate thereof, including, without limitation, any position
as
director or officer.
5. Compensation
and
Benefits. During the Term, Employer shall pay Executive the
compensation and benefits as follows:
5.1 Base
Salary. From the Commencement Date through December 31, 2006
Employer shall pay Executive a salary of $7,212 per week (the “Interim
Salary”). For the remainder of the Term, Employer shall pay Executive
an annual salary of not less than $250,000 (“Base Salary”). The
Interim Salary and the Base Salary shall be payable to Executive in accordance
with the normal payroll practices of Employer. During the Term, the
BHLB CEO shall review Executive’s Base Salary at least annually and make
increases, if any, in accordance with the BIG Budgets and Plans (as defined
in
the APA). If Executive’s Base Salary shall be increased at any time,
the then current Base Salary, plus the amount of the increase, shall constitute
the new “Base Salary” hereunder.
5.2 Additional
Compensation. For the 2007 Employment Calendar Year, Employer
shall pay Executive annual additional compensation (“Additional Compensation”)
in the amount of $125,000. Additional Compensation shall be paid in
two installments as follows: (a) $75,000 on or before April 30, 2007
and (b) the balance of $50,000 on or before December 31, 2007. After
the 2007 Employment Calendar Year, Executive shall be eligible for annual
incentive compensation based on (a) the BHLB CEO’s assessment of
Executive’s individual performance, (b) Employer’s performance, (c)
BHLB's performance and (d) the criteria of the performance-based compensation
plan which may be in effect from time to time for BHLB’s senior
executives.
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5.3 Benefits. Employer
shall provide Executive with the following benefits:
5.3.1 Vacation;
Holidays; Sick
Leave. During each Employment Calendar Year, Executive shall
be entitled to vacation in accordance with Employer’s standard vacation policies
in effect from time to time for Employer’s officers and such additional time as
shall be approved by the BHLB CEO. Executive shall take vacation at
such times as shall be mutually agreed upon by Employer and Executive in
accordance with the standard policies of Employer. Executive shall be
entitled to paid legal holidays and sick leave in accordance with the standard
policies of Employer.
5.3.2 Stock
Options. On the Commencement Date BHLB and Executive shall
enter into the Stock Option Award Agreement attached hereto as Exhibit B,
under
which Executive shall receive stock options covering 5,000 shares of BHLB
Common
Stock. During the Term, Executive shall be eligible to receive
additional stock options.
5.3.3 Expenses. Subject
to Employer’s standard procedures and requirements in effect from time to time,
Employer shall reimburse Executive for, or shall pay directly on behalf of
Executive, all normal, reasonable, necessary and properly-documented business
expenses that shall be incurred by Executive in the performance of his services
hereunder.
5.3.4 Automobile
Reimbursement. Employer shall (a) provide Executive with a
monthly automobile allowance of $1,000 for the business use of his motor
vehicle
and (b) pay, or reimburse Employee for, all fuel costs for such motor vehicle
(collectively, the “Vehicle Reimbursement”). The Vehicle
Reimbursement shall be in lieu of all costs, fees and expenses that Executive
shall incur to operate, maintain and insure the motor vehicle used by Executive
in the performance of Executive’s services hereunder.
5.3.5 Other
Benefits. In addition to the compensation and benefits
provided for in this Section 5, Executive shall be entitled to participate
in
those executive benefit plans, arrangements and perquisites set forth on
Exhibit
C attached hereto, together with such other benefit plans, arrangement and
perquisites that Employer may offer from time to time to full-time executives
and in which Executive shall be eligible to participate. Executive
shall be given full credit for his service with MassOne for purposes of
his
eligibility to participate in such benefit plans, and if any benefit plan
in
which Executive shall be entitled to participate shall contain a pre-existing
condition exclusion, eligibility waiting period or other limitation or exclusion
applicable to new employees under such plan, such limitation or exclusion
shall
not apply to Executive or his covered dependents who shall have been covered
under a similar plan of MassOne prior to Employer’s acquisition of
MassOne.
6. Payments
on
Termination. The following payments shall be made to Executive
upon termination of this Agreement prior to the expiration of the
Term:
6.1 If
this Agreement shall be terminated (a) by Employer pursuant to Section 4.3.1
(Cause) or Section 4.3.4 (death or Permanent Disability), or (b) by Executive
pursuant to Section 4.3.3, Executive shall be paid only such amount of Base
Salary and Additional Compensation (“Accrued Salary and AC”) that shall have
accrued and be unpaid as of the date of termination (the “Termination
Date”). Employer shall pay the Accrued Salary and AC to Executive as
soon as practicable after the Termination Date.
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6.2 If
this Agreement shall be terminated during the Term by Employer pursuant to
Section 4.3.3 or by Executive pursuant to Section 4.3.2, Employer shall pay
Executive the following amounts:
(a) Accrued
Salary and AC; and
(b) Severance
pay (“Severance Pay”) equal to the sum of:
(i)
Executive’s Base Salary for the greater of (1) the number of months remaining in
the then current Term or (2) 12 months (the “Severance Pay Period”);
and
(ii),
for each month of the Severance Pay Period, an amount equal to one-twelfth
of
Executive’s annual Additional Compensation.
Accrued
Salary and AC shall be paid to Executive as soon as practicable after the
Termination Date, and Severance Pay shall be paid, commencing one month after
the Termination Date, in equal monthly installments over the Severance Pay
Period. During the Severance Pay Period, Executive shall be entitled
to continue to receive the benefits to which he shall be entitled pursuant
to
Section 5.3.5, except that (a) no contributions of any Severance Pay (by
Employer or Executive) shall be made to any 401(k) plan in which the Executive
shall be participating on the Termination Date and (b), if on the Termination
Date Employer’s disability insurance plan(s) shall not allow participation in
such plan(s) by terminated employees, Executive’s coverage under such disability
insurance plan(s) shall cease on the Termination Date.
7. Disability.
7.1 Executive
shall be deemed “Temporarily Disabled” or to have suffered “Temporary
Disability” if he shall be unable, as a result of physical or mental illness or
accident to perform his duties hereunder on a full-time basis (as is customary
for Employer’s senior executives).
7.2 Executive
shall be deemed “Permanently Disabled” if (a) he and Employer shall agree that
he is permanently disabled, (b) he shall be deemed to be permanently disabled
under any employee benefit plan or program maintained by Employer or Employer’s
parent, subsidiaries or affiliates and in which Executive shall then be
participating or (c) he shall be Temporarily Disabled for six consecutive
months.
7.3 All
successive periods of disability (whether Executive shall be Temporarily
Disabled or Permanently Disabled during such period) shall be deemed a single
period of disability unless separated by at least six months of full-time
active
service.
7.4 During
any period when Executive shall be Temporarily Disabled, Executive shall,
for
the first six months of such Temporary Disability, continue to be paid his
Base
Salary and Additional Compensation; provided, however, that the payments
of Base
Salary and Additional Compensation pursuant to this Section 7.4 shall reduced
by
the amount of any
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disability
insurance proceeds received by Executive from any disability insurance policy
the premiums for which Employer shall pay directly or reimburse to Executive.
In
no event shall Executive be entitled to receive a duplicate benefit under
this
Section 7.4 and Employer’s sick pay allowance policy.
7.5 Executive
shall be entitled to apply accrued vacation time to reduce any period of
Temporary Disability.
8. Facilities. Employer
shall make available to Executive such office space, furniture, furnishings,
equipment and supplies and secretarial and administrative assistance that
shall
be commercially reasonable, necessary and appropriate for the performance
of
Executive’s services hereunder.
9. Restrictive
Covenants;
Non-Disclosure of Confidential Information.
9.1 As
used in this Section 9, the following terms shall have the meanings
indicated:
9.1.1 “Qualified
Customer” shall mean any customer of Employer or the Acquired Agencies during
the two-year period ending on the Termination Date or any prospective customer
identified by Employer or the Acquired Agencies within that two-year period
for
business solicitation.
9.1.2 “Competing
Services” shall mean the sale of insurance products and the provision of
insurance planning services and such other services that are similar to or
competitive with the products and services then provided by Employer or which
Executive has reason to know Employer intends to provide in the conduct of
the
Business.
9.2 Restrictive
Covenants. Except as set forth in Section 9.3, during the Term
and for the period commencing on Termination Date and continuing through
the
third anniversary of the Termination Date, Executive shall not:
(a),
directly or indirectly, for himself or on behalf of or in conjunction with
any
other person or entity, engage as a shareholder, officer, director, owner,
partner, member, manager, joint venturer, employee, independent contractor,
consultant or advisor, in any business that shall solicit business for Competing
Services from, or provide Competing Services to, any Qualified Customer,
wherever located; or
(b) solicit
for employment, hire or engage as an employee or independent contractor any
individual who shall be at that time, or shall have been within one year
prior
to that time, an employee of Employer or any parent, subsidiary or affiliate
of
Employer (collectively, the “Restrictive Covenants”).
9.3 Termination
of Restrictive
Covenants. If Executive shall terminate his employment
pursuant to Section 4.3.2, the Restrictive Covenants shall terminate as of
the
Termination Date. If Employer shall terminate Executive’s employment
pursuant to Section 4.3.3, the Restrictive Covenants shall terminate three
years
following the Termination Date,
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provided
that Executive shall receive payment of his full Severance Pay as provided
in
Section 6.2; if Executive shall not receive his full Severance Pay, the
Restrictive Covenants shall terminate as of the latest date of payment of
Severance Pay.
9.4 Non-Disclosure
of
Confidential Information.
9.4.1 Confidential
Information. Prior to the commencement of the Term, Executive
has had, and, during the Term, Executive shall have, access to confidential
and
proprietary information concerning the business or affairs of Employer and
Employer’s parent, subsidiaries and affiliates (collectively, the “Employer
Parties”), including, without limitation, (a) internal business information such
as financial statements, reports, summaries of operations, projections,
accounting and business methods, information relating to strategic and staffing
plans and practices, business, marketing, promotional and sales plans, practices
and programs, training practices and programs, business contracts and cost,
rate, pricing, compensation and commission structures; (b) trade secrets,
ideas
or designs (whether or not patentable or copyrightable and whether or not
reduced to practice or fixed in a tangible medium), including, without
limitation, all drawings, formulas, patterns, models, methods, procedures,
specifications, technology, development plans, samples, memoranda, notes
and
other related information; (c) computer software, program listings,
documentation, data and data bases; (d) customer lists and customer confidential
information; and (e) compilations of data, including, without limitation,
the
form or format of information that may comprise or include information otherwise
not deemed confidential (collectively, “Confidential
Information”). Confidential Information shall not include any
records, data or information that shall be in the public domain before or
during
the Term, provided that the same shall have not fallen into the public domain
as
a result of a direct or indirect disclosure by Executive in breach of this
Agreement.
9.4.2 Non-Disclosure. The
Employer Parties shall have all rights to possession, use and title to all
Confidential Information which Executive shall originate or which shall have
come into Executive’s possession in any way, and Executive shall deliver such
Confidential Information to Employer in the ordinary course of
business. Executive shall not during the Term, or thereafter,
disclose, directly or indirectly, any Confidential Information to any person,
other than (a) the Employer Parties, (b) employees of the Employer Parties
authorized to receive such Confidential Information at the time of such
disclosure, or (c) such other persons to whom Executive shall have been
specifically instructed to make disclosure by the General Counsel or Chief
Executive Officer of BHLB or the Bank, and in all such cases only to the
extent
required in the course of Executive’s employment by Employer, except as required
by law. At the expiration or termination of the Term, Executive shall
deliver to Employer all Confidential Information which shall be in Executive’s
possession or control and shall not retain or use any copies or summaries
thereof.
9.5 Remedies. Executive
acknowledges that the Employer Parties are engaged in a highly competitive
business and that the protections for the Employer Parties set forth in this
Section 9 are fair and reasonable and are of vital concern to the Employer
Parties. Further, Executive acknowledges that monetary damages for
any violation of this Section 9 will not adequately compensate the Employer
Parties with respect to any such violation. Therefore, in the event
of a breach by Executive of any of the terms and provisions contained in
this
Section 9,
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Employer
shall be entitled to institute legal proceedings to obtain damages for any
such
breach and/or to enforce the specific performance of this Agreement by Executive
and to enjoin Executive from any further violations. The remedies
available to Employer pursuant to this Section 9.5 may be exercised cumulatively
by Employer in conjunction with all other rights and remedies provided by
law. The provisions of this Section 9 shall survive the termination
of this Agreement and the termination and expiration of Executive’s employment,
regardless of how Executive’s employment may be or shall have been
terminated.
10.
Insurance. For
not less than five years after the Commencement Date and throughout the Term,
Employer shall maintain a policy of errors and omissions insurance, in such
amounts as shall be customary in the industry for full-service agencies similar
to Employer, that shall provide full coverage for Executive, including, without
limitation, coverage of prior acts during the period of Executive’s employment
by MassOne.
11.
Miscellaneous
Provisions.
11.1 Waiver. No
waiver of any breach of any provision of this Agreement shall constitute
a
waiver of any other breach of that or any other provision hereof.
11.2 Severability. If
any provision of this Agreement shall be deemed by any court having jurisdiction
thereon to be invalid or unenforceable, the balance of this Agreement shall
remain in effect; if any provision of this Agreement shall be deemed by any
such
court to be unenforceable because such provision shall be too broad in scope
by
reason of the geographic or business scope or the duration thereof, or for
any
other reason, such provision shall be construed to be limited in scope to
the
extent such court shall deem necessary to make it enforceable; and if any
provision shall be deemed inapplicable by any such court to any person or
circumstances, it shall nevertheless be construed to apply to all other persons
and circumstances.
11.3 Governing
Law;
Effect. This Agreement shall be construed and enforced in
accordance with the substantive law of the Commonwealth of Massachusetts,
without giving effect to the conflicts or choice of law provisions of
Massachusetts or any other jurisdiction, and shall have the effect of a sealed
instrument.
11.4 Binding
Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns. This
Agreement is personal to Executive and Executive may not assign nor delegate
any
of Executive’s rights or obligations hereunder in any manner without the prior
consent of Employer.
11.5 Entire
Agreement. This Agreement contains a complete statement of the
undertakings between the parties with respect to its subject matter, cannot
be
changed or terminated orally, and supersedes all prior agreements and
undertakings. There are no representations not set forth in this
Agreement which have been relied upon by the parties.
11.6 Notice. Any
notice, approval, consent or other communication under this Agreement shall
be
in writing and shall be considered given when (1) delivered personally, or
(2)
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mailed
by
registered or certified mail, return receipt requested or (3) transmitted
by
facsimile with a confirming copy sent by overnight mail or courier service
to
the parties at the addresses indicated below (or at such other address as
a
party may specify by notice to the others pursuant hereto). Notice
given by a party’s counsel shall be considered notice given by that
party.
|
(a)
|
If
to Employer, to it at:
|
x/x
Xxxxxxxxx Xxxx
X.
X. Xxx
0000
00
Xxxxx
Xxxxxx
Xxxxxxxxxx,
XX 00000-0000
Attention: Xxxxxxx
X. Xxxx, President and CEO
Facsimile
No. 000-000-0000
9
With
a
copy to:
Xxxxxx
X.
Denmark, Senior Vice President and General Counsel
P.
O. Xxx
0000
00
Xxxxx
Xxxxxx
Xxxxxxxxxx,
XX 00000-0000
Facsimile
No. 000-000-0000
|
(b)
|
If
to Executive, to him at:
|
X.X.
Xxx
000
000
Xxxx
Xxxxxx Xxxx
Xxxxxx,
XX 00000
12. Cancellation. If
the APA shall be terminated for any reason, this Agreement shall be
automatically canceled, and neither party shall have any further obligation
to
the other hereunder.
Signed
and sealed on the date first
written above.
BERKSHIRE INSURANCE GROUP, INC. | ||
By
|
/s/ Xxxx X. Xxxxxx | |
Its
|
||
/s/
Xxxx X. Xxxxxx
|
||
XXXX
X. XXXXXX
|
The
undersigned, Berkshire Hills
Bancorp, Inc., hereby guaranties full performance of the obligations of Employer
hereunder.
BERKSHIRE
HILLS BANCORP, INC.
|
||
By
|
/s/
Xxxxxxx X. Xxxx
|
|
Its
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10
EXHIBIT
A
DUTIES
AND RESPONSIBILITIES
OF EXECUTIVE
Executive’s
duties shall consist of
responsibility for all aspects of the operation of the business of Employer,
reporting to and under the direction of the BHLB CEO. Executive shall
be responsible for ensuring that (a) Employer’s long-term strategies align with
those of BHLB, (b) Employer shall achieve and maintain profitable growth,
(c)
Employer shall retain its customer accounts and (d) Employer shall effectively
utilize corporate resources of BHLB and its affiliates. Executive
shall create, implement and monitor quality standards using Six Sigma, Best
Practices and other benchmarking systems.