BERKSHIRE HILLS BANCORP,
INC.
AMENDED AND RESTATED THREE
YEAR
CHANGE IN CONTROL
AGREEMENT
This Amended and Restated Three Year Change in
Control Agreement (the “Agreement”) is made effective
as of October 1, 2008, by and among Berkshire Hills Bancorp,
Inc. (the “Company”), a corporation organized under the
laws of the State of Delaware, and its wholly-owned subsidiary,
Berkshire Bank (the “Bank”), a state chartered savings
Bank with its principal administrative offices at 24 North Street,
Pittsfield, Massachusetts 01201, and Kevin P. Riley
(“Executive”).
WHEREAS, the Company and the Executive are
currently parties to a three year change in control agreement and
the Bank and the Executive are currently parties to a three year
change in control agreement, each originally entered into as of
August 1, 2007 (the “Original Agreements”);
and
WHEREAS, the Company and the Bank (collectively,
the “Employers”) desire to consolidate the Original
Agreements such that the terms and conditions of the Original
Agreements will be provided solely under this Agreement;
and
WHEREAS, the Employers and the Executive desire
to amend and restate the Original Agreements in order to make
changes to comply with Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”) and the final
regulations issued thereunder in April 2007;
WHEREAS, the Executive is willing to serve the
Employers on the terms and conditions hereinafter set forth and has
agreed to such changes; and
WHEREAS, the Employers desire to be ensured of
the Executive’s continued active participation in the
business of the Employers; and
WHEREAS, in order to induce the Executive to
remain in the employ of the Employers and in consideration of the
Executive’s agreeing to do so, the parties desire to specify
the severance benefits which shall be due the Executive in the
event that his employment with the Employers is terminated under
specified circumstances; and
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, and upon the other terms and conditions
hereinafter provided, the parties hereto agree as
follows:
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
disinterested members of the Board of Directors of the Employers
(the “Board”) may act to extend the term of this
Agreement for an additional year, such that the remaining term of
this Agreement will be three years, unless the Executive elects not
to extend the term of this Agreement by giving written notice to
the Employers, in which case the term of this Agreement will expire
on the third anniversary of this Agreement.
(a) If the Executive’s employment by
the Employers shall be terminated upon the occurrence of or
subsequent to a Change in Control (as defined in Section 2(e) of
this Agreement) and during the term of this Agreement by
(i) the Employers for other than Cause (as defined in Section
2(f) of this Agreement) or (ii) the Executive for Good Reason
(as defined in Section 2(b) of this Agreement), then the Employers
shall pay to the Executive the cash severance and benefits provided
in Section 3 of this Agreement.
(b) Good Reason. Termination by the
Executive of the Executive’s employment for “Good
Reason” shall mean termination by the Executive following a
Change in Control based on the following:
(i) (1) a material diminution in the
Executive’s annual compensation or benefits as in effect
immediately prior to the date of the Change in Control or as the
same may be increased from time to time thereafter, (2) a
material diminution in the Executive’s authority, duties or
responsibilities as in effect immediately prior to the Change in
Control, or (3) a material diminution in the authority, duties
or responsibilities of the officer (as in effect immediately prior
to the date of the Change in Control) to whom the Executive is
required to report,
(ii) any
material breach of this Agreement by the Employer, or
(iii) any relocation of Executive’s
principal place of employment by more than 25 miles from its
location immediately prior to a Change in Control;
provided,
however, that prior to any termination of employment for Good
Reason, the Executive must first provide written notice to the
Employer within ninety (90) days of the initial existence of
the condition, describing the existence of such condition, and the
Employer shall thereafter have the right to remedy the condition
within thirty (30) days of the date the Employer received the
written notice from the Executive. If the Employer remedies the
condition within such thirty (30) day cure period, then no
Good Reason shall be deemed to exist with respect to such
condition.
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(c) Superior Reason. Notwithstanding
Section 2(b) of this Agreement, in the event, however, that the
Chief Executive Officer of the Employers 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 material diminution in
Executive’s annual compensation or benefits as in effect
immediately prior to the Change in Control, (B) a material
change in work schedule (e.g., from full time to part time or to
materially more than previously required without a commensurate
increase in compensation) or (C) a relocation of his principal
place of employment by more than fifty (50) miles (a
“Superior Reason”), then Executive may not voluntarily
terminate his employment for Good Reason 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, if the Executive’s reason to terminate is a
Superior Reason, Executive may follow the procedure in Section 2(b)
and terminate immediately following the cure period (assuming the
Superior Reason has not been cured). However, if the reason to
terminate, occurring at any time during the one-year period set
forth herein, is a Good Reason but not a Superior Reason, the
Executive may provide the notice of Good Reason within the time
specified in Section 2(b) hereof, and the Executive may voluntarily
terminate employment in accordance with this Section 2(c) effective
upon the expiration of the remainder of said one-year period, and
only during a period of 30 days thereafter (e.g., in the
13 month following a Change in Control) assuming the Good
Reason has not been cured by the Employers. If one of the events
described in Section 2(b) occurs more than one year following the
date of the Change in Control, but during the remaining term of the
Agreement, then the Executive may terminate his employment in
accordance with Section 2(b) of this Agreement, notwithstanding
this Section 2(c).
(d) Notwithstanding any other provision of
this Agreement to the contrary, the Executive may consent in
writing to any demotion, loss, reduction or relocation and waive
his ability to voluntarily terminate his employment for Good
Reason. The effect of any written consent of the Executive under
this Section 2(d) shall be strictly limited to the terms specified
in such written consent.
(e) For purposes of this Agreement, a
“Change in Control” of the Bank or Company shall mean
an event of a nature that: (i) would be required to be
reported in response to Item 5.01 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 Bank or the 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 Company, as in effect on the date hereof; or (iii) results in a
Change in Control of the Bank or Company within the meaning of the
Home Owners Loan Act, as amended (“HOLA”), and the
applicable rules and regulations promulgated thereunder, as in
effect at the time of the Change in Control; 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
3
in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Bank or the Company representing 20% or more of
the Bank’s or the Company’s outstanding securities
except for any securities of the Bank purchased by the Company in
connection with the conversion of the Bank to the stock form and
any securities purchased by any tax-qualified employee benefit plan
of the Bank; 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-quarters (3/4) of the directors comprising the Incumbent
Board, or whose nomination for election by the 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 Bank or the Company
or similar transaction occurs in which the Bank or Company is not
the resulting entity; or (D) solicitations of shareholders of
the Company, by someone other than the current management of the
Company, seeking stockholder approval of a plan of reorganization,
merger or consolidation of the Company or Bank 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 Bank or the Company shall
be distributed; or (E) a tender offer is made for 20% or more
of the voting securities of the Bank or the Company.
(f) The 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) the
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 Employers,
or (ii) the Executive’s conviction of a crime or act
involving moral turpitude or a final judgment rendered against the
Executive based upon actions of the Executive which involve moral
turpitude. For the purposes of this Section, no act, or the failure
to act, on the 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 Employers or their
affiliates. Notwithstanding the foregoing, the 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 the 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, the Executive was
guilty of conduct justifying Termination for Cause and specifying
the particulars thereof in detail. The 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 5 of this Agreement through the Date of Termination,
stock options granted to the Executive under any stock option plan
shall not be exercisable nor shall any unvested stock awards
granted to the Executive under any stock-based incentive plan of
the Employers 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 the 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 the Executive’s employment
(other than for Termination for Cause or death), or by the
Executive for Good Reason, the Employers shall:
(i) pay the Executive, or in the event of
his subsequent death, his beneficiary or beneficiaries, or his
estate, as the case may be, a lump sum payment within thirty (30)
days of the Date of Termination an amount equal to three
(3) times the Executive’s average annual compensation
for the five most recent taxable years that the Executive has been
employed by the Employers or such lesser number of years in the
event that the Executive shall have been employed by the Employers
for less than five years. For this purpose, annual compensation
shall include base salary and any other
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