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Exhibit 10.4
BERKSHIRE HILLS BANCORP,
INC.
THREE YEAR CHANGE IN CONTROL AGREEMENT
This AGREEMENT is made effective as of October
31, 2006, by and between Berkshire Hills Bancorp,
Inc. (the "Holding Company"), a corporation
organized under the laws of the state of Delaware, with its
principal administrative offices at 24 North Street, Pittsfield,
Massachusetts 01201, and John J. Howard
("Executive"). Any reference to the "Institution"
herein shall mean Berkshire Bank or any successor to Berkshire
Bank.
WHEREAS, the Holding Company recognizes the
substantial contributions Executive has made to the Holding Company
and wishes to protect Executive's position with the Holding Company
for the period provided in this Agreement; and
WHEREAS, Executive has agreed to serve in the
employ of the Holding Company.
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:
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
Holding Company, in which case the term of this Agreement will
expire on the third anniversary of this Agreement.
(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 Holding Company.
(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 judgement 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 Holding Company 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 5 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
Holding Company 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 Holding
Company or such lesser number of years in the event that Executive
shall have been employed by the Holding Company 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 Holding
Company shall cause to be continued life, medical and disability
coverage substantially identical to the coverage maintained by the
Institution or Holding Company for Executive prior to his
severance, except to the extent such coverage may be changed in its
application to all Institution or Holding Company 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.
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4.
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CHANGE IN CONTROL-RELATED
PROVISIONS.
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(a) Anything in this
Agreement to the contrary notwithstanding and except as set forth
below, in the event it shal
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