Exhibit 10.9
BERKSHIRE HILLS BANCORP, INC.
THREE YEAR CHANGE IN CONTROL AGREEMENT
This AGREEMENT is made effective as of June 27, 2000, 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 Gayle Fawcett
("Executive"). Any reference to the "Institution" herein shall mean Berkshire
Bank or any successor to Berkshire Bank.
WHEREAS, the Holding Company recognizes the substantial contribution
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 contribution and responsibilities
of Executive, and upon the other terms and conditions hereinafter provided, the
parties hereto agree as follows:
1. 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 Holding Company, in which case the term of this Agreement
will expire on the third anniversary of this Agreement.
2. 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 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. Upon
the occurrence of a Change in Control, Executive shall have the right to elect
to voluntarily terminate her employment at any time during the term of this
Agreement following any demotion, loss of title, office or significant
authority, material reduction in her annual compensation or benefits, or
relocation of her principal place of employment by more than twenty- five (25)
miles from its location immediately prior to the Change in Control; provided,
however, Executive may consent in writing to any such demotion, loss, reduction
or relocation. 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.
(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. ss. 303.4(a)
with respect to the Bank and the Board of Governors of the Federal Reserve
System ("FRB") at 12 C.F.R. ss. 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. ss. 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-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 she 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: 1) 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 2) 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
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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
her 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.
3. 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 following any demotion, loss of title, office
or significant authority, material reduction in her annual compensation or
benefits, or relocation of her principal place of employment by more than
twenty-five (25) miles from its location immediately prior to the Change in
Control (unless Executive so consents), the Holding Company shall be obligated
to pay Executive, or in the event of her subsequent death, her beneficiary or
beneficiaries, or her 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
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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 her 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.
(c) Notwithstanding the preceding paragraphs of this Section 3, in the
event that:
(i) the aggregate payments or benefits to be made or afforded to
Executive, which are deemed to be parachute payments as defined
in Section 280G of the Internal Revenue Code of 1986, as amended
(the "Code"), or any successor thereof (the "Termination
Benefits"), would be deemed to include an "excess parachute
payment" under Section 280G of the Code; and
(ii) if such Termination Benefits were reduced 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
and the Non-Triggering Amount less the product of the marginal
rate of any applicable state and federal income tax and the
Non-Triggering Amount would be greater than the aggregate value
of the Termination Benefits (without such reduction) minus (i)
the amount of tax required to be paid by the Executive thereon by
Section 4999 of the Code and further minus (ii) the product of
the Termination Benefits and the marginal rate of any applicable
state and federal income tax,
then the Termination Benefits shall be reduced to the Non-Triggering Amount. The
allocation of the reduction required hereby among the Termination Benefits shall
be determined by the Executive.
4. NOTICE OF TERMINATION.
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(a) Any purported termination by the Holding Company 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.
(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.
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(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 Holding Company 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 her annual salary)
until the earlier of: (1) the resolution of the dispute in accordance with this
Agreement; or (2) the expiration of the remaining term of this Agreement as
determined as of the Date of Termination.
5. 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 Holding
Company.
6. 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 Holding Company 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 her without reference to this
Agreement.
Nothing in this Agreement shall confer upon Executive the right to continue
in the employ of the Holding Company or shall impose on the Holding Company any
obligation to employ or retain Executive in its employ for any period.
7. 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, 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 Holding Company and their respective successors and assigns.
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8. 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.
9. 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. ss.1828(k) and any
rules and regulations promulgated thereunder, including 12 C.F.R. Part 359.
10. 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.
11. 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.
12. GOVERNING LAW.
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The validity, interpretation, performance, and enforcement of this
Agreement shall be governed by the laws of the state of Delaware.
13. 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 Holding Company's main office, in accordance
with the rules of the American Arbitration Association then in effect.
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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 her 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.
14. 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 Holding Company if Executive is successful with
respect to such dispute or question of interpretation pursuant to a legal
judgment, arbitration or settlement.
15. INDEMNIFICATION.
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The Holding Company shall provide Executive (including her heirs, executors
and administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense and shall indemnify Executive (and her
heirs, executors and administrators) to the fullest extent permitted under
Massachusetts law against all expenses and liabilities reasonably incurred by
her in connection with or arising out of any action, suit or proceeding in which
she may be involved by reason of her having been a director or officer of the
Holding Company (whether or not she 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 cost of reasonable settlements.
16. SUCCESSOR TO THE HOLDING COMPANY.
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The Holding Company 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 Holding Company, to expressly
and unconditionally assume and agree to perform the Holding Company's
obligations under this Agreement in the same manner and to the same extent that
the Holding Company 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 Hills Bancorp, Inc. has caused this Agreement
to be executed by their duly authorized officers, and Executive has signed this
Agreement, on the 10th day of August, 2000.
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ATTEST: BERKSHIRE HILLS BANCORP, INC.
/s/ Rose A. Borotto By: James A. Cunningham, Jr.
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Rose A. Borotto James A. Cunningham, Jr.
SEAL
WITNESS: EXECUTIVE
/s/ Rose A. Borotto /S/ Gayle Fawcett
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Rose A. Borotto Gayle Fawcett
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