Document:

AMENDED AND RESTATED SETTLEMENT AGREEMENT

This Amended and Restated Settlement Agreement (the “Settlement Agreement”) is entered into as of April 6, 2011 and is effective as of the Closing Date (as defined below) by and between Berkshire Hills Bancorp, Inc., a Delaware corporation (“BHLB”), Legacy Bancorp, Inc. (“Legacy”), a Delaware corporation, Legacy Banks (the “Bank”), a wholly-owned subsidiary of Legacy , and J. Williar Dunlaevy (the “Executive”).

WHEREAS, the Executive, Legacy and the Bank are parties to an Amended and Restated Employment Agreement with an effective date of November 20, 2008 (the “Employment Agreement”); and

WHEREAS, BHLB and Legacy have entered into an Agreement and Plan of Merger, dated as of December 21, 2010 (the “Merger Agreement”), pursuant to which Legacy will be merged into BHLB (the “Merger”); and

WHEREAS, Section 7.6.7 of the Merger Agreement provides that Legacy, subject to BHLB’s approval, shall enter into a Settlement Agreement which shall terminate the Employment Agreement as of the closing date of the Merger (the “Closing Date”), and in lieu of any payment or benefits under the Employment Agreement, the Executive shall be entitled to the settlement benefits set forth in a Settlement Agreement; and

WHEREAS, BHLB, Legacy, Bank and the Executive previously entered into a settlement agreement, dated as of December 21, 2010 (the “Original Agreement”); and

WHEREAS, BHLB, Legacy, Bank and the Executive desire to amend and restate the Original Agreement in order to make certain changes.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained in this Settlement Agreement, BHLB, Legacy, the Bank and the Executive hereby agree as follows:

Section 1.         Effective Date of the Settlement Agreement.  

The Settlement Agreement shall be effective as of the effective time of the Merger (“Effective Time”) on the Closing Date and the provisions contained herein shall survive the Merger.

Section 2.         Termination of the Agreement.

The Executive, BHLB, Legacy, and the Bank hereby agree that the Agreement shall be terminated without any further action of any parties hereto, effective as of the Closing Date.  The

Executive shall, in lieu of any payment or benefits under the Agreement, be entitled to the settlement benefits set forth in Section 3 of this Settlement Agreement.

  

  

  

 

Section 3.         Settlement Benefits.

(a)           Cash Payment.  The parties hereto acknowledge that the Merger qualifies as a “change in control” as defined under the Agreement.  In lieu of a payment under Section 7(a)(i) of the Agreement and in lieu of non-taxable medical and dental coverage under Section 7(a)(ii) of the Agreement on Executive’s termination of employment in connection with or following a Change in Control and in lieu of any payment under the Supplemental Executive Retirement Agreement for J. Williar Dunlaevy Amended and Restated as of November 20, 2008, BHLB (or any affiliate or subsidiary of BHLB) hereby agrees to pay Executive a cash lump payment equal to $2,986,697 (the “Cash Payment”), unless prohibited from doing so by applicable regulatory authority.  The Cash Payment shall, unless prohibited, be payable to the Executive on the Closing Date, and shall be subject to applicable withholding taxes.

(b)           Payment Exempt from Section 409A.  The payment to Executive required by Section 7 of the Agreement to be made within thirty (30) days of an involuntary termination of employment following a Change in Control, was intended to be exempt from Section 409A of the Internal Revenue Code (“Code”) under the “short-term deferral rule” set forth in Treasury Regulation Section 1.409A-1(b)(4).  The Cash Payment in lieu of the payment under Section 7, which Cash Payment shall occur on and is contingent on the occurrence of the Closing Date, is also exempt from Code Section 409A under the short-term deferral rule.

 

(c)           Gross-Up Payment.  If any payment or benefit made or provided to the Executive under this agreement or under any plan, program, or other arrangement of the Employer or any affiliated entity, separately or in the aggregate with other such payments and benefits (a “Payment”) results in the Executive being subject to the excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (“Code”), or any successor or similar provision), then the Employer shall pay to the Executive, prior to the time that such tax is payable by the Executive, an additional amount of cash (the “Additional Amount”) such that the net amount of all payments and benefits received by the Executive under this Agreement or under any other plan, program or other arrangement of the Employer or any affiliated entity after paying all applicable taxes thereon (including penalties and interest), including on such Additional Amount, shall be equal to the net after-tax amount of payments and benefits that Executive would have received if Section 4999 were not applicable.  Any payment to Executive pursuant to this subsection shall be made no later than ninety (90) days after the date on which Executive remits any excise tax to the required taxing authority.

 

Section 4.         Waiver and Release.

(a)           Except as otherwise provided in this Agreement, in the event the Executive is entitled to receive the Cash Payment, the Executive hereby agrees that payment of the Cash Payment will be in full satisfaction of all obligations of BHLB, Legacy, and the Bank to the Executive under the Agreement and this Settlement Agreement.

 

  

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(b)           The Executive, on behalf of himself, his heirs and assigns, irrevocably and unconditionally releases BHLB, Legacy and the Bank (which, for purpose of this Section 4 shall be defined to include all of BHLB’s, Legacy’s, and the Bank’s related and affiliated entities, their predecessors, successors, heirs or assigns, and any past, present or future officers, board of director members, agents, attorneys, and employees) from all claims, controversies, liabilities, demands, causes of action, debts, obligations, promises, acts, agreements, and damages of whatever kind or nature, whether known or unknown, suspected or unsuspected, foreseen or unforeseen, liquidated or contingent, actual or potential, jointly and individually, that the Executive has had or now has, based upon and/or arising out of any or all facts, circumstances and/or events relating to the Executive’s employment with BHLB, Legacy, and/or the Bank, or separation from employment, including, but not limited to, any and all claims for breach of express or implied contract or covenant of good faith and fair dealing (whether written or oral), all claims for retaliation or violation of public policy, breach of promise, detrimental reliance or tort (e.g., intentional infliction of emotional distress, defamation, wrongful termination, interference with contractual or advantageous relationship, etc.), whether based on common law or otherwise; all claims arising under Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination in Employment Act; the Americans with Disabilities Act; claims for emotional distress, mental anguish, personal injury, loss of consortium; any and all claims that may be asserted on Executive’s behalf by others (including the Equal Employment Opportunity Commission); or any other federal, state or local laws or regulations relating to employment or benefits associated with employment.  The foregoing list is meant to be illustrative rather than inclusive.  Notwithstanding the above, it is understood that the Executive does not waive any rights that the Executive may have to vested benefits under any tax-qualified retirement, restricted stock or stock option awards, or any other benefit plan, contract or arrangement,  provided by BHLB, Legacy, or the Bank other than as specifically set forth herein.

 

(c)           Except as otherwise provided for in this Agreement, the Executive waives the rights and claims to the extent set forth above, and the Executive also agrees not to institute, or have instituted, a lawsuit against BHLB, Legacy, and/or the Bank based on any such waived claims or rights, except to enforce the terms of this Agreement.

 

(d)           The Executive acknowledges that he has been instructed to, and has had the opportunity to review this Settlement Agreement with an attorney or any representative of his choosing before signing it.  The Executive further acknowledges that he has 45 days from the date the Executive receives this Settlement Agreement to consider this Settlement Agreement.  The Executive further acknowledges that he has access to information about other employees laid off and retained within his department, including their ages, and has had an opportunity to consider and review this information along with this Settlement Agreement.

 

(e)           The Executive shall have seven (7) days after signing this Settlement Agreement to revoke it.  This Settlement Agreement shall not be effective nor will any consideration be provided until after the revocation period has passed.  A revocation of this Settlement Agreement shall be written and shall not be effective unless actually received by BHLB, Legacy, and the Bank on or before the 7th day after this Settlement Agreement has been signed.

 

(f)           THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT THIS RELEASE IS A FULL AND FINAL BAR TO ANY AND ALL CLAIM(S) OF ANY TYPE THAT THE EXECUTIVE MAY NOW HAVE AGAINST BHLB, LEGACY, AND/OR THE BANK, TO THE EXTENT PROVIDED ABOVE, BUT THAT IT DOES NOT RELEASE ANY CLAIMS THAT MAY ARISE AFTER THE DATE OF THIS SETTLEMENT AGREEMENT OR NOT OTHERWISE ADDRESSED HEREIN.

 

  

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Section 5.         Miscellaneous.

  

(a)           Assurance to Make Payment.  If at any time after the Effective Time, BHLB or any of its Subsidiaries, as defined in the Merger Agreement, is precluded by applicable law or regulations from making any payment under this Agreement, BHLB shall use its reasonable best efforts to obtain regulatory approval to make such payment and BHLB or a Subsidiary shall make such payment promptly after it is permitted to do so under applicable law and regulations.

(b)           Successors.  The terms of this Settlement Agreement shall be binding upon all parties hereto and their respective heirs, successors, and assigns.

(c)           Status under Section 7.6.7 of Merger Agreement.  For the avoidance of doubt, BHLB and Legacy acknowledge and agree that this Settlement Agreement, as amended and restated, constitutes a “Settlement Agreement” with respect to the Executive in accordance with Section 7.6.7 of the Merger Agreement.

(d)           Final Agreement.  This Settlement Agreement represents the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior understandings, written or oral, including the Original Agreement.  The terms of this Settlement Agreement may be changed, modified or discharged only by an instrument in writing signed by the parties hereto.  The Executive acknowledges that the Executive has carefully read the foregoing, has had sufficient opportunity to review the Settlement Agreement with legal counsel of the Executive’s own choosing, knows and understands this Settlement Agreement contents, and freely and independently signs this Settlement Agreement.  No inducements, representations, or agreements have been made or relied upon to make this Settlement Agreement except as stated in this Settlement Agreement.

(e)           Governing Law.  The validity, interpretation, construction and performance of this Settlement Agreement shall be governed by the laws of the Commonwealth of Massachusetts without regard to principles of conflicts of laws thereof.

(f)           Statutory Changes.  All references to sections of the Code shall be deemed also to refer to any successor provisions to such sections.

(g)           Validity.  The invalidity or unenforceability of any provision of this Settlement Agreement shall not affect the validity or enforceability of any other provision of this Settlement Agreement, which shall remain in full force and effect.

(h)           No Assignment of Benefits.  Except as otherwise provided herein or by law, no right or interest of the Executive under the Settlement Agreement shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise.

(i)           Counterparts. This Settlement Agreement may be signed in counterparts, and all of the counterpart copies shall be treated as a single agreement.

  

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Section 6.         Effectiveness.

Notwithstanding anything to the contrary contained herein, this Settlement Agreement shall be effective as of the Closing Date.  In the event the Merger Agreement is terminated for any reason, this Settlement Agreement shall be deemed null and void.

 

  

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IN WITNESS WHEREOF, the parties hereto have duly executed this Settlement Agreement as of the day and year first written above.

 

	  	
EXECUTIVE

	  	  
	  	
/s/J. Williar Dunlaevy

	  	
J. Williar Dunlaevy

	  	  
	  	
BERKSHIRE HILLS BANCORP, INC.

	  	  
	  	
By:  

	
/s/Michael P.Daly

	  	
Print Name: Michael P.Daly

	  	  
	  	
LEGACY BANCORP, INC.

	  	  
	  	
By:

	
/s/Patrick J. Sullivan

	  	
Print Name:  

	
Patrick J. Sullivan

	  	  
	  	
LEGACY BANKS

	  	  
	  	
By:

	
/s/Patrick J. Sullivan

	  	
Print Name:

	
Patrick J. Sullivan

 

 

  

6NON-COMPETITION AND CONSULTING AGREEMENT

THIS NON-COMPETITION AND CONSULTING AGREEMENT (the “Agreement”) is made as of the sixth day of April, 2011, between Berkshire Hills Bancorp, Inc. (“BHLB”), a Delaware corporation, Berkshire Bank (“Berkshire Bank”), a wholly owned subsidiary of BHLB, and J. Williar Dunlaevy (“Consultant”).

           WHEREAS, Legacy Bancorp, Inc. (“Legacy”) is a Delaware corporation, and is the holding company for Legacy Banks;

           WHEREAS, BHLB and Legacy entered into an Agreement and Plan of Merger dated December 21, 2010 (“Merger Agreement”), wherein Legacy will merge with and into BHLB (the “Effective Time”);

           WHEREAS, Consultant is the Chairman and Chief Executive Officer of Legacy and Chairman of Legacy Banks;

           WHEREAS, Consultant’s executive positions will be terminated as of the Effective Time and such termination will constitute a “separation from service” within the meaning of Section 409A of the Internal Revenue Code (“Code”);

           WHEREAS, BHLB and Berkshire Bank desire to assure itself of the continued availability of the Consultant’s services as provided in this Agreement;

           WHEREAS, the Consultant is willing to serve BHLB and Berkshire Bank on the terms and conditions hereinafter set forth;

NOW THEREFORE, in consideration of the mutual agreements herein contained, and upon the other terms and conditions hereinafter provided, BHLB, Berkshire Bank and the Consultant agree as follows:

	
1.

	
Consultant Relationship.  BHLB and Berkshire Bank hereby engage Consultant and Consultant hereby agrees to serve BHLB and Berkshire Bank, under the terms and conditions set forth in this Agreement.  Consultant hereby acknowledges and recognizes that at all times he will be classified as an independent contractor.

	
2 .

	
Duties of Consultant.  Consultant shall provide consulting services as a liaison for BHLB and Berkshire Bank to the Legacy Savings Bank Foundation (“Foundation”) and, in that capacity, take such actions as may reasonably be requested by BHLB and Berkshire Bank with respect to the Foundation.  Consultant be available to provide services for an amount of time not to exceed ten (10) hours per week, and such services may be rendered by telephonic or electronic means.

  

  

 

 

	
3.

	
Term of Agreement.  This Agreement shall commence on the Effective Time and the consulting duties provided in Sections 1 and 2 of this Agreement shall expire twelve (12) months later (“Consulting Term”); however, the non-competition and non-solicitation provisions in Section 6 of this Agreement shall expire twenty-four (24) months following the Effective Time (“Non-Compete Term”).

	
4.

	
Compensation.  Berkshire Bank shall pay Consultant $400,000 (“Consideration”) for his services as a Consultant under this Agreement and for Consultant’s agreement not to compete under Section 6 hereof, with $150,000 payable by lump sum at the Effective Time and $250,000 payable in monthly installments over the twelve (12) month Consulting Term, pursuant to Berkshire Bank’s customary practices for non-employee service providers.

	
  

	 

	
5.

	
Unauthorized Disclosure.  During the Consulting Term, or at any later time, the Consultant shall not, without the written consent of the President and Chief Executive Officer of BHLB  or a person authorized thereby, knowingly disclose to any person, other than an employee of BHLB and Berkshire Bank or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Consultant of his duties, any material confidential information obtained by him while performing services for BHLB and Berkshire Bank with respect to any of BHLB  and Berkshire Bank’s services, products, improvements, formulas, designs or styles, processes, customers, methods of business or any business practices the disclosure of which could be or will be damaging to BHLB  and Berkshire Bank; provided, however, that confidential information shall not include any information known generally to the public (other than as a result of unauthorized disclosure by the Consultant or any person with the assistance, consent or direction of the Consultant) or any information of a type not otherwise considered confidential by persons engaged in the same business or a business similar to that conducted by BHLB  and Berkshire Bank or any information that must be disclosed as required by law.

	
6. 

	
Covenant Not to Compete.

	
  

	
(a)

	
Consultant hereby acknowledges and recognizes the highly competitive nature of the business of BHLB and Berkshire Bank and, accordingly, agrees that during the Non-Compete Term, Consultant shall not, except as otherwise permitted in writing by BHLB  and Berkshire Bank:

 

  

  

 

(i)         solicit, offer employment to, or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any officer or employee of BHLB  and Berkshire Bank, or any of their respective subsidiaries or affiliates, to terminate his or her employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any firm, corporation, entity or enterprise that competes with the business of BHLB  and Berkshire Bank, or any of their direct or indirect subsidiaries or affiliates, and has offices within within a sixty (60) mile radius of the Employers’ principal business 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 (“Competitor”);

(ii)        serve as a consultant, director, independent contractor, employee of, or provide financial or other assistance to, any Competitor; or

(iii)       directly or indirectly solicit persons or entities who were customers, clients, or referral sources of BHLB  and Berkshire Bank, or their subsidiaries to become a customer, client, or referral source of any Competitor.

	
  

	
(b)

	
If Consultant violates any provision of contained in Section 6 of this Agreement, the Consultant acknowledges and agrees that BHLB  and Berkshire Bank will be entitled to seek an injunction restraining Consultant from competing or disclosing, in whole or in part, the knowledge of the past, present, planned or considered business activities of BHLB and Berkshire Bank and to recover any provable damages.  Nothing herein will be construed as prohibiting BHLB and Berkshire Bank from pursuing any other remedies available to BHLB and Berkshire Bank for such breach or threatened breach, including the recovery of damages from Consultant.

 

	
  

	
(c)

	
It is expressly understood and agreed that, although Consultant and BHLB  and Berkshire Bank consider the restrictions contained in Section 6(a) hereof reasonable for the purpose of preserving for BHLB  and Berkshire Bank and their subsidiaries their good will and other proprietary rights, if a final judicial determination is made by a court having jurisdiction that the time or territory or any other restriction contained in Section 6(a) hereof is an unreasonable or otherwise unenforceable restriction against Consultant, the provisions of Section 6(a) hereof shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such other extent as such court may judicially determine or indicate to be reasonable.

	
  

	
(d)

	
The provisions of this Section 6 shall survive the termination of the Consulting Agreement, regardless of the reason for termination.

 

  

  

 

 

	
7.

	
Work Made for Hire. Any work performed by the Consultant under this Agreement should be considered a “Work Made for Hire” as the phrase is defined by the U.S. patent laws and shall be owned by and for the express benefit of BHLB  and Berkshire Bank and their subsidiaries and affiliates.  In the event it should be established that such work does not qualify as a Work Made for Hire, Consultant agrees to and does hereby assign to BHLB  and Berkshire Bank and their affiliates and subsidiaries, all of his rights, title, and/or interest in such work product, including, but not limited to, all copyrights, patents, trademarks, and propriety rights.

	
8.

	
Return of Company Property and Documents.  Consultant agrees that, at the time of termination of this Agreement, regardless of the reason for termination, he will deliver to BHLB  and Berkshire Bank and their subsidiaries and affiliates, any and all company property, including, but not limited to, keys, security codes or passes, mobile telephones, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, software programs, equipment, other documents or property, or reproductions of any of the aforementioned items developed or obtained by the Consultant during the course of this Agreement.

	
  

	 

	
9.

	
Notices.  Except as otherwise provided in this Agreement, any notice required or permitted to be given under this Agreement shall be deemed properly given if in writing and if mailed by registered or certified mail, postage prepaid with return receipt requested, to Consultant’s residence, in the case of notices to Consultant, and to the principal executive offices of BHLB and Berkshire Bank, in the case of notices to BHLB  and Berkshire Bank.

	
10.

	
Waiver.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Consultant and the President and Chief Executive Officer of BHLB.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

	
11.

	
Assignment.  This Agreement shall not be assignable by any party, except by BHLB and Berkshire Bank to any successor in interest to their respective businesses.

	
12.

	
Entire Agreement.  This Agreement supersedes any and all agreements, either oral or in writing, between the parties regarding Consultant’s consulting services and contains all the covenants and agreements between the parties with respect to the consulting arrangement.

	
13.

	
Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

  

  

 

 

	
14.

	
Applicable Law.  This Agreement shall be governed by and construed in accordance with the domestic, internal laws of the Commonwealth of Massachusetts, without regard to its conflicts of laws principles.

	
15.

	
Headings.  The section headings of this Agreement are for convenience only and shall not control or affect the meaning or construction or limit the scope or intent of any of the provisions of this Agreement.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

	  	
BERKSHIRE HILLS BANCORP, INC.

	  	  
	  	
By:   

	
/s/Michael P. Daly

	  	  	
Michael P. Daly

	  	  	
President and Chief Executive Officer

	  	  	  
	  	
BERKSHIRE BANK

	  	  
	  	
By:  

	
/s/Michael P. Daly

	  	  	
Michael P. Daly

	  	  	
President and Chief Executive Officer

	  	  	  
	  	
CONSULTANT

	  	  
	  	
By:  

	
/s/ J. Williar Dunlaevy

	  	  	
J. Williar Dunlaevy

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