SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement
|_| Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Berkshire Hills Bancorp, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
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(2) Aggregate number of securities to which transactions applies:
N/A
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11 (a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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<PAGE>
December 11, 2000
Dear Stockholder:
You are cordially invited to attend the special meeting of stockholders
of Berkshire Hills Bancorp, Inc. The meeting will be held at the Crowne Plaza
Hotel, One West Street, Pittsfield, Massachusetts, on Tuesday, January 23, 2001,
at 10:00 a.m., local time.
The notice of special meeting and proxy statement appearing on the
following pages describe the formal business to be transacted at the meeting.
It is important that your shares are represented at this meeting,
whether or not you attend the meeting in person and regardless of the number of
shares you own. To make sure your shares are represented, we urge you to
complete and mail the enclosed proxy card promptly. If you attend the meeting,
you may vote in person even if you have previously mailed a proxy card.
We look forward to seeing you at the meeting.
Sincerely,
/s/ James A. Cunningham, Jr.
James A. Cunningham, Jr.
President and Chief Executive Officer
<PAGE>
BERKSHIRE HILLS BANCORP, INC.
24 North Street
Pittsfield, Massachusetts 01201
(413) 443-5601
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
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The special meeting of stockholders of Berkshire Hills Bancorp, Inc.
(the "Company") will be held at the Crowne Plaza Hotel, One West Street,
Pittsfield, Massachusetts, on Tuesday, January 23, 2001, at 10:00 a.m., local
time, for the following purposes:
1. To adopt the Berkshire Hills Bancorp, Inc. 2001 Stock-Based
Incentive Plan;
2. To transact any other business that may properly come before the
meeting.
NOTE: The Board of Directors is not aware of any other business to
come before the meeting.
Only stockholders of record at the close of business on November 30,
2000 are entitled to receive notice of the meeting and to vote at the meeting
and any adjournment or postponement of the meeting.
Please complete and sign the enclosed form of proxy, which is solicited
by the Board of Directors, and mail it promptly in the enclosed envelope. The
proxy will not be used if you attend the meeting and vote in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Rose A. Borotto
Rose A. Borotto
Corporate Secretary
Pittsfield, Massachusetts
December 11, 2000
IMPORTANT: The prompt return of proxies will save the Company the expense of
further requests for proxies in order to ensure a quorum. A self-addressed
envelope is enclosed for your convenience. No postage is required if mailed in
the United States.
<PAGE>
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PROXY STATEMENT
OF
BERKSHIRE HILLS BANCORP, INC.
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SPECIAL MEETING OF STOCKHOLDERS
January 23, 2001
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This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Berkshire Hills Bancorp, Inc.
("Berkshire Hills" or the "Company") to be used at the special meeting of
stockholders of the Company. The Company is the holding company for Berkshire
Bank ("Berkshire Bank" or the "Bank"). The special meeting will be held at the
Crowne Plaza Hotel, One West Street, Pittsfield, Massachusetts, on Tuesday,
January 23, 2001, at 10:00 a.m., local time. This proxy statement and the
enclosed proxy card are being first mailed to stockholders on or about December
11, 2000.
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VOTING AND PROXY PROCEDURE
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Who Can Vote at the Meeting
You are entitled to vote your Company common stock if the records of
the Company show that you held your shares as of the close of business on
November 30, 2000. If your shares are held in a stock brokerage account or by a
bank or other nominee, you are considered the beneficial owner of shares held in
"street name," and these proxy materials are being forwarded to you by your
broker or nominee. As the beneficial owner, you have the right to direct your
broker or nominee on how to vote and you have the right to attend the meeting if
you bring proof of your beneficial ownership. Your broker or nominee has
enclosed a voting instruction card for you to use in directing the broker or
nominee on how to vote your shares.
As of the close of business on November 30, 2000, a total of 7,673,761
shares of Company common stock was outstanding. Each share of common stock has
one vote. As provided in the Company's Certificate of Incorporation, no record
owner of the Company's common stock which is beneficially owned, either directly
or indirectly, by a person who beneficially owns in excess of 10% of the
Company's outstanding shares, is entitled to any vote in respect of the shares
held in excess of the 10% limit.
Attending the Meeting
If you hold your shares in street name, you will need proof of
ownership to be admitted to the meeting. A recent brokerage statement or letter
from a bank or broker are examples of proof of ownership. If you want to vote
your shares of Company common stock held in street name in person at the
meeting, you will have to get a written proxy in your name from the broker, bank
or other nominee who holds your shares.
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<PAGE>
Vote Required
A majority of the outstanding shares of common stock entitled to vote
is required to be represented at the meeting in order to constitute a quorum for
the transaction of business. If you return valid proxy instructions or attend
the meeting in person, your shares will be counted for purposes of determining
whether there is a quorum, even if you abstain from voting. Broker non-votes
also will be counted for purposes of determining the existence of a quorum. A
broker non-vote occurs when a broker, bank or other nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has not
received voting instructions from the beneficial owner.
In voting on the Berkshire Hills Bancorp, Inc. 2001 Stock-Based
Incentive Plan (the "Incentive Plan"), you may vote in favor of the proposal,
vote against the proposal or abstain from voting. For purposes of Delaware law,
the adoption of the Incentive Plan will be deemed to be approved by stockholders
upon the affirmative vote of a majority of the votes cast. As such, broker
non-votes and abstentions will not be counted as votes cast and will have no
effect on the voting on this proposal. Additionally, pursuant to Massachusetts
law and regulation, the affirmative vote of two-thirds of the votes eligible to
be cast is required to implement the Incentive Plan prior to June 28, 2001.
Broker non-votes and abstentions will have the effect of a vote against this
proposal for purposes of the Massachusetts voting standard.
In the event the Incentive Plan is approved by a majority of the votes
cast but is not approved by two-thirds of the votes eligible to be cast at the
meeting, the Company will not implement the Incentive Plan until June 28, 2001.
Voting by Proxy
The Company's Board of Directors is sending you this proxy statement
for the purpose of requesting that you allow your shares of Company common stock
to be represented at the special meeting by the persons named in the enclosed
proxy card. All shares of Company common stock represented at the meeting by
properly executed and dated proxies will be voted according to the instructions
indicated on the proxy card. If you sign, date and return a proxy card without
giving voting instructions, your shares will be voted as recommended by the
Company's Board of Directors. The Board of Directors recommends a vote "FOR"
approval of the Incentive Plan.
If any matters not described in this proxy statement are properly
presented at the special meeting, the persons named in the proxy card will use
their own judgment to determine how to vote your shares. This includes a motion
to adjourn or postpone the meeting in order to solicit additional proxies. If
the special meeting is postponed or adjourned, your Company common stock may be
voted by the persons named in the proxy card on the new meeting date as well,
unless you have revoked your proxy. The Company does not know of any other
matters to be presented at the meeting.
You may revoke your proxy at any time before the vote is taken at the
meeting. To revoke your proxy you must either advise the Corporate Secretary of
the Company in writing before your common stock has been voted at the special
meeting, deliver a later dated proxy, or attend the meeting and vote your shares
in person. Attendance at the special meeting will not in itself constitute
revocation of your proxy.
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If your Company common stock is held in street name, you will receive
instructions from your broker, bank or other nominee that you must follow in
order to have your shares voted. Your broker or bank may allow you to deliver
your voting instructions via the telephone or the Internet. Please see the
instruction form that is provided by your broker, bank or other nominee and
which accompanies this proxy statement.
Participants in Berkshire Bank's ESOP
If you participate in the Berkshire Bank Employee Stock Ownership Plan,
you will have received with this proxy statement a voting authorization form.
Under the terms of the ESOP, all shares held by the ESOP are voted by the ESOP
trustee, but each participant in the ESOP may direct the trustee how to vote the
shares of Company common stock allocated to his or her account. As of November
30, 2000, no shares had been allocated under the ESOP. However, each participant
will be deemed to have allocated one share of stock solely for voting purposes.
Unallocated shares of common stock held by the ESOP and allocated shares for
which no timely voting instructions are received will be voted by the ESOP
trustee in the same proportion as shares for which the trustee has received
voting instructions, subject to the exercise of its fiduciary duties. The
deadline for returning your voting instructions to the plan's trustee is January
12, 2001.
Cost of Proxy Solicitation
The cost of solicitation of proxies on behalf of the Board will be
borne by the Company. In addition to the solicitation of proxies by mail,
Georgeson Shareholder Communications, Inc., a proxy solicitation firm, will
assist the Company in soliciting proxies for the special meeting. The Company
will pay a fee of $7,000, plus out-of-pocket expenses for these services.
Proxies may also be solicited personally or by telephone by directors, officers
and other employees of the Company and the Bank without any additional
compensation. The Company will also request persons, firms and corporations
holding shares in their names, or in the name of their nominees, which are
beneficially owned by others, to send proxy materials to, and obtain proxies
from, the beneficial owners, and will reimburse those record holders for their
reasonable expenses in doing so.
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STOCK OWNERSHIP
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The following table provides information as of November 30, 2000, with
respect to persons known by the Company to be the beneficial owners of more than
5% of the Company's outstanding common stock. A person may be considered to own
any shares of common stock over which he or she has, directly or indirectly,
sole or shared voting or investing power.
Number of Shares Percent of Common
Name and Address Owned Stock Outstanding
---------------- ---------------- -----------------
Berkshire Bank Employee Stock
Ownership Plan and Trust 613,900(1) 8.0%
24 North Street
Pittsfield, Massachusetts 01201
Berkshire Hills Charitable Foundation
(the "Foundation") 568,427(2) 7.4%
24 North Street
Pittsfield, Massachusetts 01201
(1) Under the terms of the ESOP, the ESOP trustee will vote shares allocated to
participants' accounts in the manner directed by the participants. The ESOP
Trustee, subject to its fiduciary responsibilities, will vote unallocated
shares and allocated shares for which no timely voting instructions are
received in the same proportion as shares for which the trustee has
received proper voting instructions from participants. Since no shares have
been allocated under the ESOP as of November 30, 2000, each participant
will be deemed to have been allocated one share of stock solely for voting
purposes.
(2) The Foundation was established and funded in connection with the Bank's
former mutual holding company's conversion to stock form on June 27, 2000.
As mandated by the Massachusetts Banking Commissioner, the terms of the
gift instrument require that all shares of common stock held by the
Foundation must be voted in the same ratio as all other shares of Company
common stock on all proposals considered by stockholders of the Company.
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<PAGE>
The following table provides information about the shares of Company
common stock that may be considered to be owned by each director of the Company,
by the executive officers named in the Summary Compensation Table and by all
directors and executive officers of the Company as a group as of November 30,
2000. A person may be considered to own any shares of common stock over which he
or she has, directly or indirectly, sole or shared voting or investment power.
Unless otherwise indicated, each of the named individuals has sole voting and
investment power with respect to the shares shown.
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Number of Percent of
Name Shares Common Stock
Owned Outstanding(1)
---------- -------------------------------------------
Thomas O. Andrews 25,000 *
James A. Cunningham, Jr. 29,000(2) *
Michael P. Daly 10,079 *
Thomas R. Dawson 6,500 *
Henry D. Granger 5,000 *
A. Allen Gray 15,000 *
John Kittredge 2,000 *
Peter J. Lafayette 6,000(3) *
Edward G. McCormick 10,000 *
Catherine B. Miller 11,000(4) *
Michael G. Miller 35,500(5) *
Raymond B. Murray III 12,500 *
Louis J. Oggiani 2,600(6) *
Charles F. Plungis, Jr. 2,500 *
Robert S. Raser 1,586(7) *
Susan M. Santora 1,585 *
Corydon L. Thurston 5,300(8) *
Ann H. Trabulsi 11,000(9) *
Robert A. Wells 26,100(10) *
William E. Williams 7,000 *
Anne Everest Wojtkowski 2,000 *
All Executive Officers and
Directors of the Company and 227,250 3.0%
Berkshire Bank as a Group
(21 persons)
* Less than 1% of shares outstanding
(1) Based on 7,673,761 shares of Company common stock outstanding and entitled
to vote as of November 30, 2000.
(2) Includes 500 shares held by each of Mr. Cunningham's two children.
(3) Includes 2,460 shares held by Mr. Lafayette's spouse's individual
retirement account.
(4) Includes 1,000 shares held by Ms. Miller's spouse.
(5) Includes 500 shares held by Mr. Miller's spouse.
(6) Includes 50 shares held by each of Mr. Oggiani's two children.
(7) Includes 405 shares held by Mr. Raser's spouse's individual retirement
account.
(8) Includes 100 shares held by each of Mr. Thurston's three children.
(9) Includes 1,000 shares held by Ms. Trabulsi's spouse.
(10) Includes 1,100 shares held by Mr. Wells' spouse.
5
<PAGE>
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INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
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After obtaining stockholder approval, the Company will consider
granting stock awards and options to directors, officers and employees of the
Company and the Bank under the Incentive Plan being presented for approval in
Proposal 1. To date, no awards have been made to any potential participant.
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DIRECTORS' COMPENSATION
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Fees. Non-employee directors of Berkshire Bank each receive an annual
retainer of $7,500 and members of the Executive Committee receive an additional
$1,500. In addition, non-employee directors receive $500 for each board meeting
attended, $750 for each Executive Committee meeting attended, $500 for each
Community Reinvestment Act or Audit Committee meeting attended and $250 for each
Trust Committee meeting attended.
Incentive Plan. The Company is presenting the Incentive Plan to
stockholders for approval, under which all directors of the Company and the Bank
are eligible to receive awards. To date, no awards under the Incentive Plan have
been made to any director. See Proposal 1 for a summary of the material terms of
the Incentive Plan.
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EXECUTIVE COMPENSATION
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Summary Compensation Table. The following information is furnished for
the President and Chief Executive Officer and the four other highest paid
executive officers of Berkshire Bank who received a salary and bonus of $100,000
or more during the year ended December 31, 1999.
<TABLE>
<CAPTION>
Annual Compensation (1) All Other
Name and Position Year (2) Salary (3) Bonus Compensation
<S> <C> <C> <C> <C>
James A. Cunningham, Jr. 1999 $260,400 $52,080 $68,221(4)
President and Chief Executive Officer
Robert A. Wells 1999 248,750 45,000 81,674(4)
Chairman of the Board
Susan M. Santora 1999 109,140 32,742 15,543(5)
Executive Vice President-Retail Banking
Michael P. Daly 1999 116,601 23,320 12,582(5)
Executive Vice President-Senior Loan Officer
Charles F. Plungis, Jr. 1999 110,775 22,155 16,197(5)
Senior Vice President, Treasurer and
Chief Financial Officer
</TABLE>
(1) Does not include the aggregate amount of perquisites and other benefits,
which was less than $50,000 or 10% of the total annual salary and bonus
reported.
(2) Compensation information for the 1998 and 1997 fiscal years has been
omitted because Berkshire Bank was neither a public company nor a
subsidiary of a public company at that time.
(3) Includes $23,750 of directors' fees for Mr. Wells.
(4) Consists of employer contributions to Berkshire Bank's 401(k) plan of
$4,800 each for Messrs. Cunningham and Wells. Also consists of the economic
benefit of employer-paid premiums on split-dollar life insurance
arrangements entered into with Messrs. Cunningham and Wells, respectively.
Berkshire Bank expects to recover all of the premium payments it made with
respect to the life insurance policies purchased in connection with such
arrangements.
(5) Consists of employer contributions of $3,274, $3,498 and $3,323 to
Berkshire Bank's 401(k) plan and employer service costs of $12,269, $9,084
and $12,874 to Berkshire Bank's defined benefit plan for Ms. Santora, Mr.
Daly and Mr. Plungis, respectively.
Employment Agreements. Berkshire Bank and Berkshire Hills entered into
employment agreements with Messrs. Cunningham, Wells, Daly, Plungis and Ms.
Santora. The employment agreements are intended to ensure that Berkshire Bank
and Berkshire Hills will be able to maintain a stable and competent management
base. The continued success of Berkshire Bank and Berkshire Hills depends to a
significant degree on the skills and competence of these officers.
The employment agreements provide for three-year terms that
automatically extend on a daily basis unless the Board of Directors or the
executive gives the other party written notice of non-renewal. The employment
agreements provide for base salaries for Messrs. Cunningham, Wells, Daly, and
Plungis and Ms. Santora of $320,000, $250,000, $139,250, $140,750 and $125,510,
respectively. Berkshire Hills and Berkshire Bank will review each executive's
salary at least annually. In addition to the base salary, the employment
agreements provide for, among other things, participation in stock and employee
benefit plans and fringe benefits applicable to executive personnel.
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<PAGE>
The employment agreements provide for termination by Berkshire Bank or
Berkshire Hills for cause, as defined in the employment agreements, at any time.
If Berkshire Bank or Berkshire Hills chooses to terminate an executive's
employment for reasons other than for cause, or if an executive resigns from
Berkshire Bank or Berkshire Hills after specified circumstances that would
constitute constructive termination, the executive or, if the executive dies,
his or her beneficiary, would be entitled to receive an amount equal to the
remaining base salary and incentive compensation payments due to the executive
for the remaining term of the employment agreement and the contributions that
would have been made on the executive's behalf to any employee benefit plans of
Berkshire Bank and Berkshire Hills during the remaining term of the employment
agreement. Berkshire Bank and Berkshire Hills would also continue and/or pay for
the executive's life, health, dental and disability coverage for the remaining
term of the employment agreement. Upon termination of the executive's employment
under these circumstances, the executive must adhere to a one year
non-competition restriction.
Under the employment agreements, if voluntary (upon circumstances
discussed in the agreements) or involuntary termination follows a change in
control of Berkshire Bank or Berkshire Hills, the executive or, if the executive
dies, his or her beneficiary, would be entitled to a severance payment equal to
the greater of: (1) the payments due for the remaining term of the agreement; or
(2) three times the average of the executive's compensation for the five
preceding taxable years. Berkshire Bank and Berkshire Hills would also continue
the executive's life, health, and disability coverage for thirty-six months.
Even though both the Berkshire Bank and Berkshire Hills employment agreements
provide for a severance payment if a change in control occurs, the executive
would not receive duplicative payments or benefits under the agreements. The
executive would also be entitled to receive a certain tax indemnification
payment if payments under the employment agreements or otherwise trigger
liability under the Internal Revenue Code for the excise tax applicable to
"excess parachute payments." Under applicable law, the excise tax is triggered
by change in control-related payments which equal or exceed three times the
executive's average annual compensation over the five years preceding the change
in control. The excise tax equals 20% of the amount of the payment in excess of
the executive's average compensation over that preceding five-year period.
Payments to the executive under Berkshire Bank's employment agreement
are guaranteed by Berkshire Hills if payments or benefits are not paid by
Berkshire Bank. Payment under Berkshire Hills' employment agreement would be
made by Berkshire Hills. All reasonable costs and legal fees paid or incurred by
the executive in any dispute or question of interpretation relating to the
employment agreements will be paid by Berkshire Bank or Berkshire Hills,
respectively, if the executive is successful on the merits in a legal judgment,
arbitration or settlement. The employment agreements also provide that Berkshire
Bank and Berkshire Hills will indemnify the executive to the fullest extent
legally allowable.
Pension Plan. Berkshire Bank maintains a pension plan for its eligible
employees. Generally, employees of Berkshire Bank begin participation in the
pension plan once they reach age 21 and complete 1,000 hours of service in a
consecutive 12-month period. Participants in the pension plan become vested in
their accrued benefit under the pension plan upon the earlier of the: (1)
attainment of their "normal retirement age" (as described in the pension plan)
while employed at Berkshire Bank; (2) completion of three years of service with
Berkshire Bank; or (3) death or disability of the participant. Participants are
generally credited with a year of service for each year in which they complete
at least 1,000 hours of service.
A participant's normal benefit under the pension plan equals the sum of
(1) 1.35% of the participant's average compensation (generally defined as the
average taxable compensation for the three consecutive years that produce the
highest average) divided by the number of years of service the participant has
under the plan up to 25 years of service, plus (2) 0.6% of the excess of the
participant's average compensation over the participant's covered compensation
(the social security taxable wage base for the 35 years ending in the year the
participant becomes eligible for non-reduced social security benefits) for each
year of service under the plan up to 25 years of service. Participants may
retire at or after age 65 and receive their full benefit under the plan.
Participants may also retire early at age 62 or at age 55 with ten years of
service or at age 50 with 15
8
<PAGE>
years of service under the plan and receive a reduced retirement benefit.
Pension benefits are payable in equal monthly installments for life, or for
married persons, as a joint survivor annuity over the lives of the participant
and spouse. Participants may also elect a lump sum payment with the consent of
their spouse.
The following table indicates the annual employer-provided retirement
benefit payable under the pension plan upon retirement at age 65 to a
participant electing to receive his pension benefit in the standard form of
benefit, assuming various specified levels of plan compensation and various
specified years of credited service. Under the Internal Revenue Code, maximum
annual benefits under the pension plan are limited to $135,000 per year and
annual compensation for benefit calculation purposes is limited to $170,000 per
year for the 2000 calendar year.
Years of Service
Average Annual ---------------------------------------------------------------
Compensation 10 15 20 25 30 35+
-------------- ------ ------ ------ ------ ------ ------
$25,000 $3,375 $5,063 $6,750 $8,438 $8,438 $8,438
50,000 7,766 11,649 15,532 19,415 19,415 19,415
75,000 12,641 18,962 25,282 31,603 31,603 31,603
100,000 17,516 26,274 35,032 43,790 43,790 43,790
125,000 22,391 33,587 44,782 55,978 55,978 55,978
150,000 27,266 40,899 54,532 68,165 68,165 68,165
175,000 29,216 43,824 58,432 73,040 73,040 73,040
200,000 29,216 43,824 58,432 73,040 73,040 73,040
250,000 29,216 43,824 58,432 73,040 73,040 73,040
300,000 29,216 43,824 58,432 73,040 73,040 73,040
350,000 29,216 43,824 58,432 73,040 73,040 73,040
The benefits listed on the table above for the pension plan are not
subject to a reduction for Social Security benefits or any other offset amount.
As of December 31, 2000, Messrs. Cunningham, Wells, Daly, Plungis and Ms.
Santora had 27, 39, 14, 25 and 14 years of service, respectively, for purposes
of the pension plan.
Other Retirement Arrangements. Berkshire Bank maintains a supplemental
retirement arrangement with Mr. Cunningham to provide a specified level of
benefits upon Mr. Cunningham's retirement from Berkshire Bank. Berkshire Bank
has also entered into a separate agreement with Mr. Wells to provide similar
benefits. The arrangements are designed to provide Messrs. Cunningham and Wells
with an annual retirement benefit at age 60 equal to 70% of the average of the
three consecutive years during which each of the executive's compensation is the
highest. Benefits under the supplemental arrangement are reduced by the benefits
the executives would receive under the pension plan, the 401(k) plan, social
security and split-dollar life insurance arrangements under which the executives
are entitled to share in the policy cash value at retirement.
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PROPOSAL 1 -- RATIFICATION OF THE BERKSHIRE HILLS BANCORP, INC.
2001 STOCK-BASED INCENTIVE PLAN
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9
<PAGE>
The Board of Directors of the Company is presenting for stockholder
approval the Berkshire Hills Bancorp, Inc. 2001 Stock-Based Incentive Plan. The
purpose of the plan is to attract and retain qualified personnel in key
positions, provide officers, employees and non-employee directors of the Company
and the Bank with a proprietary interest in the Company as an incentive to
contribute to the success of the Company, promote the attention of management to
other stockholder's concerns, and reward employees for outstanding performance.
The following is a summary of the material terms of the plan which is qualified
in its entirety by the complete text of the plan, which is attached hereto as
Appendix A.
General
The plan authorizes the granting of options to purchase common stock of
the Company and awards of restricted shares of common stock (collectively,
options and restricted stock awards are referred to as "awards"). Subject to
certain adjustments to prevent dilution of awards to participants, the number of
shares of common stock reserved for awards under the plan is 1,074,326 shares,
consisting of 767,376 shares reserved for options and 306,950 shares reserved
for restricted stock awards. All employees and non-employee directors of the
Company and its affiliates are eligible to receive awards under the plan. The
plan will be administered by a committee (the "Committee") consisting of
non-employee directors of the Company. Authorized but unissued shares or shares
previously issued and reacquired by the Company may be used to satisfy awards
under the plan. If authorized but unissued shares are used to satisfy awards
under the plan, it will result in an increase in the number of shares
outstanding and will have a dilutive effect on the holdings of existing
stockholders. The Company may establish a trust under which the trustee will
purchase, with contributions from the Company or the Bank, previously issued
shares to fund the Company's obligation for restricted stock awards. As of the
date of this proxy statement, no awards have been granted under the plan.
Types of Awards
General. The plan authorizes the grant of awards in the form of: (1)
options intended to qualify as incentive stock options under Section 422 of the
Internal Revenue Code (options which provide certain tax benefits to the
recipients upon compliance with applicable requirements, but which do not result
in tax deductions to the Company); (2) options that do not so qualify, referred
to as non-statutory stock options (options which do not provide the same income
tax benefits to recipients, but which may provide tax deductions to the
Company); and (3) grants of restricted shares of common stock. Each type of
award may be subject to certain vesting or service requirements or other
conditions imposed by the Committee.
Options. Subject to the terms of the plan, the Committee has the
authority to determine the amount of options granted to any individual and the
date or dates on which each option will become exercisable and any other
conditions applicable to an option. The exercise price of all options will be
determined by the Committee but will be at least 100% of the fair market value
of the underlying common stock at the time of grant. The exercise price of any
option may be paid in cash, common stock, or any other form permitted by the
Committee at its discretion. The term of options will be determined by the
Committee, but in no event will an option be exercisable more than ten years
from the date of grant (or five years from date of grant for a 10% owner with
respect to incentive stock options).
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All options granted under the plan to officers and employees may, at
the discretion of the Committee, qualify as incentive stock options to the
extent permitted under Section 422 of the Internal Revenue Code. Under certain
circumstances, incentive stock options may be converted into non-statutory stock
options. In order to qualify as incentive stock options under Section 422 of the
Internal Revenue Code: (1) the option must generally be granted only to an
employee; (2) the option must not be transferable (other than by will or the
laws of descent and distribution); (3) the exercise price must not be less than
100% of the fair market value of the common stock on the date of grant; (4) the
term of the option may not exceed ten years from the date of grant; and (5) no
more than $100,000 of options may become exercisable for the first time in any
calendar year by any recipient. Notwithstanding the foregoing requirements,
incentive stock options granted to any person who is the beneficial owner of
more than 10% of the outstanding voting stock of the Company may be exercised
only for a period of five years from the date of grant and the exercise price
must not be less than 110% of the fair market value of the common stock on the
date of grant. Non-employee directors and employees are eligible to receive
non-statutory stock options.
Unless the Committee determines otherwise, upon termination of an
option holder's services for any reason other than death, disability,
retirement, change in control or termination for cause, all then exercisable
options will remain exercisable for three months following the date of
termination, or if sooner, the expiration of the term of the option. If an
option holder dies or becomes disabled all unexercisable options will become
exercisable and remain exercisable for one year, or if sooner, the expiration of
the term of the option. Generally upon retirement, only those options that were
immediately exercisable may be exercised and only for one year following the
date of termination, or if sooner, the expiration of the term of the option.
However, the Committee may permit all unvested stock options to continue to vest
provided the option holder remains employed by the Company or the Bank as a
consultant or advisor or continues to serve the Company or the Bank as a
director, advisory director or director emeritus. In the event of a change in
control, all option awards become vested and remain exercisable for the term of
the option, unless otherwise prohibited by law or regulation. In the event of
termination for cause, all exercisable and unexercisable options held by the
option holder will be canceled.
Under generally accepted accounting principles, compensation expense is
generally not recognized with respect to the award of stock options.
Restricted Stock Awards. Subject to the terms of the plan and
applicable regulation, the Committee has the authority to determine the amounts
of restricted stock awards granted to any individual and the dates on which
restricted stock awards granted will vest or any other conditions which must be
satisfied before vesting.
Stock award recipients may also receive amounts equal to accumulated
cash and stock dividends or other distributions (if any) with respect to shares
awarded in the form of restricted stock. In addition, before vesting, recipients
of restricted stock awards may also direct the voting of shares of common stock
granted to them.
Unless the Committee determines otherwise, upon termination of the
services of a holder of a stock award for any reason other than death,
disability or retirement, all the holder's rights in unvested restricted stock
awards will be canceled. If the holder of the stock award dies or becomes
disabled, all unvested restricted stock awards held by such individual will
become fully vested. Generally, if the holder of a stock award retires, all
unvested restricted stock awards held by such individual will be canceled.
However, the Committee may permit all unvested stock awards to continue to vest
provided the holder of a stock award remains employed by the Company or the Bank
as a consultant or advisor or continues to serve the Company or the Bank as a
director, advisory director or director emeritus. In the event of a change in
control, all unvested stock awards immediately vest, unless otherwise prohibited
by law or regulation.
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<PAGE>
Federal Income Tax Treatment
Options. An option holder will generally not recognize taxable income
upon grant or exercise of any incentive stock option, provided that shares
transferred in connection with the exercise are not disposed of by the optionee
for at least one year after the date the shares are transferred in connection
with the exercise of the option and two years after the date of grant of the
option. If these holding periods are satisfied, upon disposal of the shares, the
aggregate difference between the per share option exercise price and the fair
market value of the common stock is recognized as income taxable at capital
gains rates. No compensation deduction may be taken by the Company as a result
of the grant or exercise of incentive stock options, assuming these holding
periods are met.
In the case of the exercise of a non-statutory stock option, an option
holder will recognize ordinary income equal to the aggregate amount by which the
fair market value of the common stock exceeds the exercise price of the option.
If shares received through the exercise of an incentive stock option are
disposed of before the satisfaction of the holding periods (a "disqualifying
disposition"), the exercise of the option will essentially be treated as the
exercise of a non-statutory stock option, except that the option holder will
recognize the ordinary income for the year in which the disqualifying
disposition occurs. The amount of any ordinary income recognized by an optionee
upon the exercise of a non-statutory stock option or due to a disqualifying
disposition will be a deductible expense of the Company for federal income tax
purposes.
Restricted Stock Awards. A participant who has been awarded restricted
stock under the plan and does not make an election under Section 83(b) of the
Internal Revenue Code will not recognize taxable income at the time of the
award. At the time any transfer or forfeiture restrictions applicable to the
restricted stock award lapse, the recipient will recognize ordinary income and
the Company will be entitled to a corresponding deduction equal to the fair
market value of the stock at such time. Any dividend paid to the recipient on
the restricted stock at or prior to such time will be ordinary compensation
income to the recipient and deductible as such by the Company.
A recipient of a restricted stock award who makes an election under
Section 83(b) of the Internal Revenue Code will recognize ordinary income at the
time of the award and the Company will be entitled to a corresponding deduction
equal to the fair market value of the stock at such time. Any dividends
subsequently paid to the recipient on the restricted stock will be dividend
income to the recipient and not deductible by the Company. If the recipient
makes a Section 83(b) election, there are no federal income tax consequences
either to the recipient or the Company at the time any transfer or forfeiture
restrictions applicable to the restricted stock award lapse.
Amendments
Subject to certain restrictions contained in the plan, the Board of
Directors or the Committee may amend the plan in any respect, at any time,
provided that no amendment may affect the rights of the holder of an award
without his or her permission and such amendment must comply with applicable law
and regulation.
Adjustments
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If there is any change in the outstanding shares of common stock of the
Company by reason of any stock dividend or split, recapitalization, merger,
consolidation, spin-off, reorganization, combination or exchange of shares, or
other similar corporate change, or other increase or decrease in such shares
without receipt or payment of consideration by the Company, or if an
extraordinary capital distribution is made, including the payment of an
extraordinary dividend, the Committee may make such adjustments to previously
granted awards, to prevent dilution, diminution or enlargement of the rights of
the holder. All awards under the plan will be binding upon any successors or
assigns of the Company.
Nontransferability
Unless the Committee determines otherwise, awards under the plan will
not be transferable by the recipient other than by will or the laws of intestate
succession or pursuant to a domestic relations order. With the consent of the
Committee, a recipient may permit transferability or assignment for valid estate
planning purposes of a non-statutory stock option as permitted under the
Internal Revenue Code or federal securities laws and a participant may designate
a person or his or her estate as beneficiary of any award to which the recipient
would then be entitled, if the participant dies.
Stockholder Approval, Effective Date of Plan and Regulatory Compliance
The Incentive Plan shall become effective: (i) immediately upon the
affirmative vote of two-thirds of the votes eligible to be cast at the Company's
special meeting; or (ii) on June 28, 2001 if the Incentive Plan is approved by a
majority of the votes cast at the special meeting.
New Plan Benefits
The Company anticipates that, following the effective date of the
Incentive Plan, awards will be made to eligible directors, officers and
employees at levels consistent with peer institutions and prevailing industry
practices. However, as of the date of this proxy statement, no decisions have
been made regarding the granting of any options or stock awards under the plan.
The Board of Directors recommends that you vote "FOR" approval of the
Berkshire Hills Bancorp, Inc. 2001 Stock-Based Incentive Plan.
--------------------------------------------------------------------------------
STOCKHOLDER PROPOSALS
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Since no annual meeting of stockholders at which a proxy statement was
distributed has been previously held, to be considered for inclusion in
Berkshire Hills' proxy statement and form of proxy relating to the 2001 Annual
Meeting of Stockholders, a stockholder proposal must be received by the
Secretary of the Company at the address set forth on the Notice of Special
Meeting of Stockholders a reasonable time before the proxy solicitation for the
annual meeting is made. Any such proposal will be subject to 17 C.F.R. ss.
240.14a-8 of the Rules and Regulations under the Securities Exchange Act of
1934.
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<PAGE>
The Bylaws of the Company, a copy of which may be obtained from the
Company, set forth the procedures by which a stockholder may properly bring
business before a meeting of stockholders. Pursuant to the Bylaws, only business
brought by or at the direction of the Board of Directors may be conducted at a
special meeting. The Bylaws of the Company provide an advance notice procedure
for a stockholder to properly bring business before an annual meeting. The
stockholder must give written notice to the Secretary of the Company not less
than ninety (90) days before the date originally fixed for such meeting;
provided, however, that in the event that less than one hundred (100) days
notice or prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be received not later
than the close of business on the tenth day following the date on which the
Company's notice to stockholders of the annual meeting date was mailed or such
public disclosure was made. The advance notice by stockholders must include the
stockholder's name and address, as they appear on the Company's record of
stockholders, a brief description of the proposed business, the reason for
conducting such business at the annual meeting, the class and number of shares
of the Company's capital stock that are beneficially owned by such stockholder
and any material interest of such stockholder in the proposed business. In the
case of nominations to the Board of Directors, certain information regarding the
nominee must be provided. Nothing in this paragraph shall be deemed to require
the Company to include in its proxy statement or the proxy relating to any
annual meeting any stockholder proposal which does not meet all of the
requirements for inclusion established by the Securities and Exchange Commission
in effect at the time such proposal is received.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Rose A. Borotto
Rose A. Borotto
Corporate Secretary
Pittsfield, Massachusetts
December 11, 2000
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<PAGE>
APPENDIX A
BERKSHIRE HILLS BANCORP, INC.
2001 STOCK-BASED INCENTIVE PLAN
1. DEFINITIONS.
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(a) "Affiliate" means any "parent corporation" or "subsidiary
corporation" of the Holding Company, as such terms are defined in Sections
424(e) and 424(f) of the Code.
(b) "Award" means, individually or collectively, a grant under the Plan
of Non-Statutory Stock Options, Incentive Stock Options and Stock Awards.
(c) "Award Agreement" means an agreement evidencing and setting forth
the terms of an Award.
(d) "Bank" means Berkshire Bank, a Massachusetts-chartered savings
bank.
(e) "Board of Directors" means the board of directors of the Holding
Company.
(f) "Change in Control" of the Bank or the 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"); (ii) results in a Change in Control of the Bank or the Holding
Company within the meaning of the Change in Bank 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 Rules and Regulations
promulgated by the Office of Thrift Supervision ("OTS") (or its predecessor
agency), with respect to the Holding Company, as in effect on the date of this
Agreement; or (iii) 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 voting securities of the Bank or the Holding Company representing
20% or more of the Bank's or the Holding Company's outstanding voting securities
or right to acquire such securities except for any voting securities of the Bank
purchased by the Holding Company and any voting securities purchased by any
employee benefit plan of the Holding Company or its Subsidiaries, (B)
individuals who constitute the Board 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 of the directors comprising the
Incumbent Board, or whose nomination for election by the Holding Company's
stockholders was approved by a Nominating Committee solely composed of members
which are Incumbent Board members, shall be, for purposes of this clause (B),
considered as though he were a member of the Incumbent Board, (C) a plan of
reorganization, merger, consolidation, sale of all or substantially all the
assets of the Bank or the Holding Company or similar transaction occurs or is
effectuated in which the Bank or Holding Company is not the resulting entity, or
(D) a proxy statement has been distributed soliciting proxies from stockholders
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 Bank with one or more
corporations as a result of which the outstanding shares of the class of
securities then subject to such plan or transaction are exchanged for or
converted into cash or property or securities not issued by the Bank or the
Holding Company shall be distributed, or (E) a tender offer is made for 20% or
more of the voting securities of the Bank or Holding Company then outstanding.
<PAGE>
(g) "Code" means the Internal Revenue Code of 1986, as amended.
(h) "Committee" means the committee designated by the Board of
Directors, pursuant to Section 2 of the Plan, to administer the Plan.
(i) "Common Stock" means the common stock of the Holding Company, par
value $.01 per share.
(j) "Date of Grant" means the effective date of an Award.
(k) "Disability" means any mental or physical condition with respect to
which the Participant qualifies for and receives benefits for under a long-term
disability plan of the Holding Company or an Affiliate, or in the absence of
such a long-term disability plan or coverage under such a plan, "Disability"
shall mean a physical or mental condition which, in the sole discretion of the
Committee, is reasonably expected to be of indefinite duration and to
substantially prevent the Participant from fulfilling his or her duties or
responsibilities to the Holding Company or an Affiliate.
(l) "Effective Date" means the earlier of the date that Plan is
approved by shareholders or June 28, 2001.
(m) "Employee" means any person employed by the Holding Company or an
Affiliate. Directors who are employed by the Holding Company or an Affiliate
shall be considered Employees under the Plan.
(n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(o) "Exercise Price" means the price at which a Participant may
purchase a share of Common Stock pursuant to an Option.
(p) "Fair Market Value" means the market price of Common Stock,
determined by the Committee as follows:
(i) If the Common Stock was traded on the date in question on The
Nasdaq Stock Market, then the Fair Market Value shall be equal
to the closing price reported for such date;
(ii) If the Common Stock was traded on a stock exchange on the date
in question, then the Fair Market Value shall be equal to the
closing price reported by the applicable composite
transactions report for such date; and
(iii) If neither of the foregoing provisions is applicable, then the
Fair Market Value shall be determined by the Committee in good
faith on such basis as it deems appropriate. Whenever
possible, the determination of Fair Market Value by the
Committee shall be based on the prices reported in The Wall
Street Journal. The Committee's determination of Fair Market
Value shall be conclusive and binding on all persons.
(q) "Holding Company" means Berkshire Hills Bancorp, Inc., a Delaware
corporation.
(r) "Incentive Stock Option" means a stock option granted to a
Participant, pursuant to Section 7 of the Plan, that is intended to meet the
requirements of Section 422 of the Code.
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(s) "Non-Statutory Stock Option" means a stock option granted to a
Participant pursuant to the terms of the Plan but which is not intended to be
and is not identified as an Incentive Stock Option or a stock option granted
under the Plan which is intended to be and is identified as an Incentive Stock
Option but which does not meet the requirements of Section 422 of the Code.
(t) "Option" means an Incentive Stock Option or Non-Statutory Stock
Option.
(u) "Outside Director" means a member of the board(s) of directors of
the Holding Company or an Affiliate who is not also an Employee of the Holding
Company or an Affiliate.
(v) "Participant" means any person who holds an outstanding Award.
(w) "Plan" means this Berkshire Hills Bancorp, Inc. 2001 Stock-Based
Incentive Plan.
(x) "Retirement" means retirement from employment with the Holding
Company or an Affiliate in accordance with the then current retirement policies
of the Holding Company or Affiliate, as applicable. "Retirement" with respect to
an Outside Director means the termination of service from the board(s) of
directors of the Holding Company and any Affiliate following written notice to
such board(s) of directors of the Outside Director's intention to retire.
(y) "Stock Award" means an Award granted to a Participant pursuant to
Section 8 of the Plan.
(z) "Termination for Cause" means termination because of a
Participant's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or material breach of any provision of any
employment agreement between the Holding Company and/or any subsidiary of the
Holding Company and a Participant.
(aa) "Trust" means a trust established by the Board of Directors in
connection with this Plan to hold Common Stock or other property for the
purposes set forth in the Plan.
(bb) "Trustee" means any person or entity approved by the Board of
Directors or its designee(s) to hold any of the Trust assets.
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<PAGE>
2. ADMINISTRATION.
--------------
(a) The Committee shall administer the Plan. The Committee shall
consist of two or more disinterested directors of the Holding Company, who shall
be appointed by the Board of Directors. A member of the Board of Directors shall
be deemed to be "disinterested" only if he or she satisfies: (i) such
requirements as the Securities and Exchange Commission may establish for
non-employee directors administering plans intended to qualify for exemption
under Rule 16b-3 (or its successor) under the Exchange Act and (ii) such
requirements as the Internal Revenue Service may establish for outside directors
acting under plans intended to qualify for exemption under Section 162(m)(4)(C)
of the Code. The Board of Directors may also appoint one or more separate
committees of the Board of Directors, each composed of one or more directors of
the Holding Company or an Affiliate who need not be disinterested, that may
grant Awards and administer the Plan with respect to Employees, Outside
Directors, and other individuals who are not considered officers or directors of
the Holding Company under Section 16 of the Exchange Act or for whom Awards are
not intended to satisfy the provisions of Section 162(m) of the Code.
(b) The Committee shall (i) select the Employees and Outside Directors
who are to receive Awards under the Plan, (ii) determine the type, number,
vesting requirements and other features and conditions of such Awards, (iii)
interpret the Plan and Award Agreements in all respects and (iv) make all other
decisions relating to the operation of the Plan. The Committee may adopt such
rules or guidelines as it deems appropriate to implement the Plan. The
Committee's determinations under the Plan shall be final and binding on all
persons.
(c) Each Award shall be evidenced by a written agreement ("Award
Agreement") containing such provisions as may be required by the Plan and
otherwise approved by the Committee. Each Award Agreement shall constitute a
binding contract between the Holding Company or an Affiliate and the
Participant, and every Participant, upon acceptance of an Award Agreement, shall
be bound by the terms and restrictions of the Plan and the Award Agreement. The
terms of each Award Agreement shall be in accordance with the Plan, but each
Award Agreement may include any additional provisions and restrictions
determined by the Committee, in its discretion, provided that such additional
provisions and restrictions are not inconsistent with the terms of the Plan. In
particular and at a minimum, the Committee shall set forth in each Award
Agreement: (i) the type of Award granted; (ii) the Exercise Price of any Option;
(iii) the number of shares subject to the Award; (iv) the expiration date of the
Award; (v) the manner, time, and rate (cumulative or otherwise) of exercise or
vesting of such Award; and (vi) the restrictions, if any, placed upon such
Award, or upon shares which may be issued upon exercise of such Award. The
Chairman of the Committee and such other directors and officers as shall be
designated by the Committee is hereby authorized to execute Award Agreements on
behalf of the Company or an Affiliate and to cause them to be delivered to the
recipients of Awards.
(d) The Committee may delegate all authority for: (i) the determination
of forms of payment to be made by or received by the Plan and (ii) the execution
of any Award Agreement. The Committee may rely on the descriptions,
representations, reports and estimates provided to it by the management of the
Holding Company or an Affiliate for determinations to be made pursuant to the
Plan, including the satisfaction of any conditions of a Performance Award.
However, only the Committee or a portion of the Committee may certify the
attainment of any conditions of a Performance Award intended to satisfy the
requirements of Section 162(m) of the Code.
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<PAGE>
3. TYPES OF AWARDS.
---------------
The following Awards may be granted under the Plan:
(a) Non-Statutory Stock Options.
(b) Incentive Stock Options.
(c) Stock Awards.
4. STOCK SUBJECT TO THE PLAN.
-------------------------
Subject to adjustment as provided in Section 13 of the Plan, the number
of shares reserved for Awards under the Plan is 1,074,326. Subject to adjustment
as provided in Section 13 of the Plan, the number of shares reserved hereby for
purchase pursuant to the exercise of Options granted under the Plan is 767,376.
The number of the shares reserved for Stock Awards is 306,950. The shares of
Common Stock issued under the Plan may be either authorized but unissued shares
or authorized shares previously issued and acquired or reacquired by the Trustee
or the Holding Company, respectively. To the extent that Options and Stock
Awards are granted under the Plan, the shares underlying such Awards will be
unavailable for any other use including future grants under the Plan except
that, to the extent that Stock Awards or Options terminate, expire or are
forfeited without having vested or without having been exercised, new Awards may
be made with respect to these shares.
5. ELIGIBILITY.
-----------
Subject to the terms of the Plan, all Employees and Outside Directors
shall be eligible to receive Awards under the Plan. In addition, the Committee
may grant eligibility to consultants and advisors of the Holding Company or an
Affiliate, as it sees fit.
6. NON-STATUTORY STOCK OPTIONS.
---------------------------
The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved but not previously awarded under
the Plan, grant Non-Statutory Stock Options to eligible individuals upon such
terms and conditions as it may determine to the extent such terms and conditions
are consistent with the following provisions:
(a) Exercise Price. The Committee shall determine the Exercise Price of
each Non-Statutory Stock Option. However, the Exercise Price shall not be less
than 100% of the Fair Market Value of the Common Stock on the Date of Grant.
(b) Terms of Non-Statutory Stock Options. The Committee shall determine
the term during which a Participant may exercise a Non-Statutory Stock Option,
but in no event may a Participant exercise a Non-Statutory Stock Option, in
whole or in part, more than ten (10) years from the Date of Grant. The Committee
shall also determine the date on which each Non-Statutory Stock Option, or any
part thereof, first becomes exercisable and any terms or conditions a
Participant must satisfy in order to exercise each Non-Statutory Stock Option.
The shares of Common Stock underlying each Non-Statutory Stock Option may be
purchased in whole or in part by the Participant at any time during the term of
such Non-Statutory Stock Option, or any portion thereof, once the Non-Statutory
Stock Option becomes exercisable.
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<PAGE>
(c) Non-Transferability. Unless otherwise determined by the Committee
in accordance with this Section 6(c), a Participant may not transfer, assign,
hypothecate, or dispose of in any manner, other than by will or the laws of
intestate succession, a Non-Statutory Stock Option. The Committee may, however,
in its sole discretion, permit transferability or assignment of a Non-Statutory
Stock Option if such transfer or assignment is, in its sole determination, for
valid estate planning purposes and such transfer or assignment is permitted
under the Code and Rule 16b-3 under the Exchange Act. For purposes of this
Section 6(c), a transfer for valid estate planning purposes includes, but is not
limited to: (a) a transfer to a revocable intervivos trust as to which the
Participant is both the settlor and trustee, (b) a transfer for no consideration
to: (i) any member of the Participant's Immediate Family, (ii) any trust solely
for the benefit of members of the Participant's Immediate Family, (iii) any
partnership whose only partners are members of the Participant's Immediate
Family, and (iv) any limited liability corporation or corporate entity whose
only members or equity owners are members of the Participant's Immediate Family;
or (c) a transfer to the Berkshire Charitable Foundation, Inc. For purposes of
this Section 6(c), "Immediate Family" includes, but is not necessarily limited
to, a Participant's parents, grandparents, spouse, children, grandchildren,
siblings (including half brothers and sisters), and individuals who are family
members by adoption. Nothing contained in this Section 6(c) shall be construed
to require the Committee to give its approval to any transfer or assignment of
any Non-Statutory Stock Option or portion thereof, and approval to transfer or
assign any Non-Statutory Stock Option or portion thereof does not mean that such
approval will be given with respect to any other Non-Statutory Stock Option or
portion thereof. The transferee or assignee of any Non-Statutory Stock Option
shall be subject to all of the terms and conditions applicable to such
Non-Statutory Stock Option immediately prior to the transfer or assignment and
shall be subject to any other conditions prescribed by the Committee with
respect to such Non-Statutory Stock Option.
(d) Termination of Employment or Service (General). Unless otherwise
determined by the Committee, upon the termination of a Participant's employment
or other service for any reason other than Retirement, Disability or death, a
Change in Control, or Termination for Cause, the Participant may exercise only
those Non-Statutory Stock Options that were immediately exercisable by the
Participant at the date of such termination and only for a period of three (3)
months following the date of such termination or, if sooner, until the
expiration of the term of the Option.
(e) Termination of Employment or Service (Retirement). In the event of
a Participant's Retirement, the Participant may exercise only those
Non-Statutory Stock Options that were immediately exercisable by the Participant
at the date of Retirement and only for a period of one (1) year from the date of
Retirement or, if sooner, until the expiration of the term of the Option;
provided however, that upon the Participant's Retirement, the Committee may, in
its discretion unless otherwise prohibited by law or regulation, accelerate the
vesting of all unvested Options or determine that all unvested Options shall
continue to vest in accordance with the Award Agreement provided the Participant
is immediately engaged by the Holding Company or an Affiliate as a consultant or
advisor or continues to serve the Holding Company or an Affiliate as a director,
advisory director or director emeritus.
(f) Termination of Employment or Service (Disability or Death). Unless
otherwise determined by the Committee, in the event of the termination of a
Participant's employment or other service due to Disability or death, all
Non-Statutory Stock Options held by such Participant shall immediately become
exercisable and remain exercisable for a period of one (1) year following the
date of such termination, or, if sooner, until the expiration of the term of the
Option.
(g) Termination of Employment or Service (Change in Control). In the
event of a Change in Control, unless otherwise prohibited by law or regulation,
all Non-Statutory Stock Options held by a Participant as of the date of the
Change in Control shall immediately become exercisable and shall remain
exercisable until the expiration of the term of the Non-Statutory Stock Option
regardless of termination of employment or service.
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<PAGE>
(h) Termination of Employment or Service (Termination for Cause).
Unless otherwise determined by the Committee, in the event of a Participant's
Termination for Cause, all rights with respect to the Participant's
Non-Statutory Stock Options shall expire immediately upon the effective date of
such Termination for Cause.
(i) Payment. Payment due to a Participant upon the exercise of a
Non-Statutory Stock Option shall be made in the form of shares of Common Stock.
(j) Maximum Individual Award. No individual Employee shall be granted
an amount of Non-Statutory Stock Options which exceeds 25% of all Options
eligible to be granted under the Plan within any 60-month period.
7. INCENTIVE STOCK OPTIONS.
-----------------------
The Committee may, subject to the limitations of the Plan and the
availability of shares of Common Stock reserved but unawarded under this Plan,
grant Incentive Stock Options to an Employee upon such terms and conditions as
it may determine to the extent such terms and conditions are consistent with the
following provisions:
(a) Exercise Price. The Committee shall determine the Exercise Price of
each Incentive Stock Option. However, the Exercise Price shall not be less than
100% of the Fair Market Value of the Common Stock on the Date of Grant;
provided, however, that if at the time an Incentive Stock Option is granted, the
Employee owns or is treated as owning, for purposes of Section 422 of the Code,
Common Stock representing more than 10% of the total combined voting securities
of the Holding Company ("10% Owner"), the Exercise Price shall not be less than
110% of the Fair Market Value of the Common Stock on the Date of Grant.
(b) Amounts of Incentive Stock Options. To the extent the aggregate
Fair Market Value of shares of Common Stock with respect to which Incentive
Stock Options that are exercisable for the first time by an Employee during any
calendar year under the Plan and any other stock option plan of the Holding
Company or an Affiliate exceeds $100,000, or such higher value as may be
permitted under Section 422 of the Code, such Options in excess of such limit
shall be treated as Non-Statutory Stock Options. Fair Market Value shall be
determined as of the Date of Grant with respect to each such Incentive Stock
Option.
(c) Terms of Incentive Stock Options. The Committee shall determine the
term during which a Participant may exercise an Incentive Stock Option, but in
no event may a Participant exercise an Incentive Stock Option, in whole or in
part, more than ten (10) years from the Date of Grant; provided, however, that
if at the time an Incentive Stock Option is granted to an Employee who is a 10%
Owner, the Incentive Stock Option granted to such Employee shall not be
exercisable after the expiration of five (5) years from the Date of Grant. The
Committee shall also determine the date on which each Incentive Stock Option, or
any part thereof, first becomes exercisable and any terms or conditions a
Participant must satisfy in order to exercise each Incentive Stock Option. The
shares of Common Stock underlying each Incentive Stock Option may be purchased
in whole or in part at any time during the term of such Incentive Stock Option
after such Option becomes exercisable.
(d) Non-Transferability. No Incentive Stock Option shall be
transferable except by will or the laws of descent and distribution and is
exercisable, during his or her lifetime, only by the Employee to whom the
Committee grants the Incentive Stock Option. The designation of a beneficiary
does not constitute a transfer of an Incentive Stock Option.
A-7
<PAGE>
(e) Termination of Employment (General). Unless otherwise determined by
the Committee, upon the termination of a Participant's employment or other
service for any reason other than Retirement, Disability or death, a Change in
Control, or Termination for Cause, the Participant may exercise only those
Incentive Stock Options that were immediately exercisable by the Participant at
the date of such termination and only for a period of three (3) months following
the date of such termination, or, if sooner, until the expiration of the term of
the Option.
(f) Termination of Employment (Retirement). In the event of a
Participant's Retirement, the Participant may exercise only those Non-Statutory
Stock Options that were immediately exercisable by the Participant at the date
of Retirement and only for a period of one (1) year from the date of Retirement
or, if sooner, until the expiration of the term of the Option; provided however,
that upon the Participant's Retirement, the Committee may, in its discretion
unless otherwise prohibited by law or regulation, accelerate the vesting of
unvested Options or, determine that all unvested Options shall continue to vest
in accordance with the Award Agreement provided the Participant is immediately
engaged by the Holding Company or an Affiliate as a consultant or advisor or
continues to serve the Holding Company or an Affiliate as a director, advisory
director or director emeritus. Any Option originally designated as an Incentive
Stock Option shall be treated as a Non-Statutory Stock Option to the extent the
Option does not otherwise qualify as an Incentive Stock Option pursuant to
Section 422 of the Code.
(g) Termination of Employment (Disability or Death). Unless otherwise
determined by the Committee, in the event of the termination of a Participant's
employment or other service due to Disability or death, all Incentive Stock
Options held by such Participant shall immediately become exercisable and remain
exercisable for a period of one (1) year following the date of such termination,
or, if sooner, until the expiration of the term of the Option.
(h) Termination of Employment (Change in Control). In the event of a
Change in Control, unless otherwise prohibited by law or regulation, all
Incentive Stock Options held by a Participant as of the date of the Change in
Control shall immediately become exercisable and shall remain exercisable until
the expiration of the term of the Incentive Stock Option regardless of
termination of employment. Any Option originally designated as an Incentive
Stock Option shall be treated as a Non-Statutory Stock Option to the extent the
Participant exercises Stock Options more than (3) months from the Participant's
cessation of employment.
(i) Termination of Employment (Termination for Cause). Unless otherwise
determined by the Committee, in the event of an Employee's Termination for
Cause, all rights under such Employee's Incentive Stock Options shall expire
immediately upon the effective date of such Termination for Cause.
(j) Payment. Payment due to a Participant upon the exercise of an
Incentive Stock Option shall be made in the form of shares of Common Stock.
(k) Disqualifying Dispositions. Each Award Agreement with respect to an
Incentive Stock Option shall require the Participant to notify the Committee of
any disposition of shares of Common Stock issued pursuant to the exercise of
such Option under the circumstances described in Section 421(b) of the Code
(relating to certain disqualifying dispositions) within 10 days of such
disposition.
(l) Maximum Individual Award. No individual Employee shall be granted
an amount of Incentive Stock Options which exceeds 25% of all Options eligible
to be granted under the Plan within any 60-month period.
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<PAGE>
8. STOCK AWARDS.
------------
The Committee may make grants of Stock Awards, which shall consist of
the grant of some number of shares of Common Stock, to a Participant upon such
terms and conditions as it may determine to the extent such terms and conditions
are consistent with the following provisions:
(a) Grants of the Stock Awards. Stock Awards may only be made in whole
shares of Common Stock. Stock Awards may only be granted from shares reserved
under the Plan and available for award at the time the Stock Award is made to
the Participant.
(b) Terms of the Stock Awards. The Committee shall determine the dates
on which Stock Awards granted to a Participant shall vest and any terms or
conditions which must be satisfied prior to the vesting of any Stock Award or
portion thereof. Any such terms or conditions shall be determined by the
Committee as of the Date of Grant.
(c) Termination of Employment or Service (General). Unless otherwise
determined by the Committee, upon the termination of a Participant's employment
or service for any reason other than Retirement, Disability or death, a Change
in Control, or Termination for Cause, any Stock Awards in which the Participant
has not become vested as of the date of such termination shall be forfeited and
any rights the Participant had to such Stock Awards shall become null and void.
(d) Termination of Employment or Service (Retirement). In the event of
a Participant's Retirement, any Stock Awards in which the Participant has not
become vested as of the date of Retirement shall be forfeited and any rights the
Participant had to such unvested Stock Awards shall become null and void;
provided however, that upon the Participant's Retirement, the Committee may, in
its discretion unless otherwise prohibited by law or regulation, accelerate the
vesting of unvested Stock Awards, or determine that all unvested Stock Awards
shall continue to vest in accordance with the Award Agreement provided the
Participant is immediately engaged by the Holding Company or an Affiliate as a
consultant or advisor or continues to serve the Holding Company or an Affiliate
as a director, advisory director, or director emeritus.
(e) Termination of Employment or Service (Disability or Death). Unless
otherwise determined by the Committee, in the event of a termination of the
Participant's service due to Disability or death, all unvested Stock Awards held
by such Participant shall immediately vest as of the date of such termination.
(f) Termination of Employment or Service (Change in Control). In the
event of a Change in Control, unless otherwise prohibited by law or regulation,
all unvested Stock Awards held by a Participant shall immediately vest.
(g) Termination of Employment or Service (Termination for Cause).
Unless otherwise determined by the Committee, in the event of the Participant's
Termination for Cause, all Stock Awards in which the Participant had not become
vested as of the effective date of such Termination for Cause shall be forfeited
and any rights such Participant had to such unvested Stock Awards shall become
null and void.
(h) Maximum Individual Award. No individual Employee shall be granted
an amount of Stock Awards which exceeds 25% of all Stock Awards eligible to be
granted under the Plan within any 60-month period.
(i) Issuance of Certificates. Unless otherwise held in Trust and
registered in the name of the Trustee, reasonably promptly after the Date of
Grant with respect to shares of Common Stock pursuant to a Stock Award, the
Holding Company shall cause to be issued a stock certificate, registered in the
name of the Participant to whom such Stock Award was granted, evidencing such
shares; provided, that the Holding
A-9
<PAGE>
Company shall not cause such a stock certificate to be issued unless it has
received a stock power duly endorsed in blank with respect to such shares. Each
such stock certificate shall bear the following legend:
The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including forfeiture provisions and restrictions against
transfer) contained in the Berkshire Hills Bancorp, Inc. 2001
Stock-Based Incentive Plan and Award Agreement entered into between the
registered owner of such shares and Berkshire Hills Bancorp, Inc. or
its Affiliates. A copy of the Plan and Award Agreement is on file in
the office of the Corporate Secretary of Berkshire Hills Bancorp, Inc.,
24 North Street, Pittsfield, Massachusetts 01201.
Such legend shall not be removed until the Participant becomes vested in such
shares pursuant to the terms of the Plan and Award Agreement. Each certificate
issued pursuant to this Section 8(h), in connection with a Stock Award, shall be
held by the Holding Company or its Affiliates, unless the Committee determines
otherwise.
(j) Non-Transferability. Except to the extent permitted by the Code,
the rules promulgated under Section 16(b) of the Exchange Act or any successor
statutes or rules:
(i The recipient of a Stock Award shall not sell,
transfer, assign, pledge, or otherwise encumber
shares subject to the Stock Award until full vesting
of such shares has occurred. For purposes of this
section, the separation of beneficial ownership and
legal title through the use of any "swap" transaction
is deemed to be a prohibited encumbrance.
(ii Unless determined otherwise by the Committee and
except in the event of the Participant's death or
pursuant to a domestic relations order, a Stock Award
is not transferable and may be earned in his or her
lifetime only by the Participant to whom it is
granted. Upon the death of a Participant, a Stock
Award is transferable by will or the laws of descent
and distribution. The designation of a beneficiary
shall not constitute a transfer.
(iii If a recipient of a Stock Award is subject to the
provisions of Section 16 of the Exchange Act, shares
of Common Stock subject to such Stock Award may not,
without the written consent of the Committee (which
consent may be given in the Award Agreement), be sold
or otherwise disposed of within six (6) months
following the date of grant of the Stock Award.
(k) Treatment of Dividends. Whenever shares of Common Stock underlying
a Stock Award are distributed to a Participant or beneficiary thereof under the
Plan (or at such other time as the Committee may determine with respect to a
Participant), such Participant or beneficiary shall also be entitled to receive,
with respect to each such share distributed, a payment equal to any cash
dividends or other distributions and the number of shares of Common Stock equal
to any stock dividends, declared and paid with respect to a share of the Common
Stock if the record date for determining shareholders entitled to receive such
dividends or other distributions falls between the date the relevant Stock Award
was granted and the date the relevant Stock Award or installment thereof is
issued. There shall also be distributed an appropriate amount of net earnings,
if any, of the Trust with respect to any dividends paid out on the shares
related to the Stock Award.
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<PAGE>
(l) Voting of Stock Awards. After a Stock Award has been granted but
for which the shares covered by such Stock Award have not yet been vested,
earned and distributed to the Participant pursuant to the Plan, the Participant
shall be entitled to vote or to direct the Trustee to vote, as the case may be,
such shares of Common Stock which the Stock Award covers subject to the rules
and procedures adopted by the Committee for this purpose and in a manner
consistent with the Trust agreement.
(m) Payment. Payment due to a Participant upon the redemption of a
Stock Award shall be made in the form of shares of Common Stock.
9. DEFERRED PAYMENTS.
-----------------
The Committee, in its discretion, may permit a Participant to elect to
defer receipt of all or any part of any payment under the Plan otherwise due
upon exercise of an Option. The Committee shall determine the terms and
conditions of any such deferral, including the period of deferral, the manner of
deferral, and the method for measuring appreciation on deferred amounts until
their payout.
10. METHOD OF EXERCISE OF OPTIONS.
-----------------------------
Subject to any applicable Award Agreement, any Option may be exercised
by the Participant in whole or in part at such time or times, and the
Participant may make payment of the Exercise Price in such form or forms
permitted by the Committee, including, without limitation, payment by delivery
of cash, Common Stock or other consideration (including, where permitted by law
and the Committee, Awards) having a Fair Market Value on the day immediately
preceding the exercise date equal to the total Exercise Price, or by any
combination of cash, shares of Common Stock and other consideration, including
exercise by means of a cashless exercise arrangement with a qualifying
broker-dealer, as the Committee may specify in the applicable Award Agreement.
11. RIGHTS OF PARTICIPANTS.
----------------------
No Participant shall have any rights as a shareholder with respect to
any shares of Common Stock covered by an Option until the date of issuance of a
stock certificate for such Common Stock. Nothing contained herein or in any
Award Agreement confers on any person any right to continue in the employ or
service of the Holding Company or an Affiliate or interferes in any way with the
right of the Holding Company or an Affiliate to terminate a Participant's
services.
12. DESIGNATION OF BENEFICIARY.
--------------------------
A Participant may, with the consent of the Committee, designate a
person or persons to receive, in the event of death, any Award to which the
Participant would then be entitled. Such designation will be made upon forms
supplied by and delivered to the Holding Company and may be revoked in writing.
If a Participant fails effectively to designate a beneficiary, then the
Participant's estate will be deemed to be the beneficiary.
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<PAGE>
13. DILUTION AND OTHER ADJUSTMENTS.
------------------------------
In the event of any change in the outstanding shares of Common Stock by
reason of any stock dividend or split, recapitalization, merger, consolidation,
spin-off, reorganization, combination or exchange of shares, or other similar
corporate change, or other increase or decrease in such shares without receipt
or payment of consideration by the Holding Company, or in the event an
extraordinary capital distribution is made, the Committee may make such
adjustments to previously granted Awards, to prevent dilution, diminution, or
enlargement of the rights of the Participant, including any or all of the
following:
(a) adjustments in the aggregate number or kind of shares of
Common Stock or other securities that may underlie future
Awards under the Plan;
(b) adjustments in the aggregate number or kind of shares of
Common Stock or other securities underlying Awards already
made under the Plan;
(c) adjustments in the Exercise Price of outstanding Incentive
and/or Non-Statutory Stock Options.
No such adjustments may, however, materially change the value of benefits
available to a Participant under a previously granted Award. All Awards under
this Plan shall be binding upon any successors or assigns of the Holding
Company.
14. TAXES.
-----
(a) Whenever under this Plan, cash or shares of Common Stock are to be
delivered upon exercise or payment of an Award or any other event with respect
to rights and benefits hereunder, the Committee shall be entitled to require as
a condition of delivery (i) that the Participant remit an amount sufficient to
satisfy all federal, state, and local withholding tax requirements related
thereto, (ii) that the withholding of such sums come from compensation otherwise
due to the Participant or from any shares of Common Stock due to the Participant
under this Plan or (iii) any combination of the foregoing; provided, however,
that no amount shall be withheld from any cash payment or shares of Common Stock
relating to an Award which was transferred by the Participant in accordance with
this Plan. Furthermore, Participants may direct the Committee to instruct the
Trustee to sell shares of Common Stock to be delivered upon the payment of an
Award to satisfy tax obligations.
(b) If any disqualifying disposition described in Section 7(k) is made
with respect to shares of Common Stock acquired under an Incentive Stock Option
granted pursuant to this Plan, or any transfer described in Section 6(c) is
made, or any election described in Section 13 is made, then the person making
such disqualifying disposition, transfer, or election shall remit to the Holding
Company or its Affiliates an amount sufficient to satisfy all federal, state,
and local withholding taxes thereby incurred; provided that, in lieu of or in
addition to the foregoing, the Holding Company or its Affiliates shall have the
right to withhold such sums from compensation otherwise due to the Participant,
or, except in the case of any transfer pursuant to Section 6(c), from any shares
of Common Stock due to the Participant under this Plan.
15. NOTIFICATION UNDER SECTION 83(b).
--------------------------------
The Committee may, on the Date of Grant or any later date, prohibit a
Participant from making the election described below. If the Committee has not
prohibited such Participant from making such election, and the Participant
shall, in connection with the exercise of any Option, or the grant of any Stock
Award, make the election permitted under Section 83(b) of the Code, such
Participant shall notify the Committee of
A-12
<PAGE>
such election within 10 days of filing notice of the election with the Internal
Revenue Service, in addition to any filing and notification required pursuant to
regulations issued under the authority of Section 83(b) of the Code.
16. AMENDMENT OF THE PLAN AND AWARDS.
--------------------------------
(a) Except as provided in paragraph (c) of this Section 16, the Board
of Directors may at any time, and from time to time, modify or amend the Plan in
any respect, prospectively or retroactively; provided, however, that provisions
governing grants of Incentive Stock Options shall be submitted for shareholder
approval to the extent required by law, regulation or otherwise. Failure to
ratify or approve amendments or modifications by shareholders shall be effective
only as to the specific amendment or modification requiring such ratification or
approval. Other provisions of this Plan will remain in full force and effect. No
such termination, modification or amendment may adversely affect the rights of a
Participant under an outstanding Award without the written permission of such
Participant.
(b) Except as provided in paragraph (c) of this Section 16, the
Committee may amend any Award Agreement, prospectively or retroactively;
provided, however, that no such amendment shall adversely affect the rights of
any Participant under an outstanding Award without the written consent of such
Participant.
(c) In no event shall the Board of Directors amend the Plan or shall
the Committee amend an Award Agreement in any manner that has the effect of:
(i) Allowing any Option to be granted with an Exercise
Price below the Fair Market Value of the Common Stock
on the Date of Grant.
(ii) Allowing the Exercise Price of any Option previously
granted under the Plan to be reduced subsequent to
the Date of Award.
(d) Notwithstanding anything in this Plan or any Award Agreement to the
contrary, if any Award or right under this Plan would, in the opinion of the
Holding Company's accountants, cause a transaction to be ineligible for pooling
of interest accounting that would, but for such Award or right, be eligible for
such accounting treatment, the Committee, at its discretion, may modify, adjust,
eliminate or terminate the Award or right so that pooling of interest accounting
is available.
17. EFFECTIVE DATE OF PLAN.
----------------------
The Incentive Plan shall become effective: (i) immediately upon the
affirmative vote of two-thirds of the votes eligible to be cast at the Company's
special meeting; or (ii) on June 28, 2001 provided the Incentive Plan is
approved only by a majority of the votes cast at the special meeting.
18. TERMINATION OF THE PLAN.
-----------------------
The right to grant Awards under the Plan will terminate upon the
earlier of: (i) ten (10) years after the Effective Date; or (ii) the issuance of
a number of shares of Common Stock pursuant to the exercise of Options or the
distribution of Stock Awards is equivalent to the maximum number of shares
reserved under the Plan as set forth in Section 4 hereof. The Board of Directors
has the right to suspend or terminate the Plan at any time, provided that no
such action will, without the consent of a Participant, adversely affect a
Participant's vested rights under a previously granted Award.
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<PAGE>
19. APPLICABLE LAW.
--------------
The Plan will be administered in accordance with the laws of the State
of Delaware to the extent not pre-empted by applicable federal law.
20. TREATMENT OF UNVESTED, UNEXERCISED OR NON-EXERCISABLE AWARDS UPON A
--------------------------------------------------------------------
CHANGE IN CONTROL.
-----------------
In the event of a Change in Control where the Holding Company or the
Bank is not the surviving entity, the Board of Directors of the Holding Company
and/or the Bank, as applicable, shall require that the successor entity take one
of the following actions with respect to all Awards held by Participants at the
date of the Change in Control:
(a) Assume the Awards with the same terms and conditions as granted to
the Participant under this Plan;
(b) Replace the Awards with comparable Awards, subject to the same or
more favorable terms and conditions as the Awards granted to the Participant
under this Plan, whereby the Participant will be granted common stock or the
option to purchase common stock of the successor entity; or
(c) Replace the Awards with an immediate cash payment of equivalent
value.
21. COMPLIANCE WITH CONVERSION REGULATIONS.
--------------------------------------
Notwithstanding any other provision contained in this Plan, if this
Plan is implemented prior to June 28, 2001, the following provisions shall
apply, to the extent required by applicable Massachusetts law or regulation:
(a) The Plan must be approved by two-thirds of the outstanding
shares of the Holding Company eligible to be cast at a meeting
of stockholders to consider the Plan, as determined by
Delaware law
(b) No Options or Stock Awards granted to any individual Employee
may exceed 25% of the total amount of Options or Stock Awards,
as applicable, which may be granted under the Plan;
(c) No Options or Stock Awards granted to any individual Outside
Director may exceed 5% of the total amount of Options or Stock
Awards, as applicable, which may be granted under the Plan;
(d) The aggregate amount of Options or Stock Awards granted to all
Outside Directors may not exceed 30% of the total amount of
Options or Stock Awards, as applicable, which may be granted
under the Plan; and
(e) No Option may be granted with an exercise price which is less
than the Fair Market Value of the Common Stock underlying the
Option on the Date of Grant.
(f) Options and Stock Awards shall vest at a rate no greater than
20% per year and such vesting shall accelerate only in the
event of death or disability.
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<PAGE>
REVOCABLE PROXY
BERKSHIRE HILLS BANCORP, INC.
SPECIAL MEETING OF STOCKHOLDERS
January 23, 2001
10:00 a.m. Local Time
-------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints the official proxy committee of
Berkshire Hills Bancorp, Inc. (the "Company"), consisting of James A.
Cunningham, Jr., Catherine B. Miller, Raymond B. Murray, III, Corydon L.
Thurston, Ann H. Trabulsi and Robert A. Wells, with full power of substitution,
to act as proxy for the undersigned, and to vote all shares of common stock of
the Company which the undersigned is entitled to vote only at the Special
Meeting of Stockholders, to be held on January 23, 2001, at 10:00 a.m. Local
Time, at the Crowne Plaza Hotel, One West Street, Pittsfield, Massachusetts and
at any and all adjournments thereof, with all of the powers the undersigned
would possess if personally present at such meeting as follows:
The approval of the Berkshire Hills Bancorp, Inc. 2001 Stock-Based
Incentive Plan.
FOR AGAINST ABSTAIN
--- ------- -------
|_| |_| |_|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSAL.
This proxy is revocable and will be voted as directed, but if no
instructions are specified, this proxy, properly signed and dated, will be voted
"FOR" the proposal listed. If any other business is presented at the special
meeting, including whether or not to adjourn the meeting, this proxy will be
voted by the proxies in their best judgment. At the present time, the Board of
Directors knows of no other business to be presented at the Special Meeting.
Dated:___________________________
--------------------------------
SIGNATURE OF SHAREHOLDER
--------------------------------
SIGNATURE OF CO-HOLDER (IF ANY)
The above signed acknowledges receipt from the Company prior to the
execution of this proxy of a Notice of Special Meeting of Stockholders and a
Proxy Statement dated December 11, 2000.
<PAGE>
Please sign exactly as your name appears on this card. When signing as
attorney, executor, administrator, trustee or guardian, please give your full
title. If shares are held jointly, each holder may sign but only one signature
is required.
-----------------------------
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THIS PROXY
IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
