BERKSHIRE HILLS BANCORP, INC.
                              EMPLOYMENT AGREEMENT


     This EMPLOYMENT  AGREEMENT (the "Agreement") by and between Berkshire Hills
Bancorp, Inc. (the "Holding Company"), a corporation organized under the laws of
Delaware,   with  its  principal   offices  at  24  North  Street,   Pittsfield,
Massachusetts, 01202, and Michael P. Daly ("Executive") was entered into on June
27, 2000, and amended and restated in its entirety  effective as of June 1, 2003
(the "Effective  Time"). Any reference to the "Bank" herein shall mean Berkshire
Bank or any successor to Berkshire Bank.

     WHEREAS,  the Holding  Company  believes that the assurance of  Executive's
employment by the Holding Company for the term of this Agreement and the benefit
of his business experience are of material importance; and

     WHEREAS, Executive desires to serve in the employ of the Holding Company on
a full-time basis for the term of this Agreement.

     NOW, THEREFORE,  in consideration of the mutual covenants herein contained,
and upon the other terms and  conditions  hereinafter  provided,  the parties to
this Agreement hereby agree as follows:

1.  POSITIONS AND RESPONSIBILITIES

(a) During the term of this Agreement Executive agrees to serve as President and
Chief  Executive  Officer  of  the  Holding  Company.   Executive  shall  render
administrative  and  management  services  to the  Holding  Company  such as are
customarily  performed by persons in a similar  executive  capacity.  During the
term of this Agreement, Executive also agrees to serve, if elected or appointed,
as a director of the Holding  Company and as an officer  and/or  director of any
subsidiary  of the  Holding  Company  and in such  capacity  will carry out such
duties and responsibilities reasonably appropriate to that office. In performing
his  services as  President  and Chief  Executive  Officer and  carrying out his
duties  and  responsibilities  as a  director,  Executive  shall  conform to the
policies  and codes of conduct and ethics of the Bank and the  Holding  Company,
now or hereafter in effect.

(b) During the term of Executive's  employment under this Agreement,  except for
periods of absence occasioned by illness,  vacation, and other reasonable leaves
of  absence,  Executive  shall  devote  substantially  all  his  business  time,
attention,  skill,  and efforts to the faithful  performance of his duties under
this Agreement,  including  activities and services related to the organization,
operation and management of the Holding Company and its subsidiaries, as well as
participation  in community,  professional  and civic  organizations;  provided,
however,  that,  with the  approval  of the Board of  Directors  of the  Holding
Company (the "Board of Directors"), as evidenced by a resolution of the Board of
Directors,  from time to time, Executive may serve, or continue to serve, on the
boards of directors of, and hold any other offices or positions in, companies or
organizations,  which,  in the  judgment  of the  Board of  Directors,  will not
present any conflict of

<PAGE>


interest with the Holding Company or its subsidiaries,  or materially affect the
performance of Executive's duties pursuant to this Agreement.

(c) Notwithstanding anything contained in this Agreement to the contrary, either
Executive or the Holding Company may terminate  Executive's  employment with the
Holding Company at any time during the term of this  Agreement,  with or without
cause,  subject  to the  terms and  conditions  of this  Agreement.  Termination
without  cause by the Bank  shall  require  a  resolution  duly  adopted  by the
affirmative vote of not less than two-thirds (2/3) of the independent members of
the Board of Directors,  at a meeting of the Board of Directors  called and held
for that purpose (after  reasonable  notice to Executive and an opportunity  for
him,  together with counsel,  to be heard before the Board of  Directors).  Upon
such  termination,  Executive shall be entitled to receive all  compensation and
benefits  for the  remainder  of the term of the  Agreement,  or as set forth in
Section 4 hereof, as shall be applicable.  As used herein,  "termination without
cause" shall mean  termination  of  Executive's  employment for any reason other
than those as defined as a Termination for Cause in Section 7 hereof.

2. TERM OF EMPLOYMENT

Executive's employment under this Agreement shall be deemed to have commenced as
of the Effective Time and shall  continue for a period of twenty-four  (24) full
calendar months from the Effective Time.  Commencing on the date of execution of
this  Agreement,  the term of this  Agreement  shall extend for one day each day
until such time as the Board of Directors or Executive  elects not to extend the
term of the Agreement by giving written notice to the other party, in which case
the term of this  Agreement  shall  become  fixed and  shall  end on the  second
anniversary of the date of such written notice.

3.  COMPENSATION, BENEFITS AND REIMBURSEMENT

(a) Base Salary. The Holding Company shall pay Executive an annual salary of not
less than $310,000 ("Base Salary").  Executive's Base Salary shall be payable in
accordance with the normal payroll  practices of the Holding  Company.  Whenever
used in this  Agreement,  Base Salary shall include any amounts of  compensation
deferred by Executive under any tax-qualified retirement or welfare benefit plan
or any other deferred compensation arrangement maintained by the Holding Company
or the Bank.  During the term of this  Agreement,  the Board of  Directors  or a
committee  appointed by the Board of Directors  shall  review  Executive's  Base
Salary  at least  annually  and the  Board of  Directors  or the  committee  may
increase  Executive's  Base Salary at any time. Any increase in Executive's Base
Salary shall become a term of this  Agreement and shall be the new "Base Salary"
for  purposes of this  Agreement.  Executive  shall not  receive any  additional
compensation for his service as a director.

(b) Incentive Compensation.  In addition to his Base Salary,  Executive shall be
entitled to participate in any incentive compensation bonus program sponsored by
the Holding Company or the Bank.  Executive's  incentive  compensation  shall be
determined  by the Board of Directors  or a committee  appointed by the Board of
Directors at a level appropriate for executive officers.


                                      -2-
<PAGE>

(c) Club Dues.  In addition to any other  compensation  provided  for under this
Agreement,  the Bank shall pay Executive an amount  sufficient,  on an after-tax
basis, to maintain his membership at the Country Club of Pittsfield.

(d) Automobile.  The Bank shall provide Executive with, and Executive shall have
the primary use of, an automobile owned or leased by the Bank and the Bank shall
pay (or  reimburse  Executive)  for all  expenses  of  insurance,  registration,
operation  and  maintenance  of the  automobile.  Executive  shall  comply  with
reasonable  reporting and expense limitations on the use of such automobile,  as
the Board of Directors may establish from time to time, and the Holding  Company
or  the  Bank  shall  annually  include  on  Executive's  Form  W-2  any  amount
attributable to Executive's personal use of such automobile.

(e) Vacation;  Holidays;  Sick Time.  Executive shall be entitled to vacation in
accordance  with the standard  vacation  policies of the Holding  Company or the
Bank for  senior  executive  officers,  but in no event less than four (4) weeks
vacation during each year of employment. Executive shall take vacation at a time
mutually agreed upon by the Holding Company or the Bank and Executive. Executive
shall  receive his Base Salary and other  benefits  during  periods of vacation.
Executive  shall also be entitled to paid legal holidays in accordance  with the
policies of the Holding Company or the Bank. Executive shall also be entitled to
sick leave in  accordance  with the policies of the Holding  Company or the Bank
for senior executive  officers,  but in no event less than the number of days of
sick leave per year to which Executive was entitled at the Effective Time.

(f) Other Employee  Benefits.  In addition to any other compensation or benefits
provided for under this  Agreement,  Executive  shall be entitled to continue to
participate in any employee  benefit plans,  arrangements and perquisites of the
Holding  Company  or the  Bank  in  which  he  participates  or is  eligible  to
participate  at  the  Effective  Time.  Executive  shall  also  be  entitled  to
participate in any employee  benefits or perquisites  the Holding Company or the
Bank offers to full-time  employees or executive  management in the future.  The
Holding Company or the Bank will not, without Executive's prior written consent,
make  any  changes  in such  plans,  arrangements  or  perquisites  which  would
adversely affect  Executive's  rights or benefits  thereunder without separately
providing for an arrangement that ensures Executive receives or will receive the
economic value that Executive  would  otherwise lose as a result of such adverse
effect,   unless   such   change  in  general   in  nature  and   applies  in  a
nondiscriminatory  manner to all employees covered by the Plan. Without limiting
the generality of the foregoing provisions of this paragraph, Executive shall be
entitled to participate in or receive benefits under all plans relating to stock
options,  restricted  stock awards,  stock purchases,  pension,  profit sharing,
employee stock  ownership,  group life  insurance,  medical and other health and
welfare  coverage that are made available by the Holding  Company or the Bank at
the  Effective  Time  or at any  time  in the  future  during  the  term of this
Agreement,  subject to and on a basis consistent with the terms,  conditions and
overall administration of such plans and arrangements. Nothing paid to Executive
under  any such  plans or  arrangements  will be  deemed  to be in lieu of other
compensation to which Executive is entitled under this Agreement.



                                      -3-
<PAGE>

4.  PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION

(a) Upon the  occurrence of an Event of  Termination  (as defined  herein below)
during  Executive's term of employment  under this Agreement,  the provisions of
this Section 4 shall apply. As used in this Agreement, an "Event of Termination"
shall mean and include any one or more of the following:  (i) the termination of
Executive's full-time employment under this Agreement by the Holding Company for
any reason other than a termination governed by Section 7 of this Agreement;  or
(ii) Executive's  resignation from his employment with the Holding Company upon,
any (A) failure to re-appoint  Executive to his positions set forth in Section 1
of this  Agreement,  unless  Executive  consents to such event, or a termination
without  cause of  Executive's  employment  as set forth in Section 1(c) of this
Agreement,   (B)  material   change  in  Executive's   functions,   duties,   or
responsibilities  with the Holding  Company or its  subsidiaries,  which  change
would  cause  Executive's  position(s)  to become one of lesser  responsibility,
importance, or scope, unless Executive consents to such event, (C) relocation of
Executive's  principal place of employment by more than  twenty-five  (25) miles
from its  location at the  Effective  Time,  unless  Executive  consents to such
event, (D) material reduction (except to the extent provided for in Section 3(f)
of this  Agreement) in the benefits and  perquisites  provided to Executive from
those  being  provided  as of the  Effective  Time  of  this  Agreement,  unless
Executive  consents to such event, (E) liquidation or dissolution of the Holding
Company or the Bank,  or (F) breach of this  Agreement  by the Holding  Company.
Upon the occurrence of any event described in clauses (A), (B), (C), (D), (E) or
(F),  above,  Executive  shall have the right to terminate his employment  under
this Agreement by  resignation  upon not less than sixty (60) days prior written
notice given within six (6) full  calendar  months  after the  applicable  event
giving rise to Executive's right to elect to terminate his employment.

(b) Upon  Executive's  termination  from employment in accordance with paragraph
(a) of this  Section 4, on the Date of  Termination,  as defined in Section 8 of
the Agreement,  the Holding Company shall be obligated to pay Executive,  or, in
the event of his death  following the Date of  Termination,  his  beneficiary or
beneficiaries, or his estate, as the case may be, an amount equal to the sum of:
(i) the Base  Salary  and  incentive  compensation  that would have been paid to
Executive for the remaining  term of this Agreement had the Event of Termination
not occurred  (based on  Executive's  then current Base Salary and most recently
paid or accrued  bonus at the time of the Event of  Termination);  plus (ii) the
value, as calculated by a recognized firm customarily performing such valuation,
of any stock options which as of the Date of  Termination,  have been granted to
Executive but are not  exercisable  by Executive and the value of any restricted
stock awards which have been granted to Executive,  but in which  Executive does
not  have  a  non-forfeitable  or  fully-vested  interest  as  of  the  Date  of
Termination; plus (iii) the value of all employee benefits (other than those set
forth in Section 3(c) and (d) hereof) that would have been provided to Executive
for the  remaining  term of this  Agreement  had an  Event  of  Termination  not
occurred,  based on the most  recent  level of  contribution,  accrual  or other
participation by or on behalf of Executive. At the election of Executive,  which
election is to be made prior to the Date of Termination,  such payments shall be
made in a lump sum. In the event that no election is made,  payment to Executive
will be made on a monthly basis in approximately  equal installments  during the
remaining unexpired term of the Agreement. Such payments shall



                                      -4-

<PAGE>


not be  reduced  in the  event  Executive  obtains  other  employment  following
termination of employment.

(c) In addition to the payments provided for in paragraph (b) of this Section 4,
upon Executive's  termination of employment in accordance with the provisions of
paragraph  (a) of this Section 4, to the extent that the Holding  Company or the
Bank  continues  to offer  any  life,  medical,  health,  disability  or  dental
insurance plan or arrangement in which Executive participates in on the last day
of his  employment  (each  being a "Welfare  Plan"),  Executive  and his covered
dependents shall continue  participating  in such Welfare Plans,  subject to the
same premium contributions on the part of Executive as were required immediately
prior to the Event of  Termination  until the  earlier of (i) his death (ii) his
employment by another  employer other than one of which he is the majority owner
or (iii) the end of the remaining term of this Agreement. If the Holding Company
or Bank  does  not  offer  the  Welfare  Plans at any time  after  the  Event of
Termination,  then the Holding  Company shall provide  Executive  with a payment
equal to the  premiums  for such  benefits  for the period  which runs until the
earlier of (i) his death (ii) his employment by another  employer other than one
of which he is the majority owner or (iii) the end of the remaining term of this
Agreement.

5.  CHANGE IN CONTROL

(a) For purposes of this Agreement, a "Change in Control" shall mean an event of
a nature that:  (i) would be required to be reported in response to Item 1(a) of
the  current  report on Form 8-K, as in effect on the date  hereof,  pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act");
or (ii) results in a Change in Control of the Bank or the Holding Company within
the  meaning  of the Bank  Change in Control  Act and the Rules and  Regulations
promulgated by the Federal Deposit Insurance  Corporation  ("FDIC") at 12 C.F.R.
ss.  303.4(a) with respect to the Bank and the Board of Governors of the Federal
Reserve  System ("FRB") at 12 C.F.R.  ss.  225.41(b) with respect to the Holding
Company,  as in effect on the date  hereof;  or (iii)  results in a  transaction
requiring  prior FRB approval under the Bank Holding Company Act of 1956 and the
regulations  promulgated  thereunder by the FRB at 12 C.F.R.  ss. 225.11,  as in
effect on the date hereof except for the Holding  Company's  acquisition  of the
Bank;  or (iv) without  limitation  such a Change in Control  shall be deemed to
have  occurred at such time as (A) any "person" (as the term is used in Sections
13(d) and 14(d) of the Exchange  Act) is or becomes the  "beneficial  owner" (as
defined in Rule 13d-3  under the  Exchange  Act),  directly  or  indirectly,  of
securities of the Bank or the Holding  Company  representing  20% or more of the
Bank's or the Holding Company's outstanding securities except for any securities
of the Bank purchased by the Holding  Company in connection  with the conversion
of the Bank to the stock form and any securities  purchased by any tax-qualified
employee  benefit plan of the Bank; or (B)  individuals who constitute the Board
of Directors on the date hereof (the "Incumbent  Board") cease for any reason to
constitute  at least a majority  thereof,  provided  that any person  becoming a
director  subsequent to the date hereof whose election was approved by a vote of
at least  three-quarters  (3/4) of the directors comprising the Incumbent Board,
or whose  nomination  for  election by the Holding  Company's  stockholders  was
approved by the same  Nominating  Committee  serving  under an Incumbent  Board,
shall be, for purposes of this clause (B), considered as though he were a member
of the Incumbent Board; or (C) a plan of reorganization,  merger, consolidation,
sale of all or substantially all the assets of the Bank or the


                                      -5-
<PAGE>


Holding  Company  or  similar  transaction  occurs in which the Bank or  Holding
Company is not the resulting entity; or (D) solicitations of shareholders of the
Holding  Company,  by someone  other than the current  management of the Holding
Company,  seeking  stockholder  approval of a plan of reorganization,  merger or
consolidation of the Holding Company or Bank or similar  transaction with one or
more  corporations as a result of which the  outstanding  shares of the class of
securities  then  subject  to the  plan  or  transaction  are  exchanged  for or
converted  into cash or  property  or  securities  not issued by the Bank or the
Holding Company shall be  distributed;  or (E) a tender offer is made for 20% or
more of the voting securities of the Bank or the Holding Company.

(b)  If any of the  events  described  in  paragraph  (a)  of  this  Section  5,
constituting  a Change in  Control,  have  occurred  or the  Board of  Directors
determines that a Change in Control has occurred, Executive shall be entitled to
the benefits provided in paragraphs (c), (d), (e), (f) and (g) of this Section 5
upon his termination of employment at any time during the term of this Agreement
on or  after  the date the  Change  in  Control  occurs  due to (1)  Executive's
dismissal or (2) Executive's  resignation following any demotion, loss of title,
office  or  significant   authority  or  responsibility,   reduction  in  annual
compensation  or benefits or relocation of his principal  place of employment by
more than  twenty-five  (25) miles from its  location  immediately  prior to the
Change  in  Control,  unless  such  termination  is  because  of  his  death  or
Termination for Cause; provided, however, that such payments shall be reduced by
any payment made under Section 4 of this Agreement.

(c)  Upon  the  occurrence  of a  Change  in  Control  followed  by  Executive's
termination of  employment,  as provided in paragraph (b) of this Section 5, the
Holding  Company shall pay Executive,  or in the event of his subsequent  death,
his  beneficiary  or  beneficiaries,  or his  estate,  as the  case  may be,  as
severance pay or liquidated  damages, or both, a sum equal to the greater of: 1)
the  payments and benefits  due for the  remaining  term of the  Agreement or 2)
three  (3)  times  Executive's  average  annual  compensation  from the  Holding
Company,  the Bank or their affiliates for the five (5) preceding  taxable years
or such lesser number of years in the event that  Executive  shall have actually
been  employed by the Holding  Company or the Bank for less than five (5) years.
In determining  Executive's  average annual  compensation,  annual  compensation
shall  include  Base  Salary and any other  taxable  income,  including  but not
limited to amounts  related to the  granting,  vesting or exercise of restricted
stock or stock option awards, commissions,  bonuses (whether paid or accrued for
the applicable  period), as well as, severance  payments,  retirement  benefits,
director or committee  fees and fringe  benefits paid or to be paid to Executive
or paid for Executive's  benefit during any such year, profit sharing,  employee
stock ownership plan and other retirement  contributions or benefits,  including
to any  tax-qualified  plan or  arrangement  (whether  or not  taxable)  made or
accrued on behalf of Executive of such year. At the election of Executive, which
election  is to be made  prior  to or  within  thirty  (30)  days of the Date of
Termination  on or following a Change in Control,  such payment may be made in a
lump sum (without  discount for early payment) on or  immediately  following the
Date of Termination  (which may be the date a Change in Control  occurs) or paid
in equal monthly installments during the sixty (60) months following Executive's
termination. In the event that no election is made, payment to Executive will be
made on a monthly  basis  during the sixty  (60)  months  following  Executive's
termination.




                                      -6-



<PAGE>

(d) Upon the  occurrence of a Change in Control,  Executive  will be entitled to
receive benefits due him under or contributed by the Bank or the Holding Company
on his behalf  pursuant to any  retirement,  incentive,  profit sharing or other
retirement,  bonus,  performance,  disability  or other  employee  benefit  plan
maintained  by the  Holding  Company  or the Bank on  Executive's  behalf to the
extent  such  benefits  are not  otherwise  paid to  Executive  under a separate
provision of this Agreement. In addition, for purposes of determining his vested
accrued  benefit,  Executive  shall be credited either under any defined benefit
pension plan maintained by the Bank or, if not permitted under such plan,  under
a separate  arrangement,  with the  additional  "years of service" that he would
have earned for vesting and benefit  accrual  purposes for the remaining term of
the Agreement had his employment not terminated.

(e) Upon the  occurrence of a Change in Control and  Executive's  termination of
employment  in  connection  therewith,  the  Holding  Company  will  cause to be
continued life, medical and disability coverage  substantially  identical to the
coverage  maintained by the Holding Company or the Bank for Executive and any of
his  dependents  covered  under such plans prior to the Change in Control.  Such
coverage and payments  shall cease upon the  expiration of thirty-six  (36) full
calendar  months  following the Date of  Termination.  In the event  Executive's
participation  in any such plan or program is barred,  the Holding Company shall
arrange to provide  Executive and his  dependents  with  benefits  substantially
similar to those of which Executive and his dependents would otherwise have been
entitled to receive  under such plans and  programs  from which their  continued
participation is barred or provide their economic equivalent.

(f) The use or provision of any  membership,  license,  automobile use, or other
perquisites shall be continued during the remaining term of the Agreement on the
same financial terms and obligations as were in place  immediately  prior to the
Change in  Control.  To the extent that any item  referred to in this  paragraph
will,  at the end of the term of this  Agreement,  no  longer  be  available  to
Executive,  Executive  will have the option to purchase  all rights then held by
the Holding  Company or the Bank to such item for a price equal to the then fair
market value of the item.

(g) In the event that  Executive  is  receiving  monthly  payments  pursuant  to
Section  5(c)  hereof,  on an annual  basis,  thereafter,  between  the dates of
January 1 and January 31 of each year, Executive shall elect whether the balance
of the amount  payable  under the Agreement at that time shall be paid in a lump
sum or on a pro rata basis  pursuant to such  section.  Such  election  shall be
irrevocable for the year for which such election is made.

6.  CHANGE IN CONTROL RELATED PROVISIONS

(a) Notwithstanding the preceding provisions of Section 5 of this Agreement, for
any taxable year in which Executive shall be liable for the payment of an excise
tax under Section 4999 of the Code (or any successor  provision  thereto),  with
respect to any  payment in the nature of the  compensation  made by the  Holding
Company or its  subsidiaries  to (or for the benefit of)  Executive  pursuant to
this  Agreement or otherwise,  the Holding  Company (or any  successor  thereto)
shall pay to Executive an amount determined under the following formula:




                                      -7-

<PAGE>

         An amount equal to:  (E x P) + X

WHERE:

    X        =                    E x P
                   ----------------------------------------
                  1 - [(FI x (1 - SLI)) + SLI + E + M + PO]

    E        =        the rate at which the excise tax is assessed under
                      Section 4999 of the Code;

    P        =        the amount  with  respect  to which such  excise  tax is
                      assessed,  determined  without regard to this Section 6;

    FI       =        the highest  marginal rate of federal  income, employment,
                      and other taxes (other than taxes imposed  under  Section
                      4999 of the Code)  applicable to Executive for the taxable
                      year  in  question   (including  any  effective increase
                      in   Executive's   tax  rate attributable to the
                      disallowance of any deduction);

    SLI      =        the  sum of the  highest  marginal  rates  of  income  and
                      payroll  tax  applicable  to Executive  under  applicable
                      state  and local  laws for the  taxable  year in  question
                      (including  any  effective   increase  in  Executive's tax
                      rate  attributable  to  the disallowance
                      of any deduction);

    M        =        highest marginal rate of Medicare tax; and

    PO       =        adjustment  for phase out of or loss of deduction,
                      personal  exemption or other similar items.

With  respect to any payment in the nature of  compensation  that is made to (or
for the benefit of) Executive under the terms of this Agreement or otherwise and
on which an excise tax under  Section  4999 of the Code may or will be assessed,
the payment  determined  under this  Section 6 shall be made to Executive on the
earliest of (i) the date the Holding  Company is required to withhold  such tax,
(ii) the date the tax is required to be paid by Executive,  or (iii) at the time
of the Change in Control.  It is the  intention  of the parties that the Holding
Company provide  Executive with a full tax gross-up under the provisions of this
Section 6, so that on a net after-tax  basis,  the result to Executive  shall be
the same as if the excise tax under Section 4999 (or any  successor  provisions)
of the Code had not been imposed.  The payment may be adjusted,  as appropriate,
if alternative minimum tax rules under the Code are applicable to Executive.

(b)  Notwithstanding  the  foregoing,  if it is (i) initially  determined by the
Holding Company's tax advisors that no excise tax under Section 4999 is due with
respect to any payment or benefit  described  in the first  paragraph of Section
6(a) and,  thereafter,  it is determined in a final judicial  determination or a
final  administrative  settlement  that the Section  4999 excise tax is due with
respect to such payments or benefits or (ii) subsequently  determined in a final
judicial  determination or a final administrative  settlement to which Executive
is a party  that the  excise  tax under  Section  4999 is due or that the excess
parachute payment as defined in Section 4999 of



                                      -8-
<PAGE>

the  Code is more  than  the  amount  determined  as "P",  above  (such  revised
determination  under  (i) or (ii)  above  being  thereafter  referred  to as the
"Determinative Excess Parachute Payment"),  then the tax advisors of the Holding
Company (or any successor  thereto) shall determine the amount (the  "Adjustment
Amount"), the Holding Company (or its successor) must pay to Executive, in order
to put Executive in the same position as Executive would have been if the amount
determined  as "P" above had been equal to the  Determinative  Excess  Parachute
Payment.  In determining the Adjustment Amount, the tax advisors shall take into
account any and all taxes  (including  any penalties of any nature and interest)
paid  or  payable  by  Executive  in   connection   with  such  final   judicial
determination or final administrative  settlement.  As soon as practicable after
the Adjustment Amount has been so determined,  the Holding Company shall pay the
Adjustment Amount to Executive.

(c) The Holding  Company (or its successor)  shall  indemnify and hold Executive
harmless  from  any  and all  losses,  costs  and  expenses  (including  without
limitation,  reasonable attorney's fees, reasonable accountant's fees, interest,
fines and  penalties  of any  kind)  which  Executive  incurs as a result of any
administrative or judicial review of Executive's liability under Section 4999 of
the Code by the Internal  Revenue Service or any comparable state agency through
and including a final judicial determination or final administrative  settlement
of any dispute arising out of Executive's  liability for the Section 4999 excise
tax or otherwise  relating to the classification for purposes of Section 280G of
the Code of any  payment  or  benefit  in the  nature  of  compensation  made or
provided to Executive by the Holding Company or any successor thereto. Executive
shall promptly notify the Holding Company in writing whenever Executive receives
notice of the commencement of any judicial or administrative proceeding,  formal
or informal,  in which the federal tax treatment  under Section 4999 of the Code
of any amount paid or payable  under this  Agreement is being  reviewed or is in
dispute  (including a notice of audit or other inquiry  concerning the reporting
of  Executive's  liability  under  Section  4999).  The Holding  Company (or its
successor)  may assume  control  at its  expense  over all legal and  accounting
matters  pertaining to such federal or state tax treatment (except to the extent
necessary  or  appropriate  for  Executive to resolve any such  proceeding  with
respect to any matter  unrelated  to amounts  paid or payable  pursuant  to this
contract) and Executive  shall  cooperate  fully with the Holding Company in any
such proceeding.  Executive shall not enter into any compromise or settlement or
otherwise  prejudice any rights the Holding  Company (or its successor) may have
in connection  therewith  without  prior consent to the Holding  Company (or its
successor).  In the event that the Holding  Company (or any  successor  thereto)
elects not to assume  control  over such  matters,  the Holding  Company (or any
successor thereto) shall promptly  reimburse  Executive for all expenses related
thereto as and when  incurred upon  presentation  of  appropriate  documentation
relating thereto.

7.  TERMINATION FOR CAUSE

     The  term  "Termination  for  Cause"  shall  mean  termination  because  of
Executive's  personal  dishonesty,  willful misconduct,  any breach of fiduciary
duty involving  personal profit,  intentional  failure to perform stated duties,
willful violation of any law, rule, regulation (other than traffic violations or
similar  offenses),  final  cease and  desist  order or  material  breach of any
provision of this Agreement.  Notwithstanding the foregoing, Executive shall not
be deemed to have been  terminated  for cause  unless and until there shall have
been  delivered to him a Notice


                                      -9-

<PAGE>

of  Termination  which shall include a copy of a resolution  duly adopted by the
affirmative vote of not less than two-thirds (2/3) of the independent members of
the Board of Directors  at a meeting of the Board of  Directors  called and held
for that purpose (after  reasonable  notice to Executive and an opportunity  for
him, together with counsel, to be heard before the Board of Directors),  finding
that in the good faith opinion of the Board of  Directors,  Executive was guilty
of conduct  justifying  Termination  for Cause and  specifying  the  particulars
thereof in detail. Executive shall not have the right to receive compensation or
other  benefits for any period after  Termination  for Cause.  During the period
beginning on the date of the Notice of Termination  pursuant to Section 8 hereof
through the Date of  Termination,  stock options  granted to Executive under any
stock option plan shall not be exercisable nor shall any unvested awards granted
to Executive  under any stock benefit plan of the Bank,  the Holding  Company or
any  subsidiary or affiliate  thereof,  vest. At the Date of  Termination,  such
stock options and any such unvested  awards shall become null and void and shall
not be exercisable  by or delivered to Executive at any time  subsequent to such
Termination for Cause.

8.  NOTICE

(a) Any purported  termination by the Holding  Company or by Executive  shall be
communicated by a Notice of Termination to the other party. For purposes of this
Agreement, a "Notice of Termination" shall mean a written notice which indicates
the specific  termination  provision in this Agreement relied upon and shall set
forth in  reasonable  detail  the facts and  circumstances  claimed to provide a
basis  for  termination  of  Executive's   employment  under  the  provision  so
indicated.

(b)  "Date of  Termination"  shall  mean the date  specified  in the  Notice  of
Termination.

9.  POST-TERMINATION OBLIGATIONS

All payments and benefits to Executive  under this Agreement shall be subject to
Executive's  compliance  with this  Section  9 for one (1) full  year  after the
earlier of the  expiration  of this  Agreement  or  termination  of  Executive's
employment with the Holding Company.  Executive shall,  upon reasonable  notice,
furnish such information and assistance to the Holding Company as may reasonably
be required by the Holding Company in connection with any litigation in which it
or any of its subsidiaries or affiliates is, or may become, a party.

10. NON-COMPETITION AND NON-DISCLOSURE

(a) Upon any termination of Executive's employment hereunder pursuant to Section
4 hereof,  Executive  agrees  not to  compete  with the  Holding  Company or its
subsidiaries  for a period of one (1) year  following  such  termination  in any
city, town or county in which Executive's  normal business office is located and
the  Holding  Company or any of its  subsidiaries  has an office or has filed an
application for regulatory approval to establish an office, determined as of the
effective date of such termination, except as agreed to pursuant to a resolution
duly adopted by the Board of Directors. Executive agrees that during such period
and within said  cities,  towns and  counties,  Executive  shall not work for or
advise,  consult or otherwise  serve with,  directly or  indirectly,  any entity
whose  business  materially  competes  with  the  depository,  lending  or other
business


                                      -10-

<PAGE>


activities  of the Holding  Company or its  subsidiaries.  The  parties  hereto,
recognizing  that  irreparable  injury will result to the Holding Company or its
subsidiaries,  its business and property in the event of  Executive's  breach of
this  Subsection  10(a) agree that in the event of any such breach by Executive,
the Holding Company or its  subsidiaries,  will be entitled,  in addition to any
other remedies and damages available, to an injunction to restrain the violation
hereof by Executive,  Executive's partners, agents, servants,  employees and all
persons acting for or under the direction of Executive. Executive represents and
admits  that in the  event of the  termination  of his  employment  pursuant  to
Section 4 of this Agreement,  Executive's  experience and  capabilities are such
that Executive can obtain employment in a business engaged in other lines and/or
of a different nature than the Holding Company or its subsidiaries, and that the
enforcement  of a remedy by way of injunction  will not prevent  Executive  from
earning a  livelihood.  Nothing  herein will be  construed  as  prohibiting  the
Holding Company or its subsidiaries  from pursuing any other remedies  available
to the Holding Company or its subsidiaries for such breach or threatened breach,
including the recovery of damages from Executive.

(b) Executive  recognizes  and  acknowledges  that the knowledge of the business
activities  and plans for  business  activities  of the Holding  Company and its
subsidiaries  as it may exist  from time to time,  is a  valuable,  special  and
unique  asset of the  business  of the  Holding  Company  and its  subsidiaries.
Executive  will not,  during or after the term of his  employment,  disclose any
knowledge of the past, present, planned or considered business activities of the
Holding Company and subsidiaries  thereof to any person, firm,  corporation,  or
other entity for any reason or purpose whatsoever unless expressly authorized by
the Board of  Directors  or  required  by law.  Notwithstanding  the  foregoing,
Executive  may disclose  any  knowledge of banking,  financial  and/or  economic
principles,  concepts or ideas which are not solely and exclusively derived from
the business  plans and  activities  of the Holding  Company.  In the event of a
breach or threatened  breach by Executive of the  provisions of this Section 10,
the Holding Company will be entitled to an injunction restraining Executive from
disclosing,  in whole or in part, the knowledge of the past, present, planned or
considered  business  activities of the Holding  Company or its  subsidiaries or
from rendering any services to any person,  firm,  corporation,  other entity to
whom such knowledge, in whole or in part, has been disclosed or is threatened to
be  disclosed.  Nothing  herein will be  construed  as  prohibiting  the Holding
Company from pursuing any other  remedies  available to the Holding  Company for
such  breach or  threatened  breach,  including  the  recovery  of damages  from
Executive.

11. DEATH AND DISABILITY

(a)  Death.  Notwithstanding  any  other  provision  of  this  Agreement  to the
contrary,  in the event of Executive's  death during the term of this Agreement,
the  Holding  Company  shall  immediately  pay his  estate  any salary and bonus
accrued  but  unpaid as of the date of his death,  and,  for a period of six (6)
months after  Executive's  death,  the Holding Company shall continue to provide
medical  insurance  benefits  existing  on the date of his  death  and shall pay
Executive's  designated  beneficiary  the Base  Salary that would  otherwise  be
payable to him pursuant to Section 3 of this Agreement. This provision shall not
negate any rights  Executive  or his  beneficiaries  may have to death  benefits
under any employee benefit plan of the Holding Company or the Bank.



                                      -11-
<PAGE>

(b)  Disability

     (i)  Disability.  If during the term of  Executive's  employment  Executive
begins to receive disability benefits under the long-term  disability  insurance
policy  maintained  by the Bank  (the  "Disability  Policy"),  then the  Holding
Company's obligation to pay Executive his Base Salary shall, as of the date such
benefits  first  become  payable  under  the  Disability  Policy on  account  of
Executive's  disability,  be reduced to equal the difference between Executive's
Base Salary and amounts received under all long-term disability policies, to the
extent that such salary  payments  do not result in a  reduction  in  disability
payments.

     (ii) Incapacity. If, as a result of Disability,  Executive is determined by
a physician chosen by the Holding Company or the Bank and reasonably  acceptable
to  Executive  or  Executive's  personal  representatives  not to be  capable of
fulfilling  Executive's  responsibilities  as an officer of the Holding  Company
("Incapacity Determination"),  (1) Executive shall continue to be covered by the
Bank's  medical   insurance  and  life  insurance   policies  until  the  second
anniversary of the Incapacity  Determination,  and (2) the Holding  Company's or
the Bank's obligation to provide Executive with other employment-related  fringe
benefits  hereunder shall cease as of the date of such Incapacity  Determination
("Incapacity  Determination Date"). Prior to the Incapacity  Determination Date,
the Holding  Company shall  continue to pay Executive his annual salary in usual
installments    and   Executive    shall   continue   to   receive   all   other
employment-related  fringe  benefits due to Executive  in  accordance  with this
Agreement,  as same may have been reduced by disability insurance payments under
paragraph (i) above.

     (iii)  Termination of Employment by Reason of Incapacity.  At any time from
and after the  Incapacity  Determination  Date,  the Board of Directors,  in its
discretion,  may elect to  terminate  Executive's  employment  by reason of such
incapacity.  Any such  termination as a result of incapacity shall be considered
to be an Event of Termination in accordance with Section 4 of this Agreement. In
such event,  payments due Executive shall not include any of the fringe benefits
set forth in Section 3(c) and (d).

12. SOURCE OF PAYMENTS

(a) All  payments  provided  in this  Agreement  shall be timely paid in cash or
check from the general funds of the Holding Company or subject to Section 12(b).

(b)  Notwithstanding  any provision  herein to the contrary,  to the extent that
payments and benefits, as provided by this Agreement, are paid to or received by
Executive  under an  employment  agreement in effect  between  Executive and the
Bank,  such  compensation  payments  and  benefits  paid  by the  Bank  will  be
subtracted  from any  amount  due  simultaneously  to  Executive  under  similar
provisions of this Agreement.  Payments  pursuant to this Agreement and the Bank
agreement shall be allocated in proportion to the level of activity and the time
expended on such  activities by Executive as  determined by the Holding  Company
and the Bank.


                                      -12-

<PAGE>

13. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS

This Agreement contains the entire understanding  between the parties hereto and
supersedes any prior  employment  agreement  between the Holding  Company or any
predecessor  of the Holding  Company and  Executive,  except that this Agreement
shall not affect or operate to reduce  any  benefit or  compensation  inuring to
Executive of a kind elsewhere provided.  No provision of this Agreement shall be
interpreted to mean that  Executive is subject to receiving  fewer benefits than
those available to him without reference to this Agreement.

14. NO ATTACHMENT

(a) Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation,  commutation,  alienation,  sale,  assignment,
encumbrance,  charge,  pledge,  or hypothecation,  or to execution,  attachment,
levy,  or similar  process or  assignment  by operation of law, and any attempt,
voluntary or involuntary,  to affect any such action shall be null, void, and of
no effect.

(b) This Agreement shall be binding upon, and inure to the benefit of, Executive
and the Holding Company and their respective successors and assigns.

15. MODIFICATION AND WAIVER

(a) This  Agreement  may not be modified or amended  except by an  instrument in
writing signed by the parties hereto.

(b) No term or condition of this Agreement  shall be deemed to have been waived,
nor shall there be any estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver or
estoppel.  No such written  waiver shall be deemed a  continuing  waiver  unless
specifically  stated therein,  and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such term
or condition for the future as to any act other than that specifically waived.

16. SEVERABILITY

If,  for any  reason,  any  provision  of  this  Agreement,  or any  part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this  Agreement or any part of such  provision not held so invalid,  and each
such other provision and part thereof shall, to the full extent  consistent with
law, continue in full force and effect.




                                      -13-


<PAGE>

17. HEADINGS FOR REFERENCE ONLY

The  headings  of  sections  and  paragraphs  herein  are  included  solely  for
convenience of reference and shall not control the meaning or  interpretation of
any of the provisions of this Agreement.

18. GOVERNING LAW

This  Agreement  shall be governed by the laws of the State of Delaware  without
regard to principles of conflicts of law of that state.

19. ARBITRATION

Any dispute or  controversy  arising under or in connection  with this Agreement
shall be settled  exclusively by arbitration,  conducted before a panel of three
arbitrators  sitting in a location selected by Executive within fifty (50) miles
from the location of the Holding  Company,  in accordance  with the rules of the
American Arbitration  Association then in effect. Judgment may be entered on the
arbitrator's award in any court having  jurisdiction;  provided,  however,  that
Executive shall be entitled to seek specific performance of his right to be paid
until the Date of Termination  during the pendency of any dispute or controversy
arising under or in connection with this Agreement.

In the event any dispute or  controversy  arising  under or in  connection  with
Executive's termination is resolved in favor of Executive,  whether by judgment,
arbitration  or  settlement,  Executive  shall be entitled to the payment of all
back-pay,  including  salary,  bonuses and any other cash  compensation,  fringe
benefits and any compensation and benefits due Executive under this Agreement.

A termination  without cause of Executive's  employment pursuant to Section 1(c)
hereof, shall not be subject to arbitration except to the extent that there is a
dispute as to the amount of payments due Executive hereunder.

20. PAYMENT OF COSTS AND LEGAL FEES

All  reasonable  costs and legal fees paid or incurred by Executive  pursuant to
any dispute or question of  interpretation  relating to this Agreement  shall be
paid or  reimbursed  by the Holding  Company,  if Executive is  successful  with
respect to such  dispute  or  question  of  interpretation  pursuant  to a legal
judgment, arbitration or settlement.

21. INDEMNIFICATION

(a) The Holding Company shall provide Executive (including his heirs,  executors
and  administrators)  with coverage  under a standard  directors'  and officers'
liability insurance policy at its expense and shall indemnify Executive (and his
heirs,  executors and  administrators)  to the fullest  extent  permitted  under
Delaware law against all expenses and liabilities  reasonably incurred by him in
connection with or arising out of any action, suit or proceeding in which he


                                      -14-
<PAGE>


may be  involved  by reason of his  having  been a  director  or  officer of the
Holding Company  (whether or not he continues to be a director or officer at the
time of incurring such expenses or  liabilities);  such expenses and liabilities
to include, but not to be limited to, judgments, court costs and attorneys' fees
and the cost of reasonable settlements.

(b) Any payments  made to  Executive  pursuant to this Section 21 are subject to
and conditioned  upon  compliance  with 12 U.S.C.  Section 1828(k) and 12 C.F.R.
Part 359 and any rules or regulations promulgated thereunder.

22. SUCCESSOR TO THE HOLDING COMPANY

The Holding  Company shall require any successor or assignee,  whether direct or
indirect,  by  purchase,   merger,   consolidation  or  otherwise,   to  all  or
substantially all the business or assets of the Bank or the Holding Company,  to
expressly and unconditionally  assume and agree to perform the Holding Company's
obligations under this Agreement, in the same manner and to the same extent that
the Holding  Company  would be required to perform such  obligations  if no such
succession or assignment had taken place.



                                      -15-
<PAGE>


                                   SIGNATURES


     IN WITNESS WHEREOF, Berkshire Hills Bancorp, Inc. has caused this Agreement
to be  executed  and its seal to be  affixed  hereunto  by its  duly  authorized
officer and Executive has signed this Agreement, on the 1st day of June, 2003.


ATTEST:                               BERKSHIRE HILLS BANCORP, INC.



/s/ Gerald A. Denmark                 By:      /s/ Catherine B. Miller
---------------------                          -----------------------
Corporate Secretary                            For the Entire Board of Directors



[SEAL]


WITNESS:                              EXECUTIVE



/s/ Gerald A. Denmark                 By:      /s/ Michael P. Daly
---------------------                          -------------------
Corporate Secretary                            Michael P. Daly


                                      -16-