Document:

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-BERKSHIRE BANK
                              EMPLOYMENT AGREEMENT

     This EMPLOYMENT  AGREEMENT (the  "Agreement") by and between Berkshire Bank
(the "Bank"), a state-chartered savings institution,  with its principal offices
at 24 North Street,  Pittsfield,  Massachusetts 01202,  Berkshire Hills Bancorp,
Inc. (the "Holding  Company"),  a  corporation  organized  under the laws of the
state of  Delaware  and the  holding  company of the Bank,  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").

     WHEREAS, the Bank believes that the assurance of Executive's  employment by
the  Bank  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  Bank  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 Bank.  Executive shall render  administrative and
management services to the Bank 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, as a director of the Bank 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 Bank,  as well as  participation  in community,
professional and civic organizations; provided, however, that, with the approval
of the Board of Directors of the Bank (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 interest with the Bank
or materially  affect the  performance  of Executive's  duties  pursuant to this
Agreement.

<PAGE>

(c) Notwithstanding anything contained in this Agreement to the contrary, either
Executive or the Bank may terminate Executive's  employment with the Bank 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 Bank.  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 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 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.

(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.

                                       2

<PAGE>

(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 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
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 Bank.  Executive  shall also be
entitled to sick leave in  accordance  with the  policies of 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
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 Bank offers to full-time employees or executive management in
the future. 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 is  general in nature  and  applies in a  nondiscriminatory
manner to all employees covered by the plan, arrangement or perquisite.  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 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.

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 Bank for any reason
other  than a  termination  governed  by  Section 7 of this  Agreement;  or (ii)
Executive's  resignation from his employment with the Bank upon, any (A)

                                       3

<PAGE>

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 Bank 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 Bank or 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 Bank 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 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

                                       4
<PAGE>

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
Bank 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 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.

                                       5
<PAGE>

(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
Bank  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 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.

(d) Upon the  occurrence of a Change in Control,  Executive  will be entitled to
receive benefits due him under or contributed by the Bank on his behalf pursuant
to any  retirement,  incentive,  profit  sharing  or  other  retirement,  bonus,
performance, disability or other employee benefit plan maintained by 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.

                                       6

<PAGE>

(e) Upon the  occurrence of a Change in Control and  Executive's  termination of
employment in connection  therewith,  the Bank will cause to be continued  life,
medical  and  disability  coverage  substantially   identical  to  the  coverage
maintained  by 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 by reason of his not being an employee, the Bank 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 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

    Notwithstanding  the  provisions  of  Section  5,  in no  event  shall  the
aggregate  payments or benefits to be made or afforded to  Executive  under said
paragraphs (the "Termination Benefits") constitute an "excess parachute payment"
under  Section 280G of the Internal  Revenue  Code of 1986,  as amended,  or any
successor  thereto,  and in order to avoid such a result,  Termination  Benefits
will be reduced, if necessary,  to an amount (the "Non-Triggering  Amount"), the
value of which is one  dollar  ($1.00)  less than an  amount  equal to three (3)
times  Executive's  "base amount," as determined in accordance with said Section
280G.  The  allocation of the reduction  required  hereby among the  Termination
Benefits provided by Section 5 shall be determined by Executive.

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 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

                                       7
<PAGE>

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,  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 Bank 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 Bank. Executive shall, upon reasonable notice,  furnish such
information and assistance to the Bank as may reasonably be required by the Bank
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 Bank 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 Bank 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   activities  of  the  Bank.  The  parties  hereto,   recognizing  that
irreparable  injury will result to the Bank,  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 Bank will be  entitled,  in addition to any
other remedies and damages available, to

                                       8
<PAGE>

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 Bank, 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 Bank 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 Bank as it may exist from
time to time,  is a valuable,  special and unique  asset of the  business of the
Bank.  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 Bank 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  Bank.  In the  event of a breach  or  threatened  breach  by
Executive of the  provisions of this Section 10, the Bank 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
Bank 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
Bank from pursuing any other  remedies  available to the Bank 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 Bank 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 Bank 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 Bank.

(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  Bank'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

                                       9

<PAGE>

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 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 Bank  ("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 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 Bank 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 Bank or subject  to  Section  12(b).  The
Holding Company,  however,  unconditionally  guarantees payment and provision of
all amounts and  benefits due  hereunder  to  Executive  and, if such amount and
benefits  due from the Bank are not timely paid or  provided  by the Bank,  such
amounts and benefits shall be paid or provided by the Holding Company.

(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
Holding  Company,  such  compensation  payments and benefits paid by the Holding
Company will be subtracted from any amount due simultaneously to Executive under
similar  provisions of this Agreement.  Payments  pursuant to this Agreement and
the Holding  Company  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.

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 Bank or any predecessor of
the Bank 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

                                       10

<PAGE>

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 Bank 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.

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.

                                       11
<PAGE>

18. GOVERNING LAW

This  Agreement   shall  be  governed  by  the  laws  of  the   Commonwealth  of
Massachusetts, 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 Bank,  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 Bank, 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 Bank  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
federal 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 may
be  involved  by reason of his  having  been a  director  or officer of the Bank
(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.

                                       12
<PAGE>

22. SUCCESSOR TO THE BANK

The Bank 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 Bank's  obligations  under this
Agreement,  in the same  manner  and to the same  extent  that the Bank would be
required to perform such  obligations  if no such  succession or assignment  had
taken place.

                                       13

<PAGE>

                                   SIGNATURES

     IN WITNESS WHEREOF, Berkshire Bank 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 BANK

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

ATTEST:                                       BERKSHIRE HILLS BANCORP, INC.
                                              (Guarantor)

/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

                                       14

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