BERKSHIRE HILLS BANCORP INC
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>0004.txt
<TEXT>


                                 BERKSHIRE BANK
                              EMPLOYMENT AGREEMENT


         This EMPLOYMENT  AGREEMENT  ("Agreement")  is made effective as of June
27, 2000 (the "Effective  Time"), 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  Susan  M.  Santora
("Executive").

         WHEREAS, the Bank believes that the assurance of Executive's employment
by the Bank for the  term of this  Agreement  and the  benefit  of her  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  Executive
Vice   President  -  Retail  Banking  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.

(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  her  business  time,
attention,  skill,  and efforts to the faithful  performance of her 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.

(c) Notwithstanding anything herein contained 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,  subject to the terms and conditions of this
Agreement.



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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 thirty-six  (36) 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  third
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 $125,510 ("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.

(b) Incentive Compensation.  In addition to her Base Salary,  Executive shall be
entitled  to  participate  in and shall  receive  payments  under 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) 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 her 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.

(d) 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 she  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


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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 her employment with the Bank upon, any (A) failure
to  re-appoint  Executive  to her  positions  set  forth  in  Section  1 of this
Agreement,  unless  Executive  consents to such event,  (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(d) 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 her 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 her 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
her death following the Date of Termination,  her beneficiary or  beneficiaries,
or her 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


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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  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 her  employment  (each  being a "Welfare  Plan"),  Executive  and her 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) her death (ii) her
employment by another employer other than one of which she 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)
her death (ii) her employment by another employer other than one of which she 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


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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  she were a member of the
Incumbent Board; or (C) a plan of reorganization, merger, consolidation, sale of
all or  substantially  all the  assets  of the 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.

(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 her 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 her 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  her  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  her  subsequent  death,  her
beneficiary or  beneficiaries,  or her 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),


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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 her under or contributed by the Bank on her 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 her 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 she would have  earned for vesting and benefit  accrual
purposes  for  the  remaining  term of the  Agreement  had  her  employment  not
terminated.

(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 her  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 her not being an employee, the Bank shall arrange
to provide Executive and her dependents with benefits  substantially  similar to
those of which  Executive and her 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


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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 her a Notice of  Termination  which shall include a copy of a
resolution duly adopted by the affirmative  vote of not less than  three-fourths
(3/4) of the  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,
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.


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(b)  "Date of  Termination"  shall  mean the date  specified  in the  Notice  of
Termination  (which,  in the case of a Termination for Cause,  shall not be less
than thirty (30) days from the date such Notice of Termination is given).

(c) If, within thirty (30) days after any Notice of  Termination  is given,  the
party  receiving  such  Notice of  Termination  notifies  the other party that a
dispute  exists  concerning  the  termination,  except upon the  occurrence of a
Change in Control and voluntary  termination by Executive in which case the Date
of  Termination  shall  be  the  date  specified  in the  Notice,  the  Date  of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties,  by a binding  arbitration award, or
by a final judgment,  order or decree of a court of competent  jurisdiction (the
time for appeal  therefrom  having expired and no appeal having been  perfected)
and provided further that the Date of Termination  shall be extended by a notice
of dispute  only if such notice is given in good faith and the party giving such
notice  pursues  the  resolution  of such  dispute  with  reasonable  diligence.
Notwithstanding the pendency of any such dispute,  the Bank will continue to pay
Executive  her full  compensation  in effect when the notice  giving rise to the
dispute was given (including,  but not limited to, Base Salary) and continue her
as a participant in all  compensation,  benefit and insurance plans in which she
was  participating  when the notice of dispute  was given,  until the dispute is
finally  resolved in  accordance  with this  Agreement.  Amounts paid under this
Section 8 are in addition  to all other  amounts  due under this  Agreement  and
shall not be  offset  against  or  reduce  any  other  amounts  due  under  this
Agreement.

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


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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 her  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 her 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 her estate  any  salary and bonus  accrued  but
unpaid as of the date of her 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 her  death  and  shall  pay  Executive's  designated
beneficiary  the Base Salary that would  otherwise be payable to her pursuant to
Section  3 of this  Agreement.  This  provision  shall  not  negate  any  rights
Executive or her  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 her Base Salary shall,  as of the date such benefits
first  become  payable  under the  Disability  Policy on account of  Executive's
disability,


                                      - 9 -

<PAGE>



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 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 third 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 her 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.

         (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.

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 interpreted to


                                     - 10 -

<PAGE>



mean that Executive is subject to receiving  fewer benefits than those available
to her 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 her right to be paid
until the Date of Termination  during the pendency of any dispute or controversy
arising under or in connection with this Agreement.

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.

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  her  heirs,  executors  and
administrators)   with  coverage  under  a  standard  directors'  and  officers'
liability insurance policy at its expense and shall indemnify Executive (and her
heirs,  executors and  administrators)  to the fullest  extent  permitted  under
federal law against all expenses and liabilities  reasonably  incurred by her in
connection  with or arising out of any action,  suit or  proceeding in which she
may be  involved  by reason of her having been a director or officer of the Bank
(whether  or not she  continues  to be a  director  or  officer  at the  time of
incurring  such  expenses or  liabilities);  such  expenses and  liabilities  to
include,  but not to be limited to,  judgments,  court costs and attorneys' fees
and the cost of reasonable settlements.



                                     - 12 -

<PAGE>



(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 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 16th day of August, 2000.


ATTEST:                         BERKSHIRE BANK



/s/Rose A. Borotto                  By:  /s/James A. Cunningham, Jr.
-------------------                      ---------------------------
Rose A. Borotto                          James A. Cunningham, Jr.
Corporate Secretary                      For the Entire Board of Directors



                  [SEAL]


ATTEST:                         BERKSHIRE HILLS BANCORP, INC.
                                (Guarantor)



/s/Rose A. Borotto                  By:  /s/James A. Cunningham, Jr.
-------------------                      --------------------------------
Rose A. Borotto                          James A. Cunningham, Jr.
Corporate Secretary                      For the Entire Board of Directors




                  [SEAL]


WITNESS:                        EXECUTIVE



/s/Rose A. Borotto                  By:  /s/Susan M. Santora
-------------------                      -------------------
Rose A. Borotto                          Susan M. Santora
Corporate Secretary


                                     - 14 -

</TEXT>
</DOCUMENT>
