SEPARATION AGREEMENT AND GENERAL RELEASE

Exhibit 10.1

SEPARATION AGREEMENT AND GENERAL RELEASE

     This Separation Agreement and General Release (“Separation Agreement”) dated December 21, 2007 is entered into by and between Stephen M. Conley (“Executive” or “you”) and Legacy Bancorp, Inc. (the “Company”) and Legacy Banks (the “Bank”), and confirms the agreement that has been reached with you in connection with your termination of employment with the Bank, Company and any of the Bank’s affiliates and direct and indirect subsidiaries.

     1.      a.      Executive’s employment with the Company, the Bank and all subsidiaries and affiliates of each (herein referred collectively as “Company Entities”), and Executive’s status as an officer of any Company Entity, is hereby terminated effective January 1, 2008 (“Separation Date”). The parties agree that this termination constitutes an Event of Termination as set forth in Section 4(a) of each of the employment agreements (the “Employment Agreements”) between you and the Company, dated October 26, 2005 (the “Legacy EA”), and with you and the Bank and the Company dated October 26, 2005.

              b.      Executive acknowledges and agrees that prior to signing this Agreement, Executive has executed and submitted to the Company and the Bank a letter (in the form attached hereto as Exhibit A ), by which Executive has irrevocably resigned as an officer of each Company Entity. Such resignation as an officer of any such Company Entity shall be effective on the Separation Date. As such, Executive’s status as an employee, officer, or agent of all Company Entities shall have terminated not later than the Separation Date.

     2.      In consideration of your execution of this Separation Agreement and your compliance with its terms and conditions, and provided that you execute the General Release attached hereto as Exhibit B (the “General Release”), the Bank agrees to pay or provide you with the following benefits:

              a.      A payment described in Regulation §1.409A-1(b)(9)(iii) to Internal Revenue Code Section 409 A, subject to the provision of Paragraph 17 hereof, in settlement of your rights to receive severance under Section 4(b)(i) of the Legacy EA, the Bank shall pay you $315,108.20 on the later of the Separation Date or eight days following the date you sign this Agreement and the General Release, providing that you have not revoked your consent.

              b.      Subject to the provision of Paragraph 17 hereof, the Bank shall cause to be continued life, medical, dental and disability coverage substantially equivalent to the coverage maintained for Executive prior to the Separation Date through October 26, 2009. After October 26, 2009 you shall be solely responsible for the cost of any life, medical, dental and disability coverage.

              c.      Outplacement services will be made available to Executive to assist in finding new employment for a period of up to six (6) months after the Separation Date.

              d.      The amounts set forth in Paragraphs 2a and 2b shall be reduced by all applicable federal, state and local withholding taxes and other appropriate deductions.

              e.      You acknowledge and agree that you are party to the Restricted Stock Award Agreement (the “Restricted Stock Agreement”) dated November 29, 2006, under which you have been granted an aggregate of 28,900 restricted stock units (the “RSUs”) relating to shares of common stock of the Company. In consideration of your execution of this Separation Agreement and the restrictive covenants set forth in Section 7 hereof, the Company and the Compensation Committee of the Board of Directors, have agreed, in accordance with the Legacy Bancorp, Inc. 2006 Equity Incentive Plan (the “Plan”), that the Restricted Stock Agreement shall be continued with respect to the first three (3) tranches of 5,780 shares each of restricted stock to vest on January 1, 2008, January 1, 2009 and January 1, 2010 respectively (the “Restricted Shares”); provided, however, that such vesting shall be subject to your compliance with the terms and conditions of the Plan and Paragraphs 5 and 7 of this Separation Agreement.

              f.      You acknowledge and agree that you are party to the Stock Option Agreements (the “Option Agreements”) dated November 29, 2006, under which you have been granted stock options to purchase 72,200 shares of common stock of the Company (the “Options”). You acknowledge and agree that all Options are unvested. You further acknowledge and agree that, effective on the Separation Date, all Options granted under the Option Agreements, whether vested or unvested, shall be forfeited and that the Option Agreements shall terminate and shall thereafter be of no force and effect.

              g.      The Bank’s obligation to make the payments and to provide the benefits set forth in Paragraphs 2a through 2e above shall cease as of the date of any breach of your obligations under the restrictive covenants set forth in Paragraphs 5 and 7 hereof. In the event Bank believes there is a violation of Paragraph 5 or Paragraph 7, the Bank must give Executive written notice and opportunity to cure within 15 days of Executive’s receipt of the notice. This notice and cure provision only applies to the cessation of payments and does not affect the Bank’s ability to seek a protective order against Executive.

     3.      Whether or not you execute this Separation Agreement, you will be paid for any accrued but unused vacation days on or before the Separation Date. Requests by Executive for previously submitted un-reimbursed business expenses (made in accordance with usual Bank guidelines and practices), to the extent not theretofore paid must be submitted on or before 5 days after Separation date, and payment shall be made on or before 15 days after Separation Date. In addition, following the Separation Date, you will be entitled to receive vested amount, if any, payable to you under the Company’s or Bank’s 401(k) plan, ESOP and other retirement and deferred compensation plans in accordance with the terms of such plans and applicable law. Except as specifically set forth herein, your participation in all Company and Bank plans shall remain subject to the terms and conditions of such plans as in effect from time to time and you agree that such terms and conditions are binding on you and the Company and Bank.

     4.      You agree that, as a condition to your receipt of the payments and benefits set forth in Paragraphs 2a through 2e, you will execute the General Release attached hereto as Exhibit B on the Separation Date. None of the payments or benefits described in Paragraphs 2a through 2e above shall commence prior to the Separation Date.

     5.      a.      You agree that you will cooperate in good faith with the Company Entities and their directors, officers, employees, and agents (“Persons”) and its or their respective counsel, in connection with any investigation, inquiry, administrative proceeding or litigation

relating to any matter in which you were involved or of which you have knowledge by providing truthful information, provided that such cooperation does not unreasonably interfere with your then current professional and personal commitments. The Company agrees to promptly reimburse you for reasonable expenses necessarily incurred by you, in connection with your cooperation pursuant to this paragraph.

              b.      You agree that, in the event you are subpoenaed by any person or entity (including, but not limited to, any government agency) to give testimony (in a deposition, court proceeding or otherwise) which in any way relates to your employment by any Company Entity, you will give prompt notice of such request to the General Counsel of the Company, and will provide the Company or Bank with a reasonable opportunity to contest the right of the requesting person or entity to such disclosure before making such disclosure. Nothing in this provision shall require you to violate your obligation to comply with valid legal process.

     6.      a.      The Bank shall issue a press release announcing your termination of service from the Bank and the Company as your retirement. In accordance with the Company and Bank policy, the Company and the Bank shall respond to any questions from the public regarding your employment with the Bank solely with reference to your title, dates of employment at the Bank and the contents of the press release. All requests for references for you shall be directed to the Bank’s Vice President, Human Resources. Nothing herein shall limit in any way any Company Entity’s or any Person’s ability to respond to, or take any action in any legal, administrative or regulatory inquiry, investigation or proceeding.

              b.      Each of the Company, the Bank and Executive (collectively, the “Parties”) agree that under no condition or circumstance shall any of the Parties make any disparaging remarks in any manner or in any form about any of the other Parties (including, in the case of Executive, any Company Entity, or any Person), their respective business activities or business or personal relationships.

     7.      a.      You recognize and acknowledge and agree that during your employment with the Company and the Bank you have had access to highly confidential and proprietary information relating to the Company Entities and Persons and trade secrets (“Proprietary Information,” as described herein) and the use, misappropriation or disclosure of Proprietary Information would cause irreparable injury to the Company Entities; and it is essential to the protection of the Company Entities’ good will and to the maintenance of the Company Entities’ competitive position that Proprietary Information be kept secret and that you not disclose Proprietary Information to others, or use any Proprietary Information to your own advantage or the advantage of any third parties. For purposes of this Separation Agreement, the term “Proprietary Information” shall include any and all material non-public information, and shall include and not be limited to non-public information relating to any Company Entities’ past, present or planned or considered business activities; any Company Entities’ depositors, borrowers and investors; techniques; processes; tools; market research, data and strategy; strategic initiatives including mergers, acquisitions, sales and branch openings and closings; and, information relating to sales and pricing, including customer-specific information, pricing policies and strategies. Proprietary Information shall include information in any form whatsoever, including but not limited to, hard copy, computer floppy diskette, CD, CD-ROM drive, information retained in electronic storage, or other information storage means.

“Proprietary Information” shall not include (a) information in the public domain, or (b) information disclosed to Executive by third-parties entitled to make such disclosures. You acknowledge and agree that your obligations under this paragraph shall survive the Separation Date. Notwithstanding anything contained herein to the contrary, Executive may disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which are not derived from the business plans or activities of the Company Entities. Further, Executive may disclose information regarding the business activities of the Bank to the OTS, Massachusetts Department of Banking or the FDIC pursuant to a formal regulatory request.

              b.      In exchange for the consideration from the Company and the Bank under Section 2 hereof, the Executive, the Company and the Bank agree that Executive shall not compete with the Company or the Bank for a period ending on January 1, 2010, at any bank or credit union having a presence in Berkshire County, Massachusetts. Executive agrees that during such period and within said limits, 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 Company or the Bank. The parties hereto, recognizing that irreparable injury will result to the Company or the Bank, their businesses and properties in the event of Executive’s breac