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                                                                    EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT

            AGREEMENT, dated as of the 1st day of May, 1999, by and between The
Berkshire Bank, a New York banking corporation ("Employer"), and Moses Krausz
("Employee").

                              W I T N E S S E T H :

            WHEREAS, Employee is currently serving as the President and Chief
Executive Officer of Employer; and

            WHEREAS, Employer wishes to assure itself of the continued services
of Employee, and Employee wishes to commit himself to provide such services to
Employer, all upon the terms and conditions herein contained.

            NOW, THEREFORE, in consideration of the covenants herein contained,
the parties hereto hereby agree as follows:

            1. Employment. Employer hereby employs Employee as its President and
Chief Executive Officer, and Employee hereby accepts such employment, all
subject to the terms and conditions herein contained. Subject to the overall
direction of the Board of Directors of Employer, Employee shall have primary
responsibility for the business and affairs of Employer and such other duties as
may be from time to time assigned to him by the Board of Directors of Employer.
During the term of his employment hereunder, Employee shall devote all of his
business time, attention and skills to the business and affairs of Employer and
its affiliates.

            2. Compensation.

                  2.1 Base Salary. Employer shall pay to Employee, and Employee
shall accept, for all services which may be rendered by him pursuant to this
Agreement (including any services which may be rendered by him to any affiliate
of Employer and any services which may be rendered by him as a member of the
Board of Directors of Employer or of any such affiliate or any committee
thereof), a salary ("Base Salary") at the rates per annum set forth below,
payable in accordance with Employer's then current payroll practices with
respect to senior executive personnel:

<TABLE>
<CAPTION>
   Period of Employment                       Rate Per Annum
<S>                                               <C>
May 1, 1999-April 30, 2000                        $300,000
May 1, 2000-April 30, 2001                        $315,000
May 1, 2001-April 30, 2002                        $330,750
May 1, 2002-April 30, 2003                        $347,288
May 1, 2003-April 30, 2004                        $364,653
</TABLE>

            In the event of the extension of Employee's employment hereunder
beyond April 30, 2004 for one or more additional one year periods, as
contemplated by the proviso to paragraph 3 hereof, then, in such event,
Employee's Base Salary for each such additional one year period shall be an
amount equal to 105% of Employee's Base Salary for the immediately preceding one
year period during which he was employed hereunder. For purposes of
illustration, if Employee's employment hereunder were extended for the one year
period commencing May 1, 2004 and ending on April 30, 2005, his Base Salary
during said period of employment would be $382,885 (i.e., 105% of $364,653).



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                  2.2 Discretionary Bonus. In addition to the Base Salary,
Employee may be paid such additional compensation, if any, as the Board of
Directors of Employer may from time to time, in its sole discretion, deem to be
appropriate (based upon its consideration of such factors as it considers to be
relevant).

            3. Term of Employment. The employment by Employer of Employee
pursuant hereto shall commence as of the date hereof and, subject to the
provisions of paragraph 4 hereof, shall terminate on April 30, 2004; provided,
however, that Employee's employment hereunder shall be automatically renewed for
up to five additional periods of one year each unless Employee or Employer
notifies the other, not less than 60 days nor more than 90 days prior to the
expiration of Employee's then current employment period, that he or it elects
not to extend Employee's employment hereunder beyond the expiration date of the
then current employment period.

            4. Premature Termination. Anything in this Agreement contained to
the contrary notwithstanding: (i) Employee's employment hereunder shall
terminate forthwith upon the death of Employee; (ii) Employee's employment
hereunder shall terminate, at the option of Employer, in the event that, based
upon the advice of an independent physician, Employer makes a good faith
determination that Employee is so disabled, for mental or physical reasons, as
to be unable to substantially perform his duties hereunder for an aggregate of
180 days during any period of 12 consecutive months; (iii) Employee's employment
hereunder may be terminated by either party in the event of a material failure
on the part of the other party to perform his or its obligations hereunder;
provided, however, that if such failure to perform is by its nature capable of
being cured, it shall only constitute grounds for termination if it has not been
cured within ten days after notice thereof, in reasonable detail, has been given
to the breaching party by the nonbreaching party; and (iv) Employee's employment
hereunder may be terminated forthwith for any reason whatsoever, in addition to
those reasons set forth in clauses (i), (ii), and (iii) above, at the option of
Employer. For purposes of clause (iii) of this paragraph 4, a breach by Employee
of his obligations under subparagraph 9.2 hereof, or the conviction of Employee
for a felony, shall be deemed to be a material failure to perform on the part of
Employee which is by its nature not capable of being cured.

            In the event of the termination of Employee's employment hereunder
pursuant to the provisions of clause (ii) or clause (iii) of this paragraph 4,
not less than ten days' written notice of such termination shall be given by the
terminating party to the other party, which notice shall specify the effective
date of termination.

            5. Payment Upon Premature Termination. In the event that Employee's
employment hereunder is terminated pursuant to the provisions of clause (i) or
clause (ii) of paragraph 4 above, or by Employer pursuant to the provisions of
clause (iii) of paragraph 4 above, Employee shall be paid his Base Salary
pursuant to paragraph 2 above up to the effective date of termination, as
payment in full of all amounts due and owing by Employer to Employee. In the
event that Employee's employment hereunder is terminated by Employee pursuant to
the provisions of clause (iii) of paragraph 4 above, or by Employer pursuant to
the provisions of clause (iv) of paragraph 4 above, Employee shall continue to
be paid an amount equal to (A) his Base Salary pursuant to paragraph 2 above for
the full unexpired term of this Agreement (not including any extensions
thereof), in the same manner and fashion, and at the same time, as he would have
been paid had his employment hereunder continued for the stated term of this
Agreement, minus (B) the amount of any and all compensation earned by Employee
from any other source during what would have constituted the balance of the
stated term of this Agreement (not including any extensions thereof), as payment
in full of all amounts due and owing by Employer to Employee.




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            6. Expenses. Employer shall reimburse Employee (upon the submission
by him of reasonably itemized accounts thereof) for such costs and expenses as
Employee may reasonably incur in connection with the performance by him of his
duties hereunder in accordance with Employer's policy with respect thereto as in
effect from time to time during the term of this Agreement.

            7. Participation in Employee Benefit Plans. During the term of his
employment hereunder, Employee shall be entitled to receive or participate in
all benefits and plans which Employer may from time to time during such period
provide for its employees generally or for its senior executive personnel and
for which Employee is eligible.

            8. Vacation; Religious Holidays. Employee shall be entitled to such
amount of paid vacation as is from time to time during the term hereof
consistent with Employer's policy with respect thereto. In addition, Employee
shall be entitled to such number of days of paid leave for religious observance
as are necessary in order to enable Employee to adhere to his religious beliefs
in a manner consistent with his past practices.

            9. Nondisclosure.

                  9.1 "Confidential Information" Defined. As used in this
paragraph 9, the term "Confidential Information" shall mean any and all
information (verbal and written) relating to Employer or any of its subsidiaries
or any of their respective activities, other than such information which can be
shown by Employee to be in the public domain (such information not being deemed
to be in the public domain merely because it is embraced by more general
information which is in the public domain) other than as the result of a breach
of the provisions of subparagraph 9.2 below.

                  9.2 Nondisclosure of Confidential Information. Employee hereby
agrees that he shall not, at any time during the term of his employment by
Employer (other than as may be required in connection with the performance by
him of his duties hereunder) or thereafter, directly or indirectly, use,
communicate, disclose or disseminate any Confidential Information in any manner
whatsoever.

                  9.3 Injunctive Relief, etc. The parties hereto hereby
acknowledge and agree that (i) Employer would be irreparably injured in the
event of a breach by Employee of any of his obligations under this paragraph 9,
(ii) monetary damages would not be an adequate remedy for any such breach, and
(iii) Employer shall be entitled to injunctive relief, in addition to any other
remedy which it may have, in the event of any such breach.

                  9.4 Nonexclusivity. The undertakings of Employee contained in
this paragraph 9 shall be in addition to, and not in lieu of, any obligations
which he may have with respect to the subject matter hereof, whether by
contract, as a matter of law or otherwise.

            10. Indemnification. Employer shall indemnify Employee to the
fullest extent permitted under applicable law. The foregoing shall be in
addition to any other rights which Employee may have with respect to
indemnification by virtue of the certificate of incorporation or bylaws of
Employer, officers' and directors' liability insurance which may be maintained
by Employer, or otherwise.

            11. General Provisions.

                  11.1 Execution in Counterparts. This Agreement may be executed
in one or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original but all




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of which taken together shall constitute one and the same agreement, and shall
become effective when one or more counterparts has been signed by each of the
parties hereto and delivered to each of the other parties hereto.

                  11.2 Notices. All notices, requests, demands and other
communications given hereunder shall be in writing and shall be deemed to have
been duly given: (i) on the date of delivery, if delivered personally or by
messenger, (ii) on the first business day following the date of timely deposit
with Federal Express or other nationally recognized overnight courier service,
if sent by such courier specifying next day delivery, (iii) upon receipt of
confirmation of transmission, if transmitted by telecopier; and (iv) on the
third business day after mailing, if mailed by registered or certified mail
(postage prepaid, return receipt requested); provided, however, that a notice of
change of address or telecopier number shall not be deemed to have been given
until actually received by the addressee. All such notices, requests, demands
and other communications shall be addressed as set forth below or to such other
address or telecopier number as either party hereto may designate to the other
party hereto by like notice:

               If to Employer, to:

                      The Berkshire Bank
                      600 Madison Avenue
                      New York, New York  10022
                      Attention: Chairman of the Board
                      Telecopier No.: (212) 935-7480

               Copy to:

                      Berkshire Bancorp Inc.
                      160 Broadway
                      New York, New York  10038
                      Attention: President
                      Telecopier No.: (212) 791-5367

               If to Employee, to:

                      Mr. Moses Krausz
                      138-09 78th Drive
                      Flushing, New York 11367

                  11.3 Amendment. This Agreement may only be amended by a
written instrument executed by each of the parties hereto.

                  11.4 Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings of the parties hereto, oral
and written, with respect to the subject matter hereof.

                  11.5 Applicable law. This Agreement shall be governed by the
laws of the State of New York applicable to contracts made and to be wholly
performed therein.

                  11.6 Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.




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                  11.7 Binding Effect; Benefits. Employee may not delegate his
duties or assign his rights hereunder. This Agreement shall inure to the benefit
of, and be binding upon, the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns.

                  11.8 Waiver, etc. The failure of either of the parties hereto
to at any time enforce any of the provisions of this Agreement shall not be
deemed or construed to be a waiver of any such provision, nor to in any way
affect the validity of this Agreement or any provision hereof or the right of
either of the parties hereto to thereafter enforce each and every provision of
this Agreement. No waiver of any breach of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument executed
by the party against whom or which enforcement of such waiver is sought; and no
waiver of any such breach shall be construed or deemed to be a waiver of any
other or subsequent breach.

                  11.9 Capacity, etc. Employee hereby represents and warrants to
Employer that: (i) he has full power, authority and capacity to execute and
deliver this Agreement, and to perform his obligations hereunder, (ii) said
execution, delivery and performance will not (and with the giving of notice or
lapse of time or both would not) result in the breach of any agreements or other
obligations to which he is a party or otherwise bound, and (iii) this Agreement
is his valid and binding obligation in accordance with its terms.

            IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties hereto as of the date first above written.

                                        THE BERKSHIRE BANK


                                        By /s/ Moses Marx
                                          --------------------------------------
                                           Chairman of the Board


                                        /s/ Moses Krausz
                                        ----------------------------------------
                                           Moses Krausz