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                                                                    EXHIBIT 10.3


                                              July 20, 1999





Donald C. McQueen
3 Shady Lane
Barrington, Rhode Island 02806

Dear Don:

         Reference is made to that certain letter agreement by and between Bank
Rhode Island (the "Bank") and you dated January 31, 1998, as amended by an
amendment dated September 16, 1998 (the "Letter Agreement") pursuant to which
the Bank agreed to employ you in the position of Chief Lending Officer of the
Bank upon the terms and conditions set forth therein. The Bank agrees to employ
you in the position of Executive Vice President and Chief Lending Officer of the
Bank on the terms and conditions set forth herein. The Bank and you hereby agree
that the Letter Agreement shall be amended in its entirety as follows:

PART 1.  EMPLOYMENT; DUTIES, ETC.

         1.1 RESPONSIBILITIES AND AUTHORITY. In your capacity as Executive Vice
President and Chief Lending Officer with the Bank, you will have the duties,
responsibilities, authorities and powers normally incident to such office. At
all times, however, your activities and authority will be subject to
supervision, control and direction by the Board of Directors of the Bank (the
"Board"), by the Executive Committee of the Board, and by the President and
Chief Executive Officer of the Bank (the "Chief Executive Officer") and you
agree to carry out such duties and responsibilities as any of them may from time
to time reasonably assign to you. You shall report from time to time or
routinely, upon request, to the Chief Executive Officer or his or her designee
as to the current status of any of your assigned duties and responsibilities.

         1.2 COMPENSATION. Your compensation will be at the rate of $129,150 per
year, payable on a bi-weekly basis, or at such higher rate as shall be
determined from time to time by the Board. In addition, you will be entitled to
receive payments under any incentive compensation or bonus program (as in effect
from time to time), which the Bank's Board may establish for its employees
and/or senior executives, in such amounts as are provided by such programs.

         1.3 EMPLOYEE BENEFITS. As a full-time employee of the Bank, you will be
eligible to participate in any and all employee benefit plans generally
available to full-time employees, including non-contributory plans and, at your
option, contributory plans.

         1.4 CERTAIN SPECIFIED EMPLOYEE BENEFITS

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Donald C. McQueen
July 20, 1999
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         (a) GRANT OF STOCK OPTIONS. You will receive options to purchase shares
of the Bank's common stock in such number, at an exercise price and on such
other terms as may be approved by the Compensation Committee of the Board, in
its sole discretion. Any such options will become exercisable on a schedule no
less favorable than the following: 20% on the grant date and an additional 20%
on each of the first through fourth anniversaries of the grant date, with such
vesting to accelerate on a Change in Control (as defined in Section 3.2).

         (b) CAR ALLOWANCE. You shall be entitled to receive a monthly car
allowance equal to $600 per month.

         1.5 VACATION. You will be entitled to four weeks of vacation during
each year of your employment, such vacation to be taken in accordance with the
Bank's customary vacation policies and at such times and intervals as are
mutually agreed upon by you and the Bank. You will be entitled to holiday time
and sick leave in accordance with the then existing policies of the Bank, as in
effect from time to time.

         1.6 REIMBURSEMENT OF EXPENSES. You will be reimbursed by the Bank for
reasonable business expenses incurred by you incident to your employment upon
presentation of appropriate vouchers, receipts, and other supporting documents
required by the Bank.

         1.7 DUTY TO PERFORM SERVICES. So long as you are employed by the Bank,
you agree to devote your full business and productive time, skill, and energy
diligently, loyally, effectively, and to the best of your ability to the
rendering of service to the Bank, and will exert your best efforts in the
rendering of such services. This provision will not prohibit you from:

                  (a) making passive investments or serving as a fiduciary with
respect to direct family investments;

                  (b) serving on the board of directors of any company, provided
that you will not render any material services with respect to the operations or
affairs of any such company and provided further that serving on such board of
directors does not otherwise violate the terms of this Letter Agreement,
including, but not limited to, the provisions of Section 4.2 herein; or

                  (c) engaging in religious, charitable or other community or
non-profit activities which do not impair your ability to fulfill your duties
and responsibilities to the Bank.

You agree that in the rendering of all services to the Bank and in all aspects
of your employment, in connection with your duties as Executive Vice President
and Chief Lending Officer, you will comply with all directives, policies,
standards, and regulations from time to time established by the Bank or by
applicable law.

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Donald C. McQueen
July 20, 1999
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         1.8      DEATH OR DISABILITY.

                  (a) DEATH. In the event of your death during the term of your
employment under this Letter Agreement, the Bank shall immediately pay to your
designated beneficiary any salary accrued but unpaid as of the date of your
death. Upon payment of the aforementioned sums, the Bank's obligations to make
further salary payments shall terminate. This provision shall not be construed
to negate any rights you may have to death benefits under any employee benefit
or welfare plan of the Bank in which you may from time to time be a participant
or under any other written agreement with the Bank which specifically provides
for such benefits.

                  (b) DISABILITY. In the event of your "disability" (as defined
below) during the term of your employment under this Letter Agreement, the Bank
shall continue to pay you your base salary (reduced by any benefits you are
entitled to receive under any state or federal disability insurance program,
such as Rhode Island temporary disability insurance or federal social security)
for a period of six months from the date of "disability". For purposes of this
Letter Agreement, "disability" shall mean a determination by the Board that you
are unable for any reason, either physical or mental, to perform the duties
required of you hereunder.

         1.9 TERM OF EMPLOYMENT. The term of your employment by the Bank under
this Letter Agreement shall continue, unless sooner terminated pursuant to the
provisions of this Letter Agreement, until January 31, 2000 (the "Initial Term")
and shall be automatically extended for each successive one year period
thereafter (each, a "Successive Term"), unless either party shall have given
written notice to the other of such party's election not to extend the term of
this Letter Agreement within thirty (30) calendar days prior to the Initial Term
or any Successor Term. The last day of such term, as it may be extended from
time to time, is hereinafter sometimes referred to as the "Contract Expiration
Date".

         1.10 TERMINATION AND SURVIVAL. The provisions of PART 1 of this Letter
Agreement shall terminate on the Contract Expiration Date. The provisions of
PART 2, PART 3 and PART 4 shall survive the termination of PART 1 and shall
remain in full force and effect and shall continue to be enforceable in
accordance with their terms notwithstanding any termination of PART 1. The
provisions of PART 2, PART 3 and Sections 4.1, 4.2, 4.4, 4.6, 4.7 and 4.9 hereof
shall remain in full force and effect and shall continue to be enforceable in
accordance with their terms beyond the Contract Expiration Date and beyond
termination of employment.

PART 2.  SEVERANCE.

         2.1 SEVERANCE BENEFIT. In the event of a termination of your employment
by the Bank without Cause (as such term is defined in Section 3.5) at any time,
whether before or after the Contract Expiration Date; or in the event of the
expiration of the term of your employment without extension of such Contract
Expiration Date; or in the event of termination of your employment by you after
the Contract Expiration Date, for Good Reason (as defined in Section

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Donald C. McQueen
July 20, 1999
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2.2), the Bank will continue to pay you your base salary then in effect for a
twelve (12) month period (the "Severance Benefit") commencing on the date of
termination (the "Severance Period") plus the Bank will provide you with the
medical and life insurance coverage generally available to full-time employees
during the Severance Period or as required by law, whichever is longer.
Notwithstanding anything herein to the contrary, the Bank shall have no
obligation to pay the Severance Benefit to you in the event your employment is
terminated with Cause by the Bank or voluntarily by you without Good Reason.

         2.2 "GOOD REASON" DEFINED. For purposes of this Letter Agreement "Good
Reason" shall mean the Bank's election under Section 1.9 not to extend the term
of this Letter Agreement and its failure to offer and enter into a new
employment agreement with you on terms which are substantially similar to those
of your employment existing immediately prior to such non-renewal (other than a
reduction of fringe benefits required by law or applicable to all employees
generally) provided, however, that Good Reason shall not be deemed to have
occurred unless prior to your termination of employment for Good Reason, you
shall give not less than 30 days written notice to the Bank of your intent to
terminate for Good Reason stating the basis of the Good Reason sufficient to
permit the Bank to alleviate the basis of such Good Reason prior to termination,
and the Bank has not done so within such 30 day period, and further provided,
that your continuing to work in the absence of entering into a new employment
agreement shall be without prejudice to your right to claim termination for Good
Reason, absent written agreement between you and the Bank to the contrary.

PART 3.  CHANGE IN CONTROL

         3.1 PURPOSE. In order to allow you to consider the prospect of a Change
in Control (as defined in Section 3.2) in an objective manner and in
consideration of the services rendered and to be rendered by you to the Bank,
the Bank is willing to provide, subject to the terms of this Letter Agreement,
certain severance benefits to protect you from the consequences of a Terminating
Event (as defined in Section 3.4) occurring subsequent to a Change in Control.

         3.2 CHANGE IN CONTROL. A "Change in Control" will be deemed to have
occurred if: (i) the Bank effectuates a Takeover Transaction; or (ii) the Bank
commences substantive negotiations with a third party with respect to a Takeover
Transaction and within twelve (12) months of the commencement of such
negotiations, enters into a definitive agreement with respect to a Takeover
Transaction with any party with which negotiations were originally commenced; or
(iii) any election of directors of the Bank (or, if the Bank reorganizes into a
holding company structure, directors of the holding company) occurs (whether by
the directors then in office or by the shareholders at a meeting or by written
consent) where a majority of the directors in office following such election are
individuals who were not nominated by a vote of two-thirds of the members of the
board of directors immediately preceding such election; or (iv) the Bank
effectuates a complete liquidation of the Bank or a sale or disposition of all
or substantially all of its assets. You understand and agree that a
reorganization in which the Bank

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Donald C. McQueen
July 20, 1999
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reorganizes into a holding company structure, or any similar reorganization,
will not constitute a Change in Control for purposes of this agreement or for
any other purpose; provided, however, that any such transaction may constitute a
Change in Control if accomplished in connection with a Takeover Transaction.

         3.3      TAKEOVER TRANSACTION.  A "Takeover Transaction" shall mean:

                  (a) The acquisition of voting securities of the Bank by any
         individual, entity or group (within the meaning of Section 13(d)(3) or
         14(d)(2) of the Securities Exchange Act of 1934, as amended (the
         "Exchange Act")}, other than by the Bank or its subsidiaries or any
         employee benefit plan (or related trust) of the Bank or its
         subsidiaries, which theretofore did not beneficially own (within the
         meaning of Rule 13d-3 promulgated under the Exchange Act), securities
         representing 30% or more of the voting power of all outstanding shares
         of voting securities of the Bank, if such acquisition results in such
         individual, entity or group owning securities representing more than
         30% of the voting power of all outstanding voting securities of the
         Bank; provided, that any acquisition by a corporation with respect to
         which, following such acquisition, more than 50% of the then
         outstanding shares of voting securities of such corporation, is then
         beneficially owned, directly or indirectly, by all or substantially all
         of the individuals and entities who were the beneficial owners of the
         voting securities of the Bank outstanding immediately prior to such
         acquisition in substantially the same proportion as their ownership,
         immediately prior to such acquisition, of the outstanding voting
         securities of the Bank, shall not constitute a Change in Control; or

                  (b) The issuance of additional shares of common stock of the
         Bank in a single transaction or a series of related transactions if the
         individuals and entities who were the beneficial owners of the
         outstanding voting securities of the Bank immediately prior to such
         issuance do not, following such issuance, beneficially own, directly or
         indirectly, securities representing more than 50% of the voting power
         of all then outstanding voting securities of the Bank; or

                  (c) Consummation by the Bank of (i) a reorganization, merger
         or consolidation, in each case, with respect to which all or
         substantially all of the individuals and entities who were the
         beneficial owners of the voting securities of the Bank immediately
         prior to such reorganization, merger or consolidation do not, following
         such reorganization, merger or consolidation, beneficially own,
         directly or indirectly, securities representing more than 50% of the
         voting power of then outstanding voting securities of the corporation
         resulting from such a reorganization, merger or consolidation or (ii)
         the sale, exchange or other disposition (in one transaction or a series
         of related transactions) of all or substantially all of the assets of
         the Bank (on a consolidated basis) to a party which is not controlled
         by or under common control with the Bank.

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Donald C. McQueen
July 20, 1999
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         For purposes of this Section 3.3, "voting power" means ordinary voting
power for the election of directors.

         3.4 TERMINATING EVENT.  A "Terminating Event" means either

                  (a) Termination by the Bank of your employment with the Bank
for any reason other than (i) your death or disability or (ii) for "Cause" (as
such term is defined in Section 3.5 hereof), or

                  (b) Your resignation as an employee of the Bank, other than
for reasons of disability, following (i) a significant reduction in the nature
or scope of your duties, responsibilities, authority and powers from the duties,
responsibilities, authority and powers exercised by you immediately prior to the
Change in Control or (ii) a greater than 10% reduction in your annual base
salary or fringe benefits as in effect on the date of the Change in Control,
except for the across-the-board salary reductions or change in fringe benefit
plans similarly affecting all management personnel of the Bank; or (iii) any
requirement by the Bank or of any person in control of the Bank that the
location at which you perform the principal duties of the Bank be outside a
radius of 50 miles from the location at which you performed such duties
immediately prior to the Change in Control; or (iv) the failure of any successor
of the Bank to agree in writing upon terms and conditions of employment with you
which are substantially similar to those of your employment immediately prior to
the Change in Control and which are reasonably satisfactory to you within ninety
(90) days following a Change in Control.

         3.5 TERMINATION FOR "CAUSE" DEFINED. For purposes of this Letter
Agreement, termination for Cause shall include termination by reason of any of
the following:

                  (a)      Continuing any arrangement, holding any position or
                           engaging in any activities that conflict with the
                           interest of, or that interfere with your duties owed
                           to, the Bank, after ten (10) days prior written
                           notice by the Bank to you of the same;

                  (b)      Conviction of embezzlement or other crimes against
                           the Bank, deliberate misappropriation of the Bank's
                           funds or dishonesty;

                  (c)      Material violation of written policies of the Bank,
                           irresponsible acts in the performance of your duties
                           or material breach of any of your obligations under
                           the terms of this Letter Agreement;

                  (d)      Material non-performance of your duties or material
                           acts (or omissions) of mismanagement; and

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Donald C. McQueen
July 20, 1999
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                  (e)      Refusal to perform assigned duties when such refusal
                           is not justified or excused either by the terms of
                           this Letter Agreement or by actions taken by the Bank
                           in violation of this Letter Agreement.

         3.6 PAYMENT IN CONNECTION WITH TERMINATING EVENT. If a Terminating
Event occurs within one (1) year after a Change in Control (which one year
period shall be calculated from the effective date of the Takeover Transaction
if the Terminating Event occurs after a Takeover Transaction), the Bank will pay
to you an amount (the "Severance Payment") equal to two times the sum of (a)
your annual base salary in effect at the time of the Change in Control, and (b)
an amount equal to the average executive cash bonus earned by you with respect
to the two full fiscal years immediately preceding the Change in Control, which
Severance Payment shall be payable in one lump sum within 30 days of the date of
termination of your employment, or if such Change in Control is governed by
clause (ii) of Section 3.2 and the Terminating Event occurs prior to entering
into a definitive agreement, upon the entering into of a definitive agreement by
the Bank. In addition, the Bank shall continue to pay for all medical and life
insurance coverage provided on the date of the Terminating Event for the twelve
month period commencing on the effective date of the Terminating Event. No
Severance Payment will be made to you under PART 3 if your employment with the
Bank terminates for any reason prior to a Change in Control, or if your
employment with the Bank terminates after a Change in Control but such
termination or resignation is not a Terminating Event. In addition, except as
provided in PART 2, no Severance Payment will be made to you under this Letter
Agreement with respect to a Terminating Event which occurs more than one year
after a Change in Control.

         3.7 APPLICABILITY OF CHANGE IN CONTROL PROVISIONS. (a) If there is a
Change in Control while this Letter Agreement is in effect and while you remain
actively employed by the Bank, the provisions of PART 3 shall apply and shall
continue to apply for a one - year period following the Change in Control (which
one-year period shall be calculated from the effective date of a Takeover
Transaction if a Terminating Event occurs after the Takeover Transaction), and
the provisions of PART 3 shall continue to apply regardless of whether this
Letter Agreement is terminated until all the obligations of the Bank hereunder
have been fulfilled and all benefits provided hereunder have been paid.

         (b) The provisions of PART 3 shall terminate upon the earliest of (i)
the termination by the Bank of your employment for any reason prior to a Change
in Control, (ii) the termination of your employment by the Bank after a Change
in Control because of death or disability or for Cause, (iii) your resignation
or termination of employment with the Bank for any reason other than Good Reason
prior to a Change in Control, and (iv) your resignation or termination of
employment after a Change in Control for any reason other than the occurrence of
any of the events enumerated in Section 3.4 of this Letter Agreement.

         3.8 EXCISE TAX EQUALIZATION PAYMENT. In the event that you become
entitled to a Severance Payment or any other payment or benefit under this
Letter Agreement, or under any

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Donald C. McQueen
July 20, 1999
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other agreement with or plan of the Bank (in the aggregate, the "Total
Payments"), if any of the Total Payments will be subject to the tax (the "Excise
Tax") imposed by Section 4999 of the Code (or any similar tax that may hereafter
be imposed), the Bank shall pay to you in cash an additional amount (the
"Gross-Up Payment") such that the net amount retained by you after deduction of
any Excise Tax upon the Total Payments and any Federal, state and local income
tax and Excise Tax upon the Gross-Up Payment provided for by this Section 3.8
(including FICA and FUTA), shall be equal to the Total Payments. Such payment
shall be made by the Bank to you as soon as practical following the effective
date of the Terminating Event, but in no event beyond thirty (30) days from such
date.

         3.9 TAX COMPUTATION. For purposes of determining whether any of the
Total Payments will be subject to the Excise Tax and the amounts of such Excise
Tax:

         (a) Any other payments or benefits received or to be received by you in
connection with a Change in Control of the Bank or your termination of
employment (whether pursuant to the terms of this Letter Agreement or any other
plan, arrangement, or agreement with the Bank, or with any person (which shall
have the meaning set forth in Section 3(a)(9) of the Exchange Act, including a
"group" as defined in Section 13(d) therein) whose actions result in a Change in
Control of the Bank or any person affiliated with the Bank or such persons)
shall be treated as "parachute payments" within the meaning of Section
280G(b)(1) of the Code, and all "excess parachute payments" within the meaning
of Section 280G(b)(1) shall be treated as subject to the Excise Tax, unless in
the opinion of tax counsel as supported by the Bank's independent auditors and
acceptable to you, such other payments or benefits (in whole or in part) do not
constitute parachute payments, or unless such excess parachute payments (in
whole or in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code in excess of the
base amount within the meaning of Section 280G(b)(3) of the Code, or are
otherwise not subject to the Excise Tax;

         (b) The amount of the Total Payments which shall be treated as subject
to the Excise Tax shall be equal to the lesser of: (i) the total amount of the
Total Payments; (or (ii) the amount of excess parachute payments within the
meaning of Section 280G(b)(1) (after applying clause (a) above); and

         (c) The value of any noncash benefits or any deferred payment or
benefit shall be determined by the Bank's independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code.

         For purposes of determining the amount of the Gross-Up Payment, you
shall be deemed to pay Federal income taxes at the highest marginal rate of
Federal income taxation in the calendar year in which the Gross-Up Payment is to
be made, and state and local income taxes at the highest marginal rate of
taxation in the state and locality of your residence on the effective

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Donald C. McQueen
July 20, 1999
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date of the Terminating Event, net of the maximum reduction in Federal income
taxes which could be obtained from deduction of such state and local taxes.

         3.10 SUBSEQUENT RECALCULATION. In the event the Internal Revenue
Service adjusts the computation of the Bank under Section 3.9 herein so that you
did not receive the greatest net benefit, the Bank shall reimburse you for the
full amount necessary to make you whole, plus a market rate of interest, as
determined by the Compensation Committee of the Board.

         3.11 DISPUTE RESOLUTION. If any dispute between the Bank and you as to
any of the amounts to be determined under Sections 3.8 or 3.9, or the method of
calculating such amounts, cannot be resolved by you and the Bank, either the
Bank or you after giving three (3) days written notice to the other, may refer
the dispute to a partner in the Boston, Massachusetts office of a firm of
independent certified public accountants selected jointly by you and the Bank.
The determination of such partner as to the amount to be determined under
Section 3.8 and 3.9 and the method of calculating such amounts shall be final
and binding on both you and the Bank. The Bank shall bear the costs of any such
determination.

PART 4.  MISCELLANEOUS

         4.1 CONFIDENTIAL INFORMATION. Unless you first secure the Bank's
consent, you will not disclose or use, at any time either during or subsequent
to your employment by the Bank, except as required by your duties to the Bank,
any secret or confidential information of the Bank of which you become informed
during your employment, whether or not developed by you. The term "confidential
information" includes, without limitation, financial information, business
plans, prospects, and opportunities (such as lending relationships, financial
product developments, or possible acquisitions or dispositions of business or
facilities) which have been discussed or considered by the Bank's management,
but does not include any information which has become part of the public domain
by means other than your non-observance of your obligations hereunder.

         4.2 NON-COMPETITION. During your employment by the Bank hereunder, and
during a period of one (1) year following the date of termination of your
employment with the Bank for any reason, you will not, directly or indirectly,
whether as partner, consultant, agent, employee, co-venturer, greater than 2%
owner, or otherwise, or through any Person (as hereafter defined),

                  (a) attempt to recruit any employee of the Bank, assist in
such hiring by any other Person, or encourage any such employee to terminate his
or her relationship with the Bank, or

                  (b) encourage any customer of the Bank to conduct with any
other Person any business or activity which such customer conducts or could
conduct with the Bank.

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Donald C. McQueen
July 20, 1999
Page 10


For purposes of this Section 4.2, the term "Person" shall mean an individual, a
corporation, an association, a partnership, an estate, a trust and any other
entity or organization.

         4.3 NO CONFLICTING OBLIGATIONS. The Bank, in entering into this Letter
Agreement, understands, and you hereby represent, that you are not under any
obligation to any former employer or any person, firm or corporation that would
prevent, limit or impair, in any way, the performance by you of your duties as
an employee of the Bank.

         4.4 ETHICAL BEHAVIOR. Upon termination by the Bank of your employment
for any reason, you shall act at all times in an ethical manner with regard to,
and during the one-year period following the date of such termination, shall
take no action which directly or indirectly has or could reasonably be expected
to have the effect of terminating or otherwise adversely affecting the
relationship of the Bank with any employees of, or others with business or
advantageous relationships with, the Bank or any of its affiliates.

         4.5 WITHHOLDING. All payments made by the Bank under this Letter
Agreement will be net of any tax or other amounts required to be withheld by the
Bank under applicable law.

         4.6 LEGAL FEES. Upon submission of appropriate statements or
documentation, the Bank agrees to reimburse you for reasonable legal fees
actually incurred by you in connection with the enforcement of the terms of this
Letter Agreement following a Change in Control, provided, however, that the Bank
shall not be obligated to reimburse you for any legal fees or expenses incurred
by you in connection with the Bank's enforcement of the terms of this Letter
Agreement or in connection with any arbitration or litigation in which the Bank
is the prevailing party.

         4.7 INDEMNIFICATION. The Bank hereby covenants and agrees to indemnify
you and hold you harmless fully, completely, and absolutely against and in
respect to any and all actions, suits, proceedings, claims, demands, judgments,
costs, expenses (including attorney's fees), losses, and damages resulting from
your good faith performance of your duties and obligations under the terms of
this Letter Agreement.

         4.8 BINDING EFFECT. This Letter Agreement is binding upon and will
enure to the benefit of the parties hereto and their respective heirs,
administrators, executors, successors and assigns. The Bank will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the Bank
to assume expressly and perform this Letter Agreement. Failure of the Bank to
obtain such assumption and agreement prior to the effectiveness of any such
succession shall be a breach of this Letter Agreement and shall entitle you to
compensation from the Bank in the same amount and on the same terms as you would
be entitled to hereunder following a Terminating Event, except that for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the date on which you become entitled to such
compensation

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Donald C. McQueen
July 20, 1999
Page 11


from the Bank. As used in this Letter Agreement, "Bank" shall mean the Bank, as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Letter Agreement by operation
of law, or otherwise.

         4.9 ARBITRATION OF DISPUTES. Any dispute, controversy or claim arising
out of or relating to this Letter Agreement or the breach or performance hereof
will be settled by arbitration in accordance with the laws of the State of Rhode
Island by an arbitrator mutually agreed upon by you and the Bank. If an
arbitrator cannot be agreed upon, you and the Bank shall each choose an
arbitrator, and these two together shall select a third arbitrator. If the first
two arbitrators cannot agree on the appointment of a third arbitrator, then the
third arbitrator will be appointed by the American Arbitration Association in
Providence, Rhode Island. Such arbitration will be conducted in the City of
Providence in accordance with the Commercial Arbitration Rules of the American
Arbitration Association, except with respect to the selection of arbitrators
which shall be as provided in this Section 4.9. Judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof.

         If the foregoing correctly sets forth our understanding, please sign
this letter and the enclosed counterpart hereof in the space below and return to
the undersigned the counterpart copy that you have signed.

                                          Sincerely yours,

                                          BANK RHODE ISLAND



                                          By:   /s/ Merrill W. Sherman
                                             -------------------------
                                             Merrill W. Sherman
                                             President

The foregoing correctly sets forth our agreement.

/s/ Donald C. Mcqueen
---------------------
Donald C. McQueen

   8/5/99
------------
Date