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                                                                    EXHIBIT 10.5


                                BANK RHODE ISLAND

                                  AMENDMENT TO

                1996 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN

         WHEREAS, Bank Rhode Island (the "Company") desires to amend the
provisions of the Company's 1996 Incentive and Nonqualified Stock Option Plan
(the Plan") to reflect an increase in the maximum number of Shares for which
options may be granted under the Plan; and

         WHEREAS, under Section 10 of the Plan, the Board of Directors of the
Company, may amend the Plan to increase the maximum number of Shares for which
options may be granted under the Plan, provided that such amendment shall not
become effective until the approval of the shareholders; and

         WHEREAS, the Board of Directors and the Shareholders of the Company
have each approved the amendment to increase the maximum number of Shares for
which options may be granted under the Plan;

         NOW, THEREFORE, the Plan is amended as follows:

         1. That Section 3.1 of the Plan be amended by substituting the words
and number "three hundred eighty-five thousand (385,000)" for "two hundred
thousand (200,000)" in the first sentence thereof to increase the maximum number
of Shares for which options may be granted under the Plan.

         2. All other provisions of the Plan shall remain in full force and
effect and are hereby ratified, approved and confirmed.

         IN WITNESS WHEREOF, the Company has caused this Amendment to the 1996
Incentive and Nonqualified Stock Option Plan to be executed by its duly
authorized officer as of the 20th day of May, 1998.

                                                BANK RHODE ISLAND


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

Attest:

   /s/ Margaret D. Farrell
--------------------------
Secretary

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                                BANK RHODE ISLAND

               1996 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN


SECTION 1.  PURPOSE

         This 1996 Incentive and Nonqualified Stock Option Plan (the "Plan") of
Bank Rhode Island, a Rhode Island financial institution (the "Bank"), is
designed to provide additional incentive to executives and other key employees
of the Bank and its subsidiaries and for certain other individuals providing
services to or acting as directors of the Bank and its subsidiaries. The Bank
intends that this purpose will be effected by the granting of incentive stock
options ("Incentive Stock Options") as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and nonqualified stock options
("Nonqualified Options") under the Plan which afford such executives, key
employees, directors and other eligible individuals an opportunity to acquire or
increase their proprietary interest in the Bank through the acquisition of
shares of its Common Stock. The Bank intends that Incentive Stock Options issued
under the Plan will qualify as "incentive stock options" as defined in Section
422 of the Code and the terms of the Plan shall be interpreted in accordance
with this intention; provided, however, that no option granted hereunder will
qualify as an "incentive stock option" unless the Plan is approved by the
stockholders of the Bank- within twelve months prior to or following the
adoption of the Plan by the Board. The terms "parent" and "subsidiary" as used
herein shall have the respective meanings set forth in Section 424 of the Code.

SECTION 2.  ADMINISTRATION

         2.1      BOARD OF DIRECTORS/ COMMITTEE.

         (a) Except as otherwise provided in section 2. 1 (b) below, the Plan
shall be administered by the Board of Directors (the "Board") of the Bank.

         (b) At such time as the Bank has a class of securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Plan shall be administered by a Committee (the "Committee")
consisting of at least two members of the Board of Directors appointed by the
Board of Directors of the Bank. None of the members of the Committee shall be an
officer or other employee of the Bank. It is the intention of the Bank that, so
long as the Bank has a class of securities registered pursuant to the Exchange
Act, the Plan shall be administered, in accordance with the provisions of
Section 4 hereof, by "disinterested persons" within the meaning of Rule l6b-3
under the Exchange Act, but the authority and validity of any act taken or not
taken by the Committee shall not be affected if any person administering the
Plan is not a disinterested person. Except as specifically reserved to the Board
under the terms of the Plan, the Committee shall have full and final authority
to the Board under the operate, manage, and administer the Plan on behalf of the
Bank. Action by the Committee shall require the affirmative vote of a majority
of all members thereof.

         2.2 POWERS OF THE BOARD/COMMITTEE. Subject to the terms and conditions
of the Plan, the Board or the Committee, as the case may be, shall have the
power:


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                  (a) To determine from time to time the persons eligible to
         receive options and the options to be granted to such persons under the
         Plan and to prescribe the terms, conditions, restrictions, if any, and
         provisions (which need not be identical) of each option granted under
         the Plan to such persons;

                  (b) To construe and interpret the Plan and options granted
         thereunder and to establish, amend, and revoke rules and regulations
         for administration of the Plan. In this connection, the Board or the
         Committee, as the case may be, may correct any defect or supply any
         omission, or reconcile any inconsistency in the Plan, or in any option
         agreement, in the manner and to the extent it shall deem necessary or
         expedient to make the Plan fully effective. All decisions and
         determinations by the Board or the Committee, as the case may be, in
         the exercise of this power shall be final and binding upon the Bank and
         optionees;

                  (c) To make, in its sole discretion, changes to any
         outstanding option granted under the Plan, including: (i) to reduce the
         exercise price, (ii) to accelerate the vesting schedule or (iii) to
         extend the expiration date; and

                  (d) Generally, to exercise such powers and to perform such
         acts as are deemed necessary or expedient to promote the best interests
         of the Bank with respect to the Plan.

SECTION 3.  STOCK

         3.1 STOCK TO BE ISSUED. The stock subject to the options granted under
the Plan shall be shares of the Bank's authorized but unissued common stock,
$1.00 par value (the "Common Stock"), or shares of the Bank's Common Stock held
in treasury. The total number of shares that may be issued pursuant to options -
ranted under the Plan shall not exceed an aggregate of 200,000 shares of Common
Stock; provided, however, that the class and aggregate number of shares which
may be subject to options granted under the Plan shall be subject to adjustment
as provided in Section 8 hereof.

         3.2 EXPIRATION. CANCELLATION OR TERMINATION OF OPTION. Whenever any
outstanding option under the Plan expires, is cancelled or is otherwise
terminated (other than by exercise), the shares of Common Stock allocable to the
unexercised portion of such option may again be the subject of options under the
Plan.

SECTION 4.  ELIGIBILITY

         4.1 PERSONS ELIGIBLE. Incentive Stock Options under the Plan may be
granted only to officers and other employees of the Bank, or its subsidiaries.
Nonqualified Options may be granted to officers or other employees of the Bank
or its subsidiaries, to members of the Board of Directors of the Bank or its
subsidiaries, and to consultants or other persons who render services to the
Bank or its subsidiaries (regardless of whether they are also employees),
provided, however, that no such option may be granted to a person who is a
member of the Committee, if any, at the time of grant.

         4.2 GREATER-THAN-TEN-PERCENT STOCKHOLDERS. Except as may otherwise be
permitted by the Code or other applicable law or regulation, no Incentive Stock
Option shall


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be granted to an individual who, at the time the option is granted, owns
(including ownership attributed pursuant to Section 424 of the Code) more than
ten percent of the total combined voting power of all classes of stock of the
Bank or any parent or subsidiary (a "greater-than-ten-percent stockholder"),
unless such Incentive Stock Option provides that (i) the purchase price per
share shall not be less than one hundred ten percent of the fair market value of
the Common Stock at the time such option is granted, and (ii) that such option
shall not be exercisable to any extent after the expiration of five years from
the date it is granted.

         4.3 MAXIMUM AGGREGATE FAIR MARKET VALUE. The aggregate fair market
value (determined at the time the option is granted in the manner specified in
Section 6.3) of the Common Stock with respect to which Incentive Stock Options
are exercisable for the first time by any optionee during any calendar year
(under the Plan and any other plans of the Bank or any parent or subsidiary for
the issuance of incentive stock options) shall not exceed $100,000 (or such
greater amount as may from time to time be permitted with respect to incentive
stock options by the Code or any other applicable law or regulation).

SECTION 5.  TERMINATION OF EMPLOYMENT OR DEATH OF OPTIONEE

         5.1 TERMINATION OF EMPLOYMENT. Except as may be otherwise expressly
provided herein, options shall terminate on the earlier of:

                  (a) the date of expiration thereof,

                  (b) the date of termination of the optionee's employment with
         or services to the Bank by it for cause (as determined by the Bank);

                  (c) 30 days after the date of termination of the optionee's
         employment with or services to the Bank voluntarily by the optionee; or

                  (d) 90 days after the date of termination of the optionee's
         employment with or services to the Bank by it without cause; PROVIDED,
         that Nonqualified Options granted to persons who are not employees of
         the Bank need not, unless the Board or the Committee, as the case may
         be, determines otherwise, be subject to the provisions set forth in
         clauses (b), (c) and (d) above.

An employment relationship between the Bank and the optionee shall be deemed to
exist during any period in which the optionee is employed by the Bank, or any
parent or subsidiary. Whether authorized leave of absence, or absence on
military or government service, shall constitute termination of the employment
relationship between the Bank and the optionee shall be determined by the Board
or the Committee, as the case may be, at the time thereof.

As used herein, "cause" shall mean (x) any material breach by the optionee of
any agreement to which the optionee and the Bank are both parties, (y) any act
or omission to act by the optionee which may have a material and adverse effect
on the Bank's business or on the optionee's ability to perform services for the
Bank, including, without limitation, the commission of any crime (other than
ordinary traffic violations), or (z) any material misconduct or material neglect
of duties by the optionee in connection with the business or affairs of the Bank
or any affiliate of the Bank.


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         5.2 DEATH OR PERMANENT DISABILITY OF OPTIONEE. In the event of the
death or permanent and total disability of the holder of an option that is
subject to clause (b) or (c) of Section 5.1 above prior to termination of the
optionee's employment with or services to the Bank and before the date of
expiration of such option, such option shall terminate on the earlier of such
date of expiration or one year following the date of such death or disability.
After the death of the optionee, his/her executors, administrators or any person
or persons to whom his/her option may be transferred by will or by the laws of
descent and distribution, shall have ,the right, at any time prior to such
termination, to exercise the option to the extent the optionee was entitled to
exercise such option immediately prior to his/her death. An optionee is
permanently and totally disabled if he/she is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to last for a continuous period of not
less than 12 months; permanent and total disability shall be determined in
accordance with Section 22(e)(3) of the Code and the regulations issued
thereunder.

SECTION 6.  TERMS OF THE OPTION AGREEMENTS

         Each option agreement shall be in writing and shall contain such terms,
conditions, restrictions, if any, and provisions as the Board or the Committee,
as the case may be, shall from time to time deem appropriate. Such provisions or
conditions may include without limitation restrictions on transfer, repurchase
rights, or such other provisions as shall be determined by the Board or the
Committee, as the case may be, PROVIDED that such additional provisions shall
not be inconsistent with any other term or condition of the Plan and such
additional provisions shall not cause any Incentive Stock Option granted under
the Plan to fail to qualify as an incentive option within the meaning of Section
422 of the Code. At such time as the Bank has a class of securities registered
pursuant to Section 12 of the Exchange Act, the shares of stock issuable upon
exercise of an option by any executive officer, director or beneficial owner of
more than ten percent of the Common Stock of the Bank may not be sold or
transferred (except that such shares may be issued upon exercise of such option)
by such officer, director or beneficial owner for a period of six months
following the grant of such option.

         Option agreements need not be identical, but each option agreement by
appropriate language shall include the substance of all of the following
provisions:

         6.1 EXPIRATION OF OPTION. Notwithstanding any other provision of the
Plan or of any option agreement, each option shall expire on the date specified
in the option agreement, which date shall hot, in the case of an Incentive Stock
Option, be later than the tenth anniversary (fifth anniversary in the case of a
greater-than-ten-percent stockholder) of the date on which the option was
granted, or as specified in Section 5 of this Plan.

         6.2 EXERCISE. Each option may be exercised, so long as it is valid and
outstanding from time to time in part or as a whole, subject to any limitations
with respect to the number of shares for which the option may be exercised at a
particular time and to such other conditions as the Board or the Committee, as
the case may be, in its discretion may specify upon granting the option.

         6.3 PURCHASE PRICE. The purchase price per share under each option
shall be determined by the Board or the Committee, as the case may be, at the
time the option is granted; provided, however, that the option price of any
Incentive Stock Option shall not,


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unless otherwise permitted by the Code or other applicable law or regulation, be
less than the fair market value of the Common Stock on the date the option is
granted (110 % of the fair market value in the case of a
greater-than-ten-percent stockholder). For the purpose of the Plan the fair
market value of the Common Stock shall be the closing price per share on the
date of grant of the option as reported on the Nasdaq Stock Market or by a
nationally recognized stock exchange, or, if the Common Stock is not listed on
the Nasdaq Stock Market or such an exchange, the fair market value as determined
by the Board or the Committee, as the case may be.

         6.4 TRANSFERABILITY OF OPTIONS. Options shall not be transferable by
the optionee otherwise than by will or under the laws of descent and
distribution, and shall be exercisable, during his or her lifetime, only by him
or her.

         6.5 RIGHTS OF OPTIONEES. No optionee shall be deemed for any purpose to
be the owner of any shares of Common Stock subject to any option unless and
until the option shall have been exercised pursuant to the terms thereof, and
the Bank shall have issued and delivered the shares to the optionee.

SECTION 7.  METHOD OF EXERCISE, PAYMENT OF PURCHASE PRICE

         7.1 METHOD OF EXERCISE. Any option granted under the Plan may be
exercised by the optionee by delivering to the Bank, on any business day a
written notice specifying the number of shares of Common Stock the optionee then
desires to purchase and specifying the address to which the certificates for
such shares are to be mailed (the "Notice"), accompanied by payment for such
shares.

         7.2 PAYMENT OF PURCHASE PRICE. Payment for the shares of Common Stock
purchased pursuant to the exercise of an option shall be made either by (i)
cash, certified check, bank draft or postal or express money order equal to the
option price for the number of shares specified in the Notice, or (ii) with the
consent of the Board or the Committee, as the case may be, shares of Common
Stock of the Bank having a fair market value equal to the option price of such
shares, or (iii) with the consent of the Board or the Committee, as the case may
be, such other consideration which is acceptable to said Board or Committee, as
the case may be, and which has a fair market value equal to the option price of
such shares, or (iv) with the consent of the Board or the Committee as the case
may be, a combination of (i), (ii) and/or (iii). For the purpose of the
preceding sentence, the fair market value per share of Common Stock so delivered
to the Bank shall be determined in the manner specified in Section 6.3. As
promptly as practicable after receipt of the Notice and accompanying payment,
the Bank shall deliver to the optionee certificates for the number of shares
with respect to which such option has been so exercised, issued in the
optionee's name; provided, however, that such delivery shall be deemed effected
for all purposes when the Bank or a stock transfer agent of the Bank shall have
deposited such certificates in the United States mail, addressed to the
optionee, at the address specified in the Notice.

SECTION 8.  CHANGES IN BANK'S CAPITAL STRUCTURE

         8.1 RIGHTS OF BANK. The existence of outstanding options shall not
affect in any way the right or power of the Bank or its stockholders to make or
authorize, without limitation, any or all adjustments, recapitalizations,
reorganizations or other changes in the Bank's capital structure or its
business, or any merger or consolidation of the Bank, or any


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issue of Common Stock, or any issue of bonds, debentures, preferred or prior
preference stock or other capital stock ahead of or affecting the Common Stock
or the rights thereof, or the dissolution or liquidation of the Bank, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.

         8.2 RECAPITALIZATION, STOCK SPLITS AND DIVIDENDS. If the Bank shall
effect a subdivision or consolidation of shares or other capital readjustment,
the payment of a stock dividend, or other increase or reduction of the number of
shares of the Common Stock outstanding, in any such case without receiving
compensation therefor in money, services or property, then (i) the number,
class, and price per share of shares of stock subject to outstanding options
hereunder shall be appropriately adjusted by the Bank in such a manner as to
entitle an optionee to receive upon exercise of an option, for the same
aggregate cash consideration, the same total number and class of shares as he or
she would have received as a result of the event requiring the adjustment had he
or she exercised his or her option in full immediately prior to such event; and
(ii) the number and class of shares with respect to which options may be granted
under the Plan shall be adjusted by substituting for the total number of shares
of Common Stock then reserved for issuance under the Plan that number and class
of shares of stock that the owner of an equal number of outstanding shares of
Common Stock would own as the result of the event requiring the adjustment.

         8.3 MERGER WITHOUT CHANGE OF CONTROL. After a merger of one or more
corporations into the Bank, or after a consolidation of the Bank and one or more
corporations in each case as a result of which (i) the Bank shall be the
surviving corporation, and (ii) the stockholders of the Bank immediately prior
to such merger or consolidation own after such merger or consolidation shares
representing at least fifty percent of the voting power of the Bank, or after a
reorganization of the Bank under a "bank holding company" (as such term is
defined in the Bank Holding Company Act of 1956, as amended) in which the
stockholders of the Bank immediately prior to such reorganization own after such
reorganization shares representing at least fifty percent of the voting power of
such bank holding company, each holder of an outstanding option shall, at no
additional cost, be entitled upon exercise of such option to receive in lieu of
the number of shares as to which such option shall then be so exercisable, the
number and class of shares of stock or other securities to which such holder
would have been entitled pursuant to the terms of the agreement of merger,
consolidation or reorganization if, immediately prior to such merger,
consolidation or reorganization, such holder had been the holder of record of a
number of shares of, Common Stock equal to the number of shares for which such
option was exercisable.

         8.4 SALE OR MERGER WITH CHANGE OF CONTROL. If the Bank is merged into
or consolidated with another corporation under circumstances where the Bank is
not the surviving corporation, or if there is a merger or consolidation where
the Bank is the surviving corporation but the stockholders of the Bank
immediately prior to such merger or consolidation do not own after such merger
or consolidation shares representing at least fifty percent of the voting power
of the Bank, or if the Bank is reorganized under a "bank holding g company" (as
such term is defined in the Bank Holding Company Act of 1956, as amended) in
which the stockholders of the Bank immediately prior to such reorganization own
after such reorganization shares representing less than fifty percent of the
voting power of such bank holding company, or if the Bank is liquidated, or
sells or otherwise disposes of substantially. all of its assets to another
corporation while unexercised options remain outstanding under the Plan (i)
subject to the provisions of clause (iii) below, after the


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effective date of such merger, consolidation, reorganization, liquidation; sale
or disposition, as the case may be, each holder of an outstanding option shall
be entitled, upon exercise of such option, to receive, in lieu of shares of
Common Stock, shares of such stock or other securities, cash or property as the
holders of shares of Common Stock received pursuant to the terms of the merger,
consolidation, reorganization, liquidation, sale or disposition; (ii) the Board
or the Committee, as the case may be, may accelerate the time for exercise of
all unexercised and unexpired options to and after a date prior to the effective
date of such merger, consolidation, reorganization, liquidation, sale or
disposition, as the case may be, specified by said Board or Committee; or (iii)
all outstanding options may be cancelled by the Board or the Committee, as the
case may be, as of the effective date of any such merger, consolidation,
reorganization, liquidation, sale or disposition provided that (x) notice of
such cancellation shall be given to each holder of an option and (y) each holder
of an option shall have the right to exercise such option to the extent that the
same is then exercisable or, if said Board or Committee shall have accelerated
the time for exercise of all unexercised and unexpired options, in full during,
the 30-day period preceding the effective date of such merger, consolidation,
reorganization, liquidation, sale or disposition.

         8.5 ADJUSTMENTS TO COMMON STOCK SUBJECT TO OPTION. Except as
hereinbefore expressly provided, the issue by the Bank of shares of stock of any
class, or securities convertible into shares of stock of any class, for cash or
property, or for labor or services, either upon direct sale or upon the exercise
of rights or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Bank convertible into such shares or other securities, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock then subject to outstanding
options.

         8.6 MISCELLANEOUS. Adjustments under this Section 8 shall be determined
by the Board or the Committee, as the case may be, and such determinations shall
be conclusive. No fractional shares of Common Stock shall be issued under the
Plan on account of any adjustment specified above.

SECTION 9.  GENERAL RESTRICTIONS

         9.1 INVESTMENT REPRESENTATIONS. The Bank may require any person to whom
an option is granted, as a condition of exercising such option, to give written
assurances in substance and form satisfactory to the Bank to the effect that
such person is acquiring the Common Stock subject to the option for his or her
own account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Bank deems
necessary or appropriate in order to comply with federal and applicable state
securities laws.

         9.2 COMPLIANCE WITH SECURITIES LAWS. The Bank shall not be required to
sell or issue any shares under any option if the issuance of such shares shall
constitute a violation by the optionee or by the Bank of any provisions of any
law or regulation of any governmental authority. In addition, in connection with
the Securities Act of 1933, as now in effect or hereafter amended (the
"Securities Act"), upon exercise of any option, the Bank shall not be required
to issue such shares unless the Board or the. Committee, as the case may be, has
received evidence satisfactory to it to the effect that the bolder of such
option will not transfer such shares except pursuant to a registration statement
in effect under such Act or unless an opinion of counsel satisfactory to the
Bank has been received by the Bank to the effect that such registration is not
required. Any determination in this connection by the Board or the


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Committee, as the case may be, shall be final, binding and conclusive. In the
event the shares issuable on exercise of an option are not registered under the
Securities Act, the Bank may imprint upon any certificate representing shares so
issued the following legend or any other legend which counsel for the Bank
considers necessary or advisable to comply with the Securities Act and with
applicable state securities laws:

The shares of stock represented by this certificate have not been registered
under the Securities Act of 1933 or under the securities laws of any State and
may not be sold or transferred except upon such registration or upon receipt by
the Bank of an opinion counsel satisfactory to the Bank, in form and substance
satisfactory to the Bank, that registration is not required for such sale or
transfer.

The Bank may, but shall in no event be obligated to, register any securities
covered hereby pursuant to the Securities Act; and in the event any shares are
so registered the Bank may remove any legend on certificates representing such
shares. The Bank shall not be obligated to take any other affirmative action in
order to cause the exercise of an option or the issuance of shares pursuant
thereto to comply with any law or regulation of any governmental authority.

         9.3 EMPLOYMENT OBLIGATION. The granting of any option shall not impose
upon the Bank any obligation to employ or continue to employ any optionee; and
the right of the Bank to terminate the employment of any officer or other
employee shall not be diminished or affected by reason of the fact that an
option has been granted to him or her.

SECTION 10.  AMENDMENT OR TERMINATION OF THE PLAN

The Board of Directors may modify, revise or terminate this Plan at any time and
from time to time, except that the class of persons eligible to receive options
and the aggregate number of shares issuable pursuant to this Plan shall not be
changed or increased, other than by operation of Section 8 hereof, without the
consent of the stockholders of the Bank.

SECTION 11. NONEXCLUSIVITY OF THE PLAN

Neither the adoption of the Plan by the Board of Directors nor the submission of
the Plan to the stockholders of the Bank for approval shall be construed as
creating any limitations on the power of the Board of Directors to adopt such
other incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific cases.

SECTION 12. EFFECTIVE DATE AND DURATION OF PLAN

The Plan shall become effective upon the date of opening of the Bank for
business, provided, however, that the Plan shall be subject to (i) the approval
of the Bank's stockholders in accordance with applicable laws and regulations at
an annual or special meeting held within twelve months of such effective date
and (ii) the approval of the Rhode Island Division of Banking if required by
applicable law or regulation. No options granted under the Plan prior to such
regulatory and stockholder approvals may be exercised until such approvals have
been obtained. No option may be granted under the Plan after the tenth
anniversary of the effective date. The Plan shall terminate (x) when the total
amount of the Stock with respect to


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which options may be granted shall have been issued upon the exercise of options
or (y) by action of the Board of Directors pursuant to Section 10 hereof,
whichever shall first occur.





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