SCHEDULE 14A INFORMATION
           Proxy Statement Pursuant to Section 14(a) of the Securities
                     Exchange Act of 1934 (Amendment No. __)


         Filed by the registrant [x]
         Filed by a party other than the registrant
         [ ]      Check the appropriate box:
         [ ]      Preliminary proxy statement
         [ ]      Confidential, for use of the Commission only
                  (as permitted by Rule 14a-6(e)(2))
         [X]      Definitive proxy statement
         [ ]      Definitive additional materials
         [ ]      Soliciting material under Rule 14a-12


                             Berkshire Bancorp Inc.
-------------------------------------------------------------------------------
                (Name of Registrant as Specified in Its Charter)

-------------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):
         [X]      No fee required.
         [ ]      Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
                  and 0-11.
                  (1) Title of each class of securities to which
         transaction applies:
-------------------------------------------------------------------------------
                  (2) Aggregate number of securities to which transaction
         applies:
-------------------------------------------------------------------------------
                  (3) Per unit price or other underlying value of transaction
         computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on
         which the filing fee is calculated and state how it was determined.)
-------------------------------------------------------------------------------
                  (4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------------
                  (5) Total Fee Paid:
-------------------------------------------------------------------------------
         [ ]      Fee paid previously with preliminary materials.
-------------------------------------------------------------------------------
         [ ]      Check box if any part of the fee is offset as provided by
         Exchange Act Rule 0-11(a)(2) and identify the filing for which the
         offsetting fee was paid previously. Identify the previous filing by
         registration statement number, or the form or schedule and the date of
         its filing.

         (1)      Amount previously paid:
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         (2)      Form, Schedule or Registration Statement No.:
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         (3)      Filing party:
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         (4)      Date filed:
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                             BERKSHIRE BANCORP INC.
                                  160 Broadway
                            New York, New York 10038
                               Tel: (212) 791-5362

                            -----------------------

                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

                           TO BE HELD ON MAY 18, 2004

To the Stockholders of
BERKSHIRE BANCORP INC.

      NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Berkshire Bancorp Inc., a Delaware corporation (the "Company"), will be held on
Tuesday, May 18, 2004, at 10:00 A.M. (eastern time), at the offices of Blank
Rome LLP, The Chrysler Building, 24th Floor, Boardroom, 405 Lexington Avenue,
New York, New York 10174, for the following purposes:

      1.          To elect five directors to hold office until the next Annual
                  Meeting of Stockholders and until their respective successors
                  have been duly elected and qualified; and

      2.          To consider and vote upon a proposed amendment to the
                  Company's Certificate of Incorporation effecting a one-for-ten
                  reverse stock split of the Company's issued and outstanding
                  shares of Common Stock (the "Reverse Split"); and

      3.          To transact such other business as may properly come before
                  the Annual Meeting of Stockholders and any adjournment(s)
                  thereof.

      The Board of Directors has fixed the close of business on April 8, 2004
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting. Only stockholders of record at the close of
business on that date will be entitled to notice of, and to vote at, the Annual
Meeting of Stockholders and any adjournment(s) thereof.

      Enclosed with this Notice are a Proxy Statement, a proxy card and return
envelope, and the Company's Annual Report to Stockholders for the fiscal year
ended December 31, 2003 (which includes the Company's Annual Report on Form 10-K
as filed with the Securities and Exchange Commission).

      All stockholders are cordially invited to attend the meeting in person.

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE POSTAGE PREPAID
ENVELOPE WHICH HAS BEEN PROVIDED.

                                         By Order of the Board of Directors of
                                         BERKSHIRE BANCORP INC.


                                         Emanuel J. Adler
                                         Secretary

Dated: April 26, 2004









                             BERKSHIRE BANCORP INC.
                                  160 Broadway
                            New York, New York 10038
                          Telephone No.: (212) 791-5362

                               -----------------

                                 PROXY STATEMENT

                               -----------------

                         ANNUAL MEETING OF STOCKHOLDERS
                           TO BE HELD ON MAY 18, 2004

                               -----------------

                                                                  April 26, 2004

Information Regarding Proxies

      This Proxy Statement is being furnished in connection with the
solicitation of proxies by and on behalf of the Board of Directors of Berkshire
Bancorp Inc. (the "Company") for use at the Company's 2004 Annual Meeting of
Stockholders (the "Annual Meeting") to be held on May 18, 2004, at 10:00 A.M.
(eastern time), at the offices of Blank Rome LLP, The Chrysler Building, 24th
Floor, Boardroom, 405 Lexington Avenue, New York, New York 10174 and at any
adjournment(s) or postponement(s) thereof for the purposes set forth in the
accompanying Notice of Meeting. This Proxy Statement and the accompanying proxy
card are first being mailed to stockholders of the Company on or about April 27,
2004.

      The principal executive offices of the Company are located at 160
Broadway, New York, New York 10038.

      The cost of solicitation of proxies will be borne by the Company. In
addition to the solicitation of proxies principally by the use of the mail,
directors, officers and other employees of the Company, acting on its behalf and
without special compensation, may solicit proxies by telephone, facsimile, email
or personal interview. The Company will, at its expense, request brokers and
other custodians, nominees and fiduciaries to forward proxy soliciting material
to the beneficial owners of shares held of record by such persons. It is
estimated that said solicitation costs will be nominal.

Outstanding Stock and Voting Rights

      The Board of Directors has fixed the close of business on April 8, 2004
as the record date (the "Record Date") for the determination of stockholders of
the Company who are entitled to receive notice of, and to vote at, the Annual
Meeting. Only stockholders of record on the Record Date shall be entitled to
notice of, and to vote at, the Annual Meeting. At the close of business on the
Record Date, an aggregate of 2,209,985 shares of the Company's Common Stock were
outstanding, each of which is entitled to one vote on each matter to be voted
upon at the Annual Meeting. The Company's stockholders do not have cumulative
voting rights. The Company has no other class of securities entitled to vote at
the Annual Meeting.

Voting Procedures; Revocations

      When a proxy card in the form enclosed with this Proxy Statement is
returned properly executed, the shares represented thereby will be voted at the
Annual Meeting in accordance with the directions indicated thereon. If a proxy
card is properly executed but no directions are indicated thereon, the shares
will be voted FOR the election of each of the nominees for director named herein
as shown on the form of proxy card and FOR Proposal 2.















      The Board of Directors does not know of any other business to come before
the Annual Meeting. However, if any other matters should properly come before
the Annual Meeting or any adjournment or postponement thereof for which specific
authority has not been solicited from the stockholders, then, to the extent
permissible by law, the persons named in the proxies will vote the proxies
(which confer authority upon them to vote on any such matters) in accordance
with their judgment. A stockholder who executes and returns the enclosed proxy
card may revoke it at any time prior to its exercise by giving written notice of
such revocation to the Secretary or Assistant Secretary of the Company, by
executing a subsequently dated proxy card or by voting in person at the Annual
Meeting. Attendance at the Annual Meeting by a stockholder who has executed and
returned a proxy card does not alone revoke such proxy. Votes will be counted
and certified by one or more Inspectors of Election who are expected to be
employees of American Stock Transfer & Trust Company, the Company's transfer
agent.

      Proxies in the accompanying form are being solicited by, and on behalf of,
the Company's Board of Directors. The persons named in the proxy have been
designated as proxies by the Company's Board of Directors. Pursuant to Delaware
corporate law, the presence of the holders of a majority of the outstanding
shares of the Company's Common Stock entitled to vote, represented at the Annual
Meeting in person or by proxy, will constitute a quorum. If a quorum is present
at the Annual Meeting, the nominees for director shall be elected by a plurality
of the votes present (in person or by proxy) at the Annual Meeting and entitled
to vote thereon, meaning that the five nominees receiving the highest vote
totals will be elected as Directors of the Company; approval of the amendment to
the Company's Certificate of Incorporation to effect the Reverse Split will
require the affirmative vote of a majority of the shares of Common Stock
outstanding on the Record Date; and all other matters will be approved by a
majority of votes cast and entitled to vote at the meeting. Shares represented
by proxies that are marked "abstain" will be counted as shares present for
purposes of determining the presence of a quorum on all matters. Proxies
relating to "street name" shares that are voted by brokers on some but not all
of the matters will be treated as shares present for purposes of determining the
presence of a quorum on all matters, but they will not be treated as shares
entitled to vote at the Annual Meeting on those matters as to which authority to
vote is withheld by the broker because the broker has not received instructions
from the beneficial owners on how to vote on such proposals ("Broker
Non-Votes"). Accordingly, abstentions and Broker Non-Votes will not affect the
outcome of the election but will have the same effect as a vote "against" the
proposal to amend the Company's Certificate of Incorporation to effect the
Reverse Split.

                       PROPOSAL 1 - ELECTION OF DIRECTORS

      The entire Board of Directors is to be elected at the Annual Meeting. The
Company's by-laws presently set the size of the Board of Directors at not less
than three (3) nor more than eleven (11). Accordingly, at the Annual Meeting,
five (5) nominees will be elected to hold office as directors. The five persons
listed below have been nominated to serve as directors of the Company until the
next annual meeting of stockholders and until their respective successors have
been duly elected and qualified. All of the nominees are currently directors of
the Company. In the unexpected event that any of such nominees should become
unable or decline to serve, proxies may be voted for the election of substitute
nominees as are designated by the Company's Board of Directors.

      The names of the nominees for election as directors are listed below,
together with certain personal information, including the present principal
occupation and recent business experience of each nominee (based solely upon
information furnished by such persons). Each of the persons named below has
indicated to the Board of Directors of the Company that he will be able to serve
as a director if elected and each has consented to be named in this Proxy
Statement.



                                       2






      Proxies in the accompanying form will be voted at the Annual Meeting in
favor of the election of each of the nominees listed below, unless authority to
do so is specifically withheld as to an individual nominee or nominees or all
nominees as a group. Proxies cannot be voted for a greater number of persons
than the number of nominees named. Directors will be elected by a plurality of
the votes present at the Annual Meeting in person or by proxy and entitled to
vote thereon (assuming a quorum exists).

The Nominees



                                                                                            Year
                                                                                          Commenced
                                                                                          Serving as
                                                                                          a Director
          Name, Principal Occupation                                                        of the
          and Other Directorships                                                    Age   Company
          ----------------------                                                     ---   -------
                                                                                       
William L. Cohen                                                                      62     1993
          Mr. Cohen has been a private investor for over five years. Mr. Cohen
          was President, Chief Executive Officer and Chairman of the Board of
          The Andover Apparel Group Inc., an apparel manufacturing company, from
          1980 to 2000.

Thomas V. Guarino                                                                     50     2001
          Mr. Guarino has served as a director of Goshen Savings Bank from 1996,
          and chairman of the Board of Directors of GSB Financial Corporation
          from April 1998, until the respective mergers of those companies into
          The Berkshire Bank and the Company in March 2001. Mr. Guarino is the
          President and Senior Portfolio Manager of the Hudson Valley Investment
          Advisors, Inc., an investment management and advisory company, a
          position he has held since 1995. Prior to that, he had been, since
          1988, a Vice President of Fleet Investment Advisors, Inc. and was Vice
          President in charge of investments of Norstar Bank of the Hudson
          Valley from 1981 to 1988.

Moses Marx                                                                            68     1995
          Mr. Marx has been a general partner in United Equities Company (a
          securities brokerage firm) since 1954 and a general partner in United
          Equities Commodities Company (a commodities brokerage firm) since
          1972. He is also President of Momar Corp. (a private investment
          company). Mr. Marx is a director of The Cooper Companies, Inc. (a
          developer and manufacturer of healthcare products).



                                       3








                                                                                            Year
                                                                                          Commenced
                                                                                          Serving as
                                                                                          a Director
          Name, Principal Occupation                                                        of the
          and Other Directorships                                                    Age   Company
          ----------------------                                                     ---   -------
                                                                                       
Steven Rosenberg                                                                      55     1995
          Mr. Rosenberg has served as President and Chief Executive Officer of
          the Company since March 1999 and served as Vice President-Finance and
          Chief Financial Officer of the Company from April 1990 to March 1999.
          Mr. Rosenberg continues to serve as the Chief Financial Officer of the
          Company. From September 1987 through April 1990, he served as
          President and Director of Scomel Industries, Inc., a company engaged
          in international marketing and consulting. Mr. Rosenberg is a director
          of The Cooper Companies, Inc.

Randolph B. Stockwell                                                                 57     1988
          Mr. Stockwell has been a private investor for over ten years. Since
          1999, Mr. Stockwell has served as President of Yachting Systems of
          America, LLC, a small start-up company. He served in various
          capacities with the Community Bank, a commercial bank, from September
          1972 to January 1987.


      There are no family relationships (whether by blood, marriage or adoption)
among any of the Company's current directors or executive officers.

Board Committees, Meetings and Compensation

      The Board of Directors of the Company has established two active
Committees. Committee membership is determined by the Board, and all committee
members are independent directors as determined by the Board. Where appropriate,
each Committee maintains a written charter detailing its authority and
responsibilities. Charters are reviewed periodically as legislative and
regulatory developments and business circumstances warrant. Charters are
available in their entirety to any stockholder requesting a copy.

      (i) The Audit Committee is responsible for (a) the quality and integrity
of the Company's financial statements, (b) the Company's compliance with legal
and regulatory requirements regarding accounting matters, (c) the selection,
qualification and monitoring of independence of the independent accounting firm
serving as auditors of the Corporation and (d) the performance of the Company's
internal audit function and the work of the independent auditors. The Committee
advises and makes recommendations to the Board of Directors regarding the
financial, investment and accounting procedures and practices followed by the
Company. The Committee operates under a written charter adopted by the Board of
Directors, a copy of which is attached as Exhibit A, and which is also available
to any stockholder requesting a copy. The members of the Committee are Messrs.
Stockwell (Chair), Cohen and Guarino all of whom meet the independence
requirements under current National Association of Securities Dealers, Inc.
("NASD") corporate governance standards for companies whose securities are
quoted on NASDAQ.



                                       4








      (ii) The Stock Incentive Committee is responsible for the administration
of the Company's 1999 Stock Incentive Plan. The members of the Committee are
Messrs. Cohen (Chair), Guarino and Stockwell.

      The Company does not have a nominating committee because the nominees are
approved by a majority of the Board, including all of the independent members of
the Board. In accordance with NASD rules, nominations in the future will be made
either by a nominating committee of the Board of Directors consisting solely of
independent directors or by the independent members of the Board. The Company
does not have a compensation committee.

      During the fiscal year ended December 31, 2003, the Board met one time and
acted three times by unanimous written consent. The Audit Committee met seven
times during fiscal year 2003. The Stock Incentive Committee did not meet during
fiscal year 2003. Each director attended all of the total number of meetings of
the Board and not less than 75% of the committees of the Board on which he
served. The Company does not have a policy requiring the directors to attend
Annual Meetings of Stockholders. However, each director attended the Company's
2003 Annual Meeting of Stockholders.

      For a description of compensation paid to Directors, see "Management
Compensation - Compensation of Directors."

Corporate Governance

      The Company has an ongoing commitment to good governance and business
practices. In furtherance of this commitment we regularly monitor developments
in the area of corporate governance, and review our processes and procedures in
light of such developments. We review changes in federal law and the rules and
regulations promulgated by the Securities and Exchange Commission ("SEC") and
NASD regulations applicable to Companies whose securities are quoted on NASDAQ.
We comply with new laws and rules and implement other corporate governance
practices as we believe are in the best interest of the Company and its
stockholders. We believe that we have in place policies which are designed to
enhance our stockholders' interests.

      Corporate Code of Ethics. In 2004, we adopted a Corporate Code of Ethics
Policy (the "Ethics Policy"), which is available to any stockholder requesting a
copy, which request shall be in writing addressed to the Company's Chief
Executive Officer at the Company's principal executive office. All Company
employees, officers, and directors, including the Chief Executive Officer and
Chief Financial Officer, are required to adhere to the Ethics Policy in
discharging their work-related responsibilities. Employees are required to
report any conduct that they believe in good faith to be an actual or apparent
violation of the Ethics Policy.

      We have also established a confidential hotline through which employees
may report concerns about the Company's business practices. In keeping with the
Sarbanes-Oxley Act of 2002, the Audit Committee has established procedures for
receipt and handling of complaints received by the Company regarding accounting,
internal accounting controls or auditing matters, and to allow for the
confidential, anonymous submission by our employees of concerns regarding
accounting or auditing matters.

The Board of Directors

      Our Board is elected annually, and each of our directors stands for
election every year. We do not have a classified or staggered board. Presently
the Board is comprised of five Directors, of which one is an employee, one is a
significant stockholder of the Company and three have been affirmatively
determined by the Board to be independent, meeting the objective requirements
set forth by the NASD and the SEC, and having no other relationship to the
Company other than their service on the Board of Directors.



                                       5







      Stockholders wishing to communicate with the Board of Directors or with a
specific Board member may do so by writing to the Board, or to the particular
Board member, and delivering the communication in person or mailing it to:
Steven Rosenberg, Chief Executive Officer, Berkshire Bancorp Inc., 160 Broadway,
New York, New York 10038.

Executive Officers of the Company

      Set forth below is information regarding persons deemed executive officers
of the Company who are not also directors.




        Name                           Age                          Office
        ----                           ---                          -------
                                            
Moses Krausz                            63        President and Chief Executive Officer
                                                  of The Berkshire Bank

David Lukens                            54        Senior Vice President and Chief
                                                  Financial Officer of The Berkshire Bank



      Mr. Krausz has been President of The Berkshire Bank (the "Bank") since
March 1992 and its Chief Executive Officer since November 1993. Prior to joining
the Bank, Mr. Krausz was Managing Director of SFS Management Co., L.P., a
mortgage banker, from 1987 to 1992 and was President of UMB Bank and Trust
Company, a New York State chartered bank, from 1978 to 1987.

      Mr. Lukens has been Senior Vice President and Chief Financial Officer of
the Bank since December 1999. Prior to joining the Bank, Mr. Lukens was Senior
Vice President and Chief Financial Officer of First Washington State Bank, a New
Jersey commercial bank, from 1994 to 1999 and was Vice President and Controller
at the Philadelphia, PA branch of Bank Leumi Le-Israel B.M., an international
commercial bank, from 1978 to 1994.

Section 16(a) Compliance

      Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers (as defined therein), directors and persons owning
more than ten (10%) percent of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership of all equity
and derivative securities of the Company with the SEC. SEC regulations also
require that a copy of all such Section 16(a) forms filed be furnished to the
Company by the filer.

      Based solely on a review of the copies of such forms and amendments
thereto received by the Company, or on written representations from the
Company's executive officers and directors that no Forms 5 were required to be
filed, the Company believes that during fiscal 2003 all Section 16(a) filing
requirements applicable to its executive officers, directors and beneficial
owners of more than ten (10%) percent of its Common Stock were met.

Securities Held by Management

      The following table sets forth information regarding beneficial ownership
of the Company's common stock as of the Record Date by (i) each of the Company's
current directors, (ii) the individuals named in the Summary Compensation Table
set forth below and (iii) all of the current directors and executive officers of
the Company as a group. Under the rules of the Securities and Exchange
Commission, a person is deemed to be a beneficial owner of a security if he has
or shares the power to vote or direct the voting of such security or the power
to dispose or direct the disposition of such security. A person is also deemed
to be a beneficial owner of any security of which that person has the right to
acquire beneficial ownership within sixty (60) days of the Record Date.




                                       6










                                                                        Common Stock
                                                                  Beneficially Owned as of
                                                                       the Record Date
                                                       ------------------------------------------------
Name and Address of                                          Number of                  Percent of
Beneficial Owner (1)                                          Shares                   Common Stock
--------------------                                   --------------------        --------------------
                                                                                  
William L. Cohen                                            2,500 (2)                       *
Thomas V. Guarino                                          31,781 (3)                     1.4%
Moses Krausz                                               64,503 (4)                     2.9%
David Lukens                                               10,200 (5)                       *
Moses Marx                                              1,048,620 (6)                    47.4%
Steven Rosenberg                                           20,861 (7)                       *
Randolph B. Stockwell                                       8,000 (8)                       *
All executive officers and directors as a
group (seven persons)                                   1,186,465 (9)                    51.7%


-----------------
 *  Less than 1%.

      The business address, for purposes hereof, of all of the Company's
directors and executive officers, is c/o the Company's principal executive
offices at 160 Broadway, New York, New York 10038.

(1)  Beneficial ownership has been determined in accordance with Rule 13d-3
     under the Exchange Act.
(2)  Includes 1,000 shares issuable upon the exercise of options which have been
     granted to Mr. Cohen under the Company's 1999 Stock Incentive Plan.
(3)  Includes 13,195 shares issuable upon the exercise of options which have
     been granted to Mr. Guarino under the Company's 1999 Stock Incentive Plan.
     Includes 2,286 shares held in trust for minor children and 301 shares held
     by Mr. Guarino's wife.
(4)  Includes 50,000 shares issuable upon the exercise of options which have
     been granted to Mr. Krausz under the Company's 1999 Stock Incentive Plan.
     Does not include 503 shares owned by Mr. Krausz's wife.
(5)  Includes 10,000 shares issuable upon the exercise of options which have
     been granted to Mr. Lukens under the Company's 1999 Stock Incentive Plan.
(6)  Includes 1,000 shares issuable upon the exercise of options which have been
     granted to Mr. Marx under the Company's 1999 Stock Incentive Plan and
     125,000 shares owned by Momar Corporation. Does not include 43,067 shares
     owned by Eva and Esther, L.P. of which Mr. Marx has an 80.5% limited
     partnership interest. Mr. Marx's daughters and their husbands are the
     general partners of Eva and Esther, L.P.
(7)  Includes 10,000 shares issuable upon the exercise of options which have
     been granted to Mr. Rosenberg under the Company's 1999 Stock Incentive
     Plan.
(8)  Includes 1,000 shares issuable upon the exercise of options which have been
     granted to Mr. Stockwell under the Company's 1999 Stock Incentive Plan.
(9)  Includes 86,195 shares issuable upon the exercise of outstanding options
     granted pursuant to the Company's 1999 Stock Incentive Plan.


                                       7











Certain Relationships and Related Transactions

      In January 2000, the Bank entered into a lease agreement with Bowling
Green Associates, LP, the principal owner of which is Mr. Moses Marx, a director
of the Company, for commercial space to open a bank branch. The Company obtained
an appraisal of the market rental value of the space from an independent
appraisal firm and management believes that the terms of the lease, including
the annual rent paid, $270,000 and $255,000 in fiscal 2003 and 2002,
respectively, is comparable to the terms and annual rent that would be paid to
non-affiliated parties in a similar commercial transaction for similar
commercial space.

      In June 1999 and April 2001, the Company made term loans in the principal
amount of $2,000,000 and $2,000,000, respectively, to Pharmaceutical Holdings
Corp., a Delaware corporation, a principal stockholder of which is Momar
Corporation ("Momar"). Mr. Marx is the principal stockholder of Momar. Such
loans were made on substantially the same terms, including interest rate, as
those prevailing at that time for comparable loans to unrelated parties and did
not involve more than normal risk of collectibility or present other unfavorable
features. The notes, which bear interest at prime plus 0.50%, were repaid in
full in March 2003 and June 2003.

                             MANAGEMENT COMPENSATION

Executive Compensation

      The following table shows the compensation paid in or with respect to each
of the last three fiscal years to the individual who served as the Company's
Chief Executive Officer for the fiscal year ended December 31, 2003, and to each
of the other executive officers who were paid more than $100,000 during the
fiscal year ended December 31, 2003.

                           Summary Compensation Table



                                                    Annual Compensation
                                                  -----------------------
Name and Principal Position
---------------------------                                                         All Other
                                           Year           Salary          Bonus    Compensation
                                           ----           ------          -----    ------------
                                                                       
Steven Rosenberg                           2003          $175,750        $     --  $    --
 President, Chief Executive                2002          $167,500        $     --  $    --
 Officer and Chief Financial               2001          $152,500        $     --  $    --
 Officer

Moses Krausz                               2003          $358,864        $175,000  $10,405 (1)
 President and Chief Executive             2002          $347,288        $175,000  $10,050 (1)
 Officer of The Berkshire Bank             2001          $330,750        $175,000  $ 9,300 (1)

David Lukens                               2003          $138,500        $ 25,000  $ 5,968 (2)
 Senior Vice President and                 2002          $125,000        $ 24,000  $ 5,367 (2)
 Chief Financial Officer of                2001          $115,000        $ 24,000  $ 4,988 (2)
 The Berkshire Bank


---------------------

(1)  Consists of contributions by the Company to a 401(k) account of $7,000,
     $6,000 and $5,250, respectively, in 2003, 2002 and 2001 and income
     associated with life insurance coverage in excess of $50,000.
(2)  Consists of contributions by the Company to a 401(k) account of $4,905,
     $4,470 and $4,170, respectively, in 2003, 2002 and 2001 and income
     associated with life insurance coverage in excess of $50,000. Does not
     include the annual retirement credits of 5% of gross wages under the
     Company's Retirement Income Plan.

                                       8










               Option Grants in Fiscal Year Ended December 31, 2003

      The Company did not make any grants of options in the fiscal year ended
December 31, 2003 to any of the individuals named in the Summary Compensation
Table.

            Aggregated Option Exercises and Fiscal Year-End Option Values

      The following table sets forth information concerning options exercised
during the fiscal year ended December 31, 2003, and the number of options owned
and the value of any in-the-money unexercised options as of December 31, 2003 by
any of the individuals named in the Summary Compensation Table.



                                                      Number of
                                                     Unexercised
                        Shares                        Options at
                       Acquired                    Fiscal Year-End           Value of Unexercised
                          on         Value               (#)            In-the-Money Options at Fiscal
                       Exercise    Realized          Exercisable                 Year-End ($)
Name                      (#)         ($)           /Unexercisable         Exercisable/Unexercisable
----                    ------      ------          --------------         -------------------------
                                                              

Steven Rosenberg          -0-         -0-               10,000 / 0                 200,000 / 0
Moses Krausz              -0-         -0-               50,000 / 0                 760,200 / 0
David Lukens              -0-         -0-               10,000 / 0                 191,250 / 0


---------------
Year-end values for unexercised in-the-money options represent the positive
spread between the exercise price of such options and the fiscal year end market
value of the common stock. An Option is "in-the-money" if the fiscal year end
fair market value of the Common Stock exceeds the option exercise price.

Compensation Committee Interlocks and Insider Participation in
Compensation Decisions

      The Company does not have a Compensation Committee of its Board of
Directors, although it does have a Stock Incentive Committee. Decisions as to
compensation for the fiscal year ended December 31, 2003 were made as set forth
in the Report on Executive Compensation below. In accordance with NASD rules,
compensation of the Company's officers in the future will be made either by a
compensation committee of the Board of Directors consisting solely of
independent directors or by the independent members of the Board. During the
Company's fiscal year ended December 31, 2003, none of the executive officers of
the Company served on the board of directors of any other entity, any of whose
executive officers has served on the Board of Directors of the Company.

Report on Executive Compensation

      There is no Compensation Committee of the Board of Directors or other
committee of the Board performing equivalent functions. Compensation of the
Company's executive officers for fiscal 2003 was determined by the Board of
Directors (except for persons deemed to be executive officers of the Company who
are actually employees of the Bank; such persons compensation was determined by
the board of directors of the Bank. There is no formal policy for determining
the salaries of the Company's executive officers. However, the annual salaries
of Messrs. Krausz and Lukens are governed by the terms of their respective
employment agreements.

      The Board of Directors has appointed a Stock Option Committee which makes
grants under and administers the 1999 Stock Incentive Plan. The Committee will
continue to make grants and administer the 1999 Stock Incentive Plan for the
duration of the plan.


                                     9










      Total compensation for executive officers consists of a combination of
salaries and periodic stock option awards. Executive officers are entitled to
receive such annual bonuses as the Board of Directors may in its discretion
determine to be appropriate under the circumstances, based upon, with respect to
each fiscal year, the Company's results of operations and progress with respect
to the achievement of its strategic goals, the executive officers' performance,
and such other factors as the Board of Directors deems to be relevant. Stock
option awards under the Company's 1999 Stock Incentive Plan are intended to
attract, motivate and retain senior management personnel by affording them an
opportunity to receive additional compensation based upon the performance of the
Company's Common Stock.

          William L. Cohen
          Thomas V. Guarino
          Moses Marx
          Steven Rosenberg
          Randolph B. Stockwell

Compensation of Directors

      Each director who is not also an employee of the Company (a "Non-Employee
Director") receives a stipend of $12,000 per annum and $1,000 for each meeting
held in person. Each Non-Employee Director also receives fees ranging from $100
for telephonic meetings lasting one hour or less, up to a maximum of $1,000 for
telephonic meetings of four hours or more. In addition, see -- "Stock Plans"
below.

Benefit Plans

      Except as set forth below under "Stock Plans" and "Retirement Income
Plan", the Company does not maintain any pension, profit-sharing or other
incentive compensation plans for the benefit of any of its current employees.

Stock Plans

      In 1999, the Board of Directors of the Company adopted a Stock Incentive
Plan (the "1999 Stock Incentive Plan"). The Plan was approved by the Company's
stockholders at a meeting held on March 23, 1999. A brief description of the
1999 Stock Incentive Plan is as follows:

      The 1999 Stock Incentive Plan permits the granting of awards in the forms
of nonqualified stock options, incentive stock options, restricted stock,
deferred stock, and other stock-based incentives. Up to 200,000 shares of Common
Stock of the Company may be issued pursuant to the 1999 Stock Incentive Plan
(subject to appropriate adjustment in the event of stock splits, combinations or
changes in the corporate structure of the Company). Officers, directors and
other key employees of the Company or any subsidiary are eligible to receive
awards under the 1999 Stock Incentive Plan. The option exercise price of all
options which are granted under the 1999 Stock Incentive Plan must be at least
equal to 100% of the fair market value of a share of Common Stock of the Company
on the date of grant.


                                    10








Retirement Income Plan

      In April 1985, the Company adopted its Retirement Income Plan (the
"Plan"), a noncontributory plan, and as of September 15, 1988, froze benefit
accruals resulting in a plan curtailment. Effective as of January 1, 2000, the
Company reinstated the Plan to cover substantially all full-time, non-union
United States employees of the Company and its subsidiaries. A participant in
the Plan accumulates a balance in his or her retirement account by receiving:
(i) an annual retirement credit of 5% of gross wages paid during the year, but
not in excess of the applicable annual maximum compensation permitted to be
taken into account under Internal Revenue Service guidelines for each year of
service; and (ii) an annual interest credit based upon the 30-year U. S.
Treasury securities rate. The Company pays the entire cost of the Plan for its
employees and funds such costs as they accrue.

      The estimated annual benefits payable under the Plan upon retirement (at
the normal retirement age of 65) for Messrs. Rosenberg and Lukens are
approximately $160,000 and $15,000, respectively. In accordance with the laws
currently governing the Plan, the estimated annual benefit payable to Mr.
Rosenberg is not expected to increase. Mr. Krausz is not a participant in the
Plan.

Employment Contracts

      The Company has entered into employment agreements with Messrs. Krausz and
Lukens. Mr. Krausz currently serves as President and Chief Executive Officer of
the Bank for a term expiring on April 30, 2008, subject to three automatic one
year extensions unless earlier terminated. His annual base salary is $364,652
for the year ended April 30, 2004 and increases 5% annually thereafter. Mr.
Krausz is also entitled to receive bonuses at the discretion of the Board of
Directors.

      Mr. Lukens currently serves as the Senior Vice President and Chief
Financial Officer of the Bank for a term expiring on June 30, 2005, subject to
up to three automatic one year extensions unless earlier terminated. His annual
salary is $125,000 and he may receive, as incentive compensation, an annual
bonus as may be determined by the President of the Bank. Mr. Luken's agreement
contains certain non compete provisions.

      Each of Mr. Krausz and Mr. Lukens is, in addition to salary, entitled to
payment of certain business expenses and, under certain circumstances, entitled
to receive their annual base salary for the remaining term of their respective
agreements if their employment is terminated prior to the then current term. The
employment agreements do not provide for special payments to be made to either
Mr. Krausz or Mr. Lukens in the event of a change of control of the Company.



                                    11







                             REPORT OF THE AUDIT COMMITTEE

      The Audit Committee (the "Audit Committee") of Berkshire Bancorp Inc. is
comprised of three independent directors and operates under a written charter
adopted by the Board of Directors, a copy of which is attached hereto as
Exhibit A.

      The primary function of the Audit Committee is to provide advice with
respect to the Company's financial matters and to assist the Board of Directors
in fulfilling its oversight responsibilities regarding finance, accounting, tax
and legal compliance. The Audit Committee's primary duties and responsibilities
are to:

      a.          Periodically assess the integrity of the Company's financial
                  reporting process and systems of internal control regarding
                  accounting.

      b.          Periodically assess the independence and performance of the
                  Company's outside auditors.

      c.          Provide an avenue of communication among the outside auditors,
                  management and the Board of Directors.

      Management is responsible for the Company's internal controls and the
financial reporting process. The independent accountants are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with auditing standards generally accepted in the
United States of America and to issue a report thereon. The Audit Committee's
responsibility is to monitor and oversee these processes.

      The Audit Committee held seven meetings during fiscal year 2003. During
these meetings, the Audit Committee reviewed and discussed the Company's
financial statements with management and Grant Thornton LLP ("Grant Thornton"),
its independent certified public accountants.

      The Audit Committee reviewed and discussed the audited financial
statements of the Company for the fiscal year ended December 31, 2003 with the
Company's management and management represented to the Audit Committee that the
Company's financial statements were prepared in accordance with accounting
principles generally accepted in the United States of America. The Audit
Committee discussed with Grant Thornton matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees).

      The Audit Committee received the written disclosures and conforming letter
from Grant Thornton required by Independence Standards Board Standard No. 1
(Independence Discussion with Audit Committees), and the Audit Committee
discussed with Grant Thornton their independence from the Company. It considered
the non-audit services provided by Grant Thornton and determined that the
services provided are compatible with maintaining Grant Thornton's independence.

      Based on the Audit Committee's discussions with management and Grant
Thornton LLP and the Audit Committee's review of the representations of
management and the report of Grant Thornton LLP to the Audit Committee, the
Audit Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2003 for filing with the Securities and
Exchange Commission.

                               THE AUDIT COMMITTEE
                        RANDOLPH B. STOCKWELL (Chairman)
                                WILLIAM L. COHEN
                               THOMAS V. GUARINO


                                        12










                                PERFORMANCE GRAPH

      The following graph compares the cumulative total return on the Company's
Common Stock with the cumulative total return of The Nasdaq Stock Market Bank
Stocks Index and the Nasdaq Market Total Return Index for the five-year period
ended December 31, 2003. The graph assumes that the value of the investment in
the Company and the index was $100 on December 31, 1998 and assumes that all
dividends were reinvested.

                RETURN TO SHAREHOLDERS OF BERKSHIRE BANCORP INC.



                                      ==============================================================================
                                        12/31/98      12/31/99     12/29/00      12/31/01     12/31/02      12/31/03
--------------------------------------------------------------------------------------------------------------------
                                                                                           
Berkshire Bancorp Inc.                   $100.00        98.88        83.68         79.76        96.67        140.73
--------------------------------------------------------------------------------------------------------------------
NASDAQ Market                            $100.00        96.15       109.84        118.92       121.74        156.62
Bank Stock Index
--------------------------------------------------------------------------------------------------------------------
NASDAQ Market                            $100.00       185.43       111.83         88.76        61.37         91.75
Total Return Index
====================================================================================================================



                                   PROPOSAL 2

                  AMENDMENT TO THE CERTIFICATE OF INCORPORATION
            TO EFFECT A REVERSE SPLIT OF THE OUTSTANDING COMMON STOCK

      The Board of Directors has adopted, and proposes that the stockholders of
the Company approve, a proposal for the amendment to the Certificate of
Incorporation of the Company, to effect a Reverse Split of the Company's issued
and outstanding Common Stock on the basis of one (1) share of Common Stock for
each ten (10) shares of issued and outstanding Common Stock immediately prior to
such Reverse Split. The par value of the Common Stock will remain $.10 per share
and the number of shares of Common Stock authorized to be issued will remain at
10,000,000. Approval of the Reverse Split will also authorize the Board of
Directors in its discretion to abandon and not effect the Reverse Split at any
time after the Annual Meeting and prior to the date and time at which the
Reverse Split becomes effective. The Board may also delay effecting the Reverse
Split for up to three months from the date of stockholder approval assuming that
the same is obtained at the Annual Meeting. Notwithstanding the prior sentence,
if stockholder approval is obtained at the Annual Meeting and the Board
determines to proceed with the Reverse Split, the Company intends to promptly
effect the Reverse Split by an amendment to the Company's Certificate of
Incorporation.

      In addition, it is the current intention of the Board to effect a
thirty-for-one forward stock split in the form of a stock dividend of Common
Stock (the "Stock Dividend") immediately after the effectiveness of the Reverse
Split. The proposed Stock Dividend will not require stockholder approval. We
expect that a total of approximately 6,280,000 shares of Common Stock will be
issued as a result of the Stock Dividend. The combined effect of the Reverse
Split and Stock Dividend will be to eliminate holdings of fewer than ten shares
and to effect a cumulative three-for-one stock split on the remaining holdings.

      If stockholder approval of the Reverse Split is not obtained, the Board
will not implement the Stock Dividend as described above. Instead, the Board may
effect a three-for-one forward stock split in the form of a stock dividend of
Common Stock (the "Alternative Stock Dividend"). We estimate that a total of
approximately 4,420,000 shares of Common Stock would be distributed as a result
of the implementation of the Alternative Stock Dividend. The Alternative Stock
Dividend would not require stockholder approval.


                                       13









      WE ARE NOT SOLICITING STOCKHOLDER APPROVAL OF THE PROPOSED STOCK DIVIDEND
OR THE ALTERNATIVE STOCK DIVIDEND.

Purpose of the Proposed Amendment

      The Board of Directors proposes the Reverse Split for stockholder approval
primarily for the following reasons.

      The Reverse Split will reduce the administrative costs associated with
      the smallest accounts

      As of March 25, 2004, the Company has a stockholder base of approximately
3,500 stockholders (including those whose stock is held in "street name"). As of
March 25, 2004, we estimate that approximately 1,300 stockholders, (including
those whose stock is held in "street name") owned fewer than 10 shares. At that
date, these stockholders represented approximately 37% of the total number of
holders of Common Stock, but these accounts represented fewer than 4,500 shares
of the total number of outstanding shares of Common Stock.

      The Company expects to benefit from cost savings as a result of the
Reverse Split. The cost of administering each registered stockholder's account
is the same regardless of the number of shares held in that account. Therefore,
the Company's costs to maintain such small accounts are disproportionately high
when compared to the total number of shares involved.

      In light of these disproportionate costs, the Board of Directors believes
that it is in the best interests of the Company and its stockholders, as a
whole, to eliminate the administrative burden and costs associated with
stockholders owning fewer than ten shares of Common Stock.

      The Reverse Split will provide a cost-effective method for stockholders to
dispose of small numbers of shares

      The Reverse Split will provide stockholders with fewer than ten shares of
Common Stock with a cost-effective way to cash out their investments, because
the Company will pay all transaction costs, such as brokerage or service fees,
if any, in connection with the Reverse Split. Otherwise, stockholders with small
holdings would likely incur brokerage fees which could be disproportionately
high relative to the market value of their shares if they wanted to sell their
stock. The Reverse Split will eliminate these disproportionate brokerage fees
for stockholders with small holdings.

Effects of Reverse Split on the Company's Stockholders

      Holders of Fewer Than Ten Shares Prior to the Reverse Split

      If we complete the Reverse Split and you are a stockholder who holds fewer
than ten shares immediately prior to the Reverse Split, all of your shares will
be reclassified in the Reverse Split such that you will hold less than one whole
share. No fractional shares will be issued in connection with the Reverse Split.
As soon as practicable after the effective date of the Reverse Split, and in
accordance with the procedures described below, you will receive a cash payment
in lieu of any fractional share that you would otherwise be entitled to
following the Reverse Split. See "Effectiveness of Reverse Split; No Fractional
Shares; Exchange of Certificates."

      You will not have to pay any brokerage commissions or service charges in
connection with the Reverse Split.

      After the Reverse Split, you will have no further interest in the Company
with respect to your cashed-out shares. These shares will no longer entitle you
to the right to vote as a stockholder or share in the Company's assets,
earnings,



                                       14









or profits, if any. The cashed-out shares will represent only the right to
receive cash for these shares.

      You may avoid having all of your shares of Common Stock cashed out after
the Reverse Split by taking either, or a combination, of the following actions
far enough in advance so that it is completed before the effective date of the
Reverse Split:

      *   purchase a sufficient number of shares of Common Stock on the open
          market so that you hold a certificate for at least ten shares of
          Common Stock or at least ten shares of Common Stock is in your
          brokerage account prior to the Reverse Split; or

      *   if applicable, consolidate your record holdings or brokerage accounts
          so that you hold at least ten shares of Common Stock in one account
          prior to the Reverse Split.

      The Company reserves the right to abandon the Reverse Split even if
stockholder approval is received. However, if the Reverse Split is approved by
the stockholders, the Company currently intends to implement the Reverse Split
as soon as practicable after such approval is obtained. Accordingly, if you own
fewer than ten shares of Common Stock and want to be assured that you will not
have shares cashed out, you should consider taking the actions described in the
preceding paragraphs prior to May 18, 2004, which is the scheduled date of the
meeting.

      Holders of Ten Shares or More Prior to the Reverse Split

      If we complete the Reverse Split and you are a stockholder with ten or
more shares of Common Stock immediately prior to the effective date of the
Reverse Split, we will first reclassify your shares into the number of shares
you held immediately prior to the Reverse Split divided by ten. It is the
current intention of the Board to then implement a thirty-for-one forward stock
split in the form of the Stock Dividend after the completion of the Reverse
Split. As a result, you will hold three shares of Common Stock immediately after
the Reverse Split and the Stock Dividend for every one share you hold
immediately before the Reverse Split.

      No fractional shares of Common Stock will be issued in connection with the
Reverse Split. As soon as practicable after the effective date of the Reverse
Split, and in accordance with the procedures described below, you will receive a
cash payment in lieu of any fractional shares that you would otherwise be
entitled to following the Reverse Split. See "Effectiveness of Reverse Split; No
Fractional Shares; Exchange of Certificates."

      You may avoid having your fractional shares of Common Stock cashed out
after the Reverse Split by taking either, or a combination, of the following
actions far enough in advance so that it is completed before the effective date
of the Reverse Split:

      *   purchase or sell (without having your ownership drop below ten shares
          of Common Stock) a sufficient number of shares of Common Stock on the
          open market so that you hold an exact multiple of ten shares of Common
          Stock pursuant to a stock certificate or in your brokerage account
          prior to the Reverse Split; or

      *   if applicable, consolidate your record holdings or brokerage accounts
          so that you hold an exact multiple of ten shares of Common Stock in
          each of your accounts prior to the Reverse Split.



                                       15









      The Company reserves the right to abandon the Reverse Split even if
stockholder approval is received. However, if the Reverse Split is approved by
the stockholders, the Company currently intends to implement the Reverse Split
as soon as practicable after such approval is obtained. Accordingly, if you own
ten or more shares but do not own a number of shares that is an exact multiple
of ten shares and want to be assured that you will not have shares cashed out,
you should consider taking the actions described in the preceding paragraphs
prior to May 18, 2004, which is the scheduled date of the meeting.

Effects of Reverse Split on the Company

      Authorized But Unissued Shares of Common Stock

      The number of authorized shares of Common Stock of the Company, which
currently is 10,000,000, will not be reduced as a result of the Reverse Split
and there will be no change to the 2,000,000 authorized shares of Preferred
Stock as a result of the Reverse Split. Consequently, the number of shares of
Common Stock of the Company available for future issuance will increase as a
result of the Reverse Split. After completion of the Reverse Split, the Company
will have approximately 7,438,000 additional shares of Common Stock available
for future issuance. However, the proposed Stock Dividend would cause such
number to decrease. If the proposed Stock Dividend is implemented after the
completion of the Reverse Split, then the Company will have approximately
3,370,000 additional shares of Common Stock available for future issuance.

      Authorized but unissued shares of Common Stock may be issued at such
times, for such purposes and for such consideration as the Board of Directors
may determine to be appropriate. Except for the proposals set forth in this
Proxy Statement, no further authorization by vote of the stockholders will be
solicited for the issuance of the additional shares of Common Stock, except as
might be required by law, regulatory authorities or rules of NASDAQ or any stock
exchange on which the Company's shares may then be listed. Under the rules
applicable to the Company as a NASDAQ National Market System issuer, the Company
is required to obtain stockholder approval of certain transactions including,
among others, any transaction (a) other than a public offering, in which 20% or
more of the then outstanding Common Stock (before giving effect to the
transaction) would be issued or if the consideration received for such issuance
is less than the greater of the book or market value of the Common Stock, or (b)
that will result in a change of control of the Company, although in appropriate
circumstances, the application of such rule could be waived. In addition, the
Delaware General Corporation Law, which governs the actions of the Company
generally requires stockholder approval for the Company to issue shares in
connection with a merger or consolidation with another entity. The stockholders
do not have any right to purchase or subscribe for any part of any new or
additional issuance of the Company's securities. The issuance of such authorized
but unissued shares may have the effect of diluting the earnings per share and
book value per share of outstanding Common Stock. Another potential effect of
the increase in the number of authorized but unissued shares of Common Stock is
that the interests of the existing stockholders in the Company could be diluted
substantially, by way of ownership percentage and voting power, through the
issuance of authorized but unissued shares of Common Stock (but subject to
compliance with the NASDAQ National Market System rules set forth above),
without stockholder approval. If the Board of Directors decides to implement
the proposed Stock Dividend after the completion of the Reverse Split, no
stockholder approval would be required for the issuance of the Stock Dividend,
which will have the same dilutive effects as described in the preceding
paragraph.

      Other Effects of the Reverse Split on the Company

      The proposed Reverse Split will not affect any stockholder's proportionate
equity interest in the Company, except for minor adjustments to those
stockholders who would receive cash in lieu of fractional shares. Holders of


                                       16









Common Stock will continue to be entitled to receive such dividends as may be
declared by the Board of Directors.

      Outstanding stock options, the total number of shares authorized for
issuance, and the number of shares that remain available for future grants,
under the Company's 1999 Stock Incentive Plan will be proportionately adjusted
to reflect the Reverse Split and Stock Dividend if they are effected.

      The Company's reporting obligations under the Securities Exchange Act of
1934, as amended, will not be affected by the Reverse Split.

      There were no shares of Preferred Stock issued on the Record Date. The
Company is not conducting a reverse split of any Preferred Stock since no shares
of Preferred Stock have been issued.

Effectiveness of Reverse Split; No Fractional Shares; Exchange of Certificates

      Effectiveness of Reverse Split

      If the Reverse Split is approved by the stockholders and the Board
determines to implement the Reverse Split, the Company intends to promptly
effect the Reverse Split by filing a certificate of amendment (the "Reverse
Split Amendment") to its Certificate of Incorporation with the Secretary of
State of the State of Delaware. The text of the proposed Reverse Split Amendment
is set forth as Exhibit B to this Proxy Statement; however, such text is subject
to such changes as may be required by the Delaware Secretary of State. The
proposed amendment would become effective as stated therein and, without further
action of the Company or its stockholders, every ten shares of Common Stock
outstanding would automatically be deemed to represent one share.

      No Fractional Shares

      No fractional shares of Common Stock will be issued in connection with the
proposed Reverse Split. Assuming the approval of the Reverse Split, a
stockholder who would otherwise be entitled to receive a fractional share of
Common Stock will receive, in lieu thereof, cash equal to the product of (a) the
closing price of the Common Stock on the NASDAQ National Market System on the
date prior to the effective date of the Reverse Split, times (b) the number of
shares in excess of the number of shares held by such stockholder that are
evenly divisible by ten. You will not receive any interest on cash payments owed
to you as a result of the Reverse Split.

      Exchange of Certificates

      The Company will appoint American Stock Transfer & Trust Company as the
exchange agent in connection with the Reverse Split.

      If we receive stockholder approval of the Reverse Split, the Reverse Split
is expected to be effective at 5:00 PM (EDT) on May 18, 2004. We then intend to
distribute the Stock Dividend at 5:01 PM (EDT) on the effective date of the
Reverse Split. The following discussion assumes that both the Reverse Split and
the Stock Dividend will occur.

      If you are a stockholder owning fewer than ten shares of Common Stock as
of 5:00 PM (EDT) on the effective date of the Reverse Split, all of your shares
of Common Stock will be reclassified in the Reverse Split such that you will
hold less than one whole share, and you will receive a cash payment in lieu of
any fractional share that you would otherwise be entitled to following the
Reverse Split. If you have a stock certificate representing your shares, you
will receive a letter of transmittal as soon as practicable after the effective
date of the Reverse Split. The letter of transmittal will contain instructions
on how to surrender your certificates to the Company's exchange agent for your
cash payment. You will not receive your cash payment until you surrender your


                                       17









outstanding certificates to the exchange agent together with a completed and
executed copy of the letter of transmittal. Please do not send your certificates
until you receive your letter of transmittal.

      If you are a stockholder with ten or more shares of Common Stock as of
5:00 P.M. (EDT) on the effective date of the Reverse Split, we will first
reclassify your shares into the number of shares you held immediately prior to
the Reverse Split divided by ten. One minute after the Reverse Split, at 5:01 PM
(EDT) on the effective date of the Reverse Split, we will distribute thirty
shares of Common Stock for each share of Common Stock you held after the Reverse
Split and before the Stock Dividend. As a result, you will hold three shares of
Common Stock immediately after the completion of the Reverse Split and Stock
Dividend for every share you held immediately before the Reverse Split and Stock
Dividend. If you have a stock certificate representing your shares, you will
receive a letter of transmittal as soon as practicable after the effective date
of the Reverse Split and completion of the Stock Dividend. The letter of
transmittal will contain instructions on how to surrender your certificates to
the exchange agent for a new stock certificate representing the number of shares
of Common Stock you will hold after the effectiveness of the Reverse Split and
completion of the Stock Dividend, together with a cash payment in lieu of any
fractional share. You will not receive your new stock certificate and cash
payment, if any, until you surrender your outstanding certificates to the
exchange agent together with a completed and executed copy of the letter of
transmittal. Please do not send your certificates until you receive your letter
of transmittal.

      The Company's stock records will be adjusted to reflect the shares held by
each holder of Common Stock after the completion of the Reverse Split and Stock
Dividend. On the effective date of the Reverse Split and completion of the Stock
Dividend, each existing certificate representing shares of Common Stock will be
deemed for all purposes to represent the new number of shares of Common Stock
that will result from the Reverse Split and Stock Dividend, whether or not the
certificates representing the outstanding Common Stock are surrendered for
exchange, and the right to cash payment in lieu of fractional shares, if any.
The Company will deposit with the exchange agent, as soon as practicable after
the effective date of the Reverse Split, cash in an amount equal to the value of
the estimated aggregate number of fractional shares that will result from the
Reverse Split. Any portion of the cash deposited with the exchange agent to pay
for fractional shares that is held by the exchange agent six months after the
effective date of the Reverse Split will be returned to the Company, on demand.
Thereafter, holders of shares eligible for this cash settlement for fractional
shares would be paid directly by the Company. The Company intends to use cash it
holds to make the payments in lieu of fractional shares. As of the Record Date,
there were approximately 3,500 holders of the Company's Common Stock (including
those whose stock is held in ("street name"). The Company anticipates this
number will change to approximately 2,200 as a result of the Reverse Split.

      We intend for the Reverse Split and Stock Dividend to treat stockholders
holding Common Stock in "street name" through a nominee (such as a bank or
broker) in the same manner as stockholders whose shares are registered in their
names. Nominees will be instructed to effect the Reverse Split and Stock
Dividend for their beneficial holders. However, nominees may have different
procedures and stockholders holding shares in "street name" should contact their
nominees.

      Please do not send your stock certificate now. You should send them to our
exchange agent only after you receive a letter of transmittal from our exchange
agent. If we decide to effect the Reverse Split, a letter of transmittal will be
mailed to you soon after the Reverse Split becomes effective.



                                       18









No Dissenter's Rights

      Neither the Certificate of Incorporation or bylaws of the Company nor the
laws of the State of Delaware require that appraisal rights be available to
stockholders that do not vote to approve the Reverse Split.

Resales of Restricted Securities

      The proposed amendment to effect the Reverse Split will not affect the
transferability of shares of Common Stock or any present restriction on the sale
thereof. Therefore, for purposes of determining the relevant holding period as
prescribed by Rule 144 under the Securities Act of 1933, as amended, the shares
of Common Stock to be issued to each stockholder after the effective date will
be deemed to have been acquired on the date on which the stockholder acquired
the shares of Common Stock held immediately prior to the effective date.

United States Federal Income Tax Consequences

      The following description of federal income tax consequences is based on
the Internal Revenue Code of 1986, as amended (the "Code"), applicable Treasury
Regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this Proxy
Statement. This discussion is for general information only and does not discuss
consequences which may apply to special classes of taxpayers (e.g., non-resident
aliens, broker/dealers or insurance companies). The state and local tax
consequences of the Reverse Split may vary significantly as to each stockholder,
depending upon the state in which such stockholder resides. Stockholders are
urged to consult their own tax advisors to determine the particular consequences
to them.

      The conversion of shares of the Common Stock outstanding immediately prior
to the Reverse Split into a reduced number of shares of Common Stock after
giving effect to the Reverse Split will not result in the recognition of gain or
loss (except in the case of cash received for fractional shares as described
below). The holding period of the shares of Common Stock after giving effect to
Reverse Split will include the stockholder's holding period for the shares of
Common Stock held immediately prior to the Reverse Split, provided that the
shares of Common Stock were held as a capital asset. The tax basis of the shares
of Common Stock after giving effect to the Reverse Split will be the same as the
tax basis of the shares of Common Stock immediately prior to giving effect to
the Reverse Split, reduced by the basis allocable to the receipt of cash in lieu
of fractional shares described below.

      A stockholder who receives cash in lieu of fractional shares will be
treated as if the Company has issued fractional shares to such stockholder and
then immediately redeemed such shares for cash. Such stockholder should
recognize gain or loss, as the case may be, measured by the difference between
the amount of cash received and the basis of the Common Stock allocable to such
fractional shares, had they actually been issued. Such gain or loss will be a
capital gain or loss if such stockholder's Common Stock was held as a capital
asset and any such capital gain or loss will generally be long-term capital gain
or loss to the extent such stockholder's holding period for the Common Stock
exceeds 12 months.

      The decrease in the number of outstanding shares of Common Stock as a
result of the Reverse Split will not produce any taxable income or gain or loss
to the Company.

      THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO
EFFECT THE REVERSE SPLIT.


                                       19









                                  OTHER MATTERS

      The Board of Directors of the Company knows of no other matters to be
presented at the Annual Meeting, but if any such matters properly come before
the Annual Meeting, the persons holding the accompanying proxy will vote in
accordance with their judgment.

                    INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

      Grant Thornton LLP has audited and reported upon the financial statements
of the Company for the fiscal year ended December 31, 2003. It is currently
anticipated that Grant Thornton LLP will be selected by the Audit Committee of
the Board of Directors to examine and report upon the financial statements of
the Company for the fiscal year ending December 31, 2004. A representative of
Grant Thornton LLP is expected to be present at the Annual Meeting with the
opportunity to make a statement if he or she desires to do so and is expected to
be available to respond to appropriate questions.

      The total fees paid to Grant Thornton for the last two fiscal years are as
follows:



                                                                          Fiscal Year Ended        Fiscal Year Ended
                                                                          December 31, 2003        December 31, 2002
                                                                          -----------------        -----------------
                                                                                                 
Audit Fees: Professional services rendered for the audit of                    $ 146,153                $111,399
the Company's annual financial statements and for the reviews
of the financial statements included in the Company's
Quarterly Reports on Form 10-Q.

Audit Related Fees: Professional services rendered for                         $   6,815                $  6,498
employee benefit plan audits, accounting assistance in
connection with acquisitions and consultations related to
financial accounting and reporting standards


Tax Fees: Tax consulting, preparation of returns                               $  72,096                $ 71,009

All Other Fees: Professional services rendered for corporate                          --                      --
support



      The Audit Committee has established its pre-approval policies and
procedures, pursuant to which the Audit Committee approved the foregoing audit
and permissible non-audit services provided by Grant Thornton LLP in 2003.
Consistent with the Audit Committee's responsibility for engaging our
independent auditors, all audit and permitted non-audit services require
pre-approval by the Audit Committee. The full Audit Committee approves proposed
services and fee estimates for these services. The Audit Committee chairperson
has been designated by the Audit Committee to approve any services arising
during the year that were not pre-approved by the Audit Committee and services
that were pre-approved. Services approved by the Audit Committee chairperson are
communicated to the full Audit Committee at its next regular quarterly meeting
and the Audit Committee reviews services and fees for the fiscal year at each
such meeting. Pursuant to these procedures, the Audit Committee approved the
foregoing audit and permissible non-audit services provided by Grant Thornton
LLP.

                                       20









                       SUBMISSION OF STOCKHOLDER PROPOSALS

      A stockholder proposal that complies with all of the applicable
requirements under Rule 14a-8 of the Securities Exchange Act of 1934 and any
other applicable regulation or statute must be received by the Company on or
prior to December   , 2004 at the address of the Company set forth on the first
page of this Proxy Statement in order to be eligible for inclusion in the
Company's proxy statement for the 2005 Annual Meeting of Stockholders. Any such
proposal should be directed to the Secretary or Assistant Secretary of the
Company.


      In accordance with Rules 14a-4(c) and 14a-5(e) promulgated under the
Exchange Act, the Company hereby notifies its stockholders that it did not
receive notice of any proposed matter to be submitted for stockholder vote at
the Annual Meeting and, therefore, any proxies received in respect of the Annual
Meeting will be voted in the discretion of the Company's management on any other
matters which may properly come before the Annual Meeting. The Company further
notifies its stockholders that if the Company does not receive notice by
February   , 2005 of a proposed matter to be submitted by a stockholder for
stockholders vote at the 2005 Annual Meeting of Stockholders, then any proxies
held by persons designated as proxies by the Company's Board of Directors in
respect of such Annual Meeting may be voted at the discretion of such persons on
such matter if it shall properly come before such Annual Meeting.

                                        By Order of the Board of Directors

                                        Emanuel J. Adler
                                        Secretary
Dated: April 26, 2004



                                       21










EXHIBIT A


                             AUDIT COMMITTEE CHARTER
                                       FOR
                             BERKSHIRE BANCORP INC.


Purpose

The Audit Committee (the "Committee") is appointed by the Board of Directors
(the "Board"). The Committee's primary purpose is to assist the Board in
fulfilling its oversight responsibilities with respect to:

     a.   The integrity of the Company's financial reporting process and systems
          of internal controls regarding accounting; and

     b.   The independence and qualifications of the Company's outside auditors.

In addition, the Committee will assist in providing an avenue of communication
among the outside auditors, management and the Board.

Composition

The Committee shall have at least three (3) members, comprised solely of
independent directors as such term is defined in Rule 4200 of the National
Association of Securities Dealers, Inc. ("NASD") listing standards, or any
successor rule, subject to the exception in Rule 4350 of the NASD listing
standards, or any successor rule, and subject to the effective dates and any
transition periods contained in such listing standards.

Each member of the Committee shall be able to read and understand fundamental
financial statements, including the Company's balance sheet, income statement
and cash flow statement. In addition, at least one member of the Committee shall
have past experience in finance or accounting, requisite professional
certification in accounting or any other comparable background which results in
the individual's financial sophistication, including being or having been a
chief executive officer, chief financial officer or other senior officer with
financial oversight responsibilities.

The Board shall elect or appoint a chairman of the Committee who will have
authority to act on behalf of the Committee between meetings.

Responsibilities and Authority

The responsibilities and authority of the Committee are as follows:

     a.   The Committee shall review and reassess the adequacy of this Charter
          annually.

     b.   The Committee shall have sole authority to appoint, determine funding
          for and oversee the outside auditors as set forth in Section 10A(m)(2)
          of the Securities Exchange Act of 1934.

     c.   The Committee shall engage in a dialogue with the outside auditor with
          respect to any disclosed relationships or services that, in the view
          of the Committee, may impact the objectivity and independence of the
          outside auditor.


                                       22










     d.   The Committee shall receive from the Company's outside auditor, at
          least annually, a formal written statement delineating all
          relationships between the outside auditor and the Company, consistent
          with Independence Standards Board Standard 1, or any successor
          standard.

     e.   The Committee, in consultation with the outside auditor and management
          of the Company, shall review the engagement of the outside auditors,
          audit scope and procedures to be followed in conducting the annual
          audit of the Company's financial statements.

     f.   The Committee shall review the Company's annual audited financial
          statements prior to the inclusion of the audited financial statements
          in the Company's filings with the SEC. In addition, the Committee will
          discuss any items required to be communicated by the outside auditor
          in accordance with Statement on Auditing Standards ("SAS") No. 61, as
          amended by SAS No. 91, or any successor standard.

     g.   The Committee, based upon its review and discussions, shall recommend
          to the Board whether or not the audited financial statements shall be
          included in the Company's Annual Report on Form 10-K.

     h.   The Committee shall provide a report to be included in the Company's
          annual proxy statement containing such information as may be required
          by applicable law or regulation.

     i.   The Committee shall have the responsibility to establish procedures
          for complaints as set forth in Section 10A(m)(4) of the Securities
          Exchange Act of 1934.

     j.   The Committee shall have the authority to pre-approve all audit
          services and any non-audit services to be performed by the outside
          auditors that are permissible under Section 10A(i)of the Securities
          Exchange Act of 1934 or any successor rule.

     k.   The Committee has the authority to conduct any investigation
          appropriate to fulfilling its responsibilities, and it shall have
          direct access to the outside auditors, with or without management
          being present, as well as anyone in the Company.

     l.   The Committee may retain, at the Company's expense, legal, accounting
          or other consultants or experts it deems to be necessary in the
          performance of its duties as set forth in Section 10(A)m(2) of the
          Securities Exchange Act of 1934.

     m.   The Committee may act as a qualified legal compliance committee as
          defined in 17CFR Part 205.2.

     n.   The Committee shall perform such other activities and make such other
          recommendations to the Board on such matters, within the scope of its
          functions and consistent with this Charter, as may come to its
          attention and which in its discretion warrant consideration by the
          Board.

Delegation

Any responsibility or authority of the audit committee, including, but not
limited to, the authority to preapprove all audit and permitted non-audit
services, may be delegated to one or more members of the Committee.


                                       23









Limitations

The Committee is responsible for the duties set forth in this Charter but is not
responsible for either the preparation of the financial statements or the
auditing of the financial statements. Management has the responsibility for
preparing the financial statements and implementing internal controls. The
outside auditors have the responsibility for auditing the financial statements
and monitoring the effectiveness of the internal controls. The review of the
financial statements by the Committee is not of the same quality as the audit
performed by the outside auditors and is not an audit. The oversight exercised
by the Committee is not a guarantee that the financial statements will be free
from mistake or fraud. In carrying out its responsibilities, the Committee
believes its polices and procedures should remain flexible in order to best
react to a changing environment.

March 8, 2004

                                       24










EXHIBIT B


                            CERTIFICATE OF AMENDMENT

                         OF CERTIFICATE OF INCORPORATION

                                       OF

                             BERKSHIRE BANCORP INC.

            Adopted in accordance with the provisions of Section 242
             of the General Corporation Law of the State of Delaware

      The undersigned, being a duly authorized officer of Berkshire Bancorp
Inc. (the "Corporation"), a corporation existing under the laws of the State of
Delaware, does hereby certify as follows:

      1. The Certificate of Incorporation of the Corporation is hereby amended
by striking out Section 4.1 of Article IV thereof in its entirety and by
substituting in lieu thereof the following new Section 4.1:

          "4.1 Capital Stock. The total number of shares of capital stock which
      the Corporation shall have authority to issue is twelve million
      (12,000,000) shares, of which ten million (10,000,000) shares shall be
      common stock, par value $.10 per share ("Common Stock"), and two million
      (2,000,000) shares shall be preferred stock, par value $.01 per share
      ("Preferred Stock").

          The presently issued and outstanding shares of Common Stock, including
      any treasury stock, shall be combined (through a reverse stock split) in
      the ratio of one (1) share of Common Stock for each 10 shares of Common
      Stock currently issued and outstanding, such that 256,610 shares of Common
      Stock shall be issued and outstanding (including treasury stock) as a
      result of such reverse stock split. Such combination shall not change the
      stated capital of the Corporation nor shall it affect the rights or
      preferences of the holders of the shares of Common Stock now issued and
      outstanding."

      2. That such amendment has been duly adopted by the stockholders of the
Corporation, all in accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.

      3. The effective date of this Certificate of Amendment shall be 5:00 P.M.
EDT on May 18, 2004.

Dated: April 26, 2004


                                           BERKSHIRE BANCORP INC.


                                           By:/s/ Steven Rosenberg
                                             -------------------------
                                               Name: Steven Rosenberg
                                               Title: President


                                       25







                                                                     Appendix 1



                             BERKSHIRE BANCORP INC.
                                  160 Broadway
                            New York, New York 10038

        PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 18, 2004
           THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

      The undersigned hereby appoints Steven Rosenberg and Emanuel Adler, and
each of them, as proxies, with full power of substitution in each of them, in
the name, place and stead of the undersigned, to vote at the Annual Meeting of
Stockholders of Berkshire Bancorp Inc. on Tuesday, May 18, 2004, at 405
Lexington Avenue, New York, New York, or at any adjournment or adjournments
thereof, according to the number of votes that the undersigned would be entitled
to vote if personally present, upon the following matters:

1.    ELECTION OF DIRECTORS:


                                                      
      [ ] FOR all nominees listed below                 [ ]  WITHHOLD AUTHORITY
          (except as marked to the contrary below).           to vote for all nominees listed below.


      William L. Cohen, Thomas V. Guarino, Moses Marx, Steven Rosenberg and
      Randolph B. Stockwell

(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.)

-------------------------------------------------------------------------------

      The Board of Directors recommends a vote "FOR" all nominees listed above.


2.    REVERSE STOCK SPLIT:

      [ ] FOR             [ ] AGAINST              [ ] ABSTAIN

      The Board of Directors recommends a vote "FOR" the reverse stock split.


3.    In their discretion, the proxies are authorized to vote upon such other
      business as may properly come before the meeting.

      THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE.
      IF NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED "FOR" ALL BOARD
      NOMINEES LISTED IN PROPOSAL 1 AND "FOR" PROPOSAL 2.


      DATED: __________________, 2004  Please sign exactly as name appears
                                       hereon. When shares are held by joint
                                       tenants, both should sign. When signing
                                       as attorney, executor, administrator,
                                       trustee or guardian, please give full
                                       title as such. If a corporation, please
                                       sign in full corporate name by President
                                       or other authorized officer. If a
                                       partnership, please sign in
                                       partnership name by authorized person.



                                            --------------------------------
                                                      Signature

                                            --------------------------------
                                               Signature if held jointly

      Please mark, sign, date and return this proxy card promptly using the
                               enclosed envelope.