Exhibit 10.40.3

 

ENTERPRISE BANK AND TRUST COMPANY

SUPPLEMENTAL LIFE INSURANCE AGREEMENT

 

THIS SUPPLEMENTAL LIFE INSURANCE AGREEMENT (the “Agreement”) is adopted this
15th day of July, 2005, by and between ENTERPRISE BANK AND TRUST COMPANY, a
state-chartered, commercial bank located in Lowell, Massachusetts (the “Bank”),
and ROBERT R. GILMAN (the “Executive”).

 

The purpose of this Agreement is to retain and reward the Executive, by dividing
the death proceeds of certain life insurance policies which are owned by the
Bank on the life of the Executive with the designated beneficiary of the
Executive.  The Bank will pay the life insurance premiums from its general
assets.

 

Article 1

Definitions

 

Whenever used in this Agreement, the following terms shall have the meanings
specified:

 

1.1           “Bank’s Interest” means the benefit set forth in Section 2.1.

 

1.2           “Beneficiary” means each person designated by the Executive under
a current Beneficiary Designation Form, or in the absence thereof, the estate of
the deceased Executive, entitled to benefits, if any, upon the death of the
Executive.

 

1.3           “Beneficiary Designation Form” means the form established from
time to time by the Plan Administrator that the Executive completes, signs and
returns to the Plan Administrator to designate one or more Beneficiaries.

 

1.4           “Board” means (i) the Compensation Committee, consisting of three
or more members of the Board of Directors of the Bank, when acting under duly
delegated authority from the Board of Directors, or (ii) the Board of Directors
in its entirety, in either case as from time to time constituted.

 

1.5           “Code” means the Internal Revenue Code of 1986, as amended.

 

1.6           “Executive’s Interest” means the benefit set forth in Section 2.2.

 

1.7           “Insurer” means the insurance company issuing the Policy on the
life of the Executive.

 

1.8           “Plan” or “Enterprise Bank Supplemental Executive Life Insurance
Plan” means the life insurance arrangement set forth in this Agreement.

 

1.9           “Plan Administrator” means the plan administrator described in
Article 10.

 

1.10         “Policy” or “Policies” means the individual insurance policy or
policies adopted by the Bank for purposes of insuring the Executive’s life under
this Agreement.

 

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1.11         “Separation from Service” means that the Executive’s service as an
employee to the Bank and any member of a controlled group as defined in Section
414 of the Code to which the Bank belongs, has terminated for any reason, other
than by reason of a leave of absence approved by the Bank or the death of the
Executive.

 

Article 2

Policy Ownership/Interests

 

2.1           Bank’s Interest.  The Bank shall own the Policies and shall have
the right to exercise all incidents of ownership and, subject to Article 3, the
Bank may terminate any and all Policies without the consent of the Executive. 
The Bank shall be the beneficiary of the death proceeds of the Policies in
excess of the amount payable to the Beneficiary according to Section 2.2 below.

 

2.2           Executive’s Interest.  The Executive, or the Executive’s assignee,
shall have the right to designate the Beneficiary/ies of an amount of death
proceeds, in the aggregate, as specified in Section 2.2.1 or 2.2.2.  The
Executive shall also have the right to elect and change distribution options
with respect to the Executive’s Interest by providing written notice to the Bank
and the Insurer.  Without limiting the foregoing, in no event shall the
Executive or any Beneficiary of the Executive’s Interest have access to any
Policy’s cash value.

 

2.2.1        Death Prior to Separation from Service.  If the Executive dies
while employed by the Bank, the Executive’s Beneficiary/ies shall be entitled to
a benefit equal, in the aggregate, to Two Hundred Thirty-Nine Thousand Four
Hundred Sixteen Dollars ($239,416).

 

2.2.2        Death After Separation from Service.  If the Executive dies after
Separation from Service, the Executive’s Beneficiary/ies shall be entitled to a
benefit equal, in the aggregate, to Two Hundred Thirty-Nine Thousand Four
Hundred Sixteen Dollars ($239,416).

 

2.3           Forfeiture of Executive’s Interest.  The Executive and any
assignee of the Executive’s interests hereunder shall forfeit all rights under
Section 2.2 if the Executive fails to comply fully with the terms of Sections
8(a) and 8(b) of that certain Change in Control/Noncompetition Agreement by and
among Enterprise Bancorp, Inc., the Bank and the Executive dated as of August 1,
2001, as amended by Amendment No. 1 thereto dated as of the date hereof (the
“Confidentiality and Non-compete Restrictions”).  The Bank’s enforcement rights
as to the Confidentiality and Non-compete Restrictions shall be governed by
Sections 5.4.1 and 5.4.2 of that certain Salary Continuation Agreement by and
between the Bank and the Executive of even date herewith.

 

Article 3

Comparable Coverage

 

The Bank may provide the benefit under this Agreement (as defined in Section
2.2)

 

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through comparable insurance coverage of the Executive’s life by whatever means
the Bank deems appropriate.  If the Executive forfeits his right to such benefit
pursuant to Section 2.3 or otherwise waives such right, the Bank may choose to
cancel the Policy or Policies on the Executive, or may continue such coverage
and become the direct beneficiary of the entire death proceeds.

 

Article 4

Premiums and Imputed Income

 

4.1           Premium Payment.  The Bank shall pay all premiums due on all
Policies.

 

4.2           Economic Benefit.  The Bank shall determine at least annually the
economic benefit attributable to the Executive based on the life insurance
premium factor for the Executive’s age multiplied by the aggregate death benefit
payable to the Beneficiary/ies.  The “life insurance premium factor” is the
minimum factor applicable under guidance published pursuant to Treasury Reg. §
1.61-22(d)(3)(ii) or any subsequent authority.

 

4.3           Imputed Income.  The Bank shall impute the economic benefit to the
Executive on an annual basis, by adding the economic benefit to the Executive’s
W-2, or if applicable, Form 1099.

 

Article 5

Beneficiaries

 

5.1           Beneficiary. The Executive shall have the right, at any time, to
designate a Beneficiary(ies) to receive any benefits payable under Section 2.2
of this Agreement upon the death of the Executive.  The Beneficiary designated
under this Agreement may be the same as or different from the beneficiary
designation under any other plan or agreement of the Bank in which the Executive
participates.

 

5.2           Beneficiary Designation; Change.  The Executive shall designate a
Beneficiary by completing and signing the Beneficiary Designation Form, and
delivering it to the Bank or its designated agent.  The Executive’s beneficiary
designation shall be deemed automatically revoked if the Beneficiary predeceases
the Executive or if the Executive names a spouse as Beneficiary and the marriage
is subsequently dissolved.  The Executive shall have the right to change a
Beneficiary by completing, signing and otherwise complying with the terms of the
Beneficiary Designation Form and the Bank’s rules and procedures, as in effect
from time to time.  Upon the acceptance by the Bank of a new Beneficiary
Designation Form, all Beneficiary designations previously filed shall be
cancelled.  The Bank shall be entitled to rely on the last Beneficiary
Designation Form filed by the Executive and accepted by the Bank prior to the
Executive’s death.

 

5.3           Acknowledgment.  No designation or change in designation of a
Beneficiary shall be effective until received, accepted and acknowledged in
writing by the Bank or its designated agent.

 

5.4           No Beneficiary Designation.  If the Executive dies without a valid
designation of beneficiary, or if all designated Beneficiaries predecease the
Executive, then the

 

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Executive’s surviving spouse shall be the designated Beneficiary.  If the
Executive has no surviving spouse, the benefits shall be made payable to the
personal representative of the Executive’s estate for the benefit of that
estate.

 

5.5           Facility of Payment.  If the Bank determines in its discretion
that a benefit is to be paid to a minor, to a person declared incompetent, or to
a person incapable of handling the disposition of that person’s property, the
Bank may direct payment of such benefit to the guardian, legal representative or
person having the care or custody of such minor, incompetent person or incapable
person.  The Bank may require proof of incompetence, minority or guardianship as
it may deem appropriate prior to distribution of the benefit.  Any payment of a
benefit shall be a payment for the account of the Executive and the Executive’s
Beneficiary, as the case may be, and shall be a complete discharge of any
liability under the Agreement for such payment amount.

 

Article 6

Assignment

 

The Executive may irrevocably assign without consideration all of the
Executive’s Interest in this Agreement to any person, entity, or trust.  In the
event the Executive shall transfer all of the Executive’s Interest, then all of
the Executive’s Interest in this Agreement shall be vested in the Executive’s
transferee, who shall be substituted as a party hereunder, and the Executive
shall have no further interest in this Agreement.

 

Article 7

Insurer

 

The Insurer shall be bound only by the terms of its given Policy.  The Insurer
shall not be bound by or deemed to have notice of the provisions of this
Agreement.  The Insurer shall have the right to rely on the Bank’s
representations with regard to any definitions, interpretations or Policy
interests as specified under this Agreement.

 

Article 8

Claims and Review Procedure

 

8.1           Claims Procedure.  The Executive or Beneficiary (“claimant”) who
has not received benefits under the Agreement that he or she believes should be
paid shall make a claim for such benefits as follows:

 

8.1.1        Initiation – Written Claim.  The claimant initiates a claim by
submitting to the Bank a written claim for the benefits.

 

8.1.2        Timing of Bank Response.  The Bank shall respond to such claimant
within 90 days after receiving the claim.  If the Bank determines that special
circumstances require additional time for processing the claim, the Bank can
extend the response period by an additional 90 days by notifying the claimant in
writing, prior to the end of the initial 90-day period, that an additional
period is required.  The notice of extension must set forth the special
circumstances and the date by which the

 

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Bank expects to render its decision.

 

8.1.3        Notice of Decision.  If the Bank denies part or all of the claim,
the Bank shall notify the claimant in writing of such denial.  The Bank shall
write the notification in a manner calculated to be understood by the claimant. 
The notification shall set forth:

 

(a)           The specific reasons for the denial;

(b)           A reference to the specific provisions of this Agreement on which
the denial is based;

(c)           A description of any additional information or material necessary
for the claimant to perfect the claim and an explanation of why it is needed;

(d)           An explanation of this Agreement’s review procedures and the time
limits applicable to such procedures; and

(e)           A statement of the claimant’s right to bring a civil action under
Section 502(a) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”) following an adverse benefit determination on review.

 

8.2           Review Procedure.  If the Bank denies part or all of the claim,
the claimant shall have the opportunity for a full and fair review by the Bank
of the denial, as follows:

 

8.2.1        Initiation – Written Request.  To initiate the review, the
claimant, within 60 days after receiving the Bank’s notice of denial, must file
with the Bank a written request for review.

 

8.2.2        Additional Submissions – Information Access.  The claimant shall
then have the opportunity to submit written comments, documents, records and
other information relating to the claim.  The Bank shall also provide the
claimant, upon request and free of charge, reasonable access to, and copies of,
all documents, records and other information relevant (as defined in applicable
ERISA regulations) to the claimant’s claim for benefits.

 

8.2.3        Considerations on Review.  In considering the review, the Bank
shall take into account all materials and information the claimant submits
relating to the claim, without regard to whether such information was submitted
or considered in the initial benefit determination.

 

8.2.4        Timing of Bank’s Response.  The Bank shall respond in writing to
such claimant within 60 days after receiving the request for review.  If the
Bank determines that special circumstances require additional time for
processing the claim, the Bank can extend the response period by an additional
60 days by notifying the claimant in writing, prior to the end of the initial
60-day period, that an additional period is required.  The notice of extension
must set forth the special circumstances and the date by which the Bank expects
to render its decision.

 

8.2.5        Notice of Decision.  The Bank shall notify the claimant in writing
of its decision

 

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on review.  The Bank shall write the notification in a manner calculated to be
understood by the claimant.  The notification shall set forth:

 

(a)           The specific reasons for the denial;

(b)           A reference to the specific provisions of this Agreement on which
the denial is based;

(c)           A statement that the claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, all documents, records
and other information relevant (as defined in applicable ERISA regulations) to
the claimant’s claim for benefits; and

(d)           A statement of the claimant’s right to bring a civil action under
ERISA Section 502(a).

 

8.3           Claims under Policy.  Notwithstanding anything in this Agreement
to the contrary, nothing herein shall affect or supersede the claims procedure
set forth in any Policy with respect to claims arising under and governed by
such Policy, including without limitation, claims for death proceeds.

 

Article 9

Amendments and Termination

 

This Agreement may be amended or terminated only by a written agreement signed
by the Bank and the Executive; provided, however, that the Bank may amend this
Agreement to the extent necessary to conform to any written directives or
guidelines issued by the Bank’s federal or state banking regulators and to
comply with any regulations promulgated in accordance with Section 409A of the
Code.

 

Article 10

Administration

 

10.1         Plan Administrator Duties.  This Agreement shall be administered by
a Plan Administrator which shall consist of the Board.

 

10.2         Agents.  In the administration of this Agreement, the Plan
Administrator may employ agents and delegate to them such administrative duties
as it sees fit, (including acting through a duly appointed representative), and
may from time to time consult with counsel who may be counsel to the Bank.

 

10.3         Indemnity of Plan Administrator.  The Bank shall indemnify and hold
harmless the members of the Plan Administrator against any and all claims,
losses, damages, expenses or liabilities arising from any action or failure to
act with respect to this Agreement, except in the case of willful misconduct by
the Plan Administrator or any of its members.

 

10.4         Bank Information.  To enable the Plan Administrator to perform its
functions, the Bank shall supply full and timely information to the Plan
Administrator on all matters relating to the date and circumstances of the
retirement, death or Separation from Service of the Executive, and such other
pertinent information as the Plan Administrator may

 

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reasonably require.

 

ARTICLE 11

MISCELLANEOUS

 

11.1         Binding Effect.  This Agreement shall bind the Executive and the
Bank, their beneficiaries, survivors, executors, administrators and transferees
and any Beneficiary.

 

11.2         No Guarantee of Employment.  This Agreement is not an employment
policy or contract. It does not give the Executive the right to remain an
executive or employee of the Bank, nor does it interfere with the Bank’s right
to discharge the Executive.  It also does not require the Executive to remain an
executive nor interfere with the Executive’s right to terminate employment at
any time.

 

11.3         Applicable Law.  The Agreement and all rights hereunder shall be
governed by and construed according to the laws of the Commonwealth of
Massachusetts, except to the extent preempted by the laws of the United States
of America.

 

11.4         Reorganization.  The Bank shall not merge or consolidate into or
with another company, or reorganize, or sell substantially all of its assets to
another company, firm or person unless such succeeding or continuing company,
firm or person agrees to assume and discharge the obligations of the Bank under
this Agreement.  Upon the occurrence of such event, the term “Bank” as used in
this Agreement shall be deemed to refer to the successor or survivor company.

 

11.5         Notice.  Any notice or filing required or permitted to be given to
the Bank under this Agreement shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, to the address below:

 

Enterprise Bank and Trust Company

222 Merrimack Street

Lowell, MA 01852-5901

Attention:              John P. Clancy, Jr.

Executive Vice President and

Chief Operating Officer

 

Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark or the receipt for
registration or certification.

 

Any notice or filing required or permitted to be given to the Executive under
this Agreement shall be sufficient if in writing and hand-delivered, or sent by
mail, to the last known address of the Executive.

 

11.6         Entire Agreement.  This Agreement, along with the Executive’s
Beneficiary Designation Form, constitutes the entire agreement between the Bank
and the Executive as to the subject matter hereof.  No rights are granted to the
Executive under this Agreement other than those specifically set forth herein.

 

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11.7         Death Benefit Under Policy(ies) May Exceed Executive’s Interest. 
The Executive acknowledges and agrees that the aggregate amount of the death
benefit payable under any Policy or Policies may exceed the Executive’s Interest
and that any such excess amount shall be payable to the Bank or its designee.

 

11.8         Death Benefit Under Policy(ies) Subject to Claims of Creditors. 
The Executive acknowledges and agrees that the aggregate amount of the death
benefit payable under any Policy or Policies is a general asset of the Bank and
as such is subject to the claims of the Bank’s general creditors.  Neither the
Executive nor any Beneficiary has any preferred status or secured claim with
respect to any such benefit amount.

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
indicated above as a sealed instrument.

 

EXECUTIVE:

ENTERPRISE BANK AND TRUST COMPANY

 

 

 

 

/s/ Robert R. Gilman

 

By:

  /s/ John P. Clancy, Jr.

 

Robert R. Gilman

 

 

Title:

  Chief Operating Officer

 

 

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ENTERPRISE BANK AND TRUST COMPANY

Supplemental Life Insurance Agreement

 

BENEFICIARY DESIGNATION FORM

 

o            New Designation

o            Change in Designation

 

I, Robert R. Gilman, designate the following as Beneficiary under the Enterprise
Bank Supplemental Executive Life Insurance Plan:

 

Primary:

 

 

 

 

 

 

 

 

 

 

%

 

 

 

 

 

 

 

%

 

 

 

 

 

 

 

%

 

 

 

 

Contingent:

 

 

 

 

 

 

 

 

 

 

%

 

 

 

 

 

 

 

%

 

 

 

 

 

 

 

%

 

Notes:

•      Please PRINT CLEARLY or TYPE the names of the beneficiaries.

•      To name a trust as beneficiary, please provide the name of the trustee(s)
and the exact name and date of the trust agreement.

•      To name your estate as beneficiary, please write “Estate of _[your
name]_”.

•      Be aware that none of the contingent beneficiaries will receive anything
unless ALL of the primary beneficiaries predecease you.

•      Except as otherwise defined in this instrument, the terms used in this
instrument shall have the meaning set forth in the Plan.

 

I understand that I may change these beneficiary designations by delivering a
new written designation to the Plan Administrator, which shall be effective only
upon receipt and acknowledgment by the Plan Administrator prior to my death.  I
further understand that the designations will be automatically revoked if the
beneficiary predeceases me, or, if I have named my spouse as beneficiary and our
marriage is subsequently dissolved.  I hereby revoke any and all previous
beneficiary designations made by me under the Plan.

 

 

NAME:

 

 

 

 

 

 

SIGNATURE:

 

 

DATE:

 

 

 

 

 

 

 

 

Received by the Plan Administrator this       day of                     ,
20      .

 

 

 

BY:

 

 

 

 

 

 

Title:

 

 

 

 

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POLICY ENDORSEMENT

 

Contract Owner:   ENTERPRISE BANK AND TRUST COMPANY

 

The undersigned Owner requests that the policy(ies) shown in the attached
Schedule Page issued by the                                (the “Insurer”)
provide for the following beneficiary designation:

 

1.  Upon the death of the Insured, proceeds shall be paid in one sum to the
Owner, its successors or assigns, as Beneficiary, to the extent claimed by said
Owner.

 

2.  Any proceeds at the death of the Insured in excess of the amount paid under
the provisions of paragraph 1 of this Policy Endorsement shall be paid in one
sum in accordance with the written direction of the Owner.  Such direction will
be provided to the Insurer at the time of claim.  The Insurer will be protected
in relying solely on the Owner to provide the name(s) of the party(ies) to pay
any excess not paid under paragraph 1.  If the Owner fails to provide the
name(s) of the party(ies) at the time of claim, then any proceeds payable under
this paragraph shall be paid in one sum to the Beneficiary.

 

3.  It is hereby provided that (i) any payment made to the Beneficiary or other
party under paragraph 2 of this Policy Endorsement shall be a full discharge of
the Insurer to the extent thereof; (ii) such discharge shall be binding on all
parties claiming any interest under the Policy; and (iii) the Insurer shall have
no additional responsibility with respect to the amounts so claimed.

 

4.  It is agreed by the undersigned that this designation shall be subject in
all respects to the contractual terms of the Policy.

 

5.  Except as otherwise defined in this instrument, the terms used in this
instrument shall have the meaning set forth in the Enterprise Bank Supplemental
Executive Life Insurance Plan.

 

The undersigned is signing in a representative capacity for the Owner and
warrants that he or she has the authority to bind the entity on whose behalf
this document is being executed.

 

Signed at                                         ,                      , this
              day of                              , 20      .

 

 

OWNER:

 

ENTERPRISE BANK AND TRUST COMPANY

 

By:

 

 

By:

 

 

 

(Signature: Bank Officer #1)

 

 

(Signature: Bank Officer #2)

 

 

 

 

 

 

 

 

(Printed)

 

 

(Printed)

 

Title:

 

 

Title:

 

 

 

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Schedule Page

Policy(ies) Subject to Policy Endorsement

 

Policy Number

Insured

 

Robert R. Gilman

 

 

 

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