Exhibit 10.37

 

THE BEVERLY NATIONAL BANK

GROUP TERM CARVE OUT PLAN

 

THIS PLAN is adopted this 18th day of June, 2004, by and between THE BEVERLY
NATIONAL BANK, nationally-chartered commercial bank located in Beverly,
Massachusetts (the “Company”) and the Participant selected to participate in
this Plan (the “Participant”).

 

INTRODUCTION

 

The Company wishes to attract and retain highly qualified executives. To further
this objective, the Company is willing to divide the death proceeds of certain
life insurance policies which are owned by the Company on the lives of the
participating executives with the designated beneficiary of each insured
participating executive. The Company will pay the life insurance premiums from
its general assets.

 

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

 

1.1 “Beneficiary” means each designated person, or the estate of a deceased
Participant, entitled to benefits, if any, upon the death of a Participant.

 

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

 

1.3 “Change of Control” means the transfer of shares of the Company’s voting
common stock such that one entity or one person acquires (or is deemed to
acquire when applying Section 318 of the Code) more than 50 percent of the
Company’s outstanding voting common stock.

 

1.4 “Compensation Committee” means either the Compensation Committee designated
from time to time by the Company’s Board of Directors or a majority of the
Company’s Board of Directors, either of which shall hereinafter be referred to
as the Compensation Committee.

 

1.5 “Disability” means the Participant suffering a sickness, accident or injury
which has been determined by the carrier of any individual or group disability
insurance policy covering the Participant, or by the Social Security
Administration, to be a disability rendering the Participant totally and
permanently disabled. The Participant must submit proof to the Company of the
carrier’s or Social Security Administration’s determination upon the request of
the Company.

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1.6 “Insured” means the individual whose life is insured.

 

1.7 “Insurer” means the insurance company issuing the life insurance policy on
the life of the Insured.

 

1.8 “Normal Retirement Age” means the participant attaining the age 65.

 

1.9 “Normal Retirement Date” means the later of the Normal Retirement Age or the
date that the Participant terminates or is terminated for any reason other than
Termination for Cause.

 

1.10 “Participant” means the employee who is designated by the Compensation
Committee to participate in this Plan, elects in writing to participate in this
Plan using the form attached hereto as Exhibit A, signs a Split Dollar Policy
Endorsement for each Policy in which the Participant is the Insured, and
completes a Beneficiary Election Form.

 

1.11 “Policy” or “Policies” means the individual insurance policy or policies
adopted by the Compensation Committee for purposes of insuring a Participant’s
life under this Plan.

 

1.12 “Plan” means this instrument, including all amendments thereto.

 

1.13 “Termination for Cause” means that the Company has terminated the
Participant’s employment for any of the following reasons:

 

(a) Gross negligence or gross neglect of duties;

 

(b) Commission of a felony or of a gross misdemeanor involving moral turpitude;
or

 

(c) Fraud, dishonesty or willful violation of any law or significant Company
policy committed in connection with the Participant’s employment and resulting
in an adverse effect on the Company.

 

1.14 “Base Annual Salary” means the current base annual salary of the
Participant at the earliest of: (1) the date of the Participant’s death; (2) the
date of the Participant’s Disability; (3) Change of Control; or (4) the
Participant’s Normal Retirement Date.

 

1.15 “Years of Employment” means the total number of twelve-month periods during
which the Participant has been employed with the Company.

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Article 2

 

Participation

 

2.1 Eligibility to Participate. The Compensation Committee in its sole
discretion shall designate from time to time executives that are eligible to
participate in this Plan.

 

2.2 Participation. The eligible executive may participate in this Plan by
executing an Election to Participate, a Split Dollar Policy Endorsement for each
Policy, and a Beneficiary Election Form. The Split Dollar Policy Endorsement
shall bind the Participant and his or her beneficiaries, assigns and
transferees, to the terms and conditions of this Plan. An executive’s
participation is limited to only Policies where he or she is the Insured.

 

2.3 Termination of Participation. A Participant’s rights under this Plan shall
cease and his or her participation in this Plan shall terminate if either of the
following events occur: (i) if there is a Termination for Cause; or (ii) if the
Participant’s employment with the Company is terminated prior to Normal
Retirement Age for reasons other than Disability (except as set forth in
2.4(B)), or following a Change of Control, or a leave of absence approved by the
Company. In the event that the Company decides to maintain the Policy after the
Participant’s Termination of Participation in the Plan, the Company shall be the
direct beneficiary of the entire death proceeds of the Policy.

 

2.4 Disability. (A) Except as otherwise provided in paragraph (B) of this
section 2.4, if the Participant’s employment with the Company is terminated
because of the Participant’s Disability, the Company shall maintain the Policy
in full force and effect and, in no event, shall the Company amend, terminate or
otherwise abrogate the Participant’s interest in the Policy. However, the
Company may replace the Policy with a comparable insurance policy to cover the
benefit provided under this Agreement provided that the Company and the
Participant execute a new Split Dollar Policy Endorsement(s). The Policy or any
comparable policy shall be subject to the claims of the Company’s creditors.

 

(B) Notwithstanding the provisions of paragraph (A) of this section 2.4, upon
the disabled Participant’s gainful employment with an entity other than the
Company, the Company shall have no further obligation to the disabled
Participant, and the disabled Participant’s rights pursuant to the Plan shall
cease. In the event the disabled Participant’s rights are terminated hereunder
and the Company decides to maintain the Policy, the Company shall be the direct
beneficiary of the entire death proceeds of the Policy.

 

2.5 Retirement. After the Participant’s Normal Retirement Date, the Company
shall maintain the Policy in full force and effect and in no event shall the
Company amend, terminate or otherwise abrogate the Participant’s interest in the
Policy. However, the Company may replace the Policy with a comparable insurance
policy to cover the benefit under this Agreement provided that the Company and
the Participant execute a new Split Dollar Policy Endorsement(s). The Policy or
any comparable policy shall be subject to the claims of the Company’s creditors.

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Article 3

 

Policy Ownership/Interests

 

3.1 Participant’s Interest. With respect to the Policy or Policies, the
Participant or the Participant’s assignee shall have the right to designate the
beneficiary to one of the following death benefit amounts:

 

3.1.1 Pre-Retirement Death Benefit. If the Participant was employed by the
Company at the time of death, or terminated employment prior to Normal
Retirement Age due to Disability, the death benefit shall be one of the
following amounts based on the Participant’s Years of Employment, however, this
amount shall not exceed $300,000 (Three Hundred Thousand Dollars):

 

Years of Employment

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Amount of Death Benefit

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Less Than Five

  

One Times Base Annual Salary, less $50,000 from the Group Term Policy

Five or more

  

Two Times Base Annual Salary, less $50,000 from the Group Term Policy

 

3.1.2 Change of Control. If a Participant is terminated as a result of a Change
in Control, the death benefit will be equal to one times Base Annual Salary (not
to exceed $300,000).

 

3.1.3 Early Voluntary Termination. However, if prior to Normal Retirement Age a
Participant voluntarily terminates his or her employment with the Company, for
any reason other than Disability or following a Change of Control, the death
benefit will be reduced as follows:

 

Years of Employment

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   Death Benefit Amount

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5 Years of Employment but less than 10 Years of Employment

   $ 25,000

10 or more Years of Employment

   $ 50,000

 

The Participant shall also have the right to elect and change settlement options
with the consent of the Company and the Insurer.

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3.1.2 Post-Retirement Death Benefit. If the Participant was no longer employed
by the Company at the time of death, and the termination of employment took
place upon or after Normal Retirement Age, and the Participant did not undergo
Termination for Cause, the death benefit shall be one times the Participant’s
Base Annual Salary, capped at a maximum of $300,000 (Three Hundred Thousand
Dollars). If the Participant is eligible and elects to retire before age 65 but
after attaining age 62 with not less than five (5) Years of Employment, the
death benefit shall be 80% (Eighty Percent) of the Participant’s Base Annual
Salary, capped at $300,000 (Three Hundred Thousand Dollars). The Participant
shall also have the right to elect and change settlement options with the
consent of the Company and the Insurer.

 

3.2 Company’s Interest. The Company shall own the Policies and shall have the
right to exercise all incidents of ownership except that the Company shall not
sell, surrender or transfer ownership of a Policy so long as a Participant has
an interest in the Policy as described in section 3.1. This provision shall not
impair the right of the Company to terminate this Plan. With respect to each
Policy, the Company shall be the beneficiary of the remaining death proceeds of
the Policy after the Participant’s Interest is determined according to section
3.1.

 

3.3 Option to Purchase. The Company shall not sell, surrender or transfer
ownership of a Policy without first giving a Participant or the Participant’s
transferee the option to purchase the Policy for a period of 60 days from
written notice of such intention. The purchase price shall be an amount equal to
the cash surrender value of the Policy. This provision shall not impair the
right of the Company to terminate this Agreement.

 

Article 4

 

Premiums

 

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

 

4.2 Economic Benefit. The Company shall determine the economic benefit
attributable to the Participant based on the amount of the current term rate for
the Participant’s age multiplied by the aggregate death benefit payable to the
Participant’s Beneficiary. The “current term rate” is the minimum amount
required to be imputed under Internal Revenue Notice 2002-8, or any subsequent
applicable authority.

 

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

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Article 5

 

Assignment

 

Any Participant may assign without consideration all interests in his or her
Policy and in this Plan to any person, entity or trust. In the event a
Participant shall transfer all of his or her interest in the Policy, then all of
that Participant’s interest in his or her Policy and in this Plan shall be
vested in his or her transferee, who shall be substituted as a party hereunder,
and that Participant shall have no further interest in his or her Policy or in
this Plan.

 

Article 6

 

Insurer

 

The Insurer shall be bound only by the terms of a given Policy. Any payments the
Insurer makes or actions it takes in accordance with a Policy shall fully
discharge it from all claims, suits and demands of all persons relating to that
Policy. The Insurer shall not be bound by the provisions of this Plan. The
Insurer shall have the right to rely on the Company’s representations with
regard to any definitions, interpretations or Policy interests as specified
under this Plan.

 

Article 7

 

Claims and Review Procedure

 

7.1 Claims Procedure. Any person or entity who has not received benefits under
this Plan that he or she believes should be paid (“claimant”) shall make a claim
for such benefits as follows:

 

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

 

7.1.2 Timing of Company Response. The Company shall respond to such claimant
within 90 days after receiving the claim. If the Company determines that special
circumstances require additional time for processing the claim, the Company 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 Company expects to render its decision.

 

7.1.3 Notice of Decision. If the Company denies part or all of the claim, the
Company shall notify the claimant in writing of such denial. The Company 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,

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(b) A reference to the specific provisions of the Plan 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 the Plan’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 ERISA
Section 502(a) following an adverse benefit determination on review.

 

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

 

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

 

7.2.2 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 Company 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.

 

7.2.3 Considerations on Review. In considering the review, the Company 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.

 

7.2.4 Timing of Company Response. The Company shall respond in writing to such
claimant within 60 days after receiving the request for review. If the Company
determines that special circumstances require additional time for processing the
claim, the Company 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 Company expects to render
its decision.

 

7.2.5 Notice of Decision. The Company shall notify the claimant in writing of
its decision on review. The Company 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,

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(b) A reference to the specific provisions of the Plan 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).

 

Article 8

 

Amendments and Termination

 

8.1 Amendment or Termination of Plan. Except as otherwise provided in sections
2.3, 2.4, 2.5 and 8.2, the Company may amend or terminate this Plan and/or a
Participant’s rights under this Plan at any time prior to a Participant’s death
by written notice to the Participant.

 

8.2 Amendment or Termination of Plan Upon Change of Control. Notwithstanding the
provisions of section 8.1, in the event of a Change of Control, the Company, or
its successor, shall maintain in full force and effect each Policy that is in
existence on the date the Change of Control occurs and shall not terminate or
otherwise abrogate a Participant’s interest in the Policy, unless the Company
replaces the Policy with a comparable insurance policy to cover the benefit
provided under this Agreement and the Company and the Participant shall execute
a new Split Dollar Policy Endorsement. The Policy or any comparable policy shall
be subject to the claims of the Company’s creditors. This section 8.2 shall
apply to all Participants in the Plan on the date the Change of Control occurs,
including but not limited to (i) a retired Participant who has an interest in a
Policy pursuant to section 2.5; (ii) a disabled Participant who has an interest
in the Policy pursuant to section 2.4; and (iii) a Participant whose employment
is terminated as a result of a Change of Control.

 

8.3 Waiver of Participation. A Participant may, in the Participant’s sole and
absolute discretion, waive his or her rights under the Plan at any time. Any
waiver permitted under this section 8.3 shall be in writing and delivered to the
Board of Directors of the Company.

 

8.4 Policy Retention. In the event that the Company decides to maintain the
Policy after the Participant or Participant’s transferee no longer has an
interest in the Policy, the Company shall be the direct beneficiary of the
entire death proceeds of the Policy.

 

8.5 Suicide or Misstatement. The Company shall not pay any benefit under this
Plan if a Participant commits suicide within three years after the date of this
Plan. In addition, the

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Company shall not pay any benefit under this Plan if a Participant has made any
material misstatement of fact on an employment application or resume provided to
the Company, or on any application for any benefits provided by the Company to
the Participant.

 

Article 9

 

Miscellaneous

 

9.1 Binding Effect. This Plan in conjunction with their corresponding Split
Dollar Policy Endorsement shall bind each Participant and the Company, their
beneficiaries, survivors, executors, administrators and transferees and any
Policy beneficiary.

 

9.2 No Guarantee of Employment. This Plan is not an employment policy or
contract. It does not give a Participant the right to remain an employee of the
Company, nor does it interfere with the Company’s right to discharge a
Participant. It also does not require a Participant to remain an employee nor
interfere with a Participant’s right to terminate employment at any time.

 

9.3 Applicable Law. The Plan 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.

 

9.4 Reorganization. The Company 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 Company
under this Plan. Upon the occurrence of such event, the term “Company” as used
in this Plan shall be deemed to refer to the successor or survivor company.

 

9.5 Notice. Any notice, consent or demand required or permitted to be given
under the provisions of this Plan by one party to another shall be in writing,
shall be signed by the party giving or making the same, and may be given either
by delivering the same to such other party personally, or by mailing the same,
by United States certified mail, postage prepaid, to such party, addressed to
his/her last known address as shown on the records of the Company. The date of
such mailing shall be deemed the date of such mailed notice, consent or demand.

 

9.6 Entire Agreement. This Plan along with a Participant’s Election to
Participate and Split Dollar Policy Endorsement(s) constitutes the entire
agreement between the Company and the Participant as to the subject matter
hereof. No rights are granted to the Participant under this Plan other than
those specifically set forth herein.

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9.7 Administration The Company shall have powers which are necessary to
administer this Plan, including but not limited to:

 

  (a) Interpreting the provisions of this Plan;

 

  (b) Establishing and revising the method of accounting for this Plan;

 

  (c) Maintaining a record of benefit payments; and

 

  (d) Establishing rules and prescribing any forms necessary or desirable to
administer this Plan.

 

9.8 Designated Fiduciary. The Company shall be the named fiduciary and plan
administrator under this Agreement. The named fiduciary may delegate to others
certain aspects of the management and operation responsibilities of the plan
including the employment of advisors and the delegation of ministerial duties to
qualified individuals.

 

ARTICLE 10

 

BENEFICIARIES

 

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

 

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

 

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

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10.4 No Beneficiary Designation. If the Participant dies without a valid
designation of beneficiary, or if all designated Beneficiaries predecease the
Participant, then the Participant’s surviving spouse shall be the designated
Beneficiary. If the Participant has no surviving spouse, the benefits shall be
made payable to the personal representative of the Participant’s estate.

 

10.5 Facility of Payment. If the Company 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
Company 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 Company 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 Participant
and the Participant’s Beneficiary, as the case may be, and shall be a complete
discharge of any liability under the Agreement for such payment amount.

 

IN WITNESS WHEREOF, the Company executes this Plan as of the date indicated
above.

 

COMPANY: The Beverly National Bank By  

/s/ Donat A. Fournier

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Title   President