EXHIBIT 10.40
                             SPLIT-DOLLAR AGREEMENT


THIS  AGREEMENT,  made  as of the  25th  day of  February  1999  by and  between
ENTERPRISE  BANK &  TRUST  COMPANY,  a  Massachusetts  corporation  (hereinafter
referred to as the  "Employer"),  and George L. Duncan of Lowell,  Massachusetts
(hereinafter referred to as the "Employee").

WITNESSETH THAT:

WHEREAS, the Employee is employed by the Employer, and

WHEREAS,  the Employer is desirous of retaining the services of the Employee and
of assisting the Employee in paying for life insurance on his own life; and

WHEREAS,  the Employer has determined that this assistance can be provided under
a split dollar life insurance arrangement; and

WHEREAS,  the Employee has applied for, and is the owner of the insurance policy
or policies listed in the attached schedule hereto,  hereinafter  referred to as
the "Policy", and

WHEREAS,  the Employer and the Employee agree to make the Policy subject to this
Agreement; and

WHEREAS,  the Employee has assigned the Policy to the Employer as collateral for
amounts to be advanced by the Employer  under this Agreement by an instrument of
assignment filed with the Insurer (hereinafter referred to as the "Assignment");

NOW,  THEREFORE,  in  consideration  of the promises and of the mutual covenants
herein contained, the Parties hereto hereby agree as follows:

1.   The Parties  hereto agree that the Policy shall be subject to the terms and
     conditions of this Agreement and of the  Assignment  filed with the Insurer
     relating to the Policy.  The Employee  shall be the sole and absolute owner
     of the Policy and may exercise all  ownership  rights  granted to the owner
     thereof by the terms of the  Policy,  except as may be  otherwise  provided
     herein and in the Assignment.

2.   The  premium  for  the  Policy  will be paid  by the  Employer  during  the
     Employee's  employment  and for any  period  of  time  that it may  have an
     obligation to provide  continuing fringe benefits  thereafter.  The premium
     will be allocated  between the Employee and the  Employer.  The  Employee's
     share  of the  premium  (term  insurance  allocation)  shall be paid by the
     Employer as agent for the  Employee and shall be charged to the Employee as
     cash compensation, and for all purposes, including the Assignment, shall be
     deemed cash compensation and not Employer paid premium.

                                       1
<PAGE>

3.   The Assignment shall not be terminated,  altered or amended by the Employee
     without the express  written  consent of the Employer.  The Parties  hereto
     agree to take reasonable  action to cause such Assignment to conform to the
     provisions of this Agreement.

4.   A.   Except as otherwise  provided  herein,  the  Employee  shall not sell,
          assign,  transfer,  borrow  against,  surrender  or cancel the Policy,
          change the  beneficiary  designation  provision  thereof,  in any such
          case, without the express written consent of the Employer.  Consent to
          change the beneficiary designation shall not be unreasonably withheld.
          Notwithstanding the forgoing, the Employee may borrow or withdraw cash
          value of the Policy in excess of the  collaterally  assigned values of
          the Employer without action of the Board of Directors. However, Policy
          loan interest,  if any, that may accrue on any such transaction  shall
          not reduce the  collaterally  assigned  values of the Employer,  or if
          such may be the case,  Employee  will pay such Policy loan interest in
          cash to the Insurer.

     B.   The Employer  shall not borrow  against the Policy without the express
          written consent of the Employee.

     C.   Upon the Employee's termination of employment, the Employee shall have
          the right to take any  action  with  regard  to the cash  value of the
          policy  in  excess  of  the  collaterally  assigned  interest  of  the
          Employer.

5.   A.   Upon the death of the Employee,  the Employer  shall promptly take all
          action  necessary  to obtain its share of the death  benefit  provided
          under the Policy.

     B.   The Employer shall have the unqualified  right to receive a portion of
          such  Death  Benefit  equal to the  total  amount  of its share of the
          premiums  paid by it hereunder,  (hereinafter  referred to as the "Net
          Premium"). The balance of the Death Benefit provided under the Policy,
          if any,  shall be paid directly by the Insurer to the  beneficiary  or
          beneficiaries and in the manner designated by the Employee.  No amount
          shall  be  paid  from  such  death  benefit  to  the   beneficiary  or
          beneficiaries designated by the Employee until the Employer or Insurer
          acknowledges  in  writing  that the full  amount  due to the  Employer
          hereunder has been paid. The Parties hereto agree that the beneficiary
          designation  provision of the Policy shall  conform to the  provisions
          hereof.

6.   The  Employer  shall  not  merge  or  consolidate   into  or  with  another
     organization,  or reorganize,  or sell  substantially  all of its assets to
     another  organization,  firm or person unless and until such  succeeding or
     continuing organization,  firm or person agrees to assume and discharge the
     obligations of the Employer under this Agreement.  Any such obligation will
     be defined in either the Employees  employee  handbook or in any employment
     contract between the Employee and the Employer. Upon the occurrence of such
     event,  the term  "Employer" as used in this  Agreement  shall be deemed to
     refer to such successor or survivor organization.

7.   This Agreement shall terminate upon the Employee's death and the payment of
     proceeds pursuant to Section 5 of this Agreement.


                                       2
<PAGE>

8.   A.   If the  Employee  ceases to be employed by the  Employer  for whatever
          reason,  the  Employee has the right to continue to keep the Policy in
          force either individually or through a subsequent Employer, subject to
          the  requirement  that the Policy  cash  value not be reduced  through
          loans,  premium  payment  options,  or in any other  manner  below the
          amount  needed  to repay  the  Employer  the Net  Premiums  paid by it
          hereunder.

     B.   If the Employee continues to keep the Policy in force,  termination of
          this Agreement shall be pursuant to Section 7 of this Agreement.

     C.   If the Employee  does not  continue to keep the Policy in force,  this
          Agreement will terminate  immediately  and the Employer will be repaid
          an amount equal to the lesser of Net Premiums  paid by the Employer or
          the cash surrender value as of the date of the Employee's  termination
          of Employment.

9.   The Parties hereto agree that this Agreement shall take precedence over any
     provisions of the Assignment. The Employer agrees not to exercise any right
     possessed  by it under  the  Assignment  except  in  conformity  with  this
     Agreement.

10.  This Agreement may not be amended,  altered or modified except by a written
     instrument  signed by both of the Parties  hereto and may not be  otherwise
     terminated except as provided herein.

11.  A.   The split-dollar  arrangement contemplated herein is an exempt welfare
          plan  under  regulations  promulgated  under  Title I of the  Employee
          Retirement Income Security Act of 1974 ("ERISA").

     B.   For purposes of ERISA, the Employer will be the "named  fiduciary" and
          "plan  administrator"  of the  split-dollar  arrangement  contemplated
          herein,  and this  Agreement is hereby  designated as the written plan
          instrument.

     C.   The Employee or any beneficiary of his may file a request for benefits
          with the plan administrator. If a claim request is wholly or partially
          denied,  the plan  administrator will furnish to the claimant a notice
          of its decision within ninety (90) days in writing, and in a manner to
          be understood by the claimant, which notice will contain the following
          information:

          I.   The specific reason or reasons for the denial;

          II.  Specific  reference to pertinent plan  provisions  upon which the
               denial is based;

          III. A description of any additional material or information necessary
               for the  claimant to perfect the claim and an  explanation  as to
               why such material or information is necessary.

          IV.  An explanation of the plan's  claim-review  procedure  describing
               the steps to be taken by a  claimant  who  wishes  to submit  his
               claim for review.

                                       3
<PAGE>

     D.   A claimant or his authorized  representative  may, with respect to any
          denied claim,

          I.   Request a review upon written application filed within sixty (60)
               days after  receipt  by the  claimant  of  written  notice of the
               denial of his claim;

          II.  Review pertinent documents; and

          III. Submit issues and comments in writing.

Any  request or  submission  will be in writing and will be directed to the plan
administrator.  The plan administrator will have the sole responsibility for the
review of any denied claim and will take all  appropriate  steps in light of its
findings.  The plan administrator will render a decision upon review of a denied
claim within sixty (60) days after  receipt of a request for review.  If special
circumstances  warrant additional time, the decision will be rendered as soon as
possible,  but not later than one  hundred  twenty  (120) days after  receipt of
request for review.  Written  notice of any such  extension will be furnished to
the claimant prior to the commencement of the extension.  The decision on review
will be in writing and will include specific reasons for the decision written in
a manner to be understood by the claimant, as well as the specific references of
the  pertinent  provisions  of the plan on which the  decision is based.  If the
decision  on review is not  furnished  to the  claimant  within the time  limits
described above, the claim will be deemed denied on review.

12.  This  Agreement  shall be  binding  upon and  inure to the  benefit  of the
     Employer  and  its  successors  and  assignees  and  the  Employee  and his
     successors, assignees, heirs, executors, administrators and beneficiaries.

13.  Except as may be preempted by ERISA, this Agreement,  and the rights of the
     Parties thereunder, shall be governed by and constructed in accordance with
     the laws of the Commonwealth of Massachusetts.

IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed by its
officer thereunto duly authorized and the Employee has hereunto set his hand and
seal, all as of the day and year first above written.


                                        ENTERPRISE BANK & TRUST COMPANY


_________________________________       By: ___________________________________
Witness
                                        Title: ________________________________


_________________________________        _________________________________
Witness                                  George L. Duncan


                                       4