February 6, 2002 Lawrence M. Smith, President Beverly National Corporation 240 Cabot Street Beverly, MA 01915 Dear Larry: Reference is made to your Employment Agreement dated May 31, 1991, as amended December 22, 1998, between us (the "Agreement")....

                                                                   Exhibit 10.4


                                        February 6, 2002


Xxxxxxxx X. Xxxxx, President
Beverly National Corporation
000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000

Dear Xxxxx:

     Reference is made to your Employment Agreement dated May 31, 1991, as
amended December 22, 1998, between us (the "Agreement").

     This letter will confirm our understanding that the terms of the Agreement
are amended to provide that:

     1. A new paragraph (c) is hereby added to Section 3 of the Agreement to
read as follows:

     "(c)  Repurchase of Shares. The Company shall repurchase from the Employee
           --------------------
     22,500 shares of the Employee's stock in the Company on or prior to June
     30, 2002. The price to be paid for the shares shall be the market price for
     such shares at the time the Employee tenders the stock to the Company. The
     shares shall be held by the Company as treasury stock."

     2. A new paragraph (e) is herby added to Section 8 of the Agreement to read
as follows:

     "(e)  Payment Upon Retirement. Upon the Employee's retirement, the Company
           -----------------------
     shall pay the Employee a lump sum bonus in such amount as shall result in
     the Employee being paid, after all standard deductions are taken from such
     bonus, an amount equal to the Employee's gross W-2 wages for 2001. As used
     in this Section, "standard deductions" shall mean such deductions normally
     made from the Employee's compensation, including, but not limited to
     withholding for federal and state tax, FICA, and Medicare. As used in this
     Section, "gross W-2 wages" shall mean the Employee's total W-2
     compensation, including amounts paid under any salary reduction agreements
     for plans under Sections 401(k), or 125 or 129




                                       2

     of the Internal Revenue Code of 1986, as amended. In the event the Employee
     retires on or prior to January 2, 2003, the Company will pay the bonus to
     the Employee on January 2, 2003. In the event the Employee retires after
     January 2, 2003, the Company will pay the Employee on the effective date of
     his retirement."

     3. In addition to the benefits on Exhibit A, you shall be entitled to
purchase from the Corporation the automobile presently provided to you for one
dollar ($1.00) upon the date of your retirement as President of Beverly National
Corporation and Xxxxxxx National Bank.

     All other provisions of the Agreement remain in full force and effect.

     Please sign below to indicate your concurrence with the foregoing.


                                      Sincerely,

                                      BEVERLY NATIONAL CORPORATION


                                      By: /s/  Xxxxx X. Xxxxxxx
                                          ----------------------------------

AGREED:


/s/  Xxxxxxxx X. Xxxxx
---------------------------
Xxxxxxxx X. Xxxxx