SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
Enterprise 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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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<PAGE>
March 20, 1997
Dear Stockholder:
You are cordially invited to attend the 1997 Annual Meeting of the
Stockholders (the "Annual Meeting") of Enterprise Bancorp, Inc. (the "Company"),
the parent holding company of Enterprise Bank and Trust Company, to be held
Tuesday, May 6, 1997 at 4:00 p.m. local time, at the Sheraton Inn Riverfront, 50
Warren Street, Lowell, Massachusetts.
The Annual Meeting has been called for the following purposes:
1. To elect four Directors of the Company, each for a three-year
term;
2. To ratify the Board of Directors' appointment of KPMG Peat
Marwick LLP as the Company's independent auditors for the
fiscal year ending December 31, 1997; and
3. To transact such other business as may properly come before
the meeting or any adjournments or postponements thereof.
The accompanying Proxy Statement of the Company provides information
concerning the matters to be voted on at the Annual Meeting. Also enclosed is
the Company's 1996 Annual Report to Stockholders, which contains additional
information and results for the year ended December 31, 1996, including the
Company's Annual Report on Form 10-KSB as filed with the Securities and Exchange
Commission.
It is important that your shares be represented at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, you are requested to
complete, date, sign and return the enclosed proxy card in the enclosed postage
paid envelope.
Thank you for returning your proxy. We appreciate your continuing
support of the Company.
Sincerely,
George L. Duncan
Chairman of the Board
and Chief Executive Officer
<PAGE>
ENTERPRISE BANCORP, INC.
222 MERRIMACK STREET
LOWELL, MASSACHUSETTS 01852
TELEPHONE: (508) 459-9000
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Tuesday, May 6, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Enterprise Bancorp, Inc. (the "Company") will be held at the Sheraton Inn
Riverfront, 50 Warren Street, Lowell, Massachusetts at 4:00 p.m. local time on
Tuesday, May 6, 1997 for the following purposes:
1. To elect Gerald G. Bousquet, Kathleen M. Bradley, James F.
Conway, III and Nancy L. Donahue as Directors of the Company,
each to serve for a three-year term (Proposal One);
2. To ratify the Board of Directors' appointment of KPMG Peat
Marwick LLP as the Company's independent auditors for the
fiscal year ending December 31, 1997 (Proposal Two); and
3. To transact such other business as may properly come before
the meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 10,
1997 as the record date for determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting and any adjournments or postponements
thereof. Only holders of the Company's common stock of record at the close of
business on that date will be entitled to notice of and to vote at the Annual
Meeting and any adjournments thereof.
In the event there are not sufficient votes to approve any of the
foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be
adjourned in order to permit further solicitation of proxies by the Company.
By Order of the Board of Directors
Arnold S. Lerner
Clerk
Lowell, Massachusetts
March 20, 1997
EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE ANNUAL MEETING AND DESIRE TO WITHDRAW YOUR PROXY AND VOTE IN PERSON,
YOU MAY DO SO.
<PAGE>
ENTERPRISE BANCORP, INC.
222 MERRIMACK STREET
LOWELL, MASSACHUSETTS 01852
Telephone: (508) 459-9000
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Tuesday, May 6, 1997
General
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Enterprise Bancorp, Inc. (the
"Company"), the parent holding Company of Enterprise Bank and Trust Company (the
"Bank"), for the 1997 Annual Meeting of Stockholders of the Company (the "Annual
Meeting"), to be held on Tuesday, May 6, 1997 at 4:00 p.m. local time, at the
Sheraton Inn Riverfront, 50 Warren Street, Lowell, Massachusetts and at any
adjournments or postponements thereof. This Proxy Statement, the accompanying
Notice of Annual Meeting and the accompanying proxy card are first being mailed
to stockholders on or about March 20, 1997.
The Annual Meeting has been called for the following purposes: (1) to
elect a class of four Directors of the Company, each for a three-year term; (2)
to ratify the appointment of KPMG Peat Marwick LLP as the Company's independent
auditors; and (3) to transact such other business as may properly come before
the Annual Meeting or any adjournments or postponements thereof.
The Company is a Massachusetts corporation and a registered bank
holding company. The Company was initially organized on February 29, 1996 and
became the parent corporation of the Bank pursuant to a reorganization of the
Bank into a holding company structure, which was completed on July 26, 1996.
Record Date
The Board of Directors has fixed the close of business on March 10,
1997 as the Record Date for the determination of stockholders entitled to notice
of and to vote at the Annual Meeting and any adjournments thereof. Only holders
of record of the Company's common stock at the close of business on the Record
Date will be entitled to notice of and to vote at the Annual Meeting and any
adjournments thereof. At the close of business on the Record Date, there were
1,576,192 shares of the Company's common stock, par value $0.01 per share (the
"Common Stock"), issued and outstanding and entitled to vote at the Annual
Meeting and any adjournments thereof. As of such date there were approximately
594 holders of record of the Common Stock. The holders of each share of the
Common Stock outstanding as of the close of business on the Record Date will be
entitled to one vote for each share held of record upon each matter properly
submitted to the Annual Meeting or any adjournments thereof.
Proxies
Holders of the Common Stock are requested to complete, date, sign and
promptly return the accompanying proxy card in the enclosed envelope which
requires no postage if mailed in the United States. If the enclosed form of
proxy is properly executed and returned to the Company in time to be voted at
the Annual Meeting, the shares represented thereby will, unless such proxy has
previously been revoked, be voted in accordance with the instructions marked
thereon. Executed proxies with no instructions indicated thereon will be voted
(1) FOR the election of Gerald G. Bousquet, Kathleen M. Bradley, James F.
Conway, III and Nancy L. Donahue, the four nominees of the Board of Directors,
as Directors of the Company, (2) FOR the
<PAGE>
ratification of the Board of Directors' appointment of KPMG Peat Marwick LLP as
the Company's independent auditors for the fiscal year ending December 31, 1997,
and (3) in such manner as management's proxy-holders shall decide on such other
matters as may properly come before the Annual Meeting.
The presence of a stockholder at the Annual Meeting will not
automatically revoke a stockholder's proxy. A stockholder may, however, revoke a
proxy at any time prior to the voting thereof on any matter (without, however,
affecting any vote taken prior to such revocation) by filing with the Clerk of
the Company a written notice of revocation, by delivering to the Company a duly
executed proxy bearing a later date, or by attending the Annual Meeting and
voting in person. All written notices of revocation and other communications
with respect to revocation of proxies in connection with the Annual Meeting
should be addressed as follows: Enterprise Bancorp, Inc., 222 Merrimack Street,
Lowell, Massachusetts 01852, Attention: Arnold S. Lerner, Clerk.
It is not anticipated that any matters other than those set forth in
the foregoing proposals (1) and (2) contained in this Proxy Statement will be
brought before the Annual Meeting. If any other matters properly come before the
Annual Meeting, the persons named as proxies will vote upon such matters in
their discretion in accordance with their best judgment.
In addition to use of the mails, proxies may be solicited personally or
by telephone or telegraph by officers, Directors and employees of the Company
who will not be specially compensated for such solicitation activities.
Arrangements will also be made with brokerage houses and other custodians,
nominees and fiduciaries for forwarding solicitation materials to the beneficial
owners of shares held of record by such persons, and the Company will reimburse
such persons for their reasonable out-of-pocket expenses incurred in that
connection. The cost of soliciting proxies will be borne by the Company.
Quorum; Vote Required
The presence, in person or by proxy, of at least a majority of the
total number of outstanding shares of the Common Stock is necessary to
constitute a quorum at the Annual Meeting for the transaction of business.
Abstentions and "broker non-votes" (as defined below) will be counted as present
for purposes of determining the presence or absence of a quorum for the
transaction of business at the Annual Meeting. A quorum being present, the
affirmative vote of a plurality of the votes cast at the Annual Meeting is
required to elect a class of four Directors of the Company (Proposal One).
Abstentions and broker non-votes will not be counted as "votes cast" for
purposes of electing a class of four Directors of the Company and, therefore,
will not affect the election of Directors of the Company. Approval of the
proposal to ratify the appointment of independent auditors (Proposal Two)
requires the affirmative vote of a majority of the shares present and voting, in
person or by proxy, at the Annual Meeting. Abstentions and broker non-votes will
not be included among the votes deemed to be cast at the Annual Meeting for
purposes of approving the proposal to ratify the appointment of independent
auditors and, therefore, will not have the effect of either votes "for" or votes
"against" this proposal.
A "broker non-vote" is a proxy from a broker or other nominee
indicating that such person has not received instructions from the beneficial
owner or other person entitled to vote the shares which are the subject of the
proxy on a particular matter with respect to which the broker or other nominee
does not have discretionary voting power.
The Directors and executive officers of the Company have indicated that
they intend to vote all shares of the Common Stock which they are entitled to
vote in favor of each of proposals (1) and (2) presented herein. On the Record
Date, the Directors and executive officers of the Company in the aggregate had
the right to vote 467,745 shares of the Common Stock representing approximately
29.68% of the outstanding shares of the Common Stock as of such date.
-2-
<PAGE>
PROPOSAL ONE - ELECTION OF CLASS OF DIRECTORS
The Company's By-Laws provide that the number of Directors shall be set
by a majority vote of the entire Board of Directors, which has been set at 13.
Under the Company's Articles of Organization and ByLaws, this number shall be
divided into three classes, as nearly equal in number as possible, with the
Directors in each class serving a term of three years and until their respective
successors are duly elected and qualified, or until his or her earlier
resignation, death or removal. As the term of one class expires, a successor
class is elected at the annual meeting of stockholders for that year.
At the Annual Meeting, there are four Directors to be elected to serve
until the 2000 annual meeting of stockholders and until their respective
successors are duly elected and qualified, or until his or her earlier
resignation, death or removal. The Board of Directors has nominated each of
Gerald G. Bousquet, Kathleen M. Bradley, James F. Conway, III and Nancy L.
Donahue, for election as a Director for a three-year term.
Unless authority to do so has been withheld or limited in the proxy, it
is the intention of the persons named in the proxy to vote the shares
represented by each properly executed proxy for the election as a Director of
each of the nominees named above. The Board of Directors believes that all of
the nominees will stand for election and will serve as a Director if elected.
However, if any person nominated by the Board of Directors fails to stand for
election or is unable or refuses to accept election, the proxies will be voted
for the election of such other person or persons as the Board of Directors may
recommend.
Recommendation of Directors
The Board of Directors recommends that the stockholders vote FOR the
election of Gerald G. Bousquet, Kathleen M. Bradley, James F. Conway, III and
Nancy L. Donahue, the four nominees proposed by the Board of Directors, as
Directors of the Company to serve until the 2000 annual meeting of stockholders
and until their successors are elected and qualified.
Information Regarding Directors and Nominees
The following table sets forth certain information for each of the four
nominees for election as Directors at the Annual Meeting and for those
continuing Directors whose terms expire at the annual meetings of the Company's
stockholders in 1998 and 1999. Each individual has been engaged in his or her
principal occupation for at least five years, except as otherwise indicated.
-3-
<PAGE>
<TABLE>
<CAPTION>
Nominees
(Term to Expire in 2000)
Name, Age and Principal Occupation Director Since (1)
<S> <C>
Gerald G. Bousquet, M.D. (63) 1988
Physician; director and partner in
several health care facilities
Kathleen M. Bradley (72) 1988
Former Owner, Westford Sports Center, Inc.
James F. Conway, III (44) 1989
Chairman, Chief Executive Officer and President
Courier Corporation
Nancy L. Donahue (66) 1988
Chair of the Board of Trustees, Merrimack Repertory Theatre
<CAPTION>
Continuing Directors
(Term to Expire in 1998)
Name, Age and Principal Occupation Director Since (1)
<S> <C>
Walter L. Armstrong (60) 1989
Executive Vice President of the Bank
George L. Duncan (56) 1988
Chairman and Chief Executive Officer of the Company since its inception;
Chairman and Chief Executive Officer of the Bank
John P. Harrington (54) 1989
Since February 1995, Senior Vice President,
Colonial Gas Company; prior thereto, Vice
President, Colonial Gas Company; Director, Colonial Gas Company
Charles P. Sarantos (71) 1991
Chairman, C&I Electrical Supply Co., Inc.
Michael A. Spinelli (64) 1988
Owner, Merrimac Travel and Action Six
Travel Network
-4-
<PAGE>
<CAPTION>
Continuing Directors
(Term to Expire in 1999)
Name, Age and Principal Occupation Director Since (1)
<S> <C>
Kenneth S. Ansin (32) 1994
President and Chief Executive Officer,
L.B. Evans Company; President and
Chief Executive Officer of Ansewn
Shoe Company
Eric W. Hanson (53) 1991
Chairman and President
D.J. Reardon Company, Inc.
Arnold S. Lerner (67) 1988
Partner in WLLH Radio (Lowell)
and in several other radio stations;
Director, Courier Corporation
Richard W. Main (49) 1989
President of the Company since its inception;
President, Chief Operating Officer and
Chief Lending Officer of the Bank
- --------------------------------
<FN>
(1) All of the Directors are also Directors of the Bank, and the years
listed in the foregoing tables are the respective years in which each
named individual became a Director of the Bank. Each Director became a
Director of the Company in 1996 in conjunction with the reorganization
in such year of the Bank into a holding company structure.
</FN>
</TABLE>
Meetings of Board of Directors and Committees
There were three (3) meetings (or actions in lieu of meetings) of the
Board of Directors from February 29, 1996 (the date on which the Company was
initially organized) through December 31, 1996. During such period, all
directors attended more than 75% in the aggregate of such total number of
meetings held by the Board of Directors and the total number of meetings of each
of the committees of the Board of Directors on which he or she served.
The Company's Board of Directors maintains three standing committees,
an executive committee, an audit committee and a compensation committee. The
executive committee, composed of Messrs. Duncan and Lerner, together with two
additional members chosen to serve on a three-month rotating basis, is
authorized to manage and transact the business of the Company. The audit
committee, composed of Ms. Bradley and Messrs. Hanson, Harrington and Spinelli,
recommends to the Board of Directors the appointment of an independent certified
public accounting firm to serve as independent auditors to the Company, and
oversees and reviews all internal audit examinations and reports and reviews all
reports of examination of the Company prepared by regulatory authorities. The
compensation committee, composed of Messrs. Conway, Hanson and Lerner, is
responsible for overseeing the administration of the employee benefit and
-5-
<PAGE>
compensation programs of the Company. As the Company's business activities since
its inception have been confined principally to, initially, activities relating
to its organization and subsequent acquisition of all of the capital stock of
the Bank, and, subsequently, holding all such capital stock, none of the
committees of the Company's Board of Directors were required to meet during the
period from February 29, 1996 (the date on which the Company was initially
organized) through December 31, 1996.
The Bank's Board of Directors, which met twelve (12) times during the
year ended December 31, 1996, has an executive committee, audit committee,
compensation/personnel committee, investment and asset/liability committee,
marketing committee, banking technology committee, trust committee, overdue loan
review committee and ECOA (Equal Credit Opportunity Act) committee.
Executive Committee. The executive committee is authorized to manage
and transact the business of the Bank. In addition, loans over certain amounts
must be pre-approved by at least two members of the executive committee. Messrs.
Duncan (chair of the committee) and Lerner serve as permanent members of the
executive committee, while two members are chosen to serve on a three-month
rotating basis from among the remaining members of the Board of Directors. The
committee held twelve (12) meetings in 1996.
Audit Committee. The audit committee oversees and reviews all internal
audit examinations and reports and reviews all reports of examination of the
Bank prepared by bank regulatory authorities. The current members of the
committee are Ms. Bradley and Messrs. Hanson, Harrington and Spinelli (chair of
the committee). The committee held five (5) meetings in 1996.
Compensation/Personnel Committee. The compensation/personnel committee
is responsible for overseeing the administration of the employee benefit and
compensation programs of the Bank. Messrs. Conway (chair of the committee),
Hanson and Lerner serve on the committee. The committee held ten (10) meetings
in 1996.
Investment and Asset/Liability Committee. The investment and
asset/liability committee is authorized to develop and refine the strategic
investment portfolio objectives of the Bank to ensure that the Bank maintains a
portfolio consistent with sound investment and banking practices. Messrs.
Conway, Duncan, Lerner (chair of the committee) and Main serve on the committee.
Two additional members are chosen to serve on a three-month rotating basis from
among the remaining members of the Bank's Board of Directors.
The committee held thirteen (13) meetings in 1996.
Marketing Committee. The marketing committee reviews the Bank's
marketing activities. The current members of the committee are Messrs. Ansin,
Armstrong, Duncan, Harrington, Lerner, Main, and Ms. Donahue (chair of the
committee). The committee held two (2) meetings in 1996.
Banking Technology Committee. The banking technology committee is
responsible for overseeing the administration of the Bank's data processing
function. Messrs. Ansin, Bousquet, Main and Sarantos (chair of the committee)
serve on the committee. The committee held four (4) meetings in 1996.
Trust Committee. The trust committee is responsible for overseeing
trust activities including administering trust policy and reviewing trust
accounts. Messrs. Conway, Duncan, Lerner (chair of the committee) and Main serve
on the committee. The committee held twelve (12) meetings in 1996.
Overdue Loan Review Committee. The overdue loan review committee
reviews and assesses all loan delinquencies. The current members of the
committee are Messrs. Armstrong, Bousquet (chair of the committee), Harrington,
Main, Sarantos, and Mesdames Bradley and Donahue. The committee held four (4)
meetings in 1996.
-6-
<PAGE>
ECOA Committee. The ECOA committee is responsible for reviewing,
enhancing and developing policies and procedures to combat possible
discrimination in lending. Mr. Ansin and Ms. Donahue (chair of the committee)
serve on the committee, which did not meet in 1996.
Information Regarding Executive Officers and Other Significant Employees
Set forth below is certain information regarding the executive officers
and other significant employees of the Company (including the Bank), other than
those executive officers who are also Directors of the Company and for whom such
information has been provided above. Each individual named below has held his or
her position for at least five years, except as otherwise indicated.
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Brian H. Bullock 39 Senior Vice President and Chief Commercial Lender of
the Bank since December 1996; prior thereto, Senior
Vice President and Commercial Lending Officer of the
Bank
John P. Clancy, Jr. 39 Treasurer of the Company since its inception; Senior
Vice President, Chief Financial Officer, Treasurer and
Chief Investment Officer of the Bank since December
1996; prior thereto, Senior Vice President, Chief
Financial Officer and Treasurer of the Bank
Robert R. Gilman 51 Executive Vice President, Administration, and
Commercial Lender of the Bank since December 1996;
prior thereto, Senior Vice President, Administration,
and Commercial Lender of the Bank
Stephen J. Irish 42 Senior Vice President and Chief Information and Chief
Operations Officer of the Bank since December 1996;
prior thereto, Senior Vice President and Chief
Information Officer of the Bank
Diane J. Silva 39 Senior Vice President and Mortgage Lending Officer of
the Bank
D. Eric Thomson 64 Senior Vice President and Senior Trust Officer of the
Bank
Janice R. Villanucci 44 Senior Vice President and Manager of Customer
Support of the Bank
</TABLE>
Executive Compensation
Summary Compensation Table. The following table sets forth the
compensation paid by the Company (through the Bank) for services rendered in all
capacities during the year ended December 31, 1996, to the chief executive
officer and each of the four most highly compensated executive officers of the
Bank (the "Named Executive Officers"). The Company does not employ any persons,
other than through the Bank.
-7-
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Annual Compensation
Compensation Awards
------------ ------------
Securities
Salary Bonus Underlying All Other
Name and Principal Position Year ($) ($) Options(#) Compensation (1)
- --------------------------- ---- ----- ----- ---------- ------------
<S> <C> <C> <C> <C> <C>
George L. Duncan 1996 $156,250 $ 78,219 5,500 $ 25,335 (2)
Chairman and Chief 1995 $156,250 $ 50,387 5,500 $ 4,625
Executive Officer of the 1994 $156,250 $ 19,180 - 0 - $ 3,854
Company and the Bank
Richard W. Main 1996 $124,345 $ 62,255 2,750 $ 4,750
President of the Company and 1995 $124,345 $ 39,950 2,750 $ 4,625
President, Chief Operating 1994 $124,345 $ 15,232 - 0 - $ 3,908
Officer and Chief Lending
Officer of the Bank
Walter L. Armstrong 1996 $119,600 - 0 - 1,500 $ 4,750
Executive Vice President, 1995 $115,943 - 0 - 1,000 $ 4,625
Business Development, of the 1994 $118,960 - 0 - - 0 - $ 3,472
Bank
Robert R. Gilman 1996 $ 96,180 $ 15,052 1,500 $ 4,700
Executive Vice President, 1995 $ 96,180 $ 17,793 1,000 $ 3,892
Administration, and 1994 $ 96,180 $ 11,782 - 0 - $ 2,803
Commercial Lender of the
Bank
John P. Clancy, Jr. 1996 $ 93,767 $ 14,675 1,500 $ 4,400
Treasurer of the Company and 1995 $ 93,767 $ 17,347 1,000 $ 4,218
Senior Vice President, Chief 1994 $ 93,767 $ 11,487 - 0 - $ 2,914
Financial Officer, Treasurer
and Chief Investment Officer
of the Bank
- -----------------
<FN>
(1) Reflects the Bank's matching contribution on behalf of each Named
Executive Officer to the Bank's existing 401(k) plan.
(2) Includes the dollar value, in an amount of $20,710, of the benefit to
Mr. Duncan of a portion (unrelated to term insurance coverage) of the
annual premium paid by the Bank under a split-dollar life insurance
policy projected on an actuarial basis. The premiums paid by the Bank
over the life of the policy will be fully recovered by the Bank.
</FN>
</TABLE>
-8-
<PAGE>
Director Compensation
The Company pays no separate compensation to the Directors for their
service as members of the Company's Board of Directors. The Bank pays $200 to
Directors for Board of Directors meetings, $200 to Directors for executive
committee meetings, $150 to Directors for all other committee meetings, a $100
monthly retainer to all Directors and a $100 monthly retainer to executive
committee members. The Bank also pays a $100 monthly retainer to the
vice-chairman of the Board of Directors, a $200 monthly retainer to the Clerk of
the Bank and $200 to the chairpersons of the investment and asset/liability,
trust, banking technology, ECOA, compensation/personnel, overdue loan review,
audit and marketing committees for each meeting attended. Directors who are also
salaried employees or officers of the Bank are not paid for attending Board of
Directors or committee meetings.
Employment Agreements
The Bank has entered into employment agreements with each of Messrs.
Duncan and Main.
The term of Mr. Duncan's agreement is a "rolling" three (3) years until
and unless terminated based on the occurrence of any of the following events:
(i) thirty-six (36) months after notice is given by the Bank to Mr. Duncan that
it no longer desires to extend the agreement; (ii) the death of Mr. Duncan;
(iii) the termination of Mr. Duncan by the Bank for cause; (iv) sixty (60) days
after notice is given by Mr. Duncan to the Bank at any time after the occurrence
of a Business Combination as defined in the Bank's articles of organization; and
(v) sixty (60) days after notice is given by Mr. Duncan to the Bank following
the Board of Directors' failure to re-elect Mr. Duncan as the chief executive
officer of the Bank.
Mr. Duncan receives a minimum annual base salary under the agreement of
$156,250, which is subject to periodic upward adjustments as determined by the
Board of Directors. In addition to his base salary, Mr. Duncan is entitled to
participate in all other benefit plans and otherwise receive all other fringe
benefits that the Bank from time to time makes available to its officers.
Following the occurrence of any Business Combination, Mr. Duncan has
the option, upon 60 days advance written notice to the Bank, to terminate the
agreement, in which event the Bank is obligated to pay Mr. Duncan 2.99 times his
previous highest annual earnings under the agreement. If Mr. Duncan exercises
the option to terminate under such circumstances, he is relieved of the
non-competition restrictions that would otherwise apply upon his termination of
the agreement.
If the Board of Directors fails to re-elect Mr. Duncan chief executive
officer at any time during the period of the agreement, then Mr. Duncan has the
options, upon sixty (60) days advance written notice to the Bank to (i) remain
as a full-time employee; (ii) terminate the agreement; or (iii) serve the Bank
as a consultant in lieu of serving in another capacity. In the event Mr. Duncan
elects to terminate the agreement because he is no longer the chief executive
officer, he shall receive compensation from the Bank for two (2) years. The
compensation shall equal the highest annual earnings paid to Mr. Duncan during
any year of the agreement. During the two-year period he is receiving payments
under the agreement and in consideration of the compensation to be paid to him,
Mr. Duncan is prohibited from competing with the Bank. In the event Mr. Duncan
elects to serve as a consultant to the Bank, he would be required to devote
approximately one-half of his time to the business and affairs of the Bank and
would receive as compensation a salary equal to one-half of the highest annual
earnings paid to him during the period in which he served the Bank in the
capacity of chief executive officer.
If Mr. Duncan becomes disabled during the term of the agreement, then
the Bank may elect to stop paying Mr. Duncan his regular annual earnings and,
upon notice, pay Mr. Duncan during the period of his disability an amount equal
to seventy-five percent of the highest annual earnings paid to him during the
term
-9-
<PAGE>
of the agreement less any amounts payable to him under the Bank's group
disability plan. If Mr. Duncan dies while the agreement is in effect, then the
Bank will continue to provide health insurance coverage under its group plan to
Mr. Duncan's spouse and children in accordance with certain conditions specified
in the agreement.
Under the terms of the agreement, Mr. Duncan is prohibited from
competing with the Bank during the two-year period from the date on which the
agreement is terminated for any reason, except as described above in the event
of Mr. Duncan's termination of the agreement following a Business Combination.
During each year of the two-year non-compete period, Mr. Duncan would be
entitled to receive salary payments at least equal to seventy percent of the
highest annual earnings paid to him during any year of the term of the
agreement.
The terms of Mr. Main's employment agreement are substantially
equivalent to those of Mr. Duncan's employment agreement, except that (i) the
term of Mr. Main's agreement is for a "rolling" two (2) years; (ii) Mr. Main's
minimum annual base salary is $124,345; (iii) the office which the agreement
contemplates will be held by Mr. Main is the office of president; and (iv) Mr.
Main's potential termination payment following a Business Combination is two (2)
times his previous highest annual earnings under the agreement.
Split-Dollar Agreement
The Bank has entered into a split-dollar agreement with Mr. Duncan,
pursuant to which the Bank pays the annual premiums due on an insurance policy
covering the life of Mr. Duncan, which has been assigned to the Bank by Mr.
Duncan as collateral for the amounts to be advanced by the Bank under the
agreement. The face amount of the policy is $2,172,584. Upon the death of Mr.
Duncan, the Bank will receive a portion of the death benefit payable under the
policy equal to the total amount of its share of the premiums previously paid by
it, and the balance of such death benefit will be payable to such
beneficiary(ies) designated by Mr. Duncan. Upon Mr. Duncan's termination of
employment with the Bank, he will have a right to receive the cash value of the
policy, if any, in excess of the amount payable to the Bank pursuant to its
collaterally assigned interest in the policy. The annual premium payment by the
Bank is $143,800, of which a small portion is attributed to term insurance
coverage and is allocated as taxable annual income to Mr. Duncan (e.g., $5,000
in the first year of the policy and increasing to $9,380 in the ninth year of
the policy). At the end of the tenth policy year, and thereafter assuming that
Mr. Duncan were to retire from employment with the Bank at such time, the Bank
would have a cash value and corresponding death benefit interest in the policy
of $1,232,524, while Mr. Duncan would have a right to a projected annual annuity
payment of $89,513, with a projected cash value interest in the policy of
$257,796 (increasing to a projected $295,232 by the end of the twenty-eighth
policy year) and a projected death benefit of $574,837 (decreasing to a
projected $518,242 by the end of the twenty-eighth policy year).
Stock Option Plan
The Company's 1988 stock option Plan (the "Stock Option Plan"), which
was assumed by the Company from the Bank in connection with the Bank's
reorganization into a holding company structure, serves as a performance
incentive for the Company's (including the Bank's) officers and other employees.
The Company does not maintain any "long-term incentive plans" as such term is
used for purposes of the SEC's Regulation S-K.
The Stock Option Plan is administered by the compensation committee.
The compensation committee has complete authority to administer the Stock Option
Plan, which includes the authority to determine the persons to whom options
should be granted, the number of shares and the types of options to be offered,
and other terms and conditions of the options.
-10-
<PAGE>
Under the Stock Option Plan, the compensation committee is authorized
to grant options without further stockholder approval to officers and other
employees of the Company to purchase up to 153,902 shares of the Common Stock at
the fair market value of such shares at the date of grant. Shares of the Common
Stock subject to an option granted under the Stock Option Plan which are not
exercised prior to expiration of the option may be used for purposes of granting
subsequent options. Neither the Stock Option Plan nor any other employee benefit
plan maintained by the Company provides for the granting of "stock appreciation
rights (SARs)" as such term is used for purposes of the SEC's Regulation S-K.
Both "incentive stock options" and "non-qualified stock options" may be
granted pursuant to the Stock Option Plan. The Company intends that the
"incentive stock options" granted under the Stock Option Plan will qualify under
Section 422 of the Internal Revenue Code of 1986, as amended. The market value
of all Common Stock available for the first time in any year under all such
incentive stock options granted to any person under the Stock Option Plan is
limited to $100,000. For this purpose, the value of the the Common Stock is
determined at the date of grant of each such option. No gain or loss will be
recognized by the Company or the employee as a result of the grant or exercise
of an incentive stock option, and any gain realized by an optionee at the time
of sale of the shares acquired upon exercise of an incentive stock option will
be treated as a capital gain, provided that such shares are held by the optionee
for at least one year after the date of exercise and two years after the date of
grant. Only in the event that an optionee disposes of these shares prior to the
close of the holding period will the Company be entitled to claim a tax
deductible expense in an amount equal to the difference between the exercise
price and the fair market value of the shares on the date of exercise.
In the case of non-qualified stock options, an optionee will be deemed
to receive income taxable at ordinary income rates upon exercise of a
non-qualified stock option in an amount equal to the difference between the
exercise price and the fair market value of the Common Stock on the date of
exercise. The amount of such taxable income will be a tax deductible expense to
the Company.
All options granted under the Stock Option Plan are required to have an
exercise price per share equal to a least the fair market value of a share of
the Common Stock on the date the option is granted. No option granted under the
Stock Option Plan is exercisable after the date on which the optionee ceases to
be employed by the Company (including the Bank) (except that if employment is
terminated as a result of death or disability, options may be exercisable by the
optionee or his or her estate as the case may be for up to one year thereafter),
or if the optionee continues to be employed by the Company, after the tenth
anniversary of the date on which the option was granted. Payment for shares
purchased pursuant to an option may be made in cash or check.
As of February 28, 1997, options to purchase a total of 127,650 shares
were outstanding. A total of 26,300 options were granted in 1996. All options
granted to date are classified as incentive stock options. Options to purchase
24,852 shares remain available to be granted. The exercise price for all of the
options granted to date under the Stock Option Plan ranges from $11.00 to
$14.00. The options are exercisable at the rate of 25% a year starting from
either the employee's date of hire or the date of the option grant. As of
February 28, 1997, of the options that have been granted under the Stock Option
Plan, options to purchase 1,400 shares have been exercised. The following table
shows individual grants of stock options to the Named Executive Officers during
the year ended December 31, 1996.
-11-
<PAGE>
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants in 1996
Number of Percent of Total
Securities Options
Underlying Granted to
Options Employee in Exercise or Base
Name Granted (#) Fiscal Year Price ($/Sh ) Expiration Date
- ---- ----------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
George L. Duncan 5,500 20.91% $14.00 07/03/2006
Richard W. Main 2,750 10.46% $14.00 07/03/2006
Walter L. Armstrong 1,500 5.70% $14.00 07/03/2006
Robert R. Gilman 1,500 5.70% $14.00 07/03/2006
John P. Clancy, Jr. 1,500 5.70% $14.00 07/03/2006
</TABLE>
The following table shows each exercise of stock options by the Named
Executive Officers during the year ended December 31, 1996 and the unexercised
stock options held by such persons as of such date:
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Number of
Securities Value of
Underlying Unexercised In-
Unexercised the-Money
Options at Fiscal Options at Fiscal
Shares Acquired Year-End (#) Year-End ($)
on Exercisable/ Exercisable/
Name Exercise (#) Value Realized ($) Unexercisable Unexercisable (1)
- ---- -------------- ------------------ ------------- -------------
<S> <C> <C> <C> <C>
George L. Duncan - 0 - --- 21,175/9,625 $123,612/$30,937
Richard W. Main - 0 - --- 10,587/4,813 $ 61,804/$15,464
Walter L. Armstrong - 0 - --- 10,150/2,250 $ 60,275/$ 7,125
Robert R. Gilman - 0 - --- 4,250/2,250 $ 24,875/$ 7,125
John P. Clancy, Jr. - 0 - --- 3,750/2,250 $ 21,875/$ 7,125
- --------------------
<FN>
(1) The dollar values shown equal the product of (x) the difference between
$17.00 (which represents the price at which shares of the Common Stock
were, to the best knowledge of the Board of Directors, most recently
traded in a privately negotiated arm's-length purchase and sale
transaction between an unaffiliated buyer and seller) and the exercise
price of the options and (y) the number of shares subject to the
options.
</FN>
</TABLE>
-12-
<PAGE>
Retirement Plan
The Company maintains (through the Bank) a 401(k) plan (the "Plan").
For the year ended December 31, 1996, the Company's expense for contributions to
the Plan totaled $86,964. The Company does not offer any other pension plan to
employees.
Eligible employees under the Plan may direct the Bank to reduce their
current compensation, and contribute to the Plan, up to 15% of such compensation
(the participant's "pre-tax contributions"). The Bank also makes contributions
matching the portion of each participant's pre-tax contributions not exceeding
6% of such participant's compensation. The precise percentage amount of the
Bank's pre-tax matching contributions is determined annually by the Board of
Directors. The percentage match for the years 1990 through 1996 was 50% of the
participants' first 6% of contributions. Participant pre-tax and matching
contributions are invested according to participant's instructions in a limited
number of investment funds.
Amounts allocated to a participant's accounts under the Plan generally
are not distributable prior to termination of employment, except that a
participant's pre-tax contributions may be withdrawn by the participant on
account of financial hardship and participants may borrow within limits from the
Plan. Upon termination of employment, a participant is always entitled to a
distribution of the value of his or her pre-tax contributions, but unless
termination occurs after attainment of age 65, or on account of death or
disability, a participant may be entitled to only a percentage of the value of
his or her matching contributions.
Insurance and Other Benefits
Full-time officers and employees have the option to be covered by group
health and dental insurance, long-term disability insurance and life insurance
which are available on the same terms to all employees who meet the required
minimum hours. The Company pays for a portion of the cost. Tuition reimbursement
is also available to employees for certain education programs.
Transactions with Certain Related Persons
The Bank leases its headquarters from First Holding Trust. Mr. Duncan
is a trustee of First Holding Trust and is a general partner of Old City Hall
Limited Partnership which is, in turn, the beneficiary of First Holding Trust.
Messrs. Main, Armstrong, Gilman and Clancy are limited partners of Old City Hall
Limited Partnership. Mr. Duncan has a 17% ownership interest, and Messrs. Main,
Armstrong, Gilman and Clancy each have a 5% ownership interest in Old City Hall
Limited Partnership. Under the terms of the Bank's lease with First Holding
Trust, the Bank paid $129,637 and $178,684, respectively, in rent, parking fees,
taxes and maintenance for the years ended December 31, 1996 and December 31,
1995.
Certain Directors and executive officers of the Company are also
customers of the Bank and have entered into loan transactions with the Bank in
the ordinary course of business. In addition, certain Directors are also
directors, officers or stockholders of corporations, non-profit entities or
members of partnerships which are customers of the Bank and which enter into
loan and other transactions with the Bank in the ordinary course of business.
Such loan transactions with Directors and executive officers of the Bank and
with such corporations and partnerships are on such terms, including interest
rates, repayment terms and collateral, as those prevailing at the time for
comparable transactions with persons who are not affiliated with the Bank and do
not involve more than a normal risk of collectibility or present other features
unfavorable to the Bank.
-13-
<PAGE>
SECURITIES OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to Directors,
Named Executive Officers and Directors and executive officers as a group and
persons known to the Company who are known to be the beneficial owners of more
than five percent (5%) of the the Common Stock as of February 28, 1997.
Information includes the total number of shares of the Common Stock known by the
Company to be beneficially owned by each such person and group and the
percentage of the Common Stock each such person and group beneficially owns. All
shares are owned of record and beneficially, and each person and group
identified has sole voting and investment power with respect to such shares,
except as otherwise noted.
<TABLE>
<CAPTION>
Shares of Common Stock Percent of Total
Directors Beneficially Owned (1) Common Stock
- --------- ---------------------- -----------------
<S> <C>
Kenneth S. Ansin 11,000 *
Walter L. Armstrong (2) 13,250 *
Gerald G. Bousquet 7,000 *
Kathleen M. Bradley 7,000 *
James F. Conway, III 91 *
Nancy L. Donahue 5,000 *
George L. Duncan (3) 134,254 8.52%
710 Andover Street
Lowell, MA 01852
Eric W. Hanson (4) 95,350 6.05%
Three Boardwalk
Chelmsford, MA 01824
John P. Harrington 100 *
Arnold S. Lerner (5) 131,000 8.31%
155 Pine Hill Road
Hollis, NH 03049
Richard W. Main (6) 23,887 1.52%
Charles P. Sarantos (7) 9,600 *
Michael A. Spinelli 60,000 3.81%
Other Named Executive Officers
- ------------------------------
Robert R. Gilman (8) 5,750 *
John P. Clancy, Jr. (9) 4,950 *
All Directors and Executive Officers 529,732 33.60%
as a Group (20 Persons) (10)
-14-
<PAGE>
Other 5% Stockholders
- ---------------------
Ronald M. Ansin 156,000 9.90%
132 Littleton Road
Harvard, MA 01451
- ---------------------
<FN>
* Named individual beneficially owns less than 1% of total Common Stock.
(1) The information as to the Common Stock beneficially owned has been
furnished by each such stockholder. All persons having sole voting and
investment power over the shares, unless otherwise indicated.
(2) Includes 10,150 options to purchase the Common Stock which are
currently vested, but which have not been exercised. This figure does
not include an option to purchase up to 25,000 shares of the Common
Stock owned by Mr. Duncan, which option was granted to Mr. Armstrong by
Mr. Duncan.
(3) Includes 21,175 options to purchase the Common Stock which are
currently vested but which have not been exercised, 2,500 shares owned
by Mr. Duncan's wife and 2,500 shares owned by Mr. Duncan's children.
Includes 50,000 shares owned by Mr. Duncan, which are subject to
options granted by Mr. Duncan to Mr. Armstrong and Mr. Main.
(4) Includes 91,350 shares owned jointly with Mr. Hanson's wife and 4,000
shares owned by Mr. Hanson's children, with respect to which Mr. Hanson
or his wife are the custodians.
(5) Includes 50,000 shares owned by Mr. Lerner's wife and 15,000 shares
owned by Mr. Lerner's children as to which Mr. Lerner disclaims
beneficial ownership.
(6) Includes 10,587 options to purchase the Common Stock which are
currently vested but which have not been exercised, 3,900 shares owned
jointly with Mr. Main's wife and 800 shares owned by Mr. Main's
children, with respect to which Mr. Main is the custodian. This figure
does not include an option to purchase up to 25,000 shares of the
Common Stock owned by Mr. Duncan, which option was granted to Mr. Main
by Mr. Duncan.
(7) Includes 4,000 shares owned jointly with Mr. Sarantos' wife and 1,000
shares owned jointly by Mr. Sarantos' wife and daughter.
(8) Includes 4,250 options to purchase the Common Stock, which are
currently vested but which have not been exercised, and 1,500 shares
owned by Mr. Gilman jointly with his wife.
(9) Includes 3,750 options to purchase the Common Stock, which are
currently vested but which have not been exercised, and 1,200 shares
owned by Mr. Clancy's children.
(10) Includes options to purchase shares of the Common Stock which are
currently exercisable.
</FN>
</TABLE>
-15-
<PAGE>
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP to serve as
independent auditors of the Company for the fiscal year ending December 31,
1997.
The Company is not required to submit the ratification and approval of
the Board of Directors' appointment of independent auditors to a vote of
stockholders. In the event a majority of the votes cast are against the
appointment of KPMG Peat Marwick LLP, the Board of Directors may consider the
vote and the reasons therefor in future decisions on its appointment of
independent auditors.
Representatives of KPMG Peat Marwick LLP are expected to attend the
annual meeting at which time they will have an opportunity to make a statement
if they wish to do so and will be available to answer any appropriate questions
from stockholders.
Recommendation of Directors
The Board of Directors recommends that the stockholders vote FOR the
ratification of the Board of Directors' appointment of KPMG Peat Marwick LLP as
independent auditors of the Company for the fiscal year ending December 31,
1997.
STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company intended to be presented at
the 1998 Annual Meeting of the Company must be received by the Company no later
than November 20, 1997 to be included in the Company's proxy statement and form
of proxy relating to that meeting. In addition, the Company's articles of
organization and by-laws provide that any stockholder wishing to have any
Director nominations or a stockholder proposal considered at an annual meeting
must provide written notice of said nomination or stockholder proposal to the
Clerk of the Company as set forth in the articles of organization and by-laws of
the Company at its principal executive offices not less than 60 days nor more
than 150 days prior to the date of the scheduled annual meeting; provided,
however, that in the event that less than 70 days notice or prior public
disclosure of the schedule date of the meeting is given or made to stockholders,
notice by the stockholder must be received not later than the close of business
on the 10th day following the day on which such notice of the scheduled date of
the meeting was mailed or such disclosure was made, whichever first occurs. Any
stockholder desiring to submit a nomination or proposal must comply with all of
the procedural and informational requirements contained in the articles of
organization and by-laws of the Company as applicable.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's Directors and executive officers and any other persons who own more
than 10% of the Common Stock file with the SEC initial reports of ownership and
subsequent reports of changes of ownership with respect to their beneficial
ownership of the Common Stock. Such persons are required by SEC regulations to
furnish the Company with copies of all such Section 16(a) reports that they may
be required to file. To the Company's knowledge, based solely on information
furnished to the Company for the year ended December 31, 1996, all such persons
have complied with the applicable Section 16(a) reporting requirements for such
year.
-16-
<PAGE>
OTHER MATTERS
Shares represented by proxies in the enclosed form will be voted as
stockholders direct. Proxies that contain no directions to the contrary will be
voted in favor of the election of the four nominees to serve as Directors of the
Company and the ratification of the appointment of independent auditors. At the
time of preparation of this Proxy Statement, the Board of Directors knows of no
other matters to be presented for action at the Annual Meeting. As stated in the
accompanying proxy card, if any other business should properly come before the
Annual Meeting, proxies have discretionary authority to vote the shares
according to their best judgment.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW ANY PROXY GIVEN
BY YOU AND VOTE YOUR SHARES IN PERSON.
March 20, 1997
-17-
<PAGE>
ENTERPRISE BANCORP, INC.
PROXY
This proxy is solicited on behalf of the Board of Directors of Enterprise
Bancorp, Inc. The Board of Directors recommends a vote FOR Proposals 1 and 2.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned. If no direction is given, this proxy, if otherwise properly
executed, will be voted FOR Proposals 1 and 2.
Name: _______________________________________________________________________
No. of Shares Represented by Proxy: ___ [X] Please mark your votes this way.
The undersigned, a stockholder of Enterprise Bancorp, Inc. (the
"Company"), revoking all prior proxies, hereby appoint(s) George L. Duncan and
Arnold S. Lerner, and each of them with full power of substitution, the
attorneys, agents and proxies of the undersigned to represent and vote all
shares of stock of the Company which the undersigned would be entitled to vote
if personally present at the annual meeting of stockholders of the Company and
any adjournments thereof, to be held at the Sheraton Inn Riverfront, 50 Warren
Street, Lowell, Massachusetts, on Tuesday, May 6, 1997, at 4:00 P.M. as
specified herein as to each of the proposals 1 and 2 below:
Proposal 1: Election of Directors For All Withheld from
Nominees All Nominees
Gerald G. Bousquet, Kathleen M. Bradley, James [ ] [ ]
F. Conway, III and Nancy L. Donahue
[ ] FOR ALL NOMINEES except as noted below (write name(s) of nominee(s) in
the space provided below):
- -------------------------------------------------------------------------------
For Against Abstain
Proposal 2: Ratification of appointment of KPMG [ ] [ ] [ ]
Peat Marwick LLP as the Company's independent
auditors for the fiscal year ending December 31,
1997
By execution and delivery of this proxy, the undersigned acknowledge(s) and
agree(s) that the proxies named herein are authorized to vote, in their
discretion and in accordance with their best judgment, upon such other matters
as may properly come before the meeting or any adjournments or postponements
thereof.
I plan to attend the Meeting [ ]
Mark here for address change [ ]
Please note address change at the left
Signature_______________Date______ Signature________________________Date______
Please date and sign exactly as name appears herein and return in the enclosed
envelope. When shares are held by joint owners, both should sign. Executors,
administrators, trustees and others signing in a representative capacity should
give their 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.
