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:
[X] Preliminary Proxy Statement
[ ] 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:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] 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:
(2) Form, Schedule or Registration Statement No:
(3) Filing party:
(4) Date Filed:
<PAGE>
March 25, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 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 on
Tuesday, May 4, 1999, at 4:00 p.m. local time, at the American Textile Museum,
491 Dutton Street, Lowell, Massachusetts.
The Annual Meeting has been called for the following purposes:
1. To elect five Directors of the Company, each for a three-year
term;
2. To approve and adopt an amendment to the Company's Articles of
Organization to increase the number of shares of common stock
that the Company is authorized to issue from 5,000,000 shares
to 10,000,000 shares;
3. 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, 1999; and
4. 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 1998 Annual Report to Stockholders, which contains additional
information and results for the year ended December 31, 1998, 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: (978) 459-9000
---------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Tuesday, May 4, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Enterprise Bancorp, Inc. (the "Company") will be held at the American Textile
Museum, 491 Dutton Street, Lowell, Massachusetts at 4:00 p.m. local time on
Tuesday, May 4, 1999 for the following purposes:
1. To elect Kenneth S. Ansin, Eric W. Hanson, Arnold S. Lerner,
Richard W. Main and John R. Clementi as Directors of the
Company, each to serve for a three-year term (Proposal One);
2. To approve and adopt an amendment to the Company's Articles of
Organization to increase the number of shares of common stock
that the Company is authorized to issue from 5,000,000 shares
to 10,000,000 shares (Proposal Two);
3. 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, 1999 (Proposal Three); and
4. 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,
1999 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 or postponements 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 25, 1999
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: (978) 459-9000
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Tuesday, May 4, 1999
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 1999 Annual Meeting of Stockholders of the Company (the "Annual
Meeting"), to be held on Tuesday, May 4, 1999 at 4:00 p.m. local time, at the
American Textile Museum, 491 Dutton 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 25, 1999.
The Annual Meeting has been called for the following purposes: (1) to
elect a class of five Directors of the Company, each for a three-year term; (2)
to approve and adopt an amendment to the Company's Articles of Organization to
increase the number of shares of common stock that the Company is authorized to
issue from 5,000,000 shares to 10,000,000 shares; (3) to ratify the appointment
of KPMG Peat Marwick LLP as the Company's independent auditors; and (4) 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. All of the company's material business activities are conducted
through the Bank.
On January 14, 1999, the Company effected a 2:1 split of its common
stock, par value $0.01 per share (the "Common Stock"), through the payment of a
stock dividend to stockholders of record on January 4, 1999. All references to
issued or issuable shares of Common Stock (including the exercise price of
outstanding options to purchase shares of Common Stock) contained in this Proxy
Statement have been adjusted to reflect the stock split.
Record Date
The Board of Directors has fixed the close of business on March 10,
1999 as the Record Date for the determination of stockholders entitled to notice
of and to vote at the Annual Meeting and any adjournments or postponements
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 or postponements thereof. At the close of
business on the Record Date, there were 3,169,634 shares of the Common Stock
issued and outstanding and entitled to vote at the Annual Meeting and any
adjournments or postponements thereof. As of such date there were approximately
580 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 or postponements thereof.
<PAGE>
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. Properly executed proxies with no instructions indicated thereon will
be voted (1) FOR the election of Kenneth S. Ansin, Eric W. Hanson, Arnold S.
Lerner, Richard W. Main and John R. Clementi, the five nominees of the Board of
Directors, as Directors of the Company, (2) FOR the approval and adoption of the
amendment to the Company's Articles of Organization to increase the number of
shares of Common Stock that the Company is authorized to issue from 5,000,000
shares to 10,000,000 shares, (3) FOR the 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, 1999, and (4) in such manner as management's
proxy-holders shall decide on such other matters as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
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, or 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), (2) and (3) 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 five Directors of the Company (Proposal One).
Neither abstentions nor broker non-votes will be counted as "votes cast" for
purposes of electing a class of five Directors of the Company and, therefore,
they will not affect the election of Directors of the Company. The approval and
adoption of the amendment to the Company's Articles of Organization to increase
the number of authorized shares of Common Stock (Proposal Two) requires the
affirmative vote of the holders of a majority of the outstanding shares of the
Common Stock. Neither abstentions nor broker non-votes will be included among
the outstanding shares of Common Stock that are affirmatively voted "for" this
proposal and, therefore, they will have the effect of votes "against" this
proposal. Approval of the proposal to ratify the appointment of
-2-
<PAGE>
independent auditors (Proposal Three) requires the affirmative vote of a
majority of the shares present and voting, in person or by proxy, at the Annual
Meeting. Neither abstentions nor broker non-votes will be included among the
shares that are considered to be present and voting on this proposal and,
therefore, they will have no effect on the voting for 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), (2) and (3) presented herein. On the
Record Date, the Directors and executive officers of the Company in the
aggregate had the right to vote 919,040 shares of the Common Stock representing
approximately 28.99% of the outstanding shares of the Common Stock as of such
date.
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. The number of Directors for
the Company has been accordingly set at 15. Under the Company's Articles of
Organization and By-Laws, 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 five Directors to be elected to serve
until the 2002 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
Kenneth S. Ansin, Eric W. Hanson, Arnold S. Lerner, Richard W. Main and John R.
Clementi, 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 Kenneth S. Ansin, Eric W. Hanson, Arnold S. Lerner, Richard W. Main
and John R. Clementi, the five nominees proposed by the Board of Directors, as
Directors of the Company to serve until the 2002 annual meeting of stockholders
and until their successors are elected and qualified.
-3-
<PAGE>
Information Regarding Directors and Nominees
The following table sets forth certain information for each of the five
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 2000 and 2001. Each individual has been engaged in his or her
principal occupation for at least five years, except as otherwise indicated.
<TABLE>
<CAPTION>
Nominees
(Term to Expire in 2002)
Name, Age and Principal Occupation Director Since (1)
<S> <C>
Kenneth S. Ansin (34) 1994
President and Chief Executive Officer,
L.B. Evans Company; President and
Chief Executive Officer of Ansewn
Shoe Company; Business Development
Officer of the Bank
Eric W. Hanson (55) 1991
Chairman and President
D.J. Reardon Company, Inc.
Arnold S. Lerner (69) 1988
Partner in WLLH Radio (Lowell)
and in several other radio stations;
Director, Courier Corporation;
Clerk of the Company and the Bank
Richard W. Main (51) 1989
President of the Company since its inception;
President, Chief Operating Officer and
Chief Lending Officer of the Bank
John R. Clementi (49) 1998
President
Plastican, Inc.
<CAPTION>
Continuing Directors
(Term to Expire in 2000)
Name, Age and Principal Occupation Director Since (1)
<S> <C>
Gerald G. Bousquet, M.D. (65) 1988
Physician; director and partner in
several health care facilities
Kathleen M. Bradley (74) 1988
Former owner, Westford Sports Center, Inc.
-4-
<PAGE>
James F. Conway, III (46) 1989
Chairman, Chief Executive Officer and President
Courier Corporation
Nancy L. Donahue (68) 1988
Chair of the Board of Trustees, Merrimack Repertory Theatre
Lucy A. Flynn (45) 1997
Since May 1996, Senior Vice President, Wang Laboratories;
prior thereto, Senior Vice President, Shawmut Bank, N.A.
<CAPTION>
(Term to Expire in 2001)
Name, Age and Principal Occupation Director Since (1)
<S> <C>
Walter L. Armstrong (62) 1989
Executive Vice President of the Bank
George L. Duncan (58) 1988
Chairman and Chief Executive Officer of the Company since its inception;
Chairman and Chief Executive Officer of the Bank
John P. Harrington (56) 1989
Since February 1995, Senior Vice President,
Colonial Gas Company; prior thereto, Vice
President, Colonial Gas Company; Director, Colonial Gas Company
Charles P. Sarantos (73) 1991
Chairman, C&I Electrical Supply Co., Inc.
Michael A. Spinelli (66) 1988
Owner, Merrimac Travel and Action Six
Travel Network; Assistant Clerk of the Company and the Bank
- ------------------------------
<FN>
(1) All of the Directors are also Directors of the Bank. The years listed in the foregoing tables are the
respective years in which each named individual first became a Director of the Company and/or the
Bank.
</FN>
</TABLE>
Meetings of Board of Directors and Committees
There were five meetings of the Company's Board of Directors during the
calendar year ended December 31, 1998. During such period, each Director
attended more than 75% in the aggregate of the total number of meetings of the
Board of Directors and 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 executive
committee met two times in 1998. The audit committee, composed of Ms. Bradley
and Messrs. Hanson, Harrington and Spinelli,
-5-
<PAGE>
recommends to the Board of Directors the appointment of an independent certified
public accounting firm to serve as independent auditors to the Company, oversees
and reviews all internal audit examinations and reports, and reviews all reports
of examination of the Company prepared by regulatory authorities. The audit
committee met four times in 1998. The compensation committee, composed of
Messrs. Conway, Hanson and Lerner, is responsible for overseeing the
administration of the employee benefit and compensation programs of the Company.
The compensation committee met four times in 1998.
The Bank's Board of Directors, which met 11 times during the year ended
December 31, 1998, 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 11 meetings in 1998.
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 four meetings in 1998.
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 8 meetings in 1998.
Investment and Asset/Liability Committee. The investment and
asset/liability committee is authorized to develop and refine the strategic
investment and asset/liability portfolio and asset/liability 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 11 meetings in 1998.
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 three meetings in 1998.
Banking Technology Committee. The banking technology committee is
responsible for overseeing the administration of the Bank's data processing
function. Messrs. Ansin, Bousquet and Sarantos (chair of the committee) serve on
the committee. The committee held four meetings in 1998.
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 11 meetings in 1998.
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,
Sarantos and Mesdames Bradley and Donahue. The committee held four meetings in
1998.
-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 met once in 1998.
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>
John P. Clancy, Jr. 41 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 53 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 44 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
</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, 1998, 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 1998 $159,255 $124,489 16,000 $104,581 (2)
Chairman and Chief
Executive Officer of the 1997 $156,250 $ 66,984 11,000 $104,448 (2)
Company and the Bank
1996 $156,250 $ 78,219 11,000 $ 25,335 (2)
Richard W. Main 1998 $126,736 $ 99,098 8,000 $ 6,401
President of the Company and
President, Chief Operating 1997 $124,345 $ 53,308 5,500 $ 6,042
Officer and Chief Lending
Officer of the Bank 1996 $124,345 $ 62,255 5,500 $ 4,750
Walter L. Armstrong 1998 $173,632 - 0 - 4,000 $ 5,833
Executive Vice President,
Business Development, of the 1997 $139,627 - 0 - 3,000 $ 5,795
Bank
1996 $117,230 - 0 - 3,000 $ 4,750
Stephen J. Irish 1998 $ $ 3,500 $ 5,400
Senior Vice President, Chief
Operations Officer and Chief 1997 $ $ 3,000 $ 5,050
Information Officer of the
Bank 1996 $ $ 3,000 $ 3,950
John P. Clancy, Jr. 1998 $116,224 $ 30,985 3,500 $ 5,709
Treasurer of the Company and
Senior Vice President, Chief 1997 $107,830 $ 21,954 3,000 $ 5,357
Financial Officer, Treasurer
and Chief Investment Officer 1996 $ 93,767 $ 14,675 3,000 $ 4,400
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 amounts of $5,000, $5,610 and $1,018 for 1998, 1997 and 1996, respectively,
attributable to the portion of the annual premium related to term insurance coverage paid by the Bank under a
split-dollar life insurance policy and the additional dollar value, in amounts of $91,081, $90,981 and $19,692
for 1998, 1997 and 1996, respectively, of the benefit to Mr. Duncan of the remaining portion (unrelated to
term insurance coverage) of the annual premium paid by the Bank under such 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 $350
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
full-time salaried officers of the Bank are not paid for attending Board of
Directors or committee meetings.
As of January 1, 1999, all Directors have the option to elect on an
annual basis to receive options to purchase shares of Common Stock in lieu of
receiving their $350 monthly retainer fee. Each Director who elected such option
for 1999 was granted an option on January 1, 1999, which becomes fully vested
after one year from the date of grant and is exercisable for a period of six
years thereafter, to purchase 1,160 shares of Common Stock at an exercise price
of $12.50 per share.
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 years until and
unless terminated based on the occurrence of any of the following events: (i) 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) 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) 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 annual review by the Compensation Committee and
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 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 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-
-9-
<PAGE>
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 75% of the highest annual earnings paid to him during the term 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 70% 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 years; (ii) Mr. Main's
minimum annual base salary is $124,345; (iii) the office which the agreement
contemplates will be held by Mr. Main is the office of president; and (iv) Mr.
Main's potential termination payment following a Business Combination is two
times his previous highest annual earnings under the agreement.
-10-
<PAGE>
Option Grants in Last Fiscal Year
The following table shows individual grants of stock options to the
Named Executive Officers during the year ended December 31, 1998:
<TABLE>
<CAPTION>
Number of
Securities Percent of Total
Underlying Options Granted
Options to Employee in Exercise or Base Expiration
Name Granted (#)(1)(2) Fiscal Year Price ($/Sh ) Date
- ---- ----------------- ------------- --------------- ----------
<S> <C> <C> <C> <C>
George L. Duncan 16000 17.68% $12.50 12/01/05
Richard W. Main 8,000 8.84% $12.50 12/01/05
Walter L. Armstrong 4,000 4.42% $12.50 12/01/05
Stephen J. Irish 3,500 3.87% $12.50 12/01/05
John P. Clancy, Jr. 3,500 3.87% $12.50 12/01/05
- --------------------
<FN>
(1) All options were granted under the Company's 1998 Stock Incentive Plan, were granted at an exercise price of not
less than the fair market value of the Common Stock at the date of grant and are intended to qualify as "incentive
stock options" under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
(2) The options ordinarily become exercisable at a rate of 25% per year, commencing with initial vesting on the first
anniversary of the date of grant, and become immediately exercisable in full upon a Change of Control (as such term
is defined in the 1998 Stock Incentive Plan) of the Company.
</FN>
</TABLE>
-11-
<PAGE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table shows each exercise of stock options by the Named
Executive Officers during the year ended December 31, 1998 and the unexercised
stock options held by such persons as of such date:
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised In-
Unexercised the-Money
Options at Fiscal Options at Fiscal
Shares Acquired Year-End (#) Year-End ($)
on Exercisable/ Exercisable/
Name Exercise (#) Value Realized ($) Unexercisable Unexercisable (1)
- ---- -------------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
George L. Duncan - 0 - --- 56,100/32,500 $448,663/$123,688
Richard W. Main - 0 - --- 28,050/16,250 $224,331/$ 61,844
Walter L. Armstrong - 0 - --- 22,550/ 8,250 $184,925/$ 31,375
Stephen J. Irish - 0 - --- 10,750/ 7,750 $ 84,625/$ 30,625
John P. Clancy, Jr. - 0 - --- 10,750/ 7,750 $ 84,625/$ 30,625
- --------------------
<FN>
(1) The dollar values shown are based upon the difference between $14.00, which is the purchase price paid in the most
recent purchase and sale transaction between an unaffiliated buyer and seller that is known by the Company to have
occurred prior to the date of this Proxy Statement, and the per share exercise price of the options.
</FN>
</TABLE>
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 $188,734 and $185,658, respectively, in rent, parking fees,
taxes and maintenance for the years ended December 31, 1998 and December 31,
1997.
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.
-12-
<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 the beneficial owners of more than 5% of
the Common Stock as of February 28, 1999. 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>
Directors Shares of Common Stock Percent of Total
Beneficially Owned (1) Common Stock
<S> <C> <C>
Kenneth S. Ansin 22,000 *
Walter L. Armstrong (2) 28,750 *
Gerald G. Bousquet 14,000 *
Kathleen M. Bradley 14,000 *
John R. Clementi 200 *
James F. Conway, III 182 *
Nancy L. Donahue 10,000 *
George L. Duncan (3) 282,258 8.91%
710 Andover Street
Lowell, MA 01852
Lucy A. Flynn (4) 2,150 *
Eric W. Hanson (5) 192,700 6.08%
Three Boardwalk
Chelmsford, MA 01824
John P. Harrington 200 *
Arnold S. Lerner (6) 262,000 8.27%
155 Pine Hill Road
Hollis, NH 03049
Richard W. Main (7) 54,650 1.72%
Charles P. Sarantos (8) 19,200 *
Michael A. Spinelli 122,000 3.85%
Other Named Executive Officers
- ------------------------------
Stephen J. Irish (9) 10,800 *
John P. Clancy, Jr. (10) 13,150 *
All Directors and Executive Officers 1,048,240 33.07%
as a Group (17 Persons) (11)
-13-
<PAGE>
Other 5% Stockholders
Ronald M. Ansin 312,000 9.84%
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 have sole voting and investment power over the shares, unless
otherwise indicated.
(2) Includes options to purchase 22,550 shares of the Common Stock which are currently vested, but
which have not been exercised. This figure does not include an option to purchase up to 50,000
shares of the Common Stock owned by Mr. Duncan, which option was granted to Mr. Armstrong by
Mr. Duncan.
(3) Includes options to purchase 56,100 shares of the Common Stock which are currently vested but
which have not been exercised, 5,000 shares owned by Mr. Duncan's wife and 5,000 shares owned
by Mr. Duncan's children. Includes 100,000 shares owned by Mr. Duncan, which are subject to
options granted by Mr. Duncan to Mr. Armstrong and Mr. Main.
(4) Includes 2,000 shares owned by Mrs. Flynn's husband.
(5) Includes 184,700 shares owned jointly with Mr. Hanson's wife and 8,000 shares owned by Mr.
Hanson's children, with respect to which Mr. Hanson or his wife are the custodians.
(6) Includes 100,000 shares owned by Mr. Lerner's wife and 30,000 shares owned by Mr. Lerner's
children as to which Mr. Lerner disclaims beneficial ownership.
(7) Includes options to purchase 28,050 shares of the Common Stock which are currently vested but
which have not been exercised, 7,800 shares owned jointly with Mr. Main's wife and 1,600 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 50,000 shares of the Common Stock owned by Mr. Duncan,
which option was granted to Mr. Main by Mr. Duncan.
(8) Includes 8,000 shares owned jointly with Mr. Sarantos' wife and 2,000 shares owned jointly by
Mr. Sarantos' wife and daughter.
(9) Includes options to purchase 10,750 shares of the Common Stock, which are currently vested but
which have not been exercised.
(10) Includes options to purchase 10,750 shares of the Common Stock, which are currently vested but
which have not been exercised, and 2,400 shares owned by Mr. Clancy's children.
(11) Includes options to purchase 128,200 shares of the Common Stock which are currently
exercisable.
</FN>
</TABLE>
-14-
<PAGE>
PROPOSAL TWO
APPROVAL OF AMENDMENT TO ARTICLES OF ORGANIZATION
TO INCREASE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has adopted a resolution approving and
recommending to the stockholders for their approval and adoption, an amendment
to the Company's Articles of Organization to increase the number of shares of
Common Stock that the Company is authorized to issue from 5,000,000 shares to
10,000,000 shares. The Company currently is authorized to issue a maximum of
5,000,000 shares of Common Stock, of which 3,169,634 shares were issued and
outstanding on the Record Date.
If the proposed amendment is approved by the stockholders, 10,000,000
shares of Common Stock will be authorized for issuance and the additional
authorized Common Stock may be issued by the Company without any further action
or approval by the stockholders. The purpose of the proposed amendment is to
provide additional authorized shares of Common Stock for possible use in
connection with future financings, investment opportunities, acquisitions,
employee benefit or dividend reinvestment plan distributions, other
distributions, such as stock dividends or stock splits, or for other corporate
purposes. The 2:1 stock split that became effective on January 14, 1999 doubled
the number of outstanding shares of Common Stock, so that the Company's ability
to undertake these types of transactions or distributions in the future will be
significantly restricted, unless the total number of authorized shares is
increased. The Company has no specific plans or commitments at this time for the
issuance of the additional authorized shares of Common Stock that would be added
by the proposed amendment, but desires to position itself to do so if and when
the need arises or market conditions otherwise warrant.
The issuance of additional shares of Common Stock could be deemed under
certain circumstances to have an antitakeover effect, such as if the shares were
issued to dilute the equity ownership and corresponding voting power of a
stockholder or group of stockholders who may oppose the policies or strategic
plan of the Company's existing management. On this basis, the proposed increase
in authorized shares could enable the Board of Directors to render more
difficult or discourage an attempt by another person or entity to obtain control
of the Company. The Board of Directors has no present intention of issuing any
of the additional authorized shares of Common Stock for such purposes.
Recommendation of Directors
The Board of Directors recommends that the stockholders vote FOR the
approval and adoption of the amendment to the Company's Articles of Organization
to increase the number of authorized shares of Common Stock.
-15-
<PAGE>
PROPOSAL THREE
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,
1999.
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,
1999.
-16-
<PAGE>
STOCKHOLDER PROPOSALS
Under applicable rules of the Securities and Exchange Commission (the
"SEC"), proposals of stockholders of the Company intended to be presented at the
2000 Annual Meeting of the Company must be received by the Company no later than
November 25, 1999 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 scheduled 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 applicable procedural and informational requirements
contained in the Company's Articles of Organization and By-Laws as well as the
applicable rules of the SEC.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that the Company's Directors
and executive officers and any other persons who own more than 10% of the
outstanding shares 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, 1998, all
such persons have complied with the applicable Section 16(a) reporting
requirements for such year.
OTHER MATTERS
Shares represented by proxies in the enclosed form will be voted as
stockholders direct. Properly executed proxies that contain no directions to the
contrary will be voted in favor of (1) the election of the five nominees to
serve as Directors of the Company, (2) the approval and adoption of the
amendment to the Company's Articles of Organization to increase the number of
authorized shares of Common Stock and (3) 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, the proxies named therein have
discretionary authority to vote the shares according to their best judgment.
ANNUAL REPORT ON FORM 10-KSB
The Company's Annual Report on Form 10-KSB (without exhibits) is
included with the Company's Annual Report to Stockholders, and is being
furnished to shareholders of record together with this Proxy Statement. Requests
for additional copies may be directed to: Enterprise Bancorp, Inc., 222
Merrimack Street, Lowell, Massachusetts 01852, Attention: Arnold S. Lerner,
Clerk.
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 25, 1998
-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, 2 and 3.
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, 2 and 3.
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) Richard W. Main 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 or postponements thereof, to be held at the American Textile
Museum, 491 Dutton Street, Lowell, Massachusetts, on Tuesday, May 4, 1999, at
4:00 P.M. as specified herein as to each of the proposals 1, 2 and 3 below:
<TABLE>
<CAPTION>
Proposal 1: Election of Directors For All Withheld from
Nominees All Nominees
<S> <C> <C>
Kenneth S. Ansin, Eric W. Hanson, Arnold S. Lerner, [ ] [ ]
Richard W. Main and John R. Clementi
<CAPTION>
[ ] FOR ALL NOMINEES except as noted below (write name(s) of nominee(s) in
the space provided below):
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
For Against Abstain
Proposal 2: Approval and adoption of an amendment to [ ] [ ] [ ]
the Articles of Organization of Enterprise Bancorp, Inc. to
increase the number of shares of common stock, par value
$0.01 per share, that Enterprise Bancorp, Inc. is
authorized to issue from 5,000,000 shares to 10,000,000
shares
For Against Abstain
Proposal 3: Ratification of appointment of KPMG Peat [ ] [ ] [ ]
Marwick LLP as the Company's independent auditors for
the fiscal year ending December 31, 1999
</TABLE>
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.
