Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _______________
Commission File Number 0-21021
Enterprise Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Massachusetts 04-3308902
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
222 Merrimack Street, Lowell, Massachusetts, 01852
(Address of principal executive offices) (Zip code)
(978) 459-9000
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ..X.... No......
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
April 30, 1999 Common Stock - Par Value $0.01, 3,169,634 shares outstanding
<PAGE>
<TABLE>
<CAPTION>
ENTERPRISE BANCORP, INC.
INDEX
Page Number
<S> <C> <C>
Cover Page 1
Index 2
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements of Enterprise Bancorp, Inc.
Consolidated Balance Sheets - March 31, 1999 and December 31, 1998 3
Consolidated Statements of Income -
Three months ended March 31, 1999 and 1998 4
Consolidated Statements of Changes in Stockholders' Equity - 5
Three months ended March 31, 1999
Consolidated Statements of Cash Flows -
Three months ended March 31, 1999 and 1998 6
Notes to Financial Statements 7
Item 2 Management's Discussion and
Analysis of Financial Condition and Results of Operations 8
Item 3 Quantitative and Qualitative Disclosures About Market Risk 16
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 17
Item 2 Changes in Securities and Use of Proceeds 17
Item 3 Defaults upon Senior Securities 17
Item 4 Submission of Matters to a Vote of Security Holders 17
Item 5 Other Information 17
Item 6 Exhibits and Reports on Form 8-K 17
Signature Page 18
</TABLE>
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain "forward-looking statements" including statements
concerning plans, objectives, future events or performance and assumptions and
other statements which are other than statements of historical fact. Enterprise
Bancorp, Inc. (the "company") wishes to caution readers that the following
important factors, among others, may have affected and could in the future
affect the company's results and could cause the company's results for
subsequent periods to differ materially from those expressed in any
forward-looking statement made herein: (i) the effect of changes in laws and
regulations, including federal and state banking laws and regulations, with
which the company or its subsidiaries must comply, and the associated costs of
compliance with such laws and regulations either currently or in the future as
applicable; (ii) the effect of changes in accounting policies and practices, as
may be adopted by the regulatory agencies as well as by the Financial Accounting
Standards Board, or of changes in the company's organization, compensation or
benefit plans; (iii) the effect on the company's competitive position within its
market area of the increasing competition from larger regional and out-of-state
banking organizations as well as non-bank providers of various financial
services; (iv) the effect of changes in interest rates; (v) the effect of
changes in the business cycle and downturns in the local, regional or national
economies; and (vi) the potential for the company to materially underestimate
the cost to be incurred and/or the time required in connection with systems
preparation for Year 2000 compliance.
2
<PAGE>
<TABLE>
<CAPTION>
ENTERPRISE BANCORP, INC.
Consolidated Balance Sheets
March 31, December 31,
1999 1998
($ in thousands) (Unaudited) (Audited)
----------- ------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 15,049 19,668
Daily federal funds sold 10,100 6,255
Investment securities at fair value 114,733 114,659
Loans, less allowance for loan losses of $5,416
at March 31, 1999 and $5,234 December 31, 1998 216,397 209,978
Premises and equipment 4,752 4,272
Accrued interest receivable 2,552 2,424
Prepaid expenses and other assets 990 863
Income taxes receivable -- 271
Real estate acquired by foreclosure 304 304
Deferred income taxes, net 2,161 1,787
-------- --------
Total assets $367,038 360,481
======== ========
Liabilities and Stockholders' Equity
Deposits $320,689 317,666
Short-term borrowings 15,871 12,085
Escrow deposits of borrowers 831 687
Income taxes payable 88 --
Accrued expenses and other liabilities 1,353 2,222
Accrued interest payable 629 623
-------- --------
Total liabilities 339,461 333,283
-------- --------
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000 shares
authorized, no shares issued at March 31, 1999 -- --
Common stock $.01 par value; 5,000,000 shares authorized,
3,169,634 and 3,167,684 shares issued and
outstanding at March 31, 1999 and December 31, 1998,
respectively 32 32
Additional paid-in capital 15,571 15,560
Retained earnings 11,571 10,610
Accumulated other comprehensive income 403 996
-------- --------
Total stockholders' equity 27,577 27,198
-------- --------
Total liabilities and stockholders' equity $367,038 360,481
======== ========
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
ENTERPRISE BANCORP, INC.
Consolidated Statements of Income
Three months ended March 31, 1999 and 1998
March 31, March 31,
1999 1998
($ in thousands, except per share data) (Unaudited) (Unaudited)
----------- ------------
<S> <C> <C>
Interest and dividend income:
Loans $ 4,774 4,331
Investment securities 1,712 1,713
Federal funds sold 44 24
---------- ----------
Total interest income 6,530 6,068
---------- ----------
Interest expense:
Deposits 2,398 2,259
Borrowed funds 152 169
---------- ----------
Total interest expense 2,550 2,428
---------- ----------
Net interest income 3,980 3,640
Provision for loan losses 135 90
---------- ----------
Net interest income after provision for loan losses 3,845 3,550
---------- ----------
Non-interest income:
Deposit service fees 205 219
Trust fees 285 237
Net gain on sales of loans 54 19
Net gain on sales of investments -- 71
Other income 78 84
---------- ----------
Total non-interest income 622 630
---------- ----------
Non-interest expense:
Salaries and employee benefits 1,873 1,678
Occupancy expenses 577 555
Advertising and public relations 124 106
Audit, legal and other professional fees 120 126
Trust professional and custodial expenses 67 74
Office and data processing supplies 61 93
Other operating expenses 286 300
---------- ----------
Total non-interest expense 3,108 2,932
---------- ----------
Income before income taxes 1,359 1,248
Income tax expense 398 445
---------- ----------
Net income $ 961 803
========== ==========
Basic earnings per average common share outstanding $ 0.30 0.25
========== ==========
Diluted earnings per average common share outstanding $ 0.29 0.24
========== ==========
Basic weighted average common shares outstanding 3,168,761 3,160,434
========== ==========
Diluted weighted average common shares outstanding 3,331,050 3,288,208
========== ==========
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
ENTERPRISE BANCORP, INC.
Consolidated Statements of Changes in Stockholders' Equity
Three months ended March 31, 1999
Common Stock Additional Comprehensive Income Total
--------------------- Paid-in Retained -------------------- Stockholders'
($ in thousands) Shares Amount Capital Earnings Period Accumulated Equity
----------- ------- -------- -------- ------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998 3,167,684 $ 32 $ 15,560 $ 10,610 $ 996 $ 27,198
Comprehensive income
Net income 961 $ 961 961
Unrealized losses on securities,
net of reclassification (593) (593) (593)
------
Total comprehensive income, net of tax $ 368
======
Stock options exercised 1,950 -- 11 11
--------- ----- -------- -------- ------ --------
Balance at March 31, 1999 3,169,634 $ 32 $ 15,571 $ 11,571 $ 403 $ 27,577
========= ===== ======== ======== ====== ========
Disclosure of reclassification amount:
Gross unrealized holding losses arising during the period $ (955)
Less: tax effect 362
------
Unrealized holding losses, net of tax (593)
------
Less: reclassification adjustment for gains/(losses) included
in net income (net of $ 0 tax) --
------
Net unrealized losses on securities $ (593)
======
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
ENTERPRISE BANCORP, INC.
Consolidated Statements of Cash Flows
Three months ended March 31, 1999 and 1998
March 31, March 31,
1999 1998
($ in thousands) (Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 961 803
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 135 90
Depreciation and amortization 318 274
Gains on sales of loans (54) (19)
Gains on sales of securities -- (71)
(Increase) decrease in loans held for sale 9 (507)
(Increase) decrease in accrued interest receivable (128) 335
Increase in prepaid expenses and other assets (127) (258)
Increase in deferred income taxes (12) (17)
Decrease in accrued expenses and other liabilities (869) (561)
Increase in accrued interest payable 6 12
Net change in income taxes payable/receivable 359 277
-------- --------
Net cash provided by operating activities 598 358
-------- --------
Cash flows from investing activities:
Proceeds from maturities, calls and paydowns
of investment securities 11,844 9,842
Purchase of investment securities (12,911) (9,080)
Net increase in loans (6,509) (12,250)
Additions to premises and equipment, net (760) (129)
-------- --------
Net cash used in investing activities (8,336) (11,617)
-------- --------
Cash flows from financing activities:
Net increase in deposits, including escrow deposits 3,167 9,564
Net increase in short-term borrowings 3,786 3,312
Stock options exercised 11 --
-------- --------
Net cash provided by financing activities 6,964 12,876
-------- --------
Net (decrease) increase in cash and cash equivalents (774) 1,617
Cash and cash equivalents at beginning of period 25,923 23,554
-------- --------
Cash and cash equivalents at end of period $ 25,149 25,171
======== ========
Supplemental financial data:
Cash paid for:
Interest on deposits and short-term borrowings $ 2,544 2,416
Income taxes 51 184
Transfers from loans to real estate acquired by foreclosure -- 76
</TABLE>
6
<PAGE>
ENTERPRISE BANCORP, INC.
Notes to Financial Statements
(1) Organization of Holding Company
Enterprise Bancorp, Inc. (the "company") is a Massachusetts corporation, which
was organized on February 29, 1996, at the direction of Enterprise Bank and
Trust Company, a Massachusetts trust company (the "bank"), for the purpose of
becoming the holding company for the bank. The company had no material assets or
operations prior to completion of the holding company reorganization on July 26,
1996.
(2) Basis of Presentation
The accompanying unaudited financial statements should be read in conjunction
with the company's December 31, 1998, audited financial statements and notes
thereto. Interim results are not necessarily indicative of results to be
expected for the entire year.
In preparing the financial statements, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities as of
the date of the balance sheet and revenues and expenses for the period. Actual
results could differ from those estimates. Material estimates that are
particularly susceptible to change relate to the determination of the allowance
for loan losses and valuation of other real estate owned.
In the opinion of management, the accompanying financial statements reflect all
necessary adjustments consisting of normal recurring accruals for a fair
presentation.
(3) Earnings Per Share
Basic earnings per share are calculated by dividing net income by the year to
date weighted average number of common shares that were outstanding for the
period. Diluted earnings per share reflect the effect on weighted average shares
outstanding of the number of additional shares outstanding if dilutive stock
options were converted into common stock using the treasury stock method. The
increase in average shares outstanding, using the treasury stock method, for the
diluted earnings per share calculation were 162,289 and 127,774 for the quarters
ended March 31, 1999 and March 31, 1998, respectively.
7
<PAGE>
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Capital Resources
The company's actual capital amounts and capital adequacy ratios are presented
in the table below. The bank's capital amounts and ratios do not differ
materially from the amounts and ratios presented.
<TABLE>
<CAPTION>
Minimum Capital Minimum Capital
for Capital to be
Actual Adequacy Purposes Well Capitalized
------------------------- ------------------------ ---------------------------
($ in thousands) Amount Ratio Amount Ratio Amount Ratio
-------------- --------- ------------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
As of March 31, 1999:
Total Capital
(to risk weighted assets) $ 30,052 12.56% $ 19,137 8.00% $ 23,921 10.00%
Tier 1 Capital
(to risk weighted assets) 27,030 11.30% 9,568 4.00% 14,353 6.00%
Tier 1 Capital*
(to average assets) 27,030 7.58% 14,265 4.00% 17,831 5.00%
<FN>
* For the bank to qualify as "well capitalized", it must maintain a leverage capital ratio (Tier 1 capital
to average assets) of at least 5%. This requirement does not apply to the company and is reflected merely
for informational purposes with respect to the bank.
</FN>
</TABLE>
On April 20, 1999, the board of directors declared a dividend in the amount of
$0.21 per share to be paid on or about July 1, 1999 to shareholders of record as
of the close of business on June 11, 1999. The board of directors intends to
consider the payment of future dividends on an annual basis.
Balance Sheet
Total Assets
Total assets increased $6.6 million, or 1.8 %, since December 31, 1998. The
increase is primarily attributable to an increase in gross loans of $6.6
million. The increase in assets was funded primarily by increases in deposits
and short-term borrowings of $3.0 million and $3.8 million, respectively.
Investments
At March 31, 1999 all of the bank's investment securities were classified as
available-for-sale and carried at fair value. The net unrealized gain at March
31, 1999, net of tax effects, is shown as accumulated other comprehensive
income, a separate component of stockholders' equity, in the amount of $403,000.
The net unrealized gain/loss in the investment portfolio fluctuates as interest
rates rise and fall due to the fixed rate nature of the portfolio.
Loans
Total loans, before the allowance for loan losses, were $221.8 million, or 60.4%
of total assets, at March 31, 1999, compared to $215.2 million, or 59.7% of
total assets, at December 31, 1998. The increase in loans of $6.6 million was
primarily attributed to loan originations in the commercial real estate and
commercial loan portfolios. The bank continues to pursue active customer calling
efforts as well as increased marketing and advertising to identify quality
lending opportunities.
8
<PAGE>
Deposits and Borrowings
Total deposits, including escrow deposits of borrowers, increased $3.2 million,
or 1.0%, during the first three months of 1999, from $318.3 million at December
31, 1998, to $321.5 million at March 31, 1999. Due to the cyclical nature of
some of the bank's deposits, first quarter deposit growth has historically been
lower than the average quarterly growth in deposits achieved over the remainder
of the year.
Total borrowings, consisting of securities sold under agreements to repurchase
and FHLB (Federal Home Loan Bank) borrowings, increased $3.8 million, or 31.3%,
from $12.1 million at December 31, 1998 to $15.9 million at March 31, 1999. The
increase was attributable to an increase in securities sold under agreements to
repurchase of $3.8 million. Management also actively uses FHLB borrowings in
managing the bank's asset/liability position. The bank had FHLB borrowings
outstanding of $0.5 million at March 31, 1999, and had the ability to borrow
approximately an additional $95.9 million. Management periodically takes
advantage of opportunities t fund asset growth with borrowings, but on a
long-term basis the bank intends to replace any FHLB borrowings with deposits.
Loan Loss Experience/Non-performing Assets
The following table summarizes the activity in the allowance for loan losses for
the periods indicated:
Three months ended March 31,
----------------------------
($ in thousands) 1999 1998
----------- -----------
Balance at beginning of year $ 5,234 4,290
Loans charged-off
Commercial 4 65
Commercial real estate -- --
Construction -- --
Residential real estate -- --
Home equity -- --
Other 9 --
------- -------
13 65
Recoveries on loans charged off
Commercial 30 1
Commercial real estate 2 --
Construction -- --
Residential real estate -- 6
Home equity 2 2
Other 26 32
------- -------
60 41
Net loans (recovered)/charged off (47) 24
Provision charged to income 135 90
------- -------
Balance at March 31 $ 5,416 4,356
======= =======
Annualized net (recoveries)/charge-offs: Average
loans outstanding (0.09%) 0.05%
======= =======
Allowance for loan losses: Gross loans 2.44% 2.25%
======= =======
Allowance for loan losses: Non-performing loans 664.54% 429.16%
======= =======
9
<PAGE>
The following table sets forth non-performing assets at the dates indicated:
<TABLE>
<CAPTION>
($ in thousands) March 31, December 31, March 31,
1999 1998 1998
--------- ------------ ----------
<S> <C> <C> <C>
Loans on non-accrual:
Commercial $ 459 754 489
Residential real estate 112 113 76
Commercial real estate 18 63 85
Construction -- 174 --
Consumer, including home equity 138 159 300
------ ------ ------
Total loans on non-accrual 727 1,263 950
Loans past due >90 days, still accruing 88 97 65
------ ------ ------
Total non-performing loans 815 1,360 1,015
Other real estate owned 304 304 469
------ ------ ------
Total non-performing loans and real estate owned $1,119 1,664 1,484
====== ====== ======
Non-performing loans: Gross loans 0.37% 0.63% 0.53%
====== ====== ======
Non-performing loans and real estate owned: Total assets 0.30% 0.46% 0.44%
====== ====== ======
Delinquent loans 30-89 days past due: Gross loans 0.72% 0.68% 0.74%
====== ====== ======
</TABLE>
Total non-performing loans decreased $0.2 million from March 31, 1998 to March
31, 1999. The ratio of non-performing loans to gross loans decreased from 0.53%
to 0.37% from March 31, 1998 to March 31, 1999.
Total non-performing loans decreased $0.5 million from December 31, 1998 to
March 31, 1999. The primary cause for the declines was the removal of several
commercial and construction loans from non-accrual status. The ratio of
non-performing loans to gross loans decreased from 0.63% as of December 31, 1998
to 0.37% as of March 31, 1999. The level of non-performing assets is largely a
function of economic conditions and the overall banking environment, as well as
the strength of the bank's loan underwriting. Non-performing loans remain at
historically low levels for the periods shown. Adverse changes in local,
regional or national economic conditions could negatively impact the level of
non-performing assets in the future, despite prudent underwriting.
Year 2000 Compliance
The statements in the following section include "Year 2000 Readiness Disclosure"
within the meaning of the Year 2000 Information and Readiness Disclosure Act.
This section contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1993, as amended. The company's readiness
for the Year 2000, and the eventual effects of the Year 2000 on the company may
be materially different than projected.
The company is currently in the process of determining, testing and remediating
the impact of the so-called "millenium" or "Y2K" problem (i.e., that many
existing computer chips and programs use only two digits to identify the year in
a date field and if such programs are not corrected many computer applications
or computer chip dependent operations could fail or create erroneous results by
or beginning in the year 2000). While most view the project as a data processing
or computer concern, every department and function of the company is affected
and is included in the company's analysis and compliance process. The
remediation efforts discussed below relate to both information technology
systems (i.e. computer systems, phone systems, telecommunications, etc.) and
non-information technology systems (i.e. alarm systems, security systems,
elevators, electrical systems, etc.).
10
<PAGE>
The company primarily utilizes internal resources to manage the Y2K remediation
process and test, update, and/or replace all software information systems for
Y2K modifications. The company has formed a "Year 2000 Steering Committee"
consisting of various members of senior management and all department managers.
The Year 2000 Steering Committee's purpose is to evaluate risks, formulate
timetables and allocate resources to ensure timely and effective completion of
Y2K testing and remediation. The company also has a technology committee,
consisting of certain members of the Board of Directors and management, which
oversees the Year 2000 Steering Committee and is responsible for ensuring proper
reporting of results to the full Board of Directors. One full time information
system specialist is solely devoted to Y2K issues. Many other employees are also
actively involved including each department manager, members of their staff and
the entire information systems department. The company also utilizes external
resources (information systems consultants, auditors, speakers, accountants,
etc.) as deemed necessary by the various committees and management.
Management has completed its assessment of Y2K issues, developed a plan, begun
testing its various software information systems and arranged for the required
resources, based on anticipated needs, to complete the necessary remediation.
Management has completed the changes to and testing of internal mission critical
information systems for the Y2K project and expects to complete the changes and
testing required for mission critical systems associated with service providers
by June 30, 1999, which is the timeframe established by the Federal Financial
Institutions Examination Council ("FFIEC"). Mission critical systems are those
critical to daily operations and failure of which would result in definite
disruption to business. Testing of the company's non-mission critical
applications will continue through 1999 and will be completed prior to any
anticipated impact on its operating systems. Contingency plans are also being
developed for each function so that the company is adequately prepared in the
event of a system failure, despite remediation efforts. A sub-committee of the
Y2K Steering Committee has been formed to facilitate preparation of contingency
plans. These contingency plans will be completed prior to June 30, 1999, in
accordance with FFIEC guidelines. Additionally, the bank has formed a coalition
with surrounding financial institutions to periodically meet and discuss
contingency plans and pool resources to deal with potential disruptions. (i.e.
failure of security systems, failure of electrical grids, cash needs, etc.).
Included in other non-interest expenses are charges incurred in connection with
the preparation, testing, modification or replacement of software and hardware
in connection with the process of rendering the company's computer systems Y2K
compliant. Excluding internal salary and benefit costs, approximately $10,000 in
costs associated with Y2K remediation efforts were expended through December 31,
1998 and $10,000 in the first quarter of 1999. Management expects that the costs
incurred to replace or upgrade existing hardware and software will be
capitalized and amortized in accordance with the company's existing accounting
policies, while miscellaneous consulting, salary, maintenance and modification
costs will be expensed as incurred. Anticipated future costs, excluding internal
salary and benefit costs, associated with Y2K compliance are estimated at
$150,000, which includes upgrades of security systems, modifications to the
automated teller machines, consulting costs and changes to the
telecommunications network. The estimated expenses in 1999 include consulting
fees for Year 2000 project management of $75,000. Due to short term personnel
constraints it was necessary to engage consultants to assist in the Year 2000
management process. Other than the one dedicated information system specialist
the company does not separately track the portion of its salary and benefit
costs allocable to the Y2K project. It is not anticipated that material
incremental costs will be incurred in any single period.
The cost of the project and the date on which the company plans to complete the
Y2K modifications are based on management's best estimates, which were derived
utilizing numerous assumptions of future events including the continued
availability of certain resources, third party availability and other factors.
However, there can be no guarantee that these estimates will be achieved and
actual results could differ materially from those plans. Specific factors that
might cause such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, employee turnover,
non-compliance of the company's vendors or service providers and similar
uncertainties. The company is working closely with all of its vendors and
service providers to determine the extent to which the company is vulnerable to
those third parties' failure to remediate their own Y2K issues.
11
<PAGE>
Management recognizes the potential risk of Y2K on the bank's customers. The
bank has approached the credit risk component of Y2K through education of all
lending officers, education of customers, analysis of the bank's loan portfolio,
and consideration of Y2K in the underwriting of loans. All lending officers were
required to undergo internal training to learn the potential risks of Y2K. The
bank has sponsored and intends to continue sponsoring numerous seminars for bank
customers, in addition to distribution of literature regarding Y2K to all
customers. In 1998, an analysis of the bank's commercial loan portfolio was
performed to determine potential exposure to Y2K risks. Increases in the
allowance for loan losses, solely as a result of Y2K, were not deemed necessary.
Any new commercial loans require an assessment of the customer's Y2K compliance
as part of preliminary underwriting. The need for additional provisions to the
bank's allowance for loan losses resulting from borrowers' Y2K compliance
problems will be considered, on an ongoing basis, based on management's
assessment of the potential exposure of its customer base to such problems.
The internal and external risks associated with Y2K are numerous. The company is
addressing the Y2K issue in accordance with regulatory guidelines promulgated by
the FFIEC. However, there can be no guarantee that the systems of the company,
bank customers or other associated companies (i.e. electric company, telephone
company, printing companies, office supply companies, etc.) will be timely
remediated. There can be no guarantee that the systems of third party vendors on
which the company's systems rely will be timely remediated. The failure of the
company or a critical third party vendor to timely remediate Y2K issues might
cause, among other things, systems malfunctions, incorrect or incomplete
transaction processing or the inability to reconcile accounting books and
records.
The company's operations and/or financial condition could possibly be negatively
impacted to the extent the company, customers or entities doing business with
the company are unsuccessful in timely and properly addressing their respective
Y2K compliance responsibilities.
12
<PAGE>
Results of Operations
Three Months Ended March 31, 1999 vs. Three Months Ended March 31, 1998
The company reported net income of $961,000 for the three months ended March 31,
1999, versus $803,000 for the three months ended March 31, 1998, or an increase
of 19.7%. The company had basic earnings per common share of $0.30 and $0.25 for
the three months ended March 31, 1999 and March 31, 1998, respectively. Diluted
earnings per share were $0.29 and $0.24 for the three months ending March 31,
1999 and March 31,1998, respectively.
The following table highlights changes, which affected the company's earnings
for the periods indicated:
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
($ in thousands) 1999 1998
---------- ---------
<S> <C> <C>
Average assets $ 355,779 322,992
Average deposits and short-term borrowings 325,519 297,182
Average investment securities (1) 115,022 112,601
Average loans, net of deferred loan fees 217,157 185,902
Net interest income 3,980 3,640
Provision for loan losses 135 90
Tax expense 398 445
Average loans : Average deposits and borrowings 66.71% 62.55%
Non interest expense : Average assets (2) 3.54% 3.68%
Non interest income, exclusive of securities
gains : Average assets (2) .71% .70%
Average tax equivalent rate earned on interest earning assets 8.12% 8.32%
Average rate paid on interest bearing deposits and
short-term borrowings 3.85% 4.00%
Net yield on average earning assets 5.04% 5.04%
<FN>
(1) Average investment securities are shown at average amortized cost
(2) Ratios have been annualized based on number of days for the period
</FN>
</TABLE>
Net Interest Income
The company's net interest income was $3,980,000 for the three months ended
March 31, 1999, an increase of $340,000 or 9.3% from $3,640,000 for the three
months ended March 31, 1998. Interest income increased $462,000, primarily a
result of an increase of average loan balances of $31.3 million, or 16.8% from
the quarter ended March 31, 1998 to the quarter ended March 31, 1999. The
increase in interest income was partially offset by an increase in interest
expense of $122,000, primarily due to an increase in average deposits and
short-term borrowings of $22.5 million over the same period.
The average tax-equivalent yield on earning assets in the three months ended
March 31, 1999, was 8.12%, down 20 basis points from 8.32% in the three months
ended March 31, 1998. The average rate paid on interest bearing deposits and
short-term borrowings in the three months ended March 31, 1999, was 3.85%, a
decrease of 15 basis points from 4.00% in the three months ended March 31, 1998.
The resulting interest rate spread decreased 5 basis points to 4.27% in the
three months ended March 31, 1999, from 4.32% in the three months ended March
31, 1998. The decline in the average loan yield from 9.45% to 8.92%, from March
31, 1998 to March 31, 1999, was primarily a result of the prime rate declining
by 75 basis points in the fourth quarter of 1998. Similarly, the decline in
average deposit rates paid was a result of declining market rates offered during
the same period.
The following table sets forth, among other things, the extent to which changes
in interest rates and changes in the average balances of interest-earning assets
and interest-bearing liabilities have affected interest income and expense
during the three months ended March 31, 1999, and 1998. For each category of
interest-earning assets and interest-bearing liabilities, information is
provided on changes attributable to: (1) volume (change in average portfolio
balance multiplied by prior year average rate); (2) interest rate (change in
average interest rate multiplied by prior year average balance); and (3) rate
and volume (the remaining difference).
13
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCES, INTEREST AND AVERAGE INTEREST RATES
Three Months Ended March 31, 1999 Three Months Ended March 31, 1998
--------------------------------- ---------------------------------
Average Interest Average Interest
($ in thousands) Balance Interest Rates (3) Balance Interest Rates (3)
-------- -------- --------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Loans (1) (2) $217,157 $4,774 8.92% $185,902 $ 4,331 9.45%
Investment securities (3) 115,022 1,712 6.74 112,601 1,713 6.50
Federal funds sold 3,842 44 4.64 1,691 24 5.76
-------- ------ -------- -------
Total interest earnings assets 336,021 6,530 8.12% 300,194 6,068 8.32%
------ -------
Other assets (4) 19,758 22,798
-------- --------
Total assets $355,779 $322,992
======== ========
Liabilities and stockholders' equity:
Savings, NOW and money market $109,779 553 2.04% $106,538 588 2.24%
Time deposits 144,369 1,845 5.18 122,760 1,671 5.52
Short-term borrowings 14,380 152 4.29 16,762 169 4.09
-------- ------ -------- -------
Interest bearing deposits and borrowings 268,528 2,550 3.85% 246,060 2,428 4.00%
-------- ------ -------- -------
Non-interest bearing deposits 56,991 51,122
Other liabilities 3,706 2,187
-------- --------
Total liabilities 329,283 299,369
Stockholders' equity 26,496 23,623
-------- --------
Total liabilities and
Stockholders' equity $355,779 $322,992
======== ========
Net interest rate spread 4.27% 4.32%
Net interest income $3,980 $3,640
====== ======
Net yield on average earning assets 5.04% 5.04%
<CAPTION>
($ in thousands) Changes due to
---------------------------------------------------
Interest Rate/
Total Volume Rate Volume
----- ------ -------- ------
<S> <C> <C> <C> <C>
Assets:
Loans (1) (2) $ 443 $ 728 $ (243) $ (42)
Investment securities (3) (1) 39 67 (107)
Federal funds sold 20 31 (5) (6)
----- ----- ------ -----
Total interest earnings assets 462 798 (181) (155)
----- ----- ------ -----
Other assets (4)
Total assets
Liabilities and stockholders' equity:
Savings, NOW and money market (35) 18 (53) --
Time deposits 174 294 (103) (17)
Short-term borrowings (17) (24) 8 (1)
----- ----- ------ -----
Interest bearing deposits and borrowings 122 288 (148) (18)
----- ----- ------ -----
Non-interest bearing deposits
Other liabilities
Total liabilities
Stockholders' equity
Total liabilities and
Stockholders' equity
Net interest rate spread
Net interest income $ 340 $ 510 $ (33) $(137)
===== ===== ====== =====
Net yield on average earning assets
<FN>
(1) Average loans include non-accrual loans.
(2) Average loans are net of average deferred loan fees.
(3) Average balances are presented at average amortized cost and average interest rates are presented on a tax-equivalent basis.
(4) Other assets include cash and due from banks, accrued interest receivable, allowance for loan losses, real estate acquired by
foreclosure, deferred income taxes and other miscellaneous assets.
</FN>
</TABLE>
The bank manages its earning assets by fully using available capital resources
within what management believes are prudent credit and leverage parameters.
Loans, investment securities, and federal funds sold comprise the bank's earning
assets.
14
<PAGE>
The provision for loan losses amounted to $135,000 and $90,000 for the three
months ended March 31, 1999 and March 31, 1998, respectively. With the growth in
the company's loan portfolio during 1997 and early 1998, the ratio of the
allowance for loan losses to gross loans had declined. In the second quarter of
1998, management determined that further erosion of the ratio was not prudent
and increased the provision to keep pace with further growth in the loan
portfolio. Loans, before the allowance for loan losses, have increased from
$193.3 million, at March 31, 1998, to $221.8 million, at March 31, 1999, or an
increase of 14.8%. Although there has not been an increase in problem assets,
management recognizes the increased risk and the need for additional reserves as
the loan balances increase. The provision reflects real estate values and
economic conditions in New England and in Greater Lowell, in particular, the
level of non-accrual loans, levels of charge-offs and recoveries, levels of
outstanding loans, known and inherent risks in the nature of the loan portfolio
and management's assessment of current risk. The provision for loan losses is a
significant factor in the bank's operating results.
Non-Interest Income
Non-interest income, exclusive of security gains, increased by $63,000 to
$622,000 for the three months ended March 31, 1999, compared to $559,000 for the
three months ended March 31, 1998. This increase was primarily caused by an
increase in trust fees of $48,000.
Trust fees increased by $48,000, or 20.3%, for the three months ended March 31,
1999 compared to the same period in 1998 due to an increase in trust assets.
Trust assets increased from $180.3 million at March 31, 1998 to $200.7 million
at March 31, 1999.
Deposit fees decreased by $14,000, or 6.4%, for the three months ended March 31,
1999, compared to the three months ended March 31, 1998, due primarily to a
decrease in overdrafts.
Other income for the three months ended March 31, 1999, was $78,000, a decrease
of 7.1%, from $84,000 for the three months ended March 31, 1998, due primarily
to a decrease in letter of credit fees.
Non-Interest Expenses
Salaries and benefits expense totaled $1,873,000 for the three months ended
March 31, 1999, compared with $1,678,000 for the three months ended March 31,
1998, an increase of $195,000 or 11.6%. This increase was primarily the result
of new hires to support the overall growth of the bank, and annual salary
increases.
Occupancy expense was $577,000 for the three months ended March 31, 1999,
compared with $555,000 for the three months ended March 31, 1998, an increase of
$22,000 or 4.0%. The increase was primarily due to the addition and renovation
of new facilities for the bank's accounting and loan servicing departments and
the customer service center.
Advertising and public relations expenses increased by $18,000, or 17.0%, for
the three months ended March 31, 1999 compared to the same period in 1998. The
increase was primarily attributed to expenses associated with the advertisements
for new employees and timing of other advertising programs.
Audit, legal and other professional expenses decreased by $6,000, or 4.8% for
the three months ended March 31, 1999 compared to the prior year period,
primarily due to professional services engaged by the bank in 1998, but not in
the three months ended March 31, 1999.
Trust, professional and custodial expenses decreased by $7,000, or 9.5%, for the
three months ended March 31, 1999 as compared to the same period in 1998. The
decrease was primarily due to the timing of certain professional management fees
in 1998.
Office and data processing supplies expense decreased by $32,000, or 34.4%, for
the three months ended March 31, 1999 compared to the same period in the prior
year. The decrease was primarily due to various cost saving initiatives.
15
<PAGE>
ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk
The company's primary market risk is interest rate risk, specifically, changes
in the interest rate environment. The bank's investment committee is responsible
for establishing policy guidelines on acceptable exposure to interest rate risk
and liquidity. The investment committee is comprised of certain members of the
Board of Directors and certain members of senior management. The primary
objectives of the company's asset/liability policy is to monitor, evaluate and
control the bank's interest rate risk, as a whole, within certain tolerance
levels while ensuring adequate liquidity and adequate capital. The investment
committee establishes and monitors guidelines for the net interest margin
sensitivity, equity to capital ratios, liquidity, Federal Home Loan Bank
borrowing capacity and loan to deposit ratio. The asset/liability strategies are
reviewed regularly by management and presented and discussed with the investment
committee on at least a quarterly basis. The asset/liability strategies are
revised based on changes in interest rate levels, general economic conditions,
competition in the marketplace, the current position of the bank, anticipated
growth of the bank and other factors.
One of the principal factors in maintaining planned levels of net interest
income is the ability to design effective strategies to manage the impact of
changes in interest rates on future net interest income. The balancing of
changes in interest income from interest earning assets and interest expense of
interest bearing liabilities is accomplished through the asset/liability
management program. The bank's simulation model analyzes various interest rate
scenarios. Variations in the interest rate environment affect numerous factors,
including prepayment speeds, reinvestment rates, maturities of investments (due
to call provisions), and interest rates on various asset and liability accounts.
The investment committee periodically reviews guidelines or restrictions
contained in the asset/liability policy and adjusts them accordingly. The bank's
current asset/liability policy is designed to limit the impact on net interest
income to 10% in the 24 month period following the date of the analysis, in a
rising and falling rate shock analysis of 100 and 200 basis points.
Management believes there have been no material changes in the interest rate
risk reported in the company's Annual Report on Form 10-KSB for the year ended
December 31, 1998.
16
<PAGE>
PART II - OTHER INFORMATION
Item 1 Legal Proceedings
Not Applicable
Item 2 Changes in Securities and Use of Proceeds
Not Applicable
Item 3 Defaults upon Senior Securities
Not Applicable
Item 4 Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-K
The following exhibits are included with this report:
3.1 Restated Articles of Organization of the Company, as
amended through May 10,1999.
10.17 Split Dollar Agreement for Richard W. Main
10.18 Split Dollar Agreement for Robert R. Gilman
27.1 Financial Data Schedule (included with electronic
copy only)
17
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENTERPRISE BANCORP, INC.
DATE: May 14, 1999 /s/ John P. Clancy, Jr.
John P. Clancy, Jr.
Senior Vice President, Chief Financial Officer,
Chief Investment Officer and Treasurer
18
FEDERAL IDENFITICATION
NO. Applied For
The Commonwealth of Massachusetts
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
RESTATED ARTICLES OF ORGANIZATION
(General Laws, Chapter 156B, Section 74)
We, Richard W. Main, President, and Arnold S. Lerner, Clerk, of Enterprise
Bancorp, Inc., located at 222 Merrimack Street, Lowell, Massachusetts 01852, do
hereby certify that the following Restatement of the Articles of Organization
was duly adopted at a meeting held on March 22, 1996 by a vote of the sole
incorporator in accordance with the rights and powers accorded thereto under Ch.
156B M.G.L. SS. 44.
ARTICLE I
The name of the corporation is:
Enterprise Bancorp, Inc.
ARTICLE II
The purpose of the corporation is to engage
in the following business activities:
See Exhibit A attached hereto and made a part hereof.
<PAGE>
ARTICLE III
State the total number of shares and par value, if any, of each class of stock
which the corporation is authorized to issue:
WITHOUT PAR VALUE WITH PAR VALUE
- ------------------------------ ------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- ---- ---------------- ---- ---------------- ---------
Common: Common: 500,000 $.01
Preferred: Preferred: 100,000 $.01
ARTICLE IV
If more than one class of stock is authorized, state a distinguishing
designation for each class. Prior to the issuance of any shares of a class, if
shares of another class are outstanding, the corporation must provide a
description of the preferences, voting powers, qualifications, and special or
relative rights or privileges of that class and of each other class of which
shares are outstanding and of each series then established within any class.
See Exhibit B attached hereto and made a part hereof.
ARTICLE V
The restrictions, if any, imposed by the Articles of Organization upon the
transfer of shares of stock of any class are:
See Exhibit C attached hereto and made a part hereof.
ARTICLE VI
Other lawful provisions, if any, for the conduct and regulation of the business
and affairs of the corporation, for its voluntary dissolution, or for limiting,
defining, or regulating the powers of the corporation, or of its directors or
stockholders, or of any class of stockholders:
See Exhibit D attached hereto and made a part hereof.
<PAGE>
ARTICLE VII
The effective date of the restated Articles of Organization of the corporation
shall be the date approved and filed by the Secretary of the Commonwealth. If a
later effective date is desired, specify such date which shall not be more than
thirty days after the date of filing.
ARTICLE VIII
The information contained in Article VIII is not a permanent part of the
Articles of Organization.
a. The street address (post office boxes are not acceptable) of the principal
office of the corporation in Massachusetts is:
222 Merrimack Street, Lowell, Massachusetts 01852
b The name, residential address and post office address of each director and
officer of the corporation is as follows:
<TABLE>
<CAPTION>
NAME RESIDENTIAL ADDRESS POST OFFICE ADDRESS
<S> <C> <C> <C>
Chairman: George L. Duncan 710 Andover Street Enterprise Bancorp, Inc.
Lowell, MA 01852 222 Merrimack Street
Lowell, MA 01852
President: Richard W. Main 1 Overlook Drive "
Chelmsford, MA 01824
Treasurer: John P. Clancy, Jr. 11 Tanglewood Drive "
Chelmsford, MA 01824
Clerk: Arnold S. Lerner 155 Pine Hill Road "
Hollis, NH 03049
Directors: See Exhibit E attached hereto and made a part hereof.
</TABLE>
c. The fiscal year (i.e., tax year) of the corporation shall end on the last
day of the month of: December.
d. The name and business address of the resident agent, if any, of the
corporation is: Stephen J. Coukos, Esq., Sullivan & Worcester
One Post Office Square, Boston, MA 02109
We further certify that the foregoing Restated Articles of Organization affect
no amendments to the Articles of Organization of the corporation as heretofore
amended, except amendments to the following articles. Briefly describe
amendments below
See Exhibit C hereto containing new additional provisions to Article V
pertaining to Certain Business Combinations.
SIGNED UNDER THE PENALTIES OF PERJURY, this 25th day of March, 1996
/s/Richard W. Main, President
Richard W. Main
/s/Arnold S. Lerner, Clerk
Arnold S. Lerner
<PAGE>
The Commonwealth of Massachusetts
RESTATED ARTICLE OF ORGANIZATION
(General Laws, Chapter 156B, Section 74)
I hereby approve the within Restated Articles of Organization and, the filing
fee in the amount of $____________ having been paid, said articles are deemed to
have been filed with me this ________ day of _______________ , 19 __.
Effective Date: ________________________________________
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION Photocopy of document to
be sent to:
Stephen J. Coukos, Esq.
Sullivan & Worcester
One Post Office Square
Boston, Massachusetts 02109
Telephone: (617) 338-2912
<PAGE>
ENTERPRISE BANCORP, INC.
RESTATED ARTICLES OF ORGANIZATION
EXHIBIT A
ARTICLE II: Purposes
To acquire, invest in or hold stock in any subsidiary permitted under
the Bank Holding Company Act of 1956 or Chapter 167A of the Massachusetts
General Laws, as such statutes may be amended from time to time, and to engage
in any activity or enterprise permitted to a bank holding company under said
statutes or other applicable law.
To engage generally in any business activity which may be lawfully
carried on by a corporation organized under Chapter 156B of the Massachusetts
General Laws.
<PAGE>
ENTERPRISE BANCORP, INC.
RESTATED ARTICLES OF ORGANIZATION
EXHIBIT B
ARTICLE IV: Capital Stock
The shares of the Corporation's authorized capital stock may be issued by
the Corporation from time to time by a vote of its Board of Directors without
the approval of its stockholders, except as may be otherwise provided in this
Article. Upon payment of lawful consideration therefor and issuance, all shares
of the capital stock of the Corporation shall be deemed to be fully paid and
nonassessable. No holder of any of the capital stock of the Corporation shall
have any preemptive right to purchase or subscribe for the purchase of any
additional shares issued by the Corporation. In the case of a stock dividend,
that part of the surplus account or undivided profits account of the Corporation
which is transferred to stated capital upon the issuance of shares as a stock
dividend shall be deemed to be the consideration for the issuance of such stock
dividend.
A description of the different classes and series (if any) of the
Corporation's capital stock and a statement of the designations and the relative
rights, preferences and limitations of the shares of each class and series (if
any) of capital stock are as follows:
SECTION 1. Common Stock. Except as provided by law or in this Article (or in any
supplementary sections hereto) or in any certificate of establishment of a
series of preferred stock, the holders of the Common Stock shall exclusively
possess all voting power. Each holder of outstanding shares of Common Stock
shall be entitled to one vote for each share held by such holder.
Holders of the Common Stock shall be entitled to the payment of dividends
out of any assets of the Corporation legally available for the payment thereof,
but only as and when declared by the Board of Directors.
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, after there shall have been paid to or set aside
for the holders of any class having preferences over the Common Stock in the
event of liquidation, dissolution or winding up of the Corporation, of the full
preferential amounts to which they are respectively entitled, the holders of the
Common Stock and of any class or series of stock entitled to participate, in
whole or in part, therewith, as to distribution of assets shall be entitled,
after payment or provision for payment of all debts and liabilities of the
Corporation, to receive the remaining assets of the Corporation available for
distribution, in cash or in kind, in proportion to their holdings.
SECTION 2. Preferred Stock. The Board of Directors of the Corporation is
authorized by vote or votes, from time to time adopted, to provide for the
issuance of preferred stock in one or more series and to fix and state the
voting powers, designations, preferences and relative participating,
<PAGE>
optional or other special rights of the shares of each series and the
qualifications, limitations and restrictions thereof, including, but not limited
to, determination of one or more of the following:
(1) The distinctive serial designation and the number of shares
constituting such series;
(2) The dividend rates or the amount of dividends to be paid on the shares
of such series, whether dividends shall be cumulative and, if so, from which
date or dates, the payment date or dates for dividends and the participating or
other special rights, if any, with respect to dividends;
(3) The voting powers, full or limited, if any, of shares of such series;
(4) Whether the shares of such series shall be redeemable and, if so, the
price or prices at which, and the terms and conditions on which, such shares may
be redeemed;
(5) The amount or amounts payable upon the shares of such series in the
event of voluntary or involuntary liquidation, dissolution or winding up of the
Bank;
(6) Whether the shares of such series shall be entitled to the benefit of a
sinking or retirement fund to be applied to the purchase or redemption of such
shares, and if so entitled, the amount of such fund and the manner of its
application, including the price or prices at which such shares may be redeemed
or purchased through the application of such fund;
(7) Whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes or of any other series of
the same or any other class or classes of stock of the Corporation, and if so
convertible or exchangeable, the conversion price or prices, or the rate or
rates of exchange, and the adjustments thereof, if any, at which such conversion
or exchange may be made, and any other terms and conditions of such conversion
or exchange;
(8) The price or other consideration for which the shares of such series
shall be issued; and
(9) Whether the shares of such series which are redeemed or converted shall
have the status of authorized but unissued shares of preferred stock and whether
such shares may be reissued as shares of the same or any other series of stock.
Unless otherwise provided by law, any such vote shall become effective when
the Corporation files with the Secretary of State of the Commonwealth of
Massachusetts a certificate of establishment of one or more series of preferred
stock signed by the Chairman of the Board and Chief Executive Officer or the
President and by the Clerk of the Corporation, setting forth a copy of the vote
of the Board of Directors establishing and designating the series and fixing and
determining the relative rights and preferences thereof, the date of adoption of
such vote and a certification that such vote was duly adopted by the Board of
Directors.
<PAGE>
ENTERPRISE BANCORP, INC.
RESTATED ARTICLES OF ORGANIZATION
EXHIBIT C
ARTICLE V: Certain Business Combinations
SECTION 1. Vote Required for Certain Business Combinations.
A. Required Vote for Certain Business Combinations. In addition to any
affirmative vote required by the Massachusetts General Laws or by these Articles
of Organization, and except as otherwise expressly provided in Section 2 of this
Article V:
(1) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with (i) any Interested
Stockholder (as hereinafter defined) or (ii) any other corporation or
entity (whether or not itself an Interested Stockholder) which is, or
after such merger or consolidation would be, an Affiliate (as
hereinafter defined) of an Interested Stockholder;
(2) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of transactions) to
or with any Interested Stockholder or any Affiliate of any Interested
Stockholder of any assets of the Corporation or any Subsidiary having
an aggregate Fair Market Value (as hereinafter defined) of $2,500,000
or more;
(3) the purchase, exchange, lease or other acquisition by the
Corporation or any Subsidiary (in a single transaction or a series of
related transactions) of all or substantially all of the assets or
business of any Interested Stockholder or any Affiliate of any
Interested Stockholder; or
(4) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of transactions) of any securities of
the Corporation or any Subsidiary to any Interested Stockholder or any
Affiliate of any Interested Stockholder in exchange for cash,
securities or other property (or a combination thereof) having an
aggregate Fair Market Value of $2,500,000 or more;
(5) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation proposed by or on behalf of any
Interested Stockholder or any Affiliate of any Interested Stockholder;
or
(6) any reclassification of the securities of the Corporation
(including any reverse stock split), any merger or consolidation of
the Corporation with any of its Subsidiaries or any other transaction
(whether or not with or into or otherwise involving any Interested
Stockholder) which has the effect, directly or indirectly, of
increasing the proportion of the outstanding shares of any class of
equity or convertible securities of the Corporation or any Subsidiary
which is directly or indirectly owned by any Interested Stockholder or
any Affiliate of any Interested Stockholder;
<PAGE>
shall require the affirmative vote of the holders of at least 80% of the voting
power of the Voting Stock (as hereinafter defined) voting together as a single
class. Such affirmative vote shall be required notwithstanding the fact that no
vote may be required or that a lesser percentage may be specified by law.
B. Definition of "Business Combination". The term "Business
Combination" as used in this Article shall mean any transaction which is
referred to in any one or more of the clauses (1) through (6) of Paragraph A of
this Section 1.
SECTION 2. When Higher Vote is Not Required.
The provisions of Section 1 of this Article V shall not be applicable
to any particular Business Combination, and such Business Combination shall
require only such affirmative vote as is required by law and any other provision
of these Articles of Organization, if all of the conditions specified in either
of the following paragraphs A or B are met:
A. Approval by Continuing Directors. The Business Combination shall have
been approved by two-thirds of the Continuing Directors (as hereinafter
defined); or
B. Price and Procedure Requirements. All of the following conditions shall
have been met:
(1) The aggregate amount of the cash and the Fair Market Value
as of the date of the consummation of the Business Combination (the
"Consummation Date") of any consideration other than cash to be
received per share by holders of the Common Stock in such Business
Combination shall be at least equal to the highest of the following:
(a) (if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and
soliciting dealers fees) paid by the Interested
Stockholder for any shares of the Common Stock of the
Corporation acquired by it (i) within the two year
period immediately prior to the first public
announcement of the proposal of the Business
Combination (the "Announcement Date") or (ii) in the
transaction in which it became an Interested
Stockholder, whichever is higher;
(b) the highest Fair Market Value per share of the Common
Stock of the Corporation on any date during the
one-year period prior to and including the Announcement
Date; and
(c) (if applicable) the price per share equal to the
product of (i) the Fair Market Value per share of the
Common Stock of the Corporation on the Announcement
Date or on the date on which the Interested Stockholder
became an Interested Stockholder (such latter date is
referred to in this Article V as the "Determination
Date"), whichever is higher, and (ii) a fraction, (x)
the numerator of which is the highest per share price
(including
<PAGE>
any brokerage commissions, transfer taxes and
soliciting dealers' fees) paid by the Interested
Stockholder for any shares of the Common Stock acquired
by it within the two year period immediately prior to
and including the Announcement Date, and (y) the
denominator of which is the Fair Market Value per share
of the Common Stock on the first day in such two-year
period upon which the Interested Stockholder acquired
any shares of the Common Stock.
(2) The aggregate amount of the cash and the Fair Market Value as of
the Consummation Date of the Business Combination of consideration other than
cash to be received per share by holders of shares of any other class of
outstanding Voting Stock shall be at least equal to the highest of the following
(it being intended that the requirements of this paragraph B(2) shall be
required to be met with respect to every other class of outstanding Voting
Stock, whether or not the Interested Stockholder has previously acquired any
shares of a particular class of Voting Stock):
(a) (if applicable) the highest per share price (including
any brokerage commissions, transfer taxes and
soliciting dealers fees) paid by the Interested
Stockholder for any shares of such class of Voting
Stock acquired by it (i) within the two year period
immediately prior to the Announcement Date or (ii) in
the transaction in which it became an Interested
Stockholder, whichever is higher;
(b) (if applicable) the highest preferential amount per
share which the holders of shares of such class of
Voting Stock are entitled to receive from the
Corporation in the event of any voluntary or
involuntary liquidation, dissolution or winding up of
the Corporation;
(c) (if applicable) the highest Fair Market Value per share
of such class of Voting Stock on any date during the
one year period prior to and including the Announcement
Date; and
(d) (if applicable) the price per share equal to the
product of (i) the Fair Market Value per share of such
class of Voting Stock on the Announcement Date or on
the Determination Date, whichever is higher, and (ii) a
fraction, (x) the numerator of which is the highest per
share price (including any brokerage commission,
transfer taxes and soliciting dealers fees paid by the
Interested Stockholder for any shares of such class of
Voting Stock acquired by it within the two year period
immediately prior to and including the Announcement
Date, and (y) the denominator of which is the Fair
Market Value per share of such class of Voting Stock on
the first day in such two year period upon which the
Interested Stockholder acquired any shares of such
class of Voting Stock.
(3) The consideration to be received by holders of a
particular class of outstanding Voting Stock shall be in cash or in the
same form as the Interested Stockholder has previously paid for shares
of such class of Voting Stock. If the Interested Stockholder
<PAGE>
has paid for shares of any class of Voting Stock with varying forms of
consideration, the form of consideration for such class of Voting Stock
shall be either cash or the form used to acquire the largest number of
such class of Voting Stock previously acquired by such Interested
Stockholder.
(4) After becoming an Interested Stockholder and prior to the
consummation of any such Business Combination: (a) there shall have
been (i) no failure to declare and pay at regular dates therefor the
full amount of any dividends (whether or not cumulative) payable on the
Common Stock and any other class or series of stock entitled to
dividends; (ii) no reduction in the annual rate of dividends paid on
the Common Stock (except as necessary to reflect any subdivision of the
Common Stock), except as approved by a majority of the Continuing
Directors; and (iii) an increase in such annual rate of dividends as
necessary to reflect any reclassification (including any reverse stock
split), recapitalization, reorganization or any similar transaction
which has the effect of reducing the number of outstanding shares of
the Common Stock, unless the failure so to increase such annual rate is
approved by a majority of the Continuing Directors; and (b) such
Interested Stockholder shall not have become the beneficial owner of
any additional shares of Voting Stock except as part of the transaction
which results in such Interested Stockholder's becoming an Interested
Stockholder.
(5) After becoming an Interested Stockholder, such Interested
Stockholder shall not have received the benefit, directly or indirectly
except proportionately as a stockholder, of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits or
other tax advantages provided by the Corporation, whether in
anticipation of or in connection with such Business Combination or
otherwise, unless such transaction shall have been approved or ratified
by a majority of the Continuing Directors after such person shall have
become an Interested Stockholder.
(6) A proxy or information statement describing the proposed
Business Combination and complying with the requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act") and the
rules and regulations of the Securities and Exchange Commission (the
"SEC"), or any successor agency thereto, thereunder (or any subsequent
provisions replacing such Act, rules or regulations) shall be mailed to
stockholders of the Corporation at least 20 days prior to consummation
of such Business Combination (whether or not such proxy or information
statement is required to be mailed pursuant to such Act or subsequent
provisions).
SECTION 3. Certain Definitions.
A. A "person" shall mean an individual, a Group Acting in Concert, a
corporation, a partnership, an association, a joint stock company, a trust, a
business trust, a government or political subdivision, any unincorporated
organization and any similar association or entity.
B. "Interested Stockholder" shall mean any person (other than any
Employee Stock Ownership Plan established by the Board of Directors, the
Corporation or any Subsidiary thereof formed at the direction of the
Corporation) who or which:
<PAGE>
(1) is the beneficial owner, directly or indirectly, of ten
percent (10%) or more of the voting power of the then outstanding
shares of Voting Stock;
(2) is an Affiliate of the Corporation and at any time within the
two-year period immediately prior to the date in question was the
beneficial owner, directly or indirectly, of ten percent (10%) or more
of the voting power of the then outstanding shares of Voting Stock; or
(3) is an assignee of or has otherwise succeeded to the
beneficial ownership of any shares of Voting Stock which were are any
time within the two-year period immediately prior to the date in
question beneficially owned by any Interested Stockholder, if such
assignment or succession shall have occurred in the course of a
transaction or series of transactions not involving a public offering
within the meaning of the Securities Act of 1933, as amended, and such
assignment of succession was not approved by a majority of the
Continuing Directors.
C. A person shall be a "beneficial owner" of any shares of "Voting
Stock":
(1) which such person or any of its Affiliates or Associates,
directly or indirectly, has or shares with respect to such Voting
Stock (a) the right to acquire or direct the acquisition of (whether
such right is exercisable immediately or only after the passage of
time or on the satisfaction of any conditions or both), pursuant to
any agreement, arrangement or understanding or upon the exercise of
any conversion rights, warrants, or options or otherwise; (b) the
right to vote, or direct the voting of, pursuant to any agreement,
arrangement or understanding or otherwise; or (c) the right to dispose
of or transfer or direct the disposition or transfer of pursuant to
any agreement, arrangement, understanding or otherwise; or
(2) which are beneficially owned, directly or indirectly, by any
other person with which such person or any of its Affiliates or
Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any shares of
Voting Stock.
D. For the purpose of determining whether a person is an Interested
Stockholder pursuant to paragraph B of this Section 3, the number of shares of
Voting Stock deemed to be outstanding shall include shares deemed owned by such
person through application of paragraph C of this Section 3 but shall not
include any other shares of Voting Stock which may be issuable pursuant to any
agreement, arrangement or understanding, or upon exercise of conversion rights,
warrants or options or otherwise.
E. "Affiliate" or "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the SEC's General Rules and Regulations
under the 1934 Act.
F. "Subsidiary" means any corporation of which a majority of any class
of equity security is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of Interested
Stockholder set forth in paragraph B of this Section 3, the
<PAGE>
term "Subsidiary" shall mean only a corporation of which a majority of each
class of equity security is owned, directly or indirectly, by the Corporation.
G. "Continuing Director" means any member of the Board of Directors of
the Corporation (the "Board") who is not an Interested Stockholder, or an
Affiliate or an Associate of any Interested Stockholder and was a member of the
Board prior to the time that any Interested Stockholder became an Interested
Stockholder, and any successor of a Continuing Director who is not an Interested
Stockholder, or an Affiliate or an Associate of any Interested Stockholder and
is recommended to succeed a Continuing Director by a majority of Continuing
Directors then on the Board.
H. "Fair Market Value" for the purpose of these Articles of
Organization means:
(1) in the case of stock, the highest closing sale price
during the 30-day period immediately preceding the date in question of
a share of such stock on the principal United States securities
exchange registered under the 1934 Act on which such stock is listed,
or, if such stock is not listed on any such exchange, the highest
closing bid quotation with respect to a share of such stock during the
30-day period preceding the date in question on the National
Association of Securities Dealers Automated Quotation System or a
comparable system then in use, or if not such quotations are available,
the fair market value on the date in question of a share of such stock
as determined by at least a majority of the Continuing Directors of the
Board in good faith; and
(2) in the case of property other than cash or stock, the fair
market value of such property on the date in question as determined by
at least a majority of the Continuing Directors of the Board in good
faith.
I. "Group Acting in Concert" shall mean persons seeking to combine or
pool their voting or other interests in the securities of the Corporation for a
common purpose, pursuant to any contract, understanding, relationship, agreement
or other arrangement, whether written, oral or otherwise, or any "group of
persons' as defined under Section 13(d) of the 1934 Act. When persons act
together for any such purpose, their group is deemed to have acquired their
stock.
J. "Voting Stock" shall mean the then outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors.
K. In the event of any Business Combination in which the Corporation
survives, the phrase "other consideration to be received" as used in paragraphs
B(1) and (2) of Section 2 of this Article V shall include the shares of common
stock and/or the shares of any other class of outstanding voting stock retained
by the holders of such shares.
<PAGE>
SECTION 4. Powers of the Board of Directors.
A majority of the Directors of the Corporation (or, if there is an
Interested Stockholder, a majority of the Continuing Directors then in office)
shall have the power to determine for the purposes of this Article V, on the
basis of information known to them after reasonable inquiry, including without
limitation, (A) whether a person is an Interested Stockholder, (B) the number of
shares of Voting Stock beneficially owned by any person, (C) whether a person is
an Affiliate or Associate of or is affiliated or associated with another, (D)
whether the requirements of Section 2 of this Article V have been met with
respect to any Business Combination, (E) whether the assets which are the
subject of any Business Combination have, or the consideration to be received
for the issuance or transfer of securities by the Corporation or any Subsidiary
in any Business Combination has, an aggregate Fair Market Value of $2,500,000 or
more, and (F) any other matters of interpretation arising under this Article V
or under Section 2 of Article VI. The good faith determination of a majority of
the Directors (or, if there is an Interested Stockholder, a majority of the
Continuing Directors then in office) on such matters shall be conclusive and
binding for all purposes of this Article V and of Section 2 of Article VI.
SECTION 5. No Effect on Fiduciary Obligations of Interested
Stockholders.
Nothing contained in this Article V shall be construed to relieve any
Interested Stockholder from any fiduciary obligation imposed by law.
<PAGE>
ENTERPRISE BANCORP, INC.
RESTATED ARTICLES OF ORGANIZATION
EXHIBIT D
ARTICLE VI: Other Lawful Provisions
SECTION 1. Standards for Board of Directors Evaluation of Offers. The Board
of Directors of the Corporation, when evaluating any offer of another person to
(A) make a tender or exchange offer for any equity security of the Corporation,
(B) merge or consolidate the Corporation with another institution, or acquire
all of the Voting Stock of the Corporation, or (C) purchase or otherwise acquire
all or substantially all of the properties and assets of the Corporation, shall,
in connection with the exercise of its judgment in determining what is in the
best interests of the Corporation and its stockholders, give due consideration
to all relevant factors including, without limitation, the social and economic
effects of acceptance of such offer on the Corporation's present and future
account holders, borrowers and employees; on the communities in which the
Corporation operates or is located; and on the ability of the Corporation to
fulfill the objectives of a bank holding company under applicable statutes and
regulations.
SECTION 2. Beneficial Ownership Limitation. No person shall directly or
indirectly offer to acquire or acquire the beneficial ownership of more than ten
percent ( 10%) of the outstanding shares of any class of equity securities of
the Corporation. This limitation shall not apply (A) to any acquisition of
shares of capital stock of the Corporation which has been expressly approved in
advance by an affirmative vote of not less than two-thirds of the Continuing
Directors then in office, (B) to any offer to the Corporation made by any
underwriters selected by the Corporation in connection with a public offering by
the Corporation of the Corporation's capital stock, or (C) to any Employee Stock
Ownership Plan established by the Corporation.
For the purposes of determining the number of shares of equity securities
owned hereunder by any person, the number of shares of equity securities deemed
to be outstanding shall include shares deemed owned by such person through the
application of paragraph C of Section 3 of Article V of these Articles of
Organization but shall not include any other shares of equity securities which
may be issuable pursuant to any agreement, arrangement or understanding, or upon
exercise of conversion rights, warrants or options or otherwise.
In the event that any class of equity securities is acquired in violation
of this Section 2, (I) all shares of Common Stock or Preferred Stock
beneficially owned by any person in excess of ten percent ( 10%) of the total
number of outstanding shares of such class shall be considered "excess shares"
and such shares shall not be counted as shares entitled to vote, shall not be
voted by any person or counted as voting shares in connection with any matter
submitted to the stockholders for a vote, and shall not be counted as
outstanding for purposes of determining the affirmative vote necessary to
approve any matter submitted to the stockholders for a vote, and (ii) the Board
of Directors may cause such excess shares to be transferred to an independent
trustee for sale on the open market or otherwise, with the expenses of such
trustee to be paid out of the proceeds from such sale. The term "offer" as it is
used in this Article includes every offer to buy or acquire, solicitation of an
offer to sell, tender offer for or request or invitation for tender of, a
security or interest in a security for value.
<PAGE>
SECTION 3. Directors. The Corporation shall be under the direction of a
Board of Directors. The number of Directors shall not be fewer than three (3) or
as required by law. The Board of Directors shall be divided into three classes
(Class I, Class II and Class III) as nearly equal in number as possible, with
one class to be elected annually.
The directors of the Corporation as of and from the effective date of these
Articles of Organization shall be those persons identified in Article VIII and
they shall hold office as follows: the directors initially elected to Class I
shall hold office for a term expiring at the annual meeting of stockholders to
be held in 1997, the directors initially elected to Class II shall hold office
for a term expiring at the annual meeting of stockholders to be held in 1998,
and the directors initially elected to Class III shall hold office for a term
expiring at the annual meeting of stockholders to be held in 1999, with the
members of each such class to hold office until their respective successors are
duly elected and qualified. At each annual meeting, or special meeting in lieu
thereof, of stockholders of the Corporation, the successors to the class of
directors whose term expires at the meeting shall be elected by a plurality vote
of all votes cast at such meeting to hold office for a term expiring at the
annual meeting of stockholders held in the third year following the year of
their election and until their respective successors are elected and qualified.
Any Director (including persons elected by Directors to fill vacancies in
the Board of Directors) may be removed from office only for Cause (as
hereinafter defined), by an affirmative vote of not less than (i) the holders of
two-thirds of the total votes eligible to be cast by stockholders at a duly
constituted meeting of stockholders called expressly for such purpose, or (ii)
two-thirds of the members of the Board of Directors then in office, unless at
the time of such removal there shall be an Interested Stockholder, in which case
the affirmative vote of not less than two-thirds of the Continuing Directors
then in office shall also be required for removal by vote of the Board of
Directors. At least thirty days prior to such meeting of stockholders, written
notice shall be sent to the Director whose removal will be considered at the
meeting.
For purposes of this Section 3, "Cause" shall be defined as (i) conviction
of a felony; (ii) acceptance of immunity to testify where another has been so
convicted; (iii) a court determination of liability for negligence or misconduct
in the performance of directorial duties in an important matter; or (iv) a
determination or direction by such governmental agency or authority as may
exercise proper jurisdiction that an individual should not be a Director.
SECTION 4. Indemnification of Directors. The Corporation shall indemnify any
person who was or is a party to any threatened, pending or completed action,
suit or proceeding (other than actions based upon a violation of the duty of
loyalty), whether civil, criminal, derivative, administrative or investigative
by reason of the fact that the person is or was a Director, against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him if he acted in good faith and in a
manner reasonably believed to be in or not opposed to the best interests of the
Corporation. The termination of any action, suit or proceeding by judgment,
order or settlement shall not, of itself, create a presumption that the person
did not act in good faith and in a manner reasonably believed to be in or not
opposed to the best interests of the Corporation. The provisions of this Section
4 shall not limit any other rights of indemnification from the Corporation that
a person may be entitled to by law or the By-laws of the Corporation.
<PAGE>
SECTION 5. Transactions with Interested Persons.
5.1. Unless entered into in bad faith, no contract or transaction by the
Corporation shall be void, voidable or in any way affected by reason of the fact
that it is with an Interested Person.
5.2. For the purposes of this Section 5, "Interested Person" means any
person or organization in any way interested in the Corporation whether as a
director, officer, stockholder, employee or otherwise, and any other entity in
which any such person or organization of the Corporation is in any way
interested.
5.3. Unless such contract or transaction was entered into in bad faith, no
Interested Person, because of such interest, shall be liable to the Corporation
or to any other person or organization for any loss or expense incurred by
reason of such contract or transaction or shall be accountable for any gain or
profit realized from such contract or transaction.
5.4. The provisions of this Section 5 shall be operative notwithstanding
the fact that the presence of an Interested Person was necessary to constitute a
quorum at a meeting of Directors or stockholders of the Corporation at which
such contract or transaction was authorized or that the vote of an Interested
Person was necessary for the authorization of such contract or transaction.
SECTION 6. Acting as a Partner. The Corporation may be a partner in any
business enterprise which it would have power to conduct by itself.
SECTION 7. Stockholders Meetings. Meetings of stockholders may be held at
such place in the Commonwealth of Massachusetts or, if permitted by applicable
law, elsewhere in the United States as the Board of Directors may determine.
SECTION 8. Notice of Stockholder Business at Annual Meeting. At an annual
meeting of stockholders, only such business shall be conducted as shall have
been brought before the meeting (a) by or at the direction of the Board of
Directors (unless there is an Interested Stockholder, in which case the
affirmative vote of a majority of the Continuing Directors then in office shall
also be required) or (b) by any stockholder of the Corporation who complies with
the notice procedures set forth in this Section 8. For business to be properly
brought before an annual meeting by the stockholder, the stockholder must have
given timely notice thereof in writing to the Clerk of the Corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation not less than sixty days nor
more than one hundred and fifty days prior to the meeting; provided, however,
that in the event that less than seventy days' notice or prior public disclosure
of the date of the meeting is given or made to stockholders, notice by the close
of business on the tenth day following the day on which such notice of the date
of the annual meeting was mailed or such public disclosure was made must be
given. A stockholder's notice to the Clerk shall set forth as to each matter the
shareholder proposes to bring before the annual meeting (a) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (b) the name and address, as
they appear on the Corporation's books, of the stockholder proposing such
business and any other stockholder known by such stockholder to be supporting
such proposal, (c) the class and number of shares of the Corporation which are
beneficially owned by the stockholder and any other stockholder known by such
stockholder to be supporting such proposal, and (d) any financial
<PAGE>
interest of the stockholder in such business. Notwithstanding anything in these
Articles of Organization to the contrary, no business shall be conducted at an
annual meeting except in accordance with the procedures set forth in this
Section 8 or as provided in the By-Laws of the Corporation. The Chairman of the
Board and Chief Executive Officer at an annual meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the provisions of this Section 8,
and if he should so determine, he shall so declare to the meeting and any such
business not properly brought before this meeting shall not be transacted.
SECTION 9. Call of Special Meetings. Special meetings of the stockholders
for any purpose or purposes may be called at any time only by the Chairman of
the Board and Chief Executive Officer, or by the affirmative vote of a majority
of the Directors then in office; provided, however, that if at the time of such
call there is an Interested Stockholder, any such call shall also require the
affirmative vote of a majority of the Continuing Directors then in office. Only
those matters set forth in the call of the special meeting may be considered or
acted upon at such special meeting, unless otherwise provided by law.
SECTION 10. Amendment of By-Laws. The By-Laws of the Corporation may be
adopted, altered, amended, changed or repealed by the Board of Directors or the
stockholders of the Corporation. Such action by the Board of Directors shall
also require the affirmative vote of at least two-thirds of the Directors then
in office at a duly constituted meeting of the Board of Directors, unless if at
the time of such action there shall be an Interested Stockholder, in which case
such action shall also require the affirmative vote of at least two-thirds of
the Continuing Directors then in office, at such a meeting. Such action by the
stockholders shall (i) first require approval by the affirmative vote of a
majority of the Board of Directors of the Corporation then in office at a duly
constituted meeting of the Board of Directors, unless at the time of such action
there shall be an Interested Stockholder, in which case such action shall also
require the affirmative vote of at least a two-thirds majority of the Continuing
Directors then in office, at such meeting, (ii) unless waived by the affirmative
vote of the Board of Directors (and if applicable, the Continuing Directors)
specified in the preceding sentence, require the submission by the stockholders
of written proposals for adopting, altering, amending, changing or repealing the
By-Laws at least sixty days prior to the meeting at which they are to be
considered, and (iii) shall further require the affirmative vote of at least
two-thirds of the total votes eligible to be cast by stockholders at a duly
constituted meeting of stockholders called expressly for such purpose.
SECTION 11. Amendment to Articles of Organization. No amendment, addition,
alteration, change or repeal of these Articles of Organization shall be made,
unless the same is first approved by the affirmative vote of at least two-thirds
of the Board of Directors of the Corporation then in office, and thereafter
approved by the stockholders by not less than 80% of the total votes eligible to
be cast at a duly constituted meeting, or, in the case of Articles I, II and III
of these Articles of Organization, by not less than a majority of the total
votes eligible to be cast, and if, at any time within the sixty-day period
immediately preceding the meeting at which the stockholder vote is to be taken
there is an Interested Stockholder, such amendment, addition, alteration,
change, or repeal shall also require the affirmative vote of at least two-thirds
of the Continuing Directors then in office, prior to approval by the
stockholders. Unless otherwise provided by law, any amendment, addition,
alteration, change or repeal so acted upon shall be effective on the date it is
filed with the
<PAGE>
Secretary of State of the Commonwealth of Massachusetts or on such other date as
specified in such amendment, addition, alteration, change or repeal or as the
Secretary of State may specify.
SECTION 12. Director's Liability. No director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for any breach of such director's fiduciary duty as a director of the
Corporation, notwithstanding any provision of law imposing such liability;
provided, however, that, to the extent required by applicable law, this
provision shall not eliminate the liability of a director of the Corporation (i)
for any breach of such director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law (iii) under provisions of
the Massachusetts General Laws imposing liabilities on directors in respect of
distributions to the stockholders of the Corporation or loans to officers or
directors of the Corporation, or (iv) any transaction from which such director
derived any improper personal benefit. This provision shall not eliminate the
liability of a director for any act or omission occurring prior to the date upon
which this provision becomes effective. No amendment to or repeal of this
provision shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to the date of such amendment or
repeal.
<PAGE>
ENTERPRISE BANCORP, INC.
RESTATED ARTICLES OF ORGANIZATION
EXHIBIT E
ARTICLE VIII: List of Directors
<TABLE>
<CAPTION>
Name Residential Address Post Office Address
<S> <C> <C>
Kenneth S. Ansin 5 Wyman Road Enterprise Bancorp, Inc.
West Townsend, MA 01474 222 Merrimack Street
Lowell, MA 01852
Walter L. Armstrong 50 Marshall Avenue Enterprise Bancorp, Inc.
Lowell, MA 01852 222 Merrimack Street
Lowell, MA 01852
Gerald G. Bousquet, M.D. 1 New Towne Way Enterprise Bancorp, Inc.
Chelmsford, MA 01824 222 Merrimack Street
Lowell, MA 01852
Kathleen M. Bradley 17 Bradley Lane Enterprise Bancorp, Inc.
Westford, MA 01886 222 Merrimack Street
Lowell, MA 01852
James F. Conway, III 23 Stonybrook Circle Enterprise Bancorp, Inc.
Andover, MA 01810 222 Merrimack Street
Lowell, MA 01852
Nancy L. Donahue 52 Belmont Avenue Enterprise Bancorp, Inc.
Lowell, MA 01852 222 Merrimack Street
Lowell, MA 01852
George L. Duncan 710 Andover Street Enterprise Bancorp, Inc.
Lowell, MA 01852 222 Merrimack Street
Lowell, MA 01852
<PAGE>
Eric W. Hanson 3 Boardwalk Enterprise Bancorp, Inc.
Chelmsford, MA 01824 222 Merrimack Street
Lowell, MA 01852
John P. Harrington 53 Trull Lane Enterprise Bancorp, Inc.
Lowell, MA 01852 222 Merrimack Street
Lowell, MA 01852
Arnold S. Lerner 155 Pine Hill Road Enterprise Bancorp, Inc.
Hollis, NH 03049 222 Merrimack Street
Lowell, MA 01852
Richard W. Main 1 Overlook Drive Enterprise Bancorp, Inc.
Chelmsford, MA 01824 222 Merrimack Street
Lowell, MA 01852
Charles P. Sarantos 132 Lincoln Parkway Enterprise Bancorp, Inc.
Lowell, MA 01852 222 Merrimack Street
Lowell, MA 01852
Michael A. Spinelli 6 Lakewood Road Enterprise Bancorp, Inc.
Windham, NH 03087 222 Merrimack Street
Lowell, MA 01852
</TABLE>
<PAGE>
The Commonwealth of Massachusetts
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
MICHAEL J. CONNOLLY, Secretary
ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108
ARTICLES OF AMENDMENT FEDERAL IDENTIFICATION
General Laws, Chapter 156B, Section 72 NO. 04-3308902
We Richard W. Main, President, and Arnold S. Lerner, Clerk, of Enterprise
Bancorp, Inc. located at 222 Merrimack Street, Lowell, Massachusetts 01852, do
hereby certify that these ARTICLES OF AMENDMENT affecting Articles NUMBERED: 3
of the Articles of Organization were duly adopted at a meeting held on May 22,
1996, by vote of: the sole incorporator in accordance with the rights and powers
accorded thereto under Ch. 156B M.G.L. ss.44.
<PAGE>
To CHANGE the number of shares and the par value (if any) of any type, class or
series of stock which the corporation is authorized to issue, fillin the
following:
The total presently authorized is:
WITHOUT PAR VALUE WITH PAR VALUE
- ------------------------------ ------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- ---- ---------------- ---- ---------------- ---------
Common: Common: 500,000 $.01
Preferred: Preferred: 100,000 $.01
CHANGE the total authorized to:
WITHOUT PAR VALUE WITH PAR VALUE
- ------------------------------ ------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- ---- ---------------- ---- ---------------- ---------
Common: Common: 5,000,000 $.01
Preferred: Preferred: 1,000,000 $.01
<PAGE>
The foregoing amendment will become effective when these articles of amendment
are filed in accordance with Chapter 156B, Section 6 of The General Laws unless
these articles specify, in accordance with the vote adopting the amendment, a
later effective date not more than thirty days after such filing, in which event
the amendment will become effective on such later date. LATER EFFECTIVE DATE:
- ------------------------
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto signed
our names this 17th day of July, in the year 1996.
/s/ Richard W. Main, President
Richard W. Main
/s/ Arnold S. Lerner, Clerk
Arnold S. Lerner
<PAGE>
The Commonwealth of Massachusetts
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of amendment and, the filing fee in the
amount of $5,400 having been paid, said articles are deemed to have been filed
with me this 17th day of July , 1996.
/S/ William Francis Galvin
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
PHOTOCOPY OF ARTICLES OF AMENDMENT TO BE SENT
TO: Stephen J. Coukos, Esq.
Sullivan & Worcester
One Post Office Square
Boston, Massachusetts 02109
Telephone: (617) 338-2912
<PAGE>
FEDERAL IDENTIFICATION
NO. 04-3308902
The Commonwealth of Massachusetts
OFFICE OF THE MASSACHUSETTS SECRETARY OF STATE
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
ONE ASHBURTON PLACE, BOSTON, MASSACHUSETTS 02108
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
We Richard W. Main, President, and Arnold S. Lerner, Clerk, of Enterprise
Bancorp, Inc. located at 222 Merrimack Street, Lowell, Massachusetts 01852, do
hereby certify that these articles of amendment affecting articles numbered: 3
of the Articles of Organization were duly adopted at a meeting held on May 4,
1999, by vote of: 2,707,106 shares of common stock of 3,169,634 shares
outstanding, being at least a majority of each type, class or series outstanding
and entitled to vote thereon:
<PAGE>
To change the number of shares and the par value (if any) of any type, class or
series of stock which the corporation is authorized to issue, fillin the
following:
The total presently authorized is:
WITHOUT PAR VALUE WITH PAR VALUE
- ------------------------------ ------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- ---- ---------------- ---- ---------------- ---------
Common: Common: 5,000,000 $.01
Preferred: Preferred: 1,000,000 $.01
Change the total authorized to:
WITHOUT PAR VALUE WITH PAR VALUE
- ------------------------------ ------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- ---- ---------------- ---- ---------------- ---------
Common: Common: 10,000,000 $.01
Preferred: Preferred: 1,000,000 $.01
<PAGE>
The foregoing amendment will become effective when these articles of amendment
are filed in accordance with Chapter 156B, Section 6 of The General Laws unless
these articles specify, in accordance with the vote adopting the amendment, a
later effective date not more than thirty days after such filing, in which event
the amendment will become effective on such later date. LATER EFFECTIVE DATE:
- ------------------------
IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, we have hereunto signed
our names this 4th day of May, 1999.
/s/ Richard W. Main, President
Richard W. Main
/s/ Arnold S. Lerner, Clerk
Arnold S. Lerner
<PAGE>
The Commonwealth of Massachusetts
ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
I hereby approve the within articles of amendment and, the filing fee in the
amount of $5,000 having been paid, said articles are deemed to have been filed
with me this ___ day of May , 1999.
/S/ William Francis Galvin
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
PHOTOCOPY OF ARTICLES OF AMENDMENT TO BE SENT
TO: Stephen J. Coukos, Esq.
Sullivan & Worcester LLP
One Post Office Square
Boston, Massachusetts 02109
Telephone: (617) 338-2912
EXHIBIT 10.17
SPLIT-DOLLAR AGREEMENT
THIS AGREEMENT, made as of the 10th day of February by and between ENTERPRISE
BANK & TRUST COMPANY, a Massachusetts corporation (hereinafter referred to as
the "Employer"), and Richard W. Main of Chelmsford, Massachusetts (hereinafter
referred to as the "Employee").
WITNESSETH THAT:
WHEREAS, the Employee is employed by the Employer, and
WHEREAS, the Employer is desirous of retaining the services of the Employee and
of assisting the Employee in paying for life insurance on his own life; and
WHEREAS, the Employer has determined that this assistance can be provided under
a split dollar life insurance arrangement; and
WHEREAS, the Employee has applied for, and is the owner of the insurance policy
or policies listed in the attached schedule hereto, hereinafter referred to as
the "Policy", and
WHEREAS, the Employer and the Employee agree to make the Policy subject to this
Agreement; and
WHEREAS, the Employee has assigned the Policy to the Employer as collateral for
amounts to be advanced by the Employer under this Agreement by an instrument of
assignment filed with the Insurer (hereinafter referred to as the "Assignment");
NOW, THEREFORE, in consideration of the promises and of the mutual covenants
herein contained, the Parties hereto hereby agree as follows:
1. The Parties hereto agree that the Policy shall be subject to the terms
and conditions of this Agreement and of the Assignment filed with the
Insurer relating to the Policy. The Employee shall be the sole and
absolute owner of the Policy and may exercise all ownership rights
granted to the owner thereof by the terms of the Policy, except as may
be otherwise provided herein and in the Assignment.
2. The premium for the Policy will be paid by the Employer during the
Employee's employment and for any period of time that it may have an
obligation to provide continuing fringe benefits thereafter. The
premium will be allocated between the Employee and the Employer. The
Employee's share of the premium (term insurance allocation) shall be
paid by the Employer as agent for the Employee and shall be charged to
the Employee as cash compensation, and for all purposes, including the
Assignment, shall be deemed cash compensation and not Employer paid
premium.
3. The Assignment shall not be terminated, altered or amended by the
Employee without the express written consent of the Employer. The
Parties hereto agree to take reasonable action to cause such Assignment
to conform to the provisions of this Agreement.
1
<PAGE>
4. A. Except as otherwise provided herein, the Employee shall not sell,
assign, transfer, borrow against, surrender or cancel the Policy,
change the beneficiary designation provision thereof, in any such case,
without the express written consent of the Employer. Consent to change
the beneficiary designation shall not be unreasonably withheld.
Notwithstanding the forgoing, the Employee may borrow or withdraw cash
value of the Policy in excess of the collaterally assigned values of
the Employer without action of the Board of Directors. However, Policy
loan interest, if any, that may accrue on any such transaction shall
not reduce the collaterally assigned values of the Employer, or if such
may be the case, Employee will pay such Policy loan interest in cash to
the Insurer.
B. The Employer shall not borrow against the Policy without the express
written consent of the Employee.
C. Upon the Employee's termination of employment, the Employee shall have
the right to take any action with regard to the cash value of the
policy in excess of the collaterally assigned interest of the Employer.
5. A. Upon the death of the Employee, the Employer shall promptly take all
action necessary to obtain its share of the death benefit provided
under the Policy.
B. The Employer shall have the unqualified right to receive a portion of
such Death Benefit equal to the total amount of its share of the
premiums paid by it hereunder, (hereinafter referred to as the "Net
Premium"). The balance of the Death Benefit provided under the Policy,
if any, shall be paid directly by the Insurer to the beneficiary or
beneficiaries and in the manner designated by the Employee. No amount
shall be paid from such death benefit to the beneficiary or
beneficiaries designated by the Employee until the Employer or Insurer
acknowledges in writing that the full amount due to the Employer
hereunder has been paid. The Parties hereto agree that the beneficiary
designation provision of the Policy shall conform to the provisions
hereof.
6. The Employer shall not merge or consolidate into or with another
organization, or reorganize, or sell substantially all of its assets to
another organization, firm or person unless and until such succeeding
or continuing organization, firm or person agrees to assume and
discharge the obligations of the Employer under this Agreement. Any
such obligation will be defined in either the Employees employee
handbook or in any employment contract between the Employee and the
Employer. Upon the occurrence of such event, the term "Employer" as
used in this Agreement shall be deemed to refer to such successor or
survivor organization.
7. This Agreement shall terminate upon the Employee's death and the
payment of proceeds pursuant to Section 5 of this Agreement.
8. A. If the Employee ceases to be employed by the Employer for whatever
reason, the Employee has the right to continue to keep the Policy in
force either individually or through a subsequent Employer, subject to
the requirement that the Policy cash value not be reduced through
loans, premium payment options, or in any other manner below the amount
needed to repay the Employer the Net Premiums paid by it hereunder.
2
<PAGE>
B. If the Employee continues to keep the Policy in force, termination of
this Agreement shall be pursuant to Section 7 of this Agreement.
C. If the Employee does not continue to keep the Policy in force, this
Agreement will terminate immediately and the Employer will be repaid an
amount equal to the lesser of Net Premiums paid by the Employer or the
cash surrender value as of the date of the Employee's termination of
Employment.
9. The Parties hereto agree that this Agreement shall take precedence over
any provisions of the Assignment. The Employer agrees not to exercise
any right possessed by it under the Assignment except in conformity
with this Agreement.
10. This Agreement may not be amended, altered or modified except by a
written instrument signed by both of the Parties hereto and may not be
otherwise terminated except as provided herein.
11. A. The split-dollar arrangement contemplated herein is an exempt
welfare plan under regulations promulgated under Title I of the
Employee Retirement Income Security Act of 1974 ("ERISA").
B. For purposes of ERISA, the Employer will be the "named fiduciary" and
"plan administrator" of the split-dollar arrangement contemplated
herein, and this Agreement is hereby designated as the written plan
instrument.
C. The Employee or any beneficiary of his may file a request for benefits
with the plan administrator. If a claim request is wholly or partially
denied, the plan administrator will furnish to the claimant a notice of
its decision within ninety (90) days in writing, and in a manner to be
understood by the claimant, which notice will contain the following
information:
I. The specific reason or reasons for the denial;
II. Specific reference to pertinent plan provisions upon which the
denial is based;
III. A description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation as to why such material or information is
necessary.
IV. An explanation of the plan's claim-review procedure describing
the steps to be taken by a claimant who wishes to submit his
claim for review.
D. A claimant or his authorized representative may, with respect to any
denied claim,
I. Request a review upon written application filed within sixty
(60) days after receipt by the claimant of written notice of
the denial of his claim;
3
<PAGE>
II. Review pertinent documents; and
III. Submit issues and comments in writing.
Any request or submission will be in writing and will be directed to the plan
administrator. The plan administrator will have the sole responsibility for the
review of any denied claim and will take all appropriate steps in light of its
findings. The plan administrator will render a decision upon review of a denied
claim within sixty (60) days after receipt of a request for review. If special
circumstances warrant additional time, the decision will be rendered as soon as
possible, but not later than one hundred twenty (120) days after receipt of
request for review. Written notice of any such extension will be furnished to
the claimant prior to the commencement of the extension. The decision on review
will be in writing and will include specific reasons for the decision written in
a manner to be understood by the claimant, as well as the specific references of
the pertinent provisions of the plan on which the decision is based. If the
decision on review is not furnished to the claimant within the time limits
described above, the claim will be deemed denied on review.
12. This Agreement shall be binding upon and inure to the benefit of the
Employer and its successors and assignees and the Employee and his
successors, assignees, heirs, executors, administrators and
beneficiaries.
13. Except as may be preempted by ERISA, this Agreement, and the rights of
the Parties thereunder, shall be governed by and constructed in
accordance with the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed by its
officer thereunto duly authorized and the Employee has hereunto set his hand and
seal, all as of the day and year first above written.
ENTERPRISE BANK & TRUST COMPANY
/s/ Mary Ellen Fitzpatrick By: /s/ John P. Clancy
Witness
Title: SVP/CFO
/s/ John P. Clancy /s/ Richard W. Main
Witness Richard W. Main
4
EXHIBIT 10.18
SPLIT-DOLLAR AGREEMENT
THIS AGREEMENT, made as of the 10th day of February by and between ENTERPRISE
BANK & TRUST COMPANY, a Massachusetts corporation (hereinafter referred to as
the "Employer"), and Robert R. Gilman of Lowell, Massachusetts (hereinafter
referred to as the "Employee").
WITNESSETH THAT:
WHEREAS, the Employee is employed by the Employer, and
WHEREAS, the Employer is desirous of retaining the services of the Employee and
of assisting the Employee in paying for life insurance on his own life; and
WHEREAS, the Employer has determined that this assistance can be provided under
a split dollar life insurance arrangement; and
WHEREAS, the Employee has applied for, and is the owner of the insurance policy
or policies listed in the attached schedule hereto, hereinafter referred to as
the "Policy", and
WHEREAS, the Employer and the Employee agree to make the Policy subject to this
Agreement; and
WHEREAS, the Employee has assigned the Policy to the Employer as collateral for
amounts to be advanced by the Employer under this Agreement by an instrument of
assignment filed with the Insurer (hereinafter referred to as the "Assignment");
NOW, THEREFORE, in consideration of the promises and of the mutual covenants
herein contained, the Parties hereto hereby agree as follows:
1. The Parties hereto agree that the Policy shall be subject to the terms
and conditions of this Agreement and of the Assignment filed with the
Insurer relating to the Policy. The Employee shall be the sole and
absolute owner of the Policy and may exercise all ownership rights
granted to the owner thereof by the terms of the Policy, except as may
be otherwise provided herein and in the Assignment.
2. The premium for the Policy will be paid by the Employer during the
Employee's employment and for any period of time that it may have an
obligation to provide continuing fringe benefits thereafter. The
premium will be allocated between the Employee and the Employer. The
Employee's share of the premium (term insurance allocation) shall be
paid by the Employer as agent for the Employee and shall be charged to
the Employee as cash compensation, and for all purposes, including the
Assignment, shall be deemed cash compensation and not Employer paid
premium.
3. The Assignment shall not be terminated, altered or amended by the
Employee without the express written consent of the Employer. The
Parties hereto agree to take reasonable action to cause such Assignment
to conform to the provisions of this Agreement.
1
<PAGE>
4. A. Except as otherwise provided herein, the Employee shall not sell,
assign, transfer, borrow against, surrender or cancel the Policy,
change the beneficiary designation provision thereof, in any such case,
without the express written consent of the Employer. Consent to change
the beneficiary designation shall not be unreasonably withheld.
Notwithstanding the forgoing, the Employee may borrow or withdraw cash
value of the Policy in excess of the collaterally assigned values of
the Employer without action of the Board of Directors. However, Policy
loan interest, if any, that may accrue on any such transaction shall
not reduce the collaterally assigned values of the Employer, or if such
may be the case, Employee will pay such Policy loan interest in cash to
the Insurer.
B. The Employer shall not borrow against the Policy without the express
written consent of the Employee.
C. Upon the Employee's termination of employment, the Employee shall have
the right to take any action with regard to the cash value of the
policy in excess of the collaterally assigned interest of the Employer.
5. A. Upon the death of the Employee, the Employer shall promptly take all
action necessary to obtain its share of the death benefit provided
under the Policy.
B. The Employer shall have the unqualified right to receive a portion of
such Death Benefit equal to the total amount of its share of the
premiums paid by it hereunder, (hereinafter referred to as the "Net
Premium"). The balance of the Death Benefit provided under the Policy,
if any, shall be paid directly by the Insurer to the beneficiary or
beneficiaries and in the manner designated by the Employee. No amount
shall be paid from such death benefit to the beneficiary or
beneficiaries designated by the Employee until the Employer or Insurer
acknowledges in writing that the full amount due to the Employer
hereunder has been paid. The Parties hereto agree that the beneficiary
designation provision of the Policy shall conform to the provisions
hereof.
6. The Employer shall not merge or consolidate into or with another
organization, or reorganize, or sell substantially all of its assets to
another organization, firm or person unless and until such succeeding
or continuing organization, firm or person agrees to assume and
discharge the obligations of the Employer under this Agreement. Any
such obligation will be defined in either the Employees employee
handbook or in any employment contract between the Employee and the
Employer. Upon the occurrence of such event, the term "Employer" as
used in this Agreement shall be deemed to refer to such successor or
survivor organization.
7. This Agreement shall terminate upon the Employee's death and the
payment of proceeds pursuant to Section 5 of this Agreement.
8. A. If the Employee ceases to be employed by the Employer for whatever
reason, the Employee has the right to continue to keep the Policy in
force either individually or through a subsequent Employer, subject to
the requirement that the Policy cash value not be reduced through
loans, premium payment options, or in any other manner below the amount
needed to repay the Employer the Net Premiums paid by it hereunder.
2
<PAGE>
B. If the Employee continues to keep the Policy in force, termination of
this Agreement shall be pursuant to Section 7 of this Agreement.
C. If the Employee does not continue to keep the Policy in force, this
Agreement will terminate immediately and the Employer will be repaid an
amount equal to the lesser of Net Premiums paid by the Employer or the
cash surrender value as of the date of the Employee's termination of
Employment.
9. The Parties hereto agree that this Agreement shall take precedence over
any provisions of the Assignment. The Employer agrees not to exercise
any right possessed by it under the Assignment except in conformity
with this Agreement.
10. This Agreement may not be amended, altered or modified except by a
written instrument signed by both of the Parties hereto and may not be
otherwise terminated except as provided herein.
11. A. The split-dollar arrangement contemplated herein is an exempt
welfare plan under regulations promulgated under Title I of the
Employee Retirement Income Security Act of 1974 ("ERISA").
B. For purposes of ERISA, the Employer will be the "named fiduciary" and
"plan administrator" of the split-dollar arrangement contemplated
herein, and this Agreement is hereby designated as the written plan
instrument.
C. The Employee or any beneficiary of his may file a request for benefits
with the plan administrator. If a claim request is wholly or partially
denied, the plan administrator will furnish to the claimant a notice of
its decision within ninety (90) days in writing, and in a manner to be
understood by the claimant, which notice will contain the following
information:
I. The specific reason or reasons for the denial;
II. Specific reference to pertinent plan provisions upon which the
denial is based;
III. A description of any additional material or information
necessary for the claimant to perfect the claim and an
explanation as to why such material or information is
necessary.
IV. An explanation of the plan's claim-review procedure describing
the steps to be taken by a claimant who wishes to submit his
claim for review.
D. A claimant or his authorized representative may, with respect to any
denied claim,
I. Request a review upon written application filed within sixty
(60) days after receipt by the claimant of written notice of
the denial of his claim;
3
<PAGE>
II. Review pertinent documents; and
III. Submit issues and comments in writing.
Any request or submission will be in writing and will be directed to the plan
administrator. The plan administrator will have the sole responsibility for the
review of any denied claim and will take all appropriate steps in light of its
findings. The plan administrator will render a decision upon review of a denied
claim within sixty (60) days after receipt of a request for review. If special
circumstances warrant additional time, the decision will be rendered as soon as
possible, but not later than one hundred twenty (120) days after receipt of
request for review. Written notice of any such extension will be furnished to
the claimant prior to the commencement of the extension. The decision on review
will be in writing and will include specific reasons for the decision written in
a manner to be understood by the claimant, as well as the specific references of
the pertinent provisions of the plan on which the decision is based. If the
decision on review is not furnished to the claimant within the time limits
described above, the claim will be deemed denied on review.
12. This Agreement shall be binding upon and inure to the benefit of the
Employer and its successors and assignees and the Employee and his
successors, assignees, heirs, executors, administrators and
beneficiaries.
13. Except as may be preempted by ERISA, this Agreement, and the rights of
the Parties thereunder, shall be governed by and constructed in
accordance with the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Employer has caused this Agreement to be executed by its
officer thereunto duly authorized and the Employee has hereunto set his hand and
seal, all as of the day and year first above written.
ENTERPRISE BANK & TRUST COMPANY
/s/ Mary Ellen Fitzpatrick By: /s/ John P. Clancy
Witness
Title: SVP/CFO
/s/ John P. Clancy /s/ Robert R. Gilman
Witness Robert R. Gilman
4
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from
unaudited financial statements of Enterprise Bancorp, Inc. at and for the period
ended March 31, 1999 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 15,049
<INT-BEARING-DEPOSITS> 262,563
<FED-FUNDS-SOLD> 10,100
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 114,733
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 222,848
<ALLOWANCE> 5,416
<TOTAL-ASSETS> 367,038
<DEPOSITS> 321,520
<SHORT-TERM> 15,871
<LIABILITIES-OTHER> 2,070
<LONG-TERM> 0
0
0
<COMMON> 32
<OTHER-SE> 27,545
<TOTAL-LIABILITIES-AND-EQUITY> 367,038
<INTEREST-LOAN> 4,774
<INTEREST-INVEST> 1,712
<INTEREST-OTHER> 44
<INTEREST-TOTAL> 6,530
<INTEREST-DEPOSIT> 2,398
<INTEREST-EXPENSE> 2,550
<INTEREST-INCOME-NET> 3,980
<LOAN-LOSSES> 135
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,108
<INCOME-PRETAX> 1,359
<INCOME-PRE-EXTRAORDINARY> 1,359
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 961
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.29
<YIELD-ACTUAL> 4.80
<LOANS-NON> 727
<LOANS-PAST> 88
<LOANS-TROUBLED> 519
<LOANS-PROBLEM> 1,597
<ALLOWANCE-OPEN> 5,234
<CHARGE-OFFS> 13
<RECOVERIES> 60
<ALLOWANCE-CLOSE> 5,416
<ALLOWANCE-DOMESTIC> 5,416
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> (71)
</TABLE>
