UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of


the Securities Exchange Act of 1934 (Amendment No.     )

Filed by the Registrant  x

Filed by a Party other than the Registranto

Check the appropriate box:

o

Preliminary Proxy Statement

o

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

x

Definitive Proxy Statement

o

Definitive Additional Materials

o

Soliciting Material Pursuant to §240.14a-12

Enterprise Bancorp, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

x

No fee required.

o

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)

Title of each class of securities to which transaction applies:

(2)

Aggregate number of securities to which transaction applies:

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4)

Proposed maximum aggregate value of transaction:

(5)

Total fee paid:

o

Fee paid previously with preliminary materials.

o

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)

Amount Previously Paid:

(2)

Form, Schedule or Registration Statement No.:

(3)

Filing Party:

(4)

Date Filed:


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A

(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant þ
Filed by a Party other than the Registrant ¨

Check the appropriate box:
¨ Preliminary Proxy Statement
¨Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ Definitive Proxy Statement
¨ Definitive Additional Materials
¨ Soliciting Material Pursuant to14a-12

Enterprise Bancorp, Inc.

Payment of Filing Fee (Check the appropriate box):
þ No fee required.
¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:

¨ Fee paid previously with preliminary materials.
¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:



ENTERPRISE BANCORP, INC.


222 MERRIMACK STREET

LOWELL, MASSACHUSETTS 01852

TELEPHONE: (978) 459-9000




April 1, 2013

March 30, 2012


Dear Stockholder:


You are cordially invited to attend the 20122013 Annual Meeting of Stockholders (the “Annual Meeting”) of Enterprise Bancorp, Inc. (the “Company”), the parent holding company of Enterprise Bank and Trust Company, to be held on Tuesday, May 1, 2012,7, 2013, at 4:00 p.m. local time, at the Vesper Country Club, 185 Pawtucket Boulevard, Tyngsborough, Massachusetts.

UMass Lowell Inn & Conference Center, 50 Warren Street, Lowell, Massachusetts.


The Annual Meeting has been called for the following purposes:


1.
To elect six Directors of the Company, each for a three-year term;
2.To consider and vote upon a proposal to amend Section 4.1 of the Company's Restated Articles of Organization;
3.To consider and vote upon a proposal to amend Section 5.10 of the Company's Restated Articles of Organization;
4.To consider and vote upon a proposal to amend Section 5.11 of the Company's Restated Articles of Organization;
5.To consider and vote upon an amendment and restatement of the Company's Restated Articles of Organization;
6.
To vote on the ratification of the Audit Committee’s appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2013; and
7.To transact such other business as may properly come before the meeting or any adjournments or postponements thereof.
1.                                       To elect five Directors of the Company, each for a three-year term;

2.                                       To amend the Company’s 2009 Stock Incentive Plan;

3.                                       To vote on the ratification of the Audit Committee’s appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2012; and

4.                                       To transact such other business as may properly come before the meeting or any adjournments or postponements thereof.

The accompanying Proxy Statement of the Company provides information concerning the matters to be voted on at the Annual Meeting. Also enclosed is the Company’s 2011 annual report2012 Annual Report to stockholders,Stockholders, which contains additional information and results for the year ended December 31, 2011,2012, including the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission.


It is important that your shares be represented at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, you are requested to either (1) deliver your proxy electronically by following the instructions included with your proxy card, OR (2) deliver your proxy by phone by following the instructions included with your proxy card OR, (3) deliver your proxy by mail by completing, dating, signing and returning your proxy card in the enclosed postage paid envelope.


Thank you in advance for returning your proxy. We appreciate your continuing support of the Company.

Sincerely,

George L. Duncan


Sincerely,

George L. Duncan
Chairman of the Board






ENTERPRISE BANCORP, INC.

222 MERRIMACK STREET

LOWELL, MASSACHUSETTS 01852

TELEPHONE: (978) 459-9000

TELEPHONE: (978) 459-9000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

The Annual Stockholders Meeting of Enterprise Bancorp, Inc. will be held at the

VESPER COUNTRY CLUBUMASS LOWELL INN & CONFERENCE CENTER

185 Pawtucket Boulevard50 Warren Street

Tyngsborough,Lowell, MA 0187901852

on Tuesday, May 1, 20127, 2013 at 4:00 p.m.

The Annual Meetingannual meeting is being held for the following purposes:


1.
To vote on the reelection of George L. Duncan, Eric W. Hanson, Jacqueline F. Moloney, Michael T. Putziger, Carol L. Reid and Michael A. Spinelli to serve as Directors of the Company for a three-year term (Proposal One);

2.To consider and vote upon a proposal to amend Section 4.1 of the Company's Restated Articles of Organization (Proposal Two);

3.To consider and vote upon a proposal to amend Section 5.10 of the Company's Restated Articles of Organization (Proposal Three);

4.To consider and vote upon a proposal to amend Section 5.11 of the Company's Restated Articles of Organization (Proposal Four);
5.To consider and vote on upon an amendment and restatement of the Company’s Restated Articles of Organization (Proposal Five);
6.
To vote on the ratification of the Audit Committee’s appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2013 (Proposal Six); and
7.To transact any other business which may properly come before the meeting or any adjournments or postponements thereof.    
1.                                       To vote on the reelection of Gino J. Baroni, John P. Clancy, Jr., James F. Conway, III, Lucy A. Flynn and John P. Harrington to serve as Directors of the Company for a three-year term (Proposal One);

2.                                       To amend the Company’s 2009 Stock Incentive Plan (Proposal Two);

3.                                       To vote on the ratification of the Audit Committee’s appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2012 (Proposal Three); and

4.                                       To transact any other business which may properly come before the meeting or any adjournments or postponements thereof.

You may vote at the Annual Meeting if you were a stockholder of record at the close of business on March 5, 2012.

4, 2013.

In the event there are not sufficient votes to approve any of the foregoing proposals at the time of the Annual Meeting, the Annual Meeting may be adjourned in order to permit further solicitation of proxies by the Company.

By Order of the Board of Directors

Michael A. Spinelli

Secretary

By Order of the Board of Directors
Michael A. Spinelli
Secretary
222 Merrimack Street

Lowell, Massachusetts 01852

March 30, 2012

April 1, 2013


EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE (1) DELIVER YOUR PROXY ELECTRONICALLY BY FOLLOWING THE INSTRUCTIONS INCLUDED WITH YOUR PROXY CARD OR (2) DELIVER YOUR PROXY BY PHONE BY FOLLOWING THE INSTRUCTIONS INCLUDED WITH YOUR PROXY CARD, OR (3) COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE ANNUAL MEETING AND DESIRE TO WITHDRAW YOUR PROXY AND VOTE IN PERSON, YOU MAY DO SO.



PROXY STATEMENT


ENTERPRISE BANCORP, INC.

222 MERRIMACK STREET

LOWELL, MASSACHUSETTS 01852

Telephone: (978) 459-9000

ANNUAL MEETING OF STOCKHOLDERS

To Be Held on Tuesday, May 1, 20127, 2013

IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS

FOR THE STOCKHOLDERANNUAL STOCKHOLDERS MEETING TO BE HELD ON MAY 1, 2012

7, 2013

The proxy statement and annual report are available to stockholders at www.edocumentview.com/ebtc.

You may obtain directions to the Vesper Country ClubUMass Lowell Inn & Conference Center in Tyngsborough,Lowell, where our annual meeting will be held this year, by going to the following web site: https:http://vespercc.com/

continuinged.uml.edu/directionsicc.htm

GENERAL INFORMATION

Introduction
Introduction

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Enterprise Bancorp, Inc. (the “Company”), the parent holding company of Enterprise Bank and Trust Company (the “Bank”), for the 20122013 Annual Meeting of Stockholders of the Company (the “Annual Meeting”), to be held on Tuesday, May 1, 2012,7, 2013, at 4:00 p.m. local time, at the Vesper Country Club, 185 Pawtucket Boulevard, Tyngsborough,UMass Lowell Inn & Conference Center, 50 Warren Street, Lowell, Massachusetts and at any adjournments or postponements thereof. This Proxy Statement, the accompanying Notice of Annual Meeting and the accompanying proxy card are first being mailed to stockholders on or about March 30, 2012.

April 1, 2013.

The Annual Meeting has been called for the following purposes: (1) to elect fivesix Directors of the Company, each to serve for a three-year term; (2) to consider and vote upon a proposal to amend Section 4.1 of the Company's Restated Articles of Organization; (3) to consider and vote upon a proposal to amend Section 5.10 of the Company's Restated Articles of Organization; (4) to consider and vote upon a proposal to amend Section 5.11 of the Company's Restated Articles of Organization; (5) to consider and vote upon the amendment and restatement of the Company’s 2009 Stock Incentive Plan; (3)Restated Articles of Organization; (6) to vote on the ratification of the Audit Committee’s appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2012;2013; and (4)(7) to transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.

The Company is a Massachusetts corporation and a registered bank holding company. All of the Company’s material business activities are conducted through the Bank.

1


1

Record Date

The Board of Directors has fixed the close of business on March 5, 20124, 2013 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting and any adjournments or postponements thereof (the “Record Date”). Only holders of record of the Company’s common stock (the “Common Stock”) at the close of business on the Record Date will be entitled to vote. At the close of business on the Record Date, there were 9,509,7679,726,475 shares of the Common Stock issued and outstanding. The holders of shares of the Common Stock outstanding and each shareas of the close of business on the Record Date will be entitled to one vote for each share held of record upon each matter properly submitted to the Annual Meeting or any adjournments or postponements thereof.

Proxies

You may vote at the Annual Meetingannual meeting in person or by proxy. Proxies may be delivered electronically via the Internet, by phone,telephone, or in writing by mail. If you intend to deliver a proxy electronically or by phone, you may do so by following the instructions included with your proxy card. If you hold your shares in “street name”, such as in a stock brokerage account or through a bank or other nominee, you need to check your proxy card or contact your broker or nominee to determine whether electronic or telephonic proxy delivery is available to you. If you intend to deliver a proxy by mail, we request that you complete, date, sign and promptly return the accompanying proxy card in the enclosed envelope, which requires no postage if mailed in the United States.

If you are delivering a proxy electronically or by phonetelephone and you properly follow the instructions included with your proxy card for doing so by no later than the deadline indicated in such instructions or if you are delivering a proxy by mail and you return the enclosed proxy card properly executed to the Company in time to be voted at the Annual Meeting, then the shares represented by your proxy, regardless of the method of delivery, will be voted in accordance with your voting instructions, unless you subsequently revoke your proxy as further explained below.

If you properly deliver your proxy, without including any instructions as to how your proxy should be voted, then your proxy will be voted as follows: (1) FOR the election of Gino J. Baroni, John P. Clancy, Jr.George L. Duncan, Eric W. Hanson, Jacqueline F. Moloney, Michael T. Putziger, Carol L. Reid and Michael A. Spinelli, James F. Conway, III, Lucy A. Flynn and John P. Harrington,as the fivesix nominees of the Board of Directors, as Directors of the Company; (2) FOR the amendment to Section 4.1 of the Company’s 2009 Stock Incentive Plan;Company's Restated Articles of Organization; (3) FOR the amendment to Section 5.10 of the Company's Restated Articles of Organization; (4) FOR the amendment to Section 5.11 of the Company's Restated Articles of Organization; (5) FOR the amendment and restatement of the Company's Restated Articles of Organization; (6) FOR the ratification of the Audit Committee’s appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2012;2013; and (4)(7) in such manner as management’s proxy-holders shall decide on such other matters as may properly come before the Annual Meeting or any adjournments or postponements thereof.

The presence of a stockholder at the Annual Meeting will not automatically revoke a stockholder’s proxy. A stockholder may, however, revoke a proxy at any time before the Annual Meeting is called to order by filing with the Secretary of the Company a written notice of revocation, or by delivering to the Company a duly executed proxy bearing a later date, or by properly delivering a proxy electronically or by phonetelephone at a later date. All written notices of revocation and other written communications with respect to revocation of proxies in connection with the Annual Meeting should be addressed as follows: Enterprise Bancorp, Inc., 222 Merrimack Street, Lowell, Massachusetts 01852, Attention: Michael A. Spinelli, Secretary.

It is not anticipated that any matters other than those set forth in the foregoing proposals (1), (2)Proposals One, Two, Three, Four, Five and (3),Six contained in this Proxy Statement will be brought before the Annual Meeting. Please see the additional information under the heading “Stockholder Proposals” at page 43pages 42-43 of this Proxy Statement for a description of the requirements that must be satisfied in order for any Director nomination or other stockholder proposal, which is not otherwise included in this Proxy Statement, to be presented by any stockholder at the Annual Meeting. If any other matters

2

properly come before the Annual Meeting, the persons named as proxies will vote upon such matters in their discretion in accordance with their best judgment.

In addition to use of the mails, proxies may be solicited personally or by telephone, fax or e-mail by officers, Directors and employees of the Company, none of whom will be specially compensated for such solicitation activities. Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries for forwarding solicitation materials to the

2


beneficial owners of shares held of record by such persons, and the Company will reimburse such persons for their reasonable out-of-pocketout‑of‑pocket expenses incurred in that connection. The cost of soliciting proxies will be borne by the Company.

Quorum; Vote Required

The presence, in person or by proxy, of at least a majority of the total number of outstanding shares of the Common Stock is necessary to constitute a quorum at the Annual Meeting for the transaction of business. Abstentions and “broker non-votes” (as defined below) will be counted as present for purposes of determining the presence or absence of a quorum for the transaction of business at the Annual Meeting.

The number of affirmative votes required for approval of the matters to be considered at the Annual Meeting is as follows:

Proposal One —- Election of Class of Directors

·                  A pluralityEach Director is required to be elected by a majority of the affirmative votes cast by stockholders present, in person or by proxy, at the Annual Meeting is required for the election of Directors.  “Plurality” means that the nominees receiving the largest number of affirmative votes cast are elected as Directors up to the maximum number of Directors who are nominated to be elected at the annual meeting.Meeting. At the Annual Meeting, the maximum number of Directors to be elected is five.

six.


Proposal Two —- Approval of the Amendment to 2009 Stock Incentive PlanSection 4.1 of the Restated Articles of Organization
The approval and adoption of the amendment to Section 4.1 of the Company's Restated Articles of Organization requires the affirmative vote of at least 80% of the total shares of common stock eligible to vote at the Annual Meeting.

Proposal Three - Approval of the Amendment to Section 5.10 of the Restated Articles of Organization
The approval and adoption of the amendment to Section 5.10 of the Company's Restated Articles of Organization requires the affirmative vote of at least 80% of the total shares of common stock eligible to vote at the Annual Meeting.

Proposal Four - Approval of the Amendment to Section 5.11 of the Restated Articles of Organization
The approval and adoption of the amendment to Section 5.11 of the Company's Restated Articles of Organization requires the affirmative vote of at least 80% of the total shares of common stock eligible to vote at the Annual Meeting.

Proposal Five - Approval of the Amendment and Restatement of the Restated Articles of Organization
The approval and adoption of the amendment and restatement of the Company’s Restated Articles of Organization requires the affirmative vote of at least 80% of the total shares of common stock eligible to vote at the Annual Meeting.

Proposal Six - Ratification of Appointment of Independent Registered Public Accounting Firm
The ratification, on a non-binding, advisory basis, of the appointment of KPMG LLP as our independent registered public accounting firm for

·2013                  A requires a majority of the affirmative votes cast by stockholders present, in person or by proxy at the Annual Meeting is required to approve the amendment to the Company’s 2009 Stock Incentive Plan.

Proposal Three — Ratification of Appointment of Independent Registered Public Accounting FirmMeeting.

·                  A majority of the affirmative votes cast by stockholders present, in person or by proxy, at the Annual Meeting is required to ratify on a non-binding, advisory basis the appointment of KPMG LLP as our independent registered public accounting firm for 2012.




3

In voting for the election of Directors, you may vote “FOR” each nomineeall nominees or “WITHHOLD” your vote from each nomineeall nominees or from only certain specified nominees. Withholding a vote from oneall or moresome of the nominees is effectively a vote against such nominee(s), but will not prevent the election of such nominee(s) so long as such nominee(s) receive a pluralitymajority of the affirmative votes cast at the Annual Meeting.

In voting for the approval of the amendmentProposals Two through Five regarding certain amendments to the Company’s 2009 Stock Incentive Plan,Restated Articles of Organization, you may vote “FOR” or “AGAINST” sucheach amendment or you may “ABSTAIN” from voting on the matter. Under Massachusetts law,Because each of the Proposals Two through Five requires the approval of 80% of the outstanding shares of common stock, an abstention is not consideredwill have the effect of a vote cast at a meeting and, consequently, abstentions will have no effect on the voting for thisagainst each such proposal.

In voting for the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2012,2013, you may vote “FOR” or “AGAINST” such ratification or you may “ABSTAIN” from voting on the matter. Under Massachusetts law, an abstention is not considered a vote cast at a meeting and, consequently, abstentions will have no effect on the voting for this proposal.

With respect to the matters to be considered at the Annual Meeting, broker non-votes will be disregarded for purposes of determining whether a proposal has been approved.

approved, other than with respect to Proposals Two through Five.

Under existing stock exchange rules, banks, brokers, or other nominees may vote shares held for a customer in street name on matters that are considered to be “routine” even if they have not received voting instructions from their clients. A broker “non-vote” occurs when a bank, broker, or other nominee has not received voting instructions from a customer and does not vote the customer’s shares either because the matter is not considered routine or because the bank, broker or other nominee does not exercise its prerogative to vote even if the matter is considered routine.

3


The first, second, third, fourth and secondfifth proposals to be brought before the Annual Meeting this year, namely the election of Directors and the amendment of the Company’s 2009 Stock Incentive Plan,Restated Articles of Organization, are not considered “routine” matters, which means that if your shares are held in street name, your bank, broker, or other nominee may not vote your shares on these matters unless you provide timely instructions for such voting. The thirdsixth proposal to be brought before the Annual Meeting this year, namely the ratification of the appointment of the independent registered public accounting firm, is considered a “routine” matter, which means that if your shares are held in street name your bank, broker, or other nominee may vote your shares on this matter in its sole discretion if you do not provide timely instructions for voting your shares.

The Directors and executive officers of the Company have indicated that they intend to vote all shares of the Common Stock that they are entitled to vote in favor of each of proposals (1), (2),Proposals One, Two, Three, Four, Five and (3)Six presented herein. On the Record Date, the Directors and executive officers of the Company in the aggregate had the right to vote 9,509,7679,726,475 shares of the Common Stock representing approximately 28.5%26.20% of the outstanding shares of the Common Stock as of such date.



PROPOSAL ONE


ELECTION OF CLASS OF DIRECTORS


The Company’s Amended and Restated By-Laws (the “By-Laws”"By-Laws") provide that the number of Directors shall be set by a majority vote of the entire Board of Directors. The number of Directors for the Company has been set at 17.17. Under the Company’s Restated Articles of Organization and By-Laws, this number is divided into three classes, as nearly equal in number as possible, with the Directors in each class serving a term of three years and until their respective successors are duly elected and qualified, or until his or her earlier resignation, death or removal. As the term of one class expires, a successor class is elected at the annual meeting of stockholders for that year.


4

At the Annual Meeting, there are fivesix Directors to be elected to serve until the 2015 annual meeting2016 Annual Meeting of stockholdersStockholders and until their respective successors are duly elected and qualified, or until his or her earlier resignation, death or removal. The Board of Directors has nominated, upon the recommendation of the Board’s Corporate Governance/Nominating Committee, each of Gino J. Baroni, John P. Clancy, Jr., JamesGeorge L. Duncan, Eric W. Hanson, Jacqueline F. Conway, III, LucyMoloney, Michael T. Putziger, Carol L. Reid and Michael A. Flynn and John P. Harrington,Spinelli, for election as a Director for a three-year term.

Unless authority to do so has been withheld or limited in the proxy, it is the intention of the persons named in the proxy to vote the shares represented by each properly executed proxy for the election as a Director of each of the nominees named above. The Board of Directors believes that all of the nominees will stand for election and will serve as a Director if elected. However, if any person nominated by the Board of Directors fails to stand for election or is unable or refuses to accept election, the proxies will be voted for the election of such other person or persons as the Board of Directors may recommend.


Information Regarding Nominees

The following table sets forth certain information for each of the fivesix nominees for election as Directors at the Annual Meeting. Each individual has been engaged in his or her principal occupation for at least five years, except as otherwise indicated.

Nominees
4


Nominees

(Term to expire in 2015)

2016)

Name, Age, Qualifications and Principal Occupation

Director Since (1)

Gino J. Baroni (55)

Owner

George L. Duncan (72)
Chairman of the Company and Managing Principal, Trident Project Advisors and Development Group, project advisors to public and private entities in capital improvement projects and real estate development.

2010

the Bank since their inception.

Qualifications:Mr. Baroni’s depthDuncan’s fifty plus years of experience in project management, constructionwith financial institutions and commercial lending provides the Board with an expansive knowledge relating to credit risk, loan portfolio management and real estate development, including his experiencebank management in varying market conditions. Mr. Duncan’s role as an executive officer within large companiesChairman and his familiarity with finance, risk management, contract negotiations and internal controls, provides an enhanced level of expertise and depth of experience to the Board in multiple strategic areas, such as commercial and construction lending, geographic expansion and business development. Mr. Baroni also adds value to the Board as he actively serves on several civic boards representing several communities that are served by the Bank.

John P. Clancy, Jr. (54)

past Chief Executive Officer of the Company, and the Bank (and prior to July 2007, also Chief Investment Officer of the Bank).

2003

Qualifications: Mr. Clancy’s leadership and management of the Company andalong with his related experience and familiarity with all operating areas of the Bank and the banking industry provides invaluable insight to the Board’s oversight of operations, risk management, growth and strategic planning. His prior experience serving as Chief Operating Officer and Chief Financial Officer of the Company and the Bank provides knowledge and a skill set that is extremely valuable within the context of the Board’s decision-making process. Mr. Clancy’s past tenure as Chief Financial Officerchief executive officer of an earlier Greater Lowell-based independent commercial bank prior to joining Enterprisehis founding of the Bank and leadership positions at many local, community non-profit organizations, also providesprovide valuable industry specific and local community experience, market knowledge and contacts.

1988

James

Eric W. Hanson (69)
Chairman of the Board and Chief Financial Officer of Klin Groupe, LLC, a privately held distributor of imported Russian vodka.
Qualifications: Mr. Hanson’s ownership and management of a major regional distributor and familiarity with local businesses, individuals, market trends and conditions adds value to the Board by providing a substantial depth of general business knowledge, particularly related to retail businesses, and extensive local community experience and contacts.
1991

5

Name, Age, Qualifications and Principal OccupationDirector Since (1)
Jacqueline F. Conway, IIIMoloney (59)

Executive Vice Chancellor, University of Massachusetts-Lowell, the third largest educational institution in Massachusetts.

Qualifications: Dr. Moloney’s experience with leadership, budgeting, strategic planning, technology and innovationadds value to the operating committees of the Board and enhances the Board’s overall understanding of the Bank’s operating environment and internal control structure. Dr. Moloney has served on numerous civic boards throughout the Merrimack Valley and provides valuable knowledge and insight to the Board on emerging industries and business trends within the Bank’s market area, as well as local developments affecting the Greater Lowell community.
2010
Michael T. Putziger (67)
Since 2010, Chairman of WinnCompanies, a private real estate company that develops, acquires and manages multi-family and mixed income properties nationwide; prior to 2010, Vice Chairman of WinnCompanies; Of Counsel to Murtha Cullina, LLP, a firm which provides legal services to businesses, governmental units, non-profit organizations and individuals; since 2007, Chairman of the Board of Directors of Bank of Florida Corporation, a publicly held company that formerly operated as a multi-bank holding company; prior to 2007, member of the Board of Directors of Bank of Florida Corporation and of Bank of Florida - Southwest; prior to August 2012, member of the Board of Directors of New Hampshire Thrift Bancshares, the publicly held parent company of Lake Sunapee Bank, a federally chartered savings bank; prior to 2007, Chairman of the Board of Directors of First Community Bank based in Woodstock, Vermont, which was acquired by New Hampshire Thrift Bancshares and merged into Lake Sunapee Bank.

Qualifications: Mr. Putziger’s legal experience and familiarity with commercial real estate development, financial institutions, banking industry trends and public markets provide value to all aspects of the Board’s decision-making process. Mr. Putziger’s service as chairman of a publicly traded, multi-bank holding company and as a director of a publicly traded thrift holding company and its subsidiary federal savings bank also provides him with substantial experience in the banking and thrift industries and with respect to relevant industry activities and challenges. This experience has been of value to the Board in, among other areas, its oversight of the Company’s wealth management services and its consideration of various capital raising alternatives for the Company.
2008
Carol L. Reid (65)
Financial Executive; prior to September 2005, Vice President, Corporate Controller and Chief ExecutiveAccounting Officer and Chairman, Courier Corporation,of Avid Technology, Inc., a publicly held company specializing in digital media creation tools for film, audio, animation, games and broadcast.
Qualifications: Ms. Reid’s past role as a corporate controller of an international public company benefits the publishing, printing and sale of books. Past Chairman of Associated Industries of Massachusetts and Past President of Book Manufacturers Institute.

1989

Qualifications: With sixteen years experience as the chairman and chief executive officer of a growing publicly traded company that employs approximately 1,900 individuals, Mr. Conway’s financial expertise, SEC reporting experience and knowledgeBoard in its oversight of the public markets add great depth to the Board’s understanding of current market trendsCompany’s risk management program, internal control structure and management of risk. Mr. Conwayfinancial reporting process. Ms. Reid possesses the qualifications necessary to be designated a “financial expert” under applicable SEC rules, and isshe has been designated as such if he were to serve at any time in the futurefor purposes of her membership on the Company’s audit committee.

Audit Committee.

5


Lucy A. Flynn (58)

Former Vice President, Global Marketing Communications, Raytheon Company, a publicly held technology company specializing in defense, homeland security and other government markets.

1997

2006

Qualifications: Ms. Flynn’s responsibility

Michael A. Spinelli (80)
Founder, Global Tourism Solutions, an international tourism consulting firm for corporate communications, public relations, global marketing and compliance with the SEC’s Regulation FD (“Fair Disclosure” requirements) for a multi-national, publicly traded company provides valuable support to the Board for overseeing the Company’s marketing programs and issuance of public disclosures, including financial statements. Ms. Flynn’s former training as an attorney also adds depth to the Board’s overall oversight and planning functions.

John P. Harrington (69)

Retired Energy Industry Executive; prior to December 2009, Energy Consultant for Tennessee Gas Pipeline Company; since May 2007, Assistantemerging nations; Secretary of the Company and the Bank.

1989

Qualifications: Mr. Harrington’s extensiveSpinelli adds value to the Board through his experience as a business owner of multiple companies, including a company providing services to over 2,000 travel agencies, his experience in independent investment portfolio management, sales and operations, combined with his previous involvement in civic organizations, and his knowledge of the localinternational markets and economy adds value to all aspectshis general marketing and financial acumen.
1988

6

(1)All of the Board’s oversightlisted Directors are also Directors of the Bank. The years listed in the foregoing table are the respective years in which each named individual first became a Director of the Company and planning functions.

the Bank or, if prior to the Company’s formation in 1996, of the Bank.

(1)          All of the listed nominees are also Directors of the Bank. The years listed in the foregoing table are the respective years in which each named individual first became a Director of the Company and the Bank or, if prior to the Company’s formation in 1996, of the Bank.

For information regarding the remaining members of the Board of Directors, who will continue to serve after the Annual Meeting, see the listing under the heading “Continuing Directors”"Continuing Directors" at pages 11-1512-14 below.

Recommendation of the Board of Directors

The Board of Directors recommends that the stockholders vote FOR the election of Gino J. Baroni, John P. Clancy, Jr.George L. Duncan, Eric W. Hanson, Jacqueline F. Moloney, Michael T. Putziger, Carol L. Reid and Michael A. Spinelli, James F. Conway, III, Lucy A. Flynn and John P. Harrington, the fivesix nominees proposed by the Board of Directors, as Directors of the Company to serve until the 20152016 annual meeting of stockholders and until their successors are duly elected and qualified.

PROPOSAL



INTRODUCTORY NOTE TO PROPOSALS TWO

APPROVAL OF AMENDMENT TO 2009 STOCK INCENTIVE PLAN

General.  THROUGH FIVE


The Company's Restated Articles of Organization currently consist of the Amended and Restated Articles of Organization, filed with the Massachusetts Secretary of the Commonwealth on March 22, 1996, as further amended on May 22, 1996, January 13, 1998, May 4, 1999, May 3, 2006, May 1, 2007, and December 11, 2007. On January 17, 2012,15, 2013, the Board adopted resolutions declaring it advisable and in the best interests of Directors unanimouslythe Company and its stockholders to amend certain sections of the Company's Restated Articles of Organization. The following proposals are a result of the Board's ongoing review of corporate governance matters.

The material amendments proposed and adopted by the Board are described in Proposals Two through Four below. In addition to those proposed amendments, the Board also approved an amendmentand adopted various ministerial and immaterial changes to the Company’s 2009 Stock Incentive Plan (the “Plan”), subjectCompany's Restated Articles of Organization, which are summarized in Proposal Five. The Company intends to stockholder approval.  restate the Restated Articles of Organization, with the proposed amendments, assuming that they are approved by the stockholders, and with all applicable prior amendments, and to consolidate the Restated Articles of Organization into a single document in the form attached to this Proxy Statement as Appendix A. Accordingly, the Company must receive the approval of the requisite vote for each of the Proposals Two through Five in order to amend, consolidate and restate the Company's Restated Articles of Organization.

The principle purpose and effectdescriptions set forth below are only a summary of the proposed amendment is to increase the aggregate number of shares of Common Stock that may be issued or otherwise made available under the Plan in connection with grants of stock options, restricted stock and other equity-based compensation awards by a total of 475,000 shares from 400,000 to 875,000.  A summary of the principal features of the Plan, as would continue in effect following stockholder approval of the proposed amendment to increase the aggregate number of shares subjectchanges to the Plan, is set forth

6


belowCompany's Restated Articles of Organization and is qualified in its entirety by reference to the Plan, attached as Appendix A. Please refer to Appendix A is a copy attached to this Proxy Statement to review the full text of the amended Stock Incentive Plan, marked to show the amendments.

Purpose, Participants, Effective Dateproposed Amended and Duration.  The purposeRestated Articles of Organization of the Plan isCompany (the “Proposed Articles”). Capitalized terms not otherwise defined in this Proxy Statement shall have the meanings attributed to encouragethem in the Proposed Articles attached to this Proxy Statement as Appendix A.



PROPOSAL TWO

APPROVAL OF AMENDMENT TO SECTION 4.1 OF THE RESTATED ARTICLES OF ORGANIZATION

Description of Proposed Amendment

The Board of Directors adopted resolutions declaring it advisable and enablein the officers, employees, non-employee Directors and consultantsbest interests of the Company and its subsidiaries (including without limitationstockholders to amend Section 4.1 to reduce the Bank) upon whose judgment, initiative and effortsvote required to approve certain Business Combinations as enumerated in Section 4.1 to the affirmative vote of at least two-thirds of the Company's outstanding Voting Stock

7

voting together as a single class. The Company's Restated Articles of Organization currently require the vote of 80% of the outstanding shares of the Company largely depends forto approve a Business Combination. The term “Business Combination” includes, among other transactions, (a) any merger or consolidation of the successful conductCompany with an Interested Shareholder or an Affiliate thereof, (b) any sale or other disposition of its businessassets of the Company having an aggregate Fair Market Value of $2,500,000 to acquirean Interested Shareholder or an Affiliate thereof, or (c) the issuance or transfer by the Company of any securities of the Company having an aggregate Fair Market Value of $2,500,000 to an Interested Shareholder or an Affiliate thereof.

The Board considered the advantages and disadvantages of maintaining the currently required vote of 80% of the outstanding shares of the Company to approve a proprietary interestBusiness Combination enumerated in Section 4.1. Over time, the number of shares held in street name by broker dealers and other custodians has increased and with the recent changes to rules related to the ability of brokers to vote shares held by them, the Board of Directors believes requiring the approval of 80% of the outstanding shares may prove impractical. The Board of Directors has, therefore, decided that a two-thirds approval requirement is in the Company.  The Plan allows for the granting of options to acquire Common Stock (“Options”), shares of Common Stock subject to restrictions (“Restricted Stock”), rights based on the valuebest interest of the Common Stock (“Restricted Stock Units” or “RSUs”)Company and rights basedits stockholders.

Recommendation of Directors

The Board of Directors is recommending that stockholders vote FOR the adoption of Proposal Two.


Proposed Amendment

If this Proposal Two is approved by stockholders, new Section 4.1 of the Proposed Articles would read as shown in Appendix A on future appreciationpage A-2.



PROPOSAL THREE

APPROVAL OF AMENDMENT TO SECTION 5.10 OF THE RESTATED ARTICLES OF ORGANIZATION

Description of Proposed Amendment

The Board of Directors adopted resolutions declaring it advisable and in the valuebest interests of the Common Stock (“Stock Appreciation Rights”Company and its stockholders to amend Section 5.10 toprovide that the Company's By-Laws may be altered, amended or “SARs”).  Grantsrepealed by the affirmative vote of Options, Restricted Stock, RSUs and/or SARs are referred to collectively in this summary as “Awards.”

Theat least a majority of the sharesdirectors then in office.


Section 5.10 of Common Stock reserved for issuance pursuantthe Company's Restated Articles of Organization currently requires that an amendment to the Company’s 2009 PlanBy-Laws must be approved by the affirmative vote of at least two-thirds of the directors then in office. The Board of Directors considered the advantages and disadvantages of the requisite Board of Directors approval to amend the By-Laws provided by Section 5.10 of the Company Restated Articles of Organization, and determined that a majority of the directors then in office, as opposed to a two-thirds requirement, would allow for greater flexibility and better corporate governance.


Recommendation of Directors

The Board of Directors is recommending that stockholders vote FOR the adoption of Proposal Three.





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Proposed Amendment

If this Proposal Three is approved by stockholders, new Section 5.10 (renumbered as Section 5.7 in the Proposed Articles) would read as shown in Appendix A on page A-7.


PROPOSAL FOUR

APPROVAL OF AMENDMENT TO SECTION 5.11 OF THE RESTATED ARTICLES OF ORGANIZATION

Description of Proposed Amendment

The Board of Directors adopted resolutions declaring it advisable and in the best interests of the Company and its stockholders to amend Section 5.11 of the Company's Restated Articles of Organization to reduce the requisite approvals required to amend the Company's Restated Articles of Organization.

The Company's Restated Articles of Organization require that two-thirds of the Board of Directors then in office must approve any amendment to the Restated Articles of Organization and that 80% of the outstanding shares eligible to vote approve any amendment to the Company's Restated Articles of Organization. For the same reason as described above with the regard to Proposal Two, the Board of Directors determined that the approval of a majority of the directors then in office and that the approval of two-thirds of the outstanding shares would allow for greater flexibility and better corporate governance.

Recommendation of Directors

The Board of Directors is recommending that stockholders vote FOR the adoption of Proposal Four.

Proposed Amendment

If this Proposal Four is approved by stockholders, new Section 5.11 (renumbered as Section 5.8 in the Proposed Articles) would read as shown in Appendix A on page A-8.



PROPOSAL FIVE

APPROVAL OF AMENDMENT AND RESTATEMENT OF THE COMPANY'S
ARTICLES OF ORGANIZATION

Description of Proposed Amendments

The Board of Directors adopted resolutions declaring it advisable and in the best interests of the Company and its stockholders to amend and restate the Company's Restated Articles of Organization. The Board of Directors is now unanimously proposing and recommending to the Company's stockholders for their approval certain ministerial and immaterial changes to the Company's Restated Articles of Organization regarding a variety of corporate governance and administrative matters in order to authorize the Board of Directors to restate the Restated Articles of Organization, as amended.

To ensure that all of the amendments to the Company's Restated Articles of Organization are subjectapproved by the Company's stockholders so that the Board of Directors has the authority under Massachusetts law to previously grantedrestate the

9

Restated Articles of Organization and currently outstanding Optionsall amendments thereto into a consolidated document, the Board is submitting Proposal Five to the stockholders. In addition to the material changes described above, the Board also authorized and Restricted Stock.  Consequently,approved the following amendments:

Article V, Section 5.3 of the Company's Restated Articles of Organization. The amendment to this section is to delete certain outdated language related to the time period when the Company's Board of Directors was initially classified. These provisions were no longer necessary after the initial three year period of class elections to the Board of Directors and therefore their removal would have no impact. The amendments do not alter the current classes of the Board and the Directors will continue to serve in their respective classes and be elected to classes under the Proposed Articles.

Article V, Section 5.7 of the Company's Restated Articles of Organization. The amendment to this section of the Company's Restated Articles of Organization is to delete the provisions relating to the location of stockholder meetings. The same provisions appeared in both the Restated Articles of Organization and the By-Laws. The provisions related to the location of stockholder meetings are addressed in Article II, Section 1 of the By-Laws. As a result of this amendment, the Board may, in the future, amend this provision without shareholder action.

Article V, Section 5.8 of the Company's Restated Articles of Organization. The amendment to this section of the Company's Restated Articles of Organization is to delete the provisions related to the conduct of business at the annual meeting of stockholders. The provisions related to the conduct and procedures applicable to the annual meeting of stockholders are addressed in Article II of the By-Laws, particularly Section 8 of Article II of the By-Laws. The Board of Directors believes that the procedures related to the conduct of stockholder meetings and stockholder proposals for conduct at annual meetings is better addressed from a corporate governance perspective in the By-Laws. As a result of this amendment, of the Plan to increase the number of shares thatBoard may, be issued or otherwise made available under the Plan is necessary to enable the Company to continue in the future, amend this provision without shareholder action.

Other immaterial changes. The Proposed Articles consolidate into a single document the original Restated Articles of Organization and the separate amendments thereto as applicable. Ministerial and other immaterial changes were also made to attract and retain the high caliberRestated Articles of employees and Directors required forOrganization, as set forth in the Company’s continuing growth and success.

As of the date of this Proxy Statement, there are 14 non-employee Directors, 10 executive officers (including three employee Directors) and approximately 375 other employees, including other officers, who would be eligible participants under the Plan.  While outside consultants would also be eligible participants under the Plan, the BoardProposed Articles.


Recommendation of Directors has no current intention of granting Awards to any such persons.

The Plan was approved by the Company’s stockholders at the 2009 Annual Meeting of Stockholders, and the Plan will remain in effect through January 16, 2019, unless earlier terminated by the Board of Directors.  Any early termination of the Plan by the Board of Directors will not affect Awards granted prior to such termination, but no additional Awards may be granted after any termination of the Plan.

Shares Subject to the Stock Incentive Plan.  The total number of shares of Common Stock that may be subject to Awards under the Plan may not exceed 875,000 (the “Reserved Shares”), which equals slightly less than 9.2% of the number of shares of Common Stock outstanding on the Record Date.  These shares may be authorized but unissued shares or treasury shares.  In the event of any change in the number or kind of Common Stock outstanding pursuant to a reorganization, recapitalization, exchange of shares, stock dividend or split or combination of shares, appropriate adjustments to the number of Reserved Shares and the number of shares subject to outstanding Awards, in the exercise price per share of outstanding Options and in the kind of shares which may be distributed under the Plan will be made.  The total amount of Reserved Shares that may be granted to any single employee under the Plan may not exceed in the aggregate 120,000 shares.  Shares will be deemed issued under the Plan only to the extent actually issued pursuant to an Award.  To the extent that an Award under the Plan lapses or is forfeited, any shares subject to such Award will again become available for grant under the terms of the Plan.

Administration.  The Plan may be administered by the Board of Directors’ Compensation Committee, which must consist of at least three members of the Board who are not employees of the Company or any of its subsidiaries, or by the Board of Directors itself.  References to the “Compensation Committee” in this summary are intended to refer to the Compensation Committee or the full Board of Directors, as the case may be, unless the context requires otherwise.  For so long as Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is applicable to the Company, each member of the Compensation Committee must be a “non-employee director” or the equivalent within the meaning of the SEC’s Rule 16b-3 promulgated under the Exchange Act.  For so long as Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), is applicable to the Company, each such member of the Compensation Committee must also be an “outside director” within the meaning of Section 162 of the Code and the regulation thereunder.  With respect to persons subject to Section 16 of the Exchange Act (generally, executive officers, Directors and any 10% stockholders), all transactions under the Plan are intended to comply with all applicable conditions of the SEC’s Rule 16b-3 or any successor regulation.

7



Subject to the terms of the Plan, the Compensation Committee has authority to: (i) select the persons to whom Awards shall be granted; (ii) determine the number or value and the terms and conditions of Awards granted to each such person, including the price per share to be paid upon exercise of any Option and the period within which each such Option may be exercised; and (iii) interpret the Plan and prescribe rules and regulations for the administration thereof.  Notwithstanding the Compensation Committee’s general authority to grant Awards and administer the Plan, the full Board of Directors must approve all grants of Awards to all executive officers and any Directors of the Company.

Stock Options. In granting Options under the Plan, the Compensation Committee will determine the number of shares of Common Stock subject to the Option, the exercise price of the Option, the manner and time of exercise of the Option and whether the Option is intended to qualify as an incentive stock option (“ISO”) within the meaning of Section 422 of the Code.  Options that are not intended to qualify as ISOs are referred to as nonqualified stock options (“NSOs”).  In the case of an ISO, the exercise price may not be less than the “fair market value” of the Common Stock on the date the Option is granted; provided, however, that in the case of an employee who owns (or is considered to own under Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its subsidiaries, the price at which Common Stock may be purchased pursuant to an ISO may not be less than 110% of the fair market value of the Common Stock on the date the ISO is granted.

The duration of the ISOs and NSOs granted under the Plan may be specified pursuant to each respective stock option agreement, but in no event can any ISO be exercisable after the expiration of ten years after the date of grant.  In the case of any employee who owns (or is considered under Section 424(d) of the Code as owning) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its subsidiaries, no ISO shall be exercisable after the expiration of five years from its date of grant.  The Compensation Committee, in its discretion, may provide that any Option is exercisable during its entire duration or any lesser period of time.

The option exercise price may be paid in cash, in shares of Common Stock owned by the optionee (subject to certain limitations specified in the Plan), or by means of a “cashless exercise” procedure in which a broker transmits funds to the Company in accordance with procedures specified in the Plan.

Restricted Stock.  The Compensation Committee may grant to participants a number of shares of Common Stock determined in its discretion, subject to terms and conditions so determined by it, including conditions that may require the holder to forfeit the Common Stock in the event that the holder ceases to provide services to the Company or a subsidiary before a stated time.  Unlike holders of Options, a holder of Restricted Stock has the rights of a stockholder of the Company to vote the shares and, depending upon the terms of the grant, may also be entitled to receive payments of dividends on the Restricted Stock.

Restricted Stock Units and Stock Appreciation Rights.  The granting of RSUs and SARs involve rights based on the value and the appreciation in value, if any, of the Common Stock, respectively, and do not involve in either instance the issuance of any shares at the time of grant.  The terms and conditions of any RSUs and SARs that may be granted under the Plan will be determined in the sole discretion of the Compensation Committee at the time of grant, including vesting requirements and whether vested benefits may be settled in cash and/or shares of Common Stock.

Effect of Certain Corporate Transactions.  If while unexercised or otherwise unvested Awards remain outstanding under the Plan the Company is subject to a Change in Control (as such term is defined in the Plan) or is liquidated, then, except as otherwise specifically provided to the contrary in any applicable agreement, (i) each such Option outstanding immediately prior to the effective time of such Change of Control or liquidation shall become immediately exercisable upon such effective time with respect to all of the Reserved Shares subject to such Option, whether or not the participant’s rights under such Option would otherwise have been so fully exercisable at such time and (ii) each holder of shares of Restricted Stock, RSUs and/or SARs outstanding immediately prior to the effective time of such Change in Control or liquidation shall become fully vested upon such effective time with respect to such holder’s ownership of such shares or rights under such RSUs and/or SARs, whether or not such holder would otherwise have been so fully vested with respect to such shares or rights at such time.

8


Amendments to Stock Incentive Plan.The Board of Directors may amend or discontinue the Plan at any time and the Board of Directors or the Compensation Committee, as the case may be, may also amend or cancel any outstanding Award at any time for the purpose of satisfying any changes in law or for any other lawful purpose, exceptis recommending that no such amendment, discontinuation or cancellation of the Plan or of any Awards may adversely affect the rights of any holder of an outstanding Award without the holder’s consent.  Any amendment to the Plan will require the approval of the Company’s stockholders if and to the extent required under the rules of any stock exchange or market system on which the Common Stock is listed, or required to ensure that any outstanding ISOs granted under the Plan remain qualified under Section 422 of the Code, or to ensure that compensation earned under Awards qualifies as performance-based compensation under Section 162(m) of the Code, or required to ensure the availability to the Plan of the protections of Section 16(b) of the Exchange Act or as may otherwise be required for any other reason under applicable law.

The following description of the federal income tax consequences of Options, Restricted Stock, Restricted Stock Units and Stock Appreciation Rights is general and does not purport to be complete.

Tax Treatment of Options.  A participant realizes no taxable income when an NSO is granted.  Instead, the difference between the fair market value of the Common Stock subject to the NSO and the exercise price paid is taxed as ordinary compensation income when the NSO is exercised.  The difference is measured and taxed as of the date of exercise, if the stock is not subject to a “substantial risk of forfeiture,” or as of the date or dates on which the risk terminates in other cases.  A participant may elect to be taxed on the difference between the exercise price and the fair market value of the Common Stock on the date of exercise, even though some or all of the Common Stock acquired is subject to a substantial risk of forfeiture.  Gain on the subsequent sale of the Common Stock is taxed as a capital gain.  The Company receives no tax deduction on the grant of a NSO, but is entitled to a tax deduction when the participant recognizes taxable income on or after exercise of the NSO, in the same amount as the income recognized by the participant.

Generally, a participant incurs no federal income tax liability on either the grant or the exercise of an ISO, although a participant will generally have taxable income for alternative minimum tax purposes at the time of exercise equal to the excess of the fair market value of the stock subject to an ISO over the exercise price.  Provided that the shares of Common Stock are held for at least one year after the date of exercise of the related ISO and at least two years after its date of grant, any gain realized on the subsequent sale of the stock will be taxed as long-term capital gain.  If the stock is disposed of within a shorter period of time, the participant will be taxed as if the participant had then received ordinary compensation income in an amount equal to the difference between the fair market value of the stock on the date of exercise of the ISO and its fair market value on its date of grant.  The Company receives no tax deduction on the grant or exercise of an ISO, but is entitled to a tax deduction if the participant recognizes taxable income on account of a premature disposition of ISO stock, in the same amount and at the same time as the participant’s recognition of income.

Tax Treatment of Restricted Stock.  A person who receives a grant of Common Stock subject to restrictions generally will not recognize taxable income at the time the award is received, but will recognize ordinary compensation income when any restrictions constituting a substantial risk of forfeiture lapse.  The amount of imputed income will be equal to the excess of the aggregate fair market value, as of the date the restrictions lapse, over the amount (if any) paid by the holder for the Restricted Stock.  Alternatively, a recipient of Restricted Stock may elect to be taxed on the excess of the fair market value of the Restricted Stock at the time of grant over the amount (if any) paid for the Restricted Stock, notwithstanding the restrictions on the stock.  Outright grants of Common Stock (i.e., grants without any restrictions) will result in ordinary compensation income to the participant.  All such taxable amounts are deductible by the Company at the time and in the amount of the ordinary compensation income recognized by the participant.

Tax Treatment of Restricted Stock Units and Stock Appreciation Rights.  A participant incurs no imputed income upon the grant of an RSU or SAR, but upon its exercise realizes ordinary compensation income in an amount equal to the cash and/or fair market value of the Common Stock (if the RSU or SAR is settled in whole or in part in shares of Common Stock) that the participant receives at that time.  All such taxable amounts are deductible by the Company at the time and in the amount of the ordinary compensation income recognized by the participant.  This description assumes that the terms of the RSU or SAR require that the participant exercise the RSU or SAR at the time it vests and that the participant’s receipt of payment cannot be

9


deferred beyond the “short term deferral” period permissible under Section 409A of the Code and the final U.S. Treasury regulations thereunder.

Parachute Payments.  Under certain circumstances, an accelerated vesting or granting of Awards in connection with a Change in Control of the Company may give rise to a “excess parachute payment” for purposes of the golden parachute tax provisions of Section 280G of the Code.  To the extent it is so considered, a participant may be subject to a 20% nondeductible federal excise tax and the Company may be denied an income tax deduction.

Based upon the closing price of the Common Stock as reported on the NASDAQ Global Market on March 20, 2012, the current fair market value of the Common Stock is $16.25 per share.

No Awards have been granted under the Plan that are contingent upon stockholder approval of the Plan.

Recommendation of the Board of Directors

The Board of Directors recommends that the stockholders vote FOR the approval and adoption of Proposal Five.


Proposed Amendment

Please refer to Appendix A for a complete copy of the amendment to increase the number of shares of Common Stock subject to the Company’s 2009 Stock Incentive Plan.

Proposed Articles in their amended and restated form.





PROPOSAL THREE

SIX


RATIFICATION OF APPOINTMENT OF INDEPENDENT

REGISTERED PUBLIC ACCOUNTING FIRM


The Audit Committee has appointed KPMG LLP to serve as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2012.

2013.

The Company is not required to submit the ratification of the Audit Committee’s appointment of KPMG LLP as the Company’s independent registered public accounting firm to a vote of stockholders. In the event a majority of the votes cast are against the appointment of KPMG LLP, the Audit Committee may consider the vote and the

10

reasons therefortherefore in future decisions on its appointment of the Company’s independent registered public accounting firm.

Representatives of KPMG LLP are expected to attend the Annual Meeting at which time they will have an opportunity to make a statement if they wish to do so and will be available to answer any appropriate questions from stockholders.

Audit Fees

The aggregate fees billed by KPMG LLP for professional services rendered for the audit of the Company’s annual consolidated financial statements and the audit of the Company’s internal control over financial reporting for the year ended December 31, 2011,2012, the review of the consolidated financial statements included in the Company’s quarterly reports on Form 10-Q as filed with the SEC during the year ended December 31, 2011,2012, and consents on SEC filings were $328,000.$343,200. The same fees for the year ended December 31, 20102011 were $317,500.

$328,000.

Audit-Related Fees

There were no audit-related fees billed to the Company for the years ended December 31, 20112012 or 2010.

2011.

Tax Fees

The Company paid $28,000 in 2012 and $29,750 in 2011 and $26,750 in 2010 to KPMG LLP for tax preparation services performed in each of these two years.

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All Other Fees

No additional fees were paid to KPMG LLP in 20112012 and 2010.

2011.


The Audit Committee must approve in advance any audit or permissible non-audit engagement or relationship between the Company and its independent registered public accounting firm. The Audit Committee has delegated to its chairman this approval authority, subject to the requirement that the chairman report the terms of any such engagement or relationship to the full Audit Committee at its next regularly scheduled meeting. All of the services described above, including those described under the headings, “Audit-Related Fees”, “Tax Fees”, and “All Other Fees”, were provided in conformance with such pre-approval requirements. The Audit Committee has determined that providing the services described above under the headings, “Audit-Related Fees”, “Tax Fees”, and “All Other Fees”, is compatible with maintaining the independence of KPMG LLP.


Recommendation of the Board of Directors


The Board of Directors recommends that the stockholders vote FOR the ratification of the Audit Committee’s appointment of KPMG LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2012.

2013.



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BOARD OF DIRECTORS


In addition to the nominees for election to the Board of Directors set forth above, the Board of Directors is comprised of the individuals listed below whose terms expire at the annual meetings of the Company’s stockholders in 20132014 and 2014.2015. Each individual has been engaged in his or her principal occupation for at least five years, except as otherwise indicated.


Continuing Directors

(Term to expire in 2013)

2014)

Name, Age, Qualifications and Principal Occupation

Director Since (1)

George L. Duncan (71)

Chairman of the Company and the Bank since their inception.

1988

Qualifications: Mr. Duncan’s fifty plus years of experience with financial institutions and commercial lending provides the Board with an expansive knowledge relating to credit risk, loan portfolio management and bank management in varying market conditions. Mr. Duncan’s role as Chairman and past Chief Executive Officer of the Company, along with his past tenure as chief executive officer of an earlier Greater Lowell-based independent commercial bank prior to his founding of Enterprise Bank and leadership positions at many local, community non-profit organizations, also provides valuable industry specific and local community experience, market knowledge and contacts.

11


Eric W. Hanson (68)

Chairman of the Board and Chief Financial Officer of Klin Groupe, LLC, a privately held distributor of imported Russian vodka; prior to August 2008, Chairman of the Board, D.J. Reardon Company, Inc., a privately held distributorship of Anheuser-Busch beverages and affiliated brands.

1991

Qualifications: Mr. Hanson’s ownership and management of a major regional distributor and familiarity with local businesses, individuals, market trends and conditions adds value to the Board by providing a substantial depth of general business knowledge, particularly related to retail businesses, and extensive local community experience and contacts.

Jacqueline F. Moloney (58)

Executive Vice Chancellor, University of Massachusetts-Lowell, the third largest educational institution in Massachusetts.

2010

Qualifications: Dr. Moloney’s experience with leadership, budgeting, strategic planning, technology and innovation adds value to the operating committees of the Board and enhances the Board’s overall understanding of the Bank’s operating environment and internal control structure. Dr. Moloney has served on numerous civic boards throughout the Merrimack Valley and provides valuable knowledge and insight to the Board on emerging industries and business trends within the Bank’s market area, as well as local developments affecting the Greater Lowell community.

Michael T. Putziger (66)

Since 2010, Chairman of WinnCompanies, a private real estate company that develops, acquires and manages multi-family and mixed income properties nationwide; prior to 2010, Vice Chairman of WinnCompanies; Of Counsel to Murtha Cullina, LLP, a firm which provides legal services to businesses, governmental units, non-profit organizations and individuals; since 2007, Chairman of the Board of Directors of Bank of Florida Corporation, a publicly held company that formerly operated as a multi-bank holding company (prior to 2007, member of the Board of Directors of Bank of Florida Corporation and of Bank of Florida - Southwest), since 2007, member of the Board of Directors of New Hampshire Thrift Bancshares, the publicly held parent company of Lake Sunapee Bank, a federally chartered savings bank (prior to 2007, Chairman of the Board of Directors of First Community Bank based in Woodstock, Vermont, which was acquired by New Hampshire Thrift Bancshares and merged into Lake Sunapee Bank).

2008

Qualifications: Mr. Putziger’s legal experience and familiarity with commercial real estate development, financial institutions, banking industry trends and public markets provide value to all aspects of the Board’s decision-making process. Mr. Putziger’s service as chairman of a publicly traded, multi-bank holding company and as a director of a publicly traded thrift holding company and its subsidiary federal savings bank also provides him with substantial experience in the banking and thrift industries and with respect to relevant industry activities and challenges. This experience has been of value to the Board in, among other areas, its oversight of the Company’s wealth management services and its consideration of various capital raising alternatives for the Company.

12


Carol L. Reid (64)

Financial Executive; prior to September 2005, Vice President, Corporate Controller and Chief Accounting Officer of Avid Technology, Inc., a publicly held company specializing in digital media creation tools for film, audio, animation, games and broadcast.

2006

Qualifications: Ms. Reid’s past role as a corporate controller of an international public company benefits the Board in its oversight of the Company’s risk management program, internal control structure and financial reporting process. Ms. Reid possesses the qualifications necessary to be designated a “financial expert” under applicable SEC rules, and she has been designated as such for purposes of her membership on the Company’s audit committee.

Michael A. Spinelli (79)

Founder, Global Tourism Solutions, an international tourism consulting firm for emerging nations; Secretary of the Company and the Bank.

1988

Qualifications: Mr. Spinelli adds value to the Board through his experience as a business owner of multiple companies, including a company providing services to over 2,000 travel agencies, his experience in independent investment portfolio management, his knowledge of international markets and his general marketing and financial acumen.

Continuing Directors

(Term to expire in 2014)

Name, Age, Qualifications and Principal Occupation

Director Since (1)

Kenneth S. Ansin (47)

President of Ansin Consulting Group, a boutique advisory firm which partners with non-profit and socially responsible businesses from various market sectors; Entrepreneur and private investor; since August 2010, member of the Board of Directors of New Resource Bank — California; prior to August 2007, owner and President of Norwood Fine Cabinetry, a privately held company specializing in kitchen and bath cabinetry.

1994

Qualifications: Mr. Ansin’s skills as an entrepreneur and business owner of various companies and his knowledge of micro finance add value to the Board as they closely match the characteristics and typical financing needs of many of the Company’s commercial customers. Mr. Ansin’s knowledge of and community involvement in the Leominster and Fitchburg markets provide valuable market knowledge and contacts.

13


John R. Clementi (62)

(63)

Chief Executive Officer, Longview Development, LLC, a real estate holding, development and management company; prior to October 2010, President of Plastican, Inc., a privately held manufacturer of plastic pails and covers.

1998

Qualifications: Mr. Clementi’s prior experience as president and owner of a privately owned company employing approximately 400 individuals and operating within the Company’s market area, together with his prior training as an attorney, his familiarity with wealth management principles, his knowledge of the medical and manufacturing industries and his leadership positions held at various community non-profit organizations, enable Mr. Clementi to contribute extensively in multiple aspects of the Board’s oversight and planning functions.

1998

Carole A. Cowan (69)

(70)

President, Middlesex Community College, the largest community college in Massachusetts.

1999


Qualifications: Dr. Cowan’s position as President of a local community college employing over 1,000 individuals, her knowledge of the local markets and her administrative experience, particularly in planning for and responding to rapid changes in personnel and technology, add value to the Board’s decision-making process in many key operational areas.

1999

Normand E. Deschene (57)

(58)

2011
President and Chief Executive Officer, Lowell General Hospital, an independent, not-for-profit hospital serving the Greater Lowell area in Massachusetts; prior to 2003,2002, Executive Vice President and Chief Operating Officer, Lowell General Hospital; from July 2011-June 2012, Chair, Massachusetts Hospital Association.

2011

Qualifications:Mr. Deschene’s twenty-eightDeschene's twenty-nine years of management experience at Lowell General Hospital provides him with a depth of skills relating to operations, business development, marketing, personnel and strategic planning. These skills, along with his deep local and regional community and industry involvement, add value tofacilitates Board discussions.discussions and the Board's decision-making process.

Arnold S. Lerner (82)

(83)

Retired radio station owner; Vice Chairman and Lead Director of the Company and the Bank; prior to January 2010, member of the Board of Directors, Courier Corporation, a publicly held company specializing in the publishing, printing and sale of books.

1988

Qualifications: Mr. Lerner’s ownership and management of multiple communications companies, 3738 years as a director of various banks, past Directorshipdirectorship with another publicly traded company, financial and marketing acumen and extensive knowledge of the markets in which the Company operates add value to multiple aspects of the Board’s oversight and strategic planning functions.

1988

14


12

Name, Age, Qualifications and Principal OccupationDirector Since (1)
Richard W. Main (64)

(65)

President of the Company and the Bank; prior to April 2009, also Chief Lending Officer of the Bank; prior to January 2005, President, Chief Operating Officer and Chief Lending Officer of the Bank.

1989

Qualifications: Mr. Main’s depth of knowledge relating to the management of the Company’s commercial lending function and the significance of various changes in the market conditions affecting borrowers and their businesses provide invaluable insight to the Board’s oversight and management of the Company’s credit risk and operations. Mr. Main’s past tenure as president, chief operating officer and director of an earlier Greater Lowell-based independent commercial bank prior to joining theEnterprise Bank also provides valuable industry specific and local community experience and contacts.

1989



Continuing Directors
(1)All of the listed Directors are also Directors of the Bank. The years listed(Term to expire in the foregoing table are the respective years in which each named individual first became a Director of the Company and the Bank or, if prior to the Company’s formation in 1996, of the Bank.

2015)

Name, Age and Principal OccupationDirector Since (1)
Gino J. Baroni (56)
Owner and Managing Principal, Trident Project Advisors and Development Group, project advisors to public and private entities in capital improvement projects and real estate development. Owner of commercial, residential and tax-credit projects.

Qualifications: Mr. Baroni’s depth of experience in project management, construction management and  real estate development, including his experience as an executive officer within large companies and his familiarity with finance, risk management, contract negotiations and internal controls,  provides an enhanced level of expertise and depth of experience to the Board in multiple strategic areas, such as commercial and construction lending, geographic expansion and business development. Mr. Baroni also adds value to the Board as he actively serves on several civic boards representing several communities that are served by the Bank. 
2010
John P. Clancy, Jr. (55)
Chief Executive Officer of the Company and the Bank.
Qualifications: Mr. Clancy’s bank-related experience in finance, investment, strategy, management and operations provides invaluable insight to the Board’s oversight of operations and its strategic planning function. His prior experience serving as Chief Financial Officer, Chief Investment Officer and Chief Operating Officer of the Company and the Bank provides a skill set that is extremely valuable within the context of the Board’s decision-making process. Mr. Clancy’s past tenure as Chief Financial Officer of an earlier Greater Lowell-based independent commercial bank prior to joining Enterprise Bank also provides valuable industry specific and local community experience and contacts.
2003
James F. Conway, III (60)
President, Chief Executive Officer and Chairman, Courier Corporation, a publicly held company specializing in the publishing, printing and sale of books.
Qualifications: With over twenty years experience as the chairman and chief executive officer of a growing publicly traded company that employs approximately 1,500 individuals, Mr. Conway’s financial expertise, SEC reporting experience and knowledge of the public markets add great depth to the Board’s understanding of current market trends and management of risk. Mr. Conway possesses the qualifications necessary to be designated a “financial expert” under applicable SEC rules, and could be designated as such if he were to serve at any time in the future on the Company’s Audit Committee.
1989

13

Name, Age and Principal OccupationDirector Since (1)
Lucy A. Flynn (59)
Since February 2012, Principal, LAF Associates, LLC; prior to May 2011, Vice President, Global Marketing Communications, Raytheon Company, a publicly held technology company specializing in defense, homeland security and other government markets.
Qualifications: Ms. Flynn’s responsibility for corporate communications, public relations, global marketing and compliance with the SEC’s Regulation FD (“Fair Disclosure” requirements) for a multi-national, publicly traded company provides valuable support to the Board for overseeing the Company’s marketing programs and issuance of public disclosures, including financial statements. Ms. Flynn’s former training as an attorney also adds depth to the Board’s overall oversight and planning functions.
1997
John T. Grady, Jr. (65) Since 2010, Senior Advisor, Moelis & Company, a global investment bank that provides financial advisory services and capital raising solutions to clients in connection with mergers and acquisitions, restructurings and other strategic matters; prior to 2010, Managing Director, Athena Capital, an investment management firm based outside of Boston; since January 2010, director of Bank of Cape Cod and its publicly traded holding company, New England Bancorp, Inc.

2013
Qualifications: Mr. Grady's experience in financial services in senior positions across investment management, private wealth management and banking, his knowledge of the medical industry, his leadership positions held at various community non-profit organizations, as well as his long-term connections within the New England business community will add value to the Company's wealth management, decision-making and strategic planning processes.  Mr. Grady's deep knowledge of the financial services industry and experience serving on boards of financial institutions provides him with insights into the challenges and opportunities that are faced by community banks.
John P. Harrington (70)
Retired Energy Industry Executive; prior to December 2009, Energy Consultant for Tennessee Gas Pipeline Company; since May 2007, Assistant Secretary of the Company and the Bank.
Qualifications: Mr. Harrington’s extensive experience in management, sales and operations, combined with his previous involvement in civic organizations, and his knowledge of the local markets and economy adds value to all aspects of the Board’s oversight and planning functions.
1989

(1)All of the listed Directors are also Directors of the Bank. The years listed in the foregoing table are the respective years in which each named individual first became a Director of the Company and the Bank or, if prior to the Company’s formation in 1996, of the Bank.

Independence of Board of Directors


The Board of Directors has determined that every individual who served as a Director during the year ended December 31, 20112012 was “independent” of the Company’s management as of December 31, 2011,2012, and continues to be independent as of the date of this Proxy Statement, on the basis of the independence standards contained in Rule 5605(a)(2) of the Marketplace Rules of The NASDAQ Stock Market, except for Messrs. Duncan, Main and Clancy, who are all current employees of the Company, and Messrs. Putziger and Deschene as further described below.

Mr. Putziger, who joined the Board of Directors on April 15, 2008, held a 13.7% limited partnership interest in a limited partnership that was the sole beneficiary of a real estate trust that leased the Bank’sBank's headquarters and certain related parking spaces from the U.S. National Park Service and in turn subleased the building and parking spaces to the Bank. The Bank acquired this lease with the National Park Service from the real estate trust in September 2010 for $2.0 million, in addition to having paid a total of $208,734 in prior lease payments to the real estate trust in 2010 under the existing sublease arrangements. Based on Mr. Putziger’sPutziger's ownership interest in the partnership, his

14

proportional interest in the gross proceeds paid by the Bank in connection with these lease and purchase transactions totaled $303,480 in 2010. The Board believes that the terms of all of these transactions, including the amounts paid in each case by the Bank, were a product of arms-length negotiations between the parties.

In determining the independence of Mr. Deschene, who joined the Board of Directors on June 28, 2011, the Board considered the cross-representation of Directors who serve on both the board of Mr. Deschene’sDeschene's employer, Lowell General Hospital, and the Company, as well as tothe loan, deposit and trust relationships and charitable contributions between the Bank and Mr. Deschene’sDeschene's employer. Messrs. Duncan and Hanson and Dr. Moloney currently serve on the Executive Committee of the board of directors of Lowell General Hospital, where Mr. Deschene is employed, and the Executive Committeeboard of directors is responsible for approving the compensation for Mr. Deschene. Primarily due to this cross representation, Mr. Deschene has not been deemed independent.

With respect to each of the Company’sCompany's independent Directors, there were no transactions, relationships or arrangements that have not been disclosed in this Proxy Statement under the heading “Transactions with Certain Related Persons” at pages 40-41 below, which were considered by the Board of Directors pursuant to the independence standards required under the

15


applicable NASDAQ rule referenced above in the course of the Board’sBoard's determining that each such Director meets the definition of independence.


Board Leadership Structure and the Board’s Role in Risk Oversight


The Company’sCompany's Board of Directors annually appoints a Chairman, Vice Chairman, Secretary and Assistant Secretary. These Board offices are currently held by Mr. Duncan as Chairman, Mr. Lerner as Vice Chairman, Mr. Spinelli as Secretary and Mr. Harrington as Assistant Secretary. In March 2012, Mr. Lerner was appointed as Lead Director. As Lead Director, Mr. Lerner will preside over executive sessions of independent directors.Directors. In addition to these offices, the Board of Directors maintains sixfive active committees at the Company level and tennine active committees at the Bank level, to which specific risk oversight responsibilities have been delegated by the Board. Chairpersons and committee members are elected each year to a one year term.


Mr. Duncan, who through December 31, 2006 served as the Company’sCompany's Chief Executive Officer, serves as the executive Chairman of the Board and Mr. Clancy serves as the Chief Executive Officer of the Company.  The Board has implemented this segregation of roles in order to enhance succession to the Company while recognizing the individual roles and responsibilities of the Chief Executive Officer and executive Chairman and taking into consideration the size, growth potential and complexity of the Company’sCompany's operations.


Regular meetings of the Board and its committees are held to review results of operations, including discussions of risk. The frequency of meetings is determined by the number and significance of risk matters that are discussed at either the Board or committee meetings. Each committee chairperson is provided an opportunity to present a report to the full Board at each regularly scheduled Board meeting and is required to provide a full report of past accomplishments and future strategies to the full Board on an annual basis.


The Company’sCompany's Board of Directors is responsible for oversight of the Company’sCompany's risk management. The Chief Executive Officer, the Company’sCompany's Senior Vice President-Risk Management Director and other members of senior management provide regular reports to the Board on the Company’sCompany's management of risk. Additionally, on a semi-annual basis, the Company’sCompany's Risk Management Director reports to the Executive Committee on the effectiveness of the Company’sCompany's risk management program. The Executive Committee consists of eightten permanent committee members and up to three rotating Directors. Board committees are represented by permanent members of the Executive Committee, which is intended to provide the best venue for discussions relating to interest, market, credit, liquidity, legal/compliance, capital, operational, strategic and operationalreputational risk topics that have been identified and discussed at the Board committee level.




15


Meetings of Board of Directors and Committees of Enterprise Bancorp, Inc. and Enterprise Bank and Trust Company

There were twelvethirteen joint meetings of the Company’s (i.e., Enterprise Bancorp, Inc.) Board of Directors and the Bank’s (i.e., Enterprise Bank and Trust Company) Board of Directors during the calendar year ended December 31, 2011.2012. During such period, each Director attended more than 75% in the aggregate of the total number of meetings of the Board of Directors and of each of the committees of the Board of Directors on which he or she served.

The Company’s Board of Directors maintains sixfive standing committees: an executive committee,Executive Committee, an audit committee,Audit Committee, an asset-liability committee,Asset-Liability Committee, a compensation committee, a corporate governance/nominating committeeCompensation Committee and a strategic growth planning committee.

Corporate Governance/Nominating Committee.

The Bank’s Board of Directors maintains tennine standing committees: an executive committee,Executive Committee, an audit committee,Audit Committee, an asset-liability committee,Asset-Liability Committee, a compensation committee,Compensation Committee, a corporate governance/nominating committee,Corporate Governance/Nominating Committee, a strategic growth planning committee,Marketing and Business Development Committee, a marketing and business development committee, a banking technology steering committee,Banking Technology Steering Committee, an Enterprise Investment Advisors committeeCommittee and a loan committee.

16

Loan Committee.

Executive Committee. The Executive Committee assists the Board in fulfilling its responsibilities pertaining to the oversight of the Company’s management. The Executive Committee consists of Directors who represent all other committees of the Board. Among other responsibilities, the committee is responsible for identifying and evaluating strategic growth alternatives and assessing the risks associated with such opportunities, approving and/or ratifying loans above certain limits, establishing and recommending transaction authorization limits for management, overseeing the credit quality of the loan portfolio, monitoring results of operations of Enterprise Insurance Services, and reviewing branch profitability. In addition, the Executive Committee is responsible for reviewing the effectiveness of the Company’s overall risk management program and reporting on its effectiveness to the full Board of Directors. The Executive Committee reviews the Chief Executive Officer succession plan as prepared and recommended by the Compensation Committee and recommends its approval by the Board of Directors.

Audit Committee. The audit committeeAudit Committee consists solely of independent Directors and is directly responsible for the appointment, compensation, retention and oversight of the work of the Company’s independent registered public accounting firm and the Company’s Director of Internal Audit. Among other responsibilities, the audit committeeAudit Committee also monitors the integrity of the financial statements of the Company, adequacy of internal controls relating to financial reporting, compliance by the Company with legal and regulatory requirements, the qualifications and independence of the Company’s independent registered public accounting firm, performance of the Company’s internal and independent auditors and the business conduct and ethical standards of the Company. The audit committeeAudit Committee held six executive sessions during 20112012 with the Company’s independent registered public accounting firm, KPMG LLP. One member of the Audit Committee and one other independent directorDirector have been designated as financial experts.

Asset-Liability Committee (ALCO). The asset-liability committeeAsset-Liability Committee is responsible for overseeing the Company’sCompany's interest rate risk, capital adequacy, liquidity and balance sheet growth strategies. The committee monitors the Company’sCompany's sensitivity to interest rate and market risk and the performance of the investment portfolio, approves investment strategies and approves recommended investment and borrowing vehicles while monitoring tolerance levels to ensure adequate liquidity and capital.

Compensation Committee. The compensation committeeCompensation Committee consists solely of independent Directors and is responsible for establishing the Company’sCompany's compensation philosophy and executive compensation standards, performs the annual Chairman evaluation and recommends executive compensation, any employment agreements

16

and directorDirector compensation to the Board for approval.  The committee is also responsible for overseeing the administration of the Company’sCompany's employee benefit and compensation programs and, determining the effectiveness of the Company’sCompany's compensation-related risk management practices.practices, and reviews and approves the Chief Executive Officer succession plan and recommends such plan to the Executive Committee and Board of Directors for approval.

Corporate Governance/Nominating Committee (CGNC). The corporate governance/nominating committeeCorporate Governance/Nominating Committee consists solely of independent Directors and is responsible for establishing effective governance controls and procedures for the Company and its Directors. The committee’scommittee's specific responsibilities include recommending to the Board: its determination of the independence of each director;Director; the composition of each Board committee; nominees for each Board Committeecommittee chairperson; the Company’sCompany's response to any shareholderstockholder proposals; and nominees for election to the Board of Directors and appointment as Board officers. The committee is also responsible for monitoring the effectiveness and performance of the Board and its various committees.

Strategic Growth Planning Committee. The strategic growth planning committee is responsible for identifying and evaluating strategic growth opportunities for the Company and assessing the risks associated with such opportunities. The committee considers and evaluates potential acquisitions, proposed geographic expansion and proposals for adding or diversifying revenue streams.  The committee also plays a key role in evaluating alternatives and opportunities for raising capital.

Marketing and Business Development Committee (Marketing). The marketingMarketing and business development committeeBusiness Development Committee oversees the Bank’sBank's marketing and branding initiatives and business development and sales efforts, and determines if such initiatives and efforts are consistent with the strategic plan, goals and values of the Bank. The committee also reviews marketing campaign effectiveness and market penetration through the monitoring of various metrics and market research. The committee is also responsible for determining the clarity of customer value statements, the appropriateness of target customers and markets and the effectiveness of sales incentive programs.

17


Banking Technology Steering Committee (Technology). The banking technology steering committeeBanking Technology Steering Committee is responsible for overseeing the information security program, vendor management, project management and other technology related functions of the Bank. In addition, the committee reviews the adequacy of the Company’sCompany's business continuity and disaster recovery plans and the deployment of new technologies with particular attention to operational risk management. The committee also monitors the results of external penetration and vulnerability testing as part of the Company’sCompany's ongoing efforts to maintain a secure operating environment.

Enterprise Investment Advisors Committee (EIA). The Enterprise Investment Advisors committeeCommittee is responsible for ensuring that prudent care and discretion are followed in the investment and fiduciary oversight of client assets to properly manage and report client and Company market risk exposures. The committee is responsible for approving general investment standards and the selection of independent investment advisors and for monitoring investment, advisor and portfolio performance. The committee will periodically review management’smanagement's strategic planning initiatives and direction for the investment advisory services provided under the Enterprise Investment Advisors label and is also responsible for the oversight of the sale of non-deposit investment (i.e., brokerage) products through Enterprise Investment Services using an independent third-party broker.

Loan Committee. The loan committeeLoan Committee reviews information and reports relating to the composition, status, delinquency and classification of consumer, construction and commercial loans within the Bank’sBank's loan portfolio as well as any non-performing and past due loans and/or OREO assets (i.e., foreclosed property held by the Bank). The committee also reviews certain larger construction lending projects and relationships and reviews stress testing to determine potential risk exposure(s) related to the commercial real estate portion of the loan portfolio. The overall mission of the committee is to monitor the trends in asset and credit quality of the Bank’sBank's loan portfolio as well as various other internal and external factors and controls that may impact loan quality, concentration risk and overall credit risk exposure. The committee not only identifies and informs the Board of any unfavorable trends that it may detect in the Bank’sBank's loan portfolio, but also recommends actions that may be taken to mitigate portfolio risk.


17


The following table provides 20112012 membership by current Directors and meeting information for each of the standing committees of the Board of Directors:

Executive (1)

Audit

ALCO (1)

Compensation(2)

CGNC (2)

Strategic Growth
Planning

Marketing

Technology

EIA (1)

Loan

Ansin

X*

X

X

Baroni

X

X

X

X

Clancy

X

X

X

X*

X

X

X

Clementi

X

X

X

X*

Conway

X

X*

X

X

Cowan

X

X

X

X*

X

Deschene (2)

X

X

X

Duncan

X

X

X

X

X

Flynn

X

X

X

Hanson

X

X

X

X*

Harrington

X

X

X

X

X

Lerner

X

X

X

X*

X

X

Main

X*

X

X

X

X

X

Moloney

X

X

X

X

18

 Executive (1)AuditALCO (1)CompensationCGNCStrategic Growth Planning (2)MarketingTechnologyEIA (1)Loan
Ansin (5)  X*   X  X
Baroni X   XXX X
ClancyX X  XX*XXX
ClementiX  XX   X* 
ConwayX  X*XX    
CowanXX X   X* X
Deschene     XXX  
DuncanX X  XX X 
Flynn X  X  X  
HansonX  X X   X*
Harrington XX X X  X
LernerX XXX*X  X 
MainX* X  XX XX
Moloney X    XXX 
Putziger (3)X X*  X*  XX
Reid (4)XX*X    XX 
Spinelli  X   XXX 
Total Meetings Held in 20129848414365

 

 

Executive (1)

 

Audit

 

ALCO (1)

 

Compensation(2)

 

CGNC (2)

 

Strategic Growth
Planning

 

Marketing

 

Technology

 

EIA (1)

 

Loan

Putziger

 

 

 

 

 

X

 

 

 

 

 

X*

 

 

 

 

 

X

 

X

Reid

 

 

 

X*

 

X

 

 

 

 

 

 

 

 

 

X

 

X

 

 

Spinelli

 

 

 

 

 

X

 

 

 

 

 

 

 

X

 

X

 

X

 

 

Stavropoulos (3)

 

 

 

X

 

 

 

 

 

X

 

X

 

 

 

 

 

 

 

 

Total Meetings Held in 2011

 

9

 

8

 

4

 

5

 

5

 

1

 

5

 

4

 

6

 

5

*indicates Committee Chairperson

(1)                  

(1)Up to three additional members are chosen to serve on a three-month rotating basis from among the remaining members of the Board of Directors.

(2)                   Mr. Deschene joined the Board on June 28, 2011 and was nominated and appointed on December 13, 2011 to become a member of the Marketing Committee, Strategic Growth Planning Committee and Bank Technology Steering Committee.

(3)                   Mr. Stavropoulos resigned from the Board of Directors on a three-month rotating basis from among the remaining members of the Board of Directors.

(2)Strategic Growth Planning Committee dissolved as of September 18, 2012. The responsibilities of the Strategic Growth Planning Committee were assigned to the Executive and Marketing Committee.
(3)Mr. Putziger was appointed Chairperson of the Asset-Liability Committee effective September 18, 2012 and appointed to the Executive Committee effective September 18, 2012.
(4)Ms. Reid was appointed to the Executive Committee effective May 1, 2012.
(5)As previously announced by the Company, Mr. Ansin resigned from the Board of Directors effective July 17, 2012 at which time he became a full time employee at the Bank.


18 2011.


DIRECTOR COMPENSATION

All members of the Board of Directors are Directors of the Company and of the Bank. In 2011,2012, non-employee Directors were paid $350 for attendance at each of the Board of Directors meetings and all other committee meetings, excluding executive committeeExecutive Committee meetings and audit committeeAudit Committee meetings, for which they were paid $450 per meeting, and the Board’sBoard's annual strategic meeting, for which they were paid $1,000. In addition to these per meeting fees, in 20112012 non-employee Directors were also paid annual retainers for their membership on the Board of Directors and for their additional services in various Board-related and other corporate capacities as detailed in the following table:

 

 

Annual
Retainer (1)

 

Board of Directors

 

$

7,200

 

Executive Committee members

 

$

2,400

 

Audit Committee Chairperson (2)

 

$

7,500

 

Audit Committee Vice-Chairperson (2)

 

$

4,000

 

Asset-Liability Committee Chairperson

 

$

6,000

 

Compensation Committee Chairperson

 

$

6,000

 

Corporate Governance/ Nominating Committee Chairperson

 

$

6,000

 

Strategic Growth Planning Committee Chairperson

 

$

6,000

 

Banking Technology Steering Committee Chairperson

 

$

6,000

 

Enterprise Investment Advisors Committee Chairperson

 

$

6,000

 

Loan Committee Chairperson

 

$

6,000

 

Secretary

 

$

500

 

(1)Retainers for membership on the Board of Directors and on the Executive Committee were paid in equal monthly installments.  All other retainers were paid in equal quarterly installments.

19

Annual Retainer (1)
Board of Directors$7,200
Lead Director$2,800
Executive Committee members$2,400
Audit Committee Chairperson$7,500
Audit Committee Vice-Chairperson (2)$4,000
Asset-Liability Committee Chairperson$6,000
Compensation Committee Chairperson$6,000
Corporate Governance/ Nominating Committee Chairperson$6,000
Strategic Growth Planning Committee Chairperson (3)$6,000
Banking Technology Steering Committee Chairperson$6,000
Enterprise Investment Advisors Committee Chairperson$6,000
Loan Committee Chairperson$6,000
Secretary$500


(1)Retainers for membership on the Board of Directors and on the Executive Committee were paid in equal monthly installments. All other retainers were paid in equal quarterly installments.
(2)There currently is no Audit Committee Vice-Chairperson.
(3)Strategic Growth Planning Committee dissolved as of September 18, 2012.

(2)The Audit Committee Chairperson, Ms. Reid, was elected to that position on May 18, 2011. Previously, Ms. Reid served as the Audit Committee Vice-Chairperson and, following Ms. Reid’s election, no new Vice-Chairperson was elected at that time. The Audit Committee Vice-Chairperson retainer was paid out to Ms. Reid for the first two quarters of 2011 and the Audit Committee Chairperson retainer was paid out to Ms. Reid for the last two quarters of 2011.

Directors who are also full-time salaried officers of the Bank were not paid for attending Board of Directors or committee meetings and did not receive retainers of any kind for their services in any capacity as Directors.


For the year 2011,2012, non-employee Directors had the right to make an irrevocable election (by December 31, 2010)2011) to receive shares of Common Stock in lieu of receiving an elected portion of cash fees. The number of shares issued to non-employee Directors pursuant to this election was based on the value of the Common Stock at January 3, 2011, based on the closing price of the Common Stock on the NASDAQ Global Market on that date.January 3, 2012. For the year 2011,2012, the Company issued a total of 12,13212,592 shares of Common Stock to eightnine non-employee Directors at a per share issuance price of $13.65.$14.63. These shares were issued in January 2012.2013. For the year 2012,2013, non-employee Directors have the same option to receive shares of Common Stock in lieu of cash fees at a per share issuance price of $14.63,$17.43, which reflects the value of the Common Stock at January 3, 2012,2, 2013, based on the closing price of the Common Stock on the NASDAQ Global Market on that date.

In 2011,2012, the Company also granted awards of stock, which generally vest over a two-year period, to non-employee Directors.

The Company believes that giving non-employee Directors the option to receive stock in lieu of cash fees and granting to them stock awards with vesting requirements further aligns such Directors’ interests with those of the Company’s stockholders.



19




The following table details the total compensation paid to each non-employee Director for the year ended December 31, 2011.

Name

 

Fees paid
in cash
and/or
stock ($)
(1)

 

Stock
Awards
 ($) (2)

 

Total ($)

 

Kenneth S. Ansin

 

$

25,350

 

7,202

 

$

32,552

 

Gino J. Baroni

 

$

23,750

 

7,202

 

$

30,952

 

John R. Clementi

 

$

30,700

 

7,202

 

$

37,902

 

James F. Conway, III

 

$

26,750

 

7,202

 

$

33,952

 

Carole A. Cowan

 

$

31,750

 

7,202

 

$

38,952

 

Normand E. Deschene (3)

 

$

9,350

 

n/a

 

$

9,350

 

Lucy A. Flynn

 

$

21,000

 

7,202

 

$

28,202

 

Eric W. Hanson

 

$

26,850

 

7,202

 

$

34,052

 

John P. Harrington

 

$

25,400

 

7,202

 

$

32,602

 

Arnold S. Lerner

 

$

33,600

 

7,202

 

$

40,802

 

Jacqueline F. Moloney

 

$

23,650

 

7,202

 

$

30,852

 

Michael T. Putziger

 

$

26,600

 

7,202

 

$

33,802

 

Carol L. Reid

 

$

29,050

 

7,202

 

$

36,252

 

Michael A. Spinelli

 

$

22,300

 

7,202

 

$

29,502

 

Nickolas Stavropoulos (4)

 

$

11,450

 

7,202

 

$

18,652

 

202012

.

NameFees paid in cash or stock ($) (1)
Stock Awards
 ($) (2)
Total ($)
Kenneth S. Ansin (3)$12,250$7,215$19,465
Gino J. Baroni$23,200$7,215$30,415
John R. Clementi$31,050$7,215$38,265
James F. Conway, III$28,350$7,215$35,565
Carole A. Cowan$30,850$7,215$38,065
Normand E. Deschene$17,600$7,215$24,815
Lucy A. Flynn$20,050$7,215$27,265
Eric W. Hanson$28,600$7,215$35,815
John P. Harrington$25,050$7,215$32,265
Arnold S. Lerner$34,550$7,215$41,765
Jacqueline F. Moloney$22,250$7,215$29,465
Michael T. Putziger$25,250$7,215$32,465
Carol L. Reid$34,050$7,215$41,265
Michael A. Spinelli$21,600$7,215$28,815


(1)

(1)

All non-employee Directors, excluding Messrs. Ansin, Deschene, Hanson, Lerner, Spinelli, and Stavropoulos and Ms. Flynn, elected to receive all or a portion of their Directors fees in the form of shares of Common Stock, which were issued in January 2012.

2013.

(2)

(2)

The value of the stock awards is based on the fair market value of the Common Stock on the date of grant, which was March 15, 2011.20, 2012. The fair market value was calculated as the closing price of the Common Stock on the NASDAQ Global Market on the date of grant as required under the Company’s 2009 Stock Incentive Plan. Mr. Deschene did not receive a stock award since the grant was done prior to Mr. Deschene joining the Board on June 28, 2011.

grant.

(3)

(3)

As previously announced by the Company, Mr. Deschene was appointed to the Board of Directors on June 28, 2011 in accordance with authority granted to the Board of Directors under the Company’s Amended and Restated By-laws.

(4)

Mr. StavropoulosAnsin resigned from the Board of Directors on May 18, 2011. Mr. Stavropoulos forfeited his stock award as of his resignation date.

effective July 17, 2012 at which time he became a full time employee at the Bank.


During 2011,2012, none of the above listed non-employee Directors received any stock option awards or non-equity incentive plan compensation, nor did they have pensions or nonqualified deferred compensation earnings or any other form of compensation other than the fees paid in cash or stock and the stock awards set forth above. None of the above-listedabove listed non-employee Directors held any outstanding stock options as of December 31, 2011.

2012.




20

INFORMATION REGARDING EXECUTIVE OFFICERS AND OTHER SIGNIFICANT EMPLOYEES

Set forth below is certain information regarding the executive officers of the Company (including the Bank), other than those executive officers who are also Directors of the Company and for whom such information is provided elsewhere in this Proxy Statement. Each individual named below has held his position for at least five years, except as otherwise indicated.


Name

Age

Position

NameAgePosition
Brian H. Bullock

55

54

Executive Vice President and Chief Commercial Lending Officer of the Bank; prior to April 2009, Senior Vice President and Chief Commercial Lender of the Bank

Stephen J. Irish

58

57

Executive Vice President and Chief Operating Officer of the Bank; prior to April 2009, Executive Vice President and Chief Information Officer of the Bank

Steven R. Larochelle

49

48

Executive Vice President and Chief Banking Officer of the Bank; prior to April 2009, Senior Vice President and Chief Commercial Real Estate Lender of the Bank

James A. Marcotte

55

54

Executive Vice President, Chief Financial Officer and Treasurer of the Company and the Bank

Diane J. Silva

55

54

Executive Vice President and Mortgage Lending Director of the Bank; prior to March 2011, Senior Vice President and Mortgage Lending Director of the Bank

Chester J. Szablak, Jr.

55

54

Executive Vice President and Chief Sales and Marketing Officer of the Bank; from November 2007 through March 2009, Senior Vice President and Chief Sales and Marketing Officer of the Bank; from January 2006 through October 2007, Senior Vice President and Chief Sales Officer of the Bank

Janice R. Villanucci

60

59

Executive Vice President and Deposit Services Director of the Bank; prior to March 2011, Senior Vice President and Deposit Operations Director of the Bank

21





COMPENSATION DISCUSSION AND ANALYSIS

Objectives and Design

The Company’sCompany's core compensation philosophy provides that total annual compensation levels should: (1) reflect compensation levels of those found in other banking organizations of comparable asset size and performance; (2) reflect individual responsibilities, contribution, leadership, experience, skill set and performance; and (3) provide incentive to achieve business and financial objectives within reasonable risk parameters. The Company believes that this compensation philosophy is necessary to attract, motivate and retain highly qualified executives, who are essential to achieving the financial goals set by the Board of Directors and enhancing long-term value for shareholders, while operating the Company in a safe and sound manner.


Consistent with this philosophy, the Compensation Committee regularly obtains information regarding compensation levels in the Company’sCompany's industry through various sources, including compensation surveys conducted by banking industry associations and independent compensation consultants. The Compensation Committee also reviews the responsibilities and ongoing performance of executive officers. Elements of compensation are established with the goal of rewarding the executive officers for individual performance and organizational short- and long-term goals.


Under the Compensation Committee Charter, the Compensation Committee recommends to the Board of Directors the compensation of the Company’sCompany's Chairman. The Chairman and the Compensation Committee review the performance of both the Company’sCompany's Chief Executive Officer and President. The Chairman recommends the compensation of the Chief Executive Officer and President to the Compensation Committee and after review of the Chairman’s

21

Chairman's recommendation the Compensation Committee recommends their compensation to the independent members of the Board of Directors for approval. The Chief Executive Officer of the Company evaluates the performance and responsibilities of the remaining executive officers and recommends their compensation to the Compensation Committee. After review of the Chief Executive Officer’sOfficer's recommendations, the Compensation Committee recommends executive compensation to the independent members of the Board of Directors for approval.


The Company at least annually assesses total compensation paid to its executive officers. As part of this process, the Compensation Committee assesses and evaluates the elements of total compensation paid to executive officers as a group and individually.


Elements and Rationale

Executive compensation may include the following components in addition to an executive’sexecutive's base salary: incentive cash compensation, equity compensation, supplemental retirement benefit, supplemental life insurance benefit, income protection following a termination of employment under various circumstances, including following a change in control of the Company, and automobiles and club memberships which are for business development purposes. Each of these components is reviewed, both separately and from a total compensation perspective, and approved by the Compensation Committee and the independent members of the Board of Directors on at least an annual basis. The Company believes that by using a combination of these elements it is best able to find an effective balance in motivating each executive to achieve long-term and short-term goals without taking unnecessary or excessive risks that could threaten the Company’sCompany's financial condition or prospects, thereby enhancing long-term shareholder value. In establishing the components of compensation for each individual executive officer, the Compensation Committee considers the performance and responsibilities of the individual, the executive’sexecutive's designation or role within the Company and the cost to the Company of the various components of compensation to be provided.

The Company annually engages a compensation consulting firm to review the cash (base salary and cash incentive) and equity elements of the Company’sCompany's executive compensation and to provide comparative market information on overall cash and equity compensation for the Compensation Committee’sCommittee's review. In past years and in early 2011, theThe Company engaged Pearl

22


Meyer & Partners to conduct a comparative market review of the Company’sCompany's executive annual cash and equity compensation programs for 2012. For 2013, the Company engaged McLagan, an Aon Hewitt Company, to conduct a comparative market review of the Company's executive annual cash and equity programs. In late 2011,The Company selected a new compensation consulting firm to gain an additional perspective on the executive cash and equity programs. The scope of this comparative market review was expanded to include,included, in addition to survey data, the development of a peer group of publicallypublicly traded banks with similar asset size and performance within the Company’sCompany's geographic region. The information was not gathered to benchmark executive compensation to particular levels within the peer and survey group, rather, it was reviewed for comparative purposes to ensure that total executive compensation remains competitive.

The Compensation Committee approvedselected the following peer group:

Washington Trust Bancorp, Inc.

Cape Bancorp

Century Bancorp, Inc.

SI Financial Group, Inc.

Camden National Corporation

Westfield Financial, Inc.

OceanFirst Financial Corp.

Meridian Interstate Bncp (MHC)		Bar Harbor Bankshares

Rockville Financial, Institutions,Inc

BSB Bancorp, Inc.

Univest Corporation of Pennsylvania

Canandaigua National Corp.		Hingham Institution for Savings

Arrow Financial Corporation

First Connecticut Bancorp, Inc.		Evans Bancorp, Inc.

Bryn Mawr Bank Corporation

Chemung Financial Corp.		Merchants Bancshares, Inc.

United Financial Bancorp, Inc.

Merchants Bancshares, Inc.

Alliance Financial Corporation

First Bancorp, Inc.

Westfield Financial, Inc.

Bar Harbor Bankshares

Beacon Federal Bancorp, Inc.

Hingham Institution for Savings

New Hampshire Thrift Bancshares, Inc.

Republic First Bancorp, Inc.

Harleysville Savings Financial Corporation

Parke Bancorp, Inc.


22

Base Salary

Based upon the comprehensive reviews and comparative assessments performed by Pearl Meyer & Partners, and various other factors, including a review of each executive’sexecutive's responsibilities, experience in his role, leadership, contributions, overall performance, and a review of the various components of compensation provided to the individual executive, the 20112012 annual base salaries for the Chief Executive Officer, Chief Financial Officer, and the three other most highly compensated executive officers of the Bank identified in the Summary Compensation Table at page 29 below (the “Named Executive Officers”) were increased or remained unchanged from 20102011 levels as follows: for Mr. Duncan,Marcotte, an increase from $300,000$192,000 to $350,002;$195,840; for Mr. Main,Irish, an increase from $243,900$192,000 to $258,918;$195,840; and annual base salaries remained unchanged for Mr. Clancy at $400,000, Mr. MarcotteDuncan at $192,000,$350,000, and Mr. IrishMain at $192,000.  The base salaries for Messrs. Duncan and Main increased for 2011 as a result of the competitive assessment and also reflected a change in the elements and mix of their total compensation.  Specifically in 2011, there was a decrease in the expense associated with Mr. Main’s supplemental retirement benefit.  Additionally, neither Mr. Duncan nor Mr. Main received restricted stock grants in 2011 and the increase in their base salaries aligned their salaries with the competitive range of the Company’s peer group.  The Company did not increase the base salaries of Mr. Clancy, Mr. Marcotte and Mr. Irish for 2011, as it determined that an increase in their total incentive compensation opportunity, and for Mr. Clancy, an increase in his equity incentive, would be the focus for 2011.

For 2012, the Compensation Committee reviewed the various components of the compensation provided to each executive, assessed each executive’s responsibilities, leadership, overall performance, and contributions, and reviewed the comparative assessment provided by Pearl Meyer & Partners.  The Compensation Committee recommended, and the Board of Directors approved, an increase to Mr. Marcotte’s base salary from $192,000 to $195,840 and Mr. Irish’s base salary from $192,000 to $195,840 effective March 25, 2012.$258,918. The increase in Mr. Marcotte and Mr. Irish’sIrish's base salaries was, in part, to maintain alignment with the competitive range.range of base salaries for their positions. The base salaries for Messrs. Duncan, Main and Clancy remain unchanged for 2012, as the Company determined that an increase in their total incentive compensation opportunity and an increase in equity incentive would be the focus for 2012.

23

For 2013, the Compensation Committee reviewed the various components of the compensation provided to each executive, assessed each executive's responsibilities, leadership, overall performance, and contributions, and reviewed the comparative assessment provided by McLagan. The Compensation Committee determined that the base salaries for Messrs. Duncan, Main, Clancy, Marcotte, and Irish would remain the same and that an increase in their total incentive compensation would be the focus for 2013.


Incentive Compensation (Cash)

The terms of incentive cash compensation for executive officers are established by the Compensation Committee, subject to approval by the independent members of the Board approval,of Directors, on a year-to-year basis. Certain senior officers, including the Named Executive Officers, are eligible for incentive cash compensation through the Company’sCompany's Variable Compensation Incentive Plan. Payments for executives under the Variable Compensation Incentive Plan for 20112012 were determined by various weighted elements of the Company’sCompany's short- and long-term performance, including net income, deposit growth, loan growth, and loan quality,quality. Additionally, to focus executives on growth of investment asset revenues and growth of insurance commissions.commissions, the Plan included a multiplier for executives that reduced or increased their overall payout based on performance compared to specific growth targets for these areas. Target incentive payout percentages for Messrs. Duncan, Clancy, and Main were 27.5%30% of their annual regular earnings and the target payout percentages for Messrs. Marcotte and Irish were 18.5%19.5%. Messrs. Duncan, Main, Clancy, and Marcotte were placed in the Bank-wide Variable Compensation Group, for which the relative weighting of the various performance factors was allocated as follows: net income, 50%; deposit growth, 20%; loan growth, 20%; and loan quality, 10%. Mr. Irish, who has significant responsibility for supporting long-term growth through generating deposits, was placed in the Deposit Focused Variable Compensation Group, for which the relative weighting of the various performance factors was allocated as follows: net income, 50%; deposit growth, 35%; loan growth, 10%; and loan quality, 5%. The Company’sCompany's performance in 20112012 relative to its performance targets under the plan was as follows: metexceeded its target level for net income (1.25), deposit growth (2.0) and loan growth (level 1.0)quality (1.75) and achieved less than its target level for loan quality (level 0.5)growth (0.75). The performance multipliers were just belowexceeded the targeted range and decreasedincreased the result of the weighted targets by 2.5%5%. Messrs. Duncan, Clancy, and Main, who were in the Bank-wide Variable Compensation Group, received an actual payout of 25.47%42.53%, which resulted in the following cash payments: $85,728$148,838 for Mr. Duncan; $101,893$170,100 for Mr. Clancy; and $64,926$110,105 for Mr. Main. Mr. Marcotte, also in the Bank-wide Variable Compensation Group, received an actual payout of 17.14%27.64% or $32,902.$53,847. As a member of the Deposit Focused Variable Compensation Group, Mr. Irish received an actual payout of 17.59%30.46% or $33,764.

$59,330.

On March 20, 2012,19, 2013, the Board approved the Company’s 2012Company's 2013 Variable Compensation Incentive Plan. The 20122013 plan applies to all of the Named Executive Officers. The Board approved specific performance factors, performance targets and percentage payout amounts for 20122013 for each of the Named Executive Officers. To place a more meaningful proportion of total cash compensation at risk to ensure alignment of executive rewards with the Company’s

23

Company's financial results, the target payout percentage for each of Messrs. Duncan, Clancy, and Main was increased to 30%32.5% of their annual regular earnings and the target payout percentage for each of Messrs. Marcotte and Irish was increased to 19.5%23%. As in 2011,2012, payments for participants under the 20122013 Variable Compensation Incentive Plan will be determined by various elements of Company performance and individual performance.

All employees, including Named Executive Officers, also participate in a profit sharing program, which wasis solely determined based upon the Company’sCompany's net income for the year. Payouts under this program were made in the form of an employer contribution to each employee’s,employee's, including each of the Named Executive Officer’s,Officer's, 401(k) Plan account. The Company’sCompany's achievement of net income of $10,944,000$12,242,010 exceeded target level in 20112012 resulting in a contribution of 2.5%3.5% of the first $75,000 of an individual employee’semployee's base salary was at target level.salary. Accordingly, a profit sharing contribution of $1,875$2,625 was made to each Named Executive Officer’sOfficer's 401(k) Plan account.

The Named Executive Officers will continue to participate in the Company’sCompany's bank-wide profit sharing program in 2012.2013. Payouts under the profit sharing program will be based solely on Company performance (net income) for 2012.2013. As in 2011,2012, the target payout for 20122013 is 2.5% of up to $75,000 in base salary;salary based on achieving the net income target; however, the target payout percentage may increase or decrease based upon the Company’sCompany's actual performance.

Long-Term Incentive (Equity) Compensation

The Company aligns the interests of its executives with the long-term interests of stockholders through the granting of equity-based compensation awards, which have been in the form of stock options and restricted stock, granted in all cases at current fair market value. The Company’sCompany's current long-term equity program is intended to (1) enhance management’smanagement's sense of ownership and commitment to the long-term success of the Company, (2) encourage and reward management performance that increases the long-term success and shareholder value of the Company, and (3) attract and retain the senior leadership and

24


management talent the Company needs to be successful. At this time, the Compensation Committee anticipates that restricted stock as well as stock options will continue to serve as the primary vehicles to be used to achieve these objectives.


In connection with its compensation program, the Company evaluates the issuance of equity grants to employees on an annual basis. Equity grants to executive officers have been considered and granted at the same time that equity grants have been granted for all employees during the first quarter of each year.  Stock options and restricted stock are granted to executives both to reward performance and as a retention tool. The total number of options or restricted stock granted to all employees in the aggregate is determined after considering various factors, such as overhang and run rate. The number of options or value of restricted stock awards granted to individual employees, including executives, is also based upon various factors, but is primarily based upon an employee’semployee's level of responsibility and individual performance and contribution, and, with respect to the Named Executive Officers and other senior management, the desired mix of compensation is considered. Stock option and restricted stock grants to allfor employees other than executive officers are recommended by the Chief Executive Officer and the total grant is subject to the approval of the Compensation Committee.Committee and Board of Directors. In addition to the recommendation of the Chief Executive Officer and Compensation Committee approval, stock options and restricted stock awards granted to executive officers must also be approved by independent members of the full Board of Directors. In all cases, the exercise price of the stock option and the value of the restricted stock is established based on the market price of the Company’sCompany's stock on the date of the grant.


On March 15, 2011,20, 2012, the Company granted to employees a total of 82,075 options at an exercise price of $14.85 per share (which reflected the market price of the Company’s common67,750 stock on the date of the grant) and 56,975 shares of restricted stock.  Of the options and restricted stock shares granted, the Board approved grants to the Named Executive Officers, each such grant to vest over four years.  If the Named Executive Officer retires and meets the Company’s retirement guidelines, which is a minimum age of 62 and a combination of years of service and age, options vest immediately and vesting of a portion of restricted stock shares is accelerated for grants issued 12 months prior to the retirement date.  Messrs. Duncan and Main meet the Company’s retirement guidelines.  The amounts granted in 2011 were as follows: 10,000 options and 8,000 shares of restricted stock to Mr. Clancy; 15,000 options to Mr. Duncan; 10,000 options to Mr. Main; 1,500 options and 3,500 shares of restricted stock to Mr. Marcotte; and 1,500 options and 3,500 shares of restricted stock to Mr. Irish.  Mr. Clancy also received an additional grant of 3,500 shares of restricted stock to vest immediately.  This grant was made to increase his ownership and further align Mr. Clancy’s interest with shareholders, to recognize performance and in recognition that Mr. Clancy declined a stock grant and salary increase in 2009 and salary increase in 2011.   Mr. Duncan and Mr. Main did not receive a restricted stock grant for 2011, but rather were awarded a base salary increase as their current ownership levels are more significant than the Company’s other executive officers. To ensure ongoing alignment with shareholder interests on the part of Messrs. Duncan and Main, the Compensation Committee determined that an option grant to each of them was warranted.

On March 20, 2012, the Company granted a total of 67,750 options at an exercise price of $16.25 per share (which reflected the market price of the Company’sCompany's common stock on the date of the grant), and 64,960 shares of restricted stock. Of the options and restricted stock shares granted, the Board approved grants to the Named Executive Officers, each such grant to vest over four years. If the Named Executive Officer retires and meets the Company’sCompany's retirement guidelines, which is a minimum age of 62 and a combination of years of service and age, options vest immediately and vesting of a portion of restricted stock shares is accelerated for grants issued more than 12 months prior to the retirement date. Messrs. Duncan and Main meet the Company’sCompany's retirement guidelines. The amounts granted to the Named Executive Officers in 2012 were as follows: 9,000 options and 9,400 shares of


24

restricted stock to Mr. Duncan; 9,000 options and 7,000 shares of restricted stock to Mr. Clancy; 9,000 options and 4,175 shares of restricted stock to Mr. Main; 1,500 options and 3,350 shares of restricted stock to Mr. Marcotte; and 1,500 options and 3,350 shares of restricted stock to Mr. Irish. Mr. Clancy also received 3,000 shares of restricted stock that vested immediately. This grant was made to increase his ownership and further align Mr. Clancy’sClancy's interest with stockholders, to recognize his performance and in recognition that Mr. Clancy declined a stock grant and salary increase in 2009 and salary increases in 2011 and 2012. The number of options and shares of restricted stock granted to the executivesNamed Executives Officers for 2012 were considered to be consistent with the Company’sCompany's objective of maintaining a reasonable level of employee participation in the Company’sCompany's equity compensation program and to be within competitive ranges for executive management. Additionally, the Compensation Committee believes that these equity grants further align the executives’executives' interests with those of the stockholdersstockholders.

On March 19, 2013, the Company granted a total of 44,175 options, at an exercise price of $16.43 per share (which reflected the market price of the Company's common stock on the date of the grant), and that72,660 shares of restricted stock. Of the four-yearoptions and restricted stock shares granted, the independent members of the Board of Directors approved grants to the Named Executive Officers. For the Named Executive Officers, restricted stock grants will vest based on the Company reaching specific targets in earnings per share cumulative totals. For non-executive officers restricted stock grants will vest 25% per year. Stock option grants will vest 50% at year two and 50% at year four. The equity grant vesting schedule facilitates ongoingschedules are aligned with the Company's long term performance goals. If the Named Executive Officer retires and meets the Company's retirement guidelines, which is a minimum age of 62 and a combination of years of service and age, options vest immediately and vesting of a portion of restricted stock shares is accelerated for grants issued more than 12 months prior to the retirement date. Messrs. Duncan and Main meet the Company's retirement guidelines.

The amounts granted in 2013 were as follows: 4,000 options and 10,020 shares of restricted stock to Mr. Duncan; 10,000 options and 10,570 shares of restricted stock to Mr. Clancy; 4,000 options and 5,470 shares of restricted stock to Mr. Main; 1,500 options and 3,780 shares of restricted stock to Mr. Marcotte; and 1,500 options and 3,780 shares of restricted stock to Mr. Irish. The number of options and shares of restricted stock granted to the executives for 2013 were within competitive ranges for executive retention.

25

management and meet the Company's objective of executive employee participation in the Company's equity compensation program aligning the executives' interests with those of the stockholders.


Supplemental Retirement Benefit and Supplemental Life Insurance Benefit


The Compensation Committee believes that providing a supplemental retirement benefit, which is implemented through salary continuation agreements, and supplemental life insurance benefits serve as a long-term retention tool, as well as providing a reward component to the executive.

The Bank is party to salary continuation and supplemental life insurance agreements with each of Messrs. Duncan and Main. The terms of these salary continuation agreements, and the annual amounts payable to the executives thereunder, are described further at page 3533 below. The annual expense incurred by the Company in maintaining this supplemental retirement benefit for each executive equals the annual increase of the present value of the accumulated benefit to be paid to the executive. This amount is included for each of the executives in the Summary Compensation Table at page 29 below under the heading “Change in Pension Value and Nonqualified Deferred Compensation Earnings.”

The supplemental life insurance benefits that are payable to Messrs. Duncan and Main are included in the amounts shown as payable in the event of death in the table at page 37 below and are specifically referenced in footnote 3 to the table.

During

In 2006, the Company initiated a supplemental life insurance benefit plan for a number of its employees in management positions. Under this plan, the Company has provided supplemental life insurance benefits to the employees, subject to certain restrictions. Messrs. Clancy, Marcotte and Irish participate in this plan and the amounts

25

of their supplemental life insurance benefits are included in the amounts shown as payable in the event of death in the table at page 37 below and are specifically referenced in footnote 3 to the table.

Income Protection and Non-Compete

In addition to the above noted elements of compensation, Messrs. Duncan, Main and Clancy have employment agreements with the Company, which include non-competition restrictions, and Mr. Irish and Mr. Marcotte have change in control/noncompetition agreements with the Company. These agreements provide the executive with income protection in the event of a termination of his employment under certain circumstances, including following a change in control of the Company. The Compensation Committee believes these agreements are an important tool in retaining key executives while providing protection to the Company by restricting the executive’sexecutive's ability to compete in the Company’sCompany's marketplace if he were to leave prior to any change in control. The terms of these agreements are described at pages 34-36 below and the amounts payable thereunder to the executives under various termination scenarios are included in the table at page 37 below. The Compensation Committee believes that the non-competition protection afforded by these agreements is critical in the Company’sCompany's competitive marketplace and that the payment amounts and related conditions thereto contained in the agreements are consistent with reasonable industry standards. The maximum amounts that may be paid to any executive under any of these agreements are limited by automatic “cutback” provisions that ensure payments will not exceed the limits specified under Section 280G of the Code.


Perquisites


In addition to their participation in the Company’sCompany's general employee benefit plans, as described in footnote 54 of the Summary Compensation Table at page 29 below, the Company also provides company-owned vehicles for the use of Messrs. Duncan, Main and Clancy. The Company also pays dues related to club memberships for business development purposes for Messrs. Duncan, Main, and Main.  Beginning in 2012, the Company will also pay an initiation fee, if applicable and dues for a club membership for Mr. Clancy for business development purposes.Clancy. The Compensation Committee believes that the cost of these additional perquisites is modest for the size of the Company and that providing them is consistent with maintaining a competitive total compensation and benefits package for senior management and for business development purposes.

26




20112012 Executive Compensation Program

In determining the Named Executive Officers’Officers' total 20112012 compensation (including base salary, incentive cash compensation, equity compensation, supplemental retirement benefits and other perquisites), the Compensation Committee applied rationale similar to that used in the prior year and considered the support received from stockholders in 20112012 on the “Say on Pay” advisory vote. In 2011,2012, the Compensation Committee also continued to place greater emphasis on incentive cash compensation and equity compensation as an element of total compensation for particular Named Executive Officers, to enhance the executive’sexecutive's ownership interest in the Company, to align management’smanagement's interest with shareholder interests and to reward performance.


Each Named Executive Officer’sOfficer's total compensation in 20112012 reflected the Compensation Committee’sCommittee's assessment of his responsibilities, performance and contributions as well as the comparative market data provided by Pearl Meyer & Partners. In referring to such comparative data, the Compensation Committee sought to confirm that its compensation decision for each individual executive was reasonable.


The Company believes that its 20112012 executive compensation program successfully linked executive compensation to the Company’sCompany's financial performance.







26



COMPENSATION COMMITTEE MATTERS


Role of the Compensation Committee


The Compensation Committee of the Board of Directors is comprised of five members, all of whom are currently deemed to be independent. In determining the independence of the members, the Board of Directors has used the definition of independence contained in Rule 5605(d)(2)(A) of the Marketplace Rules of the NASDAQ Stock Market and has applied this definition consistently to all members of the Compensation Committee. It is the responsibility of the Compensation Committee to review the performance of the Chairman and recommendsrecommend his compensation to the independent members of the Board of Directors for review and approval. The Chairman and Compensation Committee review the performance of the Chief Executive Officer and President and recommend their compensation to the independent members of the Board of Directors for review and approval. The Company’sCompany's Chief Executive Officer evaluates the performance of the remaining executive officers and recommends their compensation to the Compensation Committee. The Compensation Committee reviews the Chief Executive Officer’sOfficer's recommendations and recommends their compensationsubmits its recommendation to the independent members of the Board of Directors for approval. During 2011,2012, the Board of Directors approved all recommendations presented by the Compensation Committee.


The Compensation Committee has the authority to retain or obtain advice from independent advisors, such as outside legal counsel and consulting firms, as it deems necessary to perform its role. During 2011, theThe Company obtained the services of Pearl Meyer & Partners in 2011 and McLagan, an Aon Hewitt Company in 2012 to provide market assessment information to the Compensation Committee, which is discussed in further detail in the Company’sCompany's Compensation Discussion and Analysis at pages 22-2721-26 above.

The Compensation Committee confirmed that McLagan did not have any potential or actual conflicts of interest with the Board of Directors or the Company.


The Compensation Committee operates under a written charter, a copy of which can be found on the Company’sCompany's website (www.enterprisebanking.com).

27




Compensation Committee Report


The Compensation Committee has reviewed and discussed the Company’sCompany's Compensation Discussion and Analysis contained at pages 22-2721-26 above (the “CD&A”) with management and based on this review and discussion the Compensation Committee has recommended to the Board of Directors that the CD&A be included in this Proxy Statement.


James F. Conway, III (Chairperson)

John R. Clementi

Carole A. Cowan

Eric W. Hanson

Arnold S. Lerner



Compensation Committee Interlocks and Insider Participation

The Directors listed above under the heading “Compensation Committee Report” at page 2827 constitute all of the individuals who served as members of the Compensation Committee during the year ended December 31, 2011.2012. None of these Directors was an officer or employee of the Company at any time during such period or has ever been an officer of the Company. None of these Directors has had any relationship with the Company that would

27

require disclosure in this Proxy Statement under the heading “Transactions with Certain Related Persons” at pages 40-41 below under applicable SEC rules.


Mr. Duncan, Chairman of the Board, serves on the Executive Committee and the Boardboard of Directorsdirectors of Lowell General Hospital. Mr. Hanson and Dr. Moloney also serve on the Executive Committeeboard of directors of Lowell General Hospital. Mr. Deschene is the President and Chief Executive Officer of Lowell General Hospital.


As described in further detail under the heading “Transactions with Certain Related Persons” at pages 40-41 below, the members of the Compensation Committee, as well as businesses and other entities with which they may be affiliated, are customers of the Bank and/or have entered into loan transactions with the Bank in the ordinary course of business.


Risk Assessment of Compensation Policies and Practices

The Company has implemented an annual risk assessment of its compensation policies and practices, which is intended to determine whether any of its existing compensation policies or practices create incentives for taking unnecessary or excessive risks that are reasonably likely to have a material adverse effect on the Company. On the basis of this assessment, the Compensation Committee of the Board of Directors has determined that no changes to the Company’s existing compensation policies and practices are necessary at this time.



EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth the compensation paid by the Company (through the Bank) for services rendered in all capacities during the years ended December 31, 2011,2012, December 31, 20102011 and December 31, 2009,2010, to the NamedChief Executive Officers.Officer, the Chief Financial Officer and each of the three other most highly compensated executive officers of the Bank (the “Named Executive Officers”). The Company does not employ any persons, other than through the Bank.

28



28

SUMMARY COMPENSATION TABLE
Name and Principal PositionYear
Salary
($)
Bonus
($)
Stock Awards
($) (1)
Option
Awards
($) (2)
Non-Equity Incentive Plan Compen-sation
($)
Change in Pension Value and Nonqualified Deferred Compensation
Earnings
($) (3)
All Other Compensation ($) (4)Total ($)
George L. Duncan
Chairman of the Company and the Bank
2012$350,002
$—
$152,750
$56,970
$148,838
$131,253
$49,939
$889,752
2011$336,540
$—
$—
$79,050
$85,728
$179,810
$45,793
$726,921
2010$274,128
$—
$—
$—
$47,287
$158,981
$60,469
$540,865
John P. Clancy, Jr.
Chief Executive Officer of the Company and the Bank
2012$400,000
$—
$162,500
$56,970
$170,100
$—
$33,652
$823,222
2011$400,000
$—
$170,775
$52,700
$101,893
$—
$24,058
$749,426
2010$386,539
$—
$125,100
$43,520
$66,678
$—
$21,810
$643,647
Richard W. Main
President of the Company and the Bank
2012$258,918
$—
$67,844
$56,970
$110,105
$94,565
$37,324
$625,726
2011$254,879
$—
$—
$52,700
$64,926
$126,468
$32,752
$531,725
2010$237,223
$—
$62,550
$13,056
$40,915
$164,608
$31,809
$550,161
Stephen J. Irish
Executive Vice President, Chief Operating Officer of the Bank
2012$194,804
$—
$54,437
$9,495
$59,331
$—
$15,898
$333,965
2011$191,991
$—
$51,975
$7,905
$33,764
$—
$14,822
$300,457
2010$191,344
$—
$59,423
$7,616
$21,798
$—
$14,280
$294,461
James A. Marcotte
Executive Vice President, Treasurer and Chief Financial Officer of the Company and the Bank
2012$194,806
$—
$54,437
$9,495
$53,847
$—
$15,859
$328,444
2011$192,000
$—
$51,975
$7,905
$32,902
$—
$13,952
$298,734
2010$191,160
$—
$59,423
$7,616
$20,576
$—
$13,404
$292,179


SUMMARY COMPENSATION TABLE

(1)The value of the stock awards is based on the fair market value of the Common Stock on the date of grant. The fair market value was calculated as the closing price of the Common Stock on the NASDAQ Global Market on the date of grant.

Name and Principal Position

 

Year

 

Salary
($) (1)

 

Bonus
($)

 

Stock
Awards
($) (2)

 

Option
Awards
($) (3)

 

Non-Equity
Incentive
Plan
Compensation
($)

 

Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($) (4)

 

All Other
Compensation ($)
(5)

 

Total ($)

 

George L. Duncan
Chairman of the Company and the Bank

 

2011

 

$

336,540

 

$

—

 

$

—

 

$

79,050

 

$

85,728

 

$

179,810

 

$

45,793

 

$

726,921

 

 

2010

 

$

274,128

 

$

—

 

$

—

 

$

—

 

$

47,287

 

$

158,981

 

$

60,469

 

$

540,865

 

 

2009

 

$

204,108

 

$

—

 

$

350,000

 

$

—

 

$

—

 

$

101,663

 

$

49,429

 

$

705,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

John P. Clancy, Jr.
Chief Executive Officer of the Company and the Bank

 

2011

 

$

400,000

 

$

—

 

$

170,775

 

$

52,700

 

$

101,893

 

$

—

 

$

24,058

 

$

749,426

 

 

2010

 

$

386,539

 

$

—

 

$

125,100

 

$

43,520

 

$

66,678

 

$

—

 

$

21,810

 

$

643,647

 

 

2009

 

$

350,000

 

$

—

 

$

—

 

$

—

 

$

—

 

$

—

 

$

17,800

 

$

367,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Richard W. Main
President of the Company and the Bank

 

2011

 

$

254,879

 

$

—

 

$

—

 

$

52,700

 

$

64,926

 

$

126,468

 

$

32,752

 

$

531,725

 

 

2010

 

$

237,223

 

$

—

 

$

62,550

 

$

13,056

 

$

40,915

 

$

164,608

 

$

31,809

 

$

550,161

 

 

2009

 

$

214,040

 

$

—

 

$

—

 

$

—

 

$

—

 

$

218,503

 

$

25,594

 

$

458,137

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stephen J. Irish
Executive Vice President, Chief Operating Officer of the Bank

 

2011

 

$

191,991

 

$

—

 

$

51,975

 

$

7,905

 

$

33,764

 

$

—

 

$

14,822

 

$

300,457

 

 

2010

 

$

191,344

 

$

—

 

$

59,423

 

$

7,616

 

$

21,798

 

$

—

 

$

14,280

 

$

294,461

 

 

2009

 

$

188,728

 

$

24,000

 

$

43,750

 

$

5,020

 

$

—

 

$

—

 

$

10,252

 

$

271,750

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

James A. Marcotte
Executive Vice President, Treasurer and Chief Financial Officer of the Company and the Bank

 

2011

 

$

192,000

 

$

—

 

$

51,975

 

$

7,905

 

$

32,902

 

$

—

 

$

13,952

 

$

298,734

 

2010

 

$

191,160

 

$

—

 

$

59,423

 

$

7,616

 

$

20,576

 

$

—

 

$

13,404

 

$

292,178

 

2009

 

$

187,720

 

$

24,000

 

$

43,750

 

$

5,020

 

$

—

 

$

—

 

$

9,356

 

$

269,846

 

(2)
The value of the option awards is based on the fair market value of the awards as calculated using the Black-Scholes option valuation model. For assumptions used in calculating the value of option awards and the accounting treatment of the awards, refer to footnote 12 on page 108 of the Company's Annual Report on Form 10-K. For information on vesting, refer to the table “Outstanding Equity Awards at Fiscal Year-End” and the associated footnote 1 at page 33 below.
(3)
For each of Messrs. Duncan and Main this amount is equal to the increase in 2012, 2011 and 2010 of the present value of the accumulated benefit attributable to the executive's supplemental retirement plan. For Mr. Duncan, the amounts shown in 2012, 2011 and 2010 take into account payments he received through his supplemental retirement plan in each of those years. For Mr. Main, the amounts shown in 2012, 2011 and 2010 take into account payments he received through his supplemental retirement plan in each of those years. In 2012, the discount rate used to determine the present value of the accumulated benefit was updated to 4.25% from 4.75% resulting in the value to the employee increasing $60,264 and $46,002 for Messrs. Duncan and Main, respectively. There were no changes to the terms or amounts of the benefit paid to the employees based on the discount rate change.
(4)
For each of the Named Executive Officers, these amounts include $2,625, $1,875 and $2,250 in annual contributions by the Bank for the Bank's Profit Sharing Plan in 2012, 2011 and 2010, respectively, and the following:

29

(1)Mr. Duncan elected to receive vacation pay at the time he transitioned to arrears payroll in 2009.  All other executive officers transitioned to arrears payroll processing in 2008.

29



(2)The value of the stock awards is based on the fair market value of the Common Stock on the date of grant.  The fair market value in 2011 and 2010 was calculated as the closing price of the Common Stock on the NASDAQ Global Market on the date of grant as required under the Company’s 2009 Stock Incentive Plan. The fair market value in 2009 was calculated as the average of the high and low trade prices of the Common Stock on the NASDAQ Global Market on the date of grant as required under the Company’s 2003 Stock Incentive Plan.

(3)The value of the option awards is based on the fair market value of the awards as calculated using the Black-Scholes option valuation model.  For assumptions used in calculating the value of option awards and the accounting treatment of the awards, refer to footnote 14 on page 109 of the Company’s Annual Report on Form 10-K.  For information on vesting, refer to the table “Outstanding Equity Awards at Fiscal Year-End” and the associated footnote 1 at pages 33-34 below.

(4)For each of Messrs. Duncan and Main this amount is equal to the increase in 2011, 2010 and 2009 of the present value of the accumulated benefit attributable to the executive’s supplemental retirement plan.  For Mr. Duncan, the amounts shown in 2011, 2010 and 2009 take into account payments he received through his supplemental retirement plan in each of those years. For Mr. Main, the amounts shown in 2011 and 2010 takes into account payments he received through his supplemental retirement plan in each of those years. In 2011, the discount rate used to determine the present value of the accumulated benefit was updated to 4.75% from 5.5% resulting in the value to the employee increasing $89,000 and $65,000 for Messrs. Duncan and Main, respectively. There were no changes to the terms or amounts of the benefit paid to the employees based on the discount rate change.

(5)For each of the named executive officers, these amounts include $1,875 and $2,250 in annual contributions by the Bank for the Bank’s Profit Sharing Plan in 2011 and 2010, respectively and the following:

·Annual-Annual matching contributions by the Bank to the Bank’s 401(k) plan:

 

 

2011

 

2010

 

2009

 

Duncan

 

$

8,820

 

$

8,820

 

$

7,042

 

Clancy

 

$

8,820

 

$

8,820

 

$

8,820

 

Main

 

$

8,820

 

$

8,539

 

$

7,625

 

Irish

 

$

6,912

 

$

6,880

 

$

6,778

 

Marcotte

 

$

6,912

 

$

6,871

 

$

6,743

 

·Life


 201220112010
Duncan$8,820
$8,820
$8,820
Clancy$8,820
$8,820
$8,820
Main$8,820
$8,820
$8,539
Irish$7,013
$6,912
$6,880
Marcotte$7,013
$6,912
$6,871


-Life insurance premiums paid:

 

 

2011

 

2010

 

2009

 

Duncan

 

$

25,320

 

$

30,106

 

$

22,084

 

Clancy

 

$

2,092

 

$

2,044

 

$

1,938

 

Main

 

$

7,636

 

$

7,223

 

$

6,584

 

Irish

 

$

2,130

 

$

2,100

 

$

2,048

 

Marcotte

 

$

1,260

 

$

1,233

 

$

1,188

 

·Dividends


 201220112010
Duncan$27,660
$25,320
$30,106
Clancy$2,105
$2,092
$2,044
Main$10,404
$7,636
$7,223
Irish$2,041
$2,130
$2,100
Marcotte$2,001
$1,260
$1,233


-Dividends paid on unvested shares of restricted stock:

 

 

2011

 

2010

 

2009

 

Duncan

 

$

2,100

 

$

10,000

 

$

11,400

 

Clancy

 

$

5,933

 

$

4,050

 

$

2,328

 

Main

 

$

1,706

 

$

1,500

 

$

—

 

Irish

 

$

3,905

 

$

3,050

 

$

1,425

 

Marcotte

 

$

3,905

 

$

3,050

 

$

1,425

 

30


 201220112010
Duncan$3,102
$2,100
$10,000
Clancy$7,645
$5,933
$4,050
Main$2,615
$1,706
$1,500
Irish$4,220
$3,905
$3,050
Marcotte$4,220
$3,905
$3,050

·The

-The amount attributed to the personal use of Bank owned automobiles:

 

 

2011

 

2010

 

2009

 

Duncan

 

$

3,355

 

$

4,970

 

$

5,000

 

Clancy

 

$

5,338

 

$

4,646

 

$

4,715

 

Main

 

$

4,442

 

$

4,024

 

$

3,532

 

·The


 201220112010
Duncan$3,409
$3,355
$4,970
Clancy$5,136
$5,338
$4,646
Main$4,491
$4,442
$4,024


-The amount paid to a local club on the executive’s behalf for business development purposes:

 

 

2011

 

2010

 

2009

 

Duncan

 

$

4,323

 

$

4,323

 

$

3,903

 

Main

 

$

8,273

 

$

8,273

 

$

7,853

 


 201220112010
Duncan$4,323
$4,323
$4,323
Clancy$7,321
$—
$—
Main$8,368
$8,273
$8,273




30


GRANTS OF PLAN-BASED AWARDS


The following table sets forth information concerning individual grants of restricted stock and stock options and non-equity incentive plan awards made during 20112012 to each of the Named Executive Officers. Other than the grants of restricted stock and stock options shown in the table, there were no other equity-based awards granted under any incentive plans to any Named Executive Officer in 2011.

 

 

 

 

Stock
Awards:
Number
of Shares
of Stock

 

Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
(1)

 

Option
Awards:
Number of
Securities

 

Exercise or
Base Price
of Option
Awards

 

Grant Date
Fair Value
of Stock

 

Name

 

Grant
Date

 

or Units
(#)

 

Threshold
($)

 

Target
($)

 

Maximum
($)

 

Underlying
Options (#)

 

($/Sh)
(2)

 

and Option
Awards (3)

 

George L. Duncan

 

3/15/11

 

—

 

$

0

 

$

92,548

 

$

194,352

 

15,000

 

$

14.85

 

$

79,050

 

John P. Clancy, Jr.

 

3/15/11

 

 

 

$

0

 

$

110,000

 

$

231,000

 

10,000

 

$

14.85

 

$

52,700

 

John P. Clancy, Jr

 

3/15/11

 

11,500

 

 

 

 

 

 

 

 

 

 

 

$

170,775

 

Richard W. Main

 

3/15/11

 

—

 

$

0

 

$

70,092

 

$

147,193

 

10,000

 

$

14.85

 

$

52,700

 

Stephen J. Irish

 

3/15/11

 

 

 

$

0

 

$

35,518

 

$

74,588

 

1,500

 

$

14.85

 

$

7,905

 

Stephen J. Irish

 

3/15/11

 

3,500

 

 

 

 

 

 

 

 

 

 

 

$

51,975

 

James A. Marcotte

 

3/15/11

 

 

 

$

0

 

$

35,520

 

$

74,592

 

1,500

 

$

14.85

 

$

7,905

 

James A. Marcotte

 

3/15/11

 

3,500

 

 

 

 

 

 

 

 

 

 

 

$

51,975

 

(1)2012Amounts actually earned and paid to the Named Executive Officers for 2011 pursuant to the non-equity incentive plan awards that are shown in the table as having been granted in such year are included in the Summary Compensation Table at page 29 above under the heading “Non-Equity Incentive Plan Compensation”.

31

NameGrant DateStock Awards: Number of Shares of Stock or Units (#)Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)Option Awards: Number of Securities Underlying Options (#)Exercise or Base Price of Option Awards ($/Sh) (2)
Grant Date Fair Value of Stock
and Option
Awards (3)
Threshold ($)Target ($)Maximum ($)
George L. Duncan3/20/2012 $0$105,000
$220,501
9,000$16.25$56,970
George L. Duncan3/20/20129,400     $152,750
John P. Clancy, Jr.3/20/2012 $0$120,000
$252,000
9,000$16.25$56,970
John P. Clancy, Jr3/20/201210,000     $162,500
Richard W. Main3/20/2012 $0$77,676
$163,119
9,000$16.25$56,970
Richard W. Main3/20/20124,175     $67,844
Stephen J. Irish3/20/2012 $0$37,987
$79,772
1,500$16.25$9,495
Stephen J. Irish3/20/20123,350     $54,438
James A. Marcotte3/20/2012 $0$37,987
$79,773
1,500$16.25$9,495
James A. Marcotte3/20/20123,350     $54,438

(1)
Amounts actually earned and paid to the Named Executive Officers for 2012 pursuant to the non-equity incentive plan awards that are shown in the table as having been granted in such year are included in the Summary Compensation Table at page 29 above under the heading “Non-Equity Incentive Plan Compensation”.
(2)
The exercise price of all stock options granted to employees in 2012, including those granted to Named Executive Officers and reflected in this table, equals the closing price of the Common Stock on the NASDAQ Global Market on the date of grant as required under the Company’s 2009 Stock Incentive Plan.
(3)
For an explanation of the grant date fair value of the stock and option awards, including the assumptions used in calculating the grant date fair value of the option awards, refer to footnote 12 on page 108 of the Company’s Annual Report on Form 10-K.



(2)The exercise price of all stock options granted to employees in 2011, including those granted to Named Executive Officers and reflected in this table, equals the closing price of the Common Stock on the NASDAQ Global Market on the date of grant as required under the Company’s 2009 Stock Incentive Plan.

(3)For an explanation of the grant date fair value of the stock and option awards, including the assumptions used in calculating the grant date fair value of the option awards, refer to footnote 14 on page 109 of the Company’s Annual Report on Form 10-K.

31


OPTION EXERCISES AND STOCK VESTED

The following table sets forth information concerning the exercise of stock options and the vesting of stock awards for each of the Named Executive Officers during the year ended December 31, 2011:

 

 

Option Awards

 

Stock Awards

 

Name

 

Number of
Shares Acquired
on Exercise
(#)

 

Value Realized
Upon Exercise
($) (1)

 

Number of
Shares Acquired
on Vesting
(#)

 

Value Realized
on Vesting
($) (2)

 

George L. Duncan

 

—

 

$

—

 

20,000

 

$

296,000

 

John P. Clancy, Jr.

 

—

 

$

—

 

6,000

 

$

88,550

 

Richard W. Main

 

—

 

$

—

 

1,250

 

$

18,288

 

Stephen J. Irish

 

—

 

$

—

 

2,437

 

$

35,866

 

James A. Marcotte

 

—

 

$

—

 

2,437

 

$

35,866

 

2012:

(1)The value realized upon exercise calculations in the third column from the left above are based upon the difference between the value of the Common Stock on the option exercise date and the per share exercise price of the options.  The value on the exercise date was based on the closing market price of the stock on the NASDAQ Global Market on the exercise date.

(2)The value realized on vesting calculation in the far right column is based upon the value of the Common Stock on the vesting date of the restricted stock.  The value on the vesting date was based on the closing market price of the stock on the NASDAQ Global Market on the vesting date.

32

 Option AwardsStock Awards
Name
Number of Shares Acquired on Exercise
(#)
Value Realized Upon Exercise ($) (1)
Number of Shares Acquired on Vesting
(#)
Value Realized on Vesting
($) (2)
George L. Duncan—$—
—$—
John P. Clancy, Jr.—$—
7,500$124,170
Richard W. Main—$—
1,250$20,950
Stephen J. Irish—$—
3,313$55,526
James A. Marcotte1,500$11,175
3,313$55,526


(1)The value realized upon exercise calculations in the third column from the left above are based upon the difference between the value of the Common Stock on the option exercise date and the per share exercise price of the options. The value on the exercise date was based on the closing market price of the stock on the NASDAQ Global Market on the exercise date.
(2)The value realized on vesting calculation in the far right column is based upon the value of the Common Stock on the vesting date of the restricted stock. The value on the vesting date was based on the closing market price of the stock on the NASDAQ Global Market on the vesting date.





OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END


The following table sets forth information concerning unexercised stock options and unvested stock awards held by each of the Named Executive Officers as of December 31, 2011.2012. The Company has not granted any option awards that are unexercised and unearned and not otherwise disclosed in the table or any stock awards that are unearned and have not vested and are not otherwise disclosed in the table.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

 

 

Option Awards

 

Stock Awards

 

Name

 

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

 

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable (1)

 

Option
Exercise
Price ($)

 

Option
Expiration
Date

 

Number
of
Shares
or Units
of Stock
that
Have
not
Vested
(#) (2)

 

Market
Value of
Shares or
Units of
Stock that
Have Not
Vested ($)
(3)

 

George L. Duncan

 

28,000

 

0

 

$

14.375

 

08/02/13

 

 

 

 

 

 

 

13,000

 

0

 

$

16.50

 

03/06/14

 

0

 

$

—

 

 

 

10,000

 

0

 

$

12.75

 

03/17/15

 

 

 

 

 

 

 

0

 

15,000

 

$

14.85

 

03/14/18

 

 

 

 

 

John P. Clancy, Jr.

 

20,000

 

0

 

$

14.375

 

08/02/13

 

15,500

 

$

221,650

 

 

 

13,000

 

0

 

$

16.50

 

03/06/14

 

 

 

 

 

 

 

7,500

 

2,500

 

$

12.75

 

03/17/15

 

 

 

 

 

 

 

2,500

 

7,500

 

$

12.51

 

03/15/17

 

 

 

 

 

 

 

0

 

10,000

 

$

14.85

 

03/14/18

 

 

 

 

 

Richard W. Main

 

14,000

 

0

 

$

14.375

 

08/02/13

 

3,750

 

$

53,625

 

 

 

6,500

 

0

 

$

16.50

 

03/06/14

 

 

 

 

 

 

 

7,500

 

0

 

$

12.75

 

03/17/15

 

 

 

 

 

 

 

3,000

 

0

 

$

12.51

 

03/15/17

 

 

 

 

 

 

 

0

 

10,000

 

$

14.85

 

03/14/18

 

 

 

 

 

Stephen J. Irish

 

9,000

 

0

 

$

14.375

 

08/02/13

 

9,563

 

$

136,751

 

 

 

4,000

 

0

 

$

16.50

 

03/06/14

 

 

 

 

 

 

 

3,187

 

1,063

 

$

12.75

 

03/17/15

 

 

 

 

 

 

 

1,000

 

1,000

 

$

8.75

 

03/16/16

 

 

 

 

 

 

 

437

 

1,313

 

$

12.51

 

03/15/17

 

 

 

 

 

 

 

0

 

1,500

 

$

14.85

 

03/14/18

 

 

 

 

 

James A. Marcotte

 

9,000

 

0

 

$

14.375

 

08/02/13

 

9,563

 

$

136,751

 

 

 

4,000

 

0

 

$

16.50

 

03/06/14

 

 

 

 

 

 

 

2,625

 

875

 

$

12.75

 

03/17/15

 

 

 

 

 

 

 

1,000

 

1,000

 

$

8.75

 

03/16/16

 

 

 

 

 

 

 

437

 

1,313

 

$

12.51

 

03/15/17

 

 

 

 

 

 

 

0

 

1,500

 

$

14.85

 

03/14/18

 

 

 

 

 

33



32

(1)

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
 Option AwardsStock Awards
NameNumber of Securities Underlying Unexercised Options (#) ExercisableNumber of Securities Underlying Unexercised Options (#) Unexercisable (1)Option Exercise Price ($)Option Expiration DateNumber of Shares or Units of Stock that Have not Vested (#) (2)Market Value of Shares or Units of Stock that Have Not Vested ($) (3)
George L. Duncan28,0000$14.3758/2/20139,400
$155,288
13,0000$16.503/6/2014
10,0000$12.753/17/2015
3,75011,250$14.853/14/2018
09,000$16.253/19/2019
John P. Clancy, Jr.20,0000$14.3758/2/201318,000
$297,360
13,0000$16.503/6/2014
10,0000$12.753/17/2015
5,0005,000$12.513/15/2017
2,5007,500$14.853/14/2018
09,000$16.253/19/2019
Richard W. Main14,0000$14.3758/2/20136,675
$110,271
6,5000$16.503/6/2014
7,5000$12.753/17/2015
3,0000$12.513/15/2017
2,5007,500$14.853/14/2018
09,000$16.253/19/2019
Stephen J. Irish9,0000$14.3758/2/20139,600
$158,592
4,0000$16.503/6/2014
4,2500$12.753/17/2015
1,500500$8.753/16/2016
875875$12.513/15/2017
3751,125$14.853/14/2018
01,500$16.253/19/2019
James A. Marcotte9,0000$14.3758/2/20139,600
$158,592
4,0000$16.503/6/2014
3,5000$12.753/17/2015
0500$8.753/16/2016
875875$12.513/15/2017
3751,125$14.853/14/2018
01,500$16.253/19/2019

(1)
For options granted prior to 2011, one-fourth of the total number of shares of Common Stock subject to the options granted becomes exercisable on an annual basis on the anniversary date of the original grant date, and, if sooner, become fully exercisable upon the option recipient reaching the age of 62 while remaining employed with the Bank as of such date.  For options granted in 2011, one-fourth of the total number of shares of Common Stock subject to the options granted becomes exercisable on an annual basis on the anniversary date of the original grant date, and, if sooner, become fully exercisable upon the option recipient reaching the age of 62while remaining employed with the Bank as of such date. For options granted in 2011 and 2012, one-fourth of the total number of shares of Common Stock subject to the options granted becomes

33

exercisable on an annual basis on the anniversary date of the original grant date. The four most recent option grants were granted on March 18, 2008, March 17, 2009, March 16, 2010, and March 15, 2011.

(2)The shares awarded to Mr. Main subject to restricted stock awards vest over a four-year period, with 25% of the shares vesting on the first anniversary of the date of the award and an additional 25% vesting on each of the next three subsequent anniversary dates of the date of the award.  Mr. Main’s restricted stock award was granted on March 16, 2010.  The shares awarded to Mr. Clancy subject to restricted stock awards vest over a four-year period, with 25% of the shares vesting on or about the first anniversary of the date of the award and an additional 25% vesting on or about each of the next three subsequent anniversary dates of the date of the award.  As part of the shares awarded to Mr. Clancy subject to restricted stock awards, 3,500 of the shares awarded on March 15, 2011 vested on the date of grant.  Mr. Clancy’s restricted stock awards were granted on March 16, 2010 and March 15, 2011. The shares awarded to Messrs. Irish and Marcotte subject to restricted stock awards vest over a four-year period, with 25% of the shares vesting on or about the first anniversary of the date of the award and an additional 25% vesting on or about each of the next three subsequent anniversary dates of the date of the award.  The restricted stock awarded to Messrs. Irish and Marcotte were granted on March 17, 2009, March 16, 2010 and March 15, 2011.

(3)The market value of the shares subject to restricted stock awards that have not vested is based upon the value of the Common Stock on December 30, 2011, the last business day of the Company’s last completed fiscal year. The closing market price of the stock on the NASDAQ Global Market on December 30, 2011 was $14.30.

20, 2012.

(2)The shares awarded to Mr. Main subject to restricted stock awards vest over a four-year period, with 25% of the shares vesting on or about the first anniversary of the date of the award and an additional 25% vesting on or about each of the next three subsequent anniversary dates of the date of the award. Mr. Main's restricted stock awards were granted on March 16, 2010 and March 20, 2012. The shares awarded to Mr. Clancy subject to restricted stock awards vest over a four-year period, with 25% of the shares vesting on or about the first anniversary of the date of the award and an additional 25% vesting on or about each of the next three subsequent anniversary dates of the date of the award. As part of the shares awarded to Mr. Clancy subject to restricted stock awards, 3,000 of the shares awarded on March 20, 2012 and 3,500 of the shares awarded on March 15, 2011 vested on the date of grant. Mr. Clancy's restricted stock awards were granted on March 16, 2010, March 15, 2011 and March 20, 2012. The shares awarded to Messrs. Irish and Marcotte subject to restricted stock awards vest over a four-year period, with 25% of the shares vesting on or about the first anniversary of the date of the award and an additional 25% vesting on or about each of the next three subsequent anniversary dates of the date of the award. The restricted stock awarded to Messrs. Irish and Marcotte were granted on March 17, 2009, March 16, 2010, March 15, 2011 and March 20, 2012.
(3)
The market value of the shares subject to restricted stock awards that have not vested is based upon the value of the Common Stock on December 31, 2012, the last business day of the Company's last completed fiscal year. The closing market price of the stock on the NASDAQ Global Market on December 31, 2012 was $16.52.

AGREEMENTS WITH NAMED EXECUTIVE OFFICERS

The Company and the Bank are parties to employment agreements with Messrs. Duncan, Main and Clancy and change in control/noncompetition agreements with Messrs. Irish and Marcotte. The Bank is also a party to salary continuation agreements with Messrs. Duncan and Main and supplemental life insurance agreements with Messrs. Duncan, Main, Clancy, Irish and Marcotte.

Each of the employment agreements with Messrs. Duncan, Main and Clancy is for a fixed term of years (three years for Mr. Duncan and two years for each of Messrs. Main and Clancy), subject to an automatic “rolling” renewal each year, unless either the Company or the executive provides a notice of non-renewal, in which case the agreement will expire at the end of the then-current term. Each of Messrs. Duncan, Main and Clancy is guaranteed a minimum base salary under the terms of his employment agreement: $203,900 for Mr. Duncan; $193,920 for Mr. Main; and $350,000 for Mr. Clancy. These amounts from time to time, at least annually, shall be reviewed for increases by the Board.

The amount of severance payments and benefits, if any, which may be due to any of the named executive officers under any of the agreements referenced above following any form of termination of the executive is summarized generally below and is further quantified in the table at page 37 of this Proxy Statement.

Under the employment agreements with Messrs. Duncan, Main and Clancy, if the executive dies, his beneficiary will be paid a lump sum equal to one-half of his then-current annual base salary and his spouse and

34


any other eligible dependents will continue to receive health and welfare benefits at no cost, subject to limitations described in the agreement; provided, however, that if the executive dies either within one year before or two years after the occurrence of a change in control of the Company (as defined in the agreement), then, in addition to such continuing health and welfare benefits, the executive’sexecutive's beneficiary will be paid a lump sum equal to three times, in the case of Mr. Duncan, and two times, in the case of either Mr. Main or Mr. Clancy, the executive’s executive's


34

previous highest annual compensation (as defined in the agreement to include the sum of the executive’sexecutive's highest annual base salary and highest annual cash bonus paid at any time prior to the date of termination since January 1, 2004) (such lump sum payment being referred to herein as the “Lump Sum Payment”), subject to reduction for any prior lump sum payment that may have been paid following the death of the executive.

In addition to the foregoing death benefits payable to Messrs. Duncan, Main and Clancy under their employment agreements, the beneficiaries of each of the named executive officersNamed Executive Officers will also be paid the death benefits provided under the executive’sexecutive's supplemental life insurance agreement, the amounts of which are included in footnote 3 to the table at page 37 below.

Under the employment agreements with Messrs. Duncan, Main and Clancy, if the executive is terminated at any time as a result of his long-term disability (as defined in the agreement), then for the remaining term of the agreement the executive will be paid an annual amount equal to 75% of his previous highest annual compensation, subject to reduction for any payments received by the executive during this payment period under any group long-term disability plan that may be maintained by the Company, and will be entitled to receive continuing health and welfare benefits on the same terms as were available to the executive as an employee.

Under the employment agreements with Messrs. Duncan, Main and Clancy, if the executive retires on or after his specified retirement age (65 for Mr. Duncan, 63 for Mr. Main and 62 for Mr. Clancy), then the executive is entitled to receive continuing health and welfare benefits for twelve months on the same terms as were available to him as an employee, and, in addition, if the executive retires either within one year before or one year after the occurrence of a change in control, then the executive will be paid the Lump Sum Payment.

In addition to the retirement rights provided to Messrs. Duncan and Main under their employment agreements, the salary continuation agreements referenced above also provide additional annual compensation benefits payable to Messrs. Duncan and Main which vest over time, subject to acceleration upon a change in control (as defined in the agreement), and become payable to the executive over a 20-year period upon his reaching a specified age (68 for Mr. Duncan, which he reached on June 8, 2008, and 63 for Mr. Main, which he reached on April 3, 2010), whether or not the executive has retired or remains employed with the Company at such time. The annual amounts payable to each of Messrs. Duncan and Main under their salary continuation agreements are $149,500 and $95,300, respectively.

Under the employment agreements with Messrs. Duncan, Main and Clancy, if the Company (including any successor) terminates the executive at any time for cause, whether before or after the occurrence of a change in control, then the executive will not be entitled to receive any severance payments or benefits. However, if the Company (including any successor) terminates the executive at any time without cause, whether before or after the occurrence of a change in control, then the executive will be paid the Lump Sum Payment and will be entitled to receive continuing health benefits for 18 months at no cost to the executive.

Under the employment agreements with Messrs. Duncan, Main and Clancy, if the executive chooses to terminate his employment at any time for good reason (as defined in the agreement to include, among several other reasons, a material reduction in the executive’sexecutive's base salary or his authority, duties or responsibilities), whether before or after the occurrence of a change in control, then the executive will be paid the Lump Sum Payment and will be entitled to receive continuing health benefits for 18 months at no cost to the executive. If the executive chooses to terminate his employment at any time without good reason, then he

35


will not be entitled to receive any severance payments or benefits, unless the executive chooses to terminate his employment without good reason either within one year before or one year after the occurrence of a change in control, in which case the executive will be paid the Lump Sum Payment.

Each of the employment agreements with Messrs. Duncan, Main and Clancy also provides that the parties may agree at any time to enter into a modified employment arrangement for the remaining term of the agreement. Under the terms of such arrangement, in exchange for the executive continuing to work at a level of at least 50%

35

of the level worked during the preceding three years, the Company will pay the executive an annual salary equal to 50% of his previous highest annual compensation and will continue to provide the executive with full benefits.

Under each of the employment agreements with Messrs. Duncan, Main and Clancy, the executive is subject to confidentiality, non-compete and non-solicitation restrictions for up to two years after the termination of his employment for any reason if the termination occurs before a change in control. The non-compete restrictions do not apply following any termination of the executive’sexecutive's employment that occurs after a change in control, and any non-compete restrictions that may be in effect at the time of a change in control automatically expire upon such change in control. If the executive breaches any applicable confidentiality, non-compete or non-solicitation covenants, then the Company may enforce a right to recoup any prior severance payments made to the executive.

Under the terms of the change in control/noncompetition agreement with Messrs. Irish and Marcotte, the executive will be paid a lump sum equal to 1.5 times his previous highest annual compensation (as defined in the agreement to include the sum of the executive’sexecutive's highest annual base salary and highest annual cash bonus paid within the most recent three years prior to the date of termination), together with certain other specified payments and benefits, including continuation of health and welfare benefits for 18 months on the same terms as were available to the executive as of the date of termination or, if more favorable, as of the date of the change in control, if the executive’sexecutive's employment is terminated for any reason, whether at the initiative of the Company or of the executive and whether or not for cause, within two years after the date of a change in control of the Company. If Mr. Irish’sIrish's or Mr. Marcotte’sMarcotte's employment is terminated for any reason within one year prior to the occurrence of a change in control, other than for cause, then he is entitled to receive all of the payments and benefits that he would have been entitled to receive if such termination had occurred within two years after the date of such change in control.

Messrs. Irish and Marcotte are also subject to confidentiality, non-compete and non-solicitation restrictions for one year following a termination of employment for any reason prior to a change in control (and assuming a change in control does not occur within this one-year period). If Mr. Irish’sIrish's or Mr. Marcotte’sMarcotte's termination in the absence of any change in control is initiated by the Company for any reason other than for cause, then he will be paid a lump sum equal to 75% of the sum of his then-current annual base salary and the amount of any annual incentive or other bonus paid to him with respect to the most recently completed fiscal year prior to the date of termination, subject to recoupment by the Company if he breaches any of the applicable confidentiality, non-compete and non-solicitation covenants.

The following table summarizes the estimated cost of executive benefits that would be incurred by the Company, as of December 31, 2011,2012, under the various termination scenarios referenced in the table for each of the named executive officers. The estimates shown below factor in base salary and incentive compensation payments, the value realized from accelerated vesting of stock options and restricted stock, the value realized from accelerated vesting of supplemental retirement benefits and other benefits and payments to be paid to the named executive officers under the terms of any agreement or plan that is not generally available to all employees. The following calculations were made without giving consideration to any possible “cutback” or other reduction of payments or benefits that could be required under an executive’sexecutive's employment or other contract:

36



Name

 

Change in
Control (1)

 

Voluntary
Termination
(Includes Early
Retirement) (2)

 

Involuntary Not for Cause
Termination by Company
or, if Applicable, Good
Reason Termination by
Employee

 

For Cause
Termination

 

Normal
Retirement
(2)

 

Death (2)(3)

 

Disability

 

George L. Duncan (4)

 

$

1,348,353

 

$

0

 

$

1,348,353

 

$

0

 

$

14,919

 

$

1,850,658

 

$

768,862

 

John P. Clancy, Jr.

 

$

1,331,312

 

$

0

 

$

1,038,065

 

$

0

 

$

14,919

 

$

738,564

 

$

489,174

 

Richard W. Main (4)

 

$

736,351

 

$

0

 

$

682,726

 

$

0

 

$

49,376

 

$

1,083,089

 

$

324,288

 

Stephen J. Irish

 

$

545,623

 

$

0

 

$

169,323

 

$

0

 

$

0

 

$

154,077

 

$

0

 

James A. Marcotte

 

$

568,657

 

$

0

 

$

168,677

 

$

0

 

$

0

 

$

170,500

 

$

0

 

36



NameChange in Control (1)Voluntary Termination (Includes Early Retirement) (2)Involuntary Not for Cause Termination by Company or, if Applicable, Good Reason Termination by EmployeeFor Cause TerminationNormal Retirement (2)Death (2)(3)Disability
George L. Duncan (4)$1,715,407
$—
$1,538,901
$—
$36,502
$1,829,033
$876,183
John P. Clancy, Jr.$1,564,735
$—
$1,175,493
$—
$15,285
$670,369
$553,575
Richard W. Main (4)$891,324
$—
$766,098
$—
$70,208
$1,062,795
$363,401
Stephen J. Irish$612,851
$—
$190,601
$—
$—
$154,077
$—
James A. Marcotte$641,638
$—
$186,490
$—
$—
$170,500
$—

(1)
With respect to each of Messrs. Duncan, Clancy, Main, Irish and Marcotte the amount shown includes the amount payable, including the estimated expense of continuing benefits, under various termination scenarios either preceding or following a change in control under the executive's employment agreement or, in the case of Messrs. Irish and Marcotte, their change in control/noncompetition agreement, which are described in further detail under the heading “Agreements With Named Executive Officers at pages 34-36 above.
(1)With respect to each of Messrs. Duncan, Clancy, Main,  Irish and Marcotte the amount shown includes the amount payable, including the estimated expense of continuing benefits, under various termination scenarios either preceding or following a change in control under the executive’s employment agreement or, in the case of Messrs. Irish and Marcotte, their change in control/noncompetition agreement, which are described in further detail under the heading “Agreements With Named Executive Officers at pages 34-36 above.

The amounts shown also include the present value attributable to accelerated vesting of death benefit payable under the Bank’sBank's executive supplemental life insurance plan, which is $54,297$56,876 for Mr. Clancy, $50,587$52,990 for Mr. Irish and $51,018$53,441 for Mr. Marcotte, and the value attributable to the accelerated vesting of outstanding stock options and unvested restricted stock, which is $0$176,506 for Mr. Duncan, $238,950$332,365 for Mr. Clancy, $53,625$125,226 for Mr. Main, $146,299$168,270 for Mr. Irish and $146,007$179,925 for Mr. Marcotte. The value of any outstanding stock options and unvested restricted stock is based upon the value of the Common Stock on December 30, 2011,31, 2012, which equals the closing market price of the stock on the NASDAQ Global Market on that date.

(2)With respect to each of Messrs. Duncan, Clancy, Main, Irish and Marcotte assumes that termination has not occurred within the time periods before or after a change in control specified in his employment agreement or change in control/noncompetition agreement as applicable. With respect to Mr. Main the amount shown under the heading “normal retirement” includes $35,750, which is the value attributable to the accelerated vesting of unvested restricted stock.

(3)Includes amounts payable under supplemental life insurance benefits, which equal the following amounts for each of the executives:  $1,556,056 for Mr. Duncan; $190,080 for Mr. Clancy; $791,496 for Mr. Main; and the entire amount shown in the table for Messrs. Irish and Marcotte.

(2)With respect to each of Messrs. Duncan, Clancy, Main, Irish and Marcotte assumes that termination has not occurred within the time periods before or after a change in control specified in his employment agreement or change in control/noncompetition agreement as applicable. With respect to Mr. Main the amount shown under the heading “normal retirement” includes $41,300, which is the value attributable to the accelerated vesting of unvested restricted stock and $14,955, which is the value attributable to the accelerated vesting of unvested stock options. With respect to Mr. Duncan the amount shown under the heading “normal retirement” includes $21,218, which is the value attributable to the accelerated vesting of unvested stock options.
(3)Includes amounts payable under supplemental life insurance benefits, which equal the following amounts for each of the executives: $1,556,056 for Mr. Duncan; $190,080 for Mr. Clancy; $791,496 for Mr. Main; and the entire amount shown in the table for Messrs. Irish and Marcotte.
(4)In addition to the amounts payable to Messrs. Duncan and Main under the various scenarios shown in the table above, each of the executives has a fully vested right to receive annual amounts payable over a twenty-year period under the executive's salary continuation agreement.  These annual amounts, payable in monthly installments, are paid to the executive regardless of his employment status, unless the executive is terminated for cause, in which case he would forfeit his right to receive any further payments following the date of termination.  In 2012, both Messrs. Duncan and Main were eligible to receive payments under their salary continuation agreements, and each received the full annual amount to which he is entitled, detailed in the table below.

37


(4)In addition to the amounts payable to Messrs. Duncan and Main under the various scenarios shown in the table above, each of the executives has a fully vested right to receive annual amounts payable over a twenty-year period under the executive’s salary continuation agreement.  These annual amounts, payable in monthly installments, are paid to the executive regardless of his employment status, unless the executive is terminated for cause, in which case he would forfeit his right to receive any further payments following the date of termination.  In 2011, both Messrs. Duncan and Main were eligible to receive payments under their salary continuation agreements, and each received the full annual amount to which he is entitled, detailed in the table below.

The following table sets forth additional information concerning the supplemental retirement benefits as of December 31, 20112012 which are provided to Messrs. Duncan and Main:

Name

 

Plan Name

 

Number of Years of
Credited Service (#)

 

Present Value of
Accumulated
Benefit ($) (1)

 

Payments
During Last
Fiscal Year ($)

 

George L. Duncan

 

Supplemental Employee Retirement Plan

 

23

 

$

1,619,032

 

$

149,500

 

Richard W. Main

 

Supplemental Employee Retirement Plan

 

23

 

$

1,099,125

 

$

95,450

 


(1)The present value of accumulated benefit was valued at the established present value of the payments to be received by the executives upon reaching the specified ages noted above at a discount rate of 4.75%.  The annual benefit will be payable in twelve monthly installments.

NamePlan NameNumber of Years of Credited Service (#)Present Value of Accumulated Benefit ($) (1)
Payments
During Last
Fiscal Year ($)
George L. DuncanSupplemental Employee Retirement Plan24$1,689,524
$149,500
Richard W. MainSupplemental Employee Retirement Plan24$1,164,287
$95,300

(1)The present value of accumulated benefit was valued at the established present value of the payments to be received by the executives upon reaching the specified ages noted above at a discount rate of 4.25%. The annual benefit will be payable in twelve monthly installments.

DIRECTOR NOMINATIONS AND SHAREHOLDERSTOCKHOLDER COMMUNICATIONS

Proposed director nominees are recommended to the Board of Directors for its approval by the Company’sCompany's Corporate Governance/Nominating Committee (“CGNC”). The CGNC is comprised of five independent Directors. In determining the independence of the CGNC members, the Board of Directors has used the definition of independence contained in Rule 5605(a)(2) of the Marketplace Rules of The NASDAQ Stock Market and has applied this definition consistently to all members of the CGNC.


A copy of the CGNC’sCGNC's Charter and the Company’sCompany's Corporate Governance Guidelines can be found on the Company’sCompany's website (www.enterprisebanking.com)(www.enterprisebanking.com). The Charter and Guidelines outline director qualifications, appointment to and removal from the Board of Directors and its various committees, structure and operations of the Board of Directors and its various committees and the CGNC’sCGNC's reporting function to the Board of Directors.


In evaluating candidates, the CGNC considers independence, experience relevant to the needs of the Company, leadership qualities and the ability to represent the broad interests of stockholders. In selecting new Directors, consideration is given to both the personal qualities and abilities of individual candidates and the existing collective skills and aptitudes of the Board of Directors as a whole.


Although it does not have a formal diversity policy, in addition to the criteria described above, the Board and the Corporate Governance/Nominating CommitteeCGNC also consider professional, personal and

38


geographic diversity in their review of candidates. Overall, candidates are selected based on a review of qualifications that are considered in the best interest of the stockholders.


Nominees for election to the Board of Directors may be identified and submitted to the CGNC for its consideration by Directors, stockholders and/or management. The CGNC may also retain a professional search firm to assist with the identification of qualified candidates.


The Chairman of the CGNC and the Chairman of the Board of Directors shall extend an invitation to join the Board of Directors, subject to election by the Company’sCompany's stockholders, to those nominees who are recommended by the CGNC and approved by the Board of Directors. The Board of Directors also retains the right, as outlined in the Company’s Amended and Restated By-laws,Company's By-Laws, to appoint Directors as needed throughout the year.



38

Directors are required to attend the Company’sCompany's annual meeting. Absences will be allowed for serious personal or business obligations that cannot be rescheduled. All of the Company’sCompany's Directors attended the 20112012 annual meeting.


Stockholders may submit nominations for candidates for election to the Board of Directors in accordance with the applicable requirements contained in the Company’s Amended and Restated By-lawsCompany's By-Laws to the attention of the Company’sCompany's Secretary at the Company’sCompany's principal office located at 222 Merrimack Street, Lowell, Massachusetts 01852. Stockholders may also communicate directly with members of the Board of Directors by sending such communications to a specified director or group of Directors or to the Board of Directors in its entirety, addressed c/o the Secretary of the Company at the Company’sCompany's principal office at the foregoing address. There have been no changes to these procedures since the Company last described these procedures in its proxy statement relating to the 2011 annual meeting of stockholders.



AUDIT COMMITTEE REPORT

The Audit Committee of the Company’sCompany's Board of Directors (the “Audit Committee”) is comprised of six independent Directors and operates under a written charter. A copy of the Audit Committee’sCommittee's Charter can be found on the Company’sCompany's website (www.enterprisebanking.com). The Audit Committee reviews and reassesses the adequacy of the Audit Committee charter on an annual basis. The Board of Directors has determined that Carol Reid, who is one of these six independent Directors, qualifies to serve as an Audit Committee Financial Expert (as such term is defined under applicable SEC rules). The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the work of the Company’sCompany's independent registered public accounting firm, which reports directly to the Audit Committee. The Audit Committee held eight meetings in 20112012 and met in executive session at seven meetings. The Committeecommittee also held six executive sessions with the Company’sCompany's independent registered public accounting firm in 2011,2012, at which time discussions of financial management, accounting, and internal controls took place.

In determining the independence of the Audit Committee members, the Board of Directors has used, as required for a company with shares listed on the NASDAQ Global Market, the definition of independence contained in Section 5605(a)(2) of the Marketplace Rules of The NASDAQ Stock Market as well as the additional independence requirements contained in Section 10A(m)(3) of the Securities Exchange Act of 1934, as amended, and Rule 10A-3(b)(1) of the Commission, and has applied such definition and additional criteria consistently to all members of the Audit Committee.

Management is responsible for the Company’sCompany's internal controls, and the financial reporting process.process and compliance by the Company with legal and regulatory requirements. The Company’sCompany's independent registered public accounting firm is responsible for performing an independent audit of the Company’sCompany's consolidated financial statements in accordance with the standards of the Public

39


Company Accounting Oversight Board (United States) and for auditing whether the Company maintained, in all material respects, effective internal controls over financial reporting and for issuing reports thereon. The Audit Committee’sCommittee's responsibility is to monitor and oversee these processes. The Audit Committee’sCommittee's responsibilities also include resolving any disagreements that may arise between management and the Company’sCompany's independent registered public accounting firm. In addition, the Audit Committee is responsible for the oversight of financial reporting, the oversight of compliance by the Company with legal and regulatory requirements, and establishing procedures for the receipt, retention and treatment of any complaints that may be received by the Company regarding accounting, internal controls or auditing matters and the confidential, anonymous submission by employees of the Company of any concerns that may arise regarding questionable accounting or auditing matters.

The Audit Committee has met and held discussions with management and the Company’sCompany's independent registered public accounting firm. Management has represented to the Audit Committee that the Company’sCompany's consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles, and the Audit Committee has reviewed and discussed the consolidated financial statements with management and the Company’sCompany's independent registered public accounting firm. The Audit Committee has discussed with the Company’s

39

Company's independent registered public accounting firm the matters required to be discussed under the professional standards of the AICPA and Public Company Accounting Oversight Board.


The Company’sCompany's independent registered public accounting firm has also provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’saccountant's communications with the audit committeeAudit Committee concerning independence, and the Audit Committee has discussed with the Company’sCompany's independent registered public accounting firm that firm’sfirm's independence.


Based upon the Audit Committee’sCommittee's discussions with management and the Company’sCompany's independent registered public accounting firm, and the Audit Committee’sCommittee's review of the representation of management and the reports of the Company’sCompany's independent registered public accounting firm to the Audit Committee, the Audit Committee recommended that the Board of Directors include the audited consolidated financial statements in the Company’sCompany's Annual Report on Form 10-K for the year ended December 31, 20112012 as filed with the SEC.


Carol L. Reid (Chairperson)

Carole A. Cowan

Lucy A. Flynn

John P. Harrington

Gino J. Baroni

Jacqueline F. Moloney


TRANSACTIONS WITH CERTAIN RELATED PERSONS


The Audit Committee reviews disclosures made in this Proxy Statement and all other reports and filings of the Company required under the federal securities laws regarding all related-party transactions that are required to be disclosed under the requirements of Item 404 of the SEC’sSEC's Regulation S-K.  The Company’sCompany's Code of Business Conduct and Ethics, which can be found on the Company’sCompany's website (www.enterprisebanking.com)(www.enterprisebanking.com), provides procedures for the Board of Directors’Directors' review and approval of transactions involving the Company and related parties. Any transactions involving the Company (including any subsidiaries) and members of the Board of Directors, officers holding a title of senior vice president or above or any family members or affiliated entities of any such Directors or officers must be conducted on an arms-length basis and any consideration paid or received by the Company in connection with any such transaction shall be on terms no less favorable to the Company than terms that would be available under the same or similar circumstances with an unaffiliated third party. With respect to any such transaction, the

40


director’s Director's or officer’sofficer's interest is disclosed to the Board of Directors prior to any action being taken by the Board to approve the transaction.


As described in further detail under the heading “Independence of Board of Directors” at pages 15-1614-15 above, in 2010, the Bank paid $2.0 million to a real estate trust in which Mr. Putziger held an indirect interest in order to acquire a leasehold interest in its headquarters and also paid a total of $208,734 in lease payments during the year prior to its acquisition of the lease. Mr. Putziger’sPutziger's proportional interest in the gross proceeds paid by the Bank in connection with these lease and purchase transactions in 2010 totaled $303,480. The Board believes that the terms of all of these transactions, including the amounts paid by the Bank, were a product of arms-length negotiations between the parties.


Certain Directors and executive officers of the Company are also customers of the Bank and have entered into loan, trust and brokerage and deposit transactions with the Bank in the ordinary course of business. In addition, certain Directors are also Directors,directors, trustees, officers or stockholders of corporations and non-profit entities or members of partnerships that are customers of the Bank and that enter into loan and other transactions with the Bank in the ordinary course of business. Such loan transactions with Directors and executive officers of the Bank and with such corporations, non-profit entities and partnerships are on such terms, including interest rates, repayment terms and collateral, as those prevailing at the time for comparable transactions with persons who are

40

not affiliated with the Bank and do not involve more than a normal risk of collectability or present other features unfavorable to the Bank.


SECURITIES OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS


The following table sets forth stock ownership information with respect to Directors, Named Executive Officers, all Directors and executive officers as a group and all other persons known to the Company who are the beneficial owners of more than 5% of the Common Stock. All such information is as of March 5, 2012.4, 2013. This information includes the total number of shares of the Common Stock known by the Company to be beneficially owned by each such person and group and the percentage of the Common Stock each such person and group beneficially owns. All shares are owned of record and beneficially, and each person and group identified has sole voting and investment power with respect to such shares, except as otherwise noted. Unless otherwise provided, the address of the Directors and Executive Officers is: c/o Enterprise Bancorp, Inc., 222 Merrimack Street, Lowell, MA 01852.

41

Directors
Shares of Common Stock
Beneficially Owned (1)(2)
Percent of Total
Common Stock (3)
Gino J. Baroni2,285*
John P. Clancy, Jr. (4)146,8121.50%
John R. Clementi (5)124,3731.28%
James F. Conway, III21,605*
Carole A. Cowan12,215*
Normand E. Deschene1,037*
George L. Duncan (6)

430,4384.41%
Lucy A. Flynn (7)9,640*
John T. Grady, Jr.300*
Eric W. Hanson (8)431,5854.44%
John P. Harrington (9)20,063*
Arnold S. Lerner (10)
155 Pine Hill Road
Hollis, NH 03049
522,9585.38%
Richard W. Main (11)249,3162.56%
Jacqueline F. Moloney (12)6,183*
Michael T. Putziger (13)129,9031.34%
Carol L. Reid18,944*
Michael A. Spinelli280,6492.89%
   
Other Named Executive Officers  
Stephen J. Irish (14)59,572*
James A. Marcotte (15)34,085*
All Directors and Executive Officers as a Group (24 Persons)2,747,65127.68%
   
Other 5% Stockholders  
Ronald M. Ansin
132 Littleton Road
Harvard, MA 01451
747,4627.68%


Directors

 

Shares of Common Stock
Beneficially Owned (1)(2)

 

Percent of Total
Common Stock (3)

 

Kenneth S. Ansin (4)

 

170,424

 

1.79

%

Gino J. Baroni

 

700

 

*

 

John P. Clancy, Jr. (5)

 

146,176

 

1.52

%

John R. Clementi (6)

 

119,308

 

1.25

%

James F. Conway, III (7)

 

37,121

 

*

 

Carole A. Cowan

 

10,488

 

*

 

Normand E. Deschene

 

100

 

*

 

George L. Duncan (8)

 

470,987

 

4.92

%

Lucy A. Flynn (9)

 

9,196

 

*

 

Eric W. Hanson (10)

 

441,239

 

4.64

%

John P. Harrington (11)

 

18,511

 

*

 

Arnold S. Lerner (12)

155 Pine Hill Road

Hollis, NH 03049

 

522,514

 

5.49

%

Richard W. Main (13)

 

254,567

 

2.66

%

Jacqueline F. Moloney (14)

 

4,218

 

*

 

Michael T. Putziger (15)

 

127,066

 

1.33

%

Carol L. Reid

 

15,705

 

*

 

Michael A. Spinelli

 

280,205

 

2.94

%

 

 

 

 

 

 

Other Named Executive Officers

 

 

 

 

 

 

 

 

 

 

 

Stephen J. Irish (16)

 

57,130

 

*

 

James A. Marcotte (17)

 

36,500

 

*

 

All Directors and Executive Officers as a Group (24 Persons)

 

2,959,674

 

30.32

%

 

 

 

 

 

 

Other 5% Stockholders

 

 

 

 

 

 

 

 

 

 

 

Ronald M. Ansin

132 Littleton Road

Harvard, MA 01451

 

912,081

 

9.59

%

41

*Named individual beneficially owns less than 1% of total Common Stock.

(1)The information as to the Common Stock beneficially owned has been furnished by each such stockholder.

(2)Includes shares subject to options exercisable within sixty days as follows: Mr. Clancy, 50,500; Mr. Duncan, 54,750; Mr. Main, 33,500; Mr. Irish, 20,000; Mr. Marcotte, 19,250; and all Directors and executive officers as a group, 249,200.

(3)The percentage ownership interest of each Director, named executive officer and all Directors and executive officers as a group is calculated on the basis of 9,509,767 shares outstanding as of the Record Date plus, in each such calculation, the number of shares that may be purchased pursuant to vested options held by the individual director or named executive officer or all Directors and executive officers as a group, as the case may be.

(4)Includes 11,200 shares owned by Mr. Ansin’s children; 2,000 shares owned by trusts for which Mr. Ansin is the trustee; and 33,333 shares owned by Mr. Ansin that are pledged as collateral.

42
◦Named individual beneficially owns less than 1% of total Common Stock.
(1)The information as to the Common Stock beneficially owned has been furnished by each such stockholder.
(2)
Includes shares subject to options exercisable within sixty days as follows: Mr. Clancy, 37,750; Mr. Duncan, 32,750; Mr. Main, 24,250; Mr. Irish, 21,687; Mr. Marcotte, 10,437; and all Directors and executive officers as a group, 199,053.
(3)
The percentage ownership interest of each Director, named executive officer and all Directors and executive officers as a group is calculated on the basis of 9,726,475 shares outstanding as of the Record Date plus, in each such calculation, the number of shares that may be purchased pursuant to vested options held by the individual director or named executive officer or all Directors and executive officers as a group, as the case may be.
(4)Includes 2,451 shares owned by Mr. Clancy's children and 88,611 shares owned jointly with Mr. Clancy's wife.
(5)All shares held by Mr. Clementi through trusts.
(6)Includes 18,445 shares owned by Mr. Duncan's wife.
(7)Includes 1,000 shares owned by Ms. Flynn's husband.
(8)100,000 shares owned by Mr. Hanson that are pledged as collateral.
(9)Includes 4,528 shares owned by Mr. Harrington's wife.
(10)Includes 218,647 shares owned by Mr. Lerner's wife, for which Mr. Lerner disclaims beneficial ownership; and 13,033 shares owned by a trust for the Lerner Family.
(11)Includes 96,749 shares held by Mr. Main through trusts; and 78,000 shares owned jointly with Mr. Main's wife, of which 36,000 shares are pledged as collateral.
(12)Includes 5,496 shares owned jointly with Dr. Moloney's husband.
(13)Includes 24,621 shares owned by trusts for which Mr. Putziger is the trustee; and 100,095 shares owned by Mr. Putziger that are pledged as collateral.
(14)Includes 27,877 shares held by Mr. Irish through trusts, of which 20,000 shares are pledged as collateral; and 408 shares owned by Mr. Irish's minor grandchildren for whom Mr. Irish acts as custodian.
(15)Includes 11,000 shares owned jointly with Mr. Marcotte's wife.




(5)Includes 2,384 shares owned by Mr. Clancy’s children and 77,792 shares owned jointly with Mr. Clancy’s wife.

(6)Includes 119,020 shares held by Mr. Clementi through trusts.

(7)Includes 33,755 shares owned jointly with Mr. Conway’s wife.

(8)Includes 20,063 shares owned by Mr. Duncan’s wife and 29,800 shares owned jointly by Mr. Duncan’s wife and his adult children.

(9)Includes 1,000 shares owned by Ms. Flynn’s husband.

(10)100,000 shares owned by Mr. Hanson that are pledged as collateral.

(11)Includes 4,405 shares owned by Mr. Harrington’s wife.

(12)Includes 218,647 shares owned by Mr. Lerner’s wife, for which Mr. Lerner disclaims beneficial ownership; and 13,033 shares owned by a trust for the Lerner Family.

(13)Includes 96,749 shares held by Mr. Main through trusts; 78,000 shares owned jointly with Mr. Main’s wife; and 36,000 shares owned by Mr. Main that are pledged as collateral.

(14)Includes 3,733 shares owned jointly with Dr. Moloney’s husband.

(15)Includes 23,954 shares owned by trusts for which Mr. Putziger is the trustee; and 100,095 shares owned by Mr. Putziger that are pledged as collateral.

(16)Includes 23,472 shares held by Mr. Irish through trusts and 408 shares owned by Mr. Irish’s minor grandchildren for whom Mr. Irish acts as custodian.

(17)Includes 7,687 shares owned jointly with Mr. Marcotte’s wife.

STOCKHOLDER PROPOSALS

A stockholder proposal for business to be brought before the 20132014 annual meeting of stockholders will be acted upon only in the following circumstances:

·


if the proposal is to be included in next year’syear's proxy statement, pursuant to Rule 14a-8 under the Exchange Act, the proposal (meeting all the requirements set forth in the SEC’sSEC's rules and regulations) is received by our corporate secretary onno earlier than January 6, 2014 and no later than February 6, 2014; or before December 3, 2012; or

·

if the proposal is notrelates to be included in next year’s proxy statement,the nomination of a person to serve as a Director of the Company, pursuant to our amended and restated by-laws,By-Laws, a written proposal (meeting all other requirements set forth in our amended and restated by-laws) must be received by our corporate secretary not less than sixtyone

42

hundred twenty (120) days and not more than one hundred fifty (150) days prior to the 2013 annual meeting (unless at least seventy days notice or prior public disclosurethe date of the 2013 annual meetingAnnual Meeting is not given,advanced more than 30 calendar days prior to the first anniversary of the Annual Meeting or delayed more than 60 calendar days after such anniversary, in which case our amended and restated by-lawsBy-Laws prescribe an alternate deadline).

Proposals should be sent to Enterprise Bancorp, Inc., 222 Merrimack Street, Lowell, Massachusetts 01852, Attention: Corporate Secretary.

43




SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires that the Company’sCompany's Directors and executive officers and any other persons who own more than 10% of the outstanding shares of the Common Stock file with the SEC initial reports of ownership and subsequent reports of changes of ownership with respect to their beneficial ownership of the Common Stock. Such persons are required by SEC regulations to furnish the Company with copies of all such Section 16(a) reports that they may be required to file. Ms. Silva was promoted to Executive Vice PresidentMr. Baroni purchased 120 shares on March 28, 2011 andJanuary 29, 2013 for which a Form 34 was not filed until April 12, 2011. A total of 2,903 shares were omitted fromFebruary 11, 2013. Ms. Silva’s original Form 3 and an amended Form 3 was filedSilva exercised stock options using a stock swap on February 6, 2012. Ms. Flynn’s husband sold 487 shares on February 2,December 18, 2012 for which a Form 4 was not filed until February 7,December 28, 2012.

Ms. Villanucci sold 4,000 shares on May 10, 2012 for which a Form 4 was not filed until May 15, 2012.

To the Company’sCompany's knowledge, all other reports under Section 16(a) of the Exchange Act that any of its Directors or executive officers has been required to file during the year ended December 31, 20112012 and through March 5, 20124, 2013 have been filed on a timely basis.



OTHER MATTERS

Shares represented by proxies in the enclosed form that are properly executed and delivered and proxies that are properly delivered electronically or by telephone will be voted as stockholders direct. Properly delivered proxies that contain no directions to the contrary will be voted (1) FOR the election of Gino J. Baroni, John P. Clancy, Jr.George L. Duncan, Eric W. Hanson, Jacqueline F. Moloney, Michael T. Putziger, Carol L. Reid and Michael A. Spinelli, James F. Conway, III, Lucy A. Flynn and John P. Harrington, the fivesix nominees of the Board of Directors, as Directors of the Company; (2) FORthe amendment to Section 4.1 of the Company’s 2009 Stock Incentive Plan;Company's Restated Articles of Organization; (3) FOR the amendment to Section 5.10 of the Company's Restated Articles of Organization; (4) FOR the amendment to Section 5.11 of the Company's Restated Articles of Organization; (5) FOR the amendment and restatement of the Company's Restated Articles of Organization; and (6) FOR the ratification of the Audit Committee’sCommittee's appointment of KPMG LLP as the Company’sCompany's independent registered public accounting firm for the fiscal year ending December 31, 2012.2013. At the time of preparation of this Proxy Statement, the Board of Directors knows of no other matters to be presented for action at the Annual Meeting. As stated in the accompanying proxy card, if any other business should properly come before the Annual Meeting, the proxies named therein have discretionary authority to vote the shares according to their best judgment.



ANNUAL REPORT ON FORM 10-K

The Company’sCompany's Annual Report on Form 10-K (without exhibits) is included with the Company’sCompany's Annual Report to Stockholders, and is being furnished to stockholders of record together with this Proxy Statement. Requests for additional copies may be directed to: Enterprise Bancorp, Inc., 222 Merrimack Street, Lowell, Massachusetts 01852, Attention: Michael A Spinelli, Secretary.



43


ADDITIONAL COPIES OF ANNUAL REPORT AND PROXY STATEMENT

AVAILABLE TO STOCKHOLDERS SHARING COMMON MAILING ADDRESS

Unless the Company has received instructions to the contrary, two or more stockholders of record who share a common mailing address may receive one Annual Report to Stockholders and one copy of this Proxy Statement, together with a separate proxy card for each such shareholder,stockholder, in a single package addressed to such stockholders. Any shareholderstockholder of record who shares a common mailing address with one or more other stockholders of record and has received a single Annual Report to Stockholders and Proxy Statement as provided herein, may request a separate Annual Report to Stockholders and Proxy Statement either by directing such request in writing to the Secretary of the Company at the address given in the preceding paragraph or by making such request by phone, directed to Jim Marcotte at (978) 656-5614. If you are a stockholder of record who shares a common mailing address with one or more other stockholders of record, you may ensure future delivery of the desired number of Annual Reports to Stockholders and Proxy

44


Statements (whether a single copy or multiple copies) by requesting such either in writing or by phone in accordance with the foregoing instructions.

WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING, PLEASE EITHER DELIVER YOUR PROXY ELECTRONICALLY OR BY PHONE BY FOLLOWING THE INSTRUCTIONS INCLUDED WITH YOUR PROXY CARD OR COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY WITHDRAW ANY PROXY GIVEN BY YOU AND VOTE YOUR SHARES IN PERSON.

April 1, 2013

March 30, 2012

45


Appendix

44


APPENDIX A



AMENDED AND RESTATED ARTICLES OF ORGANIZATION
OF
ENTERPRISE BANCORP, INC.

2009 STOCK INCENTIVE PLAN

As amended on January 17, 2012

SECTION 1.GENERAL PURPOSE OF THE PLAN; DEFINITIONS


ARTICLE I
NAME
The name of this planthe corporation is the Enterprise Bancorp, Inc. 2009 Stock Incentive Plan (the “Plan”“Corporation”).
ARTICLE II
PURPOSE
The purpose of the PlanCorporation is to encourageengage in the following business activities:
A.To acquire, invest in or hold stock in any subsidiary permitted under the Bank Holding Company Act of 1956 and enableChapter 167A of the officers, employees, Non-EmployeeMassachusetts 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.

B.To engage generally in any business activity which may be lawfully carried on by a corporation organized under Chapter 156D of the Massachusetts General Laws as may be amended from time to time and any successor statute thereto.

ARTICLE III
CAPITAL STOCK
Section 3.1Authorized Stock. The Corporation is authorized to issue two (2) classes of capital stock designated “common” and “preferred.” The aggregate number of shares which the Corporation is authorized to issue is Twenty One Million (21,000,000), consisting of (1) Twenty Million (20,000,000) shares of common stock, par value $0.01 per share (“Common Stock”), and (2) One Million (1,000,000) shares of preferred stock, par value $0.01 per share (“Preferred 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 (the “Board”) without the approval of its shareholders, except as may be otherwise provided in this Article III. 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.

Section 3.2     Description of Stock. 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:

A.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 of Common Stock 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.
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.

A - 1

B.Preferred Stock. The Board 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, optional or other key personsspecial 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 Articles of Amendment to these Articles of Organization that establish and designate one or more series of Preferred Stock, fixing and determining the relative rights and preferences thereof, and that contain such information and are in such form as may be prescribed by said Secretary of State.
ARTICLE IV
CERTAIN BUSINESS COMBINATIONS
The restrictions, if any, imposed by the Articles of Organization upon the transfer of shares of stock of any class are:
Section 4.1.    Vote for Certain Business Combinations.
A.Required Vote. 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 4.2:
1.any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with (i) any Interested Shareholder (as hereinafter defined) or (ii) any other corporation or entity (whether or not itself an Interested Shareholder) which is, or after such merger or consolidation would be, an Affiliate (as hereinafter defined) of an Interested Shareholder;
2.any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions) to or with any Interested Shareholder or any Affiliate of any Interested Shareholder 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 Shareholder or any Affiliate of any Interested Shareholder;
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 Shareholder or any Affiliate of any Interested Shareholder 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 Shareholder or any Affiliate of any Interested Shareholder; or
6.any reclassification of the securities of the Corporation (including consultantsany 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,

A - 2

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 Shareholder or any Affiliate of any Interested Shareholder; shall require the affirmative vote of the holders of at least two-thirds 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 4.1.

Section 4.2.     When Higher Vote is Not Required. The provisions of Section 4.1 shall not be applicable to any particular Business Combination, and prospective employees)such Business Combination shall require only such affirmative vote as is required by law and any other provision of Enterprise Bancorp, Inc.these Articles of Organization, if all of the conditions specified in either of the following paragraphs A or B are met:
A.The Business Combination shall have been approved by two-thirds of the Continuing Directors (as hereinafter defined); or
B.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 “Company”“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 Shareholder 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 Shareholder, 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 Shareholder became an Interested Shareholder (such latter date is referred to in this Article IV as the “Determination Date”), whichever is higher, and (ii) a fraction, (x) the numerator of which is the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by the Interested Shareholder 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 Shareholder 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 Shareholder 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 Shareholder 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 Shareholder, 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

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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 Shareholder 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 Shareholder 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 Shareholder has previously paid for shares of such class of Voting Stock. If the Interested Shareholder 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 Shareholder.

4.After becoming an Interested Shareholder 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 Shareholder 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 Shareholder's becoming an Interested Shareholder.

5.After becoming an Interested Shareholder, such Interested Shareholder shall not have received the benefit, directly or indirectly except proportionately as a shareholder, 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 Shareholder.

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 its Subsidiaries upon whose judgment, initiativethe rules and effortsregulations of the Company largely depends forSecurities 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 shareholders of the successful conductCorporation at least 20 days prior to consummation of itssuch Business Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions).

Section 4.3.     Certain Definitions.
A.The term “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.The term “Interested Shareholder” shall mean any person (other than any Employee Stock Ownership Plan established by the Board, the Corporation or any Subsidiary thereof formed at the direction of the Corporation) who or which:
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 acquire a proprietary interestthe 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


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3.is an assignee of or has otherwise succeeded to the beneficial ownership of any shares of Voting Stock which were at any time within the two-year period immediately prior to the date in question beneficially owned by any Interested Shareholder, if such assignment or succession shall have occurred in the Company.  It is anticipated that providing such persons withcourse of a direct stake intransaction or series of transactions not involving a public offering within the Company’s welfare will assure a closer identificationmeaning of their interests with those of the Company and its stockholders, thereby stimulating their efforts on the Company’s behalf and strengthening their desire to remain with the Company.

The following terms shall be defined as set forth below:

“Act” means the Securities Act of 1933, as amended, and such assignment of succession was not approved by a majority of the rulesContinuing 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 Shareholder pursuant to paragraph B of this Section 4.3, 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 4.3 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.The terms “Affiliate” and regulations thereunder.

“Administrator” means“Associate” shall have the compensation committeerespective meanings ascribed to such terms in Rule 12b-2 of the SEC's General Rules and Regulations under the 1934 Act.


F.The term “Subsidiary” shall mean 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 Shareholder set forth in paragraph B of this Section 4.3, the 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.The term “Continuing Director” shall mean any member of the Board who is not an Interested Shareholder, or an Affiliate or an Associate of any Interested Shareholder and was a member of the Board prior to the time that any Interested Shareholder became an Interested Shareholder, and any successor of a Continuing Director who is not an Interested Shareholder, or an Affiliate or an Associate of any Interested Shareholder and is recommended to succeed a Continuing Director by a majority of Continuing Directors then on the Board.

H. The term “Fair Market Value” shall mean:

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 comprisedlisted, 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 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 in good faith.

I.The term “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.

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J. The term “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 “consideration other than cash” as used in paragraphs B(1) and (2) of Section 4.2 of this Article IV 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.

Section 4.4.     Powers of the Board of Directors. A majority of the directors of the Corporation (or, if there is an Interested Shareholder, a majority of the Continuing Directors then in office) shall have the power to determine for the purposes of this Article IV, on the basis of information known to them after reasonable inquiry, including without limitation, (A) whether a person is an Interested Shareholder, (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 4.2 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 IV or under Section 5.2. The good faith determination of a majority of the directors (or, if there is an Interested Shareholder, a majority of the Continuing Directors then in office) on such matters shall be conclusive and binding for all purposes of this Article IV and of Section 5.2.

Section 4.5.    No Effect on Fiduciary Obligations of Interested Shareholders. Nothing contained in this Article IV shall be construed to relieve any Interested Shareholder from any fiduciary obligation imposed by law.

ARTICLE V
OTHER LAWFUL PROVISIONS

Section 5.1.     Standards for Board of Directors Evaluation of Offers. The Board, 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 shareholders, 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 5.2.    Beneficial Ownership Limitation. No Person (as defined below) or group of selected Persons or Persons acting in concert may own control or have the power to vote directly or indirectly more than 9.9% of the outstanding shares of Common Stock. This limitation shall not apply (A) to any acquisition of shares of Common Stock of the Corporation which has been expressly approved in advance by an affirmative vote of not less than three Non-Employeetwo-thirds of the Continuing Directors eachthen 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 whom qualifies asthe Corporation's capital stock, or (C) to any Employee Stock Ownership Plan established by the Corporation. “Person” shall mean an “outside director” withinindividual, partnership, corporation, limited liability company, trust, unincorporated organization, government agency or partial subdivision thereof, or any other legal entity.

For the meaningpurposes of determining the number of shares of Common Stock owned hereunder by any person, the number of shares of Common Stock deemed to be outstanding shall include shares deemed owned by such Person through the application of Section 162(m)5.2 but shall not include any other shares of the Code and a “non-employee director” within the meaning of Rule 16b-3 of the Exchange Act; provided, however, that if and to the extent that the Board at any time assumes the powers and responsibilities of the Administrator under the Plan, then all references to the “Administrator” in the Plan shall refer to the Board under such circumstances.

“Award” or “Awards” means, except where referring to a particular category of grant under the Plan, any and all of the following:  IncentiveCommon Stock Options, Non-Qualified Stock Options, Restricted Stock Awards, RSUs and SARs.

“Award Agreement” means a written or electronic agreement setting forth the terms and provisions applicable to an Award granted under the Plan.  Each Award Agreement is subject to the terms and conditions of the Plan.

“Board” means the Board of Directors of the Company.

“Change in Control” means the occurrence of either (i) a change in control of the Company that the Company wouldwhich may be required to report in response to Item 5.01 of a Current Report on Form 8-K as filed by the Company with the Securities and Exchange Commissionissuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options or otherwise.

In the requirementsevent that any Common Stock is acquired in violation of this Section 13 or Section 15(d)5.2, (i) all shares of the Exchange Act or, if such reporting obligation is no longerCommon Stock beneficially owned by any Person in effect, any regulations promulgated by the Securities and Exchange Commission or any successor agency pursuant to the Exchange Act or any successor statute that are intended to serve similar purposes, or (ii) a person (as such term is used in Sections 13(d) and 14(d)(2)excess of the Exchange Act) becoming a beneficial owner (as that term is defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities


of the Company representing twenty-five percent or more9.9% of the total number of votes thatoutstanding shares of Common Stock 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 shareholders 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 shareholders for a vote, and (ii) the Board 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 Section 5.2 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.


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Section 5.3.    Directors. The Corporation shall be under the direction of the Board. The number of directors on the Board shall not be fewer than three (3) or as required by law. The Board 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 in accordance with the By-Laws, to hold office for a term expiring at the annual meeting of shareholders held in the third year following the year of their election and until their respective successors are elected and qualified, subject to their earlier death, resignation, disqualification or removal.

Any director (including persons elected by directors to fill vacancies in the Board) may be castremoved from office only for Cause (as hereinafter defined), by an affirmative vote of not less than (i) the electionholders of directorstwo-thirds of the Company, and in either such casetotal votes eligible to be cast by shareholders or (ii) two-thirds of the members of the Board has not consented tothen in office, unless at the occurrencetime of such event by a two-thirds vote of all of its members (unlessremoval there isshall be an Interested Stockholder, as that term is defined in the Company’s articles of organization, as amended,Shareholder, in which case the affirmative vote of not less than two-thirds of the Continuing Directors as that term is definedthen in the Company’s articles of organization, as amended,office shall also be required).  In additionrequired for removal by vote of the Board, and in either case such removal must be undertaken at a duly constituted meeting of shareholders or of the Board, as applicable, called expressly for such purpose. At least thirty days prior to such meeting of shareholders or of the Board, as applicable, written notice shall be sent to the foregoing, a Change in Controldirector whose removal will be considered at the meeting.

For purposes of this Section 5.3, “Cause” shall be deemed to have occurred ifdefined as the result(i) conviction of or in connection with, any tender or exchange offer, merger or other business combination, sale or other dispositiona felony, (ii) declaration of assets or any contested electionunsound mind by order of directorscourt, (iii) gross dereliction of the Company or any combination of the foregoing transactions, the persons who were directors of the Company before such transaction or related series of transactions shall cease to constituteduty as determined by a majority of the Board, (iv) commission of an action involving moral turpitude, or (v) commission of an action which constitutes intentional misconduct or a knowing violation of law if such action in either event results both in an improper substantial personal benefit and a material injury to the Corporation.
Section 5.4.    Transactions with Interested Persons.

A.Unless entered into in bad faith, and to the extent otherwise permitted by applicable law, no contract or transaction by the Corporation shall be void, voidable or in any way affected by reason of the boardfact that it is with an Interested Person.
B.For the purposes of this Section 5.4, “Interested Person” means any person or organization in any way interested in the Corporation whether as a director, officer, shareholder, employee or otherwise, and any other entity in which any such person or organization of the Corporation is in any way interested.

C.Unless such contract or transaction was entered into in bad faith, and to the extent such contract or transaction is otherwise permitted by applicable law, 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.

D.The provisions of this Section 5.4 shall be operative notwithstanding the fact that the presence of an Interested Person was necessary to constitute a quorum at a meeting of directors of any successor entity.

“Code” means the Internal Revenue Code of 1986, as amended, and any successor statute, and related rules, regulations and interpretations.

“Covered Employee” means an employee who is a “Covered Employee” within the meaning of Section 162(m)or shareholders of the Code.Corporation at which such contract or transaction was authorized.


“Disability”Section 5.5.     meansActing as a conditionPartner. The Corporation may be a partner in any business enterprise which it would have power to conduct by itself.

Section 5.6.    Call of Special Meetings. Special meetings of the shareholders for any purpose or purposes may be called at any time only by the Chairman of the Board or the 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 Shareholder, 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 5.7.    Amendment of By-Laws. The By-Laws of the Corporation may be altered, amended or repealed, in whole or in part, at any time by the affirmative vote of at least two-thirds of the total incapacity, mental or physical, for further performance of duty with the Company and/or any Subsidiary, which the Administrator shall have determined, on the basis of competent medical evidence, is likelyvotes eligible to be permanent.

“Effective Date” meanscast by the date onshareholders of the Corporation at a duly constituted meeting of the shareholders. The Board, by the affirmative vote of at least a majority of the directors then in office, may also alter, amend or repeal the By-Laws of the Corporation, in whole or in part, at a duly constituted meeting of the Board, unless at the time of such action there shall be an Interested Shareholder, in which case such action shall also require the Plan is approvedaffirmative vote of at least two-thirds of the Continuing Directors then in office at such meeting; provided, however, that the Board shall not be authorized hereunder to alter, amend or repeal, in whole or in part, any provision of the By-laws of the Corporation that, by law, these Articles of Organization or the By-Laws, may be altered, amended or repealed, in whole or in part, only through an action exclusively by the shareholders. Any By-Laws of the Corporation that are adopted by the Board as set forth in provided herein may be amended or repealed by the Corporation's shareholders.



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Section 15.5.8.    

“Exchange Act” means the Securities Exchange ActAmendment to Articles of 1934, as amended, and the rules and regulations thereunder.Organization

“Fair Market Value”. No amendment, addition, alteration, change or repeal of the Stock on any given date means the closing pricethese Articles of the Stock as reported on the Nasdaq Global Market or another national securities exchange.  If there is no trading in the Stock on such date, the determinationOrganization shall be made, unless the same is first approved by referencethe affirmative vote of at least a majority of the directors then in office, and thereafter, if and to the closing priceextent that applicable law requires that such amendment, addition, alteration, change or repeal must also be approved by the shareholders of the StockCorporation, approved by the shareholders by not less than two-thirds of the total votes eligible to be cast at a duly constituted meeting, or, in the case of any amendment, addition, alteration, change or repeal that requires shareholder approval under applicable law and does not affect in any way any of Articles III or IV 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 any required shareholder vote is to be taken there is an Interested Shareholder, 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 shareholders. Unless otherwise provided by law, any amendment, addition, alteration, change or repeal so acted upon shall be effective on the last date preceding such date on whichit is filed with the Stock was traded.

“Incentive Stock Option” means any Stock Option designated and qualified as an “incentive stock option” as defined in Section 422Secretary of State of the Code.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.

“Non-Employee Director”Section 5.9.     means a memberDirector's Liability. No director of the Board who is not also an employeeCorporation shall be personally liable to the Corporation or its shareholders for monetary damages for any breach of such director's fiduciary duty as a director of the CompanyCorporation, 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 shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law (iii) for improper distributions under Section 6.40 of Chapter 156D of the Massachusetts General Laws as may be amended from time to time or any Subsidiary.successor statute thereto, or (iv) for 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.

“Non-Qualified



TERMS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
The following is a statement of the terms (including preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms or conditions of redemption) of the Series A Junior Participating Preferred Stock, Option”par value $.01 per share, of Enterprise Bancorp, Inc. (the “Corporation”):
1.
Designation and Amount. The shares of such series shall be designated as “Series A Junior Participating Preferred Shares” and the number of shares constituting such series shall be 200,000.

2.
Dividends and Distributions.

(a) means any Stock Option that is not an Incentive Stock Option.

“Option” or “Stock Option” means any optionSubject to purchasethe prior and superior rights of the holders of any shares of Stock granted pursuantany series of shares of preferred stock (generally, “Preferred Shares”) ranking prior and superior to Section 5.

“Restricted Stock Award” means an Award entitling the recipientSeries A Junior Participating Preferred Shares with respect to acquire,dividends (if any), the holders of Series A Junior Participating Preferred Shares shall be entitled to receive, when, as and if declared by the Board out of funds legally available for the purpose, dividends payable in cash at such purchase price (which may be zero)times as determineddividends, other than dividends payable in Common Shares (as defined herein), are paid by the Administrator,Corporation to holders of shares of Stock, subject to such restrictions and conditions as the Administrator may determine at the time of grant.

“RSU” means a restricted stock unit granted pursuant to Section 7.

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“SAR” means a stock appreciation right granted pursuant to Section 7.

“Section 409A” means Section 409A of the Code and the regulations and other guidance promulgated thereunder.

“Stock” means the common stock, par value $0.01 per share, of the Company,Corporation (the “Common Shares”), commencing on the first date on which such a dividend is paid by the Corporation to the holders of the Common Shares following the first issuance of a Series A Junior Participating Preferred Share or fraction thereof. Each such dividend payable on the Series A Junior Participating Preferred Shares shall be in an amount per share (rounded to the nearest cent) equal to, subject to adjustmentsthe provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, plus 100 times the aggregate per share amount (payable in kind) of all noncash dividends or other distributions, other than a dividend payable in Common Shares or a subdivision of the outstanding Common Shares (by reclassification or otherwise), declared by the Board and then payable on the Common Shares. In the event the Corporation shall at any time after December 11, 2007 (the “Rights Declaration Date”) (i) declare any dividend on Common Shares payable in Common Shares, (ii) subdivide the outstanding Common Shares or (iii) combine the outstanding Common Shares into a smaller number of shares, then in each such case the amount to which holders of Series A Junior Participating Preferred Shares were entitled immediately prior to such event pursuant to Section 3.the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of Common Shares outstanding immediately after such event and the denominator of which is the number of Common Shares that were outstanding immediately prior to such event.

“Subsidiary”(b) means any corporationThe Board shall declare a dividend or other entitydistribution on the Series A Junior Participating Preferred Shares as provided in paragraph (a) above immediately after it declares a dividend or distribution on the Common Shares (other than a dividend payable in Common Shares).


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(c)Dividends shall begin to accrue and be cumulative on outstanding Series A Junior Participating Preferred Shares from the Company)date of issue of such shares. Accrued but unpaid dividends shall not bear interest. Dividends paid on the Series A Junior Participating Preferred Shares in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board may fix a record date for the determination of holders of Series A Junior Participating Preferred Shares entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 70 days prior to the date fixed for the payment thereof.

3.Voting Rights. The holders of Series A Junior Participating Preferred Shares shall have the following voting rights:

(a)Subject to the provision for adjustment hereinafter set forth, each Series A Junior Participating Preferred Share shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the shareholders of the Corporation. In the event that the Board shall at any time after the Rights Declaration Date (i) declare any dividend on Common Shares payable in Common Shares, (ii) subdivide the outstanding Common Shares or (iii) combine the outstanding Common Shares into a smaller number of shares, then in each such case the number of votes per share to which holders of Series A Junior Participating Preferred Shares were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of Common Shares outstanding immediately after such event and the denominator of which is the number of Common Shares that were outstanding immediately prior to such event.

(b)Except as otherwise provided herein or by law, the holders of Series A Junior Participating Preferred Shares and the holders of Common Shares shall vote together as one class on all matters submitted to a vote of shareholders of the Corporation.

(c)(i) If at any time dividends on any Series A Junior Participating Preferred Shares shall be in arrears, the occurrence of such contingency shall mark the beginning of a period (a “Default Period”) which shall extend until such time when all accrued and unpaid dividends for all previous dividend periods and for the current dividend period on all Series A Junior Participating Preferred Shares then outstanding shall have been declared and paid or set apart for payment. During each Default Period, all holders of Preferred Shares (including holders of the Series A Junior Participating Preferred Shares) with dividends in arrears, voting as a class, irrespective of series, shall have the right to elect two (2) directors.

(ii)During any Default Period, such voting right of the holders of Series A Junior Participating Preferred Shares may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(c) or at an annual meeting of shareholders, and thereafter at annual meetings of shareholders, provided that neither such voting right nor the right of the holders of any other series of Preferred Shares, if any, to increase, in certain cases, the authorized number of directors shall be exercised unless the holders of ten percent (10%) in number of Preferred Shares outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Shares shall not affect the exercise by the holders of Preferred Shares of such voting right. At any meeting at which the Company hasholders of Preferred Shares shall exercise such voting right initially during an existing Default Period, they shall have the right, voting as a class, to elect directors to fill up to two (2) vacancies, if any, in the Board or, if such right is exercised at least a 50 percent interest, either directlyan annual meeting, to elect two (2) directors. The holders of Preferred Shares shall have the right to make such increase in the number of directors as shall be necessary to permit the election by them at any special meeting of two (2) directors. After the holders of Preferred Shares shall have exercised their right to elect directors in any Default Period and during the continuance of such period, the number of directors shall not be increased or indirectly.

“Ten Percent Owner” means an employee who owns or is deemed to own (by reasondecreased except by vote of the attribution rulesholders of Section 424(d)Preferred Shares as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series A Junior Participating Preferred Shares, if any.


(iii)Unless the holders of Preferred Shares shall, during an existing Default Period, have previously exercised their right to elect directors, the Board may order, or any shareholder or shareholders owning in the aggregate not less than ten percent (10%) of the Code) more than 10 percenttotal number of Preferred Shares outstanding, irrespective of series, may request, the calling of a special meeting of the combinedholders of Preferred Shares, which meeting shall thereupon be called by the Board, the Chairman or the Chief Executive Officer of the Corporation. The Secretary of the Corporation shall give notice of such meeting and of any annual meeting at which holders of Preferred Shares are entitled to vote pursuant to this paragraph (c)(iii) to each holder of record of Preferred Shares by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than fifteen (15) days and not later than sixty (60) days after such order or request. If such meeting is not called within sixty (60) days after such order or request, such meeting may be called on similar notice by any shareholder or shareholders owning in the aggregate not less than ten percent (10%) of the total number of Preferred Shares outstanding. Notwithstanding the provisions of this paragraph (c)(iii), no such special meeting shall be called during the period within sixty (60) days immediately preceding the date fixed for the next annual meeting of the shareholders.


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(iv)In any Default Period, the holders of Common Shares shall continue to be entitled to elect the whole number of directors of the Corporation until the holders of Preferred Shares shall have exercised their rights to elect two (2) directors voting poweras a class, after the exercise of all classeswhich right, (X) the directors so elected by the holders of Preferred Shares shall continue in office until their successors shall have been elected by such holders or until the expiration of the Default Period, and (Y) any vacancy in the Board shall (except as provided in paragraph (c)(ii) of this Section 3) be filled by vote of a majority of the remaining directors theretofore elected by the holders of the class of capital stock of the CompanyCorporation (i.e., the Common Shares or the Preferred Shares) which elected the directors whose office shall have become vacant. References in this paragraph (c) to directors elected by the holders of a particular class of the capital stock of the Corporation shall include directors elected by such directors to fill vacancies as provided in clause (Y) of the foregoing sentence.

(v)Immediately upon the expiration of a Default Period, (X) the right of the holders of Preferred Shares as a class to elect directors shall cease, (Y) the term of any parent corporation or Subsidiary.

SECTION 2.ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS

(a)Administrationdirectors elected by the holders of Plan.  The PlanPreferred Shares as a class shall terminate, and (Z) the number of directors shall be administered bysuch number as may be provided for in the Administrator.

(b)PowersArticles of Administrator.  SubjectOrganization, as may then be amended or restated and in effect, or the By-Laws of the Corporation, irrespective of any increase made pursuant to the penultimate sentenceprovisions of paragraph (c)(ii) of this subsection (b),Section 3 (such number being subject, however, to change thereafter in any manner provided by law, or in the Administrator shall have the power and authority to grant Awards consistent with the termsArticles of the Plan, including the power and authority:

(i)  to select the individuals to whom AwardsOrganization, as may be amended or restated from time to time, be granted;

(ii)  to determineor the time or times of grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock Awards, RSUs and SARs, or any combinationBy-Laws of the foregoing, granted to any one or more grantees;

(iii)  to determineCorporation). Any vacancies in the number of shares of Stock to be coveredBoard effected by any Award;

(iv)  to determine and modify from time to time the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and grantees, and to approve the form of written instruments evidencing the Awards;

(v)  subject to the terms of the Plan, to accelerate at any time the exercisability or vesting of all or any portion of any Award;

(vi) to waive the forfeiture of, or extend the date upon which a forfeiture would be effective with respect to, all or any portion of any Award;

(vii)  subject to the provisions of Section 5(c), to extend at any timeclauses (Y) and (Z) in the period in which Stock Optionspreceding sentence may be exercised; and

(viii)  at any time to adopt, alter or repeal such rules, guidelines and practices for administrationfilled by a majority of the Planremaining directors.


(d)Except as set forth herein, holders of Series A Junior Participating Preferred Shares shall have no special voting rights and for its own acts and proceedings as ittheir consent shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan.

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Notwithstanding any other provision contained in the Plannot be required (except to the contrary, the terms and conditionsextent they are entitled to vote with holders of each and every Award granted to the Company’s chairman, president, and chief executive officer, to all other executive officers of the Company or any Subsidiary, which shall include all officers who are subject to the provisions of Section 16 of the Exchange Act and any other additional officersCommon Shares as may be determined by the Board, and to any director of the Company, shall be approved by the Board.  All decisions and interpretations of the Administrator shall be binding on all persons, including the Company and Plan grantees.

(c)Delegation of Authority to Grant Awards.  Subject to applicable law, the Administrator, in its discretion, may delegate to the chief executive officer of the Company all or part of the Administrator’s authority and duties with respect to the granting of Awards to persons other than the chairman, the president, and the chief executive officer of the Company, any other executive officer of the Company or any Subsidiary (as determined pursuant to the penultimate sentence of Section 2(b) above), and any director of the Company.  Any such delegation by the Administrator shall include a limitation as to the amount or value of Awards that may be granted during the period of the delegation and shall contain guidelines as to the determination of any applicable exercise price and the vesting criteria.  The Administrator may revoke or amend the terms of a delegation at any time, but such action shall not invalidate any prior actions of the Administrator’s delegate or delegates that were consistent with the terms of the Plan.

(d)Award Agreement.  Awards under the Plan shall be evidenced by Award Agreements that set forth the terms, conditions and limitationsherein) for each Award, which may include, without limitation, the term of an Award, the provisions applicable in the event employment or service terminates, and the Company’s authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an Award.

(e)Indemnification.  Neither the Board nor the Administrator, nortaking any member of either or any delegate thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan, and the members of the Board and the Administrator (and any delegate thereof) shall be entitled in all cases to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under the Company’s articles of organization or bylaws, each as amended, or any directors’ and officers’ liability insurance coverage which may be in effect from time to time and/or any indemnification agreement between such individual and the Company.corporate action.


SECTION 3.4.STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTIONCertain Restrictions

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(a)Stock Issuable.  The maximum number of shares of Stock reserved and available for issuance underWhenever dividends or other distributions payable on the Plan, subject to adjustmentSeries A Junior Participating Preferred Shares as provided in Section 3(c),2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on Series A Junior Participating Preferred Shares outstanding shall be 400,000875,000 shares.  For purposes of this limitation,have been paid in full, the Corporation shall not:

i.declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of Stock underlyingcapital stock of the Corporation ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Shares;

ii.declare or pay dividends on or make any Awards thatother distributions on any shares of capital stock of the Corporation ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Preferred Shares except dividends paid ratably on the Series A Junior Participating Preferred Shares and all such parity shares of capital stock of the Corporation on which dividends are forfeited, canceled, held back upon exercisepayable or in arrears in proportion to the total amounts to which the holders of an Optionall such shares of capital stock are then entitled;

iii.redeem or settlement of an Award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of Stockpurchase or otherwise terminated (other than by exercise) shall be added backacquire for consideration shares of capital stock of the Corporation ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Preferred Shares provided that the Corporation may at any time redeem, purchase or otherwise acquire any such parity shares of capital stock in exchange for any shares of capital stock ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Junior Participating Preferred Shares;

iv.purchase or otherwise acquire for consideration any Series A Junior Participating Preferred Shares, or any shares of Stock available for issuance under the Plan.  The shares available for issuance under the Plan may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company.

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(b)Limitations on Size of Grants.  The total number of shares of Stock with respect to which Options and Restricted Stock Awards and any RSUs and/or SARs that may by their terms be settled in whole or in part in shares of Stock may be granted under the Plan to any single person, whether an employeecapital stock of the Company or otherwise, shall not exceed inCorporation ranking on a parity with the aggregate 120,000 (subject to adjustmentSeries A Junior Participating Preferred Shares, except pursuant to Section 3(c) below).

(c)Changes in Capital Stock.  If, as a result of any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in the Company’s capital stock, the outstanding shares of Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional shares or new or different shares or other securities of the Company are distributed with respect to such shares of Stock, the Administrator shall make an appropriate or proportionate adjustment in (i) the maximum number of shares reserved for issuance under the Plan, including the limitation set forth in Section 3(b) above), (ii) the number and kind of shares or other securities subject to any then outstanding Awards under the Plan, (iii) the repurchase price, if any, per share subject to each outstanding Restricted Stock Award, and (iv) the exercise price for each share subject to any then outstanding Stock Options under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number of shares subject to such outstanding Stock Options) as to which such Stock Options remain exercisable; provided, however, that no adjustment shall be made hereunder with respect to any Incentive Stock Option that would constitute a modification as defined under Section 424 of the Code.  Any adjustment by the Administrator hereunder shall be final, binding and conclusive.  No fractional shares of Stock shall be issued under the Plan resulting from any such adjustment, but the Administrator in its discretion may make a cash payment in lieu of fractional shares. No adjustment shall be made under the foregoing sentence in connection with any sale of shares of Stock at their full fair market value, paid in cash8 hereof or in property, asaccordance with a purchase offer made in writing or by publication (as determined by the Administrator. If the Administrator determines that events not specified above in this Section affect the Common Stock in a manner comparableBoard) to one or more of such events, the Administrator may, in its discretion, may make adjustments to any or all of the items specified in clauses (i)-(iv) above; provided, however, no adjustment shall be made if the increase or decrease in the number of issued shares of Stock does not amount to at least 5% of the numberholders of such shares outstanding at any time duringupon such terms as the calendar year under consideration.  No adjustment under this paragraph may be made if it wouldBoard, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in an Award being subject to Section 409Afair and equitable treatment among the respective series or ceasing to be an Incentive Stock Option.

(d)Change in Control or Liquidation.  Except as the Administrator may otherwise specify with respect to particular Awards in the relevant Award documentation, in the case of and subject to the consummation of a Change in Control or a liquidation of the Company, all Options that are not exercisable immediately prior to the effective time of the Change in Control or liquidation shall become fully exercisable as of such effective time and all Restricted Stock Awards, RSUs and SARs shall become fully vested and nonforfeitable as of such effective time.  Upon the effective time of a Change in Control or liquidation of the Company, the Plan and all outstanding Options granted hereunder shall terminate, unless, in the case of a Change in Control, provision is made in connection with the Change in Control in the sole discretion of the parties thereto for the assumption or continuation of all Options theretofore granted by the successor entity, or the substitution of such Options with new stock options of the successor entity or parent thereof, with appropriate adjustment as to the number and kind of shares and, if appropriate, the per share exercise prices, as such parties shall agree (after taking into account

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any acceleration hereunder).  In the event of such prospective termination of outstanding Options, the Company shall have the option in its sole discretion to either (i) make or provide for a cash payment to the holders of such Options, in exchange for the cancellation thereof, in an amount equal to the difference between (A) the value on a per share basis as determined by the Administrator of the consideration payable or otherwise to be received by the Company’s shareholders in such Change in Control or liquidation multiplied by the number of shares of Stock subject to such Options (to the extent then exercisable (after taking into account any acceleration hereunder) at prices not in excess of such value) and (B) the aggregate exercise price of all such Options or (ii) permit the holders of such Options, within a specified period of time prior to the consummation of the Change in Control or liquidation as determined by the Administrator, to exercise the Options.

(e)Substitute Awards.  The Administrator may grant Awards under the Plan in substitution for stock and stock based awards held by employees, directors or other key persons of another corporation in connection with the merger or consolidation of the employing corporation with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of property or stock of the employing corporation.  The Administrator may direct that the substitute Awards be granted on such terms and conditions as the Administrator considers appropriate in the circumstances. Any substitute Awards granted under the Plan shall not count against the share limitation set forth in Sections 3(a) and 3(b).  In any individual event, the number of incentive stock options granted will be limited so that it does not exceed the total number of shares available for grant at that time.

(f)Interpretation.  Except as expressly provided to the contrary in this Section 3, the issuance by the Companyclasses of shares of capital stock of the Corporation.


(b)The Corporation shall not permit any class for cash or property or for services, either upon direct sale or upon the exercise of rights or warrants, or upon conversion of shares or obligationssubsidiary of the Company convertible intoCorporation to purchase or otherwise acquire for consideration any shares of capital stock of the Corporation unless the Corporation could, under paragraph (a) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

5.Reacquired Shares. Any Series A Junior Participating Preferred Shares, purchased or other securities,otherwise acquired by the Corporation in any manner whatsoever shall not affectbe retired and cancelled promptly after the number, classacquisition thereof. All such shares shall upon their cancellation become authorized but unissued Preferred Shares and may be reissued as part of a new series of Preferred

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Shares to be created by resolution or priceresolutions of the Board, subject to the conditions and restrictions on issuance set forth herein.

6.Liquidation, Dissolution or Winding Up.

(a)Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of Stock then subject to outstanding Options or Restricted Stock Awards.

SECTION 4.ELIGIBILITY

Grantees under the Plan will be such full or part-time officers and other employees and Non-Employee Directorscapital stock of the Company and its Subsidiaries,Corporation ranking junior (either as well as other key persons (including consultants and prospective employees), as are selected from time to time by the Administrator in its sole discretion.

SECTION 5.STOCK OPTIONS

(a)Stock Option Grants.  Any Stock Option granted under the Plan shall be in such form as the Administrator may from time to time approve.  Stock Options granted under the Plan may be either Incentive Stock Optionsdividends or Non-Qualified Stock Options.  Incentive Stock Options may be granted only to employees of the Companyupon liquidation, dissolution or any Subsidiary that is a “subsidiary corporation” within the meaning of Section 424(f) of the Code.  To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option. Stock Options granted pursuant to this Section 5(a) shall be subjectwinding up) to the following termsSeries A Junior Participating Preferred Shares, unless, prior thereto, the holders of Series A Junior Participating Preferred Shares shall have received Five Thousand Two Hundred and conditions contained in this Section 5 and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable.

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(b)Exercise Price.  The exercise price00/100 Dollars ($5,200.00) per share, for the Stock covered by a Stock Option granted pursuantplus an amount equal to Section 5(a) shall be determined by the Administrator at the time of grant, but shallaccrued and unpaid dividends and distributions thereon, whether or not be less than 100 percent of the Fair Market Value ondeclared, to the date of grant.  Insuch payment (the “Liquidation Preference”). Following the casepayment of an Incentive Stock Option that is granted to a Ten Percent Owner, the option pricefull amount of such Incentive Stock Optionthe Liquidation Preference, no additional distributions shall be not less than 110 percentmade to the holders of Series A Junior Participating Preferred Shares, unless, prior thereto, the Fair Market Value onholders of Common Shares shall have received an amount per share (the “Common Adjustment”) equal to the grant date.

(c)Option Term.  The term of each Stock Option shall be fixedquotient obtained by dividing (i) the Administrator, but no Stock Option shall be exercisable more than ten years after the date the Stock Option is granted.  In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the term of such Stock Option shall be no more than five years from the date of grant.

(d)Exercisability; Rights of a Stockholder.  Stock Options shall become exercisable at such time or times, whether or not in installments,Liquidation Preference by (ii) 100 (as appropriately adjusted as shall be determined by the Administrator at the time of grant and set forth in the applicable Option Award Agreement.  The Administrator may not accelerate the exercisability of all or any portion of any Stock Option, except in the case of a Change in Control or liquidation of the Company or upon the death or Disability of the grantee.  A grantee of a Stock Option shall have the rights of a stockholder onlysubparagraph (c) below to reflect such events as to shares acquired upon the exercise of the Stock Optionstock splits, stock dividends and not as to any unexercised portion of the Stock Option.

(e)Method of Exercise.  Stock Options may be exercised in whole or in part by giving written notice of exercise to the Company or to such third-party service provider as may be designated by the Company for such purpose, specifying the number of shares to be purchased.  Payment of the purchase price may be made by one or more of the following methods to the extent provided in the Option Award Agreement:

(i)  In cash, by certified or bank check or other instrument acceptable to the Administrator;

(ii)  Through the delivery (or attestation to the ownership) of shares of Stock that have been purchased by the optionee on the open market or that are beneficially owned by the optionee and are not then subject to restrictions under any Company plan.  Such surrendered shares shall be valued at Fair Market Value on the exercise date.  To the extent required to avoid variable accounting treatment under FAS 123R or other applicable accounting rules, such surrendered shares shall have been owned by the optionee for at least six months; or

(iii)  By the optionee delivering to the Company or its third-party designee a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure.

Payment instruments will be received subject to collection.  The transfer to the optionee on the records of the Company or of the Company’s transfer agent of the shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the

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optionee (or a purchaser acting in his or her stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such shares and the fulfillment of any other requirements contained in the Option Award Agreement or applicable provisions of laws (including the satisfaction of any withholding taxes that the Company is obligated to withholdrecapitalization with respect to the optionee)Common Shares) (such number in clause (ii) immediately above being referred to as the “Adjustment Number”). Subject to the rights of any other series of Preferred Shares then outstanding, if any, following the payment of the full amount of the Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A Junior Participating Preferred Shares and Common Shares, respectively, holders of Series A Junior Participating Preferred Shares and holders of shares of Common Shares shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to one (1) with respect to such Series A Junior Participating Preferred Shares and Common Shares, on a per share basis, respectively.


(b)In the event, an optionee chooseshowever, that there are not sufficient assets available to paypermit payment in full of the purchase priceLiquidation Preference and the liquidation preferences of all other series of Preferred Shares, if any, which rank on a parity with the Series A Junior Participating Preferred Shares, then such remaining assets shall be distributed ratably to the holders of such parity Preferred Shares (including the Series A Junior Participating Preferred Shares) in proportion to their respective liquidation preferences. In the event, however, that there are not sufficient assets available to permit payment in full of the Common Adjustment after satisfaction of the liquidation preferences of all series of Preferred Shares, if any, then such remaining assets shall be distributed ratably to the holders of Common Shares.

(c)In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Shares payable in Common Shares, (ii) subdivide the outstanding Common Shares or (iii) combine the outstanding Common Shares into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by previously-owned sharesmultiplying such Adjustment Number by a fraction the numerator of Stock throughwhich is the attestation method,number of Common Shares outstanding immediately after such event and the denominator of which is the number of shares of Stock transferred to the optionee upon the exercise of the Stock Option shall be net of the number of attested shares.  In the eventCommon Shares that the Company establishes, for itself or using the services of a third party, an automated system for the exercise of Stock Options, such as a system using an internet website or interactive voice response, then the paperless exercise of Stock Options may be permitted through the use of such an automated system.

(f)Annual Limit on Incentive Stock Options.  To the extent required for “incentive stock option” treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the shares of Stock with respect to which Incentive Stock Options granted under this Plan and any other plan of the Company or of its parent corporation or any Subsidiary become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000.  To the extent that any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock Option.

SECTION 6.RESTRICTED STOCK AWARDS

(a)Nature of Restricted Stock Awards.  The Administrator shall determine the restrictions and conditions applicable to each Restricted Stock Award at the time of grant.  Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives.  The grant of a Restricted Stock Award is contingent on the grantee executing a Restricted Stock Award Agreement.  The terms and conditions of each such Restricted Stock Award Agreement shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees.

(b)Rights as a Stockholder.  Upon execution of a Restricted Stock Award Agreement and payment of any applicable purchase price, a grantee shall have the rights of a stockholder with respect to the voting of the Restricted Stock, subjectwere outstanding immediately prior to such conditions contained inevent.


7.Consolidation, Merger, etc. In case the Restricted Stock Award Agreement.  Unless the AdministratorCorporation shall otherwise determine, (i) uncertificated Restricted Stock shall be accompanied by a notation on the records of the Company or the Company’s transfer agent to the effect that they are subject to forfeiture until such Restricted Stock are vested as provided in Section 6(d) below, and (ii) certificated Restricted Stock shall remain in the possession of the Company until such Restricted Stock is vested as provided in Section 6(d) below, and the grantee shall be required, as a condition of the grant, to deliver to the Company such instruments of transfer as the Administrator may prescribe.

(c)Restrictions.  Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided herein or in the applicable Restricted Stock Award Agreement.  Except in the case of a Change in Control or liquidation of the Company or upon the death or Disability of the grantee, if a grantee’s employment (or other service relationship) with the Company and its Subsidiaries terminates forenter into any reason, any Restricted Stock that has not vested at the time of termination shall automatically and without any requirement of notice to such grantee from,consolidation, merger, combination or other action by or on behalf of, the Company be deemed to have been reacquired by the Company at its original purchase price (if any) from

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such grantee or such grantee’s legal representative simultaneously with such termination of employment (or other service relationship), and thereafter shall cease to represent any ownership of the Company by the grantee or rights of the grantee as a stockholder.  Following such deemed reacquisition of shares of unvested Restricted Stock that are represented by physical certificates, a grantee shall surrender such certificates to the Company upon request without consideration.

(d)Vesting of Restricted Stock.  The Administrator at the time of grant shall specify and includetransaction in the applicable Restricted Stock Award Agreement the date or dates and/or the attainment of pre-established performance goals, objectives and other conditions on which the non-transferability of the Restricted Stock and the Company’s right of repurchaseCommon Shares are exchanged for or forfeiture shall lapse.  Subsequent to such datechanged into other stock or dates and/or the attainment of such pre-established performance goals, objectives and other conditions, the shares on which all restrictions have lapsed shall no longer be Restricted Stock and shall be deemed “vested”.  Except to the extent otherwise provided in the Plan in the case of a Change in Control or liquidation of the Company or upon the death or Disability of the grantee, if a grantee terminates employment (or other service relationship) before the date, or attainment of the performance goals, objectives or other conditions, specified in the Award Agreement, such grantee’s rights in any shares of Restricted Stock that have not vested shall automatically terminate upon the grantee’s termination of employment (or other service relationship) with the Company and its Subsidiaries and such shares shall be subject to the provisions of Section 6(c) above.

SECTION 7.RESTRICTED STOCK UNITS AND STOCK APPRECIATION RIGHTS

The Administrator may grant RSUs and SARs in respect of such number of shares of Stock subject to the Plan as it shall determine in its sole discretion.  The terms and conditions of any such RSUs or SARs shall be contained in an RSU Agreement or SAR Agreement as the case may be.

SECTION 8.TRANSFERABILITY OF AWARDS

(a)Transferability.  Except as provided in Section 8(b) below, during a grantee’s lifetime, his or her Awards shall be exercisable only by the grantee, or by the grantee’s legal representative or guardian in the event of the grantee’s incapacity.  No Awards shall be sold, assigned, transferred or otherwise encumbered or disposed of by a grantee other than by will or by the laws of descent and distribution.  No Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind, and any purported transfer in violation hereof shall be null and void.

(b)Administrator Action.  Notwithstanding Section 8(a), the Administrator, in its discretion, may provide either in the Award Agreement regarding a given Award or by subsequent written approval that the grantee may transfer his or her Awards (other than any Incentive Stock Options) to his or her immediate family members, to trusts for the benefit of such family members, or to partnerships or limited liability companies in which such family members are the only partners or members, provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of the Plan and the applicable Award.

(c)Family Member.  For purposes of Section 8(b), “family member” shall mean a grantee’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,

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sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the grantee’s household (other than a tenant or employee of the grantee), a trust in which these persons (or the grantee) have more than 50 percent of the beneficial interest, a foundation in which these persons (or the grantee) control the management of assets, and any other entity in which these persons (or the grantee) own more than 50 percent of the voting interests.

(d)Designation of Beneficiary.  Each grantee to whom an Award has been made under the Plan may designate a beneficiary or beneficiaries to exercise any Award or receive any payment under any Award payable on or after the grantee’s death.  Any such designation shall be on a form provided for that purpose by the Administrator and shall not be effective until received by the Administrator.  If no beneficiary has been designated by a deceased grantee, or if the designated beneficiaries have predeceased the grantee, the beneficiary shall be the grantee’s estate.

SECTION 9.TAX WITHHOLDING

(a)Payment by Grantee.  Each grantee shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includable in the gross income of the grantee for federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any federal, state, or local taxes of any kind required by law to be withheld by the Company with respect to such income.  The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the grantee.  The Company’s obligation to deliver evidence of book entry (or stock certificates) to any grantee is subject to and conditioned on tax withholding obligations being satisfied by the grantee.

(b)Payment in Stock.  Subject to approval by the Administrator, a grantee may elect to have the Company’s minimum required tax withholding obligation (and not more than such amount) satisfied, in whole or in part, by authorizing the Company to withhold from shares of Stock to be issued pursuant to any Award a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due.

SECTION 10.SECTION409A AWARDS

To the extent that any Award is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A (a “409A Award”), the Award shall be subject to such additional rules and requirements as specified by the Administrator from time to time in order to comply with Section 409A.  In this regard, if any amount under a 409A Award is payable upon a “separation from service” (within the meaning of Section 409A) to a grantee who is then considered a “specified employee” (within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the grantee’s separation from service, or (ii) the grantee’s death, but only to the extent such delay is necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A.  Further, the settlement of any such Award may not be accelerated except to the extent permitted by Section 409A.

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SECTION 11.TRANSFER, LEAVE OF ABSENCE, ETC.

For purposes of the Plan, the following events shall not be deemed a termination of employment:  (i) a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or (ii) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee’s right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Administrator otherwise so provides in writing.

SECTION 12.              ��      AMENDMENTS AND TERMINATION

The Board may, at any time, amend or discontinue the Plan and the Administrator may, at any time, amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Award without the holder’s consent.  To the extent required under the rules of any securities, exchange or market system on which the Stock is listed, to the extent determined by the Administrator to be required by the Code to ensure that Incentive Stock Options granted under the Plan are qualified under Section 422 of the Code or to ensure that compensation earned under Awards qualifies as performance-based compensation under Section 162(m) of the Code, or to the extent determined by the Administrator to be required to ensure the availability to the Plan of the protections of Section 16(b) of the Exchange Act or for any other reason under applicable law, Plan amendments shall be subject to the approval of the Company’s stockholders entitled to vote at a meeting of stockholders.  Nothing in this Section 12 shall limit the Administrator’s authority to take any action permitted pursuant to Section 3(c) or 3(d).

SECTION 13.STATUS OF PLAN

With respect to the portion of any Award that has not been exercised and any payments in cash Stock or other consideration not received by a grantee, a grantee shall have no rights greater than those of a general creditor of the Company unless the Administrator shall otherwise expressly determine in connection with any Award or Awards.  In its sole discretion, the Administrator may authorize the creation of trusts or other arrangements to meet the Company’s obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the foregoing sentence.

SECTION 14.GENERAL PROVISIONS

(a)No Distribution.  The Administrator may require each person acquiring Stock pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof.

(b)Delivery of Stock Certificates.  Stock certificates to grantees under this Plan shall be deemed delivered for all purposes when the Company or a transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company.  Uncertificated Stock shall be deemed delivered for all purposes when the Company or a transfer agent of the Company shall have given to the grantee by electronic mail (with proof of receipt) or by United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company, notice of issuance and recorded the issuance in its records (which may include electronic “book entry” records).  Notwithstanding anything herein to the contrary, the Company shall not be required to issue or

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deliver any certificates evidencing shares of Stock pursuant to the exercise of any Award, unless and until the Administrator has determined, with advice of counsel (to the extent the Administrator deems such advice necessary or advisable), that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the shares of Stock are listed, quoted or traded.  All stock certificates delivered pursuant to the Plan shall be subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state or foreign jurisdiction, securities or other laws, and the rules, regulations and requirements of any stock exchange on which the Stock is listed or traded.  The Administrator may place legends on any stock certificate to reference restrictions applicable to the Stock.  In addition to the terms and conditions provided herein, the Administrator may require that an individual make such reasonable covenants, agreements, and representations as the Administrator, in its discretion, deems necessary or advisable in order to comply with any such laws, rules, regulations or requirements.  The Administrator shall have the right to require any individual to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Administrator.

(c)Stockholder Rights.  Until Stock is deemed delivered in accordance with Section 14(b), no right to vote or receive dividends or any other rightsproperty, then in any such case the Series A Junior Participating Preferred Shares shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of a stockholder will exist with respect to shares, of Stock to be issued in connection with an Award, notwithstanding the exercise of a Stock Optionsecurities, cash or any other action by the grantee with respect to an Award.

(d)Other Compensation Arrangements; No Employment Rights.  Nothing containedproperty (payable in this Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only in specific cases.  The adoption of this Plan and the grant of Awards do not confer upon any employee or other person any right to continued employment or other service relationship with the Company or any Subsidiary.

(e)Insider Trading Policy Restrictions.  Option exercises and other Awards under the Plan shall be subject to the Company’s insider trading policy and procedures, as in effect from time to time.

(f)Forfeiture of Awards under Sarbanes-Oxley Act.  If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the federal securities laws, then any grantee of an Award who is included among the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 shall reimburse the Company for the amount of any Award received by such individual under the Plan during the 12-month period following the first public issuance or filing with the Securities and Exchange Commission,kind), as the case may be, into which or for which each Common Share is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Shares payable in Common Shares, (ii) subdivide the outstanding Common Shares or (iii) combine the outstanding Common Shares into a smaller number of Shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of Series A Junior Participating Preferred Shares shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of Common Shares outstanding immediately after such event and the denominator of which is the number of Common Shares that were outstanding immediately prior to such event.


8.Redemption. The Series A Junior Participating Preferred Shares shall not be redeemable.

9.Ranking. The Series A Junior Participating Preferred Shares shall rank junior to all other series of the financial document embodying such financial reporting requirement.

(g)Forfeiture of Awards for Dishonesty.  Notwithstanding anythingCorporation's Preferred Shares as to the contrary inpayment of dividends and the Plan or in any Award Agreement, if the Administrator determines, after full considerationdistribution of the facts presented on behalf of both the Company and a grantee of an Award, that the grantee has been engaged in fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his or her employment by or performance of services for the Company or a Subsidiary that has damaged the Company or a Subsidiary in any way, or has disclosed trade

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secrets or other proprietary information of the Company or a Subsidiary or has otherwise violatedassets, unless the terms of hisany such series shall provide otherwise.


10.Amendment. At such time as Series A Junior Participating Preferred Shares are outstanding, the Articles of Organization of the Corporation shall not be amended, nor shall any Articles of Amendment thereto, including without limitation any amendment establishing a series or her employment by, or any other agreement or understandingclass of stock pursuant to Section 6.02 of Chapter 156D of the Massachusetts General Laws, be filed with the Company or any Subsidiary, (i) the grantee shall forfeit all unexercised Options and/or unvested Restricted Stock, RSUs and SARs and all exercised Options and vested Restricted Stock, RSUs and SARs to the extent that the Company has not yet delivered or otherwise released the shares or other payments in question, (ii) the Company shall have the right to repurchase all or any partSecretary of the shares of Stock acquired by the grantee upon the earlier exercise of any Option or vesting of Restricted Stock or vesting of any RSU or SAR, at a price equal to the amount, if any, paid to the Company by the grantee upon the exercise of such Option, receipt of such Restricted Stock or vesting of such RSU or SAR,,  and (iii) the Company shall have the right to recoup the full amount of all cash payments previously paid to the grantee under any vested RSU or SAR and to recoup the full amount of any profit realized by the grantee upon the sale of any Restricted Stock that has previously vested or any shares of Stock acquired upon the grantee’s earlier exercise of any Option or vesting of any RSU or SAR, which recoupment shall be reduced by an amount equal to the price, if any, paid to the Company by the grantee upon the earlier issuance of such Restricted Stock, exercise of such Option or vesting of such RSU or SAR.  The decision of the Administrator as to the cause of a grantee’s discharge and the damage done to the Company or a Subsidiary shall be final, binding and conclusive.  No decision of the Administrator, however, shall affect in any manner the finality of the discharge of a grantee by the Company or a Subsidiary.

SECTION 15.EFFECTIVE DATE OF PLAN

The Plan shall become effective on the date on which it is adopted by the Board (the “Effective Date”), but no Award granted under the Plan shall become exercisable unless and until the Plan shall have been approved by the Company’s shareholders.  If such shareholder approval is not obtained within twelve months after the Effective Date, the Awards previously granted under the Plan shall not vest and shall terminate and no Awards shall be granted under the Plan thereafter.  Amendments to the Plan not requiring shareholder approval shall become effective when adopted by the Board; amendments requiring shareholder approval (as provided in Section 12) shall become effective when adopted by the Board, but no Award granted after the date of such amendment shall become exercisable (to the extent that such amendment to the Plan was required to enable the Company to grant such Award to a particular person) unless and until such amendment shall have been approved by the Company’s shareholders.  If such shareholder approval is not obtained within twelve months of the Board’s adoption of such amendment, any Awards granted on or after the date of such amendment shall terminate to the extent that such amendment was required to enable the Company to grant such Award to a particular grantee.  Subject to this limitation, Awards may be granted under the Plan at any time during the period from and including the Effective Date through and including the day next preceding the tenth anniversary of the Effective Date.

SECTION 16.GOVERNING LAW

The Plan and all Awards and actions taken thereunder shall be governed by, and construed in accordance with, the lawsState of the Commonwealth of Massachusetts applied without regard to conflict of law principles.

13or otherwise amended, in any manner which would materially


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Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. X 01F8IB 5 2 C V + Annual Meeting Proxy Card . Date (mm/dd/yyyy) — Please print date below. + IMPORTANT ANNUAL MEETING INFORMATION A Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2 and 3. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. For Against Abstain For Against Abstain 2. To amend the Company’s 2009 Stock Incentive Plan. 3. To ratify the Audit Committee’s appointment of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2012. 01 - Gino J. Baroni 04 - Lucy A. Flynn 02 - John P. Clancy, Jr. 05 - John P. Harrington 03 - James F. Conway, III 1. Election of Directors: For Withhold For Withhold For Withhold Meeting Attendance Mark box to the right if you plan to attend the Annual Meeting. Change of Address — Please print new address below. Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below C B Non-Voting Items MMMMMMMMMMMM MMMMMMMMMMMMMMM 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000004 MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 ENDORSEMENT_LINE______________ SACKPACK_____________ 1234 5678 9012 345 MMMMMMM 1 3 4 2 4 3 1 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MMMMMMMMM C 1234567890 J N T C123456789 qIF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q Electronic Voting Instructions You can vote by Internet or telephone! Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Eastern Time, on May 1, 2012. Vote by Internet • Log on to the Internet and go to www.envisionreports.com/ebtc • Follow the steps outlined on the secured website. Vote by telephone • Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada any time on a touch tone telephone. There is NO CHARGE to you for the call. • Follow the instructions provided by the recorded message.


alter or change the powers, preferences or special rights of the Series A Junior Participating Preferred Shares so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding Series A Junior Participating Preferred Shares voting separately as a class.

11.Fractional Shares. Series A Junior Participating Preferred Shares may be issued in fractions of a share which shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and have the benefit of all other rights of a holder of Series A Junior Participating Preferred Shares.









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. This proxy is solicited on behalf of the Board of Directors of Enterprise Bancorp, Inc. Each of the proposals contained in this proxy has been proposed by our Board of Directors. The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2 and 3. This proxy, when properly executed on the reverse side, will be voted in the manner directed herein by the undersigned. If no direction is given, this proxy, if otherwise properly executed, will be voted FOR all the nominees listed and FOR Proposals 2 and 3. The undersigned, a stockholder of Enterprise Bancorp, Inc. (the “Company”), revoking all prior proxies, hereby appoint(s) Michael A. Spinelli and Arnold S. Lerner, and each of them with full power of substitution, the attorneys, agents and proxies of the undersigned to represent and vote all shares of stock of the Company which the undersigned would be entitled to vote if personally present at the annual meeting of stockholders of the Company and any adjournments or postponements thereof, to be held at the Vesper Country Club, 185 Pawtucket Boulevard, Tyngsborough, Massachusetts, on Tuesday, May 1, 2012, at 4:00 P.M. as specified herein as to each of the proposals. Please mark, date and sign exactly as your name appears on the reverse side and return in the enclosed envelope. Proxy — Enterprise Bancorp, Inc. qIF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q