Exhibit 10.3


 


ENTERPRISE
BANCORP, INC.


 


Nonqualified Stock
Option Agreement


 


 


This Agreement is entered
into as of this Xth day of XXXXX, 20XX by and between Enterprise Bancorp, Inc.,
a Massachusetts corporation (the “Company”), and                                                             
(the “Optionee”).


 


WITNESSETH THAT:


 


WHEREAS, the Company has
instituted a program entitled “Enterprise Bancorp, Inc. 2009 Stock
Incentive Plan” (the “Plan”); and


 


WHEREAS, the Compensation
Committee of the Board of Directors, or the full Board of Directors, as the
case may be, of the Company has authorized the grant of stock options upon the
terms and conditions set forth below; and


 


WHEREAS, the Compensation
Committee or the full Board of Directors, as the case may be, has authorized
the grant of this stock option pursuant and subject to the terms of the Plan, a
copy of which is attached hereto and incorporated herein; and


 


WHEREAS, the Compensation
Committee or the full Board of Directors, as the case may be, has designated
this stock option a nonqualified stock option in accordance with Section 5
of the Plan;


 


NOW, THEREFORE, in
consideration of the premises and the mutual covenants and agreements herein
contained, the Company and the Optionee agree as follows.


 


1.                                       Grant.  Subject to the terms of the Plan and this
Agreement, the Company hereby grants to the Optionee a stock option (the “Option”)
to purchase from the Company XXX shares of its common stock, $0.01 par value
per share (“Stock”). This Option is not intended to be an incentive stock
option or to qualify for special federal income tax treatment under Section 422
of the Code.


 


2.                                       Exercise
Price.  This Option may be exercised
at the exercise price of $XX.XX per share of Stock, subject to adjustment as
provided herein and in the Plan.


 


3.                                       Term
and Exercisability of Option.  This
Option shall expire on the earlier of XXXX XX, 20XX or the last day of the
exercise period determined pursuant to subsection (c) of this Section 3.
At any time before its expiration, this Option may be exercised to the extent
set forth in the schedule attached to this Agreement as Exhibit 1, which
is incorporated herein and made a part hereof by this reference, provided that:


 


(a)                                 at
the time of exercise the Optionee is not in violation of any employee
confidentiality, noncompetition or other agreement with the Company or a
Subsidiary;


 

















 


(b)                                the
Optionee must maintain the employment, contractual or other service
relationship with the Company or a Subsidiary that was in effect at the time of
the initial grant of this Option (the “Relationship”) without change on the
relevant date set forth in Exhibit 1 in order for any scheduled increment
in the exercisable portion of the Option to become effective;


 


(c)                                 this
Option may not be exercised if three months or more have elapsed following the
date of termination, or any change in the nature, of the Relationship between
the Optionee and the Company or a Subsidiary; provided, however, that if the
Relationship terminates as a result of the Optionee’s retirement at age 62 or
older, “thirty-six months” shall be substituted for “three months” in this
sentence; and provided, further, that if the Relationship terminates by reason
of the Optionee’s permanent and total disability (as determined by the Compensation
Committee or the full Board of Directors, as the case may be, on the basis of
medical advice satisfactory to it) or death, the Option must be exercised
within twelve months of the Optionee’s death or disability; and


 


(d)                                For
purposes of subsections (b) and (c) of this Section 3, the
nature of the Relationship between the Optionee and the Company shall not be
deemed to have changed if the fundamental nature of the Relationship, meaning
the Optionee serving as an employee or as a non-employee director or as a
third-party consultant, advisor or other vendor, as the case may be, does not
change, regardless of any changes in the Optionee’s title, compensation or
other terms of employment or service, as the case may be, which do not change
the fundamental nature of the Relationship. 
A fundamental change in the nature of the Relationship would include,
for example, a change from the Optionee serving as an employee of the Company
to serving as a third-party consultant to the Company or a change from the
Optionee serving as an employee director of the Company to serving as a
non-employee director of the Company.


 


4.                                       Method
of Exercise.  Prior to its expiration
and to the extent that the right to purchase shares of Stock has vested
hereunder, this Option may be exercised from time to time by written notice to
the Company, substantially in the form attached hereto as Exhibit 2,
stating the number of shares with respect to which this Option is being
exercised and accompanied by either (a) payment in full of the exercise
price for the number of shares to be delivered, by means of payment acceptable
to the Company in accordance with Section 5(c) of the Plan, or (b) a
description of a “cashless exercise” procedure and such other documents and
undertakings as are necessary to satisfy that procedure. As soon as practicable
after its receipt of such notice, the Company shall, without transfer or issue
tax to the Optionee (or other person entitled to exercise this Option), deliver,
or cause to be delivered, to the Optionee (or other person entitled to exercise
this Option), at the principal executive offices of the Company or such other
place as shall be mutually acceptable, a stock certificate or certificates for
such shares out of theretofore authorized but unissued shares or reacquired
shares of its Stock as the Company may elect; provided, however, that the time
of such delivery may be postponed by the Company for such period as may be
required for it with reasonable diligence to comply with any applicable
requirements of law.  If and to the
extent that the Company also provides to its shareholders generally a means to
hold title to shares on a noncertificated basis, then any shares to be issued
to the Optionee upon the exercise of this Option may be issued on such a noncertificated
basis if 


 


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mutually agreed upon by
the Company and the Optionee and otherwise permissible under applicable law and
the rules of any applicable stock exchange. Payment of the exercise price
may be made in cash or cash equivalents or, in accordance with the terms and
conditions of Section 5(c) of the Plan, in whole or in part in shares
of Common Stock of the Company; provided, however, that the Compensation
Committee or the full Board of Directors, as the case may be, reserves the
right upon receipt of any written notice of exercise from the Optionee to
require payment in cash with respect to the shares contemplated in such notice;
and provided, further, that the Optionee may not make payment in shares of
Stock that he acquired upon the earlier exercise of any incentive stock option,
unless he has held the shares until at least two years after the date the
incentive stock option was granted and at least one year after the date the
incentive stock option was exercised. If the Optionee (or other person entitled
to exercise this Option) fails to pay for and accept delivery of all of the
shares specified in such notice upon tender of delivery thereof, his right to
exercise this Option with respect to such shares not paid for may be terminated
by the Company.


 


Notwithstanding any of
the foregoing to the contrary, if the Company has established, for itself or
using the services of a third party, an automated system for the exercise of
stock options that may be granted under the Plan, such as a system using an
internet website or interactive voice response system, then the Optionee shall
be permitted to exercise this Option on a paperless basis through the use of
such an automated system.


 


5.                                       Withholding
Taxes.  The Optionee hereby agrees,
as a condition to any exercise of this Option, to provide to the Company an
amount sufficient to satisfy the Company’s obligation to withhold certain
federal, state and local taxes arising by reason of such exercise (the “Withholding
Amount”), if any, by (a) authorizing the Company and/or a Subsidiary to
withhold the Withholding Amount from his cash compensation or (b) remitting
the Withholding Amount to the Company in cash; provided, however, that to the
extent that the Withholding Amount is not provided by one or a combination of
such methods, the Company may at its election withhold from the Stock that
would otherwise be delivered upon exercise of this Option that number of shares
having a Fair Market Value, on the date of exercise, sufficient to eliminate
any deficiency in the Withholding Amount.


 


6.                                       Nonassignability
of Option.  This Option shall not be
assignable or transferable by the Optionee except by will or by the laws of
descent and distribution.  During the
life of the Optionee, this Option shall be exercisable only by him, by a
conservator or guardian duly appointed for him by reason of his incapacity or
by the person appointed by the Optionee in a durable power of attorney
acceptable to the Company’s counsel.


 


7.                                       Compliance
with Securities Act; Lock-Up Agreement. 
The Company shall not be obligated to sell or issue any shares of Stock
or other securities pursuant to the exercise of this Option unless the shares
of Stock or other securities with respect to which this Option is being
exercised are at that time effectively registered or exempt from registration
under the Securities Act and applicable state securities laws. In the event
shares or other securities shall be issued that shall not be so registered, the
Optionee hereby represents, warrants and agrees that he will receive such
shares or other securities for investment and not with a view to their resale
or distribution, and will execute an appropriate investment letter satisfactory
to the Company and its counsel. The Optionee further hereby agrees that as a
condition to the purchase of shares upon 


 


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exercise of this Option,
he will execute an agreement in a form acceptable to the Company to the effect
that the shares shall be subject to any underwriter’s lock-up agreement in
connection with a public offering of any securities of the Company that may
from time to time apply to shares held by officers and employees of the
Company, and such agreement or a successor agreement must be in full force and
effect.


 


8.                                       Legends.  The Optionee hereby acknowledges that the
stock certificate or certificates evidencing shares of Stock or other
securities issued pursuant to any exercise of this Option may bear a legend
setting forth the restrictions on their transferability described in Section 7
hereof, if such restrictions are then in effect. If any such shares or other
securities are issued on a noncertificated basis in accordance with Section 4
hereof, then the Company shall adopt alternative measures to ensure that any such
restrictions are properly observed.


 


9.                                       Rights
as Stockholder.  The Optionee shall
have no rights as a stockholder with respect to any shares covered by this
Option until the date of issuance of a stock certificate to him for such shares
or such shares are otherwise issued on a noncertificated basis in accordance
with Section 4 hereof. No adjustment shall be made for dividends or other
rights for which the record date is prior to the date on which any such shares
are so issued.


 


10.                                 Termination
or Amendment of Plan.  The Board may
terminate or amend the Plan at any time. No such termination or amendment will
affect rights and obligations under this Option to the extent it is then in
effect and unexercised.


 


11.                                 Effect
Upon Employment and Performance of Services.  Nothing in this Option or the Plan shall be
construed to impose any obligation upon the Company or any Subsidiary to employ
the Optionee or to retain the Optionee in its employ or to engage or retain the
services of the Optionee.


 


12.                                 [Intentionally Omitted]


 


13.                                 [Intentionally Omitted]


 


14.                                 General
Provisions.


 


(a)                                  Amendment;
Waivers.  This Agreement, including
the Plan, contains the full and complete understanding and agreement of the
parties hereto as to the subject matter hereof and, except as otherwise
permitted by the express terms of the Plan and this Agreement, it may not be
modified or amended nor may any provision hereof be waived, except by a further
written  agreement duly signed by each of the
parties; provided, however, that a modification or amendment that does not
materially diminish the rights of the Optionee hereunder, as they may exist
immediately before the effective date of the modification or amendment, shall
be effective upon written notice of its provisions to the Optionee. The waiver
by either of the parties hereto of any provision hereof in any instance shall
not operate as a waiver of any other provision hereof or in any other instance.


 


(b)                                Binding
Effect.  This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
heirs, executors, administrators, representatives, successors and assigns.


 


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(c)                                 Governing
Law.  This Agreement has been executed
in Massachusetts and shall be governed by and construed in accordance with the
laws of The Commonwealth of Massachusetts.


 


(d)                                Construction.  This Agreement is to be construed in
accordance with the terms of the Plan. In case of any conflict between the Plan
and this Agreement, the Plan shall control. The titles of the sections of this
Agreement and of the Plan are included for convenience only and shall not be
construed as modifying or affecting their provisions. The masculine gender
shall include both sexes; the singular shall include the plural and the plural
the singular unless the context otherwise requires. Capitalized terms not
defined herein shall have the meanings given to them in the Plan.


 


(e)                                 Notices.  Any notice in connection with this Agreement
shall be deemed to have been properly delivered if it is in writing and is
delivered by hand or facsimile or sent by registered mail, postage prepaid, to
the party addressed as follows, unless another address has been substituted by
notice so given:


 


	
  To the Optionee:

  	
   

  	
  To his address as set
  forth on the signature page hereof.

  
	
   

  	
   

  	
   

  
	
  To the Company:

  	
   

  	
  Enterprise
  Bancorp, Inc.

  
	
   

  	
   

  	
  222 Merrimack Street

  
	
   

  	
   

  	
  Lowell, Massachusetts
  01852

  
	
   

  	
   

  	
  Attn: Mr. James A.
  Marcotte

  



 


IN WITNESS WHEREOF, the
Company has caused this Agreement to be executed as a sealed instrument by its
officer thereunto duly authorized as of the date set forth below.


 


	
  Date of grant: XXXX XX,
  20XX

  	
   

  
	
   

  	
   

  
	
   

  	
  ENTERPRISE BANCORP,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


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ACCEPTANCE


 


I hereby accept, as of
the date of grant, the foregoing Option, a nonqualified stock option, in
accordance with its terms and conditions and in accordance with the terms and
conditions of the Enterprise Bancorp, Inc. 2009 Stock Incentive Plan.


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Signature of Optionee)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Notice Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 

















 


Exhibit 1 to


Nonqualified Stock


Option Agreement


 


	
  Employee name
  (“Optionee”):

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date of grant:

  	
   

  	
  XXXX XX, 20XX

  
	
   

  	
   

  	
   

  
	
  Number of shares
  granted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exercise price:

  	
   

  	
  $XX.XX per share
  (subject to adjustment as provided in this Agreement and in the Plan)

  
	
   

  	
   

  	
   

  
	
  Vesting schedule:

  	
   

  	
   

  



 


	
   

  	
   

  	
  Incremental Amount

  	
   

  	
  Cumulative Amount

  	
   

  
	
   

  	
   

  	
  % of shares

  	
   

  	
  # of shares

  	
   

  	
  % of shares

  	
   

  	
  # of shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  On or after XXXX
  XX, 20XX

  	
   

  	
  25

  	
  %

  	
   

  	
   

  	
  25

  	
  %

  	
   

  	
   

  
	
  On or after XXXX
  XX, 20XX

  	
   

  	
  25

  	
  %

  	
   

  	
   

  	
  50

  	
  %

  	
   

  	
   

  
	
  On or after XXXX
  XX, 20XX

  	
   

  	
  25

  	
  %

  	
   

  	
   

  	
  75

  	
  %

  	
   

  	
   

  
	
  On or after XXXX
  XX, 20XX

  	
   

  	
  25

  	
  %

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  



 


Notwithstanding
the foregoing vesting schedule, this Option shall become fully exercisable upon
the Optionee’s reaching age 62 while continuing to be employed by the Company
or a Subsidiary as of such date.


 


 


	
   

  	
   

  
	
   

  	
  [Name and Title of Authorized
  Officer]

  



 

















 


Exhibit 2 to


Nonqualified Stock


Option Agreement


 


[FORM FOR
EXERCISE OF NONQUALIFIED STOCK OPTION]


[SAMPLE ONLY]


 


Enterprise Bancorp, Inc.


222 Merrimack Street


Lowell, Massachusetts
01852


 


RE:                              Exercise
of Nonqualified Stock Option under Enterprise Bancorp, Inc. 2009 Stock
Incentive Plan


 


Gentlemen:


 


I hereby elect to
exercise the stock option granted to me on March     ,
2009 by and to the extent of purchasing                           
shares of the Common Stock of Enterprise Bancorp, Inc. for the exercise
price of $                            
per share, subject to the terms and conditions of the Nonqualified Stock Option
Agreement between myself and Enterprise Bancorp, Inc. dated as of                     ,
200     (the “Agreement”).


 


Enclosed please find
payment, in cash or in such other property as is permitted under the Enterprise
Bancorp, Inc. 2009 Stock Incentive Plan (the “Plan”), of the purchase
price for the shares.


 


I hereby confirm that I
have investigated and considered the possible income tax consequences of my
exercising the option, of any sale or other disposition by me of any shares
acquired upon the exercise of the option and, if I am making payment of any
part of the purchase price by delivery of shares of stock of Enterprise Bancorp, Inc.,
of my making such payment in that form.


 


I hereby agree to provide
to Enterprise Bancorp, Inc. an amount sufficient to satisfy its obligation
to withhold certain taxes, in accordance with the Agreement.


 


I further agree to any
securities lock-up agreement between one or more underwriters and shareholders
of the Company who are officers or employees of the Company or a Subsidiary,
and any successor to that agreement, with regard to the shares acquired upon
this exercise of my stock option.


 


I hereby specifically
confirm to Enterprise Bancorp, Inc. that I am acquiring the shares for
investment and not with a view to their sale or distribution, and that the
shares shall be held subject to all of the terms and conditions of the Plan and
the Agreement.


 


	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  (Signed by
                          
  or other party duly

  
	
   

  	
   

  	
  exercising option)