Cambridge Bancorp (NasdaqCM:CATC) (Cambridge) entered into a definitive agreement to acquire Wellesley Bancorp, Inc. (NasdaqCM:WEBK) (Wellesley) from a group of shareholders for approximately $120 million on December 5, 2019. Under the terms of the agreement, each share of Wellesley common stock will be exchanged for 0.580 shares of Cambridge common stock. The transaction is presently valued at $45.54 per Wellesley common share, or approximately $122 million in the aggregate. Effective as of the effective time, each Wellesley option, whether vested or unvested, that is outstanding as of immediately prior to the effective time, shall be cancelled and automatically converted into the right to receive a cash payment from Wellesley equal to the number of shares of Wellesley stock subject to such Wellesley option at the effective time, multiplied by the amount by which the per share consideration exceeds the per share exercise price of such Wellesley option. Each share of restricted stock outstanding immediately prior thereto pursuant to the Wellesley equity plans shall automatically lapse, and each share of Wellesley restricted stock shall be treated as an issued and outstanding share of Wellesley stock for the purposes of this agreement. It is expected that the former shareholders of Wellesley as a group will receive shares in the merger constituting approximately 23% of the outstanding shares of Cambridge common stock immediately after the merger.

Concurrently with entering into the agreement, Cambridge and Wellesley entered into voting agreements with each of the Directors and certain of the Executive officers of Wellesley and Cambridge, respectively, pursuant to which such shareholders agreed to vote their shares of Wellesley or Cambridge, respectively, in favor of the merger. As part of the acquisition, Wellesley Bancorp will merge with and into Cambridge Bancorp and immediately thereafter, Wellesley Bank, a subsidiary of Wellesley Bancorp will merge with and into Cambridge Trust, a subsidiary of Cambridge Bancorp, with Cambridge Trust as the surviving bank. The name of the surviving company shall be Cambridge Bancorp. The name of the surviving bank shall be Cambridge Trust Company. Either Cambridge or Wellesley may terminate the merger agreement under certain circumstances, including if the merger has not been consummated by September 30, 2020. If the merger is not consummated under specified circumstances, Wellesley may be required to pay Cambridge a termination fee of approximately $4.1 million.

Thomas Fontaine, Chairman, President and Chief Executive Officer of Wellesley, will join the combined company in the role of Chief Banking Officer and Director. Upon closing, three Wellesley Directors will join the Board of Directors of Cambridge, including Thomas Fontaine. At the effective time, the Directors of each of the surviving company and the surviving bank immediately prior the effective time shall continue to be the Directors of the surviving company and the surviving bank, provided that at the effective time, or at Cambridge's option, immediately following the 2020 annual meeting of shareholders of Cambridge, the number of persons constituting the Board of Directors of the surviving company and the surviving bank shall each be increased by three Directors to be selected by Cambridge upon consultation with Wellesley (the new members), and the new members shall be appointed to the Board of Directors of both the surviving company and the surviving bank for terms to expire at Cambridge's and the surviving bank's next annual meeting. At the effective time, the officers of the surviving company and the surviving bank shall consist of the officers of the surviving company and the surviving bank in office immediately prior to the effective time.

The transaction is subject to regulatory approval, approval by Cambridge and Wellesley shareholders, merger registration statement shall have been declared effective by the SEC, shares of Cambridge stock issuable pursuant to this agreement shall have been approved for listing on NASDAQ, Cambridge shall have received a letter setting forth the written opinion of Hogan Lovells US LLP, in and form and substance reasonably satisfactory to Cambridge, dated as of the closing date, and Wellesley shall have received a letter setting forth the written opinion of Kilpatrick Townsend & Stockton LLP, the Wellesley and Cambridge voting agreements shall have been executed and delivered by each Director and certain Executive officers and other customary closing conditions. The merger agreement restricts Wellesley's ability to solicit or engage in discussions or negotiations with a third party regarding a proposal to acquire a significant interest in Wellesley. The transaction has been approved by the Board of Director of Cambridge. Wellesley Board of Directors unanimously approved the transaction. The Board of Directors of Cambridge and Wellesley recommends that all Cambridge and Wellesley shareholders vote for the merger proposal. The shareholders of Wellesley and Cambridge Bancorp have approved the transaction on March 12, 2020, and March 16, 2020, respectively. As of May 15, 2020, Cambridge Bancorp announced that all regulatory approvals relating to the proposed merger have been received. The transaction is expected to be completed during the second quarter of 2020. As of May 15, 2020, transaction is expected to close on June 1, 2020.

On a pro forma basis the transaction is expected to be approximately 4.4% accretive to Cambridge's 2021 earnings per share and approximately 1.6% dilutive to tangible book value per share with an expected earn back period of approximately 2.2 years. Keefe, Bruyette & Woods, Inc. acted as financial advisor and provided a fairness opinion to Cambridge Bancorp and Richard A. Schaberg and Les B. Reese, III of Hogan Lovells US LLP acted as its legal counsels. Sandler O'Neill + Partners, L.P. acted as financial advisor and provided a fairness opinion to Wellesley and Gary R. Bronstein and Edward G. Olifer of Kilpatrick Townsend & Stockton LLP acted as its legal counsel. The Proxy Advisory Group, LLC acted as proxy solicitor to Cambridge and will be paid a fee which is not to exceed $10,000. Cambridge has agreed to pay Keefe, Bruyette & Woods a cash fee currently estimated to be approximately $1 million, $0.2 million of which became payable with the rendering of Keefe, Bruyette & Woods' opinion and the balance of which is contingent upon the consummation of the merger. Sandler O'Neill will receive an amount equal to 1.25% of the aggregate purchase price as fee. At the time of announcement of the merger, Sandler O'Neill's fee was approximately $1.5 million. Sandler O'Neill also received a $0.15 million fee from Wellesley upon rendering its opinion. Morrow Sodali LLC acted as proxy solicitor for Wellesley. Wellesley has agreed to pay $7,500, plus expenses, for the services.