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EXHIBIT 10.1
HPSC, INC.
2002 SUPPLEMENTAL STOCK INCENTIVE PLAN
MAY 14, 2002
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TABLE OF CONTENTS
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1. Purpose; Restrictions.......................................................................................1
2. Effective Date..............................................................................................1
3. Stock Covered by the Plan...................................................................................1
4. Administration..............................................................................................1
5. Eligible Recipients; Automatic Grants to Non-Employee Directors.............................................2
(a) Key Employees, Consultants and Other Individual Contributors............................................2
(b) Non-Employee Directors..................................................................................2
(i) Price................................................................................................3
(ii) Exercise.............................................................................................3
(iii) Expiration...........................................................................................3
(iv) Other Terms..........................................................................................3
6. Duration of the Plan........................................................................................3
7. Terms and Conditions of Options.............................................................................3
(a) Price...................................................................................................3
(b) Number of Shares........................................................................................3
(d) Exercise of Options.....................................................................................3
(e) Payment.................................................................................................4
(f) Withholding Taxes; Delivery of Shares...................................................................4
(g) Transferability.........................................................................................5
(h) Termination of Options..................................................................................5
(i) Rights as Stockholder...................................................................................6
(j) Forfeiture..............................................................................................6
(l) Confidentiality Agreements..............................................................................6
(m) Aggregate Limitation....................................................................................6
(n) Right to Terminate......................................................................................6
(o) Deferral................................................................................................6
8. Certain Restrictions on Exercise............................................................................8
9. Suspension of Rights Prior to a Dissolution, Reorganization, Etc............................................8
10. Adjustment in Shares........................................................................................8
11. Investment Representations; Transfer Restrictions...........................................................9
12. Definitions.................................................................................................9
(a) "Board".................................................................................................9
(b) "Change in Control".....................................................................................9
(c) "Code"..................................................................................................9
(d) "Committee".............................................................................................9
(e) "Common Stock"..........................................................................................9
(f) "Company" and "Company Group"...........................................................................9
(g) "Deferred Compensation Account".........................................................................9
(h) "Director Option".......................................................................................9
(i) "Disability"............................................................................................9
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(j) "Effective Date"........................................................................................9
(k) "Employee"..............................................................................................9
(l) "Event"................................................................................................10
(m) "Exchange Act".........................................................................................10
(n) "Incentive Option".....................................................................................10
(o) "Market Price".........................................................................................10
(p) "1995 Plan"............................................................................................10
(q) "Non-Employee Director"................................................................................10
(r) "Nonqualified Option"..................................................................................10
(s) "Option"...............................................................................................10
(t) "Participant"..........................................................................................10
(u) "Performance Conditions"...............................................................................10
(v) "Performance Period"...................................................................................10
(w) "Phantom Stock"........................................................................................10
(x) "Plan".................................................................................................10
(z) "Service"..............................................................................................11
(aa) "Service Requirement"..................................................................................11
(bb) "Shares"...............................................................................................11
(cc) "Subsidiary"...........................................................................................11
13. Termination or Amendment of Plan.........................................................................11
14. Change in Control........................................................................................11
</Table>
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HPSC, INC.
2002 SUPPLEMENTAL STOCK INCENTIVE PLAN
1. PURPOSE; RESTRICTIONS. The purpose of this HPSC, Inc. 2002
Supplemental Stock Incentive Plan (the "Plan") is to advance the interests of
HPSC, Inc., a Delaware corporation (the "Company"), and of its shareholders by
strengthening the ability of the Company to attract, retain and motivate key
employees, directors, consultants and other individual contributors of or to the
Company or any present or future Subsidiary(1) of the Company (the Company and
all such Subsidiaries shall be collectively referred to as the "Company Group")
by providing such employees, directors, consultants and other individual
contributors with an opportunity to purchase or receive as bonuses stock of the
Company, thereby permitting such persons to share in the Company's success while
aligning their interests with those of the Company's shareholders. It is
intended that this purpose will be effected by granting non-statutory stock
options ("Non-Qualified Options" or "Options") which are not intended to meet
the requirements of Section 422 of the Code and which are intended to be taxed
upon exercise under Section 83 of the Code.
2. EFFECTIVE DATE. This Plan was adopted by the Board of Directors on
May 14, 2002 which is also the Effective Date of the Plan. The Compensation
Committee shall determine the effective date of each option granted under this
Plan, and any such effective date may be any date prior to the termination of
the Plan, including any date prior to the Effective Date.
3. STOCK COVERED BY THE PLAN. Subject to adjustment as provided in
Sections 9 and 10 below, the shares that may be made subject to Options under
this Plan ("Shares") shall not exceed in the aggregate 200,000 shares of the
common stock, $.01 par value, of the Company ("Common Stock"). Notwithstanding
the foregoing, additional shares of Common Stock may be issued and sold pursuant
to Nonqualified Options in amounts up to the number of shares of Common Stock
(i) underlying any restricted stock award or option granted under the 1998 Plan
which shall terminate or expire without being fully exercised, but only to the
extent such shares remained available for purchase or award at the time of such
termination or expiration, or (ii) withheld or reacquired by the Company
pursuant to withholding, payment, forfeiture or repurchase rights under the 1998
Plan. Any Shares subject to an Option which for any reason expires or is
terminated unexercised as to such Shares and any Shares withheld or reacquired
by the Company pursuant to withholding, payment, forfeiture or a repurchase
right hereunder may again be the subject of an Option under the Plan. The Shares
purchased or issued under the Plan may, in whole or in part, be either
authorized but unissued Shares or issued Shares reacquired by the Company.
4. ADMINISTRATION. This Plan shall be administered by the Compensation
Committee of the Board (the "Committee"); provided that each of the members of
the Committee shall be a person who in the opinion of counsel to the Company is
(i) a "Non-
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(1) Capitalized terms not otherwise defined herein are defined in Section 12
below.
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Employee Director" as such term is used in Rule 16b-3 promulgated under the
Exchange Act and (ii) an "outside director" as such term is used in regulation
Section 1.162.27(e)(3) under Section 162(m) of the Code. The Committee shall
have authority, subject to the express provisions of the Plan, to construe the
Plan and the respective Options and related agreements, to prescribe, amend and
rescind rules and regulations relating to the Plan, to determine, within the
limits of the Plan, the amounts, times, forms, terms, conditions and status (as
Incentive or Nonqualified Options) of the respective Options and related
agreements, and to make all other determinations in the judgment of the
Committee necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Option or related agreement in the manner
and to the extent it shall deem expedient to carry the Plan into effect, and it
shall be the sole and final judge of such expediency.
The Committee shall have authority to establish guidelines for the
grant of Options to key employees of the Company Group who are not executive
officers of the Company and to authorize the Company's chief executive officer
to recommend the award of Options, within such guidelines, to such eligible
non-executive key employees; PROVIDED, HOWEVER, that such recommendation must be
submitted to the Committee for final approval.
No member of the Committee and no delegate of the Committee shall be
liable for any action or determination under the Plan taken or made in good
faith.
5. ELIGIBLE RECIPIENTS; AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS.
(a) KEY EMPLOYEES, CONSULTANTS AND OTHER INDIVIDUAL CONTRIBUTORS.
Subject to the restrictions of this Plan, Options may be granted to such key
employees, consultants or other individual contributors of or to the Company
Group, including, without limitation, directors of the Company (whether or not
any such director is also an Employee), as are selected by the Committee or
(except as to employees who are Company executive officers) by the Company's
Chief Executive Officer pursuant to Section 4 above (a "Participant").
(b) NON-EMPLOYEE DIRECTORS. Subject to the restrictions of this Plan,
Nonqualified Options will be granted annually pursuant to this Section 5(b) to
each director of the Company who is a director on the date of grant and who is
not an Employee ("Non-Employee Directors"). Each Non-Employee Director who is
such at the conclusion of any regular annual meeting of the Company's
stockholders while this Plan is in effect and who will continue to serve on the
Board thereafter (a "Director Participant" or, unless the context otherwise
requires, a "Participant") shall receive on such date a Nonqualified Option to
purchase 1,000 Shares (a "Director Option"). Further, each Non-Employee Director
who was not such at the conclusion of the last regular annual meeting of the
Company's stockholders will, on the date that such Non-Employee Director is
elected a director of the Company, automatically be granted a Director Option to
purchase the same number of Shares covered by the last Director Option granted
by the Board. All Director Options granted pursuant to this Section are subject
to adjustment as provided in Section 10 below. Each Director Option shall be
subject to the following terms and conditions:
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(i) PRICE. The purchase price per Share payable upon the
exercise of a Director Option shall be one hundred percent (100%) of the Market
Price per Share on the date of grant of the Director Option.
(ii) EXERCISE. Each Director Option shall be exercisable for
the full amount or for any part thereof immediately on the date of grant. Any
unexercised portion of a Director Option may be subsequently exercised for the
full amount or for any part thereof at any time and from time to time (until
exhausted) prior to the expiration or other termination of the Option.
(iii) EXPIRATION. Each Director Option shall terminate and may
no longer be exercised upon the earliest of (1) ten years after the date of
grant, and (2) immediately upon termination of the Participant's Service for
cause. The Board's good faith determination of whether the termination of a
Director Participant's Service was for cause shall be binding for purposes of
the Plan.
(iv) OTHER TERMS. Each Director Option shall be subject to all
other terms of the Plan (including without limitation the terms of Sections 7,
9, 10 and 11) except to the extent that such terms are inconsistent with the
express provisions of this Section 5(b).
6. DURATION OF THE PLAN. This Plan shall terminate ten years from the
Effective Date hereof, unless terminated earlier pursuant to Section 13 below,
and no Options may be granted or made thereafter.
7. TERMS AND CONDITIONS OF OPTIONS. Options granted or made under this
Plan shall be evidenced by grant forms or agreements in such form and containing
such terms and conditions as the Committee or (except as to grants and awards to
employees who are Company executive officers) the Committee's delegate shall
determine; provided, however, that such grant forms and agreements shall
evidence among their terms and conditions the following:
(a) PRICE. The purchase price per Share payable upon the
exercise of each Option (other than a Director Option) granted or made hereunder
shall be determined by the Committee at the time the Option is granted or made
subject to the following restrictions. The purchase price per Share payable upon
the exercise of each Nonqualified Option granted hereunder shall be not less
than eighty-five percent (85%) of the Market Price per Share on the date of the
grant. No Share shall be issued for less than its par value, if any, paid in
cash, property or services.
(b) NUMBER OF SHARES. Each grant or award form or agreement
shall specify the number of Shares to which it pertains.
(c) OMITTED.
(d) EXERCISE OF OPTIONS. Each Option (other than a Director
Option) shall be exercisable for the full amount or for any part thereof at such
time or at such intervals and in such installments as the Committee (or its
delegate, if applicable) may determine at the time it grants
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such Option; provided, however, that no Option shall be exercisable with respect
to any Shares later than ten years after the date of the grant of such Option.
Notwithstanding the foregoing, if the Committee so provides at the time of an
Option grant, an outstanding Option shall become immediately exercisable for the
full amount or any part thereof upon the occurrence of a Change in Control of
the Company. In the case of Options that by their terms do not become
immediately exercisable upon a Change in Control, the Committee is authorized,
in its discretion, to provide for the accelerated vesting of such options upon a
Change in Control.
An Option shall be exercisable only by delivery of a written
notice to the Company's Treasurer, or any other officer of the Company
designated by the Committee to accept such notices on its behalf, specifying the
number of Shares for which the Option is exercised and accompanied by either (i)
payment or (ii) if permitted by the Committee, irrevocable instructions to a
broker to promptly deliver to the Company full payment in accordance with
Section 7(e)(ii) below of the amount necessary to pay the aggregate exercise
price.
(e) PAYMENT. Payment shall be made in full (i) at the time the
Option is exercised, or (ii) promptly after the Participant forwards the
irrevocable instructions referred to in Section 7(d)(ii) above to the
appropriate broker, if exercise of an Option is made pursuant to Section
7(d)(ii) above. Payment shall be made either (I) in cash, (II) by check, (III)
if permitted by the Committee, by delivery or deemed delivery and assignment to
the Company of shares of Company stock which (1) have a fair market value (as
determined by the Committee) equal to the exercise or purchase price and (2)
except to the extent otherwise permitted by the Committee in any instance, have
been owned by the Participant (or other person(s) exercising the Participant's
rights under this Plan) for at least six months prior to the date of delivery or
deemed delivery of such shares, (IV) by a combination of one or more of the
foregoing methods. For purposes of this Section, a deemed delivery of shares
shall mean the offset by the Company of a number of shares subject to the Option
against an equal number of shares of the Company's stock owned by the
Participant.
Notwithstanding any other provision of this Plan, if an Option would
have a before-tax net value of at least $10,000 to the holder upon exercise,
then the holder of the Option shall be deemed to have exercised the Option in
full (to the extent not previously exercised) on the last day that such Option
is exercisable. Such deemed exercise shall be subject to payment in full of the
exercise price (and all applicable withholding taxes) by any of the methods
permitted pursuant to this Section 7(e) and Section 7(f), but subject to the
discretion of the Committee to require payment in cash if it determines that
payment by other methods is not in the best interests of the Company.
(f) WITHHOLDING TAXES; DELIVERY OF SHARES. The Company's
obligation to deliver Shares upon exercise of an Option shall be subject to the
Participant's satisfaction of all applicable federal, state and local income and
employment tax withholding obligations. Without limiting the generality of the
foregoing, the Company shall have the right to deduct from payments of any kind
otherwise due to the Participant any federal, state or local taxes of any kind
required by law to be withheld with respect to any Shares issued upon exercise
of Options.
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Furthermore, to the extent possible, all federal, state and local tax
withholding required by law shall be satisfied by withholding of vested and
unrestricted Shares or by delivery to the Company of already owned unrestricted
Shares, having a value equal to the amount required to be withheld, as
determined by the Committee. To the extent satisfaction of all required tax
withholding is not possible in the manner specified in the preceding sentence
and to the extent that additional tax withholding is elected by the Participant,
payment of withholding taxes may be made by any of the methods permitted in
Section 7(e) for payment of the exercise or purchase price of an Option, subject
to the discretion of the Committee to require payment in cash if it determines
that payment by other methods is not in the best interests of the Company.
(g) TRANSFERABILITY. No Option shall be transferable by the
Participant otherwise than by will or the laws of descent or distribution, and
each Option shall be exercisable during the Participant's lifetime only by the
Participant. Notwithstanding the foregoing, the Board or the Committee, as the
case may be, may grant Nonqualified Options under this Plan that are
transferable (subject to any terms and conditions imposed by the Committee) by
the Participant, either directly or in trust, to one or more members of the
Participant's family or to a trust, a family partnership or other entity for the
exclusive benefit of one or more members of the Participant's family. Following
any transfer permitted pursuant to this paragraph, of which the Participant has
notified the Committee in writing, such Option may be exercised or shall be held
by the transferee(s), subject to all terms and conditions of the Option. For
these purposes, the members of the Participant's family are only the
Participant's: (i) spouse and the lineal descendants of such spouse; (ii) lineal
descendants and the spouses of such lineal descendants; (iii) lineal ancestors
and the spouses of such lineal ancestors; and (iv) siblings and the spouses and
the children of such siblings.
(h) TERMINATION OF OPTIONS. Except to the extent the Committee
provides specifically in a grant form or Option agreement for a lesser or
greater period each Option (other than a Director Option) shall terminate and
may no longer be exercised if the Participant ceases for any reason to render
continuous Service, in accordance with the following provisions:
(i) if the Participant ceases to render Service for
any reason other than death, Disability or termination for cause, the
Participant may, at any time within a period of three months after the date of
such cessation of Service, exercise the Option to the extent that the Option was
exercisable on the date of such cessation;
(ii) if the Participant ceases to render Service
because of termination for cause, the Option shall terminate immediately and may
no longer be exercised on and after the date of such termination for cause;
(iii) if the Participant ceases to render Service
because of Disability, the Participant may, at any time within a period of six
months after the date of such cessation of Service, exercise the Option to the
extent that the Option was exercisable on the date of such cessation; and
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(iv) if the Participant ceases to render Service
because of death, the Option, to the extent that the Participant was entitled to
exercise it on the date of death, may be exercised within a period of six months
after the Participant's death by the person or persons to whom the Participant's
rights under the Option pass by will or by the laws of descent or distribution;
provided, however, that no Option may be exercised to any extent by anyone after
the date of its expiration; and provided, further, that Options may be exercised
at any time only as to Shares which at such time are available for acquisition
pursuant to the terms of the applicable grant form or agreement.
(i) RIGHTS AS STOCKHOLDER. A Participant shall have no rights
as a stockholder with respect to any Shares covered by an Option until the date
of issuance of a stock certificate in the Participant's name for such Shares.
(j) FORFEITURE. Any Options, any Shares acquired upon exercise
of an Option and any gain realized upon exercise of any Options (other than, in
each case, a Director Option) may in the discretion of the Committee be subject
to forfeiture to the Company if and to the extent and at the repurchase price,
if any, specifically set forth in the applicable Option grant form or agreement.
Certificates representing Shares subject to such repurchase or forfeiture may be
subject to such escrow and stock legending provisions as may be set forth in the
Option grant form or agreement pursuant to which the Shares were acquired.
(k) OMITTED.
(l) CONFIDENTIALITY AGREEMENTS. Each Participant shall
execute, prior to or contemporaneously with the grant of any Option hereunder,
the Company's then standard form of agreement, if any, relating to nondisclosure
of confidential information, assignment of inventions and related matters.
(m) AGGREGATE LIMITATION. The maximum number of Shares with
respect to which any Options may be granted under the Plan to any individual
during each successive twelve-month period commencing on the Effective Date of
the Plan shall not exceed 200,000 shares.
(n) RIGHT TO TERMINATE. Nothing contained in the Plan or in
any Option granted hereunder shall restrict the right of any member of the
Company Group to terminate the employment of any Participant or other Service by
the Participant at any time and for any reason, with or without notice. Nothing
contained in the Plan or in any Option granted hereunder shall give any
Non-Employee Director the right to continue in Service as a director.
(o) DEFERRAL
(i) Notwithstanding anything herein to the contrary,
a Participant, may elect, at the discretion of, and in accordance with rules
(consistent with the terms of this Plan) which may be established by, the
Committee, to defer delivery of the Shares otherwise receivable upon exercise of
a Nonqualified Option using any of the payment methods permitted by Section
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7(e) (I) or (II) of this Plan (provided that any such election must apply to all
Shares otherwise receivable upon such exercise of the Option) or Section
7(e)(III) of this Plan, provided such election is irrevocable and is made at
least (i) six months prior to the date that such Option otherwise would expire
and (ii) two months prior to the exercise of such Option. Phantom shares of
Common Stock (the "Phantom Shares") equal in number to the Shares so deferred
shall be credited to an account in the name of the Participant on the books and
records of the Company (a "Deferred Compensation Account") at the date of
exercise. A separate Deferred Compensation Account shall be maintained with
respect to each Option subject to an effective deferral election.
(ii) The Phantom Shares shall be entitled to
dividends when, as and if paid generally with respect to shares of Common Stock.
At its election, the Company may (i) pay such dividends to the Participant in
cash when such dividends are paid to the holders of Common Stock or (ii) credit
the Deferred Compensation Account with additional Phantom Shares equal to the
aggregate pre-tax amount of the dividends otherwise payable upon the number of
Phantom Shares then held in the Deferred Compensation Account, based on the
Market Value of the Common Stock on the date of payment of such dividends with
any resulting fractional Phantom Shares rounded up to the next whole Phantom
Share.
(iii) The value of a Participant's Deferred
Compensation Account shall be payable in shares of Common Stock in one single
payment or in annual installments over a period not to exceed 10 years or as
otherwise determined by the Committee. At the time Participant makes such
deferral election, the Participant shall elect the form of payment and date for
lump sum payment or commencement of annual payments of the Deferred Compensation
Account, with such date at least one year subsequent to the date of exercise of
the Option, but not later than the date of the Participant's termination of
Service. Notwithstanding any election by an optionee, in the event of Disability
or death of the optionee, the Participant's Deferred Compensation Account shall
be paid within 90 days in the form of shares of Common Stock in a single lump
sum.
(iv) Notwithstanding the deferred payment date
elected by the Participant, the Committee may, in its discretion, allow for
early payment of a Participant's Deferred Compensation Account in the event of
an "unforeseeable emergency." For this purpose, an unforeseeable emergency shall
be defined as an unanticipated emergency that is caused by an event beyond the
control of the Participant and that would result in severe financial hardship to
the Participant if early withdrawal were not permitted. Any withdrawal on
account of an unforeseeable emergency must be limited to the amount necessary to
meet the emergency. The above provisions regarding a withdrawal upon an
unforeseeable emergency shall be interpreted in accordance with published
revenue procedures, regulations, releases or interpretations. In addition,
solely for the convenience or other benefit of the Company, Deferred
Compensation Accounts may be distributed on an accelerated basis in the
discretion of the Committee.
(v) Participants have the status of general unsecured
creditors of the Company with respect to their Deferred Compensation Accounts,
and such accounts constitute a mere promise by the Company to make payments with
respect thereto.
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(vi) A Participant's right to benefit payments under
this Plan with respect to the Deferred Compensation Accounts may not be
anticipated, alienated, sold, transferred, assigned, pledged, encumbered by the
Participant on the Participant's beneficiary, or attached or garnished by
creditors of the Participant or the Participant's beneficiary and any attempt to
do so shall be void.
8. CERTAIN RESTRICTIONS ON EXERCISE.
(a) In any twelve-month period, the total number of shares
that can be exercised pursuant to options granted hereunder shall not exceed
five percent (5%) of the then-outstanding shares of the Company's common stock,
less the sum of all shares then issuable under the 1998 Plan and any other
non-shareholder approved plans. In any five-year period, the total number of
shares that can be exercised pursuant to options granted hereunder shall not
exceed ten percent (10%) of the then-outstanding shares of the Company's common
stock, less the sum of all shares then issuable under the 1998 Plan and any
other non-shareholder approved plans.
(b) In addition to any other limitations on the exercisability
of Options granted hereunder, as provided under Section 7(d) above, the total
number of shares for which each Option may be exercised in any 12-month period
shall not exceed 80% of the total shares underlying such Option. Notwithstanding
the foregoing, if the Board or the Committee determines, in its sole discretion,
that total exercises under the Plan are sufficiently below the limitations set
forth in clause 8(a) above, it may permit exercises above the 80% limit on a
ratable basis.
9. SUSPENSION OF RIGHTS PRIOR TO A DISSOLUTION, REORGANIZATION, ETC.
Prior to any dissolution, liquidation, merger, consolidation or reorganization
of the Company as to which the Company will not be the surviving corporation, or
the sale or exchange of substantially all of the Common Stock or the sale of
substantially all of the assets of the Company (the "Event"), unless such Event
would constitute a Change in Control of the Company, the Board or the Committee
may decide to terminate each outstanding Option. If the Board or the Committee
so decides, each Option (including Director Options) shall terminate as of the
effective date of the Event, but the Board or the Committee shall suspend the
exercise of all outstanding Options a reasonable time prior to the Event, giving
each person affected thereby not less than fourteen days written notice of the
date of suspension, prior to which date such person may purchase in whole or in
part the Shares otherwise available to him or her as of the date of purchase. If
the Event is not consummated, the suspension shall be removed and all Options
shall continue in full force and effect, subject to their terms.
10. ADJUSTMENT IN SHARES. Appropriate adjustment shall be made by the
Committee in the maximum number of Shares subject to the Plan and in the number,
kind, and exercise or purchase price of Shares covered by outstanding Options
granted hereunder and in the number and kind of Shares in each Director Option
subsequently granted pursuant to Section 5(b) to give effect to any stock
dividends, stock splits, stock combinations, recapitalizations and other similar
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changes in the capital structure of the Company after the Effective Date of the
Plan. In the event of a change of the Common Stock resulting from a merger or
similar reorganization as to which the Company is the surviving corporation, the
number and kind of Shares which thereafter may be purchased pursuant to an
Option under the Plan and the number and kind of Shares then subject to Options
granted hereunder and the price per Share thereof shall be appropriately
adjusted in such manner as the Committee may deem equitable to prevent dilution
or enlargement of the rights available or granted hereunder.
11. INVESTMENT REPRESENTATIONS; TRANSFER RESTRICTIONS. The Company may
require Participants, as a condition of purchasing Shares pursuant to the
exercise of an Option to give written assurances in substance and form
satisfactory to the Company to the effect that such person is acquiring the
Shares for the Participant's own account for investment and not with any present
intention of selling or otherwise distributing the same, and to such other
effects as the Company deems necessary or appropriate (including without
limitation confirmation that the Participant is aware of any applicable
restrictions on transfer of the Shares, as specified in the by-laws of the
Company or otherwise) in order to comply with federal and applicable state
securities laws.
12. DEFINITIONS.
(a) "BOARD" means the Board of Directors of the Company.
(b) "CHANGE IN CONTROL" has the meaning defined in Section 14
below.
(c) "CODE" means the Internal Revenue Code of 1986, as
heretofore and hereafter amended, and the regulations promulgated thereunder.
(d) "COMMITTEE" has the meaning defined in Section 4 above.
(e) "COMMON STOCK" has the meaning defined in Section 3 above.
(f) "COMPANY" AND "COMPANY GROUP" have the meanings defined in
Section 1 above.
(g) "DEFERRED COMPENSATION ACCOUNT" has the meaning defined in
Section 7(o) above.
(h) "DIRECTOR OPTION" has the meaning defined in Section 5(b)
above.
(i) "DISABILITY" has the meaning defined in Section 22(e)(3)
of the Code.
(j) "EFFECTIVE DATE" has the meaning defined in Section 2
above.
(k) "EMPLOYEE" means any individual (including an officer of
the Company) who is a common law employee of any member of the Company Group.
Any individual who
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was an Employee at the start of a leave of absence shall continue to be an
Employee for purposes of this Plan to the extent provided in regulations under
applicable provisions of the Code or to the extent required by the Uniformed
Services Employment and Reemployment Rights Act or other applicable law.
(l) "EVENT" has the meaning defined in Section 9 above.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as heretofore and hereafter amended.
(n) "INCENTIVE OPTION" has the meaning defined in Section 1
above.
(o) "MARKET PRICE" means the closing price of the Common Stock
as published in the WALL STREET JOURNAL on the relevant date (or if such date is
not a trading date or if no trades took place on such date, then the closing
price for the last previous trading date or the last previous date on which such
a trade occurred, as the case may be); provided that if the closing price of the
Common Stock is no longer reported in the WALL STREET JOURNAL then the Market
Price as of the relevant date shall be as determined by the Board.
(p) "1995 PLAN" means the HPSC, Inc. 1995 Stock Incentive
Plan, as adopted March 8, 1995, and amended and restated March 14, 1996.
(q) "1998 PLAN" means the HPSC, Inc. 1998 Stock Incentive
Plan, as adopted February 23, 1998, and amended and restated on April 26, 1999.
(r) "2000 PLAN" means the HPSC, Inc. 2000 Stock Incentive Plan
as adopted December 13, 1999.
(s) "NON-EMPLOYEE DIRECTOR" has the meaning defined in Section
5(b) above.
(t) "NONQUALIFIED OPTION" has the meaning defined in Section 1
above.
(u) "OPTION" has the meaning defined in Section 1 above.
(v) "PARTICIPANT" has the meaning defined in Section 5 above.
(w) "PERFORMANCE CONDITIONS" "PARTIAL PERFORMANCE CONDITION"
AND "FULL PERFORMANCE CONDITION" have the meanings defined in Section 7(c)
above.
(x) "PERFORMANCE PERIOD" has the meaning defined in Section
7(c) above.
(y) "PHANTOM STOCK" has the meaning defined in Section 7(o)
above.
(z) "PLAN" has the meaning defined in Section 1 above.
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(aa) "SERVICE" means the performance of work for one or more
members of the Company Group as an Employee, consultant or other individual
contributor, or service as a Non-Employee Director of the Company.
(bb) "SERVICE REQUIREMENT" has the meaning defined in Section
7(c) above.
(cc) "SHARES" has the meaning defined in Section 3 above.
(dd) "SUBSIDIARY" has the meaning defined in Section 424(f) of
the Code.
13. TERMINATION OR AMENDMENT OF PLAN. The Board may by written
action at any time terminate the Plan or make such changes in or additions or
deletions to the Plan as it deems advisable without further action on the part
of the stockholders of the Company, provided:
(a) that no such termination or amendment shall adversely
affect or impair any then outstanding Option or related agreement without the
consent of the Participant holding such Option or related agreement; and
(b) that no such amendment which (i) increases the maximum
number of Shares subject to this Plan (except to the extent provided in Sections
9 and 10), (ii) materially modifies the requirements as to eligibility for
participation in the Plan, or (iii) makes any other change which, pursuant to
the Code or regulations thereunder or Section 16(b) of the Exchange Act and the
rules and regulations thereunder, requires action by the stockholders may be
made without obtaining, or being conditioned upon, stockholder approval.
With the consent of the Participant affected, the Committee may amend
outstanding Options or related agreements in a manner not inconsistent with the
Plan. The Committee shall have the right to amend or modify the terms and
provisions of the Plan and of any outstanding Incentive Options granted under
the Plan to the extent necessary to qualify any or all such Options for such
favorable federal income tax treatment (including deferral of taxation upon
exercise) as may be afforded incentive stock options under Section 422 of the
Code.
14. CHANGE IN CONTROL. A change in control of the Company (a "Change in
Control") will occur upon:
(a) The acquisition by any individual, entity or group (within the
meaning of Sections 13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20 percent or more of either (i) the then outstanding shares of
the Common Stock or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
the directors (the "Outstanding Company Voting Securities"); provided, however,
that the following acquisitions shall not constitute a Change in Control: (A)
any acquisition directly from the Company (excluding an acquisition by virtue of
the exercise of a conversion privilege); (B) any acquisition by the Company or
by any corporation controlled by the Company; (C) any
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acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company; or (D)
any acquisition by any corporation pursuant to a consolidation or merger, if,
following such consolidation or merger, the conditions described in clauses (i),
(ii), and (iii) of paragraph (c) of this Section 14 are satisfied.
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired beneficial
ownership of more than the permitted percentage of the then Outstanding Company
Voting Securities as a result of the acquisition of Voting Securities by the
Company which by reducing the number of Voting Securities then outstanding,
increases the percentage of shares beneficially owned by the Subject Person,
provided that if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting Securities by the Company
and, after such share acquisition by the Company, the Subject Person becomes the
beneficial owner of any additional Voting Securities which increases the
percentage of the then Outstanding Company Voting Securities beneficially owned
by the Subject Person, then a Change in Control shall occur;
(b) Individuals who, as of the date of this Agreement, constitute the
Board (the "Incumbent Board") ceasing for any reason to constitute at least
two-thirds of the Board over any period of 24 consecutive months or less;
provided, however, that any individual becoming a director subsequent to the
date of this Agreement whose election, or nomination for election by the
Corporation's shareholders, was approved by a vote or resolution of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board;
(c) Adoption by the Board of a resolution approving an agreement of
consolidation of the Company with or merger of the Company into another
corporation or business entity in each case, unless, following such
consolidation or merger, (i) more than 60 percent of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
consolidation or merger and/or the combined voting power of the then outstanding
voting securities of such corporation or business entity entitled to vote
generally in the election of directors (or other persons having the general
power to direct the affairs of such entity) is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Common Stock and Outstanding
Company Voting Securities immediately prior to such consolidation or merger in
substantially the same proportions as their ownership, immediately prior to such
consolidation or merger, of the Common Stock and/or Outstanding Company Voting
Securities, as the case may be, (ii) no Person (excluding the Company, any
employee benefit plan (or related trust) of the Company or such corporation or
other business entity resulting from such consolidation or merger and any Person
beneficially owning, immediately prior to such consolidation or merger, directly
or indirectly, 35 percent or more of the Common Stock and/or Outstanding Company
Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 35 percent or more of,
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respectively, the then outstanding shares of common stock of the corporation
resulting from such consolidation or merger or the combined voting power of the
then outstanding voting securities of such corporation or business entity
entitled to vote generally in the election of its directors (or other persons
having the general power to direct the affairs of such entity) and (iii) at
least two-thirds of the members of the board of directors (or other group of
persons having the general power to direct the affairs of the corporation or
other business entity) resulting from such consolidation or merger were members
of the Incumbent Board at the time of the execution of the initial agreement
providing for such consolidation or merger; provided that any right which shall
vest by reason of the action of the Board pursuant to this paragraph (c) shall
be divested, with respect to any such right not already exercised, upon (A) the
rejection of such agreement of consolidation or merger by the stockholders of
the Company or (B) its abandonment by either party thereto in accordance with
its terms; or
(d) Adoption by the requisite majority of the whole Board, or by the
holders of such majority of stock of the Company as is required by law or by the
Certificate of Incorporation or By-Laws of the Company as then in effect, of a
resolution or consent authorizing (i) the dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the assets of the
Company, other than to a corporation or other business entity with respect to
which, following such sale or other disposition, (A) more than 60 percent of,
respectively, the then outstanding shares of common stock of such corporation
and/or the combined voting power of the outstanding voting securities of such
corporation or other business entity entitled to vote generally in the election
of directors (or other persons having the general power to direct the affairs of
such entity) is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in substantially
the same proportions as their ownership, immediately prior to such sale or other
disposition, of the Common Stock and/or Outstanding Company Voting securities,
as the case may be, (B) no Person (excluding the Company and any employee
benefit plan (or related trust) of the Company or such corporation or other
business entity and any Person beneficially owning, immediately prior to such
sale or other disposition, directly or indirectly, 35 percent or more of the
Common Stock and/or Outstanding Company Voting Securities, as the case may be)
beneficially owns, directly or indirectly, 35 percent or more of, respectively,
the then outstanding shares of common stock of such corporation and/or the
combined voting power of the then outstanding voting securities of such
corporation or other business entity entitled to vote generally in the election
of directors (or other persons having the general power to direct the affairs of
such entity) and (C) at least two-thirds of the members of the board of
directors (or other group of persons having the general power to direct the
affairs of such corporation or other entity) were members of the Incumbent Board
at the time of the execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the Company; provided
that any right which shall vest by reason of the action of the Board or the
stockholders pursuant to this paragraph (d) shall be divested, with respect to
any such right not already exercised, upon the abandonment by the Company of
such dissolution, or such sale or other disposition of assets, as the case may
be.
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A Change in Control shall not occur upon the mere reincorporation of
the Company in another state.
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