FINAL
7/25/94
MILL3/AC3
Exhibit 10.3
HPSC, INC.
SUPPLEMENTAL EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
(July, 1994)
HPSC, INC
SUPPLEMENTAL EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
ARTICLE I - NAME . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - DEFINITIONS . . . . . . . . . . . . . . . . . . . 1
ARTICLE III - PURPOSE AND PRELIMINARY MATTERS. . . . . . . . . 4
3.1 Nature of Plan; No Reversion of Trust Assets;
Grantor Trust . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Qualification of Plan . . . . . . . . . . . . . . . . . . 5
ARTICLE IV - RESPONSIBILITIES AND DUTIES OF PLAN
ADMINISTRATOR AND TRUSTEE. . . . . . . . . . . . . . . . . 5
4.1 In General. . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Plan Administrator. . . . . . . . . . . . . . . . . . . . 5
4.3 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.4 Agents; Counsel; Custodian; Fees. . . . . . . . . . . . . 5
4.5 Fiduciary Duties. . . . . . . . . . . . . . . . . . . . . 6
4.6 Multiple Fiduciary Capacities . . . . . . . . . . . . . . 6
4.7 Limit on Fiduciary Compensation . . . . . . . . . . . . . 6
4.8 Indemnification . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE V - EFFECTIVE DATE . . . . . . . . . . . . . . . . . . 6
ARTICLE VI - PARTICIPATION . . . . . . . . . . . . . . . . . . 6
6.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . 6
6.2 Procedures. . . . . . . . . . . . . . . . . . . . . . . . 6
6.3 Designation of Death Beneficiary. . . . . . . . . . . . . 7
6.4 Duties of Plan Administrator. . . . . . . . . . . . . . . 7
ARTICLE VII - CONTRIBUTIONS BY THE EMPLOYER. . . . . . . . . . 7
7.1 Contributions . . . . . . . . . . . . . . . . . . . . . . 7
7.2 Acceptance by Trustee . . . . . . . . . . . . . . . . . . 7
7.3 Timing of Payment . . . . . . . . . . . . . . . . . . . . 7
7.4 Contributions In Kind . . . . . . . . . . . . . . . . . . 7
ARTICLE VIII - EMPLOYEE CONTRIBUTIONS. . . . . . . . . . . . . 7
ARTICLE IX - ACCOUNTS AND ALLOCATIONS. . . . . . . . . . . . . 8
9.1 Separate Accounts . . . . . . . . . . . . . . . . . . . . 8
9.2 Time for Crediting Contributions. . . . . . . . . . . . . 8
9.3 Allocation of Forfeitures . . . . . . . . . . . . . . . . 8
9.4 Contribution Allocation Limits Applicable to this Plan. . 8
9.5 Valuing Plan Interests. . . . . . . . . . . . . . . . . . 8
ARTICLE X - BENEFITS . . . . . . . . . . . . . . . . . . . . . 8
10.1 Vesting. . . . . . . . . . . . . . . . . . . . . . . . . 8
10.2 Distribution . . . . . . . . . . . . . . . . . . . . . . 8
10.3 Forfeitures. . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE XI - CLAIMS PROCEDURE. . . . . . . . . . . . . . . . . 10
ARTICLE XII - LIFE INSURANCE . . . . . . . . . . . . . . . . . 11
ARTICLE XIII - STOCK INVESTMENT FUND . . . . . . . . . . . . . 11
13.1 Investment Fund; Suspense Account; Stock Account; and
Cash Benefit Account . . . . . . . . . . . . . . . . . . . 11
13.2 ESOP Definitions . . . . . . . . . . . . . . . . . . . . 12
13.3 Borrowing and Use of Loan Proceeds . . . . . . . . . . . 12
13.4 Valuation and Accounting . . . . . . . . . . . . . . . . 15
13.5 Voting Rights. . . . . . . . . . . . . . . . . . . . . . 16
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ARTICLE XIV - NON-STOCK INVESTMENT FUND. . . . . . . . . . . . 16
ARTICLE XV - TRUST FUND AND POWERS AND DUTIES OF TRUSTEE . . . 16
15.1 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . 16
15.2 Trustee's Powers . . . . . . . . . . . . . . . . . . . . 16
15.3 Trustee's Fees and Expenses. . . . . . . . . . . . . . . 17
15.4 Limitation on Trustee's Duties . . . . . . . . . . . . . 17
15.5 Trustee's Accounts . . . . . . . . . . . . . . . . . . . 17
15.6 Identity of Initial Trustees; Resignation and Removal of
Trustees; Successor Trustees . . . . . . . . . . . . . . . 18
15.7 Successor Trustee's Duties . . . . . . . . . . . . . . . 19
15.8 Trustee's Written Statements . . . . . . . . . . . . . . 19
15.9 Employer's Power of Substitution of Assets Prior
to a Change of Control . . . . . . . . . . . . . . . . . . 19
ARTICLE XVI - AMENDMENT. . . . . . . . . . . . . . . . . . . . 19
16.1 Right to Amend Prior to a Change of Control. . . . . . . 19
16.2 Right to Amend Following a Change of Control . . . . . . 20
ARTICLE XVII - DISCONTINUANCE OF CONTRIBUTIONS AND
TERMINATION OF PLAN. . . . . . . . . . . . . . . . . . . . 20
17.1 Right to Terminate Prior to a Change of Control. . . . . 20
17.2 Right to Terminate Following a Change of Control . . . . 20
17.3 Events Causing Plan Termination. . . . . . . . . . . . . 20
17.4 Liquidation of Trust and Distribution of Benefits. . . . 21
17.5 Vesting on Termination Following a Change of Control . . 21
17.6 Reversion of Excess Assets After Termination . . . . . . 21
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ARTICLE XVIII - LOANS. . . . . . . . . . . . . . . . . . . . . 21
ARTICLE XIX - ROLLOVERS AND DIRECTED INVESTMENTS . . . . . . . 21
19.1 No Rollovers Into Plan . . . . . . . . . . . . . . . 21
19.2 No Directed Investments Permitted. . . . . . . . . . 21
ARTICLE XX - MISCELLANEOUS . . . . . . . . . . . . . . . . . . 21
20.1 No Employment Contract . . . . . . . . . . . . . . . . . 21
20.2 Employer Not Liable for Plan Liabilities . . . . . . . . 22
20.3 Benefit Accounts Are Unsecured Claims. . . . . . . . . . 22
20.4 No Anticipation or Assignment of Benefits. . . . . . . . 22
20.5 Acceptance of Trust. . . . . . . . . . . . . . . . . . . 22
20.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . 22
20.7 Uniformity of Treatment. . . . . . . . . . . . . . . . . 22
ARTICLE XXI - TRUSTEE'S RESPONSIBILITY WHEN EMPLOYER IS
INSOLVENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
21.1 Procedure If Employer Is Insolvent . . . . . . . . . . . 23
21.2 Procedure Following Insolvency . . . . . . . . . . . . . 25
SCHEDULE I . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 1 - DEFINITIONS (Refer to Article II). . . . . . . . . 27
SECTION 2 - EFFECTIVE DATE (Refer to Article V). . . . . . . . 27
SECTION 3 - PARTICIPATION (Refer to Article VI). . . . . . . . 27
SECTION 4 - ALLOCATION (REFER TO ARTICLES IX AND XIII) . . . . 27
SECTION 5 - VESTING (Refer to Article X) . . . . . . . . . . . 28
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HPSC, INC
SUPPLEMENTAL EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
AGREEMENT between HPSC, Inc., a corporation duly organized and existing
under the laws of Delaware and having its principal place of business in Boston,
Massachusetts, and John Everets and Raymond Doherty as the Trustees.
ARTICLE I - NAME
The Plan and Trust created in accordance with the terms of this instrument
shall be named "The HPSC, Inc. Supplemental Employee Stock Ownership Plan and
Trust."
ARTICLE II - DEFINITIONS
Wherever used herein, unless the context clearly indicates otherwise, the
following words shall have the following meanings:
2.1 "Act" means the federal Employee Retirement Income Security Act of
1974 as amended from time to time, and any comparable subsequent legislation.
2.2 "Beneficiary" means any person, estate, trust or organization entitled
to receive payment on the death of a Participant.
2.3 "Board of Directors" means the of the Board of Directors of the
Employer.
2.5 "Change of Control" means the occurrence of an event or events as the
result of which (i) the business of the Employer is disposed of by the Employer
pursuant to a liquidation, merger in which the Employer is not the surviving
corporation, sale of assets or otherwise; or (ii) there is any transfer of the
Employer's stock currently pledged to certain banks, to a holder or holders who
seek to exercise control over the Employer, including without limitation such
banks and their transferee(s); or (iii) a majority of the issued and outstanding
shares of the Employer's voting stock is transferred during any two (2) year
period to any person (individual or entity) who did not own ten percent (10%) of
the Employer's outstanding stock at the beginning of the two (2) year period; or
(iv) during any twelve (12) month period a majority of the members of the Board
of Directors in office at the beginning of the period die, resign, are removed
from office or are not re-elected.
2.6 "Break in Service" means a Fiscal Year during which an Employee fails
to complete more than 500 Hours of Service.
2.7 "Code" means the federal Internal Revenue Code of 1986 as amended from
time to time, and any comparable successor legislation.
2.6 "Compensation" means (i) the total salaries or wages paid by the
Employer to the Participant during any Fiscal Year that are subject to federal
income taxation (as reported by the Employer on Form W-2), including overtime
pay, commissions and bonuses, plus (ii) compensation reduction contributions
made pursuant to any Code Section 401(k) arrangement or Code Section 125
arrangements in plans maintained by the Employer. Except for
compensation-reduction contributions referred to above, "Compensation" does NOT
include any Employer contributions to this or any other employee benefit plan or
for Social Security or unemployment benefits. No Participant's Compensation for
purposes of this Plan shall be subject to any limitations imposed under the
Code, including without limitation Code Section 401(a)(17) and the regulations
thereunder.
2.8 "Employee" means any individual employed by the Employer, including
officers and directors who are employees. "Ineligible Employee" means: (i) any
Employee who is a member of a collective bargaining unit the retirement benefits
of which have been the subject of good faith bargaining and (ii) any Employee
who is a non resident alien and who receives no earned income (within the
meaning of Code Section 911 (d)(2)) from the Employer which constitutes income
from sources within the United States (within the meaning of Code Section 861
(a)(3)).
2.9 "Employer" means the corporation signatory to this agreement, and
shall also mean any successor organization to the corporation which shall assume
the Employer's obligations under this Plan. Such assumption shall be in writing,
signed by the organization assuming the obligations of the Plan and accepted by
the Trustee.
2.10 "Employment Commencement Date" means the day on which an Employee
first performs an Hour of Service.
2.11 "Entry Date" means the date or dates specified on Schedule I.
2.12 "Fiduciary" means the Plan Administrator and the Trustee.
2.13 "Hour of Service" means each hour for which the Employee is directly
or indirectly paid or entitled to payment by the Employer (i) for the
performance of duties for the Employer; (ii) for a period of time, up to 501
hours for any single continuous period, during which no duties are performed
(whether or not employment has been terminated), due to vacation, holiday,
illness, incapacity, disability, layoff, jury duty, military duty or leave of
absence; and (iii) for back pay, by award or by agreement of the Employer,
irrespective of mitigation of damages. The hours of
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service referred to in (i) above shall be credited to the Employee as of the
computation period during which the duties were performed; the hours of service
referred to in (ii) above shall be credited for the computation period during
which the duties were not performed and in accordance with Department of Labor
Regulation, 29 C.F.R. 2530.200b-2(b) and (c), which is incorporated by reference
herein together with any subsequent amendment or replacement thereof; and the
hours of service referred to in (iii) shall be credited for the computation
period during which the period covered by such award or agreement occurred. The
same hours of service shall not be credited both under (i) or (ii), as the case
may be, and under (iii). Additionally, hours of service by a person who is
considered a "leased employee" under Code Section 414(n) or with an organization
while it is under common control with the Employer (Code Section 414(c)) or
while it is a member of a controlled group of corporations with the Employer
(Code Section 414(b)) or while it is a member of an affiliated service group
with the Employer (Code Section 414(m)) shall be considered as hours of service
with the Employer, but except as otherwise expressly provided in the Plan no
person shall be treated as an Employee of the Employer solely on account of such
service. Notwithstanding the foregoing, in no event will an Employee be credited
with hours of service for any period during which no duties were performed but
payments were made from a plan maintained solely to comply with applicable
workmen's compensation, unemployment compensation or disability insurance laws.
Solely for purposes of determining whether a Break in Service, as defined
in Section 2.4, for participation and vesting purposes has occurred in a
computation period, an individual who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service which would
otherwise have been credited to such individual but for such absence, or in any
case in which such hours cannot be determined, eight Hours of Service per day of
such absence. For purposes of this paragraph, an absence from work for maternity
or paternity reasons means an absence (1) by reason of the pregnancy of the
individual, (2) by reason of a birth of a child of the individual, (3) by reason
of the placement of a child with the individual in connection with the adoption
of such child by such individual, or (4) for purposes of caring for such child
for a period beginning immediately following such birth or placement. The Hours
of Service credited under this paragraph shall be credited (1) in the
computation period in which the absence begins if the crediting is necessary to
prevent a Break in Service in that period, or (2) in all other cases, in the
following computation period.
2.14 "Insolvent" means that the Employer (i) is unable to pay its debts as
they come due or (ii) is subject to a pending proceeding as a debtor under the
federal Bankruptcy Code or under the insolvency laws of any state.
2.15 "Participant" means a person who has qualified to participate under
the Plan in accordance with Article VI.
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2.16 "Plan" means the supplemental employee stock ownership plan set forth
in accordance with this Agreement, as it may from time to time be amended.
2.17 "Plan Administrator" means the person or persons described as such on
Schedule I and any successor. The Plan Administrator may be removed, and any
vacancy shall be filled, by the Board of Directors. In the event that the
position shall be vacant, or in the event of the incapacity of the Plan
Administrator, the President of the Employer shall serve as Plan Administrator.
2.18 "Qualified ESOP" means the HPSC, Inc. Employee Stock Ownership Plan
(adopted effective January 1, 1993), as amended from time to time, and any
successor plan thereto.
2.19 "Year" and "Fiscal Year" mean the fiscal year of the Trust as
specified in Schedule I.
2.20 "Trust" means the trust herein set forth.
2.21 "Trustee" means the trustee or trustees herein named and any duly
appointed successor trustees or trustee.
2.22 "Valuation Date" means the last day of the Fiscal Year.
Whenever used herein a pronoun in the masculine gender shall include the
feminine gender and a word in the singular number shall include the plural
number unless the context clearly indicates otherwise.
ARTICLE III - PURPOSE AND PRELIMINARY MATTERS
3.1 NATURE OF PLAN; NO REVERSION OF TRUST ASSETS; GRANTOR TRUST. This
Plan constitutes the principal instrument of a stock bonus type of employee
stock ownership plan established by the Employer and, subject to the Employer's
power of substitution pursuant to Section 15.9, it is designed to be invested
primarily in "Employer Securities," as provided in Article XIII. It is intended
not to be a "qualified plan" within the meaning of Code Section 401(a) and shall
not be subject to or, except as expressly provided herein, be interpreted or
administered in accordance with said Section 401(a) or any other Code section
governing qualified plans, including without limitation Code Sections 401
through 417 inclusive and Code Section 4975. Furthermore, this Plan is intended
not to be an "employee benefit plan" or a "pension plan" or "welfare plan"
within the meaning of Act Section 3 and shall not be subject to or be
interpreted or administered in accordance with the Act. In any event, this Plan
is intended to be "unfunded" for purposes of both the Code and (should it apply)
the Act. Except as otherwise expressly provided herein, the principal or income
of the Trust
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shall not be paid to or revested in the Employer or used for any purpose
whatsoever other than as provided herein, including without limitation
distributing benefits to the Participants or their Beneficiaries and defraying
reasonable expenses of administering the Plan and Trust. The Trust created
pursuant to this Plan is intended to be a grantor trust (of which the Employer
is the grantor) within the meaning of subpart E, part I, subchapter J, chapter
1, subtitle A of the Code, and it shall be construed accordingly.
3.2 QUALIFICATION OF PLAN. The Plan Administrator shall not submit this
Plan to the Internal Revenue Service for a determination letter that the Plan,
as embodied in this Agreement, meets the qualification requirements of
Section 401(a) of the Code.
ARTICLE IV - RESPONSIBILITIES AND DUTIES OF PLAN ADMINISTRATOR AND
TRUSTEE
4.1 IN GENERAL. Unless otherwise agreed in writing by the Plan
Administrator and the Trustee, the responsibilities, duties and obligations of
the Plan Administrator and of the Trustee shall be allocated as provided in this
Article.
4.2 PLAN ADMINISTRATOR. The Plan Administrator, except as expressly
provided otherwise by this Agreement, shall have exclusive responsibility to
decide all questions relating to eligibility and benefits and all other matters
which are not expressly reserved to the Trustee, including the power to sue or
be sued on behalf of this Plan and Trust. If two or more persons are serving as
Plan Administrators, they may, by a writing signed by all such persons, allocate
among themselves in any reasonable manner their responsibilities as
Administrators. The Plan Administrator may appoint one or more qualified
persons, including actuaries, to assist him in performing his responsibilities
hereunder and delegate to such persons specific responsibilities. The Plan
Administrator is hereby designated as agent for the service of legal process.
4.3 TRUSTEE. The Trustee, except as expressly provided otherwise by this
Agreement, shall have exclusive responsibility to manage and control the assets
of the Trust. If two or more persons are serving as Trustees they may by a
writing signed by all such persons, allocate among themselves in any reasonable
manner their responsibilities, duties and obligations as Trustees. The Trustee
shall maintain records of the interest of each Participant in the Trust Fund.
4.4 AGENTS; COUNSEL; CUSTODIAN; FEES. The Trustee and the Plan
Administrator may employ one or more persons, including counsel, to render
advice with regard to any responsibility such Fiduciary may have and may employ
such agents and employees and delegate to them such nondiscretionary duties and
responsibilities as they shall decide to be reasonable and appropriate in the
exercise of their
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responsibilities. The Trustee may appoint a bank or other financial institution
to act as custodian of the assets of the Trust and enter into such agreements
concerning the custodian's duties and compensation as the Trustee shall
determine to be appropriate. All fees and expenses of such persons who are
employed to give advice or to act as agents or employees shall be paid by the
Employer. In the event of the failure of the Employer to make such payment, the
expenses shall be considered as an expense of, and shall constitute a lien on,
the Trust Fund; provided that collection of such expenses from the Trust Fund
shall not relieve the Employer of liability to reimburse the Trust Fund.
4.5 FIDUCIARY DUTIES. Every person who is a Fiduciary with respect to the
Plan shall discharge his duties in accordance with the Plan and Trust and other
governing documents and instruments except insofar as such documents and
instruments are inconsistent with applicable law.
4.6 MULTIPLE FIDUCIARY CAPACITIES. A Fiduciary may serve in more than one
fiduciary capacity with respect to the Plan.
4.7 LIMIT ON FIDUCIARY COMPENSATION. No Fiduciary who receives full-time
pay from the Employer shall receive compensation from the Plan except for
reimbursement of expenses properly and actually incurred.
4.8 INDEMNIFICATION. Except as prohibited by law, any individual or
individuals serving as Trustee or Plan Administrator shall be indemnified in
full by the Employer against expenses, including attorneys' fees, and against
the amount of any judgment, money decree, fine, or penalty, or against the
amount of any settlement deemed reasonable by the Board of Directors,
necessarily paid or incurred by such individual or individuals in connection
with or arising out of any claim made, or any civil or criminal action, suit or
proceeding of whatever nature brought against such individual, or in which such
individual is made a party, or in which such individual is otherwise involved,
by reason of being or having been such Trustee or Plan Administrator. Such
indemnification shall apply to any such individual even though at the time of
such claim, action, suit or proceeding such individual is no longer a Trustee or
Plan Administrator.
ARTICLE V - EFFECTIVE DATE
The Effective Date of this Plan shall be the date specified as such on
Schedule I.
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ARTICLE VI - PARTICIPATION
6.1 ELIGIBILITY. Each Employee shall be eligible to become a Participant
hereunder on the Entry Date and on fulfilling the conditions as set forth on
Schedule I hereto.
6.2 PROCEDURES. Each Employee shall be advised by the Plan Administrator
prior to his initial eligibility of his right to participate in the Plan. To
become a Participant, an eligible Employee must execute such application forms
as are required by the Plan Administrator within 30 days from the date on which
he was notified of his eligibility.
6.3 DESIGNATION OF DEATH BENEFICIARY. Each Employee upon becoming a
Participant shall notify the Plan Administrator in writing of his designation of
a Beneficiary to receive payment of benefits under the Plan in the event of his
death. Such designation or designations may be changed by him in writing from
time to time by notice to the Plan Administrator.
6.4 DUTIES OF PLAN ADMINISTRATOR. The Plan Administrator annually after
the close of each Fiscal Year shall prepare and deliver to the Trustee a
certified list of the Employees who were Participants for such year. The list
shall show the Compensation for the year of each Participant.
ARTICLE VII - CONTRIBUTIONS BY THE EMPLOYER
7.1 CONTRIBUTIONS. On account of each Fiscal Year prior to the occurrence
of a Change of Control, the Employer may contribute any amount as may be
determined by the Board of Directors to meet the obligations of the Plan and
Trust. On account of each Fiscal Year ending after the occurrence of a Change of
Control, the Employer shall contribute at least such amounts as will enable the
Trustee to (i) repay any Loans pursuant to the terms thereof and (ii) timely
make any distributions of vested account balances as the Trustee elects to pay
in cash.
7.2 ACCEPTANCE BY TRUSTEE. The Trustee shall not be under any duty to
inquire into the correctness of the amounts contributed to the Trust hereunder,
nor shall the Trustee be under any duty to determine whether any contribution is
payable under this Article.
7.3 TIMING OF PAYMENT. Payments on account of any Fiscal Year may be made
by the Employer from time to time prior to the close of such year or may be made
on account of any year within the period allowed for filing its federal income
tax return for such year, including any extensions thereof.
7.4 CONTRIBUTIONS IN KIND. To the extent permitted by applicable laws and
regulations, the Employer may make any
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contribution in cash or in kind, including by issuing or transferring to the
Trustee Employer Securities.
ARTICLE VIII - EMPLOYEE CONTRIBUTIONS
No contributions by Employees shall be required or permitted under this
Plan.
ARTICLE IX - ACCOUNTS AND ALLOCATIONS
9.1 SEPARATE ACCOUNTS. The Trustee shall establish a separate account to
reflect the interest in the Trust of each Participant, former Participant and
Beneficiary. The Trustee shall maintain adequate records of such individual
accounts and credits and charges shall be made to such accounts in the manner
herein provided. A segregation of the assets of the Trust Fund into separate
accounts shall not be required. Distributions made from an account shall be
charged to the account as of the date paid. Each Participant shall receive a
statement of the value of the Participant's account at least annually.
9.2 TIME FOR CREDITING CONTRIBUTIONS. The contribution made by the
Employer pursuant to Article VII and Schedule I shall be credited to the
Participant's account as of the last day of the Fiscal Year for which it was
made.
9.3 ALLOCATION OF FORFEITURES. Any forfeitures for the Fiscal Year shall
be allocated in the manner provided in Section 4 of Schedule I.
9.4 CONTRIBUTION AND ALLOCATION LIMITS APPLICABLE TO THIS PLAN. No limits
on contributions and allocations under this Plan shall apply except as
specifically provided in this Agreement.
9.5 VALUING PLAN INTERESTS. As of each Valuation Date, the interest of
each Participant in the Trust Fund shall be determined. The interest of each
Participant in the Trust Fund shall be the sum of (i) the interest of the
Participant in the Investment Fund attributable to Employer contributions
(including earnings thereon) and (ii) his share, if any, of contributions and
forfeitures credited to his account as of such Valuation Date.
ARTICLE X - BENEFITS
10.1 VESTING. A Participant's account in the Trust Fund shall vest in
accordance with Section 5 of Schedule I to this Agreement.
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10.2 DISTRIBUTION.
.01 BENEFIT. In each Fiscal Year, the vested balance of a
Participant's account in the Trust Fund which has not been previously
distributed shall be distributed (subject to the provisions of this Article
and provided that the Employer is not Insolvent at the time of the
distribution) as soon as is administratively convenient following the date
which is six (6) months after the date that the Board of Directors
determines the Employer's contribution for such Fiscal Year (or, if no
contribution is determined for a Fiscal Year, then as soon as is
administratively convenient following the end of the sixth month of such
Fiscal Year). Distribution shall be made to the Participant if he is then
living and otherwise to his Beneficiary. The Participant's remaining non-
vested balance, if any, shall continue to be held in the Trust Fund until
it either vests in accordance with Section 10.1 above or is forfeited in
accordance with Section 10.3 below.
.02 PAYMENT. Each vested balance that becomes distributable in
accordance with paragraph .01 of this Section shall be distributed in cash
or in kind (including without limitation shares of Employer Securities) at
the sole option of the Trustee. No interest shall be due or paid on any
distribution on account of any good faith delay in making the distribution
prior to the occurrence of a Change of Control. Distributions made after
the occurrence of a Change of Control shall bear interest (which shall be
paid with the distribution) from the date that the Change of Control occurs
through the date that the distribution is made at an annual rate equal to
the greater of twelve percent (12%) and two (2) percentage points above the
greater of the "prime rate" as published from time to time in the WALL
STREET JOURNAL and the highest rate of interest paid by the Employer from
time to time on any financing undertaken in connection with the Change of
Control. If the Trustee cannot or does not distribute any portion or all of
the vested balance of a Participant's account when such distribution is due
pursuant to paragraph .01, then the Employer shall pay the balance of each
such distribution (with any applicable interest) as it falls due. To the
full extent that distributions are made from the Trust Fund, the Employer's
obligation to pay such amounts shall be deemed to have been satisfied.
.03 WITHHOLDING. Each Participant, Beneficiary or other recipient of
a distribution under this Plan shall be liable for all tax obligations, if
any, with respect to any sum received pursuant to the Plan and for
accurately reporting and paying in full all such taxes to the appropriate
federal, state and local authorities. The Trustee and the Employer shall
have the right to deduct and withhold from any distribution due under the
Trust Fund or the Plan (whether such distribution be in cash or in kind) or
from other amounts owed to or with respect to the
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Participant all withholding taxes and other amounts required by law.
Furthermore, prior to the occurrence of any Change of Control (but not
afterwards), upon notice in writing from the Employer the Trustee shall set
off from any distribution payable under the Plan all amounts owed by the
Participant to the Employer.
.04 PROCEDURES. At the close of each Fiscal Year, the Plan
Administrator shall deliver to the Trustee a list of all Participants who
will be entitled to receive distributions in the ensuing year. The failure
of the Plan Administrator to provide such a list shall not affect the
Participant's right to receive distributions as provided in this Article.
.05 NO BENEFICIARY. If no Beneficiary has been designated, or if the
designated Beneficiary shall not survive the Participant, distribution
shall be made to the Participant's surviving spouse or if none, then to his
issue PER STIRPES. If there is neither surviving spouse nor issue then
living, distribution shall be made to the deceased Participant's executor
or administrator.
10.3 FORFEITURES. The non-vested balance, if any, of a Participant's
account in the Trust Fund shall be forfeited as of the date that the Participant
incurs a Break in Service following the termination of his employment for any
reason (including without limitation death, disability or retirement); provided
that if the Participant again becomes an Employee prior to incurring a Break in
Service, no forfeiture shall occur on account of such termination and the
Participant's account shall continue to be subject to the provisions of this
Article. Forfeitures shall be dealt with as provided in Section 9.3 above.
ARTICLE XI - CLAIMS PROCEDURE
11.1 Within a reasonable time after the close of the Fiscal Year in which
an event occurs which entitles a Participant or Beneficiary to any distribution
under the Trust, the Plan Administrator shall notify the Participant or
Beneficiary in writing of the entitlement to distribution and the amount
thereof.
11.2 If the Participant or Beneficiary shall claim that he is entitled to
any other benefit or amount, he shall notify the Plan Administrator in writing
within 60 days of the notice provided in Section 11.1 of such claim.
11.3 In the event of such a claim, or any other claim for benefits under
the Trust, the following procedures shall apply:
.01 All claims for benefits under this Section shall be in writing
and shall be sufficient to notify the Plan Administrator of the type of
benefit claimed.
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.02 All claims shall be addressed to the Plan Administrator or the
chief personnel officer of the Employer.
.03 If a claim is denied in whole or in part by the Plan
Administrator, he shall furnish the claimant written notice of such denial
within a reasonable time after receipt of the claim by him. If no notice of
denial is furnished within 90-days after receipt of the claim by the Plan
Administrator, the claim shall be deemed denied and the Participant may
request a review of such denial.
.04 The notice of denial shall set forth, in a manner calculated to
be understood by the claimant, (i) the specific reason or reasons for the
denial, (ii) specific reference to the pertinent provisions of the Trust,
(iii) a description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such material
or information is necessary, and (iv) an explanation of this claims
procedure.
.05 Upon receipt of a notice of denial, the claimant may, by a
written application filed with the Plan Administrator within 60 days of
receipt of the notice, request a review by the Plan Administrator of such
denial.
.06 In connection with such review, the claimant may review pertinent
documents, may submit issues and comments in writing and may request a
hearing before the Plan Administrator.
.07 The decision of the Plan Administrator on such review shall be
final.
ARTICLE XII - LIFE INSURANCE
The Trustee shall not use any portion of the contributions under the Plan
to purchase life insurance policies on the life of any Participant.
ARTICLE XIII - STOCK INVESTMENT FUND
13.1 INVESTMENT FUND; SUSPENSE ACCOUNT; STOCK ACCOUNT; AND CASH BENEFIT
ACCOUNT.
.01 INVESTMENT FUND; SUSPENSE ACCOUNT AND STOCK ACCOUNT. The
Trustee shall establish a fund to be known as the Investment Fund and all
Employer contributions shall be allocated to the Investment Fund as of the
close of the Fiscal Year on account of which the contributions are made. As
part of the Investment Fund, the Trustee shall establish a "Stock Account"
and, if
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assets are to be acquired by this Plan with the proceeds of a Loan, a
"Suspense Account." All assets acquired by this Plan with the proceeds of a
Loan shall be allocated first to the Suspense Account and shall
subsequently be withdrawn from the Suspense Account and reallocated to the
Stock Account in accordance with the provisions of Section 13.3 of this
Article. All Employer Securities acquired by this Plan other than with the
proceeds of a Loan shall be allocated directly to the Stock Account.
.02 CASH BENEFIT ACCOUNT. Also as part of the Investment Fund, the
Trustee shall establish a Cash Benefit Account. All Employer contributions
which (a) are designated by the Employer for the payment of cash benefits
under the Plan or (b) are neither (i) made in shares of Employer
Securities, nor (ii) designated by the Employer for the repayment of a Loan
or the purchase of shares of Employer Securities, nor (iii) deemed
necessary by the Trustee for the repayment of a Loan shall be allocated
initially to the Cash Benefit Account. If shares of Employer Securities are
reallocated from a Participant's account in the Stock Account to the Cash
Benefit Account in order to make a cash distribution, cash (or other
property, except shares of Employer Securities) equal in value to the
amount that such shares of Employer Securities would have realized if sold
by the Trustee on the date of the reallocation (as determined in accordance
with the valuation principles of Section 13.4.01 of this Article) shall be
allocated from the Cash Benefit Account to such Participant's account in
the Stock Account. As of the last day of each Fiscal Year, all shares of
Employer Securities in the Cash Benefit Account and any remaining
unallocated cash or other property in the Cash Benefit Account shall be
allocated in accordance with the provisions of Section 4 of Schedule I of
the Plan to the accounts of all Participants entitled to share in an
allocation of Employer contributions for the Fiscal Year; provided that,
(i) any such shares of Employer Securities allocated pursuant to this
sentence shall be allocated to each eligible Participant's account in the
Stock Account and (ii) all other assets allocated pursuant to this sentence
shall be allocated to each eligible Participant's account in the Cash
Benefit Account, where such cash or other property shall remain available
for reallocation pursuant to this Paragraph .02 in order to pay cash
benefits to other Participants or Beneficiaries. If any such unallocated
cash or other property is allocated pursuant to the preceding sentence, and
subsequently shares of Employer Securities are transferred into the Cash
Benefit Account in exchange for such cash or other property, such shares of
Employer Securities shall then be allocated to the accounts in the Stock
Account of the Participants from whose accounts in the Cash Benefit Account
such cash or other property was taken in exchange for the shares of
Employer Securities.
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13.2 ESOP DEFINITIONS. For purposes of this Plan, the following terms
shall have the following meanings:
.01 "EMPLOYER SECURITY" means common or preferred stock issued by the
Employer (or by a corporation which is a member of the same controlled
group within the meaning of Code Section 409(1)(4)).
.02 "LOAN" means a loan made to this Plan for the purpose of (or
which is used for) acquiring Employer Securities. A Loan may be made and/or
guaranteed by any person.
13.3 BORROWING AND USE OF LOAN PROCEEDS. The Plan may receive a Loan,
provided that such Loan shall satisfy the following requirements.
.01 USE OF LOAN PROCEEDS. The proceeds of the Loan shall be used
within a reasonable time after their receipt by the Plan only for any or
all of the following purposes: (i) to acquire Employer Securities; (ii) to
repay the Loan; and (iii) to repay a prior Loan.
.02 LIABILITY AND COLLATERAL. Each Loan shall be without recourse
against this Trust. Furthermore, the only assets of this Plan that may be
given as collateral on a Loan are any or all of the following Employer
Securities: (i) those acquired with the proceeds of the Loan and (ii) those
that were used as collateral on a prior Loan repaid with the proceeds of
the current Loan. No person entitled to payment under the Loan shall have
any right to assets of this Plan other than: (i) collateral given for the
Loan; (ii) contributions (other than contributions of Employer Securities)
that are made under this Plan to meet its obligations under the Loan and
(iii) earnings attributable to such collateral and the investment of such
contributions.
.03 REPAYMENT OF THE LOAN. Payments made with respect to the Loan by
this Plan shall be made from any assets of the Trust Fund (other than
Employer Securities) at the Trustee's sole discretion.
.04 DEFAULT. In the event of default upon the Loan, the value of
Plan assets transferred in satisfaction of the Loan shall not exceed the
amount of default. Furthermore, the Loan shall provide for a transfer of
Plan assets upon default only upon and to the extent of the failure of the
Plan to meet the payment schedule of the Loan.
.05 RELEASE FROM ENCUMBRANCE. The Loan shall provide for the release
from encumbrance of Plan assets used as collateral
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for the Loan as follows: For each Fiscal Year during the duration of the
Loan, the number of securities released shall equal the number of
encumbered securities held immediately before release for the current
Fiscal Year multiplied by a fraction. The numerator of the fraction is the
amount of principal paid for the Year and the denominator of the fraction
is the sum of the numerator plus the aggregate principal to be paid for all
future years. The number of future years under the Loan shall be definitely
ascertainable and shall be determined without taking into account any
possible extensions or renewal periods. If the collateral includes more
than one class of securities, the number of securities of each class to be
released for a Fiscal Year shall be determined by applying the same
fraction to each class. Notwithstanding the foregoing, all Plan assets used
as collateral for any outstanding Loan shall be released from encumbrance
immediately upon the occurrence of a Change of Control.
.06 USE OF SUSPENSE ACCOUNT. All assets acquired by this Plan with
the proceeds of the Loan shall be added to and maintained in the Suspense
Account until they are released from encumbrance in accordance with
paragraph .05 of this Section (or would have been released, if they had
been used as collateral for the Loan). If shares of Employer Securities are
used as collateral for the Loan, they shall be withdrawn from the Suspense
Account at the same time and in the same amounts as they are released from
encumbrance. If such shares are not used as collateral, they shall be
withdrawn from the Suspense Account as if they had been so used and were
being released from encumbrance as provided in paragraph .05. No
Participant shall have any interest in, or rights with respect to, any
shares of Employer Securities while they are held in the Suspense Account.
In the event that any shares of Employer Securities held in the Suspense
Account are sold, the proceeds shall be (i) first, used to repay the Loan
and (ii) second, if there is any excess amount (including any shares of
Employer Securities released from encumbrance by reason of such repayment),
allocated among the accounts of all Participants in proportion to the
aggregate value of each such person's total interest in the Trust Fund
(including his interest in the Stock Account and all non-Stock Accounts).
.07 ALLOCATION TO ACCOUNTS OF PARTICIPANTS. As Employer Securities
are released from encumbrance and withdrawn from the Suspense Account they
shall be transferred to the Stock Account. As of the end of each Fiscal
Year, the account of each Participant shall be credited with a portion of
all Employer Securities transferred to the Stock Account for such Year
determined as follows: (a) from the Employer Securities transferred as the
result of Loan payments made with (i) the Employer's contribution and
(ii) earnings on the Plan's assets that have not been allocated to
Participants, that portion which
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is equal to such Participant's proportionate share of the Employer's
contribution for such Year; plus (b) from the Employer Securities
transferred as the result of Loan payments made with earnings on the Plan's
assets that have been allocated to Participants, that portion which is
equal to such Participant's account balance attributable to the assets that
resulted in the earnings compared to the aggregate account balances of all
Participants attributable to such assets; provided that (c) credits
resulting from dividends on unallocated Employer Securities that have been
used to make Loan payments pursuant to Section 13.4.02 below and that are
otherwise determinable under clause (a)(ii) above shall instead be
determined and credited under clause (b) to the extent necessary to provide
each Participant with Employer Securities allocated under clause (b) having
an aggregate Fair Value at least equal to the amount of dividends paid on
the Employer Securities that have been allocated to the Participant's
account. Notwithstanding the foregoing, Employer Securities and other Plan
assets that are released from encumbrance as the result of a Change of
Control (as provided in paragraph .05 of this Section) shall be credited to
the account of each Participant as if an Employer contribution had been
made to fully discharge all amounts due under all Loans outstanding on the
date that the Change of Control occurred.
.08 SOURCE OF FORFEITURES. If a portion of a Participant's account is
forfeited, Employer Securities allocated under paragraph .07 of this
Section shall be forfeited only after other assets. If interests in more
than one class of Employer Securities have been allocated to the
Participant's account, the same proportion of each class so allocated shall
be forfeited if any is forfeited.
13.4 VALUATION AND ACCOUNTING. Employer Securities acquired by this Plan
shall be valued and accounted for as provided in this Section.
.01 VALUATION. Employer Securities shall be acquired, accounted for,
distributed and disposed of for all purposes under this Plan at their
current "Fair Value." Fair Value shall be determined in good faith and
based on all relevant factors. Fair Value shall be (i) in the case of
purchases or sales of shares of Employer Securities, the actual price paid
or received in the transaction; (ii) in the case of transfers of shares of
Employer Securities to or from the Cash Benefit Account pursuant to section
13.1.02, the amount that would have been realized (as defined below) if
such shares had been sold on the date of the transfer; (iii) in the case of
all other transactions involving shares of Employer Securities, the amount
that would have been realized if such shares had been sold on the most
recent Valuation Date prior to or coinciding with the transaction; and (iv)
in the case of any valuations of shares of Employer
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Securities made for purposes of the Plan (including, without limitation,
valuations for purposes of Sections 9.5 and 15.5) EXCEPT as otherwise
required by the Plan (including, without limitation, application of Section
13.3.07), the amount that would have been realized if such shares had been
sold on the Valuation Date as of which such valuation is made. For purposes
of clauses (ii), (iii) and (iv) of the preceding sentence, the amount that
would have been realized upon the sale of shares of Employer Securities on
a given date shall be deemed to be the average of the highest and lowest
selling prices of all such shares sold on such date (or, if no shares of
Employer Securities were sold on such date, such average of the selling
prices on the most recent date that such shares where sold which precedes
the relevant date). Notwithstanding the foregoing, if at any time shares of
Employer Securities are not readily tradeable on an established securities
market, Fair Value shall be determined at the Trustee's sole good-faith
discretion.
.02 ALLOCATION OF INCOME. Income received by the Plan with respect
to any Employer Securities (whether or not allocated to Participants) may
be used to make payments on any Loan. To the extent not used to make
payments on a Loan, income received with respect to allocated shares of
Employer Securities shall be allocated with respect to such shares.
.03 ACCOUNTING. The Trustee shall maintain adequate records to
determine the number of shares of Employer Securities allocated with
respect to each Participant's account in the Trust Fund. To the extent
assets other than Employer Securities are held in the Investment Fund, as
of each Valuation Date the Trustee shall determine the total net worth of
the Investment Fund by valuing all of such other assets at their fair value
as of such valuation and shall compare such value to the total amount
standing to the credit in the accounts of all such Participants in the Fund
as of the prior Valuation Date. Any increase or decrease shall be
apportioned among such Participants' accounts in the same proportion as the
amount standing to the credit of each such Participant bears to the total
of all amounts standing to the accounts of all such Participants.
13.5 VOTING RIGHTS. The Trustee may exercise all voting rights in any
Employer Securities held in the Trust Fund, whether allocated to the Suspense
Account, the Stock Account or otherwise. The Trustee shall not be liable to
anyone (including without limitation the Employer or any Participant or
Beneficiary) for exercising or failing to exercise any voting rights in any
Employer Securities held in the Trust Fund, including without limitation voting
or failing to vote any Employer Securities, giving or failing to give any proxy
with respect to any Employer Securities, or tendering or failing to tender any
Employer Securities.
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ARTICLE XIV - NON-STOCK INVESTMENT FUND
The Trustee shall establish a Non-Stock Investment Fund if and only if the
Trustee determines that such Fund is needed in order to hold assets of the Plan
which are neither Employer Securities nor assets of the Cash Benefit Account
(provided for in Article XIII). If established, such Fund shall be invested by
the Trustee pursuant to the investment powers hereinafter provided. The Trustee
shall apportion any increase or decrease in the value of the Fund at periodic
intervals, not less frequently than annually, in an equitable manner among the
Participants having an interest in the Fund.
ARTICLE XV - TRUST FUND AND POWERS AND DUTIES OF TRUSTEE
15.1 TRUST FUND. Subject to the claims of creditors as set forth in
Article XXI, the Employer hereby deposits with the Trustee in trust One Dollar
($1.00) which shall become the principal of the Trust Fund to be held,
administered and disposed of by the Trustee as provided in this Agreement. The
Trust Fund shall consist of the contributions by the Employer and the
investments and reinvestments thereof without distinction between principal and
income, and the said Trust Fund shall be held, administered and invested and
reinvested in accordance with Article IV by the Trustee.
15.2 TRUSTEE'S POWERS. In furtherance and not in limitation of the
Trustee's investment authority, but subject to the requirements of Article XIII
and Section 15.9, the Trustee shall have full power and authority to deal with
all or any part of the Fund, including, without limitation, to invest, reinvest,
and change investments; to acquire any property, real or personal, by purchase,
subscription, lease, or other means; to sell for cash or on credit, convey,
lease for long or short terms or convert, redeem or exchange, all or any part of
the Fund; to enforce by suit or otherwise, or to waive, its rights on behalf of
the Trust, and to defend claims asserted against the Trust; to compromise,
adjust and settle any and all claims against or in favor of the Trust; to renew
extend or foreclose any mortgage or other security; to bid in property on
foreclosure; to take deeds in lieu of foreclosure, with or without paying a
consideration therefor; to vote, or give proxies to vote, any stock or other
security, and to waive notice of meetings; to oppose, participate in and consent
to the reorganization, merger, consolidation, or readjustment of the finances of
any enterprise, to pay assessments and expenses in connection therewith, and to
deposit securities under deposit agreements; to hold securities unregistered, or
to register them in its own name or in the names of nominees; to purchase for
the benefit of the Trust insurance on the lives of any shareholder or employee
of the Employer; to make, execute, acknowledge and deliver any and all
instruments that it shall deem necessary or appropriate to carry out the powers
herein
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granted; to purchase other contracts issued by insurance companies, including
group annuity contracts; and generally to exercise any of the powers of an owner
with respect to all or any part of the Fund. The Trustee may retain as much cash
or cash equivalents as it deems advisable. The Trustee shall have full power and
authority to borrow against the credit of the Plan and Trust and to pledge or
mortgage assets of the Plan and Trust to secure such borrowing; provided that
any borrowing and pledge of assets made for the purpose of acquiring Employer
Securities shall be subject to the requirements of Article XIII.
15.3 TRUSTEE'S FEES AND EXPENSES. The Trustee's fee for performing its
duties hereunder shall be such as may be mutually agreed upon by the Employer
and the Trustee, and the Employer agrees to pay the same. The Employer agrees to
reimburse the Trustee for any and all expenses reasonably incurred by the
Trustee, including counsel fees. In the event of the failure of the Employer to
make such payment or reimbursement, the expenses shall be considered as an
expense of, and shall constitute a lien on, the trust fund; provided that
collection of such expenses from the Trust Fund shall not relieve the Employer
of liability to reimburse the Trust Fund.
15.4 LIMITATION ON TRUSTEE'S DUTIES. The Trustee is a party to this
agreement solely for the purposes set forth in this Trust and its duties shall
be only such as are set forth herein.
15.5 TRUSTEE'S ACCOUNTS. Within a reasonable period after the close of
each Fiscal Year and at any other time upon the request of the Employer, the
Trustee shall render to the Employer accounts of its administration of this
Trust during the preceding Fiscal Year or interim period including all
allocations required for such year. The written approval of any Trustee's
account by the Plan Administrator, as to all matters and transactions stated or
shown therein, shall be final and binding upon the Employer. Failure of the Plan
Administrator to notify the Trustee within ninety days after the receipt of any
account of his disapproval of such account shall be the equivalent of written
approval.
If the Plan Administrator files any exceptions or objections with respect
to any matters or transactions stated or shown in the account and the Plan
Administrator and the Trustee cannot amicably settle the questions raised in
such exceptions or objections, the Trustee or the Employer shall have the right
to have such questions settled by judicial proceeding. Nothing herein contained
shall be construed as depriving the Trustee of the right to have a judicial
settlement of its accounts.
15.6 IDENTITY OF INITIAL TRUSTEES; RESIGNATION AND REMOVAL OF TRUSTEES;
SUCCESSOR TRUSTEES. Until December 31, 1998, the Trustees in office on the date
of execution of this Agreement (namely, John Everets and Raymond Doherty), or
the designee of each such Trustee, shall be and shall remain the only two
Trustees of this Trust
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(hereinafter, the "Initial Trustees"); provided, however, that (1) each Initial
Trustee shall be subject to removal by the Board of Directors if and only if
legal counsel to the Employer advises the Board of Directors (or a court of
competent jurisdiction determines in a final order not subject to any further
appeal) that such Initial Trustee has committed (and failed to remedy upon
notice) material breaches of his fiduciary duties under the Trust and (2) if
either Initial Trustee shall cease to serve as Trustee for any reason and has
failed seasonably to appoint a designee as his successor Trustee (to serve for
so long as such Initial Trustee was to serve as one of the only two Trustees of
the Trust and to appoint a designee as his own successor during such period),
the remaining Initial Trustee (or his designee) shall appoint the other Initial
Trustee's successor. The Board of Directors shall appoint the successor Trustee
or Trustees to each Initial Trustee (or additional co-Trustees) when the Initial
Trustee no longer is entitled to be (or have his designee be) one of the only
two Trustees of the Trust.
Any Trustee may resign from this Trust at any time by giving written notice
to the Board of Directors and to each other Trustee then in office. Such
resignation shall be effective the later of 30 days after notice is given or on
the date specified by the Trustee in such notice, provided that the Board of
Directors may waive all or any part of such 30-day notice requirement. The Board
of Directors may remove the original Trustee and any successor Trustee upon
written notice (which shall be effective when given or on any other date
specified by the Board of Directors in such notice) and shall designate and
appoint all successor Trustees. Any successor Trustee shall have all the powers
herein conferred upon the original Trustee.
The Board of Directors may appoint a special Trustee whose duties are
limited to making independent fiduciary decisions with respect to the
acquisition (and the terms of such acquisition) of Qualifying Employer
Securities by the Plan and Trust pursuant to Article XIII. If such special
Trustee is appointed, while such special Trustee is in office any other Trustee
then in office shall not have any authority with respect to the decision to
acquire or the acquisition of Qualifying Employer Securities, but shall solely
exercise all other authority of the Trustee hereunder.
15.7 SUCCESSOR TRUSTEE'S DUTIES. No successor Trustee shall be required
to inquire into or shall be liable for the acts or omissions of any prior
Trustee.
15.8 TRUSTEE'S WRITTEN STATEMENTS. A written statement of the Trustee at
any time as to any facts relative to the Trust may always be relied upon and
shall always be conclusive evidence in favor of any person dealing in good faith
with the Trustee in reliance upon such statement.
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15.9 EMPLOYER'S POWER OF SUBSTITUTION OF ASSETS PRIOR TO A CHANGE OF
CONTROL. Prior to the occurrence of a Change of Control (but not after such
occurrence) the Employer shall have the right at any time, and from time to
time, in its sole discretion to substitute assets of equal fair market value for
any asset held in the Trust Fund (including without limitation any Employer
Securities). This right shall be exercisable by the Employer in a non-fiduciary
capacity without the approval or consent of any person in a fiduciary capacity.
ARTICLE XVI - AMENDMENT
16.1 RIGHT TO AMEND PRIOR TO A CHANGE OF CONTROL. The Employer reserves
the right at any time or times prior to the occurrence of a Change of Control to
amend this Agreement to any extent and in any manner that it may deem advisable
by delivery to the Trustee of an executed copy of such amendment; provided that
no amendment shall:
.01 except as provided in Article XVII, have the effect of vesting in
the Employer any interest in any property held subject to the terms of this
Trust;
.02 cause or permit any property held subject to the terms of the
Trust to be used in a manner other than as provided in this Agreement;
.03 reduce any Participant's vested interest in the Trust Fund;
.04 increase the duties or liability of the Trustee or alter the
Trustee's rights under Section 13.5 or alter any of the provisions of
Article XV or of this Section 16.1 without the Trustee's written consent;
or
.05 more often than once every six months change the eligibility
provisions of the Plan (including without limitation the provisions of
Section 2.8, Article VI, and Schedule I, Section 3) or the allocation
provisions of the Plan (including without limitation the provisions of
Article IX and Schedule I, Section 4).
16.2 RIGHT TO AMEND FOLLOWING A CHANGE OF CONTROL. At any time or times
following the occurrence of a Change of Control, the Employer may amend this
Agreement in any manner otherwise permitted under Section 16.1 above only with
the Trustee's express written consent.
ARTICLE XVII - DISCONTINUANCE OF CONTRIBUTIONS AND TERMINATION OF PLAN
17.1 RIGHT TO TERMINATE PRIOR TO A CHANGE OF CONTROL. The Employer has
established this Plan with the bona fide intention and
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expectation that it will be able to make its contributions indefinitely, but the
Employer may in its sole and absolute discretion terminate the Plan and Trust at
any time prior to the occurrence of a Change of Control without any liability
whatsoever for such discontinuance or termination.
17.2 RIGHT TO TERMINATE FOLLOWING A CHANGE OF CONTROL. At any time
following the occurrence of a Change of Control, the Employer may terminate the
Plan and Trust only with the Trustee's express written consent.
17.3 EVENTS CAUSING PLAN TERMINATION. The Plan and Trust hereby created
shall terminate upon the happening of any of the following events:
.01 Delivery to the Trustee of a notice of termination executed on
behalf of the Employer specifying the date of termination.
.02 Adjudication of the Employer as a bankrupt or general assignment
by the Employer to or for the benefit of creditors.
.03 Dissolution of the Employer or the permanent cessation and
winding-up of its business.
.04 A complete discontinuance of contributions by the Employer (but a
temporary suspension of contributions shall not constitute a termination).
Provided, however, in the event the dissolution of the Employer or cessation of
its business is occasioned by merger, consolidation, reorganization or transfer
of substantially all of its assets and liabilities to another corporation, and
such successor assumes the obligations of the Employer hereunder pursuant to
Section 2.9, the Plan and Trust shall not terminate but shall continue in full
force and effect.
17.4 LIQUIDATION OF TRUST AND DISTRIBUTION OF BENEFITS. If an event
described in Section 17.3 occurs, the Trustee shall forthwith liquidate the
entire Trust Fund. After proportional adjustment of accounts to reflect any
provision for expenses and any increase or decrease in the net worth of the
Trust Fund since the last Valuation Date, each Participant shall be entitled to
receive the vested amount standing to the credit of his account in the Trust
Fund as of the date of liquidation. The Trustee shall distribute such amounts in
cash or in kind (including without limitation shares of Employer Securities) at
the Trustee's sole option.
17.5 VESTING ON TERMINATION FOLLOWING A CHANGE OF CONTROL. In the event
of the termination of the Plan or the complete discontinuance of contributions,
provided that such termination or discontinuance coincides with or follows the
occurrence of a Change
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of Control, each Participant shall be fully vested in his account in the Trust
Fund and no Participant shall thereafter be divested of any funds in his account
as a result of the provisions of Section 10.3.
17.6 REVERSION OF EXCESS ASSETS AFTER TERMINATION. Notwithstanding
anything to the contrary herein, all assets remaining in the Trust Fund (whether
principal or interest) after satisfying all liabilities of the Plan and the
Trust Fund (including without limitation distribution of benefits in accordance
with Section 17.4) shall be revested in the Employer and the Trustee shall
promptly pay over the same to the Employer following termination of the Plan and
Trust.
ARTICLE XVIII - LOANS
The Trustee shall not make loans to Participants or Beneficiaries from
assets of this Plan.
ARTICLE XIX - ROLLOVERS AND DIRECTED INVESTMENTS
19.1 NO ROLLOVERS INTO PLAN. The Plan shall not receive any amounts
received by a Participant from any other plan.
19.2 NO DIRECTED INVESTMENTS PERMITTED. No Participant or Beneficiary may
direct the Trustee as to the investment of his account in the Trust Fund either
generally or in respect of some particular investment or investments.
ARTICLE XX - MISCELLANEOUS
20.1 NO EMPLOYMENT CONTRACT. The adoption and maintenance of this Trust
shall not be deemed to be a contract between the Employer and an Employee or the
Trustee and an Employee. Nothing herein contained shall be deemed to give to any
Employee the right to be retained in the employ of the Employer or to interfere
with the right of the Employer to discharge any Employee at any time, nor shall
it be deemed to give the Employer the right to require any Employee to remain in
its employ, nor shall it interfere with the Employee's right to terminate his
employment at any time.
20.2 EMPLOYER LIABLE FOR PLAN LIABILITIES. Each Participant shall have
full recourse against the Employer for any insufficiency of benefits payable
under this Plan.
20.3 BENEFIT ACCOUNTS ARE UNSECURED CLAIMS. No Participant or Beneficiary
shall have any preferred claim on, or any beneficial ownership interest in, any
assets of the Trust Fund prior to the time such assets are distributed to the
Participant or Beneficiary as provided in Article X, and all rights created
under the Plan and Trust shall be mere unsecured contractual rights of a
Participant against the Employer.
-22-
20.4 NO ANTICIPATION OR ASSIGNMENT OF BENEFITS. No interest of any
Participant or Beneficiary hereunder shall be subject to anticipation or
alienation by such Participant or Beneficiary, either by sale, transfer,
assignment, pledge, encumbrance, attachment, garnishment, or by any other method
and shall not be subject to be taken by his creditors by any process whatsoever.
20.5 ACCEPTANCE OF TRUST. The Trustee hereby accepts the Trust herein
expressed and agrees to carry out the provisions which it is required to perform
hereunder.
20.6 GOVERNING LAW. This instrument and the Trust created hereby shall be
construed, administered, regulated and governed in all respects under and by the
laws of Massachusetts.
20.7 UNIFORMITY OF TREATMENT. All the provisions of this instrument shall
be administered in such a way that all Participants under similar circumstances
will be similarly treated.
ARTICLE XXI - TRUSTEE'S RESPONSIBILITY WHEN EMPLOYER IS INSOLVENT
21.1 PROCEDURE IF EMPLOYER IS INSOLVENT.
.01 BENEFITS UNSECURED. At all times during the continuance of this
Trust, the principal and income of the Trust Fund shall be subject to
claims of general creditors of the Employer as hereinafter set forth. All
Participants and Beneficiaries shall have the rights under this Trust
Agreement of unsecured general creditors of the Employer and shall not have
any preferred claim on, or any beneficial interest in, the Trust Fund other
than in amounts as they become distributable under Section 10.2. Nothing in
this Agreement shall in any way diminish any rights of any Participant or
Beneficiary to pursue his or her rights as an unsecured general creditor of
the Employer with respect to his or her interest in the Plan or otherwise.
.02 PROCEDURE IF NOTICE IS GIVEN. At any time that the Trustee has
received notice that the Employer is Insolvent, the Trustee shall
immediately discontinue distribution to every Participant and Beneficiary
and shall thereafter deliver any undistributed principal and income of the
Trust Fund to satisfy all claims of general creditors (including the
Participants and their Beneficiaries) as a court of competent jurisdiction
may direct; provided, however, that the Trustee may deduct or continue to
deduct any unreimbursed fees and expenses of the Trust Fund, including
taxes, pending receipt of such court direction.
.03 DUTY TO GIVE NOTICE; RELIANCE BY TRUSTEE. The Employer (by its
board of directors and chief executive officer)
-23-
and the Plan Administrator shall have the duty to inform the Trustee
immediately in writing if the Employer becomes Insolvent, and the Trustee
may rely on such notice (except as provided in the following paragraph)
without making an independent determination. Unless the Trustee has actual
knowledge of the Employer's insolvency, the Trustee shall have no duty to
inquire whether the Employer is Insolvent.
.04 DUTY TO MAKE AN INDEPENDENT DETERMINATION. Notwithstanding the
foregoing, if the Trustee receives such notice that the Employer is
Insolvent at any time after a Change of Control has occurred or receives a
written allegation of an event of insolvency from a third party considered
by the Trustee to be reliable and responsible, the Trustee shall
independently determine, as soon as practicable after receipt of such
notice or allegation, whether the Employer is Insolvent, and the Employer
shall furnish such evidence as the Trustee reasonably requests for the
purpose of making such determination. The Trustee may in all events rely on
such evidence concerning the Employer's solvency as may be furnished to the
Trustee which will give the Trustee a reasonable basis for making a
determination concerning the Employer's solvency. For purposes of this
Agreement, the Trustee (if it is a bank) shall be considered to possess any
knowledge and information concerning the Employer in the possession of the
Trustee's Banking Department or other department that can reasonably be
imputed to the Trustee under normal bank procedures.
.05 PROCEDURE WHILE A DETERMINATION IS BEING MADE. Pending such
determination by the Trustee if one is required pursuant to paragraph
.04 above, the Trustee shall suspend distributions to every Participant and
Beneficiary, shall hold the Trust assets for the benefit of the Insolvent
Employer's general creditors and the payment of fees and expenses (to the
extent permitted under this Agreement), and shall resume distributions to
Participants and Beneficiaries in accordance with Section 10.2 of this
Agreement only after the Trustee has determined that the Employer is not
Insolvent (or is no longer Insolvent, if the Trustee initially determined
the Employer to be Insolvent).
06. CONCLUSIVE DETERMINATION OR NOTICE. In performing any of its
obligations or taking any discretionary action under this Agreement which
is dependent on the Employer being Insolvent, the Trustee may rely on its
determination (if such was required under paragraph .04 above), including
an opinion of counsel (who may be counsel to the Trustee), that the
Employer is Insolvent or on a written notice of insolvency from the
Employer or the Plan Administrator. Unless such a determination arises out
of the Trustee's gross negligence or willful misconduct, the Trustee's
determination as to whether the Employer is Insolvent shall be binding and
conclusive on all persons to the extent of determining their respective
interests, rights and duties under this Agreement.
-24-
21.2 PROCEDURE FOLLOWING INSOLVENCY.
.01 RESUMPTION OF TRUSTEE'S DUTIES. If the Trustee suspends or
discontinues distributions from the Trust Fund pursuant to Section 21.1 and
the Insolvent Employer later becomes solvent again without the entry of a
court order concerning the disposition of the Trust Fund, the Employer
shall so inform the Trustee immediately in writing and the Trustee shall
thereupon resume all of its duties and responsibilities under this
Agreement.
.02 RESUMPTION OF DISTRIBUTIONS. The first distribution to each
Participant or Beneficiary following any suspension or discontinuance of
distributions pursuant to Section 21.1 shall include the aggregate amount
of all payments which would have been made to each such recipient in
accordance with the Plan during the period of such suspension or
discontinuance, plus interest on the delayed payments (at a rate which the
Trustee determines to be reasonable under the circumstances at its sole
discretion) and less the aggregate amount of distributions made to the
recipient by the Employer in lieu of the distributions provided for
hereunder during any such period of suspension or discontinuance.
-25-
IN WITNESS WHEREOF, the parties have executed this instrument under seal
this 28th day of July, 1994.
HPSC, INC.
By /s/ John Everets
-------------------------------------
John Everets, Chairman
Initial Trustees
/s/ John Everets
- ----------------------------------
John Everets, As Trustee
and Not Individually
/s/ Raymond Doherty
- ----------------------------------
Raymond Doherty, As Trustee
and Not Individually
-26-
SCHEDULE I
to the
HPSC, INC.
SUPPLEMENTAL EMPLOYEE STOCK OWNERSHIP PLAN
SECTION 1 - DEFINITIONS (Refer to Article II)
1.1 The Entry Date of this Plan shall be the first business day of each
calendar month.
1.2 The Fiscal Year shall be each successive twelve-month period which
ends on December 31.
1.3 The Plan Administrator shall be: the individual or entity appointed
by the Board of Directors. The initial Plan Administrator is the
Employer.
SECTION 2 - EFFECTIVE DATE (Refer to Article V)
The Effective Date of the Plan is January 1, 1993.
SECTION 3 - PARTICIPATION (Refer to Article VI)
Each Employee who is not an Ineligible Employee under Section 2.8 shall
become a Participant on the first Entry Date on or after the later of (i) his
Employment Commencement Date and (ii) the date on which he ceased to be an
Ineligible Employee.
SECTION 4 - ALLOCATION (REFER TO ARTICLES IX AND XIII)
4.1 ALLOCATION OF CONTRIBUTIONS AND FORFEITURES.
.01 GENERAL PROVISIONS. Any contribution made by the Employer for a
Fiscal Year plus any forfeitures allocable for a Fiscal Year
shall be allocated among the Participants who are employed by the
Employer on the last day of such Fiscal Year and who have
completed 150 Hours of Service during such Fiscal Year (or a
proportionate number of Hours of Service during any Fiscal Year
that is shorter than 12 months). All amounts so allocated shall
be credited to the Participants' accounts as of the last day of
the Fiscal Year for which the contributions were made and the
forfeitures became allocable. Notwithstanding the foregoing, all
Employer Securities and other Plan assets that are released from
encumbrance and become subject to allocation as the result of a
Change of Control (as provided in Section 13.3) shall be
allocated among all Participants who were employed by
-27-
the Employer on the day before the date that such Change of
Control occurred, such allocations to be made pursuant to
paragraphs .02 and .03 of this Section as if an Employer
contribution had been made to cause the release of the assets
from encumbrance and to be credited to the Participants' accounts
as of the day before the date that the Change of Control
occurred.
.02 SPECIAL PRIORITY ALLOCATION. All Employer contributions and
forfeitures available for allocation on account of a Fiscal Year
shall be allocated first to Participants in this Plan who have
not received an allocation of Employer contributions and
forfeitures under the Qualified ESOP which is the same percentage
of their total Compensation (as defined in this Plan) as received
for the Fiscal Year under the Qualified ESOP generally by
participants in the Qualified ESOP who are not "highly
compensated employees" for such Fiscal Year within the meaning of
Code Section 414(q). Employer contributions and forfeitures shall
be allocated pursuant to this paragraph .02 in proportion to the
Compensation of all Participants eligible under this paragraph
.02 for the Fiscal Year; provided that no such Participant shall
receive an allocation pursuant to this paragraph .02 which, when
added to his allocation under the Qualified ESOP, exceeds the
percentage of Compensation received for the Fiscal Year under the
Qualified ESOP generally by the participants who are not highly
compensated employees.
.03 GENERAL ALLOCATION. All Employer contributions and forfeitures
available for allocation on account of a Fiscal Year that are not
required to be allocated pursuant to the Special Priority
Allocation rules of paragraph .02 above shall be allocated in
proportion to the Compensation of all eligible Participants (as
determined under paragraph .01 of this Section) for the Fiscal
Year.
4.2 PROCEDURES. As of the close of each Fiscal Year, the Employer shall
furnish to the Plan Administrator a list of those Participants
eligible to share in the contribution, reflecting the Compensation for
each Participant.
SECTION 5 - VESTING (Refer to Article X)
5.1 VESTED INTEREST. Each Participant shall immediately have a non-
forfeitable interest in 100 percent of his account in the Trust Fund
on the date that a Change of Control occurs. Prior to the occurrence
of a Change of Control, a Participant's vested interest in the Trust
Fund as of the first day of each Fiscal Year shall be a percentage of
his
-28-
account in the Trust Fund based on years of service completed on or
before the last day of the previous Fiscal Year, determined as
follows:
YEARS OF SERVICE PERCENTAGE
Less than 1 year -0-
1 year 20%
2 years 40%
3 years 60%
4 years 80%
5 years or more 100%
5.2 VESTING YEARS OF SERVICE. For purposes of this section, a year of
service shall be credited for each twelve-month period commencing with
an Employee's Employment Commencement Date and each anniversary
thereof during which the Employee completes at least 1,000 Hours of
Service, including the year of termination.
5.3 SERVICE COUNTING RULES. All of the Participant's years of service
with the Employer shall be taken into account except the following
shall be disregarded:
.01 years of service completed before the Participant attained age
18.
.02 years of service completed before the Effective Date of the Plan.
.03 in the case of a Participant who has any one-year Break in
Service, years of service before such Break.
All service of a Participant after any Break in Service shall be
disregarded for the purpose of vesting the Participant's account
balance that accrued before such Break in Service.
5.4 EFFECT OF SERVICE WITH AFFILIATED EMPLOYERS. For purposes of this
Section all of a person's service with any employer which is counted
as Hours of Service pursuant to Section 2.13 of Article II shall be
considered to be service with the Employer. Notwithstanding the
foregoing, no such person shall be treated as an Employee of the
Employer for any other purpose during the period of such service
unless it is otherwise expressly provided in this Plan.
5.5 EFFECT OF CHANGE IN FISCAL YEAR. In case of any change in the Fiscal
Year of the Plan, for purposes of this Section 5 an Employee shall be
credited with one year of service if he otherwise satisfies the
requirements of Subsection 5.2 above during the twelve-month period
beginning on the first day of the final Fiscal Year prior to the
change and a second year of service if he otherwise satisfies the
-29-
requirements of Subsection 5.2 above during the twelve-month period
beginning on the first day of the new Fiscal Year.
HPSC, INC.
By /s/ John Everets
--------------------------------------
John Everets, Chairman
Acknowledged July 28th, 1994:
Initial Trustees
/s/ John Everets /s/ Raymond R. Doherty
- ---------------------------- --------------------------------------
John Everets, As Trustee Raymond Doherty, As Trustee
and Not Individually and Not Individually
-30-
PLEDGE AND SECURITY AGREEMENT
-----------------------------
AGREEMENT between the Trustees of the HPSC, Inc. Supplemental Employee
Stock Ownership Plan and Trust (the "Plan"), a Massachusetts trust (the
"Pledgor"), and HPSC, Inc. (the "Company"), a Delaware corporation (the
"Pledgee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Pledgor and the Pledgee are parties to a certain Secured
Promissory Note (the "Note") dated as of the date hereof, pursuant to which the
Pledgor is indebted to the Pledgee in the amount of $1,225,000; and
WHEREAS, as a condition to the Note the Pledgee requires that the Pledgor
pledge certain shares of capital stock in the Pledgee purchased by the Pledgor
from the Pledgee and paid for by the Pledgor by delivery of the Note, in order
to secure the Pledgor's performance in full of its obligation to the Pledgee
under the Note;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency is of which is hereby
acknowledged by each of the parties hereto, the parties do hereby agree as
follows:
1. PLEDGE.
The Pledgor hereby assigns, transfers, sets over, pledges and grants a
continuing security interest to the Pledgee in (i) those shares of capital stock
in the Pledgee which were purchased by the Pledgor and paid for by the Pledgor
by delivery of the Note and which have not been allocated to the participants
under the terms of the Plan documents (the "Pledged Shares"), it being the
intent of the parties that upon any such allocation, the shares of capital stock
so allocated shall automatically cease to be included as Pledged Shares subject
to this Agreement, (ii) contributions (other than contributions of employer
securities) that are made to the Pledgor to meet its obligations under the Note,
and (iii) earnings attributable to the investment of such
contributions and earnings attributable to the Pledged Shares including, but not
limited to, dividends and any other distributions with respect to the Pledged
Shares (except for cash dividends as provided in paragraph 3.1 below), and (iv)
the proceeds thereof and any property substituted therefor by the Company
pursuant to its power of substitution under the Plan, to secure the payment and
performance of the liabilities and obligations of the Pledgor to the Pledgee
arising under the Note, as now or hereafter amended (subsections (i), (ii),
(iii) and (iv) above shall be collectively referred to as the "Collateral").
Notwithstanding the foregoing, the Pledgee's security interest in the Collateral
shall terminate simultaneously with the occurrence of a Change of Control (as
such term is defined in the Plan as in effect on the date of this Agreement)
with respect to the Company. The Pledgor herewith delivers to the Pledgee the
stock certificates evidencing the initial amount of the Pledged Shares, namely,
350,000 shares, endorsed in blank or with duly executed stock powers attached.
2. REPRESENTATIONS; COVENANTS.
The Pledgor represents and warrants that it has good title to all the
Pledged Shares, free and clear of any mortgages, pledges, liens, encumbrances or
charges of any nature whatsoever except the pledge and security interest created
and granted by this Agreement in favor of the Pledgee, and that the Pledged
Shares are all duly and validly issued, fully paid and non-assessable, and duly
and validly pledged hereby with the Pledgee in accordance with applicable law.
The Pledgor covenants that it will defend the Pledgee's right, title, and
special property and security interest in and to all of the Collateral against
the claims of all persons whomsoever.
3. RIGHTS PRIOR TO DECLARATION OF DEFAULT.
3.1 Until an Event of Default (as hereafter defined) shall have occurred
and be continuing, the Pledged Shares shall continue to be registered in the
name of the Pledgor, and the Pledgor shall have the right to vote the same at
all stockholders meetings at which the same or any part thereof may be voted.
The Pledgor shall not have the right to receive any cash dividends (including
without limitation any liquidating or similar dividends) and other income
allocable with respect to the Collateral except upon the condition that any such
income shall be
-2-
used to pay down the Pledgor's obligations to the Pledgee under the Note. If an
Event of Default shall have occurred and be continuing, all such rights of the
Pledgor to vote with respect to the Pledged Shares shall, at the Pledgee's
option, cease with respect to that amount of Pledged Shares having a value
which, if such value had been paid in cash by the Pledgor to the Pledgee in a
timely manner pursuant to the payment schedule set forth in the Note, would
cause the loan as evidenced by the Note to be current.
3.2 If the capital stock of the Pledgee shall be changed into or exchanged
for a different number or kind of shares of stock or other securities of such
corporation or of another corporation, whether through merger, consolidation,
reorganization, recapitalization, stock split, or combination of shares, there
shall be substituted for each of the Pledged Shares held by the Pledgee under
this Agreement the number of shares of stock or other securities into which each
outstanding share of such capital stock shall be so changed or for which each
share shall be exchanged. The Pledgor hereby agrees that any securities so
substituted for the Pledged Shares pursuant to the terms of such change or
exchange shall be delivered directly to the Pledgee, to be held and disposed of
by the Pledgee as Pledged Shares in accordance with the terms and provisions of
this Agreement. The Pledgor authorizes the Pledgee to surrender the Pledged
Shares or take whatever other action is required to be taken with respect to the
Pledged Shares under the terms of such change or exchange and further agrees to
execute and deliver to the Pledgee such stock powers as may be necessary to
carry out the purposes of this Agreement in view of such substitution.
4. DEFAULT.
The term "Event of Default" shall mean the occurrence of any of the
following events:
(a) The Pledgor shall fail to make all payments when due under the Note,
including amounts becoming due by reason of acceleration of the Note;
(b) The Pledgor shall fail to perform any covenant contained in the Note
or herein; or
-3-
(c) If any warranty or representation contained in the Note or herein
should prove not to be true in any material respect.
5. RIGHTS ON DEFAULT.
5.1 If the Event of Default shall have occurred and be continuing, the
Pledgee is hereby irrevocably authorized to cause the Pledged Shares or
substitute Collateral to be transferred into its name or the name of its nominee
on the books of the corporation issuing the same, provided that the value of the
Pledged Shares or substitute Collateral so transferred shall not exceed in value
that amount which, if it had been paid in cash by the Pledgor to the Pledgee in
a timely manner pursuant to the payment schedule set forth in the Note (not
including any amounts due by reason of the Note's acceleration), would cause the
loan as evidenced by the Note to be current; the remainder (if any) of the
Pledged Shares or substitute Collateral not so transferred shall continue to be
held and disposed of by the Pledgee in accordance with this Agreement. The
Pledgor and the Pledgee agree that any transfer of the Pledged Shares or
substitute Collateral according to this paragraph shall be deemed an acceptance
of such stock in satisfaction of the obligations of the Pledgor to the Pledgee
under the Note, to the extent of the value of any Pledged Shares or substitute
Collateral so transferred.
5.2 No course of dealing or delay in taking or failing to take any action
with respect to an Event of Default shall affect the Pledgee's right to take
such action at a later time. No waiver as to any one Event of Default shall
affect the Pledgee's rights upon any other Event of Default.
5.3 Notwithstanding any other provision of this Pledge Agreements, except
to the extent of the Pledgee's right to the Pledged Shares or substitute
Collateral (or a portion thereof) as provided in this Section 5, the Note shall
be without recourse against the Pledgor, the Plan, or the participants in the
Plan. Specifically, without limiting the generality of the foregoing, under no
circumstances shall the Pledgee have any recourse against the shares of the
Company's stock that have been allocated to the accounts of participants in the
Plan as of the time of an Event of Default.
-4-
6. NOTICES.
Any notice under this Agreement shall be in writing and shall be deemed
delivered if mailed by registered or certified mail, postage prepaid, return
receipt requested, in hand, or by recognized commercial courier, if addressed to
the Pledgor or the Pledgee, as the case may be, at the following respective
addresses:
IF TO THE PLEDGEE: IF TO THE PLEDGOR:
----------------- ------------------
HPSC, Inc. Trustee
60 State Street HPSC, Inc. Supplemental
Boston, Massachusetts 02109 Employee Stock Ownership Plan
Attention: Chief Executive Officer c/o HPSC, Inc.
60 State Street
Boston, Massachusetts 02109
If notice is given by mail and is not delivered within three days of the date of
the post mark, any applicable notice period shall be extended by two days.
Nothing contained herein shall prevent the giving of actual written notice in
any other effective manner.
7. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon, and inure to the benefit of, the
Pledgor and its successors and assigns. This Agreement shall be binding upon,
and inure to the benefit of, the Pledgee and its successors and assigns.
8. TERM.
Except as provided below, the term of this Agreement shall be until the
obligations of the Pledgor to the Pledgee under the Note have been paid and
performed in full. Upon the first to occur of (i) payment in full of all
obligations of the Pledgor to the Pledgee under the Note and (ii) a Change of
Control (as defined in Section 1 above), this Agreement shall terminate and the
Pledgee shall surrender to the Pledgor the Pledged Shares and other Collateral
which have not theretofore been sold or otherwise disposed of pursuant to this
Agreement.
-5-
9. WAIVERS.
With respect both to obligations of the Pledgor to the Pledgee under the
Note and to the Pledged Shares and other Collateral, the Pledgor assents to any
extension or postponement of the time of payment or any other indulgence, to any
release of collateral, to the acceptance of partial payment thereof and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Pledgee may deem advisable. The Pledgee shall not be
deemed to have waived any of its rights under the Note or with respect to the
Pledged Shares and other Collateral unless such waiver is in writing and signed
by the Pledgee. No delay or omission on the part of the Pledgee in exercising
any right shall operate as a waiver of such right or any other right. A waiver
on any one occasion shall not be construed as a bar to or waiver of any right on
any future occasion. All rights and remedies of the Pledgee with respect to the
Note or the Pledged Shares and other Collateral, whether evidenced hereby or by
any other instrument or document, shall be cumulative and may be exercised
separately or concurrently.
10. EXONERATION.
Under no circumstance shall the Pledgee be deemed to assume any
responsibility for or obligation or duty with respect to the Pledged Shares or
other Collateral or any matter or proceeding arising out of or relating thereto,
other than to exercise reasonable care in the protective custody of the Pledged
Shares and other Collateral.
11. GOVERNING LAW; COUNTERPARTS.
This Agreement and the rights and obligations of the parties hereunder
shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts applicable to contracts made and to be performed
entirely within such Commonwealth, shall have the effect of a sealed instrument,
and may be executed in counterparts, each of which shall constitute an original.
12. AMENDMENTS.
This Agreement may not be amended or modified except by a writing duly
executed by both parties.
-6-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, under
seal, this 28th day of July, 1994.
PLEDGEE: PLEDGOR:
HPSC, INC. TRUSTEES OF THE HPSC, INC.
SUPPLEMENTAL EMPLOYEE STOCK
OWNERSHIP PLAN AND TRUST
By: /s/ John Everets, Jr. By: /s/ John Everets, Jr.
----------------------------- -----------------------------
Name: John Everets, Jr. Name: John Everets, Jr., as
Trustee and not
Title: Chief Executive Officer individually
By: /s/ Raymond R. Doherty
-----------------------------
Name: Raymond R. Doherty, as
Trustee and not
individually
-7-
7/25/94
SECURED PROMISSORY NOTE
(HPSC, Inc. Supplemental Employee Stock Ownership Plan and Trust)
$1,225,000 July 28, 1994
FOR VALUE RECEIVED, the undersigned Trustees of the HPSC, Inc. Supplemental
Employee Stock Ownership Plan and Trust (the "Plan"), a Massachusetts trust (the
"Maker"), hereby promise to pay to the order of HPSC, Inc.(the "Company"), a
Delaware corporation, 60 State Street, Boston, Massachusetts 02109 (together
with its successors and assigns, the "Holder"), the principal amount of one
million two hundred twenty-five thousand Dollars ($1,225,000) and to pay
interest from the date hereof on the unpaid balance of such principal amount
outstanding from time to time at a rate per annum equal to the prime rate on the
first business day of January in the applicable year, as reported in the WALL
STREET JOURNAL, plus one percentage point.
Principal shall be payable in 10 equal annual installments of $122,500
beginning September 1, 1995. Interest shall be calculated and payable annually
in arrears beginning September 1, 1995. Interest shall be based on a 360-day
year and paid for the actual number of days elapsed. All payments due hereunder
shall be made to the Holder at the address shown above or at such other place as
the Holder may designate from time to time in writing at least ten (10) days
before any such payment is due.
The principal of this Note may be prepaid in whole or in part at any time
or from time to time at the option of the Maker, without premium or penalty but
with interest on the amount so prepaid to the date of such prepayment. Any such
prepayment shall be applied to the installment payments required hereunder in
inverse order thereof, and no such prepayment will affect the Maker's obligation
to make any subsequent required payment or prepayment until this Note shall have
been paid in full.
If the Maker shall fail to make any payment on this Note when due and
payable and such amount shall remain unpaid for ten (10) business days after the
due date thereof; or if the Maker shall fail to comply with or perform any other
of the terms of this Note within ten (10) business days of receipt by the Maker
of written notice from the Holder of such failure to comply; or if the Maker
shall become insolvent or unable to meet its obligations as they become due, or
shall begin or be the subject of any bankruptcy or other proceeding for the
relief of debtors; or any substantial part of the Maker's property shall be
taken on attachment or by foreclosure; then, in any such case (an "Event of
Default"), the Holder may at the Holder's option declare this Note, including
the entire unpaid principal amount then outstanding and all interest accrued and
unpaid thereon, to become due and payable immediately.
This Note, including the entire unpaid principal amount then outstanding
and all interest accrued and unpaid thereon, shall be cancelled immediately upon
the occurrence of a
Change of Control (as such term is defined in the Plan as in effect on the date
of this Note) with respect to the Company.
The failure of any party to insist, on any one or more occasions, upon
performance of any of the terms or conditions of this Note, shall not be
construed as a waiver or relinquishment of any rights granted hereunder or the
future performance of any such term or condition.
The Maker shall pay to the Holder upon demand all legal and other costs and
expenses of every kind, including reasonable attorneys' fees and disbursements,
relating to the collection and/or enforcement of this Note or of any rights
hereunder.
This Note is secured pursuant to the terms of a Pledge and Security
Agreement of even date herewith between Maker and Holder. Except as so secured,
this Note is without recourse against the Maker.
The parties hereto, including the Maker and all endorsers and guarantors of
this Note, hereby waive presentment, demand, notice of protest and all other
demands and notices in connection with the delivery, acceptance, performance or
enforcement of this Note.
This Note may not be amended, or the terms waived, except in writing signed
by the party against whom such amendment or waiver is sought to be enforced.
This Note shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts applicable to contracts made and to be
performed entirely within the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has duly executed this Note as an
instrument under seal as of the day and year first above written.
TRUSTEES OF THE HPSC, INC.
SUPPLEMENTAL EMPLOYEE STOCK
OWNERSHIP PLAN AND TRUST
By:
------------------------------------
John Everets, Jr., as
Trustee and not individually
By:
------------------------------------
Raymond R. Doherty, as
Trustee and not individually
-2-