EXHIBIT 10.4
HPSC, INC.
1994 Stock Plan
As adopted March 23, 1994
TABLE OF CONTENTS
HPSC, INC.
1994 Stock Plan
As adopted March 23, 1994
1. PURPOSE; REGISTRATION . . . . . . . . . . . . 1
2. EFFECTIVE DATE. . . . . . . . . . . . . . . . 1
3. STOCK COVERED BY THE PLAN . . . . . . . . . . 2
4. ADMINISTRATION. . . . . . . . . . . . . . . . 2
5. ELIGIBLE RECIPIENTS . . . . . . . . . . . . . 2
6. DURATION OF THE PLAN. . . . . . . . . . . . . 2
7. TERMS AND CONDITIONS OF OPTIONS, PURCHASE
AUTHORIZATIONS AND BONUSES. . . . . . . . . . 3
(a) PRICE. . . . . . . . . . . . . . . . . . 3
(b) NUMBER OF SHARES . . . . . . . . . . . . 3
(c) EXERCISE OF OPTIONS. . . . . . . . . . . 3
(d) PAYMENT. . . . . . . . . . . . . . . . . 4
(e) WITHOLDING TAXES; DELIVERY OF SHARES . . 4
(f) NON-TRANSFERABILITY. . . . . . . . . . . 4
(g) TERMINATION OF PURCHASE AUTHORIZATIONS
AND OPTIONS. . . . . . . . . . . . . . . 5
(h) RIGHTS AS STOCKHOLDER. . . . . . . . . . 5
(i) REPURCHASE OF SHARES BY THE COMPANY. . . 5
(j) 10% STOCKHOLDER. . . . . . . . . . . . . 6
(k) CONFIDENTIALITY AGREEMENTS . . . . . . . 6
(l) AGGREGATE LIMITATION . . . . . . . . . . 6
(m) RIGHT TO TERMINATE . . . . . . . . . . . 6
8. RESTRICTIONS ON INCENTIVE OPTIONS . . . . . . 6
9. SUSPENSION OF RIGHTS PRIOR TO A DISSOLUTION,
REORGANIZATION, ETC.. . . . . . . . . . . . . 7
10. ADJUSTMENT IN SHARES. . . . . . . . . . . . . 7
11. INVESTMENT REPRESENTATIONS; TRANSFER
RESTRICTIONS . . . . . . . . . . . . . . . . 7
12. DEFINITIONS . . . . . . . . . . . . . . . . . 8
(a) "BOARD". . . . . . . . . . . . . . . . . 8
(b) "BONUSES". . . . . . . . . . . . . . . . 8
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(c) "CODE" . . . . . . . . . . . . . . . . . 8
(d) "COMMITTEE". . . . . . . . . . . . . . . 8
(e) "COMMON STOCK" . . . . . . . . . . . . . 8
(f) "COMPANY". . . . . . . . . . . . . . . . 8
(g) "COMPANY GROUP". . . . . . . . . . . . . 8
(h) "DISABILITY" . . . . . . . . . . . . . . 8
(i) "EFFECTIVE DATE" . . . . . . . . . . . . 8
(j) "EMPLOYEE" . . . . . . . . . . . . . . . 8
(k) "EVENT". . . . . . . . . . . . . . . . . 8
(l) "EXCHANGE ACT" . . . . . . . . . . . . . 8
(m) "INCENTIVE OPTION" . . . . . . . . . . . 8
(n) "NON-QUALIFIED OPTION" . . . . . . . . . 9
(o) "OFFICER". . . . . . . . . . . . . . . . 9
(p) "OPTIONS". . . . . . . . . . . . . . . . 9
(q) "PARENT" . . . . . . . . . . . . . . . . 9
(r) "PARTICIPANT". . . . . . . . . . . . . . 9
(s) "PLAN" . . . . . . . . . . . . . . . . . 9
(t) "PURCHASE AUTHORIZATION" . . . . . . . . 9
(u) "SERVICE". . . . . . . . . . . . . . . . 9
(v) "SHARES" . . . . . . . . . . . . . . . . 9
(w) "SUBSIDIARY" . . . . . . . . . . . . . . 9
13. TERMINATION OR AMENDMENT OF PLAN. . . . . . . 9
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As adopted 3/23/94
HPSC, INC.
1994 STOCK PLAN
1. PURPOSE; RESTRICTIONS. The purpose of this HPSC, Inc. 1994 Stock
Plan (the "Plan") is to advance the interests of HPSC, Inc., a Delaware
corporation (the "Company"), by strengthening the ability of the Company to
attract, retain and motivate key employees, consultants and other individual
contributors of or to the Company or any present or future parent or
subsidiary of the Company (the "Company Group") by providing them with an
opportunity to purchase or receive as bonuses stock of the Company and thereby
permitting them to share in the Company's success. It is intended that this
purpose will be effected by granting (i) incentive stock options ("Incentive
Options"), which are intended to qualify under the provisions of Section 422
of the Code (as hereinafter defined), and non-statutory stock options ("Non
qualified Options"), which are not intended to meet the requirements of
Section 422 of the Code and which are intended to be taxed upon exercise under
Section 83 of the Code (both Incentive Options and Nonqualified Options shall
be collectively referred to as "Options"), (ii) stock purchase
authorizations ("Purchase Authorizations") and (iii) stock bonus awards
("Bonuses").
Notwithstanding the foregoing:
(a) Unless and until this Plan is approved by the Company's
shareholders, and prior to the effective date of such approval, no stock of
the Company shall be issued pursuant to this Plan to any director or Officer
(as defined herein) of the Company, except to a director or Officer not
previously employed by the Company, as an inducement essential to the
individual's entering into an employment agreement with the Company. For
purposes of this paragraph, the term "Officer" shall mean any of the Company's
executive officers who are subject to the trading limitations of Section 16(b)
of the Exchange Act (as hereinafter defined).
(b) No Incentive Options shall be granted under this Plan unless this
Plan shall have been approved by the stockholders of the Company within twelve
(12) months after the Effective Date (as hereinafter defined).
2. EFFECTIVE DATE. This Plan was adopted on March 23, 1994, which is
also the Effective Date of the Plan.
3. STOCK COVERED BY THE PLAN. Subject to adjustment as provided in
Sections 9 and 10 below, the shares that may be made subject to Options,
Purchase Authorizations or Bonuses under this Plan ("Shares") shall not exceed
in the aggregate 200,000 shares of the common stock, $.01 par value, of the
Company ("Common Stock"). Any Shares subject to an Option or Purchase
Authorization which for any reason expires or is terminated unexercised as to
such Shares and any Shares reacquired by the Company pursuant to forfeiture or
a repurchase right hereunder may again be the subject of an Option, Purchase
Authorization or Bonus under the Plan. The Shares purchased pursuant to
Purchase Authorizations or the exercise of Options under this Plan or issued
as Bonuses may, in whole or in part, be either authorized but unissued Shares
or issued Shares reacquired by the Company.
4. ADMINISTRATION. This Plan shall be administered by a committee
(the "Committee") consisting of not less than three (3) members of the Board
(as hereinafter defined). Each of the members of the Committee shall be, and
shall have been at all times within the one year period ending on the date of
appointment to the Committee, a person who in the opinion of counsel to the
Company is (i) a "disinterested person" as such term is used in Rule 16b-3
promulgated under the Exchange Act and (ii) an "outside director" as such term
is used in proposed regulation Section 1.162.27(e)(3) under Section 162(m) of
the Code. The Committee shall have authority, subject to the express
provisions of the Plan, to construe the Plan and the respective Options,
Purchase Authorizations, Bonuses and related agreements, to prescribe, amend
and rescind rules and regulations relating to the Plan to determine the terms
and provisions of the respective Options, Purchase Authorizations, Bonuses and
related agreements, and to make all other determinations in the judgment of
the Committee necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Option, Purchase Authorization, Bonus, or
related agreement in the manner and to the extent it shall deem expedient to
carry the Plan into effect, and it shall be the sole and final judge of such
expediency. No member of the Committee shall be liable for any action or
determination made in good faith.
5. ELIGIBLE RECIPIENTS. Subject to the restrictions of Section 1
above, Options, Purchase Authorizations and Bonuses may be granted to such key
employees, consultants or other individual contributors of or to the Company
Group, including without limitation members of the Board, as are selected by
the Committee (a "Participant"); provided, that only Employees (as defined
below) of the Company Group shall be eligible for grants of Incentive Options.
6. DURATION OF THE PLAN. This Plan shall terminate ten (10) years
from the Effective Date hereof, unless terminated earlier
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pursuant to Section 13 below, and no Options, Purchase Authorizations or
Bonuses May be granted or made thereafter.
7. TERMS AND CONDITIONS OF OPTIONS, PURCHASE AUTHORIZATIONS AND
BONUSES. Options, Purchase Authorizations and Bonuses granted or made under
this Plan shall be evidenced by grant forms or agreements in such form and
containing such terms and conditions as the Committee shall determine;
provided, however, that such grant forms and agreements shall evidence among
their terms and conditions the following:
(a) PRICE. The purchase price per Share payable upon the exercise
of each Option or the purchase pursuant to each Purchase Authorization granted
or made hereunder shall be determined by the Committee at the time the Option
or Purchase Authorization is granted or made. Subject to Section 7(j)(i), if
applicable, the purchase price per Share payable upon the exercise of each
Incentive Option granted hereunder shall not be less than one hundred percent
(100%) of the fair market value per Share of the Common Stock on the day the
Incentive Option is granted or made. The purchase price per Share payable on
exercise of each Nonqualified Option or upon the purchase of Shares pursuant
to each Purchase Authorization granted hereunder shall be not less than fifty
percent (50%) of the fair market value per Share of the Common Stock on the
date of the grant. Fair market value shall be determined in accordance with
procedures to be established in good faith by the Committee. Bonus Shares
shall be issued in consideration of services previously rendered, which shall
be valued for such purposes by the Committee. No Share shall be issued for
less than its par value, if any.
(b) NUMBER OF SHARES. Each grant form or agreement shall specify
the number of Shares to which it pertains.
(c) EXERCISE OF OPTIONS. Each Option shall be exercisable for the
full amount or for any part thereof and at such intervals or in such
installments as the Committee may determine at the time it grants such Option;
provided, however, that no Option shall be exercisable with respect to any
Shares later than ten (10) years after the date of the grant of such Option
(or five (5) years in the case of Incentive Options to which Section 7(j)(ii)
applies). An Option shall be exercisable only by delivery of a written notice
to the Company's Treasurer, or any other officer of the Company designated by
the Committee to accept such notices on its behalf, specifying the number of
Shares for which the Option is exercised and accompanied by either (i)
payment or (ii) if permitted by the Committee, irrevocable instructions to a
broker to promptly deliver to the Company full payment in accordance with
Section 7(d)(ii) below of the amount necessary to pay the aggregate exercise
price. With respect to an Incentive Option, the permission of the
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Committee referred to in clause (ii) of the preceding sentence must be granted
at the time the Incentive Option is granted.
(d) Payment. Payment shall be made in full (i) at the time the
Option is exercised, (ii) promptly after the Participant forwards the
irrevocable instructions referred to in Section 7(c)(ii) above to the
appropriate broker, if exercise of an Option is made pursuant to Section
7(c)(ii) above, or (iii) at the time the purchase pursuant to a Purchase
Authorization is made. Payment shall be made either (I) in cash, (II) by
check, (III) if permitted by the Committee (with respect to an Incentive
Option, such permission to have been granted at the time of the Incentive
Option grant), by delivery and assignment to the Company of shares of Company
stock having a fair market value (as determined by the Committee) equal to the
exercise or purchase price, (IV) if permitted by the Committee, as stated in
the grant form or agreement evidencing the Option or Purchase Authorization,
and to the extent permitted by any applicable law, by the Participant's
recourse promissory note, which note must be due and payable not more than
five (5) years after the date the Option or Purchase Authorization is
exercised, or (V) by a combination of one or more of the foregoing methods.
If shares of Company stock are to be used to pay the exercise price of an
Incentive Option, the Company prior to such payment must be furnished with
evidence satisfactory to it that the acquisition of such shares and their
transfer in payment of the exercise price satisfy the requirements of Section
422 of the Code and other applicable laws.
(e) WITHHOLDING TAXES; DELIVERY OF SHARES. The Company's
obligation to deliver Shares upon exercise of an Option or upon purchase
pursuant to a Purchase Authorization or issuance pursuant to a Bonus shall be
subject to the Participant's satisfaction of all applicable federal, state and
local income and employment tax withholding obligations. Without limiting
the generality of the foregoing, the Company shall have the right to deduct
from payments of any kind otherwise due to the Participant any federal, state
or local taxes of any kind required by law to be withheld with respect to any
Shares issued upon exercise of Options or purchased or issued pursuant to
Purchase Authorizations or Bonuses. The Participant may elect to satisfy such
obligation(s), in whole or in part, by (i) delivering to the Company a check
for the amount required to be withheld or (ii) if the Committee in its sole
discretion approves in any specific or general case, having the Company
withhold Shares or delivering to the Company already owned shares of Common
Stock, having a value equal to the amount required to be withheld, as
determined by the Committee.
(f) NON-TRANSFERABILITY. No Option or Purchase Authorization
shall be transferable by the Participant otherwise than by will or the laws of
descent or distribution, and each
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Option or Purchase Authorization shall be exercisable during the Participant's
lifetime only by the Participant.
(g) TERMINATION OF PURCHASE AUTHORIZATIONS AND OPTIONS. Each
Purchase Authorization shall terminate and may no longer be exercised if the
Participant ceases for any reason to render continuous Service (as defined
below). Except to the extent the Committee provides specifically in a grant
form or Option agreement for a lesser period (or a greater period, in the case
of Nonqualified Options only), each Option shall terminate and may no longer
be exercised if the Participant ceases for any reason to render continuous
Service, in accordance with the following provisions:
(i) if the Participant ceases to render Service for any
reason other than death or Disability (as defined below), the
Participant may, at any time within a period of three months after
the date of such cessation of Service, exercise the Option to the
extent that the Option was exercisable on the date of such
cessation;
(ii) if the Participant ceases to render Service because of
Disability, the Participant may, at any time within a period of
one year after the date of such cessation of Service, exercise the
Option to the extent that the Option was exercisable on the date
of such cessation; and
(iii) if the Participant ceases to render Service because of
death, the Option, to the extent that the Participant was entitled
to exercise it on the date of death, may be exercised within a
period of one year after the Participant's death by the person or
persons to whom the Participant's rights under the Option pass by
will or by the laws of descent or distribution;
provided, however, that no Option or Purchase Authorization may be exercised
to any extent by anyone after the date of its expiration; and provided,
further, that Options and Purchase Authorizations may be exercised at any time
only as to Shares which at such time are available for acquisition pursuant to
the terms of the applicable grant form or agreement.
(h) RIGHTS AS STOCKHOLDER. A Participant shall have no rights as
a stockholder with respect to any Shares covered by an Option, Purchase
Authorization or Bonus until the date of issuance of a stock certificate in
the Participant's name for such Shares.
(i) REPURCHASE OF SHARES BY THE COMPANY. Any Shares acquired
upon exercise of an Option or pursuant to a Purchase
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Authorization or Bonus may in the discretion of the Committee be subject to
repurchase by or forfeiture to the Company if and to the extent and at the
repurchase price, if any, specifically set forth in the option, purchase or
bonus grant form or agreement pursuant to which the Shares were acquired.
Certificates representing Shares subject to such repurchase or forfeiture may
be subject to such escrow and stock legending provisions as may be set forth
in the option, purchase or bonus grant form or agreement pursuant to which the
Shares were acquired.
(j) 10% STOCKHOLDER. If any Participant to whom an Incentive
Option is granted pursuant to the provisions of the Plan is on the date of
grant the owner of stock (as determined under Section 424(d) of the Code)
possessing more than 10% of the total combined voting power or value of all
classes of stock of the Company, its parent, if any, or subsidiaries, then the
following special provisions shall be applicable:
(i) The exercise price per Share subject to such Option
shall not be less than 110% of the fair market value of each Share
on the date of grant; and
(ii) The Option shall not have a term in excess of five
years from the date of grant.
(k) CONFIDENTIALITY AGREEMENTS. Each Participant shall execute,
prior to or contemporaneously with the grant of any Option, Purchase
Authorization or Bonus hereunder, the Company's then standard form of
agreement, if any, relating to nondisclosure of confidential information,
assignment of inventions and related matters.
(l) AGGREGATE LIMITATION. The maximum number of Shares with
respect to which any Options, Purchase Authorizations and Bonuses may be
granted under the Plan to any individual during each successive twelve-month
period commencing on the Effective Date of the Plan shall not exceed 100,000
shares.
(m) RIGHT TO TERMINATE. Nothing contained in the Plan or in any
Option, Purchase Authorization or Bonus granted hereunder shall restrict the
right of any member of the Company Group to terminate the employment of any
Participant or other Service by the Participant at any time and for any
reason, with or without notice.
8. RESTRICTIONS ON INCENTIVE OPTIONS. Incentive Options granted
under this Plan shall be specifically designated as such and shall be subject
to the additional restriction that the aggregate fair market value,
determined as of the date the Incentive Option is granted, of the Shares with
respect to which Incentive Options are exercisable for the first time by a
Participant during any calendar year shall not exceed $100,000.
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If an Incentive Option which exceeds the $100,000 limitation of this Section 8
is granted, the portion of such Option which is exercisable for Shares in excess
of the $100,000 limitation shall be treated as a Nonqualified Option pursuant
to Section 422(d) of the Code. In the event that such Participant is
eligible to participate in any other stock incentive plans of the Company, its
parent, if any, or a subsidiary which are also intended to comply with the
provisions of Section 422 of the Code, such annual limitation shall apply to
the aggregate number of shares for which options may be granted under all such
plans.
9. SUSPENSION OF RIGHTS PRIOR TO A DISSOLUTION, REORGANIZATION, ETC.
Prior to any dissolution, liquidation, merger, consolidation or reorganization
of the Company as to which the Company will not be the surviving corporation,
or the sale or exchange of substantially all of the Common Stock or the sale
of substantially all of the assets of the Company (the "Event"), the Board or
the Committee may decide to terminate each outstanding Option and Purchase
Authorization. If the Board or the Committee so decides, each Option and
Purchase Authorization shall terminate as of the effective date of the Event,
but the Board or the Committee shall suspend the exercise of all outstanding
Options and Purchase Authorizations a reasonable time prior to the Event,
giving each person affected thereby not less than fourteen days written notice
of the date of suspension, prior to which date such person may purchase in
whole or in part the Shares otherwise available to him as of the date of
purchase. If the Event is not consummated, the suspension shall be removed
and all Options and Purchase Authorizations shall continue in full force and
effect, subject to their terms.
10. ADJUSTMENT IN SHARES. Appropriate adjustment shall be made by the
Committee in the maximum number of Shares subject to the Plan and in the
number, kind, and exercise or purchase price of Shares covered by outstanding
Options and Purchase Authorizations granted hereunder to give effect to any
stock dividends, stock splits, stock combinations, recapitalizations and other
similar changes in the capital structure of the Company after the Effective
Date of the Plan. In the event of a change of the Common Stock resulting from
a merger or similar reorganization as to which the Company is the surviving
corporation, the number and kind of Shares which thereafter may be purchased
pursuant to an Option or Purchase Authorization under the Plan and the number
and kind of Shares then subject to Options or Purchase Authorizations granted
hereunder and the price per Share thereof shall be appropriately adjusted in
such manner as the Committee may deem equitable to prevent dilution or
enlargement of the rights available or granted hereunder.
11. INVESTMENT REPRESENTATIONS; TRANSFER RESTRICTIONS. The Company may
require Participants, as a condition of purchasing Shares pursuant to the
exercise of an Option or to a Purchase
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Authorization or receipt of shares as a Bonus, to give written assurances in
substance and form satisfactory to the Company to the effect that such person
is acquiring the Shares for the Participant's own account for investment and
not with any present intention of selling or otherwise distributing the same,
and to such other effects as the Company deems necessary or appropriate
(including without limitation confirmation that the Participant is aware of
any applicable restrictions on transfer of the Shares, as specified in the
by-laws of the Company or otherwise) in order to comply with federal and
applicable state securities laws.
12. DEFINITIONS.
(a) "BOARD" means the Board of Directors of the Company.
(b) "BONUSES" has the meaning defined in Section 1 above.
(c) "CODE" means the Internal Revenue Code of 1986, as heretofore
and hereafter amended, and the regulations promulgated thereunder.
(d) "COMMITTEE" has the meaning defined in Section 4 above.
(e) "COMMON STOCK" has the meaning defined in Section 3 above.
(f) "COMPANY" has the meaning defined in Section 1 above.
(g) "COMPANY GROUP" has the meaning defined in Section 1 above.
(h) "DISABILITY" has the meaning defined in Section 22(e)(3) of the
Code.
(i) "EFFECTIVE DATE" has the meaning defined in Section 2 above.
(j) "EMPLOYEE" has the meaning defined in Section 3401(c) of the
Code.
(k) "EVENT" has the meaning defined in Section 9 above.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
heretofore and hereafter amended.
(m) "INCENTIVE OPTION" has the meaning defined in Section 1 above.
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(n) "NON-QUALIFIED OPTION" has the meaning defined in Section 1
above.
(o) "OFFICER" has the meaning defined in Section 1 above.
(p) "OPTIONS" has the meaning defined in Section 1 above.
(q) "PARENT" has the meaning defined in Section 424(e) of the Code.
(r) "PARTICIPANT" has the meaning defined in Section 5 above.
(s) "PLAN" has the meaning defined in Section 1 above.
(t) "PURCHASE AUTHORIZATION" has the meaning defined in Section 1
above.
(u) "SERVICE" means the performance of work for one or more members
of the Company Group as an employee, director, consultant or other individual
contributor.
(v) "SHARES" has the meaning defined in Section 3 above.
(w) "SUBSIDIARY" has the meaning defined in Section 424(f) of the
Code.
13. TERMINATION OR AMENDMENT OF PLAN. The Board may by written action
at any time terminate the Plan or make such changes in or additions to the
Plan as it deems advisable without further action on the part of the
stockholders of the Company, provided:
(a) that no such termination or amendment shall adversely affect or
impair any then outstanding Option, Purchase Authorization, Bonus or related
agreement without the consent of the Participant holding such Option, Purchase
Authorization, Bonus or related agreement; and
(b) that if the Plan itself shall have been approved by the
stockholders of the Company, no such amendment which (i) increases the maximum
number of Shares subject to this Plan (except to the extent provided in
Section 3), (ii) materially increases the benefits accruing to Participants,
or (iii) materially modifies the requirements as to eligibility for
participation in the Plan may be made without obtaining, or being conditioned
upon, stockholder approval.
With the consent of the Participant affected, the Committee may amend
outstanding Options, Purchase Authorizations, Bonuses
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or related agreements in a manner not inconsistent with the Plan. The Committee
shall have the right to amend or modify the terms and provisions of the Plan
and of any outstanding Incentive Options granted under the Plan to the extent
necessary to qualify any or all such Options for such favorable federal income
tax treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code.
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