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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
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Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
HPSC, Inc.
(Name of Registrant as Specified In Its Charter)
HPSC, Inc.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11:
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Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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HPSC, INC.
470 ATLANTIC AVENUE
BOSTON, MA 02210-2208
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 25, 1994
The Annual Meeting of Stockholders of HPSC, Inc., a Delaware corporation,
will be held on May 25, 1994, at ten o'clock in the morning, Eastern Daylight
Savings Time, at the America Room, The First National Bank of Boston, 100
Federal Street, Boston, Massachusetts, for the following purposes:
1. To determine the number of directors and elect a Board of
Directors for the ensuing year.
2. To ratify the appointment of Coopers & Lybrand as the independent
accountants for the Company for the fiscal year ending December 31, 1994.
3. To consider and act upon such other business and matters or
proposals as may properly come before the meeting or any adjournment
thereof.
The Board of Directors has fixed the close of business on April 18, 1994 as
the record date for determining the stockholders having the right to receive
notice of and to vote at this meeting or any adjournments thereof.
By Order of the Board of Directors
DENNIS W. TOWNLEY
Secretary
Boston, Massachusetts
April 20, 1994
IF YOU DO NOT EXPECT TO BE PRESENT AT THIS MEETING AND YOU WISH YOUR SHARES OF
COMMON STOCK TO BE VOTED, YOU ARE REQUESTED TO SIGN AND MAIL PROMPTLY THE
ENCLOSED PROXY WHICH IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. A
RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES IS
ENCLOSED FOR THAT PURPOSE.
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HPSC, INC.
470 ATLANTIC AVENUE
BOSTON, MA 02210-2208
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 1994
This proxy statement is furnished in connection with the solicitation by
and on behalf of the Board of Directors of HPSC, Inc., a Delaware corporation
(the "Company" or "HPSC"), of proxies for use at the Annual Meeting of
Stockholders of the Company to be held, pursuant to the accompanying Notice, on
Wednesday, May 25, 1994 at ten o'clock in the morning, Eastern Daylight Savings
Time, at the America Room, The First National Bank of Boston, 100 Federal
Street, Boston, Massachusetts and at any adjournment thereof (the "Annual
Meeting").
If a stockholder specifies in the proxy how it is to be voted, it will be
voted in accordance with such specification. Any stockholder giving a proxy in
the accompanying form retains the power to revoke it at any time prior to the
exercise of the powers conferred thereby, by notice in writing to the Secretary
of the Company. Any stockholder who attends the Annual Meeting in person will
not be deemed thereby to revoke the proxy unless such stockholder affirmatively
indicates at the Annual Meeting his intention to vote the shares covered thereby
in person.
It is expected that copies of the Notice of Meeting, this Proxy Statement
and related form of proxy will be mailed on or about April 20, 1994 to the
holders of record of shares of Common Stock of the Company at the close of
business on April 18, 1994. HPSC's Annual Report to Stockholders for the fiscal
year ended December 25, 1993 accompanies this Proxy Statement.
PROPOSAL ONE -- NUMBER AND ELECTION OF DIRECTORS
The Company's By-Laws provide that the Board of Directors shall consist of
not less than three nor more than fifteen directors. It is the intention of the
persons named as proxies in the accompanying form of proxy to fix the number of
directors for the ensuing year at EIGHT and to vote FOR the election as
directors (unless authority to vote is specifically withheld) of the persons
listed below under "Nominees for Directorships" to serve until the next Annual
Meeting of Stockholders and until their successors are chosen and qualified.
In the event that any of the nominees becomes unavailable (which is not now
anticipated by the Company), the persons named as proxies have discretionary
authority either to vote for a substitute or to fix the number of directors at
less than eight. The Board of Directors has no reason to believe that any of
such persons will be unwilling or unable to serve if elected. THE BOARD OF
DIRECTORS RECOMMENDS THAT ALL STOCKHOLDERS VOTE FOR THE ELECTION OF THE NOMINEES
NAMED BELOW.
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NOMINEES FOR DIRECTORSHIPS
DIRECTOR
NAME AGE SINCE
---- --- --------
Joseph A. Biernat (1)........................................ 66 1993
J. Kermit Birchfield (2) (3)................................. 54 1993
Louis J. P. Calisti, D.D.S................................... 68 1988
Dollie A. Cole (1) (2)....................................... 63 1991
Samuel P. Cooley (1) (2) (3)................................. 62 1993
Raymond R. Doherty (3)....................................... 48 1991
John Everets, Jr. (3)........................................ 47 1983
Thomas M. McDougal, D.D.S. (1)............................... 54 1991
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<FN>
(1) Member of Audit Committee
(2) Member of Compensation and Stock Option Committee
(3) Member of Executive Committee
EXECUTIVE OFFICERS
Executive officers are elected by the Board of Directors to hold office
until their successors are elected and qualified. The names, ages, and positions
of the executive officers of HPSC are listed below.
POSITIONS AND
NAME AGE OFFICES HELD
---- --- -------------
John Everets, Jr.......................... 47 Chairman of the Board and Chief Executive
Officer
Raymond R. Doherty........................ 48 President, Chief Operating Officer, and
Treasurer
Louis J. P. Calisti, D.D.S................ 68 Senior Vice President
John P. Murgo............................. 36 Vice President of Finance, Chief Financial
Officer and Assistant Secretary
Dennis J. McMahon......................... 48 Vice President of Administration and
Controller
Edward G. Shire........................... 57 Vice President of Sales
PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE OF DIRECTORS AND EXECUTIVE OFFICERS
Information regarding each nominee for director and each executive officer
of HPSC is presented below.
Joseph A. Biernat became a director of HPSC in December 1993. Since his
retirement in 1987, Mr. Biernat has served as a consultant for several
investment management firms. From 1965 until 1987, he was employed with United
Technologies Corporation, most recently as Senior Vice President -- Treasurer,
and previously thereto served as President, Treasurer and Chief Financial
Officer of Philco-Ford Finance Corporation. He is also a director of The
Hartford Insurance Company Mutual Funds and previously has been a director of
several financial and civic organizations.
J. Kermit Birchfield became a director of HPSC in December 1993. Since
1990, Mr. Birchfield has served as Senior Vice President, Secretary, and General
Counsel with M/A-COM, Inc., a publicly-held manufacturer of semiconductors and
communications equipment based in Wakefield, Massachusetts. Before joining
M/A-COM, he was Senior Vice President for Legal and Governmental Affairs and
General Counsel
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for the Georgia Pacific Corporation. Mr. Birchfield is also a Managing Director
of Century Partners, Incorporated, a privately-held investment and operating
company, of Darien, Connecticut. He is also a director of Intermountain
Industries Inc., which owns Intermountain Gas Company, a public utility.
Louis J. P. Calisti, D.D.S., M.P.H., has been a director of HPSC since
1988. For a brief period during 1991, Dr. Calisti served as Chairman and Chief
Executive Officer of the Company, and he presently serves as Senior Vice
President. From 1984 until May 1991 he was Head of Development and Assistant
Director of the Forsyth Dental Center, the world's leading dental research
center. Dr. Calisti is also a consultant to underdeveloped countries in
establishing national dental care delivery systems, and a lecturer in Dental
Care Administration at Harvard University. Dr. Calisti served for eight years as
the Dean of Tufts University School of Dental Medicine and for two years as
President of the University of Southern Maine.
Dollie A. Cole, a director of HPSC since 1991, has been involved for many
years in the leadership of several business, charitable and civic organizations.
She serves as Chairman of the Dollie Cole Corporation, a venture capital and
industrial consulting firm. For seven years Mrs. Cole was an owner and board
member of Checker Motors and Checker Taxi until selling her interest in 1988.
Mrs. Cole was also Senior Editor of Curtis Publishing until 1977, and was
director of Public Relations for Magnetic Video and Twentieth Century Fox Video
until 1985. She serves as a consultant to the Solar and Electric 500 Company
based in Phoenix, Arizona, and to Separation Dynamics, an international company
involved in the energy and manufacturing industries. In addition to these
business activities, Mrs. Cole serves on the boards of Project Hope -- the World
Health Organization, the National Captioning Institute for the Hearing Impaired,
the Smithsonian Institution and the National Academy of Science -- President's
Circle Board.
Samuel P. Cooley became a director of HPSC in December 1993. From 1955
until his retirement at the end of 1993, Mr. Cooley was employed with Shawmut
Bank Connecticut, N.A., and its predecessors and affiliates, including Hartford
National Bank and Connecticut National Bank. His most recent position was
Executive Vice President and Senior Credit Approval Officer. Mr. Cooley is also
a director of Lydall, Inc. and the Connecticut Health and Education Facilities
Authority and serves as a director or trustee of numerous nonprofit
organizations in Connecticut.
John Everets, Jr. has been Chairman of the Board and Chief Executive
Officer of HPSC since July 1993 and has been a director of HPSC since 1983. He
was Chairman of the Board of T.O. Richardson Co., Inc., a financial services
company, from January 1, 1990 until July 1993. Previously he was Executive Vice
President of Advest, Inc., an investment banking firm, from 1983 to January 1,
1990. Mr. Everets also served as Chairman of the Board of Billings and Co.,
Inc., a real estate investment banking firm, and Chairman of Advest Credit
Corp., both subsidiaries of Advest Group, Inc. Mr. Everets is also Vice Chairman
of the Connecticut Development Authority and Chairman of the Loan Committee of
the Connecticut Development Authority.
Raymond R. Doherty has been President of HPSC since December 1989, Chief
Operating Officer of HPSC since August 1993, and Treasurer of HPSC since
December 1988. He was elected a director of HPSC in June 1991. Mr. Doherty
previously served as Chairman and Chief Executive Officer of HPSC from October
1992 until July 1993, Chief Operating Officer of HPSC from December 1989 to
October 1992, and Chief Financial Officer of HPSC from December 1988 to October
1992. He was Assistant Treasurer of HPSC from June 1986 to December 1988. He was
the Executive Vice President and Chief Operating Officer of Healthco
International, Inc. from October 1992 until August 1993. He was the Senior Vice
President of Finance and Operational Controls of Healthco International, Inc.
from January 1986 to October 1992.
Thomas M. McDougal, D.D.S. was elected a director of HPSC in 1991. He has
been a practicing dentist for approximately 29 years. He is active in national,
state and local dental organizations and has lectured extensively throughout the
United States. He is a past President of the Dallas County Dental Society and is
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past Chairman of its Continuing Education Committee and its Banking, Nominating
and Patient Relations Committee.
John P. Murgo has been Chief Financial Officer of HPSC since October 1992
and Vice President of Finance since June 1991. He was HPSC's Office and Systems
Manager from September 1989, when he joined the Company, to June 1991. From 1983
to 1989, he worked at Coopers & Lybrand, a worldwide provider of accounting,
auditing and management consulting services. Coopers & Lybrand are the Company's
independent auditors.
Dennis J. McMahon has been Vice President of Administration and Controller
of HPSC since March 1983.
Edward G. Shire has been Vice President of Sales of HPSC since October
1992. He was a Senior Credit Manager for HPSC from June 1990, when he joined the
Company, to October 1992. He served as Dental Administrator for the Rhode Island
Group Health Association from May 1986 to June 1990. He previously served as
HPSC's Vice President of Sales from 1979 to 1980.
COMMITTEES OF THE BOARD
The Board of Directors has three standing committees: an Audit Committee, a
Compensation and Stock Option Committee and an Executive Committee. It does not
have a Nominating Committee.
The current members of the Audit Committee are Dollie A. Cole, Samuel P.
Cooley, Thomas M. McDougal, and Joseph A. Biernat. Messrs. Cooley and Biernat
did not join the Audit Committee until they became directors in December 1993.
Mr. Everets was a member of the Audit Committee during 1993 until his employment
by the Company in July 1993. The functions of the Audit Committee are to review
the Company's external and internal auditing procedures, to evaluate the
Company's objectives and performance and to study and make recommendations
periodically to the Board on these and such other matters as the Committee deems
to be in the best interests of the Company. The Committee reviews with the
Company's independent auditors the scope and results of their audit for the year
and any problems encountered during it. The Committee also reviews with the
Company's management the plan, scope and results of the Company's operations and
discusses any recommendations or matters considered to be of significance.
During 1993, the Committee held one meeting.
The current members of the Compensation and Stock Option Committee are
Dollie A. Cole, J. Kermit Birchfield, and Samuel P. Cooley. Messrs. Birchfield
and Cooley did not join the Compensation Committee until they became directors
in December 1993. Before December 1993, Thomas M. McDougal was a member of this
Committee. Mr. Everets was a member of such Committee during 1993 until his
employment by the Company in July 1993. The functions of the Compensation and
Stock Option Committee are to be available for consultation with the Chairman of
the Board, to review the salaries and other forms of compensation of officers
and to make recommendations to the Board of Directors with respect to the
granting of stock options to officers and key employees and with respect to
stock option matters generally. During 1993, the Committee held three meetings,
but no meetings were held in 1993 after the appointment of Messrs. Birchfield
and Cooley.
The current members of the Executive Committee are John Everets, Jr., J.
Kermit Birchfield, Samuel P. Cooley, and Raymond R. Doherty. The Executive
Committee was formed in December 1993 and held no meetings in 1993. The function
of the Executive Committee is to exercise all the powers of the Board of
Directors in accordance with the policy of the Company, to the extent permitted
by Delaware law, during intervals between board meetings.
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During fiscal 1993, the Board of Directors held six meetings. Each nominee
for reelection as a director attended all of the meetings of the Board of
Directors held during the time he or she was a director and the meetings of all
Committees of the Board on which he or she served.
VOTING SECURITIES
Each share of common stock, $0.01 par value, (the "Common Stock") is
entitled to one vote on each of the matters listed in the Notice of the Annual
Meeting. The holders of record of shares of Common Stock of the Company at the
close of business on April 18, 1994 may vote at the Annual Meeting. At that
date, there were outstanding 5,224,097 shares of Common Stock.
SHARE OWNERSHIP OF MANAGEMENT
The following table sets forth certain information, as of the record date,
with respect to the beneficial ownership of the Company's Common Stock by each
of the Company's directors and its executive officers named in the Summary
Compensation Table on page 9 of this Proxy Statement (the "Named Officers"),
individually, and by all of the Company's directors and executive officers as a
group. The information in the table and in the related notes has been furnished
by or on behalf of the indicated owners. Unless otherwise noted, HPSC believes
the persons referred to in this table have sole voting and investment power with
respect to the shares listed in this table. The percentage owned is calculated
with respect to each person by treating shares issuable to such person within 60
days of the record date as outstanding, in accordance with rules of the
Securities and Exchange Commission.
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP OF HPSC % OF
NAME OF BENEFICIAL OWNER COMMON STOCK(1) CLASS
------------------------ ----------------- -----
Joseph A. Biernat........................................... 2,000 *
J. Kermit Birchfield........................................ 3,000 *
Louis J. P. Calisti, D.D.S.................................. 15,000 *
Dollie A. Cole.............................................. 25,500 *
Samuel P. Cooley............................................ 2,000 *
John Everets, Jr............................................ 96,500(2) 1.83 %
Raymond R. Doherty.......................................... 54,250(2) 1.03 %
Thomas M. McDougal, D.D.S................................... 10,000 *
John P. Murgo............................................... 15,435 *
All Directors and Officers as a group (11 persons).......... 229,399 4.25 %
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<FN>
* Percent of class less than 1%.
(1) Includes shares of the Company's Common Stock which the named security
holder has the right to acquire within 60 days of the record date through
the exercise of options granted by the Company to the named individuals or
group as follows: Messrs. Biernat, Birchfield and Cooley, 2,000 shares each;
Dr. Calisti, 15,000 shares; Mrs. Cole and Dr. McDougal, 10,000 shares each;
Mr. Everets, 60,000 shares; Mr. Doherty, 54,000 shares; Mr. Murgo, 13,000
shares; and such group, 173,400 shares.
(2) Messrs. Doherty and Everets are trustees of the HPSC, Inc. Employee Stock
Ownership Plan (the "ESOP") and, as such, may be deemed to be beneficial
owners of the 300,000 shares held in the ESOP for the benefit of the
employee participants. See "Share Ownership of Others" below.
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SHARE OWNERSHIP OF OTHERS
The following table lists those persons known by the Company to own
beneficially more than five percent (5%) of the Company's outstanding shares of
Common Stock as of the record date:
NUMBER OF SHARES/
NAME AND ADDRESS PERCENT OF CLASS
---------------- -----------------
William J. Brandt, Jr.................................................. 1,949,182 (37.31%)(1)
Trustee of the estate of
Healthco International, Inc.
Development Specialists, Inc.
Three First National Plaza
70 West Madison Street, Suite 230
Chicago, IL 60602-4205
Dimensional Fund Advisors, Inc......................................... 346,200 (6.63%)(2)
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Tweedy, Browne Company, L.P.,
TBK Partners, L.P. and
Vanderbilt Partners, L.P............................................. 463,800 (8.88%)(3)
52 Vanderbilt Avenue
New York, NY 10017
John Everets, Jr. and Raymond R. Doherty............................... 300,000 (5.74%)
as Trustees of the HPSC, Inc.
Employee Stock Ownership Plan
470 Atlantic Avenue
Boston, MA 02210
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<FN>
(1) Counsel for the trustee is Daniel C. Cohn, Esq., Cohn and Kelakos, 265
Franklin Street, Boston, MA 02110. Mr. Brandt serves as the trustee of the
estate of Healthco International, Inc., which filed for bankruptcy under
Chapter 11 of the federal Bankruptcy Code on June 9, 1993. This proceeding
was converted to a Chapter 7 proceeding on September 1, 1993, at which time
Healthco began liquidation. The trustee in bankruptcy possesses voting power
with respect to these shares. These shares have been pledged by Healthco to
Chemical Bank, as Agent for a group of banks. The terms of a Pledge
Agreement between Healthco and Chemical Bank, as Agent, provide that, after
Healthco's default on its loan obligations to the banks, Chemical Bank, as
Agent, may transfer the shares into its name and may vote and dispose of the
shares as permitted by law. Chemical Bank holds the certificates
representing the pledged stock, together with a stock power covering such
certificates executed in blank by Healthco. The rights of Chemical Bank, as
Agent, under the Pledge Agreement are not conditioned upon the pursuit by
Chemical Bank or the other banks of any right or remedy they may have
against any other person or any other collateral. As of the record date for
the Annual Meeting, Chemical Bank has not requested that these shares be
transferred into its name. Chemical Bank has not filed a Schedule 13D with
the Securities and Exchange Commission with respect to these shares.
(2) Dimensional Fund Advisors, Inc. ("Dimensional") has filed an Amendment No. 3
to Schedule 13G with the Securities and Exchange Commission reporting that
it is a registered investment adviser and is deemed to have sole dispositive
power with respect to all such shares and sole voting power with respect to
224,300 of such shares. It may be deemed to have voting power over an
additional 121,900 of such shares by virtue of the fact that certain
officers of the named security holder are also officers of DFA
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Investment Dimensions Group Inc., and The Investment Trust Company, two
open-end investment companies for which the named security holder serves as
investment adviser.
(3) Tweedy, Browne Company L.P. ("TBC") filed an Amendment No. 3 to Schedule 13D
with the Securities and Exchange Commission reporting that it may be deemed
to have beneficial ownership of 438,800 shares of Common Stock of the
Company (the "TBC Shares") which are held in the accounts of various
customers of TBC, with respect to which accounts TBC has investment
discretion (the "TBC Accounts"), and with respect to some of which it has
obtained sole or shared voting power. TBK Partners, L.P. ("TBK")
beneficially owns directly 15,000 shares of Common Stock of the Company (the
"TBK Shares"). TBK and certain of the general partners in TBK, who are also
general partners of TBC, may also be deemed to be the indirect beneficial
owners of 463,800 shares of Common Stock of the Company. TBK has sole power
to vote and dispose of the TBK Shares, except that the general partners in
TBK, solely by reason of their positions as such, may be deemed to have
shared power to vote and dispose of the TBK Shares. Vanderbilt Partners,
L.P. ("Vanderbilt") beneficially owns directly 10,000 shares of Common Stock
of the Company (the "Vanderbilt Shares"). Vanderbilt and certain of the
general partners of Vanderbilt, who are also general partners in TBC, may
also be deemed to be the indirect beneficial owners of 463,800 shares of
Common Stock of the Company. Vanderbilt has sole power to vote and dispose
of the Vanderbilt Shares, except that the general partners in Vanderbilt,
solely by reason of their positions as such, may be deemed to have shared
power to vote and dispose of the Vanderbilt Shares. The aggregate number of
shares of Common Stock of the Company with respect to which TBC, TBK and
Vanderbilt could be deemed to be the beneficial owner is 463,800 shares.
Each of TBC, TBK and Vanderbilt disclaims that it is the beneficial owner of
any of the shares of Common Stock of the Company held in the TBC Accounts.
EXECUTIVE COMPENSATION
REPORT OF COMPENSATION AND STOCK OPTION COMMITTEE
The Company's executive compensation program is administered by the
Compensation and Stock Option Committee of the Board of Directors (the
"Committee") consisting of Dollie A. Cole, J. Kermit Birchfield, and Samuel P.
Cooley, all of whom are independent, nonemployee directors. Messrs. Birchfield
and Cooley did not join the Committee until they became members of the Board of
Directors in December 1993. Before December 1993, Thomas M. McDougal was a
member of the Committee. Following review and approval by the Committee, all
issues pertaining to executive compensation are submitted to the Board of
Directors for approval.
The compensation policy of the Company with respect to its executives, in
general, is to provide a total compensation package under which the mix and
total of base salary, annual incentives and long-term incentives (1) are
structured in the best interests of the Company's shareholders, (2) are
reasonable in comparison to competitive practice, (3) align the amount of
compensation with corporate performance, and (4) will continue to motivate and
reward executives on the basis of Company and individual performance. The
Committee believes that a significant portion of the total compensation of all
executives, and most specifically, the Chief Executive Officer, should be "at
risk" and based upon the achievement of measurable, financial and operational
performance.
In discharging its responsibility, the Committee, subject to the final
approval of the Board of Directors, determines the factors and criteria to be
used in compensating the Chief Executive Officer, as well as other executives of
the Company, and applies these factors and criteria in administering the various
plans and programs in which executives participate to ensure they are consistent
with the policies noted above.
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During fiscal 1993, HPSC experienced a significant decline in revenues and
earnings due, in large part, to the financial difficulties and ultimate
liquidation of Healthco, its largest customer and a 37.3% stockholder. The
executive officers of HPSC have begun the process of replacing lost business
while simultaneously diversifying into other markets. Also in 1993, management
completed a $70 million asset securitization with a 5.01% interest rate,
enabling the Company to retire $50 million 10.125% Senior Notes and $20 million
10% Subordinated Debentures. The Committee believes that it is critical to the
Company's recovery that it retain senior management while it is dealing with
these issues and has considered this factor in determining compensation levels,
despite the financial difficulties which HPSC currently faces.
The Committee negotiated a three-year employment agreement with Mr. Everets
on behalf of the Company in July 1993. See the section entitled "Employment
Agreements" for a description of the terms of Mr. Everets' contract. In setting
Mr. Everets' base salary, the Committee reviewed independently-produced surveys
and other compilations of base salaries paid to chief executive officers in
companies in the leasing and financial sectors. The Committee did not use the
members of the self-constructed peer group in the Company Performance Graph for
purposes of salary comparison, because such companies are not in the same line
of business as the Company and thus do not represent a likely source of
recruiting for the Company for its executive officers, particularly its Chief
Executive Officer. According to the most recent (1992) leasing industry wage and
compensation survey by the Equipment Leasing Association of America, Mr.
Everets' base salary is within 3% of the mean base salary for chief executive
officers of multiple business line leasing companies with a gross leasing
portfolio of $100 million to $500 million. In setting Mr. Everets' salary, the
Committee also placed great weight on Mr. Everets' 20 years of experience in the
financial services field, including numerous years in senior executive
positions, as well as the need to provide a certain level of security for Mr.
Everets in light of the relatively unsteady recent financial history of the
Company. In addition, the Committee did not provide Mr. Everets with either a
guaranteed bonus arrangement for his first year or a signing bonus, as is often
provided in such situations.
The Committee deferred negotiation of an appropriate formula for Mr.
Everets' bonus until 1994, given the financial troubles of HPSC in 1993. Mr.
Everets did not receive any bonus for fiscal 1993.
Mr. Everets' options granted in 1993 include an option for 25,000 shares of
common stock at $3.25 per share, the fair market value of a share of HPSC Common
Stock on the date of grant, granted to him in March 1993 for service as a
director in conjunction with similar grants to all independent directors. He
also received an option for 150,000 shares at $2.625 per share, the fair market
value of a share of HPSC Common Stock on the date of grant. This option grant
represents approximately 3% of the Company's issued and outstanding Common
Stock. The size of the option grant is not based on a formula or any particular
corporate performance factors but is instead based on the Committee's assessment
of Mr. Everets' potential contribution to enhancing future share value and its
desire to motivate Mr. Everets to achieve superior results by providing him with
a significant equity interest in the Company.
The Committee determined the salary of the President of the Company based
on a comparison of salaries paid to company presidents by the same companies
used for the Chief Executive Officer's salary comparison. It also considered Mr.
Doherty's many years of experience in the dental equipment industry and his
intimate knowledge of the Company's practices, as well as the level of salary he
earned in fiscal 1992 for services rendered to HPSC and to Healthco. Dr.
Calisti's base salary was based on a November 1991 contract which the Committee
did not negotiate. The President of the Company recommended to the Committee Mr.
Murgo's base salary, which represents an 18% increase over his 1992 base salary.
Based upon a recommendation of management, the Committee awarded no
executive bonuses for fiscal 1993.
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Option grants to executive officers for 1993 were not based on any
particular formula but were based on the important role of key management
personnel in guiding the Company through its financial recovery and on the
performance of the individual executive officer and his contribution to the
Company.
The undersigned were the members of the Committee during fiscal 1993; Mr.
Everets did not vote on matters relating to his own compensation.
Compensation and Stock Option
Committee
Dollie A. Cole, Chair
Thomas M. McDougal
John Everets, Jr.
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows all compensation paid to the Chief
Executive Officer and the four other most highly paid executive officers
receiving aggregate compensation in excess of $100,000 per year for services
rendered in all capacities during the past three fiscal years. HPSC has only
four executive officers who received aggregate compensation during fiscal year
1993 in excess of $100,000.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------ ------------
OTHER
ANNUAL SECURITIES ALL OTHER
COMPEN- UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SATION OPTIONS SATION(1)
--------------------------- ---- ------ ----- ------- ---------- --------
John Everets, Jr. (2)............... 1993 $110,719(3) $ -0- $11,054(4) 175,000 $1,135
Chief Executive Officer and
Chairman of the Board
Raymond R. Doherty (5).............. 1993 112,856 -0- 5,095(6) 90,000 2,404
President, Treasurer 1992 51,770 60,000 -0- 35,000 -0-
and Director 1991 25,000 50,000 -0- 25,000 -0-
Louis J. P. Calisti (7)............. 1993 128,772 -0- 10,763(6) -0- 2,562
Senior Vice President 1992 126,901 12,000 4,566 -0- 1,890
and Director 1991 78,094 12,000 2,062 25,000 6,741
John P. Murgo....................... 1993 100,141 -0- 11,358(6) 10,000 5,481
Chief Financial Officer 1992 84,742 25,000 3,690 5,000 374
1991 76,587 25,000 1,771 10,000 270
- ---------------
<FN>
(1) Includes term life insurance premiums paid by the Company and Company
contributions to the individual's 401(k) retirement plan account,
respectively, in the following amounts for the fiscal year ended December
25, 1993: Mr. Everets, $1,135 and $0; Mr. Doherty, $942 and $1,462; Dr.
Calisti, $1,135 and $1,427; and Mr. Murgo, $3,300 and $2,181.
(2) Mr. Everets' employment with the Company commenced in July 1993. His
compensation is governed by an employment agreement, dated July 19, 1993.
See "Executive Compensation -- Employment Agreements."
(3) Includes $19,000 paid to Mr. Everets in fiscal 1993 for service as a
director in 1992 and 1993, including service during 1992 on a special
committee of the Board of Directors.
(4) Includes relocation and temporary living expenses of $9,794 paid in fiscal
1993 in connection with Mr. Everets' relocation to the Boston area.
(5) Mr. Doherty's compensation is governed by an employment agreement, dated
August 2, 1993. See "Executive Compensation -- Employment Agreements." The
grant of 25,000 stock options to Mr. Doherty in 1991 includes 15,000 new
stock options and 10,000 stock options that were issued to replace the same
number of options that were issued in 1989 and were cancelled in 1991. The
exercise
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price of the canceled options was $5.25 per share, as compared with $3.25
per share for the replacement options.
(6) Includes $3,835, $8,423 and $9,018 paid by the Company for an automobile for
Mr. Doherty, Dr. Calisti, and Mr. Murgo, respectively.
(7) Dr. Calisti's employment with the Company commenced in May 1991. In November
1993, Dr. Calisti commenced working under a new arrangement which calls for
him to work a minimum of 1,000 hours per annum for the Company.
STOCK OPTIONS
The Company believes that stock options are a key element of its total
compensation program. During 1993, the Company had two Stock Option Plans
covering a maximum of 720,000 shares of the Company's Common Stock: its Key
Employee Stock Option Plan, dated March 24, 1983, as amended April 26, 1984 (the
"1983 Plan"), and its Stock Option Plan, dated March 5, 1986 (the "1986 Plan").
Both plans provide that the option price, the option term and the terms and
conditions upon which the options may be exercised, including the dates on which
they may be exercised, will be determined by the Company's Board of Directors at
the time the options are granted. The 1983 Plan was terminated in March 1993.
Officers and directors of the Company, any subsidiary companies, and Healthco
International, Inc. are eligible to participate under the 1986 Plan. The Company
established the 1994 Stock Option Plan in March 1994 for key employees, focusing
on new employees of the Company. The Company has reserved 200,000 shares under
the 1994 Stock Option Plan.
OPTION GRANT TABLE
The following table shows the stock options granted to the Named Officers
during 1993 and the potential realizable value of those grants (on a pre-tax
basis) determined in accordance with SEC rules. The information in this table
shows how much the Named Officers may eventually realize in future dollars under
two hypothetical situations: if the price of HPSC Common Stock gains 5% or 10%
in value per year, compounded over the life of the options. These amounts
represent assumed rates of appreciation and are not intended to forecast future
appreciation of the Company's Common Stock. The options described in this table
have exercise prices equal to the fair market value of a share of Common Stock
on the date they were granted.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS EXERCISE STOCK PRICE
SECURITIES GRANTED TO OR BASE APPRECIATION FOR
UNDERLYING EMPLOYEES PRICE OPTION TERM
OPTIONS IN FISCAL PER SHARE EXPIRATION ---------------------
NAME GRANTED YEAR(1) ($/SH.) DATE 5% 10%
---- ---------- ---------- --------- ---------- --------- ---------
John Everets, Jr................. 25,000(2) 8.71% $ 3.25 03/22/03 $ 51,098 $ 129,492
150,000(3) 52.29% $ 2.625 07/19/98 108,786 240,388
Raymond R. Doherty............... 90,000(4) 31.37% $ 2.625 07/19/98 65,272 144,233
Louis J. P. Calisti.............. -0- -- -- -- -- --
John P. Murgo.................... 10,000(2) 3.49% $ 3.25 03/22/03 20,439 51,797
- ---------------
<FN>
(1) Options granted to all employees are net of options granted and subsequently
cancelled during fiscal 1993.
(2) Options are exercisable over a four-year period with 20% exercisable
immediately and an additional 20% exercisable on each of the first through
fourth anniversaries of the date of the grant. Options terminate shortly
after the individual ceases to be an officer or director of the Company for
any reason, and expire on the tenth anniversary of their date of grant.
(3) Options are exercisable one-third immediately and one-third on each of the
first and second anniversaries of the date of grant, terminate shortly after
termination of the individual's employment by the Company only for cause,
and vest entirely in the event of (a) termination of employment by the
Company other than for cause or (b) a change of control of the Company (see
"Employment Agreements" below)
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followed within three years by (i) termination of employment by the Company
other than for cause or (ii) termination of employment by the employee due
to an adverse change in the terms of the individual's employment. Options
expire on the fifth anniversary of their date of grant.
(4) Options are exercisable over a four-year period with 20% exercisable
immediately and an additional 20% exercisable on each of the first through
fourth anniversaries of the date of grant. Options terminate shortly after
termination of the individual's employment for any reason, except that they
vest entirely in the event of a change of control of the Company (see
"Employment Agreements" below) followed within three years by (a)
termination of employment by the Company other than for cause or (b)
termination of employment by the employee due to an adverse change in the
terms of the individual's employment. Options expire on the fifth
anniversary of their date of grant.
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUE TABLE
The following table provides information regarding the exercise of stock
options by the Named Officers during fiscal year 1993 and the value of
unexercised "in-the-money" options (i.e., options whose exercise price was below
the market price of the Company's stock) at fiscal year-end. The columns showing
the number of options exercised during fiscal year 1993 and the value realized
thereby have been omitted because none of the Named Officers exercised any
options during fiscal year 1993.
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL 1993 IN-THE-MONEY OPTIONS
YEAR-END AT FISCAL 1993 YEAR-END
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------------------- -------------------------
John Everets, Jr........................... 60,000/115,000 $31,250/$62,500(1)
Raymond R. Doherty......................... 54,000/ 96,000 11,250/ 45,000(1)
Louis J. P. Calisti........................ 15,000/ 10,000 -0-
John P. Murgo.............................. 13,000/ 12,000 -0-
- ---------------
<FN>
(1) Of the options held by Messrs. Everets and Doherty, only options granted for
150,000 and 90,000 shares, respectively, are in-the-money.
PERFORMANCE GRAPH
SEC rules require that the Company present a line graph comparing
cumulative total shareholder return over a period of five years, assuming
reinvestment of dividends, with a broad equity market index and either a
published industry index or an index made up of peer companies selected by the
Company. The broad equity market index selected by the Company for inclusion in
the graph is the Russell 2000 Index, an index of 2,000 public companies with
relatively small market capitalization, as compared with the companies included
in other available broad equity market indices. For its second comparative
index, the Company was unable to locate a published industry index of companies
that management regarded as comparable to HPSC, so the Company has prepared its
own index of five publicly-owned state commercial banks that are of similar
market capitalization to the Company, ranging in size from approximately $7
million to approximately $18 million market capitalization. (The companies
included in the index of peer issuers are Bank San Francisco Co., BSD Bancorp,
First City Bancorp, Professional Bancorp and Redwood Empire Bancorp.)
In selecting the companies to be included in the Company's second index,
management was unable to identify any companies that it considered reasonably
comparable to HPSC. Several factors unique to HPSC make it difficult to draw an
accurate comparison with other companies. Until the second half of 1993, the
Company's only source of customers was Healthco International, Inc.
("Healthco"). Healthco, whose performance had already begun to decline, was
further weakened by a leveraged buyout in May 1991. Healthco's liquidation,
which commenced in 1993, also has had a direct impact on HPSC's results. In
addition, Healthco holds approximately 37.3% of the Company's outstanding Common
Stock, limiting trading in the stock. Among other effects, these factors and
others have restricted the Company's access to public
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markets for capital, which has resulted in a higher cost of funds as compared
with the Company's competitors. Management is taking steps to alleviate the
impact of these factors.
Set forth below is a graph comparing the cumulative total return for the
Company, the Russell 2000 Index and the five-company index selected by the
Company for the past five years. Management does not believe the comparison
accurately portrays current management's performance because much of the decline
in the Company's performance is attributable to the decline of Healthco's
business (and the corresponding reduction in demand for equipment financing from
the Company) and because the graph does not adequately reflect the change in the
Company's management that occurred in July 1993 when the Board of Directors
elected a new Chairman and Chief Executive Officer, John Everets, Jr. Also, in
August 1993, Raymond R. Doherty, President of the Company, became a full-time
employee of the Company after resigning from Healthco.
CUMULATIVE TOTAL RETURN
Based on reinvestment of $100 beginning December 31, 1988
Dec. 88 Dec. 89 Dec. 90 Dec. 91 Dec. 92 Dec. 93
HPSC Inc. $100 $115 $ 42 $ 43 $ 56 $ 52
Russell 2000 Index $100 $116 $ 94 $137 $162 $192
Custom Composite Index $100 $185 $130 $109 $ 95 $ 99
(5 Stocks)
The 5-Stock Custom Composite Index includes Bank of San Francisco Co.,
BSD Bancorp, First City Bancorp, Professional Bancorp, and
Redwood Empire Bancorp.
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COMPENSATION OF DIRECTORS
Each non-employee director of the Company is entitled to be paid a
director's fee of $5,000 per annum plus $2,500 per annum for each committee of
the Board on which he or she serves and $500 for each meeting attended. In
addition, the Company reimburses directors for their travel expenses incurred in
attending meetings of the Board of Directors or its committees.
During the last fiscal year, in addition to regular director's compensation
the Company paid $10,000 to John Everets, Jr., $5,000 to Dollie A. Cole and
$2,500 to Thomas M. McDougal for their service during fiscal 1992 on a special
committee of the Board of Directors.
EMPLOYMENT AGREEMENTS
During 1993, the Company entered into an employment agreement with each of
John Everets, Jr. and Raymond Doherty. The Company agreed to pay a base annual
salary of $210,000 to Mr. Everets and $190,000 to Mr. Doherty as well as a bonus
of up to 100% of base salary to each individual under an incentive plan to be
developed by the Company's Compensation Committee in consultation with
management, subject to approval by the Board of Directors. The Company also
granted options for 150,000 shares of Common Stock to Mr. Everets and 90,000
shares of Common Stock to Mr. Doherty, each at a price of $2.625 per share,
which was the fair market value of a share of HPSC Common Stock on the date of
grant. The Company also agreed to pay Mr. Everets' reasonable expenses incurred
in his relocation to Boston, up to $50,000 on an after-tax basis. The term of
each employment agreement is three years and thereafter the agreement will
automatically renew from year to year unless either party to such agreement
gives notice of intention to terminate the agreement six months in advance of
any anniversary. Either party to each employment agreement may terminate it at
any time for any reason.
In the event of termination or decision not to renew by either party which
is not "for cause," the Company will pay the employee his base monthly pay plus
his maximum monthly bonus for the next 12 months. Upon a termination by the
Company which is not "for cause," all of Mr. Everets' stock options will fully
vest. Each employee agrees not to compete with the business of the Company while
receiving termination payments and to maintain in confidence all of the
Company's confidential information.
If in the event of a "change of control" of the Company (as defined in each
agreement) and, within three years thereafter, either the Company terminates the
employee other than "for cause" or the employee terminates his employment due to
a "change in employment" (as defined in each agreement): the Company will pay
the employee his base monthly pay plus the maximum monthly bonus for 24 months;
the non-compete provisions will no longer apply; the employee's stock options
will fully vest; and normal employee benefits will continue for 12 months. In
the event of a "change of control" and, within three years thereafter, the
employee terminates his employment for any reason other than a "change in
employment," the Company will pay the employee his base monthly pay plus the
maximum monthly bonus for 12 months.
On November 26, 1991, the Company and Louis J. P. Calisti, D.D.S., entered
into an employment agreement for Dr. Calisti's service as Senior Vice President
of the Company. This agreement was terminated, and Dr. Calisti commenced working
under a new arrangement with the Company in November 1993, which calls for Dr.
Calisti to work a minimum of 1,000 hours per annum for the Company.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and beneficial owners of more than
ten percent of the Company's Common Stock to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock of the Company. Officers, directors and beneficial
owners of ten percent or more of the
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Company's Common Stock are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of such reports
furnished to the Company and written representations that no other reports were
required during the fiscal year ended December 25, 1993, all Section 16(a)
filing requirements applicable to the Company's officers, directors and
beneficial owners of ten percent or more of the Company's Common Stock were
complied with, except that the following individuals filed a Form 4 or Form 5
late: Messrs. Everets and Doherty, with respect to the grant of options in July
1993; and Mr. Murgo with respect to purchase of Common Stock under the Company's
Section 423 Stock Purchase Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH HEALTHCO
Until Healthco filed for bankruptcy on June 9, 1993, Healthco referred to
the Company substantially all of its financing business. Healthco was a leading
distributor of merchandise, equipment and services to dentists and institutional
providers of dental care, including dental schools and dental laboratories. In
1993, the Company financed approximately $9.5 million of Healthco's equipment
sales.
Until its bankruptcy, Healthco also provided certain sales and related
services to the Company as well as certain management, data processing, and
administrative services to the Company pursuant to an agreement (the
"Intercompany Agreement") under which Healthco agreed to (1) refer to HPSC all
equipment financing opportunities arising from sales to Healthco's customers and
not to refer any such opportunity to any other party unless HPSC failed to
accept it within a reasonable period of time, but in no event more than ten days
after HPSC has received the written terms of the opportunity being offered, (2)
make available to HPSC all financial promotions and concessions it may offer
from time to time to its equipment customers and (3) provide services, including
data processing and other support services, for HPSC to operate its business in
the ordinary course, and the advice and assistance of Healthco's sales personnel
in identifying and consummating financing transactions with respect to equipment
sold by Healthco and with regard to any repossession and resale of such
equipment financed by HPSC. During 1993, HPSC paid Healthco under the
Intercompany Agreement an amount, determined on a formula basis intended to
reflect Healthco's cost of providing such services, equal to $396,000.
The Company also leased its office space from Healthco until August 9,
1993. The Company leased certain equipment to Healthco; amounts due to HPSC from
Healthco under such equipment leases totaled $1,051,000 at the end of fiscal
1993. Amounts payable to Healthco totaled $1,666,000 at year-end 1993. The
Company purchased substantially all of the dental equipment which it leased to
its customers from Healthco for $6,603,000 in 1993. The Company also financed
Healthco's customers through conditional sales agreements in the amount of
$2,890,000 in 1993.
Healthco is currently being liquidated pursuant to a proceeding under
Chapter 7 of the United States Bankruptcy Code. Healthco is no longer providing
services, leasing equipment or office space, or selling equipment to the Company
under the arrangements described above. The resolution of payables and
receivables and other preexisting obligations between Healthco and HPSC is the
subject of discussions between the Company and the secured creditors of
Healthco.
The Company provided an elective employees savings plan for all eligible
employees through its participation in the Healthco Retirement Savings Plan,
which qualified as a thrift plan under Section 401(k) of the Internal Revenue
Code. The Company's participation in this Plan was terminated July 1, 1993, and
the Company thereafter established its own 401(k) plan.
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Raymond R. Doherty, President, Treasurer and Chief Operating Officer of
HPSC, was also Executive Vice President and Chief Operating Officer of Healthco
until August 1993.
PROPOSAL TWO -- RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Coopers & Lybrand have acted as the Company's independent accountants since
1976 and have been selected to act as the Company's independent public
accountants for the current fiscal year, subject to ratification by vote of the
holders of a majority of the shares of Common Stock voting thereon at the Annual
Meeting. Representatives of that firm are expected to be present at the Annual
Meeting and will have the opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions.
The Company's Board of Directors recommends that the stockholders vote FOR
the ratification of the selection of Coopers & Lybrand.
PROPOSALS OF SECURITY HOLDERS
Any proposal of a stockholder intended to be presented at the 1995 Annual
Meeting of Stockholders must be received at the corporate headquarters of the
Company not later than Friday, December 21, 1994 in order to be included in the
Company's Proxy Statement and form of proxy relating to that meeting.
QUORUM AND VOTING PROCEDURES
The By-Laws of the Company provide that a majority of the shares of Common
Stock issued and outstanding are entitled to vote, present in person or by
proxy, shall constitute a quorum at a meeting of stockholders of the Company.
Shares of Common Stock represented by a properly signed and returned proxy are
considered as present at the Annual Meeting for purposes of determining a
quorum. Abstentions are counted as present for purposes of determining the
existence of a quorum.
Brokers holding shares for beneficial owners must vote those shares
according to the specific instructions they receive from the owners. If specific
instructions are not required, however, brokers may vote these shares in their
discretion with respect to election of directors.
The vote required for the election of directors is the affirmative vote of
a plurality of the shares present or represented at the Annual Meeting and
entitled to vote thereon. Unless authority to vote for any director is withheld
in the Proxy, votes will be cast in favor of election of the nominees listed
herein. Votes withheld from election of directors will be excluded entirely from
the vote.
OTHER MATTERS
The Company's management knows of no business which will be presented for
consideration at the Annual Meeting other than that shown above. However, if any
such other business should properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed form of proxy to vote the proxies
in respect to any such business in accordance with their best judgment.
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The cost of preparing, assembling and mailing this proxy material will be
borne by the Company. The Company may solicit proxies otherwise than by the use
of the mail, in that certain officers and regular employees of the Company,
without additional compensation, may use their personal efforts, by telephone or
otherwise, to obtain proxies. The Company requests individuals, firms and
corporations holding shares in their names, or in the names of their nominees,
which shares are beneficially owned by others, to send this proxy material to
and obtain proxies from such beneficial owners and will reimburse such holders
for their reasonable expenses in doing so.
By Order of the Board of Directors
DENNIS W. TOWNLEY
Secretary
April 20, 1994
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PROXY
HPSC, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints John Everets, Jr. and Raymond R.
Doherty or either of them, with full power of substitution, as proxy to
represent and to vote as designated on the reverse side all the shares of
Common Stock of HPSC, Inc. (the "Company"), which the undersigned would be
entitled to vote at the Annual Meeting of Stockholders to be held at 100
Federal Street, Boston, Massachusetts on Wednesday, May 25, 1994, 10:00 A.M.
Eastern Daylight Savings Time, or at any adjournment thereof, in respect to all
matters which may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSALS 1 AND 2.
If the undersigned hold(s) any shares in a fiduciary, custodial or joint
capacity or capacities this proxy is signed by the undersigned in every such
capacity as well as individually.
(continued and to be signed on reverse side)
/SEE REVERSE SIDE/
/X/ PLEASE MARK
VOTES AS IN
THIS EXAMPLE.
(continued from other side)
1. To fix the number of directors at eight, and to elect
the following nominees: Joseph A. Biernat, J. Kermit
Birchfield, Louis J. P. Calisti, Dollie A. Cole,
Samuel P. Cooley, Raymond R. Doherty, John Everets, Jr.,
Thomas M. McDougal.
FOR WITHHELD
/ / / /
/ /______________________________________
FOR ALL NOMINEES EXCEPT AS NOTED ABOVE
2. To ratify the selection of Coopers & Lybrand as the
Company's independent public accountants for the current
fiscal year.
FOR AGAINST ABSTAIN
/ / / / / /
In their discretion, the proxies are authorized to vote
upon such other business as may properly come
before the meeting.
MARK HERE / /
FOR ADDRESS
CHANGE AND
NOTE AT LEFT
Please sign exactly as your name appears hereon. If acting as
attorney, executor, trustee or in other representative capacity,
sign name and title.
Signature: _______________________________________ Date __________
Signature: _______________________________________ Date __________