Exhibit 10.4
HPSC, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
As of August 2, 1996
Xxxxxxx Xxxxxxx, President
HPSC, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Dear Ray:
On behalf of the Board of Directors, I am pleased that you have accepted
our offer to continue to serve as President and Chief Operating Officer of
HPSC, Inc. (the "Company"). This agreement will formally record the
arrangements to which we have agreed. I would appreciate your noting your
acceptance of these terms and returning a copy of this agreement to me as
soon as possible.
1. You have served as the Company's President and Chief Operating
Officer since August 2, 1993, reporting to the Chairman and Chief Executive
Officer. You will adhere to policies established by the Board and devote your
full working time and best efforts to the Company.
2. Your annual base salary will be established by the Compensation
Committee of the Board of Directors (the "Compensation Committee") on an
annual basis but it shall not be less than Two Hundred Thousand Dollars
($200,000), paid in accordance with our normal payroll practices. The
Compensation Committee has developed a performance-based incentive
compensation plan ("Incentive Plan") for key management based on earnings,
working capital management and achieving strategic objectives. The Incentive
Plan is designed to pay members of key management up to One Hundred Percent
(100%) of their annual base salary for achieving superior results. You shall
be eligible to receive awards under the Incentive Plan, as determined
annually by the Compensation Committee.
3. You will be eligible for the fringe benefit plans applicable to the
Company's key employees, including the Company's Employee Stock Ownership
Plan and Supplemental Stock Ownership Plan. The Company will provide you
with an appropriate automobile. You will be entitled to take four (4) weeks'
vacation annually.
4. You will be eligible for awards under the Company's 1995 Stock
Incentive Plan, as it may be amended from time to time, and under any
subsequent similar plans, as determined by the Compensation Committee.
5. This agreement will begin on August 2, 1996 and continue for three
(3) years from that date. Thereafter, it will automatically renew from year
to year unless you or the Company give notice of your intention to terminate
this agreement six (6) months in advance of any anniversary. You or the
Company may terminate your employment and this agreement at any time for any
reason whatsoever. Except as provided in paragraph 6, if the termination is
by the Company and is not "for cause" (as defined in Exhibit A), you will
receive your base monthly salary for twelve (12) months plus an additional
monthly payment equal to one-twelfth (1/12) of the maximum incentive
compensation you would have earned for the next twelve (12) months. You will
also be entitled to your normal employee benefits during that period. If, at
the end of an agreement period, you or the Company choose not to renew the
agreement, the Company will make the termination payments to you described
above in this Paragraph 5 in the same manner as if you had been terminated by
the Company not "for cause." You agree that you will not in any manner
compete with the business of the Company or be employed by a competitor of
the Company while you are receiving termination payments. In addition, you
will maintain in confidence all of the Company's confidential information.
If your termination is by reason of your death or disability (as defined in
the Company's long-term disability insurance policies) you or your estate
will receive your base monthly salary for six (6) months from the date of
your death or disability. You (and/or your family) will also be entitled to
your normal employee benefits during that six (6) month period. If you
terminate this agreement or your termination is "for cause" (as defined in
Exhibit A), the Company's only liability to you will be to pay any arrearages
of salary or bonus as of the date of termination.
6. A. In the event a "Change of Control" (as defined in Exhibit A)
occurs and during the three (3) year period thereafter:
(x) your employment is terminated by the Company for any reason
other than "for cause" (as defined in Exhibit A); or
(y) you terminate your employment due to a "Change in Your
Employment" (as defined in Exhibit A) made by the Company,
the following will apply as of the date that the termination described in
either (x) or (y) above occurs:
(i) you will receive an amount equal to the average of your
total compensation from the Company which was includable
in your gross income for federal income tax purposes (as
reported on IRS Form W-2) for each of the preceding five
(5) calendar years ending before the date of the Change of
Control (or if you have not been employed for five (5) years
for such lesser period as you have been employed, with your
compensation to be annualized for any portion of a calendar
year of your employment that is shorter than twelve months)
multiplied by 2.99, provided, however, that you may choose,
in your discretion, to receive a lesser amount than you are
entitled to receive under this
Section 6A(i) if after consultation with the Compensation
Committee you determine that it is in your best interests to
accept a lesser amount;
(ii) the non-compete provisions of paragraph 5 will no longer
apply to you;
(iii) your stock options will entirely vest; and
(iv) your normal employee benefits will be payable for the next
twelve (12) months.
B. In the event a "Change of Control" (as defined in Exhibit A)
occurs and during the three (3) year period thereafter you terminate your
employment for any reason other than a "Change in Your Employment" (as
defined in Exhibit A) by the Company, the following will apply as of the date
of termination:
(i) you will receive your base monthly pay for the next twelve
(12) months plus an additional monthly payment equal to one-
twelfth (1/12) the maximum incentive compensation you would
have earned for the next twelve (12) months; and
(ii) your normal employee benefits will be payable for the next
twelve (12) months.
C. In the event a "Change of Control" (as defined in Exhibit A)
occurs and during the three (3) year period thereafter your employment is
terminated by the Company "for cause" (as defined in Exhibit A), the
Company's only liability to you will be to pay any arrearages of salary or
bonus as of the date of termination.
7. This Agreement may be changed only by a written agreement signed by
you and an authorized representative of the Company.
8. The Company shall (a) indemnify you for fees and expenses incurred
in successfully enforcing against the Company your rights under this
Agreement, and (b) pay your expenses incurred in enforcing your rights under
this Agreement, in advance of a final disposition of the action relating to
such enforcement, upon receipt of your undertaking to repay the amount
advanced if the Company prevails upon the final disposition of such action.
Sincerely,
HPSC, Inc.
By: /s/ Xxxx X. Xxxxxxx
-----------------------------
Xxxx X. Xxxxxxx
Chairman and Chief Executive
Officer
ACCEPTED:
/s/ Xxxxxxx Xxxxxxx
------------------------------
Xxxxxxx Xxxxxxx
EXHIBIT A
DEFINITIONS
1. DEFINITION OF CHANGE IN CONTROL
A "Change in Control" has the meaning set forth in the Company's
1995 Stock Incentive Plan, as amended to the date hereof.
2. DEFINITION OF "CHANGE IN YOUR EMPLOYMENT"
A "Change in Your Employment" by the Company which would entitle you to
terminate and receive benefits in accordance with Section 6 hereof would be:
(i) Diminution in your duties and responsibilities so that you
are no longer President or Chief Operating Officer of the
Company; or
(ii) reduction in pay or benefits; or
(iii) forced relocation outside of the greater Boston area.
3. DEFINITION OF "CAUSE"
"Cause" which would entitle the Company to terminate you would be:
(i) Your conviction of a crime involving moral turpitude; or
(ii) Any act of dishonesty which is material to the business of the
Company.