<PAGE>
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 / /
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/ No fee required.
/ / $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:
4) Proposed maximum aggregate value of transaction:
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.
1) Amount Previously Paid:
-----------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
3) Filing Party:
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4) Date Filed:
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<PAGE>
HPSC, INC.
60 STATE STREET
BOSTON, MA 02109-1803
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1997
The Annual Meeting of Stockholders of HPSC, Inc., a Delaware corporation
(the "Company" or "HPSC"), will be held on May 13, 1997, at nine o'clock in the
morning, Eastern Daylight Time, in the America Room, 2nd Floor at the Bank of
Boston, 100 Federal Street, Boston, Massachusetts, for the following purposes:
1. To elect three directors for a three-year term to expire at the 2000
Annual Meeting of Stockholders;
2. To ratify the appointment of Deloitte & Touche LLP as the
independent accountants for the Company for the year ending December 31,
1997; and
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 March 28, 1997 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 10, 1997
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.
<PAGE>
HPSC, INC.
60 STATE STREET
BOSTON, MA 02109-1803
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 1997
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 Tuesday, May
13, 1997 at nine o'clock in the morning, Eastern Daylight Time, in the America
Room, 2nd Floor at the 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 before 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 10, 1997 to the
holders of record of shares of Common Stock of the Company at the close of
business on March 28, 1997. The Company's Annual Report to Stockholders for the
fiscal year ended December 31, 1996 accompanies this proxy statement.
PROPOSAL ONE--ELECTION OF DIRECTORS
The Restated Certificate of Incorporation of the Corporation provides that
the Board of Directors shall consist of not less than three (3) nor more than
twelve (12) members, as determined by a vote of a majority of the entire Board
of Directors, and that the Board shall be divided into three (3) classes (Class
I, Class II and Class III). Directors of one class are elected each year to a
term of three (3) years. As of the date of this proxy statement, the Board of
Directors consists of eight (8) members, three (3) of whom have terms which
expire at this year's Annual Meeting (Class II), three of whom have terms which
expire at the 1998 Annual Meeting (Class III) and two (2) of whom have terms
which expire at the 1999 Annual Meeting (Class I).
Messrs. Biernat, Cooley and Doherty are the three nominees for Class II
director to be voted on at this Annual Meeting. If elected as Class II
directors, Messrs. Biernat, Cooley and Doherty will have a three-year term
expiring at the 2000 Annual Meeting of Stockholders. Messrs. Birchfield and
Everets and Ms. Cole will continue to serve as Class III directors. Their term
will expire at the 1998 Annual Meeting of Stockholders. Mr. Weicker and Dr.
McDougal will continue to serve as Class I directors. Their term will expire at
the 1999 Annual Meeting of Stockholders. In each case a director shall serve
until his or her successor is duly elected and qualified or until his or her
death, resignation or removal.
All nominees for Class II directors to be voted on at this Annual Meeting
have advised the Company that they will serve if elected. If any of the nominees
for Class II director 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 vote required for the
<PAGE>
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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
NAMED BELOW AND YOUR PROXY WILL BE SO VOTED UNLESS YOU SPECIFY OTHERWISE.
NOMINEES FOR CLASS II DIRECTORS
JOSEPH A. BIERNAT, age 69, 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
prior thereto as President, Treasurer and Chief Financial Officer of Philco-Ford
Finance Corporation. He is also a director of the ITT Mutual Funds and
previously has been a director of several financial and civic organizations.
RAYMOND R. DOHERTY, age 51, has been President of HPSC since December 1989
and Chief Operating Officer of HPSC since August 1993. He was Treasurer of HPSC
from December 1988 until May 1994. 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 Vice President and Chief Operating Officer of Healthco
International, Inc., a company engaged in sales of dental equipment and formerly
affiliated with the Company, 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.
SAMUEL P. COOLEY, age 65, became a director of HPSC in December 1993. From
1955 until his retirement in 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 serves as a director or trustee of numerous
nonprofit organizations in Connecticut.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
CLASS III DIRECTORS (TERM EXPIRES AT THE 1998 ANNUAL MEETING)
JOHN W. EVERETS, age 50, 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 and Chief Executive Officer of T.O. Richardson Co.,
Inc., a financial services company, from January 1990 until July 1993.
Previously he was Executive Vice President of Advest, Inc., an investment
banking firm, from 1977 to January 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 formerly was Vice Chairman of the Connecticut Development Authority and
Chairman of the Loan Committee of the Connecticut Development Authority. Mr.
Everets is also a director of Dairy Mart Convenience Stores, Inc.,
Crown/Northcorp, and the Eastern Company.
2
<PAGE>
DOLLIE A. COLE, age 66, 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 Ms. Cole was an owner
and board member of Checker Motors and Checker Taxi until selling her interest
in 1988. Ms. 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, and to Separation Dynamics, an international company involved in the
energy and manufacturing industries. In addition to these business activities,
Ms. Cole serves on the boards of Project Hope--the World Health Organization,
the National Captioning Institute for the Hearing Impaired, the Smithsonian
Institution and on the National Academy of Science--President's Circle Board.
J. KERMIT BIRCHFIELD, age 57, became a director of HPSC in December 1993. He
currently serves as Chairman of Displaytech, Inc., a privately-held manufacturer
of miniature high-resolution ferrite liquid crystal display screens and as a
consultant for various businesses. From 1990 until 1994, Mr. Birchfield served
as Senior Vice President, Secretary, and General Counsel with M/A-COM, Inc., a
publicly-held manufacturer of semiconductors and communications equipment.
Before joining M/A-COM, he was Senior Vice President for Legal and Governmental
Affairs and General Counsel for the Georgia Pacific Corporation. Mr. Birchfield
is also a Managing Director of Century Partners, Incorporated, a privately-held
investment and operating company. He is also a director of Intermountain
Industries Inc. and its wholly-owned public utility subsidiary, Intermountain
Gas Company, Mass. Financial Compass Group of Mutual Funds and Dairy Mart
Convenience Stores, Inc.
CLASS I DIRECTORS (TERM EXPIRES AT THE 1999 ANNUAL MEETING)
LOWELL P. WEICKER, JR., age 65, was elected a director in December 1995. Mr.
Weicker began his political career in 1962, when he was elected as a member of
Connecticut's House of Representatives for the Town of Greenwich, serving three
terms. Mr. Weicker served concurrently as First Selectman of Greenwich from 1964
to 1968. He was elected to the U.S. Congress from Connecticut's 4th District in
1968 and was subsequently elected to the United States Senate in 1970, 1976 and
1982, serving until January 1989. In January 1991, Mr. Weicker was elected
Governor of Connecticut, a position which he held until January 1995. He is
presently a visiting professor at the University of Virginia. Mr. Weicker is
also a director of UST Corp., Phoenix Home Life Mutual Funds and Compuware Corp.
THOMAS M. MCDOUGAL, D.D.S., age 57, was elected a director of HPSC in 1991.
He has been a practicing dentist for approximately 30 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 past Chairman of its Continuing Education Committee and its
Banking, Nominating and Patient Relations Committee.
OTHER EXECUTIVE OFFICERS
RENE LEFEBVRE, age 50, has been Chief Financial Officer, Vice President of
Finance and Treasurer of HPSC since May 1994. From June 1993 until May 1994, he
was Chief Financial Officer of NETTS, Inc., a vocational training institution.
He was an independent financial services consultant from February 1992 through
May 1993. He served as interim Chief Financial Officer of the Business Funding
Group from June
3
<PAGE>
through November of 1991. From September 1982 until March 1991, Mr. Lefebvre was
Chief Financial Officer of Eaton Financial Corporation, a subsidiary of AT&T
Capital Corporation.
COMMITTEES OF THE BOARD
The Board of Directors has an Executive Committee, an Audit Committee and a
Compensation Committee. It does not have a Nominating Committee or a committee
performing similar functions.
The current members of the Executive Committee are J. Kermit Birchfield,
Samuel P. Cooley, Raymond R. Doherty, and John W. Everets. The Executive
Committee exercises 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 meetings of the Board of Directors. During fiscal year 1996,
the Executive Committee held two meetings and acted by unanimous consent on four
occasions.
The current members of the Audit Committee are Dollie A. Cole, Samuel P.
Cooley, Thomas M. McDougal, Joseph A. Biernat, and Lowell P. Weicker, Jr.. The
functions of the Audit Committee are to review the Company's external and
internal auditing procedures, to review with the Company's management the plan,
scope and results of the Company's operations, and to study and make
recommendations periodically to the Board of Directors on these and related
matters. During fiscal year 1996, the Audit Committee held four meetings.
The current members of the Compensation Committee are Dollie A. Cole, J.
Kermit Birchfield, and Samuel P. Cooley. The functions of the Compensation
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 and restricted stock to officers, key employees and consultants and
regarding stock option and restricted stock matters generally. During fiscal
year 1996, the Compensation Committee held four meetings.
During fiscal year 1996, the Board of Directors held five meetings and acted
by unanimous consent on one occasion. Each member of the Board (including each
nominee for reelection as director) attended at least 75% of the meetings of the
Board of Directors held during the time he or she was a director and at least
75% of 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 Annual
Meeting. Holders of record of shares of Common Stock of the Company at the close
of business on March 28, 1997 may vote at the Annual Meeting. At that date,
there were outstanding 4,657,930 shares of Common Stock, excluding 128,600
shares of Common Stock held in the Company's treasury.
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 28, 1997,
the record date, with respect to the beneficial ownership of the Company's
Common Stock by (1) each person or entity 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 and (ii) by each of the Company's directors
and (iii) its Named Executive Officers; and (iv) by all directors and executive
officers of the Company as a group. The information in the table and in the
related notes has been furnished by or on behalf of the indicated
4
<PAGE>
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
("SEC").
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP OF HPSC % OF
NAME (AND ADDRESS OF OWNER OF MORE THAN 5%) COMMON STOCK(1)(2) CLASS
- -------------------------------------------------------------------------------- ------------------------ -----
<S> <C> <C>
John W. Everets................................................................. 461,733(3)(4)(5)(6) 9.6%
60 State Street, 35th Floor
Boston, MA 02109-1803
Tweedy, Browne Company, L.P..................................................... 385,562(7) 8.3%
52 Vanderbilt Avenue
New York, NY 10017
Harder Management Company, Inc.................................................. 364,390(8) 7.8%
Somerset Court
281 Winter Street, Suite 340
Waltham, MA 02154
Hollybank Investments, LP....................................................... 353,000(9) 7.6%
One Financial Center, Suite 1600
Boston, MA 02111
Fidelity Management and Research Corporation.................................... 352,500(10) 7.6%
82 Devonshire Street
Boston, MA 02109-3605
John W. Everets and Raymond R. Doherty.......................................... 350,000(11) 7.5%
as Trustees of the HPSC, Inc.
Supplemental Employee Stock
Ownership Plan and Trust
60 State Street, 35th Floor
Boston, MA 02109-1803
Dimensional Fund Advisors, Inc.................................................. 342,900(12) 7.3%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
John W. Everets and Raymond R. Doherty.......................................... 300,000(13) 6.4%
as Trustees of the HPSC, Inc.
Employee Stock Ownership Plan
60 State Street, 35th Floor
Boston, MA 02109-1803
Raymond R. Doherty.............................................................. 245,280(3)(4)(6) 5.1%
Rene Lefebvre................................................................... 66,766(4)(6) 1.4%
Joseph A. Biernat............................................................... 10,000 *
J. Kermit Birchfield............................................................ 40,667(14) *
Dollie A. Cole.................................................................. 42,500 *
Samuel P. Cooley................................................................ 11,000 *
Thomas M. McDougal.............................................................. 27,000 *
Lowell P. Weicker, Jr........................................................... 5,900(15) *
All Directors and Executive Officers as a group (9 persons)..................... 910,846(3)(6) 17.9%
</TABLE>
- ------------------------
* Percent of class less than 1%.
5
<PAGE>
(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, 10,000 shares
each; Ms. Cole and Dr. McDougal, 27,000 shares each; Mr. Weicker, 5,000
shares, Mr. Everets, 175,000 shares; Mr. Doherty, 132,000 shares; Mr.
Lefebvre, 24,000 shares; and such group, 420,000 shares.
(2) Includes allocated shares under the HPSC, Inc. Employee Stock Ownership Plan
(the "ESOP") of 6,033 for Mr. Everets, 8,030 for Mr. Doherty, 2,766 for Mr.
Lefebvre and 16,829 for all executive officers and directors as a group.
(3) Excludes the 300,000 shares held in the ESOP for the benefit of the employee
participants (other than the shares allocated to the respective ESOP
accounts of Messrs. Doherty and Everets listed in Note (2) above) and the
350,000 shares held in the HPSC, Inc. Supplemental Employee Stock Ownership
Plan and Trust (the "SESOP") for the benefit of the employee participants.
Although Messrs. Doherty and Everets are the trustees of both the ESOP and
SESOP and accordingly share voting power with respect to all unallocated
shares and share dispositive power with respect to all shares in the ESOP
and the SESOP, they disclaim beneficial ownership of all such shares, other
than the shares allocated to their respective ESOP accounts listed in Note
(2) above.
(4) Includes 26,133 shares, 10,000 shares and 10,000 shares, respectively, for
Messrs. Everets, Doherty and Lefebvre, purchased under the Stock Loan
Program described in "EXECUTIVE COMPENSATION--Stock Loan Program." All such
shares are pledged to the Company pursuant to such Program.
(5) Includes 100 shares held by Mr. Everets' son, A. Hale W. Everets. Mr.
Everets disclaims beneficial ownership of such shares.
(6) Includes 185,000, 90,000 and 25,000 restricted shares granted to Messrs.
Everets, Doherty and Lefebvre, respectively, on May 12, 1995, as described
under the Summary Compensation Table.
(7) Based solely upon information reported on Schedule 13D as filed with the
SEC. Tweedy, Browne Company L.P. ("TBC"), TBK Partners, L.P. ("TBK") and
Vanderbilt Partners, L.P. ("Vanderbilt") filed an Amendment No. 5 to its
Schedule 13D on February 18, 1997 with the SEC. TBC is the beneficial owner
of 360,562 shares of the Company's Common Stock. TBK and Vanderbilt own
directly 15,000 and 10,000 shares of the Company's Common Stock,
respectively. The aggregate number of shares of the Company's Common Stock
of which TBC, TBK and Vanderbilt could be deemed to be beneficial owners is
385,562. TBC has investment discretion with respect to 360,562 shares and
sole power to dispose or direct the disposition of all of such shares. TBC
has shared power to vote or direct the vote of 331,465 shares. TBK has the
sole power to vote or direct the voting of and to dispose or direct the
disposition of the 15,000 shares it holds. Vanderbilt has the sole power to
vote or direct the voting of and dispose or direct the disposition of the
10,000 shares it holds. The general partners of TBC and Vanderbilt are
Christopher H. Browne, William H. Browne and John D. Spears. The general
partners of TBK are Christopher H. Browne, William H. Browne, Thomas P.
Knapp and John D. Spears. The general partners of TBC, by reason of their
positions as such, may be deemed to have shared power to dispose of or to
direct the disposition of 360,562 shares and shared power to vote or to
direct the vote of 331,465 shares. Each of the general partners of TBK and
Vanderbilt, by reason of his position as such, may be deemed to have shared
power to vote or direct the vote of and to dispose or direct the disposition
of the 15,000 shares held by TBK and the 10,000 shares held by Vanderbilt,
respectively.
(8) Harder Management Company, Inc. ("Harder") filed a Schedule 13G with the SEC
reporting that it is a registered investment adviser and that the 364,390
shares of the Company's Common Stock held by Harder is held on behalf of its
clients in accounts over which Harder has complete investment
6
<PAGE>
discretion. Harder disclaims beneficial ownership of the 364,390 shares
except in its capacity as an investment adviser.
(9) Hollybank Investments, LP ("Hollybank") reports that Dorsey R. Gardner,
Hollybank's general partner, has sole voting power with respect to an
additional 30,580 shares of Common Stock of the Company held in his name.
Mr. Gardner disclaims beneficial ownership, except to the extent of his
partnership interest, in the 353,000 shares of Company Common Stock held by
Hollybank.
(10) Based solely upon information reported on Schedule 13G as filed with the
SEC. Fidelity Management and Research Corporation ("FMRC") filed an
Amendment No. 1 to its Form 13G with the SEC on February 14, 1997 for the
year ended December 31, 1996 reporting that it is a registered investment
adviser and as such, has sole power to dispose or to direct the disposition
of 352,500 shares of Common Stock of the Company. FMRC reports that it has
no voting authority with respect to such shares.
(11) None of the 350,000 shares have been allocated to the accounts of
participants in the SESOP. Messrs. Doherty and Everets disclaim beneficial
ownership of all such shares.
(12) Based solely on information reported on Schedule 13G as filed with the SEC.
Dimensional Fund Advisors, Inc. ("Dimensional") filed an Amendment No. 6 to
its Schedule 13G with the SEC in February 1997 reporting that it is a
registered investment adviser and is deemed to have beneficial ownership of
342,900 shares of Common Stock of the Company held by it, all of which
shares are owned by advisory clients of Dimensional. Officers of Dimensional
also serve as officers of DFA Investment Dimensions Group Inc. (the "Fund")
and DFA Investment Trust Company (the "Trust"), each an open-end management
investment company registered under the Investment Company Act of 1940. In
their capacities as officers of the Fund and the Trust, these officers vote
74,800 shares which are owned by the Fund and 43,800 shares which are owned
by the Trust, all of which shares are included in the 342,900 shares over
which Dimensional is deemed to have sole dispositive power.
(13) 89,654 of these shares have been allocated to the accounts of ESOP
participants and 210,346 shares are unallocated. Messrs. Doherty and Everets
disclaim beneficial ownership of all such shares, other than the shares
allocated to their respective ESOP accounts listed in Note (2) above.
(14) Includes 3,000 shares held by Mr. Birchfield's spouse. Mr. Birchfield
disclaims beneficial ownership of such shares.
(15) Includes 200 shares held by Mr. Weicker's spouse. Mr. Weicker disclaims
beneficial ownership of such shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, Directors and persons who own more than ten percent of a
registered class of the Company's equity securities ("Reporting Persons") to
file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission (the "SEC") and the New York Stock Exchange
(the "NYSE"). These Reporting Persons are required by SEC regulation to furnish
the Company with copies of all Forms 3, 4 and 5 they file with the SEC and the
NYSE.
Based on the Company's review of the copies of the Forms it has received and
written representations from certain Reporting Persons, the Company believes
that a Form 3 and Form 4 reflecting Mr. Weicker's election as a director and his
receipt of a stock option at the time of his election inadvertently were not
filed on a timely basis. A Form 5 was filed to correct the disclosure. The
Company believes that all other Reporting Persons complied with all filing
requirements applicable to them with respect to transactions during fiscal year
1996.
7
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows all compensation paid to the Chief
Executive Officer and the other current executive officers for services rendered
in all capacities during the past three years. HPSC has three current executive
officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION -------------------------------------------
------------------------------------------------ RESTRICTED SECURITIES
OTHER ANNUAL STOCK AWARDS UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1)(2) OPTIONS COMPENSATION(3)
- ------------------------------- --------- ---------- --------- -------------- ------------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
John W. Everets (4)............ 1996 $ 239,200 $ 50,000 $ -0- $ -0- -0- $ 15,904
Chief Executive Officer and 1995 210,000 -0- -0- 809,375 -0- 18,959
Chairman of the Board 1994 210,000 125,000 96,636(5) -0- -0- 15,904
Raymond R. Doherty (6)......... 1996 197,300 33,000 -0- -0- -0- 14,954
President, Chief Operating 1995 190,000 -0- -0- 393,750 -0- 18,606
Officer and Director 1994 190,000 75,000 -0- -0- -0- 22,885
Rene Lefebvre (7).............. 1996 132,300 13,000 -0- -0- -0- 10,404
Vice President of Finance, 1995 125,000 -0- -0- 109,375 -0- 10,905
Treasurer and Chief Financial 1994 78,731 15,000 -0- -0- 30,000 1,790
Officer
</TABLE>
- ------------------------
(1) The Company's stockholders approved the 1995 Stock Incentive Plan (the "1995
Stock Plan") at the 1995 annual meeting of stockholders. The 1995 Stock Plan
provides for the issuance of up to 550,000 options and/or grants of shares
of restricted stock to key employees and non-employee directors of the
Company. The 1995 Stock Plan is administered by the Compensation Committee
of the Board of Directors. Upon the recommendation of the Compensation
Committee, the Board of Directors adopted an amendment to the 1995 Stock
Plan to provide service requirements for participation in the 1995 Stock
Plan in addition to the performance conditions which were contained in the
1995 Stock Plan as originally adopted.
The 1995 Stock Plan, as amended (the "Amended 1995 Stock Plan") provides
that shares of restricted stock granted under the Amended 1995 Stock Plan
shall vest for participants when (i) certain performance conditions are met
(50% vest if and when during the five-year period from the date of grant
(the "Performance Period") the closing price of a share of the Company's
Common Stock, as reported on the NASDAQ National Market System for a
consecutive ten-day period, equals or exceeds 134.175% of the closing price
on the grant date (the "Partial Performance Condition"), and the remaining
50% vest if and when during the Performance Period the closing price of a
share of the Company's Common Stock, as reported on the NASDAQ National
Market System for a consecutive ten-day period, equals or exceeds 168.35% of
the closing price on the grant date (the "Full
8
<PAGE>
Performance Condition") and (ii) the holder of the restricted stock has
completed five (5) years of continued service from the grant date (the
"Service Requirement").
The Partial Performance Condition for the shares of restricted stock granted
to Messrs. Everets, Doherty and Lefebvre in 1995 is $5.90 per share and the
Full Performance Condition is $7.37 per share. Upon a "change of control" of
the Company (as defined in the Amended 1995 Stock Plan), all awards granted
prior to such date become fully vested. Upon the termination of a
participant's employment by the Company without "cause" (as defined in the
Amended 1995 Stock Plan) or by reason of death or disability during the
Performance Period, any awards for which the Partial Performance Condition
or the Full Performance Condition shall have been satisfied no later than
four months after the date of such termination of employment shall become
fully vested and shall be deemed to satisfy the Service Requirement. The
Partial Performance Condition for the restricted stock granted in 1995 to
Messrs. Everets, Doherty, and Lefebvre was met in 1996, but the shares of
restricted stock held by these individuals remain subject to the Service
Requirement.
(2) The amounts reported in this column represent the market price as reported
on the Nasdaq National Market of the stock awarded under the Amended 1995
Stock Plan on the grant date without diminution in value attributable to the
restrictions on such stock. The aggregate non-vested restricted stock
holdings at the end of fiscal 1996 were as follows: for Mr. Everets--185,000
shares (the value of these shares at the end of fiscal 1996 equaled
$1,110,000, which is 137% of the value at the grant date); for Mr.
Doherty--90,000 shares (the value of these shares at the end of fiscal 1996
equaled $540,000, which is 137% of the value at the grant date); and for Mr.
Lefebvre, 25,000 shares (the value of these shares at the end of fiscal 1996
equaled $150,000, which is 137% of the value at the grant date). Dividends
on stock awards will be paid at the same rate as dividends, if any, are paid
to all stockholders.
(3) Includes term life insurance premiums paid by the Company and Company
contributions to the Named Executive Officer's 401(k) retirement plan
account, respectively, in the following amounts for fiscal 1996: Mr.
Everets, $3,240 and $4,750; Mr. Doherty, $3,240 and $3,800; and Mr.
Lefebvre, $756 and $2,646. Also includes the value of shares of Common Stock
in the Company's Employee Stock Ownership Plan ("ESOP") allocated to Named
Executive Officers in fiscal 1996 (for services rendered during fiscal 1995)
in the following amounts: Mr. Everets, $7,914; Mr. Doherty, $7,914; and Mr.
Lefebvre, $7,002. The value of the allocated ESOP shares was calculated by
using the December 31, 1996 closing price for the Company's Common Stock of
$6.00 per share as reported on the Nasdaq National Market. The Company has
not allocated shares of Common Stock to participants in its ESOP for
services rendered during fiscal 1996 as of the date of this Proxy Statement.
(4) Mr. Everets' employment with the Company commenced in July 1993. His
compensation were formerly governed by an employment agreement with the
Company dated July 19, 1993 and is governed by an employment agreement with
the Company dated as of July 19, 1996. See "EXECUTIVE
COMPENSATION--Employment Agreements".
(5) Includes relocation and temporary living expenses of $81,806 paid in fiscal
1994 in connection with Mr. Everets' relocation to the Boston area.
(6) Mr. Doherty's compensation was formerly governed by an employment agreement
with the Company dated as of August 2, 1993 and is governed by an employment
agreement with the Company dated August 2, 1996. See "EXECUTIVE
COMPENSATION--Employment Agreements".
9
<PAGE>
(7) Mr. Lefebvre's employment with the Company commenced in May 1994. His
compensation is governed by an employment agreement with the Company dated
April 6, 1994. See "EXECUTIVE COMPENSATION--Employment Agreements".
STOCK LOAN PROGRAM
On January 5, 1995 the Compensation Committee approved a Stock Loan Program
whereby executive officers and other senior personnel of the Company earning
more than $80,000 per year may borrow from the Company an amount equal to the
cost of purchasing two shares of Common Stock, solely for the purpose of
acquiring such stock, for each share of Common Stock purchased by the employee
from sources other than Company funds. Such borrowings may not exceed $200,000
in any fiscal quarter of the Company, $200,000 per employee or $400,000 during
the term of the loan program for all employees. All shares purchased with such
loans are pledged to the Company as collateral for repayment of the loans. The
loans are recourse, bear interest at a variable rate which is one-half of one
percent above the Company's cost of funds, payable monthly in arrears, and are
payable as to principal no later than five (5) years after the date of the loan.
As of the date of this proxy statement, the Company has loans outstanding to
executive officers in the following amounts secured by the number of shares
listed: Mr. Everets, $98,000, secured by 26,133 shares; Mr. Doherty, $37,500,
secured by 10,000 shares; and Mr. Lefebvre, $37,500, secured by 10,000 shares.
None of the loans to the Named Executive Officers has been repaid as of December
31, 1996, other than monthly interest payments thereon. The largest aggregate
amount of outstanding indebtedness under the Stock Loan Program since its
inception has been $218,000.
SUPPLEMENTAL EMPLOYEE RETIREMENT PLAN
The table below sets forth a range of annual retirement benefits available
to certain executive employees under the HPSC Supplemental Executive Retirement
Plan (the "SERP") effective as of January 1, 1997. Benefits under the SERP are
intended to supplement the retirement benefits received by executive employees
through other Company programs, such as the ESOP and SESOP and 401(k) Plan (as
such terms are defined herein), as well as Social Security benefits attributable
to Company-paid FICA taxes. Benefits under the SERP, payable upon normal
retirement at age 65 (or upon early retirement at age 62) as an actuarial
equivalent of a life annuity, are based upon age, length of service (up to a
maximum of 15 credited years of service) and an average of the participant's
three highest calendar years of compensation (total remuneration for services
rendered in a specified year excluding employer contributions under the
Company's benefit plans) out of the five calendar years immediately preceding
the normal or early retirement date or other date of termination of employment
("Average Final Compensation"). The SERP provides for making payments to the
executive in amounts equal to 65% of the employee's Average Final Compensation,
offset by amounts deemed available under the 401(k) Plan and Social Security
benefits, to the extent attributable to the Company's contribution and to
Company-paid FICA taxes, respectively, as well as the deemed value of shares
allocated to the employee under the Company's ESOP and SESOP.
Accrual and vesting of benefits are contingent on the executive's continued
service as an employee of the Company, with accrual in equal amounts over the
first 15 years of service and vesting over a period of 10 years, starting in the
sixth year of service, provided that an executive's benefits will also fully
accrue and vest upon a "change in control" of the Company (as defined in the
SERP) unless such change in control is approved by at least a two-thirds vote of
the incumbent Board of Directors. Limited service credit (up to a maximum of
three years) is given for service before 1993 and full credit is given for
service between January 1, 1993 and the effective date of the SERP. For all
periods prior to the effective date, service as
10
<PAGE>
either an employee of the Company or a member of its Board of Directors is
credited. On and after the effective date, only service as an employee is
credited.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN BENEFIT TABLE(1)
<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------------
AVERAGE FINAL COMPENSATION 5 10 15+
- ------------------------------------------------------------------------------- --------- ---------- ----------
<S> <C> <C> <C>
$100,000....................................................................... $ 16,250 $ 48,750 $ 65,000
150,000....................................................................... 24,375 73,125 97,500
200,000....................................................................... 32,500 97,500 130,000
250,000....................................................................... 40,625 121,875 162,500
300,000....................................................................... 48,750 146,250 195,000
400,000....................................................................... 65,000 195,000 260,000
500,000....................................................................... 81,250 243,750 325,000
</TABLE>
- ------------------------
(1) Amounts shown do not reflect offset for benefits received and attributable
to the Company under the Company's 401(k) plan, employee stock ownership
plans, and FICA contributions.
For the Named Executive Officers, the years of credited service and 1996
compensation as of December 31, 1996, were: Mr. Everets--7.0 years, $289,200;
Mr. Doherty--7.0 years, $230,300; and Mr. Lefebvre--2.7 years, $145,300.
OPTION GRANTS IN LAST FISCAL YEAR
The Company made no option or SAR grants to its Named Executive Officers in
its last fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information regarding the exercise of stock
options by the Named Executive Officers during fiscal 1996 and the value of
unexercised "in-the-money" options at fiscal 1996 year-end. The columns showing
the number of options exercised during fiscal 1996 and the value realized
thereby have been omitted because none of the executive officers exercised any
options during fiscal 1996.
AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT 1996 IN-THE-MONEY OPTIONS
FISCAL YEAR-END AT 1996 FISCAL YEAR-END
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---------------------------------------------------------------- ----------------------- --------------------------
<S> <C> <C>
John W. Everets................................................. 170,000/5,000 $561,250/$13,750
Raymond R. Doherty.............................................. 132,000/18,000 $408,000/$60,750
Rene Lefebvre................................................... 18,000/12,000 $43,875/$29,250
</TABLE>
- ------------------------
(1) An "in-the-money" option is an option for which the option price of the
underlying stock is less than the December 31, 1996 market price as reported
on the Nasdaq National Market ($6.00 per share); the value shown reflects
stock price appreciation since the date of grant of the option.
11
<PAGE>
EMPLOYMENT AGREEMENTS
JOHN W. EVERETS AND RAYMOND R. DOHERTY
As of July 19, 1996 and August 2, 1996, the Company entered into new
employment agreements with each of John W. Everets and Raymond R. Doherty,
respectively. The Company agreed to pay a base annual salary of $250,000 to Mr.
Everets and $200,000 to Mr. Doherty as well as a bonus of up to 100% of base
salary to each individual under an incentive plan developed by the Compensation
Committee of the Board in consultation with management and approved by the full
Board of Directors.
Each employment agreement has a three-year term and thereafter 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 a decision not to renew by either party
or a termination by the Company which is not "for cause" (as defined in each
agreement) with respect to either Mr. Everets or Mr. Doherty (or, in the case of
Mr. Everets, in the event of termination by Mr. Everets), 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 has agreed 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. In the
event of the employee's termination due to death or disability, the Company will
pay the employee or his estate the employee's base monthly salary for six months
from the date of death or disability. The employee and his family will also be
entitled to receive the employee's benefits during this six-month period.
If, within three years after a "change of control" of the Company (as
defined in each agreement), either the Company terminates Mr. Everets or Mr.
Doherty 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 up to 2.99 times the employee's average annual compensation for the
preceding five calendar years before the date of the change of control; 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. If, within
three years after a "change of control", 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 and normal employee
benefits for 12 months.
RENE LEFEBVRE
On April 6, 1994, the Company entered into an employment agreement with Rene
Lefebvre for employment commencing in May 1994. The Company agreed to pay Mr.
Lefebvre an initial base annual salary of $125,000 (which has since been
increased to $135,000) as well as a bonus of up to 50% of base salary at the
discretion of the Chief Executive Officer and subject to approval of the
Compensation Committee of the Board of Directors. The Company also granted to
Mr. Lefebvre options to purchase 30,000 shares of Common Stock, which vest over
a five-year period in equal annual installments, at a price of $3.5625 per
share, which was the fair market value of a share of Common Stock on the date of
grant.
The employment agreement has a three-year term and thereafter will
automatically renew from year to year unless either party to such agreement
gives notice of intention to terminate the agreement 60 days in advance of any
anniversary. Either party to Mr. Lefebvre's employment agreement may terminate
it at any time for any reason. The Company is obligated to pay Mr. Lefebvre's
salary for three months after termination, if it does not renew the agreement,
and for six months after termination, if it otherwise
12
<PAGE>
terminates his employment other than "for cause" (as defined in his agreement).
Mr. Lefebvre has agreed not to compete with the business of the Company while
receiving severance payments and to maintain in confidence all of the Company's
confidential information. In the event of a "change of control" of the Company
(as defined in his agreement), Mr. Lefebvre's stock options will fully vest.
COMPENSATION OF DIRECTORS
The Company pays each non-employee director a 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 or its
committees. Pursuant to the 1995 Stock Plan, each non-employee continuing
director is granted 1,000 non-qualified stock options on the day of each annual
meeting of stockholders during the term of the 1995 Stock Plan.
REPORT OF THE COMPENSATION COMMITTEE
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee") currently
consisting of Dollie A. Cole, J. Kermit Birchfield and Samuel P. Cooley, all of
whom are independent, non-employee directors.
The Committee has primary responsibility for analyzing the compensation of
executive officers of the Company, establishing performance goals for executive
officers, reporting to the full Board with respect to such compensation, and
administering the Company's stock option plans.
SALARIES FOR 1996
The Chairman of the Board and Chief Executive Officer (the "Chairman") and
each of the other two executive officers has an employment agreement which
provides for base cash compensation which is fixed during the term of the
agreement. See "Employment Agreements" above.
The base cash compensation levels for the Chairman and other executive
officers were established in their original employment agreements by the
Committee based upon a number of factors including the prior experience of the
executive officer, company size and the obstacles to attracting experienced
managers to HPSC because of the Company's weakened financial status at the time
each employment agreement was executed. In setting the compensation for the
Chairman and Mr. Doherty in the new employment agreements executed in July and
August of 1996, respectively, the Committee considered the experience and prior
performance of each officer, other employment opportunities available to such
officer and the difficulty in replacing him, and the information contained in
the 1996 Leasing Industry Wage and Compensation Survey of the Equipment Leasing
Association of America (the "1996 Compensation Survey") relating to independent
finance companies with portfolios of comparable size to that of the Company.
CASH BONUSES FOR 1996
In recommending bonuses for the Chairman and other executive officers for
the fiscal year ended December 31, 1996, the Committee reviewed the incentive
plan goals that it had established, including financial and overall performance
criteria. Instead of using specific target levels with respect to individual and
Company performance to calculate bonuses, the Committee considered a number of
factors, including the following: (i) the overall financial performance of the
Company, particularly in terms of its achieving
13
<PAGE>
the revenue goals that were established in the Business Plan of the Company;
(ii) the increase in value of the Company's stock; (iii) the Company's success
in obtaining bank and asset securitization financing on favorable terms; (iv)
the Company's success in hiring and retaining sales personnel; (v) the
information contained in the 1996 Compensation Survey; and (vi) other positive
developments in the Company's business. The Committee also considered the
contribution of each executive officer to the performance of the Company, the
responsibilities of each executive officer in connection with this performance,
the importance of the individual to the future growth and profitability of the
Company, cash compensation levels of competitors in the industry (many of these
competitors are included in the 1996 Compensation Survey) and the success of the
management team in achieving the Company's short-term and long-term goals.
Although the Committee considered all of these factors in exercising its
judgment as to compensation levels for the Chairman and other executive
officers, the Committee did not use a precise formula to weigh the relative
importance of such factors.
RESTRICTED STOCK AWARDS
The Committee considered the size of restricted stock awards made to its
executive officers in 1995 and made no restricted stock awards to its executive
officers in 1996.
None of the compensation paid to any executive officer in fiscal year 1996
is subject to Section 162(m) of the Internal Revenue Code of 1986, as amended,
which precludes a public corporation from taking a deduction in 1995 or
subsequent years for compensation of certain executive officers in excess of $1
million.
Compensation Committee
Dollie A. Cole, Chair
J. Kermit Birchfield
Samuel P. Cooley
14
<PAGE>
PERFORMANCE GRAPH
SEC rules require that the Company present a line graph comparing cumulative
total shareholder return for HPSC 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 prepared its own index (the "Custom Index") of four
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, and two companies in the equipment leasing
field.
Set forth below is a graph comparing, over a five-year period beginning
December 31, 1991, the cumulative total return for the Company, the Russell 2000
Index and the Custom Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
<S> <C> <C> <C>
Based on reinvestment of $100 beginning December 31,
1991
Custom Composite
HPSC Inc. Russell 2000 Index (6 Stocks)
Dec-91 $100 $100 $100
Dec-92 $129 $118 $112
Dec-93 $120 $141 $107
Dec-94 $133 $138 $91
Dec-95 $160 $178 $163
Dec-96 $213 $207 $235
SOURCE; GEORGESON & COMPANY INC.
</TABLE>
15
<PAGE>
The Custom Index includes: AT&T Capital Corp. (added fourth quarter 1993, began
trading 7/28/93), First City Bancorp, Professional Bancorp, Redwood Empire
Bancorp (added fourth quarter 1991, began trading 9/26/91), San Francisco
Company--Class A (included through 1994 only, as company was delisted in March
1995) and Trans Leasing International Inc.
PROPOSAL TWO--RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. resigned as independent accountants for the Company
on June 12, 1996. None of the reports of Coopers & Lybrand on the financial
statements of the Company for either of the two most recent fiscal years
preceding the resignation of Coopers & Lybrand contained an adverse opinion or a
disclaimer of opinion, or was qualified or modified as to uncertainty, audit
scope or accounting principles. During the Company's two most recent fiscal
years and the subsequent interim period preceding the resignation of Coopers &
Lybrand, there were no disagreements with Coopers & Lybrand on any matter of
accounting principles or practices, financial statement disclosure or auditing
scope or procedure, which disagreements, if not resolved to the satisfaction of
Coopers & Lybrand, would have caused it to make reference to the subject matter
of the disagreement in connection with its report. None of the reportable events
listed in Item 304(a)(1)(v) of Regulation S-K occurred with respect to the
Company during the Company's two most recent fiscal years and subsequent interim
period preceding the resignation of Coopers & Lybrand.
Deloitte & Touche LLP have acted as the Company's independent accountants
since June 19, 1996 and have been selected to act as the Company's independent
public accountants for the current 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 so desire and
will be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF DELOITTE & TOUCHE LLP AND YOUR PROXY WILL BE SO VOTED UNLESS YOU
SPECIFY OTHERWISE.
PROPOSALS OF SECURITY HOLDERS
Any proposal of a stockholder intended to be presented at the 1998 Annual
Meeting of Stockholders must be received at the corporate headquarters of the
Company not later than Thursday, December 11, 1997 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 and 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.
With regard to the election of directors, votes may be cast in favor of or
withheld from each nominee; votes that are withheld will be excluded entirely
from the vote and will have no effect. Abstentions may be specified on Proposal
Two--ratification of appointment of independent auditors--but not in the
election of directors and will be counted as present for purposes of determining
the existence of a quorum
16
<PAGE>
regarding the item on which the abstention is noted. Under the rules of the
National Association of Securities Dealers (NASD) that govern brokers using the
NASD's automated quotation system (Nasdaq), brokers who hold shares in street
name generally do not have the authority to vote on any items unless they have
received instructions from beneficial owners. If the broker is also a member of
a national securities exchange, however, NASD rules permit the broker to vote
shares held in street name in accordance with the rules of the exchange. Under
the rules of the New York Stock Exchange, a broker who does not receive
instructions is entitled to vote on both the election of directors and the
appointment of independent auditors. Under Section 160(c) of the Delaware
General Corporation Law, the 1,125,182 shares of Common Stock retired by the
Company and the 128,600 shares of common stock held by the Company in its
treasury are not entitled to vote on any matters coming before the Annual
Meeting or to be counted for quorum purposes.
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.
The cost of preparing, assembling and mailing this proxy material will be
borne by the Company. The Company may solicit proxies other 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 10, 1997
0284983.01
17
<PAGE>
SKU #0616-PS-97
<PAGE>
DETACH HERE
HPSC, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints John W. Everets and Raymond R. Doherty
P 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
R 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,
O Boston, Massachusetts on Tuesday, May 13, 1997, 9:00 A.M. Eastern Daylight
Time, or at any adjournment thereof, in respect to all matters which may
X properly come before the meeting in accordance with and as more fully
described in the Notice of Meeting and Proxy Statement, receipt of which is
Y acknowledged.
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.
------------
SEE REVERSE
(continued and to be signed on reverse side) SIDE
------------
<PAGE>
/x/ Please mark
votes as in
this example.
(continued from other side)
<TABLE>
<CAPTION>
<S> <C> <C>
1. To fix the number of directors at 2. To ratify the
eight and to elect the following selection of Deloitte FOR AGAINST ABSTAIN
nominees to serve for a three-year & Touche LLP as the / / / / / /
term to expire at the 2000 Annual Meeting Company's independent
of Stockholders: Joseph A. Biernat, public accountants for
Raymond R.Doherty, and Samuel P. Cooley the current fiscal year.
In their discretion, the
FOR WITHHELD proxies are authorized to
/ / / / vote upon such other
business as may properly
come before the meeting.
/ / --------------------------------------
For all nominees except as noted above 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.
</TABLE>
Signature:---------------- Date:--------- Signature: ------------- Date-------
