Exhibit 10.1
MICROFINANCIAL INCORPORATED
2008 EQUITY INCENTIVE PLAN
1. Purpose.
The purpose of the MicroFinancial Incorporated 2008 Equity Incentive Plan (the
“Plan”) is to attract and retain persons who are expected to make important
contributions to the Company and its Affiliates, to provide an incentive for
them to achieve the Company’s goals, and to enable them to participate in the
growth of the Company by granting Awards with respect to the Company’s Common
Stock. Certain capitalized terms used herein are defined in Section 7 below.
2. Administration.
The Plan shall be administered by the Committee; provided, that the Board may in
any instance perform any of the functions of the Committee hereunder. The
Committee shall have authority to adopt, alter and repeal such administrative
rules, guidelines and practices governing the operation of the Plan as it shall
from time to time consider advisable, and to interpret the provisions hereof in
its discretion. The Committee’s determinations hereunder shall be final and
binding. The Committee may, subject to applicable law, delegate to one or more
executive officers of the Company the power to make Awards to Participants who
are not Reporting Persons or Covered Employees and all determinations hereunder
with respect thereto, provided that the Committee shall fix the maximum number
of shares that may be subject to such Awards.
3. Eligibility.
All directors and all employees of the Company or any Affiliate capable of
contributing to the successful performance of the Company are eligible to be
Participants in the Plan. Incentive Stock Options may be granted only to persons
eligible to receive such Options under the Code.
4. Stock Available for Awards.
     (a) Amount.     (i) Subject to adjustment under subsection (c), up to an
aggregate of 1,000,000 shares of Common Stock, plus the shares subject to any
Award that expires or is terminated unexercised or is forfeited, to the extent
of such expiration, termination, or forfeiture, (collectively, the “Share
Reserve”) may be issued pursuant to Awards, including Incentive Stock Options,
under the Plan. Shares issued under the Plan may consist of authorized but
unissued shares. Common Stock issued through the assumption or substitution of
outstanding grants from an acquired company shall not reduce the shares
available for Awards under the Plan.
          (ii) In determining the number of shares granted hereunder for
purposes of subsection (a)(i), (A) each share subject to an Option or to the
settled portion of a Stock Appreciation Right shall reduce the Share Reserve by
one share, (B) each share issued upon the

 

--------------------------------------------------------------------------------

 

lapse of restrictions or other vesting with respect to any other Award made to a
non-employee director shall reduce the Share Reserve by one share, and (C) each
share issued upon the lapse of restrictions or other vesting with respect to any
other Award made to an employee shall reduce the Share Reserve by three
(3) shares.
     (b) Limit on Individual Grants. The aggregate number of shares of Common
Stock that may be granted to any Participant in any fiscal year (i) subject to
Options or Stock Appreciation Rights or (ii) subject to other types of Awards
with respect to which Performance Goals apply shall not exceed 200,000 shares,
subject to adjustment under subsection (c).
     (c) Adjustments. Upon any equity restructuring, whether a stock dividend,
recapitalization, split-up or combination of shares, or otherwise, the number of
shares in respect of which Awards may be made under the Plan, the number of
shares subject to outstanding Awards, the exercise price with respect to any of
the foregoing, and the limit on individual grants in subsection (b) shall be
proportionately adjusted, provided that the number of shares subject to any
Award shall always be a whole number. In the event the Committee determines that
any other reorganization, recapitalization, extraordinary dividend of cash
and/or assets, merger, spin-off or other corporate transaction affects the
Common Stock such that an adjustment is required in order to preserve the
benefits intended to be provided by the Plan, the Committee shall equitably
adjust any or all of the number and kind of shares in respect of which Awards
may be made under the Plan, the number and kind of shares subject to outstanding
Awards, the exercise price with respect to any of the foregoing, and the limit
on individual grants in subsection (b), provided that the number of shares
subject to any Award shall always be a whole number. Any adjustment made
pursuant to this subsection shall be subject, in the case of Incentive Stock
Options, to any limitation required under the Code and shall comply with the
requirements of Section 409A of the Code.
5. Awards under the Plan.
     (a) Types of Awards. The Committee may grant Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units, Stock Equivalents and Awards
of shares of Common Stock that are not subject to restrictions or forfeiture.
     (b) Terms and Conditions of Awards.
     (i) The Committee shall select the Participants to receive Awards and
determine the terms and conditions of each Award. Without limiting the foregoing
but subject to the other provisions of the Plan and applicable law, the
Committee shall determine (A) the number of shares of Common Stock subject to
each Award or the manner in which such number shall be determined, (B) the
price, if any, a Participant shall pay to receive or exercise an Award or the
manner in which such price shall be determined, (C) the time or times when an
Award may vest or be exercised or settled; provided, however, that no Award
granted to an employee shall become fully vested within one (1) year from its
date of grant, (D) any Performance Goals, restrictions or other conditions to
vesting, exercise, or settlement of an Award, (E) whether an Award may be
settled in the form of cash, Common Stock or other securities of the Company,
Awards or other property, and the manner of calculating the amount or value
thereof,

2

--------------------------------------------------------------------------------

 

(F) the duration of any Restricted Period or any other circumstances in which an
Award may be forfeited to the Company; provided that an Award to an employee
without any other performance-based qualification criteria other than the
employee’s continued service shall have a minimum Restricted Period of at least
one (1) year, (G) the effect on an Award of the disability, death, retirement or
other termination of service of a Participant, and (H) the extent to which, and
the period during which, the Participant or the Participant’s legal
representative, guardian or Designated Beneficiary may receive payment of an
Award or exercise rights thereunder.
     (ii) The Committee shall determine the form of consideration and manner of
payment of the exercise price of any Award; provided, however, that a
Participant shall be required to pay the exercise price of any Award in cash, by
personal check, certified check or payment commitment of a financial or
brokerage institution as determined by the Committee.
     (iii) Any Award may be made alone, in addition to, or in relation to any
other Award. The terms of Awards of each type need not be identical, and the
Committee need not treat Participants uniformly. No Award shall be transferable
except upon such terms and conditions and to such extent as the Committee
determines, provided that no Award shall be transferable for value and Incentive
Stock Options may be transferable only to the extent permitted by the Code. No
Award to any Participant subject to United States income taxation shall provide
for the deferral of compensation that does not comply with Section 409A of the
Code. The achievement or satisfaction of any Performance Goals, restrictions or
other conditions to vesting, exercise, or settlement of an Award shall be
determined by the Committee.
     (c) Provisions Applicable to Certain Types of Awards.
     (i) Options and Stock Appreciation Rights. The exercise price for any
Option or Stock Appreciation Right shall not be less than 100% of the Fair
Market Value of the Common Stock on the Date of Grant; provided that if the
Board approves the grant of an Option or Stock Appreciation Right with an
exercise price to be determined on a future date, the exercise price shall be no
less than 100% of the Fair Market Value of the Common Stock on such future date.
No Option or Stock Appreciation Right shall have a term longer than ten years.
No Incentive Stock Option may be granted more than ten years after the effective
date of the Plan. The Committee shall determine the manner of calculating the
excess in value of the shares of Common Stock over the exercise price of a Stock
Appreciation Right.
     (ii) Restricted Stock and Restricted Stock Units. Shares of Restricted
Stock and shares subject to Restricted Stock Units may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as permitted by the
Committee, during the applicable Restricted Period. Restricted Stock Units shall
be settled in shares of Common Stock. The Company shall deliver certificates
with respect to shares of Restricted Stock and Restricted Stock Units to the
Participant or, if the Participant has

3

--------------------------------------------------------------------------------

 

died, to the Participant’s Designated Beneficiary at the expiration of the
Restricted Period.
6. General Provisions.
     (a) Documentation. Each Award under the Plan shall be evidenced by
documentation in the form prescribed by the Committee and delivered to or
executed and delivered by the Participant specifying the terms and conditions of
the Award and containing such other terms and conditions not inconsistent with
the provisions hereof as the Committee considers necessary or advisable to
achieve the purposes of the Plan or to comply with applicable law and accounting
principles.
     (b) Termination and Forfeiture. The terms of any Award may include such
continuing provisions for termination of the Award and/or forfeiture or
recapture of any shares, cash or other property previously issued pursuant
thereto relating to competition or other activity or circumstances detrimental
to the Company as the Committee may determine to be in the Company’s best
interests.
     (c) Dividends. In the discretion of the Committee, any Award may provide
the Participant with dividends or dividend equivalents payable (in cash, in
shares of Common Stock, or in the form of Awards under the Plan) currently or
deferred and with or without interest.
     (d) Committee Discretion. Except as otherwise provided hereby or in a
particular Award, any determination or action with respect to an Award may be
made or taken by the Committee at the time of grant or at any time thereafter.
     (e) Change in Control. In order to preserve a Participant’s rights under an
Award in the event of a change in control of the Company (as defined by the
Committee) and subject to the provisions of any particular documentation
evidencing the terms and conditions of an Award, the Committee in its discretion
may, at the time an Award is made or at any time thereafter, take such actions,
including without limitation one or more of the following: (i) providing for the
acceleration of any time period relating to the vesting, exercise, or settlement
of the Award, (ii) providing for payment to the Participant of cash or other
property with a Fair Market Value equal to the amount that would have been
received upon the vesting, exercise, or settlement of the Award in connection
with the change in control, (iii) adjusting the terms of the Award in a manner
determined by the Committee to reflect the change in control, or (iv) causing
the Award to be assumed, or new rights substituted therefor, by another entity,
as the Committee may consider equitable to Participants and in the best
interests of the Company.
     (f) Tax Withholding. A Participant shall pay to the Company, or make
provision satisfactory to the Committee for payment of, the minimum withholding
taxes required by law to be withheld in respect of Awards under the Plan no
later than the date of the event creating the tax liability. The Company and its
Affiliates may, to the extent permitted by law, deduct the minimum tax
obligations from any payment of any kind due to the Participant under the Plan
or otherwise. In the Committee’s discretion, the minimum tax obligations
required by law to be withheld in respect of Awards may be paid in whole or in
part in shares of Common Stock,

4

--------------------------------------------------------------------------------

 

including shares retained from the Award creating the tax obligation, valued at
their Fair Market Value on the date of retention or delivery.
     (g) Legal Compliance. The Company shall not be required to issue any shares
of Common Stock or take any other action pursuant to the Plan unless the Company
is satisfied that all requirements of law, or of any stock exchange on which the
Common Stock is then listed, in connection therewith have been or will be
complied with, and the Committee may impose any restrictions on the rights of
Participants hereunder as it shall deem necessary or advisable to comply with
any such requirements.
     (h) Amendment of Awards. The Committee may amend, modify or terminate any
outstanding Award, including without limitation changing the dates of vesting,
exercise or settlement, causing the Award to be assumed by another entity, and
converting an Incentive Stock Option to a Nonstatutory Stock Option, provided
that the Participant’s consent to such action shall be required unless the terms
of the Award permit such action, the Committee determines that such action is
required by law, or the Committee determines that the action, taking into
account any related action, would not materially and adversely affect the
Participant. The foregoing notwithstanding, without further approval of the
stockholders of the Company, the Committee shall not authorize the amendment of
any outstanding Option or Stock Appreciation Right to reduce the exercise price
and no Option or Stock Appreciation Right shall be canceled and replaced with an
Award exercisable for Common Stock at a lower exercise price.
7. Definitions.
     (a) “Affiliate” means any business entity in which the Company owns
directly or indirectly 50% or more of the total voting power or has a
significant financial interest as determined by the Committee.
     (b) “Award” means any award of shares of Common Stock or right with respect
to shares described in Section 5(a).
     (c) “Board” means the Board of Directors of the Company.
     (d) “Code” means the Internal Revenue Code of 1986, as amended from time to
time, or any successor law.
     (e) “Committee” means the Compensation Committee of the Board or such other
committee appointed by the Board to administer the Plan or a specified portion
thereof. Each such committee shall be comprised of not less than two members of
the Board who shall meet such criteria as the Board may specify from time to
time.
     (f) “Common Stock” means the Class A Common Stock, $0.01 par value, of the
Company, or such other securities of the Company as may be designated by the
Committee from time to time.
     (g) “Company” means MicroFinancial Incorporated, a Massachusetts
corporation.

5

--------------------------------------------------------------------------------

 

     (h) “Covered Employee” means a “covered employee” within the meaning of
Section 162(m) of the Code.
     (i) “Date of Grant” means the date on which all requirements under
applicable law and the Company’s certificate of incorporation and bylaws for the
effective grant of an Award have been satisfied.
     (j) “Designated Beneficiary” means the beneficiary designated by a
Participant, in a manner determined by the Committee, to receive amounts due or
exercise rights of the Participant in the event of the Participant’s death. In
the absence of an effective designation by a Participant, “Designated
Beneficiary” means the Participant’s legal representative.
     (k) “Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time, or any successor law.
     (l) “Fair Market Value” with respect to the Common Stock or other property
means the fair market value thereof determined by such methods as shall be
established by the Committee from time to time. Unless otherwise determined by
the Committee in good faith, the per share Fair Market Value of the Common Stock
as of any date shall mean (i) if the Common Stock is then listed or admitted to
trading on a national securities exchange, the last reported sale price on such
date on the principal national securities exchange on which the Common Stock is
then listed or admitted to trading or, if no such reported sale takes place on
such date, the average of the closing bid and asked prices on such exchange on
such date or (ii) if the Common Stock is then traded in the over-the-counter
market, the average of the closing bid and asked prices on such date, as
reported by The Wall Street Journal or other appropriate publication selected by
the Committee, for the over-the-counter market.
     (m) “Incentive Stock Option” means an Option complying with the
requirements of Section 422 of the Code or any successor provision and any
regulations thereunder.
     (n) “Option” means a right to purchase shares of Common Stock and may be an
Incentive Stock Option if specified by the Committee.
     (o) “Participant” means a person selected by the Committee to receive an
Award under the Plan.
     (p) “Performance Goals” means one or more objective performance goals based
on one or more of the following criteria established by the Committee: revenue;
revenue growth; sales; expenses; margins; net income; earnings or earnings per
share; cash flow; shareholder return; return on investment; return on invested
capital, assets, or equity; profit before or after tax; operating profit;
unearned income; lease origination measures; credit quality measures; market
capitalization; quality improvements; market share; cycle time reductions;
customer satisfaction measures; strategic positioning or marketing programs;
business/information systems improvements; expense management; infrastructure
support programs; human resource programs; customer programs; technology
development programs; or any combination of any of

6

--------------------------------------------------------------------------------

 

the foregoing, and may be particular to a Participant or may be based, in whole
or in part, on the performance of the division, department, line of business,
subsidiary, or other business unit, whether or not legally constituted, in which
the Participant works or on the performance of the Company generally. Such
performance goals shall be set by the Committee within the time period
prescribed by, and shall otherwise comply with the requirements of, Section
162(m) of the Code, or any successor provision thereto, and the regulations
thereunder.
     (q) “Reporting Person” means a person subject to Section 16 of the Exchange
Act.
     (r) “Restricted Period” means any period during which an Award or any part
thereof may be forfeited to the Company.
     (s) “Restricted Stock” means shares of Common Stock that are subject to
forfeiture to the Company.
     (t) “Restricted Stock Unit” means the right, subject to forfeiture, to
receive the value of a share of Common Stock in the future, payable in the form
of Common Stock or other securities of the Company, Awards or other property,
and is an unfunded and unsecured obligation of the Company.
     (u) “Stock Appreciation Right” means the right to receive any excess in
value of shares of Common Stock over the exercise price of such right.
     (v) “Stock Equivalent” means the right to receive payment from the Company
based in whole or in part on the value of the Common Stock, payable in the form
of cash, Common Stock or other securities of the Company, Awards or other
property, and may include without limitation phantom stock, performance units,
and Stock Appreciation Rights.
     (w) “Transferable for value” means a transfer on terms that would prevent
the Company from relying on Securities and Exchange Commission Form S-8 (or any
successor form) with respect to the issuance of the Common Stock underlying the
respective Award.
8. Miscellaneous.
     (a) No Rights with Respect to Service. No person shall have any claim or
right hereunder to be granted an Award. Neither the adoption, maintenance, or
operation of the Plan nor any Award hereunder shall confer upon any person any
right with respect to the continuance of his or her employment by or other
service with the Company or any Affiliate nor shall they interfere with the
rights of the Company or any Affiliate to terminate or otherwise change the
terms of such service at any time, including, without limitation, the right to
promote, demote or otherwise re-assign any person from one position to another
within the Company or any Affiliate. Unless the Committee otherwise provides in
any case, the service of a Participant with an Affiliate shall be deemed to
terminate for purposes of the Plan when such Affiliate ceases to be an Affiliate
of the Company.

7

--------------------------------------------------------------------------------

 

     (b) No Rights as Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be issued under the
Plan until he or she becomes the holder thereof.
     (c) Effective Date. The effective date of the Plan, from time to time,
shall be the most recent date that the Plan was adopted or that it was approved
by the stockholders, if earlier (as such terms are used in the regulations under
Section 422 of the Code).
     (d) Amendment of Plan; Plan Term. The Board may amend, suspend or terminate
the Plan or any portion thereof at any time, subject to such stockholder
approval as the Board determines to be necessary or advisable to comply with any
tax or regulatory requirement. Unless sooner terminated, the Plan shall
automatically terminate on the day before the tenth (10th) anniversary of the
earlier of (i) the date the Plan is adopted by the Board, or (ii) the date the
Plan is approved by the stockholders of the Company. No Awards may be granted
under the Plan while the Plan is suspended or after it is terminated.

8