<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended June 25, 1994
------------------------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-11618
HPSC, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2560004
- ----------------------------------------- ------------------------------------
(State or other jurisdiction (IRS Employer
of Identification No.)
incorporation or
organization)
60 STATE STREET, BOSTON, MASSACHUSETTS 02109
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 720-3600
----------------------------
470 ATLANTIC AVENUE, BOSTON, MASSACHUSETTS
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(Former name, former address, and former fiscal year if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date COMMON STOCK, PAR VALUE $.01 PER
SHARE. SHARES OUTSTANDING AT AUGUST 6, 1994, 5,574,395.
THIS DOCUMENT IS A COPY OF THE FORM 10-Q FILED ON AUGUST 10, 1994 PURSUANT TO
A RULE 201 TEMPORARY HARDSHIP EXEMPTION.
1
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HPSC, INC.
INDEX
PART I - FINANCIAL INFORMATION PAGE
----
Consolidated Balance Sheets as of June 25, 1994
and December 25, 1993............................ 3
Consolidated Statements of Income for each of the
three and six months ended June 25, 1994 and
June 26, 1993.................................... 4
Consolidated Statements of Cash Flows for
each of the six months ended June 25, 1994
and June 26, 1993................................ 5
Notes to Consolidated Financial Statements....... 6-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 8-9
PART II - OTHER INFORMATION
Signatures........................................ 10
Exhibit Index..................................... 11
2
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<TABLE>
<CAPTION>
HPSC, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(unaudited)
ASSETS
June 25, December 25,
1994 1993
------------ ------------
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 155 $ 16,600
RESTRICTED CASH 9,153 -----
INVESTMENT IN LEASES AND NOTES:
Lease contracts receivable and notes
receivable due in installments 110,750 126,369
Estimated residual value of equipment
at end of lease term 10,752 12,325
Less unearned income (17,511) (21,803)
Less allowance for losses (7,071) (6,897)
Less security deposits (2,711) (2,860)
Deferred origination costs 2,234 2,618
------------ ------------
Net investment in leases and notes 96,443 109,752
------------ ------------
OTHER ASSETS:
Deferred expense and other assets 2,022 1,812
Refundable income taxes 768 2,273
------------ ------------
TOTAL ASSETS $108,541 $ 130,437
------------ ------------
------------ ------------
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
NOTES PAYABLE TO BANKS $ 4,820 $ 7,130
ACCOUNTS PAYABLE 4,639 5.348
ACCRUED INTEREST 287 3,434
INCOME TAXES:
Currently payable 289 310
Deferred 5,597 6,632
SENIOR NOTES 54,988 50,000
SUBORDINATED DEBT (net of unamortized
discount of $38) ----- 19,962
------------ ------------
Total Liabilities 70,620 92,816
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STOCKHOLDERS' EQUITY:
Preferred Stock, $1.00 par value;
authorized 5,000,000 shares;
Issued -- NONE ----- -----
Common Stock, $.01 par value;
15,000,000 shares authorized; issued
and outstanding 5,224,097 shares in
1994 and 4,923,571 in 1993 52 49
Additional paid-in capital 14,694 13,645
Retained earnings 24,497 24,151
Cumulative foreign currency
translation adjustments (371) (224)
------------ ------------
38,872 37,621
Less Loan Receivable from Employee
Stock Ownership Plan (951) -----
------------ ------------
Total stockholders' equity 37,921 37,621
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $108,541 $ 130,437
------------ ------------
------------ ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
3
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<TABLE>
<CAPTION>
HPSC, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR EACH OF THE THREE AND SIX MONTHS ENDED JUNE 25, 1994 AND JUNE 26, 1993
(in thousands, except per share and share amounts)
(unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
--------------------------- ---------------------------
JUNE 25, JUNE 26, JUNE 25, JUNE 26,
1994 1993 1994 1993
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Earned income on leases and notes $ 3,062 $ 4,876 $ 6,667 $ 9,646
Provision for losses (204) (1,028) (360) (2,066)
------------ ------------ ------------ ------------
Net revenues 2,858 3,848 6,307 7,580
------------ ------------ ------------ ------------
EXPENSES:
Selling, general and administrative 1,734 822 3,532 1,410
Interest, net 895 2,253 2,206 4,626
------------ ------------ ------------ ------------
Total expenses 2,629 3,075 5,738 6,036
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES 229 773 569 1,544
------------ ------------ ------------ ------------
PROVISION FOR INCOME TAXES:
Federal, Foreign and State:
Current 560 536 1,258 1,228
Deferred (470) (229) (1,035) (620)
------------ ------------ ------------ ------------
TOTAL INCOME TAXES 90 307 223 608
------------ ------------ ------------ ------------
NET INCOME $ 139 $ 466 $ 346 $ 936
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
NET INCOME PER SHARE $ .03 $ .09 $ .07 $ .19
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
SHARES USED TO COMPUTE INCOME PER SHARE. 4,962,959 4,925,699 4,980,338 4,927,455
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS
4
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<TABLE>
<CAPTION>
HPSC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR EACH OF THE SIX MONTHS ENDED JUNE 25, 1994 AND JUNE 26, 1993
(in thousands)
(unaudited)
June 25, June 26,
1994 1993
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 346 $ 936
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 222 539
Deferred income taxes (1,035) (620)
Provision for losses on lease contracts and notes
receivable 360 2,066
(Decrease) in accrued interest (3,147) (54)
(Decrease) in accounts payable (709) (2,357)
(Decrease) in accrued income taxes (21) (749)
Decrease in refundable income taxes 1,505 2
Decrease in other assets 799 306
------------ ------------
Cash (used in) provided by operating activities (1,680) 69
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (320) (74)
Lease contracts receivable and notes receivable 15,481 19,545
Estimated residual value of equipment 1,573 336
Unearned income (4,292) (5,678)
Security deposits (149) (244)
Deferred origination costs 384 263
------------ ------------
Cash provided by investing activities 12,677 14,148
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of Senior Notes (65,012) -----
Repayment of Subordinated Debt (20,000) -----
Repayment of notes payable to banks (2,310) (9,444)
Proceeds from issuance of Senior Notes 70,000 -----
Debt issuance costs (918) -----
Increase in restricted cash (9,153) -----
Proceeds from issuance of common stock ----- 1
Contribution to Employee Stock Ownership Plan 99 -----
Other (148) (30)
------------ ------------
Cash (used in) financing activities (27,442) (9,473)
------------ ------------
Net (decrease) increase in cash and cash equivalents (16,445) 4,744
Cash and cash equivalents at beginning of period 16,600 625
------------ ------------
Cash and cash equivalents at end of period $ 155 $ 5,369
------------ ------------
------------ ------------
Supplemental disclosures of cash flow information:
Interest Paid $ 5,031 $4,212
Income taxes paid 1,031 3,081
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS
5
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HPSC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The information presented for the interim periods is unaudited, but
includes all adjustments (consisting only of normal recurring adjustments)
which, in the opinion of the Company, are necessary for a fair presentation of
the financial position, results of operations and cash flows for the periods
presented. The results for interim periods are not necessarily indicative of
results to be expected for the full fiscal year. Certain 1993 account balances
have been reclassed to conform with 1994 presentation.
2. Interest expense is net of interest income of $83,000 and $65,000 for the
three months ended and $154,000 and $134,000 for the six months ended June 25,
1994 and June 26, 1993, respectively. Included in interest expense is
amortization of debt discount of $38,000 and $218,000 for the three months ended
and $38,000 and $436,000 for the six months ended June 25, 1994 and June 26,
1993, respectively.
3. For the three and six months ended June 25, 1994 and June 26, 1993, the
earnings per share computation assumes the conversion of stock options under the
modified treasury stock method and includes only those shares allocated to
participant accounts in the Company's Employee Stock Ownership Plan discussed in
Note 6.
4. Effective January 1, 1993, the Company adopted Statement of Accounting
Standards No. 109, "Accounting for Income Taxes," which requires recognition of
deferred tax liabilities and assets for the expected future tax consequences of
events that have been included in the financial statements or tax returns.
Prior to 1993, the Company used the asset and liability method prescribed by
Statement of Financial Accounting Standards No. 96, under which deferred tax
assets and liabilities were recognized for all events that had been recognized
in the financial statements. The effect of this change in accounting for income
taxes had no impact on the financial results of the Company.
The Items which comprise a significant portion of deferred tax liabilities
as of June 25, 1994 are as follows:
Operating method $8,620,000
State income tax accrual $1,590,000
Alternative minimum tax credit $(2,710,000)
Other $(1,903,000)
-------------
Deferred income taxes $5,597,000
-------------
-------------
5. On June 25, 1994, the Company had $9,153,000 in restricted cash of which
$3,287,000 was reserved for debt service and $5,866,000 was reserved for credit
enhancement pursuant to the terms of agreements entered into by the Company on
December 27, 1993 with respect to a $70,000,000 securitization transaction.
6. In June, 1994, the Board of Directors authorized and the Company made a
contribution of $99,000 to the Employee Stock Ownership Plan (ESOP) for 1993.
This contribution had the effect of allocating 28,280 shares of common stock of
the Company to qualified participant accounts at the end of 1993 in a ratio
representing approximately 8.6% of qualified 1993 wages as defined in the
appropriate regulations. The ESOP holds 271,720 shares that have not yet been
funded or allocated to specific participant accounts. These unallocated shares
have not been included in earnings per share calculations.
6
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HPSC, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONT'D)
On July 28, 1994, the Company adopted a supplemental Employee Stock
Ownership Plan (Supplemental ESOP) that is expected to be primarily invested in
Common Stock of the Company. The Company has issued 350,000 shares of Common
Stock to the Supplemental ESOP which will be allocated first to the accounts of
certain highly compensated employees to make up for certain limitations on
Company contributions under the ESOP required by the 1993 Tax Act and next to
all eligible employees of the Company on a non-discriminatory basis. The
Company has not yet made contributions to the Supplemental ESOP. Shares
allocated to participant accounts in the Supplemental ESOP fully vest over five
years of service from plan adoption at 20% per year of service. At retirement or
other qualifying termination of a participant, the vested portion of the common
stock may be distributed or converted to cash.
7. On June 23, 1994 the Company executed a $20,000,000 revolving credit
agreement with the First National Bank of Boston and Continental Bank, N.A.. The
agreement is secured primarily by the customer receivables of the Company,
expires on December 31, 1995 and contains certain financial and other
restrictive covenants.
At June 25, 1994, the Company was in compliance with the covenants of the
agreement and had not yet drawn any funds under the agreement.
8. The Company entered into an agreement to transfer substantially all the
finance assets of Credident, Inc., its wholly-owned Canadian subsidiary,
effective June 30, 1994, to Newcourt Credit Group, Inc. (Newcourt), for
approximately $7 million (U.S.) in cash. The Company also entered into a
service agreement whereby Newcourt will manage certain accounts over the next
two years for a fee related to collections. The final accounting for assets
sold and those to be serviced by Newcourt has not yet been completed and the
effect of these transactions is not currently expected to have a material effect
on the Company's results of operations. Subsequent to the transfers, all of
Credident, Inc.'s Canadian bank debt was retired. As discussed in its annual
Form 10-K for fiscal 1993, HPSC ceased to book any more business in Canada
effective July, 1993. This transfer of substantially all of Credident's finance
assets is consistent with the Company's strategic plan to focus on its business
in the United States
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
Quarter Ended June 25, 1994 Compared to Quarter Ended June 26, 1993.
The Company's net income for the second quarter of 1994 was $139,000, or
$.03 per share, compared to $466,000, or $.09 per share for the second quarter
of 1993. For the six months ended June 25, 1994, net income was $346,000 or
$.07 per share compared to $936,000 or $.19 per share in 1993. These decreases
were due principally to a decrease in earned income on leases and notes as well
as a continuing increase in selling, general administrative costs as part of the
Company's implementation of its long term strategic plan, partially offset by a
reduced provision for losses and a reduction in interest expense discussed
below.
Earned income on leases and notes for the second quarter of 1994 was
$3,062,000 compared to $4,876,000 for the second quarter of 1993. For the six
months ended June 25, 1994, earned income was $6,667,000 compared to $9,646,000
in 1993. This decline is partially due to a declining portfolio resulting from
reduced bookings over the last several quarters of 1993 and to reduced finance
rates charged to the Company's customers. The reduced bookings were due to the
fact that Healthco International, Inc. (Healthco), which had previously referred
to the Company substantially all of the Company's business, filed for bankruptcy
on June 9, 1993 and subsequently began liquidation under Chapter 7 of the U.S.
Bankruptcy Code. The Company has reduced its cost of capital as a result of a
securitization transaction described herein in the first quarter of 1994 which
allowed it to lower the rates which it charges to its customers, while helping
to maintain its target margins on financings. Although the Company's management
anticipates increases in its 1994 bookings from 1993 levels, it expects earned
income on leases and notes to continue to decrease from comparable 1993 levels
until its volume of new business consistently exceeds portfolio runoff. The
Company's U.S. bookings for the second quarter of 1994 were $6,296,000 compared
to $4,027,000 for the comparable period in 1993. The Company also had
$1,096,000 of Canadian bookings in the second quarter of 1993 but stopped
booking business in Canada in July, 1993.
The provision for losses was $204,000 in the second quarter of 1994
compared to $1,028,000 for the comparable period in 1993. For the six months
ended June 25, 1994, the provision for losses was $360,000 compared to
$2,066,000 in 1993. This decrease is due in part to an increase in loan loss
reserves for the year ended December 25, 1993 and in part to a decrease in
portfolio size.
Selling general and administrative expenses for the second quarter of 1994
were $1,734,000 compared to $822,000 in the second quarter of 1993. For the six
months ended June 25, 1994 it was $3,532,000 compared to $1,410,000 in 1993.
The increase was due in part on the Company's need to replace services which
were formerly provided by Healthco under intercompany agreements between the two
companies. The Company continues to hire additional sales and support personnel
to assist in its transition to a diversified financial services organization no
longer affiliated with a single vendor. The Company opened an asset based
lending subsidiary with an office in Connecticut and a Midwest Division near St.
Louis, supported by a sales office in Oregon, during the second quarter.
Net interest expense for the second quarter of 1994 decreased to $895,000
from $2,253,000 for the same period in 1993. For the six months ended June 25,
1994, interest expense was $2,206,000 compared to $4,626,000 in 1993. This
decrease resulted from a reduced level of borrowings as well as reduced interest
rates on outstanding debt.
The Company's income before income taxes for the second quarter of 1994 was
$229,000 compared to $773,000 for the second quarter of 1993. For the six
months ended June 25, 1994, income before income taxes was $569,000 compared to
$1,544,000 in 1993.
Despite the adverse developments arising out of the Healthco bankruptcy,
the Company is replacing the business previously supplied by Healthco with
referrals from the Company's customers and an expanding list of vendors
representing diversified sources of new business. At quarter end, the Company
had customer inquiries with respect to possible new business of $36,000,000,
compared to $20,000,000 of customer inquiries at December 25, 1993. The volume
of U.S. bookings in the first six months of 1994 was $10,843,000 compared to
$8,468,000 in 1993.
8
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONT'D)
LIQUIDITY AND CAPITAL RESOURCES
At June 25, 1994 the Company had $155,000 in cash and cash equivalents
compared with $16,600,000 at the end of 1993. As described in footnote 5 to the
Company's consolidated financial statements included in this report on Form 10-
Q, $9,153,000 of cash was restricted pursuant to the Securitization agreements
as of June 25, 1994. Cash used for operating activities was $1,680,000 for the
six months ended June 25, 1994, compared to $69,000 of cash provided by
operating activities for the same period in 1993. Cash provided by investing
activities was $12,677,000 for the six months ended June 25, 1994 compared to
$14,148,000 for the same period in 1993.
On December 27, 1993, the Company raised $70,000,000 through an asset
securitization transaction in which a wholly owned subsidiary, HPSC Funding
Corp. I issued senior secured notes at a rate of 5.01%. The notes were secured
by a portion of the Company's portfolio which it sold in part and contributed in
part to HPSC Funding. Proceeds of this financing were used to retire
$50,000,000, 10.125% senior notes due December 28, 1993, and $20,000,000, 10%
subordinated debentures due January 15, 1994. As of June 25, 1994, the HPSC
Funding portfolio is performing according to expectations. On June 23, 1994,
the Company entered into a $20,000,000 revolving credit agreement with The First
National Bank of Boston as Agent Bank and Continental Bank, N.A. as described in
Note 7 of the Financial Statements.
The Company anticipates that it may seek to raise additional capital in
1994 to finance its activities and expects that it will be able to obtain
additional capital on competitive terms, but there can be no assurance it will
be able to do so.
9
<PAGE>
HPSC, INC.
PART II. OTHER INFORMATION
ITEMS 1 THROUGH 3 AND 5 ARE OMITTED BECAUSE THEY ARE INAPPLICABLE
Item 4. Submission of matters to a Vote of Security Holders.
The Company held its annual meeting of stockholders on May 25, 1994, at
which its stockholders voted to elect each of the nominees for director of the
Company and to ratify the appointment of Coopers & Lybrand as independent
accountants for the fiscal year ending December 31, 1994. Total voters cast for
and withheld from each director are as follows:
<TABLE>
<CAPTION>
Total Vote for Total Vote Withheld
Each Director from each Director
------------- ------------------
<S> <C> <C>
Joseph A. Biernat 2,859,382 2,024,904
J. Kermit Birchfield 2,859,482 2,024,804
Louis J.P. Calisti 2,858,382 2,025,904
Dollie A. Cole 2,859,482 2,024,804
Samuel P. Cooley 2,859,382 2,024,904
Raymond R. Doherty 2,857,682 2,026,604
John Everets, Jr. 2,856,782 2,027,504
Thomas M. McDougal 2,859,382 2,024,904
</TABLE>
Stockholders holding 2,915,654 shares voted in favor of ratification of the
appointment of Coopers & Lybrand, stockholders holding 3,300 shares voted
against and stockholders holding 1,965,332 shares abstained.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
See the Exhibit Index on Page 11.
b) Reports on Form 8-K
There were no reports on Form 8-K filed during the three months
ended June 25, 1994.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, HPSC, Inc. has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated: August 9, 1994 HPSC, INC.
----------------------- ----------------------------------------
(Registrant)
By: /s/ John Everets, Jr.
----------------------------------------
John Everets, Jr.
Chairman & Chief Executive Officer
By: /s/ Rene Lefebvre
----------------------------------------
Rene Lefebvre
Chief Financial Officer
By: /s/ Dennis J. McMahon
----------------------------------------
Dennis J. McMahon
Vice President--Administration
Controller
(Principal Accounting Officer)
10
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HPSC, INC.
EXHIBIT INDEX
EXHIBIT
NO. TITLE PAGE
--- ----- ----
3.1 Amended and Restated By-Laws
10.1 Revolving Credit Agreement dated as of
June 23, 1994 among HPSC, Inc., The First
National Bank of Boston, individually and
as agent, and Continental Bank, N.A.,
individually and as co-agent
10.2 First Amendment effective January 1, 1993
to HPSC, Inc. Employee Stock Ownership
Plan
10.3 HPSC, Inc. Supplemental Employee Stock
Ownership Plan and Trust dated July 25, 1994
10.4 HPSC, Inc. 1994 Stock Plan dated as
of March 23, 1994 and related forms of
Non-qualified Option Grant and Option
Exercise Form
10.5 Employment Agreement between HPSC, Inc.
and Rene Lefebvre dated April 6, 1994
10.6 Amendment dated as of May 25, 1994 to
Employment Agreement between HPSC, Inc.
and John Everets, Jr.
10.7 Amendment dated as of May 25, 1994 to
Employment Agreement between HPSC, Inc.
and Raymond R. Doherty.
11
<PAGE>
EXHIBIT 3.1
As in effect on the date of HPSC's 1994 Annual
Meeting of Stockholders
AMENDED AND RESTATED BY-LAWS
OF
HPSC, INC.
ARTICLE I
Stockholders
SECTION 1. ANNUAL MEETING. An annual meeting of the stockholders of
the corporation, for the election of the Directors to succeed those whose terms
expire and for the transaction of such other business as may properly come
before the meeting, shall be held on the third Tuesday of March in each year (or
if that be a legal holiday in the place where the meeting is to be held, on the
next succeeding full business day) at the hour stated in the notice of the
meeting. If the annual meeting of the stockholders is not held on such date, the
Directors shall cause the meeting to be held as soon thereafter as convenient.
SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders
may be called by the President or by order of the Board of Directors, and shall
be called by the Secretary (or in the case of the death, absence, incapacity or
refusal of the Secretary, by any other officer) upon written application by one
or more stockholders who together hold at least 50 percent in interest of the
Capital stock entitled to vote at the meeting.
SECTION 3. PLACE AND HOUR OF MEETINGS. All meetings of stockholders
shall be held at the principal office of the corporation at 10:00 a.m. local
time unless a different place or hour is fixed by the person or persons calling
the meeting and stated in the notice of the meeting.
SECTION 4. NOTICES OF MEETINGS AND ADJOURNED MEETINGS. A written
notice of each annual or special meeting of the stockholders stating the place,
date, and hour thereof, shall be given by the Secretary (or the person or
persons calling the meeting), not less than 10 nor more than 60 days before the
date of the meeting, to each stockholder entitled to vote thereat, by leaving
such notice with him or at his residence or usual place of business, or by
depositing it postage prepaid in the United States mail, directed to each
stockholder at his address as it appears on the records of the corporation. The
notice of a special meeting of the stockholders shall state the purpose or
<PAGE>
purposes for which the meeting is called. An affidavit of the Secretary,
Assistant Secretary, or transfer agent of the corporation that the notice has
been given shall, in the absence of fraud, be prima facie evidence of the facts
stated therein. No notice need be given to any person with whom communication is
unlawful or to any person who has waived such notice (a) in writing (which
writing need not specify the business to be transacted at, or the purpose of,
the meeting) signed by such person before or after the time of the meeting or
(b) by attending the meeting except for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the meeting
is not lawfully called or convened. When a meeting is adjourned to another time
and place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken
except that, if the adjournment is for more than thirty days or if, after the
adjournment, a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given in the manner provided in this Section 4.
SECTION 5. QUORUM. At any meeting of the stockholders, a quorum for
the transaction of business shall consist of one or more individuals appearing
in person or represented by proxy and owning or representing a majority of the
shares of the corporation then outstanding and entitled to vote, provided that
less than such quorum shall have power to adjourn the meeting from time to time.
SECTION 6. VOTING. Unless otherwise provided in the Certificate of
Incorporation and subject to the provisions of Section 10 of this Article I,
each stockholder shall have one vote for each share of stock entitled to vote
held by him of record according to the records of the corporation. Persons
holding stock in a fiduciary capacity shall be entitled to vote the shares so
held. Persons whose stock is pledged shall be entitled to vote unless in the
transfer by the pledgor on the books of the corporation he has expressly
empowered the pledgee to vote the pledged shares, in which case only the pledgee
or his proxy shall be entitled to vote. If shares stand of record in the names
of two or more persons or if two or more persons have the same fiduciary
relationship respecting the shares then, unless the Secretary is given written
notice to the contrary and is furnished with a copy of the instrument or order
appointing them or creating the relationship wherein it is so provided to the
contrary: (a) if only one votes, his act binds all; (b) if more than one vote,
the act of the majority so voting binds all; and (c) if more than one vote and
the vote is evenly split, the effect shall be as provided by law.
SECTION 7. PROXIES. Each stockholder entitled to vote at a meeting
of stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize
-2-
<PAGE>
another person or any group of not more than three persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period.
SECTION 8. ACTION AT MEETING. When a quorum is present at any
meeting, action of the stockholders on any matter properly brought before such
meeting shall require, and may be effected by, the affirmative vote of the
holders of a majority in interest of the stock present or represented and
entitled to vote and voting on such matter, except where a different vote is
required by law, the Certificate of Incorporation or these By-laws. If the
Certificate of Incorporation so provides, no ballot shall be required for any
election unless requested by a stockholder present or represented at the meeting
and entitled to vote in the election.
SECTION 9. STOCKHOLDER LISTS. The officer who has charge of the
stock ledger of the corporation shall prepare and make, at least ten days before
every meeting of stockholders, a complete list of stockholders entitled to vote
at the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote in person or by proxy at any
meeting of stockholders.
SECTION 10. RECORD DATE.
(a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action other than stockholder action by written consent, the Board
of Directors may fix a record date which shall not precede the date such record
date is fixed and shall not be more than 60 nor less than ten days before the
date of such meeting, nor more than 60 days prior to any such other action. If
no record is fixed, the record date for determining stockholders entitled to
notice of or to vote at a meeting of
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stockholders shall be at the close of business on the day next preceding the day
on which notice is given. The record date for any other purpose other than
stockholder action by written consent shall be at the close of business on the
day on which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors shall fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. Any stockholder of record or other person seeking to take corporate
action by written consent or to have the stockholders authorize action to be
taken by written consent, shall, by written notice to the Secretary of the
Corporation, request the Board of Directors to fix a record date. The Board of
Directors shall promptly, but in all events within ten days after the date upon
which such a request is received, adopt a resolution fixing a record date. If a
request for the fixing of a record date is not made and received by the
Secretary prior to the delivery of a written consent to the Corporation in
accordance with 8 Del. C. Section 228(c), the Board of Directors shall promptly,
but in all events within ten days after the date on which such a consent is
delivered to the Corporation in accordance with 8 Del. C. Section 228(c), adopt
a resolution fixing a record date. If no record date has been fixed by the Board
of Directors within ten days of the date on which such a request is received or
within 10 days of the date on which such consent is delivered, whichever is
earlier, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting, when no prior action by the Board
of Directors is required by applicable law, shall be the first date on which
such a signed written consent setting forth the action taken or proposed to be
taken is delivered to the Corporation in accordance with 8 Del. C. Section
228(c). If no record date has been fixed by the Board of Directors and prior
action by the Board of Directors is required by applicable law, the record date
for determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the date on which the
Board of Directors adopts the resolution taking such prior action.
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SECTION 11. ACTION BY WRITTEN CONSENT.
(a) Any action required by law to be taken at any annual or special
meeting of stockholders of the Corporation, or any action which may be taken at
any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice to the stockholders and without a vote, if a
consent or consents in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted and
shall be delivered to the Corporation by delivery to its registered office in
the State of Delaware, its principal place of business or an officer or agent of
the Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
(b) Every written consent shall bear the date of signature of each
stockholder who signs the consent, and no written consent shall be effective to
take corporate action referred to therein unless, within 60 days of the earliest
dated consent delivered in the manner required by this Section to the
Corporation, written consents signed by a sufficient number of holders to take
action are delivered to the Corporation in accordance with Subsection (a) of
this Section. Consents may be revoked by written notice (i) to the Corporation,
(ii) to the stockholder or stockholders soliciting consents or soliciting
revocations in opposition to action by consent proposed by the Corporation (the
"Soliciting Stockholders"), or (iii) to a proxy solicitor or other agent
designated by the Corporation or the Soliciting Stockholders.
(c) Within three business days after receipt of a request for the
fixing of a record date, as required by Subsection (b) of Section 10 of
Article 1, or after delivery of a consent in accordance with Subsection (a) of
this Section, whichever is earlier, the Board of Directors or the Secretary of
the Corporation may engage inspectors of elections for the purpose of performing
a ministerial review of the validity of the consents and revocations. Any cost
of retaining inspectors of election shall be borne by the Corporation. Consents
and revocations shall be delivered to the inspectors upon receipt by the
Corporation, the Soliciting Stockholders or their proxy solicitors or other
designated agents. As soon as consents and revocations are received, the
inspector shall review the consents and revocations and shall maintain a count
of the number of valid and unrevoked consents. Within three business days after
the earlier of: (i) 60 days after the date of the earliest dated consent
delivered to the Corporation in the manner provided in Subsection (a) of this
Section or (ii) notification by the
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Corporation or the Soliciting Stockholders (whichever is soliciting consents)
stating that the Corporation or Soliciting Stockholders, as the case may be,
have a good faith belief that the requisite number of valid and unrevoked
consents to authorize or take the action specified in the consents has been
delivered in accordance with Subsection (a) of this Section, the inspectors
shall issue a preliminary report to the Corporation and the Soliciting
Stockholders stating: (i) the number of valid consents; (ii) the number of valid
revocations; (iii) the number of valid and unrevoked consents; (iv) the number
of invalid consents; (v) the number of invalid revocations; and (vi) whether,
based on the preliminary count, the requisite number of valid and unrevoked
consents has been obtained to authorize or take the action specified in the
consents.
The Corporation and the Soliciting Stockholders shall have 48 hours to
review the consents and revocations and to advise the inspectors and the
opposing party in writing as to whether they intend to challenge the preliminary
report of the inspectors. If no written notice of an intention to challenge the
preliminary report is received within 48 hours after the inspector's issuance of
the preliminary report, the preliminary report shall become final. If the
Corporation or the Soliciting Stockholders issue written notice of an intention
to challenge the inspector's preliminary report within 48 hours after the
issuance of that report, a challenge session shall be scheduled by the
inspectors within 48 hours of the receipt of such written notice. A transcript
of the challenge session shall be recorded by a certified court reporter. Within
24 hours following the completion of the challenge session, the inspectors shall
issue their final report to the Soliciting Stockholders and the Corporation,
which report shall contain the information included in the preliminary report,
plus all changes in the vote totals as a result of the challenge and a
certification of whether the requisite number of valid and unrevoked consents
was obtained to authorize or take the action specified in the consents. A copy
of the final report of the inspectors shall be included in the book in which the
proceedings of meetings of stockholders are recorded.
SECTION 12. NOTIFICATION OF NOMINATIONS. Subject to the provisions
of Section 5 of Article II of these by-laws which permit a vacancy in the board
of directors to be filled by directors, only a stockholder of record entitled to
vote in the election of directors generally may nominate one or more persons for
election as directors at a meeting of stockholders and only if written notice of
such stockholder's intent to make such nomination or nominations has been given,
either by personal delivery or by United States mail, postage prepaid, to the
Secretary of the Corporation and has been received by the Secretary in advance
of the meeting of stockholders. In no event may such notice of intention to
nominate be made from the floor of the meeting of stockholders.
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Each such notice shall set forth:
(a) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated;
(b) a representation that the stockholder is a holder of record of stock
of the Corporation entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person and persons specified
in the notice;
(c) a description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons (naming such person
or persons) pursuant to which the nomination or nominations are to be made by
the stockholder; and
(d) such other information regarding each nominee proposed by such
stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission, had the
nominee been nominated, or intended to be nominated, by the Board of Directors.
To be effective, each notice of intent to make a nomination given hereunder
shall be accompanied by the written consent of each nominee to serve as a
director of the Corporation if elected.
The chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not properly brought before the
meeting in accordance with the provisions hereof and, if he should so determine,
he shall declare to the meeting that such nomination was not properly brought
before the meeting and shall not be considered.
SECTION 13. ADVANCE NOTICE OF STOCKHOLDER BUSINESS.
At any special meeting of stockholders only such business shall be
conducted as shall have been set forth in the notice of special meeting. At an
annual meeting of stockholders, only such business shall be conducted as shall
have been properly brought before the meeting. To be properly brought before an
annual meeting, business must be (i) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (ii)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors, or (iii) otherwise (a) properly requested to be brought
before the meeting by a stockholder of record entitled to vote in the election
of directors generally and (b) constitute a proper subject to be brought before
such meeting.
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For business (other than the election of directors, which is addressed by
Section 12 of this Article I) to be properly brought before an annual meeting by
a stockholder, the stockholder must give notice in writing which is either
personally delivered to or mailed and received by the Secretary of the
Corporation in advance of such meeting. In no event may such notice be given
from the floor of the meeting of stockholders. A stockholder's notice to the
Secretary shall set forth as to each matter (other than the election of
directors, which is addressed by Section 12 of this Article I) the stockholder
proposes to bring before the annual meeting: (a) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (b) the name and address, as
they appear on the Corporation's books, of the stockholder intending to propose
such business, (c) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the stockholder, (d) a
representation that the stockholder is a holder of record of capital stock of
the Corporation entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to present such business, and (e) any material
interests of the stockholder in such business.
Notwithstanding anything in the By-laws to the contrary, no business shall
be conducted at any annual meeting except in accordance with the procedures set
forth in Section 12 and this Section 13. The chairman of the annual meeting
shall, if the facts warrant, determine and declare to the meeting that (i) the
business proposed to be brought before the meeting was not a proper subject
therefor and/or (ii) such business was not properly brought before the meeting
in accordance with the provisions of this Section 13, and, if he should so
determine, he shall so declare to the meeting and any such business not properly
brought before the meeting or not a proper subject therefor shall not be
transacted.
ARTICLE II
Directors
SECTION 1. POWERS. The business and affairs of the corporation shall
be managed by or under the direction of the Board of Directors.
SECTION 2. NUMBER OF DIRECTORS. The Board of Directors shall consist
of not less than 3 nor more than 15 persons. The number of Directors shall be
fixed by the stockholders at the annual meeting and may be increased or
decreased by the stockholders or the Board of Directors at any time.
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SECTION 3. ELECTION AND TENURE. Each Director shall be elected by
plurality vote of the stockholders at the annual meeting or as provided in
Section 5 of this Article II. Each Director shall serve until the date fixed in
these By-laws for the next annual meeting of stockholders after his election and
thereafter until his successor is elected and qualified, or until his earlier
resignation or removal.
SECTION 4. QUALIFICATION. No Director must be a stockholder.
SECTION 5. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Vacancies and
newly created Directorships resulting from any increase in the authorized number
of Directors may be filled by the stockholders at any meeting or by written
consent, by a majority of the Directors then in office, although less than a
quorum, or by a sole remaining Director. When one or more Directors shall resign
from the board, effective at a future date, a majority of Directors then in
office, including those who have so resigned, shall have power to fill such
vacancy or vacancies by vote to take effect when such resignation or
resignations shall become effective.
SECTION 6. REMOVAL. Any Director or the entire Board of Directors
may be removed, with or without cause, by the holders of the shares then
entitled to vote at an election of the Directors.
SECTION 7. RESIGNATION. Any Director of the corporation may resign
at any time by giving written notice to the Board of Directors, to the Chairman
of the Board, if any, to the President, or to the Secretary, and any member of a
committee may resign therefrom at any time by giving notice as aforesaid or to
the Chairman or Secretary of such committee. Any such resignation shall take
effect at the time specified therein, or, if the time be not specified, upon
receipt thereof; and unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
SECTION 8. ANNUAL MEETING. Immediately after each annual meeting of
stockholders and at the place thereof, if a quorum of the Directors is present,
there shall be a meeting of the Directors without notice.
SECTION 9. REGULAR MEETINGS. Regular meetings of the Directors may
be held at such times and places as shall from time to time be fixed by
resolution of the Board, and no notice need be given of regular meetings held at
times and places so fixed, PROVIDED, HOWEVER, that any resolution relating to
the holding of regular meetings shall remain in force only until the next annual
meeting of stockholders and that, if at any meeting of Directors at which a
resolution is adopted fixing the times or place or
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places for any regular meetings any Director is absent, no meeting shall be held
pursuant to such resolution without notice to or waiver by such absent Director
pursuant to Section 11 of this Article II.
SECTION 10. SPECIAL MEETINGS. Special meetings of the Directors may
be called by the Chairman of the Board (if any), the President, or by any two
Directors, and shall be held at the place and on the date and hour designated in
the call thereof.
SECTION 11. NOTICES. Notices of any special meeting of the Directors
shall be given by the Secretary or an Assistant Secretary to each Director, by
mailing to him, postage prepaid, and addressed to him at his address as
registered on the books of the corporation, or if not so registered at his last
known home or business address, a written notice of such meeting at least four
days before the meeting or by delivering such notice to him at least 48 hours
before the meeting or by sending to him at least 48 hours before the meeting, by
prepaid telegram addressed to him at such address, notice of such meeting. In
the absence of all such officers, such notice may be given by the officer or one
of the Directors calling the meeting. Notice need not be given to any Director
who has waived notice (a) in writing executed by him before or after the meeting
and filed with the records of the meeting, or (b) by attending the meeting
except for the express purpose of objecting, at the beginning of the meeting, to
the transaction of any business because the meeting is not lawfully called or
convened. A notice or waiver of notice of a meeting of the Directors need not
specify the business to be transacted at or the purpose of the meeting.
SECTION 12. QUORUM. At any meeting of the Directors a majority of
the total number of Directors shall constitute a quorum for the transaction of
business; provided always that any number of Directors (whether one or more and
whether or not constituting a quorum) present at any meeting or at any adjourned
meeting may adjourn such meeting, provided that all absent Directors receive or
waive notice pursuant to Section 11 of Article II of any such adjournment that
exceeds four business days.
SECTION 13. ACTION AT MEETING. At any meeting of the Directors at
which a quorum is present, the action of the Directors on any matter brought
before the meeting shall be decided by vote of a majority of those present and
voting, unless a different vote is required by law, the Certificate of
Incorporation, or these By-laws.
SECTION 14. ACTION BY WRITTEN CONSENT. Any action required or
permitted to be taken at any meeting of the Board of Directors, or of any
committee thereof, may be taken without a meeting if all members of the Board or
committee, as the case may
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be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
SECTION 15. TELEPHONE MEETINGS. Members of the Board of Directors,
or any committee thereof, may participate in a meeting of such Board or
committee by means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section 15 shall constitute
presence in person at such meeting.
SECTION 16. PLACE OF MEETINGS. The Board of Directors may hold its
meetings, and have an office or offices, within or without the State of
Delaware.
SECTION 17. COMPENSATION. The Board of Directors shall have the
authority to fix the compensation of Directors.
SECTION 18. COMMITTEES. (a) The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees, each committee to consist of one or more of the Directors of the
corporation. The Board may designate one or more Directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the Board of Directors,
shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in reference
to amending the Certificate of Incorporation, adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property or assets, recommending
to the stockholders a dissolution of the corporation or a revocation of a
dissolution, or amending the By-laws of the corporation. Such a committee may,
to the extent expressly provided in the resolution of the Board of Directors,
have the power or authority to declare a dividend or to authorize the issuance
of stock.
(b) At any meeting of any committee, a majority of the whole
committee shall constitute a quorum and, except as otherwise provided by
statute, by the Certificate of Incorporation, or by these By-laws, the
affirmative vote of at least a majority of the members present at a meeting at
which there is a quorum shall be the act of the committee.
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(c) Each committee, except as otherwise provided by resolution of the
Board of Directors, shall fix the time and place of its meetings within or
without the State of Delaware, shall adopt its own rules and procedures, and
shall keep a record of its acts and proceedings and report the same from time to
time to the Board of Directors.
ARTICLE III
Officers
SECTION 1. OFFICERS AND THEIR ELECTION. The officers of the
corporation shall be a President, a Secretary, a Treasurer and such Vice
Presidents, Assistant Secretaries, Assistant Treasurers and other officers as
the Board of Directors may from time to time determine and elect or appoint. The
Board of Directors may appoint one of its members to the office of Chairman of
the Board and another of its members to the office of Vice-Chairman of the Board
and from time to time define the powers and duties of these offices
notwithstanding any other provisions of these By-laws. The President, the
Secretary and the Treasurer shall be elected by the Board of directors at its
annual meeting or at the first meeting of the Board after the date fixed by
these By-laws therefor and may, but need not, be members of the Board of
Directors. Two or more offices may be held by the same person.
SECTION 2. TERM OF OFFICE. The President, the Treasurer and the
Secretary shall, unless sooner removed under the provisions of these By-laws,
hold office until the next annual election of officers and thereafter until
their respective successors are elected and qualified or until their earlier
resignation or removal. All other officers shall hold office for such term as
shall be determined from time to time by the Board of Directors.
SECTION 3. VACANCIES. Any vacancy at any time existing in any office
may be filled by the Directors.
SECTION 4. PRESIDENT. The President shall be the chief executive
officer of the corporation except as the Board of Directors may otherwise
provide. It shall be his duty and he shall have the power to see that all orders
and resolutions of the Board of Directors are carried into effect. He shall from
time to time report to the Board of Directors all matters within his knowledge
which the interests of the corporation may require to be brought to its notice.
The President, when present, shall preside at all meetings of the stockholders
and of the Board of Directors, unless otherwise provided by the Board of
Directors. The President shall perform such duties and have such powers
additional to the foregoing as the Board of Directors shall designate.
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SECTION 5. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
have the powers and duties expressly designated in these By-laws and shall
perform such duties and have such powers additional thereto as the Board of
Directors shall designate.
SECTION 6. VICE PRESIDENTS. In the absence or disability of the
President, his powers and duties shall be performed by the Vice President, if
only one, or, if more than one, by the one designated for the purpose by the
Board of Directors. Each Vice President shall perform such duties and have such
powers additional to the foregoing as the Board of Directors shall designate.
SECTION 7. TREASURER. The Treasurer shall keep full and accurate
accounts of receipts and disbursements in books belonging to the corporation and
shall deposit all monies and other valuable effects in the name and to the
credit of the corporation in such depositories as shall be designated by the
Board of Directors or in the absence of such designation in such depositories as
he shall from time to time deem proper. He shall disburse the funds of the
corporation as shall be ordered by the Board of Directors, taking proper
vouchers for such disbursements. He shall promptly render to the President and
to the Board of Directors such statements of his transactions and accounts as
the President and Board of Directors respectively may from time to time require.
The Treasurer shall Perform such duties and have such powers additional to the
foregoing as the Board of Directors may designate.
SECTION 8. ASSISTANT TREASURERS. In the absence or disability of the
Treasurer, his powers and duties shall be performed by the Assistant Treasurer,
if only one, or if more than one, by the one designated for the purpose by the
Board of Directors. Each Assistant Treasurer shall perform such duties and have
such powers additional to the foregoing as the Board of Directors shall
designate.
SECTION 9. SECRETARY. The Secretary shall issue notices of all
meetings of stockholders, of the Board of Directors and of committees thereof
where notices of such meetings are required by law or these By-laws. He shall
record the proceedings of the meetings of the stockholders and of the Board of
Directors and shall be responsible for the custody thereof in a book to be kept
for that purpose. He shall also record the Proceedings of the committees of the
Board of Directors unless such committees appoint their own respective
secretaries. Unless the Board of Directors shall appoint a transfer agent and/or
registrar, the Secretary shall be charged with the duty of keeping, or causing
to be kept, accurate records of all stock outstanding, stock certificates issued
and stock transfers. He shall sign such instruments as require his
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signature. The Secretary shall have custody of the corporate seal and shall
affix and attest such seal on all documents whose execution under seal is duly
authorized. In his absence at any meeting, an Assistant Secretary or the
Secretary pro tempore shall Perform his duties thereat. He shall perform such
duties and have such powers additional to the foregoing as the Board of
Directors shall designate.
SECTION 10. ASSISTANT SECRETARIES. In the absence or disability of
the Secretary, his powers and duties shall be performed by the Assistant
Secretary, if only one, or, if more than one, by the one designated for the
purpose by the Board of Directors. Each Assistant Secretary shall perform such
duties and have such powers additional to the foregoing as the Board of
Directors shall designate.
SECTION 11. SALARIES. The salaries and other compensation of
officers, agents and employees shall be fixed from time to time by or under
authority from the Board of Directors. No officer shall be prevented from
receiving a salary or other compensation by reason of the fact that he is also a
Director of the corporation.
SECTION 12. REMOVAL. The Board of Directors may remove any officer,
either with or without cause, at any time.
SECTION 13. BOND. The corporation may secure the fidelity of any or
all of its officers or agents by bond or otherwise.
SECTION 14. RESIGNATIONS. Any officer, agent or employee of the
corporation may resign at any time by giving written notice to the Board of
Directors, to the Chairman of the Board, if any, to the President or to the
Secretary of the corporation. Any such resignation shall take effect at the time
specified therein, or, if the time be not specified, upon receipt thereof; and
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
ARTICLE IV
Capital Stock
SECTION 1. STOCK CERTIFICATES. Each stockholder shall be entitled to
have a certificate signed by, or in the name of the corporation by the Chairman
or Vice-Chairman of the Board or the President or a Vice President, and by the
Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary
certifying the number of shares owned by him in the corporation. Any or all of
the signatures on the certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a
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certificate shall have ceased to be such officer, transfer agent or registrar
before the certificate is issued, such certificate may nevertheless be issued by
the corporation with the same effect as if he were such officer, transfer agent
or registrar at the date of issue.
SECTION 2. CLASSES OF STOCK. If the corporation shall be authorized
to issue more than one class of stock or more than one series of any class, the
face or back of each certificate issued by the Corporation to represent such
class or series shall either (a) set forth in full or summarize the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions thereof, or (b) contain a statement that the
corporation will furnish a statement of the same without charge to each
stockholder who so requests.
SECTION 3. TRANSFER OF STOCK. Shares of stock shall be transferable
on the books of the corporation pursuant to applicable law and such rules and
regulations as the Board of Directors shall from time to time prescribe. The
Board of Directors may at any time or from time to time appoint a transfer agent
or agents or a registrar or registrars for the transfer or registration of
shares of stock.
SECTION 4. HOLDERS OF RECORD. Prior to due presentment for
registration of transfer the corporation may treat the holder of record of a
share of its stock as the complete owner thereof exclusively entitled to vote,
to receive notifications and otherwise entitled to all the rights and powers of
a complete owner thereof, notwithstanding notice to the contrary.
SECTION 5. LOST, STOLEN, OR DESTROYED STOCK CERTIFICATES. The Board
of Directors may direct a new stock certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the corporation
alleged to have been lost, stolen, or destroyed upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificate or certificates or his legal representative, to give the corporation
a bond sufficient to indemnify it against any claim that may be made against the
corporation on account of the alleged loss, theft, or destruction, of such
certificates or the issuance of such new certificate.
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ARTICLE V
Miscellaneous Provisions
SECTION 1. INTERESTED DIRECTORS AND OFFICERS. (a) No contract or
transaction between the corporation and one or more of its Directors or
officers, or between the corporation and any other corporation, partnership,
association, or other organization in which one or more of its Directors or
officers are Directors or officers, or have a financial interest, shall be void
or voidable solely for this reason, or solely because the Director or officer is
present at or participates in the meeting of the Board or committee thereof
which authorizes the contract or transaction, or solely because his or their
votes are counted for such purpose, if:
(1) The material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to the Board
of Directors or the committee, and the Board or committee in good
faith authorizes the contract or transaction by the affirmative vote
of a majority of the disinterested Directors, even though the
disinterested Directors be less than a quorum; or
(2) The material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the contract or transaction
is specifically approved in good faith by vote of the shareholders; or
(3) The contract or transaction is fair as to the corporation as
of the time it is authorized, approved or ratified, by the Board of
Directors, a committee thereof, or the shareholders.
(b) Common or interested Directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
SECTION 2. INDEMNIFICATION. To the maximum extent permitted by the
Delaware General Corporation Law, as the same may be in effect from time to
time, the corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a Director or officer of the corporation,
or is or was a Director or officer of the corporation serving at the request of
the corporation as a Director or officer of another entity, against expenses
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(including attorneys' fees), judgments, fines and amounts paid in settlement in
connection with such action, suit, or proceeding. Nothing herein shall be deemed
to limit the power of the corporation to similarly indemnify employees or agents
of the corporation or persons who are serving at the request of the corporation
as a Director or officer of another entity but who are not Directors or officers
of the corporation.
SECTION 3. STOCK IN OTHER CORPORATIONS. Subject to any limitations
that may be imposed by the Board of Directors, the President or any person or
persons authorized by the Board of Directors may, in the name and on behalf of
the corporation, (a) call meetings of the holders of stock or other securities
of any corporation or other organization, stock or other securities of which are
held by this corporation, (b) act, or appoint any other person or persons (with
or without powers of substitution) to act in the name and on behalf of the
corporation, or (c) express consent or dissent, as a holder of such securities,
to corporate or other action by such other corporation or organization.
SECTION 4. CHECKS, NOTES, DRAFTS AND OTHER INSTRUMENTS. Checks,
notes, drafts and other instruments for the payment of money drawn or endorsed
in the name of the corporation may be signed by any officer or officers or
person or persons authorized by the Board of Directors to sign the same. No
officer or person shall sign any such instrument as aforesaid unless authorized
by the Board of Directors to do so.
SECTION 5. CORPORATE SEAL. The seal of the Corporation shall be
circular in form, bearing the name of the corporation, the word "Delaware", and
the year of incorporation, and the same may be used by causing it or a facsimile
thereof to be impressed or affixed or in any other manner reproduced.
SECTION 6. FISCAL YEAR. The fiscal year of the corporation shall be
the year ending with the last Saturday of December.
SECTION 7. BOOKS AND RECORDS. The books, accounts and records of the
corporation, except as may be otherwise required by the laws of the State of
Delaware, may be kept outside of the State of Delaware, at such place or places
as the Board of Directors may from time to time appoint. Except as may otherwise
be provided by law, the Board of Directors shall determine whether and to what
extent the books, accounts, records and documents of the corporation, or any of
them, shall be open to the inspection of the stockholders.
SECTION 8. SEPARABILITY. If any term or provision of the By-laws, or
the application thereof to any person or circumstances or period of time, shall
to any extent be invalid or unenforceable, the remainder of the By-laws shall be
valid and enforced to the fullest extent permitted by law.
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SECTION 9. AMENDMENTS. The By-laws may be amended or repealed by the
stockholders or, if such power is conferred by the Certificate of Incorporation,
by the Board of Directors, except that any By-law added or amended by the
stockholders may be altered or repealed only by the stockholders if such By-law
expressly so provides.
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EXHIBIT 10.1
REVOLVING CREDIT AGREEMENT
--------------------------
dated as of June 23, 1994
between
HPSC, INC.
and
THE FIRST NATIONAL BANK OF BOSTON
individually and as Agent
and
CONTINENTAL BANK N.A.
individually and as co-agent
<PAGE>
TABLE OF CONTENTS
-----------------
1. DEFINITIONS AND RULES OF INTERPRETATION. . . . . 1
1.1. Definitions. . . . . . . . . . . . . . . . 1
1.2. Rules of Interpretation. . . . . . . . . . 16
2. THE REVOLVING CREDIT FACILITY. . . . . . . . . . 17
2.1. Commitment to Lend. . . . . . . . . . . . 17
2.2. Commitment Fee. . . . . . . . . . . . . . 18
2.3. Reduction of Total Commitment. . . . . . . 18
2.4. The Revolving Credit Notes. . . . . . . . 18
2.5. Interest on Revolving Credit Loans. . . . 19
2.6. Requests for Revolving Credit Loans. . . . 21
2.7. Conversion Options. . . . . . . . . . . . 21
2.7.1. Conversion to Different Type of
Revolving Credit Loan. . . . . . 21
2.7.2. Continuation of Type of Revolving
Credit Loan. . . . . . . . . . . 22
2.7.3. Eurodollar Rate Loans. . . . . . . 22
2.8. Funds for Revolving Credit Loans. . . . . 22
2.8.1. Funding Procedures. . . . . . . . . 22
2.8.2. Advances by Agent. . . . . . . . . 23
2.9. Change in Borrowing Base. . . . . . . . . 24
3. REPAYMENT OF THE REVOLVING CREDIT LOANS. . . . . 24
3.1. Maturity. . . . . . . . . . . . . . . . . 24
3.2. Mandatory Repayments of Revolving Credit
Loans. . . . . . . . . . . . . . . . . . . 24
3.3. Optional Repayments of Revolving Credit
Loans. . . . . . . . . . . . . . . . . . 24
4. CERTAIN GENERAL PROVISIONS. . . . . . . . . . . . 25
4.1. Closing Fee. . . . . . . . . . . . . . . . 25
4.2. Agent's Fee. . . . . . . . . . . . . . . . 25
4.3. Funds for Payments. . . . . . . . . . . . 25
4.3.1. Payments to Agent. . . . . . . . . 25
4.3.2. No Offset, etc. . . . . . . . . . . 25
4.4. Computations. . . . . . . . . . . . . . . 26
4.5. Inability to Determine Eurodollar Rate. . 26
4.6. Illegality. . . . . . . . . . . . . . . . 26
4.7. Additional Costs, etc. . . . . . . . . . . 27
4.8. Capital Adequacy. . . . . . . . . . . . . 28
4.9. Certificate. . . . . . . . . . . . . . . . 29
4.10. Indemnity. . . . . . . . . . . . . . . . 29
4.11. Overdue Amounts. . . . . . . . . . . . . 29
5. SECURITY AND GUARANTIES. . . . . . . . . . . . . 29
5.1. Security of Borrower. . . . . . . . . . . 29
5.2. Guaranties and Security of Subsidiaries. . 30
6. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . 30
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6.1. Corporate Authority. . . . . . . . . . . . 30
6.1.1. Incorporation; Good Standing. . . . 30
6.1.2. Authorization. . . . . . . . . . . 30
6.1.3. Enforceability. . . . . . . . . . . 30
6.2. Governmental Approvals. . . . . . . . . . 31
6.3. Title to Properties; Leases. . . . . . . . 31
6.4. Financial Statements and Projections. . . 31
6.4.1. Financial Statements. . . . . . . . 31
6.4.2. Projections. . . . . . . . . . . . 32
6.5. No Material Changes, etc. . . . . . . . . 32
6.6. Franchises, Patents, Copyrights, etc. . . 32
6.7. Litigation. . . . . . . . . . . . . . . . 32
6.8. No Materially Adverse Contracts, etc. . . 33
6.9. Compliance With Other Instruments, Laws, etc. 33
6.10. Tax Status. . . . . . . . . . . . . . . . 33
6.11. No Event of Default. . . . . . . . . . . 34
6.12. Holding Company and Investment Company Acts. 34
6.13. Absence of Financing Statements, etc. . . 34
6.14. Perfection of Security Interest. . . . . 34
6.15. Certain Transactions. . . . . . . . . . . 34
6.16. Employee Benefit Plans. . . . . . . . . . 35
6.16.1. In General. . . . . . . . . . . . 35
6.16.2. Terminability of Welfare Plans. . 35
6.16.3. Guaranteed Pension Plans. . . . . 35
6.16.4. Multiemployer Plans. . . . . . . . 35
6.17. Regulations U and X. . . . . . . . . . . 35
6.18. Environmental Compliance. . . . . . . . . 36
6.19. Subsidiaries, etc. . . . . . . . . . . . 37
6.20. Bank Accounts. . . . . . . . . . . . . . 38
6.21. Eligible Accounts Receivable, Equipment and
Contracts. . . . . . . . . . . . . . . 38
6.22. Vehicle Leases . . . . . . . . . . . . . 41
7. AFFIRMATIVE COVENANTS OF THE BORROWER. . . . . . 41
7.1. Punctual Payment. . . . . . . . . . . . . 41
7.2. Maintenance of Office. . . . . . . . . . . 41
7.3. Records and Accounts. . . . . . . . . . . 41
7.4. Financial Statements, Certificates and
Information. . . . . . . . . . . . . . . 42
7.5. Notices. . . . . . . . . . . . . . . . . . 43
7.5.1. Defaults. . . . . . . . . . . . . . 43
7.5.2. Environmental Events. . . . . . . . 44
7.5.3. Notification of Claims Against
Collateral. . . . . . . . . . . . 44
7.5.4. Notice of Litigation and
Judgments. . . . . . . . . . . . 44
7.6. Corporate Existence; Maintenance of
Properties. . . . . . . . . . . . . . . 45
7.7. Insurance. . . . . . . . . . . . . . . . . 45
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7.8. Taxes. . . . . . . . . . . . . . . . . . . 45
7.9. Inspection of Properties and Books, etc. . 46
7.9.1. General. . . . . . . . . . . . . . 46
7.9.2. Collateral Reports. . . . . . . . . 46
7.9.3. Communication with Accountants. . . 47
7.10. Compliance with Laws, Contracts, Licenses,
and Permits. . . . . . . . . . . . . . 47
7.11. Employee Benefit Plans. . . . . . . . . . 47
7.12. Use of Proceeds. . . . . . . . . . . . . 48
7.13. Bank Accounts. . . . . . . . . . . . . . 48
7.14. Credit Criteria. . . . . . . . . . . . . 48
7.15. Further Assurances. . . . . . . . . . . . 48
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. . . . 48
8.1. Restrictions on Indebtedness. . . . . . . 48
8.2. Restrictions on Liens. . . . . . . . . . . 50
8.3. Restrictions on Investments. . . . . . . . 51
8.4. Distributions. . . . . . . . . . . . . . . 53
8.5. Merger, Consolidation and Disposition of
Assets. . . . . . . . . . . . . . . . . 53
8.5.1. Mergers and Acquisitions. . . . . . 53
8.5.2. Disposition of Assets. . . . . . . 53
8.6. Sale and Leaseback. . . . . . . . . . . . 53
8.7. Compliance with Environmental Laws. . . . 53
8.8. Subordinated Debt. . . . . . . . . . . . . 54
8.9. Employee Benefit Plans. . . . . . . . . . 54
8.10. Bank Accounts. . . . . . . . . . . . . . 54
8.11. Funding Stock. . . . . . . . . . . . . . 54
9. FINANCIAL COVENANTS OF THE BORROWER. . . . . . . 55
9.1. Debt to Consolidated Tangible Capital
Funds. . . . . . . . . . . . . . . . . . 55
9.2. Consolidated Tangible Net Worth. . . . . . 55
9.3. Debt Service. . . . . . . . . . . . . . . 55
9.4. Capital Expenditures. . . . . . . . . . . 56
9.5. Reissued Customer Receivables to Gross
Customer Receivables. . . . . . . . . . 56
9.6. Delinquent Customer Receivables to Gross
Customer Receivables. . . . . . . . . . 56
9.7. Reserves to Delinquent Customer
Receivables. . . . . . . . . . . . . . . 56
9.8. Provision for Losses. . . . . . . . . . . 56
9.9. Collections to Billings. . . . . . . . . . 57
9.10. Leases. . . . . . . . . . . . . . . . . . 57
9.11. Equipment Supplier Concentration. . . . . 57
10. CLOSING CONDITIONS. . . . . . . . . . . . . . . 57
10.1. Loan Documents. . . . . . . . . . . . . . 57
10.2. Certified Copies of Charter Documents. . 57
10.3. Corporate Action. . . . . . . . . . . . . 58
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10.4. Incumbency Certificate. . . . . . . . . . 58
10.5. Validity of Liens. . . . . . . . . . . . 58
10.6. Perfection Certificates and UCC Search
Results. . . . . . . . . . . . . . . . 58
10.7. Certificates of Insurance. . . . . . . . 58
10.8. Bank Agency Agreements. . . . . . . . . . 59
10.9. Borrowing Base Report. . . . . . . . . . 59
10.10. Accounts Receivable Aging Report. . . . 59
10.11. Solvency Certificate. . . . . . . . . . 59
10.12. Opinions of Counsel. . . . . . . . . . . 59
10.13. Payment of Fees. . . . . . . . . . . . . 59
10.14. Management Letter. . . . . . . . . . . . 59
10.15. Funding Report. . . . . . . . . . . . . 59
11. CONDITIONS TO ALL BORROWINGS. . . . . . . . . . 60
11.1. Representations True; No Event of
Default. . . . . . . . . . . . . . . . 60
11.2. No Legal Impediment. . . . . . . . . . . 60
11.3. Governmental Regulation. . . . . . . . . 60
11.4. Proceedings and Documents. . . . . . . . 60
11.5. Borrowing Base Report. . . . . . . . . . 60
12. EVENTS OF DEFAULT; ACCELERATION; ETC. . . . . . 61
12.1. Events of Default and Acceleration. . . . 61
12.2. Termination of Commitments. . . . . . . . 65
12.3. Remedies. . . . . . . . . . . . . . . . . 65
12.4. Distribution of Collateral Proceeds. . . 65
13. SETOFF. . . . . . . . . . . . . . . . . . . . . 66
14. THE AGENT. . . . . . . . . . . . . . . . . . . . 67
14.1. Authorization. . . . . . . . . . . . . . 67
14.2. Employees and Agents. . . . . . . . . . . 67
14.3. No Liability. . . . . . . . . . . . . . . 68
14.4. No Representations. . . . . . . . . . . . 68
14.5. Payments. . . . . . . . . . . . . . . . . 68
14.5.1. Payments to Agent. . . . . . . . . 68
14.5.2. Distribution by Agent. . . . . . . 69
14.5.3. Delinquent Banks. . . . . . . . . 69
14.6. Holders of Notes. . . . . . . . . . . . . 70
14.7. Indemnity. . . . . . . . . . . . . . . . 70
14.8. Agent as Bank. . . . . . . . . . . . . . 70
14.9. Resignation. . . . . . . . . . . . . . . 70
15. EXPENSES. . . . . . . . . . . . . . . . . . . . 70
16. INDEMNIFICATION. . . . . . . . . . . . . . . . . 71
17. SURVIVAL OF COVENANTS, ETC. . . . . . . . . . . 72
18. ASSIGNMENT AND PARTICIPATION. . . . . . . . . . 73
18.1. Conditions to Assignment by Banks. . . . 73
18.2. Certain Representations and Warranties;
Limitations; Covenants. . . . . . . . . 73
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18.3. Register. . . . . . . . . . . . . . . . . 74
18.4. New Notes. . . . . . . . . . . . . . . . 75
18.5. Participations. . . . . . . . . . . . . . 75
18.6. Disclosure. . . . . . . . . . . . . . . . 76
18.7. Assignee or Participant Affiliated with
the Borrower. . . . . . . . . . . . . . 76
18.8. Miscellaneous Assignment Provisions. . . 76
18.9. Assignment by Borrower. . . . . . . . . . 77
19. NOTICES, ETC. . . . . . . . . . . . . . . . . . 77
20. GOVERNING LAW. . . . . . . . . . . . . . . . . . 78
21. HEADINGS. . . . . . . . . . . . . . . . . . . . 78
22. COUNTERPARTS. . . . . . . . . . . . . . . . . . 78
23. ENTIRE AGREEMENT, ETC. . . . . . . . . . . . . . 79
24. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . 79
25. CONSENTS, AMENDMENTS, WAIVERS, ETC. . . . . . . 79
26. SEVERABILITY. . . . . . . . . . . . . . . . . . 80
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SCHEDULES
---------
Schedule 1 Banks
Schedule 6.3 Leases
Schedule 6.4.1 Contingent Liabilities
Schedule 6.7 Litigation
Schedule 6.18 Environmental Matters
Schedule 6.19 Subsidiaries
Schedule 6.20 Bank Accounts
Schedule 6.22 Vehicle Leases
Schedule 8.1 Existing Indebtedness
Schedule 8.2 Existing Liens
Schedule 8.3 Existing Investments
EXHIBITS
--------
Exhibit A Form of Borrowing Base Report
Exhibit B Form of Revolving Credit Note
Exhibit C Form of Revolving Credit Loan Request
Exhibit D Form of Compliance Certificate
Exhibit E Form of Security Agreement
Exhibit F Form of Assignment and Acceptance
Exhibit G Form of Guaranty
Exhibit H Form of Stock Pledge Agreement
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is made as of June 23,
1994, by and among HPSC, INC. (the "Borrower"), a Delaware
corporation having its principal place of business at 60
State Street, Boston, Massachusetts 02109, THE FIRST
NATIONAL BANK OF BOSTON, a national banking association,
CONTINENTAL BANK N.A., a national banking association and
the other lending institutions listed on SCHEDULE 1 and THE
FIRST NATIONAL BANK OF BOSTON as Agent for itself and such
other lending institutions and CONTINENTAL BANK N.A. as
co-agent for itself and such other lending institutions.
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. DEFINITIONS. The following terms shall have the
meanings set forth in this Section 1 or elsewhere in the
provisions of this Credit Agreement referred to below:
ACFC. American Commercial Finance Corporation a
Delaware corporation and wholly-owned Subsidiary of the
Borrower.
ACCOUNTS RECEIVABLE. All rights of the Borrower or any
of its Subsidiaries (other than Funding and Credident) to
payment for and under a Customer Receivable, except for that
portion of the sum of money or other proceeds due thereon
that relate to sales, use or property taxes in conjunction
with such transactions, recorded on books of account in
accordance with generally accepted accounting principles.
ADJUSTMENT DATE. See Section 2.5.
AFFILIATE. Any Person that would be considered to be
an affiliate of the Borrower under Rule 144(a) of the Rules
and Regulations of the Securities and Exchange Commission,
as in effect on the date hereof, if the Borrower were
issuing securities.
AGENT'S HEAD OFFICE. The Agent's head office located
at 100 Federal Street, Boston, Massachusetts 02110, or at
such other location as the Agent may designate from time to
time.
AGENT. The First National Bank of Boston acting as
co-agent for the Banks.
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AGENT'S SPECIAL COUNSEL. Bingham, Dana & Gould or such
other counsel as may be approved by the Agent.
APPLICABLE MARGIN. See Section 2.5.
ASSIGNMENT AND ACCEPTANCE. See Section 18.1.
BALANCE SHEET DATE. December 25, 1993.
BANKS. FNBB, Continental and the other lending
institutions listed on SCHEDULE 1 hereto and any other
Person who becomes an assignee of any rights and obligations
of a Bank pursuant to Section 18.
BASE RATE. The higher of (i) the annual rate of
interest announced from time to time by FNBB at its head
office in Boston, Massachusetts, as its "base rate" or (ii)
one-half of one percent (1/2%) above the Federal Funds
Effective Rate. For the purposes of this definition,
"Federal Funds Effective Rate" shall mean, for any day, the
rate per annum equal to the weighted average of the rates on
overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as
published for such day (or if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of
the quotations for such day on such transactions received by
the Agent from three funds brokers of recognized standing
selected by the Agent.
BASE RATE LOANS. Revolving Credit Loans bearing
interest calculated by reference to the Base Rate.
BILLINGS. The aggregate amount of invoices rendered by
the Borrower or any of its Subsidiaries (other than Funding
and Credident) to any account debtor during the relevant
period.
BORROWER. As defined in the preamble hereto.
BORROWING BASE. At the relevant time of reference
thereto, an amount determined by the Agent by reference to
the most recent Borrowing Base Report delivered to the Banks
and the Agent pursuant to Section 7.4(e), which is equal to
the sum of the following:
(i) 80% of Eligible Accounts Receivable; PLUS
(ii) 50% of the Residual Value of Equipment, PROVIDED,
that the amount included in the Borrowing Base
pursuant to this clause (ii) shall not exceed
$1,000,000.
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BORROWING BASE REPORT. A Borrowing Base Report signed
by the chief financial officer of the Borrower and in
substantially the form of EXHIBIT A hereto.
BUSINESS DAY. Any day on which banking institutions in
Boston, Massachusetts, are open for the transaction of
banking business and, in the case of Eurodollar Rate Loans,
also a day which is a Eurodollar Business Day.
CAPITAL ASSETS. Fixed assets, both tangible (such as
land, buildings, fixtures, machinery and equipment) and
intangible (such as patents, copyrights, trademarks,
franchises and good will); PROVIDED that Capital Assets
shall not include any item customarily charged directly to
expense or depreciated over a useful life of twelve (12)
months or less in accordance with generally accepted
accounting principles.
CAPITAL EXPENDITURES. Amounts paid or indebtedness
incurred by the Borrower or any of its Subsidiaries in
connection with the purchase or lease by the Borrower or any
of its Subsidiaries of Capital Assets that would be required
to be capitalized and shown on the balance sheet of such
Person in accordance with generally accepted accounting
principles.
CAPITALIZED LEASES. Leases (other than Vehicle Leases)
under which the Borrower or any of its Subsidiaries is the
lessee or obligor, the discounted future rental payment
obligations under which are required to be capitalized on
the balance sheet of the lessee or obligor in accordance
with generally accepted accounting principles.
CERCLA. See Section 6.18.
CLOSING DATE. The first date on which the conditions
set forth in Section 10 have been satisfied and any
Revolving Credit Loans are to be made.
CODE. The Internal Revenue Code of 1986.
COLLATERAL. All of the property, rights and interests
of the Borrower and its Subsidiaries (other than Funding and
Credident) that are or are intended to be subject to the
security interests created by the Security Documents.
COLLECTIONS. The aggregate amount of all payments in
cash actually received by the Borrower or any of its
Subsidiaries (other than Funding and Credident) on Accounts
Receivable during the relevant period.
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COMMITMENT. With respect to each Bank, the amount set
forth on SCHEDULE 1 hereto as the amount of such Bank's
commitment to make Loans to the Borrower, as the same may be
reduced from time to time; or if such commitment is
terminated pursuant to the provisions hereof, zero.
COMMITMENT PERCENTAGE. With respect to each Bank, the
percentage set forth on SCHEDULE 1 hereto as such Bank's
percentage of the aggregate Commitments of all of the Banks.
CONSOLIDATED or CONSOLIDATED. With reference to any
term defined herein, shall mean that term as applied to the
accounts of the Borrower and certain of its Subsidiaries,
consolidated in accordance with generally accepted
accounting principles.
CONSOLIDATED EARNINGS BEFORE INTEREST AND TAXES. The
consolidated earnings (or loss) from the operations of the
Borrower and its Subsidiaries (other than Credident) for any
period, after all expenses and other proper charges but
before payment or provision for any income taxes or interest
expense for such period, determined in accordance with
generally accepted accounting principles.
CONSOLIDATED NET INCOME (OR DEFICIT). The consolidated
net income (or deficit) of the Borrower and its Subsidiaries
(other than Credident), after deduction of all expenses,
taxes, and other proper charges, determined in accordance
with generally accepted accounting principles, after
eliminating therefrom all extraordinary nonrecurring items
of income.
CONSOLIDATED TANGIBLE CAPITAL FUNDS. The sum of (a)
Consolidated Tangible Net Worth PLUS (b) Subordinated Debt.
CONSOLIDATED TANGIBLE NET WORTH. The excess of
Consolidated Total Assets over Consolidated Total
Liabilities, and LESS the sum of:
(a) the total book value of all assets of the
Borrower and its Subsidiaries (other than Credident)
properly classified as intangible assets under
generally accepted accounting principles, including
such items as good will, the purchase price of acquired
assets in excess of the fair market value thereof,
trademarks, trade names, service marks, brand names,
copyrights, patents and licenses, and rights with
respect to the foregoing; PLUS
(b) all amounts representing any write-up in the
book value of any assets of the Borrower or its
Subsidiaries (other than Credident) resulting from a
revaluation thereof subsequent to the
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Balance Sheet Date, excluding adjustments to translate
foreign assets and liabilities for changes in foreign
exchange rates made in accordance with Financial
Accounting Standards Board Statement No. 52; PLUS
(c) to the extent otherwise includable in the
computation of Consolidated Tangible Net Worth, any
subscriptions receivable; plus
(d) deferred underwriting expenses and deferred
origination costs.
CONSOLIDATED TOTAL ASSETS. All assets of the Borrower
and its Subsidiaries (other than Credident) determined on a
consolidated basis in accordance with generally accepted
accounting principles.
CONSOLIDATED TOTAL INTEREST EXPENSE. For any period,
the aggregate amount of interest required to be paid or
accrued by the Borrower and its Subsidiaries (other than
Credident) during such period on all Indebtedness of the
Borrower and its Subsidiaries (other than Credident)
outstanding during all or any part of such period, whether
such interest was or is required to be reflected as an item
of expense or capitalized, including payments consisting of
interest in respect of Capitalized Leases and including
commitment fees, agency fees, facility fees, balance
deficiency fees and similar fees or expenses in connection
with the borrowing of money.
CONSOLIDATED TOTAL LIABILITIES. All liabilities of the
Borrower and its Subsidiaries determined on a consolidated
basis in accordance with generally accepted accounting
principles and all Indebtedness of the Borrower and its
Subsidiaries (other than Credident or Indebtedness of
Borrower with respect to Credident), whether or not so
classified.
CONTINENTAL. Continental Bank N.A., a national banking
association, in its individual capacity.
CONTRACT. Each lease, conditional sale agreement,
note, agreement or instrument which evidences any Account
Receivable included in Eligible Accounts Receivable at any
time.
CONVERSION REQUEST. A notice given by the Borrower to
the Agent of the Borrower's election to convert or continue
a Loan in accordance with Section 2.7.
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CREDIT AGREEMENT. This Revolving Credit Agreement,
including the Schedules and Exhibits hereto.
CREDIDENT. Credident, Inc., a Canadian corporation and
wholly-owned Subsidiary of the Borrower.
CREDIT POLICY. The criteria for the extension of
credit for receivables and contracts of the Borrower and its
Subsidiaries.
CUSTOMER. A Person for whom the Borrower or its
Subsidiaries (other than Funding and Credident) finances
property or goods or leasehold improvements or working
capital requirements.
CUSTOMER RECEIVABLE. Obligations of any kind or nature
to the Borrower or its Subsidiaries (other than Funding and
Credident) (i) incurred by Customers in the ordinary course
of their respective businesses or (ii) arising from the
purchase by the Borrower or any of its Subsidiaries (other
than Funding and Credident) of promissory notes, leases
payable or accounts receivable from a third party obligee.
DEFAULT. See Section 12.
DELINQUENT. As to any Customer Receivable, a default
thereunder (with respect to payment or otherwise) which at
the end of any calendar month has remained uncured for
ninety days (on a billed and uncollected delinquency basis),
PROVIDED that during each year of the original contract term
remaining on such Customer Receivable, the Borrower or its
Subsidiaries (other than Funding and Credident) may (without
rendering such Customer Receivable Delinquent) extend one
full or partial payment for a period not to exceed one month
beyond the then scheduled payment date, so long as no more
than two such extensions are granted in any year.
DISTRIBUTION. The declaration or payment of any
dividend on or in respect of any shares of any class of
capital stock of the Borrower, other than dividends payable
solely in shares of common stock of the Borrower; the
purchase, redemption, or other retirement of any shares of
any class of capital stock of the Borrower, directly or
indirectly through a Subsidiary of the Borrower or
otherwise; the return of capital by the Borrower to its
shareholders as such; or any other distribution on or in
respect of any shares of any class of capital stock of the
Borrower.
DOLLARS or $. Dollars in lawful currency of the United
States of America.
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DOMESTIC LENDING OFFICE. Initially, the office of each
Bank designated as such in SCHEDULE 1 hereto; thereafter,
such other office of such Bank, if any, located within the
United States that will be making or maintaining Base Rate
Loans.
DRAWDOWN DATE. The date on which any Revolving Credit
Loan is made or is to be made, and the date on which any
Revolving Credit Loan is converted or continued in
accordance with Section 2.7.
ELIGIBLE ACCOUNTS RECEIVABLE. The aggregate of the
unpaid portions of Accounts Receivable (net of any credits,
rebates, offsets, holdbacks or other adjustments or
commissions payable to third parties that are adjustments to
such Accounts Receivable) (i) that the Borrower reasonably
and in good faith determines to be collectible; (ii) that
are with account debtors that (A) are not Affiliates of the
Borrower, (B) are Customers in an arm's length transaction;
(C) are not insolvent or involved, whether voluntary or
involuntary, in any case or proceeding under any bankruptcy,
reorganization, arrangement, insolvency, adjustment of debt,
dissolution, liquidation or similar law of any jurisdiction;
(D) which, from time to time, at the election of the Agent,
have been reviewed by the Agent and found in the Agent's
reasonable judgment to be collectable (iii) that are in
payment of obligations that have been fully performed and
are not subject to dispute or any other similar claims that
would reduce the cash amount payable therefor; (iv) that are
not subject to any pledge, restriction, security interest or
other lien or encumbrance other than those created by the
Loan Documents; (v) in which the Agent has a valid and
perfected first priority security interest; (vi) that are
not outstanding for more than ninety (90) days past the date
such Accounts Receivable are due, but in no event
outstanding for more than 120 days from date of invoice;
(vii) that are not due from any single account debtor if
more than fifteen percent (15%) of the aggregate amount of
all Accounts Receivable owing from such account debtor would
otherwise not be Eligible Accounts Receivable; (viii) that
are payable in Dollars; (ix) that are not payable from an
office outside of the United States; (x) that are not
secured by a letter of credit unless the Agent has a prior,
perfected security interest in such letter of credit; (xi)
that have been reissued no more than two times; (xii) that
are not included in the "Receivables Pool" (as such term is
defined in the Funding Indenture); (xiii) that are not
subject to any lien or any negative pledge pursuant to the
Funding Indenture; (xiv) that originated in the ordinary
course of business of the Borrower; and (xv) that are not
due from any single account debtor if, after including such
Accounts Receivable, the Borrowing Base will be comprised of
more than seven and one-half percent (7.5%) of Accounts
Receivable owing from such account debtor; (x) Accounts
Receivables that have been reissued more than twice
<PAGE>
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may be treated as Eligible Accounts Receivable so long as
such Accounts Receivable do not exceed in the aggregate ten
percent (10%) of Gross Customer Receivables; and (y)
Accounts Receivable that have balances outstanding for more
than 120 days from date of invoice and less than 150 days
from date of invoice may be treated as Eligible Accounts
Receivable so long as not more than five and one-quarter
percent (5.25%) of the Borrowing Base is comprised of such
Accounts Receivable.
ELIGIBLE ASSIGNEE. Any of (i) a commercial bank or
finance company organized under the laws of the United
States, or any State thereof or the District of Columbia,
and having total assets in excess of $1,000,000,000; (ii) a
savings and loan association or savings bank organized under
the laws of the United States, or any State thereof or the
District of Columbia, and having a net worth of at least
$100,000,000, calculated in accordance with generally
accepted accounting principles; (iii) a commercial bank
organized under the laws of any other country which is a
member of the Organization for Economic Cooperation and
Development (the "OECD"), or a political subdivision of any
such country, and having total assets in excess of
$1,000,000,000, PROVIDED that such bank is acting through a
branch or agency located in the country in which it is
organized or another country which is also a member of the
OECD; (iv) the central bank of any country which is a member
of the OECD; and (v) if, but only if, an Event of Default
has occurred and is continuing, any other bank, insurance
company, commercial finance company or other financial
institution or other Person approved by the Agent, such
approval not to be unreasonably withheld.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan
within the meaning of Section 3(2) of ERISA maintained or
contributed to by the Borrower or any ERISA Affiliate, other
than a Multiemployer Plan.
ENVIRONMENTAL LAWS. See Section 6.18(a).
EQUIPMENT. Each item of equipment that is the subject
of any Contract, including all parts, accessions and
modifications thereto and all replacements thereof.
EQUIPMENT SUPPLIER. A Person (other than the Borrower)
who supplies Equipment to Customers.
ERISA. The Employee Retirement Income Security Act of
1974.
ERISA AFFILIATE. Any Person which is treated as a
single employer with the Borrower under Section 414 of the
Code.
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ERISA REPORTABLE EVENT. A reportable event with
respect to a Guaranteed Pension Plan within the meaning of
Section 4043 of ERISA and the regulations promulgated
thereunder as to which the requirement of notice has not
been waived.
EUROCURRENCY RESERVE RATE. For any day with respect to
a Eurodollar Rate Loan, the maximum rate (expressed as a
decimal) at which any lender subject thereto would be
required to maintain reserves under Regulation D of the
Board of Governors of the Federal Reserve System (or any
successor or similar regulations relating to such reserve
requirements) against "Eurocurrency Liabilities" (as that
term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be
adjusted automatically on and as of the effective date of
any change in the Eurocurrency Reserve Rate.
EURODOLLAR BUSINESS DAY. Any day on which commercial
banks are open for international business (including
dealings in Dollar deposits) in London or such other
eurodollar interbank market as may be selected by the Agent
in its sole discretion acting in good faith.
EURODOLLAR LENDING OFFICE. Initially, the office of
each Bank designated as such in SCHEDULE 1 hereto;
thereafter, such other office of such Bank, if any, that
shall be making or maintaining Eurodollar Rate Loans.
EURODOLLAR RATE. For any Interest Period with respect
to a Eurodollar Rate Loan, the rate of interest equal to (i)
the arithmetic average of the rates per annum for each
Reference Bank (rounded upwards to the nearest 1/16 of one
percent) of the rate at which such Reference Bank's
Eurodollar Lending Office is offered Dollar deposits two
Eurodollar Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market where the
eurodollar and foreign currency and exchange operations of
such Eurodollar Lending Office are customarily conducted at
or about 10:00 a.m., Boston time, for delivery on the first
day of such Interest Period for the number of days comprised
therein and in an amount comparable to the amount of the
Eurodollar Rate Loan of such Reference Bank to which such
Interest Period applies, divided by (ii) a number equal to
1.00 minus the Eurocurrency Reserve Rate, if applicable.
EURODOLLAR RATE LOANS. Revolving Credit Loans bearing
interest calculated by reference to the Eurodollar Rate.
EVENT OF DEFAULT. See Section 12.
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FNBB. The First National Bank of Boston, a national
banking association, in its individual capacity.
FUNDING. HPSC Funding Corp. I, a Delaware corporation
and wholly-owned Subsidiary of the Borrower.
FUNDING EVENT OF DEFAULT. Any event or condition
identified as an "Event of Default" in Section 11 of the
Funding Indenture.
FUNDING INDENTURE. The Indenture and Servicing
Agreement dated as of December 23, 1993 among the Borrower
as Servicer, Funding as Issuer and State Street Bank and
Trust Company of Connecticut, National Association as
Trustee, pursuant to which the issuer issued $70,000,000 of
receivable backed notes.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. (i) When
used in Section 9, whether directly or indirectly through
reference to a capitalized term used therein, means (A)
principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards
Board and its predecessors, in effect for the fiscal year
ended on the Balance Sheet Date, and (B) to the extent
consistent with such principles, the accounting practice of
the Borrower reflected in its financial statements for the
year ended on the Balance Sheet Date, and (ii) when used in
general, other than as provided above, means principles that
are (A) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its
predecessors, as in effect from time to time and (B)
consistently applied with past financial statements of the
Borrower adopting the same principles, PROVIDED that in each
case referred to in this definition of "generally accepted
accounting principles" a certified public accountant would,
insofar as the use of such accounting principles is
pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in
generally accepted accounting principles) as to financial
statements in which such principles have been properly
applied.
GROSS CUSTOMER RECEIVABLES. The aggregate amount at
any time of all amounts due or to become due in cash on
Customer Receivables which amount shall include the
aggregate Residual Value of Equipment.
GUARANTEED PENSION PLAN. Any employee pension benefit
plan within the meaning of Section 3(2) of ERISA maintained
or contributed to by the Borrower or any ERISA Affiliate the
benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other
than a Multiemployer Plan.
<PAGE>
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GUARANTY. The Guaranty dated as of the date hereof
made by each Subsidiary of the Borrower (other than Funding
and Credident) in favor of the Banks and the Agent pursuant
to which each Subsidiary (other than Funding and Credident)
of the Borrower guaranties to the Banks and the Agent the
payment and performance of the Obligations and in form and
substance satisfactory to the Banks and the Agent.
HAZARDOUS SUBSTANCES. See Section 6.18(b).
INDEBTEDNESS. All obligations, contingent and
otherwise, that in accordance with generally accepted
accounting principles should be classified upon the
obligor's balance sheet as liabilities, or to which
reference should be made by footnotes thereto, including in
any event and whether or not so classified: (i) all debt
and similar monetary obligations, whether direct or
indirect; (ii) all liabilities secured by any mortgage,
pledge, security interest, lien, charge, or other
encumbrance existing on property owned or acquired subject
thereto, whether or not the liability secured thereby shall
have been assumed; and (iii) all guarantees, endorsements
and other contingent obligations whether direct or indirect
in respect of indebtedness of others, including any
obligation to supply funds to or in any manner to invest in,
directly or indirectly, the debtor, to purchase
indebtedness, or to assure the owner of indebtedness against
loss, through an agreement to purchase goods, supplies, or
services for the purpose of enabling the debtor to make
payment of the indebtedness held by such owner or otherwise,
and the obligations to reimburse the issuer in respect of
any letters of credit.
INTEREST PAYMENT DATE. (i) As to any Base Rate Loan,
the last day of the calendar quarter which includes the
Drawdown Date thereof; and (ii) as to any Eurodollar Rate
Loan in respect of which the Interest Period is (A) 3 months
or less, the last day of such Interest Period and (B) more
than 3 months, the date that is 3 months from the first day
of such Interest Period and, in addition, the last day of
such Interest Period.
INTEREST PERIOD. With respect to each Loan, (i)
initially, the period commencing on the Drawdown Date of
such Loan and ending on the last day of one of the periods
set forth below, as selected by the Borrower in a Loan
Request (A) for any Base Rate Loan, the last day of the
calendar quarter; and (B) for any Eurodollar Rate Loan, 1,
2, 3 or 6 months; and (ii) thereafter, each period
commencing on the last day of the next preceding Interest
Period applicable to such Loan and ending on the last day of
one of the periods set forth above, as selected by the
Borrower in a Conversion Request; PROVIDED that all of the
foregoing provisions relating to Interest Periods are
subject to the following:
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(a) if any Interest Period with respect to a
Eurodollar Rate Loan would otherwise end on a day that
is not a Eurodollar Business Day, that Interest Period
shall be extended to the next succeeding Eurodollar
Business Day unless the result of such extension would
be to carry such Interest Period into another calendar
month, in which event such Interest Period shall end on
the immediately preceding Eurodollar Business Day;
(b) if any Interest Period with respect to a Base
Rate Loan would end on a day that is not a Business
Day, that Interest Period shall end on the next
succeeding Business Day;
(c) if the Borrower shall fail to give notice as
provided in Section 2.7, the Borrower shall be deemed
to have requested a conversion of the affected
Eurodollar Rate Loan to a Base Rate Loan and the
continuance of all Base Rate Loans as Base Rate Loans
on the last day of the then current Interest Period
with respect thereto;
(d) any Interest Period that begins on the last
Eurodollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day
in the calendar month at the end of such Interest
Period) shall end on the last Eurodollar Business Day
of a calendar month; and
(e) any Interest Period relating to any
Eurodollar Rate Loan that would otherwise extend beyond
the Revolving Credit Loan Maturity Date shall end on
the Revolving Credit Loan Maturity Date.
INTEREST RATIO. For the relevant time of reference
thereto, the ratio of Consolidated Earnings Before Interest
and Taxes to Consolidated Total Interest Expense.
INVESTMENTS. All expenditures made and all liabilities
incurred (contingently or otherwise) for the acquisition of
stock or Indebtedness of, or for loans, advances, capital
contributions or transfers of property to, or in respect of
any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In
determining the aggregate amount of Investments outstanding
at any particular time: (i) the amount of any Investment
represented by a guaranty shall be taken at not less than
the principal amount of the obligations guaranteed and still
outstanding; (ii) there shall be included as an Investment
all interest accrued with respect to Indebtedness
constituting an Investment unless and until such interest is
paid; (iii) there shall be deducted in respect of each such
Investment any amount received as a return of capital (but
only
<PAGE>
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by repurchase, redemption, retirement, repayment,
liquidating dividend or liquidating distribution); (iv)
there shall not be deducted in respect of any Investment any
amounts received as earnings on such Investment, whether as
dividends, interest or otherwise, except that accrued
interest included as provided in the foregoing clause (ii)
may be deducted when paid; and (v) there shall not be
deducted from the aggregate amount of Investments any
decrease in the value thereof.
LEASE. Each lease which evidences any Account
Receivable included in Eligible Accounts Receivable.
LOAN DOCUMENTS. This Credit Agreement, the Notes, and
the Security Documents.
LOAN REQUEST. See Section 2.6.
LOANS. The Revolving Credit Loans.
MAJORITY BANKS. As of any date, the Banks holding at
least fifty-one percent (51%) of the outstanding principal
amount of the Notes on such date; and if no such principal
is outstanding, the Banks whose aggregate Commitments
constitute at least fifty-one percent (51%) of the Total
Commitment.
MULTIEMPLOYER PLAN. Any multiemployer plan within the
meaning of Section 3(37) of ERISA maintained or contributed
to by the Borrower or any ERISA Affiliate.
NET CUSTOMER RECEIVABLES. Gross Customer Receivables
less Unearned Income.
NOTES. The Revolving Credit Notes.
OBLIGATIONS. All indebtedness, obligations and
liabilities of any of the Borrower and its Subsidiaries to
any of the Banks and the Agent, individually or
collectively, existing on the date of this Credit Agreement
or arising thereafter, direct or indirect, joint or several,
absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising by contract,
operation of law or otherwise, arising or incurred under
this Credit Agreement or any of the other Loan Documents or
in respect of any of the Loans or any of the Notes or other
instruments at any time evidencing any thereof.
OBLIGOR. Each Person obligated to make payments under
a Contract.
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OUTSTANDING. With respect to the Loans, the aggregate
unpaid principal thereof as of any date of determination.
PAYMENT RESTRICTION EVENT. Any event identified as a
"Payment Restriction Event" in the definition of such term
contained in Section 15 of the Funding Indenture.
PBGC. The Pension Benefit Guaranty Corporation created
by Section 4002 of ERISA and any successor entity or
entities having similar responsibilities.
PERFECTION CERTIFICATES. The Perfection Certificates
as defined in the Security Agreements.
PERMITTED LIENS. Liens, security interests and other
encumbrances permitted by Section 8.2.
PERSON. Any individual, corporation, partnership,
trust, unincorporated association, business, or other legal
entity, and any government or any governmental agency or
political subdivision thereof.
RATIO CALCULATION DATE. See Section 2.5.
REAL ESTATE. All real property at any time owned or
leased (as lessee or sublessee) by the Borrower or any of
its Subsidiaries; PROVIDED HOWEVER that the definition of
Real Estate shall not include office space leased by the
Borrower or any of its Subsidiaries in buildings where the
Borrower or any of its Subsidiaries do not occupy more than
fifty percent (50%) of such building.
RECORD. The grid attached to a Note, or the
continuation of such grid, or any other similar record,
including computer records, maintained by any Bank with
respect to any Loan referred to in such Note.
REFERENCE BANK. The First National Bank of Boston.
REISSUED CUSTOMER RECEIVABLES. Customer Receivables
that are issued by the Borrower or any of its Subsidiaries
(other than Funding and Credident) with respect to Customer
Receivables (i) which have previously been referred to a
collection agency or attorney for collection, (ii) with
respect to which enforcement action against the Customer has
previously been commenced or (iii) the original terms of
which have been altered to extend the time for payment or
reduce the interest rate or total indebtedness thereon if
such Customer Receivables are Delinquent at the time of such
alteration of terms; provided that Reissued Customer
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Receivables shall not include any Customer Receivable which
shall not have been Delinquent at any time within the
immediately preceding twelve months.
RENTAL OBLIGATIONS. All present or future obligations
of the Borrower or any of its Subsidiaries (other than
Credident) under any rental agreements or leases of real or
personal property, other than (i) obligations that can be
terminated by the giving of notice without liability to the
Borrower or such Subsidiary in excess of the liability for
rent due as of the date on which such notice is given and
under which no penalty or premium is paid as a result of any
such termination, and (ii) obligations in respect of
Capitalized Leases.
RESERVES. With respect to any fiscal quarter, the
ending allowance for doubtful accounts (excluding Funding
and Credident) on the Borrower's balance sheet at the end of
such fiscal quarter, prepared in accordance with generally
accepted accounting principles.
RESIDUAL VALUE OF EQUIPMENT. The aggregate estimated
residual value of equipment at end of lease term of the
Borrower and the Subsidiaries (other than Funding and
Credident) as determined in accordance with generally
accepted accounting principles.
REVOLVING CREDIT LOAN MATURITY DATE. December 31,
1995.
REVOLVING CREDIT LOANS. Revolving credit loans made or
to be made by the Banks to the Borrower pursuant to Section
2.
REVOLVING CREDIT NOTE RECORD. A Record with respect to
a Revolving Credit Note.
REVOLVING CREDIT NOTES. See Section 2.4.
SECURITY AGREEMENTS. The several Security Agreements
dated as of the date hereof between the Borrower and certain
of its Subsidiaries and the Agent and in form and substance
satisfactory to the Banks and the Agent.
SECURITY DOCUMENTS. The Guaranty, the Security
Agreements and the Stock Pledge Agreement.
SERVICER EVENT OF DEFAULT. Any event or condition
identified as a "Servicer Event of Default" in Section 12 of
the Funding Indenture.
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STOCK PLEDGE AGREEMENT. The Stock Pledge Agreement
dated as of the date hereof between the Borrower and the
Agent and in form and substance satisfactory to the Banks
and the Agent.
SUBORDINATED DEBT. Unsecured Indebtedness of the
Borrower or any of its Subsidiaries that is expressly
subordinated and made junior to the payment and performance
in full of the Obligations, and evidenced as such by a
written instrument containing subordination provisions in
form and substance approved by the Banks in writing.
SUBSIDIARY. Any corporation, association, trust, or
other business entity of which the designated parent shall
at any time own directly or indirectly through a Subsidiary
or Subsidiaries at least a majority (by number of votes) of
the outstanding Voting Stock.
TOTAL COMMITMENT. The sum of the Commitments of the
Banks, as in effect from time to time.
TYPE. As to any Revolving Credit Loan, its nature as a
Base Rate Loan or a Eurodollar Rate Loan.
UNEARNED INCOME. With respect to Customer Receivables
any interest component to be paid by the Customer in the
future in connection with such Customer Receivable which is
accounted for by the Borrower as unearned income under its
present accounting practices.
VEHICLE LEASE. Any lease providing for the lease of
vehicles to the Borrower or any of its Subsidiaries.
VOTING STOCK. Stock or similar interests, of any class
or classes (however designated), the holders of which are at
the time entitled, as such holders, to vote for the election
of a majority of the directors (or persons performing
similar functions) of the corporation, association, trust or
other business entity involved, whether or not the right so
to vote exists by reason of the happening of a contingency.
1.2. RULES OF INTERPRETATION.
(a) A reference to any document or agreement
shall include such document or agreement as amended,
modified or supplemented from time to time in
accordance with its terms and the terms of this Credit
Agreement.
(b) The singular includes the plural and the
plural includes the singular.
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(c) A reference to any law includes any amendment
or modification to such law.
(d) A reference to any Person includes its
permitted successors and permitted assigns.
(e) Accounting terms not otherwise defined herein
have the meanings assigned to them by generally
accepted accounting principles applied on a consistent
basis by the accounting entity to which they refer.
(f) The words "include", "includes" and
"including" are not limiting.
(g) All terms not specifically defined herein or
by generally accepted accounting principles, which
terms are defined in the Uniform Commercial Code as in
effect in the Commonwealth of Massachusetts, have the
meanings assigned to them therein, with the term
"instrument" being that defined under Article 9 of the
Uniform Commercial Code.
(h) Reference to a particular "Section" refers
to that section of this Credit Agreement unless
otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and
words of like import shall refer to this Credit
Agreement as a whole and not to any particular section
or subdivision of this Credit Agreement.
2. THE REVOLVING CREDIT FACILITY.
2.1. COMMITMENT TO LEND. Subject to the terms and
conditions set forth in this Credit Agreement, each of the
Banks severally agrees to lend to the Borrower and the
Borrower may borrow, repay, and reborrow from time to time
between the Closing Date and the Revolving Credit Loan
Maturity Date upon notice by the Borrower to the Agent given
in accordance with Section 2.6, such sums as are requested
by the Borrower up to a maximum aggregate principal amount
outstanding (after giving effect to all amounts requested)
at any one time equal to such Bank's Commitment, PROVIDED
that the sum of the outstanding amount of the Revolving
Credit Loans (after giving effect to all amounts requested)
shall not at any time exceed the lesser of (i) the Total
Commitment and (ii) the Borrowing Base. The Revolving
Credit Loans shall be made PRO RATA in accordance with each
Bank's Commitment Percentage. Each request for a Revolving
Credit Loan hereunder shall constitute a representation and
warranty by the Borrower that the conditions set forth in
Section 10 and Section 11, in
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the case of the initial Revolving Credit Loans to be made on
the Closing Date, and Section 11, in the case of all other
Revolving Credit Loans, have been satisfied on the date of
such request.
2.2. COMMITMENT FEE. The Borrower agrees to pay to
the Agent for the accounts of the Banks in accordance with
their respective Commitment Percentages a commitment fee
calculated at the rate of three-eighths of one percent
(3/8%) per annum on the average daily amount during each
calendar quarter or portion thereof from the Closing Date to
the Revolving Credit Loan Maturity Date by which the Total
Commitment exceeds the outstanding amount of Revolving
Credit Loans during such calendar quarter. The commitment
fee shall be payable quarterly in arrears on the first day
of each calendar quarter for the immediately preceding
calendar quarter commencing on the first such date following
the date hereof, with a final payment on the Revolving
Credit Maturity Date or any earlier date on which the
Commitments shall terminate.
2.3. REDUCTION OF TOTAL COMMITMENT. The Borrower
shall have the right at any time and from time to time upon
five (5) Business Days prior written notice to the Agent to
reduce by $500,000 or an integral multiple thereof or
terminate entirely the unborrowed portion of the Total
Commitment, whereupon the Commitments of the Banks shall be
reduced PRO RATA in accordance with their respective
Commitment Percentages of the amount specified in such
notice or, as the case may be, terminated. Promptly after
receiving any notice of the Borrower delivered pursuant to
this Section 2.3, the Agent will notify the Banks of the
substance thereof. Upon the effective date of any such
reduction or termination, the Borrower shall pay to the
Agent for the respective accounts of the Banks the full
amount of any commitment fee then accrued on the amount of
the reduction. No reduction of the Commitments may be
reinstated.
2.4. THE REVOLVING CREDIT NOTES. The Revolving Credit
Loans shall be evidenced by separate promissory notes of the
Borrower in substantially the form of EXHIBIT B hereto (each
a "Revolving Credit Note"), dated as of the Closing Date and
completed with appropriate insertions. One Revolving Credit
Note shall be payable to the order of each Bank in a
principal amount equal to such Bank's Commitment or, if
less, the outstanding amount of all Revolving Credit Loans
made by such Bank, plus interest accrued thereon, as set
forth below. The Borrower irrevocably authorizes each Bank
to make or cause to be made, at or about the time of the
Drawdown Date of any Revolving Credit Loan or at the time of
receipt of any payment of principal on such Bank's Revolving
Credit Note, an appropriate notation on such Bank's
Revolving Credit
<PAGE>
-19-
Note Record reflecting the making of such Revolving Credit
Loan or (as the case may be) the receipt of such payment.
The outstanding amount of the Revolving Credit Loans set
forth on such Bank's Revolving Credit Note Record shall be
PRIMA FACIE evidence of the principal amount thereof owing
and unpaid to such Bank, but the failure to record, or any
error in so recording, any such amount on such Bank's
Revolving Credit Note Record shall not limit or otherwise
affect the obligations of the Borrower hereunder or under
any Revolving Credit Note to make payments of principal of
or interest on any Revolving Credit Note when due.
2.5. INTEREST ON REVOLVING CREDIT LOANS. Except as
otherwise provided in Section 4.11,
(a) The Borrower shall pay interest on the
unpaid principal amount of each Loan made by the Banks
to the Borrower from the Drawdown Date, until such
principal amount is paid in full, at an annual rate
equal to, (i) with respect to any Base Rate Loan, the
Base Rate in effect from time to time PLUS the
Applicable Base Rate Margin, and (ii) with respect to
any Eurodollar Rate Loan, the Eurodollar Rate in effect
for the applicable Interest Period PLUS the Applicable
Eurodollar Rate Margin (the Applicable Base Rate Margin
or the Applicable Eurodollar Rate Margin, whichever is
applicable, is sometimes referred to herein as the
"Applicable Margin").
(b) The Applicable Margin shall be the
annual percentage rates in effect from time to time
determined in accordance with the following provisions
of this Section 2.5. The Agent shall give prompt
notice of the Applicable Margin to the Borrower and the
Banks following the time of delivery to the Agent of
the required quarterly financial statements and
Compliance Certificate pursuant to Sections 7.4(b)
and (c) (provided, if the Interest Ratio reflected
in the financial statements delivered pursuant to
Section 7.4(a) differs from such ratio in the
financial statements delivered pursuant to Section
7.4(b) for a fiscal quarter which is the last fiscal
quarter of a fiscal year, then the Interest Ratio as
reflected in the financial statements delivered
pursuant to Section 7.4(a) shall govern from and after
the date of delivery of such financial statements
pursuant to Section 7.4(a)), which such quarterly
financial statements shall include, in reasonable
detail, a calculation of the Interest Ratio as of the
date (the "Ratio Calculation Date") which is the end of
the quarterly period covered by such quarterly
financial statements, based on the Interest Ratio for
the period of four (4) fiscal quarters ended on such
Ratio
<PAGE>
-20-
Calculation Date, with such determination of the
Applicable Margin to be made in accordance with the
following table:
<TABLE>
<CAPTION>
<S> <C> <C>
Applicable
Applicable Base Eurodollar
Rate Margin Rate Margin
INTEREST RATIO (PER ANNUM) (PER ANNUM)
------------- ---------------- ----------
LESS THAN 1.40:1.00 .50% 2.00%
GREATER THAN 1.40:1.00 .25% 1.75%
</TABLE>
For the purposes of this Section 2.5, the symbol "LESS THAN"
shall mean "less than or equal to" and the symbol "GREATER THAN" shall
mean "greater than".
(c) The Applicable Margin so determined
pursuant to the foregoing table shall become effective
as of the date (the "Adjustment Date") which is the
first day of the month which immediately follows the
date of receipt by the Agent of the applicable
quarterly financial statements and Compliance
Certificates delivered pursuant to Sections 7.4(b)
and (c). The Applicable Margin which becomes
effective on each such Adjustment Date shall remain in
effect (subject to the other provisions of this Section
2.5 and except as otherwise provided in Section 4.11
hereof) until the next Adjustment Date; PROVIDED,
HOWEVER, in the event the Borrower fails to deliver to
the Agent and the Banks the quarterly financial
statements and Compliance Certificate in accordance
with Sections 7.4(b) and (c) prior to any scheduled
Adjustment Date, the Applicable Margin shall
automatically be the highest Applicable Margin set
forth above commencing on the date which would have
otherwise been the next Adjustment Date had such
financial statement and Compliance Certificate been
delivered in accordance with Sections 7.4(b) and
(c) and continuing until the next scheduled delivery of
financial statements and Compliance Certificate.
Notwithstanding the provisions of the preceding two
sentences, if at any time the Interest Ratio as of any
applicable Ratio Calculation Date was actually a ratio
other than that ratio on the basis of which the Agent
determined the rate of interest in effect hereunder on
any date, then such interest rate determination shall
be adjusted retroactively to the appropriate Adjustment
Date on the basis of such corrected determination of
the actual Interest Ratio for the four (4) quarter
period ended on such Ratio Calculation Date, and within
ten (10) Business Days after notice thereof in
reasonable
<PAGE>
-21-
detail requesting a retroactive adjustment of interest
previously paid given by the Borrower, the Agent or any
Bank, the Borrower shall pay to the Banks, or the Banks
severally, on a ratable basis, shall credit the
Borrower with, as the case may be, the amount of the
appropriate retroactive adjustment in respect of such
adjusted interest rate for any portion of any Interest
Period as to which interest has been paid.
(d) The Borrower promises to pay interest on
each Loan in arrears on each Interest Payment Date with
respect thereto and at maturity of such Loan.
2.6. REQUESTS FOR REVOLVING CREDIT LOANS. The
Borrower shall give to the Agent written notice in the form
of EXHIBIT C hereto (or telephonic notice confirmed in a
writing in the form of EXHIBIT C hereto) of each Revolving
Credit Loan requested hereunder (a "Loan Request") no less
than (i) 1:00 P.M. on the proposed Drawdown Date of any Base
Rate Loan and (ii) three (3) Eurodollar Business Days prior
to the proposed Drawdown Date of any Eurodollar Rate Loan.
Each such notice shall specify (A) the principal amount of
the Revolving Credit Loan requested, (B) the proposed
Drawdown Date of such Revolving Credit Loan, (C) the
Interest Period for such Revolving Credit Loan and (D) the
Type of such Revolving Credit Loan. Promptly upon receipt
of any such notice, the Agent shall notify each of the Banks
thereof. Each such notice shall be irrevocable and binding
on the Borrower and shall obligate the Borrower to accept
the Revolving Credit Loan requested from the Banks on the
proposed Drawdown Date. Each Loan Request shall be in a
minimum aggregate amount of $100,000 or an integral multiple
thereof.
2.7. CONVERSION OPTIONS.
2.7.1. CONVERSION TO DIFFERENT TYPE OF REVOLVING
CREDIT LOAN. The Borrower may elect from time to time
to convert any outstanding Revolving Credit Loan to a
Revolving Credit Loan of another Type, PROVIDED that
(i) with respect to any such conversion of a Revolving
Credit Loan to a Base Rate Loan, the Borrower shall
give the Agent written notice prior to 1:00 p.m. on the
date of such election; (ii) with respect to any such
conversion of a Eurodollar Rate Loan into a Revolving
Credit Loan of another Type, such conversion shall only
be made on the last day of the Interest Period with
respect thereto; (iii) with respect to any such
conversion of a Base Rate Loan to a Eurodollar Rate
Loan, the Borrower shall give the Agent at least three
(3) Eurodollar Business Days prior written notice of
such election and (iv) no Loan may be converted into a
<PAGE>
-22-
Eurodollar Rate Loan when any Default or Event of
Default has occurred and is continuing. On the date on
which such conversion is being made each Bank shall
take such action as is necessary to transfer its
Commitment Percentage of such Revolving Credit Loans to
its Domestic Lending Office or its Eurodollar Lending
Office, as the case may be. All or any part of
outstanding Revolving Credit Loans of any Type may be
converted as provided herein, PROVIDED that partial
conversions shall be in an aggregate principal amount
of $1,000,000 or a whole multiple thereof. Each
Conversion Request relating to the conversion of a
Revolving Credit Loan to a Eurodollar Rate Loan shall
be irrevocable by the Borrower.
2.7.2. CONTINUATION OF TYPE OF REVOLVING CREDIT
LOAN. Any Revolving Credit Loans of any Type may be
continued as such upon the expiration of an Interest
Period with respect thereto by compliance by the
Borrower with the notice provisions contained in
Section 2.7.1; PROVIDED that no Eurodollar Rate Loan
may be continued as such when any Default or Event of
Default has occurred and is continuing, but shall be
automatically converted to a Base Rate Loan on the last
day of the first Interest Period relating thereto
ending during the continuance of any Default or Event
of Default of which the officers of the Agent active
upon the Borrower's account have actual knowledge. In
the event that the Borrower fails to provide any such
notice with respect to the continuation of any
Eurodollar Rate Loan as such, then such Eurodollar Rate
Loan shall be automatically converted to a Base Rate
Loan on the last day of the first Interest Period
relating thereto. The Agent shall notify the Banks
promptly when any such automatic conversion
contemplated by this Section 2.7 is scheduled to occur.
2.7.3. EURODOLLAR RATE LOANS. Any conversion to
or from Eurodollar Rate Loans shall be in such amounts
and be made pursuant to such elections so that, after
giving effect thereto, the aggregate principal amount
of all Eurodollar Rate Loans having the same Interest
Period shall not be less than $1,000,000 or a whole
multiple of $100,000.
2.8. FUNDS FOR REVOLVING CREDIT LOANS.
2.8.1. FUNDING PROCEDURES. Not later than 1:00
p.m. (Boston time) on the proposed Drawdown Date of any
Revolving Credit Loans, each of the Banks will make
available to the Agent, at its Head Office, in
immediately available funds, the amount of
<PAGE>
-23-
such Bank's Commitment Percentage of the amount of the
requested Revolving Credit Loans. Upon receipt from
each Bank of such amount, and upon receipt of the
documents required by Sections 10 and 11 and the
satisfaction of the other conditions set forth therein,
to the extent applicable, the Agent will make available
to the Borrower the aggregate amount of such Revolving
Credit Loans made available to the Agent by the Banks.
The failure or refusal of any Bank to make available to
the Agent at the aforesaid time and place on any
Drawdown Date the amount of its Commitment Percentage
of the requested Revolving Credit Loans shall not
relieve any other Bank from its several obligation
hereunder to make available to the Agent the amount of
such other Bank's Commitment Percentage of any
requested Revolving Credit Loans. As an alternative to
the foregoing, advances may be made pursuant to cash
management arrangements satisfactory to the Agent and
the Banks.
2.8.2. ADVANCES BY AGENT. The Agent may, unless
notified to the contrary by any Bank prior to a
Drawdown Date, assume that such Bank has made available
to the Agent on such Drawdown Date the amount of such
Bank's Commitment Percentage of the Revolving Credit
Loans to be made on such Drawdown Date, and the Agent
may (but it shall not be required to), in reliance upon
such assumption, make available to the Borrower a
corresponding amount. If any Bank makes available to
the Agent such amount on a date after such Drawdown
Date, such Bank shall pay to the Agent on demand an
amount equal to the product of (i) the average computed
for the period referred to in clause (iii) below, of
the weighted average interest rate paid by the Agent
for federal funds acquired by the Agent during each day
included in such period, TIMES (ii) the amount of such
Bank's Commitment Percentage of such Revolving Credit
Loans, TIMES (iii) a fraction, the numerator of which
is the number of days that elapse from and including
such Drawdown Date to the date on which the amount of
such Bank's Commitment Percentage of such Revolving
Credit Loans shall become immediately available to the
Agent, and the denominator of which is 365. A
statement of the Agent submitted to such Bank with
respect to any amounts owing under this paragraph shall
be PRIMA FACIE evidence of the amount due and owing to
the Agent by such Bank. If the amount of such Bank's
Commitment Percentage of such Revolving Credit Loans is
not made available to the Agent by such Bank within
three (3) Business Days following such Drawdown Date,
the Agent shall be entitled to recover such amount from
the Borrower on demand, with interest thereon at the
rate per
<PAGE>
-24-
annum applicable to the Revolving Credit Loans made on
such Drawdown Date.
2.9. CHANGE IN BORROWING BASE. The Borrowing Base
shall be determined monthly (or at such other interval as
may be specified pursuant to Section 7.4(e)) by the Agent by
reference to the Borrowing Base Report delivered to the
Banks and the Agent pursuant to Section 7.4(e).
3. REPAYMENT OF THE REVOLVING CREDIT LOANS.
3.1. MATURITY. The Borrower promises to pay on the
Revolving Credit Loan Maturity Date, and there shall become
absolutely due and payable on the Revolving Credit Loan
Maturity Date, all of the Revolving Credit Loans outstanding
on such date, together with any and all accrued and unpaid
interest thereon.
3.2. MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS.
If the sum of the outstanding amount of the Revolving Credit
Loans exceeds the lesser of (i) the Total Commitment and
(ii) the Borrowing Base, for more than five (5) consecutive
Business Days then the Borrower shall immediately pay the
amount of such excess to the Agent for application to the
Revolving Credit Loans. In addition, collections of
Accounts Receivable shall be applied to the Revolving Credit
Loans pursuant to cash management arrangements satisfactory
to the Agent and the Banks.
3.3. OPTIONAL REPAYMENTS OF REVOLVING CREDIT LOANS.
The Borrower shall have the right, at its election, to repay
the outstanding amount of the Revolving Credit Loans, as a
whole or in part, at any time without penalty or premium,
PROVIDED that the full or partial prepayment of the
outstanding amount of any Eurodollar Rate Loans pursuant to
this Section 3.3 may be made only on the last day of the
Interest Period relating thereto. The Borrower shall give
the Agent, no later than 1:00 p.m., Boston time, on the date
of any proposed repayment written notice, of any proposed
repayment pursuant to this Section 3.3 of Base Rate Loans,
and three (3) Eurodollar Business Days notice of any
proposed repayment pursuant to this Section 3.3 of
Eurodollar Rate Loans, in each case, specifying the proposed
date of payment of Revolving Credit Loans and the principal
amount to be paid. Each such partial prepayment of the
Loans shall be in an integral multiple of $100,000, shall be
accompanied by the payment of accrued interest on the
principal repaid to the date of payment and shall be applied
first to the principal of Base Rate Loans and then to the
principal of Eurodollar Rate Loans, at the Borrower's
option. Each partial prepayment shall be allocated among
the Banks, in proportion, as nearly as practicable, to the
respective unpaid principal amount of each Bank's
<PAGE>
-25-
Revolving Credit Note, with adjustments to the extent
practicable to equalize any prior repayments not exactly in
proportion.
4. CERTAIN GENERAL PROVISIONS.
4.1. CLOSING FEE. The Borrower agrees to pay to the
Agent for the PRO RATA accounts of the Banks on the Closing
Date a closing fee in the amount of $100,000.00, subject to
credit of any fee paid prior to the Closing Date.
4.2. AGENT'S FEE. The Borrower shall pay to the Agent
semi-annually in advance, for the Agent's own account, on
the Closing Date and every six months thereafter, an Agent's
fee in the amount of $7,500.00.
4.3. FUNDS FOR PAYMENTS.
4.3.1. PAYMENTS TO AGENT. All payments of
principal, interest, commitment fees and any other
amounts due hereunder or under any of the other Loan
Documents shall be made to the Agent, for the
respective accounts of the Banks and the Agent, at the
Agent's Head Office or at such other location in the
Boston, Massachusetts, area that the Agent may from
time to time designate, in each case in immediately
available funds.
4.3.2. NO OFFSET, ETC. All payments by the
Borrower hereunder and under any of the other Loan
Documents shall be made without setoff or counterclaim
and free and clear of and without deduction for any
taxes, levies, imposts, duties, charges, fees,
deductions, withholdings, compulsory loans,
restrictions or conditions of any nature now or
hereafter imposed or levied by any jurisdiction or any
political subdivision thereof or taxing or other
authority therein unless the Borrower is compelled by
law to make such deduction or withholding. If any such
obligation is imposed upon the Borrower with respect to
any amount payable by it hereunder or under any of the
other Loan Documents, the Borrower will pay to the
Agent, for the account of the Banks or (as the case may
be) the Agent, on the date on which such amount is due
and payable hereunder or under such other Loan
Document, such additional amount in Dollars as shall be
necessary to enable the Banks or the Agent to receive
the same net amount which the Banks or the Agent would
have received on such due date had no such obligation
been imposed upon the Borrower. The Borrower will
deliver promptly to the Agent certificates or other
valid vouchers for all taxes or other charges deducted
from or paid with
<PAGE>
-26-
respect to payments made by the Borrower hereunder or
under such other Loan Document.
4.4. COMPUTATIONS. All computations of interest on
the Loans and of commitment fees shall, unless otherwise
expressly provided herein, be based on a 360-day year and
paid for the actual number of days elapsed. Except as
otherwise provided in the definition of the term "Interest
Period" with respect to Eurodollar Rate Loans, whenever a
payment hereunder or under any of the other Loan Documents
becomes due on a day that is not a Business Day, the due
date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during
such extension. The outstanding amount of the Loans as
reflected on the Revolving Credit Note Records from time to
time shall be considered correct and binding on the Borrower
unless within five (5) Business Days after receipt of any
notice by the Agent or any of the Banks of such outstanding
amount, the Agent or such Bank shall notify the Borrower to
the contrary.
4.5. INABILITY TO DETERMINE EURODOLLAR RATE. In the
event, prior to the commencement of any Interest Period
relating to any Eurodollar Rate Loan, the Agent shall
determine that adequate and reasonable methods do not exist
for ascertaining the Eurodollar Rate that would otherwise
determine the rate of interest to be applicable to any
Eurodollar Rate Loan during any Interest Period, the Agent
shall forthwith give notice of such determination (which
shall be conclusive and binding on the Borrower and the
Banks) to the Borrower and the Banks. In such event (i) any
Loan Request or Conversion Request with respect to
Eurodollar Rate Loans shall be automatically withdrawn and
shall be deemed a request for Base Rate Loans, (ii) each
Eurodollar Rate Loan will automatically, on the last day of
the then current Interest Period thereof, become a Base Rate
Loan, and (iii) the obligations of the Banks to make
Eurodollar Rate Loans shall be suspended until the Agent
determines that the circumstances giving rise to such
suspension no longer exist, whereupon the Agent shall so
notify the Borrower and the Banks.
4.6. ILLEGALITY. Notwithstanding any other provisions
herein, if any present or future law, regulation, treaty or
directive or in the interpretation or application thereof
shall make it unlawful for any Bank to make or maintain
Eurodollar Rate Loans, such Bank shall forthwith give notice
of such circumstances to the Borrower and the other Banks
and thereupon (i) the commitment of such Bank to make
Eurodollar Rate Loans or convert Loans of another Type to
Eurodollar Rate Loans shall forthwith be suspended and (ii)
such Bank's Revolving Credit Loans then outstanding as
Eurodollar Rate Loans, if any, shall be converted
<PAGE>
-27-
automatically to Base Rate Loans on the last day of each
Interest Period applicable to such Eurodollar Rate Loans or
within such earlier period as may be required by law. The
Borrower hereby agrees promptly to pay the Agent for the
account of such Bank, upon demand by such Bank, any
additional amounts necessary to compensate such Bank for any
costs incurred by such Bank in making any conversion in
accordance with this Section 5.6, including any interest or
fees payable by such Bank to lenders of funds obtained by it
in order to make or maintain its Eurodollar Loans hereunder.
4.7. ADDITIONAL COSTS, ETC. If any present or future
applicable law, which expression, as used herein, includes
statutes, rules and regulations thereunder and
interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged
with the administration or the interpretation thereof and
requests, directives, instructions and notices at any time
or from time to time hereafter made upon or otherwise issued
to any Bank or the Agent by any central bank or other
fiscal, monetary or other authority (whether or not having
the force of law), shall:
(a) subject any Bank or the Agent to any tax,
levy, impost, duty, charge, fee, deduction or
withholding of any nature with respect to this Credit
Agreement, the other Loan Documents, such Bank's
Commitment or the Loans (other than taxes based upon or
measured by the income or profits of such Bank or the
Agent), or
(b) materially change the basis of taxation
(except for changes in taxes on income or profits) of
payments to any Bank of the principal of or the
interest on any Loans or any other amounts payable to
any Bank or the Agent under this Credit Agreement or
the other Loan Documents, or
(c) impose or increase or render applicable
(other than to the extent specifically provided for
elsewhere in this Credit Agreement) any special
deposit, reserve, assessment, liquidity, capital
adequacy or other similar requirements (whether or not
having the force of law) against assets held by, or
deposits in or for the account of, or loans by, or
commitments of an office of any Bank, or
(d) impose on any Bank or the Agent any other
conditions or requirements with respect to this Credit
Agreement, the other Loan Documents, the Loans, such
Bank's Commitment, or any class of loans or commitments
of which any of the Loans or such Bank's Commitment
forms a part, and the result of any of the foregoing is
<PAGE>
-28-
(i) to increase the cost to any Bank of
making, funding, issuing, renewing, extending or
maintaining any of the Loans or such Bank's
Commitment, or
(ii) to reduce the amount of principal,
interest or other amount payable to such Bank or
the Agent hereunder on account of such Bank's
Commitment or any of the Loans, or
(iii) to require such Bank or the Agent to
make any payment or to forego any interest or
other sum payable hereunder, the amount of which
payment or foregone interest or other sum is
calculated by reference to the gross amount of any
sum receivable or deemed received by such Bank or
the Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, upon demand
made by such Bank or (as the case may be) the Agent at any
time and from time to time and as often as the occasion
therefor may arise, pay to such Bank or the Agent such
additional amounts as will be sufficient to compensate such
Bank or the Agent for such additional cost, reduction,
payment or foregone interest or other sum.
4.8. CAPITAL ADEQUACY. If after the date hereof any
Bank or the Agent determines that (i) the adoption of or
change in any law, governmental rule, regulation, policy,
guideline or directive (whether or not having the force of
law) regarding capital requirements for banks or bank
holding companies or any change in the interpretation or
application thereof by a court or governmental authority
with appropriate jurisdiction, or (ii) compliance by such
Bank or the Agent or any corporation controlling such Bank
or the Agent with any law, governmental rule, regulation,
policy, guideline or directive (whether or not having the
force of law) of any such entity regarding capital adequacy,
has the effect of reducing the return on such Bank's or the
Agent's commitment with respect to any Loans to a level
below that which such Bank or the Agent could have achieved
but for such adoption, change or compliance (taking into
consideration such Bank's on the Agent's then existing
policies with respect to capital adequacy and assuming full
utilization of such entity's capital) by any amount deemed
by such Bank or (as the case may be) the Agent to be
material, then such Bank or the Agent may notify the
Borrower of such fact. To the extent that the amount of
such reduction in the return on capital is not reflected in
the Base Rate, the Borrower agrees to pay such Bank or (as
<PAGE>
-29-
the case may be) the Agent for the amount of such reduction
in the return on capital as and when such reduction is
determined upon presentation by such Bank or (as the case
may be) the Agent of a certificate in accordance with
Section 4.9 hereof. Each Bank shall allocate such cost
increases among its customers in good faith and on an
equitable basis.
4.9. CERTIFICATE. A certificate setting forth any
additional amounts payable pursuant to Section 4.7 or 4.8
and a brief explanation of such amounts which are due,
submitted by any Bank or the Agent to the Borrower, shall be
conclusive, absent manifest error, that such amounts are due
and owing.
4.10. INDEMNITY. The Borrower agrees to indemnify
each Bank and to hold each Bank harmless from and against
any loss, cost or expense (including loss of anticipated
profits) that such Bank may sustain or incur as a
consequence of (i) default by the Borrower in payment of the
principal amount of or any interest on any Eurodollar Rate
Loans as and when due and payable, including any such loss
or expense arising from interest or fees payable by such
Bank to lenders of funds obtained by it in order to maintain
its Eurodollar Rate Loans, (ii) default by the Borrower in
making a borrowing after the Borrower has given (or is
deemed to have given) a Loan Request or a Conversion Request
relating thereto in accordance with Section 2.6 or Section
2.7 or (iii) the making of any payment of a Eurodollar Rate
Loan or the making of any conversion of any such Loan to a
Base Rate Loan on a day that is not the last day of the
applicable Interest Period with respect thereto, including
interest or fees payable by such Bank to lenders of funds
obtained by it in order to maintain any such Loans.
4.11. OVERDUE AMOUNTS. Overdue principal and (to the
extent permitted by applicable law) interest on the Loans
and all other overdue amounts payable hereunder or under any
of the other Loan Documents shall bear interest compounded
monthly and payable on demand at a rate per annum equal to
two percent (2%) above the Base Rate until such amount shall
be paid in full (after as well as before judgment).
5. SECURITY AND GUARANTIES.
5.1. SECURITY OF BORROWER. The Obligations shall be
secured by a perfected first priority security interest
(subject only to Permitted Liens entitled to priority under
applicable law) in all of the assets of the Borrower,
whether now owned or hereafter acquired, and a pledge of and
perfected first priority lien on all of the issued and
outstanding shares of each of the Borrower's Subsidiaries
(including Funding but excluding Credident) pursuant to the
terms of the Security Documents to which the Borrower is a
party.
<PAGE>
-30-
5.2. GUARANTIES AND SECURITY OF SUBSIDIARIES. The
Obligations shall also be guaranteed pursuant to the terms
of the Guaranty. The obligations of the Borrower's
Subsidiaries under the Guaranty shall be in turn secured by
a perfected first priority security interest (subject only
to Permitted Liens entitled to priority under applicable
law) in all of the assets of each such Subsidiary, whether
now owned or hereafter acquired, pursuant to the terms of
the Security Documents to which such Subsidiary is a party.
6. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Banks and
the Agent as follows:
6.1. CORPORATE AUTHORITY.
6.1.1. INCORPORATION; GOOD STANDING. Each of the
Borrower and its Subsidiaries (other than Credident)
(i) is a corporation duly organized, validly existing
and in good standing under the laws of its state of
incorporation, (ii) has all requisite corporate power
to own its property and conduct its business as now
conducted and as presently contemplated, and (iii) is
in good standing as a foreign corporation and is duly
authorized to do business in each jurisdiction where
such qualification is necessary except where a failure
to be so qualified would not have a materially adverse
effect on the business, assets or financial condition
of the Borrower or its Subsidiaries taken as a whole.
6.1.2. Authorization. The execution, delivery
and performance of this Credit Agreement and the other
Loan Documents to which the Borrower or any of its
Subsidiaries is or is to become a party and the
transactions contemplated hereby and thereby (i) are
within the corporate authority of such Person, (ii)
have been duly authorized by all necessary corporate
proceedings, (iii) do not conflict with or result in
any breach or contravention of any provision of law,
statute, rule or regulation to which the Borrower or
any of its Subsidiaries is subject or any judgment,
order, writ, injunction, license or permit applicable
to the Borrower or any of its Subsidiaries and (iv) do
not conflict with any provision of the corporate
charter or bylaws of, or any agreement or other
instrument binding upon, the Borrower or any of its
Subsidiaries.
6.1.3. ENFORCEABILITY. The execution and
delivery of this Credit Agreement and the other Loan
Documents to which the Borrower or any of its
Subsidiaries is or is to become a party will
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result in valid and legally binding obligations of such Person enforceable
against it in accordance with the respective terms and provisions hereof
and thereof, except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally
the enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor
may be brought.
6.2. GOVERNMENTAL APPROVALS. The execution, delivery and performance by
the Borrower and any of its Subsidiaries of this Credit Agreement and the other
Loan Documents to which the Borrower or any of its Subsidiaries is or is to
become a party and the transactions contemplated hereby and thereby do not
require the approval or consent of, or filing with, any governmental agency or
authority other than those already obtained except to the extent financing
statements are required to be filed to perfect the security interest granted
pursuant to the Security Documents.
6.3. TITLE TO PROPERTIES; LEASES. Except as indicated on SCHEDULE 6.3
hereto, the Borrower and its Subsidiaries own all of the assets reflected in
the consolidated balance sheet of the Borrower and its Subsidiaries as at the
Balance Sheet Date or acquired since that date (except property and assets sold
or otherwise disposed of in the ordinary course of business since that date),
subject to no rights of others, including any mortgages, leases, conditional
sales agreements, title retention agreements, liens or other encumbrances
except Permitted Liens.
6.4. FINANCIAL STATEMENTS AND PROJECTIONS.
6.4.1. FINANCIAL STATEMENTS. There has been furnished to the
Agent a consolidated balance sheet of the Borrower and its Subsidiaries
as at the Balance Sheet Date, and a consolidated statement of income for
the fiscal year then ended, certified by the Borrower's independent
certified public accountants. Such balance sheet and statement of income
have been prepared in accordance with generally accepted accounting
principles and fairly present the financial condition of the Borrower as
at the close of business on the date thereof and the results of operations
for the fiscal year then ended. Other than as set forth on SCHEDULE 6.4.1,
there are no contingent liabilities of the Borrower or any of its
Subsidiaries as of such date involving material amounts and of a nature
customarily reflected on a balance sheet in accordance with generally
accepted accounting principles consistently applied, known to the officers
of
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the Borrower not disclosed in said balance sheet and the related notes
thereto.
6.4.2. PROJECTIONS. The projections of the annual operating
budgets of the Borrower and its Subsidiaries (other than Credident) on a
consolidated basis, balance sheets and cash flow statements for the 1994
and 1995 fiscal years, copies of which have been delivered to each Bank,
disclose all assumptions made with respect to general economic, financial
and market conditions used in formulating such projections. To the
knowledge of the Borrower or any of its Subsidiaries, no facts exist that
(individually or in the aggregate) would result in any material change in
any of such projections. The projections are based upon reasonable
estimates and assumptions, have been prepared on the basis of the
assumptions stated therein and reflect the reasonable estimates of the
Borrower and its Subsidiaries of the results of operations and other
information projected therein.
6.5. NO MATERIAL ADVERSE CHANGES, ETC. Since the Balance Sheet Date there
has occurred no materially adverse change in the financial condition or business
of the Borrower and its Subsidiaries as shown on or reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries as at the
Balance Sheet Date, or the consolidated statement of income for the fiscal year
then ended, other than changes in the ordinary course of business that have not
had any materially adverse effect in the aggregate on the business or financial
condition of the Borrower and its Subsidiaries. Since the Balance Sheet Date,
the Borrower has not made any Distribution.
6.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. Each of the Borrower and its
Subsidiaries possesses all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now conducted without known
conflict with any rights of others.
6.7. LITIGATION. Other than as set forth on SCHEDULE 6.7, there are no
actions, suits, proceedings or investigations of any kind pending, or to the
knowledge of the Borrower, threatened against the Borrower or any of its
Subsidiaries before any court, tribunal or administrative agency or board that,
if adversely determined, might, either in any case or in the aggregate,
materially adversely affect the properties, assets, financial condition or
business of the Borrower and its Subsidiaries, taken as a whole, or materially
impair the right of the Borrower and its Subsidiaries,
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considered as a whole, to carry on business substantially as now conducted by
them, or result in any substantial liability not adequately covered by
insurance, or for which adequate reserves are not maintained on the consolidated
balance sheet of the Borrower, or which question the validity of this Credit
Agreement or any of the other Loan Documents, or any action taken or to be
takenpursuant hereto or thereto. For purpose of this Section 6.7, any
counterclaim by a Customer in response to a collection action shall not be
deemed to be material unless such counterclaim is reasonably likely to result in
an uninsured liability in excess of $500,000.
6.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower nor any
of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected in the future to have a materially adverse effect on the business,
assets or financial condition of the Borrower and its Subsidiaries, taken as a
whole. Neither the Borrower nor its Subsidiaries is a party to any contract or
agreement that has or is expected, in the judgment of the Borrower's officers,
to have any materially adverse effect on the business of the Borrower and its
Subsidiaries, taken as a whole.
6.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. Neither the Borrower
nor any of its Subsidiaries is in violation of any provision of its charter
documents, bylaws, or any agreement or instrument to which it may be subject or
by which it or any of its properties may be bound or any decree, order,
judgment, statute, license, rule or regulation, in any of the foregoing cases in
a manner that could materially and adversely affect the financial condition,
properties or business of the Borrower or any of its Subsidiaries.
6.10. TAX STATUS. The Borrower and its Subsidiaries (i) have made or
filed (or timely filed an extension to file) all federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to
which any of them is subject or an extension to file has been timely filed, (ii)
have paid all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and by appropriate proceedings and (iii) have set
aside on their books provisions reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Borrower know of no basis for any such claim.
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6.11. NO EVENT OF DEFAULT. No Default or Event of Default has occurred
and is continuing.
6.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. Neither the Borrower
nor any of its Subsidiaries is a "holding company", or a "subsidiary company" of
a "holding company", or an affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it an
"investment company", or an "affiliated company" or a "principal underwriter" of
an "investment company", as such terms are defined in the Investment Company Act
of 1940.
6.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to
Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry, or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
in, any assets or property of the Borrower or any of its Subsidiaries or rights
thereunder.
6.14. PERFECTION OF SECURITY INTEREST. All filings, assignments,
pledges and deposits of documents or instruments have been made and all other
actions have been taken that are necessary or advisable, under applicable law,
to establish and perfect the Agent's security interest in the Collateral. The
Collateral and the Agent's rights with respect to the Collateral are not subject
to any setoff, claims, withholdings or other defenses other than Permitted
Liens. The Borrower and its Subsidiaries (other than Funding) are the owners of
the Collateral free from any lien, security interest, encumbrance and any other
claim or demand, except for Permitted Liens.
6.15. CERTAIN TRANSACTIONS. Except for arm's length transactions
pursuant to which the Borrower or any of its Subsidiaries makes payments in the
ordinary course of business upon terms no less favorable than the Borrower or
such Subsidiary could obtain from third parties, none of the officers,
directors, or employees of the Borrower or any of its Subsidiaries is presently
a party to any transaction with the Borrower or any of its Subsidiaries (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personalproperty to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Borrower, any corporation, partnership, trust or other entity
in which any
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officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
6.16.1. EMPLOYEE BENEFIT PLANS.
6.16.1. IN GENERAL. Each Employee Benefit Plan has been maintained
and operated in compliance in all material respects with the provisions of
ERISA and, to the extent applicable, the Code, including but not limited to
the provisions thereunder respecting prohibited transactions. Neither the
Borrower nor any ERISA Affiliate maintains or contributes to any Guaranteed
Pension Plan.
6.16.2. TERMINABILITY OF WELFARE PLANS. Under each Employee Benefit
Plan which is an employee welfare benefit plan within the meaning of
Section 3(1) or Section 3(2)(B) of ERISA, no benefits are due unless the
event giving rise to the benefit entitlement occurs prior to plan
termination (except as required by Title I, Part 6 of ERISA). The Borrower
or an ERISA Affiliate, as appropriate, may terminate each such Plan at any
time (or at any time subsequent to the expiration of any applicable
bargaining agreement) in the discretion of the Borrower or such ERISA
Affiliate without liability to any Person.
6.16.3. GUARANTEED PENSION PLANS. Neither the Borrower or any ERISA
Affiliate maintains or contributes to any Guaranteed Pension Plan.
6.16.4. MULTIEMPLOYER PLANS. Neither the Borrower nor any ERISA
Affiliate has incurred any material liability (including secondary
liability) to any Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan under Section 4201 of ERISA or as a
result of a sale of assets described in Section 4204 of ERISA. Neither the
Borrower nor any ERISA Affiliate has been notified that any Multiemployer
Plan is in reorganization or insolvent under and within the meaning of
Section 4241 or Section 4245 of ERISA or that any Multiemployer Plan
intends to terminate or has been terminated under Section 4041A of ERISA.
6.17. REGULATIONS U AND X. The proceeds of the Loans shall be used for
working capital purposes. No portion of any Loan is to be used for the purpose
of purchasing or carrying any "margin security" or "margin stock" as such terms
are used in Regulations U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. Parts 221 and 224.
<PAGE>
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6.18. ENVIRONMENTAL COMPLIANCE. The Borrower has taken all necessary
steps to investigate the past and present condition and usage of the Real Estate
and the operations conducted thereon and, based upon such diligent
investigation, has determined that:
(a) none of the Borrower or any of its Subsidiaries is in violation,
or alleged violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without
limitation, those arising under the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the
Federal Clean Air Act, the Toxic Substances Control Act, or any state or
local statute, regulation, ordinance, order or decree relating to health,
safety or the environment (hereinafter "Environmental Laws"), which
violation would have a material adverse effect on the environment or the
business, assets or financial condition of the Borrower or any of its
Subsidiaries;
(b) neither the Borrower nor any of its Subsidiaries has received
notice from any third party including, without limitation: any federal,
state or local governmental authority, (i) that any one of them has been
identified by the United States Environmental Protection Agency ("EPA") as
a potentially responsible party under CERCLA with respect to a site listed
on the National Priorities List, 40 C.F.R. Part 300 Appendix B; (ii) that
any hazardous waste, as defined by 42 U.S.C. Section 6903(5), any
hazardous substances as defined by 42 U.S.C. Section 9601(14), any
pollutant or contaminant as defined by 42 U.S.C. Section 9601(33) and any
toxic substances, oil or hazardous materials or other chemicals or
substances regulated by any Environmental Laws ("Hazardous Substances")
which any one of them has generated, transported or disposed of has been
found at any site at which a federal, state or local agency or other third
party has conducted or has ordered that the Borrower or any of its
Subsidiaries conduct a remedial investigation, removal or other response
action pursuant to any Environmental Law; or (iii) that it is or shall be
a named party to any claim, action, cause of action, complaint, or legal
or administrative proceeding (in each case, contingent or otherwise)
arising out of any third party's incurrence of costs, expenses, losses or
damages of any kind whatsoever in connection with the release of
Hazardous Substances;
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(c) except as set forth on SCHEDULE 6.18 attached hereto: (i) no
portion of the Real Estate has been used for the handling, processing,
storage or disposal of Hazardous Substances except in accordance with
applicable Environmental Laws; and no underground tank or other underground
storage receptacle for Hazardous Substances is located on any portion of
the Real Estate; (ii) in the course of any activities conducted by the
Borrower or any of its Subsidiaries, no Hazardous Substances have been
generated or are being used on the Real Estate except in accordance with
applicable Environmental Laws; (iii) there have been no releases (i.e. any
past or present releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, disposing or dumping) or
threatened releases of Hazardous Substances on, upon, into or from the
properties of the Borrower or its Subsidiaries, which releases would have a
material adverse effect on the value of any of the Real Estate or adjacent
properties or the environment; (iv) to the best of the Borrower's
knowledge, there have been no releases on, upon, from or into any real
property in the vicinity of any of the Real Estate which, through soil or
groundwater contamination, may have come to be located on, and which would
have a material adverse effect on the value of, the Real Estate; and (v) in
addition, any Hazardous Substances that have been generated on any of the
Real Estate have been transported offsite only by carriers having an
identification number issued by the EPA, treated or disposed of only by
treatment or disposal facilities maintaining valid permits as required
under applicable Environmental Laws, which transporters and facilities have
been and are, to the best of the Borrower's knowledge, operating in
compliance with such permits and applicable Environmental Laws; and
(d) None of the Borrower and its Subsidiaries, or any of the Real
Estate is subject to any applicable environmental law requiring the
performance of Hazardous Substances site assessments, or the removal or
remediation of Hazardous Substances, or the giving of notice to any
governmental agency or the recording or delivery to other Persons of an
environmental disclosure document or statement by virtue of the
transactions set forth herein and contemplated hereby or to the
effectiveness of any other transactions contemplated hereby.
6.19. SUBSIDIARIES, ETC. Funding, Credident, and ACFC are the only
Subsidiaries of the Borrower. Except as set forth on SCHEDULE 6.19
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hereto, neither the Borrower nor any Subsidiary of the Borrower is engaged in
any joint venture or partnership with any other person.
6.20. BANK ACCOUNTS. SCHEDULE 6.20 sets forth the account numbers and
location of all bank accounts of the Borrower or any of its Subsidiaries (other
than Credident); PROVIDED, HOWEVER, that the Borrower, ACFC and Funding may
maintain bank accounts not listed on SCHEDULE 6.20 so long as the aggregate
amount contained in such accounts does not exceed $100,000.
SECTION 6.21. ELIGIBLE ACCOUNTS RECEIVABLE, EQUIPMENT AND CONTRACTS. Each
Account Receivable of the Borrower included in Eligible Accounts Receivable
meets the following criteria:
(a) The Borrower is the sole legal owner of the Accounts Receivable,
the Contracts and the Equipment (or will have a first priority security
interest in the Equipment), free and clear of all liens other than
Permitted Liens.
(b) Each of the Contracts is a legal, valid and binding full recourse
obligation of the Obligor thereunder, enforceable by the Borrower and its
assigns against such Obligor in accordance with the terms thereof, except
as such enforcement may be limited by bankruptcy, insolvency,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally and by any and all applicable requirements of
any federal, state or local law including, without limitation, usury,
truth-in-lending and equal credit opportunity laws applicable to each
Contract have been complied with.
(c) The Borrower and, to the best of the Borrower's knowledge, the
other parties to such contract, had all requisite authority and capacity to
enter into such Contract; and no Obligor has been released, in whole or in
part, from any of its obligations in respect of any Contract.
(d) Except as enforcement may be limited by bankruptcy, insolvency,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally and by equitable principles, the obligation of
each Obligor to pay all amounts owed under each of the Contracts to which
such Obligor is a party throughout the term thereof is and will be
unconditional, without any right of set-off or counterclaim or any defense
by such Obligor, and without regard to any event affecting the Equipment,
if any, subject to such Contract, any claim of such Obligor against the
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Borrower or any change in circumstance of such Obligor or any other
circumstance whatsoever.
(e) There will be no facts or circumstances existing as of the
relevant time which give rise to any right of rescission, offset,
counterclaim or defense, including the defense of usury, to the obligations
of any Obligor, including the obligation of such Obligor to pay all amounts
due thereunder, with respect to any Contract to which such Obligor is a
party; and neither the operation of any of the terms of any Contract nor
the exercise of any right thereunder will render such Contract nor the
exercise of any right thereunder will render such Contract unenforceable in
whole or in part or subject to any right of rescission, offset,
counterclaim or defense, including the defense of usury (other than
limitations on enforcement as a result of bankruptcy, insolvency,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally and by general equitable principles), and no
such right of rescission, offset, counterclaim or defense has been asserted
with respect thereto.
(f) No Contract, and no provision of any Contract, has been amended,
terminated, altered, waived or modified since inception in any respect that
is adverse to the interests of the Borrower except for reissues that are
consistent with Borrower's past practices, no Contract has been satisfied,
cancelled or subordinated, in whole or in part, or rescinded, nor has any
instrument been executed that would effect any such satisfaction,
cancellation, subordination or rescission, except for Contracts that have
been prepaid in full.
(g) No Obligor has been released by the Borrower from the terms of
the related Contract.
(h) Each Contract was originated or acquired in the Borrower's
ordinary course of business, in accordance with the Borrower's Credit
Policy. Each Contract is of a type customarily in use in the leasing or
financing business and has not been found, in the Agent's reasonable
judgment, to be unacceptable.
(i) Each Obligor is a resident of the United States of America and is
not the Borrower or an Affiliate of the Borrower.
(j) Each Lease requires the Obligor to assume all risk of loss or
malfunction of the related Equipment. Each Lease and Conditional Sale
Agreement requires the Obligor to pay all sales,
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use, property, excise and other similar taxes imposed on or with respect to
the related Equipment and permits the rights with respect to such Contract,
and all collateral related thereto, to be assigned by the Borrower without
the consent of any Person. No Contract permits early termination or
prepayment, unless the amount required to be paid by or on behalf of
Obligor in respect thereof is equal to or greater than the applicable
termination amount. No Contract provides for the substitution, exchange or
addition of any Equipment subject thereto which would result in any
reduction of the amount of payments or change the timing of payments due
under such Contract.
(k) There are no proceedings or investigations pending against the
Borrower or, to the best of the Borrower's knowledge, threatened or
otherwise pending before any court, regulatory body, administrative agency
or other tribunal or government instrumentality (A) asserting the
invalidity or unenforceability of any Contract, (B) seeking to prevent
payment and performance of any Contract, or (C) seeking any determination
or ruling that might, in the aggregate, adversely and materially affect the
validity or enforceability of any Contract.
(l) The Borrower has duly performed all material obligations on its
part required to be performed by it under or in connection with each
Contract, and has done nothing to materially impair its rights thereunder.
(m) Each Contract is either an "account" (as defined in Section 9-106
of the UCC) or "chattel paper" (as defined in Section 9-105 of the UCC) or
an "instrument" (as defined in Section 9-105 of the UCC). If the Contract
is chattel paper, then (i) there is only one counterpart of the Contract
that constitutes "chattel paper" for purposes of Section 9-105(b) and 9-308
of the UCC and (ii) either the Borrower or its Subsidiaries (other than
Funding or Credident) has a first priority security interest in the
Equipment that is the subject of the Contract.
(n) Each Lease requires the related Obligor to maintain the related
Equipment, if any, in good and workable order. Each Lease and Conditional
Sale Agreement requires the related Obligor to obtain and maintain physical
damage insurance on the Equipment subject thereto and to name the lessor or
lender thereunder as loss payee and an additional insured with respect
thereto. The Agent is named as loss payee under all of the
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Borrower's or any of its Subsidiaries' (other than Funding and Credident)
physical damage insurance on the Equipment, other than insurance of the
Borrower maintained under Borrower's lessee insurance program pursuant to
equipment leases and conditional sales agreements with its lessees. To the
best of the Borrower's knowledge, the Equipment was properly delivered to
the Obligor in good repair, without defects and in satisfactory order and
the related Equipment, if any, is in good operating condition and repair.
To the best of the Borrower's knowledge, the related Equipment was accepted
by the Obligor after reasonable opportunity to inspect and test the same
and no Obligor has informed the Borrower and its Subsidiaries (other than
Funding) of any defects therein.
(o) No Contract constitutes a "consumer lease" under the UCC.
(p) The Borrower and its Subsidiaries (other than Funding and
Credident) have marked their computer records, to reflect the interest
granted to the Agent hereunder.
6.22 VEHICLE LEASES. SCHEDULE 6.22 sets forth all Vehicle Leases.
7. AFFIRMATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans:
7.1. PUNCTUAL PAYMENT. The Borrower will duly and punctually pay or cause
to be paid the principal and interest on the Loans and the commitment fees and
Agent's fee provided for in this Credit Agreement, all in accordance with the
terms of this Credit Agreement and the Notes.
7.2. MAINTENANCE OF OFFICE. The Borrower will, and will cause each of its
Subsidiaries (other than Credident) to, maintain its chief executive office in
Boston, Massachusetts, or at such other place in the United States of America as
the Borrower shall designate upon written notice to the Agent, where notices,
presentations and demands to or upon the Borrower and its Subsidiaries in
respect of the Loan Documents may be given or made.
7.3. RECORDS AND ACCOUNTS. The Borrower will (i) keep, and cause each of
its Subsidiaries to keep, true and accurate records and books of account in
which full, true and correct entries will be made in accordance with generally
accepted accounting principles and (ii) maintain adequate accounts and reserves
for all taxes (including income
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taxes), depreciation, depletion, obsolescence and amortization of its properties
and the properties of its Subsidiaries, contingencies, and other reserves in
accordance with generally accepted accounting principles.
7.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrower
will deliver to each of the Banks:
(a) as soon as practicable, but in any event not later than one
hundred (100) days after the end of each fiscal year of the Borrower, the
consolidated balance sheet of the Borrower and its Subsidiaries and the
consolidating balance sheet of the Borrower and its Subsidiaries, each as
at the end of such year, and the related consolidated statement of income
and consolidated statement of cash flow and consolidating statement of
income and consolidating statement of cash flow for such year, each setting
forth in comparative form the figures for the previous fiscal year and all
such consolidated and consolidating statements to be in reasonable detail,
prepared in accordance with generally accepted accounting principles, the
consolidated statements certified without qualification by Coopers &
Lybrand or by other independent certified public accountants satisfactory
to the Agent, together with a written statement from such accountants to
the effect that they have read a copy of this Credit Agreement, and that,
in making the examination necessary to said certification, they have
obtained no knowledge of any Default or Event of Default, or, if such
accountants shall have obtained knowledge of any then existing Default or
Event of Default they shall disclose in such statement any such Default or
Event of Default; PROVIDED that such accountants shall not be liable to the
Banks for failure to obtain knowledge of any Default or Event of Default;
(b) as soon as practicable, but in any event not later than
forty-eight (48) days after the end of each of the first three (3) fiscal
quarters of the fiscal year of the Borrower, copies of the unaudited
consolidated balance sheet of the Borrower and its Subsidiaries and the
unaudited consolidating balance sheet of the Borrower and its Subsidiaries,
each as at the end of such quarter, and the related consolidated statement
of income and consolidated statement of cash flow and consolidating
statement of income and consolidating statement of cash flow for the
portion of the Borrower's fiscal year then elapsed, all in reasonable
detail and prepared in accordance with generally accepted accounting
principles, together with a certification by the principal financial or
accounting officer of the Borrower that the information contained in such
financial
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statements fairly presents the financial position of the Borrower and its
Subsidiaries on the date thereof (subject to year-end adjustments);
(c) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement certified by the
principal financial or accounting officer of the Borrower in substantially
the form of EXHIBIT E hereto and setting forth in reasonable detail
computations evidencing compliance with the applicable covenants contained
in Section 9 and (if applicable) reconciliations to reflect changes in
generally accepted accounting principles since the Balance Sheet Date;
(d) contemporaneously with the filing or mailing thereof, copies of
all material of a financial nature filed with the Securities and Exchange
Commission or sent to the stockholders of the Borrower;
(e) within fifteen (15) days after the end of each calendar month or
at such earlier time as the Agent may reasonably request, a Borrowing Base
Report setting forth the Borrowing Base as at the end of such calendar
month;
(f) within fifteen (15) days after the end of each calendar month, an
Accounts Receivable aging report;
(g) from time to time upon request of the Agent, projections of the
Borrower and its Subsidiaries updating those projections delivered to the
Banks and referred to in Section 6.4.2 or, if applicable, updating any
later such projections delivered in response to a request pursuant to this
Section 7.4(g);
(h) from time to time copies of all reports delivered under the
Funding Indenture and such other financial data and information (including
accountants' management letters) as the Agent or any Bank may reasonably
request; and
(i) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, an updated SCHEDULE 6.22
setting forth all Vehicle Leases.
7.5. NOTICES.
7.5.1. DEFAULTS. The Borrower will promptly notify the Agent and
each of the Banks in writing of the occurrence of any
<PAGE>
-44-
Default or Event of Default. If any Person shall give any notice or take
any other action in respect of a claimed default (whether or not
constituting an Event of Default) under this Credit Agreement or in respect
of a claimed default under any other note, evidence of indebtedness,
indenture or other obligation to which or with respect to which the
Borrower or any of its Subsidiaries is a party or obligor, whether as
principal or surety, if such claimed default is material to the business or
the financial condition of the Borrower, the Borrower shall forthwith give
written notice thereof to each of the Banks, describing the notice or
action and the nature of the claimed default.
7.5.2. ENVIRONMENTAL EVENTS. The Borrower will promptly give notice
to the Agent (i) of any violation of any Environmental Law that the
Borrower or any of its Subsidiaries reports in writing or is reportable by
such Person in writing (or for which any written report supplemental to any
oral report is made) to any federal, state or local environmental agency
and (ii) upon becoming aware thereof, of any inquiry, proceeding,
investigation, or other action, including a notice from any agency of
potential environmental liability, or any federal, state or local
environmental agency or board, that has the potential to materially affect
the assets, liabilities, financial conditions or operations of the Borrower
or any of its Subsidiaries, or the Agent's security interests pursuant to
the Security Documents.
7.5.3. NOTIFICATION OF CLAIMS AGAINST COLLATERAL. The Borrower will,
immediately upon becoming aware thereof, notify the Agent in writing of any
setoff, claims, withholdings or other defenses in excess of $500,000 in the
aggregate to which any of the Collateral, or the Agent's rights with
respect to the Collateral, are subject.
7.5.4. NOTICE OF LITIGATION AND JUDGMENTS. The Borrower will, and
will cause each of its Subsidiaries to, give notice to the Agent in writing
within fifteen (15) days of becoming aware of any litigation or proceedings
threatened in writing or any pending litigation and proceedings affecting
the Borrower or any of its Subsidiaries or to which the Borrower or any of
its Subsidiaries is or becomes a party involving an uninsured claim against
the Borrower or any of its Subsidiaries that could reasonably be expected
to have a materially adverse effect on the Borrower or any of its
Subsidiaries and stating the nature and status of such litigation or
proceedings. The Borrower will, and will cause each of
<PAGE>
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its Subsidiaries to, give notice to the Agent, in writing, in form and
detail satisfactory to the Agent, within ten (10) days of any judgment not
covered by insurance, final or otherwise, against the Borrower or any of
its Subsidiaries in an amount in excess of $500,000.
7.6. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrower will do
or cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence, rights and franchises and those of its
Subsidiaries. It (i) will cause all of its properties and those of its
Subsidiaries used or useful in the conduct of its business or the business of
its Subsidiaries to be maintained and kept in good condition, repair and working
order, reasonable wear and tear excepted, and supplied with all necessary
equipment, (ii) will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Borrower may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times, and (iii)
will, and will cause each of its Subsidiaries to, continue to engage primarily
in the businesses now conducted by them and in related businesses; PROVIDED that
nothing in this Section 7.6 shall prevent the Borrower from discontinuing the
operation and maintenance of any of its properties or those of its Subsidiaries
if such discontinuance is, in the judgment of the Borrower, desirable in the
conduct of its or their business and that do not in the aggregate materially
adversely affect the business of the Borrower and its Subsidiaries on a
consolidated basis.
7.6. INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, maintain with financially sound and reputable insurers
insurance with respect to its properties and business against such casualties
and contingencies as shall be in accordance with the general practices of
businesses engaged in similar activities in similar geographic areas; PROVIDED,
HOWEVER, that the Borrower shall not be required to maintain such insurance with
respect to Equipment which it leases or transfers to third parties pursuant to
an equipment lease or a conditional sales agreement to the extent that the
lessee thereon maintains such insurance pursuant to the terms of its equipment
lease or conditional sales agreement with the Borrower. Such insurance shall be
in amounts, containing such terms, in such forms and for such periods as may be
reasonable and prudent and in accordance with the terms of Section 8.1 of the
Security Agreements.
7.8. TAXES. The Borrower will, and will cause each of its Subsidiaries to,
duly pay and discharge, or cause to be paid and
<PAGE>
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discharged, before the same shall become overdue, all taxes, assessments and
other governmental charges (other than taxes, assessments and other governmental
charges imposed by foreign jurisdictions that in the aggregate are not material
to the business or assets of the Borrower on an individual basis or of the
Borrower and its Subsidiaries on a consolidated basis) imposed upon it and its
real properties, sales and activities, or any part thereof, or upon the income
or profits therefrom, as well as all claims for labor, materials, or supplies
that if unpaid might by law become a lien or charge upon any of its property;
PROVIDED that any such tax, assessment, charge, levy or claim need not be paid
if the validity or amount thereof shall currently be contested in good faith by
appropriate proceedings and if the Borrower or such Subsidiary shall have set
aside on its books adequate reserves with respect thereto; and PROVIDED FURTHER
that the Borrower and each Subsidiary of the Borrower will pay all such taxes,
assessments, charges, levies or claims forthwith upon the commencement of
proceedings to foreclose any lien that may have attached as security therefor.
7.9. INSPECTION OF PROPERTIES AND BOOKS, ETC.
7.9.1. GENERAL. The Borrower shall permit the Banks, through the
Agent or any of the Banks' other designated representatives, to visit and
inspect any of the properties of the Borrower or any of its Subsidiaries to
examine the books of account of the Borrower and its Subsidiaries (and to
make copies thereof and extracts therefrom), and to discuss the affairs,
finances and accounts of the Borrower and its Subsidiaries with, and to be
advised as to the same by, its and their officers, all at such reasonable
times and intervals as the Agent or any Bank may reasonably request.
7.9.2. COLLATERAL REPORTS. No more frequently than once each calendar
quarter, or more frequently as determined by the Agent if an Event of
Default shall have occurred and be continuing, upon the request of the
Agent, the Borrower will obtain and deliver to the Agent a report of an
independent collateral auditor satisfactory to the Agent (which may be
affiliated with any of the Banks) with respect to the Accounts Receivable
included in the Borrowing Base, which report shall indicate whether or not
the information set forth in the Borrowing Base Report most recently
delivered is accurate and complete in all material respects based upon a
review by such auditors of the Accounts Receivable (including verification
with respect to the amount, aging, identity and credit of the respective
account debtors and the billing practices
<PAGE>
-47-
of the Borrower or its applicable Subsidiary) and inventory (including
verification as to the value, location and respective types). All such
collateral value reports shall be conducted and made at the expense of the
Borrower; PROVIDED, HOWEVER, that the liability of the Borrower for such
expenses shall be limited to $25,000 so long as no Event of Default has
occurred and is continuing.
7.9.3. COMMUNICATION WITH ACCOUNTANTS. The Borrower authorizes the
Agent and, if accompanied by the Agent, the Banks to communicate directly
with the Borrower's independent certified public accountants and authorizes
such accountants to disclose to the Agent and the Banks any and all
financial statements and other supporting financial documents and schedules
including copies of any management letter with respect to the business,
financial condition and other affairs of the Borrower or any of its
Subsidiaries, PROVIDED, HOWEVER, that a representative of Borrower shall be
entitled to be present at any meeting between or among the Agent, the Banks
and the Borrower's independent certified accountants. At the request of
the Agent, the Borrower shall deliver a letter addressed to such
accountants instructing them to comply with the provisions of this Section
7.9.4.
7.10. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND PERMITS. The Borrower
will, and will cause each of its Subsidiaries to, comply with (i) the applicable
laws and regulations wherever its business is conducted, including all
Environmental Laws, (ii) the provisions of its charter documents and by-laws,
(iii) all agreements and instruments by which it or any of its properties may be
bound and (iv) all applicable decrees, orders, and judgments; provided, however,
that a failure to do so shall not be deemed a Default or an Event of Default to
the extent that it would not be reasonably likely to have a material adverse
effect on the business or financial condition of the Borrower and its
Subsidiaries, taken as a whole. If at any time while any Loan or Note is
outstanding or either Bank has any obligation to make Loans hereunder, any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that the Borrower may fulfill any of its obligations hereunder, the Borrower
will immediately take or cause to be taken all reasonable steps within the power
of the Borrower to obtain such authorization, consent, approval, permit or
license and furnish the Banks with evidence thereof.
7.11. EMPLOYEE BENEFIT PLANS. The Borrower will (i) promptly upon request
of the Agent, furnish to the Agent a copy of the most recent
<PAGE>
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actuarial statement required to be submitted under Section 103(d) of ERISA and
Annual Report, Form 5500, with all required attachments, in respect of each
Guaranteed Pension Plan and (ii) promptly upon receipt or dispatch, furnish to
the Agent any notice, report or demand sent or received in respect of a
Guaranteed Pension Plan under Sections 302, 4041, 4042, 4043, 4063, 4065, 4066
and 4068 of ERISA, or in respect of a Multiemployer Plan, under Sections 4041A,
4202, 4219, 4242, or 4245 of ERISA.
7.12. USE OF PROCEEDS. The Borrower will use the proceeds of the Loans
solely for working capital purposes.
7.13. BANK ACCOUNTS. The Borrower will, and will cause each of its
Subsidiaries (other than Funding and Credident) to, together with the employees,
agents and other Persons acting on behalf of the Borrower or such Subsidiary, to
cause all payments constituting proceeds of Accounts Receivable or other
Collateral to be paid into a lockbox designated by the Agent and, in the event
any such proceeds are received, by any of them to receive and hold in trust for
the Agent and the Banks all payments constituting proceeds of Accounts
Receivable or other Collateral which come into their possession or under their
control and, immediately upon receipt thereof, deposit such payments in the form
received, with any appropriate endorsements, in one of the accounts designated
as a central depositary account on SCHEDULE 6.20.
7.14. CREDIT CRITERIA. The Borrower will, and will cause each of its
Subsidiaries (other than Funding and Credident) to furnish to the Agent a copy
of the most recent Credit Policy of the Borrower and its Subsidiaries (other
than Funding and Credident) and to promptly furnish to the Agent any amendments
to such Credit Policy.
7.15. FURTHER ASSURANCES. The Borrower will, and will cause each of its
Subsidiaries to, cooperate with the Banks and the Agent and execute such further
instruments and documents as the Banks or the Agent shall reasonably request to
carry out to their satisfaction the transactions contemplated by this Credit
Agreement and the other Loan Documents.
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER.
The Borrower covenants and agrees that, so long as any Loan or Note is
outstanding or any Bank has any obligation to make any Loans:
8.1. RESTRICTIONS ON INDEBTEDNESS. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume, guarantee
<PAGE>
-49-
or be or remain liable, contingently or otherwise, with respect to any
Indebtedness other than:
(a) Indebtedness to the Banks and the Agent arising under any of the
Loan Documents;
(b) current liabilities of the Borrower incurred in the ordinary
course of business not incurred through (i) the borrowing of money, or (ii)
the obtaining of credit except for credit on an open account basis
customarily extended and in fact extended in connection with normal
purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be made
in accordance with the provisions of Section 7.8;
(d) Indebtedness in respect of judgments or awards that have been in
force for less than the applicable period for taking an appeal so long as
execution is not levied thereunder or in respect of which the Borrower
shall at the time in good faith be prosecuting an appeal or proceedings for
review and in respect of which a stay of execution shall have been obtained
pending such appeal or review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary
course of business;
(f) Subordinated Debt;
(g) obligations under Capitalized Leases not exceeding $1,000,000 in
aggregate amount at any time outstanding;
(h) Indebtedness incurred in connection with the acquisition after
the date hereof of any real or personal property by the Borrower or any
Subsidiary of the Borrower, PROVIDED that the aggregate principal amount of
such Indebtedness of the Borrower and its Subsidiaries shall not exceed the
aggregate amount of $1,000,000 at any one time;
(i) Indebtedness existing on the date of this Credit Agreement and
listed and described on SCHEDULE 8.1 hereto; and
(j) Indebtedness (i) of Credident to the Borrower not in excess of
$250,000 in cash in the aggregate (not including Indebtedness
<PAGE>
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listed on SCHEDULE 8.1); or (ii) of Subsidiaries of the Borrower to the
Borrower so long as (a) such Subsidiary has made a guaranty in favor of the
Banks and the Agent pursuant to which such Subsidiary guaranties to the
Banks and the Agent the payment and performance of the Obligations in form
and substance satisfactory to the Banks and the Agent and (b) the
obligations of such Subsidiary (other than Funding) under such guaranty are
in turn secured by a perfected first priority security interest (subject
only to the Permitted Liens entitled to priority under applicable law) in
all the assets of such Subsidiary, whether now owned or hereafter acquired,
pursuant to the terms of the Security Documents to which such Subsidiary is
a party.
8.2. RESTRICTIONS ON LIENS. The Borrower will not, and will not permit any
of its Subsidiaries to, (i) create or incur or suffer to be created or incurred
or to exist any lien, encumbrance, mortgage, pledge, charge, restriction or
other security interest of any kind upon any of its property or assets of any
character (including the capital stock of Funding) whether now owned or
hereafter acquired, or upon the income or profits therefrom; (ii) transfer any
of such property or assets or the income or profits therefrom for the purpose of
subjecting the same to the payment of Indebtedness or performance of any other
obligation in priority to payment of its general creditors; (iii) acquire, or
agree or have an option to acquire, any property or assets upon conditional sale
or other title retention or purchase money security agreement, device or
arrangement; (iv) suffer to exist for a period of more than thirty (30) days
after the same shall have been incurred any Indebtedness or claim or demand
against it that if unpaid might by law or upon bankruptcy or insolvency, or
otherwise, be given any priority whatsoever over its general creditors; or (v)
sell, assign, pledge or otherwise transfer any accounts, contract rights,
general intangibles, chattel paper or instruments, with or without recourse;
PROVIDED that the Borrower and any Subsidiary of the Borrower may create or
incur or suffer to be created or incurred or to exist:
(a) liens in favor of the Borrower on all or part of the assets of
Subsidiaries of the Borrower securing Indebtedness owing by Subsidiaries of
the Borrower to the Borrower;
(b) liens to secure taxes, assessments and other government charges
in respect of obligations not overdue or liens on properties to secure
claims for labor, material or supplies in respect of obligations not
overdue;
<PAGE>
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(c) deposits or pledges made in connection with, or to secure payment
of, workmen's compensation, unemployment insurance, old age pensions or
other social security obligations;
(d) liens on properties in respect of judgments or awards, the
Indebtedness with respect to which is permitted by Section 8.1(d);
(e) liens of carriers, warehousemen, mechanics and materialmen, and
other like liens on properties, in existence less than 120 days from the
date of creation thereof in respect of obligations not overdue;
(f) encumbrances consisting of easements, rights of way, zoning
restrictions, restrictions on the use of real property and defects and
irregularities in the title thereto, landlord's or lessor's liens under
leases to which the Borrower or a Subsidiary of the Borrower is a party,
and other minor liens or encumbrances none of which in the opinion of the
Borrower interferes materially with the use of the property affected in the
ordinary conduct of the business of the Borrower and its Subsidiaries,
which defects do not individually or in the aggregate have a materially
adverse effect on the business of the Borrower individually or of the
Borrower and its Subsidiaries on a consolidated basis;
(g) presently outstanding liens listed on SCHEDULE 8.2 hereto;
(h) purchase money security interests in or purchase money mortgages
on real or personal property, incurred in connection with the acquisition
of such property, which security interests or mortgages cover only the real
or personal property so acquired; and
(i) liens in favor of the Agent for the benefit of the Banks and the
Agent under the Loan Documents.
8.3. RESTRICTIONS ON INVESTMENTS. The Borrower will not, and will not
permit any of its Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United States
of America that mature within one (1) year from the date of purchase by the
Borrower;
(b) demand deposits, certificates of deposit, bankers acceptances and
time deposits of United States banks having total assets in excess of
$1,000,000,000;
<PAGE>
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(c) (i) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States of
America or any state thereof that at the time of purchase have been rated
and the ratings for which are not less than "P 1" if rated by Moody's
Investors Services, Inc., and not less than "A 1" if rated by Standard and
Poor's (ii) securities commonly known as "short-term bank notes" issued by
any Bank denominated in Dollars which at the time of purchase have been
rated and the ratings for which are not less than "P 2" if rated by Moody's
Investors Services, Inc., and not less than "A 2" if rated by Standard and
Poor's Corporation;
(d) Investments existing on the date hereof and listed on
SCHEDULE 8.3 hereto;
(e) Investments with respect to Indebtedness permitted by Section
8.1(j) so long as such entities remain Subsidiaries of the Borrower;
(f) Investments consisting of the Guaranty or Investments by the
Borrower in Subsidiaries of the Borrower existing on the Closing Date;
(g) Investments consisting of promissory notes received as proceeds
of asset dispositions permitted by Section 8.5.2;
(h) Investments consisting of loans and advances to employees for
moving, entertainment, travel and other similar expenses in the ordinary
course of business not to exceed $250,000 in the aggregate at any time
outstanding; and
(i) Investments not otherwise permitted by this Section 8.3,
PROVIDED, THAT the aggregate amount of such Investments shall not exceed
$1,000,000.
PROVIDED, HOWEVER, that, with the exception of demand deposits referred to in
Section 8.3(b) and loans and advances referred to in Section 8.3(h), such
Investments will be considered Investments permitted by this Section 8.3 only if
all actions have been taken to the satisfaction of the Agent to provide to the
Agent, for the benefit of the Banks and the Agent, a first priority perfected
security interest in all of such Investments free of all encumbrances other than
Permitted Encumbrances.
8.4. DISTRIBUTIONS. The Borrower will not make any Distributions.
<PAGE>
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8.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
8.5.1. MERGERS AND ACQUISITIONS. The Borrower will not, and will not
permit any of its Subsidiaries to, become a party to any merger or
consolidation, or agree to or effect any asset acquisition or stock
acquisition (other than the acquisition of assets in the ordinary course of
business consistent with industry practices).
8.5.2. DISPOSITION OF ASSETS. The Borrower will not, and will not
permit any of its Subsidiaries to, become a party to or agree to or effect
any disposition of assets, other than the disposition of assets in the
ordinary course of business, consistent with industry practices, provided
however, that such dispostion of assets in the ordinary course of business
shall not include a transfer of a material amount of Customer Receivables
without the prior written approval of the Banks.
8.6. SALE AND LEASEBACK. The Borrower will not, and will not permit any of
its Subsidiaries to, enter into any arrangement, directly or indirectly, whereby
the Borrower or any Subsidiary of the Borrower shall sell or transfer any
property owned by it in order then or thereafter to lease such property or lease
other property that the Borrower or any Subsidiary of the Borrower intends to
use for substantially the same purpose as the property being sold or
transferred.
8.7. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Borrower will not, and will
not permit any of its Subsidiaries to, (i) use any of the Real Estate or any
portion thereof for the handling, processing, storage or disposal of Hazardous
Substances, (ii) cause or permit to be located on any of the Real Estate any
underground tank or other underground storage receptacle for Hazardous
Substances, (iii) generate any Hazardous Substances on any of the Real Estate,
(iv) conduct any activity at any Real Estate or use any Real Estate in any
manner so as to cause a release (i.e. releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching,
disposing or dumping) or threatened release of Hazardous Substances on, upon or
into the Real Estate or (v) otherwise conduct any activity at any Real Estate or
use any Real Estate in any manner that would violate any Environmental Law or
bring such Real Estate in violation of any Environmental Law, in any case in a
manner which could reasonably be expected to have a material adverse effect on
the business or financial condition of the Borrower and its Subsidiaries, taken
as a whole.
8.8. OTHER DEBT. The Borrower will not, and will not permit any of its
Subsidiaries (other than Funding) to, amend, supplement or
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otherwise modify the terms of any of the Subordinated Debt or prepay or
repurchase any of the Subordinated Debt or Indebtedness outstanding under the
Funding Indenture.
8.9. EMPLOYEE BENEFIT PLANS. Neither the Borrower nor any ERISA Affiliate
will:
(a) engage in any "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code which could result in a
material liability for the Borrower or any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur a material
"accumulated funding deficiency", as such term is defined in Section 302 of
ERISA, whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner which, could
result in the imposition of a lien or encumbrance of a material amount on
the assets of the Borrower or any of its Subsidiaries pursuant to Section
302(f) or Section 4068 of ERISA; or
(d) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of Section 4001 of ERISA) of all
Guaranteed Pension Plans exceeding the value of the aggregate assets of
such Plans, disregarding for this purpose the benefit liabilities and
assets of any such Plan with assets in excess of benefit liabilities.
8.10. BANK ACCOUNTS. The Borrower will not, and will not permit any of its
Subsidiaries (other than Credident) to, (i) establish any bank accounts other
than those listed on SCHEDULE 6.20 without the Agent's prior written consent,
(ii) violate directly or indirectly any bank agency or lock box agreement in
favor of the Agent for the benefit of the Banks and the Agent with respect to
such account, or (iii) deposit into any of the payroll accounts listed on
SCHEDULE 6.20 any amounts in excess of amounts necessary to pay current payroll
obligations from such accounts.
8.11. FUNDING STOCK. The Borrower will not sell, assign (by operation of
law or otherwise) or otherwise dispose of, or grant any option with respect to
any shares of stock of Funding.
<PAGE>
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9. FINANCIAL COVENANTS OF THE BORROWER.
9.1. DEBT TO CONSOLIDATED TANGIBLE CAPITAL FUNDS. The Borrower will
restrict Indebtedness of the Borrower and its Subsidiaries (other than
Credident) PLUS security deposits received by the Borrower and its Subsidiaries
(other than Credident) with respect to Accounts Receivable to not more than 400%
of Consolidated Tangible Capital Funds.
9.2. CONSOLIDATED TANGIBLE NET WORTH. The Borrower will not permit
Consolidated Tangible Net Worth at any time to be less than the sum of (i)
$30,000,000 PLUS (ii) on a cumulative basis, 75% of positive Consolidated Net
Income for each fiscal quarter beginning with the fiscal quarter commencing on
or after June 26, 1994, PLUS (iii) 100% of the proceeds of any sale by the
Borrower or any of its Subsidiaries (other than Credident) of (A) equity
securities issued by the Borrower or any of its Subsidiaries (other than
Credident), or (B) warrants or subscription rights for equity securities issued
by the Borrower or any of its Subsidiaries (other than Credident).
9.3. INTEREST COVERAGE. The Borrower will not, during any period described
in the table set forth below, permit Consolidated Earnings Before Interest and
Taxes for such period, to be less than the percentage of Consolidated Total
Interest Expense set forth opposite such period in such table:
<TABLE>
<CAPTION>
Mimimum
Period Percentage
------ ----------
<S> <C>
For the quarter ending March 26, 1994 115%
For the quarter ending June 30, 1994 and the immediately 115%
preceding quarter (treated as a single accounting
period).
For the quarter ending September 28, 1994 and the 115%
immediately preceding two fiscal quarters (treated as a
single accounting period).
<PAGE>
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For the quarter ending December 31, 1994 and the 115%
immediately preceding three fiscal quarters (treated as a
single accounting period).
For any fiscal quarter ending thereafter, for such fiscal 120%
quarter taken together with the immediately preceding
three fiscal quarters (treated as a single accounting
period).
</TABLE>
9.4. CAPITAL EXPENDITURES. The Borrower will not make, or permit any
Subsidiary of the Borrower to make, after the date hereof, Capital Expenditures
that exceed, in the aggregate, $1,000,000.
9.5. REISSUED CUSTOMER RECEIVABLES TO GROSS CUSTOMER RECEIVABLES. The
Borrower will at no time permit Reissued Customer Receivables (originated and
calculated after the date hereof) to exceed 15% of Gross Customer Receivables.
9.6. DELINQUENT CUSTOMER RECEIVABLES TO GROSS CUSTOMER RECEIVABLES RATIO.
The Borrower will not permit Delinquent Customer Receivables at any time during
any period described in the table set forth below to exceed the percentage of
Gross Customer Receivables set forth opposite such period in such table:
<TABLE>
<CAPTION>
Maximum
Period Percentage
------ ----------
<S> <C>
Closing Date to March 30, 1995 18%
March 31, 1995 to September 29, 1995 13%
September 30, 1995 and thereafter 10%
</TABLE>
9.7. RESERVES TO DELINQUENT CUSTOMER RECEIVABLES. The Borrower will not at
the end of any fiscal quarter permit Reserves to be less than 60% of the sum of
Delinquent Customer Receivables.
9.8. PROVISION FOR LOSSES. The Borrower will (at the end of each fiscal
quarter) recognize a provision for losses on its books for losses with respect
to Accounts Receivables at least equal to two percent (2%) of Net Customer
Receivables originated during such fiscal quarter, as reduced by
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recoveries in such quarter and otherwise adjusted in accordance with generally
accepted accounting principles.
9.9. COLLECTIONS TO BILLINGS. The Borrower will not permit during the
period described in the table set forth below, at the end of any calendar month
during such period, with respect to the preceding three month period, the
average Collections to be less than the minimum percentage of Billings set forth
opposite such period in such table:
<TABLE>
<CAPTION>
Minimum
Period Percentage
------ ----------
<S> <C>
Closing Date through December 31, 1995 90%
After December 31, 1995 94%
</TABLE>
9.10. LEASES. The Borrower will not, and will not permit any of its
Subsidiaries to, as lessee, enter into, permit to exist, or renew any agreements
to rent or lease any real or personal property if the aggregate amount of Rental
Obligations accrued and to accrue under all such agreements will exceed $
5,000,000.
9.11. EQUIPMENT SUPPLIER CONCENTRATION. The aggregate of Accounts
Receivable generated after the date of this agreement through the financing of
Equipment supplied by any single Equipment Supplier shall not exceed 50% of
total Accounts Receivable.
10. CLOSING CONDITIONS.
The obligations of the Banks to make the initial Revolving Credit Loans
shall be subject to the satisfaction of the following conditions precedent on or
prior to the date hereof:
10.1. LOAN DOCUMENTS. Each of the Loan Documents shall have been duly
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance satisfactory to each of the Banks.
Each Bank shall have received a fully executed copy of each such document.
10.2. CERTIFIED COPIES OF CHARTER DOCUMENTS. Each of the Banks shall have
received from the Borrower and each Subsidiary of the Borrower, a copy,
certified by a duly authorized officer of such Person to be true and complete on
the Closing Date, of each of (i) its charter or other
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incorporation documents as in effect on such date of certification, and (ii) its
by-laws as in effect on such date.
10.3. CORPORATE ACTION. All corporate action necessary for the valid
execution, delivery and performance by the Borrower and each of its Subsidiaries
(other than Funding and Credident) of this Credit Agreement and the other Loan
Documents to which it is or is to become a party shall have been duly and
effectively taken, and evidence thereof satisfactory to the Banks shall have
been provided to each of the Banks.
10.4. INCUMBENCY CERTIFICATE. Each of the Banks shall have received from
the Borrower and each of its Subsidiaries (other than Funding and Credident) an
incumbency certificate, dated as of the Closing Date, signed by a duly
authorized officer of the Borrower or such Subsidiary, and giving the name and
bearing a specimen signature of each individual who shall be authorized: (i) to
sign, in the name and on behalf of each of the Borrower of such Subsidiary, each
of the Loan Documents and Subordination Documents to which the Borrower or such
Subsidiary is or is to become a party; (ii) in the case of the Borrower, to make
Loan Requests and Conversion Requests; and (iii) to give notices and to take
other action on its behalf under the Loan Documents.
10.5. VALIDITY OF LIENS. The Security Documents shall be effective to
create in favor of the Agent a legal, valid and enforceable first (except for
Permitted Liens entitled to priority under applicable law) security interest in
the Collateral. All filings, recordings, deliveries of instruments and other
actions necessary or desirable in the opinion of the Agent to protect and
preserve such security interests shall have been duly effected. The Agent shall
have received evidence thereof in form and substance satisfactory to the Agent.
10.6. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The Agent shall have
received from each of the Borrower and its Subsidiaries (other than Funding and
Credident), a completed and fully executed Perfection Certificate and the
results of UCC searches with respect to its Collateral, indicating no liens
other than Permitted Liens and otherwise in form and substance satisfactory to
the Agent.
10.7. CERTIFICATES OF INSURANCE. The Agent shall have received (i) a
certificate of insurance from an independent insurance broker dated as of the
Closing Date, identifying insurers, types of insurance, insurance limits, and
policy terms, and otherwise describing the insurance obtained in accordance with
the provisions of the Security Agreements and (ii) certified copies of all
policies evidencing such insurance (or certificates
<PAGE>
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therefore signed by the insurer or an agent authorized to bind the insurer).
10.8. BANK AGENCY AGREEMENTS. The Agent shall have received an agreement,
in form and substance satisfactory to the Agent, from each bank at which the
Borrower or any of its Subsidiaries maintains depositary accounts (including
bank agency or lock box agreements) concerning the Agent's interest for the
benefit of the Banks and the Agent in such accounts.
10.9. BORROWING BASE REPORT. The Agent shall have received from the
Borrower the initial Borrowing Base Report dated as of the Closing Date.
10.10. ACCOUNTS RECEIVABLE AGING REPORT. The Agent shall have received
from the Borrower the most recent Accounts Receivable aging report of the
Borrower and its Subsidiaries dated as of a date which shall be no more than
fifteen (15) days prior to the Closing Date and the Borrower shall notify the
Agent in writing on the Closing Date of any material deviation from the Accounts
Receivable values reflected in such Accounts Receivable aging report and shall
provide the Agent with such supplementary documentation as the Agent may
reasonably request.
10.11. SOLVENCY CERTIFICATE. Each of the Banks shall have received an
officer's certificate of the Borrower dated as of the Closing Date as to the
solvency of the Borrower and its Subsidiaries following the consummation of the
transactions contemplated herein and in form and substance satisfactory to the
Banks.
10.12. OPINIONS OF COUNSEL. Each of the Banks and the Agent shall have
received a favorable opinion addressed to the Banks and the Agent, dated as of
the Closing Date, in form and substance satisfactory to the Banks and the Agent,
from counsel to the Borrower and its Subsidiaries.
10.13. PAYMENT OF FEES. The Borrower shall have paid to the Banks or the
Agent, as appropriate, the Closing Fee pursuant to Section 4.1.
10.l4. MANAGEMENT LETTER. The Banks and the Agent shall have received a
copy of the most recent accountants' management letter received by the Borrower.
10.15. FUNDING REPORTS. The Bank and the Agent shall have received a copy
of each of the most recent reports delivered by Borrower, as service
pursuant to the Funding Indenture.
<PAGE>
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11. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Loan whether on or after the
Closing Date, shall also be subject to the satisfaction of the following
conditions precedent:
11.1 REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of any of the Borrower and its Subsidiaries
contained in this Credit Agreement, the other Loan Documents or in any document
or instrument delivered pursuant to or in connection with this Credit Agreement
shall be true as of the date as of which they were made and shall also be true
at and as of the time of the making of such Loan, with the same effect as if
made at and as of that time (except to the extent of changes resulting from
transactions contemplated or permitted by this Credit Agreement and the other
Loan Documents and changes occurring in the ordinary course of business that
singly or in the aggregate are not materially adverse, and to the extent that
such representations and warranties relate expressly to an earlier date) and no
Default or Event of Default shall have occurred and be continuing.
11.2 NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Bank would make it illegal for such Bank to make such Loan.
11.3 GOVERNMENTAL REGULATION. Each Bank shall have received such statements
in substance and form reasonably satisfactory to such Bank as such Bank shall
require for the purpose of compliance with any applicable regulations of the
Comptroller of the Currency or the Board of Governors of the Federal Reserve
System.
11.4 PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Banks and to the Agent and the Agent's Special Counsel, and the
Banks, the Agent and such counsel shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Agent may reasonably request.
11.5 BORROWING BASE REPORT. The Agent shall have received the most recent
Borrowing Base Report required to be delivered to the Agent in accordance with
Section 7.4(e) and, if requested by the Agent, a Borrowing
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Base Report dated within one (1) days of the Drawdown Date of the requested
Loan.
12. EVENTS OF DEFAULT; ACCELERATION; ETC.
12.1 EVENTS OF DEFAULT AND ACCELERATION. If any of the following events
("Events of Default" or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice or lapse of time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the Loans when
the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment;
(b) the Borrower shall fail to pay any interest on the Loans, the
commitment fee, the Agent's fee, or other sums due hereunder or under any
of the other Loan Documents, when the same shall become due and payable,
whether at the stated date of maturity or any accelerated date of maturity
or at any other date fixed for payment;
(c) the Borrower shall (i) fail to comply with any of its covenants
contained in (i) Sections 7.4, 8.1 through 8.6, or 9 or (ii) fail to
comply with any of its covenants contained in Sections 7.1 through
7.3, Sections 7.5 through 7.14 and Sections 8.7 through 8.10 for a period
exceeding ten (10) days;
(d) the Borrower or any of its Subsidiaries shall fail to perform any
term, covenant or agreement contained herein or in any of the other Loan
Documents (other than those specified elsewhere in this Section 12.1) for
fifteen (15) days after written notice of such failure has been given to
the Borrower by the Agent;
(e) any representation or warranty of the Borrower or any of its
Subsidiaries in this Credit Agreement or any of the other Loan Documents or
in any other document or instrument delivered pursuant to or in connection
with this Credit Agreement shall prove to have been false in any material
respect upon the date when made or deemed to have been made or repeated;
(f) the Borrower or any of its Subsidiaries shall fail to pay at
maturity, or within any applicable period of grace, any obligation for
borrowed money or credit received or in respect of any Capitalized Leases,
or fail to observe or perform any material term,
<PAGE>
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covenant or agreement contained in any agreement by which it is bound,
evidencing or securing borrowed money or credit received or in respect of
any Capitalized Leases for such period of time as would permit (assuming
the giving of appropriate notice if required) the holder or holders thereof
or of any obligations issued thereunder to accelerate the maturity thereof
and which default is not waived by the parties thereto;
(g) the Borrower or any of its Subsidiaries shall make an assignment
for the benefit of creditors, or admit in writing its inability to pay or
generally fail to pay its debts as they mature or become due, or shall
petition or apply for the appointment of a trustee or other custodian,
liquidator or receiver of the Borrower or any of its Subsidiaries or of any
substantial part of the assets of the Borrower or any of its Subsidiaries
or shall commence any case or other proceeding relating to the Borrower or
any of its Subsidiaries under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar law
of any jurisdiction, now or hereafter in effect, or shall take any action
to authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such case or other proceeding
shall be commenced against the Borrower or any of its Subsidiaries and the
Borrower or any of its Subsidiaries shall indicate its approval thereof,
consent thereto or acquiescence therein;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower or any of
its Subsidiaries bankrupt or insolvent, or approving a petition in any such
case or other proceeding, or a decree or order for relief is entered in
respect of the Borrower or any Subsidiary of the Borrower in an involuntary
case under federal bankruptcy laws as now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any final
judgment against the Borrower or any of its Subsidiaries that, with other
outstanding final judgments, undischarged, against the Borrower or any of
its Subsidiaries exceeds in the aggregate $500,000;
(j) the holders of all or any part of the Subordinated Debt or
Indebtedness under the Funding Indenture shall accelerate the maturity of
all or any part of such debt or such debt shall be
<PAGE>
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prepaid or repurchased in whole or in part which in the case of
Subordinated Debt violate any provision thereof; PROVIDED, HOWEVER, that
early termination of the Funding Indenture by Funding pursuant to the terms
thereof shall not constitute an acceleration by such holders;
(k) if any of the Loan Documents shall be cancelled, terminated,
revoked or rescinded or the Agent's security interests, mortgages or liens
in substantially all of the Collateral shall cease to be perfected, or
shall cease to have the priority contemplated by the Security Documents, in
each case otherwise than in accordance with the terms thereof or with the
express prior written agreement, consent or approval of the Banks, or any
action at law, suit or in equity or other legal proceeding to cancel,
revoke or rescind any of the loan documents shall be commenced by or on
behalf of the Borrower or any of its Subsidiaries party thereto or any of
their respective stockholders, or any court or any other governmental or
regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof;
(l) with respect to any Guaranteed Pension Plan, an ERISA Reportable
Event shall have occurred and the Majority Banks shall have determined in
their reasonable discretion that such event reasonably could be expected to
result in liability of the Borrower or any of its Subsidiaries to the PBGC
or such Guaranteed Pension Plan in an aggregate amount exceeding $100,000
and such event in the circumstances occurring reasonably could constitute
grounds for the termination of such Guaranteed Pension Plan by the PBGC or
for the appointment by the appropriate United States District Court of a
trustee to administer such Guaranteed Pension Plan; or a trustee shall have
been appointed by the United States District Court to administer such
Guaranteed Pension Plan; or the PBGC shall have instituted proceedings to
terminate such Guaranteed Pension Plan;
(m) the Borrower or any of its Subsidiaries shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any material part of
its business and such order shall continue in effect for more than thirty
(30) days;
<PAGE>
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(n) there shall occur any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy,
or other casualty, which in any such case causes, for more than fifteen
(15) consecutive days, the cessation or substantial curtailment of revenue
producing activities at any facility of the Borrower or any of its
Subsidiaries if such event or circumstance is not covered by business
interruption insurance and would have a material adverse effect on the
business or financial condition of the Borrower and its Subsidiaries, taken
as a whole;
(o) there shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by
the Borrower or any of its Subsidiaries if such loss, suspension,
revocation or failure to renew would have a material adverse effect on the
business or financial condition of the Borrower and its Subsidiaries, taken
as a whole;
(p) the Borrower or any of its Subsidiaries shall be indicted for a
state or federal crime, or any civil or criminal action shall otherwise
have been brought against the Borrower or any of its Subsidiaries, a
punishment for which in any such case could include the forfeiture of any
assets of the Borrower or such Subsidiary included in the Borrowing Base or
any assets of the Borrower or such Subsidiary not included in the Borrowing
Base but having a fair market value in excess of $100,000;
(q) any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934, as amended) shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 promulgated
by the Securities and Exchange Commission under said Act) of fifty-one
percent (51%) or more of the outstanding shares of common stock of the
Borrower;
(r) the occurrence of a Funding Event of Default, a Payment
Restriction Event, or a Servicer Event of Default under the Funding
Indenture and the expiration of any cure period available to Funding under
the Funding Indenture;
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Banks shall, by notice in writing to
the Borrower declare all amounts owing with respect to this Credit Agreement,
the Notes and the other Loan Documents to be, and they shall thereupon forthwith
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of
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which are hereby expressly waived by the Borrower; PROVIDED that in the event of
any Event of Default specified in Section 12.1(g), 12.1(h) or 12.1(j), all
such amounts shall become immediately due and payable automatically and
without any requirement of notice from the Agent or any Bank.
12.2 TERMINATION OF COMMITMENTS. If any one or more of the Events of
Default specified in Section 12.1(g), Section 12.1(h) or Section 12.1(j) shall
occur, any unused portion of the credit hereunder shall forthwith terminate
and each of the Banks shall be relieved of all obligations to make Loans to
the Borrower. If any other Event of Default shall have occurred and be
continuing, or if on any Drawdown Date the conditions precedent to the making
of the Loans to be made on such Drawdown Date are not satisfied, the Agent may
and, upon the request of the Majority Banks, shall, by notice to the Borrower,
terminate the unused portion of the credit hereunder, and upon such notice
being given such unused portion of the credit hereunder shall terminate
immediately and each of the Banks shall be relieved of all further obligations
to make Loans. If any such notice is given to the Borrower the Agent will
forthwith furnish a copy thereof to each of the Banks. No termination of the
credit hereunder shall relieve the Borrower of any of the Obligations or any
of its existing obligations to any of the Banks arising under other agreements
or instruments.
12.3 REMEDIES. In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Banks shall have
accelerated the maturity of the Loans pursuant to Section 12.1, each Bank, if
owed any amount with respect to the Loans, may proceed to protect and enforce
its rights by suit in equity, action at law or other appropriate proceeding,
whether for the specific performance of any covenant or agreement contained in
this Credit Agreement and the other Loan Documents or any instrument pursuant
to which the Obligations to such Bank are evidenced, including as permitted by
applicable law the obtaining of the EX PARTE appointment of a receiver, and,
if such amount shall have become due, by declaration or otherwise, proceed to
enforce the payment thereof or any other legal or equitable right of such
Bank. No remedy herein conferred upon any Bank or the Agent or the holder of
any Note is intended to be exclusive of any other remedy and each and every
remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or any other provision of law.
12.4 DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that following
the occurrence or during the continuance of any Default or Event of Default, the
Agent or any Bank, as the case may be, receives any monies in connection with
the enforcement of any the security documents,
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- -
or otherwise with respect to the realization upon any of the Collateral, such
monies shall be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent or any of the Banks for or in respect of all
reasonable costs, expenses, disbursements and losses which shall have been
incurred or sustained by the Agent or any of the Banks in connection with
the collection of such monies by the Agent or any of the Banks, for the
exercise, protection or enforcement by the Agent or any of the Banks of all
or any of the rights, remedies, powers and privileges of the Agent or any
of the Banks under this Credit Agreement or any of the other loan documents
or in respect of the collateral and supports the provision of adequate
indemnity to the Agent or any of the Banks against all taxes or liens which
by law shall have, or may have, priority over the rights of the Agent or
any of the Banks to such monies;
(b) Second, to all other Obligations in such order or preference as
the Majority Banks may determine; PROVIDED, HOWEVER, that distributions in
respect of such Obligations shall be made (i) PARI PASSU among Obligations
with respect to the Agent's fee payable under Section 4.2 and all other
Obligations and (ii) Obligations owing to the Banks with respect to each
type of Obligation such as interest, principal, fees and expenses, shall be
made among the Banks PRO RATA; and PROVIDED, FURTHER, that the Agent may in
its discretion make proper allowance to take into account any Obligations
not then due and payable;
(c) Third, upon payment and satisfaction in full or other provisions
for payment in full satisfactory to the Banks and the Agent of all of the
Obligations, to the payment of any obligations required to be paid pursuant
to Section 9-504(1)(c) of the Uniform Commercial Code of the Commonwealth
of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the Borrower or
to such other Persons as are entitled thereto.
13. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of any
Event of Default, any deposits or other sums credited by or due from any of the
Banks to the Borrower and any securities or other property of the Borrower in
the possession of such Bank may be applied to or set off by such Bank against
the payment of Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to
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become due, now existing or hereafter arising, of the Borrower to such Bank.
Each of the Banks agrees with each other Bank that (i) if an amount to be set
off is to be applied to Indebtedness of the Borrower to such Bank, other than
Indebtedness evidenced by the Notes held by such Bank, such amount shall be
applied ratably to such other Indebtedness and to the Indebtedness evidenced by
all such Notes held by such Bank, and (ii) if such Bank shall receive from the
Borrower, whether by voluntary payment, exercise of the right of setoff,
counterclaim, cross action, enforcement of the claim evidenced by the Notes held
by such Bank by proceedings against the Borrower at law or in equity or by proof
thereof in bankruptcy, reorganization, liquidation, receivership or similar
proceedings, or otherwise, and shall retain and apply to the payment of the Note
or Notes held by such Bank any amount in excess of its ratable portion of the
payments received by all of the Banks with respect to the Notes held by all of
the Banks, such Bank will make such disposition and arrangements with the other
Banks with respect to such excess, either by way of distribution, PRO TANTO
assignment of claims, subrogation or otherwise as shall result in each Bank
receiving in respect of the Notes held by its proportionate payment as
contemplated by this Credit Agreement; PROVIDED that if all or any part of such
excess payment is thereafter recovered from such Bank, such disposition and
arrangements shall be rescinded and the amount restored to the extent of such
recovery, but without interest.
THE AGENT.
14.1 AUTHORIZATION. The Agent is authorized to take such action on behalf
of each of the Banks and to exercise all such powers as are hereunder and under
any of the other Loan Documents and any related documents delegated to the
Agent, together with such powers as are reasonably incident thereto, PROVIDED
that no duties or responsibilities not expressly assumed herein or therein
shall be implied to have been assumed by the Agent. The relationship between
the Agent and the Banks is and shall be that of agent and principal only, and
nothing contained in this Credit Agreement or any of the other Loan Documents
shall be construed to constitute the Agent as a trustee for any Bank.
14.2 EMPLOYEES AND AGENTS. The Agent may exercise its powers and execute
its duties by or through employees or agents and shall be entitled to take, and
to rely on, advice of counsel concerning all matters pertaining to its rights
and duties under this Credit Agreement and the other Loan Documents. The Agent
may utilize the services of such Persons as the Agent in its sole discretion may
reasonably determine, and
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all reasonable fees and expenses of any such Persons shall be paid by the
Borrower.
14.3 NO LIABILITY. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
14.4 NO REPRESENTATIONS. The Agent shall not be responsible for the
execution or validity or enforceability of this Credit Agreement, the Notes, any
of the other Loan Documents or any instrument at anytime constituting, or
intended to constitute, collateral security for the Notes, or for the value of
any such collateral security or for the validity, enforceability or
collectability of any such amounts owing with respect to the Notes, or for any
recitals or statements, warranties or representations made herein or in any of
the other Loan Documents or in any certificate or instrument hereafter furnished
to it by or on behalf of the Borrower, or be bound to ascertain or inquire as to
the performance or observance of any of the terms, conditions, covenants or
agreements herein or in any instrument at any time constituting, or intended to
constitute, collateral security for the Notes or to inspect any of the
properties, books or records of the Borrower or any of its Subsidiaries. The
Agent shall not be bound to ascertain whether any notice, consent, waiver or
request delivered to it by the Borrower or any holder of any of the Notes shall
have been duly authorized or is true, accurate and complete. The Agent has not
made nor does it now make any representations or warranties, express or implied,
nor does it assume any liability to the Banks, with respect to the credit
worthiness or financial conditions of the Borrower or any of its Subsidiaries.
Each Bank acknowledges that it has, independently and without reliance upon the
Agent or any other Bank, and based upon such information and documents as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Credit Agreement.
14.5 PAYMENTS.
14.5.1 PAYMENTS TO AGENT. A payment by the Borrower to the Agent
hereunder or any of the other Loan Documents for the account of any Bank
shall constitute a payment to such Bank. The Agent agrees promptly to
distribute to each Bank such Bank's PRO
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RATA share of payments received by the Agent for the account of the Banks
except as otherwise expressly provided herein or in any of the other Loan
Documents.
14.5.2. DISTRIBUTION BY AGENT. If in the opinion of the Agent the
distribution of any amount received by it in such capacity hereunder, under
the Notes or under any of the other Loan Documents might involve it in
liability, it may refrain from making distribution until its right to make
distribution shall have been adjudicated by a court of competent
jurisdiction. If a court of competent jurisdiction shall adjudge that any
amount received and distributed by the Agent is to be repaid, each Person
to whom any such distribution shall have been made shall either repay to
the Agent its proportionate share of the amount so adjudged to be repaid or
shall pay over the same in such manner and to such Persons as shall be
determined by such court.
14.5.3. DELINQUENT BANKS. Notwithstanding anything to the contrary
contained in this Credit Agreement or any of the other Loan Documents, any
Bank that fails (i) to make available to the Agent its PRO RATA share of
any Loan or (ii) to comply with the provisions of Section 13 with respect
to making dispositions and arrangements with the other Banks, where such
Bank's share of any payment received, whether by setoff or otherwise, is in
excess of its PRO RATA share of such payments due and payable to all of the
Banks, in each case as, when and to the full extent required by the
provisions of this Credit Agreement, shall be deemed delinquent (a
"Delinquent Bank") and shall be deemed a Delinquent Bank until such time as
such delinquency is satisfied. A Delinquent Bank shall be deemed to have
assigned any and all payments due to it from the Borrower, whether on
account of outstanding Loans, interest, fees or otherwise, to the remaining
nondelinquent Banks for application to, and reduction of, their respective
PRO RATA shares of all outstanding Loans. The Delinquent Bank hereby
authorizes the Agent to distribute such payments to the nondelinquent Banks
in proportion to their respective PRO RATA shares of all outstanding Loans.
A Delinquent Bank shall be deemed to have satisfied in full a delinquency
when and if, as a result of application of the assigned payments to all
outstanding Loans of the nondelinquent Banks, the Banks' respective PRO
RATA shares of all outstanding Loans have returned to those in effect
immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.
<PAGE>
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14.6. HOLDERS OF NOTES. The Agent may deem and treat the payee of any Note
as the absolute owner thereof for all purposes hereof until it shall have been
furnished in writing with a different name by such payee or by a subsequent
holder.
14.7. INDEMNITY. The Banks ratably agree hereby to indemnify and hold
harmless the Agent from and against any and all claims, actions and suits
(whether groundless or otherwise), losses, damages, costs, expenses (including
any expenses for which the Agent has not been reimbursed by the Borrower as
required by Section 15), and liabilities of every nature and character arising
out of or related to this Credit Agreement, the Notes, or any of the other Loan
Documents or the transactions contemplated or evidenced hereby or thereby, or
the Agent's actions taken hereunder or thereunder, except to the extent that any
of the same shall be directly caused by the Agent's willful misconduct or gross
negligence.
14.8. AGENT AS BANK. In its individual capacity, FNBB shall have the same
obligations and the same rights, powers and privileges in respect to its
Commitment and the Loans made by it, and as the holder of any of the Notes, as
it would have were it not also the Agent.
14.9. RESIGNATION. The Agent may resign at any time by giving sixty (60)
days prior written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Majority Banks shall have the right to appoint a successor
Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the Borrower.
If no successor Agent shall have been so appointed by the Majority Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a financial institution
having a rating of not less than A or its equivalent by Standard & Poor's
Corporation. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation, the provisions of this
Credit Agreement and the other Loan Documents shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
15. EXPENSES.
The Borrower agrees to pay (i) the reasonable costs of producing and
reproducing this Credit Agreement, the other Loan Documents and
<PAGE>
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the other agreements and instruments mentioned herein, (ii) any taxes
(including any interest and penalties in respect thereto) payable by the Agent
or any of the Banks (other than taxes based upon the Agent's or any Bank's net
income) on or with respect to the transactions contemplated by this Credit
Agreement (the Borrower hereby agreeing to indemnify the Agent and each Bank
with respect thereto), (iii) the reasonable fees, expenses and disbursements of
the Agent's Special Counsel or any local counsel to the Agent incurred in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, each closing hereunder, and
amendments, modifications, approvals, consents or waivers hereto or hereunder,
(iv) the reasonable fees, expenses and disbursements of the Agent incurred by
the Agent in connection with the preparation, administration or interpretation
of the Loan Documents and other instruments mentioned herein, including all
title insurance premiums and surveyor, engineering and appraisal charges, (v)
any fees, costs, expenses and bank charges, including bank charges for returned
checks, incurred by the Agent in establishing, maintaining or handling agency
accounts, lock box accounts and other accounts for the collection of any of the
Collateral; (vi) all reasonable out-of-pocket expenses (including without
limitation reasonable attorneys' fees and costs, which attorneys may be
employees of either Bank or the Agent, and reasonable consulting, accounting,
appraisal, investment banking and similar professional fees and charges)
incurred by any Bank or the Agent in connection with (A) the enforcement of or
preservation of rights under any of the Loan Documents against the Borrower or
any of its Subsidiaries or the administration thereof after the occurrence of a
Default or Event of Default and (B) any litigation, proceeding or dispute
whether arising hereunder or otherwise, in any way related to any Bank's or the
Agent's relationship with the Borrower or any of its Subsidiaries and (vii) all
reasonable fees, expenses and disbursements of either Bank or the Agent incurred
in connection with UCC searches, UCC filings or mortgage recordings. The
covenants of this Section 15 shall survive payment or satisfaction of payment of
amounts owing with respect to the Notes.
16. INDEMNIFICATION.
The Borrower agrees to indemnify and hold harmless the Agent and the Banks
from and against any and all claims, actions and suits whether groundless or
otherwise, and from and against any and all liabilities, losses, damages and
expenses of every nature and character arising out of this Credit Agreement or
any of the other Loan Documents or the transactions contemplated hereby
including, without limitation, (i) any actual or proposed use by the Borrower or
any of its Subsidiaries of the
<PAGE>
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proceeds of any of the Loans, (ii) the reversal or withdrawal of any provisional
credits granted by the Agent upon the transfer of funds from bank agency or lock
box accounts or in connection with the provisional honoring of checks or other
items, (iii) any actual or alleged infringement of any patent, copyright,
trademark, service mark or similar right of the Borrower or any of its
Subsidiaries comprised in the Collateral, (iv) the Borrower or any of its
Subsidiaries entering into or performing this Credit Agreement or any of the
other Loan Documents or (v) with respect to the Borrower and its Subsidiaries
and their respective properties and assets, the violation of any Environmental
Law, the presence, disposal, escape, seepage, leakage, spillage, discharge,
emission, release or threatened release of any Hazardous Substances or any
action, suit, proceeding or investigation brought or threatened with respect to
any Hazardous Substances (including, but not limited to claims with respect to
wrongful death, personal injury or damage to property), in each case including,
without limitation, the reasonable fees and disbursements of counsel and
allocated costs of internal counsel incurred in connection with any such
investigation, litigation or other proceeding. In litigation, or the
preparation therefor, the Banks and the Agent shall be entitled to select their
own counsel and, in addition to the foregoing indemnity, the Borrower agrees to
pay promptly the reasonable fees and expenses of such counsel. If, and to the
extent that the obligations of the Borrower under this Section 16 are
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment in satisfaction of such obligations which is
permissible under applicable law. The covenants contained in this Section 16
shall survive payment of satisfaction in full of all other obligations.
17. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein, in
the Notes, in any of the other Loan Documents or in any documents or other
papers delivered by or on behalf of the Borrower or any of its Subsidiaries
pursuant hereto shall be deemed to have been relied upon by the Banks and the
Agent, notwithstanding any investigation heretofore or hereafter made by any of
them, and shall survive the making by the Banks of the Loans, as herein
contemplated, and shall continue in full force and effect so long as any amount
due under this Credit Agreement or the Notes or any of the other Loan Documents
remains outstanding or any Bank has any obligation to make any Loans, and for
such further time as may be otherwise expressly specified in this Credit
Agreement. All statements contained in any certificate or other paper delivered
to any Bank or the Agent at any time by or on behalf of the Borrower or any of
its Subsidiaries pursuant hereto or in connection
<PAGE>
-73-
with the transactions contemplated hereby shall constitute representations and
warranties by the Borrower or such Subsidiary hereunder.
18. ASSIGNMENT AND PARTICIPATION.
18.1. CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided herein, each
Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit Agreement (including all or
a portion of its Commitment Percentage and Commitment and the same portion of
the Loans at the time owing to it) and the Notes held by it; PROVIDED that (i)
the Agent shall have given its prior written consent to such assignment, (ii)
each such assignment shall be of a constant, and not a varying, percentage of
all the assigning Bank's rights and obligations under this Credit Agreement,
(iii) each assignment shall be in an amount that is a whole multiple of
$1,000,000 the parties to such assignment shall execute and deliver to the
Agent, for recording in the Register (as hereinafter defined), an Assignment and
Acceptance, substantially in the form of EXHIBIT G hereto (an "Assignment and
Acceptance"), together with any Notes subject to such assignment. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be at
least five (5) Business Days after the execution thereof, (i) the assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder,
and (ii) the assigning Bank shall, to the extent provided in such assignment and
upon payment to the Agent of the registration fee referred to in Section 18.3,
be released from its obligations under this Credit Agreement.
18.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS. By
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the legal
and beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, the assigning Bank makes no representation or
warranty, express or implied, and assumes no responsibility with respect to
any statements, warranties or representations made in or in connection with
this Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, the other Loan
Documents or any other instrument or document
<PAGE>
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furnished pursuant hereto or the attachment, perfection or priority of any
security interest or mortgage;
(b) the assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower and its Subsidiaries or any other Person primarily or secondarily
liable in respect of any of the Obligations, or the performance or
observance by the Borrower and its Subsidiaries or any other Person
primarily or secondarily liable in respect of any of the Obligations of any
of their obligations under this Credit Agreement or any of the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto;
(c) such assignee confirms that it has received a copy of this Credit
Agreement, together with copies of the most recent financial statements
referred to in Section 6.4 and Section 7.4 and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance;
(d) such assignee will, independently and without reliance upon the
assigning Bank, the Agent or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Credit
Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Credit
Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof or thereof, together with such powers as are reasonably
incidental thereto;
(g) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Credit
Agreement are required to be performed by it as a Bank; and
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance.
18.3. REGISTER. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the
<PAGE>
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Banks and the Commitment Percentage of, and principal amount of the Revolving
Credit Loans owing to the Banks from time to time. The entries in the Register
shall be conclusive, in the absence of manifest error, and the Borrower, the
Agent and the Banks may treat each Person whose name is recorded in the Register
as a Bank hereunder for all purposes of this Credit Agreement. The Register
shall be available for inspection by the Borrower and the Banks at any
reasonable time and from time to time upon reasonable prior notice. Upon each
such recordation, the assigning Bank agrees to pay to the Agent a registration
fee in the sum of $2,500.
18.4. NEW NOTES. Upon its receipt of an Assignment and Acceptance executed
by the parties to such assignment, together with each Note subject to such
assignment, the Agent shall (i) record the information contained therein in the
Register, and (ii) give prompt notice thereof to the Borrower and the Banks
(other than the assigning Bank). Within five (5) Business Days after receipt of
such notice, the Borrower, at its own expense, shall execute and deliver to the
Agent, in exchange for each surrendered Note, a new Note to the order of such
Eligible Assignee in an amount equal to the amount assumed by such Eligible
Assignee pursuant to such Assignment and Acceptance and, if the assigning Bank
has retained some portion of its obligations hereunder, a new Note to the order
of the assigning Bank in an amount equal to the amount retained by it hereunder.
Such new Notes shall provide that they are replacements for the surrendered
Notes, shall be in an aggregate principal amount equal to the aggregate
principal amount of the surrendered Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of the assigned Notes. Within five (5) days of issuance of any new Notes
pursuant to this Section 18.4, the Borrower shall deliver an opinion of counsel,
addressed to the Banks and the Agent, relating to the due authorization,
execution and delivery of such new Notes and the legality, validity and binding
effect thereof, in form and substance satisfactory to the Banks. The
surrendered Notes shall be cancelled and returned to the Borrower.
18.5. PARTICIPATIONS. Each Bank may sell participations to one or more
banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents; PROVIDED
that (i) each such participation shall be in an amount of not less than
$1,000,000 (ii) any such sale or participation shall not affect the rights and
duties of the selling Bank hereunder to the Borrower and (iii) the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of the Loan Documents shall be
the rights to approve waivers, amendments
<PAGE>
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or modifications that would reduce the principal of or the interest rate on any
Loans, extend the term or increase the amount of the Commitment of such Bank as
it relates to such participant, reduce the amount of any commitment fees to
which such participant is entitled or extend any regularly scheduled payment
date for principal or interest.
18.6. DISCLOSURE. The Borrower agrees that in addition to disclosures made
in accordance with standard and customary banking practices any Bank may
disclose information obtained by such Bank pursuant to this Credit Agreement to
assignees or participants and potential assignees or participants hereunder;
PROVIDED that such assignees or participants or potential assignees or
participants shall agree (i) to treat in confidence such information unless such
information otherwise becomes public knowledge, (ii) not to disclose such
information to a third party, except as required by law or legal process and
(iii) not to make use of such information for purposes of transactions unrelated
to such contemplated assignment or participation.
18.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWER. If any
assignee Bank is an Affiliate of the Borrower, then any such assignee Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the Loan Documents or
for purposes of making requests to the Agent pursuant to Section 12.1 or Section
12.2, and the determination of the Majority Banks shall for all purposes of this
Agreement and the other Loan Documents be made without regard to such assignee
Bank's interest in any of the Loans. If any Bank sells a participating interest
in any of the Loans to a participant, and such participant is the Borrower or an
Affiliate of the Borrower, then such transferor Bank shall promptly notify the
Agent of the sale of such participation. A transferor Bank shall have no right
to vote as a Bank hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or modifications to any of the Loan Documents or for purposes of
making requests to the Agent pursuant to Section 12.1 or Section 12.2 to the
extent that such participation is beneficially owned by the Borrower or any
Affiliate of the Borrower, and the determination of the Majority Banks shall for
all purposes of this Agreement and the other Loan Documents be made without
regard to the interest of such transferor Bank in the Loans to the extent of
such participation.
18.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank shall retain
its rights to be indemnified pursuant to Section 15 with respect to any claims
or actions arising prior to the date of such
<PAGE>
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assignment. If any assignee Bank is not incorporated under the laws of the
United States of America or any state thereof, it shall, prior to the date on
which any interest or fees are payable hereunder or under any of the other Loan
Documents for its account, deliver to the Borrower and the Agent certification
as to its exemption from deduction or withholding of any United States federal
income taxes. If any Reference Bank transfers all of its interest, rights and
obligations under this Credit Agreement, the Agent shall, in consultation with
the Borrower and with the consent of the Borrower and the Majority Banks,
appoint another Bank to act as a Reference Bank hereunder. Anything contained
in this Section 18 to the contrary notwithstanding, any Bank may at any time
pledge all or any portion of its interest and rights under this Credit Agreement
(including all or any portion of its Notes) to any of the twelve Federal Reserve
Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section
341. No such pledge or the enforcement thereof shall release the pledgor Bank
from its obligations hereunder or under any of the other Loan Documents.
18.9. ASSIGNMENT BY BORROWER. The Borrower shall not assign or transfer
any of its rights or obligations under any of the Loan Documents without the
prior written consent of each of the Banks.
19. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Notes shall be in writing and shall be delivered in
hand, mailed by United States registered or certified first class mail, postage
prepaid, sent by overnight courier, or sent by telegraph, telecopy, telefax or
telex and confirmed by delivery via courier or postal service, addressed as
follows:
(a) if to the Borrower, at 60 State Street, Boston, Massachusetts
02110, Attention: Rene Lefebvre, Chief Financial Officer, or at such other
address for notice as the Borrower shall last have furnished in writing to
the Person giving the notice;
(b) if to the Agent, at 100 Federal Street, Boston, Massachusetts
02110, USA, Attention: Mitchell B. Feldman, Director, or such other address
for notice as the Agent shall last have furnished in writing to the Person
giving the notice; and
(c) if to any Bank, at such Bank's address set forth on SCHEDULE 1
hereto, or such other address for notice as such Bank shall have last
furnished in writing to the Person giving the notice.
<PAGE>
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Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof.
20. GOVERNING LAW.
THIS CREDIT AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER
AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENT TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION
19. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN
AN INCONVENIENT COURT.
21. HEADINGS.
The captions in this Credit Agreement are for convenience of reference only
and shall not define or limit the provisions hereof.
22. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Credit Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.
<PAGE>
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23. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection herewith
or therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Credit Agreement nor any term
hereof may be changed, waived, discharged or terminated, except as provided in
Section 25.
24. WAIVER OF JURY TRIAL.
The Borrower hereby waives its right to a jury trial with respect to any
action or claim arising out of any dispute in connection with this Credit
Agreement, the Notes or any of the other Loan Documents, any rights or
obligations hereunder or thereunder or the performance of such rights and
obligations. Except as prohibited by law, the Borrower hereby waives any right
it may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Borrower (i)
certifies that no representative, agent or attorney of any Bank or the Agent has
represented, expressly or otherwise, that such Bank or the Agent would not, in
the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that the Agent and the Banks have been induced to enter into this
Credit Agreement, the other Loan Documents to which it is a party by, among
other things, the waivers and certifications contained herein.
25. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Except as otherwise expressly provided in this Credit Agreement, any
consent or approval required or permitted by this Credit Agreement to be given
by one or more or all of the Banks may be given, and any term of this Credit
Agreement or of any other instrument related hereto or mentioned herein may be
amended, and the performance or observance by the Borrower of any terms of this
Credit Agreement or such other instrument or the continuance of any Default or
Event of Default may be waived (either generally or in a particular instance and
either retroactively or prospectively) with, but only with, the written consent
of the Borrower and the written consent of the Majority Banks. Notwithstanding
the foregoing, the rate of interest on the Notes, the term of the Notes, the
amount of the Commitments of the Banks, and the amount of commitment fee
hereunder may not be changed without the written consent of the Borrower and the
written consent of each Bank affected thereby; the definition of Majority Banks
may not be amended without the written consent of all of the Banks; and the
amount of the Agent's fee and Section 14 may not be amended without the written
consent of
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the Agent. No waiver shall extend to or affect any obligation not expressly
waived or impair any right consequent thereon. No course of dealing or delay or
omission on the part of either Bank in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon
the Borrower shall entitle the Borrower to other or further notice or demand in
similar or other circumstances.
26. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one clause
or provision hereof shall be held invalid or unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Credit Agreement in any jurisdiction.
<PAGE>
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IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
HPSC, INC.
By: /s/ Rene Lefebvre
-------------------------
Name: Rene Lefebvre
Title: CFO
THE FIRST NATIONAL BANK OF BOSTON, individually
and as Agent
By: /s/ Mitchell B. Feldman
-------------------------
Name: Mitchell B. Feldman
Title: Director
CONTINENTAL BANK N.A., individually and as
co-agent
By: /s/ David Noda
------------------------
Name: David Noda
Title: Vice President
<PAGE>
REVOLVING CREDIT AGREEMENT
SCHEDULE 1
Banks; Addresses; Commitments; Commitment Percentages
dated as of June 23, 1994
<TABLE>
<CAPTION>
BANK'S NAME AND ADDRESS COMMITMENT PERCENTAGE
----------------------- ---------- ----------
<S> <C> <C>
The First National Bank of Boston $10,000,000 50%
100 Federal Street
Boston, MA 02110
Attention: Mitchell B. Feldman, Director
Continental Bank N.A. $10,000,000 50%
231 South LaSalle Street
Chicago, IL 60697
Attention: David Noda, Vice President
TOTAL $20,000,000 100%
</TABLE>
<PAGE>
Exhibit A
---------
FORM OF
BORROWING BASE REPORT
---------------------
Dated:_____________
For Period Ended: _____________________
The undersigned, _________________, the duly elected and qualified
_________________ of HPSC, Inc. (such entity referred to herein as the
"Borrower"), hereby certifies pursuant to Section 7.4(e) of the Revolving Credit
Agreement, dated as of June 23, 1994 (as amended and in effect from time to
time, the "Credit Agreement"), among the Borrower, the banking institutions
referred to therein as the Banks (collectively, the "Banks"), and The First
National Bank of Boston, as co-agent (the "Agent") and Continental Bank N.A., as
co-agent that (a) the information set forth in this Borrowing Base Report was
true and correct as of the last day of the period specified herein, (b) this
Borrowing Base Report has been prepared in accordance with the applicable
provisions of the Credit Agreement relating to the computation of the Borrowing
Base Report and the various components thereof, and (c) as of the date of this
Borrowing Base Report, there exists no Default or Event of Default or condition
which would, with either or both the giving of notice or the lapse of time,
result in a Default or an Event of Default.
Except as otherwise specified in this Borrowing Base Report, capitalized
terms used herein without definition have the same meanings herein as in the
Credit Agreement.
HPSC, INC.
By:______________________________
Title:
<PAGE>
-2-
Borrowing Base as of ________, 199_ for the Period Ended __________, 199_
<TABLE>
<CAPTION>
<S> <C>
I. Eligible Account Receivable Portion of the Borrowing Base
A. Eligible Accounts Receivable
1. Accounts Receivable:
(a) Customer Receivables of HPSC
"Non-Select" $_______
(b) ACFC Receivables $_______
(c) Total Receivables
(item I.A.1(a) PLUS item I.A.1(b)) $_______
2. Ineligible Accounts Receivable (Accounts
Receivable which are any of the following):
(a) uncollectible $_______
(b) with account debtors that (i) are
Affiliates of the Borrower, (ii) are not
Customers in an arm's length
transaction, (iii) are insolvent or
involved, whether voluntary or
involuntary, in any case or proceeding
under bankruptcy, reorganization,
arrangement, insolvency, adjustment of
debt, dissolution, liquidation or similar
law of any jurisdiction, (iv) which have
been found in the Agent's reasonable
judgment not to be creditworthy $_______
(c) in payment of obligations that have not
been fully performed or are subject to
dispute or any other similar claims that
would reduce the cash amount payable thereof $_______
<PAGE>
-3-
(d) subject to any pledge, restriction, security
interest or other lien or encumbrance other
than those created by the Loan Documents $_______
(e) in which the Agent does not have a valid and
perfected first priority security interest $_______
(f) more than 90 days past due or in any event
outstanding for more than 120 days from the
date of invoice $_______
(g) due from any single account debtor if more
than 15% of the aggregate amount of all
Accounts Receivable owing from such account
debtor would not otherwise be Eligible
Accounts Receivable $_______
(h) not payable in Dollars $_______
(i) payable from an office outside of the
United States $_______
(j) secured by a letter of credit unless the
Agent has a prior, perfected security
interest in such letter of credit $_______
(k) have been reissued more than two times $_______
(l) included in the "Receivables Pool" $_______
(m) subject to any lien or any negative
pledge pursuant to the Funding
Indenture $_______
(n) did not originate in the ordinary
course of business of the Borrower $_______
(o) due from any single account debtor
if, after including such Accounts
Receivable, the Borrowing Base will
be more than 7.5% of Accounts
Receivable owing from such account
debtor $_______
<PAGE>
-4-
(p) Total of items I.A.2(a) - (o) $_______
3. Accounts Receivable reissued more than twice
which do not exceed in the aggregate 10% of
Gross Customer Receivables $_______
4. Accounts Receivables outstanding for more
than 120 days, and less than 150 days, from
date of invoice which are not more than 5.25%
of the Borrowing Base $_______
5. Eligible Accounts Receivable
(item I.A.1(c) MINUS item I.A.2(p) PLUS item
I.A.3 PLUS item I.A.4) $_______
B. Rate 80%
C. Eligible Accounts Receivable Portion of the
Borrowing Base (item I.A.5 MULTIPLIED by item I.B) $_______
II. Residual Value of Equipment Portion of the Borrowing Base
A. Residual Value of Equipment $_______
B. Rate 50%
C. Residual Value of Equipment Portion of Borrowing
Base (item II.A MULTIPLIED by item II.B) (must not
exceed $1,000,000) $_______
III. Borrowing Base (item I.C PLUS item II.C) $_______
</TABLE>
<PAGE>
EXHIBIT B-1
-----------
FORM OF
REVOLVING CREDIT NOTE
---------------------
$10,000,000 June 23, 1994
FOR VALUE RECEIVED, the undersigned HPSC, INC., a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of THE FIRST NATIONAL BANK OF
BOSTON (the "Bank") at the Bank's head office at 100 Federal Street, Boston,
Massachusetts 02110:
(a) prior to or on December 31, 1995 the principal amount of TEN
MILLION DOLLARS ($10,000,000) or, if less, the aggregate unpaid principal
amount of Revolving Credit Loans advanced by the Bank to the Borrower
pursuant to the Revolving Credit Agreement dated as of June 23, 1994 (as
amended and in effect from time to time, the "Credit Agreement"), among the
Borrower, the Bank and other parties thereto;
(b) the principal outstanding hereunder from time to time at the
times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through and
including the maturity date hereof at the times and at the rate provided in
the Credit Agreement.
This Note evidences borrowings under and has been issued by the Borrower in
accordance with the terms of the Credit Agreement. The Bank and any holder
hereof is entitled to the benefits of the Credit Agreement, the Security
Documents and the other Loan Documents, and may enforce the agreements of the
Borrower contained therein, and any holder hereof may exercise the respective
remedies provided for thereby or otherwise available in respect thereof, all in
accordance with the respective terms thereof. All capitalized terms used in
this Note and not otherwise defined herein shall have the same meanings herein
as in the Credit Agreement.
<PAGE>
-2-
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at or about the time of the Drawdown Date of any Revolving Credit Loan or at the
time of receipt of any payment of principal of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, reflecting the making of
such Revolving Credit Loan or (as the case may be) the receipt of such payment.
The outstanding amount of the Revolving Credit Loans set forth on the grid
attached to this Note, or the continuation of such grid, or any other similar
record, including computer records, maintained by the Bank with respect to any
Revolving Credit Loans shall be PRIMA FACIE evidence of the principal amount
thereof owing and unpaid to the Bank, but the failure to record, or any error in
so recording, any such amount on any such grid, continuation or other record
shall not limit or otherwise affect the obligation of the Borrower hereunder or
under the Credit Agreement to make payments of principal of and interest on this
Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
<PAGE>
-3-
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 19 OF THE CREDIT AGREEMENT.
THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under the
laws of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Revolving Credit Note
to be signed in its corporate name and its corporate seal to be impressed
thereon by its duly authorized officer as of the day and year first above
written.
[Corporate Seal]
HPSC, INC.
By: ________________________________
Title:
<PAGE>
- ----------------------------------------------------------------------
Amount of Balance of
Amount Principal Paid Principal Notation
Date of Loan or Prepaid Unpaid Made By:
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<PAGE>
EXHIBIT B-2
FORM OF
REVOLVING CREDIT NOTE
---------------------
$10,000,000 June 23, 1994
FOR VALUE RECEIVED, the undersigned HPSC, INC., a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of CONTINENTAL BANK, N.A. (the
"Bank") at the head office of the First National Bank of Boston, as co-agent
(the "Agent"), at 100 Federal Street, Boston, Massachusetts 02110:
(a) prior to or on December 31, 1995 the principal amount of TEN
MILLION DOLLARS ($10,000,000) or, if less, the aggregate unpaid principal
amount of Revolving Credit Loans advanced by the Bank to the Borrower
pursuant to the Revolving Credit Agreement dated as of June 23, 1994 (as
amended and in effect from time to time, the "Credit Agreement"), among the
Borrower, the Bank and other parties thereto;
(b) the principal outstanding hereunder from time to time at the
times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to time
outstanding from the Closing Date under the Credit Agreement through and
including the maturity date hereof at the times and at the rate provided in
the Credit Agreement.
This Note evidences borrowings under and has been issued by the Borrower in
accordance with the terms of the Credit Agreement. The Bank and any holder
hereof is entitled to the benefits of the Credit Agreement, the Security
Documents and the other Loan Documents, and may enforce the agreements of the
Borrower contained therein, and any holder hereof may exercise the respective
remedies provided for thereby or otherwise available in respect thereof, all in
accordance with the respective terms thereof. All capitalized terms used in
this Note and not otherwise defined herein shall have the same meanings herein
as in the Credit Agreement.
<PAGE>
-2-
The Borrower irrevocably authorizes the Bank to make or cause to be made,
at or about the time of the Drawdown Date of any Revolving Credit Loan or at the
time of receipt of any payment of principal of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, reflecting the making of
such Revolving Credit Loan or (as the case may be) the receipt of such payment.
The outstanding amount of the Revolving Credit Loans set forth on the grid
attached to this Note, or the continuation of such grid, or any other similar
record, including computer records, maintained by the Bank with respect to any
Revolving Credit Loans shall be PRIMA FACIE evidence of the principal amount
thereof owing and unpaid to the Bank, but the failure to record, or any error in
so recording, any such amount on any such grid, continuation or other record
shall not limit or otherwise affect the obligation of the Borrower hereunder or
under the Credit Agreement to make payments of principal of and interest on this
Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire unpaid
principal amount of this Note and all of the unpaid interest accrued thereon may
become or be declared due and payable in the manner and with the effect provided
in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Bank or such holder, nor shall any delay, omission or waiver
on any one occasion be deemed a bar or waiver of the same or any other right on
any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waives presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
<PAGE>
-3-
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 19 OF THE CREDIT AGREEMENT.
THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under the
laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has caused this Revolving Credit Note
to be signed in its corporate name and its corporate seal to be impressed
thereon by its duly authorized officer as of the day and year first above
written.
[Corporate Seal]
HPSC, INC.
By: ____________________
Title:
<PAGE>
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Amount of Balance of
Amount Principal Paid Principal Notation
Date of Loan or Prepaid Unpaid Made By:
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<PAGE>
EXHIBIT C
---------
FORM OF
REVOLVING CREDIT LOAN REQUEST
-----------------------------
, 199
------------- --
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Attention: Large Corporate New England Division
Re: Revolving Credit Loan Request
-----------------------------
Ladies and Gentlemen:
The undersigned, HPSC, Inc. (the "Borrower") hereby requests that you make
a Revolving Credit Loan pursuant to the terms and conditions set forth in the
Revolving Credit Agreement, dated as of June 23, 1994, among the Borrower, the
banking institutions referred to therein as the Banks (collectively, the
"Banks") and The First National Bank of Boston, as co-agent (the "Agent") and
Continental Bank, N.A., as co-agent, as the same may be amended and in effect
from time to time (such agreement, as amended and in effect from time to time,
the "Credit Agreement"), as set forth below.
The Borrower hereby represents, warrants and certifies to you that (a) the
proceeds specified herein shall be used in accordance with the provisions of the
Credit Agreement, (b) the representations and warranties of the Borrower
contained in the Credit Agreement or otherwise made by the Borrower in
connection with the transactions contemplated thereby were true and correct in
all respects when made and are true and correct in all respects on and as of the
date hereof with the same effect as if made herein (except to the extent of
changes resulting from transactions contemplated or permitted by the Credit
Agreement and the other Loan Documents and changes occurring in the ordinary
course of business that singly or in the aggregate are not materially adverse,
and except to the extent that such representations and warranties relate
expressly to an earlier date), (c) the Borrower has performed and complied in
all respects with all of the
<PAGE>
2
terms and conditions contained in the Credit Agreement required to be performed
or complied with by the Borrower prior to or at the time of the borrowing
requested herein, and (d) at and as of the date hereof, no Default or Event of
Default exists and no Default or Event of Default shall result from the
consummation of the borrowing requested herein.
The Borrower request that the Bank make a [Base] [Eurodollar] Rate
Revolving Credit Loan in the principal amount of $[INSERT AMOUNT] on the
Drawdown Date of [INSERT PROPOSED DRAWDOWN DATE] for the Interest Period
commencing on [INSERT PROPOSED DRAWDOWN DATE] and ending on December 31, 1995.
We understand that this request obligates us to accept the requested Revolving
Credit Loan on the proposed Drawdown Date.
Capitalized terms which are used herein without definition and which are
defined in the Credit Agreement shall have the same meanings herein as in the
Credit Agreement.
Very truly yours,
HPSC, INC.
By:______________________________
Title:
<PAGE>
EXHIBIT D
---------
FORM OF
COMPLIANCE CERTIFICATE
----------------------
[Date]
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Attn.: Large Corporate New England Division
Ladies and Gentlemen:
Reference is made to the Revolving Credit Agreement, dated as of June 23,
1994 (as amended and in effect from time to time, the "Credit Agreement"), by
and among HPSC, Inc. (the "Borrower"), the banking institutions referred to
therein as the Banks (collectively, the "Banks") and The First National Bank of
Boston, as co-agent (the "Agent") and Continental Bank N.A., as co-agent.
Capitalized terms used herein without definition and which are defined in the
Credit Agreement shall have the respective meanings assigned to such terms in
the Credit Agreement.
Pursuant to Section 7.4(d) of the Credit Agreement, the Borrower, by the
undersigned officer of the Borrower (who has reviewed the Loan Documents) hereby
certifies to each of you as follows: (a) the information furnished in the
calculations attached hereto was true and correct in all material respects as of
the last day of the fiscal [year] [quarter] next preceding the date of this
certificate; (b) as of the date of this certificate, there exists no Default or
Event of Default or, to the best of the Borrower's knowledge after diligent
review, condition which would, with either or both the giving of notice or the
lapse of time, result in a Default or an Event of Default; and (c) the financial
statements delivered herewith were prepared in accordance with generally
accepted accounting principles applied on a basis consistent with prior periods
(except, in the case of quarterly statements, for provisions for footnotes and
subject to year-end adjustments and, in all cases, except as disclosed therein).
IN WITNESS WHEREOF, HPSC, Inc. has executed this Compliance Certificate as
of the date first written above.
HPSC, INC.
By:_______________________________
Title:
<PAGE>
-2-
COMPLIANCE CERTIFICATE
HPSC, INC.
I. SECTION 9.1- DEBT TO CONSOLIDATED TANGIBLE CAPITAL FUNDS
--------------------------------------------------------
Period - any time
A. Indebtedness of the Borrower and its Subsidiaries (other
than Credident) PLUS security deposits received by the
Borrower and its Subsidiaries (other than Credident) with
respect to Accounts Receivable $_______
B. Consolidated Tangible Capital Funds:
1. Consolidated Tangible Net Worth:
(a) Consolidated Total Assets $_______
(b) Consolidated Total Liabilities $_______
(c) the book value of all assets of the
Borrower and its Subsidiaries (other
than Credident) properly classified as
intangible assets under generally
accepted accounting principles,
including such items as good will, the
purchase price of acquired assets in
excess of fair market value thereof,
trademarks, trade names, service marks,
brand names, copyrights, patents and
licenses, and rights with respect to the
foregoing $_______
(d) all amounts representing any write-up in
the book value of any asset of the
Borrower or its Subsidiaries (other than
Credident) resulting from a revaluation
thereof, excluding adjustments to
translate foreign assets and liabilities
for changes in foreign exchange rates
made in accordance with Financial
Accounting Standards Board Statement
No. 52 $_______
<PAGE>
-3-
(e) to the extent otherwise includable in
the computation of Consolidated Tangible
Net Worth, any subscriptions receivable $_______
(f) deferred underwriting expenses and origination
costs $_______
(g) I.B.1(c) PLUS I.B.1(d) PLUS I.B.1(e) PLUS
I.B.1(f) $_______
(h) I.B.1(a) MINUS I.B.1(b) MINUS I.B.1(g) $_______
2. Subordinated Debt $_______
3. I.B.1(h) PLUS I.B.2 $_______
C. I.A DIVIDED BY I.B.3 (expressed as a %)
(must not exceed 400%) ______%
II. SECTION 9.2- CONSOLIDATED TANGIBLE NET WORTH
---------------------------------------------
Period - any time
A. Consolidated Tangible Net Worth (I.B.1(h))
(must be equal to or greater than II.E) $_______
B. $30,000,000
C. on a cumulative basis, 75% of positive Consolidated Net
Income for each fiscal quarter beginning with the fiscal
quarter commencing on or after March 30, 1994 $_______
D. 100% of the proceeds of any sale by the Borrower or any of
its Subsidiaries (other than Credident) of (1) equity
securities issued by the Borrower or any of its Subsidiaries
(other than Credident), or (2) warrants or subscription
rights for equity securities issued by the Borrower or any
of its Subsidiaries (other than Credident) $_______
E. II.B PLUS II.C PLUS II.D $_______
<PAGE>
-4-
III. SECTION 9.3- INTEREST COVERAGE
-------------------------------
Period - See table set forth in III.C below:
A. Consolidated Earnings Before Interest and Taxes for
such period $_______
B. Consolidated Total Interest Expense for such period $_______
C. III.A DIVIDED BY III.B (expressed as a %) (must be
equal to or greater than the minimum permitted % set
forth below): _______%
<TABLE>
<CAPTION>
MINIMUM
PERIOD PERCENTAGE
----- ----------
<S> <C>
Quarter ending 3/26/94 115%
Quarter ending 6/30/94
and the immediately
preceding fiscal quarter 115%
Quarter ending 9/28/94
and the immediately
preceding two fiscal quarters 115%
Quarter ending 12/31/94
and the immediately
preceding three fiscal
quarters 115%
Any fiscal quarter ending
thereafter, taken together
with the immediately preceding
three fiscal quarters 120%
</TABLE>
IV. SECTION 9.4- CAPITAL EXPENDITURES
----------------------------------
Period - any time (cumulative since closing)
A. Capital Expenditures
(must not exceed, in the aggregate, $1,000,000) $_______
<PAGE>
-5-
V. SECTION 9.5- REISSUED CUSTOMER RECEIVABLES TO GROSS CUSTOMER RECEIVABLES
-------------------------------------------------------------------------
Period - any time (cumulative since closing)
A. Reissued Customer Receivables (originated and calculated
after Closing Date) (non-select) $_______
B. Gross Customer Receivables (non-select) $_______
C. V.A DIVIDED BY V.B (expressed as a %)
(must not exceed 15%) ______%
VI. SECTION 9.6- DELINQUENT CUSTOMER RECEIVABLES TO GROSS CUSTOMER
RECEIVABLES
-------------------------------------------------------------------------
Period - See table set forth in VI.C below:
A. Delinquent Customer Receivables $_______
B. Gross Customer Receivables $_______
C. VI.A DIVIDED BY VI.B (expressed as a %)
(must not exceed the maximum permitted % set forth below): ______%
<TABLE>
<CAPTION>
MAXIMUM
PERIOD PERCENTAGE
------ ----------
<S> <C>
Closing Date - 03/30/95 18%
03/31/95 - 09/29/95 13%
09/30/95 and thereafter 10%
</TABLE>
VII. SECTION 9.7- RESERVES TO DELINQUENT CUSTOMER RECEIVABLES
---------------------------------------------------------
Period - the end of any fiscal quarter
A. Reserves (non-select) $_______
B. Delinquent Customer Receivables (non-select) $_______
C. VII.A DIVIDED BY VII.B (expressed as a %)
(must be greater than or equal to 60%) ______%
<PAGE>
-6-
VIII. SECTION 9.8- PROVISION FOR LOSSES
----------------------------------
Period - the end of each fiscal quarter
A. Provision for Losses (must be equal to or greater than
the amount calculated in VIII.C) $_______
B. Net Customer Receivables originated during such fiscal quarter:
1. Gross Customer receivables originated
during such fiscal quarter $_______
2. Unearned Income generated during such fiscal quarter $_______
3. VIII.B.1 MINUS VIII.B.2 $_______
C. VIII.B.3 MULTIPLIED BY .02 $_______
IX. SECTION 9.9- COLLECTIONS TO BILLINGS
-------------------------------------
Period - the end of any month during each period listed in the table set
forth in IX.C below:
A. Collections (average for preceding 3 month period)
(non-select) $_______
B. Billings (average for preceding 3 month period)
(non-select) $_______
C. IX.A DIVIDED BY IX.B (expressed as a %)
(must be equal to or greater than the minimum % set
forth below): _______%
<TABLE>
<CAPTION>
MINIMUM
PERIOD PERCENTAGE
------ ----------
<S> <C>
Closing Date - 12/31/95 90%
After 12/31/95 94%
</TABLE>
<PAGE>
-7-
X. SECTION 9.10- LEASES
--------------------
Period - any time
A. Rental Obligations (must not exceed $5,000,000) $_______
XI. SECTION 9.11- EQUIPMENT SUPPLIER CONCENTRATION
----------------------------------------------
Period - any time
Does the aggregate of Accounts Receivable generated after the
Closing Date through the financing of Equipment supplied by any
single Equipment Supplier exceed 50% of total Accounts
Receivable? Y__ N__
<PAGE>
Exhibit E-1
SECURITY AGREEMENT
DATED as of June 23, 1994
between
HPSC, INC.
and
THE FIRST NATIONAL BANK OF BOSTON, as Agent
<PAGE>
TABLE OF CONTENTS
1. Definition
1. Definitions...............................................................1
2. Grant of Security Interest................................................2
2.1. Collateral Granted................................................2
2.2. Delivery of Instruments, etc......................................2
2.3. Excluded Collateral...............................................3
2.4. Stock Pledge Agreement............................................4
3. Title to Collateral, etc..................................................4
4. Continuous Perfection.....................................................4
5. No Liens..................................................................4
6. No Transfers..............................................................5
7. Legend....................................................................5
8. Insurance.................................................................5
8.1. Maintenance of Insurance..........................................5
8.2. Insurance Proceeds................................................6
8.3. Notice of Cancellation, etc.......................................7
9. Maintenance of Collateral; Compliance with Law............................7
10. Collateral Protection Expenses; Preservation of Collateral................7
10.1. Expenses Incurred by Agent.......................................7
10.2. Agent's Obligations and Duties...................................8
11. Securities and Deposits...................................................8
12. Notification to Account Debtors and Other Obligors........................8
13. Further Assurances........................................................9
14. Power of Attorney.........................................................9
14.1. Appointment and Powers of Agent..................................9
14.2. Ratification by Company.........................................10
14.3. No Duty on Agent................................................11
15. Remedies.................................................................11
16. No Waiver, etc...........................................................11
17. Marshalling..............................................................12
18. Proceeds of Dispositions; Expenses.......................................12
19. Overdue Amounts..........................................................13
20. Governing Law; Consent to Jurisdiction...................................13
21. Waiver of Jury Trial.....................................................13
22. Miscellaneous............................................................14
23. Termination of Security Interests........................................14
<PAGE>
HPSC, INC.
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of June 23, 1994, between HPSC, INC., a
Delaware corporation (the "Company"), and THE FIRST NATIONAL BANK OF BOSTON, a
national banking association, as co-agent (hereinafter, in such capacity, the
"Agent") for itself and other banking institutions (hereinafter, collectively,
the "Banks") which are or may become parties to a Revolving Credit Agreement
dated as of June 23, 1994 (as amended and in effect from time to time, the
"Credit Agreement"), among the Company, the Banks, the Agent and Continental
Bank N.A., as co-agent for the Banks.
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Company under the Credit Agreement that the
Company execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a security agreement in substantially the form hereof; and
WHEREAS, the Company wishes to grant security interests in favor of the
Agent, for the benefit of the Banks and the Agent, as herein provided;
NOW, THEREFORE, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. All capitalized terms used herein without definitions
shall have the respective meanings provided therefor in the Credit Agreement.
All terms defined in the Uniform Commercial Code of the Commonwealth of
Massachusetts and used herein shall have the same definitions herein as
specified therein.
<PAGE>
-2-
2. GRANT OF SECURITY INTEREST.
2.1. COLLATERAL GRANTED. The Company hereby grants to the Agent, for
the benefit of the Banks and the Agent, to secure the payment and
performance in full of all of the Obligations, a security interest in and
so pledges and assigns to the Agent, for the benefit of the Banks and the
Agent, the following properties, assets and rights of the Company, wherever
located, whether now owned or hereafter acquired or arising, and all
proceeds and products thereof (all of the same being hereinafter called the
"Collateral"):
All personal and fixture property of every kind and nature
including without limitation all furniture, fixtures, equipment, raw
materials, inventory, goods, accounts, contract rights, rights to the
payment of money, insurance refund claims and all other insurance
claims and proceeds, tort claims, chattel paper, documents,
instruments (including certificated securities other than certificated
securities issued by Credident, Inc., a Delaware corporation), deposit
accounts and all general intangibles including, without limitation,
all uncertificated securities, tax refund claims, license fees,
patents, patent applications, trademarks, trademark applications,
trade names, copyrights, copyright applications, rights to sue and
recover for past infringement of patents, trademarks and copyrights,
computer programs, computer software, engineering drawings, service
marks, customer lists, goodwill, and all licenses, permits, agreements
of any kind or nature pursuant to which the Company possesses, uses or
has authority to possess or use property (whether tangible or
intangible) of others or others possess, use or have authority to
possess or use property (whether tangible or intangible) of the
Company, and all recorded data of any kind or nature, regardless of
the medium of recording including, without limitation, all software,
writings, plans, specifications and schematics.
2.2. DELIVERY OF INSTRUMENTS, ETC. Pursuant to the terms hereof, the
Company has endorsed, assigned and delivered to the Agent all negotiable or
non-negotiable instruments (including certificated securities and excluding
instruments which constitute part of chattel paper as defined in Section
9-105(b) of the Massachusetts UCC) pledged by it hereunder, together with
instruments of transfer or assignment duly executed in blank as the Agent
may have specified. Upon the occurrence and during the continuance of
<PAGE>
-3-
an Event of Default, the Company will endorse, assign and deliver all
chattel paper pledged by it hereunder. In the event that the Company
shall, after the date of this Agreement, acquire any other negotiable or
non-negotiable instruments (including certificated securities and excluding
instruments which constitute part of chattel paper as defined in Section
9-105(b) of the Massachusetts UCC) to be pledged by it hereunder, the
Company shall forthwith endorse, assign and deliver the same to the Agent,
accompanied by such instruments of transfer or assignment duly executed in
blank as the Agent may from time to time specify. To the extent that any
securities are uncertificated, appropriate book-entry transfers reflecting
the pledge of such securities created hereby have been or, in the case of
uncertificated securities hereafter acquired by the Company, will at the
time of such acquisition be, duly made for the account of the Agent or one
or more nominees of the Agent with the issuer of such securities or other
appropriate book-entry facility or financial intermediary, with the Agent
having at all times the right to obtain definitive certificates (in the
Agent's name or in the name of one or more nominees of the Agent) where the
issuer customarily or otherwise issues certificates, all to be held as
Collateral hereunder. The Company hereby acknowledges that the Agent may,
in its discretion, appoint one or more financial institutions to act as the
Agent's agent in holding in custodial account instruments or other
financial assets in which the Agent is granted a security interest
hereunder, including, without limitation, certificates of deposit and other
instruments evidencing short term obligations.
2.3. EXCLUDED COLLATERAL. Notwithstanding the foregoing provisions of
this Section 2, such grant of security interest shall not extend to, and
the term "Collateral" shall not include, any chattel paper and general
intangibles which are now or hereafter held by the Company as licensee,
lessee or otherwise, to the extent that (i) such chattel paper and general
intangibles are not assignable or capable of being encumbered as a matter
of law or under the terms of the license, lease or other agreement
applicable thereto (but solely to the extent that any such restriction
shall be enforceable under applicable law), without the consent of the
licensor or lessor thereof or other applicable party thereto and (ii) such
consent has not been obtained; PROVIDED, HOWEVER, that the foregoing grant
of security interest shall extend to, and the term "Collateral" shall
include, (A) any and all proceeds of such chattel paper and general
intangibles to the extent that the assignment or encumbering of such
proceeds is not so restricted and (B) upon any such licensor, lessor or
other applicable party consent with respect to any such otherwise
<PAGE>
-4-
excluded chattel paper or general intangibles being obtained, thereafter
such chattel paper or general intangibles as well as any and all proceeds
thereof that might have theretofore have been excluded from such grant of a
security interest and the term "Collateral".
2.4 STOCK PLEDGE AGREEMENT. Concurrently herewith the Company is
executing and delivering to the Agent, for the benefit of the Banks and the
Agent, a stock pledge agreement pursuant to which the Company is pledging
to the Agent, for the benefit of the Banks and the Agent, all the shares of
the capital stock of the Borrower's subsidiaries other than Credident.
Such pledge shall be governed by the terms of such stock pledge agreement
and not by the terms of this Agreement.
3. TITLE TO COLLATERAL, ETC. The Company is the owner of the Collateral
free from any adverse lien, security interest or other encumbrance, except for
the security interest created by this Agreement and the Permitted Liens. None
of the Collateral constitutes, or is the proceeds of, "farm products" as defined
in Section 9-109(3) of the Uniform Commercial Code of the Commonwealth of
Massachusetts. None of the account debtors in respect of any accounts, chattel
paper or general intangibles and none of the obligors in respect of any
instruments included in the Collateral is a governmental authority subject to
the Federal Assignment of Claims Act.
4. CONTINUOUS PERFECTION. The Company's place of business or, if more
than one, chief executive office is indicated on the Perfection Certificate
delivered to the Agent herewith (the "Perfection Certificate"). The Company
will not change the same, or the name, identity or corporate structure of the
Company in any manner, without providing at least 30 days prior written notice
to the Agent. The Collateral, to the extent not delivered to the Agent pursuant
to Section 2.2, will be kept at those locations listed on the Perfection
Certificate and the Company will not remove the Collateral from such locations,
without providing at least 30 days prior written notice to the Agent, PROVIDED,
that Collateral which constitutes inventory may be moved without such notice.
5. NO LIENS. Except for the security interest herein granted and liens
permitted by the Credit Agreement, the Company shall be the owner of the
Collateral free from any lien, security interest or other encumbrance, and the
Company shall defend the same against all claims and demands of all persons at
any time claiming the same or any interests therein adverse to the Agent or any
of the Banks. The Company shall not
<PAGE>
-5-
pledge, mortgage or create, or suffer to exist a security interest in the
Collateral in favor of any person other than the Agent, for the benefit of the
Banks and the Agent, except for Permitted Liens.
6. NO TRANSFERS. The Company will not sell or offer to sell or otherwise
transfer the Collateral or any interest therein except for (i) sales and leases
of inventory and licenses of general intangibles in the ordinary course of
business and (ii) sales or other dispositions of obsolescent items of equipment
in the ordinary course of business consistent with past practices.
7. LEGEND. The Company is required and must prominently and
conspicuously stamp or affix the following legend to each and every item of
chattel paper subject to this Agreement and will do so at the Company's first
opportunity:
---------------------------------------------------------------
NOTICE: TRANSFER PROHIBITED
THIS CHATTEL PAPER MAY NOT BE SOLD, ASSIGNED,
USED AS COLLATERAL, OR TRANSFERRED. IT IS
SUBJECT TO A SECURITY INTEREST.
Dated: June 21, 1994
Granted by: HPSC, Inc.
Debtor
In favor of: The First National Bank of Boston, as Agent
Secured Party
Located at: 100 Federal Street
Boston, MA 02110
Attention: M. Feldman
--------------------------------------------------------------
8. INSURANCE.
8.1. MAINTENANCE OF INSURANCE. The Company will maintain with
financially sound and reputable insurers insurance with respect to its
properties and business against such casualties and contingencies as shall
be in accordance with general practices of businesses engaged in similar
activities in similar geographic
<PAGE>
-6-
areas; PROVIDED, HOWEVER, that the Company shall not be required to
maintain such insurance with respect to Equipment which it leases or
transfers to third parties pursuant to an equipment lease or a conditional
sales agreement to the extent that the lessee thereon maintains such
insurance pursuant to the terms of its equipment lease or conditional sales
agreement with the Company. Such insurance shall be in such minimum
amounts that the Company will not be deemed a co-insurer under applicable
insurance laws, regulations and policies and otherwise shall be in such
amounts, contain such terms, be in such forms and be for such periods as
may be reasonably satisfactory to the Agent. In addition, all of the
Company's insurance shall be payable to the Agent as loss payee under a
"standard" or "New York" loss payee clause for the benefit of the Banks and
the Agent. Without limiting the foregoing, the Company will (i) keep (or
cause its Equipment lessees to keep) all of its physical property insured
with casualty or physical hazard insurance on an "all risks" basis, with
broad form flood and earthquake coverages and electronic data processing
coverage, with a full replacement cost endorsement and an "agreed amount"
clause in an amount equal to 100% of the full replacement cost of such
property, (ii) maintain all such workers' compensation or similar insurance
as may be required by law and (iii) maintain, in amounts equal to those
generally maintained by businesses engaged in similar activities in similar
geographic areas, general public liability insurance against claims of
bodily injury, death or property damage occurring, on, in or about the
properties of the Company; business interruption insurance; and product
liability insurance.
8.2. INSURANCE PROCEEDS. The proceeds of any of the Company's
casualty insurance in respect of any casualty loss of any of the Collateral
shall, subject to the rights, if any, of other parties with a prior
interest in the property covered thereby, (i) so long as no Default or
Event of Default has occurred and is continuing, be disbursed to the
Company for direct application by the Company solely to the repair or
replacement of the Company's property so damaged or destroyed and (ii) in
all other circumstances, be held by the Agent as cash collateral for the
Obligations. The Agent may, at its sole option, disburse from time to time
all or any part of such proceeds so held as cash collateral, upon such
terms and conditions as the Agent may reasonably prescribe, for direct
application by the Company solely to the repair or replacement of the
Company's property so damaged or destroyed, or the Agent may apply all or
any part of such proceeds to the Obligations with the Total
<PAGE>
-7-
Commitment (if not then terminated) being reduced by the amount so applied
to the Obligations.
8.3. NOTICE OF CANCELLATION, ETC. All policies of insurance shall
provide for at least ten days prior written cancellation notice to the
Agent. In the event of failure by the Company to provide and maintain
insurance as herein provided, the Agent may, at its option, provide such
insurance and charge the amount thereof to the Company. The Company shall
furnish the Agent with certificates of insurance and policies evidencing
compliance with the foregoing insurance provision.
9. MAINTENANCE OF COLLATERAL; COMPLIANCE WITH LAW. The Company will keep
the Collateral in good order and repair, reasonable wear and tear excepted, and
will not use the same in violation of law or any policy of insurance thereon.
The Agent, or its designee, may inspect the Collateral at any reasonable time,
wherever located. The Company will pay promptly when due all taxes,
assessments, governmental charges and levies upon the Collateral or incurred in
connection with the use or operation of such Collateral or incurred in
connection with this Agreement; PROVIDED that any such tax, assessment, charge,
levy or claim need not be paid if the validity or amount thereof shall currently
be contested in good faith by appropriate proceedings and if the Borrower or
such Subsidiary shall have set aside on its books adequate reserves with respect
thereto; and PROVIDED FURTHER that the Borrower and each Subsidiary of the
Borrower will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor. The Company has at all times operated, and
the Company will continue to operate, its business in compliance in all material
respects with all applicable provisions of the federal Fair Labor Standards Act,
as amended, and with all applicable provisions of federal, state and local
statutes and ordinances dealing with the control, shipment, storage or disposal
of hazardous materials or substances.
10. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
10.1. EXPENSES INCURRED BY AGENT. Upon failure by the Company to do
so, the Agent may discharge taxes and other encumbrances at any time levied
or placed on any of the Collateral, make repairs thereto and pay any
necessary filing fees. The Company agrees to reimburse the Agent on demand
for any and all expenditures so made. The Agent shall have no obligation
to the
<PAGE>
-8-
Company to make any such expenditures, nor shall the making thereof relieve
the Company of any default.
10.2 AGENT'S OBLIGATIONS AND DUTIES. Anything herein to the contrary
notwithstanding, the Company shall remain liable under each contract or
agreement comprised in the Collateral to be observed or performed by the
Company thereunder. Neither the Agent nor any Bank shall have any
obligation or liability under any such contract or agreement by reason of
or arising out of this Agreement or the receipt by the Agent or any Bank of
any payment relating to any of the Collateral, nor shall the Agent or any
Bank be obligated in any manner to perform any of the obligations of the
Company under or pursuant to any such contract or agreement, to make
inquiry as to the nature or sufficiency of any payment received by the
Agent or any Bank in respect of the Collateral or as to the sufficiency of
any performance by any party under any such contract or agreement, to
present or file any claim, to take any action to enforce any performance or
to collect the payment of any amounts which may have been assigned to the
Agent or to which the Agent or any Bank may be entitled at any time or
times. The Agent's sole duty with respect to the custody, safe keeping and
physical preservation of the Collateral in its possession, under Section
9-207 of the Uniform Commercial Code of the Commonwealth of Massachusetts
or otherwise, shall be to deal with such Collateral in the same manner as
the Agent deals with similar property for its own account, but in any event
in a commercially reasonable manner.
11. SECURITIES AND DEPOSITS. The Agent may at any time, at its option,
transfer to itself or any nominee any securities constituting Collateral,
receive any income thereon and hold such income as additional Collateral or
apply it to the Obligations. Upon the occurrence and during the continuance of
an Event of Default, the Agent may (i) demand, sue for, collect, or make any
settlement or compromise which it deems desirable with respect to the Collateral
and (ii) regardless of the adequacy of Collateral or any other security for the
Obligations, any deposits or other sums at any time credited by or due from the
Agent or any Bank to the Company may at any time be applied to or set off
against any of the Obligations.
12. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER OBLIGORS. If a Default or
an Event of Default shall have occurred and be continuing, the Company shall, at
the request of the Agent, notify account debtors on accounts, chattel paper and
general intangibles of the Company and
<PAGE>
-9-
obligors on instruments for which the Company is an obligee of the security
interest of the Agent in any account, chattel paper, general intangible or
instrument and that payment thereof is to be made directly to the Agent or to
any financial institution designated by the Agent as the Agent's agent therefor,
and the Agent may itself, if a Default or an Event of Default shall have
occurred and be continuing, without notice to or demand upon the Company, so
notify account debtors and obligors. After the making of such a request or the
giving of any such notification, the Company shall hold any proceeds of
collection of accounts, chattel paper, general intangibles and instruments
received by the Company as trustee for the Agent, for the benefit of the Banks
and the Agent, without commingling the same with other funds of the Company and
shall turn the same over to the Agent in the identical form received, together
with any necessary endorsements or assignments. The Agent shall apply the
proceeds of collection of accounts, chattel paper, general intangibles and
instruments received by the Agent to the Obligations, such proceeds to be
immediately entered after final payment in cash or solvent credits of the items
giving rise to them.
13. FURTHER ASSURANCES. The Company, at its own expense, shall do, make,
execute and deliver all such additional and further acts, things, deeds,
assurances and instruments as the Agent may reasonably require more completely
to vest in and assure to the Agent and the Banks their respective rights
hereunder or in any of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
continuation statements under the Uniform Commercial Code, (ii) obtaining
governmental and other third party consents and approvals, including without
limitation any consent of any licensor, lessor or other applicable party
referred to in Section 2.3, (iii) obtaining waivers from mortgagees and
landlords and (iv) taking all actions required by Sections 8-313 and 8-321 of
the Uniform Commercial Code, as applicable in each relevant jurisdiction, with
respect to certificated and uncertificated securities.
14. POWER OF ATTORNEY.
14.1 APPOINTMENT AND POWERS OF AGENT. The Company hereby irrevocably
constitutes and appoints the Agent and any officer or agent thereof, with
full power of substitution, as its true and lawful attorneys-in-fact with
full irrevocable power and authority in the place and stead of the Company
or in the Agent's own name, for the purpose of carrying out the terms of
this Agreement, to take any and all appropriate action and to execute any
and all documents and instruments that may be necessary or
<PAGE>
-10-
desirable to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, hereby gives said attorneys the
power and right, on behalf of the Company, without notice to or assent by
the Company, to do the following:
(a) upon the occurrence and during the continuance of a Default
or an Event of Default, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral
in such manner as is consistent with the Uniform Commercial Code of
the Commonwealth of Massachusetts and as fully and completely as
though the Agent were the absolute owner thereof for all purposes, and
to do at the Company' expense, at any time, or from time to time, all
acts and things which the Agent deems necessary to protect, preserve
or realize upon the Collateral and the Agent's security interest
therein, in order to effect the intent of this Agreement, all as fully
and effectively as the Company might do, including, without
limitation, (i) the filing and prosecuting of registration and
transfer applications with the appropriate federal or local agencies
or authorities with respect to trademarks, copyrights and patentable
inventions and processes, (ii) upon written notice to the Company, the
exercise of voting rights with respect to voting securities, which
rights may be exercised, if the Agent so elects, with a view to
causing the liquidation in a commercially reasonable manner of assets
of the issuer of any such securities and (iii) the execution, delivery
and recording, in connection with any sale or other disposition of any
Collateral, of the endorsements, assignments or other instruments of
conveyance or transfer with respect to such Collateral; and
(b) to file such financing statements with respect hereto, with
or without the Company's signature, or a photocopy of this Agreement
in substitution for a financing statement, as the Agent may deem
appropriate and to execute in the Company's name such financing
statements and amendments thereto and continuation statements which
may require the Company's signature.
14.2. RATIFICATION BY COMPANY. To the extent permitted by law, the
Company hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
<PAGE>
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14.3. NO DUTY ON AGENT. The powers conferred on the Agent hereunder
are solely to protect the interests of the Agent and the Banks in the
Collateral and shall not impose any duty upon the Agent to exercise any
such powers. The Agent shall be accountable only for the amounts that it
actually receives as a result of the exercise of such powers and neither it
nor any of its officers, directors, employees or agents shall be
responsible to the Company for any act or failure to act, except for the
Agent's own gross negligence or willful misconduct.
15. REMEDIES. If an Event of Default shall have occurred and be
continuing, the Agent may, without notice to (except as herein provided) or
demand upon the Company, declare this Agreement to be in default, and the Agent
shall thereafter have in any jurisdiction in which enforcement hereof is sought,
in addition to all other rights and remedies, the rights and remedies of a
secured party under the Uniform Commercial Code, including, without limitation,
the right to take possession of the Collateral, and for that purpose the Agent
may, so far as the Company can give authority therefor, enter upon any premises
on which the Collateral may be situated and remove the same therefrom. The
Agent may in its discretion require the Company to assemble all or any part of
the Collateral at such location or locations within the state(s) of the
Company's principal office(s) or at such other locations as the Agent may
designate. Unless the Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, the Agent
shall give to the Company at least five Business Days prior written notice of
the time and place of any public sale of Collateral or of the time after which
any private sale or any other intended disposition is to be made. The Company
hereby acknowledges that five Business Days prior written notice of such sale or
sales shall be reasonable notice. In addition, the Company waives any and all
rights that it may have to a judicial hearing in advance of the enforcement of
any of the Agent's rights hereunder, including, without limitation, its right
following an Event of Default to take immediate possession of the Collateral and
to exercise its rights with respect thereto. To the extent that any of the
Obligations are to be paid or performed by a person other than the Company, the
Company waives and agrees not to assert any rights or privileges which it may
have under Section 9-112 of the Uniform Commercial Code of the Commonwealth of
Massachusetts.
16. NO WAIVER, ETC. The Company waives demand, notice, protest, notice of
acceptance of this Agreement, notice of loans made, credit extended, Collateral
received or delivered or other action taken in reliance hereon and all other
demands and notices of any description. With
<PAGE>
-12-
respect to both the Obligations and the Collateral, the Company assents to any
extension or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of or failure to perfect any security interest
in any Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Agent may deem advisable. The Agent shall have no
duty as to the collection or protection of the Collateral or any income thereon,
nor as to the preservation of rights against prior parties, nor as to the
preservation of any rights pertaining thereto beyond the safe custody thereof as
set forth in Section 9.2 or Section 13.3. The Agent shall not be deemed to have
waived any of its rights upon or under the Obligations or the Collateral unless
such waiver shall be in writing and signed by the Agent with the consent of the
Majority Banks. No delay or omission on the part of the Agent in exercising any
right shall operate as a waiver of such right or any other right. A waiver on
any one occasion shall not be construed as a bar to or waiver of any right on
any future occasion. All rights and remedies of the Agent with respect to the
Obligations or the Collateral, whether evidenced hereby or by any other
instrument or papers, shall be cumulative and may be exercised singularly,
alternatively, successively or concurrently at such time or at such times as the
Agent deems expedient.
17. MARSHALLING. Neither the Agent nor any Bank shall be required to
marshal any present or future collateral security (including but not limited to
this Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights of the
Agent hereunder and of the Agent or any Bank in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights, however existing or arising. To the extent that it lawfully
may, the Company hereby agrees that it will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Agent's rights under this Agreement or under any other instrument
creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
the Company hereby irrevocably waives the benefits of all such laws.
18. PROCEEDS OF DISPOSITIONS; EXPENSES. The Company shall pay to the
Agent on demand any and all reasonable expenses, including reasonable attorneys'
fees and disbursements, reasonably incurred or paid by the Agent in protecting,
preserving or enforcing the Agent's rights
<PAGE>
-13-
under or in respect of any of the Obligations or any of the Collateral. After
deducting all of said expenses, the residue of any proceeds of collection or
sale of the Obligations or Collateral shall, to the extent actually received in
cash, be applied to the payment of the Obligations in such order or preference
as is provided in the Credit Agreement, proper allowance and provision being
made for any Obligations not then due. Upon the final payment and satisfaction
in full of all of the Obligations and after making any payments required by
Section 9-504(1)(c) of the Uniform Commercial Code of the Commonwealth of
Massachusetts, any excess shall be returned to the Company, and the Company
shall remain liable for any deficiency in the payment of the Obligations.
19. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the
Company hereunder shall be a debt secured by the Collateral and shall bear,
whether before or after judgment, interest at the rate of interest for overdue
principal set forth in the Credit Agreement.
20. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS INTENDED TO
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The Company
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the Commonwealth of Massachusetts or any federal court sitting therein
and consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Company by mail at the address
specified in Section 19 of the Credit Agreement. The Company hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
21. WAIVER OF JURY TRIAL. THE COMPANY WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION
WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF
ANY SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Company waives
any right which it may have to claim or recover in any litigation referred to in
the preceding sentence any special, exemplary, punitive or consequential damages
or any damages other than, or in addition to, actual damages. The Company (i)
certifies that neither the Agent or any Bank nor any representative, agent or
attorney of the Agent or any Bank has represented, expressly or otherwise, that
the Agent or any Bank would not, in the event of litigation, seek to enforce the
foregoing waivers and (ii) acknowledges that, in entering into the Credit
Agreement and the other Loan
<PAGE>
-14-
Documents to which the Agent or any Bank is a party, the Agent and the Banks are
relying upon, among other things, the waivers and certifications contained in
this Section 20.
22. MISCELLANEOUS. The headings of each section of this Agreement are for
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Company and its respective successors and assigns, and shall inure to the
benefit of the Agent, the Banks and their respective successors and assigns. If
any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included herein. The
Company acknowledges receipt of a copy of this Agreement.
23. TERMINATION OF SECURITY INTERESTS. Upon repayment in full of all
Obligations and the termination of the Commitment, the Agent agrees to terminate
the Security Agreement.
<PAGE>
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IN WITNESS WHEREOF, intending to be legally bound, the Company has caused
this Agreement to be duly executed as of the date first above written.
HPSC, INC.
By: /s/ Rene Lefebvre
------------------------------------
Title: CFO
Accepted:
THE FIRST NATIONAL
BANK OF BOSTON,
as Agent
By: /s/ Mitchell B. Feldman
--------------------------------
Title: Director
<PAGE>
-16-
CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OF MASSACHUSETTS )
) ss.
COUNTY OF SUFFOLK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this 23rd day of June, 1994, personally appeared Rene Lefebvre
to me known personally, and who, being by me duly sworn, deposes and says that
he is the Chief Financial Officer of HPSC, Inc., and that said instrument was
signed and sealed on behalf of said corporation by authority of its Board of
Directors, and said Rene Lefebvre acknowledged said instrument to be the free
act and deed of said corporation.
/s/ Veronica D. Jarlis
----------------------------------------
Notary Public
My commission expires: 5-2-97
<PAGE>
Exhibit E-2
AMERICAN COMMERCIAL FINANCE CORPORATION
FORM OF
SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of June 23, 1994, between AMERICAN COMMERCIAL
FINANCE CORPORATION, a Delaware corporation (the "Company"), and THE FIRST
NATIONAL BANK OF BOSTON, a national banking association, as co-agent
(hereinafter, in such capacity, the "Agent") for itself and other banking
institutions (hereinafter, collectively, the "Banks") which are or may become
parties to a Revolving Credit Agreement dated as of June 23, 1994 (as amended
and in effect from time to time, the "Credit Agreement"), among HPSC, Inc. (the
"Borrower"), the Banks, the Agent and Continental Bank N.A., as co-agent for the
Banks.
WHEREAS, the Company and the Borrower are members of a group of related
corporations, the success of any one of which is dependent in part on the
success of the other members of such group;
WHEREAS, the Company expects to receive substantial direct and indirect
benefits from the Credit Agreement (which benefits are hereby acknowledged);
WHEREAS, the Company expects to receive substantial direct and indirect
benefits from the Credit Agreement (which benefits are hereby acknowledged);
WHEREAS, the Company has guaranteed the obligations of the Borrower under
and in respect of the Credit Agreement under a Guaranty in favor of the Agent
dated as of the date hereof (the "Guaranty");
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Borrower under the Credit Agreement that the
Company execute and deliver to the Agent, for the
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benefit of the Banks and the Agent, a security agreement in substantially the
form hereof; and
WHEREAS, the Company wishes to grant security interests in favor of the
Agent, for the benefit of the Banks and the Agent, as herein provided;
NOW, THEREFORE, in consideration of the promises contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. The term "Obligations" shall have meaning provided
therefor in the Guaranty. All capitalized terms used herein without definitions
shall have the respective meanings provided therefor in the Credit Agreement.
All terms defined in the Uniform Commercial Code of the Commonwealth of
Massachusetts and used herein shall have the same definitions herein as
specified therein.
2. GrANT OF SECURITY INTEREST.
2.1 COLLATERAL GRANTED. The Company hereby grants to the Agent, for
the benefit of the Banks and the Agent, to secure the payment and performance in
full of all of the Obligations, a security interest in and so pledges and
assigns to the Agent, for the benefit of the Banks and the Agent, the following
properties, assets and rights of the Company, wherever located, whether now
owned or hereafter acquired or arising, and all proceeds and products thereof
(all of the same being hereinafter called the "Collateral"):
All personal and fixture property of every kind and nature including
without limitation all furniture, fixtures, equipment, raw materials,
inventory, goods, accounts, contract rights, rights to the payment of
money, insurance refund claims and all other insurance claims and proceeds,
tort claims, chattel paper, documents, instruments (including certificated
securities, deposit accounts and all general intangibles including, without
limitation, all uncertificated securities, tax refund claims, license fees,
patents, patent applications, trademarks, trademark applications, trade
names, copyrights, copyright applications, rights to sue and recover for
past infringement of patents, trademarks and copyrights, computer programs,
computer software, engineering drawings, service marks, customer lists,
goodwill, and all licenses, permits, agreements of any kind or nature
pursuant to which the Company possesses, uses or has authority to possess
or use property (whether
<PAGE>
-3-
tangible or intangible) of others or others possess, use or have authority
to possess or use property (whether tangible or intangible) of the Company,
and all recorded data of any kind or nature, regardless of the medium of
recording including, without limitation, all software, writings, plans,
specifications and schematics.
2.2 DELIVERY OF INSTRUMENTS, ETC. Pursuant to the terms hereof, the
Company has endorsed, assigned and delivered to the Agent all negotiable or non-
negotiable instruments (including certificated securities and excluding
instruments which constitute part of chattel paper as defined in 9-105(b) of the
Massachusetts UCC) pledged by it hereunder, together with instruments of
transfer or assignment duly executed in blank as the Agent may have specified.
Upon the occurrence and during the continuance of an Event of Default, the
Company will endorse, assign and deliver all chattel paper pledged by it
hereunder. In the event that the Company shall, after the date of this
Agreement, acquire any other negotiable or non-negotiable instruments (including
certificated securities and excluding instruments which constitute part of
chattel paper as defined in Section 9-105(b) of the Massachusetts UCC) to be
pledged by it hereunder, the Company shall forthwith endorse, assign and deliver
the same to the Agent, accompanied by such instruments of transfer or assignment
duly executed in blank as the Agent may from time to time specify. To the
extent that any securities are uncertificated, appropriate book-entry transfers
reflecting the pledge of such securities created hereby have been or, in the
case of uncertificated securities hereafter acquired by the Company, will at the
time of such acquisition be, duly made for the account of the Agent or one or
more nominees of the Agent with the issuer of such securities or other
appropriate book-entry facility or financial intermediary, with the Agent having
at all times the right to obtain definitive certificates (in the Agent's name or
in the name of one or more nominees of the Agent) where the issuer customarily
or otherwise issues certificates, all to be held as Collateral hereunder. The
Company hereby acknowledges that the Agent may, in its discretion, appoint one
or more financial institutions to act as the Agent's agent in holding in
custodial account instruments or other financial assets in which the Agent is
granted a security interest hereunder, including, without limitation,
certificates of deposit and other instruments evidencing short term obligations.
2.3 EXCLUDED COLLATERAL. Notwithstanding the foregoing provisions of
this Section 2, such grant of security interest shall not extend to, and the
term "Collateral" shall not include, any chattel paper and general intangibles
which are now or hereafter held by the Company as licensee, lessee or otherwise,
to the extent that (i) such chattel paper and general
<PAGE>
-4-
intangibles are not assignable or capable of being encumbered as a matter of law
or under the terms of the license, lease or other agreement applicable thereto
(but solely to the extent that any such restriction shall be enforceable under
applicable law), without the consent of the licensor or lessor thereof or other
applicable party thereto and (ii) such consent has not been obtained; PROVIDED,
HOWEVER, that the foregoing grant of security interest shall extend to, and the
term "Collateral" shall include, (A) any and all proceeds of such chattel paper
and general intangibles to the extent that the assignment or encumbering of such
proceeds is not so restricted and (B) upon any such licensor, lessor or other
applicable party consent with respect to any such otherwise excluded chattel
paper or general intangibles being obtained, thereafter such chattel paper or
general intangibles as well as any and all proceeds thereof that might have
theretofore have been excluded from such grant of a security interest and the
term "Collateral".
3. TITLE TO COLLATERAL, ETC. The Company is the owner of the
Collateral free from any adverse lien, security interest or other encumbrance,
except for the security interest created by this Agreement and the Permitted
Liens. None of the Collateral constitutes, or is the proceeds of, "farm
products" as defined in Section 9-109(3) of the Uniform Commercial Code of the
Commonwealth of Massachusetts. None of the account debtors in respect of any
accounts, chattel paper or general intangibles and none of the obligors in
respect of any instruments included in the Collateral is a governmental
authority subject to the Federal Assignment of Claims Act.
4. CONTINUOUS PERFECTION. The Company's place of business or, if more
than one, chief executive office is indicated on the Perfection Certificate
delivered to the Agent herewith (the "Perfection Certificate"). The Company
will not change the same, or the name, identity or corporate structure of the
Company in any manner, without providing at least 30 days prior written notice
to the Agent. The Collateral, to the extent not delivered to the Agent pursuant
to Section 2.2, will be kept at those locations listed on the Perfection
Certificate and the Company will not remove the Collateral from such locations,
without providing at least 30 days prior written notice to the Agent, PROVIDED,
that Collateral which constitutes inventory may be moved without such notice.
5. NO LIENS. Except for the security interest herein granted and liens
permitted by the Credit Agreement, the Company shall be the owner of the
Collateral free from any lien, security interest or other encumbrance, and the
Company shall defend the same against all claims and demands of all persons at
any time claiming the same or any interests therein adverse to the Agent or any
of the Banks. The Company shall not pledge,
<PAGE>
-5-
mortgage or create, or suffer to exist a security interest in the Collateral in
favor of any person other than the Agent, for the benefit of the Banks and the
Agent, except for Permitted Liens.
6. NO TRANSFERS. The Company will not sell or offer to sell or otherwise
transfer the Collateral or any interest therein except for (i) sales and leases
of inventory and licenses of general intangibles in the ordinary course of
business and (ii) sales or other dispositions of obsolescent items of equipment
in the ordinary course of business consistent with past practices.
7. LEGEND. The Company is required and must prominently and
conspicuously stamp or affix the following legend to each and every item of
chattel paper subject to this Agreement and will do so at the Company's first
opportunity:
NOTICE: TRANSFER PROHIBITED
THIS CHATTEL PAPER MAY NOT BE SOLD, ASSIGNED, USED AS COLLATERAL, OR
TRANSFERRED. IT IS SUBJECT TO A SECURITY INTEREST.
Dated: June 21, 1994
Granted by: American Commercial Finance Corporation
Debtor
In favor of: The First National Bank of Boston, as Agent
Secured Party
Located at: 100 Federal Street
Boston, MA 02110
Attention: M. Feldman
8. INSURANCE.
8.1 MAINTENANCE OF INSURANCE. The Company will maintain with financially
sound and reputable insurers insurance with respect to its properties and
business against such casualties and contingencies as shall be in accordance
with general practices of businesses engaged in
<PAGE>
-6-
similar activities in similar geographic areas; PROVIDED, HOWEVER, that the
Company shall not be required to maintain such insurance with respect to
Equipment which it leases or transfers to third parties pursuant to an equipment
lease or a conditional sales agreement to the extent that the lessee thereon
maintains such insurance pursuant to the terms of its equipment lease or
conditional sales agreement with the Company. Such insurance shall be in such
minimum amounts that the Company will not be deemed a co-insurer under
applicable insurance laws, regulations and policies and otherwise shall be in
such amounts, contain such terms, be in such forms and be for such periods as
may be reasonably satisfactory to the Agent. In addition, all of the Company's
insurance shall be payable to the Agent as loss payee under a "standard" or "New
York" loss payee clause for the benefit of the Banks and the Agent. Without
limiting the foregoing, the Company will (i) keep (or cause its Equipment
lessees to keep) all of its physical property insured with casualty or physical
hazard insurance on an "all risks" basis, with broad form flood and earthquake
coverages and electronic data processing coverage, with a full replacement cost
endorsement and an "agreed amount" clause in an amount equal to 100% of the full
replacement cost of such property, (ii) maintain all such workers' compensation
or similar insurance as may be required by law and (iii) maintain, in amounts
equal to those generally maintained by businesses engaged in similar activities
in similar geographic areas, general public liability insurance against claims
of bodily injury, death or property damage occurring, on, in or about the
properties of the Company; business interruption insurance; and product
liability insurance.
8.2 INSURANCE PROCEEDS. The proceeds of any of the Company's casualty
insurance in respect of any casualty loss of any of the Collateral shall,
subject to the rights, if any, of other parties with a prior interest in the
property covered thereby, (i) so long as no Default or Event of Default has
occurred and is continuing, be disbursed to the Company for direct application
by the Company solely to the repair or replacement of the Company's property so
damaged or destroyed and (ii) in all other circumstances, be held by the Agent
as cash collateral for the Obligations. The Agent may, at its sole option,
disburse from time to time all or any part of such proceeds so held as cash
collateral, upon such terms and conditions as the Agent may reasonably
prescribe, for direct application by the Company solely to the repair or
replacement of the Company's property so damaged or destroyed, or the Agent may
apply all or any part of such proceeds to the Obligations with the Total
Commitment (if not then terminated) being reduced by the amount so applied to
the Obligations.
<PAGE>
-7-
8.3 NOTICE OF CANCELLATION, ETC. All policies of insurance shall
provide for at least ten days prior written cancellation notice to the Agent.
In the event of failure by the Company to provide and maintain insurance as
herein provided, the Agent may, at its option, provide such insurance and charge
the amount thereof to the Company. The Company shall furnish the Agent with
certificates of insurance and policies evidencing compliance with the foregoing
insurance provision.
9. MAINTENANCE OF COLLATERAL; COMPLIANCE WITH LAW. The Company will keep the
Collateral in good order and repair, reasonable wear and tear excepted, and will
not use the same in violation of law or any policy of insurance thereon. The
Agent, or its designee, may inspect the Collateral at any reasonable time,
wherever located. The Company will pay promptly when due all taxes,
assessments, governmental charges and levies upon the Collateral or incurred in
connection with the use or operation of such Collateral or incurred in
connection with this Agreement; PROVIDED that any such tax, assessment, charge,
levy or claim need not be paid if the validity or amount thereof shall currently
be contested in good faith by appropriate proceedings and if the Borrower or
such Subsidiary shall have set aside on its books adequate reserves with respect
thereto; and PROVIDED FURTHER that the Borrower and each Subsidiary of the
Borrower will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor. The Company has at all times operated, and
the Company will continue to operate, its business in compliance in all material
respects with all applicable provisions of the federal Fair Labor Standards Act,
as amended, and with all applicable provisions of federal, state and local
statutes and ordinances dealing with the control, shipment, storage or disposal
of hazardous materials or substances.
10. COLLATERAL PROTECTION EXPENSES; PRESERVATION OF COLLATERAL.
10.1 EXPENSES INCURRED BY AGENT. Upon failure by the Company to do
so, the Agent may discharge taxes and other encumbrances at any time levied or
placed on any of the Collateral, make repairs thereto and pay any necessary
filing fees. The Company agrees to reimburse the Agent on demand for any and
all expenditures so made. The Agent shall have no obligation to the Company to
make any such expenditures, nor shall the making thereof relieve the Company of
any default.
10.2 AGENT'S OBLIGATIONS AND DUTIES. Anything herein to the
contrary notwithstanding, the Company shall remain liable under each
<PAGE>
-8-
contract or agreement comprised in the Collateral to be observed or performed by
the Company thereunder. Neither the Agent nor any Bank shall have any
obligation or liability under any such contract or agreement by reason of or
arising out of this Agreement or the receipt by the Agent or any Bank of any
payment relating to any of the Collateral, nor shall the Agent or any Bank be
obligated in any manner to perform any of the obligations of the Company under
or pursuant to any such contract or agreement, to make inquiry as to the nature
or sufficiency of any payment received by the Agent or any Bank in respect of
the Collateral or as to the sufficiency of any performance by any party under
any such contract or agreement, to present or file any claim, to take any action
to enforce any performance or to collect the payment of any amounts which may
have been assigned to the Agent or to which the Agent or any Bank may be
entitled at any time or times. The Agent's sole duty with respect to the
custody, safe keeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the Uniform Commercial Code of the
Commonwealth of Massachusetts or otherwise, shall be to deal with such
Collateral in the same manner as the Agent deals with similar property for its
own account, but in any event in a commercially reasonable manner.
11. SECURITIES AND DEPOSITS. The Agent may at any time, at its option,
transfer to itself or any nominee any securities constituting Collateral,
receive any income thereon and hold such income as additional Collateral or
apply it to the Obligations. Upon the occurrence and during the continuance of
an Event of Default, the Agent may (i) demand, sue for, collect, or make any
settlement or compromise which it deems desirable with respect to the Collateral
and (ii) regardless of the adequacy of Collateral or any other security for the
Obligations, any deposits or other sums at any time credited by or due from the
Agent or any Bank to the Company may at any time be applied to or set off
against any of the Obligations.
12. NOTIFICATION TO ACCOUNT DEBTORS AND OTHER OBLIGORS. If a Default or an
Event of Default shall have occurred and be continuing, the Company shall, at
the request of the Agent, notify account debtors on accounts, chattel paper and
general intangibles of the Company and obligors on instruments for which the
Company is an obligee of the security interest of the Agent in any account,
chattel paper, general intangible or instrument and that payment thereof is to
be made directly to the Agent or to any financial institution designated by the
Agent as the Agent's agent therefor, and the Agent may itself, if a Default or
an Event of Default shall have occurred and be continuing, without notice to or
demand upon the Company, so notify account debtors and obligors. After
<PAGE>
-9-
the making of such a request or the giving of any such notification, the Company
shall hold any proceeds of collection of accounts, chattel paper, general
intangibles and instruments received by the Company as trustee for the Agent,
for the benefit of the Banks and the Agent, without commingling the same with
other funds of the Company and shall turn the same over to the Agent in the
identical form received, together with any necessary endorsements or
assignments. The Agent shall apply the proceeds of collection of accounts,
chattel paper, general intangibles and instruments received by the Agent to the
Obligations, such proceeds to be immediately entered after final payment in cash
or solvent credits of the items giving rise to them.
13. FURTHER ASSURANCES. The Company, at its own expense, shall do, make,
execute and deliver all such additional and further acts, things, deeds,
assurances and instruments as the Agent may reasonably require more completely
to vest in and assure to the Agent and the Banks their respective rights
hereunder or in any of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
continuation statements under the Uniform Commercial Code, (ii) obtaining
governmental and other third party consents and approvals, including without
limitation any consent of any licensor, lessor or other applicable party
referred to in Section 2.3, (iii) obtaining waivers from mortgagees and
landlords and (iv) taking all actions required by Sections 8-313 and 8-321 of
the Uniform Commercial Code, as applicable in each relevant jurisdiction, with
respect to certificated and uncertificated securities.
14. POWER OF ATTORNEY.
14.1 APPOINTMENT AND POWERS OF AGENT. The Company hereby irrevocably
constitutes and appoints the Agent and any officer or agent thereof, with full
power of substitution, as its true and lawful attorneys-in-fact with full
irrevocable power and authority in the place and stead of the Company or in the
Agent's own name, for the purpose of carrying out the terms of this Agreement,
to take any and all appropriate action and to execute any and all documents and
instruments that may be necessary or desirable to accomplish the purposes of
this Agreement and, without limiting the generality of the foregoing, hereby
gives said attorneys the power and right, on behalf of the Company, without
notice to or assent by the Company, to do the following:
(a) upon the occurrence and during the continuance of a Default or an
Event of Default, generally to sell, transfer, pledge, make any agreement
with respect to or otherwise deal with any of
<PAGE>
-10-
the Collateral in such manner as is consistent with the Uniform Commercial
Code of the Commonwealth of Massachusetts and as fully and completely as
though the Agent were the absolute owner thereof for all purposes, and to
do at the Company' expense, at any time, or from time to time, all acts and
things which the Agent deems necessary to protect, preserve or realize upon
the Collateral and the Agent's security interest therein, in order to
effect the intent of this Agreement, all as fully and effectively as the
Company might do, including, without limitation, (i) the filing and
prosecuting of registration and transfer applications with the appropriate
federal or local agencies or authorities with respect to trademarks,
copyrights and patentable inventions and processes, (ii) upon written
notice to the Company, the exercise of voting rights with respect to voting
securities, which rights may be exercised, if the Agent so elects, with a
view to causing the liquidation in a commercially reasonable manner of
assets of the issuer of any such securities and (iii) the execution,
delivery and recording, in connection with any sale or other disposition of
any Collateral, of the endorsements, assignments or other instruments of
conveyance or transfer with respect to such Collateral; and
(b) to file such financing statements with respect hereto, with or
without the Company's signature, or a photocopy of this Agreement in
substitution for a financing statement, as the Agent may deem appropriate
and to execute in the Company's name such financing statements and
amendments thereto and continuation statements which may require the
Company's signature.
14.2 RATIFICATION BY COMPANY. To the extent permitted by law, the
Company hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
14.3 NO DUTY ON AGENT. The powers conferred on the Agent hereunder are
solely to protect the interests of the Agent and the Banks in the Collateral
and shall not impose any duty upon the Agent to exercise any such powers. The
Agent shall be accountable only for the amounts that it actually receives as a
result of the exercise of such powers and neither it nor any of its officers,
directors, employees or agents shall be responsible to the Company for any act
or failure to act, except for the Agent's own gross negligence or willful
misconduct.
15. REMEDIES. If an Event of Default shall have occurred and be continuing,
the Agent may, without notice to (except as herein provided)
<PAGE>
-11-
or demand upon the Company, declare this Agreement to be in default, and the
Agent shall thereafter have in any jurisdiction in which enforcement hereof is
sought, in addition to all other rights and remedies, the rights and remedies of
a secured party under the Uniform Commercial Code, including, without
limitation, the right to take possession of the Collateral, and for that purpose
the Agent may, so far as the Company can give authority therefor, enter upon any
premises on which the Collateral may be situated and remove the same therefrom.
The Agent may in its discretion require the Company to assemble all or any part
of the Collateral at such location or locations within the state(s) of the
Company's principal office(s) or at such other locations as the Agent may
designate. Unless the Collateral is perishable or threatens to decline speedily
in value or is of a type customarily sold on a recognized market, the Agent
shall give to the Company at least five Business Days prior written notice of
the time and place of any public sale of Collateral or of the time after which
any private sale or any other intended disposition is to be made. The Company
hereby acknowledges that five Business Days prior written notice of such sale or
sales shall be reasonable notice. In addition, the Company waives any and all
rights that it may have to a judicial hearing in advance of the enforcement of
any of the Agent's rights hereunder, including, without limitation, its right
following an Event of Default to take immediate possession of the Collateral and
to exercise its rights with respect thereto. To the extent that any of the
Obligations are to be paid or performed by a person other than the Company, the
Company waives and agrees not to assert any rights or privileges which it may
have under Section 9-112 of the Uniform Commercial Code of the Commonwealth of
Massachusetts.
16. NO WAIVER, ETC. The Company waives demand, notice, protest, notice of
acceptance of this Agreement, notice of loans made, credit extended, Collateral
received or delivered or other action taken in reliance hereon and all other
demands and notices of any description. With respect to both the Obligations
and the Collateral, the Company assents to any extension or postponement of the
time of payment or any other indulgence, to any substitution, exchange or
release of or failure to perfect any security interest in any Collateral, to the
addition or release of any party or person primarily or secondarily liable, to
the acceptance of partial payment thereon and the settlement, compromising or
adjusting of any thereof, all in such manner and at such time or times as the
Agent may deem advisable. The Agent shall have no duty as to the collection or
protection of the Collateral or any income thereon, nor as to the preservation
of rights against prior parties, nor as to the preservation of any rights
pertaining thereto beyond the safe custody thereof as set forth in Section 9.2
or Section 13.3. The Agent shall not be deemed to have waived any of its
<PAGE>
-12-
rights upon or under the Obligations or the Collateral unless such waiver shall
be in writing and signed by the Agent with the consent of the Majority Banks.
No delay or omission on the part of the Agent in exercising any right shall
operate as a waiver of such right or any other right. A waiver on any one
occasion shall not be construed as a bar to or waiver of any right on any future
occasion. All rights and remedies of the Agent with respect to the Obligations
or the Collateral, whether evidenced hereby or by any other instrument or
papers, shall be cumulative and may be exercised singularly, alternatively,
successively or concurrently at such time or at such times as the Agent deems
expedient.
17. MARSHALLING. Neither the Agent nor any Bank shall be required to marshal
any present or future collateral security (including but not limited to this
Agreement and the Collateral) for, or other assurances of payment of, the
Obligations or any of them or to resort to such collateral security or other
assurances of payment in any particular order, and all of the rights of the
Agent hereunder and of the Agent or any Bank in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to
all other rights, however existing or arising. To the extent that it lawfully
may, the Company hereby agrees that it will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Agent's rights under this Agreement or under any other instrument
creating or evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
payment thereof is otherwise assured, and, to the extent that it lawfully may,
the Company hereby irrevocably waives the benefits of all such laws.
18. PROCEEDS OF DISPOSITIONS; EXPENSES. The Company shall pay to the Agent
on demand any and all reasonable expenses, including reasonable attorneys' fees
and disbursements, reasonably incurred or paid by the Agent in protecting,
preserving or enforcing the Agent's rights under or in respect of any of the
Obligations or any of the Collateral. After deducting all of said expenses, the
residue of any proceeds of collection or sale of the Obligations or Collateral
shall, to the extent actually received in cash, be applied to the payment of the
Obligations in such order or preference as is provided in the Credit Agreement,
proper allowance and provision being made for any Obligations not then due.
Upon the final payment and satisfaction in full of all of the Obligations and
after making any payments required by Section 9-504(1)(c) of the Uniform
Commercial Code of the Commonwealth of Massachusetts, any excess shall be
returned to the Company, and the Company shall remain liable for any deficiency
in the payment of the Obligations.
<PAGE>
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19. OVERDUE AMOUNTS. Until paid, all amounts due and payable by the Company
hereunder shall be a debt secured by the Collateral and shall bear, whether
before or after judgment, interest at the rate of interest for overdue principal
set forth in the Credit Agreement.
20. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS INTENDED TO
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. The Company
agrees that any suit for the enforcement of this Agreement may be brought in the
courts of the Commonwealth of Massachusetts or any federal court sitting therein
and consents to the non-exclusive jurisdiction of such court and to service of
process in any such suit being made upon the Company by mail at the address
specified in Section 19 of the Credit Agreement. The Company hereby waives any
objection that it may now or hereafter have to the venue of any such suit or any
such court or that such suit is brought in an inconvenient court.
21. WAIVER OF JURY TRIAL. THE COMPANY WAIVES ITS RIGHT TO A JURY TRIAL WITH
RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF ANY
SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law, the Company waives any
right which it may have to claim or recover in any litigation referred to in the
preceding sentence any special, exemplary, punitive or consequential damages or
any damages other than, or in addition to, actual damages. The Company (i)
certifies that neither the Agent or any Bank nor any representative, agent or
attorney of the Agent or any Bank has represented, expressly or otherwise, that
the Agent or any Bank would not, in the event of litigation, seek to enforce the
foregoing waivers and (ii) acknowledges that, in entering into the Credit
Agreement and the other Loan Documents to which the Agent or any Bank is a
party, the Agent and the Banks are relying upon, among other things, the waivers
and certifications contained in this Section 20.
22. MISCELLANEOUS. The headings of each section of this Agreement are for
convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon the
Company and its respective successors and assigns, and shall inure to the
benefit of the Agent, the Banks and their respective successors and assigns. If
any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of all other terms hereof shall in no way be
affected thereby, and this Agreement shall be construed
<PAGE>
-14-
and be enforceable as if such invalid, illegal or unenforceable term had not
been included herein. The Company acknowledges receipt of a copy of this
Agreement.
23. TERMINATION OF SECURITY INTERESTS. Upon repayment in full of all
Obligations and the termination of the Commitment, the Agent agrees to terminate
the Security Agreement.
<PAGE>
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IN WITNESS WHEREOF, intending to be legally bound, the Company has caused
this Agreement to be duly executed as of the date first above written.
AMERICAN COMMERCIAL FINANCE CORPORATION
By:
-----------------------------
Title:
Accepted:
THE FIRST NATIONAL
BANK OF BOSTON,
AS AGENT
By:
---------------------
Title:
<PAGE>
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CERTIFICATE OF ACKNOWLEDGMENT
COMMONWEALTH OF MASSACHUSETTS )
) ss.
COUNTY OF SUFFOLK )
Before me, the undersigned, a Notary Public in and for the county
aforesaid, on this _______ day of June, 1994, personally appeared _____________
to me known personally, and who, being by me duly sworn, deposes and says that
he is the ________________________ of American Commercial Finance Corporation,
and that said instrument was signed and sealed on behalf of said corporation by
authority of its Board of Directors, and said ________________________
acknowledged said instrument to be the free act and deed of said corporation.
______________________________
Notary Public
My commission expires:
<PAGE>
EXHIBIT F
FORM OF
ASSIGNMENT AND ACCEPTANCE
Dated as of ____________, 19___
Reference is made to the Revolving Credit Agreement, dated as of June 23,
1994 (as from time to time amended and in effect, the "Credit Agreement"), by
and among HPSC, INC., a Delaware corporation (the "Borrower"), the banking
institutions referred to therein as the Banks (collectively, the "Banks"), and
THE FIRST NATIONAL BANK OF BOSTON, a national banking association, as co-agent
for the Banks (in such capacity, the "Agent") for the Banks and CONTINENTAL BANK
N.A., a national banking association, as co-agent for the Banks. Capitalized
terms used herein and not otherwise defined shall have the meanings assigned to
such terms in the Credit Agreement.
___________________ (the "Assignor") and ___________________ (the
"Assignee") hereby agree as follows:
1. ASSIGNMENT. Subject to the terms and conditions of this Assignment and
Acceptance, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes without recourse to the Assignor, a
$_____________ interest in and to the rights, benefits, indemnities and
obligations of the Assignor under the Credit Agreement equal to ____.00% in
respect of the Total Commitment immediately prior to the Effective Date (as
hereinafter defined).
2. ASSIGNOR'S REPRESENTATIONS. The Assignor (i) represents and warrants
that (A) it is legally authorized to enter into this Assignment and Acceptance,
(B) as of the date hereof, its Commitment is $_________, its Commitment
Percentage is _____.00%, the aggregate outstanding principal balance of its
Revolving Credit Loans equals $_________, (in each case after giving effect to
the assignment contemplated hereby but without giving effect to any contemplated
assignments which have not yet become effective), and (C) immediately after
giving effect to all assignments which have not yet become effective, the
Assignor's Commitment Percentage will be sufficient to give effect to this
Assignment and Acceptance, (ii) makes no representation or warranty,
<PAGE>
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express or implied, and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Credit Agreement or any of the other Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, any of the other Loan Documents or any other instrument or document
furnished pursuant thereto or the attachment, perfection or priority of any
security interest or mortgage, other than that it is the legal and beneficial
owner of the interest being assigned by it hereunder free and clear of any claim
or encumbrance; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any of
its Subsidiaries or any other Person primarily or secondarily liable in respect
of any of the Obligations, or the performance or observance by the Borrower or
any of its Subsidiaries or any other Person primarily or secondarily liable in
respect of any of the Obligations of any of its obligations under the Credit
Agreement or any of the other Loan Documents or any other instrument or document
delivered or executed pursuant thereto; and (iv) attaches hereto the Revolving
Credit Note delivered to it under the Credit Agreement.
The Assignor requests that the Borrower exchange the Assignor's Revolving
Credit Note for new Revolving Credit Notes payable to the Assignor and the
Assignee as follows:
<TABLE>
<CAPTION>
Notes Payable to Amount of Revolving
The Order of: Credit Note
---------------- -------------------
<S> <C>
Assignor $______________
Assignee $______________
</TABLE>
3. ASSIGNEE'S REPRESENTATIONS. The Assignee (i) represents and warrants
that (A) it is duly and legally authorized to enter into this Assignment and
Acceptance, (B) the execution, delivery and performance of this Assignment and
Acceptance do not conflict with any provision of law or of the charter or by-
laws of the Assignee, or of any agreement binding on the Assignee, (C) all acts,
conditions and things required to be done and performed and to have occurred
prior to the execution, delivery and performance of this Assignment and
Acceptance, and to render the same the legal, valid and binding obligation of
the Assignee, enforceable against it in accordance with its terms, have been
done and performed and have occurred in due and strict compliance with all
applicable laws; (ii) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recent financial statements
delivered pursuant to Sections 6.4, 7.4 thereof and such other documents and
information as it has
<PAGE>
-3-
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (iii) agrees that it will, independently and
without reliance upon the Assignor, the Agent or any other Bank and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Credit Agreement; (iv) represents and warrants that it is an Eligible
Assignee; (v) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement and the other
Loan Documents as are delegated to the Agent by the terms thereof, together with
such powers as are reasonably incidental thereto; and (vi) agrees that it will
perform in accordance with their terms all the obligations which by the terms of
the Credit Agreement are required to be performed by it as a Bank.
4. EFFECTIVE DATE. The effective date for this Assignment and Acceptance
shall be _________ (the "Effective Date"). Following the execution of this
Assignment and Acceptance, each party hereto shall deliver its duly executed
counterpart hereof to the Agent for consent by the Agent and recording in the
Register by the Agent. SCHEDULE 1 to the Credit Agreement shall thereupon be
replaced as of the Effective Date by the SCHEDULE 1 annexed hereto.
5. RIGHTS UNDER CREDIT AGREEMENT. Upon such acceptance and recording, from
and after the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment and Acceptance, have
the rights and obligations of a Bank thereunder, and (ii) the Assignor shall,
with respect to that portion of its interest under the Credit Agreement assigned
hereunder, relinquish its rights and be released from its obligations under the
Credit Agreement; provided, however, that the Assignor shall retain its rights
to be indemnified pursuant to Section 16 of the Credit Agreement with respect to
any claims or actions arising prior to the Effective Date.
6. PAYMENTS. Upon such acceptance of this Assignment and Acceptance by the
Agent and such recording, from and after the Effective Date, the Agent shall
make all payments in respect of the rights and interests assigned hereby
(including payments of principal, interest, fees and other amounts) to the
Assignee. [The Assignor and the Assignee shall make any appropriate adjustments
in payments for periods prior to the Effective Date by the Agent or with respect
to the making of this assignment directly between themselves.]
7. GOVERNING LAW. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE
EFFECT AS A SEALED INSTRUMENT TO
<PAGE>
-4-
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH
OF MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICT OF LAWS).
8. COUNTERPARTS. This Assignment and Acceptance may be executed in any
number of counterparts which shall together constitute but one and the same
agreement.
IN WITNESS WHEREOF, intending to be legally bound, each of the undersigned
has caused this Assignment and Acceptance to be executed on its behalf by its
officer thereunto duly authorized, as of the date first above written.
ASSIGNOR:
By: __________________________
Title:
ASSIGNEE:
By: _________________________
Title:
CONSENTED TO:
- -------------
THE FIRST NATIONAL
BANK OF BOSTON, as
Agent
By: _______________
Title:
<PAGE>
EXHIBIT G
AMERICAN COMMERCIAL FINANCE CORPORATION
FORM OF
GUARANTY
GUARANTY, dated as of June 23, 1994, by AMERICAN COMMERCIAL FINANCE
CORPORATION, a Delaware corporation (the "Guarantor") in favor of (i) THE FIRST
NATIONAL BANK OF BOSTON, a national banking association, as co-agent
(hereinafter, in such capacity, the "Agent") for itself and the other banking
institutions (hereinafter, collectively, the "Banks") which are or may become
parties to a Revolving Credit Agreement dated as of June 23, 1994 (as amended
and in effect from time to time, the "Credit Agreement"), among HPSC, INC., a
Delaware corporation (the "Company"), the Banks, the Agent and Continental Bank
N.A., as co-agent for the Banks and (ii) each of the Banks.
WHEREAS, the Company and the Guarantor are members of a group of related
corporations, the success of any one of which is dependent in part on the
success of the other members of such group;
WHEREAS, the Guarantor expects to receive substantial direct and indirect
benefits from the extensions of credit to the Company by the Banks pursuant to
the Credit Agreement (which benefits are hereby acknowledged);
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Company under the Credit Agreement that the
Guarantor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a guaranty substantially in the form hereof; and
WHEREAS, the Guarantor wishes to guaranty the Company's obligations to the
Banks and the Agent under or in respect of the Credit Agreement as provided
herein;
NOW, THEREFORE, the Guarantor hereby agrees with the Banks and the Agent as
follows:
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1. DEFINITIONS. The term "Obligations" and all other capitalized terms
used herein without definition shall have the respective meanings provided
therefor in the Credit Agreement.
2. GUARANTY OF PAYMENT AND PERFORMANCE. The Guarantor hereby
guarantees to the Banks and the Agent the full and punctual payment when due
(whether at stated maturity, by required pre-payment, by acceleration or
otherwise), as well as the performance, of all of the Obligations including all
such which would become due but for the operation of the automatic stay pursuant
to Section 362(a) of the Federal Bankruptcy Code and the operation of
Sections 502(b) and 506(b) of the Federal Bankruptcy Code. This Guaranty is an
absolute, unconditional and continuing guaranty of the full and punctual payment
and performance of all of the Obligations and not of their collectibility only
and is in no way conditioned upon any requirement that the Agent or any Bank
first attempt to collect any of the Obligations from the Company or resort to
any collateral security or other means of obtaining payment. Should the Company
default in the payment or performance of any of the Obligations, the obligations
of the Guarantor hereunder with respect to such Obligations in default shall,
upon demand by the Agent, become immediately due and payable to the Agent, for
the benefit of the Banks and the Agent, without demand or notice of any nature,
all of which are expressly waived by the Guarantor. Payments by the Guarantor
hereunder may be required by the Agent on any number of occasions. All payments
by the Guarantor hereunder shall be made to the Agent, in the manner and at the
place of payment specified therefor in the Credit Agreement, for the account of
the Banks and the Agent. Notwithstanding the foregoing, the Guarantor shall be
liable under this Guaranty for the maximum amount of such liability that can be
hereby incurred without rendering this Guaranty, as it relates to the Guarantor,
voidable under applicable law relating to fraudulence conveyance or fraudulent
transfer, and not for any greater amount.
3. GUARANTOR'S AGREEMENT TO PAY ENFORCEMENT COSTS, ETC. The Guarantor
further agrees, as the principal obligor and not as a guarantor only, to pay to
the Agent, on demand, all reasonable costs and expenses (including court costs
and reasonable legal expenses) reasonably incurred or expended by the Agent or
any Bank in connection with the Obligations, this Guaranty and the enforcement
thereof, together with interest on amounts recoverable under this Section 3 from
the time when such amounts become due until payment, whether before or after
judgment, at the rate of interest for overdue principal set forth in the Credit
Agreement, PROVIDED that if such interest exceeds the maximum amount permitted
to
<PAGE>
-3-
be paid under applicable law, then such interest shall be reduced to such
maximum permitted amount.
4. WAIVERS BY GUARANTOR; BANK'S FREEDOM TO ACT. The Guarantor agrees that
the Obligations will be paid and performed strictly in accordance with their
respective terms, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of the
Agent or any Bank with respect thereto. The Guarantor waives promptness,
diligences, presentment, demand, protest, notice of acceptance, notice of any
Obligations incurred and all other notices of any kind, all defenses which may
be available by virtue of any valuation, stay, moratorium law or other similar
law now or hereafter in effect, any right to require the marshalling of assets
of the Company or any other entity or other person primarily or secondarily
liable with respect to any of the Obligations, and all suretyship defenses
generally. Without limiting the generality of the foregoing, the Guarantor
agrees to the provisions of any instrument evidencing, securing or otherwise
executed in connection with any Obligation and agrees that the obligations of
the Guarantor hereunder shall not be released or discharged, in whole or in
part, or otherwise affected by (i) the failure of the Agent or any Bank to
assert any claim or demand or to enforce any right or remedy against the Company
or any other entity or other person primarily or secondarily liable with respect
to any of the Obligations; (ii) any extensions, compromise, refinancing,
consolidation or renewals of any Obligation; (iii) any change in the time, place
or manner of payment of any of the Obligations or any rescissions, waivers,
compromise, refinancing, consolidation or other amendments or modifications of
any of the terms or provisions of the Credit Agreement, the Note, the other Loan
Documents or any other agreement evidencing, securing or otherwise executed in
connection with any of the Obligation, (iv) the addition, substitution or
release of any entity or other person primarily or secondarily liable for any
Obligation; (v) the adequacy of any rights which the Agent or any Bank may have
against any collateral security or other means of obtaining repayment of any of
the Obligations; (vi) the impairment of any collateral securing any of the
Obligations, including without limitation the failure to perfect or preserve any
rights which the Agent or any Bank might have in such collateral security or the
substitution, exchange, surrender, release, loss or destruction of any such
collateral security; or (vii) any other act or omission which might in any
manner or to any extent vary the risk of the Guarantor or otherwise operate as a
release or discharge of the Guarantor, all of which may be done without notice
to the Guarantor. To the fullest extent permitted by law, the Guarantor hereby
expressly waives any and all rights or defenses arising by reason of (A) any
"one action" or "anti-deficiency" law which
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would otherwise prevent the Agent or any Bank from bringing any action,
including any claim for a deficiency, or exercising any other right or remedy
(including any right of set-off), against the Guarantor before or after the
Agent's or such Bank's commencement or completion of any foreclosure action,
whether judicially, by exercise of power of sale or otherwise, or (B) any other
law which in any other way would otherwise require any election of remedies by
the Agent or any Bank.
5. UNENFORCEABILITY OF OBLIGATIONS AGAINST COMPANY. If for any reason
the Company has no legal existence or is under no legal obligation to discharge
any of the Obligations, or if any of the Obligations have become irrecoverable
from the Company by reason of the Company's insolvency, bankruptcy or
reorganization or by other operation of law or for any other reason, this
Guaranty shall nevertheless be binding on the Guarantor to the same extent as if
the Guarantor at all times had been the principal obligor on all such
Obligations. In the event that acceleration of the time for payment of any of
the Obligations is stayed upon the insolvency, bankruptcy or reorganization of
the Company, or for any other reason, all such amounts otherwise subject to
acceleration under the terms of the Credit Agreement, the Note, the other Loan
Documents or any other agreement evidencing, securing or otherwise executed in
connection with any Obligation shall be immediately due and payable by the
Guarantor.
6. SUBROGATION; SUBORDINATION.
6.1 WAIVER OF RIGHTS AGAINST COMPANY. Until the final payment
and performance in full of all of the Obligations, (i) the Guarantor shall
not exercise and hereby waives any rights against the Company arising as a
result of payment by the Guarantor hereunder, by way of subrogation,
reimbursement, restitution, contribution or otherwise, and will not prove
any claim in competition with the Agent or any Bank in respect of any
payment hereunder in any bankruptcy, insolvency or reorganization case or
proceedings of any nature; (ii) the Guarantor will not claim any setoff,
recoupment or counterclaim against the Company in respect of any liability
of the Guarantor to the Company; and (iii) the Guarantor waives any benefit
of and any right to participate in any collateral security which may be
held by the Agent or any Bank.
6.2 SUBORDINATION. Upon the occurrence and during the
continuance of any Default or Event of Default, the payment of any amounts
due with respect to any indebtedness of the Company for money borrowed or
credit received now or hereafter owed to the
<PAGE>
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Guarantor is hereby subordinated to the prior payment in full of all of the
Obligations. The Guarantor agrees that, after the occurrence of any
default in the payment or performance of any of the Obligations, the
Guarantor will not demand, sue for or otherwise attempt to collect any such
indebtedness of the Company to the Guarantor until all of the Obligations
shall have been paid in full. If, notwithstanding the foregoing sentence,
the Guarantor shall collect, enforce or receive any amounts in respect of
such indebtedness while any Obligations are still outstanding, such amounts
shall be collected, enforced and received by the Guarantor as trustee for
the Banks and the Agent and be paid over to the Agent, for the benefit of
the Banks and the Agent, on account of the Obligations without affecting in
any manner the liability of the Guarantor under the other provisions of
this Guaranty.
6.3 PROVISIONS SUPPLEMENTAL. The provisions of this Section 6
shall be supplemental to and not in derogation of any rights and remedies
of the Banks and the Agent under any separate subordination agreement which
the Agent may at any time and from time to time enter into with the
Guarantor for the benefit of the Banks and the Agent.
7. SECURITY; SETOFF. The Guarantor grants to each of the Agent and the
Banks, as security for the full and punctual payment and performance of all of
the Guarantor's obligations hereunder, a continuing lien on and security
interest in all securities or other property belonging to the Guarantor now or
hereafter held by the Agent or such Bank and in all deposits (general or
special, time or demand, provisional or final) and other sums credited by or due
from the Agent or such Bank to the Guarantor or subject to withdrawal by the
Guarantor. Upon the occurrence and continuance of any Default or Event of
Default, regardless of the adequacy of any collateral security or other means of
obtaining payment of any of the Obligations, each of the Agent and the Banks is
hereby authorized at any time and from time to time, without notice to the
Guarantor (any such notice being expressly waived by the Guarantor) and to the
fullest extent permitted by law, to set off and apply such deposits and other
sums against the obligations of the Guarantor under this Guaranty, whether or
not the Agent or such Bank shall have made any demand under this Guaranty and
although such obligations may be contingent or unmatured.
8. FURTHER ASSURANCES. The Guarantor agrees that it will from time to
time, at the request of the Agent, do all such things and execute all such
documents as the Agent may consider necessary or desirable to
<PAGE>
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give full effect to this Guaranty and to perfect and preserve the rights and
powers of the Banks and the Agent hereunder. The Guarantor acknowledges and
confirms that the Guarantor itself has established its own adequate means of
obtaining from the Company on a continuing basis all information desired by the
Guarantor concerning the financial condition of the Company and that the
Guarantor will look to the Company and not to the Agent or any Bank in order for
the Guarantor to keep adequately informed of changes in the Company's financial
condition.
9. TERMINATION; REINSTATEMENT. This Guaranty shall remain in full force
and effect until the Agent is given written notice of the Guarantor's intention
to discontinue this Guaranty, notwithstanding any intermediate or temporary
payment or settlement of the whole or any part of the Obligations. No such
notice shall be effective unless received and acknowledged by an officer of the
Agent at the address of the Agent for notices set forth in Section 19 of the
Credit Agreement. No such notice shall affect any rights of the Agent or any
Bank hereunder, including without limitation the rights set forth in Sections 4
and 6, with respect to any Obligations incurred or accrued prior to the receipt
of such notice or any Obligations incurred or accrued pursuant to any contract
or commitment in existence prior to such receipt. This Guaranty shall continue
to be effective or be reinstated, notwithstanding any such notice, if at any
time any payment made or value received with respect to any Obligation is
rescinded or must otherwise be returned by the Agent or any Bank upon the
insolvency, bankruptcy or reorganization of the Company, or otherwise, all as
though such payment had not been made or value received.
10. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon the
Guarantor, its successors and assigns, and shall inure to the benefit of the
Agent and the Banks and their respective permitted successors, transferees and
assigns. Without limiting the generality of the foregoing sentence, each Bank
may assign or otherwise transfer the Credit Agreement, the Note, the other Loan
Documents or any other agreement or note held by it evidencing, securing or
otherwise executed in connection with the Obligations, or sell participations in
any interest therein, to any other entity or other person, and such other entity
or other person shall thereupon become vested, to the extent set forth in the
agreement evidencing such assignment, transfer or participation, with all the
rights in respect thereof granted to such Bank herein, all in accordance with
Section 18 of the Credit Agreement. The Guarantor may not assign any of its
obligations hereunder.
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11. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by the Guarantor therefrom shall be
effective unless the same shall be in writing and signed by the Agent with the
consent of the Majority Banks. No failure on the part of the Agent or any Bank
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.
12. NOTICES. All notices and other communications called for hereunder
shall be made in the manner set forth in Section 19 of the Credit Agreement.
13. GOVERNING LAW; CONSENT TO JURISDICTION. THE GUARANTY IS INTENDED TO
TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE COMONWEALTH OF MASSACHUSETTS. The Guarantor
agrees that any suit for the enforcement of this Guaranty may be brought in the
courts of the Comonwealth of Massachusetts or any federal court sitting therein
and consents to the nonexclusive jurisdiction of such court and to service of
process in any such suit being made upon the Guarantor by mail at the address
specified by reference in Section 12. The Guarantor hereby waives any objection
that it may now or hereafter have to the venue of any such suit or any such
court or that such suit was brought in an inconvenient court.
14. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY WAIVES ITS RIGHT TO A
JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN
CONNECTION WITH THIS GUARANTY, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE
PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS. Except as prohibited by law,
the Guarantor hereby waives any right which it may have to claim or recover in
any litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. The Guarantor (i) certifies that neither the Agent or any Bank
nor any representative, agent or attorney of the Agent or any Bank has
represented, expressly or otherwise, that the Agent or any Bank would not, in
the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that, in entering into the Credit Agreement and the other Loan
Documents to which the Agent or any Bank is a party, the Agent and the Banks are
relying upon, among other things, the waivers and certifications contained in
this Section 14.
<PAGE>
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15. MISCELLANEOUS. This Guaranty constitutes the entire agreement of the
Guarantor with respect to the matters set forth herein. The rights and remedies
herein provided are cumulative and not exclusive of any remedies provided by law
or any other agreement, and this Guaranty shall be in addition to any other
guaranty of or collateral security for any of the Obligations. The invalidity
or unenforceability of any one or more sections of this Guaranty shall not
affect the validity or enforceability of its remaining provisions. Captions are
for the ease of reference only and shall not affect the meaning of the relevant
provisions. The meanings of all defined terms used in this Guaranty shall be
equally applicable to the singular and plural forms of the terms defined.
<PAGE>
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IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be executed
and delivered as of the date first above written.
AMERICAN COMMERCIAL FINANCE CORPORATION
By:
------------------------
Title:
Address:
-----------------------------
-----------------------------
-----------------------------
Telex:
----------------------
y
<PAGE>
EXHIBIT H
HPSC, INC.
FORM OF
STOCK PLEDGE AGREEMENT
This STOCK PLEDGE AGREEMENT is made as of June 23, 1994, by and
between HPSC, INC., a Delaware corporation (the "Company"), and THE
FIRST NATIONAL BANK OF BOSTON, a national banking association, as co-
agent (hereinafter, in such capacity, the "Agent") for itself and the
other banking institutions (hereinafter, collectively, the "Banks")
which are or may become parties to a Revolving Credit Agreement dated as
of June 23, 1994 (as amended and in effect from time to time, the
"Credit Agreement"), among the Company, the Banks, the Agent and
Continental Bank N.A., as co-agent for the Banks.
WHEREAS, the Company is the direct legal and beneficial owner of
all of the issued and outstanding shares of each class of the capital
stock of each of the corporations described on ANNEX A (the
"Subsidiaries"); and
WHEREAS, it is a condition precedent to the Banks' making any
loans or otherwise extending credit to the Company under the Credit
Agreement that the Company execute and deliver to the Agent, for the
benefit of the Banks and the Agent, a pledge agreement in substantially
the form hereof; and
WHEREAS, the Company wishes to grant pledges and security
interests in favor of the Agent, for the benefit of the Banks and the
Agent, as herein provided;
NOW, THEREFORE, in consideration of the premises contained herein
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree
as follows:
1. PLEDGE OF STOCK, ETC.
1.1 PLEDGE OF STOCK. The Company hereby pledges, assigns,
grants a security interest in, and delivers to the Agent, for the
benefit of the Banks and the Agent, all of the shares of capital
stock of the Subsidiaries of every class, as more fully described
on ANNEX A hereto, to be held by the Agent, for the benefit of the
<PAGE>
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Banks and the Agent, subject to the terms and conditions
hereinafter set forth. The certificates for such shares,
accompanied by stock powers or other appropriate instruments of
assignment thereof duly executed in blank by the Company, have
been delivered to the Agent.
1.2 ADDITIONAL STOCK. In case the Company shall acquire
any additional shares of the capital stock of any Subsidiary or
corporation which is the successor of any Subsidiary, or any
securities exchangeable for or convertible into shares of such
capital stock of any class of any Subsidiary, by purchase, stock
dividend, stock split or otherwise, then the Company shall
forthwith deliver to and pledge such shares or other securities to
the Agent, for the benefit of the Banks and the Agent, under this
Agreement and shall deliver to the Agent forthwith any
certificates therefor, accompanied by stock powers or other
appropriate instruments of assignment duly executed by the Company
in blank. The Company agrees that the Agent may from time to time
attach as ANNEX A hereto an updated list of the shares of capital
stock or securities at the time pledged with the Agent hereunder.
1.3 PLEDGE OF CASH COLLATERAL ACCOUNT. The Company also
hereby pledges, assigns, grants a security interest in, and
delivers to the Agent, for the benefit of the Banks and the Agent,
the Cash Collateral Account and all of the Cash Collateral as such
terms are hereinafter defined.
2.DEFINITIONS. The term "Obligations" and all other capitalized
terms used herein without definition shall have the respective meanings
provided therefor in the Credit Agreement. Terms used herein and not
defined in the Credit Agreement or otherwise defined herein that are
defined in the Commonwealth of Massachusetts have such defined meanings
herein, unless the context otherwise indicated or requires, and the
following terms shall have the following meanings:
CASH COLLATERAL. See Section 4.
CASH COLLATERAL ACCOUNT. See Section 4.
STOCK. Includes the shares of stock described in ANNEX A attached
hereto and any additional shares of stock at the time pledged with the
Agent hereunder.
STOCK COLLATERAL. The property at any time pledged to the Agent
hereunder (whether described herein or not) and all income therefrom,
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increases therein and proceeds thereof, including without limitation
that included in Cash Collateral, but excluding from the definition of
"Stock Collateral" any income, increases or proceeds received by the
Company to the extent expressly permitted by Section 6.
TIME DEPOSITS. See Section 4.
3. SECURITY FOR OBLIGATIONS. This Agreement and the security
interest in and pledge of the Stock Collateral hereunder are made with
and granted to the Agent, for the benefit of the Banks and the Agent, as
security for the payment and performance in full of all the Obligations.
4. LIQUIDATION, RECAPITALIZATION, ETC.
4.1 DISTRIBUTIONS PAID TO AGENT. Any sums or other
property paid or distributed upon or with respect to any of the
Stock, whether by dividend or redemption or upon the liquidation
or dissolution of the issuer thereof or otherwise, shall, except
to the limited extent provided in Section 6, be paid over and
delivered to the Agent to be held by the Agent, for the benefit of
the Banks and the Agent, as security for the payment and
performance in full of all of the Obligations. In case, pursuant
to the recapitalization or reclassification of the capital of the
issuer thereof or pursuant to the reorganization thereof, any
distribution of capital shall be made on or in respect of any of
the Stock or any property shall be distributed upon or with
respect to any of the Stock, the property so distributed shall be
delivered to the Agent, for the benefit of the Banks and the
Agent, to be held by it as security for the Obligations. Except
to the limited extent provided in Section 6, all sums of money and
property paid or distributed in respect of the Stock, whether as a
dividend or upon such a liquidation, dissolution, recapitalization
or reclassification or otherwise, that are received by the Company
shall, until paid or delivered to the Agent, be held in trust for
the Agent, for the benefit of the Banks and the Agent, as security
for the payment and performance in full of all of the Obligations.
4.2 CASH COLLATERAL ACCOUNT. All sums of money that are
delivered to the Agent pursuant to this Section 4 shall be
deposited into an interest bearing account with the Agent (the
"Cash Collateral Account"). Some or all of the funds from time to
time in the Cash Collateral Account may be invested in time
deposits, including, without limitation, certificates of deposit
issued by the Agent (such certificates of deposit or other time
deposits being hereinafter referred to, collectively, as "Time
Deposits"), that are satisfactory to the Agent after consultation
with the Company, PROVIDED, that, in
<PAGE>
-4-
each such case, arrangements satisfactory to the Agent are made
and are in place to perfect and to insure the first priority of
the Agent's security interest therein. Interest earned on the
Cash Collateral Account and on the Time Deposits, and the
principal of the Time Deposits at maturity that is not invested in
new Time Deposits, shall be deposited in the Cash Collateral
Account. The Cash Collateral Account, all sums from time to time
standing to the credit of the Cash Collateral Account, any and all
Time Deposits, any and all instruments or other writings
evidencing Time Deposits and any and all proceeds or any thereof
are hereinafter referred to as the "Cash Collateral."
4.3 COMPANY'S RIGHTS TO CASH COLLATERAL, ETC. Except as
otherwise expressly provided in Section 15, the Company shall have
no right to withdraw sums from the Cash Collateral Account, to
receive any of the Cash Collateral or to require the Agent to part
with the Agent's possession of any instruments or other writings
evidencing any Time Deposits.
5. WARRANTY OF TITLE; AUTHORITY. The Company hereby represents
and warrants that: (i) the Company has good and marketable title to, and
is the sole record and beneficial owner of, the Stock described in
Section 1, subject to no pledges, liens, security interests, charges,
options, restrictions or other encumbrances except the pledge and
security interest created by this Agreement, (ii) all of the Stock
described in Section 1 is validly issued, fully paid and non-assessable,
(iii) the Company has full power, authority and legal right to execute,
deliver and perform its obligations under this Agreement and to pledge
and grant a security interest in all of the Stock Collateral pursuant to
this Agreement, and the execution, delivery and performance hereof and
the pledge of and granting of a security interest in the Stock
Collateral hereunder have been duly authorized by all necessary
corporate or other action and do not contravene any law, rule or
regulation or any provision of the Company's charter documents or by-
laws or of any judgment, decree or order of any tribunal or of any
agreement or instrument to which the Company is a party or by which it
or any of its property is bound or affected or constitute a default
thereunder, and (iv) the information set forth in ANNEX A hereto
relating to the Stock is true, correct and complete in all respects.
The Company covenants that it will defend the rights of the Banks and
the Agent and security interest of the Agent, for the benefit of the
Banks and the Agent, in such Stock against the claims and demands of all
other persons whomsoever. The Company further covenants that it will
have the like title to and right to pledge and grant a security interest
in the Stock Collateral hereafter pledged or in which a security
interest is
<PAGE>
-5-
granted to the Agent hereunder and will likewise defend the rights,
pledge and security interest thereof and therein of the Banks and the
Agent.
6. DIVIDENDS, VOTING, ETC., PRIOR TO MATURITY. So long as no
Default or Event of Default shall have occurred and be continuing, the
Company shall be entitled to receive all cash dividends paid in respect
of the Stock, to vote the Stock and to give consents, waivers and
ratifications in respect of the Stock; PROVIDED, HOWEVER, that no vote
shall be cast or consent, waiver or ratification given by the Company if
the effect thereof would in the reasonable judgment of the Majority
Banks materially impair any of the Stock Collateral or be inconsistent
with or result in any violation of any of the provisions of the Credit
Agreement, the Notes or any of the other Loan Documents. All such
rights of the Company to receive cash dividends shall cease in case a
Default or an Event of Default shall have occurred and be continuing.
All such rights of the Company to vote and give consents, waivers and
ratifications with respect to the Stock shall, at the Agent's option, as
evidenced by the Agent's notifying the Company of such election, cease
in case a Default or an Event of Default shall have occurred and be
continuing.
7. REMEDIES.
7.1 IN GENERAL. If a Default or an Event of Default shall
have occurred and be continuing, the Agent shall thereafter have
the following rights and remedies (to the extent permitted by
applicable law) in addition to the rights and remedies of a
secured party under the Commonwealth of Massachusetts, all such
rights and remedies being cumulative, not exclusive, and
enforceable alternatively, successively or concurrently, at such
time or times as the Agent deems expedient:
(a) if the Agent so elects and gives notice of such
election to the Company, the Agent may vote any or all
shares of the Stock (whether or not the same shall have been
transferred into its name or the name of its nominee or
nominees) for any lawful purpose, including, without
limitation, if the Agent so elects, for the liquidation of
the assets of the issuer thereof, and give all consents,
waivers and ratifications in respect of the Stock and
otherwise act with respect thereto as though it were the
outright owner thereof (the Company hereby irrevocably
constituting and appointing the Agent the proxy and
attorney-in-fact of the Company, with full power of
substitution, to do so);
<PAGE>
-6-
(b) the Agent may demand, sue for, collect or make
any compromise or settlement the Agent deems suitable in
respect of any Stock Collateral;
(c) the Agent may sell, resell, assign and deliver,
or otherwise dispose of any or all of the Stock Collateral,
for cash or credit or both and upon such terms at such place
or places, at such time or times and to such entities or
other persons as the Agent thinks expedient, all without
demand for performance by the Company or any notice or
advertisement whatsoever except as expressly provided herein
or as may otherwise be required by law;
(d) the Agent may cause all or any part of the Stock
held by it to be transferred into its name or the name of
its nominee or nominees; and
(e) the Agent may set off against the Obligations any
and all sums deposited with it or held by it, including
without limitation, any sums standing to the credit of the
Cash Collateral Account and any Time Deposits issued by the
Agent.
7.2 SALE OF STOCK COLLATERAL. In the event of any
disposition of the Stock Collateral as provided in clause (c) of
Section 7.1, the Agent shall give to the Company at least five
Business Days prior written notice of the time and place of any
public sale of the Stock Collateral or of the time after which any
private sale or any other intended disposition is to be made. The
Company hereby acknowledges that five Business Days prior written
notice of such sale or sales shall be reasonable notice. The
Agent may enforce its rights hereunder without any other notice
and without compliance with any other condition precedent now or
hereunder imposed by statute, rule of law or otherwise (all of
which are hereby expressly waived by the Company, to the fullest
extent permitted by law). The Agent may buy any part or all of
the Stock Collateral at any public sale and if any part or all of
the Stock Collateral is of a type customarily sold in a recognized
market or is of the type which is the subject of widely-
distributed standard price quotations, the Agent may buy at
private sale and may make payments thereof by any means. The
Agent may apply the cash proceeds actually received from any sale
or other disposition to the reasonable expenses of retaking,
holding, preparing for sale, selling and the like, to reasonable
attorneys' fees, travel and all other expenses
<PAGE>
-7-
which may be incurred by the Agent in attempting to collect the
Obligations or to enforce this Agreement or in the prosecution or
defense of any action or proceeding related to the subject matter
of this Agreement, and then to the Obligations pursuant to Section
12.4 of the Credit Agreement. To the extent that any of the
Obligations are to be paid or performed by a person other than the
Company, the Company waives and agrees not to assert any rights or
privileges which it may have under Section 9-112 of the
Commonwealth of Massachusetts.
7.3 REGISTRATION OF STOCK. If the Agent shall determine
to exercise its right to sell any or all of the Stock pursuant to
this Section 7, and if in the opinion of counsel for the Agent it
is necessary, or if in the reasonable opinion of the Agent it is
advisable, to have the Stock, or that portion thereof to be sold,
registered under the provisions of the Securities Act of 1933, as
amended (the "Securities Act"), the Company agrees to use its best
efforts to cause the issuer or issuers of the Stock contemplated
to be sold, to execute and deliver, and cause the directors and
officers of such issuer to execute and deliver, all at the
Company's expense, all such instruments and documents, and to do
or cause to be done all such other acts and things as may be
necessary or, in the reasonable opinion of the Agent, advisable to
register such Stock under the provisions of the Securities Act and
to cause the registration statement relating thereto to become
effective and to remain effective for a period of 9 months from
the date such registration statement became effective, and to make
all amendments thereto or to the related prospectus or both that,
in the reasonable opinion of the Agent, are necessary or
advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto. The Company agrees to use
its best efforts to cause such issuer or issuers to comply with
the provisions of the securities or "Blue Sky" laws of any
jurisdiction which the Agent shall designate and to cause such
issuer or issuers to make available to its security holders, as
soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section 11(a) of the
Securities Act.
7.4 PRIVATE SALES. The Company recognizes that the
Agent may be unable to effect a public sale of the Stock by reason
of certain prohibitions contained in the Securities Act, federal
banking laws, and other applicable laws, but may be compelled to
resort to one or more private sales thereof to a restricted group
of
<PAGE>
-8-
purchasers. The Company agrees that any such private sales may be
at prices and other terms less favorable to the seller than if
sold at public sales and that such private sales shall not by
reason thereof be deemed not to have been made in a commercially
reasonable manner. The Agent shall be under no obligation to
delay a sale of any of the Stock for the period of time necessary
to permit the issuer of such securities to register such
securities for public sale under the Securities Act, or such other
federal banking or other applicable laws, even if the issuer would
agree to do so. Subject to the foregoing, the Agent agrees that
any sale of the Stock shall be made in a commercially reasonable
manner, and the Company agrees to use its best efforts to cause
the issuer or issuers of the Stock contemplated to be sold, to
execute and deliver, and cause the directors and officers of such
issuer to execute and deliver, all at the Company's expense, all
such instruments and documents, and to do or cause to be done all
such other acts and things as may be necessary or, in the
reasonable opinion of the Agent, advisable to exempt such Stock
from registration under the provisions of the Securities Act, and
to make all amendments to such instruments and documents which, in
the opinion of the Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange Commission
applicable thereto. The Company further agrees to use its best
efforts to cause such issuer or issuers to comply with the
provisions of the securities or "Blue Sky" laws of any
jurisdiction which the Agent shall designate and, if required, to
cause such issuer or issuers to make available to its security
holders, as soon as practicable, an earnings statement (which need
not be audited) which will satisfy the provisions of Section 11(a)
of the Securities Act.
7.5 COMPANY'S AGREEMENTS, ETC The Company further
agrees to do or cause to be done all such other acts and things as
may be reasonably necessary to make any sales of any portion or
all of the Stock pursuant to this Section 7 valid and binding and
in compliance with any and all applicable laws (including, without
limitation, the Securities Act, the Securities Exchange Act of
1934, as amended, the rules and regulations of the Securities and
Exchange Commission applicable thereto and all applicable state
securities or "Blue Sky" laws), regulations, orders, writs,
injunctions, decrees or awards of any and all courts, arbitrators
or governmental instrumentalities, domestic or foreign, having
jurisdiction over any such sale or sales, all at the Company's
expense. The Company further agrees that a breach of any of the
covenants contained in
<PAGE>
-9-
this Section 7 will cause irreparable injury to the Agent and the
Banks, that the Agent and the Banks have no adequate remedy at law
in respect of such breach and, as a consequence, agrees that each
and every covenant contained in this Section 7 shall be
specifically enforceable against the Company by the Agent and the
Company hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants.
8. MARSHALLING. Neither the Agent nor any Bank shall be required
to marshal any present or future collateral security for (including but
not limited to this Agreement and the Stock Collateral), or other
assurances of payment of, the Obligations or any of them, or to resort
to such collateral security or other assurances of payment in any
particular order. All of the Agent's rights hereunder and of the Banks
and the Agent in respect of such collateral security and other
assurances of payment shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that it lawfully
may, the Company hereby agrees that it will not invoke any law relating
to the marshalling of collateral that might cause delay in or impede the
enforcement of the Agent's rights under this Agreement or under any
other instrument evidencing any of the Obligations or under which any of
the Obligations is outstanding or by which any of the Obligations is
secured or payment thereof is otherwise assured, and to the extent that
it lawfully may the Company hereby irrevocably waives the benefits of
all such laws.
9. COMPANY'S OBLIGATIONS NOT AFFECTED. The obligations of the
Company hereunder shall remain in full force and effect without regard
to, and shall not be impaired by (i) any exercise or nonexercise, or any
waiver, by the Agent or any Bank of any right, remedy, power or
privilege under or in respect of any of the Obligations or any security
thereof (including this Agreement); (ii) any amendment to or
modification of the Credit Agreement, the Note, the other Loan Documents
or any of the Obligations; (iii) any amendment to or modification of any
instrument (other than this Agreement) securing any of the Obligations,
including, without limitation, any of the Security Documents; or (iv)
the taking of additional security for, or any other assurances of
payment of, any of the Obligations or the release or discharge or
termination of any security or other assurances of payment or
performance for any of the Obligations; whether or not the Company shall
have notice or knowledge of any of the foregoing.
10. TRANSFER, ETC., BY COMPANY. Without the prior written
consent of the Agent, the Company will not sell, assign, transfer or
otherwise dispose of, grant any option with respect to, or pledge or
grant any
<PAGE>
-10-
security interest in or otherwise encumber or restrict any of the Stock
Collateral or any interest therein, except for the pledge thereof and
security interest therein provided for in this Agreement.
11. FURTHER ASSURANCES. The Company will do all such acts,
and will furnish to the Agent all such financing statements,
certificates, legal opinions and other documents and will obtain all
such governmental consents and corporate approvals and will do or cause
to be done all such other things as the Agent may reasonably request
from time to time in order to give full effect to this Agreement and to
secure the rights of the Banks and the Agent hereunder, all without any
cost or expense to the Agent or any Bank. If the Agent so elects, a
photocopy of this Agreement may at any time and from time to time be
filed by the Agent as a financing statement in any recording office in
any jurisdiction.
12. AGENT'S EXONERATION. Under no circumstances shall the
Agent be deemed to assume any responsibility for or obligation or duty
with respect to any part or all of the Stock Collateral of any nature or
kind or any matter or proceedings arising out of or relating thereto,
other than (i) to exercise reasonable care in the physical custody of
the Stock Collateral and (ii) after a Default or an Event of Default
shall have occurred and be continuing to act in a commercially
reasonable manner. Neither the Agent nor any Bank shall be required to
take any action of any kind to collect, preserve or protect its or the
Company's rights in the Stock Collateral or against other parties
thereto. The Agent's prior recourse to any part or all of the Stock
Collateral shall not constitute a condition of any demand, suit or
proceeding for payment or collection of any of the Obligations.
13. NO WAIVER, ETC. Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated except by a written
instrument expressly referring to this Agreement and to the provisions
so modified or limited, and executed by the Agent, with the consent of
the Majority Banks, and the Company. No act, failure or delay by the
Agent shall constitute a waiver of its rights and remedies hereunder or
otherwise. No single or partial waiver by the Agent of any default or
right or remedy that it may have shall operate as a waiver of any other
default, right or remedy or of the same default, right or remedy on a
future occasion. The Company hereby waives presentment, notice of
dishonor and protest of all instruments, included in or evidencing any
of the Obligations or the Stock Collateral, and any and all other
notices and demands whatsoever (except as expressly provided herein or
in the Credit Agreement).
<PAGE>
-11-
14. NOTICE, ETC. All notices, requests and other
communications hereunder shall be made in the manner set forth in
Section 19 of the Credit Agreement.
15. TERMINATION. Upon final payment and performance in full
of the Obligations, this Agreement shall terminate and the Agent shall,
at the Company's request and expense, return such Stock Collateral in
the possession or control of the Agent as has not theretofore been
disposed of pursuant to the provisions hereof, together with any moneys
and other property at the time held by the Agent hereunder.
16. OVERDUE AMOUNTS. Until paid, all amounts due and payable by
the Company hereunder shall be a debt secured by the Stock Collateral
and shall bear, whether before or after judgment, interest at the rate
of interest for overdue principal set forth in the Credit Agreement.
17. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT IS
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS. The Company agrees that any suit for the enforcement of
this Agreement may be brought in the courts of the Commonwealth of
Massachusetts or any federal court sitting therein and consents to the
non-exclusive jurisdiction of such court and to service of process in
any such suit being made upon the Company by mail at the address
specified in Section 19 of the Credit Agreement. The Company hereby
waives any objection that it may now or hereafter have to the venue of
any such suit or any such court or that such suit is brought in an
inconvenient court.
18. WAIVER OF JURY TRIAL. THE COMPANY WAIVES ITS RIGHT TO A
JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except
as prohibited by law, the Company waives any right which it may have to
claim or recover in any litigation referred to in the preceding sentence
any special, exemplary, punitive or consequential damages or any damages
other than, or in addition to, actual damages. The Company (i)
certifies that neither the Agent or any Bank nor any representative,
agent or attorney of the Agent or any Bank has represented, expressly or
otherwise, that the Agent or any Bank would not, in the event of
litigation, seek to enforce the foregoing waivers and (ii) acknowledges
that, in entering into the Credit Agreement and the other Loan Documents
to which the Agent is a party, the Agent and the Banks are
<PAGE>
-12-
relying upon, among other things, the waivers and certifications
contained in this Section 18.
19. MISCELLANEOUS. The headings of each section of this
Agreement are for convenience only and shall not define or limit the
provisions thereof. This Agreement and all rights and obligations
hereunder shall be binding upon the Company and its respective
successors and assigns, and shall inure to the benefit of the Agent and
the Banks and their respective successors and assigns. If any term of
this Agreement shall be held to be invalid, illegal or unenforceable,
the validity of all other terms hereof shall be in no way affected
thereby, and this Agreement shall be construed and be enforceable as if
such invalid, illegal or unenforceable term had not been included
herein. The Company acknowledges receipt of a copy of this Agreement.
<PAGE>
-13-
IN WITNESS WHEREOF, intending to be legally bound, the Company and
the Agent have caused this Agreement to be executed as of the date first
above written.
HPSC, INC.
By:
--------------------------------
Title:
THE FIRST NATIONAL BANK OF BOSTON,
AS AGENT
By:
--------------------------------
Title:
------------------------
The undersigned Subsidiaries hereby join in the above Agreement
for the sole purpose of consenting to and being bound by the provisions
of Sections 4.1, 6 and 7 thereof, the undersigned hereby agreeing to
cooperate fully and in good faith with the Agent and the Company in
carrying out such provisions.
AMERICAN COMMERCIAL
FINANCE CORPORATION
By:
--------------------------------
Title:
<PAGE>
ANNEX A TO PLEDGE AGREEMENT
None of the issuers has any authorized, issued or outstanding shares of
its capital stock of any class or any commitments to issue any shares of its
capital stock of any class or any securities convertible into or exchangeable
for any shares of its capital stock of any class except as otherwise stated in
this ANNEX A.
<TABLE>
<CAPTION>
Number of Number of Number of Par or
Record Class of Authorized Issued Outstanding Liquidation
Issuer Owner Shares Shares Shares Shares Value
- ------ ------ -------- ---------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ACFC HPSC,Inc. Common 100 1 1 $10.00
</TABLE>
<PAGE>
Exhibit 10.2
FIRST AMENDMENT TO THE HPSC, INC.
EMPLOYEE STOCK OWNERSHIP PLAN
This First Amendment to the HPSC, Inc. Employee Stock Ownership Plan (the
"Plan") is made effective as of January 1, 1993 by HPSC, Inc. (the "Employer").
In accordance with Article XVI, the Employer hereby amends the Plan as follows:
1. The following new Section 2.4A is added to Article II:
2.4A "Change of Control" means the occurrence of an event or events as
the result of which (i) the business of the Employer is disposed of by the
Employer pursuant to a liquidation, merger in which the Employer is not the
surviving corporation, sale of assets or otherwise; or (ii) there is any
transfer of the Employer's stock currently pledged to certain banks, to a holder
or holders who seek to exercise control over the Employer, including without
limitation such banks and their transferee(s); or (iii) a majority of the issued
and outstanding shares of the Employer's voting stock is transferred during any
two (2) year period to any person (individual or entity) who did not own ten
percent (10%) of the Employer's outstanding stock at the beginning of the two
(2) year period; or (iv) during any twelve (12) month period a majority of the
members of the Board of Directors in office at the beginning of the period die,
resign, are removed from office or are not re-elected.
2. Section 2.7 of Article II is deleted and replaced with the following:
2.7 "Employee" means any individual employed by the Employer,
including officers and directors who are employees. "Ineligible Employee" means:
(i) any Employee who is a member of a collective bargaining unit the retirement
benefits of which have been the subject of good faith bargaining and (ii) any
Employee who is a non-resident alien and who receives no earned income (within
the meaning of Code Section 911(d)(2)) from the Employer which constitutes
income from sources within the United States (within the meaning of Code Section
861(a)(3)).
<PAGE>
3. Paragraphs .01 and .02 of Section 9.4 of Article IX are deleted and
replaced with the following:
.01 BASIC LIMITATION ON CONTRIBUTION ALLOCATIONS. Except as provided
below, the "ESOP annual addition" to a Participant's account for any
limitation year shall not exceed the lower of: (i) the "basic dollar limit"
and (ii) 25% of the Participant's total "415 compensation." Notwithstanding
the foregoing, for limitation years beginning after December 31, 1994, if
the Participant is a member of the "special ESOP limit Employee group,"
then the portion of the total allocation to such Participant's account with
respect to any Employer contribution that is deductible under Code
Section 404(a)(9) (and eligible for the special limitations pursuant to
Code Section 415(c)(6) and .02 below) shall also not exceed the
Participant's pro rata share of the "maximum aggregate ESOP annual
addition" for such limitation year. Each such Participant's pro rata share
of the "maximum aggregate ESOP annual addition" for a limitation year shall
be determined as the proportion that his Compensation for such year bears
to the total Compensation of all Participants who are members of the
"special ESOP limit Employee group" for such limitation year.
The terms "ESOP annual addition," "basic dollar limit," "special ESOP
limit Employee group" and "maximum aggregate ESOP annual addition" are
defined in .03 below. The term "415 compensation" is defined in .05 below.
The "limitation year" is defined in Schedule I of the Plan.
.02 SPECIAL LIMITATION FOR INTEREST PAYMENTS AND FORFEITURES. For
limitation years beginning after December 31, 1994, the limitations imposed
in .01 above shall not apply to (i) Employer contributions to this Plan
which are deductible under Code Section 404(a)(9)(B) and charged against
the Participant's account or (ii) forfeitures of Qualifying Employer
Securities acquired with the proceeds of a loan as described in Code
Section 404(a)(9)(A) and allocated under this Plan.
4. The first paragraph of Section 9.5 of Article IX is deleted and
replaced with the following:
9.5 CONTRIBUTION ALLOCATION LIMITS APPLICABLE TO A COMBINATION OF DEFINED
CONTRIBUTION PLANS. If a Participant is also a participant in one or more
additional qualified defined contribution plans or welfare benefit funds (as
defined in Code Section 419(e)) maintained by the Employer (or its affiliates
within the meaning of Code Sections 414(b) or 414(c) (as modified by 415(h)) or
414(m)), the "ESOP annual addition" made to the Participant's account under this
Plan shall be limited so that the sum of the "annual additions" made to the
Participant's accounts under all such other plans plus
-2-
<PAGE>
the "ESOP annual addition" made to the Participant's account under this Plan
shall not exceed the limitation set forth in Section 9.4. Amounts allocated,
after March 31, 1984, to an individual medical account, as defined in Code
Section 415(l)(1), which is part of a defined benefit plan maintained by the
Employer, are treated as annual additions to a defined contribution plan. Also,
amounts derived from contributions paid or accrued after December 31, 1985, in
taxable years ending after such date, which are attributable to post-retirement
medical benefits allocated to the separate account of a key employee, as defined
in Code Section 419(d)(3), under a welfare benefit fund, as defined in Code
Section 419(e), maintained by the Employer, are treated as annual additions to a
defined contribution plan.
5. Section 15.6 of Article XV is amended by deleting the caption thereof
and inserting the following new first paragraph and substitute caption prior to
the two existing paragraphs of the Section:
15.6 IDENTITY OF INITIAL TRUSTEES; RESIGNATION AND REMOVAL OF TRUSTEES;
SUCCESSOR TRUSTEES. Until December 31, 1998, the Trustees in office
on May 1, 1994 (namely, John Everets and Raymond Doherty), or the
designee of each such Trustee, shall be and shall remain the only
two Trustees of this Trust (hereinafter, the "Initial Trustees");
provided, however, that (1) each Initial Trustee shall be subject to
removal by the Board if and only if legal counsel to the Employer
advises the Board (or a court of competent jurisdiction determines
in a final order not subject to any further appeal) that such
Initial Trustee has committed (and failed to remedy upon notice)
material breaches of his fiduciary duties under the Trust and (2) if
either Initial Trustee shall cease to serve as Trustee for any
reason and has failed seasonably to appoint a designee as his
successor Trustee (to serve for so long as such Initial Trustee was
to serve as one of the only two Trustees of the Trust and to appoint
a designee as his own successor during such period), the remaining
Initial Trustee (or his designee) shall appoint the other Initial
Trustee's successor. The Board shall appoint the successor Trustee
or Trustees to each Initial Trustee (or additional co-Trustees) when
the Initial Trustee no longer is
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<PAGE>
entitled to be (or have his designee be) one of the only two
Trustees of the Trust.
6. The following new paragraph .07 is added to Section 16.1 of Article
XVI and conforming changes are made to paragraphs .05 and .06:
.07 except as required to comport with changes to the Act, the Code
or the rules thereunder, more often than once every six months change the
eligibility provisions of the Plan (including without limitation the provisions
of Section 2.7, Article VI, and Schedule I, Section 3) or the allocation
provisions of the Plan (including without limitation the provisions of Article
IX and Schedule I, Section 4).
7. Paragraph .01 of Section 4.1 of Schedule I is deleted and replaced
with the following:
.01 GENERAL PROVISIONS.
Any contribution made by the Employer for a Fiscal Year plus any
forfeitures allocable for a Fiscal Year shall be allocated among the
Participants who are employed by the Employer on the last day of such
Fiscal Year and who have completed 150 Hours of Service during such
Fiscal Year (or a proportionate number of Hours of Service during any
Fiscal Year that is shorter than 12 months). All amounts so allocated
shall be credited to the Participants' accounts as of the last day of
the Fiscal Year for which the contributions were made and the
forfeitures became allocable.
8. The first paragraph of Section 5.1 of Schedule I is deleted and
replaced with the following:
5.1 VESTED INTEREST. Each Participant shall immediately have a non-
forfeitable interest in 100 percent of his account in the Trust Fund on the date
that a Change of Control occurs. Prior to the occurrence of a Change of Control,
a Participant's vested interest in the Trust Fund shall be a percentage of his
account in the Trust Fund based on years of service as follows:
* * *
Except as specifically amended hereby, the Plan is hereby reaffirmed in all
respects.
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<PAGE>
Signed as a sealed Massachusetts instrument effective on the date stated
above.
HPSC, INC.
By: /s/ John Everets
-------------------------------------
John Everets, Chairman
By their signatures below, the Initial Trustees of the HPSC, Inc. Employee
Stock Ownership Plan hereby consent to the foregoing amendment and all of its
terms:
/s/ John Everets
-------------------------------------------
John Everets, as Trustee and not
Individually
/s/ Raymond Doherty
-------------------------------------------
Raymond Doherty, as Trustee and not
Individually
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<PAGE>
FINAL
7/25/94
MILL3/AC3
Exhibit 10.3
HPSC, INC.
SUPPLEMENTAL EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
(July, 1994)
<PAGE>
HPSC, INC
SUPPLEMENTAL EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
ARTICLE I - NAME . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II - DEFINITIONS . . . . . . . . . . . . . . . . . . . 1
ARTICLE III - PURPOSE AND PRELIMINARY MATTERS. . . . . . . . . 4
3.1 Nature of Plan; No Reversion of Trust Assets;
Grantor Trust . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Qualification of Plan . . . . . . . . . . . . . . . . . . 5
ARTICLE IV - RESPONSIBILITIES AND DUTIES OF PLAN
ADMINISTRATOR AND TRUSTEE. . . . . . . . . . . . . . . . . 5
4.1 In General. . . . . . . . . . . . . . . . . . . . . . . . 5
4.2 Plan Administrator. . . . . . . . . . . . . . . . . . . . 5
4.3 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.4 Agents; Counsel; Custodian; Fees. . . . . . . . . . . . . 5
4.5 Fiduciary Duties. . . . . . . . . . . . . . . . . . . . . 6
4.6 Multiple Fiduciary Capacities . . . . . . . . . . . . . . 6
4.7 Limit on Fiduciary Compensation . . . . . . . . . . . . . 6
4.8 Indemnification . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE V - EFFECTIVE DATE . . . . . . . . . . . . . . . . . . 6
ARTICLE VI - PARTICIPATION . . . . . . . . . . . . . . . . . . 6
6.1 Eligibility . . . . . . . . . . . . . . . . . . . . . . . 6
6.2 Procedures. . . . . . . . . . . . . . . . . . . . . . . . 6
6.3 Designation of Death Beneficiary. . . . . . . . . . . . . 7
6.4 Duties of Plan Administrator. . . . . . . . . . . . . . . 7
<PAGE>
ARTICLE VII - CONTRIBUTIONS BY THE EMPLOYER. . . . . . . . . . 7
7.1 Contributions . . . . . . . . . . . . . . . . . . . . . . 7
7.2 Acceptance by Trustee . . . . . . . . . . . . . . . . . . 7
7.3 Timing of Payment . . . . . . . . . . . . . . . . . . . . 7
7.4 Contributions In Kind . . . . . . . . . . . . . . . . . . 7
ARTICLE VIII - EMPLOYEE CONTRIBUTIONS. . . . . . . . . . . . . 7
ARTICLE IX - ACCOUNTS AND ALLOCATIONS. . . . . . . . . . . . . 8
9.1 Separate Accounts . . . . . . . . . . . . . . . . . . . . 8
9.2 Time for Crediting Contributions. . . . . . . . . . . . . 8
9.3 Allocation of Forfeitures . . . . . . . . . . . . . . . . 8
9.4 Contribution Allocation Limits Applicable to this Plan. . 8
9.5 Valuing Plan Interests. . . . . . . . . . . . . . . . . . 8
ARTICLE X - BENEFITS . . . . . . . . . . . . . . . . . . . . . 8
10.1 Vesting. . . . . . . . . . . . . . . . . . . . . . . . . 8
10.2 Distribution . . . . . . . . . . . . . . . . . . . . . . 8
10.3 Forfeitures. . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE XI - CLAIMS PROCEDURE. . . . . . . . . . . . . . . . . 10
ARTICLE XII - LIFE INSURANCE . . . . . . . . . . . . . . . . . 11
ARTICLE XIII - STOCK INVESTMENT FUND . . . . . . . . . . . . . 11
13.1 Investment Fund; Suspense Account; Stock Account; and
Cash Benefit Account . . . . . . . . . . . . . . . . . . . 11
13.2 ESOP Definitions . . . . . . . . . . . . . . . . . . . . 12
13.3 Borrowing and Use of Loan Proceeds . . . . . . . . . . . 12
13.4 Valuation and Accounting . . . . . . . . . . . . . . . . 15
13.5 Voting Rights. . . . . . . . . . . . . . . . . . . . . . 16
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<PAGE>
ARTICLE XIV - NON-STOCK INVESTMENT FUND. . . . . . . . . . . . 16
ARTICLE XV - TRUST FUND AND POWERS AND DUTIES OF TRUSTEE . . . 16
15.1 Trust Fund . . . . . . . . . . . . . . . . . . . . . . . 16
15.2 Trustee's Powers . . . . . . . . . . . . . . . . . . . . 16
15.3 Trustee's Fees and Expenses. . . . . . . . . . . . . . . 17
15.4 Limitation on Trustee's Duties . . . . . . . . . . . . . 17
15.5 Trustee's Accounts . . . . . . . . . . . . . . . . . . . 17
15.6 Identity of Initial Trustees; Resignation and Removal of
Trustees; Successor Trustees . . . . . . . . . . . . . . . 18
15.7 Successor Trustee's Duties . . . . . . . . . . . . . . . 19
15.8 Trustee's Written Statements . . . . . . . . . . . . . . 19
15.9 Employer's Power of Substitution of Assets Prior
to a Change of Control . . . . . . . . . . . . . . . . . . 19
ARTICLE XVI - AMENDMENT. . . . . . . . . . . . . . . . . . . . 19
16.1 Right to Amend Prior to a Change of Control. . . . . . . 19
16.2 Right to Amend Following a Change of Control . . . . . . 20
ARTICLE XVII - DISCONTINUANCE OF CONTRIBUTIONS AND
TERMINATION OF PLAN. . . . . . . . . . . . . . . . . . . . 20
17.1 Right to Terminate Prior to a Change of Control. . . . . 20
17.2 Right to Terminate Following a Change of Control . . . . 20
17.3 Events Causing Plan Termination. . . . . . . . . . . . . 20
17.4 Liquidation of Trust and Distribution of Benefits. . . . 21
17.5 Vesting on Termination Following a Change of Control . . 21
17.6 Reversion of Excess Assets After Termination . . . . . . 21
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<PAGE>
ARTICLE XVIII - LOANS. . . . . . . . . . . . . . . . . . . . . 21
ARTICLE XIX - ROLLOVERS AND DIRECTED INVESTMENTS . . . . . . . 21
19.1 No Rollovers Into Plan . . . . . . . . . . . . . . . 21
19.2 No Directed Investments Permitted. . . . . . . . . . 21
ARTICLE XX - MISCELLANEOUS . . . . . . . . . . . . . . . . . . 21
20.1 No Employment Contract . . . . . . . . . . . . . . . . . 21
20.2 Employer Not Liable for Plan Liabilities . . . . . . . . 22
20.3 Benefit Accounts Are Unsecured Claims. . . . . . . . . . 22
20.4 No Anticipation or Assignment of Benefits. . . . . . . . 22
20.5 Acceptance of Trust. . . . . . . . . . . . . . . . . . . 22
20.6 Governing Law. . . . . . . . . . . . . . . . . . . . . . 22
20.7 Uniformity of Treatment. . . . . . . . . . . . . . . . . 22
ARTICLE XXI - TRUSTEE'S RESPONSIBILITY WHEN EMPLOYER IS
INSOLVENT. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
21.1 Procedure If Employer Is Insolvent . . . . . . . . . . . 23
21.2 Procedure Following Insolvency . . . . . . . . . . . . . 25
SCHEDULE I . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 1 - DEFINITIONS (Refer to Article II). . . . . . . . . 27
SECTION 2 - EFFECTIVE DATE (Refer to Article V). . . . . . . . 27
SECTION 3 - PARTICIPATION (Refer to Article VI). . . . . . . . 27
SECTION 4 - ALLOCATION (REFER TO ARTICLES IX AND XIII) . . . . 27
SECTION 5 - VESTING (Refer to Article X) . . . . . . . . . . . 28
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<PAGE>
HPSC, INC
SUPPLEMENTAL EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST
AGREEMENT between HPSC, Inc., a corporation duly organized and existing
under the laws of Delaware and having its principal place of business in Boston,
Massachusetts, and John Everets and Raymond Doherty as the Trustees.
ARTICLE I - NAME
The Plan and Trust created in accordance with the terms of this instrument
shall be named "The HPSC, Inc. Supplemental Employee Stock Ownership Plan and
Trust."
ARTICLE II - DEFINITIONS
Wherever used herein, unless the context clearly indicates otherwise, the
following words shall have the following meanings:
2.1 "Act" means the federal Employee Retirement Income Security Act of
1974 as amended from time to time, and any comparable subsequent legislation.
2.2 "Beneficiary" means any person, estate, trust or organization entitled
to receive payment on the death of a Participant.
2.3 "Board of Directors" means the of the Board of Directors of the
Employer.
2.5 "Change of Control" means the occurrence of an event or events as the
result of which (i) the business of the Employer is disposed of by the Employer
pursuant to a liquidation, merger in which the Employer is not the surviving
corporation, sale of assets or otherwise; or (ii) there is any transfer of the
Employer's stock currently pledged to certain banks, to a holder or holders who
seek to exercise control over the Employer, including without limitation such
banks and their transferee(s); or (iii) a majority of the issued and outstanding
shares of the Employer's voting stock is transferred during any two (2) year
period to any person (individual or entity) who did not own ten percent (10%) of
the Employer's outstanding stock at the beginning of the two (2) year period; or
(iv) during any twelve (12) month period a majority of the members of the Board
of Directors in office at the beginning of the period die, resign, are removed
from office or are not re-elected.
2.6 "Break in Service" means a Fiscal Year during which an Employee fails
to complete more than 500 Hours of Service.
<PAGE>
2.7 "Code" means the federal Internal Revenue Code of 1986 as amended from
time to time, and any comparable successor legislation.
2.6 "Compensation" means (i) the total salaries or wages paid by the
Employer to the Participant during any Fiscal Year that are subject to federal
income taxation (as reported by the Employer on Form W-2), including overtime
pay, commissions and bonuses, plus (ii) compensation reduction contributions
made pursuant to any Code Section 401(k) arrangement or Code Section 125
arrangements in plans maintained by the Employer. Except for
compensation-reduction contributions referred to above, "Compensation" does NOT
include any Employer contributions to this or any other employee benefit plan or
for Social Security or unemployment benefits. No Participant's Compensation for
purposes of this Plan shall be subject to any limitations imposed under the
Code, including without limitation Code Section 401(a)(17) and the regulations
thereunder.
2.8 "Employee" means any individual employed by the Employer, including
officers and directors who are employees. "Ineligible Employee" means: (i) any
Employee who is a member of a collective bargaining unit the retirement benefits
of which have been the subject of good faith bargaining and (ii) any Employee
who is a non resident alien and who receives no earned income (within the
meaning of Code Section 911 (d)(2)) from the Employer which constitutes income
from sources within the United States (within the meaning of Code Section 861
(a)(3)).
2.9 "Employer" means the corporation signatory to this agreement, and
shall also mean any successor organization to the corporation which shall assume
the Employer's obligations under this Plan. Such assumption shall be in writing,
signed by the organization assuming the obligations of the Plan and accepted by
the Trustee.
2.10 "Employment Commencement Date" means the day on which an Employee
first performs an Hour of Service.
2.11 "Entry Date" means the date or dates specified on Schedule I.
2.12 "Fiduciary" means the Plan Administrator and the Trustee.
2.13 "Hour of Service" means each hour for which the Employee is directly
or indirectly paid or entitled to payment by the Employer (i) for the
performance of duties for the Employer; (ii) for a period of time, up to 501
hours for any single continuous period, during which no duties are performed
(whether or not employment has been terminated), due to vacation, holiday,
illness, incapacity, disability, layoff, jury duty, military duty or leave of
absence; and (iii) for back pay, by award or by agreement of the Employer,
irrespective of mitigation of damages. The hours of
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<PAGE>
service referred to in (i) above shall be credited to the Employee as of the
computation period during which the duties were performed; the hours of service
referred to in (ii) above shall be credited for the computation period during
which the duties were not performed and in accordance with Department of Labor
Regulation, 29 C.F.R. 2530.200b-2(b) and (c), which is incorporated by reference
herein together with any subsequent amendment or replacement thereof; and the
hours of service referred to in (iii) shall be credited for the computation
period during which the period covered by such award or agreement occurred. The
same hours of service shall not be credited both under (i) or (ii), as the case
may be, and under (iii). Additionally, hours of service by a person who is
considered a "leased employee" under Code Section 414(n) or with an organization
while it is under common control with the Employer (Code Section 414(c)) or
while it is a member of a controlled group of corporations with the Employer
(Code Section 414(b)) or while it is a member of an affiliated service group
with the Employer (Code Section 414(m)) shall be considered as hours of service
with the Employer, but except as otherwise expressly provided in the Plan no
person shall be treated as an Employee of the Employer solely on account of such
service. Notwithstanding the foregoing, in no event will an Employee be credited
with hours of service for any period during which no duties were performed but
payments were made from a plan maintained solely to comply with applicable
workmen's compensation, unemployment compensation or disability insurance laws.
Solely for purposes of determining whether a Break in Service, as defined
in Section 2.4, for participation and vesting purposes has occurred in a
computation period, an individual who is absent from work for maternity or
paternity reasons shall receive credit for the Hours of Service which would
otherwise have been credited to such individual but for such absence, or in any
case in which such hours cannot be determined, eight Hours of Service per day of
such absence. For purposes of this paragraph, an absence from work for maternity
or paternity reasons means an absence (1) by reason of the pregnancy of the
individual, (2) by reason of a birth of a child of the individual, (3) by reason
of the placement of a child with the individual in connection with the adoption
of such child by such individual, or (4) for purposes of caring for such child
for a period beginning immediately following such birth or placement. The Hours
of Service credited under this paragraph shall be credited (1) in the
computation period in which the absence begins if the crediting is necessary to
prevent a Break in Service in that period, or (2) in all other cases, in the
following computation period.
2.14 "Insolvent" means that the Employer (i) is unable to pay its debts as
they come due or (ii) is subject to a pending proceeding as a debtor under the
federal Bankruptcy Code or under the insolvency laws of any state.
2.15 "Participant" means a person who has qualified to participate under
the Plan in accordance with Article VI.
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<PAGE>
2.16 "Plan" means the supplemental employee stock ownership plan set forth
in accordance with this Agreement, as it may from time to time be amended.
2.17 "Plan Administrator" means the person or persons described as such on
Schedule I and any successor. The Plan Administrator may be removed, and any
vacancy shall be filled, by the Board of Directors. In the event that the
position shall be vacant, or in the event of the incapacity of the Plan
Administrator, the President of the Employer shall serve as Plan Administrator.
2.18 "Qualified ESOP" means the HPSC, Inc. Employee Stock Ownership Plan
(adopted effective January 1, 1993), as amended from time to time, and any
successor plan thereto.
2.19 "Year" and "Fiscal Year" mean the fiscal year of the Trust as
specified in Schedule I.
2.20 "Trust" means the trust herein set forth.
2.21 "Trustee" means the trustee or trustees herein named and any duly
appointed successor trustees or trustee.
2.22 "Valuation Date" means the last day of the Fiscal Year.
Whenever used herein a pronoun in the masculine gender shall include the
feminine gender and a word in the singular number shall include the plural
number unless the context clearly indicates otherwise.
ARTICLE III - PURPOSE AND PRELIMINARY MATTERS
3.1 NATURE OF PLAN; NO REVERSION OF TRUST ASSETS; GRANTOR TRUST. This
Plan constitutes the principal instrument of a stock bonus type of employee
stock ownership plan established by the Employer and, subject to the Employer's
power of substitution pursuant to Section 15.9, it is designed to be invested
primarily in "Employer Securities," as provided in Article XIII. It is intended
not to be a "qualified plan" within the meaning of Code Section 401(a) and shall
not be subject to or, except as expressly provided herein, be interpreted or
administered in accordance with said Section 401(a) or any other Code section
governing qualified plans, including without limitation Code Sections 401
through 417 inclusive and Code Section 4975. Furthermore, this Plan is intended
not to be an "employee benefit plan" or a "pension plan" or "welfare plan"
within the meaning of Act Section 3 and shall not be subject to or be
interpreted or administered in accordance with the Act. In any event, this Plan
is intended to be "unfunded" for purposes of both the Code and (should it apply)
the Act. Except as otherwise expressly provided herein, the principal or income
of the Trust
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<PAGE>
shall not be paid to or revested in the Employer or used for any purpose
whatsoever other than as provided herein, including without limitation
distributing benefits to the Participants or their Beneficiaries and defraying
reasonable expenses of administering the Plan and Trust. The Trust created
pursuant to this Plan is intended to be a grantor trust (of which the Employer
is the grantor) within the meaning of subpart E, part I, subchapter J, chapter
1, subtitle A of the Code, and it shall be construed accordingly.
3.2 QUALIFICATION OF PLAN. The Plan Administrator shall not submit this
Plan to the Internal Revenue Service for a determination letter that the Plan,
as embodied in this Agreement, meets the qualification requirements of
Section 401(a) of the Code.
ARTICLE IV - RESPONSIBILITIES AND DUTIES OF PLAN ADMINISTRATOR AND
TRUSTEE
4.1 IN GENERAL. Unless otherwise agreed in writing by the Plan
Administrator and the Trustee, the responsibilities, duties and obligations of
the Plan Administrator and of the Trustee shall be allocated as provided in this
Article.
4.2 PLAN ADMINISTRATOR. The Plan Administrator, except as expressly
provided otherwise by this Agreement, shall have exclusive responsibility to
decide all questions relating to eligibility and benefits and all other matters
which are not expressly reserved to the Trustee, including the power to sue or
be sued on behalf of this Plan and Trust. If two or more persons are serving as
Plan Administrators, they may, by a writing signed by all such persons, allocate
among themselves in any reasonable manner their responsibilities as
Administrators. The Plan Administrator may appoint one or more qualified
persons, including actuaries, to assist him in performing his responsibilities
hereunder and delegate to such persons specific responsibilities. The Plan
Administrator is hereby designated as agent for the service of legal process.
4.3 TRUSTEE. The Trustee, except as expressly provided otherwise by this
Agreement, shall have exclusive responsibility to manage and control the assets
of the Trust. If two or more persons are serving as Trustees they may by a
writing signed by all such persons, allocate among themselves in any reasonable
manner their responsibilities, duties and obligations as Trustees. The Trustee
shall maintain records of the interest of each Participant in the Trust Fund.
4.4 AGENTS; COUNSEL; CUSTODIAN; FEES. The Trustee and the Plan
Administrator may employ one or more persons, including counsel, to render
advice with regard to any responsibility such Fiduciary may have and may employ
such agents and employees and delegate to them such nondiscretionary duties and
responsibilities as they shall decide to be reasonable and appropriate in the
exercise of their
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<PAGE>
responsibilities. The Trustee may appoint a bank or other financial institution
to act as custodian of the assets of the Trust and enter into such agreements
concerning the custodian's duties and compensation as the Trustee shall
determine to be appropriate. All fees and expenses of such persons who are
employed to give advice or to act as agents or employees shall be paid by the
Employer. In the event of the failure of the Employer to make such payment, the
expenses shall be considered as an expense of, and shall constitute a lien on,
the Trust Fund; provided that collection of such expenses from the Trust Fund
shall not relieve the Employer of liability to reimburse the Trust Fund.
4.5 FIDUCIARY DUTIES. Every person who is a Fiduciary with respect to the
Plan shall discharge his duties in accordance with the Plan and Trust and other
governing documents and instruments except insofar as such documents and
instruments are inconsistent with applicable law.
4.6 MULTIPLE FIDUCIARY CAPACITIES. A Fiduciary may serve in more than one
fiduciary capacity with respect to the Plan.
4.7 LIMIT ON FIDUCIARY COMPENSATION. No Fiduciary who receives full-time
pay from the Employer shall receive compensation from the Plan except for
reimbursement of expenses properly and actually incurred.
4.8 INDEMNIFICATION. Except as prohibited by law, any individual or
individuals serving as Trustee or Plan Administrator shall be indemnified in
full by the Employer against expenses, including attorneys' fees, and against
the amount of any judgment, money decree, fine, or penalty, or against the
amount of any settlement deemed reasonable by the Board of Directors,
necessarily paid or incurred by such individual or individuals in connection
with or arising out of any claim made, or any civil or criminal action, suit or
proceeding of whatever nature brought against such individual, or in which such
individual is made a party, or in which such individual is otherwise involved,
by reason of being or having been such Trustee or Plan Administrator. Such
indemnification shall apply to any such individual even though at the time of
such claim, action, suit or proceeding such individual is no longer a Trustee or
Plan Administrator.
ARTICLE V - EFFECTIVE DATE
The Effective Date of this Plan shall be the date specified as such on
Schedule I.
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<PAGE>
ARTICLE VI - PARTICIPATION
6.1 ELIGIBILITY. Each Employee shall be eligible to become a Participant
hereunder on the Entry Date and on fulfilling the conditions as set forth on
Schedule I hereto.
6.2 PROCEDURES. Each Employee shall be advised by the Plan Administrator
prior to his initial eligibility of his right to participate in the Plan. To
become a Participant, an eligible Employee must execute such application forms
as are required by the Plan Administrator within 30 days from the date on which
he was notified of his eligibility.
6.3 DESIGNATION OF DEATH BENEFICIARY. Each Employee upon becoming a
Participant shall notify the Plan Administrator in writing of his designation of
a Beneficiary to receive payment of benefits under the Plan in the event of his
death. Such designation or designations may be changed by him in writing from
time to time by notice to the Plan Administrator.
6.4 DUTIES OF PLAN ADMINISTRATOR. The Plan Administrator annually after
the close of each Fiscal Year shall prepare and deliver to the Trustee a
certified list of the Employees who were Participants for such year. The list
shall show the Compensation for the year of each Participant.
ARTICLE VII - CONTRIBUTIONS BY THE EMPLOYER
7.1 CONTRIBUTIONS. On account of each Fiscal Year prior to the occurrence
of a Change of Control, the Employer may contribute any amount as may be
determined by the Board of Directors to meet the obligations of the Plan and
Trust. On account of each Fiscal Year ending after the occurrence of a Change of
Control, the Employer shall contribute at least such amounts as will enable the
Trustee to (i) repay any Loans pursuant to the terms thereof and (ii) timely
make any distributions of vested account balances as the Trustee elects to pay
in cash.
7.2 ACCEPTANCE BY TRUSTEE. The Trustee shall not be under any duty to
inquire into the correctness of the amounts contributed to the Trust hereunder,
nor shall the Trustee be under any duty to determine whether any contribution is
payable under this Article.
7.3 TIMING OF PAYMENT. Payments on account of any Fiscal Year may be made
by the Employer from time to time prior to the close of such year or may be made
on account of any year within the period allowed for filing its federal income
tax return for such year, including any extensions thereof.
7.4 CONTRIBUTIONS IN KIND. To the extent permitted by applicable laws and
regulations, the Employer may make any
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<PAGE>
contribution in cash or in kind, including by issuing or transferring to the
Trustee Employer Securities.
ARTICLE VIII - EMPLOYEE CONTRIBUTIONS
No contributions by Employees shall be required or permitted under this
Plan.
ARTICLE IX - ACCOUNTS AND ALLOCATIONS
9.1 SEPARATE ACCOUNTS. The Trustee shall establish a separate account to
reflect the interest in the Trust of each Participant, former Participant and
Beneficiary. The Trustee shall maintain adequate records of such individual
accounts and credits and charges shall be made to such accounts in the manner
herein provided. A segregation of the assets of the Trust Fund into separate
accounts shall not be required. Distributions made from an account shall be
charged to the account as of the date paid. Each Participant shall receive a
statement of the value of the Participant's account at least annually.
9.2 TIME FOR CREDITING CONTRIBUTIONS. The contribution made by the
Employer pursuant to Article VII and Schedule I shall be credited to the
Participant's account as of the last day of the Fiscal Year for which it was
made.
9.3 ALLOCATION OF FORFEITURES. Any forfeitures for the Fiscal Year shall
be allocated in the manner provided in Section 4 of Schedule I.
9.4 CONTRIBUTION AND ALLOCATION LIMITS APPLICABLE TO THIS PLAN. No limits
on contributions and allocations under this Plan shall apply except as
specifically provided in this Agreement.
9.5 VALUING PLAN INTERESTS. As of each Valuation Date, the interest of
each Participant in the Trust Fund shall be determined. The interest of each
Participant in the Trust Fund shall be the sum of (i) the interest of the
Participant in the Investment Fund attributable to Employer contributions
(including earnings thereon) and (ii) his share, if any, of contributions and
forfeitures credited to his account as of such Valuation Date.
ARTICLE X - BENEFITS
10.1 VESTING. A Participant's account in the Trust Fund shall vest in
accordance with Section 5 of Schedule I to this Agreement.
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10.2 DISTRIBUTION.
.01 BENEFIT. In each Fiscal Year, the vested balance of a
Participant's account in the Trust Fund which has not been previously
distributed shall be distributed (subject to the provisions of this Article
and provided that the Employer is not Insolvent at the time of the
distribution) as soon as is administratively convenient following the date
which is six (6) months after the date that the Board of Directors
determines the Employer's contribution for such Fiscal Year (or, if no
contribution is determined for a Fiscal Year, then as soon as is
administratively convenient following the end of the sixth month of such
Fiscal Year). Distribution shall be made to the Participant if he is then
living and otherwise to his Beneficiary. The Participant's remaining non-
vested balance, if any, shall continue to be held in the Trust Fund until
it either vests in accordance with Section 10.1 above or is forfeited in
accordance with Section 10.3 below.
.02 PAYMENT. Each vested balance that becomes distributable in
accordance with paragraph .01 of this Section shall be distributed in cash
or in kind (including without limitation shares of Employer Securities) at
the sole option of the Trustee. No interest shall be due or paid on any
distribution on account of any good faith delay in making the distribution
prior to the occurrence of a Change of Control. Distributions made after
the occurrence of a Change of Control shall bear interest (which shall be
paid with the distribution) from the date that the Change of Control occurs
through the date that the distribution is made at an annual rate equal to
the greater of twelve percent (12%) and two (2) percentage points above the
greater of the "prime rate" as published from time to time in the WALL
STREET JOURNAL and the highest rate of interest paid by the Employer from
time to time on any financing undertaken in connection with the Change of
Control. If the Trustee cannot or does not distribute any portion or all of
the vested balance of a Participant's account when such distribution is due
pursuant to paragraph .01, then the Employer shall pay the balance of each
such distribution (with any applicable interest) as it falls due. To the
full extent that distributions are made from the Trust Fund, the Employer's
obligation to pay such amounts shall be deemed to have been satisfied.
.03 WITHHOLDING. Each Participant, Beneficiary or other recipient of
a distribution under this Plan shall be liable for all tax obligations, if
any, with respect to any sum received pursuant to the Plan and for
accurately reporting and paying in full all such taxes to the appropriate
federal, state and local authorities. The Trustee and the Employer shall
have the right to deduct and withhold from any distribution due under the
Trust Fund or the Plan (whether such distribution be in cash or in kind) or
from other amounts owed to or with respect to the
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Participant all withholding taxes and other amounts required by law.
Furthermore, prior to the occurrence of any Change of Control (but not
afterwards), upon notice in writing from the Employer the Trustee shall set
off from any distribution payable under the Plan all amounts owed by the
Participant to the Employer.
.04 PROCEDURES. At the close of each Fiscal Year, the Plan
Administrator shall deliver to the Trustee a list of all Participants who
will be entitled to receive distributions in the ensuing year. The failure
of the Plan Administrator to provide such a list shall not affect the
Participant's right to receive distributions as provided in this Article.
.05 NO BENEFICIARY. If no Beneficiary has been designated, or if the
designated Beneficiary shall not survive the Participant, distribution
shall be made to the Participant's surviving spouse or if none, then to his
issue PER STIRPES. If there is neither surviving spouse nor issue then
living, distribution shall be made to the deceased Participant's executor
or administrator.
10.3 FORFEITURES. The non-vested balance, if any, of a Participant's
account in the Trust Fund shall be forfeited as of the date that the Participant
incurs a Break in Service following the termination of his employment for any
reason (including without limitation death, disability or retirement); provided
that if the Participant again becomes an Employee prior to incurring a Break in
Service, no forfeiture shall occur on account of such termination and the
Participant's account shall continue to be subject to the provisions of this
Article. Forfeitures shall be dealt with as provided in Section 9.3 above.
ARTICLE XI - CLAIMS PROCEDURE
11.1 Within a reasonable time after the close of the Fiscal Year in which
an event occurs which entitles a Participant or Beneficiary to any distribution
under the Trust, the Plan Administrator shall notify the Participant or
Beneficiary in writing of the entitlement to distribution and the amount
thereof.
11.2 If the Participant or Beneficiary shall claim that he is entitled to
any other benefit or amount, he shall notify the Plan Administrator in writing
within 60 days of the notice provided in Section 11.1 of such claim.
11.3 In the event of such a claim, or any other claim for benefits under
the Trust, the following procedures shall apply:
.01 All claims for benefits under this Section shall be in writing
and shall be sufficient to notify the Plan Administrator of the type of
benefit claimed.
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.02 All claims shall be addressed to the Plan Administrator or the
chief personnel officer of the Employer.
.03 If a claim is denied in whole or in part by the Plan
Administrator, he shall furnish the claimant written notice of such denial
within a reasonable time after receipt of the claim by him. If no notice of
denial is furnished within 90-days after receipt of the claim by the Plan
Administrator, the claim shall be deemed denied and the Participant may
request a review of such denial.
.04 The notice of denial shall set forth, in a manner calculated to
be understood by the claimant, (i) the specific reason or reasons for the
denial, (ii) specific reference to the pertinent provisions of the Trust,
(iii) a description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such material
or information is necessary, and (iv) an explanation of this claims
procedure.
.05 Upon receipt of a notice of denial, the claimant may, by a
written application filed with the Plan Administrator within 60 days of
receipt of the notice, request a review by the Plan Administrator of such
denial.
.06 In connection with such review, the claimant may review pertinent
documents, may submit issues and comments in writing and may request a
hearing before the Plan Administrator.
.07 The decision of the Plan Administrator on such review shall be
final.
ARTICLE XII - LIFE INSURANCE
The Trustee shall not use any portion of the contributions under the Plan
to purchase life insurance policies on the life of any Participant.
ARTICLE XIII - STOCK INVESTMENT FUND
13.1 INVESTMENT FUND; SUSPENSE ACCOUNT; STOCK ACCOUNT; AND CASH BENEFIT
ACCOUNT.
.01 INVESTMENT FUND; SUSPENSE ACCOUNT AND STOCK ACCOUNT. The
Trustee shall establish a fund to be known as the Investment Fund and all
Employer contributions shall be allocated to the Investment Fund as of the
close of the Fiscal Year on account of which the contributions are made. As
part of the Investment Fund, the Trustee shall establish a "Stock Account"
and, if
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assets are to be acquired by this Plan with the proceeds of a Loan, a
"Suspense Account." All assets acquired by this Plan with the proceeds of a
Loan shall be allocated first to the Suspense Account and shall
subsequently be withdrawn from the Suspense Account and reallocated to the
Stock Account in accordance with the provisions of Section 13.3 of this
Article. All Employer Securities acquired by this Plan other than with the
proceeds of a Loan shall be allocated directly to the Stock Account.
.02 CASH BENEFIT ACCOUNT. Also as part of the Investment Fund, the
Trustee shall establish a Cash Benefit Account. All Employer contributions
which (a) are designated by the Employer for the payment of cash benefits
under the Plan or (b) are neither (i) made in shares of Employer
Securities, nor (ii) designated by the Employer for the repayment of a Loan
or the purchase of shares of Employer Securities, nor (iii) deemed
necessary by the Trustee for the repayment of a Loan shall be allocated
initially to the Cash Benefit Account. If shares of Employer Securities are
reallocated from a Participant's account in the Stock Account to the Cash
Benefit Account in order to make a cash distribution, cash (or other
property, except shares of Employer Securities) equal in value to the
amount that such shares of Employer Securities would have realized if sold
by the Trustee on the date of the reallocation (as determined in accordance
with the valuation principles of Section 13.4.01 of this Article) shall be
allocated from the Cash Benefit Account to such Participant's account in
the Stock Account. As of the last day of each Fiscal Year, all shares of
Employer Securities in the Cash Benefit Account and any remaining
unallocated cash or other property in the Cash Benefit Account shall be
allocated in accordance with the provisions of Section 4 of Schedule I of
the Plan to the accounts of all Participants entitled to share in an
allocation of Employer contributions for the Fiscal Year; provided that,
(i) any such shares of Employer Securities allocated pursuant to this
sentence shall be allocated to each eligible Participant's account in the
Stock Account and (ii) all other assets allocated pursuant to this sentence
shall be allocated to each eligible Participant's account in the Cash
Benefit Account, where such cash or other property shall remain available
for reallocation pursuant to this Paragraph .02 in order to pay cash
benefits to other Participants or Beneficiaries. If any such unallocated
cash or other property is allocated pursuant to the preceding sentence, and
subsequently shares of Employer Securities are transferred into the Cash
Benefit Account in exchange for such cash or other property, such shares of
Employer Securities shall then be allocated to the accounts in the Stock
Account of the Participants from whose accounts in the Cash Benefit Account
such cash or other property was taken in exchange for the shares of
Employer Securities.
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13.2 ESOP DEFINITIONS. For purposes of this Plan, the following terms
shall have the following meanings:
.01 "EMPLOYER SECURITY" means common or preferred stock issued by the
Employer (or by a corporation which is a member of the same controlled
group within the meaning of Code Section 409(1)(4)).
.02 "LOAN" means a loan made to this Plan for the purpose of (or
which is used for) acquiring Employer Securities. A Loan may be made and/or
guaranteed by any person.
13.3 BORROWING AND USE OF LOAN PROCEEDS. The Plan may receive a Loan,
provided that such Loan shall satisfy the following requirements.
.01 USE OF LOAN PROCEEDS. The proceeds of the Loan shall be used
within a reasonable time after their receipt by the Plan only for any or
all of the following purposes: (i) to acquire Employer Securities; (ii) to
repay the Loan; and (iii) to repay a prior Loan.
.02 LIABILITY AND COLLATERAL. Each Loan shall be without recourse
against this Trust. Furthermore, the only assets of this Plan that may be
given as collateral on a Loan are any or all of the following Employer
Securities: (i) those acquired with the proceeds of the Loan and (ii) those
that were used as collateral on a prior Loan repaid with the proceeds of
the current Loan. No person entitled to payment under the Loan shall have
any right to assets of this Plan other than: (i) collateral given for the
Loan; (ii) contributions (other than contributions of Employer Securities)
that are made under this Plan to meet its obligations under the Loan and
(iii) earnings attributable to such collateral and the investment of such
contributions.
.03 REPAYMENT OF THE LOAN. Payments made with respect to the Loan by
this Plan shall be made from any assets of the Trust Fund (other than
Employer Securities) at the Trustee's sole discretion.
.04 DEFAULT. In the event of default upon the Loan, the value of
Plan assets transferred in satisfaction of the Loan shall not exceed the
amount of default. Furthermore, the Loan shall provide for a transfer of
Plan assets upon default only upon and to the extent of the failure of the
Plan to meet the payment schedule of the Loan.
.05 RELEASE FROM ENCUMBRANCE. The Loan shall provide for the release
from encumbrance of Plan assets used as collateral
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for the Loan as follows: For each Fiscal Year during the duration of the
Loan, the number of securities released shall equal the number of
encumbered securities held immediately before release for the current
Fiscal Year multiplied by a fraction. The numerator of the fraction is the
amount of principal paid for the Year and the denominator of the fraction
is the sum of the numerator plus the aggregate principal to be paid for all
future years. The number of future years under the Loan shall be definitely
ascertainable and shall be determined without taking into account any
possible extensions or renewal periods. If the collateral includes more
than one class of securities, the number of securities of each class to be
released for a Fiscal Year shall be determined by applying the same
fraction to each class. Notwithstanding the foregoing, all Plan assets used
as collateral for any outstanding Loan shall be released from encumbrance
immediately upon the occurrence of a Change of Control.
.06 USE OF SUSPENSE ACCOUNT. All assets acquired by this Plan with
the proceeds of the Loan shall be added to and maintained in the Suspense
Account until they are released from encumbrance in accordance with
paragraph .05 of this Section (or would have been released, if they had
been used as collateral for the Loan). If shares of Employer Securities are
used as collateral for the Loan, they shall be withdrawn from the Suspense
Account at the same time and in the same amounts as they are released from
encumbrance. If such shares are not used as collateral, they shall be
withdrawn from the Suspense Account as if they had been so used and were
being released from encumbrance as provided in paragraph .05. No
Participant shall have any interest in, or rights with respect to, any
shares of Employer Securities while they are held in the Suspense Account.
In the event that any shares of Employer Securities held in the Suspense
Account are sold, the proceeds shall be (i) first, used to repay the Loan
and (ii) second, if there is any excess amount (including any shares of
Employer Securities released from encumbrance by reason of such repayment),
allocated among the accounts of all Participants in proportion to the
aggregate value of each such person's total interest in the Trust Fund
(including his interest in the Stock Account and all non-Stock Accounts).
.07 ALLOCATION TO ACCOUNTS OF PARTICIPANTS. As Employer Securities
are released from encumbrance and withdrawn from the Suspense Account they
shall be transferred to the Stock Account. As of the end of each Fiscal
Year, the account of each Participant shall be credited with a portion of
all Employer Securities transferred to the Stock Account for such Year
determined as follows: (a) from the Employer Securities transferred as the
result of Loan payments made with (i) the Employer's contribution and
(ii) earnings on the Plan's assets that have not been allocated to
Participants, that portion which
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is equal to such Participant's proportionate share of the Employer's
contribution for such Year; plus (b) from the Employer Securities
transferred as the result of Loan payments made with earnings on the Plan's
assets that have been allocated to Participants, that portion which is
equal to such Participant's account balance attributable to the assets that
resulted in the earnings compared to the aggregate account balances of all
Participants attributable to such assets; provided that (c) credits
resulting from dividends on unallocated Employer Securities that have been
used to make Loan payments pursuant to Section 13.4.02 below and that are
otherwise determinable under clause (a)(ii) above shall instead be
determined and credited under clause (b) to the extent necessary to provide
each Participant with Employer Securities allocated under clause (b) having
an aggregate Fair Value at least equal to the amount of dividends paid on
the Employer Securities that have been allocated to the Participant's
account. Notwithstanding the foregoing, Employer Securities and other Plan
assets that are released from encumbrance as the result of a Change of
Control (as provided in paragraph .05 of this Section) shall be credited to
the account of each Participant as if an Employer contribution had been
made to fully discharge all amounts due under all Loans outstanding on the
date that the Change of Control occurred.
.08 SOURCE OF FORFEITURES. If a portion of a Participant's account is
forfeited, Employer Securities allocated under paragraph .07 of this
Section shall be forfeited only after other assets. If interests in more
than one class of Employer Securities have been allocated to the
Participant's account, the same proportion of each class so allocated shall
be forfeited if any is forfeited.
13.4 VALUATION AND ACCOUNTING. Employer Securities acquired by this Plan
shall be valued and accounted for as provided in this Section.
.01 VALUATION. Employer Securities shall be acquired, accounted for,
distributed and disposed of for all purposes under this Plan at their
current "Fair Value." Fair Value shall be determined in good faith and
based on all relevant factors. Fair Value shall be (i) in the case of
purchases or sales of shares of Employer Securities, the actual price paid
or received in the transaction; (ii) in the case of transfers of shares of
Employer Securities to or from the Cash Benefit Account pursuant to section
13.1.02, the amount that would have been realized (as defined below) if
such shares had been sold on the date of the transfer; (iii) in the case of
all other transactions involving shares of Employer Securities, the amount
that would have been realized if such shares had been sold on the most
recent Valuation Date prior to or coinciding with the transaction; and (iv)
in the case of any valuations of shares of Employer
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Securities made for purposes of the Plan (including, without limitation,
valuations for purposes of Sections 9.5 and 15.5) EXCEPT as otherwise
required by the Plan (including, without limitation, application of Section
13.3.07), the amount that would have been realized if such shares had been
sold on the Valuation Date as of which such valuation is made. For purposes
of clauses (ii), (iii) and (iv) of the preceding sentence, the amount that
would have been realized upon the sale of shares of Employer Securities on
a given date shall be deemed to be the average of the highest and lowest
selling prices of all such shares sold on such date (or, if no shares of
Employer Securities were sold on such date, such average of the selling
prices on the most recent date that such shares where sold which precedes
the relevant date). Notwithstanding the foregoing, if at any time shares of
Employer Securities are not readily tradeable on an established securities
market, Fair Value shall be determined at the Trustee's sole good-faith
discretion.
.02 ALLOCATION OF INCOME. Income received by the Plan with respect
to any Employer Securities (whether or not allocated to Participants) may
be used to make payments on any Loan. To the extent not used to make
payments on a Loan, income received with respect to allocated shares of
Employer Securities shall be allocated with respect to such shares.
.03 ACCOUNTING. The Trustee shall maintain adequate records to
determine the number of shares of Employer Securities allocated with
respect to each Participant's account in the Trust Fund. To the extent
assets other than Employer Securities are held in the Investment Fund, as
of each Valuation Date the Trustee shall determine the total net worth of
the Investment Fund by valuing all of such other assets at their fair value
as of such valuation and shall compare such value to the total amount
standing to the credit in the accounts of all such Participants in the Fund
as of the prior Valuation Date. Any increase or decrease shall be
apportioned among such Participants' accounts in the same proportion as the
amount standing to the credit of each such Participant bears to the total
of all amounts standing to the accounts of all such Participants.
13.5 VOTING RIGHTS. The Trustee may exercise all voting rights in any
Employer Securities held in the Trust Fund, whether allocated to the Suspense
Account, the Stock Account or otherwise. The Trustee shall not be liable to
anyone (including without limitation the Employer or any Participant or
Beneficiary) for exercising or failing to exercise any voting rights in any
Employer Securities held in the Trust Fund, including without limitation voting
or failing to vote any Employer Securities, giving or failing to give any proxy
with respect to any Employer Securities, or tendering or failing to tender any
Employer Securities.
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ARTICLE XIV - NON-STOCK INVESTMENT FUND
The Trustee shall establish a Non-Stock Investment Fund if and only if the
Trustee determines that such Fund is needed in order to hold assets of the Plan
which are neither Employer Securities nor assets of the Cash Benefit Account
(provided for in Article XIII). If established, such Fund shall be invested by
the Trustee pursuant to the investment powers hereinafter provided. The Trustee
shall apportion any increase or decrease in the value of the Fund at periodic
intervals, not less frequently than annually, in an equitable manner among the
Participants having an interest in the Fund.
ARTICLE XV - TRUST FUND AND POWERS AND DUTIES OF TRUSTEE
15.1 TRUST FUND. Subject to the claims of creditors as set forth in
Article XXI, the Employer hereby deposits with the Trustee in trust One Dollar
($1.00) which shall become the principal of the Trust Fund to be held,
administered and disposed of by the Trustee as provided in this Agreement. The
Trust Fund shall consist of the contributions by the Employer and the
investments and reinvestments thereof without distinction between principal and
income, and the said Trust Fund shall be held, administered and invested and
reinvested in accordance with Article IV by the Trustee.
15.2 TRUSTEE'S POWERS. In furtherance and not in limitation of the
Trustee's investment authority, but subject to the requirements of Article XIII
and Section 15.9, the Trustee shall have full power and authority to deal with
all or any part of the Fund, including, without limitation, to invest, reinvest,
and change investments; to acquire any property, real or personal, by purchase,
subscription, lease, or other means; to sell for cash or on credit, convey,
lease for long or short terms or convert, redeem or exchange, all or any part of
the Fund; to enforce by suit or otherwise, or to waive, its rights on behalf of
the Trust, and to defend claims asserted against the Trust; to compromise,
adjust and settle any and all claims against or in favor of the Trust; to renew
extend or foreclose any mortgage or other security; to bid in property on
foreclosure; to take deeds in lieu of foreclosure, with or without paying a
consideration therefor; to vote, or give proxies to vote, any stock or other
security, and to waive notice of meetings; to oppose, participate in and consent
to the reorganization, merger, consolidation, or readjustment of the finances of
any enterprise, to pay assessments and expenses in connection therewith, and to
deposit securities under deposit agreements; to hold securities unregistered, or
to register them in its own name or in the names of nominees; to purchase for
the benefit of the Trust insurance on the lives of any shareholder or employee
of the Employer; to make, execute, acknowledge and deliver any and all
instruments that it shall deem necessary or appropriate to carry out the powers
herein
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granted; to purchase other contracts issued by insurance companies, including
group annuity contracts; and generally to exercise any of the powers of an owner
with respect to all or any part of the Fund. The Trustee may retain as much cash
or cash equivalents as it deems advisable. The Trustee shall have full power and
authority to borrow against the credit of the Plan and Trust and to pledge or
mortgage assets of the Plan and Trust to secure such borrowing; provided that
any borrowing and pledge of assets made for the purpose of acquiring Employer
Securities shall be subject to the requirements of Article XIII.
15.3 TRUSTEE'S FEES AND EXPENSES. The Trustee's fee for performing its
duties hereunder shall be such as may be mutually agreed upon by the Employer
and the Trustee, and the Employer agrees to pay the same. The Employer agrees to
reimburse the Trustee for any and all expenses reasonably incurred by the
Trustee, including counsel fees. In the event of the failure of the Employer to
make such payment or reimbursement, the expenses shall be considered as an
expense of, and shall constitute a lien on, the trust fund; provided that
collection of such expenses from the Trust Fund shall not relieve the Employer
of liability to reimburse the Trust Fund.
15.4 LIMITATION ON TRUSTEE'S DUTIES. The Trustee is a party to this
agreement solely for the purposes set forth in this Trust and its duties shall
be only such as are set forth herein.
15.5 TRUSTEE'S ACCOUNTS. Within a reasonable period after the close of
each Fiscal Year and at any other time upon the request of the Employer, the
Trustee shall render to the Employer accounts of its administration of this
Trust during the preceding Fiscal Year or interim period including all
allocations required for such year. The written approval of any Trustee's
account by the Plan Administrator, as to all matters and transactions stated or
shown therein, shall be final and binding upon the Employer. Failure of the Plan
Administrator to notify the Trustee within ninety days after the receipt of any
account of his disapproval of such account shall be the equivalent of written
approval.
If the Plan Administrator files any exceptions or objections with respect
to any matters or transactions stated or shown in the account and the Plan
Administrator and the Trustee cannot amicably settle the questions raised in
such exceptions or objections, the Trustee or the Employer shall have the right
to have such questions settled by judicial proceeding. Nothing herein contained
shall be construed as depriving the Trustee of the right to have a judicial
settlement of its accounts.
15.6 IDENTITY OF INITIAL TRUSTEES; RESIGNATION AND REMOVAL OF TRUSTEES;
SUCCESSOR TRUSTEES. Until December 31, 1998, the Trustees in office on the date
of execution of this Agreement (namely, John Everets and Raymond Doherty), or
the designee of each such Trustee, shall be and shall remain the only two
Trustees of this Trust
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(hereinafter, the "Initial Trustees"); provided, however, that (1) each Initial
Trustee shall be subject to removal by the Board of Directors if and only if
legal counsel to the Employer advises the Board of Directors (or a court of
competent jurisdiction determines in a final order not subject to any further
appeal) that such Initial Trustee has committed (and failed to remedy upon
notice) material breaches of his fiduciary duties under the Trust and (2) if
either Initial Trustee shall cease to serve as Trustee for any reason and has
failed seasonably to appoint a designee as his successor Trustee (to serve for
so long as such Initial Trustee was to serve as one of the only two Trustees of
the Trust and to appoint a designee as his own successor during such period),
the remaining Initial Trustee (or his designee) shall appoint the other Initial
Trustee's successor. The Board of Directors shall appoint the successor Trustee
or Trustees to each Initial Trustee (or additional co-Trustees) when the Initial
Trustee no longer is entitled to be (or have his designee be) one of the only
two Trustees of the Trust.
Any Trustee may resign from this Trust at any time by giving written notice
to the Board of Directors and to each other Trustee then in office. Such
resignation shall be effective the later of 30 days after notice is given or on
the date specified by the Trustee in such notice, provided that the Board of
Directors may waive all or any part of such 30-day notice requirement. The Board
of Directors may remove the original Trustee and any successor Trustee upon
written notice (which shall be effective when given or on any other date
specified by the Board of Directors in such notice) and shall designate and
appoint all successor Trustees. Any successor Trustee shall have all the powers
herein conferred upon the original Trustee.
The Board of Directors may appoint a special Trustee whose duties are
limited to making independent fiduciary decisions with respect to the
acquisition (and the terms of such acquisition) of Qualifying Employer
Securities by the Plan and Trust pursuant to Article XIII. If such special
Trustee is appointed, while such special Trustee is in office any other Trustee
then in office shall not have any authority with respect to the decision to
acquire or the acquisition of Qualifying Employer Securities, but shall solely
exercise all other authority of the Trustee hereunder.
15.7 SUCCESSOR TRUSTEE'S DUTIES. No successor Trustee shall be required
to inquire into or shall be liable for the acts or omissions of any prior
Trustee.
15.8 TRUSTEE'S WRITTEN STATEMENTS. A written statement of the Trustee at
any time as to any facts relative to the Trust may always be relied upon and
shall always be conclusive evidence in favor of any person dealing in good faith
with the Trustee in reliance upon such statement.
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15.9 EMPLOYER'S POWER OF SUBSTITUTION OF ASSETS PRIOR TO A CHANGE OF
CONTROL. Prior to the occurrence of a Change of Control (but not after such
occurrence) the Employer shall have the right at any time, and from time to
time, in its sole discretion to substitute assets of equal fair market value for
any asset held in the Trust Fund (including without limitation any Employer
Securities). This right shall be exercisable by the Employer in a non-fiduciary
capacity without the approval or consent of any person in a fiduciary capacity.
ARTICLE XVI - AMENDMENT
16.1 RIGHT TO AMEND PRIOR TO A CHANGE OF CONTROL. The Employer reserves
the right at any time or times prior to the occurrence of a Change of Control to
amend this Agreement to any extent and in any manner that it may deem advisable
by delivery to the Trustee of an executed copy of such amendment; provided that
no amendment shall:
.01 except as provided in Article XVII, have the effect of vesting in
the Employer any interest in any property held subject to the terms of this
Trust;
.02 cause or permit any property held subject to the terms of the
Trust to be used in a manner other than as provided in this Agreement;
.03 reduce any Participant's vested interest in the Trust Fund;
.04 increase the duties or liability of the Trustee or alter the
Trustee's rights under Section 13.5 or alter any of the provisions of
Article XV or of this Section 16.1 without the Trustee's written consent;
or
.05 more often than once every six months change the eligibility
provisions of the Plan (including without limitation the provisions of
Section 2.8, Article VI, and Schedule I, Section 3) or the allocation
provisions of the Plan (including without limitation the provisions of
Article IX and Schedule I, Section 4).
16.2 RIGHT TO AMEND FOLLOWING A CHANGE OF CONTROL. At any time or times
following the occurrence of a Change of Control, the Employer may amend this
Agreement in any manner otherwise permitted under Section 16.1 above only with
the Trustee's express written consent.
ARTICLE XVII - DISCONTINUANCE OF CONTRIBUTIONS AND TERMINATION OF PLAN
17.1 RIGHT TO TERMINATE PRIOR TO A CHANGE OF CONTROL. The Employer has
established this Plan with the bona fide intention and
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expectation that it will be able to make its contributions indefinitely, but the
Employer may in its sole and absolute discretion terminate the Plan and Trust at
any time prior to the occurrence of a Change of Control without any liability
whatsoever for such discontinuance or termination.
17.2 RIGHT TO TERMINATE FOLLOWING A CHANGE OF CONTROL. At any time
following the occurrence of a Change of Control, the Employer may terminate the
Plan and Trust only with the Trustee's express written consent.
17.3 EVENTS CAUSING PLAN TERMINATION. The Plan and Trust hereby created
shall terminate upon the happening of any of the following events:
.01 Delivery to the Trustee of a notice of termination executed on
behalf of the Employer specifying the date of termination.
.02 Adjudication of the Employer as a bankrupt or general assignment
by the Employer to or for the benefit of creditors.
.03 Dissolution of the Employer or the permanent cessation and
winding-up of its business.
.04 A complete discontinuance of contributions by the Employer (but a
temporary suspension of contributions shall not constitute a termination).
Provided, however, in the event the dissolution of the Employer or cessation of
its business is occasioned by merger, consolidation, reorganization or transfer
of substantially all of its assets and liabilities to another corporation, and
such successor assumes the obligations of the Employer hereunder pursuant to
Section 2.9, the Plan and Trust shall not terminate but shall continue in full
force and effect.
17.4 LIQUIDATION OF TRUST AND DISTRIBUTION OF BENEFITS. If an event
described in Section 17.3 occurs, the Trustee shall forthwith liquidate the
entire Trust Fund. After proportional adjustment of accounts to reflect any
provision for expenses and any increase or decrease in the net worth of the
Trust Fund since the last Valuation Date, each Participant shall be entitled to
receive the vested amount standing to the credit of his account in the Trust
Fund as of the date of liquidation. The Trustee shall distribute such amounts in
cash or in kind (including without limitation shares of Employer Securities) at
the Trustee's sole option.
17.5 VESTING ON TERMINATION FOLLOWING A CHANGE OF CONTROL. In the event
of the termination of the Plan or the complete discontinuance of contributions,
provided that such termination or discontinuance coincides with or follows the
occurrence of a Change
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<PAGE>
of Control, each Participant shall be fully vested in his account in the Trust
Fund and no Participant shall thereafter be divested of any funds in his account
as a result of the provisions of Section 10.3.
17.6 REVERSION OF EXCESS ASSETS AFTER TERMINATION. Notwithstanding
anything to the contrary herein, all assets remaining in the Trust Fund (whether
principal or interest) after satisfying all liabilities of the Plan and the
Trust Fund (including without limitation distribution of benefits in accordance
with Section 17.4) shall be revested in the Employer and the Trustee shall
promptly pay over the same to the Employer following termination of the Plan and
Trust.
ARTICLE XVIII - LOANS
The Trustee shall not make loans to Participants or Beneficiaries from
assets of this Plan.
ARTICLE XIX - ROLLOVERS AND DIRECTED INVESTMENTS
19.1 NO ROLLOVERS INTO PLAN. The Plan shall not receive any amounts
received by a Participant from any other plan.
19.2 NO DIRECTED INVESTMENTS PERMITTED. No Participant or Beneficiary may
direct the Trustee as to the investment of his account in the Trust Fund either
generally or in respect of some particular investment or investments.
ARTICLE XX - MISCELLANEOUS
20.1 NO EMPLOYMENT CONTRACT. The adoption and maintenance of this Trust
shall not be deemed to be a contract between the Employer and an Employee or the
Trustee and an Employee. Nothing herein contained shall be deemed to give to any
Employee the right to be retained in the employ of the Employer or to interfere
with the right of the Employer to discharge any Employee at any time, nor shall
it be deemed to give the Employer the right to require any Employee to remain in
its employ, nor shall it interfere with the Employee's right to terminate his
employment at any time.
20.2 EMPLOYER LIABLE FOR PLAN LIABILITIES. Each Participant shall have
full recourse against the Employer for any insufficiency of benefits payable
under this Plan.
20.3 BENEFIT ACCOUNTS ARE UNSECURED CLAIMS. No Participant or Beneficiary
shall have any preferred claim on, or any beneficial ownership interest in, any
assets of the Trust Fund prior to the time such assets are distributed to the
Participant or Beneficiary as provided in Article X, and all rights created
under the Plan and Trust shall be mere unsecured contractual rights of a
Participant against the Employer.
-22-
<PAGE>
20.4 NO ANTICIPATION OR ASSIGNMENT OF BENEFITS. No interest of any
Participant or Beneficiary hereunder shall be subject to anticipation or
alienation by such Participant or Beneficiary, either by sale, transfer,
assignment, pledge, encumbrance, attachment, garnishment, or by any other method
and shall not be subject to be taken by his creditors by any process whatsoever.
20.5 ACCEPTANCE OF TRUST. The Trustee hereby accepts the Trust herein
expressed and agrees to carry out the provisions which it is required to perform
hereunder.
20.6 GOVERNING LAW. This instrument and the Trust created hereby shall be
construed, administered, regulated and governed in all respects under and by the
laws of Massachusetts.
20.7 UNIFORMITY OF TREATMENT. All the provisions of this instrument shall
be administered in such a way that all Participants under similar circumstances
will be similarly treated.
ARTICLE XXI - TRUSTEE'S RESPONSIBILITY WHEN EMPLOYER IS INSOLVENT
21.1 PROCEDURE IF EMPLOYER IS INSOLVENT.
.01 BENEFITS UNSECURED. At all times during the continuance of this
Trust, the principal and income of the Trust Fund shall be subject to
claims of general creditors of the Employer as hereinafter set forth. All
Participants and Beneficiaries shall have the rights under this Trust
Agreement of unsecured general creditors of the Employer and shall not have
any preferred claim on, or any beneficial interest in, the Trust Fund other
than in amounts as they become distributable under Section 10.2. Nothing in
this Agreement shall in any way diminish any rights of any Participant or
Beneficiary to pursue his or her rights as an unsecured general creditor of
the Employer with respect to his or her interest in the Plan or otherwise.
.02 PROCEDURE IF NOTICE IS GIVEN. At any time that the Trustee has
received notice that the Employer is Insolvent, the Trustee shall
immediately discontinue distribution to every Participant and Beneficiary
and shall thereafter deliver any undistributed principal and income of the
Trust Fund to satisfy all claims of general creditors (including the
Participants and their Beneficiaries) as a court of competent jurisdiction
may direct; provided, however, that the Trustee may deduct or continue to
deduct any unreimbursed fees and expenses of the Trust Fund, including
taxes, pending receipt of such court direction.
.03 DUTY TO GIVE NOTICE; RELIANCE BY TRUSTEE. The Employer (by its
board of directors and chief executive officer)
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<PAGE>
and the Plan Administrator shall have the duty to inform the Trustee
immediately in writing if the Employer becomes Insolvent, and the Trustee
may rely on such notice (except as provided in the following paragraph)
without making an independent determination. Unless the Trustee has actual
knowledge of the Employer's insolvency, the Trustee shall have no duty to
inquire whether the Employer is Insolvent.
.04 DUTY TO MAKE AN INDEPENDENT DETERMINATION. Notwithstanding the
foregoing, if the Trustee receives such notice that the Employer is
Insolvent at any time after a Change of Control has occurred or receives a
written allegation of an event of insolvency from a third party considered
by the Trustee to be reliable and responsible, the Trustee shall
independently determine, as soon as practicable after receipt of such
notice or allegation, whether the Employer is Insolvent, and the Employer
shall furnish such evidence as the Trustee reasonably requests for the
purpose of making such determination. The Trustee may in all events rely on
such evidence concerning the Employer's solvency as may be furnished to the
Trustee which will give the Trustee a reasonable basis for making a
determination concerning the Employer's solvency. For purposes of this
Agreement, the Trustee (if it is a bank) shall be considered to possess any
knowledge and information concerning the Employer in the possession of the
Trustee's Banking Department or other department that can reasonably be
imputed to the Trustee under normal bank procedures.
.05 PROCEDURE WHILE A DETERMINATION IS BEING MADE. Pending such
determination by the Trustee if one is required pursuant to paragraph
.04 above, the Trustee shall suspend distributions to every Participant and
Beneficiary, shall hold the Trust assets for the benefit of the Insolvent
Employer's general creditors and the payment of fees and expenses (to the
extent permitted under this Agreement), and shall resume distributions to
Participants and Beneficiaries in accordance with Section 10.2 of this
Agreement only after the Trustee has determined that the Employer is not
Insolvent (or is no longer Insolvent, if the Trustee initially determined
the Employer to be Insolvent).
06. CONCLUSIVE DETERMINATION OR NOTICE. In performing any of its
obligations or taking any discretionary action under this Agreement which
is dependent on the Employer being Insolvent, the Trustee may rely on its
determination (if such was required under paragraph .04 above), including
an opinion of counsel (who may be counsel to the Trustee), that the
Employer is Insolvent or on a written notice of insolvency from the
Employer or the Plan Administrator. Unless such a determination arises out
of the Trustee's gross negligence or willful misconduct, the Trustee's
determination as to whether the Employer is Insolvent shall be binding and
conclusive on all persons to the extent of determining their respective
interests, rights and duties under this Agreement.
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<PAGE>
21.2 PROCEDURE FOLLOWING INSOLVENCY.
.01 RESUMPTION OF TRUSTEE'S DUTIES. If the Trustee suspends or
discontinues distributions from the Trust Fund pursuant to Section 21.1 and
the Insolvent Employer later becomes solvent again without the entry of a
court order concerning the disposition of the Trust Fund, the Employer
shall so inform the Trustee immediately in writing and the Trustee shall
thereupon resume all of its duties and responsibilities under this
Agreement.
.02 RESUMPTION OF DISTRIBUTIONS. The first distribution to each
Participant or Beneficiary following any suspension or discontinuance of
distributions pursuant to Section 21.1 shall include the aggregate amount
of all payments which would have been made to each such recipient in
accordance with the Plan during the period of such suspension or
discontinuance, plus interest on the delayed payments (at a rate which the
Trustee determines to be reasonable under the circumstances at its sole
discretion) and less the aggregate amount of distributions made to the
recipient by the Employer in lieu of the distributions provided for
hereunder during any such period of suspension or discontinuance.
-25-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this instrument under seal
this 28th day of July, 1994.
HPSC, INC.
By /s/ John Everets
-------------------------------------
John Everets, Chairman
Initial Trustees
/s/ John Everets
- ----------------------------------
John Everets, As Trustee
and Not Individually
/s/ Raymond Doherty
- ----------------------------------
Raymond Doherty, As Trustee
and Not Individually
-26-
<PAGE>
SCHEDULE I
to the
HPSC, INC.
SUPPLEMENTAL EMPLOYEE STOCK OWNERSHIP PLAN
SECTION 1 - DEFINITIONS (Refer to Article II)
1.1 The Entry Date of this Plan shall be the first business day of each
calendar month.
1.2 The Fiscal Year shall be each successive twelve-month period which
ends on December 31.
1.3 The Plan Administrator shall be: the individual or entity appointed
by the Board of Directors. The initial Plan Administrator is the
Employer.
SECTION 2 - EFFECTIVE DATE (Refer to Article V)
The Effective Date of the Plan is January 1, 1993.
SECTION 3 - PARTICIPATION (Refer to Article VI)
Each Employee who is not an Ineligible Employee under Section 2.8 shall
become a Participant on the first Entry Date on or after the later of (i) his
Employment Commencement Date and (ii) the date on which he ceased to be an
Ineligible Employee.
SECTION 4 - ALLOCATION (REFER TO ARTICLES IX AND XIII)
4.1 ALLOCATION OF CONTRIBUTIONS AND FORFEITURES.
.01 GENERAL PROVISIONS. Any contribution made by the Employer for a
Fiscal Year plus any forfeitures allocable for a Fiscal Year
shall be allocated among the Participants who are employed by the
Employer on the last day of such Fiscal Year and who have
completed 150 Hours of Service during such Fiscal Year (or a
proportionate number of Hours of Service during any Fiscal Year
that is shorter than 12 months). All amounts so allocated shall
be credited to the Participants' accounts as of the last day of
the Fiscal Year for which the contributions were made and the
forfeitures became allocable. Notwithstanding the foregoing, all
Employer Securities and other Plan assets that are released from
encumbrance and become subject to allocation as the result of a
Change of Control (as provided in Section 13.3) shall be
allocated among all Participants who were employed by
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<PAGE>
the Employer on the day before the date that such Change of
Control occurred, such allocations to be made pursuant to
paragraphs .02 and .03 of this Section as if an Employer
contribution had been made to cause the release of the assets
from encumbrance and to be credited to the Participants' accounts
as of the day before the date that the Change of Control
occurred.
.02 SPECIAL PRIORITY ALLOCATION. All Employer contributions and
forfeitures available for allocation on account of a Fiscal Year
shall be allocated first to Participants in this Plan who have
not received an allocation of Employer contributions and
forfeitures under the Qualified ESOP which is the same percentage
of their total Compensation (as defined in this Plan) as received
for the Fiscal Year under the Qualified ESOP generally by
participants in the Qualified ESOP who are not "highly
compensated employees" for such Fiscal Year within the meaning of
Code Section 414(q). Employer contributions and forfeitures shall
be allocated pursuant to this paragraph .02 in proportion to the
Compensation of all Participants eligible under this paragraph
.02 for the Fiscal Year; provided that no such Participant shall
receive an allocation pursuant to this paragraph .02 which, when
added to his allocation under the Qualified ESOP, exceeds the
percentage of Compensation received for the Fiscal Year under the
Qualified ESOP generally by the participants who are not highly
compensated employees.
.03 GENERAL ALLOCATION. All Employer contributions and forfeitures
available for allocation on account of a Fiscal Year that are not
required to be allocated pursuant to the Special Priority
Allocation rules of paragraph .02 above shall be allocated in
proportion to the Compensation of all eligible Participants (as
determined under paragraph .01 of this Section) for the Fiscal
Year.
4.2 PROCEDURES. As of the close of each Fiscal Year, the Employer shall
furnish to the Plan Administrator a list of those Participants
eligible to share in the contribution, reflecting the Compensation for
each Participant.
SECTION 5 - VESTING (Refer to Article X)
5.1 VESTED INTEREST. Each Participant shall immediately have a non-
forfeitable interest in 100 percent of his account in the Trust Fund
on the date that a Change of Control occurs. Prior to the occurrence
of a Change of Control, a Participant's vested interest in the Trust
Fund as of the first day of each Fiscal Year shall be a percentage of
his
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<PAGE>
account in the Trust Fund based on years of service completed on or
before the last day of the previous Fiscal Year, determined as
follows:
YEARS OF SERVICE PERCENTAGE
Less than 1 year -0-
1 year 20%
2 years 40%
3 years 60%
4 years 80%
5 years or more 100%
5.2 VESTING YEARS OF SERVICE. For purposes of this section, a year of
service shall be credited for each twelve-month period commencing with
an Employee's Employment Commencement Date and each anniversary
thereof during which the Employee completes at least 1,000 Hours of
Service, including the year of termination.
5.3 SERVICE COUNTING RULES. All of the Participant's years of service
with the Employer shall be taken into account except the following
shall be disregarded:
.01 years of service completed before the Participant attained age
18.
.02 years of service completed before the Effective Date of the Plan.
.03 in the case of a Participant who has any one-year Break in
Service, years of service before such Break.
All service of a Participant after any Break in Service shall be
disregarded for the purpose of vesting the Participant's account
balance that accrued before such Break in Service.
5.4 EFFECT OF SERVICE WITH AFFILIATED EMPLOYERS. For purposes of this
Section all of a person's service with any employer which is counted
as Hours of Service pursuant to Section 2.13 of Article II shall be
considered to be service with the Employer. Notwithstanding the
foregoing, no such person shall be treated as an Employee of the
Employer for any other purpose during the period of such service
unless it is otherwise expressly provided in this Plan.
5.5 EFFECT OF CHANGE IN FISCAL YEAR. In case of any change in the Fiscal
Year of the Plan, for purposes of this Section 5 an Employee shall be
credited with one year of service if he otherwise satisfies the
requirements of Subsection 5.2 above during the twelve-month period
beginning on the first day of the final Fiscal Year prior to the
change and a second year of service if he otherwise satisfies the
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<PAGE>
requirements of Subsection 5.2 above during the twelve-month period
beginning on the first day of the new Fiscal Year.
HPSC, INC.
By /s/ John Everets
--------------------------------------
John Everets, Chairman
Acknowledged July 28th, 1994:
Initial Trustees
/s/ John Everets /s/ Raymond R. Doherty
- ---------------------------- --------------------------------------
John Everets, As Trustee Raymond Doherty, As Trustee
and Not Individually and Not Individually
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<PAGE>
PLEDGE AND SECURITY AGREEMENT
-----------------------------
AGREEMENT between the Trustees of the HPSC, Inc. Supplemental Employee
Stock Ownership Plan and Trust (the "Plan"), a Massachusetts trust (the
"Pledgor"), and HPSC, Inc. (the "Company"), a Delaware corporation (the
"Pledgee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Pledgor and the Pledgee are parties to a certain Secured
Promissory Note (the "Note") dated as of the date hereof, pursuant to which the
Pledgor is indebted to the Pledgee in the amount of $1,225,000; and
WHEREAS, as a condition to the Note the Pledgee requires that the Pledgor
pledge certain shares of capital stock in the Pledgee purchased by the Pledgor
from the Pledgee and paid for by the Pledgor by delivery of the Note, in order
to secure the Pledgor's performance in full of its obligation to the Pledgee
under the Note;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency is of which is hereby
acknowledged by each of the parties hereto, the parties do hereby agree as
follows:
1. PLEDGE.
The Pledgor hereby assigns, transfers, sets over, pledges and grants a
continuing security interest to the Pledgee in (i) those shares of capital stock
in the Pledgee which were purchased by the Pledgor and paid for by the Pledgor
by delivery of the Note and which have not been allocated to the participants
under the terms of the Plan documents (the "Pledged Shares"), it being the
intent of the parties that upon any such allocation, the shares of capital stock
so allocated shall automatically cease to be included as Pledged Shares subject
to this Agreement, (ii) contributions (other than contributions of employer
securities) that are made to the Pledgor to meet its obligations under the Note,
and (iii) earnings attributable to the investment of such
<PAGE>
contributions and earnings attributable to the Pledged Shares including, but not
limited to, dividends and any other distributions with respect to the Pledged
Shares (except for cash dividends as provided in paragraph 3.1 below), and (iv)
the proceeds thereof and any property substituted therefor by the Company
pursuant to its power of substitution under the Plan, to secure the payment and
performance of the liabilities and obligations of the Pledgor to the Pledgee
arising under the Note, as now or hereafter amended (subsections (i), (ii),
(iii) and (iv) above shall be collectively referred to as the "Collateral").
Notwithstanding the foregoing, the Pledgee's security interest in the Collateral
shall terminate simultaneously with the occurrence of a Change of Control (as
such term is defined in the Plan as in effect on the date of this Agreement)
with respect to the Company. The Pledgor herewith delivers to the Pledgee the
stock certificates evidencing the initial amount of the Pledged Shares, namely,
350,000 shares, endorsed in blank or with duly executed stock powers attached.
2. REPRESENTATIONS; COVENANTS.
The Pledgor represents and warrants that it has good title to all the
Pledged Shares, free and clear of any mortgages, pledges, liens, encumbrances or
charges of any nature whatsoever except the pledge and security interest created
and granted by this Agreement in favor of the Pledgee, and that the Pledged
Shares are all duly and validly issued, fully paid and non-assessable, and duly
and validly pledged hereby with the Pledgee in accordance with applicable law.
The Pledgor covenants that it will defend the Pledgee's right, title, and
special property and security interest in and to all of the Collateral against
the claims of all persons whomsoever.
3. RIGHTS PRIOR TO DECLARATION OF DEFAULT.
3.1 Until an Event of Default (as hereafter defined) shall have occurred
and be continuing, the Pledged Shares shall continue to be registered in the
name of the Pledgor, and the Pledgor shall have the right to vote the same at
all stockholders meetings at which the same or any part thereof may be voted.
The Pledgor shall not have the right to receive any cash dividends (including
without limitation any liquidating or similar dividends) and other income
allocable with respect to the Collateral except upon the condition that any such
income shall be
-2-
<PAGE>
used to pay down the Pledgor's obligations to the Pledgee under the Note. If an
Event of Default shall have occurred and be continuing, all such rights of the
Pledgor to vote with respect to the Pledged Shares shall, at the Pledgee's
option, cease with respect to that amount of Pledged Shares having a value
which, if such value had been paid in cash by the Pledgor to the Pledgee in a
timely manner pursuant to the payment schedule set forth in the Note, would
cause the loan as evidenced by the Note to be current.
3.2 If the capital stock of the Pledgee shall be changed into or exchanged
for a different number or kind of shares of stock or other securities of such
corporation or of another corporation, whether through merger, consolidation,
reorganization, recapitalization, stock split, or combination of shares, there
shall be substituted for each of the Pledged Shares held by the Pledgee under
this Agreement the number of shares of stock or other securities into which each
outstanding share of such capital stock shall be so changed or for which each
share shall be exchanged. The Pledgor hereby agrees that any securities so
substituted for the Pledged Shares pursuant to the terms of such change or
exchange shall be delivered directly to the Pledgee, to be held and disposed of
by the Pledgee as Pledged Shares in accordance with the terms and provisions of
this Agreement. The Pledgor authorizes the Pledgee to surrender the Pledged
Shares or take whatever other action is required to be taken with respect to the
Pledged Shares under the terms of such change or exchange and further agrees to
execute and deliver to the Pledgee such stock powers as may be necessary to
carry out the purposes of this Agreement in view of such substitution.
4. DEFAULT.
The term "Event of Default" shall mean the occurrence of any of the
following events:
(a) The Pledgor shall fail to make all payments when due under the Note,
including amounts becoming due by reason of acceleration of the Note;
(b) The Pledgor shall fail to perform any covenant contained in the Note
or herein; or
-3-
<PAGE>
(c) If any warranty or representation contained in the Note or herein
should prove not to be true in any material respect.
5. RIGHTS ON DEFAULT.
5.1 If the Event of Default shall have occurred and be continuing, the
Pledgee is hereby irrevocably authorized to cause the Pledged Shares or
substitute Collateral to be transferred into its name or the name of its nominee
on the books of the corporation issuing the same, provided that the value of the
Pledged Shares or substitute Collateral so transferred shall not exceed in value
that amount which, if it had been paid in cash by the Pledgor to the Pledgee in
a timely manner pursuant to the payment schedule set forth in the Note (not
including any amounts due by reason of the Note's acceleration), would cause the
loan as evidenced by the Note to be current; the remainder (if any) of the
Pledged Shares or substitute Collateral not so transferred shall continue to be
held and disposed of by the Pledgee in accordance with this Agreement. The
Pledgor and the Pledgee agree that any transfer of the Pledged Shares or
substitute Collateral according to this paragraph shall be deemed an acceptance
of such stock in satisfaction of the obligations of the Pledgor to the Pledgee
under the Note, to the extent of the value of any Pledged Shares or substitute
Collateral so transferred.
5.2 No course of dealing or delay in taking or failing to take any action
with respect to an Event of Default shall affect the Pledgee's right to take
such action at a later time. No waiver as to any one Event of Default shall
affect the Pledgee's rights upon any other Event of Default.
5.3 Notwithstanding any other provision of this Pledge Agreements, except
to the extent of the Pledgee's right to the Pledged Shares or substitute
Collateral (or a portion thereof) as provided in this Section 5, the Note shall
be without recourse against the Pledgor, the Plan, or the participants in the
Plan. Specifically, without limiting the generality of the foregoing, under no
circumstances shall the Pledgee have any recourse against the shares of the
Company's stock that have been allocated to the accounts of participants in the
Plan as of the time of an Event of Default.
-4-
<PAGE>
6. NOTICES.
Any notice under this Agreement shall be in writing and shall be deemed
delivered if mailed by registered or certified mail, postage prepaid, return
receipt requested, in hand, or by recognized commercial courier, if addressed to
the Pledgor or the Pledgee, as the case may be, at the following respective
addresses:
<TABLE>
<CAPTION>
IF TO THE PLEDGEE: IF TO THE PLEDGOR:
----------------- ------------------
<S> <C>
HPSC, Inc. Trustee
60 State Street HPSC, Inc. Supplemental
Boston, Massachusetts 02109 Employee Stock Ownership Plan
Attention: Chief Executive Officer c/o HPSC, Inc.
60 State Street
Boston, Massachusetts 02109
</TABLE>
If notice is given by mail and is not delivered within three days of the date of
the post mark, any applicable notice period shall be extended by two days.
Nothing contained herein shall prevent the giving of actual written notice in
any other effective manner.
7. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon, and inure to the benefit of, the
Pledgor and its successors and assigns. This Agreement shall be binding upon,
and inure to the benefit of, the Pledgee and its successors and assigns.
8. TERM.
Except as provided below, the term of this Agreement shall be until the
obligations of the Pledgor to the Pledgee under the Note have been paid and
performed in full. Upon the first to occur of (i) payment in full of all
obligations of the Pledgor to the Pledgee under the Note and (ii) a Change of
Control (as defined in Section 1 above), this Agreement shall terminate and the
Pledgee shall surrender to the Pledgor the Pledged Shares and other Collateral
which have not theretofore been sold or otherwise disposed of pursuant to this
Agreement.
-5-
<PAGE>
9. WAIVERS.
With respect both to obligations of the Pledgor to the Pledgee under the
Note and to the Pledged Shares and other Collateral, the Pledgor assents to any
extension or postponement of the time of payment or any other indulgence, to any
release of collateral, to the acceptance of partial payment thereof and the
settlement, compromising or adjusting of any thereof, all in such manner and at
such time or times as the Pledgee may deem advisable. The Pledgee shall not be
deemed to have waived any of its rights under the Note or with respect to the
Pledged Shares and other Collateral unless such waiver is in writing and signed
by the Pledgee. No delay or omission on the part of the Pledgee in exercising
any right shall operate as a waiver of such right or any other right. A waiver
on any one occasion shall not be construed as a bar to or waiver of any right on
any future occasion. All rights and remedies of the Pledgee with respect to the
Note or the Pledged Shares and other Collateral, whether evidenced hereby or by
any other instrument or document, shall be cumulative and may be exercised
separately or concurrently.
10. EXONERATION.
Under no circumstance shall the Pledgee be deemed to assume any
responsibility for or obligation or duty with respect to the Pledged Shares or
other Collateral or any matter or proceeding arising out of or relating thereto,
other than to exercise reasonable care in the protective custody of the Pledged
Shares and other Collateral.
11. GOVERNING LAW; COUNTERPARTS.
This Agreement and the rights and obligations of the parties hereunder
shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts applicable to contracts made and to be performed
entirely within such Commonwealth, shall have the effect of a sealed instrument,
and may be executed in counterparts, each of which shall constitute an original.
12. AMENDMENTS.
This Agreement may not be amended or modified except by a writing duly
executed by both parties.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, under
seal, this 28th day of July, 1994.
PLEDGEE: PLEDGOR:
HPSC, INC. TRUSTEES OF THE HPSC, INC.
SUPPLEMENTAL EMPLOYEE STOCK
OWNERSHIP PLAN AND TRUST
By: /s/ John Everets, Jr. By: /s/ John Everets, Jr.
----------------------------- -----------------------------
Name: John Everets, Jr. Name: John Everets, Jr., as
Trustee and not
Title: Chief Executive Officer individually
By: /s/ Raymond R. Doherty
-----------------------------
Name: Raymond R. Doherty, as
Trustee and not
individually
-7-
<PAGE>
7/25/94
SECURED PROMISSORY NOTE
(HPSC, Inc. Supplemental Employee Stock Ownership Plan and Trust)
$1,225,000 July 28, 1994
FOR VALUE RECEIVED, the undersigned Trustees of the HPSC, Inc. Supplemental
Employee Stock Ownership Plan and Trust (the "Plan"), a Massachusetts trust (the
"Maker"), hereby promise to pay to the order of HPSC, Inc.(the "Company"), a
Delaware corporation, 60 State Street, Boston, Massachusetts 02109 (together
with its successors and assigns, the "Holder"), the principal amount of one
million two hundred twenty-five thousand Dollars ($1,225,000) and to pay
interest from the date hereof on the unpaid balance of such principal amount
outstanding from time to time at a rate per annum equal to the prime rate on the
first business day of January in the applicable year, as reported in the WALL
STREET JOURNAL, plus one percentage point.
Principal shall be payable in 10 equal annual installments of $122,500
beginning September 1, 1995. Interest shall be calculated and payable annually
in arrears beginning September 1, 1995. Interest shall be based on a 360-day
year and paid for the actual number of days elapsed. All payments due hereunder
shall be made to the Holder at the address shown above or at such other place as
the Holder may designate from time to time in writing at least ten (10) days
before any such payment is due.
The principal of this Note may be prepaid in whole or in part at any time
or from time to time at the option of the Maker, without premium or penalty but
with interest on the amount so prepaid to the date of such prepayment. Any such
prepayment shall be applied to the installment payments required hereunder in
inverse order thereof, and no such prepayment will affect the Maker's obligation
to make any subsequent required payment or prepayment until this Note shall have
been paid in full.
If the Maker shall fail to make any payment on this Note when due and
payable and such amount shall remain unpaid for ten (10) business days after the
due date thereof; or if the Maker shall fail to comply with or perform any other
of the terms of this Note within ten (10) business days of receipt by the Maker
of written notice from the Holder of such failure to comply; or if the Maker
shall become insolvent or unable to meet its obligations as they become due, or
shall begin or be the subject of any bankruptcy or other proceeding for the
relief of debtors; or any substantial part of the Maker's property shall be
taken on attachment or by foreclosure; then, in any such case (an "Event of
Default"), the Holder may at the Holder's option declare this Note, including
the entire unpaid principal amount then outstanding and all interest accrued and
unpaid thereon, to become due and payable immediately.
This Note, including the entire unpaid principal amount then outstanding
and all interest accrued and unpaid thereon, shall be cancelled immediately upon
the occurrence of a
<PAGE>
Change of Control (as such term is defined in the Plan as in effect on the date
of this Note) with respect to the Company.
The failure of any party to insist, on any one or more occasions, upon
performance of any of the terms or conditions of this Note, shall not be
construed as a waiver or relinquishment of any rights granted hereunder or the
future performance of any such term or condition.
The Maker shall pay to the Holder upon demand all legal and other costs and
expenses of every kind, including reasonable attorneys' fees and disbursements,
relating to the collection and/or enforcement of this Note or of any rights
hereunder.
This Note is secured pursuant to the terms of a Pledge and Security
Agreement of even date herewith between Maker and Holder. Except as so secured,
this Note is without recourse against the Maker.
The parties hereto, including the Maker and all endorsers and guarantors of
this Note, hereby waive presentment, demand, notice of protest and all other
demands and notices in connection with the delivery, acceptance, performance or
enforcement of this Note.
This Note may not be amended, or the terms waived, except in writing signed
by the party against whom such amendment or waiver is sought to be enforced.
This Note shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts applicable to contracts made and to be
performed entirely within the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the undersigned has duly executed this Note as an
instrument under seal as of the day and year first above written.
TRUSTEES OF THE HPSC, INC.
SUPPLEMENTAL EMPLOYEE STOCK
OWNERSHIP PLAN AND TRUST
By:
------------------------------------
John Everets, Jr., as
Trustee and not individually
By:
------------------------------------
Raymond R. Doherty, as
Trustee and not individually
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<PAGE>
EXHIBIT 10.4
HPSC, INC.
1994 Stock Plan
As adopted March 23, 1994
<PAGE>
TABLE OF CONTENTS
HPSC, INC.
1994 Stock Plan
As adopted March 23, 1994
1. PURPOSE; REGISTRATION . . . . . . . . . . . . 1
2. EFFECTIVE DATE. . . . . . . . . . . . . . . . 1
3. STOCK COVERED BY THE PLAN . . . . . . . . . . 2
4. ADMINISTRATION. . . . . . . . . . . . . . . . 2
5. ELIGIBLE RECIPIENTS . . . . . . . . . . . . . 2
6. DURATION OF THE PLAN. . . . . . . . . . . . . 2
7. TERMS AND CONDITIONS OF OPTIONS, PURCHASE
AUTHORIZATIONS AND BONUSES. . . . . . . . . . 3
(a) PRICE. . . . . . . . . . . . . . . . . . 3
(b) NUMBER OF SHARES . . . . . . . . . . . . 3
(c) EXERCISE OF OPTIONS. . . . . . . . . . . 3
(d) PAYMENT. . . . . . . . . . . . . . . . . 4
(e) WITHOLDING TAXES; DELIVERY OF SHARES . . 4
(f) NON-TRANSFERABILITY. . . . . . . . . . . 4
(g) TERMINATION OF PURCHASE AUTHORIZATIONS
AND OPTIONS. . . . . . . . . . . . . . . 5
(h) RIGHTS AS STOCKHOLDER. . . . . . . . . . 5
(i) REPURCHASE OF SHARES BY THE COMPANY. . . 5
(j) 10% STOCKHOLDER. . . . . . . . . . . . . 6
(k) CONFIDENTIALITY AGREEMENTS . . . . . . . 6
(l) AGGREGATE LIMITATION . . . . . . . . . . 6
(m) RIGHT TO TERMINATE . . . . . . . . . . . 6
8. RESTRICTIONS ON INCENTIVE OPTIONS . . . . . . 6
9. SUSPENSION OF RIGHTS PRIOR TO A DISSOLUTION,
REORGANIZATION, ETC.. . . . . . . . . . . . . 7
10. ADJUSTMENT IN SHARES. . . . . . . . . . . . . 7
11. INVESTMENT REPRESENTATIONS; TRANSFER
RESTRICTIONS . . . . . . . . . . . . . . . . 7
12. DEFINITIONS . . . . . . . . . . . . . . . . . 8
(a) "BOARD". . . . . . . . . . . . . . . . . 8
(b) "BONUSES". . . . . . . . . . . . . . . . 8
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<PAGE>
(c) "CODE" . . . . . . . . . . . . . . . . . 8
(d) "COMMITTEE". . . . . . . . . . . . . . . 8
(e) "COMMON STOCK" . . . . . . . . . . . . . 8
(f) "COMPANY". . . . . . . . . . . . . . . . 8
(g) "COMPANY GROUP". . . . . . . . . . . . . 8
(h) "DISABILITY" . . . . . . . . . . . . . . 8
(i) "EFFECTIVE DATE" . . . . . . . . . . . . 8
(j) "EMPLOYEE" . . . . . . . . . . . . . . . 8
(k) "EVENT". . . . . . . . . . . . . . . . . 8
(l) "EXCHANGE ACT" . . . . . . . . . . . . . 8
(m) "INCENTIVE OPTION" . . . . . . . . . . . 8
(n) "NON-QUALIFIED OPTION" . . . . . . . . . 9
(o) "OFFICER". . . . . . . . . . . . . . . . 9
(p) "OPTIONS". . . . . . . . . . . . . . . . 9
(q) "PARENT" . . . . . . . . . . . . . . . . 9
(r) "PARTICIPANT". . . . . . . . . . . . . . 9
(s) "PLAN" . . . . . . . . . . . . . . . . . 9
(t) "PURCHASE AUTHORIZATION" . . . . . . . . 9
(u) "SERVICE". . . . . . . . . . . . . . . . 9
(v) "SHARES" . . . . . . . . . . . . . . . . 9
(w) "SUBSIDIARY" . . . . . . . . . . . . . . 9
13. TERMINATION OR AMENDMENT OF PLAN. . . . . . . 9
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<PAGE>
As adopted 3/23/94
HPSC, INC.
1994 STOCK PLAN
1. PURPOSE; RESTRICTIONS. The purpose of this HPSC, Inc. 1994 Stock
Plan (the "Plan") is to advance the interests of HPSC, Inc., a Delaware
corporation (the "Company"), by strengthening the ability of the Company to
attract, retain and motivate key employees, consultants and other individual
contributors of or to the Company or any present or future parent or
subsidiary of the Company (the "Company Group") by providing them with an
opportunity to purchase or receive as bonuses stock of the Company and thereby
permitting them to share in the Company's success. It is intended that this
purpose will be effected by granting (i) incentive stock options ("Incentive
Options"), which are intended to qualify under the provisions of Section 422
of the Code (as hereinafter defined), and non-statutory stock options ("Non
qualified Options"), which are not intended to meet the requirements of
Section 422 of the Code and which are intended to be taxed upon exercise under
Section 83 of the Code (both Incentive Options and Nonqualified Options shall
be collectively referred to as "Options"), (ii) stock purchase
authorizations ("Purchase Authorizations") and (iii) stock bonus awards
("Bonuses").
Notwithstanding the foregoing:
(a) Unless and until this Plan is approved by the Company's
shareholders, and prior to the effective date of such approval, no stock of
the Company shall be issued pursuant to this Plan to any director or Officer
(as defined herein) of the Company, except to a director or Officer not
previously employed by the Company, as an inducement essential to the
individual's entering into an employment agreement with the Company. For
purposes of this paragraph, the term "Officer" shall mean any of the Company's
executive officers who are subject to the trading limitations of Section 16(b)
of the Exchange Act (as hereinafter defined).
(b) No Incentive Options shall be granted under this Plan unless this
Plan shall have been approved by the stockholders of the Company within twelve
(12) months after the Effective Date (as hereinafter defined).
2. EFFECTIVE DATE. This Plan was adopted on March 23, 1994, which is
also the Effective Date of the Plan.
<PAGE>
3. STOCK COVERED BY THE PLAN. Subject to adjustment as provided in
Sections 9 and 10 below, the shares that may be made subject to Options,
Purchase Authorizations or Bonuses under this Plan ("Shares") shall not exceed
in the aggregate 200,000 shares of the common stock, $.01 par value, of the
Company ("Common Stock"). Any Shares subject to an Option or Purchase
Authorization which for any reason expires or is terminated unexercised as to
such Shares and any Shares reacquired by the Company pursuant to forfeiture or
a repurchase right hereunder may again be the subject of an Option, Purchase
Authorization or Bonus under the Plan. The Shares purchased pursuant to
Purchase Authorizations or the exercise of Options under this Plan or issued
as Bonuses may, in whole or in part, be either authorized but unissued Shares
or issued Shares reacquired by the Company.
4. ADMINISTRATION. This Plan shall be administered by a committee
(the "Committee") consisting of not less than three (3) members of the Board
(as hereinafter defined). Each of the members of the Committee shall be, and
shall have been at all times within the one year period ending on the date of
appointment to the Committee, a person who in the opinion of counsel to the
Company is (i) a "disinterested person" as such term is used in Rule 16b-3
promulgated under the Exchange Act and (ii) an "outside director" as such term
is used in proposed regulation Section 1.162.27(e)(3) under Section 162(m) of
the Code. The Committee shall have authority, subject to the express
provisions of the Plan, to construe the Plan and the respective Options,
Purchase Authorizations, Bonuses and related agreements, to prescribe, amend
and rescind rules and regulations relating to the Plan to determine the terms
and provisions of the respective Options, Purchase Authorizations, Bonuses and
related agreements, and to make all other determinations in the judgment of
the Committee necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Option, Purchase Authorization, Bonus, or
related agreement in the manner and to the extent it shall deem expedient to
carry the Plan into effect, and it shall be the sole and final judge of such
expediency. No member of the Committee shall be liable for any action or
determination made in good faith.
5. ELIGIBLE RECIPIENTS. Subject to the restrictions of Section 1
above, Options, Purchase Authorizations and Bonuses may be granted to such key
employees, consultants or other individual contributors of or to the Company
Group, including without limitation members of the Board, as are selected by
the Committee (a "Participant"); provided, that only Employees (as defined
below) of the Company Group shall be eligible for grants of Incentive Options.
6. DURATION OF THE PLAN. This Plan shall terminate ten (10) years
from the Effective Date hereof, unless terminated earlier
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<PAGE>
pursuant to Section 13 below, and no Options, Purchase Authorizations or
Bonuses May be granted or made thereafter.
7. TERMS AND CONDITIONS OF OPTIONS, PURCHASE AUTHORIZATIONS AND
BONUSES. Options, Purchase Authorizations and Bonuses granted or made under
this Plan shall be evidenced by grant forms or agreements in such form and
containing such terms and conditions as the Committee shall determine;
provided, however, that such grant forms and agreements shall evidence among
their terms and conditions the following:
(a) PRICE. The purchase price per Share payable upon the exercise
of each Option or the purchase pursuant to each Purchase Authorization granted
or made hereunder shall be determined by the Committee at the time the Option
or Purchase Authorization is granted or made. Subject to Section 7(j)(i), if
applicable, the purchase price per Share payable upon the exercise of each
Incentive Option granted hereunder shall not be less than one hundred percent
(100%) of the fair market value per Share of the Common Stock on the day the
Incentive Option is granted or made. The purchase price per Share payable on
exercise of each Nonqualified Option or upon the purchase of Shares pursuant
to each Purchase Authorization granted hereunder shall be not less than fifty
percent (50%) of the fair market value per Share of the Common Stock on the
date of the grant. Fair market value shall be determined in accordance with
procedures to be established in good faith by the Committee. Bonus Shares
shall be issued in consideration of services previously rendered, which shall
be valued for such purposes by the Committee. No Share shall be issued for
less than its par value, if any.
(b) NUMBER OF SHARES. Each grant form or agreement shall specify
the number of Shares to which it pertains.
(c) EXERCISE OF OPTIONS. Each Option shall be exercisable for the
full amount or for any part thereof and at such intervals or in such
installments as the Committee may determine at the time it grants such Option;
provided, however, that no Option shall be exercisable with respect to any
Shares later than ten (10) years after the date of the grant of such Option
(or five (5) years in the case of Incentive Options to which Section 7(j)(ii)
applies). An Option shall be exercisable only by delivery of a written notice
to the Company's Treasurer, or any other officer of the Company designated by
the Committee to accept such notices on its behalf, specifying the number of
Shares for which the Option is exercised and accompanied by either (i)
payment or (ii) if permitted by the Committee, irrevocable instructions to a
broker to promptly deliver to the Company full payment in accordance with
Section 7(d)(ii) below of the amount necessary to pay the aggregate exercise
price. With respect to an Incentive Option, the permission of the
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<PAGE>
Committee referred to in clause (ii) of the preceding sentence must be granted
at the time the Incentive Option is granted.
(d) Payment. Payment shall be made in full (i) at the time the
Option is exercised, (ii) promptly after the Participant forwards the
irrevocable instructions referred to in Section 7(c)(ii) above to the
appropriate broker, if exercise of an Option is made pursuant to Section
7(c)(ii) above, or (iii) at the time the purchase pursuant to a Purchase
Authorization is made. Payment shall be made either (I) in cash, (II) by
check, (III) if permitted by the Committee (with respect to an Incentive
Option, such permission to have been granted at the time of the Incentive
Option grant), by delivery and assignment to the Company of shares of Company
stock having a fair market value (as determined by the Committee) equal to the
exercise or purchase price, (IV) if permitted by the Committee, as stated in
the grant form or agreement evidencing the Option or Purchase Authorization,
and to the extent permitted by any applicable law, by the Participant's
recourse promissory note, which note must be due and payable not more than
five (5) years after the date the Option or Purchase Authorization is
exercised, or (V) by a combination of one or more of the foregoing methods.
If shares of Company stock are to be used to pay the exercise price of an
Incentive Option, the Company prior to such payment must be furnished with
evidence satisfactory to it that the acquisition of such shares and their
transfer in payment of the exercise price satisfy the requirements of Section
422 of the Code and other applicable laws.
(e) WITHHOLDING TAXES; DELIVERY OF SHARES. The Company's
obligation to deliver Shares upon exercise of an Option or upon purchase
pursuant to a Purchase Authorization or issuance pursuant to a Bonus shall be
subject to the Participant's satisfaction of all applicable federal, state and
local income and employment tax withholding obligations. Without limiting
the generality of the foregoing, the Company shall have the right to deduct
from payments of any kind otherwise due to the Participant any federal, state
or local taxes of any kind required by law to be withheld with respect to any
Shares issued upon exercise of Options or purchased or issued pursuant to
Purchase Authorizations or Bonuses. The Participant may elect to satisfy such
obligation(s), in whole or in part, by (i) delivering to the Company a check
for the amount required to be withheld or (ii) if the Committee in its sole
discretion approves in any specific or general case, having the Company
withhold Shares or delivering to the Company already owned shares of Common
Stock, having a value equal to the amount required to be withheld, as
determined by the Committee.
(f) NON-TRANSFERABILITY. No Option or Purchase Authorization
shall be transferable by the Participant otherwise than by will or the laws of
descent or distribution, and each
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<PAGE>
Option or Purchase Authorization shall be exercisable during the Participant's
lifetime only by the Participant.
(g) TERMINATION OF PURCHASE AUTHORIZATIONS AND OPTIONS. Each
Purchase Authorization shall terminate and may no longer be exercised if the
Participant ceases for any reason to render continuous Service (as defined
below). Except to the extent the Committee provides specifically in a grant
form or Option agreement for a lesser period (or a greater period, in the case
of Nonqualified Options only), each Option shall terminate and may no longer
be exercised if the Participant ceases for any reason to render continuous
Service, in accordance with the following provisions:
(i) if the Participant ceases to render Service for any
reason other than death or Disability (as defined below), the
Participant may, at any time within a period of three months after
the date of such cessation of Service, exercise the Option to the
extent that the Option was exercisable on the date of such
cessation;
(ii) if the Participant ceases to render Service because of
Disability, the Participant may, at any time within a period of
one year after the date of such cessation of Service, exercise the
Option to the extent that the Option was exercisable on the date
of such cessation; and
(iii) if the Participant ceases to render Service because of
death, the Option, to the extent that the Participant was entitled
to exercise it on the date of death, may be exercised within a
period of one year after the Participant's death by the person or
persons to whom the Participant's rights under the Option pass by
will or by the laws of descent or distribution;
provided, however, that no Option or Purchase Authorization may be exercised
to any extent by anyone after the date of its expiration; and provided,
further, that Options and Purchase Authorizations may be exercised at any time
only as to Shares which at such time are available for acquisition pursuant to
the terms of the applicable grant form or agreement.
(h) RIGHTS AS STOCKHOLDER. A Participant shall have no rights as
a stockholder with respect to any Shares covered by an Option, Purchase
Authorization or Bonus until the date of issuance of a stock certificate in
the Participant's name for such Shares.
(i) REPURCHASE OF SHARES BY THE COMPANY. Any Shares acquired
upon exercise of an Option or pursuant to a Purchase
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<PAGE>
Authorization or Bonus may in the discretion of the Committee be subject to
repurchase by or forfeiture to the Company if and to the extent and at the
repurchase price, if any, specifically set forth in the option, purchase or
bonus grant form or agreement pursuant to which the Shares were acquired.
Certificates representing Shares subject to such repurchase or forfeiture may
be subject to such escrow and stock legending provisions as may be set forth
in the option, purchase or bonus grant form or agreement pursuant to which the
Shares were acquired.
(j) 10% STOCKHOLDER. If any Participant to whom an Incentive
Option is granted pursuant to the provisions of the Plan is on the date of
grant the owner of stock (as determined under Section 424(d) of the Code)
possessing more than 10% of the total combined voting power or value of all
classes of stock of the Company, its parent, if any, or subsidiaries, then the
following special provisions shall be applicable:
(i) The exercise price per Share subject to such Option
shall not be less than 110% of the fair market value of each Share
on the date of grant; and
(ii) The Option shall not have a term in excess of five
years from the date of grant.
(k) CONFIDENTIALITY AGREEMENTS. Each Participant shall execute,
prior to or contemporaneously with the grant of any Option, Purchase
Authorization or Bonus hereunder, the Company's then standard form of
agreement, if any, relating to nondisclosure of confidential information,
assignment of inventions and related matters.
(l) AGGREGATE LIMITATION. The maximum number of Shares with
respect to which any Options, Purchase Authorizations and Bonuses may be
granted under the Plan to any individual during each successive twelve-month
period commencing on the Effective Date of the Plan shall not exceed 100,000
shares.
(m) RIGHT TO TERMINATE. Nothing contained in the Plan or in any
Option, Purchase Authorization or Bonus granted hereunder shall restrict the
right of any member of the Company Group to terminate the employment of any
Participant or other Service by the Participant at any time and for any
reason, with or without notice.
8. RESTRICTIONS ON INCENTIVE OPTIONS. Incentive Options granted
under this Plan shall be specifically designated as such and shall be subject
to the additional restriction that the aggregate fair market value,
determined as of the date the Incentive Option is granted, of the Shares with
respect to which Incentive Options are exercisable for the first time by a
Participant during any calendar year shall not exceed $100,000.
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<PAGE>
If an Incentive Option which exceeds the $100,000 limitation of this Section 8
is granted, the portion of such Option which is exercisable for Shares in excess
of the $100,000 limitation shall be treated as a Nonqualified Option pursuant
to Section 422(d) of the Code. In the event that such Participant is
eligible to participate in any other stock incentive plans of the Company, its
parent, if any, or a subsidiary which are also intended to comply with the
provisions of Section 422 of the Code, such annual limitation shall apply to
the aggregate number of shares for which options may be granted under all such
plans.
9. SUSPENSION OF RIGHTS PRIOR TO A DISSOLUTION, REORGANIZATION, ETC.
Prior to any dissolution, liquidation, merger, consolidation or reorganization
of the Company as to which the Company will not be the surviving corporation,
or the sale or exchange of substantially all of the Common Stock or the sale
of substantially all of the assets of the Company (the "Event"), the Board or
the Committee may decide to terminate each outstanding Option and Purchase
Authorization. If the Board or the Committee so decides, each Option and
Purchase Authorization shall terminate as of the effective date of the Event,
but the Board or the Committee shall suspend the exercise of all outstanding
Options and Purchase Authorizations a reasonable time prior to the Event,
giving each person affected thereby not less than fourteen days written notice
of the date of suspension, prior to which date such person may purchase in
whole or in part the Shares otherwise available to him as of the date of
purchase. If the Event is not consummated, the suspension shall be removed
and all Options and Purchase Authorizations shall continue in full force and
effect, subject to their terms.
10. ADJUSTMENT IN SHARES. Appropriate adjustment shall be made by the
Committee in the maximum number of Shares subject to the Plan and in the
number, kind, and exercise or purchase price of Shares covered by outstanding
Options and Purchase Authorizations granted hereunder to give effect to any
stock dividends, stock splits, stock combinations, recapitalizations and other
similar changes in the capital structure of the Company after the Effective
Date of the Plan. In the event of a change of the Common Stock resulting from
a merger or similar reorganization as to which the Company is the surviving
corporation, the number and kind of Shares which thereafter may be purchased
pursuant to an Option or Purchase Authorization under the Plan and the number
and kind of Shares then subject to Options or Purchase Authorizations granted
hereunder and the price per Share thereof shall be appropriately adjusted in
such manner as the Committee may deem equitable to prevent dilution or
enlargement of the rights available or granted hereunder.
11. INVESTMENT REPRESENTATIONS; TRANSFER RESTRICTIONS. The Company may
require Participants, as a condition of purchasing Shares pursuant to the
exercise of an Option or to a Purchase
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<PAGE>
Authorization or receipt of shares as a Bonus, to give written assurances in
substance and form satisfactory to the Company to the effect that such person
is acquiring the Shares for the Participant's own account for investment and
not with any present intention of selling or otherwise distributing the same,
and to such other effects as the Company deems necessary or appropriate
(including without limitation confirmation that the Participant is aware of
any applicable restrictions on transfer of the Shares, as specified in the
by-laws of the Company or otherwise) in order to comply with federal and
applicable state securities laws.
12. DEFINITIONS.
(a) "BOARD" means the Board of Directors of the Company.
(b) "BONUSES" has the meaning defined in Section 1 above.
(c) "CODE" means the Internal Revenue Code of 1986, as heretofore
and hereafter amended, and the regulations promulgated thereunder.
(d) "COMMITTEE" has the meaning defined in Section 4 above.
(e) "COMMON STOCK" has the meaning defined in Section 3 above.
(f) "COMPANY" has the meaning defined in Section 1 above.
(g) "COMPANY GROUP" has the meaning defined in Section 1 above.
(h) "DISABILITY" has the meaning defined in Section 22(e)(3) of the
Code.
(i) "EFFECTIVE DATE" has the meaning defined in Section 2 above.
(j) "EMPLOYEE" has the meaning defined in Section 3401(c) of the
Code.
(k) "EVENT" has the meaning defined in Section 9 above.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
heretofore and hereafter amended.
(m) "INCENTIVE OPTION" has the meaning defined in Section 1 above.
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<PAGE>
(n) "NON-QUALIFIED OPTION" has the meaning defined in Section 1
above.
(o) "OFFICER" has the meaning defined in Section 1 above.
(p) "OPTIONS" has the meaning defined in Section 1 above.
(q) "PARENT" has the meaning defined in Section 424(e) of the Code.
(r) "PARTICIPANT" has the meaning defined in Section 5 above.
(s) "PLAN" has the meaning defined in Section 1 above.
(t) "PURCHASE AUTHORIZATION" has the meaning defined in Section 1
above.
(u) "SERVICE" means the performance of work for one or more members
of the Company Group as an employee, director, consultant or other individual
contributor.
(v) "SHARES" has the meaning defined in Section 3 above.
(w) "SUBSIDIARY" has the meaning defined in Section 424(f) of the
Code.
13. TERMINATION OR AMENDMENT OF PLAN. The Board may by written action
at any time terminate the Plan or make such changes in or additions to the
Plan as it deems advisable without further action on the part of the
stockholders of the Company, provided:
(a) that no such termination or amendment shall adversely affect or
impair any then outstanding Option, Purchase Authorization, Bonus or related
agreement without the consent of the Participant holding such Option, Purchase
Authorization, Bonus or related agreement; and
(b) that if the Plan itself shall have been approved by the
stockholders of the Company, no such amendment which (i) increases the maximum
number of Shares subject to this Plan (except to the extent provided in
Section 3), (ii) materially increases the benefits accruing to Participants,
or (iii) materially modifies the requirements as to eligibility for
participation in the Plan may be made without obtaining, or being conditioned
upon, stockholder approval.
With the consent of the Participant affected, the Committee may amend
outstanding Options, Purchase Authorizations, Bonuses
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<PAGE>
or related agreements in a manner not inconsistent with the Plan. The Committee
shall have the right to amend or modify the terms and provisions of the Plan
and of any outstanding Incentive Options granted under the Plan to the extent
necessary to qualify any or all such Options for such favorable federal income
tax treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code.
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<PAGE>
Exhibit 10.5
HPSC, Inc.
470 Atlantic Avenue
Boston, Massachusetts 02210
April 6, 1994
Rene Lefebvre
45 Melanie Lane
Wrentham, MA 02093
Dear Rene:
On behalf of the Board of Directors, I am pleased that you have accepted
our offer to become Chief Financial Officer of HPSC, Inc. (the "Company"). This
agreement will formally record the arrangements to which we agreed. I would
appreciate your noting your acceptance of these terms and returning a copy to me
as soon as possible.
1. Your employment will begin on May 9, 1994. You will report to the
Chief Executive Officer and you will adhere to policies established by him and
by the Board of Directors.
2. Your starting annual salary will be One Hundred Twenty-Five Thousand
Dollars ($125,000), paid in accordance with our normal payroll practices. At
the discretion of the Chief Executive Officer, and subject to the approval of
the Compensation Committee of the Board, you may also receive incentive bonuses
up to 50% of your salary in any year.
3. You will be eligible for the fringe benefit plans applicable to the
Company's key employees. The Company will provide you with an appropriate
automobile. You will be entitled to take three (3) weeks vacation annually,
provided, however, that you will not take more that one (1) week of your
vacation prior to August, 1994.
4. The Company will grant you an option to acquire thirty thousand
(30,000) shares of its common stock. This grant will vest at the rate of 20%
per year over the next five (5) years and will be subject to all of the
provisions of any applicable stock option plan. Your stock option will vest
entirely upon the occurrence of a "Change in Control" as defined in Appendix A.
5. This agreement will continue until May 8, 1997, unless sooner
terminated. Thereafter, it will automatically renew from year to year unless
you or the Company gives notice of an intention not to renew sixty (60) days in
advance of any expiration date. You or the Company may terminate your
<PAGE>
employment and this agreement at any time for any reason on thirty (30) days
notice, except that the Company may terminate you for cause (as defined in
Appendix A) without notice. You will receive monthly severance payments, equal
to your monthly salary on the date your employment ends, as follows:
i. None, if you are terminated for cause, if you give notice of your
intention not to renew your employment agreement, or if you terminate
your employment at any other time;
ii. Three months, if the Company gives notice of its intention not to
renew your employment agreement; and
iii. Six months, if the Company otherwise terminates your employment.
6. While you are an employee of the Company you will devote your full
working time and your best efforts to its business. After your employment ends,
you will not in any manner compete with the Company's business or be employed by
a competitor of the Company while you are receiving severance payments. At all
times during your employment and thereafter you will maintain the confidence of
the trade secrets and other confidential and proprietary information of the
Company and you will not use any such information for any purpose other than the
business of the Company. For a period of one year after the end of your
employment, you will not make any offers of employment to any employees of the
Company.
7. This agreement may not be changed orally but only by a written
agreement signed by you and an authorized representative of the Company. If any
provision of this agreement is found by a court to be unenforceable, the
remaining provisions shall continue in effect. This agreement will be governed
by Massachusetts law.
I look forward to working with you.
Sincerely,
HPSC, Inc.
By: /s/ John Everetts
---------------------------
John Everets, Chairman and
Chief Executive Officer
ACCEPTED:
/s/ Rene Lefebvre
- -----------------------------
Rene Lefebvre
-2-
<PAGE>
APPENDIX A
DEFINITIONS
1. DEFINITION OF "CHANGE IN CONTROL"
A "Change in Control" would occur if:
(i) The business of the Company is disposed of by the Company
pursuant to a liquidation, merger in which the Company is not the surviving
corporation, sale of assets or otherwise; or
(ii) Any transfer of the Company's stock currently pledged to
certain banks, to a holder or holders who seek to exercise control over the
Company, including, without limitation, such banks and their transferee(s); or
(iii) If a majority of the issued and outstanding shares of the
Company's voting stock is transferred during any two (2) year period to a
"person" who did not own Ten Percent (10%) of the Company's outstanding stock at
the beginning of the two (2) year period; or
(iv) If, during any twelve (12) month period a majority of the
members of the Company's Board of Directors in office at the beginning of the
period die, resign, are removed from office or are not re-elected.
2. DEFINITION OF "CAUSE"
"Cause" which would entitle the Company to terminate you would be:
(i) Your conviction of a felony; or
(ii) Any act of dishonesty which is material to the business of
the Company; or
(iii) Any willful misconduct in the performance of your employment
duties.
-3-
<PAGE>
Exhibit 10.6
HPSC, Inc.
60 State Street
Boston, Massachusetts 02109-1803
As of May 25, 1994
John Everets, Jr.
72 Chestnut Street
Boston, Massachusetts 02108
Re: First Amendment to Employment Agreement
---------------------------------------
Dear John:
By unanimous resolution of the Board of Directors of HPSC, Inc. (the
"Company") adopted at a meeting held May 25, 1994, as to which resolution you
abstained from voting, the Company has agreed to amend the terms of your
employment, as set forth in that certain letter agreement dated as of July 19,
1993 between you and the Company (your "Employment Agreement"), by adding the
following new Paragraph 9 to your Employment Agreement:
9. 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.
Pursuant to Paragraph 8 of your Employment Agreement, if you agree to the
above amendment, please sign both copies of this letter and return one copy to
the Company.
Sincerely,
HPSC, Inc.
By: /s/ Dollie A. Cole, Director
______________________________
Dollie A. Cole, Director
By: Thomas M. McDougal, Director
______________________________
Thomas M. McDougal, Director
ACCEPTED:
John Everets, Jr.
__________________________________
John Everets, Jr.
<PAGE>
Exhibit 10.7
HPSC, Inc.
60 State Street
Boston, Massachusetts 02109-1803
As of May 25, 1994
Raymond R. Doherty
242 Cross Street
Belmont, Massachusetts 02178
Re: First Amendment to Employment Agreement
---------------------------------------
Dear Ray:
By unanimous resolution of the Board of Directors of HPSC, Inc. (the
"Company") adopted at a meeting held May 25, 1994, as to which resolution you
abstained from voting, the Company has agreed to amend the terms of your
employment, as set forth in that certain letter agreement dated as of August 2,
1993 between you and the Company (your "Employment Agreement"), by adding the
following new Paragraph 8 to your Employment Agreement:
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.
Pursuant to Paragraph 7 of your Employment Agreement, if you agree to the
above amendment, please sign both copies of this letter and return one copy to
the Company.
Sincerely,
HPSC, Inc.
By: ______________________________
John Everets, Jr., Chairman and
Chief Executive Officer
ACCEPTED:
__________________________________
Raymond R. Doherty
