<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 March 31, 1995
--------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the transition period from _____________________ to _____________________
Commission file number 0-11618
HPSC, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2560004
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
60 State Street, Boston, Massachusetts 02109
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 720-3600
--------------
NONE
----------------------------------------------------
(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 MAY 1, 1995, 5,574,712.
1
<PAGE>
HPSC, INC.
INDEX
PART 1 -- FINANCIAL INFORMATION PAGE
Consolidated Balance Sheets as of March 31, 1995, and
December 31, 1994............................................... 3
Consolidated Statements of Income for each of the three
months ended March 31, 1995 and March 26, 1994.................. 4
Consolidated statements of Cash Flows for each of the three
months ended March 31, 1995 and March 26, 1994.................. 5
Notes to Consolidated Financial Statements...................... 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 7-8
PART II -- OTHER INFORMATION
Exhibit Index................................................... 9
Signatures...................................................... 9
2
<PAGE>
HPSC, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(unaudited)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
--------- ------------
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 658 $ 419
RESTRICTED CASH 7,413 7,936
INVESTMENT IN LEASES AND NOTES:
Lease contracts receivable and notes receivable due in installments 109,966 103,531
Estimated residual value of equipment at end of lease term 9,361 9,321
Less unearned income (18,436) (16,924)
Less allowance for losses (4,578) (4,595)
Less security deposits (2,824) (2,639)
Deferred origination costs 2,723 2,499
--------- ------------
Net investment in leases and notes 96,212 91,193
--------- ------------
OTHER ASSETS:
Deferred expense and other assets 2,518 2,154
Refundable income taxes 814 1,446
--------- ------------
TOTAL ASSETS $107,615 $103,148
--------- ------------
--------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
NOTES PAYABLE TO BANKS 19,500 $ 16,500
NOTES PAYABLE - TREASURY STOCK PURCHASE 3,000 4,500
ACCOUNTS PAYABLE 2,071 2,450
ACCRUED INTEREST 469 293
INCOME TAXES:
Currently payable 56 20
Deferred 4,945 5,539
SENIOR NOTES 44,662 41,024
--------- ------------
TOTAL LIABILITIES $ 74,703 $ 70,326
--------- ------------
--------- ------------
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 5,574,712 shares in 1995 and
5,574,395 shares in 1994 56 56
TREASURY STOCK (at cost) 1,225,182 shares (5,023) (5,023)
Additional paid-in capital 15,916 15,916
Retained earnings 24,688 24,601
Cumulative foreign currency translation adjustments (549) (552)
--------- ------------
35,088 34,998
Less deferred ESOP and SESOP compensation (2,176) (2,176)
--------- ------------
Total Stockholders' Equity 32,912 32,822
--------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $107,615 $103,148
--------- ------------
--------- ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THE CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
HPSC, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR EACH OF THE THREE MONTHS ENDED MARCH 31, 1995 AND MARCH 26, 1994
(in thousands, except per share and share amounts)
(unaudited)
<TABLE>
<CAPTION>
March 31, March 26,
1995 1994
--------- ---------
<S> <C> <C>
REVENUES:
Earned income on leases and notes $ 2,944 $ 3,605
Provision for losses (277) (156)
--------- ---------
Net revenues 2,667 3,449
--------- ---------
EXPENSES:
Selling, general and administrative 1,480 1,798
Interest, net 1,044 1,311
--------- ---------
Total expenses 2,524 3,109
--------- ---------
INCOME BEFORE INCOME TAXES 143 340
--------- ---------
PROVISION FOR INCOME TAXES:
Federal, Foreign and State:
Current 650 695
Deferred (594) (562)
--------- ---------
TOTAL INCOME TAXES 56 133
--------- ---------
NET INCOME $ 87 $ 207
--------- ---------
--------- ---------
NET INCOME PER SHARE $ .02 $ .04
--------- ---------
--------- ---------
SHARES USED TO COMPUTE INCOME PER SHARE: 5,044,811 4,944,614
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THE CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
HPSC, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR EACH OF THE THREE MONTHS ENDED MARCH 31, 1995 AND MARCH 26, 1994
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
March 31, March 26,
1995 1994
--------- ---------
<S> <S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 87 $ 207
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 125 123
Deferred income taxes (594) (562)
Provision for losses on lease contracts and notes
receivable 277 156
Increase (decrease) in accrued interest 176 (3,103)
(Decrease) in accounts payable (379) (24)
Increase in accrued income taxes 36 695
Decrease in refundable income taxes 632 1,184
(Increase) decrease in other Assets (209) 174
--------- ---------
Cash provided by (used in) operating activities 151 (1,150)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (32) (89)
Lease contracts receivable and notes receivable (6,758) 9,692
Estimated residual value of equipment (40) 984
Unearned income 1,512 (3,161)
Security deposits 185 (122)
Deferred orgination costs (224) 192
--------- ---------
Cash (used in) provided by investing activities (5,357) 7,496
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of Senior Notes (5,862) (56,655)
Repayments of Subordinated Debt -- (20,000)
Repayment of notes payable to banks -- (1,391)
Repayment of notes payable treasury stock purchase (1,500) --
Proceeds from issuance of Senior Notes 9,500 70,000
Proceeds from revolving notes payable to banks 3,000 --
Decrease (increase) in restricted funds 523 (10,663)
Debt issuance costs (219) (864)
Other 3 (167)
--------- ---------
Cash provided by (used in) financing activities 5,445 (19,740)
--------- ---------
Net increase(decrease) in cash and cash equivalents 239 (13,394)
Cash and cash equivalents at beginning of period 419 (16,600)
--------- ---------
Cash and cash equivalents at end of period $ 658 $ 3,206
--------- ---------
--------- ---------
Supplemental disclosures of cash flow information:
Interest paid $ 886 $ 4,133
Income taxes paid 71 --
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
OF THE CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE>
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 1994
account balances have been reclassed to conform with 1995 presentation.
2. Interest expense is net of interest income of $95,000 and $71,000 for the
three months ended March 31, 1995, and March 26, 1994, respectively. Included
in interest expense is amortization of debt discount of -0- and $38,000 for
the three months ended March 31, 1995, and March 26, 1994.
3. For the three months ended March 31, 1995, and March 26, 1994, the
earnings per share computation assumed the exercise of stock options under
the modified treasury stock method.
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 March 31, 1995, are as follows:
<TABLE>
<S> <C>
Operating method $ 6,217,000
State income tax accrual $ 1,134,000
Alternative minimum tax credit $ (612,000)
Other $(1,794,000)
------------
Deferred income taxes $ 4,945,000
</TABLE>
5. On March 31, 1995, the Company had $7,413,000 in restricted cash of which
$4,065,000 was reserved for debt service and $3,348,000 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
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Quarter Ended March 31, 1995 Compared to Quarter Ended March 26, 1994
The Company's net income in the first quarter of 1995 was $87,000 or $.02 per
share compared to $207,000 or $.04 per share in the first quarter of 1994.
This decrease was principally due to a decrease in earned income on leases
and notes and an increase in the provision for losses partially offset by
lower selling, general and administrative expenses and reduced interest costs.
Earned income on leases and notes for the first quarter of 1995 was
$2,944,000 compared to $3,605,000 for the first quarter of 1994. This
decline was primarily due to a declining portfolio resulting from a run-off
of portfolio assets exceeding the new financings for most of 1994 and the
sale of the Canadian portfolio during 1994. The Company's volume of new
financing for the first quarter of 1995 was approximately $14,600,000
compared to $4,648,000 in the comparable period in 1994.
The provision for losses in the first quarter of 1995 was $277,000 compared
to $156,000 in 1994. This increase was due to the higher volume of new
financings added.
Selling, general and administrative expenses for the quarter were $1,480,000
compared to $1,798,000 in 1994. This decrease was due primarily to a
significant decrease in Canadian subsidiary operating costs.
Net interest expense for the first quarter of 1995 decreased to $1,044,000
from $1,311,000 for the same period in 1994. This decrease was caused by the
elimination of Canadian interest costs in 1995 compared to 1994, and higher
debt levels in 1995 at lower interest rates.
The Company's income before income taxes in the first quarter of 1995 was
$143,000 compared to $340,000 in 1994, and its effective tax rate remained
constant.
The Company continues to increase the amount of new financing assets added to
the portfolio for the fifth consecutive quarter. The quarter ended March 31,
1995 was the first quarter in the last five years in which that the net
investment in leases and notes increased from the previous quarter end.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(cont'd)
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1995, the Company has $8,071,000 in cash and cash equivalents as
compared to $8,355,000 at the end of 1994. As described in Note 6 to the
Company's consolidated financial statements included in this report on Form
10-Q, $7,413,000 of such cash was restricted pursuant to financing agreements
as of March 31, 1995. Cash provided by operating activities was $151,000 for
the three months ended March 31, 1995 compared to cash used in operating
activities of $1,150,000 in the same period of 1994. Cash used in investing
activities was $5,357,000 for the three months ended March 31, 1995 compared
to cash provided by investing activities of $7,496,000 for the first quarter
of 1994.
As of January 31, 1995, the Company, along with its newly-formed,
wholly-owned, special-purpose subsidiary, HPSC Bravo Funding Corp.
("Bravo") completed a $50,000,000 revolving credit facility structured and
guaranteed by Capital Markets Assurance Corporation ("CapMAC"). Under the
terms of the facility, Bravo, to which the Company has sold and may continue
to sell or contribute certain of its portfolio assets, pledges its interest
in these assets to a commercial-paper conduit entity. Bravo incurs interest
at variable rates in the commercial paper market and enters into interest
rate swap agreements to assure fixed rate funding.
Monthly settlements of principal and interest payments are made from the
collection of payments on Bravo's transactions. Additional sales to Bravo
from HPSC may be made subject to certain covenants regarding Bravo's
portfolio performance and borrowing base calculations.
The Company is the servicer of the Bravo portfolio, subject to meeting
certain covenants. The required monthly payments of principal and interest to
purchasers of the commercial paper are guaranteed by Cap MAC pursuant to the
terms of the agreement. Amounts outstanding under this agreement were
$9,500,000 at March 31, 1995.
In February 1995, the Company's Revolving Loan Agreement was amended to
increase availability to $25 Million. The Company currently has received
commitments to increase the availability under an amended and restated
agreement to $50 Million subject to finalizing negotiations and
documentation. This new agreement would expire at December 31, 1995. In
order to finance adequately its anticipated growth, the Company will continue
to seek to raise additional capital from bank and non-bank sources in 1995.
The Company expects that it will be able to obtain additional capital at
competitive rates, but there can be no assurance it will be able to do so.
8
<PAGE>
HPSC, INC.
PART II. OTHER INFORMATION
Items 1 through 5 are omitted because they are inapplicable.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
10.1 Loan Agreement between Springfield Institution for
Savings and HPSC, Inc. dated April 13, 1995.
10.2 Eighth Amendment dated as of April 12, 1995 to
Revolving Credit Agreement dated as of June 23,
1994, among HPSC, Inc., The First National Bank of Boston,
individually and as agent, and Bank of America Illinois,
individually and as co-agent.
10.3 Ninth Amendment dated as of April 28, 1995, to
Revolving Credit Agreement dated as of June 23, 1994,
among HPSC, Inc., The First National Bank of Boston,
individually and as agent, and Bank of America Illinois,
individually and as co-agent.
10.4 Tenth Amendment dated as of May 11, 1995 to
Revolving Credit Agreement dated as of June 23, 1994,
among HPSC, Inc., The First National Bank of Boston,
individually and as agent, and Bank of America Illinois,
individually and as co-agent.
27. Financial Data Schedule.
b) Reports on Form 8-K
During the quarter for which this report is filed, the Company filed
with the Commission the following report on Form 8-K.
The Registrant determined on March 29, 1995 to change its fiscal year
from a 52/53 week year (the "Old Fiscal Year") to a calendar year (the
"New Fiscal Year"). Since the quarter ending dates for the Old Fiscal
Year and the New Fiscal Year coincided for the quarter ended December 31,
1994, there is no stub period and accordingly no report covering the
transition period needs to be filed.
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: May 12, 1995 HPSC, INC.
----------------------------
(Registrant)
By: /s/ John W. Everets
----------------------------
John W. Everets
Chief Executive Officer
Chairman of the Board
By: /s/ Rene Lefebvre
----------------------------
Rene Lefebvre
Vice President
Chief Financial Officer
9
<PAGE>
Exhibit 10.1
LOAN AGREEMENT BETWEEN
SPRINGFIELD INSTITUTION FOR SAVINGS
AND
HPSC, INC.
THIS LOAN AGREEMENT dated April 13, 1995 by and between HPSC, INC.,
whose principal place of business is at 60 State Street, Boston,
Massachusetts 02109 (the "Borrower") and SPRINGFIELD INSTITUTION FOR SAVINGS,
whose principal place of business is at 1441 Main Street, Springfield,
Massachusetts 01103 (the "Bank").
BACKGROUND: Borrower has requested that the Bank lend moneys and extend
other financial accommodations to Borrower in the total sum of $3,656,477.93,
and the Bank has agreed to provide Borrower with such financing upon the
terms and conditions set forth hereinafter.
1. CERTAIN DEFINITIONS.
1.1 The capitalized terms used herein shall have the meanings set forth
in this Section 1 or elsewhere in this Loan Agreement:
"Applicable Rate" means nine and one-half (9.5%) percent per annum.
Except as otherwise provided, upon Default, the Applicable Rate on the Loan
shall be the lower of (a) the highest rate of interest permitted by the laws
of The Commonwealth of Massachusetts or (b) two (2%) percent per annum in
excess of the interest rate otherwise in effect at the time of such event
hereunder. Interest will be calculated upon a three hundred sixty (360) day
year.
"Balance Sheet Date" shall mean December 31, 1994.
"Collateral" means the contracts, notes, security agreements, loan
agreements, guaranties, mortgages, landlord's waivers, subordination
agreements, UCC financing statements, assignments, chattel paper and other
documents and instruments evidencing and/or securing the Underlying Loans in
which the Borrower has granted a security interest this day to Bank.
"Default" shall mean an event or condition which with the passage of
time or the giving of notice or both would become an Event of Default.
"Documentation" means any and all documents executed in connection with
this transaction which evidence or secure the Obligations, including but not
limited to the following documents executed this date, as the same may be
amended from time to time: this Loan Agreement, the Note, the Security
Agreement and the affidavit as to missing Note and any certificates delivered
to Bank.
<PAGE>
2
"Event of Default" shall have the meaning set forth in Section 7 hereof.
"Loan" means any advances made to or on account of Borrower pursuant to
or as a result of the Loan described in Section 2.
"Obligations" means any and all loans and advances made hereunder to
Borrower, together with interest thereon, and any and all other Indebtedness
of Borrower to Bank, no matter how or when arising and whether under this
Agreement or under any other agreement, guaranty or instrument, and including
the obligation to perform acts or to refrain from acting.
"Permitted Liens" means "none," as there are no liens permitted as to
the Collateral.
"Revolving Credit Agreement" means the Revolving Credit Agreement dated
June 23, 1994 by and among Borrower, The First National Bank of Boston and
Continental Bank, as amended by the First, Second, Third, Fourth, Fifth,
Sixth, Seventh and Eighth Amendments, copies of which are attached hereto and
all of which are hereby incorporated herein by reference.
"Security Agreement" means the Security Agreement of even date herewith
from Borrower to Bank as amended from time to time in which Borrower grants
to Bank a perfected first security interest in the Collateral.
"Underlying Debtor or Debtors" as the case may be, means the borrower or
borrowers from the Borrower under any one or more of the Underlying Loans.
"Underlying Loans" means the loans from Borrower to certain Obligors,
referred to herein as the Underlying Debtors, which constitute a part of the
Collateral, as enumerated in the Securi ty Agreement.
1.2 Capitalized terms used in the provisions of the Revolving Credit
Agreement that are incorporated herein by reference shall have the meanings
ascribed to such terms in this Agreement, except as set forth below:
(a) the following capitalized terms used in the incorporated
provisions of the Revolving Credit Agreement shall have the definitions
ascribed to such terms in the Revolving Credit Agreement, which definitions
are hereby incorporated herein in their entirety by reference:
"ACFC, Capital Assets, Capital Expenditures, Capitalized Leases,
Code, Consolidated, Consolidated Earnings Before Interest and Taxes,
Consolidated Net Income (or Deficit), Consolidated Tangible Capital Funds,
Consolidated Tangible Net
<PAGE>
3
Worth, Consolidated Total Assets, Consolidated Total Interest Expense,
Consolidated Total Liabilities, Credit, Credit Policy, Customer, Customer
Receivable, Delinquent, Distribution, Employee Benefit Plan, Equipment,
ERISA, ERISA Affiliate, ERISA Reportable Event, Funding, generally accepted
accounting principles, Gross Customer Receivables, Guaranteed Pension Plan,
Hazardous Substances, Indebtedness, Interest Ratio, Investments,
Multiemployer Plan, Obligor, PBGC, Person, Reissued Customer Receivables,
Rental Obligations, Reserves, Residual Value of Equipment, Subordinated Debt,
Subsidiary, Unearned Income."
(b) the following capitalized terms as used in the Revolving
Credit Agreement shall have the following meanings herein:
"Accounts Receivable," and "Eligible Accounts Receivable" as used
in the provisions of the Revolving Credit Agreement incorporated herein,
shall be deleted herein.
"Agent" or "Banks" as used in the provisions of the Revolving
Credit Agreement incorporated herein, shall refer herein to the "Bank."
"Contract," as used in the provisions of the Revolving Credit
Agreement incorporated herein, shall refer herein to the "Collateral. "
"Credit Agreement" as used in the provisions of the Revolving
Credit Agreement incorporated herein, shall refer herein to this "Agreement."
"Loan Documents" as used in the provisions of the Revolving Credit
Agreement incorporated herein, shall refer herein to the "Documentation."
2. THE LOAN.
2.1 On the terms and conditions hereinafter set forth, the Bank agrees
to make a loan (the "Loan") to the Borrower at the principal office of the
Bank in Springfield, Massachusetts, in the principal amount of $3,656,477.93.
2.2 The obligation of the Borrower to repay the Loan shall be evidenced
by a promissory note to the Bank (the "Note") of even date herewith,
appropriately completed, maturing on April 1, 2001 and payable to the order
of the Bank, the principal amount of which is to be repaid by the Borrower in
accordance with the provisions of the Note.
<PAGE>
4
3. CONDITIONS OF LOAN. The Obligation of the Bank to make the Loan is
subject to the following conditions precedent:
3.1 (i) The Borrower shall be in compliance with all the terms,
covenants and conditions of this Agreement which are binding upon it directly
or indirectly, (ii) there shall exist no Default hereunder, and (iii) the
representations and warranties contained in this Agreement shall be true as
of such date.
3.2 The Bank shall have received from counsel for the Borrower, a
favorable opinion as to the validity and enforceability of the Documentation,
and as to such other matters as the Bank may reasonably request.
3.3 The Bank shall have received a certificate of the Secretary or an
Assistant Secretary of the Borrower which shall certify the names of the
officers of the Borrower authorized to sign this Agreement and all other
documents contemplated hereby or referred to herein together with the true
signatures of such officers, upon which such certificate the Bank may rely
until it shall receive a further signed certificate of the Secretary or an
Assistant Secretary of the Borrower canceling or amending its prior
certificate and setting forth the signatures of the officers named in such
further certificate.
3.4 No law, regulation, executive order or judicial order (including,
without limitation, Regulations U or X of the Board of Governors of the
Federal Reserve System), ruling, other governmental action or guideline shall
be in effect or shall have occurred, the effect of which in the Bank's
judgment would be to prevent the Bank from fulfilling its obligations
hereunder.
3.5 All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Bank and the Bank shall have
received all information and all documents (including, but not limited to,
copies of corporate votes and copies of the Articles of Organization and
bylaws of the Borrower, each as amended to date and each certified by the
Secretary), including records of corporate proceedings, which the Bank may
reasonably have requested in connection therewith, such documents where
appropriate to be certified by proper corporate or governmental authorities.
The acceptance by the Borrower of each advance shall constitute a
representation by the Borrower to the Bank that all of the applicable
conditions specified in this Section exist as of the time of the making of
such borrowing.
3.6 The Bank shall have received all of the Collateral described in
this Agreement and the Security Agreement.
<PAGE>
5
4. BORROWER'S REPRESENTATIONS WARRANTIES AND COVENANTS.
4.1 OUTSTANDING PRINCIPAL OF UNDERLYING LOANS. Borrower represents to
Bank that the attached EXHIBIT 4.1 contains a full and complete description
of the Underlying Loans and that the amount listed under the column "Legal
Balance" on said EXHIBIT 4.1 represents the outstanding principal balance of
each of the Underlying Loans as of April 1, 1995, without inclusion of any
interest, whether future, accrued or otherwise.
4.2 UNDERLYING LOANS. In addition to the representations set forth in
Section 6.21 of the Revolving Credit Agreement as incorporated by reference
herein, the Borrower represents that it entered into all of the Underlying
Loans on its own, without participation from the Bank, prior to applying for
the Loan granted hereunder.
4.3 REVOLVING CREDIT AGREEMENT REPRESENTATIONS AND WARRANTIES
INCORPORATED HEREIN BY REFERENCE. Subject to the provisions set forth in
Section 1 above as to the interpretation of capitalized terms used herein,
the parties hereby incorporate by reference each and every one of the
provisions contained in the following sections of the Revolving Credit
Agreement as if such entire sections were set forth herein, with such changes
as set forth below, and Borrower hereby represents and warrants to the Bank
that each of the representations and warranties so incorporated herein are
true as of the date of this Agreement. Borrower hereby represents that any
schedules referenced in the following sections, which schedules are hereby
incorporated herein by reference, are accurate as of the date of this
Agreement and need not be updated.
"6.1 CORPORATE AUTHORITY.
6.1.1 INCORPORATION; GOOD STANDING.
6.1.2 AUTHORIZATION.
6.1.3 ENFORCEABILITY.
6.2 GOVERNMENTAL APPROVALS.
6.3 TITLE TO PROPERTIES: LEASES.
6.4 FINANCIAL STATEMENTS
6.4.1 FINANCIAL STATEMENTS.
6.5 NO MATERIAL ADVERSE CHANGE. ETC.
6.6 FRANCHISES. PATENTS, COPYRIGHTS, ETC.
<PAGE>
6
6.7 LITIGATION.
6.8 NO MATERIALLY ADVERSE CONTRACTS.
6.9 COMPLIANCE WITH OTHER INSTRUMENTS. LAWS, ETC.
6.10 TAX STATUS.
6.11 NO EVENT OF DEFAULT. No Default or Event of Default has occurred
or is continuing under this Agreement or under the Revolving Credit Agreement.
6.12 HOLDING COMPANY AND INVESTMENT COMPANY.
6.13 ABSENCE OF FINANCING STATEMENTS, ETC.
6.14 PERFECTION OF SECURITY INTEREST.
6.15 CERTAIN TRANSACTIONS.
6.16 EMPLOYEE BENEFIT PLANS.
6.17 REGULATIONS U AND X.
6.18 ENVIRONMENTAL COMPLIANCE.
6.19 SUBSIDIARIES, ETC.
6.21 ELIGIBLE ACCOUNTS RECEIVABLE. EQUIPMENT AND CONTRACTS. (Specific
reference is made to Section 1.2(b) of this Loan Agreement for the meanings
of capitalized terms used in section 6.21, as such section is incorporated
herein).
EXHIBIT D - COMPLIANCE CERTIFICATE."
5. COVENANTS. Borrower does hereby covenant and agree with the Bank that
it will during the term of this Agreement:
5.1 CONDUCT OF BUSINESS.
(a) Borrower will do all things necessary to preserve, renew, and
keep in force and effect its corporate existence, and all rights and
franchises necessary to conduct its business, and will comply with all laws
and regulations of any governmental authority which may be applicable to it
or its business.
(b) Borrower will pay all taxes, assessments and charges assessed
against it or payable by it at such times and in such manner to prevent any
penalty from accruing or any lien or charge from attaching to its properties,
unless Borrower in good faith contests the same and has set aside adequate
reserves, in which case Borrower shall, in any event, pay all such taxes,
<PAGE>
7
assessments, charges, or levies prior to foreclosure on such properties.
(c) Borrower will pay, when due, or in conformity with customary
trade terms but not later than sixty (60) days from the due date (subject to
agreements modifying such terms) all lease obligations, all trade debt, and
all other Indebtedness incident to the operations of the Borrower, except
such as are being contested in good faith and by proper proceedings if the
Borrower shall have set aside on its books adequate reserves with respect
thereto.
5.2 ACCOUNTS AND REPORTS. The Bank is hereby authorized to examine and
make copies of any of Borrower's books or records, as deemed necessary or
desirable by the Bank. The Bank shall have the right from time to time to
discuss Borrower's affairs directly with Borrower's accountants after notice
to Borrower and opportunity of Borrower to be present at such discussions.
5.3 NOTICE OF CLAIMS. The Borrower shall immediately notify the Bank
of all cases involving loss or damage of to the Collateral; of any request
for credit or adjustments or of any of the Underlying Loans or other dispute
arising with respect to any of the Collateral; and generally of all
happenings and events affecting the Collateral.
5.4 MAINTENANCE OF BOOKS. The Borrower shall maintain its books and
records in a manner and form satisfactory to the Bank, but not contrary to
sound accounting practice or regulatory requirements, and at all reasonable
times, and from time to time, allow the Bank, by or through any of its
officers, agents, attorneys or accountants, to examine, inspect or make
extracts from the Borrower's books and records and to arrange for physical
inspection of and for verification of the records as to the Collateral.
5.5 VERIFICATION OF BALANCES. The Bank shall have the right to
instruct the Borrower's accountants to verify the balances outstanding on any
or all of Underlying Loans. On instructions of the Bank, the accountants
will send notices to the Underlying Debtors in the customary manner without
revealing the security interest of the Bank therein, and such verifications
shall be transmitted by said accountants to the Bank, not the Borrower, but
at the expense of the Borrower. The Bank shall have the right to verify the
balances outstanding of any or all of the Underlying Loans.
5.6 NOTICE OF LITIGATION. Borrower will give immediate notice to the
Bank of any litigation in which Borrower is a party, involving claims against
Borrower in excess of $100,000, and of the institution of any administrative
proceeding which
<PAGE>
8
might adversely affect Borrower's operations, financial condition, property
or business.
5.7 APPOINTMENT OF BANK AS ATTORNEY. To facilitate the exercise by
Bank of any right or remedies set forth in this Agreement and the
documentation, the Borrower hereby constitutes Bank or its agents, or any
other person whom Bank may designate, as attorney-in-fact for the Borrower,
at the Borrower's own cost and expense, to exercise all or any of the
following powers; which, being coupled with an interest, shall be
irrevocable, shall continue until all obligations have been paid in full, and
shall be in addition to any other rights and remedies that Bank may have: (i)
to remove from any premises where the same may be located, any and all
documents, instruments, files and records, and any receptacles and cabinets
containing the same, relating to Collateral; and the Bank may, at the
Borrower's cost and expense, use such of the personnel, supplies, and space
of the Borrower at its place of business as may be necessary to properly
administer and control the Collateral or the handling of collections and
realizations thereon; and (ii) to take or bring, in the Bank's name or in the
name of the Borrower, all steps, actions, suits, or proceedings deemed by
Bank necessary or desirable to effect collection of or to realize upon
Collateral; and (iv) to settle, compromise, or adjust any of the Underlying
Loans.
5.8 MAINTENANCE OF PROPERTY AND LEASES. The Borrower and any
Subsidiary will maintain its properties in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time to the
extent required by the exercise of sound business judgment will make all
necessary and proper repairs, renewals, replacements, additions and
improvements thereto; and the Borrower will at all times comply with the
provisions of all leases to which the Borrower is a party or under which it
occupies property so as to prevent any material loss or forfeiture thereof or
thereunder except to the extent that if there is a bona fide dispute between
the parties under any outstanding lease, the Borrower may contest such matter
by appropriate means if there shall have been set aside on the books of the
corporation involved adequate reserves with respect thereto. The Borrower
will comply in all material respects with all laws and with all rules,
regulations and orders made by governmental authority and applicable to their
respective properties or any part thereof.
5.9 INSURANCE.
(a) The Borrower will keep all of its properties which are
customarily insured by companies owning similar property or engaged in the
same or similar business, insured by financially sound and reputable insurers
against loss or damage by fire, explosion, and other hazards customarily
covered by extended coverage in amounts not less than one hundred (l00%)
percent of
<PAGE>
9
the full insurable value of the property insured. The Borrower will maintain
with financially sound and reputable insurers, comprehensive general
liability insurance of at least $1,000,000.00 per occurrence and such other
reasonable and proper insurance against other hazards, risks and liability to
persons and property to the extent and in the manner customary for companies
operating like properties in similar businesses similarly situated, including
without limitation, fire, extended coverage, vandalism and malicious mischief
to include all risk physical loss.
(b) Borrower will furnish to the Bank such evidence of insurance
as the Bank may reasonably require.
5.10 FINANCIAL STATEMENTS AND OTHER INFORMATION. The Borrower will
deliver to the Bank the following:
(a) As soon as available, and, in any event, within forty-eight
(48) days after the end of the first three quarterly fiscal periods in each
fiscal year (i) a copy of all Form 10-Q filings and (ii) a completed
compliance certificate as to Borrower's compliance with the Financial
Covenants described in Section 5.13(a) of this Agreement, addressed to Bank
and making reference to this Agreement, substantially in the form attached to
the Revolving Credit Agreement as EXHIBIT D.
(b) As soon as available, and in any event, within ninety-three
(93) days after the end of each fiscal year, (i) a copy of each Form 10-K
filing and (ii) a completed compliance certificate in the form to the
Revolving Credit Agreement.
The Bank shall have the right from time to time to discuss Borrower's
affairs directly with Borrower's independent certified public accountants
after notice to Borrower and with the opportunity of Borrower to be present
at said discussions.
(c) A report indicating the date and amount of any payments made
as to the Underlying Loans shall be delivered to Bank on the fifth of each
month.
5.11 RESTRICTIONS ON LIENS. The Borrower shall not create or incur or
suffer to be created or incurred or to exist any mortgage, pledge, lien,
charge, security interest or encumbrance of any kind upon any of the
Collateral nor shall the Borrower transfer any of its interest in such
Collateral.
5.12 NOTICE OF DEFAULT. Borrower will notify the Bank immediately if it
becomes aware of the occurrence of any Default or Event of Default hereunder,
or of any fact, condition, or event which only with the giving of notice, or
passage of time would become an Event of Default.
<PAGE>
10
5.13 REVOLVING CREDIT AGREEMENT COVENANTS INCORPORATED HEREIN BY
REFERENCE. The parties hereby incorporate by reference the following entire
sections of the Revolving Credit Agreement, as of this date, as if such
provisions were set forth herein:
(a) Each and every one of the following Financial Covenants:
"Sections 9.1, 9.2, 9.3, 9.4, 9.5, 9.6, 9.7, 9.8, 9.9, 9.10 and 9.11 of the
Revolving Credit Agreement."
(b) Each and every one of the following general provisions of the
Revolving Credit Agreement:
"Section 4.3.2. NO OFFSET.
Section 4.7 ADDITIONAL COSTS, ETC.
Section 4.8 CAPITAL ADEQUACY.
Section 4.9 CERTIFICATE."
(c) Each and every one of the following Negative Covenants
contained in the Revolving Credit Agreement:
Section 8.5 MERGER CONSOLIDATION AND DISPOSITION OF ASSETS.
Section 8.7 COMPLIANCE WITH ENVIRONMENTAL LAWS.
Section 8.9 EMPLOYEE BENEFIT PLANS.
5.14 INDEMNITY. The Borrower agrees to indemnify, defend and hold the
Bank harmless from any liability and expense, including reasonable counsel
fees, incurred by the Bank on account of the Borrower's breach of any
representation or warranty included in this Agreement.
5.15 CONFIRMATION AS TO MISSING NOTE. Borrower has this day delivered
to Bank an affidavit as to a missing original note from an Underlying Debtor.
Without limiting the provisions of the Affidavit, Borrower agrees to deliver
to Bank within thirty days of closing an original confirmation from such
Underlying Debtor as to the authenticity of the copy of the Note delivered to
Bank, in form approved by Bank.
5.16 CERTIFICATE OF GOOD STANDING. Borrower agrees that in the event it
does not deliver to Bank a certificate of tax good standing at closing, that
it will deliver such a certificate within thirty days after closing.
6. SECURITY. To secure the Obligations, the Borrower has executed or
caused to be executed the Security Agreement as of this date.
<PAGE>
11
7. DEFAULT. With respect to the Borrower and any endorser, guarantor or
surety for the Borrower, the occurrence of any of the following shall
constitute a Default ("Event of Default") hereunder:
7.1 Failure to pay any Obligation within three (3) days of the date
that such payment shall be due and payable.
7.2 Failure to perform any term, condition, or covenant contained in
this Agreement not cured within fifteen (15) days of written notice thereof
by the Bank, other than failure to perform under Sections 5.10 or 5.l3(a) of
this Agreement or Section 8.5 of the Revolving Credit Agreement as
incorporated herein by Section 5.13(c) of this Agreement, for which there
shall be no cure period.
7.3 An Event of Default of or under any of the Documentation.
7.4 An event of default under the Revolving Credit Agreement as the
same may be amended from time to time, unless such default is waived by the
parties to such Revolving Credit Agreement within thirty (30) days of breach.
No such waiver shall be considered a waiver of any provision of the
Revolving Credit Agreement to the extent that such provision is incorporated
herein by reference. To the extent any such provision is incorporated herein
by reference, it becomes a part of this Loan Agreement as if set forth herein
and may not be waived or amended except pursuant to an amendment to this Loan
Agreement.
7.5 Any financial statement, representation, warranty, or certificate
made or furnished to the Bank if materially incorrect or materially
incomplete when furnished.
7.6 The involvement in any financial difficulty as evidenced by:
(a) an assignment, composition, or similar device for
the benefit of creditors, or
(b) inability to pay debts when due, or
(c) the commencement of a voluntary proceeding in bankruptcy or
the failure to have dismissed within ninety (90) days any involuntary
proceeding in bankruptcy or the voluntary institution or the failure to have
dismissed within ninety (90) days any involuntary institution of any other
proceedings under the law relating to bankruptcy reorganization, insolvency
or relief of debtors, or
(d) the voluntary appointment of a receiver or trustee, or the
failure to have dismissed within ninety (90) days any
<PAGE>
12
involuntary appointment, the institution of proceedings for the dissolution,
or full or partial liquidation, or the change in nature or discontinuance of
its business.
(e) Entry of Judgment in excess of $100,000.00 not satisfied,
discharged or appealed in good faith within thirty (30) days of the entry
thereof.
(f) Any event which results in the acceleration of any
indebtedness in excess of $100,000.00 to any others under any instrument,
agreement, or undertaking.
8. REMEDIES.
8.1 Upon the occurrence of any Event of Default, the Bank at its option
may declare any or all Obligations immediately due and payable and shall have
all rights and remedies of a secured party under the laws of The Commonwealth
of Massachusetts and as otherwise provided by law and by the Documentation.
8.2 Proceeds actually received by the Bank from any Collateral may be
applied by the Bank to principal or interest of any or all of the
Obligations, after deducting therefrom any expenses reasonably incurred by
the Bank in enforcing its rights hereunder, including reasonable attorney's
fees incurred by the Bank.
9. MISCELLANEOUS PROVISIONS.
9.1 WAIVER AND MODIFICATION. The Bank shall not be deemed to have
waived any of its rights hereunder or under any other Obligations unless such
waiver is in writing and signed by the Bank. No delay or omission on the part
of the Bank in exercising any right shall operate as a waiver of such right
or any other right. A waiver on one occasion shall not be construed as a bar
to or a waiver of any right or remedy on any future occasion. The Borrower
hereby waives presentment, demand, protest, and notice of nonpayment or
default. The Borrower consents to and waives notice of the granting of any
extension of time for payment or other indulgence granted to any account
debtor or any other party, the taking and releasing by the Bank of any
security, or the compromise or settlement of any accounts.
9.2 NOTICES. Except for any notice required under applicable law to be
given in another manner, all notices to be given pursuant to this Agreement
shall be sufficient if mailed postage prepaid, certified or registered mail,
return receipt requested or by a recognized overnight delivery service for
which evidence of delivery is provided to the addresses of the parties below,
or to such other address as a party may direct by notice given as herein
provided. Any time period provided in the giving of any
<PAGE>
13
notice hereunder shall commence upon the date such notice is deposited in the
mail unless otherwise expressly provided in this Agreement.
To Borrower:
HPSC, Inc.
60 State Street
Boston, MA 02109
with a copy to:
Hill & Barlow
1 International Place
Boston, MA 02110
Attn: Dennis W. Townley, Esquire
To Bank:
Springfield Institution for Savings
1441 Main Street
Springfield, MA 01103
Attention: Imran Riaz
with a copy to:
Gary S. Fentin, Esquire
Shatz, Schwartz and Fentin, P.C.
1441 Main Street
Springfield, MA 01103
9.3 MASSACHUSETTS LAW. The Documentation shall be construed according
to and governed by the laws of The Commonwealth of Massachusetts. All
parties submit to the jurisdiction of the courts of The Commonwealth of
Massachusetts for all matters in connection with this instrument as well as
for all purposes in connection with any other relationship between the
parties. Any and all disputes or litigation proceedings between the parties
shall be commenced in the state or federal courts located in Springfield,
Massachusetts.
9.4 INTEREST. Interest shall be computed on the basis of a year of 360
days and paid for the actual number of days for which due. If the due date
for any payment of principal is extended by operation of law or otherwise,
interest shall be payable for such extended time.
9.5 COSTS. Borrower will pay, upon demand, all reasonable counsel fees
and expenses incurred by the Bank in connection with the financing being
concluded as of this date, as well as all reasonable fees and expenses,
including reasonable counsel fees, which the Bank may hereafter incur in
protecting and enforcing
<PAGE>
14
any of the Bank's rights. Borrower specifically authorizes the Bank to pay
all such fees and expenses and charge the same to its loan account with the
Bank.
9.6 CERTAIN DEFINITIONS. Except as otherwise herein expressly
provided, all terms shall have the meanings assigned to such terms under the
Uniform Commercial Code and generally accepted accounting principles.
9.7 COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures thereto and hereto
were upon the same instrument.
9.8 PARTIAL INVALIDITY. In the event any clause or provision of the
Documentation shall be invalid or void for any reason, such invalid or void
clause or provision shall not affect the remainder of the Documentation, and
the balance of the provisions thereof shall remain in full force and effect.
9.9 RESOLUTION OF CONFLICTS. In the case of conflict or ambiguity
between any covenants and/or conditions under this Loan Agreement and any
other instrument signed in connection therewith then the Bank may, at its
option, have the right to elect the provision that controls.
9.10 POWER OF ATTORNEY. Borrower hereby grants the Bank a power of
attorney to endorse the name of the Borrower on any documents reasonably
deemed necessary by the Bank to effectuate the purpose of this Agreement.
10. REPRESENTATIONS; JURY TRIAL. THE BORROWER ACKNOWLEDGES THAT IT HAS BEEN
REPRESENTED BY COUNSEL AND THAT THIS DOCUMENT WAS AVAILABLE FOR REVIEW AND
NEGOTIATION PRIOR TO ITS EXECUTION. THE BORROWER HEREBY AGREES THAT ALL OF
BANK'S RIGHTS WERE THE RESULT OF NEGOTIATIONS BETWEEN THE BANK AND THE
BORROWER AND WERE INDUCED IN A MATERIAL RESPECT BY THE BENEFITS GRANTED TO
THE BORROWER HEREUNDER. IN THIS CONTEXT, THE BORROWER, ANY GUARANTORS, AND
BANK ALL AGREE TO WAIVE TRIAL BY JURY AS TO ANY AND ALL MATTERS AND ISSUES
WHICH MAY ARISE HEREFROM OR FROM ANY OTHER DOCUMENT, LETTER OR AGREEMENT
EXECUTED IN CONJUNCTION HEREWITH, WHETHER DIRECTLY OR INDIRECTLY, INCLUDING
WITHOUT LIMITATION, COUNTERCLAIMS, IF ANY.
10.1 OTHER PROVISIONS. Any provisions contained in any Exhibit annexed
hereto are hereby incorporated by reference into this Agreement.
<PAGE>
15
IN WITNESS WHEREOF, the parties have on the date first-above written
executed this Agreement as a sealed instrument.
WITNESS: HPSC, INC.
Authorized Signatory By: /s/ Rene Lefebvre
- ---------------------------- ---------------------------------------
Rene Lefebvre
Its Vice President, Chief Financial Officer
SPRINGFIELD INSTITUTION FOR SAVINGS
Authorized Signatory By: /s/ Imran Riaz
- ---------------------------- ---------------------------------------
Imran Riaz
Its Assistant Vice President
<PAGE>
Exhibit 10.2
EIGHTH AMENDMENT
TO REVOLVING CREDIT AGREEMENT
This EIGHTH AMENDMENT TO REVOLVING CREDIT AGREEMENT (this "Eighth
Amendment") dated as of April 12, 1995, by and among HPSC, Inc. (the
"Borrower"), a Delaware corporation, THE FIRST NATIONAL BANK OF BOSTON
("FNBB"), a national banking association, BANK OF AMERICA ILLINOIS (formerly
known as Continental Bank N.A.) ("BoAI", and together with FNBB, the
"Banks"), and THE FIRST NATIONAL BANK OF BOSTON as agent (the "Agent") for
the Banks and BoAI as co-agent for the Banks. Capitalized terms used herein
without definition shall have the meanings set forth in the Credit Agreement
(as defined below).
WHEREAS, the Borrower, the Agent and the Banks are parties to that certain
Revolving Credit Agreement dated as of June 23, 1994 (as amended by the First
Amendment dated September 2, 1994, the Second Amendment dated November 8,
1994, the Third Amendment dated November 22, 1994, the Fourth Amendment dated
as of December 22, 1994, the Fifth Amendment dated as of January 6, 1995, the
Sixth Amendment dated as of February 3, 1995, the Seventh Amendment dated as
of February 6, 1995 and as may be further amended, modified or supplemented
and in effect from time to time, the "Credit Agreement");
WHEREAS, the Borrower requested that the Credit Agreement be amended to
permit the Borrower to enter into that certain credit agreement dated as of
April 13, 1995 by and between the Borrower and Springfield Institution for
Savings substantially in the form of EXHIBIT A attached hereto and made a
part hereof.
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. AMENDMENT TO THE CREDIT AGREEMENT.
1.1 CERTAIN NEW DEFINITIONS. Section 1 of the Credit Agreement is
hereby amended by inserting the following new definition in the appropriate
place in the alphabetical sequence of definitions:
"SIS. The Springfield Institution for Savings."
"SIS CREDIT AGREEMENT. The dental practice receivables- backed credit
agreement dated as of April 13, 1995 by and between the Borrower and
SISB."
1.2 RESTRICTIONS ON INDEBTEDNESS. Section 8.1 of the Credit Agreement
is hereby amended by adding to the end thereof the following new subsection (m):
"(m) Indebtedness incurred by the Borrower pursuant to the SIS Credit
Agreement, PROVIDED that the aggregate principal amount of such
Indebtedness of the Borrower shall not exceed $5,000,000 at any time."
<PAGE>
2
1.3 RESTRICTIONS ON LIENS. Section 8.2 of the Credit Agreement is
hereby amended by adding to the end thereof the following new subsection (m):
"(m) Liens granted by the Borrower to SIS on the assets of the
Borrower listed on SCHEDULE 8.5.2 in connection with the SIS Credit
Agreement."
1.4 OTHER DEBT. Section 8.8 of the Credit Agreement is hereby amended
by inserting the following text at the end thereof:
"or the SIS Credit Agreement."
1.5. EVENTS OF DEFAULT AND ACCELERATION. (a) Section 12.1(j) of the
Credit Agreement is hereby amended by inserting the text "or Indebtedness under
the SIS Credit Agreement" after the text "Indebtedness under the Funding
Indenture or Indebtedness under the Funding II Credit Agreement" and before
the text "shall accelerate the maturity".
(b) Section 12.1 of the Credit Agreement is hereby amended by inserting
the following new subsection (t) immediately after existing
subsection (s) thereof:
"(t) the occurrence of any default or any event of default under the
SIS Credit Agreement."
1.6. AGENT'S AUTHORIZATION. Section 14.1 of the Credit Agreement is
hereby amended by adding the following new sentence at the end thereof:
"Each of the Banks and the Agent further acknowledge and agree that
(i) the Agent is authorized to release the security interest created
by the Security Documents in the assets listed on SCHEDULE 8.5.2 and
that (ii) the Agent is authorized to execute and deliver, on behalf of
the Banks and the Agent, such partial releases under the Uniform
Commercial Code as may be necessary or desirable to accomplish a
release of the security interest created by the Security Documents
in the assets listed on SCHEDULE 8.5.2."
2. CONDITIONS TO EFFECTIVENESS. This Eighth Amendment shall not become
effective unless and until:
(a) the Agent receives counterparts of this Eighth Amendment executed by
each of the Borrower, the Banks, the Agent and the Guarantor; and
(b) all proceedings in connection with the transactions contemplated by
this Eighth Amendment and all documents incident hereto, including,
without limitation, the SIS Credit Agreement and related documents,
shall be satisfactory in form and substance to the Agent, and the Agent
shall have received all information and counterpart originals or
certified or other copies of such documents, including, without
limitation, the SIS Credit Agreement and related documents as the
Agent may reasonably request.
3. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The Borrower represents
and warrants to the Agent and the Banks that (a) each and every one of the
representations and warranties made by the Borrower to the Agent and the
Banks in Section 6 or elsewhere in the Credit Agreement or in the other Loan
Documents, as amended by this Eighth Amendment, are true and correct in all
material respects on and as of the date hereof except to the extent that any
of such representations and warranties relate, by the express terms thereof,
solely to a date prior hereto; (b) the Borrower has duly and properly
performed, complied with and observed each of
<PAGE>
3
its covenants, agreements and obligations contained in sections 7 and 8 or
elsewhere in the Credit Agreement or the other Loan Documents, as amended by
this Eighth Amendment; and (c) no event has occurred or is continuing and no
condition exists which constitutes a Default or Event of Default.
4. RATIFICATION, ETC. Except as expressly amended by this Amendment,
the Credit Agreement and the Loan Documents and all documents, instruments
and agreements related thereto, including, but not limited to the Security
Documents, are hereby ratified and confirmed in all respects and shall
continue in full force and effect. The Borrower confirms and agrees that the
Obligations of the Borrower to the Banks under the Loan Documents, as amended
hereby, are secured by, guarantied under, and entitled to the benefits, of
the Security Documents. The Borrower, the Guarantor, the Agent and the Banks
hereby acknowledge and agree that all references to the Credit Agreement and
the Obligations thereunder contained in any of the Loan Documents shall be
references to the Credit Agreement and the Obligations, as affected and
increased hereby and as the same may be amended, modified, supplemented, or
restated from time to time. The Security Documents and the perfected first
priority security interests of the Agent on behalf of the Banks thereunder
shall continue in full force and effect, and the collateral security and
guaranties provided for in the Security Documents shall not be impaired by
this Amendment. The Credit Agreement and this Eighth Amendment shall be read
and construed as a single agreement.
5. MISCELLANEOUS. The Borrower hereby agrees to pay to the Agent, on
demand by the Agent, all reasonable out-of-pocket costs and expenses incurred
or sustained by the Agent or any of the Banks in connection with the
preparation of this Eighth Amendment and the documents referred to herein
(including reasonable legal fees). Nothing contained herein shall constitute
a waiver of, impair or otherwise affect any Obligations, any other obligation
of the Borrower or any rights of the Agent or either of the Banks consequent
thereon. This Eighth Amendment may be executed in one or more counterparts,
each of which shall be deemed an original but which together shall constitute
one and the same instrument. Section headings in this Eighth Amendment are
included herein for convenience of reference only and shall not constitute
part of this Eighth Amendment for any other purpose. This Eighth Amendment
shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Massachusetts (without reference to conflict of laws).
<PAGE>
4
IN WITNESS WHEREOF, the undersigned have duly executed this Eighth
Amendment as a sealed instrument as of the date first set forth above.
HPSC, INC.
By: /s/ Rene Lefebvre
---------------------------------
Chief Financial Officer
THE FIRST NATIONAL BANK
OF BOSTON, individually and
as Agent
By: /s/ Authorized Signatory
---------------------------------
BANK OF AMERICA ILLINOIS,
individually and as co-agent
By: /s/ Authorized Signatory
---------------------------------
CONSENTED TO BY THE UNDERSIGNED GUARANTOR:
AMERICAN COMMERCIAL
FINANCE CORPORATION
By: /s/ John W. Everets
---------------------------------
President
<PAGE>
Exhibit 10.3
NINTH AMENDMENT
TO REVOLVING CREDIT AGREEMENT
This NINTH AMENDMENT TO REVOLVING CREDIT AGREEMENT (this "Ninth
Amendment") dated as of April 28, 1995, by and among HPSC, Inc. (the
"Borrower"), a Delaware corporation, THE FIRST NATIONAL BANK OF BOSTON
("FNBB"), a national banking association, BANK OF AMERICA ILLINOIS ("BoAI",
and together with FNBB, the "Banks"), and THE FIRST NATIONAL BANK OF BOSTON
as Agent for the Banks and BoAI as co-agent for the Banks. Capitalized terms
used herein without definition shall have the meanings set forth in the
Credit Agreement (as defined below).
WHEREAS, the Borrower, the Agent and the Banks are parties to that certain
Revolving Credit Agreement dated as of June 23, 1994 (as amended by the First
Amendment dated September 2, 1994, the Second Amendment dated November 8,
1994, the Third Amendment dated November 22, 1994, the Fourth Amendment dated
as of December 22, 1994, the Fifth Amendment dated as of January 6, 1995, the
Sixth Amendment dated as of February 3, 1995, the Seventh Amendment dated as
of February 6, 1995, the Eighth Amendment dated as of April 12, 1995 and as
may be further amended, modified or supplemented and in effect from time to
time, the "Credit Agreement");
WHEREAS, the Borrower requested that FNBB temporarily increase its lending
commitment and FNBB, subject to the terms and provisions of the Fifth
Amendment, agreed to temporarily increase its lending commitment and the
Agent and the other Banks approved such temporary increase;
WHEREAS, the Borrower has requested that the Supplemental Period (as
defined in the Fifth Amendment and as extended by the Seventh Amendment) be
further extended and the Agent and the Banks, subject to the terms and
provisions hereof have agreed to further extend the Supplemental Period (as
defined in the Fifth Amendment and as extended by the Seventh Amendment);
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. EXTENSION OF SUPPLEMENTAL PERIOD. The Supplemental Period as defined
in the Fifth Amendment and as extended by the Seventh Amendment is hereby
further extended until May 31, 1995.
2. CONDITIONS TO EFFECTIVENESS. This Ninth Amendment shall not become
effective unless and until:
(a) the Agent receives counterparts of this Ninth Amendment executed by
each of the Borrower, the Banks, the Agent and the Guarantor; and
(b) all proceedings in connection with the transactions contemplated by
this Ninth Amendment, including, without limitation, copies, certified
by the Secretary or Assistant Secretary of the Borrower as of the date
hereof, of the resolutions of the Borrower approving this Ninth
Amendment; and copies, certified by the Secretary or Assistant
Secretary of the Guarantor as of the date hereof, of the resolutions
of the Guarantor approving this Ninth Amendment, in a form
<PAGE>
2
satisfactory to the Agent and all documents incident hereto shall be
satisfactory in form and substance to the Agent, and the Agent shall
have received all information and counterpart originals or certified
or other copies of such documents as the Agent may reasonably request
in a form satisfactory to the Agent.
3. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The Borrower represents
and warrants to the Agent and the Banks that (a) each and every one of the
representations and warranties made by the Borrower to the Agent and the
Banks in Section 6 or elsewhere in the Credit Agreement or in the other Loan
Documents, as amended by this Ninth Amendment, are true and correct in all
material respects on and as of the date hereof except to the extent that any
of such representations and warranties relate, by the express terms thereof,
solely to a date prior hereto; (b) the Borrower has duly and properly
performed, complied with and observed each of its covenants, agreements and
obligations contained in Sections 7 and 8 or elsewhere in the Credit Agreement
or the other Loan Documents, as amended by this Ninth Amendment; and (c) no
event has occurred or is continuing and no condition exists which constitutes
a Default or Event of Default.
4. RATIFICATION, ETC. Except as expressly amended by this Amendment, the
Credit Agreement and the Loan Documents and all documents, instruments and
agreements related thereto, including, but not limited to the Security
Documents, are hereby ratified and confirmed in all respects and shall
continue in full force and effect. The Borrower confirms and agrees that the
Obligations of the Borrower to the Banks under the Loan Documents, as amended
and supplemented hereby, are secured by, guarantied under, and entitled to
the benefits, of the Security Documents. The Borrower, the Guarantor, the
Agent and the Banks hereby acknowledge and agree that all references to the
Credit Agreement and the Obligations thereunder contained in any of the Loan
Documents shall be references to the Credit Agreement and the Obligations, as
affected and increased hereby and as the same may be amended, modified,
supplemented, or restated from time to time. The Security Documents and the
perfected first priority security interests of the Banks thereunder shall
continue in full force and effect, and the collateral security and guaranties
provided for in the Security Documents shall not be impaired by this
Amendment. The Credit Agreement and this Ninth Amendment shall be read and
construed as a single agreement.
5. MISCELLANEOUS. The Borrower hereby agrees to pay to the Agent, on
demand by the Agent, all reasonable out-of-pocket costs and expenses incurred
or sustained by the Agent or any of the Banks in connection with the
preparation of this Ninth Amendment and the documents referred to herein
(including reasonable legal fees). Nothing contained herein shall constitute
a waiver of, impair or otherwise affect any Obligations, any other obligation
of the Borrower or any rights of the Agent or either of the Banks consequent
thereon. This Ninth Amendment may be executed in one or more counterparts,
each of which shall be deemed an original but which together shall constitute
one and the same instrument. Section headings in this Ninth Amendment are
included herein for convenience of reference only and shall not constitute
part of this Ninth Amendment for any other purpose. This Ninth Amendment
shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Massachusetts (without reference to conflict of laws).
<PAGE>
3
IN WITNESS WHEREOF, the undersigned have duly executed this Ninth
Amendment as a sealed instrument as of the date first set forth above.
HPSC, INC.
By: /s/ Rene Lefebvre
---------------------------------
Chief Financial Officer
THE FIRST NATIONAL BANK
OF BOSTON, individually and
as Agent
By: /s/ Authorized Signatory
---------------------------------
Director
BANK OF AMERICA ILLINOIS,
individually and as co-agent
By: /s/ Mark N. Hurley
---------------------------------
Mark N. Hurley
Vice President
CONSENTED TO BY THE UNDERSIGNED GUARANTOR:
AMERICAN COMMERCIAL
FINANCE CORPORATION
By: /s/ John W. Everets
---------------------------------
President
<PAGE>
Exhibit 10.4
TENTH AMENDMENT
TO REVOLVING CREDIT AGREEMENT
This TENTH AMENDMENT TO REVOLVING CREDIT AGREEMENT (this "Tenth
Amendment") dated as of May 11, 1995, by and among HPSC, Inc. (the
"Borrower"), a Delaware corporation, THE FIRST NATIONAL BANK OF BOSTON
("FNBB"), a national banking association, BANK OF AMERICA ILLINOIS ("BoAI",
and together with FNBB, the "Banks"), and THE FIRST NATIONAL BANK OF BOSTON
as Agent for the Banks and BoAI as co-agent for the Banks. Capitalized terms
used herein without definition shall have the meanings set forth in the
Credit Agreement (as defined below).
WHEREAS, the Borrower, the Agent and the Banks are parties to that
certain Revolving Credit Agreement dated as of June 23, 1994 (as amended by
the First Amendment dated September 2, 1994, the Second Amendment dated
November 8, 1994, the Third Amendment dated November 22, 1994, the Fourth
Amendment dated as of December 22, 1994, the Fifth Amendment dated as of
January 6, 1995, the Sixth Amendment dated as of February 3, 1995, the
Seventh Amendment dated as of February 6, 1995, the Eighth Amendment dated as
of April 12, 1995, the Ninth Amendment dated as of April 28, 1995 and as may
be further amended, modified or supplemented and in effect from time to time,
the "Credit Agreement");
WHEREAS, the Borrower has requested that certain terms and provisions of
the Credit Agreement be amended and the Agent and the Banks have agreed to so
amend the Credit Agreement;
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. INTEREST COVERAGE. Section 9.3 of the Credit Agreement is hereby
amended by deleting it in its entirety and inserting in lieu thereof the
following:
"9.3 INTEREST COVERAGE. The Borrower will not permit the ratio
of (i) Consolidated Earnings Before Interest and Taxes for any period
of four consecutive fiscal quarters (treated as a single accounting
period), to (ii) Consolidated Total Interest Expense for such period,
to be less than 1.15 to 1.00 at any time."
2. CONDITIONS TO EFFECTIVENESS. This Tenth Amendment shall not become
effective unless and until:
(a) the Agent receives counterparts of this Tenth Amendment executed by
each of the Borrower, the Banks, the Agent and the Guarantor; and
(b) all proceedings in connection with the transactions contemplated
by this Tenth Amendment, including, without limitation, copies,
certified by the Secretary or Assistant Secretary of the Borrower
as of the date hereof, of the resolutions of the Borrower approving
this Tenth Amendment; and copies, certified by the Secretary or
Assistant Secretary of the Guarantor as of the date hereof, of the
resolutions of the Guarantor approving this Tenth Amendment, in a
form satisfactory to the Agent and all documents incident hereto
shall be satisfactory in form and substance to the Agent, and the
Agent shall have received all
<PAGE>
2
information and counterpart originals or certified or other copies
of such documents as the Agent may reasonably request in a form
satisfactory to the Agent.
3. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The Borrower represents
and warrants to the Agent and the Banks that (a) each and every one of the
representations and warranties made by the Borrower to the Agent and the
Banks in Section 6 or elsewhere in the Credit Agreement or in the other Loan
Documents, as amended by this Tenth Amendment, are true and correct in all
material respects on and as of the date hereof except to the extent that any
of such representations and warranties relate, by the express terms thereof,
solely to a date prior hereto; (b) the Borrower has duly and properly
performed, complied with and observed each of its covenants, agreements and
obligations contained in Sections 7 and 8 or elsewhere in the Credit Agreement
or the other Loan Documents, as amended by this Tenth Amendment; and (c) no
event has occurred or is continuing and no condition exists which constitutes
a Default or Event of Default.
4. RATIFICATION, ETC. Except as expressly amended by this Amendment,
the Credit Agreement and the Loan Documents and all documents, instruments
and agreements related thereto, including, but not limited to the Security
Documents, are hereby ratified and confirmed in all respects and shall
continue in full force and effect. The Borrower confirms and agrees that the
Obligations of the Borrower to the Banks under the Loan Documents, as
amended and supplemented hereby, are secured by, guarantied under, and
entitled to the benefits, of the Security Documents. The Borrower, the
Guarantor, the Agent and the Banks hereby acknowledge and agree that all
references to the Credit Agreement and the Obligations thereunder contained
in any of the Loan Documents shall be references to the Credit Agreement and
the Obligations, as affected and increased hereby and as the same may be
amended, modified, supplemented, or restated from time to time. The Security
Documents and the perfected first priority security interests of the Banks
thereunder shall continue in full force and effect, and the collateral
security and guaranties provided for in the Security Documents shall not be
impaired by this Amendment. The Credit Agreement and this Tenth Amendment
shall be read and construed as a single agreement.
5. MISCELLANEOUS. The Borrower hereby agrees to pay to the Agent, on
demand by the Agent, all reasonable out-of-pocket costs and expenses incurred
or sustained by the Agent or any of the Banks in connection with the
preparation of this Tenth Amendment and the documents referred to herein
(including reasonable legal fees). Nothing contained herein shall constitute
a waiver of, impair or otherwise affect any Obligations, any other obligation
of the Borrower or any rights of the Agent or either of the Banks consequent
thereon. This Tenth Amendment may be executed in one or more counterparts,
each of which shall be deemed an original but which together shall constitute
one and the same instrument. Section headings in this Tenth Amendment are
included herein for convenience of reference only and shall not constitute
part of this Tenth Amendment for any other purpose. This Tenth Amendment
shall be governed by, and construed in accordance with, the laws of the
Commonwealth of Massachusetts (without reference to conflict of laws).
<PAGE>
3
IN WITNESS WHEREOF, the undersigned have duly executed this Tenth
Amendment as a sealed instrument as of the date first set forth above.
HPSC, INC.
By: /s/ Rene Lefebvre
---------------------------------
Chief Financial Officer
THE FIRST NATIONAL BANK
OF BOSTON, individually and
as Agent
By: /s/ Michell B. Fellman
---------------------------------
Michell B. Fellman
Director
BANK OF AMERICA ILLINOIS,
individually and as co-agent
By: /s/ Bridget A. Garavalia
---------------------------------
Bridget A. Garavalia
Vice President
CONSENTED TO BY THE UNDERSIGNED GUARANTOR:
AMERICAN COMMERCIAL
FINANCE CORPORATION
By: /s/ John W. Everets
---------------------------------
President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 8,071
<SECURITIES> 0
<RECEIVABLES> 100,790
<ALLOWANCES> 4,578
<INVENTORY> 0
<CURRENT-ASSETS> 104,283
<PP&E> 935
<DEPRECIATION> 329
<TOTAL-ASSETS> 107,615
<CURRENT-LIABILITIES> 24,571
<BONDS> 44,662
<COMMON> 56
0
0
<OTHER-SE> 32,856
<TOTAL-LIABILITY-AND-EQUITY> 107,615
<SALES> 0
<TOTAL-REVENUES> 2,944
<CGS> 0
<TOTAL-COSTS> 1,480
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 277
<INTEREST-EXPENSE> 1,044
<INCOME-PRETAX> 143
<INCOME-TAX> 56
<INCOME-CONTINUING> 87
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 87
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
