HPSC INC, S-1, 1997-01-30

HPSC INC
S-1, 1997-01-30
FINANCE LESSORS

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 30, 1997.

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

HPSC, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 6159 04-2560004
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

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

60 STATE STREET, 35TH FLOOR
BOSTON, MASSACHUSETTS 02109-1803
(617) 720-3600
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
------------------------

JOHN W. EVERETS, CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE OFFICER
HPSC, INC.
60 STATE STREET, 35TH FLOOR
BOSTON, MASSACHUSETTS 02109-1803
(617) 720-3600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------

Copies of all communications to:

<TABLE>
<S> <C>
DENNIS W. TOWNLEY, ESQ. LEWIS J. GEFFEN, ESQ.
Hill & Barlow, P.C. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
One International Place P.C.
Boston, MA 02110-2607 One Financial Center
(617) 428-3000 Boston, MA 02111-2657
(617) 542-6000
</TABLE>

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as practicable after the effective date of this Registration Statement

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this form is a post effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED (1) PER NOTE (2) OFFERING PRICE (2) FEE
<S> <C> <C> <C> <C>
% Senior Subordinated Notes Due 2007............. $23,000,000 100% $23,000,000 $6,970
</TABLE>

(1) Includes $3,000,000 principal amount which the Underwriters have the option
to purchase from the Company to cover over-allotments, if any.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) under the Securities Act.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JANUARY 30, 1997

$20,000,000

HPSC LOGO

% SENIOR SUBORDINATED NOTES DUE 2007
--------------------------

The % Senior Subordinated Notes offered hereby (the "Notes") will mature
on 1, 2007. Interest on the Notes is payable semiannually on
1 and 1, beginning 1, 1997. The Notes are
redeemable at the option of HPSC, Inc. ("HPSC"), in whole or in part, other than
through the operation of the Sinking Fund (defined herein), as described in this
Prospectus, after 1, 2002 at the redemption prices set forth herein,
plus accrued but unpaid interest to the date of repurchase.

On and after 1, 2002, HPSC is required to redeem, on 1,
1, 1 and 1 of each year, a portion of the
aggregate principal amount of the Notes as set forth herein at a redemption
price equal to 100% of the aggregate principal amount of the Notes so redeemed,
plus accrued but unpaid interest to the redemption date. The principal amount of
Notes to be redeemed may at the option of HPSC be reduced in inverse order of
maturity by an amount equal to the sum of (i) the principal amount of Notes
theretofore issued and acquired at any time by HPSC and delivered to the Trustee
for cancellation, and not theretofore made the basis for the reduction of a
Sinking Fund payment, and (ii) the principal amount of Notes at any time
redeemed and paid pursuant to the optional redemption provisions of the Notes or
which shall at any time have been duly called for redemption (otherwise than
through operation of the Sinking Fund) and the redemption price shall have been
deposited in trust for that purpose and which theretofore have not been made the
basis for the reduction of a Sinking Fund payment. See "Description of
Notes--Redemption--SINKING FUND."

Upon the occurrence of a Change of Control (defined herein), each holder of
the Notes will have the option to require HPSC to repurchase such holder's
Notes, in whole or in part, at a price equal to 101% of the principal amount
thereof, together with accrued but unpaid interest to the date of repurchase.
See "Description of Notes--Certain Covenants--REPURCHASE OF NOTES AT THE OPTION
OF THE HOLDER UPON A CHANGE OF CONTROL."

The Notes are unsecured, general obligations of HPSC, subordinate in right
of payment to all Secured Portfolio Debt (as defined) of HPSC, ranking PARI
PASSU with all existing unsecured Funded Recourse Debt (as defined) of HPSC, and
senior in right of payment to all future unsecured Funded Recourse Debt of HPSC.
In addition, as no existing or future subsidiary of HPSC has guaranteed or will
guarantee the Notes, the Notes will be effectively subordinated to any
Indebtedness of any Subsidiaries (as such terms are defined herein) of HPSC. As
of September 30, 1996 and after giving effect to the sale of the Notes and the
application of the estimated net proceeds thereof, the outstanding Secured
Portfolio Debt of the Company would have been $95.0 million and the outstanding
Indebtedness of Subsidiaries of HPSC would have been $55.0 million.

HPSC does not intend to list the Notes on any securities exchange or to
include them on any quotation system, and no active trading market is likely to
develop. Although the Underwriters have indicated an intention to make a market
in the Notes, neither Underwriter is obligated to make a market in the Notes,
and any market making may be discontinued at any time without notice at the sole
discretion of such Underwriter. See "Underwriting."
--------------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE NOTES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions(1) Company(2)
<S> <C> <C> <C>
Per Senior Subordinated Note.................... 100% % %
Total(3)........................................ $20,000,000 $ $
</TABLE>

(1) HPSC has agreed to indemnify the Underwriters against certain liabilities
under the Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses payable by HPSC estimated at $500,000.
(3) HPSC has granted the Underwriters a 30-day option to purchase up to an
additional $3,000,000 principal amount of the Notes, solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions and Proceeds to HPSC
will be $23,000,000, $ and $ .
------------------------------

The Notes are offered by the Underwriters, subject to prior sale, receipt
and acceptance by them, and subject to the right of the Underwriters to reject
any order in whole or in part and certain other conditions. It is expected that
delivery of the Notes will be made at the offices of Advest, Inc., New York, New
York, on or about , 1997.

ADVEST, INC. LEGG MASON WOOD WALKER
INCORPORATED
The date of this Prospectus is , 1997.
<PAGE>
[Map of the continental United States displaying the locations of the Company's
sales offices and the regional distribution of the Company's portfolio balances
for contracts owned and managed by HPSC (ACFC portfolio excluded)]

<TABLE>
<CAPTION>
REGION AMOUNT ($) NUMBER OF CONTRACTS
- ------------------------------ ----------- -------------------
<S> <C> <C>
West $54 million 2,900
Central $48 million 2,900
Southeast $48 million 3,100
Northeast $40 million 2,200
</TABLE>

HEADQUARTERS:
Boston, Massachusetts

BRANCHES:
Fairfield, New Jersey

Charlotte, North Carolina

Atlanta, Georgia

Peachtree City, Georgia

Valrico, Florida

Bloomingdale, Illinois

Chicago, Illinois

Itasca, Illinois

Dallas, Texas

Arvada, Colorado

Chatsworth, California

Emeryville, California

FORWARD-LOOKING STATEMENTS

This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act. Discussions containing such forward-looking
statements may be found in the material set forth under "Prospectus Summary,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business," as well as within the Prospectus generally. When
used in this Prospectus, the words "believes," "anticipates," "expects,"
"plans," "intends," "estimates," "continue," "could," "may" or "will" (or the
negative of such words) and similar expressions are intended to identify
forward-looking statements. Such statements are subject to a number of risks and
uncertainties. Actual results in the future could differ materially from those
described in the forward-looking statements as a result of the risk factors set
forth beginning on page 9 and the matters set forth in this Prospectus
generally. HPSC cautions the reader, however, that such list of risk factors may
not be exhaustive. HPSC undertakes no obligation to release publicly the result
of any revisions to these forward-looking statements that may be made to reflect
any future events or circumstances.
------------------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

The logo of HPSC is a registered service mark of HPSC. All trademarks and
trade names referred to in this Prospectus are the property of their respective
owners.

2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND THE CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO
APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS THE CONTEXT INDICATES OTHERWISE,
WHEN USED HEREIN "HPSC" REFERS TO HPSC, INC., A DELAWARE CORPORATION, AND THE
"COMPANY" REFERS TO HPSC AND ITS SUBSIDIARIES, AS DESCRIBED BELOW. INVESTORS
SHOULD CAREFULLY CONSIDER THE RISK FACTORS RELATED TO THE PURCHASE OF NOTES OF
THE COMPANY. SEE "RISK FACTORS."

THE COMPANY

HPSC, Inc. is a specialty finance company engaged primarily in providing
financing for equipment and other professional practice-related expenses to the
dental, ophthalmic, general medical, chiropractic and veterinary professions
throughout the United States. Management believes that the Company is a leading
provider of financing to dental professionals in the United States, with over 20
years of experience in this market.

In 1996, 62% of the Company's originations were derived from healthcare
equipment financing. Management estimates that the Company currently provides
financing for equipment of more than 500 vendors. The Company competes
principally in the portion of the healthcare finance market where the size of
the transaction is $250,000 or less, sometimes referred to as the "small-ticket"
market. The average size of the Company's financing transactions during 1996 was
approximately $25,000. The Company's equipment financing transactions consist of
noncancellable, direct finance leases and installment sales contracts,
substantially all of which provide for a full payout at a fixed interest rate
over a term of one to seven years. The Company provides its leasing customers
with an option to purchase the leased equipment at the end of the term. Since
1991, over 99.0% of the Company's customers have exercised this option.

HPSC also finances the purchase of healthcare practices, particularly dental
practices. In addition, through its subsidiary, American Commercial Finance
Corporation, the Company makes asset-based loans to a variety of businesses in
the northeastern United States. In 1996, approximately 28.0% of the Company's
originations were generated from financing professional practice related
expenses, including practice finance, leasehold improvements, office furniture,
working capital and supplies, and approximately 10.0% arose from asset-based
lending.

At December 31, 1996, the Company's outstanding leases and notes receivable
owned and managed were approximately $208.0 million, consisting of 11,100 active
contracts. HPSC's financing contract originations were approximately $87.0
million in 1996 compared to approximately $61.3 million in 1995 and
approximately 28.4 million in 1994, annual increases of 41.9% and 115.8%,
respectively. ACFC originated lines of credit in the amount of $18 million in
1996, $14.0 million in 1995 and $5.0 million in 1994. The Company markets its
financing services to healthcare providers in a number of ways, including
through advertising and participation at trade shows and conventions, through
its sales staff with 14 offices in nine states and through cooperative
arrangements with equipment vendors.

The Company's strategy is to expand its business and to enhance its
profitability by (i) increasing its share of the dental equipment financing
market, as well as by expanding its activities in other healthcare markets; (ii)
diversifying the Company's revenue stream through its practice finance and
asset-based lending; (iii) emphasizing service to vendors and customers; (iv)
increasing its direct sales and other marketing efforts; (v) maintaining and
increasing the Company's access to low-cost capital and managing interest rate
risks; (vi) continuing to manage effectively its credit risks; and (vii)
capitalizing on information technology to increase productivity and enable the
Company to manage a higher volume of financing transactions.

HPSC was incorporated in Delaware in 1975. Its executive offices are located
at 60 State Street, Boston, Massachusetts 02109, and its telephone number is
(617) 720-3600. The Company's common stock is traded on the Nasdaq National
Market under the symbol "HPSC."

3
<PAGE>
THE OFFERING

<TABLE>
<S> <C>
Securities Offered by the $20,000,000 principal amount of % Senior Subordinated
Company....................... Notes due 2007 (the "Notes").

Maturity Date................... , 2007

Sinking Fund.................... Sinking fund payments beginning in year five to yield a
weighted average life to maturity of approximately seven
and one-half years. On and after 1, 2002, HPSC is
required to redeem, on 1, 1, 1
and 1 of each year, a portion of the aggregate
principal amount of the Notes as set forth herein at a
redemption price equal to 100% of the aggregate principal
amount of the Notes so redeemed, plus accrued but unpaid
interest to the redemption date. The principal amount of
Notes to be redeemed may at the option of HPSC be reduced
in inverse order of maturity by an amount equal to the sum
of (i) the principal amount of Notes theretofore issued
and acquired at any time by HPSC and delivered to the
Trustee for cancellation, and not theretofore made the
basis for the reduction of a Sinking Fund payment, and
(ii) the principal amount of Notes at any time redeemed
and paid pursuant to the optional redemption provisions of
the Notes or which shall at any time have been duly called
for redemption (otherwise than through operation of the
Sinking Fund) and the redemption price shall have been
deposited in trust for that purpose and which theretofore
have not been made the basis for the reduction of a
Sinking Fund payment. See "Description of
Notes--Redemption--Sinking Fund."

Interest Payment Dates.......... 1 and 1, beginning 1, 1997

Ranking......................... The Notes will be unsecured, general obligations of HPSC,
subordinate in right of payment to all Secured Portfolio
Debt (as defined) of HPSC, ranking PARI PASSU with all
existing unsecured Funded Recourse Debt (as defined) of
HPSC, and senior in right of payment to all future
unsecured Funded Recourse Debt of HPSC. In addition, as no
existing or future subsidiary of HPSC has guaranteed or
will guarantee the Notes, the Notes will be effectively
subordinated to any Indebtedness of any Subsidiaries (as
such terms are defined herein) of HPSC. The Company does
not currently have outstanding any Indebtedness that is
subordinate or junior in right of payment to the Notes.

Optional Redemption............. The Notes will be nonredeemable for five years after
issuance. The Notes will be redeemable at the option of
HPSC, in whole or in part, after five years, at premiums
declining annually until 1, 200 , at which time
the Notes will be redeemable at par plus accrued interest.
</TABLE>

4
<PAGE>

<TABLE>
<S> <C>
Repurchase Option Upon Death.... Upon the death of any Holder, HPSC will repurchase upon
request, at par plus accrued but unpaid interest, such
Holder's Notes, subject to limits of $25,000 in principal
amount per Holder per year and $250,000 in aggregate
principal amount for all Holders in any 12-month period,
and subject to other conditions being satisfied.

Change of Control............... Upon the occurrence of a Change of Control (as defined),
each Holder of the Notes will have the option to require
HPSC to repurchase such Holder's Notes, in whole or in
part, at a price equal to 101% of the principal amount
thereof, together with accrued but unpaid interest to the
date of repurchase.

Use of Proceeds................. To repay indebtedness outstanding under the Revolver (as
defined herein) and for working capital and general
corporate purposes.

Principal Covenants............. The Indenture will contain certain covenants that will
restrict, among other things, the ability of the Company
to (i) incur Funded Recourse Debt and Disqualified Capital
Stock (as defined), (ii) make Restricted Payments (as
defined), (iii) restrict the ability of Subsidiaries to
pay dividends or make distributions, (iv) incur liens, (v)
enter into Affiliate Transactions (as defined), (vi) merge
or consolidate with or into another entity or sell
substantially all of its assets and (vii) engage in other
lines of business.
</TABLE>

5
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED
----------------------------------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DEC. 28, DEC. 26, DEC. 25, DEC. 31, DEC. 31, SEPT. 30, SEPT. 30,
1991 1992 1993 (1) 1994 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
STATEMENT OF INCOME DATA:
Earned income on leases and notes................ $25,565 $21,734 $17,095 $11,630 $12,924 $ 9,564 $13,447
Provision for losses............................. (4,403) (4,307) (15,104) (754) (1,296) (877) (1,224)
--------- --------- --------- --------- --------- --------- ---------
Net revenues................................. 21,162 17,427 1,991 10,876 11,628 8,687 12,223
Selling, general and administrative expenses..... 3,345 3,574 5,160 6,970 5,984 4,537 5,580
Interest, net.................................... 12,816 10,609 8,979 3,156 4,964 3,636 5,649
--------- --------- --------- --------- --------- --------- ---------
Total operating expenses..................... 16,161 14,183 14,139 10,126 10,948 8,173 11,229
Operating profit (loss).......................... 5,001 3,244 (12,148) 750 680 514 994
(Loss) on write-off of foreign currency
translation adjustment (2).................... -- -- -- -- (601) -- --
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before income taxes................ 5,001 3,244 (12,148) 750 79 514 994
Provision (benefit) for income taxes............. 1,819 1,260 (4,870) 300 204 202 390
--------- --------- --------- --------- --------- --------- ---------
Net income (loss)................................ $ 3,182 $ 1,984 $ (7,278) $ 450 $ (125) $ 312 $ 604
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) per share...................... $ 0.65 $ 0.40 $ (1.48) $ 0.09 $ (0.03) $ 0.08 $ 0.15
--------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- ---------
Shares used to compute net income (loss) per
share......................................... 4,921,145 4,922,473 4,923,233 4,989,391 3,881,361 3,837,218 4,107,313

OTHER DATA:
Leases and notes receivable originated during
period (3).................................... $29,145 $25,161 $14,152 $32,609 $68,554 $46,030 $66,026
Number of leases and notes originated during
period (3).................................... 1,450 1,575 745 1,590 2,800 1,960 2,600
Average amount financed per contract originated
during period (3)............................. $ 20 $ 16 $ 19 $ 21 $ 24 $ 23 $ 25
Net charge-offs divided by average net investment
in leases and notes (before allowance)........ 1.8% 3.4% 12.3% 2.9% 1.3% 0.9% 0.8%
Ratio of earnings to fixed charges (4)........... 1.39x 1.31x -- 1.24x 1.14x 1.14x 1.18x
EBITDA (5)....................................... $18,690 $14,835 $ (474) $ 5,778 $ 7,383 $ 5,708 $ 9,461
Ratio of EBITDA to interest expense (6).......... 1.46x 1.40x -- 1.83x 1.49x 1.57x 1.67x
Pro forma ratio of EBITDA to interest expense (5)
(7)........................................... 1.56x

SEPTEMBER 30, 1996
--------------------
AS
ACTUAL ADJUSTED(7)
--------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................ $4,323 $625 $16,600 $419 $861 $715 $715
Restricted cash.................................. -- -- -- 7,936 5,610 6,751 6,751
Net investment in leases and notes............... 179,572 157,058 109,752 91,193 119,886 142,424 142,424
Total assets..................................... 185,168 158,857 130,437 103,148 130,739 153,262 154,762
Senior secured bank debt......................... 33,593 24,584 7,130 16,500 42,070 58,574 40,074
Senior secured limited recourse debt............. 68,000 50,000 50,000 41,024 46,453 54,968 54,968
Senior Subordinated Notes........................ -- -- -- -- -- -- 20,000
Subordinated debt................................ 18,326 19,090 19,962 -- -- -- --
Total liabilities................................ 141,783 113,816 92,816 70,326 97,380 119,194 120,694
Total stockholders' equity....................... 43,385 45,041 37,621 32,822 33,359 34,068 34,068
</TABLE>

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

(1) In 1993, the Company experienced a substantial decrease in new business,
increased selling, general and administrative costs and a substantial
adjustment to its loan loss reserves, in each case largely as a result of
the bankruptcy of Healthco International, Inc., which previously had
referred to the Company substantially all of the Company's business.

(2) Reflects a one-time, non-operating, non-cash loss on write-off of cumulative
foreign currency translation adjustments related to the Company's
discontinued Canadian operations.

6
<PAGE>
(3) For contracts originated by ACFC, originations reflect initial advances on
committed lines of credit. Excludes leases and notes receivable originated
by the Company's discontinued Canadian operations in 1991, 1992 and 1993.

(4) For purposes of this ratio, earnings consist of earnings before income taxes
plus fixed charges. Fixed charges consist of interest expense and
amortization of debt issuance costs. Earnings before taxes were insufficient
to cover fixed charges in 1993 by approximately $3.2 million.

(5) EBITDA is defined as earnings from operations before interest, taxes,
depreciation and amortization. EBITDA is presented here to provide
additional information about the Company's ability to meet its future debt
service and working capital requirements. EBITDA is not a measure of
financial performance under generally accepted accounting principles
("GAAP") and should not be considered as an alternative either to net income
as an indicator of the Company's operating performance, or to cash flows as
a measure of the Company's liquidity.

(6) Ratio of EBITDA (as defined above) to interest expense is widely used as an
indicator of a company's ability to service its debt, but is not necessarily
an indication of, and should not be considered as an alternative to, the
ratio of earnings to fixed charges. EBITDA was insufficient to cover
interest expense in 1993 by approximately $8.5 million.

(7) Adjusted to give effect to the sale of $20,000,000 principal amount of the
Notes by the Company and the application of approximately $18.5 million of
net proceeds therefrom, taking into account an assumed underwriting discount
and estimated expenses of the offering, to repay senior secured bank debt.
See "Use of Proceeds" and "Capitalization."

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

EXCEPT AS OTHERWISE NOTED, ALL INFORMATION IN THIS PROSPECTUS ASSUMES NO
EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION, AND FURTHER ASSUMES NO
EXERCISE OF THE 641,875 OPTIONS OUTSTANDING AS OF DECEMBER 31, 1996 TO PURCHASE
SHARES OF THE COMPANY'S COMMON STOCK AT A WEIGHTED AVERAGE EXERCISE PRICE OF
$3.80 PER SHARE. SEE "CAPITALIZATION" AND "UNDERWRITING."

7
<PAGE>
THE COMPANY

HPSC was incorporated in 1975 as a captive finance company for Healthco
International, Inc. ("Healthco") to provide financing to the dental profession
for Healthco equipment. Healthco was a leading distributor of merchandise,
equipment and services to dentists and institutional providers of dental care.
Healthco referred to HPSC substantially all of HPSC's business and provided
sales and related services to HPSC, as well as certain management, data
processing and administrative services. Healthco sold approximately 60% of the
stock of HPSC to the public in an initial public offering in 1983 and a
subsequent offering in 1986, retaining an ownership interest of approximately
40%. HPSC repurchased this interest from Healthco's secured creditors in 1995.

Healthco filed for bankruptcy on June 9, 1993, and subsequently was
liquidated. At that time, HPSC severed its relationship with Healthco and became
a fully autonomous finance company for healthcare providers. HPSC was able to
replace the business previously referred to it by Healthco with business from
other equipment vendors, which represented new sources of business in the
dental, medical and other healthcare professions. It also began to provide for
itself the sales, management, data processing and administrative services
formerly provided by Healthco. Since 1993, HPSC has provided financing for over
900 equipment vendors. HPSC's annual originations of financing contracts have
increased from $14.2 million in 1993, the year of Healthco's bankruptcy, to
$87.0 million in 1996, a cumulative increase of 512.7%.

In 1994, HPSC formed American Commercial Finance Corporation ("ACFC"), a
wholly-owned subsidiary, in order to expand into asset-based lending. ACFC
originated secured lines of credit in the amount of $5 million in 1994, $14
million in 1995 and $18 million in 1996.

In 1993, HPSC formed HPSC Funding Corp. I ("Funding I"), a wholly-owned
special-purpose subsidiary, in connection with a $70 million receivables-backed
securitization transaction. In 1995, HPSC formed HPSC Bravo Funding Corp.
("Bravo"), a wholly-owned special-purpose subsidiary, in connection with the
establishment of a $50 million (now $100 million) revolving credit
securitization facility. HPSC also has a Canadian subsidiary, Credident, Inc.
("Credident"), the operations of which were largely discontinued during 1994 and
1995.

Unless the context otherwise requires, references herein to the "Company"
refer to HPSC, Inc., Funding I, Bravo and ACFC, each a Delaware corporation.

8
<PAGE>
RISK FACTORS

THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN ADDITION TO THE
OTHER INFORMATION IN THIS PROSPECTUS BEFORE PURCHASING THE NOTES OFFERED BY THIS
PROSPECTUS.

DEPENDENCE ON FUNDING SOURCES; RESTRICTIVE COVENANTS. The Company's
financing activities are capital intensive. The Company's revenues and
profitability are related directly to the volume of financing contracts it
originates. To generate new financing contracts, the Company requires access to
substantial short- and long-term credit. To date, the Company's principal
sources of funding for its financing transactions have been (i) a revolving
credit facility with The First National Bank of Boston, as Agent, for borrowing
up to $95 million (the "Revolver"), (ii) a receivables-backed limited recourse
asset securitization transaction with Funding I in an original amount of $70
million, (iii) a $100 million limited recourse revolving credit facility with
Bravo, (iv) a fixed-rate, full recourse term loan from, and specific recourse
sales of financing contracts to, savings banks and other purchasers and (v) the
Company's internally generated revenues. There can be no assurance that the
Company will be able to negotiate a new revolving credit facility at the end of
the current term of the Revolver in December 1997, complete additional asset
securitizations or obtain other additional financing, when needed and on
acceptable terms. The Company would be adversely affected if it were unable to
continue to secure sufficient and timely funding on acceptable terms. The
agreement governing the Revolver (the "Revolver Agreement") contains numerous
financial and operating covenants. There can be no assurance that the Company
will be able to maintain compliance with these covenants, and failure to meet
such covenants would result in a default under the Revolver Agreement. Moreover,
the Company's financing arrangements with Bravo and the savings banks described
above incorporate the covenants and default provisions of the Revolver
Agreement. Thus, any default under the Revolver Agreement will also trigger
defaults under these other financing arrangements. In addition, the Indenture
contains certain covenants that could restrict the Company's access to funding.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources," "Business--Funding Sources,"
"Description of Notes" and "Description of Certain Indebtedness."

CUSTOMER CREDIT RISKS. The Company maintains an allowance for doubtful
accounts in connection with payments due under financing contracts originated by
the Company (whether or not such contracts have been securitized, sold or held
as collateral for loans to the Company) at a level which the Company deems
sufficient to meet future estimated uncollectible receivables, based on an
analysis of the delinquencies, problem accounts, and overall risks and probable
losses associated with such contracts, together with a review of the Company's
historical credit loss experience. There can be no assurance that this allowance
will prove to be adequate. Failure of the Company's customers to make scheduled
payments under their financing contracts could require the Company to (i) make
payments in connection with its recourse loan and asset sale transactions, (ii)
lose its residual interest in any underlying equipment and (iii) forfeit
collateral pledged as security for the Company's limited recourse asset
securitizations. In addition, although credit losses on the contracts originated
by the Company have averaged less than 1% of the Company's net investment in
leases and notes for the nine months ended September 30, 1996, any increase in
such losses or in the rate of payment defaults under the financing contracts
originated by the Company could adversely affect the Company's ability to obtain
additional financing, including its ability to complete additional asset
securitizations and secured asset sales or loans. There can be no assurance that
the Company will be able to maintain or reduce its current level of credit
losses. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources" and
"Business--Collection and Loss Experience."

RANKING; SUBORDINATION OF THE NOTES. The Notes are unsecured, general
obligations of HPSC. The payment of the principal of, premium (if any) and
interest on the Notes is subordinate in right of payment, as set forth in the
Indenture, to the payment when due of all Secured Portfolio Debt of HPSC, which
includes, without limitation, the Revolver and Savings Bank Indebtedness. In
addition, none of HPSC's existing or future Subsidiaries has guaranteed or will
guarantee the Indebtedness under the Notes. Accordingly, the Indebtedness under
the Notes will be effectively subordinated to any Indebtedness of any

9
<PAGE>
Subsidiary of HPSC, including, without limitation, Indebtedness of Funding I or
Bravo. The Notes will rank senior to all other subordinated indebtedness of
HPSC. The Company does not currently have outstanding any indebtedness that is
subordinate or junior in right of payment to the Notes. At September 30, 1996,
after giving effect to the issuance and sale of the Notes and the application of
the net proceeds therefrom as described herein under "Use of Proceeds," the
outstanding Secured Portfolio Debt of the Company would have been $95.0 million,
of which $55.0 million would have been Indebtedness of Subsidiaries of HPSC.
Although the Indenture contains limitations on the amount of additional Funded
Recourse Debt which the Company may incur, the Indenture contains no
restrictions on the amount of Secured Portfolio Debt which the Company may incur
and, under certain circumstances, the amount of additional Funded Recourse Debt
permitted to be incurred could be substantial. In the event of the bankruptcy,
liquidation, reorganization or other dissolution of the Company, there may not
be sufficient assets remaining to satisfy the holders of the Notes after
satisfying the claims of any holders of Secured Portfolio Debt of the Company
and Indebtedness of any existing or future Subsidiaries of HPSC. See
"Description of Notes--Ranking; Subordination of the Notes."

COMPETITION. The Company's financing activities are highly competitive. The
Company competes for customers with a number of national, regional and local
finance companies, including those which, like the Company, specialize in
financing for healthcare providers. In addition, the Company's competitors
include those equipment manufacturers which finance the sale or lease of their
products themselves, conventional leasing companies and other types of financial
services companies such as commercial banks and savings and loan associations.
Many of the Company's competitors and potential competitors possess
substantially greater financial, marketing and operational resources than the
Company. Moreover, the Company's future profitability will be directly related
to its ability to obtain capital funding at favorable funding rates as compared
to the capital costs of its competitors. The Company's competitors and potential
competitors include many larger, more established companies that have a lower
cost of funds than the Company and access to capital markets and to other
funding sources that may be unavailable to the Company. There can be no
assurance that the Company will be able to continue to compete successfully in
its targeted markets. See "Business--Competition."

EQUIPMENT MARKET RISK. The demand for the Company's equipment financing
services depends upon various factors not within its control. These factors
include general economic conditions, including the effects of recession or
inflation, and fluctuations in supply and demand related to, among other things,
(i) technological advances in and economic obsolescence of the equipment and
(ii) government regulation of equipment and payment for healthcare services. The
acquisition, use, maintenance and ownership of most types of medical and dental
equipment, including the types of equipment financed by the Company, are
affected by rapid technological changes in the healthcare field and evolving
federal, state and local regulation of healthcare equipment, including
regulation of the ownership and resale of such equipment. Changes in the
reimbursement policies of the Medicare and Medicaid programs and other
third-party payors, such as insurance companies, as well as changes in the
reimbursement policies of managed care organizations, such as health maintenance
organizations, may also affect demand for medical and dental equipment and,
accordingly, may have a material adverse effect on the Company's business,
operating results and financial condition.

CHANGES IN HEALTHCARE PAYMENT POLICIES. The increasing cost of medical care
has brought about federal and state regulatory changes designed to limit
governmental reimbursement of certain healthcare providers. These changes
include the enactment of fixed-price reimbursement systems in which the rates of
payment to hospitals, outpatient clinics and private individual and group
practices for specific categories of care are determined in advance of
treatment. Rising healthcare costs may also cause non-governmental medical
insurers, such as Blue Cross and Blue Shield associations and the growing number
of self-insured employers, to revise their reimbursement systems and policies
governing the purchasing and leasing of medical and dental equipment.
Alternative healthcare delivery systems, such as health maintenance
organizations, preferred provider organizations and managed care programs, have
adopted similar cost containment measures. Other proposals to reform the United
States healthcare system are considered from time to time. These proposals could
lead to increased government involvement in healthcare and

10
<PAGE>
otherwise change the operating environment for the Company's customers.
Healthcare providers may react to these proposals and the uncertainty
surrounding such proposals by curtailing or deferring investment in medical and
dental equipment. Future changes in the healthcare industry, including
governmental regulation thereof, and the effect of such changes on the Company's
business cannot be predicted. Changes in payment or reimbursement programs could
adversely affect the ability of the Company's customers to satisfy their payment
obligations to the Company and, accordingly, may have a material adverse effect
on the Company's business, operating results and financial condition. See
"Business--Healthcare Provider Financing--GOVERNMENT REGULATION AND HEALTHCARE
TRENDS."

INTEREST RATE RISK. Substantially all of the Company's financing contracts
require the Company's customers to make payments at fixed interest rates for
specified terms. However, approximately 34% of the Company's borrowings
currently are subject to a variable interest rate. Consequently, an increase in
interest rates, before the Company is able to secure fixed-rate, long-term
financing for such contracts or to generate higher-rate financing contracts to
compensate for the increased borrowing cost, could adversely affect the
Company's business, operating results and financial condition. The Company's
ability to secure additional long-term financing and to generate higher-rate
financing contracts is limited by many factors, including competition, market
and general economic conditions and the Company's financial condition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and "Business--Funding Sources."

RESIDUAL VALUE RISK. At the inception of its equipment leasing
transactions, the Company estimates what it believes will be the fair market
value of the financed equipment at the end of the initial lease term and records
that value (typically 10% of the initial purchase price) on its balance sheet.
The Company's results of operations depend, to some degree, upon its ability to
realize these residual values (as of September 30, 1996, the estimated residual
value of equipment at the end of the lease term was approximately $9.3 million,
representing approximately 6% of the Company's total assets). Realization of
residual values depends on many factors, several of which are not within the
Company's control, including, but not limited to, general market conditions at
the time of the lease expiration; any unusual wear and tear on the equipment;
the cost of comparable new equipment; the extent, if any, to which the equipment
has become technologically or economically obsolete during the contract term;
and the effects of any new government regulations. If, upon the expiration of a
lease contract, the Company sells or refinances the underlying equipment and the
amount realized is less than the original recorded residual value for such
equipment, a loss reflecting the difference will be recorded on the Company's
books. Failure to realize aggregate recorded residual values could thus have an
adverse effect on the Company's business, operating results and financial
condition. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business--Healthcare Provider Financing--
REALIZATION OF RESIDUAL VALUES ON EQUIPMENT LEASES."

DEPENDENCE ON SALES REPRESENTATIVES. The Company is, and its growth and
future revenues are, dependent in large part upon (i) the ability of the
Company's sales representatives to establish new relationships, and maintain
existing relationships, with equipment vendors, distributors and manufacturers
and with healthcare providers and other customers and (ii) the extent to which
such relationships lead equipment vendors, distributors and manufacturers to
promote the Company's financing services to potential purchasers of their
equipment. As of December 31, 1996, the Company had 14 field sales
representatives and eight in-house sales personnel. Although the Company is not
materially dependent upon any one sales representative, the loss of a group of
sales representatives could, until appropriate replacements were obtained, have
a material adverse effect on the Company's business, operating results and
financial condition. See "Business--Sales and Marketing."

ABSENCE OF PUBLIC MARKET. There is no existing market for the Notes, and
there can be no assurance that one will develop or, if developed, as to whether
it will be sustained. Accordingly, there can be no assurance as to the liquidity
of any market that may develop, the ability of holders to sell their Notes or
the price that holders would receive upon sale of their Notes. The Underwriters
have advised the Company that they intend to make a market in the Notes;
however, they are not obligated to do so and any market

11
<PAGE>
making may be discontinued at any time without notice. The Company does not
intend to apply for listing of the Notes on any securities exchange or quotation
system. Future trading prices of the Notes will depend on many factors,
including, among others, prevailing interest rates, the Company's operating
results and the market for similar securities. See "Underwriting."

NO RATING OF NOTES. The Notes are not rated by any financial rating
organization and may be characterized as "high-yield" securities. In recent
years, uncertainties in the high-yield debt market have been reflected in
volatile prices of such securities. Such volatility may have a material adverse
effect on the price of the Notes and the ability of a purchaser to resell the
Notes for any value. There can be no assurance that any purchaser of the Notes
will be able to resell the Notes in the future.

UNDERWRITERS' INFLUENCE ON THE MARKET. A significant number of the Notes
may be sold to customers of the Underwriters. Such customers may subsequently
engage in transactions for the sale or purchase of the Notes through or with the
Underwriters. Although they have no obligation to do so, the Underwriters intend
to make a market in the Notes and may otherwise effect transactions in such
securities. As a result, the Underwriters may exert a dominating influence on
the market for the Notes, if a market is developed, and such market activity by
the Underwriters may be discontinued at any time. The price and liquidity of the
Notes may be significantly affected by the degree, if any, of the Underwriters'
participation in the market for the Notes. See "Underwriting."

REPURCHASE OF THE NOTES UPON A CHANGE OF CONTROL. Upon a Change of Control
(as defined in the Indenture), the Company will be required to offer to
repurchase the Notes then outstanding at a purchase price equal to 101% of the
principal amount thereof, plus accrued but unpaid interest, to the date of
repurchase. There can be no assurance that the Company will have adequate funds
to repurchase the Notes in the event of a Change of Control. Such repurchase, if
made, could constitute an event of default under the Revolver Agreement. The
failure of the Company following a Change of Control to make or consummate an
offer to repurchase the Notes would constitute an Event of Default under the
Indenture. In such an event, the Trustee or the holders of at least 25% in
aggregate principal amount of the outstanding Notes may accelerate the maturity
of all of the outstanding Notes. A Change of Control generally means any
transaction which would result in any person beneficially owning or controlling
more than 50% of the voting stock of HPSC. See "Description of Notes --Certain
Covenants--REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF
CONTROL."

DEPENDENCE ON CURRENT MANAGEMENT. The operations and future success of the
Company are dependent upon the continued efforts of the Company's executive
officers, two of whom are also directors of the Company. The loss of the
services of any of these key executives could have a material adverse effect on
the Company's business, operating results and financial condition. See
"Management--Executive Officers and Directors."

FLUCTUATIONS IN QUARTERLY OPERATING RESULTS. Historically, the Company has
generally experienced fluctuating quarterly revenues and earnings caused by
varying portfolio performance and operating and interest costs. Given the
possibility of such fluctuations, the Company believes that quarterly
comparisons of the results of its operations during any fiscal year are not
necessarily meaningful and that results for any one fiscal quarter should not be
relied upon as an indication of future performance. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."

BROAD DISCRETION IN USE OF PROCEEDS. The principal purpose of this offering
is to increase the Company's working capital. The Company intends to use the net
proceeds of this offering to repay, in part, amounts outstanding under the
Revolver and for working capital and general corporate purposes. Accordingly,
the Company's management will have broad discretion as to the use of such net
proceeds without any action or approval by the Company's stockholders. See "Use
of Proceeds."

12
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the Notes, after deducting
underwriting discounts and estimated offering expenses payable by the Company,
are estimated to be approximately $18.5 million ($21.3 million if the
Underwriters' over-allotment option is exercised in full). The Company intends
to use the net proceeds of this offering to repay, in part, amounts outstanding
under the Revolver and for working capital and general corporate purposes. As of
December 31, 1996, the total amount outstanding under the Revolver was
approximately $40 million. Management believes that the Company's liquidity is
adequate to meet current obligations and future projected levels of financings
and to carry on normal operations.

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
September 30, 1996 and as adjusted to give effect to this offering and the
application of the estimated net proceeds therefrom. This table should be read
in conjunction with the Company's Consolidated Financial Statements and the
Notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------
<S> <C> <C>
ACTUAL AS ADJUSTED(1)
---------- --------------
(DOLLARS IN THOUSANDS)
Senior secured bank debt.............................................................. $ 58,574 $ 40,074
Senior secured limited recourse debt.................................................. 54,968 54,968
Senior Subordinated Notes............................................................. -- 20,000
Stockholders' equity:
Preferred stock, $1.00 par value per share: 5,000,000 shares authorized, none issued
and outstanding................................................................... -- --
Common stock, $0.01 par value per share: 15,000,000 shares authorized; 4,786,530
issued; and 4,686,530 shares outstanding (2)...................................... 48 48
Treasury stock (at cost): 100,000 shares............................................ (410) (410)
Additional paid-in capital.......................................................... 11,311 11,311
Retained earnings................................................................... 25,080 25,080
---------- --------------
36,029 36,029
Less deferred ESOP and SESOP compensation........................................... (1,961) (1,961)
---------- --------------
Total stockholders' equity........................................................ 34,068 34,068
---------- --------------
Total capitalization............................................................ $ 147,610 $ 149,110
---------- --------------
---------- --------------
</TABLE>

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

(1) Adjusted to give effect to the sale of $20,000,000 principal amount of the
Notes by the Company and the application of approximately $18.5 million of
net proceeds therefrom, taking into account an assumed underwriting discount
and estimated expenses of the offering, to repay senior secured bank debt.

(2) Includes 337,000 shares of restricted stock granted to certain key employees
of the Company, which shares are subject to certain Company performance and
employee service requirements prior to becoming fully vested. If the Company
does not meet the applicable performance requirements, or if the employee
does not meet the applicable service requirements, some or all of the
restricted stock held by that employee will revert to the Company and will
be retired or become treasury stock. See "Management--Executive
Compensation--STOCK OPTION AND STOCK INCENTIVE PLANS."

13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED
-------------------------------------------------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
DEC. 28, DEC. 26, DEC. 25, DEC. 31, DEC. 31, SEPT. 30, SEPT. 30,
1991 1992 1993 (1) 1994 1995 1995 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------

<CAPTION>
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Earned income on leases and notes... $ 25,565 $ 21,734 $ 17,095 $ 11,630 $ 12,924 $ 9,564 $ 13,447
Provision for losses................ (4,403) (4,307) (15,104) (754) (1,296) (877) (1,224)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net revenues.................... 21,162 17,427 1,991 10,876 11,628 8,687 12,223
Selling, general and administrative
expenses......................... 3,345 3,574 5,160 6,970 5,984 4,537 5,580
Interest, net....................... 12,816 10,609 8,979 3,156 4,964 3,636 5,649
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses........ 16,161 14,183 14,139 10,126 10,948 8,173 11,229
Operating profit (loss)............. 5,001 3,244 (12,148) 750 680 514 994
(Loss) on write-off of foreign
currency translation adjustment
(2).............................. -- -- -- -- (601) -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes... 5,001 3,244 (12,148) 750 79 514 994
Provision (benefit) for income
taxes............................ 1,819 1,260 (4,870) 300 204 202 390
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss)................... $ 3,182 $ 1,984 $ (7,278) $ 450 $ (125) $ 312 $ 604
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss) per share......... $ 0.65 $ 0.40 $ (1.48) $ 0.09 $ (0.03) $ 0.08 $ 0.15
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
<CAPTION>
Shares used to compute net income
(loss) per share................. 4,921,145 4,922,473 4,923,233 4,989,391 3,881,361 3,837,218 4,107,313
<S> <C> <C> <C> <C> <C> <C> <C>

OTHER DATA:
Leases and notes receivable
originated during period (3)..... $ 29,145 $ 25,161 $ 14,152 $ 32,609 $ 68,554 $ 46,030 $ 66,026
Number of leases and notes
originated during period (3)..... 1,450 1,575 745 1,590 2,800 1,960 2,600
Average amount financed per contract
originated during period (3)..... $ 20 $ 16 $ 19 $ 21 $ 24 $ 23 $ 25
Net charge-offs divided by average
net investment in leases and
notes (before allowance)......... 1.8% 3.4% 12.3% 2.9% 1.3% 0.9% 0.8%
Ratio of earnings to fixed charges
(4).............................. 1.39x 1.31x -- 1.24x 1.14x 1.14x 1.18x
EBITDA (5).......................... $ 18,690 $ 14,835 $ (474) $ 5,778 $ 7,383 $ 5,708 $ 9,461
Ratio of EBITDA to interest expense
(6).............................. 1.46x 1.40x -- 1.83x 1.49x 1.57x 1.67x
Pro forma ratio of EBITDA to
interest expense (5) (7)......... 1.56x
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-----------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AS
ACTUAL ADJUSTED(7)
---------- ----------
BALANCE SHEET DATA:
Cash and cash equivalents............. $ 4,323 $ 625 $ 16,600 $ 419 $ 861 $ 715 $ 715
Restricted cash....................... -- -- -- 7,936 5,610 6,751 6,751
Net investment in leases and notes.... 179,572 157,058 109,752 91,193 119,886 142,424 142,424
Total assets.......................... 185,168 158,857 130,437 103,148 130,739 153,262 154,762
Senior secured bank debt.............. 33,593 24,584 7,130 16,500 42,070 58,574 40,074
Senior secured limited recourse
debt............................... 68,000 50,000 50,000 41,024 46,453 54,968 54,968
Senior Subordinated Notes............. -- -- -- -- -- -- 20,000
Subordinated debt..................... 18,326 19,090 19,962 -- -- -- --
Total liabilities..................... 141,783 113,816 92,816 70,326 97,380 119,194 120,694
Total stockholders' equity............ 43,385 45,041 37,621 32,822 33,359 34,068 34,068
</TABLE>

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

(1) In 1993, the Company experienced a substantial decrease in new business,
increased selling, general and administrative costs and a substantial
adjustment to its loan loss reserves, in each case largely as a result of
the bankruptcy of Healthco, which previously had referred to the Company
substantially all of the Company's business.

(2) Reflects a one-time non-operating, non-cash loss on write-off of cumulative
foreign currency translation adjustments related to the Company's
discontinued Canadian operations.

14
<PAGE>
(3) For contracts originated by ACFC, originations reflect initial advances on
committed lines of credit. Excludes leases and notes receivable originated
by the Company's discontinued Canadian operations in 1991, 1992 and 1993.

SUMMARY QUARTERLY FINANCIAL INFORMATION AND OTHER DATA

The following table sets forth certain unaudited quarterly income statement
and financing contract information for each of the four quarters ending with the
quarter ended September 30, 1996. This data has been prepared on the same basis
as the audited financial statements contained elsewhere in this Prospectus and
includes all adjustments, consisting only of normal recurring adjustments,
necessary for the fair presentation of the information for the periods
presented, when read in conjunction with the Company's Consolidated Financial
Statements and related Notes thereto. Results for any previous fiscal quarter
are not necessarily indicative of results for the full year or for any future
quarter.
<TABLE>
<CAPTION>
FISCAL QUARTER ENDED
------------------------------------------
<S> <C> <C> <C> <C>
DEC. 31, MARCH 31, JUNE 30, SEPT. 30,
1995 1996 1996 1996
--------- --------- --------- ---------

<CAPTION>
(DOLLARS IN THOUSANDS EXCEPT PER SHARE
DATA)
<S> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Earned income on leases and notes............................... $ 3,360 $ 3,856 $ 4,547 $ 5,044
Provision for losses............................................ (419) (348) (452) (424)
--------- --------- --------- ---------
Net revenues.................................................. 2,941 3,508 4,095 4,620
Selling, general and administrative expenses.................... 1,447 1,647 1,867 2,066
Interest, net................................................... 1,328 1,609 1,894 2,146
--------- --------- --------- ---------
Total operating expenses...................................... 2,775 3,256 3,761 4,212
--------- --------- --------- ---------
Operating profit................................................ 166 252 334 408
(Loss) on write-off of foreign currency translation adjustment
(1)........................................................... (601) -- -- --
--------- --------- --------- ---------
Income (loss) before income taxes............................... (435) 252 334 408
--------- --------- --------- ---------
Provision for income taxes...................................... 2 100 130 160
--------- --------- --------- ---------
Net income (loss)............................................... $ (437) $ 152 $ 204 $ 248
--------- --------- --------- ---------
--------- --------- --------- ---------
Net income (loss) per share..................................... $ (0.11) $ 0.04 $ 0.05 $ 0.06
--------- --------- --------- ---------
--------- --------- --------- ---------
Shares used to compute net income (loss) per share.............. 3,906,637 4,013,862 4,069,795 4,145,270

OTHER DATA (2):
Leases and notes receivable originated during period............ $ 22,524 $ 20,282 $ 23,354 $ 22,389
Number of leases and notes originated during period............. 830 796 923 883
Average amount financed per contract originated during period... $ 27 $ 25 $ 25 $ 25
</TABLE>

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

(1) Reflects one-time, non-operating, non-cash loss on cumulative write-off of
foreign currency translation adjustments related to the Company's
discontinued Canadian operations.

(2) For contracts originated by ACFC, originations reflect initial advances on
committed lines of credit.

15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FINANCING CONTRACT ACCOUNTING

OVERVIEW

The Company provides financing primarily to healthcare providers throughout
the United States. The Company finances dental, ophthalmic, general medical,
chiropractic, and veterinary equipment, as well as leasehold improvements,
office furniture and equipment, working capital and certain other costs involved
in opening or maintaining a healthcare provider's office. The Company
principally engages in two types of equipment financing transactions with its
customers, which transactions are classified for accounting purposes either as
direct finance leases (which encompasses all leases) or notes. In a lease
transaction, the Company takes title to the financed equipment which is
delivered by the vendor to the customer. In a note transaction, the Company does
not take title to or retain a residual interest in any underlying equipment. The
Company does not carry any inventory in either type of transaction. The Company
also finances the acquisition of healthcare practices by healthcare providers,
and engages in asset-based lending through its wholly-owned subsidiary ACFC.
Except for approximately $18 million of ACFC receivables, substantially all of
the Company's financing contracts with its customers are noncancellable and
provide for a full payout at a fixed financing rate with a fixed payment
schedule over a term of one to seven years.

When a financing transaction is initially activated, the Company records the
minimum payments and, in the case of leases, the estimated residual value
associated with the transaction. The difference between the sum of the payments
due plus residual, if applicable, less the cost of the transaction is recorded
as unearned income. The unearned income is recognized as revenue over the life
of the transaction using the interest method in essentially all cases. No later
than 145 days after scheduled payments become delinquent, recognition of revenue
for that transaction is suspended. Earned income includes fee income from
service charges on portfolio accounts, gains and losses on residual transactions
and asset sales, as well as miscellaneous income items, in each case net of
initial direct cost amortization.

The Company records an allowance for losses in its portfolio in connection
with its financing transactions. The extent of the allowance is based on a
specific analysis of potential loss accounts, delinquencies and historical loss
experiences. An account is written off when deemed uncollectible. The Company
occasionally repossesses equipment from customers who have defaulted on their
obligations to the Company; however, the Company held no such equipment for sale
at December 31, 1996 or December 31, 1995.

DIRECT FINANCE LEASES

Equipment financing transactions are classified as direct finance leases
when the Company retains a residual interest in the equipment being financed and
therefore has a continuing economic interest in the relevant financing contract.
In addition, collectibility of the contract payments must be reasonably certain
and the transaction must meet at least one of the following criteria: (i) the
contract transfers ownership of the equipment to the customer at the end of the
contract term, (ii) the contract contains a bargain purchase option, (iii) the
contract term at inception is at least 75% of the estimated economic life of the
financed equipment, or (iv) the present value of the minimum payments required
of the customer is at least 90% of the fair market value of the equipment at the
inception of the contract. For direct finance leases, the Company records the
total contract payments, estimated unguaranteed residual value and initial
direct costs (consisting of sales commissions, referral fees and other
origination costs) as the gross investment in the direct finance lease. The
difference between the gross investment in the direct finance lease and the cost
to the Company of the equipment being financed is recorded as unearned income.
Interest income is recognized over the term of the contract by amortizing the
unearned income using the interest method.

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NOTES RECEIVABLE

Transactions are classified as "Notes Receivable" when no residual interest
is retained by the Company and the customer takes title to any equipment.
Approximately one-half of the Company's equipment financings, and all of its
practice financing and asset-based lending, are accounted for as Notes
Receivable. Earnings are recorded on a similar basis as that described above for
leases, except that, for equipment Notes Receivable, gross investment does not
include residual estimates.

GAIN ON SALE OF FINANCING TRANSACTIONS

As part of its operating strategy, the Company occasionally sells its
financing contracts to other parties. Income is recorded at the time of the sale
in an amount that is approximately equal to the present value of the anticipated
future cash flow, partially offset by initial direct costs and expenses and
estimated credit losses under certain recourse provisions of the related sale
agreements. Generally, the Company retains the servicing of financing contracts
that are sold. Income equal to the estimated future costs of servicing these
financing contracts is deferred and recognized in proportion to the estimated
periodic servicing costs.

RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995

Earned income from leases and notes for the nine months ended September 30,
1996 was approximately $13.4 million as compared to approximately $9.6 million
for the same period in 1995. This increase of approximately 40% was due
primarily to the increase in the net investment in leases and notes and the gain
from sales of finance receivables (principally practice finance receivables) in
1996. The increase in net investment resulted from an increase of approximately
43% in the Company's financing contract originations for the nine month period
in 1996 to approximately $66.0 million from approximately $46.0 million for the
same period in 1995. Earned income on leases and notes is a function of the
amount of net investment in leases and notes and the level of financing contract
interest rates. Earned income is earned over the life of the net investment in
leases and notes.

Net interest expense for the nine months ended September 30, 1996 was
approximately $5.6 million (42% of earned income) compared to approximately $3.6
million (38% of earned income) for the same period in 1995, an increase of 55%.
The increase in amount was due primarily to a 44% increase in average debt
levels from 1995 to 1996, which resulted from borrowings to finance the
Company's financing contract originations. The increase as a percentage of
earned income was due to higher interest rates on debt in 1996 as compared to
1995.

Net interest margin for the nine months ended September 30, 1996 was
approximately $7.8 million (58% of earned income) as compared to approximately
$5.9 million (62% of earned income) in 1995. The increase in amount was due to
higher earnings on a higher balance of earning assets. The decline in percentage
of earned income was due to higher average rates of interest during the 1996
period as compared to the 1995 period.

The provision for losses for the nine month period ended September 30, 1996
was approximately $1.2 million (9% of earned income) compared to $877,000 (9% of
earned income) for the same period in 1995. This increase in amount resulted
from higher levels of new financings in 1996. The allowance for losses at
September 30, 1996 was approximately $4.8 million (3.4% of net investment in
leases and notes) as compared to approximately $4.6 million (4.2% of net
investment in leases and notes) for the same period in 1995. Net charge-offs
were approximately $1 million in each period.

Selling, general and administrative costs for the nine months ended
September 30, 1996, were approximately $5.6 million (42% of earned income) for
that period, as compared to approximately $4.5 million (47% of earned income)
for the same period in 1995. This increase in amount resulted from

17
<PAGE>
increased staffing and systems and support costs required by higher volumes of
financing activity in 1996 and anticipated near-term growth.

The Company's income before income taxes for the nine months ended September
30, 1996, was $994,000 compared to $514,000 for the same period in 1995. The
effective tax rate remained at approximately 40% for both periods.

The Company's net income for the nine months ended September 30, 1996 was
$604,000 or $0.15 per share compared to $312,000 or $0.08 per share for the same
period in 1995. The increase in the nine month period of 1996 over 1995 was due
to higher earned income from leases and notes offset by increases in the
provision for losses, higher selling, general and administrative expenses,
higher average debt levels and higher average rates of interest on debt.

At September 30, 1996, the Company had approximately $44 million of customer
applications which had been approved but had not yet resulted in a completed
transaction, compared to approximately $34 million of such customer applications
at September 30, 1995. Not all approved applications will result in completed
financing transactions with the Company.

FISCAL YEARS ENDED DECEMBER 31, 1995 AND DECEMBER 31, 1994

Earned income from leases and notes for fiscal 1995 was approximately $12.9
million compared to approximately $11.6 million in 1994. This increase of 11%
resulted primarily from an increase of 6% in the average net investment in
leases and notes from 1994 to 1995. The Company financed new portfolio assets at
a cost of approximately $68.6 million in 1995 compared to approximately $32.6
million in 1994, a 110% increase in the value of assets financed.

Net interest expense for 1995 was approximately $5.0 million (38% of earned
income) compared to approximately $3.2 million (27% of earned income) in 1994.
The 57% increase in amount was due primarily to a 43% increase in the level of
debt required to support the increase in new portfolio assets and higher average
interest rates in 1995. The Company funded its business in 1995 in part with
fixed rate and revolving credit arrangements. See "--Liquidity and Capital
Resources" and Note B to the Company's Consolidated Financial Statements
contained elsewhere in this Prospectus.

Net interest margin for fiscal 1995 was approximately $8.0 million (62% of
earned income), compared to approximately $8.5 million (73% of earned income) in
fiscal 1994. The declines in both the amount of net interest margin and its
percentage of earned income were due to the Company's higher levels of debt at
higher average interest rates on debt in 1995 as compared to 1994.

The provision for losses was approximately $1.3 million (10% of earned
income) in 1995 as compared to $754,000 (7% of earned income) in 1994. The
allowance for losses at December 31, 1995 was approximately $4.5 million (3.8%
of net investment in leases and notes), compared to approximately $4.6 million
(5.0% of net investment in leases and notes) at December 31, 1994. Net
charge-offs were approximately $1.4 million in 1995 compared to approximately
$3.1 million in 1994. The increase in the provision for losses was due to the
higher level of financing contract originations and the Company's continuing
adjustment of the provision for losses to reflect the risks and diversification
in its portfolio.

Selling, general and administrative expenses were approximately $6.0 million
(46% of earned income) in fiscal year 1995 compared to approximately $7.0
million (60% of earned income) in fiscal year 1994. The decrease in amount was
due to a reduction in expenses related to the Company's discontinued Canadian
operations in 1995 and the reversal of certain accruals which had previously
been included in general reserves to reflect the uncertain impact on the Company
of the bankruptcy of Healthco in 1993.

In 1994, the Company discontinued its Canadian operations as part of its
strategic plan to focus on its business in the United States. Consistent with
this strategy, and in an effort to begin to liquidate its Canadian operations,
the Company in 1994 sold a large portion of its Canadian portfolio to Newcourt
Credit Group, Inc. ("Newcourt") for approximately $7.0 million and used most of
the proceeds to repay third party debt. Some of the proceeds were repatriated to
the Company. As part of the sale agreement,

18
<PAGE>
the Company entered into a service agreement whereby Newcourt agreed to manage
certain accounts over the next two-year period ending June 30, 1996. Since the
Company no longer generated new business in Canada, these managed accounts were
written down to estimated net realizable value. As a result of the transaction
with Newcourt the Company's total investment in Canada decreased from
approximately $3.8 million to approximately $2.1 million at December 31, 1994.
In 1995, the Company continued to liquidate its Canadian assets and repatriated
another $700,000 to the United States. At December 31, 1995, after currency
adjustments, the Company's investment in Canada was less than $800,000.
Accordingly, the Company was deemed to have substantially liquidated its
Canadian investment. Therefore, in accordance with Statement of Financing
Accounting Standards No. 52 ("Foreign Currency Translation"), the Company
recognized in earnings the cumulative translation losses incurred in prior years
that had been deferred as a separate component of equity.

The Company had income before income taxes in 1995 of $79,000 compared to
$750,000 in 1994. The provision for income taxes was $204,000 in 1995 compared
to $300,000 in 1994. The provision for income taxes in 1995 was 258% of income
before income taxes, due to the fact that the $601,000 foreign currency
translation adjustment related to the Company's Canadian operations was not
deductible. In addition, the Company had a $128,000 reduction in its tax
provision for a 1995 Canadian provincial refund of taxes from prior years.

The Company's net loss was $125,000 or $0.03 per share in 1995 compared to
net income of $450,000 or $0.09 per share in 1994. The decrease in 1995 was
primarily caused by the recognition of a non-operating, non-cash write-off of a
cumulative foreign currency translation adjustment of $601,000 related to the
Company's discontinued Canadian operations. The Company had operating income in
1995 of $680,000 compared to $750,000 in 1994. This decrease in operating income
was due to a higher volume of financing originations, which required the Company
to record a higher provision for losses, and an increase in interest expense,
partially offset by an increase in earned income and a decrease in selling,
general and administrative expenses.

The earnings per share impact from the Company's repurchase and retirement
of treasury shares in 1995 was less than $0.01. Earnings per share were
unfavorably affected in 1995 by $0.16 per share due to the 1995 write-off of the
Company's cumulative translation adjustment from the substantial liquidation of
its Canadian operations.

FISCAL YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 25, 1993

Earned income from leases and notes for 1994 was approximately $11.6 million
compared to approximately $17.1 million in 1993. This decline of 33% resulted
primarily from a reduction of average net investment in leases and notes between
1993 and 1994 of 26%. However, as the Company made the transition to an
independent, open-market financial services company in 1994, it financed
portfolio assets at a cost of approximately $32.6 million in 1994 compared to
approximately $16.4 million in 1993, an approximately 99% increase in the amount
of assets financed. The Company reduced its cost of capital as a result of
securitization and revolving line of credit transactions. By reducing its cost
of capital, the Company was able to maintain competitive rates which it charged
to its customers. See "--Liquidity and Capital Resources" and Note B to the
Company's Consolidated Financial Statements contained elsewhere in this
Prospectus.

Net interest expense for 1994 was approximately $3.2 million (27% of earned
income) compared to approximately $9.0 million (53% of earned income) in 1993.
The 65% decrease in amount resulted from a 30% reduction in average level of
borrowings, as well as reduced overall interest rates on outstanding debt. The
Company funded its business in 1994 in part with fixed rate and revolving credit
arrangements.

Net interest margin for fiscal 1994 was approximately $8.5 million (73% of
earned income), compared to approximately $8.1 million (47% of earned income) in
fiscal 1993. The increase in both amount and percentage of net income was caused
by lower average debt levels and lower average rates of interest on debt in 1994
as compared to 1993.

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<PAGE>
The provision for losses was $754,000 (7% of earned income) in 1994 compared
to approximately $15.1 million (88% of earned income) in 1993. The allowance for
losses at December 31, 1994 of approximately $4.6 million (5% of net investment
in leases and notes) compared to approximately $6.9 million (6% of net
investment in leases and notes) at December 25, 1993. Net charge-offs were
approximately $3.1 million in 1994 compared to approximately $17.4 million in
1993. The 1994 amount included approximately $1.2 million of charge-offs taken
against the portfolio of the Company's Canadian subsidiary. The decrease in the
provision for losses in 1994 was due in part to the decline in portfolio size,
an increase in the allowance for losses in 1993, and management's continuing
analysis of the risks and diversification in its current portfolio of assets.
The loss exposure to the Company from certain accounts generated in the mid- to
late 1980s decreased significantly to approximately 8% of the Company's
portfolio at December 31, 1994. This category of accounts represented a
substantial portion of the 1993 provision for losses. Management believes that
any exposure to these accounts at September 30, 1996 is not material to the
Company's business, operating results and financial condition.

Selling, general and administrative expenses were approximately $7.0 million
(60% of earned income) in 1994 compared to approximately $5.2 million (30% of
earned income) in 1993. As a result of the Healthco bankruptcy, the Company
became responsible for providing services which were formerly provided by
Healthco under agreements between the two companies, including computer, tax
compliance, human resources and certain advertising services. After the Healthco
bankruptcy the Company hired additional senior management and sales and support
personnel to assist the Company in its transition to an independent financial
services organization. In addition, as discussed above, the Company's
originations increased by approximately 130% in 1994 over 1993 (excluding
Credident's operations). The Company also incurred substantial legal fees in
connection with the Healthco bankruptcy and the transition of the Company to an
open-market financial services organization.

The Company had income before income taxes in 1994 of $750,000 compared to a
loss of approximately $12.1 million in 1993. The provision for income taxes was
$300,000 in 1994 compared to a credit of approximately $4.9 million in 1993.

The Company's net income of $450,000 or $0.09 per share in 1994 compared
with a loss of approximately $7.3 million or $1.48 per share in 1993. The return
to profitability was due principally to a decrease in the provision for losses
and interest expense, partially offset by a decline in earned income on
portfolio assets as well as an increase in selling, general and administrative
costs as part of the Company's continuing transition into an independent,
open-market financial services company.

Despite the adverse developments arising out of the Healthco bankruptcy in
1993, the Company replaced the business previously generated by Healthco with
referrals from other equipment vendors. The Company established relationships
with dental, medical, and other healthcare equipment distributors representing
diversified sources of new business. All of the new financing transactions
entered into by the Company in 1994 involved equipment vendors other than
Healthco.

LIQUIDITY AND CAPITAL RESOURCES

The Company's financing activities require substantial amounts of capital,
and its ability to originate new financing transactions is dependent on the
availability of cash and credit. The Company currently has access to credit
under the Revolver, its securitization transactions with Bravo, and a loan
secured by financing contracts. The Company obtains cash from sales of its
financing contracts to various savings banks and from lease and note payments.
Substantially all of the assets of HPSC and ACFC and the stock of ACFC have been
pledged to HPSC's lenders as security under HPSC's various short- and long-term
credit arrangements. Borrowings under the securitizations are secured by
financing contracts, including the amounts receivable thereunder, and the assets
securing the financing contracts. The securitizations are limited recourse
obligations of the Company, structured so that the cash flow from the
securitized financing contracts services the debt. In these limited recourse
transactions, the Company retains some risk of loss because it shares in any
losses incurred, and it may forfeit the residual interest, if any, it has in the
securitized financing contracts should a default occur. The Company's borrowings
under the Revolver are

20
<PAGE>
full recourse obligations of HPSC. Most of the Company's borrowings under the
Revolver are used to temporarily fund new financing contracts entered into by
the Company and are repaid with the proceeds obtained from other full or limited
recourse financings and cash flow from the Company's financing transactions.

At September 30, 1996, the Company had approximately $7.5 million in cash,
cash equivalents and restricted cash as compared to approximately $6.5 million
at the end of 1995 and approximately $8.4 million at the end of 1994. As
described in Note B to the Company's Consolidated Financial Statements included
in this Prospectus, approximately $6.8 million of such cash was restricted
pursuant to financing agreements as of September 30, 1996, compared to
approximately $5.6 million at December 31, 1995 and approximately $7.9 million
at December 31, 1994.

Cash provided by operating activities was approximately $2.6 million for the
nine months ended September 30, 1996 compared to approximately $2.5 million in
the same period of 1995. Cash used in investing activities was approximately
$26.6 million for the nine months ended September 30, 1996 compared to
approximately $20.2 million in the same period of 1995. Cash provided by
financing activities was approximately $23.9 million for the nine months ended
September 30, 1996 compared to cash provided by financing activities of
approximately $18.4 million for the same period in 1995.

Cash provided by operating activities was approximately $4.5 million for the
year ended December 31, 1995, compared to cash used in operating activities of
approximately $2.6 million for 1994. Cash used in investing activities was
approximately $32.4 million for the year ended December 31, 1995, compared to
cash provided by investing activities of approximately $15.7 million in 1994.
Cash provided by financing activities was approximately $28.3 million for 1995
compared to cash used in financing activities of approximately $29.3 million in
1994.

On December 27, 1993, the Company raised $70.0 million through an asset
securitization transaction in which its wholly-owned subsidiary, Funding I,
issued senior secured notes (the "Funding I Notes") at a rate of 5.01%. The
Funding I Notes are secured by a portion of the Company's portfolio which it
sold in part and contributed in part to Funding I. Proceeds of this financing
were used to retire $50.0 million of 10.125% senior notes due December 28, 1993,
and $20.0 million of 10% subordinated notes due January 15, 1994. The Funding I
Notes had an outstanding balance of approximately $7.0 million at December 31,
1996. In July and August of 1996, the level of delinquencies in Funding I rose
above certain levels, as defined in the related agreements, and triggered a
payment restriction event. This restriction had the effect of "trapping" any
cash distribution that the Company otherwise would have been eligible to
receive. The event was considered a technical default under the Revolver, which
default was waived by the lending banks in September 1996. In September 1996,
delinquency levels improved and the payment restrictions were removed. A payment
restriction event is not unusual during the later stages of a static pool
securitization and may occur again before Funding I is fully paid out. The
Revolver Agreement was amended and restated on December 12, 1996, amending the
default provisions with respect to Funding I payment restriction events to
conform to the default provisions of the Funding I agreements. As a result, a
payment restriction event under Funding I will not constitute a default under
the Revolver unless such event continues for at least six months. There can be
no assurance that any future defaults will be waived by the lending banks. Under
the terms of the Funding I securitization, when the principal balance of the
Funding I Notes equals the balance of the restricted cash in the facility,
Funding I must automatically pay the Funding I Notes and terminate. This event
is expected to occur during fiscal 1997, prior to the scheduled termination of
Funding I. In the event of an early termination, the Company would incur a non-
cash, non-operating charge against earnings representing the early recognition
of certain unamortized deferred transaction origination costs. At December 31,
1996, these unamortized costs were approximately $400,000 and were amortizing at
approximately $17,000 per month.

The Revolver Agreement, as amended and restated, increased the Company's
availability under the Revolver to $95.0 million. Under the Revolver Agreement,
the Company may borrow at variable rates of prime plus 0.25% to 0.50% and at
LIBOR plus 1.75% to 2.00%, dependent on certain performance covenants. At
December 31, 1996, the Company had approximately $40 million outstanding under
this

21
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facility and approximately $55 million available for borrowing, subject to
borrowing base limitations. The Revolver Agreement currently is not hedged and
is, therefore, exposed to upward movements in interest rates.

As of January 31, 1995, the Company, along with its newly-formed,
wholly-owned, special-purpose subsidiary Bravo, established a $50.0 million
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 interests 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 portfolio. HPSC may make additional sales to
Bravo 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 CapMAC
pursuant to the terms of the agreement. The Company had approximately $67.5
million outstanding under the Bravo facility at December 31, 1996, and, in
connection with this facility, had 14 separate interest rate swap agreements
with The First National Bank of Boston with a total notional value of
approximately $65.2 million. Effective November 5, 1996, the Bravo facility was
increased to $100.0 million and amended to provide that up to $30.0 million of
such facility may be used as sales of receivables from Bravo for accounting
purposes.

In April 1995, the Company entered into a fixed rate, fixed term loan
agreement with Springfield Institution for Savings ("SIS") under which the
Company borrowed approximately $3.5 million at 9.5% subject to certain recourse
and performance covenants. The Company had approximately $2.4 million
outstanding under this agreement at December 31, 1996. Also in fiscal 1995, the
Company entered into a sale agreement with SIS under which it sold approximately
$1.7 million of financing contracts, subject to certain recourse covenants and
servicing of these contracts by the Company, and recognized a net gain of
approximately $53,000 in connection with the sale. Through December 31, 1996,
the Company had entered into several similar sale agreements with savings banks
under which it sold a total of approximately $20.6 million of financing
contracts and recognized a net gain of approximately $1.2 million, which is
included in earned income from leases and notes for the nine month period.

Amortization of debt discount of $0, $38,000, and $872,000 in 1995, 1994 and
1993, respectively, is included in interest expense.

The Company's existing senior secured debt, issued in connection with
certain securitization transactions as shown on the balance sheet contained in
the Company's Consolidated Financial Statements appearing elsewhere in this
Prospectus, reflect its approximate fair market value. The fair market value is
estimated based on the quoted market prices for the same or similar issues or on
the current rates offered to the Company for debt of the same maturity.

Management believes that the Company's liquidity, resulting from the
availability of credit under the Revolver, the Bravo facility and the loan from
SIS, along with cash obtained from the sales of its financing contracts and from
internally generated revenues and the anticipated net proceeds of this offering,
is adequate to meet current obligations and future projected levels of
financings and to carry on normal operations. In order to finance adequately its
anticipated growth, the Company will continue to seek to raise additional
capital from bank and non-bank sources, make selective use of asset sale
transactions in 1997 and use its current credit facilities. 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.

Inflation in the form of rising interest rates could have an adverse impact
on the interest rate margins of the Company and its ability to maintain adequate
earning spreads on its portfolio assets.

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CERTAIN ACCOUNTING PRONOUNCEMENTS

The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." Current tax liabilities or assets are recognized,
through charges or credits to the current tax provision, for the estimated taxes
payable or refundable for the current year. Net deferred tax liabilities or
assets are recognized, through charges or credits to the deferred tax provision,
for the estimated future tax effects, based on enacted tax rates, attributable
to temporary differences. Deferred tax liabilities are recognized for temporary
differences that will result in amounts taxable in the future, and deferred tax
assets are recognized for temporary differences and tax benefit carryforwards
that will result in amounts deductible or creditable in the future.

Effective January 1, 1995, the Company adopted prospectively Statement of
Financial Accounting Standards (SFAS) No. 114, "Accounting by Creditors for
Impairment of a Loan," as amended by SFAS No. 118, "Accounting by Creditors for
Impairment of a Loan--Income Recognition and Disclosure." These standards apply
to the Company's practice acquisition loans and asset-based lending. The
standards require that a loan be classified and accounted for as an impaired
loan when it is probable that the Company will be unable to collect all
principal and interest due on the loan in accordance with the loan's original
contractual terms. Impaired loans are valued based on the present value of
expected future cash flows, using the interest rate in effect at the time the
loan was placed on nonaccrual status. A loan's observable market value or
collateral value may be used as an alternative valuation technique. Impairment
exists when the recorded investment in a loan exceeds the value of the loan
measured using the above-mentioned valuation techniques. Such impairment is
recognized as a valuation reserve, which is included as a part of the Company's
allowance for losses. The adoption of these new standards did not have a
material impact on the Company's allowance for losses.

In October 1995, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123, "Accounting for Stock-Based Compensation." This standard was
effective January 1, 1996. The standard encourages, but does not require,
adoption of a fair value-based accounting method for stock-based compensation
arrangements and would supersede the provisions of Accounting Principles Board
Opinion No. 25 (APB No. 25), "Accounting for Stock Issued to Employees." An
entity may continue to apply APB No. 25 provided the entity discloses its pro
forma net income and earnings per share as if the fair value-based method had
been applied in measuring compensation cost. The Company continues to apply APB
No. 25 and to disclose the pro forma information required by SFAS No. 123.

Statement of Financial Accounting Standards No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities"
(SFAS 125), effective for the Company on January 1, 1997, provides new methods
of accounting and reporting for transfers and servicing of financial assets and
extinguishments of liabilities. SFAS No. 127 has delayed the effective date of
certain sections of SFAS 125 until January 1, 1998. The Company's adoption of
the appropriate sections of SFAS 125 is not expected to have a material effect
on the Company's financial position or results of operations.

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BUSINESS

GENERAL

The Company is a specialty finance company engaged primarily in financing
healthcare providers throughout the United States. To date, the largest part of
the Company's revenues has been derived from its financing of healthcare
equipment. HPSC also finances the purchase of healthcare practices, particularly
dental practices. Management believes that the Company is a leading provider of
financing to dental professionals in the United States, with over 20 years of
experience in this market. Through its subsidiary, ACFC, the Company also
provides asset-based lending to a variety of businesses in the northeastern
United States.

HPSC provides financing for equipment and other practice-related expenses to
the dental, ophthalmic, general medical, chiropractic and veterinary
professions. On a consolidated basis, approximately 62% of the Company's
business arises from equipment financing, approximately 28% from related
financing, including practice finance, leasehold improvements, office furniture,
working capital and supplies, and approximately 10% from asset-based lending.
HPSC principally competes in the portion of the healthcare finance market where
the size of the transaction is $250,000 or less, sometimes referred to as the
"small-ticket" market. The average size of the Company's financing transactions
in 1996 has been approximately $25,000. In connection with its equipment
financings, the Company enters into noncancellable installment sales and lease
contracts, substantially all of which provide for a full payout at a fixed
interest rate over a term of one to seven years. The Company markets its
financing services to healthcare providers in a number of ways, including direct
marketing through trade shows, conventions and advertising, through its sales
staff with 14 offices in nine states and through cooperative arrangements with
equipment vendors.

At December 31, 1996, HPSC's outstanding leases and notes receivable owned
and managed were approximately $190 million, consisting of approximately 11,100
active contracts. HPSC's financing contract originations in 1996 were
approximately $87.0 million compared to approximately $61.3 million in 1995, an
increase of 42%, which compared to financing contract originations of
approximately $28.4 million in 1994, an increase of 116%. The following table
summarizes HPSC's financing contract originations for fiscal years 1994 through
1996 (excluding ACFC originations).

HPSC ORIGINATIONS BY MARKET (1)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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<S> <C> <C> <C> <C> <C> <C>
1994 1995 1996
------------------------ ------------------------ ------------------------

<CAPTION>
DOLLAR PERCENTAGE OF DOLLAR PERCENTAGE OF DOLLAR PERCENTAGE OF
MARKET AMOUNT ORIGINATIONS AMOUNT ORIGINATIONS AMOUNT ORIGINATIONS
- --------------------------------------------- --------- ------------- --------- ------------- --------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Dental....................................... $ 19,000 67.0% $ 29,000 47.0% $ 46,000 53.0%
Other Medical (2)............................ 9,400 33.0% 32,000 53.0% 41,000 47.0%
--------- ------------- --------- ------------- --------- -------------
Total.................................... $ 28,400 100.0% $ 61,000 100.0% $ 87,000 100.0%
--------- ------------- --------- ------------- --------- -------------
--------- ------------- --------- ------------- --------- -------------
</TABLE>

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

(1) Items financed include equipment (through leases and notes), leasehold
improvements, working capital, supplies, as well as practice finance.

(2) Includes financing contracts for the ophthalmic, general medical,
chiropractic and veterinary professions.

ACFC, the Company's wholly-owned subsidiary, provides asset-based financing,
principally in the northeastern United States, for companies which cannot
readily obtain traditional bank financing. The ACFC loan portfolio generally
provides the Company with a greater spread over its borrowing costs than the
Company can achieve in its healthcare financing business. The Company
anticipates that it will expand its asset-based financing business. The
following table summarizes ACFC's line of credit originations for fiscal 1994
and 1995 and for the nine months ended September 30, 1996.

24
<PAGE>
ACFC ORIGINATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------ NINE MONTHS ENDED
1994 1995 SEPTEMBER 30, 1996
----------------- ----------------- ------------------
<S> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Amount of Originated Lines of Credit................... $ 5,000 $ 14,000 $ 11,000
Balance Outstanding (period end)....................... $ 4,000 $ 12,000 $ 18,000
Number of Lines of Credit Originated................... 2 8 9
</TABLE>

The continuing increase in the Company's originations of financing contracts
and lines of credit resulted in a 48% increase in the Company's revenues for the
nine month period ended September 30, 1996, as compared with the same period in
1995, and an 11% increase in the Company's revenues for fiscal year 1995
compared with fiscal year 1994. This percentage increase in revenues is lower
than the percentage increase in originations because revenues consist of earned
income on leases and notes, which is a function of the amount of net investment
in leases and notes and the level of interest rates, and is recognized over the
life of the financing contract, while originations are recognized at the time of
origination.

BUSINESS STRATEGY

The Company's strategy is to expand its business and enhance its
profitability by (i) increasing its share of the dental equipment financing
market, the Company's traditional market, as well as by expanding its activities
in other healthcare markets; (ii) diversifying the Company's revenue stream
through its practice finance and asset-based lending businesses; (iii)
emphasizing service to vendors and customers; (iv) increasing its direct sales
and other marketing efforts; (v) maintaining and increasing its access to low-
cost capital and managing interest rate risks; (vi) continuing to manage
effectively its credit risks; and (vii) capitalizing on information technology
to increase productivity and enable the Company to manage a higher volume of
financing transactions. Important components of the Company's strategy include:

- INCREASE HEALTHCARE EQUIPMENT FINANCING. The Company's goal is to increase
its share of the dental equipment financing market, as well as to expand
its activities in other healthcare markets, such as the ophthalmic,
general medical, chiropractic and veterinary professions. The Company is
pursuing this goal by hiring sales personnel with experience in financing
for those professions, through direct sales calls and advertising and by
applying the Company's experience in the dental profession to other
medical professions. The Company has increased its share of the dental
equipment financing market in each year since 1993 and believes that it
can increase its market share in other targeted professions through its
sales and marketing efforts and high level of service. The Company
believes that it has benefited and will continue to benefit from
technological advances which stimulate the demand for new and upgraded
healthcare equipment. The Company also believes that regulatory trends in
the healthcare professions have resulted in greater demand for outpatient
services, which may result in greater need for medical outpatient
equipment and supporting office equipment, including office automation
equipment. The Company intends to pursue these potential opportunities for
new financing business. This Note offering will increase the Company's
capital base, thereby permitting the Company to increase its financing
activity.

- DIVERSIFY REVENUE STREAM. In addition to retaining and increasing its
share of the healthcare equipment financing market, the Company plans to
expand its presence in the practice finance and asset-based lending
markets. For the nine months ended September 30, 1996, practice finance
transactions accounted for approximately 18% of HPSC's financing contract
originations. HPSC has originated approximately 260 practice finance loans
aggregating approximately $24.8 million over the past three years. In
addition to this business being profitable on a stand-alone basis,
management believes that practice finance earns HPSC substantial goodwill
among healthcare providers. Asset-based lending through ACFC accounts for
approximately 14% of the Company's revenues on a consolidated basis. ACFC
has entered into 19 asset-based lending transactions since its inception
in 1994, totaling $30 million in lines of credit, and currently has
approximately $18

25
<PAGE>
million of loans outstanding. The Company anticipates that it will expand
its asset-based financing business.

- EMPHASIZE SERVICE TO VENDORS AND CUSTOMERS. The Company believes that
healthcare providers seek financing through the Company in large part due
to the high level of service it provides to both customers and vendors,
including the Company's familiarity with the specialized needs of dental
and medical professionals, the speed and convenience of financing
equipment through the Company and the Company's established relationships
with equipment vendors. The Company competes with other providers of
financing services for the business of vendors by ensuring that vendors in
approved equipment financing transactions are paid promptly for the
equipment, usually within one day of delivery to the customer. The Company
intends to continue to provide equipment vendors with timely, convenient
and competitive financing for their equipment sales and with a variety of
other value-added services that promote both the vendors' equipment sales
and the selection of the Company to provide financing, and thereby expects
to continue to obtain referrals for additional financing transactions. The
Company also will continue to emphasize customer service, which includes
the flexibility to customize financing arrangements to the needs of
individual healthcare providers. In most cases, the Company's sales
representatives work directly with the vendors' potential purchasers,
providing them with the guidance necessary to complete the equipment
financing transaction. The Company believes that such "consultative
financing" has enhanced, and will continue to enhance, customer
satisfaction and loyalty.

- INCREASE DIRECT SALES AND OTHER MARKETING EFFORTS. The Company currently
has sales and marketing personnel located in 14 offices across the United
States. The Company intends to open additional sales offices and to
continue to hire sales staff with significant prior experience in the
healthcare financing business. In addition to promoting its financing
services through its sales and marketing personnel, the Company relies on
various equipment financing referral sources and relationships with
vendors and manufacturers of dental, medical and other equipment and
intends to further leverage these relationships. Management believes that
this marketing approach is more effective than isolated solicitations of
equipment purchasers. The Company also expects to continue to broaden its
customer base through national advertising in trade journals and
magazines, by participation in trade shows and through the broad
dissemination of literature describing the Company's financing programs.

- REDUCE BORROWING COSTS AND MANAGE INTEREST RATE RISKS. In order to reduce
its borrowing costs and manage interest rate risks, the Company seeks to
match-fund its financing contracts through a variety of funding sources.
Currently the Company has access to funding through the $95 million
Revolver and the $100 million Bravo asset securitization facility, as well
as its asset sales to, and loans from, a number of savings banks. The
Company completed the Funding I and Bravo asset securitizations to take
advantage of the significantly lower cost of funds available under these
facilities, as compared with the Company's bank borrowings, with which to
finance its contract originations. The Company's recently completed
amendment to its Bravo asset securitization facility permits it to sell up
to $30 million of financing assets under that program on a limited
recourse basis. The Company will continue to seek advantageous sources of
credit, possibly including additional securitizations and assets sales, if
appropriate.

- MANAGE CREDIT RISK. The Company employs comprehensive credit review
procedures. The credit background of each potential customer is checked
with one or more commercial credit reporting agencies, including TRW Inc.,
Equifax Inc., Trans Union Corporation and Dun & Bradstreet Corporation.
Appropriate professional organizations may be consulted regarding the
customer's professional status. In addition to a customer's credit
profile, information such as the equipment type and vendor may be
considered in some circumstances. The delinquency rate (based on
contractual balances more than 60 days past due) of the Company's
equipment financing contract portfolio has declined from 11.0% in fiscal
year 1994 to 4.2% at December 31, 1996. The Company believes that its
delinquency rate has declined because of (i) the Company's comprehensive
on-line

26
<PAGE>
credit evaluation procedure to screen financing applications, (ii) the
Company's improved collection procedures and (iii) growth in the Company's
portfolio of financing contracts. Management believes that the Company's
credit and loss experience compares favorably with other "small-ticket"
equipment finance companies. The Company will continue its thorough credit
application screening process and will seek to maintain the decline in its
delinquency rate.

- CAPITALIZE ON INFORMATION TECHNOLOGY. The Company has developed automated
information systems and telecommunications capabilities tailored to
support all areas within the organization. Systems support is provided for
accounting, taxes, credit, collections, operations, sales, sales support
and marketing. The Company has invested a significant amount of time and
capital in computer hardware and proprietary customized software and has
developed a substantial database of information that enables the Company
to better target its sales and marketing activities. The Company's Boston
headquarters is linked electronically with all of the Company's other
offices. Each salesperson's laptop computer can also connect to the Boston
office, permitting a salesperson to respond promptly to a customer's
financing request. This capability also permits the Company to control the
speed, accuracy and quality of the credit application process. The
Company's centralized data processing system provides timely support for
the marketing and service efforts of the Company's salespeople and for
equipment manufacturers and dealers. The Company's computerized systems
also provide management with accurate, up-to-date customer data which it
uses to strengthen the Company's internal controls and forecasting. The
Company believes that its system is among the most advanced in the
small-ticket equipment financing industry and can accommodate
significantly greater financing volume, giving the Company a competitive
advantage based on the speed of its contract processing, control over
credit risk and high level of service.

INDUSTRY OVERVIEW

The equipment financing industry in the United States includes a wide
variety of sources for financing the purchase and leasing of equipment, ranging
from specialty financing companies, which concentrate on a particular industry
or financing vehicle, to large banking institutions, which offer a full array of
financial services. According to the Equipment Leasing Association of America
("ELA") 1995 Annual Survey of Industry Activity & Business Operations, the total
financing volume in the United States for all types of equipment (including
medical) was estimated to be approximately $160 billion in 1995, of which
medical equipment, according to responses to the ELA survey, accounted for 3.1%
(or approximately $5.0 billion) of 1995 total annual financing volume.

The medical equipment finance industry includes two distinct markets which
are generally differentiated based on equipment price and type of healthcare
provider. The first market, in which the Company currently does not compete, is
financing of equipment priced at over $250,000, which is typically sold to
hospitals and other institutional purchasers. Because of the size of the
purchase, long sales cycle, and number of financing alternatives generally
available to these types of customers, their choice among financing alternatives
tends to be based primarily on cost of financing. The second market, in which
the Company competes, is the financing of lower-priced or "small-ticket"
equipment, where the price of the financed equipment is generally $250,000 or
less. Much of this equipment is sold to individual practitioners or small group
practices, including dentists, ophthalmologists, physicians, chiropractors,
veterinarians and other healthcare providers. The Company focuses on the
small-ticket market because it is able to respond in a prompt and flexible
manner to the needs of individual customers. Management believes that purchasers
in the small-ticket healthcare equipment market often seek the value-added sales
support and general ease of conducting business which the Company offers.

The Company believes that healthcare providers are increasingly choosing to
purchase rather than lease, equipment because of (i) the availability of a tax
deduction of up to $17,500 of the purchase price in the first year of equipment
use, (ii) changes in healthcare reimbursement methodologies that reduce
incentives to lease equipment for relatively short periods of time and (iii) a
reduced difference in financing costs between equipment purchases and equipment
leases, due to generally lower interest rates. Consistent

27
<PAGE>
with industry trends, installment sales agreements (notes) now comprise 60% of
the financing contracts originated by the Company.

Although the Company has focused its business in the past on equipment
finance, it has expanded more recently into practice finance. Practice finance
is a specialized segment of the finance industry, in which the Company's primary
competitors are banks. Practice finance is a relatively new business opportunity
for financing companies such as HPSC that has developed as the sale of
healthcare professional practices has increased. The primary sources of
healthcare practice financing are banks; not all financing companies provide
this service. Typically, HPSC has financed approximately 70% of the cost of the
practice being purchased, although buyers are increasingly choosing to finance
the entire purchase price. Management believes that HPSC is a leading provider
of dental practice financing, due in large part to its active advertising
program to the dental profession and direct solicitation of dental healthcare
providers.

HEALTHCARE PROVIDER FINANCING

TERMS AND CONDITIONS

The Company's business consists primarily of the origination of equipment
financing contracts pursuant to which the Company finances the acquisition by
healthcare providers of various types of equipment as well as leasehold
improvements, working capital and supplies. The contracts are either installment
sales agreements (notes) or lease agreements and are noncancellable. The
installment sales agreements are full payout contracts and provide for scheduled
payments sufficient, in the aggregate, to cover the Company's borrowing costs
and the costs of the underlying equipment, and to provide the Company with an
appropriate profit margin. The majority of contracts originated by the Company
(approximately 60%) are installment sales agreements. The balance of the
equipment financing contracts originated by the Company are leases. The Company
provides its leasing customers with an option to purchase the equipment at the
end of the lease for 10% of its original cost. Since 1991, approximately 99% of
lessees have exercised this option. The average cost of financings by HPSC for
the nine months ended September 30, 1996 was approximately $23,000. In that
period, HPSC entered into approximately 2,600 new financing contracts, an
increase of approximately 30% from the same period in 1995.

All of the Company's equipment financing contracts require the customer to:
(i) maintain, service and operate the equipment in accordance with the
manufacturer's and government-mandated procedures; (ii) maintain property and
public liability insurance for the equipment; (iii) pay all taxes associated
with the equipment; and (iv) make all scheduled contract payments regardless of
the performance of the equipment. Substantially all of the Company's financing
contracts provide for principal and interest payments due monthly for the term
of the contract. In the event of default by a customer, the financing contract
provides that the Company has the rights afforded creditors under law, including
the right to repossess the underlying equipment and in the case of legal
proceedings arising from a default, to recover damages and attorneys' fees. The
Company's equipment financing contracts generally provide for late fees and
service charges to be applied on payments which are overdue. In the nine months
ended September 30, 1996, the Company billed approximately $840,000 in late fees
and service charges on late payments, compared to approximately $500,000 in the
year ended December 31, 1995. This increase was due primarily to the completion
of the Company's implementation of its late fee and service charge program,
rather than to increased delinquencies. The length of the Company's lease
agreements ranges from 12 to 84 months, with a median term of 60 months and an
average initial term of 55 months.

Although the customer has the full benefit of the equipment manufacturers'
warranties with respect to the equipment it finances, the Company makes no
warranties to its customers as to the equipment. In addition, the financing
contract obligates the customer to continue to make contract payments regardless
of any defects in the equipment. Under an installment sale contract (note), the
customer holds title to the equipment and the Company has a lien on the
equipment to secure the loan; under a lease, the Company retains title to the
equipment. The Company has the right to assign any financing contract without
the consent of the customer.

28
<PAGE>
A practice finance transaction typically takes the form of a loan to a
healthcare provider purchasing a practice, which is secured by the assets of the
practice being financed and may be secured by one or more personal guarantees or
personal assets. The average size of a practice finance transaction is
approximately $100,000, with a typical contract term of 60 to 72 months.

CUSTOMERS

The primary customers for the Company's financing contracts are healthcare
providers, including dentists, ophthalmologists, other physicians, chiropractors
and veterinarians. The following table provides the general composition of the
Company's healthcare finance portfolio as of September 30, 1996 (excluding
ACFC's portfolio).

HPSC LEASES AND NOTES RECEIVABLE (1)

<TABLE>
<CAPTION>
NUMBER OF
DOLLARS PERCENTAGE CONTRACTS PERCENTAGE
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Dental........................................................... $ 116,000 69.0% 7,100 71.0%
Other Medical (2)................................................ $ 52,000 31.0% 2,900 29.0%
---------- ----- ----------- -----
Total........................................................ $ 168,000 100.0% 10,000 100.0%
---------- ----- ----------- -----
---------- ----- ----------- -----
</TABLE>

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

(1) Includes receivables owned or managed.

(2) Includes ophthalmic, general medical, chiropractic and veterinary providers.

As of December 31, 1996, no single customer (or group of affiliated
customers) accounted for more than 1% of the Company's healthcare finance
portfolio.

The Company's customers are located throughout the United States, but
primarily in heavily populated states such as California, Florida, Texas,
Illinois and New York. The map located on the inside front cover page of this
Prospectus shows the distribution of HPSC's portfolio balance by region as of
December 31, 1996.

REALIZATION OF RESIDUAL VALUES ON EQUIPMENT LEASES

Since 1994, the Company has realized over 99% of the residual value of
equipment covered by leases. The overall growth in the Company's equipment lease
portfolio in recent years has resulted in increases in the aggregate amount of
recorded residual values. Substantially all of the residual values on the
Company's balance sheet as of September 30, 1996 are attributable to leases
which will expire before 2001. Realization of such values depends on factors not
within the Company's control, such as the condition of the equipment, the cost
of comparable new equipment and the technological or economic obsolescence of
equipment. Although the Company has received over 99% of recorded residual
values for leases which expired during the last three years, there can be no
assurance that this realization rate will be maintained.

PRACTICE FINANCE

The Company regularly provides financing to healthcare providers in
connection with the acquisition of professional practices. HPSC typically makes
a loan to the professional acquiring the practice, which is secured by all of
the assets of the practice and which may require a personal guarantee and a
pledge of personal assets by the professional who is obtaining the financing.
Through December 31, 1996, the Company has originated a total of approximately
260 practice finance loans aggregating approximately $24.8 million, with an
average loan of approximately $100,000. The term of such loans averages 60 to 72
months. For the nine months ended September 30, 1996, practice finance generated
approximately 18% of HPSC's financing contract originations. Management believes
that its practice finance business contributes to the diversification of the
Company's revenue sources and earns HPSC substantial goodwill among healthcare
providers. All practice finance inquiries received at the Company's sales
office, or by its salespersons in the field, are referred to the Boston office
for processing.

29
<PAGE>
The Company solicits business for its practice finance services primarily by
advertising in trade magazines, attending healthcare conventions, and directly
approaching potential purchasers of healthcare practices. Over half of the
healthcare practices financed by the Company to date have been dental practices.
The Company has also financed the purchase of practices by chiropractors,
ophthalmologists, general medical practitioners and veterinarians.

The following table sets forth the estimated practice finance loan
originations for fiscal years 1994, 1995 and 1996.

PRACTICE FINANCE ORIGINATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
<S> <C> <C> <C>
1994 1995 1996
----------------- ----------------- ------------------

<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Amount of Originations............. $ 4,000 $ 8,900 $ 13,100
Number of Contracts................ 50 90 120
</TABLE>

GOVERNMENT REGULATION AND HEALTHCARE TRENDS

The majority of the Company's present customers are healthcare providers.
The healthcare industry is subject to substantial federal, state and local
regulation. In particular, the federal and state governments have enacted laws
and regulations designed to control healthcare costs, including mandated
reductions in fees for the use of certain medical equipment and the enactment of
fixed-price reimbursement systems, where the rates of payment to healthcare
providers for particular types of care are fixed in advance of actual treatment.
The United States Congress is considering changes to the Medicare program. The
impact on the Company's business of any changes to the Medicare program which
may be adopted cannot be predicted.

Major changes have occurred in the United States healthcare delivery system,
including the formation of integrated patient care networks (often involving
joint ventures between hospitals and physician groups), as well as the grouping
of healthcare consumers into managed-care organizations sponsored by insurance
companies and other third parties. Moreover, state healthcare initiatives have
significantly affected the financing and structure of the healthcare delivery
system. These changes have not yet had a material effect on the Company's
business, but the effect of any changes on the Company's future business cannot
be predicted.

The Company believes that the trend toward managed healthcare through health
maintenance organizations may have a positive effect on the Company's future
operations. The Company believes that as primary care physicians increasingly
become "gatekeepers" to more specialized care, the Company will be able to
accelerate its marketing programs to family and general practitioners. These
physicians would require additional, cost-effective equipment that emphasizes
early diagnosis and screening as compared to the more costly "big-ticket"
medical equipment purchased by hospitals for treatment purposes. Medicaid
managed care programs also encourage the increased availability of
cost-effective "small-ticket" equipment such as that financed by the Company.
Furthermore, the various reform initiatives are intended to result in a greater
percentage of the population having access to some type of health coverage,
which would increase the likelihood that healthcare providers will be reimbursed
at some (perhaps lower) rate for services provided to this expanded insured
population, thereby improving the credit quality of providers and increasing
their ability to purchase and finance new equipment.

ASSET-BASED LENDING

ACFC makes asset-based loans of $3 million or less, primarily secured by
accounts receivable, inventory and equipment. ACFC typically makes accounts
receivable loans to borrowers that cannot obtain traditional bank financing in a
variety of industries (none of which to date are medical). ACFC takes a security
interest in all of the borrower's assets and monitors collection of its
receivables. Advances on a revolving loan generally do not exceed 80% of the
borrower's eligible accounts receivable. ACFC also makes revolving and "term
like" inventory loans not exceeding 50% of the value of the customer's active

30
<PAGE>
inventory, valued at the lower of cost or market rate. Finally, ACFC provides
term financing for equipment, which is secured by the machinery and equipment of
the borrower. Each of ACFC's officers has over ten years of experience providing
these types of financing on behalf of various finance companies.

The average ACFC loan is for a term of two to three years in an amount of $1
million. No single borrower accounts for more than 10% of ACFC's aggregate
portfolio, and no more than 25% of ACFC's portfolio is concentrated in any
single industry.

ACFC's loans are "fully followed," which means that ACFC receives daily
settlement statements of its borrowers' accounts receivable. ACFC participates
in the collection of its borrowers' accounts receivable and requires that
payments be made directly to an ACFC lock-box account. Availability under lines
of credit is usually calculated daily. ACFC's credit committee, which includes
members of the senior management of HPSC, must approve in advance all ACFC
loans. To date, ACFC has experienced no loan losses; however, there can be no
assurance that it will not experience losses in the future.

From its inception through December 31, 1996, ACFC has provided 19 lines of
credit totaling $30 million and currently has approximately $18 million of loans
outstanding to 18 borrowers. The annual dollar volume of originations of lines
of credit by ACFC has grown from $5 million in 1994 to $14 million in 1995 to
$18 million in 1996. The Company anticipates that ACFC's asset-based lending
will continue to grow.

CREDIT AND ADMINISTRATIVE PROCEDURES

The Company processes all credit applications, and monitors all existing
contracts, at its corporate headquarters in Boston, Massachusetts (other than
ACFC applications and contracts, all of which are processed at ACFC's
headquarters in West Hartford, Connecticut). The Company's credit procedure
requires the review, verification and approval of a potential customer's credit
file, accurate and complete documentation, delivery of the equipment and
verification of installation by the customer, and correct invoicing by the
vendor. When a sales representative receives a credit application from a
potential customer, he or she enters it into the Company's computer system. The
credit of the potential customer is checked with one or more commercial credit
reporting agencies, including TRW Inc., Equifax Inc., Trans Union Corporation
and Dun & Bradstreet Corporation. Appropriate professional organizations may be
consulted regarding the customer's professional status. In addition to a
customer's credit profile, information such as the equipment type and vendor may
be considered. The type and amount of information and time required for a credit
decision varies according to the nature, size and complexity of each
transaction. In smaller, less complicated transactions, a decision can often be
reached within one hour; more complicated transactions may require up to three
or four days. Once the equipment is shipped and installed, the vendor invoices
the Company. The Company verifies that the customer has received and accepted
the equipment and obtains the customer's authorization to pay the vendor.
Following this telephone verification, the file is forwarded to the contract
administration department for audit, booking and funding and to commence
automated billing and transaction accounting procedures.

Timely and accurate vendor payments are essential to the Company's business.
In order to maintain its relationships with existing vendors and attract new
vendors, the Company makes most payments to vendors for financed equipment
within one day of equipment delivery to the customer.

ACFC's underwriting procedures include an evaluation of the collectibility
of the borrower's receivables that are pledged to ACFC, including an evaluation
of the validity of such receivables and the creditworthiness of the payors of
such receivables. ACFC may also require its customers to pay for credit
insurance with respect to its loans. The Loan Administration Officer of ACFC is
responsible for maintaining its lending standards and for monitoring its loans
and underlying collateral. Before approving a loan, ACFC examines the
prospective customer's books and records, and continues to make such
examinations and to monitor its customers' operations as it deems necessary
during the term of the loan. Loan officers are required to rate the risk of each
loan made by ACFC, and to update the rating upon receipt of any financial
statement from the customer or when 90 days have elapsed since the date of the
last rating. Loan loss reserves are based on a percentage of loans outstanding.
An account will be placed in non-accrual status when a customer is unable to
service the debt and the collateral is deteriorating.

31
<PAGE>
COLLECTION AND LOSS EXPERIENCE

The delinquency statistics for the Company's equipment financing contract
portfolio have improved every year since 1993. The delinquency rate (based on
contractual balances more than 60 days past due) of the Company's portfolio has
declined from 11.0% at December 31, 1994 to 4.2% at December 31, 1996. The
Company believes that the delinquency rate has declined because of (i) the
Company's comprehensive on-line credit evaluation procedure to screen financing
applications, (ii) the Company's improved collection procedures and (iii) growth
in the Company's portfolio of financing contracts. The Company believes that its
credit and loss experience compares favorably with other "small-ticket"
equipment finance companies.

The Company uses its own five-person in-house staff to collect late payments
from customers and manage accounts that are in litigation. When an account is 30
days past due, the Company begins collection procedures. The following table
illustrates HPSC's historical delinquent payment experience.

DELINQUENCY EXPERIENCE (1)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
<S> <C> <C> <C>
1994 1995 1996
------------ ------------ ------------

<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Total Portfolio Owned and Managed..................................... $ 100,045 $ 130,066 $ 189,910
Contractual Delinquencies:
61-90 days.......................................................... $ 1,925 $ 2,314 $ 2,134
Over 90 days........................................................ 9,108 4,964 5,763
------------ ------------ ------------
Total Contractual Delinquencies (over 60 days)........................ $ 11,033 $ 7,278 $ 7,897
------------ ------------ ------------
------------ ------------ ------------
Contractual Delinquencies as a Percentage of Total Portfolio Owned and
Managed
61-90 days.......................................................... 1.9% 1.8% 1.12%
Over 90 days........................................................ 9.1 3.8 3.1
------------ ------------ ------------
Total Contractual Delinquencies (over 60 days)........................ 11.0% 5.6% 4.2%
------------ ------------ ------------
------------ ------------ ------------
Net charge-offs divided by Average Total Portfolio Owned and Managed
(2)................................................................. 1.7% 1.3% 0.9%
</TABLE>

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

(1) Excludes ACFC. To date, ACFC has experienced no credit losses in its
asset-based lending portfolio.

(2) Excludes losses attributable to the Company's discontinued Canadian
operations.

ALLOWANCE FOR LOSSES; CHARGE-OFFS

The Company maintains an allowance for losses in connection with equipment
financing contracts and other loans held in the Company's portfolio at a level
which the Company deems sufficient to meet future estimated uncollectible
receivables, based on an analysis of delinquencies, problem accounts, and
overall risks and probable losses associated with such contracts, and a review
of the Company's historical loss experience. At September 30, 1996, this
allowance for losses was 3.3% of the Company's net investment in leases and
notes (before allowance). There can be no assurance that this allowance will
prove to be adequate. Failure of the Company's customers to make scheduled
payments under their financing contracts could require the Company to (i) make
payments in connection with the recourse portion of its borrowing relating to
such contract, (ii) forfeit its residual interest in any underlying equipment
and (iii) forfeit cash collateral pledged as security for the Company's asset
securitizations. In addition, although net charge-offs on the financing
contracts originated by the Company have averaged less than 1% of the Company's
average net investment in leases and notes (before allowance) for the nine
months ended September 30, 1996, any increase in such losses or in the rate of
payment defaults under the financing contracts originated by the Company could
adversely affect the Company's ability to obtain additional funding, including
its ability to complete additional asset securitizations.

32
<PAGE>
Accounts are normally charged off when future payment is deemed unlikely.
The following table illustrates the Company's historical allowance for losses
and charge-off experience.

CHARGE-OFFS AND ALLOWANCE FOR LOSSES

<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------------------------- NINE MONTHS
DEC. 28, DEC. 26, DEC. 25, DEC. 31, DEC. 31, SEPT. 30,
1991 1992 1993 (1) 1994 1995 1996
---------- ---------- ----------- --------- ---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Allowance for losses:
Balance at beginning of period.................. $ 10,091 $ 11,033 $ 9,216 $ 6,897 $ 4,595 $ 4,512
Additions....................................... 4,403 4,307 15,104 754 1,296 1,294
Net charge-offs................................. (3,461) (6,124) (17,423) (3,056) (1,379) (1,017)
---------- ---------- ----------- --------- ---------- ------------
Balance at end of period........................ $ 11,033 $ 9,216 $ 6,897 $ 4,595 $ 4,512 $ 4,789
---------- ---------- ----------- --------- ---------- ------------
---------- ---------- ----------- --------- ---------- ------------
Net investment in leases and notes (before
allowance).................................... $ 190,605 $ 166,274 $ 116,649 $ 95,788 $ 124,398 $ 147,213
Ending allowance divided by net investment in
leases and notes (before allowance)........... 5.8% 5.5% 5.9% 4.8% 3.6% 3.3%
Net charge-offs divided by average net
investment in leases and notes (before
allowance).................................... 1.8% 3.4% 12.3% 2.9% 1.3% 0.8%
</TABLE>

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

(1) In 1993, the Company experienced a substantial decrease in originations,
increased selling, general and administrative costs and a substantial
adjustment to its allowance for losses, in each case largely as a result of
the bankruptcy of Healthco, which previously had referred to the Company
substantially all of the Company's business.

FUNDING SOURCES

GENERAL

The Company's principal sources of funding for its financing transactions
have been: (i) a $95 million Revolver, (ii) a receivables-backed limited
recourse asset securitization transaction with Funding I in an original amount
of $70 million, (iii) a securitized limited recourse revolving credit facility
with Bravo, currently in the amount of $100 million, (iv) a defined recourse
fixed-term loan from and sales of financing contracts to savings banks and other
purchasers and (v) the Company's internally generated revenues. Management
believes that the Company's liquidity is adequate to meet current obligations
and future projected levels of financings and to carry on normal operations.

The Revolver is a line of credit arrangement under which the Company may
borrow up to $95 million at any given time at variable rates. The Company is
subject to extensive borrowing covenants and certain restrictions on its
operations in connection with the Revolver. See "Description of Certain
Indebtedness."

The Company's securitization transactions provide funding for the Company's
financing transactions at more favorable interest rates than the Company is able
to obtain from conventional borrowing sources such as banks. In a
securitization, the Company sells or contributes financing contracts to a
special-purpose corporation ("SPC") wholly-owned by the Company. The SPC, in
turn, either itself or through a third-party trust to which the SPC has pledged
the financing contracts, issues securities representing an interest in the
financing contracts to outside investors (the securitization). The offering
proceeds from the securities are paid to the SPC, which then pays the Company
for the financing contracts or makes credit available to the Company at
favorable rates. Simultaneously, the Company and the SPC may arrange for
interest rate swaps with institutional lenders, such that any credit extended to
the Company by the SPC can be fixed at a lower rate of interest than that being
paid on the Company's financing contracts. The SPC enlists the services of a
credit organization to guarantee the issued securities, and pays a fee to the

33
<PAGE>
Company to service the underlying contracts (subject to the Company's compliance
with certain financial and performance covenants). As the financing contracts
generate revenue from customers' monthly payments, that revenue is used by the
SPC or the trust to make payments on the securities. The SPC is intended to be
bankruptcy remote, with assets entirely separate from those of the Company. It
is limited in its business activities to owning the transferred financing
contracts, completing the securitization of those contracts and providing credit
to the Company based on the securitization. The SPC may incur indebtedness or
other obligations only in relation to the securitization. The Company has found
that securitizations are an effective means of obtaining credit on a limited
recourse basis at favorable interest rates.

Another funding source for the Company has been sales of its financing
contracts to, and borrowing against such contracts from, a variety of savings
banks. Each of these transactions is subject to certain covenants that may
require the Company to (i) repurchase financing contracts from the bank and make
payments under certain circumstances, including the delinquency of the
underlying debtor, and (ii) service the underlying financing contracts. The
Company carries a recourse reserve for each transaction in its allowance for
losses and recognizes a gain that is included for accounting purposes in earned
income for leases and notes for the year in which the transaction is completed.
Each of these transactions incorporates the covenants under the Revolver as such
covenants were in effect at the time the asset sale or loan agreement was
entered into. Any default under the Revolver may trigger a default under the
loan or asset sale agreements. The Company may enter into additional asset sale
agreements in the future in order to manage its liquidity.

THE REVOLVER

The Company executed a Revolving Credit Agreement on June 23, 1994 with The
First National Bank of Boston, individually and as Agent, and another bank, for
borrowing up to $20 million. This agreement was amended and restated in May
1995, increasing credit availability to $50 million and adding additional
lending banks. The agreement was next amended in December 1995 to increase
availability to $60 million and extend the term to December 31, 1996, and
amended again in July 1996 to increase availability to $75 million, and further
amended in December 1996 to increase availability to $95 million. There are
currently five banks providing the credit facility to the Company under the
Revolver Agreement. Under the Revolver Agreement, the Company may borrow at
variable rates of prime plus 0.25% to 0.50% and at LIBOR plus 1.75% to 2.00%,
depending upon certain performance covenants. At December 31, 1996, the Company
had approximately $40 million outstanding under this facility. The Revolver is
not currently hedged and is, therefore, exposed to upward movements in interest
rates. See "Description of Certain Indebtedness." The Revolver is secured by a
lien on the assets of HPSC and ACFC (including a pledge of the capital stock of
ACFC), including, without limitation, Customer Receivables (as defined herein).
Accordingly, indebtedness under the Revolver constitutes Secured Portfolio Debt
for purposes of the Indenture, and is senior in right of payment to the Notes.

FUNDING I

In December 1993, in a one-time receivables-backed securitization
transaction, Funding I (a wholly-owned SPC of the Company) issued $70 million of
secured notes ("Funding I Notes") bearing interest at 5.01% to three
institutional investors, Travelers Insurance Company, Prudential Insurance
Company and the Principal Group. Under the terms of the securitization, the
Company sold or contributed certain of its financing contracts, equipment
residual rights and rights to the underlying equipment to Funding I as
collateral for the Funding I Notes (the "Collateral"). The Funding I Notes are
rated "AAA" by Standard & Poor's. The required monthly payments of interest and
principal to holders of the Funding I Notes are unconditionally guaranteed by
Municipal Bond Investor Assurance Corporation ("MBIA") pursuant to the terms of
a Note guarantee insurance policy. In connection with the securitization, the
Company made an investment in Funding I, some or all of which may be required to
fund payments to holders of the Funding I Notes if certain default and
delinquency ratios relating to the Collateral are not met. As of September 30,
1996, Funding I had approximately $12.0 million of gross receivables as
collateral for the Funding I Notes. The securitization agreement also imposes
restrictions on cash balances of Funding I under certain conditions; at
September 30, 1996, this restricted cash amounted to approximately $2.5 million.
At

34
<PAGE>
December 31, 1996, the Funding I Notes had an outstanding balance of
approximately $7.0 million. Note payments to investors for the years 1997
through 2000, based on projected cash flows from the Collateral, are expected to
be $6.2 million, $1.7 million, $275,000 and $55,000, respectively. The Company
is not permitted to sell or contribute additional financing contracts to Funding
I.

In July and August of 1996, the level of delinquencies of the contracts held
in Funding I rose above certain levels, as defined in the operative documents,
and triggered a payment restriction event. This restriction had the effect of
"trapping" any cash distribution that the Company otherwise would have been
eligible to receive. The event is considered a technical default under the
Revolver, which default was waived by the lending banks. In September 1996,
delinquency levels improved and the payment restrictions were removed. A payment
restriction event is not unusual during the later stages of a static pool
securitization and may occur again before Funding I is fully paid out. The
default provisions of the Revolver Agreement were amended on December 12, 1996
to conform to the default provisions of the Funding I agreements. As a result, a
payment restriction event under Funding I will not constitute a default under
the Revolver unless such event continues for at least six months. There can be
no assurance that any future defaults will be waived by the lending banks. Under
the terms of Funding I, when the principal balance of the Funding I Notes equals
the balance of the restricted cash in the facility, Funding I must automatically
pay the Funding I Notes and terminate. This event is expected to occur during
fiscal 1997, prior to the scheduled termination of the facility. In the event of
an early termination, the Company would incur a non-cash, non-operating charge
against earnings representing the early recognition of certain unamortized
deferred transaction origination costs. At December 31, 1996, these unamortized
costs were approximately $400,000 and were amortizing at approximately $17,000
per month. The Notes are effectively subordinated to the Funding I Notes, which
also constitute Secured Portfolio Debt. Funding I has not guaranteed payment of
the Notes.

BRAVO

In January 1995, the Company entered into a revolving credit securitization
facility (the "Facility") with another SPC, Bravo, structured and guaranteed by
CapMAC. Under the Facility, the Company sells certain equipment financing
contracts to Bravo which, along with the underlying equipment, serve as
collateral or consideration for cash advanced to Bravo by Triple-A One Funding
Corporation ("Triple-A"), a commercial paper conduit entity. Bravo, in turn,
makes cash advances to the Company in return for the contracts. In November
1996, the Facility was amended to increase available borrowing to up to $100
million and to allow up to $30 million of the Facility to be used for sales of
financing contracts to Triple-A from Bravo, $7.0 million of which had been used
for such sales at December 31, 1996. Bravo incurs interest at variable rates in
the commercial paper market and enters into interest rate swap agreements to
assure fixed rate funding. Additional sales of financing contracts to Bravo from
the Company may be made subject to certain covenants regarding Bravo's portfolio
performance and borrowing base calculations. The Company's ability to make
additional sales under the Facility (and therefore to continue to draw advances
at commercial paper rates) will depend upon a number of factors, including
general conditions in the credit markets and the ability of the Company to
originate financing contracts which satisfy eligibility requirements set forth
in the Facility documents. There can be no assurance that the Company will
continue to originate eligible contracts.

In order to secure a AAA rating for its commercial paper, Triple-A has
established a liquidity line of credit with a group of liquidity banks, for
which The First National Bank of Boston serves as liquidity agent. Each
liquidity bank commits to make advances for a one-year term, which term may be
extended at the sole option of each liquidity bank. The Facility terminates on
the earlier of the termination of the liquidity banks' commitment to make
liquidity advances (currently December 1997) or October 28, 1999, or upon an
event of default. Upon termination of the Facility, no further advances will be
made to either Bravo or the Company, and Bravo will continue to pay principal,
interest and "sale" payments until all advances from Triple-A have been repaid
in full. The Company had approximately $67.5 million outstanding under the
Facility on December 31, 1996 and, in connection with the Facility, had 14
separate interest rate swap agreements with The First National Bank of Boston
with a total notional value of approximately

35
<PAGE>
$65.2 million. The weighted average cost of funds associated with Bravo's
borrowings under the Facility since January 1995 is approximately 7.3%.

The Notes are effectively subordinated to Bravo's obligations to Triple-A,
which also constitute Secured Portfolio Debt. Bravo has not guaranteed payment
of the Notes.

SAVINGS BANK LOAN AND SALES OF FINANCING CONTRACTS

In April 1995, the Company entered into a secured, fixed rate, fixed term
loan agreement with Springfield Institution for Savings under which the Company
borrowed $3.5 million at 9.5% subject to certain recourse and performance
covenants. The Company had approximately $2.4 million outstanding under this
agreement at December 31, 1996. In addition, between November 1995 and December
1996, the Company sold an aggregate of $20.6 million net amount of financing
contracts to the following savings banks: Cambridge Savings Bank; Century Bank
and Trust Co.; First Essex Bank, FSB; and Springfield Institution for Savings.
Financing contract sales secured by Customer Receivables constitute Secured
Portfolio Debt which is senior in right of payment to the Notes. The foregoing
loan and financing contract sales are secured by the underlying Customer
Receivables and accordingly constitute Secured Portfolio Debt.

INFORMATION TECHNOLOGY

The Company has developed automated information systems and
telecommunications capabilities to support all areas within the organization.
Systems support is provided for accounting, taxes, credit, collections,
operations, sales, sales support and marketing. The Company has invested a
significant amount of time and capital in computer hardware and proprietary
software. The Company's computerized systems provide management with accurate
and up-to-date customer data which strengthens its internal controls and assists
in forecasting.

The Company contracts with an outside consulting firm to provide information
technology services and has developed its own customized computer software. The
Company's Boston office is linked electronically with all of the Company's other
offices. Each salesperson's laptop computer may also be linked to the computer
systems in the Boston office, permitting a salesperson to respond to a
customer's financing request, or a vendor's informational request, almost
immediately. Management believes that its investment in technology has
positioned the Company to manage increased equipment financing volume.

The Company's centralized data processing system provides timely support for
the marketing and service efforts of its salespeople and for equipment
manufacturers and dealers. The system permits the Company to generate collection
histories, vendor analyses, customer reports and credit histories and other data
useful in servicing customers and equipment suppliers. The system is also used
for financial and tax reporting purposes, internal controls, personnel training
and management. The Company believes that its system is among the most advanced
in the small-ticket equipment financing industry, giving the Company a
competitive advantage based on the speed of its contract processing, control
over credit risk and high level of service.

SALES AND MARKETING

GENERAL

In addition to promoting its financing services through its sales and
marketing employees, most of whom work out of the Company's regional offices,
the Company relies on various equipment financing referral sources and
relationships with vendors and manufacturers of dental, medical and other
equipment for the marketing of its services. The Company's sales and marketing
staff focuses its efforts primarily on these vendors in an effort to encourage
them to recommend the Company as a preferred funding source to purchasers of
their equipment. The Company then enters into financing contracts directly with
the vendors' customers.

HPSC currently has 14 field sales and marketing personnel located in 14
offices throughout the United States, as well as eight sales representatives at
the Company's Boston headquarters. Sales

36
<PAGE>
personnel are assigned to a particular region of the country or to a particular
healthcare profession. Sales personnel generally can obtain approval of a
financing transaction within 24 to 48 hours, and often within one hour, of
completion of documentation through use of the Company's computer system.
Practice finance sales and marketing is managed centrally from Boston, with
leads referred to Boston from the Company's sales offices. ACFC's employees are
located in West Hartford, Connecticut. Its business is presently conducted
primarily in the northeastern United States with all sales and marketing efforts
managed from its West Hartford office.

The Company's sales force emphasizes customer service, including providing
customized financing arrangements for individual healthcare providers. In most
cases, the Company's sales representatives work directly with the vendors'
potential purchasers, providing them with the guidance necessary to complete the
equipment financing transaction. The Company believes that such "consultative
financing" enhances customer satisfaction and loyalty.

The Company also attempts to broaden its customer base through national
advertising in trade journals and magazines, by attending trade shows and
through the broad dissemination of literature describing the Company's financing
programs.

VENDORS

The Company's sales representatives establish formal and informal
relationships with equipment vendors and manufacturers. The primary objective of
these relationships is for the sales representative to support the equipment
manufacturer or vendor or their representatives in their sales efforts by
providing timely, convenient and competitive financing for their equipment
sales. In addition, the Company provides these vendors with a variety of
value-added services which simultaneously promote the vendors' equipment sales
as well as the selection of the Company for financing. These services include
consulting with the vendors on structuring financing transactions which meet the
needs of the vendor and the equipment purchaser; training the vendor's sales and
management staffs to understand and market the Company's various financing
products; customizing financing products to encourage product sales; and, in
most cases, working directly with the vendors' potential purchasers to provide
them with the guidance necessary to complete the equipment financing
transaction.

The Company believes this method of marketing is more effective than
isolated solicitations of equipment purchasers. During the nine months ended
September 30, 1996, the Company estimates that vendor relationships generated a
majority of the Company's financing contract originations, but no one vendor's
financing accounted for more than 13% of the Company's financing contract
originations. The top ten vendors in terms of the dollar volume of the Company's
financings for the year ended December 31, 1996, accounted for approximately 35%
of HPSC's originations during that period.

MARKETING PROGRAMS

The Company employs a number of marketing strategies to promote its
healthcare provider financing services. For example, the Company advertises its
services in national publications targeting dental, ophthalmic and other
healthcare professionals. Representatives of the Company attend approximately 80
healthcare conventions per year, as well as solicit business directly from key
manufacturers and distributors of equipment. From time to time, the Company
participates in special promotions with equipment vendors to encourage both the
purchase and financing of healthcare equipment. The Company also distributes to
its customers and others informational brochures, which are produced by the
Company and which describe the various financing services provided by the
Company, as well as quarterly outlook fliers and a year-end tax advisory letter.

COMPETITION

Healthcare provider financing and asset-based lending are highly competitive
businesses. The Company competes for customers with a number of national,
regional and local finance companies, including those which, like the Company,
specialize in financing for healthcare providers. In addition, the Company's
competitors include those equipment manufacturers which finance the sale or
lease of their products

37
<PAGE>
themselves, conventional leasing companies and other types of financial services
companies such as commercial banks and savings and loan associations. Although
the Company believes that it currently has a competitive advantage based on its
customer-oriented financing and value-added services, many of the Company's
competitors and potential competitors possess substantially greater financial,
marketing and operational resources than the Company. Moreover, the Company's
future profitability will be directly related to the Company's ability to obtain
capital funding at favorable rates as compared to the capital costs of its
competitors. The Company's competitors and potential competitors include many
larger, more established companies that have a lower cost of funds than the
Company and access to capital markets and to other funding sources which may be
unavailable to the Company. The Company's ability to compete effectively for
profitable equipment financing business will continue to depend upon its ability
to procure funding on attractive terms, to develop and maintain good relations
with new and existing equipment suppliers, and to attract additional customers.

Historically, the Company's equipment finance business has concentrated on
leasing small-ticket dental, medical and office equipment. The Company may in
the future finance more expensive equipment than it has in the past. As it does
so, the Company's competition can be expected to increase. In addition, the
Company may face greater competition with its expansion into the practice
finance and asset-based lending markets.

EMPLOYEES

At December 31, 1996, the Company had 67 full-time employees, seven of whom
work for ACFC, and none of whom was represented by a labor union. Approximately
13 of the Company's employees are engaged in credit, collections and lease
documentation, approximately 30 are in sales, marketing and customer service,
and 19 are engaged in general administration, tax and accounting. Management
believes that the Company's employee relations are good.

PROPERTY

The Company leases approximately 11,320 square feet of office space at 60
State Street, Boston, Massachusetts for approximately $24,000 per month. This
lease expires on May 31, 1999 with a five-year extension option. ACFC leases
approximately 2,431 square feet at 433 South Main Street, West Hartford,
Connecticut for approximately $4,000 per month. This lease expires on August 31,
1999 with a three-year extension option. The Company's total rent expense for
1996 under all operating leases was $390,665. The Company also rents space as
required for its sales locations on a short-term basis. The Company believes
that its facilities are adequate for its current operations and for the
foreseeable future.

LEGAL PROCEEDINGS

Although the Company is from time to time subject to actions or claims for
damages in the ordinary course of its business and engages in collection
proceedings with respect to delinquent accounts, the Company is aware of no such
actions, claims, or proceedings currently pending or threatened that are
expected to have a material adverse effect on the Company's business, operating
results or financial condition.

38
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- ---------------------------------------------------------------
<S> <C> <C>

John W. Everets........................... 50 Chairman of the Board, Chief Executive Officer and Director (1)

Raymond R. Doherty........................ 51 President, Chief Operating Officer and Director (1)

Rene Lefebvre............................. 50 Vice President of Finance, Chief Financial Officer and
Treasurer

Joseph A. Biernat......................... 69 Director (2)

J. Kermit Birchfield...................... 56 Director (1)(3)

Dollie A. Cole............................ 66 Director (2)(3)

Samuel P. Cooley.......................... 64 Director (1)(2)(3)

Thomas M. McDougal........................ 56 Director (2)

Lowell P. Weicker, Jr..................... 64 Director (2)
</TABLE>

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

(1) Member of the Executive Committee.

(2) Member of the Audit Committee.

(3) Member of the Compensation Committee.

John W. Everets has been Chairman of the Board and Chief Executive Officer
of HPSC since July 1993 and has been a director of HPSC since 1983. He was
Chairman of the Board and Chief Executive Officer of T.O. Richardson Co., Inc.,
a financial services company, from January 1990 until July 1993. Previously he
was Executive Vice President of Advest, Inc., an investment banking firm, from
1977 to January 1990. Mr. Everets also served as Chairman of the Board of
Billings and Co., Inc., a real estate investment banking firm, and Chairman of
Advest Credit Corp., both subsidiaries of Advest Group, Inc. Mr. Everets
formerly was Vice Chairman of the Connecticut Development Authority and Chairman
of the Loan Committee of the Connecticut Development Authority. Mr. Everets is
also a director of Dairy Mart Convenience Stores, Inc., Crown/Northcorp, and the
Eastern Company.

Raymond R. Doherty has been President of HPSC since December 1989 and Chief
Operating Officer of HPSC since August 1993. He was Treasurer of HPSC from
December 1988 until May 1994. He was elected a director of HPSC in June 1991.
Mr. Doherty previously served as Chairman and Chief Executive Officer of HPSC
from October 1992 until July 1993, Chief Operating Officer of HPSC from December
1989 to October 1992, and Chief Financial Officer of HPSC from December 1988 to
October 1992. He was Assistant Treasurer of HPSC from June 1986 to December
1988. He was Vice President and Chief Operating Officer of Healthco, a company
engaged in sales of dental equipment and formerly affiliated with the Company,
from October 1992 until August 1993. He was the Senior Vice President of Finance
and Operational Controls of Healthco from January 1986 to October 1992.

Rene Lefebvre has been Chief Financial Officer, Vice President of Finance
and Treasurer of HPSC since May 1994. From June 1993 until May 1994, he was
Chief Financial Officer of NETTS, Inc., a vocational training institution. He
was an independent financial services consultant from February 1992 through May
1993. He served as interim Chief Financial Officer of the Business Funding Group
from June through November of 1991. From September 1982 until March 1991, Mr.
Lefebvre was Chief Financial Officer of Eaton Financial Corporation, a
subsidiary of AT&T Capital Corporation.

39
<PAGE>
Joseph A. Biernat became a director of HPSC in December 1993. Since his
retirement in 1987, Mr. Biernat has served as a consultant for several
investment management firms. From 1965 until 1987, he was employed with United
Technologies Corporation, most recently as Senior Vice President-Treasurer, and
prior thereto as President, Treasurer and Chief Financial Officer of Philco-Ford
Finance Corporation. He is also a director of the ITT Mutual Funds and
previously has been a director of several financial and civic organizations.

J. Kermit Birchfield became a director of HPSC in December 1993. He
currently serves as Chairman of Displaytech, Inc., a privately-held manufacturer
of miniature high-resolution ferrite liquid crystal display screens and as a
consultant for various businesses. From 1990 until 1994, Mr. Birchfield served
as Senior Vice President, Secretary, and General Counsel with M/A-COM, Inc., a
publicly-held manufacturer of semiconductors and communications equipment.
Before joining M/A-COM, he was Senior Vice President for Legal and Governmental
Affairs and General Counsel for the Georgia Pacific Corporation. Mr. Birchfield
is a Managing Director of Century Partners, Incorporated, a privately-held
investment and operating company. He is also a director of Intermountain
Industries Inc. and its wholly-owned public utility subsidiary, Intermountain
Gas Company, and Dairy Mart Convenience Stores, Inc.

Dollie A. Cole, a director of HPSC since 1991, has been involved for many
years in the leadership of several business, charitable and civic organizations.
She serves as Chairman of the Dollie Cole Corporation, a venture capital and
industrial consulting firm. For seven years Ms. Cole was an owner and board
member of Checker Motors and Checker Taxi until selling her interest in 1988.
Ms. Cole was also Senior Editor of Curtis Publishing until 1977, and was
director of Public Relations for Magnetic Video and Twentieth Century Fox Video
until 1985. She serves as a consultant to the Solar and Electric 500 Company,
and to Separation Dynamics, an international company involved in the energy and
manufacturing industries. In addition to these business activities, Ms. Cole
serves on the boards of Project Hope--the World Health Organization, the
National Captioning Institute for the Hearing Impaired, the Smithsonian
Institution and on the National Academy of Science--President's Circle Board.

Samuel P. Cooley became a director of HPSC in December 1993. From 1955 until
his retirement in 1993, Mr. Cooley was employed with Shawmut Bank Connecticut,
N.A., and its predecessors and affiliates, including Hartford National Bank and
Connecticut National Bank. His most recent position was Executive Vice President
and Senior Credit Approval Officer. Mr. Cooley is also a director of Lydall,
Inc. and serves as a director or trustee of numerous nonprofit organizations in
Connecticut.

Thomas M. McDougal, D.D.S., was elected a director of HPSC in 1991. He has
been a practicing dentist for approximately 30 years. He is active in national,
state and local dental organizations and has lectured extensively throughout the
United States. He is a past President of the Dallas County Dental Society and is
past Chairman of its Continuing Education Committee and its Banking, Nominating
and Patient Relations Committee.

Lowell P. Weicker, Jr. was elected a director in December 1995. Mr. Weicker
began his political career in 1962, when he was elected as a member of
Connecticut's House of Representatives for the Town of Greenwich, serving three
terms. Mr. Weicker served concurrently as First Selectman of Greenwich from 1964
to 1968. He was elected to the United States House of Representatives from
Connecticut's 4th District in 1968 and was subsequently elected to the United
States Senate in 1970, 1976 and 1982, serving until January 1989. In January
1991, Mr. Weicker was elected Governor of Connecticut, a position which he held
until January 1995. He is presently a visiting professor at the University of
Virginia. Mr. Weicker is also a director of UST Corp., Phoenix Home Life Mutual
Funds and Compuware Corp.

Each officer serves at the discretion of the Board of Directors. There are
no family relationships among any of the directors and executive officers of the
Company.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has an Executive Committee, an Audit Committee and a
Compensation Committee. The Executive Committee exercises all the powers of the
Board of Directors in accordance

40
<PAGE>
with the policy of the Company, to the extent permitted by Delaware law, during
intervals between meetings of the Board of Directors. The Audit Committee
reviews the Company's external and internal auditing procedures, reviews with
the Company's independent auditors the scope and results of their audit for the
year, reviews with the Company's management the plan, scope and results of the
Company's operations, and studies and makes recommendations periodically to the
Board of Directors on these and related matters. The Compensation Committee's
functions are to be available for consultation on compensation matters with the
Chairman of the Board, to review the salaries and other forms of compensation of
officers of the Company and to make recommendations to the Board of Directors
regarding the grant of stock options and restricted stock to officers, key
employees and consultants, and regarding stock option and restricted stock
matters generally. None of the members of the Audit Committee or the
Compensation Committee is a past or current officer or employee of the Company.
The Board of Directors does not maintain a nominating committee or a committee
performing similar functions.

ELECTION OF DIRECTORS

The Company's Restated Certificate of Incorporation classifies the Board of
Directors into three classes, with the members of the respective classes serving
for staggered three-year terms. The Class I directors are Messrs. Weicker and
McDougal; the Class II directors are Messrs. Biernat, Doherty and Cooley; and
the Class III directors are Messrs. Everets and Birchfield and Ms. Cole. The
terms of the directors comprising each class expire upon the election and
qualification of directors at the annual meetings of stockholders to be held
following the fiscal years of the Company ending December 31, 1999, 1997 and
1998, respectively. At each annual meeting of stockholders, nominees for
director will be eligible for re-election or election for full three-year terms.

DIRECTOR COMPENSATION

The Company pays each non-employee director a fee of $5,000 per annum plus
$2,500 per annum for each committee of the Board of Directors on which he or she
serves and $500 for each meeting attended. In addition, the Company reimburses
directors for their travel expenses incurred in attending meetings of the Board
of Directors or its committees. Pursuant to the Company's 1995 Stock Incentive
Plan (the "1995 Stock Plan"), each non-employee continuing director is granted
1,000 non-qualified stock options to purchase shares of Common Stock on the day
of each annual meeting of stockholders during the term of the 1995 Stock Plan.

Mr. Weicker received a non-qualified stock option exercisable for 4,000
shares of Common Stock at $4.75 per share, the fair market value of Common Stock
on the date of grant, at the time that he joined the Board of Directors. This
option was not granted under any of the Company's stock option plans.

EXECUTIVE COMPENSATION

COMPENSATION SUMMARY

The following table sets forth certain information regarding all
compensation received by the Company's Chief Executive Officer and the other two
current executive officers (collectively, the "Named Executive Officers") for
services rendered in all capacities during the Company's past three fiscal
years.

41
<PAGE>
SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION
------------------------------------- -------------------------

<S> <C> <C> <C> <C> <C> <C> <C>
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS(1)(2) OPTIONS COMPENSATION(3)
- -------------------------------- --------- ---------- ---------- ------------- ------------ ----------- ----------------

John W. Everets(4).............. 1996 $ 239,200 $ 50,000 $ -0- $ -0- -0- $ 15,688
Chairman of the Board, 1995 210,000 -0- -0- 809,375 -0- 18,959
Chief Executive Officer 1994 210,000 125,000 96,636(5) -0- -0- 15,904
and Director

Raymond R. Doherty(6)........... 1996 197,300 33,000 -0- -0- -0- 14,738
President, Chief 1995 190,000 -0- -0- 393,750 -0- 18,606
Operating Officer 1994 190,000 75,000 -0- -0- -0- 22,885
and Director

Rene Lefebvre(7)................ 1996 132,300 13,000 -0- -0- -0- 10,404
Vice President of 1995 125,000 -0- -0- 109,375 -0- 10,905
Finance, Chief Financial 1994 78,731 15,000 -0- -0- 30,000 1,790
Officer and Treasurer
</TABLE>

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

(1) The Company's stockholders approved the 1995 Stock Incentive Plan (the "1995
Stock Plan") at the 1995 annual meeting of stockholders. The 1995 Stock Plan
provides for the issuance of up to 550,000 options and/or grants of shares
of restricted stock to key employees and non-employee directors of the
Company. The 1995 Stock Plan is administered by the Compensation Committee
of the Board of Directors. Upon the recommendation of the Compensation
Committee, the Board of Directors adopted an amendment to the 1995 Stock
Plan to provide service requirements for participation in the 1995 Stock
Plan in addition to the performance conditions which were contained in the
1995 Stock Plan as originally adopted.

The 1995 Stock Plan, as amended (the "Amended 1995 Stock Plan"), provides
that shares of restricted stock granted under the Amended 1995 Stock Plan
shall vest for participants when (i) certain performance conditions are met
(50% vest if and when during the five-year period from the date of grant
(the "Performance Period") the closing price of a share of the Company's
Common Stock, as reported on the Nasdaq National Market for a consecutive
ten-day period, equals or exceeds 134.175% of the closing price on the grant
date (the "Partial Performance Condition"), and the remaining 50% vest if
and when during the Performance Period the closing price of a share of the
Company's Common Stock, as reported on the Nasdaq National Market for a
consecutive ten-day period, equals or exceeds 168.35% of the closing price
on the grant date (the "Full Performance Condition")) and (ii) the holder of
the restricted stock has completed five (5) years of continuous service from
the grant date (the "Service Requirement").

The Partial Performance Condition for the shares of restricted stock granted
to Messrs. Everets, Doherty and Lefebvre in 1995 is $5.90 per share and the
Full Performance Condition is $7.37 per share. Upon a "change in control" of
the Company (as defined in the Amended 1995 Stock Plan), all awards granted
prior to such date become fully vested. Upon the termination of a
participant's employment by the Company without "cause" (as defined in the
Amended 1995 Stock Plan) or by reason of death or disability during the
Performance Period, any awards for which the Partial Performance Condition
or the Full Performance Condition shall have been satisfied no later than
four months after the date of such termination of employment shall become
fully vested and shall be deemed to satisfy the Service Requirement. The
Partial Performance Condition for the restricted stock granted in 1995 to
Messrs. Everets, Doherty and Lefebvre was met in 1995, but the shares of
restricted stock held by these individuals remain subject to the Service
Requirement.

42
<PAGE>
(2) The amounts reported in this column represent the market price as reported
on the Nasdaq National Market of the restricted stock awarded under the
Amended 1995 Stock Plan on the grant date without diminution in value
attributable to the restrictions on such stock. The aggregate non-vested
restricted stock holdings at the end of fiscal 1996 were as follows: for Mr.
Everets--185,000 shares (the value of these shares at the end of fiscal 1996
equaled $1,110,000, which is 137% of the value at the grant date); for Mr.
Doherty--90,000 shares (the value of these shares at the end of fiscal 1996
equaled $540,000, which is 137% of the value at the grant date); and for Mr.
Lefebvre--25,000 shares (the value of these shares at the end of fiscal 1996
equaled $150,000, which is 137% of the value at the grant date). Dividends
on stock awards will be paid at the same rate as dividends, if any, are paid
to all stockholders.

(3) Includes term life insurance premiums paid by the Company and Company
contributions to the Named Executive Officer's 401(k) retirement plan
account, respectively, in the following amounts for fiscal 1996: Mr.
Everets, $3,024 and $4,750; Mr. Doherty, $3,024 and $3,800; and Mr.
Lefebvre, $756 and $2,646. Also includes the value of shares of Common Stock
in the Company's Employee Stock Ownership Plan ("ESOP") allocated to Named
Executive Officers in fiscal 1996 (for services rendered during fiscal 1995)
in the following amounts: Mr. Everets, $7,914; Mr. Doherty $7,914; and Mr.
Lefebvre, $7,002. The value of the allocated ESOP shares was calculated by
using the December 31, 1996 closing price for the Company's Common Stock of
$6.00 per share as reported on the Nasdaq National Market. The Company has
not allocated shares of Common Stock to participants in its ESOP for
services rendered during fiscal 1996 as of the date of this Prospectus.

(4) Mr. Everets' employment with the Company commenced in July 1993. His
compensation is governed by an employment agreement with the Company dated
as of July 19, 1996. See "Employment Agreements."

(5) Includes relocation and temporary living expenses of $81,806 paid in fiscal
1994 in connection with Mr. Everets' relocation to the Boston area.

(6) Mr. Doherty's compensation is governed by an employment agreement with the
Company dated as of August 2, 1996. See "Employment Agreements."

(7) Mr. Lefebvre's employment with the Company commenced in May 1994. His
compensation is governed by an employment agreement with the Company dated
April 6, 1994. See "Employment Agreements."

EMPLOYMENT AGREEMENTS

JOHN W. EVERETS AND RAYMOND R. DOHERTY

As of July 19, 1996 and August 2, 1996, the Company entered into new
employment agreements with John W. Everets and Raymond R. Doherty, respectively.
The Company agreed to pay a base annual salary of $250,000 to Mr. Everets and
$200,000 to Mr. Doherty as well as a bonus of up to 100% of base salary to each
individual under an incentive plan developed by the Compensation Committee of
the Board in consultation with management and approved by the full Board of
Directors.

Each employment agreement has a three-year term and thereafter will
automatically renew from year to year unless either party to such agreement
gives notice of intention to terminate the agreement six months in advance of
any anniversary. Either party to each employment agreement may terminate it at
any time for any reason. In the event of a decision not to renew by either party
or a termination by the Company which is not "for cause" (as defined in each
agreement) with respect to either Mr. Everets or Mr. Doherty (or, in the case of
Mr. Everets, in the event of voluntary termination), the Company will pay the
employee his base monthly salary plus his maximum monthly bonus and normal
employee benefits for the next 12 months. Upon a termination by the Company
which is not "for cause," all of Mr. Everets' stock options will fully vest.
Each employee has agreed not to compete with the business of the Company while
receiving severance payments and to maintain in confidence all of the Company's
confidential information. In the event of the employee's termination due to
death or disability, the Company will pay the employee or his estate the
employee's base monthly salary for six months from the date of death or
disability. The

43
<PAGE>
employee and his family will also be entitled to receive the employee's benefits
during this six-month period.

If, within three years after a "change of control" of the Company (as
defined in each agreement), either the Company terminates the employee other
than "for cause" or the employee terminates his employment due to a "change in
employment" (as defined in each agreement), the Company will pay the employee up
to 2.99 times the employee's average annual compensation for the preceding five
calendar years before the date of the change of control; the non-compete
provisions will no longer apply; the employee's stock options will fully vest;
and normal employee benefits will continue for 12 months. If, within three years
after a "change of control," the employee terminates his employment for any
reason other than a "change in employment," the Company will pay the employee
his base monthly salary plus his maximum monthly bonus and normal employee
benefits for 12 months.

RENE LEFEBVRE

On April 6, 1994, the Company entered into an employment agreement with
Rene Lefebvre for employment commencing in May 1994. The Company agreed to pay
Mr. Lefebvre an initial base annual salary of $125,000 (which has since been
increased to $135,000) as well as a bonus of up to 50% of base salary at the
discretion of the Chief Executive Officer and subject to approval of the
Compensation Committee of the Board of Directors. The Company also granted to
Mr. Lefebvre options to purchase 30,000 shares of Common Stock, which vest over
a five-year period in equal annual installments, at a price of $3.5625 per
share, which was the fair market value of a share of Common Stock on the date of
grant.

The employment agreement has a three-year term and thereafter will
automatically renew from year to year unless either party to such agreement
gives notice of intention to terminate the agreement 60 days in advance of any
anniversary. Either party to Mr. Lefebvre's employment agreement may terminate
it at any time for any reason. The Company is obligated to pay Mr. Lefebvre's
salary for three months after termination, if it does not renew the agreement,
and for six months after termination, if it otherwise terminates his employment
other than "for cause" (as defined in his agreement). Mr. Lefebvre has agreed
not to compete with the business of the Company while receiving severance
payments and to maintain in confidence all of the Company's confidential
information. In the event of a "change of control" of the Company (as defined in
his agreement), Mr. Lefebvre's stock options will fully vest.

OPTION GRANTS IN LAST FISCAL YEAR

The Company made no option or SAR grants to the Named Executive Officers in
its last fiscal year.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

The following table provides information regarding the exercise of stock
options by the Named Executive Officers during fiscal year 1996 and the value of
unexercised "in-the-money" options at fiscal 1996 year-end. The columns showing
the number of options exercised during fiscal year 1996 and the value realized
thereby have been omitted because none of the Named Executive Officers exercised
any options during fiscal year 1996.

44
<PAGE>
AGGREGATED UNEXERCISED OPTIONS AND YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE MONEY OPTIONS
OPTIONS AT AT FISCAL 1996 YEAR-END
FISCAL 1996 YEAR-END EXERCISABLE/UNEXERCISABLE
NAME EXERCISABLE/UNEXERCISABLE (1)
- ------------------------------------------------------------ ----------------------- --------------------------
<S> <C> <C>

John W. Everets............................................. 170,000/5,000 $ 561,250/$13,750

Raymond R. Doherty.......................................... 132,000/18,000 $ 408,000/$60,750

Rene Lefebvre............................................... 18,000/12,000 $ 43,875/$29,250
</TABLE>

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

(1) An "in-the-money" option is an option for which the exercise price to
purchase the underlying stock is less than the December 31, 1996 market
price per share of the Company's Common Stock as reported on the Nasdaq
National Market ($6.00 per share); the value shown reflects stock price
appreciation since the date of grant of the option.

STOCK OPTION AND STOCK INCENTIVE PLANS

The Company has outstanding options under three stock option plans which
were terminated in May 1995 upon approval of the 1995 Stock Incentive Plan by
the Company's stockholders at the 1995 annual meeting. As of December 31, 1996,
the Company had 76,875 options to purchase Common Stock outstanding under its
Employee Stock Option Plan dated March 23, 1983, as amended (the "1983 Plan"),
345,000 options to purchase Common Stock outstanding under its Stock Option Plan
dated March 5, 1986 (the "1986 Plan") and 145,000 options to purchase Common
Stock outstanding under its 1994 Stock Plan dated March 23, 1994 (the "1994
Plan"). Options exercisable under the 1983, 1986 and 1994 Plans at December 31,
1996 were 74,500, 306,000 and 49,000, respectively.

Options granted under the 1983 Plan are either incentive stock options or
non-qualified options and were granted with an exercise price of no less than
100% or 85%, respectively, of the fair market value of the Common Stock of the
Company on the date of grant. Under the 1986 Plan, only officers and directors
of the Company and its subsidiaries were eligible to participate and only
non-qualified stock options were granted. Key employees, directors of and
consultants to the Company were eligible to participate in the 1994 Plan. Only
non-qualified options were granted under the 1994 Plan and the option exercise
price was in each case not less than 50% of the fair market value of the Common
Stock on the date of grant.

The stockholders of the Company approved the Company's 1995 Stock Incentive
Plan (the "1995 Stock Plan") at the 1995 annual meeting. The 1995 Stock Plan
provides for the issuance of up to 550,000 options and/or grants of shares of
restricted stock to key employees and non-employee directors. The 1995 Stock
Plan is administered by the Compensation Committee of the Board of Directors. As
of December 31, 1996, the Company had 61,000 options to purchase Common Stock
outstanding under the 1995 Stock Plan, 23,000 of which were exercisable.

Pursuant to the recommendation of the Compensation Committee, the Board of
Directors adopted an amendment to the 1995 Stock Plan to provide service
requirements for participation in the 1995 Stock Plan in addition to the
performance conditions which were contained in the 1995 Stock Plan as originally
adopted. The 1995 Stock Plan, as amended (the "Amended 1995 Stock Plan"),
provides that shares of restricted stock granted under the Amended 1995 Stock
Plan shall vest for participants when (i) certain performance conditions are met
(50% vest if and when during the five-year period from the date of grant (the
"Performance Period") the closing price of a share of the Company's Common
Stock, as reported on the Nasdaq National Market for a consecutive ten-day
period, equals or exceeds 134.175% of the closing price on the grant date (the
"Partial Performance Condition"), and the remaining 50% vest if and when during
the Performance Period the closing price of a share of the Company's Common
Stock, as reported on the Nasdaq National Market for a consecutive ten-day
period, equals or exceeds 168.35% of the closing price on the grant date (the
"Full Performance Condition")) and (ii) the holder of the restricted stock has
completed five (5) years of continuous service from the grant date (the "Service
Requirement").

45
<PAGE>
The Partial Performance Condition for the shares of restricted stock granted
to Messrs. Everets, Doherty and Lefebvre in fiscal year 1995 is $5.90 per share
and the Full Performance Condition is $7.37 per share. Upon a "change in
control" of the Company (as defined in the Amended 1995 Stock Plan), all
restricted stock awards granted prior to such date become fully vested. Upon the
termination of a participant's employment by the Company without "cause" (as
defined in the Amended 1995 Stock Plan) or by reason of death or disability
during the Performance Period, any restricted stock awards for which the Partial
Performance Condition or the Full Performance Condition shall have been
satisfied no later than four months after the date of such termination of
employment shall become fully vested and shall be deemed to satisfy the Service
Requirement. The Partial Performance Condition for the restricted stock granted
to Messrs. Everets, Doherty and Lefebvre was met in fiscal year 1995, but the
shares of restricted stock held by these individuals remain subject to the
Service Requirement.

Awards of 337,000 restricted shares of the Company's Common Stock were
granted in May 1995. The Partial Performance Condition of these shares is $5.90
per share with respect to 332,000 shares and $6.04 per share with respect to
5,000 shares; the Full Performance Condition is $7.37 per share with respect to
332,000 shares and $7.58 with respect to 5,000 shares.

The Amended 1995 Stock Plan provides that with respect to options granted to
key employees (except non-employee directors), the option term and the terms and
conditions upon which the options may be exercised will be determined by the
Compensation Committee of the Company's Board of Directors for each such option
at the time it is granted (except as delegated to the Chief Executive Officer
for non-executive officer grants). Options granted to key employees of the
Company may be either incentive stock options (within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"),
and subject to the restrictions of that section on certain terms of such
options) or non-qualified options, as designated by the Compensation Committee.

At December 31, 1996, there were options exercisable for an aggregate of
2,000 shares of Common Stock outstanding to key employees and options
exercisable for an aggregate of 5,000 shares of Common Stock outstanding to
non-employee directors of the Company, pursuant to the automatic formula grant
under the Amended 1995 Stock Plan.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

The Board of Directors has approved, upon the recommendation of the
Compensation Committee, the adoption by the Company of a Supplemental Executive
Retirement Plan (the "SERP"). Under the SERP, which became effective on January
1, 1997, the Company will provide certain retirement income benefits to certain
of its executive employees, as such employees are designated from time to time
by the Board upon recommendation of the Chairman of the Board. Currently, the
beneficiaries of the SERP are Messrs. Everets, Doherty and Lefebvre. The SERP
will be administered by an Administrative Committee of one or more members as
appointed by the Board, which members shall be the members of the Compensation
Committee if no other appointment is in effect at any given time. The SERP is
intended to be unfunded for purposes of the Internal Revenue Code and the
Employee Retirement Income Security Act of 1974, as amended.

Benefits under the SERP are intended to supplement the retirement benefits
received by executive employees through other Company programs, such as the ESOP
and SESOP and 401(k) Plan (as such terms are defined herein) described below, as
well as Social Security benefits attributable to Company-paid FICA taxes.
Benefits under the SERP, payable upon normal retirement at age 65 (or upon early
retirement at age 62) as an actuarial equivalent of a life annuity, are based
upon age, length of service (up to a maximum of 15 credited years of service)
and an average of the participant's three highest consecutive calendar years of
compensation out of the five calendar years immediately preceding the normal or
early retirement date or other date of termination of employment ("Average Final
Compensation"). The SERP provides for making payments to the executive in
amounts equal to 65% of the employee's Average Final Compensation, offset by
amounts deemed available under the 401(k) Plan and Social Security benefits, to
the extent attributable to the Company's contribution and to Company-paid FICA
taxes, respectively, as well as the deemed value of shares allocated to the
employee under the Company's ESOP and SESOP. The amount deemed available under
the Company's 401(k) Plan and the deemed value of shares in the

46
<PAGE>
ESOP and SESOP shall equal, respectively, (1) the amount of the Company's
contributions to the 401(k) Plan accreted at a deemed simple annual interest
rate of 7% and (2) the value of the HPSC shares allocated to the executive's
account in the ESOP and SESOP as of the date of the executive's initial
participation in the ESOP and SESOP, also accreted at a deemed simple annual
interest rate of 7% until the date of the executive's termination of employment.
Accrual and vesting of benefits are contingent on the executive's continued
service as an employee of the Company, with accrual in equal amounts over the
first 15 years of service and vesting over a period of 10 years, starting in the
sixth year of service, provided that an executive's benefits will also fully
accrue and vest upon a "change in control" of the Company (as defined in the
SERP) unless such change in control is approved by at least a two-thirds vote of
the incumbent Board of Directors. Limited service credit (up to a maximum of
three years) is given for service before 1993 and full service credit is given
for service between January 1, 1993 and the effective date of the SERP. For all
periods prior to the effective date, service as either an employee of the
Company or a member of its Board of Directors is credited. On and after the
effective date, only service as an employee is credited. Benefits will be paid
from the SERP only upon a participant's termination of employment and the
occurrence of any one of the following: (i) attainment by the employee of his or
her early or normal retirement age, (ii) the employee's death, (iii) if the
Company's net worth decreases below $25 million,or (iv) if there is a change in
control of the Company. The SERP contains a tax "gross-up" provision such that
any payment made under the SERP following a change in control of the Company
that results in imposition of an excise tax on the employee under Section 4999
of the Internal Revenue Code (or any successor legislation) will also result in
payment by the Company of all excise taxes plus the employee's regular federal,
state and local income taxes on such gross-up, so that the employee is made
whole for the full effect of the excise tax.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN BENEFIT TABLE(1)

<TABLE>
<CAPTION>
YEARS OF SERVICE
---------------------------
AVERAGE FINAL COMPENSATION 5 10 15+
---------------------------------------- ------- -------- --------
<S> <C> <C> <C>

$100,000................................ $16,250 $ 48,750 $ 65,000

150,000................................ 24,375 73,125 97,500

200,000................................ 32,500 97,500 130,000

250,000................................ 40,625 121,875 162,500

300,000................................ 48,750 146,250 195,000

400,000................................ 65,000 195,000 260,000

500,000................................ 81,250 243,750 325,000
</TABLE>

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

(1) Amounts shown do not reflect offset for benefits received and attributable
to the Company under the Company's 401(k) plan, employee stock ownership
plans, and FICA contributions.

For the Named Executive Officers, the years of credited service and 1996
compensation as of December 31, 1996, were: Mr. Everets--7.0 years, $250,000;
Mr. Doherty--7.0 years, $200,000; and Mr. Lefebvre--2.7 years, $135,000.

The SERP will be funded through the Company's purchase of an annuity
contract at an initial cost of $258,425 per year, the first payment of which was
made in November 1996. It is anticipated that the Company will recover all of
its costs related to the SERP, other than potential earnings thereon. The
Company is not obligated to continue the SERP, and may terminate the SERP at any
time provided that no termination shall reduce any participant's vested benefits
thereunder. Any disputes arising under the SERP shall be determined by binding
arbitration.

EMPLOYEE STOCK OWNERSHIP PLANS

In December 1993, the Company established an Employee Stock Ownership Plan
(the "ESOP") for the benefit of all eligible employees. The ESOP is invested
primarily in Common Stock of the Company on

47
<PAGE>
behalf of the participating employees. The Company made contributions of
$105,000 in fiscal year 1996 for the 1995 allocation to the ESOP, $110,000 in
fiscal year 1995 for the 1994 allocation to the ESOP and $99,000 in fiscal year
1994 for the 1993 allocation to the ESOP.

Employees with five or more years of service with the Company from and after
December 1993 at the time of termination of employment will be fully vested in
their benefits under the ESOP. For a participant with fewer than five years of
service from December 1993 through his or her termination date, his or her
account balance will vest at the rate of 20% for each year of service. Upon the
retirement or other termination of an ESOP participant, the shares of Common
Stock in which he or she is vested, at the option of the participant, may be
converted to cash or may be distributed to the participant. The unvested shares
are allocated to the remaining ESOP participants. The Company has issued 300,000
shares of Common Stock to the ESOP in consideration of a Promissory Note in the
principal amount of $1,050,000, payable in ten equal annual installments
beginning September 1, 1994, with interest at prime plus 1%; 31,372 shares of
Common Stock were allocated to participant accounts for fiscal year 1994 under
the ESOP, 31,372 shares of Common Stock were allocated to participant accounts
for fiscal year 1995 and 30,000 shares of Common Stock were allocated to
participant accounts for fiscal year 1996.

In July 1994, the Company adopted a Supplemental Employee Stock Ownership
Plan (the "SESOP") for the benefit of all eligible employees. Eligibility
requirements are similar to the ESOP described above except that any amounts
allocated under the SESOP will be allocated first to the accounts of certain
highly compensated employees, to make up for certain limitations on Company
contributions under the ESOP imposed by the Internal Revenue Code, and next to
all eligible employees on a non-discriminatory basis. The Company has issued
350,000 shares of Common Stock to this plan in consideration of a Promissory
Note in the principal amount of $1,225,000, payable in ten equal annual
installments beginning September 1, 1995, with interest at prime plus 1%. As of
December 31, 1996, no allocations of Common Stock had been made to participant
accounts under the SESOP.

401(K) SAVINGS PLAN

The Company has established a Savings Plan pursuant to Section 401(k) of the
Internal Revenue Code (the "401(k) Plan"), available to substantially all
employees, which allows participants to make contributions to the 401(k) Plan
through salary deductions. The Company matches employee contributions up to a
maximum of 2% of the employee's salary. Amounts contributed to the 401(k) Plan
and any earnings or interest accrued thereon are generally not subject to
federal income tax until distributed to the participant. Both employee and
employer contributions to the 401(k) Plan vest immediately. The Company's
contributions to the 401(k) Plan were $62,841 in fiscal year 1996, $49,419 in
fiscal year 1995, and $37,975 in fiscal year 1994.

STOCK LOAN PROGRAM

On January 5, 1995 the Compensation Committee approved a Stock Loan Program
whereby executive officers and other senior personnel of the Company earning
more than $80,000 per year may borrow from the Company an amount equal to the
cost of purchasing two shares of Common Stock, solely for the purpose of
acquiring such stock, for each share of Common Stock purchased by the employee
from sources other than Company funds. Such borrowings may not exceed $200,000
in any fiscal quarter of the Company, $200,000 per employee or $400,000 during
the term of the loan program for all employees. All shares purchased with such
loans are pledged to the Company as collateral for repayment of the loans. The
loans are recourse, bear interest at a variable rate which is one-half of one
percent above the Company's cost of funds, payable monthly in arrears, and are
payable as to principal no later than five (5) years after the date of the loan.
As of the date of this Prospectus, the Company has loans outstanding to
executive officers in the following amounts secured by the number of shares of
Common Stock listed: Mr. Everets, $98,000, secured by 26,133 shares; Mr.
Doherty, $37,500, secured by 10,000 shares; and Mr. Lefebvre, $37,500, secured
by 10,000 shares. None of the loans to the Named Executive Officers has been
repaid as of December 31, 1996, other than monthly interest payments thereon.
The largest aggregate amount of outstanding indebtedness under the Stock Loan
Program since its inception has been $198,500.

48
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The current members of the Compensation Committee are Ms. Cole (Chair) and
Messrs. Birchfield and Cooley. None of these individuals is or has been an
employee of the Company. No executive officer of the Company serves as a member
of the board of directors or compensation committee of any entity that has one
or more executive officers serving as a member of the Company's Board of
Directors or Compensation Committee.

CERTAIN TRANSACTIONS

STOCK LOAN PROGRAM

REPURCHASE OF SHARES FORMERLY HELD BY HEALTHCO INTERNATIONAL, INC.

In July 1995 the Company completed the repurchase of 1,225,182 shares of its
Common Stock, at $4.62 per share, from certain secured creditors of Healthco
(which was formerly the largest shareholder of the Company and which declared
bankruptcy in June 1993) pursuant to a Purchase and Sale Agreement between the
Company and the Healthco secured creditors, dated as of November 1, 1994 (the
"Stock Purchase Agreement"). Healthco had pledged the shares of the Company's
Common Stock to secure its obligations to the secured creditors. The shares were
released from the pledge agreement upon the Company's completion of payment of
the purchase price for the shares. The secured creditors also released the
Company from any claims that may arise out of the bankruptcy of Healthco. The
Company retired 1,125,182 of these shares and holds 100,000 of these shares in
its treasury.

CONSULTING AGREEMENT BETWEEN MR. EVERETS AND ADVEST, INC.

In January 1990, in connection with Mr. Everets' termination of his
employment with Advest, Inc. ("Advest"), one of the Underwriters, Mr. Everets
agreed to provide consulting services on a limited basis to Advest on various
matters. Since that date, Mr. Everets has received $1,000 per month from Advest
for such services. The agreement has no fixed term and is terminable by either
party at any time without notice.

49
<PAGE>
PRINCIPAL STOCKHOLDERS

The following table sets forth as of December 31, 1996 certain information
with respect to the beneficial ownership of the Common Stock by: (i) each person
or entity known by the Company to beneficially own 5% or more of the Common
Stock; (ii) each director of the Company; (iii) each of the Named Executive
Officers; and (iv) all directors and executive officers of the Company as a
group. The information in the table and in the related notes has been furnished
by or on behalf of the indicated owners. Unless otherwise noted, the Company
believes the persons and entities referred to in this table have sole voting and
investment power with respect to the shares listed in this table. The percentage
owned is calculated with respect to each person by treating shares issuable to
such person within 60 days of December 31, 1996 as outstanding, in accordance
with rules of the Securities and Exchange Commission ("SEC"). The Company had
4,657,930 shares of Common Stock outstanding as of December 31, 1996.

<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP OF
COMMON STOCK PERCENT
NAME (AND ADDRESS OF OWNER OF MORE THAN 5%) (1)(2) OF CLASS
- ------------------------------------------------------- ----------------- ---------
<S> <C> <C>
John W. Everets........................................ 456,733(3)(4)(5)(6) 9.5%
60 State Street, 35th Floor
Boston, MA 02109-1803

Tweedy, Browne Company, L.P............................ 433,285(7) 9.3%
52 Vanderbilt Avenue
New York, NY 10017

Dimensional Fund Advisors, Inc......................... 374,900(8) 8.0%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401

Harder Management Company, Inc......................... 364,390(9) 7.8%
Somerset Court
281 Winter Street, Suite 340
Waltham, MA 02154

Fidelity Management and Research Corporation........... 352,500(10) 7.6%
82 Devonshire Street
Boston, MA 02109-3605

Hollybank Investments, LP.............................. 352,000(11) 7.6%
One Financial Center, Suite 1600
Boston, MA 02111

John W. Everets and Raymond R. Doherty................. 350,000(12) 7.5%
as Trustees of the HPSC, Inc.
Supplemental Employee Stock
Ownership Plan and Trust
60 State Street, 35th Floor
Boston, MA 02109-1803

John W. Everets and Raymond R. Doherty................. 300,000(13) 6.4%
as Trustees of the HPSC, Inc.
Employee Stock Ownership Plan
60 State Street, 35th Floor
Boston, MA 02109-1803

Raymond R. Doherty..................................... 245,280(3)(4)(6) 5.1%

Rene Lefebvre.......................................... 60,766(4)(6) 1.3%

Joseph A. Biernat...................................... 10,000 *

J. Kermit Birchfield................................... 40,667(14) *

Dollie A. Cole......................................... 37,500 *

Samuel P. Cooley....................................... 11,000 *

Thomas M. McDougal..................................... 22,000 *

Lowell P. Weicker, Jr.................................. 5,900(15) *

All Directors and Executive Officers as a group (9
persons)............................................. 889,846(3)(6) 17.6%
</TABLE>

50
<PAGE>
- ------------------------

* Percent of class less than 1%.

(1) Includes shares of the Company's Common Stock which the named security
holder has the right to acquire within 60 days of December 31, 1996 through
the exercise of options granted by the Company to the named individuals or
group as follows: Messrs. Biernat, Birchfield and Cooley, 10,000 shares
each; Ms. Cole and Dr. McDougal, 22,000 shares each; Mr. Weicker, 5,000
shares; Mr. Everets, 170,000 shares; Mr. Doherty, 132,000 shares; Mr.
Lefebvre, 18,000 shares; and all such persons collectively, 399,000 shares.

(2) Includes allocated shares under the HPSC, Inc. Employee Stock Ownership Plan
(the "ESOP") of 6,033 for Mr. Everets, 8,030 for Mr. Doherty, 2,766 for Mr.
Lefebvre and 16,829 for all executive officers and directors as a group.

(3) Excludes the 300,000 shares held in the ESOP for the benefit of the employee
participants (other than the shares allocated to the respective ESOP
accounts of Messrs. Doherty and Everets listed in Note (2) above) and the
350,000 shares held in the HPSC, Inc. Supplemental Employee Stock Ownership
Plan and Trust (the "SESOP") for the benefit of the employee participants.
Although Messrs. Doherty and Everets are the trustees of both the ESOP and
SESOP and accordingly share voting power with respect to all unallocated
shares and share dispositive power with respect to all shares in the ESOP
and the SESOP, they disclaim beneficial ownership of all such shares, other
than the shares allocated to their respective ESOP accounts listed in Note
(2) above.

(4) Includes 26,133 shares, 10,000 shares and 10,000 shares, respectively, for
Messrs. Everets, Doherty and Lefebvre, purchased under the Stock Loan
Program described in "Management--Executive Compensation--Stock Loan
Program" and "Certain Transactions--Stock Loan Program." All such shares are
pledged to the Company pursuant to the Stock Loan Program.

(5) Includes 100 shares held by Mr. Everets' son, A. Hale W. Everets. Mr.
Everets disclaims beneficial ownership of such shares.

(6) Includes 185,000, 90,000 and 25,000 restricted shares granted to Messrs.
Everets, Doherty and Lefebvre, respectively, on May 12, 1995, as described
in "Management--Executive Compensation-- Summary Compensation Table."

(7) Based solely upon information reported on Schedule 13D as filed with the
SEC. Tweedy, Browne Company, L.P. ("TBC"), TBK Partners, L.P. ("TBK") and
Vanderbilt Partners, L.P. ("Vanderbilt") filed an Amendment No. 4 to its
Schedule 13D with the SEC on October 28, 1995. TBC is the beneficial owner
of 408,285 shares of the Company's Common Stock. TBK and Vanderbilt own
directly 15,000 and 10,000 shares of the Company's Common Stock,
respectively. The aggregate number of shares of the Company's Common Stock
of which TBC, TBK and Vanderbilt could be deemed to be beneficial owners is
433,285. TBC has investment discretion with respect to 408,285 shares and
sole power to dispose or direct the disposition of all of such shares. TBC
has shared power to vote or direct the vote of 350,285 shares. TBK has the
sole power to vote or direct the voting of and to dispose or direct the
disposition of the 15,000 shares it holds. Vanderbilt has the sole power to
vote or direct the voting of and dispose or direct the disposition of the
10,000 shares it holds. The general partners of TBC and Vanderbilt are
Christopher H. Browne, William H. Browne and John D. Spears. The general
partners of TBK are Christopher H. Browne, William H. Browne, Thomas P.
Knapp and John D. Spears. The general partners of TBC, by reason of their
positions as such, may be deemed to have shared power to dispose of or to
direct the disposition of 408,285 shares and shared power to vote or to
direct the vote of 350,285 shares. Each of the general partners of TBK and
Vanderbilt, by reason of his position as such, may be deemed to have shared
power to vote or direct the vote of and to dispose or direct the disposition
of the 15,000 shares held by TBK and the 10,000 shares held by Vanderbilt,
respectively.

51
<PAGE>
(8) Dimensional Fund Advisors, Inc. ("Dimensional") filed an Amendment No. 5 to
its Schedule 13G with the SEC in February 1996 reporting that it is a
registered investment adviser and is deemed to have beneficial ownership of
all of the shares of Common Stock of the Company held by it (374,900 shares
as of September 30, 1996), all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware business trust,
or the DFA Group Trust and DFA Participating Group Trust, investment
vehicles for qualified employee benefit plans, all of which Dimensional
serves as investment manager. Dimensional disclaims beneficial ownership of
all such shares.

(9) Harder Management Company, Inc. ("Harder") filed a Schedule 13G with the SEC
reporting that it is a registered investment adviser and that the 364,390
shares of the Company's Common Stock held by Harder is held on behalf of its
clients in accounts over which Harder has complete investment discretion.
Harder disclaims beneficial ownership of the 364,390 shares except in its
capacity as an investment adviser.

(10) Based solely upon information reported on Schedule 13G as filed with the
SEC. Fidelity Management and Research Corporation ("FMRC") filed a Schedule
13G with the SEC for the year ended December 31, 1995 reporting that it has
investment discretion with respect to 352,500 shares of Common Stock of the
Company. FMRC reports that it has no voting authority with respect to such
shares.

(11) Hollybank Investments, LP ("Hollybank") reports that Dorsey R. Gardner,
Hollybank's general partner, has sole voting power with respect to an
additional 30,580 shares of Common Stock of the Company held in his name.
Mr. Gardner disclaims beneficial ownership, except to the extent of his
partnership interest, in the 352,000 shares of Company Common Stock held by
Hollybank.

(12) None of the 350,000 shares have been allocated to the accounts of
participants in the SESOP. Messrs. Doherty and Everets disclaim beneficial
ownership of all such shares.

(13) 89,654 of these shares have been allocated to the accounts of ESOP
participants and 210,346 shares are unallocated. Messrs. Doherty and Everets
disclaim beneficial ownership of all such shares, other than the shares
allocated to their respective ESOP accounts listed in Note (2) above.

(14) Includes 3,000 shares held by Mr. Birchfield's spouse. Mr. Birchfield
disclaims beneficial ownership of such shares.

(15) Includes 200 shares held by Mr. Weicker's spouse. Mr. Weicker disclaims
beneficial ownership of such shares.

52
<PAGE>
DESCRIPTION OF NOTES

The Notes will be issued pursuant to an indenture (the "Indenture") to be
dated as of , 1997, by and between HPSC and State Street Bank and Trust
Company, as trustee (the "Trustee"). The terms of the Notes include those stated
in the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The following
summary of certain provisions of the Indenture is a summary only, does not
purport to be complete and is qualified in its entirety by reference to all of
the provisions of the Indenture. A copy of the Indenture has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part.
Capitalized terms used herein and not otherwise defined shall have the meanings
assigned to them in the Indenture.

GENERAL

The Notes will mature on , 2007. Interest on the Notes will accrue at
the rate of % per annum from the date of issuance or from the most recent
Interest Payment Date to which interest has been paid or provided for, payable
semi-annually on 1 and 1 of each year, commencing 1, 1997,
to the Persons in whose names such Notes are registered at the close of business
on the 15 or 15 immediately preceding such Interest Payment Date.
Interest will be calculated on the basis of a 360-day year consisting of twelve
30-day months.

Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes may be presented for registration of transfer or exchange, at the
office or agency of HPSC maintained for such purpose, which office or agency
shall be maintained in the City of Boston, Massachusetts. At the option of HPSC,
payment of interest may be made by check mailed to the Holders of the Notes at
the addresses set forth upon the registry books of HPSC. No service charge will
be made for any registration of transfer or exchange of Notes, but HPSC may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. Until otherwise designated by HPSC,
HPSC's office or agency will be the corporate trust office of the Trustee
maintained for such purpose. The Notes will be issued only in fully registered
form, without coupons, in denominations of $1,000 and integral multiples
thereof.

RANKING; SUBORDINATION OF THE NOTES

The Notes are unsecured, general obligations of HPSC, limited in aggregate
principal amount to $23.0 million. The payment of the principal of, premium (if
any) and interest on the Notes is subordinated in right of payment, as set forth
in the Indenture, to the payment when due of all Secured Portfolio Debt of HPSC,
including, without limitation, Indebtedness under the Revolver Agreement and
Savings Bank Indebtedness. In addition, none of HPSC's existing or future
Subsidiaries has guaranteed or will guarantee the Indebtedness under the Notes.
Accordingly, the Indebtedness under the Notes will effectively be "structurally
subordinated" to any Indebtedness of any Subsidiary of HPSC. At September 30,
1996, after giving effect to the issuance and sale of the Notes and the
application of the net proceeds therefrom as described herein under "Use of
Proceeds", the outstanding Secured Portfolio Debt of the Company would have been
$95.0 million and the outstanding Indebtedness of Subsidiaries of HPSC would
have been $55.0 million. Although the Indenture contains limitations on the
amount of additional Funded Recourse Debt which the Company may incur, the
Indenture contains no restrictions on the amount of Secured Portfolio Debt which
the Company may incur and, under certain circumstances, the amount of additional
Funded Recourse Debt permitted to be incurred could be substantial. See "Certain
Covenants--LIMITATION ON INCURRENCE OF FUNDED RECOURSE DEBT AND DISQUALIFIED
CAPITAL STOCK" below.

Indebtedness of the Company that is Secured Portfolio Debt will rank senior
to the Notes in accordance with the provisions of the Indenture. The Notes will
in all respects rank (i) PARI PASSU with any and all other existing unsecured
Funded Recourse Debt of the Company and (ii) senior in right of payment with all
future unsecured Funded Recourse Debt of the Company. The Company has agreed in
the Indenture that it will not incur, directly or indirectly, any additional
unsecured Funded Recourse Debt which is subordinate or junior in ranking in any
respect to any Indebtedness of the Company unless such unsecured Funded Recourse
Debt is expressly subordinated in right of payment to the Notes. Unsecured
Indebtedness is not deemed to be subordinate or junior to Secured Indebtedness
merely because it is

53
<PAGE>
unsecured. The Company does not currently have outstanding any indebtedness that
is subordinate or junior in right of payment to the Notes. In the event of the
bankruptcy, liquidation, reorganization or other dissolution of the Company,
there may not be sufficient assets remaining to satisfy the holders of the Notes
after satisfying the claims of any holders of Secured Portfolio Debt and
Indebtedness of any existing or future subsidiaries of HPSC.

Upon any payment or distribution of assets of HPSC or upon a total or
partial liquidation or dissolution or reorganization of or similar proceeding
relating to HPSC or its property, the holders of Secured Portfolio Debt will be
entitled to receive payment in full of the Secured Portfolio Debt before Holders
of Notes are entitled to receive any payment and, until the Secured Portfolio
Debt is paid in full, any payment or distribution to which Holders of Notes
would be entitled but for the subordination provisions of the Indenture will be
made to holders of the Secured Portfolio Debt as their interest may appear. If a
distribution is made to Holders of Notes that due to the subordination
provisions should not have been made to them, such Holders of Notes are required
to hold the distribution in trust for the holders of Secured Portfolio Debt and
pay it over to them as their interests may appear.

The Company may not pay principal of, premium (if any) or interest on, the
Notes or make any deposit pursuant to the provisions described under "Legal
Defeasance and Covenant Defeasance" below and may not otherwise purchase or
retire any Notes if any Secured Portfolio Debt is not paid when due. However,
payment from the money or the proceeds of U.S. Government Obligations held in
any defeasance trust described under "Legal Defeasance or Covenant Defeasance"
below is not subordinated to any Secured Portfolio Debt or subject to the
restrictions described herein. In addition, the Company may pay the Notes
without regard to the foregoing if the Company and the Trustee receive written
notice approving such payment from the Representative of any such Secured
Portfolio Debt which is not paid when due.

By reason of such subordination provisions contained in the Indenture, in
the event of insolvency (i) creditors of the Company who are holders of Secured
Portfolio Debt may recover ratably more than holders of the Notes, (ii) funds
which would otherwise be payable to the holders of the Notes will be paid to
holders of Secured Portfolio Debt (or their representatives) to the extent
necessary to pay such Secured Portfolio Debt in full and (iii) the Company may
be unable to meet its obligations fully with respect to the Notes or such other
indebtedness and obligations in respect thereof.

REDEMPTION

SINKING FUND

On or after , 2002, the Company is required to redeem on 1,
1, 1 and 1 of each year (each, a "Sinking Fund Payment Date"),
a portion of the aggregate principal amount of the Notes as set forth below
(each, a "Sinking Fund Payment") at a Redemption Price equal to 100% of the
aggregate principal amount of the Notes so redeemed, plus accrued but unpaid
interest to the Redemption Date:

<TABLE>
<CAPTION>
SINKING FUND PRINCIPAL AMOUNT
PAYMENT DATE TO BE REDEEMED
- ---------------------------------------------------------------------------- ----------------
<S> <C>

</TABLE>

The principal amount of Notes to be redeemed may at the option of HPSC be
reduced in inverse order of maturity by an amount equal to the sum of (i) the
principal amount of Notes theretofore issued and acquired at any time by HPSC
and delivered to the Trustee for cancellation and not theretofore made the basis
for the reduction of a Sinking Fund Payment and (ii) the principal amount of
Notes at any time

54
<PAGE>
redeemed and paid pursuant to the provisions set forth below under the heading
"OPTIONAL REDEMPTION", or which shall at any time have been duly called for
redemption (otherwise than through operation of the Sinking Fund) and the
Redemption Price shall have been deposited in trust for that purpose and which
theretofore have not been made the basis for the reduction of a Sinking Fund
Payment.

OPTIONAL REDEMPTION

HPSC will not have the right to redeem any Notes prior to 1, 2002. The
Notes will be redeemable at the option of HPSC, in whole or in part, otherwise
than through operation of the Sinking Fund, at any time on or after 1,
2002, at the following redemption prices (expressed as percentages of the
principal amount) if redeemed during the 12-month period commencing 1, of
the years indicated below, in each case together with accrued and unpaid
interest thereon to the Redemption Date:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---------------------------------------------------------------------------------- -------------

Except as described above and as set forth below under "--Certain
Covenants--REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF
CONTROL and--REPURCHASE OF NOTES UPON DEATH OF HOLDER," HPSC is not required to
make any mandatory redemption with respect to the Notes.

SELECTION AND NOTICE

In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a pro rata basis, by lot or in such other
manner it deems appropriate and fair. The Notes may be redeemed in part, but
only in multiples of $1,000. Notice of any redemption, whether through operation
of the Sinking Fund or otherwise, will be sent by first class mail at least 30
days and not more than 60 days prior to the date fixed for redemption to the
Holder of each Note to be redeemed to such Holder's last address as then shown
upon the registry books of the Registrar. Any notice which relates to a Note to
be redeemed in part only must state the portion of the principal amount equal to
the unredeemed portion thereof and must state, among other things, that on and
after the date of redemption, upon surrender of such Note, a new Note or Notes
in a principal amount equal to the unredeemed portion thereof will be issued. On
and after the date of redemption, interest will cease to accrue on the Notes or
portions thereof called for redemption (subject to the right of Holders of
record on a Record Date to receive interest due on an Interest Payment Date that
is on or prior to such date of redemption).

CERTAIN COVENANTS

REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL

The Indenture provides that in the event that a Change of Control (as
defined below) has occurred, each Holder of Notes will have the right, at such
Holder's option, pursuant to an irrevocable and unconditional offer by HPSC (the
"Change of Control Offer"), to require HPSC to repurchase all or any part of
such Holder's Notes (provided, that the principal amount of such Notes must be
$1,000 or an integral multiple thereof) on a date determined by HPSC (the
"Change of Control Purchase Date") that is no later than 45 Business Days after
the occurrence of such Change of Control, at a cash price (the "Change of
Control Purchase Price") equal to 101% of the principal amount thereof, together
with accrued and unpaid interest to the Change of Control Purchase Date. The
Change of Control Offer shall be made within 15 Business Days following a Change
of Control and shall remain open for 20 Business Days (or such later date as may
be required by applicable law, rule or regulation) following the commencement
(the "Change of Control Offer Period") thereof. Upon expiration of the Change of

55
<PAGE>
Control Offer Period, HPSC shall purchase all Notes properly tendered in
response to the Change of Control Offer and such offer shall terminate.

As used herein, a "Change of Control" means (i) any sale, merger or
consolidation with or into any Person or any transfer or other conveyance,
whether direct or indirect, of all or substantially all of the assets of HPSC,
on a consolidated basis, in one transaction or in a series of related
transactions, if, immediately after giving effect to such transaction, any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable) is or becomes the
"beneficial owner," directly or indirectly, of more than 50% of the total voting
power in the aggregate normally entitled to vote in the election of directors,
managers or trustees, as applicable, of the transferee or surviving entity, (ii)
any "person" or "group" (as such terms are used for purposes of Sections 13(d)
and 14(d) of the Exchange Act, whether or not applicable) is or becomes the
"beneficial owner," directly or indirectly, of more than 50% of the total voting
power in the aggregate of all classes of Capital Stock of HPSC then outstanding
normally entitled to vote in elections of directors or (iii) during any period
of 12 consecutive months after the Issue Date, individuals who at the beginning
of any such 12-month period constituted the Board of Directors of HPSC (together
with any new directors whose election by such Board or whose nomination for
election by the shareholders of HPSC was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election, recommendation, or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of HPSC then in office.

On or before the Change of Control Purchase Date, HPSC will (i) accept for
payment Notes or portions thereof properly tendered pursuant to the Change of
Control Offer and (ii) deposit with the Paying Agent cash sufficient to pay the
Change of Control Purchase Price (together with accrued but unpaid interest) of
all Notes so tendered. Promptly following the Change of Control Purchase Date,
HPSC will deliver to the Trustee the Notes so accepted, together with an
Officers' Certificate listing the Notes or portions thereof being purchased by
HPSC. The Paying Agent will promptly mail to the Holders of Notes so accepted
payment in an amount equal to the Change of Control Purchase Price (together
with accrued but unpaid interest), and the Trustee will promptly authenticate
and mail or deliver to such Holders a new Note equal in principal amount to any
unpurchased portion of the Note surrendered. Any Notes not so accepted will be
promptly mailed or delivered by HPSC to the Holder thereof. HPSC will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Purchase Date.

The phrase "all or substantially all" of the assets of HPSC will likely be
interpreted under applicable state law and will be dependent upon particular
facts and circumstances. As a result, there may be a degree of uncertainty in
ascertaining whether a sale or transfer of "all or substantially all" of the
assets of HPSC has occurred, in which case a Holder's ability to obtain the
benefit of a Change of Control Offer may be impaired.

The Revolver Agreement contains, and other Indebtedness that may be incurred
in the future could contain, prohibitions on certain events that would
constitute a Change in Control and on a repurchase of the Notes upon a Change in
Control. Moreover, the exercise by the Holders of their right to require HPSC to
repurchase the Notes could cause a default under such Indebtedness even if the
Change of Control itself does not, due to the prohibition on repurchases and the
financial effect of such repurchase on HPSC. The breach of any such prohibitions
or any such default could result in a default and subsequent acceleration of any
such Indebtedness and the enforcement of available remedies thereunder. In
addition, HPSC's ability to pay cash to the Holders of Notes upon a repurchase
may be limited by HPSC's then existing financial resources.

Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under the
Exchange Act and the rules thereunder and all other applicable federal and state
securities laws.

The Change of Control purchase feature of the Notes may make more difficult
or discourage a takeover of HPSC, and, thus, the removal of incumbent
management. The Change of Control purchase feature resulted from negotiations
between HPSC and the Underwriters.

56
<PAGE>
REPURCHASE OF NOTES UPON DEATH OF HOLDER

Upon the death of any Holder of Notes, HPSC will repurchase such Holder's
Notes on request, if (i) the Notes have been registered in the Holder's name
since their date of issuance or for a period of six months prior to the date of
such Holder's death, whichever is less, (ii) the repurchase payments with
respect to such Holder's Notes will not exceed $25,000 in aggregate principal
amount in any calendar year, (iii) HPSC will not, after giving effect to such
payment, have made repurchase payments on Notes of deceased Holders in an
aggregate principal amount exceeding $250,000 in any calendar year (if such
aggregate principal amount exceeds $250,000, the Trustee will repay such Notes
up to $250,000 in aggregate principal amount in the order in which such requests
for repurchase were received), (iv) either the Company or the Trustee has been
notified in writing of the request for repurchase within one year after the
Holder's death, and if less than all of such Holder's Notes are repurchased
pursuant to such initial request, either HPSC or the Trustee has been notified
in writing of subsequent requests for repurchase of additional Notes of such
Holder within one year after any such preceding notice, (v) HPSC is not, after
giving effect to such payment, in default under any Indebtedness and (vi) HPSC
is not subject to any law, regulation, agreement or administrative directive
preventing such repurchase. The Revolver contains a prohibition on any
repurchase of the Notes without the consent of the holders of 66 2/3% of the
outstanding principal amount under the Revolver. Notes for which such repurchase
is requested shall, subject to the limitations described above, be repaid at
100% of the principal amount thereof, together with accrued but unpaid interest
to the repurchase date, within 30 days following receipt by HPSC of the
following: (A) a written request for payment signed by a duly authorized
representative of the deceased Holder, which shall indicate the name of the
deceased Holder, the date of death of the deceased Holder and the principal
amount of Notes to be repurchased, (B) the certificates, if any, representing
the Notes to be repurchased and (C) evidence satisfactory to HPSC and the
Trustee of the death of the Holder and evidence of authority of the
representative to the extent required by the Trustee. Authorized representatives
of a deceased Holder shall include executors, administrators or other legal
representatives of an estate, trustees of a trust, joint owners of Notes owned
in joint tenancy or tenancy by the entirety, custodians, conservators,
guardians, attorneys-in-fact and other persons generally recognized as having
legal authority to act on behalf of others.

The death of a person owning a Note in joint tenancy or tenancy by the
entirety with another or others shall be deemed the death of the Holder of the
Note, and the entire principal amount of the Note so held shall be subject to
repurchase, together with accrued but unpaid interest thereon to the repurchase
date. The death of a person owning a Note by tenancy in common shall be deemed
the death of a Holder of a Note only with respect to the deceased Holder's
interest in the Note so held by tenancy in common, except that in the event a
Note is held by husband and wife as tenants in common, the death of either shall
be deemed the death of the Holder of the Note, and the entire principal amount
of the Note so held shall be subject to repurchase. The death of a person who,
during his or her lifetime, was entitled to substantially all of the beneficial
interests of ownership of a Note, will be deemed the death of the Holder thereof
for purposes of this provision, regardless of the registered Holder, if such
beneficial interest can be established to the satisfaction of the Trustee. Such
beneficial interest will be deemed to exist in typical cases of nominee
ownership, ownership under the Uniform Transfers (or Gifts) to Minors Act,
community property or other joint ownership arrangements between a husband and
wife and trust arrangements where one person has substantially all of the
beneficial ownership interests in the Note during his or her lifetime.

LIMITATION ON INCURRENCE OF FUNDED RECOURSE DEBT AND DISQUALIFIED CAPITAL
STOCK

(a) The Indenture provides that, except as described below, HPSC will not,
and will not permit any of its Subsidiaries to, directly or indirectly, issue,
assume, guaranty, incur, become directly or indirectly liable with respect to
(including as a result of an Acquisition), or otherwise become responsible for,
contingently or otherwise (individually and collectively, to "incur" or, as
appropriate, an "incurrence"), any Funded Recourse Debt (including Acquired
Recourse Debt) or any Disqualified Capital Stock; PROVIDED that (i) HPSC may,
and may permit any Subsidiary of HPSC to, incur Permitted Recourse Debt
(including Secured Portfolio Debt) and (ii) HPSC may incur Funded Recourse Debt
(including Acquired Recourse Debt) or any Disqualified Capital Stock if (A) no
Default or Event of Default shall have occurred and be

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continuing at the time of, or would occur after giving effect on a pro forma
basis to, such incurrence of Funded Recourse Debt or Disqualified Capital Stock
and the application of proceeds therefrom and (B) on the date of such incurrence
(the "Incurrence Date"), the Consolidated Interest Coverage Ratio of HPSC for
the Reference Period immediately preceding the Incurrence Date, after giving
effect on a pro
forma basis to such incurrence of such Funded Recourse Debt or Disqualified
Capital Stock and, to the extent set forth in the definition of Consolidated
Interest Coverage Ratio, the use of proceeds therefrom, would be at least 1.55
to 1.0.

(b) The Indenture provides that HPSC will not, directly or indirectly, incur
any unsecured Funded Recourse Debt unless such unsecured Funded Recourse Debt is
subordinated in right of payment to payment of the Notes upon terms and
conditions no less favorable to the holders of the Notes than the subordination
provisions contained in an exhibit to the Indenture.

(c) The Indenture provides that HPSC will not, and will not permit any of
its Subsidiaries to, directly or indirectly, incur any unsecured Funded Recourse
Debt which by its terms (or by the terms of any agreement governing such
unsecured Funded Recourse Debt) is subordinated to any other Indebtedness of
HPSC unless such unsecured Funded Recourse Debt is also by its terms (or by the
terms of any agreement governing such Funded Recourse Debt) made expressly
subordinate to the Notes to the same extent and in the same manner as such
unsecured Funded Recourse Debt is subordinated pursuant to subordination
provisions that are most favorable to the holders of any other Indebtedness of
HPSC. Unsecured Indebtedness is not deemed to be subordinate or junior to
Secured Indebtedness merely because it is unsecured.

(d) Indebtedness of any Person which is outstanding at the time such Person
becomes a Subsidiary of HPSC or is merged with or into or consolidated with HPSC
or a Subsidiary of HPSC shall be deemed to have been incurred at the time such
Person becomes such a Subsidiary of HPSC or is merged with or into or
consolidated with HPSC or a Subsidiary of the Company, as applicable.

LIMITATION ON RESTRICTED PAYMENTS

The Indenture provides that HPSC will not, and will not permit any of its
Subsidiaries to, directly or indirectly, make any Restricted Payment if, after
giving effect to such Restricted Payment on a pro forma basis, (1) a Default or
an Event of Default shall have occurred and be continuing, (2) HPSC is not
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Consolidated Interest Coverage Ratio in the covenant "Limitation on Incurrence
of Additional Indebtedness and Disqualified Capital Stock" or (3) the aggregate
amount of all Restricted Payments made by HPSC and its Subsidiaries, including
after giving effect to such proposed Restricted Payment, from and after the
Issue Date, would exceed the sum of (a) $2.5 million, plus (b) 50% of the
aggregate Consolidated Net Income of HPSC for the period (taken as one
accounting period), commencing on the first day of the first full fiscal quarter
commencing after the Issue Date, to and including the last day of the fiscal
quarter ended immediately prior to the date of each such calculation (or, in the
event Consolidated Net Income for such period is a deficit, then minus 100% of
such deficit), plus (c) 100% of the aggregate Net Cash Proceeds received by HPSC
and not applied in connection with a Qualified Exchange from the issue or sale
by HPSC after the Issue Date of its Qualified Capital Stock or its debt
securities that have been converted into Qualified Capital Stock (other than an
issue or sale to a Subsidiary of HPSC), including the Net Cash Proceeds received
by HPSC upon the exercise, exchange or conversion of such securities into
Qualified Capital Stock, plus (d) the Net Cash Proceeds received by HPSC or any
of its Subsidiaries from its investment in, and the sale, disposition or other
liquidation of, any Restricted Investment.

The foregoing clauses (2) and (3) of the immediately preceding paragraph,
however, will not prohibit (v) a Qualified Exchange; (w) the payment of any
dividend on Qualified Capital Stock within 60 days after the date of its
declaration if such dividend could have been made on the date of such
declaration in compliance with the foregoing provisions; (x) any redemption or
repurchase or payment on account of Capital Stock of HPSC permitted to be made
under (i) the Restricted Stock Plan or (ii) the Stock Option Plan, in an amount
equal to the sum of the exercise prices paid to HPSC by the holder of such
Capital Stock upon the exercise of such stock options; (y) (i) any redemption or
repurchase by HPSC of its Capital Stock, (ii) any contribution or dividend paid
by HPSC to the ESOP or (iii) any loan made by HPSC to the

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ESOP, in each case (A) only to the extent made in the ordinary course of
business consistent with past practice and pursuant to the terms of the ESOP and
the provisions of ERISA and the Code and (B) not to exceed in the aggregate
$ per calendar year; and (z) any contribution or dividend paid by the ESOP,
in each case only to the extent used by the ESOP (i) to pay administrative
expenses of the ESOP in an amount not to exceed $100,000 per year or (ii) to
repay Indebtedness of the ESOP owed to HPSC or its Subsidiaries. The full amount
of any Restricted Payment made pursuant to the foregoing clauses (w) and (x) of
the immediately preceding sentence, however, will be deducted in the calculation
of the aggregate amount of Restricted Payments available to be made which is
referred to in clause (3) of the immediately preceding paragraph.

LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES

The Indenture provides that HPSC will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, assume or suffer to exist any
consensual restriction on the ability of any Subsidiary of HPSC to pay dividends
or make other distributions to or on behalf of, or to pay any obligation to or
on behalf of, or otherwise to transfer assets or property to, or make or pay
loans or advances to or on behalf of, HPSC or any Subsidiary of HPSC, except (a)
restrictions imposed by the Notes or the Indenture, (b) restrictions imposed by
applicable law, (c) existing restrictions under specified Indebtedness
outstanding on the Issue Date or under any Acquired Recourse Debt not incurred
in violation of the Indenture or any agreement relating to any property, asset,
or business acquired by HPSC or any of its Subsidiaries, which restrictions, in
each case, existed at the time of acquisition, were not put in place in
connection with or in anticipation of such acquisition and are not applicable to
any Person, other than to the Person acquired, or to any property, asset or
business, other than the property, assets and business so acquired, (d) any such
restriction or requirement imposed by Indebtedness of HPSC and its Subsidiaries
under the Revolver Agreement (including any Indebtedness issued to refinance,
refund or replace such Indebetedness in whole or in part, including any extended
maturity or increase in the amount thereof), provided such restriction or
requirement is no more restrictive than that imposed by the Revolver Agreement
in effect as of the Issue Date, (e) restrictions with respect solely to a
Subsidiary of HPSC imposed pursuant to a binding agreement which has been
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Subsidiary, provided such restrictions apply
solely to the Capital Stock or assets of such Subsidiary which are being sold,
(f) in connection with and pursuant to permitted Refinancings, replacements of
restrictions imposed pursuant to clause (c) of this paragraph that are not more
restrictive than those being replaced and do not apply to any other Person or
assets than those that would have been covered by the restrictions in the
Indebtedness so refinanced, (g) any such restriction or requirement imposed by
non-recourse or limited-recourse Indebtedness of a special purpose Subsidiary of
HPSC which was or is incurred solely in connection with securitization of
Customer Receivables in the ordinary course of business consistent with past
practice and (h) any Lien permitted by the covenant "Limitation on Liens."

LIMITATION ON LIENS

The Indenture provides that HPSC will not, and will not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien on any of their respective Non-Receivable Assets, whether now
owned or hereinafter acquired, securing any Funded Recourse Debt of HPSC unless
the Notes are equally and ratably secured; PROVIDED that (i) the foregoing
restrictions shall not prohibit HPSC or its Subsidiaries from incurring
Permitted Liens and (ii) if such Funded Recourse Debt is by its terms expressly
subordinate to the Notes, the Lien securing such Funded Recourse Debt shall be
subordinate and junior to the Lien securing the Notes with the same relative
priority as such subordinated Funded Recourse Debt shall have with respect to
the Notes.

LIMITATION ON TRANSACTIONS WITH AFFILIATES

The Indenture provides that HPSC will not, and will not permit any of its
Subsidiaries to, enter into any contract, agreement, arrangement or transaction
with any Affiliate (an "Affiliate Transaction") or any series of related
Affiliate Transactions, unless such Affiliate Transaction is made in good faith,
the terms of such Affiliate Transaction are fair and reasonable to HPSC or such
Subsidiary, as the case may be, and are

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on terms at least as favorable as the terms which could be obtained by HPSC or
such Subsidiary, as the case may be, in a comparable transaction made on an
arm's-length basis with Persons who are not Affiliates; provided, however, that
the foregoing restrictions will not apply to Exempted Affiliate Transactions.

Without limiting the foregoing, any Affiliate Transaction or series of
related Affiliate Transactions (i) involving consideration to either party in
excess of $2.0 million, must be evidenced by a resolution of a committee of
non-employee directors of HPSC who are disinterested with respect to such
transaction (an "Independent Committee"), set forth in an Officers' Certificate
addressed and delivered to the Trustee, certifying that (a) the terms of such
Affiliate Transaction are fair and reasonable to HPSC or such Subsidiary, as the
case may be, and no less favorable to HPSC or such Subsidiary, as the case may
be, than could have been obtained in an arm's-length transaction with a
non-Affiliate and (b) such Affiliate Transaction has been approved by a majority
of the members of an Independent Committee, and (ii) involving consideration to
either party in excess of $5.0 million must be evidenced by a resolution of an
Independent Committee in accordance with the foregoing clause (i) and, prior to
the consummation thereof, a written favorable opinion as to the fairness of such
transaction to HPSC or such Subsidiary, as the case may be, from a financial
point of view from an independent investment banking firm of national
reputation; provided, however, that the foregoing restrictions will not apply to
Exempted Affiliate Transactions.

LIMITATION ON MERGER, SALE OR CONSOLIDATION

The Indenture provides that HPSC will not, directly or indirectly,
consolidate with or merge with or into another Person or sell, lease, convey or
transfer all or substantially all of its assets (computed on a consolidated
basis), whether in a single transaction or a series of related transactions, to
another Person or group of affiliated Persons, unless (i) either (a) HPSC is the
continuing entity or (b) the resulting, surviving or transferee entity is a
corporation organized under the laws of the United States, any state thereof or
the District of Columbia and expressly assumes by supplemental indenture all of
the obligations of HPSC in connection with the Notes and the Indenture; (ii) no
Default or Event of Default shall exist or shall occur immediately after giving
effect on a pro forma basis to such transaction; (iii) immediately after giving
effect to such transaction on a pro forma basis, the Consolidated Net Worth of
the consolidated resulting, surviving or transferee entity is at least equal to
the Consolidated Net Worth of HPSC immediately prior to such transaction; and
(iv) immediately after giving effect to such transaction on a pro forma basis,
the consolidated resulting, surviving or transferee entity would immediately
thereafter be permitted to incur at least $1.00 of additional Funded Recourse
Debt pursuant to the Consolidated Interest Coverage Ratio set forth in the
covenant "Limitation on Incurrence of Additional Funded Recourse Debt and
Disqualified Capital Stock."

Upon any consolidation or merger or any transfer of all or substantially all
of the assets of HPSC in accordance with the foregoing, the successor
corporation formed by such consolidation or into which HPSC is merged or to
which such transfer is made, shall succeed to, and be substituted for, and may
exercise every right and power of, HPSC under the Indenture with the same effect
as if such successor corporation had been named therein as HPSC, and when a
successor corporation duly assumes all of the obligations of HPSC pursuant to
the Indenture and the Notes, HPSC shall be released from the obligations under
the Notes and the Indenture except with respect to any obligations that arise
from, or are related to, such transaction.

LIMITATION ON LINES OF BUSINESS

The Indenture provides that neither HPSC nor any of its Subsidiaries shall
directly or indirectly engage to any substantial extent in any line or lines of
business activity other than that which, in the reasonable good faith judgment
of the Board of Directors of HPSC, is a Related Business.

LIMITATION ON STATUS AS INVESTMENT COMPANY

The Indenture prohibits HPSC and its Subsidiaries from being required to
register as an "investment company" (as that term is defined in the Investment
Company Act of 1940, as amended), or from otherwise becoming subject to
regulation as an investment company.

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REPORTS

The Indenture provides that whether or not HPSC is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, HPSC shall deliver to
the Trustee and each Holder of Notes, within ten days after it is or would have
been required to file such with the Commission, annual and quarterly financial
statements substantially equivalent to financial statements that would have been
included in reports filed with the Commission, if HPSC were subject to the
requirements of Section 13 or 15(d) of the Exchange Act, including, with respect
to annual information only, a report thereon by HPSC's certified independent
public accountants as such would be required in such reports to the Commission,
and, in each case, together with management's discussion and analysis of
financial condition and results of operations which would be so required. In
addition, whether or not required by the rules and regulations of the
Commission, HPSC will file a copy of all such information and reports with the
Commission for public availability (unless the Commission will not accept such a
filing).

EVENTS OF DEFAULT AND REMEDIES

The Indenture defines an Event of Default as (i) the failure by HPSC to pay
any installment of interest on the Notes as and when the same becomes due and
payable and the continuance of any such failure for 15 days, (ii) the failure by
HPSC to pay all or any part of the principal of, or premium, if any, on the
Notes when and as the same becomes due and payable at maturity, upon redemption
or repurchase, by acceleration or otherwise, including, without limitation,
payment of the Change of Control Purchase Price, (iii) the failure by HPSC to
comply with the provisions described under the covenant "Limitation on Merger,
Sale or Consolidation," (iv) the failure by HPSC to observe or perform any other
covenant or agreement contained in the Notes or the Indenture and, subject to
certain exceptions, the continuance of such failure for a period of 30 days
after written notice is given to HPSC by the Trustee or to HPSC and the Trustee
by the Holders of at least 25% in aggregate principal amount of the Notes
outstanding, (v) certain events of bankruptcy, insolvency or reorganization in
respect of HPSC or any of its Subsidiaries, (vi) a default in any Indebtedness
of HPSC or any of its Subsidiaries with an aggregate principal amount in excess
of $1 million (a) resulting from the failure to pay principal of, premium, if
any, or interest on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness or (b) as a result of which the maturity of
such Indebtedness has been accelerated prior to its stated maturity, or (vii)
the failure by HPSC or any of its Subsidiaries to pay final judgments
aggregating in excess of $1.0 million if (A) any creditor has commenced an
enforcement proceeding with respect to such final judgements or (B) such final
judgments remain undischarged for a period (during which execution shall not be
effectively stayed) of 30 days after their entry.

If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (vi) above relating to HPSC or any Subsidiary), then
in every such case, unless the principal of all of the Notes shall have already
become due and payable, either the Trustee or the Holders of 25% in aggregate
principal amount of the Notes then outstanding, by notice in writing to HPSC
(and to the Trustee if given by Holders), may (after five days' prior written
notice to HPSC, which shall in turn give notice to the representatives of
holders of Secured Portfolio Debt, in the case of an Event of Default specified
in clause (vi) above, unless HPSC or any of its Subsidiaries has paid in full
the Indebtedness with respect to which the payment default gave rise to such
Event of Default or otherwise cured or obtained a waiver of such payment
default) declare all principal and accrued interest thereon to be due and
payable immediately. If an Event of Default specified in clause (v) above
relating to HPSC or any Subsidiary occurs, all principal and accrued interest
thereon will be immediately due and payable on all outstanding Notes without any
declaration or other act on the part of Trustee or the Holders. Holders of a
majority in aggregate principal amount of Notes generally are authorized to
rescind such acceleration if all existing Events of Default (other than the
non-payment of the principal of, premium, if any, and interest on the Notes
which have become due solely by such acceleration) have been cured or waived,
except a default with respect to any provision which cannot be modified or
amended by majority approval.

Prior to the declaration of acceleration of the maturity of the Notes, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders

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any default, except a default in the payment of principal of, premium on, or
interest on any Note not yet cured or a default with respect to any covenant or
provision which cannot be modified or amended without the consent of the Holder
of each outstanding Note affected. Subject to the provisions of the Indenture
relating to the duties of the Trustee, the Trustee will be under no obligation
to exercise any of its rights or powers under the Indenture at the request,
order or direction of any of the Holders, unless such Holders have offered to
the Trustee reasonable security or indemnity. Subject to all provisions of the
Indenture and applicable law, the Holders of a majority in aggregate principal
amount of the Notes at the time outstanding will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee.

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

The Indenture provides that HPSC may, at its option and at any time, elect
to have its obligations discharged with respect to the outstanding Notes ("Legal
Defeasance"). Such Legal Defeasance means that HPSC shall be deemed to have paid
and discharged the entire Indebtedness represented, and the Indenture shall
cease to be of further effect as to all outstanding Notes, except as to (i)
rights of Holders to receive payments in respect of the principal of, premium,
if any, and interest on such Notes when such payments are due from the trust
funds described in the following paragraph; (ii) HPSC's obligations with respect
to such Notes concerning issuing temporary Notes, registration of Notes,
mutilated, destroyed, lost or stolen Notes, and the maintenance of an office or
agency for payment and money for security payments held in trust; (iii) the
rights, powers, trust, duties, and immunities of the Trustee, and HPSC's
obligations in connection therewith; and (iv) the Legal Defeasance and Covenant
Defeasance (as defined) provisions of the Indenture. In addition, HPSC may, at
its option and at any time, elect to have the obligations of HPSC released with
respect to certain covenants that are described in the Indenture ("Covenant
Defeasance") and thereafter any omission to comply with such obligations shall
not constitute a Default or Event of Default with respect to the Notes. In the
event Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, rehabilitation and insolvency events) described in the
Indenture under "Events of Default" will no longer constitute an Event of
Default with respect to the Notes.

In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
HPSC must irrevocably deposit with the Trustee, in trust, for the benefit of the
Holders of the Notes, U.S. legal tender, noncallable government securities or a
combination thereof, in such amounts as will be sufficient, in the opinion of a
nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on such Notes on the stated date for
payment thereof or on the redemption date of such principal or installment of
principal of, premium, if any, or interest on such Notes, and the Holders of
Notes must have a valid, perfected, first priority security interest in such
trust; (ii) in the case of Legal Defeasance, HPSC shall have delivered to the
Trustee an opinion of counsel in the U.S. reasonably acceptable to the Trustee
confirming that (A) HPSC has received from, or there has been published by the
Internal Revenue Service, a ruling or (B) since the date of the Indenture, there
has been a change in the applicable Federal income tax law, in either case to
the effect that, and based thereon such opinion of counsel shall confirm that,
the Holders of such Notes will not recognize income, gain or loss for Federal
income tax purposes as a result of such Legal Defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred; (iii) in
the case of Covenant Defeasance, HPSC shall have delivered to the Trustee an
opinion of counsel in the U.S. reasonably acceptable to such Trustee confirming
that the Holders of such Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such Covenant Defeasance and will be
subject to Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant Defeasance had not
occurred; (iv) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the period ending
on the 91st day after the date of deposit; (v) such Legal Defeasance or Covenant
Defeasance shall not result in a breach or violation of, or constitute a default
under the Indenture or any other material agreement or instrument to which HPSC
or any of its Subsidiaries is a party or by which any of them is bound; (vi)
HPSC shall have delivered to the Trustee an Officers' Certificate stating that
the deposit was not made by HPSC

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with the intent of preferring the Holders of such Notes over any other creditors
of HPSC or with the intent of defeating, hindering, delaying or defrauding any
other creditors of HPSC or others; and (vii) HPSC shall have delivered to the
Trustee an Officers' Certificate and an opinion of counsel, each stating that
the conditions precedent provided for in, in the case of the Officers'
Certificate, (i) through (vi) and, in the case of the opinion of counsel,
clauses (i) (with respect to the validity and perfection of the security
interest), (ii) (if applicable), (iii) and (v) of this paragraph have been
complied with. The Revolver Agreement prohibits the Company from making the
payments required for defeasance without the consent of the holders of 66 2/3%
of the outstanding principal amount under the Revolver.

AMENDMENTS AND SUPPLEMENTS

The Indenture contains provisions permitting HPSC and the Trustee to enter
into a supplemental indenture for certain limited purposes without the consent
of the Holders. With the consent of the Holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, HPSC and the
Trustee are permitted to amend or supplement the Indenture or any supplemental
indenture or modify the rights of the Holders; provided that no such
modification may, without the consent of each Holder affected thereby: (i)
change the Stated Maturity of or the Change of Control Purchase Date on any
Note, or reduce the principal amount thereof or the rate (or extend the time for
payment) of interest thereon or any premium payable upon the redemption thereof,
or change the place of payment where, or the coin or currency in which, any Note
or any premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date), or reduce the Change of Control Purchase Price or alter the redemption
provisions or the provisions under the covenants "Repurchase of Notes at the
Option of the Holder Upon a Change of Control" or "Repurchase of Notes Upon
Death of Holder" in a manner adverse to the Holders, (ii) make a change that
would adversely affect the contractual ranking of the Notes, (iii) reduce the
percentage in principal amount of the outstanding Notes, the consent of whose
Holders is required for any such amendment, supplemental indenture or waiver
provided for in the Indenture or (iv) modify any of the waiver provisions,
except to increase any required percentage or to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent of
the Holder of each outstanding Note affected thereby. The Revolver Agreement
prohibits the Company from modifying or amending the Indenture or the Notes
without the consent of the holders of 66 2/3% of the outstanding principal
amount under the Revolver.

PAYMENTS FOR CONSENT

The Indenture prohibits HPSC and any of its Subsidiaries from, directly or
indirectly, paying or causing to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any terms or provisions of the Notes
unless such consideration is offered to be paid or agreed to be paid to all
Holders of the Notes which so consent, waive or agree to amend in the time frame
set forth in the solicitation documents relating to such consent, waiver or
agreement.

NO PERSONAL LIABILITY OF STOCKHOLDERS, OFFICERS, DIRECTORS

The Indenture provides that no direct or indirect stockholder, employee,
officer or director, as such, past, present or future of HPSC or any successor
entity shall have any personal liability in respect of the obligations of HPSC
under the Indenture or the Notes by reason of his, her or its status as such
stockholder, employee, officer or director.

GOVERNING LAW

The Indenture provides that it and the Notes will be governed by and
construed in accordance with the laws of the State of New York, as applied to
contracts made and performed within the State of New York.

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CONCERNING THE TRUSTEE

State Street Bank and Trust Company is the Trustee under the Indenture.
State Street Bank and Trust Company is a Massachusetts corporation.

The Indenture contains certain limitations on the right of the Trustee,
should it be or become a creditor of HPSC, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee is permitted to engage in other
transactions with HPSC; however, if it acquires any conflicting interest (as
defined), it must eliminate such conflict or resign.

The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee. However, the Trustee may
refuse to follow any direction that conflicts with applicable laws or the
Indenture, is unduly prejudicial to the rights of other Holders of the Notes or
would involve the Trustee in personal liability. The Indenture will provide that
in case an Event of Default shall occur (which shall not be cured), the Trustee
will be required, in the exercise of its powers, to use the degree of care of a
prudent person in the conduct of his or her own affairs. Subject to such
provisions, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request of any of the Holders,
unless they shall have offered to the Trustee satisfactory indemnity.

CERTAIN DEFINITIONS

"ACFC" means American Commercial Finance Corporation, a Delaware
corporation, together with its successors and permitted assigns.

"Acquired Recourse Debt" means Funded Recourse Debt or Disqualified Capital
Stock of any Person existing at the time such Person becomes a direct or
indirect Subsidiary of HPSC or is merged or consolidated into or with HPSC or
one of its Subsidiaries.

"Acquisition" means the purchase or other acquisition of any Person or
substantially all the assets of any Person by any other Person, whether by
purchase, merger, consolidation or other transfer, and whether or not for
consideration.

"Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with HPSC. For purposes
of this definition, the term "control" means the power to direct the management
and policies of a Person, directly or through one or more intermediaries,
whether through the ownership of voting securities, by contract or otherwise,
provided that a beneficial owner of 10% or more of the total voting power
normally entitled to vote in the election of directors, managers or trustees, as
applicable, shall for such purposes be deemed to constitute control.

"Average Life" means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (i) the sum of the
product of (a) the number of years from the date of determination to the date or
dates of each successive scheduled principal (or redemption) payment of such
security or instrument, multiplied by (b) the amount of each such respective
principal (or redemption) payment, by (ii) the sum of all such principal (or
redemption) payments.

"Beneficial Owner" for purposes of the definition of Change of Control has
the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange Act (as
in effect on the Issue Date), whether or not applicable, except that a "person"
shall be deemed to have "beneficial ownership" of all shares that any such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time.

"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in Boston, Massachusetts are
authorized or obligated by law or executive order to close.

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"Capitalized Lease Obligation" means rental obligations under a lease that
are required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Indebtedness represented by such obligations shall
be the capitalized amount of such obligations, as determined in accordance with
GAAP.

"Capital Stock" means, (i) with respect to any Person formed as a
corporation, any and all shares, interests, rights to purchase (other than
convertible or exchangeable Indebtedness), warrants, options, participations or
other equivalents of or interests (however designated) in stock issued by that
corporation and (ii) with respect to any Person formed other than as a
corporation, any and all partnership or other equity interests of such Person.

"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) maturing within one year after
the date of acquisition, (ii) time deposits, certificates of deposit, bankers'
acceptances and commercial paper issued by the parent corporation of any
domestic commercial bank of recognized standing having capital and surplus in
excess of $1 billion, (iii) commercial paper issued by any other issuer which at
the time of purchase is rated at least A-1 or the equivalent thereof by Standard
& Poor's Corporation ("S&P") or at least P-1 or the equivalent thereof by
Moody's Investors Service, Inc. ("Moody's"), (iv) securities commonly known as
"short-term bank notes" issued by any commercial bank denominated in U.S.
Dollars which at the time of purchase is rated at least A-2 or the equivalent
thereof by S&P or at least P-2 or the equivalent thereof by Moody's, (v)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (i) and (ii) above entered into
with any commercial bank meeting the qualifications specified in clause (ii)
above and (vi) shares of any money market fund, or similar fund, in each case
having assets in excess of $1 billion, which invests predominantly in
investments of the type described in clauses (i), (ii), (iii), (iv) or (v)
above.

"Consolidated EBITDA" means, with respect to any Person, for any period, the
Consolidated Net Income of such Person for such period adjusted to add thereto
(to the extent deducted from net revenues in determining Consolidated Net
Income), without duplication, the sum of (i) consolidated income tax expense for
such period, (ii) consolidated depreciation and amortization expense for such
period, (iii) non-cash charges of such Person and its Consolidated Subsidiaries
during such period less the amount of all cash payments made during such period
to the extent such payments relate to non-cash charges that were added back in
determining Consolidated EBITDA for such period, (iv) Consolidated Interest
Expense for such period and (v) to the extent not excluded from the Consolidated
Net Income of such Person for such period, losses (determined on a consolidated
basis in accordance with GAAP) which are either extraordinary (as determined in
accordance with GAAP) or are unusual or nonrecurring.

"Consolidated Interest Coverage Ratio" of any Person on any date of
determination (the "Transaction Date") means the ratio, on a pro forma basis, of
(a) the aggregate amount of Consolidated EBITDA of such Person attributable to
continuing operations and businesses (exclusive of amounts, whether positive or
negative, attributable to operations and businesses permanently discontinued or
disposed of) for the Reference Period to (b) the aggregate Consolidated Interest
Expense of such Person (exclusive of amounts attributable to operations and
businesses permanently discontinued or disposed of, but only to the extent that
the obligations giving rise to such Consolidated Interest Expense would no
longer be obligations contributing to such Person's Consolidated Interest
Expense subsequent to the Transaction Date) during the Reference Period;
provided, that for purposes of such calculation, (i) Acquisitions which occurred
during the Reference Period or subsequent to the Reference Period and on or
prior to the Transaction Date (including any Consolidated EBITDA associated with
such Acquisition) shall be assumed to have occurred on the first day of the
Reference Period, (ii) transactions giving rise to the need to calculate the
Consolidated Interest Coverage Ratio shall be assumed to have occurred on the
first day of the Reference Period, (iii) the incurrence or repayment of any
Indebtedness or issuance of any Disqualified Capital Stock during the Reference
Period or subsequent to the Reference Period and on or prior to the Transaction
Date (and the application of the proceeds therefrom to the extent used to
refinance or retire other Indebtedness), other than under a revolving credit or
similar facility to the extent that the proceeds were

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used to finance working capital requirements in the ordinary course of business,
shall be assumed to have occurred on the first day of such Reference Period and
(iv) the Consolidated Interest Expense of such Person attributable to interest
on any Indebtedness or dividends on any Disqualified Capital Stock bearing a
floating interest (or dividend) rate shall be computed on a pro forma basis as
if the rate in effect on the Transaction Date had been the applicable rate for
the entire period, unless such Person or any of its Subsidiaries is a party to a
Hedging and Interest Swap Obligation (which shall remain in effect for the
12-month period immediately following the Transaction Date) that has the effect
of fixing the interest rate on the date of computation, in which case such rate
(whether higher or lower) shall be used.

"Consolidated Interest Expense" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to Capitalized Lease Obligations) of such Person and its
Consolidated Subsidiaries during such period, including (i) original issue
discount and noncash interest payments or accruals on any Indebtedness, (ii) the
interest portion of all deferred payment obligations and (iii) all commissions,
discounts and other fees and charges owed with respect to bankers' acceptances
and letters of credit financing and currency and Hedging and Interest Swap
Obligations, in each case to the extent attributable to such period and (b) the
amount of dividends accrued or payable (other than in additional shares of such
Preferred Stock) by such Person or any of its Consolidated Subsidiaries in
respect of Preferred Stock (other than by Subsidiaries of such Person to such
Person or such Person's Consolidated Subsidiaries). For purposes of this
definition, (x) interest on a Capitalized Lease Obligation shall be deemed to
accrue at an interest rate reasonably determined by HPSC to be the rate of
interest implicit in such Capitalized Lease Obligation in accordance with GAAP,
(y) interest expense attributable to any Indebtedness represented by the
guaranty of such Person or a Subsidiary of such Person of an obligation of
another Person shall be deemed to be the interest expense attributable to the
Indebtedness guaranteed, and (z) dividends in respect of Preferred Stock shall
be deemed to be an amount equal to the actual dividends paid divided by one
minus the applicable actual combined Federal, state, local and foreign income
tax rate of HPSC and its Consolidated Subsidiaries (expressed as a decimal).

"Consolidated Net Income" means, with respect to any Person for any period,
the net income (or loss) of such Person and its Consolidated Subsidiaries
(determined on a consolidated basis in accordance with GAAP) for such period,
(i) adjusted to exclude (only to the extent included in computing such net
income (or loss) and without duplication): (a) net gains (but not net losses)
from the sale, lease, transfer or other disposition of property or assets not in
the ordinary course of business; (b) net gains (but not net losses) which are
either extraordinary (as determined in accordance with GAAP) or are either
unusual or nonrecurring, (c) the net income, if positive, of any other Person
accounted for by the equity method of accounting, except to the extent of the
amount of any dividends or distributions actually paid in cash to such Person or
a Consolidated Subsidiary of such Person during such period, but in any case not
in excess of such Person's PRO RATA share of such Person's net incomefor
suchperiod, (d)the netincome, ifpositive, ofany Personacquired ina
pooling-of-interests transaction for any period prior to the date of such
acquisition, (e) the net income, if positive, of any of such Person's
Consolidated Subsidiaries in the event and solely to the extent that the
declaration or payment of dividends or similar distributions is not at the time
permitted by operation of the terms of its charter or bylaws or any other
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to such Consolidated Subsidiary, (f) all gains (but not
losses) from currency exchange transactions not in the ordinary course of
business consistent with past practice, and (g) any non-cash expense determined
in accordance with GAAP in connection with a transaction between the Company and
the ESOP; and (ii) adjusted to include the amount of any dividends or
distributions actually paid in cash to such Person or a Consolidated Subsidiary
of such Person by an Unrestricted Subsidiary in an amount not to exceed such
Persons' PRO RATA share of such Unrestricted Subsidiary's net income.

"Consolidated Net Worth" of any Person at any date means the aggregate
consolidated stockholders' equity of such Person (plus amounts of equity
attributable to Preferred Stock) and its Consolidated Subsidiaries, as would be
shown on the consolidated balance sheet of such Person prepared in accordance

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with GAAP, adjusted to exclude (to the extent included in calculating such
equity), (a) the amount of any such stockholders' equity attributable to
Disqualified Capital Stock or treasury stock of such Person and its Consolidated
Subsidiaries, (b) all upward revaluations and other write-ups in the book value
of any asset of such Person or a Consolidated Subsidiary of such Person
subsequent to the Issue Date and (c) all investments in Subsidiaries that are
not Consolidated Subsidiaries and in Persons that are not Subsidiaries.

"Consolidated Subsidiary" means, for any Person, each Subsidiary of such
Person (whether now existing or hereafter created or acquired) the financial
statements of which are consolidated for financial statement reporting purposes
with the financial statements of such Person in accordance with GAAP.

"Customer" means any Person for whom HPSC or any of its Subsidiaries
finances property, equipment, practice acquisition, goods, leasehold
improvements or working capital requirements.

"Customer Receivable" means any obligation of any kind or nature, however
denominated, to HPSC or any of its Subsidiaries (i) incurred by Customers in the
ordinary course of the respective business of HPSC and its Subsidiaries or (ii)
arising from the purchase or acquisition by HPSC or any of its Subsidiaries of
any lease, promissory note, account receivable, loan or similar financial
arrangement, or any right or asset reasonably related to any of the foregoing.

"Disqualified Capital Stock" means (a) except as set forth in (b), with
respect to any Person, Capital Stock of such Person that, by its terms or by the
terms of any security into which it is then convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time would
be, required to be redeemed or repurchased (including at the option of the
holder thereof) by such Person or any of its Subsidiaries, in whole or in part,
on or prior to the Stated Maturity of the Notes and (b) with respect to any
Subsidiary of such Person (including with respect to any Subsidiary of HPSC),
any Capital Stock other than any common stock with no preference, privileges, or
redemption or repayment provisions.

"ESOP" means, collectively, the HPSC, Inc. Employee Stock Ownership Plan and
the HPSC, Inc. Supplemental Employee Stock Ownership Plan, and any successor
employee stock ownership plans having terms similar to the foregoing plans, as
amended from time to time by a resolution of the Board of Directors of HPSC or a
duly authorized committee thereof.

"Exempted Affiliate Transaction" means (a) transactions solely between HPSC
and any of its Wholly-Owned Subsidiaries or solely among Wholly-Owned
Subsidiaries of HPSC, (b) transactions permitted under the terms of the covenant
"Limitation on Restricted Payments", (c) customary employee compensation and
retirement arrangements approved by a majority of independent (as to such
transactions) members of the Board of Directors of HPSC, (d) reasonable fees and
compensation paid to, and indemnities to, and directors and officers and
ERISA-based fiduciary liability insurance provided on behalf of, officers,
directors, agents or employees of HPSC or any of its Subsidiaries or the ESOP or
any trustee thereof, in each case in the ordinary course of business and as
determined in good faith by the Board of Directors of HPSC and (e) any guarantee
by HPSC or any of its Subsidiaries of any Indebtedness of HPSC and/or any
Wholly-Owned Subsidiary of HPSC (but not of any other Person).

"Funded Recourse Debt" means, without duplication, any Indebtedness of HPSC
or any Subsidiary of HPSC which by its terms matures at or is extendable or
renewable at the sole option of the obligor without requiring the consent of the
obligee to a date more then one year after the date of the creation or
incurrence of such obligation; provided, however, that Funded Recourse Debt
shall not include any Non-Recourse Indebtedness of HPSC or any Subsidiary of
HPSC.

"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession as in effect on the Issue Date.

"Hedging and Interest Swap Obligations" means, with respect to any Person,
the obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar

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agreements and (ii) other agreements or arrangements designed to protect such
Person against fluctuations in interest rates.

"Indebtedness" of any Person means, without duplication; (a) all liabilities
and obligations, contingent or otherwise, of any such Person, (i) in respect of
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), (ii) evidenced by bonds,
notes, debentures or similar instruments, (iii) representing the balance
deferred and unpaid of the purchase price of any property or services, except
(other than accounts payable or other obligations to trade creditors which have
remained unpaid for greater than 90 days past their original due date, unless
contested in good faith) those incurred in the ordinary course of its business
that would constitute ordinarily a trade payable to trade creditors, (iv)
evidenced by bankers' acceptances or similar instruments issued or accepted by
banks, (v) for the payment of money relating to a Capitalized Lease Obligation,
or (vi) evidenced by a letter of credit or a reimbursement obligation of such
Person with respect to any letter of credit; (b) all net obligations of such
Person under Hedging and Interest Swap Obligations; (c) all liabilities and
obligations of others of the kind described in the preceding clauses (a) or (b)
that such Person has guaranteed or that is otherwise its legal liability or
which are secured by any assets or property of such Person; and (d) all
immediately enforceable obligations to purchase, redeem or acquire any Capital
Stock of such Person (other than, in the case of HPSC or any of its
Subsidiaries, obligations under the Restricted Stock Plans or the Stock Option
Plans).

"Investment" by any Person in any other Person means (without duplication);
(a) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such Person (whether for cash, property, services, securities or otherwise) of
Capital Stock, bonds, notes, debentures, partnership or other ownership
interests or other securities, including any options or warrants, of such other
Person or any agreement to make any such acquisition; (b) the making by such
Person of any deposit with, or advance, loan or other extension of credit to,
such other Person (including the purchase of property from another Person
subject to an understanding or agreement, contingent or otherwise, to resell
such property to such other Person) or any commitment to make any such advance,
loan or extension (but excluding accounts receivable or deposits arising in the
ordinary course of business); (c) other than guarantees of Indebtedness of HPSC
or any Subsidiary to the extent permitted by the covenant "Limitation on
Incurrence of Additional Funded Recourse Debt and Disqualified Capital Stock,"
the entering into by such Person of any guarantee of, or other credit support or
contingent obligation with respect to, Indebtedness or other liability of such
other Person; and (d) the making of any capital contribution by such Person to
such other Person.

"Issue Date" means the date of first issuance of the Notes under the
Indenture.

"Net Cash Proceeds" means the aggregate amount of Cash and Cash Equivalents
received by HPSC in the case of a sale of Qualified Capital Stock, plus in the
case of any issuance of Qualified Capital Stock by HPSC upon any exercise,
exchange or conversion of securities (including options, warrants, rights and
convertible or exchangeable debt) of HPSC that were issued for cash on or after
the Issue Date, the amount of cash originally received by HPSC upon the issuance
of such securities (including options, warrants, rights and convertible or
exchangeable debt) less, in each case, the sum of all payments, fees,
commissions and reasonable and customary expenses (including, without
limitation, the fees and expenses of legal counsel and investment banking fees
and expenses) incurred in connection with such sale of Qualified Capital Stock.

"Non-Receivable Asset" means any asset, property or right of HPSC or any of
its Subsidiaries, other than any Customer Receivable.

"Non-Recourse Indebtedness" means Indebtedness or that portion of
Indebtedness (i) as to which neither HPSC nor any of its Subsidiaries (a)
provide credit support (including any undertaking, agreement or instrument which
would constitute Indebtedness), (b) is directly or indirectly liable or (c)
constitutes the lender and (ii) with respect to which no default would permit
(upon notice, lapse of time or both) any holder of any other Indebtedness of
HPSC or any Subsidiary to declare a default on such other Indebtedness or cause
the payment therefor to be accelerated or payable prior to its stated maturity.

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"Permitted Lien" means any of the following:

(a) Liens existing on the Issue Date;

(b) Liens imposed by governmental authorities for taxes, assessments or
other charges not yet subject to penalty or which are being contested in
good faith and by appropriate proceedings, if adequate reserves with respect
thereto are maintained on the books of HPSC in accordance with GAAP;

(c) statutory Liens of carriers, warehousemen, mechanics, materialmen,
landlords, repairmen or other like Liens arising by operation of law in the
ordinary course of business provided that (i) the underlying obligations are
not overdue for a period of more than 30 days or (ii) such Liens are being
contested in good faith and by appropriate proceedings and adequate reserves
with respect thereto are maintained on the books of HPSC in accordance with
GAAP;

(d) Liens securing the performance of bids, trade contracts (other than
for borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business;

(e) easements, rights-of-way, zoning, similar restrictions and other
similar encumbrances or title defects which, singly or in the aggregate, do
not in any case materially detract from the value of the property, subject
thereto (as such property is used by HPSC or any of its Subsidiaries) or
interfere with the ordinary conduct of the business of HPSC or any of its
Subsidiaries;

(f) Liens arising by operation of law in connection with judgments, only
to the extent, for an amount and for a period not resulting in an Event of
Default with respect thereto;

(g) pledges or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security legislation;

(h) Liens on the property or assets of a Person existing at the time
such Person becomes a Subsidiary or is merged with or into HPSC or a
Subsidiary, provided in each case that such Liens were in existence prior to
the date of such acquisition, merger or consolidation, were not incurred in
anticipation thereof and do not extend to any other assets;

(i) Liens on property or assets existing at the time of the acquisition
thereof by HPSC or any of its Subsidiaries, provided that such Liens were in
existence prior to the date of such acquisition and were not incurred in
anticipation thereof;

(j) Liens securing Refinancing Indebtedness incurred to refinance any
Indebtedness that was previously so secured in a manner no more adverse to
the Holders of the Notes than the terms of the Liens securing such
refinanced Indebtedness;

(k) Liens securing Secured Portfolio Debt;

(l) Liens securing Purchase Money Indebtedness or Capitalized Lease
Obligations permitted to be incurred under clause (c) of the definition of
"Permitted Recourse Debt;"

(m) Liens in favor of HPSC or any Subsidiary; and

(n) Liens securing the Notes.

"Permitted Recourse Debt" means any of the following:

(a) Indebtedness of HPSC evidenced by the Notes pursuant to the
Indenture up to the amounts specified therein as of the Issue Date;

(b) Indebtedness of HPSC and its Subsidiaries under the Revolver
Agreement (including any Indebtedness issued to refinance, refund or replace
such Indebtedness in whole or in part, including any extended maturity or
increase in the amount thereof);

(c) Indebtedness of HPSC and its Subsidiaries (in addition to
Indebtedness permitted by any other clause of this paragraph) in an
aggregate amount outstanding at any time (including any Indebtedness issued
to refinance, replace or refund such Indebtedness in whole or in part) of up
to $1.5 million;

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(d) Refinancing Indebtedness of HPSC and its Subsidiaries incurred with
respect to any Indebtedness or Disqualified Capital Stock, as applicable,
described in clause (ii) of the proviso contained in the description of the
covenant "Limitation on Incurrence of Funded Recourse Debt and Disqualified
Capital Stock" or described in clause (e) of this definition of "Permitted
Recourse Debt";

(e) Indebtedness of HPSC owed to any Wholly-Owned Subsidiary, and
Indebtedness of any Subsidiary of HPSC owed to any other Wholly-Owned
Subsidiary or to HPSC; provided that any such obligations of HPSC owed to
any Wholly-Owned Subsidiary shall be unsecured and subordinated in all
respects to HPSC's obligations pursuant to the Notes; and, provided,
further, that if any Wholly-Owned Subsidiary ceases to be a Wholly-Owned
Subsidiary of HPSC or if HPSC or any Wholly-Owned Subsidiary transfers such
Indebtedness to any Person (other than to HPSC or another Wholly-Owned
Subsidiary), such events, in each case, shall constitute the incurrence of
such Indebtedness by HPSC or such Wholly-Owned Subsidiary, as the case may
be, at the time of such event;

(f) Indebtedness of HPSC and its Subsidiaries existing on the Issue
Date;

(g) Indebtedness of HPSC and its Subsidiaries incurred solely in respect
of bankers acceptances, letters of credit, surety bonds and performance
bonds (in each case to the extent that such incurrence does not result in
the incurrence of any obligation for the payment of borrowed money of
others) issued (i) in connection with the incurrence or refinancing of
Secured Portfolio Debt and (ii) in the ordinary course of business
consistent with past practice;

(h) Indebtedness of HPSC and its Subsidiaries represented by Hedging and
Interest Swap Obligations entered into in the ordinary course of business
consistent with past practice and related to Indebtedness of HPSC and its
Subsidiaries otherwise permitted to be incurred pursuant to the Indenture;
and

(i) Secured Portfolio Debt.

"Purchase Money Indebtedness" means Indebtedness of HPSC or its Subsidiaries
to the extent that (i) such Indebtedness is incurred in connection with the
acquisition of specified assets and property (the "Subject Assets") for the
business of HPSC or the Subsidiaries, including Indebtedness which existed at
the time of the acquisition of such Subject Asset and was assumed in connection
therewith, and (ii) the Liens securing such Indebtedness are limited to the
Subject Asset.

"Qualified Capital Stock" means any Capital Stock of HPSC that is not
Disqualified Capital Stock.

"Qualified Exchange" means any legal defeasance, redemption, retirement,
repurchase or other acquisition of Capital Stock or Subordinated Indebtedness of
HPSC issued on or after the Issue Date with the Net Cash Proceeds received by
HPSC from the substantially concurrent (i.e., within 60 days) sale (other than
to a Subsidiary of HPSC or the ESOP) of Qualified Capital Stock or any issuance
of Qualified Capital Stock in exchange for any Capital Stock or Subordinated
Indebtedness issued on or after the Issue Date.

"Reference Period" with regard to any Person means the four full fiscal
quarters (or such lesser period during which such Person has been in existence)
ended immediately preceding any date upon which any determination is to be made
pursuant to the terms of the Notes or the Indenture.

"Refinancing Indebtedness" means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of (each of (a) and (b) above is a "Refinancing"), any Indebtedness or
Disqualified Capital Stock in a principal amount or, in the case of Disqualified
Capital Stock, liquidation preference, not to exceed (after deduction of
reasonable and customary fees and expenses incurred in connection with the
Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so refinanced and (ii) if such Indebtedness being
refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing;
provided, that (A) such Refinancing Indebtedness of any Subsidiary of HPSC

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shall only be used to refinance outstanding Indebtedness or Disqualified Capital
Stock of such Subsidiary, (B) Refinancing Indebtedness shall (x) not have an
Average Life shorter than the Indebtedness or Disqualified Capital Stock to be
so refinanced at the time of such Refinancing and (y) in all respects, be no
less subordinated or junior, if applicable, to the rights of Holders of the
Notes than was the Indebtedness or Disqualified Capital Stock to be refinanced
and (C) such Refinancing Indebtedness shall have no installment of principal (or
redemption payment) scheduled to come due earlier than the scheduled maturity of
any installment of principal of the Indebtedness or Disqualified Capital Stock
to be so refinanced which was scheduled to come due prior to the Stated
Maturity.

"Related Business" means the business conducted by HPSC and its Subsidiaries
as of the Issue Date and any and all businesses that in the good faith judgment
of the Board of Directors of HPSC are related businesses.

"Restricted Investment" means any Investment other than:

(a) Investments in Customer Receivables;

(b) Investments in Cash Equivalents;

(d) Investments in HPSC or a Wholly-Owned Subsidiary;

(e) Investments in any Person engaged in a Related Business if, as a
consequence of such Investment, (i) such Person becomes a Wholly-Owned
Subsidiary or (ii) such Person is merged, consolidated or amalgamated with
or into, or conveys substantially all of its assets to HPSC or a
Wholly-Owned Subsidiary;

(f) Investments consisting of loans or advances to employees of HPSC or
any of its Subsidiaries (i) for moving, entertainment, travel and other
similar expenses in the ordinary course of business not exceeding $250,000
outstanding in the aggregate at any one time or (ii) pursuant to the HPSC
Stock Loan Program not exceeding $400,000 (or such greater amount as may be
permitted under Federal Reserve regulations from time to time) outstanding
in the aggregate at any one time;

(g) Investments made as a result of the receipt of non-cash
consideration in connection with the sale, lease, disposal, pledge,
encumbrance or other transfer of Customer Receivables;

(h) Investments not otherwise specified in clauses (a) through (g) above
not exceeding $1 million outstanding in the aggregate at any one time; and

(i) Investments not otherwise specified in clauses (a) through (h) above
which are from time to time permitted to be made by HPSC or any of its
Subsidiaries under Section 8.3 (or any successor provision) of the Revolver
Agreement.

"Restricted Payment" means, with respect to any Person, (a) the declaration
or payment of any dividend or other distribution in respect of any Capital Stock
of such Person or any Subsidiary of such Person, (b) any payment on account of
the purchase, redemption or other acquisition or retirement for value of Capital
Stock of such Person or any Subsidiary of such Person, (c) other than with the
proceeds from the substantially concurrent (i.e., within 60 days) sale of, or in
exchange for, Refinancing Indebtedness, any purchase, redemption or other
acquisition or retirement for value of, any payment in respect of any amendment
of the terms of or any defeasance of, any Subordinated Indebtedness of such
Person or any Affiliate or Subsidiary of such Person, directly or indirectly, by
such Person or any Subsidiary of such Person prior to the scheduled maturity,
any scheduled repayment of principal, or any scheduled sinking fund payment, as
the case may be, of such Subordinated Indebtedness and (d) any Restricted
Investment by such Person; provided, however, that the term "Restricted Payment"
does not include (i) any dividend, distribution or other payment on or with
respect to, or on account of the purchase, redemption or other acquisition or
retirement for value of, Capital Stock of an issuer to the extent payable solely
in shares of Qualified Capital Stock of such issuer or (ii) any dividend,
distribution or other payment to HPSC or to any of its Wholly-Owned Subsidiaries
by HPSC or any of its Subsidiaries.

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"Restricted Stock Plans" shall mean collectively, (i) HPSC's 1995 Stock
Incentive Plan and (ii) comparable plans providing for the issuance of Capital
Stock of HPSC to officers, directors and employees of HPSC and its Subsidiaries
having terms similar to the foregoing, each as amended from time to time by a
resolution of the Board of Directors of HPSC or a duly authorized committee
thereof.

"Revolver Agreement" means the credit agreement dated as of December 12,
1996, as amended on the Issue Date, by and among HPSC and ACFC, certain
financial institutions, and The First National Bank of Boston, as agent,
providing for an aggregate $95.0 million revolving credit facility, including
any related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, as such credit agreement and/or related
documents may by HPSC be amended, restated, supplemented, renewed, replaced or
otherwise modified from time to time whether or not with the same agent,
trustee, representative lenders or holders and irrespective of any changes in
the terms and conditions thereof. Without limiting the generality of the
foregoing, the term "Revolver Agreement" shall include any amendment, amendment
and restatement, renewal, extension, restructuring, supplement or modification
to any Revolver Agreement by HPSC and all refundings, refinancings and
replacements of any such Revolver Agreement by HPSC, including any agreement (i)
extending the maturity of any Indebtedness incurred thereunder or contemplated
thereby, (ii) adding or deleting borrowers or guarantors thereunder, so long as
borrowers and issuers include one or more of HPSC and its Subsidiaries and their
respective successors and assigns, (iii) increasing the amount of Indebtedness
incurred thereunder or available to be borrowed thereunder or (iv) otherwise
altering the terms and conditions thereof in a manner which constitutes a breach
of any of the covenants described under the heading "Certain Covenants" above.

"Savings Bank Indebtedness" of HPSC or any Subsidiary means Indebtedness to
a savings bank which Indebtedness is (i) created, incurred, assumed or
guaranteed by HPSC or such Subsidiary of HPSC in order to finance one or more
Customer Receivables created in the ordinary course of business of HPSC or such
Subsidiary and (ii) secured by a lien on such Customer Receivable(s).

"Secured Portfolio Debt" of HPSC or any Subsidiary means any Indebtedness
(including without limitation Indebtedness under the Revolver Agreement and
Savings Bank Indebtedness) of HPSC or such Subsidiary, whether outstanding on
the Issue Date or thereafter created, incurred, assumed or guaranteed by HPSC or
such Subsidiary, which Indebtedness is (i) created, incurred, assumed or
guaranteed by HPSC or such Subsidiary of HPSC in order to finance one or more
Customer Receivables created in the ordinary course of business of HPSC or such
Subsidiary and (ii) secured by a Lien on such Customer Receivable(s).

"Senior Indebtedness" of HPSC or any Subsidiary means any Indebtedness of
HPSC or such Subsidiary, whether outstanding on the Issue Date or thereafter
created, incurred, assumed or guaranteed by HPSC or such Subsidiary, other than
Indebtedness as to which the instrument creating or evidencing the same or the
assumption or guarantee thereof expressly provides that such Indebtedness is
subordinated or junior to the Notes. Notwithstanding the foregoing, however, in
no event shall Senior Indebtedness include (a) Indebtedness to any Subsidiary of
HPSC or any officer, director or employee of HPSC or any Subsidiary of HPSC or
(b) Indebtedness incurred in violation of the terms of the Indenture.

"Sinking Fund" means the method provided for in the Indenture and the Notes
of amortizing the aggregate principal amount of the Notes.

"Stated Maturity," when used with respect to any Note, means , 2007.

"Stock Option Plans" shall mean collectively, (i) HPSC's 1995 Stock
Incentive Plan and (ii) comparable plans providing for the issuance of options
to purchase Capital Stock of HPSC to officers, directors and employees of HPSC
and its Subsidiaries having terms similar to the foregoing, each as amended from
time to time by a resolution of the Board of Directors of HPSC or a duly
authorized committee thereof.

"Subordinated Indebtedness" means Indebtedness of HPSC that is (i)
subordinated in right of payment to the Notes in any respect or (ii) any
Indebtedness which is expressly subordinate to Senior Indebtedness and has a
stated maturity on or after the Stated Maturity.

"Subsidiary," with respect to any Person, means (i) a corporation a majority
of whose Capital Stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly,

72
<PAGE>
owned by such Person, by such Person and one or more Subsidiaries of such Person
or by one or more Subsidiaries of such Person, or (ii) any other Person (other
than a corporation) in which such Person, one or more Subsidiaries of such
Person, or such Person and one or more Subsidiaries of such Person, directly or
indirectly, at the date of determination thereof has at least majority ownership
interest. Notwithstanding the foregoing, an Unrestricted Subsidiary shall not
constitute a Subsidiary of HPSC or any of HPSC's Subsidiaries.

"Wholly-Owned Subsidiary" means a Subsidiary of HPSC of which all of the
outstanding Capital Stock or other ownership interests shall at the time be
owned by HPSC or by one or more Wholly-Owned Subsidiaries of HPSC or by HPSC and
one or more Wholly-Owned Subsidiaries of HPSC.

BOOK-ENTRY, DELIVERY AND FORM; CERTIFICATED NOTES

The Notes will initially be issued in the form of one or more registered
notes in global form (the "Global Notes"). Each Global Note will be deposited on
the Issue Date with, or on behalf of, The Depository Trust Company ("DTC" or the
"Depository") and registered in the name of Cede & Co., as nominee of the
Depository.

DTC has advised HPSC that it is (i) a limited purpose trust company
organized under the laws of the State of New York, (ii) a member of the Federal
Reserve System, (iii) a "clearing corporation" within the meaning of the Uniform
Commercial Code, as amended, and (iv) a "Clearing Agency" registered pursuant to
Section 17A of the Exchange Act. DTC was created to hold securities for its
participants (collectively, the "Participants") and facilitates the clearance
and settlement of securities transactions between Participants through
electronic book-entry changes to the accounts of its Participants, thereby
eliminating the need for physical transfer and delivery of certificates. The
Depository's Participants include securities brokers and dealers (including the
Initial Purchasers), banks and trust companies (collectively, the "Indirect
Participants") that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly. Beneficial owners may elect to hold
Notes purchased by them through the Depository. Persons who are not Participants
may beneficially own securities held by or on behalf of the Depository only
through Participants or Indirect Participants.

HPSC expects that pursuant to procedures established by the Depository (i)
upon deposit of the Global Notes, the Depository will credit the accounts of
Participants designated by the Underwriters with an interest in the Global Notes
and (ii) ownership of the Notes evidenced by the Global Notes will be shown on,
and the transfer of ownership thereof will be effected only through, records
maintained by the Depository (with respect to the interests of Participants),
the Participants and the Indirect Participants. The laws of some states require
that certain persons take physical delivery in definitive form of securities
that they own and that security interests in negotiable instruments can only be
perfected by delivery of certificates representing the instruments.
Consequently, the ability to transfer Notes or to pledge the Notes as collateral
will be limited to such extent.

So long as the Depository or its nominee is the registered owner of a Global
Note, the Depository or such nominee, as the case may be, will be considered the
sole owner or Holder of the Notes represented by the Global Note for all
purposes under the Indenture. Except as provided below, owners of beneficial
interests in a Global Note will not be entitled to have Notes represented by
such Global Note registered in their names, will not receive or be entitled to
receive physical delivery of Certificated Notes, and will not be considered the
owners or holders thereof under the Indenture for any purpose, including with
respect to the giving of any directions, instructions or approvals to the
Trustee thereunder. As a result, the ability of a person having a beneficial
interest in Notes represented by a Global Note to pledge such interest to
persons or entities that do not participate in the Depository's system or to
otherwise take actions with respect to such interest, may be affected by the
lack of a physical certificate evidencing such interest.

Accordingly, each person owning a beneficial interest in a Global Note must
rely on the procedures of the Depository and, if such beneficial owner is not a
Participant or an Indirect Participant, on the procedures of the Participant
through which such beneficial owner owns its interest, to exercise any rights of
a Holder under the Indenture or such Global Note. HPSC understands that under
existing industry practice, in the event HPSC requests any action of Holders or
a person that is an owner of a beneficial

73
<PAGE>
interest in a Global Note desires to take any action that the Depository, as the
Holder of such Global Note, is entitled to take, the Depository would authorize
the Participants to take such action and the Participants would authorize
beneficial owners owning through such Participants to take such action or would
otherwise act upon the instructions of such beneficial owners. Neither HPSC nor
the Trustee will have any responsibility or liability for any aspect of the
records relating to or payments made on account of Notes by the Depository, or
for maintaining, supervising or reviewing any records of the Depository relating
to such Notes.

Payments with respect to the principal of, premium, if any, interest on any
Notes represented by a Global Note registered in the name of the Depository or
its nominee on the applicable record date will be payable by the Trustee to or
at the direction of the Depository or its nominee in its capacity as the
registered Holder of the Global Note representing such Notes under the
Indenture. Under the terms of the Indenture, HPSC and the Trustee may treat the
persons in whose names the Notes, including the Global Notes, are registered as
the owners thereof for the purpose of receiving such payments and for any and
all other purposes whatsoever. Consequently, neither HPSC nor the Trustee has or
will have any responsibility or liability for the payment of such amounts to
beneficial owners of the Notes (including principal, premium, if any, and
interest), or to immediately credit the accounts of the relevant Participants
with such payment, in amounts proportionate to their respective holdings in
principal amount of beneficial interest in the Global Note as shown on the
records of the Depository. Payments by the Participants and the Indirect
Participants to the beneficial owners of the Notes will be governed by standing
instructions and customary practice and will be the responsibility of the
participants or the Indirect Participants.

CERTIFICATED NOTES

If (i) HPSC notifies the Trustee in writing that the Depository is no longer
willing or able to act as a depository and HPSC is unable to locate a qualified
successor within 90 days or (ii) HPSC, at its option, notifies the Trustee in
writing that it elects to cause the issuance of Notes in definitive form under
the Indenture, then, upon surrender by the Depository of its Global Note,
Certificated Notes will be issued to each person that the Depository identifies
as the beneficial owner of the Notes represented by the Global Note. In
addition, subject to certain conditions, any person having a beneficial interest
in a Global Note may, upon request to the Trustee, exchange such beneficial
interest for Certificated Notes. Upon any such issuance, the Trustee is required
to register such Certificated Notes in the name of such person or persons (or
the nominee of any thereof), and cause the same to be delivered thereto.

Neither HPSC nor the Trustee shall be liable for any delay by the Depository
or any participant or Indirect Participant in identifying the beneficial owners
of the related Notes and each such person may conclusively rely on, and shall be
protected in relying on, instructions from the Depository for all purposes
(including with respect to the registration and delivery, and the respective
principal amounts, of the Notes to be issued).

SETTLEMENT AND PAYMENT

The Indenture will require that payments in respect of the Notes represented
by the Global Note (including principal, premium, if any, and interest) be made
by wire transfer of immediately available funds to the accounts specified by the
Depositary or its nominee. With respect to Notes represented by Certificated
Notes, however, HPSC will make all payments of principal, premium, if any, and
interest by mailing a check to each such Holder's registered address. Secondary
trading in long-term notes and debentures of corporate issuers is generally
settled in clearing-house or next-day funds.

TRUSTEE AND REGISTRAR

The trustee and registrar for the Company's Notes is State Street Bank and
Trust Company, of Boston, Massachusetts.

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<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS

The Second Amended and Restated Credit Agreement (referred to herein as the
Revolver) by and among the Company, The First National Bank of Boston,
individually and as Managing Agent, NationsBank, N.A., individually and as
Agent, and certain other lending banks (the "Banks"), contains numerous
operating and financial covenants that impose limitations on the Company's
ability to operate its business. These covenants include restrictions on
indebtedness, liens and investments of the Company; prohibitions on dividends,
mergers or consolidations and disposition of assets of the Company; requirements
relating to certain receivables, reserve and delinquency ratios; and limitations
on capital expenditures. The Revolver also permits the Banks, upon an Event of
Default by the Company (as defined in the Revolver Agreement), to declare all
amounts owed by the Company under the Revolver immediately due and payable. The
Revolver currently expires in December 1997 and provides for borrowing by the
Company of up to $95 million, approximately $40 million of which was outstanding
as of December 31, 1996. The net proceeds from the offering of the Notes will be
used by the Company to repay, in part, amounts outstanding under the Revolver.

CERTAIN NEGATIVE COVENANTS

RESTRICTIONS ON INDEBTEDNESS. The Company has covenanted and agreed that,
so long as any obligation is outstanding under the Revolver, it will not, and
will not permit any of its subsidiaries to, incur, assume or guarantee any
indebtedness other than (i) indebtedness under the Revolver, (ii) current
liabilities incurred in the ordinary course of business, (iii) taxes and other
governmental charges, (iv) subordinated debt, (v) lease obligations not
exceeding $1 million at any time outstanding, (vi) indebtedness of subsidiaries
to the Company, as long as the subsidiary has executed a guaranty in favor of
the Banks and Agent secured by a perfected first priority security interest in
all assets of the debtor subsidiary, (vii) indebtedness under the asset sales
agreements with the savings banks, subject to certain conditions, (viii)
indebtedness incurred by Bravo under the credit agreement pertaining to the
securitization facility and (ix) certain other pre-existing or ordinary course
indebtedness.

RESTRICTIONS ON LIENS. For so long as the Revolver remains outstanding, the
Company has agreed that it will not and will not permit its subsidiaries to (i)
create or incur any lien, encumbrance, mortgage, pledge, charge, restriction or
other security interest on its property or assets or the income or profits
therefrom, (ii) transfer any property or assets, or income or profits therefrom,
to pay for other indebtedness or priority obligations, (iii) acquire property or
assets upon a conditional sale or other title retention or a purchase money
security agreement, (iv) allow to remain unpaid for more than 30 days any
indebtedness that may be given priority over general creditors, or (v) sell,
assign, pledge or otherwise transfer any accounts, contract rights, general
intangibles, chattel paper or instruments, with or without recourse. However,
the Company may create or incur liens on property of the subsidiaries in favor
of the Company to secure indebtedness owed to the Company by the Subsidiaries,
liens to secure taxes and other governmental charges, liens in favor of the
Agent for the benefit of the Banks under the Revolver, liens on margin stock,
liens granted by Bravo in connection with the securitization facility, and liens
on Company assets granted to certain savings banks in connection with loans
against and sales of the Company's contract receivables.

RESTRICTIONS ON INVESTMENTS. For so long as the Revolver remains
outstanding, the Company and its subsidiaries may not permit to exist or remain
outstanding any investments other than (i) one-year, marketable direct or
guaranteed obligations of the United States, (ii) demand deposits, certificates
of deposit, bankers acceptances and time deposits of United States banks with
total assets over $1 billion, (iii) commercial paper securities rated at least
P1 by Moody's Investors Services, Inc. or A1 by Standard and Poor's or
short-term bank notes rated at least P2 or A2, (iv) investments in the Company's
subsidiaries so long as such entities remain subsidiaries, the aggregate amount
of investments made by the Company and its subsidiaries in ACFC does not exceed
$15 million in fiscal 1997 and the aggregate investment by the Company in
Credident does not exceed $100,000 in any fiscal year, (v) promissory notes
received for asset dispositions, (vi) advances to employees for moving,
entertainment, travel and similar business expenses, not to exceed $250,000 in
the aggregate at any time outstanding, (vii) investments made pursuant to the
Stock Purchase Agreement and (viii) other investments not exceeding $1 million.

75
<PAGE>
RESTRICTIONS ON CORPORATE POWERS. For so long as the Revolver remains
outstanding, the Company may not make any distributions to its shareholders,
including (i) dividends on, and purchase, redemption or other retirement of,
shares of capital stock of the Company, (ii) return of capital to its
shareholders, or (iii) any other distribution on or in respect of any shares of
any class of Company capital stock. In addition, the Company and its
subsidiaries may not be party to any merger or consolidation or asset or stock
acquisition, other than in the ordinary course of business, may not dispose of
any assets other than in the ordinary course of business, and may not transfer a
material amount of Customer Receivables (as defined in the Revolver Agreement)
without the prior written approval of the Banks. The Company also may not engage
in any sale and leaseback transaction, and may not amend, supplement or
otherwise modify the terms of any subordinated debt agreement or prepay or
repurchase any subordinated debt or indebtedness outstanding under the
securitizations with Funding I and Bravo or the asset transactions with the
savings banks listed above in "Funding Sources--Savings Bank Loans and Asset
Sales." The Company may not sell, assign or otherwise dispose of, or grant
options with respect to, the capital stock of Funding I. Neither HPSC nor ACFC
may change the character of its business or its credit policy if such change
would impair the collectibility of any outstanding financing contract.

FINANCIAL COVENANTS

The Revolver also imposes several financial and operating requirements and
limitations on the Company, including (i) maintenance of a minimum consolidated
tangible net worth; (ii) a limitation on capital expenditures of $700,000 in the
aggregate; (iii) a limitation on lease obligations of $5 million in the
aggregate; (iv) a permitted ratio of indebtedness plus security deposits
received on accounts receivable to consolidated tangible net worth plus
subordinated debt; (v) permitted reissued customer receivables as a percentage
of gross customer receivables; (vi) permitted delinquent customer receivables as
a percentage of gross customer receivables; (vii) minimum reserves as a
percentage of contractually delinquent customer receivables at the end of any
fiscal quarter; (viii) minimum allowance for doubtful accounts of both the
Company and ACFC as a percentage of net investment in leases and notes; (ix)
minimum average collections at the end of any three month period as a percentage
of billings; (x) a ratio of consolidated earnings before interest and taxes to
consolidated total interest expense; and (xi) maximum aggregate accounts
receivable by any single equipment supplier as a percentage of total accounts
receivable.

EVENTS OF DEFAULT

Events of Default by the Company under the Revolver Agreement include: (i)
failure to pay principal or interest on loans under the Revolver as it becomes
due and payable; (ii) failure to comply with covenants under the Revolver; (iii)
false representation or warranty under the Revolver; (iv) failure to pay any
obligation under any other borrowing arrangement or lease agreement which could
require acceleration of all obligations thereunder; (v) commencement of
proceedings in bankruptcy, including dissolution or liquidation; (vi)
acceleration of payment, prepayment or repurchase of debt under the
securitization arrangements with Funding I and Bravo, subject to certain
limitations; (vii) certain violations under the Employee Retirement Income
Security Act of 1974, as amended; (viii) a change of control of the Company;
(ix) any default or event of default under the Company's credit agreement with
Springfield Institution for Savings; and (x) ceasing to hold 100% of the capital
stock of ACFC.

There can be no assurance that the Company will be able to continue to
comply with all of its obligations under the Revolver. Any failure to comply
with such obligations which leads to an Event of Default under the Revolver
would have a material adverse effect on the Company's business, operating
results and financial condition. In July and August 1996, the level of
delinquencies under certain of the Company's financing transactions triggered a
payment restriction event under Funding I, which event was considered a
technical default under the previous Revolver agreement. This default
subsequently was waived by the Banks; however, a payment restriction event is
not unusual during the later stages of a static pool securitization and may
occur again before Funding I is fully paid out. The current Revolver provides
that such a payment restriction event will not constitute a default unless it
continues for at least six months. There can be no assurance that the Company
will be able to secure further waivers from the Banks in the event of a
subsequent payment restriction event that constitutes a default under the
Revolver. See "Risk Factors--Dependence on Funding Sources; Restrictive
Covenants," "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources" and "Funding Sources."

76
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, Advest,
Inc. and Legg Mason Wood Walker, Incorporated (the "Underwriters"), have
severally agreed to purchase from the Company the following respective principal
amounts of Notes at face value less the underwriting discounts and commissions
set forth on the cover page of this Prospectus:

<TABLE>
<CAPTION>
PRINCIPAL
UNDERWRITER AMOUNT
- ------------------------------------------------------------------------------- -------------
<S> <C>
Advest, Inc.................................................................... $ 10,000,000
Legg Mason Wood Walker, Incorporated........................................... 10,000,000
-------------
Total...................................................................... $ 20,000,000
-------------
-------------
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent including the absence of any
material adverse change in the Company's business and the receipt of certain
certificates, opinions and letters from the Company, its counsel and independent
auditors. The nature of the Underwriters' obligation is that they are committed
to purchase all Notes offered hereby if any of such Notes are purchased.

The Company has been advised by the Underwriters that the Underwriters
propose to offer the Notes to the public at face value as set forth on the cover
page of this Prospectus and to certain dealers at such price less a concession
not in excess of %. The Underwriters may allow, and such dealers may reallow,
a concession not in excess of % to certain other dealers. After the offering
of the Notes hereby, the offering price and other selling terms may be changed
by the Underwriters.

The Company has granted to the Underwriters an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to $3,000,000
principal amount of Notes, at face value less the underwriting discounts set
forth on the cover page of this Prospectus. To the extent that the Underwriters
exercise this option, each of the Underwriters will have a firm commitment to
purchase approximately the same percentage thereof which the principal amount of
Notes to be purchased by it shown in the above table bears to the total
principal amount of Senior Notes offered hereby. The Company will be obligated,
pursuant to the option, to sell such Notes to the Underwriters. The Underwriters
may exercise such option only to cover over-allotments made in connection with
the sale of Notes offered hereby. If purchased, the Underwriters will offer such
additional senior notes on the same terms as those on which the $20,000,000
principal amount of Notes are being offered.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, and to contribute
to payments the Underwriters may be required to make in respect thereof.

The Underwriters have advised the Company that they do not intend to confirm
sales to any account over which they exercise discretionary authority.

The Company has no plans to list the Notes on any securities exchange. The
Company has been advised by each of the Underwriters that each presently intends
to make a market in the Notes, although neither is obliged to do so. Any such
market making activity may be discontinued at any time, for any reason, without
notice. If both Underwriters cease to act as a market maker for the Notes for
any reason, there can be no assurance that another firm or person will make a
market therein. There can be no assurance that an active market for the Notes
will develop, or, if developed, at what prices the Notes will trade.

LEGAL MATTERS

The validity of the Notes being offered hereby will be passed upon for the
Company by Hill & Barlow, a Professional Corporation, Boston, Massachusetts.
Certain legal matters in connection with this offering will be passed upon for
the Underwriters by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Boston,
Massachusetts.

77
<PAGE>
EXPERTS

The financial statements as of December 31, 1995 and 1994 and for the fiscal
years ended December 31, 1995, December 31, 1994 and December 25, 1993 included
in this Prospectus have been so included in reliance on the report of Coopers &
Lybrand L.L.P. ("Coopers & Lybrand"), independent accountants, given on the
authority of said firm as experts in auditing and accounting.

Coopers & Lybrand resigned as independent accountants for the Company on
June 12, 1996. None of the reports of Coopers & Lybrand on the financial
statements of the Company for either of the past two fiscal years contained an
adverse opinion or a disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope or accounting principles. During the Company's two most
recent fiscal years and the subsequent interim period preceding the resignation
of Coopers & Lybrand, there were no disagreements with Coopers & Lybrand on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Coopers & Lybrand, would have caused it to make reference to the
subject matter of the disagreement in connection with its report. None of the
reportable events listed in Item 304(a)(1)(v) of Regulation S-K occurred with
respect to the Company during the Company's two most recent fiscal years and the
subsequent interim period preceding the resignation of Coopers & Lybrand.

On June 19, 1996, the Company engaged Deloitte & Touche LLP as its
independent accountants.
------------------------

The Company intends to furnish to the holders of the Notes unaudited
quarterly financial statements and annual reports containing consolidated
financial statements audited by an independent accounting firm.
------------------------

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Notes offered hereby. This Prospectus, which constitutes
part of the Registration Statement, omits certain of the information contained
in the Registration Statement and the exhibits and schedules thereto on file
with the Commission pursuant to the Securities Act and the rules and regulations
of the Commission thereunder.

The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Commission (collectively, "Exchange Act Filings").

The Registration Statement, including exhibits and schedules thereto, as
well as the Company's Exchange Act Filings, may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, DC 20549, and at the Commission's regional offices
at Seven World Trade Center, Suite 1300, New York, New York 10048 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and copies may be obtained
at prescribed rates from the Public Reference Section of the Commission at its
principal office in Washington, D.C. The Commission also maintains a Web site on
the Internet that contains reports, proxy and information statements and other
information regarding registrants such as the Company that file electronically
with the Commission. The address of such site is: http://www.sec.gov. Statements
contained in this Prospectus as to the contents of any contract or other
document are not necessarily complete and in each instance reference is made to
the copy of such contract or other document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference.

78
<PAGE>
HPSC, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Consolidated Balance Sheets as of December 31, 1995 and September 30, 1996 (unaudited)..................... F-2

Consolidated Statements of Income for Each of the Three and Nine Months Ended September 30, 1995 and 1996
(unaudited).............................................................................................. F-3

Consolidated Statements of Cash Flows for Each of the Nine Months Ended September 30, 1995 and 1996
(unaudited).............................................................................................. F-4

Notes to Consolidated Financial Statements (unaudited)..................................................... F-5

Report of Independent Accountants.......................................................................... F-6

Consolidated Balance Sheets as of December 31, 1994 and 1995............................................... F-7

Consolidated Statements of Income for Each of the Years Ended December 25, 1993, December 31, 1994 and
December 31, 1995........................................................................................ F-8

Consolidated Statements of Changes in Stockholders' Equity................................................. F-9

Consolidated Statements of Cash Flows for Each of the Years Ended December 25, 1993, December 31, 1994 and
December 31, 1995........................................................................................ F-10

Notes to Consolidated Financial Statements................................................................. F-11
</TABLE>

F-1
<PAGE>
HPSC, INC.

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPT. 30,
1996 DECEMBER 31,
(UNAUDITED) 1995
----------- ------------
<S> <C> <C>

<CAPTION>
ASSETS
<S> <C> <C>
Cash and Cash Equivalents............................................................. $ 715 $ 861
Restricted Cash....................................................................... 6,751 5,610
Investment in Leases and Notes:
Lease contracts receivable and notes receivable due in installments................. 144,534 115,364
Notes receivable due in installments................................................ 25,064 25,325
Estimated residual value of equipment at end of lease term.......................... 9,309 9,206
Less unearned income................................................................ (32,009) (25,875)
Less allowance for losses........................................................... (4,789) (4,512)
Less security deposits.............................................................. (4,148) (3,427)
Deferred origination costs.......................................................... 4,463 3,805
----------- ------------
Net investment in leases and notes.............................................. 142,424 119,886
----------- ------------
Other Assets:
Deferred expense and other assets................................................... 3,372 3,294
Refundable income taxes............................................................. -- 1,088
----------- ------------
Total Assets.................................................................... $ 153,262 $ 130,739
----------- ------------
----------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY

Notes Payable to Banks................................................................ $ 58,574 $ 42,070
Accounts Payable and Accrued Liabilities.............................................. 1,308 3,537
Accrued Interest...................................................................... 508 339
Income Taxes:
Currently payable................................................................... 783 368
Deferred............................................................................ 3,053 4,613
Senior Notes.......................................................................... 54,968 46,453
----------- ------------
Total Liabilities............................................................... 119,194 97,380
----------- ------------
----------- ------------
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; 4,786,530 issued in 1996
and 1995; and outstanding 4,686,530 shares in 1996 and 1995....................... 48 48
Treasury stock (at cost); 100,000 shares............................................ (410) (410)
Additional paid-in capital.......................................................... 11,311 11,311
Retained earnings................................................................... 25,080 24,476
----------- ------------
36,029 35,425
Less deferred ESOP and SESOP compensation........................................... (1,961) (2,066)
----------- ------------
Total stockholders' equity.......................................................... 34,068 33,359
----------- ------------
Total Liabilities and Stockholders' Equity............................................ $ 153,262 $ 130,739
----------- ------------
----------- ------------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-2
<PAGE>
HPSC, INC.

CONSOLIDATED STATEMENTS OF INCOME

FOR EACH OF THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996
AND SEPTEMBER 30, 1995

(IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
------------- ------------- ------------- -------------
Revenues:
Earned income on leases and notes.................. $ 5,044 $ 3,417 $ 13,447 $ 9,564
Provisions for losses.............................. (424) (336) (1,224) (877)
------------- ------------- ------------- -------------
Net Revenues................................... 4,620 3,081 12,223 8,687
------------- ------------- ------------- -------------
Expenses:
Selling, general and administrative................ 2,066 1,537 5,580 4,537
Interest, net...................................... 2,146 1,397 5,649 3,636
------------- ------------- ------------- -------------
Total expenses................................. 4,212 2,934 11,229 8,173
------------- ------------- ------------- -------------
Income Before Income Taxes........................... 408 147 994 514
------------- ------------- ------------- -------------
Provision for Income Taxes:
Current.......................................... 650 496 1,950 1,652
Deferred......................................... (490) (438) (1,560) (1,450)
------------- ------------- ------------- -------------
Total Income Taxes............................. 160 58 390 202
------------- ------------- ------------- -------------
Net Income..................................... $ 248 $ 89 $ 604 $ 312
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net Income Per Share................................. $ .06 $ .02 $ .15 $ .08
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Shares Used to Compute Income Per Share.............. 4,145,270 3,903,462 4,107,313 3,837,218
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-3
<PAGE>
HPSC, INC.

CONSOLIDATED STATEMENTS OF CASH FLOW

FOR EACH OF THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995

(IN THOUSANDS)
(UNAUDITED)

<TABLE>
<CAPTION>
SEPT. 30, SEPT. 30,
1996 1995
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income................................................................................. $ 604 $ 312
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization............................................................ 2,818 1,558
Deferred income taxes.................................................................... (1,560) (1,450)
Provision for losses on lease contracts and notes receivable............................. 1,224 877
Increase in accrued interest............................................................. 169 75
(Decrease) in accounts payable........................................................... (2,229) (472)
Increase in accrued income taxes......................................................... 415 480
Decrease in refundable income taxes...................................................... 1,088 1,418
Increase (decrease) in other assets...................................................... 67 (309)
--------- ---------
Cash provided by operating activities...................................................... 2,596 2,489
--------- ---------
Cash Flows from Investing Activities:
Payments on capital lease.................................................................. (60) (36)
Proceeds from sale of receivables.......................................................... 14,086 --
Lease contracts receivable and notes receivable............................................ (47,968) (23,908)
Estimated residual value of equipment...................................................... (103) 37
Unearned income............................................................................ 10,126 5,495
Security deposits.......................................................................... 721 497
Purchase of furniture & equipment.......................................................... (563) (409)
Initial direct costs incurred.............................................................. (2,888) (1,891)
--------- ---------
Cash (used in) investing activities........................................................ (26,649) (20,215)
--------- ---------
Cash Flows from Financing Activities:
Repayment of Senior Notes.................................................................. (20,825) (16,733)
Repayment of notes payable treasury stock purchase......................................... -- (4,500)
Proceeds from issuance of Senior Notes..................................................... 29,340 21,165
Proceeds from revolving notes payable to banks............................................. 16,504 16,346
(Increase) decrease in restricted funds.................................................... (1,141) 2,346
Debt issuance costs........................................................................ (128) (325)
Contribution to Employee Stock Ownership Plan.............................................. 105 110
Other...................................................................................... 52 7
--------- ---------
Cash provided by financing activities...................................................... 23,907 18,416
--------- ---------
Net (decrease) increase in cash and cash equivalents......................................... (146) 690
Cash and cash equivalents at beginning of period............................................. 861 419
--------- ---------
Cash and cash equivalents at end of period................................................... $ 715 $ 1,109
--------- ---------
--------- ---------
Supplemental disclosures of cash flow information:
Interest paid.............................................................................. $ 5,127 $ 3,372
Income taxes paid.......................................................................... 675 688
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-4
<PAGE>
HPSC, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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 1995 account balances
have been reclassified to conform with 1996 presentation.

2. Interest expense is net of interest income of $56,000 and $84,000 for the
three months, and $175,000 and $319,000 for the nine months, ended September 30,
1996 and September 30, 1995, respectively.

3. For the three months ended September 30, 1996, and September 30, 1995,
the earnings per share computation assumes the exercise 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 ("ESOP").
The ESOP holds 210,348 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. There has been no allocation of shares from
the Supplemental ESOP, which holds 350,000 shares.

4. On September 30, 1996, the Company had $6,751,000 in restricted cash of
which $4,059,000 was reserved for debt service and $2,692,000 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, and on January 31, 1995 with respect to the HPSC Bravo Funding
Corp. ("Bravo") revolving credit facility.

5. In connection with the Bravo revolving credit facility, the Company had
$45,726,000 of its Senior Notes subject to interest rate swap agreements. Under
the structure of the facility, Bravo incurs interest at variable rates in the
commercial paper market and enters into interest rate swap agreements to assure
fixed rate funding. At September 30, 1996, Bravo had eleven separate swap
contracts with the Bank of Boston with a total notional value of $47,611,000.

F-5
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of HPSC, Inc.:

We have audited the accompanying consolidated balance sheets of HPSC, Inc.
as of December 31, 1995 and December 31, 1994, and the related consolidated
statements of income, changes in stockholders' equity and cash flows for each of
the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of HPSC, Inc. as
of December 31, 1995 and December 31, 1994, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.

As discussed in Note A to the financial statements, the Company adopted
Statement of Financial Accounting Standards No. 114, "Accounting by Creditors
for Impairment of a Loan," as amended by Statement of Financial Accounting
Standards No. 118, "Accounting by Creditors for Impairment of a Loan--Income
Recognition and Disclosure," effective January 1, 1995.

Boston, Massachusetts
March 25, 1996

Coopers & Lybrand, L.L.P.

F-6
<PAGE>
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents............................................................ $ 861 $ 419
Restricted Cash...................................................................... 5,610 7,936
Investment in Leases and Notes:
Lease contracts receivable due in installments..................................... 115,364 95,408
Notes receivable due in installments............................................... 25,325 8,123
Estimated residual value of equipment at end of lease term......................... 9,206 9,321
Less unearned income............................................................... (25,875) (16,924)
Less allowance for losses.......................................................... (4,512) (4,595)
Less security deposits............................................................. (3,427) (2,639)
Deferred origination costs......................................................... 3,805 2,499
------------ ------------
Net investment in leases and notes............................................. 119,886 91,193
------------ ------------
Other Assets:
Other assets....................................................................... 3,294 2,154
Refundable income taxes............................................................ 1,088 1,446
------------ ------------
Total Assets................................................................... $ 130,739 $ 103,148
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Notes Payable to Banks............................................................... $ 42,070 $ 16,500
Notes Payable--Treasury Stock Purchase............................................... -- 4,500
Accounts Payable and Accrued Liabilities............................................. 3,537 2,450
Accrued Interest..................................................................... 339 293
Income Taxes:
Currently payable.................................................................. 368 20
Deferred........................................................................... 4,613 5,539
Senior Notes......................................................................... 46,453 41,024
------------ ------------
Total Liabilities.............................................................. 97,380 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; and issued 4,786,530 in
1995 and 5,574,395 shares in 1994................................................ 48 56
Treasury Stock (at cost) 100,000 shares in 1995 and 1,225,182 shares in 1994....... (410) (5,023)
Additional paid-in capital......................................................... 11,311 15,916
Retained earnings.................................................................. 24,476 24,601
Cumulative foreign currency translation adjustments................................ -- (552)
------------ ------------
35,425 34,998
Less deferred ESOP and SESOP compensation.......................................... (2,066) (2,176)
------------ ------------
Total Stockholders' Equity..................................................... 33,359 32,822
------------ ------------
Total Liabilities and Stockholders' Equity......................................... $ 130,739 $ 103,148
------------ ------------
------------ ------------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-7
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)

<TABLE>
<CAPTION>
EACH OF THE YEARS ENDED
----------------------------------------
<S> <C> <C> <C>
DECEMBER 31, DECEMBER 31, DECEMBER 25,
1995 1994 1993
------------ ------------ ------------
REVENUES
Earned income on leases and notes................................... $ 12,924 $ 11,630 $ 17,095
Provision for losses................................................ (1,296) (754) (15,104)
------------ ------------ ------------
Net Revenues.................................................... 11,628 10,876 1,991
------------ ------------ ------------

OPERATING EXPENSES
Selling, general and administrative................................. 5,984 6,970 5,160
Interest, net....................................................... 4,964 3,156 8,979
------------ ------------ ------------
Total Operating Expenses........................................ 10,948 10,126 14,139
------------ ------------ ------------
Operating profit (loss)............................................... 680 750 (12,148)
(Loss) on write-off of foreign currency translation adjustment........ (601) -- --
------------ ------------ ------------
Income (Loss) before Income Taxes..................................... 79 750 (12,148)
------------ ------------ ------------
Provision (Benefit) for Income Taxes.................................. 204 300 (4,870)
------------ ------------ ------------
Net Income (Loss)..................................................... $ (125) $ 450 $ (7,278)
------------ ------------ ------------
------------ ------------ ------------
Net Income (Loss) per Share........................................... $ (.03) $ .09 $ (1.48)
------------ ------------ ------------
------------ ------------ ------------
Shares Used to Compute Net Income (Loss) per Share.................. 3,881,361 4,989,391 4,923,233
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-8
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(IN THOUSANDS EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
CUMULATIVE
DEFERRED FOREIGN
COMMON STOCK ADDITIONAL ESOP & CURRENCY
------------------------- PAID-IN RETAINED TREASURY SESOP TRANSLATION
SHARES AMOUNT CAPITAL EARNINGS STOCK COMPENSATION ADJUSTMENT TOTAL
----------- ----------- ------ --------- --------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 26, 1992....... 4,922,677 $ 49 $13,643 $ 31,429 -- -- $ (80) $45,041
Issuance of Common Stock........... 894 -- 2 -- -- -- -- 2
Net loss........................... -- -- -- (7,278) -- -- -- (7,278)
Foreign currency translation
adjustments...................... -- -- -- -- -- -- (144) (144)
----------- ----- ------ --------- --------- --------- ------- --------
Balance at December 25, 1993....... 4,923,571 49 13,645 24,151 -- -- (224) 37,621
Issuance of Common Stock........... 824 -- 3 -- -- -- -- 3
Net income......................... -- -- -- 450 -- -- -- 450
Purchase of Treasury Stock......... -- -- -- -- (5,023) -- -- (5,023)
Issuance of Common Stock to ESOP &
SESOP............................ 650,000 7 2,268 -- -- (2,275) -- --
ESOP Compensation.................. -- -- -- -- -- 99 -- 99
Foreign currency translation
adjustments...................... -- -- -- -- -- -- (328) (328)
----------- ----- ------ --------- --------- --------- ------- --------
Balance at December 31, 1994....... 5,574,395 56 15,916 24,601 (5,023) (2,176) (552) 32,822
Issuance of Common Stock........... 317 -- -- -- -- -- -- --
Net loss........................... -- -- -- (125) -- -- -- (125)
Retirement of Treasury Stock....... (1,125,182) (12) (4,601) -- 4,613 -- -- --
Restricted Stock Awards............ 337,000 4 (4) -- -- -- -- --
ESOP Compensation.................. -- -- -- -- -- 110 -- 110
Foreign currency translation
adjustments...................... -- -- -- -- -- -- (49) (49)
Recognized in current period upon
liquidation of foreign
subsidiary....................... -- -- -- -- -- -- 601 601
----------- ----- ------ --------- --------- --------- ------- --------
Balance at December 31, 1995....... 4,786,530 $ 48 $11,311 $ 24,476 $ (410) $ (2,066) $ -- $33,359
----------- ----- ------ --------- --------- --------- ------- --------
----------- ----- ------ --------- --------- --------- ------- --------
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-9
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR EACH OF THE YEARS ENDED
----------------------------------------
<S> <C> <C> <C>
DECEMBER 31, DECEMBER 31, DECEMBER 25,
1995 1994 1993
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................................ $ (125) $ 450 $ (7,278)
Adjustments to reconcile net income to net cash provided by operating
activities:
Foreign currency translation adjustments................................. 601 -- --
Depreciation and amortization............................................ 2,340 1,872 2,695
Deferred income taxes.................................................... (926) (1,093) (4,333)
Gain on sale of receivables.............................................. (53) -- --
Provision for losses on lease contracts and notes receivable............. 1,296 754 15,104
Increase (decrease) in accrued interest.................................. 46 (3,141) (79)
Increase (decrease) in accounts payable and accrued liabilities.......... 1,087 (2,898) 882
Increase (decrease) in accrued income taxes.............................. 348 (290) (880)
Decrease (increase) in refundable income taxes........................... 358 827 (1,968)
(Increase) decrease in other assets...................................... (458) 921 (940)
------------ ------------ ------------
Cash provided by (used in) operating activities...................... 4,514 (2,598) 3,203
------------ ------------ ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments on capital leases............................................... (81) (27) (60)
Proceeds from sales of receivables....................................... 1,630 6,958 --
Lease contracts receivable and notes receivable.......................... (40,494) 11,957 41,136
Estimated residual value of equipment.................................... 115 2,339 2,734
Unearned income.......................................................... 9,391 (3,346) (11,988)
Security deposits........................................................ 788 (221) (603)
Purchase of furniture and equipment...................................... (463) (598) (154)
Initial direct costs incurred............................................ (3,003) (1,303) (684)
Investments.............................................................. (300) (75) --
------------ ------------ ------------
Cash (used in) provided by investing activities...................... (32,417) 15,684 30,381
------------ ------------ ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of senior notes................................................ (23,385) (78,976) --
Repayment of subordinated debt........................................... -- (20,000) --
Repayment of notes payable to banks...................................... -- -- (14,000)
Proceeds from issuance of senior notes................................... 28,813 70,000 --
(Decrease) increase in notes payable treasury stock purchase............. (4,500) 4,500 --
Net (decrease) in demand notes payable to banks.......................... -- (7,130) (3,454)
Proceeds from revolving notes payable to banks........................... 25,570 16,500 --
Purchase of treasury stock............................................... -- (5,023) --
Debt issuance costs...................................................... (391) (967) --
Increase (decrease) in restricted cash................................... 2,326 (7,936) --
Proceeds from issuance of common stock................................... -- 3 2
Contribution to employee stock ownership plan............................ 110 99 --
Loans to employees....................................................... (198) (9) (13)
Other.................................................................... -- (328) (144)
------------ ------------ ------------
Cash provided by (used in) financing activities...................... 28,345 (29,267) (17,609)
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents....................... 442 (16,181) 15,975
Cash and cash equivalents at beginning of year............................. 419 16,600 625
------------ ------------ ------------
Cash and cash equivalents at end of year................................... $ 861 $ 419 $ 16,600
------------ ------------ ------------
------------ ------------ ------------
Supplemental disclosures of cash flow information:
Interest paid............................................................ $ 4,510 $ 6,630 $ 8,103
Income taxes paid........................................................ 1,423 2,018 2,587
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.

F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL--Until Healthco International, Inc. ("Healthco") filed for
bankruptcy on June 9, 1993, Healthco referred to the Company substantially all
of the Company's financing business. Healthco was a leading distributor of
merchandise, equipment and services to dentists and institutional providers of
dental care, including dental schools and dental laboratories. Healthco also
provided certain sales and related services to the Company as well as certain
management, data processing and administrative services to the Company.

Healthco also owned 1,949,182 shares of the Company's Common Stock, which it
had pledged to certain of its secured creditors (the "Secured Creditors") and,
as a result of the bankruptcy of Healthco, the Secured Creditors and the Company
made certain claims against each other for moneys due.

During 1994 and 1995, HPSC replaced the business that previously had been
referred to it by Healthco with business from other vendors. Now HPSC provides
for itself the sales, management, data processing and administrative services
formerly provided by Healthco.

In July 1995, the Company completed payment for 1,225,182 shares of its
Common Stock which it repurchased from certain secured creditors of Healthco,
pursuant to a Purchase and Sale Agreement between the Company and the Healthco
secured creditors, dated as of November 1, 1994. Healthco had pledged the shares
of the Company's Common Stock to secure its obligations to the secured
creditors. The shares were released from the pledge agreement upon the Company's
completion of the payment. The secured creditors also released the Company from
any claims that may arise out of the bankruptcy of Healthco, effective upon
payment by the Company for the shares. The Company has retired 1,125,182 of
these shares and holds 100,000 of these shares in its treasury.

The Company entered into an agreement to sell substantially all the finance
assets of Credident Inc. ("Credident"), the Company's Canadian subsidiary,
effective June 30, 1994, to Newcourt Credit Group, Inc. (Newcourt) for
approximately (US) $7,000,000 in cash. The Company also entered into a service
agreement whereby Newcourt will manage certain accounts for the two years ended
June 30, 1996 for a fee related to collections. The sale did not have a material
effect on the Company's operations in 1994. Subsequent to the sale, all of
Credident's Canadian bank debt was retired. The sale of substantially all of
Credident's finance assets was consistent with the Company's strategic plan to
focus on its business in the United States. As of December 31, 1994, in light of
the fact that the Company had discontinued its Canadian operations, the Company
wrote off all assets deemed uncollectable at that time. Credident's total assets
at December 31, 1994, were approximately 1.5% of the Company's total
consolidated assets and Credident's earned revenues represented 4.0% of total
consolidated earned revenues.

In 1995, the Company reduced its investment in Credident through asset
liquidation, repatriation of funds from Canada and adjustments, to approximately
$800,000. At December 31, 1995, Credident's total assets were less than 1% of
consolidated assets.

CONSOLIDATION--The accompanying consolidated financial statements include
the following wholly-owned subsidiaries: HPSC Funding Corp. I ("HPSCF"), a
special purpose corporation formed in connection with a securitization
transaction; Credident; American Commercial Finance Corporation ("ACFC"), an
asset-based lender focused primarily on accounts receivable and inventory
financing at variable rates; and HPSC Bravo Funding Corp. ("Bravo"), a special
purpose corporation formed in connection with a securitization in 1995. All
intercompany transactions have been eliminated.

USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION--When a transaction is initially activated, the Company
records the minimum payments and the estimated residual value, if any,
associated with the transaction. The difference between the sum of the payments
due plus residual less the cost of the transaction is recorded as unearned
income. The unearned income is recognized as revenue over the life of the
transaction using the interest method in essentially all cases. Recognition of
revenue on these assets is suspended no later than when a transaction becomes
145 days delinquent in scheduled payments. Also included in earned income are
fee income from service charges on portfolio accounts, gains and losses on
residual transactions plus miscellaneous income items net of initial direct cost
amortization.

CASH AND EQUIVALENTS--The Company considers all highly liquid investments
with an original maturity of three months or less to be cash equivalents.

FINANCING OPERATIONS--The Company provides credit primarily to healthcare
professionals throughout the United States. The Company finances dental,
ophthalmic, chiropractic, veterinary, podiatry and other medical equipment
utilized in the healthcare professions, as well as leasehold improvements,
office furniture and equipment and certain other costs involved in opening or
maintaining a healthcare provider's office. The Company also finances the
acquisition of healthcare practices by healthcare professionals and, through its
wholly-owned subsidiary, ACFC, engages in asset-based lending.

The Company finances equipment only after a customer's credit has been
approved and a financing agreement for the transaction has been executed. The
Company performs ongoing credit evaluations of its customers and maintains
allowances for potential credit losses.

The Company does not carry any inventory. The Company acquires the financed
equipment from vendors at their customary selling price to other customers.

The Company sells lease and notes receivable to other parties. Income is
recorded at the time of the sale approximately equal to the present value of the
anticipated future cash flow, partially offset by initial direct costs, expenses
and estimated credit losses under certain recourse provisions of the related
sale agreements. Also included in net income is the difference between the net
sales proceeds and the carrying amount of the lease receivables sold. Generally,
the Company retains the servicing of lease receivables sold. Income equal to the
estimated future costs of servicing these lease receivables is deferred and
recognized in proportion to the estimated periodic servicing costs.

ALLOWANCE FOR LOSSES--In connection with the Company's financing
transactions, it records an allowance for losses in its portfolio. The extent of
the allowance is based on a specific analysis of potential loss accounts,
delinquencies and historical loss experiences. An account is reserved for or
written off when deemed uncollectable.

The Company occasionally repossesses equipment from lessees who have
defaulted on their obligations to the Company. There was no such equipment held
for sale at December 31, 1995, or December 31, 1994.

Except for approximately $12,000,000 of ACFC receivables, substantially all
of the Company's agreements with its customers are non-cancelable and provide
for a full payout at a fixed financing rate with a fixed payment schedule over a
term of three to seven years. All leases are classified as direct financing
leases.

Delinquent installments on the Company's financing agreements amounted to
$2,618,000 at December 31, 1995 compared to $3,496,000 at December 31, 1994. An
account is considered delinquent when not paid within thirty days of the billing
due date. Total balances on accounts in non-accrual status at December 31, 1995,
and December 31, 1994, were $4,709,000 and $6,181,000, respectively.

F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Effective January 1, 1995, the Company adopted prospectively, SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan," as amended by SFAS No. 118,
"Accounting by Creditors for Impairment of a Loan-Income Recognition and
Disclosure." These standards apply to the Company's practice acquisition loans
and asset-based lending. The standards require that a loan be classified and
accounted for as an impaired loan when it is probable that the Company will be
unable to collect all principal and interest due on the loan in accordance with
the loan's original contractual terms.

Impaired loans are valued based on the present value of expected future cash
flows, using the interest rate in effect at the time the loan was placed on
nonaccrual status. A loan's observable market value or collateral value may be
used as an alternative valuation technique. Impairment exists when the recorded
investment in a loan exceeds the value of the loan measured using the
above-mentioned valuation techniques. Such impairment is recognized as a
valuation reserve, which is included as a part of the Company's allowance for
losses.

The adoption of these new standards did not have a material impact on the
Company's allowance for losses.

INCOME TAXES--The Company accounts for income taxes in accordance with SFAS
No. 109, "Accounting for Income Taxes." Current tax liabilities or assets are
recognized, through charges or credits to the current tax provision, for the
estimated taxes payable or refundable for the current year. Net deferred tax
liabilities or assets are recognized, through charges or credits to the deferred
tax provision, for the estimated future tax effects, based on enacted tax rates,
attributable to temporary differences. Deferred tax liabilities are recognized
for temporary differences that will result in amounts taxable in the future, and
deferred tax assets are recognized for temporary differences and tax benefit
carryforwards that will result in amounts deductible or creditable in the
future. The effect of enacted changes in tax law, including changes in tax
rates, on these deferred tax assets and liabilities is recognized in income in
the period that includes the enactment date. A deferred tax valuation reserve is
established if it is more likely than not that all or a portion of the Company's
deferred tax assets will not be realized. Changes in the deferred tax valuation
reserve are recognized through charges or credits to the deferred tax provision.

FOREIGN CURRENCY TRANSLATION--The Company accounts for translation of
foreign currency in accordance with Statement of Financial Accounting Standards
No. 52, "Foreign Currency Translation" (FAS 52). Over a number of years, the
accounts of the Company's Canadian subsidiary, Credident, when translated into
US dollars lost value as a result of the decline in the Canadian dollar in
relation to the US dollar. In accordance with FAS 52, the cumulative amount of
such translation losses had been presented as a reduction of stockholders'
equity. As reported last year, the Company discontinued its Canadian operations
in 1994. During 1995, the Company substantially liquidated its investment in
Credident. In accordance with FAS 52, upon substantial liquidation, cumulative
exchange losses are reflected in the income statement in the current period and
eliminated as a separate component of stockholders' equity.

NET INCOME (LOSS) PER SHARE--Earnings-per-share computations for the years
ended December 31, 1995 and December 31, 1994 are based on the weighted average
number of common and common share equivalents outstanding. At December 31, 1995
and 1994, the calculation included only allocated shares under the Company's
ESOP and SESOP plans and excluded unvested restricted stock grants. Fully
diluted and primary income per share are the same for each of the periods
presented. For the year ended December 25, 1993, the weighted average number of
common shares outstanding was used to calculate the loss per share.

DEFERRED ORIGINATION COSTS--The Company capitalizes initial direct costs
that relate to the origination of leases and notes receivable. These initial
direct costs are comprised of certain specific activities related

F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
to processing requests for financing. Deferred origination costs are amortized
over the life of the receivable as an adjustment of yield.

INTEREST RATE CONTRACTS--The Company utilizes interest rate contracts to
reduce interest rate risk. The Company has established a control environment
which includes policies and procedures for risk assessment and the approval,
reporting and monitoring of derivative financial instrument activities. The
Company does not hold or issue derivative financial instruments for trading
purposes. The differentials to be received or paid under contracts designated as
hedges are recognized in income over the life of the contracts as adjustments to
interest expense.

PROPERTY AND EQUIPMENT--Office furniture, equipment and capital leases are
recorded at cost and depreciated using the straight-line method over a period of
three to five years. Leaseholds are amortized over the shorter of the life of
the lease or the asset. Upon retirement or other disposition, the cost and
related accumulated depreciation of the assets are removed from the accounts and
the resulting gain or loss is reflected in income. Net property, plant and
equipment is included in other assets and was not material at December 31, 1995
and 1994.

RECLASSIFICATIONS--Certain amounts in the 1994 financial statements have
been reclassified to conform to the current year presentation. Such
reclassifications had no effect on earnings.

NOTE B. NOTES PAYABLE TO BANKS AND OTHER DEBT

In 1994, the Company retired its outstanding $50,000,000 10.125% Senior
Notes (principal and interest of $52,527,000) with the proceeds of the
Securitization described below. The Company's $20,000,000 10% Subordinated Notes
were retired at par value plus accrued interest of $1,000,000 on January 15,
1994.

The Company raised $70,000,000 in a receivable backed securitization
transaction ("Securitization") on December 27, 1993. Under the terms of the
Securitization, the Company formed a wholly-owned, special-purpose subsidiary,
HPSC Funding Corp. I ("HPSCF") to which the Company sold or contributed certain
of its equipment lease contracts, conditional sales agreements, leasehold
improvement loans, equipment residual rights and rights to underlying equipment
("Collateral"). HPSCF subsequently issued $70,000,000 of secured notes
("Notes"), bearing interest at 5.01%, secured by the Collateral. The Notes are
rated "AAA" by Standard & Poor's. Monthly payments of interest and principal on
the Notes are made through the application of regularly scheduled monthly
receivable payments on the Collateral. The Company is the servicer of the
Collateral portfolio, subject to its meeting certain covenants. The required
monthly payments of interest and principal to holders of the Notes are
unconditionally guaranteed by Municipal Bond Investor Assurance Corporation
pursuant to the terms of a Note guarantee insurance policy.

In connection with the Securitization, the Company made an investment in
HPSCF. Some or all of the Company's investment in HPSCF may be required to fund
payments to holders of the Notes if certain default and delinquency ratios
applicable to the Collateral are not met. As of December 31, 1995 HPSCF had
approximately $26,984,000 of gross receivables as collateral for the Notes. The
Agreement also provides for restrictions on cash balances under certain
conditions; at December 31, 1995, this restricted cash amounted to $4,693,000.
The Notes had an outstanding balance of $20,150,000 at December 31,1995.

Note payments to investors, based on projected cash flows from the
Collateral, for the years 1996 through 2000 are expected to be as follows:
$11,868,000, $6,218,000, $1,734,000, $275,000 and $55,000, respectively.

F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE B. NOTES PAYABLE TO BANKS AND OTHER DEBT (CONTINUED)
In May, 1995, the Company executed an Amended and Restated Revolving Loan
agreement with the First National Bank of Boston as Agent Bank ("Revolving Loan
Agreement") increasing availability under this arrangement to $50,000,000. This
agreement was amended in December, 1995, to increase availability to $60,000,000
and extend the term to December 31, 1996. Under this agreement, the Company may
acquire US dollar loans at variable rates of prime plus 1/4% to 1/2% in
Eurodollar loans at LIBOR plus 1.75% to 2.00%, dependent on certain performance
covenants. At December 31, 1995, the Company had $39,000,000 outstanding under
this facility. This revolving loan agreement is not currently hedged and is,
therefore, exposed to upward movements in interest rates. Management believes
that the Company's liquidity is adequate to meet current obligations and future
projected levels of financings and carry on normal operations. The Company will
continue to seek to raise additional capital from bank and non-bank sources and
selective use of asset-sale transactions in 1996. 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.

As of November 30, 1994, the Company executed a Purchase Agreement with the
Healthco Secured Creditors (as described in Note A) to purchase 1,225,182 shares
for $6,285,000, payable $1,785,000 at closing (December 30, 1994) and $4,500,000
pursuant to a promissory note which provided for six equal monthly payments of
$750,000 beginning February 1, 1995. All scheduled payments were made in 1995,
and the note was paid in full in July 1995.

As of January 31, 1995, the Company, along with its 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 sells and may continue to sell or contribute certain
of its portfolio assets, pledges its interests 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 its meeting
certain covenants. The required monthly payments of principal and interest to
purchasers of the commercial paper are guaranteed by CapMAC pursuant to the
terms of the agreement.

The Company had $26,303,000 outstanding under this facility at December 31,
1995, and, in connection with this transaction, had six separate interest rate
swap agreements with the Bank of Boston with a total notional value of
approximately $27,500,000.

In April, 1995, the Company entered into a fixed rate, fixed term loan
agreement with Springfield Institution for Savings ("SIS") under which the
Company borrowed $3,500,000 at 9.5% subject to certain recourse and performance
covenants. The Company had $3,070,000 outstanding under this agreement at
December 31, 1995. In November, 1995, the Company sold approximately $1,500,000
in assets to SIS subject to certain covenants that may require (i) the Company
to repurchase assets from SIS and/or make payments under certain circumstances,
including the delinquencies of the underlying debtor and (ii) servicing of these
assets by the Company. Related to this agreement, the Company carries a recourse
reserve of $30,000 in its allowance for losses. A gain of approximately $53,000
was recognized in connection with this transaction and is included in earned
income from leases and notes for 1995. The Company may enter into additional
asset sale agreements in the future in order to manage its liquidity.

Amortization of debt discount of $0, $38,000, and $872,000 in 1995, 1994,
and 1993, respectively, is included in interest expense.

F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE B. NOTES PAYABLE TO BANKS AND OTHER DEBT (CONTINUED)
Certain debt/securitization agreements contain restrictive covenants which,
among other things, include minimum net worth, interest coverage ratios, capital
expenditures, and portfolio performance guidelines. At December 31, 1995, the
Company was in compliance with the provisions of its debt covenants.

Debt of the Company as of December 31, 1995, and December 31, 1994 is
summarized below.

<TABLE>
<CAPTION>
DEC. 31, DEC. 31,
1995 1994
--------- ---------
<S> <C> <C>
(IN THOUSANDS)
Senior Notes (HPSCF)
Due Dec., 1999.......................................................... $ 20,150 41,024
Senior Notes (Bravo)
Due Nov., 2000 through Aug., 2001....................................... 26,303 --
Senior Notes (SIS)
Due Mar., 2001.......................................................... 3,070 --
Notes Payable--treasury stock purchase
Due July 1, 1995........................................................ -- 4,500
Revolving credit arrangement
Due Dec. 31, 1996....................................................... 39,000 16,500
--------- ---------
Total................................................................... $ 88,523 $ 62,024
--------- ---------
--------- ---------
</TABLE>

Interest expense is net of interest income of $375,000, $358,000 and $78,000
in 1995, 1994, and 1993, respectively.

NOTE C. LEASE COMMITMENTS

The Company leases various office locations under noncancelable lease
arrangements that have terms of from three to five years and that generally
provide renewal options from one to five years. Rent expense under all operating
leases was $318,000, $198,000 and $92,000 for 1995, 1994 and 1993, respectively.

Future minimum lease payments for commitments exceeding twelve months under
non-cancelable operating leases as of December 31, 1995, are as follows (in
thousands):

<TABLE>
<S> <C>
1996................................................................. $ 290
1997................................................................. 324
1998................................................................. 324
1999................................................................. 146
2000 & thereafter.................................................... -0 -
</TABLE>

NOTE D. INCOME TAXES

Deferred income taxes reflect the impact of "temporary differences" between
the amount of assets and liabilities for financial reporting purposes and such
amounts as measured by tax laws and regulations.

F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE D. INCOME TAXES (CONTINUED)
The components of income (loss) before income taxes are as follows:
<TABLE>
<CAPTION>
FOR EACH OF THE YEARS ENDED
------------------------------------
<S> <C> <C> <C>
DEC. 31, DEC. 31, DEC. 25,
1995 1994 1993
----------- ----------- ----------

<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic........................................................................... $ 154 $ 891 $ (11,661)
Foreign............................................................................ (75) (141) (487)
----- ----- ----------
Income (loss) before income taxes.................................................. $ 79 $ 750 $ (12,148)
</TABLE>

Income taxes consist of the following:
<TABLE>
<CAPTION>
FOR EACH OF THE YEARS ENDED
-----------------------------------
<S> <C> <C> <C>
DEC. 31, DEC. 31, DEC. 25,
1995 1994 1993
----------- ----------- ---------

<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
Federal:
Current........................................................................... $ 1,050 $ 808 $ (1,079)
Deferred.......................................................................... (787) (530) (2,663)
State
Current........................................................................... 426 635 --
Deferred.......................................................................... (357) (563) (957)
Foreign
Current........................................................................... (128) (50) 542
Deferred.......................................................................... -- -- (713)
----------- ----- ---------
Provision (credit) for income taxes............................................... $ 204 $ 300 $ (4,870)
----------- ----- ---------
----------- ----- ---------
</TABLE>

Deferred income taxes arise from the following:
<TABLE>
<CAPTION>
FOR EACH OF THE YEARS ENDED
-------------------------------
<S> <C> <C> <C>
DEC. 31, DEC. 31, DEC. 25,
1995 1994 1993
--------- --------- ---------

<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
Operating method.................................................................. $ (2,501) $ (3,498) (4,277)
Alternative minimum tax credit.................................................... 609 2,147 --
Other............................................................................. 748 258 (56)
--------- --------- ---------
$ (1,144) $ (1,093) $ (4,333)
--------- --------- ---------
--------- --------- ---------
</TABLE>

A reconciliation of the statutory federal income tax rate and the effective
tax rate as a percentage of pre-tax income for each year is as follows:

<TABLE>
<CAPTION>
1995 1994 1993
---------- --------- ---------
<S> <C> <C> <C>
Statutory rate......................................................................... 34.0% 34.0% 34.0%
State taxes net of US federal income tax benefit....................................... 55.7 5.2 5.2
Effect of prior year foreign tax recovery.............................................. (162.0) -- --
Foreign loss not benefited............................................................. 22.7 -- --
Non-deductible write-off of foreign currency translation adjustment.................... 258.5 -- --
Other.................................................................................. 49.4 .8 .8
---------- --- ---
258.2% 40.0% 40.0%
---------- --- ---
---------- --- ---
</TABLE>

F-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE D. INCOME TAXES (CONTINUED)
The items which comprise a significant portion of deferred tax liabilities
as of December 31, 1995, and December 31, 1994, are as follows:

<TABLE>
<CAPTION>
1995 1994
----------- -----------
DEF. TAX DEF. TAX
LIABILITIES LIABILITIES
----------- -----------
<S> <C> <C>
(IN THOUSANDS)
Operating method....................................................... $ 4,089 $ 6,122
State income tax accrual............................................... 915 1,273
Alternative minimum tax credit......................................... -- (609)
Other.................................................................. (391) (1,247)
----------- -----------
Deferred income taxes.................................................. $ 4,613 $ 5,539
----------- -----------
----------- -----------
</TABLE>

At December 31, 1995, consolidated retained earnings included $381,000 of
unremitted earnings from the Company's foreign subsidiary. In the event of
repatriation, the Company does not anticipate any significant additional income
taxes.

NOTE E. SCHEDULED FUTURE RECEIPTS ON LEASES AND NOTES

Scheduled future receipts on leases and notes, excluding the residual value
of the equipment and ACFC receivables, are as follows (in thousands):

<TABLE>
<S> <C>
1996............................................................... $ 40,439
1997............................................................... 33,466
1998............................................................... 24,454
1999............................................................... 17,802
2000 and thereafter................................................ 12,104
</TABLE>

NOTE F. STOCK OPTION AND STOCK INCENTIVE PLANS

The Company has outstanding options under three stock option plans which
were terminated in May, 1995 upon approval of the 1995 Stock Incentive Plan
described below. The Company has 101,875 shares outstanding under its Employee
Stock Option Plan dated March 23, 1983, as amended (the "1983 Plan"), 345,000
shares outstanding under its Stock Option Plan dated March 5, 1986 (the "1986
Plan") and 150,000 shares under its 1994 Stock Plan dated March 23, 1994 (the
"1994 Plan").

Options exercisable under the 1983, 1986 and 1994 Plans at December 31,
1995, were 90,125, 267,000 and 32,000, respectively.

Options granted under the 1983 Plan are either incentive stock options or
non-qualified options and were granted at no less than 85% of the fair market
value of the Common Stock on the date of grant. Officers and directors of the
Company and its subsidiaries were eligible to participate under the 1986 Plan
and only non-qualified stock options were granted under the 1986 Plan. Key
employees, directors of and consultants to the Company were eligible to
participate in the 1994 Plan. Only non-qualified options were granted under the
1994 Plan and the option exercise price was in each case not less than 50% of
the fair market value of the Common Stock on the date of grant.

The Stock Purchase Plan was terminated upon the approval of the Stock
Incentive Plan in May, 1995. During 1995 and 1994, 317 and 824 shares,
respectively, were issued under the Stock Purchase Plan.

F-18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1995 STOCK INCENTIVE PLAN

The Company has outstanding stock options and awards of restricted stock
under its 1995 Stock Incentive Plan dated March 8, 1995, as amended March 14,
1996, (the "1995 Stock Plan") pursuant to which 550,000 shares of Common Stock
are reserved.

The 1995 Stock Plan provides that restricted shares of Common Stock awarded
under the plan will remain unvested until certain performance and service
conditions are both met. The performance condition is met with respect to 50% of
the restricted shares if and when during the five-year period after the date of
grant ("the Performance Period") the closing price of the Company's Common
Stock, as reported on the Nasdaq National Market System for a consecutive
ten-day period, equals at least 134.175% of the closing price on the grant date
(the "Partial Performance Condition"). The performance condition is met with
respect to the remaining 50% of the restricted shares if and when during the
Performance Period the closing price of the Company's Common Stock, as reported
on the Nasdaq National Market System for a consecutive ten-day period, equals at
least 168.35% of the closing price on the grant date (the "Full Performance
Condition"). The service condition is met with respect to all restricted shares
(provided that the applicable performance condition has also been met) by the
holder's continuous service for the Company throughout the Performance Period
provided that such holder shall also have completed five (5) years of continued
service with the Company from the date of grant. When either the partial or full
performance condition is met, the value of the shares awarded related to the
period earned would be charged to expense and the remainder would be recorded as
deferred compensation to be amortized over the recipient's remaining required
service period. Upon a change of control of the Company (as defined in the 1995
Stock Plan), all restricted stock awards granted prior to such change of control
become fully vested. Upon the termination of a holder's employment by the
Company without cause or by reason of death or disability during the Performance
Period, any restricted stock awards for which the applicable performance
condition is satisfied no later than four months after the date of such
termination of employment shall become fully vested.

Awards of 337,000 restricted shares of the Company's Common Stock were made
in May 1995. The Partial Performance Condition of these shares is $5.90 per
share with respect to 332,000 shares and $6.04 with respect to 5,000 shares, and
the Full Performance Condition is $7.37 per share with respect to 332,000 shares
and $7.58 with respect to 5,000 shares.

The 1995 Stock Plan provides that with respect to options made to key
employees (except non-employee directors), the option term and the terms and
conditions upon which the options may be exercised will be determined by the
Compensation Committee of the Company's Board of Directors for each such option
at the time it is granted (except so delegated to the chief executive officer
for non-executive officer grants). Options granted to key employees of the
Company may be either incentive stock options (within the meaning of Section 422
of the Internal Revenue Code of 1986 and subject to the restrictions of that
section on certain terms of such options) or non-qualified options, as
designated by the Compensation Committee.

With respect to automatic options to non-employee directors of the Company
(which must be non-qualified options), the 1995 Stock Plan specifies the option
term and the terms and conditions upon which the options may be exercised. Each
non-employee director who is such at the conclusion of any regular annual
meeting of the Company's stockholders while the 1995 Stock Plan is in effect and
who will continue to serve on the Board of Directors is granted such automatic
options to purchase 1,000 shares of the Company's Common Stock at a price equal
to the closing price of the Common Stock, as reported on the Nasdaq National
Market System, on the date of grant of the option. Each automatic option is
exercisable immediately in full or for any portion thereof and remains
exercisable for ten years after the date of grant, unless terminated earlier (as
provided in the Plan) upon or following termination of the holder's service as a
director.

F-19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1995 STOCK INCENTIVE PLAN (CONTINUED)
At December 31, 1995, there were options exercisable for an aggregate of
2,000 shares of Common Stock outstanding to key employees and automatic options
exercisable for an aggregate of 5,000 shares of Common Stock outstanding to
non-employee directors of the Company, granted under the 1995 Stock Plan. The
Company also granted a non-qualified stock option to Lowell P Weicker, Jr.
effective December 7, 1995, in connection with his becoming a director of the
Company. The option is exercisable for 4,000 shares of Common Stock at $4.75 per
share, the fair market value of Common Stock on the date of grant. The option
grant is not pursuant to any of the stock plans referred to above.

A total of 198,000 shares of the Company's Common Stock remained available
for grants of options or awards of restricted stock under the 1995 Stock Plan at
December 31, 1995.

In November 1995, SFAS No. 123, "Accounting for Stock-Based Compensation,"
was issued, and is effective January 1, 1996. This new standard requires either
the recording of compensation expense for all stock awards and stock option
grants or significantly increased disclosures for such awards and grants made
after December 31, 1994. The Company intends to disclose the information
required by the standard.

The following table summarizes 1995 and 1994 activity under the Stock Option
Plans and the Stock Purchase Plan:

<TABLE>
<CAPTION>
1983 STOCK 1986 1994 1995
OPTION PURCHASE OPTION OPTION STOCK
PLAN PLAN PLAN PLAN PLAN
--------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Shares available at Dec. 31, 1993.......................... -- 70,448 155,000 -- --
1994 Stock Plan Shares available Mar. 23, 1994............. -- -- -- 200,000 --
Options granted in 1994:
Price $3.375............................................... -- -- -- 10,000 --
Price $3.5625.............................................. -- -- -- 80,000 --
Price $3.625............................................... -- -- -- 10,000 --
Price $3.75................................................ -- -- -- 50,000 --
Price $4.00................................................ -- -- -- 40,000 --
Shares purchased in 1994................................... -- 824 -- -- --
Options canceled in 1994................................... (25,000) -- -- -- --
1995 Stock Plan Shares available Mar. 8, 1995.............. -- -- -- -- 550,000
Options granted in 1995
Price $3.75................................................ -- -- -- 5,000 --
Price $3.625............................................... -- -- -- 5,000 --
Price $4.75................................................ -- -- -- -- 15,000
Restricted Stock Awards in 1995
Price $4.375............................................... -- -- -- -- 332,000
Price $4.50................................................ -- -- -- -- 5,000
Shares purchased in 1995................................... -- 317 -- -- --
Options canceled in 1995................................... -- -- -- (50,000) --
Plan terminations: Mar. 8, 1995
Stock Purchase Plan;
1986 Option Plan;
1994 Option Plan;
Remaining Options on shares................................ -- 69,307 155,000 50,000 --
Options outstanding at Dec. 31, 1995....................... 101,875 -- 345,000 150,000 352,000
Shares available at Dec. 31, 1995 -- -- -- -- 198,000
</TABLE>

F-20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE G. FOURTH QUARTER ADJUSTMENTS

In the fourth quarter of 1995, the Company recognized a loss on foreign
currency translation of $601,000 as a result of the substantial liquidation of
its Canadian subsidiary (see Note A). Also in the fourth quarter, the Company
reversed accruals of $290,000, which had previously been included in general
reserves to reflect the uncertainty created by the bankruptcy of Healthco in
1993 on the Company's portfolio and operations. The aggregate effect of these
adjustments on fourth quarter results was a decrease in income before tax of
$311,000 ($435,000 after tax).

NOTE H. EMPLOYEE BENEFIT PLANS

In December 1993, the Company established a stock bonus type of Employee
Stock Ownership Plan ("ESOP") for the benefit of all eligible employees. The
ESOP is expected to be primarily invested in common stock of the Company on
behalf of the employees. The Company made contributions of $110,000 in 1995 for
the 1994 allocation to the ESOP and $99,000 in 1994 for the 1993 allocation to
the ESOP.

Employees with five or more years of service with the Company from and after
December 1993 at the time of termination of employment will be fully vested in
their benefits under the ESOP. For a participant with fewer than five years of
service from December 1993 through his or her termination date, his or her
account balance will vest at the rate of 20% for each year of employment. Upon
the retirement or other termination of an ESOP participant, the shares of common
stock in which he or she is vested, at the option of the participant, may be
converted to cash or may be distributed. The unvested shares are allocated to
the remaining participants. The Company has issued 300,000 shares of Common
Stock to this plan in consideration of a Promissory Note in the principal amount
of $1,050,000; 31,372 shares of Common Stock were allocated to participant
accounts for 1994 under the ESOP. No allocation has yet been made for 1995.

In July, 1994, the Company adopted a Supplemental Employee Stock Ownership
Plan ("SESOP") for the benefit of all eligible employees. Eligibility
requirements are similar to the ESOP discussed above except that any amounts
allocated under the SESOP would first be allocated 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 on a non-discriminatory basis. The Company has issued 350,000
shares of Common Stock to this plan in consideration for a Promissory Note in
the principal amount of $1,225,000. No allocations have yet been made to
participant accounts.

The Company has established a Savings Plan covering substantially all
full-time employees, which allows participants to make contributions by salary
deductions pursuant to Section 401(k) of the Internal Revenue Code. The Company
matches employee contributions up to a maximum of 2% of the employee's salary.
Both employee and employer contributions are vested immediately. The Company's
contributions to the Savings Plan were $49,419 in 1995, and $37,975 in 1994.

NOTE I. PREFERRED STOCK PURCHASE RIGHTS PLAN

Pursuant to a rights agreement between the Company and the First National
Bank of Boston, as rights agent, dated August 3, 1993, the Board of Directors
declared a dividend on August 3, 1993 of one preferred stock purchase right
("Right") for each share of the Company's common stock (the "Shares")
outstanding on or after August 13, 1993. The Right entitles the holder to
purchase one one-hundredth of a share of Series A Preferred Stock, which
fractional share is substantially equivalent to one share of Common Stock, at an
exercise price of $20.00. The Rights will not be exercisable or transferable
apart from the Common Stock until the earlier to occur of (i) 10 days following
a public announcement that a person or affiliated group has acquired 15 percent
or more of the outstanding Common Stock (such person or group, an "Acquiring
Person"), or (ii) 10 business days after an announcement or commencement of a
tender offer which would result in a person or group's becoming an Acquiring
Person, subject to certain

F-21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE I. PREFERRED STOCK PURCHASE RIGHTS PLAN (CONTINUED)
exceptions. The Rights beneficially owned by the Acquiring Person and its
affiliates become null and void upon the Rights becoming exercisable.

If a person becomes an Acquiring Person or certain other events occur, each
Right entitles the holder, other than the Acquiring Person, to purchase common
stock (or one one-hundredths of a share of Preferred Stock, in the discretion of
the Board of Directors) having a market value of two times the exercise price of
the Right. If the Company is acquired in a merger or other business combination,
each exercisable Right entitles the holder, other than the Acquiring Person, to
purchase Common Stock of the acquiring company having a market value of two
times the exercise price of the Right.

At any time after a person becomes an Acquiring Person and prior to the
acquisition by such person of 50% or more of the outstanding Common Stock, the
Board of Directors may direct the Company to exchange the Rights held by any
person other than an Acquiring Person at an exchange ratio of one share of
Common Stock per Right. The Rights may be redeemed by the Company, subject to
approval of the Board of Directors, for one cent per Right in accordance with
the provisions of the Rights Plan. The Rights have no voting or dividend
privileges.

NOTE J. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The FASB Statement 107, Disclosures about Fair Value of Financial
Instruments ("SFAS No. 107"), requires the Company to disclose the estimated
fair values for certain of its financial instruments. Financial instruments
include items such as loans, interest rate contracts, notes payable, and other
items as defined in SFAS No. 107.

Fair value of a financial instrument is the amount at which the instrument
could be exchanged in a current transaction between willing parties, other than
in a forced or liquidation sale.

Quoted market prices are used when available; otherwise, management
estimates fair value based on prices of financial instruments with similar
characteristics or using valuation techniques such as discounted cash flow
models. Valuation techniques involve uncertainties and require assumptions and
judgments regarding prepayments, credit risk and discount rates. Changes in
these assumptions will result in different valuation estimates. The fair values
presented would not necessarily be realized in an immediate sale; nor are there
plans to settle liabilities prior to contractual maturity. Additionally, SFAS
No. 107 allows companies to use a wide range of valuation techniques; therefore,
it may be difficult to compare the Company's fair value information to other
companies' fair value information.

The following table presents a comparison of the carrying value and
estimated fair value of the Company's financial instruments at December 31,
1995:

<TABLE>
<CAPTION>
CARRYING ESTIMATED
VALUE FAIR VALUE
---------- ----------
<S> <C> <C>
IN THOUSANDS
Financial assets:
Cash and cash equivalents........................................... $ 861 $ 861
Restricted cash..................................................... $ 5,610 $ 5,610
Net investment in leases and notes.................................. $ 119,886 $ 119,886
Financial liabilities:
Notes payable....................................................... $ 88,523 $ 88,523
</TABLE>

The following methods and assumptions were used to estimate the fair value
of each class of financial instrument:

F-22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE J. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
Cash, cash equivalents and restricted cash: For these short-term
instruments, the carrying amount is a reasonable estimate of fair value.

Net investment in leases and notes: The fair value of loans is estimated by
discounting the future cash flows using the current rates at which similar loans
would be made to borrowers with similar credit rating and for the same remaining
maturities. For nonaccrual loans, fair value is estimated by discounting
management's estimate of future cash flows with a discount rate commensurate
with the risk associated with such assets.

Notes payable: The Company's senior notes, as shown on the accompanying
balance sheet, reflect their approximate fair market value. The fair market
value is estimated based on the quoted market prices for the same or similar
issues or on the current rates offered to the Company for debt of the same
maturity.

Interest rate contracts: The fair values of interest rate contracts is
estimated based on the estimated amount necessary to terminate the agreements,
which is not material.

NOTE K. OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS

Off-balance-sheet financial instruments represent various degrees and types
of risk to the Company, including credit, interest rate and liquidity risk.

In the normal course of its business the Company enters into interest rate
swap contracts to hedge its interest rate risk related to its variable rate
notes payable. Credit risk is the possibility that a loss may occur if a
counterparty to a transaction fails to perform according to the terms of the
contract. The notional amount of interest rate contracts is the amount upon
which interest and other payments under the contract are based.

Interest rate swaps generally involve the exchange of fixed and variable
rate interest payments between two parties based on a common notional principal
amount and maturity date. The primary risks associated with interest rate swaps
are the exposure to movements in interest rates and the ability of the
counterparties to meet the terms of the contracts.

At December 31, 1995, the Company has six interest rate swap agreements with
a notional value of approximately $27,500,000. The agreements mature from 2000
to 2001.

NOTE L. CONCENTRATIONS OF CREDIT RISK

The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of lease and note receivables and temporary cash
balances. To reduce the risk to the Company, stringent underwriting policies in
approving leases and notes and lease pools are closely monitored by management.
In addition, the cash is maintained with several high quality financial
institutions.

F-23
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................... 3
The Company...................................... 8
Risk Factors..................................... 9
Use of Proceeds.................................. 13
Capitalization................................... 13
Selected Consolidated Financial Data............. 14
Management's Discussion and Analysis of Financial
Condition and Results of Operations............ 16
Business......................................... 24
Management....................................... 39
Certain Transactions............................. 49
Principal Stockholders........................... 50
Description of Notes............................. 53
Description of Certain Indebtedness.............. 75
Underwriting..................................... 77
Legal Matters.................................... 77
Experts.......................................... 78
Additional Information........................... 78
Index to Financial Statements.................... F-1
</TABLE>

$20,000,000

[LOGO]

% SENIOR SUBORDINATED
NOTES DUE 2007

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

PROSPECTUS

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

ADVEST, INC.

LEGG MASON WOOD WALKER
INCORPORATED

, 1997

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses payable by the Company
in connection with the sale of the Notes being registered hereby. All the
amounts shown are estimated, except the SEC registration fee and the NASD filing
fee.

<TABLE>
<S> <C>
SEC registration fee.............................................. $ 6,970
NASD filing fee................................................... 2,800
Blue Sky fees and expenses........................................ 5,000
Printing and engraving expenses................................... 100,000
Legal fees and expenses........................................... 250,000
Auditors' accounting fees and expenses............................ 100,000
Trustee and Registrar fees........................................ 15,000
Miscellaneous expenses............................................ 20,230
---------
Total....................................................... $ 500,000
---------
---------
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Company is a Delaware corporation, subject to the applicable
indemnification provisions of the General Corporation Law of the State of
Delaware (the "DGCL"). Section 145 of the DGCL empowers a Delaware corporation
to indemnify, subject to the standards therein prescribed, any person in
connection with any action, suit or proceeding brought or threatened by reason
of the fact that such person is or was a director, officer, employee or agent of
the corporation or was serving as such with respect to another corporation or
other entity at the request of such corporation.

In accordance with Section 102(b)(7) of the DGCL, Article 9 of the Company's
Restated Certificate of Incorporation, as amended, provides that "[n]o director
shall be personally liable to the corporation or its stockholders for monetary
damages for any breach of fiduciary duty by such director as a director, except
to the extent required by law (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith, or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which the director derived an improper personal
benefit. Any repeal or modification of this Article 9 shall not increase the
personal liability or alleged liability of any director for any act or omission
occurring prior to such repeal or modification, or otherwise adversely affect
any right or protection of a director existing at the time of such repeal or
modification. The provisions of this Article 9 shall not affect rights or
indemnification under the corporation's by-laws or otherwise."

The Company's Amended and Restated By-Laws contain provisions that require
the Company to indemnify its directors and officers to the fullest extent
permitted by Delaware law.

The Underwriting Agreement (Exhibit 1.1 hereto) provides for indemnification
by the underwriters of the Company, its directors and executive officers, and
each person, if any, who controls the Company, for certain liabilities,
including liabilities arising under the Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The Company granted a non-qualified stock option to Lowell P. Weicker, Jr.,
a director of the Company, on December 7, 1995 for the purchase of 4,000 shares
of Common Stock of the Company at an exercise price of $4.75 per share (the
market price per share on the date of grant). Any shares purchased by Mr.
Weicker under this option will not be registered under the Securities Act. Mr.
Weicker's option will

II-1
<PAGE>
expire on December 7, 2005 unless terminated earlier in accordance with the
terms of the option agreement.

The Company granted a non-qualified stock option to Terry Lierman effective
April 9, 1996 for the purchase of 10,000 shares of Company Common Stock at an
exercise price of $4.50 per share, in recognition of Mr. Lierman's agreement to
assist the Company in obtaining certain financing transactions. Any shares
purchased by Mr. Lierman under this option will not be registered under the
Securities Act. Mr. Lierman's option will expire on April 9, 2001 unless
terminated earlier in accordance with the terms of the option agreement.

No underwriters were engaged in connection with the foregoing issuances of
securities. Such issuances were made in reliance upon the exemption from
registration set forth in Section 4(2) of the Securities Act.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

a. Exhibits

<TABLE>
<CAPTION>
NO. DESCRIPTION OF DOCUMENT METHOD OF FILING
- --------- --------------------------------------------------- ---------------------------------------------------
<C> <S> <C>

1.1 Form of Underwriting Agreement by and among HPSC, Filed herewith
Inc. and the Underwriters

3.1 Restated Certificate of Incorporation of HPSC, Inc. Incorporated by reference to Exhibit 3.1 to HPSC's
filed in the State of Delaware on April 25, 1983 Annual Report on Form 10-K for the fiscal year
ended December 31, 1995

3.2 Certificate of Amendment to Restated Certificate of Incorporated by reference to Exhibit 3.2 to HPSC's
Incorporation of HPSC, Inc. filed in Delaware on Annual Report on Form 10-K for the fiscal year
September 14, 1987 ended December 31, 1995

3.3 Certificate of Amendment to Restated Certificate of Incorporated by reference to Exhibit 3.3 to HPSC's
Incorporation of HPSC, Inc. filed in Delaware on Annual Report on Form 10-K for the fiscal year
May 22, 1995 ended December 31, 1995

3.4 Amended and Restated By-Laws Incorporated by reference to Exhibit 3.4 to HPSC's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1995

4.1 Rights Agreement dated as of August 3, 1993 between Incorporated by reference to Exhibit 4 to HPSC's
the Company and The First National Company and The Amendment No. 1 to its Current Report on Form 8-K
First National Bank of Boston, N.A., including as filed August 11, 1993
Exhibit B thereto the form of Rights Certificate

4.2 Form of Indenture To be filed by amendment

4.3 Form of Senior Subordinated Note Included in Exhibit 4.2

5.1 Opinion of Hill & Barlow regarding legality of To be filed by amendment
Senior Subordinated Notes

10.1 Lease dated as of March 8, 1994 between the Incorporated by reference to Exhibit 10.1 to HPSC's
Trustees of 60 State Street Trust and HPSC, Inc., Annual Report on Form 10-K for the fiscal year
dated September 10, 1970 and relating to the ended December 31, 1994
principal executive offices of HPSC, Inc. at 60
State Street, Boston, Massachusetts

10.2 HPSC, Inc. Stock Option Plan, dated March 5, 1986 Incorporated by reference to Exhibit 10.6 to HPSC's
Annual Report on Form 10-K for the fiscal year
ended December 30, 1989
</TABLE>

II-2
<PAGE>
<TABLE>
<CAPTION>
NO. DESCRIPTION OF DOCUMENT METHOD OF FILING
- --------- --------------------------------------------------- ---------------------------------------------------
<C> <S> <C>
10.3 Employment Agreement between HPSC, Inc. and John W. To be filed by amendment
Everets, dated as of July 19, 1996

10.4 Employment Agreement between HPSC, Inc. and Raymond To be filed by amendment
R. Doherty dated as of August 2, 1996

10.5 Employment Agreement between HPSC, Inc. and Rene Incorporated by reference to Exhibit 10.5 to HPSC's
Lefebvre dated April 6, 1994 Quarterly Report on Form 10-Q for the quarter ended
June 25, 1994

10.6 HPSC, Inc. Employee Stock Ownership Plan Agreement Incorporated by reference to Exhibit 10.9 to HPSC's
dated December 22, 1993 between HPSC, Inc. and John Annual Report on Form 10-K for the fiscal year
W. Everets and Raymond R. Doherty, as trustees ended December 25, 1993

10.8 Second Amendment effective January 1, 1994 to HPSC, Incorporated by reference to Exhibit 10.11 to
Inc. Employee Stock ownership Plan HPSC's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994

10.9 Third Amendment effective January 1, 1993 to HPSC, Incorporated by reference to Exhibit 10.12 to
Inc. Employee Stock Ownership Plan HPSC's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994

10.10 HPSC, Inc. Supplemental Employee Stock Ownership Incorporated by reference to Exhibit 10.3 to HPSC's
Plan and Trust dated July 25, 1994 Quarterly Report on Form 10-Q for the quarter ended
June 25, 1994

10.11 HPSC, Inc. 1994 Stock Plan dated as of March 23, Incorporated by reference to Exhibit 10.4 to HPSC's
1994 and related forms of Nonqualified Option Grant Quarterly Report on Form 10-Q for the quarter ended
and Option Exercise Form June 25, 1994

10.12 HPSC, Inc. Supplemental Executive Retirement Plan To be filed by amendment
dated December , 1996

10.13 HPSC, Inc. 401(k) Plan dated February, 1993 between Incorporated by reference to Exhibit 10.15 to
HPSC, Inc. and Metropolitan Life Insurance Company HPSC's Annual Report on Form 10-K for the fiscal
year ended December 25, 1993

10.14 Indenture and Service Agreement dated as of Incorporated by reference to Exhibit 10.10 to
December 23, 1993 by and among HPSC Funding Corp. HPSC's Annual Report on Form 10-K for the fiscal
I, HPSC, Inc. and State Street Bank and Trust year ended December 25, 1993
company of Connecticut, N.A.

10.15 Sale and Contribution Agreement dated as of Incorporated by reference to Exhibit 10.11 to
December 23, 1993 between HPSC Funding Corp. I and HPSC's Annual Report on Form 10-K for the fiscal
HPSC, Inc. year ended December 25, 1993

10.16 Note Purchase Agreement dated as of December 23, Incorporated by reference to Exhibit 10.12 to
1993 among HPSC Funding Corp. I, HPSC, Inc. and the HPSC's Annual Report on Form 10-K for the fiscal
Prudential Life Insurance Company of America year ended December 25, 1993
</TABLE>

II-3
<PAGE>
<TABLE>
<CAPTION>
NO. DESCRIPTION OF DOCUMENT METHOD OF FILING
- --------- --------------------------------------------------- ---------------------------------------------------
<C> <S> <C>
10.17 Insurance Agreement dated as of December 23, 1993 Incorporated by reference to Exhibit 10.13 to
among Municipal Bond Investors Assurance HPSC's Annual Report on Form 10-K for the fiscal
Corporation, HPSC Funding Corp. I, HPSC, Inc. and year ended December 25, 1993
State Street Bank and Trust Company of Connecticut,
N.A.

10.18 Undertaking with respect to Exhibits to certain Incorporated by reference to Exhibit 10.14 to
Agreements HPSC's Annual Report on Form 10-K for the fiscal
year ended December 25, 1993

10.19 Second Amended and Restated Revolving Credit Filed herewith
Agreement dated as of December 12, 1996 between
HPSC, Inc., The First National Bank of Boston,
individually and as Managing Agent, NationsBank,
N.A., individually and as Agent, and the banks
named therein

10.20 Loan Agreement dated April 13, 1995 between HPSC, Incorporated by reference to Exhibit 10.1 to HPSC's
Inc. and Springfield Institution for Savings Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995

10.22 Stock Purchase Agreement, dated as of November 1, Incorporated by reference to Exhibit 10.3 to HPSC's
1994, by and among HPSC, Inc. and each of Chemical Quarterly Report on Form 10-Q for the quarter ended
Bank; The CIT Group/ Business Credit, Inc.; Van September 24, 1994
Kampen Merritt Prime Rate Income Trust; the Nippon
Credit Bank, Ltd.; Union Bank of Finland, Grand
Cayman Branch; HPSC, Inc.; The Bank of Tokyo Trust
Company; and Morgens, Waterfall, Vintiadis & Co.
Inc., and related Schedules

10.23 Purchase and Contribution Agreement dated as of Incorporated by reference to Exhibit 10.31 to
January 31, 1995 between HPSC, Inc. and HPSC Bravo HPSC's Annual Report on Form 10-K for the fiscal
Funding Corp. year ended December 31, 1994

10.24 Credit Agreement dated as of January 31, 1995 among Incorporated by reference to Exhibit 10.32 to
HPSC Bravo Funding Corp., Triple-A One Funding HPSC's Annual Report on Form 10-K for the fiscal
Corporation, as lender, and CapMAC, as year ended December 31, 1994
Administrative Agent and as Collateral Agent

10.25 Agreement to furnish copies of Omitted Exhibits to Incorporated by reference to Exhibit 10.33 to
Certain Agreements with HPSC Bravo Funding Corp. HPSC's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994

10.26 Amendment documents, effective November 5, 1996, to Filed herewith
Credit Agreement dated as of January 31, 1995 among
HPSC Bravo Funding Corp., Triple-A One Funding
Corporation, as lender, and CapMAC, as
Administrative Agent and as Collateral Agent
</TABLE>

II-4
<PAGE>
<TABLE>
<CAPTION>
NO. DESCRIPTION OF DOCUMENT METHOD OF FILING
- --------- --------------------------------------------------- ---------------------------------------------------
<C> <S> <C>
10.27 Amended and Restated HPSC, Inc. 1995 Stock Incorporated by reference to Exhibit 10.29 to
Incentive Plan HPSC's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995

10.28 Stock Option grant to Lowell P. Weicker effective Incorporated by reference to Exhibit 10.30 to
December 7, 1995 HPSC's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995

11.1 Statement of Computation of Earnings per Share Incorporated by reference to Exhibit 11 to HPSC's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996

13.1 Annual Report to Stockholders for the fiscal year Incorporated by reference to Exhibit 13 to HPSC's
ended December 31, 1995 Annual Report on Form 10-K for the fiscal year
ended December 31, 1995

16.1 Letter from Coopers & Lybrand L.L.P. re change in Incorporated by reference to Exhibit 16 to HPSC's
certifying accountant Current Report on Form 8-K dated June 16, 1996

21.1 Subsidiaries of HPSC, Inc. Incorporated by reference to Exhibit 21 to HPSC's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1995

23.1 Consent of Coopers & Lybrand L.L.P. Filed herewith

23.2 Consent of Hill & Barlow, a Professional Included in Exhibit 5.1
Corporation

25.1 Statement of Eligibility of Trustee on Form T-1 Filed herewith

27.1 HPSC, Inc. Financial Data Schedule Filed herewith

b. Financial Statement Schedules.
None.
</TABLE>

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the provisions described in Item 14, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.

The undersigned Company hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

II-5
<PAGE>
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

The undersigned Company hereby undertakes to provide at the closing of this
offering to the Underwriters specified in the Underwriting Agreement
certificates in such denominations and registered in such names as required by
the Underwriters to permit prompt delivery to each purchaser.

II-6
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company has duly caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Boston,
Commonwealth of Massachusetts on the 30th day of January, 1997.

<TABLE>
<S> <C> <C>
HPSC, INC.

By: /s/ JOHN W. EVERETS
-----------------------------------------
John W. Everets
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE
OFFICER
</TABLE>

POWER OF ATTORNEY

Each person whose signature appears below hereby authorizes and appoints
John W. Everets, Raymond R. Doherty, Rene Lefebvre and Dennis W. Townley, and
each of them, with full power of substitution and full power to act without the
other, as his true and lawful attorney-in-fact and agent to act in his name,
place and stead and to execute in the name and on behalf of each person,
individually and in each capacity stated below, and to file any and all
amendments to this Registration Statement, including any and all post-effective
amendments and any subsequent Registration Statement for the same offering which
may be filed under Rule 462(b).

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated below on the 30th day of January, 1997.

<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------

<C> <S>
Chairman of the Board,
/s/ JOHN W. EVERETS Chief Executive Officer
- ------------------------------ and Director (Principal
John W. Everets Executive Officer)

Vice President of Finance,
/s/ RENE LEFEBVRE Chief Financial Officer
- ------------------------------ and Treasurer (Principal
Rene Lefebvre Financial and Accounting
Officer)

/s/ RAYMOND R. DOHERTY
- ------------------------------ President, Chief Operating
Raymond R. Doherty Officer and Director

/s/ JOSEPH A. BIERNAT
- ------------------------------ Director
Joseph A. Biernat

/s/ J. KERMIT BIRCHFIELD
- ------------------------------ Director
J. Kermit Birchfield
</TABLE>

II-7
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------

<C> <S>
/s/ DOLLIE A. COLE
- ------------------------------ Director
Dollie A. Cole

/s/ SAMUEL P. COOLEY
- ------------------------------ Director
Samuel P. Cooley

/s/ THOMAS M. MCDOUGAL
- ------------------------------ Director
Thomas M. McDougal

/s/ LOWELL P. WEICKER, JR.
- ------------------------------ Director
Lowell P. Weicker, Jr.
</TABLE>

II-8
<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 30, 1997.

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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

EXHIBITS
TO
FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

HPSC, INC.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
NO. DESCRIPTION OF DOCUMENT METHOD OF FILING
- --------- --------------------------------------------------- ---------------------------------------------------
<C> <S> <C>

1.1 Form of Underwriting Agreement by and among HPSC, Filed herewith
Inc. and the Underwriters

3.4 Amended and Restated By-Laws Incorporated by reference to Exhibit 3.4 to HPSC's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1995

4.2 Form of Indenture To be filed by amendment

4.3 Form of Senior Subordinated Note Included in Exhibit 4.2

5.1 Opinion of Hill & Barlow regarding legality of To be filed by amendment
Senior Subordinated Notes

10.2 HPSC, Inc. Stock Option Plan, dated March 5, 1986 Incorporated by reference to Exhibit 10.6 to HPSC's
Annual Report on Form 10-K for the fiscal year
ended December 30, 1989

10.3 Employment Agreement between HPSC, Inc. and John W. To be filed by amendment
Everets, dated as of July 19, 1996

10.4 Employment Agreement between HPSC, Inc. and Raymond To be filed by amendment
R. Doherty dated as of August 2, 1996

10.7 First Amendment effective January 1, 1993 to HPSC, Incorporated by reference to Exhibit 10.2 to HPSC's
Inc. Employee Stock Ownership Plan Quarterly Report on Form 10-Q for the quarter ended
June 25, 1994
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NO. DESCRIPTION OF DOCUMENT METHOD OF FILING
- --------- --------------------------------------------------- ---------------------------------------------------
<C> <S> <C>
10.8 Second Amendment effective January 1, 1994 to HPSC, Incorporated by reference to Exhibit 10.11 to
Inc. Employee Stock ownership Plan HPSC's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994

10.12 HPSC, Inc. Supplemental Executive Retirement Plan To be filed by amendment
dated December , 1996

10.17 Insurance Agreement dated as of December 23, 1993 Incorporated by reference to Exhibit 10.13 to
among Municipal Bond Investors Assurance HPSC's Annual Report on Form 10-K for the fiscal
Corporation, HPSC Funding Corp. I, HPSC, Inc. and year ended December 25, 1993
State Street Bank and Trust Company of Connecticut,
N.A.

10.18 Undertaking with respect to Exhibits to certain Incorporated by reference to Exhibit 10.14 to
Agreements HPSC's Annual Report on Form 10-K for the fiscal
year ended December 25, 1993

10.21 Sale Agreement dated November 16, 1995 between Incorporated by reference to Exhibit 10.24 to
HPSC, Inc. and Springfield Institution for Savings HPSC's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NO. DESCRIPTION OF DOCUMENT METHOD OF FILING
- --------- --------------------------------------------------- ---------------------------------------------------
<C> <S> <C>
10.22 Stock Purchase Agreement, dated as of November 1, Incorporated by reference to Exhibit 10.3 to HPSC's
1994, by and among HPSC, Inc. and each of Chemical Quarterly Report on Form 10-Q for the quarter ended
Bank; The CIT Group/ Business Credit, Inc.; Van September 24, 1994
Kampen Merritt Prime Rate Income Trust; the Nippon
Credit Bank, Ltd.; Union Bank of Finland, Grand
Cayman Branch; HPSC, Inc.; The Bank of Tokyo Trust
Company; and Morgens, Waterfall, Vintiadis & Co.
Inc., and related Schedules

10.27 Amended and Restated HPSC, Inc. 1995 Stock Incorporated by reference to Exhibit 10.29 to
Incentive Plan HPSC's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995

10.28 Stock Option grant to Lowell P. Weicker effective Incorporated by reference to Exhibit 10.30 to
December 7, 1995 HPSC's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995

11.1 Statement of Computation of Earnings per Share Incorporated by reference to Exhibit 11 to HPSC's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996

13.1 Annual Report to Stockholders for the fiscal year Incorporated by reference to Exhibit 13 to HPSC's
ended December 31, 1995 Annual Report on Form 10-K for the fiscal year
ended December 31, 1995

16.1 Letter from Coopers & Lybrand L.L.P. re change in Incorporated by reference to Exhibit 16 to HPSC's
certifying accountant Current Report on Form 8-K dated June 16, 1996

21.1 Subsidiaries of HPSC, Inc. Incorporated by reference to Exhibit 21 to HPSC's
Annual Report on Form 10-K for the fiscal year
ended December 31, 1995

23.1 Consent of Coopers & Lybrand L.L.P. Filed herewith

23.2 Consent of Hill & Barlow, a Professional Included in Exhibit 5.1
Corporation

25.1 Statement of Eligibility of Trustee on Form T-1 Filed herewith

27.1 HPSC, Inc. Financial Data Schedule Filed herewith
</TABLE>

<PAGE>

UNDERWRITING AGREEMENT

HPSC, INC.

$20,000,000

___% SENIOR NOTES DUE 2007

ADVEST, INC.
LEGG MASON WOOD WALKER, INCORPORATED
c/o Advest, Inc.
90 State House Square
Hartford, Connecticut 06103

_______________ __, 1997

Ladies and Gentlemen:

SECTION 1. INTRODUCTION. Subject to the terms and conditions hereof, HPSC,
Inc., a Delaware corporation (the "Company"), proposes to issue and sell an
aggregate of $20,000,000 principal amount of its ___% Senior Notes due 2007 (the
"Firm Notes"), to the several underwriters identified in SCHEDULE A annexed
hereto (collectively, the "Underwriters"), who are acting severally and not
jointly. In addition, the Company has agreed to grant to the Underwriters an
option to purchase up to $3,000,000 principal amount of Senior Notes (the
"Option Notes") on the terms and for the purposes set forth in Section 4. The
Firm Notes and, to the extent such option is exercised, the Option Notes, are
hereinafter collectively referred to as the "Notes." The Notes will be issued
pursuant to an indenture, to be dated as of , 1997 (the
"Indenture") between the Company and The First National Bank of Boston, as
trustee (the "Trustee").

You have advised the Company that the Underwriters intend to make a public
offering of the Notes as soon hereafter as in your judgment is advisable.

The parties hereby agree as follows:

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* Plus an option to acquire up to $3,000,000 principal amount of Senior
Notes from the Company to cover over-allotments.

<PAGE>

SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the several Underwriters as
follows:

(a) The Company and each of its subsidiaries is, and on each
Closing Date (as hereinafter defined) will be, a corporation duly organized and
incorporated and validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, with full corporate power and
authority to conduct all the activities conducted by the Company and each of its
subsidiaries, to own or lease all their respective assets owned or leased by
them, to conduct their respective businesses as described in the Prospectus (as
hereinafter defined) and to enter into this Agreement and the Indenture and
perform the Company's obligations thereunder. The Company and each of its
subsidiaries is, and on each Closing Date will be, duly licensed or qualified to
do business and in good standing as a foreign corporation in each jurisdiction
in which the nature of the activities conducted by the Company or such
subsidiary or the character of the assets owned or leased by the Company or such
subsidiary makes such licensure or qualification necessary. Complete and
correct copies of the Restated Certificate of Incorporation as heretofore
amended, and By-laws of the Company and each of its subsidiaries in effect on
the date of this Agreement (the "Existing Charter Documents") have been
delivered to the Underwriters, and no changes to the Existing Charter Documents
will be made subsequent to the date of this Agreement and prior to the First
Closing Date (as hereinafter defined) or, if later, the Second Closing Date (as
hereinafter defined).

(b) The Company and each of its subsidiaries is not in violation
of any provision of their respective Existing Charter Documents, and at each
Closing Date will not be, in violation of any provision of their respective
Existing Charter Documents. No state of facts exists or will exist at any
Closing Date which, upon notice or lapse of time or both, would constitute a
violation of any provision of the Existing Charter Documents.

(c) The Company had at the date indicated in the Prospectus a duly
authorized and outstanding capitalization as set forth in the column entitled
"Actual" under the caption "Capitalization" as set forth in the Prospectus, and
based on the assumptions stated in the Prospectus, the Company will have on each
Closing Date the adjusted capitalization as set forth in the column entitled "As
Adjusted" under the caption "Capitalization" as set forth in the Prospectus. At
the time of delivery of the Notes to the Underwriters hereunder, all of the
issued and outstanding shares of capital stock of the Company will have been
duly authorized and validly issued, will be fully paid and nonassessable, and
the descriptions thereof contained in the Prospectus and the Registration
Statement (as hereinafter defined) will be complete and accurate in all
respects. All of the issued and outstanding shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and issued and
are fully paid and nonassessable and are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims (except
for restrictions on the disposition of such shares of

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stock by the Company described in the Prospectus pursuant to loan agreements and
notes and guaranties thereof and related agreements to which the Company or any
such subsidiary is a party).

(d) Except as disclosed in the Prospectus, the Company has not
issued, and as of each Closing Date will not have issued (i) any options,
warrants or other rights of any description, contractual or otherwise, entitling
any person to purchase or receive any class of security from the Company or (ii)
any securities or obligations convertible into, or any contracts or commitments
to issue or sell, any shares of the Company's capital stock, or any of such
options, warrants, other rights or convertible securities or obligations.

(e) The Company's Common Stock is listed on the National
Association of Securities Dealers, Inc. National Market (the "Nasdaq National
Market").

(f) The Company has the requisite corporate power and authority to
execute and deliver this Agreement, the Indenture and the Notes, to perform its
obligations (including the issuance, sale and delivery of the Notes) hereunder
and thereunder; and all corporate action required to be taken for the due and
proper authorization, issuance, sale and delivery of the Notes and the
consummation of the transactions contemplated by this Agreement and the
Indenture have been duly and validly taken.

(g) This Agreement has been duly and validly authorized, executed
and delivered by the Company.

(h) The Notes have been duly and validly authorized by the Company
for issuance and when executed by the Company and authenticated by the Trustee
in accordance with the provisions of the Indenture, and delivered to and paid
for by the Underwriters in accordance with the terms hereof, will have been duly
executed, issued and delivered and will constitute valid and legally binding
obligations of the Company, entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms, except that
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity) and the discretion of any court before which any proceeding therefor may
be brought.

(i) The Indenture has been duly and validly authorized by the
Company and upon effectiveness of the Registration Statement will be qualified
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"),
and, when executed and delivered by the Company (assuming the due authorization,
execution and delivery by the Trustee), will constitute

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a valid and legally binding agreement of the Company, enforceable against the
Company in accordance with its terms, except that the enforcement thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity) and the discretion of any court
before which any proceeding therefor may be brought.

(j) The Company is subject to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and is in
compliance with the provisions of such section.

(k) The execution, delivery and performance by and on behalf of
the Company of this Agreement and the Indenture, the performance of the
Company's obligations thereunder and the consummation of the transactions
contemplated thereby (including the issuance, sale and delivery of the Notes),
and the execution and delivery of the Notes by the Company and compliance by the
Company with all of the provisions hereof and thereof will not violate any
provision of the Existing Charter Documents; will not result in the breach, or
be in contravention, of or result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Company or its subsidiaries
pursuant to the terms or provisions of (i) any provision of any lease,
franchise, license, indenture, loan agreement, mortgage, deed of trust, voting
trust agreement or any other contract, agreement or instrument to which the
Company or any of its subsidiaries are a party or by which the Company or its
subsidiaries or any of their properties may be bound or affected, (ii) any
statute, order, rule or regulation applicable to the Company or any of its
subsidiaries of any court or regulatory body, administrative agency, authority
or other governmental body having jurisdiction over the Company or any of its
subsidiaries or any of their properties or (iii) any order of any court or
regulatory body, administrative agency, authority or other governmental body
rendered in any proceeding to which the Company or any of its subsidiaries was
or is now a party or by which it or any of its subsidiaries and/or any of their
properties is bound, except those, if any, described in the Prospectus or which
would not have a material adverse effect on the business, properties, business
prospects, assets, condition (financial or otherwise), net worth or results of
operations of the Company on a consolidated basis (a "Material Adverse Effect").

(l) No consent, approval, authorization or other order of, or
filing or declaration with, any court or regulatory body, administrative agency
or other governmental body of the United States or any other jurisdiction is
necessary in connection with the execution, delivery and performance of this
Agreement, the Indenture and/or the issuance and/or sale of the Notes by the
Company pursuant to this Agreement and the Indenture and/or the consummation of
the transactions contemplated by this Agreement and the Indenture, other than
such as have been obtained or made by the Company on or before the date of this
Agreement,

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except the registration of the Notes under the Securities Act of 1933, as
amended (the "Act") and the Rules and Regulations (as hereinafter defined), the
qualifications of the Indenture under the Trust Indenture Act and such consents,
approvals, authorizations, registrations or qualifications as may be required by
the state securities laws ("Blue Sky Laws") applicable to the public offering of
the Notes by the several Underwriters or the by-laws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") in connection with the
purchase and distribution by the several Underwriters of the Notes.

(m) The Company has prepared a registration statement on Form S-1
(File No. 333- ) with respect to the Notes, including a form of
preliminary prospectus, in conformity with the requirements of the Act and the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") promulgated thereunder and has filed such
registration statement with the Commission under the Act. The Company has
prepared and filed such amendments thereto and such amended preliminary
prospectuses as may have been required to the date hereof, and will file such
additional amendments thereto and such amended preliminary prospectuses as may
hereafter be required. The Company has delivered or caused to be delivered to
each of the Underwriters without charge two (2) signed copies of such
registration statement and each amendment thereto together with two (2) copies
of each exhibit filed therewith; one (1) conformed copy of such registration
statement and each amendment thereto, but without exhibits, for each of the
Underwriters if requested; and such numbers of the related Preliminary
Prospectus (as hereinafter defined) and of the Prospectus as the Underwriters
heretofore have reasonably requested. As used in this Agreement, the term
"Preliminary Prospectus" means each and every prospectus filed with the
registration statement and amendments thereto (except the Prospectus). Such
registration statement, as amended, has been declared effective by the
Commission under the Act and is not proposed to be further amended. If such
registration statement, as it may have been amended, omits information in
accordance with Rule 430A under the Act, promptly after the execution of this
Agreement the Company will file with the Commission a prospectus in the form
most recently included in an amendment to such registration statement (or, if no
such amendment shall have been filed, in such registration statement) with such
changes or insertions as are required by Rule 430A or permitted by Rule 424(b)
under the Act and as have been provided to and approved by the Underwriters.
Such registration statement, as finally amended and revised at the time such
registration statement is or was declared effective by the Commission,
(including without limitation the information contained in the form of final
prospectus, filed with the Commission pursuant to Rule 424(b) and Rule 430A of
the Rules and Regulations and deemed to be part of the registration statement)
is referred to herein as the "Registration Statement". "Prospectus" means (a)
the form of prospectus first filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations or (b) the last preliminary prospectus included in
the Registration Statement filed prior to the time it becomes effective or filed
pursuant to Rule 424(a) under the Act that is delivered by the Company to the
Underwriters for delivery to

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purchasers of the Notes, together with the term sheet or abbreviated term sheet
filed with the Commission pursuant to Rule 424(b)((7).

(n) The Company's Common Stock is registered pursuant to Section
12(g) of the Exchange Act.

(o) Neither the Commission nor the securities authority of any
state or other jurisdiction has issued any order preventing or suspending the
use of any Preliminary Prospectus, and no proceeding for that purpose has been
instituted or threatened by the Commission or any such securities authority. No
stop order suspending the effectiveness of the Registration Statement or any
part thereof has been issued and no proceeding for that purpose has been
instituted or threatened or, to the best of the Company's knowledge,
contemplated by the Commission or any such securities authority. Each
Preliminary Prospectus complies with the requirements of the Act and the Rules
and Regulations and did not include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading. As of
the effective date of the Registration Statement (the "Effective Date"), and at
all times subsequent thereto up to and including each Closing Date (including
the date of filing of any amendments to such Registration Statement and the date
of effectiveness of any post-effective amendment), the Registration Statement
and the Prospectus contained therein, and any amendments or supplements thereto,
including without limitation the financial statements included in such
Prospectus, contained or will contain all statements that are required to be
stated therein in accordance with the Act and the Rules and Regulations and
conformed or will conform in all respects to the requirements of the Act and the
Rules and Regulations, and neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, included or will include
any untrue statement of a material fact or omitted or will omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading. When the Prospectus or any amendment or supplement
thereto is filed with the Commission pursuant to Rule 424(b) (or, if the
Prospectus or such amendment or supplement is not required to be so filed, when
the Registration Statement or amendment thereto containing such amendment or
supplement to the Prospectus was or is declared effective) and at each Closing
Date, the Prospectus, as amended or supplemented at any such time, contained or
will contain all statements that are required to be stated therein in accordance
with the Act and the Rules and Regulations and conformed or will conform in all
respects to the requirements of the Act and the Rules and Regulations and did
not or will not include any untrue statement of a material fact or omitted or
will omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances under
which they were made. The Indenture conforms in all respects to the
requirements of the Trust Indenture Act and the applicable rules and regulations
thereunder. No representation or warranty is made as to information contained
in or omitted from the Registration Statement, the Prospectus or any such

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amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
specifically for inclusion in the Registration Statement or Prospectus or any
amendment or supplement thereto (as confirmed in Section 3 hereof) or as to that
part of the Registration Statement that constitutes the Statement of Eligibility
under the Trust Indenture Act of the Trustee. The Company hereby acknowledges
and agrees that the information set forth under the heading "Underwriting" in
the Prospectus constitutes the only written information furnished to the Company
by or on behalf of any Underwriter specifically for inclusion in the
Registration Statement or Prospectus or any amendment or supplement thereto.

(p) Coopers & Lybrand L.L.P. and Deloite & Touche LLP (the
"Accountants"), who are certifying and have expressed their opinions with
respect to certain of the financial statements filed with the Commission as a
part of the Registration Statement and included or to be included, as the case
may be, in the Prospectus and in the Registration Statement, are independent
accountants with respect to the Company and its subsidiaries as required by the
Act and the Rules and Regulations.

(q) Except as disclosed in the Prospectus, the financial
statements and related notes thereto included or to be included, as the case may
be, in the Registration Statement and the Prospectus present fairly the
financial position of the Company and its subsidiaries as of the respective
dates thereof and the results of operations and cash flows of the Company and
its subsidiaries for the respective periods covered thereby, all in conformity
with generally accepted accounting principles consistently applied throughout
the entire period involved. No other financial statements or schedules of the
Company and its subsidiaries are required by the Act or the Rules and
Regulations to be included in the Registration Statement or the Prospectus.
Except as disclosed in the Prospectus, the summary financial and statistical
data and the other financial and numerical information included in the
Registration Statement and the Prospectus present fairly the information shown
therein and have been compiled on a basis consistent with the financial
statements presented therein.

(r) Neither the Company nor any of its subsidiaries is, and on
each Closing Date will be, in default under any court or administrative order or
decree, or in default with respect to any provision of any lease, loan
agreement, indenture, commission sales agreement, license, permit or other
agreement or contractual obligation to which the Company or any of its
subsidiaries is a party or by which any of their respective properties are
bound, and there does not exist any state of facts which constitute an event of
default as defined in any such document or which, upon notice or lapse of time
or both, would constitute such an event of default, where in any such case such
default or event of default by any party thereto has or is reasonably likely to
have a Material Adverse Effect.

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(s) Except as disclosed in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or threatened
against or affecting the Company or any of its subsidiaries or any property
owned or leased by the Company or any of its subsidiaries or any of the
Company's officers or directors in their capacity as such, before or by any
foreign, federal, state, municipal or local court, commission, regulatory body,
administrative agency or other governmental body, which are required to be
disclosed in the Registration Statement or the Prospectus and are not so
disclosed, or which question the validity of this Agreement or the Indenture or
any action taken or to be taken pursuant thereto.

(t) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and have good and marketable title to
all personal property and other assets reflected as owned by the Company and its
subsidiaries in the financial statements described above (or elsewhere in the
Registration Statement or the Prospectus), free and clear of all liens,
mortgages, pledges, charges, encumbrances or restrictions of every kind or
nature whatsoever except those, if any, reflected in such financial statements
(or elsewhere in the Registration Statement or the Prospectus) or which would
not have a Material Adverse Effect or which do not interfere in any material
respect with the use or proposed use of the property or the conduct of the
business of the Company and its subsidiaries; all properties (including without
limitation real property and buildings) held or used by the Company and its
subsidiaries under leases, licenses, franchises or other agreements are held by
the Company and its subsidiaries under valid, subsisting, binding and
enforceable leases, franchises, licenses or other agreements with respect to
which the Company or any of its subsidiaries are not in default, except to the
extent that such defaults in the aggregate do not have a Material Adverse Effect
on the conduct of their respective businesses as conducted or proposed to be
conducted or to the extent that the enforceability of the rights and remedies of
the Company and its subsidiaries under any such lease, franchise, license or
other agreement may be limited by the application of bankruptcy, reorganization,
insolvency or other laws generally affecting the rights of creditors and by
equitable principles being applied at the discretion of a court before which any
proceeding may be brought.

(u) Neither the Company nor any of its directors, officers,
affiliates or controlling persons has, directly or indirectly (i) taken any
action designed, or which might reasonably be expected, to cause or result in,
or which has constituted, or might reasonably be expected to constitute,
stabilization or manipulation, under the Act or the Exchange Act or otherwise,
of the price of any security of the Company to facilitate the sale or resale of
any of the Notes; or (ii) since the filing of the Registration Statement (A)
sold, bid for, purchased or paid any person any compensation for soliciting
purchases of the Notes or (B) paid or agreed to pay to any person any
compensation for soliciting another person to purchase any securities of the
Company.

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(v) Except as disclosed in the Registration Statement or the
Prospectus, since the respective dates as of which information is given in the
Registration Statement or the Prospectus and prior to the First Closing Date and
Second Closing Date:

(i) the Company or its subsidiaries have not and will not
have incurred any material liabilities or obligations, direct, indirect or
contingent, or entered into any material transactions, other than in the
ordinary course of business or pursuant to this Agreement and the transactions
referred to herein;

(ii) the Company has not and will not have purchased any of
its outstanding capital stock or paid or declared or otherwise made any
dividends or other distributions of any kind with respect to any class of its
capital stock, and the Company and its subsidiaries are not and will not be
delinquent in the payment of principal or interest on any outstanding material
debt obligation; and

(iii) there has not been and will not be (A) any change in
the capital stock or any change in the indebtedness of the Company and its
subsidiaries, or (B) any adverse change or any development involving a
prospective adverse change in their businesses (resulting from litigation or
otherwise), properties, business prospects, condition (financial or otherwise),
net worth or results of operations.

(w) There is no contract or other document, transaction or
relationship of a character required to be described in the Prospectus or the
Registration Statement or to be filed as an exhibit to the Registration
Statement that has not been described, incorporated therein by reference or
filed as required. All such contracts to which the Company or any of its
subsidiaries is a party have been duly authorized, executed and delivered by the
Company or such subsidiary, constitute valid and binding agreements of the
Company or such subsidiary, as the case may be, and are enforceable against the
Company or such subsidiary, as the case may be, in accordance with the terms
thereof, except as enforceability of any such agreement may be limited by the
application of bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors rights generally and by equitable principles being applied
at the discretion of a court before which any proceeding may be brought.

(x) Except as disclosed in the Prospectus, the Company and its
subsidiaries have filed all necessary foreign, federal, state, municipal and
local income and franchise tax returns and paid all taxes shown as due thereon
as well as all other taxes, assessments and governmental charges that are due
and payable; and no tax deficiency has been asserted or threatened against the
Company or any of its subsidiaries that would have a Material Adverse Effect.

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(y) Neither the Company nor any of its subsidiaries has at any
time:

(i) made, directly or indirectly, any unlawful contribution
to any candidate for political office or failed to disclose fully any
contribution in violation of law; or

(ii) directed, authorized or caused any director, officer,
employee or other agent of the Company or any of its subsidiaries to make any
unlawful contribution to any candidate for political office or to fail to
disclose any such contribution in violation of law; or

(iii) made or directed, authorized or caused any director,
officer, employee or agent of the Company or any of its subsidiaries to make any
payment to any foreign, federal, state, municipal or local government officer or
official, orally other person charged with similar public or quasi-public
duties, other than payments required or permitted by the laws of the United
States or any jurisdiction thereof or any applicable foreign jurisdiction.

(z) The Company and its subsidiaries have in place and effective
such policies of insurance, with limits of liability in such amounts, as are
customary and prudent in the businesses in which each is engaged. Neither the
Company nor any of its subsidiaries has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its businesses at a comparable cost.

(aa) Except as disclosed in the Prospectus, the Company and its
subsidiaries own or have adequate rights to use all trademarks, service marks,
trade names, trademark registrations, service mark registrations, patent rights,
patent applications, mask works and copyrights necessary for the conduct of
their respective businesses and the ownership of their respective properties,
and neither the Company nor any of its subsidiaries have any knowledge of any
infringement by it of any trademark, service mark, trade name right, patent
right, mask work, copyright, license, trade secret or other similar right of any
other person or entity, and there is no claim being made against the Company or
any of its subsidiaries, or to the best of the Company's knowledge, any employee
of the Company or any of its subsidiaries, regarding trademark, service mark,
trade name, patent, mask work, copyright, license, trade secret or other
infringement.

(bb) The Company and its subsidiaries hold and are in substantial
compliance with all material permits, certificates, licenses, approvals,
registrations, franchises and authorizations (collectively, the "Permits")
required under all laws, rules and regulations to own their respective
properties and conduct their respective businesses in the manner described in
the Prospectus, and all of such Permits are in full force and effect; the
Company and its subsidiaries have fulfilled and performed all of their
respective material obligations with respect to such

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Permits; no event has occurred which allows or, after notice or lapse of time or
both, would allow revocation or termination of any such Permit or result in any
other material impairment of the Company's or any of its subsidiaries' rights
under any such Permit; and such Permits contain no restrictions that materially
affect the Company's or its subsidiaries' ability to conduct their respective
businesses as presently conducted or as proposed to be conducted. There are no
pending proceedings, and neither the Company nor any subsidiary has received
notice of any threatened proceedings, relating to the revocation, withdrawal,
cancellation, modification, suspension or non-renewal of any such Permit. The
Company and its subsidiaries are not and have not been (by virtue of any action,
omission to act, contract to which it is a party or by which it is bound, or any
occurrence or state of facts whatsoever) in violation of any applicable foreign,
federal, state, municipal or local statutes, laws, ordinances, rules,
regulations and/or orders issued pursuant to foreign, federal, state, municipal
or local statutes, laws, ordinances, rules or regulations (including without
limitation those relating to environmental protection, occupational safety and
health and equal employment practices) heretofore or currently in effect, except
any such violations that have been fully cured or satisfied without recourse or
that are not, either individually or collectively, reasonably likely to have a
Material Adverse Effect.

(cc) To the best knowledge of the Company, except as reasonably could
not be expected, either singly or in the aggregate, to have a Material Adverse
Effect, and except as disclosed in the Prospectus: (i) the Company and each of
its subsidiaries are in compliance with all applicable Environmental Laws (as
defined herein), which compliance includes, but is not limited to, the
possession by the Company and each of its subsidiaries of all permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof, and neither the Company nor
any of its subsidiaries has received any communication, from any person or
entity, that alleges that the Company or any of its subsidiaries are not in such
compliance; (ii) there is no pending or threatened claim, lawsuit, or
administrative proceeding against the Company or any of its subsidiaries under
any Environmental Law, nor has the Company or any of its subsidiaries received
any notice from any person or entity alleging that the Company or any of its
subsidiaries are liable for any civil or criminal liability or penalty under any
Environmental Law; (iii) there is no pending or threatened claim, lawsuit or
administrative proceeding against any person or entity, whose liability, under
any Environmental Law, the Company or any of its subsidiaries may have retained
or assumed either contractually or by operation of law; (iv) there have been no
releases, spills or discharges of Hazardous Substances (as defined herein) on or
underneath any of the properties currently or formerly owned, leased or operated
by the Company or any of its subsidiaries; and (v) there are no foreseeable
requirements relating to compliance with applicable Environmental Laws in the
future or liability for past non-compliance with Environmental Laws or disposal
of Hazardous Substances that are reasonably likely to cause the Company or its
subsidiaries to incur any material expenditures. For purposes of this
Agreement, the term "Environmental Law" means any foreign, federal, provincial,
state or local law, regulation,

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code, rule, ordinance, or common law standard, in each case as in effect on the
date hereof, relating to pollution or to the protection of human health, safety
or the environment, including, without limitation, laws relating to releases or
threatened releases of Hazardous Substances into the indoor or outdoor
environment (including, without limitation, ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, release,
transport or handling of Hazardous Substances. The term "Hazardous Substances"
means chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or its derivatives, asbestos, polychlorinated biphenyls,
caustic substances, radioactive materials, or any other substance defined as
hazardous, toxic, or dangerous by, or regulated under, any Environmental Law.

(dd) No labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the best knowledge of the Company, is imminent, in
each case which, if determined adversely to the Company, would not have a
Material Adverse Effect.

(ee) The Company is in compliance in all material respects with all
presently applicable provisions of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder (the "Code"), and the Employee
Retirement Income Security Act of 1974, as amended, and the regulations and
published interpretations thereunder ("ERISA"). No "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined in
ERISA) established or maintained by the Company or any of its subsidiaries
(each, a "Pension Plan"). To the best of the Company's knowledge, all
contributions required to be made with respect to any Pension Plan have been
timely made. The amount of "unfunded benefit liabilities" (as defined in ERISA)
under all Pension Plans would not have a Material Adverse Effect. Neither the
Company nor any of its subsidiaries nor any person (as defined in Section 3(9)
of ERISA) which together with the Company or a subsidiary of the Company would
be deemed to be a "single employer" within the meaning of Section 404(b), (c),
(m) or (o) of the Code (an "ERISA Affiliate") has incurred or expects to incur
liability under (i) Section 409, 502(i), 502(l) or 515 of ERISA, or (ii) Title
IV of ERISA with respect to termination of, or withdrawal from, any Pension Plan
or (iii) Section 401(a)(29), 4971, 4975 or 4980B of the Code and each Pension
Plan that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by action
or by failure to act, which would cause the loss of such qualification. Using
actuarial assumptions and computation methods consistent with Part 1 of subtitle
E of Title IV of ERISA, the aggregate liabilities of the Company and its
subsidiaries and its ERISA Affiliates to all Pension Plans which are
multiemployer plans (as defined in Section 4001(a)(3) of ERISA) in the event of
a complete withdrawal therefrom, as of the close of the most recent fiscal year
of each such Pension Plan ended prior to the date hereof, would not have a
Material Adverse Effect. Except as disclosed in the Prospectus, the Company and
its subsidiaries do not maintain or contribute to any employee welfare benefit
plan (as defined in Section 3(1) of ERISA) which provides

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<PAGE>

benefits to retired employees or other former employees (other than as required
by Section 601 of ERISA) or any employee pension benefit plan (as defined in
Section 3(2) of ERISA). To the best of the Company's knowledge, no condition
exists which presents a material risk to the Company or any subsidiary of the
Company or any ERISA Affiliate of incurring a liability with respect to any of
the foregoing which would have a Material Adverse Effect. The execution and
delivery of this Agreement and the Indenture and the issuance and sale of the
Notes will be exempt from, or will not involve any transaction which is subject
to, the prohibitions of Section 406 of ERISA and Section 4975 of the Code and
will not involve any transaction in connection with which a penalty could be
imposed under Section 502(i) of ERISA or a tax could be imposed pursuant to
Section 4975 of the Code.

(ff) Neither the Company nor any of its subsidiaries is an
"investment company," or a company "controlled" by, or an "affiliated person"
of, or a "promoter" or "principal underwriter" for, an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended (the "1940
Act"), and upon the Company's receipt of any proceeds from the sale of the
Notes, it will not become or be deemed to be an "investment company" under the
1940 Act.

(gg) The Company and its subsidiaries make and keep accurate books
and records reflecting the Company's and its subsidiaries' assets and maintains
internal accounting controls which provide reasonable assurance that:

(i) transactions are executed with management's
authorization;

(ii) transactions are recorded as necessary to permit
preparation of the Company's consolidated financial statements in accordance
with generally accepted accounting principles and to maintain accountability for
the assets of the Company and its subsidiaries;

(iii) access to the assets of the Company and its
subsidiaries are permitted only in accordance with management's authorization;
and

(iv) the reported amounts of the assets of the Company and
its subsidiaries are compared with the existing assets of the Company and its
subsidiaries at reasonable intervals and appropriate action is taken with
respect to any differences.

(hh) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Act with respect to any securities of the Company owned or to be owned by
such person or to require the Company to include such securities in (i) the
securities registered pursuant to the Registration Statement or (ii) any other

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<PAGE>

securities now or hereafter registered pursuant to any other registration
statement filed by the Company under the Act. Except as disclosed in the
Prospectus, no holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement, and all such holders, if any, have waived all such
rights as of the date hereof.

(ii) Any certificate signed by any officer of the Company and
delivered to the Underwriters or to counsel for the Underwriters shall be deemed
a representation and warranty of the Company to the Underwriters as to the
matters covered thereby.

A certificate delivered by the Company to its counsel for purposes of
enabling such counsel to render the opinion referred to in Section 7(g)(i) will
also be furnished to the Underwriters and counsel for the Underwriters and shall
be deemed to be additional representations and warranties to the Underwriters by
the Company as to the matters covered thereby.

SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITERS. The
Representative, on behalf of the several Underwriters, represents and warrants
to the Company that only the information set forth in the section in the
Prospectus entitled "Underwriting," was furnished to the Company by and on
behalf of the Underwriters for use in connection with the preparation of the
Registration Statement and the Prospectus, and that such information is correct
and complete in all material respects and does not include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.

SECTION 4. PURCHASE, SALE AND DELIVERY OF THE NOTES. (a) On the basis of
the representations, warranties, covenants and agreements herein contained, but
subject to all of the terms and conditions herein set forth, (i) the Company
agrees to issue and to sell to the Underwriters identified in SCHEDULE A a total
of $20,000,000 principal amount Company Firm Notes; and (ii) each of the
Underwriters agrees, severally and not jointly, to purchase from the Company the
respective number of Firm Notes set forth opposite the name of such Underwriter
in SCHEDULE A at a purchase price equal to _______% of the principal amount
thereof at a closing described in Section 4(c) below.

(b) Upon the basis of the representations, warranties, covenants
and agreements herein contained, but subject to all of the terms and conditions
herein set forth, the Company hereby grants an option (the "Option") to the
several Underwriters to purchase, severally and not jointly, from the Company up
to $3,000,000 principal amount of Option Notes at the purchase price per Note to
be paid by the Underwriters for the Firm Notes, for use solely in covering any
over-allotments made by the Underwriters in the sale and distribution of the

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<PAGE>

Firm Notes. The Option many be exercised at any time (but not more than once),
in whole or in part, on or before the thirtieth (30th) day after the date of
this Agreement, upon written or telecopied notice (the "Option Notice") by the
Underwriters to the Company no later than 5:00 p.m. eastern time, setting forth
the aggregate number of Option Notes as to which the Underwriters are exercising
the Option, the names and denominations in which the certificates for such Notes
are to be registered, and the time and place at which such certificates shall be
delivered to and paid for by the Underwriters. Such time of delivery may not be
earlier than the First Closing Date, and is herein called the "Second Closing
Date." The Second Closing Date shall be determined by the Underwriters, but if
at any time other than the First Closing Date, shall not be earlier than three
(3) nor later than ten (10) full business days after delivery of the Option
Notice unless otherwise agreed upon by the Underwriters and the Company.
Certificates for the Option Notes shall be made available for checking and
packaging at 9:00 a.m., eastern time, on the business day immediately preceding
the Second Closing Date at a location to be designated by the Underwriters. On
the Second Closing Date the Company shall issue and sell to the Underwriters the
number of Notes set forth in the Option Notice, and each Underwriter will
purchase the number of Option Notes allocated to it pursuant to the first
sentence of this Section 4(b). The manner of payment for and delivery of
(including the denominations of and the names in which certificates are to be
registered) the Option Notes shall be the same as for the Firm Notes as
specified in Section 4(c).

(c) At 9:00 a.m., eastern time, on the fourth business day after
the date of this Agreement, unless otherwise required by the Commission pursuant
to Rule 15c6-1 of the Exchange Act or at such other time on such other day not
later than five business days after such fourth business day as the Underwriters
and the Company may agree, the Company shall deliver to the Underwriters, at the
offices of Advest, Inc., 40 Rector Street, New York, New York 10006, or through
the facilities of the Depository Trust Company, 55 Water Street, New York, New
York 10041, for the accounts of the several Underwriters, certificates in
definitive form representing the Firm Notes to be sold by them, against payment
in Hartford, Connecticut or such other location agreed upon by the parties of
the purchase price therefor by certified or bank cashier's check in New York
Clearing House (next day) funds payable to the order of the Company. Such time
of delivery against payment is referred to herein as the "First Closing Date,"
and the First Closing Date and the Second Closing Date are referred to herein
individually as a "Closing Date." The certificates representing the Firm Notes
to be delivered shall be in denominations and registered in such names as the
Underwriters request by notice to the Company prior to 9:00 a.m., eastern time,
on the second full business day preceding the First Closing Date, and shall be
made available for checking and packaging at 9:00 a.m., eastern time, on the
business day immediately preceding the First Closing Date at a location to be
designated by the Underwriters.

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<PAGE>

(d) The Company shall bear the cost of original issue tax stamps,
if any, in connection with the issuance and delivery of the Firm Notes and the
Option Notes sold by the Company to the respective Underwriters. The Company
shall pay and save each Underwriter and any subsequent holder of each Note
harmless from any and all liabilities with respect to or resulting from any
failure or delay in paying foreign, federal and state stamp and other transfer
taxes, if any, which may be payable or determined to be payable in connection
with the original issuance or sale to such Underwriter of the Firm Notes and/or
the Option Notes.

SECTION 5. COVENANTS OF THE COMPANY. The Company covenants and agrees with
the several Underwriters that:

(a) The Company shall not during such period as the Prospectus is
required by law to be delivered in connection with sales of the Notes by an
underwriter or any dealer, file any amendment or supplement to the Registration
Statement or any Preliminary Prospectus or the Prospectus (including without
limitation a prospectus filed pursuant to Rule 424(b)), unless a copy thereof
shall first have been submitted to the Underwriters within a reasonable period
of time prior to the filing thereof and the Underwriters shall not have objected
thereto in good faith.

(b) The Company shall use its best efforts to cause the
Registration Statement to continue to be effective and each post-effective
amendment thereto to become effective, and shall notify the Underwriters and
counsel to the Underwriters promptly, and shall confirm such advice in writing,
(i) when any post-effective amendment to the Registration Statement becomes
effective; (ii) of any request by the Commission or any securities authority of
any other jurisdiction for amendments or supplements to the Registration
Statement or the Prospectus or for additional information; (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose or
the threat thereof; (iv) of receipt by the Company or any representative or
attorney of the Company of any other communication from the Commission relating
to the Company, the Registration Statement, any Preliminary Prospectus or the
Prospectus (other than a communication confirming the effectiveness of the
Registration Statement); and (v) of receipt by the Company of any notification
of the suspension of qualification of the Notes for sale in any jurisdiction or
the initiation of any proceedings for that purpose or threat thereof. The
Company shall use its best efforts to prevent the issuance of any such stop
order or suspension.

(d) The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the several Underwriters and by all dealers
to whom the Notes may be

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<PAGE>

sold, both in connection with the offering or sale of the Notes and for any
period of time thereafter during which the Prospectus is required by law to be
delivered in connection therewith.

(e) The Company shall furnish to its securityholders as soon as
practicable after the end of each fiscal year an annual report (including,
without limitation, a balance sheet and statements of income, stockholders'
equity and cash flow of the Company and its consolidated subsidiaries certified
by independent public accountants) and, as soon as practicable after the end of
each of the first three quarters of each fiscal year (beginning with the fiscal
quarter ending after the Effective Date), the Company shall make available to
its securityholders consolidated summary financial information of the Company
and its consolidated subsidiaries for such quarter in reasonable detail.

(f) The Company shall make generally available to holders of its
securities and the Underwriters as soon as may be practicable, but in no event
later than the forty-fifth (45th) day following the end of the first quarter
first occurring after the first anniversary of the Effective Date, an earnings
statement (which need not be audited but shall be in reasonable detail)
satisfying the provisions of Section 11(a) of the Act (including without
limitation Rule 158 of the Rules and Regulations).

(g) Neither the Company nor any of its officers, directors or
affiliates will at any time, directly or indirectly, (i) take any action
designed, or which might reasonably be expected, to cause or result in, or which
shall constitute, or might reasonably be expected to constitute, stabilization
or manipulation, under the Act or the Exchange Act or otherwise, of the price of
any security of the Company to facilitate the sale or resale of any of the
Notes, (ii) sell, bid for, purchase or pay any person any compensation for
soliciting purchases of the Notes or (iii) pay or agree to pay any person any
compensation for soliciting another person to purchase any securities of the
Company.

(h) The Company shall apply the net proceeds from the offering and
sale of the Notes to be sold by it hereunder solely for the purposes set forth
in the Prospectus under "Use of Proceeds" and shall file such reports with the
Commission with respect to the sale of the Notes and the application of the
proceeds therefrom as may be required in accordance with Rule 463 under the Act.

(i) If any information shall have been omitted from the
Registration Statement in reliance upon Rule 430A, the Company, at the earliest
possible time, shall furnish the Underwriters with a copy of the Prospectus to
be filed by the Company with the Commission to comply with Rule 424(b) and Rule
430A under the Act, and, if the Underwriters do not object to the contents
thereof, shall file such Prospectus with the Commission in compliance with such
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<PAGE>

Rules, PROVIDED that the Company shall file such prospectus with the Commission
not later than the earlier of (i) the second business day following the
execution and delivery of this Agreement or (ii) the fifteenth business day
after the Effective Date. Upon filing the Prospectus with the Commission in
compliance with such Rules, the Company shall so advise the Underwriters
promptly.

(j) If, at any time when a prospectus relating to the Notes is
required by law to be delivered, any event occurs as a result of which the
Prospectus or the Registration Statement, including any subsequent amendment or
supplement, would include an untrue statement of a material fact, or would omit
to state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend or supplement
the Prospectus, including any amendment or supplement thereto, to comply with
any applicable law, the Company promptly shall advise the Underwriters and
counsel to the Underwriters thereof and forthwith shall prepare and duly file
with the Commission an appropriate amendment or supplement that will correct
such statement or omission or an amendment that will effect such compliance and
will furnish without charge to each Underwriter and to any dealer in securities
as many copies of such amended or supplemented Prospectus as the Underwriters
may from time to time reasonably request. If any Underwriter is required to
deliver a prospectus nine months or more after the Effective Date, the Company,
upon request of the Underwriters but at the expense of the Company, shall
prepare promptly such prospectus or prospectuses as may be necessary to permit
compliance with the requirements of Section 10(a)(3) of the Act. Neither the
Underwriters' consent to nor delivery of, any such amendment or supplement shall
constitute a waiver of any condition set forth in Section 7.

(k) Except as contemplated by the Prospectus, the Company shall
not, prior to the Second Closing Date or thirty (30) days after the date of this
Agreement, whichever occurs first, incur any material liability or obligation,
direct or contingent, or enter into any material transaction or any transaction
with a related party which is required to be disclosed in the Prospectus
pursuant to Item 404 of Regulation S-K under the Act unless the Company gives
the Underwriters adequate prior notice of any such transaction and, if the
Underwriters reasonably request but at the Company's expense, files a post-
effective amendment to the Registration Statement to include the required
disclosure regarding any such transaction.

(l) Except as disclosed in the Prospectus, the Company shall not
acquire any of its Common Stock before the Second Closing Date or thirty (30)
days after the date of this Agreement, whichever occurs first; and the Company
shall not declare or pay any dividend or make any other distribution upon its
Common Stock payable to shareholders of record on a date prior to such earlier
date.

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<PAGE>

(m) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or any dealer, the Company
shall furnish or cause to be furnished to the Underwriters, at the expense of
the Company, copies of the Registration Statement, the Prospectus, any
Preliminary Prospectus and all amendments and supplements to any such documents,
in each case as soon as available and in such quantities as the Underwriters
reasonably may request for the purposes contemplated by the Act.

(n) Prior to any public offering of the Notes, the Company shall
cooperate with the Underwriters and counsel to the Underwriters in qualifying or
registering the Notes for offer and sale under the Blue Sky Laws of such
jurisdictions as the Underwriters reasonably may designate, PROVIDED the Company
shall not be required to qualify as a foreign corporation in any jurisdiction
where it is not now so qualified or to consent to general service of process
under the law of any state where it is not now so qualified (except with respect
to the offering and sale of the Notes), and the Company shall continue such
qualifications or registrations in effect so long as reasonably requested by the
Underwriters to effect the distribution of the Notes. In each jurisdiction where
any of the Notes shall have been qualified as provided above, the Company shall
file such reports and statements as may be required to continue such
qualification in effect for so long a period as the Underwriters may reasonably
request for a distribution of the Notes.

(o) For so long as any of the Notes remain outstanding, (i) as
soon as practicable after the end of each of its fiscal years, the Company shall
furnish to the Underwriters two (2) copies of the annual report of the Company
containing the consolidated balance sheet of the Company as of the close of such
fiscal year and corresponding consolidated statements of earnings, shareholders
equity and cash flows for the year then ended, such consolidated financial
statements to be under the certificate or opinion of the Company's independent
accountants, and (ii) the Company shall file promptly and shall furnish to the
Underwriters at or before the filing thereof copies of all reports and any
definitive proxy or information statements required to be filed by the Company
with the Commission pursuant to Sections 13, 14 or 15 of the Exchange Act.
During such period, the Company also shall furnish to the Underwriters one (1)
copy of each of the following:

(A) as soon as practicable after the filing thereof, each
report, statement, or other document filed by the Company with the
Commission, except that the portions of any such report, statement or other
document for which the Company has requested confidential treatment from
the Commission may be withheld from the Underwriters at the Company's
discretion;

(B) as soon as practicable after the filing thereof, all
reports, statements, other documents and financial statements furnished by
the Company to either the NASD or the Nasdaq National Market pursuant to
requirements of or agreements

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<PAGE>

with the NASD or the Nasdaq National Market, except that the portions of
any such report, statement or other document for which the Company has
requested confidential treatment from the NASD or the Nasdaq National
Market may be withheld from the Underwriters at the Company's discretion;
and

(p) The Company shall use its best efforts to satisfy or cause to
be satisfied the conditions to the obligations of the Underwriters in Section 7.

(q) The Company shall prepare and timely file with the Commission,
from time to time, such reports and statements as may be required to be filed by
the Exchange Act and or the Rules and Regulations.

(r) The Company shall comply in all respects with the undertakings
given by the Company in connection with the qualification or registration of the
Notes for offering and sale under the Blue Sky Laws.

(s) The Company will not, so long as the Notes are outstanding, be
or become an investment company, unit investment trust or face-amount
certificate company that is required to be registered under the 1940 Act, and is
not, and will not be or become, a closed-end investment company required to be
registered, under the 1940 Act.

(t) The Company will cooperate with the Underwriters and the
Trustee to permit the Notes to be eligible for clearance and settlement through
The Depository Trust Company.

(u) During the period beginning on the date hereof and continuing
through the Second Closing Date, not to offer for sale, sell, contract to sell
or otherwise dispose of, directly or indirectly, any debt securities of the
Company (other than the Notes) without the prior written consent of the
Underwriters.

SECTION 6. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated hereunder are consummated, or if this Agreement is terminated for
any reason, the Company shall pay, or reimburse the Underwriters if paid by the
Underwriters, for all costs, fees and expenses incurred by or on behalf of the
Company in connection with the public offering. Such costs, fees and expenses to
be paid by the Company are the following:

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<PAGE>

(a) All costs, fees and expenses (other than expenses customarily
paid by the Underwriters) incurred in connection with the performance of the
Company's obligations hereunder, including, without limiting the generality of
the foregoing, all fees and expenses of the Company's accountants and the fees
and expenses of counsel for the Company, the fees and expenses of the Trustee,
any agent of the Trustee or counsel to the Trustee, all costs and expenses
incurred in connection with the preparation, printing, filing, and distribution
of the Registration Statement as originally filed and each amendment thereto and
any post-effective amendments, each Preliminary Prospectus and the Prospectus
(including all exhibits and financial statements) and all agreements, amendments
and supplements provided for herein, and with the reproduction of this
Agreement, the Indenture, the Agreement Among Underwriters, the Dealers
Agreement, the Underwriters' Questionnaire, various Underwriters' letters
(including powers-of-attorney), and the Preliminary and all Supplemental Blue
Sky Memoranda. Except as set forth in Section 6(b) or if the provisions of
Section 8 become applicable, the Company shall not be responsible for the legal
fees and disbursements of counsel for the Underwriters or the expenses
customarily paid by the Underwriters.

(b) All filing and registration fees and expenses, including
without limitation the legal fees and disbursements of counsel for the
Underwriters, incurred in connection with qualifying or registering all or any
part of the Notes for offer and sale under the Blue Sky Laws (including without
limitation the preparation of the Preliminary and all Supplemental Blue Sky
Memoranda) and the clearing of the public offering of the Notes with the NASD.

(c) All fees and expenses of the Company's transfer agent, the
cost of printing and delivering the certificates representing the Notes, and all
transfer taxes, if any, with respect to the sale and delivery of the Notes.

Except as provided in Sections 6, 8, 10 and 13, the Underwriters shall pay
all of their own costs and expenses.

SECTION 7. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters under this Agreement shall be subject to
the accuracy of the representations and warranties on the part of the Company
herein set forth as of the date hereof and as of the First Closing Date or the
Second Closing Date, as the case may be; to the accuracy of the statements of
the Company's officers; to the performance by the Company of its obligations
hereunder; and to the following additional conditions, except to the extent
waived in writing by the Underwriters:

(a) The Underwriters shall have been notified not later than 5:00
p.m. eastern time, on the date of this Agreement, that the Commission has
declared the Registration Statement effective. The Underwriters shall also be
notified not later than the time specified in

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<PAGE>

Section 5(j) hereof that all filings of the Company required by Rule 424 and
Rule 430A of the Rules and Regulations have been made.

(b) No stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no proceedings for such
purpose shall be pending before or, to the knowledge of the Company, threatened
or contemplated by the Commission. Any request for additional information on the
part of the staff of the Commission or any such authority shall have been
complied with to the satisfaction of the staff of the Commission or such
authority. After the date of this Agreement, no amendment or supplement to the
Registration Statement or the Prospectus shall have been filed unless a copy
thereof was first submitted to the Underwriters and the Underwriters did not
object thereto in good faith.

(c) The Notes shall have been qualified or registered for sale
under the Blue Sky Laws of such jurisdictions as shall have been reasonably
specified by the Underwriters as contemplated by Section 5(n); each such
qualification shall be in effect and not subject to any stop order and no
proceeding for such purpose shall be pending before or, to the knowledge of the
Company, threatened or contemplated by the authorities of any such jurisdiction
on the applicable Closing Date; and the offering of the Notes shall have been
cleared by the NASD.

(d) The legality and sufficiency of the authorization, issuance
and sale of the Notes, the validity and form of the certificates representing
the Notes, the execution and delivery of this Underwriting Agreement and the
Indenture, and all corporate proceedings and other legal matters incident
thereto, and the form of the Registration Statement and the Prospectus (except
financial statements and other statistical or financial data included therein)
shall have been approved by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
counsel for the Underwriters.

(e) The Underwriters shall not have been advised by the Company
that the Registration Statement or Prospectus, or any amendment or supplement
thereto, contains a material untrue statement of fact or omits to state a fact
which is material and is required to be stated therein or necessary to make the
statements therein not misleading.

(f) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus:

(i) There shall not have been any material adverse change
or development in the business (whether by reason of any court, legislative,
other governmental action, order or decree, or otherwise), business prospects,
properties, general affairs, management, condition (financial or otherwise), net
worth or results of operations of the Company, whether or not arising from
transactions in the ordinary course of business, which

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<PAGE>

has not been disclosed in or otherwise contemplated by the Registration
Statement or the Prospectus; and

(ii) The Company shall not have sustained any material loss
or interference with its business or properties from any labor dispute, strike,
fire, flood, windstorm, accident or other calamity (whether or not covered by
insurance) or from any court or legislative or other governmental action, order
or decree, which is not set forth in the Registration Statement and the
Prospectus, if any such development or developments described in Section 7(f)(i)
or Section 7(f)(ii), in the sole judgment of the Underwriters makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Notes on the terms and in the manner contemplated in the Registration
Statement, the Prospectus, the Indenture and/or this Agreement.

(g) There shall have been furnished to the Underwriters, on each
Closing Date, except as otherwise expressly provided below:

(i) An opinion of Hill & Barlow, counsel for the Company,
reasonably satisfactory to the Underwriters and counsel for the Underwriters,
addressed to the Underwriters and dated the First Closing Date or the Second
Closing Date, as the case may be, to the effect that:

(A) The Company and each of its subsidiaries have been duly
organized and incorporated, are validly existing and are in good standing
as corporations under the laws of their respective jurisdiction of
incorporation, with full corporate power and authority to conduct all their
respective activities, to own or lease all the respective assets owned or
leased by the Company and its subsidiaries and to conduct their businesses
as described in the Prospectus. Except for its subsidiaries, the Company
does not control, directly or indirectly, any corporation, partnership or
joint venture. There are no jurisdictions in which the nature of the
respective activities of the Company and its subsidiaries or the character
of the assets owned or leased by the Company or its subsidiaries make it
necessary for them to be licensed or qualified to do business as a foreign
corporation, except where the failure to so qualify would not have a
Material Adverse Effect; and

(B) The Indenture has been duly and validly authorized,
executed and delivered by the Company and duly qualified under the Trust
Indenture Act and, assuming due authorization, execution and delivery
thereof by the Trustee, is a valid and legally binding obligation of the
Company enforceable against the Company in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting

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<PAGE>

creditors' rights generally, by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at
law) or by an implied covenant of good faith and fair dealing; and

(C) The Indenture conforms as to form in all material
respects with the requirements of the Trust Indenture Act and the Rules and
Regulations applicable to an indenture which is qualified thereunder; and

(D) The Notes are in the form contemplated by the Indenture
and have been duly and validly authorized and executed and, assuming the
due execution, authentication and delivery thereof by the Trustee pursuant
to the Indenture (and payment therefor by the Underwriters in accordance
with the terms of this Agreement), are valid and legally binding
obligations of the Company enforceable against the Company in accordance
with their terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) or by an implied covenant of good faith dealing, and
entitled to the benefits of the Indenture; and

(E) On each Closing Date, the authorized capital stock of
the Company will consist solely of 15,000,000 shares of Common Stock, $.01
par value, and 1,000,000 shares of Preferred Stock, $1.00 par value, and
all such stock, and the Indenture and Notes of the Company, conform in all
material respects to the descriptions thereof in the Prospectus as of the
date of the Prospectus; and

(F) Neither the Company nor any of its subsidiaries are in
violation of any provision of their respective Existing Charter Documents;
and

(G) The Company had at the date indicated in the Prospectus
a duly authorized and outstanding capitalization as set forth in the column
entitled "Actual" under the caption "Capitalization" as set forth in the
Prospectus, and, based on the assumptions stated in the Prospectus, the
Company will have on each Closing Date the adjusted capitalization as set
forth in the column entitled "As Adjusted" under the caption
"Capitalization" as set forth in the Prospectus; and all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and conform to the
description thereof contained in the Prospectus; and all of the issued
shares of capital stock of each subsidiary of the Company have been duly
and validly authorized and issued and are fully paid, non-assessable and
are owned directly or indirectly by the Company and, to such counsel's
knowledge, free and clear of all liens, encumbrances, equities or claims
(except for

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<PAGE>

restrictions on the disposition of such shares of stock by the Company
described in the Prospectus pursuant to loan agreements and notes and
guarantees thereof and related agreements to which the Company or any such
subsidiary is a party); and

(H) Except as disclosed in the Prospectus, to such
counsel's knowledge, the Company has not issued (1) any options, warrants
or other rights of any description, contractual or otherwise, entitling any
person to purchase or receive any class of security from the Company, or
(2) any securities or obligations convertible into, or any contracts or
commitments to issue or sell, any shares of the Company's capital stock, or
any of such options, warrants, other rights or convertible securities or
obligations; and

(I) Neither the Company nor any of its subsidiaries is an
"investment company," or a company "controlled" by, or an "affiliated
person" of, or a "promoter" or "principal underwriter" for, an "investment
company" within the meaning of the 1940 Act, and upon the Company's receipt
of any proceeds from the sale of the Notes, it will not become or be deemed
to be an "investment company" under the 1940 Act; and

(J) The Company has the requisite corporate power and
authority to execute and deliver this Agreement, the Indenture, and the
Notes, to perform its obligations (including the issuance, sale and
delivery of the Notes) hereunder and thereunder; and all requisite
corporate action required to be taken for the due and proper authorization,
issuance, sale and delivery of the Notes and the consummation of the
transactions contemplated by this Agreement and by the Indenture have been
duly and validly taken by the Company; and

(K) This Agreement has been duly and validly authorized,
executed and delivered by the Company; and

(L) The execution, delivery and performance by and on
behalf of the Company of this Agreement and the Indenture, the performance
of the Company's obligations thereunder, and the consummation of the
transactions contemplated thereby (including the issuance sale and delivery
of the Notes), and the execution and delivery of the Notes by the Company
and compliance by the Company with all of the provisions hereof and thereof
will not violate any provision of the Existing Charter Documents of the
Company and each of its subsidiaries; will not result in the breach, or be
in contravention, of or result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Company or its
subsidiaries pursuant to the terms or provisions of (1) any provision of
any lease, franchise, license, indenture, loan

- 26 -
<PAGE>

agreement, mortgage, deed of trust, voting trust agreement or any other
contract, agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
or any of their properties may be bound or affected of which such counsel
is aware, (2) any statute, rule or regulation applicable to the Company or
any of its subsidiaries of any court or regulatory body, administrative
agency, authority or other governmental body having jurisdiction over the
Company or any of its subsidiaries or any of their properties or (3) any
order of which such counsel is aware of any court or regulatory body,
administrative agency, authority or other governmental body rendered in any
proceeding to which the Company or any of its subsidiaries was or is now a
party or by which they and/or any of their properties is bound, except
those, if any, described in the Prospectus or which would not have a
Material Adverse Effect; and

(M) No consent, approval, authorization or other order of,
or filing or declaration with, any court or regulatory body, administrative
agency or other governmental body of the United States or any other
jurisdiction is necessary in connection with the execution, delivery and
performance of this Agreement, the Indenture and/or the issuance and/or
sale of the Notes by the Company pursuant to this Agreement and the
Indenture and/or the consummation of the transactions contemplated by this
Agreement and the Indenture, other than such as have been obtained or made
by the Company on or before the date of this Agreement, except the
registration of the Notes under the Act and the Rules and Regulations, the
qualification of the Indenture under the Trust Indenture Act, and such
consents, approvals, authorizations, registrations or qualifications as may
be required by the Blue Sky Laws applicable to the public offering of the
Notes by the several Underwriters (as to which such counsel need express no
opinion) or the by-laws and rules of the NASD in connection with the
purchase and distribution by the several Underwriters of the Notes (as to
which such counsel need express no opinion); and

(N) (1) The Registration Statement has become effective
under the Act and any required filing pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule 424(b); (2) to
the best knowledge of such counsel after due inquiry no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for such purpose are pending before or threatened or
contemplated by the Commission; (3) all requests for additional information
on the part of the staff of the Commission or any such authority have been
complied with to the satisfaction of the staff of the Commission or such
authority; (4) the Registration Statement, the Prospectus and each
amendment or supplement thereto (except for the financial statements and
other statistical or financial data included therein as to which such
counsel need express no opinion) comply as to form in all material respects
with

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<PAGE>

the requirements of the Act and the Rules and Regulations; (5) the
Indenture complies as to form in all material respects with the
requirements of the Trust Indenture Act and the applicable rules and
regulations thereunder; and (6) such counsel is not aware of any contracts
or other documents, transactions or relationships of a character required
to be described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not described,
incorporated therein or filed as required; and

(O) To the best of such counsel's knowledge after due
inquiry, neither the Company nor any of its subsidiaries are in default
under any court or administrative order or decree, or in default with
respect to any provision of any material lease, license agreement,
franchise agreement, loan agreement, indenture, commission sales agreement
or other agreement or contractual obligation to which the Company or any of
its subsidiaries are a party or by which any of their respective properties
are bound, and of which such counsel is aware, including, but not limited
to the contracts listed as exhibits to the Registration Statement
(collectively, the "Material Contracts"), and to the best of such counsel's
knowledge there does not exist any state of facts which constitutes an
event of default by the Company or any of its subsidiaries as defined in
any such Material Contract or which, upon notice or lapse of time or both,
would constitute such an event of default, where in any such case such
default or event of default by such party thereto has or is reasonably
likely to have a Material Adverse Effect on the conduct of the business of
the Company or any of its subsidiaries. Each such Material Contract
constitutes a valid and binding agreement of the Company or its subsidiary,
as the case may be, and is enforceable against the Company or its
subsidiary, as the case may be, in accordance with the terms thereof,
except to the extent that the enforcement of any such contract may be
limited by the application of bankruptcy, reorganization, insolvency or
other laws generally affecting the rights of creditors and by equitable
principles being applied at the discretion of a court before which any
proceeding may be brought; and

(P) To the best of such counsel's knowledge after due
inquiry, there are no actions, suits or proceedings pending or threatened
against or affecting the Company or any of its subsidiaries or any property
owned or leased by the Company or any of its subsidiaries or any of the
Company's or its subsidiaries' officers or directors in their capacity as
such, before or by any foreign, federal, state, municipal or local court,
commission, regulatory body, administrative agency or other governmental
body, which (i) are required to be disclosed in the Registration Statement
or the Prospectus and are not so disclosed, or (ii) question the validity
of this Agreement, the Indenture or any action taken or to be taken
pursuant thereto or (iii) relate to the revocation, withdrawal,
cancellation, modification, suspension or non-renewal of any material
permits,

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<PAGE>

certificates, licenses, approvals, registrations and authorizations of the
Company or any of its subsidiaries; and

(Q) All contracts listed as exhibits to the Registration
Statement to which the Company or any of its subsidiaries are a party have
been duly authorized, executed and delivered by the Company or its
subsidiaries, as the case may be; and

(R) Except as disclosed in the Prospectus, to the best of
such counsel's knowledge after due inquiry there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company owned
or to be owned by such person or to require the Company to include such
securities in (1) the securities registered pursuant to the Registration
Statement or (2) any other securities now or hereafter registered pursuant
to any other registration statement filed by the Company under the Act. All
registration rights held by holders of securities of the Company with
respect to shares of Common Stock or other securities of the Company of
which such counsel is aware have, with respect to the offering contemplated
by this Agreement, been waived; and

(S) The description in the Registration Statement and the
Prospectus of statutes and contracts and other legal documents
described therein present fairly the information required to be shown.

Such counsel may rely as to factual matters on certificates of
officers of the Company and of state officials and, as to legal matters in
jurisdictions other than Massachusetts, on opinions of local counsel, in each
case satisfactory in form and substance to the Underwriters and counsel to the
Underwriters, in which case the opinion of counsel to the Company shall state
that they are so doing and that they have no reason to believe that (x) any such
certificate is not complete and accurate and (y) they and the Underwriters are
not entitled to so rely, and copies of such certificates or opinions shall be
attached to such counsel's opinion.

In addition to the matters set forth above, such opinion shall also
include a statement to the effect that although such counsel has not undertaken,
except as otherwise indicated in their opinion, to determine independently, and
does not assume responsibility for, the accuracy or completeness of statements
in the Registration Statement or the Prospectus, such counsel has participated
in the preparation of the Registration Statement and the Prospectus, including
without limitation review and discussion of the contents thereof, and no facts
have come to the attention of such counsel which lead them to believe that
either the Registration Statement or the Prospectus, or any amendment or
supplement to the Registration Statement or the Prospectus, as of their
respective effective or issue dates, contained any untrue statement of

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<PAGE>

a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which such statements were made or that the Prospectus,
as amended or supplemented, if applicable, as of the First Closing Date or the
Second Closing Date, as the case may be, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances under which such statements were made (except for the financial
statements and other statistical or financial data included therein as to which
such counsel need express no opinion).

(ii) Such opinion or opinions of Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C., counsel for the Underwriters, dated the First Closing Date or
the Second Closing Date, as the case may be, with respect to the incorporation
of the Company, validity of the Notes, the Registration Statement and the
Prospectus, and other related matters as the Underwriters may reasonably
require, and the Company shall have furnished to such counsel such documents and
shall have exhibited to them such papers and records as such counsel reasonably
request for the purpose of enabling them to pass upon such matters.

(iii) Concurrently with the execution of this Agreement and on each
Closing Date, a certificate of the chief executive officer and the principal
financial officer of the Company, dated the date of this Agreement, the First
Closing Date or the Second Closing Date, as the case may be, in form and
substance satisfactory to the Underwriters, to the effect that:

(A) Each of the representations and warranties of the
Company set forth in Section 2 are true and correct as of the date of this
Agreement and as of the First Closing Date or the Second Closing Date, as
the case may be; and

(B) The Company has duly, timely and fully performed each
of the covenants required to be performed by it under this Agreement; and
the Company has duly, timely and fully satisfied or fulfilled each
condition required to be satisfied or fulfilled by it on or prior to the
date of such certificate; and

(C) To the best of such officers' information and belief
after due inquiry, the Commission has not issued an order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus filed as
a part of the Registration Statement or any amendment thereto; no stop
order suspending the effectiveness of the Registration Statement has been
issued; and no proceedings for that purpose have been instituted or, to the
best knowledge of the respective signatories, are pending or contemplated
under the Act; and

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<PAGE>

(D) To the best of such officers' knowledge and belief
after due inquiry, no order suspending the qualification or registration of
the Notes under the Blue Sky Laws of any jurisdiction shall be in effect
and no proceeding for such purpose shall be pending before or, to the
knowledge of the Company, threatened or contemplated by the authorities of
any such jurisdiction; and

(E) Each of the respective signatories of the certificate
has carefully examined the Registration Statement and the Prospectus, and
the Registration Statement and the Prospectus and any amendment or
supplement thereto contain all statements and information required to be
included therein, and neither the Registration Statement nor the Prospectus
nor any amendment or supplement thereto includes any untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make all statements therein not misleading in light
of the circumstances under which such statements were made, and since the
date on which the Registration Statement was initially filed with the
Commission, no event has occurred that was required to be set forth in an
amended or supplemented prospectus or in an amendment to the Registration
Statement that has not been so set forth; and

(F) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there, has not been
any material adverse change or development (or development involving a
potential adverse change) in the business, properties, financial condition
or earnings of the Company, whether or not arising from transactions in the
ordinary course of business, having a Material Adverse Effect, except as
disclosed in or otherwise contemplated by the Prospectus and the
Registration Statement as heretofore amended or (but only if the
Underwriters expressly consent thereto in writing) as disclosed in an
amendment or supplement thereto filed with the Commission and delivered to
the Underwriters after the execution of this Agreement; since such
respective dates and except as so disclosed the Company has not incurred
any liability or obligation, direct or indirect, or entered into any
transaction that is material to the Company and was not contemplated by the
Prospectus; since such respective dates and except as so disclosed there
has not been any material change in the outstanding capital stock of the
Company, or any change in the short-term debt or long-term debt of the
Company that is material to the Company; since such respective dates and
except as so disclosed the Company has not acquired any of the Common Stock
or other capital stock of the Company nor has the Company declared or paid
any dividend, or made any other distribution not expressly consented to in
writing by the Underwriters upon its outstanding Common Stock payable to
shareholders of record on a date prior to the First Closing Date or Second
Closing Date, as the case may be; since such respective dates and except as
so disclosed the Company has not incurred any material contingent
obligations, and no material litigation is pending or threatened against
the Company; and

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<PAGE>

since such respective dates and except as so disclosed the Company has not
sustained any material loss or interference (1) from any strike, fire,
flood, windstorm, accident or other calamity or casualty (whether or not
insured) or (2) from any court or governmental action, order or decree.

(iv) Concurrently with the execution of this Agreement, the
Accountants shall have delivered to the Underwriters letters, dated the date of
this Agreement, addressed to the Underwriters and the directors of the Company,
in form and substance satisfactory to the Underwriters, confirming that the
Accountants are independent accountants with respect to the Company and its
subsidiaries as required by the Act and the Rules and Regulations and with
respect to certain financial and other statistical and numerical information
contained in the Registration Statement. On the First Closing Date and, as to
the Option Notes, the Second Closing Date, the Accountants shall have furnished
to the Underwriters letters, dated the date of the applicable Closing Date,
which shall confirm, on the basis of a review in accordance with the procedures
set forth in such letters from the Accountants, that nothing has come to their
attention during the period from the date of this Agreement to a date (specified
in such letters) not more than five (5) days prior to the First Closing Date or
the Second Closing Date, as the case may be, which would require any change in
their letters dated the date of this Agreement if it were required to be dated
and delivered at the First Closing Date or the Second Closing Date, as
applicable. There shall not have been any change or decrease set forth in any of
the letters referred to in this Section 7(g)(iv) that makes it impracticable or
inadvisable in the judgment of the Underwriters to proceed with the public
offering or purchase of the Notes contemplated hereby.

(v) Such further certificates and documents as the Underwriters
reasonably may request (including without limitation certificates of officers of
the Company).

All such opinions, certificates, letters and documents shall be in
compliance with the provisions of this Agreement only if they are reasonably
satisfactory to the Underwriters and to Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C., counsel for the Underwriters. The Company shall furnish the
Underwriters with such manually signed or conformed copies of such opinions,
certificates, letters and documents as the Underwriters reasonably may request.

(h) On the First Closing Date and the Second Closing Date the Common
Stock shall be listed on the Nasdaq National Market and no proceeding relating
to delisting the Common Stock from the Nasdaq National Market shall be pending.

(i) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
subsidiaries, or any their officers or directors in

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<PAGE>

their capacities as such, for or by any foreign, federal, state, municipal or
local court, commission, regulatory body, administrative agency or other
governmental body, in which litigation or proceeding an unfavorable ruling,
decision or finding would have a Material Adverse Effect.

(j) Each of the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
at the First Closing Date and, with respect to the Option Notes, at the Second
Closing Date, and all covenants and agreements contained in this Agreement to be
performed on the part of the Company and all conditions contained herein to be
fulfilled or complied with by the Company at or prior to the First Closing Date
and, with respect to the Option Notes, at or prior to the Second Closing Date,
shall have been duly performed, fulfilled or complied with.

If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at the First Closing Date or the Second Closing Date is not so
satisfied, this Agreement, at the Underwriters election, shall, upon
notification of the Company, terminate without liability on the part of any
Underwriter, or the Company, except for the expenses to be paid by the Company
pursuant to Section 6 or reimbursed by the Company pursuant to Section 8 and
except to the extent provided in Section 10.

SECTION 8. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale to the
Underwriters of the Notes at the First Closing is not consummated because any
condition to the Underwriters' obligations under this Agreement is not satisfied
or because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof, the Company
agrees to reimburse the Underwriters upon demand for all reasonable out-of-
pocket expenses (including without limitation fees and disbursements of counsel)
that shall have been incurred by the Underwriters in connection with the
proposed purchase and the sale of Notes. Any such failure of consummation shall
be without liability of any party to any other except that the provisions of
this Section 8 and Sections 6 and 10 shall at all times be effective and shall
apply.

SECTION 9. MAINTENANCE OF EFFECTIVENESS OF REGISTRATION STATEMENT. The
Underwriters and the Company shall use their respective best efforts to prevent
the issuance of any stop order suspending the effectiveness of the Registration
Statement and, if any such stop order is issued, to obtain the withdrawal of
such order at the earliest possible moment.

SECTION 10. INDEMNIFICATION. (a) The Company agrees to indemnify and hold
harmless each Underwriter; the directors, officers, employees and agents of each
Underwriter; and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act; from and
against any losses, claims, damages, expenses,

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<PAGE>

liabilities or actions in respect thereof (including without limitation any and
all investigative, legal and other expenses, reasonably incurred in connection
with, and any amounts paid in settlement of, any action, suit or proceeding or
any claim asserted) (collectively, "Claims"), whether joint or several, to which
any such Underwriter, person or controlling person may become subject under the
Act, the Exchange Act, any Blue Sky Law, or any other federal or state statutory
law or regulation, at common law or otherwise (including without limitation
payments made in settlement of any litigation, if such settlement is effected
with the written consent of the Company, which consent shall not be unreasonably
withheld), insofar as such Claims arise out of or are based upon the inaccuracy
or breach of any representation, warranty or covenant of the Company contained
in this Agreement or any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances in which they were made,
and will reimburse each Underwriter, each such other person and each such
controlling person for any legal fees or other expenses incurred by such
Underwriter or any such other person or any such controlling person in
connection with investigating, defending against or appearing as a third witness
in connection with any such Claim; PROVIDED, however, that the Company will not
be liable in any such case to the extent that:

(i) any such Claim arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment or supplement thereto, in reliance upon and in conformity with the
written information furnished by or on behalf of the Underwriters to the Company
pursuant to Section 3; or

(ii) such statement or omission was contained or made in any
Preliminary Prospectus and corrected in the Prospectus and (A) any such Claim
suffered or incurred by any Underwriter (or any person who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) resulted from an action, claim, or suit by any person who
purchased Notes that are the subject thereof from such Underwriter in the
offering, and (B) such Underwriter failed to deliver a copy of the Prospectus
(as then amended if the Company shall have amended the Prospectus) to such
person at or prior to the confirmation of the sale of such Notes in any case
where such delivery is required by the Act, unless such failure was due to
failure by the Company to provide copies of the Prospectus (as so amended) to
the Underwriters as required by this Agreement. The indemnification obligations
of the Company pursuant to this Section 10(a) are in addition to any liabilities
the Company may otherwise have.

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<PAGE>

The Company will not, without the prior written consent of the
Underwriters, settle or compromise or consent to the entry of any judgment in
any pending or threatened Claim (or related cause of action or portion thereof)
in respect of which indemnification may be sought hereunder (whether or not any
Underwriter is a party to such Claim), unless such settlement, compromise or
consent includes an unconditional release of each Underwriter from all liability
arising out of such Claim (or related cause of action or portion thereof).

(b) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless the Company, each of its directors, and each of its
officers who signs the Registration Statement, and each person who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, against any Claim to which the Company or any of its directors,
officers or controlling persons may become subject under the Act, the Exchange
Act, any Blue Sky Law or any other federal or state statutory law or regulation,
at common law or otherwise (including without limitation payments made in
settlement of any litigation, if such settlement is effected with the written
consent of such Underwriter, which consent shall not be unreasonably withheld),
insofar as such Claims arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained in the Registration Statement,
any Preliminary Prospectus, the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement by such Underwriter
to the Company pursuant to Section 3. Each Underwriter will severally reimburse
any legal fees or other expenses reasonably incurred by the Company, or any of
its directors, officers or controlling persons in connection with investigating
or defending any such Claim, and from any and all Claims resulting from failure
of an Underwriter to deliver a copy of the Prospectus, if the person asserting
such Claim purchases Notes from such Underwriter and a copy of the Prospectus
(as then amended if the Company shall have amended the Prospectus) was not sent
or given by or on behalf of such Underwriter to such person, if required by law
so to have been delivered, at or prior to the written confirmation of the sale
of the Notes to such person, and if the Prospectus (as so amended) would have
cured the defect giving rise to such Claim. The indemnification obligations of
each Underwriter pursuant to this Section 10(b) are in addition to any
liabilities any such Underwriter may otherwise have.

(c) Any party that proposes to assert its right to be indemnified
under this Section 10 shall, promptly after receipt of notice of the
commencement of any action against such party in respect of a Claim, if a Claim
in respect thereof is to be made against an indemnifying party under this
Section 10, notify each such indemnifying party in writing of the commencement
thereof (a "Commencement Notice"), and such Commencement Notice shall

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<PAGE>

include a copy of all papers served upon the notifying party, PROVIDED that the
omission to so notify such indemnifying party or parties shall only relieve the
indemnifying party or parties from any liability it or they may have to any
indemnified party under this Section 10 to the extent that such omission results
in the loss of substantive rights or defenses by the indemnifying party. If any
such action is brought against any indemnified party, and such indemnified party
notifies an indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving a
Commencement Notice, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party; PROVIDED, HOWEVER, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded (based on advice of counsel)
that there may be legal defenses available to the indemnified party and/or other
indemnified parties that are different from or in addition to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties in accordance with clause (d) hereof.

(d) Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election to assume the defense of
such action and upon approval by the indemnified party of counsel selected by
the indemnifying party, the indemnifying party shall not be liable to such
indemnified party under Section 10(a) or Section 10(b) for any legal fees or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with such defense,
unless:

(i) the indemnified party shall have employed separate
counsel in connection with the assumption of legal defenses in accordance with
the proviso to the last sentence of Section 10(c) (it being understood, however,
that the indemnifying party shall not be liable for the legal fees and expenses
of more than one separate counsel, approved by the Underwriters if one or more
of the Underwriters or their controlling persons are the indemnified parties);
or

(ii) the indemnifying party has authorized in writing the
employment of counsel at the expense of the indemnifying party; or

(iii) a conflict or potential conflict exists (based on
advice of counsel to the indemnified party) between the indemnified party and
any indemnifying party (in which case the indemnifying party shall not have the
right to direct the defense of such action on behalf of the indemnified party).

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<PAGE>

It is understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees, disbursements and other charges of more than
one separate firm admitted to practice in such jurisdiction at any one time for
all such indemnified party or parties. All such fees, disbursements and other
charges shall be reimbursed by the indemnifying party or parties promptly as
they are incurred. No indemnifying party shall be liable for any settlement of
any action or claim effected without such indemnifying party's written consent
(which consent shall not be unreasonably withheld).

(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 10 is
applicable in accordance with its terms but for any reason is held to be
unavailable from the Company or the Underwriters, the Company and the
Underwriters shall contribute to the total losses, claims, liabilities, expenses
and damages (including without limitation any investigative, legal and other
expenses reasonably incurred in connection with, and any amount paid in
settlement of, any Claim, but after deducting any contribution received by the
Company from persons other than the Underwriters, such as persons who control
the Company within the meaning of the Act, officers of the Company who signed
the Registration Statement and directors of the Company, who also may be liable
for contribution) to which each indemnified party may be subject as a result of
such Claim:

(i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Notes; or

(ii) if the allocation provided by Section 10(e)(i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in Section 10(e)(i) above, but also
the relative fault of the Company on the one hand and the Underwriters on the
other hand in connection with the statements or omissions that resulted in such
Claim, as well as any other relevant equitable considerations.

The respective relative benefits received by the Company on the one hand
and the Underwriters on the other hand shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company on the
one hand and the Underwriters on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the
Underwriters on the other hand and the parties' relative intent, knowledge,

- 36 -
<PAGE>

access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 10(e) were to be determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to in this Section 10(e). The
amount paid or payable by an indemnified party as a result of the Claims
referred to above shall be deemed to include, subject to the limitations set
forth in Sections 10(c) and 10(d), any legal or other fees or expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim.

(f) Notwithstanding the other provisions of this Section 10, no
Underwriter shall be required to contribute any amount in excess of the
underwriting discounts received by it, and no person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 10 are several in proportion to the respective number of Firm Notes set
forth opposite their names in SCHEDULE A (or such number of Firm Notes increased
as set forth in Section 11) and not joint. For purposes of this Section 10, any
person who controls a party to this Agreement within the meaning of the Act
shall have the same rights to contribution as that party, and each officer of
the Company who signed the Registration Statement shall have the same rights to
contribution as the Company, subject in each case to the provisions of this
Section 10. Any party entitled to contribution, promptly after receipt of
notice of commencement of any action against any such party in respect of which
a claim for contribution may be made under this Section 10, shall notify any
such party or parties from whom contribution may be sought, but the omission so
to notify shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section 10. No
party shall be liable for contribution with respect to any action or claim
settled without its written consent (which consent shall not be unreasonably
withheld).

(g) The indemnity and contribution agreements contained in this
Section 10 shall remain operative and in full force and effect regardless of (i)
any investigation made by or on behalf of the Underwriters, (ii) acceptance of
any of the Notes and payment therefor or (iii) any termination of this
Agreement.

SECTION 11. SUBSTITUTION OF UNDERWRITERS. It shall be a condition to this
Agreement and to the obligations of the Company to sell and deliver the Notes
hereunder, and to the obligations of each Underwriter to purchase the Notes in
the manner as described herein, that, except as hereinafter provided in this
Section 11, each of the Underwriters shall purchase and pay for all the Notes
agreed to be purchased by such Underwriter hereunder upon tender to the
Underwriters of all such Notes in accordance with the terms hereof. If any
Underwriter or

- 37 -
<PAGE>

Underwriters defaults in its or their obligations to purchase Notes hereunder on
either the First Closing Date or the Second Closing Date and the aggregate
amount of Notes that such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase does not exceed ten percent (10%) of the total
amount of Notes the Underwriters are obligated to purchase on such Closing Date,
the Underwriters may make arrangements for the purchase of such Notes by other
persons, including without limitation any of the Underwriters, but if no such
arrangements are made by such Closing Date the nondefaulting Underwriters shall
be obligated severally, in proportion to their respective commitments hereunder,
to purchase the Notes such defaulting Underwriters agreed but failed or refused
to purchase on such Closing Date, PROVIDED that in no event shall the maximum
amount of Notes which any Underwriter has become obligated to purchase pursuant
to Section 4 be increased pursuant to this Section 11 by more than one-eleventh
of such amount of Notes without the prior written consent of such Underwriter.
If any Underwriter or Underwriters so default and the aggregate amount of Notes
with respect to which such default or defaults occur is greater than the above
percentage and arrangements satisfactory to the Underwriters for the purchase of
such Notes by other persons are not made within thirty-six (36) hours after such
default, this Agreement shall terminate without liability on the part of any
nondefaulting Underwriter and the Company, except for the expenses to be paid by
the Company pursuant to Section 6 and except to the extent provided in Section
10.

If the Notes to which such a default relates are to be purchased by the
nondefaulting Underwriters or by another party or parties, the Underwriters or
the Company shall have the right to postpone the First or Second Closing Date,
as the case may be, for not more than seven (7) business days so that the
required changes in the Registration Statement, Prospectus and any other
documents, as well as any other arrangements, may be effected. The term
"Underwriter" shall include any person substituting for a defaulting Underwriter
hereunder. Nothing contained in this Agreement shall relieve a defaulting
Underwriter from liability for its default.

SECTION 12. EFFECTIVE DATE OF THIS AGREEMENT. This Agreement shall become
effective immediately upon the execution hereof on the date hereof.

SECTION 13. TERMINATION. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof, this Agreement may be
terminated by the Underwriters prior to the First Closing Date and the Option,
if exercised, may be canceled by the Underwriters at any time prior to the
Second Closing Date, prior to delivery of and payment for the applicable Notes,
if in the Underwriters's sole judgment, payment for and delivery of the Notes is
rendered impracticable or inadvisable because:

(a) additional governmental restrictions, not in force and effect
on the date hereof, shall have been imposed upon trading in securities generally
or minimum or maximum prices shall have been generally established over-the-
counter on the Nasdaq Stock Market,

- 38 -
<PAGE>

American Stock Exchange or on the New York Stock Exchange, or trading in
securities generally shall have been suspended or limited on the Nasdaq Stock
Market, American Stock Exchange or the New York Stock Exchange by the
Commission, by such exchange or over-the-counter market or by any other
regulatory body or governmental authority having jurisdiction; or

(b) (i) neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth in the Prospectus, or (ii) since such date there shall not have been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective change,
in or affecting the general affairs, management, consolidated financial
position, stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth in the Prospectus, the effect of
which, in any such case described in clause (i) or (ii), is, in the judgment of
the Underwriters, so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Notes on
the terms and in the manner contemplated in the Prospectus; or

(d) any event shall have occurred or shall exist that makes untrue
or incorrect in any material respect any statement or information contained in
the Registration Statement or that is not reflected in the Registration
Statement but should be reflected therein to make the statements or information
contained therein not misleading in an material respect; or

(e) any outbreak or escalation of major hostilities or other
national or international calamity or crisis or any substantial change in
political, financial or economic conditions or any other event or events shall
have occurred or shall have accelerated to such extent, in the Underwriters's
sole judgment, as to have a material adverse effect on the general financial
and/or securities markets of the United States or make it impracticable or
inadvisable to proceed with completion of the sale of and payment for the Notes
as provided in this Agreement; or

(f) trading in any of the equity securities of the Company shall
have been suspended by the Commission, by an exchange that lists the Common
Stock or by the Nasdaq Stock Market.

- 39 -
<PAGE>

Any termination pursuant to this Section 13 shall be without liability on
the part of any Underwriter to the Company or on the part of the Company to any
Underwriter (except for expenses to be paid by the Company pursuant to Section 6
or reimbursed by the Company pursuant to Section 8 and except as to
indemnification to the extent provided in Section 10).

SECTION 14. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties, covenants and
other statements of the Company or its officers or directors, and of the several
Underwriters set forth in or made by or on behalf of them pursuant to this
Agreement shall remain in full force and effect, regardless of (a) any
investigation made by or on behalf of any Underwriter, the Company, or any of
its or their partners, officers, directors, or any controlling person, as the
case may be; (b) any termination of this Agreement; and (c) delivery of and
payment for the Notes sold hereunder.

SECTION 15. NOTICES. All communications hereunder shall be in writing
and, if sent to the Underwriters, shall be mailed, delivered, telecopied
(with receipt confirmed) or telegraphed and confirmed to Advest, Inc. at
90 State House Square, Hartford, Connecticut 06103, Attention: Robert
Keane, Jr., with a copy to Lewis J. Geffen, Esq., Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., One Financial Center, Boston, Massachusetts, 02111;
and if sent to the Company, shall be mailed, delivered, telecopied (with
receipt confirmed) or telegraphed and confirmed to the Company at 60 State
Street, Boston, MA 02109, Attention: John W. Everets, President, with a copy
to Dennis W. Townley, Esq., Hill & Barlow, One International Place, Boston,
Massachusetts, 02110.

SECTION 16. SUCCESSORS. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors and assigns,
and to the benefit of the officers and directors (and their personal
representatives and controlling persons referred to in Section 10), and no other
person shall acquire or have any right or obligation hereunder. The term
successors and assigns shall not include any purchaser of the Notes as such from
any of the Underwriters merely by reason of such purchase.

SECTION 17. PARTIAL UNENFORCEABILITY. If any Section, subsection, clause
or provision of this Agreement is for any reason determined to be invalid or
unenforceable, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible.

- 40 -
<PAGE>

SECTION 18. WAIVER OF JURY TRIAL. The Company and the Underwriters each
hereby waive any right they may have to a trial by jury in respect of any claim
based upon or arising out of this Agreement or any of the transactions
contemplated hereby.

SECTION 19. APPLICABLE LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Connecticut.
No doctrine of choice of law shall be used to apply any law other than that of
the State of Connecticut, and no defense, counterclaim or right of set-off given
or allowed by the laws of any other state jurisdiction, or arising out of the
enactment, modification or repeal of any law, regulation, ordinance or decree of
any foreign jurisdiction, shall be interposed in any action upon or relating to
this Agreement.

SECTION 20. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the parties hereto with respect to the transactions contemplated herein,
and there have been and there are no agreements between the parties with respect
to such transactions other than as set forth, or provided for herein.

SECTION 21. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.

SECTION 22. HEADINGS FOR CONVENIENCE. The Section titles contained in this
Agreement are for convenience of reference only and shall be without substantive
meaning or content of any kind whatsoever and are not a part of the agreement
between the parties.

SECTION 23. CONSTRUCTION. The terms "hereof," "herein," "hereunder" and
similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Section, paragraph and Schedule
references are to this Agreement unless otherwise specified.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

- 41 -
<PAGE>

If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon this
Agreement shall become a binding agreement among the Company and the several
Underwriters all in accordance with its terms.

Very truly yours,

HPSC, INC.

By:
------------------------------------

Title:
---------------------------------

The foregoing Underwriting Agreement
is hereby confirmed and accepted by
the several Underwriters identified
in SCHEDULE A annexed hereto, as of
the date first above written.

ADVEST, INC.

By:
-----------------------------

Title:
------------------------------

LEGG MASON WOOD WALKER, INCORPORATED

By:
-------------------------------

Title:
-------------------------------

- 42 -
<PAGE>

SCHEDULE A

Principal Amount
of Firm Notes
Name of Underwriter to be Purchased
- ------------------- ---------------

Advest, Inc. $10,000,000
Legg Mason Wood Walker, Incorporated 10,000,000

Total: $20,000,000
-----------
-----------

- 43 -

<PAGE>

EXECUTION
COPY
- --------------------------------------------------------------------------------

SECOND
AMENDED AND RESTATED
REVOLVING CREDIT
AGREEMENT

dated as of December 12, 1996
between

HPSC, INC.

and

THE FIRST NATIONAL BANK OF BOSTON
individually and as Managing Agent
and

NATIONSBANK, N.A.
individually and as Agent

AND THE BANKS NAMED HEREIN

- --------------------------------------------------------------------------------
<PAGE>

1. DEFINITIONS AND RULES OF INTERPRETATION . . . . . . . . . . . . . . .1
1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . .1
1.2. Rules of Interpretation. . . . . . . . . . . . . . . . 19
2. THE FACILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.1. Commitment to Lend . . . . . . . . . . . . . . . . . . 20
2.2. Commitment Fee . . . . . . . . . . . . . . . . . . . . 21
2.3. Reduction of Total Commitment. . . . . . . . . . . . 21
2.4. The Notes. . . . . . . . . . . . . . . . . . . . . . . 21
2.5. Interest on Loans . . . . . . . . . . . . . . . . . . 22
2.6. Requests for Loans . . . . . . . . . . . . . . . . . . 24
2.7. Conversion Options . . . . . . . . . . . . . . . . . . 24
2.7.1. Conversion to Different Type of Loan. . . . . 24
2.7.2. Continuation of Type of Loan . . . . . . . . 25
2.7.3. Eurodollar Rate Loans . . . . . . . . . . . . 25
2.8. Funds for Loans. . . . . . . . . . . . . . . . . . . . 25
2.8.1. Funding Procedures. . . . . . . . . . . . . . 25
2.8.2. Advances by Agent . . . . . . . . . . . . . . 26
2.9. Change in Borrowing Base . . . . . . . . . . . . . . . 26
3. REPAYMENT OF THE LOANS . . . . . . . . . . . . . . . . . . . . . . . 26
3.1. Maturity . . . . . . . . . . . . . . . . . . . . . . . 27
3.2. Mandatory Repayments of Loans. . . . . . . . . . . . . 27
3.3. Optional Repayments of Loans . . . . . . . . . . . . . 27
3A. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . 28
3A.1. Letter of Credit Commitments . . . . . . . . . . . . . 28
3A.1.1. Commitment to Issue Letters of Credit. . . . 28
3A.1.2. Letter of Credit Applications . . . . . . . . 28
3A.1.3. Terms of Letters of Credit. . . . . . . . . . 28
3A.1.4. Reimbursement Obligations of Banks. . . . . . 28
3A.1.5. Participations of Banks . . . . . . . . . . . 29
3A.2. Reimbursement Obligation of the Borrower. . . . . . . 29
3A.3. Letter of Credit Payments . . . . . . . . . . . . . . 30
3A.4. Obligations Absolute. . . . . . . . . . . . . . . . . 30
3A.5. Reliance by Issuer. . . . . . . . . . . . . . . . . . 31
3A.6. Letter of Credit Fee. . . . . . . . . . . . . . . . . 31
4. CERTAIN GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . 32
4.1. Agent's Fee. . . . . . . . . . . . . . . . . . . . . . 32
4.2. Funds for Payments . . . . . . . . . . . . . . . . . . 32
4.2.1. Payments to Agent. . . . . . . . . . . . . . 32
4.2.2. No Offset, etc. . . . . . . . . . . . . . . . 32
4.3. Computations . . . . . . . . . . . . . . . . . . . . . 32
4.4. Inability to Determine Eurodollar Rate. . . . . . . . 33
4.5. Illegality . . . . . . . . . . . . . . . . . . . . . . 33
4.6. Additional Costs, etc. . . . . . . . . . . . . . . . . 34
4.7. Capital Adequacy . . . . . . . . . . . . . . . . . . . 35
4.8. Certificate. . . . . . . . . . . . . . . . . . . . . 36

<PAGE>
- ii -

4.9. Indemnity. . . . . . . . . . . . . . . . . . . . . . . 36
4.10. Overdue Amounts . . . . . . . . . . . . . . . . . . . 36
5. SECURITY AND GUARANTIES. . . . . . . . . . . . . . . . . . . . . . . 36
5.1. Security of Borrower . . . . . . . . . . . . . . . . . 36
5.2. Guaranty and Security of ACFC. . . . . . . . . . . . 36
6. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . 37
6.1. Corporate Authority. . . . . . . . . . . . . . . . . . 37
6.1.1. Incorporation; Good Standing. . . . . . . . . 37
6.1.2. Authorization. . . . . . . . . . . . . . . . . 37
6.1.3. Enforceability . . . . . . . . . . . . . . . . 37
6.2. Governmental Approvals . . . . . . . . . . . . . . . . 38
6.3. Title to Properties; Leases. . . . . . . . . . . . . . 38
6.4. Financial Statements and Projections . . . . . . . . . 38
6.4.1. Financial Statements . . . . . . . . . . . . . 38
6.4.2. Projections. . . . . . . . . . . . . . . . . . 39
6.5. No Material Adverse Changes, etc. . . . . . . . . . . 39
6.6. Franchises, Patents, Copyrights, etc. . . . . . . . . 39
6.7. Litigation. . . . . . . . . . . . . . . . . . . . . . 39
6.8. No Materially Adverse Contracts, etc. . . . . . . . . 40
6.9. Compliance With Other Instruments, Laws, etc. . . . . 40
6.10. Tax Status . . . . . . . . . . . . . . . . . . . . . . 40
6.11. No Event of Default. . . . . . . . . . . . . . . . . . 40
6.12. Holding Company and Investment Company Acts. . . . . . 40
6.13. Absence of Financing Statements, etc.. . . . . . . . . 41
6.14. Perfection of Security Interest. . . . . . . . . . . . 41
6.15. Certain Transactions . . . . . . . . . . . . . . . . . 41
6.16. Employee Benefit Plans . . . . . . . . . . . . . . . . 41
6.16.1. In General. . . . . . . . . . . . . . . . . . 41
6.16.2. Terminability of Welfare Plans. . . . . . . . 42
6.16.3. Guaranteed Pension Plans. . . . . . . . . . . 42
6.16.4. Multiemployer Plans . . . . . . . . . . . . . 42
6.17. Regulations U and X. . . . . . . . . . . . . . . . . . 42
6.18. Environmental Compliance . . . . . . . . . . . . . . . 42
6.19. Subsidiaries, etc. The . . . . . . . . . . . . . . . . 44
6.20. Bank Accounts. . . . . . . . . . . . . . . . . . . . . 44
6.21. Eligible Accounts Receivable, Equipment and Contracts. 45
6.22 Vehicle Leases. Schedule 6.22 sets forth all Vehicle
Leases . . . . . . . . . . . . . . . . . . . . . . . . 48
7. AFFIRMATIVE COVENANTS OF THE BORROWER. . . . . . . . . . . . . . . . 48
7.1. Punctual Payment. . . . . . . . . . . . . . . . . . . 48
7.2. Maintenance of Office. . . . . . . . . . . . . . . . . 49
7.3. Records and Accounts . . . . . . . . . . . . . . . . . 49
7.4. Financial Statements, Certificates and Information . . 49
7.5. Notices. . . . . . . . . . . . . . . . . . . . . . . . 51
7.5.1. Defaults. . . . . . . . . . . . . . . . . . . 51
7.5.2. Environmental Events. . . . . . . . . . . . . 51
<PAGE>
- iii -

7.5.3. Notification of Claims Against Collateral. . 52
7.5.4. Notice of Litigation and Judgments. . . . . . 52
7.6. Corporate Existence; Maintenance of Properties. . . . 52
7.7. Insurance. . . . . . . . . . . . . . . . . . . . . . 53
7.8. Taxes. . . . . . . . . . . . . . . . . . . . . . . . 53
7.9. Inspection of Properties and Books, etc. . . . . . . 54
7.9.1. General . . . . . . . . . . . . . . . . . . . 54
7.9.2. Collateral Reports. . . . . . . . . . . . . . 54
7.9.3. Communication with Accountants. . . . . . . . 54
7.10. Compliance with Laws, Contracts, Licenses, and
Permits. . . . . . . . . . . . . . . . . . . . . . . . 55
7.11. Employee Benefit Plans . . . . . . . . . . . . . . . . 55
7.12. Use of Proceeds. . . . . . . . . . . . . . . . . . . . 55
7.13. Bank Accounts. . . . . . . . . . . . . . . . . . . . . 55
7.14. Credit Policies. . . . . . . . . . . . . . . . . . . . 56
7.15. Perfected Security Interest under Contracts. . . . . . 56
7.16. Performance and Compliance with Receivables and
Contracts. . . . . . . . . . . . . . . . . . . . . . . 56
7.17. Further Assurances. . . . . . . . . . . . . . . . . . 56
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. . . . . . . . . . . . . 56
8.1. Restrictions on Indebtedness. . . . . . . . . . . . . 57
8.2. Restrictions on Liens. . . . . . . . . . . . . . . . 58
8.3. Restrictions on Investments. . . . . . . . . . . . . 60
8.4. Distributions. . . . . . . . . . . . . . . . . . . . 61
8.5. Merger, Consolidation and Disposition of Assets. . . . 61
8.5.1. Mergers and Acquisitions . . . . . . . . . . 61
8.5.2. Disposition of Assets. . . . . . . . . . . . 61
8.6. Sale and Leaseback. . . . . . . . . . . . . . . . . . 62
8.7. Compliance with Environmental Laws. . . . . . . . . . 62
8.8. Other Debt. . . . . . . . . . . . . . . . . . . . . . 62
8.9. Employee Benefit Plans. . . . . . . . . . . . . . . . 63
8.10. Bank Accounts. . . . . . . . . . . . . . . . . . . . 63
8.11. Funding Subsidiaries Stock. . . . . . . . . . . . . . 63
8.12. Change in Credit Policy. . . . . . . . . . . . . . . 63
9. FINANCIAL COVENANTS OF THE BORROWER. . . . . . . . . . . . . . . . 64
9.1. Debt to Consolidated Tangible Capital Funds. . . . . 64
9.2. Consolidated Tangible Net Worth. . . . . . . . . . . 64
9.3. Interest Coverage. . . . . . . . . . . . . . . . . . 64
9.4. Capital Expenditures. . . . . . . . . . . . . . . . . 64
9.5. Reissued Customer Receivables to Gross Customer
Receivables. . . . . . . . . . . . . . . . . . . . . . 64
9.6. Contractually Delinquent Customer Receivables to Gross
Customer Receivables Ratio . . . . . . . . . . . . . . 64
9.7. Reserves to Contractually Delinquent Customer
Receivables. . . . . . . . . . . . . . . . . . . . . . 65
9.8. Allowance for Doubtful Accounts. . . . . . . . . . . . 65
9.9. Collections to Billings. . . . . . . . . . . . . . . . 65
9.10. Leases. . . . . . . . . . . . . . . . . . . . . . . . 65
9.11. Equipment Supplier Concentration . . . . . . . . . . . 65

<PAGE>
- iv -

10. CLOSING CONDITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 65
10.1. Loan Documents . . . . . . . . . . . . . . . . . . . . 65
10.2. Certified Copies of Charter Documents. . . . . . . . . 65
10.3. Corporate Action . . . . . . . . . . . . . . . . . . . 66
10.4. Incumbency Certificate . . . . . . . . . . . . . . . . 66
10.5. Validity of Liens. . . . . . . . . . . . . . . . . . . 66
10.6. Perfection Certificates and UCC Search Results . . . . 66
10.7. Certificates of Insurance . . . . . . . . . . . . . . 67
10.8. Bank Agency Agreements . . . . . . . . . . . . . . . . 67
10.9. Borrowing Base Report . . . . . . . . . . . . . . . . 67
10.10. Accounts Receivable Aging Report . . . . . . . . . . . 67
10.11. Solvency Certificate . . . . . . . . . . . . . . . . 67
10.12. Opinion of Counsel . . . . . . . . . . . . . . . . . . 67
10.13. Funding Reports . . . . . . . . . . . . . . . . . . . 68
11. CONDITIONS TO ALL BORROWINGS . . . . . . . . . . . . . . . . . . . 68
11.1. Representations True; No Event of Default. . . . . . . 68
11.2. No Legal Impediment. . . . . . . . . . . . . . . . . . 68
11.3. Governmental Regulation. . . . . . . . . . . . . . . . 68
11.4. Proceedings and Documents. . . . . . . . . . . . . . . 68
11.5. Borrowing Base Report. . . . . . . . . . . . . . . . . 69
12. EVENTS OF DEFAULT; ACCELERATION; ETC. . . . . . . . . . . . . . . 69
12.1. Events of Default and Acceleration . . . . . . . . . . 69
12.2. Termination of Commitments . . . . . . . . . . . . . . 73
12.3. Remedies . . . . . . . . . . . . . . . . . . . . . . . 73
12.4. Distribution of Collateral Proceeds. . . . . . . . . . 74
13. SETOFF. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
14. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
14.1. Authorization. . . . . . . . . . . . . . . . . . . . 76
14.2. Employees and Agents. . . . . . . . . . . . . . . . . 76
14.3. No Liability. . . . . . . . . . . . . . . . . . . . . 76
14.4. No Representations. . . . . . . . . . . . . . . . . . 77
14.5. Payments. . . . . . . . . . . . . . . . . . . . . . . 77
14.5.1. Payments to Agent. . . . . . . . . . . . . . 77
14.5.2. Distribution by Agent. . . . . . . . . . . . 77
14.5.3. Delinquent Banks . . . . . . . . . . . . . . 78
14.6. Holders of Notes. . . . . . . . . . . . . . . . . . . 78
14.7. Indemnity. . . . . . . . . . . . . . . . . . . . . . . 79
14.8. Agent as Bank. . . . . . . . . . . . . . . . . . . . . 79
14.9. Resignation. . . . . . . . . . . . . . . . . . . . . 79
15. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
16. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . 80
17. SURVIVAL OF COVENANTS, ETC. . . . . . . . . . . . . . . . . . . . . 81
18. ASSIGNMENT AND PARTICIPATION. . . . . . . . . . . . . . . . . . . . 82
18.1. Conditions to Assignment by Banks. . . . . . . . . . . 82

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18.2. Certain Representations and Warranties; Limitations;
Covenants. . . . . . . . . . . . . . . . . . . . . . 82
18.3. Register. . . . . . . . . . . . . . . . . . . . . . . 83
18.4. New Notes. . . . . . . . . . . . . . . . . . . . . . . 84
18.5. Participations. . . . . . . . . . . . . . . . . . . . 84
18.6. Disclosure. . . . . . . . . . . . . . . . . . . . . . 85
18.7. Assignee or Participant Affiliated with the Borrower. 85
18.8. Miscellaneous Assignment Provisions. . . . . . . . . 85
18.9. Assignment by Borrower. . . . . . . . . . . . . . . . 86
19. NOTICES, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
20. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . 87
21. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
22. COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
23. ENTIRE AGREEMENT, ETC. . . . . . . . . . . . . . . . . . . . . . . 87
24. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . 88
25. CONSENTS, AMENDMENTS, WAIVERS, ETC. . . . . . . . . . . . . . . . 88
25.1. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . 89
26. TRANSITIONAL ARRANGEMENTS. . . . . . . . . . . . . . . . . . . . . 89
26.1. Prior Loan Agreement Superseded. . . . . . . . . . . . 89
26.2. Return and Cancellation of Notes . . . . . . . . . . . 89
26.3. Interest and Fees Under Superseded Agreement . . . . . 89
26.4. No Claims Under Prior Loan Agreement . . . . . . . . . 90
26.5. Interbank Settlements. . . . . . . . . . . . . . . . . 90

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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(g) Existing Liens
Schedule 8.3 Existing Investments

EXHIBITS

Exhibit A Form of Borrowing Base Report
Exhibit B Form of Note
Exhibit C Form of 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
Exhibit I Form of Agency Agreement
Exhibit J ACFC Credit Policy

<PAGE>

EXECUTION COPY

SECOND AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT

This SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is made as of
December 12, 1996, by and among HPSC, INC. (the "Borrower"), a Delaware
corporation having its principal place of business at 60 State Street, Boston,
Massachusetts 02109, AMERICAN COMMERCIAL FINANCE COMPANY ("ACFC"), a Delaware
corporation (solely for the specific purposes herein set forth), THE FIRST
NATIONAL BANK OF BOSTON, a national banking association ("FNBB"), BANK OF
AMERICA ILLINOIS, an Illinois banking corporation ("BOA"), NATIONSBANK, N.A., a
national banking association ("NationsBank"), CORESTATES BANK, N.A., a national
banking association ("CoreStates"), THE SUMITOMO BANK, LIMITED, ("Sumitomo") and
the other lending institutions listed on SCHEDULE 1, THE FIRST NATIONAL BANK OF
BOSTON, in its capacity as managing agent as Agent for itself and such other
lending institutions and NATIONSBANK as agent.

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.

ACFC CREDIT POLICY. ACFC's criteria for the extension of credit for
receivables and contracts as set forth on EXHIBIT J attached hereto and made a
part hereof.

ACFC RECEIVABLE. An Account Receivable originated by ACFC pursuant to
ACFC's Credit Policy.

ACCOUNTS RECEIVABLE. All rights of the Borrower or ACFC to payment for and
under a Customer Receivable or a Practice 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.

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AGENT. The First National Bank of Boston acting as agent for the Banks.

AGENT'S SPECIAL COUNSEL. Bingham, Dana & Gould LLP or such other counsel
as may be approved by the Agent.

APPLICABLE MARGIN. See Section 2.5.

APPLICABLE RATE. See Section 3A.6.

ASSIGNMENT AND ACCEPTANCE. See Section 18.1.

BALANCE SHEET DATE. December 31, 1995.

BANKS. FNBB, BOA, NationsBank, CoreStates, Sumitomo 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. 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 the Funding Subsidiaries and Credident) to any
Customer 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

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(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 $2,000,000; minus

(iii) the Reserve Amount;

PROVIDED, HOWEVER, that ACFC Receivables included in the Borrowing Base shall
not comprise more than 35% of the Borrowing Base.

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.

BRAVO. HPSC Bravo Funding Corp., a Delaware corporation and wholly-owned
subsidiary of the Borrower.

BRAVO CREDIT AGREEMENT. The lease receivables-backed credit agreement
dated as of January 31, 1995 by and among Bravo, Triple-A One Funding
Corporation, a Delaware corporation and Capital Markets Assurance Corporation, a
New York stock insurance company, as amended by Amendment No. 1 dated as of
December 18, 1995 and Amendment No. 2 dated as of October 18, 1996.

BRAVO FACILITY DOCUMENTS. Collectively, the Purchase Agreement, the Bravo
Credit Agreement and all other agreements, documents and instruments entered
into pursuant thereto or in connection therewith.

BUSINESS DAY. Any day on which banking institutions in Boston,
Massachusetts are open for the transaction of commercial 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 as in effect as of the date of this Credit Agreement.

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 (other than the
purchase of computer software) that would be required to be capitalized and
shown on the balance sheet of such Person in accordance with generally accepted
accounting principles as in effect as of the date of this Credit Agreement.

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

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sheet of the lessee or obligor in accordance with generally accepted accounting
principles as in effect as of the date of this Credit Agreement.

CERCLA. See Section 6.18.

CLOSING DATE. The first date on which the conditions set forth in Section
10 have been satisfied and any Loans are to be made.

CODE. The Internal Revenue Code of 1986.

COLLATERAL. All of the property, rights and interests of the Borrower and
ACFC 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 on Accounts Receivable during the relevant period.

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, and participate
in the issuance, extension and renewal of Letters of Credit for the account of,
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 as in effect on the
date of this Credit Agreement, 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.

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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 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 the Borrower with respect
to Credident), whether or not so classified.

CONTRACT. Each lease, finance agreement, note, agreement or instrument
which evidences any Customer Receivable or Practice Receivable relating to any
Account Receivable included in Eligible Accounts Receivable at any time.

CONTRACT FILE. With respect to each Contract, the executed original
counterpart of the Contract that constitutes an "instrument" for purposes of 9-
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105(1)(i) of the UCC, together with a duly executed allonge transferring such
instrument to the Agent.

CONTRACTUALLY DELINQUENT CUSTOMER RECEIVABLES. All Customer Receivables
owing from any particular Customer in respect of any Contract if any Customer
Receivable owing from such Customer in respect of such Contract is Delinquent.

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.

CREDIT AGREEMENT. This Agreement, including the Schedules and Exhibits
hereto.

CREDIT POLICY. The criteria for the extension of credit for receivables
and contracts of the Borrower.

CREDIDENT. Credident, Inc., a Canadian corporation and wholly-owned
Subsidiary of the Borrower.

CUSTOMER. A Person for whom the Borrower finances property, goods,
leasehold improvements, or, in the case of ACFC, a Person for whom ACFC finances
inventory, accounts receivable or working capital requirements.

CUSTOMER RECEIVABLE. Obligations of any kind or nature to the Borrower or
ACFC (i) incurred by Customers in the ordinary course of their respective
businesses or (ii) arising from the purchase by the Borrower or ACFC 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 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.

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DOLLARS or $. Dollars in lawful currency of the United States of America.

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 Loan is made or is to be made, and
the date on which any 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 Customers 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
Customer if more than fifteen percent (15%) of the aggregate amount of all
Accounts Receivable owing from such Customer 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 are not included in the "Receivables Pool" (as
such term is defined in the Funding Indenture); (xii) that are not subject to
any lien or any negative pledge pursuant to the Funding Indenture; (xiii) that
originated in the ordinary course of business of the Borrower or ACFC; (xiv)
that are not due from any single Customer if, after including such Accounts
Receivable, the Borrowing Base will be comprised of more than $750,000 of
Accounts Receivable owing from such Customer PROVIDED, HOWEVER that Practice
Receivables shall not be included when calculating this $750,000 Customer
concentration limitation; (xv) that are not due from any single Customer if,
after including such Accounts Receivable, the Borrowing Base will be comprised
of more than $1,000,000 of Practice Receivables owing from such Customer; (xvi)
that have not been transferred to Bravo pursuant to the Purchase Agreement;
(xvii) that are not subject to any lien or negative pledge pursuant to the Bravo
Facility Documents; (xviii) that if an ACFC Receivable, the Contract Files with
respect to the Contracts relating thereto have been delivered to the Agent;
(xix) that with respect to which all

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the representations and warranties set forth in Section 6.21 of this Credit
Agreement 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 to the relevant
date; (xx) that with respect to which the Borrower or ACFC has filed and
maintained the effectiveness of UCC financing statements against the Obligor in
order to perfect any security interest granted in such Contract in the related
collateral of the Obligor; (xxi) that satisfies all applicable requirements of
the Borrower's Credit Policy or if an ACFC Receivable, the ACFC Credit Policy;
and (xxii) that is freely assignable and arose under a Contract which is also
freely assignable. Notwithstanding the foregoing, (i) 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 and (ii) the maximum
aggregate amount of Practice Receivables which may be treated as Eligible
Accounts Receivable is $20,000,000.

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.

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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.

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 Business 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. Loans bearing interest calculated by reference to
the Eurodollar Rate.

EVENT OF DEFAULT. See Section 12.

EVENT OF TERMINATION. Any event or condition identified as an Event of
Termination" in Section 7.01 of the Purchase Agreement.

<PAGE>
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FINANCE AGREEMENT. Each finance agreement which evidences any Accounts
Receivable.

FNBB. The First National Bank of Boston, a national banking association,
in its individual capacity.

FUNDING I. 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 I 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.

FUNDING SUBSIDIARIES. Together, Funding I and Bravo.

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.

GUARANTY. The Guaranty in the form of EXHIBIT G attached hereto dated as
of June 23, 1994 made by ACFC in favor of the Banks and the Agent pursuant to
which

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ACFC guaranties to the Banks and the Agent the payment and performance of the
Obligations and otherwise in form and substance satisfactory to the Banks and
the Agent.

HAZARDOUS SUBSTANCES. See Section 6.18(b).

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.

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:

(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

<PAGE>
- 12 -

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 Maturity Date shall end on the 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 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.

<PAGE>

- 13 -

LETTER OF CREDIT. See Section 3A.1.

LETTER OF CREDIT APPLICATION. See Section 3A.1.1.

LETTER OF CREDIT FEE. See Section 3A.6.

LETTER OF CREDIT PARTICIPATION. See Section 3A.1.4.

LOAN DOCUMENTS. This Credit Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit and the Security Documents.

LOAN REQUEST. See Section 2.6.

LOANS. Loans made or to be made by the Banks to the Borrower pursuant to
Section 2.

MAJORITY BANKS. As of any date, the Banks holding at least sixty-six and
two-thirds percent (66-2/3%) 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 sixty-six and two-thirds percent (66-2/3%) of
the Total Commitment.

MATURITY DATE. December 11, 1997.

MAXIMUM DRAWING AMOUNT. The maximum aggregate amount from time to time
that the beneficiaries may draw under outstanding Letters of Credit, as such
aggregate amount may be reduced from time to time pursuant to the terms of the
Letters of Credit.

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 INVESTMENT IN LEASES AND NOTES. (i) Gross Customer Receivables, MINUS
(ii) the sum of (A) Unearned Income PLUS (B) allowances for losses PLUS (C)
security deposits, PLUS (iii) deferred origination costs.

NOTES. See Section 2.4.

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
or incurred under this Credit Agreement or any of the other Loan Documents or in
respect of any of the Loans made or Reimbursement Obligations incurred or any
of the Notes, Letter of Credit Applications, Letters of Credit or other
instruments at any time evidencing any thereof.

<PAGE>
- 14 -

OBLIGOR. Each Person obligated to make payments under a Contract.

OUTSTANDING. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.

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.

PURCHASE AGREEMENT. The Purchase and Contribution Agreement dated as of
January 31, 1995 by and between Bravo and the Borrower, as amended by Amendment
No. 1 dated as of December 18, 1995 and Amendment No. 2 dated as of October 18,
1996.

PRACTICE RECEIVABLES. Obligations of any kind or nature to the Borrower
incurred by Customers in connection with the acquisition of a medical practice
or in connection with the re-financing of an existing practice.

PRIOR LOAN AGREEMENT. The Amended and Restated Revolving Credit Agreement
dated as of May 15, 1995 by and among the Borrower, FNBB, and the other banks
named therein (as heretofore amended and in effect prior to the date hereof).

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.

<PAGE>
- 15 -

REIMBURSEMENT OBLIGATION. The Borrower's obligation to reimburse the Agent
and the Banks on account of any drawing under any Letter of Credit as provided
in Section 3A.2.

REISSUED CUSTOMER RECEIVABLES. Customer Receivables that are issued by the
Borrower 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 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.

RESERVE AMOUNT. $1,000,000.

RESERVES. With respect to any fiscal quarter, the ending allowance for
doubtful accounts (excluding the Funding Subsidiaries) 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
the Funding Subsidiaries and Credident) as determined in accordance with
generally accepted accounting principles.

SALE AGREEMENTS. Collectively, (i) the dental practice receivables-backed
credit agreement dated as of April 13, 1995 by and between the Borrower and SIS;
(ii) the sale agreement dated as of November 16, 1995 by and between the
Borrower and SIS; (iii) the sale agreement dated as of March 29, 1996 by and
between the Borrower and SIS, (iv) the sale agreement dated as of June 26, 1996
by and between the Borrower and SIS; (v) the sale agreement dated as of
September 30, 1996 by and between the Borrower and First Essex Bank, FSB; (vi)
the sale agreement dated as of September 26, 1996 by and between the Borrower
and Cambridge Savings Bank; (vii) the sale agreement by and between the Borrower
and Century Bank and Trust Company dated June 13, 1996 and (viii) any other
similar sale or credit agreements entered into from time to time by and between
the Borrower and a financial institution PROVIDED THAT (A) no Event of Default
has occurred and is continuing at

<PAGE>

- 16 -

the time the Borrower enters into any such sale or credit agreement or would
result therefrom; (B) such agreement is substantially in the form of one of the
Sale Agreements enumerated in subsections (i) through (viii) of this definition
and (C) such agreements are otherwise in form and substance approved by the
Agent in writing.

SECURITY AGREEMENTS. The (i) Security Agreement dated as of June 23, 1994
between the Borrower and the Agent and (ii) the Security Agreement dated June
23, 1994 between ACFC and the Agent, each in the form of EXHIBIT E hereto
attached hereto and otherwise 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.

SIS. The Springfield Institution for Savings.

STOCK PLEDGE AGREEMENT. The Stock Pledge Agreement dated June 23, 1994
between the Borrower and the Agent and in form and substance satisfactory to the
Banks and the Agent.

STOCK PURCHASE AGREEMENT. That certain Stock Purchase Agreement dated as
of November 1, 1994 by and among the Borrower and other parties thereto and the
Chemical Bank, as 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.

TRANSFERRED ASSETS. The accounts, chattel paper, instruments, and other
assets related thereto, comprised in the Collateral which are sold or otherwise
transferred to Bravo pursuant to the Purchase Agreement.

TYPE. As to any Loan, its nature as a Base Rate Loan or a Eurodollar Rate
Loan.

<PAGE>
- 17 -

UCC. The Uniform Commercial Code as enacted and in effect from time to
time in the Commonwealth of Massachusetts.

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 generally accepted accounting practices.

UNIFORM CUSTOMS. With respect to any Letter of Credit, the Uniform Customs
and Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, or any successor version thereto adopted by the
Agent in the ordinary course of its business as a letter of credit issuer and in
effect at the time of issuance of such Letter of Credit.

UNPAID REIMBURSEMENT OBLIGATION. Any Reimbursement Obligation for which
the Borrower does not reimburse the Agent and the Banks on the date specified
in, and in accordance with, Section 3A.2.

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.

WIND-DOWN EVENT. Any event or condition identified as a "Wind-Down Event"
in Section 7.01 of the Bravo Credit Agreement.

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.

(d) A reference to any Person includes its permitted successors and
permitted assigns.

<PAGE>
- 18 -

(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.

(j) Each reference in the Credit Agreement to the exclusion "(other
than Credident)" or "(other than the Funding Subsidiaries or Credident)"
shall be deemed to cover, without limitation, any foreign currency
translation adjustment related to Credident or to the Borrower's investment
in Credident, with the result that such adjustments not be reflected in the
Borrower's financial reporting for purposes of the Credit Agreement.

2. THE 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 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 MINUS such Bank's Commitment Percentage of the sum of the Maximum
Drawing Amount and all Unpaid Reimbursement Obligations, PROVIDED that the sum
of the outstanding amount of the Loans (after giving effect to all amounts
requested) PLUS the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations shall not at any time exceed the lesser of (i) the Total Commitment
and (ii) the Borrowing Base. The Loans shall be made PRO RATA in accordance
with each Bank's Commitment Percentage. Each request for a Loan hereunder
shall constitute a representation and warranty by the Borrower that the
conditions set forth in Section 10 and Section 11, in the case of the initial
Loans to be made on the Closing Date, and Section 11, in the case of all other
Loans, have been satisfied on the date of such request.

<PAGE>
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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 Maturity Date by which the Total Commitment
MINUS the sum of the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations exceeds the outstanding amount of 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 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 NOTES. The Loans shall be evidenced by separate promissory notes
of the Borrower in substantially the form of EXHIBIT B hereto (each a "Note" and
collectively, the "Notes"), dated as of the Closing Date and completed with
appropriate insertions. One 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 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 Loan or at the time of
receipt of any payment of principal on such Bank's Note, an appropriate notation
on such Bank's Note Record reflecting the making of such Loan or (as the case
may be) the receipt of such payment. The outstanding amount of the Loans set
forth on such Bank's 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 Note Record shall not
limit or otherwise affect the obligations of the Borrower hereunder or under any
Note to make payments of principal of or interest on any Note when due.

2.5. INTEREST ON 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)

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with respect to any Base Rate Loan, the Base Rate in effect from time to
time PLUS the Applicable Base Rate Margin (as set forth in Section 2.5(b)),
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 (as set forth in Section 2.5(b) (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 notice of
the Applicable Margin to the Borrower and the Banks five (5) Business Days
after the delivery to the Agent of the required quarterly financial
statements and compliance certificate pursuant to Sections 7.4(b) and (c)
which 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 Calculation Date, with such
determination of the Applicable Margin to be made in accordance with the
following table:

<PAGE>
- 21 -

APPLICABLE BASE APPLICABLE
RATE MARGIN EURODOLLAR
INTEREST RATIO (PER ANNUM) RATE MARGIN (PER ANNUM)
-------------- ----------- -----------------------
<S> <C> <C>
greater than or equal 0% 1.25%
to 1.30:1.00

greater than or equal 0% 1.50%
to 1.20:1.00 and less
than 1.30:1.00

Less than 1.20:1.00 0% 1.75%
</TABLE>

(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 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

<PAGE>
- 22 -

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 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 Loan requested hereunder (a
"Loan Request") no less than (i) 12:00 noon (Boston time) 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 Loan requested, (B) the
proposed Drawdown Date of such Loan, (C) the Interest Period for such Loan and
(D) the Type of such 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 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 LOAN. The Borrower may elect
from time to time to convert any outstanding Loan to a Loan of another
Type, PROVIDED that (i) with respect to any such conversion of a 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 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 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 Loans to its
Domestic Lending Office or its Eurodollar Lending Office, as the case may
be. All or any part of outstanding 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 Loan to a Eurodollar
Rate Loan shall be irrevocable by the Borrower.

2.7.2. CONTINUATION OF TYPE OF LOAN. Any 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

<PAGE>
- 23 -

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 LOANS.

2.8.1. FUNDING PROCEDURES. Not later than 2:00 p.m. (Boston time) on
the proposed Drawdown Date of any Loans, each of the Banks will make
available to the Agent, at its Head Office, in immediately available funds,
the amount of such Bank's Commitment Percentage of the amount of the
requested 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 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 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 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 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

<PAGE>
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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 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 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 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 annum applicable to the Loans made on
such Drawdown Date.

2.9. CHANGE IN BORROWING BASE. The Borrowing Base shall be determined
weekly (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 LOANS.

3.1. MATURITY. The Borrower promises to pay on the Maturity Date, and
there shall become absolutely due and payable on the Maturity Date, all of the
Loans outstanding on such date, together with any and all accrued and unpaid
interest thereon.

3.2. MANDATORY REPAYMENTS OF LOANS. If at any time the sum of the
outstanding amount of the Loans, the Maximum Drawing Amount and all Unpaid
Reimbursement Obligations 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
the respective accounts of the Banks for application: first, to any Unpaid
Reimbursement Obligations; second, to the Loans; and third, to provide to the
Agent cash collateral for Reimbursement Obligations as contemplated by Section
3A.2(b) and (c). Each payment of any Unpaid Reimbursement Obligations or
prepayment of the Loans shall be allocated among the Banks, in proportion, as
nearly as practicable, to the Reimbursement Obligation owing to each such Bank
or (as the case may be) the respective unpaid principal amount of each Bank's
Note, with adjustments to the extent practicable to equalize any prior payments
or repayments not exactly in proportion. In addition, collections of Accounts
Receivable shall be applied to the Loans pursuant to cash management
arrangements satisfactory to the Agent and the Banks.

<PAGE>
- 25 -

3.3 OPTIONAL REPAYMENTS OF LOANS. The Borrower shall have the right, at
its election, to repay the outstanding amount of the 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 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
Note, with adjustments to the extent practicable to equalize any prior
repayments not exactly in proportion.

3A. LETTERS OF CREDIT.

3A.1. LETTER OF CREDIT COMMITMENTS.

3A.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the
terms and conditions hereof and the execution and delivery by the Borrower
of a letter of credit application on the Agent's customary form (a "Letter
of Credit Application"), the Agent on behalf of the Banks and in reliance
upon the agreement of the Banks set forth in Section 3A.1.4 and upon the
representations and warranties of the Borrower contained herein, agrees, in
its individual capacity, to issue, extend and renew for the account of the
Borrower one or more letters of credit (individually, a "Letter of
Credit"), in such form as may be requested by the Borrower and agreed to by
the Agent; PROVIDED, HOWEVER, that, after giving effect to such request,
(a) the sum of the aggregate Maximum Drawing Amount and all Unpaid
Reimbursement Obligations shall not exceed Five Hundred Thousand Dollars
($500,000) at any one time and (b) the sum of (i) the Maximum Drawing
Amount on all Letters of Credit, (ii) all Unpaid Reimbursement Obligations,
and (iii) the amount of all Loans outstanding shall not exceed the lesser
of (A) the Total Commitment and (B) the Borrowing Base.

3A.1.2. LETTER OF CREDIT APPLICATIONS. Each Letter of Credit
Application shall be completed to the satisfaction of the Agent. In the
event that any provision of any Letter of Credit Application shall be
inconsistent with any provision of this Credit Agreement, then the
provisions of this Agreement shall, to the extent of any such
inconsistency, govern.

<PAGE>
- 26 -

3A.1.3. TERMS OF LETTERS OF CREDIT. Each Letter of Credit issued,
extended or renewed hereunder shall, among other things, (i) provide for
the payment of sight drafts for honor thereunder when presented in
accordance with the terms thereof and when accompanied by the documents
described therein and (ii) have an expiry date no later than the date which
is fourteen (14) Business Days prior to the Maturity Date. Each Letter of
Credit so issued, extended or renewed shall be subject to the Uniform
Customs.

3A.1.4. REIMBURSEMENT OBLIGATIONS OF BANKS. Each Bank severally
agrees that it shall be absolutely liable, without regard to the occurrence
of any Default or Event of Default or any other condition precedent
whatsoever, to the extent of such Bank's Commitment Percentage, to
reimburse the Agent on demand for the amount of each draft paid by the
Agent under each Letter of Credit to the extent that such amount is not
reimbursed by the Borrower pursuant to Section 3A.2 (such agreement for a
Bank being called herein the "Letter of Credit Participation" of such
Bank).

3A.1.5. PARTICIPATIONS OF BANKS. Each such payment made by a Bank
shall be treated as the purchase by such Bank of a participating interest
in the Borrower's Reimbursement Obligation under Section 3A.2 in an amount
equal to such payment. Each Bank shall share in accordance with its
participating interest in any interest which accrues pursuant to Section
3A.2.

3A.2. REIMBURSEMENT OBLIGATION OF THE BORROWER. In order to induce the
Agent to issue, extend and renew each Letter of Credit and the Banks to
participate therein, the Borrower hereby agrees to reimburse or pay to the
Agent, for the account of the Agent or (as the case may be) the Banks, with
respect to each Letter of Credit issued, extended or renewed by the Agent
hereunder,

(a) except as otherwise expressly provided in Section 3A.2(b) and
(c), on each date that any draft presented under such Letter of Credit is
honored by the Agent, or the Agent otherwise makes a payment under or
pursuant to such Letter of Credit, (i) the amount paid by the Agent under
or pursuant to such Letter of Credit, and (ii) the amount of any customary
taxes, fees, charges or other reasonable costs and expenses whatsoever
incurred by the Agent or any Bank in connection with any payment made by
the Agent or any Bank under, or pursuant to, such Letter of Credit,

(b) upon the reduction (but not termination) of the Total
Commitment to an amount less than the Maximum Drawing Amount, an amount
equal to such difference, which amount shall be held by the Agent for the
benefit of the Banks and the Agent as cash collateral for all Reimbursement
Obligations, and

(c) upon the termination of the Total Commitment or the
acceleration of the Reimbursement Obligations with respect to all Letters
of

<PAGE>
- 27 -

Credit in accordance with Section 12, an amount equal to the then Maximum
Drawing Amount of all Letters of Credit, which amount shall be held by the
Agent for the benefit of the Banks and the Agent as cash collateral for all
Reimbursement Obligations.

Each such payment shall be made to the Agent at the Agent's Head Office in
immediately available funds. Interest on any and all amounts remaining unpaid
by the Borrower under this Section 3A.2 at any time from the date such amounts
become due and payable (whether as stated in this Section 3A.2, by acceleration
or otherwise) until payment in full (whether before or after judgment) shall be
payable to the Agent on demand at the rate specified in Section 4.11 for overdue
principal of the Loans.

3A.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or other
demand for payment shall be made under any Letter of Credit, the Agent shall
notify the Borrower of the date and amount of the draft presented or demand for
payment and of the date and time when it expects to pay such draft or honor such
demand for payment. If the Borrower fails to reimburse the Agent as provided in
Section 3A.2 on or before the date that such draft is paid or other payment is
made by the Agent, the Agent may at any time thereafter notify the Banks of the
amount of any such Unpaid Reimbursement Obligation. No later than 3:00 p.m.
(Boston time) on the Business Day next following the receipt of such notice,
each Bank shall make available to the Agent, at its Head Office, in immediately
available funds, such Bank's Commitment Percentage of such Unpaid Reimbursement
Obligation, together with 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 equal to such
Bank's Commitment Percentage of such Unpaid Reimbursement Obligation, TIMES
(iii) a fraction, the numerator of which is the number of days that elapse from
and including the date the Agent paid the draft presented for honor or otherwise
made payment up to but excluding the date on which such Bank's Commitment
Percentage of such Unpaid Reimbursement Obligation shall become immediately
available to the Agent, and the denominator of which is 360. The responsibility
of the Agent to the Borrower and the Banks shall be only to determine that the
documents (including each draft) delivered under each Letter of Credit in
connection with such presentment shall be in conformity in all material respects
with such Letter of Credit.

3A.4. OBLIGATIONS ABSOLUTE. The Borrower's obligations under this Section
3A shall be absolute and unconditional under any and all circumstances and
irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which the Borrower may have or have had against the Agent, any Bank or any
beneficiary of a Letter of Credit. The Borrower further agrees with the Agent
and the Banks that the Agent and the Banks shall not be responsible for, and
the Borrower's Reimbursement Obligations under Section 3A.2 shall not be
affected by, among other things, the validity or genuineness of documents or of
any endorsements thereon, even if such documents

<PAGE>
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should in fact prove to be in any or all respects invalid, fraudulent or forged,
or any dispute between or among the Borrower, the beneficiary of any Letter of
Credit or any financing institution or other party to which any Letter of Credit
may be transferred or any claims or defenses whatsoever of the Borrower against
the beneficiary of any Letter of Credit or any such transferee. The Agent and
the Banks shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit. The Borrower agrees that
any action taken or omitted by the Agent or any Bank under or in connection with
each Letter of Credit and the related drafts and documents, if done in good
faith, shall be binding upon the Borrower and shall not result in any liability
on the part of the Agent or any Bank to the Borrower.

3A.5. RELIANCE BY ISSUER. To the extent not inconsistent with Section
3A.4, the Agent shall be entitled to rely, and shall be fully protected in
relying upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons
and upon advice and statements of legal counsel, independent accountants and
other experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action requested by the Majority Banks unless it
shall first have received such advice or concurrence of the Majority Banks as it
reasonably deems appropriate or it shall first be indemnified to its reasonable
satisfaction by the Banks against any and all liability and expense which may be
incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement in accordance with a request of the Majority Banks,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon the Banks and all future holders of the Notes or of a Letter of
Credit Participation.

3A.6. LETTER OF CREDIT FEE. The Borrower shall, on the date of issuance
or any extension or renewal of any Letter of Credit and at such other time or
times as such charges are customarily made by the Agent, pay a fee (in each
case, a "Letter of Credit Fee") to the Agent in respect of each Letter of Credit
equal to the Applicable Rate (as defined below) per annum of the face amount of
such Letter of Credit, PLUS the Agent's customary issuance fee. For the
purposes of this Section 3A.6, "Applicable Rate" shall mean the percentage rate
per annum then in effect that the Borrower would pay with respect to Eurodollar
Rate Loans as the applicable margin over the Eurodollar Rate as set forth in
Section 2.5 of this Credit Agreement.

4. CERTAIN GENERAL PROVISIONS.

4.1. AGENT'S FEE. The Borrower shall pay to the Agent semi-annually in
advance, for the Agent's own account, an Agent's fee in the amount and at the
times specified in the letter agreement, dated the Closing Date, between the
Borrower and the Agent.

<PAGE>
- 29 -

4.2. FUNDS FOR PAYMENTS.

4.2.1. PAYMENTS TO AGENT. All payments of principal, interest,
Reimbursement Obligations, Letter of Credit Fees, 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.

4.2.2. 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 respect to payments made
by the Borrower hereunder or under such other Loan Document.

4.3. COMPUTATIONS. All computations of interest on the Loans and of
commitment fees and Letter of Credit 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 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.

4.4. 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

<PAGE>
- 30 -

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.

4.5. ILLEGALITY. Notwithstanding any other provisions herein, if any
present or future law, regulation, treaty or directive or change 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 Loans then outstanding as Eurodollar Rate Loans, if any, shall be
converted 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 4.5, 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.

4.6. 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, any Letters of Credit, such
Bank's Commitment or the Loans or deposits obtained to fund Loans or
Letters of Credit (other than taxes based upon or measured by the net
profit or income 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

<PAGE>
- 31 -

interest on the 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, assessment, liquidity, capital adequacy, or reserve or
other similar requirement (whether or not having the force of law) against
assets held by, or deposits in or for the account of, or loans by, or
letters of credit issued 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 Letters of Credit, the Loans, such Bank's Commitment, or any
class of loans, letters of credit or commitments of which any of the Loans,
the Letters of Credit, or such Bank's Commitment forms a part, and the
result of any of the foregoing is

(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 any Letter of Credit, or

(ii) to reduce the amount of principal, interest,
Reimbursement Obligation or other amount payable to such Bank or the
Agent hereunder on account of such Bank's Commitment, any Letter of
Credit or any of the Loans, or

(iii) to require such Bank or the Agent to make any payment
or to forego any interest or Reimbursement Obligation or other sum
payable hereunder, the amount of which payment or foregone interest
or Reimbursement Obligation 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 written 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 the Bank or the Agent for such additional cost, reduction,
payment or foregone interest, Reimbursement Obligation or other sum.

4.7. 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

<PAGE>
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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 or 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 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 4.8 hereof. Each Bank shall allocate
such cost increases among its customers in good faith and on an equitable basis.

4.8. CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to Section 4.6 or 4.7 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.

4.9. 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.

4.10. 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.
<PAGE>
- 33 -

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
(other than Transferred Assets and the assets which have been transferred
pursuant to, or are subject to a security interest under, any Sale Agreements
existing as of the Closing Date) whether now owned or hereafter acquired, and a
pledge of and perfected first priority lien on all of the issued and outstanding
shares of ACFC pursuant to the terms of the Security Documents to which the
Borrower is a party.

5.2. GUARANTY AND SECURITY OF ACFC.

The Obligations shall also be guaranteed pursuant to the terms of the
Guaranty. The obligations of ACFC 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 ACFC, whether
now owned or hereafter acquired, pursuant to the terms of the Security Documents
to which ACFC is a party.

6. REPRESENTATIONS AND WARRANTIES.

The Borrower and ACFC each 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 (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

<PAGE>
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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 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 the Borrower not disclosed
in said balance sheet and the related notes thereto.

<PAGE>

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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 1996
and 1997 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, 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 taken pursuant 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.

<PAGE>
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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.

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.

<PAGE>
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6.14. PERFECTION OF SECURITY INTEREST. All filings, assignments, pledges
an 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 ACFC 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 personal property 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 officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner.

6.16. 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

<PAGE>
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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 which is to be used for the
purpose of purchasing or carrying any "margin security" or "margin stock" will
be secured directly or indirectly by "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.

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

<PAGE>
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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;

(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. The Funding Subsidiaries, Credident and ACFC are
the only Subsidiaries of the Borrower. Except as set forth on SCHEDULE 6.19
hereto, neither the Borrower nor any Subsidiary of the Borrower is engaged in
any joint

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venture or partnership with any other person. Each of the Funding Subsidiaries,
Credident and ACFC have no Subsidiaries.

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;
PROVIDED, HOWEVER, that the Borrower, ACFC and the Funding Subsidiaries may
maintain bank accounts not listed on SCHEDULE 6.20 so long as the aggregate
amount contained in such accounts does not at any time exceed $100,000.

6.21. ELIGIBLE ACCOUNTS RECEIVABLE, EQUIPMENT AND CONTRACTS. Each Account
Receivable included in Eligible Accounts Receivable meets the following
criteria:

(a) Either the Borrower or ACFC is the sole legal owner of the
Account 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
or ACFC and their respective 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 ACFC, and to the best of their respective
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 Borrower or ACFC 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

<PAGE>

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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 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 or ACFC except for
reissues that are consistent with Borrower's past practices, no Contract
has been satisfied, canceled 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 or ACFC from the
terms of the related Contract.

(h) Each Contract was originated or acquired in (1) in the
Borrower's ordinary course of business, in accordance with the Borrower's
Credit Policy or (2) in ACFC's ordinary course of business, in accordance
with ACFC'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 ACFC or an Affiliate of the Borrower or ACFC.

(j) Each Contract requires the Obligor to assume all risk of loss
or malfunction of the related Equipment, if any. Each Contract requires
the Obligor to pay all sales, use, property, excise and other similar taxes
imposed on or with respect to the related Equipment, if any. 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 as set forth in such Contract. No
Contract provides for the substitution, exchange or addition of any
Equipment subject thereto, if any, which would result in any reduction of
the amount of payments or change the timing of payments due under such
Contract.

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(k) There are no proceedings or investigations pending against the
Borrower or ACFC or, to the best of their respective 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) Each of the Borrower and ACFC 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 ACFC, as applicable,
has a first priority security interest in the Equipment that is the subject
of the Contract.

(n) Each Contract requires the related Obligor to maintain the
related Equipment, if any, in good and workable order. Each Contract
requires the related Obligor to obtain and maintain physical damage
insurance on the Equipment subject thereto, if any, 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 Borrower's or
ACFC's physical damage insurance on the Equipment, if any (other than
insurance of the Borrower or ACFC maintained under Borrower's or ACFC's
lessee insurance program, as the case may be, pursuant to equipment leases
with its lessees). To the best of the Borrower's and ACFC's knowledge, the
Equipment, if any, was properly delivered to each 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 and ACFC's knowledge, the related Equipment, if any was accepted
by the Obligor after reasonable opportunity to inspect and test the same
and no Obligor has informed the Borrower or ACFC of any defects therein.

(o) No Contract constitutes a "consumer lease" under the UCC.

(p) The Borrower and ACFC have marked their computer records, to
reflect the interest granted to the Agent hereunder.

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(q) Each Contract permits the rights with respect to such
Contract, and all collateral related thereto, to be assigned by either the
Borrower or ACFC, as applicable, without the consent of any Person.

(r) The Borrower or ACFC, as applicable, shall have taken actions
with respect to the collateral in respect of each Contract related to any
Account Receivable which has an outstanding balance equal to or greater
than $5,000 as is necessary to insure that the Borrower or ACFC, as
applicable, maintains, as against the Obligor thereunder a perfected
security interest in any collateral of the Obligor relating thereto free
and clear of adverse claims, or in the case of any Lease, to ensure that
the Borrower or ACFC, as the case may be, would maintain such a perfected
security interest in the event that a court or other Person were to
determine that such Lease purported to transfer to the Obligor an ownership
(rather than a leasehold) interest in the Equipment subject thereto.

(s) The Borrower or ACFC, as applicable, shall have taken actions
with respect to the Accounts Receivable to ensure that the Agent, for the
benefit of itself and the Banks, has a priority perfected security interest
in such Accounts Receivable free and clear of any adverse claims,
including, without limitation, delivery of any applicable Contract Files.

6.22 VEHICLE LEASES. SCHEDULE 6.22 sets forth all Vehicle Leases.

7. AFFIRMATIVE COVENANTS OF THE BORROWER.

The Borrower and ACFC each 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, the
Letter of Credit 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 and ACFC) 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. ACFC will maintain its
chief executive office in West Hartford, Connecticut, or at such other place in
the United States of America as ACFC shall designate upon written notice to the
Agent, where notices, presentations and demands to or upon ACFC in respect of
the Loan Documents may be given or made.

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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 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 Deloitte &
Touche or by other independent certified public accountants satisfactory to
the Agent;

(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 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 D 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;

<PAGE>
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(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 three Business Days (3) after the end of each week, a
Borrowing Base Report setting forth the Borrowing Base as at the end of
such week;

(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) within 5 days of receipt of the same by the Borrower copies of
(i) the monthly status reports under the Funding Indenture and (ii) monthly
settlement reports under the Bravo Facility Documents and from time to time
if the Agent or any Bank so requests copies of (i) other reports delivered
under the Funding Indenture or the Bravo Facility Documents and (ii) other
financial data and information with respect to the Borrower or any of its
Subsidiaries;

(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 if such Schedule has changed since it was
last delivered to the Banks;

(j) within fifteen (15) days after the end of each calendar month
or at such earlier time as the Agent may request, the monthly management
report for ACFC;

(k) as soon as practicable, but in any event not later than one
hundred (100) days after the end of each fiscal year of ACFC, copies of any
reports prepared by management with respect to the financial conditions and
results of operation of ACFC;

(l) as soon as practicable, but in any event not later than forty-
eight (48) days after the end of each of the first three fiscal quarters of
the fiscal year of ACFC, copies of any reports prepared by management with
respect to the financial condition and results of operation of ACFC; and

(m) from time to time, such other information regarding the
financial condition and results of operation of the Borrower or ACFC as any
of the Banks or the Agent shall reasonably request.

7.5. NOTICES.
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7.5.1 DEFAULTS. The Borrower will promptly notify the Agent and
each of the Banks in writing of the occurrence of any 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 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

<PAGE>
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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.

7.7 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 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.

<PAGE>
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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
Customers and the billing practices 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
during any fiscal year of the Borrower 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

<PAGE>
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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 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 the Funding Subsidiaries 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 depository account on SCHEDULE 6.20.

7.14. CREDIT POLICIES. The Borrower will, and will cause ACFC to furnish
to the Agent a copy of the most recent Credit Policy of the Borrower and of ACFC
and to promptly furnish to the Agent any amendments to such Credit Policies.
The Borrower and ACFC shall comply in all material respects with the Credit
Policy and the ACFC Credit Policy, as applicable, in regard to each Account
Receivable and any related Contracts.

7.15. PERFECTED SECURITY INTEREST UNDER CONTRACTS. The Borrower or ACFC,
as applicable, shall take such actions with respect to the collateral in respect

<PAGE>
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of each Contract related to any Account Receivable which has an outstanding
balance equal to or greater than $5,000 as is necessary to insure that the
Borrower or ACFC, as applicable, maintains against the Obligor thereunder a
perfected security interest in any collateral of the Obligor relating thereto
free and clear of adverse claims, or in the case of any Lease, to ensure that
the Borrower or ACFC, as the case may be, would maintain such a perfected
security interest in the event that a court or other Person were to determine
that such Lease purported to transfer to the Obligor an ownership (rather than a
leasehold) interest in the Equipment subject thereto.

7.16. PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND CONTRACTS. The
Borrower and ACFC, as applicable, shall at its own expense timely and fully
perform and comply in all material respects, with all material provisions,
covenants and other promises required to be observed by it under the Contacts.

7.17. 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 and ACFC each covenants and agrees that, so long as any Loan,
Unpaid Reimbursement Obligation, Letter of Credit or Note is outstanding or any
Bank has any obligation to make any Loans or the Agent has any obligations to
issue, extend or renew any Letters of Credit hereunder:

8.1. RESTRICTIONS ON INDEBTEDNESS. The Borrower will not, and will not
permit any of its Subsidiaries to, create, incur, assume, guarantee 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

<PAGE>
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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;

(j) Indebtedness 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 the Funding Subsidiaries and Credident) 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;

(k) [Intentionally Omitted]

(l) Indebtedness incurred by Bravo pursuant to the Bravo Credit
Agreement; and

(m) Indebtedness incurred by the Borrower pursuant to the Sale
Agreements, PROVIDED THAT no Event of Default has occurred and is
continuing at the time such Indebtedness is incurred and PROVIDED FURTHER
that the sum of (i) aggregate outstanding principal amount of such
Indebtedness of the Borrower under such Sale Agreements and (ii) other
proceeds received by the Borrower under such Sale Agreements and not
characterized as Indebtedness shall not exceed $40,000,000 at any time.

<PAGE>
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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 the Funding Subsidiaries) 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;

(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

<PAGE>
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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(g) 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;

(i) liens in favor of the Agent for the benefit of the Banks and
the Agent under the Loan Documents;

(j) liens on "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;

(k) [Intentionally Omitted]

(l) liens granted by Bravo in connection with the Bravo Facility
Documents; and

(m) liens granted by the Borrower to financial institutions on
assets which are sold or otherwise transferred pursuant to the Sale
Agreements.

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;

(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;
<PAGE>

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(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 (i) such entities remain Subsidiaries of the Borrower,
(ii) the aggregate amount of incremental Investments made by the Borrower
and its subsidiaries in ACFC does not exceed $12,500,000 during fiscal year
1996 and $15,000,000 during fiscal year 1997 and (iii) the aggregate amount
of incremental investments by the Borrower and its Subsidiaries in
Credident does not exceed $100,000 during any fiscal year.

(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;

(i) Investments not otherwise permitted by this Section 8.3,
PROVIDED, THAT the aggregate amount of such Investments shall not exceed
$1,000,000; and

(j) Investments made pursuant to the Stock Purchase Agreement.

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.

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

<PAGE>
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of business, consistent with industry practices, PROVIDED, HOWEVER, that
such disposition 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. Notwithstanding the foregoing
provisions of this Section 8.5.2 and so long as no Event of Default has
occurred and is continuing, the Borrower and its Subsidiaries may dispose
of assets pursuant to the Purchase Agreement and the Sale Agreements;
PROVIDED that the sum of (i) aggregate principal amount of Indebtedness
outstanding under the Sale Agreements plus (ii) all other proceeds received
by the Borrower under such Sale Agreements and not characterized as
Indebtedness shall not in any event exceed $40,000,000.

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 the Funding Subsidiaries and Credident) to, amend,
supplement or otherwise modify the terms of any Subordinated Debt or prepay or
repurchase any Subordinated Debt or Indebtedness outstanding under the Funding
Indenture, the Bravo Credit Agreement or the Sale Agreements.

8.9. EMPLOYEE BENEFIT PLANS. Neither the Borrower nor any ERISA Affiliate
will:

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(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 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 SUBSIDIARIES 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 the Funding Subsidiaries.

8.12. CHANGE IN CREDIT POLICY. The Borrower shall not make any change in
the character of its business or in its Credit Policy, which change would, in
either case, impair the collectibility of any Contract. ACFC shall not make any
change in the character of its business or in the ACFC Credit Policy, which
change would, in either case, impair the collectibility of any Contract.

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 600%
of Consolidated Tangible Capital Funds.

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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 (other than
up to $4,000,000 of proceeds from the re-sale by the Borrower of 949,182 shares
of the Borrower's Common Stock, $0.01 par value, purchased pursuant to the Stock
Purchase Agreement) 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) MINUS up to $5,000,000 of the total Stock Purchase Price (as defined
in the Stock Purchase Agreement) used to purchase shares of the Borrower's
Common Stock, $0.01 par value, pursuant to the Stock Purchase Agreement which
shares thereafter are to be either held by the Borrower as treasury shares or
retired.

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.

9.4. CAPITAL EXPENDITURES. The Borrower will not make, or permit any
Subsidiary of the Borrower to make, Capital Expenditures during the period from
January 1, 1997 to December 31, 1997 that exceed, in the aggregate, $700,000.

9.5. REISSUED CUSTOMER RECEIVABLES TO GROSS CUSTOMER RECEIVABLES. The
Borrower will not permit Reissued Customer Receivables (originated and
calculated after June 23, 1994) to exceed 10% of Gross Customer Receivables, at
any time.

9.6. CONTRACTUALLY DELINQUENT CUSTOMER RECEIVABLES TO GROSS CUSTOMER
RECEIVABLES RATIO. The Borrower will not permit the sum of Contractually
Delinquent Customer Receivables to exceed 9% of Gross Customer Receivables, at
any time.

9.7. RESERVES TO CONTRACTUALLY DELINQUENT CUSTOMER RECEIVABLES. The
Borrower will not, at the end of any fiscal quarter, permit Reserves to be less
than 50% of the sum of Contractually Delinquent Customer Receivables.

9.8. ALLOWANCE FOR DOUBTFUL ACCOUNTS. The Borrower will not permit
Borrower's allowance for doubtful accounts (as determined in accordance with
generally accepted accounting practices), to be less than 2% of Borrower's Net
Investment in Leases and Notes, at any time. ACFC will not permit ACFC's
allowance for doubtful accounts (as determined in accordance with generally
accepted accounting practices), to be less than 1% of ACFC's Net Investment in
Leases and Notes, at any time.

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9.9. COLLECTIONS TO BILLINGS. The Borrower will not permit, at the end of
any calendar month with respect to the preceding three month period, the average
Collections to be less than 94% of Billings.

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 June 23, 1994 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 Loans and of the Agent to
issue any initial Letters of Credit 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 ACFC, (i) a copy, certified by a duly authorized
officer of such Person to be true and complete on the Closing Date, of each of
(A) its charter or other incorporation documents as in effect on such date of
certification, and (B) its by-laws as in effect on such date, or (ii) a
certificate executed by a duly authorized officer of such Person certifying that
there have been no changes to such charter documents or by-laws since May 15,
1995 and that the copies of such documents delivered to the Banks on May 15,
1995, were, as of the date of original delivery, and are, as of the date hereof,
true and correct copies of such documents as in effect at such time.

10.3. CORPORATE ACTION. All corporate action necessary for the valid
execution, delivery and performance by the Borrower and ACFC 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 ACFC 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

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authorized: (i) to sign, in the name and on behalf of each of the Borrower of
such Subsidiary, each of the Loan 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 ACFC, a completed and fully executed
Perfection Certificate or a certificate of the Secretary or Assistant Secretary
of the Borrower and ACFC, as the case may be, certifying that the information
set forth in the Perfection Certificates delivered to the Agent on May 15, 1995
remains true and complete in all respects as of the Closing Date (other than
with respect to Schedules 6(A), 6(B), 9, thereto, copies of which changed
Schedules shall have been received by each of the Banks) 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 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 ACFC maintains depository accounts (including bank agency or lock
box agreements but excluding accounts for which availability is swept daily into
accounts maintained by the Borrower or ACFC at FNBB) concerning the Agent's
security 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

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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. OPINION 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 Hill & Barlow counsel to the Borrower and its Subsidiaries.

10.13. FUNDING REPORTS. The Bank and the Agent shall have received a copy
of each of the most recent reports delivered by Borrower, as servicer pursuant
to the Funding Indenture.

11. CONDITIONS TO ALL BORROWINGS.

The obligation of the Banks to make any Loans and of the Agent to issue,
extend or renew any Letters of Credit whether on or after the Closing Date shall
be subject to the satisfaction of each 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 or to
participate in the issuance, extension or renewal of such Letter of Credit or in
the reasonable opinion of the Agent would make it illegal for the Agent to
issue, extend or renew such Letter of Credit.

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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 Base Report
dated within one (1) day of the Drawdown Date of the requested Loan or the
issuance, extension or renewal of the requested Letter of Credit.

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, any Letter of Credit 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 7.18 and Sections 8.7 through 8.12 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;

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(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, 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 or Indebtedness under the Bravo

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Facility Documents shall accelerate the maturity of all or any part of such
debt or such debt shall be 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 I
pursuant to the terms thereof shall not constitute an acceleration by such
holders; AND PROVIDED FURTHER that (A) the early termination of the Bravo
Credit Agreement by Bravo pursuant to the terms thereof shall not
constitute an acceleration by such holders and (B) payments by Bravo
pursuant to Sections 2.05(b) and 2.05(c) of the Purchase Agreement shall
not constitute prepayment of Indebtedness under the Bravo Credit Agreement;

(k) if any of the Loan Documents shall be canceled, 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;

(n) there shall occur any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike,
lockout,

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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 or a Servicer
Event of Default under the Funding Indenture and the expiration of any cure
period available to Funding I under the Funding Indenture;

(s) the occurrence of a Event of Termination and the expiration of
any applicable cure period available to Bravo under the Purchase Agreement
or a Wind-Down Event and the expiration of any applicable cure period
available to Bravo under the Bravo Facility Documents;

(t) the occurrence of any default or any event of default under any
of the Sale Agreements; or

(u) the Borrower shall cease to own one hundred percent (100%) of
the outstanding shares of common stock of ACFC.

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

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Borrower declare all amounts owing with respect to this Credit Agreement, the
Notes, the other Loan Documents, and all Reimbursement Obligations to be, and
they shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of 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 or the Reimbursement Obligations, 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 or purchaser of any Letter of Credit
Participation 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, or otherwise with respect to the

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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 4.1 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 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 or constituting Reimbursement Obligations owed to
such Bank, such amount shall be applied ratably

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to such other Indebtedness and to the Indebtedness evidenced by all such Notes
held by such Bank or constituting Reimbursement Obligations owed to 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, or constituting
Reimbursement Obligations owed to, 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, or Reimbursement
Obligations owed to, 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, and
Reimbursement Obligations owed to, 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
it or Reimbursement Obligations owed it, 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.

14. 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. Each of
the Banks and the Agent acknowledge and agree that (i) the Agent is authorized
to release the security interest created by the Security Documents in the
Transferred Assets 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 Transferred Assets.
Each of the Banks and the Agent further acknowledge and agree that (i) the Agent
is authorized, from time to time, to release the security interest created by
the Security Documents in any assets sold or otherwise transferred by the
Borrower pursuant to the Sale Agreements 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 sold or otherwise transferred by the Borrower pursuant to the Sale
Agreements. NationsBank shall have no additional duties, rights, obligations or
liabilities under

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this Credit Agreement or the other Loan Documents by virtue of its designation
on the cover page of this Credit Agreement as agent.

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 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
collectibility 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

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shall constitute a payment to such Bank. The Agent agrees promptly to
distribute to each Bank such Bank's PRO 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 to purchase any Letter of Credit Participation 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, Unpaid Reimbursement Obligations, interest, fees or otherwise, to
the remaining nondelinquent Banks for application to, and reduction of,
their respective PRO RATA shares of all outstanding Loans and Unpaid
Reimbursement Obligations. 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 and Unpaid
Reimbursement Obligations. 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 and Unpaid Reimbursement
Obligations of the nondelinquent Banks, the Banks' respective PRO RATA
shares of all outstanding Loans and Unpaid Reimbursement Obligations have
returned to those in effect immediately prior to such delinquency and
without giving effect to the nonpayment causing such delinquency.

14.6. HOLDERS OF NOTES. The Agent may deem and treat the payee of any Note
or the purchaser of any Letter of Credit Participation as the absolute owner

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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 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

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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, and in connection with the
syndication of the Credit Agreement (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 any 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
any 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 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

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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 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, its participating interest in the risk
relating to any Letters of Credit 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 F 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

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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 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;

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(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;

(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and

(i) such assignee acknowledges that it has made arrangements with
the assigning Bank satisfactory to such assignee with respect to its PRO
RATA share of Letter of Credit Fees in respect of outstanding Letters of
Credit.

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 Banks and the Commitment
Percentage of, and principal amount of the Loans owing to and Letter of Credit
Participations purchased by 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

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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 canceled 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 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 or Letter of Credit 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 or Reimbursement Obligations. If any Bank
sells a participating interest in any of the Loans or Reimbursement Obligations
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

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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 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

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(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.

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>
- 78 -

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 (other than Defaults of Events of Default set forth in Sections
12.1(a) and (b)) 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, (i) 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 or
Letter of Credit Fees hereunder may not be changed without the written consent
of the Borrower and the written consent of each Bank directly or indirectly
affected thereby; (ii) the definition of Majority Banks may not be amended,
Collateral may not be released, the Guaranty may not be released, the Defaults
or Events of Default set forth in Sections 12.1(a) and (b) may not be waived
(either generally or in a particular instance and either retroactively or
prospectively and this Section 25 may not be amended, without the written
consent of all of the Banks; (iii) and the amount of the Agent's fee or Letter
of Credit Fees and Section 14 may not be amended without the written consent of
the Agent. No waiver shall extend to or affect any obligation not expressly
waived or impair any right consequent thereon. No course

<PAGE>
- 79 -

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.

25.1 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.

26. TRANSITIONAL ARRANGEMENTS.

26.1 PRIOR LOAN AGREEMENT SUPERSEDED. This Credit Agreement shall
supersede the Prior Loan Agreement in its entirety, except as provided in this
Section 26. On the Closing Date, the rights and obligations of the parties
under the Prior Loan Agreement and the "Notes" as defined therein shall be
subsumed within and be governed by this Credit Agreement and the Notes;
provided, however, that each of the " Loans" (as defined in the Prior Loan
Agreement) outstanding under the Prior Loan Agreement on the Closing Date shall,
for purposes of this Credit Agreement, be Loans.

2.6.2 RETURN AND CANCELLATION OF NOTES. Upon its receipt of the Notes to be
delivered hereunder on the Closing Date, each Bank will promptly return to the
Borrower, marked "Canceled", the notes of the Borrower held by such Bank
pursuant to the Prior Loan Agreement.

26.3 INTEREST AND FEES UNDER SUPERSEDED AGREEMENT. All interest and all
commitment, facility and other fees and expenses owing or accruing under or in
respect of the Prior Loan Agreement shall be calculated as of the Closing Date
(prorated in the case of any fractional periods), and shall be paid on the
Closing Date in accordance with the method specified in the Prior Loan
Agreement, as if the Prior Loan Agreement were still in effect.

2.6.4. NO CLAIMS UNDER PRIOR LOAN AGREEMENT. Each Bank wishes (and the
Borrower agrees) to eliminate any possibility that any past conditions, acts,
omissions, events, circumstances or matters would impair or otherwise adversely
affect such Bank's rights, interests, contracts, collateral security or
remedies. Therefore, the Borrower unconditionally releases, waives and forever
discharges (i) any and all liabilities, obligations, duties, promises or
indebtedness of any kind of such Bank to the Borrower regarding the execution,
delivery or performance of the Prior Loan Agreement or any of the other Loan
Documents (as defined in the prior Loan Agreement), except the obligations to be
performed by such Bank for the

<PAGE>
- 80 -

Borrower as expressly stated in this Credit Agreement and the other Loan
Documents (as defined in this Credit Agreement), and (ii) all claims, offsets,
causes of action, suits or defenses of any kind whatsoever (if any), whether
known or unknown, which the Borrower might otherwise have against such Bank or
any of its directors, offices, employees or agents, in either case (i) or (ii),
on account of any condition, act, omission, event, contract, liability,
obligation, indebtedness, claim cause of action, defense, circumstance or matter
of any kind whatsoever which existed, arose or occurred at any time prior to the
date hereof regarding the execution, delivery or performance of the Prior Loan
Agreement or any of the Loan Documents (as defined in the Prior Loan Agreement).

26.5 INTERBANK SETTLEMENTS. On the Closing Date, each of the Banks
shall pay to each of the other Banks such amounts as may be necessary so as to
result in the outstanding amount of Loans made by each Bank being equal to such
Bank's Commitment Percentage of the aggregate amount of Loans outstanding as of
the Closing Date. The Borrower and the Banks hereby agree that all amounts paid
to any Bank by any other Bank in connection with interbank settlements with
respect to Loans outstanding immediately prior to the date hereof shall be
deemed to constitute Loans under the Credit Agreement.

<PAGE>
- 81 -

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: Vice President, Finance and Chief
Financial Officer

THE FIRST NATIONAL BANK OF BOSTON, individually
and as Agent

By: /s/ Mitchell B. Feldman
------------------------------
Name: Mitchell B. Feldman
Title: Managing Director

BANK OF AMERICA ILLINOIS

By: /s/ Nelson Albrecht
------------------------------
Name: Nelson Albrecht
Title: Vice President

NATIONSBANK, N.A.

By: /s/ Roger A. Lee
------------------------------
Name: Roger A. Lee
Title: Vice President

CORESTATES BANK, N.A.

By: /s/ Verna R. Prentice
------------------------------
Name: Verna R. Prentice
Title: Vice President

<PAGE>
- 82 -

THE SUMITOMO BANK, LIMITED

By: /s/ Daniel G. Eastman
------------------------------

Name: Daniel G. Eastman
Title: Vice President & Manager

By: /s/ Alfred DeGemmis
------------------------------
Name: Alfred DeGemmis
Title: Vice President

JOINDER BY GUARANTOR. The Guarantor is hereby joined to the Credit
Agreement for the purpose of making the representations and warranties set forth
in Section 6 and being bound by the covenants set forth in Sections 7 and 8.

AMERICAN COMMERCIAL
FINANCE CORPORATION

By: /s/ John W. Everets
------------------------------
Name: John W. Everets
Title: Chairman and Chief Executive Officer

<PAGE>

SECOND AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT

SCHEDULE 1
Banks; Addresses; Commitments; Commitment Percentages
dated as of December 12, 1996

BANK'S NAME AND ADDRESS COMMITMENT PERCENTAGE
------------------------ ---------- ----------

The First National Bank of Boston $25,000,000 26.31579%
100 Federal Street
Boston, MA 02110
Attn.: Mitchell B. Feldman, Director
Phone: 617-434-5760
Fax: 617-434-0637

NationsBank, N.A. $25,000,000 26.31579%
100 South Charles Street
Fourth Floor
Baltimore, MD 21201
Attn: Roger A. Lee, Vice President
Phone: 410-547-5888
Fax: 410-576-2958

CoreStates Bank, N.A. $20,000,000 21.05263%
1339 Chestnut Street, FC-1-8-11-24
Philadelphia, PA 19107
Attn.: Verna R. Prentice, Vice President
Phone: 215-973-5866
Fax: 215-786-7704

Bank of America Illinois $15,000,000 15.78947%
231 South LaSalle Street
Chicago, IL 60697
Attn.: Nelson Albrecht, Vice President
Phone: 312-828-3166
Fax: 312-828-1997

The Sumitomo Bank, Limited $10,000,000 10.52632%
One Post Office Square, Suite 3820
Boston, MA 02109
Attn.: Alfred DeGemmis, Vice President
Phone: 617-451-3200
Fax: 617-423-4884

TOTAL $95,000,000 100%

0270104.01

<PAGE>

Exhibit 10.32
Execution Copy (10/29/96)

LEASE RECEIVABLES PURCHASE AGREEMENT

Dated as of October 18, 1996

among

HPSC BRAVO FUNDING CORP.,

as Seller

HPSC, INC.,
as Servicer

TRIPLE-A ONE FUNDING CORPORATION

and

CAPITAL MARKETS ASSURANCE CORPORATION,
as Administrative Agent and Collateral Agent

<PAGE>

TABLE OF CONTENTS

ARTICLE I DEFINITIONS
SECTION 1.01 Certain Definitions 1
SECTION 1.02 Accounting Terms 2
SECTION 1.03. Other Terms 2
SECTION 1.04. Computation of Time Periods 2

ARTICLE II AMOUNT AND TERMS OF THE PURCHASES
SECTION 2.01. Receivables Purchase Facility 2
SECTION 2.02. Making Purchases from the Seller. 3
SECTION 2.03. Reduction of Facility Limit. 5
SECTION 2.04. Settlement Procedures 6
SECTION 2.05. Payments and Computations, Etc. 8
SECTION 2.06. Compensation 8
SECTION 2.07. Dividing or Combining of Capital and Fixed
Periods 9
SECTION 2.08. Increased Costs, Capital Adequacy 9
SECTION 2.09. Taxes 10
SECTION 2.10. Fees 12
SECTION 2.11. Grant of Security Interest in Equipment
Collateral 12

ARTICLE III CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial
Receivables Purchase 13
SECTION 3.02. Conditions Precedent to Each Receivables
Purchase 15

ARTICLE IV REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the
Seller 16

ARTICLE V GENERAL COVENANTS
SECTION 5.01. Affirmative Covenants of the Seller 22
SECTION 5.02. Reporting Requirements of the Seller 28
SECTION 5.03. Negative Covenants of the Seller 30

ARTICLE VI ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Servicer 34
SECTION 6.02. Duties of the Servicer 34
SECTION 6.03. Rights of the Collateral Agent 37
SECTION 6.04. Further Action Evidencing Transfers 38
SECTION 6.05. Responsibilities of the Seller 39
SECTION 6.06. Administration of Collections by Servicer 39
SECTION 6.07. Application of Collections 39
SECTION 6.08. Servicing Fee 40
SECTION 6.09. Resignation; Successor Servicer 40

<PAGE>

SECTION 6.10. Lock-Box Accounts; Collection Account 41
SECTION 6.11. Collection Account. 41

ARTICLE VII WIND-DOWN EVENTS; REMEDIES
SECTION 7.01. Wind-Down Events 45
SECTION 7.02. Remedies 47

ARTICLE VIII INDEMNIFICATION; REPURCHASES
SECTION 8.01. Indemnities by the Seller 48

ARTICLE IX MISCELLANEOUS
SECTION 9.01. Amendments, Etc. 50
SECTION 9.02. Notices, Etc. 51
SECTION 9.03. No Waiver; Remedies 51
SECTION 9.04. Binding Effect; Assignability 51
SECTION 9.05. GOVERNING LAW; WAIVER OF JURY TRIAL 52
SECTION 9.06. Costs, Expenses and Taxes 53
SECTION 9.07. Execution in Counterparts; Severability 53
SECTION 9.08. No Bankruptcy Petition Against Triple-A 53

<PAGE>

APPENDICES

APPENDIX A DEFINITIONS LIST

LIST OF EXHIBITS

EXHIBIT A Form of Sale Notice

EXHIBIT B Form of Opinion of Counsel

EXHIBIT C Form of Officer's Certificate

EXHIBIT D List of Offices of Originator Where Records Are Kept

EXHIBIT E Form of Interest Rate Hedge Assignment

<PAGE>

LEASE RECEIVABLES PURCHASE AGREEMENT

LEASE RECEIVABLES PURCHASE AGREEMENT, dated as of October 18, 1996 (the
"TRIPLE-A PURCHASE AGREEMENT"), among HPSC BRAVO FUNDING CORP., a Delaware
corporation, as Seller (the "SELLER"), HPSC, INC., a Delaware corporation, as
Servicer (the "SERVICER"), TRIPLE-A ONE FUNDING CORPORATION, a Delaware
corporation ("TRIPLE-A") and CAPITAL MARKETS ASSURANCE CORPORATION, a New York
stock insurance company ("CapMAC"), as Collateral Agent and as Administrative
Agent (in such capacities, the "COLLATERAL AGENT" or the "ADMINISTRATIVE
AGENT").

W I T N E S S E T H:

WHEREAS, pursuant to the Purchase Agreement, the Seller has agreed to
purchase and otherwise acquire certain Transferred Assets from time to time from
HPSC, Inc., a Delaware corporation (the "ORIGINATOR") and the Originator has
agreed to act as Servicer of the Transferred Assets; and

WHEREAS, the Seller has requested that Triple-A make Receivables Purchases
from the Seller, the proceeds of which shall be used by the Seller to purchase
new Transferred Assets from the Originator in accordance with the terms of the
Purchase Agreement; and

WHEREAS, Triple-A will fund such Receivables Purchases by (i) the issuance
of Commercial Paper or (ii) if Triple-A is unable for any reason to issue
Commercial Paper, by borrowing under the Liquidity Agreement, dated as of the
date hereof, among Triple-A, the Liquidity Banks and the Liquidity Agent; and

WHEREAS, Capital Markets Assurance Corporation (the "SURETY"), the Seller
and Triple-A will enter into the Insurance and Indemnity Agreement pursuant to
which the Surety will issue the Surety Bonds; and

WHEREAS, subject to the terms and conditions set forth herein, Triple-A is
willing to make the Receivables Purchases from the Seller.

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01 CERTAIN DEFINITIONS. As used in this Triple-A Purchase
Agreement or any certificate or other document made or delivered pursuant hereto
or thereto, the capitalized terms used herein and therein shall, unless
otherwise defined herein or therein, have the meanings assigned to them in the
Definitions List attached hereto as Appendix A, the terms of which are
incorporated herein by reference (the "DEFINITIONS LIST").

<PAGE>

SECTION 1.02. ACCOUNTING TERMS. As used herein and in any certificate or
other document made or delivered pursuant hereto and thereto, accounting terms
not defined in the Definitions List and accounting terms partly defined in the
Definitions List to the extent not defined, shall have the respective meanings
given to them under GAAP.

SECTION 1.03. OTHER TERMS.

(a) All other undefined terms contained in this Triple-A Purchase
Agreement shall, unless the context indicates otherwise, have the meanings
provided for by the UCC to the extent the same are used or defined therein.

(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Triple-A Purchase Agreement shall refer to this
Triple-A Purchase Agreement as a whole and not to any particular provision
of this Triple-A Purchase Agreement, and Section, subsection, Schedule and
Exhibit references are to this Triple-A Purchase Agreement unless otherwise
specified.

SECTION 1.04. COMPUTATION OF TIME PERIODS. In this Triple-A Purchase
Agreement, in the computation of periods of time from a specified date to a
later specified date, the word "from" shall mean "from and including" and the
words "to" and "until" shall each mean "to but excluding."

ARTICLE II

AMOUNT AND TERMS OF THE PURCHASES

SECTION 2.01. RECEIVABLES PURCHASE FACILITY. Triple-A may, in its sole
discretion and otherwise subject to the terms and conditions hereinafter set
forth, make purchases of Receivables ("RECEIVABLES PURCHASES") from time to time
on any Settlement Date (except that the initial Receivables Purchase may be on a
date other than a Settlement Date) during the period from the date the
conditions precedent in SECTION 3.01 are satisfied to the Termination Date.
Each Receivables Purchase shall constitute an assignment and sale by the Seller,
and a purchase and acquisition by Triple-A of Purchased Assets, including,
without limitation, designated Eligible Receivables, Related Security and
Collections with respect thereto. Under no circumstances shall Triple-A make
any Receivables Purchase if, after giving effect to such Receivables Purchase,
the aggregate outstanding Capital hereunder would exceed the least of (i) the
Facility Limit, (ii) the Capital Limit, or (iii) the sum, on such Receivables
Purchase Date, of (a) the net proceeds from the sale of Commercial Paper PLUS
(b) the proceeds of Advances. The Capital Limit in effect on any date shall be
determined by reference to the most recent Settlement Report delivered by the
Seller to Triple-A in accordance with SECTION 5.02(f) hereof (i) as adjusted on
the most recent Settlement Date to reflect additional Eligible Receivables sold
on such Settlement Date since the delivery of such Settlement Report and (ii) as
adjusted on any

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<PAGE>

other date of determination to eliminate from the Discounted Eligible
Receivables Balance any Receivables which were Eligible Receivables as of the
dates reflected in the Settlement Report but which no longer satisfy the
criteria for Eligible Receivables. Nothing in this Triple-A Purchase Agreement
shall be deemed to be or construed as a commitment by Triple-A to make
Receivables Purchases at any time. It is the intention of the parties hereto
that each Receivables Purchase to be made hereunder shall constitute either
(i) a "sale of accounts or chattel paper", as such term is used in Article 9 of
the UCC, or (ii) a sale of "instruments", as such term is used in Article 9 of
the UCC. If at any time a court characterizes the transactions hereunder as
loans by Triple-A to the Seller, then the Seller hereby pledges, grants a
security interest in and assigns to the Collateral Agent, for the benefit of
Triple-A, all of the right and title to and interest in the Purchased Assets,
including the Purchased Receivables and the Related Security, Collections and
Equipment related thereto, as security for such loans and for the payment and
performance of all obligations of the Seller hereunder.

SECTION 2.02. MAKING PURCHASES FROM THE SELLER.

(a) Sale Notice. Whenever the Seller wishes to sell Receivables
hereunder, it shall deliver to Triple-A a notice ("Sale Notice") in
substantially the form of Exhibit A hereto no later than 10:00 A.M. (New
York City time) on the Business Day immediately prior to the proposed
Receivables Purchase Date; provided that, in the case of any Capital funded
as part of a Receivables Purchase with respect to which Yield is to be
calculated at the Eurodollar Rate, such Sale Notice must be given not later
than 10:00 A.M. (New York City time) at least three (3) Business Days prior
to the proposed Receivables Purchase Date. Each Sale Notice shall be by
telephone, telex, telecopy, cable or other facsimile transmission (in the
case of any such Sale Notice by telephone, confirmed immediately in
writing) and shall specify therein the (i) aggregate initial Capital to be
funded in connection with such Receivables Purchase, (ii) the date of such
Receivables Purchase and (iii) the duration of the initial Fixed Period(s)
for such Capital.

(b) Amount of Purchased Assets; Deferred Purchase Price. The
consideration for each Receivables Purchase shall consist of the Capital
funded under this Agreement and the obligation of the Purchaser to remit to
the Seller the Deferred Purchase Price. The amount of the Deferred
Purchase Price shall be initially computed as of the opening of business of
the Collection Agent on the date of the initial Receivables Purchase
hereunder. Thereafter until the Termination Date, the amount of the
Deferred Purchase Price shall be automatically recomputed as of the close
of business of the Collection Agent on each day on which the aggregate
Capital hereunder is increased or decreased or on which any funds are
remitted to the Seller in satisfaction thereof under clause (v) of
Section 6.11(b). From and after the Termination Date until the Collection
Date, the Deferred Purchase Price shall be automatically recomputed on each
Business Day to reflect any reductions in the amount hereof on account of
accrued Yield, Carrying Costs, or other amounts owed by (or paid on behalf
of) the Seller under this Agreement. The Purchased Assets shall become
zero at such time as Triple-A shall have recovered the aggregate
outstanding Capital and shall have received all other amounts payable to
Triple-A pursuant to this Triple-A Purchase Agreement and the Seller has
received

- 3 -

<PAGE>

payment of the Deferred Purchase Price. The Purchased Assets and the
Deferred Purchase Price shall each remain constant from the time as of
which any such computation or recomputation is made until the time as of
which the next such recomputation, if any, shall be made. Triple-A shall,
in consideration of the sale of the Purchased Assets, from and after the
Collection Date, remit to the Seller with the proceeds of Collections in
respect of the Purchased Assets, in satisfaction of the Deferred Purchase
Price; provided that, from and after the date that the Outstanding Balance
of the Purchased Receivables is less than or equal to 10% of the
Outstanding Balance of the Purchased Receivables as of the Termination
Date, the Administrative Agent may, in lieu of continuing to make such
remittances, by at least three (3) Business Days' prior written notice to
the Seller, reassign to the Seller all of Triple-A's right, title and
interest in and to the Purchased Assets in full satisfaction of the
Deferred Purchase Price. It is expressly understood and agreed that the
Deferred Purchase Price shall be payable solely through Collections and
other proceeds of the Purchased Assets and that none of Triple-A, the
Administrative Agent, the Collateral Agent nor any Liquidity Bank shall
have any personal liability for the payment of the Deferred Purchase Price.

(c) Selection of Fixed Periods. Promptly upon receiving each Sale
Notice, the Administrative Agent shall, following its review of the
Seller's proposal, select Fixed Periods for all Capital so that all
outstanding Capital is at all times allocated to a Fixed Period (it being
understood that if the Seller does not propose a specific Fixed Period, the
Administrative Agent shall select such Fixed Period in its discretion).
The initial Fixed Period for any Capital shall be specified in the Sale
Notice described in subsection (a) hereof. At least one Business Day prior
to the last day of each Fixed Period for any Capital allocated to such
Fixed Period, the Seller shall request new Fixed Periods for such Capital;
provided that, in the case of any Fixed Period for Capital for which Yield
is to be determined by reference to the Eurodollar Rate, such request shall
be given not later than 10:00 A.M. (New York City time) at least three (3)
Business Days prior to the last day of the relevant Fixed Period. The
Administrative Agent shall, on the date of any Receivables Purchase
hereunder and, so long as any Capital related to such Receivables Purchase
is outstanding, on the first day of each successive Fixed Period for such
Capital, notify the Collateral Agent and the Seller of the duration of the
relevant Fixed Period and the Yield which will be applicable to the Capital
during such Fixed Period. Any Fixed Period that commences before the
Termination Date and would otherwise end on a date occurring after the
Termination Date shall end on the Termination Date and the duration of any
Fixed Period that commences on or after the Termination Date shall be of
such duration as shall be selected by the Administrative Agent. In
addition, if a CP Disruption shall have occurred and be continuing,
Triple-A, or the Administrative Agent on its behalf, may, upon notice to
the Originator and the Seller, terminate any Fixed Period then in effect if
Triple-A has funded the Capital allocated to such Fixed Period by issuing
Commercial Paper. All outstanding Capital shall be assigned a Fixed Period
at all times, which Fixed Periods will be limited as set forth in the
definition thereof.

(d) Funding. Triple-A shall, before 3:00 P.M. (New York City time)
on the proposed Receivables Purchase Date of each Receivables Purchase,
subject to the

- 4 -

<PAGE>

applicable conditions set forth in Article IV, make available to the Seller
a wire transfer of such funds to the Seller in accordance with the Seller's
written wire transfer instructions.

SECTION 2.03. REDUCTION OF FACILITY LIMIT. The Seller shall have the
right, at any time upon at least three (3) Business Days' notice to Triple A, to
terminate in whole or reduce in part the unused portion of the Facility Limit in
a minimum amount of $10,000,000 and increments of $1,000,000 in excess thereof;
PROVIDED that if the aggregate of the simultaneous reductions in the Facility
Limit hereunder and under the Credit Agreement satisfy such test, the Seller may
reduce the unused portion of the Facility Limit hereunder in a minimum amount of
$3,000,000 and increments of $600,000 in excess thereof; PROVIDED, that in no
event shall the Facility Limit be reduced to less than the amount of Capital
then outstanding. Any such termination shall be without premium or penalty of
any kind, except for any indemnification which may be owed in connection with
such termination pursuant to SECTION 2.06 and SECTION 8.01.

SECTION 2.04. SETTLEMENT PROCEDURES.

(a) Any Collections of Purchased Receivables received (or deemed to
have been received) by the Seller shall be remitted directly to Triple-A by
depositing such Collections in the Lock-Box Account within one Business Day
of Seller's receipt (or deemed receipt) thereof. On each Payment Date, the
Seller shall pay to Triple-A (i) Yield on all outstanding Capital the Fixed
Period for which ends on such date plus (ii) the CP Dealer Fees, if any, on
any Commercial Paper maturing on such date and raised to fund such Capital.

(b) On each Settlement Date to occur prior to the Designated
Termination Date, the Seller shall either:

(i) if Triple-A has consented thereto, sell additional
Receivables hereunder in accordance with the procedures
and subject to the conditions set forth in Section 2.01
such that, immediately following such Receivables Purchase,
the Capital Limit equals or exceeds outstanding Capital, in
which event the Collateral Agent shall, subject to the
order of priority set forth in Section 6.11(b), remit the
Collections so set aside to the Seller in consideration of
the purchase price for such Receivables Purchase; or

(ii) if Triple-A has not consented to such additional purchase,
out of the Collections so set aside, direct the Collateral
Agent to remit to the Administrative Agent, subject to the
order of priority set forth in Section 6.11, an amount of
such Collections to be applied toward the reduction of
outstanding Capital such that, following the application of
such Collections to outstanding Capital, the Capital Limit
equals or exceeds the outstanding Capital.

- 5 -

<PAGE>

(c) On each Payment Date from and after the Designated Termination
Date, the Seller shall direct the Collateral Agent to distribute to the
Administrative Agent for the benefit of Triple-A, to be applied toward the
reduction of outstanding Capital, all Collections so set aside but not to
exceed the sum of (i) the Capital allocated to such Fixed Period, (ii) all
accrued and unpaid Yield thereon, and (iii) the aggregate of all other
amounts owed hereunder by the Seller to Triple-A and/or the Administrative
Agent, all as more fully set forth in Section 6.11.

(d) If on any day the Outstanding Balance of any Purchased Receivable
is either (i) reduced or adjusted as a result of any defective, rejected,
returned, repossessed or foreclosed merchandise, any defective or rejected
services, any cash discount or any other adjustment made or performed by
the Seller or any other Person (including, without limitation, those
described in the definition of "Dilution Factors"), or (ii) reduced or
canceled as a result of a setoff in respect of any claim by the Obligor
thereof against the Seller or any other Person (whether such claim arises
out of the same or a related transaction or an unrelated transaction), the
Seller shall be deemed to have received on such day a Collection of such
Purchased Receivable in the amount of such reduction, cancellation or
adjustment. If on any day any of the representations or warranties in
Section 4.01(g) is no longer true with respect to a Purchased Receivable or
if the Seller has breached its obligations under Section 5.01(j), then the
Seller shall be deemed to have received on such day a Collection of such
Purchased Receivable: (x) if such representation, warranty or covenant
relates to the non-existence of any Adverse Claims, the Seller shall be
deemed to have received a Collection of such Purchased Receivable in the
dollar amount of the Adverse Claims attaching thereto and (y) if such
representation or warranty relates to the validity or perfection of the
transfer of such Purchased Receivable under this Triple-A Purchase
Agreement or the perfection of Triple-A's security interest in any
Equipment as against the Obligor thereunder, then the Seller be deemed to
have received a Collection of such Purchased Receivable in an amount equal
to the Outstanding Balance thereof. To the extent that any such deemed
Collection reduces the Outstanding Balance of such Purchased Receivable to
zero, then, upon the Seller's payment to the Collateral Agent of such
deemed Collection, the Collateral Agent shall re-assign to the Seller all
of its right, title and interest in and to the relevant Purchased
Receivable, the Contract under which such Purchased Receivable arose and
the Related Security relating thereto.

(e) Although the Originator, the Seller and Triple-A agree that the
Originator shall have no right to so terminate, reject or not assume a
Contract, if the Originator in its capacity as Servicer (or its successor
in interest, including a trustee appointed under the Bankruptcy Code)
terminates, rejects or does not assume a Contract, in whole or in part,
prior to the expiration of the original term of such Contract, whether such
rejection, termination or non-assumption is made pursuant to an equitable
cause, statute, regulation, judicial proceeding or other applicable law
(including, without limitation, Section 365 of the Bankruptcy Code), then
(i) the Seller shall be deemed to have received Collections with respect to
Purchased Receivables arising under such Contract in an amount equal to
(A) in the event of a prepayment or termination consented to by the
Originator at the

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Obligor's request, the excess, if any, of the Termination Amount over all
amounts paid by the Obligor on account of such termination or (B) in the
event of any other rejection or non-assumption, the amount, of the
Outstanding Balance thereof that has not been, or may not be paid as a
result of such rejection, termination or non-assumption. Upon the Seller's
payment of any such deemed Collections described in this Section 2.05(e),
the Collateral Agent shall re-assign to the Seller all of its right, title
and interest in and to the relevant Purchased Receivable or Purchased
Receivables, the Contracts under which such Purchased Receivable(s) arose
and the Related Security relating thereto.

SECTION 2.05. PAYMENTS AND COMPUTATIONS, ETC. All amounts to be paid or
deposited by the Seller hereunder shall be paid or deposited by the Seller in
immediately available funds to Triple-A not later than 1:00 P.M. (New York City
time) on the date on which payable. Payments received by Triple-A after such
time shall be deemed to have been received on the next Business Day. All
payments by the Seller under this Triple-A Purchase Agreement shall be made
without setoff, deduction or counterclaim and the Seller agrees to pay on demand
any present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Triple-A Purchase Agreement. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next applicable Business Day and interest shall
be payable at the applicable rate during such extension; PROVIDED, that if such
extension would be inconsistent with one of the provisions set forth in the
definition of "Fixed Period", then such provision shall control.

SECTION 2.06. COMPENSATION. The Seller shall compensate Triple-A, upon
its written request, for all losses, expenses and liabilities, including,
without limitation, any indemnification payments owed by Triple-A pursuant to
the Liquidity Agreement, on account of any liquidation or reemployment of
deposits or other funds acquired by such party to make, fund or maintain Capital
hereunder, (i) if for any reason a Receivables Purchase does not occur on a date
specified therefor in the Sale Notice; (ii) if for any reason any payment,
prepayment or conversion of any Capital occurs on a date which is not the last
day of the Fixed Period for such Capital or (iii) as a consequence of any
required conversion of any Eurodollar Rate Advance prior to the last day of the
Fixed Period for the relevant Capital. Any request for compensation under this
SECTION 2.06 shall be accompanied by a copy of a statement from Triple-A setting
forth in reasonable detail the basis for requesting compensation and the
determination of the amount thereof in such statement shall be conclusive and
binding for all purposes, absent manifest error.

SECTION 2.07. DIVIDING OR COMBINING OF CAPITAL AND FIXED PERIODS. The
Seller may, on notice to and with the consent of the Administrative Agent
received at least one Business Day prior to the last day of any Fixed Period,
either (a) divide such Capital so as to allocate such Capital to two or more
Fixed Periods, or (b) combine such Capital with other Capital originating on
such last day or having Fixed Periods ending on such last day so as to allocate
all such Capital to a single Fixed Period. On and after the Termination Date,
the Administrative Agent shall have the right to divide and/or combine Capital
for purposes of allocation to Fixed Periods in any manner which it may select in
its sole discretion.

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SECTION 2.08. INCREASED COSTS, CAPITAL ADEQUACY.

(a) If, after the date hereof due to either (i) the introduction of
or any change in or to the interpretation of any law or regulation by the
governmental authority that promulgated or administers compliance with such
law or regulation (other than laws or regulations with respect to income
taxes or any change by way of imposition or increase of reserve
requirements included in the Eurodollar Reserve Percentage) or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority or similar agency (whether or not having the force
of law), and taking into account the obligations of the Liquidity Banks
under the Liquidity Agreement and otherwise in connection with Triple-A's
asset-supported financing business, any reserve or deposit or similar
requirement shall be imposed, modified or deemed applicable or, any basis
of taxation shall be changed or any other condition shall be imposed, and
there shall be any increase in the cost to Triple-A (either directly or
indirectly through any increase in the costs to the Liquidity Banks) of
making, funding, or maintaining Receivables Purchases or in the cost to
Triple-A of agreeing to make, fund, or maintain Receivables Purchases
(including the reduction of any sum received or Receivable hereunder), then
the Seller shall from time to time, upon demand by Triple-A by the
submission of the certificate described below, pay to Triple-A additional
amounts sufficient to compensate Triple-A for such increased cost. A
certificate setting forth in reasonable detail the amount of such increased
cost submitted to the Seller by Triple-A shall be conclusive and binding
for all purposes, absent manifest error.

(b) If Triple-A or any Liquidity Bank determines that compliance with
any law or regulation or any guideline or request or any written
interpretation from any central bank or other governmental authority or
similar agency (whether or not having the force of law) which is
introduced, implemented or received by Triple-A or such Liquidity Bank
after the date hereof, affects or would affect capital adequacy or the
amount of capital required or expected to be maintained by Triple-A or such
Liquidity Bank or any corporation controlling Triple-A or such Liquidity
Bank and that the amount of such capital is increased by or based upon the
Triple-A Loans or the existence of this Triple-A Purchase Agreement or upon
the Advances or such Liquidity Bank's commitment to lend under the
Liquidity Agreement and other commitments of that type, or has or would
have the effect of reducing the rate of return on capital, then, upon
demand by Triple-A by the submission of the certificate described below,
the Seller shall pay to Triple-A, from time to time as specified by
Triple-A, additional amounts sufficient to compensate Triple-A or such
corporation in the light of such circumstances, to the extent that Triple-A
reasonably determines such increase in capital to be allocable to the
Receivables Purchases or the existence of this Triple-A Purchase Agreement
or to the extent that Triple-A owes compensation to a Liquidity Bank in
respect of or on account of such events. A certificate setting forth in
reasonable detail such amounts submitted to the Seller by Triple-A shall be
conclusive and binding for all purposes, absent manifest error.

(c) In the event that Triple-A requests compensation for increased
costs on behalf of any Liquidity Bank under this Section 2.08 and such
increased costs are not

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being requested by the other Liquidity Banks generally or, if only one
Liquidity Bank exists, by Triple-A's liquidity providers for similar
transactions, then Triple-A shall, promptly following identification by the
Seller of an "Eligible Assignee" (as defined in the Liquidity Agreement)
willing to accept such commitment, cause the Liquidity Bank requesting such
increased costs to assign its outstanding Advances and commitments under
the Liquidity Agreement to such Eligible Assignee, all as more particularly
described in Section 8.06(g) of the Liquidity Agreement.

SECTION 2.09. TAXES.

(a) All payments made by the Seller under this Triple-A Purchase
Agreement shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any
governmental authority having taxing authority, excluding net income taxes
and franchise taxes (imposed in lieu of income taxes) imposed on Triple-A,
as a result of any present or former connection between the jurisdiction of
the government or taxing authority imposing such tax or any political
subdivision or taxing authority thereof or therein and Triple-A (excluding
a connection arising solely from Triple-A having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Triple-A Purchase Agreement) (all such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions and withholdings being hereinafter called
"Taxes"). If any Taxes are required to be withheld from any amounts
payable by the Seller, (i) the sum payable shall be increased as may be
necessary so that, after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.09),
Triple-A receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Seller shall make such deductions, and
(iii) the Seller shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.

(b) In addition, the Seller agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges, or
similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Triple-A Purchase Agreement (hereinafter "Other Taxes").

(c) The Seller will indemnify Triple-A for the full amount of Taxes
or Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.09)
paid by Triple-A and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. Whenever any Taxes
are payable by the Seller, as promptly as possible thereafter the Seller
shall send to Triple-A, a certified copy of an original official receipt
received by the Seller showing payment thereof. If the Seller fails to pay
any Taxes when due to the appropriate taxing authority or fails to remit to
Triple-A the required receipts or other required documentary evidence, the
Seller shall indemnify Triple-A for any incremental

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Taxes, interest or penalties that Triple-A is legally required to pay as a
result of any such failure. The agreements in this subsection shall
survive the termination of this Triple-A Purchase Agreement.

SECTION 2.10. FEES. In further consideration of the Receivables Purchases
to be made hereunder, the Seller agrees to pay to the Administrative Agent and
Triple-A all fees specified in the Fee Letter of even date herewith, which fees
will be due and payable at the times and in the manner set forth in such Fee
Letter.

SECTION 2.11. GRANT OF SECURITY INTEREST IN EQUIPMENT COLLATERAL.

(a) As security for the payment and performance of all the
obligations of the Seller hereunder and as additional enhancement to enable
Triple-A, the Liquidity Banks and CapMAC to fully recover Capital and
accrued and unpaid Yield and fees, the Seller hereby grants to the
Collateral Agent, for the benefit of Triple-A, the Liquidity Banks and
CapMAC, a security interest in all of the Seller's right, title and
interest in and to the following, whether now owned or hereafter acquired
and whether now existing or hereafter arising (the "Equipment Collateral"):
all Equipment which is the subject of a Contract for any Purchased
Receivable and substitutions therefor and products and proceeds thereof,
including, without limitation, all payments under insurance (whether or not
the Collateral Agent is the loss payee thereof) or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing.

(b) The Seller shall, at its expense, promptly execute and deliver
all further instruments and documents, and take all further action
(including, without limitation, the execution and filing of such financing
or continuation statements, or amendments thereto and assignments thereof),
that may reasonably be necessary or desirable, or that the Administrative
Agent may request, in order to perfect and protect any security interest
granted or purported to be granted to the Collateral Agent hereunder or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Equipment Collateral. The Seller hereby
authorizes the Collateral Agent to file one or more financing or
continuation statements, and amendments thereto and assignments thereof,
relative to all or any part of the Equipment Collateral now existing or
hereafter arising without the signature of the Seller where permitted by
law. A carbon, photographic or other reproduction of the Triple-A Purchase
Agreement of any financing statement covering the Equipment Collateral or
any part thereof shall be sufficient as a financing statement.

ARTICLE III

CONDITIONS OF PURCHASES

SECTION 3.01. CONDITIONS PRECEDENT TO INITIAL RECEIVABLES PURCHASE. The
agreement of Triple-A to make a Receivables Purchase on the occasion of the
initial Receivables Purchase Date hereunder is subject to satisfaction of the
following conditions precedent:

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(a) Triple-A shall have received, on or before the initial
Receivables Purchase Date, all of the following, each fully executed and in
form and substance satisfactory to Triple-A:

(i) This Triple-A Purchase Agreement;

(ii) The Custodial Agreement and the Lock-Box Agreements;

(iii) A copy of the resolutions of the Board of Directors of
the Seller approving this Triple-A Purchase Agreement
and all other documents and instruments to be delivered
hereunder or thereunder by the Seller, certified by its
Secretary or Assistant Secretary;

(iv) A certificate of the Secretary or an Assistant
Secretary of the Seller certifying (A) the names and
true signatures of the officers of the Seller
authorized to sign this Triple-A Purchase Agreement and
the other documents and instruments to be delivered by
the Seller pursuant hereto or thereto (on which
certificate Triple-A may conclusively rely until such
time as Triple-A shall receive from the Seller a
revised certificate meeting the requirements of this
subsection (iv)) and (B) a true and complete copy of
the By-laws of the Seller;

(v) A certificate executed by an officer of the Seller
certifying that as of the initial Receivables Purchase
Date, all of the representations and warranties
contained in Article IV hereof are true and accurate in
all material respects with the same force and effect as
though such representations and warranties had been
made as of such time;

(vi) The Certificate of Incorporation of the Seller,
certified by the Secretary of State of Delaware;

(vii) Good Standing Certificates for the Seller issued by the
Secretaries of the States of Delaware and
Massachusetts;

(viii) Certificates executed by an officer of the Seller and
the Originator relating to solvency;

(ix) An opinion of Hill & Barlow, counsel to the Seller, in
substantially the form of Exhibit B and as to such
other matters as Triple-A may reasonably request;

(x) An opinion of Hill & Barlow, counsel to the Seller, in
form and substance reasonably satisfactory to the
Collateral Agent, that, in

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the event of any Insolvency Proceeding filed by or
against the Originator, the Transferred Assets would
not be treated as property of the Originator's estate
and that the Seller's assets and liabilities would not
be substantively consolidated with those of the
Originator;

(xi) Acknowledgment copies of proper UCC-1 Financing
Statements executed by the Seller, as may be necessary
or, in the opinion of the Administrative Agent,
desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect the
Collateral Agent's interests in all Purchased
Receivables, Contracts and Related Security in which an
interest may be acquired hereunder;

(xii) Certified copies of Requests for Information or Copies
(Form UCC-11) (or a similar search report certified by
a party acceptable to the Buyer), dated a date
reasonably near to the date hereof, listing all
effective financing statements which name the
Originator or the Seller (under its present name and
any previous names) as debtor and which are filed in
the jurisdictions in which filings were made pursuant
to subsection (xi) of this Section 3.01, together with
copies of such financing statements;

(xiii) An Officer's Certificate in the form of Exhibit C,
executed by the President or the Treasurer of the
Seller;

(xiv) The Fee Letter;

(xv) The Insurance Agreement;

(xvi) The Surety Bonds; and

(xvii) The Liquidity Agreement;

(b) All fees and expenses due and owing as of the initial Receivables
Purchase Date under the Fee Letter shall have been paid;

(c) The Administrative Agent shall have received confirmation from
Standard & Poor's Corporation and Moody's Investors Services, Inc. that the
terms and conditions of the Receivables Purchases satisfy the criteria of
such rating agencies for "investment-grade" transactions without giving
effect to the Surety Bonds; and

(d) Triple-A shall have received such other approvals or documents as
it may reasonably request.

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SECTION 3.02. Conditions Precedent to Each Receivables Purchase. The
agreement of Triple-A to make a Receivables Purchase on the occasion of each
Receivables Purchase Date (including the initial Receivables Purchase) shall be
subject (i) to Triple-A's receipt of (A) a Settlement Statement for the most
recent calendar month then ended, (B) a notice from the Custodian in
substantially the form of Exhibit A to the Custodial Agreement confirming that
the Custodian has received the Contract Files required to be delivered to it
pursuant to Section 6.04(b) hereof and (C) such other approvals or documents as
Triple-A may reasonably request and (ii) to the condition precedent that on the
Receivables Purchase Date of such Receivables Purchase, before and after giving
effect to such Receivables Purchase and to the application of the proceeds
therefrom, the following statements shall be true (and each of the giving of the
applicable Sale Notice and the acceptance by the Seller of the proceeds of such
Receivables Purchase shall constitute a representation and warranty by the
Seller that on the Receivables Purchase Date of such Receivables Purchase,
before and after giving effect thereto and to the application of the proceeds
therefrom, such statements are true):

(i) the representations and warranties contained in
Article IV hereof and all representations and
warranties of the Originator in the Purchase Agreement
are true and accurate as of the Receivables Purchase
Date in all material respects with the same force and
effect as though such representations and warranties
had been made as of such time;

(ii) no event has occurred and is continuing, or would
result from such Receivables Purchase, which
constitutes an Event of Termination or an Unmatured
Event of Termination or a Wind-Down Event or Unmatured
Wind-Down Event;

(iii) the outstanding amount of all Capital after giving
effect to such Receivables Purchase shall be equal to
or less than the Capital Limit; and

(iv) the proceeds of such Receivables Purchase shall be used
to fund a Purchase of Transferred Assets under the
Purchase Agreement to occur simultaneously with such
Receivables Purchase and all conditions to such
Purchase under the Purchase Agreement on such date have
been satisfied or waived.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Seller. The Seller
represents and warrants to Triple-A that:

(a) Due Incorporation and Good Standing. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. The Seller is duly qualified to do business
as a foreign corporation and is in good standing in every jurisdiction in
which the nature of its business requires it to be so qualified or where
the ownership of its properties or the nature of its activities makes

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such qualification necessary, except where the failure to be so qualified
would not materially adversely affect (i) the collectibility of the
Purchased Assets, (ii) the collectibility of any Receivable, (iii) the
business, properties, operations, prospects, profits or condition
(financial or otherwise) of the Seller or (iv) the ability of the Seller to
perform its obligations hereunder and under the other Facility Documents to
which it is a party.

(b) Due Authorization and No Conflict. The execution, delivery and
performance by the Seller of this Triple-A Purchase Agreement and all other
Facility Documents and the transactions contemplated hereby and thereby,
including the acquisition of the Transferred Assets under the Purchase
Agreement and the purchases contemplated hereunder, are within the Seller's
corporate powers, have been duly authorized by all necessary corporate
action, do not contravene (i) the Seller's charter or by-laws, (ii) any
law, rule or regulation applicable to the Seller, (iii) any contractual
restriction contained in any indenture, loan or credit agreement, lease,
mortgage, security agreement, bond, note, or other agreement or instrument
binding on or affecting the Seller or its property or (iv) any order, writ,
judgment, award, injunction or decree binding on or affecting the Seller or
its property, and do not result in or require the creation of any Adverse
Claim upon or with respect to any of its properties; and no transaction
contemplated hereby requires compliance with any bulk sales act or similar
law. This Triple-A Purchase Agreement and the other Facility Documents to
which the Seller is a party have been duly executed and delivered on behalf
of the Seller.

(c) Governmental and Other Consents. Except for the filing of
financing statements pursuant to the UCC required to perfect the security
interests granted hereunder or under the other Facility Documents and
except for consents under certain contractual agreements which have been
obtained, no authorization, consent, approval or other action by, and no
registration, qualification, designation, declaration, notice to or filing
with, any governmental authority or other Person is or will be necessary in
connection with the execution and delivery of this Triple-A Purchase
Agreement or any other Facility Document to which the Seller is a party or
any of the other documents contemplated hereby or thereby, consummation of
the transactions herein or therein contemplated, or performance of or
compliance with the terms and conditions hereof or thereof, to ensure the
legality, validity or enforceability hereof or thereof.

(d) Enforceability of Facility Documents. This Triple-A Purchase
Agreement and each of the other Facility Documents to which the Seller is a
party have been duly and validly executed and delivered by the Seller and
constitute the legal, valid and binding obligation of the Seller
enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
relating to or affecting creditors' rights generally and by equitable
principles.

(e) No Litigation. There are no actions, suits or proceedings at law
or in equity or by or before any governmental authority now pending or, to
the knowledge of the Seller, threatened against or affecting the Seller or
any property or rights of the Seller

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which purport to challenge the legality, validity or enforceability of this
Triple-A Purchase Agreement or any other Facility Document or which may
materially impair the ability of the Seller to carry on business
substantially as now being conducted or which may materially adversely
affect the condition (financial or otherwise), operations or properties of
the Seller.

(f) Use of Proceeds. No proceeds of any Receivables Purchase will be
used by the Seller other than to fund a Purchase of Transferred Assets from
the Originator except that the Seller may net from the Purchase Price paid
to the Originator reasonable and necessary amounts for the funding of its
operating expenses.

(g) Valid Title and Perfected Interest. Each Receivable, together
with the Contract related thereto, is owned by the Seller free and clear of
any Adverse Claim except as provided herein or in the Credit Agreement and,
upon the making of each Receivables Purchase, Triple-A shall acquire a
valid and perfected first priority undivided percentage ownership interest,
to the extent of the Purchased Assets, in each Purchased Receivable then
existing or thereafter arising and in the Related Security and Collections
with respect thereto, in each case free and clear of any Adverse Claim
except as provided hereunder or under the Credit Agreement, the Liquidity
Agreement or the Liquidity Security Agreement (except that the Collateral
Agent will not have a perfected security interest in any Collateral
constituting Equipment which is owned by the Seller and located in a state
other than The Commonwealth of Massachusetts); and no effective financing
statement or other instrument similar in effect covering any Purchased
Receivable or the Related Security or Collections with respect thereto
shall at any time be filed except in favor of the Collateral Agent in
accordance with this Triple-A Purchase Agreement and the Credit Agreement.

(h) Accuracy of Information. All certificates, reports, financial
statements and similar writings furnished by or on behalf of the Seller to
Triple-A, the Collateral Agent, or the Administrative Agent at any time
pursuant to any requirement of, or in response to any written request of
any such party under, this Triple-A Purchase Agreement or any other
Facility Document or any transaction contemplated hereby or thereby, have
been, and all such certificates, reports, financial statements and similar
writings hereafter furnished by the Seller to such parties will be, true
and accurate in every respect material to the transactions contemplated
hereby on the date as of which any such certificate, report, financial
statement or similar writing was or will be delivered, and shall not omit
to state any material facts or any facts necessary to make the statements
contained therein not materially misleading.

(i) Governmental Regulations. The Seller is not an "investment
company" or a company controlled by an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as
amended, or otherwise subject to any other federal or state statute or
regulation limiting its ability to incur indebtedness.

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(j) Margin Regulations. The Seller is not engaged, principally or as
one of its important activities, in the business of extending credit for
the purpose of "purchasing" or "carrying" any "margin stock" (as each of
the quoted terms is defined or used in Regulation G, T, U or X). No part
of the proceeds of any Receivables Purchase has been used for so purchasing
or carrying margin stock or for any purpose which violates, or which would
be inconsistent with, the provisions of Regulation G, T, U or X.

(k) Location of Chief Executive Office and Records. The chief place
of business and chief executive office of the Seller are located at the
address referred to in Exhibit D hereof and the locations of the offices
where the Seller keeps all the Records are listed on Exhibit D (or at such
other locations, notified to the Collateral Agent in accordance with
Section 5.01(f), in jurisdictions where all action required by Section 6.04
has been taken and completed).

(l) Lock-Box Accounts. Each Obligor under a Contract has, within one
month of the date of Purchase of such Contract, been instructed to remit
payment on the Receivables to a Post Office Box for remittance to a
Lock-Box Account or directly to a Lock-Box Account substantially in the
form of Exhibit G to the Purchase Agreement. From and after the initial
Purchase Date, the Originator will have no right, title and/or interest to
any of the Lock-Box Accounts and will maintain no lock-box accounts in its
own name for the collection of such Receivables. The Seller has caused the
Originator to deliver to the Collateral Agent a duplicate key to each Post
Office Box and has filed a standing delivery order with the United States
Postal Service authorizing the Collateral Agent to receive mail delivered
to each such Post Office Box. The account numbers of all Lock-Box
Accounts, together with the names and addresses of all the Lock-Box Banks
maintaining such Lock-Box Accounts and the related Post Office Boxes, are
specified in Exhibit H to the Purchase Agreement. The Seller has no other
Lock-Box Accounts for the collection of the Transferred Assets except for
the Lock-Box Accounts.

(m) No Trade Names. The Seller has no trade names, fictitious names,
assumed names or "doing business as" names.

(n) Separate Identity. The Seller is operated as an entity separate
from the Originator and each other Subsidiary of the Originator and (i) has
its own board of directors, (ii) has at least one director who is
reasonably acceptable to Triple-A and who is not a direct, indirect or
beneficial stockholder, officer, director, employee, affiliate, associate,
customer or supplier of the Originator nor a relative of any thereof, nor a
trustee in bankruptcy for any Affiliate of the Originator, (iii) maintains
its assets in a manner which facilitates their identification and
segregation from those of its Affiliates, and has a separate telephone
number from that of the Originator or any Subsidiary of the Originator,
(iv) has all office furniture, fixtures and equipment necessary to operate
its business and such furniture, fixtures and equipment are either owned by
the Seller or leased pursuant to written leases, (v) conducts all
intercompany transactions with the Originator and each other Subsidiary of
the Originator on terms which the Seller reasonably believes to be on an
arm's-length basis, (vi) has not guaranteed any obligation

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of the Originator or any other Subsidiary of the Originator, nor has it had
any of its obligations guaranteed by any such entities and has not held
itself out as responsible for debts of any such entity or for the decisions
or actions with respect to the business and affairs of any such entity,
(vii) has not, except as otherwise expressly acknowledged under the
Facility Documents, permitted the commingling or pooling of its funds or
other assets with the assets of the Originator or any other Affiliate,
(viii) has separate deposit and other bank accounts to which neither the
Originator nor any other Affiliate has any access and does not at any time
pool any of its funds with those of the Originator or any such Affiliate,
(ix) maintains financial records which are separate from those of the
Originator and each other Subsidiary of the Originator, (x) compensates all
employees, consultants and agents, or reimburses the Originator, from the
Seller's own funds, for services provided to the Seller by such employees,
consultants and agents, (xi) has agreed with the Originator to allocate
among themselves shared corporate operating services and expenses which are
not reflected in the Servicing Fee (including, without limitation, the
services of shared employees, consultants and agents and reasonable legal
and auditing expenses) on the basis of actual use or the value of services
rendered, and otherwise on a basis reasonably related to actual use or the
value of services rendered, (xii) pays directly for its own account for
accounting and payroll services, rent, lease and other expenses and does
not have such operating expenses paid by the Originator or any other
Subsidiary of the Originator, (xiii) conducts all of its business (whether
in writing or orally) solely in its own name, (xiv) is not, directly or
indirectly, named as a direct or contingent beneficiary or loss payee on
any insurance policy covering the property of the Originator or any other
Subsidiary of the Originator and has entered into no agreement to be named
as such a beneficiary or payee, (xv) acknowledges that Triple-A, the
Administrative Agent, the Surety and the Liquidity Banks are entering into
the transactions contemplated by this Triple-A Purchase Agreement and the
other Facility Documents in reliance on the Seller's identity as a separate
legal entity from the Originator and each other Subsidiary of the
Originator, and (xvi) practices and adheres to corporate formalities such
as complying with its By-laws and corporate resolutions and the holding of
regularly scheduled board of directors meetings.

(o) Subsidiaries. The Seller has no Subsidiaries and does not own or
hold, directly or indirectly, any capital stock or equity security of, or
any equity interest in, any Person.

(p) Facility Documents. The Purchase Agreement is the only agreement
pursuant to which the Seller purchases Receivables or other Transferred
Assets. The Seller has furnished to Triple-A true, correct and complete
copies of each Facility Document to which the Seller is a party, each of
which is in full force and effect. Neither the Seller nor any Affiliate
thereof is in default of any of its obligations thereunder in any material
respect. Upon the Purchase of each Receivable pursuant to the Purchase
Agreement, the Seller shall be the lawful owner of, and have good title to,
such Receivable and all Transferred Assets relating thereto, free and clear
of any Adverse Claims. All such Transferred Assets are purchased without
recourse to the Originator except as described in the Purchase Agreement.
The Purchases of the Transferred Assets

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by the Seller constitute valid and true sales and transfers for
consideration (and not merely a pledge of such Transferred Assets for
security purposes), enforceable against creditors of the Originator and no
Transferred Assets shall constitute property of the Originator.

(q) Business. Since its incorporation, the Seller has conducted no
business other than the execution, delivery and performance of the Facility
Documents contemplated hereby, the purchase and servicing of Transferred
Assets thereunder, and such other activities as are incidental to the
foregoing. The Seller has incurred no Indebtedness except that expressly
incurred hereunder and under the other Facility Documents.

(r) Ownership of the Seller. One hundred percent (100%) of the
outstanding capital stock of the Seller is directly owned (both
beneficially and of record) by HPSC, Inc. Such stock is validly issued,
fully paid and nonassessable and there are no options, warrants or other
rights to acquire capital stock from the Seller.

(s) Taxes. The Seller has filed or caused to be filed all Federal,
state and local tax returns which are required to be filed by it, and has
paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessments received by it, other than any taxes or
assessments, the validity of which are being contested in good faith by
appropriate proceedings and with respect to which the Seller has set aside
adequate reserves on its books in accordance with GAAP and which
proceedings have not given rise to any Adverse Claim.

(t) Solvency. The Seller, both prior to and after giving effect to
the initial Purchase on the initial Purchase Date, and after giving effect
to each subsequent Purchase, (i) is not "insolvent" (as such term is
defined in Section 101(31)(A) of the Bankruptcy Code); (ii) is able to pay
its debts as they become due; and (iii) does not have unreasonably small
capital for the business in which it is engaged or for any business or
transaction in which it is about to engage.

(u) Diversification. After giving effect to the initial Receivables
Purchase on the initial Receivables Purchase Date, the number of Contracts
and the number of Obligors associated with the Purchased Receivables shall
equal or exceed 100, and, commencing no later than 90 days after the
initial Receivables Purchase, such number shall equal or exceed 300.

(v) Average Outstanding Balance. After giving effect to the initial
Receivables Purchase on the initial Receivables Purchase Date, and
immediately after giving effect to each subsequent Receivables Purchase,
the average Outstanding Balance of all Purchased Receivables hereunder
shall not be less than 90% nor more than 110% of the average "Outstanding
Balance" of "Pledged Receivables" (as each term is defined in the
Definitions List to the Credit Agreement).

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(w) Implicit Interest Rate. As of the date of any Receivables
Purchase, the excess of (i) the average implicit interest rates being
charged to Obligors in respect of the Receivables then being purchased over
(ii) the Discount Rate applicable to such Receivables, shall not be greater
than eight percent (8.0%).

ARTICLE V

GENERAL COVENANTS

SECTION 5.01. AFFIRMATIVE COVENANTS OF THE SELLER. From the initial
Receivables Purchase Date until the later of the Termination Date or the
Collection Date, the Seller will, unless Triple-A shall otherwise consent in
writing:

(a) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders with respect to it, its
business and properties and all Receivables and related Contracts.

(b) Preservation of Corporate Existence. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction
of its incorporation, and qualify and remain qualified in good standing as
a foreign corporation in each jurisdiction except where the failure to
preserve and maintain such existence, rights, franchises, privileges and
qualifications would not materially adversely affect (i) the collectibility
of the Purchased Assets, (ii) the collectibility of any Receivable,
(iii) the business, properties, operations, prospects, profits or condition
(financial or otherwise) condition of the Seller or (iv) the ability of the
Seller to perform its obligations hereunder and under the other Facility
Documents to which it is a party.

(c) Audits. At any time and from time to time upon prior written
notice to the Seller during regular business hours and on a quarterly basis
if requested, permit the Collateral Agent, or its agents or
representatives, (i) to examine and make copies of and abstracts from all
Records, and (ii) to visit the offices and properties of the Seller for the
purpose of examining such Records, and to discuss matters relating to the
Receivables or the Seller's performance hereunder with any of the officers
or employees of the Seller having knowledge of such matters. Each such
audit shall be at the sole expense of the Seller (subject to the Seller's
right under the Purchase Agreement to recover such expenses from the
Originator); provided, that, so long as no Wind-Down Event has occurred
during any calendar year, the annual audit expenses during such year for
which the Seller is responsible hereunder and under the Credit Agreement
shall not exceed $40,000 in the aggregate.

(d) Keeping of Records and Books of Account. Maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Receivables in the event of the
destruction of the originals thereof) and keep and maintain, all documents,
books, records and other information reasonably necessary or advisable for
the collection of all Receivables (including, without

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limitation, records adequate to permit the daily identification of all
collections of and adjustments to each Purchased Receivable).

(e) Performance and Compliance with Receivables and Contracts. At
its expense timely and fully perform and comply, and cause the Originator
to comply, in all material respects, with all material provisions,
covenants and other promises required to be observed by it or the
Originator under the Contracts.

(f) Location of Records. Keep its chief place of business and chief
executive office, and the offices where it keeps the Records, at the
address of the Seller referred to in Section 4.01(j), or, in any such case,
upon 30 days' prior written notice to the Collateral Agent, at such other
locations within the United States where all action required by
Section 6.04 shall have been taken and completed.

(g) Credit and Collection Policies. Comply in all material respects
with the Credit and Collection Policy in regard to each Purchased
Receivable and the related Contract.

(h) Collections. Instruct all Obligors to cause all Collections to
be deposited directly to a Post Office Box or Lock-Box Account and if the
Seller shall receive any Collections, the Seller shall hold such
Collections in trust for the benefit of the Collateral Agent and deposit
such Collections into a Lock-Box Account or the Collection Account within
one Business Day following Seller's receipt thereof.

(i) Compliance with ERISA. Comply in all material respects with the
provisions of ERISA, the IRC, and all other applicable laws, and the
regulations and interpretations thereunder.

(j) Perfected Security Interest under Contracts. Take such action
with respect to each Purchased Receivable as is necessary to ensure that
the Seller maintains, as against the Obligor thereunder, a perfected
security interest in any Equipment relating thereto free and clear of
Adverse Claims or, in the case of any Lease, to ensure that the Seller
would maintain such a perfected priority security interest in the event
that a court or other Person were to determine that such Lease purported to
transfer to the Obligor an ownership (rather than a leasehold) interest in
the Equipment subject thereto; provided, that the Seller shall not be
required to file financing statements or to maintain the effectiveness of
previously filed financing statements with respect to any Eligible
Receivables the Outstanding Balance of which originally is or has
thereafter been reduced below $5,000, respectively, so long as the
aggregate Outstanding Balance of Receivables hereunder for which no such
financing statements are in effect at any time remains less than 7.5% of
the Discounted Eligible Receivables Balance hereunder; provided that such
seven and one-half percent limitation shall not apply from and after the
Termination Date unless and to the extent that the Collateral Agent
specifically requests otherwise.

(k) Maintenance of Insurance. Maintain, or cause the Originator or
each Obligor to maintain, with respect to the Contracts and the Equipment
related thereto,

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casualty and general liability insurance which provide at least the same
coverage as a fire and extended coverage insurance policy as is comparable
for other companies in related businesses. Such insurance policies (and
self-insurance where permitted) shall be maintained in an amount which is
not less than the aggregate Discounted Value of the Purchased Receivables
hereunder arising under the relevant Contracts hereunder. Each such
casualty and liability policy if maintained by an Obligor, shall name the
Originator or the Seller as loss payee and additional insured, and the
Originator shall have assigned any such interest to the Seller. The Seller
shall remit, or shall cause to be remitted, the proceeds of any such
insurance policy to a Lock-Box Account or the Collection Account.

(l) Separate Identity. Take all actions required to maintain the
Seller's status as a separate legal entity. Without limiting the
foregoing, the Seller shall:

(i) conduct all of its business, and make all
communications to third parties (including all invoices
(if any), letters, checks and other instruments) solely
in its own name (and not as a division of any other
Person), and require that its employees, if any, when
conducting its business identify themselves as such and
not as employees of any other Affiliate of the Seller
(including, without limitation, by means of providing
appropriate employees with business or identification
cards identifying such employees as the Seller's
employees);

(ii) compensate all employees, consultants and agents
directly or indirectly through reimbursement of the
Originator each calendar quarter, from the Seller's
bank accounts, for services provided to the Seller by
such employees, consultants and agents and, to the
extent any employee, consultant or agent of the Seller
is also an employee, consultant or agent of any
Affiliate of the Seller, allocate the compensation of
such employee, consultant or agent between the Seller
and such Affiliate on a basis which reflects the
services rendered to the Seller and such Affiliate;

(iii) pay its own operating expenses and liabilities from its
own funds, allocate all overhead expenses (including,
without limitation, telephone and other utility
charges) for items shared between the Seller and any
Affiliate on the basis of actual use to the extent
practicable and, to the extent such allocation is not
practicable, on a basis reasonably related to actual
use and allocate taxes on the basis of their respective
incomes in accordance with applicable federal
regulations;

(iv) at all times have at least one "Independent Director",
as defined in and as required under the Seller's
Certificate of Incorporation and have at least one
officer responsible for managing its day-to-day

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business and manage such business by or under the
direction of its board of directors;

(v) maintain its books and records separate from those of
any Affiliate;

(vi) prepare its financial statements separately from those
of its other Affiliates and insure that any
consolidated financial statements of the Originator
have notes to the effect that the Seller is a separate
corporate entity whose creditors have a claim on its
assets prior to those assets becoming available to its
equity holders and therefore to any creditors of the
Originator;

(vii) use its best efforts not to commingle its funds or
other assets with those of any other Affiliate, and not
to hold its assets in any manner that would create an
appearance that such assets belong to any other
Affiliate, and not maintain bank accounts or other
depository accounts to which any Affiliate is an
account party, into which any Affiliate makes deposits
or from which any Affiliate has the power to make
withdrawals;

(viii) not permit any Affiliate to pay its operating expenses
(except pursuant to allocation arrangements that comply
with the requirements of subsection (ii) or (iii) of
this Section 5.01(l) or pursuant to the terms of the
Purchase Agreement);

(ix) not guarantee any obligation of any Affiliate nor (to
the extent that the Seller has the legal power to
prevent such) have any of its obligations guaranteed by
any such Affiliate, (either directly or by seeking
credit based on the assets of such Affiliate) or
otherwise hold itself out as responsible for the debts
of any Affiliate;

(x) maintain at all times stationery and a telephone number
separate from that of any Affiliate and which telephone
number will be answered in its own name, and have all
its officers and employees conduct all of its business
solely in its own name;

(xi) hold regular meetings of its board of directors in
accordance with the provisions of its Certificate of
Incorporation and otherwise take such actions as are
necessary on its part to ensure that all corporate
procedures required by its Certificate of Incorporation
and by-laws are duly and validly taken;

(xii) maintain a separate office from the offices of any of
its Affiliates and identify such office by a sign in
its own name;

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(xiii) pay dividends only if (A) no other dividend has been
paid during the calendar month in which such dividend
is paid, (B) such dividend has been duly authorized by
its board of directors in accordance with applicable
law and (C) its net worth, determined immediately after
giving effect to such dividend is at least $2,000,000;
and

(xiv) take such other actions as are necessary on its part to
ensure that the facts and assumptions set forth in the
opinion described in Section 3.01(x) remain true and
correct at all times.

(m) Taxes. File or cause to be filed, and (to the extent it has
legal power to cause such) cause each of its Affiliates with whom it shares
consolidated tax liability to file, all federal, state and local tax
returns which are required to be filed by it, except where the failure to
file such returns could not reasonably be expected to have a material
adverse effect on the collectibility of the Transferred Assets or the
ability of the Seller to perform its obligations hereunder or under any
other Facility Document to which it is a party or which could otherwise be
reasonably expected to expose the Seller to a material liability. The
Seller shall pay or cause to be paid all taxes shown to be due and payable
on such returns or on any assessments received by it, other than any taxes
or assessments, the validity of which are being contested in good faith by
appropriate proceedings and with respect to which the Seller or the
applicable subsidiary shall have set aside adequate reserves on its books
in accordance with GAAP and which proceedings could not reasonably be
expected to have a material adverse effect on the collectibility of the
Transferred Assets or the ability of the Seller to perform its obligations
hereunder or under any other Facility Document to which it is a party or
which could otherwise be reasonably expected to expose the Seller to a
material liability.

(n) Interest Rate Hedges. Concurrently with each Receivables
Purchase, enter into an Interest Rate Hedge with the Swap Provider as
contemplated in the definition of "Discount Rate", and transfer, assign and
otherwise convey to the Collateral Agent all of the Seller's rights in, to
and under such Interest Rate Hedge pursuant to an Interest Rate Hedge
Assignment in substantially in the form of Exhibit E hereto, together with
a certificate executed by the Swap Provider in substantially the form of
Exhibit A to such Interest Rate Hedge Assignment. The Seller shall
thereafter maintain such Interest Rate Hedges in full force and effect at
all times until the Capital associated with such Receivables Purchase has
been recovered in full by Triple-A, in a notional amount equal to no less
than 96% and no more than 105% of the sum of the outstanding Capital plus
the principal amount of all "Triple-A Loans" (as defined in the Credit
Agreement) related thereto and based on an amortization schedule which
matches the amortization of the aggregate Receivables then outstanding and
the terms of which are otherwise reasonably satisfactory to the Collateral
Agent. The Seller acknowledges that Triple-A and/or the Surety on behalf
of Triple-A have guaranteed the Seller's performance of its obligations
under the Interest Rate Hedges. The Seller shall perform all of its
obligations under the Interest Rate Hedges to the same extent as if its
rights under the Interest Rate Hedges has

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not been assigned hereunder and shall indemnify each of Triple-A and the
Surety against any payments by either such party on account of the Seller's
failure to perform its obligations under the Interest Rate Hedges,
including, without limitation, any payments by the Surety under the Swap
Bond, which indemnity shall survive any termination of this Triple-A
Purchase Agreement or the Credit Agreement. The exercise by the Collateral
Agent of any of its rights hereunder or under the Interest Rate Hedge
Assignment shall not relieve the Seller from such obligations.

(o) Facility Documents. Comply in all material respects with the
terms of and employ the procedures outlined in and enforce the obligations
of the Originator under the Purchase Agreement, and all of the other
Facility Documents to which it is a party, take all such action to such end
as may be from time to time reasonably requested by the Collateral Agent,
maintain all such Facility Documents in full force and effect and make to
the Originator such reasonable demands and requests for information and
reports or for action as the Seller is entitled to make thereunder and as
may be from time to time reasonably requested by the Collateral Agent.

(p) Segregation of Collections. Prevent the deposit into any of the
Lock-Box Accounts of any funds other than Collections in respect of the
Transferred Assets and, to the extent that any such funds are nevertheless
deposited into any of such Lock-Box Accounts, promptly identify any such
funds to the Servicer for segregation and remittance to the owner thereof.

(q) Diversification. Sell sufficient Receivables under this
Agreement so that, no later than ninety (90) days after the initial
Receivables Purchase Date, the number of Contracts and the number of
Obligors associated with the Purchased Receivables shall have exceeded 300.

SECTION 5.02. Reporting Requirements of the Seller. From the initial
Receivables Purchase Date until the later of the Termination Date or the
Collection Date, the Seller will, unless the Collateral Agent shall otherwise
consent in writing, furnish to the Collateral Agent and to CapMAC:

(a) as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of the Seller,
balance sheets of the Seller as of the end of such quarter, and (to the
extent available) statements of income and retained earnings of the Seller
for the period commencing at the end of the previous fiscal year and ending
with the end of such quarter, certified by the chief financial officer,
chief accounting officer or treasurer of the Seller;

(b) as soon as available and in any event within 105 days after the
end of each fiscal year of the Seller, a copy of the balance sheet of the
Seller as of the end of such year and the related statements of income and
retained earnings of the Seller for such year each reported on by
nationally recognized independent public accountants acceptable to the
Collateral Agent (the Collateral Agent acknowledges that any of the "Big 5"
accounting firms will be acceptable to the Collateral Agent);

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(c) promptly upon receipt thereof, copies of (i) all annual and
quarterly financial statements delivered to the Seller by the Originator
pursuant to the Purchase Agreement and (ii) all other reports and other
written information not specified above which are required to be delivered
by the Originator (individually, or as Servicer) to the Seller pursuant to
the terms of the Purchase Agreement;

(d) as soon as possible and in any event within five Business Days
after the occurrence of each Event of Termination or Wind-Down Event or
each Unmatured Event of Termination or Unmatured Wind-Down Event, the
statement of the chief financial officer, chief accounting officer or
treasurer of the Seller setting forth details of such Event of Termination,
Wind-Down Event, Unmatured Event of Termination or Unmatured Wind-Down
Event and the action which the Seller proposes to take with respect
thereto;

(e) promptly after the filing or receiving thereof, copies of all
reports and notices with respect to any Reportable Event defined in
Article IV of ERISA which the Seller or any Affiliate files under ERISA
with the IRS or the PBGC or the DOL or which the Seller receives from the
PBGC;

(f) on or before the 15th day of each month (or if such day is not a
Business Day, the immediately succeeding Business Day), a copy of the
Settlement Report for the most recent calendar month, which shall include a
summary of the portfolio of Interest Rate Hedges as of such day; and

(g) promptly, from time to time, such other information, documents,
records or reports respecting the Purchased Receivables or the conditions
or operations, financial or otherwise, of the Seller as the Collateral
Agent may from time to time reasonably request in order to protect the
interests of the Collateral Agent or of Triple-A under or as contemplated
by this Triple-A Purchase Agreement.

SECTION 5.03. Negative Covenants of the Seller. From the initial
Receivables Purchase Date until the later of the Termination Date or the
Collection Date, the Seller will not, without the written consent of the
Collateral Agent:

(a) Sales, Liens, Etc. Against Receivables and Related Security.
Except as otherwise provided herein, sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist, any
Adverse Claim upon or with respect to, any Purchased Receivable, Related
Security, Collections, or any related Contract, or upon or with respect to
any Lock-Box Account to which any Collections of any Purchased Receivable
are sent, or assign any right to receive income in respect thereof, or upon
any other Transferred Asset, except (i) Adverse Claims created under the
Credit Agreement, and (ii) that the Seller shall have no responsibility for
any Adverse Claim created by an Obligor upon or with respect to any
Equipment owned by such Obligor so long as such Adverse Claim is
subordinate to the security interest of the Seller in such Equipment.

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(b) Extension or Amendment of Receivables. Except for actions of the
Servicer otherwise permitted hereunder and in the Purchase Agreement,
extend, amend or otherwise modify, the terms of any Receivable, or amend,
modify or waive, any term or condition of any Contract related thereto,
whether for any reason relating to a negative change in the related
Obligor's creditworthiness or inability to make any payment under the
related Contract or otherwise.

(c) Change in Business or Credit and Collection Policy. Make any
change in the character of its business or in the Credit and Collection
Policy, which change would, in either case, impair the collectibility of
any Transferred Asset.

(d) Change in Payment Instructions to Obligors. Add or terminate any
bank as a Lock-Box Bank from those listed in Exhibit I to the Purchase
Agreement or make any change in its instructions to Obligors regarding
payments to be made to the Seller or payments to be made to any Lock-Box
Bank, unless the Collateral Agent shall have received (i) ten Business
Days' prior notice of such addition, termination or change and (ii) prior
to the effective date of such addition, termination or change, (x) executed
copies of Lock-Box Agreements executed by each new Lock-Box Bank and the
Seller and (y) copies of all agreements and documents signed by either the
Seller or the respective Lock-Box Bank with respect to any new Lock-Box
Account.

(e) Stock, Merger, Consolidation, Etc. Sell any shares of any class
of its capital stock to any Person (other than the Originator) or
consolidate with or merge into or with any other corporation, or purchase
or otherwise acquire all or substantially all of the assets or capital
stock, or other ownership interest of, any Person or sell, transfer, lease
or otherwise dispose of all or substantially all of its assets to any
Person, except for the conveyances of a security interest in favor of the
Collateral Agent as expressly permitted under the terms of this Triple-A
Purchase Agreement and the Credit Agreement.

(f) Change in Corporate Name. Make any change to its corporate name
or use any trade names, fictitious names, assumed names or "doing business
as" names.

(g) ERISA Matters. (i) Engage or permit any ERISA Affiliate to
engage in any prohibited transaction for which an exemption is not
available or has not previously been obtained from the DOL; (ii) permit to
exist any accumulated funding deficiency, as defined in Section 302(a) of
ERISA and Section 412(a) of the IRC, or funding deficiency with respect to
any Benefit Plan other than a Multiemployer Plan; (iii) fail to make any
payments to any Multiemployer Plan that the Seller or any ERISA Affiliate
may be required to make under the agreement relating to such Multiemployer
Plan or any law pertaining thereto; (iv) terminate any Benefit Plan so as
to result in any liability; or (v) permit to exist any occurrence of any
reportable event described in Title IV of ERISA which represents a material
risk of a liability of the Seller or any ERISA Affiliate under ERISA or the
IRC; provided, however, the Seller's ERISA Affiliates may take or allow
such prohibited transactions, accumulated funding deficiencies, payments,
terminations

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and reportable events described in clauses (i) through (iv) above so long
as such events occurring within any fiscal year of the Seller, in the
aggregate, involve a payment of money by or an incurrence of liability of
any such ERISA Affiliate in an amount which does not exceed $500,000.

(h) Terminate or Reject Contracts. Without limiting Section 5.03(b),
terminate or reject any Contract prior to the term of such Contract,
whether such rejection or early termination is made pursuant to an
equitable cause, statute, regulation, judicial proceeding or other
applicable law (including, without limitation, Section 365 of the
Bankruptcy Code), unless prior to such termination or rejection, the Seller
pays the Collateral Agent, for the benefit of Triple-A, an amount equal to
the Termination Amount owed with respect thereto.

(i) Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness except for (i) Indebtedness to Triple-A, the Collateral Agent
or any Liquidity Bank expressly contemplated hereunder or under the Credit
Agreement, (ii) ordinary course expenses (to the extent, if any, that such
ordinary course expenses constitute Indebtedness) in an aggregate amount
outstanding at any time not to exceed $10,000 (exclusive of taxes) and
(iii) Indebtedness to the Originator pursuant to the Purchase Agreement.

(j) Guarantees. Guarantee, endorse or otherwise be or become
contingently liable (including by agreement to maintain balance sheet
tests) in connection with the obligations of any other Person, except
endorsements of negotiable instruments for collection in the ordinary
course of business and reimbursement or indemnification obligations in
favor of Triple-A, the Collateral Agent, or any Liquidity Bank as provided
for under this Triple-A Purchase Agreement or under the Credit Agreement.

(k) Limitation on Transactions with Affiliates. Enter into, or be a
party to any transaction with any Affiliate, except for:

(i) the transactions contemplated by the Purchase
Agreement;

(ii) transactions related to the allocation of shared
overhead expenses or taxes as described in clause (iii)
of Section 5.01(l); and

(iii) to the extent not otherwise prohibited under this
Triple-A Purchase Agreement, other transactions in the
nature of employment contracts and directors' fees,
upon fair and reasonable terms materially no less
favorable to the Seller than would be obtained in a
comparable arm's-length transaction with a Person not
an Affiliate.

(l) Facility Documents. Except as otherwise permitted under
Section 9.01, (a) terminate, amend or otherwise modify any Facility
Document to which it is a party, or grant any waiver or consent thereunder,
(b) without the prior consent of the Collateral

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Agent, exercise any discretionary rights granted to the Seller under the
Purchase Agreement pursuant to provisions thereof providing for certain
actions to be taken "with the consent of the Buyer", "acceptable to the
Buyer" as "specified by the Buyer", "in the reasonable judgment of the
Buyer" or similar provisions (it being understood that inaction by the
Seller shall not be considered to be an exercise of such discretionary
rights) or (c) without the prior written consent of the Collateral Agent,
consent to any amendment or modification of the Credit and Collection
Policy.

(m) Charter and By-Laws. Amend or otherwise modify its Certificate
of Incorporation or By-laws in any manner which requires the consent of the
"Independent Director" (as defined in the Seller's Certificate of
Incorporation) without the prior written consent of the Collateral Agent
and delivery of an opinion of counsel that such amendment shall not alter
the conclusions set forth in the legal opinion described in
Section 3.01(x).

(n) Lines of Business. Conduct any business other than that
described in Section 4.01(q), or enter into any transaction with any Person
which is not contemplated by or incidental to the performance of its
obligations under the Facility Documents.

(o) Accounting Treatment. Prepare any financial statements or other
statements (including any tax filings which are not consolidated with those
of the Originator) which shall account for the transactions contemplated by
the Purchase Agreement in any manner other than as the sale of, or a
capital contribution of, the Transferred Assets by the Originator to the
Seller (it being understood that non-recognition of such transaction due to
the application of consolidated financial reporting principles under GAAP
or the filing of tax returns on a consolidated basis shall not constitute a
violation of this covenant).

(p) Limitation on Investments. Make or suffer to exist any loans or
advances to, or extend any credit to, or make any investments (by way of
transfer of property, contributions to capital, purchase of stock or
securities or evidences of indebtedness, acquisition of the business or
assets, or otherwise) in, any Affiliate or any other Person except for
(i) Permitted Investments, (ii) the purchase of Receivables and other
Transferred Assets pursuant to the terms of the Purchase Agreement and
(iii) so long as the aggregate outstanding Capital hereunder is less than
the Capital Limit then in effect, the acceptance of investments in exchange
for Defaulted Receivables in an effort to maximize the recoveries thereon.

ARTICLE VI

ADMINISTRATION AND COLLECTION

SECTION 6.01. Designation of Servicer. The servicing, administering and
collection of the Purchased Receivables and the other Purchased Assets shall be
conducted by the Person (the "Servicer") designated by the Collateral Agent from
time to time in accordance with this

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Section 6.01. Until the Collateral Agent gives notice to the Originator of the
designation of a new Servicer, the Originator is hereby designated as, and
hereby agrees to perform the duties and obligations of, the Servicer pursuant to
the terms hereof. The Collateral Agent may at any time from and after a
Servicing Termination Event, or earlier upon the written request of the Seller,
designate as Servicer any other Person to succeed the Originator or any
Successor Servicer, on the condition in each case that any such Person so
designated shall agree to perform the duties and obligations of the Servicer
pursuant to the terms hereof. The Servicer may, with the prior written consent
of Triple-A and the Collateral Agent, subcontract with any other Person for
servicing, administering or collecting the Purchased Assets, provided that the
Servicer shall remain liable for the performance of the duties and obligations
of the Servicer pursuant to the terms hereof. The Servicer shall use reasonable
care in performing its duties as Servicer hereunder and, without limiting the
foregoing, shall service the Purchased Receivables in accordance with the Credit
and Collection Policy.

SECTION 6.02. Duties of the Servicer.

(a) The Servicer shall take or cause to be taken all such actions as
may be necessary or advisable to collect each Purchased Receivables from
time to time, all in accordance with applicable laws, rules and
regulations, with reasonable care and diligence, and in accordance with the
Credit and Collection Policy. Each of the Seller, Triple-A, the
Administrative Agent and the Collateral Agent hereby appoints as its agent
the Servicer, from time to time designated pursuant to Section 6.01, to
enforce its respective rights and interests in and under the Purchased
Receivables, the Related Security related thereto and the related
Collections. The Servicer will at all times apply the same standards and
follow the same procedures with respect to the decision to commence, and in
prosecuting and litigating with respect to Purchased Receivables as it
applies and follows with respect to accounts, chattel paper and instruments
which are not Purchased Receivables. In no event shall the Servicer be
entitled to make the Collateral Agent, Triple-A or the Administrative Agent
a party to any litigation without the Collateral Agent's, Triple-A's and
the Administrative Agent's express prior written consent. The Servicer
shall segregate and set aside for the account of Triple-A all Collections
of the Purchased Receivables and Related Security in accordance with
Section 2.05 of the Purchase Agreement and Section 6.06 hereof and shall
cause all such Collections to be remitted to a Lock-Box Account and/or
deposited directly into the Collection Account within one Business Day
after identification thereof by the Servicer and in any event within four
Business Days after the Servicer's receipt thereof. The Servicer shall
promptly review all checks and other instruments returned to it by the
Lock-Box Bank on account of restrictive endorsements, improper payees,
incorrect amounts or for any other reason and shall not deposit any such
checks or instruments in its own accounts unless it is determined to the
Collateral Agent's satisfaction that such amounts do not constitute
Collections; any such checks or instruments which are determined to be
Collections of the Purchased Receivables or Related Security related
thereto shall be promptly remitted to the Lock-Box Account or the
Collection Account as provided above. Provided that the Termination Date
shall not have occurred, the Originator, while it is Servicer, may, in
accordance with the Credit and Collection Policy,

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(i) amend, modify or waive any term or condition of any Contract to reflect
any Permitted Extension, (ii) adjust the Outstanding Balance of any
Purchased Receivable to reflect the reductions, adjustments or
cancellations described in the first sentence of Section 2.04(d) of this
Triple-A Purchase Agreement, (iii) so long as such prepayment would not
cause a Wind-Down Event under this Triple-A Purchase Agreement or a
"Wind-Down Event" under the Credit Agreement, and subject to the payment of
the Termination Amount, consent to the prepayment or early termination of a
Contract, and (iv) amend, modify or waive any provision of a Delinquent
Receivable or Defaulted Receivable so as to maximize the collectibility
thereof. The Servicer shall hold in trust for the Seller and Triple-A in
accordance with their respective interests, all Records. Notwithstanding
anything to the contrary contained herein, following the occurrence of an
Event of Termination, the Collateral Agent shall have the absolute and
unlimited right to direct the Servicer (whether the Servicer is the
Originator or otherwise) to commence or settle any legal action to enforce
collection of any Receivable or other Transferred Asset or to foreclose
upon or repossess any Related Security.

(b) The Servicer shall, as soon as practicable following receipt,
turn over (i) to the "Collateral Agent" under the Credit Agreement the
collections of any Transferred Asset which is not a Purchased Asset, and
(ii) to the Originator the collections of any receivable which is not a
Transferred Asset, in either case less, in the event the Originator is not
the Servicer, all reasonable and appropriate out-of-pocket costs and
expenses of such Servicer of servicing, collecting and administering such
receivable.

(c) Notwithstanding anything to the contrary contained in this
Agreement, the Servicer, if the Collateral Agent or its designee, shall
have no obligation to collect, enforce or take any other action described
in this Article VI with respect to any receivable that is not a
Purchased Receivable other than to deliver to the Seller the Collections
and documents with respect to any such receivable as described in the
first two sentences of Section 6.02(b) and to exercise the same degree of
care with respect to Collections and documents in its possession as it
would exercise with respect to its own property.

(d) In the event the Servicer accepts in payment of any Purchased
Receivable the taking of repossession of the Equipment the sale or lease of
which gave rise to such Purchased Receivable, the Servicer agrees to use
its reasonable efforts to resell or re-lease such Equipment for the account
of Triple-A and shall remit to the Collateral Agent the gross sale proceeds
thereof or, to the extent such Equipment is re-leased, shall deliver to the
Collateral Agent the chattel paper or other documents evidencing the rights
to payment arising from such re-lease, all of which documents shall
constitute Contracts and which rights to payment shall constitute Purchased
Receivables, and all of which Contracts and Purchased Receivables shall
constitute part of the Purchased Assets. Neither Triple-A nor the
Collateral Agent shall have any obligation to take any action or commence
any proceedings to realize upon any Purchased Receivable or to enforce any
of its rights or remedies with respect thereto. Any moneys collected by
the Servicer pursuant to this subsection 6.02(d) shall be segregated by the
Servicer, held in trust by the Servicer for Triple-A and shall be remitted
to a Lock-Box Account or to the Collection

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Account within one Business Day after identification thereof by the
Servicer and in any event within four Business Days after the Servicer's
receipt thereof.

(e) The Servicer shall maintain all books of account and other
records pertaining to the Purchased Receivables and the other Purchased
Assets in such form as will enable Triple-A or its designees to determine
at any time the status thereof. The Servicer will permit Triple-A, the
Collateral Agent and any Person designated by Triple-A or the Collateral
Agent, during regular business hours, to inspect, audit, check and make
abstracts from all books, accounts, records, or other papers pertaining to
such Purchased Assets. From time to time, at the request of Triple-A or
the Collateral Agent, the Servicer, at its own expense, will (i) deliver to
Triple-A and the Collateral Agent and any Person designated by Triple-A or
the Collateral Agent any records and invoices pertaining to the Purchased
Assets and evidence thereof as Triple-A, the Collateral Agent or such
designee may deem necessary to enable it to enforce its rights thereunder
and (ii) mark each computer record relating to, and each invoice or other
evidence of, the Purchased Assets (whether or not such computer record or
other item is the property of Triple-A) as Triple-A or the Collateral Agent
may direct to reflect the interests of Triple-A and the Collateral Agent in
such Purchased Assets. The Servicer will either (i) segregate, from all
the documents relating to other receivables then owned or being serviced by
the Servicer, all documents relating to the Purchased Assets or (ii) mark
all such documents relating to the Purchased Assets so as to make such
documents readily identifiable as property of Triple-A and with such legend
as shall be specified by the Collateral Agent, and will, in either such
event, hold all such documents in trust for Triple-A and safely keep such
documents in filing cabinets or other suitable containers marked to show
Triple-A's interest.

SECTION 6.03. RIGHTS OF THE COLLATERAL AGENT. At any time:

(a) The Collateral Agent may notify the Obligors of the Purchased
Receivables, or any of them, of Triple-A's ownership interest in the
Purchased Assets and direct such Obligors, or any of them, that payment of
all amounts payable under any Purchased Receivable be made directly to
Triple-A or its designee (including, without limitation, the Collateral
Agent).

(b) The Seller shall, at the Collateral Agent's or Triple-A's request
and at the Seller's expense, give notice of Triple-A's interest in the
Purchased Assets to each Obligor (in substantially the form of the Notice
of Assignment) and direct that payments be made directly to Triple-A or its
designee (including, without limitation, the Collateral Agent).

(c) The Seller shall, at the Collateral Agent's request, assemble all
Records which the Collateral Agent reasonably believes are necessary or
appropriate for the administration and enforcement of the Purchased Assets,
and shall make the same available to the Collateral Agent at a place
selected by the Collateral Agent or its designee.

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(d) Each of the Seller and Triple-A hereby authorize the Collateral
Agent to take any and all steps in the Seller's name and on behalf of the
Seller necessary or desirable, in the determination of the Collateral
Agent, to collect all amounts due under any and all Purchased Receivables
or Related Security related thereto, including, without limitation,
endorsing the Seller's name on checks and other instruments representing
Collections and enforcing such Purchased Receivables and the related
Contracts.

SECTION 6.04. FURTHER ACTION EVIDENCING TRANSFERS.

a) The Seller agrees that from time to time, at its expense, it will
promptly execute and deliver all further instruments and documents, and
take all further action that Triple-A may reasonably request in order to
protect or more fully evidence Triple-A's ownership interest in the
Purchased Receivables, the Related Security and the Collections related
thereto, or to enable Triple-A to exercise or enforce any of its rights
hereunder or under any related document. Without limiting the generality
of the foregoing, the Seller will mark its master data processing records
evidencing such Purchased Receivables, Related Security and Collections
related thereto with a legend, acceptable to Triple-A, evidencing that
Triple-A has acquired an ownership interest therein as provided in this
Agreement and, upon the request of Triple-A, will execute and file such
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate or as Triple-A may reasonably request. The Seller hereby
authorizes Triple-A to file one or more financing or continuation
statements, and amendments thereto and assignments thereof, relative to all
or any of the Purchased Receivables, Related Security and Collections
related thereto now existing or hereafter arising without the signature of
the Seller where permitted by law. A carbon, photographic or other
reproduction of this Agreement or any financing statement covering the
Purchased Receivables, Related Security and Collections related thereto, or
any part thereof, shall be sufficient as a financing statement. If the
Seller fails to perform any of its agreements or obligations under this
Agreement, Triple-A may (but shall not be required to) itself perform, or
cause performance of, such agreement or obligation, and the expenses of
Triple-A incurred in connection therewith shall be payable by the Seller
upon Triple-A's demand therefor; provided, however, prior to taking any
such action, Triple-A shall give notice of such intention to the Seller and
provide the Seller with a reasonable opportunity to take such action
itself.

(b) The Seller shall, on or prior to the date of each Receivables
Purchase hereunder, deliver or cause to be delivered the related Contract
File to the Custodian, in suitable form for transfer by delivery, or
accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to Triple-A. In the event
that the Seller or the Servicer receives any other instrument or any
writing constituting chattel paper which, in either event, evidences a
Purchased Receivable or other Purchased Assets, the Seller or the Servicer
as applicable shall deliver such instrument or chattel paper to the
Custodian on behalf of Triple-A within three (3) Business Days after
receipt, in suitable form for transfer by delivery, or accompanied by

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duly executed instruments of transfer or assignment in blank, all in form
and substance satisfactory to Triple-A.

SECTION 6.05. RESPONSIBILITIES OF THE SELLER. Anything herein to the
contrary notwithstanding, the Seller shall (i) perform all of its obligations
under the Contracts to the same extent as if such Contracts had not been
transferred to Triple-A hereunder and the exercise by Triple-A or its assigns
of their respective rights hereunder shall not relieve Seller from such
obligations and (ii) pay when due any taxes, including without limitation,
sales, excise and personal property taxes payable in connection with the
Purchased Assets, unless the Seller is contesting the payment of such taxes in
good faith and by appropriate proceedings and with respect to which no Adverse
Claim has been asserted or filed.

SECTION 6.06. ADMINISTRATION OF COLLECTIONS BY SERVICER.

(a) The Servicer shall identify on a timely basis all Collections
which are on account of the Purchased Assets, including all deposits to
Lock Box Accounts. On each Business Day, all Collections received in the
Lock Box Accounts for the prior Business Day (and such Business Day, if
practicable) shall be transferred to the Collection Account. If the
Servicer receives any cash or checks, drafts, wire transfers or other
instruments for the payment of money on account or otherwise in respect of
the Purchased Assets, the Servicer shall segregate such cash and other
items, hold such cash and other items in trust for the benefit of Triple-A
and the Collateral Agent and shall cause such cash and other items
(properly endorsed, where required, so that such items may be collected by
Triple-A) to be deposited in a Lock Box Account or directly in the
Collection Account immediately after the date any such cash or other item
shall have been identified as being on account of a Purchased Assets.

SECTION 6.07. Application of Collections. All Collections on account of the
Purchased Receivables of each Obligor shall be applied in the order of maturity
thereof unless specifically identified otherwise in writing by such Obligor or
directed by a court of competent jurisdiction. Any payment by an Obligor in
respect of any indebtedness or other obligations owed by such Obligor to the
Seller or the Servicer shall, except as otherwise specified by such Obligor or
otherwise required by law, be applied as a Collection of a Receivable of such
Obligor (in the order of the age by invoice date of such Receivables, starting
with the oldest such Receivable) to the extent of any amounts then due and
payable thereunder before being applied to any other indebtedness of such
Obligor to the Seller or the Servicer. The Servicer shall not influence or
instruct any Obligor who is indebted to the Seller in respect of any
indebtedness not included in the Purchased Assets to direct that its remittances
be applied to any such indebtedness prior to being applied to the Purchased
Assets.

SECTION 6.08. Servicing Fee. On each Settlement Date, as full compensation
for its servicing activities hereunder, the Servicer shall be entitled to
receive a fee (the "Servicing Fee") in an amount equal to 1.15% times the
Outstanding Balance of the Purchased Receivables as of the last day of the prior
calendar month times a fraction, the numerator of which is the number of actual
days elapsed in such calendar month and the denominator of which equals 360,
provided,

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that, if the Servicer hereunder is also the Servicer under the Purchase
Agreement, the Servicing Fee hereunder shall be deemed paid to the extent of any
payment by the Seller of the "Servicing Fee" specified and defined in the
Purchase Agreement. In the event that Triple-A (or the Collateral Agent)
appoints a successor Servicer, the Servicing Fee may be adjusted as required by
such successor Servicer and as agreed to by Triple-A and the Collateral Agent.

SECTION 6.09. Resignation; Successor Servicer.

(a) The obligation of the Servicer to service the Purchased
Receivables is personal to the Servicer and the parties recognize that
another Person may not be qualified to perform such obligations.
Accordingly, the Servicer's obligation to service the Purchased Assets
hereunder shall be specifically enforceable and shall be absolute and
unconditional in all circumstances, including, without limitation, after
the occurrence and during the continuation of any Event of Termination or
Servicing Termination Event hereunder; provided, however, that a Successor
Servicer may be appointed pursuant to this Section 6.09.

(b) Notwithstanding the foregoing, the Servicer may resign from the
obligations and duties hereby imposed on it as Servicer upon determination
that (i) the performance of its duties hereunder is no longer permissible
under any applicable law and (ii) there is no reasonable action which the
Servicer could take to make the performance of its duties hereunder
permissible under any such applicable law. Any determination permitting
the resignation of the Servicer shall be evidenced as to clause (i) above
by an opinion of counsel to such effect delivered to Triple-A and the
Collateral Agent. Except to the extent inconsistent with any such
applicable law, no such resignation shall become effective until a
Successor Servicer shall have assumed the responsibilities and obligations
of the Servicer in accordance with the remaining provisions of this
Section 6.09.

(c) The Collateral Agent shall, as promptly as possible after the
Servicer has given notice pursuant to Section 6.09(b) above or at any time
after the Collateral Agent's designation of a successor Servicer pursuant
to Section 6.01, appoint a successor servicer (the "Successor Servicer")
and such Successor Servicer shall accept its appointment by a written
assumption in a form acceptable to the Collateral Agent. Upon its
appointment, the Successor Servicer shall be the successor in all respects
to the Servicer with respect to servicing functions under this Agreement
shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof,
and all references in this Agreement or any other Facility Documents to the
Servicer shall be deemed to refer to the Successor Servicer. The Servicer
agrees to cooperate with the Successor Servicer in effecting the transfer
of its responsibilities, duties, liabilities and rights hereunder,
including, without limitation, the execution and delivery of assignments of
financing statements, the transfer to the Successor Servicer of all cash
amounts held by the Servicer or thereafter received with respect to the
Purchased Assets, the transfer of electronic records relating to the
Purchased Assets in such form as the Successor Servicer

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may reasonably request and the transfer of all related Records,
correspondence and other documents relating to the Purchased Assets.

SECTION 6.10. LOCK-BOX ACCOUNTS; COLLECTION ACCOUNT. The Seller has
established and will maintain a system of operations, accounts and instructions
to the Lock-Box Banks and will establish and maintain the Collection Account as
provided in this SECTION 6.10. Pursuant to a Lock-Box Agreement, each Lock-Box
Account shall be irrevocably instructed to wire all funds to the Collection
Account, which Collection Account shall be maintained in the name of the
Collateral Agent. Neither the Seller, nor any Person claiming by, through or
under the Seller shall have any control over the use of, or any right to
withdraw any item or amount from, any Lock-Box Account or the Collection Account
except as expressly provided in the Lock-Box Agreements. The Collateral Agent
on behalf of Triple-A is hereby irrevocably authorized and empowered, as the
Seller's attorney-in-fact, to endorse any item deposited in a lock-box or
presented for deposit in any Lock-Box Account or the Collection Account
requiring the endorsement of the Seller, which authorization is coupled with an
interest.

SECTION 6.11. COLLECTION ACCOUNT.

(a) Pursuant to the Credit Agreement, the Seller has established for
the sole and exclusive benefit of the Collateral Agent for the benefit of
Triple-A, the Surety and their respective assigns, a cash collateral
account (the "Collection Account"). The Collection Account shall be a
special purpose segregated trust account maintained with Bank of Boston but
shall be under the sole dominion and control of, and in the name of, the
Collateral Agent. All funds held in the Collection Account, including
investment earnings thereon, shall be invested in Permitted Investments at
the direction of the Seller; provided, however, that from and after the
Termination Date or otherwise upon the occurrence and during the
continuance of any Event of Termination, the Collateral Agent shall have
the sole right to restrict the maturities of any investments held in the
Collection Account and to direct the withdrawal of any such investments for
the purposes of paying Capital, Yield and any Obligations owed hereunder.
The Collateral Agent shall have the sole and exclusive right to withdraw or
order a transfer of funds from the Collection Account in accordance with
the terms and provisions of this Section 6.11.; provided however, that the
Collateral Agent agrees to turn over to the Originator any funds which are
deposited in the Collection Account and which do not constitute Collections
or other proceeds of Purchased Assets, less all reasonable and appropriate
out-of-pocket costs and expenses incurred by the Collateral Agent in
connection with such misdirected funds.

(b) All Collections and other proceeds of the Purchased Assets in the
Collection Account shall be held in trust for the benefit of Triple-A and
the Surety and, except as otherwise provided in Section 6.11(d) below with
respect to any Business Day from and after the Designated Termination Date,
such Collections and other proceeds shall be used solely for the following
purposes and in the following order of priority:

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(i) To remit to the Seller any Collections representing sales or
other taxes or insurance payments for the purpose of
satisfying the Seller's obligations in respect of such taxes
or insurance;

(ii) To pay Yield and other Carrying Costs which are then due and
payable;

(iii) To repay Capital as provided in Section 2.04;

(iv) To pay any other Obligations which may be due and owing at
such time; and

(v) If such day is a Settlement Date, to be remitted to the
Seller in consideration of the Deferred Purchase Price,
provided, that if any "Obligations" under the Credit
Agreement remain outstanding, such amounts shall be remitted
to the Collateral Agent for application in accordance with
the terms of the Credit Agreement to the extent of such
Obligations; provided, further, that such funds shall only
be remitted to the Seller to the extent that, after giving
effect to such transfer of funds and such Purchases, the
amount of Capital then outstanding does not exceed the
Capital Limit then in effect.

The Seller, in making any request for funds to be withdrawn from the
Collection Account, shall certify to each of the Collateral Agent and the
Collection Account Bank that the funds will be used for one of the purposes
described above in this Section 6.11(b).

If, on any Business Day prior to the Designated Termination Date, the
Collections of Purchased Assets on deposit in the Collection Account and
available for withdrawal under clause (ii) above are less than the amount of the
obligations described in such clause, such available funds shall be allocated in
the priority set forth in Section 6.11(c) below; if, on any such Business Day,
the Collections of Purchased Assets on deposit in the Collection Account and
available for withdrawal under clause (iv) above are less than the amount of the
obligations described in such clause, such available funds shall be allocated to
the Persons to whom such obligations are owed ratably according to the
respective amounts owed.

(c) On each Business Day prior to the Designated Termination Date, to the
extent that the Collections of Purchased Assets on deposit in the Collection
Account and available under clause (ii) of Section 6.11(b) are insufficient to
pay all Carrying Costs which are then due and payable, such funds shall be
applied to the Carrying Costs in the following order of priority:

(i) To pay any accrued and unpaid Yield (either directly, by
paying to the Swap Provider amounts owed under the Interest
Rate Hedges or by reimbursing Triple-A and/or the Surety for
payments made by

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either of them to the Swap Provider on account of amounts
owed under the Interest Rate Hedges);

(ii) To pay the pro-rata portion of any accrued and unpaid fees
owing under the Fee Letter which are allocable to this
Agreement;

(iii) To pay the pro-rata portion of any accrued and unpaid
expenses of the Collateral Agent which are allocable to this
Agreement;

(iv) To pay any accrued and unpaid Servicing Fee; and

(v) To pay ordinary course expenses of the Seller to the extent
the same are due or past due.

If, on any such Business Day, the Collections of Purchased Assets on deposit in
the Collection Account and available for withdrawal under either clause (ii) or
(v) above are less than the amount of the obligations described in such clause,
such available funds shall be allocated to the Persons to whom such obligations
are owed ratably according to the respective amounts owed.

(d) On each Business Day from and after the Designated Termination Date,
Collections and other proceeds of Purchased Assets shall be withdrawn from the
Collection Account solely upon direction of the Collateral Agent to be applied
against the Obligations in the following order of priority;

(i) To remit to the Seller any Collections representing sales or
other taxes or insurance payments for the purpose of
satisfying the Seller's obligations in respect of such taxes
or insurance;

(ii) To pay any accrued and unpaid Servicing Fee (if the Servicer is a
party other than the Originator or an Affiliate thereof);

(iii) To pay accrued and unpaid Yield (either directly or by paying to
the Swap Provider amounts owed under the Interest Rate Hedges or
by reimbursing Triple-A and/or the Surety for payments made by
either of them to the Swap Provider on account of amounts owed
under the Interest Rate Hedges);

(iv) To pay the pro-rata portion of any accrued and unpaid fees owing
under the Fee Letter which are allocable to this Agreement;

(v) To repay all outstanding Capital;

(vi) To pay the pro-rata portion of the accrued and unpaid expenses of
the Collateral Agent which are allocable to this Agreement;

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(vii) To pay any other accrued and unpaid Obligations which have not
been paid pursuant to clauses (i) through (v) above;

(viii) To pay any other Carrying Costs which are due and owing but have
not been paid pursuant to clauses (i) through (vi) above; and

(ix) To pay any accrued and unpaid Servicing Fee owed to the
Originator or an Affiliate thereof.

If, on any such Business Day, the funds on deposit in the Collection Account and
available for withdrawal under either clause (iv), (vi), (vii) or (viii) above
are less than the amount of the obligations described in such clause, such
available funds shall be allocated to the Persons to whom such obligations are
owed ratably according to the respective amounts owed. Any funds remaining in
the Collection Account after payment of the foregoing Obligations and other fees
and expenses shall be remitted to the Seller in consideration of the Deferred
Purchase Price, provided that if any "Obligations" under the Credit Agreement
remain outstanding, such funds shall be remitted to the Collateral Agent for
application in accordance with the terms of the Credit Agreement to the extent
of such "Obligations".

ARTICLE VII

WIND-DOWN EVENTS; REMEDIES

SECTION 7.01. Wind-Down Events. Each of the following events shall
constitute a "Wind-Down Event" within the meaning of this Triple-A Purchase
Agreement:

(a) The occurrence of any Event of Termination under the Purchase
Agreement or any "Wind-Down Event" under the Credit Agreement;

(b) The Servicer (if the Seller or any Affiliate of the Seller) shall
fail to perform or observe any term, covenant or agreement hereunder (other
than as referred to in clause (ii) of this Section 7.01(b)) and such
failure shall remain unremedied for three Business Days after written
notice from the Collateral Agent or (ii) either the Servicer (if the Seller
or any Affiliate of the Seller) or the Seller shall fail to make any
payment or deposit to be made by it hereunder when due and, solely in the
case of any such payments which do not constitute payments of Capital or
Yield, such failure shall remain unremedied for three (3) Business Days
after written notice from the Collateral Agent; or

(c) The Seller shall fail to perform or observe any term, covenant or
agreement contained in Section 5.03 and any such failure shall remain
unremedied for five (5) Business Days after written notice from the
Collateral Agent; or

(d) Any representation or warranty made or deemed to be made by the
Seller (or any of its officers) under or in connection with this Triple-A
Purchase Agreement, any

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<PAGE>

Settlement Report or other information or report delivered pursuant hereto
shall prove to have been false or incorrect in any material respect when
made; provided, however, that (i) to the extent any breach of any such
representation or warranty may be cured within ten (10) Business Days, the
Seller shall have ten (10) Business Days after learning of such breach to
make such representation and warranty true and correct and (ii) if any such
false or incorrect representation or warranty has given rise to a deemed
Collection as provided under Section 2.04 of this Triple-A Purchase
Agreement, then, upon the Seller's payment of such deemed Collection at the
time and in the manner required under this Triple-A Purchase Agreement, the
breach of such representation or warranty shall not give rise to a
Wind-Down Event under this subsection (d); or;

(e) The Seller shall fail to perform or observe any other term,
covenant or agreement contained in this Triple-A Purchase Agreement on its
part to be performed or observed and any such failure shall remain
unremedied for ten (10) Business Days after written notice from the
Collateral Agent (it being understood that if any such failure gives rise
to a deemed Collection under Section 2.04 of this Triple-A Purchase
Agreement, then, the payment of such deemed Collection at the time and in
the manner required under this Triple-A Purchase Agreement shall be deemed
a remedy of such failure); or

(f) The interest of the Collateral Agent in the Purchased Assets
shall for any reason, except to the extent permitted by the terms hereof,
cease to create a valid and perfected first priority interest in such
Purchased Assets; provided, however, if any such failure results in a
deemed Collection under Section 2.04 of this Triple-A Purchase Agreement
and the Seller satisfies in full its payment obligations under such section
with respect to such deemed Collection, then such failure shall not give
rise to a Wind-Down Event under this subsection (f); or

(g) (i) An Insolvency Event shall occur with respect to the Seller or
the Originator or (ii) the Seller or the Originator shall take any
corporate action to authorize the filing of any Insolvency Proceeding; or

(h) As of the close of business on any Settlement Date, the Capital
Limit shall be less than the aggregate outstanding Capital; or

(i) The Originator shall cease to own 100% of the issued and
outstanding stock of the Seller; or

(j) There shall have occurred, since the initial Receivables Purchase
Date, a material adverse change in the financial condition of the Seller or
there shall have occurred any event which materially and adversely affects
the collectibility or the Receivables generally or the ability of the
Seller to perform hereunder; or

(k) Triple-A or the Surety shall determine that continuation of this
Triple-A Purchase Agreement without exercise of remedies under Section 7.02
will impose a material adverse regulatory impact on Triple-A or the Surety,
as the case may be.

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<PAGE>

SECTION 7.02. Remedies. During the existence of a Wind-Down Event, the
Collateral Agent on behalf of Triple-A may, by written notice to the Seller,
take any or all of the following actions, at the same or different times:
(i) declare the Termination Date to have occurred; (ii) declare the Obligations
to be immediately due and payable; (iii) pursue any other remedy under this
Triple-A Purchase Agreement and the other Facility Documents and (iv) exercise
any rights and remedies of a secured party under Article 9 of the UCC, which
rights and remedies shall be cumulative to those provided for under this
Triple-A Purchase Agreement and the other Facility Documents; provided, however,
that in the case of any event described in clause (i) of subsection 7.01(g)
above, then, automatically upon the occurrence of such event without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Seller, anything contained herein to the contrary
notwithstanding, the Termination Date shall be deemed to have occurred
automatically and any Obligations owed hereunder shall be immediately due and
payable. The rights and remedies of a secured party which may be exercised by
the Collateral Agent pursuant to clause (iv) of this Section 7.02 shall include,
without limitation, the right to (y) identify and engage a Successor Servicer to
act as servicer for the Receivables in the event of a Servicing Termination
Event, and (z) without notice except as specified below solicit and accept bids
for and sell the Purchased Assets or any part thereof in one or more parcels at
a public or private sale, at any exchange, broker's board or at any of the
Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent may deem
commercially reasonable. The Seller agrees that, to the extent notice of sale
shall be required by law, 10 Business Days' notice to the Seller of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification and that it shall be commercially
reasonable for the Collateral Agent to sell the Purchased Assets on an as-is
basis, without representation or warranty of any kind. The Collateral Agent
shall not be obligated to make any sale of Purchased Assets regardless of notice
of sale having been given and may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.

ARTICLE VIII

INDEMNIFICATION; REPURCHASES

SECTION 8.01. Indemnities by the Seller. (a) Without limiting any other
rights which Triple-A may have hereunder or under applicable law, the Seller
hereby agrees to indemnify Triple-A and its permitted successors and assigns
(including, without limitation, Triple-A, the Collateral Agent and the Surety)
and their respective officers, directors, agents and employees (each, an
"Indemnified Party"), from and against any and all damages, losses, claims,
liabilities and related costs and expenses, including reasonable attorneys' fees
and disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by any Indemnified Party
relating to or resulting from any of the following (excluding, however,
(i) Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of an Indemnified Party or (ii) recourse (except with
respect to payment and performance obligations provided for in this Agreement)
for uncollectible Receivables):

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<PAGE>

(i) the transfer of any Receivable which was not, as of the Receivables
Purchase Date, an Eligible Receivable;

(ii) any representation or warranty made or deemed made by the Seller or
the Originator (or any of their respective officers) under or in
connection with the Purchase Agreement or this Triple-A Purchase
Agreement, any Settlement Report or any other information or report
delivered by the Seller or the Originator pursuant hereto, which
shall have been false or incorrect in any material respect when
made or deemed made or delivered;

(iii) the failure by the Seller or the Originator (individually or as
Servicer) to comply with any term, provision or covenant contained in
this Triple-A Purchase Agreement or the Purchase Agreement (other than
any covenant contained in Section 5.04 of the Purchase Agreement, a
breach of which shall constitute an Event of Termination but shall not
give rise to indemnification under this Section 8.01), or any
agreement executed in connection with this Triple-A Purchase Agreement
or the Purchase Agreement or with any applicable law, rule or
regulation with respect to any Purchased Receivable, the related
Contract, the Related Security or the other Purchased Assets, or the
nonconformity of any Purchased Receivable, the related Contract, the
Related Security or the other Purchased Assets with any such
applicable law, rule or regulation;

(iv) the failure to vest and maintain vested in Triple-A or to transfer to
Triple-A an ownership interest in the Purchased Assets, free and clear
of any Adverse Claim (including, without limitation, free and clear of
any Permitted Lien except in favor of Triple-A or its assignees)
whether existing on the Receivables Purchase Date or at any time
thereafter;

(v) the failure to file, or any delay in filing (other than solely as a
result of the action or inaction of Triple-A), financing statements or
other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws against the Obligor with respect
to any Contract or Receivables which are, or are purported to be,
Purchased Assets, whether at the time of any Purchase or at any
subsequent time;

(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any
Purchased Receivable (including, without limitation, a defense based
on such Purchased Receivable or the related Contract not being a
legal, valid and binding obligation of such Obligor enforceable
against it in accordance with its terms), or any other claim resulting
from the sale or lease of the Equipment and/or services related
thereto or the furnishing or failure to furnish such Equipment and/or
services;

(vii) any failure of the Seller or the Originator, as Servicer or otherwise,
to perform its duties or obligations in accordance with the provisions
of Article VI hereof or Article VI of the Purchase Agreement;

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<PAGE>

(viii) any products liability claim or personal injury or property damage
suit or other similar or related claim or action of whatever sort
arising out of or in connection with the Equipment or any other
goods, merchandise and/or services which are the subject of any
Receivable or Contract;

(ix) the failure to pay when due any taxes, including, without limitation,
sales, excise or personal property taxes payable in connection with
the Purchased Assets;

(x) the termination, rejection or non-assumption by the Seller of any
Contract prior to the original term of such Contract, whether such
rejection, early termination or non-assumption is made pursuant to an
equitable cause, statute, regulation, judicial proceeding or other
applicable laws (including, without limitation, Section 365 of the
Bankruptcy Code);

(xi) the failure of the Seller, the Originator and the Obligors under the
Contracts to maintain casualty and liability insurance for the
Equipment related to the Purchased Receivables in an amount at least
equal to the Discounted Receivables Balance for such Purchased
Receivables;

(xii) the failure of any Lock-Box Bank to remit any funds in the Lock-Box
Accounts as required hereunder; and

(xiii) the commingling of Collections of any Transferred Assets with any
other funds of the Seller.

Any amounts subject to the indemnification provisions of this Section 8.01
shall be paid by the Seller to the applicable Indemnified Party within two
Business Days following the Indemnified Party's demand therefor.

ARTICLE IX

MISCELLANEOUS

SECTION 9.01. Amendments, Etc. No amendment to or waiver of any provision
of this Triple-A Purchase Agreement nor consent to any departure by the Seller,
shall in any event be effective unless the same shall be in writing and signed
by (i) the Collateral Agent on behalf of itself and Triple-A and the Seller
(with respect to an amendment) or (ii) the Collateral Agent on behalf of itself
and Triple-A (with respect to a waiver or consent by it) or the Seller (with
respect to a waiver or consent by it), as the case may be, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given. This Triple-A Purchase Agreement contains a final and
complete integration of all prior expressions by the parties hereto with respect
to the subject matter hereof and shall constitute the entire agreement (together
with the exhibits hereto) among the parties hereto with respect to the subject
matter hereof, superseding all prior oral or written understandings.

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<PAGE>

SECTION 9.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telex communication and communication by facsimile copy) and mailed,
telexed, transmitted or delivered, as to each party hereto, at its address set
forth under its name on the signature pages hereof or at such other address as
shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall be effective, upon receipt,
or in the case of delivery by mail, five days after being deposited in the
mails, or, in the case of notice by telex, when telexed against receipt of
answer back, or in the case of notice by facsimile copy, when verbal
communication of receipt is obtained, in each case addressed as aforesaid,
except that notices and communications pursuant to Article II shall not be
effective until received.

SECTION 9.03. No Waiver; Remedies. No failure on the part of the
Collateral Agent or Triple-A 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. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.

SECTION 9.04. Binding Effect; Assignability. This Triple-A Purchase
Agreement shall be binding upon and inure to the benefit of the Seller,
Triple-A, the Collateral Agent and their respective successors and permitted
assigns (which successors of the Seller shall include a trustee in bankruptcy).
The Seller may not assign any of its rights and obligations hereunder or any
interest herein without the prior written consent of Triple-A and the Collateral
Agent. Each of Triple-A and the Collateral Agent may assign at any time its
rights and obligations hereunder and interests herein to any other Person
without the consent of the Seller. Without limiting the foregoing, the Seller
hereby acknowledges that Triple-A has agreed pursuant to the Liquidity Agreement
and certain related agreements that, subject to the restrictions set forth
therein, certain parties providing credit enhancements and/or liquidity for
Triple-A in connection with the Triple-A Purchase Agreement shall be entitled to
exercise Triple-A's rights under this Triple-A Purchase Agreement and in
addition, shall constitute third-party beneficiaries of this Agreement. The
Seller hereby consents to the foregoing and agrees to cooperate with any such
Person electing to exercise Triple-A's rights under this Triple-A Purchase
Agreement. This Triple-A Purchase Agreement shall create and constitute the
continuing obligations of the parties hereto in accordance with its terms, and
shall remain in full force and effect until such time, after the Termination
Date, as the Collection Date shall occur; provided, however, that the rights and
remedies with respect to any breach of any representation and warranty made by
the Seller pursuant to Article IV and Article VIII shall be continuing and shall
survive any termination of this Triple-A Purchase Agreement.

SECTION 9.05. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS TRIPLE-A PURCHASE
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF
THE INTERESTS OF THE COLLATERAL AGENT IN THE COLLATERAL OR REMEDIES HEREUNDER OR
THEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. THE SELLER HEREBY

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<PAGE>

AGREES TO THE JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE STATE OF NEW
YORK, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS
THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE
SELLER AT THE ADDRESS SET FORTH ON THE SIGNATURE PAGE HEREOF AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN
DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID, OR, AT THE OPTION OF EITHER
TRIPLE-A OR THE COLLATERAL AGENT, BY SERVICE UPON CT CORPORATION SYSTEM,
1633 BROADWAY, NEW YORK, NEW YORK 10019, WHICH THE SELLER HEREBY IRREVOCABLY
APPOINTS AS ITS AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS. THE
SELLER HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE SELLER AND
TRIPLE-A AND/OR THE COLLATERAL AGENT ARISING OUT OF, CONNECTED WITH, RELATED TO,
OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH THIS TRIPLE-A
PURCHASE AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN
A BENCH TRIAL WITHOUT A JURY. WITH RESPECT TO THE FOREGOING CONSENT TO
JURISDICTION, THE SELLER HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 9.05 SHALL AFFECT THE RIGHT
OF TRIPLE-A OR THE COLLATERAL AGENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF TRIPLE-A OR THE COLLATERAL AGENT TO
BRING ANY ACTION OR PROCEEDING AGAINST THE SELLER OR ITS PROPERTY IN THE COURTS
OF ANY OTHER JURISDICTION.

SECTION 9.06. Costs, Expenses and Taxes.

(a) The Seller agrees to pay on demand all reasonable costs and
expenses in connection with the preparation, execution, delivery and
administration (including periodic auditing fees as provided for in
Section 5.01(c) and any requested amendments, waivers or consents) of this
Triple-A Purchase Agreement and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for Triple-A and the Collateral Agent
with respect thereto and with respect to advising Triple-A and the
Collateral Agent as to its rights and remedies under this Triple-A Purchase
Agreement, and the other agreements executed pursuant hereto and all costs
and expenses, if any (including reasonable counsel fees and expenses), in
connection with the enforcement of this Triple-A Purchase Agreement and the
other agreements and documents to be delivered hereunder.

(b) In addition, the Seller shall pay any and all stamp, sales,
excise and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this
Triple-A Purchase Agreement or the other

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<PAGE>

agreements and documents to be delivered hereunder, and agrees to indemnify
the Collateral Agent, Triple-A and their respective assignees against any
liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.

SECTION 9.07. Execution in Counterparts; Severability. This Triple-A
Purchase Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. In case any provision in or
obligation under this Triple-A Purchase Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.

SECTION 9.08. No Bankruptcy Petition Against Triple-A. The Seller
covenants and agrees that it will not institute against Triple-A, or join any
other Person in instituting against Triple-A, any Insolvency Proceeding under
bankruptcy law or under any similar federal or state law.

IN WITNESS WHEREOF, the parties below have caused this Triple-A Purchase
Agreement to be duly executed by their duly authorized officers and delivered as
of the day and year first above written.

HPSC BRAVO FUNDING CORP., as Seller

By: /s/ John W. Everets
------------------------------------
Title: President
Address: Sixty State Street, 35th Floor
Boston, MA 02109-1803
Attn: President
Telephone: (617) 720-7251
Telecopy: (617) 720-7272

HPSC, INC., as Servicer

By: /s/ Rene Lefebvre
------------------------------------
Title: CFO
Address: Sixty State Street, 35th Floor
Boston, MA 02109-1803
Attn: Vice President, Finance
Telephone:
Telecopy:

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<PAGE>

TRIPLE-A ONE FUNDING CORPORATION

By: Capital Markets Assurance Corporation, its
Attorney-in-Fact

By: /s/ David E. Czerniecki
------------------------------------
Title: Vice-President
Address: 885 Third Avenue
New York, New York 10022
Attn: Head of Exposure
Management
Telephone: (212) 755-1155
Telecopy: (212) 755-5487

CAPITAL MARKETS ASSURANCE CORPORATION

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<PAGE>

Execution Copy

AMENDMENT NO. 2
Dated as of October 18, 1996

CREDIT AGREEMENT
Dated as of January 31, 1995

THIS AMENDMENT NO. 2 dated as of October 18, 1996 ("AMENDMENT") is entered
into by and between HPSC BRAVO FUNDING CORP. (the "BORROWER"), TRIPLE-A ONE
FUNDING CORPORATION, a Delaware corporation ("TRIPLE-A") and CAPITAL MARKETS
ASSURANCE CORPORATION, a New York stock insurance company ("CapMAC"). as
Collateral Agent and as Administrative Agent. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to such terms in
the Definitions List referred to below.

PRELIMINARY STATEMENTS

A. The Borrower, Triple-A and CapMAC are parties to that certain Credit
Agreement dated as of January 31, 1995 (as amended by that certain Amendment
No. 1 dated as of December 19, 1995, the "CREDIT AGREEMENT"), pursuant to which
Triple-A agreed to make Triple-A Loans to the Borrower, the proceeds of which
have been used to purchase Transferred Assets from the Seller in accordance with
the terms of the Purchase Agreement;

B. As a condition precedent to the making of Triple-A Loans, the Borrower
agreed to grant a security interest in favor of the Collateral Agent, for the
benefit of Triple-A, in all of its right, title and interest in, to and under
the Transferred Assets, the Purchase Agreement and the other collateral
described in the Credit Agreement;

C. The Borrower desires to sell certain Transferred Assets to Triple-A
pursuant to that certain Triple-A Purchase Agreement dated as of the date
hereof.

D. The Buyer and the Seller have agreed to amend the Credit Agreement on
the terms and subject to the conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises set forth above, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, Triple-A and CapMAC agree as follows:

SECTION 1. AMENDMENT TO THE CREDIT AGREEMENT. Effective as of the date
first above written, subject to the satisfaction of the conditions precedent set
forth in SECTION 3 below, the Credit Agreement is hereby amended as follows:

<PAGE>

1.1 DEFINITIONS. The Definitions List referenced in Section 1.01 of
the Credit Agreement is hereby amended and restated in its entirety. The
Amended and Restated Definitions List is attached hereto as Annex A.

1.2 USE OF TERM "RELATED SECURITY". Each reference in the Credit
Agreement to the term "Related Security" is hereby replaced with the phrase
"Related Security with respect thereto".

1.3 SECTION 2.01(a). The third sentence of Section 2.01(a) is hereby
amended to delete clause (ii) in its entirety and to substitute the
following therefor:

"(ii) as adjusted on any other date of determination to eliminate
from the Discounted Eligible Receivables Balance (x) any Pledged
Receivables which were Eligible Receivables as of the dates
reflected in the Settlement Report but which no longer satisfy
the criteria for Eligible Receivables, and (y) any Eligible
Receivables reflected in the Settlement Report which have become
Purchased Receivables since the date of such Settlement Report."

1.4 SECTION 2.04. Section 2.04 is hereby amended to delete the
proviso thereto and to substitute the following:

"PROVIDED, that (x) in no event shall the Facility Limit be
reduced to an amount less than the sum of the Triple-A Loans then
outstanding at that time; and (y) concurrently with each such
reduction, the "Facility Limit" in the Triple-A Purchase
Agreement shall be reduced by the equivalent amount times 30%."

1.5 SECTION 2.05. Section 2.05 is hereby amended to delete the
reference to "Eurodollar Loan" in the last sentence thereof and to insert
therefor the term "Eurodollar Rate Advance".

1.6 SECTION 2.07. Section 2.07 is hereby amended: (i) to delete, from
clause (A) in subsection (b) and from clause (i) in subsection (c) thereof,
the word "funds" which appears in each such clause and to substitute
therefor the phrase "Collections of Pledged Receivables".

1.7 SECTION 2.09. Section 2.09 is hereby amended to add, at the
conclusion thereof, the following new subsection (c):

"(c) In the event that Triple-A requests compensation for
increased costs on behalf of any Liquidity Bank under this
Section 2.09 and such increased costs are not being requested by
the other Liquidity Banks generally or, if only one Liquidity
Bank exists, by Triple-A's liquidity providers for similar
transactions, then Triple-A shall, promptly following
identification by the Seller of an "Eligible Assignee" (as
defined in the

<PAGE>

Liquidity Agreement) willing to accept such commitment, cause the
Liquidity Bank requesting such increased costs to assign its
outstanding Advances and commitments under the Liquidity Agreement to
such Eligible Assignee, all as more particularly described in
Section 8.06(g) of the Liquidity Agreement."

1.8 SECTION 4.01(g). Section 4.01(g) is hereby amended to insert,
immediately before the words "first priority", the following parenthetical
phrase: "(except as expressly contemplated under Section 6.01)".

1.9 SECTION 4.01. Section 4.01 is hereby further amended to add, at
the conclusion thereof, the following clause (u):

"(u) Implicit Interest Rate. As of the date of any Receivables
Purchase, the excess of (i) the average implicit interest rates
being charged to Obligors in respect of the Receivables then
being purchased over (ii) the Discount Rate applicable to such
Receivables, shall not be greater than eight percent (8.0%)."

1.10 SECTION 5.01(c). Section 5.01(c) is hereby amended to delete the
proviso therein and to insert the following therefor:

"PROVIDED, that so long as no Wind-Down Event has occurred during
any calendar year, the annual audit expenses during such year for
which the Borrower is responsible hereunder and under the
Triple-A Purchase Agreement shall not exceed $40,000 in the
aggregate."

1.11 SECTION 5.01(j). Section 5.01(j) is amended to delete the
proviso which appears at the end thereof in its entirety and to substitute
the following therefor:

"PROVIDED that the Seller shall not be required to file financing
statements or to maintain the effectiveness of previously filed
financing statements with respect to any Eligible Receivables the
Outstanding Balance of which originally is or has thereafter been
reduced below $5,000, respectively, so long as the aggregate
Outstanding Balance of Receivables for which no such financing
statements are in effect at any time remains less than 7.5% of
the Discounted Eligible Receivables Balance; provided that such
seven and one-half percent limitation shall not apply from and
after the Termination Date unless and to the extent that the
Collateral Agent specifically requests otherwise."

1.12 SECTION 5.01(l). Clause (iii) of Section 5.01(l) of the Credit
Agreement is amended to delete each of the brackets ("[" and "]") which
currently appear therein.

<PAGE>

1.13 SECTION 5.01(n). The second sentence of Section 5.01(n) is
hereby amended to delete therefrom the phrase "the outstanding principal
amount of the Triple-A Loans", and to substitute therefor the phrase "the
Aggregate Outstandings".

1.14 SECTION 5.03(a). Section 5.03(a) is hereby amended to add, after
the initial phrase "Except as otherwise provided herein", the phrase "or in
the Triple-A Purchase Agreement".

1.15 SECTION 5.03(e). Section 5.03(e) is hereby amended to add,
immediately before the period at the conclusion thereof, the phrase "and
the Triple-A Purchase Agreement".

1.16 SECTION 5.03(i). Section 5.03(i) is hereby amended to delete the
word "hereunder" which appears in clause (i) thereof and to substitute
therefor the phrase "under this Credit Agreement or under the Triple-A
Purchase Agreement".

1.17 SECTION 5.03(j). Section 5.03(j) is hereby amended to delete the
phrase "under this Credit Agreement" which appears at the conclusion
thereof and to substitute therefor the phrase "under this Credit Agreement
or under the Triple-A Purchase Agreement".

1.18 SECTION 5.03(p). Clause (iii) of Section 5.03(p) is hereby
amended to add the phrase "under this Credit Agreement or the Triple-A
Purchase Agreement" between the term "Defaulted Receivables" and the word
"in".

1.19 SECTION 6.01. Section 6.01 is hereby amended to add the
following at the end thereof:

"Notwithstanding anything herein or in the Triple-A Purchase
Agreement to the contrary, it is expressly agreed that the
Collateral assigned and pledged to Triple-A hereunder shall
include all right, title and interest of the Borrower, if any, in
and to the Purchased Assets, including, without limitation, the
residual interest in all of the Borrower's right, title and
interest in and to the Purchased Assets, PROVIDED, that the
interest of Triple-A as purchaser under the Triple-A Purchase
Agreement with respect to the Purchased Assets shall be senior to
the interest of the Collateral Agent hereunder."

1.20 SECTION 6.06(a). Section 6.06(a) is hereby amended to delete the
period at the end thereof and to insert the following:

"; and PROVIDED, FURTHER, that notwithstanding anything herein to
the contrary, funds on deposit in the Collection Account which
constitute "Collections" under the Triple-A Purchase Agreement
shall be applied in accordance with the terms and provisions of
the Triple-A Purchase Agreement before being applied to satisfy
any Obligations hereunder."

<PAGE>

1.21 SECTION 6.06(b). The first sentence of Section 6.06(b) is hereby
amended to insert, after the word "funds" the first time such word appears
therein, the following parenthetical phrase: "(net of any funds
constituting "Collections" under the Triple-A Purchase Agreement and
applied to pay "Yield", to reduce "Capital" or otherwise to pay
"Obligations" thereunder)".

1.22 SECTIONS 6.06(b). Clause (iv) of Section 6.06(b) is hereby
amended to delete therefrom the phrase "any other Obligations which may be
due and owing at such time" and to substitute the following therefor:

"any other Obligations and any "Obligations" (i.e., any recourse
obligations of the Borrower) under the Triple-A Purchase
Agreement which may, in either such case, be due and owing at
such time;"

1.23 SECTION 6.06(d). The first sentence of Section 6.06(d) is hereby
amended to insert, after the word "funds" the first time such word appears
therein, the following parenthetical phrase: "(net of any funds
constituting "Collections" under the Triple-A Purchase Agreement and
applied to pay "Yield", to reduce "Capital" or otherwise to pay
"Obligations" thereunder)".

1.24 SECTION 6.06(d). Clause (vii) of Section 6.06(d) is hereby
amended to add, at the conclusion thereof, the following phrase:

"and to pay any "Obligations" (i.e., any recourse obligations of
the Borrower) under the Triple-A Purchase Agreement which may be
due and owing at such time."

1.25 SECTION 7.01(a). Section 7.01(a) is hereby amended to add, at
the end thereof, the phrase "or any 'Wind-Down Event' under the Triple-A
Purchase Agreement".

SECTION 2. REPRESENTATIONS AND WARRANTIES. The Seller represents and
warrants as follows:

(a) This Amendment and the Credit Agreement as previously executed
and as amended hereby, constitute legal, valid and binding obligations of
the Seller and are enforceable against the Seller in accordance with their
terms.

(b) Upon the effectiveness of this Amendment, the Seller hereby
reaffirms that the representations and warranties contained in ARTICLE IV
of the Credit Agreement are true and correct.

(c) Upon the effectiveness of this Amendment, the Seller hereby
reaffirms all covenants made in the Credit Agreement and the other Facility
Documents to the extent the same are not amended hereby and agrees that all
such covenants shall be deemed to have been remade as of the effective date
of this Amendment.

<PAGE>

(d) No Wind-Down Event or Unmatured Wind-Down Event has occurred or
is continuing.

SECTION 3. CONDITIONS PRECEDENT. This Amendment shall become effective
as of November 5, 1996, PROVIDED that all of the following conditions are met in
form and substance satisfactory to the Buyer.

(a) This Amendment shall have been executed and delivered by the
Borrower and Triple-A.

(b) On the date the last of the conditions listed herein is satisfied
(the "Delivery Date") there shall exist no Wind-Down Event or Unmatured
Wind-Down Event.

SECTION 4. REFERENCE TO THE EFFECT ON THE CREDIT AGREEMENT. Except as
specifically set forth above, the Credit Agreement, and all other documents,
instruments and agreements executed and/or delivered in connection therewith,
shall remain in full force and effect, and are hereby ratified and confirmed.
The execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided herein and for the limited purposes set forth herein, operate
as a waiver of any right, power or remedy of the Buyer, nor constitute a waiver
of any provisions of the Credit Agreement, or any other documents, instruments
and agreements executed and/or delivered in connection therewith.

SECTION 5. HEADINGS. Section headings in the Amendment are included
herein for convenience of reference only and shall not constitute part of this
Amendment for any other purpose.

SECTION 6. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the internal laws, and not the conflicts of law
provisions, of the State of New York.

SECTION 7. COUNTERPARTS. This Amendment may be executed by one or more
of the parties to this Amendment on any number of separate counterparts and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.

<PAGE>

IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and
year first above written.

HPSC BRAVO FUNDING CORP.,
as Borrower

By: /s/ John W. Everets
-----------------------------------
Title:

TRIPLE-A ONE FUNDING CORPORATION

By CAPITAL MARKETS ASSURANCE
CORPORATION, Its Attorney-In-Fact

By: /s/ David E. Czerniecki
-----------------------------------
Title: Vice President

CAPITAL MARKETS ASSURANCE CORPORATION,
as Collateral Agent and Administrative
Agent

By: /s/ David E. Czerniecki
-----------------------------------
Title: Vice President

<PAGE>

Execution Copy (Final)

AMENDMENT NO. 2
Dated as of October 18, 1996

PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of January 31, 1995

THIS AMENDMENT NO. 2 dated as of October 18, 1996 ("AMENDMENT") is entered
into by and between HPSC BRAVO FUNDING CORP. (the "BUYER") and HPSC, INC., a
Delaware corporation (the "SELLER"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Definitions List referred to below.

PRELIMINARY STATEMENTS

A. The Buyer and the Seller are parties to that certain Purchase and
Contribution Agreement dated as of January 31, 1995 (as amended by that certain
Amendment No. 1 dated as of December 19, 1995, the "PURCHASE AGREEMENT"),
pursuant to which the Buyer has agreed to purchase certain Transferred Assets
from the Seller from time to time pursuant to the terms of the Purchase
Agreement.

B. The Buyer has assigned the Transferred Assets to Triple-A One Funding
Corporation ("Triple-A") as security for Triple-A Loans made by Triple-A
pursuant to that certain Credit Agreement dated as of January 31, 1995 (as
amended by that certain Amendment No. 1 dated as of December 19, 1995, the
"Credit Agreement").

C. The Buyer desires to sell certain Transferred Assets to Triple-A
pursuant to that certain Triple-A Purchase Agreement dated as of the date
hereof.

D. The Buyer and the Seller have agreed to amend the Purchase Agreement
on the terms and subject to the conditions hereinafter set forth.

SECTION 1. AMENDMENT TO THE PURCHASE AGREEMENT. Effective as of the
date first above written, subject to the satisfaction of the conditions
precedent set forth in SECTION 3 below, the Purchase Agreement is hereby amended
as follows:

1.1 DEFINITIONS. The Definitions List referenced in Section 1.01 of
the Purchase Agreement is hereby amended and restated in its entirety. The
Amended and Restated Definitions List is attached hereto as Annex A.

<PAGE>

1.2 SECTION 2.07. Section 2.07 is hereby amended to delete the
proviso which appears at the end thereof in its entirety and to substitute
therefor the following:

"PROVIDED that the Seller shall not be required to file financing
statements or to maintain the effectiveness of previously filed
financing statements with respect to any Receivables the
Outstanding Balance of which originally is or has thereafter been
reduced below $5,000, respectively, so long as the aggregate
Outstanding Balance of Receivables for which no such financing
statements are in effect at any time remains less than 7.5% of
the Discounted Eligible Receivables Balance at such time;
provided that such seven and one-half percent limitation shall
not apply from and after the Termination Date unless and to the
extent that the Buyer or the Collateral Agent on its behalf
specifically requests otherwise."

1.3 SECTION 4.01(h). Section 4.01(h) is hereby amended (i) to insert
a period (".") immediately after the phrase "Adverse Claim" the second time
such phrase appears in the first sentence of such section, (ii) to insert
an extra space following such period and (iii) to capitalize the word "all"
which immediately follows such extra space.

1.4 SECTION 4.01(r)(vi). Section 4.01(r)(vi) is hereby amended to
add, at the end thereof, the phrase "for all Contracts".

1.5 SECTION 4.01(r). Section 4.01(r) is hereby further amended to
add, at the conclusion thereof, the following clause (xi):

"(xi) As of the Purchase Date thereof, the excess of (i) the
average implicit interest rates being charged to Obligors in
respect of the Receivables then being purchased OVER (ii) the
Discount Rate applicable to such Receivables, shall not be
greater than eight percent (8.0%)."

1.6 SECTION 5.01(j). Section 5.01(j) is hereby amended to delete the
proviso which appears at the end thereof in its entirety and to substitute
therefor the following:

"provided that the Seller shall not be required to file financing
statements or to maintain the effectiveness of previously filed
financing statements with respect to any Receivables the
Outstanding Balance of which originally is or has thereafter been
reduced below $5,000, respectively, so long as the aggregate
Outstanding Balance of Receivables for which no such financing
statements are in effect at any time remains less than 7.5% of
the Discounted Receivables Balance of all Receivables at such
time; provided that such seven and one-half percent limitation
shall not apply from and after the Termination Date unless and to
the extent that the Buyer or the Collateral Agent on its behalf
specifically requests otherwise."

<PAGE>

1.7 SECTION 5.01(l)(vii). Section 5.01(l)(vii) is hereby amended to
add, at the end thereof, the phrase "and Section 5.01(l) of the Triple-A
Purchase Agreement".

1.8 SECTION 5.02. Section 5.02 is hereby amended (i) to delete the
period (".") at the conclusion of clause (f) thereof and to substitute
therefor a semi-colon followed by the word and ("; and") and (ii) to then
add, at the conclusion thereof, the following additional clause (g):

"(g) as soon as possible and in any event with five Business Days
after the occurrence thereof, notification of: (i) any material
changes in the Seller's bank agreements, indentures or other
material agreements governing Indebtedness and/or (ii) any event
which constitutes (or which, with the giving of notice or the
passage of time or both, would constitute) a default under any
such agreement or permits or (iii) any other event which permits
(or which, with the giving of notice or the passage of time,
would permit) the holder of such Indebtedness to accelerate the
maturity thereof."

1.9 SECTION 6.01. Section 6.01 is hereby amended to delete the last
sentence thereof and to substitute the following:

"The Servicer acknowledges that the Buyer has (a) pursuant to the
Credit Agreement, granted to the Collateral Agent, for the
benefit of Triple-A and the Surety, a security interest in
Pledged Assets and has assigned to the Collateral Agent all of
its rights under this Agreement with respect to such Pledged
Assets, including its rights with respect to the Servicer under
this Article VI, as more fully described in Section 9.04
hereunder, and (b) pursuant to the Triple-A Purchase Agreement,
sold to Triple-A Purchased Assets which will be serviced pursuant
to Article VI of the Triple-A Purchase Agreement."

1.10 SECTION 6.02(a). Section 6.02(a) is hereby amended to delete the
fifth sentence thereof and to substitute the following therefor:

"The Servicer shall segregate and set aside for the account of
the Buyer all Collections of Transferred Assets in accordance
with Section 2.05 hereof, Section 6.06 of the Credit Agreement
and Section 6.06 of the Triple-A Purchase Agreement and shall
cause all such Collections to be remitted to a Lock-Box Account
and/or deposited directly into the Collection Account within one
Business Day after identification thereof by the Servicer and in
any event within four Business Days after the Servicer's receipt
thereof."

1.11 SECTION 7.01(j). Section 7.01(j) is hereby deleted in its
entirety and the following is substituted therefor:

<PAGE>

"(k) As of the last day of any month, the "Default Ratio" under
either the Credit Agreement or the Triple-A Purchase Agreement
shall be greater than 3.5%; or"

1.12 SECTION 7.01(k). Section 7.01(k) is hereby deleted in its
entirety and the following is substituted therefor:

"(k) As of the last day of any month, the "Delinquency Ratio"
under either the Credit Agreement or the Triple-A Purchase
Agreement shall be greater than 5.5%; or"

1.13 SECTION 7.01(m). Section .01(m) is hereby amended to delete the
semi-colon (";") at the end thereof and to substitute therefor the phrase
"or any 'Wind-Down Event' shall occur under the Triple-A Purchase
Agreement; or".

1.14 SECTION 8.01(a)(iv). Section 8.01(a)(vi) is hereby amended to
delete the reference to "Permitted Lien" and to insert therefor the term
"Permitted Encumbrance".

1.15 SECTION 8.01(a)(xi). Section 8.01(a)(xi) is hereby amended to
add, at the end thereof, the phrase "for all Receivables at such time".

1.16 SECTION 9.04. Section 9.04 is hereby amended to delete the
fourth, fifth, sixth and seventh sentences thereof and to substitute the
following therefor:

"Without limiting the foregoing, the Seller acknowledges that the
Buyer shall (i) assign to the Collateral Agent, for the benefit
of Triple-A and the Surety, as collateral security for its
obligations under the Credit Agreement, all of its rights,
remedies, powers and privileges hereunder with respect to Pledged
Assets pledged to the Collateral Agent thereunder and (ii) sell
to Triple-A all of its right, remedies, powers and privileges
hereunder with respect to Purchased Assets (as defined in the
Triple-A Purchase Agreement), and that Triple-A and/or the
Collateral Agent may further assign such rights, remedies, powers
and privileges to the extent permitted in the Credit Agreement
and the Triple-A Purchase Agreement. The Seller agrees that the
Collateral Agent, as the assignee of the Buyer, or Triple-A, as
appropriate, shall, subject to the terms of the Credit Agreement
and the Triple-A Purchase Agreement, have the right to enforce
this Agreement and to exercise directly all of the Buyer's rights
and remedies under this Agreement (including, without limitation,
the rights and remedies under Sections 6.01, 6.02, 6.03, 6.04 and
8.01) and the Seller agrees to cooperate fully with the
Collateral Agent and/or Triple-A in the exercise of such rights
and remedies. Without limiting the foregoing, the Seller hereby
acknowledges that the Buyer and Triple-A have agreed pursuant to
the Credit Agreement, the Triple-A Purchase Agreement and certain
related agreements that, subject to the restrictions set forth
therein, the Collateral Agent and certain parties providing
credit

<PAGE>

enhancements and/or liquidity for Triple-A in connection with the
Credit Agreement and the Triple-A Purchase Agreement shall be entitled
to exercise the Buyer's rights under this Agreement. The Seller
hereby consents to the foregoing and agrees to cooperate with any such
Person electing to exercise the Buyer's rights under this Agreement."

SECTION 2. REPRESENTATIONS AND WARRANTIES. The Seller represents and
warrants as follows:

(a) This Amendment and the Purchase Agreement as previously executed
and as amended hereby, constitute legal, valid and binding obligations of
the Seller and are enforceable against the Seller in accordance with their
terms.

(b) Upon the effectiveness of this Amendment, the Seller hereby
reaffirms that the representations and warranties contained in ARTICLE IV
of the Purchase Agreement are true and correct.

(c) Upon the effectiveness of this Amendment, the Seller hereby
reaffirms all covenants made in the Purchase Agreement and the other
Facility Documents to the extent the same are not amended hereby and agrees
that all such covenants shall be deemed to have been remade as of the
effective date of this Amendment.

(d) No Event of Termination or Unmatured Event of Termination has
occurred or is continuing.

SECTION 3. CONDITIONS PRECEDENT. This Amendment shall become effective
as of November 5, 1996, provided that all of the following conditions are met in
form and substance satisfactory to the Buyer.

(a) This Amendment shall have been executed and delivered by the
Buyer and the Seller.

(b) On the date the last of the conditions listed herein is satisfied
(the "Delivery Date") there shall exist no Event of Termination or
Unmatured Event of Termination.

SECTION 4. REFERENCE TO THE EFFECT ON THE PURCHASE AGREEMENT. Except
as specifically set forth above, the Purchase Agreement, and all other
documents, instruments and agreements executed and/or delivered in connection
therewith, shall remain in full force and effect, and are hereby ratified and
confirmed. The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein and for the limited purposes set forth
herein, operate as a waiver of any right, power or remedy of the Buyer, nor
constitute a waiver of any provisions of the Purchase Agreement, or any other
documents, instruments and agreements executed and/or delivered in connection
therewith.

<PAGE>

SECTION 5. HEADINGS. Section headings in the Amendment are included
herein for convenience of reference only and shall not constitute part of this
Amendment for any other purpose.

SECTION 6. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the internal laws, and not the conflicts of law
provisions, of the State of New York.

IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and
year first above written.

HPSC, INC., as Seller

By: /s/ Rene Lebfebvre
-----------------------------------
Title: CFO

HPSC BRAVO FUNDING CORP.,
as Buyer

By: /s/ John W. Everets
-----------------------------------
Title: President

<PAGE>

Execution Copy

AMENDED AND RESTATED DEFINITIONS LIST

Unless otherwise defined therein, the capitalized terms used in the
documents listed below shall have the meanings set forth in the Amended and
Restated Definitions List below.

1. Purchase and Contribution Agreement, dated as of January 31, 1995 (as
amended by that certain Amendment No. 1 dated as of December 19, 1995
and that certain Amendment No. 2 dated as of October 18, 1996, the
"PURCHASE AGREEMENT"), between the Seller and the Buyer, as the same
may be amended, supplemented or otherwise modified from time to time.

2. Credit Agreement, dated as of January 31, 1995 (as amended by that
certain Amendment No. 1 dated as of December 19, 1995 and that certain
Amendment No. 2 dated as of October 18, 1996, the "Credit Agreement"),
among the Borrower, Triple-A, and Capital Markets Assurance
Corporation ("CapMAC") as the Administrative Agent and the Collateral
Agent, as the same may be amended, supplemented or otherwise modified
from time to time.

3. Insurance and Indemnity Agreement, dated as of January 31, 1995 (as
amended by that certain Amendment No. 1 dated as of October 18, 1996,
the "Insurance Agreement"), among Triple-A, the Borrower, the
Liquidity Agent and CapMAC, as the Administrative Agent and the
Collateral Agent, as the same may be amended, supplemented or
otherwise modified from time to time.

4. Amended and Restated Fee Letter Agreement, dated October 18, 1996 (the
"Fee Letter"), among the Seller, the Borrower, Triple-A, and CapMAC as
the Administrative Agent and the Collateral Agent, as the same may be
amended, supplemented or otherwise modified from time to time.

5. Custodial Agreement, dated as January 31, 1995 (as amended by that
certain Amendment No. 1 dated as of October 18, 1996, the "Custodial
Agreement") among Triple-A, the Seller, the Borrower, the Custodian
and the Collateral Agent, as the same may be amended, supplemented or
otherwise modified from time to time.

<PAGE>

AMENDED AND RESTATED DEFINITIONS LIST

"ADVANCE" means an "Advance" funded to Triple-A under the Liquidity
Agreement.

"ADMINISTRATIVE AGENT" means CapMAC in its capacity as "Administrative
Agent" for Triple-A.

"Adverse Claim" means a lien, security interest, charge, encumbrance or
other right or claim of any Person other than Permitted Encumbrances.

"Affiliate" means, with respect to any Person, a Person: (i) that directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such Person; (ii) that beneficially owns or
holds 5% or more of any class of the voting stock (or, in the case of a Person
that is not a corporation, 5% or more of the equity interest) of such Person; or
(iii) 5% or more of the voting stock (or, in the case of a Person that is not a
corporation, 5% or more of the equity interest) of which is beneficially owned
or held, directly or indirectly, by such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting stock or an equity interest, by contract, or otherwise.

"Affiliated Obligor" means any Obligor which is an Affiliate of another
Obligor.

"Aggregate Outstandings" means, on any day, an amount equal to the sum of
(i) the outstanding principal amount of the Triple-A Loans and (ii) the
outstanding "Capital" under the Triple-A Purchase Agreement.

"Aggregate Reserves" means, on any day, an amount equal to the Discounted
Eligible Receivables Balance times the greatest of (i) 15%, (ii) the Default
Reserve Ratio as computed in the most recent Settlement Report and (iii) the
Excess Concentration Reserve Ratio as computed on the most recent Settlement
Date, provided, that the Aggregate Reserves shall be no less than $2,500,000 at
any time; provided further, however, that if the "Capital" outstanding under the
Triple-A Purchase Agreement has been reduced to zero, the Aggregate Reserves
shall thereafter be no less than the sum of (i) $2,500,000 plus (ii) the lesser
of (x) $1,000,000 and (y) the Outstanding Balance of the Purchased Receivables
at the time such Capital was reduced to zero.

"Banco Santander" means Banco Santander, a Spanish bank, New York Branch.

"Bank of Boston" means The First National Bank of Boston, a national
banking association.

"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
Section 101 et seq.), as amended from time to time, or any successor statute.

"Base Rate" means a fluctuating interest rate per annum equal to the higher
of (i) the rate of interest published in the Wall Street Journal as the prime
rate, or, in the event that no such rate is published, the rate of interest
announced publicly by the Liquidity Agent in New York, New York, as its prime or
reference rate, whether or not such rate is the lowest rate offered by such

<PAGE>

institution to its corporate borrowers and (ii) 1/2 of one percent per annum
above the Federal Funds Rate.

"Base Rate Advance" means an Advance which bears interest at the Base Rate.

"Benefit Plan" means a defined benefit plan as defined in Section 3(35) of
ERISA (other than a Multiemployer Plan) in respect of which the Seller or any
ERISA Affiliate is, or at any time within the immediately preceding six (6)
years was, an "employer" as defined in Section 3(5) of ERISA.

"Borrower" means HPSC Bravo Funding Corp., a Delaware corporation.

"Borrowing" means a borrowing of Triple-A Loans under the Credit Agreement.

"Borrowing Base" means, on any day, (A) the Discounted Eligible Receivables
Balance on such day minus (B) the Aggregate Reserves then in effect.

"Borrowing Date" means, with respect to any Borrowing, the date on which
such Borrowing is funded, which date, other than in the case of the Closing
Date, shall be a Settlement Date.

"Business Day" means any day other than a Saturday, Sunday or public
holiday or the equivalent for banks in New York City or Boston, Massachusetts;
provided that, when used in connection with any Eurodollar Rate Advance or other
matters concerning the Eurodollar Rate, the term "Business Day" means any such
day on which dealings are carried on in the London interbank market and on which
banks are open for business in London, England.

"Buyer", when used in the Purchase Agreement or in these definitions, means
HPSC Bravo Funding Corp., a Delaware corporation.

"CapMAC" means Capital Markets Assurance Corporation, a New York stock
insurance company.

"Carrying Costs" means, at any time, the aggregate amount of (i) all
accrued and unpaid interest, fees, premiums and other expenses owing by the
Borrower to Triple-A, the Collateral Agent, the Dealer, the Surety, the Swap
Provider, the Servicer and the Administrative Agent (including, without
limitation, all fees owed under the Fee Letter, collateral audit fees and
expenses, the Servicing Fee, the CP Dealer Fees and the Surety Bond Premium)
plus (ii) all ordinary course operating expenses incurred by the Borrower during
such calendar month (including rent, salaries, professional fees and expenses
incurred in connection therewith).

"Carrying Costs Percentage" means a percentage, calculated as of the last
day of each month equal to the sum of (i) the sum of the per annum rates used to
calculate the Servicing Fee and the "Administration Fee" and "Program Fee"
described in the Fee Letter plus (ii) a fraction (expressed as a percentage) the
numerator of which equals Carrying Costs described in clause (ii) of the
definition thereof which were incurred during the calendar month then ending and
the denominator of which equals the average Aggregate Outstandings during such
month.

- 2 -
<PAGE>

"Certificate" means a certificate of assignment, in the substantially the
form delivered on the Closing Date, evidencing the assignment by the Seller to
the Buyer of the Transferred Assets.

"Closing Date" means the date on which the Borrower makes its initial
Borrowing under the Credit Agreement and its initial Purchase under the Purchase
Agreement.

"Collateral" has the meaning assigned thereto in Section 6.01 of the Credit
Agreement.

"Collateral Agent" means CapMAC, in its capacity as Collateral Agent
pursuant to the Credit Agreement and the Triple-A Purchase Agreement, and any
successor Collateral Agent.

"Collection Account" has the meaning assigned thereto in Section 6.06 of
the Credit Agreement.

"Collection Account Bank" means the bank maintaining the Collection
Account.

"Collection Date" means the date following the Termination Date on which
(i) the aggregate outstanding Triple-A Loans have been paid in full,
(ii) Triple-A has received all interest, fees and other amounts payable under
the Credit Agreement and the other Facility Documents (other than the Triple-A
Purchase Agreement) and (iii) the Surety Bonds have been discharged (other than
through payment thereunder).

"Collections" means, with respect to any Transferred Asset or Receivable,
as applicable, all cash collections and other cash proceeds of such Transferred
Asset or Receivable, including, without limitation, all cash proceeds of Related
Security related thereto, and, in the case of Transferred Assets, all cash
collections of any Receivables included therein, and, in either such case, any
Collection of such Transferred Asset or Receivable deemed to have been received
pursuant to Section 2.05 of the Purchase Agreement (it being understood that the
Seller shall pay all such deemed Collection amounts to the Buyer by depositing
the amount thereof into the Lock-Box Account).

"Commercial Paper" means the short-term promissory notes of Triple-A
denominated in dollars, issued by Triple-A in connection with the transactions
contemplated by the Facility Documents, including any portion of such short-term
promissory notes that are identified on the books and records of Triple-A as
issued in respect of the transactions contemplated by the Facility Documents.

"Conditional Sale Agreement" means a written conditional sales agreement in
substantially the form of Exhibit K-2 to the Purchase Agreement, pursuant to
which the Buyer sells Equipment to an Obligor.

"Contract" means each Lease, Conditional Sale Agreement or Leasehold
Improvement Note or other agreement or instrument which is purported to be
transferred to the Buyer under the Purchase Agreement, whether by purchase or
contribution to the Buyer's capital, as identified on Exhibit A of the Purchase
Agreement as such exhibit may be supplemented from time to time in connection
with any subsequent Purchase as described in Section 2.02(b) of the Purchase
Agreement.

- 3 -
<PAGE>

"Contract File" means, with respect to each Contract, the following
documents:

(i) The executed original counterpart of each Contract that constitutes
"chattel paper" under 9-105(1)(b) of the UCC or that constitutes an
"instrument" for purposes of 9-105(1)(i) of the UCC;

(ii) Any evidence of insurance and any other documents evidencing or
related to any insurance policy maintained by the related Obligor
pursuant to the Contract that covers physical damage to the
Equipment;

(iii) If the related Contract is a Lease, copies of such documents, if any,
indicating that the Equipment was, as of the date such Contract
arose, owned by the Seller and kept on file by the Seller in
accordance with its customary procedures relating to such type of
Contract, such Obligor and such item of Equipment; and

(iv) Copies (if available) of UCC financing statements filed by the Seller
with respect to the related Equipment or, if no such copies are
available, other documentary evidence confirming the filing thereof.

"Contract Payment" means each periodic installment payable by an Obligor
under a Contract for rent, principal and/or interest, excluding all supplemental
or additional payments required by the terms of such Contract with respect to
sales or other taxes, insurance, maintenance, ancillary products and services
and other specific charges.

"Contract Payment Date" means, with respect to any Contract, each date on
which a Contract Payment is or becomes due and payable thereunder.

"CP Dealer Fee" means, on any day, the fees payable to the Dealer in
respect of any Commercial Paper.

"CP Disruption" means the inability of Triple-A, at any time, whether as a
result of a prohibition or any other event or circumstance whatsoever, to raise
funds through the issuance of its commercial paper notes (whether or not
constituting Commercial Paper as defined above) in the United States commercial
paper market.

"Credit Agreement" has the meaning assigned thereto on page (i) of this
Definitions List.

"Credit and Collection Policy" means those credit and collection policies
and practices relating to the Contracts and the Receivables described in
Exhibit D of the Purchase Agreement, as modified in compliance with
Section 5.03(c).

"Custodial Agreement" has the meaning assigned thereto on page (i) of this
Definitions List.

"Custodian" means Bank of Boston, in its capacity as "Custodian" under the
Custodial Agreement, or any successor thereto under the Custodial Agreement.

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"Cut-Off Date" means December 31, 1994.

"Dealer" means any dealer or placement agent in respect of the Commercial
Paper.

"Default Ratio" means the ratio (expressed as a percentage), computed as of
the last day of each month by dividing (i) two times the aggregate Outstanding
Balance of all Pledged Receivables that became Defaulted Receivables or were
written off the books of the Buyer as uncollectible during the six-month period
then ending by (ii) the average aggregate Outstanding Balances of all Pledged
Receivables during such six-month period.

"Default Reserve Ratio" means the ratio (expressed as a percentage),
computed as of the last day of each month in accordance with the following
formula:

DRR = 2 X ADR X WRT, where

DRR = the Default Reserve Ratio;

ADR = the six-month rolling average of the Default Ratios for
the six most recent calendar months (including the month
then ending); and

WRT = the Weighted Average Remaining Term of the Pledged
Receivables as of such day.

"Defaulted Receivable" means a Receivable at any time: (i) as to which any
Scheduled Contract Payment or part thereof is unpaid more than 180 days from its
original due date, (ii) as to which the Obligor thereof has taken any action, or
suffered any event to occur, of the type described in the definition of
Insolvency Event or (iii) which, consistent with the Credit and Collection
Policy, has been or should be written off the Borrower's books as uncollectible.

"Delinquency Ratio" means the ratio (expressed as a percentage), computed
as of the last day of each month, by dividing (i) the aggregate Outstanding
Balance of all Pledged Receivables which became Delinquent Receivables during
the three-month period then ending, by (ii) the sum of the aggregate Outstanding
Balances of all Pledged Receivables as of each of the last days of the fifth,
fourth and third preceding calendar months (so that, for example, the
Delinquency Ratio calculated as of June 30th would have a denominator equal to
the sum of the Outstanding Balances of all Pledged Receivables as of
January 31st, February 28th, and March 31st).

"Delinquent Receivable" means a Receivable that is not a Defaulted
Receivable and (i) as to which any Scheduled Contract Payment or part thereof,
is unpaid more than 90 days from its original due date or (ii) which, consistent
with the Credit and Collection Policy, has been or should be classified as
delinquent by the Seller.

"Designated Obligor" means, at any time, any Obligor of the Seller whom the
Collateral Agent has, following three Business Days' notice, advised the Seller
that such Obligor shall be considered a Designated Obligor.

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"Designated Termination Date" means the date of the declaration or
automatic occurrence of the Termination Date pursuant to Section 7.01 of the
Purchase Agreement or Section 7.02 of the Credit Agreement.

"Dilution Factors" means with respect to the Receivables, any credits,
rebates, freight charges, cash discounts, volume discounts, cooperative
advertising expenses, royalty payments, warranties, cost of parts required to be
maintained by agreement (whether express or implied), allowances, disputes,
chargebacks, returned or repossessed goods, inventory transfers, allowances for
early payments and other allowances that are made or coordinated with the
Seller's usual practices.

"Discount Rate" means, with respect to any Receivable, the discount rate
used to calculate the aggregate Discounted Value of the Scheduled Contract
Payments payable under the related Contract as of the last day of the month
immediately preceding the month in which such Receivable was acquired from the
Seller. The Discount Rate for the Receivables transferred on any date shall be
a rate equal to the sum of (i) the interest rate per annum quoted to the
Borrower by the Swap Provider as the rate at which such Swap Provider is willing
to enter into an Interest Rate Hedge pursuant to which the Borrower will pay an
interest rate calculated in conjunction with an Interest Rate Hedge amortization
prepared by the Borrower and which complies with Section 5.01(n) of the Credit
Agreement and in return shall receive a floating interest rate (calculated
against the same principal amount) approximately equal to the Eurodollar Rate,
plus (ii) .50% per annum (representing the interest rate spread on "Eurodollar
Rate Advances" under the Liquidity Agreement) plus (iii) the Carrying Costs
Percentage at such time; provided, that the Borrower may, at its option, with
respect to the Receivables transferred on any Settlement Date, designate a rate
which is higher than the rates calculated above to be the "Discount Rate" for
such Receivables.

"Discounted Eligible Receivables Balance" means, as of any date of
determination, the aggregate of the Discounted Values for all Pledged
Receivables which constitute Eligible Receivables.

"Discounted Receivables Balance" means, as of any date of determination,
the aggregate of the Discounted Values for all Receivables or Pledged
Receivables, as the case may be.

"Discounted Value" means, with respect to any Receivable, the present value
of the aggregate amount of the remaining Scheduled Contract Payments under the
Contract relating thereto, with such aggregate amount discounted to present
value using the Discount Rate for such Scheduled Contract Payments and a payment
schedule of the first day of each month commencing with the first day of the
month in which the Discounted Value is calculated and assuming that each
Scheduled Contract Payment is paid on the last Business Day of the month in
which such Scheduled Contract Payment is due; it being understood that the
Discounted Value for that portion of any Receivable which constitute payments or
charges excluded from the definition of Contract Payment or which constitute the
price for a purchase option shall be zero.

"DOL" means the United States Department of Labor and any successor
department or agency.

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"Eligible Obligor" means, at any time, an Obligor who is a licensed
professional dental or medical practitioner and who (i) is not an Affiliate of
the Seller; (ii) is not the subject of any Insolvency Proceeding; (iii) is not a
Designated Obligor; (iv) is a United States resident; (v) is not the United
States of America nor any state, or other local governmental agency, or any
department, agency or instrumentality thereof and (vi) is not an Obligor of any
Defaulted Receivable.

"Eligible Receivable" means, at any time, a Receivable:

(i) the Obligor of which is an Eligible Obligor;

(ii) which is not a Delinquent Receivable or a Defaulted Receivable;

(iii) which, according to the Contract under which such Receivable
arises, is required to be paid in full within 72 months of the
original commencement date of such Contract (or such longer
period as may be consented to by the Collateral Agent and the
"Majority Liquidity Banks" (as such term is defined in the
Liquidity Agreement);

(iv) which, if arising under a Lease or Conditional Sale Agreement
arises under a Contract pursuant to which the Equipment related
thereto has been installed and accepted by the related Obligor;

(v) the original Outstanding Balance of which, when added to the
Outstanding Balance of all other Receivables owing by the same
Obligor at such time, does not exceed $250,000, PROVIDED, THAT,
no more than 30% of the Discounted Eligible Receivables Balance
shall relate to Receivables the original Outstanding Balance of
which, when added to the Outstanding Balance of all other
Eligible Receivables owing by the same Obligor at such time,
exceeds $150,000;

(vi) which 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) as in effect in any jurisdiction which has adopted
Article 9 of the UCC and, if the Contract is chattel paper,
then there is only one counterpart of the Contract that
constitutes "chattel paper" for purposes of Section 9-105(l)(b)
and 9-308 of the UCC;

(vii) which is denominated and payable only in United States dollars
in the United States;

(viii) which arises under a Contract which has been duly authorized
and which is in full force and effect and constitutes the
legal, valid and binding obligation of the Obligor enforceable
against such Obligor in accordance with its terms and is not
subject (at the time each

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<PAGE>

determination of eligibility is made hereunder) to any dispute, offset
or counterclaim whatsoever;

(ix) which, together with the Contract related thereto, does not
contravene in any material respect any laws, rules or
regulations applicable thereto (including, without limitation,
laws, rules and regulations relating to truth in lending, fair
credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and
with respect to which no party to the Contract related thereto
is in violation of any such law, rule or regulation applicable
to such Contract in any material respect;

(x) which, has not been compromised, adjusted, rewritten or
otherwise modified (including by extension of time for payment
or the granting of any discounts, allowances or credits) for
any reason unless such modification constitutes a Permitted
Extension;

(xi) which (A) satisfies all applicable requirements of the Credit
and Collection Policy and (B) which is freely assignable and
arises under a Contract which is also freely assignable;

(xii) with respect to which, from and after the Purchase thereof, (A) the
Buyer has a first priority ownership therein, free and clear of any
Adverse Claim; and (B) the Collateral Agent has a first priority
perfected security interest free and clear of any Adverse Claim;

(xiii) which arises under a Contract, none of the parties to which have
done or failed to do anything which would or might permit any other
party thereto to terminate such Contract or to suspend or reduce any
payments or obligations due or to become due thereunder;

(xiv) which does not constitute a "consumer lease" under the UCC;

(xv) which, if it arises under a Lease, such Lease requires the Obligor
to maintain insurance against loss or damage to the Equipment
subject to such Lease under an insurance policy which names the
Buyer or the Seller as loss payee and which interest as loss payee
has been transferred to the Buyer pursuant to the Purchase Agreement
and been assigned to the Collateral Agent as security in accordance
with the Credit Agreement;

(xvi) which arises under a Contract, no portion of which has been, or is
subject to rejection, early termination or non-assumption, prior to
the original term of such Contract except pursuant to a provision
therein requiring payment of a Termination Amount upon any such
rejection, early termination or non-assumption;

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<PAGE>

(xvii) which arises under a Contract that requires payments to be made on a
regular periodic basis and which payments, in the case of any Lease,
do not represent the payment of interim rents;

(xviii) which arises under a Contract that requires the Obligor to be in
possession of any Equipment subject thereto and does not permit the
subleasing of such Equipment to any other Person;

(xix) no portion of which is payable on account of sales taxes;

(xx) as to which the Collateral Agent has not notified the Seller
that the Collateral Agent has determined, in its reasonable
discretion, that such Receivable (or class of Receivables) is
not acceptable for eligibility hereunder (which notice shall
state the reason(s) the Collateral Agent has elected to make
such determination);

(xxi) which was originated or acquired by the Seller in the ordinary
course of its business;

(xxii) the Discounted Value of which, if arising under a Leasehold
Improvement Note, when added to the Discounted Value of all Eligible
Receivables arising under Leasehold Improvement Notes, does not
exceed 25% of the Discounted Eligible Receivables Balance;

(xxiii) the Contract for which is either (A) a Lease in substantially the
form of EXHIBIT K-1 to the Purchase Agreement, (B) a Conditional
Sale Agreement in substantially the form of EXHIBIT K-2 thereto; or
(C) a Leasehold Improvement Note in substantially the form of
EXHIBIT K-3 thereto; or (D) a promissory note, the Discounted Value
of which, when added to the Discounted value of all Eligible
Receivables owed by such Obligor and not described under (A), (B) or
(C) above, does not exceed $25,000 and the Discounted Value of
which, when added to the Discounted Value of all Eligible
Receivables not described under (A), (B) or (C) above owed by all
Obligors, does not exceed 5% of the Discounted Eligible Receivables
Balance;

(xxiv) with respect to which the Seller has filed and maintained the
effectiveness of UCC financing statements against the Obligor in
order to perfect any security interest granted under in such
Contract in the related Equipment, PROVIDED that failure to maintain
the effectiveness of any financing statements for an otherwise
Eligible Receivable whose Outstanding Balance has been reduced below
$5,000 shall, so long as such failure is permitted by
SECTION 5.01(j) of the Credit Agreement, not cause such Receivable
to become ineligible;

(xxv) the Contract for which was originated no earlier than December 1,
1993 and no later than the date which is one month prior to the
Purchase thereof by the Buyer and for which the Obligor has made at
least one Scheduled Contract Payment in full and in a timely manner;

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(xxvi) the Obligor of which has been notified of the Buyer's interest as
required under the Purchase Agreement;

(xxvii) with respect to which the Contract File has been delivered to the
Custodian as contemplated under the Custodial Agreement;

(xxviii) which, if arising under a Lease or Conditional Sale Agreement or
Leasehold Improvement Note, relates to Equipment leased or acquired
by Obligors a substantial majority of whom (i.e., 70% or greater)
are in the fields of dentistry and ophthalmology, in each case for
use in the ordinary course of their dental or medical practices; and

(xxix) with respect to which the other representations and warranties
contained in clauses (i) (ii) (iv) and (v) of SECTION 4.01(r) of the
Purchase Agreement are true and correct in all material respects and
with respect to which all other representations and warranties
contained in such SECTION 4.01(r) are true and correct in all
material respects as of the date or dates therein made.

"Equipment" means each item of equipment that is the subject of a Contract,
including all parts, accessions and modifications thereto and all replacements
thereof.

"ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.

"ERISA Affiliate" means any (i) corporation which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
IRC) as the Seller; (ii) partnership or other trade or business (whether or not
incorporated) under common control (within the meaning of Section 414(c) of the
IRC) with the Seller or (iii) member of the same affiliated service group
(within the meaning of Section 414(m) of the IRC) as the Seller, any corporation
described in clause (i) above or any partnership or other trade or business
described in clause (ii) above.

"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.

"Eurodollar Rate" means for a Eurodollar Rate Advance and the relevant
Interest Period, an interest rate per annum equal to an interest rate per annum
determined by the Liquidity Agent equal to the quotient of (i) the rate at which
it would offer deposits in United States dollars to prime banks in the London
interbank market for a period equal to such Interest Period and in a principal
amount of not less than $1,000,000 at or about 11:00 A.M. (London time) on the
second Business Day before (and for value on) the first day of such Interest
Period, divided by, (ii) one minus the Eurodollar Reserve Percentage (expressed
as a decimal) applicable to the Liquidity Agent for that Interest Period.

"Eurodollar Rate Advance" means an Advance which bears interest at a rate
per annum calculated by reference to the Eurodollar Rate.

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<PAGE>

"Eurodollar Reserve Percentage" of any Liquidity Bank for the Interest
Period for any Eurodollar Rate Advance means the reserve percentage applicable
during such Interest Period (or, if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for such Liquidity Bank with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities having
a term equal to such Interest Period.

"Event of Termination" has the meaning assigned to that term in
Section 7.01 of the Purchase Agreement.

"Excess Concentration Reserve Ratio" means, on any day, a ratio (expressed
as a percentage) calculated as of the most recent Settlement Date in accordance
with the following formula:

ECRR = (MOB/DRB * 2) + [.14(1-[MOB/DRB * 2])]; where

ECRR = the Excess Concentration Reserve Ratio;

MOB = the largest Outstanding Balance of Eligible
Receivables owed by a single Obligor; and

DRB = the Discounted Eligible Receivables Balance;

PROVIDED, however, that if MOB/DRB IS LESS THAN OR EQUAL TO 1.5%, the Excess
Concentration Reserve Ratio shall be zero.

"Face Amount" means (i) with respect to any Commercial Paper issued on a
discount basis, the face amount of any such Commercial Paper and (ii) with
respect to any Commercial Paper issued on an interest-bearing basis, the sum of
the principal amount thereof and the amount of all interest stated to accrue
thereon through the stated maturity date.

"Facility Documents" means, collectively, the Purchase Agreement, the
Credit Agreement, the Triple-A Purchase Agreement, the Custodial Agreement, the
Lock-Box Agreements, the Insurance Agreement, and all other agreements,
documents and instruments delivered pursuant thereto or in connection therewith.

"Facility Limit" means $100,000,000, as such amount may be reduced pursuant
to Section 2.04 of the Credit Agreement, less the aggregate outstanding Capital
under the Triple-A Purchase Agreement.

"Federal Funds Rate" means, for any day, a fluctuating interest 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 which is a Business Day, the
average of the quotations for such day for such transactions received by the
Liquidity Agent from three Federal funds brokers of recognized standing selected
by it.

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"Fee Letter" has the meaning assigned thereto on page (i) of this
Definitions List.

"GAAP" means generally accepted accounting principles as in effect from
time to time and applied on a basis consistent with the audited financial
statements described in Section 4.01(e) of the Purchase Agreement.

"Indebtedness" of any Person means (i) indebtedness of such Person for
borrowed money, (ii) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) obligations of such Person to pay the
deferred purchase price of property or services, (iv) obligations of such Person
as lessee under leases which shall have been or should be, in accordance with
GAAP, recorded as capital leases, (v) obligations secured by any lien or other
charge upon property or assets owned by such Person, even though such Person has
not assumed or become liable for the payment of such obligations,
(vi) obligations of such Person in connection with any letter of credit issued
for the account of such Person and (vii) obligations of such Person under direct
or indirect guaranties in respect of, and obligations (contingent or otherwise)
to purchase or otherwise acquire, or otherwise to assure a creditor against loss
in respect of, indebtedness or obligations of others of the kinds referred to in
clauses (i) through (vi) above.

"Indemnified Party" has the meaning assigned to such term in Section 8.01
of the Purchase Agreement.

"Insolvency Event" means with respect to any Person, any of the following
events: such Person shall generally not pay its debts as such debts become due
or shall admit in writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or any case or
proceeding shall be instituted by or against such Person seeking to adjudicate
it a bankrupt or insolvent, or seeking liquidation, dissolution, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property.

"Insolvency Proceeding" means any proceeding of the sort described in the
definition of Insolvency Event.

"Insurance Agreement" has the meaning assigned thereto on page (i) of this
Definitions List.

"Interest Payment Date" means, with respect to any Triple-A Loan, the last
day of the Interest Period then applicable to such Triple-A Loan.

"Interest Period" means, with respect to any Triple-A Loan, commencing on
the date such Triple-A Loan is advanced until the Interest Payment Date
therefor, and thereafter commencing on the last day of the then existing
Interest Period for such Triple-A Loan until the next Interest Payment Date
therefor, a period selected by the Administrative Agent and notified to the
Borrower in accordance with Section 2.03(b) of the Credit Agreement. Such
Interest Period shall be:

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(i) if such Triple-A Loan is funded through the issuance of
Commercial Paper, a period of from 1 to 180 days;

(ii) if such Triple-A Loan is funded through Base Rate Advances, a
period of from 1 to 30 days;

(iii) if such Triple-A Loan is funded through Eurodollar Rate Advances,
a period of one, two or three months;

PROVIDED, HOWEVER, that

(x) whenever the last day of an Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest
period shall be extended to occur on the next succeeding Business
Day, unless such extension would cause the last day of an
Interest Period described in clause (iii) above to occur in the
next following calendar month, in which event the last day of
such Interest Period shall be deemed to occur on the immediately
preceding Business Day;

(y) whenever an Interest Period described in clause (iii) above
commences on the last Business Day in a month or on a date for
which there is no numerically corresponding day in the month in
which such Interest Period would otherwise end, the last day of
such Interest Period shall occur on the last Business Day of the
month in which such Interest Period ends; and

(z) no Interest Period described in clause (iii) above may end later
than the Scheduled Termination Date.

"Interest Rate Hedge Assignment" means an assignment in substantially the
form of Exhibit F to the Credit Agreement pursuant to which the Borrower assigns
to the Collateral Agent all of its rights to payment under the Interest Rate
Hedges.

"Interest Rate Hedges" means interest rate swap or similar agreements
entered into by the Borrower and Triple-A with the Swap Provider to provide
protection to, or minimize the impact upon, the Borrower and Triple-A of
increasing interest rates under the Credit Agreement.

"IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.

"IRS" means the Internal Revenue Service of the United States of America.

"Issuing and Paying Agent" means Bankers Trust Company, acting in its
capacity as the issuing and paying agent and depositary for the Commercial Paper
pursuant to that certain Depositary and Issuing and Paying Agency Agreement
dated as of February 25, 1994 among Triple-A, the Administrative Agent and
Bankers Trust Company, as the same may be amended, supplemented or otherwise
modified from time to time, and any successor to Bankers Trust Company under
such agreement.

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<PAGE>

"Lease" means a lease agreement between the Seller and an Obligor
substantially in the form of Exhibit K-1 to the Purchase Agreement, pursuant to
which the Seller originally leased Equipment to such Obligor.

"Leasehold Improvement Note" means a note or instrument substantially in
the form of Exhibit K-3 to the Purchase Agreement, evidencing an Obligor's
indebtedness to the Buyer on account of a loan made to finance improvements to,
or other costs incurred in connection with the installation or maintenance of,
Equipment.

"Liquidity Agent" means Bank of Boston, in its capacity as the agent for
the Liquidity Banks under the Liquidity Agreement, or any successor thereto.

"Liquidity Banks" means the financial institutions party to the Liquidity
Agreement as "Liquidity Banks" thereunder.

"Liquidity Agreement" means that certain Liquidity Agreement dated as of
January 31, 1995, as amended by that certain Amendment No. 1 dated as of
October 18, 1996, by and among Triple-A, the Liquidity Banks party thereto and
the Liquidity Agent, as the same may be amended, supplemented or otherwise
modified from time to time.

"Liquidity Security Agreement" means that certain Liquidity Security
Agreement dated as of January 31, 1995, as amended by that certain Amendment
No. 1 dated as of October 18, 1996, by and among Triple-A, CapMAC and Bank of
Boston in its capacity as the Liquidity Agent and as "Liquidity Collateral
Agent" under the Liquidity Security Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.

"Lock-Box Account" means an account maintained at a Lock-Box Bank for the
purpose of receiving Collections.

"Lock-Box Agreement" means an agreement, in substantially the form of
Exhibit G to the Purchase Agreement, among the Seller, the Buyer and a Lock-Box
Bank which agreement sets forth the rights of the Collateral Agent, the Seller,
the Buyer and the Lock-Box Bank with respect to the disposition and application
of the Collections received into the applicable Lock-Box Account, including,
without limitation, the right of the Collateral Agent to direct the Lock-Box
Bank to remit all Collections of Transferred Assets directly to the Collateral
Agent.

"Lock-Box Bank" means any of the banks holding one or more lock-box
accounts for receiving Collections from the Receivables.

"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by either the Seller or any ERISA Affiliate.

"Notice of Assignment" means a Notice of Assignment in substantially the
form of Exhibit B to the Purchase Agreement.

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"Notice of Borrowing" has the meaning assigned to such term in Section 2.03
of the Credit Agreement.

"Obligations" means all present and future indebtedness and other
liabilities and obligations (howsoever created, arising or evidenced, whether
direct or indirect, absolute or contingent, or due or to become due) of the
Borrower to Triple-A, the Collateral Agent, the Administrative Agent, the Surety
and/or the Indemnified Parties, arising under or in connection with the Credit
Agreement, the Triple-A Note and the other Facility Documents (other than the
Triple-A Purchase Agreement) or the transactions contemplated thereby and shall
include, without limitation, all liability for principal of and interest on the
Triple-A Loans, closing fees, unused line fees, audit fees, expense
reimbursements, indemnifications, and other amounts due or to become due under
the Facility Documents, including, without limitation, interest, fees and other
obligations that accrue after the commencement of an Insolvency Proceeding (in
each case whether or not allowed as a claim in such Insolvency Proceeding).

"Obligor" means each Person obligated to make payments under a Contract.

"Other Taxes" has the meaning assigned to such term in Section 2.10(b) of
the Credit Agreement.

"Outstanding Balance" means, with respect to any Receivable at any time,
the Discounted Value of the remaining Scheduled Contract Payments under the
related Contract, as such amounts are adjusted as a result of any of the events
described in Section 2.05 of the Purchase Agreement.

"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.

"Permitted Encumbrance" means any of the following:

(a) liens, charges or other encumbrances for taxes and other governmental
assessments which are not yet due and payable;

(b) workers', mechanics', suppliers', carriers', warehousemen's, landlords'
liens and deposits, pledges or liens to secure statutory obligations,
surety or appeal bonds or other liens of like general nature incurred
in the ordinary course of business and not in connection with the
borrowing of money, PROVIDED in each case, the obligation secured is
not overdue or, if overdue, is being contested in good faith by
appropriate actions or proceedings, and PROVIDED, FURTHER, that such
liens do not, in the reasonable opinion of the Buyer, materially
detract from the value of the Contract or the Equipment subject
thereto;

(d) liens, charges or encumbrances created in favor of the Buyer pursuant
to the Purchase Agreement or in favor of the Collateral Agent or
otherwise granted to Triple-A or to a Liquidity Bank in the Facility
Documents; or

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<PAGE>

(e) with respect to Equipment, liens thereon created in favor of the Seller
pursuant to a Contract and assigned to the Buyer pursuant to the
Purchase Agreement.

"Permitted Extension" means an extension of a Scheduled Contract Payment in
the ordinary course of business for reasons unrelated to an Obligor's
creditworthiness for a period not to exceed 2 months.

"Permitted Investments" means (i) securities issued or directly and fully
guaranteed or insured by the United States government or any agency or
instrumentality thereof having maturities on or before the first Settlement Date
after the date of acquisition; (ii) time deposits and certificates of deposit
having maturities on or before the first Settlement Date after the date of
acquisition, maintained with or issued by any commercial bank having capital and
surplus in excess of $500,000,000 and having the highest commercial paper rating
available by both Rating Agencies; (iii) money market funds which have the
highest applicable rating available by both Rating Agencies; (iv) repurchase
agreements having maturities on or before the first Settlement Date after the
date of acquisition for underlying securities of the types described in
clauses (i) and (ii) above or clause (v) below with any institution with the
highest long term debt rating and commercial paper rating available by both
Rating Agencies; and (v) commercial paper maturing on or before the first
Settlement Date after the date of acquisition and having the highest commercial
paper rating available by both Rating Agencies.

"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, government (or any agency or political subdivision thereof) or other
entity.

"Plan" means an employee benefit plan defined in Section 3(3) of ERISA in
respect of which the Seller or any ERISA Affiliate is, or within the immediately
preceding six years was, an "employer" as defined in Section 3(5) of ERISA.

"Pledged Assets" means (i) at all times prior to the Termination Date,
(a) all then outstanding Pledged Receivables, (b) all Related Security relating
to such Pledged Receivables and (c) all Collections with respect to, and other
proceeds of, such Receivables and (ii) at all times on and after the Termination
Date, (a) all Pledged Receivables outstanding as of the close of business on the
day preceding the Termination Date (including any interest or finance charges
accruing after the Termination Date which relate to any Pledged Receivables
outstanding as of the close of business on the day preceding the Termination
Date, (b) all Related Security relating to such Pledged Receivables and (c) all
Collections with respect to, and other proceeds of, such Receivables.

"Pledged Receivables" means all Receivables which are not Purchased
Receivables.

"Post Office Box" means each post office box to which Obligors are directed
to mail payments in respect of the Receivables.

"Purchase" means a purchase (whether by means of cash payment or by capital
contribution) of Transferred Assets by the Buyer from the Seller pursuant to
Sections 2.01 and 2.02 of the Purchase Agreement.

- 16 -
<PAGE>

"Purchase Agreement" has the meaning assigned thereto on page (i) of this
Definitions List.

"Purchase Date" means, with respect to any Purchase, the date on which such
purchase occurs.

"Purchase Price" means the purchase price payable for any Purchase as
calculated in Section 2.02(b) of the Purchase Agreement.

"Purchased Receivables" has the meaning assigned thereto in the Triple-A
Purchase Agreement.

"Purchased Assets" has the meaning assigned thereto in the Triple-A
Purchase Agreement.

"Rating Agencies" means, collectively, Standard & Poor's Corporation and
Moody's Investors Services, Inc., or their respective successors.

"Receivable" means all rights to payment arising under a Contract,
including, without limitation, (i) Contract Payments, (ii) Termination Payments
and (iii) Residual Realizations, together with all supplemental or additional
payments required by the terms of such Contract with respect to insurance,
maintenance, ancillary products and services and other specific charges.

"Records" means all Contracts and other documents, books, records and other
information (including without limitation, computer programs, tapes, discs,
punch cards, data processing software and related property and rights)
maintained with respect to Contracts and the related Obligors.

"Related Security" means with respect to any Contract:

(i) all security interests or liens and property subject thereto from
time to time purporting to secure payment of the Receivables arising
under such Contract, whether pursuant to such Contract or otherwise;

(ii) the assignment to the Buyer, of all UCC financing statements covering
any Equipment or covering any collateral securing payment of the
Receivable arising under such Contract;

(iii) all guarantees, indemnities, warranties, letters of credit, insurance
policies and proceeds and premium refunds thereof and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of the Receivables arising under such
Contract whether pursuant to the Contract related to such Receivable
or otherwise;

(iv) all of the Seller's right, title and interest in, to and under the
Equipment related to such Contract, whether as an ownership interest,
as collateral security, or which

- 17 -
<PAGE>

was repossessed from an Obligor of a Receivable to the extent that the
Outstanding Balance of such Receivable remains unpaid;

(v) all Records; and

(vi) all Collections and other proceeds of the foregoing, including,
without limitation, all insurance and condemnation proceeds and all
security deposits related to the Equipment.

"Reportable Event" means any of the events described in Section 4043 of
ERISA.

"Residual Realization" means, with respect to any Equipment, the amount
received or receivable by the Buyer or the Servicer upon the sale or other
disposition of the Equipment, whether from the Obligor upon the exercise of any
purchase option or from a sale or from insurance proceeds or otherwise.

"Scheduled Contract Payments" means the Contract Payments due under each
Contract, as set forth in the appendix to Exhibit A of the Purchase Agreement
(including any supplement to such exhibit delivered under Section 2.02(b)
thereof and also including any modification to such appendix as the result of
any modification, waiver or amendment to any Contract undertaken in conformity
with the Purchase Agreement), excluding, however, (i) in the case of any
Contract which is not a Lease, starting with the final Contract Payment owed
thereunder and proceeding in reverse order of maturity, the Contract Payments
(or portions thereof) equal to any security deposit related to such Contract and
(ii) any Contract Payment that is due more than 72 months after the original
commencement date of such Contract. The term "Scheduled Contract Payment" does
not include any Contract Payment which is payable in respect of any Residual
Realization or which otherwise reflects the residual value of the related
Equipment.

"Scheduled Liquidity Commitment Termination Date" has the meaning assigned
to that term in the Liquidity Agreement.

"Scheduled Termination Date" means October 28, 1999.

"Seller" means HPSC, Inc., a Delaware corporation.

"Servicer" has the meaning assigned to that term in Section 6.01 of the
Purchase Agreement.

"Servicing Fee" has the meaning assigned to that term in Section 6.08 of
the Purchase Agreement.

"Servicing Termination Event" means a failure on the part of the Servicer
to observe or perform any of its duties or obligations as Servicer under the
Purchase Agreement or as "Servicer" under the Triple-A Purchase Agreement, as
determined by the Collateral Agent in its reasonable judgment.

- 18 -
<PAGE>

"Settlement Date" means the 20th day of each month; provided, that if in
any month such day is not a Business Day, the "Settlement Date" for such month
shall be the first Business Day to occur after such 20th day.

"Settlement Report" means a report, in substantially the form of Exhibit C
to the Purchase Agreement, furnished by the Seller to the Buyer pursuant to
Section 2.05(b) thereof.

"Subsidiary" means, as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.

"Successor Servicer" means any Person which succeeds to the Seller as the
Servicer in accordance with the terms and provisions of the Purchase Agreement
and the Credit Agreement.

"Surety" means CapMAC.

"Surety Bonds" means the Surety Bonds for the benefit of Triple-A and the
Liquidity Banks to be issued by the Surety under the Insurance Agreement.

"Swap Bond" means that certain surety bond in favor of the Swap Provider
whereby CapMAC guarantees the payments to be made by the Borrower under the
Interest Rate Hedges.

"Swap Provider" means Bank of Boston or such other financial institution
reasonably acceptable to CapMAC which enters into an Interest Rate Hedge with
the Borrower, provided that the Swap Provider must at all times be a nationally
recognized financial institution rated A or better by Standard & Poor's
Corporation or the equivalent by Moody's Investors Services, Inc.

"Taxes" has the meaning assigned to such term in Section 2.10(a) of the
Credit Agreement.

"Termination Amount" means, with respect to any Contract which has been
prepaid or otherwise terminated prior to its stated maturity or termination
date, an amount equal to the present value of the remaining Scheduled Contract
Payments, discounted to the date of prepayment or termination at the Discount
Rate, plus, any billed and uncollected amounts related to and amounts owing
under such Contract, including late charges and overdue interest charges, plus,
if such Contract is a Lease or Conditional Sale Agreement, the booked residual
value of the related Equipment, plus any processing fees charged to cover
expenses.

"Termination Date" means the earliest of (i) that Business Day which the
Seller designates as the Termination Date by notice to the Buyer and the
Administrative Agent at least five Business Days prior to such Business Day,
(ii) that Business Day which the Buyer designates as the Termination Date by
notice to the Seller and the Administrative Agent at least five Business Days
prior to such Business Day, (iii) the date of the declaration or automatic
occurrence of the Termination Date pursuant to Section 7.01 of the Purchase
Agreement, Section 7.02 of the Credit Agreement or Section 7.02 of the Triple-A
Purchase Agreement,

- 19 -
<PAGE>

(iv) the Scheduled Liquidity Commitment Termination Date and (v) the Scheduled
Termination Date.

"Termination Payment" means any amount or amounts payable by an Obligor
upon termination or prepayment of a Contract prior to the payment of all
Contract Payments.

"Transferred Assets" means, at any time, the Receivables, the Contracts,
the Equipment, all Related Security with respect to the foregoing and all
Collections with respect to, and other proceeds of, the foregoing.

"Triple-A" means Triple-A One Funding Corporation, a Delaware corporation.

"Triple-A Loan" has the meaning assigned to such term in Section 2.01 of
the Credit Agreement.

"Triple-A Note" has the meaning assigned to such term in Section 2.02 of
the Credit Agreement.

"Triple-A Purchase Agreement" means that certain Lease Receivables Purchase
Agreement dated as of October 18, 1996 between HPSC Bravo Funding Corp., as
Seller, Triple-A and CapMAC.

"UCC" means the Uniform Commercial Code as from time to time in effect in
the State of New York, except that, with respect to the perfection or priority
of any security interest created under the UCC, the term "UCC" means the Uniform
Commercial Code as in effect in the jurisdiction whose law governs the
perfection and effect of perfection or non-perfection of such security interest.

"Unmatured Event of Termination" means any event which, with the giving of
notice or the passage of time or both, would constitute an Event of Termination.

"Unmatured Wind-Down Event" means any event which, with the giving of
notice or the passage of time or both, would constitute a Wind-Down Event.

"Weighted Average Remaining Term" means the weighted average remaining
maturities of the Transferred Assets or the Pledged Assets, as the case may be,
calculated to equal (i) the aggregate amount of the remaining Scheduled Contract
Payments of each Receivable or Pledged Receivable, as the case may be, times the
remaining term of such Receivable or Pledged Receivable, as the case may be,
divided by (ii) the aggregate amount of the remaining Scheduled Contract
Payments of all the Receivables or Pledged Receivables, as the case may be,
(each such calculation to include, for purposes of calculating the Weighted
Average Remaining Term on any Settlement Date, any Receivables to be purchased
on such date).

"Wind-Down Event" has the meaning assigned to such term in Section 7.01 of
the Credit Agreement.

- 20 -

<PAGE>
EXHIBT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement
on Form S-1 (File No. 333- ) of our report dated March 25,
1996, on our audits of the financial statements and financial
statement schedules of HPSC, Inc. We also consent to the
reference to our firm under the caption "Experts".

/s/ Coopers & Lybrand L.L.P
Coopers & Lybrand L.L.P.

Boston, Massachusetts
January 24, 1997

<PAGE>

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM T-1
----------

STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE

CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) __

STATE STREET BANK AND TRUST COMPANY
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)

Massachusetts 04-1867445
(JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER
ORGANIZATION IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)

225 Franklin Street, Boston, Massachusetts 02110
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

John R. Towers, Esq. Senior Vice President and Corporate Secretary
225 Franklin Street, Boston, Massachusetts 02110
(617)654-3253
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)

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

HPSC, INC.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)

DELAWARE 04-2560004
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

60 STATE STREET, 35TH FLOOR
BOSTON, MA 02109-1803
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

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

% SENIOR SUBORDINATED NOTES DUE 2007
(TITLE OF INDENTURE SECURITIES)

<PAGE>

GENERAL

ITEM 1. GENERAL INFORMATION.

FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:

(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.

Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.

Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.

(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercise corporate trust powers.

ITEM 2. AFFILIATIONS WITH OBLIGOR.

IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.

The obligor is not an affiliate of the trustee or of its parent,
State Street Boston Corporation.

(See note on page 2.)

ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.

ITEM 16. LIST OF EXHIBITS.

LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF
ELIGIBILITY.

1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.

A copy of the Articles of Association of the trustee, as now
in effect, is on file with the Securities and Exchange
Commission as Exhibit 1 to Amendment No. 1 to the Statement
of Eligibility and Qualification of Trustee (Form T-1) filed
with the Registration Statement of Morse Shoe, Inc. (File
No. 22-17940) and is incorporated herein by reference
thereto.

2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.

A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the
trustee to commence business was necessary or issued is on
file with the Securities and Exchange Commission as Exhibit
2 to Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.

3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE
DOCUMENTS SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.

A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and
Exchange Commission as Exhibit 3 to Amendment No. 1 to the
Statement of Eligibility and Qualification of Trustee (Form
T-1) filed with the Registration Statement of Morse Shoe,
Inc. (File No. 22-17940) and is incorporated herein by
reference thereto.

4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.

A copy of the by-laws of the trustee, as now in effect, is
on file with the Securities and Exchange Commission as
Exhibit 4 to the Statement of Eligibility and Qualification
of Trustee (Form T-1) filed with the Registration Statement
of Eastern Edison Company (File No. 33-37823) and is
incorporated herein by reference thereto.

1
<PAGE>

5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS
IN DEFAULT.

Not applicable.

6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(b) OF THE ACT.

The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.

7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR
EXAMINING AUTHORITY.

A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority is annexed hereto as
Exhibit 7 and made a part hereof.

NOTES

In answering any item of this Statement of Eligibility which relates
to matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.

The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.

SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 23rd day of January, 1997.

STATE STREET BANK AND TRUST COMPANY

By: /s/ Gary Dougherty
--------------------------------------
GARY DOUGHERTY

ASSISTANT VICE PRESIDENT

2
<PAGE>

EXHIBIT 6

CONSENT OF THE TRUSTEE

Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by HPSC, INC.
of its % Senior Subordinated Notes Due 2007, we hereby consent that reports of
examination by Federal, State, Territorial or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.

STATE STREET BANK AND TRUST COMPANY

By: /s/ Gary Dougherty
------------------------------------
Gary Dougherty
ASSISTANT VICE PRESIDENT

DATED: January 23, 1997

<PAGE>

EXHIBIT 7

Consolidated Report of Condition of State Street Bank and Trust Company of
Boston, Massachusetts and foreign and domestic subsidiaries, a state banking
institution organized and operating under the banking laws of this commonwealth
and a member of the Federal Reserve System, at the close of business JUNE 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act and in
accordance with a call made by the Commissioner of Banks under General Laws,
Chapter 172, Section 22(a).

Thousands of
ASSETS Dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin . . . . . . . . . . . . . . 1,787,130
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,756,486
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,430,910
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary . . . . . . . . . . . . . . . . . . . . . . 4,090,665
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . . . . . . . . . . . . . . 4,426,059
Allowance for loan and lease losses . . . . . . . . . . . . . . . . . . . . . . 70,088
Loans and leases, net of unearned income and allowances . . . . . . . . . . . . 4,355,971
Assets held in trading accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . 880,647
Premises and fixed assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 367,731
Other real estate owned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,067
Investments in unconsolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . 65,772
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . . 33,530
Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,505
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,002,465
------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,840,879
------------
------------

LIABILITIES

Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,531,683
Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . 5,387,924
Interest-bearing. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,143,759
In foreign offices and Edge subsidiary . . . . . . . . . . . . . . . . . . . . 12,050,265
Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . 46,768
Interest-bearing. . . . . . . . . . . . . . . . . . . . . . . . . . . 12,003,497
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary . . . . . . . . . . . . . . . . . . . . . . 5,337,231
Demand notes issued to the U.S. Treasury and Trading Liabilities . . . . . . . . . . 871,847
Other borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 794,349
Bank's liability on acceptances executed and outstanding . . . . . . . . . . . . . . 33,530
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 665,616
------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,284,521
------------

EQUITY CAPITAL
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,931
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276,915
Undivided profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,247,942
Cumulative foreign currency translation adjustments . . . . . . . . . . . . . . . . 1,570
------------
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,556,358
------------
Total liabilities and equity capital . . . . . . . . . . . . . . . . . . . . . . . . 28,840,879
------------
------------
</TABLE>

<PAGE>

I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.

Rex S. Schuette

We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.

David A. Spina
Marshall N. Carter
Charles F. Kaye

<PAGE>
<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 7,600
<SECURITIES> 0
<RECEIVABLES> 169,598
<ALLOWANCES> 4,789
<INVENTORY> 0
<CURRENT-ASSETS> 150,024
<PP&E> 1,834
<DEPRECIATION> 635
<TOTAL-ASSETS> 153,396
<CURRENT-LIABILITIES> 59,882
<BONDS> 54,968
0
0
<COMMON> 44
<OTHER-SE> 34,024
<TOTAL-LIABILITY-AND-EQUITY> 153,396
<SALES> 0
<TOTAL-REVENUES> 13,447
<CGS> 0
<TOTAL-COSTS> 5,580
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,224
<INTEREST-EXPENSE> 5,649
<INCOME-PRETAX> 994
<INCOME-TAX> 390
<INCOME-CONTINUING> 604
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 604
<EPS-PRIMARY> .15
<EPS-DILUTED> .15

</TABLE>