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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-11618
HPSC, Inc.
(Exact name of registrant as specified in its charter)
Delaware 04-2560004
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
60 STATE STREET, BOSTON, MASSACHUSETTS 02109
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (617) 720-3600
NONE
(Former name, former address, and former fiscal year if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date: COMMON STOCK, PAR VALUE $.01 PER
SHARE. SHARES OUTSTANDING AT APRIL 26, 2000, 4,184,630.
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HPSC, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I -- FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets as of March 31, 2000 and December 31,
1999......................................................................... 3
Condensed Consolidated Statements of Income for the Three Months
Ended March 31, 2000 and March 31, 1999...................................... 4
Condensed Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 2000 and March 31, 1999...................................... 5
Notes to Condensed Consolidated Financial Statements.......................... 6
Management's Discussion and Analysis of Financial Condition and Results of
Operations................................................................... 8
PART II -- OTHER INFORMATION
Other Information............................................................. 11
Signatures.................................................................... 11
</TABLE>
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HPSC, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share and share amounts)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------- ------------
(unaudited)
<S> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS .......................................... $ 2,153 $ 1,356
RESTRICTED CASH .................................................... 16,112 14,924
INVESTMENT IN LEASES AND NOTES:
Lease contracts and notes receivable due in installments ...... 401,045 387,909
Notes receivable .............................................. 39,709 38,720
Retained interest in leases and notes sold .................... 19,359 17,869
Estimated residual value of equipment at end of lease term .... 19,655 18,988
Less unearned income .......................................... (97,344) (94,228)
Less allowance for losses ..................................... (9,532) (9,150)
Less security deposits ........................................ (6,569) (6,721)
Deferred origination costs .................................... 8,898 8,696
--------- ---------
Net investment in leases and notes ................................. 375,221 362,083
--------- ---------
OTHER ASSETS:
Other assets .................................................. 7,193 7,104
Refundable income taxes ....................................... 260 260
--------- ---------
TOTAL ASSETS ....................................................... $ 400,939 $ 385,727
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
REVOLVING CREDIT BORROWINGS ........................................ $ 74,000 $ 70,000
SENIOR NOTES ....................................................... 242,613 227,445
SENIOR SUBORDINATED NOTES .......................................... 20,000 20,000
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES ........................... 9,997 15,454
ACCRUED INTEREST ................................................... 2,217 1,940
INCOME TAXES:
Currently payable ............................................. 408 398
Deferred ...................................................... 10,585 10,192
--------- ---------
TOTAL LIABILITIES .................................................. 359,820 345,429
--------- ---------
STOCKHOLDERS' EQUITY:
PREFERRED STOCK, $1.00 par value; authorized 5,000,000 shares;
issued - None ................................................. -- --
COMMON STOCK, $.01 par value; 15,000,000 shares authorized;
issued and outstanding 4,704,030 shares in 2000 and
4,699,530 in 1999 ............................................. 47 47
Additional paid-in capital .................................... 14,191 14,119
Retained earnings ............................................. 31,860 31,167
Less: Treasury Stock (at cost) 526,300 shares in 2000 and
518,500 in 1999 .............................................. (3,681) (3,611)
Deferred compensation ......................................... (913) (1,008)
Notes receivable from officers and employees .................. (385) (416)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY ......................................... 41,119 40,298
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ......................... $ 400,939 $ 385,727
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
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HPSC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999
(in thousands, except per share and share amounts)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------
MARCH 31, MARCH 31,
2000 1999
--------- ---------
<S> <C> <C>
REVENUES:
Earned income on leases and notes ............. $ 11,492 $ 9,260
Gain on sales of leases and notes ............. 1,154 1,165
Provision for losses .......................... (1,357) (749)
----------- -----------
Net Revenues ...................................... 11,289 9,676
----------- -----------
EXPENSES:
Selling, general and administrative ........... 4,770 4,547
Interest expense .............................. 5,669 4,222
Interest income ............................... (330) (103)
----------- -----------
Net operating expenses ............................ 10,109 8,666
----------- -----------
INCOME BEFORE INCOME TAXES ........................ 1,180 1,010
----------- -----------
PROVISION FOR INCOME TAXES:
Federal, Foreign and State:
Current ................................... 98 72
Deferred .................................. 383 318
Additional paid-in capital from exercise of
non-qualified stock options .............. 6 26
----------- -----------
TOTAL INCOME TAXES ................................ 487 416
----------- -----------
NET INCOME ........................................ $ 693 $ 594
=========== ===========
BASIC NET INCOME PER SHARE ........................ $ 0.19 $ 0.16
=========== ===========
SHARES USED TO COMPUTE BASIC NET
INCOME PER SHARE .................................. 3,746,707 3,765,517
DILUTED NET INCOME PER SHARE ...................... $ 0.16 $ 0.14
=========== ===========
SHARES USED TO COMPUTE DILUTED NET
INCOME PER SHARE .................................. 4,319,621 4,340,447
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
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HPSC, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR EACH OF THE THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ....................................................... $ 693 $ 594
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization .................................... 1,417 1,142
Increase in deferred income taxes ................................ 393 318
Restricted stock and option compensation ......................... 95 150
Gain on sale of lease contracts and notes receivable ............. (1,154) (1,165)
Provision for losses on lease contracts and notes receivable ..... 1,357 749
Increase in accrued interest ..................................... 277 371
Increase (decrease) in accounts payable and accrued liabilities .. (172) 74
Increase in accrued income taxes ................................. 10 16
Decrease in refundable income taxes .............................. -- 33
Increase in other assets ......................................... (46) (154)
-------- --------
Cash provided by operating activities ................................. 2,870 2,128
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Origination of lease contracts and notes receivable due in
installments ................................................... (66,651) (39,813)
Portfolio receipts, net of amounts included in income ............ 23,451 20,006
Proceeds from sales of lease contracts and notes receivable due in
installments ................................................... 21,544 9,829
Net (increase) decrease in notes receivable ...................... (975) 3,114
Net increase (decrease) in security deposits ..................... (152) 79
Net (increase) decrease in other assets .......................... 374 (142)
Net decrease in loans to employees ............................... 31 36
-------- --------
Cash used in investing activities ..................................... (22,378) (6,891)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of senior notes ........................................ (24,932) (18,337)
Proceeds from issuance of senior notes, net of debt issue costs .. 40,099 33,069
Net proceeds (repayments) of revolving credit borrowings ......... 4,000 (8,000)
Purchase of treasury stock ....................................... (70) (683)
Increase in restricted cash ...................................... 1,188 1,256
Exercise of employee stock options ............................... 20 53
-------- --------
Cash provided by financing activities ................................. 20,305 7,358
-------- --------
Net increase in cash and cash equivalents ............................. 797 2,595
Cash and cash equivalents at beginning of period ...................... 1,356 4,583
-------- --------
Cash and cash equivalents at end of period ............................ $ 2,153 $ 7,178
======== ========
Supplemental disclosures of cash flow information:
Interest paid .................................................... $ 5,257 $ 3,696
Income taxes paid ................................................ 77 43
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
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HPSC, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The information presented for the interim periods is unaudited, but
includes all adjustments (consisting only of normal recurring adjustments)
which, in the opinion of HPSC, Inc. (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 1999
account balances have been reclassified to conform with 2000 presentation. Such
financial statements have been prepared in accordance with the instructions of
Form 10-Q pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures have been omitted
pursuant to such rules and regulations. As a result, these financial statements
should be read in conjunction with the audited consolidated financial statements
and related notes included in the Company's latest annual report on Form 10-K.
2. The Company computes and presents its earnings per share data in
accordance with Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings per Share". The Company's basic net income per share calculation is
based on the weighted average number of common shares outstanding, which does
not include unallocated shares under the Company's Employee Stock Ownership Plan
("ESOP"), restricted shares issued under the Company's Incentive Stock Plans,
treasury stock, or any shares issuable upon the exercise of outstanding stock
options. Diluted net income per share includes the weighted average number of
stock options and contingently issuable restricted shares under the Company's
Incentive Stock Plans outstanding as calculated under the treasury stock method,
but not treasury stock or unallocated shares under the Company's ESOP.
3. In March 2000, the HPSC Bravo Funding Corp. ("Bravo") revolving credit
facility (the "Bravo Facility") was amended under substantially the same terms
and conditions, providing the Company with available borrowings of up to
$347,500,000. As of March 31, 2000, Bravo had a total of $207,611,000
outstanding under the loan and sale portions of the Bravo Facility ($145,871,000
in loans and $61,740,000 in sales). Bravo incurs interest at various rates in
the commercial paper market and enters into interest rate swap agreements to
assure fixed rate funding. In connection with these borrowing and sales, Bravo
had a total of 41 separate interest rate swap contracts with BankBoston with a
total notional value of $207,000,000 at March 31, 2000. These interest rate
swaps are matched swaps, and as such, are accounted for using settlement
accounting. Monthly cash settlements on the swap agreements are recognized in
income as they accrue. In the case where the notional value of the interest rate
swap agreements significantly exceeds the outstanding underlying debt, the
excess swap agreements would be marked-to-market through income until new
borrowings are incurred which would be subject to such swap agreements. All
interest rate swap agreements entered into by the Company are for other than
trading purposes.
4. In April 1999, the Company, along with its wholly-owned, special
purpose subsidiary, HPSC Capital Funding, Inc. ("Capital"), signed an amended
Lease Receivable Purchase Agreement with EagleFunding Capital Corporation
("Eagle"). Pursuant to the terms of the revolving credit facility (the "Capital
Facility"), Capital had a total of $122,068,000 outstanding in loans and sales
($77,956,000 in loans and $44,112,000 in sales) at March 31, 2000, and in
connection with these borrowings and sales, had 22 separate interest rate swap
agreements with BankBoston with a total notional value of $118,887,000. These
interest rate swaps are matched swaps, and as such, are accounted for using
settlement accounting. Monthly cash settlements on the swap agreements are
recognized in income as they accrue. In the case where the notional value of the
interest rate swap agreements significantly exceeds the outstanding underlying
debt, the excess swap agreements would be marked-to-market through income until
new borrowings are incurred which would be subject to such swap agreements. All
interest rate swap agreements entered into by the Company are for other than
trading purposes.
5. On March 31, 2000, the Company had restricted cash of $10,476,000
under the Bravo Facility and $5,636,000 under the Capital Facility. All such
restricted cash is reserved for debt service.
6. In February 2000, the Company entered into an additional secured,
fixed rate, fixed term loan agreement with Springfield Institution for Savings.
The Company borrowed $9,324,000 under that agreement, subject to certain
recourse and performance covenants.
7. The Financial Accounting Standards Board ("FASB") issued SFAS No. 130,
"Reporting Comprehensive Income". This statement, adopted January 1, 1998,
established standards for reporting and presenting comprehensive income and its
components. Comprehensive income equals net income for each of the three month
periods ended March 31, 2000 and March 31, 1999.
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8. A summary of information about the Company's operations by segment for
each of the three months ended March 31, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
COMMERCIAL
LICENSED AND
(in thousands) PROFESSIONAL INDUSTRIAL
FINANCING FINANCING TOTAL
------------ ---------- -----
<S> <C> <C> <C>
FOR THE THREE MONTHS ENDED MARCH 31, 2000
- -----------------------------------------
Earned income on leases and notes ............... $ 10,272 $ 1,220 $ 11,492
Gain on sales of leases and notes ............... 1,154 -- 1,154
Provision for losses ............................ (1,357) -- (1,357)
Selling, general and administrative expenses..... (4,270) (500) (4,770)
--------- --------- ---------
Net profit contribution ......................... 5,799 720 6,519
Total assets .................................... 364,099 36,840 400,939
FOR THE THREE MONTHS ENDED MARCH 31, 1999
- -----------------------------------------
Earned income on leases and notes ............... 8,087 1,173 9,260
Gain on sales of leases and notes ............... 1,165 -- 1,165
Provision for losses ............................ (720) (29) (749)
Selling, general and administrative expenses..... (4,151) (396) (4,547)
--------- --------- ---------
Net profit contribution ......................... 4,381 748 5,129
Total assets .................................... 270,122 35,677 305,799
</TABLE>
The following reconciles net segment profit contribution as reported above to
total consolidated income before income taxes:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31, 2000 1999
---- ----
(in thousands)
<S> <C> <C>
Net segment profit contribution....... $ 6,519 $ 5,129
Interest expense ..................... (5,669) (4,222)
Interest income on cash balances...... 330 103
------- -------
Income before income taxes ........... $ 1,180 $ 1,010
</TABLE>
Other Segment Information - The Company derives substantially all of its
revenues from domestic customers. As of March 31, 2000, no single customer
within the licensed professional financing segment accounted for greater than 1%
of the total owned and serviced portfolio of that segment. Within the commercial
and industrial financing segment, no single customer accounted for greater than
11% of the total portfolio of that segment. The licensed professional financing
segment relies on certain vendors to provide referrals to the Company. For the
three months ended March 31, 2000, no one vendor accounted for greater than 8%
of the Company's licensed professional financing originations.
9. In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" was issued. This Statement establishes new accounting and
reporting standards for derivative instruments and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. This statement will be effective for the first quarter of the
Company's year ended December 31, 2001. The Company is evaluating the impact of
this statement on its consolidated results of operations.
7
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Earned income from leases and notes for the three months ended March 31,
2000 was $11,492,000 (including approximately $1,220,000 from the Company's
commercial lending subsidiary, American Commercial Finance Corporation ("ACFC"))
as compared to $9,260,000 (including approximately $1,173,000 from ACFC) for the
three months ended March 31, 1999. The increase of 24% was due primarily to an
increase in the net investment in leases and notes in 2000 over 1999, resulting
in part from a higher level of originations in the first quarter of 2000 of
$57,253,000 compared to $40,277,000 for the same period in 1999. Gains on sales
of leases and notes were $1,154,000 in the three months ended March 31, 2000
compared to $1,165,000 for the quarter ended March 31, 1999. The decrease was
due to higher levels of asset sales activity in 2000 of $24,166,000 compared to
$10,921,000 in 1999, offset by lower margins generated by the current year asset
sales.
Interest expense (net of interest income) for the first quarter of 2000 was
$5,339,000 (46% of earned income) compared to $4,119,000 (44% of earned income)
in the comparable 1999 period. The increase in net interest expense was
primarily due to a 35% increase in average debt levels from March 31, 1999 to
March 31, 2000. These higher average debt levels resulted primarily from
borrowings to finance a higher level of contract originations. The increase in
percentage was due to higher interest rate borrowing costs during the most
recent three month period as compared to borrowing costs during the first three
months of the Company's prior fiscal year.
Net financing margin (earned income less net interest expense) for the
first quarter of 2000 was $6,153,000 (54% of earned income) compared to
$5,141,000 (56% of earned income) for the first quarter of 1999. The increase in
amount was due to higher earnings on a higher balance of earning assets. The
decrease in percentage was due to higher interest rate borrowing costs during
the most recent three month period as compared to borrowing costs during the
first three months of the Company's prior fiscal year.
The provision for losses for the first quarter of 2000 was $1,357,000 (12%
of earned income) compared to $749,000 (8% of earned income) in the first
quarter of 1999. The increases in amount and percentage were due to growth in
the portfolio, along with the Company's continuing evaluation of its portfolio
quality, delinquencies, loss history and allowance for losses.
The allowance for losses at March 31, 2000 was $9,532,000 (2.5% of net
investment in leases and notes) compared to $9,150,000 (2.5% of net investment
in leases and notes) at December 31, 1999. Net charge offs for the three months
ended March 31, 2000 were $975,000 compared to $534,000 for the same period in
1999.
Selling, general and administrative expenses for the three months ended
March 31, 2000 were $4,770,000 (42% of earned income) compared to $4,547,000
(49% of earned income) in the comparable 1999 period. The increase in amount was
caused by increased administrative costs required to support higher levels of
owned and serviced assets. The decrease in percentage of earned income resulted
primarily from increased productivity and the Company's continuing efforts to
control its operating expense growth rate.
The Company's income before income taxes for the quarter ended March 31,
2000 was $1,180,000 compared to $1,010,000 in the same period in 1999. The
provision for income taxes was $487,000 (41% of income before income taxes) for
the three months ended March 31, 2000 compared to $416,000 (41% of income before
income taxes) for the same period in 1999.
The Company's net income for the three months ended March 31, 2000 was
$693,000 ($0.16 diluted net income per share) compared to $594,000 ($0.14
diluted net income per share) for the three months ended March 31, 1999. The
increase resulted from higher earned income on leases and notes, offset by
higher selling, general and administrative costs, higher net interest costs, and
a higher provision for losses.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Company had $18,265,000 in cash, cash equivalents
and restricted cash as compared to $16,280,000 at December 31, 1999. As
described in Note 5 to the Company's condensed consolidated financial statements
included in this report on Form 10-Q, $16,112,000 was restricted pursuant to
financing agreements as of March 31, 2000, compared to $14,924,000 at December
31, 1999.
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Cash provided by operating activities was $2,870,000 for the three months
ended March 31, 2000 compared to $2,128,000 for the three months ended March 31,
1999. The significant components of cash provided by operating activities for
the three months ended March 31, 2000 as compared to the same period in 1999
were an increase in the provision for losses of $1,357,000 compared to $749,000
for the same period in 1999, offset by gains on sales of lease contracts and
notes receivable of $1,154,000 in 2000 compared to $1,165,000 for the same
period in 1999.
Cash used in investing activities was $22,378,000 for the three months
ended March 31, 2000 compared to $6,891,000 for the three months ended March 31,
1999. The significant components of cash used in investing activities for the
first three months of 2000 compared to the same period in 1999 were an increase
in originations of lease contracts and notes receivable due in installments to
$66,651,000 from $39,813,000 and an increase in notes receivable of $975,000
compared to a decrease of $3,114,000 in the prior year, offset by an increase in
portfolio receipts to $23,451,000 from $20,006,000, along with an increase in
proceeds from sales of lease contracts and notes receivable of $21,544,000 in
2000 compared to $9,829,000 in the comparable period ended March 31, 1999.
Cash provided by financing activities for the three months ended March 31,
2000 was $20,305,000 compared to $7,358,000 for the three months ended March 31,
1999. The significant components of cash provided by financing activities for
the first three months of 2000 as compared to the equivalent period in 1999 were
an increase in proceeds from issuance of senior notes, net of debt issuance
costs, to $40,099,000 from $33,069,000, and net proceeds from revolving credit
borrowings of $4,000,000 in the first three months of 2000 compared to net
repayments of revolving credit borrowings of $8,000,000 in the same period in
1999, offset by higher repayments of senior notes of $24,932,000 for the three
months ended March 31, 2000 compared to $18,337,000 for the three months ended
March 31, 1999.
In May 1999, the Company executed the Third Amendment to the Third Amended
and Restated Revolving Credit Agreement with BankBoston as the Agent Bank (the
"Revolver Agreement"). The Third Amendment to the Revolver Agreement provides
availability to the Company of $90,000,000 through May 2000. Under the Revolver
Agreement, the Company may borrow at variable rates of prime and at LIBOR plus
1.35% to 1.50% respectively, depending upon certain performance covenants. At
March 31, 2000, the Company had $74,000,000 outstanding under this facility and
$16,000,000 available for borrowing, subject to borrowing base limitations. The
outstanding borrowings under the Revolver Agreement are not hedged and,
therefore, are exposed to upward movements in interest rates. In May 2000, the
Company executed the Fourth Amended and Restated Revolving Credit Agreement,
providing the Company with available borrowings up to $90,000,000 under
substantially the same terms and conditions.
In March 1997, the Company issued $20,000,000 of unsecured senior
subordinated notes due in 2007 ("Senior Subordinated Notes") bearing interest at
a fixed rate of 11% (the "Note Offering"). The Company received approximately
$18,300,000 in net proceeds from the Note Offering and used such proceeds to
repay amounts outstanding under the Revolver Agreement. The Senior Subordinated
Notes are redeemable at the option of the Company, in whole or in part, other
than through the operation of a sinking fund, after April 1, 2002 at established
redemption prices, plus accrued but unpaid interest to the date of repurchase.
Beginning July 1, 2002, the Company is required to redeem through sinking fund
payments, on January 1, April 1, July 1, and October 1 of each year, a portion
of the aggregate principal amount of the Senior Subordinated Notes at a
redemption price equal to $1,000,000 plus accrued but unpaid interest to the
redemption date.
In April 1999, the Company, along with its wholly-owned, special purpose
subsidiary, HPSC Capital Funding, Inc. ("Capital"), signed an amended Lease
Receivable Purchase Agreement with EagleFunding Capital Corporation ("Eagle").
This revolving credit facility (the "Capital Facility") provides the Company
with available borrowings up to $125,000,000. Under the terms of the Capital
Facility, Capital, to which the Company may sell or contribute certain of its
portfolio assets from time to time, pledges or sells its interests in these
assets to Eagle, a commercial paper conduit entity. Capital may borrow at
variable rates in the commercial paper market and may enter into interest rate
swap agreements to assure fixed rate funding. Monthly settlements of the
borrowing base and any applicable principal and interest payments are made from
collections of Capital's portfolio. The Company is the servicer of the Capital
portfolio subject to certain covenants. The required monthly payments of
principal and interest to purchasers of the commercial paper are guaranteed by
BankBoston pursuant to the terms of the facility. At March 31, 2000, the Company
had $44,112,000 outstanding from sales of receivables and $77,956,000 of
borrowings outstanding from loans under the Capital Facility. In connection with
this facility, the Company had 22 separate interest rate swap agreements with
BankBoston with a total notional value of $118,887,000.
In June 1998, the Company, along with its wholly-owned, special-purpose
subsidiary HPSC Bravo Funding Corp. ("Bravo"), signed an amended revolving
credit facility (the "Bravo Facility") structured and guaranteed by MBIA, Inc.,
providing the Company with available borrowings up to $225,000,000. In March
2000, the Bravo Facility was amended on substantially the same terms and
conditions, providing the Company with available borrowings up to $347,500,000.
Under the terms of the Bravo Facility, Bravo, to
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<PAGE> 10
which the Company sells and may continue to sell or contribute certain of its
portfolio assets subject to certain covenants regarding Bravo's portfolio
performance and borrowing base calculations, pledges or sells 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.
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 MBIA pursuant to the terms of the
facility. At March 31, 2000, Bravo had $61,740,000 outstanding from sales of
receivables under the sale accounting portion of the Bravo Facility and
$145,871,000 of indebtedness outstanding under the loan portion of the Bravo
Facility. In connection with this facility, the Company had 41 separate interest
rate swap agreements with BankBoston with a total notional value of
$207,000,000.
In February 2000, the Company entered into an additional fixed rate, fixed
term loan agreement with Springfield Institution for Savings ("SIS"). The
Company borrowed $9,324,000, subject to certain recourse and performance
covenants. The Company had $14,112,000 outstanding under all loan agreements
with SIS at March 31, 2000.
Management believes that the Company's liquidity, resulting from the
availability of credit under the Revolver Agreement, the Bravo Facility, the
Capital Facility, the Senior Subordinated Notes, and loans from various savings
banks, along with cash obtained from the sales of its financing contracts and
from internally generated revenues, 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 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.
FORWARD-LOOKING STATEMENTS
This Form 10-Q may contain forward-looking statements within the meaning of
Section 27A of the Securities Act. When used in this Form 10-Q, the words
"believes," "anticipates," "expects," "plans," "intends," "estimates,"
"continue," "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, including but not limited to
the following: the Company's dependence on funding sources; restrictive
covenants in funding documents; payment restrictions and default risks in asset
securitization transactions to which the Company, or its subsidiaries, are a
party; customer credit risks; competition for customers and for capital funding
at favorable rates relative to the capital costs of the Company's competitors;
changes in healthcare payment policies; interest rate risk; the risk that the
Company may not be able to realize the residual value on financed equipment at
the end of its lease term; risks associated with the sale of certain receivable
pools by the Company; dependence on sales representatives and the current
management team; and fluctuations in quarterly operating results. The Company's
filings with the Securities and Exchange Commission, including its Annual Report
on Form 10-K for the year ended December 31, 1999, contain additional
information concerning such risk factors. Actual results in the future could
differ materially from those described in any forward-looking statements as a
result of the risk factors set forth above, and the risk factors described in
the Annual Report. 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.
10
<PAGE> 11
HPSC, INC.
PART II. OTHER INFORMATION
ITEMS 1 THROUGH 5 ARE OMITTED BECAUSE THEY ARE INAPPLICABLE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
10.1 Amended and Restated Purchase and Contribution Agreement, dated
March 31, 2000, between HPSC, Inc. and HPSC Bravo Funding Inc.
10.2 Amended and Restated Lease Receivable Purchase Agreement, dated
March 31, 2000, by and among HPSC Bravo Funding, Inc., HPSC,
Inc., Triple-A One Funding Corporation, and Capital Markets
Assurance Corporation.
27 Financial Data Schedule
b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the three months ended March
31, 2000.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, HPSC, Inc. has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
HPSC, INC.
------------
(REGISTRANT)
By: /s/ JOHN W. EVERETS
-------------------------------
JOHN W. EVERETS
CHIEF EXECUTIVE OFFICER
CHAIRMAN OF THE BOARD
By: /s/ RENE LEFEBVRE
-------------------------------
RENE LEFEBVRE
VICE PRESIDENT
CHIEF FINANCIAL OFFICER
By: /s/ WILLIAM S. HOFT
-------------------------------
WILLIAM S. HOFT
FINANCIAL REPORTING MANAGER
Dated: May 15, 2000
11
<PAGE> 1
EXECUTION COPY
AMENDED AND RESTATED
PURCHASE AND CONTRIBUTION AGREEMENT
DATED AS OF MARCH 31, 2000
BETWEEN
HPSC BRAVO FUNDING CORP.,
AS THE BUYER
AND
HPSC, INC.,
AS THE SELLER AND AS SERVICER
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
ARTICLE I DEFINITIONS............................................................................................1
SECTION 1.01. Certain Defined Terms.........................................................................1
SECTION 1.02. Other Terms...................................................................................1
SECTION 1.03. Computation of Time Periods...................................................................1
ARTICLE II AMOUNTS AND TERMS OF THE PURCHASES....................................................................2
SECTION 2.01. Agreement to Sell and Contribute..............................................................2
SECTION 2.02. Purchases from the Seller.....................................................................2
SECTION 2.03. Servicing of Contracts and Equipment..........................................................3
SECTION 2.04. Transfer of Records...........................................................................3
SECTION 2.05. Collections; Deemed Collections...............................................................4
SECTION 2.06. Payments and Computations, Etc................................................................5
SECTION 2.07. Perfection of Liens; Further Assurances.......................................................5
ARTICLE III CONDITIONS OF PURCHASES..............................................................................6
SECTION 3.01. Conditions Precedent to Initial Purchase......................................................6
SECTION 3.02. Conditions Precedent to All Purchases.........................................................6
SECTION 3.03. Effect of Payment of Purchase Price...........................................................7
ARTICLE IV REPRESENTATIONS AND WARRANTIES........................................................................7
SECTION 4.01. Representations and Warranties of the Seller..................................................7
ARTICLE V GENERAL COVENANTS OF THE SELLER.......................................................................13
SECTION 5.01. Affirmative Covenants of the Seller..........................................................13
SECTION 5.02. Reporting Requirements of the Seller.........................................................16
SECTION 5.03. Negative Covenants of the Seller.............................................................17
SECTION 5.04. Financial Covenants of the Seller............................................................19
ARTICLE VI ADMINISTRATION AND COLLECTION........................................................................21
SECTION 6.01. Designation of Servicer......................................................................21
SECTION 6.02. Duties of the Servicer.......................................................................22
SECTION 6.03. Rights of the Buyer..........................................................................24
SECTION 6.04. Further Action Evidencing Transfers..........................................................25
SECTION 6.05. Responsibilities of the Seller...............................................................25
SECTION 6.06. Administration of Collections by Servicer....................................................25
SECTION 6.07. Application of Collections...................................................................26
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 6.08. Servicing Fee................................................................................26
SECTION 6.09. Resignation; Successor Servicer..............................................................26
ARTICLE VII EVENTS OF TERMINATION...............................................................................27
SECTION 7.01. Events of Termination........................................................................27
ARTICLE VIII INDEMNIFICATION....................................................................................29
SECTION 8.01. Indemnities by the Seller....................................................................29
ARTICLE IX MISCELLANEOUS........................................................................................31
SECTION 9.01. Amendments, Etc..............................................................................31
SECTION 9.02. Notices, Etc.................................................................................31
SECTION 9.03. No Waiver; Remedies..........................................................................31
SECTION 9.04. Binding Effect; Assignability................................................................32
SECTION 9.05. GOVERNING LAW; WAIVER OF JURY TRIAL..........................................................32
SECTION 9.06. Costs, Expenses and Taxes....................................................................33
SECTION 9.07. Execution in Counterparts; Severability......................................................33
SECTION 9.08. Reference to and Effect on Prior PCA.........................................................34
</TABLE>
ii
<PAGE> 4
LIST OF EXHIBITS
EXHIBIT A List of Contracts
EXHIBIT B Form of Notice of Assignment
EXHIBIT C Form of Settlement Report
EXHIBIT D Description of Credit and Collection Policy
EXHIBIT E Form of Opinion(s) of Counsel for Seller
EXHIBIT F List of Offices of Seller where Records Are Kept
EXHIBIT G Form of Lock-Box Agreement
EXHIBIT H List of Lock-Box Banks
EXHIBIT I Trade Names and Assumed Names
EXHIBIT J List of Computer Software
EXHIBIT K-1 Form of Lease
EXHIBIT K-2 Form of Finance Agreement
EXHIBIT K-3 Form of Leasehold Improvement Note
EXHIBIT K-4 Form of Practice Finance Loan and Practice Finance Loan
Underwriting Criteria
EXHIBIT K-5 Forms of Related Contract Documents
<PAGE> 5
AMENDED AND RESTATED
PURCHASE AND CONTRIBUTION AGREEMENT
DATED AS OF MARCH 31, 2000
HPSC BRAVO FUNDING CORP., a Delaware corporation (the "Buyer"), and
HPSC, INC., a Delaware corporation, (the "Seller") agree as follows:
PRELIMINARY STATEMENTS. (1) Certain terms which are capitalized and
used throughout this Agreement (in addition to those defined above) are defined
in the "Definitions List" (as defined in Article I of this Agreement).
(2) The Seller and the Buyer are parties to that certain Purchase and
Contribution Agreement, dated as of January 31, 1995 (as amended, the "Prior
PCA").
(3) The Seller and the Buyer have agreed to amend and restate the
Prior PCA in its entirety as follows:
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement,
capitalized terms used herein shall, unless otherwise defined herein, have the
meanings assigned to them in the Definitions List dated as of the date hereof
that refers to this Agreement (the "DEFINITIONS LIST"), the terms of which are
incorporated herein by reference (such meanings to be equally applicable to both
the singular and plural forms of the terms defined). Any reference in the
Facility Documents to a note, instrument, or other agreement substantially in
the form of Exhibit K-1, K-2, K-3, or K-4 to this Agreement, as applicable,
shall mean and be a reference to a note, instrument or other agreement in
substantially one of the forms included in such Exhibit.
(a) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to Sections, subsections, Schedules and
Exhibits of this Agreement unless otherwise specified.
SECTION 1.02. OTHER TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC in the State of New York, and not specifically defined
herein, are used herein as defined in such Article 9.
SECTION 1.03. COMPUTATION OF TIME PERIODS. Unless otherwise stated in
this Agreement, in the computation of a period of time from a specified date to
a later specified date,
<PAGE> 6
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding."
ARTICLE II
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 2.01. AGREEMENT TO SELL AND CONTRIBUTE. On the terms and
conditions hereinafter set forth, the Seller hereby agrees, from time to time
until the Termination Date, to sell in part and to contribute in part to the
Buyer, and the Buyer hereby agrees, from time to time until the Termination
Date, to purchase and acquire from the Seller, all of the Seller's right, title
and interest in, to and under the Receivables, the Contracts, all Equipment, all
Related Security with respect to the foregoing, and all Collections and other
proceeds of the foregoing. Except as provided in the immediately succeeding
sentence, nothing contained in this Agreement is intended to, nor shall it be
deemed to, constitute a commitment on the part of the Seller or on the part of
the Buyer to consummate any Purchase hereunder, it being understood that all
such Purchases shall be made at the discretion of each such party but otherwise
subject to the terms and conditions set forth herein. Notwithstanding the
foregoing, the Buyer agrees, subject to the satisfaction of the conditions set
forth in SECTION 3.02, to consummate any Purchase requested by the Seller
pursuant to SECTION 2.02(b) for which the notice of purchase specifies that the
entire Purchase Price shall be paid as a contribution to the Buyer's capital and
not in cash. Nothing contained in this Agreement is intended to, nor shall it be
deemed to, constitute an assumption by the Buyer of any obligation under any
Contract, all of which obligations shall be retained by the Seller, and the
Seller hereby agrees to perform all such obligations.
(a) It is the intent of the Seller and the Buyer that the transfer by
the Seller to the Buyer of the Transferred Assets constitute a sale, in part,
and a contribution to capital, in part, which sales and contributions are
absolute and irrevocable, without recourse except as otherwise provided in this
Agreement, and will provide the Buyer with full ownership of the Transferred
Assets. Each of Seller and the Buyer hereby agrees to treat such transfer as a
sale and a contribution for tax, reporting and accounting purposes (except to
the extent that such transfer is not recognized due to the reporting of taxes on
a consolidated basis where applicable and the application of consolidated
financial reporting principles under GAAP). The Seller agrees to respond to any
inquiries with respect to the transfer hereunder by confirming the sale and
contribution of the Receivables, Contracts and the Equipment to the Buyer, and
to note on its financial statements that such Receivables, Contracts and
Equipment have been sold and/or contributed to the Buyer.
SECTION 2.02. PURCHASES FROM THE SELLER. On the Closing Date, the
Seller shall sell to the Buyer, and the Buyer shall purchase from the Seller,
all of the Transferred Assets arising under or in connection with the Contracts
described on EXHIBIT A hereto in consideration of which the Buyer will pay to
the Seller $8,000.000 in cash. The remaining portion of such Transferred Assets
shall be a contribution to the capital of the Buyer in return for 999 shares of
the capital stock of the Buyer.
2
<PAGE> 7
(a) Each Purchase subsequent to the Closing Date shall be made on a
Settlement Date upon not less than three Business Days' prior written notice to
the Buyer requesting such Purchase, which notice shall contain a supplemental
EXHIBIT A hereto setting forth a list of the Contracts to be transferred to the
Buyer on such Settlement Date. Each such notice of a proposed Purchase shall
accompany a Settlement Report and shall specify that portion of the Purchase
Price which is payable in cash for the Transferred Assets to be transferred.
Such notice shall be accompanied by a certification from the Seller that, after
giving effect to the Purchase proposed in such notice, the conditions set forth
in SECTION 3.02 hereto shall have been satisfied. The purchase price (the
"PURCHASE PRICE") for the new Transferred Assets included in any Purchase shall
be agreed to in writing by the Buyer and the Seller on or before the applicable
Settlement Date and shall be an amount not less than 95% nor more than 100%
TIMES the aggregate Discounted Receivables Balance of the Receivables included
in such Purchase.
(b) Except as otherwise provided below in this SECTION 2.02, the
Purchase Price for the Transferred Assets sold by the Seller under this
Agreement shall be payable in full in cash by the Buyer, in each case on the
date of each such Purchase, except that the Buyer may, with respect to any
Purchase, offset against such Purchase Price any amounts owed by the Seller to
the Buyer hereunder and which remain unpaid. On the date of each Purchase, the
Buyer shall, upon satisfaction of the applicable conditions set forth in ARTICLE
III, make available to the Seller the portion of the Purchase Price payable in
cash referred to above in same day funds.
(c) If, on any Settlement Date, the Buyer has insufficient funds to
pay in full the Purchase Price owed on such day, then the Buyer shall so notify
the Seller prior to consummating such Purchase and the Seller shall, by
accepting the cash proceeds tendered by the Buyer, be deemed to have contributed
to the capital of the Buyer Transferred Assets having a Purchase Price equal to
the otherwise unpaid portion of the total Purchase Price otherwise owed on such
day.
(d) Promptly after each Purchase hereunder (including the initial
Purchase), the Seller will send to each Obligor under the Contracts included in
such Purchase, with the next invoice sent to such Obligor, a Notice of
Assignment, substantially in the form attached hereto as EXHIBIT B, which shall,
inter alia, advise such Obligor of the absolute transfer by the Seller to the
Buyer of that Obligor's Contract, including the Receivables due thereunder, and
any related Equipment.
SECTION 2.03. SERVICING OF CONTRACTS AND EQUIPMENT. In connection with
the contribution, assignment, transfer, sale and conveyance of the Transferred
Assets to the Buyer, the Seller hereby agrees to service the Contracts and
Equipment for the benefit of the Buyer and its successors and assigns in
accordance with the terms and provisions of ARTICLE VI hereof.
SECTION 2.04. TRANSFER OF RECORDS. (a) The transfer of Transferred
Assets hereunder shall include the transfer to the Buyer of all of the Seller's
right and title to and interest in the Records relating to such Transferred
Assets, which transfer shall be effected automatically
3
<PAGE> 8
on the Purchase Date for such Transferred Assets without any further
documentation. In connection with such transfer, the Seller hereby grants to the
Buyer an irrevocable, non-exclusive license to use, without royalty or payment
of any kind, all software used by the Seller to account for the Receivables and
the Contracts, to the extent necessary to administer the Transferred Assets,
whether such software is owned by the Seller or is owned by others and used by
the Seller under license agreements with respect thereto, such use to be subject
to the terms and conditions of any such license agreements with third parties
where applicable. The license granted hereby shall be irrevocable, and shall
terminate on the date on which the aggregate Receivables Balance shall have been
reduced to zero.
(b) The Seller shall take such action requested by the Buyer, from
time to time hereafter, that may be necessary or appropriate to ensure that the
Buyer and its assigns have (i) an enforceable ownership interest in the Records
relating to the Transferred Assets and (ii) an enforceable right (whether by
license or sublicense or otherwise) to use all of the computer software used to
account for the Transferred Assets and/or to recreate such Records, such use to
be subject to the terms and conditions of any license agreements with third
parties pursuant to which the Seller has the right to use the applicable
computer software.
SECTION 2.05. COLLECTIONS; DEEMED COLLECTIONS. (a) Any Collections of
Receivables received (or deemed to have been received) by the Seller shall be
remitted directly to the Buyer by depositing such Collections in the Lock-box
Account within one Business Day of Seller's receipt.
(b) If on any day the Outstanding Balance of any 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 cancelled 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 Receivable in the amount of such reduction, cancellation or
adjustment. If on any day any of the representations or warranties in the first
sentence of SECTION 4.01(h) is no longer true with respect to a 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 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 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 Receivable under this Agreement or the perfection of the
Buyer's security interest in any Equipment as against the Obligor thereunder,
then the Seller be deemed to have received a Collection of such Receivable in an
amount equal to the Outstanding Balance thereof. To the extent that any such
deemed Collection reduces the Outstanding Balance of such Receivable to zero,
then, upon the Seller's payment to the Buyer of such deemed Collection, the
Buyer shall re-assign to the Seller all of its right, title and interest in and
to the relevant
4
<PAGE> 9
Receivable, the Contract under which such Receivable arose and the Related
Security relating thereto. Prior to the 15th day of each month (or if such day
is not a Business Day, the immediately succeeding Business Day), the Seller
shall prepare and forward to the Buyer, a Settlement Report as of the close of
business of the Seller on the last day of the immediately preceding month, in
substantially the form set forth in EXHIBIT C.
(c) Although the Seller and the Buyer agree that the Seller (except in
its capacity as Servicer pursuant to SECTION 6.02(a)), shall have no right to so
terminate, reject or not assume a Contract, if the Seller 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
Receivables arising under such Contract in an amount equal to (A) in the event
of a prepayment or termination consented to by the Seller at the 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(c), the Buyer shall re-assign to the Seller all
of its right, title and interest in and to the relevant Receivable or
Receivables, the Contracts under which such Receivable(s) arose and the Related
Security relating thereto.
SECTION 2.06. PAYMENTS AND COMPUTATIONS, ETC. Except as otherwise
provided herein, all amounts to be paid or deposited by the Seller hereunder
shall be paid or deposited in accordance with the terms hereof no later than
11:00 A.M. (New York City time) on the day when due in lawful money of the
United States of America in immediately available funds to a special account in
the name of Buyer and maintained at Bank of Boston. The Seller shall, to the
extent permitted by law, pay to the Buyer interest on all amounts not paid or
deposited when due hereunder (whether owing by the Seller individually or as
Servicer) at 2% per annum above the Base Rate, payable on demand; PROVIDED,
HOWEVER, that such interest rate shall not at any time exceed the maximum rate
permitted by applicable law. All computations of interest and other fees
hereunder shall be made on the basis of a year of 360 days for the actual number
of days (including the first but excluding the last day) elapsed.
SECTION 2.07. PERFECTION OF LIENS; FURTHER ASSURANCES. Upon the
request of the Buyer, 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 or assignments thereof), that may
be necessary or desirable, or that the Buyer may request, in order to (i)
perfect and protect any security interest granted or purported to be granted by
an Obligor under any Contract and (ii) perfect and protect any ownership or
security interest granted or purported to be granted to the Buyer hereunder or
(iii) to enable the Buyer to exercise and enforce its rights and remedies
5
<PAGE> 10
hereunder with respect to any Transferred Assets; 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.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. CONDITIONS PRECEDENT TO INITIAL PURCHASE. The first
Purchase hereunder after the date hereof shall be subject to the condition
precedent that the Buyer shall have received the following, each in form and
substance satisfactory to the Buyer:
(a) The Certificate for the Buyer;
(b) This Purchase Agreement executed by the Buyer and the Seller;
(c) A fully executed copy of the Triple-A Purchase Agreement;
(d) A copy of the resolutions of the Board of Directors of the Seller
approving this Purchase Agreement and the other Facility Documents to be
delivered by it hereunder and the transactions contemplated hereby, certified by
its Secretary or Assistant Secretary;
(e) The Certificate of Incorporation of the Seller certified by the
Secretary of State of Delaware;
(f) Good Standing Certificates for the Seller issued by the
Secretaries of State of Delaware and Massachusetts; and
(g) A certificate of the Secretary or Assistant Secretary of the
Seller certifying (i) the names and true signatures of the officers authorized
on its behalf to sign this Agreement and the other Facility Documents to be
delivered by it hereunder (on which certificate the Buyer (and the Collateral
Agent) may conclusively rely until such time as the Buyer (and the Collateral
Agent) shall receive from the Seller a revised certificate meeting the
requirements of this subsection (g)) and (ii) a copy of the Seller's by-laws.
SECTION 3.02. CONDITIONS PRECEDENT TO ALL PURCHASES. Each Purchase
(including the initial Purchase) by the Buyer from the Seller shall be subject
to the further conditions precedent that (a) with respect to any such Purchase,
on or prior to the date of such Purchase, the Seller shall have delivered to the
Buyer (i) in form and substance satisfactory to the Buyer, a completed
Settlement Report as of the end of the immediately preceding calendar month and
containing such additional information as may be reasonably requested by the
Buyer,
6
<PAGE> 11
(ii) a notice of purchase and list of the Contracts to be purchased as provided
in SECTION 2.02(b), (iii) a completed Certificate with respect to such Contracts
and (iv) 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 for each Contract to be included in such Purchase; (b) on the date of such
Purchase the following statements shall be true and the Seller by accepting the
cash portion of the Purchase Price shall be deemed to have certified that:
(i) The representations and warranties contained in SECTION 4.01
are correct on and as of such day as though made on and as of
such date and
(ii) No event has occurred and is continuing, or would result
from such Purchase which constitutes an Event of Termination or
would constitute an Event of Termination but for the requirement
that notice be given or time elapse or both; and
(iii) the Buyer shall have received such other approvals or
documents as the Buyer may reasonably request.
SECTION 3.03. EFFECT OF PAYMENT OF PURCHASE PRICE. Upon the payment of
the Purchase Price for any Purchase, (whether in cash or through a capital
contribution), title to the related Transferred Assets shall vest in the Buyer,
whether or not the conditions precedent to such Purchase were in fact satisfied;
PROVIDED, HOWEVER, that the Buyer shall not be deemed to have waived any claim
it may have under this Agreement for the failure by the Seller in fact to
satisfy any such condition precedent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller
represents and warrants as follows:
(a) DUE INCORPORATION AND GOOD STANDING. The Seller is a corporation
duly incorporated, validly existing and in good standing under the laws of the
jurisdiction named at the beginning hereof and is duly qualified to do business,
and is in good standing, in every jurisdiction in which the nature of its
business requires it to be so qualified, except where the failure to be so
qualified would not materially adversely affect (i) the interests hereunder of
the Buyer, (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 (individually or as Servicer) to
perform its obligations hereunder.
(b) DUE AUTHORIZATION AND NO CONFLICT. The execution, delivery and
performance by the Seller of this Agreement, the Certificate, and all other
agreements, instruments and documents to be delivered hereunder, and the
transactions contemplated hereby and thereby (including the sale and
contribution to the Buyer of the Transferred Assets contemplated hereunder), are
within the Seller's corporate powers, have been duly authorized by all necessary
7
<PAGE> 12
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 material 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 (other than in favor of the
Buyer as contemplated hereunder); and no transaction contemplated hereby
requires compliance with any bulk sales act or similar law. This Agreement and
the Certificate 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 sales of
accounts and chattel paper under this Agreement and the security interests
granted under the Credit Agreement 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 Agreement, the Certificate 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 Agreement, the
Certificate and each other Facility Documents to be delivered by the Seller in
connection herewith constitute the legal, valid and binding obligations of the
Seller enforceable against the Seller 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) FINANCIAL STATEMENTS. (i) The consolidated balance sheets of the
Seller and its consolidated Subsidiaries as at December 31, 1998, and the
related statements of income, retained earnings and cash flows of the Seller and
its consolidated Subsidiaries for the fiscal year then ended, certified by
Deloitte & Touche, independent public accountants, and the unaudited interim
consolidated balance sheets of the Seller and its subsidiaries as of June 30,
1999 and September 30, 1999 and the related consolidated statements of income,
retained earnings and cash flows for the six months and nine months,
respectively, ending on such dates (the "Interim Financials"), in each case
fairly present the consolidated financial condition of the Seller and its
consolidated Subsidiaries as at such dates and the consolidated results of the
operations of the Seller and its consolidated Subsidiaries for the period ended
on such dates, all in accordance with GAAP, and since December 31, 1998, there
has been no material adverse change in any such condition or operations, except
as reflected in the Interim Financials. Neither the Seller nor any of its
subsidiaries has any material liabilities or obligations other than those
disclosed in the financial statements referred to above or for which adequate
reserves are reflected in such financial statements.
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(f) NO LITIGATION. There are no actions, suits or proceedings pending,
or to the knowledge of the Seller threatened, against or affecting the Seller or
any of its Subsidiaries, or the property of the Seller or any of its
Subsidiaries, in any court, or before any arbitrator of any kind, or before or
by any governmental body, which may materially adversely affect (i) the
business, properties, operations, prospects, profits or condition (financial or
otherwise) financial condition of the Seller or (ii) the ability of the Seller
to perform its obligations under this Agreement or the Certificate or (iii) the
collectibility of the Receivables. Neither the Seller nor any of its
Subsidiaries is in default with respect to any order of any court, arbitrator or
governmental body except for defaults with respect to orders of governmental
agencies which defaults are not material to the business or operations of the
Seller or any of its Subsidiaries or the Seller's ability to perform its
obligations hereunder.
(g) USE OF PROCEEDS. No proceeds of any Purchase will be used by the
Seller to acquire any security in any transaction which is subject to Section 13
or 14 of the Securities Exchange Act of 1934, as amended.
(h) PERFECTION OF INTEREST IN TRANSFERRED ASSETS. Prior to the Buyer's
Purchase and/or acquisition of each Transferred Asset hereunder, the Seller is
or will be the lawful owner of, and have good title to, such Transferred Asset
free and clear of any Adverse Claim and upon each Purchase and/or acquisition by
the Buyer of Transferred Assets hereunder, the Buyer shall acquire a valid and
perfected first priority ownership interest in each Receivable then existing or
thereafter arising and in the Related Security, the other Transferred Assets and
Collections and with respect thereto, in each case free and clear of any Adverse
Claim. All such Purchases of Receivables and related Transferred Assets
constitute true and valid sales, and all such Purchases and contributions of
Receivables and related Transferred Assets constitute true and valid transfers
and assignments of all of Seller's right, title and interest in, to and under
such Transferred Assets (and not merely a pledge of such Receivables and related
Transferred Assets for security purposes), enforceable against creditors of the
Seller and no such Transferred Assets shall constitute property of the Seller;
and no effective financing statement or other instrument similar in effect
covering any Receivable, the Related Security, Collections or the other
Transferred Assets shall at any time be on file in any recording office except
such as may be filed in favor of the Buyer (or its assignees) in accordance with
this Agreement.
(i) ACCURACY OF INFORMATION. No Settlement Report (if prepared by the
Seller, or to the extent that information contained therein is supplied by the
Seller), information, exhibit, financial statement, document, book, record or
report (other than forecasts required to be delivered by the Seller hereunder)
furnished or to be furnished by the Seller to the Buyer in connection with this
Agreement is or shall be inaccurate in any material respect as of the date it is
or shall be dated or (except as otherwise disclosed to the Buyer, as the case
may be, at such time) as of the date so furnished, or contains or shall contain
any material misstatement of fact or omits or shall omit to state a material
fact or any fact necessary to make the statements contained therein not
materially misleading.
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(j) LOCATION OF CHIEF EXECUTIVE OFFICE AND RECORDS. The chief place of
business and chief executive office of the Seller are located at the address of
the Seller referred to in SECTION 9.02 hereof and the locations of the offices
where the Seller keeps all the Records are listed on EXHIBIT F (or at such other
locations, notified to the Buyer in accordance with SECTION 5.01(f), in
jurisdictions where all action required by SECTION 6.03 has been taken and
completed).
(k) 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. From and
after the Closing Date, the Seller 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 delivered 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.
(l) NO TRADE NAMES. Except as described in EXHIBIT I, the Seller has
no trade names, fictitious names, assumed names or "doing business as" names.
(m) SEPARATE CORPORATE EXISTENCE. The Seller is entering into the
transactions contemplated by this Agreement in reliance on the Buyer's identity
as a separate legal entity from the Seller and each of its Affiliates other than
the Buyer, and acknowledges that the Buyer and the other parties to the Facility
Documents are similarly entering into the transactions contemplated by the other
Facility Documents in reliance on the Buyer's identity as a separate legal
entity from the Seller and each such other Affiliate.
(n) 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 have not given rise to any Adverse
Claims.
(o) SOLVENCY. The Seller (i) is not "insolvent" (as such term is
defined in ss.101(32)(A) of the Bankruptcy Code, (ii) is able to pay its debts
as they mature; 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.
(p) NO FRAUDULENT CONVEYANCE. The transactions contemplated by this
Agreement and by each of the Facility Documents are being consummated by the
Seller in furtherance of the Seller's ordinary business, with no contemplation
of insolvency and with no intent to hinder, delay or defraud any of its present
or future creditors. By its receipt of the
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Purchase Prices hereunder and its ownership of the capital stock of the Buyer,
the Seller shall have received reasonably equivalent value for the Transferred
Assets sold or otherwise conveyed to the Buyer under this Agreement.
(q) SOFTWARE. Attached as EXHIBIT J is a list of all computer software
used by the Seller to administer the Receivables and other Transferred Assets.
Each of the Buyer and the Collateral Agent, as assignee of the Buyer, has (or
will have, concurrently with the effectiveness hereof) an enforceable right
(whether by license, sublicense or assignment) to use all of the computer
software used to account for the Transferred Assets to the extent necessary to
administer the Receivables and other Transferred Assets, such use to be subject
to the terms and conditions of any license agreement for such software between
the Seller and any third parties where applicable.
(r) REPRESENTATIONS WITH RESPECT TO RECEIVABLES AND CONTRACTS. With
respect to each Receivable:
(i) Each such Receivable, at the time of Purchase thereof, is an
Eligible Receivable. Each Contract relating to a Receivable: (a)
if it constitutes a Lease, is in substantially the form of
EXHIBIT K-1 hereto; (b) if it constitutes a Finance Agreement, is
in substantially the form of EXHIBIT K-2 hereto; (c) if it
constitutes a Leasehold Improvement Note, is in substantially the
form of EXHIBIT K-3 hereto; (d) if it constitutes a Practice
Finance Loan, is in substantially the form of EXHIBIT K-4 hereto,
and (e) if it constitutes a Non-Medical Contract, is in
substantially the form of EXHIBIT K-1, EXHIBIT K-2, EXHIBIT K-3
or EXHIBIT K-4 hereto.
(ii) There are no facts or circumstances existing as of the
Purchase Date thereof which give rise to any right of rescission,
offset, counterclaim or defense, including the defense of usury,
to the obligations of any Obligor, including the obligation of
such Obligor to pay all amounts due thereunder, with respect to
any Contract to which such Obligor is a party; and neither the
operation of any of the terms of any Contract nor the exercise of
any right thereunder will render such Contract 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 which may subsequently arise 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.
(iii) As of the Cut-Off Date, (i) the aggregate Discounted
Receivables Balance of Contracts that are Leases is $5,239,644,
(ii) the aggregate Discounted Receivables Balance of Contracts
that are Finance Agreements
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pursuant to which the Buyer finances an Obligor's purchase of
Equipment is $2,963,452, (iii) the aggregate Discounted
Receivables Balance of Contracts that are Leasehold Improvement
Notes is $1,439,116 and (iv) the aggregate discounted book value
of anticipated residuals on the Equipment subject to Leases is,
net of security deposits, $290,283.
(iv) Each Lease requires the Obligor to assume all risk of loss
or malfunction of the related Equipment. Each Lease and Finance
Agreement pursuant to which the Buyer finances an Obligor's
purchase of Equipment requires the Obligor to pay all sales, use,
property, excise and other similar taxes imposed on or with
respect to the related Equipment and permits the rights with
respect to such Contract, and all collateral related thereto, to
be assigned by the Seller without the consent of any Person. No
Contract permits early termination or prepayment, unless the
amount required to be paid by or on behalf of Obligor in respect
thereof is equal to or greater than the applicable Termination
Amount. No Contract provides for the substitution, exchange or
addition of any Equipment subject thereto which would result in
any reduction of the amount of payments or change the timing of
payments due under such Contract.
(v) Each Lease requires the related Obligor to maintain the
related Equipment, if any, in good and workable order. Each Lease
and Finance Agreement pursuant to which the Buyer finances an
Obligor's purchase of Equipment requires the related Obligor to
obtain and maintain physical damage insurance on the Equipment
subject thereto and to name the lessor or lender thereunder as
loss payee and an additional insured with respect thereto. The
Collateral Agent is named as loss payee under all physical damage
insurance on the Equipment that is carried by the Seller or the
Buyer. To the best of Seller's knowledge, the Equipment was
properly delivered to the Obligor in good repair, without defects
and in satisfactory order and the related Equipment, if any, is
in good operating condition and repair. To the best of the
Seller's knowledge, the related Equipment was accepted by the
Obligor after reasonable opportunity to inspect and test the same
and no Obligor has informed the Seller of any defects therein.
(vi) On each Purchase Date, after giving effect to the Purchases
to be made on such date, the aggregate Discounted Receivables
Balance of all Contracts with Obligors located in any one state
does not exceed 30% of the Discounted Receivables Balance for all
Contracts.
(vii) On the Cut-Off Date, the Weighted Average Remaining Term of
the Contracts included in the initial Purchase was 49 months. On
each subsequent Purchase Date, after giving effect to the
Purchases to be made
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on such date, the Weighted Average Remaining Term does not exceed
57 months.
(viii) On the Cut-Off Date, the lowest Outstanding Balance of the
Receivables under any Contract included in the Purchases to be
made on such date is no less than $224 and the highest
Outstanding Balance of the Receivables under any Contract
included in the Purchases to be made on such date is no greater
than $130,667. As of each Purchase Date, after giving effect to
the Purchases to be made on such date, the average Outstanding
Balance of the Receivables is no greater than $30,000.
(ix) As of the Purchase Date thereof, the Seller has delivered
the Contract File for the related Contract to the Buyer or to the
Custodian on the Buyer's behalf together with duly executed
instruments of transfer or assignment in blank for each Contract
constituting an instrument or chattel paper.
(x) As of the Purchase Date thereof, the average original terms
of the Contracts included in such Purchase does not exceed 4.75
years.
(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%).
(s) OTHER INDEBTEDNESS. The Seller is not in default under any
material indenture, loan or credit agreement with respect to any Indebtedness,
the effect of which is to cause, or which would, with the giving of notice of
the lapse of time or both, permit the holder or holders thereof to cause, such
Indebtedness to become due prior to its stated maturity.
(t) INVESTMENT COMPANY. The Seller is not an "investment company" or a
company controlled by an "investment company" within the meaning of the
Investment Company Act of 1940.
(u) ERISA. Neither the Seller nor any of its ERISA Affiliates
maintains, contributes to or has any obligation to contribute to any Plan which
could reasonably be expected to, individually or in the aggregate, materially
adversely affect the ability of the Seller to perform its obligations under this
Agreement or any other Facility Document to which it is a party or which could
expose the Buyer to any material liability under ERISA. No accumulated or waived
funding deficiency (as defined in Section 302(a)(2) of ERISA or Section 412(a)
of the Internal Revenue Code) exists with respect to any Benefit Plan, and the
Seller has not failed to satisfy the minimum funding requirements under ERISA or
the Internal Revenue Code with respect to any Benefit Plan. Neither the Seller
nor any of its ERISA Affiliates has incurred any liability to or on account of a
Benefit Plan or Multiemployer Plan pursuant to Section 515, 4062, 4063, 4064,
4201 or 4204 of ERISA or expects to incur any liability under any of the
foregoing sections on
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account of the termination of participation in or contributions to any such Plan
or Multiemployer Plan.
(v) SELECTION OF RECEIVABLES. Each Receivable has been randomly
selected from the Originator's portfolio of receivables in accordance with its
normal standards and procedures used for all of its standard securitization
transactions and no selection procedures adverse to Triple-A have been employed
in such selections.
(w) HISTORIC LOSS DATA. Attached hereto as a part of EXHIBIT D is a
summary of historical static loss data of the Originator suffered as a result of
charge-offs of the Originator's receivables, which summary is true and accurate
with respect to the periods described therein and does not omit any information
necessary to make such summary not misleading.
(x) NON-MEDICAL CONTRACTS. On each Purchase Date, after giving effect
to the Purchases to be made on such date, the aggregate Discounted Receivables
Balance of all Non-Medical Contracts does not exceed 10% of the Discounted
Receivables Balance for all Contracts.
ARTICLE V
GENERAL COVENANTS OF THE SELLER
SECTION 5.01. AFFIRMATIVE COVENANTS OF THE SELLER. From the Closing
Date until the later of the Termination Date or the Collection Date, the Seller
will, unless the Buyer 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 interests hereunder of the Buyer,
(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 (individually or as Servicer) 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 and during regular business hours and on a quarterly basis
if requested, permit the Buyer and its designees (including the Collateral
Agent), or their respective 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
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expense of the Seller; PROVIDED, however, that so long as no Event of
Termination has occurred in any calendar year, the annual costs of the audits
during such year for which the Seller is responsible shall not exceed $22,000.
(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 limitation, records adequate
to permit the daily identification of all Collections of and adjustments to each
Receivable).
(e) PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND CONTRACTS. At its
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 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(es)
of the Seller referred to in SECTION 4.01(j), or, in any such case, upon 30
days' prior written notice to the Buyer, at such other locations within the
United States where all action required by SECTION 2.08 and by SECTION 6.04
shall have been taken and completed.
(g) CREDIT AND COLLECTION POLICIES. Comply in all material respects
with its Credit and Collection Policy attached hereto as EXHIBIT D in regard to
each 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 (including, without limitation, any Collections
deemed to have been received pursuant to SECTION 2.05), the Seller shall hold
such Collections in trust for the benefit of the Buyer and remit such
Collections to the Buyer by depositing such Collections into a Lock-Box Account
within one Business Day following Seller's identification thereof and in any
event within four Business Days following Seller's receipt thereof.
(i) COMPLIANCE WITH ERISA. Establish, maintain and operate all Plans
to 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 Receivable as is necessary to ensure that the Buyer 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 Buyer 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
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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.
(k) MAINTENANCE OF INSURANCE. Maintain, or cause each Obligor to
maintain, with respect to the Contracts and the Equipment related thereto,
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 Discounted Value for the Receivables arising under the relevant
Contracts. Each such casualty and liability policy if maintained by an Obligor,
shall name the Seller or the Buyer as loss payee and additional insured and the
Seller shall have assigned any such interest to the Buyer. The Seller shall
remit, or shall cause to be remitted, the proceeds of any such insurance policy
to a Lock-Box Account.
(l) SEPARATE IDENTITY. Take all actions required to maintain the
Buyer's status as a separate legal entity, including, without limitation, (i)
not holding the Buyer out to third parties as other than an entity with assets
and liabilities distinct from the Seller and the Seller's other Subsidiaries;
(ii) not holding itself out to be responsible for the debts of the Buyer or,
other than by reason of owning capital stock of the Buyer, for any decisions or
actions relating to the business and affairs of the Buyer; (iii) causing any
financial statements consolidated with those of the Buyer to address (by
footnote or otherwise and in language reasonably satisfactory to the Buyer and
the Collateral Agent) the separate corporate existence of the Buyer and the
Buyer's ownership of the Receivables; (iv) taking such other actions as are
necessary on its part to ensure that all corporate procedures required by its
and the Buyer's respective certificates of incorporation and by-laws are duly
and validly taken; (v) keeping correct and complete records and books of account
and corporate minutes; (vi) not acting in any other matter that could
foreseeably mislead others with respect to the Buyer's separate identity; and
(vii) taking such other actions as may be necessary on its part to ensure that
the Buyer is in compliance at all times with SECTION 5.01(l) of the Credit
Agreement and SECTION 5.01(l) of the Triple-A Purchase Agreement.
(m) TAXES. File or cause to be filed, and cause each of its
Subsidiaries 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 Buyer 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
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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 Buyer to a
material liability.
(n) 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.
SECTION 5.02. REPORTING REQUIREMENTS OF THE SELLER. From the Closing
Date until the later of the Termination Date or the Collection Date, the Seller
will, unless the Buyer shall otherwise consent in writing, furnish to the Buyer:
(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,
consolidated balance sheets of the Seller and its consolidated Subsidiaries as
of the end of such quarter, and consolidated statements of income and retained
earnings of the Seller and its consolidated Subsidiaries each 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 consolidated balance sheets
of the Seller and its consolidated Subsidiaries as of the end of such year and
the related consolidated statements of income and retained earnings of the
Seller and its consolidated Subsidiaries for such year each reported on by
nationally recognized independent public accountants acceptable to the Buyer
(the Buyer acknowledges that any of the "Big 5" accounting firms will be
acceptable to the Buyer);
(c) promptly after the sending or filing thereof, copies of all
reports which the Seller sends to any of its security holders and copies of all
reports and registration statements which the Seller files with the Securities
and Exchange Commission or any national securities exchange other than
registration statements relating to employee benefit plans and to registrations
of securities for selling security holders;
(d) as soon as possible and in any event within five Business Days
after the occurrence of each Event of Termination or each event which, with the
giving of notice or lapse of time or both, would constitute an Event of
Termination, the statement of the chief financial officer, chief accounting
officer or treasurer of the Seller setting forth details of such Event of
Termination or 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
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Subsidiary of the Seller files under ERISA with the IRS or the PBGC or the DOL
or which the Seller or any Subsidiary of the Seller receives from the PBGC;
(f) promptly, from time to time, such other information, documents,
records or reports respecting the Receivables or the conditions or operations,
financial or otherwise, of the Seller or any Subsidiary of the Seller as the
Buyer may from time to time reasonably request in order to protect the interests
of the Buyer under or as contemplated by this Agreement; and
(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.
SECTION 5.03. NEGATIVE COVENANTS OF THE SELLER. From the Closing Date
until the later of the Termination Date or the Collection Date, the Seller will
not, without the written consent of the Buyer:
(a) SALES, LIENS, ETC. AGAINST RECEIVABLES AND TRANSFERRED ASSETS.
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 Receivable, Related Security or Collections,
or any related Contract, or upon or with respect to any Lock-Box Account to
which any Collections of any Receivable are sent, or assign any right to receive
income in respect thereof, or upon any other Transferred Asset, except 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.
(b) EXTENSION OR AMENDMENT OF RECEIVABLES. Extend, amend or otherwise
modify, the terms of any Receivable, or amend, modify or waive, any term or
condition of any Contract related thereto, except to the extent that the Seller,
in its capacity as Servicer, may make such amendments in accordance with the
Credit and Collection Policy or as otherwise permitted under ARTICLE VI hereof.
(c) CHANGE IN BUSINESS OR CREDIT AND COLLECTION POLICY. Without the
prior written consent of the Collateral Agent, make any material change in the
character of its business or make any change 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. (i) After giving the
payment instructions described in the first sentence of SECTION 4.01(k), make
any change in such instructions to Obligors regarding payments to be made to the
Buyer or payments to be made to any Lock-Box Bank or (ii) add or terminate any
bank as a Lock-Box Bank from those listed in
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EXHIBIT H unless the Buyer shall have received (A) ten Business Days' prior
notice of such addition, termination or change and (B) 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 (y) copies of all agreements
and documents signed by the Seller or the respective Lock-Box Bank with respect
to any new Lock-Box Account.
(e) MERGER ETC. (i) Merge with or into or consolidate with or into or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) or acquire all or substantially all of the assets
or capital stock or other ownership interest of, any Person, or permit any
Subsidiary of Seller to do so, except that (A) any Subsidiary of Seller may
merge or consolidate with or transfer assets to or acquire assets from any other
Subsidiary of Seller, (B) any Subsidiary of Seller may merge into or transfer
assets to the Seller or any other Person and (C) the Seller or any Subsidiary of
the Seller may acquire the capital stock or assets of any other Person, provided
in each case that immediately after giving effect to such proposed transaction,
no Event of Termination or event which, with the giving of notice or lapse of
time, or both, would constitute an Event of Termination, would exist, and in the
case of any such merger to which the Seller is a party, the Seller is the
surviving corporation.
(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 other than those described in EXHIBIT I, unless the Seller has given to
the Buyer at least thirty (30) days' prior written notice thereof and, prior to
the effective date of any such name change or use, Seller delivers to the Buyer
such Financing Statements (Form UCC-1 and UCC-3) executed by Seller which the
Buyer may reasonably request to reflect such name change or use, together with
such other documents and instruments that the Buyer may request in connection
therewith.
(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 and its ERISA
Affiliates may take or allow such prohibited transactions, accumulated funding
deficiencies, payments, terminations 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 the Seller or any ERISA Affiliate (collectively, "ERISA
Liabilities") in an amount which does not exceed $500,000.
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(h) TERMINATE OR REJECT CONTRACTS. Without limiting SECTION 5.03(b)
and except as otherwise expressly permitted pursuant to SECTION 2.05, 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 shall have paid to the Buyer an amount
equal to the Termination Amount thereof.
(i) ACCOUNTING TREATMENT. Prepare any financial statements or other
statements which shall account for the transactions contemplated by this
Agreement in any manner other than as the sale of, or a capital contribution of,
the Transferred Assets by the Seller to the Buyer (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).
(j) CERTIFICATE OF INCORPORATION. Cause the Buyer to amend its
Certificate of Incorporation or By-laws in any manner which would require the
consent of the Buyer's independent director or directors, without the Collateral
Agent's prior written consent.
SECTION 5.04. FINANCIAL COVENANTS OF THE SELLER. (a) From the Closing
Date until the later of the Termination Date or the Collection Date, the Seller
will not suffer or permit:
(i) CONSOLIDATED TANGIBLE NET WORTH. The Seller will not permit
"Consolidated Tangible Net Worth" (as defined below) as of the
end of any fiscal quarter to be less than the sum of (i)
$35,000,000 PLUS (ii) on a cumulative basis, 75% of positive
"Consolidated Net Income" (as defined below) for each fiscal
quarter beginning with the fiscal quarter commencing on or after
October 1, 1999 PLUS (iii) 100% of the proceeds of any sale by
the Seller or any of its Subsidiaries of (A) equity securities
issued by the Seller or any of its Subsidiaries, or (B) warrants
or subscription rights for equity securities issued by the Seller
or any of its Subsidiaries.
(ii) Indebtedness of the Seller and its Consolidated Subsidiaries
at the end of any fiscal quarter to exceed seven-hundred percent
(700%) of Consolidated Tangible Net Worth at the end of such
fiscal quarter. For purposes of this SECTION 5.04(a)(ii), the
following shall be considered liabilities when calculating
"Consolidated Tangible Net Worth" as used herein:
(A) any Indebtedness of the Seller and/or its Consolidated Subsidiaries
that (i) is unsecured and expressly subordinate to the repayment of the
obligations evidenced by the Facility Documents and (ii) matures after the
date that is less than five years from the date on which "Consolidated
Tangible Net Worth" is calculated hereunder, excluding, without
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limitation, the unsecured and expressly subordinate Indebtedness with an
aggregate principal amount equal to $20,000,000 in existence on March 31,
2000, and
(B) any preferred stock or other equity interests in the Seller and/or its
Consolidated Subsidiaries that are subject to acceleration or other
mandatory repayment conditions and that mature in fewer than five years
from the date on which "Consolidated Tangible Net Worth" is calculated as
required hereunder (the Indebtedness described in clause (A) and the
preferred stock or other equity interests described in clause (B), taken
together, the "Sub Debt");
PROVIDED, that, on any date of calculation, in the event the aggregate amount of
the Sub Debt exceeds an amount equal to 45% of the sum of (a) "Consolidated
Tangible Net Worth" PLUS (b) Sub Debt PLUS (c) any other Indebtedness, preferred
stock or equity interest that does not constitute Sub Debt, then the amount of
such excess shall constitute a liability for purposes of calculating
"Consolidated Tangible Net Worth" hereunder.
(iii) The ratio of (A) "Consolidated EBIT" (as defined below) to
(B) "Total Interest Expense" (as defined below), as of the end of
any fiscal quarter, to be less than (1) 1.15 to 1.0 for the four
fiscal quarter period then ending.
(iv) the Seller to have a credit line less than $50,000,000 under
the terms of at least one committed credit facility not insured
by MBIA Insurance Corporation where such facility is extended to
the Seller by a financial institution (with the understanding
that such financial institution may not offer such facility
through a commercial paper conduit) and the terms and conditions
of such facility are in form and substance similar to the terms
and conditions set forth in the Third Amended and Restated Credit
Agreement, dated as of March 16, 1998 (as the same may be
amended, restated, supplemented or otherwise modified from time
to time, the "1998 Credit Agreement") among HPSC, Inc., American
Commercial Finance Company, and BankBoston, N.A.
(b) As used in this SECTION 5.04, the following terms shall have the
following meanings:
"CONSOLIDATED EBIT" for any period means the consolidated earnings (or
loss) from the operations of the Seller and its Consolidated Subsidiaries
after all expenses and other proper charges but before payment or provision
for income taxes or interest expense for such period, as determined in
accordance with GAAP.
"CONSOLIDATED NET INCOME" for any period means the consolidated net
income (or deficit) of the Seller and its Consolidated Subsidiaries, after
deduction of all expenses,
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taxes and other proper charges, for such period as determined in accordance
with GAAP, after eliminating therefrom all extraordinary nonrecurring items
of income.
"CONSOLIDATED SUBSIDIARIES" means all of the Subsidiaries of the
Seller consolidated for financial reporting purposes in accordance with
GAAP, whether or not such Subsidiary should be so consolidated for
financial reporting purposes.
"CONSOLIDATED TANGIBLE NET WORTH" means the excess of (i) total assets
of the Seller and its Consolidated Subsidiaries as determined in accordance
with GAAP MINUS (ii) total liabilities of the Seller and its Consolidated
Subsidiaries as determined in accordance with GAAP and any Indebtedness of
the Seller and its Consolidated Subsidiaries (whether or not classified as
liabilities) MINUS (iii) the total book value of all assets of the Seller
and its Consolidated Subsidiaries 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
MINUS (iv) all amounts representing any write-up in the book value of any
assets of the Seller or its Consolidated Subsidiaries resulting from a
revaluation thereof subsequent to December 25, 1993, 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, MINUS (v) deferred underwriting expenses and deferred
origination costs.
"TOTAL INTEREST EXPENSE" means for any period the aggregate amount of
interest required to be paid or accrued by the Seller and its Consolidated
Subsidiaries during such period in respect of Indebtedness, 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 such Indebtedness.
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. DESIGNATION OF SERVICER. Consistent with the Buyer's
ownership of the Transferred Assets, the Buyer shall have as against the Seller
the sole right to service, administer and collect the Receivables, to assign
such right and to delegate such right. The servicing, administering and
collection of the Receivables and the other Transferred Assets shall be
conducted by the Person (the "SERVICER") so designated by the Buyer from time to
time in accordance with this SECTION 6.01. Until the Collateral Agent gives
notice to the Seller of the designation of a new Servicer, the Seller is hereby
designated as, and hereby agrees to perform the duties and obligations of, the
Servicer pursuant to the terms hereof. The Buyer may, at any time upon ten
Business Days prior written notice, designate as Servicer any Person to succeed
the Seller on the condition any such Person so designated shall agree to perform
the duties and obligations of the Servicer pursuant to the terms hereof and
shall be acceptable to the Collateral
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Agent; PROVIDED that the Buyer's right to so designate a successor Servicer at
any time is personal to the Buyer and may not be assigned to any other Person
(including the Collateral Agent). The Collateral Agent may at any time from and
after a Servicing Termination Event designate as Servicer any other Person to
succeed the Seller 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 the Buyer and the Collateral Agent, subcontract with any
other Person for servicing, administering or collecting the Transferred 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 Transferred Assets in accordance with
the Credit and Collection Policy. 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.
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 Transferred Asset 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. The Buyer 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 Receivables, the
Related Security, the related Contracts and the other Transferred Assets. 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 Receivables as it applies and follows with respect to
accounts, chattel paper and instruments which are not Transferred Assets. In no
event shall the Servicer be entitled to make the Collateral Agent or the Buyer a
party to any litigation without the Buyer's and the Collateral Agent's express
prior written consent. 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. 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 Buyer's
satisfaction that such amounts do not constitute Collections; any such checks or
instruments which are determined to be Collections 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 Seller, while it is Servicer,
may, in accordance with the Credit and Collection Policy, (i) amend, modify or
waive
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any term or condition of any Contract to reflect any Permitted Extension, (ii)
adjust the Outstanding Balance of any Transferred Asset to reflect the
reductions, adjustments or cancellations described in the first sentence of
SECTION 2.05 of the Purchase Agreement, (iii) so long as such prepayment would
not cause an Event of Termination under SECTION 7.01(m) hereof 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 Seller shall deliver to the Servicer, and the
Servicer shall hold in trust for the Seller and the Buyer 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 Seller 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 to the Seller the collections of any receivable which is not a Transferred
Asset less, in the event the Seller 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 Transferred Asset 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) The Servicer will, at the Servicer's cost and expense and as agent
in the name of and on behalf of the Buyer, but subject at any time to the right
of the Buyer to direct and control, endeavor to collect, as and when the same
becomes due, all amounts owing on each Receivable. In the event of default by an
Obligor under any Receivable, the Servicer shall have the power and authority,
on behalf of the Buyer, to take such action in respect of the enforcement and
collection of such Receivable as the Servicer, in the absence of contrary
instructions from the Buyer, may deem advisable. In any such suit for
enforcement or collection, the Servicer shall be entitled to sue thereon in its
own name or as agent for the Buyer, in either case, for the account of the
Buyer.
(e) In the event the Servicer accepts in payment of any Receivable the
taking of repossession of the Equipment the sale or lease of which gave rise to
such Receivable, the Servicer agrees to use its reasonable efforts to resell or
re-lease such Equipment for the account of the Buyer and shall remit to the
Buyer the gross sale proceeds thereof or, to the extent such Equipment is
re-leased, shall deliver to the Buyer 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 Receivables, and all of which
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Contracts and Receivables shall constitute part of the Transferred Assets.
Neither the Buyer nor the Collateral Agent shall have any obligation to take any
action or commence any proceedings to realize upon any 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(e) shall be segregated by the
Servicer, held in trust by the Servicer for the Buyer and shall be remitted to a
Lock-Box Account or to 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.
(f) The Servicer shall maintain all books of account and other records
pertaining to the Receivables and the other Transferred Assets in such form as
will enable the Buyer or its designees to determine at any time the status
thereof. The Servicer will permit the Buyer, the Collateral Agent and any Person
designated by the Buyer 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 Transferred Assets. From time to time, at the
request of the Buyer or the Collateral Agent, the Servicer, at its own expense,
will (i) deliver to the Buyer and the Collateral Agent and any Person designated
by the Buyer or the Collateral Agent any records and invoices pertaining to the
Transferred Assets and evidence thereof as the Buyer, 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 Transferred Assets (whether or not such computer record or
other item is the property of the Buyer) as the Buyer or Collateral Agent may
direct to reflect the interests of the Buyer and the Collateral Agent in such
Transferred 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 Transferred Assets or (ii) mark all such
documents relating to the Transferred Assets so as to make such documents
readily identifiable as property of the Buyer 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 the Buyer and safely keep such documents in filing
cabinets or other suitable containers marked to show the Buyer's interest.
SECTION 6.03. Rights of the Buyer. At any time:
(a) The Buyer may notify the Obligors of the Receivables, or any of
them, of the Buyer's ownership interest in Transferred Assets and direct such
Obligors, or any of them, that payment of all amounts payable under any
Receivable be made directly to the Buyer or its designee (including, without
limitation, the Collateral Agent).
(b) The Seller shall, at the Collateral Agent's or Buyer's request and
at the Seller's expense, give notice of the Buyer's interest in the Transferred
Assets to each Obligor (in substantially the form of the Notice of Assignment)
and direct that payments be made directly to the Buyer or its designee
(including, without limitation, the Collateral Agent).
(c) The Seller shall, at the Buyer's request, assemble all Records
which the Buyer reasonably believes are necessary or appropriate for the
administration and enforcement of the
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Transferred Assets, and shall make the same available to the Buyer at a place
selected by the Buyer or its designee.
(d) The Seller hereby authorizes the Buyer and 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 Buyer and/or the Collateral
Agent, to collect all amounts due under any and all Transferred Assets or
related Receivables, including, without limitation, endorsing the Seller's name
on checks and other instruments representing Collections and enforcing such
Receivables and the related Contracts.
SECTION 6.04. FURTHER ACTION EVIDENCING TRANSFERS. 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 the Buyer
may reasonably request in order to perfect, protect or more fully evidence the
Buyer's interest in the Transferred Assets, or to enable the Buyer 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 Transferred Assets with a legend, acceptable
to the Buyer, evidencing that the Buyer has acquired an ownership interest
therein as provided in this Agreement and, upon the request of the Buyer, 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 the Buyer may reasonably request. The Seller
hereby authorizes the Buyer to file one or more financing or continuation
statements, and amendments thereto and assignments thereof, relative to all or
any of the Transferred Assets 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
Transferred Assets, 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, the Buyer may (but shall not be required to) itself
perform, or cause performance of, such agreement or obligation, and the expenses
of the Buyer incurred in connection therewith shall be payable by the Seller
upon the Buyer's demand therefor; PROVIDED, HOWEVER, prior to taking any such
action, the Buyer shall give notice of such intention to the Seller and provide
the Seller with a reasonable opportunity to take such action itself.
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 the Buyer under the Purchase Agreement and the exercise by the
Buyer 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 Transferred 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 Transferred Assets.
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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 Transferred Assets, the Servicer shall segregate such cash and other items,
hold such cash and other items in trust for the benefit of the Buyer and the
Collateral Agent and shall cause such cash and other items (properly endorsed,
where required, so that such items may be collected by the Buyer) 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 Transferred Asset.
SECTION 6.07. APPLICATION OF COLLECTIONS. All Collections on account
of the 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 Transferred Assets to direct that its
remittances be applied to any such indebtedness prior to being applied to the
Transferred 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 1.0% TIMES
the Outstanding Balance of the 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.
Notwithstanding the foregoing, to the extent that Advances under the Liquidity
Agreement are used to fund or maintain Borrowings or Purchases, then the
Servicing Fee shall be .75% TIMES the Outstanding Balance of the 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. In the event that the Buyer (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 the Buyer and the
Collateral Agent.
SECTION 6.09. RESIGNATION; SUCCESSOR SERVICER. (a) The obligation of
the Servicer to service the 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 Transferred
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
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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 the Buyer 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 Buyer's or 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 and the Credit
Agreement shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof and
thereof, 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 Transferred Assets, the transfer of
electronic records relating to the Transferred Assets in such form as the
Successor Servicer may reasonably request and the transfer of all related
Records, correspondence and other documents relating to the Transferred Assets.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. EVENTS OF TERMINATION. If any of the following events
("Events of Termination") shall occur:
(a) (i) 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(a)) and such
failure shall remain unremedied for three Business Days after written notice
from the Buyer 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 with respect to such payments which do not relate
to the remittance of Collections,
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such failure shall remain unremedied for three Business Days after written
notice from the Buyer; or
(b) The Seller shall fail to perform or observe any term, covenant or
agreement contained in ARTICLE VI and any such failure shall remain unremedied
for five Business Days after written notice from the Buyer; or
(c) Any representation or warranty made or deemed to be made by the
Seller (or any of its officers) under or in connection with this Agreement, any
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 Business Days, the Seller shall have ten
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
2.05, then, upon the Seller's payment of such deemed Collection at the time and
in the manner required under this Agreement, the breach of such representation
or warranty shall not give rise to an Event of Termination under this subsection
(c); or
(d) The Seller shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be performed or
observed and any such failure shall remain unremedied for ten Business Days
after written notice from the Buyer (it being understood that, if any such
failure gives rise to a deemed Collection as provided under SECTION 2.05, then
the payment of such deemed Collection at the time and in the manner required
under this Agreement shall be deemed a remedy of such failure); or
(e) The Seller shall fail to pay any principal of or premium or
interest on any Indebtedness when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise) and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such Indebtedness; or any other
default under any agreement or instrument relating to any such Indebtedness of
the Seller or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or instrument if
the effect of such default or event is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or any such Indebtedness
shall be declared to be due and payable or required to be prepaid (other than by
a regularly scheduled required prepayment) prior to the stated maturity thereof;
or
(f) Any Purchase or acquisition by the Buyer of Transferred 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 each Receivable, the
Related Security and the Equipment and Collections with respect thereto;
provided, HOWEVER, if any such failure results in a deemed Collection under
SECTION 2.05 hereof and the Seller satisfies in full its payment obligations
under such section, then such failure shall not give rise to an Event of
Termination under this subsection (f); or
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(g) (i) An Insolvency Event shall occur with respect to the Seller or
the Buyer or (ii) the Seller or the Buyer shall take any corporate action to
authorize the filing of any Insolvency Proceeding; or
(h) There shall have been any material adverse change in the financial
condition or operations of the Seller since December 31, 1999 (except as
disclosed in the Interim Financials described in SECTION 4.01(e)), or there
shall have occurred any event which materially adversely affects the
collectibility of the Receivables generally or there shall have occurred any
other event which materially adversely affects the ability of the Seller to
collect Receivables generally or the ability of the Seller to perform hereunder;
or
(i) The Seller shall fail to observe any covenant contained in SECTION
5.04; or
(j) As of the last day of any month, the "Default Ratio" for the
aggregate of Receivables subject to the terms of the Credit Agreement and
Receivables subject to the terms of the Triple-A Purchase Agreement shall be
greater than 3.5%; or
(k) As of the last day of any month, the "Delinquency Ratio" for the
aggregate of Receivables subject to the terms of the Credit Agreement and
Receivables subject to the terms of the Triple-A Purchase Agreement shall be
greater than 3.5%; or
Any "Wind-Down Event" shall occur under the Credit Agreement or any
"Wind-Down Event" shall occur under the Triple-A Purchase Agreement; or
then, and in any such event, the Buyer may by notice to the Seller declare the
Termination Date to have occurred, EXCEPT that, in the case of any event
described in clause (i) of subsection (g) above, the Termination Date shall be
deemed to have occurred automatically upon the occurrence of such event. Upon
any such declaration or automatic occurrence, the Buyer shall have, in addition
to all other rights and remedies under this Agreement or otherwise, all other
rights and remedies provided under the UCC of the applicable jurisdiction and
other applicable laws, which rights shall be cumulative.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. INDEMNITIES BY THE SELLER. (a) Without limiting any
other rights which the Buyer may have hereunder or under applicable law, the
Seller hereby agrees to indemnify the Buyer 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
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<PAGE> 35
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):
(i) the transfer of any Receivable which was not, as of the date
of Purchase, an Eligible Receivable;
(ii) any representation or warranty made or deemed made by the
Seller (or any of its officers) under or in connection with this
Agreement, any Settlement Report or any other information or
report delivered by the Seller 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 (individually or as Servicer) to
comply with any term, provision or covenant contained in this
Agreement (other than any covenant contained in SECTION 5.04, 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 Agreement or
with any applicable law, rule or regulation with respect to any
Receivable, the related Contract, the Related Security or the
other Transferred Assets, or the nonconformity of any Receivable,
the related Contract, the Related Security or the other
Transferred Assets with any such applicable law, rule or
regulation;
(iv) the failure to vest and maintain vested in the Buyer or to
transfer to the Buyer an interest in the Transferred Assets, free
and clear of any Adverse Claim (including, without limitation,
free and clear of any Permitted Encumbrance except in favor of
the Buyer or its assignees) whether existing at the time of the
Purchase of such Receivable 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 the Buyer),
financing statements or other similar instruments or documents
under the UCC of any applicable jurisdiction or other applicable
laws against the Seller with respect to any Contract or
Receivables which are, or are purported to be, Transferred
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 Receivable (including, without limitation, a defense based on
such 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;
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(vii) any failure of the Seller, as Servicer or otherwise, to
perform its duties or obligations in accordance with the
provisions of ARTICLE VI;
(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 Transferred 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 and the Obligors under the
Contracts to maintain casualty and liability insurance for the
Equipment related to the Receivables in an amount at least equal
to the Discounted Receivables Balance for all Receivables at such
time;
(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 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
Seller and the Buyer (with respect to an amendment) or (ii) the Buyer (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 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
32
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the exhibits hereto) among the parties hereto with respect to the subject matter
hereof, superseding all prior oral or written understandings.
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 Buyer
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 Agreement shall be
binding upon and inure to the benefit of the Seller, the Buyer 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 the Buyer and the Collateral Agent. The Buyer 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 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 enhancements and/or liquidity for Triple-A in connection with
the Credit Agreement and the Triple-A Purchase
33
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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. This
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
the indemnification and payment provisions of ARTICLE VIII and ARTICLE X shall
be continuing and shall survive any termination of this Agreement.
SECTION 9.05. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS 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 BUYER IN THE TRANSFERRED ASSETS 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 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 BUYER'S OPTION, 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 THE BUYER ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN
CONNECTION WITH THIS 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
THE BUYER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
THE RIGHT OF THE BUYER 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) In addition to the rights
of indemnification under ARTICLE VIII hereof, the Seller agrees to pay on demand
all reasonable
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costs and expenses in connection with the preparation, execution, delivery and
administration (including periodic auditing and any requested amendments,
waivers or consents) of this Agreement and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Buyer (and the Collateral Agent) with respect
thereto and with respect to advising the Buyer (and the Collateral Agent) as to
its rights and remedies under this 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 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 Agreement or the other
agreements and documents to be delivered hereunder, and agrees to indemnify the
Buyer and its 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 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 Agreement or the
Certificate 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. REFERENCE TO AND EFFECT ON PRIOR PCA. Each of the
parties hereto ratifies the sales, conveyances, payments, representations,
warranties, covenants and indemnities made by such party in the Prior PCA and
agrees that such agreement is, as of the date hereof, in full force and effect.
From and after the effectiveness of the initial Receivables Purchase under this
Agreement in accordance with Section 3.01, (i) the terms and provisions of this
Agreement shall amend and supersede the terms and provisions of the Prior PCA in
its entirety, (ii) the continuing rights, remedies and obligations of the
parties with respect to any Receivables acquired under the Prior PCA shall be
governed by the terms and provisions of this Agreement to the same extent as if
such Receivables had been conveyed under this Agreement, and (iii) all
references in any other Facility Documents to the Prior PCA or Appendix A
thereto shall mean and be a reference to this Agreement and Appendix A hereto.
It is expressly understood and agreed that the execution and delivery of this
Agreement is not intended to be, and shall not be construed as, a novation of
the Prior PCA nor of any liens granted or indebtedness incurred thereunder.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
SELLER/SERVICER: HPSC, INC.
By:________________________________
Name: Rene LeFebvre
Title: Vice President and
Chief Financial Officer
By:________________________________
Name: John Everets, Jr.
Title: Chairman and Chief Executive
Officer
Address: Sixty State Street
35th Floor
Boston, MA 02109-1803
Attn: Vice President, Finance
BUYER: HPSC BRAVO FUNDING CORP.
By:________________________________
Name: John Everets, Jr.
Title: President
Address: Sixty State Street
35th Floor
Boston, MA 02109-1803
Attn: President
Signature Page to Amended and Restated Purchase and Contribution Agreement
<PAGE> 1
EXECUTION COPY
AMENDED AND RESTATED
LEASE RECEIVABLES PURCHASE AGREEMENT
Dated as of March 31, 2000
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> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I.........................................................................................................1
DEFINITIONS.......................................................................................................1
SECTION 1.01 Certain Definitions..............................................................................1
SECTION 1.02. Accounting Terms................................................................................1
SECTION 1.03. Other Terms.....................................................................................2
SECTION 1.04. Computation of Time Periods.....................................................................2
ARTICLE II........................................................................................................2
AMOUNT AND TERMS OF THE PURCHASES.................................................................................2
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...........................................................................5
SECTION 2.05. Payments and Computations, Etc..................................................................6
SECTION 2.06. Compensation....................................................................................7
SECTION 2.07. Dividing or Combining of Capital and Fixed Periods..............................................7
SECTION 2.08. Increased Costs, Capital Adequacy...............................................................7
SECTION 2.09. Taxes...........................................................................................8
SECTION 2.10. Fees............................................................................................9
SECTION 2.11. Grant of Security Interest in Equipment Collateral..............................................9
ARTICLE III......................................................................................................10
CONDITIONS OF PURCHASES..........................................................................................10
SECTION 3.01. Conditions Precedent to Initial Receivables Purchase...........................................10
SECTION 3.02. Conditions Precedent to Each Receivables Purchase..............................................11
ARTICLE IV.......................................................................................................13
REPRESENTATIONS AND WARRANTIES...................................................................................13
SECTION 4.01. Representations and Warranties of the Seller...................................................13
ARTICLE V........................................................................................................18
GENERAL COVENANTS................................................................................................18
SECTION 5.01. Affirmative Covenants of the Seller............................................................18
SECTION 5.02. Reporting Requirements of the Seller...........................................................22
SECTION 5.03. Negative Covenants of the Seller...............................................................23
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VI.......................................................................................................26
ADMINISTRATION AND COLLECTION....................................................................................26
SECTION 6.01. Designation of Servicer........................................................................26
SECTION 6.02. Duties of the Servicer.........................................................................27
SECTION 6.03. Rights of the Collateral Agent.................................................................29
SECTION 6.04. Further Action Evidencing Transfers............................................................29
SECTION 6.05. Responsibilities of the Seller.................................................................30
SECTION 6.06. Administration of Collections by Servicer......................................................30
SECTION 6.07. Application of Collections.....................................................................31
SECTION 6.08. Servicing Fee..................................................................................31
SECTION 6.09. Resignation; Successor Servicer................................................................31
SECTION 6.10. Lock-Box Accounts; Collection Account..........................................................32
SECTION 6.11. Collection Account.............................................................................32
ARTICLE VII......................................................................................................35
WIND-DOWN EVENTS; REMEDIES.......................................................................................35
SECTION 7.01. Wind-Down Events...............................................................................35
SECTION 7.02. Remedies.......................................................................................37
ARTICLE VIII.....................................................................................................37
INDEMNIFICATION; REPURCHASES.....................................................................................37
SECTION 8.01. Indemnities by the Seller......................................................................37
ARTICLE IX.......................................................................................................41
MISCELLANEOUS....................................................................................................41
SECTION 9.01. Amendments, Etc................................................................................41
SECTION 9.02. Notices, Etc...................................................................................41
SECTION 9.03. No Waiver; Remedies............................................................................41
SECTION 9.04. Binding Effect; Assignability..................................................................41
SECTION 9.05. GOVERNING LAW; WAIVER OF JURY TRIAL............................................................42
SECTION 9.06. Costs, Expenses and Taxes......................................................................43
SECTION 9.07. Execution in Counterparts; Severability........................................................43
SECTION 9.08. No Bankruptcy Petition Against Triple-A........................................................43
SECTION 9.09. Reference to and Effect on Prior LRPA and Credit Agreement.....................................43
</TABLE>
ii
<PAGE> 4
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
EXHIBIT F Historical Static Loss Data
<PAGE> 5
EXECUTION COPY
AMENDED AND RESTATED
LEASE RECEIVABLES PURCHASE AGREEMENT
THIS AMENDED AND RESTATED LEASE RECEIVABLES PURCHASE AGREEMENT, dated as of
March 31, 2000 (as the same may be amended, restated, supplemented or otherwise
modified from time to time, the "TRIPLE-A PURCHASE AGREEMENT"), is entered into
by and 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, the Seller, the Servicer, Triple-A, and CapMAC are parties to that
certain Lease Receivables Purchase Agreement, dated as of October 18, 1996 (as
amended, the "Prior LRPA"); and
WHEREAS, the Seller, the Servicer, Triple-A, and CapMAC desire to amend and
restate the Prior LRPA in certain respects;
NOW, THEREFORE, the Seller, the Servicer, Triple-A, and CapMAC have agreed
to amend and restate the Prior LRPA in its entirety 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"). Any reference in the
Facility Documents to a note, instrument, or other agreement substantially in
the form of Exhibit K-1, K-2, K-3, or K-4 to the Purchase Agreement, as
applicable, shall mean and be a reference to a note, instrument or other
agreement in substantially one of the forms included in such Exhibit.
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.
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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.
(c) Capitalized terms used herein shall be equally applicable to both the
singular and plural forms of such terms.
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 shall 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. Notwithstanding the foregoing, if, at any
time, two or more of the individuals who held the positions of Chief Executive
Officer, Chief Financial Officer and President of the Servicer as of April 30,
1998 no longer remain actively involved in the day-to-day management of the
Servicer, then Triple-A is no longer required to, but may, in its sole
discretion, make Receivables Purchases. 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
Receivables identified as Eligible Receivables by the Seller, and 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 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. It is the
intention of the parties hereto that each Receivables Purchase to be made
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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. In addition to the foregoing, the Seller shall
indicate which Receivables subject to such Sale Notice are Designated
Receivables and which Receivables subject to such Sale Notice are Non-Designated
Receivables.
(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 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
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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
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
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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.
(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
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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 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
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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.
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
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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 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
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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
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
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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
first Receivables Purchase after the date hereof is subject to satisfaction of
the following conditions precedent:
(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 Amended and Restated Purchase and Contribution Agreement,
dated as of the date hereof, between the Seller and HPSC, Inc.;
(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;
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(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) An Officer's Certificate in the form of EXHIBIT C, executed by
the President or the Treasurer of the Seller;
(b) All fees and expenses due and owing as of the initial Receivables
Purchase Date under the Fee Letter shall have been paid;
(c) Triple-A shall have received a Sale Notice from the Seller requesting
that Triple-A Purchase all Receivables currently funded under the Credit
Agreement and indicating that all such Receivables are to constitute Designated
Receivables hereunder; and
(d) Triple-A shall have received such other approvals or documents as it
may reasonably request.
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;
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(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.
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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 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.
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(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 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.
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(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.
(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 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 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
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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 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 by the Seller
constitute valid and true sales and transfers for consideration (and not merely
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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
ss.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 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).
(x) 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%).
(y) SELECTION OF RECEIVABLES. Each Receivable has been randomly
selected from the Originator's portfolio of receivables in accordance with its
normal standards and procedures used for all of its standard securitization
transactions and no selection procedures
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adverse to Triple-A have been employed in such selections. In addition, (i) the
designation of a Purchased Receivable as a Designated Receivable or a
Non-Designated Receivable and (ii) the repurchase of any Designated Receivable
pursuant to Section 8.02 shall be done on a basis which is not adverse to
Triple-A or CapMAC.
(z) HISTORIC LOSS DATA. Attached hereto as EXHIBIT F is a summary of
historical static loss data suffered by the Originator as a result of
charge-offs of the Originator's receivables, which summary is true and accurate
with respect to the periods described therein and does not omit any information
necessary to make such summary not misleading.
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
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keep and maintain, all documents, books, records and other information
reasonably necessary or advisable for the collection of all Receivables
(including, without 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, casualty
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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 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
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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;
(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
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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 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,
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promptly identify any such funds to the Servicer for segregation and remittance
to the owner thereof.
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);
(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
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(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.
(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
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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 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:
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(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 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
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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 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
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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, (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
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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 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
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shall make the same available to the Collateral Agent at a place selected
by the Collateral Agent or its designee.
(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
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delivery, or accompanied by 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 1.0% 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, 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
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"Servicing Fee" specified and defined in the Purchase Agreement. Notwithstanding
the foregoing, to the extent that Advances under the Liquidity Agreement are
used to fund or maintain Borrowings or Purchases, then the Servicing Fee shall
be .75% TIMES the Outstanding Balance of the 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. 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 may reasonably request and the transfer of
all related Records, correspondence and other documents relating to the
Purchased Assets.
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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:
(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;
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(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 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.
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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;
(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
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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 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
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(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.
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
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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):
(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
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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;
(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
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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.
SECTION 8.02. REPURCHASES OF DESIGNATED RECEIVABLES. The following
rights are in addition to and not in limitation of any other rights or remedies
that Triple-A or CapMAC may have hereunder.
(a) The Seller may, at any time upon not less than five Business
Days' prior written notice to the Collateral Agent, elect to repurchase any
Designated Receivable and the Purchased Assets relating thereto, which purchase
shall take place on the first Settlement Date to occur after the Collateral
Agent's receipt of such notice, for the repurchase price specified in SUBSECTION
(b) of this SECTION 8.02.
(b) In the case of a repurchase from Triple-A by the Seller of a
Purchased Asset pursuant to this SECTION 8.02, the Seller shall, on the
Settlement Date coinciding with such repurchase pay to the Collateral Agent as a
reduction of Capital an amount equal to the Outstanding Balance of the related
Designated Receivable. The proceeds of any such repurchase shall be deemed to be
Collections of such Purchased Asset received by the Seller, and the amount of
each such Collection shall be applied as provided in SECTION 2.04. The
repurchase of any Purchased Asset shall not relieve the Seller of its obligation
under SECTION 2.04(a) to pay Yield on the Capital outstanding with respect to
such Purchased Asset through the Payment Date relating to such Capital. Any such
repurchase shall be made without recourse or warranty, express or implied (other
than a representation and warranty that such Asset is free and clear of any
Adverse Claim created by or through Triple-A).
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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.
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-
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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 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.
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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 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.
SECTION 9.09. REFERENCE TO AND EFFECT ON PRIOR LRPA AND CREDIT
AGREEMENT. Each of the parties hereto ratifies the sales, conveyances, payments,
representations, warranties, covenants and indemnities made by such party in the
Prior LRPA and Credit Agreement and agrees that such agreement is, as of the
date hereof, in full force and effect. From and after the effectiveness of the
initial Receivables Purchase under this Agreement in accordance with Section
3.01, (i) the terms and provisions of this Agreement shall amend and supersede
the terms and provisions of the Prior LRPA and the Credit Agreement in their
entirety, (ii) the continuing rights, remedies and obligations of the parties
with respect to any Receivables and other Purchased Assets acquired under the
Prior LRPA or financed under the Credit Agreement shall be governed by the terms
and provisions of this Agreement to the same extent as if such Purchased Assets
had been conveyed under this Agreement, (iii) all of Triple-A's funding
commitments under the Credit Agreement shall be terminated and (iv) all
references in any other
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<PAGE> 48
Facility Documents to the Prior LRPA or Appendix A thereto shall mean and be a
reference to this Agreement and Appendix A hereto. It is expressly understood
and agreed that the execution and delivery of this Agreement is not intended to
be, and shall not be construed as, a novation of the Prior LRPA nor the Credit
Agreement nor of any liens granted or indebtedness incurred thereunder.
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<PAGE> 49
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: ________________________________________
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: ________________________________________
Title:__________________________________
Address: Sixty State Street
35th Floor
Boston, MA 02109-1803
Attn: Vice President, Finance
Telephone:
Telecopy:
<PAGE> 50
TRIPLE-A ONE FUNDING CORPORATION
By: Capital Markets Assurance Corporation,
its Attorney-in-Fact
By:__________________________________________
Title: Vice-President
Address: 113 King Street
Armonk, New York 10504
Attn: Head of Exposure Management
Telephone: (914) 273-4545
Telecopy: (914) 765-3810
CAPITAL MARKETS ASSURANCE CORPORATION
By:__________________________________________
Title: Vice-President
Address: 113 King Street
Armonk, New York 10504
Attn: Head of Exposure Management
Telephone: (914) 273-4545
Telecopy: (914) 765-3810
<PAGE> 51
APPENDIX A
to
TRIPLE-A PURCHASE AGREEMENT
DEFINITIONS LIST
Attached
<PAGE> 52
DEFINITIONS LIST
TO
TRIPLE-A PURCHASE AGREEMENT
"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.
"AGREEMENT" means the Triple-A Purchase Agreement.
"AGGREGATE OUTSTANDINGS" means, on any day, an amount equal to the sum
of (i) the outstanding Capital as of such day and (ii) the outstanding principal
amount of all "Triple-A Loans" under the Credit Agreement as of such day.
"AGGREGATE RESERVES" means, on any day, an amount equal to the
Discounted Eligible Receivables Balance times the GREATEST of (i) 10%, (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 not be less than the greatest
of (a) $1,000,000, (b) the sum of the Outstanding Balances of all Receivables
owed by the five (5) Obligors who owe the largest Outstanding Balances of
Receivables owed by any single Obligor, and (c) twenty-five percent (25%) of the
highest dollar amount of Aggregate Reserves as of any previous time.
"BANCO SANTANDER" means Banco Santander Central Hispano, a Spanish
bank, New York Branch.
<PAGE> 53
"BANK OF BOSTON" means The First National Bank of Boston, now known as
Fleet Capital Corporation, 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 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
Originator 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.
"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.
"CAPITAL" means the original amount paid to the Seller for each
Receivables Purchase under this Triple-A Purchase Agreement pursuant to SECTIONS
2.01 and 2.02, reduced from time to time by Collections received and distributed
on account of such Capital pursuant to SECTION 2.04 hereof. If Triple-A or the
Administrative Agent is required (or believes in good faith that it is required)
by law to repay (as a preference or otherwise) to any Obligor, the Originator,
the Seller, a Lock-Box Bank, a trustee for any Obligor, the Originator or the
Seller, a court or any other Person, any amount that previously caused a
reduction in Capital, then Capital shall be reinstated by the amount of such
repayment and the Seller will indemnify and hold Triple-A or the Administrative
Agent harmless for the amount of such repayment, interest thereon required (or
believed in good faith by Triple-A or the Administrative Agent to be required)
to be paid in connection therewith and all losses, liabilities, costs and
expenses related thereto (including but not limited to reasonable attorneys'
fees and expenses).
"CAPITAL LIMIT" means, on any day, (A) the Discounted Eligible
Receivables Balance on such day MINUS (B) the Aggregate Reserves then in effect.
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<PAGE> 54
"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 Yield, fees, premiums and other expenses owing by the Seller
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 Seller 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 sum of the average Aggregate
Outstandings during such month.
"COLLATERAL AGENT" means CapMAC, in its capacity as Collateral Agent
pursuant to the Credit Agreement and this Triple-A Purchase Agreement, and any
successor Collateral Agent.
"COLLECTION ACCOUNT" means that account defined as such in SECTION
6.11 of this Triple-A Purchase 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 Capital has been reduced to zero, (ii)
Triple-A has received all accrued Yield, fees and other amounts payable under
this Triple-A Purchase Agreement and the other Facility Documents (other than
the Credit Agreement) and (iii) the Surety Bonds have been discharged (other
than through payment thereunder).
"COLLECTIONS" means, with respect to any Purchased Asset or other
Receivable, as applicable, all cash collections and other cash proceeds of such
Purchased Asset or Receivable, including, without limitation, all cash proceeds
of Related Security related thereto, and in the case of any Purchased Assets,
all cash collections of any Purchased Receivables included therein, and, in
either such case, any Collection of such Purchased Asset or Receivable deemed to
have been received pursuant to SECTION 2.04 of this Triple-A Purchase Agreement
(it being understood that the Seller shall pay, or shall cause the Originator to
pay, all such deemed Collection amounts to Triple-A 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
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<PAGE> 55
identified on the books and records of Triple-A as issued in respect of the
transactions contemplated by the Facility Documents.
"CONTRACT" means each Lease, Finance Agreement, Leasehold Improvement
Note, Practice Finance Loan, Non-Medical Contract 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.
"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 Originator and kept on file by the Originator 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
Originator 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.
4
<PAGE> 56
"CREDIT AGREEMENT" means that certain Credit Agreement, dated as of
January 31, 1995, as has been amended and as the same may be amended, restated,
supplemented, or otherwise modified from time to time, among the Borrower,
Triple-A, and CapMAC, as the Administrative Agent and the Collateral Agent.
"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" means that certain Custodial Agreement, dated as
January 31, 1995, as has been amended and as the same may be amended, restated,
supplemented, or otherwise modified from time to time, among Triple-A, the
Originator, the Seller, the Custodian and the Collateral Agent.
"CUSTODIAN" means Bank of Boston, in its capacity as "Custodian" under
the Custodial Agreement, or any successor thereto under the Custodial Agreement.
"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 Purchased 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 Purchased 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 as expressed in years of the
Purchased Receivables as of such day.
"DEFAULTED RECEIVABLE" means a Purchased 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 Seller's books as
uncollectible.
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<PAGE> 57
"DEFERRED PURCHASE PRICE" means, on any date, the excess if any of (i)
the aggregate Outstanding Balance of all Purchased Receivables over (ii) the sum
of aggregate outstanding Capital, accrued and unpaid Yield thereon, and any
other Carrying Costs or other amounts owed hereunder or paid under this
Agreement on behalf of the Seller including the pro-rata portion of any fees
payable under the Fee Letter to Triple-A and allocable to this Agreement, the
Administrative Agent, the Collateral Agent or any Liquidity Bank.
"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 Purchased Receivables which became Delinquent
Receivables during the three-month period then ending, by (ii) the sum of the
aggregate Outstanding Balances of all Purchased 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 Purchased
Receivables as of January 31st, February 28th, and March 31st).
"DELINQUENT RECEIVABLE" means a Purchased 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 Originator.
"DESIGNATED OBLIGOR" means, at any time, any Obligor of the Originator
whom the Collateral Agent has, following three Business Days' notice, advised
the Originator that such Obligor shall be considered a Designated Obligor.
"DESIGNATED RECEIVABLE" means a Purchased Receivable identified by the
Seller to Triple-A as a "Designated Receivable" pursuant to Section 2.02 of the
Triple-A Purchase Agreement.
"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 this Triple-A Purchase Agreement.
"DILUTION FACTORS" means with respect to the Purchased 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 Originator's usual practices.
"DISCOUNT RATE" means (i) with respect to any Lease or Finance
Agreement pursuant to which the Buyer finances an Obligor's purchase of
Equipment, 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 Originator and (ii) with respect to any other Contract,
the interest rate set forth in such Contract. The Discount Rate for such Leases
or Finance
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<PAGE> 58
Agreements transferred on any date shall be a rate equal to the sum of (i) the
interest rate per annum quoted to the Seller 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 Seller will pay an interest rate calculated in conjunction
with an Interest Rate Hedge amortization prepared by the Seller and which
complies with SECTION 5.01(n) of the Triple-A Purchase Agreement, and in return
shall receive a floating interest rate (calculated against the same principal
amount) approximately equal to the Eurodollar Rate, PLUS (ii) .15% per annum
PLUS (iii) the Carrying Costs Percentage at such time; PROVIDED, that the Seller
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 Eligible
Receivables.
"DISCOUNTED RECEIVABLES BALANCE" means, as of any date of
determination, the aggregate of the Discounted Values for all Purchased
Receivables.
"DISCOUNTED VALUE" means, (i) with respect to any Lease or Finance
Agreement pursuant to which the Buyer finances an Obligor's purchase of
Equipment, 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; and
(ii) with respect to any other Contract, as of any date of determination, the
outstanding principal amount thereof.
"DOL" means the United States Department of Labor and any successor
department or agency.
"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 Originator; (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; PROVIDED, HOWEVER, that an Obligor of a Non-Medical
Contract that otherwise constitutes an Eligible Receivable shall not be required
to be a licensed professional dental or medical practitioner.
"ELIGIBLE RECEIVABLE" means, at any time, a Purchased Receivable:
(i) the Obligor of which is an Eligible Obligor;
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<PAGE> 59
(ii) which is not a Delinquent Receivable or a Defaulted Receivable;
(iii) which (a) if evidenced by a Practice Finance Loan, is required
pursuant to the terms thereof to be paid in full within 84 months of the
original commencement date of such Loan (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)), and (b) if evidenced by
a Contract other than a Practice Finance Loan, is required pursuant to the
terms thereof to be paid in full within 72 months of the original
commencement date thereof (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)); PROVIDED, HOWEVER, that an aggregate
amount of 30% of such Contracts that are not Practice Finance Loans and are
underlying Purchased Receivables may be allowed pursuant to the terms
thereof to be paid in full within 84 months of the original commencement
date thereof so long as each such Contract satisfies each other requirement
for an Eligible Receivable as set forth herein;
(iv) which, if arising under a Lease or Finance Agreement pursuant to
which the Buyer finances an Obligor's purchase of Equipment, arises under
such terms and conditions that 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 the lesser of (i) $1,000,000 and (ii) 1.5% of
the Discounted Eligible Receivables Balance at such time;
(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
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
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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 Receivables Purchase
thereof, Triple-A has a first priority ownership therein, 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 Originator as loss payee and which interest as loss payee has been
transferred to the Buyer pursuant to the Purchase Agreement and to Triple-A
pursuant to this Triple-A Purchase 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, in the case of a Practice Finance
Loan, pursuant to a provision therein requiring payment of a Termination
Amount upon any such rejection, early termination or non-assumption;
(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 Originator
that the Collateral Agent has determined, in its reasonable discretion,
that such Receivable (or
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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 Originator in the
ordinary course of its business;
(xxii) The Discounted Value of which, (A) 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, (B) if arising under a
promissory note, when added to the Discounted Value of all Eligible
Receivables arising under promissory notes, does not exceed 10% of the
Discounted Eligible Receivables Balance, and (C) if arising under either a
Leasehold Improvement Note or a promissory note, when added to the
Discounted Value of all Eligible Receivables arising under both Leasehold
Improvement Notes and promissory notes, does not exceed 30% of the
Discounted Eligible Receivables Balance;
(xxiii) the Contract for which is either (A) a Lease in substantially
the same form of EXHIBIT K-1 to the Purchase Agreement, (B) a Finance
Agreement in substantially the same form of EXHIBIT K-2 thereto, (C) a
Leasehold Improvement Note in substantially the same form of EXHIBIT K-3
thereto, (D) a Practice Finance Loan in substantially the same form of
EXHIBIT K-4 thereto, underwritten in accordance with Practice Finance Loan
underwriting criteria, as attached to EXHIBIT K-4, and which, when added to
all Practice Finance Loans, does not exceed 20% of the Discounted Eligible
Receivables Balance, (E) a Non-Medical Contract in substantially the form
of EXHIBIT K-1, EXHIBIT K-2, EXHIBIT K-3 or EXHIBIT K-4 to the Purchase
Agreement, or (F) 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), (C), (D) or (E) above, does not
exceed $150,000; PROVIDED, that if a Contract is a Non-Medical Contract,
the Discounted Value of such Non-Medical Contract, when added together with
the Discounted Values of all other Non-Medical Contracts, does not exceed
10% of the Discounted Eligible Receivables Balance; and
(xxiv) with respect to which the Originator has filed and maintained
the effectiveness of UCC financing statements against the Obligor in order
to perfect any security interest granted under 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) the Obligors of which are either (A) licensed dental, medical
or veterinary professionals or (B) corporations or similar entities engaged
in a dental, medical or veterinary practice, and which are licensed and/or
qualified, as appropriate, in each jurisdiction in which the nature of
their practices would require such license or qualification; PROVIDED,
HOWEVER, that an Obligor of a Receivable constituting a Non-Medical
Contract shall not be required to satisfy the conditions set forth in the
preceding clauses (A) and (B); 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, in each such case (except for the
representations and warranties which specifically relate to the Cut-Off
Date), as if such representations and warranties were made with respect to
the Purchased Receivables only; PROVIDED, HOWEVER, that an Obligor of a
Non-Medical Contract which otherwise constitutes an Eligible Receivable
shall not be required to be a licensed professional dental or medical
practitioner.
"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 Originator; (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 Originator or (iii) member of the same affiliated service
group (within the meaning of Section 414(m) of the IRC) as the Originator, 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
Fixed 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 Fixed Period and in a
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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
Fixed Period, divided by, (ii) one minus the Eurodollar Reserve Percentage
(expressed as a decimal) applicable to the Liquidity Agent for that Fixed
Period.
"EURODOLLAR RATE ADVANCE" means an Advance which bears interest at a
rate per annum calculated by reference to the Eurodollar Rate.
"EURODOLLAR RESERVE PERCENTAGE" of any Liquidity Bank for the Fixed
Period for any Eurodollar Rate Advance means the reserve percentage applicable
during such Fixed Period (or, if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such Fixed
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 Fixed 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) + [.10(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 less and equal 1.5%, the Excess
Concentration Reserve Ratio shall be zero.
"FACILITY DOCUMENTS" means, collectively, the Purchase Agreement, the
Credit Agreement, this 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, as of any date of determination, (i)
$347,500,000, as such amount may be reduced pursuant to SECTION 2.03 of the
Triple-A Purchase Agreement MINUS (ii) the aggregate principal amount of
"Triple-A Loans" outstanding on such date under the Credit Agreement.
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"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.
"FEE LETTER" means that certain Fourth Amended and Restated Fee Letter
Agreement, dated March 31, 2000, among the Seller and CapMAC, individually, as
the Administrative Agent and the Collateral Agent, as the same may be amended,
supplemented or otherwise modified from time to time.
"FINANCE AGREEMENT" means a written finance agreement substantially in
the form of EXHIBIT K-2 to the Purchase Agreement, together with any Related
Contract Documents that may be entered into in connection with such written
finance agreement, pursuant to which the Buyer finances an Obligor's purchase of
equipment, leasehold improvements and/or working capital needs.
"FIXED PERIOD" means, with respect to any outstanding Capital, a
period selected in accordance with SECTION 2.02 and SECTION 2.07 of this
Triple-A Purchase Agreement. Such Fixed Period shall be:
(i) if such Capital is funded through the issuance of Commercial
Paper, a period of from 1 to 90 days;
(ii) if such Capital is funded through Base Rate Advances, a period of
from 1 to 30 days;
(iii) if such Capital is funded through Eurodollar Rate Advances, a
period of one, two or three months;
provided, however, that
(x) whenever the last day of a Fixed Period would otherwise occur on a
day other than a Business Day, the last day of such Fixed period shall be
extended to occur on the next succeeding Business Day, unless such
extension would cause the last day of a Fixed Period described in clause
(iii) above to occur in the next following calendar month, in which event
the last day of such Fixed Period shall be deemed to occur on the
immediately preceding Business Day;
(y) whenever a Fixed 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 Fixed Period would
otherwise end, the last day of such Fixed Period shall occur on the last
Business Day of the month in which such Fixed Period ends; and
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(z) no Fixed Period described in CLAUSE (iii) above may end later than
the Scheduled Termination Date.
"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 this Triple-A 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" means that certain Insurance and Indemnity
Agreement, dated as of January 31, 1995, as has been amended and as the same may
be amended, restated, supplemented or otherwise modified from time to time,
among Triple-A, the Seller, the Liquidity Agent and CapMAC, as the
Administrative Agent and the Collateral Agent.
"INTEREST RATE HEDGE ASSIGNMENT" means an assignment in substantially
the form of EXHIBIT F to this Triple-A Purchase Agreement pursuant to which the
Seller assigns to the Collateral Agent all of its rights to payment under the
Interest Rate Hedges.
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"INTEREST RATE HEDGES" means interest rate swap or similar agreements
entered into by the Seller and Triple-A with the Swap Provider to provide
protection to, or minimize the impact upon, the Seller and Triple-A of
increasing interest rates under the Triple-A Purchase 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.
"LEASE" means a lease agreement between the Originator and an Obligor
substantially in the form of EXHIBIT K-1 to the Purchase Agreement, together
with any Related Contract Documents that may be entered into in connection with
such lease agreement, pursuant to which the Originator 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, together with any Related
Contract Documents that may be entered into in connection with such note or
instrument, 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 Banco Santander 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 Amended and Restated
Liquidity Agreement, dated as of June 29, 1998, as has been amended and as the
same may be amended, supplemented, restated, supplemented or otherwise modified
from time to time, by and among Triple-A, the Liquidity Banks party thereto and
the Liquidity Agent.
"LIQUIDITY SECURITY AGREEMENT" means that certain Liquidity Security
Agreement dated as of January 31, 1995, as has been amended and as the same may
be amended, restated, supplemented or otherwise modified from time to time, by
and among Triple-A, CapMAC and Banco Santander, in its capacity as the Liquidity
Agent and as "Liquidity Collateral Agent" under the Liquidity Security
Agreement.
"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 Originator, the Buyer and a
Lock-Box Bank which agreement sets forth the rights of the Collateral Agent, the
Originator, 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
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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 Originator or any ERISA Affiliate.
"NON-DESIGNATED RECEIVABLE" means a Purchased Receivable identified by
the Seller to Triple-A as a "Non-Designated Receivable" pursuant to Section 2.02
of the Triple-A Purchase Agreement.
"NON-MEDICAL CONTRACT" means a Contract the Obligor of which is not
required to be a licensed professional or dental medical practitioner.
"NOTICE OF ASSIGNMENT" means a Notice of Assignment in substantially
the form of EXHIBIT B to the Purchase 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
Seller to Triple-A, the Collateral Agent, the Administrative Agent, the Surety
and/or the Indemnified Parties, arising under or in connection with this
Triple-A Purchase Agreement or the transactions contemplated hereby and shall
include, without limitation, all liability for Yield, 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.
"ORIGINATOR" means HPSC, Inc., a Delaware corporation.
"OTHER TAXES" has the meaning assigned to such term in SECTION 2.09(b)
of this Triple-A Purchase Agreement.
"OUTSTANDING BALANCE" means, with respect to any Purchased 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.
"PAYMENT DATE" means, with respect to any Capital, the last day of the
Fixed Period then applicable to such Capital.
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"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
(e) with respect to Equipment, liens thereon created in favor of the
Originator 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.
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"PLAN" means an employee benefit plan defined in Section 3(3) of ERISA
in respect of which the Originator or any ERISA Affiliate is, or within the
immediately preceding six years was, an "employer" as defined in Section 3(5) of
ERISA.
"POST OFFICE BOX" means each post office box to which Obligors are
directed to mail payments in respect of the Receivables.
"PRACTICE FINANCE LOAN" means a note or instrument substantially in
the form of EXHIBIT K-4 to the Purchase and Contribution Agreement, together
with any Related Contract Documents that may be entered into in connection with
such note or instrument, evidencing an Obligor's indebtedness on account of a
loan made to finance working capital needs of such Obligor, in connection with
such Obligor's professional dental, medical or veterinary practice.
"PURCHASE" means a purchase (whether by means of cash payment or by
capital contribution) of Transferred Assets by the Buyer from the Originator
pursuant to SECTIONS 2.01 and 2.02 of the Purchase Agreement.
"PURCHASE AGREEMENT" means that certain Amended and Restated Purchase
and Contribution Agreement, dated as of March 31, 2000, as the same may be
amended, restated, supplemented or otherwise modified from time to time, between
the Originator and the Buyer.
"PURCHASE DATE" means, with respect to any Purchase, the date on which
such purchase occurs.
"PURCHASED ASSETS" (i) at all times prior to the Termination Date, (a)
all then outstanding Purchased Receivables, (b) all Related Security relating to
such Purchased 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 Purchased 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 Purchased
Receivables outstanding as of the close of business on the day preceding the
Termination Date), (b) all Related Security relating to such Purchased
Receivables and (c) all Collections with respect to, and other proceeds of, such
Receivables.
"PURCHASED RECEIVABLES" means all Receivables purchased by Triple-A
pursuant to this 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.
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"RECEIVABLES PURCHASE" means a purchase (whether by means of cash
payment or by capital contribution) of Receivables by Triple-A from the Seller
pursuant to SECTIONS 2.01 and 2.02 of the Triple-A Purchase Agreement.
"RECEIVABLES PURCHASE DATE" means, with respect to any Receivables
Purchase, the date on which such Receivables Purchase is funded, which date,
other than in the case of the initial Receivables Purchase, shall be a
Settlement Date.
"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 CONTRACT
DOCUMENT" means any agreement or document substantially in the form of EXHIBIT
K-5 to the Purchase Agreement which may be entered into contemporaneously with a
Contract.
"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 Originator'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 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.
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"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.
"SALE NOTICE" has the meaning set forth in SECTION 2.02(a) of the
Triple-A Purchase Agreement.
"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 (unless such Contract
is a Contract that is permitted to come due in 84 months under the definition of
Eligible Receivables, in which case 84 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 June 29, 2003.
"SELLER" means HPSC Bravo Funding Corp., a Delaware corporation.
"SERVICER" has the meaning assigned to that term in SECTION 6.01 of
this Triple-A Purchase Agreement.
"SERVICING FEE" has the meaning assigned to that term in SECTION 6.08
of this Triple-A 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 this Triple-A Purchase Agreement or as "Servicer" under the Purchase
Agreement, as determined by the Collateral Agent in its reasonable judgment.
"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.
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"SETTLEMENT REPORT" means a report, in substantially the form of
EXHIBIT C to the Purchase Agreement, furnished by the Originator to the Buyer
pursuant to SECTION 2.05(b) thereof and to the Collateral Agent pursuant to
SECTION 5.02(f) hereof.
"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 Originator
as the Servicer in accordance with the terms and provisions of this Triple-A
Purchase 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 Seller 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 Seller, 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
this Triple-A Purchase 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 Finance Agreement pursuant to which the Buyer
finances an Obligor's purchase of Equipment, 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 Originator designates as the Termination Date by notice to the Buyer and the
Administrative Agent at least thirty calendar days prior to such Business Day,
(ii) that Business Day which the Buyer designates as the Termination Date by
notice to the Originator and the Administrative Agent at least thirty calendar
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
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Agreement, (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 PURCHASE AGREEMENT" means the Amended and Restated Lease
Receivables Purchase Agreement, dated as of March 31, 2000, by and among HPSC
Bravo Funding Corp., a Delaware corporation, HPSC, Inc., a Delaware corporation,
Triple-A One Funding Corporation, a Delaware corporation, and Capital Markets
Assurance Corporation, a New York Stock insurance company, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"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 Purchased Assets calculated to equal (i) the aggregate amount
of the remaining Scheduled Contract Payments of each Purchased Receivable TIMES
the remaining term of such Purchased Receivable, DIVIDED BY (ii) the aggregate
amount of the remaining Scheduled Contract Payments of all the Purchased
Receivables (each such calculation to include, for purposes of calculating the
Weighted Average Remaining Term on any Settlement Date, any Purchased
Receivables to be purchased on such date).
"WIND-DOWN EVENT" has the meaning assigned to such term in SECTION
7.01 of this Triple-A Purchase Agreement.
"YIELD" means, with respect to all Capital during any Fixed Period,
the product of
YR x C x ED
--
AD
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where:
C = the Capital allocated to such Fixed Period.
YR = the Yield Rate for the Capital allocated to such Fixed Period.
ED = the actual number of days elapsed during such Fixed
Period.
AD = 360; provided, however, that if the applicable Yield Rate is the
Base Rate, then AD = 365 or 366 days, as applicable, for the
current year.
PROVIDED, HOWEVER that (i) no provision of this Agreement shall require the
payment or permit the collection of Yield in excess of the maximum permitted by
applicable law and (ii) Yield shall not be considered paid by any distribution
if at any time such distribution is rescinded or must otherwise be returned for
any reason.
"YIELD RATE" for any Capital allocated to any Fixed Period means:
(a) to the extent that as of the first day of such Fixed Period,
Triple-A funds such Capital, or portion thereof, for such Fixed Period by
issuing Commercial Paper, the rate (or if more than one rate, the weighted
average of the rates) at which Commercial Paper of Triple-A having a term
equal to such Fixed Period and to be issued to fund the Purchase or
maintenance of such Capital by Triple-A may be sold by any Dealer selected
by Triple-A, as agreed between each such Dealer and Triple-A and notified
by Triple-A to the Administrative Agent and the Collateral Agent; PROVIDED,
HOWEVER, if the rate (or rates) as agreed between any such Dealer and
Triple-A with regard to any Fixed Period for any Capital is a discount rate
(or rates), the "YIELD RATE" for such Fixed Period shall be the rate (or if
more than one rate, the weighted average of the rates) resulting from
converting such discount rate (or rates) to an interest-bearing equivalent
rate (or rates) per annum; or
(b) to the extent that as of the first day of such Fixed Period,
Triple-A funds or maintains such Capital, or portion thereof, for such
Fixed Period through the making of Base Rate Advances, a per annum rate
equal to the Base Rate for such Fixed Period or such other rate as the
Administrative Agent and the Seller shall agree to in writing; or
(c) to the extent that as of the first day of such Fixed Period,
Triple-A funds or maintains such Capital, or portion thereof, for such
Fixed Period through the making of Eurodollar Rate Advances under the
Liquidity Agreement, a per annum rate equal to the Eurodollar Rate for such
Fixed Period plus one-half of one percent (.50%).
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<PAGE> 75
DEFINITIONS LIST
Unless otherwise defined therein, the capitalized terms used in the
documents listed below shall have the meanings set forth in this Definitions
List.
1. Amended and Restated Purchase and Contribution Agreement, dated as of
March 31, 2000 (the "PURCHASE AGREEMENT"), between the Seller and the
Buyer, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
2. Credit Agreement, dated as of January 31, 1995 (as amended, 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, restated, supplemented
or otherwise modified from time to time.
3. Insurance and Indemnity Agreement, dated as of January 31, 1995 (as
amended, 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, restated, supplemented
or otherwise modified from time to time.
4. Fourth Amended and Restated Fee Letter Agreement, dated March 31, 2000
(the "FEE LETTER"), among the Borrower and CapMAC individually, as the
Administrative Agent and the Collateral Agent, as the same may be
amended, restated, supplemented or otherwise modified from time to
time.
5. Custodial Agreement, dated as January 31, 1995 (as amended, the
"CUSTODIAL AGREEMENT") among Triple-A, the Seller, the Borrower, the
Custodian and the Collateral Agent, as the same may be amended,
restated, supplemented or otherwise modified from time to time.
<PAGE> 76
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" has the meaning set forth in the Credit
Agreement.
"BANCO SANTANDER" means Banco Santander Central Hispano, a Spanish
bank, New York Branch.
"BANK OF BOSTON" means The First National Bank of Boston, now known as
Fleet Capital Corporation, 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 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.
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"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.
"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.
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"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.
"CONTRACT" means each Lease, Finance Agreement, Leasehold Improvement
Note, Practice Finance Loan, Non-Medical Contract 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.
"CONTRACT FILE" means, with respect to each Contract, the following
documents:
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(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 the first page
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 the first page
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 as expressed in years 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.
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"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.
"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 (i) with respect to any Lease or Finance
Agreement pursuant to which the Buyer finances an Obligor's purchase of
Equipment, 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 and (ii) with respect to any other Contract, the
interest rate set forth in such Contract. The Discount Rate for such Leases or
Finance Agreements 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 Seller 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) .15% per annum
PLUS (iii) the Carrying Costs Percentage at such time; PROVIDED, that the Seller
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, (i) with respect to any Lease or Finance
Agreement pursuant to which the Buyer finances an Obligor's purchase of
Equipment, 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
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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; and (ii) with
respect to any other Contract, as of any date of determination, the outstanding
principal amount thereof.
"DOL" means the United States Department of Labor and any successor
department or agency.
"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; PROVIDED, HOWEVER, that an Obligor of a Non-Medical
Contract that otherwise constitutes an Eligible Receivable shall not be required
to be a licensed professional dental or medical practitioner.
"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 (a) if evidenced by a Practice Finance Loan, is
required pursuant to the terms thereof to be paid in full within 84
months of the original commencement date of such Loan (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)), and (b) if evidenced by a Contract other than a Practice
Finance Loan, is required pursuant to the terms thereof to be paid in
full within 72 months of the original commencement date thereof (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); PROVIDED, HOWEVER, that an aggregate amount of
30% of such Contracts that are not Practice Finance Loans and are
underlying Purchased Receivables may be allowed pursuant to the terms
thereof to be paid in full within 84 months of the original
commencement date thereof so long as each such Contract satisfies each
other requirement for an Eligible Receivable as set forth herein;
(iv) which, if arising under a Lease or Finance Agreement
pursuant to which the Buyer finances an Obligor's purchase of
Equipment, arises under such terms and conditions that 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 the lesser of (i) $1,000,000 and (ii)
1.5% of the Discounted Eligible Receivables Balance at such time;
(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;
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(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 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, in the case of a
Practice Finance Loan, pursuant to a provision therein requiring
payment of a Termination Amount upon any such rejection, early
termination or non-assumption;
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(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, (A) 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, (B) if
arising under a promissory note, when added to the Discounted Value of
all Eligible Receivables arising under promissory notes, does not
exceed 10% of the Discounted Eligible Receivables Balance, and (C) if
arising under either a Leasehold Improvement Note or a promissory
note, when added to the Discounted Value of all Eligible Receivables
arising under both Leasehold Improvement Notes and promissory notes,
does not exceed 30% of the Discounted Eligible Receivables Balance;
(xxiii) the Contract for which is either (A) a Lease in
substantially the same form of EXHIBIT K-1 to the Purchase Agreement,
(B) a Finance Agreement in substantially the same form of EXHIBIT K-2
thereto, (C) a Leasehold Improvement Note in substantially the same
form of EXHIBIT K-3 thereto, (D) a Practice Finance Loan in
substantially the same form of EXHIBIT K-4 thereto, underwritten in
accordance with Practice Finance Loan underwriting criteria, as
attached to EXHIBIT K-4, and which, when added to all Practice Finance
Loans, does not exceed 20% of the Discounted Eligible Receivables
Balance; (E) a Non-Medical Contract in substantially the form of
EXHIBIT K-1, EXHIBIT K-2, EXHIBIT K-3 or EXHIBIT K-4 to the Purchase
Agreement, or (F) 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), (C), (D) or (E) above,
does not exceed $150,000; PROVIDED, that if a Contract is a
Non-Medical Contract, the Discounted Value of such Non-Medical
Contract, when added together with the Discounted Values of all other
Non-Medical Contracts, does not exceed 10% 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) the Obligors of which are either (A) licensed dental,
medical or veterinary professionals or (B) corporations or similar
entities engaged in a dental, medical or veterinary practice, and
which are licensed and/or qualified, as appropriate, in each
jurisdiction in which the nature of their practices would require such
license or qualification; PROVIDED, HOWEVER, that an Obligor of a
Receivable constituting a Non-Medical Contract shall not be required
to satisfy the conditions set forth in the preceding CLAUSES (A) and
(B); 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.
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"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.
"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.
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"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) + [.10(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 less and equal 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, on any date of calculation, the amount
set forth in CLAUSE (I) of the definition of the "Facility Limit", as defined in
the Triple-A Purchase Agreement, MINUS the aggregate amount of "Capital"
outstanding thereunder on such date MINUS the aggregate principal amount of
Triple-A Loans under the Credit Agreement on such date.
"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.
"FEE LETTER" has the meaning assigned thereto on the first page
of this Definitions List.
"FINANCE AGREEMENT" means a written finance agreement
substantially in the form of EXHIBIT K-2 to the Purchase Agreement, together
with any Related Contract Documents that
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may be entered into in connection with such written finance agreement, pursuant
to which the Buyer finances an Obligor's purchase of equipment, leasehold
improvements and/or working capital needs.
"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 the
first page 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
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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:
(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.
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"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.
"LEASE" means a lease agreement substantially in the form of
EXHIBIT K-1 to the Purchase Agreement, together with any Related Contract
Documents that may be entered into in connection with such lease 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, together
with any Related Contract Documents that may be entered into in connection with
such note or instrument, 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 Banco Santander, 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 Amended and Restated
Liquidity Agreement, dated as of June 29, 1998, as has been amended and as the
same may be amended, supplemented, restated, supplemented or otherwise modified
from time to time, by and among Triple-A, the Liquidity Banks party thereto and
the Liquidity Agent.
"LIQUIDITY SECURITY AGREEMENT" means that certain Liquidity
Security Agreement dated as of January 31, 1995, as has been amended and as the
same may be amended, restated, supplemented or otherwise modified from time to
time, by and among Triple-A, CapMAC and Banco Santander, in its capacity as the
Liquidity Agent and as "Liquidity Collateral Agent" under the Liquidity Security
Agreement.
"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.
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"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.
"NON-MEDICAL CONTRACT" means a Contract the Obligor of which is
not required to be a licensed professional dental or medical practitioner.
"NOTICE OF ASSIGNMENT" means a Notice of Assignment in
substantially the form of EXHIBIT B to the Purchase Agreement.
"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;
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(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;
(c) 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
(d) 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
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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.
"PRACTICE FINANCE LOAN" means a note or instrument substantially in
the form of EXHIBIT K-4 to the Purchase Agreement, together with any Related
Contract Documents that may be entered into in connection with such note or
instrument, evidencing an Obligor's indebtedness on account of a loan made to
finance working capital needs of such Obligor, in connection with such Obligor's
professional dental, medical or veterinary practice.
"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.
"PURCHASE AGREEMENT" has the meaning assigned thereto on the first
page 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
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processing software and related property and rights) maintained with respect to
Contracts and the related Obligors.
"RELATED CONTRACT DOCUMENT" means any agreement or document
substantially in the form of EXHIBIT K-5 to the Purchase Agreement which may be
entered into contemporaneously with a Contract.
"RELATED SECURITY" means with respect to any Contract:
(xxxv) 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;
(xxxvi) 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;
(xxxvii) 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;
(xxxviii) 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 was repossessed
from an Obligor of a Receivable to the extent that the Outstanding
Balance of such Receivable remains unpaid;
(xxxix) all Records; and
(xl) 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
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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
(unless such Contract is a Contract that is permitted to come due in 84 months
under the definition of Eligible Receivables, in which case 84 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 June 29, 2003.
"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.
"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.
21
<PAGE> 96
"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 Finance Agreement pursuant to which the Buyer
finances an Obligor's purchase of Equipment, 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 thirty calendar 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 thirty calendar 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, (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.
22
<PAGE> 97
"TRIPLE-A PURCHASE AGREEMENT" means the Amended and Restated Lease
Receivables Purchase Agreement, dated as of March 31, 2000, by and among HPSC
Bravo Funding Corp., a Delaware corporation, HPSC, Inc., a Delaware corporation,
Triple-A One Funding Corporation, a Delaware corporation, and Capital Markets
Assurance Corporation, a New York Stock insurance company, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"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.
23
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 18,265
<SECURITIES> 0
<RECEIVABLES> 460,113
<ALLOWANCES> 9,532
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,584
<DEPRECIATION> 1,680
<TOTAL-ASSETS> 400,939
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<BONDS> 336,613
0
0
<COMMON> 47
<OTHER-SE> 41,072
<TOTAL-LIABILITY-AND-EQUITY> 400,939
<SALES> 0
<TOTAL-REVENUES> 12,646
<CGS> 0
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<LOSS-PROVISION> 1,357
<INTEREST-EXPENSE> 5,669
<INCOME-PRETAX> 1,180
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<INCOME-CONTINUING> 693
<DISCONTINUED> 0
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