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EXHIBIT 10.6
AMENDMENT NO. 3
Dated as of June 29, 1998
to
CREDIT AGREEMENT
Dated as of January 31, 1995
THIS AMENDMENT NO. 3 dated as of June 29, 1998 ("AMENDMENT") is
entered into by and between HPSC BRAVO FUNDING CORP. (the "BORROWER"), TRIPLE-A
ONE FUNDING CORPORATION, a Delaware corporation ("TRIPLE-A") and CAPITAL MARKETS
ASSURANCE CORPORATION, a New York stock insurance company ("CapMAC"), as
Collateral Agent and as Administrative Agent. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to such terms in
the Amended and Restated Definitions List referred to below.
PRELIMINARY STATEMENTS
A. The Borrower, Triple-A and CapMAC are parties to that certain
Credit Agreement dated as of January 31, 1995 (as amended by that certain
Amendment No. 1 dated as of December 19, 1995 and that certain Amendment No. 2
dated as of October 18, 1996, the "CREDIT AGREEMENT"), pursuant to which
Triple-A agreed to make Triple-A Loans to the Borrower, the proceeds of which
have been used to purchase Transferred Assets from the Seller in accordance with
the terms of the Purchase Agreement;
B. The Borrower, Triple-A and CapMAC wish to increase the
facility limit and certain other terms and conditions set forth in the Credit
Agreement and as a result have agreed to amend the Credit Agreement on the terms
and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises set forth above,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Borrower, Triple-A and CapMAC agree as follows:
SECTION 1. AMENDMENT TO THE CREDIT AGREEMENT. Effective as of the
date first above written, subject to the satisfaction of the conditions
precedent set forth in SECTION 3 below, the Credit Agreement is hereby amended
as follows:
1.1 DEFINITIONS. The Amended and Restated Definitions List
referenced in Section 1.01 of the Credit Agreement is hereby amended as follows:
1.1 (a) The definition of "AGGREGATE RESERVES" is hereby
deleted and
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replaced with the following:
""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 be no less than the
greatest of (a) $2,500,000; (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, (c) twenty-five percent
(25%) of the highest dollar amount of Aggregate Reserves as of any previous time
and (d) from and after the date that the "Capital" outstanding under the
Triple-A Purchase Agreement has been reduced to zero, the sum of (1) $2,500,000
PLUS (2) the lesser of (x) $1,000,000 and (y) the Outstanding Balance of the
Purchased Receivables at the time such Capital was reduced to zero."
1.1 (b) The definition of "CONTRACT" is hereby modified to
insert immediately after the phrase "Leasehold Improvement Note" the phrase "or
Practice Finance Loan".
1.1(c) The definition of "DISCOUNT RATE" is hereby modified
to delete the text thereof in its entirety and to substitute therefor the
following:
"DISCOUNT RATE" means (i) with respect to any Lease or
Conditional Sale Agreement, 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 Receivable, the interest rate
set forth in the documents creating such Receivable. The Discount Rate
for the Leases or Conditional Sale 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.
1.1 (d) The definition of "DISCOUNTED VALUE" is hereby
modified to delete therefrom the phrase "means, with respect to any Receivable,"
and to substitute therefor the phrase "means, (i) with respect to any Lease or
Conditional Sale Agreement," and to delete
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therefrom the phrase "purchase option shall be zero." and to substitute therefor
the phrase "purchase option shall be zero; and (ii) with respect to any other
Receivable, as of any date of determination, the outstanding principal amount
thereof."
1.1(e) For the definition of "ELIGIBLE RECEIVABLE":
(i) Paragraph (iii) is hereby modified to insert immediately
after the phrase "commencement date of such Contract", the phrase ", except for
Practice Finance Loans, which are required to be paid in full within 84 months
of the original commencement dates of such Loans"
(ii) Paragraph (v) is hereby deleted and replaced with the
following:
"(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;"
(iii) Paragraph (xvi) is hereby modified to delete therefrom
the phrase "except pursuant to a provision therein requiring payment of a
Termination Amount" and to substitute therefor the phrase "except in the case of
a Practice Finance Loan, pursuant to a provision therein requiring payment of a
Termination Amount".
(iv) Paragraph (xxii) is hereby deleted and replaced with
the following:
"(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;"
(v) Paragraph (xxiii) is hereby deleted and replaced with
the following:
"(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
Conditional Sale 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
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underwriting criteria, as attached to EXHIBIT K-4, and which, when added to all
Practice Finance Loans, does not exceed 10% of the Discounted Eligible
Receivables Balance; or (E) 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) or (D) above, does not exceed
$150,000;"
(vi) Paragraph (xxviii) is hereby deleted and replaced with
the following:
the Obligors of which are either (i) licensed dental,
medical or veterinary professionals or (ii) 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;".
1.1 (f) The definition of "EXCESS CONCENTRATION RESERVE
RATIO" is hereby modified to delete therefrom the number ".14" and substitute
therefor the number ".10".
1.1 (g) The definition of "FACILITY LIMIT" is hereby
modified to delete therefrom the number "$100,000,000" and substitute therefor
the number "$225,000,000".
1.1 (h) The definition of "FEE LETTER" on page (i) is hereby
modified to delete therefrom the phrase "Amended and Restated Fee Letter
Agreement, dated October 18, 1996" and substitute therefor the phrase "Second
Amended and Restated Fee Letter Agreement, dated June 29, 1998".
1.1 (i) The following is hereby inserted alphabetically with
the other definitions contained in the Definitions List referred to in Section
1.01 of the Credit Agreement:
""PRACTICE FINANCE LOAN" means a note or instrument
substantially in the form of EXHIBIT K-4 to the Purchase Agreement, evidencing
an Obligor's indebtedness to the Seller 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."
1.1 (j) The definition of "SCHEDULED TERMINATION DATE" is
hereby deleted and replaced with the following: ""SCHEDULED TERMINATION DATE"
means June 29, 2003."
1.1 (k) The definition of "TERMINATION DATE" is hereby
modified to delete therefrom each occurrence of the phrase "five Business Days"
and substitute therefor the phrase "thirty calendar days".
1.2 SECTION 1.01. Section 1.01 is hereby amended to insert after
the first
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sentence contained therein the following:
"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."
1.3 SECTION 2.01. The first sentence of Section 2.01 is hereby
amended to delete the character "(a)" that precedes the phrase "Triple-A agrees
that it may," and to delete therefrom the phrase "may, in its sole discretion
and otherwise" and substitute therefor the word "shall,". Section 2.01 also is
amended to insert, after the first sentence contained therein, the following:
"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 Seller as of April 30, 1998 no longer
remain actively involved in the day-to-day management of the Seller, then
Triple-A is no longer required to, but may, in its sole discretion, make the
above-mentioned Triple-A Loans."
1.4 SECTION 2.03. Section 2.03(c) is hereby amended to delete
therefrom the time "3:00 P.M." and substitute therefor the time "3:30 P.M.".
1.5 SECTION 2.06. Paragraph (a)(iii) is hereby amended to delete
therefrom the number ".50%" and substitute therefor the number ".40%"
1.6 SECTION 2.07. Paragraphs (b) and (c) of Section 2.07 are
hereby amended to delete therefrom the phrase "Termination Date" and substitute
therefor the phrase "Designated Termination Date".
1.7 SECTION 4.01. Section 4.01 is hereby amended to insert, at
the conclusion thereof, the following clauses (v) and (w):
(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 EXHIBIT G is a summary
of historical static loss data of the Originator suffered as a result of
defaults under 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.
1.8 The Exhibits to the Credit Agreement are hereby amended to
add, as
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EXHIBIT G to the Credit Agreement, the summary data concerning historical losses
attached to this Amendment as EXHIBIT G.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The Borrower
represents and warrants as follows:
(a) This Amendment and the Credit Agreement as previously
executed and as amended hereby, constitute legal, valid and binding obligations
of the Borrower and are enforceable against the Borrower in accordance with
their terms.
(b) Upon the effectiveness of this Amendment, the Borrower hereby
reaffirms that the representations and warranties contained in ARTICLE IV of the
Credit Agreement are true and correct.
(c) Upon the effectiveness of this Amendment, the Borrower hereby
reaffirms all covenants made in the Credit Agreement and the other Facility
Documents to the extent the same are not amended hereby and agrees that all such
covenants shall be deemed to have been remade as of the effective date of this
Amendment.
(d) No Wind-Down Event or Unmatured Wind-Down Event has occurred
or is continuing.
SECTION 3. CONDITIONS PRECEDENT. This Amendment shall become
effective as of June 29, 1998, PROVIDED that all of the following conditions are
met in form and substance satisfactory to Triple-A.
(a) This Amendment shall have been executed and delivered by the
Borrower, Triple-A and CapMAC.
(b) On the date the last of the conditions listed herein is
satisfied (the "DELIVERY DATE") there shall exist no Wind-Down Event or
Unmatured Wind-Down Event.
(c) The Amended and Restated Liquidity Agreement shall have been
executed and delivered by the Liquidity Borrower, the Liquidity Banks and the
Liquidity Agent and shall be in full force and effect.
(d) The Second Amended and Restated Surety Bonds shall have been
executed and delivered by CapMAC.
(e) Each of the Rating Agencies shall have delivered written
confirmation to the Administrative Agent to the effect that (i) the Loans and
Receivables Purchases constitute "investment grade risks", without giving effect
to the Surety Bonds and (ii) the then current
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rating of the "Transaction Commercial Paper Notes" (as defined in the Amended
and Restated Liquidity Agreement) shall not be withdrawn or downgraded by virtue
of this Amendment and the transactions contemplated hereby.
(f) All fees and expenses due and owing CapMAC and/or MBIA
Insurance Corporation shall have been paid, subject to the terms of that certain
letter agreement between the Seller and Triple-A dated April 23, 1998.
SECTION 4. REFERENCE TO THE EFFECT ON THE CREDIT AGREEMENT.
Except as specifically set forth above, the Credit Agreement, and all other
documents, instruments and agreements executed and/or delivered in connection
therewith, shall remain in full force and effect, and are hereby ratified and
confirmed. The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein and for the limited purposes set forth
herein, operate as a waiver of any right, power or remedy of Triple-A, nor
constitute a waiver of any provisions of the Credit Agreement, or any other
documents, instruments and agreements executed and/or delivered in connection
therewith.
SECTION 5. HEADINGS. Section headings in the Amendment are
included herein for convenience of reference only and shall not constitute part
of this Amendment for any other purpose.
SECTION 6. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 7. COUNTERPARTS. This Amendment may be executed by one or
more of the parties to this Amendment on any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.
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IN WITNESS WHEREOF, this Amendment has been duly executed as of
the day and year first above written.
HPSC BRAVO FUNDING CORP.,
as Borrower
By: /s/ Xxxx X. Xxxxxxx
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Title: President
TRIPLE-A ONE FUNDING
CORPORATION
By CAPITAL MARKETS ASSURANCE
CORPORATION, Its Attorney-In-Fact
By: /s/ Xxxxxxx Xxxxxxxxxxx
----------------------------
Title: Vice President
CAPITAL MARKETS ASSURANCE
CORPORATION, as Collateral Agent and
Administrative Agent
By: /s/ Xxxxxxx Xxxxxxxxxxx
-----------------------------
Title: Vice President
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