Exhibit 10.5
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SERVICING AGREEMENT
by and among
HPSC GLOUCESTER FUNDING 2003-1 LLC I
and
HPSC GLOUCESTER FUNDING 2003-1 LLC II,
as Issuers,
HPSC, INC.,
as Servicer and Originator,
BNY MIDWEST TRUST COMPANY,
as Indenture Trustee
and
BNY ASSET SOLUTIONS LLC,
as Back-Up Servicer
Dated as of Xxxxx 00, 0000
Xxxxx Backed Notes, Series 2003-1
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TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS......................................................................................1
Section 1.01 Definitions.............................................................................1
Section 1.02 Interpretive............................................................................1
ARTICLE 2 REPRESENTATIONS, WARRANTIES AND COVENANTS........................................................2
Section 2.01 Representations, Warranties and Covenants of the Originator.............................2
Section 2.02 Representations, Warranties and Covenants of the Servicer...............................3
Section 2.03 Representations and Warranties of the Back-up Servicer..................................8
ARTICLE 3 PERFECTION OF TRANSFER...........................................................................9
Section 3.01 Filing; Custody of Files; Contract Files................................................9
Section 3.02 Name Change or Relocation...............................................................9
Section 3.03 Chief Executive Offices.................................................................9
Section 3.04 Costs and Expenses.....................................................................10
Section 3.05 Power of Attorney......................................................................10
ARTICLE 4 ADMINISTRATION AND SERVICING OF CONTRACTS.......................................................10
Section 4.01 Acceptance of Appointment; Duties of Servicer..........................................10
Section 4.02 Collection of Payments.................................................................13
Section 4.03 Servicer Advances......................................................................14
Section 4.04 Realization Upon Defaulted Contracts...................................................15
Section 4.05 Maintenance of Insurance Policies......................................................16
Section 4.06 Reserved...............................................................................17
Section 4.07 Servicing Compensation; Payment of Certain Expenses and Custodian Fee by Servicer......17
Section 4.08 Monthly Statement......................................................................17
Section 4.09 Annual Certificates as to Compliance...................................................18
Section 4.10 Annual Independent Public Accountant's Reports.........................................18
Section 4.11 Access to Certain Documentation and Information Regarding the Pledged Property.........19
Section 4.12 Financial Statements...................................................................20
Section 4.13 Performance of Back-up Servicer's Duties...............................................20
Section 4.14 Indemnity for Liability Claims.........................................................22
ARTICLE 5 THE SERVICER....................................................................................22
Section 5.01 Liability of Servicer; Indemnities.....................................................22
Section 5.02 Merger, Consolidation, or Assumption of the Obligations of Servicer....................23
Section 5.03 Limitation on Liability of Servicer and Others.........................................24
Section 5.04 Servicer Not to Resign.................................................................24
ARTICLE 6 SERVICING TERMINATION...........................................................................24
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TABLE OF CONTENTS
(continued)
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Section 6.01 Events of Servicing Termination........................................................24
Section 6.02 Resignation of Servicer; Back-up Servicer; Appointment of
Successor; Limitations on Liability....................................................27
Section 6.03 Notification to Noteholders............................................................29
Section 6.04 Waiver of Past Defaults................................................................29
Section 6.05 Effects of Termination of Servicer.....................................................29
ARTICLE 7 MISCELLANEOUS PROVISIONS........................................................................30
Section 7.01 Amendment..............................................................................30
Section 7.02 Counterparts...........................................................................31
Section 7.03 Governing Law..........................................................................31
Section 7.04 Waiver of Jury Trial...................................................................31
Section 7.05 Notices................................................................................31
Section 7.06 Severability of Provisions.............................................................32
Section 7.07 Third Party Beneficiaries..............................................................32
Section 7.08 Assignment.............................................................................32
Section 7.09 Binding Effect.........................................................................32
Section 7.10 Survival of Agreement..................................................................32
Section 7.11 Captions...............................................................................32
Section 7.12 Exhibits...............................................................................32
Section 7.13 Calculations...........................................................................32
Section 7.14 No Proceedings.........................................................................33
Section 7.15 Rights of Indenture Trustee............................................................33
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This
SERVICING AGREEMENT, dated as of March 31, 2003 (this "AGREEMENT") is made
by and among HPSC, Inc. ("HPSC"), a Delaware corporation, as servicer (the
"SERVICER"), HPSC, as originator (the "ORIGINATOR"), HPSC Gloucester Funding
2003-1 LLC I and HPSC Gloucester Funding 2003-1 LLC II, each a Delaware limited
liability company, as issuers (each an "ISSUER" and collectively, the
"ISSUERS"), BNY Midwest Trust Company, an Illinois corporation, not in its
individual capacity but solely as indenture trustee (the "INDENTURE TRUSTEE")
and BNY Asset Solutions LLC, a Delaware limited liability company, as back-up
servicer (the "BACK-UP SERVICER").
WITNESSETH:
WHEREAS, the Issuers have entered into an Indenture, dated as of the date
hereof, with the Servicer, the Originator and the Indenture Trustee pursuant to
which the Issuers have pledged the Pledged Property to the Indenture Trustee for
the benefit of the Noteholders; and
WHEREAS, it is contemplated that following such pledge the Servicer will service
the Receivables pursuant to this Agreement for the benefit of the Noteholders;
and
WHEREAS, each of the Servicer, the Originator and the Issuers agrees that all of
the respective representations, warranties, covenants and agreements made by it
herein shall also be for the benefit of the Indenture Trustee and the
Noteholders;
NOW, THEREFORE, in consideration of the mutual agreements herein contained, and
of other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 DEFINITIONS. Capitalized terms used and not defined herein
shall have the meanings specified in Annex A hereto.
Section 1.02 INTERPRETIVE
For purposes of this Agreement except as otherwise expressly provided or unless
the context otherwise requires:
(a) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other
gender;
(b) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP as in effect on the date
hereof;
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(c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs" and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without
limitation by reason of enumeration.
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE ORIGINATOR.
The Originator hereby makes the following representations, warranties and
covenants to the Indenture Trustee, the Servicer, the Issuers and the
Noteholders, on which the Indenture Trustee relies in accepting the Pledged
Property in trust and authenticating the Notes and on which the Noteholders have
relied and will rely in purchasing the Notes. Such representations, warranties
and covenants are made as of the Closing Date, as of each Subsequent Transfer
Date and as of each Substitute Transfer Date and shall survive the pledge,
transfer, and assignment of any Pledged Property to the Indenture Trustee for
the benefit of the Noteholders.
(a) ORGANIZATION AND GOOD STANDING. The Originator is a
corporation duly organized, validly existing in good standing under the laws of
the State of Delaware, has the power to own its assets and to transact the
business in which it is presently engaged, and had at all relevant times and now
has the power, authority and legal right to perform its obligations hereunder
and under the other Transaction Documents to which it is a party.
(b) DUE QUALIFICATION. The Originator is duly qualified to do
business as a foreign corporation and is in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions where the failure to be
so qualified and in good standing or obtain such licenses or approvals would
have a material adverse effect on the Originator's business and operations or on
the performance of its obligations under the Transaction Documents to which it
is a party.
(c) AUTHORIZATION. The Originator has the power, authority and
legal right to execute, deliver and perform this Agreement and the other
Transaction Documents to which it is a party, and the execution, delivery and
performance of this Agreement and the other Transaction Documents to which it is
a party have been duly authorized by the Originator by all necessary corporate
action.
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(d) BINDING OBLIGATION. Each of this Agreement and the other
Transaction Documents to which it is a party, assuming due authorization,
execution and delivery by the other parties thereto, constitutes a legal, valid
and binding obligation of the Originator enforceable against the Originator in
accordance with its terms, except that (A) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
(whether statutory, regulatory or decisional) now or hereafter in effect
relating to creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before which any
proceeding therefore may be brought, whether in a proceeding at law or in
equity.
(e) NO VIOLATION. The consummation by the Originator of the
transactions contemplated by this Agreement and the other Transaction Documents
to which it is a party and the fulfillment of the terms hereof and thereof will
not conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice, lapse of time or both) a default under,
the articles of incorporation or by-laws of the Originator or any material
indenture, agreement, mortgage, deed of trust or other instrument to which the
Originator is a party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its material properties pursuant to the terms
of any such indenture, agreement, mortgage, deed of trust or other instrument,
other than as contemplated in any Transaction Document, or violate any law or
any order, rule or regulation applicable to the Originator of any court or of
any Governmental Authority having jurisdiction over the Originator or any of its
properties.
(f) NO PROCEEDINGS. There are no Proceedings or investigations to
which the Originator or any of its Affiliates, is a party pending or, to the
best of the Originator's knowledge, threatened before any court, regulatory
body, administrative agency or other tribunal or governmental instrumentality
(A) asserting the invalidity of this Agreement, the other Transaction Documents
or the Notes, (B) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement or the
other Transaction Documents or (C) seeking any determination or ruling that is
reasonably likely to materially and adversely affect the performance by the
Originator of its obligations under, or the validity or enforceability of, this
Agreement or the other Transaction Documents to which it is a party.
(g) APPROVALS. All approvals, authorizations, consents, orders or
other actions of any Person or court required on the part of the Originator in
connection with the execution and delivery of this Agreement and the other
Transaction Documents to which it is a party have been or will be taken or
obtained on or prior to the Closing Date.
Section 2.02 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SERVICER.
The Servicer hereby makes the following representations, warranties and
covenants to the Indenture Trustee, the Originator, the Issuers and the
Noteholders, on which the Indenture Trustee relies in accepting the Pledged
Property in trust and authenticating the Notes and on which the Noteholders have
relied or will rely in purchasing the Notes. Such representations, warranties
and covenants are made as of the Closing Date, as of each Subsequent Transfer
Date and as of each Substitute Transfer Date and shall survive the pledge,
transfer, and assignment of any Pledged Property to the Indenture Trustee for
the benefit of the Noteholders.
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(a) The Servicer represents and warrants as to itself:
(i) ORGANIZATION AND GOOD STANDING. The Servicer is a
corporation duly organized, validly existing in good standing under the laws of
the State of Delaware, has the power to own its assets and to transact the
business in which it is presently engaged, and had at all relevant times and now
has the power, authority and legal right to service the Contracts and perform
its obligations hereunder and under the other Transaction Documents to which it
is a party.
(ii) DUE QUALIFICATION. The Servicer is duly qualified to
do business as a foreign corporation and is in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions where the failure to
be so qualified and in good standing or obtain such licenses or approvals would
have a material adverse effect on the Servicer's business and operations or the
servicing of the Contracts as required by this Agreement or the performance of
its obligations under the Transaction Documents to which it is a party.
(iii) AUTHORIZATION. The Servicer has the power, authority
and legal right to execute, deliver and perform this Agreement and the other
Transaction Documents to which it is a party, and the execution, delivery and
performance of this Agreement and the other Transaction Documents to which it is
a party have been duly authorized by the Servicer by all necessary corporate
action.
(iv) BINDING OBLIGATION. Each of this Agreement and the
other Transaction Documents to which it is a party, assuming due authorization,
execution and delivery by the other parties thereto, constitutes a legal, valid
and binding obligation of the Servicer, enforceable against the Servicer in
accordance with its terms, except that (A) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
(whether statutory, regulatory or decisional) now or hereafter in effect
relating to creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, whether in a proceeding at law or in equity.
(v) NO VIOLATION. The consummation by the Servicer of the
transactions contemplated by this Agreement and the other Transaction Documents
to which it is a party and the fulfillment of the terms hereof and thereof will
not conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice, lapse of time or both) a default under,
the articles of incorporation or by-laws of the Servicer, or any material
indenture, agreement, mortgage, deed of trust or other instrument to which the
Servicer is a party or by which it is bound, or result in the creation or
imposition of any Lien upon any of its material properties pursuant to the terms
of any such indenture, agreement, mortgage, deed of trust or other instrument,
other than as contemplated in any Transaction Document, or violate any law or
any order, rule or regulation applicable to the Servicer of any court or of any
Governmental Authority having jurisdiction over the Servicer or any of its
properties.
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(vi) NO PROCEEDINGS. There are no Proceedings or
investigations to which the Servicer, or any of the Servicer's Affiliates, is a
party pending or, to the best of the Servicer's knowledge, threatened before any
court, regulatory body, administrative agency or other tribunal or governmental
instrumentality (A) asserting the invalidity of this Agreement or the other
Transaction Documents or the Notes, (B) seeking to prevent the issuance of the
Notes or the consummation of any of the transactions contemplated by this
Agreement or the other Transaction Documents or (C) seeking any determination or
ruling that is reasonably likely to materially and adversely affect the
performance by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement or the other Transaction Documents to which it
is a party.
(vii) APPROVALS. All approvals, authorizations, consents,
orders or other actions of any Person or court required on the part of the
Servicer in connection with the execution and delivery of this Agreement and the
other Transaction Documents to which it is a party have been or will be taken or
obtained on or prior to the Closing Date.
(viii) EVENT OF SERVICING TERMINATION. No Event of Servicing
Termination has occurred and no condition exists, which, upon the issuance of
the Notes, would constitute an Event of Servicing Termination.
(b) The Servicer additionally covenants as follows as to the
Pledged Property:
(i) CONTRACT MANAGEMENT SYSTEM. The Servicer will, at its
own cost and expense, (A) retain the Contract Management System, or an
alternative system of equal capability, used by the Servicer as a master record
of the Contracts and (B) xxxx the Contract Management System to the effect that
the Contracts listed thereon have been conveyed to the Issuers pursuant to the
Receivables Transfer Agreement and pledged by the Issuers to the Indenture
Trustee for the benefit of the Noteholders pursuant to the Indenture.
(ii) COMPLIANCE WITH LAW. The Servicer will comply, in all
material respects, with all acts, rules, regulations, orders, decrees and
directions of any Governmental Authority applicable to the Contracts and the
Equipment or any part thereof; PROVIDED, HOWEVER, that the Servicer may contest
any act, regulation, order, decree or direction in any reasonable manner which
shall not materially and adversely affect the rights of the Noteholders in the
Contracts, the Equipment and any other collateral securing the Contracts; and
PROVIDED, FURTHER, that such contests shall be in good faith by appropriate
proceedings and as to which adequate reserves in accordance with GAAP have been
established, but only so long as such proceedings shall not individually or in
the aggregate subject the Indenture Trustee or any Noteholder to any civil or
criminal liability or involve any risk of loss or decline in the value of any
collateral.
(iii) PRESERVATION OF SECURITY INTEREST. The Servicer shall
execute and file such continuation statements and any other documents necessary
to fully preserve and protect the interest of the Indenture Trustee on behalf of
the Noteholders in and to the Pledged Property.
(iv) OBLIGATIONS WITH RESPECT TO CONTRACTS. The Servicer
will use commercially reasonable efforts to duly fulfill, and comply in all
material respects with, all
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obligations on the part of the "lessor" or "lender," as applicable, to be
fulfilled under or in connection with each Contract, and the Servicer will do
nothing to impair the rights of the Indenture Trustee in the Contracts, the
Equipment and any other Collateral; PROVIDED, HOWEVER, that any successor
Servicer will be obligated to use commercially reasonable efforts to duly
fulfill and comply with the obligations on the part of the "lessor" or "lender,"
as applicable, under each Contract only to the extent that any out-of-pocket
costs associated with such compliance or fulfillment are reimbursed.
(v) NOTIFICATION. The Servicer agrees to notify the
Issuers, the Noteholders and the Indenture Trustee in writing as soon as
practicable, but in no event later than three Business Days after the earlier of
the Servicer's discovery or its receipt of notice thereof, of a material breach
of any representation or warranty contained herein, or the failure of the
Servicer to perform its duties hereunder in any material respect.
(vi) LIEN IN FORCE. The Servicer shall not release or
assign any Lien in favor of the Indenture Trustee on any item of Equipment
related to or Contract or any other Collateral in whole or in part, except in
accordance with its Servicing Standard or as otherwise provided herein. The
Servicer shall use commercially reasonable efforts to remove, or to cause the
related Obligor to remove, any Liens on the Pledged Property other than the Lien
created pursuant to the Indenture or other liens which do not constitute Adverse
Claims.
(vii) FULFILL OBLIGATIONS. The Servicer will in all
material respects duly fulfill all obligations on the Servicer's part to be
fulfilled under or in connection with the Pledged Property. The Servicer will
not amend, rescind, cancel or modify any Contract or term or provision thereof,
except in accordance with the Servicing Standard or as contemplated herein, and
the Servicer will not do anything that would otherwise impair the rights of the
Noteholders in the Pledged Property.
(viii) PRESERVATION OF THE EQUIPMENT AND COLLATERAL. As more
specifically set forth in this Agreement, in performing its servicing duties
hereunder, the Servicer shall, in accordance with the Servicing Standard,
collect all payments required to be made by the Obligors under the Contracts,
enforce all material rights of the Issuers under the Contracts and defend the
Equipment and all other Collateral against all Persons, claims and demands
whatsoever. The Servicer shall not assign, sell, pledge, or exchange, or in any
way encumber or otherwise dispose of the Equipment or any other Collateral,
except as permitted under this Agreement and the Indenture.
(ix) NOTICE OF EVENT OF SERVICING TERMINATION; OTHER
REQUESTED INFORMATION. The Servicer shall deliver to the Issuers, the Back-up
Servicer, each Noteholder, a Responsible Officer of the Indenture Trustee and
the Rating Agencies:
(1) NOTICE OF EVENT OF SERVICING TERMINATION.
Immediately upon becoming aware of the existence of any condition or event which
constitutes an Event of Servicing Termination or an Event of Default, or any
event which, with the lapse of time and/or the giving of notice, would
constitute an Event of Servicing Termination or an Event of Default and which,
in each case, has not been waived in writing by the Majority Holders, a written
notice
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describing its nature and period of existence and, in the case of an Event of
Servicing Termination, the action the Servicer is taking or proposes to take
with respect thereto; and
(2) REQUESTED INFORMATION. With reasonable
promptness, any other data and information in the possession of the Servicer
which may be reasonably requested from time to time, including any information
required to be made available at any time to any prospective transferee of any
Notes in order to satisfy the requirements of Rule 144A under the Securities
Act, provided that, if the Back-up Servicer becomes a successor Servicer, such
successor Servicer may attach any reasonable disclaimer to any information
provided to the Servicer by any third party.
(x) DELIVERY OF CONTRACTS FILES. Upon an Event of
Servicing Termination, the Servicer shall, at its expense, promptly deliver to
the Custodian any Contract Files, or portion thereof, as applicable, that may
have been delivered to the Servicer pursuant to Section 3.01(b) hereof. Upon the
request of the Custodian or the Indenture Trustee, the Servicer shall return any
Contract Files to the Custodian within two Business Days of such request.
(xi) PREPAYMENTS. The Servicer may accept Prepayments in
part or in full; PROVIDED, that (1) in the event of a Prepayment in full, the
Servicer may consent to such Prepayment only if an amount not less than the
Prepayment Amount is deposited in the Collection Account and (2) in the event of
a partial Prepayment, the Servicer may consent to such partial Prepayment only
if (x) following such partial Prepayment there are no delinquent amounts then
due from the related Obligor and (y) such partial Prepayment will not reduce the
Discounted Contract Balance of the related Contract by more than an amount equal
to (I) the amount of such partial Prepayment, minus (II) unpaid interest at the
Discount Rate, accrued through the end of the Collection Period immediately
following such partial Prepayment on such Contract's Discounted Contract Balance
prior to such partial Prepayment.
(xii) REFUNDS TO OBLIGORS IN RESPECT OF PREPAYMENTS. The
Servicer may grant to an Obligor any rebate, refund or adjustment that the
Servicer in good faith believes is required, because of Prepayment in full of a
Contract. The Servicer may deduct the amount of any such rebate, refund or
adjustment from the amount otherwise payable by the Servicer into the Collection
Account; PROVIDED, HOWEVER, that the Servicer will not permit any rescission or
cancellation of any Contract which would materially impair the rights of the
Issuers or the Noteholders in the Contracts or the proceeds thereof, nor will
the prepayment price after giving effect to any such rebate, refund or
adjustment be less than the Prepayment Amount.
(xiii) PARTIAL PREPAYMENT RECALCULATIONS. In the event of a
partial Prepayment, the Servicer shall recalculate the Discounted Contract
Balance and the allocation of Scheduled Payments to principal and interest.
(xiv) NO OWNERSHIP INTEREST. The Servicer does not have any
ownership interest in the Pledged Property and will not assert any ownership
interest in the Pledged Property.
(xv) COLLECTION POLICIES AND PROCEDURES. The Servicer
shall not amend, modify or otherwise change its Collection Policies and
Procedures in any manner without
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providing prior written notice to the Indenture Trustee and the Noteholders, and
without the prior written consent of the Indenture Trustee and the Majority
Holders if such amendment, modification or change could materially and adversely
affect the collectability or the credit quality of the Contracts. The Servicer
shall notify the Indenture Trustee and the Rating Agencies of any such proposed
change and the Indenture Trustee shall notify the Noteholders and seek the
consent of the Majority Holders.
Section 2.03 REPRESENTATIONS AND WARRANTIES OF THE BACK-UP SERVICER. The
Back-up Servicer hereby makes the following representations and warranties on
which the Originator, the Issuers, the Servicer, the Indenture Trustee and
Noteholders shall be entitled to rely:
(a) The Back-up Servicer is a Delaware limited liability company
duly organized, validly existing, and in good standing under the laws of the
State of Delaware.
(b) The Back-up Servicer has full power, authority and legal
right to execute, deliver, and perform this Agreement, and has taken all
necessary action to authorize the execution, delivery, and performance by it of
this Agreement.
(c) The execution, delivery and performance by the Back-up
Servicer of this Agreement and any other documents and transactions in
connection herewith to which the Servicer is party do not and will not (i)
violate any of the provisions of the organizational documents of the Back-up
Servicer, (ii) violate any provision of any law, governmental rule or regulation
currently in effect applicable to the Back-up Servicer or its properties or by
which the Back-up Servicer or its properties may be bound or affected, (iii)
violate any judgment, decree, writ, injunction, award, determination or order
currently in effect applicable to the Back-up Servicer or its properties or by
which the Back-up Servicer or its properties are bound or affected, (iv)
conflict with, or result in a breach of, or constitute a default under, any of
the provisions of any material indenture, mortgage, deed of trust, contract or
other instrument to which the Back-up Servicer is a party or by which it is
bound or (v) result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, mortgage, deed of trust,
contract or other instrument.
(d) The execution, delivery and performance by the Back-up
Servicer of this Agreement does not require the authorization, consent, or
approval of, the giving of notice to, the filing or registration with, or the
taking of any other action in respect of, any governmental authority or agency
regulating the banking and corporate trust activities of the Back-up Servicer.
(e) This Agreement has been duly executed and delivered by the
Back-up Servicer and constitutes the legal, valid, and binding agreement of the
Back-up Servicer, enforceable in accordance with its terms subject, as to the
enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium
and other similar laws affecting the enforceability of creditors' rights
generally applicable in the event of the bankruptcy, insolvency or
reorganization of the Servicer and to general principles of equity.
(f) There is no pending or, to the best of the Back-up Servicer's
knowledge, threatened action, suit, proceeding or investigation before any
court, administrative agency, arbitrator or governmental body against or
affecting the Back-up Servicer which, if decided
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adversely, would materially and adversely affect (i) the condition (financial or
otherwise), business or operations of the Back-up Servicer, (ii) the ability of
the Back-up Servicer to perform its obligations under, or the validity or
enforceability of, this Agreement or any other documents or transactions
contemplated hereunder, (iii) any Pledged Property or title of any Obligor to
any Pledged Property or (iv) the Indenture Trustee's ability to foreclose or
otherwise enforce the liens of the Contracts.
ARTICLE 3
PERFECTION OF TRANSFER
Section 3.01 FILING; CUSTODY OF FILES; CONTRACT FILES.
(a) On the Closing Date with respect to the Initial Contracts, on
the related Subsequent Transfer Date with respect to Subsequent Contracts and on
the related Substitute Transfer Date with respect to Substitute Contracts, the
Servicer shall submit the Financing Statements for filing in the respective
filing offices named therein, and upon receipt of the filed stamped copies
thereof, the Servicer shall promptly deliver such filed stamped copies to the
Custodian. From time to time thereafter, the Servicer shall protect each of the
Issuers', the Indenture Trustee's and the Noteholders' interests, as such
interests may appear, in the Pledged Property by the filing of Financing
Statements, amendments thereto and continuation statements (in each case,
subject to the Filing Requirements), executing transfer instruments and making
notations on or taking possession of all records or documents of title, and
other actions requested by the Indenture Trustee or the Majority Holders, in
each case which would not require the Servicer to incur any out-of-pocket
expenses which are not reimbursable to the Servicer pursuant to this Agreement.
(b) Pursuant to the Indenture, the Indenture Trustee, on behalf
of the Issuers, acknowledges the pledge of the Pledged Property by LLC I and LLC
II, as applicable, to the Indenture Trustee and declares that the Indenture
Trustee will hold such Pledged Property, and maintain control of the Contract
Files held by the Custodian, in trust, for the use and benefit of the
Noteholders.
Section 3.02 NAME CHANGE OR RELOCATION. If any change is to occur in an
Issuer's name, identity or structure, or in the location of its principal place
of business or chief executive office, then such Issuer shall deliver thirty
(30) days' prior written notice of such change or relocation to the Servicer,
the Indenture Trustee, the Custodian and the Noteholders. No later than five
days after the effective date of such change, the Servicer on behalf of the
Issuers shall file such amendments or statements as may be required to preserve
and protect the Indenture Trustee's interest in the Pledged Property, and shall
deliver copies thereof to the Indenture Trustee.
Section 3.03 CHIEF EXECUTIVE OFFICES. During the term of this Agreement
and the Indenture, the Originator and the Initial Servicer will remain
incorporated and maintain their chief executive offices and principal places of
business in one of the States of the United States.
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Section 3.04 COSTS AND EXPENSES. The Servicer agrees to pay all costs and
disbursements in connection with filing Financing Statements and continuation
statements, as against all third parties, of the Indenture Trustee's right,
title and interest in and to the Pledged Property (subject to the Filing
Requirements with respect to the Equipment). The Initial Servicer agrees to pay
all taxes (other than net income taxes or taxes imposed in lieu thereof), if
any, owed in connection with ownership, transfer or sale of the Contracts and
the Collateral, together with all taxes required by the terms of the Contracts
to be paid by the Servicer on behalf of the related Obligors. The Initial
Servicer shall not be entitled to reimbursement for any such costs or
disbursements, other than from the Excluded Amounts retained by the Servicer.
Section 3.05 POWER OF ATTORNEY. The Initial Servicer hereby irrevocably
constitutes and appoints the Indenture Trustee, with full power of substitution,
as its true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of such Issuer and in the name of the Servicer
or in its own name, for the purpose of carrying out the terms of this Agreement,
to take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, the
Servicer hereby gives the Indenture Trustee the power and right, on behalf of
the Servicer, without notice to or assent by the Servicer, to do any or all of
the following:
(a) after an Event of Default or Event of Servicer Termination
has occurred and is continuing, at any time, in the name of the Servicer or its
own name, or otherwise, to take possession of and endorse and collect any
checks, drafts, notes, acceptances or other instruments, general intangibles or
contracts or with respect to any other collateral and to file any claim or to
take any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Indenture Trustee for the purpose of collecting any
and all such moneys due under any account, instrument, general intangible or
contract with respect to the Pledged Property or to any other collateral
whenever payable; and
(b) whether or not an Event of Default or Event of Servicer
Termination has occurred, execute and deliver any and all agreements,
instruments, documents and papers (including, without limitation, UCC Financing
Statements) as the Indenture Trustee or a Noteholder may request to perfect the
Indenture Trustee's security interest in the Pledged Property (and subject to
the Filing Requirements with respect to the Equipment) or any other Collateral
and the goodwill and general intangibles of such Issuer relating thereto or
represented thereby.
ARTICLE 4
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01 ACCEPTANCE OF APPOINTMENT; DUTIES OF SERVICER.
(a) DUTIES OF SERVICER. The Servicer shall service, administer
and enforce the Contracts as Servicer and shall have full power and authority to
do any and all things in connection with such servicing and administration which
it may deem necessary or desirable;
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PROVIDED, that such things are not inconsistent with the terms of this
Agreement. The Servicer will manage, service, administer, and make collections
on the Contracts in accordance with the terms of this Agreement, the Contracts,
the Credit and Collection Policies and Procedures and applicable law and, to the
extent consistent with such terms, in the same manner in which, and with the
same care, skill, prudence and diligence with which, it services and administers
leases and loans of similar credit quality for itself or others, if any, but in
any event, with no less care, skill, prudence and diligence than the customary
and usual standards of practice of prudent institutional small and middle ticket
equipment finance lease, receivable finance and professional practice finance
servicers and, in each case, taking into account its other obligations hereunder
(the "SERVICING STANDARD"). Notwithstanding the prior sentence, the Servicer
shall have previously directed or shall direct, not later than five Business
Days after the Closing Date, the Subsequent Transfer Date, or the Substitute
Transfer Date, as the case may be, each Obligor to make all payments with
respect to the respective Contracts which are due after the related Cut-Off Date
directly to the Lockbox Account. The Servicer's duties shall include collection
and posting of all payments, responding to inquiries of Obligors on the
Contracts, investigating delinquencies, accounting for collections and
furnishing monthly, quarterly and annual statements as provided herein, making
Servicer Advances and using commercially reasonable efforts to maintain the
first priority perfected security interest of the Indenture Trustee for the
benefit of the Noteholders in the Issuers' interest in the Contracts and, in
accordance with the Filing Requirements, in the related Equipment, including,
but not limited to, the filing of any Financing Statements or continuation
statements required to be filed pursuant to the UCC, which continuation
statements shall be filed on or before the 60th day prior to the expiration date
of such financing statement; and promptly delivering evidence of all such
filings to the Custodian, with a copy to the Indenture Trustee, with evidence of
the filing of continuation statements being delivered on or before the 30th day
before the expiration of such financing statements. The Servicer shall follow
its customary standards, policies, and procedures as set forth in its Credit and
Collection Policies and Procedures and shall have full power and authority,
acting alone, to do any and all things in connection with such managing,
servicing, administration, and collection that it may deem necessary or
desirable, subject to Section 2.02(b)(x). The Servicer may waive, modify or vary
any term of a Contract in accordance with the Servicing Standard or otherwise as
required by law if the Servicer determines, in its reasonable and prudent
judgment, that it will not materially and adversely affect the Noteholders;
PROVIDED, that the Servicer may only make Material Modifications to Contracts
having an aggregate Discounted Contract Balance (calculated as of the last day
of the immediately preceding Collection Period prior to the date of such
modification) not to exceed $13,300,000. In no event shall the Servicer make a
Material Modification to any Contract which would result in (i) the Discounted
Contract Balance of Contracts modified during any one Collection Period being
less than the aggregate Discounted Contract Balance of such Contracts
immediately prior to such modification or (ii) the term of such Contract being
extended by more than 6 months, PROVIDED, that in no event shall any such
extension cause the maturity date of such Contract to be extended beyond a date
which is later than 6 months prior to the latest Stated Maturity Date. With (i)
the prior written consent of (a) the Majority Holders and (b) the Rating
Agencies, or (ii) the unanimous written consent of the Noteholders, the Servicer
may make Material Modifications in excess of such $13,300,000 limit. If the
Servicer determines that a Material Modification should be made, the Servicer
shall forward such recommendation to the Indenture Trustee and the Indenture
Trustee shall forward such recommendation to the Noteholders for their consent
to such action. If such consent is not
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received within 30 days, the Indenture Trustee shall notify the Servicer and
such consent shall be deemed denied. If the Servicer commences a legal
proceeding to enforce a Defaulted Contract pursuant to Section 4.04 hereof or
participates in a legal proceeding (including, without limitation, a bankruptcy
proceeding relating to or involving a Defaulted Contract), the Indenture Trustee
shall thereupon be deemed to have automatically assigned such Contract to the
Servicer solely for purposes of commencing or participating in any such
proceeding as a party or claimant, and the Servicer is authorized and empowered
by the Indenture Trustee, pursuant to this Section 4.01, to execute and deliver,
on behalf of the Indenture Trustee, any and all instruments of satisfaction or
cancellation, or partial or full release or discharge, and all other notices,
demands, claims, complaints, responses, affidavits or other documents or
instruments in connection with any such proceedings (without representation,
warranty or recourse on behalf of the Indenture Trustee). The Indenture Trustee,
the Originator and the Issuers, as applicable, shall furnish the Servicer, and
the Servicer shall furnish any subservicer, with any powers of attorney and
other documents necessary or appropriate to enable the Servicer or a
subservicer, as applicable, to carry out its servicing and administrative duties
under this Agreement. If in any enforcement suit or legal proceeding it shall be
held that the Servicer may not enforce a Contract on the ground that it shall
not be a real party in interest or a holder entitled to enforce the Contract,
the Issuers shall, at the Originator's expense and direction, take steps to
enforce the Contract, including bringing suit in its name or the name of the
Indenture Trustee (prior written notice of which shall be given to the Indenture
Trustee and the Noteholders.
(b) CONSENT TO ASSIGNMENT OR REPLACEMENT. At the request of an
Obligor, the Servicer may, so long as such action is consistent with the
Servicing Standard, consent to the assignment or sublease of a unit of Equipment
under a Contract provided that the Obligor will remain liable for all of its
obligations under such Contract; PROVIDED, HOWEVER, that such assignee or
sub-lessee must satisfy the credit criteria set forth in the Credit and
Collection Policies and Procedures. Upon the request of any Obligor, the Initial
Servicer may, so long as such action is consistent with the Servicing Standard,
provide for additions and upgrades to a Contract, and the substitution or
replacement of any unit of Equipment for a substantially similar unit of
additional equipment having substantially the same fair market value as the unit
of Equipment that will be replaced or substituted.
(c) MAINTENANCE OF CREDIT FILES AND CONTRACT FILES. The Servicer
(i) shall maintain the Credit Files in a manner consistent with the Servicing
Standard and the performance of its obligations as Servicer pursuant to this
Agreement and will not dispose of any documents constituting the Contract Files
(other than Contract Files which relate solely to an Early Termination Contract,
an Expired Contract or a Purchased Contract and, to the extent applicable, the
related Collateral, but solely to the extent that the Obligor has paid all
amounts due with respect to such Contract in full), (ii) will use reasonable
efforts not to permit any person other than the Indenture Trustee to maintain
any Adverse Claim upon any Contract File (other than Contract Files which relate
solely to an Early Termination Contract, an Expired Contract or a Purchased
Contract and, to the extent applicable, the related Collateral, but solely to
the extent that the Obligor has paid all amounts due with respect to such
Contract in full) and (iii) except as otherwise permitted pursuant to Section
3.01(b)(ii), will not permit any person other than the Custodian to maintain
possession of any Contract File (other than Contract Files which relate solely
to an Early Termination Contract, an Expired Contract or a Purchased Contract
and, to the
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extent applicable, the related Collateral but solely to the extent that all
Scheduled Payments due with respect to such Contract have been deposited in the
Collection Account).
(d) SUBSERVICERS. The Servicer may enter into
servicing
agreements with one or more subservicers to perform all or a portion of the
servicing functions on behalf of the Servicer; PROVIDED, that the Servicer will
remain obligated and be liable to the Indenture Trustee and the Issuers for
servicing and administering the Contracts in accordance with the provisions of
this Agreement without diminution of such obligation and liability by virtue of
the appointment of such subservicer, to the same extent and under the same terms
and conditions as if the Servicer alone were servicing and administering the
Contracts. The fees and expenses of the subservicer (if any) will be as agreed
between the Servicer and its subservicer and paid by the Servicer from its own
funds, and neither the Indenture Trustee, the Issuers nor the Noteholders will
have any responsibility therefor. All actions of a subservicer taken pursuant to
such a subservicer agreement will be taken as an agent of the Servicer with the
same force and effect as though performed by the Servicer. Each sub
servicing
agreement, if any, shall provide that upon the occurrence of an Event of
Servicing Termination, the successor Servicer may assume or reject such
sub
servicing agreement.
(e) FURTHER ASSURANCES. The Indenture Trustee, the Originator and
the Issuers will furnish the Servicer, and the Servicer will furnish any
subservicer, with any powers of attorney and other documents necessary or
appropriate to enable the Servicer or a subservicer, as applicable, to carry out
its servicing and administrative duties under this Agreement.
(f) NOTICE TO OBLIGORS. The Servicer shall be required to notify
each Obligor in accordance with Section 4.01(a) hereof to make its payments to
the Lockbox Account; PROVIDED, HOWEVER, that in the event that any Servicer
resigns or is replaced, then if the place for payment pursuant to any Contract
is changed, the Successor Servicer must give each related Obligor prompt written
notice of its appointment and the place to which such Obligor should make
payments pursuant to each such Contract.
Section 4.02 COLLECTION OF PAYMENTS.
(a) The Servicer shall use commercially reasonable efforts to
collect all payments called for under the terms and provisions of the Contracts
as and when the same shall become due, and shall follow such collection
procedures as it follows with respect to all comparable Contracts that it
services for itself or others in a manner consistent with the Servicing
Standard. The Servicer may in its reasonable discretion waive any late payment
charge or any other fees that may be collected in the ordinary course of
servicing a Contract.
(b) Notwithstanding the terms of any Contract, the Servicer may
in its discretion allow full Prepayments of a Contract by or on behalf of the
Obligor in accordance with Section 2.02(b)(xi) hereof. All Prepayments, if any,
received directly by the Servicer, notwithstanding the Servicer's notice to each
Obligor pursuant to Section 4.01(f) hereof, shall be deposited in the Collection
Account within two Business Days of receipt by the Servicer.
(c) To the extent provided for in any Contract, the Servicer
shall make commercially reasonable efforts to collect all payments with respect
to amounts due for
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maintenance, taxes or assessments on the Equipment, any other Collateral or the
Contracts and shall remit such amounts to the appropriate maintenance provider
or Governmental Authority on or prior to the date such payments are due.
(d) The Servicer shall withdraw from the Lockbox Account all
Excluded Amounts and may deduct from amounts otherwise payable to the Collection
Account the amounts described in the last sentence of Section 3.01 of the
Indenture, and shall deposit or cause the Lockbox Bank to deposit all
Collections received in the Lockbox Account on an as collected basis by wire
transfer into the Collection Account no later than the second Business Day
following the date of receipt of any Collections in the Lockbox Account or
otherwise by the Servicer. The Servicer shall notify the Indenture Trustee in
writing in the Monthly Statement of all amounts transferred into the Collection
Account during the immediately preceding Collection Period. The Servicer shall
deposit on the related Transfer Date into the Collection Account all Collections
received during the period from a Transfer Date through the applicable Cut-Off
Date to the extent such amounts relate to Scheduled Payments due after such
Cut-Off Date..
(e) Based upon the amounts set forth in the Monthly Statement,
the Servicer shall cause the Indenture Trustee to distribute the Available Funds
in the Collection Account according to the priority set forth in Section 3.04(b)
of the Indenture.
(f) In the event that the Servicer acquires title to any item of
Equipment in the enforcement of any Contract, the Servicer shall use
commercially reasonable efforts to sell or otherwise dispose promptly of such
item of Collateral, consistent with the Servicing Standard. The Servicer shall
not lease, operate or otherwise manage any such items of Collateral unless prior
thereto, the Servicer remits to the Collection Account the related Prepayment
Amount with respect to such Contract.
(g) Any payments (net of Excluded Amounts except taxes) received
from, or on behalf of, an Obligor with respect to a Contract will be allocated
first to amounts then payable under the Contract which became due and payable
first.
(h) The Servicer shall not allow an offset of the amount of any
security deposit against any Scheduled Payment under such Contract.
(i) Based upon the amounts set forth in the Monthly Statement,
the Servicer shall direct the Indenture Trustee (by means of the Monthly
Statement) as to amounts of Residual Payments that are required to be withdrawn
from the Collection Account and deposited to the Residual Payment Account.
Section 4.03 SERVICER ADVANCES. If on any Determination Date occurring
prior to the payment in full of the Notes, the Servicer determines that any
Scheduled Payments or Final Scheduled Payments due on the Contracts with respect
to the related Collection Period have not been received by such Determination
Date, the Servicer, to the extent that in its good faith business judgment it
determines that it can recoup such Servicer Advance from subsequent collections
or recoveries under the related Contract, shall make a Servicer Advance up to an
amount equal to the amount of such delinquent Scheduled Payments. The Servicer
shall deposit any Servicer Advances into the Collection Account on such
Determination Date in same day
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funds. The Servicer shall be reimbursed for any outstanding Servicer Advance
from Collections on the related Contracts in respect of which it has made a
Servicer Advance. If a Contract in respect of which a Servicer Advance has been
made becomes a Defaulted Contract, the Servicer shall be reimbursed for such
Servicer Advance pursuant to Section 3.04 of the Indenture from amounts on
deposit in the Collection Account on any Payment Date. If at any time HPSC or
any of its Affiliates is no longer acting as Servicer hereunder, no successor
Servicer shall be required to make any Servicer Advance.
Section 4.04 REALIZATION UPON DEFAULTED CONTRACTS.
(a) The Servicer shall use commercially reasonable efforts,
consistent with the Servicing Standard, to accelerate, repossess, foreclose
upon, or otherwise comparably convert the ownership of any Collateral that it
has reasonably determined should be repossessed or otherwise converted following
a default under the Contract, and remarket, either through sale or re-lease, the
Collateral upon the expiration of the term of the related Contract or following
a default under the Contract and act as sales and processing agent for
Collateral which it repossesses. The Servicer shall follow such practices and
procedures as are consistent with the Servicing Standard and as it shall deem
necessary or advisable and as shall be customary and usual in its servicing of
contracts similar to the contracts and other actions by the Servicer in order to
realize upon such a Contract, which may include commercially reasonable efforts
to enforce any recourse obligations of Obligors and repossessing and selling the
Collateral at public or private sale. The foregoing is subject to the provision
that the Servicer shall not be required to expend funds in connection with the
foregoing unless it shall determine in accordance with the Servicing Standard,
that such action will increase the Liquidation Proceeds by an amount greater
than the amount of such expenses.
(b) Notwithstanding the foregoing, the Servicer shall take action
to accelerate all amounts due under any Contract immediately after such Contract
becomes a Defaulted Contract and shall, in accordance with its Credit and
Collection Policies and Procedures, bring an action against the Obligor for all
amounts due under the Contract and, to the extent applicable, institute
proceedings to repossess, foreclose upon and sell or re-lease the Collateral;
PROVIDED, HOWEVER, that the Servicer will not accelerate any Scheduled Payment
unless permitted to do so by the terms of the Contract or under applicable law;
and PROVIDED, FURTHER, that the Servicer shall not declare an Obligor to be in
default under a Contract nor exercise any other remedies under such Contract
based solely on a default by such Obligor under any other obligation of such
Obligor to the Originator or either of their Affiliates, if such Obligor is not
also in default under such Contract unless it concludes that declaring such
default is in the best interest of the Noteholders or will maximize potential
recoveries from such Obligor for the Issuers for the benefit of the Noteholders.
To the extent that an escrow account has been established by the related Obligor
to cover defaults on contracts between such Obligor and the Originator, amounts
in such escrow account shall be applied against defaults under each such
contract in the order that such defaults occur with respect to any such
contract.
(c) The Servicer shall remit to the Collection Account within two
Business Days of receipt all Liquidation Proceeds, if any, received directly by
the Servicer, notwithstanding the Servicer's notice to each Obligor pursuant to
Section 4.01(f) hereof, in
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connection with the sale or disposition of a Defaulted Contract to the extent
such Liquidation Proceeds do not constitute Excluded Amounts. Expenses and costs
plus interest on such amounts related to this Section at the Reimbursement Rate
shall first be reimbursed from proceeds received in respect of a liquidation
then from Excluded Amounts and then pursuant to Section 3.04(b)(I)(xxi) or
Section 3.04(b)(II)(xx), as applicable.
(d) The Servicer shall remit to the Collection Account within two
Business Days of receipt all payments made directly to the Servicer,
notwithstanding any notice given pursuant to Section 4.01(f) hereof, with
respect to any guaranties of an Obligor's obligations under any Contract.
Section 4.05 MAINTENANCE OF INSURANCE POLICIES.
(a) In accordance with the Servicing Standard, the Servicer shall
cause each Obligor to maintain all related Insurance Policies. To the extent
that Obligors have elected to pay amounts under the related Contracts, which
will be applied to pay premiums in respect of Insurance Policies entered into by
the Originator in respect of such Contracts, the Servicer shall, from the
Excluded Amounts, cause such premiums to be applied to maintain such Insurance
Policies, with any excess amounts being retained by the Servicer.
(b) In connection with its activities as Servicer of the
Contracts, the Servicer agrees to present claims to the insurer under each
Insurance Policy, and to settle, adjust and compromise such claims, in each
case, consistent with the terms of each Contract. The Servicer shall remit to
the Collection Account within two Business Days of receipt all Insurance
Proceeds received directly by the Servicer with respect to any Contract,
Equipment or any other Collateral subject thereto, notwithstanding any notice
given pursuant to Section 4.01(f) hereof.
(c) In addition to the insurance maintained by the Obligors with
respect to the Equipment or any other Collateral, the Servicer (or an Affiliate
of the Servicer) maintains, and at all times while acting as Servicer hereunder
shall continue to maintain a general liability insurance policy in the aggregate
amount of $2,000,000 and an excess liability insurance policy in umbrella form
in the aggregate amount of $5,000,000. All premiums in respect of such policies
have been paid and shall continue to be promptly paid as such premiums become
due. The Indenture Trustee shall at all times while the Notes are outstanding be
named as an additional insured on such casualty and liability policies
maintained by the Servicer. In the event the Back-up Servicer, when acting as
Servicer hereunder, maintains such insurance policy and the cost of such
insurance policy is in excess of the cost of insurance policies otherwise
maintained by the Back-up Servicer, such cost shall be reimbursed to the Back-up
Servicer in its capacity as Servicer as an expense pursuant to Section 3.04(b)
of the Indenture.
(d) The Servicer shall maintain errors and omissions insurance
with respect to the Servicer, its employees and agents, a fidelity bond and
coverage in respect of crime and breaches of fiduciary duty ("FIDUCIARY
INSURANCE") in such form and amount as is customary for institutions acting as
custodian of funds in respect of equipment leases, loans or receivables on
behalf of institutional investors. Any such fidelity bond and errors and
omissions insurance shall protect and insure the Servicer and the Indenture
Trustee on behalf of the Noteholders against
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losses, including forgery, theft, embezzlement, fraud, errors and omissions and
negligent acts of such persons and shall be maintained in a form and amount that
would meet the requirements of prudent institutional equipment lease and loan
servicers. No provision of this Section 4.05 requiring such fidelity bond,
Fiduciary Insurance and errors and omissions insurance shall diminish or relieve
the Servicer from its duties and obligations as set forth in this Agreement. The
Servicer shall be deemed to have complied with this provision if one of its
respective Affiliates has such fidelity bond, Fiduciary Insurance and errors and
omissions policy coverage and, by the terms of such fidelity bond, Fiduciary
Insurance and errors and omissions policy, the coverage afforded thereunder
extends to the Servicer and the Indenture Trustee on behalf of the Noteholders.
The Servicer shall cause each and every subservicer for it to maintain a policy
of insurance covering errors and omissions and a fidelity bond which would meet
such requirements. The Indenture Trustee, on behalf of the Noteholders, shall be
named an additional insured and upon a request of the Indenture Trustee, the
Servicer shall cause to be delivered to the Indenture Trustee a certification
evidencing coverage under such fidelity bond and insurance policy. Any such
fidelity bond or insurance policy shall not be (i) canceled unless the Servicer
has identified a replacement fidelity bond or (ii) modified in a materially
adverse manner without ten days' prior written notice to the Noteholders, the
Indenture Trustee and the Rating Agencies, and such modification shall not
result in the withdrawal or downgrade of the rating of any class of Notes.
Section 4.06 RESERVED.
Section 4.07 SERVICING COMPENSATION; PAYMENT OF CERTAIN EXPENSES AND
CUSTODIAN FEE BY SERVICER. Until such time as the Servicer has received a
Servicer Termination Notice (and has been paid all accrued and unpaid Servicer
Fees as of the date of actual termination), as compensation for its activities,
the Servicer shall be entitled to receive the Servicer Fee pursuant to Section
3.04(b)(I)(iii) of the Indenture. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder, including,
without limitation, (a) fees and disbursements of the Independent Public
Accountants, (b) taxes imposed on the Servicer (but excluding any sales taxes
imposed on any Obligor, the Originator, the Issuers, the Transferors, any
Noteholder or any other Person), (c) expenses incurred in connection with
distributions and reports to the Noteholders and (d) all other fees and expenses
incurred by the Servicer in connection with performing its duties hereunder, not
expressly stated hereunder to be for the account of the Noteholders or otherwise
reimbursable pursuant to this Agreement or Indenture. On each Payment Date, the
Servicer shall pay to the Custodian the Custodian Fee out of Excluded Amounts.
Section 4.08 MONTHLY STATEMENT.
(a) With respect to each Payment Date and the related Collection
Period, the Servicer will provide to the Back-up Servicer and the Indenture
Trustee, and the Indenture Trustee will provide to the Noteholders and the
Rating Agencies, on each Determination Date, a monthly statement (a "MONTHLY
STATEMENT"), signed by a Servicing Officer, in substantially the form of Exhibit
A hereto.
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(b) On each Determination Date, the Servicer will deliver or
cause to be delivered to the Indenture Trustee and the Back-up Servicer a
Computer Tape and a diskette (or any other electronic transmission reasonably
acceptable to the Indenture Trustee) in a format reasonably acceptable to the
Indenture Trustee, containing the information with respect to the Contracts as
of the preceding Collection Period necessary for preparation of the Monthly
Statement relating to the immediately succeeding Determination Date and
necessary to determine the application of Collections as provided in the
Indenture. Other than the duties specifically set forth in the Transaction
Documents, the Indenture Trustee shall have no obligations hereunder, including,
without limitation, to supervise, verify, monitor or administer the performance
of the Servicer or to verify the information contained on the Computer Tape
delivered pursuant to this Section other than to verify that such Computer Tape
is in a readable format.
Section 4.09 ANNUAL CERTIFICATES AS TO COMPLIANCE. The Servicer will
provide to the Indenture Trustee and the Rating Agencies, no later than April 30
of each year, commencing on April 30, 2004, an Officer's Certificate stating
that (a) a review of the activities of the Servicer, and the Servicer's
performance pursuant to this Agreement, for the period ending on the last day of
the immediately preceding fiscal year has been made under such Person's
supervision, and (b) the Servicer has performed or has caused to be performed in
all material respects all of its obligations under this Agreement throughout
such period and no Event of Servicing Termination has occurred and is continuing
(or, if an Event of Servicing Termination has so occurred and is continuing,
specifying each such event, the nature and status thereof and the steps
necessary to remedy such event, and, if an Event of Servicing Termination
occurred during such fiscal year but is no longer continuing, and no notice
thereof was given to the Indenture Trustee, specifying such Event of Servicing
Termination and the steps which were taken to remedy such event).
Section 4.10 ANNUAL INDEPENDENT PUBLIC ACCOUNTANT'S REPORTS. The Initial
Servicer will cause an Independent Public Accountant (who may also render other
services to the Servicer) to furnish to the Indenture Trustee, the Noteholders
and the Rating Agencies, no later than May 31 of each year, commencing May 31,
2004, a report relating to the previous calendar year to the effect that (a)
such firm has read the Indenture and this Agreement, (b) has examined, in
accordance with the uniform Single Attestation Program for Mortgage Bankers
("USAP") and with certain procedures specified in such certificate or opinion,
the records and calculations set forth in the Monthly Statements delivered by
the Initial Servicer during the reporting period and certain specified documents
and records relating to the servicing of the Contracts and the reporting
requirements with respect thereto and (c) on the basis of such examination,
certifies that the Initial Servicer complied with the minimum servicing
standards identified in USAP, in all material respects, except for such
significant exceptions or errors in records that, in the opinion of such firm,
the USAP requires it to report, and the servicing reporting requirements have
been conducted in compliance with the Indenture and this Agreement. In the event
such firm requires the Indenture Trustee to agree to the procedures performed by
such firm, the Servicer shall request the Indenture Trustee in writing to so
agree; it being understood and agreed that the Indenture Trustee will deliver
such letter of agreement upon written direction of the Majority Holders, and the
Indenture Trustee shall not make any independent inquiry or investigation as to,
and shall have no obligation or liability in respect of, the sufficiency,
validity or correctness of such procedures. Delivery of such reports,
information and documents to the
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Indenture Trustee is for informational purposes only, and the Indenture
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Servicer's compliance with any of its covenants
hereunder.
In the event the Back-up Servicer is then acting as Servicer, in lieu of the
above, the Back-up Servicer, no later than May 31 of each year, commencing May
31, 2004, at its expense, shall cause an Independent Public Accountant to
furnish a statement (an "ACCOUNTANT'S STATEMENT") to the Indenture Trustee and
the Noteholders to the effect that (i) such Independent Public Accountant has
obtained a letter of representation regarding certain matters from the
management of the Back-up Servicer, which includes an assertion that the Back-up
Servicer has complied with certain minimum mortgage loan servicing standards (to
the extent applicable to commercial and multifamily mortgage loans) identified
in USAP, with respect to the servicing of commercial and multifamily mortgage
loans during the most recently completed calendar year and (ii) on the basis of
an examination conducted by such Independent Public Accountant in accordance
with standards established by the American Institute of Certified Public
Accountants, such representation is fairly stated in all material respects,
subject to such exceptions and other qualifications that may be appropriate. In
rendering its report such firm may rely, as to matters relating to the direct
servicing of commercial and multifamily mortgage loans by sub-servicers, upon
comparable reports of Independent Public Accountants rendered on the basis of
examinations conducted in accordance with the same standards (rendered within
one year of such report) with respect to those sub-servicers. With respect to
any electronic version of an Accountant's Statement prepared by the reporting
person, the reporting person shall receive written confirmation from the related
accountants that such electronic version is a conformed copy of the original
Accountant's Statement.
Section 4.11 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING THE
PLEDGED PROPERTY.
(a) The Servicer shall provide the Indenture Trustee, the
Noteholders and their respective duly authorized representatives, agents,
attorneys or accountants access to any and all documentation regarding the
Pledged Property (including the List of Initial Contracts, all Lists of
Subsequent Contracts and all Lists of Substitute Contracts) that the Servicer
may possess, such access being afforded without charge but only upon reasonable
request and during normal business hours, so as not to interfere unreasonably
with the Servicer's normal operations or customer or employee relations, at
offices of the Servicer designated by the Servicer.
(b) At all times during the term hereof, the Servicer shall
either (i) keep available in physical form at its principal executive office for
inspection by the Indenture Trustee, any Noteholder, or their respective duly
authorized representatives, agents, attorneys or accountants a list of all
Contracts then subject to the lien of the Indenture, together with a
reconciliation of such list to the List of Initial Contracts, all Lists of
Subsequent Contracts and all Lists of Substitute Contracts and each of the
Monthly Statements, indicating the cumulative removals and additions of
Contracts, subject to the lien of the Indenture or (ii) maintain electronic
facilities which allow such list and reconciliation to be generated.
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(c) The Servicer will maintain accounts and records as to each
respective Contract serviced by the Servicer that are accurate and sufficiently
detailed to permit (i) the reader thereof to know as of the most recent
Determination Date the status of such Contract, including payments and
recoveries made and payments owing (and the nature of each), and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Contract and the amounts from time to time deposited in the Collection Account
in respect of such Contract.
(d) The Servicer will maintain its Contract Management System and
other computerized records so that, from and after the time of the pledge under
the Indenture of each Contract to the Indenture Trustee, the Servicer's accounts
and records (including any back-up computer archives) that refer to any Contract
indicate clearly that the Contract is Pledged Property. Indication of a Contract
being Pledged Property will be deleted from or modified on the Servicer's
accounts and records when, and only when such Contract is an Early Termination
Contract, an Expired Contract or a Purchased Contract and all amounts payable
under the Contract or, in the case of a Purchased Contract, under the
Transaction Documents, have been paid in full.
(e) The failure of the Servicer to disclose information whose
disclosure is not permitted by applicable law shall not constitute a breach of
this Section 4.11.
Section 4.12 FINANCIAL STATEMENTS. The Servicer (except if the Back-up
Servicer is acting in such capacity) shall provide to the Indenture Trustee, the
Noteholders and the Rating Agencies (i) quarterly unaudited financial statements
of the Servicer for the then-current fiscal year and (ii) annual audited
financial statements of the Servicer for the most recently completed fiscal
year; PROVIDED, that to the extent such information is publicly available on a
website, the Servicer shall only need to notify the Indenture Trustee, the
Noteholders and the Rating Agencies in writing of the availability of such
financial statements and the address for the website where such financial
statements are located.
Section 4.13 SERVICER ASSISTANCE. The Servicer shall make reasonable
efforts to cooperate with the Back-up Servicer to enable the Back-up Servicer to
perform its duties hereunder. In addition, the Servicer shall be required to
provide to the Back-up Servicer the following: (i) information regarding the
Collections and the Accounts on a daily basis, (ii) a weekly data tape with
respect to the Contracts, (iii) each Monthly Statement as required pursuant to
Section 4.08 above, together with a monthly data tape with respect to the
Contracts, (iv) a copy of the Servicer's current Credit and Collection Policies
and Procedures, as amended from time to time, and (v) such periodic UCC and tax
information as it may require from time to time, or access to the Servicer's
third party service providers in such respects.
Section 4.14 PERFORMANCE OF BACK-UP SERVICER'S DUTIES.
(a) The Back-up Servicer, prior to becoming the successor
Servicer, shall perform the following duties and obligations:
(i) Immediately following the Closing Date, the Back-up
Servicer shall accurately record the Contracts in its records.
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(ii) Promptly on receipt of the daily information received
from the Servicer in respect of the Collections and the Accounts, the Back-up
Servicer shall record such information in its records.
(iii) Promptly on receipt of the weekly data tape with
respect to the Contracts received from the Servicer with respect to the
Contracts, the Back-up Servicer shall review such data tape and reconcile the
Discounted Contract Balances with those in its records.
(iv) As soon as practicable following each related
Determination Date (but in no event later than 2 Business Days following such
Determination Date), the Back-up Servicer shall review the summary and
settlement report worksheets contained in the Monthly Statement and will verify
that the correct balances have been inserted based solely on the formulas
contained in the Monthly Statement. As soon as practicable following each
related Determination Date (but in no event later than 2 Business Days following
such Determination Date), the Back-up Servicer shall review the monthly data
tape provided by the Servicer with respect to the Contracts.
(v) The Back-up Servicer shall notify the Servicer and
the Indenture Trustee in writing of any disagreements with the summary and
settlement worksheet in the Monthly Statement based on such review or of any
discrepancies with respect to the monthly data tape not later than the third
Business Day preceding the related Payment Date to the extent such Monthly
Statement or monthly data tape was received on or prior to the Business Day
following the related Determination Date and as soon as practicable if it is
received after such date.
(vi) If the Servicer disagrees with the notice provided
under paragraph (iv) above by the Back-up Servicer or if the Servicer has not
reconciled such discrepancy, the Back-up Servicer agrees to confer with the
Servicer to resolve such disagreement as promptly as practicable and shall
settle such discrepancy with the Servicer if possible, and notify the Indenture
Trustee and the Rating Agencies in writing of the resolution thereof. The
Servicer hereby agrees to cooperate at its own expense with the Back-up Servicer
in reconciling any discrepancies therein. If after the notification provided
under paragraph (i) above by the Back-up Servicer and prior to the related
Payment Date, such discrepancy is not resolved, the Back-up Servicer shall
promptly notify in writing the Indenture Trustee of the continued existence of
such discrepancy. Following receipt of such notice by the Indenture Trustee, the
Servicer shall deliver to the Indenture Trustee and the Back-up Servicer no
later than two Business Days after such receipt, a certificate describing the
nature and amount of such discrepancies and the actions the Servicer proposes to
take with respect thereto.
(vii) On a quarterly basis, beginning on the Determination
Date occurring in July 2003, the Back-up Servicer shall prepare a duplicate
Monthly Statement from the Back-up Servicer's records.
(b) In the event that the Back-up Servicer shall become the
Servicer hereunder, the Back-up Servicer shall service and administer the
Contracts and perform all of its duties hereunder in accordance with customary
and usual procedures employed by institutions
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servicing commercial loans, which institutions are considered prudent by the
Back-up Servicer, and in accordance with the Back-up Servicer's own customary
practices, or if a higher standard, the highest degree of skill and attention
that the Back-up Servicer exercises with respect to contracts comparable to the
Contacts that the Back-up Servicer services for itself.
(c) The Back-up Servicer undertakes to perform only such duties
and obligations as are specifically set forth in this Agreement, it being
expressly understood by all parties hereto that there are no implied duties or
obligations of the Back-up Servicer hereunder. Without limiting the generality
of the foregoing, the Back-up Servicer, except as expressly set forth herein,
shall have no obligation to supervise, verify, monitor or administer the
performance of the Servicer. The Back-up Servicer shall have no liability for
any act or omission of the Servicer. Neither the Back-up Servicer nor any of its
officers, directors, employees or agents shall be liable, directly or
indirectly, for any damages or expenses arising out of the services performed
under this Agreement other than damages or expenses which result from the gross
negligence or willful misconduct of it or them.
Section 4.15 INDEMNITY FOR LIABILITY CLAIMS. The Issuers shall jointly and
severally indemnify, defend and hold harmless the Back-up Servicer (which shall
include any of its directors, members, managers, employees, officers and agents)
against and from any and all costs, expenses, losses, damages, claims and
liabilities arising out of or resulting from this Agreement (in its role as
Back-up Servicer and as successor Servicer hereunder) to the extent not paid by
the Servicer pursuant to Section 5.01 of this Agreement. Such amounts shall be
paid solely from amounts on deposit in the Collection Account pursuant to
Section 3.04(b)(I)(ii) of the Indenture and is otherwise non-recourse to the
Issuers; provided, that the Back-up Servicer shall not be entitled to any
indemnification for any cost, expense, loss, damage or liability arising out of
or resulting from the willful misconduct or gross negligence of the Back-up
Servicer or its directors, employees, officers or agents.
ARTICLE 5
THE SERVICER
Section 5.01 LIABILITY OF SERVICER; INDEMNITIES. (a) The Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer herein. Such obligations shall include the following:
(i) The Servicer (unless the Back-up Servicer is then
acting as Servicer) shall indemnify, defend and hold harmless the Indenture
Trustee (which shall include any of its directors, employees, officers and
agents), the Issuers, the Originator, the Transferors, the Back-up Servicer and
the Noteholders against and from, and reimburse for, any and all costs,
expenses, losses, liabilities, obligations, damages, claims, injuries (to
persons, property or natural resources), penalties, documentary stamp or similar
taxes, actions, suits and judgments arising out of or resulting from the use,
repossession, foreclosure or operation of any Collateral by the Servicer; and
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(ii) The Initial Servicer shall indemnify, defend and hold
harmless the Indenture Trustee (which shall include any of its directors,
employees, officers and agents), the Issuers, the Originator, the Transferors,
the Back-up Servicer and the Noteholders against and from, and reimburse for,
any and all costs, losses, liabilities, obligations, expenses (including the
reasonable fees and expenses of agents and counsel) claims, damages, injuries
(to persons, property or natural resources), penalties, documentary stamp or
similar taxes, actions, suits and judgments to the extent that such losses,
claims, damages or liabilities arose out of, or were imposed upon the Indenture
Trustee, the Issuers, the Originator, the Transferors or the Noteholders in
connection with or by reason of (a) the acts of the Initial Servicer or the
failure by the Initial Servicer to perform its duties under this Agreement or
under the other Transaction Documents or errors or omissions of the Initial
Servicer related to such duties including the making of any representations or
warranties hereunder which are inaccurate in any material respect; or (b) in the
case of the Indenture Trustee, the performance of its duties hereunder and under
the other Transaction Documents, except to the extent that such loss, expense,
damage, claim or liability resulted from the Indenture Trustee's gross
negligence or willful misconduct. The provisions of this Section shall run
directly to and be enforceable by an injured party subject to the limitations
hereof, and the indemnification provided to the Indenture Trustee, the Issuers,
the Originator, the Transferors and the Noteholders pursuant to this Article V
by the Initial Servicer shall survive the payment in full of the Notes, the
termination of the Indenture, and the resignation or removal of the Indenture
Trustee.
(b) If the Back-up Servicer is acting as Servicer, the Back-up
Servicer will indemnify, defend and hold harmless the Issuers, the Originator,
the Indenture Trustee, the Transferors, the Servicer and the Noteholders against
any and all costs, losses, liabilities, obligations, expenses, claims, damages,
injuries, penalties, actions, suits and judgments arising out of (i) a breach of
the representations and warranties of the Back-up Servicer hereunder or (ii)
arising out of the willful misconduct or gross negligence of the Back-up
Servicer in performing its duties as successor Servicer hereunder provided,
however, that the Back-up Servicer shall have no obligation to indemnify any
Person for any cost, loss, liability, obligation, expense, claim, damage,
injury, penalty, action, suit or judgment arising out of the gross negligence or
willful misconduct of such Person or for any loss or damage which is in the
nature of consequential or indirect loss or damage.
(c) The Servicer shall pay any amounts owing pursuant to Section
5.01(a) hereof directly to the indemnified Person, and such amounts shall not be
deposited in the Collection Account.
(d) Indemnification under this Section 5.01 shall include,
without limitation, reasonable fees and expenses of counsel and expenses of
litigation reasonably incurred. If the Servicer has made any indemnity payments
to the Indenture Trustee, the Issuers, the Originator, the Transferors or the
Noteholders pursuant to this Section 5.01 and such party thereafter collects any
of such amounts from others, such party will promptly repay such amounts
collected to the Servicer, without interest.
Section 5.02 MERGER, CONSOLIDATION, OR ASSUMPTION OF THE OBLIGATIONS OF
SERVICER. Any entity (i) into which the Servicer may be merged or consolidated,
(ii) resulting from any
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merger or consolidation to which the Servicer shall be a party or (iii)
succeeding to the business of the Servicer, shall be the successor to the
Servicer hereunder, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding, and such entity in any of the foregoing cases shall execute an
agreement of assumption, in a form reasonably satisfactory to the Indenture
Trustee and the Noteholders, agreeing to perform every obligation of the
Servicer hereunder; PROVIDED, HOWEVER, that the Initial Servicer shall not merge
or consolidate with any other entity nor discontinue its existence until the
Indenture Trustee has received written confirmation from the Rating Agencies
that such action shall not adversely affect the rating of any Class of Notes.
The Servicer shall provide prompt written notice of any such event to the
Issuers, the Indenture Trustee, the Noteholders and the Rating Agencies.
Section 5.03 LIMITATION ON LIABILITY OF SERVICER AND OTHERS. Neither the
Servicer nor any of the directors, officers, employees or agents of the Servicer
shall be under any liability to the Indenture Trustee, the Originator, the
Transferors, the Issuers or the Noteholders, except as expressly provided
herein, for any action taken or for refraining from the taking of any action
pursuant to this Agreement or the Indenture or for errors in judgment made in
good faith; PROVIDED, HOWEVER, that this provision shall not protect the
Servicer or any Person against any liability that would otherwise be imposed by
reason of willful misconduct, bad faith or gross negligence in the performance
of duties hereunder or under the Indenture. The Servicer and any director or
officer or employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder or under the Indenture. Except as
provided herein, the Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties to
service the Pledged Property in accordance with this Agreement and that in its
opinion may involve it in any expense or liability.
Section 5.04 SERVICER NOT TO RESIGN. Subject to the provisions of Section
5.02 hereof, the Servicer shall not resign from the obligations and duties
hereby imposed on it as Servicer except upon the consent of either (i) (a) the
Majority Holders and (b) the Rating Agencies, or (ii) 100% of the Noteholders,
or (iii) a determination that the performance of the Servicer's duties hereunder
is no longer permissible under applicable law. Any such determination permitting
the resignation of the Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Indenture Trustee, the Noteholders and the Rating
Agencies. No such resignation shall become effective until a successor Servicer
reasonably acceptable to the Majority Holders shall have assumed the
responsibilities and obligations of the Servicer in accordance with Section 6.02
hereof.
ARTICLE 6
SERVICING TERMINATION
Section 6.01 EVENTS OF SERVICING TERMINATION.
(a) If any of the following events (each an "EVENT OF SERVICING
TERMINATION") shall occur and be continuing:
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(i) Any failure by the Servicer (A) to make a Servicer
Advance in accordance with Section 4.03 hereof (for so long as HPSC or any of
its Affiliates is acting as Servicer) or (B) to make any payment or deposit
required to be made hereunder that, in either case, continues unremedied for a
period of two Business Days after the date such Servicer Advance, payment or
deposit, as applicable, was due (or with respect to reimbursable fees and
expenses payable to third parties by the Servicer, within ten Business Days of
the date when any such reimbursement was due);
(ii) Any failure by the Servicer to submit a Monthly
Statement pursuant to Section 4.08 hereof that continues unremedied for a period
of three Business Days after the earlier of the date upon which (A) the
Indenture Trustee or a Noteholder provides written notification to the Servicer
of such failure or (B) any Servicing Officer has actual knowledge that the
Indenture Trustee and the Noteholders have not received a copy of the Monthly
Statement in accordance with the provisions hereof;
(iii) Any failure on the part of the Servicer duly to
observe or perform in any material respect any other covenants or agreements of
the Servicer set forth in this Agreement or any other Transaction Document to
which it is a party or any breach of a representation or warranty of the
Servicer set forth in Section 2.02 of this Agreement, which failure or breach,
individually or taken together with all other failures or breaches, (A)
materially and adversely affects the rights of the Indenture Trustee, the
Noteholders or the Issuers and (B) continues unremedied for a period of 30 days
after the earlier to occur of (x) the date on which written notice of such
failure or breach shall have been given to a Servicing Officer by the Indenture
Trustee, the Issuers or any of the Noteholders or (y) the date on which any
Servicing Officer has actual knowledge, or is required pursuant to the terms of
this Agreement to provide notice to the Noteholders, of any such failure or
breach;
(iv) The Servicer shall consent to the appointment of a
custodian, receiver, trustee or liquidator (or other similar official) of
itself, or of a substantial part of its property, or shall admit in writing its
inability to pay its debts generally as they come due, a court of competent
jurisdiction shall determine that the Servicer is generally not paying its debts
as they come due or the Servicer shall make a general assignment for the benefit
of creditors;
(v) The Servicer shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking reorganization in a
proceeding under any bankruptcy laws (as now or hereafter in effect) or an
answer admitting the material allegation of a petition filed against the
Servicer in any such proceeding, or the Servicer shall, by voluntary petition,
answer or consent, seek relief under the provisions of any now existing or
future bankruptcy or other similar law providing for the reorganization or
winding up of debtors, or providing for an agreement, composition, extension or
adjustment with its creditors;
(vi) A petition against the Servicer in a proceeding under
applicable bankruptcy laws or other insolvency laws, as now or hereafter in
effect, shall be filed and shall not be stayed, withdrawn or dismissed within 60
days thereafter, or if, under the provisions of any law providing for
reorganization or winding-up of debtors which may apply to the Servicer, any
court of competent jurisdiction shall assume jurisdiction, custody or control of
the Servicer,
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or any substantial part of its property, and such jurisdiction, custody or
control shall remain in force unrelinquished, unstayed or unterminated for a
period of 60 days;
(vii) Any assignment of rights or delegations of duties by
the Servicer with respect to its duties or rights hereunder, except as
specifically permitted hereunder, or any attempt to make such an assignment or
delegation;
(viii) A Restricting Event shall occur;
(ix) The occurrence of a change of control of the Servicer
("control" having the meaning ascribed to it in the rules and regulations under
the Securities Exchange Act of 1934, as amended);
(x) Failure of the Initial Servicer or the Originator to
make one or more payments due with respect to aggregate recourse debt or other
obligations exceeding $1,000,000, after giving effect to any applicable cure
period, so long as such failure shall be continuing and shall not have been
waived by the Person or Persons entitled to performance;
(xi) One or more judgments, decrees or orders against the
Servicer or the Originator for the payment of money aggregating in excess of
$1,000,000 shall exist, and any one of such judgments, decrees or orders shall
have been unsatisfied and in effect for any period of 60 consecutive days
without a stay of execution; PROVIDED, HOWEVER that the foregoing shall not
apply to the extent of any judgment which is covered by an insurance policy (a)
provided by an insurance company ranking among the four highest ratings in
Best's Key Rating Guide, (b) with respect to which such insurance company has
acknowledged in writing its payment obligation for such judgment, and (c) with
respect to which such insurance coverage is not subject to any deductible which
is in an amount which would cause the payment to be made by such insurance
company to be insufficient to reduce the outstanding judgment to below
$1,000,000.
(xii) Failure of the Servicer and its Affiliates, on a
consolidated basis, to maintain a minimum tangible net worth of $35,000,000
(excluding the accounting effects of FASB Statement 133) plus (a) 100% of new
equity offerings and (b) 75% of consolidated net income for each fiscal quarter
commencing March 31, 2003 (without any offset for any net losses during any such
fiscal quarter); or
(xiii) The Initial Servicer and its Affiliates, on a
consolidated basis, shall report negative net income in any two or more
consecutive fiscal quarters;
then, and in each and every case, so long as an Event of Servicing Termination
shall not have been remedied within any applicable period set forth above, the
Indenture Trustee shall, at the written direction of the Majority Holders, by
notice (the "SERVICER TERMINATION NOTICE") then given in writing to the
Servicer, terminate all, but not less than all, of the rights and obligations of
the Servicer under this Agreement. The Indenture Trustee shall furnish a copy of
any Servicer Termination Notice to the Rating Agencies.
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In the event the Back-up Servicer is acting as Servicer hereunder, events
described in clauses (viii) through (xiii) above shall not constitute Events of
Servicing Termination in respect of the Back-up Servicer acting as Servicer
hereunder.
(b) On and after the time the Servicer receives a Servicer
Termination Notice pursuant to this Section 6.01, all authority and power of the
Servicer under this Agreement, whether with respect to the Notes or the
Contracts or otherwise, shall pass to and be vested in the Back-up Servicer and,
without limitation, the Back-up Servicer is hereby authorized and empowered
(which authority and power are coupled with an interest and are irrevocable) to
execute and deliver, on behalf of the predecessor Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such Servicer Termination Notice, whether to complete the transfer
of the Contracts and related documents or otherwise.
The predecessor Servicer agrees to cooperate with the Indenture Trustee and the
successor Servicer in effecting the termination of the responsibilities and
rights of the Back-up Servicer hereunder, including, without limitation,
providing the Back-up Servicer with access to its servicing system and records
with respect to the Contracts, and transferring to the Back-up Servicer for
administration by it of all cash amounts that shall at the time be held by the
predecessor Servicer for deposit, or shall have been deposited by the
predecessor Servicer, in the Collection Account or the Lockbox Account, or
thereafter shall be received with respect to Contracts, and in accordance
therewith, the Indenture Trustee shall have the right to receive distributions
of all Collections on deposit in the Lockbox Account. To assist the Back-up
Servicer in enforcing all rights under the Contracts, the predecessor Servicer,
at its own expense, shall transfer its electronic records relating to such
Contracts to the Back-up Servicer in such electronic form as the Back-up
Servicer may reasonably request and shall transfer the related Contract Files
and all other records, correspondence and documents relating to the Contracts
that it may possess to the Back-up Servicer in the manner and at such times as
the Back-up Servicer shall reasonably request.
(c) Following the occurrence of an Event of Servicing
Termination, but without limiting the rights of the Indenture Trustee or the
Majority Holders under any other provisions of the Transaction Documents, the
Majority Holders may direct the Indenture Trustee in writing, to conduct a
review of the Servicer's cash application procedures with respect to Collections
on the Contracts, including, without limitation, transfers from the Lockbox
Account to the Collection Account, and the Indenture Trustee hereby agrees to
conduct such review, or cause a third party to conduct such review, at the
expense of the Servicer on such basis as the Majority Holders shall reasonably
determine.
Section 6.02 RESIGNATION OF SERVICER; BACK-UP SERVICER; APPOINTMENT OF
SUCCESSOR; LIMITATIONS ON LIABILITY.
(a) Upon the Servicer's receipt of notice of termination pursuant
to Section 6.01 or the Servicer's resignation pursuant to Section 5.04, the
Back-up Servicer shall be the successor in all respects to the Servicer in its
capacity as servicer under this
Servicing Agreement (including the right to
withdraw funds from the Lockbox Account), and shall be subject to all the
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responsibilities, duties and liabilities of the Servicer pursuant to this
Agreement; PROVIDED, HOWEVER, that BNY Asset Solutions LLC in its capacity as
Back-up Servicer, shall not be responsible for, and shall have no liability with
respect to, the acts or omissions of the Servicer or any prior servicer
occurring prior to the time that BNY Asset Solutions LLC becomes the Servicer
hereunder; and, PROVIDED FURTHER, that before becoming subject to all the
responsibilities, duties and liabilities of the Servicer hereunder, the Back-up
Servicer may require that satisfactory indemnity or other security be furnished
to protect it against all liability, except liability which is adjudicated to
have resulted from its negligence or willful misconduct. As compensation
therefor, the Back-up Servicer shall be entitled to such compensation, payable
out of the Collection Account, as the Servicer would have been entitled to under
this Agreement if no such notice of termination had been given.
(b) Notwithstanding subsection (a) above, BNY Asset Solutions LLC
may, if for any reason BNY Asset Solutions LLC shall be unwilling to act as
Back-up Servicer, or shall, if it shall be legally unable so to act, appoint, or
petition a court of competent jurisdiction to appoint, any established financial
institution reasonably acceptable to the Majority Holders, whose regular
business shall include the servicing of contracts comparable to the Contracts
and the appointment of which will not cause a downgrade in the ratings assigned
by the Rating Agencies to the Notes, as the successor to the Servicer under this
Agreement. BNY Asset Solutions LLC shall act as Back-up Servicer until a
successor is appointed in accordance herewith. In connection with such
appointment, the Indenture Trustee may make such arrangements for the
compensation of such successor, out of payments on the Contracts, as it and such
successor shall agree; PROVIDED, HOWEVER, that the Servicing Fee Rate shall not
be in excess of 0.75% per annum unless approved in writing by the Holders of at
least 66 2/3 percent of the Aggregate Outstanding Note Principal Balance of the
Notes. Pending appointment of a successor to the Servicer hereunder, BNY Asset
Solutions LLC shall act in such capacity, subject to the protections afforded
BNY Asset Solutions LLC in subsections (a) and (c) of this Section 6.02. The
Indenture Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
Notwithstanding anything else herein to the contrary, in no event shall the
Indenture Trustee be liable for any servicing fee or for any differential in the
amount of the servicing fee paid hereunder and the amount necessary to induce
any successor Servicer to act as successor Servicer under this Agreement and the
transactions set forth or provided for herein.
In the event the Back-up Servicer becomes the successor Servicer, it may at any
time resign and be discharged from the trusts hereby created by giving at least
60 days' written notice thereof to the Servicer, the Issuers, and each
Noteholder, which resignation will not become effective until such time as a
successor Servicer has been appointed in accordance with the provisions of this
Section 6.02. Upon receiving such notice of resignation, the Issuers shall
promptly appoint a successor Servicer, acceptable to the Majority Holders, by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Servicer and one copy to the successor Servicer. If
no successor Servicer shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the Indenture
Trustee shall petition any court of competent jurisdiction for the appointment
of a successor Servicer.
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(c) Notwithstanding any other provision of this Agreement, in the
event that BNY Asset Solutions LLC acts as the servicer in accordance with this
Section 6.02, it shall be entitled to terminate any existing sub
servicing
agreements and perform the duties required of the Servicer by entering into one
or more sub
servicing agreements with a subservicer selected by it with
reasonable care. The Indenture Trustee shall pay any subservicing fees to any
such subservicer engaged by it with the Servicing Fee.
(d) BNY Asset Solutions LLC, in its capacity as Back-up Servicer
or as Servicer, may resign from the duties and obligations hereby imposed on it
upon at least 60 days written notice to the Indenture Trustee and the
Noteholders; PROVIDED that BNY Asset Solutions LLC may not resign in its
capacity as Servicer until a successor Servicer is appointed pursuant to Section
6.02 hereof. If no successor Servicer shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the Indenture Trustee shall petition any court of competent
jurisdiction for the appointment of a successor Servicer.
(e) In its capacity as Back-up Servicer, the Back-up Servicer
shall be entitled to receive the Back-up Servicing Fee.
(f) Upon the resignation or termination of the Initial Servicer
and the assumption of its duties by the Back-up Servicer in accordance with this
Section 6.02, the Back-up Servicer shall no longer be entitled to receive the
Back-up Servicing Fee, and shall be entitled to receive the Servicer Fee which
shall be inclusive of all other amounts reimbursable pursuant to this Agreement.
Section 6.03 NOTIFICATION TO NOTEHOLDERS. The Servicer shall promptly
notify a Responsible Officer of the Indenture Trustee and the Noteholders in
writing of any Event of Servicing Termination. Upon any termination of, or
appointment of a successor to, the Servicer pursuant to this Article VI, the
Indenture Trustee shall give prompt written notice thereof to the Noteholders at
their respective addresses appearing in the Register, the Issuers and the Rating
Agencies.
Section 6.04 WAIVER OF PAST DEFAULTS. The Majority Holders may, on behalf
of the Noteholders, with notice to the Indenture Trustee, waive any default by
the Servicer in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Servicing Termination arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon except to the extent expressly waived. The Servicer shall promptly
deliver to each of the Rating Agencies notice of any such waiver.
Section 6.05 EFFECTS OF TERMINATION OF SERVICER.
(a) Upon the appointment of the successor Servicer, the
predecessor Servicer shall immediately remit any Scheduled Payments, Final
Scheduled Payments, Liquidation Proceeds or other payments that it may receive
pursuant to any Contract or otherwise to the successor Servicer for the benefit
of the Indenture Trustee on behalf of the Noteholders after such date of
appointment.
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(b) Subject to Section 6.02 hereof, after the delivery of a
Servicer Termination Notice, the predecessor Servicer shall have no further
rights or obligations with respect to the management or servicing of the Pledged
Property or the enforcement, custody or collection of the Contracts, and the
successor Servicer shall have all of such obligations, except that the
predecessor Servicer will transmit or cause to be transmitted directly to the
successor Servicer for the benefit of the Noteholders, promptly upon receipt and
in the same form in which received, any amounts held by the predecessor Servicer
(properly endorsed where required for the successor Servicer to collect them)
received as payments upon or otherwise in connection with the Contracts. The
predecessor Servicer's indemnification obligations pursuant to Section 5.01
hereof will survive the termination or resignation of the predecessor Servicer
but will not extend to any acts or omissions of a successor Servicer.
(c) An Event of Servicing Termination shall not affect the rights
and duties of the parties hereunder (including, but not limited to, the
obligations and indemnities of the Servicer pursuant to Article IV of the
Indenture and Section 5.01 hereof) other than those relating to the management,
servicing, custody or collection of the Contracts.
ARTICLE 7
MISCELLANEOUS PROVISIONS
Section 7.01 AMENDMENT.
(a) This Agreement may be amended from time to time by the
Issuers, the Servicer, the Back-up Servicer and the Indenture Trustee, without
the consent of any of the Noteholders, to cure any ambiguity herein; PROVIDED,
HOWEVER, that such action shall not, as evidenced by an Opinion of Counsel
acceptable to the Indenture Trustee, adversely affect in any respect the
interests of any Noteholder.
(b) This Agreement may also be amended from time to time by the
Servicer, the Issuers and the Indenture Trustee with the written consent of the
Majority Holders for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Noteholders; PROVIDED, HOWEVER, that no such
amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, payments that are required to be made on any
Note without the written consent of the Holder of such Note or (ii) reduce the
aforesaid percentage required to consent to any such amendment, without the
written consent of the Holders of all Notes then outstanding.
(c) Prior to the effectiveness of any amendment under Section
7.01(a) or (b) hereof, the Rating Agencies shall have confirmed in writing their
respective ratings of the Notes.
(d) Promptly after the execution of any such amendment, the
Indenture Trustee shall furnish a written copy of the text of such amendment
(and any consent required with respect thereto) to each Noteholder and the
Rating Agencies.
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(e) Approval of the particular form and substance of any proposed
amendment or consent shall be necessary for the consent of the Noteholders under
Section 7.01(b) hereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by the Noteholders shall be subject
to such reasonable requirements as the Indenture Trustee may prescribe.
(f) The Indenture Trustee shall be entitled to receive an
officer's certificate and an Opinion of Counsel to the effect that all
conditions precedent to the amendment of this Agreement have been satisfied. The
Indenture Trustee may, but shall not be obligated to, execute and deliver any
such amendment which affects the Indenture Trustee's rights, powers, immunities
or indemnifications hereunder.
Section 7.02 COUNTERPARTS. For the purpose of facilitating the execution
of this Agreement and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all of which counterparts shall constitute but
one and the same instrument.
Section 7.03 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS OF
ANY STATE.
Section 7.04 WAIVER OF JURY TRIAL. The Issuers, the Servicer, the
Originator and the Indenture Trustee each hereby waive any right to have a jury
participate in resolving any dispute, sounding in contract, tort, or otherwise
arising out of, connected with, related to, or in connection with this
agreement. Instead, any dispute resolved in court will be resolved in a bench
trial without a jury.
Section 7.05 NOTICES. All demands, notices, instructions, directions and
communications hereunder (other than periodic communications of a routine nature
made in connection with the dissemination of information regarding the Pledged
Property, the Servicer and the Issuers required to be delivered hereunder, which
shall be delivered or mailed by first class mail or facsimile transmission)
shall be in writing, personally delivered or mailed by overnight courier, and
shall be deemed to have been duly given upon receipt (a) in the case of the
Servicer, at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, 00000-0000, (b) in the case
of the Originator, to HPSC, at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx,
00000-0000, (c) in the case of the Issuers, if to LLC I at 00 Xxxxx Xxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxxxxxxxxxx 00000-0000 and if to LLC II at 00 Xxxxx
Xxxxxx, Xxxxx 0000, Xxxxxx Xxxxxxxxxxxxx 00000-0000, with a copy to the
Originator as set forth in clause (b) above, (d) in the case of the Indenture
Trustee, at 0 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000,
Attention: Structured Finance (e) in the case of the Back-up Servicer, at 000 X.
Xxx Xxxxxxx Xxxx., Xxxxx 0000, Xxxxxx, Xxxxx 00000, with a copy to BNY Asset
Solutions LLC, 0000 Xxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000,
Attention: ABS Servicing, (f) in the case of S&P, at 00 Xxxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, XX 00000, Attention: Asset Backed Surveillance, telephone (212)
000-0000, telecopy (000) 000-0000, and (g) in the case of Moody's, at 00 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx
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10007, Attention: ABS Monitoring Group, telephone (000) 000-0000, telecopy (212)
298-7139, email: XxxxxxxXxxxxx@xxxxxx.xxx. Any notice required or permitted to
be mailed to a Noteholder shall be given by first class mail or overnight
courier, postage prepaid, at the address of such Noteholder as shown in the Note
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given on the fifth Business Day
following mailing, whether or not the Noteholder receives such notice. A copy of
each notice sent by any party to a Noteholder hereunder shall be promptly sent
by such party to each Rating Agency.
Section 7.06 SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or the
rights of the Holders thereof.
Section 7.07 THIRD PARTY BENEFICIARIES. The parties hereto acknowledge and
agree that the Noteholders are intended third party beneficiaries of this
Agreement.
Section 7.08 ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, except as provided in Section 5.02 hereof, this Agreement may
not be assigned by the Servicer except with prior written consent of the
Majority Holders. Notice of any such assignment received by a Responsible
Officer of the Indenture Trustee shall be given to the Rating Agencies by the
Indenture Trustee.
Section 7.09 BINDING EFFECT. This Agreement shall inure to the benefit of,
and shall be binding upon the Servicer, the Originator, the Issuers, the
Indenture Trustee and the Noteholders and their respective successors and
permitted assigns, subject, however, to the limitations contained in this
Agreement. This Agreement shall not inure to the benefit of any Person other
than the Issuers, the Servicer, the Indenture Trustee and the Noteholders.
Section 7.10 SURVIVAL OF AGREEMENT. All covenants, agreements,
representations and warranties made herein and in the other documents delivered
pursuant hereto shall survive the pledge of the Pledged Property and the
issuance of the Notes and shall continue in full force and effect until payment
in full of the Notes and all amounts owing to the Indenture Trustee hereunder
and under the other Transaction Documents, as applicable.
Section 7.11 CAPTIONS. The captions or headings in this Agreement are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions or sections of this Agreement.
Section 7.12 EXHIBITS. The exhibits to this Agreement are hereby
incorporated herein and made a part hereof and are an integral part of this
Agreement.
Section 7.13 CALCULATIONS. Except as otherwise provided in this Agreement,
including, without limitation, with respect to the calculation of interest on
the Floating Rate Notes all interest rate calculations under this Agreement,
including those with respect to the Contracts,
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will be made on the basis of a 360-day year and twelve 30-day months and will be
carried out to at least seven decimal places.
Section 7.14 NO PROCEEDINGS. The Servicer, the Originator and the
Indenture Trustee each hereby agrees that it will not directly or indirectly
institute, or cause to be instituted, against any of the Issuers or the
Transferors any bankruptcy or insolvency proceeding so long as there shall not
have elapsed one year plus one day since the maturity date of the latest
maturing securities of either of the Issuers.
Section 7.15 RIGHTS OF INDENTURE TRUSTEE. The Indenture Trustee shall be
afforded the same rights, protections, immunities and indemnities set forth in
the Indenture as if specifically set forth herein.
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IN WITNESS WHEREOF, the Servicer, the Originator, the Issuers and the Indenture
Trustee have caused this Agreement to be duly executed by their respective
officers, all as of the day and year first above written.
HPSC GLOUCESTER FUNDING 2003-1 LLC I, as Issuer
By: /s/ Xxxx Xxxxxxxx
---------------------------
Name: Xxxx Xxxxxxxx
Title: Manager
HPSC GLOUCESTER FUNDING 2003-1 LLC II, as Issuer
By: /s/ Xxxx Xxxxxxxx
---------------------------
Name: Xxxx Xxxxxxxx
Title: Manager
HPSC, INC., as Servicer
By: /s/ Xxxx Xxxxxxxx
---------------------------
Name: Xxxx Xxxxxxxx
Title: Chief Financial Officer
HPSC, INC., as Originator
By: /s/ Xxxx Xxxxxxxx
---------------------------
Name: Xxxx Xxxxxxxx
Title: Chief Financial Officer
BNY MIDWEST TRUST COMPANY, not in its
individual capacity
but solely as Indenture Trustee
By: /s/ X. Xxxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxxx
Title: Assistant Vice President
BNY ASSET SOLUTIONS LLC, as Back-up Servicer
By: /s/ X.X. Xxxxxxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Managing Director
[Signature Page to
Servicing Agreement]
EXHIBIT A
FORM OF MONTHLY STATEMENT
A-1
EXHIBIT B
FORM OF REQUEST FOR RELEASE OF DOCUMENTS
[Date]
BNY Midwest Trust Company
0 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Re:
Servicing Agreement, dated as of [ ], 2003, among HPSC
Gloucester Funding 2003-1 LLC I and HPSC Gloucester Funding
2003-1 LLC II, as Issuers, HPSC, Inc., as Servicer, HPSC,
Inc. as Originator, and BNY Midwest Trust Company, as
Indenture Trustee
------------------------------------------------------------
In connection with the administration of the pool of Contracts held by BNY
Midwest Trust Company, as Indenture Trustee, for the benefit of the Noteholders
we request the release, and acknowledge receipt, of the (Contract File/[specify
document]) for the Contract described below, for the reason indicated.
OBLIGOR'S NAME, ADDRESS & ZIP CODE:
CONTRACT NUMBER:
REASON FOR REQUESTING DOCUMENTS (check one)
/ / 1. Contract Paid in Full.
(Servicer hereby certifies that all amounts received in
connection therewith have been credited to the Collection Account)
/ / 2. Contract Liquidated.
(Servicer hereby certifies that all proceeds of foreclosure,
insurance or other liquidation have been received and credited to
the Collection Account)
/ / 3. Contract in Foreclosure.
B-1
/ / 4. Contract Purchased. (Servicer hereby certifies that the Purchase
Amount has been deposited in the Collection Account)
/ / 5. Contract Substituted.
/ / 6. Other (explain)____________________________________________________
If box 1 or 2 above is checked, and if all or part of the Contract File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Contract.
If box 3, 4, 5 or 6 above is checked, upon our return of all of the above
documents to the Indenture Trustee, please acknowledge your receipt by signing
in the space indicated below, and returning this form.
HPSC, INC., as Servicer
By:
------------------------------
Name:
Title:
Documents returned to Indenture Trustee:
BNY MIDWEST TRUST COMPANY,
as Indenture Trustee
By:
-------------------------------
Name:
Title:
Date:
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