Exhibit 10.32
Execution Copy (10/29/96)
LEASE RECEIVABLES PURCHASE AGREEMENT
Dated as of October 18, 1996
among
HPSC BRAVO FUNDING CORP.,
as Seller
HPSC, INC.,
as Servicer
TRIPLE-A ONE FUNDING CORPORATION
and
CAPITAL MARKETS ASSURANCE CORPORATION,
as Administrative Agent and Collateral Agent
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
SECTION 1.01 Certain Definitions 1
SECTION 1.02 Accounting Terms 2
SECTION 1.03. Other Terms 2
SECTION 1.04. Computation of Time Periods 2
ARTICLE II AMOUNT AND TERMS OF THE PURCHASES
SECTION 2.01. Receivables Purchase Facility 2
SECTION 2.02. Making Purchases from the Seller. 3
SECTION 2.03. Reduction of Facility Limit. 5
SECTION 2.04. Settlement Procedures 6
SECTION 2.05. Payments and Computations, Etc. 8
SECTION 2.06. Compensation 8
SECTION 2.07. Dividing or Combining of Capital and Fixed
Periods 9
SECTION 2.08. Increased Costs, Capital Adequacy 9
SECTION 2.09. Taxes 10
SECTION 2.10. Fees 12
SECTION 2.11. Grant of Security Interest in Equipment
Collateral 12
ARTICLE III CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial
Receivables Purchase 13
SECTION 3.02. Conditions Precedent to Each Receivables
Purchase 15
ARTICLE IV REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the
Seller 16
ARTICLE V GENERAL COVENANTS
SECTION 5.01. Affirmative Covenants of the Seller 22
SECTION 5.02. Reporting Requirements of the Seller 28
SECTION 5.03. Negative Covenants of the Seller 30
ARTICLE VI ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Servicer 34
SECTION 6.02. Duties of the Servicer 34
SECTION 6.03. Rights of the Collateral Agent 37
SECTION 6.04. Further Action Evidencing Transfers 38
SECTION 6.05. Responsibilities of the Seller 39
SECTION 6.06. Administration of Collections by Servicer 39
SECTION 6.07. Application of Collections 39
SECTION 6.08. Servicing Fee 40
SECTION 6.09. Resignation; Successor Servicer 40
i
SECTION 6.10. Lock-Box Accounts; Collection Account 41
SECTION 6.11. Collection Account. 41
ARTICLE VII WIND-DOWN EVENTS; REMEDIES
SECTION 7.01. Wind-Down Events 45
SECTION 7.02. Remedies 47
ARTICLE VIII INDEMNIFICATION; REPURCHASES
SECTION 8.01. Indemnities by the Seller 48
ARTICLE IX MISCELLANEOUS
SECTION 9.01. Amendments, Etc. 50
SECTION 9.02. Notices, Etc. 51
SECTION 9.03. No Waiver; Remedies 51
SECTION 9.04. Binding Effect; Assignability 51
SECTION 9.05. GOVERNING LAW; WAIVER OF JURY TRIAL 52
SECTION 9.06. Costs, Expenses and Taxes 53
SECTION 9.07. Execution in Counterparts; Severability 53
SECTION 9.08. No Bankruptcy Petition Against Triple-A 53
ii
APPENDICES
APPENDIX A DEFINITIONS LIST
LIST OF EXHIBITS
EXHIBIT A Form of Sale Notice
EXHIBIT B Form of Opinion of Counsel
EXHIBIT C Form of Officer's Certificate
EXHIBIT D List of Offices of Originator Where Records Are Kept
EXHIBIT E Form of Interest Rate Hedge Assignment
LEASE RECEIVABLES PURCHASE AGREEMENT
LEASE RECEIVABLES PURCHASE AGREEMENT, dated as of October 18, 1996 (the
"TRIPLE-A PURCHASE AGREEMENT"), among HPSC BRAVO FUNDING CORP., a Delaware
corporation, as Seller (the "SELLER"), HPSC, INC., a Delaware corporation, as
Servicer (the "SERVICER"), TRIPLE-A ONE FUNDING CORPORATION, a Delaware
corporation ("TRIPLE-A") and CAPITAL MARKETS ASSURANCE CORPORATION, a New York
stock insurance company ("CapMAC"), as Collateral Agent and as Administrative
Agent (in such capacities, the "COLLATERAL AGENT" or the "ADMINISTRATIVE
AGENT").
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement, the Seller has agreed to
purchase and otherwise acquire certain Transferred Assets from time to time from
HPSC, Inc., a Delaware corporation (the "ORIGINATOR") and the Originator has
agreed to act as Servicer of the Transferred Assets; and
WHEREAS, the Seller has requested that Triple-A make Receivables Purchases
from the Seller, the proceeds of which shall be used by the Seller to purchase
new Transferred Assets from the Originator in accordance with the terms of the
Purchase Agreement; and
WHEREAS, Triple-A will fund such Receivables Purchases by (i) the issuance
of Commercial Paper or (ii) if Triple-A is unable for any reason to issue
Commercial Paper, by borrowing under the Liquidity Agreement, dated as of the
date hereof, among Triple-A, the Liquidity Banks and the Liquidity Agent; and
WHEREAS, Capital Markets Assurance Corporation (the "SURETY"), the Seller
and Triple-A will enter into the Insurance and Indemnity Agreement pursuant to
which the Surety will issue the Surety Bonds; and
WHEREAS, subject to the terms and conditions set forth herein, Triple-A is
willing to make the Receivables Purchases from the Seller.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 CERTAIN DEFINITIONS. As used in this Triple-A Purchase
Agreement or any certificate or other document made or delivered pursuant hereto
or thereto, the capitalized terms used herein and therein shall, unless
otherwise defined herein or therein, have the meanings assigned to them in the
Definitions List attached hereto as Appendix A, the terms of which are
incorporated herein by reference (the "DEFINITIONS LIST").
SECTION 1.02. ACCOUNTING TERMS. As used herein and in any certificate or
other document made or delivered pursuant hereto and thereto, accounting terms
not defined in the Definitions List and accounting terms partly defined in the
Definitions List to the extent not defined, shall have the respective meanings
given to them under GAAP.
SECTION 1.03. OTHER TERMS.
(a) All other undefined terms contained in this Triple-A Purchase
Agreement shall, unless the context indicates otherwise, have the meanings
provided for by the UCC to the extent the same are used or defined therein.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Triple-A Purchase Agreement shall refer to this
Triple-A Purchase Agreement as a whole and not to any particular provision
of this Triple-A Purchase Agreement, and Section, subsection, Schedule and
Exhibit references are to this Triple-A Purchase Agreement unless otherwise
specified.
(c) Capitalized terms used herein shall be equally applicable to both
the singular and plural forms of such terms.
SECTION 1.04. COMPUTATION OF TIME PERIODS. In this Triple-A Purchase
Agreement, in the computation of periods of time from a specified date to a
later specified date, the word "from" shall mean "from and including" and the
words "to" and "until" shall each mean "to but excluding."
ARTICLE II
AMOUNT AND TERMS OF THE PURCHASES
SECTION 2.01. RECEIVABLES PURCHASE FACILITY. Triple-A may, in its sole
discretion and otherwise subject to the terms and conditions hereinafter set
forth, make purchases of Receivables ("RECEIVABLES PURCHASES") from time to time
on any Settlement Date (except that the initial Receivables Purchase may be on a
date other than a Settlement Date) during the period from the date the
conditions precedent in SECTION 3.01 are satisfied to the Termination Date.
Each Receivables Purchase shall constitute an assignment and sale by the Seller,
and a purchase and acquisition by Triple-A of Purchased Assets, including,
without limitation, designated Eligible Receivables, Related Security and
Collections with respect thereto. Under no circumstances shall Triple-A make
any Receivables Purchase if, after giving effect to such Receivables Purchase,
the aggregate outstanding Capital hereunder would exceed the least of (i) the
Facility Limit, (ii) the Capital Limit, or (iii) the sum, on such Receivables
Purchase Date, of (a) the net proceeds from the sale of Commercial Paper PLUS
(b) the proceeds of Advances. The Capital Limit in effect on any date shall be
determined by reference to the most recent Settlement Report delivered by the
Seller to Triple-A in accordance with SECTION 5.02(f) hereof (i) as adjusted on
the most recent Settlement Date to reflect additional Eligible Receivables sold
on such Settlement Date since the delivery of such Settlement Report and (ii) as
adjusted on any
- 2 -
other date of determination to eliminate from the Discounted Eligible
Receivables Balance any Receivables which were Eligible Receivables as of the
dates reflected in the Settlement Report but which no longer satisfy the
criteria for Eligible Receivables. Nothing in this Triple-A Purchase Agreement
shall be deemed to be or construed as a commitment by Triple-A to make
Receivables Purchases at any time. It is the intention of the parties hereto
that each Receivables Purchase to be made hereunder shall constitute either
(i) a "sale of accounts or chattel paper", as such term is used in Article 9 of
the UCC, or (ii) a sale of "instruments", as such term is used in Article 9 of
the UCC. If at any time a court characterizes the transactions hereunder as
loans by Triple-A to the Seller, then the Seller hereby pledges, grants a
security interest in and assigns to the Collateral Agent, for the benefit of
Triple-A, all of the right and title to and interest in the Purchased Assets,
including the Purchased Receivables and the Related Security, Collections and
Equipment related thereto, as security for such loans and for the payment and
performance of all obligations of the Seller hereunder.
SECTION 2.02. MAKING PURCHASES FROM THE SELLER.
(a) Sale Notice. Whenever the Seller wishes to sell Receivables
hereunder, it shall deliver to Triple-A a notice ("Sale Notice") in
substantially the form of Exhibit A hereto no later than 10:00 A.M. (New
York City time) on the Business Day immediately prior to the proposed
Receivables Purchase Date; provided that, in the case of any Capital funded
as part of a Receivables Purchase with respect to which Yield is to be
calculated at the Eurodollar Rate, such Sale Notice must be given not later
than 10:00 A.M. (New York City time) at least three (3) Business Days prior
to the proposed Receivables Purchase Date. Each Sale Notice shall be by
telephone, telex, telecopy, cable or other facsimile transmission (in the
case of any such Sale Notice by telephone, confirmed immediately in
writing) and shall specify therein the (i) aggregate initial Capital to be
funded in connection with such Receivables Purchase, (ii) the date of such
Receivables Purchase and (iii) the duration of the initial Fixed Period(s)
for such Capital.
(b) Amount of Purchased Assets; Deferred Purchase Price. The
consideration for each Receivables Purchase shall consist of the Capital
funded under this Agreement and the obligation of the Purchaser to remit to
the Seller the Deferred Purchase Price. The amount of the Deferred
Purchase Price shall be initially computed as of the opening of business of
the Collection Agent on the date of the initial Receivables Purchase
hereunder. Thereafter until the Termination Date, the amount of the
Deferred Purchase Price shall be automatically recomputed as of the close
of business of the Collection Agent on each day on which the aggregate
Capital hereunder is increased or decreased or on which any funds are
remitted to the Seller in satisfaction thereof under clause (v) of
Section 6.11(b). From and after the Termination Date until the Collection
Date, the Deferred Purchase Price shall be automatically recomputed on each
Business Day to reflect any reductions in the amount hereof on account of
accrued Yield, Carrying Costs, or other amounts owed by (or paid on behalf
of) the Seller under this Agreement. The Purchased Assets shall become
zero at such time as Triple-A shall have recovered the aggregate
outstanding Capital and shall have received all other amounts payable to
Triple-A pursuant to this Triple-A Purchase Agreement and the Seller has
received
- 3 -
payment of the Deferred Purchase Price. The Purchased Assets and the
Deferred Purchase Price shall each remain constant from the time as of
which any such computation or recomputation is made until the time as of
which the next such recomputation, if any, shall be made. Triple-A shall,
in consideration of the sale of the Purchased Assets, from and after the
Collection Date, remit to the Seller with the proceeds of Collections in
respect of the Purchased Assets, in satisfaction of the Deferred Purchase
Price; provided that, from and after the date that the Outstanding Balance
of the Purchased Receivables is less than or equal to 10% of the
Outstanding Balance of the Purchased Receivables as of the Termination
Date, the Administrative Agent may, in lieu of continuing to make such
remittances, by at least three (3) Business Days' prior written notice to
the Seller, reassign to the Seller all of Triple-A's right, title and
interest in and to the Purchased Assets in full satisfaction of the
Deferred Purchase Price. It is expressly understood and agreed that the
Deferred Purchase Price shall be payable solely through Collections and
other proceeds of the Purchased Assets and that none of Triple-A, the
Administrative Agent, the Collateral Agent nor any Liquidity Bank shall
have any personal liability for the payment of the Deferred Purchase Price.
(c) Selection of Fixed Periods. Promptly upon receiving each Sale
Notice, the Administrative Agent shall, following its review of the
Seller's proposal, select Fixed Periods for all Capital so that all
outstanding Capital is at all times allocated to a Fixed Period (it being
understood that if the Seller does not propose a specific Fixed Period, the
Administrative Agent shall select such Fixed Period in its discretion).
The initial Fixed Period for any Capital shall be specified in the Sale
Notice described in subsection (a) hereof. At least one Business Day prior
to the last day of each Fixed Period for any Capital allocated to such
Fixed Period, the Seller shall request new Fixed Periods for such Capital;
provided that, in the case of any Fixed Period for Capital for which Yield
is to be determined by reference to the Eurodollar Rate, such request shall
be given not later than 10:00 A.M. (New York City time) at least three (3)
Business Days prior to the last day of the relevant Fixed Period. The
Administrative Agent shall, on the date of any Receivables Purchase
hereunder and, so long as any Capital related to such Receivables Purchase
is outstanding, on the first day of each successive Fixed Period for such
Capital, notify the Collateral Agent and the Seller of the duration of the
relevant Fixed Period and the Yield which will be applicable to the Capital
during such Fixed Period. Any Fixed Period that commences before the
Termination Date and would otherwise end on a date occurring after the
Termination Date shall end on the Termination Date and the duration of any
Fixed Period that commences on or after the Termination Date shall be of
such duration as shall be selected by the Administrative Agent. In
addition, if a CP Disruption shall have occurred and be continuing,
Triple-A, or the Administrative Agent on its behalf, may, upon notice to
the Originator and the Seller, terminate any Fixed Period then in effect if
Triple-A has funded the Capital allocated to such Fixed Period by issuing
Commercial Paper. All outstanding Capital shall be assigned a Fixed Period
at all times, which Fixed Periods will be limited as set forth in the
definition thereof.
(d) Funding. Triple-A shall, before 3:00 P.M. (New York City time)
on the proposed Receivables Purchase Date of each Receivables Purchase,
subject to the
- 4 -
applicable conditions set forth in Article IV, make available to the Seller
a wire transfer of such funds to the Seller in accordance with the Seller's
written wire transfer instructions.
SECTION 2.03. REDUCTION OF FACILITY LIMIT. The Seller shall have the
right, at any time upon at least three (3) Business Days' notice to Triple A, to
terminate in whole or reduce in part the unused portion of the Facility Limit in
a minimum amount of $10,000,000 and increments of $1,000,000 in excess thereof;
PROVIDED that if the aggregate of the simultaneous reductions in the Facility
Limit hereunder and under the Credit Agreement satisfy such test, the Seller may
reduce the unused portion of the Facility Limit hereunder in a minimum amount of
$3,000,000 and increments of $600,000 in excess thereof; PROVIDED, that in no
event shall the Facility Limit be reduced to less than the amount of Capital
then outstanding. Any such termination shall be without premium or penalty of
any kind, except for any indemnification which may be owed in connection with
such termination pursuant to SECTION 2.06 and SECTION 8.01.
SECTION 2.04. SETTLEMENT PROCEDURES.
(a) Any Collections of Purchased Receivables received (or deemed to
have been received) by the Seller shall be remitted directly to Triple-A by
depositing such Collections in the Lock-Box Account within one Business Day
of Seller's receipt (or deemed receipt) thereof. On each Payment Date, the
Seller shall pay to Triple-A (i) Yield on all outstanding Capital the Fixed
Period for which ends on such date plus (ii) the CP Dealer Fees, if any, on
any Commercial Paper maturing on such date and raised to fund such Capital.
(b) On each Settlement Date to occur prior to the Designated
Termination Date, the Seller shall either:
(i) if Triple-A has consented thereto, sell additional
Receivables hereunder in accordance with the procedures
and subject to the conditions set forth in Section 2.01
such that, immediately following such Receivables Purchase,
the Capital Limit equals or exceeds outstanding Capital, in
which event the Collateral Agent shall, subject to the
order of priority set forth in Section 6.11(b), remit the
Collections so set aside to the Seller in consideration of
the purchase price for such Receivables Purchase; or
(ii) if Triple-A has not consented to such additional purchase,
out of the Collections so set aside, direct the Collateral
Agent to remit to the Administrative Agent, subject to the
order of priority set forth in Section 6.11, an amount of
such Collections to be applied toward the reduction of
outstanding Capital such that, following the application of
such Collections to outstanding Capital, the Capital Limit
equals or exceeds the outstanding Capital.
- 5 -
(c) On each Payment Date from and after the Designated Termination
Date, the Seller shall direct the Collateral Agent to distribute to the
Administrative Agent for the benefit of Triple-A, to be applied toward the
reduction of outstanding Capital, all Collections so set aside but not to
exceed the sum of (i) the Capital allocated to such Fixed Period, (ii) all
accrued and unpaid Yield thereon, and (iii) the aggregate of all other
amounts owed hereunder by the Seller to Triple-A and/or the Administrative
Agent, all as more fully set forth in Section 6.11.
(d) If on any day the Outstanding Balance of any Purchased Receivable
is either (i) reduced or adjusted as a result of any defective, rejected,
returned, repossessed or foreclosed merchandise, any defective or rejected
services, any cash discount or any other adjustment made or performed by
the Seller or any other Person (including, without limitation, those
described in the definition of "Dilution Factors"), or (ii) reduced or
canceled as a result of a setoff in respect of any claim by the Obligor
thereof against the Seller or any other Person (whether such claim arises
out of the same or a related transaction or an unrelated transaction), the
Seller shall be deemed to have received on such day a Collection of such
Purchased Receivable in the amount of such reduction, cancellation or
adjustment. If on any day any of the representations or warranties in
Section 4.01(g) is no longer true with respect to a Purchased Receivable or
if the Seller has breached its obligations under Section 5.01(j), then the
Seller shall be deemed to have received on such day a Collection of such
Purchased Receivable: (x) if such representation, warranty or covenant
relates to the non-existence of any Adverse Claims, the Seller shall be
deemed to have received a Collection of such Purchased Receivable in the
dollar amount of the Adverse Claims attaching thereto and (y) if such
representation or warranty relates to the validity or perfection of the
transfer of such Purchased Receivable under this Triple-A Purchase
Agreement or the perfection of Triple-A's security interest in any
Equipment as against the Obligor thereunder, then the Seller be deemed to
have received a Collection of such Purchased Receivable in an amount equal
to the Outstanding Balance thereof. To the extent that any such deemed
Collection reduces the Outstanding Balance of such Purchased Receivable to
zero, then, upon the Seller's payment to the Collateral Agent of such
deemed Collection, the Collateral Agent shall re-assign to the Seller all
of its right, title and interest in and to the relevant Purchased
Receivable, the Contract under which such Purchased Receivable arose and
the Related Security relating thereto.
(e) Although the Originator, the Seller and Triple-A agree that the
Originator shall have no right to so terminate, reject or not assume a
Contract, if the Originator in its capacity as Servicer (or its successor
in interest, including a trustee appointed under the Bankruptcy Code)
terminates, rejects or does not assume a Contract, in whole or in part,
prior to the expiration of the original term of such Contract, whether such
rejection, termination or non-assumption is made pursuant to an equitable
cause, statute, regulation, judicial proceeding or other applicable law
(including, without limitation, Section 365 of the Bankruptcy Code), then
(i) the Seller shall be deemed to have received Collections with respect to
Purchased Receivables arising under such Contract in an amount equal to
(A) in the event of a prepayment or termination consented to by the
Originator at the
- 6 -
Obligor's request, the excess, if any, of the Termination Amount over all
amounts paid by the Obligor on account of such termination or (B) in the
event of any other rejection or non-assumption, the amount, of the
Outstanding Balance thereof that has not been, or may not be paid as a
result of such rejection, termination or non-assumption. Upon the Seller's
payment of any such deemed Collections described in this Section 2.05(e),
the Collateral Agent shall re-assign to the Seller all of its right, title
and interest in and to the relevant Purchased Receivable or Purchased
Receivables, the Contracts under which such Purchased Receivable(s) arose
and the Related Security relating thereto.
SECTION 2.05. PAYMENTS AND COMPUTATIONS, ETC. All amounts to be paid or
deposited by the Seller hereunder shall be paid or deposited by the Seller in
immediately available funds to Triple-A not later than 1:00 P.M. (New York City
time) on the date on which payable. Payments received by Triple-A after such
time shall be deemed to have been received on the next Business Day. All
payments by the Seller under this Triple-A Purchase Agreement shall be made
without setoff, deduction or counterclaim and the Seller agrees to pay on demand
any present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Triple-A Purchase Agreement. Whenever any payment to be made hereunder
shall be stated to be due on a day which is not a Business Day, the due date
thereof shall be extended to the next applicable Business Day and interest shall
be payable at the applicable rate during such extension; PROVIDED, that if such
extension would be inconsistent with one of the provisions set forth in the
definition of "Fixed Period", then such provision shall control.
SECTION 2.06. COMPENSATION. The Seller shall compensate Triple-A, upon
its written request, for all losses, expenses and liabilities, including,
without limitation, any indemnification payments owed by Triple-A pursuant to
the Liquidity Agreement, on account of any liquidation or reemployment of
deposits or other funds acquired by such party to make, fund or maintain Capital
hereunder, (i) if for any reason a Receivables Purchase does not occur on a date
specified therefor in the Sale Notice; (ii) if for any reason any payment,
prepayment or conversion of any Capital occurs on a date which is not the last
day of the Fixed Period for such Capital or (iii) as a consequence of any
required conversion of any Eurodollar Rate Advance prior to the last day of the
Fixed Period for the relevant Capital. Any request for compensation under this
SECTION 2.06 shall be accompanied by a copy of a statement from Triple-A setting
forth in reasonable detail the basis for requesting compensation and the
determination of the amount thereof in such statement shall be conclusive and
binding for all purposes, absent manifest error.
SECTION 2.07. DIVIDING OR COMBINING OF CAPITAL AND FIXED PERIODS. The
Seller may, on notice to and with the consent of the Administrative Agent
received at least one Business Day prior to the last day of any Fixed Period,
either (a) divide such Capital so as to allocate such Capital to two or more
Fixed Periods, or (b) combine such Capital with other Capital originating on
such last day or having Fixed Periods ending on such last day so as to allocate
all such Capital to a single Fixed Period. On and after the Termination Date,
the Administrative Agent shall have the right to divide and/or combine Capital
for purposes of allocation to Fixed Periods in any manner which it may select in
its sole discretion.
- 7 -
SECTION 2.08. INCREASED COSTS, CAPITAL ADEQUACY.
(a) If, after the date hereof due to either (i) the introduction of
or any change in or to the interpretation of any law or regulation by the
governmental authority that promulgated or administers compliance with such
law or regulation (other than laws or regulations with respect to income
taxes or any change by way of imposition or increase of reserve
requirements included in the Eurodollar Reserve Percentage) or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority or similar agency (whether or not having the force
of law), and taking into account the obligations of the Liquidity Banks
under the Liquidity Agreement and otherwise in connection with Triple-A's
asset-supported financing business, any reserve or deposit or similar
requirement shall be imposed, modified or deemed applicable or, any basis
of taxation shall be changed or any other condition shall be imposed, and
there shall be any increase in the cost to Triple-A (either directly or
indirectly through any increase in the costs to the Liquidity Banks) of
making, funding, or maintaining Receivables Purchases or in the cost to
Triple-A of agreeing to make, fund, or maintain Receivables Purchases
(including the reduction of any sum received or Receivable hereunder), then
the Seller shall from time to time, upon demand by Triple-A by the
submission of the certificate described below, pay to Triple-A additional
amounts sufficient to compensate Triple-A for such increased cost. A
certificate setting forth in reasonable detail the amount of such increased
cost submitted to the Seller by Triple-A shall be conclusive and binding
for all purposes, absent manifest error.
(b) If Triple-A or any Liquidity Bank determines that compliance with
any law or regulation or any guideline or request or any written
interpretation from any central bank or other governmental authority or
similar agency (whether or not having the force of law) which is
introduced, implemented or received by Triple-A or such Liquidity Bank
after the date hereof, affects or would affect capital adequacy or the
amount of capital required or expected to be maintained by Triple-A or such
Liquidity Bank or any corporation controlling Triple-A or such Liquidity
Bank and that the amount of such capital is increased by or based upon the
Triple-A Loans or the existence of this Triple-A Purchase Agreement or upon
the Advances or such Liquidity Bank's commitment to lend under the
Liquidity Agreement and other commitments of that type, or has or would
have the effect of reducing the rate of return on capital, then, upon
demand by Triple-A by the submission of the certificate described below,
the Seller shall pay to Triple-A, from time to time as specified by
Triple-A, additional amounts sufficient to compensate Triple-A or such
corporation in the light of such circumstances, to the extent that Triple-A
reasonably determines such increase in capital to be allocable to the
Receivables Purchases or the existence of this Triple-A Purchase Agreement
or to the extent that Triple-A owes compensation to a Liquidity Bank in
respect of or on account of such events. A certificate setting forth in
reasonable detail such amounts submitted to the Seller by Triple-A shall be
conclusive and binding for all purposes, absent manifest error.
(c) In the event that Triple-A requests compensation for increased
costs on behalf of any Liquidity Bank under this Section 2.08 and such
increased costs are not
- 8 -
being requested by the other Liquidity Banks generally or, if only one
Liquidity Bank exists, by Triple-A's liquidity providers for similar
transactions, then Triple-A shall, promptly following identification by the
Seller of an "Eligible Assignee" (as defined in the Liquidity Agreement)
willing to accept such commitment, cause the Liquidity Bank requesting such
increased costs to assign its outstanding Advances and commitments under
the Liquidity Agreement to such Eligible Assignee, all as more particularly
described in Section 8.06(g) of the Liquidity Agreement.
SECTION 2.09. TAXES.
(a) All payments made by the Seller under this Triple-A Purchase
Agreement shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any
governmental authority having taxing authority, excluding net income taxes
and franchise taxes (imposed in lieu of income taxes) imposed on Triple-A,
as a result of any present or former connection between the jurisdiction of
the government or taxing authority imposing such tax or any political
subdivision or taxing authority thereof or therein and Triple-A (excluding
a connection arising solely from Triple-A having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Triple-A Purchase Agreement) (all such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions and withholdings being hereinafter called
"Taxes"). If any Taxes are required to be withheld from any amounts
payable by the Seller, (i) the sum payable shall be increased as may be
necessary so that, after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.09),
Triple-A receives an amount equal to the sum it would have received had no
such deductions been made, (ii) the Seller shall make such deductions, and
(iii) the Seller shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
(b) In addition, the Seller agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges, or
similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Triple-A Purchase Agreement (hereinafter "Other Taxes").
(c) The Seller will indemnify Triple-A for the full amount of Taxes
or Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.09)
paid by Triple-A and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. Whenever any Taxes
are payable by the Seller, as promptly as possible thereafter the Seller
shall send to Triple-A, a certified copy of an original official receipt
received by the Seller showing payment thereof. If the Seller fails to pay
any Taxes when due to the appropriate taxing authority or fails to remit to
Triple-A the required receipts or other required documentary evidence, the
Seller shall indemnify Triple-A for any incremental
- 9 -
Taxes, interest or penalties that Triple-A is legally required to pay as a
result of any such failure. The agreements in this subsection shall
survive the termination of this Triple-A Purchase Agreement.
SECTION 2.10. FEES. In further consideration of the Receivables Purchases
to be made hereunder, the Seller agrees to pay to the Administrative Agent and
Triple-A all fees specified in the Fee Letter of even date herewith, which fees
will be due and payable at the times and in the manner set forth in such Fee
Letter.
SECTION 2.11. GRANT OF SECURITY INTEREST IN EQUIPMENT COLLATERAL.
(a) As security for the payment and performance of all the
obligations of the Seller hereunder and as additional enhancement to enable
Triple-A, the Liquidity Banks and CapMAC to fully recover Capital and
accrued and unpaid Yield and fees, the Seller hereby grants to the
Collateral Agent, for the benefit of Triple-A, the Liquidity Banks and
CapMAC, a security interest in all of the Seller's right, title and
interest in and to the following, whether now owned or hereafter acquired
and whether now existing or hereafter arising (the "Equipment Collateral"):
all Equipment which is the subject of a Contract for any Purchased
Receivable and substitutions therefor and products and proceeds thereof,
including, without limitation, all payments under insurance (whether or not
the Collateral Agent is the loss payee thereof) or any indemnity, warranty
or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing.
(b) The Seller shall, at its expense, promptly execute and deliver
all further instruments and documents, and take all further action
(including, without limitation, the execution and filing of such financing
or continuation statements, or amendments thereto and assignments thereof),
that may reasonably be necessary or desirable, or that the Administrative
Agent may request, in order to perfect and protect any security interest
granted or purported to be granted to the Collateral Agent hereunder or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Equipment Collateral. The Seller hereby
authorizes the Collateral Agent to file one or more financing or
continuation statements, and amendments thereto and assignments thereof,
relative to all or any part of the Equipment Collateral now existing or
hereafter arising without the signature of the Seller where permitted by
law. A carbon, photographic or other reproduction of the Triple-A Purchase
Agreement of any financing statement covering the Equipment Collateral or
any part thereof shall be sufficient as a financing statement.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. CONDITIONS PRECEDENT TO INITIAL RECEIVABLES PURCHASE. The
agreement of Triple-A to make a Receivables Purchase on the occasion of the
initial Receivables Purchase Date hereunder is subject to satisfaction of the
following conditions precedent:
- 10 -
(a) Triple-A shall have received, on or before the initial
Receivables Purchase Date, all of the following, each fully executed and in
form and substance satisfactory to Triple-A:
(i) This Triple-A Purchase Agreement;
(ii) The Custodial Agreement and the Lock-Box Agreements;
(iii) A copy of the resolutions of the Board of Directors of
the Seller approving this Triple-A Purchase Agreement
and all other documents and instruments to be delivered
hereunder or thereunder by the Seller, certified by its
Secretary or Assistant Secretary;
(iv) A certificate of the Secretary or an Assistant
Secretary of the Seller certifying (A) the names and
true signatures of the officers of the Seller
authorized to sign this Triple-A Purchase Agreement and
the other documents and instruments to be delivered by
the Seller pursuant hereto or thereto (on which
certificate Triple-A may conclusively rely until such
time as Triple-A shall receive from the Seller a
revised certificate meeting the requirements of this
subsection (iv)) and (B) a true and complete copy of
the By-laws of the Seller;
(v) A certificate executed by an officer of the Seller
certifying that as of the initial Receivables Purchase
Date, all of the representations and warranties
contained in Article IV hereof are true and accurate in
all material respects with the same force and effect as
though such representations and warranties had been
made as of such time;
(vi) The Certificate of Incorporation of the Seller,
certified by the Secretary of State of Delaware;
(vii) Good Standing Certificates for the Seller issued by the
Secretaries of the States of Delaware and
Massachusetts;
(viii) Certificates executed by an officer of the Seller and
the Originator relating to solvency;
(ix) An opinion of Hill & Xxxxxx, counsel to the Seller, in
substantially the form of Exhibit B and as to such
other matters as Triple-A may reasonably request;
(x) An opinion of Hill & Xxxxxx, counsel to the Seller, in
form and substance reasonably satisfactory to the
Collateral Agent, that, in
- 11 -
the event of any Insolvency Proceeding filed by or
against the Originator, the Transferred Assets would
not be treated as property of the Originator's estate
and that the Seller's assets and liabilities would not
be substantively consolidated with those of the
Originator;
(xi) Acknowledgment copies of proper UCC-1 Financing
Statements executed by the Seller, as may be necessary
or, in the opinion of the Administrative Agent,
desirable under the UCC of all appropriate
jurisdictions or any comparable law to perfect the
Collateral Agent's interests in all Purchased
Receivables, Contracts and Related Security in which an
interest may be acquired hereunder;
(xii) Certified copies of Requests for Information or Copies
(Form UCC-11) (or a similar search report certified by
a party acceptable to the Buyer), dated a date
reasonably near to the date hereof, listing all
effective financing statements which name the
Originator or the Seller (under its present name and
any previous names) as debtor and which are filed in
the jurisdictions in which filings were made pursuant
to subsection (xi) of this Section 3.01, together with
copies of such financing statements;
(xiii) An Officer's Certificate in the form of Exhibit C,
executed by the President or the Treasurer of the
Seller;
(xiv) The Fee Letter;
(xv) The Insurance Agreement;
(xvi) The Surety Bonds; and
(xvii) The Liquidity Agreement;
(b) All fees and expenses due and owing as of the initial Receivables
Purchase Date under the Fee Letter shall have been paid;
(c) The Administrative Agent shall have received confirmation from
Standard & Poor's Corporation and Xxxxx'x Investors Services, Inc. that the
terms and conditions of the Receivables Purchases satisfy the criteria of
such rating agencies for "investment-grade" transactions without giving
effect to the Surety Bonds; and
(d) Triple-A shall have received such other approvals or documents as
it may reasonably request.
- 12 -
SECTION 3.02. Conditions Precedent to Each Receivables Purchase. The
agreement of Triple-A to make a Receivables Purchase on the occasion of each
Receivables Purchase Date (including the initial Receivables Purchase) shall be
subject (i) to Triple-A's receipt of (A) a Settlement Statement for the most
recent calendar month then ended, (B) a notice from the Custodian in
substantially the form of Exhibit A to the Custodial Agreement confirming that
the Custodian has received the Contract Files required to be delivered to it
pursuant to Section 6.04(b) hereof and (C) such other approvals or documents as
Triple-A may reasonably request and (ii) to the condition precedent that on the
Receivables Purchase Date of such Receivables Purchase, before and after giving
effect to such Receivables Purchase and to the application of the proceeds
therefrom, the following statements shall be true (and each of the giving of the
applicable Sale Notice and the acceptance by the Seller of the proceeds of such
Receivables Purchase shall constitute a representation and warranty by the
Seller that on the Receivables Purchase Date of such Receivables Purchase,
before and after giving effect thereto and to the application of the proceeds
therefrom, such statements are true):
(i) the representations and warranties contained in
Article IV hereof and all representations and
warranties of the Originator in the Purchase Agreement
are true and accurate as of the Receivables Purchase
Date in all material respects with the same force and
effect as though such representations and warranties
had been made as of such time;
(ii) no event has occurred and is continuing, or would
result from such Receivables Purchase, which
constitutes an Event of Termination or an Unmatured
Event of Termination or a Wind-Down Event or Unmatured
Wind-Down Event;
(iii) the outstanding amount of all Capital after giving
effect to such Receivables Purchase shall be equal to
or less than the Capital Limit; and
(iv) the proceeds of such Receivables Purchase shall be used
to fund a Purchase of Transferred Assets under the
Purchase Agreement to occur simultaneously with such
Receivables Purchase and all conditions to such
Purchase under the Purchase Agreement on such date have
been satisfied or waived.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Seller. The Seller
represents and warrants to Triple-A that:
(a) Due Incorporation and Good Standing. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. The Seller is duly qualified to do business
as a foreign corporation and is in good standing in every jurisdiction in
which the nature of its business requires it to be so qualified or where
the ownership of its properties or the nature of its activities makes
- 13 -
such qualification necessary, except where the failure to be so qualified
would not materially adversely affect (i) the collectibility of the
Purchased Assets, (ii) the collectibility of any Receivable, (iii) the
business, properties, operations, prospects, profits or condition
(financial or otherwise) of the Seller or (iv) the ability of the Seller to
perform its obligations hereunder and under the other Facility Documents to
which it is a party.
(b) Due Authorization and No Conflict. The execution, delivery and
performance by the Seller of this Triple-A Purchase Agreement and all other
Facility Documents and the transactions contemplated hereby and thereby,
including the acquisition of the Transferred Assets under the Purchase
Agreement and the purchases contemplated hereunder, are within the Seller's
corporate powers, have been duly authorized by all necessary corporate
action, do not contravene (i) the Seller's charter or by-laws, (ii) any
law, rule or regulation applicable to the Seller, (iii) any contractual
restriction contained in any indenture, loan or credit agreement, lease,
mortgage, security agreement, bond, note, or other agreement or instrument
binding on or affecting the Seller or its property or (iv) any order, writ,
judgment, award, injunction or decree binding on or affecting the Seller or
its property, and do not result in or require the creation of any Adverse
Claim upon or with respect to any of its properties; and no transaction
contemplated hereby requires compliance with any bulk sales act or similar
law. This Triple-A Purchase Agreement and the other Facility Documents to
which the Seller is a party have been duly executed and delivered on behalf
of the Seller.
(c) Governmental and Other Consents. Except for the filing of
financing statements pursuant to the UCC required to perfect the security
interests granted hereunder or under the other Facility Documents and
except for consents under certain contractual agreements which have been
obtained, no authorization, consent, approval or other action by, and no
registration, qualification, designation, declaration, notice to or filing
with, any governmental authority or other Person is or will be necessary in
connection with the execution and delivery of this Triple-A Purchase
Agreement or any other Facility Document to which the Seller is a party or
any of the other documents contemplated hereby or thereby, consummation of
the transactions herein or therein contemplated, or performance of or
compliance with the terms and conditions hereof or thereof, to ensure the
legality, validity or enforceability hereof or thereof.
(d) Enforceability of Facility Documents. This Triple-A Purchase
Agreement and each of the other Facility Documents to which the Seller is a
party have been duly and validly executed and delivered by the Seller and
constitute the legal, valid and binding obligation of the Seller
enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
relating to or affecting creditors' rights generally and by equitable
principles.
(e) No Litigation. There are no actions, suits or proceedings at law
or in equity or by or before any governmental authority now pending or, to
the knowledge of the Seller, threatened against or affecting the Seller or
any property or rights of the Seller
- 14 -
which purport to challenge the legality, validity or enforceability of this
Triple-A Purchase Agreement or any other Facility Document or which may
materially impair the ability of the Seller to carry on business
substantially as now being conducted or which may materially adversely
affect the condition (financial or otherwise), operations or properties of
the Seller.
(f) Use of Proceeds. No proceeds of any Receivables Purchase will be
used by the Seller other than to fund a Purchase of Transferred Assets from
the Originator except that the Seller may net from the Purchase Price paid
to the Originator reasonable and necessary amounts for the funding of its
operating expenses.
(g) Valid Title and Perfected Interest. Each Receivable, together
with the Contract related thereto, is owned by the Seller free and clear of
any Adverse Claim except as provided herein or in the Credit Agreement and,
upon the making of each Receivables Purchase, Triple-A shall acquire a
valid and perfected first priority undivided percentage ownership interest,
to the extent of the Purchased Assets, in each Purchased Receivable then
existing or thereafter arising and in the Related Security and Collections
with respect thereto, in each case free and clear of any Adverse Claim
except as provided hereunder or under the Credit Agreement, the Liquidity
Agreement or the Liquidity Security Agreement (except that the Collateral
Agent will not have a perfected security interest in any Collateral
constituting Equipment which is owned by the Seller and located in a state
other than The Commonwealth of Massachusetts); and no effective financing
statement or other instrument similar in effect covering any Purchased
Receivable or the Related Security or Collections with respect thereto
shall at any time be filed except in favor of the Collateral Agent in
accordance with this Triple-A Purchase Agreement and the Credit Agreement.
(h) Accuracy of Information. All certificates, reports, financial
statements and similar writings furnished by or on behalf of the Seller to
Triple-A, the Collateral Agent, or the Administrative Agent at any time
pursuant to any requirement of, or in response to any written request of
any such party under, this Triple-A Purchase Agreement or any other
Facility Document or any transaction contemplated hereby or thereby, have
been, and all such certificates, reports, financial statements and similar
writings hereafter furnished by the Seller to such parties will be, true
and accurate in every respect material to the transactions contemplated
hereby on the date as of which any such certificate, report, financial
statement or similar writing was or will be delivered, and shall not omit
to state any material facts or any facts necessary to make the statements
contained therein not materially misleading.
(i) Governmental Regulations. The Seller is not an "investment
company" or a company controlled by an "investment company" registered or
required to be registered under the Investment Company Act of 1940, as
amended, or otherwise subject to any other federal or state statute or
regulation limiting its ability to incur indebtedness.
- 15 -
(j) Margin Regulations. The Seller is not engaged, principally or as
one of its important activities, in the business of extending credit for
the purpose of "purchasing" or "carrying" any "margin stock" (as each of
the quoted terms is defined or used in Regulation G, T, U or X). No part
of the proceeds of any Receivables Purchase has been used for so purchasing
or carrying margin stock or for any purpose which violates, or which would
be inconsistent with, the provisions of Regulation G, T, U or X.
(k) Location of Chief Executive Office and Records. The chief place
of business and chief executive office of the Seller are located at the
address referred to in Exhibit D hereof and the locations of the offices
where the Seller keeps all the Records are listed on Exhibit D (or at such
other locations, notified to the Collateral Agent in accordance with
Section 5.01(f), in jurisdictions where all action required by Section 6.04
has been taken and completed).
(l) Lock-Box Accounts. Each Obligor under a Contract has, within one
month of the date of Purchase of such Contract, been instructed to remit
payment on the Receivables to a Post Office Box for remittance to a
Lock-Box Account or directly to a Lock-Box Account substantially in the
form of Exhibit G to the Purchase Agreement. From and after the initial
Purchase Date, the Originator will have no right, title and/or interest to
any of the Lock-Box Accounts and will maintain no lock-box accounts in its
own name for the collection of such Receivables. The Seller has caused the
Originator to deliver to the Collateral Agent a duplicate key to each Post
Office Box and has filed a standing delivery order with the United States
Postal Service authorizing the Collateral Agent to receive mail delivered
to each such Post Office Box. The account numbers of all Lock-Box
Accounts, together with the names and addresses of all the Lock-Box Banks
maintaining such Lock-Box Accounts and the related Post Office Boxes, are
specified in Exhibit H to the Purchase Agreement. The Seller has no other
Lock-Box Accounts for the collection of the Transferred Assets except for
the Lock-Box Accounts.
(m) No Trade Names. The Seller has no trade names, fictitious names,
assumed names or "doing business as" names.
(n) Separate Identity. The Seller is operated as an entity separate
from the Originator and each other Subsidiary of the Originator and (i) has
its own board of directors, (ii) has at least one director who is
reasonably acceptable to Triple-A and who is not a direct, indirect or
beneficial stockholder, officer, director, employee, affiliate, associate,
customer or supplier of the Originator nor a relative of any thereof, nor a
trustee in bankruptcy for any Affiliate of the Originator, (iii) maintains
its assets in a manner which facilitates their identification and
segregation from those of its Affiliates, and has a separate telephone
number from that of the Originator or any Subsidiary of the Originator,
(iv) has all office furniture, fixtures and equipment necessary to operate
its business and such furniture, fixtures and equipment are either owned by
the Seller or leased pursuant to written leases, (v) conducts all
intercompany transactions with the Originator and each other Subsidiary of
the Originator on terms which the Seller reasonably believes to be on an
arm's-length basis, (vi) has not guaranteed any obligation
- 16 -
of the Originator or any other Subsidiary of the Originator, nor has it had
any of its obligations guaranteed by any such entities and has not held
itself out as responsible for debts of any such entity or for the decisions
or actions with respect to the business and affairs of any such entity,
(vii) has not, except as otherwise expressly acknowledged under the
Facility Documents, permitted the commingling or pooling of its funds or
other assets with the assets of the Originator or any other Affiliate,
(viii) has separate deposit and other bank accounts to which neither the
Originator nor any other Affiliate has any access and does not at any time
pool any of its funds with those of the Originator or any such Affiliate,
(ix) maintains financial records which are separate from those of the
Originator and each other Subsidiary of the Originator, (x) compensates all
employees, consultants and agents, or reimburses the Originator, from the
Seller's own funds, for services provided to the Seller by such employees,
consultants and agents, (xi) has agreed with the Originator to allocate
among themselves shared corporate operating services and expenses which are
not reflected in the Servicing Fee (including, without limitation, the
services of shared employees, consultants and agents and reasonable legal
and auditing expenses) on the basis of actual use or the value of services
rendered, and otherwise on a basis reasonably related to actual use or the
value of services rendered, (xii) pays directly for its own account for
accounting and payroll services, rent, lease and other expenses and does
not have such operating expenses paid by the Originator or any other
Subsidiary of the Originator, (xiii) conducts all of its business (whether
in writing or orally) solely in its own name, (xiv) is not, directly or
indirectly, named as a direct or contingent beneficiary or loss payee on
any insurance policy covering the property of the Originator or any other
Subsidiary of the Originator and has entered into no agreement to be named
as such a beneficiary or payee, (xv) acknowledges that Triple-A, the
Administrative Agent, the Surety and the Liquidity Banks are entering into
the transactions contemplated by this Triple-A Purchase Agreement and the
other Facility Documents in reliance on the Seller's identity as a separate
legal entity from the Originator and each other Subsidiary of the
Originator, and (xvi) practices and adheres to corporate formalities such
as complying with its By-laws and corporate resolutions and the holding of
regularly scheduled board of directors meetings.
(o) Subsidiaries. The Seller has no Subsidiaries and does not own or
hold, directly or indirectly, any capital stock or equity security of, or
any equity interest in, any Person.
(p) Facility Documents. The Purchase Agreement is the only agreement
pursuant to which the Seller purchases Receivables or other Transferred
Assets. The Seller has furnished to Triple-A true, correct and complete
copies of each Facility Document to which the Seller is a party, each of
which is in full force and effect. Neither the Seller nor any Affiliate
thereof is in default of any of its obligations thereunder in any material
respect. Upon the Purchase of each Receivable pursuant to the Purchase
Agreement, the Seller shall be the lawful owner of, and have good title to,
such Receivable and all Transferred Assets relating thereto, free and clear
of any Adverse Claims. All such Transferred Assets are purchased without
recourse to the Originator except as described in the Purchase Agreement.
The Purchases of the Transferred Assets
- 17 -
by the Seller constitute valid and true sales and transfers for
consideration (and not merely a pledge of such Transferred Assets for
security purposes), enforceable against creditors of the Originator and no
Transferred Assets shall constitute property of the Originator.
(q) Business. Since its incorporation, the Seller has conducted no
business other than the execution, delivery and performance of the Facility
Documents contemplated hereby, the purchase and servicing of Transferred
Assets thereunder, and such other activities as are incidental to the
foregoing. The Seller has incurred no Indebtedness except that expressly
incurred hereunder and under the other Facility Documents.
(r) Ownership of the Seller. One hundred percent (100%) of the
outstanding capital stock of the Seller is directly owned (both
beneficially and of record) by HPSC, Inc. Such stock is validly issued,
fully paid and nonassessable and there are no options, warrants or other
rights to acquire capital stock from the Seller.
(s) Taxes. The Seller has filed or caused to be filed all Federal,
state and local tax returns which are required to be filed by it, and has
paid or caused to be paid all taxes shown to be due and payable on such
returns or on any assessments received by it, other than any taxes or
assessments, the validity of which are being contested in good faith by
appropriate proceedings and with respect to which the Seller has set aside
adequate reserves on its books in accordance with GAAP and which
proceedings have not given rise to any Adverse Claim.
(t) Solvency. The Seller, both prior to and after giving effect to
the initial Purchase on the initial Purchase Date, and after giving effect
to each subsequent Purchase, (i) is not "insolvent" (as such term is
defined in Section 101(31)(A) of the Bankruptcy Code); (ii) is able to pay
its debts as they become due; and (iii) does not have unreasonably small
capital for the business in which it is engaged or for any business or
transaction in which it is about to engage.
(u) Diversification. After giving effect to the initial Receivables
Purchase on the initial Receivables Purchase Date, the number of Contracts
and the number of Obligors associated with the Purchased Receivables shall
equal or exceed 100, and, commencing no later than 90 days after the
initial Receivables Purchase, such number shall equal or exceed 300.
(v) Average Outstanding Balance. After giving effect to the initial
Receivables Purchase on the initial Receivables Purchase Date, and
immediately after giving effect to each subsequent Receivables Purchase,
the average Outstanding Balance of all Purchased Receivables hereunder
shall not be less than 90% nor more than 110% of the average "Outstanding
Balance" of "Pledged Receivables" (as each term is defined in the
Definitions List to the Credit Agreement).
- 18 -
(w) Implicit Interest Rate. As of the date of any Receivables
Purchase, the excess of (i) the average implicit interest rates being
charged to Obligors in respect of the Receivables then being purchased over
(ii) the Discount Rate applicable to such Receivables, shall not be greater
than eight percent (8.0%).
ARTICLE V
GENERAL COVENANTS
SECTION 5.01. AFFIRMATIVE COVENANTS OF THE SELLER. From the initial
Receivables Purchase Date until the later of the Termination Date or the
Collection Date, the Seller will, unless Triple-A shall otherwise consent in
writing:
(a) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders with respect to it, its
business and properties and all Receivables and related Contracts.
(b) Preservation of Corporate Existence. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction
of its incorporation, and qualify and remain qualified in good standing as
a foreign corporation in each jurisdiction except where the failure to
preserve and maintain such existence, rights, franchises, privileges and
qualifications would not materially adversely affect (i) the collectibility
of the Purchased Assets, (ii) the collectibility of any Receivable,
(iii) the business, properties, operations, prospects, profits or condition
(financial or otherwise) condition of the Seller or (iv) the ability of the
Seller to perform its obligations hereunder and under the other Facility
Documents to which it is a party.
(c) Audits. At any time and from time to time upon prior written
notice to the Seller during regular business hours and on a quarterly basis
if requested, permit the Collateral Agent, or its agents or
representatives, (i) to examine and make copies of and abstracts from all
Records, and (ii) to visit the offices and properties of the Seller for the
purpose of examining such Records, and to discuss matters relating to the
Receivables or the Seller's performance hereunder with any of the officers
or employees of the Seller having knowledge of such matters. Each such
audit shall be at the sole expense of the Seller (subject to the Seller's
right under the Purchase Agreement to recover such expenses from the
Originator); provided, that, so long as no Wind-Down Event has occurred
during any calendar year, the annual audit expenses during such year for
which the Seller is responsible hereunder and under the Credit Agreement
shall not exceed $40,000 in the aggregate.
(d) Keeping of Records and Books of Account. Maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Receivables in the event of the
destruction of the originals thereof) and keep and maintain, all documents,
books, records and other information reasonably necessary or advisable for
the collection of all Receivables (including, without
- 19 -
limitation, records adequate to permit the daily identification of all
collections of and adjustments to each Purchased Receivable).
(e) Performance and Compliance with Receivables and Contracts. At
its expense timely and fully perform and comply, and cause the Originator
to comply, in all material respects, with all material provisions,
covenants and other promises required to be observed by it or the
Originator under the Contracts.
(f) Location of Records. Keep its chief place of business and chief
executive office, and the offices where it keeps the Records, at the
address of the Seller referred to in Section 4.01(j), or, in any such case,
upon 30 days' prior written notice to the Collateral Agent, at such other
locations within the United States where all action required by
Section 6.04 shall have been taken and completed.
(g) Credit and Collection Policies. Comply in all material respects
with the Credit and Collection Policy in regard to each Purchased
Receivable and the related Contract.
(h) Collections. Instruct all Obligors to cause all Collections to
be deposited directly to a Post Office Box or Lock-Box Account and if the
Seller shall receive any Collections, the Seller shall hold such
Collections in trust for the benefit of the Collateral Agent and deposit
such Collections into a Lock-Box Account or the Collection Account within
one Business Day following Seller's receipt thereof.
(i) Compliance with ERISA. Comply in all material respects with the
provisions of ERISA, the IRC, and all other applicable laws, and the
regulations and interpretations thereunder.
(j) Perfected Security Interest under Contracts. Take such action
with respect to each Purchased Receivable as is necessary to ensure that
the Seller maintains, as against the Obligor thereunder, a perfected
security interest in any Equipment relating thereto free and clear of
Adverse Claims or, in the case of any Lease, to ensure that the Seller
would maintain such a perfected priority security interest in the event
that a court or other Person were to determine that such Lease purported to
transfer to the Obligor an ownership (rather than a leasehold) interest in
the Equipment subject thereto; provided, that the Seller shall not be
required to file financing statements or to maintain the effectiveness of
previously filed financing statements with respect to any Eligible
Receivables the Outstanding Balance of which originally is or has
thereafter been reduced below $5,000, respectively, so long as the
aggregate Outstanding Balance of Receivables hereunder for which no such
financing statements are in effect at any time remains less than 7.5% of
the Discounted Eligible Receivables Balance hereunder; provided that such
seven and one-half percent limitation shall not apply from and after the
Termination Date unless and to the extent that the Collateral Agent
specifically requests otherwise.
(k) Maintenance of Insurance. Maintain, or cause the Originator or
each Obligor to maintain, with respect to the Contracts and the Equipment
related thereto,
- 20 -
casualty and general liability insurance which provide at least the same
coverage as a fire and extended coverage insurance policy as is comparable
for other companies in related businesses. Such insurance policies (and
self-insurance where permitted) shall be maintained in an amount which is
not less than the aggregate Discounted Value of the Purchased Receivables
hereunder arising under the relevant Contracts hereunder. Each such
casualty and liability policy if maintained by an Obligor, shall name the
Originator or the Seller as loss payee and additional insured, and the
Originator shall have assigned any such interest to the Seller. The Seller
shall remit, or shall cause to be remitted, the proceeds of any such
insurance policy to a Lock-Box Account or the Collection Account.
(l) Separate Identity. Take all actions required to maintain the
Seller's status as a separate legal entity. Without limiting the
foregoing, the Seller shall:
(i) conduct all of its business, and make all
communications to third parties (including all invoices
(if any), letters, checks and other instruments) solely
in its own name (and not as a division of any other
Person), and require that its employees, if any, when
conducting its business identify themselves as such and
not as employees of any other Affiliate of the Seller
(including, without limitation, by means of providing
appropriate employees with business or identification
cards identifying such employees as the Seller's
employees);
(ii) compensate all employees, consultants and agents
directly or indirectly through reimbursement of the
Originator each calendar quarter, from the Seller's
bank accounts, for services provided to the Seller by
such employees, consultants and agents and, to the
extent any employee, consultant or agent of the Seller
is also an employee, consultant or agent of any
Affiliate of the Seller, allocate the compensation of
such employee, consultant or agent between the Seller
and such Affiliate on a basis which reflects the
services rendered to the Seller and such Affiliate;
(iii) pay its own operating expenses and liabilities from its
own funds, allocate all overhead expenses (including,
without limitation, telephone and other utility
charges) for items shared between the Seller and any
Affiliate on the basis of actual use to the extent
practicable and, to the extent such allocation is not
practicable, on a basis reasonably related to actual
use and allocate taxes on the basis of their respective
incomes in accordance with applicable federal
regulations;
(iv) at all times have at least one "Independent Director",
as defined in and as required under the Seller's
Certificate of Incorporation and have at least one
officer responsible for managing its day-to-day
- 21 -
business and manage such business by or under the
direction of its board of directors;
(v) maintain its books and records separate from those of
any Affiliate;
(vi) prepare its financial statements separately from those
of its other Affiliates and insure that any
consolidated financial statements of the Originator
have notes to the effect that the Seller is a separate
corporate entity whose creditors have a claim on its
assets prior to those assets becoming available to its
equity holders and therefore to any creditors of the
Originator;
(vii) use its best efforts not to commingle its funds or
other assets with those of any other Affiliate, and not
to hold its assets in any manner that would create an
appearance that such assets belong to any other
Affiliate, and not maintain bank accounts or other
depository accounts to which any Affiliate is an
account party, into which any Affiliate makes deposits
or from which any Affiliate has the power to make
withdrawals;
(viii) not permit any Affiliate to pay its operating expenses
(except pursuant to allocation arrangements that comply
with the requirements of subsection (ii) or (iii) of
this Section 5.01(l) or pursuant to the terms of the
Purchase Agreement);
(ix) not guarantee any obligation of any Affiliate nor (to
the extent that the Seller has the legal power to
prevent such) have any of its obligations guaranteed by
any such Affiliate, (either directly or by seeking
credit based on the assets of such Affiliate) or
otherwise hold itself out as responsible for the debts
of any Affiliate;
(x) maintain at all times stationery and a telephone number
separate from that of any Affiliate and which telephone
number will be answered in its own name, and have all
its officers and employees conduct all of its business
solely in its own name;
(xi) hold regular meetings of its board of directors in
accordance with the provisions of its Certificate of
Incorporation and otherwise take such actions as are
necessary on its part to ensure that all corporate
procedures required by its Certificate of Incorporation
and by-laws are duly and validly taken;
(xii) maintain a separate office from the offices of any of
its Affiliates and identify such office by a sign in
its own name;
- 22 -
(xiii) pay dividends only if (A) no other dividend has been
paid during the calendar month in which such dividend
is paid, (B) such dividend has been duly authorized by
its board of directors in accordance with applicable
law and (C) its net worth, determined immediately after
giving effect to such dividend is at least $2,000,000;
and
(xiv) take such other actions as are necessary on its part to
ensure that the facts and assumptions set forth in the
opinion described in Section 3.01(x) remain true and
correct at all times.
(m) Taxes. File or cause to be filed, and (to the extent it has
legal power to cause such) cause each of its Affiliates with whom it shares
consolidated tax liability to file, all federal, state and local tax
returns which are required to be filed by it, except where the failure to
file such returns could not reasonably be expected to have a material
adverse effect on the collectibility of the Transferred Assets or the
ability of the Seller to perform its obligations hereunder or under any
other Facility Document to which it is a party or which could otherwise be
reasonably expected to expose the Seller to a material liability. The
Seller shall pay or cause to be paid all taxes shown to be due and payable
on such returns or on any assessments received by it, other than any taxes
or assessments, the validity of which are being contested in good faith by
appropriate proceedings and with respect to which the Seller or the
applicable subsidiary shall have set aside adequate reserves on its books
in accordance with GAAP and which proceedings could not reasonably be
expected to have a material adverse effect on the collectibility of the
Transferred Assets or the ability of the Seller to perform its obligations
hereunder or under any other Facility Document to which it is a party or
which could otherwise be reasonably expected to expose the Seller to a
material liability.
(n) Interest Rate Xxxxxx. Concurrently with each Receivables
Purchase, enter into an Interest Rate Hedge with the Swap Provider as
contemplated in the definition of "Discount Rate", and transfer, assign and
otherwise convey to the Collateral Agent all of the Seller's rights in, to
and under such Interest Rate Hedge pursuant to an Interest Rate Hedge
Assignment in substantially in the form of Exhibit E hereto, together with
a certificate executed by the Swap Provider in substantially the form of
Exhibit A to such Interest Rate Hedge Assignment. The Seller shall
thereafter maintain such Interest Rate Xxxxxx in full force and effect at
all times until the Capital associated with such Receivables Purchase has
been recovered in full by Triple-A, in a notional amount equal to no less
than 96% and no more than 105% of the sum of the outstanding Capital plus
the principal amount of all "Triple-A Loans" (as defined in the Credit
Agreement) related thereto and based on an amortization schedule which
matches the amortization of the aggregate Receivables then outstanding and
the terms of which are otherwise reasonably satisfactory to the Collateral
Agent. The Seller acknowledges that Triple-A and/or the Surety on behalf
of Triple-A have guaranteed the Seller's performance of its obligations
under the Interest Rate Xxxxxx. The Seller shall perform all of its
obligations under the Interest Rate Xxxxxx to the same extent as if its
rights under the Interest Rate Xxxxxx has
- 23 -
not been assigned hereunder and shall indemnify each of Triple-A and the
Surety against any payments by either such party on account of the Seller's
failure to perform its obligations under the Interest Rate Xxxxxx,
including, without limitation, any payments by the Surety under the Swap
Bond, which indemnity shall survive any termination of this Triple-A
Purchase Agreement or the Credit Agreement. The exercise by the Collateral
Agent of any of its rights hereunder or under the Interest Rate Hedge
Assignment shall not relieve the Seller from such obligations.
(o) Facility Documents. Comply in all material respects with the
terms of and employ the procedures outlined in and enforce the obligations
of the Originator under the Purchase Agreement, and all of the other
Facility Documents to which it is a party, take all such action to such end
as may be from time to time reasonably requested by the Collateral Agent,
maintain all such Facility Documents in full force and effect and make to
the Originator such reasonable demands and requests for information and
reports or for action as the Seller is entitled to make thereunder and as
may be from time to time reasonably requested by the Collateral Agent.
(p) Segregation of Collections. Prevent the deposit into any of the
Lock-Box Accounts of any funds other than Collections in respect of the
Transferred Assets and, to the extent that any such funds are nevertheless
deposited into any of such Lock-Box Accounts, promptly identify any such
funds to the Servicer for segregation and remittance to the owner thereof.
(q) Diversification. Sell sufficient Receivables under this
Agreement so that, no later than ninety (90) days after the initial
Receivables Purchase Date, the number of Contracts and the number of
Obligors associated with the Purchased Receivables shall have exceeded 300.
SECTION 5.02. Reporting Requirements of the Seller. From the initial
Receivables Purchase Date until the later of the Termination Date or the
Collection Date, the Seller will, unless the Collateral Agent shall otherwise
consent in writing, furnish to the Collateral Agent and to CapMAC:
(a) as soon as available and in any event within 45 days after the
end of each of the first three quarters of each fiscal year of the Seller,
balance sheets of the Seller as of the end of such quarter, and (to the
extent available) statements of income and retained earnings of the Seller
for the period commencing at the end of the previous fiscal year and ending
with the end of such quarter, certified by the chief financial officer,
chief accounting officer or treasurer of the Seller;
(b) as soon as available and in any event within 105 days after the
end of each fiscal year of the Seller, a copy of the balance sheet of the
Seller as of the end of such year and the related statements of income and
retained earnings of the Seller for such year each reported on by
nationally recognized independent public accountants acceptable to the
Collateral Agent (the Collateral Agent acknowledges that any of the "Big 5"
accounting firms will be acceptable to the Collateral Agent);
- 24 -
(c) promptly upon receipt thereof, copies of (i) all annual and
quarterly financial statements delivered to the Seller by the Originator
pursuant to the Purchase Agreement and (ii) all other reports and other
written information not specified above which are required to be delivered
by the Originator (individually, or as Servicer) to the Seller pursuant to
the terms of the Purchase Agreement;
(d) as soon as possible and in any event within five Business Days
after the occurrence of each Event of Termination or Wind-Down Event or
each Unmatured Event of Termination or Unmatured Wind-Down Event, the
statement of the chief financial officer, chief accounting officer or
treasurer of the Seller setting forth details of such Event of Termination,
Wind-Down Event, Unmatured Event of Termination or Unmatured Wind-Down
Event and the action which the Seller proposes to take with respect
thereto;
(e) promptly after the filing or receiving thereof, copies of all
reports and notices with respect to any Reportable Event defined in
Article IV of ERISA which the Seller or any Affiliate files under ERISA
with the IRS or the PBGC or the DOL or which the Seller receives from the
PBGC;
(f) on or before the 15th day of each month (or if such day is not a
Business Day, the immediately succeeding Business Day), a copy of the
Settlement Report for the most recent calendar month, which shall include a
summary of the portfolio of Interest Rate Xxxxxx as of such day; and
(g) promptly, from time to time, such other information, documents,
records or reports respecting the Purchased Receivables or the conditions
or operations, financial or otherwise, of the Seller as the Collateral
Agent may from time to time reasonably request in order to protect the
interests of the Collateral Agent or of Triple-A under or as contemplated
by this Triple-A Purchase Agreement.
SECTION 5.03. Negative Covenants of the Seller. From the initial
Receivables Purchase Date until the later of the Termination Date or the
Collection Date, the Seller will not, without the written consent of the
Collateral Agent:
(a) Sales, Liens, Etc. Against Receivables and Related Security.
Except as otherwise provided herein, sell, assign (by operation of law or
otherwise) or otherwise dispose of, or create or suffer to exist, any
Adverse Claim upon or with respect to, any Purchased Receivable, Related
Security, Collections, or any related Contract, or upon or with respect to
any Lock-Box Account to which any Collections of any Purchased Receivable
are sent, or assign any right to receive income in respect thereof, or upon
any other Transferred Asset, except (i) Adverse Claims created under the
Credit Agreement, and (ii) that the Seller shall have no responsibility for
any Adverse Claim created by an Obligor upon or with respect to any
Equipment owned by such Obligor so long as such Adverse Claim is
subordinate to the security interest of the Seller in such Equipment.
- 25 -
(b) Extension or Amendment of Receivables. Except for actions of the
Servicer otherwise permitted hereunder and in the Purchase Agreement,
extend, amend or otherwise modify, the terms of any Receivable, or amend,
modify or waive, any term or condition of any Contract related thereto,
whether for any reason relating to a negative change in the related
Obligor's creditworthiness or inability to make any payment under the
related Contract or otherwise.
(c) Change in Business or Credit and Collection Policy. Make any
change in the character of its business or in the Credit and Collection
Policy, which change would, in either case, impair the collectibility of
any Transferred Asset.
(d) Change in Payment Instructions to Obligors. Add or terminate any
bank as a Lock-Box Bank from those listed in Exhibit I to the Purchase
Agreement or make any change in its instructions to Obligors regarding
payments to be made to the Seller or payments to be made to any Lock-Box
Bank, unless the Collateral Agent shall have received (i) ten Business
Days' prior notice of such addition, termination or change and (ii) prior
to the effective date of such addition, termination or change, (x) executed
copies of Lock-Box Agreements executed by each new Lock-Box Bank and the
Seller and (y) copies of all agreements and documents signed by either the
Seller or the respective Lock-Box Bank with respect to any new Lock-Box
Account.
(e) Stock, Merger, Consolidation, Etc. Sell any shares of any class
of its capital stock to any Person (other than the Originator) or
consolidate with or merge into or with any other corporation, or purchase
or otherwise acquire all or substantially all of the assets or capital
stock, or other ownership interest of, any Person or sell, transfer, lease
or otherwise dispose of all or substantially all of its assets to any
Person, except for the conveyances of a security interest in favor of the
Collateral Agent as expressly permitted under the terms of this Triple-A
Purchase Agreement and the Credit Agreement.
(f) Change in Corporate Name. Make any change to its corporate name
or use any trade names, fictitious names, assumed names or "doing business
as" names.
(g) ERISA Matters. (i) Engage or permit any ERISA Affiliate to
engage in any prohibited transaction for which an exemption is not
available or has not previously been obtained from the DOL; (ii) permit to
exist any accumulated funding deficiency, as defined in Section 302(a) of
ERISA and Section 412(a) of the IRC, or funding deficiency with respect to
any Benefit Plan other than a Multiemployer Plan; (iii) fail to make any
payments to any Multiemployer Plan that the Seller or any ERISA Affiliate
may be required to make under the agreement relating to such Multiemployer
Plan or any law pertaining thereto; (iv) terminate any Benefit Plan so as
to result in any liability; or (v) permit to exist any occurrence of any
reportable event described in Title IV of ERISA which represents a material
risk of a liability of the Seller or any ERISA Affiliate under ERISA or the
IRC; provided, however, the Seller's ERISA Affiliates may take or allow
such prohibited transactions, accumulated funding deficiencies, payments,
terminations
- 26 -
and reportable events described in clauses (i) through (iv) above so long
as such events occurring within any fiscal year of the Seller, in the
aggregate, involve a payment of money by or an incurrence of liability of
any such ERISA Affiliate in an amount which does not exceed $500,000.
(h) Terminate or Reject Contracts. Without limiting Section 5.03(b),
terminate or reject any Contract prior to the term of such Contract,
whether such rejection or early termination is made pursuant to an
equitable cause, statute, regulation, judicial proceeding or other
applicable law (including, without limitation, Section 365 of the
Bankruptcy Code), unless prior to such termination or rejection, the Seller
pays the Collateral Agent, for the benefit of Triple-A, an amount equal to
the Termination Amount owed with respect thereto.
(i) Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness except for (i) Indebtedness to Triple-A, the Collateral Agent
or any Liquidity Bank expressly contemplated hereunder or under the Credit
Agreement, (ii) ordinary course expenses (to the extent, if any, that such
ordinary course expenses constitute Indebtedness) in an aggregate amount
outstanding at any time not to exceed $10,000 (exclusive of taxes) and
(iii) Indebtedness to the Originator pursuant to the Purchase Agreement.
(j) Guarantees. Guarantee, endorse or otherwise be or become
contingently liable (including by agreement to maintain balance sheet
tests) in connection with the obligations of any other Person, except
endorsements of negotiable instruments for collection in the ordinary
course of business and reimbursement or indemnification obligations in
favor of Triple-A, the Collateral Agent, or any Liquidity Bank as provided
for under this Triple-A Purchase Agreement or under the Credit Agreement.
(k) Limitation on Transactions with Affiliates. Enter into, or be a
party to any transaction with any Affiliate, except for:
(i) the transactions contemplated by the Purchase
Agreement;
(ii) transactions related to the allocation of shared
overhead expenses or taxes as described in clause (iii)
of Section 5.01(l); and
(iii) to the extent not otherwise prohibited under this
Triple-A Purchase Agreement, other transactions in the
nature of employment contracts and directors' fees,
upon fair and reasonable terms materially no less
favorable to the Seller than would be obtained in a
comparable arm's-length transaction with a Person not
an Affiliate.
(l) Facility Documents. Except as otherwise permitted under
Section 9.01, (a) terminate, amend or otherwise modify any Facility
Document to which it is a party, or grant any waiver or consent thereunder,
(b) without the prior consent of the Collateral
- 27 -
Agent, exercise any discretionary rights granted to the Seller under the
Purchase Agreement pursuant to provisions thereof providing for certain
actions to be taken "with the consent of the Buyer", "acceptable to the
Buyer" as "specified by the Buyer", "in the reasonable judgment of the
Buyer" or similar provisions (it being understood that inaction by the
Seller shall not be considered to be an exercise of such discretionary
rights) or (c) without the prior written consent of the Collateral Agent,
consent to any amendment or modification of the Credit and Collection
Policy.
(m) Charter and By-Laws. Amend or otherwise modify its Certificate
of Incorporation or By-laws in any manner which requires the consent of the
"Independent Director" (as defined in the Seller's Certificate of
Incorporation) without the prior written consent of the Collateral Agent
and delivery of an opinion of counsel that such amendment shall not alter
the conclusions set forth in the legal opinion described in
Section 3.01(x).
(n) Lines of Business. Conduct any business other than that
described in Section 4.01(q), or enter into any transaction with any Person
which is not contemplated by or incidental to the performance of its
obligations under the Facility Documents.
(o) Accounting Treatment. Prepare any financial statements or other
statements (including any tax filings which are not consolidated with those
of the Originator) which shall account for the transactions contemplated by
the Purchase Agreement in any manner other than as the sale of, or a
capital contribution of, the Transferred Assets by the Originator to the
Seller (it being understood that non-recognition of such transaction due to
the application of consolidated financial reporting principles under GAAP
or the filing of tax returns on a consolidated basis shall not constitute a
violation of this covenant).
(p) Limitation on Investments. Make or suffer to exist any loans or
advances to, or extend any credit to, or make any investments (by way of
transfer of property, contributions to capital, purchase of stock or
securities or evidences of indebtedness, acquisition of the business or
assets, or otherwise) in, any Affiliate or any other Person except for
(i) Permitted Investments, (ii) the purchase of Receivables and other
Transferred Assets pursuant to the terms of the Purchase Agreement and
(iii) so long as the aggregate outstanding Capital hereunder is less than
the Capital Limit then in effect, the acceptance of investments in exchange
for Defaulted Receivables in an effort to maximize the recoveries thereon.
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Servicer. The servicing, administering and
collection of the Purchased Receivables and the other Purchased Assets shall be
conducted by the Person (the "Servicer") designated by the Collateral Agent from
time to time in accordance with this
- 28 -
Section 6.01. Until the Collateral Agent gives notice to the Originator of the
designation of a new Servicer, the Originator is hereby designated as, and
hereby agrees to perform the duties and obligations of, the Servicer pursuant to
the terms hereof. The Collateral Agent may at any time from and after a
Servicing Termination Event, or earlier upon the written request of the Seller,
designate as Servicer any other Person to succeed the Originator or any
Successor Servicer, on the condition in each case that any such Person so
designated shall agree to perform the duties and obligations of the Servicer
pursuant to the terms hereof. The Servicer may, with the prior written consent
of Triple-A and the Collateral Agent, subcontract with any other Person for
servicing, administering or collecting the Purchased Assets, provided that the
Servicer shall remain liable for the performance of the duties and obligations
of the Servicer pursuant to the terms hereof. The Servicer shall use reasonable
care in performing its duties as Servicer hereunder and, without limiting the
foregoing, shall service the Purchased Receivables in accordance with the Credit
and Collection Policy.
SECTION 6.02. Duties of the Servicer.
(a) The Servicer shall take or cause to be taken all such actions as
may be necessary or advisable to collect each Purchased Receivables from
time to time, all in accordance with applicable laws, rules and
regulations, with reasonable care and diligence, and in accordance with the
Credit and Collection Policy. Each of the Seller, Triple-A, the
Administrative Agent and the Collateral Agent hereby appoints as its agent
the Servicer, from time to time designated pursuant to Section 6.01, to
enforce its respective rights and interests in and under the Purchased
Receivables, the Related Security related thereto and the related
Collections. The Servicer will at all times apply the same standards and
follow the same procedures with respect to the decision to commence, and in
prosecuting and litigating with respect to Purchased Receivables as it
applies and follows with respect to accounts, chattel paper and instruments
which are not Purchased Receivables. In no event shall the Servicer be
entitled to make the Collateral Agent, Triple-A or the Administrative Agent
a party to any litigation without the Collateral Agent's, Triple-A's and
the Administrative Agent's express prior written consent. The Servicer
shall segregate and set aside for the account of Triple-A all Collections
of the Purchased Receivables and Related Security in accordance with
Section 2.05 of the Purchase Agreement and Section 6.06 hereof and shall
cause all such Collections to be remitted to a Lock-Box Account and/or
deposited directly into the Collection Account within one Business Day
after identification thereof by the Servicer and in any event within four
Business Days after the Servicer's receipt thereof. The Servicer shall
promptly review all checks and other instruments returned to it by the
Lock-Box Bank on account of restrictive endorsements, improper payees,
incorrect amounts or for any other reason and shall not deposit any such
checks or instruments in its own accounts unless it is determined to the
Collateral Agent's satisfaction that such amounts do not constitute
Collections; any such checks or instruments which are determined to be
Collections of the Purchased Receivables or Related Security related
thereto shall be promptly remitted to the Lock-Box Account or the
Collection Account as provided above. Provided that the Termination Date
shall not have occurred, the Originator, while it is Servicer, may, in
accordance with the Credit and Collection Policy,
- 29 -
(i) amend, modify or waive any term or condition of any Contract to reflect
any Permitted Extension, (ii) adjust the Outstanding Balance of any
Purchased Receivable to reflect the reductions, adjustments or
cancellations described in the first sentence of Section 2.04(d) of this
Triple-A Purchase Agreement, (iii) so long as such prepayment would not
cause a Wind-Down Event under this Triple-A Purchase Agreement or a
"Wind-Down Event" under the Credit Agreement, and subject to the payment of
the Termination Amount, consent to the prepayment or early termination of a
Contract, and (iv) amend, modify or waive any provision of a Delinquent
Receivable or Defaulted Receivable so as to maximize the collectibility
thereof. The Servicer shall hold in trust for the Seller and Triple-A in
accordance with their respective interests, all Records. Notwithstanding
anything to the contrary contained herein, following the occurrence of an
Event of Termination, the Collateral Agent shall have the absolute and
unlimited right to direct the Servicer (whether the Servicer is the
Originator or otherwise) to commence or settle any legal action to enforce
collection of any Receivable or other Transferred Asset or to foreclose
upon or repossess any Related Security.
(b) The Servicer shall, as soon as practicable following receipt,
turn over (i) to the "Collateral Agent" under the Credit Agreement the
collections of any Transferred Asset which is not a Purchased Asset, and
(ii) to the Originator the collections of any receivable which is not a
Transferred Asset, in either case less, in the event the Originator is not
the Servicer, all reasonable and appropriate out-of-pocket costs and
expenses of such Servicer of servicing, collecting and administering such
receivable.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Servicer, if the Collateral Agent or its designee, shall
have no obligation to collect, enforce or take any other action described
in this Article VI with respect to any receivable that is not a
Purchased Receivable other than to deliver to the Seller the Collections
and documents with respect to any such receivable as described in the
first two sentences of Section 6.02(b) and to exercise the same degree of
care with respect to Collections and documents in its possession as it
would exercise with respect to its own property.
(d) In the event the Servicer accepts in payment of any Purchased
Receivable the taking of repossession of the Equipment the sale or lease of
which gave rise to such Purchased Receivable, the Servicer agrees to use
its reasonable efforts to resell or re-lease such Equipment for the account
of Triple-A and shall remit to the Collateral Agent the gross sale proceeds
thereof or, to the extent such Equipment is re-leased, shall deliver to the
Collateral Agent the chattel paper or other documents evidencing the rights
to payment arising from such re-lease, all of which documents shall
constitute Contracts and which rights to payment shall constitute Purchased
Receivables, and all of which Contracts and Purchased Receivables shall
constitute part of the Purchased Assets. Neither Triple-A nor the
Collateral Agent shall have any obligation to take any action or commence
any proceedings to realize upon any Purchased Receivable or to enforce any
of its rights or remedies with respect thereto. Any moneys collected by
the Servicer pursuant to this subsection 6.02(d) shall be segregated by the
Servicer, held in trust by the Servicer for Triple-A and shall be remitted
to a Lock-Box Account or to the Collection
- 30 -
Account within one Business Day after identification thereof by the
Servicer and in any event within four Business Days after the Servicer's
receipt thereof.
(e) The Servicer shall maintain all books of account and other
records pertaining to the Purchased Receivables and the other Purchased
Assets in such form as will enable Triple-A or its designees to determine
at any time the status thereof. The Servicer will permit Triple-A, the
Collateral Agent and any Person designated by Triple-A or the Collateral
Agent, during regular business hours, to inspect, audit, check and make
abstracts from all books, accounts, records, or other papers pertaining to
such Purchased Assets. From time to time, at the request of Triple-A or
the Collateral Agent, the Servicer, at its own expense, will (i) deliver to
Triple-A and the Collateral Agent and any Person designated by Triple-A or
the Collateral Agent any records and invoices pertaining to the Purchased
Assets and evidence thereof as Triple-A, the Collateral Agent or such
designee may deem necessary to enable it to enforce its rights thereunder
and (ii) xxxx each computer record relating to, and each invoice or other
evidence of, the Purchased Assets (whether or not such computer record or
other item is the property of Triple-A) as Triple-A or the Collateral Agent
may direct to reflect the interests of Triple-A and the Collateral Agent in
such Purchased Assets. The Servicer will either (i) segregate, from all
the documents relating to other receivables then owned or being serviced by
the Servicer, all documents relating to the Purchased Assets or (ii) xxxx
all such documents relating to the Purchased Assets so as to make such
documents readily identifiable as property of Triple-A and with such legend
as shall be specified by the Collateral Agent, and will, in either such
event, hold all such documents in trust for Triple-A and safely keep such
documents in filing cabinets or other suitable containers marked to show
Triple-A's interest.
SECTION 6.03. RIGHTS OF THE COLLATERAL AGENT. At any time:
(a) The Collateral Agent may notify the Obligors of the Purchased
Receivables, or any of them, of Triple-A's ownership interest in the
Purchased Assets and direct such Obligors, or any of them, that payment of
all amounts payable under any Purchased Receivable be made directly to
Triple-A or its designee (including, without limitation, the Collateral
Agent).
(b) The Seller shall, at the Collateral Agent's or Triple-A's request
and at the Seller's expense, give notice of Triple-A's interest in the
Purchased Assets to each Obligor (in substantially the form of the Notice
of Assignment) and direct that payments be made directly to Triple-A or its
designee (including, without limitation, the Collateral Agent).
(c) The Seller shall, at the Collateral Agent's request, assemble all
Records which the Collateral Agent reasonably believes are necessary or
appropriate for the administration and enforcement of the Purchased Assets,
and shall make the same available to the Collateral Agent at a place
selected by the Collateral Agent or its designee.
- 31 -
(d) Each of the Seller and Triple-A hereby authorize the Collateral
Agent to take any and all steps in the Seller's name and on behalf of the
Seller necessary or desirable, in the determination of the Collateral
Agent, to collect all amounts due under any and all Purchased Receivables
or Related Security related thereto, including, without limitation,
endorsing the Seller's name on checks and other instruments representing
Collections and enforcing such Purchased Receivables and the related
Contracts.
SECTION 6.04. FURTHER ACTION EVIDENCING TRANSFERS.
a) The Seller agrees that from time to time, at its expense, it will
promptly execute and deliver all further instruments and documents, and
take all further action that Triple-A may reasonably request in order to
protect or more fully evidence Triple-A's ownership interest in the
Purchased Receivables, the Related Security and the Collections related
thereto, or to enable Triple-A to exercise or enforce any of its rights
hereunder or under any related document. Without limiting the generality
of the foregoing, the Seller will xxxx its master data processing records
evidencing such Purchased Receivables, Related Security and Collections
related thereto with a legend, acceptable to Triple-A, evidencing that
Triple-A has acquired an ownership interest therein as provided in this
Agreement and, upon the request of Triple-A, will execute and file such
financing or continuation statements, or amendments thereto or assignments
thereof, and such other instruments or notices, as may be necessary or
appropriate or as Triple-A may reasonably request. The Seller hereby
authorizes Triple-A to file one or more financing or continuation
statements, and amendments thereto and assignments thereof, relative to all
or any of the Purchased Receivables, Related Security and Collections
related thereto now existing or hereafter arising without the signature of
the Seller where permitted by law. A carbon, photographic or other
reproduction of this Agreement or any financing statement covering the
Purchased Receivables, Related Security and Collections related thereto, or
any part thereof, shall be sufficient as a financing statement. If the
Seller fails to perform any of its agreements or obligations under this
Agreement, Triple-A may (but shall not be required to) itself perform, or
cause performance of, such agreement or obligation, and the expenses of
Triple-A incurred in connection therewith shall be payable by the Seller
upon Triple-A's demand therefor; provided, however, prior to taking any
such action, Triple-A shall give notice of such intention to the Seller and
provide the Seller with a reasonable opportunity to take such action
itself.
(b) The Seller shall, on or prior to the date of each Receivables
Purchase hereunder, deliver or cause to be delivered the related Contract
File to the Custodian, in suitable form for transfer by delivery, or
accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to Triple-A. In the event
that the Seller or the Servicer receives any other instrument or any
writing constituting chattel paper which, in either event, evidences a
Purchased Receivable or other Purchased Assets, the Seller or the Servicer
as applicable shall deliver such instrument or chattel paper to the
Custodian on behalf of Triple-A within three (3) Business Days after
receipt, in suitable form for transfer by delivery, or accompanied by
- 32 -
duly executed instruments of transfer or assignment in blank, all in form
and substance satisfactory to Triple-A.
SECTION 6.05. RESPONSIBILITIES OF THE SELLER. Anything herein to the
contrary notwithstanding, the Seller shall (i) perform all of its obligations
under the Contracts to the same extent as if such Contracts had not been
transferred to Triple-A hereunder and the exercise by Triple-A or its assigns
of their respective rights hereunder shall not relieve Seller from such
obligations and (ii) pay when due any taxes, including without limitation,
sales, excise and personal property taxes payable in connection with the
Purchased Assets, unless the Seller is contesting the payment of such taxes in
good faith and by appropriate proceedings and with respect to which no Adverse
Claim has been asserted or filed.
SECTION 6.06. ADMINISTRATION OF COLLECTIONS BY SERVICER.
(a) The Servicer shall identify on a timely basis all Collections
which are on account of the Purchased Assets, including all deposits to
Lock Box Accounts. On each Business Day, all Collections received in the
Lock Box Accounts for the prior Business Day (and such Business Day, if
practicable) shall be transferred to the Collection Account. If the
Servicer receives any cash or checks, drafts, wire transfers or other
instruments for the payment of money on account or otherwise in respect of
the Purchased Assets, the Servicer shall segregate such cash and other
items, hold such cash and other items in trust for the benefit of Triple-A
and the Collateral Agent and shall cause such cash and other items
(properly endorsed, where required, so that such items may be collected by
Triple-A) to be deposited in a Lock Box Account or directly in the
Collection Account immediately after the date any such cash or other item
shall have been identified as being on account of a Purchased Assets.
SECTION 6.07. Application of Collections. All Collections on account of the
Purchased Receivables of each Obligor shall be applied in the order of maturity
thereof unless specifically identified otherwise in writing by such Obligor or
directed by a court of competent jurisdiction. Any payment by an Obligor in
respect of any indebtedness or other obligations owed by such Obligor to the
Seller or the Servicer shall, except as otherwise specified by such Obligor or
otherwise required by law, be applied as a Collection of a Receivable of such
Obligor (in the order of the age by invoice date of such Receivables, starting
with the oldest such Receivable) to the extent of any amounts then due and
payable thereunder before being applied to any other indebtedness of such
Obligor to the Seller or the Servicer. The Servicer shall not influence or
instruct any Obligor who is indebted to the Seller in respect of any
indebtedness not included in the Purchased Assets to direct that its remittances
be applied to any such indebtedness prior to being applied to the Purchased
Assets.
SECTION 6.08. Servicing Fee. On each Settlement Date, as full compensation
for its servicing activities hereunder, the Servicer shall be entitled to
receive a fee (the "Servicing Fee") in an amount equal to 1.15% times the
Outstanding Balance of the Purchased Receivables as of the last day of the prior
calendar month times a fraction, the numerator of which is the number of actual
days elapsed in such calendar month and the denominator of which equals 360,
provided,
- 33 -
that, if the Servicer hereunder is also the Servicer under the Purchase
Agreement, the Servicing Fee hereunder shall be deemed paid to the extent of any
payment by the Seller of the "Servicing Fee" specified and defined in the
Purchase Agreement. In the event that Triple-A (or the Collateral Agent)
appoints a successor Servicer, the Servicing Fee may be adjusted as required by
such successor Servicer and as agreed to by Triple-A and the Collateral Agent.
SECTION 6.09. Resignation; Successor Servicer.
(a) The obligation of the Servicer to service the Purchased
Receivables is personal to the Servicer and the parties recognize that
another Person may not be qualified to perform such obligations.
Accordingly, the Servicer's obligation to service the Purchased Assets
hereunder shall be specifically enforceable and shall be absolute and
unconditional in all circumstances, including, without limitation, after
the occurrence and during the continuation of any Event of Termination or
Servicing Termination Event hereunder; provided, however, that a Successor
Servicer may be appointed pursuant to this Section 6.09.
(b) Notwithstanding the foregoing, the Servicer may resign from the
obligations and duties hereby imposed on it as Servicer upon determination
that (i) the performance of its duties hereunder is no longer permissible
under any applicable law and (ii) there is no reasonable action which the
Servicer could take to make the performance of its duties hereunder
permissible under any such applicable law. Any determination permitting
the resignation of the Servicer shall be evidenced as to clause (i) above
by an opinion of counsel to such effect delivered to Triple-A and the
Collateral Agent. Except to the extent inconsistent with any such
applicable law, no such resignation shall become effective until a
Successor Servicer shall have assumed the responsibilities and obligations
of the Servicer in accordance with the remaining provisions of this
Section 6.09.
(c) The Collateral Agent shall, as promptly as possible after the
Servicer has given notice pursuant to Section 6.09(b) above or at any time
after the Collateral Agent's designation of a successor Servicer pursuant
to Section 6.01, appoint a successor servicer (the "Successor Servicer")
and such Successor Servicer shall accept its appointment by a written
assumption in a form acceptable to the Collateral Agent. Upon its
appointment, the Successor Servicer shall be the successor in all respects
to the Servicer with respect to servicing functions under this Agreement
shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof,
and all references in this Agreement or any other Facility Documents to the
Servicer shall be deemed to refer to the Successor Servicer. The Servicer
agrees to cooperate with the Successor Servicer in effecting the transfer
of its responsibilities, duties, liabilities and rights hereunder,
including, without limitation, the execution and delivery of assignments of
financing statements, the transfer to the Successor Servicer of all cash
amounts held by the Servicer or thereafter received with respect to the
Purchased Assets, the transfer of electronic records relating to the
Purchased Assets in such form as the Successor Servicer
- 34 -
may reasonably request and the transfer of all related Records,
correspondence and other documents relating to the Purchased Assets.
SECTION 6.10. LOCK-BOX ACCOUNTS; COLLECTION ACCOUNT. The Seller has
established and will maintain a system of operations, accounts and instructions
to the Lock-Box Banks and will establish and maintain the Collection Account as
provided in this SECTION 6.10. Pursuant to a Lock-Box Agreement, each Lock-Box
Account shall be irrevocably instructed to wire all funds to the Collection
Account, which Collection Account shall be maintained in the name of the
Collateral Agent. Neither the Seller, nor any Person claiming by, through or
under the Seller shall have any control over the use of, or any right to
withdraw any item or amount from, any Lock-Box Account or the Collection Account
except as expressly provided in the Lock-Box Agreements. The Collateral Agent
on behalf of Triple-A is hereby irrevocably authorized and empowered, as the
Seller's attorney-in-fact, to endorse any item deposited in a lock-box or
presented for deposit in any Lock-Box Account or the Collection Account
requiring the endorsement of the Seller, which authorization is coupled with an
interest.
SECTION 6.11. COLLECTION ACCOUNT.
(a) Pursuant to the Credit Agreement, the Seller has established for
the sole and exclusive benefit of the Collateral Agent for the benefit of
Triple-A, the Surety and their respective assigns, a cash collateral
account (the "Collection Account"). The Collection Account shall be a
special purpose segregated trust account maintained with Bank of Boston but
shall be under the sole dominion and control of, and in the name of, the
Collateral Agent. All funds held in the Collection Account, including
investment earnings thereon, shall be invested in Permitted Investments at
the direction of the Seller; provided, however, that from and after the
Termination Date or otherwise upon the occurrence and during the
continuance of any Event of Termination, the Collateral Agent shall have
the sole right to restrict the maturities of any investments held in the
Collection Account and to direct the withdrawal of any such investments for
the purposes of paying Capital, Yield and any Obligations owed hereunder.
The Collateral Agent shall have the sole and exclusive right to withdraw or
order a transfer of funds from the Collection Account in accordance with
the terms and provisions of this Section 6.11.; provided however, that the
Collateral Agent agrees to turn over to the Originator any funds which are
deposited in the Collection Account and which do not constitute Collections
or other proceeds of Purchased Assets, less all reasonable and appropriate
out-of-pocket costs and expenses incurred by the Collateral Agent in
connection with such misdirected funds.
(b) All Collections and other proceeds of the Purchased Assets in the
Collection Account shall be held in trust for the benefit of Triple-A and
the Surety and, except as otherwise provided in Section 6.11(d) below with
respect to any Business Day from and after the Designated Termination Date,
such Collections and other proceeds shall be used solely for the following
purposes and in the following order of priority:
- 35 -
(i) To remit to the Seller any Collections representing sales or
other taxes or insurance payments for the purpose of
satisfying the Seller's obligations in respect of such taxes
or insurance;
(ii) To pay Yield and other Carrying Costs which are then due and
payable;
(iii) To repay Capital as provided in Section 2.04;
(iv) To pay any other Obligations which may be due and owing at
such time; and
(v) If such day is a Settlement Date, to be remitted to the
Seller in consideration of the Deferred Purchase Price,
provided, that if any "Obligations" under the Credit
Agreement remain outstanding, such amounts shall be remitted
to the Collateral Agent for application in accordance with
the terms of the Credit Agreement to the extent of such
Obligations; provided, further, that such funds shall only
be remitted to the Seller to the extent that, after giving
effect to such transfer of funds and such Purchases, the
amount of Capital then outstanding does not exceed the
Capital Limit then in effect.
The Seller, in making any request for funds to be withdrawn from the
Collection Account, shall certify to each of the Collateral Agent and the
Collection Account Bank that the funds will be used for one of the purposes
described above in this Section 6.11(b).
If, on any Business Day prior to the Designated Termination Date, the
Collections of Purchased Assets on deposit in the Collection Account and
available for withdrawal under clause (ii) above are less than the amount of the
obligations described in such clause, such available funds shall be allocated in
the priority set forth in Section 6.11(c) below; if, on any such Business Day,
the Collections of Purchased Assets on deposit in the Collection Account and
available for withdrawal under clause (iv) above are less than the amount of the
obligations described in such clause, such available funds shall be allocated to
the Persons to whom such obligations are owed ratably according to the
respective amounts owed.
(c) On each Business Day prior to the Designated Termination Date, to the
extent that the Collections of Purchased Assets on deposit in the Collection
Account and available under clause (ii) of Section 6.11(b) are insufficient to
pay all Carrying Costs which are then due and payable, such funds shall be
applied to the Carrying Costs in the following order of priority:
(i) To pay any accrued and unpaid Yield (either directly, by
paying to the Swap Provider amounts owed under the Interest
Rate Xxxxxx or by reimbursing Triple-A and/or the Surety for
payments made by
- 36 -
either of them to the Swap Provider on account of amounts
owed under the Interest Rate Xxxxxx);
(ii) To pay the pro-rata portion of any accrued and unpaid fees
owing under the Fee Letter which are allocable to this
Agreement;
(iii) To pay the pro-rata portion of any accrued and unpaid
expenses of the Collateral Agent which are allocable to this
Agreement;
(iv) To pay any accrued and unpaid Servicing Fee; and
(v) To pay ordinary course expenses of the Seller to the extent
the same are due or past due.
If, on any such Business Day, the Collections of Purchased Assets on deposit in
the Collection Account and available for withdrawal under either clause (ii) or
(v) above are less than the amount of the obligations described in such clause,
such available funds shall be allocated to the Persons to whom such obligations
are owed ratably according to the respective amounts owed.
(d) On each Business Day from and after the Designated Termination Date,
Collections and other proceeds of Purchased Assets shall be withdrawn from the
Collection Account solely upon direction of the Collateral Agent to be applied
against the Obligations in the following order of priority;
(i) To remit to the Seller any Collections representing sales or
other taxes or insurance payments for the purpose of
satisfying the Seller's obligations in respect of such taxes
or insurance;
(ii) To pay any accrued and unpaid Servicing Fee (if the Servicer is a
party other than the Originator or an Affiliate thereof);
(iii) To pay accrued and unpaid Yield (either directly or by paying to
the Swap Provider amounts owed under the Interest Rate Xxxxxx or
by reimbursing Triple-A and/or the Surety for payments made by
either of them to the Swap Provider on account of amounts owed
under the Interest Rate Xxxxxx);
(iv) To pay the pro-rata portion of any accrued and unpaid fees owing
under the Fee Letter which are allocable to this Agreement;
(v) To repay all outstanding Capital;
(vi) To pay the pro-rata portion of the accrued and unpaid expenses of
the Collateral Agent which are allocable to this Agreement;
- 37 -
(vii) To pay any other accrued and unpaid Obligations which have not
been paid pursuant to clauses (i) through (v) above;
(viii) To pay any other Carrying Costs which are due and owing but have
not been paid pursuant to clauses (i) through (vi) above; and
(ix) To pay any accrued and unpaid Servicing Fee owed to the
Originator or an Affiliate thereof.
If, on any such Business Day, the funds on deposit in the Collection Account and
available for withdrawal under either clause (iv), (vi), (vii) or (viii) above
are less than the amount of the obligations described in such clause, such
available funds shall be allocated to the Persons to whom such obligations are
owed ratably according to the respective amounts owed. Any funds remaining in
the Collection Account after payment of the foregoing Obligations and other fees
and expenses shall be remitted to the Seller in consideration of the Deferred
Purchase Price, provided that if any "Obligations" under the Credit Agreement
remain outstanding, such funds shall be remitted to the Collateral Agent for
application in accordance with the terms of the Credit Agreement to the extent
of such "Obligations".
ARTICLE VII
WIND-DOWN EVENTS; REMEDIES
SECTION 7.01. Wind-Down Events. Each of the following events shall
constitute a "Wind-Down Event" within the meaning of this Triple-A Purchase
Agreement:
(a) The occurrence of any Event of Termination under the Purchase
Agreement or any "Wind-Down Event" under the Credit Agreement;
(b) The Servicer (if the Seller or any Affiliate of the Seller) shall
fail to perform or observe any term, covenant or agreement hereunder (other
than as referred to in clause (ii) of this Section 7.01(b)) and such
failure shall remain unremedied for three Business Days after written
notice from the Collateral Agent or (ii) either the Servicer (if the Seller
or any Affiliate of the Seller) or the Seller shall fail to make any
payment or deposit to be made by it hereunder when due and, solely in the
case of any such payments which do not constitute payments of Capital or
Yield, such failure shall remain unremedied for three (3) Business Days
after written notice from the Collateral Agent; or
(c) The Seller shall fail to perform or observe any term, covenant or
agreement contained in Section 5.03 and any such failure shall remain
unremedied for five (5) Business Days after written notice from the
Collateral Agent; or
(d) Any representation or warranty made or deemed to be made by the
Seller (or any of its officers) under or in connection with this Triple-A
Purchase Agreement, any
- 38 -
Settlement Report or other information or report delivered pursuant hereto
shall prove to have been false or incorrect in any material respect when
made; provided, however, that (i) to the extent any breach of any such
representation or warranty may be cured within ten (10) Business Days, the
Seller shall have ten (10) Business Days after learning of such breach to
make such representation and warranty true and correct and (ii) if any such
false or incorrect representation or warranty has given rise to a deemed
Collection as provided under Section 2.04 of this Triple-A Purchase
Agreement, then, upon the Seller's payment of such deemed Collection at the
time and in the manner required under this Triple-A Purchase Agreement, the
breach of such representation or warranty shall not give rise to a
Wind-Down Event under this subsection (d); or;
(e) The Seller shall fail to perform or observe any other term,
covenant or agreement contained in this Triple-A Purchase Agreement on its
part to be performed or observed and any such failure shall remain
unremedied for ten (10) Business Days after written notice from the
Collateral Agent (it being understood that if any such failure gives rise
to a deemed Collection under Section 2.04 of this Triple-A Purchase
Agreement, then, the payment of such deemed Collection at the time and in
the manner required under this Triple-A Purchase Agreement shall be deemed
a remedy of such failure); or
(f) The interest of the Collateral Agent in the Purchased Assets
shall for any reason, except to the extent permitted by the terms hereof,
cease to create a valid and perfected first priority interest in such
Purchased Assets; provided, however, if any such failure results in a
deemed Collection under Section 2.04 of this Triple-A Purchase Agreement
and the Seller satisfies in full its payment obligations under such section
with respect to such deemed Collection, then such failure shall not give
rise to a Wind-Down Event under this subsection (f); or
(g) (i) An Insolvency Event shall occur with respect to the Seller or
the Originator or (ii) the Seller or the Originator shall take any
corporate action to authorize the filing of any Insolvency Proceeding; or
(h) As of the close of business on any Settlement Date, the Capital
Limit shall be less than the aggregate outstanding Capital; or
(i) The Originator shall cease to own 100% of the issued and
outstanding stock of the Seller; or
(j) There shall have occurred, since the initial Receivables Purchase
Date, a material adverse change in the financial condition of the Seller or
there shall have occurred any event which materially and adversely affects
the collectibility or the Receivables generally or the ability of the
Seller to perform hereunder; or
(k) Triple-A or the Surety shall determine that continuation of this
Triple-A Purchase Agreement without exercise of remedies under Section 7.02
will impose a material adverse regulatory impact on Triple-A or the Surety,
as the case may be.
- 39 -
SECTION 7.02. Remedies. During the existence of a Wind-Down Event, the
Collateral Agent on behalf of Triple-A may, by written notice to the Seller,
take any or all of the following actions, at the same or different times:
(i) declare the Termination Date to have occurred; (ii) declare the Obligations
to be immediately due and payable; (iii) pursue any other remedy under this
Triple-A Purchase Agreement and the other Facility Documents and (iv) exercise
any rights and remedies of a secured party under Article 9 of the UCC, which
rights and remedies shall be cumulative to those provided for under this
Triple-A Purchase Agreement and the other Facility Documents; provided, however,
that in the case of any event described in clause (i) of subsection 7.01(g)
above, then, automatically upon the occurrence of such event without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Seller, anything contained herein to the contrary
notwithstanding, the Termination Date shall be deemed to have occurred
automatically and any Obligations owed hereunder shall be immediately due and
payable. The rights and remedies of a secured party which may be exercised by
the Collateral Agent pursuant to clause (iv) of this Section 7.02 shall include,
without limitation, the right to (y) identify and engage a Successor Servicer to
act as servicer for the Receivables in the event of a Servicing Termination
Event, and (z) without notice except as specified below solicit and accept bids
for and sell the Purchased Assets or any part thereof in one or more parcels at
a public or private sale, at any exchange, broker's board or at any of the
Collateral Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Collateral Agent may deem
commercially reasonable. The Seller agrees that, to the extent notice of sale
shall be required by law, 10 Business Days' notice to the Seller of the time and
place of any public sale or the time after which any private sale is to be made
shall constitute reasonable notification and that it shall be commercially
reasonable for the Collateral Agent to sell the Purchased Assets on an as-is
basis, without representation or warranty of any kind. The Collateral Agent
shall not be obligated to make any sale of Purchased Assets regardless of notice
of sale having been given and may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
ARTICLE VIII
INDEMNIFICATION; REPURCHASES
SECTION 8.01. Indemnities by the Seller. (a) Without limiting any other
rights which Triple-A may have hereunder or under applicable law, the Seller
hereby agrees to indemnify Triple-A and its permitted successors and assigns
(including, without limitation, Triple-A, the Collateral Agent and the Surety)
and their respective officers, directors, agents and employees (each, an
"Indemnified Party"), from and against any and all damages, losses, claims,
liabilities and related costs and expenses, including reasonable attorneys' fees
and disbursements (all of the foregoing being collectively referred to as
"Indemnified Amounts") awarded against or incurred by any Indemnified Party
relating to or resulting from any of the following (excluding, however,
(i) Indemnified Amounts to the extent resulting from gross negligence or willful
misconduct on the part of an Indemnified Party or (ii) recourse (except with
respect to payment and performance obligations provided for in this Agreement)
for uncollectible Receivables):
- 40 -
(i) the transfer of any Receivable which was not, as of the Receivables
Purchase Date, an Eligible Receivable;
(ii) any representation or warranty made or deemed made by the Seller or
the Originator (or any of their respective officers) under or in
connection with the Purchase Agreement or this Triple-A Purchase
Agreement, any Settlement Report or any other information or report
delivered by the Seller or the Originator pursuant hereto, which
shall have been false or incorrect in any material respect when
made or deemed made or delivered;
(iii) the failure by the Seller or the Originator (individually or as
Servicer) to comply with any term, provision or covenant contained in
this Triple-A Purchase Agreement or the Purchase Agreement (other than
any covenant contained in Section 5.04 of the Purchase Agreement, a
breach of which shall constitute an Event of Termination but shall not
give rise to indemnification under this Section 8.01), or any
agreement executed in connection with this Triple-A Purchase Agreement
or the Purchase Agreement or with any applicable law, rule or
regulation with respect to any Purchased Receivable, the related
Contract, the Related Security or the other Purchased Assets, or the
nonconformity of any Purchased Receivable, the related Contract, the
Related Security or the other Purchased Assets with any such
applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in Triple-A or to transfer to
Triple-A an ownership interest in the Purchased Assets, free and clear
of any Adverse Claim (including, without limitation, free and clear of
any Permitted Lien except in favor of Triple-A or its assignees)
whether existing on the Receivables Purchase Date or at any time
thereafter;
(v) the failure to file, or any delay in filing (other than solely as a
result of the action or inaction of Triple-A), financing statements or
other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws against the Obligor with respect
to any Contract or Receivables which are, or are purported to be,
Purchased Assets, whether at the time of any Purchase or at any
subsequent time;
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any
Purchased Receivable (including, without limitation, a defense based
on such Purchased Receivable or the related Contract not being a
legal, valid and binding obligation of such Obligor enforceable
against it in accordance with its terms), or any other claim resulting
from the sale or lease of the Equipment and/or services related
thereto or the furnishing or failure to furnish such Equipment and/or
services;
(vii) any failure of the Seller or the Originator, as Servicer or otherwise,
to perform its duties or obligations in accordance with the provisions
of Article VI hereof or Article VI of the Purchase Agreement;
- 41 -
(viii) any products liability claim or personal injury or property damage
suit or other similar or related claim or action of whatever sort
arising out of or in connection with the Equipment or any other
goods, merchandise and/or services which are the subject of any
Receivable or Contract;
(ix) the failure to pay when due any taxes, including, without limitation,
sales, excise or personal property taxes payable in connection with
the Purchased Assets;
(x) the termination, rejection or non-assumption by the Seller of any
Contract prior to the original term of such Contract, whether such
rejection, early termination or non-assumption is made pursuant to an
equitable cause, statute, regulation, judicial proceeding or other
applicable laws (including, without limitation, Section 365 of the
Bankruptcy Code);
(xi) the failure of the Seller, the Originator and the Obligors under the
Contracts to maintain casualty and liability insurance for the
Equipment related to the Purchased Receivables in an amount at least
equal to the Discounted Receivables Balance for such Purchased
Receivables;
(xii) the failure of any Lock-Box Bank to remit any funds in the Lock-Box
Accounts as required hereunder; and
(xiii) the commingling of Collections of any Transferred Assets with any
other funds of the Seller.
Any amounts subject to the indemnification provisions of this Section 8.01
shall be paid by the Seller to the applicable Indemnified Party within two
Business Days following the Indemnified Party's demand therefor.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment to or waiver of any provision
of this Triple-A Purchase Agreement nor consent to any departure by the Seller,
shall in any event be effective unless the same shall be in writing and signed
by (i) the Collateral Agent on behalf of itself and Triple-A and the Seller
(with respect to an amendment) or (ii) the Collateral Agent on behalf of itself
and Triple-A (with respect to a waiver or consent by it) or the Seller (with
respect to a waiver or consent by it), as the case may be, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given. This Triple-A Purchase Agreement contains a final and
complete integration of all prior expressions by the parties hereto with respect
to the subject matter hereof and shall constitute the entire agreement (together
with the exhibits hereto) among the parties hereto with respect to the subject
matter hereof, superseding all prior oral or written understandings.
- 42 -
SECTION 9.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including telex communication and communication by facsimile copy) and mailed,
telexed, transmitted or delivered, as to each party hereto, at its address set
forth under its name on the signature pages hereof or at such other address as
shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall be effective, upon receipt,
or in the case of delivery by mail, five days after being deposited in the
mails, or, in the case of notice by telex, when telexed against receipt of
answer back, or in the case of notice by facsimile copy, when verbal
communication of receipt is obtained, in each case addressed as aforesaid,
except that notices and communications pursuant to Article II shall not be
effective until received.
SECTION 9.03. No Waiver; Remedies. No failure on the part of the
Collateral Agent or Triple-A to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 9.04. Binding Effect; Assignability. This Triple-A Purchase
Agreement shall be binding upon and inure to the benefit of the Seller,
Triple-A, the Collateral Agent and their respective successors and permitted
assigns (which successors of the Seller shall include a trustee in bankruptcy).
The Seller may not assign any of its rights and obligations hereunder or any
interest herein without the prior written consent of Triple-A and the Collateral
Agent. Each of Triple-A and the Collateral Agent may assign at any time its
rights and obligations hereunder and interests herein to any other Person
without the consent of the Seller. Without limiting the foregoing, the Seller
hereby acknowledges that Triple-A has agreed pursuant to the Liquidity Agreement
and certain related agreements that, subject to the restrictions set forth
therein, certain parties providing credit enhancements and/or liquidity for
Triple-A in connection with the Triple-A Purchase Agreement shall be entitled to
exercise Triple-A's rights under this Triple-A Purchase Agreement and in
addition, shall constitute third-party beneficiaries of this Agreement. The
Seller hereby consents to the foregoing and agrees to cooperate with any such
Person electing to exercise Triple-A's rights under this Triple-A Purchase
Agreement. This Triple-A Purchase Agreement shall create and constitute the
continuing obligations of the parties hereto in accordance with its terms, and
shall remain in full force and effect until such time, after the Termination
Date, as the Collection Date shall occur; provided, however, that the rights and
remedies with respect to any breach of any representation and warranty made by
the Seller pursuant to Article IV and Article VIII shall be continuing and shall
survive any termination of this Triple-A Purchase Agreement.
SECTION 9.05. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS TRIPLE-A PURCHASE
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF
THE INTERESTS OF THE COLLATERAL AGENT IN THE COLLATERAL OR REMEDIES HEREUNDER OR
THEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. THE SELLER HEREBY
- 43 -
AGREES TO THE JURISDICTION OF ANY FEDERAL COURT LOCATED WITHIN THE STATE OF NEW
YORK, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS
THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL DIRECTED TO THE
SELLER AT THE ADDRESS SET FORTH ON THE SIGNATURE PAGE HEREOF AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN
DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID, OR, AT THE OPTION OF EITHER
TRIPLE-A OR THE COLLATERAL AGENT, BY SERVICE UPON CT CORPORATION SYSTEM,
0000 XXXXXXXX, XXX XXXX, XXX XXXX 00000, WHICH THE SELLER HEREBY IRREVOCABLY
APPOINTS AS ITS AGENT FOR THE PURPOSE OF ACCEPTING SERVICE OF PROCESS. THE
SELLER HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE BETWEEN THE SELLER AND
TRIPLE-A AND/OR THE COLLATERAL AGENT ARISING OUT OF, CONNECTED WITH, RELATED TO,
OR INCIDENTAL TO THE RELATIONSHIP BETWEEN THEM IN CONNECTION WITH THIS TRIPLE-A
PURCHASE AGREEMENT. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN
A BENCH TRIAL WITHOUT A JURY. WITH RESPECT TO THE FOREGOING CONSENT TO
JURISDICTION, THE SELLER HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 9.05 SHALL AFFECT THE RIGHT
OF TRIPLE-A OR THE COLLATERAL AGENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR AFFECT THE RIGHT OF TRIPLE-A OR THE COLLATERAL AGENT TO
BRING ANY ACTION OR PROCEEDING AGAINST THE SELLER OR ITS PROPERTY IN THE COURTS
OF ANY OTHER JURISDICTION.
SECTION 9.06. Costs, Expenses and Taxes.
(a) The Seller agrees to pay on demand all reasonable costs and
expenses in connection with the preparation, execution, delivery and
administration (including periodic auditing fees as provided for in
Section 5.01(c) and any requested amendments, waivers or consents) of this
Triple-A Purchase Agreement and the other documents to be delivered
hereunder, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for Triple-A and the Collateral Agent
with respect thereto and with respect to advising Triple-A and the
Collateral Agent as to its rights and remedies under this Triple-A Purchase
Agreement, and the other agreements executed pursuant hereto and all costs
and expenses, if any (including reasonable counsel fees and expenses), in
connection with the enforcement of this Triple-A Purchase Agreement and the
other agreements and documents to be delivered hereunder.
(b) In addition, the Seller shall pay any and all stamp, sales,
excise and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of this
Triple-A Purchase Agreement or the other
- 44 -
agreements and documents to be delivered hereunder, and agrees to indemnify
the Collateral Agent, Triple-A and their respective assignees against any
liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.
SECTION 9.07. Execution in Counterparts; Severability. This Triple-A
Purchase Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. In case any provision in or
obligation under this Triple-A Purchase Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 9.08. No Bankruptcy Petition Against Triple-A. The Seller
covenants and agrees that it will not institute against Triple-A, or join any
other Person in instituting against Triple-A, any Insolvency Proceeding under
bankruptcy law or under any similar federal or state law.
IN WITNESS WHEREOF, the parties below have caused this Triple-A Purchase
Agreement to be duly executed by their duly authorized officers and delivered as
of the day and year first above written.
HPSC BRAVO FUNDING CORP., as Seller
By: /s/ Xxxx X. Xxxxxxx
------------------------------------
Title: President
Address: Sixty Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Attn: President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
HPSC, INC., as Servicer
By: /s/ Xxxx Xxxxxxxx
------------------------------------
Title: CFO
Address: Sixty Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000-0000
Attn: Vice President, Finance
Telephone:
Telecopy:
- 45 -
TRIPLE-A ONE FUNDING CORPORATION
By: Capital Markets Assurance Corporation, its
Attorney-in-Fact
By: /s/ Xxxxx X. Xxxxxxxxxx
------------------------------------
Title: Vice-President
Address: 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Head of Exposure
Management
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
CAPITAL MARKETS ASSURANCE CORPORATION
By: /s/ Xxxxx X. Xxxxxxxxxx
------------------------------------
Title: Vice-President
Address: 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Head of Exposure
Management
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
- 46 -
Execution Copy
AMENDMENT NO. 2
Dated as of October 18, 1996
to
CREDIT AGREEMENT
Dated as of January 31, 1995
THIS AMENDMENT NO. 2 dated as of October 18, 1996 ("AMENDMENT") is entered
into by and between HPSC BRAVO FUNDING CORP. (the "BORROWER"), TRIPLE-A ONE
FUNDING CORPORATION, a Delaware corporation ("TRIPLE-A") and CAPITAL MARKETS
ASSURANCE CORPORATION, a New York stock insurance company ("CapMAC"). as
Collateral Agent and as Administrative Agent. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to such terms in
the Definitions List referred to below.
PRELIMINARY STATEMENTS
A. The Borrower, Triple-A and CapMAC are parties to that certain Credit
Agreement dated as of January 31, 1995 (as amended by that certain Amendment
No. 1 dated as of December 19, 1995, the "CREDIT AGREEMENT"), pursuant to which
Triple-A agreed to make Triple-A Loans to the Borrower, the proceeds of which
have been used to purchase Transferred Assets from the Seller in accordance with
the terms of the Purchase Agreement;
B. As a condition precedent to the making of Triple-A Loans, the Borrower
agreed to grant a security interest in favor of the Collateral Agent, for the
benefit of Triple-A, in all of its right, title and interest in, to and under
the Transferred Assets, the Purchase Agreement and the other collateral
described in the Credit Agreement;
C. The Borrower desires to sell certain Transferred Assets to Triple-A
pursuant to that certain Triple-A Purchase Agreement dated as of the date
hereof.
D. The Buyer and the Seller have agreed to amend the Credit Agreement on
the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises set forth above, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, Triple-A and CapMAC agree as follows:
SECTION 1. AMENDMENT TO THE CREDIT AGREEMENT. Effective as of the date
first above written, subject to the satisfaction of the conditions precedent set
forth in SECTION 3 below, the Credit Agreement is hereby amended as follows:
1.1 DEFINITIONS. The Definitions List referenced in Section 1.01 of
the Credit Agreement is hereby amended and restated in its entirety. The
Amended and Restated Definitions List is attached hereto as Annex A.
1.2 USE OF TERM "RELATED SECURITY". Each reference in the Credit
Agreement to the term "Related Security" is hereby replaced with the phrase
"Related Security with respect thereto".
1.3 SECTION 2.01(a). The third sentence of Section 2.01(a) is hereby
amended to delete clause (ii) in its entirety and to substitute the
following therefor:
"(ii) as adjusted on any other date of determination to eliminate
from the Discounted Eligible Receivables Balance (x) any Pledged
Receivables which were Eligible Receivables as of the dates
reflected in the Settlement Report but which no longer satisfy
the criteria for Eligible Receivables, and (y) any Eligible
Receivables reflected in the Settlement Report which have become
Purchased Receivables since the date of such Settlement Report."
1.4 SECTION 2.04. Section 2.04 is hereby amended to delete the
proviso thereto and to substitute the following:
"PROVIDED, that (x) in no event shall the Facility Limit be
reduced to an amount less than the sum of the Triple-A Loans then
outstanding at that time; and (y) concurrently with each such
reduction, the "Facility Limit" in the Triple-A Purchase
Agreement shall be reduced by the equivalent amount times 30%."
1.5 SECTION 2.05. Section 2.05 is hereby amended to delete the
reference to "Eurodollar Loan" in the last sentence thereof and to insert
therefor the term "Eurodollar Rate Advance".
1.6 SECTION 2.07. Section 2.07 is hereby amended: (i) to delete, from
clause (A) in subsection (b) and from clause (i) in subsection (c) thereof,
the word "funds" which appears in each such clause and to substitute
therefor the phrase "Collections of Pledged Receivables".
1.7 SECTION 2.09. Section 2.09 is hereby amended to add, at the
conclusion thereof, the following new subsection (c):
"(c) In the event that Triple-A requests compensation for
increased costs on behalf of any Liquidity Bank under this
Section 2.09 and such increased costs are not being requested by
the other Liquidity Banks generally or, if only one Liquidity
Bank exists, by Triple-A's liquidity providers for similar
transactions, then Triple-A shall, promptly following
identification by the Seller of an "Eligible Assignee" (as
defined in the
Liquidity Agreement) willing to accept such commitment, cause the
Liquidity Bank requesting such increased costs to assign its
outstanding Advances and commitments under the Liquidity Agreement to
such Eligible Assignee, all as more particularly described in
Section 8.06(g) of the Liquidity Agreement."
1.8 SECTION 4.01(g). Section 4.01(g) is hereby amended to insert,
immediately before the words "first priority", the following parenthetical
phrase: "(except as expressly contemplated under Section 6.01)".
1.9 SECTION 4.01. Section 4.01 is hereby further amended to add, at
the conclusion thereof, the following clause (u):
"(u) Implicit Interest Rate. As of the date of any Receivables
Purchase, the excess of (i) the average implicit interest rates
being charged to Obligors in respect of the Receivables then
being purchased over (ii) the Discount Rate applicable to such
Receivables, shall not be greater than eight percent (8.0%)."
1.10 SECTION 5.01(c). Section 5.01(c) is hereby amended to delete the
proviso therein and to insert the following therefor:
"PROVIDED, that so long as no Wind-Down Event has occurred during
any calendar year, the annual audit expenses during such year for
which the Borrower is responsible hereunder and under the
Triple-A Purchase Agreement shall not exceed $40,000 in the
aggregate."
1.11 SECTION 5.01(j). Section 5.01(j) is amended to delete the
proviso which appears at the end thereof in its entirety and to substitute
the following therefor:
"PROVIDED that the Seller shall not be required to file financing
statements or to maintain the effectiveness of previously filed
financing statements with respect to any Eligible Receivables the
Outstanding Balance of which originally is or has thereafter been
reduced below $5,000, respectively, so long as the aggregate
Outstanding Balance of Receivables for which no such financing
statements are in effect at any time remains less than 7.5% of
the Discounted Eligible Receivables Balance; provided that such
seven and one-half percent limitation shall not apply from and
after the Termination Date unless and to the extent that the
Collateral Agent specifically requests otherwise."
1.12 SECTION 5.01(l). Clause (iii) of Section 5.01(l) of the Credit
Agreement is amended to delete each of the brackets ("[" and "]") which
currently appear therein.
1.13 SECTION 5.01(n). The second sentence of Section 5.01(n) is
hereby amended to delete therefrom the phrase "the outstanding principal
amount of the Triple-A Loans", and to substitute therefor the phrase "the
Aggregate Outstandings".
1.14 SECTION 5.03(a). Section 5.03(a) is hereby amended to add, after
the initial phrase "Except as otherwise provided herein", the phrase "or in
the Triple-A Purchase Agreement".
1.15 SECTION 5.03(e). Section 5.03(e) is hereby amended to add,
immediately before the period at the conclusion thereof, the phrase "and
the Triple-A Purchase Agreement".
1.16 SECTION 5.03(i). Section 5.03(i) is hereby amended to delete the
word "hereunder" which appears in clause (i) thereof and to substitute
therefor the phrase "under this Credit Agreement or under the Triple-A
Purchase Agreement".
1.17 SECTION 5.03(j). Section 5.03(j) is hereby amended to delete the
phrase "under this Credit Agreement" which appears at the conclusion
thereof and to substitute therefor the phrase "under this Credit Agreement
or under the Triple-A Purchase Agreement".
1.18 SECTION 5.03(p). Clause (iii) of Section 5.03(p) is hereby
amended to add the phrase "under this Credit Agreement or the Triple-A
Purchase Agreement" between the term "Defaulted Receivables" and the word
"in".
1.19 SECTION 6.01. Section 6.01 is hereby amended to add the
following at the end thereof:
"Notwithstanding anything herein or in the Triple-A Purchase
Agreement to the contrary, it is expressly agreed that the
Collateral assigned and pledged to Triple-A hereunder shall
include all right, title and interest of the Borrower, if any, in
and to the Purchased Assets, including, without limitation, the
residual interest in all of the Borrower's right, title and
interest in and to the Purchased Assets, PROVIDED, that the
interest of Triple-A as purchaser under the Triple-A Purchase
Agreement with respect to the Purchased Assets shall be senior to
the interest of the Collateral Agent hereunder."
1.20 SECTION 6.06(a). Section 6.06(a) is hereby amended to delete the
period at the end thereof and to insert the following:
"; and PROVIDED, FURTHER, that notwithstanding anything herein to
the contrary, funds on deposit in the Collection Account which
constitute "Collections" under the Triple-A Purchase Agreement
shall be applied in accordance with the terms and provisions of
the Triple-A Purchase Agreement before being applied to satisfy
any Obligations hereunder."
1.21 SECTION 6.06(b). The first sentence of Section 6.06(b) is hereby
amended to insert, after the word "funds" the first time such word appears
therein, the following parenthetical phrase: "(net of any funds
constituting "Collections" under the Triple-A Purchase Agreement and
applied to pay "Yield", to reduce "Capital" or otherwise to pay
"Obligations" thereunder)".
1.22 SECTIONS 6.06(b). Clause (iv) of Section 6.06(b) is hereby
amended to delete therefrom the phrase "any other Obligations which may be
due and owing at such time" and to substitute the following therefor:
"any other Obligations and any "Obligations" (i.e., any recourse
obligations of the Borrower) under the Triple-A Purchase
Agreement which may, in either such case, be due and owing at
such time;"
1.23 SECTION 6.06(d). The first sentence of Section 6.06(d) is hereby
amended to insert, after the word "funds" the first time such word appears
therein, the following parenthetical phrase: "(net of any funds
constituting "Collections" under the Triple-A Purchase Agreement and
applied to pay "Yield", to reduce "Capital" or otherwise to pay
"Obligations" thereunder)".
1.24 SECTION 6.06(d). Clause (vii) of Section 6.06(d) is hereby
amended to add, at the conclusion thereof, the following phrase:
"and to pay any "Obligations" (i.e., any recourse obligations of
the Borrower) under the Triple-A Purchase Agreement which may be
due and owing at such time."
1.25 SECTION 7.01(a). Section 7.01(a) is hereby amended to add, at
the end thereof, the phrase "or any 'Wind-Down Event' under the Triple-A
Purchase Agreement".
SECTION 2. REPRESENTATIONS AND WARRANTIES. The Seller represents and
warrants as follows:
(a) This Amendment and the Credit Agreement as previously executed
and as amended hereby, constitute legal, valid and binding obligations of
the Seller and are enforceable against the Seller in accordance with their
terms.
(b) Upon the effectiveness of this Amendment, the Seller hereby
reaffirms that the representations and warranties contained in ARTICLE IV
of the Credit Agreement are true and correct.
(c) Upon the effectiveness of this Amendment, the Seller hereby
reaffirms all covenants made in the Credit Agreement and the other Facility
Documents to the extent the same are not amended hereby and agrees that all
such covenants shall be deemed to have been remade as of the effective date
of this Amendment.
(d) No Wind-Down Event or Unmatured Wind-Down Event has occurred or
is continuing.
SECTION 3. CONDITIONS PRECEDENT. This Amendment shall become effective
as of November 5, 1996, PROVIDED that all of the following conditions are met in
form and substance satisfactory to the Buyer.
(a) This Amendment shall have been executed and delivered by the
Borrower and Triple-A.
(b) On the date the last of the conditions listed herein is satisfied
(the "Delivery Date") there shall exist no Wind-Down Event or Unmatured
Wind-Down Event.
SECTION 4. REFERENCE TO THE EFFECT ON THE CREDIT AGREEMENT. Except as
specifically set forth above, the Credit Agreement, and all other documents,
instruments and agreements executed and/or delivered in connection therewith,
shall remain in full force and effect, and are hereby ratified and confirmed.
The execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided herein and for the limited purposes set forth herein, operate
as a waiver of any right, power or remedy of the Buyer, nor constitute a waiver
of any provisions of the Credit Agreement, or any other documents, instruments
and agreements executed and/or delivered in connection therewith.
SECTION 5. HEADINGS. Section headings in the Amendment are included
herein for convenience of reference only and shall not constitute part of this
Amendment for any other purpose.
SECTION 6. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the internal laws, and not the conflicts of law
provisions, of the State of New York.
SECTION 7. COUNTERPARTS. This Amendment may be executed by one or more
of the parties to this Amendment on any number of separate counterparts and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and
year first above written.
HPSC BRAVO FUNDING CORP.,
as Borrower
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Title:
TRIPLE-A ONE FUNDING CORPORATION
By CAPITAL MARKETS ASSURANCE
CORPORATION, Its Attorney-In-Fact
By: /s/ Xxxxx X. Xxxxxxxxxx
-----------------------------------
Title: Vice President
CAPITAL MARKETS ASSURANCE CORPORATION,
as Collateral Agent and Administrative
Agent
By: /s/ Xxxxx X. Xxxxxxxxxx
-----------------------------------
Title: Vice President
Execution Copy (Final)
AMENDMENT NO. 2
Dated as of October 18, 1996
to
PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of January 31, 1995
THIS AMENDMENT NO. 2 dated as of October 18, 1996 ("AMENDMENT") is entered
into by and between HPSC BRAVO FUNDING CORP. (the "BUYER") and HPSC, INC., a
Delaware corporation (the "SELLER"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Definitions List referred to below.
PRELIMINARY STATEMENTS
A. The Buyer and the Seller are parties to that certain Purchase and
Contribution Agreement dated as of January 31, 1995 (as amended by that certain
Amendment No. 1 dated as of December 19, 1995, the "PURCHASE AGREEMENT"),
pursuant to which the Buyer has agreed to purchase certain Transferred Assets
from the Seller from time to time pursuant to the terms of the Purchase
Agreement.
B. The Buyer has assigned the Transferred Assets to Triple-A One Funding
Corporation ("Triple-A") as security for Triple-A Loans made by Triple-A
pursuant to that certain Credit Agreement dated as of January 31, 1995 (as
amended by that certain Amendment No. 1 dated as of December 19, 1995, the
"Credit Agreement").
C. The Buyer desires to sell certain Transferred Assets to Triple-A
pursuant to that certain Triple-A Purchase Agreement dated as of the date
hereof.
D. The Buyer and the Seller have agreed to amend the Purchase Agreement
on the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises set forth above, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Buyer and the Seller agree as follows:
SECTION 1. AMENDMENT TO THE PURCHASE AGREEMENT. Effective as of the
date first above written, subject to the satisfaction of the conditions
precedent set forth in SECTION 3 below, the Purchase Agreement is hereby amended
as follows:
1.1 DEFINITIONS. The Definitions List referenced in Section 1.01 of
the Purchase Agreement is hereby amended and restated in its entirety. The
Amended and Restated Definitions List is attached hereto as Annex A.
1.2 SECTION 2.07. Section 2.07 is hereby amended to delete the
proviso which appears at the end thereof in its entirety and to substitute
therefor the following:
"PROVIDED that the Seller shall not be required to file financing
statements or to maintain the effectiveness of previously filed
financing statements with respect to any Receivables the
Outstanding Balance of which originally is or has thereafter been
reduced below $5,000, respectively, so long as the aggregate
Outstanding Balance of Receivables for which no such financing
statements are in effect at any time remains less than 7.5% of
the Discounted Eligible Receivables Balance at such time;
provided that such seven and one-half percent limitation shall
not apply from and after the Termination Date unless and to the
extent that the Buyer or the Collateral Agent on its behalf
specifically requests otherwise."
1.3 SECTION 4.01(h). Section 4.01(h) is hereby amended (i) to insert
a period (".") immediately after the phrase "Adverse Claim" the second time
such phrase appears in the first sentence of such section, (ii) to insert
an extra space following such period and (iii) to capitalize the word "all"
which immediately follows such extra space.
1.4 SECTION 4.01(r)(vi). Section 4.01(r)(vi) is hereby amended to
add, at the end thereof, the phrase "for all Contracts".
1.5 SECTION 4.01(r). Section 4.01(r) is hereby further amended to
add, at the conclusion thereof, the following clause (xi):
"(xi) As of the Purchase Date thereof, the excess of (i) the
average implicit interest rates being charged to Obligors in
respect of the Receivables then being purchased OVER (ii) the
Discount Rate applicable to such Receivables, shall not be
greater than eight percent (8.0%)."
1.6 SECTION 5.01(j). Section 5.01(j) is hereby amended to delete the
proviso which appears at the end thereof in its entirety and to substitute
therefor the following:
"provided that the Seller shall not be required to file financing
statements or to maintain the effectiveness of previously filed
financing statements with respect to any Receivables the
Outstanding Balance of which originally is or has thereafter been
reduced below $5,000, respectively, so long as the aggregate
Outstanding Balance of Receivables for which no such financing
statements are in effect at any time remains less than 7.5% of
the Discounted Receivables Balance of all Receivables at such
time; provided that such seven and one-half percent limitation
shall not apply from and after the Termination Date unless and to
the extent that the Buyer or the Collateral Agent on its behalf
specifically requests otherwise."
1.7 SECTION 5.01(l)(vii). Section 5.01(l)(vii) is hereby amended to
add, at the end thereof, the phrase "and Section 5.01(l) of the Triple-A
Purchase Agreement".
1.8 SECTION 5.02. Section 5.02 is hereby amended (i) to delete the
period (".") at the conclusion of clause (f) thereof and to substitute
therefor a semi-colon followed by the word and ("; and") and (ii) to then
add, at the conclusion thereof, the following additional clause (g):
"(g) as soon as possible and in any event with five Business Days
after the occurrence thereof, notification of: (i) any material
changes in the Seller's bank agreements, indentures or other
material agreements governing Indebtedness and/or (ii) any event
which constitutes (or which, with the giving of notice or the
passage of time or both, would constitute) a default under any
such agreement or permits or (iii) any other event which permits
(or which, with the giving of notice or the passage of time,
would permit) the holder of such Indebtedness to accelerate the
maturity thereof."
1.9 SECTION 6.01. Section 6.01 is hereby amended to delete the last
sentence thereof and to substitute the following:
"The Servicer acknowledges that the Buyer has (a) pursuant to the
Credit Agreement, granted to the Collateral Agent, for the
benefit of Triple-A and the Surety, a security interest in
Pledged Assets and has assigned to the Collateral Agent all of
its rights under this Agreement with respect to such Pledged
Assets, including its rights with respect to the Servicer under
this Article VI, as more fully described in Section 9.04
hereunder, and (b) pursuant to the Triple-A Purchase Agreement,
sold to Triple-A Purchased Assets which will be serviced pursuant
to Article VI of the Triple-A Purchase Agreement."
1.10 SECTION 6.02(a). Section 6.02(a) is hereby amended to delete the
fifth sentence thereof and to substitute the following therefor:
"The Servicer shall segregate and set aside for the account of
the Buyer all Collections of Transferred Assets in accordance
with Section 2.05 hereof, Section 6.06 of the Credit Agreement
and Section 6.06 of the Triple-A Purchase Agreement and shall
cause all such Collections to be remitted to a Lock-Box Account
and/or deposited directly into the Collection Account within one
Business Day after identification thereof by the Servicer and in
any event within four Business Days after the Servicer's receipt
thereof."
1.11 SECTION 7.01(j). Section 7.01(j) is hereby deleted in its
entirety and the following is substituted therefor:
"(k) As of the last day of any month, the "Default Ratio" under
either the Credit Agreement or the Triple-A Purchase Agreement
shall be greater than 3.5%; or"
1.12 SECTION 7.01(k). Section 7.01(k) is hereby deleted in its
entirety and the following is substituted therefor:
"(k) As of the last day of any month, the "Delinquency Ratio"
under either the Credit Agreement or the Triple-A Purchase
Agreement shall be greater than 5.5%; or"
1.13 SECTION 7.01(m). Section .01(m) is hereby amended to delete the
semi-colon (";") at the end thereof and to substitute therefor the phrase
"or any 'Wind-Down Event' shall occur under the Triple-A Purchase
Agreement; or".
1.14 SECTION 8.01(a)(iv). Section 8.01(a)(vi) is hereby amended to
delete the reference to "Permitted Lien" and to insert therefor the term
"Permitted Encumbrance".
1.15 SECTION 8.01(a)(xi). Section 8.01(a)(xi) is hereby amended to
add, at the end thereof, the phrase "for all Receivables at such time".
1.16 SECTION 9.04. Section 9.04 is hereby amended to delete the
fourth, fifth, sixth and seventh sentences thereof and to substitute the
following therefor:
"Without limiting the foregoing, the Seller acknowledges that the
Buyer shall (i) assign to the Collateral Agent, for the benefit
of Triple-A and the Surety, as collateral security for its
obligations under the Credit Agreement, all of its rights,
remedies, powers and privileges hereunder with respect to Pledged
Assets pledged to the Collateral Agent thereunder and (ii) sell
to Triple-A all of its right, remedies, powers and privileges
hereunder with respect to Purchased Assets (as defined in the
Triple-A Purchase Agreement), and that Triple-A and/or the
Collateral Agent may further assign such rights, remedies, powers
and privileges to the extent permitted in the Credit Agreement
and the Triple-A Purchase Agreement. The Seller agrees that the
Collateral Agent, as the assignee of the Buyer, or Triple-A, as
appropriate, shall, subject to the terms of the Credit Agreement
and the Triple-A Purchase Agreement, have the right to enforce
this Agreement and to exercise directly all of the Buyer's rights
and remedies under this Agreement (including, without limitation,
the rights and remedies under Sections 6.01, 6.02, 6.03, 6.04 and
8.01) and the Seller agrees to cooperate fully with the
Collateral Agent and/or Triple-A in the exercise of such rights
and remedies. Without limiting the foregoing, the Seller hereby
acknowledges that the Buyer and Triple-A have agreed pursuant to
the Credit Agreement, the Triple-A Purchase Agreement and certain
related agreements that, subject to the restrictions set forth
therein, the Collateral Agent and certain parties providing
credit
enhancements and/or liquidity for Triple-A in connection with the
Credit Agreement and the Triple-A Purchase Agreement shall be entitled
to exercise the Buyer's rights under this Agreement. The Seller
hereby consents to the foregoing and agrees to cooperate with any such
Person electing to exercise the Buyer's rights under this Agreement."
SECTION 2. REPRESENTATIONS AND WARRANTIES. The Seller represents and
warrants as follows:
(a) This Amendment and the Purchase Agreement as previously executed
and as amended hereby, constitute legal, valid and binding obligations of
the Seller and are enforceable against the Seller in accordance with their
terms.
(b) Upon the effectiveness of this Amendment, the Seller hereby
reaffirms that the representations and warranties contained in ARTICLE IV
of the Purchase Agreement are true and correct.
(c) Upon the effectiveness of this Amendment, the Seller hereby
reaffirms all covenants made in the Purchase Agreement and the other
Facility Documents to the extent the same are not amended hereby and agrees
that all such covenants shall be deemed to have been remade as of the
effective date of this Amendment.
(d) No Event of Termination or Unmatured Event of Termination has
occurred or is continuing.
SECTION 3. CONDITIONS PRECEDENT. This Amendment shall become effective
as of November 5, 1996, provided that all of the following conditions are met in
form and substance satisfactory to the Buyer.
(a) This Amendment shall have been executed and delivered by the
Buyer and the Seller.
(b) On the date the last of the conditions listed herein is satisfied
(the "Delivery Date") there shall exist no Event of Termination or
Unmatured Event of Termination.
SECTION 4. REFERENCE TO THE EFFECT ON THE PURCHASE AGREEMENT. Except
as specifically set forth above, the Purchase Agreement, and all other
documents, instruments and agreements executed and/or delivered in connection
therewith, shall remain in full force and effect, and are hereby ratified and
confirmed. The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein and for the limited purposes set forth
herein, operate as a waiver of any right, power or remedy of the Buyer, nor
constitute a waiver of any provisions of the Purchase Agreement, or any other
documents, instruments and agreements executed and/or delivered in connection
therewith.
SECTION 5. HEADINGS. Section headings in the Amendment are included
herein for convenience of reference only and shall not constitute part of this
Amendment for any other purpose.
SECTION 6. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the internal laws, and not the conflicts of law
provisions, of the State of New York.
SECTION 7. COUNTERPARTS. This Amendment may be executed by one or more
of the parties to this Amendment on any number of separate counterparts and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and
year first above written.
HPSC, INC., as Seller
By: /s/ Xxxx Lebfebvre
-----------------------------------
Title: CFO
HPSC BRAVO FUNDING CORP.,
as Buyer
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Title: President
Execution Copy
AMENDED AND RESTATED DEFINITIONS LIST
Unless otherwise defined therein, the capitalized terms used in the
documents listed below shall have the meanings set forth in the Amended and
Restated Definitions List below.
1. Purchase and Contribution Agreement, dated as of January 31, 1995 (as
amended by that certain Amendment No. 1 dated as of December 19, 1995
and that certain Amendment No. 2 dated as of October 18, 1996, the
"PURCHASE AGREEMENT"), between the Seller and the Buyer, as the same
may be amended, supplemented or otherwise modified from time to time.
2. Credit Agreement, dated as of January 31, 1995 (as amended by that
certain Amendment No. 1 dated as of December 19, 1995 and that certain
Amendment No. 2 dated as of October 18, 1996, the "Credit Agreement"),
among the Borrower, Triple-A, and Capital Markets Assurance
Corporation ("CapMAC") as the Administrative Agent and the Collateral
Agent, as the same may be amended, supplemented or otherwise modified
from time to time.
3. Insurance and Indemnity Agreement, dated as of January 31, 1995 (as
amended by that certain Amendment No. 1 dated as of October 18, 1996,
the "Insurance Agreement"), among Triple-A, the Borrower, the
Liquidity Agent and CapMAC, as the Administrative Agent and the
Collateral Agent, as the same may be amended, supplemented or
otherwise modified from time to time.
4. Amended and Restated Fee Letter Agreement, dated October 18, 1996 (the
"Fee Letter"), among the Seller, the Borrower, Triple-A, and CapMAC as
the Administrative Agent and the Collateral Agent, as the same may be
amended, supplemented or otherwise modified from time to time.
5. Custodial Agreement, dated as January 31, 1995 (as amended by that
certain Amendment No. 1 dated as of October 18, 1996, the "Custodial
Agreement") among Triple-A, the Seller, the Borrower, the Custodian
and the Collateral Agent, as the same may be amended, supplemented or
otherwise modified from time to time.
AMENDED AND RESTATED DEFINITIONS LIST
"ADVANCE" means an "Advance" funded to Triple-A under the Liquidity
Agreement.
"ADMINISTRATIVE AGENT" means CapMAC in its capacity as "Administrative
Agent" for Triple-A.
"Adverse Claim" means a lien, security interest, charge, encumbrance or
other right or claim of any Person other than Permitted Encumbrances.
"Affiliate" means, with respect to any Person, a Person: (i) that directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such Person; (ii) that beneficially owns or
holds 5% or more of any class of the voting stock (or, in the case of a Person
that is not a corporation, 5% or more of the equity interest) of such Person; or
(iii) 5% or more of the voting stock (or, in the case of a Person that is not a
corporation, 5% or more of the equity interest) of which is beneficially owned
or held, directly or indirectly, by such Person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting stock or an equity interest, by contract, or otherwise.
"Affiliated Obligor" means any Obligor which is an Affiliate of another
Obligor.
"Aggregate Outstandings" means, on any day, an amount equal to the sum of
(i) the outstanding principal amount of the Triple-A Loans and (ii) the
outstanding "Capital" under the Triple-A Purchase Agreement.
"Aggregate Reserves" means, on any day, an amount equal to the Discounted
Eligible Receivables Balance times the greatest of (i) 15%, (ii) the Default
Reserve Ratio as computed in the most recent Settlement Report and (iii) the
Excess Concentration Reserve Ratio as computed on the most recent Settlement
Date, provided, that the Aggregate Reserves shall be no less than $2,500,000 at
any time; provided further, however, that if the "Capital" outstanding under the
Triple-A Purchase Agreement has been reduced to zero, the Aggregate Reserves
shall thereafter be no less than the sum of (i) $2,500,000 plus (ii) the lesser
of (x) $1,000,000 and (y) the Outstanding Balance of the Purchased Receivables
at the time such Capital was reduced to zero.
"Banco Santander" means Banco Santander, a Spanish bank, New York Branch.
"Bank of Boston" means The First National Bank of Boston, a national
banking association.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
Section 101 et seq.), as amended from time to time, or any successor statute.
"Base Rate" means a fluctuating interest rate per annum equal to the higher
of (i) the rate of interest published in the Wall Street Journal as the prime
rate, or, in the event that no such rate is published, the rate of interest
announced publicly by the Liquidity Agent in New York, New York, as its prime or
reference rate, whether or not such rate is the lowest rate offered by such
institution to its corporate borrowers and (ii) 1/2 of one percent per annum
above the Federal Funds Rate.
"Base Rate Advance" means an Advance which bears interest at the Base Rate.
"Benefit Plan" means a defined benefit plan as defined in Section 3(35) of
ERISA (other than a Multiemployer Plan) in respect of which the Seller or any
ERISA Affiliate is, or at any time within the immediately preceding six (6)
years was, an "employer" as defined in Section 3(5) of ERISA.
"Borrower" means HPSC Bravo Funding Corp., a Delaware corporation.
"Borrowing" means a borrowing of Triple-A Loans under the Credit Agreement.
"Borrowing Base" means, on any day, (A) the Discounted Eligible Receivables
Balance on such day minus (B) the Aggregate Reserves then in effect.
"Borrowing Date" means, with respect to any Borrowing, the date on which
such Borrowing is funded, which date, other than in the case of the Closing
Date, shall be a Settlement Date.
"Business Day" means any day other than a Saturday, Sunday or public
holiday or the equivalent for banks in New York City or Boston, Massachusetts;
provided that, when used in connection with any Eurodollar Rate Advance or other
matters concerning the Eurodollar Rate, the term "Business Day" means any such
day on which dealings are carried on in the London interbank market and on which
banks are open for business in London, England.
"Buyer", when used in the Purchase Agreement or in these definitions, means
HPSC Bravo Funding Corp., a Delaware corporation.
"CapMAC" means Capital Markets Assurance Corporation, a New York stock
insurance company.
"Carrying Costs" means, at any time, the aggregate amount of (i) all
accrued and unpaid interest, fees, premiums and other expenses owing by the
Borrower to Triple-A, the Collateral Agent, the Dealer, the Surety, the Swap
Provider, the Servicer and the Administrative Agent (including, without
limitation, all fees owed under the Fee Letter, collateral audit fees and
expenses, the Servicing Fee, the CP Dealer Fees and the Surety Bond Premium)
plus (ii) all ordinary course operating expenses incurred by the Borrower during
such calendar month (including rent, salaries, professional fees and expenses
incurred in connection therewith).
"Carrying Costs Percentage" means a percentage, calculated as of the last
day of each month equal to the sum of (i) the sum of the per annum rates used to
calculate the Servicing Fee and the "Administration Fee" and "Program Fee"
described in the Fee Letter plus (ii) a fraction (expressed as a percentage) the
numerator of which equals Carrying Costs described in clause (ii) of the
definition thereof which were incurred during the calendar month then ending and
the denominator of which equals the average Aggregate Outstandings during such
month.
- 2 -
"Certificate" means a certificate of assignment, in the substantially the
form delivered on the Closing Date, evidencing the assignment by the Seller to
the Buyer of the Transferred Assets.
"Closing Date" means the date on which the Borrower makes its initial
Borrowing under the Credit Agreement and its initial Purchase under the Purchase
Agreement.
"Collateral" has the meaning assigned thereto in Section 6.01 of the Credit
Agreement.
"Collateral Agent" means CapMAC, in its capacity as Collateral Agent
pursuant to the Credit Agreement and the Triple-A Purchase Agreement, and any
successor Collateral Agent.
"Collection Account" has the meaning assigned thereto in Section 6.06 of
the Credit Agreement.
"Collection Account Bank" means the bank maintaining the Collection
Account.
"Collection Date" means the date following the Termination Date on which
(i) the aggregate outstanding Triple-A Loans have been paid in full,
(ii) Triple-A has received all interest, fees and other amounts payable under
the Credit Agreement and the other Facility Documents (other than the Triple-A
Purchase Agreement) and (iii) the Surety Bonds have been discharged (other than
through payment thereunder).
"Collections" means, with respect to any Transferred Asset or Receivable,
as applicable, all cash collections and other cash proceeds of such Transferred
Asset or Receivable, including, without limitation, all cash proceeds of Related
Security related thereto, and, in the case of Transferred Assets, all cash
collections of any Receivables included therein, and, in either such case, any
Collection of such Transferred Asset or Receivable deemed to have been received
pursuant to Section 2.05 of the Purchase Agreement (it being understood that the
Seller shall pay all such deemed Collection amounts to the Buyer by depositing
the amount thereof into the Lock-Box Account).
"Commercial Paper" means the short-term promissory notes of Triple-A
denominated in dollars, issued by Triple-A in connection with the transactions
contemplated by the Facility Documents, including any portion of such short-term
promissory notes that are identified on the books and records of Triple-A as
issued in respect of the transactions contemplated by the Facility Documents.
"Conditional Sale Agreement" means a written conditional sales agreement in
substantially the form of Exhibit K-2 to the Purchase Agreement, pursuant to
which the Buyer sells Equipment to an Obligor.
"Contract" means each Lease, Conditional Sale Agreement or Leasehold
Improvement Note or other agreement or instrument which is purported to be
transferred to the Buyer under the Purchase Agreement, whether by purchase or
contribution to the Buyer's capital, as identified on Exhibit A of the Purchase
Agreement as such exhibit may be supplemented from time to time in connection
with any subsequent Purchase as described in Section 2.02(b) of the Purchase
Agreement.
- 3 -
"Contract File" means, with respect to each Contract, the following
documents:
(i) The executed original counterpart of each Contract that constitutes
"chattel paper" under 9-105(1)(b) of the UCC or that constitutes an
"instrument" for purposes of 9-105(1)(i) of the UCC;
(ii) Any evidence of insurance and any other documents evidencing or
related to any insurance policy maintained by the related Obligor
pursuant to the Contract that covers physical damage to the
Equipment;
(iii) If the related Contract is a Lease, copies of such documents, if any,
indicating that the Equipment was, as of the date such Contract
arose, owned by the Seller and kept on file by the Seller in
accordance with its customary procedures relating to such type of
Contract, such Obligor and such item of Equipment; and
(iv) Copies (if available) of UCC financing statements filed by the Seller
with respect to the related Equipment or, if no such copies are
available, other documentary evidence confirming the filing thereof.
"Contract Payment" means each periodic installment payable by an Obligor
under a Contract for rent, principal and/or interest, excluding all supplemental
or additional payments required by the terms of such Contract with respect to
sales or other taxes, insurance, maintenance, ancillary products and services
and other specific charges.
"Contract Payment Date" means, with respect to any Contract, each date on
which a Contract Payment is or becomes due and payable thereunder.
"CP Dealer Fee" means, on any day, the fees payable to the Dealer in
respect of any Commercial Paper.
"CP Disruption" means the inability of Triple-A, at any time, whether as a
result of a prohibition or any other event or circumstance whatsoever, to raise
funds through the issuance of its commercial paper notes (whether or not
constituting Commercial Paper as defined above) in the United States commercial
paper market.
"Credit Agreement" has the meaning assigned thereto on page (i) of this
Definitions List.
"Credit and Collection Policy" means those credit and collection policies
and practices relating to the Contracts and the Receivables described in
Exhibit D of the Purchase Agreement, as modified in compliance with
Section 5.03(c).
"Custodial Agreement" has the meaning assigned thereto on page (i) of this
Definitions List.
"Custodian" means Bank of Boston, in its capacity as "Custodian" under the
Custodial Agreement, or any successor thereto under the Custodial Agreement.
- 4 -
"Cut-Off Date" means December 31, 1994.
"Dealer" means any dealer or placement agent in respect of the Commercial
Paper.
"Default Ratio" means the ratio (expressed as a percentage), computed as of
the last day of each month by dividing (i) two times the aggregate Outstanding
Balance of all Pledged Receivables that became Defaulted Receivables or were
written off the books of the Buyer as uncollectible during the six-month period
then ending by (ii) the average aggregate Outstanding Balances of all Pledged
Receivables during such six-month period.
"Default Reserve Ratio" means the ratio (expressed as a percentage),
computed as of the last day of each month in accordance with the following
formula:
DRR = 2 X ADR X WRT, where
DRR = the Default Reserve Ratio;
ADR = the six-month rolling average of the Default Ratios for
the six most recent calendar months (including the month
then ending); and
WRT = the Weighted Average Remaining Term of the Pledged
Receivables as of such day.
"Defaulted Receivable" means a Receivable at any time: (i) as to which any
Scheduled Contract Payment or part thereof is unpaid more than 180 days from its
original due date, (ii) as to which the Obligor thereof has taken any action, or
suffered any event to occur, of the type described in the definition of
Insolvency Event or (iii) which, consistent with the Credit and Collection
Policy, has been or should be written off the Borrower's books as uncollectible.
"Delinquency Ratio" means the ratio (expressed as a percentage), computed
as of the last day of each month, by dividing (i) the aggregate Outstanding
Balance of all Pledged Receivables which became Delinquent Receivables during
the three-month period then ending, by (ii) the sum of the aggregate Outstanding
Balances of all Pledged Receivables as of each of the last days of the fifth,
fourth and third preceding calendar months (so that, for example, the
Delinquency Ratio calculated as of June 30th would have a denominator equal to
the sum of the Outstanding Balances of all Pledged Receivables as of
January 31st, February 28th, and March 31st).
"Delinquent Receivable" means a Receivable that is not a Defaulted
Receivable and (i) as to which any Scheduled Contract Payment or part thereof,
is unpaid more than 90 days from its original due date or (ii) which, consistent
with the Credit and Collection Policy, has been or should be classified as
delinquent by the Seller.
"Designated Obligor" means, at any time, any Obligor of the Seller whom the
Collateral Agent has, following three Business Days' notice, advised the Seller
that such Obligor shall be considered a Designated Obligor.
- 5 -
"Designated Termination Date" means the date of the declaration or
automatic occurrence of the Termination Date pursuant to Section 7.01 of the
Purchase Agreement or Section 7.02 of the Credit Agreement.
"Dilution Factors" means with respect to the Receivables, any credits,
rebates, freight charges, cash discounts, volume discounts, cooperative
advertising expenses, royalty payments, warranties, cost of parts required to be
maintained by agreement (whether express or implied), allowances, disputes,
chargebacks, returned or repossessed goods, inventory transfers, allowances for
early payments and other allowances that are made or coordinated with the
Seller's usual practices.
"Discount Rate" means, with respect to any Receivable, the discount rate
used to calculate the aggregate Discounted Value of the Scheduled Contract
Payments payable under the related Contract as of the last day of the month
immediately preceding the month in which such Receivable was acquired from the
Seller. The Discount Rate for the Receivables transferred on any date shall be
a rate equal to the sum of (i) the interest rate per annum quoted to the
Borrower by the Swap Provider as the rate at which such Swap Provider is willing
to enter into an Interest Rate Hedge pursuant to which the Borrower will pay an
interest rate calculated in conjunction with an Interest Rate Hedge amortization
prepared by the Borrower and which complies with Section 5.01(n) of the Credit
Agreement and in return shall receive a floating interest rate (calculated
against the same principal amount) approximately equal to the Eurodollar Rate,
plus (ii) .50% per annum (representing the interest rate spread on "Eurodollar
Rate Advances" under the Liquidity Agreement) plus (iii) the Carrying Costs
Percentage at such time; provided, that the Borrower may, at its option, with
respect to the Receivables transferred on any Settlement Date, designate a rate
which is higher than the rates calculated above to be the "Discount Rate" for
such Receivables.
"Discounted Eligible Receivables Balance" means, as of any date of
determination, the aggregate of the Discounted Values for all Pledged
Receivables which constitute Eligible Receivables.
"Discounted Receivables Balance" means, as of any date of determination,
the aggregate of the Discounted Values for all Receivables or Pledged
Receivables, as the case may be.
"Discounted Value" means, with respect to any Receivable, the present value
of the aggregate amount of the remaining Scheduled Contract Payments under the
Contract relating thereto, with such aggregate amount discounted to present
value using the Discount Rate for such Scheduled Contract Payments and a payment
schedule of the first day of each month commencing with the first day of the
month in which the Discounted Value is calculated and assuming that each
Scheduled Contract Payment is paid on the last Business Day of the month in
which such Scheduled Contract Payment is due; it being understood that the
Discounted Value for that portion of any Receivable which constitute payments or
charges excluded from the definition of Contract Payment or which constitute the
price for a purchase option shall be zero.
"DOL" means the United States Department of Labor and any successor
department or agency.
- 6 -
"Eligible Obligor" means, at any time, an Obligor who is a licensed
professional dental or medical practitioner and who (i) is not an Affiliate of
the Seller; (ii) is not the subject of any Insolvency Proceeding; (iii) is not a
Designated Obligor; (iv) is a United States resident; (v) is not the United
States of America nor any state, or other local governmental agency, or any
department, agency or instrumentality thereof and (vi) is not an Obligor of any
Defaulted Receivable.
"Eligible Receivable" means, at any time, a Receivable:
(i) the Obligor of which is an Eligible Obligor;
(ii) which is not a Delinquent Receivable or a Defaulted Receivable;
(iii) which, according to the Contract under which such Receivable
arises, is required to be paid in full within 72 months of the
original commencement date of such Contract (or such longer
period as may be consented to by the Collateral Agent and the
"Majority Liquidity Banks" (as such term is defined in the
Liquidity Agreement);
(iv) which, if arising under a Lease or Conditional Sale Agreement
arises under a Contract pursuant to which the Equipment related
thereto has been installed and accepted by the related Obligor;
(v) the original Outstanding Balance of which, when added to the
Outstanding Balance of all other Receivables owing by the same
Obligor at such time, does not exceed $250,000, PROVIDED, THAT,
no more than 30% of the Discounted Eligible Receivables Balance
shall relate to Receivables the original Outstanding Balance of
which, when added to the Outstanding Balance of all other
Eligible Receivables owing by the same Obligor at such time,
exceeds $150,000;
(vi) which is either an "account" (as defined in Section 9-106 of
the UCC) or "chattel paper" (as defined in Section 9-105 of the
UCC) or an "instrument" (as defined in Section 9-105 of the
UCC) as in effect in any jurisdiction which has adopted
Article 9 of the UCC and, if the Contract is chattel paper,
then there is only one counterpart of the Contract that
constitutes "chattel paper" for purposes of Section 9-105(l)(b)
and 9-308 of the UCC;
(vii) which is denominated and payable only in United States dollars
in the United States;
(viii) which arises under a Contract which has been duly authorized
and which is in full force and effect and constitutes the
legal, valid and binding obligation of the Obligor enforceable
against such Obligor in accordance with its terms and is not
subject (at the time each
- 7 -
determination of eligibility is made hereunder) to any dispute, offset
or counterclaim whatsoever;
(ix) which, together with the Contract related thereto, does not
contravene in any material respect any laws, rules or
regulations applicable thereto (including, without limitation,
laws, rules and regulations relating to truth in lending, fair
credit billing, fair credit reporting, equal credit
opportunity, fair debt collection practices and privacy) and
with respect to which no party to the Contract related thereto
is in violation of any such law, rule or regulation applicable
to such Contract in any material respect;
(x) which, has not been compromised, adjusted, rewritten or
otherwise modified (including by extension of time for payment
or the granting of any discounts, allowances or credits) for
any reason unless such modification constitutes a Permitted
Extension;
(xi) which (A) satisfies all applicable requirements of the Credit
and Collection Policy and (B) which is freely assignable and
arises under a Contract which is also freely assignable;
(xii) with respect to which, from and after the Purchase thereof, (A) the
Buyer has a first priority ownership therein, free and clear of any
Adverse Claim; and (B) the Collateral Agent has a first priority
perfected security interest free and clear of any Adverse Claim;
(xiii) which arises under a Contract, none of the parties to which have
done or failed to do anything which would or might permit any other
party thereto to terminate such Contract or to suspend or reduce any
payments or obligations due or to become due thereunder;
(xiv) which does not constitute a "consumer lease" under the UCC;
(xv) which, if it arises under a Lease, such Lease requires the Obligor
to maintain insurance against loss or damage to the Equipment
subject to such Lease under an insurance policy which names the
Buyer or the Seller as loss payee and which interest as loss payee
has been transferred to the Buyer pursuant to the Purchase Agreement
and been assigned to the Collateral Agent as security in accordance
with the Credit Agreement;
(xvi) which arises under a Contract, no portion of which has been, or is
subject to rejection, early termination or non-assumption, prior to
the original term of such Contract except pursuant to a provision
therein requiring payment of a Termination Amount upon any such
rejection, early termination or non-assumption;
- 8 -
(xvii) which arises under a Contract that requires payments to be made on a
regular periodic basis and which payments, in the case of any Lease,
do not represent the payment of interim rents;
(xviii) which arises under a Contract that requires the Obligor to be in
possession of any Equipment subject thereto and does not permit the
subleasing of such Equipment to any other Person;
(xix) no portion of which is payable on account of sales taxes;
(xx) as to which the Collateral Agent has not notified the Seller
that the Collateral Agent has determined, in its reasonable
discretion, that such Receivable (or class of Receivables) is
not acceptable for eligibility hereunder (which notice shall
state the reason(s) the Collateral Agent has elected to make
such determination);
(xxi) which was originated or acquired by the Seller in the ordinary
course of its business;
(xxii) the Discounted Value of which, if arising under a Leasehold
Improvement Note, when added to the Discounted Value of all Eligible
Receivables arising under Leasehold Improvement Notes, does not
exceed 25% of the Discounted Eligible Receivables Balance;
(xxiii) the Contract for which is either (A) a Lease in substantially the
form of EXHIBIT K-1 to the Purchase Agreement, (B) a Conditional
Sale Agreement in substantially the form of EXHIBIT K-2 thereto; or
(C) a Leasehold Improvement Note in substantially the form of
EXHIBIT K-3 thereto; or (D) a promissory note, the Discounted Value
of which, when added to the Discounted value of all Eligible
Receivables owed by such Obligor and not described under (A), (B) or
(C) above, does not exceed $25,000 and the Discounted Value of
which, when added to the Discounted Value of all Eligible
Receivables not described under (A), (B) or (C) above owed by all
Obligors, does not exceed 5% of the Discounted Eligible Receivables
Balance;
(xxiv) with respect to which the Seller has filed and maintained the
effectiveness of UCC financing statements against the Obligor in
order to perfect any security interest granted under in such
Contract in the related Equipment, PROVIDED that failure to maintain
the effectiveness of any financing statements for an otherwise
Eligible Receivable whose Outstanding Balance has been reduced below
$5,000 shall, so long as such failure is permitted by
SECTION 5.01(j) of the Credit Agreement, not cause such Receivable
to become ineligible;
(xxv) the Contract for which was originated no earlier than December 1,
1993 and no later than the date which is one month prior to the
Purchase thereof by the Buyer and for which the Obligor has made at
least one Scheduled Contract Payment in full and in a timely manner;
- 9 -
(xxvi) the Obligor of which has been notified of the Buyer's interest as
required under the Purchase Agreement;
(xxvii) with respect to which the Contract File has been delivered to the
Custodian as contemplated under the Custodial Agreement;
(xxviii) which, if arising under a Lease or Conditional Sale Agreement or
Leasehold Improvement Note, relates to Equipment leased or acquired
by Obligors a substantial majority of whom (i.e., 70% or greater)
are in the fields of dentistry and ophthalmology, in each case for
use in the ordinary course of their dental or medical practices; and
(xxix) with respect to which the other representations and warranties
contained in clauses (i) (ii) (iv) and (v) of SECTION 4.01(r) of the
Purchase Agreement are true and correct in all material respects and
with respect to which all other representations and warranties
contained in such SECTION 4.01(r) are true and correct in all
material respects as of the date or dates therein made.
"Equipment" means each item of equipment that is the subject of a Contract,
including all parts, accessions and modifications thereto and all replacements
thereof.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA Affiliate" means any (i) corporation which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
IRC) as the Seller; (ii) partnership or other trade or business (whether or not
incorporated) under common control (within the meaning of Section 414(c) of the
IRC) with the Seller or (iii) member of the same affiliated service group
(within the meaning of Section 414(m) of the IRC) as the Seller, any corporation
described in clause (i) above or any partnership or other trade or business
described in clause (ii) above.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Rate" means for a Eurodollar Rate Advance and the relevant
Interest Period, an interest rate per annum equal to an interest rate per annum
determined by the Liquidity Agent equal to the quotient of (i) the rate at which
it would offer deposits in United States dollars to prime banks in the London
interbank market for a period equal to such Interest Period and in a principal
amount of not less than $1,000,000 at or about 11:00 A.M. (London time) on the
second Business Day before (and for value on) the first day of such Interest
Period, divided by, (ii) one minus the Eurodollar Reserve Percentage (expressed
as a decimal) applicable to the Liquidity Agent for that Interest Period.
"Eurodollar Rate Advance" means an Advance which bears interest at a rate
per annum calculated by reference to the Eurodollar Rate.
- 10 -
"Eurodollar Reserve Percentage" of any Liquidity Bank for the Interest
Period for any Eurodollar Rate Advance means the reserve percentage applicable
during such Interest Period (or, if more than one such percentage shall be so
applicable, the daily average of such percentages for those days in such
Interest Period during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental or other
marginal reserve requirement) for such Liquidity Bank with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities having
a term equal to such Interest Period.
"Event of Termination" has the meaning assigned to that term in
Section 7.01 of the Purchase Agreement.
"Excess Concentration Reserve Ratio" means, on any day, a ratio (expressed
as a percentage) calculated as of the most recent Settlement Date in accordance
with the following formula:
ECRR = (MOB/DRB * 2) + [.14(1-[MOB/DRB * 2])]; where
ECRR = the Excess Concentration Reserve Ratio;
MOB = the largest Outstanding Balance of Eligible
Receivables owed by a single Obligor; and
DRB = the Discounted Eligible Receivables Balance;
PROVIDED, however, that if MOB/DRB IS LESS THAN OR EQUAL TO 1.5%, the Excess
Concentration Reserve Ratio shall be zero.
"Face Amount" means (i) with respect to any Commercial Paper issued on a
discount basis, the face amount of any such Commercial Paper and (ii) with
respect to any Commercial Paper issued on an interest-bearing basis, the sum of
the principal amount thereof and the amount of all interest stated to accrue
thereon through the stated maturity date.
"Facility Documents" means, collectively, the Purchase Agreement, the
Credit Agreement, the Triple-A Purchase Agreement, the Custodial Agreement, the
Lock-Box Agreements, the Insurance Agreement, and all other agreements,
documents and instruments delivered pursuant thereto or in connection therewith.
"Facility Limit" means $100,000,000, as such amount may be reduced pursuant
to Section 2.04 of the Credit Agreement, less the aggregate outstanding Capital
under the Triple-A Purchase Agreement.
"Federal Funds Rate" means, for any day, a fluctuating interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day, the
average of the quotations for such day for such transactions received by the
Liquidity Agent from three Federal funds brokers of recognized standing selected
by it.
- 11 -
"Fee Letter" has the meaning assigned thereto on page (i) of this
Definitions List.
"GAAP" means generally accepted accounting principles as in effect from
time to time and applied on a basis consistent with the audited financial
statements described in Section 4.01(e) of the Purchase Agreement.
"Indebtedness" of any Person means (i) indebtedness of such Person for
borrowed money, (ii) obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments, (iii) obligations of such Person to pay the
deferred purchase price of property or services, (iv) obligations of such Person
as lessee under leases which shall have been or should be, in accordance with
GAAP, recorded as capital leases, (v) obligations secured by any lien or other
charge upon property or assets owned by such Person, even though such Person has
not assumed or become liable for the payment of such obligations,
(vi) obligations of such Person in connection with any letter of credit issued
for the account of such Person and (vii) obligations of such Person under direct
or indirect guaranties in respect of, and obligations (contingent or otherwise)
to purchase or otherwise acquire, or otherwise to assure a creditor against loss
in respect of, indebtedness or obligations of others of the kinds referred to in
clauses (i) through (vi) above.
"Indemnified Party" has the meaning assigned to such term in Section 8.01
of the Purchase Agreement.
"Insolvency Event" means with respect to any Person, any of the following
events: such Person shall generally not pay its debts as such debts become due
or shall admit in writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or any case or
proceeding shall be instituted by or against such Person seeking to adjudicate
it a bankrupt or insolvent, or seeking liquidation, dissolution, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property.
"Insolvency Proceeding" means any proceeding of the sort described in the
definition of Insolvency Event.
"Insurance Agreement" has the meaning assigned thereto on page (i) of this
Definitions List.
"Interest Payment Date" means, with respect to any Triple-A Loan, the last
day of the Interest Period then applicable to such Triple-A Loan.
"Interest Period" means, with respect to any Triple-A Loan, commencing on
the date such Triple-A Loan is advanced until the Interest Payment Date
therefor, and thereafter commencing on the last day of the then existing
Interest Period for such Triple-A Loan until the next Interest Payment Date
therefor, a period selected by the Administrative Agent and notified to the
Borrower in accordance with Section 2.03(b) of the Credit Agreement. Such
Interest Period shall be:
- 12 -
(i) if such Triple-A Loan is funded through the issuance of
Commercial Paper, a period of from 1 to 180 days;
(ii) if such Triple-A Loan is funded through Base Rate Advances, a
period of from 1 to 30 days;
(iii) if such Triple-A Loan is funded through Eurodollar Rate Advances,
a period of one, two or three months;
PROVIDED, HOWEVER, that
(x) whenever the last day of an Interest Period would otherwise occur
on a day other than a Business Day, the last day of such Interest
period shall be extended to occur on the next succeeding Business
Day, unless such extension would cause the last day of an
Interest Period described in clause (iii) above to occur in the
next following calendar month, in which event the last day of
such Interest Period shall be deemed to occur on the immediately
preceding Business Day;
(y) whenever an Interest Period described in clause (iii) above
commences on the last Business Day in a month or on a date for
which there is no numerically corresponding day in the month in
which such Interest Period would otherwise end, the last day of
such Interest Period shall occur on the last Business Day of the
month in which such Interest Period ends; and
(z) no Interest Period described in clause (iii) above may end later
than the Scheduled Termination Date.
"Interest Rate Hedge Assignment" means an assignment in substantially the
form of Exhibit F to the Credit Agreement pursuant to which the Borrower assigns
to the Collateral Agent all of its rights to payment under the Interest Rate
Xxxxxx.
"Interest Rate Xxxxxx" means interest rate swap or similar agreements
entered into by the Borrower and Triple-A with the Swap Provider to provide
protection to, or minimize the impact upon, the Borrower and Triple-A of
increasing interest rates under the Credit Agreement.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"IRS" means the Internal Revenue Service of the United States of America.
"Issuing and Paying Agent" means Bankers Trust Company, acting in its
capacity as the issuing and paying agent and depositary for the Commercial Paper
pursuant to that certain Depositary and Issuing and Paying Agency Agreement
dated as of February 25, 1994 among Triple-A, the Administrative Agent and
Bankers Trust Company, as the same may be amended, supplemented or otherwise
modified from time to time, and any successor to Bankers Trust Company under
such agreement.
- 13 -
"Lease" means a lease agreement between the Seller and an Obligor
substantially in the form of Exhibit K-1 to the Purchase Agreement, pursuant to
which the Seller originally leased Equipment to such Obligor.
"Leasehold Improvement Note" means a note or instrument substantially in
the form of Exhibit K-3 to the Purchase Agreement, evidencing an Obligor's
indebtedness to the Buyer on account of a loan made to finance improvements to,
or other costs incurred in connection with the installation or maintenance of,
Equipment.
"Liquidity Agent" means Bank of Boston, in its capacity as the agent for
the Liquidity Banks under the Liquidity Agreement, or any successor thereto.
"Liquidity Banks" means the financial institutions party to the Liquidity
Agreement as "Liquidity Banks" thereunder.
"Liquidity Agreement" means that certain Liquidity Agreement dated as of
January 31, 1995, as amended by that certain Amendment No. 1 dated as of
October 18, 1996, by and among Triple-A, the Liquidity Banks party thereto and
the Liquidity Agent, as the same may be amended, supplemented or otherwise
modified from time to time.
"Liquidity Security Agreement" means that certain Liquidity Security
Agreement dated as of January 31, 1995, as amended by that certain Amendment
No. 1 dated as of October 18, 1996, by and among Triple-A, CapMAC and Bank of
Boston in its capacity as the Liquidity Agent and as "Liquidity Collateral
Agent" under the Liquidity Security Agreement, as the same may be amended,
supplemented or otherwise modified from time to time.
"Lock-Box Account" means an account maintained at a Lock-Box Bank for the
purpose of receiving Collections.
"Lock-Box Agreement" means an agreement, in substantially the form of
Exhibit G to the Purchase Agreement, among the Seller, the Buyer and a Lock-Box
Bank which agreement sets forth the rights of the Collateral Agent, the Seller,
the Buyer and the Lock-Box Bank with respect to the disposition and application
of the Collections received into the applicable Lock-Box Account, including,
without limitation, the right of the Collateral Agent to direct the Lock-Box
Bank to remit all Collections of Transferred Assets directly to the Collateral
Agent.
"Lock-Box Bank" means any of the banks holding one or more lock-box
accounts for receiving Collections from the Receivables.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by either the Seller or any ERISA Affiliate.
"Notice of Assignment" means a Notice of Assignment in substantially the
form of Exhibit B to the Purchase Agreement.
- 14 -
"Notice of Borrowing" has the meaning assigned to such term in Section 2.03
of the Credit Agreement.
"Obligations" means all present and future indebtedness and other
liabilities and obligations (howsoever created, arising or evidenced, whether
direct or indirect, absolute or contingent, or due or to become due) of the
Borrower to Triple-A, the Collateral Agent, the Administrative Agent, the Surety
and/or the Indemnified Parties, arising under or in connection with the Credit
Agreement, the Triple-A Note and the other Facility Documents (other than the
Triple-A Purchase Agreement) or the transactions contemplated thereby and shall
include, without limitation, all liability for principal of and interest on the
Triple-A Loans, closing fees, unused line fees, audit fees, expense
reimbursements, indemnifications, and other amounts due or to become due under
the Facility Documents, including, without limitation, interest, fees and other
obligations that accrue after the commencement of an Insolvency Proceeding (in
each case whether or not allowed as a claim in such Insolvency Proceeding).
"Obligor" means each Person obligated to make payments under a Contract.
"Other Taxes" has the meaning assigned to such term in Section 2.10(b) of
the Credit Agreement.
"Outstanding Balance" means, with respect to any Receivable at any time,
the Discounted Value of the remaining Scheduled Contract Payments under the
related Contract, as such amounts are adjusted as a result of any of the events
described in Section 2.05 of the Purchase Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"Permitted Encumbrance" means any of the following:
(a) liens, charges or other encumbrances for taxes and other governmental
assessments which are not yet due and payable;
(b) workers', mechanics', suppliers', carriers', warehousemen's, landlords'
liens and deposits, pledges or liens to secure statutory obligations,
surety or appeal bonds or other liens of like general nature incurred
in the ordinary course of business and not in connection with the
borrowing of money, PROVIDED in each case, the obligation secured is
not overdue or, if overdue, is being contested in good faith by
appropriate actions or proceedings, and PROVIDED, FURTHER, that such
liens do not, in the reasonable opinion of the Buyer, materially
detract from the value of the Contract or the Equipment subject
thereto;
(d) liens, charges or encumbrances created in favor of the Buyer pursuant
to the Purchase Agreement or in favor of the Collateral Agent or
otherwise granted to Triple-A or to a Liquidity Bank in the Facility
Documents; or
- 15 -
(e) with respect to Equipment, liens thereon created in favor of the Seller
pursuant to a Contract and assigned to the Buyer pursuant to the
Purchase Agreement.
"Permitted Extension" means an extension of a Scheduled Contract Payment in
the ordinary course of business for reasons unrelated to an Obligor's
creditworthiness for a period not to exceed 2 months.
"Permitted Investments" means (i) securities issued or directly and fully
guaranteed or insured by the United States government or any agency or
instrumentality thereof having maturities on or before the first Settlement Date
after the date of acquisition; (ii) time deposits and certificates of deposit
having maturities on or before the first Settlement Date after the date of
acquisition, maintained with or issued by any commercial bank having capital and
surplus in excess of $500,000,000 and having the highest commercial paper rating
available by both Rating Agencies; (iii) money market funds which have the
highest applicable rating available by both Rating Agencies; (iv) repurchase
agreements having maturities on or before the first Settlement Date after the
date of acquisition for underlying securities of the types described in
clauses (i) and (ii) above or clause (v) below with any institution with the
highest long term debt rating and commercial paper rating available by both
Rating Agencies; and (v) commercial paper maturing on or before the first
Settlement Date after the date of acquisition and having the highest commercial
paper rating available by both Rating Agencies.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture, government (or any agency or political subdivision thereof) or other
entity.
"Plan" means an employee benefit plan defined in Section 3(3) of ERISA in
respect of which the Seller or any ERISA Affiliate is, or within the immediately
preceding six years was, an "employer" as defined in Section 3(5) of ERISA.
"Pledged Assets" means (i) at all times prior to the Termination Date,
(a) all then outstanding Pledged Receivables, (b) all Related Security relating
to such Pledged Receivables and (c) all Collections with respect to, and other
proceeds of, such Receivables and (ii) at all times on and after the Termination
Date, (a) all Pledged Receivables outstanding as of the close of business on the
day preceding the Termination Date (including any interest or finance charges
accruing after the Termination Date which relate to any Pledged Receivables
outstanding as of the close of business on the day preceding the Termination
Date, (b) all Related Security relating to such Pledged Receivables and (c) all
Collections with respect to, and other proceeds of, such Receivables.
"Pledged Receivables" means all Receivables which are not Purchased
Receivables.
"Post Office Box" means each post office box to which Obligors are directed
to mail payments in respect of the Receivables.
"Purchase" means a purchase (whether by means of cash payment or by capital
contribution) of Transferred Assets by the Buyer from the Seller pursuant to
Sections 2.01 and 2.02 of the Purchase Agreement.
- 16 -
"Purchase Agreement" has the meaning assigned thereto on page (i) of this
Definitions List.
"Purchase Date" means, with respect to any Purchase, the date on which such
purchase occurs.
"Purchase Price" means the purchase price payable for any Purchase as
calculated in Section 2.02(b) of the Purchase Agreement.
"Purchased Receivables" has the meaning assigned thereto in the Triple-A
Purchase Agreement.
"Purchased Assets" has the meaning assigned thereto in the Triple-A
Purchase Agreement.
"Rating Agencies" means, collectively, Standard & Poor's Corporation and
Xxxxx'x Investors Services, Inc., or their respective successors.
"Receivable" means all rights to payment arising under a Contract,
including, without limitation, (i) Contract Payments, (ii) Termination Payments
and (iii) Residual Realizations, together with all supplemental or additional
payments required by the terms of such Contract with respect to insurance,
maintenance, ancillary products and services and other specific charges.
"Records" means all Contracts and other documents, books, records and other
information (including without limitation, computer programs, tapes, discs,
punch cards, data processing software and related property and rights)
maintained with respect to Contracts and the related Obligors.
"Related Security" means with respect to any Contract:
(i) all security interests or liens and property subject thereto from
time to time purporting to secure payment of the Receivables arising
under such Contract, whether pursuant to such Contract or otherwise;
(ii) the assignment to the Buyer, of all UCC financing statements covering
any Equipment or covering any collateral securing payment of the
Receivable arising under such Contract;
(iii) all guarantees, indemnities, warranties, letters of credit, insurance
policies and proceeds and premium refunds thereof and other
agreements or arrangements of whatever character from time to time
supporting or securing payment of the Receivables arising under such
Contract whether pursuant to the Contract related to such Receivable
or otherwise;
(iv) all of the Seller's right, title and interest in, to and under the
Equipment related to such Contract, whether as an ownership interest,
as collateral security, or which
- 17 -
was repossessed from an Obligor of a Receivable to the extent that the
Outstanding Balance of such Receivable remains unpaid;
(v) all Records; and
(vi) all Collections and other proceeds of the foregoing, including,
without limitation, all insurance and condemnation proceeds and all
security deposits related to the Equipment.
"Reportable Event" means any of the events described in Section 4043 of
ERISA.
"Residual Realization" means, with respect to any Equipment, the amount
received or receivable by the Buyer or the Servicer upon the sale or other
disposition of the Equipment, whether from the Obligor upon the exercise of any
purchase option or from a sale or from insurance proceeds or otherwise.
"Scheduled Contract Payments" means the Contract Payments due under each
Contract, as set forth in the appendix to Exhibit A of the Purchase Agreement
(including any supplement to such exhibit delivered under Section 2.02(b)
thereof and also including any modification to such appendix as the result of
any modification, waiver or amendment to any Contract undertaken in conformity
with the Purchase Agreement), excluding, however, (i) in the case of any
Contract which is not a Lease, starting with the final Contract Payment owed
thereunder and proceeding in reverse order of maturity, the Contract Payments
(or portions thereof) equal to any security deposit related to such Contract and
(ii) any Contract Payment that is due more than 72 months after the original
commencement date of such Contract. The term "Scheduled Contract Payment" does
not include any Contract Payment which is payable in respect of any Residual
Realization or which otherwise reflects the residual value of the related
Equipment.
"Scheduled Liquidity Commitment Termination Date" has the meaning assigned
to that term in the Liquidity Agreement.
"Scheduled Termination Date" means October 28, 1999.
"Seller" means HPSC, Inc., a Delaware corporation.
"Servicer" has the meaning assigned to that term in Section 6.01 of the
Purchase Agreement.
"Servicing Fee" has the meaning assigned to that term in Section 6.08 of
the Purchase Agreement.
"Servicing Termination Event" means a failure on the part of the Servicer
to observe or perform any of its duties or obligations as Servicer under the
Purchase Agreement or as "Servicer" under the Triple-A Purchase Agreement, as
determined by the Collateral Agent in its reasonable judgment.
- 18 -
"Settlement Date" means the 20th day of each month; provided, that if in
any month such day is not a Business Day, the "Settlement Date" for such month
shall be the first Business Day to occur after such 20th day.
"Settlement Report" means a report, in substantially the form of Exhibit C
to the Purchase Agreement, furnished by the Seller to the Buyer pursuant to
Section 2.05(b) thereof.
"Subsidiary" means, as to any Person, any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
"Successor Servicer" means any Person which succeeds to the Seller as the
Servicer in accordance with the terms and provisions of the Purchase Agreement
and the Credit Agreement.
"Surety" means CapMAC.
"Surety Bonds" means the Surety Bonds for the benefit of Triple-A and the
Liquidity Banks to be issued by the Surety under the Insurance Agreement.
"Swap Bond" means that certain surety bond in favor of the Swap Provider
whereby CapMAC guarantees the payments to be made by the Borrower under the
Interest Rate Xxxxxx.
"Swap Provider" means Bank of Boston or such other financial institution
reasonably acceptable to CapMAC which enters into an Interest Rate Hedge with
the Borrower, provided that the Swap Provider must at all times be a nationally
recognized financial institution rated A or better by Standard & Poor's
Corporation or the equivalent by Xxxxx'x Investors Services, Inc.
"Taxes" has the meaning assigned to such term in Section 2.10(a) of the
Credit Agreement.
"Termination Amount" means, with respect to any Contract which has been
prepaid or otherwise terminated prior to its stated maturity or termination
date, an amount equal to the present value of the remaining Scheduled Contract
Payments, discounted to the date of prepayment or termination at the Discount
Rate, plus, any billed and uncollected amounts related to and amounts owing
under such Contract, including late charges and overdue interest charges, plus,
if such Contract is a Lease or Conditional Sale Agreement, the booked residual
value of the related Equipment, plus any processing fees charged to cover
expenses.
"Termination Date" means the earliest of (i) that Business Day which the
Seller designates as the Termination Date by notice to the Buyer and the
Administrative Agent at least five Business Days prior to such Business Day,
(ii) that Business Day which the Buyer designates as the Termination Date by
notice to the Seller and the Administrative Agent at least five Business Days
prior to such Business Day, (iii) the date of the declaration or automatic
occurrence of the Termination Date pursuant to Section 7.01 of the Purchase
Agreement, Section 7.02 of the Credit Agreement or Section 7.02 of the Triple-A
Purchase Agreement,
- 19 -
(iv) the Scheduled Liquidity Commitment Termination Date and (v) the Scheduled
Termination Date.
"Termination Payment" means any amount or amounts payable by an Obligor
upon termination or prepayment of a Contract prior to the payment of all
Contract Payments.
"Transferred Assets" means, at any time, the Receivables, the Contracts,
the Equipment, all Related Security with respect to the foregoing and all
Collections with respect to, and other proceeds of, the foregoing.
"Triple-A" means Triple-A One Funding Corporation, a Delaware corporation.
"Triple-A Loan" has the meaning assigned to such term in Section 2.01 of
the Credit Agreement.
"Triple-A Note" has the meaning assigned to such term in Section 2.02 of
the Credit Agreement.
"Triple-A Purchase Agreement" means that certain Lease Receivables Purchase
Agreement dated as of October 18, 1996 between HPSC Bravo Funding Corp., as
Seller, Triple-A and CapMAC.
"UCC" means the Uniform Commercial Code as from time to time in effect in
the State of New York, except that, with respect to the perfection or priority
of any security interest created under the UCC, the term "UCC" means the Uniform
Commercial Code as in effect in the jurisdiction whose law governs the
perfection and effect of perfection or non-perfection of such security interest.
"Unmatured Event of Termination" means any event which, with the giving of
notice or the passage of time or both, would constitute an Event of Termination.
"Unmatured Wind-Down Event" means any event which, with the giving of
notice or the passage of time or both, would constitute a Wind-Down Event.
"Weighted Average Remaining Term" means the weighted average remaining
maturities of the Transferred Assets or the Pledged Assets, as the case may be,
calculated to equal (i) the aggregate amount of the remaining Scheduled Contract
Payments of each Receivable or Pledged Receivable, as the case may be, times the
remaining term of such Receivable or Pledged Receivable, as the case may be,
divided by (ii) the aggregate amount of the remaining Scheduled Contract
Payments of all the Receivables or Pledged Receivables, as the case may be,
(each such calculation to include, for purposes of calculating the Weighted
Average Remaining Term on any Settlement Date, any Receivables to be purchased
on such date).
"Wind-Down Event" has the meaning assigned to such term in Section 7.01 of
the Credit Agreement.
- 20 -
