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EXHIBIT 10.5
AMENDMENT NO. 1
Dated as of June 29, 1998
to
LEASE RECEIVABLES PURCHASE AGREEMENT
Dated as of October 18, 1996
THIS AMENDMENT NO. 1 dated as of June 29, 1998 ("AMENDMENT") is
entered into by and among HPSC BRAVO FUNDING CORP., a Delaware corporation, as
Seller (the "SELLER"), HPSC, INC., a Delaware corporation, as Servicer (the
"SERVICER"), TRIPLE-A ONE FUNDING CORPORATION, a Delaware corporation
("TRIPLE-A") and CAPITAL MARKETS ASSURANCE CORPORATION, a New York stock
insurance company ("CAPMAC"), as Collateral Agent and as Administrative Agent
(in such capacities, the "COLLATERAL AGENT" or the "ADMINISTRATIVE AGENT").
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 Seller, the Servicer, Triple-A and CapMAC are parties to
that certain Lease Receivables Purchase Agreement dated as of October 18, 1996
(the "TRIPLE-A PURCHASE AGREEMENT"), pursuant to which Triple-A has agreed to
make Receivables Purchases from the Seller, the proceeds of which have been used
to purchase new Transferred Assets from the Originator in accordance with the
terms of the Purchase Agreement;
B. The Seller, the Servicer, Triple-A and CapMAC wish to increase
the purchase limit and certain other terms and conditions set forth in the
Triple-A Purchase Agreement and as a result have agreed to amend the Triple-A
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 Seller, the Servicer, Triple-A and CapMAC agree as
follows:
1.1 DEFINITIONS. The Definitions List referenced in Section 1.01
of the Triple-A Purchase Agreement is hereby amended as follows:
1.1 (a) The definition of "AGGREGATE RESERVES" is hereby
deleted and
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replaced with the following:
""AGGREGATE RESERVES" means, on any day, an amount equal to the
Discounted Eligible Receivables Balance times the GREATEST of (i) 10%, (ii) the
Default Reserve Ratio as computed in the most recent Settlement Report and (iii)
the Excess Concentration Reserve Ratio as computed on the most recent Settlement
Date; PROVIDED, that the Aggregate Reserves shall not be less than the greatest
of (a) $1,000,000, (b) the sum of the Outstanding Balances of all Receivables
owed by the five (5) Obligors who owe the largest Outstanding Balances of
Receivables owed by any single Obligor, and (c) twenty-five percent (25%) of the
highest dollar amount of Aggregate Reserves as of any previous time."
1.1 (b) The definition of "Contract" is hereby modified to
insert immediately after the phrase "Leasehold Improvement Note" the phrase "or
Practice Finance Loan."
1.1 (c) The definition of "DISCOUNT RATE" is hereby modified
to delete the text thereof in its entirety and to substitute therefor the
following:
"DISCOUNT RATE" means (i) with respect to any Lease or
Conditional Sale Agreement, the discount rate used to calculate the
aggregate Discounted Value of the Scheduled Contract Payments payable
under the related Contract as of the last day of the month immediately
preceding the month in which such Receivable was acquired from the
Originator and (ii) with respect to any other Receivable, the interest
rate set forth in the documents creating such Receivable. The Discount
Rate for the Leases or Conditional Sale Agreements transferred on any
date shall be a rate equal to the sum of (i) the interest rate per annum
quoted to the Seller by the Swap Provider as the rate at which such Swap
Provider is willing to enter into an Interest Rate Hedge pursuant to
which the Seller will pay an interest rate calculated in conjunction
with an Interest Rate Hedge amortization prepared by the Seller and
which complies with SECTION 5.01(N) of the Triple-A Purchase Agreement,
and in return shall receive a floating interest rate (calculated against
the same principal amount) approximately equal to the Eurodollar Rate,
PLUS (ii) .15% per annum PLUS (iii) the Carrying Costs Percentage at
such time; PROVIDED, that the Seller may, at its option, with respect to
the Receivables transferred on any Settlement Date, designate a rate
which is higher than the rates calculated above to be the "Discount
Rate" for such Receivables.
1.1 (d) The definition of "DISCOUNTED VALUE" is hereby
modified to delete therefrom the phrase "means, with respect to any Receivable,"
and to substitute therefor the phrase "means, (i) with respect to any Lease or
Conditional Sale Agreement," and to delete therefrom the phrase "purchase option
shall be zero." and to substitute therefor the phrase "purchase option shall be
zero; and (ii) with respect to any other Receivable, as of any date of
determination, the outstanding principal amount thereof".
1.1 (e) For the definition of "ELIGIBLE RECEIVABLE":
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(i) Paragraph (iii) is hereby modified to insert immediately
after the phrase "commencement date of such Contract", the phrase ", except for
Practice Finance Loans, which are required to be paid in full within 84 months
of the original commencement dates of such Loans"
(ii) Paragraph (v) is hereby deleted and replaced with the
following:
"(v) the original Outstanding Balance of which, when added
to the Outstanding Balance of all other Receivables owing by the same Obligor at
such time, does not exceed the lesser of (i) $1,000,000 and (ii) 1.5% of the
Discounted Eligible Receivables Balance at such time;"
(iii) Paragraph (xvi) is hereby modified to delete therefrom
the phrase "except pursuant to a provision therein requiring payment of a
Termination Amount" and to substitute therefor the phrase "except, in the case
of a Practice Finance Loan, pursuant to a provision therein requiring payment of
a Termination Amount".
(iv) Paragraph (xxii) is hereby deleted and replaced with
the following:
"(xxii) The Discounted Value of which, (A) if arising under
a Leasehold Improvement Note, when added to the Discounted Value of all Eligible
Receivables arising under Leasehold Improvement Notes, does not exceed 25% of
the Discounted Eligible Receivables Balance, (B) if arising under a promissory
note, when added to the Discounted Value of all Eligible Receivables arising
under promissory notes, does not exceed 10% of the Discounted Eligible
Receivables Balance, and (C) if arising under either a Leasehold Improvement
Note or a promissory note, when added to the Discounted Value of all Eligible
Receivables arising under both Leasehold Improvement Notes and promissory notes,
does not exceed 30% of the Discounted Eligible Receivables Balance;"
(v) Paragraph (xxiii) is hereby deleted and replaced with
the following:
"(xxiii) the Contract for which is either (A) a Lease in
substantially the same form of EXHIBIT K-1 to the Purchase Agreement, (B) a
Conditional Sale Agreement in substantially the same form of EXHIBIT K-2
thereto, (C) a Leasehold Improvement Note in substantially the same form of
EXHIBIT K-3 thereto, (D) a Practice Finance Loan in substantially the same form
of EXHIBIT K-4 thereto, underwritten in accordance with Practice Finance Loan
underwriting criteria, as attached to EXHIBIT K-4, and which, when added to all
Practice Finance Loans, does not exceed 10% of the Discounted Eligible
Receivables Balance; or (E) a promissory note, the Discounted Value of which,
when added to the Discounted Value of all Eligible Receivables owed by such
Obligor and not described under (A), (B), (C) or (D) above, does not exceed
$150,000;"
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(vi) Paragraph (xxviii) is hereby deleted and replaced with
the following:
"the Obligors of which are either (i) licensed dental,
medical or veterinary professionals or (ii) corporations or similar entities
engaged in a dental, medical or veterinary practice, and which are licensed
and/or qualified, as appropriate, in each jurisdiction in which the nature of
their practices would require such license or qualification;"
1.1 (f) The definition of "EXCESS CONCENTRATION RESERVE
RATIO" is hereby modified to delete therefrom the number ".14" and substitute
therefor the number ".10".
1.1 (g) The definition of "FACILITY LIMIT" is hereby
modified to delete therefrom the number "$30,000,000" and substitute therefor
the number "$67,500,000".
1.1 (h) In the definition of "FEE LETTER", the phrase "that
certain amended and restated Fee Letter Agreement, dated October 18, 1996," is
hereby deleted and replaced with "that certain second amended and restated Fee
Letter Agreement, dated June 29, 1998,".
1.1 (i) The following is hereby inserted alphabetically with
the other definitions contained in the Definitions List referred to in Section
1.01 of the Triple-A Purchase Agreement:
""PRACTICE FINANCE LOAN" means a note or instrument
substantially in the form of EXHIBIT K-4 to the Purchase and Contribution
Agreement, evidencing an Obligor's indebtedness on account of a loan made to
finance working capital needs of such Obligor, in connection with such Obligor's
professional dental, medical or veterinary practice."
1.1(j) The definition of "SCHEDULED TERMINATION DATE" is
hereby deleted and replaced with the following:
""SCHEDULED TERMINATION DATE" means June 29, 2003."
1.1 (k) The definition of "TERMINATION DATE" is hereby
modified to delete therefrom each occurrence of the phrase "five Business Days"
and substitute therefor the phrase "thirty calendar days".
1.2 SECTION 1.01. Section 1.01 is hereby amended to insert
after the first sentence contained therein the following:
"Any reference in the Facility Documents to a note,
instrument, or other agreement substantially in the form of Exhibit K-1, K-2,
K-3 or K-4 to the Purchase Agreement, as applicable, shall mean and be a
reference to a note, instrument or other agreement in substantially one of the
forms included in such Exhibit."
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1.3 SECTION 2.01. The first sentence of Section 2.01 is
hereby amended to delete therefrom the phrase "may, in its sole discretion and
otherwise" and substitute therefor the word "shall,". Section 2.01 also is
amended to insert after the first sentence contained therein the following:
"Notwithstanding the foregoing, if, at any time, two or
more of the individuals who held the positions of Chief Executive Officer, Chief
Financial Officer and President of the Servicer as of April 30, 1998 no longer
remain actively involved in the day-to-day management of the Servicer, then
Triple-A is no longer required to, but may, in its sole discretion, make
Receivables Purchases.
The fifth sentence of Section 2.01, beginning with the
phrase "Nothing in this Triple-A Purchase Agreement" is hereby deleted.
1.4. SECTION 4.01. Section 4.01 is hereby amended to insert,
at the conclusion thereof, the following clauses (y) and (z):
(y) SELECTION OF RECEIVABLES. Each Receivable has been
randomly selected from the Originator's portfolio of receivables in accordance
with its normal standards and procedures used for all of its standard
securitization transactions and no selection procedures adverse to Triple-A have
been employed in such selections.
(z) HISTORIC LOSS DATA. Attached hereto as EXHIBIT F is a
summary of historical static loss data suffered by the Originator as a result of
defaults under the Originator's receivables, which summary is true and accurate
with respect to the periods described therein and does not omit any information
necessary to make such summary not misleading.
1.5 SECTION 6.08. Section 6.08 is hereby amended to delete
therefrom the number "1.15%" and substitute therefor the number "1.0%". Section
6.08 also is hereby amended to insert immediately after the first sentence
contained therein the following:
"Notwithstanding the foregoing, to the extent that
Advances under the Liquidity Agreement are used to fund or maintain Borrowings
or Purchases, then the Servicing Fee shall be .75% TIMES the Outstanding Balance
of the Receivables as of the last day of the prior calendar month TIMES a
fraction, the numerator of which is the number of actual days elapsed in such
calendar month and the denominator of which equals 360.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The Seller
represents and warrants as follows:
(a) This Amendment and the Triple-A 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
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the representations and warranties contained in ARTICLE IV of the Triple-A
Purchase Agreement are true and correct.
(c) Upon the effectiveness of this Amendment, the Seller
hereby reaffirms all covenants made in the Triple-A 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 Wind-Down Event or Unmatured Wind-Down Event has
occurred or is continuing.
SECTION 3. CONDITIONS PRECEDENT. This Amendment shall become
effective as of June 29, 1998, PROVIDED that all of the following conditions are
met in form and substance satisfactory to Triple-A.
(a) This Amendment shall have been executed and delivered by
the Seller, the Servicer and CapMAC.
(b) On the date the last of the conditions listed herein is
satisfied (the "DELIVERY DATE") there shall exist no Wind-Down Event or
Unmatured Wind-Down Event.
(c) All conditions precedent to the effectiveness of
Amendment No. 3 to the Credit Agreement, dated as of even date herewith, shall
have been satisfied.
(d) Each of the Rating Agencies shall have delivered written
confirmation to the Administrative Agent to the effect that (i) the Loans and
Receivables Purchases constitute "investment grade risks", without giving effect
to the Surety Bonds and (ii) the then current rating of the "Transaction
Commercial Paper Notes" (as defined in the Amended and Restated Liquidity
Agreement) shall not be withdrawn or downgraded by virtue of this Amendment and
the transactions contemplated hereby.
(e) All fees and expenses due and owing CapMAC and/or MBIA
Insurance Corporation shall have been paid, subject to the terms of that certain
letter agreement between the Originator and Triple-A dated April 23, 1998.
SECTION 4. REFERENCE TO THE EFFECT ON THE TRIPLE-A PURCHASE
AGREEMENT. Except as specifically set forth above, the Triple-A 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 Triple-A, nor constitute a waiver of any provisions of the Credit
Agreement, or any other documents, instruments and agreements executed and/or
delivered in connection therewith.
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SECTION 5. HEADINGS. Section headings in the Amendment are
included herein for convenience of reference only and shall not constitute part
of this Amendment for any other purpose.
SECTION 6. GOVERNING LAW. This Amendment shall be governed
by and construed in accordance with the laws of the State of New York.
SECTION 7. COUNTERPARTS. This Amendment may be executed by
one or more of the parties to this Amendment on any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
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IN WITNESS WHEREOF, this Amendment has been duly executed as
of the day and year first above written.
HPSC BRAVO FUNDING CORP.,
as Seller
By: /s/ John W. Everets
------------------------
Title: President
HPSC, INC., as Servicer
By: /s/ Rene Lefebvre
---------------------------
Title: CFO
TRIPLE-A ONE FUNDING
CORPORATION
By CAPITAL MARKETS ASSURANCE
CORPORATION, Its Attorney-In-Fact
By: /s/ Richard Pfaltzgraff
--------------------------
Title: Vice President
CAPITAL MARKETS ASSURANCE
CORPORATION, as Collateral Agent
and Administrative Agent
By: /s/ Richard Pfaltzgraff
-----------------------------
Title: Vice President
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