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Exhibit 10.3
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RECEIVABLES TRANSFER AGREEMENT
by and among
HPSC GLOUCESTER FUNDING 2003-1 LLC I
and
HPSC GLOUCESTER FUNDING 2003-1 LLC II,
as Issuers,
HPSC, INC.,
as Servicer
HPSC, INC.,
as Originator
and
HPSC, INC.
and
HPSC BRAVO FUNDING, LLC,
as Transferors
Dated as of March 31, 2003
Asset Backed Notes, Series 2003-1
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TABLE OF CONTENTS
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ARTICLE I. DEFINITIONS.................................................................................1
Section 1.01. Definitions..........................................................................1
Section 1.02. General Interpretive Principles......................................................1
ARTICLE II. TRANSFER OF CONVEYED ASSETS................................................................2
Section 2.01. Conveyance of Initial Conveyed Assets................................................2
Section 2.02. Conveyance of Subsequent Conveyed Assets.............................................4
Section 2.03. Custody of Contract Files............................................................6
ARTICLE III. REPRESENTATIONS AND WARRANTIES............................................................6
Section 3.01. Representations and Warranties.......................................................6
Section 3.02. Representations and Warranties of the Originator with Respect to the Contracts......11
Section 3.03. Substitution of Contracts and Equipment by the Originator and the Servicer..........15
Section 3.04. Breach of Representations and Warranties; Repurchase of Contracts...................15
ARTICLE IV. COVENANTS.................................................................................16
Section 4.01. Covenants of the Originator.........................................................16
Section 4.02. Covenants of the Issuers............................................................20
Section 4.03. Transfer of Conveyed Assets.........................................................22
ARTICLE V. CONDITIONS PRECEDENT.......................................................................22
Section 5.01. Conditions to Issuers' Initial Obligations..........................................22
Section 5.02. Conditions to Issuers' Subsequent Obligations.......................................23
ARTICLE VI. TERMINATION...............................................................................24
Section 6.01. Termination.........................................................................24
ARTICLE VII. MISCELLANEOUS PROVISIONS.................................................................24
Section 7.01. Amendment...........................................................................24
Section 7.02. GOVERNING LAW.......................................................................24
Section 7.03. Waiver of Jury Trial................................................................24
Section 7.04. Notices.............................................................................24
Section 7.05. Severability of Provisions..........................................................25
Section 7.06. Assignment..........................................................................25
Section 7.07. Further Assurances..................................................................25
Section 7.08. No Waiver; Cumulative Remedies......................................................25
Section 7.09. Counterparts........................................................................25
Section 7.10. Binding Effect; Third-Party Beneficiaries...........................................25
Section 7.11. Merger and Integration..............................................................26
Section 7.12. Headings............................................................................26
Section 7.13. Schedules and Exhibits..............................................................26
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Section 7.14. No Bankruptcy Petition Against the Transferors or the Issuers.......................26
Section 7.15. Limited Recourse to Bravo...........................................................26
Exhibit A Subsequent Transfer Agreement
Schedule 1 List Of Initial Contracts
Schedule 2 Delinquent Contracts
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RECEIVABLES TRANSFER AGREEMENT
This RECEIVABLES TRANSFER AGREEMENT (this "AGREEMENT"), dated as of
March 31, 2003, is entered into among HPSC, INC. ("HPSC"), as servicer (the
"SERVICER"), HPSC, as originator (the "ORIGINATOR"), HPSC and HPSC BRAVO
FUNDING, LLC ("BRAVO"), as transferors (each, a "TRANSFEROR" and collectively,
the "TRANSFERORS"), HPSC GLOUCESTER FUNDING 2003-1 LLC I ("LLC I") and HPSC
GLOUCESTER FUNDING 2003-1 LLC II ("LLC II"), as issuers (each, an "ISSUER" and
collectively, the "ISSUERS").
WITNESSETH:
WHEREAS, Bravo has previously acquired its rights in certain
Contracts, Equipment and other Collateral from HPSC under certain existing
purchase agreements; and
WHEREAS, each of the Transferors desires to convey, transfer, sell and
assign all of its right, title and interest in and to the Contracts and all of
its right, title and interest in and to the Equipment and all other Collateral
to LLC I or LLC II, as applicable, upon the terms and conditions hereinafter set
forth; and
WHEREAS, the Originator, the Servicer, each of the Transferors and
each of the Issuers agree that all representations, warranties, covenants and
agreements made by it herein shall be for the benefit of the Noteholders and the
Indenture Trustee.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. DEFINITIONS.
Whenever used in this Agreement, capitalized terms used and not
defined herein shall have the meanings set forth in Annex A attached hereto.
Section 1.02. GENERAL INTERPRETIVE PRINCIPLES.
For purposes of this Agreement except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP as in effect on the date hereof;
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(c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs" and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
this Agreement;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
ARTICLE II.
TRANSFER OF CONVEYED ASSETS
Section 2.01. CONVEYANCE OF INITIAL CONVEYED ASSETS.
(a) Each of HPSC and Bravo hereby sells, transfers and otherwise
conveys to LLC I all of its right, title and interest in, to and under the
Initial Contracts owned by it on the date hereof and set forth on the List of
Initial Contracts attached hereto as SCHEDULE 1A and SCHEDULE 1B, respectively,
and the Initial Conveyed Assets related thereto, without recourse.
Notwithstanding the foregoing, each of HPSC and Bravo retains all rights to
monies due under the Contracts prior to the Initial Cut-Off Date.
(b) Each of HPSC and Bravo hereby sells, transfers and otherwise
conveys to LLC II all of its respective right, title and interest in, to and
under the Initial Contracts owned by it on the date hereof and set forth on the
List of Initial Contracts attached hereto as SCHEDULE 1C and SCHEDULE 1D,
respectively, and the Initial Conveyed Assets related thereto, without recourse
(except as set forth herein). Notwithstanding the foregoing, each of HPSC and
Bravo retains all rights to monies due under the Contracts prior to the Initial
Cut-Off Date.
(c) The conveyances occurring on the Closing Date, each Subsequent
Transfer Date and each Substitute Transfer Date shall be consummated such that
only Conveyed Assets which constitute Financial Assets may be conveyed to LLC I.
The Conveyed Assets which are conveyed to LLC I and LLC II, respectively, on the
Closing Date, each Subsequent Transfer Date and each Substitute Transfer Date
will be indicated on a List of Contracts delivered to the Indenture Trustee on
such date.
(d) In connection with such sales and conveyances, each of the
Transferors agrees to record and file financing statements (and thereafter will
file continuation statements with respect to such financing statements) (such
recordation and filing to be at the expense of the Servicer) with respect to the
related Initial Conveyed Assets sold and to be transferred to LLC I or LLC II,
as applicable, pursuant to this Agreement, the Subsequent Conveyed Assets to be
sold and transferred to LLC I or LLC II pursuant to any Subsequent Transfer
Agreement, and the Substitute Conveyed Assets, meeting the requirements of
applicable state law in such manner
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and in such jurisdictions as are necessary to perfect and to maintain the
perfection of, the transfer, conveyance and sale of the related Initial Conveyed
Assets, the related Subsequent Conveyed Assets and the related Substitute
Conveyed Assets (subject to the Filing Requirements with respect to the
Equipment) from each of the Transferors to LLC I or LLC II, as applicable, and
the transfer, assignment and pledge of the Pledged Property from LLC I or LLC
II, as applicable, to the Indenture Trustee on behalf of the Noteholders,
pursuant to the Indenture, and to deliver a file-stamped copy of such financing
statements or other evidence of such filings to the Indenture Trustee within
thirty (30) days of each Transfer Date. The Contract Files (including each
original executed Contract) will not be physically delivered to the Issuers and
the Transferors agree to deliver such Contract Files to the Custodian which will
hold such Contract Files for the benefit of the Indenture Trustee in accordance
with the Custody Agreement.
(e) In accordance with the Servicing Agreement, including, without
limitation, Section 4.11(d) thereof, the Servicer shall, on or prior to the
related Transfer Date, and with respect to Substitute Contracts, as soon as
possible, but in no event later than two Business Days after the related
Transfer Date, (i) cause the Contract Management System to be marked with a
specified code (the "CONTRACT MANAGEMENT CODE") to show that the Initial
Conveyed Assets, the Subsequent Conveyed Assets, or the Substitute Conveyed
Assets, as the case may be, have been assigned and transferred to LLC I or LLC
II, as applicable, in accordance with this Agreement, a Subsequent Transfer
Agreement or a Substitute Transfer Agreement, as applicable, and pledged to the
Indenture Trustee on behalf of the Noteholders pursuant to the Indenture and
(ii) prepare and hold in its capacity as Servicer on behalf of the Issuers and
the Indenture Trustee the List of Initial Contracts on or prior to the Closing
Date, a List of Subsequent Contracts on or prior to the related Subsequent
Transfer Date and a List of Substitute Contracts on or prior to the related
Substitute Transfer Date. Pursuant to Section 3.03 hereof, the Originator or the
Servicer may, from time to time, convey Substitute Contracts to LLC I or LLC II,
as applicable, by delivering a List of Substitute Contracts to the Issuers and
the Indenture Trustee on each Transfer Date.
(f) Except for the obligations of the Originator and the Servicer
pursuant to this Agreement, the Servicing Agreement and the Indenture with
respect to any Warranty Event with respect to the Contracts and the Conveyed
Assets, the conveyance of the Contracts and the Conveyed Assets will be without
recourse to the Transferors. Except as specified in this Agreement, the
Servicing Agreement and the Indenture, upon each Transferor's transfer of its
interest in the Contracts and the Conveyed Assets to LLC I or LLC II, as
applicable, the Transferors will not bear any further risk with respect to the
ultimate collectibility of the Contracts or the adequacy of the Collateral
securing the Contracts or the value or sufficiency of the Equipment.
(g) It is the intention of the parties hereto that each transfer of
the Contracts and the Conveyed Assets to be made pursuant to the terms hereof
shall constitute a sale and an absolute assignment of such Contracts and
Conveyed Assets by the Transferors to LLC I or LLC II, as applicable, and not a
loan. In the event, however, that a court of competent jurisdiction were to hold
that any such transfer constitutes a loan and not a sale and an absolute
assignment, each of the Transferors shall be deemed to have granted to LLC I or
LLC II, as applicable, a first priority perfected security interest in all of
each Transferor's respective right, title and interest in, to and under such
Contracts and related Conveyed Assets and all income and proceeds thereof, to
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secure all of such Transferor's obligations hereunder, and this Agreement shall
constitute a security agreement under applicable law, and in such event, the
parties hereto acknowledge that the Indenture Trustee, in addition to holding
the Contracts and Conveyed Assets for the benefit of the Noteholders, holds the
Contracts and Conveyed Assets as assignee of LLC I or LLC II, as applicable, as
secured party.
Section 2.02. CONVEYANCE OF SUBSEQUENT CONVEYED ASSETS.
(a) Subject to the conditions set forth in paragraph (c) below, on
any Subsequent Transfer Date, either or both of the Transferors shall sell,
assign, set over and convey, without recourse, to LLC I and/or LLC II, but
subject to the other terms and provisions of this Agreement, all of the right,
title and interest of such Transferor(s) in and to the Subsequent Contracts and
the Subsequent Conveyed Assets identified on the related List of Subsequent
Contracts. The transfer by a Transferor to LLC I and/or LLC II of the Subsequent
Contracts and the Subsequent Conveyed Assets identified on each List of
Subsequent Contracts shall be absolute and is intended by such Transferor and
LLC I and/or LLC II to constitute and to be treated as a sale and an absolute
assignment of the Subsequent Contracts and the Subsequent Conveyed Assets by
such Transferor to LLC I and/or LLC II.
In the event such transactions shall be deemed not to be a sale and an
absolute assignment, the related Transferor shall be deemed to have granted to
LLC I and/or LLC II as of each Subsequent Transfer Date a first priority
perfected security interest in all of such Transferor's right, title and
interest in, to and under each Subsequent Contract and each related Subsequent
Conveyed Asset, and all income and proceeds thereof, to secure all of such
Transferor's obligations hereunder, and this Agreement shall constitute a
security agreement under applicable law, and in such event, the parties hereto
acknowledge that the Indenture Trustee, in addition to holding the Subsequent
Contracts and the Subsequent Conveyed Assets for the benefit of the Noteholders,
holds the Subsequent Contracts and the Subsequent Conveyed Assets as assignee of
LLC I and/or LLC II as secured party.
(b) At least one Business Day prior to a Subsequent Transfer Date,
the Servicer shall advise the Indenture Trustee in writing as to the sum of the
Discounted Contract Balances of the Subsequent Contracts to be conveyed on such
Subsequent Transfer Date.
(c) The following conditions must be satisfied on each Subsequent
Transfer Date in order for a Transferor to convey Subsequent Contracts and
related Conveyed Assets to LLC I and/or LLC II, as applicable:
(i) The Transferors shall have delivered to the Indenture
Trustee a duly executed Subsequent Transfer Agreement, substantially in the form
of EXHIBIT A attached hereto, including a List of Subsequent Contracts attached
thereto, and confirming the satisfaction of each condition precedent specified
in this paragraph (c);
(ii) As of each Subsequent Transfer Date, as evidenced by
delivery of the Subsequent Transfer Agreement in the form of EXHIBIT A, none of
the Transferors (a) shall be insolvent or have been made insolvent by such
transfers, nor shall they be aware of any pending insolvency, (b) shall intend
to incur or believe that it shall incur debts that would be beyond its
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ability to pay as such debts mature, (c) shall make such transfer with actual
intent to hinder, delay or defraud any Person, and (d) shall have assets that
constitute unreasonably small capital to carry out its business as then
conducted;
(iii) Each such Subsequent Contract must satisfy the
representations and warranties made in Section 3.02 of this Agreement and each
Transferor shall have performed all obligations to be performed by it hereunder
on or prior to such Subsequent Transfer Date;
(iv) The Transferors shall not have selected such Subsequent
Contracts in a manner that they reasonably believe is adverse to the interests
of the Issuers and the Noteholders;
(v) Such transfer shall not result in a material adverse
tax consequence to either of the Issuers or the Noteholders;
(vi) The Subsequent Cut-Off Date for such Subsequent
Contracts is no later than (1) the close of business in the month immediately
following the related Transfer Date and (2) June 30, 2003;
(vii) The Pre-Funding Period shall not have terminated;
(viii) The Transferors shall have provided the Indenture
Trustee and the Rating Agencies with an Addition Notice not later than three
Business Days prior to such Subsequent Transfer Date and shall have provided any
information reasonably requested by any of them with respect to the related
Subsequent Contracts;
(ix) The Transferors shall have deposited in the Collection
Account all Collections received in respect of the related Subsequent Contracts
due after the related Subsequent Cut-Off Date;
(x) All Financing Statements prepared in accordance with
the Filing Requirements and executed on behalf of each of the Transferors, as
appropriate, shall have been delivered to the Indenture Trustee;
(xi) The Indenture Trustee shall have received a Custody
Receipt with respect to the Contract Files for the Subsequent Contracts listed
on the related List of Subsequent Contracts; and
(xii) Each of the Transferors shall have delivered to the
Rating Agencies and the Indenture Trustee "bringdown opinions" to the Opinions
of Counsel regarding bankruptcy, delivered on the Closing Date with respect to
the transfer of such Subsequent Contracts, in form and substance substantially
similar to opinions delivered on the Closing Date.
(xiii) All Necessary Consents, including, without limitation,
consents of Triple-A One Funding Corporation and Capital Markets Assurance
Corporation.
(xiv) All related Contract Files have been delivered at least
two Business Days prior to such Subsequent Transfer Date.
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(xv) The ratio of the sum of Discounted Contract Balances of
the Practice Finance Contracts to the Aggregate Outstanding Contract Balance as
of the end of the Pre-Funding Period shall not materially exceed such ratio as
of the Closing Date.
(xvi) The sum of (x) the Discounted Contract Balances for
Contracts listed on SCHEDULE 2 hereto (measured as of the Closing Date) and (y)
the Discounted Contract Balances of Subsequent Contracts added on each
Subsequent Transfer Date (measured as of such Subsequent Transfer Date) for
which two payments (but no more than two) were past due does not exceed
$5,000,000.
(d) Upon satisfaction of the requirements specified in (c) above, the
Indenture Trustee shall withdraw and disburse funds from the Pre-Funding Account
in accordance with Section 3.02 of the Indenture.
Section 2.03. CUSTODY OF CONTRACT FILES. In connection with the sale,
transfer and conveyance of the Contracts (including the Subsequent Contracts and
Substitute Contracts) to LLC I or LLC II, as applicable, pursuant to this
Agreement and each Subsequent Transfer Agreement and Substitute Transfer
Agreement, the Servicer shall deliver the related Contract Files to the
Custodian; provided, however, that the Servicer may retain copies of the
Contract Files in connection with the performance of its obligations under the
Servicing Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section 3.01. REPRESENTATIONS AND WARRANTIES.
(a) HPSC, as Originator and Transferor, hereby makes the following
representations and warranties for the benefit of the Indenture Trustee, the
Noteholders and the Issuers. Such representations and warranties are made as of
each Transfer Date and shall survive each assignment, transfer and conveyance by
the Transferors of the Conveyed Assets to LLC I or LLC II, as applicable, and
their successors and assigns.
(i) ORGANIZATION AND GOOD STANDING. HPSC is a corporation
duly organized, validly existing and in good standing, under the laws of the
State of Delaware, with corporate power and authority to own its properties and
to conduct its business as such properties are currently owned and such business
is currently conducted, and had at all relevant times, and now has, power,
authority and legal right to own the Conveyed Assets transferred by it in its
capacity as a Transferor;
(ii) DUE QUALIFICATION. HPSC is qualified as a foreign
corporation in any state where it is required to be so qualified to conduct its
business and has obtained all necessary licenses, consents and approvals as
required under federal and state law, in each case, where the failure to be so
qualified, licensed, consented to or approved could reasonably be expected
materially and adversely to affect the ability of HPSC to comply with the terms
of this Agreement, any Subsequent Transfer Agreement or any other Transaction
Document to which it is a party;
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(iii) LEGAL NAME. The legal name of HPSC is as set forth in
its signature line of this Agreement and HPSC has not changed its name since its
formation and since such formation HPSC has not used, and does not now use, any
trade names, fictitious names, assumed name or "doing business as" names;
(iv) POWER AND AUTHORITY. HPSC has the corporate power and
authority to execute and deliver this Agreement, any Subsequent Transfer
Agreement and any other Transaction Document to which it is a party, and to
carry out its obligations set forth herein and therein; HPSC has duly authorized
the conveyance to LLC I or LLC II, as applicable, of all its right, title and
interest, if any, in the Conveyed Assets transferred by it by all necessary
action; and the execution, delivery, and performance of this Agreement, any
Subsequent Transfer Agreement and any other Transaction Document to which it is
a party, has been duly authorized by HPSC by all necessary corporate action;
(v) DUE EXECUTION AND DELIVERY. This Agreement and each of
the other Transaction Documents to which it is a party have been duly executed
and delivered on behalf of HPSC;
(vi) TITLE. Immediately prior to the transfers herein
contemplated, HPSC had good and marketable title to the Contracts and Conveyed
Assets to be conveyed by HPSC to LLC I or LLC II, as applicable, hereunder, free
and clear of all Adverse Claims;
(vii) VALID ASSIGNMENT; BINDING OBLIGATIONS. This Agreement
constitutes a valid sale, assignment, transfer and conveyance to LLC I or LLC
II, as applicable, of all right, title, and interest of HPSC in, to and under
the Contracts and the Conveyed Assets to be conveyed by HPSC, and such Contracts
and Conveyed Assets will be held by LLC I or LLC II, as applicable, free and
clear of any Adverse Claim of any Person claiming through or under HPSC, except
the lien on the Contracts and the Conveyed Assets in favor of the Indenture
Trustee granted pursuant to the Indenture; and this Agreement and every other
Transaction Document to which it is a party when duly executed and delivered,
will constitute the legal, valid, and binding obligation of HPSC enforceable
against HPSC in accordance with their respective terms, except that (A) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws (whether statutory, regulatory or decisional) now or
hereafter in effect relating to creditors' rights generally and (B) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to certain equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought, whether in a proceeding at
law or in equity;
(viii) INSOLVENCY. HPSC is not insolvent nor will it be
rendered insolvent by the transactions contemplated by this Agreement or any
other Transaction Document to which it is a party and HPSC has an adequate
amount of capital to conduct its business in the ordinary course and to carry
out its obligations hereunder and under each other Transaction Document to which
it is a party;
(ix) NO VIOLATION. The consummation of the transactions
contemplated by and the fulfillment of the terms of this Agreement, any
Subsequent Transfer Agreement and the other Transaction Documents to which HPSC
is a party will not conflict with, result in any
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breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under, the articles of incorporation
or bylaws of HPSC or any material indenture, agreement, mortgage, deed of trust,
or other instrument to which HPSC is a party or by which it is bound, or result
in the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement, mortgage, deed of trust, or other
instrument, other than this Agreement, any Subsequent Transfer Agreement or the
other Transaction Documents to which HPSC is a party, or violate any law or any
order, injunction, writ, rule, or regulation applicable to HPSC of any court or
of any Governmental Authority having jurisdiction over HPSC or any of its
properties which is reasonably likely to have a material adverse effect on (A)
the transactions contemplated under this Agreement, any Subsequent Transfer
Agreement or the other Transaction Documents to which HPSC is a party or (B) the
validity, enforceability or collectability of the Contracts or the Conveyed
Assets;
(x) NO PROCEEDINGS. There are no Proceedings or
investigations pending, or, to the knowledge of HPSC, threatened, before any
Governmental Authority (A) asserting the invalidity of the Transaction Documents
to which it is a party, (B) seeking to prevent the consummation of any of the
transactions contemplated by the Transaction Documents to which it is a party,
or (C) seeking any determination or ruling that is reasonably likely to
materially and adversely affect the performance by HPSC of its obligations
under, or the validity or enforceability of, this Agreement or any other
Transaction Document to which it is a party;
(xi) NO CONSENT REQUIRED. HPSC is not required to obtain the
consent of any other Person, or any consent, license, approval or authorization
or registration or declaration with, any Governmental Authority in connection
with the execution, delivery or performance of this Agreement and the
Transaction Documents to which it is a party, except for such as have been
obtained, effected or made;
(xii) FAIR CONSIDERATION. The consideration received by HPSC
hereunder is fair consideration having value reasonably equivalent to or in
excess of the value of the Contracts and the Conveyed Assets conveyed by it and
the performance of HPSC's obligations hereunder;
(xiii) PRINCIPAL PLACE OF BUSINESS OF HPSC. The principal
place of business and chief executive office of HPSC is located at 60 State
Street, Boston Massachusetts 02109-1803 and, there are not now, and during the
past four months there have not been, any other locations where HPSC is located
(as that term is used in the UCC in the state of such location) except that,
with respect to such changes occurring after the date of this Agreement, as
shall have been specifically disclosed to the Servicer and the Indenture Trustee
in writing;
(xiv) VALID BUSINESS REASONS. HPSC has valid business reasons
for selling its interest in the Contracts and the Conveyed Assets rather than
obtaining a loan and using the Contracts and the Conveyed Assets as collateral;
(xv) ABSENCE OF EVENT. No event has occurred which
materially and adversely affects HPSC's operations or its ability to perform its
obligations under the Transaction Documents to which it is a party; and
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(xvi) ACCOUNTING TREATMENT. HPSC will treat the sale of the
Contracts and the Conveyed Assets to LLC I or LLC II, as applicable, pursuant to
Article II as a sale of the Contracts and the Conveyed Assets to LLC I or LLC
II, as applicable, for financial reporting and accounting purposes.
(b) Bravo hereby makes the following representations and warranties,
in each case solely as to itself, for the benefit of the Indenture Trustee, the
Noteholders and the Issuers. Such representations and warranties are made as of
each Transfer Date on which Bravo transfers Conveyed Assets and shall survive
each sale, assignment, transfer and conveyance by the Transferors of the
respective Conveyed Assets to LLC I or LLC II, as applicable, and their
successors and assigns.
(i) ORGANIZATION AND GOOD STANDING. Bravo is a limited
liability company, duly organized, validly existing and in good standing, under
the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is currently conducted, and had at all relevant times, and now
has, power, authority, and legal right to acquire and own the Conveyed Assets
transferred by it;
(ii) DUE QUALIFICATION. Bravo is qualified as a foreign
limited liability company in any state where it is required to be so qualified
to conduct its business and has obtained all necessary licenses, consents and
approvals as required under federal and state law, in each case, where the
failure to be so qualified, licensed, consented to or approved could reasonably
be expected materially and adversely to affect the ability of Bravo to comply
with the terms of this Agreement and the secretary's certificate and Officer's
Certificate to be delivered by Bravo;
(iii) LEGAL NAME. The legal name of Bravo is as set forth in
its signature line of this Agreement and Bravo has not changed its name since
its formation and since such formation Bravo has not used, or does not now use,
any trade names, fictitious names, assumed name or "doing business as" names;
(iv) POWER AND AUTHORITY. Bravo has the power and authority
to execute and deliver this Agreement, any Subsequent Transfer Agreement and any
other Transaction Document to which it is a party, and to carry out its
obligations set forth herein and therein; Bravo has duly authorized the
conveyance to LLC I or LLC II, as applicable, of all of its right, title and
interest, if any, in the Conveyed Assets transferred by it by all necessary
action; and the execution, delivery, and performance of this Agreement, any
Subsequent Transfer Agreement and any other Transaction Document to which it is
a party, has been duly authorized by Bravo by all necessary action;
(v) DUE EXECUTION AND DELIVERY. This Agreement has been
duly executed and delivered on behalf of Bravo;
(vi) TITLE. Immediately prior to the transfers herein
contemplated, Bravo had good and marketable title to the Contracts and Conveyed
Assets to be conveyed by
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Bravo to LLC I or LLC II, as applicable, hereunder, free and clear of all
Adverse Claims created by or through Bravo;
(vii) VALID ASSIGNMENT; BINDING OBLIGATIONS. This Agreement
constitutes a valid sale, assignment, transfer and conveyance to LLC I or LLC
II, as applicable, of all right, title, and interest of Bravo in, to and under
the Contracts and the Conveyed Assets to be conveyed by Bravo and such Contracts
and Conveyed Assets will be held by LLC I or LLC II, as applicable, free and
clear of any Adverse Claim of any Person claiming through or under Bravo, except
the lien on the Contracts and the Conveyed Assets in favor of the Indenture
Trustee granted pursuant to the Indenture; and this Agreement and any Subsequent
Transfer Agreement to which it is a party when duly executed and delivered, will
constitute the legal, valid, and binding obligation of Bravo, enforceable
against it, in accordance with its terms, except that (A) such enforcement may
be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws (whether statutory, regulatory or decisional) now or hereafter in
effect relating to creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, whether in a proceeding at law or in equity;
(viii) INSOLVENCY. Bravo is not insolvent nor will it be
rendered insolvent by the transactions contemplated by this Agreement or any
Subsequent Transfer Agreement and Bravo has an adequate amount of capital to
conduct its business in the ordinary course and to carry out its obligations
hereunder and under any Subsequent Transfer Agreement;
(ix) NO VIOLATION. The consummation of the transactions
contemplated by and the fulfillment of the terms of this Agreement and the other
Transaction Documents to which Bravo is a party will not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time or both) a default under, Bravo's organizational
documents or any material indenture, agreement, mortgage, deed of trust, or
other instrument to which Bravo is a party or by which it is bound, or result in
the creation or imposition of any Lien upon any of its respective properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of trust,
or other instrument, other than this Agreement, or violate any law or any order,
injunction, writ, rule, or regulation applicable to Bravo of any court or of any
Governmental Authority having jurisdiction over Bravo or any of its properties
which is reasonably likely to have a material adverse effect on (A) the
transactions contemplated under this Agreement, any Subsequent Transfer
Agreement or the other Transaction Documents to which Bravo is a party or (B)
the validity, enforceability or collectability of the Contracts or the Conveyed
Assets to be conveyed by Bravo;
(x) NO PROCEEDINGS. There are no Proceedings or
investigations pending, or, to the knowledge of Bravo threatened against Bravo
before any Governmental Authority (A) asserting the invalidity of this Agreement
or any other Transaction Document to which it is a party, (B) seeking to prevent
the consummation of any of the transactions contemplated by this Agreement or
any Subsequent Transfer Agreement, or (C) seeking any determination or ruling
that is reasonably likely to materially and adversely affect the performance by
Bravo of its obligations under, or the validity or enforceability of, this
Agreement or any other Transaction Document to which it is a party;
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(xi) NO CONSENT REQUIRED. Bravo is not required to obtain
the consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any Governmental Authority in
connection with the execution, delivery or performance of this Agreement and the
other Transaction Documents to which it is a party, except for such as have been
obtained, effected or made;
(xii) FAIR CONSIDERATION. The consideration received by Bravo
hereunder is fair consideration having value reasonably equivalent to or in
excess of the value of the Contracts and the Conveyed Assets conveyed by it and
the performance of Bravo's obligations hereunder;
(xiii) PRINCIPAL PLACE OF BUSINESS. The principal place of
business and chief executive office of Bravo is located at 60 State Street,
Boston, Massachusetts 02109-1803 and, there are not now, and during the past
four months there have not been, any other locations where Bravo is located (as
that term is used in the UCC in the state of such location) except that, with
respect to such changes occurring after the date of this Agreement, as shall
have been specifically disclosed to the Servicer and the Indenture Trustee in
writing;
(xiv) VALID BUSINESS REASONS. Bravo has valid business
reasons for selling its interest in the Contracts and the Conveyed Assets rather
than obtaining a loan with the Contracts and the Conveyed Assets as collateral;
(xv) ABSENCE OF EVENT. No event has occurred which
materially and adversely affects Bravo's operations or its ability to perform
its obligations under the Transaction Documents to which it is a party; and
(xvi) ACCOUNTING TREATMENT. Bravo will treat the sale of the
Contracts and the Conveyed Assets to LLC I or LLC II, as applicable, pursuant to
Article II as a sale of the Contracts and the Conveyed Assets to LLC I or LLC
II, as applicable, for financial reporting and accounting purposes.
Section 3.02. REPRESENTATIONS AND WARRANTIES OF THE ORIGINATOR WITH
RESPECT TO THE CONTRACTS. With respect to each Contract, the Originator hereby
makes the following representations and warranties to the Indenture Trustee, the
Issuers and the Noteholders, on which the Indenture Trustee relies in accepting
the Pledged Property in trust and authenticating the Notes, and on which the
Noteholders have relied and will rely in purchasing the Notes. Such
representations, warranties and covenants are made as of the Closing Date with
respect to an Initial Contract, and on the applicable Transfer Date with respect
to a Subsequent Contract or a Substitute Contract, as the case may be, and shall
survive the pledge, transfer, and assignment of any Pledged Property to the
Indenture Trustee for the benefit of the Noteholders.
(a) HPSC represents and warrants as follows with respect to each
Contract:
(i) The Obligor under such Contract (A) is not an affiliate
of HPSC and (B) is not a government or a governmental subdivision or agency.
(ii) HPSC has performed all material obligations required to
be performed by it under such Contract.
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(iii) Such Contract is "chattel paper" or "instrument" within
the meaning of Article 9 of the UCC of all applicable jurisdictions. Such
contract is secured by a first priority perfected security interest in the
related Equipment and all other Collateral, unless such Contract is solely for
the purpose of financing the purchase or lease of Equipment which has an
original cost of less than or equal to $5,000 (in which case, the security
interest has been created and attached but unperfected due to non-filing of a
Financing Statement).
(iv) If such Contract is a Lease, the relevant Transferor
holds title in all the underlying Equipment and upon execution of the
Receivables Transfer Agreement, the related Issuer will hold title in such
Equipment.
(v) There is not more than one original counterpart of such
Contract and the Custodian has possession of such original.
(vi) Such Contract is denominated and payable only in United
States dollars in the United States by an Obligor with a billing address in the
United States and for which the related Collateral is located in the United
States.
(vii) Such Contract is in full force and effect and is and at
all times will be the legal, valid and binding obligation of the related Obligor
enforceable against such Obligor in accordance with its terms and is not subject
to, nor has there been asserted, any litigation, right of rescission, setoff,
counterclaim or other defense thereunder.
(viii) Such Contract 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 no part of such Contract is in violation
of any such law, rule or regulation in any material respect.
(ix) Such Contract is assignable without the prior written
consent of the Obligor thereunder except for such consents as have been
previously obtained.
(x) Such Contract was generated in the ordinary course of
business of the Originator.
(xi) The Obligor under such Contract has been or will be
directed to make all payments to the Lockbox Account.
(xii) The Obligor under such Contract is responsible for the
payment of all expenses in connection with maintenance, repair, insurance and
taxes with respect to the related Equipment and such Obligor is required to make
Scheduled Payments thereunder without condition notwithstanding damage to or
destruction of the Equipment, or any other event, including Equipment
obsolescence and any Insurance Policy relating thereto is required to have HPSC
as loss payee.
(xiii) Such Contract is not a lease on a vehicle or other type
of equipment which requires titling in the name of the related Issuer in order
to perfect such Issuer's interest therein.
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(xiv) Such Contract has an outstanding term of 85 months or
less.
(xv) Such Contract contains customary and enforceable
provisions adequate for realization of the benefits of the related Collateral.
(xvi) Such Contract is not a "consumer lease" as defined in
Section 2A-103(l)(e) of the UCC.
(xvii) Such Contract is not subject to any guaranty of the
payment obligation thereunder by the Originator or any of its Affiliates nor has
the Originator established any specific credit reserve with respect to the
related Obligor.
(xviii) Such Contract provides that the Originator and its
assignees may accelerate all remaining Scheduled Payments due thereunder if the
Obligor is in default under any of its obligations under such Contract
(xix) Such Contract has not been terminated as a result of
the loss, theft, damage beyond repair or governmental seizure of any item of
Equipment and/or Loan Collateral or for any other reason.
(xx) Such Contract provides that in the event of the loss,
theft, damage beyond repair or governmental seizure of the related Equipment
and/or Loan Collateral, the Obligor is required to repair or replace the related
Equipment and/or Loan Collateral.
(xxi) The Obligor under such Contract has represented to HPSC
that such Obligor has accepted the related Equipment and/or Loan Collateral or
is contractually bound to accept such Equipment and/or Loan Collateral upon
shipment or delivery thereof.
(xxii) Such Contract has been originated in all material
respects in accordance with the then effective Credit and Collection Policies
and Procedures.
(xxiii) The Contract Files for such Contract are complete and
in the custody of the Custodian on behalf of the Indenture Trustee.
(xxiv) Such Contract and the related Equipment and any other
Collateral has not been assigned or pledged to anyone except the Indenture
Trustee, and the related Transferor has good and marketable title thereto and is
the sole owner and holder thereof, free and clear of any and all liens, claims,
encumbrances, participation or contingent interests, share appreciation
features, equities, pledges, charges or security interests of any nature and has
full right and authority, subject to no interest or participation of, or
agreement with, any other party, to sell and assign the same pursuant to this
Agreement.
(xxv) Such Contract contains customary and enforceable
provisions which render the rights and remedies of the holder thereof adequate
for the realization against the Equipment and/or other Collateral of the
benefits of the security, including by judicial foreclosure.
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(xxvi) The origination, servicing and collection practices
used by HPSC with respect to such Contract have been in all respects legal,
proper, prudent and have met customary standards utilized by lenders for
commercial loan origination and servicing business.
(xxvii) Such Contract provides for the Obligor to pay a base
monthly payment, and contains other provisions customarily included in such
leases or commercial loans.
(xxviii) If such Contract is a Practice Finance Contract, the
Discounted Contract Balance of such Practice Finance Contract, together with the
aggregate Discounted Contract Balances of all other Practice Finance Contracts,
does not exceed 20% of the Aggregate Outstanding Contract Balance.
(xxix) The Obligor under such Contract has made at least one
Scheduled Payment as of the related Transfer Date.
(xxx) The Obligor under such Contract is not an Obligor in
respect of Contracts with an Aggregate Discounted Contract Balance in excess of
0.75% of the Aggregate Outstanding Contract Balance of all Contracts, plus the
Pre-Funded Amount as of the related Transfer Date, if such Contract is a
Subsequent Contract or a Substitute Contract, as the case may be.
(xxxi) Such Contract is not a Defaulted Contract.
(xxxii) Except if such is an Initial Contract listed on
SCHEDULE 2 hereto, no Scheduled Payment in respect of such Initial Contract is
greater than one payment past due as of the related Closing Date. If such is an
Initial Contract listed on SCHEDULE 2, such Contract has Scheduled Payments
which are greater than one payment past due but not greater than two payments
past due as of the Closing Date.
(xxxiii) If such Contract is a Subsequent Contract, when the
Discounted Contract Balance of such Subsequent Contract (as of the related
Transfer Date) is aggregated with the sum of the Discounted Contract Balances of
the Initial Contracts listed on SCHEDULE 2 hereto (as of the Closing Date), the
total does not exceed $5,000,000.
(xxxiv) Such Contract is an "eligible asset" as defined in Rule
3a-7 under the Investment Company Act of 1940, as amended.
(xxxv) With respect to such Contract, HPSC has not established
any specific credit reserve with respect to the related Obligor.
(xxxvi) The information set forth on the related List of
Contracts is complete, true and correct in all material respects as of the
related Transfer Date.
(xxxvii) The Contract, if it is a Loan, is a valid, subsisting
and enforceable first priority lien on the related Loan Collateral.
(xxxviii) The terms of such Contract have not been impaired,
waived, altered or modified in any respect, except by a written instrument which
has been filed and/or
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recorded, in all places necessary to perfect, maintain and continue the validity
and priority lien of such Contract. The substance of any such alteration or
modification is reflected on the List of Initial Contracts.
(xxxix) No instruments of release or waiver have been executed
in connection with such Contract, and no Obligor has been released from
liability under such Contract, in whole or in part.
(xl) The Contract File relating to such Contract is complete
and contains each of the documents and instruments specified to be included
therein duly executed and in due and proper form.
(xli) Such Contract obligates the relevant Obligor thereunder
to maintain insurance on the related Equipment at such Obligor's cost and
expense, and upon such Obligor's failure to do so, authorizes the holder of such
Contract to call an event of default or, at holder's option, to obtain and
maintain such insurance at such Obligor's cost and expense and to seek
reimbursement therefor from such Obligor. All Collateral securing such Contract
is covered by such insurance.
(xlii) Such Contract is not subject to any right of
rescission, set-off, abatement, diminution, counterclaim or defense, including
the defense of usury, nor will the operation of any of the terms of such
Contract, or the exercise of any right thereunder, render such Contract
unenforceable, in whole or in part, or subject to any right of rescission, set
off, abatement, diminution, counterclaim or defense, including the defense of
usury, or the violation of any applicable disclosure or consumer credit laws,
and no such right of rescission, set-off, abatement, diminution, counterclaim or
defense has been asserted with respect thereto.
(xliii) Such Contract, if it is a Loan, contains an enforceable
provision for the acceleration of the payment of the unpaid principal balance of
the Loan in the event the related Loan Collateral is sold without the prior
consent of HPSC thereunder.
(xliv) There is no claim, litigation or other judicial or
administrative proceeding pending or, to the knowledge of HPSC, threatened
against the related Equipment and/or Loan Collateral or any Obligor which could
materially and adversely affect the value of the related Equipment and/or Loan
Collateral or the validity or priority of such Contract or the ability of any
Obligor to perform its obligations in connection with such Contract.
(xlv) Such Contract has not been selected from HPSC's
portfolio of commercial loans in a manner which would be adverse to the
interests of the Noteholders.
Section 3.03. BREACH OF REPRESENTATIONS AND WARRANTIES; REPURCHASE OR
SUBSTITUTION OF CONTRACTS.
(a) If HPSC during the term of this Agreement discovers, or receives
notice that any of its representations or warranties contained in Section 3.01
or 3.02 hereof are, in any material respect, false, incorrect or misleading, or
if HPSC obtains knowledge of any event or circumstance that would reasonably
cause HPSC to believe that any of its respective representations or warranties
are, in any material respect, false, incorrect or misleading, HPSC
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shall have 30 days from the earlier of notice or knowledge to cure such breach
in all material respects. If HPSC fails or is unable to cure such breach in all
material respects, then, on or before the first Payment Date following such 30
day period, HPSC shall be required to either (i) deposit or cause to be
deposited in the Collection Account an amount equal to the Purchase Amount with
respect to the related Contract or (ii) replace the related Contract with a
Substitute Contract meeting the requirements specified below and in the
Indenture.
(b) Except as may be set forth in the Transaction Documents, it is
understood and agreed that the obligations of HPSC with respect to a breach as
provided in this Section 3.03 and in the Indenture shall constitute the sole
remedy against HPSC for such breach.
Section 3.04. SUBSTITUTION OF CONTRACTS.
(a) In addition to the substitution option specified in Section
3.03(a) with respect to Contract for which a breach of representation and
warranty exists, HPSC shall have the option but not the obligation to, subject
to the provisions of Section 4.02 of the Indenture and this Section 3.04, remove
one or more Contracts owned by LLC II which are (i) 90-Day Delinquent Contracts,
(ii) Defaulted Contracts, (iii) Contracts that are subject to a Full Prepayment
and (iv) Contracts that are subject of a Casualty Loss, and to replace such
Contracts with one or more Substitute Contracts.
(b) With respect to a substitution of Contracts in accordance with
the provisions of this Section 3.04 and Section 4.02 of the Indenture, each
proposed Substitute Contract must be a Qualified Substitute Contract.
(c) No substitutions shall be permitted if any condition specified in
Section 4.02(c) of the Indenture shall exist.
(d) Any substitution of a Contract pursuant to this Agreement will be
effected by (i) delivery to the Custodian of the Contract File for each such
Substitute Contract at least two Business Days prior to such conveyance, (ii)
filing of any Financing Statements necessary to perfect the interest of the
Indenture Trustee in the Substitute Contracts and delivery to the Indenture
Trustee of all such Financing Statements prepared in accordance with the Filing
Requirements and (iii) delivery to the Indenture Trustee of a List of Substitute
Contracts reflecting such substitution.
ARTICLE IV.6
COVENANTS
Section 4.01. COVENANTS OF THE ORIGINATOR. The Originator hereby
covenants and agrees with the Issuers, the Noteholders and the Indenture Trustee
as follows:
(a) PRESERVATION OF SECURITY INTEREST. The Originator shall execute
and file or cause to be executed and filed such financing statements and cause
to be executed and filed such continuation statements, all in such manner and in
such places as may be required by law fully to preserve, maintain, and protect
the respective right, title and interest of the Issuers, as owners, and the
Indenture Trustee, as secured party, in the Contracts and the Conveyed Assets
(subject to
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the Filing Requirements with respect to the Equipment). The Originator shall
deliver (or cause to be delivered) to the Indenture Trustee file-stamped copies
of, or filing receipts for, any document filed as provided above, as soon as
available following such filing.
(b) OBLIGATIONS WITH RESPECT TO CONTRACTS AND CONVEYED ASSETS. The
Originator will duly fulfill all obligations on its part to be fulfilled under
or in connection with each Contract, and will do nothing to impair the rights of
the Issuers or the Indenture Trustee in any of the Contracts or the Conveyed
Assets.
(c) COMPLIANCE WITH LAW. The Originator will comply, in all material
respects, with all acts, rules, regulations, orders, decrees and directions of
any Governmental Authority applicable to its business and to the Contracts and
the Conveyed Assets or any part thereof; provided, however, that the Originator
may contest any act, rule, regulation, order, decree or direction in any
reasonable manner which shall not materially and adversely affect the rights of
the Issuers or the Indenture Trustee in the Contracts or the Conveyed Assets.
(d) CONVEYANCE OF CONTRACTS AND CONVEYED ASSETS; SECURITY INTERESTS.
Except for the transfers and conveyances hereunder, under any Subsequent
Transfer Agreement or under any other Transaction Document, the Originator will
not, and will not permit other Transferors to, sell, pledge, assign or transfer
to any other Person, or grant, create, incur, assume or suffer to exist any
Adverse Claim, on any Contract, any Conveyed Asset, or any interest therein and
the Originator shall defend the right, title, and interest of the Issuers, the
Indenture Trustee and their respective successors and assigns in, to and under
the Contracts and the Conveyed Assets, against all claims of third parties
claiming through or under the Transferors.
(e) NOTIFICATION OF BREACH. The Originator will advise the Issuers,
the Indenture Trustee and the Noteholders promptly, in reasonable detail, upon
discovery of the occurrence of a breach, in any material respect, by the
Originator, the Servicer or any of the Transferors of any of its respective
representations, warranties and covenants contained herein.
(f) FURTHER ASSURANCES. The Originator will make, execute or endorse,
acknowledge and file or deliver (or will cause to be made, executed or endorsed,
acknowledged and filed or delivered) to the Issuers and the Indenture Trustee
from time to time such schedules, confirmatory assignments, conveyances,
transfer endorsements, powers of attorney, certificates, reports and other
assurances or instruments and take such further steps relating to the Contracts
and the Conveyed Assets and other rights covered by this Agreement, as the
Issuers, a Noteholder or the Indenture Trustee may request and reasonably
require, provided that no UCC filing will be required with respect to the
Equipment, except as required by the Filing Requirements.
(g) INDEMNIFICATION. The Originator agrees to indemnify, defend and
hold the Issuers, the Noteholders and the Indenture Trustee harmless from and
against any and all loss, liability, damage, judgment, claim, deficiency, or
expense (including interest, penalties, reasonable attorneys' fees and amounts
paid in settlement) to which any of them may become subject insofar as such
loss, liability, damage, judgment, claim, deficiency, or expense arises out of
or is based upon a breach of representations and warranties contained in Section
3.01 or 3.02 hereof or covenants contained in this Section 4.01, or any
information certified or set forth in this
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Agreement or in any schedule delivered by it hereunder, being untrue in any
material respect at any time. The obligations of the Originator under this
Section 4.01(g) shall be considered to have been relied upon by the Issuers, the
Noteholders and the Indenture Trustee and shall survive the execution, delivery,
and performance of this Agreement regardless of any investigation made by or on
behalf of the Issuers, the Noteholders or the Indenture Trustee.
(h) NOTICE OF ADVERSE CLAIMS. The Originator shall notify the
Issuers, the Noteholders and the Indenture Trustee, promptly after becoming
aware of any Adverse Claim on any Contract or Conveyed Asset.
(i) TAXES. The Originator shall promptly pay or cause to be paid all
applicable taxes required to be paid in connection with the transfer of the
Contracts and the Conveyed Assets by the Transferors to LLC I or LLC II, as
applicable, and acknowledges that none of the Issuers or Bravo shall have any
responsibility with respect thereto. The Originator shall promptly pay and
discharge, or cause the payment and discharge of, all federal income taxes (and
all other material taxes) when due and payable by each Transferor, except such
as may be contested in good faith by appropriate proceedings and for which an
adequate reserve has been established and is maintained in accordance with GAAP.
The Originator shall promptly notify the Issuers, the Indenture Trustee and the
Noteholders of any material challenge, contest or proceeding pending by or
against any of the Transferors before any taxing authority.
(j) OPERATION OF BRAVO. The Originator shall ensure that Bravo shall:
(i) be a limited purpose, limited liability company whose
primary activities are restricted in its certificate of formation;
(ii) not engage in any action that would cause the separate
legal identity of Bravo not to be respected, including, without limitation, (a)
holding itself out as being liable for the debts of any other party or (b)
acting other than through its duly authorized agents;
(iii) not be involved in the day-to-day management of HPSC or
the Issuers;
(iv) not incur, assume or guarantee any indebtedness except
for such indebtedness as may be incurred by Bravo in accordance with its
certificate of formation;
(v) not commingle its funds, assets and records relating
thereto with those of HPSC or any other entity except in the Lockbox Account, as
provided for in the Escrow Agreement;
(vi) act solely in its own name in the conduct of its
business, including business correspondence and other communications, and shall
conduct its business so as not to mislead others as to the identity of the
entity with which they are concerned;
(vii) maintain separate corporate records and books of
account and shall not commingle its corporate records and books of account with
the records and books of account of any entity;
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(viii) not engage in any business or activity other than as
permitted in its certificate of incorporation;
(ix) comply with all restrictions and covenants in, and
shall not fail to comply with the formalities established in, its certificate of
incorporation and by-laws;
(x) manage its day-to-day business without the involvement
of HPSC or any other entity, except for HPSC's role as a Servicer of receivables
for Bravo or as otherwise contemplated under the Bravo Documents;
(xi) maintain a separate office from that of HPSC and any
other entity;
(xii) not act as an agent of HPSC or any other entity, except
to the limited extent provided in the Transaction Documents and the Bravo
Documents; and
(xiii) maintain at all times at least one director who is an
independent director as required by its certificate of formation.
(k) FINANCIAL STATEMENTS. The financial statements and books and
records of the Originator will reflect the separate existence of the Transferors
and the Issuers; the annual consolidated financial statements of the Originator
after the date hereof will contain disclosures to the effect that the Originator
has or will have one or more direct and indirect subsidiaries that were or may
be established as bankruptcy remote entities to facilitate asset securitization;
that in connection therewith, assets have been or will be transferred directly
or indirectly by the Originator to such subsidiaries; and that these bankruptcy
remote entities are separate legal entities the assets of which are not
available to satisfy the claims of creditors of the Originator, any subsidiary
or any other affiliate.
(l) MERGER OR CONSOLIDATION.
(i) The Originator will keep in full effect its existence,
rights and franchises as a corporation and will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction which
permits such qualification and in which it is necessary to protect the validity
and enforceability of this Agreement, any other Transaction Document to which it
is a party and to perform its duties under this Agreement and each other
Transaction Document to which it is a party.
(ii) Any partnership, corporation or limited liability
company (i) into which the Originator may be merged or consolidated, (ii)
resulting from any merger, conversion, or consolidation to which the Originator
shall be party, or (iii) succeeding to the Originator's business substantially
as a whole, shall execute an agreement of assumption to perform all of the
Originator's obligations under this Agreement and any other Transaction Document
to which it is a party, and upon such execution will be the Originator's
successor under this Agreement and any other Transaction Document, without the
execution or filing of any document or any further act on the part of any of the
parties to this Agreement and any other Transaction Document to which it is a
party, anything in this Agreement and any other Transaction Document to which it
is a party to the contrary notwithstanding; provided, however, that (a) the
Originator shall have delivered to the Rating Agencies, the Issuers, the
Noteholders and the Indenture Trustee an
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Officer's Certificate and an opinion of counsel, satisfactory to each of them,
each stating that such consolidation, conversion, merger, or succession and such
agreement of assumption comply with this Section 4.01(l) and that all conditions
precedent, if any, provided for in this Agreement relating to such transaction
have been complied with, (b) the Originator shall have delivered to the Issuers,
the Rating Agencies, the Noteholders and the Indenture Trustee an opinion of
counsel, satisfactory to each of them, stating that, in the opinion of such
counsel, (1) either (A) all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Issuers, the Indenture Trustee and the
Noteholders in the Contracts and the Conveyed Assets and reciting the details of
such filings, or (B) no such action shall be necessary to preserve and protect
such interest, and (2) after giving effect to such merger or consolidation, such
Transferor (or its successor) would not be substantively consolidated with HPSC
in the event of a bankruptcy of HPSC and (c) such partnership, corporation or
limited liability company shall have organizational documents with similar
restrictions as those of the Transferor which is the object of such merger or
consolidation.
(m) NAME CHANGE OR RELOCATION. If any change is to occur in a
Transferor's name, identity or structure, or in the location of its principal
place of business or chief executive office, then the Originator shall deliver
at least thirty (30) days' prior written notice of such change or relocation to
the Servicer, the Noteholders and the Indenture Trustee. No later than three
days after the effective date of such change, the Originator shall file such
amendments or statements as may be required to preserve and protect the
Indenture Trustee's interest in the Pledged Property, and shall deliver copies
thereof to the Indenture Trustee.
(n) CHIEF EXECUTIVE OFFICES. During the term of this Agreement and
the Indenture, the Originator will maintain and will cause Bravo to maintain,
its chief executive office and principal place of business in one of the States
of the United States.
Section 4.02. COVENANTS OF THE ISSUERS. Each of the Issuers hereby
covenants and agrees with the Indenture Trustee and the Noteholders as follows:
(a) ISSUER'S CERTIFICATE. Prior to each date as of which Contracts
and the interest of LLC I or LLC II, as applicable, in the Equipment subject to
such Contracts are to be purchased by the Originator or the Servicer, as
applicable, pursuant to the Indenture, LLC I or LLC II, as applicable, shall
submit to the Originator or the Servicer, as applicable, a certificate signed by
a manager of LLC I or LLC II, as applicable (an "ISSUER'S CERTIFICATE"). Each
Issuer's Certificate shall operate as an assignment, without recourse,
representation, or warranty, to the Originator or the Servicer, as applicable,
of all of LLC I's or LLC II's, as applicable, right, title, and interest in and
to such purchased Contract, the related Equipment and all security and documents
relating thereto, such assignment being an assignment outright and not for
security; and upon payment of the Purchase Amount, the Originator or the
Servicer, as applicable, will thereupon own such Contract, such interest in the
related Equipment and all such security and documents, free of any further
obligation to LLC I or LLC II, as applicable, with respect thereto.
(b) OBLIGOR'S QUIET ENJOYMENT. Each of the Issuers hereby
acknowledges and agrees that its rights in the Equipment are expressly subject
to the rights of the related Obligors in such Equipment pursuant to the
applicable Contracts. Each of the Issuers covenants and agrees
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that, so long as an Obligor shall not be in default of any of the provisions of
the applicable Contract, none of the Issuers nor any assignee of the Issuers
will disturb the Obligor's quiet and peaceful possession of the related
Equipment and the Obligor's use thereof for its intended purpose.
(c) OPERATION OF THE ISSUERS. Each of the Issuers shall:
(i) be a limited purpose, limited liability company whose
primary activities are restricted in its certificate of formation and operating
agreement;
(ii) not engage in any action that would cause the separate
legal identity of such Issuer not to be respected, including, without
limitation, (a) holding itself out as being liable for the debts of any other
party (other than the other Issuer) or (b) acting other than through its duly
authorized agents;
(iii) not be involved in the day-to-day management of HPSC;
(iv) not incur, assume or guarantee any indebtedness except
for such indebtedness as may be incurred by such Issuer in connection with the
issuance of the Notes;
(v) not commingle its funds (other than amounts temporarily
deposited in the Lockbox Account), assets and records relating thereto with
those of HPSC or any other entity (other than the other Issuer) except in the
Lockbox Account as provided for in the Escrow Agreement;
(vi) act solely in its own name in the conduct of its
business, including business correspondence and other communications, and shall
conduct its business so as not to mislead others as to the identity of the
entity with which they are concerned;
(vii) maintain company records and books of account and shall
not commingle its company records and books of account with the records and
books of account of any entity;
(viii) not engage in any business or activity other than in
connection with or relating to its articles of organization and operating
agreement;
(ix) not form, or cause to be formed, any subsidiaries;
(x) comply with all restrictions and covenants in, and
shall not fail to comply with the limited liability company formalities
established in, its certificate of formation and operating agreement;
(xi) manage its day-to-day business without the involvement
of HPSC;
(xii) maintain a separate office from that of HPSC;
(xiii) not act as an agent of HPSC, except to the limited
extent provided in the Transaction Documents;
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(xiv) maintain at all times two independent managers as
required by its limited liability company agreement; and
(xv) not amend its certificate of formation or operating
agreement without the prior written consent of the Noteholders and a written
confirmation from each of the Rating Agencies that the ratings on the Notes will
not be downgraded or withdrawn.
Section 4.03. TRANSFER OF CONVEYED ASSETS. Each of the Transferors,
the Originator and the Servicer understands that the Issuers intend to pledge
the Pledged Property to the Indenture Trustee for the benefit of the Noteholders
pursuant to the Indenture. Each of the Transferors, the Originator and the
Servicer agrees that the Indenture Trustee may exercise the rights of the
Issuers hereunder and shall be entitled to all of the benefits to which the
Issuers are entitled to hereunder to the extent provided for herein.
ARTICLE V.
CONDITIONS PRECEDENT
Section 5.01. CONDITIONS TO ISSUERS' INITIAL OBLIGATIONS. The
obligations of LLC I or LLC II, respectively, to accept the transfer of the
Initial Contracts and the Initial Conveyed Assets on the Closing Date as set
forth herein shall be subject to the satisfaction of the following conditions:
(a) All representations and warranties of each of the Transferors,
the Originator and the Servicer contained in this Agreement shall be true and
correct on the Closing Date with the same effect as though such representations
and warranties had been made on such date;
(b) All information concerning the Initial Contracts and the Initial
Conveyed Assets provided to the Issuers and the Noteholders shall be true and
correct as of the Initial Cut-Off Date in all material respects;
(c) Each of the Transferors shall have delivered to LLC I or LLC II,
as applicable, a List of Initial Contracts as of the Initial Cut-Off Date and
shall have substantially performed all other obligations required to be
performed by the provisions of this Agreement;
(d) Each of the Transferors shall have recorded and filed, at the
expense of the Servicer or the Originator, any financing statement with respect
to the Initial Contracts and the Initial Conveyed Assets to be sold on the
Closing Date to LLC I or LLC II, as applicable, by each Transferor, as
applicable, pursuant to this Agreement meeting the requirements of applicable
state law in such manner in such jurisdictions as are necessary to perfect the
transfer of the Initial Contracts and the Initial Conveyed Assets from each such
Transferor to LLC I or LLC II, as applicable (subject to the Filing Requirements
with respect to the Equipment), and shall deliver a file-stamped copy of such
financing statements or other evidence of such filings to the Indenture Trustee;
(e) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to
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the Issuers and the Noteholders, and the Issuers and the Noteholders shall have
received from each of the Transferors copies of all documents (including,
without limitation, records of corporate or partnership proceedings, as
applicable) relevant to the transactions herein contemplated as the Issuers or
any Noteholder may reasonably have requested; and
(f) All conditions necessary to vest in each of the Transferors and
subsequently in LLC I, LLC II and the Noteholders, good title, free and clear of
all Adverse Claims, to its respective Initial Contracts, Initial Conveyed Assets
and interests in the related Equipment and any other Collateral securing the
contracts shall have been satisfied.
Section 5.02. CONDITIONS TO ISSUERS' SUBSEQUENT OBLIGATIONS. The
obligations of LLC I or LLC II, respectively, to accept the transfer of any
Subsequent Contracts and any Subsequent Conveyed Assets as set forth herein
shall be subject to the satisfaction of the following conditions:
(a) All representations and warranties of each of the Transferors,
the Originator and the Servicer contained in this Agreement and every other
Transaction Document to which it is a party, shall be true and correct on the
Subsequent Transfer Date with the same effect as though such representations and
warranties had been made on such date;
(b) All information concerning the Subsequent Contracts and the
related Subsequent Conveyed Assets provided to the Issuers shall be true and
correct as of the applicable Subsequent Cut-Off Date in all material respects;
(c) Each of the Transferors shall have delivered to LLC I or LLC II,
as applicable, a List of Subsequent Contracts as of the applicable Subsequent
Cut-Off Date and shall have substantially performed all other obligations
required to be performed by the provisions of this Agreement;
(d) Each of the Transferors shall have recorded and filed, at the
expense of the Servicer, any financing statement with respect to the Subsequent
Contracts and the related Conveyed Assets to be sold on such Subsequent Closing
Date to LLC I or LLC II, as applicable, by each Transferor, as applicable,
pursuant to this Agreement meeting the requirements of applicable state law in
such manner in such jurisdictions as are necessary to perfect the transfer of
the Subsequent Contracts and the related Subsequent Conveyed Assets from each
such Transferor to LLC I or LLC II, as applicable (subject to the Filing
Requirements with respect to the Equipment), and shall deliver a file-stamped
copy of such financing statements or other evidence of such filings to the
Indenture Trustee;
(e) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to the Issuers, and the Issuers shall have
received from each of the Transferors copies of all documents (including,
without limitation, records of corporate or partnership proceedings, as
applicable) relevant to the transactions herein contemplated as the Issuers may
reasonably have requested; and
(f) All conditions necessary to vest in each of the Transferors good
title, free and clear of all Adverse Claims, to its respective Subsequent
Contracts and the related
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Subsequent Conveyed Assets and interests in the related Equipment and other
Collateral securing the Contracts shall have been satisfied.
ARTICLE VI.
TERMINATION
Section 6.01. TERMINATION. The obligations and responsibilities of
each of the Transferors, the Originator, the Servicer and the Issuers created by
this Agreement shall terminate upon the latest of (i) the maturity or other
liquidation of the last remaining Contract and the disposition of any amounts
received upon disposition of any Defaulted Contracts and any Equipment leased
thereunder; and (ii) the termination of the Indenture in accordance with the
terms thereof; provided, however, that the indemnifications contained in Section
4.01(g) herein shall survive the termination of this Agreement and the other
Transaction Documents.
ARTICLE VII.
MISCELLANEOUS PROVISIONS
Section 7.01. AMENDMENT. This Agreement may be amended from time to
time by the parties hereto only with the prior written consent of the Indenture
Trustee and the Noteholders and written confirmation from the Rating Agencies
that amendment will not result in the reduction or withdrawal of any rating on
any Class of Notes.
Section 7.02. GOVERNING LAW. THIS AGREEMENT AND ANY AMENDMENT HEREOF
PURSUANT TO SECTION 7.01 SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CHOICE OF LAW
PRINCIPLES) APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED THEREIN AND THE
OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 7.03. WAIVER OF JURY TRIAL. The Issuers, the Servicer, the
Originator and the Transferors each hereby waive any right to have a jury
participate in resolving any dispute, sounding in contract, tort, or otherwise
arising out of, connected with, related to, or in connection with this
agreement. Instead, any dispute resolved in court will be resolved in a bench
trial without a jury.
Section 7.04. NOTICES. All demands, notices, and communications under
this Agreement shall be in writing and shall be deemed to have been duly given,
made and received (i) when delivered against receipt of registered or certified
mail or upon actual receipt of registered or certified mail, postage prepaid,
return receipt requested; (ii) when delivered by courier with appropriate
evidence of receipt; or (iii) upon transmission via facsimile or telex with
appropriate evidence of receipt (a) in the case of the Servicer, at the
following address: 60 State Street, Boston Massachusetts 02109-1803, (b) in the
case of Bravo, at the following address: 60 State Street, Boston Massachusetts
02109-1803, with a copy to the Originator as set forth in clause (d) below, (c)
in the case of LLC I, at the following address: 60 State Street, Suite 3520,
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Boston Massachusetts 02109-1803, and in the case of LLC II, at the following
address: 60 State Street, Suite 3520, Boston Massachusetts 02109-1803, in each
case with a copy to the Originator as set forth in clause (d) below, and (d) in
the case of the Originator, at its address set forth in Section 11.05 of the
Indenture. Any party may alter the address to which communications are to be
sent by giving notice of such change of address in conformity with the
provisions of this Section 7.04 for giving notice and by otherwise complying
with any applicable terms of this Agreement.
Section 7.05. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
Section 7.06. ASSIGNMENT. Notwithstanding anything to the contrary
contained in this Agreement, this Agreement may not be assigned by any of the
Transferors, without the prior written consent of the Issuers and the
Noteholders and, except as provided in Section 4.03, this Agreement may not be
assigned by the Issuers without the prior written consent of the Noteholders.
Whether or not expressly stated, all representations, warranties, covenants and
agreements of the Originator, the Servicer, the Transferors and the Issuers in
this Agreement, or in any document delivered by any of them in connection with
this Agreement, shall be for the benefit of, and shall be exercisable by the
Indenture Trustee for the benefit of the Noteholders.
Section 7.07. FURTHER ASSURANCES. Each of the parties hereto agrees to
do such further acts and things and to execute and deliver to the Indenture
Trustee or any Noteholders such additional assignments, agreements, powers and
instruments as are required by the Indenture Trustee or any Noteholders to carry
into effect the purposes of this Agreement or to better assure and confirm unto
the Indenture Trustee its rights, powers and remedies hereunder, provided that
Bravo shall only be required to take any such actions if and to the extent
reimbursement from another Person for any costs, expenses or liabilities
incurred in taking such actions is reasonably assured.
Section 7.08. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise
and no delay in exercising any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise hereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exhaustive of any rights, remedies, powers and privilege provided by law.
Section 7.09. COUNTERPARTS. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which shall constitute one and the same
instrument.
Section 7.10. BINDING EFFECT; THIRD-PARTY BENEFICIARIES. This
Agreement will inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assigns. The Indenture Trustee and
the Noteholders are intended third party beneficiaries of this Agreement.
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Section 7.11. MERGER AND INTEGRATION. Except as specifically stated
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 7.12. HEADINGS. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 7.13. SCHEDULES AND EXHIBITS. The schedules and exhibits
attached hereto and referred to herein shall constitute a part of this Agreement
and are incorporated into this Agreement for all purposes.
Section 7.14. NO BANKRUPTCY PETITION AGAINST THE TRANSFERORS OR THE
ISSUERS. Each of the parties hereto agrees that, prior to the date that is one
year and one day after the payment in full of the latest maturing Notes issued
by the Issuers, it will not institute against any of Bravo or the Issuers, or
join any other Person in instituting against any of the Transferors or the
Issuers, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other proceedings under the laws of the United States or any
state of the United States. This Section 7.14 shall survive the termination of
this Agreement.
Section 7.15. LIMITED RECOURSE TO BRAVO.
(a) Each of the parties hereto acknowledges that Bravo is intended to
be operated as a bankruptcy-remote entity which will enter into other
securitization transactions and each other party hereto acknowledges and agrees
that it shall have no right, title or interest in or to any assets or interests
of Bravo (other than the Contracts and Conveyed Assets conveyed or purported to
be conveyed hereunder) which are conveyed or purported to be conveyed by Bravo
to any other Person (whether by way of a sale, assignment, capital contribution
or by virtue of the granting of a lien) ("OTHER SECURITIZED ASSETS"). To the
extent that, notwithstanding the agreements and provisions contained in the
immediately preceding sentence, any Issuer or assignee thereof either (i)
asserts an interest or claim to, or benefit from, Other Securitized Assets,
whether asserted against or through Bravo or any other Person owned by Bravo, or
(ii) is deemed to have any such interest, claim or benefit in or from Other
Securitized Assets, whether by operation of law, legal process, pursuant to
applicable provisions of insolvency laws or otherwise (including by virtue of
Section 1111(b) of the Federal Bankruptcy Code or any successor provision having
similar effect under the Bankruptcy Code), and whether deemed asserted against
or through Bravo or any other Person owned by Bravo, then each Issuer, by
accepting the transfer of Conveyed Assets from Bravo, further acknowledges and
agrees that any such interest, claim or benefit in or from Other Securitized
Assets is and shall be expressly subordinated to the indefeasible payment in
full of all obligations and liabilities of Bravo which, under the terms of the
relevant documents relating to the securitization of such Other Securitized
Assets, are entitled to be paid from, entitled to the benefits of, or otherwise
secured by such Other Securitized Assets (whether or not any such entitlement or
security interest is legally perfected or otherwise entitled to priority of
distribution or application under applicable law, including insolvency laws, and
whether asserted against Bravo or any other Person owned by Bravo), including
the payment of post-petition interest on such other obligations and liabilities.
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This subordination agreement shall be deemed a subordination agreement within
the meaning of Section 510(a) of the Bankruptcy Code. Each Issuer, by accepting
the transfer of Conveyed Assets from Bravo, further acknowledges and agrees that
no adequate remedy at law exists for a breach of this Section 7.15 and the terms
of this Section 7.15 may be enforced by an action for specific performance. The
provisions of this Section 7.15 shall be for the third party benefit of those
entitled to rely thereon and shall survive the termination of this Agreement.
(b) Notwithstanding the foregoing, nothing in this Section 7.15 shall
affect the rights of the Issuers to enforce any claims which Bravo may have
against HPSC in respect of any representations, warranties, covenants and
indemnities made by HPSC under the transaction documents pursuant to which HPSC
transfers certain assets to Bravo as applicable, with respect to the Initial
Conveyed Assets conveyed or purported to be conveyed by Bravo hereunder, all of
which representations, warranties, covenants and indemnities are hereby assigned
to the Issuers by Bravo as part of the Initial Conveyed Assets.
[Signature Pages Follow]
<Page>
IN WITNESS WHEREOF, the parties hereto have caused this Receivables
Transfer Agreement to be duly executed by their respective officers as of the
day and year first above written.
HPSC, INC.
By: /s/ Rene Lefebvre
------------------------------
Name: Rene Lefebvre
Title: Chief Financial Officer
HSPC BRAVO FUNDING, LLC
By: /s/ Rene Lefebvre
------------------------------
Name: Rene Lefebvre
Title: Chief Financial Officer
HPSC GLOUCESTER FUNDING 2003-1 LLC I
By: /s/ Rene Lefebvre
------------------------------
Name: Rene Lefebvre
Title: Manager
HPSC GLOUCESTER FUNDING 2003-1 LLC II
By: /s/ Rene Lefebvre
------------------------------
Name: Rene Lefebvre
Title: Manager
<Page>
EXHIBIT A
SUBSEQUENT TRANSFER AGREEMENT
This Subsequent Transfer Agreement (this "Agreement"), dated as of
______________, is entered into among HPSC, INC. ("HPSC"), as servicer (the
"SERVICER"), HPSC, as originator (the "ORIGINATOR"), HPSC and HPSC BRAVO
FUNDING, LLC ("BRAVO"), as transferors (each, a "TRANSFEROR" and collectively,
the "TRANSFERORS"), HPSC GLOUCESTER FUNDING 2003-1 LLC I ("LLC I") and HPSC
GLOUCESTER FUNDING 2003-1 LLC II ("LLC II"), as issuers (each, an "ISSUER" and
collectively, the "ISSUERS").
Pursuant to this Agreement and the Receivables Transfer Agreement,
dated as of March 31, 2003 (the "RECEIVABLES TRANSFER AGREEMENT"), among the
Originator, the Servicer, the Transferors and the Issuers, the parties hereto
agree to the sale by [HPSC][Bravo] to [LLC I/LLC II] of the Subsequent Contracts
listed on the attached List of Subsequent Contracts (hereinafter in this
Agreement, the "SUBSEQUENT CONTRACTS") and the Subsequent Conveyed Assets
related thereto, and the pledge of the Subsequent Contracts and the Subsequent
Conveyed Assets by [LLC I/LLC II] to the Indenture Trustee.
Capitalized terms used and not defined herein have their respective
meanings as set forth in the definitions contained in Annex A to the Receivables
Transfer Agreement, which definitions are incorporated by reference herein. All
other capitalized terms used herein shall have the meanings specified herein.
Section 1. CONVEYANCE OF SUBSEQUENT CONTRACTS AND SUBSEQUENT CONVEYED
ASSETS.
(a) [HPSC][Bravo] does hereby sell, assign, set over and convey to
LLC I and/or LLC II [specify applicable entity at time of conveyance], without
recourse, the Subsequent Contracts listed on the attached SCHEDULE 1A and
SCHEDULE 1B, respectively, and the Subsequent Conveyed Assets related thereto,
whether now existing or hereinafter arising, without recourse (except as may be
set forth in the Servicing Agreement).
(b) The parties hereto intend that the transactions set forth herein
constitute a sale and an absolute assignment by [HPSC][Bravo] to LLC I and/or
LLC II on the Subsequent Transfer Date of all of [HPSC][Bravo] right, title and
interest in and to such Subsequent Contracts and Subsequent Conveyed Assets. In
the event the transactions set forth herein shall be deemed not to be a sale and
an absolute assignment, each of the Transferors hereby grants to LLC I and/or
LLC II as of the Subsequent Transfer Date a first priority perfected security
interest in all of each Transferor's respective right, title and interest in, to
and under such Subsequent Contracts and Subsequent Conveyed Assets and all
income and proceeds thereof, to secure all of such Transferor's obligations
hereunder, and this Agreement shall constitute a security agreement under
applicable law, and in such event, the parties hereto acknowledge that the
Indenture Trustee, in addition to holding the Subsequent Contracts and
Subsequent Conveyed Assets for the benefit of the Noteholders, holds the
Subsequent Contracts and Subsequent Conveyed Assets as assignee of LLC I and/or
LLC II as secured party.
<Page>
(c) Annexed hereto is a List of Subsequent Contracts listing the
Contracts that constitute the Subsequent Contracts sold by [HPSC][Bravo] to LLC
I and/or LLC II pursuant to this Agreement on the date hereof.
Section 2. REPRESENTATIONS AND WARRANTIES; CONDITIONS PRECEDENT.
(a) [HPSC][Bravo] hereby affirm the representations and warranties
set forth in Section 3.01(a), Section 3.01(b) and Section 3.02 of the
Receivables Transfer Agreement that relate to [HPSC][Bravo] as of the date
hereof.
(b) The Originator and the Servicer, as applicable, hereby affirm (i)
the representations and warranties set forth in Section 3.01(a) and Section
3.01(b), respectively, as of the date hereof and (ii) that each Subsequent
Contract satisfies the representations and warranties set forth in Section 3.02
of the Receivables Transfer Agreement relating to the Contracts, which
representations and warranties are hereby re-made and incorporated by reference
as if fully set forth herein.
(c) [HPSC][Bravo] is solvent, is able to pay its debts as they become
due and has capital sufficient to carry on its business and its obligations
hereunder; each such Transferor will not be rendered insolvent by the execution
and delivery of this Agreement or by the performance of its respective
obligations hereunder nor is it aware of any pending insolvency; no petition of
bankruptcy (or similar insolvency proceeding) has been filed by or against any
of the Transferors prior to the date hereof.
(d) All terms and conditions of the Receivables Transfer Agreement
are hereby ratified and confirmed; PROVIDED, HOWEVER, that in the event of any
conflict the provisions of this Agreement shall control over the conflicting
provisions of the Receivables Transfer Agreement.
(e) [HPSC][Bravo], the Servicer and the Originator hereby confirm
that each of the conditions precedent set forth in Sections 2.02(c) and 5.02 of
the Receivables Transfer Agreement have been satisfied as of the date hereof.
(f) [HPSC][Bravo], the Servicer and the Originator represent and
warrant that the aggregate Discounted Contract Balance of the Subsequent
Contracts listed on the List of Subsequent Contracts annexed hereto and sold to
LLC I and/or LLC II pursuant to this Agreement as of the related Subsequent
Cut-Off Date is $__________.
Section 3. GRANT FROM THE ISSUERS TO THE INDENTURE TRUSTEE. LLC I
and/or LLC II hereby grants, as of the Subsequent Transfer Date, to the
Indenture Trustee for the benefit of the Noteholders to secure all of LLC I
and/or LLC II's obligations under the Indenture, a security interest in all of
LLC I and/or LLC II's right, title and interest in and to, whether now existing
or hereafter created, (a) the Subsequent Contracts and the Subsequent Conveyed
Assets; (b) all funds on deposit from time to time in the Lockbox Account and
the Collection Account allocable to the Subsequent Contracts and the Subsequent
Conveyed Assets; (c) all its rights under this Agreement; and (d) all present
and future claims, demands, causes and of choses in action in respect of any or
all of the foregoing and all payments on or
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under, and all proceeds of every kind and nature whatsoever in respect of, any
or all of the foregoing and all payments on or under, and all proceeds of every
kind and nature whatsoever in the conversion thereof, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, checks, deposit accounts, rights to
payment of any and every kind, and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing.
Section 4. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, WITHOUT
GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 5. WAIVER OF JURY TRIAL. The Issuers, the Servicer, the
Originator and the Transferors each hereby waive any right to have a jury
participate in resolving any dispute, sounding in contract, tort, or otherwise
arising out of, connected with, related to, or in connection with this
agreement. Instead, any dispute resolved in court will be resolved in a bench
trial without a jury.
Section 6. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed, shall be deemed to be an original; such
counterparts, together, shall constitute one and the same instrument.
Section 7. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the Transferors, the Originator, the Servicer,
the Issuers and their respective successors and permitted assigns.
Section 8. BINDING EFFECT; THIRD-PARTY BENEFICIARIES. This Agreement
will inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. The Indenture Trustee and the
Noteholders are intended and express third party beneficiaries of this
Agreement.
Section 9. NO BANKRUPTCY PETITION AGAINST THE TRANSFERORS OR THE
ISSUERS. Each of the parties hereto agrees that, prior to the date that is one
year and one day after the payment in full of the latest maturing Notes issued
by the Issuers, it will not institute against any of Bravo or the Issuers, or
join any other Person in instituting against any of the Transferors or the
Issuers, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other proceedings under the laws of the United States or any
state of the United States. This Section 9 shall survive the termination of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Subsequent Transfer Agreement as of the day and year first written above.
HPSC, INC.
By:
------------------------------
Name:
Title:
[HPSC BRAVO FUNDING, LLC]
[If applicable]
By:
------------------------------
Name:
Title:
HPSC GLOUCESTER FUNDING 2003-1 LLC I
By:
------------------------------
Name:
Title:
HPSC GLOUCESTER FUNDING 2003-1 LLC II
By:
------------------------------
Name:
Title:
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