Exhibit 10.4

 

Execution Copy

 

AMENDMENT NO. 2 TO THIRD AMENDED AND RESTATED
LEASE RECEIVABLES PURCHASE AGREEMENT

 

Dated as of October 17, 2003

 

THIS AMENDMENT NO. 2 dated as of October 17, 2003 (“Amendment”), to the THIRD
AMENDED AND RESTATED LEASE RECEIVABLES PURCHASE AGREEMENT, dated as of June 19,
2003 (as amended, restated, supplemented or otherwise modified from time to
time, the “LRPA”), among HPSC Bravo Funding, LLC, a Delaware limited liability
company (“HPSC Bravo”), as the Seller thereunder, HPSC, Inc., a Delaware
corporation (“HPSC”), as the Servicer thereunder, Triple-A One Funding
Corporation, a Delaware corporation, as a Purchaser thereunder, Merrill Lynch
Commercial Finance Corp. (“Merrill”), as a Purchaser and as a Managing Agent
thereunder, Capital Markets Assurance Corporation, and MBIA Insurance
Corporation, successor in interest to Capital Markets Assurance Corporation
(“MBIA”), as Managing Agent, as the Insurer and as the Collateral Agent
thereunder, is entered into as of the date hereof by HPSC Bravo and the
Collateral Agent (on behalf of itself and the Purchasers).  Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Definitions List referenced in the LRPA.

 

PRELIMINARY STATEMENTS

 

WHEREAS, pursuant to Section 3.02(i) of the LRPA, the Seller has represented and
warranted, with respect to each Purchased Receivable, that at least one
Scheduled Contract Payment had been made by the related Obligor prior to the
related Purchase Date in accordance with clause (xxvi) of the definition of
“Eligible Receivable” (as such clause was in effect prior to the effectiveness
of this Amendment); and

 

WHEREAS, it has come to the attention of the parties hereto that, with respect
to certain Purchased Receivables, no Scheduled Contract Payments had been made
by the Obligors prior to the related Purchase Dates; and

 

WHEREAS, as a result of the foregoing, and also the resulting inaccuracy of the
calculations of the Discounted Eligible Receivables Balance as set forth in
certain Settlement Reports delivered by the Seller pursuant to Section 5.02(f),
Wind-Down Events have occurred pursuant to Section 7.01(d) of the LRPA
(collectively, the “Eligibility Default”); and

 

WHEREAS, pursuant to Section 7.01(h) of the LRPA, a Wind-Down Event has
occurred, as reflected by the Settlement Report delivered by the Seller to MBIA
and Merrill on September 17, 2003, in accordance with Section 5.02(f) of the
LRPA (the “Collateral Shortfall Default”); and

 

WHEREAS, HPSC Bravo has requested that MBIA waive, and MBIA has agreed to waive,
subject to the terms and conditions set forth herein, the Eligibility Default
and the Collateral Shortfall Default pursuant to Section 11.01 of the LRPA; and

 

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WHEREAS, pursuant to Section 11.01 of the LRPA, HPSC Bravo and MBIA, as Insurer
and as Collateral Agent, and with the consent of each Managing Agent, wish to
amend the LRPA in certain respects and have agreed to amend the LRPA on the
terms and subject to the conditions set forth herein;

 

NOW, THEREFORE, in consideration of the premises set forth above, and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, HPSC Bravo and MBIA agree as follows:

 

SECTION 1.                  Waiver.  Effective as of the date first above
written, subject to the satisfaction of the conditions precedent set forth in
Section 5 below, the Insurer and the Collateral Agent hereby waive the
Eligibility Default and the Collateral Shortfall Default.

 

SECTION 2.                  Amendment to the LRPA.  Effective as of the date
first above written, subject to the satisfaction of the conditions precedent set
forth in Section 5 below, the LRPA is hereby amended as follows:

 

(a)                    Appendix A to the LRPA is amended by deleting the
definition of “Default Reserve Ratio” in its entirety and replacing it with the
following:

 

“Default Reserve Ratio” means the ratio (expressed as a percentage), computed as
of the last day of each month in accordance with the following formula:

 

DRR

 

=

 

DRSF X DR X WRT, where

 

 

 

 

 

DRR

 

=

 

the Default Reserve Ratio;

 

 

 

 

 

DRSF

 

=

 

the Default Reserve Stress Factor as of such day;

 

 

 

 

 

DR

 

=

 

the Default Ratio as of such day; and

 

 

 

 

 

WRT

 

=

 

the Weighted Average Remaining Term as expressed in years of the Purchased
Receivables as of such day.

 

(b)                   Appendix A to the LRPA is further amended by deleting the
definition of “Delinquent Receivable” in its entirety and replacing it with the
following:

 

“Delinquent Receivable” means a Purchased Receivable or HPSC Portfolio
Receivable (i) that is not a Defaulted Receivable and (ii) (a) as to which any
Scheduled Contract Payment or part thereof, is unpaid more than 90 days from its
original due date, (b) which, consistent with the Credit and Collection Policy,
has been or should be classified as delinquent by the Originator or (c) with
respect to which, if, on the related Purchase Date, no Scheduled Contract
Payment shall have yet been due and payable under the related Contract, the
first Scheduled Contract Payment due after such Purchase Date is not paid in
full on the due date therefor; provided, that, upon receipt from the Obligor of
payment in full of such first Scheduled Contract Payment, such Receivable shall
no longer constitute a “Delinquent Receivable” pursuant to this clause (ii)(c).

 

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(c)                    Appendix A to the LRPA is further amended by deleting
clauses (xxvi) and (xxvii) of the definition of “Eligible Receivable” in their
entirety and replacing them with the following:

 

(xxvi)  (a) the Contract for which was originated no later than the date that is
one month prior to the related Purchase Date therefor and (b) (1) such
Receivable is an Eligible Deferred Receivable or (2) on the date of such
Purchase by the Buyer, the Obligor shall have made at least one Scheduled
Contract Payment pursuant to the related Contract in full and in a timely
manner;

 

(xxvii)  [Intentionally left blank]

 

(d)                   Appendix A to the LRPA is further amended by adding the
following definitions thereto in their appropriate alphabetical locations:

 

“Default Reserve Stress Factor” means (i) for the last day of the calendar month
preceding each Settlement Date from and including October 20, 2003 to and
including December 22, 2003, (x) if the Default Ratio determined as of such day
is greater than or equal to 1.20%, 3.0, and (y) if the Default Ratio determined
as of such day is less than 1.20%, 2.2, and (ii) for the last day of the
calendar month preceding the January 20, 2004 Settlement Date and each
Settlement Date thereafter, 3.0.

 

“Eligible Deferred Receivable” means a Receivable (i) with respect to which the
first Scheduled Contract Payment required to be paid by the Obligor under such
Contract is due not more than 90 days after the date of such Contract but which
Scheduled Contract Payment is not yet due on the Purchase Date on which such
Receivable is purchased pursuant to the Sale Agreement, (ii) that is not a
Delinquent Receivable and (iii) (a) that is purchased by the Buyer under the
Sale Agreement before October 20, 2003 or (b) (1) that is purchased by the Buyer
under the Sale Agreement on or after October 20, 2003 and (2) the Outstanding
Balance of which, on such Purchase Date, when added to the Outstanding Balance
of all other Receivables purchased by the Buyer under the Sale Agreement on such
Purchase Date and to which clauses (i) and (ii) above are applicable on such
Purchase Date, does not exceed 33% of the Outstanding Balance of all Eligible
Receivables purchased by the Buyer under the Sale Agreement on such Purchase
Date.

 

(e)                    The LRPA is further amended by adding the following
SECTION 3.03 at the end of Article III:

 

SECTION 3.03  Effect of Payment of Consideration for Receivables Purchase.  Upon
receipt by the Seller of the consideration for any Receivables Purchase pursuant
to Section 2.02 (including without limitation the assumption by the Collateral
Agent of the obligation to remit to the Seller any Deferred Purchase Price), all
right, title and interest of the Seller in and to the Receivables and Related
Security that are the subject of such Receivables Purchase and that are assigned
by the Seller pursuant to Section 2.01 shall vest in the Purchasers (or the
Collateral Agent, as applicable), whether or not the conditions precedent to
such Receivables Purchase were in fact satisfied; provided, however, that none
of the Purchasers, the Managing Agents or the Collateral Agent shall be deemed
to have waived any claim it may have under this

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Receivables Purchase Agreement for the failure by the Seller in fact to satisfy
any such condition precedent.

 

SECTION 3.                  Acknowledgment of Transfer.  For the avoidance of
doubt, each of HPSC Bravo, the Collateral Agent and each Managing Agent on
behalf of the applicable Purchasers hereby acknowledges and agrees that,
notwithstanding the Eligibility Default or any other failure by the Seller to
satisfy any conditions precedent to any Receivables Purchase occurring prior to
the date hereof, upon receipt by the Seller of the consideration for any
Receivables Purchase pursuant to Section 2.02 of the LRPA (including without
limitation the assumption by the Collateral Agent of the obligation to remit to
the Seller any Deferred Purchase Price), all right, title and interest of the
Seller in and to the Receivables and Related Security that were the subject of
such Receivables Purchase and that were assigned by the Seller pursuant to
Section 2.01 of the LRPA have vested in the Purchasers, whether or not the
conditions precedent to such Receivables Purchase were in fact satisfied;
provided, however, that, other than as expressly set forth in this Amendment,
none of the Purchasers, the Managing Agents, the Collateral Agent or the Insurer
shall be deemed to have waived any claim it may have for the failure by the
Seller in fact to satisfy any such condition precedent.

 

SECTION 4.                  Representations and Warranties.  HPSC Bravo
represents and warrants as follows:

 

(a)                    This Amendment and the LRPA as amended hereby, constitute
legal, valid and binding obligations of HPSC Bravo and are enforceable against
HPSC Bravo in accordance with their terms.

 

(b)                   Upon the effectiveness of this Amendment, HPSC Bravo
hereby reaffirms that the representations and warranties contained in Article IV
of the LRPA are true and correct.

 

(c)                    Upon the effectiveness of this Amendment, HPSC Bravo
hereby reaffirms all covenants made in the LRPA and the other Facility Documents
to which it is a party to the extent the same are not amended hereby and agrees
that all such covenants shall be deemed to have been remade as of the effective
date of this Amendment.

 

(d)                   Upon the effectiveness of this Amendment, no Wind-Down
Event or Unmatured Wind-Down Event, Event of Termination or Unmatured Event of
Termination shall have occurred and shall be continuing.

 

SECTION 5.                  Conditions Precedent.  This Amendment shall become
effective as of the date hereof on the date on which the Collateral Agent shall
receive (i) a Settlement Report for the October 20, 2003 Settlement Date,
generated using the definitions set forth in Appendix A to the LRPA after giving
effect to this Amendment, (ii) a copy of this Amendment, duly executed and
delivered by each of HPSC Bravo and MBIA and acknowledged by each of MBIA and
Merrill in their capacity as Managing Agents, and (iii) a copy of Amendment No.
2 to the Sale Agreement, dated as of the date hereof, duly executed and
delivered by each of HPSC and HPSC Bravo and acknowledged by MBIA in its
capacities as Insurer and as Collateral Agent.

 

SECTION 6.                  Reference to and Effect on the LRPA.  (a) Except as
specifically set forth above, the LRPA, and all other documents, instruments and
agreements executed and/or

 

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delivered in connection therewith, shall remain in full force and effect, and
are hereby ratified and confirmed.  The execution, delivery and effectiveness of
this Amendment shall not, except as expressly provided herein and for the
limited purposes set forth herein, operate as a waiver of any right, power or
remedy of any Purchaser, any Managing Agent, the Collateral Agent or the
Insurer, nor constitute a waiver of any provision of the LRPA, or any other
documents, instruments and agreements executed and/or delivered in connection
therewith.

 

(b) Upon the effectiveness of this Amendment, each reference in the LRPA to
“this Receivables Purchase Agreement”, “hereunder”, “hereof”, “herein” or words
of like import shall mean and be a reference to the LRPA as amended hereby, and
each reference to the LRPA in any other document, instrument or agreement
executed and/or delivered in connection with the LRPA shall mean and be a
reference to the LRPA as amended hereby.

 

SECTION 7.                  Consent to Amendment and Waiver.  MBIA, in its
capacity as the Insurer, hereby consents, for the purposes of Section 4.02 of
the Insurance Agreement, to the acknowledgment of and consent to the amendments
and waivers contained in this Amendment by Merrill in its capacity as a Managing
Agent.

 

SECTION 8.                  Headings.  Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute part
of this Amendment for any other purpose.

 

SECTION 9.                  Governing Law.  This Amendment shall be governed by
and construed in accordance with the laws of the State of New York.

 

SECTION 10.            Counterparts.  This Amendment may be executed by one or
more of the parties to this Amendment on any number of separate counterparts and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.

 

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IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year
first above written.

 

 

HPSC BRAVO FUNDING, LLC, as Seller

 

 

 

 

 

By:

/s/ Rene Lefebvre

 

 

Name: Rene Lefebvre

 

Title:  Manager

 

 

 

 

 

MBIA INSURANCE CORPORATION, as
Collateral Agent and as Insurer

 

 

 

 

 

By:

/s/ Glenn H. Roder

 

 

Name: Glenn H. Roder

 

Title: Vice President

 

 

Agreed and Acknowledged:

 

 

 

MBIA INSURANCE CORPORATION,
as a Managing Agent

 

 

 

 

 

By:

/s/ Andrew Laterza

 

 

Name: Andrew P. Laterza

 

Title:   Vice President

 

 

 

MERRILL LYNCH COMMERCIAL
FINANCE CORP., as a Managing Agent

 

 

 

 

 

By:

/s/ Joseph Magnus

 

 

Name: Joseph Magnus

 

Title:   Director

 

 

Signature Page to Amendment No. 2 to Lease Receivables Purchase Agreement

 

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