Exhibit 10.5

 

EXECUTION DRAFT

 

 

 

BACK-UP SERVICING AGREEMENT

 

by and among

 

 

HPSC BRAVO FUNDING, LLC,
as Seller,

 

 

HPSC, INC.,
as Servicer,

 

 

TRIPLE-A ONE FUNDING CORPORATION,
as a Purchaser,

 

 

MERRILL LYNCH COMMERCIAL FINANCE CORP.,
as a Purchaser,

 

 

MBIA INSURANCE CORPORATION,
as the Collateral Agent,

 

and

 

BNY ASSET SOLUTIONS LLC,
as Back-Up Servicer

 

 

Dated as of September 16, 2003

 

 

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TABLE OF CONTENTS

 

ARTICLE 1 DEFINITIONS

 

 

 

 

Section 1.01  Definitions.

 

 

Section 1.02  Interpretive.

 

 

 

ARTICLE 2 REPRESENTATIONS, WARRANTIES AND COVENANTS

 

 

 

 

 

Section 2.01  Representations and Warranties of the Back-up Servicer.

 

 

 

ARTICLE 3 ADMINISTRATION AND SERVICING OF CONTRACTS

 

 

 

 

 

Section 3.01  Designation and Duties of Servicer.

 

 

Section 3.02  Back-up Servicer.

 

 

Section 3.03  Back-up Servicing Fee.

 

 

Section 3.04  Indemnity for Liability Claims.

 

 

Section 3.05  Termination or Resignation of Servicer; Back-up Servicer as
Successor;  Indemnification of Back-up Servicer.

 

 

 

ARTICLE 4 MISCELLANEOUS PROVISIONS

 

 

 

 

 

Section 4.01  Amendment.

 

 

Section 4.02  Counterparts.

 

 

Section 4.03  Governing Law.

 

 

Section 4.04  Waiver of Jury Trial.

 

 

Section 4.05  Notices.

 

 

Section 4.06  Severability of Provisions.

 

 

Section 4.07  Binding Effect.

 

 

Section 4.08  Survival of Agreement.

 

 

Section 4.09  Captions.

 

 

Section 4.10  Exhibits.

 

 

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This BACK-UP SERVICING AGREEMENT, dated as of September 16, 2003 (this
“Agreement”) is made by and among HPSC, Inc., a Delaware corporation, as
servicer (the “Servicer”), HPSC Bravo Funding, LLC, a Delaware limited liability
company, as seller (the “Seller”), Triple-A One Funding Corporation, as
Purchaser (“Triple-A”), Merrill Lynch Commercial Finance Corp., as Purchaser and
as a Managing Agent (“Merrill” and together with Triple-A, the “Purchasers”),
MBIA Insurance Corporation, as a Managing Agent and as the Collateral Agent
(“Collateral Agent”) and BNY Asset Solutions LLC, a Delaware limited liability
company, as back-up servicer (the “Back-up Servicer”).

 

WITNESSETH:

 

WHEREAS, the parties hereto, together with Capital Markets Assurance
Corporation, have entered into a Third Amended and Restated Lease Receivables
Purchase Agreement (“LRPA”), dated as of June 19, 2003, pursuant to which the
Seller from time to time sells Receivables and certain related property to the
Purchasers; and

 

WHEREAS, the Seller, Servicer, Back-up Servicer, Triple-A, Capital Markets
Assurance Corporation (as Administrative Agent and Collateral Agent) and ING
Capital LLC (“ING”) have entered into a certain Receivables Interest Purchase
Agreement, dated as of August 5, 2002 (the “ING Purchase Agreement”) pursuant to
which Triple-A from time to time sells an interest in the Purchased Receivables
to ING; and

 

WHEREAS, it is contemplated that following such sales the Servicer will service
the Purchased Receivables and other Purchased Assets pursuant to the LRPA, the
Sale Agreement, the ING Purchase Agreement and this Agreement for the benefit of
the Purchasers and ING; and

 

WHEREAS, the parties desire that the Back-up Servicer perform certain duties and
discharge certain obligations prior to becoming a successor Servicer under the
LRPA;

 

NOW, THEREFORE, in consideration of the mutual agreements herein contained, and
of other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:

 

ARTICLE 1

 

DEFINITIONS

 

Section 1.01                  Definitions.  Capitalized terms used and not
defined herein shall have the meanings specified in Appendix A to the LRPA.

 

Section 1.02                  Interpretive.  For purposes of this Agreement
except as otherwise expressly provided or unless the context otherwise requires:

 

(A)                    THE TERMS DEFINED IN THIS AGREEMENT HAVE THE MEANINGS
ASSIGNED TO THEM IN THIS AGREEMENT AND INCLUDE THE PLURAL AS WELL AS THE
SINGULAR, AND THE USE OF ANY GENDER HEREIN SHALL BE DEEMED TO INCLUDE THE OTHER
GENDER;

 

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(B)                   ACCOUNTING TERMS NOT OTHERWISE DEFINED HEREIN HAVE THE
MEANINGS ASSIGNED TO THEM IN ACCORDANCE WITH GAAP AS IN EFFECT ON THE DATE
HEREOF;

 

(C)                    REFERENCES HEREIN TO “ARTICLES”, “SECTIONS”,
“SUBSECTIONS”, “PARAGRAPHS” AND OTHER SUBDIVISIONS WITHOUT REFERENCE TO A
DOCUMENT ARE TO DESIGNATED ARTICLES, SECTIONS, SUBSECTIONS, PARAGRAPHS AND OTHER
SUBDIVISIONS OF THIS AGREEMENT;

 

(D)                   A REFERENCE TO A SUBSECTION WITHOUT FURTHER REFERENCE TO A
SECTION IS A REFERENCE TO SUCH SUBSECTION AS CONTAINED IN THE SAME SECTION IN
WHICH THE REFERENCE APPEARS, AND THIS RULE SHALL ALSO APPLY TO PARAGRAPHS AND
OTHER SUBDIVISIONS;

 

(E)                    THE WORDS “HEREIN”, “HEREOF”, “HEREUNDER” AND OTHER WORDS
OF SIMILAR IMPORT REFER TO THIS AGREEMENT AS A WHOLE AND NOT TO ANY PARTICULAR
PROVISION; AND

 

(F)                      THE TERM “INCLUDE” OR “INCLUDING” SHALL MEAN WITHOUT
LIMITATION BY REASON OF ENUMERATION.

 

ARTICLE 2

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 2.01                  Representations and Warranties of the Back-up
Servicer.  The Back-up Servicer hereby makes the following representations and
warranties on which the Seller, Servicer, the Purchasers and the Collateral
Agent shall be entitled to rely:

 

(A)                    THE BACK-UP SERVICER IS A DELAWARE LIMITED LIABILITY
COMPANY DULY ORGANIZED, VALIDLY EXISTING, AND IN GOOD STANDING UNDER THE LAWS OF
THE STATE OF DELAWARE.

 

(B)                   THE BACK-UP SERVICER HAS FULL POWER, AUTHORITY AND LEGAL
RIGHT TO EXECUTE, DELIVER, AND PERFORM THIS AGREEMENT, AND HAS TAKEN ALL
NECESSARY ACTION TO AUTHORIZE THE EXECUTION, DELIVERY, AND PERFORMANCE BY IT OF
THIS AGREEMENT.

 

(C)                    THE EXECUTION, DELIVERY AND PERFORMANCE BY THE BACK-UP
SERVICER OF THIS AGREEMENT AND ANY OTHER DOCUMENTS AND TRANSACTIONS IN
CONNECTION HEREWITH TO WHICH THE BACK-UP SERVICER IS PARTY DO NOT AND WILL NOT
(I) VIOLATE ANY OF THE PROVISIONS OF THE ORGANIZATIONAL DOCUMENTS OF THE BACK-UP
SERVICER, (II) VIOLATE ANY PROVISION OF ANY LAW, GOVERNMENTAL RULE OR REGULATION
CURRENTLY IN EFFECT APPLICABLE TO THE BACK-UP SERVICER OR ITS PROPERTIES OR BY
WHICH THE BACK-UP SERVICER OR ITS PROPERTIES MAY BE BOUND OR AFFECTED, (III)
VIOLATE ANY JUDGMENT, DECREE, WRIT, INJUNCTION, AWARD, DETERMINATION OR ORDER
CURRENTLY IN EFFECT APPLICABLE TO THE BACK-UP SERVICER OR ITS PROPERTIES OR BY
WHICH THE BACK-UP SERVICER OR ITS PROPERTIES ARE BOUND OR AFFECTED, (IV)
CONFLICT WITH, OR RESULT IN A BREACH OF, OR CONSTITUTE A DEFAULT UNDER, ANY OF
THE PROVISIONS OF ANY MATERIAL INDENTURE, MORTGAGE, DEED OF TRUST, CONTRACT OR
OTHER INSTRUMENT TO WHICH THE BACK-UP SERVICER IS A PARTY OR BY WHICH IT IS
BOUND OR (V) RESULT IN THE CREATION OR IMPOSITION OF ANY LIEN UPON ANY OF ITS
PROPERTIES PURSUANT TO THE TERMS OF ANY SUCH INDENTURE, MORTGAGE, DEED OF TRUST,
CONTRACT OR OTHER INSTRUMENT.

 

(D)                   THE EXECUTION, DELIVERY AND PERFORMANCE BY THE BACK-UP
SERVICER OF THIS AGREEMENT DOES NOT REQUIRE THE AUTHORIZATION, CONSENT, OR
APPROVAL OF, THE GIVING OF NOTICE TO, THE

 

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FILING OR REGISTRATION WITH, OR THE TAKING OF ANY OTHER ACTION IN RESPECT OF,
ANY GOVERNMENTAL AUTHORITY OR AGENCY REGULATING THE BANKING AND CORPORATE TRUST
ACTIVITIES OF THE BACK-UP SERVICER.

 

(E)                    THIS AGREEMENT HAS BEEN DULY EXECUTED AND DELIVERED BY
THE BACK-UP SERVICER AND CONSTITUTES THE LEGAL, VALID, AND BINDING AGREEMENT OF
THE BACK-UP SERVICER, ENFORCEABLE IN ACCORDANCE WITH ITS TERMS SUBJECT, AS TO
THE ENFORCEMENT OF REMEDIES, TO BANKRUPTCY, INSOLVENCY, REORGANIZATION,
MORATORIUM AND OTHER SIMILAR LAWS AFFECTING THE ENFORCEABILITY OF CREDITORS’
RIGHTS GENERALLY APPLICABLE IN THE EVENT OF THE BANKRUPTCY, INSOLVENCY OR
REORGANIZATION OF THE BACK-UP SERVICER AND TO GENERAL PRINCIPLES OF EQUITY.

 

(F)                      THERE IS NO PENDING OR, TO THE BEST OF THE BACK-UP
SERVICER’S KNOWLEDGE, THREATENED ACTION, SUIT, PROCEEDING OR INVESTIGATION
BEFORE ANY COURT, ADMINISTRATIVE AGENCY, ARBITRATOR OR GOVERNMENTAL BODY AGAINST
OR AFFECTING THE BACK-UP SERVICER WHICH, IF DECIDED ADVERSELY, WOULD MATERIALLY
AND ADVERSELY AFFECT (I) THE CONDITION (FINANCIAL OR OTHERWISE), BUSINESS OR
OPERATIONS OF THE BACK-UP SERVICER, (II) THE ABILITY OF THE BACK-UP SERVICER TO
PERFORM ITS OBLIGATIONS UNDER, OR THE VALIDITY OR ENFORCEABILITY OF, THIS
AGREEMENT OR ANY OTHER DOCUMENTS OR TRANSACTIONS CONTEMPLATED HEREUNDER,
(III) ANY PURCHASED ASSETS OR TITLE OF THE COLLATERAL AGENT OR ANY PURCHASER TO
ANY PURCHASED ASSETS OR (IV) THE COLLATERAL AGENT’S ABILITY TO FORECLOSE OR
OTHERWISE ENFORCE ITS LIENS ON THE RECEIVABLES.

 

ARTICLE 3

ADMINISTRATION AND SERVICING OF RECEIVABLES

 

Section 3.01                  Designation and Duties of Servicer.

 

(A)                    THE PARTIES ACKNOWLEDGE AND AGREE THAT THE SERVICING,
ADMINISTERING AND COLLECTION OF THE PURCHASED RECEIVABLES AND THE OTHER
PURCHASED ASSETS SHALL BE CONDUCTED BY THE “SERVICER” DESIGNATED BY THE
COLLATERAL AGENT FROM TIME TO TIME IN ACCORDANCE WITH SECTION 6.01 OF THE LRPA.

 

(B)                   SERVICER ASSISTANCE.  THE SERVICER SHALL MAKE REASONABLE
EFFORTS TO COOPERATE WITH THE BACK-UP SERVICER TO ENABLE THE BACK-UP SERVICER TO
PERFORM ITS DUTIES HEREUNDER.  THE SERVICER SHALL BE REQUIRED TO PROVIDE TO THE
BACK-UP SERVICER THE FOLLOWING: (I) INFORMATION REGARDING THE COLLECTIONS AND
THE RECEIVABLES ON A DAILY BASIS, (II) A WEEKLY DATA TAPE WITH RESPECT TO THE
RECEIVABLES, (III) EACH SETTLEMENT REPORT AS REQUIRED PURSUANT TO SECTION 3.02
BELOW, TOGETHER WITH A MONTHLY DATA TAPE WITH RESPECT TO THE RECEIVABLES, (IV) A
COPY OF THE SERVICER’S CURRENT CREDIT AND COLLECTION POLICY, AS AMENDED FROM
TIME TO TIME, AND (V) SUCH PERIODIC UCC AND TAX INFORMATION AS IT MAY REQUIRE
FROM TIME TO TIME, OR ACCESS TO THE SERVICER’S THIRD PARTY SERVICE PROVIDERS IN
SUCH RESPECTS.

 

Section 3.02                  Back-up Servicer.

 

(A)                    THE PARTIES HEREBY APPOINT BNY ASSET SOLUTIONS LLC TO ACT
AS BACK-UP SERVICER WITH RESPECT TO THE PURCHASED RECEIVABLES AND THE OTHER
PURCHASED ASSETS.

 

(B)                   PRIOR TO SEPTEMBER 17, 2003, THE BACK-UP SERVICER SHALL
PERFORM THE FOLLOWING DUTIES AND OBLIGATIONS (SO LONG AS THE BACK-UP SERVICER
HAS NOT BEEN DESIGNATED AS SUCCESSOR SERVICER):

 

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(I)                                ON OR PRIOR TO THE 17TH DAY OF THE MONTH
IMMEDIATELY PRECEDING EACH RELATED SETTLEMENT DATE; PROVIDED THAT IF IN ANY
MONTH SUCH DAY IS NOT A BUSINESS DAY, THE FIRST BUSINESS DAY AFTER SUCH 17TH DAY
OF THE MONTH (EACH SUCH DAY, A “DETERMINATION DATE”), THE BACK-UP SERVICER SHALL
REVIEW THE SUMMARY AND SETTLEMENT REPORT WORKSHEETS CONTAINED IN THE SETTLEMENT
REPORT AND WILL ATTEMPT TO VERIFY THAT THE CORRECT BALANCES HAVE BEEN INSERTED
BASED SOLELY ON THE FORMULAS CONTAINED IN THE SETTLEMENT REPORT.  THE BACK-UP
SERVICER SHALL NOT BE REQUIRED TO REVIEW OR VERIFY ANY OTHER INFORMATION
CONTAINED IN THE SETTLEMENT REPORT.  THE BACK-UP SERVICER SHALL NOTIFY THE
SERVICER IN WRITING OF ANY DISAGREEMENTS WITH THE SUMMARY AND SETTLEMENT REPORT
WORKSHEETS IN THE SETTLEMENT REPORT BASED ON SUCH REVIEW NOT LATER THAN THE 2ND
BUSINESS DAY PRECEDING THE RELATED SETTLEMENT DATE TO THE EXTENT SUCH SETTLEMENT
REPORT WAS RECEIVED ON OR PRIOR TO THE 17TH DAY OF THE MONTH IMMEDIATELY
PRECEDING THE RELATED SETTLEMENT DATE AND AS SOON AS PRACTICABLE IF IT IS
RECEIVED AFTER SUCH DATE.

 

(II)                             IF THE SERVICER DISAGREES WITH THE NOTICE
PROVIDED UNDER PARAGRAPH (I) ABOVE BY THE BACK-UP SERVICER OR IF THE SERVICER
HAS NOT RECONCILED SUCH DISCREPANCY, THE BACK-UP SERVICER AGREES TO CONFER WITH
THE SERVICER TO RESOLVE SUCH DISAGREEMENT AS PROMPTLY AS PRACTICABLE AND SHALL
SETTLE SUCH DISCREPANCY WITH THE SERVICER IF POSSIBLE, AND NOTIFY THE PURCHASERS
AND THE COLLATERAL AGENT IN WRITING OF THE RESOLUTION THEREOF.  THE SERVICER
HEREBY AGREES TO COOPERATE AT ITS OWN EXPENSE WITH THE BACK-UP SERVICER IN
RECONCILING ANY DISCREPANCIES THEREIN.  IF AFTER THE NOTIFICATION PROVIDED UNDER
PARAGRAPH (I) ABOVE BY THE BACK-UP SERVICER AND PRIOR TO THE RELATED SETTLEMENT
DATE, SUCH DISCREPANCY IS NOT RESOLVED, THE BACK-UP SERVICER SHALL PROMPTLY
NOTIFY IN WRITING THE PURCHASERS AND THE COLLATERAL AGENT OF THE CONTINUED
EXISTENCE OF SUCH DISCREPANCY.  FOLLOWING RECEIPT OF SUCH NOTICE BY THE
PURCHASERS AND THE COLLATERAL AGENT, THE SERVICER SHALL DELIVER TO THE
PURCHASERS, THE COLLATERAL AGENT AND THE BACK-UP SERVICER NO LATER THAN TWO
BUSINESS DAYS AFTER SUCH RECEIPT, A CERTIFICATE DESCRIBING THE NATURE AND AMOUNT
OF SUCH DISCREPANCY AND THE ACTIONS THE SERVICER PROPOSES TO TAKE WITH RESPECT
THERETO.

 

(C)                    FROM SEPTEMBER 17, 2003 AND THEREAFTER, THE BACK-UP
SERVICER, PRIOR TO BECOMING THE SUCCESSOR SERVICER, SHALL PERFORM THE FOLLOWING
DUTIES AND OBLIGATIONS, AND, TO THE EXTENT APPLICABLE TO IT, THE SERVICER AGREES
AS FOLLOWS:

 

(I)                                THE BACK-UP SERVICER SHALL ACCURATELY RECORD
THE PURCHASED RECEIVABLES AND OTHER PURCHASED ASSETS IN ITS RECORDS UPON RECEIPT
OF SUCH INFORMATION FROM THE SERVICER.

 

(II)                             PROMPTLY ON RECEIPT OF THE DAILY INFORMATION
RECEIVED FROM THE SERVICER IN RESPECT OF THE COLLECTIONS AND THE ACCOUNTS, THE
BACK-UP SERVICER SHALL RECORD SUCH INFORMATION IN ITS RECORDS.

 

(III)                          PROMPTLY ON RECEIPT OF THE WEEKLY DATA TAPE
RECEIVED FROM THE SERVICER WITH RESPECT TO THE PURCHASED RECEIVABLES, THE
BACK-UP SERVICER SHALL REVIEW SUCH DATA TAPE AND ATTEMPT TO RECONCILE THE
OUTSTANDING BALANCES WITH THOSE IN ITS RECORDS.

 

(IV)                         AS SOON AS PRACTICABLE FOLLOWING EACH DETERMINATION
DATE (BUT IN NO EVENT LATER THAN 2 BUSINESS DAYS FOLLOWING SUCH DETERMINATION
DATE), THE BACK-UP SERVICER SHALL REVIEW THE SUMMARY AND SETTLEMENT REPORT
WORKSHEETS CONTAINED IN THE SETTLEMENT REPORT

 

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AND WILL VERIFY THAT THE CORRECT BALANCES HAVE BEEN INSERTED BASED SOLELY ON THE
FORMULAS CONTAINED IN THE SETTLEMENT REPORT.  AS SOON AS PRACTICABLE FOLLOWING
EACH DETERMINATION DATE (BUT IN NO EVENT LATER THAN 2 BUSINESS DAYS FOLLOWING
SUCH DETERMINATION DATE), THE BACK-UP SERVICER SHALL REVIEW THE MONTHLY DATA
TAPE PROVIDED BY THE SERVICER WITH RESPECT TO THE RECEIVABLES.

 

(V)                            THE BACK-UP SERVICER SHALL NOTIFY THE SERVICER,
THE COLLATERAL AGENT AND THE PURCHASERS IN WRITING OF ANY DISAGREEMENTS WITH THE
SUMMARY AND SETTLEMENT REPORT WORKSHEETS IN THE SETTLEMENT REPORT BASED ON SUCH
REVIEW OR OF ANY DISCREPANCIES WITH RESPECT TO THE MONTHLY DATA TAPE NOT LATER
THAN THE THIRD BUSINESS DAY PRECEDING THE RELATED SETTLEMENT DATE TO THE EXTENT
SUCH SETTLEMENT REPORT OR MONTHLY DATA TAPE WAS RECEIVED ON OR PRIOR TO THE
RELATED DETERMINATION DATE AND AS SOON AS PRACTICABLE IF IT IS RECEIVED AFTER
SUCH DATE.

 

(VI)                         IF THE SERVICER DISAGREES WITH THE NOTICE PROVIDED
UNDER PARAGRAPH (V) ABOVE BY THE BACK-UP SERVICER OR IF THE SERVICER HAS NOT
RECONCILED SUCH DISCREPANCY, THE BACK-UP SERVICER AGREES TO CONFER WITH THE
SERVICER TO RESOLVE SUCH DISAGREEMENT AS PROMPTLY AS PRACTICABLE AND SHALL
SETTLE SUCH DISCREPANCY WITH THE SERVICER IF POSSIBLE, AND NOTIFY THE COLLATERAL
AGENT AND THE PURCHASERS IN WRITING OF THE RESOLUTION THEREOF.  THE SERVICER
HEREBY AGREES TO COOPERATE AT ITS OWN EXPENSE WITH THE BACK-UP SERVICER IN
RECONCILING ANY DISCREPANCIES THEREIN.  IF AFTER THE NOTIFICATION PROVIDED UNDER
PARAGRAPH (V) ABOVE BY THE BACK-UP SERVICER AND PRIOR TO THE RELATED SETTLEMENT
DATE, SUCH DISCREPANCY IS NOT RESOLVED, THE BACK-UP SERVICER SHALL PROMPTLY
NOTIFY IN WRITING THE PURCHASERS AND THE COLLATERAL AGENT OF THE CONTINUED
EXISTENCE OF SUCH DISCREPANCY.  FOLLOWING RECEIPT OF SUCH NOTICE BY THE
PURCHASERS AND THE COLLATERAL AGENT, THE SERVICER SHALL DELIVER TO THE
PURCHASERS, THE COLLATERAL AGENT AND THE BACK-UP SERVICER NO LATER THAN TWO
BUSINESS DAYS AFTER SUCH RECEIPT, A CERTIFICATE DESCRIBING THE NATURE AND AMOUNT
OF SUCH DISCREPANCY AND THE ACTIONS THE SERVICER PROPOSES TO TAKE WITH RESPECT
THERETO.

 

(VII)                      ON A QUARTERLY BASIS, BEGINNING ON THE SETTLEMENT
DATE OCCURRING IN JANUARY 2004, THE BACK-UP SERVICER SHALL PREPARE A DUPLICATE
SETTLEMENT REPORT FOR THE PRIOR MONTH FROM THE BACK-UP SERVICER’S RECORDS.  SUCH
DUPLICATE SETTLEMENT REPORT SHALL BE DELIVERED TO THE COLLATERAL AGENT ON THE
SETTLEMENT DATE.

 

(D)                   THE BACK-UP SERVICER UNDERTAKES TO PERFORM ONLY SUCH
DUTIES AND OBLIGATIONS AS ARE SPECIFICALLY SET FORTH IN THIS AGREEMENT AND THE
LRPA, IT BEING EXPRESSLY UNDERSTOOD BY ALL PARTIES HERETO THAT THERE ARE NO
IMPLIED DUTIES OR OBLIGATIONS OF THE BACK-UP SERVICER HEREUNDER.  WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, THE BACK-UP SERVICER, EXCEPT AS
EXPRESSLY SET FORTH HEREIN, SHALL HAVE NO OBLIGATION TO SUPERVISE, VERIFY,
MONITOR OR ADMINISTER THE PERFORMANCE OF THE SERVICER.  THE BACK-UP SERVICER
SHALL HAVE NO LIABILITY FOR ANY ACT OR OMISSION OF THE SERVICER.  NEITHER THE
BACK-UP SERVICER NOR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS SHALL
BE LIABLE, DIRECTLY OR INDIRECTLY, FOR ANY DAMAGES OR EXPENSES ARISING OUT OF
THE SERVICES PERFORMED UNDER THIS AGREEMENT OTHER THAN DAMAGES OR EXPENSES WHICH
RESULT FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF IT OR THEM.

 

Section 3.03                  Back-up Servicing Fee.    On each Settlement Date
prior to September 17, 2003, as full compensation for its servicing activities
under Section 3.02(b) hereof and under the ING Purchase Agreement, the Back-up
Servicer shall be entitled to receive a fee (the “Back-up

 

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Servicing Fee”) in an amount equal to 0.04% times the Discounted Receivables
Balance as of the last day of the prior calendar month times one twelfth. 
Notwithstanding the foregoing, if the Back-up Servicer becomes the Servicer
under the LRPA, the Back-up Servicer shall be entitled solely to payment by the
Seller of the “Servicing Fee” specified and defined in the LRPA for performance
of its duties as Servicer and shall no longer receive the Back-up Servicing
Fee.  On each Settlement Date after September 17, 2003, as full compensation for
its servicing activities under Section 3.02(c) hereof, the Back-up Servicer
shall be entitled to receive a fee (the “Enhanced Back-up Servicing Fee”) in an
amount equal to 0.07% times the Discounted Receivables Balance as of the last
day of the prior calendar month times one twelfth.  Notwithstanding the
foregoing, if the Back-up Servicer becomes the Servicer under the LRPA, the
Back-up Servicer shall be entitled solely to payment by the Seller of the
“Servicing Fee” specified and defined in the LRPA for performance of its duties
as Servicer and shall no longer receive the Enhanced Back-up Servicing Fee.

 

Section 3.04                  Indemnity for Liability Claims.  The Seller hereby
agrees to indemnify, defend and hold harmless the Back-up Servicer (which shall
include any of its directors, members, managers, employees, officers and agents)
(in its role as Back-up Servicer hereunder and as successor Servicer under the
LRPA ) against and from any and all costs, expenses, losses, damages, claims and
liabilities arising out of or resulting from this Agreement, the Sale Agreement,
the LRPA and the ING Purchase Agreement to the extent not paid by the Servicer
pursuant to the LRPA.  The Back-up Servicer shall not be entitled to any
indemnification for any cost, expense, loss, damage or liability arising out of
or resulting from the willful misconduct or gross negligence of the Back-up
Servicer or its directors, members, managers, employees, officers or agents.
Indemnification under this Section 3.04 shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation reasonably
incurred.

 

Section 3.05                  Termination or Resignation of Servicer; Back-up
Servicer as Successor;  Indemnification of Back-up Servicer.

 

(A)                    UPON TERMINATION OF THE SERVICER PURSUANT TO SECTION 6.01
OF EACH OF THE SALE AGREEMENT AND THE LRPA OR THE SERVICER’S RESIGNATION
PURSUANT TO SECTION 6.09 OF EACH OF THE SALE AGREEMENT AND THE LRPA, THE BACK-UP
SERVICER SHALL BE THE SUCCESSOR IN ALL RESPECTS TO THE SERVICER IN ITS CAPACITY
AS SERVICER UNDER THE SALE AGREEMENT AND THE LRPA (INCLUDING THE RIGHT TO
WITHDRAW FUNDS FROM THE COLLECTION ACCOUNT TO THE EXTENT PERMITTED UNDER
SECTION 6.11 OF THE LRPA), AND SHALL BE SUBJECT TO ALL THE RESPONSIBILITIES,
DUTIES AND LIABILITIES OF THE SERVICER PURSUANT TO EACH OF THE SALE AGREEMENT
AND THE LRPA; PROVIDED, HOWEVER, THAT BNY ASSET SOLUTIONS LLC, SHALL NOT BE
RESPONSIBLE FOR, AND SHALL HAVE NO LIABILITY WITH RESPECT TO, THE ACTS OR
OMISSIONS OF THE SERVICER OR ANY PRIOR SERVICER OCCURRING PRIOR TO THE TIME THAT
BNY ASSET SOLUTIONS LLC BECOMES THE SERVICER UNDER THE SALE AGREEMENT AND THE
LRPA; AND, PROVIDED FURTHER, THAT BEFORE BECOMING SUBJECT TO ALL THE
RESPONSIBILITIES, DUTIES AND LIABILITIES OF THE SERVICER UNDER THE SALE
AGREEMENT AND THE LRPA, THE BACK-UP SERVICER MAY REQUIRE THAT SATISFACTORY
INDEMNITY OR OTHER SECURITY BE FURNISHED TO PROTECT IT AGAINST ALL LIABILITY,
EXCEPT LIABILITY WHICH IS ADJUDICATED TO HAVE RESULTED FROM ITS GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT.  AS COMPENSATION FOR ITS ACTIVITIES AS SERVICER, THE
BACK-UP SERVICER SHALL BE ENTITLED TO THE SERVICING FEE, PAYABLE OUT OF THE
COLLECTION ACCOUNT.

 

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(B)                   IF THE BACK-UP SERVICER SHALL BECOME THE SERVICER UNDER
THE SALE AGREEMENT AND THE LRPA, THE BACK-UP SERVICER SHALL SERVICE AND
ADMINISTER THE PURCHASED RECEIVABLES AND THE OTHER PURCHASED ASSETS AND PERFORM
ALL OF ITS DUTIES THEREUNDER IN ACCORDANCE WITH CUSTOMARY AND USUAL PROCEDURES
EMPLOYED BY INSTITUTIONS SERVICING COMMERCIAL LOANS, WHICH INSTITUTIONS ARE
CONSIDERED PRUDENT BY THE BACK-UP SERVICER, AND IN ACCORDANCE WITH THE BACK-UP
SERVICER’S OWN CUSTOMARY PRACTICES, OR IF A HIGHER STANDARD, THE HIGHEST DEGREE
OF SKILL AND ATTENTION THAT THE BACK-UP SERVICER EXERCISES WITH RESPECT TO
CONTRACTS COMPARABLE TO THE CONTRACTS THAT THE BACK-UP SERVICER SERVICES FOR
ITSELF (THE “SERVICING STANDARD”). NOTWITHSTANDING ANY CONTRARY PROVISION
CONTAINED HEREIN, FOR SO LONG AS THE BACK-UP SERVICER IS ACTING AS SERVICER, ITS
RESPONSIBILITIES AS SERVICER SHALL BE DEEMED TO HAVE BEEN DISCHARGED IT IF HAS
COMPLIED WITH THE SERVICING STANDARD IN THE PERFORMANCE OF SUCH
RESPONSIBILITIES.

 

(C)                    BNY ASSET SOLUTIONS LLC MAY, IF FOR ANY REASON BNY ASSET
SOLUTIONS LLC SHALL BE UNWILLING TO ACT AS BACK-UP SERVICER, OR SHALL, IF IT
SHALL BE LEGALLY UNABLE SO TO ACT, APPOINT, OR PETITION A COURT OF COMPETENT
JURISDICTION TO APPOINT, ANY ESTABLISHED FINANCIAL INSTITUTION REASONABLY
ACCEPTABLE TO THE PURCHASERS AND THE COLLATERAL AGENT, WHOSE REGULAR BUSINESS
SHALL INCLUDE THE SERVICING OF CONTRACTS COMPARABLE TO THE PURCHASED
RECEIVABLES, AS THE SUCCESSOR TO THE SERVICER UNDER THE LRPA.  BNY ASSET
SOLUTIONS LLC SHALL ACT AS BACK-UP SERVICER UNTIL A SUCCESSOR IS APPOINTED IN
ACCORDANCE HEREWITH.  IN CONNECTION WITH SUCH APPOINTMENT, THE COLLATERAL AGENT
MAY MAKE SUCH ARRANGEMENTS FOR THE COMPENSATION OF SUCH SUCCESSOR, OUT OF
PAYMENTS ON THE PURCHASED RECEIVABLES, AS IT AND SUCH SUCCESSOR SHALL AGREE;
PROVIDED, HOWEVER, THAT THE BACK-UP SERVICING FEE SHALL NOT BE IN EXCESS OF THE
RATE SET FORTH IN SECTION 3.03 ABOVE UNLESS APPROVED IN WRITING BY THE
PURCHASERS AND THE COLLATERAL AGENT.

 

(D)                   IF THE BACK-UP SERVICER BECOMES THE SUCCESSOR SERVICER, IT
MAY AT ANY TIME RESIGN AND BE DISCHARGED FROM THE TRUSTS HEREBY CREATED BY
GIVING AT LEAST 60 DAYS’ WRITTEN NOTICE THEREOF TO THE PURCHASERS AND THE
COLLATERAL AGENT, WHICH RESIGNATION WILL NOT BECOME EFFECTIVE UNTIL SUCH TIME AS
A SUCCESSOR SERVICER HAS BEEN APPOINTED IN ACCORDANCE WITH THE PROVISIONS OF
SECTION 6.01 OF THE LRPA AND THIS SECTION 3.05(D).  UPON RECEIVING SUCH NOTICE
OF RESIGNATION, THE COLLATERAL AGENT SHALL PROMPTLY APPOINT A SUCCESSOR
SERVICER, ACCEPTABLE TO THE PURCHASERS, BY WRITTEN INSTRUMENT, IN DUPLICATE, ONE
COPY OF WHICH INSTRUMENT SHALL BE DELIVERED TO THE RESIGNING SERVICER AND ONE
COPY TO THE SUCCESSOR SERVICER.  IF NO SUCCESSOR SERVICER SHALL HAVE BEEN SO
APPOINTED AND HAVE ACCEPTED APPOINTMENT WITHIN 30 DAYS AFTER THE GIVING OF SUCH
NOTICE OF RESIGNATION, THE COLLATERAL AGENT SHALL PETITION ANY COURT OF
COMPETENT JURISDICTION FOR THE APPOINTMENT OF A SUCCESSOR SERVICER.

 

(E)                    IF THE BACK-UP SERVICER IS ACTING AS SERVICER, THE
BACK-UP SERVICER WILL INDEMNIFY, DEFEND AND HOLD HARMLESS THE SELLER, THE FORMER
SERVICER, THE PURCHASERS AND THE COLLATERAL AGENT AGAINST ANY AND ALL COSTS,
LOSSES, LIABILITIES, OBLIGATIONS, EXPENSES, CLAIMS, DAMAGES, INJURIES,
PENALTIES, ACTIONS, SUITS AND JUDGMENTS ARISING OUT OF (I) A BREACH OF THE
REPRESENTATIONS AND WARRANTIES OF THE BACK-UP SERVICER HEREUNDER OR (II) ARISING
OUT OF THE WILLFUL MISCONDUCT OR GROSS NEGLIGENCE OF THE BACK-UP SERVICER IN
PERFORMING ITS DUTIES AS SUCCESSOR SERVICER HEREUNDER PROVIDED, HOWEVER, THAT
THE BACK-UP SERVICER SHALL HAVE NO OBLIGATION TO INDEMNIFY ANY PERSON FOR ANY
COST, LOSS, LIABILITY, OBLIGATION, EXPENSE, CLAIM, DAMAGE, INJURY, PENALTY,
ACTION, SUIT OR JUDGMENT ARISING OUT OF THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF SUCH PERSON OR FOR ANY LOSS OR DAMAGE WHICH IS IN THE NATURE OF
CONSEQUENTIAL OR INDIRECT LOSS OR DAMAGE.

 

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(F)                      INDEMNIFICATION UNDER THIS SECTION 3.05 SHALL INCLUDE,
WITHOUT LIMITATION, REASONABLE FEES AND EXPENSES OF COUNSEL AND EXPENSES OF
LITIGATION REASONABLY INCURRED.  IF THE BACK-UP SERVICER, ACTING AS SUCCESSOR
SERVICER HAS MADE ANY INDEMNITY PAYMENTS TO THE SELLER, THE PURCHASERS OR THE
COLLATERAL AGENT PURSUANT TO THIS SECTION 3.05 AND SUCH PARTY THEREAFTER
COLLECTS ANY OF SUCH AMOUNTS FROM OTHERS, SUCH PARTY WILL PROMPTLY REPAY SUCH
AMOUNTS COLLECTED TO THE BACK-UP SERVICER, WITHOUT INTEREST.

 

(G)                   NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, IN
THE EVENT THAT BNY ASSET SOLUTIONS LLC ACTS AS THE SERVICER IN ACCORDANCE WITH
ARTICLE VI OF THE LRPA, IT SHALL BE ENTITLED TO TERMINATE ANY EXISTING
SUBSERVICING AGREEMENTS AND PERFORM THE DUTIES REQUIRED OF THE SERVICER BY
ENTERING INTO ONE OR MORE SUBSERVICING AGREEMENTS WITH A SUBSERVICER SELECTED BY
IT IN ACCORDANCE WITH THE SERVICING STANDARD.  IF SO DIRECTED BY THE BACK-UP
SERVICER, THE COLLATERAL AGENT SHALL PAY ANY SUBSERVICING FEES DIRECTLY TO ANY
SUCH SUBSERVICER ENGAGED BY THE BACK-UP SERVICER, SOLELY WITH FUNDS AVAILABLE TO
PAY THE SERVICING FEE PURSUANT TO SECTION 6.11 OF THE LRPA.

 

ARTICLE 4

 

MISCELLANEOUS PROVISIONS

 

Section 4.01                  Amendment.  This Agreement may be amended from
time to time by the written agreement of all parties hereto.

 

Section 4.02                  Counterparts.  For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.

 

Section 4.03                  Governing Law.  THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS OF
ANY STATE.

 

Section 4.04                  Waiver of Jury Trial.  The parties hereto 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 4.05                  Notices.  All demands, notices, instructions,
directions and communications hereunder (other than periodic communications the
distribution of which is specifically described herein) shall be in writing,
personally delivered or mailed by overnight courier, and shall be deemed to have
been duly given upon receipt  (a) in the case of the Servicer, at 60 State
Street, Boston, Massachusetts, 02109-1803, (b) in the case of the Seller, to
HPSC Bravo Funding, LLC, at 60 State Street, Boston, Massachusetts, 02109-1803,
(c) in the case of Triple-A, 113 King Street, Armonk, NY 10504, (d) in the case
of Merrill, 4 WFCN, 10th Floor, New York, NY 10080, (e) in the case of the
Back-up Servicer, at 600 E. Las Colinas Blvd., Suite 1300,

 

8

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Irving, Texas 75039, and (f) in the case of Collateral Agent, 113 King Street,
Armonk, NY 10504.

 

Section 4.06                  Severability of Provisions.  If any one or more of
the covenants, agreements, provisions, or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the LRPA or the
ING Purchase Agreement.

 

Section 4.07                  Binding Effect.  This Agreement shall inure to the
benefit of, and shall be binding upon the Servicer, the Back-up Servicer, the
Seller, the Purchasers and the Collateral Agent and their respective successors
and permitted assigns, subject, however, to the limitations contained in this
Agreement.

 

Section 4.08                  Survival of Agreement.  All covenants, agreements,
representations and warranties made herein and in the other documents delivered
pursuant hereto shall continue in full force and effect until payment in full of
the Purchased Receivables and all amounts owing to the Collateral Agent, the
Purchasers under the LRPA.

 

Section 4.09                  Captions.  The captions or headings in this
Agreement are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Agreement.

 

Section 4.10                  Exhibits.  The exhibits to this Agreement are
hereby incorporated herein and made a part hereof and are an integral part of
this Agreement.

 

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IN WITNESS WHEREOF, the Seller, the Servicer, the Purchasers, the Collateral
Agent and the Back-up Servicer have caused this Agreement to be duly executed by
their respective officers, all as of the day and year first above written.

 

 

 

HPSC BRAVO FUNDING, LLC, as Seller

 

 

 

 

 

By:

   /s/ Rene Lefebvre

 

 

 

Name: Rene Lefebvre

 

 

Title:  Manager

 

 

 

 

 

HPSC, INC., as Servicer

 

 

 

 

 

By:

   /s/ Rene Lefebvre

 

 

 

Name: Rene Lefebvre

 

 

Title:  CFO

 

 

 

 

 

MERRILL LYNCH COMMERCIAL FINANCE CORP.,
as a Purchaser

 

 

 

 

 

By:

   /s/ Andrew J. Coon

 

 

 

Name: Andrew J. Coon

 

 

Title:  Director

 

 

 

 

 

TRIPLE-A ONE FUNDING CORPORATION, as a
Purchaser

 

 

 

 

 

By:

   /s/ John Dare

 

 

 

Name: John Dare

 

 

Title:  Managing Director

 

 

 

 

 

MBIA INSURANCE CORPORATION, as Collateral
Agent

 

 

 

 

 

By:

   /s/ Glenn H. Roder

 

 

 

Name: Glenn H. Roder

 

 

Title:  Vice President

 

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BNY ASSET SOLUTIONS LLC, as Back-up Servicer

 

 

 

 

 

By:

    /s/ Michael F. Cocanougher

 

 

 

Name: Michael F. Cocanougher

 

 

Title:  Managing Director

 

 

[Signature Page to Back-up Servicing Agreement]

 

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