Exhibit
10.8


 


HPSC, INC.


 


LIMITED RECOURSE
NOTE AND SECURITY AGREEMENT


 


	
  Principal amount $870,732.12

  	
   

  	
  Date: 
  October 28, 2003

  



 


 


FOR VALUE RECEIVED, the undersigned, HPSC, Inc.
(“HPSC”), hereby promises to pay to the order of DOLLIE A. COLE (the “Payee”), the
sum of EIGHT HUNDRED SEVENTY THOUSAND SEVEN HUNDRED THIRTY TWO DOLLARS AND
TWELVE CENTS ($870,732.12).  This
Limited Recourse Note and Security Agreement (“this Note”) shall be payable
upon the terms and conditions and entitled to the security and benefits, all as
set forth in the HPSC Gloucester Funding 2003-1 LLC I and HPSC Gloucester
Funding 2003-1 LLC II 13.947% Asset Backed Note, Series 2003-1, Class F (the
“Class F Note”) issued pursuant to an Indenture, dated as of March 31,
2003, by and among HPSC Gloucester Funding 2003-1 LLC I and HPSC Gloucester
Funding 2003-1 LLC II, as Issuers, HPSC, Inc., as Servicer and Originator and
BNY Midwest Trust Company, as Indenture Trustee (the “Indenture”).  An interest in the Class F Note, equal to
$965,000, was transferred to, and paid for in full by, HPSC (the “HPSC Interest
in the Class F Note”).  Such transfer
was made through the book-entry facilities of DTC as required by the Class F
Note.  The HPSC Interest in the Class F
Note is held in book entry form in the name of HPSC in the Oppenheimer Account,
as described below.  The remaining
principal balance of such interest is $868,032.80.  The Form of Class F Note is attached hereto as Exhibit A.


 


Contemporaneously with the execution of this Note,
funds in the amount of $870,732.12 have been wired to HPSC by Payee.


 


This Note shall be payable solely from the proceeds of
the HPSC Interest in the Class F Note. 
The Payee shall have no recourse to any assets of HPSC with respect to
any amounts due on this Note except for the Collateral described below and HPSC
shall have no obligations under this Note, except to the extent of such
Collateral.


 


This Note is a secured note with the Payee having all
the benefits and rights of a secured creditor under applicable law.  As security for the payment and performance
of the obligations under this Note, HPSC hereby grants the Payee a security
interest in and lien on all of HPSC’s right, title and interest in and to in
the following described property now owned by HPSC (hereinafter called the
“Collateral”):


 


•                  All HPSC’s
right, title and interest in that certain HPSC Gloucester Funding 2003-1 LLC I
and HPSC Gloucester Funding 2003-1 LLC II 13.947% Asset Backed Note, Series
2003-1, Class F Note, dated as of March 31, 2003, Cusip No. 40429DAG5,
said interest having been transferred to HPSC, Inc. and held in book-entry form
through DTC in the Oppenheimer Account as defined below; and


 


•                  HPSC Account No.
G38-1619522, Oppenheimer & Co, Inc., One Federal Street, 22nd Floor,
Boston, MA 02110 (the “Oppenheimer Account”) which holds all HPSC’s right,
title and interest in the Class F Note in book entry form, and all proceeds of
the HPSC interest in the Class F Note contained in such account, now existing
or hereafter arising.


 

















 


HPSC has taken all necessary actions to authorize this
Note and the execution, delivery and performance of this Note, and this Note
has been duly executed and delivered by HPSC. 
This Note constitutes the legal, valid and binding obligation of HPSC
enforceable against HPSC in accordance with its terms.  HPSC does not require the consent or
approval of any third party to execute, deliver or perform the Note nor will
HPSC thereby default under the terms of any other agreement to which it is a
party.


 


The Collateral will be held by Oppenheimer & Co.,
Inc., subject to that certain Pledged Collateral Account Agreement, dated as of
the date hereof, among HPSC, the Payee and Oppenheimer & Co., Inc. (the
“Pledged Collateral Account Agreement”).


 


HPSC will execute and deliver any further instruments
and documents and take such further actions as the Payee may reasonably request
from time to time to preserve and perfect the Payee’s rights hereunder.


 


HPSC will not sell, transfer, grant a security
interest to any other party in, or otherwise dispose of, in each case, any of
its interest in the Collateral.


 


HPSC will notify the Payee at least 30 days in advance
of any change in HPSC’s chief executive office, state of entity formation, name
of entity, form of entity, or legal identity, as applicable.


 


This Note shall, at the option of the Payee, be
immediately due and payable upon the (i) the Class F Note becoming due and
payable or (ii) filing by HPSC of an assignment for the benefit of creditors,
or pursuant to any bankruptcy or insolvency law, or the suffering by HPSC of an
involuntary petition under any such law or for receivership to exist, which is
not vacated within thirty (30) days (each, an “Event of Default”).


 


If an Event of Default shall have occurred then, or at
any time thereafter while such Event of Default is continuing, the Payee (a)
shall be entitled to the rights and remedies set forth in the Pledged
Collateral Account Agreement; (b) may declare the principal balance hereof and
all accrued interest due and payable, whereupon it shall become immediately due
and payable without notice or demand; (c) shall be entitled to all of the
rights and remedies of a secured creditor under the Uniform Commercial Code as
it may be in effect from time to time in the Commonwealth of Massachusetts (the
“UCC”) in addition to all other rights and remedies available to the Payee
hereunder and by law; (d) shall have the right to take possession of the
Collateral; and (e) may take any other action which it deems necessary or
desirable to protect the Collateral or the security interest.  HPSC agrees that if notice of sale is
required by law to be given, seven (7) days’ notice shall constitute reasonable
notice.  HPSC shall have no liability
for any deficiency if the net proceeds of any sale or disposition of Collateral
are less than the total outstanding amounts due under this Note.  All rights of the Payee with respect to the
HPSC Interest in the Class F Note upon an Event of Default shall be subject to
the terms of the Indenture.


 


This Note shall be prepayable in whole but not in part
at the option of HPSC, provided that upon prepayment HPSC shall pay all
outstanding principal and interest plus an additional amount as follows:  if the Note is prepaid prior to the first
anniversary hereof, HPSC shall pay an additional amount equal to 4% of the
outstanding principal balance at the time of prepayment; if the Note is prepaid
after the first anniversary but prior to the second anniversary hereof, HPSC
shall pay an


 


2

















 


additional amount equal to 3% of the outstanding
principal balance at the time of prepayment; if the Note is prepaid after the
second anniversary but prior to the third anniversary hereof, HPSC shall pay an
additional amount equal to 2% of the outstanding principal balance at the time
of prepayment; if the Note is prepaid after the third anniversary but prior to
the fourth anniversary hereof, HPSC shall pay an additional amount equal to 1%
of the outstanding principal balance at the time of prepayment.  This Note shall be deemed to have been paid
in full when all payments due and/or payable under the HPSC Interest in the
Class F Note, and any additional payments as described above, have been deposited
in the Oppenheimer Account and thereafter transmitted to the Payee.


 


HPSC hereby waives demand, presentment and protest and
all notices hereto.  No modification or
indulgence or waiver hereof shall be binding unless in writing and signed by
the Payee and HPSC.


 


Except as otherwise specified herein, all notices
hereunder shall be in writing, shall be sent to the addresses set forth below
or at such other address as any party hereto may hereafter specify to the other
in writing: 


 


	
  If to the Secured Party:

  	
  Dollie A. Cole

  
	
   

  	
  Briarpatch Ranch

  
	
   

  	
  Country Road 179,

  
	
   

  	
  West Mendoza

  
	
   

  	
  Lockhart, Texas 78644

  
	
   

  	
   

  
	
  If to the undersigned:

  	
  HPSC, Inc.

  
	
   

  	
  60 State Street

  
	
   

  	
  Boston, MA 02109

  
	
   

  	
  Fax: 617-723-4786

  
	
   

  	
  Attention: 
  John W. Everets, Chairman and CEO

  
	
   

  	
   

  
	
  with copy to:

  	
  Day, Berry & Howard LLP

  
	
   

  	
  260 Franklin Street

  
	
   

  	
  Boston, MA 02110

  
	
   

  	
  Fax: 617-345-4745

  
	
   

  	
  Attention: Dennis W. Townley, Esq.

  



 


This Note shall be binding upon and inure to the
benefit of HPSC, the Payee and their respective heirs, successors and assigns,
except that HPSC may not assign or transfer its rights or obligations hereunder
without the prior written consent of the Payee.


 


This Note shall be governed by the substantive laws of
the Commonwealth of Massachusetts, without regard to conflicts of law
rules.  Any dispute arising under this
Note shall be decided in the jurisdiction of any state or Federal court located
within Massachusetts.  ANY RIGHTS TO A
TRIAL BY JURY ARE EXPRESSLY WAIVED.


 


*      *     
*


 


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IN WITNESS WHEREOF, the undersigned has duly executed
this Note under seal as of the day and year first above written.


 


	
   

  	
  HPSC, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John W. Everets

  
	
   

  	
   

  	
  Name: 
  John W. Everets

  
	
   

  	
   

  	
  Title: 
  Chairman and CEO

  
	
   

  	
   

  	
   

  
	
  Agreed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Dollie A. Cole

  	
   

  	
   

  	
   

  
	
  Dollie A. Cole

  	
   

  	
   

  
				



 


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