** **

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON,D.C. 20549**

** **

**FORM 10-K**

 

 

**ýANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934**

 

## ***For the fiscal yearended DECEMBER 31, 2001***

** **

**or**

 

**oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF1934**

 

**Commission file number 0-11618**

 

**HPSC, INC.**

(Exact name of registrant as specified in its charter)

|                                                |   |                              |
|-----------------------------------------------------|--------|-----------------------------------|
| **Delaware**                                        |   | **04-2560004**                    |
| (State or other jurisdiction of                     |   | (IRS Employer Identification No.) |
| incorporation or organization)                      |   |                              |
|                                                |   |                              |
| **60  STATE STREET, BOSTON, MASSACHUSETTS 02109**   |
| (Address of principal executive offices) (Zip Code) |

 

Registrant'stelephone number, including area code: ** (617) 720-3600**

 

Securitiesregistered pursuant to section 12(b) of the Act:

 

## **NONE**

 

Securitiesregistered pursuant to section 12(g) of the Act:

|                                       |   | **Name of Exchange**         |
|--------------------------------------------|--------|------------------------------|
| **Title of Class**                         |   | **on which Registered**      |
|                                       |   |                         |
| **COMMON  STOCK-PAR VALUE $.01 PER SHARE** |   | **American  Stock Exchange** |

 

Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the Registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.

 

******ý****            **

Indicate by check mark if disclosure of delinquentfilers pursuant to Item 405 of regulation S-K is not contained herein, and willnot be contained, to the best of the registrant’s knowledge, in definitiveproxy or information statements incorporated by reference in Part III of thisForm 10-K or any other amendment to this Form 10-K.

 

**YES****ý****        NO****o**

 

Theaggregate market value of the voting stock held by non-affiliates of theregistrant was $22,705,161 at March 1, 2002 representing 3,271,637 shares.

 

Thenumber of shares of common stock, par value $.01 per share, outstanding as ofMarch 1, 2002 was 4,163,765.

 

 

 

##### **DOCUMENTS INCORPORATED BY REFERENCE**

 

 

Portionsof the Proxy Statement for the Annual Meeting of Stockholders to be held May14, 2002 (the "2002 Proxy Statement") are incorporated by referenceinto Part III of this annual report on Form 10-K.

 

The2002 Proxy Statement, except for the parts therein which have been specificallyincorporated by reference, shall not be deemed "filed" as part ofthis annual report on Form 10-K.

 

Portionsof the Company’s 2001 Annual Report to Shareholders (the “2001 Annual Report”)are incorporated by reference into Parts I, II and IV of this annual report onForm 10-K.

 

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#### **PART I**

### ** **

### ***Item 1.*** BUSINESS

 

### **GENERAL**

 

HPSC,Inc. ("HPSC" or the "Company") is a specialty financecompany engaged primarily in financing licensed healthcare providers throughoutthe United States. A majority of the Company's revenues comes from itsfinancing of equipment and other healthcare practice related expenses. Throughits wholly-owned subsidiary, American Commercial Finance Corporation("ACFC"), the Company also provides asset-based lending to commercialand industrial businesses, principally in the eastern United States.  The Company periodically sells leases andnotes receivable in its securitization facilities and to various banks.

 

HPSCprovides financing, in the form of leases and notes due in installments, to thedental, ophthalmic, chiropractic, optometry, veterinary, podiatry and othermedical and healthcare professions. At December 31, 2001, approximately 91% ofthe Company's consolidated net investment in leases and notes consisted offinancing contracts with licensed healthcare professionals. Approximately 70%of these leases and notes are for equipment financing while approximately 30%relate to practice financing, leasehold improvements, office furniture, workingcapital and supplies. HPSC competes in the healthcare finance market where thesize of the transaction is $250,000 or less, sometimes referred to as the"small-ticket" market. The average size of an obligor’s originalobligation to the Company under a contract originated by the Company in 2001 wasapproximately $38,000. The Company’s finance and lease agreements arenon-cancelable and provide for a full payout at a fixed interest rate over aterm of one to seven years. The Company markets its financing services tohealthcare providers in a number of ways, including direct marketing throughtrade shows, conventions, advertising, cooperative arrangements with equipmentvendors, and through its sales staff located in 23 offices throughout theUnited States.

 

AtDecember 31, 2001, the net investment of owned and managed financing contractsin the licensed professional financing segment was $621 million, consisting ofapproximately 22,000 active contracts. Licensed professional financing contractoriginations were $250 million, $242 million and $208 million, for the yearsended December 31, 2001, 2000 and 1999, respectively.

 

Theremaining 9% of the Company’s portfolio consists of notes receivable. Thesenotes primarily relate to ACFC revolving, asset-based lines of credit of $5million or less extended to commercial and industrial businesses which oftencannot obtain traditional bank financing. The average ACFC loan is for aterm of two to three years with a credit line of $1 million. At December 31,2001, ACFC's notes receivable outstanding, net of allowance for loan losses,was $28 million. ACFC’s originations of new lines of credit were $13 million,$7 million and $18 million, for the years ended December 31, 2001, 2000 and1999, respectively.

 

### **BUSINESS STRATEGY**

 

TheCompany's strategy is to expand its business and enhance its profitability by(i) maintaining its strong position in the small-ticket dental equipment marketwhile increasing its share of other medical related small-ticket equipmentfinancing markets; (ii) diversifying the Company's revenue stream by increasingits financing of acquisitions of healthcare practices; (iii) emphasizingsuperior service to vendors and customers; (iv) increasing its direct sales andother marketing efforts; (v) maintaining and increasing its access to low-costcapital while managing interest rate risks; (vi) continuing to manageeffectively its credit risks; and (vii) capitalizing on information technologyto increase productivity and enable the Company to manage a higher volume offinancing transactions.

 

### **INDUSTRY OVERVIEW**

 

Theequipment financing industry in the United States includes a wide variety ofsources for financing the purchase or lease of equipment, ranging fromspecialty financing companies, which concentrate on a particular industry orfinancing technique, to large banking institutions, which offer a full array offinancial services.

 

Themedical equipment finance industry includes two distinct markets, generallydifferentiated based on equipment price and type of healthcare provider. Thefirst market, in which the Company currently does not compete, is financing ofequipment priced over $250,000, which is typically sold to hospitals and otherinstitutional purchasers. Because of the size of the purchase, long salescycle, and number of financing alternatives available to these types ofcustomers, their choice among financing alternatives tends to be basedprimarily on cost of financing. The second market, in which the Company doescompete, is the financing of lower-priced or "small-ticket" equipment,where the price of the financed equipment is $250,000 or less. Much of thisequipment is sold to individual

 

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healthcarepractitioners or small group practices, including dentists, ophthalmologists,physicians, chiropractors, veterinarians and other healthcare providers. TheCompany focuses on the small-ticket market because it is able to respond in aprompt and flexible manner to the needs of individual customers. Managementbelieves that purchasers in the small-ticket healthcare equipment market oftenseek the value-added sales support and ease of conducting business that theCompany offers.

 

Although the Company primarily focuses its business onequipment financing to licensed professionals, it continues to expand itsfinancing of healthcare practice acquisitions. Practice finance is aspecialized segment of the finance industry, in which the Company's primarycompetitors are banks. Practice finance is a relatively new businessopportunity for financing companies such as HPSC. It has developed as the saleof healthcare professional practices has increased. HPSC typically financesbetween 70% and 100% of the cost of the practice being purchased.

 

### **HEALTHCARE PROVIDER FINANCING**

 

###### *Terms and Conditions*

** **

TheCompany's business consists primarily of the origination of equipment financingcontracts through which the Company finances healthcare providers’ acquisitionof equipment as well as leasehold improvements, working capital and supplies.The contracts are either finance agreements (notes) or leases, and arenon-cancelable. The contracts are full payout contracts and provide forscheduled payments sufficient, in the aggregate, to cover the Company's costs,and to provide the Company with an appropriate return on its investment. During2001, approximately 77% of the contracts originated by the Company were financeagreements (74% for 2000) while the remaining 23% were lease agreements (26%for 2000). The Company provides its leasing customers with an option to purchasethe equipment at the end of the lease, generally for 10% of its original cost.In the past, substantially all lessees have exercised this option. The terms ofthe Company's leases and notes range from 12 to 84 months, with aweighted-average original term of 63 months for the year ended December 31,2001.

 

Allof the Company's equipment financing contracts require the customer to: (i)maintain, service and operate the equipment in accordance with themanufacturer's and government-mandated procedures, and (ii) make all scheduledcontract payments regardless of the performance of the equipment. Substantiallyall of the Company's financing contracts provide for payments due monthly forthe term of the contract. In the event of default by a customer, the financingcontract provides the Company with the rights afforded to creditors under law,including the right to repossess the underlying equipment and in the case oflegal proceeding arising from a default, to recover damages and attorneys'fees. The Company's equipment financing contracts provide for late fees andservice charges to be applied on overdue payments.

 

Althoughthe customer has the full benefit of the equipment manufacturers' warrantieswith respect to the equipment it finances, the Company makes no warranties toits customers regarding the equipment. In addition, the financing contract obligates the customer to continueto make contract payments regardless of any defects in the equipment. Under afinancing agreement (note), the customer holds title to the equipment and theCompany has a lien on the equipment to secure the loan; under a lease, theCompany retains title to the equipment. The Company has the right to assign anyfinancing contract without the consent of the customer.

 

Since1994, the Company has originated a total of approximately 1,160 practicefinance loans aggregating approximately $182 million in financings. The term ofa practice finance loan generally ranges from 72 to 84 months, with an averageoriginal balance of approximately $150,000. In both 2001 and 2000,approximately 17% of HPSC's total healthcare originations consisted of practicefinance loans. Management believes that its practice finance businesscontributes to the diversification of the Company's revenue sources and earnsHPSC substantial goodwill among healthcare providers. All practice financeinquiries received by the Company are referred to the Boston office forprocessing.

 

TheCompany solicits business for its practice finance services primarily byadvertising in trade magazines, attending healthcare conventions, working withpractice brokers, and by directly approaching potential purchasers ofhealthcare practices. The majority of the healthcare practices financed by theCompany to date have been dental practices. The Company has also financed thepurchase of professional practices of chiropractors, ophthalmologists, generalmedical practitioners, optometrists, opticians, podiatrists, and veterinarians.

 

###### *Customers*

** **

Theprimary customers for the Company's financing contracts are healthcareproviders, including dentists, ophthalmologists, other physicians,chiropractors and veterinarians. As of December 31, 2001, no single customer(or group of affiliated customers) accounted

 

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formore than 1% of the Company's healthcare finance portfolio. The Company'scustomers are located throughout the United States, with a higher concentrationin heavily populated states such as California, Florida, Texas, Illinois andNew York.

 

###### *Realization of Residual Values on Equipment Leases*

 

Inthe past, the Company has realized almost 100% of the residual value ofequipment covered by leases that run to maturity. The continued growth in theCompany's equipment lease portfolio has resulted in increases in the aggregateamount of recorded residual values on the Company’s balance sheet. As ofDecember 31, 2001, substantially all of the Company’s leasing portfolio andassociated residual values are scheduled to expire by the year 2008. Realizationof such residual values depends on factors not within the Company's control,such as the condition of the equipment, the cost of comparable new equipmentand the technological or economic obsolescence of the equipment. Although theCompany has historically received almost 100% of recorded residual values,there can be no assurance that this realization rate will continue.

 

###### *Government Regulation and Healthcare Trends*

 

Themajority of the Company's present customers are healthcare providers. Thehealthcare industry is subject to substantial federal, state and localregulation. In particular, federal and state governments have enacted laws andregulations designed to control healthcare costs, including mandated reductionsin fees for the use of certain medical equipment and fixed-price reimbursementsystems, where the rates of payment to healthcare providers for particulartypes of care are fixed in advance of actual treatment.

 

Majorchanges have occurred in the United States healthcare delivery system, includingthe formation of integrated patient care networks (often involving jointventures between hospitals and physician groups), as well as the grouping ofhealthcare consumers into managed-care organizations sponsored by insurancecompanies and other third parties. Moreover, state healthcare initiatives havesignificantly affected the financing and structure of the healthcare deliverysystem. These changes have not had a material adverse effect on the Company'sbusiness, but the effect of any changes on the Company's future business cannotbe predicted.

 

### **ASSET-BASED LENDING**

 

ACFCmakes asset-based loans, generally $5 million or less, to commercial andindustrial companies, primarily secured by accounts receivable, inventory andequipment. ACFC typically makes accounts receivable loans to borrowers thatcannot obtain traditional bank financing. ACFC takes a security interest in allof the borrower's assets and monitors collection of its receivables. Advanceson a revolving loan generally do not exceed 80% of the borrower's eligibleaccounts receivable. ACFC also makes inventory loans, generally not exceeding50% of the value of the customer's active inventory, valued at the lower ofcost or market value. In addition, ACFC provides term financing for equipment,which is secured by the machinery and equipment of the borrower.

 

Theaverage ACFC loan is for a term of two to three years. No single borroweraccounts for more than 10% of ACFC's aggregate portfolio, and no more than 10%of ACFC's portfolio is concentrated in any single industry.

 

ACFC'sloans are "fully followed," which means ACFC receives dailysettlement statements of its borrowers' accounts receivable. ACFC participatesin the collection of its borrowers' accounts receivable and requires thatpayments be made directly to an ACFC controlled lock-box account. Availabilityunder lines of credit is usually calculated daily. ACFC's credit committee,which includes members of senior management of HPSC, must approve all ACFCloans in advance. Each of ACFC's officers has over fifteen years of experienceproviding this type of financing.

 

Fromits inception in 1994 through December 31, 2001, ACFC has provided 76 lines ofcredit totaling approximately $108 million and currently has $29 million inloans outstanding to 34 borrowers. The annual dollar volume of originations ofnew lines of credit by ACFC were $13 million, $7 million and $18 million, in2001, 2000 and 1999, respectively.

 

### **CREDIT AND ADMINISTRATIVE PROCEDURES**

 

TheCompany processes all credit applications, and monitors all existing contractsat its corporate headquarters in Boston, Massachusetts (other than ACFCapplications and contracts, all of which are processed at ACFC's headquartersin West Hartford, Connecticut). The Company's credit procedures require thereview, verification and approval of a potential customer's credit file,accurate and complete documentation, delivery of equipment and verification ofinstallation by the customer, and correct invoicing by the vendor. The type andlevel of information and time required for a credit decision varies accordingto the nature, size and complexity of each transaction. In smaller, lesscomplicated transactions, a decision can often be reached within one hour; more

 

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complicatedtransactions may require up to three or four days. Once the equipment isshipped and installed, the vendor invoices the Company. The Company verifiesthat the customer has received and accepted the equipment and obtains the customer'sauthorization to pay the vendor. Following this telephone verification, thefile is forwarded to the Company’s accounting department for audit, booking andfunding and to commence automated billing and transaction accountingprocedures.

 

Timelyand accurate vendor payments are essential to the Company's business. In orderto maintain its relationships with existing vendors and attract new vendors,the Company generally makes payments to vendors for financing transactionswithin one day of authorization to pay from the customer.

 

ACFC'sunderwriting procedures include an evaluation of the collectibility of theborrower's receivables pledged to ACFC, including an evaluation of the validityof such receivables and the creditworthiness of the payors of such receivables.ACFC may also require its customers to pay for credit insurance with respect toits loans. The Loan Administration Officer of ACFC is responsible formaintaining lending standards and for monitoring loans and underlyingcollateral. Before approving a loan, ACFC examines the prospective customer'sbooks and records and monitors its customer’s operations as deemed necessaryduring the term of the loan. Loan officers are required to rate the risk ofeach loan made by ACFC and to update the rating upon receipt of financialstatements from the customer or when 90 days have elapsed since the date of thelast rating.

 

### **ALLOWANCE FOR LOSSES AND CHARGE-OFFS**

 

TheCompany maintains an allowance for losses in connection with its financingcontracts which it deems sufficient to meet current and future estimateduncollectible receivables held in the Company's portfolio. Each quarter, theCompany performs a detailed analysis of delinquent accounts to evaluatespecific factors affecting the obligor’s ability to pay. As part of theanalysis, the Company looks at the delinquency status of the customer, the fairvalue of the collateral, the current credit rating of the obligor, and thefinancial strength of guarantors, among other factors. In addition, the Companytakes into consideration the Company's historical loss experience and generaleconomic conditions. At December 31, 2001, this allowance for losses was 3.9%of the Company's owned net investment in leases and notes. There can be noassurance that this allowance will prove to be adequate. Failure of theCompany's customers to make scheduled payments under their financing contractscould require the Company to (i) make payments in connection with any recourseportion of its borrowings relating to such contract, (ii) lose its residualinterest in any underlying equipment or (iii) forfeit cash collateral pledgedas security for the Company's asset securitizations. In addition, anysignificant increase in losses or in the rate of payment defaults under theCompany’s financing contracts could adversely affect the Company's ability toobtain additional funding, including its ability to complete additional assetsecuritizations.

 

Tomanage credit risk, the Company has adopted underwriting and collectionpolicies that are closely monitored by management. Additionally, the Companymay be subject to limited recourse from leases and notes receivable sold undercertain securitization agreements. Such risk of loss is generally limited tothe extent of the Company’s retained interest in the leases and notes sold andresidual values related to the sold financing contracts. Accounts are normallycharged-off when future payments are deemed unlikely.

 

Asummary of activity in the Company's consolidated allowance for losses for eachof the years in the three-year period ended December 31, 2001 is as follows:

 

| **(in  thousands)**        |   | **2001** |    | **2000** |   | **1999** |   |
|----------------------------|--------|----------|---------|----------|--------|----------|--------|
|                       |   |     |    |     |   |     |   |
| Balance, beginning of year |   | $        | (14,170 | )        | $      | (9,150   | )      | $ | (7,350 | ) |
| Provision for losses       |   | (9,409   | )       | (9,218   | )      | (4,489   | )      |
| Charge-offs                |   | 8,253    |    | 4,287    |   | 2,853    |   |
| Recoveries                 |   | (33      | )       | (89      | )      | (164     | )      |
|                       |   |     |    |     |   |     |   |
| Balance, end of year       |   | $        | (15,359 | )        | $      | (14,170  | )      | $ | (9,150 | ) |

 

Thetotal gross contractual balances of delinquent leases and notes receivable duein installments, both owned and managed by the Company, which were over 90 dayspast due was $24,945,000 at December 31, 2001 compared to $23,759,000 atDecember 31, 2000. An account is considered delinquent when not paid within 30days of the billing due date. Charge-offs for the year 2001 were adversely affected by thebankruptcy of an equipment vendor and resulting customer lawsuits over thevendor’s products financed by the Company. The Company agreed to settle therelated lawsuit and subsequently charged-off approximately $1,800,000representing the remaining balances due on the disputed customers’ accounts.

 

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### **FUNDING SOURCES**

 

###### *General*

 

TheCompany's principal sources of funding for its financing transactions are: (i)a revolving loan agreement with Fleet National Bank as Agent, providingborrowing availability of up to $83.5 million (the "Revolver"), (ii)a securitized limited recourse revolving sale and loan credit facility with awholly-owned, special-purpose subsidiary of the Company, HPSC Bravo Funding LLC("Bravo"), with an aggregate availability of $385 million, (iii) a$527 million sale and loan term securitization with a remaining outstandingprincipal balance of $360 million (“Equipment Receivables 2000-1”). Financingfor the term securitization is provided through two wholly-owned,special-purpose subsidiaries of the Company, HPSC Equipment Receivables 2000-1LLC I (“ER 2000-1 LLC I”) and HPSC Equipment Receivables 2000-1 LLC II (“ER2000-1 LLC II”); (iv) full recourse, fixed-term loans and sales of financingcontracts with savings banks and other purchasers; (v) the Company’s SeniorSubordinated Notes issued in 1997; and (vi) the Company's internally generatedrevenues.

 

Managementbelieves that the Company’s sources of liquidity are adequate to meet currentobligations and carry on current operations. We note, however, that theCompany’s Revolver expires in May 2002. Although, historically, the Company has been successful in renewing itsannual Revolver facility at levels and costs acceptable to the Company, theCompany has reason to believe that one or more of the banks lending to theCompany may not renew their commitment. If this occurs, the Company will seek to replace any bank not renewing.  There can be no assurance that the Company willbe able to replace any non-renewing banks. Thus, it is possible that the Company will have a reduced amount or noamount available under its Revolver after expiration of the current RevolverAgreement in May 2002.  If the RevolverAgreement is not renewed or replaced, the outstanding balance under the currentRevolver must be repaid in quarterly installments over a twelve month periodwith the first installment due on June 30, 2002.  If the Revolver is terminated or reduced below specific levels,the Company may be in default under its Bravo facility and the Company may beunable to conduct its business or may be unable to conduct its business atcurrent levels.

 

TheBravo commercial paper conduit facility expires in June 2003.  The required annual liquidity facilityexpires in June 2002.   The Companyexpects that it will be able to renew the liquidity facility and may seek toexpand the size of the facility.  It ispossible, however, the banks providing liquidity under the facility will notextend their commitment.  If annualliquidity commitments are not renewed, the facility will be limited to the thenexisting outstandings and will not be available to the Company to providefuture liquidity.  If the liquiditybanks terminate or reduce their commitment, the Company will seek to replacethe terminated or reduced amount, but there can be no assurance that theCompany will be able to do so.   If theBravo facility is unavailable, the Company may be unable to conduct itsbusiness or may be unable to conduct its business at current levels.

 

Inorder to finance future operations, the Company may seek to raise additionalequity or subordinated debt, but there can be no assurance it will be able todo so.

 

Informationregarding the Company’s funding sources referred to in the previous paragraphis incorporated by reference to Notes C****andD****ofthe "Notes to Consolidated Financial Statements" at pages 9 through12 and "Management's Discussion and Analysis of Financial Condition"at pages 28 through 37 of the 2001 Annual Report.

 

### **INFORMATION TECHNOLOGY**

 

TheCompany uses automated information systems and telecommunications capabilitiesto support its business functions, including accounting, taxes, credit,collections, operations, sales, and marketing. The Company has developed andowns proprietary software designed to support several of these businessfunctions. The Company has invested a significant amount of time and capital incomputer hardware and proprietary software. The Company's computerized systemsprovide management with accurate and up-to-date customer data which strengthensthe Company’s internal controls and assists in its forecasting. These systemsare used to generate monthly billing, portfolio earnings recognition,collection histories, vendor analysis, customer reports and credit historiesand other data useful in servicing customers and equipment suppliers. They arealso used to provide financial and tax reporting, internal controls andpersonnel training and management. The Company recently introduced aninteractive website offering its customers advanced functionality and services,and industry-specific information. The Company believes that its computersystems give it a competitive advantage by providing rapid contract processingand control over credit risk. These systems permit the Company to offer a highlevel of customer service.

 

TheCompany contracts with an outside consulting firm to provide informationtechnology services. The Company's Boston office is linked electronically withall of the Company's other offices. Each salesperson's laptop computer may alsobe linked to the computer

 

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systemsin the Boston office, permitting a salesperson to respond to a customer'sfinancing request or a vendor's information request on a timely basis.  Management believes that its investment intechnology has positioned the Company to manage increased equipment financingvolume.

 

### **COMPETITION**

 

Healthcareprovider financing and asset-based lending are highly competitive businesses.The Company competes for customers with a number of national, regional andlocal finance companies, including those, like the Company, which specialize infinancing for healthcare providers. In addition, the Company's competitors includeequipment manufacturers which finance the sale or lease of their own products,other leasing companies and other types of financial services companies such ascommercial banks and savings and loan associations. Although the Companybelieves that it currently has a competitive advantage based on its excellentcustomer service, many of the Company's competitors and potential competitorspossess substantially greater financial, marketing and operational resourcesthan HPSC. Moreover, the Company's future profitability may be directly relatedto the Company's ability to obtain capital funding at rates that are comparableto or better than the capital costs of its competitors. The Company'scompetitors and potential competitors include many larger companies that have alower cost of funds and access to capital markets and to other funding sourceswhich may not be available to the Company. The Company's ability to competeeffectively for profitable equipment financing business will continue to dependupon its ability to procure funding on attractive terms, to develop andmaintain good relations with new and existing equipment suppliers, and toattract new customers.

 

### **EMPLOYEES**

 

At December 31, 2001, the Company had 131 full-timeemployees, 14 of whom work for ACFC. None of the Company’s employees is represented by a labor union.Management believes that the Company’s employee relations are good.

 

*Item 2.*  **PROPERTIES**

 

TheCompany leases approximately 13,800 square feet of office space at 60 StateStreet, Boston, Massachusetts for approximately $36,000 per month. The leaseexpires on June 30, 2004 with a five-year extension option. ACFC leasesapproximately****5,900 square feet at 433 South Main Street, West Hartford,Connecticut for approximately $10,000 per month. This lease expires on February28, 2003 with a three-year extension option. The Company also rents space asrequired for its sales locations on a shorter-term basis. Total consolidatedrent expense for the year 2001 under all operating leases was **$**875,000.The Company believes that its facilities are adequate for its currentoperations and for the foreseeable future.

 

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*Item 3.*  **LEGAL PROCEEDINGS**

 

Although the Company is from time to time subject to actions or claimsfor damages in the ordinary course of its business and engages in collectionproceedings with respect to delinquent accounts, the Company is aware of nosuch actions, claims, or proceedings currently pending or threatened that areexpected to have a material adverse effect on the Company’s business, operatingresults or financial condition.

 

*Item 4.*  **SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

 

No matters were submitted to a vote of securityholders during the fourth quarter of the fiscal year ended December 31, 2001.

 

#### **PART II**

 

*Item 5.*  **MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**

 

**On May 17, 2000, the Company’scommon stock began trading on the American Stock Exchange  (Symbol: “HDR”).  Prior to that date, the Company’s common stock was traded on theNASDAQ Market (Symbol: “HPSC”). The high and low closing prices for shares ofthe common stock as reported by the American Stock Exchange and by NASDAQ foreach quarter in the last two fiscal years, as well as the approximate number ofholders and information with respect to dividend restrictions, are incorporatedby reference to page 26 of the 2001 Annual Report.**

 

TheCompany neither issued nor sold equity securities during the period covered bythis annual report on Form 10-K other than shares covered by employee anddirector compensation plans.

 

*Item 6.*  **SELECTED FINANCIAL DATA**

 

Selectedfinancial data for each of the periods in the five-year period ended December31, 2001 is incorporated by reference to page 27 of the 2001 Annual Report.

 

*Item 7.*  **MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTSOF  OPERATIONS**

** **

The information required bythis item is incorporated by reference to the section captioned “Management’sDiscussion and Analysis of Financial Condition” on pages 28 through 37 of the2001 Annual Report.

 

### ***Item 7a.*** QUANTITATIVE AND QUALITATIVE DISCLOSURESABOUT MARKET RISK

 

Discussion regarding Quantitative and Qualitative Disclosures aboutMarket Risk is included in “Management’sDiscussion and Analysis of Financial Condition” on pages 36 and 37 of the 2001Annual Report.

 

#### **FORWARD-LOOKING STATEMENTS**

 

Thisannual report on Form 10-K contains forward-looking statements within themeaning of Section 27A of the Securities Act. Discussions containing suchforward-looking statements may be found in the material set forth under"Management's Discussion and Analysis of Financial Condition and Resultsof Operations" and "Business" sections of this Form 10-K, aswell as within the annual report generally. When used in this annual report,the words "believes," "anticipates," "expects,""plans," "intends," "estimates,""continue," "could," "may" or "will"(or the negative of such words) and similar expressions are intended toidentify forward-looking statements. Such statements are subject to a number ofrisks and uncertainties. Actual results in the future could differ materiallyfrom those described in the forward-looking statements as a result of the riskconsiderations set forth below under the heading "CertainConsiderations" and the matters set forth in this annual report generally.HPSC cautions the reader, however, that such list of considerations may not beexhaustive. HPSC undertakes no obligation to release publicly the result of anyrevisions to these forward-looking statements that may be made to reflect anyfuture events or circumstances.

 

 

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#### **CERTAIN CONSIDERATIONS**

 

*Dependence on Funding Sources;Restrictive Covenants*. The Company's financing activities are capitalintensive. The Company's revenues and profitability are related directly to thevolume of financing contracts it originates. To generate new financingcontracts, the Company requires access to substantial short- and long-termcredit. To date, the Company's principal sources of funding for its financingtransactions have been (i) a revolving credit facility with Fleet Bank, asAgent, for borrowing up to $83.5 million (the "Revolver"), (ii) a$385 million limited-recourse revolving credit facility with Bravo, (iii) aterm asset securitization of $527 million completed in December 2000; (iv)fixed-rate, full recourse term loans from several savings banks, (v) specificrecourse sales of financing contracts to savings banks and other purchasers,(vi) the issuance of Senior Subordinated Notes in 1997 and (vii) the Company'sinternally generated revenues. The Company’s Revolver provides availabilitythrough May 2002 at which time the Company plans to renew the facility foranother year. However, there can be no assurance that it will be able to renewor extend the Revolver or to complete additional asset securitizations or toobtain other additional financing when needed and on acceptable terms. TheCompany would be adversely affected if it were unable to continue to securesufficient and timely funding on acceptable terms. The agreement governing theRevolver (the "Revolver Agreement") contains numerous financial andoperating covenants. There can be no assurance that the Company will be able tocomply with these covenants, and failure to meet such covenants or the failureof the lending banks to agree to amend or waive compliance with covenants thatthe Company does not meet would result in a default under the RevolverAgreement. Moreover, the Company's financing arrangements with Bravo and thesavings banks described above incorporate the covenants and default provisionsof the Revolver Agreement. The term asset securitization facility also containscovenants and default provisions as does the Indenture governing the Company’sSenior Subordinated Notes. Thus, any material default that is not amended orwaived under any of these agreements will result in a default under most or allof the Company’s financing arrangements. In addition, the Indenture for the Senior Subordinated Notes containscertain limits on the Company’s ability to incur certain types and amounts ofsenior debt.

 

*Securitization Recourse; PaymentRestriction and Default Risk*. As part of its overall fundingstrategy, the Company utilizes asset securitization transactions providedthrough wholly-owned, bankruptcy-remote subsidiaries to obtain fixed-rate,matched-term financing. The Company transfers financing contracts to thesesubsidiaries which, in turn, either pledge or sell the contracts to thirdparties. The third parties' recourse with regard to the pledge or sale islimited to the contracts sold to the subsidiary. If the contract portfolio ofthese subsidiaries does not perform within certain guidelines, the subsidiariesmust retain or "trap" any monthly cash distribution to which theCompany might otherwise be entitled. This restriction on cash distributionscould continue until the portfolio performance returns to acceptable levels (asdefined in the relevant agreements), which restriction could have a negativeimpact on the cash flow available to the Company. In the event of a “paymenttrap”, there can be no assurance that the portfolio performance would return toacceptable levels or that the payment restrictions would be removed.

 

*Customer Credit Risks*. The Companymaintains an allowance for doubtful accounts in connection with payments dueunder financing contracts originated by the Company (whether or not suchcontracts have been securitized, held as collateral for loans to the Company orsold) at a level which the Company deems sufficient to meet future estimateduncollectible receivables, based on an analysis of delinquencies and overallrisks and probable losses associated with such contracts, and a review of theCompany's historical credit loss experience. There can be no assurance thatthis allowance will prove to be adequate. Failure of the Company's customers tomake scheduled payments under their financing contracts could require theCompany to (i) make payments in connection with its recourse loan and assetsale transactions, (ii) lose its residual interest in any underlying equipment,and/or (iii) lose collateral pledged as security for the Company's limitedrecourse asset securitizations. In addition, any increase in losses or in therate of payment defaults under the financing contracts originated by theCompany could adversely affect the Company's ability to obtain additionalfinancing, including restricting its ability to borrow under its RevolverAgreement and its ability to complete additional asset securitizations andsecured asset sales or loans. There can be no assurance that the Company willbe able to maintain or reduce its current level of credit losses.

 

*Competition*. The Companyoperates in highly competitive markets. The Company competes for customers witha number of national, regional and local finance companies, including those,like the Company, which specialize in financing for healthcare providers. Inaddition, the Company's competitors include those equipment manufacturers whichfinance the sale or lease of their products themselves, other leasing companiesand other types of financial services companies such as commercial banks andsavings and loan associations. Many of the Company's competitors and potentialcompetitors possess substantially greater financial, marketing and operationalresources than the Company. Moreover, the Company's future profitability willbe directly related to its ability to obtain capital funding at funding ratesthat are comparable to or better than the capital costs of its competitors. TheCompany's competitors and potential competitors include many larger companiesthat have a lower cost of funds than the Company and access to capital marketsand to other funding sources that may be unavailable to the Company. There canbe no assurance that the Company will be able to continue to competesuccessfully in its targeted markets.

 

*Changes in Healthcare Payment Policies*. The increasingcost of medical care has brought about federal and state regulatory changes

 

10

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designedto limit governmental reimbursement of certain healthcare providers. Thesechanges include the enactment of fixed-price reimbursement systems in which therates of payment to hospitals, outpatient clinics and private individual andgroup practices for specific categories of care are determined in advance oftreatment. Rising healthcare costs may also cause non-governmental medicalinsurers, such as Blue Cross and Blue Shield associations and the growingnumber of self-insured employers, to revise their reimbursement systems andpolicies governing the purchasing and leasing of medical and dental equipment.Alternative healthcare delivery systems, such as health maintenanceorganizations, preferred provider organizations and managed care programs, haveadopted similar cost containment measures. Other proposals to reform the UnitedStates healthcare system are considered from time to time. These proposalscould lead to increased government involvement in healthcare and otherwisechange the operating environment for the Company's customers. Healthcareproviders may react to these proposals and the uncertainty surrounding suchproposals by curtailing or deferring investment in medical and dentalequipment. Future changes in the healthcare industry, including governmentalregulation thereof, and the effect of such changes on the Company's businesscannot be predicted. Changes in payment or reimbursement programs could adverselyaffect the ability of the Company's customers to satisfy their paymentobligations to the Company and, accordingly, may have a material adverse effecton the Company's business, operating results and financial condition.

 

*Interest Rate Risk*. The Company'sfinancing contracts generally require the Company's customers to make paymentsat fixed rates for a specified term. Approximately $52 million of the Company'sborrowings are at variable interest rates and are not hedged. Thus, anyincrease in interest rates would reduce the Company’s financing margins andcould adversely affect the Company's business, operating results and financialcondition. The Company's ability to secure additional long-term financing atfavorable rates is limited by many factors, including competition, market andgeneral economic conditions and the Company's financial condition.

 

*Residual Value Risk*. At the inceptionof its equipment leasing transactions, the Company estimates what it believeswill be the fair market value of the financed equipment at the end of theinitial lease term and records that value (typically 10% of the initialpurchase price) on its balance sheet. The Company's results of operationsdepend, to some degree, upon its ability to realize these residual values (asof December 31, 2001, the estimated residual value of equipment at the end ofthe lease term was approximately $24****million, representing approximately 5% ofthe Company's total assets). The Company’s ability to realize these residualvalues depends on many factors, several of which are not within the Company'scontrol, including, but not limited to, general market conditions at the timeof the lease expiration; any unusual wear and tear on the equipment; the costof comparable new equipment; the extent, if any, to which the equipment hasbecome obsolete during the lease contract term; and the effects of any newgovernment regulations. If, upon the expiration of a lease, the Company sellsor refinances the leased equipment and the amount realized is less than theoriginal recorded residual value for such equipment, a loss reflecting thedifference will be recorded on the Company's books. Failure to realizeaggregate recorded residual values could have an adverse effect on theCompany's business, operating results and financial condition.

 

*Sales of Receivables*. As part of theCompany's portfolio management strategy and as a source of funding of itsoperations, the Company has sold selected pools of its leases and notesreceivable due in installments to a number of savings banks and as part of theBravo and term asset securitization facilities. Each of these sale transactionsis subject to certain covenants that may require the Company to repurchasefinancing contracts and/or make payments under certain circumstances. TheCompany carries a reserve for each transaction in its allowance for losses andrecognizes a gain that is included for accounting purposes in net revenues forthe year in which the sale transaction is completed. Each of thesesecuritization transactions has financial and operating covenants which are thesame as or similar to those contained in the Revolver Agreement.  Thus, a material default under any agreementis likely to be a default under most or all of the Company’s other financingagreements. The Company may enter into additional agreements for the sale ofits financing contracts in the future in order to manage its liquidity. Thelevel of reserves established by the Company in relation to its sold financingcontracts may prove to be inadequate. There can be no assurance that theCompany will be able to continue to sell its leases and notes or that the salesin the future will generate gain recognition that is comparable to thatrecognized in the past.

 

*Dependence on Sales Representatives*. The Company is,and its growth and future revenues are, dependent in a large part upon (i) theability of the Company's sales representatives to establish new relationships,and maintain existing relationships, with equipment vendors, distributors and manufacturersand with healthcare providers and other customers and (ii) the extent to whichsuch relationships lead equipment vendors, distributors and manufacturers topromote the Company's financing services to potential purchasers of theirequipment. Although the Company is not materially dependent upon any one salesrepresentative, the loss of a group of sales representatives could, untilappropriate replacements were obtained, have a material adverse effect on theCompany's business, operating results and financial condition.

 

*Dependence on Current Management*. The operationsand future success of the Company are dependent upon the continued efforts ofthe Company's executive officers, two of whom are also directors of theCompany. The loss of the services of any of these key executives could have amaterial adverse effect on the Company's business, operating results andfinancial condition.

 

11

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*Fluctuations in Quarterly OperatingResults*.  The Company has historicallyexperienced fluctuating quarterly revenues and earnings due to varyingportfolio performance and operating and interest costs. Given the possibilityof such fluctuations, the Company believes that quarterly comparisons of theresults of its operations during any fiscal year are not necessarily meaningfuland that results for any one fiscal quarter should not be relied upon as anindication of future performance.

 

*General Market Risk.*  The demand for the Company’s financing products is subject tooverall market risks, such as inflation, recession and changes in technologyneeds of medical professionals.

 

*Item 8**.*              **FINANCIAL STATEMENTS AND SUPPLEMENTARYDATA**

 

Theinformation required by this item together with the Independent Auditors'Report****is incorporated by reference to pages 2through 25 of the 2001 Annual Report. (See also the “Financial StatementSchedule” filed under Item 14 of this form 10-K.)

 

*Item 9.*            **CHANGES IN AND DISAGREEMENTS WITHACCOUNTANTS ON ACCOUNTING AND FINANCIAL****DISCLOSURE**

 

NotApplicable

12

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#### **PART III**

 

*Item 10.*  **DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT**

** **

Theinformation required by this item is incorporated by reference from thesections captioned "PROPOSAL ONE — ELECTION OF DIRECTORS - Nominees forClass I Directors," " - Members of the Board of Directors Continuingin Office" and " - Other Executive Officers" and "VOTINGSECURITIES - Section 16(a) Beneficial Ownership Reporting Compliance" inthe 2002 Proxy Statement to be filed before April 30, 2002.

 

*Item 11.*  **EXECUTIVE COMPENSATION**

 

Theinformation required by this item is incorporated by reference from thesections captioned "EXECUTIVE COMPENSATION - Summary CompensationTable," " - Stock Loan Program," " - Supplemental ExecutiveRetirement Plan," " - Option Grants in Last Fiscal Year," "- Aggregated Option Exercises and Year-End Option Values," " -Employment Agreements, Termination of Employment and Change in ControlArrangements" and " - Compensation of Directors" in the 2002Proxy Statement to be filed before April 30, 2002.

 

*Item 12.*  **SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS ANDMANAGEMENT**

 

Theinformation required by this item is incorporated by reference from the sectioncaptioned "VOTING SECURITIES - Share Ownership of Certain BeneficialOwners and Management" in the 2002 Proxy Statement to be filed beforeApril 30**,**2002.

 

 

*Item 13.*  **CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**

 

Theinformation required by this item is incorporated by reference from the sectioncaptioned “VOTING SECURITIES – Certain Transactions” in the 2002 ProxyStatement to be filed prior to April 30, 2002**.**

 

13

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#### **PART IV**

 

*Item 14.*  **EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ONFORM 8-K**

 

 
|                                                                                          | **PAGE NUMBER  IN**       |   |
|-----------------------------------------------------------------------------------------------|---------------------------|--------|
| (a)  1.  **FINANCIAL STATEMENTS**                                                        | **2001****ANNUAL REPORT** |   |
|                                                                                          |                      |   |
| Incorporated by reference from the Company's Annual  Report to Stockholders for the fiscal    |                      |   |
| year ended December 31, 2001                                                                  |                      |   |
|                                                                                          |                      |   |
| Consolidated Balance Sheets at December 31, 2001 and  December 31, 2000                       | 2                         |   |
|                                                                                          |                      |   |
| Consolidated Statements of Operations for each of the  three years in the period ended        |                      |   |
| December 31, 2001                                                                             | 3                         |   |
|                                                                                          |                      |   |
| Consolidated Statements of Changes in Stockholders'  Equity and Comprehensive Income for each |                      |   |
| of the three years in the period ended December 31,  2001                                     | 4                         |   |
|                                                                                          |                      |   |
| Consolidated Statements of Cash Flows for each of the  three years in the period ended        |                      |   |
| December 31, 2001                                                                             | 5                         |   |
|                                                                                          |                      |   |
| Independent Auditors' Report                                                                  | 25                        |   |

 

 

(a)  2.  **FINANCIALSTATEMENT SCHEDULES**

 

FinancialStatement Schedules have been omitted because of the absence of conditionsunder which they are required or because the required information is given inthe consolidated financial statements or notes thereto.

 

(a)          3.  **EXHIBITS**

   
| **Exhibit   No.** |   | **Title**                                                                                                                              |   | **Method of  Filing**                                                                                                        |   |
|-------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------|--------|
| 3.1               |   | Restated  Certificate of Incorporation of HPSC, Inc                                                                                    |   | Incorporated  by reference to Exhibit 3.1 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 1995  |   |
|              |   |                                                                                                                                   |   |                                                                                                                         |   |
| 3.2               |   | Certificate  of Amendment to Restated Certificate of Incorporation of HPSC, Inc. filed in  Delaware on September 14, 1987              |   | Incorporated  by reference to Exhibit 3.2 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 1995  |   |
|              |   |                                                                                                                                   |   |                                                                                                                         |   |
| 3.3               |   | Certificate  of Amendment to Restated Certificate of Incorporation of HPSC, Inc. filed in  Delaware on May 22, 1995                    |   | Incorporated  by reference to Exhibit 3.3 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 1995. |   |
|              |   |                                                                                                                                   |   |                                                                                                                         |   |
| 3.4               |   | Amended  and Restated By-Laws                                                                                                          |   | Incorporated  by reference to Exhibit 3.1 to HPSC's Quarterly Report on Form 10-Q for the  quarter ended September 30, 1999. |   |
|              |   |                                                                                                                                   |   |                                                                                                                         |   |
| 4.1               |   | Amended  and Restated Rights Agreement dated as of September 16, 1999 between the  Company and The First National Bank of Boston, N.A. |   | Incorporated  by reference to Exhibit 4.1 to HPSC's Current Report on Form 8-K filed  November 5, 1999.                      |   |

 

14

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| *10.1  |   | HPSC,  Inc. Stock Option Plan, dated March 5, 1986                                                                                                     |   | Incorporated  by reference to Exhibit 10.6 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 30, 1989        |   |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |   |                                                                                                                                                   |   |                                                                                                                                |   |
| *10.2  |   | Amendment  No. 1 to the HPSC, Inc. Stock Option Plan dated March 5, 1986                                                                               |   | Filed  herewith                                                                                                                     |   |
|   |   |                                                                                                                                                   |   |                                                                                                                                |   |
| *10.3  |   | HPSC,  Inc. Employee Stock Ownership Plan Agreement dated December 22, 1993 between  HPSC, Inc. and John W. Everets and Raymond R Doherty, as trustees |   | Incorporated  by reference to Exhibit 10.9 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 25, 1993        |   |
|   |   |                                                                                                                                                   |   |                                                                                                                                |   |
| *10.4  |   | First  Amendment effective January 1, 1993 to HPSC, Inc. Employee Stock Ownership  Plan                                                                |   | Incorporated  by reference to Exhibit 10.2 to HPSC's Quarterly Report on Form 10-Q for the  quarter ended June 25, 1994             |   |
|   |   |                                                                                                                                                   |   |                                                                                                                                |   |
| *10.5  |   | Second  Amendment effective January 1, 1994 to HPSC, Inc. Employee Stock Ownership  Plan                                                               |   | Incorporated  by reference to Exhibit 10.11 to HPSC's Annual Report on  Form 10-K for the fiscal year ended  December 31, 1994 |   |
|   |   |                                                                                                                                                   |   |                                                                                                                                |   |
| *10.6  |   | Third  Amendment effective January 1, 1993 to HPSC, Inc. Employee Stock Ownership  Plan                                                                |   | Incorporated  by reference to Exhibit 10.12 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 1994       |   |
|   |   |                                                                                                                                                   |   |                                                                                                                                |   |
| *10.7  |   | HPSC,  Inc. 1994 Stock Plan dated as of March 23, 1994 and related forms of Nonqualified  Option Grant and Option Exercise Form                        |   | Incorporated  by reference to Exhibit 10.4 to HPSC's Quarterly Report on Form 10-Q for the  quarter ended June 25, 1994             |   |
|   |   |                                                                                                                                                   |   |                                                                                                                                |   |
| *10.8  |   | Amended  and Restated HPSC, Inc. 1995 Stock Incentive Plan                                                                                             |   | Incorporated  by reference to Exhibit 10.27 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 1995       |   |
|   |   |                                                                                                                                                   |   |                                                                                                                                |   |
| *10.9  |   | First  Amendment to HPSC, Inc. Amended and Restated 1995 Stock Incentive Plan                                                                          |   | Incorporated  by reference to Exhibit 10.2 to HPSC’s Quarterly Report on Form 10-Q for the  quarter ended June 30, 1999        |   |
|   |   |                                                                                                                                                   |   |                                                                                                                                |   |
| *10.10 |   | HPSC,  Inc. Amended and Restated 1998 Stock Incentive Plan                                                                                             |   | Incorporated  by reference to Exhibit 10.1 to HPSC’s Quarterly Report on Form 10-Q for the  quarter ended June 30, 1999        |   |
|   |   |                                                                                                                                                   |   |                                                                                                                                |   |
| *10.11 |   | Amendment  No. 1 to the Amended and Restated 1998 Stock Option Plan                                                                                    |   | Filed  herewith                                                                                                                     |   |
|   |   |                                                                                                                                                   |   |                                                                                                                                |   |
| *10.12 |   | HPSC,  Inc. 2000 Stock Incentive Plan                                                                                                                  |   | Incorporated  by reference to Exhibit 10.1 to HPSC’s Quarterly Report on Form 10-Q for the  quarter ended June 30, 2000        |   |
|   |   |                                                                                                                                                   |   |                                                                                                                                |   |
| *10.13 |   | Amendment  No. 1 to the HPSC, Inc. 2000 Stock Option Plan                                                                                              |   | Filed  herewith                                                                                                                     |   |
|   |   |                                                                                                                                                   |   |                                                                                                                                |   |
| *10.14 |   | HPSC,  Inc. Amended Outside Directors Stock Bonus Plan                                                                                                 |   | Incorporated  by reference to Exhibit 10.11 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 2000       |   |
|   |   |                                                                                                                                                   |   |                                                                                                                                |   |
| *10.15 |   | Amended  and Restated Stock Loan Program                                                                                                               |   | Incorporated  by reference to Exhibit 10.1 to HPSC's Quarterly Report on Form 10-Q for the  quarter ended September 30, 2001        |   |

 

15

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| *10.16 |   | Stock  Option grant to Lowell P. Weicker  effective December 7, 1995                                                                                                                                                              |   | Incorporated  by reference to Exhibit 10.28 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 1995      |   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |   |                                                                                                                                                                                                                              |   |                                                                                                                               |   |
| *10.17 |   | HPSC,  Inc. Supplemental Executive Retirement Plan dated as of January 1, 1997                                                                                                                                                    |   | Incorporated  by reference to Exhibit 10.12 to HPSC's Annual Report on Form 10-K for the  fiscal year-ended December 31, 1997      |   |
|   |   |                                                                                                                                                                                                                              |   |                                                                                                                               |   |
| *10.18 |   | First  Amendment dated March 15, 1999 to HPSC, Inc. Supplemental Executive  Retirement Plan dated as of January 1, 1997                                                                                                           |   | Incorporated  by reference to Exhibit 10.12 to HPSC’s Annual Report on Form 10-K for the  fiscal year ended December 31, 1998 |   |
|   |   |                                                                                                                                                                                                                              |   |                                                                                                                               |   |
| *10.19 |   | Second  Amendment to HPSC, Inc. Supplemental Executive Retirement Plan                                                                                                                                                            |   | Incorporated  by reference to Exhibit 10.3 to HPSC’s Quarterly Report on Form 10-Q for the  quarter ended June 30, 1999       |   |
|   |   |                                                                                                                                                                                                                              |   |                                                                                                                               |   |
| *10.20 |   | Third  Amendment to HPSC, Inc. Supplemental Executive Retirement Plan                                                                                                                                                             |   | Incorporated  by reference to Exhibit 10.15 HPSC’s Annual Report on Form 10-K for the  fiscal year ended December 31, 1999    |   |
|   |   |                                                                                                                                                                                                                              |   |                                                                                                                               |   |
| *10.21 |   | Fourth  Amendment to the HPSC, Inc. Supplemental Executive Retirement Plan, dated  August 10, 2000                                                                                                                                |   | Incorporated  by reference to Exhibit 10.6 to HPSC’s Quarterly Report Form 10-Q for the  quarter ended June 30, 2000          |   |
|   |   |                                                                                                                                                                                                                              |   |                                                                                                                               |   |
| *10.22 |   | HPSC,  Inc. 1998 Executive Bonus Plan                                                                                                                                                                                             |   | Incorporated  by reference to Exhibit 10.32 to HPSC’s Annual Report on Form 10-K for the  fiscal year ended December 31, 1998 |   |
|   |   |                                                                                                                                                                                                                              |   |                                                                                                                               |   |
| *10.23 |   | 2001  Supplemental Executive Bonus Plan                                                                                                                                                                                           |   | Incorporated  by reference to Exhibit 10.2 to HPSC's Quarterly Report on Form 10-Q for the  quarter ended September 30, 2001       |   |
|   |   |                                                                                                                                                                                                                              |   |                                                                                                                               |   |
| *10.24 |   | HPSC,  Inc. 401(k) Plan dated February, 1993 between HPSC, Inc. and Metropolitan  Life Insurance Company                                                                                                                          |   | Incorporated  by reference to Exhibit 10.15 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 25, 1993      |   |
|   |   |                                                                                                                                                                                                                              |   |                                                                                                                               |   |
| *10.25 |   | Amended  and Restated Employment Agreement between HPSC, Inc. and John W. Everets  dated August 4, 2000                                                                                                                           |   | Incorporated  by reference to Exhibit 10.7 to HPSC’s Quarterly Report on Form 10-Q for the  quarter ended June 30, 2000       |   |
|   |   |                                                                                                                                                                                                                              |   |                                                                                                                               |   |
| *10.26 |   | Amended  and Restated Employment Agreement between HPSC, Inc. and Raymond R. Doherty  dated August 4, 2000                                                                                                                        |   | Incorporated  by reference to Exhibit 10.8 to HPSC’s Quarterly Report on Form 10-Q for the  quarter ended June 30, 2000       |   |
|   |   |                                                                                                                                                                                                                              |   |                                                                                                                               |   |
| *10.27 |   | Amended  and Restated Employment Agreement between HPSC, Inc. and Rene Lefebvre dated  August 4, 2000                                                                                                                             |   | Incorporated  by reference to Exhibit 10.9 to HPSC's Quarterly Report on Form 10-Q for the  quarter ended June 30, 2000            |   |
|   |   |                                                                                                                                                                                                                              |   |                                                                                                                               |   |
| 10.28  |   | Lease  dated as of March 8, 1994 between the Trustees of 60 State Street Trust and  HPSC, Inc., dated September 10, 1970 and relating to the principal executive  offices of HPSC, Inc. at 60 State Street, Boston, Massachusetts |   | Incorporated  by reference to Exhibit 10.1 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 1994       |   |

 

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|   |   |                                                                                                                                                                                                                                                                    |   |                                                                                                                              |   |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|--------|
| 10.29  |   | Second  Amendment, dated May 1998, to Lease dated as of March 8, 1994 between the  Trustees of 60 State Street Trust and HPSC, Inc., dated September 10, 1970  and relating to the principal executive offices of HPSC, Inc. at 60 State  Street, Boston, Massachusetts |   | Incorporated  by reference to Exhibit 10.2 to HPSC’s Annual Report on Form 10-K for the  fiscal year ended December 31, 1999 |   |
|   |   |                                                                                                                                                                                                                                                                    |   |                                                                                                                              |   |
| 10.30  |   | Fourth  Amended and Restated Credit Agreement  dated May 12, 2000 among HPSC, Inc. and Fleet National Bank individually and  as Agent, and the Banks named therein                                                                                                 |   | Incorporated  by reference to Exhibit 10.14 to HPSC's Quarterly Report on Form 10-Q for the  quarter ended June 30, 2000          |   |
|   |   |                                                                                                                                                                                                                                                                    |   |                                                                                                                              |   |
| 10.31  |   | First  Amendment dated as of December 1, 2000 to Fourth Amended and Restated Credit  Agreement dated May 12, 2000 among HPSC, Inc., American Commercial Finance  Corporation and Fleet National Bank individually and as Agent, and the Banks  named therein.           |   | Incorporated  by reference to Exhibit 10.27 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 2000     |   |
|   |   |                                                                                                                                                                                                                                                                    |   |                                                                                                                              |   |
| 10.32  |   | Second  Amendment dated as of December 31, 2000 to Fourth Amended and Restated Credit  Agreement dated May 12, 2000 among HPSC, Inc., American Commercial Finance  Corporation and Fleet National Bank individually and as Agent, and the Banks  named therein.         |   | Filed  herewith                                                                                                                   |   |
|   |   |                                                                                                                                                                                                                                                                    |   |                                                                                                                              |   |
| 10.33  |   | Third  Amendment dated as of May 8, 2001 to Fourth Amended and Restated Credit Agreement  dated May 12, 2000 among HPSC, Inc., American Commercial Finance Corporation  and Fleet National Bank individually and as Agent, and the Banks named  therein.                |   | Incorporated  by reference to Exhibit 10.1 to HPSC's Quarterly Report on Form 10-Q for the  quarter  ended June 30, 2000.    |   |
|   |   |                                                                                                                                                                                                                                                                    |   |                                                                                                                              |   |
| 10.34  |   | Purchase  and Contribution Agreement dated as of January 31, 1995 between HPSC, Inc.  and HPSC Bravo Funding Corp.                                                                                                                                                      |   | Incorporated  by reference to Exhibit 10.31 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 1994     |   |
|   |   |                                                                                                                                                                                                                                                                    |   |                                                                                                                              |   |
| 10.35  |   | Amended  and Restated Purchase and Contribution Agreement, dated March 31, 2000,  between HPSC, Inc. and HPSC Bravo Funding Corp.                                                                                                                                       |   | Incorporated  by reference to Exhibit 10.1 to HPSC’s Quarterly Report on Form 10-Q for the  quarter ended March 31, 2000     |   |
|   |   |                                                                                                                                                                                                                                                                    |   |                                                                                                                              |   |
| 10.36  |   | Amendment  No. 1 to Amended and Restated Purchase and Contribution Agreement dated as of  June 16, 2000, between HPSC, Inc. and HPSC Bravo Funding Corp.                                                                                                                |   | Incorporated  by reference to Exhibit 10.5 to HPSC’s Quarterly Report on Form 10-Q for the  quarter ended June 30, 2000      |   |
|   |   |                                                                                                                                                                                                                                                                    |   |                                                                                                                              |   |
| 10.37  |   | Credit  Agreement dated as of January 31, 1995 among HPSC Bravo Funding Corp.,  Triple-A One Funding Corporation, as lender, and CapMAC, as Administrative  Agent and as Collateral Agent                                                                               |   | Incorporated  by reference to Exhibit 10.32 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 1994     |   |
|   |   |                                                                                                                                                                                                                                                                    |   |                                                                                                                              |   |
| 10.38  |   | Amended  and Restated Lease Receivable Purchase Agreement, dated March 31, 2000 by and  among HPSC Bravo Funding Inc., HPSC, Inc., Triple-A One Funding Corporation  and Capital Markets Assurance Corporation                                                          |   | Incorporated  by reference to Exhibit 10.2 to HPSC’s Quarterly Report on Form 10-Q for the  quarter ended March 31, 2000     |   |
|   |   |                                                                                                                                                                                                                                                                    |   |                                                                                                                              |   |
| 10.39  |   | Agreement  to furnish copies of Omitted Exhibits to Certain Agreements with HPSC Bravo  Funding Corp.                                                                                                                                                                   |   | Incorporated  by reference to Exhibit 10.33 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 1994     |   |

 

17

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| 10.40  |   | Amendment  No. 1 to Amended and Restated Lease Receivables Purchase Agreement dated as  of May 26, 2000, among HPSC Bravo Funding Corp., HPSC, Inc., Triple-A One  Funding Corp. and Capital Markets Assurance Corp.                                                                    |   | Incorporated  by reference to Exhibit 10.4 to HPSC’s Quarterly Report on Form 10-Q for the  quarter ended June 30, 2000        |   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |   |                                                                                                                                                                                                                                                                                    |   |                                                                                                                                |   |
| 10.41  |   | Consent  dated December 20, 2000 to Amended and Restated Lease Receivables Purchase  Agreement dated as of December 20, 2000, among HPSC Bravo Funding Corp., HPSC  Inc., Triple–A One Funding Corp. and Capital Markets Assurance Corp.                                           |   | Incorporated  by reference to Exhibit 10.35 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 2000       |   |
|   |   |                                                                                                                                                                                                                                                                                    |   |                                                                                                                                |   |
| 10.42  |   | Amendment  documents, effective November 5, 1996 to Credit Agreement dated as of January  31, 1995 among HPSC Bravo Funding Corp., Triple-A Funding Corporation, as  Lender, and CapMAC, as Administrative Agent and as Collateral Agent                                                |   | Incorporated  by reference to Exhibit 10.26 to HPSC's Registration Statement on Form S-1  filed January 30, 1997                    |   |
|   |   |                                                                                                                                                                                                                                                                                    |   |                                                                                                                                |   |
| 10.43  |   | Amendment  No. 3 dated June 29, 1998 to Credit Agreement dated January 31, 1995 by and  among HPSC Bravo Funding Corp., Triple-A One Funding Corporation and CapMac,  as Administrative Agent and Collateral Agent                                                                      |   | Incorporated  by reference to Exhibit 10.6 to HPSC's Quarterly Report on Form 10-Q for the  quarter ended March 30, 1998            |   |
|   |   |                                                                                                                                                                                                                                                                                    |   |                                                                                                                                |   |
| 10.44  |   | Merger  Agreement dated May 14, 2001 between HPSC Bravo Funding, LLC and HPSC Bravo  Funding Corp.                                                                                                                                                                                      |   | Incorporated  by reference to Exhibit 10.2 to HPSC's Quarterly Report on Form 10-Q for the  quarter ended June 30, 2001.            |   |
|   |   |                                                                                                                                                                                                                                                                                    |   |                                                                                                                                |   |
| 10.45  |   | Lease  Receivables Purchase Agreement dated as of June 27, 1997 among HPSC Capital  Funding, Inc., as Seller, HPSC, Inc. as Service and Custodian, EagleFunding  Capital Corporation as Purchaser and BankBoston Securities, Inc. as Deal  Agent                                        |   | Incorporated  by reference to Exhibit 10.1 to HPSC's Quarterly Report on Form 10-Q for the  quarter ended September 30, 1997.       |   |
|   |   |                                                                                                                                                                                                                                                                                    |   |                                                                                                                                |   |
| 10.46  |   | Appendix  A to EagleFunding Purchase Agreement (Definitions List Attached.)                                                                                                                                                                                                             |   | Incorporated  by reference to Exhibit 10.2 to HPSC's Quarterly Report on Form 10-Q for the  quarter ended September 30, 1997        |   |
|   |   |                                                                                                                                                                                                                                                                                    |   |                                                                                                                                |   |
| 10.47  |   | Purchase  and Contribution Agreement dated as of June 27, 1997 Between HPSC Capital  Funding, Inc. as the Buyer, and HPSC, Inc. as the Originator and the  Servicer.                                                                                                                    |   | Incorporated  by reference to Exhibit 10.3 to HPSC's Quarterly Report on Form 10-Q for the  quarter ended September 30, 1997        |   |
|   |   |                                                                                                                                                                                                                                                                                    |   |                                                                                                                                |   |
| 10.48  |   | Undertaking  to Furnish Certain Copies of Omitted Exhibits to Exhibit 10.27 hereof.                                                                                                                                                                                                     |   | Incorporated  by reference to Exhibit 10.4 to HPSC's Quarterly Report on Form 10-Q for the  quarter ended September 30, 1997.       |   |
|   |   |                                                                                                                                                                                                                                                                                    |   |                                                                                                                                |   |
| 10.49  |   | Amendment  No. 2, dated April 30, 1998 to Lease Receivable Purchase Agreement dated June  27, 1997, by and among HPSC Capital Funding, Inc. (Seller), EagleFunding  Capital Corporation (Purchaser), HPSC, Inc. (Servicer and Custodian), and  BankBoston Securities, Inc. (Deal Agent) |   | Incorporated  by reference to Exhibit 10.4 to HPSC's Quarterly Report on Form 10-Q for the  quarter ended June 30, 1998             |   |
|   |   |                                                                                                                                                                                                                                                                                    |   |                                                                                                                                |   |
| 10.50  |   | Amendment No. 3, dated  April 4, 1999 to Lease Receivable Purchase Agreement dated June 27, 1997, by  and among HPSC Capital Funding, Inc. (Seller), EagleFunding Capital                                                                                                               |   | Incorporated by  reference to Exhibit 10.32 to HPSC’s Annual Report on Form 10-K for the  fiscal year ended December 31, 1999. |   |

 

18

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|   |   | Corporation  (Purchaser), HPSC, Inc. (Servicer and Custodian), and BankBoston Securities,  Inc. (Deal Agent)                                                                                                                                                                                                                                                                                |   |                                                                                                                                |   |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                |   |
| 10.51  |   | Amendment  No. 3 and Consent dated December 1, 2000 to Lease Receivables Purchase  Agreement dated June 27, 1997 by and among HPSC Capital Funding Inc.  (Seller), Eagle Funding Capital Corporation (Purchaser), HPSC, Inc. (Services  and Custodian), Robertson Stephens Inc. (formerly known as BancBoston  Securities Inc. (Old Deal Agent) and Fleet Securities Inc. (New Deal Agent.) |   | Incorporated  by reference to Exhibit 10.44 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 2000       |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                |   |
| 10.52  |   | Indenture  dated as of March 20, 1997 between HPSC, Inc. and State Street Bank and Trust  Company, as Trustee                                                                                                                                                                                                                                                                               |   | Incorporated  by reference to HPSC's Exhibit 10.28 to HPSC's Annual Report on Form 10K for  the fiscal year ended December 31, 1997 |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                |   |
| 10.53  |   | Limited  Liability Company Agreement of HPSC Equipment Receivables 2000-1 LLC I                                                                                                                                                                                                                                                                                                             |   | Incorporated  by reference to Exhibit 10.46 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 2000       |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                |   |
| 10.54  |   | Limited  Liability Company Agreement of HPSC Equipment Receivables 2000-1 LLC II                                                                                                                                                                                                                                                                                                            |   | Incorporated  by reference to Exhibit 10.47 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 2000       |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                |   |
| 10.55  |   | Custody  Agreement among HPSC Equipment Receivables 2000-1 LLC I, HPSC Equipment  Receivables 2000-1 LLC II, BNY Midwest Trust Company, Iron Mountain Records  Management, Inc., and HPSC, Inc. dated as of December 1, 2000                                                                                                                                                                |   | Incorporated  by reference to Exhibit 10.48 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 2000       |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                |   |
| 10.56  |   | Servicing  Agreement by and among HPSC Equipment Receivables 2000-1 LLC I, HPSC  Equipment Receivables 2000-1 LLC II, HPSC, Inc., American Commercial Finance  Corporation, BNY Midwest Trust Company and BNY Asset Solutions, LLC dated as  of December 1, 2000                                                                                                                            |   | Incorporated  by reference to Exhibit 10.49 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 2000       |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                |   |
| 10.57  |   | Purchase  Agreement for Equipment Contract-Backed Notes, Series 2000-1 of Class A-F  between HPSC Equipment Receivables 2000-1 LLC I, HPSC Equipment Receivables  2000-1 LLC II and Credit Suisse First Boston Corporation dated December 14,  2000                                                                                                                                         |   | Incorporated  by reference to Exhibit 10.50 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 2000       |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                |   |
| 10.58  |   | Purchase  Agreement for Floating Rate Equipment Contract-Backed Variable Funding Notes,  Series 2000-1 between HPSC Equipment Receivables 2000-1 LLC I, HPSC Equipment  Receivables 2000-1 LLC II and Credit Suisse First Boston Corporation dated  December 14, 2000                                                                                                                       |   | Incorporated  by reference to Exhibit 10.51 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 2000       |   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                                                |   |
| 10.59  |   | Receivables  Transfer Agreement by and among HPSC Equipment Receivables 2000-1 LLC I, HPSC  Equipment Receivables 2000-1 LLC II, HPSC, Inc., American Commercial Finance  Corporation, HPSC Bravo Funding Corp. and HPSC Capital Funding, Inc. dated as  December 1, 2000                                                                                                                   |   | Incorporated  by reference to Exhibit 10.52 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 2000       |   |

 

19

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| 10.60  |   | Indenture  Agreement by and among HPSC Equipment Receivables 2000-1 LLC I, HPSC  Equipment Receivables 2000-1 LLC II, HPSC, Inc., American Commercial Finance  Corporation, and BNY Midwest Trust Company dated as of December 1, 2000 |   | Incorporated  by reference to Exhibit 10.53 to HPSC's Annual Report on Form 10-K for the  fiscal year ended December 31, 2000 |   |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------|--------|
|   |   |                                                                                                                                                                                                                                   |   |                                                                                                                          |   |
| 13.1   |   | HPSC,  Inc. 2001 Annual Report to Shareholders                                                                                                                                                                                         |   | Filed  herewith                                                                                                               |   |
|   |   |                                                                                                                                                                                                                                   |   |                                                                                                                          |   |
| 21.1   |   | Subsidiaries  of HPSC, Inc.                                                                                                                                                                                                            |   | Filed  herewith                                                                                                               |   |
|   |   |                                                                                                                                                                                                                                   |   |                                                                                                                          |   |
| 23.1   |   | Consent  of Deloitte & Touche LLP                                                                                                                                                                                                  |   | Filed  herewith                                                                                                               |   |

 

----

*Management contracts or compensatory plans or arrangements required to be filedas exhibits are identified by an asterisk.

 

Copiesof Exhibits may be obtained for a nominal charge by writing to:

 

**INVESTORRELATIONS**

**HPSC, INC.**

**60 STATE STREET**

**BOSTON,MASSACHUSETTS 02109**

 

(b) Reports on Form 8-K

 

None

 

20

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#### **SIGNATURES**

 

Pursuantto the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,HPSC, Inc. has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized.

 
|                   | *HPSC, Inc.*                |
|------------------------|-----------------------------|
|                   |                        |
| Dated:  March 29, 2002 | By:  /s/ John W. Everets    |
|                   | *John W. Everets*           |
|                   | *Chairman, Chief Executive* |
|                   | *Officer and Director*      |

 

Pursuantto the requirements of the Securities Exchange Act of 1934, this report hasbeen signed below by the following persons on behalf of HPSC, Inc. and in thecapacities and on the dates indicated.

 
|      | **NAME**                    |   | **TITLE**                                                               |   | **DATED**           |
|-----------|-----------------------------|--------|-------------------------------------------------------------------------|--------|---------------------|
|      |                        |   |                                                                    |   |                |
| **By:**   | **/s/  John W. Everets**    |   | **Chairman,  Chief Executive Officer and Director**                     |   | **March  29, 2002** |
|      | John  W. Everets            |   | (Principal  Executive Officer)                                          |   |                |
|      |                        |   |                                                                    |   |                |
| By:       | /s/  Raymond R. Doherty     |   | President  and Director                                                 |   | March  29, 2002     |
|      | Raymond  R. Doherty         |   |                                                                    |   |                |
|      |                        |   |                                                                    |   |                |
|  By: | /s/  Rene Lefebvre          |   | Senior  Executive Vice President, Chief Financial Officer and Treasurer |   | March  29, 2002     |
|      | Rene  Lefebvre              |   | (Principal  Financial Officer)                                          |   |                |
|      |                        |   |                                                                    |   |                |
| By:       | /s/  William S. Hoft        |   | Vice  President- Finance                                                |   | March  29, 2002     |
|      | William  S. Hoft            |   | (Principal  Accounting Officer)                                         |   |                |
|      |                        |   |                                                                    |   |                |
| By:       | /s/  Dollie A. Cole         |   | Director                                                                |   | March  29, 2002     |
|      | Dollie  A. Cole             |   |                                                                    |   |                |
|      |                        |   |                                                                    |   |                |
| By:       | /s/  Thomas M. McDougal     |   | Director                                                                |   | March  29, 2002     |
|      | Thomas  M. McDougal         |   |                                                                    |   |                |
|      |                        |   |                                                                    |   |                |
| By:       | /s/  Samuel P. Cooley       |   | Director                                                                |   | March  29, 2002     |
|      | Samuel  P. Cooley           |   |                                                                    |   |                |
|      |                        |   |                                                                    |   |                |
| By:       | /s/  J. Kermit Birchfield   |   | Director                                                                |   | March  29, 2002     |
|      | J.  Kermit Birchfield       |   |                                                                    |   |                |
|      |                        |   |                                                                    |   |                |
| By:       | /s/  Lowell P. Weicker, Jr. |   | Director                                                                |   | March  29, 2002     |
|      | Lowell  P. Weicker, Jr.     |   |                                                                    |   |                |
|      |                        |   |                                                                    |   |                |

 

21

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