Document:

Exhibit
10.4

 

Execution Copy

 

AMENDMENT NO. 2 TO THIRD AMENDED AND RESTATED

LEASE RECEIVABLES PURCHASE AGREEMENT

 

Dated as of
October 17, 2003

 

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

 

PRELIMINARY STATEMENTS

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

	
  DRR

  	
   

  	
  =

  	
   

  	
  DRSF X DR X WRT, where

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DRR

  	
   

  	
  =

  	
   

  	
  the Default Reserve Ratio;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DRSF

  	
   

  	
  =

  	
   

  	
  the Default Reserve Stress Factor as of
  such day;

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DR

  	
   

  	
  =

  	
   

  	
  the Default Ratio as of such day; and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WRT

  	
   

  	
  =

  	
   

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

  

 

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

 

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

 

2

 

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

 

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

 

(xxvii) 
[Intentionally left blank]

 

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

 

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

 

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

 

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

 

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

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

	
   

  	
  HPSC BRAVO FUNDING, LLC, as Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rene Lefebvre

  	
   

  
	
   

  	
  Name: Rene Lefebvre

  
	
   

  	
  Title: 
  Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MBIA INSURANCE CORPORATION, as

  Collateral Agent and as Insurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Glenn H. Roder

  	
   

  
	
   

  	
  Name: Glenn H. Roder

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
  Agreed and Acknowledged:

  	
   

  
	
   

  	
   

  
	
  MBIA INSURANCE
  CORPORATION,

  as a Managing Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Andrew Laterza

  	
   

  	
   

  
	
  Name: Andrew P.
  Laterza

  	
   

  
	
  Title:   Vice
  President

  	
   

  
	
   

  	
   

  
	
  MERRILL LYNCH
  COMMERCIAL

  FINANCE CORP., as a Managing Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Joseph Magnus

  	
   

  	
   

  
	
  Name: Joseph
  Magnus

  	
   

  
	
  Title:   Director

  	
   

  
								

 

Signature Page to Amendment No. 2 to Lease
Receivables Purchase AgreementExhibit 10.5

 

EXECUTION DRAFT

 

 

 

BACK-UP SERVICING AGREEMENT

 

by and among

 

 

HPSC BRAVO FUNDING, LLC, 

as Seller,

 

 

HPSC, INC., 

as Servicer,

 

 

TRIPLE-A ONE FUNDING
CORPORATION,

as a Purchaser,

 

 

MERRILL LYNCH COMMERCIAL
FINANCE CORP.,

as a Purchaser,

 

 

MBIA INSURANCE CORPORATION,

as the Collateral Agent,

 

and

 

BNY ASSET SOLUTIONS LLC, 

as Back-Up Servicer

 

 

Dated as of September 16,
2003

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1 DEFINITIONS

  	
   

  
	
   

  	
   

  
	
   

  	
  Section 1.01  Definitions.

  	
   

  
	
   

  	
  Section 1.02  Interpretive.

  	
   

  
	
   

  	
   

  
	
  ARTICLE 2 REPRESENTATIONS, WARRANTIES AND COVENANTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

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

  	
   

  
	
   

  	
   

  
	
  ARTICLE 3 ADMINISTRATION AND SERVICING OF CONTRACTS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 3.01  Designation
  and Duties of Servicer.

  	
   

  
	
   

  	
  Section 3.02  Back-up Servicer.

  	
   

  
	
   

  	
  Section 3.03  Back-up
  Servicing Fee.

  	
   

  
	
   

  	
  Section 3.04  Indemnity for
  Liability Claims.

  	
   

  
	
   

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

  	
   

  
	
   

  	
   

  
	
  ARTICLE 4 MISCELLANEOUS PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 4.01  Amendment.

  	
   

  
	
   

  	
  Section 4.02  Counterparts.

  	
   

  
	
   

  	
  Section 4.03  Governing Law.

  	
   

  
	
   

  	
  Section 4.04  Waiver of Jury
  Trial.

  	
   

  
	
   

  	
  Section 4.05  Notices.

  	
   

  
	
   

  	
  Section 4.06  Severability
  of Provisions.

  	
   

  
	
   

  	
  Section 4.07  Binding
  Effect.

  	
   

  
	
   

  	
  Section 4.08  Survival of
  Agreement.

  	
   

  
	
   

  	
  Section 4.09  Captions.

  	
   

  
	
   

  	
  Section 4.10  Exhibits.

  	
   

  

 

i

 

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

 

WITNESSETH:

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 1

 

DEFINITIONS

 

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

 

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

 

(a)                    the terms
defined in this Agreement have the meanings assigned to them in this Agreement
and include the plural as well as the singular, and the use of any gender
herein shall be deemed to include the other gender;

 

 

(b)                   accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with GAAP as in effect on the date hereof;

 

(c)                    references
herein to “Articles”, “Sections”, “Subsections”, “Paragraphs” and other
subdivisions without reference to a document are to designated Articles,
Sections, Subsections, Paragraphs and other subdivisions of this Agreement;

 

(d)                   a reference to
a Subsection without further reference to a Section is a reference to
such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;

 

(e)                    the words
“herein”, “hereof”, “hereunder” and other words of similar import refer to this
Agreement as a whole and not to any particular provision; and

 

(f)                      the term
“include” or “including” shall mean without limitation by reason of
enumeration.

 

ARTICLE 2

 

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

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

 

(a)                    The Back-up
Servicer is a Delaware limited liability company duly organized, validly
existing, and in good standing under the laws of the State of Delaware.

 

(b)                   The Back-up
Servicer has full power, authority and legal right to execute, deliver, and
perform this Agreement, and has taken all necessary action to authorize the
execution, delivery, and performance by it of this Agreement.

 

(c)                    The execution,
delivery and performance by the Back-up Servicer of this Agreement and any
other documents and transactions in connection herewith to which the Back-up
Servicer is party do not and will not (i) violate any of the provisions of the
organizational documents of the Back-up Servicer, (ii) violate any provision of
any law, governmental rule or regulation currently in effect applicable to the
Back-up Servicer or its properties or by which the Back-up Servicer or its
properties may be bound or affected, (iii) violate any judgment, decree, writ,
injunction, award, determination or order currently in effect applicable to the
Back-up Servicer or its properties or by which the Back-up Servicer or its
properties are bound or affected, (iv) conflict with, or result in a breach of,
or constitute a default under, any of the provisions of any material indenture,
mortgage, deed of trust, contract or other instrument to which the Back-up Servicer
is a party or by which it is bound or (v) result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of any such
indenture, mortgage, deed of trust, contract or other instrument.

 

(d)                   The execution,
delivery and performance by the Back-up Servicer of this Agreement does not
require the authorization, consent, or approval of, the giving of notice to,
the

 

2

 

filing or registration with, or the taking of
any other action in respect of, any governmental authority or agency regulating
the banking and corporate trust activities of the Back-up Servicer.

 

(e)                    This Agreement
has been duly executed and delivered by the Back-up Servicer and constitutes
the legal, valid, and binding agreement of the Back-up Servicer, enforceable in
accordance with its terms subject, as to the enforcement of remedies, to
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting the enforceability of creditors’ rights generally applicable in the
event of the bankruptcy, insolvency or reorganization of the Back-up Servicer
and to general principles of equity.

 

(f)                      There is no
pending or, to the best of the Back-up Servicer’s knowledge, threatened action,
suit, proceeding or investigation before any court, administrative agency,
arbitrator or governmental body against or affecting the Back-up Servicer
which, if decided adversely, would materially and adversely affect (i) the
condition (financial or otherwise), business or operations of the Back-up
Servicer, (ii) the ability of the Back-up Servicer to perform its obligations
under, or the validity or enforceability of, this Agreement or any other
documents or transactions contemplated hereunder, (iii) any Purchased Assets
or title of the Collateral Agent or any Purchaser to any Purchased Assets or
(iv) the Collateral Agent’s ability to foreclose or otherwise enforce its liens
on the Receivables.

 

ARTICLE 3

ADMINISTRATION AND SERVICING OF
RECEIVABLES

 

Section 3.01                  Designation
and Duties of Servicer.

 

(a)                    The parties
acknowledge and agree that the servicing, administering and collection of the
Purchased Receivables and the other Purchased Assets shall be conducted by the
“Servicer” designated by the Collateral Agent from time to time in accordance
with Section 6.01 of the LRPA.

 

(b)                   Servicer
Assistance.  The Servicer shall make
reasonable efforts to cooperate with the Back-up Servicer to enable the Back-up
Servicer to perform its duties hereunder. 
The Servicer shall be required to provide to the Back-up Servicer the
following: (i) information regarding the Collections and the Receivables on a
daily basis, (ii) a weekly data tape with respect to the Receivables, (iii)
each Settlement Report as required pursuant to Section 3.02 below,
together with a monthly data tape with respect to the Receivables, (iv) a copy
of the Servicer’s current Credit and Collection Policy, as amended from time to
time, and (v) such periodic UCC and tax information as it may require from time
to time, or access to the Servicer’s third party service providers in such
respects.

 

Section 3.02                  Back-up
Servicer. 

 

(a)                    The parties
hereby appoint BNY ASSET SOLUTIONS LLC to act as Back-up Servicer with respect
to the Purchased Receivables and the other Purchased Assets.

 

(b)                   Prior to
September 17, 2003, the Back-up Servicer shall perform the following
duties and obligations (so long as the Back-up Servicer has not been designated
as successor Servicer):

 

3

 

(i)                                On
or prior to the 17th day of the month immediately preceding each related
Settlement Date; provided that if in any month such day is not a
Business Day, the first Business Day after such 17th day of the month (each
such day, a “Determination Date”), the Back-up Servicer shall review the
summary and settlement report worksheets contained in the Settlement Report and
will attempt to verify that the correct balances have been inserted based
solely on the formulas contained in the Settlement Report.  The Back-up Servicer shall not be required
to review or verify any other information contained in the Settlement
Report.  The Back-up Servicer shall
notify the Servicer in writing of any disagreements with the summary and
settlement report worksheets in the Settlement Report based on such review not
later than the 2nd Business Day preceding the related Settlement
Date to the extent such Settlement Report was received on or prior to the 17th
day of the month immediately preceding the related Settlement Date and as soon
as practicable if it is received after such date.

 

(ii)                             If
the Servicer disagrees with the notice provided under paragraph (i) above
by the Back-up Servicer or if the Servicer has not reconciled such discrepancy,
the Back-up Servicer agrees to confer with the Servicer to resolve such
disagreement as promptly as practicable and shall settle such discrepancy with
the Servicer if possible, and notify the Purchasers and the Collateral Agent in
writing of the resolution thereof.  The
Servicer hereby agrees to cooperate at its own expense with the Back-up
Servicer in reconciling any discrepancies therein.  If after the notification provided under paragraph (i) above
by the Back-up Servicer and prior to the related Settlement Date, such
discrepancy is not resolved, the Back-up Servicer shall promptly notify in
writing the Purchasers and the Collateral Agent of the continued existence of
such discrepancy.  Following receipt of
such notice by the Purchasers and the Collateral Agent, the Servicer shall
deliver to the Purchasers, the Collateral Agent and the Back-up Servicer no
later than two Business Days after such receipt, a certificate describing the
nature and amount of such discrepancy and the actions the Servicer proposes to
take with respect thereto.

 

(c)                    From September 17,
2003 and thereafter, the Back-up Servicer, prior to becoming the successor
Servicer, shall perform the following duties and obligations, and, to the
extent applicable to it, the Servicer agrees as follows:

 

(i)                                The
Back-up Servicer shall accurately record the Purchased Receivables and other
Purchased Assets in its records upon receipt of such information from the
Servicer.

 

(ii)                             Promptly
on receipt of the daily information received from the Servicer in respect of
the Collections and the Accounts, the Back-up Servicer shall record such
information in its records.

 

(iii)                          Promptly
on receipt of the weekly data tape received from the Servicer with respect to
the Purchased Receivables, the Back-up Servicer shall review such data tape and
attempt to reconcile the Outstanding Balances with those in its records.

 

(iv)                         As soon
as practicable following each Determination Date (but in no event later than 2
Business Days following such Determination Date), the Back-up Servicer shall
review the summary and settlement report worksheets contained in the Settlement
Report

 

4

 

and will verify that the correct balances have been inserted based
solely on the formulas contained in the Settlement Report.  As soon as practicable following each
Determination Date (but in no event later than 2 Business Days following such
Determination Date), the Back-up Servicer shall review the monthly data tape
provided by the Servicer with respect to the Receivables.

 

(v)                            The
Back-up Servicer shall notify the Servicer, the Collateral Agent and the
Purchasers in writing of any disagreements with the summary and settlement
report worksheets in the Settlement Report based on such review or of any
discrepancies with respect to the monthly data tape not later than the third
Business Day preceding the related Settlement Date to the extent such
Settlement Report or monthly data tape was received on or prior to the related
Determination Date and as soon as practicable if it is received after such date.

 

(vi)                         If the
Servicer disagrees with the notice provided under paragraph (v) above by the
Back-up Servicer or if the Servicer has not reconciled such discrepancy, the
Back-up Servicer agrees to confer with the Servicer to resolve such
disagreement as promptly as practicable and shall settle such discrepancy with
the Servicer if possible, and notify the Collateral Agent and the Purchasers in
writing of the resolution thereof.  The
Servicer hereby agrees to cooperate at its own expense with the Back-up Servicer
in reconciling any discrepancies therein. 
If after the notification provided under paragraph (v) above by the
Back-up Servicer and prior to the related Settlement Date, such discrepancy is
not resolved, the Back-up Servicer shall promptly notify in writing the
Purchasers and the Collateral Agent of the continued existence of such
discrepancy.  Following receipt of such
notice by the Purchasers and the Collateral Agent, the Servicer shall deliver
to the Purchasers, the Collateral Agent and the Back-up Servicer no later than
two Business Days after such receipt, a certificate describing the nature and
amount of such discrepancy and the actions the Servicer proposes to take with
respect thereto.

 

(vii)                      On a
quarterly basis, beginning on the Settlement Date occurring in
January 2004, the Back-up Servicer shall prepare a duplicate Settlement
Report for the prior month from the Back-up Servicer’s records.  Such duplicate Settlement Report shall be
delivered to the Collateral Agent on the Settlement Date.

 

(d)                   The Back-up
Servicer undertakes to perform only such duties and obligations as are
specifically set forth in this Agreement and the LRPA, it being expressly
understood by all parties hereto that there are no implied duties or
obligations of the Back-up Servicer hereunder. 
Without limiting the generality of the foregoing, the Back-up Servicer,
except as expressly set forth herein, shall have no obligation to supervise,
verify, monitor or administer the performance of the Servicer.  The Back-up Servicer shall have no liability
for any act or omission of the Servicer. 
Neither the Back-up Servicer nor any of its officers, directors,
employees or agents shall be liable, directly or indirectly, for any damages or
expenses arising out of the services performed under this Agreement other than
damages or expenses which result from the gross negligence or willful
misconduct of it or them.

 

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

 

5

 

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

 

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

 

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

 

(a)                    Upon
termination of the Servicer pursuant to Section 6.01 of each of the Sale
Agreement and the LRPA or the Servicer’s resignation pursuant to
Section 6.09 of each of the Sale Agreement and the LRPA, the Back-up
Servicer shall be the successor in all respects to the Servicer in its capacity
as servicer under the Sale Agreement and the LRPA (including the right to
withdraw funds from the Collection Account to the extent permitted under
Section 6.11 of the LRPA), and shall be subject to all the
responsibilities, duties and liabilities of the Servicer pursuant to each of
the Sale Agreement and the LRPA; provided, however, that BNY
Asset Solutions LLC, shall not be responsible for, and shall have no liability
with respect to, the acts or omissions of the Servicer or any prior servicer
occurring prior to the time that BNY Asset Solutions LLC becomes the Servicer
under the Sale Agreement and the LRPA; and, provided further, that
before becoming subject to all the responsibilities, duties and liabilities of
the Servicer under the Sale Agreement and the LRPA, the Back-up Servicer may
require that satisfactory indemnity or other security be furnished to protect
it against all liability, except liability which is adjudicated to have
resulted from its gross negligence or willful misconduct.  As compensation for its activities as
Servicer, the Back-up Servicer shall be entitled to the Servicing Fee, payable
out of the Collection Account.

 

6

 

(b)                   If the Back-up
Servicer shall become the Servicer under the Sale Agreement and the LRPA, the
Back-up Servicer shall service and administer the Purchased Receivables and the
other Purchased Assets and perform all of its duties thereunder in accordance
with customary and usual procedures employed by institutions servicing
commercial loans, which institutions are considered prudent by the Back-up
Servicer, and in accordance with the Back-up Servicer’s own customary
practices, or if a higher standard, the highest degree of skill and attention
that the Back-up Servicer exercises with respect to contracts comparable to the
Contracts that the Back-up Servicer services for itself (the “Servicing
Standard”). Notwithstanding any
contrary provision contained herein, for so long as the Back-Up Servicer is
acting as Servicer, its responsibilities as Servicer shall be deemed to have
been discharged it if has complied with the Servicing Standard in the
performance of such responsibilities.

 

(c)                    BNY Asset
Solutions LLC may, if for any reason BNY Asset Solutions LLC shall be unwilling
to act as Back-up Servicer, or shall, if it shall be legally unable so to act,
appoint, or petition a court of competent jurisdiction to appoint, any
established financial institution reasonably acceptable to the Purchasers and
the Collateral Agent, whose regular business shall include the servicing of
contracts comparable to the Purchased Receivables, as the successor to the
Servicer under the LRPA.  BNY Asset
Solutions LLC shall act as Back-up Servicer until a successor is appointed in
accordance herewith.  In connection with
such appointment, the Collateral Agent may make such arrangements for the
compensation of such successor, out of payments on the Purchased Receivables,
as it and such successor shall agree; provided, however, that the
Back-Up Servicing Fee shall not be in excess of the rate set forth in
Section 3.03 above unless approved in writing by the Purchasers and the
Collateral Agent.

 

(d)                   If the Back-up
Servicer becomes the successor Servicer, it may at any time resign and be
discharged from the trusts hereby created by giving at least 60 days’ written
notice thereof to the Purchasers and the Collateral Agent, which resignation
will not become effective until such time as a successor Servicer has been
appointed in accordance with the provisions of Section 6.01 of the LRPA
and this Section 3.05(d).  Upon
receiving such notice of resignation, the Collateral Agent shall promptly
appoint a successor Servicer, acceptable to the Purchasers, by written
instrument, in duplicate, one copy of which instrument shall be delivered to
the resigning Servicer and one copy to the successor Servicer.  If no successor Servicer shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the Collateral Agent shall petition any court of
competent jurisdiction for the appointment of a successor Servicer.

 

(e)                    If the Back-up
Servicer is acting as Servicer, the Back-up Servicer will indemnify, defend and
hold harmless the Seller, the former Servicer, the Purchasers and the Collateral
Agent against any and all costs, losses, liabilities, obligations, expenses,
claims, damages, injuries, penalties, actions, suits and judgments arising out
of (i) a breach of the representations and warranties of the Back-up Servicer
hereunder or (ii) arising out of the willful misconduct or gross negligence of
the Back-up Servicer in performing its duties as successor Servicer hereunder
provided, however, that the Back-up Servicer shall have no obligation to
indemnify any Person for any cost, loss, liability, obligation, expense, claim,
damage, injury, penalty, action, suit or judgment arising out of the gross
negligence or willful misconduct of such Person or for any loss or damage which
is in the nature of consequential or indirect loss or damage.

 

7

 

(f)                      Indemnification
under this Section 3.05 shall include, without limitation, reasonable fees
and expenses of counsel and expenses of litigation reasonably incurred.  If the Back-up Servicer, acting as successor
Servicer has made any indemnity payments to the Seller, the Purchasers or the
Collateral Agent pursuant to this Section 3.05 and such party thereafter
collects any of such amounts from others, such party will promptly repay such
amounts collected to the Back-up Servicer, without interest.

 

(g)                   Notwithstanding
any other provision of this Agreement, in the event that BNY Asset Solutions
LLC acts as the servicer in accordance with Article VI of the LRPA, it
shall be entitled to terminate any existing subservicing agreements and perform
the duties required of the Servicer by entering into one or more subservicing
agreements with a subservicer selected by it in accordance with the Servicing
Standard.  If so directed by the Back-up
Servicer, the Collateral Agent shall pay any subservicing fees directly to any
such subservicer engaged by the Back-up Servicer, solely with funds available
to pay the Servicing Fee pursuant to Section 6.11 of the LRPA.

 

ARTICLE 4

 

MISCELLANEOUS
PROVISIONS

 

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

 

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

 

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

 

Section 4.04                  Waiver
of Jury Trial.  The parties hereto
each hereby waive any right to have a jury participate in resolving any
dispute, sounding in contract, tort, or otherwise arising out of, connected
with, related to, or in connection with this agreement.  Instead, any dispute resolved in court will
be resolved in a bench trial without a jury.

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

 

	
   

  	
  HPSC BRAVO FUNDING, LLC, as Seller

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ Rene Lefebvre

  	
   

  
	
   

  	
   

  	
  Name: Rene Lefebvre

  
	
   

  	
   

  	
  Title: 
  Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HPSC, INC., as Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ Rene Lefebvre

  	
   

  
	
   

  	
   

  	
  Name: Rene Lefebvre

  
	
   

  	
   

  	
  Title: 
  CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MERRILL
  LYNCH COMMERCIAL FINANCE CORP.,

  as a Purchaser

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ Andrew J. Coon

  	
   

  
	
   

  	
   

  	
  Name: Andrew J. Coon

  
	
   

  	
   

  	
  Title: 
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TRIPLE-A ONE
  FUNDING CORPORATION, as a

  Purchaser

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ John Dare

  	
   

  
	
   

  	
   

  	
  Name: John Dare

  
	
   

  	
   

  	
  Title: 
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MBIA
  INSURANCE CORPORATION, as Collateral

  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ Glenn H. Roder

  	
   

  
	
   

  	
   

  	
  Name: Glenn H. Roder

  
	
   

  	
   

  	
  Title: 
  Vice President

  
					

 

10

 

	
   

  	
  BNY ASSET
  SOLUTIONS LLC, as Back-up Servicer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/ Michael F.
  Cocanougher

  	
   

  
	
   

  	
   

  	
  Name: Michael F. Cocanougher

  
	
   

  	
   

  	
  Title: 
  Managing Director

  

 

 

[Signature Page to
Back-up Servicing Agreement]

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