SECURITY AGREEMENT
Exhibit 10.5
This SECURITY AGREEMENT (this “Agreement”) is made as of the 2nd day of August,
2007, by MICROFINANCIAL INCORPORATED, a Massachusetts corporation (“MFI”), and its
Subsidiaries from time to time party hereto (together with MFI, each an “Obligor”, and
collectively, the “Obligors”), in favor of SOVEREIGN BANK, in its capacity as Agent (in
such capacity, the “Agent”) for the Secured Parties (as defined below).
WITNESSETH:
WHEREAS, TimePayment Corp. (the “Borrower”), the Agent and the Lenders intend to enter
into a Credit Agreement, dated as of even date herewith (as amended, modified, supplemented or
restated from time to time, the “Credit Agreement”);
WHEREAS, MFI is executing and delivering its Guaranty of even date herewith in favor of the
Agent (the “Guaranty”) guarantying all Obligations;
WHEREAS, it is a condition precedent to the Agent and the Lenders entering into the Credit
Agreement and making extensions of credit thereunder that each Obligor execute and deliver this
Agreement and grant the security interests herein provided;
NOW, THEREFORE, in order to induce the Agent and the Lenders to enter into the Credit
Agreement and the Lenders to make or extend to the Borrower one or more loans, advances or other
extensions of credit upon the terms and subject to the conditions set forth therein, and in
consideration thereof, and for other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, each Obligor agrees as follows:
Section 1. Definitions. The following capitalized terms used herein or in any
certificate, report or other document delivered pursuant hereto shall have the meanings assigned to
them below. Unless otherwise defined herein, the terms defined in the Credit Agreement are used
herein, and in any certificate, report or other document delivered pursuant hereto, as defined in
the Credit Agreement. Except as otherwise defined herein or in the Credit Agreement, terms defined
in the Uniform Commercial Code and used herein shall have the meanings set forth therein;
provided, however, that the term “instrument” shall be such term as defined in
Article 9 of the Uniform Commercial Code rather than Article 3 of the Uniform Commercial Code.
Accounts. All rights of each Obligor to payment of a monetary obligation (i) for
property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii)
for services rendered or to be rendered, (iii) for a secondary obligation incurred or to be
incurred, or (iv) arising out of the use of a credit or charge card or information contained on or
for use with the card; and all sums of money and other proceeds due or becoming due thereon, all
notes, bills, drafts, acceptances, instruments, documents and other debts, obligations and
liabilities, in whatever form, owing to such Obligor with respect thereto, all guarantees and
security therefor, and each Obligor’s rights pertaining to and interest in such property, including
the right of stoppage in transit, replevin or reclamation; all chattel paper; all amounts due from
Affiliates of each Obligor; all insurance proceeds; all other rights and claims to the payment of
money, under
contracts or otherwise; and all other property constituting “accounts” as such term is defined
in the Uniform Commercial Code.
Collateral. All property belonging to each Obligor or in which such Obligor has any
rights, of every kind and description, tangible and intangible, whether now owned or existing or
hereafter arising or acquired; including, without limitation, all Accounts, Equipment, General
Intangibles, Inventory and Investment Property, together with all goods, instruments (including
promissory notes), documents of title, policies and certificates of insurance, commercial tort
claims, chattel paper (whether tangible or electronic), deposit accounts, letter of credit rights
(whether or not the letter of credit is evidenced by a writing), and other property owned by each
Obligor or in which such Obligor has an interest; and including, without limitation, any cash that
is now or may hereafter be in the possession, custody or control of the Agent or the Secured
Parties or their participants or assigns for any purpose; any and all additions, substitutions,
replacements and accessions to the foregoing and all supporting obligations relating to the
foregoing; and all Proceeds and products of any of the foregoing.
Collateral Account. See Section 3.9(a).
Encumbrance. Any mortgage, pledge, security interest, lien or other charge or
encumbrance of any kind or nature (including, without limitation, the lien or retained security
title of a conditional vendor) upon or with respect to any property.
Equipment. All machinery, equipment and fixtures, furniture, furnishings, trade
fixtures, specialty tools and parts, motor vehicles and materials handling equipment of each
Obligor, together with each Obligor’s interest in, and right to, any and all manuals, computer
programs, data bases and other materials relating to the use, operation or structure of any of the
foregoing; and all other property constituting “equipment” as such term is defined in the Uniform
Commercial Code.
General Intangibles. All rights with respect to trademarks, service marks, trade
names, trade styles, patents, copyrights, mask works, trade-secrets information, all intellectual
property listed on Exhibit B hereto, other proprietary rights and rights to prevent others
from doing acts that constitute unfair competition with any Obligor or misappropriation of its
property, including without limitation any sums (net of expenses) that such Obligor may receive
arising out of any claim for infringement of its rights in any of the foregoing, and all rights of
each Obligor under contracts to enjoy performance by others or to be entitled to enjoy rights
granted by others, including without limitation any licenses; all payment intangibles; all
obligations and indebtedness of any kind (other than Accounts) owing to each Obligor from whatever
source arising; all contract rights; all rights of each Obligor as a xxxxxx; all tax refunds; all
right, title and interest of each Obligor in and to all software, documents, books, records, files
and other information (on whatever medium recorded, and including without limitation computer
programs, tapes, discs, data processing software and related property and rights) maintained by
each Obligor that reflect the conduct of such Obligor’s business, such as financial records,
marketing and sales records, research and development records, and design, engineering and
manufacturing records; all rights under service bureau service contracts; all computer data and the
concepts and ideas on which said data is based; all developmental ideas and concepts, papers,
plans, schematics, drawings, blueprints, sketches and documents; all data bases; all customer
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lists; and all other property constituting “general intangibles” as such term is defined in
the Uniform Commercial Code.
Inventory. All goods, merchandise and other personal property (including warehouse
receipts and other negotiable and non-negotiable documents of title covering any such property) of
each Obligor that are held for sale, lease or other disposition or to be furnished under contracts
of service (or that are so furnished), or for display or demonstration, or leased or consigned, or
that are raw materials, piece goods, work-in-process, finished goods or supplies or other materials
used or consumed or to be used or consumed in such Obligor’s business, whether in transit or in the
possession of such Obligor or another, including without limitation all goods covered by purchase
orders and contracts with suppliers and all goods billed and held by suppliers and goods located on
the premises of any carriers, forwarding agents, truckers, warehousemen, vendors, selling agents or
other third parties; all proprietary rights, patents, plans, drawings, diagrams, schematics,
assembly and display materials relating to any of the foregoing; and all other property
constituting “inventory” as such term is defined in the Uniform Commercial Code.
Investment Property. All of the securities (whether certificated or uncertificated)
of each Obligor, including without limitation all stocks, bonds, Treasury bills, certificates of
deposit, mutual or money market fund shares, security entitlements, securities accounts, commodity
contracts and commodity accounts; and all sums due or to become due on any of the foregoing, and
all securities, instruments or other property purchased or acquired as a result of the investment
and reinvestment thereof as hereinafter provided, and all other property constituting “investment
property” as such term is defined in the Uniform Commercial Code.
Lease. Any lease agreement, installment sales contract or other agreement (including
any and all schedules, supplements and amendments thereon and modifications thereof) entered into
by an Obligor as lessor or seller with respect to Equipment.
Perfection Certificate. A certificate signed by a Responsible Officer of each Obligor
in the form attached hereto as Exhibit A.
Proceeds. All proceeds of and all other profits, rentals and receipts, in whatever
form, received or arising from any Collateral, including: whatever is received or acquired upon the
sale, lease, exchange, assignment, licensing or other disposition of any Collateral; whatever is
received, collected on or distributed on account of any Collateral; all rights arising out of any
Collateral; all claims arising out of the loss, nonconformity, interference with the use of,
defects or infringement of rights in, or damage to or destruction of, any Collateral; any insurance
payable by reason of the loss or nonconformity of, defects or infringement of rights in, or damage
to or destruction of, any Collateral; any unearned premiums with respect to policies of insurance
in respect of any Collateral; any condemnation or requisition payments with respect to any
Collateral; and all other property constituting “proceeds” as such term is defined in the Uniform
Commercial Code; in each case whether now existing or hereafter arising.
Secured Obligations. All Obligations (as defined in the Credit Agreement) and all
obligations of the Obligor hereunder and under the Guaranty.
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Secured Parties. Collectively, the Agent, the Lenders and any other Persons the
Secured Obligations owing to which are or are purported to be secured by the Collateral under the
terms of the Security Documents.
Security Interests. The security interests and liens granted pursuant to Section 2
hereof, as well as all other security interests created or assigned as additional security for the
Secured Obligations pursuant to this Agreement.
Uniform Commercial Code. The Uniform Commercial Code as in effect in The Commonwealth
of Massachusetts from time to time, provided, that if by reason of mandatory provisions of
law, perfection, or the effect of perfection or nonperfection, of the Security Interests in any
Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than
Massachusetts, “Uniform Commercial Code” means the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of
perfection or non-perfection, as the case may be.
Section 2. Grant.
(a) To secure the full and punctual payment and performance of the Secured Obligations,
each Obligor hereby assigns and pledges to the Agent for the benefit of the Secured Parties
all of its respective rights, title and interest in, and grants to the Agent for the benefit
of the Secured Parties a continuing security interest in, the Collateral of such Obligor.
The Security Interests are granted as security only and shall not subject the Agent or any
Secured Party to, or transfer to the Agent or any Secured Party or in any way affect or
modify, any obligation or liability of any Obligor with respect to any of the Collateral or
any transaction in connection therewith.
(b) Contemporaneously with the execution of this Agreement, and from time to time
thereafter, each Obligor (i) shall deliver to the Agent such assignments, intellectual
property mortgages and assignments, instruments and notices and assignments under the
Assignment of Claims Act of 1940, as amended, as may reasonably be deemed necessary or
desirable by the Agent to perfect its Security Interest in the Collateral and (ii) authorizes
the Agent to file such Uniform Commercial Code financing statements and amendments as may be
deemed necessary or desirable by the Agent to perfect its Security Interest in the
Collateral, which financing statements may identify the collateral as being all assets of the
Obligor (or words of similar effect) or of equal or lesser scope or with lesser or greater
detail and may be filed by the Agent at any time in any jurisdiction and may be signed by the
Agent on behalf of the Borrower.
Section 3. Representations, Warranties and Covenants. The Obligors hereby, jointly
and severally, make the following representations and warranties, and agree to the following
covenants, each of which representations, warranties and covenants shall be continuing and in force
so long as this Agreement is in effect:
3.1 Name; Location; Changes.
(a) The name of each Obligor set forth in Section 1(a) of its Perfection Certificate is
the true and correct legal name of such Obligor, and except as otherwise
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disclosed to the Agent in the Perfection Certificate, such Obligor has not done business
as or used any other name.
(b) The type and state of organization of each Obligor set forth in Sections 1(c) and
1(d) of its Perfection Certificate is the true and correct type and state of organization of
such Obligor and the organizational identification number set forth in Section 1(e) of its
Perfection Certificate is the true and correct organizational identification number issued to
such Obligor by its state of organization (or if such state did not issue such Obligor an
organizational identification number such Obligor has so indicated in Section 1(e) of its
Perfection Certificate) and such Obligor is duly organized and in good standing in such state
on the date hereof.
(c) The address of each Obligor set forth in Section 2(a) of its Perfection Certificate
is such Obligor’s chief executive office and the place where its business records are kept.
Except as disclosed on the Perfection Certificate, all business records of such Obligor are
located at such chief executive office.
(d) No Obligor will change its name, identity or organizational structure, nature or
jurisdiction of organization, or chief executive office or place where its business records
are kept, or merge into or consolidate with any other entity, unless such Obligor shall have
given the Agent at least 30 days’ prior written notice thereof and such Obligor shall have
delivered to the Agent such new documents as may be necessary or reasonably required by the
Agent to ensure the continued perfection and priority of the Security Interests.
(e) Each Obligor has delivered a Perfection Certificate to the Agent on the date hereof.
All information set forth in each Perfection Certificate is true and correct in all material
respects. Each Obligor agrees to supplement its Perfection Certificate promptly after
obtaining information which would require a correction or addition thereto.
3.2 Ownership of Collateral; Absence of Liens and Restrictions. Each Obligor is, and
in the case of property acquired after the date hereof, will be, the sole legal and equitable owner
of the Collateral of such Obligor, holding good and marketable title to the same free and clear of
all Encumbrances except for the Security Interests and Permitted Encumbrances, and has good right
and legal authority to assign, deliver, and create a security interest in such Collateral in the
manner herein contemplated. The Collateral is genuine and is what it is purported to be. The
Collateral is not subject to any restriction that would prohibit or restrict the assignment,
delivery or creation of the security interests contemplated hereunder.
3.3 First Priority Security Interest. This Agreement creates a valid and continuing
lien on and security interest in the Collateral, and upon the filing of Uniform Commercial Code
financing statements in the appropriate filing offices of each Obligor’s state of organization and
where Collateral consisting of fixtures is located, in each case as identified in such Obligor’s
Perfection Certificate, the Security Interests will be perfected (except to the extent a security
interest may not be perfected by filing under the Uniform Commercial Code) prior to all other
Encumbrances (other than the Permitted Encumbrances), and are enforceable as such against creditors
of each of the Obligors, any owner of the real property where any of the
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Collateral is located, any purchaser of such real property and any present or future creditor
obtaining a lien on such real property. The Agent acknowledges that the attachment of its security
interest in any commercial tort claim of any Obligor as original collateral is subject to such
Obligor’s compliance with Section 5(e).
3.4 No Conflicts. Neither any Obligor nor any of their respective predecessors has
performed any acts or is bound by any agreements which might prevent the Agent or the Secured
Parties from enforcing the Security Interests or any of the terms of this Agreement or which would
limit the Agent or the Secured Parties in any such enforcement. No financing statement under the
Uniform Commercial Code of any state or other instrument evidencing a lien that names any Obligor
as debtor is on file in any jurisdiction and no Obligor has signed any such document or any
agreement authorizing the filing of any such financing statement or instrument, except (i) as
specifically disclosed in a Perfection Certificate, (ii) with respect to Permitted Encumbrances and
(iii) with respect to which the secured party has authorized in writing, on or before the date
hereof, the filing of a termination statement.
3.5 Sales and Further Encumbrances. No Obligor will sell, grant, assign or transfer
any interest in, or permit to exist any Encumbrance on, any of the Collateral of such Obligor,
except the Security Interests, Permitted Encumbrances and as permitted by the Credit Agreement.
3.6 Fixture Conflicts; Required Waivers. Each Obligor intends, to the extent not
inconsistent with applicable law, that the Collateral of such Obligor shall remain personal
property of such Obligor and shall not be deemed to be a fixture irrespective of the manner of its
attachment to any real estate. Each Obligor will deliver to the Agent such disclaimers, waivers,
or other documents as the Agent may reasonably request to confirm the foregoing, executed by each
person having an interest in such real estate.
3.7 Validity of Accounts. Each Account arises and will arise in the ordinary course
of an Obligor’s business out of or in connection with the sale or lease of goods or the rendering
of services and is and shall be a valid, legal and binding obligation of the party purported to be
obligated thereon, enforceable in accordance with its terms and free of material setoffs, defenses
or counterclaims. No Obligor has knowledge of any fact that would materially impair the validity
or collectibility of any of the Accounts.
3.8 Maintenance of Books, Records and Leases; Legends; Verification of Accounts; Computer
Access.
(a) Each Obligor shall keep complete and accurate books and records relating to the
Collateral, including without limitation all Leases, and upon request of the Agent shall
stamp, or otherwise xxxx or place legends on, such books and records, including without
limitation all Leases, in such manner as the Agent may reasonably request in order to reflect
the Security Interests.
(b) Each Obligor will allow the Agent and its designees to examine, inspect and make
extracts from or copies of such Obligor’s books and records, inspect the Collateral and
arrange for verification of Accounts directly with any account debtors or by
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other methods, under reasonable procedures established by the Agent after consulting
with the Obligor. Such access to such Obligor’s books and records shall include access to
all computer files, systems and servers maintained by such Obligor.
(c) Each Obligor will maintain its original documents of all Leases forming part of the
Collateral in a separate, fireproof cabinet on the Obligor’s premises or at a third-party
storage site reasonably acceptable to the Agent. Upon request of the Agent, each Obligor
will deliver to the Agent or a third-party custodian designated by the Agent the original
documents of any or all Leases.
3.9 Collection and Delivery of Proceeds.
(a) Each Obligor will diligently collect all of its Accounts until the Agent exercises
its rights to collect the Accounts pursuant to this Agreement. Upon the occurrence and
during the continuance of any Event of Default, each Obligor shall deliver daily to the
account at the Agent designated by the Agent for receipt of such collections (the
“Collateral Account”) all Proceeds of Accounts and Inventory received by such Obligor
and all other cash Proceeds of Collateral regardless of the source or nature of such
Proceeds, whether in the form of wire or ACH transfers, cash, checks, notes or other
instruments, in the identical form received (properly endorsed or assigned where required to
enable the Agent to collect same), and until such delivery such Obligor shall hold such
Proceeds in trust for and as the property of the Agent and shall not commingle such Proceeds
with any of such Obligor’s other funds or property. All deposits in the Collateral Account
shall constitute Proceeds of Collateral and shall not constitute payment of the Secured
Obligations. If any Accounts are at any time evidenced by tangible chattel paper, promissory
notes, trade acceptances or other instruments, upon the occurrence and during the continuance
of any Event of Default, each Obligor will, upon the request of the Agent, promptly deliver
the same to the Agent appropriately endorsed to the Agent’s order and, regardless of the form
of such endorsement, each Obligor hereby waives presentment, demand, notice of dishonor,
protest, notice of protest and all other notices with respect thereto.
(b) Each Obligor shall, at the request of the Agent at any time upon the occurrence and
during the continuance of an Event of Default, notify its account debtors, and the Agent may
itself, after the occurrence and during the continuance of an Event of Default notify such
Obligor’s account debtors directly, of the Security Interest of the Agent in any Account and
that payment thereof is to be made directly to the Agent.
(c) The Agent shall credit amounts received by the Agent pursuant to this Section 3.9 as
of the second Business Day after receipt thereof by the Agent. Such credit shall be
conditional upon final payment in cash or solvent credits of the items giving rise thereto.
3.10 [Intentionally Omitted].
3.11 Insurance. Each Obligor will keep the Collateral of such Obligor insured at all
times by insurance in such form and amounts as may be reasonably satisfactory to the
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Agent, and in any event (without specific request by the Agent) will insure such Collateral
against physical hazard on an “all risks” basis, including fire, theft, and, in the case of motor
vehicles, collision. Such insurance shall be with insurance companies reasonably satisfactory to
the Agent and shall be payable to the Agent as loss payee and such Obligor, as their respective
interests may appear. Such insurance shall provide for not less than 30 days’ prior notice of
cancellation, change in form or non-renewal to the Agent, and shall insure the interest of the
Agent regardless of any breach or violation by such Obligor or any other person of the warranties,
declarations or covenants contained in such policies. Each Obligor shall insure the Collateral in
amounts sufficient to prevent the application of any co-insurance provisions. Each Obligor shall
evidence its compliance with the foregoing by delivering a certificate with respect to each policy
concurrently with the execution hereof, annually thereafter, and from time to time upon the request
of the Agent.
3.12 Maintenance and Use; Payment of Taxes. Each Obligor will preserve, protect and
keep the Collateral of such Obligor in good order and repair, will not use the same in violation of
law or any policy of insurance thereon, and will pay promptly when due all taxes and assessments on
such Collateral or on its use or operation, except as otherwise permitted by the Credit Agreement.
3.13 General Intangibles. Each Obligor will apply for, and diligently pursue
applications for, registration of its ownership of the General Intangibles for which registration
is appropriate, and will use such other measures as are appropriate to preserve its rights in its
other General Intangibles. Each Obligor will, at the request of the Agent, retain off-site current
copies of all materials created by or furnished to such Obligor on which is recorded then-current
information about any computer programs or data bases that such Obligor has developed or otherwise
has the right to use from time to time. Such materials shall include, without limitation, magnetic
or other computer media on which object, source or other code is recorded and documentation of
those computer programs or data bases, in the nature of listing printouts, narrative descriptions,
flow diagrams and similar things. Each Obligor will, at the request of the Agent, deliver a set of
such copies to the Agent or a third-party custodian designated by the Agent. Exhibit B
hereto sets forth all United States and foreign trademarks, servicemarks, trade names, trade
styles, patents, copyrights, and all registrations and applications for registration thereof and
all licenses thereof, owned or held by each Obligor.
3.14 Securities, Investment Property. Except upon the occurrence and during the
continuance of an Event of Default, each Obligor shall retain the right to vote any Collateral
consisting of the Investment Property in a manner not inconsistent with the terms of this Agreement
and the Credit Agreement. If such Obligor, as registered holder of such Investment Property,
receives (i) any dividend or other distribution in cash or other property in connection with the
liquidation or dissolution of the issuer of such Investment Property, or in connection with the
redemption or payment of such, or (ii) any stock certificate, option or right, or other
distribution, whether as an addition to, in substitution of, or in exchange for, such Investment
Property, or otherwise, such Obligor agrees to accept the same in trust for the Agent and to
deliver the same forthwith to the Agent or its designee, in the exact form received, with such
Obligor’s endorsement or reassignment when necessary, to be held by the Agent as Collateral. Upon
request of the Agent, each Obligor will (i) deliver all of its Investment Property represented by
certificates, including without limitation all stock of its Subsidiaries, to the Agent
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to hold pursuant to the terms of this Agreement, (ii) register in the name of the Agent or its
designee any uncertificated Investment Property or the Agent’s security interest therein on the
books maintained by or on behalf of the issuer thereof or the depository therefor and (iii) do all
things necessary or desirable, as determined by the Agent, to transfer control over any Investment
Property to the Agent including, but not limited to, registering the Agent as the holder of the
securities entitlement or commodities contract, as appropriate, and entering into any control
agreement, in the form designated by the Agent, pursuant to which the securities intermediary shall
agree that it will comply with the entitlement orders originated by the Agent without further
consent by such Obligor, and entering into any control agreement, in the form designated by the
Agent, pursuant to which the commodity intermediary shall agree that it will apply any value
distributed on account of any commodity contract as directed by the Agent without further consent
by such Obligor.
3.15 Deposit Accounts. Each Obligor shall take all actions necessary or requested by
the Agent to maintain, preserve or protect the rights and interest of the Agent with respect to all
cash deposits of such Obligor and all other Proceeds of Collateral. After the occurrence and
during the continuance of an Event of Default, each Obligor shall not open or maintain any deposit
or other bank account unless such Obligor shall either (a) cause the depositary bank to agree in an
authenticated record to comply at any time with instructions from the Agent to such depositary bank
directing the disposition of funds from time to time credited to such deposit account, without
further consent of such Obligor, or (b) arrange for the Agent to become the customer of the
depositary bank with respect to the depositary account, with such Obligor being permitted, only
with the consent of the Agent, to exercise rights to withdraw funds from such deposit account. The
provisions of this paragraph shall not apply to (i) any deposit account for which such Obligor, the
depositary bank and the Agent have entered into a cash collateral agreement specifically negotiated
among such Obligor, the depositary bank and the Agent for the specific purpose set forth therein,
(ii) deposit accounts for which the Agent is the depositary and (iii) deposit accounts specially
and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or
for the benefit of such Obligor’s salaried employees.
3.16 Letters of Credit Rights. For each letter of credit at any time issued to any
Obligor as beneficiary thereunder, such Obligor shall, at the request of the Agent, pursuant to an
agreement in form and substance satisfactory to the Agent, either (i) arrange for the issuer and
any confirmer of such letter of credit to consent to an assignment to the Agent of the proceeds of
any drawing under the letter of credit or (ii) arrange for the Agent to become the transferee
beneficiary of the letter of credit.
3.17 Electronic Chattel Paper and Transferable Records. For any interest in an
electronic chattel paper or any “transferable record,” as that term is defined in Section 201 of
the federal Electronic Signatures in Global and National Commerce Act, or in Section 16 of the
Uniform Electronic Transactions Act as in effect in any jurisdiction applicable to any Obligor, any
Collateral or any transaction contemplated hereby, the applicable Obligor shall take such action as
the Agent may reasonably request to vest in the Agent control under Section 9-105 of the Uniform
Commercial Code of such electronic chattel paper or control under Section 201 of the federal
Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the
Uniform Electronic Transactions Act of such transferable record.
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3.18 Bailments, Etc. If any Collateral of any Obligor is at any time in the
possession or control of any warehouseman, bailee or the Obligor’s agents or processors, such
Obligor shall, upon request of the Agent, (i) notify such warehouseman, bailee, agent or processor
of the Security Interests and instruct such warehouseman, bailee, agent or processor to hold all
such Collateral for the Agent’s account subject to the Agent’s instructions, (ii) arrange for such
warehouseman, bailee, agent or processor to authenticate a record acknowledging that it holds
possession of the Collateral for the Agent’s benefit, (iii) deliver any negotiable warehouse
receipt, xxxx of lading or other document of title issued with regard to the Collateral to the
Agent appropriately endorsed to the Agent’s order, and (iv) arrange for the issuance in the name of
the Agent, in form reasonably satisfactory to the Agent, any nonnegotiable document of title
covering such Collateral.
3.19 Assignment of Claims Act. If at any time any Accounts of any Obligor arise from
contracts with the United States of America or any department, agency or instrumentality thereof,
such Obligor, upon request of the Agent, shall execute all assignments and take all steps
reasonably requested by the Agent in order that all monies due and to become due thereunder will be
assigned and paid to the Agent under the Assignment of Claims Act of 1940.
3.20 Notes and Instruments. If at any time any amount payable under or in connection
with any of the Collateral is evidenced by any promissory note or other instrument, such note or
instrument, upon the request of the Agent, shall be promptly delivered to the Agent, duly endorsed
in a manner satisfactory to the Agent.
Section 4. Further Assurances. Upon the reasonable request of the Agent, and at the
sole expense of such Obligor, each Obligor will promptly execute and deliver such further
instruments and documents and take such further actions as the Agent may deem desirable to obtain
the full benefits of this Agreement and of the rights and powers herein granted, including, without
limitation, filing of any financing statement, continuation statement, amendment or notice under
the Uniform Commercial Code or other applicable law, execution of assignments or mortgages of
General Intangibles, delivery of appropriate stock or bond powers, and transfer of Collateral
(other than Inventory, Accounts and Equipment) to the Agent’s possession. Each Obligor authorizes
the Agent to file financing statements, amendments and continuation statements naming the Obligor
as debtor in order to perfect its interest in the Collateral without the signature of such Obligor
to the extent permitted by applicable law, and to file a copy of this Agreement in lieu thereof,
and to take any and all actions required by any earlier versions of the Uniform Commercial Code or
by other law, as applicable in any relevant Uniform Commercial Code jurisdiction, or by other laws
applicable in any foreign jurisdiction in order to protect or perfect its Security Interests. Each
Obligor shall provide the Agent with any information the Agent shall reasonably request in
connection with the foregoing, including, without limitation, the type and jurisdiction of
organization of such Obligor, and any organizational identification number issued to such Obligor.
Each Obligor shall also take all actions reasonably requested by the Agent in order to insure the
continued perfection and priority of the Agent’s security interest in any of the Collateral and of
the preservation of its rights therein.
Section 5. Notices and Reports Pertaining to Collateral. Each Obligor will, with
respect to the Collateral:
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(a) promptly furnish to the Agent, from time to time upon request, reports in form and
detail reasonably satisfactory to the Agent;
(b) promptly notify the Agent of any Encumbrance (except Permitted Encumbrances)
asserted against the Collateral, including any attachment, levy, execution or other legal
process levied against any of the Collateral, and of any information received by such Obligor
relating to the Collateral, including the Accounts, the account debtors, or other persons
obligated in connection therewith, that may in any way materially adversely affect the value
of the Collateral or the rights and remedies of the Agent with respect thereto;
(c) deliver to the Agent, as the Agent may from time to time request, delivery
receipts, customers’ purchase orders, shipping instructions, bills of lading and any other
evidence of shipping arrangements;
(d) promptly after the application by such Obligor for registration of any General
Intangibles, as contemplated in Section 3.13, notify the Agent thereof;
(e) promptly upon acquiring any commercial tort claim, notify the Agent in a writing
signed by such Obligor, of the details thereof and grant to the Agent in such writing a
security interest therein and in all the Proceeds thereof, such writing to be in form and
substance satisfactory to the Agent; and
(f) promptly upon receipt of any letter of credit issued to such Obligor as beneficiary
thereunder or upon acquiring an interest in any electronic chattel paper or any “transferable
record,” as that term is defined in Section 201 of the federal Electronic Signatures in
Global and National Commerce Act, or in Section 16 of the Uniform Electronic Transactions
Act, notify the Agent thereof.
Each Obligor authorizes the Agent to destroy all invoices, delivery receipts, reports and
other types of documents and records submitted to the Agent in connection with the transactions
contemplated herein at any time subsequent to 12 months from the time such items are delivered to
the Agent.
Section 6. Agent’s Rights and Remedies in General. So long as any Event of Default
shall have occurred and is continuing:
(a)
(i) the Agent may, at its option, without notice or demand, take immediate
possession of the Collateral, and for that purpose the Agent may, so far as any
Obligor can give authority therefor, enter upon any premises on which any of the
Collateral is situated and remove the same therefrom or remain on such premises and
in possession of such Collateral for purposes of conducting a sale or enforcing the
rights of the Agent;
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(ii) each Obligor will, upon demand, assemble the Collateral and make it
available to the Agent at a place and time designated by the Agent that is reasonably
convenient to both parties;
(iii) the Agent may collect and receive all income and Proceeds in respect of
any Collateral and exercise all rights of each Obligor with respect thereto,
including without limitation the right to exercise all voting and corporate rights at
any meeting of the shareholders of the issuer of any Investment Property and to
exercise any and all rights of conversion, exchange, subscription or any other
rights, privileges or options pertaining to any Investment Property as if the Agent
were the absolute owner thereof, including the right to exchange, at its discretion,
any and all of any securities upon the merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof, all without liability
except to account for property actually received (but the Agent shall have no duty to
exercise any of the aforesaid rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing);
(iv) the Agent may sell, lease or otherwise dispose of any Collateral at a
public or private sale, with or without having such Collateral at the place of sale,
and upon such terms and in such manner as the Agent may determine, and the Agent may
purchase any Collateral at any such sale. Unless such Collateral threatens to
decline rapidly in value or is of the type customarily sold on a recognized market,
the Agent shall send to the Obligor owning such Collateral prior written notice
(which, if given within ten (10) days of any sale, shall be deemed to be reasonable,
provided that the Agent shall use commercially reasonable efforts to provide at least
ten (10) days’ notice to the extent practicable under the circumstances) of the time
and place of any public sale of such Collateral or of the time after which any
private sale or other disposition thereof is to be made. Each Obligor agrees that
upon any such sale such Collateral shall be held by the purchaser free from all
claims or rights of every kind and nature, including any equity of redemption or
similar rights, and all such equity of redemption and similar rights are hereby
expressly waived and released by such Obligor. In the event any consent, approval or
authorization of any governmental agency is necessary to effectuate any such sale,
such Obligor shall execute all applications or other instruments as may be required;
and
(v) in any jurisdiction where the enforcement of its rights hereunder is sought,
the Agent shall have, in addition to all other rights and remedies, the rights and
remedies of a secured party under the Uniform Commercial Code and other applicable
law.
(b) The Agent may perform any covenant or agreement of any Obligor contained herein that
such Obligor has failed to perform and in so doing the Agent may expend such sums as it may
reasonably deem advisable in the performance thereof, including, without limitation, the
payment of any taxes or insurance premiums, payment to obtain a release of an Encumbrance or
potential Encumbrance, expenditures made in defending against any adverse claim and all other
expenditures which the Agent may
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make for the protection of any Collateral or which it may be compelled to make by
operation of law. All such sums and amounts so expended shall be repaid by such Obligor upon
demand, shall constitute additional Secured Obligations and shall bear interest from the date
said amounts are expended at the rate per annum provided in the Credit Agreement to be paid
on Base Rate Loans after the occurrence of an Event of Default. No such performance of any
covenant or agreement by the Agent on behalf of such Obligor, and no such advance or
expenditure therefor, shall relieve such Obligor of any Event of Default under the terms of
this Agreement or the other Loan Documents.
(c) Prior to any disposition of Collateral pursuant to this Agreement the Agent may, at
its option, cause any of the Collateral to be repaired or reconditioned (but not upgraded
unless mutually agreed) in such manner and to such extent as to make it saleable.
(d) The Agent is hereby granted a license or other right to use, without charge, each
Obligor’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names,
trademarks and advertising matter, or any property of a similar nature, relating to the
Collateral, in completing production of, advertising for sale and selling any Collateral; and
each Obligor’s rights under all licenses and all franchise agreements shall inure to the
Agent’s benefit.
(e) Each Obligor recognizes that the Agent may be unable to effect a public sale of all
or a part of the Investment Property by reason of certain prohibitions contained in the
Securities Act of 1933 (as amended from time to time, the “Securities Act”) or the
securities laws of various states (the “Blue Sky Laws”), but may be compelled to
resort to one or more private sales to a restricted group of purchasers who will be obliged
to agree, among other things, to acquire the Investment Property for their own account, for
investment and not with a view to the distribution or resale thereof. Each Obligor
acknowledges that private sales so made may be at prices and upon other terms less favorable
to the seller than if the Investment Property were sold at public sales. Each Obligor agrees
that the Agent has no obligation to delay sale of any of the Investment Property for the
period of time necessary to permit the Investment Property to be registered for public sale
under the Securities Act or the Blue Sky Laws, and that private sales made under the
foregoing circumstances shall be deemed to have been made in a commercially reasonable
manner.
(f) The Agent shall be entitled to retain and to apply the Proceeds of any collection or
disposition of the Collateral, first, to its reasonable expenses of collecting, retaking,
holding, protecting and maintaining, and preparing for disposition and disposing of, the
Collateral, including reasonable attorneys’ fees and other legal expenses incurred by it in
connection therewith; and second, to the payment of the Secured Obligations in accordance
with the terms of the Credit Agreement. Any surplus remaining after such application shall
be paid to the Obligors or to whomever may be legally entitled thereto, provided that in no
event shall the Obligors be credited with any part of the Proceeds of the disposition of the
Collateral until such Proceeds shall have been received in cash by the Agent. The Obligors
shall remain liable for any deficiency.
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(g) Each Obligor hereby appoints the Agent and each of the Agent’s designees or agents
as attorney-in-fact of such Obligor, irrevocably and with power of substitution, with full
authority in the name of such Obligor, the Agent or otherwise, for sole use and benefit of
the Agent, but at such Obligor’s expense, so long as an Event of Default is continuing, to
take any and all of the actions specified above in this Section and elsewhere in this
Agreement. This power of attorney is a power coupled with an interest and shall be
irrevocable for so long as any of the Secured Obligations remain outstanding.
Section 7. Agent’s Rights and Remedies with Respect to Collateral. The Agent may, at
its option, at any time and from time to time after the occurrence and during the continuance of an
Event of Default, without notice to or demand on any Obligor, take the following actions with
respect to the Collateral:
(a) with respect to any Accounts (i) demand, collect, and receipt for any amounts
relating thereto, as the Agent may determine; (ii) commence and prosecute any actions in any
court for the purposes of collecting any such Accounts and enforcing any other rights in
respect thereof; (iii) defend, settle or compromise any action brought and, in connection
therewith, give such discharges or releases as the Agent may deem appropriate; (iv) receive,
open and dispose of mail addressed to any Obligor and endorse checks, notes, drafts,
acceptances, money orders, bills of lading, warehouse receipts or other instruments or
documents evidencing payment, shipment or storage of the goods giving rise to such Accounts
or securing or relating to such Accounts, on behalf of and in the name of such Obligor; and
(v) sell, assign, transfer, make any agreement in respect of, or otherwise deal with or
exercise rights in respect of, any such Accounts or the goods or services which have given
rise thereto, as fully and completely as though the Agent were the absolute owner thereof for
all purposes;
(b) with respect to any Equipment and Inventory (i) make, adjust and settle claims under
any insurance policy related thereto and place and pay for appropriate insurance thereon;
(ii) discharge taxes and other Encumbrances at any time levied or placed thereon; (iii) make
repairs or provide maintenance with respect thereto; and (iv) pay any necessary filing fees
and any taxes arising as a consequence of any such filing. The Agent shall have no
obligation to make any such expenditures nor shall the making thereof relieve the Obligor of
its obligation to make such expenditures; and
(c) with respect to any Investment Property (i) transfer them at any time to itself, or
to its nominee, and receive the income and all other distributions thereon and hold the same
as Collateral hereunder or apply it to any matured Secured Obligations; and (ii) demand, xxx
for, collect or make any compromise or settlement it deems desirable.
Except as otherwise provided herein, the Agent shall have no duty as to the collection or
protection of any Collateral nor as to the preservation of any rights pertaining thereto, beyond
the safe custody of any Collateral in its possession.
Section 8. Set-off Rights. Regardless of the adequacy of any Collateral or any other
means of obtaining repayment for any Secured Obligations, any deposits, balances or other sums
credited by or due from the head office of the Agent, any Secured Party or any of their branch
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offices to any Obligor and any property of such Obligor now or hereafter in the possession,
custody, safekeeping or control of the Agent or any Secured Party or in transit to the Agent or any
Secured Party may, at any time and from time to time, without notice to such Obligor or compliance
with any other condition precedent now or hereafter imposed by statute, rule of law, or otherwise
(all of which are hereby expressly waived by each Obligor) and to the fullest extent permitted by
law, set off, appropriated and applied by the Agent or any Secured Party against any and all
Secured Obligations of such Obligor in such manner as the head office of the Agent, any Secured
Party or any of their branch offices in their sole discretion may determine, and each Obligor
hereby grants the Agent and each Secured Party a continuing security interest in such deposits,
balances, other sums and property for the payment and performance of all such Secured Obligations
and although such Secured Obligations may be contingent or unmatured. ANY AND ALL RIGHTS TO
REQUIRE THE AGENT OR ANY SECURED PARTY TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER
COLLATERAL WHICH SECURES THE SECURED OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHTS OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, BALANCES, OTHER SUMS AND PROPERTY OF ANY OBLIGOR ARE HEREBY KNOWINGLY,
VOLUNTARILY AND IRREVOCABLY WAIVED. Agent, Secured Party or the branch office, as the case may be,
will provide prompt notice to the Obligor of any setoff hereunder.
Section 9. [Intentionally Omitted].
Section 10. Waivers. To the extent permitted by applicable law, each Obligor waives
presentment, demand, notice, protest, notice of acceptance of this Agreement, notice of any loans
made, credit or other extensions granted, Collateral received or delivered and any other action
taken in reliance hereon and all other demands and notices of any description, except for such
demands and notices as are expressly required to be provided to such Obligor under this Agreement
or any other document evidencing the Secured Obligations. Each Obligor waives, to the fullest
extent permitted by law, the benefit of all appraisement, valuation, stay, extension and redemption
laws now or hereafter in force and all rights of marshaling in the event of any sale or disposition
of any of the Collateral. To the extent permitted by applicable law, with respect to both the
Secured Obligations and any Collateral, each Obligor assents to any extension or postponement of
the time of payment or any other forgiveness or indulgence, to any substitution, exchange or
release of Collateral, to the addition or release of any party or person primarily or secondarily
liable, to the acceptance of partial payment thereon and the settlement, compromise or adjustment
of any thereof, all in such manner and at such time or times as the Agent may deem advisable. The
Agent may exercise its rights with respect to the Collateral without resorting, or regard, to other
collateral or sources of reimbursement for Secured Obligations. The Agent shall not be deemed to
have waived any of its rights with respect to the Secured Obligations or the Collateral unless such
waiver is in writing and signed by the Agent. No delay or omission on the part of the Agent in
exercising any right and no course of dealing shall operate as a waiver of such right or any other
right. A waiver on any one occasion shall not bar or waive the exercise of any right on any future
occasion. All rights and remedies of the Agent in the Secured Obligations or the Collateral,
whether evidenced hereby or by any other instrument or papers, are cumulative and not exclusive of
any remedies provided by law or any other agreement, and may be exercised separately or
concurrently.
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Section 11. Expenses. Each Obligor shall, on demand, pay or reimburse the Agent for
all reasonable expenses (including attorneys’ fees and disbursements of outside counsel and
allocated costs of in-house counsel) incurred or paid by the Agent in connection with the
negotiation, preparation, filing or recording, interpretation and the administration and
enforcement of this Agreement, its on-site periodic examinations of the Collateral and any other
exercise, preservation or enforcement of any rights, remedies or options of the Agent or the
satisfaction of any Secured Obligation, or in connection with any litigation, proceeding or dispute
in any way related to Secured Obligations, or the Collateral. Such costs and expenses shall
include, without limitation, reasonable fees and disbursements of outside legal counsel and the
allocated costs of in-house legal counsel; accounting, consulting, appraisal, brokerage or other
similar professional fees or expenses; all reasonable fees, charges (including the Agent’s per diem
charges) and expenses as are incurred to preserve the validity, perfection, priority and value of
any Security Interest created hereby; and all reasonable costs, charges and expenses relating to
any attempt to inspect, verify, protect, preserve, restore, collect, sell, liquidate or otherwise
dispose of any of or realize upon any Collateral or the exercise by the Agent of any of the rights
conferred upon it hereunder. The obligation to pay any such amount of all such costs and expenses
shall, except as otherwise provided herein, until paid, bear interest at the rate applicable to
Base Rate Loans and shall be an additional Secured Obligation secured by the Collateral.
Section 12. Notices. All notices hereunder shall be given in the same manner as set
forth in Section 11.1 of the Credit Agreement and any notice given to the Borrower in accordance
with the terms of such Section shall be deemed to be given to each of the Obligors.
Section 13. Joinder. Each Obligor agrees that from time to time in the event that it
shall acquire or form any Subsidiary, other than a Special Purpose Subsidiary, such Obligor shall
cause such Subsidiary to execute and deliver an Instrument of Joinder in the form attached hereto
as Exhibit C, a Perfection Certificate and all other documents deemed desirable by the
Agent, and that upon such execution and delivery, this Agreement shall become the binding
obligation of such Subsidiary which shall become an Obligor hereunder and this Agreement shall
create a valid and continuing lien on and security interest in the Collateral of such Subsidiary.
Section 14. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of each Obligor, its respective successors and assigns, and shall be binding upon and
inure to the benefit of and be enforceable by the Agent, the Secured Parties and their respective
successors and assigns; provided that no Obligor may assign or transfer its rights or
obligations hereunder.
Section 15. Governing Law; Consent to Jurisdiction, Etc.
(a) THIS AGREEMENT IS A CONTRACT UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL
FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OBLIGOR CONSENTS TO THE
JURISDICTION OF ANY OF THE FEDERAL OR STATE COURTS LOCATED IN SUFFOLK COUNTY IN THE COMMONWEALTH OF
MASSACHUSETTS IN CONNECTION WITH ANY SUIT TO
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ENFORCE THE RIGHTS OF THE AGENT AND THE SECURED PARTIES UNDER THIS AGREEMENT AND CONSENTS TO
SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON SUCH OBLIGOR IN THE MANNER PROVIDED IN SECTION
12 ABOVE. EACH OBLIGOR IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH ACTION BROUGHT IN THE COURTS REFERRED TO IN THIS SECTION AND
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH ACTION THAT SUCH ACTION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
Section 16. Waiver of Jury Trial. EACH OBLIGOR AND THE AGENT HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER
OR THEREUNDER, THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT
LIMITATION, ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE AGENT RELATING
TO THE ADMINISTRATION OR ENFORCEMENT OF THIS AGREEMENT, AND AGREES THAT IT WILL NOT SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CAN NOT BE OR HAS NOT BEEN
WAIVED. EXCEPT AS PROHIBITED BY LAW, EACH OBLIGOR AND THE AGENT HEREBY WAIVES ANY RIGHT IT MAY
HAVE TO CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. EACH OBLIGOR (a) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT OR
SECURED PARTIES HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (b) ACKNOWLEDGES THAT THE AGENT AND THE
SECURED PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO
WHICH EACH IS A PARTY BECAUSE OF, AMONG OTHER THINGS, THE OBLIGOR’S WAIVERS AND CERTIFICATIONS
CONTAINED HEREIN.
Section 17. General. This Agreement may not be amended or modified except by a
writing signed by each of the Obligors and the Agent. This Agreement and any amendment hereof may
be executed in several counterparts and by each party on a separate counterpart, each of which when
so executed and delivered shall be an original, but all of which together shall constitute one
instrument. Section headings are for convenience of reference only and are not a part of this
Agreement. In the event that any Collateral or any deposit or other sum due from or credited by
the Agent is held or stands in the name of any Obligor and another or others jointly, the Agent may
deal with the same for all purposes as if it belonged to or stood in the name of such Obligor
alone.
[Remainder of page intentionally left blank.
The next page is the signature page.]
The next page is the signature page.]
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IN WITNESS WHEREOF, the undersigned have caused this Security Agreement to be duly executed as
an instrument under seal as of the date first written above.
| MICROFINANCIAL INCORPORATED |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | President | |||
| ACCEPTED AS OF THE DATE FIRST ABOVE WRITTEN: SOVEREIGN BANK, as Agent |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxx | |||
| Title: | Senior Vice President | |||
[SIGNATURE PAGE TO MFI SECURITY AGREEMENT]
EXHIBIT A
PERFECTION CERTIFICATE
(attached hereto)
EXHIBIT B
LIST OF INTELLECTUAL PROPERTY
[TO BE COMPLETED BY BORROWER]
TRADEMARKS (including registered and material unregistered trademarks, trade names and service
marks, and all applications for any of the foregoing.)
CORPORATE NAMES
INTERNET DOMAIN NAMES
COPYRIGHTS
EXHIBIT C
INSTRUMENT OF JOINDER
[SUBSIDIARY], a [STATE] [ENTITY] (the “Company”), hereby agrees that as of the date
hereof it is an Obligor under that certain Security Agreement (as the same may be amended,
modified, supplemented or restated from time to time, the “Security Agreement”), dated as
of the 2nd day of August, 2007, by MicroFinancial Incorporated in favor of Sovereign
Bank, acting as Agent for the Secured Parties, as if it were an original signatory thereto. The
Company hereby agrees that it shall be subject to all of the obligations of an Obligor set forth in
the Security Agreement, and that all of the Collateral (as defined in the Security Agreement) now
or hereafter owned by the Company or in which the Company has an interest shall be subject to the
Security Interests described in the Security Agreement.
EXECUTED
on this _____ day of __________, 200__.
| [SUBSIDIARY] |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
