Exhibit 10.8
SUBORDINATED CONDITIONAL GUARANTY
THIS SUBORDINATED CONDITIONAL GUARANTY (this "Guaranty"), is
entered into as of June 10, 2004, by MICROFINANCIAL INCORPORATED, a
Massachusetts corporation ("Guarantor"), in favor of and for the benefit of
AMPAC CAPITAL SOLUTIONS, LLC, a Nevada limited liability company ("Subordinated
Lender").
RECITALS
1. Pursuant to the Subordinated Note Purchase Agreement dated as
of the date hereof (as amended, supplemented or modified from time to time, the
"Subordinated Note Purchase Agreement"; capitalized terms used but not defined
herein shall have the meanings given such terms in the Subordinated Note
Purchase Agreement) by and among TimePayment Corp. LLC, a Delaware limited
liability company and wholly-owned subsidiary of Guarantor ("Borrower"), and
Subordinated Lender, Subordinated Lender has agreed to make the Loan to
Borrower; and
2. Guarantor, as Borrower's parent, acknowledges and agrees that
Guarantor has received and will receive direct and indirect benefits from the
extension of the Loan made to Borrower.
3. Guarantor wishes to grant Subordinated Lender security and
assurance in order to secure the payment and performance by Borrower of all of
its present and future Obligations (as hereinafter defined), and, to that
effect, to guaranty Borrower's Obligations as set forth herein.
Accordingly, Guarantor hereby agrees as follows:
A. Conditional Guaranty.
1. Subject to Section A(5), Guarantor hereby unconditionally
and irrevocably guarantees to Subordinated Lender the full and punctual payment
by Borrower, when due, whether at the stated due date, by acceleration or
otherwise of all Obligations (as defined below) of Borrower, howsoever created,
arising or evidenced, voluntary or involuntary, whether direct or indirect,
absolute or contingent now or hereafter existing or owing to Subordinated
Lender, (collectively, the "Guaranteed Obligations"). Except as provided in
Section A(5), this Guaranty is an absolute, unconditional, continuing guaranty
of payment and not of collection of the Guaranteed Obligations and includes
Guaranteed Obligations arising from successive transactions which shall either
continue such Guaranteed Obligations or from time to time renew such Guaranteed
Obligations after the same has been satisfied. This Guaranty is in no way
conditioned upon any attempt to collect from Borrower or upon any other event or
contingency, and shall be binding upon and enforceable against Guarantor without
regard to the validity or enforceability of any document, instrument or
agreement evidencing or governing the Obligations or any other agreement or
instrument executed in connection therewith (including, without limitation, this
Guaranty) or contemplated thereby (each, a "Subordinated Debt Document" and,
collectively, the "Subordinated Debt Documents"). If for any reason Borrower
shall fail or be unable duly and punctually to pay any of the Guaranteed
Obligations (including, without limitation, amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. ss. 362(a)), Guarantor will forthwith pay the same, in cash. As
used herein "Obligations" shall mean all obligations, liabilities and
indebtedness of Borrower to Subordinated Lender under the Subordinated Note
Purchase Agreement and the Subordinated Debt Documents and any documents
relating thereto, whether now existing or hereafter created, absolute or
contingent, direct or indirect, due or not, whether created directly or acquired
by assignment or otherwise, including, without limitation, the Loans and the
payment and performance of all other obligations, liabilities, and indebtedness
of Borrower to Subordinated Lender under the Subordinated Debt Documents,
including without limitation all fees, costs, expenses and indemnity obligations
thereunder.
2. In the event any Subordinated Debt Document shall be
terminated as a result of the rejection thereof by any trustee, receiver or
liquidating agent of Borrower or any of its properties in any bankruptcy,
insolvency, reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar proceeding, Guarantor's obligations hereunder shall
continue to the same extent as if such Subordinated Debt Document had not been
so rejected.
3. Guarantor agrees to pay all reasonable costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements)
incurred in connection with the enforcement of the Guaranteed Obligations of
Borrower to the extent that such costs and expenses are not paid by Borrower
pursuant to the respective Subordinated Debt Documents.
4. Guarantor further agrees that if any payment made by
Borrower or Guarantor to Subordinated Lender on any Guaranteed Obligation is
rescinded, recovered from or repaid by Subordinated Lender, in whole or in part,
in any bankruptcy, insolvency or similar proceeding instituted by or against
Borrower or Guarantor, this Guaranty shall continue to be fully applicable to
such Guaranteed Obligation to the same extent as though the payment so recovered
or repaid had never originally been made on such Guaranteed Obligation
regardless of, and, without giving effect to, any discharge or release of
Guarantor's obligations hereunder granted by Subordinated Lender after the date
hereof.
5. Notwithstanding the execution and delivery of this
Agreement on the date hereof, the guaranty pursuant hereto shall not be deemed
made, and this Guaranty shall not be effective, until the earlier of the day
that (A) all obligations under the Fleet Loan Agreement shall have been
discharged in full, or (B) Fleet otherwise consents to this Guaranty.
B. Guaranty Continuing, Absolute, Unlimited. Subject to Section
A(5) and Section D hereof, the obligations of Guarantor hereunder shall be
continuing, absolute, unlimited and unconditional, shall not be subject to any
counterclaim, setoff, deduction or defense based upon any claim Guarantor may
have against Subordinated Lender or Borrower or any other person, and shall
remain in full force and effect without regard to, and, to the fullest extent
permitted by applicable law, shall not be released, discharged or in any way
affected by, any circumstance or condition (whether or not Guarantor shall have
any knowledge or notice thereof) whatsoever which might constitute a legal or
equitable discharge or defense.
C. Waiver. Guarantor unconditionally and irrevocably waives, to
the fullest extent permitted by applicable law: (1) notice of any of the matters
referred to in Section B hereof; (2) all notices which may be required by
statute, rule of law or otherwise to preserve any rights against Guarantor
hereunder, including, without limitation, notice of the acceptance of this
Guaranty, or the creation, renewal, extension, modification or accrual of the
Guaranteed Obligations or notice of any other matters relating thereto, any
presentment, demand, notice of dishonor, protest, nonpayment of any damages or
other amounts payable under any Subordinated Debt Document; (3) any requirement
for the enforcement, assertion or exercise of any right, remedy, power or
privilege under or in respect of any Subordinated Debt Document, including,
without limitation, diligence in collection or protection of or realization upon
the Guaranteed Obligations or any part thereof or any collateral therefor; (4)
any requirement of diligence; (5) any requirement to mitigate the damages
resulting from a default by Borrower under any Subordinated Debt Document; (6)
the occurrence of every other condition precedent to which Guarantor or Borrower
may otherwise be entitled; (7) the right to require Subordinated Lender to
proceed against Borrower or any other person liable on the Guaranteed
Obligations, to proceed against or exhaust any security held by Borrower or any
other person, or to pursue any other remedy in Subordinated Lender's power
whatsoever; (8) the right to have the property of Borrower first applied to the
discharge of the Guaranteed Obligations and (9) until such time that all
Guaranteed Obligations have been indefeasibly paid in full, any and all rights
it may now or hereafter have under any agreement or at law or in equity
(including, without limitation, any law subrogating Guarantor to the rights of
Subordinated Lender) to assert any claim against or seek contribution,
indemnification or any other form of reimbursement from Borrower or any other
party liable for payment of any or all of the Guaranteed Obligations for any
payment made by Guarantor under or in connection with this Guaranty or
otherwise.
Subordinated Lender may, at its election, exercise any right
or remedy it may have against Borrower without affecting or impairing in any way
the liability of Guarantor hereunder and Guarantor waives, to the fullest extent
permitted by applicable law, any defense arising out of the absence, impairment
or loss of any right of reimbursement, contribution or subrogation or any other
right or remedy of Guarantor against Borrower, whether resulting from such
election by Subordinated Lender or otherwise. Guarantor waives any defense
arising by reason of any disability or other defense of Borrower or by reason of
the cessation for any cause whatsoever of the liability, either in whole or in
part, of Borrower to Subordinated Lender for the Guaranteed Obligations.
Guarantor assumes the responsibility for being and keeping
informed of the financial condition of Borrower and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and agrees
that Subordinated Lender shall not have any duty to advise Guarantor of
information regarding any condition or circumstance or any change in such
condition or circumstance. Guarantor acknowledges that Subordinated Lender has
not made any representations to Guarantor concerning the financial condition of
Borrower.
D. Subordination. This Guaranty shall at all times be wholly
subordinate and junior in right of payment to all Senior Obligations to the
extent and in the manner provided in this Part D.
1. Definitions. The following terms shall have the following
meanings. All other capitalized terms used herein without definition
shall have the meanings assigned to them in the Subordinated Note
Purchase Agreement.
1.1 Agent. Any administrative or collateral agent acting on
behalf of any one or more Senior Lenders and as indicated in a written
notice provided to Subordinated Lender by Borrower or Guarantor and
such Senior Lender(s) stating that such agent has been requested and
authorized to act as agent for such Senior Lender(s) hereunder pursuant
to the terms of the applicable Senior Credit Agreement (s). Guarantor
agrees that any Agent, to the extent it may so act hereunder, shall
exercise all of the rights and remedies hereunder on behalf of, and as
agent for the benefit of, each of such Senior Lenders. Without limiting
the generality of the foregoing, such Agent is authorized to execute
and deliver, from time to time, on behalf of the applicable Senior
Lender(s), any and all amendments and modifications to this Guaranty
and any and all waivers to any conditions herein or any default
hereunder.
1.2 Bankruptcy or Liquidation Event. (a) Any dissolution,
winding-up or liquidation of a Debtor, partial or complete, whether or
not involving insolvency or bankruptcy proceedings, (b) any bankruptcy,
insolvency, receivership or other statutory or common law proceedings
or assignment for the benefit of creditors involving a Debtor or any
marshalling of the assets or liabilities of a Debtor, (c) any
proceeding by or against a Debtor for relief of any kind under any
bankruptcy or insolvency law(s) relating to the relief of debtors or
readjustments, reorganizations, compositions or extensions of
indebtedness, or (d) any other marshalling of the assets of any Debtor.
1.3 Debtor. Borrower, Guarantor or any of their respective
Affiliates.
1.4 Liabilities. When used with respect to any Debtor, the
term "Liabilities" shall mean indebtedness, obligations and liabilities
of such Debtor to the designated Person(s), whether the same is now
existing or hereafter arising, direct or indirect, absolute or
contingent, secured or unsecured, liquidated or unliquidated, matured
or unmatured, disputed or undisputed, legal or equitable, and however
made or evidenced.
1.5 Maximum Senior Debt Amount. The sum of (a) $75,000,000
plus (b) any additional Indebtedness incurred as permitted under
Section 6.1 of the Subordinated Note Purchase Agreement.
1.6 Payment in Full. The expressions "prior payment in full",
"payment in full", "paid or satisfied in full", "paid in full" and any
other similar phrases, when used herein with respect to the Senior
Obligations, shall mean the indefeasible, full and final payment in
cash, in immediately available funds, of all the Senior Obligations,
whether or not any of the Senior Obligations shall have been voided,
disallowed or subordinated pursuant to any provisions of the United
States Bankruptcy Code or any applicable state fraudulent conveyance
laws, in any case whether asserted directly or indirectly.
1.7 Required Senior Lenders. For purposes of Sections 2.7 and
2.8 of this Part D, those Senior Lenders having the right to consent to
amendments of the Subordinated Documents and to approve agreements
effecting any transfer of the Subordinated Obligations, respectively,
pursuant to the terms of their respective Senior Credit Agreements.
1.8 Senior Covenant Default. Any "Event of Default", as
defined in any agreement pertaining to Senior Obligations, other than a
Senior Payment Default.
1.9 Senior Credit Agreements. Any and all loan agreements,
credit agreements, indentures, reimbursement agreements and other
agreements providing for the extension of credit to Borrower by one or
more Senior Lenders (including but not limited to the credit agreement
entered into by Borrower with Acorn Capital Group, LLC, a Delaware
limited liability company, dated as of May __, 2004), in each case as
the same may be amended, extended, renewed, restated, supplemented or
otherwise modified from time to time in accordance with their
respective terms, and any additional agreement or agreements entered
into from time to time governing Indebtedness incurred to refinance,
replace, restructure or refund in whole or in part the extensions of
credit and the maximum commitments thereunder and under such additional
agreement(s) (whether, in any case, with the original Senior Lender and
its successors and assigns or otherwise, and whether provided under the
original Senior Credit Agreement or other credit agreements or
otherwise).
1.10 Senior Credit Documents. The Senior Credit Agreements,
the Senior Notes, the Senior Security Documents and any and all other
documents pertaining to Senior Obligations.
1.11 Senior Default. A Senior Payment Default or a Senior
Covenant Default.
1.12 Senior Lender. Any holder of any Senior Obligation
(including any Affiliate of such Senior Lender and their respective
successors and assigns).
1.13 Senior Notes. Any and all promissory notes issued
pursuant to any and all of the Senior Credit Agreements.
1.14 Senior Obligations. All Liabilities of any or all of
the Debtors designated from time to time as Senior Obligations by a
written notice to Subordinated Lender from Borrower or Guarantor
(including without limitation interest accruing after the maturity of
such Liabilities and interest accruing after the filing of any
petition in bankruptcy or the commencement of any insolvency,
reorganization or similar proceeding relating to any Debtor, whether
or not such post-filing or post-petition interest is allowed in such
proceeding and whether the applicable Senior Lender(s) is (or are)
oversecured or undersecured) and other fees, charges and other amounts
due on or under the applicable Senior Credit Agreements, Senior Notes
and Senior Security Documents. Notwithstanding the foregoing, in no
event shall the aggregate principal amount of all Senior Obligations
exceed the Maximum Senior Debt Amount (as defined in Section 1.5
above). The term "Senior Obligations" shall include any renewals,
extensions, refinancings, modifications or refundings of the
Liabilities described above in this Section 1.14.
1.15 Senior Payment Default. Any default in the payment of
principal, interest or fees under any Senior Obligation when due in
accordance with the terms and conditions thereof.
1.16 Senior Security Documents. Any and all guaranties,
security agreements, pledge agreements and other documents pursuant to
which any of the Senior Obligations are secured, including without
limitation the Conditional Guaranty of even date herewith executed and
delivered by Guarantor and Leasecomm in favor of Acorn Capital Group,
LLC.
1.17 Subordinated Default. Any "Event of Default", as
defined in the Subordinated Note Purchase Agreement.
1.18 Subordinated Documents. The Subordinated Note Purchase
Agreement, the Notes, this Guaranty, the Warrant Certificates, the
Registration Rights Agreement and any and all other documents
pertaining to Subordinated Obligations.
1.19 Subordinated Obligations. All Liabilities owed by any
or all of the Debtors to Subordinated Lender, including without
limitation all such Liabilities (a) in respect of subrogation rights
under any guaranty or any other rights to be subrogated to the rights
of the holders of the Senior Obligations in respect of payments or
distributions of assets of, or ownership interests in, the Debtors
made on the Senior Obligations, (b) under the Subordinated Note
Purchase Agreement and the Subordinated Notes, (c) under this Guaranty
and (d) as compensation or in respect of any ownership interests (or
warrants, options or other rights for the purchase thereof) in any
Debtor issued or sold to Subordinated Lender, including without
limitation the Warrant Certificates and the Warrant Shares, whether by
dividend, redemption, repurchase or otherwise.
2. Terms of Subordination.
2.1 Subordination. Subordinated Lender hereby (a) covenants and
agrees that the Subordinated Obligations are and shall be subordinate
and subject in right of payment to the prior payment in full of all of
the Senior Obligations, whether or not any portion of the Senior
Obligations shall have been voided, disallowed or subordinated
pursuant to Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx Bankruptcy Code or any
applicable state fraudulent conveyance laws, whether asserted directly
or under Section 544 of the United States Bankruptcy Code, and (b)
irrevocably directs Guarantor to make such payment in full, and all
other payments in respect of the Senior Obligations contemplated by
this Guaranty and referred to below, to Senior Lenders (or their
Agent(s), as applicable) before making any payments or distributions
of any kind in respect of the Subordinated Obligations, except as
provided in Section 2.4. In furtherance of the foregoing, Subordinated
Lender will not demand, accept or receive, any payment of interest,
principal or any other amount on account of the Subordinated
Obligations or as a sinking fund for any Subordinated Obligations, or
in respect of any redemption, retirement, prepayment, purchase or
other acquisition of any Subordinated Obligations, including without
limitation any dividends or other distributions, or exercise any right
of set-off or recoupment until all of the Senior Obligations shall
have been paid in full.
2.2 Distributions in Bankruptcy or Liquidation Events.
(a) Distributions. Anything in the Subordinated Documents to
the contrary notwithstanding, in the event of any distribution,
division or application, in whole or in part, voluntary or
involuntary, by operation of law or otherwise, of the assets of any
Debtor or the proceeds thereof, to or for the benefit of any of the
Debtors' creditors arising by reason of a Bankruptcy or Liquidation
Event, then all Senior Obligations shall first be paid in full before
any payment is made upon any Subordinated Obligations; and any payment
or distribution of any kind or character (whether in cash, property or
securities and whether or not any of such Senior Obligations has been
disallowed, or estimated for purpose of allowance, under the United
States Bankruptcy Code or otherwise) made upon or in respect of the
Subordinated Obligations in violation of this Guaranty shall be paid
over to Senior Lenders (or their Agent(s), as applicable), for
application in payment of the Senior Obligations, unless and until the
Senior Obligations shall have been paid or satisfied in full.
(b) Authority to Act for Creditor. If Subordinated Lender
fails to file a proper claim or proof of debt therefor prior to thirty
(30) days before the expiration of the time to file such claim or
proof, then Senior Lenders (and/or their Agent(s), as applicable) are
hereby permitted and authorized (but not obligated) for the specified
and limited purpose set forth in this paragraph, to file such claim or
proof for or on behalf of such holder at any time prior to the
expiration of the time to file such claim or proof; provided, however,
that Senior Lenders (and/or such Agent(s)) shall promptly deliver a
copy of any such claim or proof so filed to Subordinated Lender. Upon
written request of any Senior Lender (or any Agent, as applicable),
Subordinated Lender shall confirm to Senior Lenders (and such Agent)
whether Subordinated Lender shall have in fact filed a proof of claim
in order for the Senior Lenders (and their Agent(s), as applicable) to
exercise their rights in this paragraph. Nothing contained in this
Guaranty shall be interpreted or construed to impair the voting rights
of Subordinated Lender in any meeting relating to any Reorganization
or Liquidation Event, except that Subordinated Lender hereby covenants
to Senior Lenders that Subordinated Lender shall not vote in favor of
any reorganization plan (whether under Chapter 11 of the United States
Bankruptcy Code or other statute or law) that any Senior Lender
opposes.
(c) Additional Action. Subordinated Lender agrees duly and
promptly to file appropriate proofs of claim in respect of the
Subordinated Obligations and to execute and deliver to Senior Lenders,
or their Agent(s), as applicable, promptly following request, such
assignments, proofs of claim or other instruments as may be reasonably
requested by any Senior Lender (and/or their Agent(s)) to enable
Senior Lender (and/or their Agent(s)) to enforce any and all claims
upon or with respect to the Subordinated Obligations and to collect
and receive any and all payments and distributions which may be
payable or deliverable at any time upon or with respect to the
Subordinated Obligations.
(d) Payments Held in Trust. In the event that any payment of
principal or interest or other payment or distribution of assets of
any Debtor shall be collected or received by Subordinated Lender in
violation of the subordination provisions of this Part D, before
payment in full of all of the Senior Obligations, Subordinated Lender
shall forthwith deliver the same to Senior Lenders (and/or their
Agent(s), as applicable), in the form received, together with any
endorsement and assignment necessary to make such delivery, for
application to the Senior Obligations, whether then due or not due. If
Subordinated Lender shall fail to make such endorsement or assignment,
Senior Lenders (or such Agent(s) or any of their respective officers)
are hereby irrevocably authorized to make the same. Until so
delivered, Subordinated Lender shall hold such payment or distribution
in trust as the property of Senior Lenders, segregated from all other
funds and property held by Subordinated Lender.
2.3 [Reserved.]
2.4 Limitation on Exercise of Remedies by Subordinated Lender.
(a) In the event that any Subordinated Default shall occur,
Subordinated Lender shall not be entitled to, and will not, (i)
ask, demand or xxx for, or take or receive from any Debtor, by
set-off or otherwise, payment of all or any portion of the
Subordinated Obligations under this Guaranty or any collateral
provided therefor; (ii) accelerate any Subordinated Obligations;
(iii) exercise any of its remedies in respect of any Subordinated
Obligations; (iv) initiate or join in any litigation or other
proceedings against, or reorganization of, any Debtor; or (v)
foreclose or otherwise realize on any security given by any
Debtor or any other Person (including any guarantor) to secure
the Subordinated Obligations; in any such case unless and until
the earliest to occur of the following:
(A) Senior Lenders shall have caused the Senior
Obligations to become due prior to their stated maturity and
shall have commenced the exercise of material remedies under
the Senior Security Documents;
(B) a Subordinated Default pursuant to Section 7.1(h)
or 7.1(i) of the Subordinated Note Purchase Agreement shall
have commenced; and
(C) any other Subordinated Default shall have occurred
under the Subordinated Note Purchase Agreement and
Subordinated Lender shall have provided to the Senior
Lenders (and their Agent(s), as applicable), Borrower and
Guarantor written notice of Subordinated Lender's ability
(under the terms of the Subordinated Note Purchase
Agreement) to accelerate on account of the occurrence of
such Subordinated Default (a "Remedy Notice"), such Remedy
Notice shall have been received by Senior Lenders (and such
Agents), Borrower and Guarantor and 180 days shall have
elapsed following such receipt (in any such case, the
"Remedy Standstill Period").
(b) Notwithstanding the foregoing, the Remedy Standstill
Period shall be inapplicable or cease to be effective if Senior
Lenders shall have caused the Senior Obligations to become due prior
to their stated maturity and shall have commenced the exercise of
material remedies under the Senior Security Documents or a
Subordinated Default pursuant to Section 7.1(h) or 7.1(i) of the
Subordinated Note Purchase Agreement shall have occurred.
(c) Upon the expiration or termination of any Remedy
Standstill Period, Subordinated Lender shall be entitled to exercise
any of its rights with respect to the Subordinated Obligations (but
otherwise subject to the subordination and other provisions of this
Guaranty) other than any right to accelerate the maturity date of any
Subordinated Obligation based upon the occurrence of any Subordinated
Default in respect thereto which has been cured or otherwise remedied
during such Remedy Standstill Period.
2.5 Covenants to Cooperate. In addition to its agreements set forth in
Section 2.4, Subordinated Lender, in its capacity as a holder of
Subordinated Obligations, agrees to take such actions as may be reasonably
necessary or appropriate, and otherwise to cooperate with Senior Lenders
(and their Agent(s), as applicable) to effectuate the subordination
provided hereby. In furtherance thereof, Subordinated Lender agrees (a) not
to oppose any motion filed or supported by any Senior Lender for relief
from stay or for adequate protection in respect of the Senior Obligations;
(b) not to oppose any motion supported by any Senior Lender for any
Debtor's use of cash collateral or post-petition borrowing from any Senior
Lender; (c) not to institute against any Debtor any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or
other proceedings under any United States Federal or state bankruptcy or
similar law, until such time as the Senior Obligations have been paid in
full; and (d) not otherwise to (i) impede, interfere with or restrict or
restrain the exercise by Senior Lenders (and their Agent(s), as applicable)
of their rights and remedies under the Senior Credit Documents or (ii) take
or permit any action prejudicial to or inconsistent with the priority
position over Subordinated Lender that is created in favor of Senior
Lenders by this Guaranty.
2.6 Violation of Agreements to Take No Action and Cooperate. If
Subordinated Lender shall commence, prosecute or participate in any suit,
action or proceeding against any Debtor or take any other action in any
legal proceeding involving any Debtor in violation of this Guaranty, such
Debtor may interpose this Guaranty as a defense or plea and each of Senior
Lenders (and each of their Agent(s), as applicable) are irrevocably
authorized to intervene and to interpose such defense or plea in its or any
Debtor's name. Without limiting the generality of Section 3 below, if
Subordinated Lender attempts to enforce or realize upon any security for
the Subordinated Obligations in violation of this Guaranty, any Debtor, any
Senior Lender or any Agent (in such Debtor's, such Senior Lender's or such
Agent's name) may by virtue of this Guaranty restrain such realization or
enforcement.
2.7 No Amendment of Subordinated Obligations. Subordinated Lender
shall not, without the prior written consent of the Required Senior
Lenders, amend or permit the amendment of the terms of this Guaranty or any
other instrument or agreement evidencing any Subordinated Obligations the
effect of which is to (a) increase the maximum principal amount or rate of
interest under the Subordinated Notes (it being understood that the
imposition of a default rate of interest contained in the Subordinated
Documents as in effect on the date hereof shall not be restricted by this
clause (a)), (b) accelerate the dates (including maturity dates) upon which
payments of principal or interest on the Subordinated Notes are due, (c)
add or make more restrictive any event of default, any financial covenant
(including the definitions applicable thereto) or any other covenant with
respect to the Subordinated Notes set forth in the Subordinated Documents
(as in effect on the date hereof), (d) change the redemption or prepayment
provisions of the Subordinated Notes, (e) amend the Warrant Certificates to
increase the shares of capital stock of the Parent issuable upon exercise
thereof, (f) provide for the issuance to Subordinated Lender of any
additional warrants or other equity securities in any Debtor in violation
of any Senior Credit Agreement, or (g) change, amend or supplement any
other term of the Subordinated Documents if such change, amendment or
supplementation would materially increase the obligations of Borrower or
confer additional material rights on Subordinated Lender or any other
holder of the Subordinated Notes in a manner adverse to Borrower, Guarantor
or any Senior Lender (or any Agent).
2.8 No Transfer of Subordinated Obligations. Subordinated Lender will
not sell, assign or transfer any of its interest in the Subordinated
Obligations, unless the buyer, assignee or transferee thereof shall agree
in writing to become bound by the provisions of this Part D pursuant to a
written agreement in form and substance satisfactory to the Required Senior
Lenders (or their Agent(s), as applicable) executed by the buyer, assignee
or transferee, an original copy of which shall have been furnished to
Senior Lenders (and such Agent(s)). In addition, Subordinated Lender shall
not grant or agree to any subordination in respect of the Subordinated
Obligations or grant a security interest or participation in any of the
Subordinated Obligations to any Person other than the Senior Lenders. In
addition, Subordinated Lender shall not grant or agree to any subordination
in respect of the Subordinated Obligations or grant a security interest or
participation in any of the Subordinated Obligations to any Person other
than Senior Lenders and to Persons to whom Senior Lenders shall have
granted or agreed to any subordination in respect of the Senior Obligations
or granted a security interest or participation in any of the Senior
Obligations.
3. No Collateral. Subordinated Lender will not take or enjoy any
collateral to secure the Subordinated Obligations. Without limiting the
generality of the foregoing, none of the Senior Lenders (or their Agent(s), as
applicable) shall have any duty to Subordinated Lender with respect to the
preservation or maintenance of any collateral or the manner in which the Senior
Lenders (or such Agent(s)) enforce their respective rights in such collateral or
to preserve or maintain the rights of any Person in any collateral, and
Subordinated Lender hereby waives (a) any claims which it may now or hereafter
have against Senior Lenders (or such Agent(s)) which relate to such
preservation, maintenance or enforcement and (b) the right to require Senior
Lenders (or such Agent(s)) to marshal any collateral, to enforce any security
interest or lien Senior Lenders (or such Agent(s)) may now or hereafter have in
any collateral securing the Senior Obligations or to pursue any claim any of
Senior Lenders (or any such Agent) may have against any guarantor of the Senior
Obligations, as a condition to Senior Lenders' (and such Agent(s)') entitlement
to receive any payment on account of the Subordinated Obligations.
4. Agreements with Respect to Loan Documents.
(a) Subordinated Lender hereby agrees that at any time, and from
time to time, without the consent of, or notice to, Subordinated
Lender, the Senior Lenders (and their Agent(s), as applicable) may, in
their sole discretion, (i) modify or amend (with consent of other
parties to the agreements so affected), grant consents under and
waivers of or release any of the terms of the Senior Credit
Agreements, the Senior Notes, the Senior Security Documents or any of
the other Senior Credit Documents, (ii) exercise or refrain from
exercising any powers or rights which the Senior Lenders (and such
Agent(s)) may have thereunder and (iii) make loans and other financial
accommodations to the Debtors in addition to the loans made on the
date hereof, it being understood and agreed that no such modification,
amendment, consent, waiver, release, exercise, failure to exercise or
financial accommodation shall affect, release, or impair any of the
subordination rights or other rights and benefits afforded to the
Senior Lenders (and such Agent(s)) under this Guaranty or give rise to
any liabilities on the part of the Senior Lenders (or such Agent(s))
to Subordinated Lender. Notwithstanding the foregoing, no such
amendment, restatement, waiver, or other modification shall, without
the prior written consent of Subordinated Lender, (A) increase the
principal amount of the Senior Obligations in excess of the Maximum
Senior Debt Amount then in effect, (B) further limit the right of the
Debtors to amend or otherwise modify the Subordinated Agreements, or
(C) prohibit or restrict the payment of principal of, interest on, or
other amounts payable with respect to, the Subordinated Notes in a
manner that is more restrictive than the prohibitions and restrictions
currently contained in the Senior Credit Documents (as in effect as of
the date hereof).
(b) Without limiting the generality of the foregoing, no right of
Senior Lenders (or their Agent(s), as applicable) to enforce
subordination as herein provided shall at any time or in any way be
affected or impaired by any act or failure to act on the part of any
Debtor or Subordinated Lender, or by any act or failure to act of
Senior Lenders (or such Agent(s)), or by any non-compliance by any
Debtor with any of the terms, provisions and covenants of this
Guaranty or any other Senior Credit Document, regardless of any
knowledge thereof that the Senior Lenders (or such Agent(s)) may have
or be charged with.
5. Relative Rights. Nothing contained in this Section 5 is
intended to or shall impair, as between each Debtor, its creditors other than
Senior Lenders, and Subordinated Lender, the obligation of such Debtor, which is
absolute and unconditional, to pay to Subordinated Lender when due the principal
of and the interest on the Subordinated Obligations, or is intended to or shall
affect the relative rights of Subordinated Lender and the creditors of each
Debtor other than Senior Lenders.
6. Subrogation. After all amounts payable under or in respect of
Senior Obligations are indefeasibly paid in full in cash, Subordinated Lender
shall be subrogated to the rights of holders of Senior Obligations to receive
payments or distributions applicable to Senior Obligations to the extent that
distributions otherwise payable to Subordinated Lender have been applied to the
payment of Senior Obligations. A distribution made under this Part D to a holder
of Senior Obligations which otherwise would have been made to Subordinated
Lender is not, as between the applicable Debtor, on the one hand, and
Subordinated Lender, on the other hand, a payment by any Debtor on Senior
Obligations.
7. Reliance. Subordinated Lender acknowledges notice that, in
entering into the Senior Credit Agreements and electing to hold the Senior
Obligations, each of Senior Lenders is relying, and will rely, on the
subordination of the Subordinated Obligations provided herein. Subordinated
Lender expressly waives all notice of the acceptance of, or reliance on, the
provisions of this Part D by the Senior Lenders.
8. Miscellaneous.
8.1 Conforming Agreement; Reinstatement. The agreements of
Guarantor and Subordinated Lender set forth in this Part D shall be
continuing agreements and shall be irrevocable and shall remain in full
force and effect so long as there are Senior Obligations outstanding or
committed to be advanced. The liability of Subordinated Lender
hereunder shall be reinstated and revived, and the rights of Senior
Lenders (and their Agent(s), as applicable) shall continue, with
respect to any amount at any time paid on account of the Senior
Obligations which shall thereafter be required to be restored or
returned by any Senior Lender in any Bankruptcy or Liquidation Event
(including without limitation any repayment made pursuant to any
provision of Chapter 5 of Title 11, United States Code), all as though
such amount had not been paid.
8.2 Application of Payments. Subordinated Lender hereby agrees
that all payments received by Senior Lenders (or their Agent(s), as
applicable) may be applied, reversed and reapplied, in whole or in
part, to such part of the Senior Obligations as Senior Lenders, in
their sole discretion, deem appropriate, in accordance with the
provisions of their respective Senior Credit Agreements.
8.3 Specific Performance. Subordinated Lender hereby waives
any defense based on the adequacy of a remedy at law that might be
asserted as a bar to the remedy of specific performance of this
Guaranty in any action brought therefor by or on behalf of the Senior
Lenders.
8.4 Modification of Part D. The provisions of this Part D are
for the benefit of the holders from time to time of Senior Obligations
and, so long as any Senior Obligations remain unpaid, may not be
modified, rescinded or canceled in whole or in part (except insofar as
the effect thereof would be to cause such provisions to be more
favorable to Senior Lenders, without the prior written consent thereto
of all the Senior Lenders.
E. Miscellaneous.
1. Notices. Any notice delivered under this Guaranty shall
be given in the manner, to the addresses and with the effect set forth in
Section 8.1 of the Subordinated Note Purchase Agreement.
2. Amendments. Any term of this Guaranty may be amended,
waived, discharged or terminated only by an instrument in writing signed by each
party to this Guaranty and only as permitted under Section D(8.4) hereof. No
notice to or demand on Guarantor shall be deemed to be a waiver of the
Obligations or of the right of Subordinated Lender to take further action
without notice or demand as provided in this Guaranty. No course of dealing
between Guarantor and Subordinated Lender shall change, modify or discharge, in
whole or in part, this Guaranty or any Obligations. No waiver of any term,
covenant or provision of this Guaranty shall be effective unless given in
writing by Subordinated Lender and if so given shall only be effective in the
specific instance in which given.
3. Successors and Assigns. The provisions of this Guaranty
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that Guarantor may not assign or
otherwise transfer any of its rights or Obligations hereunder without the prior
written consent of Subordinated Lender (and any attempted assignment or transfer
by Guarantor without such consent shall be null and void).
4. Severability. Any provision of this Guaranty held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without effecting the validity, legality and enforceability of
the remaining provisions thereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
5. Right to Deal with Borrower. At any time and from time to
time, without terminating, affecting or impairing the validity of this Guaranty
or the obligations of Guarantor hereunder, Subordinated Lender may deal with
Borrower in the same manner and as fully as if this Guaranty did not exist and
shall be entitled, among other things, to grant Borrower, without notice or
demand and without affecting Guarantor's liability hereunder, such extension or
extensions of time to perform, renew, compromise, accelerate or otherwise change
the time for payment of or otherwise change the terms of indebtedness or any
part thereof contained in or arising under any Subordinated Debt Document or any
other document evidencing Obligations of Borrower to Subordinated Lender, or to
waive any obligation of Borrower to perform any act or acts, as Subordinated
Lender may deem advisable.
6. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY FEDERAL OR STATE COURT IN THE STATE OF NEW YORK IN ANY
ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION
WITH THIS GUARANTY OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND CONSENTS
TO THE PLACING OF VENUE IN NEW YORK COUNTY OR OTHER COUNTY PERMITTED BY LAW. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, GUARANTOR HEREBY WAIVES AND AGREES NOT
TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE, IN ANY SUCH SUIT, ACTION
OR PROCEEDING ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF
SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT ANY
SUBORDINATED DEBT DOCUMENT OR INSTRUMENT REFERRED TO HEREIN MAY NOT BE LITIGATED
IN OR BY SUCH COURTS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, GUARANTOR
AGREES NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF
ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE
CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT. EXCEPT AS PROHIBITED BY
LAW, GUARANTOR HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION
WITH ANY SUBORDINATED DEBT DOCUMENT. EACH PARTY TO THIS GUARANTY IRREVOCABLY
CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 8.1
OF THE SUBORDINATED NOTE PURCHASE AGREEMENT. NOTHING IN THIS GUARANTY WILL
AFFECT THE RIGHT OF ANY PARTY TO THIS GUARANTY TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.
7. Headings; Counterparts. Article and Section headings and
the table of contents (if applicable) used herein are for convenience of
reference only, are not part of this Guaranty and shall not affect the
construction of, or be taken into consideration in interpreting, this Guaranty.
This Guaranty may be executed in counterparts (and by different parties hereto
on different counterparts), each of which shall constitute an original, but all
of which when taken together shall constitute a single contract. Delivery of an
executed counterpart of a signature page of this Guaranty or of any other
Subordinated Debt Document by telecopy shall be effective as delivery of a
manually executed counterpart of this Guaranty or of such other Subordinated
Debt Document.
8. No Waiver; Rights Cumulative. No course of dealing
between Guarantor and Subordinated Lender, or Subordinated Lender's failure to
exercise or delay in exercising any right, power or privilege hereunder shall
operate as a waiver thereof. Any single or partial exercise of any right, power
or privilege hereunder shall not preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. All of Subordinated
Lender's rights and remedies hereunder, whether established hereby or by any
other agreements, instruments or documents or by law, shall be cumulative and
may be exercised singly or concurrently.
9. No Partnership. The relationship between Subordinated
Lender and Guarantor shall be only of creditor-debtor and no relationship of
agency, partner or joint- or co-venturer shall be created by or inferred from
this Guaranty or the other Subordinated Debt Documents. Guarantor shall
indemnify, defend, and save Subordinated Lender harmless from any and all claims
asserted against Subordinated Lender as being the agent, partner, or
joint-venturer of Guarantor.
10. Entire Agreement. This Guaranty and the other
Subordinated Debt Documents embody the entire agreement and understanding
between Guarantor and Secured Party with respect to the subject matter hereunder
and supersede all prior conflicting or inconsistent agreements, consents and
understandings relating to such subject matter. Guarantor acknowledges and
agrees that there is no oral agreement between Guarantor and Subordinated Lender
which has not been incorporated in this Guaranty or another Subordinated Debt
Document.
11. Other Guaranties. The execution and delivery of this
Guaranty shall not supersede, terminate, modify or supplement in any manner any
other guaranty previously executed and delivered to Subordinated Lender by
Guarantor and no release or termination of any guaranty shall be construed to
terminate or release any other guaranty unless such guaranty is specifically
referred to in any such termination.
F. Covenant of Guarantor. Guarantor hereby covenants and agrees
that from and after the date hereof, it will not, nor will it permit Leasecomm
to, originate any new lease financing business (other than through its [_____]
division), it being understood and agreed that all new leases (other than
[_____] leases) will be financed by Borrower after the date hereof.
[ REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK ]
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Guaranty as of the day and year first above written.
MICROFINANCIAL INCORPORATED
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Commonwealth of Massachusetts)
) ss.
County of ___________________)
On May __, 2004, before me, a Notary Public, personally
appeared , personally known to me or proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
Witness my hand and official seal. SEAL
Signature:______________________________
