Exhibit 10.3
CONDITIONAL GUARANTY
THIS CONDITIONAL GUARANTY, is entered into as of June 10,
2004, by MICROFINANCIAL INCORPORATED, a Massachusetts corporation ("MFI"), and
LEASECOMM CORPORATION, a Massachusetts corporation and wholly-owned subsidiary
of MFI ("Leasecomm" and together with MFI, collectively referred to herein as
"Guarantor"), in favor of and for the benefit of ACORN CAPITAL GROUP, LLC
("Lender").
RECITALS
A. Pursuant to the Credit Agreement dated as of the date
hereof (as amended, supplemented or modified from time to time, the "Credit
Agreement"; capitalized terms used but not defined herein shall have the
meanings given such terms in the Credit Agreement) by and among TimePayment
Corp. LLC, a Delaware limited liability company and wholly-owned subsidiary of
MFI ("Borrower"), certain guarantors named therein, including MFI and Leasecomm,
and Lender, Lender has agreed to make the Loan to Borrower; and
B. Guarantor, being affiliated with Borrower, acknowledges and
agrees that Guarantor has received and will receive direct and indirect benefits
from the extension of the Loan made to Borrower.
C. Guarantor wishes to grant 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:
1. Conditional Guaranty.
(a) Subject to Section 1(e), Guarantor hereby
unconditionally and irrevocably guarantees to 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 Lender,
(collectively, the "Guaranteed Obligations"). Except as provided in Section
1(e), 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 "Credit Document" and, collectively,
the "Credit 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 Lender
under the Credit Agreement and the "Credit Documents" referred to therein 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 Lender under the Credit Documents, including without
limitation all fees, costs, expenses and indemnity obligations thereunder.
(b) In the event any Credit 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 Credit Document had not been so rejected.
(c) 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 Credit Documents.
(d) Guarantor further agrees that if any payment made by
Borrower or Guarantor to Lender on any Guaranteed Obligation is rescinded,
recovered from or repaid by 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 Lender after the date hereof.
(e) 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.
2. Guaranty Continuing, Absolute, Unlimited. Subject to
Section 1(e), 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
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.
3. Waiver. Guarantor unconditionally and irrevocably waives,
to the fullest extent permitted by applicable law: (a) notice of any of the
matters referred to in Section 2 hereof; (b) 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 Credit Document; (c) any requirement for the
enforcement, assertion or exercise of any right, remedy, power or privilege
under or in respect of any Credit Document, including, without limitation,
diligence in collection or protection of or realization upon the Guaranteed
Obligations or any part thereof or any collateral therefor; (d) any requirement
of diligence; (e) any requirement to mitigate the damages resulting from a
default by Borrower under any Credit Document; (f) the occurrence of every other
condition precedent to which Guarantor or Borrower may otherwise be entitled;
(g) the right to require 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 Lender's
power whatsoever; (h) the right to have the property of Borrower first applied
to the discharge of the Guaranteed Obligations and (i) 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
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.
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 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 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 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 Lender has not made any representations to Guarantor
concerning the financial condition of Borrower.
4. Security. Subject to Permitted Encumbrances (and the other
Liens permitted by Section 6.7 of the Credit Agreement) and Section 1(e), the
Guaranteed Obligations are secured by collateral more fully described in the
Credit Documents and the Credit Agreement.
5. Miscellaneous.
(a) 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 Credit Agreement.
(b) 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. No notice to or demand on Guarantor shall be deemed to
be a waiver of the Obligations or of the right of Lender to take further action
without notice or demand as provided in this Guaranty. No course of dealing
between Guarantor and 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 Lender
and if so given shall only be effective in the specific instance in which given.
(c) 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 Lender (and any attempted assignment or transfer by Guarantor
without such consent shall be null and void).
(d) 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.
(e) 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, 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 Credit Document or any other
document evidencing Obligations of Borrower to Lender, or to waive any
obligation of Borrower to perform any act or acts, as Lender may deem advisable.
(f) 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
CREDIT 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 CREDIT DOCUMENT. Each party to this GUARANTY irrevocably consents to service
of process in the manner provided for notices in Section 8.1 of the Credit
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.
(g) 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 Credit
Document by telecopy shall be effective as delivery of a manually executed
counterpart of this Guaranty or of such other Credit Document.
(h) No Waiver; Rights Cumulative. No course of dealing
between Guarantor and Lender, or 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 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.
(i) No Partnership. The relationship between 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 Credit Documents. Guarantor shall indemnify, defend, and
save Lender harmless from any and all claims asserted against Lender as being
the agent, partner, or joint-venturer of Guarantor.
(j) Entire Agreement. This Guaranty and the other Credit
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 Lender which has not been incorporated
in this Guaranty or another Credit Document.
(k) 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 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.
6. Joint and Several Obligations. All Obligations, agreements
and liabilities of Guarantor under this Guaranty shall be joint and several.
7. Covenant of Guarantor. Guarantor hereby covenants and
agrees that, from and after the date hereof, it will not originate any new lease
financing business other than new leases financed by Borrower.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Conditional Guaranty as of the day and year first above written.
MICROFINANCIAL INCORPORATED
By: _______________________
Name:
Title:
LEASECOMM CORPORATION
By: _______________________
Name:
Title:
Commonwealth of Massachusetts)
) ss.
County of ___________________)
On June __, 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:______________________________
Commonwealth of Massachusetts)
) ss.
County of ___________________)
On June __, 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:______________________________