8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (date of earliest event reported): February 10, 2009

MICROFINANCIAL INCORPORATED

(Exact name of registrant as specified in its charter)

MASSACHUSETTS

(State or other jurisdiction of incorporation)

1-14771	04-2962824
(Commission file number)	(IRS Employer Identification Number)

10-M Commerce Way, Woburn, MA 01801

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: 781-994-4800

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Ex-10.1 Agreement and Amendment No. 1 to Restated Credit Agreement dated February 10, 2009

Ex-10.2 Additional Lender Supplement dated February 10, 2009

Ex-10.3 Commitment Increase Supplement dated February 10, 2009

Ex-99.1 Press Release dated February 13, 2009

Item 1.01. Entry into a Material Definitive Agreement.

On February 10, 2009, the Registrant’s wholly-owned subsidiary, TimePayment Corp. (the “Borrower”) entered into an amended secured revolving line of credit (the “Facility”) with Sovereign Bank, as agent (the “Agent”) and the lenders thereunder (the “Lenders”). The Facility was originally entered into in August 2007. It was amended and restated in July 2008 in order to increase the total commitment of the Lenders from $30 million to $60 million.

In connection with the most recent amendment, the total commitment of the Lenders was further increased from $60 million to $85 million, through the addition of one Lender and the increased commitment of another. Availability under the Facility remains subject to a borrowing base that is calculated with respect to eligible receivables. Under the amendment, the interest rate payable by the Borrower under the Facility for Base Rate loans was increased from the Base Rate (defined in the Facility to mean the “prime rate” made available by the Agent from time to time) to the Base Rate plus 1.75%. The interest rate on LIBOR loans was increased from LIBOR plus 2.75% to LIBOR plus 3.75%. In either case, the interest rate will not be below five percent. The Registrant was in compliance with the covenants of the Facility at the time of the February 10 amendment.

The other material terms of the Facility remain the same, including the borrowing base calculation, the maturity date of August 10, 2010, and the other affirmative and negative covenants applicable to the Registrant and the Borrower (including financial covenants). The Facility is guaranteed by the Registrant and by Leasecomm Corporation (“Leasecomm”), also a wholly-owned subsidiary of the Registrant. The Facility and related guarantees are secured by a first priority security interest in the assets of the Borrower, the Registrant and Leasecomm, including the equity interest of the Registrant in both the Borrower and Leasecomm.

The foregoing description of the Facility is a summary only, and is qualified in its entirety by reference to the Amended and Restated Credit Agreement between the parties attached to the Registrant’s Form 8-K filed on July 15, 2008 and the amendments thereto described in this report.

On February 13, 2009, the Registrant issued a press release announcing the amendment to the Facility. A copy of that press release is attached to this report as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits.

Exhibit	Exhibit Title
Exhibit 10.1	Agreement and Amendment No. 1 to Restated Credit Agreement dated February 10, 2009
Exhibit 10.2	Additional Lender Supplement dated February 10, 2009
Exhibit 10.3	Commitment Increase Supplement dated February 10, 2009
Exhibit 99.1	Press Release dated February 13, 2009

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

MICROFINANCIAL INCORPORATED Registrant
By:	/s/ James R. Jackson, Jr.
	James R. Jackson, Jr.
	Vice President and Chief Financial Officer

Dated: February 17, 2009

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EX-10.1

Exhibit 10.1

AGREEMENT AND AMENDMENT NO. 1

     THIS AGREEMENT AND AMENDMENT NO. 1 (this “Amendment”) is made as of February 10, 2009 by and among TIMEPAYMENT CORP, a Delaware corporation (the “Borrower”), SOVEREIGN BANK, as a Lender and as agent, and the other Lenders party hereto.

     WHEREAS, the parties hereto are parties to a certain Amended and Restated Credit Agreement, dated as of July 9, 2008 (as amended, supplemented, or restated from time to time, the “Credit Agreement”; terms defined in the Credit Agreement are used herein with the same meanings);

     WHEREAS, simultaneously with the execution of this Amendment, Wells Fargo Bank, National Association, acting through its Wells Fargo Business Credit operating division (“Wells Fargo”), is becoming a Lender under the Credit Agreement with a Commitment of $22,500,000 pursuant to an Additional Lender Supplement dated as of the date hereof and Commerce Bank & Trust Company is increasing its Commitment by $2,500,000 pursuant to a Commitment Increase Supplement dated as of the date hereof; and

     WHEREAS, the Borrower and the Lenders wish to agree to the amendments to the Credit Agreement and other matters contained herein;

     NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1. Amendments to the Credit Agreement.

          (a) Section 2.5(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“(a) Each Loan which is a Base Rate Loan shall bear interest on the outstanding principal amount thereof at a rate per annum equal to the greater of (i) the Base Rate plus one and three quarters percent (1.75%) per annum, which rate shall change contemporaneously with any change in the Base Rate, as provided below, and (ii) five percent (5%) per annum. Such interest shall be payable monthly in arrears on the first Business Day of each month.”

          (b) Section 2.5(b) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“(b) Each Loan which is a LIBOR Loan shall bear interest on the outstanding principal amount thereof, for each Interest Period applicable thereto, at a rate per annum equal to the greater of (i) the LIBOR Rate plus three and three quarters percent (3.75%) per annum, and (ii) five percent (5%) per annum. Such interest shall be payable monthly in arrears on the first Business Day of each month.

     2. Agreement to Assign Commitment. Wells Fargo hereby agrees to assign, within thirty (30) days after the date hereof, up to $2,500,000 of its Commitment to each of Sovereign Bank, TD Bank, N.A. and Danversbank if any or all of such Lenders so elect within such thirty (30) day period, or such other portions as Wells Fargo and the Lenders purchasing a portion of Wells Fargo’s Commitment may mutually agree. The assignments to be made under this Section 2 shall be made pursuant to an Assignment Agreement substantially in the form attached hereto as Exhibit A.

     3. Effective Date. This Amendment shall become effective as of the date first set forth above immediately after all of the following shall have occurred:

          (a) the execution and delivery of this Amendment by the Lenders and the Borrower;

          (b) the execution and delivery of the Additional Lender Supplement by Wells Fargo and the Borrower; and

          (c) the execution and delivery of the Commitment Increase Supplement by Commerce Bank & Trust Company and the Borrower.

     4. Representations. The Borrower represents and warrants to the Lenders as follows:

          (a) the representations and warranties contained in Section IV of the Credit Agreement are true and correct in all material respects on and as of the date hereof except to the extent that such representations and warranties expressly relate to an earlier date;

          (b) immediately following the effectiveness of this Amendment, no Default will have occurred and be continuing;

          (c) the resolutions referred to in Section 3.1(a)(viii) of the Credit Agreement remain in full force and effect; and

          (d) after giving effect to the increase to the Total Commitment as of the date hereof as contemplated hereby (assuming the Total Commitment, as so increased, is fully utilized by the Borrower), no Default will have occurred and be continuing and the Borrower will be in compliance on a pro forma basis with all covenants under Section VI of the Credit Agreement.

     5. General. The amendments to the Credit Agreement contained herein are limited as provided herein and do not extend to any other provisions of the Credit Agreement not specified herein or to any other matter. The Credit Agreement is ratified and confirmed and shall continue in full force and effect as amended hereby. This Amendment may be executed in any number of counterparts with the same effect as if the signatures hereto and thereto were upon the same instrument.

2

IN WITNESS WHEREOF, this Agreement and Amendment No. 1 has been executed as a sealed instrument as of the date first set forth above.

TIMEPAYMENT CORP.		SOVEREIGN BANK, Individually and as Agent
By:		By:
	Name: Richard F. Latour		Name: Jeffrey G. Millman
	Title: President		Title: Senior Vice President

TD BANK, N.A.
By:
	Name:	C. Lee Willingham
	Title:	Senior Vice President
COMMERCE BANK & TRUST COMPANY
By:
	Name:	David J. Costello
	Title:	Senior Vice President
DANVERSBANK
By:
	Name:	Mary E. McLemore
	Title:	Vice President
WELLS FARGO BANK, NATIONAL ASSOCIATION
By:
	Name:
	Title:

[Signature Page to Agreement and Amendment No.1]

EX-10.2

Exhibit 10.2

ADDITIONAL LENDER SUPPLEMENT

ADDITIONAL LENDER SUPPLEMENT, dated February 10, 2009 (this “Supplement”), to the Amended and Restated Credit Agreement dated as of July 9, 2008, as amended (as further amended, restated or supplemented from time to time, the “Credit Agreement”), among the Borrower, the Agent and the undersigned Lender (as defined in the Credit Agreement; terms defined in the Credit Agreement are used herein with the same meanings)
        .

WITNESSETH:

     WHEREAS, the Credit Agreement provides in Section 2.1(f)(i) thereof that any financial institution, although not originally a party thereto, may become a party to the Credit Agreement following consultation by the Agent with the Borrower and approval by the Agent, by executing and delivering to the Borrower and the Agent a supplement to the Credit Agreement in substantially the form of this Supplement; and

     WHEREAS, the undersigned Additional Lender was not an original party to the Credit Agreement but now desires to become a party thereto;

     NOW, THEREFORE, each of the parties hereto hereby agrees as follows:

     1. The undersigned Additional Lender agrees to be bound by the provisions of the Credit Agreement and agrees that it shall, on the date this Supplement is accepted by the Borrower and acknowledged by the Agent, become a Lender for all purposes of the Credit Agreement to the same extent as if originally a party thereto, with a Commitment of $22,500,000.

     2. The undersigned Additional Lender (a) represents and warrants that it is legally authorized to enter into this Supplement; (b) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 4.6 or 5.1 thereof, as applicable, and has reviewed such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Supplement; (c) agrees that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement or any other instrument or document furnished pursuant hereto or thereto; (d) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Credit Agreement or any other instrument or document furnished pursuant hereto or thereto as are delegated to the Agent by the terms thereof, together with such powers as are incidental thereto; and (e) agrees that it will be bound by the provisions of the Credit Agreement and will perform in accordance with its terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender.

     3. The undersigned’s address for notices for the purposes of the Credit Agreement is as follows:

Wells Fargo Bank, National Association

300 Commercial Street

Boston, MA 02109

     4. The Borrower represents and warrants that no Event of Default has occurred and is continuing on and as of the date hereof, and giving effect hereto.

     5. This Supplement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts, without regard to conflicts of law rules.

     This Supplement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same document.

[Signature Page Follows]

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     IN WITNESS WHEREOF, each of the undersigned has caused this Additional Lender Supplement to be executed and delivered under seal by a duly authorized officer on the date first above written.

		WELLS FARGO BANK, NATIONAL ASSOCIATION (acting through its Wells Fargo Business Credit operating division)
		By:
			Name:
			Title:
Agreed and accepted this                      day of February, 2009.
TIMEPAYMENT CORP.
By:
	Name: Richard F. Latour
	Title: President
SOVEREIGN BANK, Individually and as Agent
By:
	Name: Jeffrey G. Millman
	Title: Senior Vice President

[Signature Page to Additional Lender Supplement]

EX-10.3

Exhibit 10.3

COMMITMENT INCREASE SUPPLEMENT

     COMMITMENT INCREASE SUPPLEMENT, dated February 10, 2009 (this “Supplement”), to the Amended and Restated Credit Agreement, dated as of July 9, 2008, as amended (as further amended, restated or supplemented from time to time, the “Credit Agreement”), among the Borrower, the Agent and the undersigned Lender (as defined in the Credit Agreement; terms defined in the Credit Agreement are used herein with the same meanings).

WITNESSETH:

          WHEREAS, pursuant to Section 2.1(f)(i) of the Credit Agreement, the Borrower has the right, subject to the terms and conditions thereof, to request from time to time that any one or more of the Lenders increases its Commitment under the Credit Agreement;

          WHEREAS, the Borrower has given notice to the Agent of its request to increase the undersigned Lender’s Commitment pursuant to such Section 2.1(f)(i); and

          WHEREAS, pursuant to Section 2.1(f)(ii) of the Credit Agreement, the undersigned Lender now desires to increase the amount of its Commitment under the Credit Agreement by executing and delivering to the Borrower a supplement to the Credit Agreement in substantially the form of this Supplement;

          NOW THEREFORE, each of the parties hereto hereby agrees as follows:

     1. The undersigned Lender agrees, subject to the terms and conditions of the Credit Agreement, that on the date this Supplement is accepted by the Borrower, such Lender shall have its Commitment increased by $2,500,000, thereby making its total Commitment equal to $12,500,000.

     2. Borrower represents and warrants that no Default or Event of Default has occurred and is continuing on and as of the date hereof.

     3. This Supplement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts.

     4. This Supplement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same document.

[Signature Page Follows]

          IN WITNESS WHEREOF, each of the undersigned has caused this Commitment Increase Supplement to be executed and delivered under seal by a duly authorized officer as of the date first above written.

		COMMERCE BANK & TRUST COMPANY
		By:
			Name: David J. Costello Title: Senior Vice President
Agreed and accepted this 10th day of February, 2009.
TIMEPAYMENT CORP.
By:
	Name: Richard F. Latour Title: President
SOVEREIGN BANK, Individually and as Agent
By:
	Name: Jeffrey G. Millman Title: Senior Vice President

[Signature Page to Commitment Increase Supplement]

EX-99.1

Exhibit 99.1

Release February 13, 2009	Contact:
4:01 pm	Richard F. Latour
	President and CEO
	Tel: 781-994-4800

MICROFINANCIAL INCORPORATED
- - Company Announces Increase in Bank Credit Facility-

Woburn, MA— February 13, 2009— MicroFinancial Incorporated (NASDAQ: MFI) a financial intermediary specializing in vendor-based leasing and finance programs for microticket transactions, announced that its operating subsidiary, TimePayment Corp., has increased its line of credit with a five member bank syndicate led by Sovereign Bank, a subsidiary of Banco Santander (STD), from $60 to $85 million.

The loan agreement allows the Company to borrow up to $85 million against eligible lease receivables subject to a borrowing base calculation. The interest rate under the amended agreement will be the Prime Rate plus 1.75% or, at the Company’s option, LIBOR plus 3.75%, in each case with a minimum rate of five percent.

Richard Latour, President and Chief Executive Officer said, “Our ability to increase our line of credit in this challenging economic environment demonstrates a continued confidence in our Company. We are pleased to have increased our credit facility which, when combined with our strong cash flow from operations, will allow us to continue to provide our customers with the financial services they need to grow their business.”

About MicroFinancial

MicroFinancial Inc. (NASDAQ: MFI), is a financial intermediary specializing in microticket leasing and financing. MicroFinancial has been operating since 1986, and is headquartered in Woburn, Massachusetts.

About Sovereign

Sovereign Bank is a financial institution with principal markets in the Northeastern United States and is a subsidiary of Banco Santander, S.A. Sovereign Bank has 754 community banking offices,

over 2,300 ATMs and approximately 11,000 team members. Sovereign Bank offers a broad array of financial services and products including retail banking, business and corporate banking, cash management, capital markets and wealth management. Banco Santander, S.A. is an international financial services company based in Madrid, Spain. For more information on Sovereign Bank, call 1-877-SOV-BANK.

Statements in this release that are not historical facts, including statements about future dividends, growth plans, or future changes to the line of credit are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In addition, words such as “believes,” “anticipates,” “expects,” “views,” “will” and similar expressions are intended to identify forward-looking statements. We caution that a number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us or on our behalf. Readers should not place undue reliance on forward-looking statements, which reflect our views only as of the date hereof. We undertake no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances. We cannot assure that we will be able to anticipate or respond timely to changes which could adversely affect our operating results. Results of operations in any past period should not be considered indicative of results to be expected in future periods. Fluctuations in operating results or other factors may result in fluctuations in the price of our common stock. For a more complete description of the prominent risks and uncertainties inherent in our business, see the risk factors described in documents that we file from time to time with the Securities and Exchange Commission.