Exhibit 10.2

 

AMENDED AND RESTATED GUARANTY AGREEMENT

 

THIS AMENDED AND RESTATED GUARANTY AGREEMENT (“Guaranty”), dated as of June 22,
2004, is executed by NEWTEK BUSINESS SERVICES, INC., a New York corporation
(“Guarantor”), in favor of DB STRUCTURED PRODUCTS, INC., a Delaware corporation
(“Counterparty”).

 

RECITALS

 

Newtek Small Business Finance, Inc. (the “Borrower”) has requested that the
terms of the Amended and Restated Master Loan and Security Agreement, dated as
of December 31, 2002 (as amended, restated or otherwise modified and in effect
from time to time, the “Loan Agreement”), between Borrower and Counterparty, be
amended pursuant to a Third Amendment to Amended and Restated Master Loan and
Security Agreement, dated as of the date hereof (the “Third Amendment”).

 

The Counterparty’s willingness to enter into the Third Amendment is conditioned
on the Guarantor’s execution and delivery of this Guaranty.

 

Guarantor has received and will continue to receive substantial direct and
indirect benefits from the extension of credit to Borrower by Counterparty
pursuant to the Loan Agreement and thus has agreed to provide the guaranty of
the Guaranteed Obligations (as defined herein) to the Counterparty as set forth
herein.

 

Capitalized terms not defined on Schedule attached hereto shall have the
meanings assigned to such terms in the Loan Agreement.

 

NOW THEREFORE, the Guarantor hereby agrees with the Counterparty as follows:

 

Guaranty.

 

To induce the Counterparty to enter into the Third Amendment, subject to the
terms and provisions hereof, Guarantor absolutely, unconditionally and
irrevocably guarantees to the Counterparty and its respective successors and
permitted assigns the prompt payment when due (whether at stated maturity, by
required prepayment, by acceleration or otherwise), subject to any applicable
grace period, of (i) all of the present and future payment obligations of
Borrower pursuant to the Loan Agreement (collectively, the “Loan Agreement
Obligations”), and (ii) all of the present and future payment obligations of
Borrower or its affiliates pursuant to the Loan Documents (collectively, the
“Loan Document Obligations,” and together with the Loan Agreement Obligation,
the “Guaranteed Obligations”). This Guaranty does not extend to the payment of
any damages assertable against Borrower that are excluded or limited by any
provision of the Loan Agreement.

 

The Guarantor acknowledges and agrees that the Guaranteed Obligations are a
guarantee of payment, and not collection, and that the Counterparty shall have
no duty or obligation to

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proceed or exhaust any remedy against Borrower, or to give any notice whatsoever
to the Guarantor, prior to collecting amounts due from or exercising other
remedies against the Guarantor hereunder.

 

The obligations of the Guarantor under this Guaranty are independent of the
obligations of Borrower, and a separate action or actions may be brought and
prosecuted against the Guarantor to enforce this Guaranty, irrespective of
whether any action is brought against the Borrower or whether the Borrower is
joined in any such action or actions. The liability of the Guarantor under this
Guaranty shall be absolute and unconditional, and, to the fullest extent
permitted by applicable law, irrespective of any other circumstances whatsoever
that might otherwise constitute a legal or equitable discharge or defense of a
surety or guarantor.

 

The Guarantor will not exercise any rights that it may acquire by way of
subrogation under this Guaranty, by any payment made hereunder or otherwise,
until all Guaranteed Obligations shall have been satisfied in full or paid in
full in cash. If any amount shall be paid to the Guarantor on account of such
subrogation rights at any time when all the Guaranteed Obligations of Borrower
shall not have been satisfied in full or paid in full in cash, such amount shall
be held in trust for the benefit of the Counterparty and shall forthwith be paid
to the Counterparty to be credited and applied upon the Guaranteed Obligations
of Borrower.

 

Notwithstanding anything in this Guaranty to the contrary, the Guaranteed
Obligations are only those undertakings specifically described above.

 

Covenant of the Guarantor. The obligations of Guarantor under this Guaranty
shall rank at all times during the term of this Guaranty at least pari passu
with all other senior unsecured indebtedness of the Guarantor.

 

Limitation of Liability. Notwithstanding any provision of this Guaranty to the
contrary, in no event shall Guarantor be liable for any lost profits, lost
sales, business interruption, lost business opportunities, lost or disallowed
tax credits, lost tax benefits, consequential, incidental, punitive or exemplary
damages, except to the extent such amounts are specifically included in the
Guaranteed Obligations pursuant to the terms of the Loan Agreement.

 

Consents and Waivers.

 

Guarantor hereby waives (i) notice of acceptance of this Guaranty, (ii)
presentment and demand concerning the liabilities of Guarantor, except for the
demand for payment specified in Section 6, and (iii) any right to require that
any action or proceeding be brought against Borrower or any of its respective
assets or properties, or against any other person, or to require that
Counterparty seek enforcement of any performance against Borrower or any other
person, prior to any action against Guarantor under the terms hereof.

 

Except as to applicable statutes of limitation, no delay of Counterparty in the
exercise of, or failure to exercise, any rights hereunder shall operate as a
waiver of such rights, a waiver of any other rights or a release of Guarantor
from any obligations hereunder.

 

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Guarantor consents to the renewal, compromise, extension, acceleration or other
changes in the time of payment of or other changes in the terms of the
Guaranteed Obligations, or any part thereof or any changes or modifications to
the terms of the Loan Agreement.

 

Reservation; No Defenses. Guarantor reserves to itself all rights of setoff, and
all counterclaims and defenses to which Borrower is or may be entitled to
arising from or out of the Loan Agreement on and after the Third Amendment
Effective Date except for defenses arising out of the bankruptcy, insolvency,
dissolution or liquidation of Borrower on and after the Third Amendment
Effective Date. Neither the Borrower nor the Guarantor has any defense, offset,
counterclaim or right of recoupment with respect to its obligations under the
Loan Agreement or this Guaranty as of the Third Amendment Effective Date, and
that all such defenses, offsets, counterclaims and rights of recoupment existing
on the Third Amendment Effective Date, whether known or unknown, are hereby
unconditionally waived.

 

Demands and Notices. If Borrower fails or refuses to pay any Guaranteed
Obligation (or any bankruptcy or any insolvency proceeding is commenced by or
against Borrower), Counterparty shall make a demand upon Guarantor at such time
as Counterparty seeks payment by Guarantor under this Guaranty (a “Payment
Demand”). A Payment Demand shall be in writing and shall reasonably specify in
what manner and what amount Borrower has failed to pay and an explanation of why
such payment is due, with a specific statement that Counterparty is calling upon
Guarantor to pay under this Guaranty. A Payment Demand satisfying the foregoing
requirements shall be required with respect to any Guaranteed Obligation before
Guarantor is required to pay such Guaranteed Obligations and shall be deemed
sufficient notice to Guarantor that it must pay the Guaranteed Obligation
specified. A single written Payment Demand shall be effective as to any specific
default during the continuance of such default or, upon acceleration, as to the
entire amount due as a result of such acceleration, until Borrower or Guarantor
has cured such default or, upon acceleration, paid the entire amount due as a
result of such acceleration, and additional written demands concerning such
default or, upon acceleration, the amount due as a result of such acceleration
shall not be required until such default is cured or, upon acceleration, the
entire amount due as a result of such acceleration is paid.

 

Representations and Warranties. Guarantor hereby represents and warrants as
follows:

 

Guarantor is a corporation duly organized, validly existing and in good standing
under the laws of the state of its incorporation as set forth on the first page
hereof, and Guarantor has all requisite corporate power and authority to
execute, deliver and perform this Guaranty.

 

The execution, delivery, and performance of this Guaranty have been and remain
duly authorized by all necessary corporate action by Guarantor and do not
contravene any provision of law or of the Guarantor’s constitutional documents
or any contractual restriction binding on the Guarantor or its assets.

 

No authorization, approval, consent or order of, or registration or filing with,
any court or other governmental body having jurisdiction over Guarantor is
required on the part of Guarantor for the execution and delivery of this
Guaranty, and other than violations that either individually or in the aggregate
would not have a material adverse effect on Guarantor’s ability to perform its
obligations hereunder.

 

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This Guaranty is a legal, valid and binding obligation of Guarantor, enforceable
against Guarantor in accordance with its terms except as limited by (i) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity), or (ii) bankruptcy, insolvency or other laws of
general application relating to the enforcement of creditors’ rights and by
general equitable principles.

 

Additional Covenants of the Guarantor. Guarantor covenants and agrees with
Counterparty that so long as any Advance is outstanding and the Counterparty
shall have any obligation to make any Advance under the Loan Agreement, and
until payment in full of all Secured Obligations:

 

8.01 Transfer of Shares and Ownership of Borrower. Guarantor (a) shall not, at
any time, sell or otherwise transfer in any way any shares of Borrower,
irrespective of the class and types of shares, owned by Guarantor; and (b) will,
at all times, own, on a fully diluted basis, not less than 80% of the shares of
each class of capital stock of the Borrower.

 

8.02 Transactions with Affiliates. The Guarantor will not enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate of the
Guarantor unless such transaction is (a) otherwise permitted by the Guaranty,
(b) in the ordinary course of the Guarantor’s business and (c) upon fair
consideration and reasonable terms no less favorable to the Guarantor than it
would obtain in a comparable arm’s length transaction with a Person which is not
an Affiliate of the Guarantor.

 

8.03 No Distributions. Guarantor shall not make any Distribution, payment on
account of, or set apart assets for, a sinking or other analogous fund for the
purchase, redemption, defeasance, retirement or other acquisition of any equity
of the Guarantor, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Guarantor. Guarantor shall also not request
to receive, accept or demand any Distribution from Borrower.

 

8.04 Maintenance of Net Worth. Prior to the first closing of a Qualifying Stock
Offering, Guarantor shall not permit consolidated Net Worth of the Guarantor and
its Subsidiaries to be less than $30,000,000 at any time. On or after the first
closing of a Qualifying Stock Offering, Guarantor shall not permit consolidated
Net Worth of the Guarantor and its Subsidiaries to be less than $55,000,000 at
any time.

 

8.05 Maintenance of Ratio of Total Indebtedness to Net Worth. Guarantor shall
not permit the ratio of Total Indebtedness of the Guarantor and its Subsidiaries
to consolidated Net Worth of the Guarantor and its Subsidiaries to be greater
than 6.00:1.00 at any time.

 

8.06 Maintenance of Profitability. The Guarantor shall not permit the
Guarantor’s Net Income (before income taxes) for any period of three consecutive
fiscal quarters ending after the Effective Date (each such period, a “Test
Period”) to be less than $1.00.

 

8.07 Keyman Requirement. If Barry Sloane, Brian Wasserman or Jeffrey Rubin shall
cease to be a director of Guarantor or shall cease to maintain the same title
and responsibilities as an officer of Guarantor as such person held on the Third
Amendment Effective Date (whether due to death, disability, termination of
employment or any other reason), Guarantor shall, within 90

 

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days of each such event, retain a qualified replacement for such person (for the
entire position, if such person has ceased to maintain such position in its
entirety, or for the responsibilities that are no longer being performed by such
person, if such person is continuing to perform certain, but not all of such
responsibilities), such replacement to be subject to the prior written approval
of Counterparty, which approval shall not be unreasonably withheld.

 

8.08 Reaffirmation of Release. On or before the next Business Day after
receiving the SBA’s approval of the Third Amendment and the transactions
contemplated therein, a duly authorized officer of Guarantor shall execute and
deliver to Lender the Reaffirmation of Release Letter in the form attached to
the Third Amendment as Exhibit A (“Reaffirmation of Release Letter”).”

 

Assignment. Neither Guarantor nor Counterparty may assign its rights, interest,
or obligations hereunder to any other person without the prior written consent
of Guarantor or Counterparty, as the case may be; provided, however, that
Counterparty may assign its rights, interest, or obligations hereunder to any
person who is a permitted transferee under the Loan Agreement.

 

Survival of Representations, Warranties and Indemnities. All representations,
warranties, indemnities, and undertakings to pay costs and expenses contained in
this Guaranty or made in writing by or on behalf of the Guarantor, as the case
may be, in connection herewith shall survive the execution and delivery of this
Guaranty and may be relied upon by the Counterparty or any assignees of the
Counterparty permitted under this Guaranty.

 

Expenses. The Guarantor agrees to pay upon written demand all out-of-pocket
expenses (including the reasonable fees and expenses of the Counterparty’s
counsel) relating to the enforcement or protection of the rights of the
Counterparty hereunder, provided, however, that the Guarantor shall not be
liable for any such out-of-pocket expenses of the Counterparty if no payment
from the Guarantor pursuant to the terms and conditions of this Guaranty is due.

 

Severability. If any provision of this Guaranty or the application thereof to
any person or circumstance shall be invalid or unenforceable, then the remaining
provisions or the application of such provision to persons or circumstances
other than those as to which it is invalid or unenforceable, shall continue to
be valid and enforceable.

 

Governing Law.

 

THIS GUARANTY SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW RULES THEREOF OTHER
THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

 

Entire Agreement. The parties hereto acknowledge and agree that this Guaranty
represents all of the agreements and understandings relating to the subject
matter hereof and supersedes all prior written and oral agreements or
understandings between or among Guarantor and Counterparty.

 

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Interpretation and Reliance. No presumption will apply in favor of any party
hereto in the interpretation of this Guaranty or in the resolution of any
ambiguity of any provisions hereof.

 

No Oral Change. No amendment of any provision of this Guaranty shall be
effective unless it is in writing and signed by Guarantor and Counterparty. No
waiver of any provision of this Guaranty, and no consent to any departure by any
party therefrom, shall be effective unless it is in writing and signed by the
party against which such waiver or consent is asserted, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

 

Headings and References. The headings used herein are for purposes of
convenience only and shall not be used in construing the provisions hereof.

 

Notices. Any notice or communication required or permitted hereunder shall be
given in writing, sent by (a) personal delivery, (b) expedited delivery service
with proof of delivery, (c) registered or certified United States mail, postage
prepaid, or (d) prepaid telegram or facsimile, addressed to the appropriate
party as follows:

 

To Guarantor:

  

Newtek Business Services, Inc.

462 Seventh Avenue

14th Floor

New York, New York 10018

Attention: Barry Sloane

Facsimile: (212) 643-1006

with a copy to:

  

Cozen O’Connor

1667 K Street, N.W.

Suite 500

Washington, D.C. 20006-1650

Attention: Matthew Ash

Facsimile: (202) 912-9880

To Counterparty:

  

DB Structured Products, Inc.

60 Wall Street

New York, New York 10005

Attention: David J. Bell

Facsimile: (212) 797-5695

with a copy to:

  

Bingham McCutchen LLP

399 Park Avenue, 21st Floor

New York, New York 10022

Attention: F. Mark Fucci, Esq.

Facsimile: (860) 240-2567

 

Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient’s

 

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normal business hours, or at the beginning of the recipient’s next business day
after receipt if not received during the recipient’s normal business hours. All
Notices by telegram or telecopier shall be confirmed promptly after transmission
in writing by certified mail or personal delivery. Any party may change any
address to which Notice is to be given to it by giving notice as provided above
of such change of address.

 

Counterparts. This Guaranty may be executed in any number of counterparts, each
of which when so executed shall be deemed to constitute one and the same
Guaranty. A facsimile of a counterpart hereof shall be deemed an original
counterpart and may be relied upon for all purposes hereunder.

 

Certain Obligations. Guarantor agrees that to the extent Borrower makes any
payment in respect of the Guaranteed Obligations, which payment or any part
thereof is subsequently required to be repaid by a Counterparty or declared to
be fraudulent or preferential, set aside, recovered, rescinded or is required to
be retained by or repaid to a trustee, receiver, or any other person under any
bankruptcy code, common law, or equitable cause, then and to the extent of such
payment, the obligation or the part thereof intended to be satisfied shall be
revived and continued in full force and effect with respect to Guarantor’s
obligations hereunder, as if such payment had not been made. The terms of this
Section 20 shall survive termination of the Loan Agreement.

 

Dispute Resolution. Any dispute between the Guarantor, on the one hand, and the
Counterparty on the other, shall be resolved in accordance with Sections 11.10
and 11.11 of the Loan Agreement.

 

Legal Opinions. Counterparty shall have received on or before the date hereof
the opinion of counsel to Guarantor, to the effect that (i) Guarantor has all
requisite corporate power and authority to execute and deliver the Guaranty
Agreement and to perform its obligations thereunder, (ii) the Guaranty Agreement
has been duly authorized, executed and delivered by Guarantor and constitutes
the legal, valid and binding agreement, enforceable against Guarantor in
accordance with its terms, (iii) the execution, delivery, and performance by
Guarantor of the Guaranty Agreement (a) do not require any consent, approval,
authorization, exemption, license, permission or order of filing, recording, or
registration with, or qualification by or notice to, any person or governmental
body under any applicable law and (b) do not result in a breach of or violation
of any of the terms and provisions of, or constitute a default under Guarantor’s
certificate of incorporation and bylaws, each as amended, or any agreement,
judgment, injunction, order, decree, or other instrument to which Guarantor is
subject.

 

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IN WITNESS WHEREOF, the parties have executed and delivered this Guaranty as of
the date first above written.

 

NEWTEK BUSINESS SERVICES, INC., as Guarantor By:  

/s/    Barry Sloane        

    Name:   Barry Sloane     Title:   Chief Executive Officer

 

DB STRUCTURED PRODUCTS, INC., as Counterparty By:  

/s/    Elizabeth A. Whalen        

    Name:   Elizabeth A. Whalen     Title:   Director

 

By:  

/s/    Christine Belbusti        

    Name:   Christine Belbusti     Title:   Vice President

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Schedule 1

 

Definitions

 

“Distribution” shall mean any dividends (other than dividends payable solely in
common stock); distributions; return of capital to any stockholders, general or
limited partners or members; other payments, distributions or delivery of
property or cash to stockholders, general or limited partners or members; or any
redemption, retirement, purchase or other acquisition, directly or indirectly,
of any shares of any class of capital stock now or hereafter outstanding (or any
options or warrants issued with respect to capital stock), general or limited
partnership interest; or the setting aside of any funds for the foregoing;
provided, however, that the term “Distribution” shall not include payments in
consideration of the delivery of goods and services provided that such goods and
services are in the ordinary course of the Guarantor’s business and are provided
upon fair and reasonable terms no less favorable to the Guarantor than it would
obtain in a comparable arm’s length transaction with a Person which is not a
stockholder, general partner or limited partner, or member.

 

“Material Adverse Effect” shall mean in relation to any event, occurrence or
development of whatsoever nature (including adverse determination in any
litigation, arbitration or governmental investigation or proceeding) any
materially adverse effect on (a) the Property, business, operations, financial
condition or prospects of a Person, (b) the ability of a Person to perform its
obligations under any of the Loan Documents to which it is a party, (c) the
validity or enforceability of any of the Loan Documents or the rights and
remedies of Counterparty thereunder, (d) the rights and remedies of the
Counterparty under any of the Loan Documents, (e) the timely payment of the
principal of or interest on the Advances or other amounts payable in connection
therewith or (f) the Collateral.

 

“Net Income” shall mean, with respect to any Person, for any period, the net
earnings (or loss) after taxes of such Person and its Subsidiaries on a
consolidated basis for such period taken as a single accounting period
determined in accordance with GAAP.”

 

“Net Worth” shall mean, with respect to any Person as of a particular date, all
amounts which would be included under capital on a balance sheet of such Person
at such date, including Permitted Subordinated Debt, if applicable, determined
in accordance with GAAP.

 

“Total Indebtedness” shall mean, with respect to any Person for any period, the
aggregate Indebtedness of such Person and its Subsidiaries, determined in
accordance with GAAP, less (i) the amount of any nonspecific balance sheet
reserves, (ii) an amount of debt equal to the Guaranteed Portions of any SBA
Loans owned by such Person and its Subsidiaries; and (iii) any debt related to
repurchase agreements, maintained in accordance with GAAP.