Document:

Agreement dated November 8, 2004

 

Exhibit 10.1

AGREEMENT

     This Agreement (hereinafter the “Agreement”) is made and entered into
between The TJX Companies, Inc. (hereinafter referred to collectively with its
subsidiaries and affiliates as “TJX” or the “Company”), and Carol Meyrowitz
(hereinafter the “Executive”), as of November 8, 2004. The Executive is
currently employed by the Company as a Senior Executive Vice President. The
parties seek through this Agreement to set forth the mutually agreed upon terms
and conditions of the Executive’s departure from TJX.

     1. Termination of Employment; Certain Remuneration. Effective January 21,
2005 or as of such earlier date as the Executive and the Company may mutually
agree, the Executive will cease to serve in her present position and will
promptly resign all Company officerships and directorships. Until January 21,
2005 the Executive shall continue faithfully to perform her current duties and
responsibilities. From January 21, 2005 until September 30, 2005, the
Executive will continue to be employed by the Company in a transitional and
consulting capacity. In that capacity her duties and responsibilities will
consist solely of meeting with and advising and consulting with the President
of Marmaxx Group in accordance with the schedule attached as Exhibit A, subject
to such schedule changes as are necessitated by illness or disability or are
otherwise reasonably necessary to accommodate scheduling conflicts of the
parties. During such period the Executive may accept other employment that is
consistent with her obligations hereunder (including the preceding sentence and
Sections 3 and 5 below). The Executive will cease to be employed by the
Company effective as of September 30, 2005. From the date hereof through and
including January 31, 2005, the Executive will continue to receive her current
level of salary and benefits. For the period February 1, 2005 through the last
day of FYE ‘06, the Executive will receive remuneration (the
“transition/consulting remuneration”) of $900,000, payable in substantially
equal installments over that period in accordance with the Company’s normal
payroll practices for executive employees; provided, that the
transition/consulting remuneration for any period shall be reduced by any
remuneration earned by the Executive from other employment as a full-time
(determined without regard to her transition/consulting obligations hereunder)
employee during such period. The foregoing payments of remuneration shall be
in addition to the benefits described in Section 2 below. Except as provided
in this Section 1 or in Section 2 below, the Executive shall not be entitled to
any additional awards under the Company’s Management Incentive Plan (as in
effect on the date hereof, “MIP”), Long Range Performance Incentive Plan (as in
effect on the date hereof, “LRPIP”), Stock Incentive Plan (as in effect on the
date hereof, the “Incentive Plan”) or any other incentive, retirement,
insurance, or fringe benefit plan or arrangement.

     2. Retirement and Other Benefits. Subject to and conditioned upon
satisfaction of compliance with the terms of this Agreement, TJX shall provide
the Executive with the following payments and benefits:

	 	(a)	 	MIP, LRPIP. The Executive shall be entitled to such payments,
if any, as are determined by the Executive Compensation Committee
(the “Committee”) in accordance with MIP to be owed to her under MIP
with respect to the FYE ‘05 award, in accordance with the terms of
that MIP award, but not less than her target award (55% of her actual
salary for FYE ‘05), to be paid not later than April 30, 2005. The
Executive shall be entitled to such payments, if any, as are
determined by the Committee in accordance with LRPIP to be owed to
her under LRPIP with respect to the three-year cycle ending in FYE
‘05, in accordance with the terms of her LRPIP award for that cycle,
such payments, if any, to be made at the same time as other LRPIP
awards, if any, are paid for such cycle. For FYE ‘06, the Executive
shall be entitled to a payment, in lieu of any MIP award for that
year, equal to 55% of her transition/consulting remuneration (as
defined in Section 1) determined net of any offset for other earnings
from employment as a full-time employee as described in Section 1.
Such payment, if any, shall be made at the same time as other awards
under MIP for FYE ‘06 are paid but in no event later than April 30,
2006. In lieu of any payment under LRPIP for the cycle ending in FYE
‘06, the Executive shall be paid, at the same time other awards, if
any, are paid in FYE ‘06, but not later than April 30, 2006, the
product of (i) the award payment, if any, that she would have had
under LRPIP for the award cycle ending in FYE ‘06 had she remained an
employee, multiplied by (ii) a fraction, the numerator of which is
thirty-six (36) if the Executive has not accepted other employment as
a full-time employee prior to the end of FYE ‘06, and otherwise the
number of months completed between the beginning of the FYE ‘04 to
FYE ‘06 LRPIP award and the date on which the Executive first accepts
such other employment as a full-time employee, and the denominator of
which is thirty-six (36). The Executive shall not be entitled to
any payments in respect of MIP or LRPIP except as specified in this
paragraph.
	 
	 	(b)	 	Restricted Stock. The Executive currently holds 37,500 shares
of restricted stock, granted under the Incentive Plan, that are
scheduled to vest in September 2005 and an additional 37,500 shares
of restricted stock, also granted under the Incentive Plan, that are
scheduled to vest in September 2006 (the “Affected Restricted
Shares”). The Executive shall vest in the Affected Restricted Shares
at the same time and under the same conditions as she would have
vested in those shares had

 

 

	 	 	 	she remained a full-time employee through September 30, 2006. Except as
specified in this paragraph, the Executive shall have no other rights
with respect to awards of restricted stock granted under the Incentive
Plan.
	 
	 	(c)	 	Stock Options. The Executive currently holds the following
unvested (unexercisable) stock options, granted under the Incentive
Plan, that will be subject to the following vesting in accordance
with this Agreement (the “Affected Options”): a tranche covering
75,000 shares, granted in 2002, that is scheduled to vest (become
exercisable) on September 4, 2005; another tranche, also covering
75,000 shares, granted in 2003, that is scheduled to vest (become
exercisable) on September 9, 2005; and a third tranche, also covering
75,000 shares, granted in 2004, that is scheduled to vest (become
exercisable) on September 8, 2005. The Affected Options shall vest
(become exercisable) in September 2005 at the same time that they
would have become exercisable had the Executive remained a full-time
employee. All of the Executive’s stock options granted under the
Incentive Plan, to the extent not yet vested (exercisable) as of
September 30, 2005, shall expire, terminate and be forfeited
immediately upon termination of the Executive’s employment. All of
the Executive’s stock options granted under the Incentive Plan,
including the Affected Options, to the extent not earlier exercised,
expired, terminated or forfeited in accordance with their terms,
shall continue to be exercisable for six months following termination
of the Executive’s employment (that is, until the close of business
on March 31, 2006), which is the treatment specified in the awards
previously granted to the Executive, and shall expire, terminate and
be forfeited at the close of business on March 31, 2006.
	 
	 	(d)	 	Pension Benefits. The Executive shall be entitled, when she
attains age 55, to a lump sum payment of her benefit accrued as a
Category B Key Employee under the terms of the Company’s Supplemental
Executive Retirement Plan (“SERP”) as in effect on the date hereof,
taking into account service and remuneration through December 31,
2005. The amount of such lump sum shall be determined on the basis
of such actuarial assumptions as are then applied to the
determination of lump sum benefits under the SERP, or, if there are
no such factors then in use for such purpose, on the basis of such
actuarial assumptions as are then applied to the determination of
lump sum benefits under the Company’s Retirement Plan (as in effect
on the date hereof, “Retirement Plan”). In addition to the
foregoing, the Executive shall be entitled, following termination of
her employment hereunder, to her vested benefits under the Company’s
Retirement Plan and its Savings/Profit-Sharing Plan, in each case in
accordance with the terms of those plans. Attached as Exhibit B is
the Company’s estimate of the Executive’s accrued benefit under SERP;
provided, that Executive’s actual benefit amount shall be determined
under the provisions of SERP as in effect on the date hereof, using
final data. For the avoidance of doubt, the Executive shall not be
entitled to participate actively in (defer compensation or earn
additional accruals under) the Company’s Retirement Plan or its
Savings/Profit-Sharing Plan with respect to periods after September
30, 2005.
	 
	 	(e)	 	COBRA. The Company shall continue to provide the Executive
family medical coverage through September 30, 2005. Executive shall
be entitled to elect family medical coverage during the so-called
“COBRA” benefits continuation period beginning October 1, 2005. If
the Executive elects such coverage under COBRA, the Company shall pay
the Executive’s premium cost for such coverage through the period
ending December 31, 2006.
	 
	 	(f)	 	Other Benefits. Following termination of her employment on
September 30, 2005 and for the period thereafter ending at the end of
FYE ‘06, the Executive will be entitled to continued use of the
Company-provided automobile that was available to her prior to
October 1, 2005, on the same terms and conditions.

     3. Restricted Activities. The Executive agrees that some restrictions on
her activities during and after her employment are necessary to protect the
goodwill, Confidential Information (as defined in Section 5 below) and other
legitimate business interests of the Company:

	 	(a)	 	While the Executive is employed by the Company and thereafter
until and including January 31, 2007 (in the aggregate, the
“Non-Competition Period”), the Executive shall not, directly or
indirectly, be a partner or investor in, or be engaged in any
employment, consulting or fees-for-services relationship with, (i)
any business listed on Exhibit C hereto or (ii) any other business
that operates an off-price apparel and/or footwear and/or home
fashions or furnishings business, including any such business that is
a store-based, on-line, “e-commerce,” other internet-based, or
catalogue business, nor shall the Executive undertake any planning to
engage in any such business; provided, that the mere application for
employment with a competitive business shall not be treated as a
prohibited planning to engage in such business. The provisions of
this Section 3 and Sections 4 and 5 shall apply in lieu of any
noncompetition provision in SERP or other benefit plan under which
the Executive is entitled to benefits hereunder.

 

 

	 	(b)	 	The Executive agrees that, during her employment with the
Company, she will not undertake any outside activity, whether or not
competitive with the business of the Company, that could reasonably
give rise to a conflict of interest or otherwise interfere with her
duties and obligations to the Company.
	 
	 	(c)	 	The Executive agrees that, during the Non-Competition Period,
the Executive will not hire or retain, or attempt to hire or retain,
any employee of the Company or any individual who was an employee of
the Company during the six-month period preceding such hiring or
retention or attempt to hire, assist in such hiring by any Person,
encourage any such employee to terminate his or her relationship with
the Company, or solicit or encourage any supplier, vendor, contractor
or agent of the Company to terminate or diminish his, her or its
relationship with the Company. As used in this Agreement, “Person”
means an individual, a corporation, a limited liability company, an
association, a partnership, an estate, a trust and any other entity
or organization, other than the Company.

     4. Notification Requirement. Until the conclusion of the Non-Competition
Period, the Executive shall give notice to the Company of each new business
activity she has agreed or plans to undertake, at least fifteen (15) days prior
to commencing any such activity. Such notice shall state the name and address
of the Person for whom such activity is undertaken and the nature of the
Executive’s business relationship(s) and position(s) with such Person. The
Executive shall provide the Company with such other pertinent information
concerning such business activity as the Company may reasonably request in
order to determine the Executive’s continued compliance with her obligations
under Sections 3 and 5 hereof.

     5. Confidential Information. The Executive agrees that, except as
required by applicable law, rule, regulation or legal process, she will never,
directly or indirectly, use or disclose any Confidential Information belonging
to the Company. For purposes of this Agreement, “Confidential Information”
means any and all proprietary or confidential information of TJX contained in
documents or writings (the term “documents or writings” for purposes of this
Section 5 includes actual documents and writings as well as email and other
electronically formulated or transmitted writing and data) that is not
generally known by others with whom it competes or does business, including but
not limited to documents and writings relating to (a) products and services,
technical data, financial information, methods, processes, trade secrets,
know-how, developments, inventions, and formulae of the Company, (b) the
development, research, testing, marketing, financial activities and strategic
plans of the Company, (c) the manner in which TJX operates, (d) TJX’s actual
and projected financial performance, and (e) the substance of the relationships
with the people and organizations with whom the Company has business
relationships. Confidential Information also includes documents and writings
that TJX has received from investors, business partners or others with any
understanding, express or implied, that the information would not be publicly
disclosed. Notwithstanding the foregoing, “Confidential Information” does not
include any documents or writings (i) that are currently or become publicly
available or a matter of public knowledge or domain through no wrongful act or
omission by the Executive, or (ii) that are received by the Executive from a
third party who is not known by the Executive to be bound by an obligation of
confidentiality to TJX not to disclose that information. Upon resigning from
all Company officerships and directorships on January 21, 2005 and/or upon any
termination of her employment with the Company, other than by reason of death,
or at such later time as the Company by notice to the Executive may agree, the
Executive shall immediately return all writings and documents, including all
copies, relating to the Company’s business, and shall execute a certificate
certifying that she has returned all such items in her possession or under her
control.

     6. Remedies. TJX and the Executive agree without reservation that the
restraints set forth in Sections 3 and 5 hereof are necessary for the
reasonable and proper protection of the Company; that each and every one of the
restraints is reasonable with respect to subject matter, length of time, and
geographic area; and that these restraints will not prevent the Executive from
obtaining other suitable employment, if she wishes to do so, during the
Non-Competition Period. The Executive further agrees that, were she to breach
any of the covenants contained in Section 3 or Section 5, the damage to the
Company would be irreparable. The Executive therefore agrees that the Company,
in addition to any other remedies available to it, shall be entitled to
preliminary and permanent injunctive relief against any breach or threatened
breach by the Executive of any of those covenants. The Company shall also be
entitled to recover all attorney’s fees and expenses reasonably incurred by
the Company relating solely to any successful effort to obtain preliminary
injunctive relief. The Company is not entitled to recover any attorney’s fees
and expenses incurred by the Company that do not relate to the successful
effort to obtain preliminary injunctive relief even if such fees are incurred
in the same action. It is expressly agreed that the Company will not have to
post bond in connection with any such injunction, and that the Executive will
not take, and will not permit anyone else to take on her behalf, any position
in a court or any other forum inconsistent with any of her covenants and
agreements herein. In addition to the foregoing, the Company and the Executive
agree that, in the event of any breach of the Executive’s covenants hereunder,
the Executive shall immediately forfeit any and all rights or interests in the
compensation described in Section 1 hereof and to the retirement and other
benefits described in Section 2 hereof, to the fullest extent permitted by law,
and shall promptly pay over to the Company all amounts previously paid to her
thereunder (including, without limitation, the value of all restricted stock
previously vested hereunder and any stock purchased upon the exercise of stock
options vested hereunder, less the applicable exercise price). The Company and
the Executive further agree that, in the event that any provision of Section 3
or Section 5 of this Agreement is determined by any court of

 

 

competent jurisdiction to be unenforceable by reason of its being extended
over too great a time, too large a geographic area, or too great a range of
activities, that provision shall be deemed to be modified to permit its
enforcement to the maximum extent permitted by law. Further, the Company and
the Executive agree that the period of restriction described in Section 3 shall
be tolled, and shall not run, during any period of time in which the Executive
is in breach of the terms of Section 3 or Section 5 of this Agreement.

     7. Executive’s Release of Claims. In consideration of the benefits to be
provided the Executive hereunder, which benefits the Executive acknowledges are
not otherwise due, the Executive hereby releases, waives and forever discharges
TJX and all those persons, employees, directors, agents and entities (including
benefit plans) affiliated with it from and against any and all claims, rights
and causes of action now existing, both known and unknown, including but not
limited to all claims for breach of contract or misrepresentation, wrongful
discharge, breach of fiduciary duty, and claims of alleged violations of Title
VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act,
the Fair Labor Standards Act, the Employee Retirement Income Security Act, the
Americans With Disabilities Act, Massachusetts G.L. c. 151B, Massachusetts G.L.
c. 149, § 148, and any other local, state, or federal law, regulation or other
requirement or any other claim relating to or arising out of the Executive’s
employment with TJX and/or her ownership of Company stock. Notwithstanding
anything to the contrary contained herein, this release does not include and
will not preclude (a) claims under the Employee Retirement Income Security Act
(29 U.S.C. §1001 et seq.) for vested benefits under the Retirement Plan or
SERP; (b) claims under the Consolidated Omnibus Budget reconciliation Act of
1985 (“COBRA”); (c) rights, if any, to defense and indemnification from the
Company or its insurers for actions taken by the Executive in the course and
scope of her employment with the Company; (d) claims under the Massachusetts
Workers Compensation Act (M.G.L. c. 152) or any disability insurance policy;
(e) claims, actions, or rights to enforce the terms of this Agreement. The
Executive hereby covenants that she will not institute any charge, complaint,
or lawsuit to challenge the validity of this release or to otherwise assert
claims against TJX that have been waived hereunder, and that, if the Company is
not in breach of this Agreement, she will execute and not revoke another such
general release in favor of TJX, in the form appended hereto and marked
“Exhibit D,” coincident with the effective date of termination of her
employment with the Company.

     8. Entire Agreement. This Agreement, together with all other plans,
agreements and documents referred to herein and as modified hereby, constitute
the entire agreement between TJX and the Executive, and supersede any other
contracts or commitments with respect to the Executive’s employment with the
Company, and/or the termination of her employment, including without limitation
that certain employment agreement between the Executive and the Company dated
as of January 28, 2001 and that certain change of control severance agreement
date as of April 9, 1999, as amended as of January 28, 2001, except to the
extent expressly provided for herein.

     9. Modification of Agreement. This Agreement may only be amended,
modified or waived by a writing signed by parties duly authorized to do so.

     10. Successors and Assigns; Death Benefits. It is agreed and understood
that this Agreement shall inure to the benefit of and be binding upon the
parties’ successors and assigns. If the Executive dies prior to the payment of
all remuneration specified in Section 1, the balance shall be paid to her
estate. If the Executive dies prior to the payment of other benefits
hereunder, the heirs or beneficiaries of the Executive or the executors,
personal representatives or administrators of the Executive’s estate shall be
entitled only to such death benefits and other rights and benefits, if any, as
are provided under the terms of the applicable plan or program.

     11. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given three days after having been
mailed by first-class mail or registered or certified mail, or twelve hours
after having been delivered or sent by facsimile, to (a) in the case of the
Executive, to her address as shown in the records of the Company (or such other
address as she may specify by notice given in accordance with this Section),
and (b) in the case of the Company, to The TJX Companies, Inc., Attn: Chief
Executive Officer, 770 Cochituate Road, Framingham, MA 01701.

     12. Miscellaneous.

	 	(a)	 	All payments to the Executive and all benefits, entitlements
and accruals of the Executive are conditioned upon the payment by the
Executive of the employee’s portion of applicable required tax
withholdings, including, without limitation, FICA (including
Medicare) tax withholdings. TJX may reduce any payments by the
amount of any such applicable tax withholdings.
	 
	 	(b)	 	The provisions of this Agreement shall survive any termination
if so provided herein or if necessary or desirable to accomplish the
purposes of other surviving provisions, including, without
limitation, the obligations of the Executive under Sections 3 and 5
hereof. The obligations of the Company under Section 1 or Section 2
of the Agreement or otherwise

 

 

	 	 	 	(including under MIP, LRPIP, the Incentive Plan or SERP) to make
payments to or on behalf of the Executive are expressly conditioned
upon the Executive’s continued full performance of all of her
obligations under Sections 3 and 5 hereof.
	 
	 	(c)	 	If the Executive terminates her employment voluntarily, prior
to September 30, 2005, the Executive shall not be entitled to any
compensation or benefits described in Section 1 or Section 2 of this
Agreement or otherwise to any compensation or benefits following the
termination of her employment, other than the payment of already
accrued but unpaid salary, her vested benefits under the Company’s
tax-qualified retirement plans, and such rights, if any, to so-called
“COBRA” health benefit coverage continuation as she may have under
law. Notwithstanding the foregoing, and for the avoidance of doubt,
the Executive shall continue to be bound by her obligations under
Sections 3 and 5 of this Agreement in the event of a termination of
her employment for any reason, voluntary or involuntary, including a
termination described in the preceding sentence.
	 
	 	(d)	 	The parties hereto acknowledge that certain provisions hereof
may be required to be amended, following the issuance of guidance by
the Internal Revenue Service with respect to Section 409A of the
Internal Revenue Code as recently enacted (“Section 409A”), to avoid
the acceleration of tax and the possible imposition of additional tax
under Section 409A with respect to certain payments and benefits
under Section 1 and Section 2 of this Agreement. The Company agrees
that it will not unreasonably withhold its consent to any such
amendments which in its determination are (i) feasible and necessary
to avoid adverse tax treatment under Section 409A for the Executive,
and (ii) not adverse to the interests of the Company.
	 
	 	(e)	 	In order to be certain that this Agreement will resolve any and
all concerns that the Executive might have, TJX requests that she
carefully consider its terms, including the general release of claims
set forth above. For a period of seven days following her execution
of this Agreement, the Executive may revoke her acceptance hereof as
to the release of claims under the Age Discrimination in Employment
Act, and this Agreement shall not become effective or enforceable as
to the release of such claims until after that seven-day revocation
period has expired.
	 
	 	(f)	 	In signing this Agreement, the Executive acknowledges that she
understands its provisions; that her agreement is knowing and
voluntary; that she has been afforded a full and reasonable
opportunity of at least 21 days to consider its terms and consult
with or seek advice from an attorney of her choosing; and that she
has been advised to seek counsel from an attorney and has in fact
done so.
	 
	 	(g)	 	The parties’ substantive and procedural rights with respect to
this Agreement shall be governed by the laws of the Commonwealth of
Massachusetts, without resort to choice of law or conflict of law
principles.
	 
	 	(h)	 	This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and which together shall
be deemed to be one and the same instrument.

	 	 	 	 	 
	ACCEPTED AND AGREED TO:	 	ACCEPTED AND AGREED TO:
	 
	 	 	 	 
	/s/ Carol Meyrowitz	 	The TJX Companies, Inc.
	

	 	 	 	 
	Carol Meyrowitz

	 	By:
	 	/s/ Edmond J. English
	

	 	 	 	
 
	

	 	 	 	President and Chief Executive Officer<PAGE>

                                                                   EXHIBIT 10.11

                                                                  EXECUTION COPY

            THE SECURITIES EVIDENCED BY THIS INSTRUMENT HAVE NOT BEEN
          REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
          "ACT"), AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY, AND
              NOT WITH A VIEW TO THE DISTRIBUTION THEREOF, AND SUCH
            SECURITIES MAY NOT BE SOLD, PLEDGED OR TRANSFERRED UNLESS
           THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
         COVERING SUCH SECURITIES OR THE COMPANY RECEIVES AN OPINION OF
           COUNSEL (WHICH MAY BE COUNSEL FOR THE COMPANY), REASONABLY
          SATISFACTORY IN FORM AND CONTENT TO THE COMPANY, STATING THAT
                    SUCH SALE OR TRANSFER IS EXEMPT FROM THE
                      REGISTRATION AND PROSPECTUS DELIVERY
                            REQUIREMENTS OF THE ACT.

                           MICROFINANCIAL INCORPORATED

       (Incorporated under the laws of The Commonwealth of Massachusetts)

                               WARRANT CERTIFICATE

No. 5                                                         September 29, 2004

                    To Purchase 75,000 Shares of Common Stock

         This is to certify that, for value received, STONEBRIDGE ASSOCIATES,
LLC having an office at Ten Post Office Square, Suite 1330, Boston,
Massachusetts 02109 ("STONEBRIDGE"), or any subsequent holder hereof
(collectively with STONEBRIDGE, the "HOLDER"), is entitled to purchase from
MICROFINANCIAL INCORPORATED a Massachusetts corporation (the "COMPANY"), in
whole or in part, at an exercise price of $3.704 per share, subject to
adjustment as hereinafter provided (the "EXERCISE PRICE"), at any time after
9:00 a.m. (Boston time) on the date hereof (the "EXERCISABLE DATE") and prior to
5:00 p.m. (Boston time) on September 28, 2011, (the "EXPIRATION DATE"), 75,000
shares of fully paid and non-assessable shares of the Common Stock $0.01 par
value, of the Company (the "COMMON STOCK"). As used herein, the period from the
Exercisable Date through the Expiration Date shall be the "EXERCISE PERIOD".
This Warrant Certificate, any other warrants issued as provided herein and any
other warrants issued as provided in the Warrant Purchase Agreement (as defined
below), are hereinafter collectively referred to as the "WARRANTS" and all
shares of Common Stock and other securities purchased or purchasable upon
exercise of this Warrant are hereinafter collectively referred to as "WARRANT
SHARES." The number of shares of Common Stock and the Exercise Price are subject
to adjustment as hereinafter set forth.

         SECTION 1.  EXERCISE OF WARRANT.

         1.1 Time and Manner of Exercise. This Warrant may be exercised by the
Holder hereof, in whole or in part, any time during the Exercise Period by
surrender of this Warrant,

<PAGE>

with the form of subscription attached hereto (the "SUBSCRIPTION") completed and
duly executed by such Holder, to the Company at its principal office at 10-M
Commerce Way, Woburn, Massachusetts 01801, or at such other address as the
Company may designate by notice in writing to the Holder hereof at the address
of such Holder on the books of the Company. Notwithstanding the foregoing, the
Holder may only exercise this Warrant in part if the Holder is exercising for at
least 15,000 Warrant Shares (as adjusted for stock splits, stock dividends,
subdivisions and the like) or all Warrant Shares represented by this Warrant, if
less than 15,000 Warrant Shares (as adjusted for stock splits, stock dividends,
subdivisions and the like) remain outstanding in the aggregate.

         1.2 Payment. Payment in an amount equal to the product of (a) the
number of shares of Common Stock designated in the Subscription, times (b) the
Exercise Price shall be due to the Company, in cash or by certified or official
bank check payable to the Company within five (5) Business Days after the date
of exercise.

         1.3 When Exercise Effective. Each exercise of this Warrant shall be
deemed to have been effected immediately prior to the close of business on the
Business Day on which this Warrant shall have been surrendered to the Company as
provided in subsection 1.1, and at such time the person or persons in whose name
or names any certificate or certificates for shares of Common Stock (or of the
other securities or property to which such Holder is entitled upon such exercise
in accordance with the terms hereof) shall be issuable upon such exercise as
provided in subsection 1.2, shall be deemed to have become the Holder or Holders
of record thereof.

         1.4 Delivery of Stock Certificates, etc. As soon as practicable after
the exercise of this Warrant, in whole or in part, and in any event within 10
days thereafter, the Company at its expense will cause to be issued in the name
of and delivered to the Holder hereof, or as such Holder may direct:

                  (a) a certificate or certificates for the number of full
shares of Common Stock to which such Holder shall be entitled upon such exercise
plus, in lieu of any fractional share to which such Holder would otherwise be
entitled, cash in an amount equal to the same fraction of the Exercise Price of
one full share of Common Stock, which shall be paid to the Holders thereof on
the Business Day next preceding the date of such exercise;

                  (b) in case such exercise is in part only, a new Warrant or
Warrants of like tenor, for the number of shares of Common Stock in respect of
which this Warrant shall not have been exercised;

                  (c) each certificate representing shares of Common Stock
issued upon exercise of this Warrant shall be stamped or otherwise imprinted
with a legend substantially in the following form (in addition to, or in
combination with, any other legend required under applicable state securities
law and agreements or by-law provisions relating to the transfer of the
Company's securities):

    THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
              THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),

                                      -2-
<PAGE>

AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY, AND NOT WITH A VIEW TO THE
DISTRIBUTION THEREOF, AND SUCH SECURITIES MAY NOT BE SOLD, PLEDGED OR
TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
COVERING SUCH SECURITIES OR THE COMPANY RECEIVES AN OPINION OF COUNSEL (WHICH
MAY BE COUNSEL FOR THE COMPANY), REASONABLY SATISFACTORY IN FORM AND CONTENT TO
THE COMPANY, STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT.

         SECTION 2.  INVESTMENT REPRESENTATIONS.

         The Holder hereof understands that this Warrant (and the Common Stock
issuable upon exercise of this Warrant) to be purchased by such Holder have not
been registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), or any similar federal statute, and the rules and regulations of the
Securities and Exchange Commission, or any other federal agency at the time
administering the Securities Act by reason of a specific exemption from the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of the investment intent as expressed herein. The
Holder further understands that neither this Warrant nor the Common Stock
issuable upon the exercise of this Warrant may be offered, sold or otherwise
transferred, pledged or hypothecated unless or until this Warrant or the Common
Stock issuable upon the exercise of this Warrant, as the case may be, is
registered under the Securities Act or an exemption form such registration is
available. The Holder hereof has had an opportunity to discuss the Company's
business, management and financial affairs with the Company's management and to
obtain any additional information necessary to verify the accuracy of the
information given to such Holder. The Holder hereof represents that such Holder
is an accredited investor under Rule 501(a) of Regulation D of the Securities
Act and that such Holder is able to bear the economic risk of such Holder's
investment in the Company contemplated hereby. The Holder is acquiring this
Warrant for its own account for investment purposes without a view to any
distribution thereof in violation of the Securities Act.

         SECTION 3. MAINTENANCE OF WARRANT REGISTER; ASSIGNMENT AND TRANSFER AND
REPLACEMENT.

         3.1 Registered Holders. The Company will maintain a register containing
the name and address of the Holder of this Warrant. The "REGISTERED HOLDER" of
this Warrant shall be the person in whose name such Warrant is registered in
said warrant register. Any registered Holder of this Warrant may change such
Holder's address as shown on the warrant register by written notice to the
Company requesting such change. Any notice or written communication required or
permitted to be given to the registered Holder of this Warrant shall be mailed,
by certified or registered mail, return receipt requested, postage prepaid, or
delivered to such registered Holder at its address as shown on the warrant
register.

         3.2 Assignment and Transfer of the Warrant. Subject to Section 9 and on
the basis of the foregoing representations set forth in Section 2 above, this
Warrant has not been registered under the Securities Act, and neither this
Warrant nor the rights evidenced hereby shall be assigned, pledged, transferred
or otherwise disposed of unless either (a) this Warrant first shall

                                      -3-
<PAGE>

have been registered under the Securities Act, or (b) the Company first shall
have been furnished with an opinion of legal counsel reasonably satisfactory to
the Company stating that such sale or transfer is an exempted transaction under
the Securities Act and, unless such opinion states that such Warrant may be
transferred by the transferee immediately after acquisition without registration
under the Securities Act, a written agreement by the transferee thereof not to
sell or transfer such Warrant without complying with the requirements provided
for in this subsection 3.2. Upon surrender of this Warrant to the Company for
transfer as an entirety by the registered Holder (as permitted by this Section)
at the offices of the Company referred to in Section 1.1 hereof, with the form
of assignment attached hereto completed and duly executed by the registered
Holder, the Company shall, at the Company's expense, issue a new Warrant of the
same denomination to the assignee.

         3.3 Replacement. In case this Warrant shall be mutilated, lost, stolen,
or destroyed, the Company shall issue a new Warrant of like tenor and
denomination and deliver the same at the holder's expense (a) in exchange and
substitution for and upon surrender and cancellation of the mutilated Warrant,
or (b) in lieu of the Warrant lost, stolen or destroyed, upon receipt of (i) a
reasonably detailed affidavit with respect to the circumstances of any loss,
theft or destruction, and (ii) an indemnity reasonably satisfactory to the
Company.

         SECTION 4.  ADJUSTMENT OF STOCK ISSUABLE UPON EXERCISE.

         4.1 Adjustment for Subdivisions, Combinations or Consolidation of
Common Stock. If the outstanding shares of Common Stock are subdivided by stock
split, stock dividends or otherwise, into a greater number of shares of Common
Stock, concurrently with the effectiveness of such subdivision, the Exercise
Price then in effect shall be proportionately decreased and the number of
Warrant Shares shall be proportionately increased so that the number of shares
of Common Stock issuable upon the exercise of this Warrant shall be increased in
proportion to such increase in outstanding shares of Common Stock and the
aggregate consideration payable upon the exercise of this Warrant with respect
to the Warrant Shares before giving effect to such subdivision shall not change.
If the outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
concurrently with the effectiveness of such combination or consolidation, the
Exercise Price then in effect shall be proportionately increased and the number
of Warrant Shares shall be proportionately decreased so that the number of
shares of Common Stock issuable upon the exercise of this Warrant shall be
decreased in proportion to such decrease in outstanding shares of Common Stock
and the aggregate consideration payable upon the exercise of this Warrant with
respect to the Warrant Shares before giving effect to such combination or
consolidation shall not change.

         4.2 No Impairment. The Company will not, by amendment of its
certificate of incorporation or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of the Warrants, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holders of the Warrants
hereunder against impairment. Without limiting the generality of the foregoing,
the Company (a) will not increase

                                      -4-
<PAGE>

the par value of any share of stock receivable upon the exercise of the Warrants
above the amount payable therefor upon such exercise, and (b) will take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and non-assessable shares upon the exercise of all
Warrants at the time outstanding.

         4.3 Certificate as to Adjustment. In each case of an adjustment in the
number of shares of Common Stock or the number or type of other stock,
securities or property receivable on the exercise of the Warrants, the Company
at its expense shall cause its chief financial officer (who may be the
independent public accountants then auditing the books of the Company) to
compute such adjustment in accordance with the terms of the Warrants and prepare
a certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based, including a statement of (a) the number of
Warrant Shares issuable upon exercise of this Warrant, and (b) the Exercise
Price. The Company will forthwith mail a copy of each such certificate to each
Holder of a Warrant at the time outstanding.

         4.4. Notices of Record Date: In case:

                  (a) the Company shall take a record of the Holders of its
Common Stock (or other stock or securities at the time receivable upon the
exercise of the Warrants) for the purpose of any stock split, stock dividend,
subdivision, combination or consolidation, or

                  (b) of any capital reorganization of the Company, any
reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another person, or any conveyance of all or
substantially all of the assets of the Company to another person, or

                  (c) of any voluntary dissolution, liquidation or winding-up of
the Company, then, and in each such case, the Company will mail or cause to be
mailed to each Holder of a Warrant at the time outstanding a notice specifying,
as the case may be, (i) the date on which a record is to be taken for the
purpose of any stock split, stock dividend, subdivision, combination or
consolidation, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up is
expected to take place, and the time, if any is to be fixed, as of which the
Holders of record of Common Stock (or such stock or securities at the time
receivable upon the exercise of the Warrants) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up. Such
notice shall be mailed at least twenty (20) days prior to the date specified in
the notice on which any such action is to be taken.

         4.5 Adjustments For Consolidation, Merger, Sale of Assets,
Reorganization, Etc. If the Company effects a capital reorganization or
reclassification of the stock of the Company (other than a change in par value
or as a result of a stock dividend or subdivision, split-up or combination of
shares), or the consolidation or merger of the Company with or into another
person (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any change in the Common
Stock), or sells or otherwise disposes of all or substantially all the
properties and assets of the Company as an entirety to any other

                                      -5-
<PAGE>

person, the Holder of this Warrant, upon the exercise hereof at any time after
the consummation of such reorganization, reclassification, consolidation,
merger, sale or other disposition, shall be entitled to receive, in lieu of the
Common Stock issuable upon such exercise prior to such consummation, the kind
and number of shares of stock or other securities or property of the Company or
of the corporation resulting from such consolidation or surviving such merger or
to which such properties and assets shall have been sold or otherwise disposed
to which such Holder would have been entitled if immediately prior to such
reorganization, reclassification, consolidation, merger, sale or other
disposition such Holder had exercised this Warrant. The provisions of this
subsection 4.5 shall similarly apply to successive reorganizations,
reclassifications, consolidations, mergers, sales or other dispositions. The
Company shall not effect any such merger, consolidation, or similar
reorganization in which the Company does not survive or in which its Common
Stock changes, unless prior to or simultaneously with the consummation thereof
the successor corporation shall assume by written instrument executed and mailed
or delivered to the Holder of this Warrant at the last address of such Holder
appearing on the books of the Company, the obligations to deliver to such Holder
such shares of stock, securities or assets as, in accordance with the foregoing
provisions, such Holder may be entitled to purchase.

         4.6 Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its properties or assets,
the Company, prior to such dissolution, shall at its expense deliver or cause to
be delivered the stock and other securities and property (including cash, where
applicable) receivable by the holders of this Warrant after the effective date
of such dissolution pursuant to this Section 4 to a bank or trust company as a
trustee for the holders of this Warrant.

         4.7 Continuation of Terms. Upon any reorganization, consolidation,
merger or transfer (and any dissolution following any transfer) referred to in
this Section 4, this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the consummation of
such reorganization, consolidation, or merger or the effective date of
dissolution following any such transfer, as the case may be, and shall be
binding upon the issuer of any stock or other securities, including in the case
of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant.

         4.8 Calculations Made to Nearest Cent or Full Share. All calculations
under this Section 4 shall be made to the nearest cent or to the nearest full
share, as the case may be (with one-half of a cent or a share being rounded to
the next highest full cent or share).

         SECTION 5.  OTHER NOTICES.  In case at any time:

                  (a) the Company shall declare any dividend or other
distribution upon its Common Stock payable in stock to the Holders of its Common
Stock; or

                                      -6-
<PAGE>

                  (b) the Company shall propose a subdivision of its outstanding
Common Stock into a greater number of shares of Common Stock or propose a
combination of its outstanding Common Stock into a smaller number of shares of
Common Stock; or

                  (c) the Company shall propose any capital reorganization or
any reclassification of capital stock of the Company or any consolidation,
merger or sale of all or substantially all of its properties and assets; or

                  (d) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then, and in each of said cases, the
Company shall cause notice thereof to be mailed to the Holder of this Warrant at
the last address appearing on the books of the Company or given by such Holder
to the Company for the purpose of notice. Such notices shall be mailed at least
twenty (20) days prior to the date on which the books of the Company shall
close, or a record date shall be taken for such dividend, distribution, stock
split or combination or issue of rights or to vote upon such capital
reorganization, reclassification, consolidation, merger or sale of properties
and assets, as the case may be, and shall specify such record date or date for
the closing of the transfer books.

         SECTION 6.  RESERVATION OF STOCK ISSUABLE UPON EXERCISE.

         The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for issuance and delivery
upon the exercise of this Warrant, such number of its shares of Common Stock as
shall from time to time be issuable upon the exercise of this Warrant; and if at
any time the number of authorized but unissued shares of its Common Stock shall
not be sufficient for such purpose, the Company will take such corporate actions
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of its Common Stock to such number of shares as shall be
sufficient for such purpose.

         SECTION 7.  RIGHTS AS STOCKHOLDER.

         The registered Holder of this Warrant, as such, shall not be entitled
to vote or receive dividends or be deemed the Holder of shares of Common Stock
for any purpose, nor shall anything contained in this Warrant be construed to
confer upon the registered Holder of this Warrant, as such, any of the rights of
a stockholder of the Company or any right to vote, give or withhold consent to
any action by the Company (whether upon any recapitalization, issue of shares,
reclassification of shares, consolidation, merger, conveyance or otherwise),
receive notice of meetings or other action affecting stockholders (except for
notices provided for in this Warrant), receive dividends or subscription rights,
or otherwise until this Warrant shall have been exercised and the shares of
Common Stock purchasable upon the exercise hereof shall have become deliverable
as provided in Section 1 hereof, at which time the person or persons in whose
name or names the certificate or certificates for the shares of Common Stock
being purchased are to be issued shall be deemed the holder or holders of record
of shares of Common Stock for all purposes.

                                      -7-
<PAGE>

         SECTION 8.  REMEDIES.

         The Company stipulates that the remedies at law of the Holder of this
Warrant in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of this Warrant are not and
will not be adequate, and that such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.

         SECTION 9.  TRANSFERABILITY.

         This Warrant may be transferred or assigned in whole or in part by the
Holder either to an affiliate (as that term is defined in the Securities Act) of
the Holder or to anyone else except for a competitor if the Holder has complied
with the terms and conditions of (i) this Warrant and (ii) all applicable
federal and state securities laws; provided however that (other than in the case
of a transfer or assignment of this Warrant to an affiliate of the Holder), such
compliance shall include, without limitation, the delivery of investment
representation letters and legal opinions reasonably satisfactory to the
Company. Subject to the provisions of this Warrant with respect to compliance
with the Securities Act, title to this Warrant may be transferred by endorsement
(by the Holder executing the Form of Assignment annexed hereto) and delivery in
the same manner as a negotiable instrument transferable by endorsement and
delivery. For purposes of this Agreement, "competitor" shall mean any company
that is primarily engaged in the business of manufacturing, selling, licensing
or developing products that are competitive with products being manufactured,
sold, leased, developed or licensed by the Company or any Subsidiary on or after
the date hereof. Notwithstanding the foregoing, this Warrant may only be
assigned in part if the Holder is assigning the right to receive at least 15,000
Warrant Shares (as adjusted for stock splits, stock dividends, subdivisions and
the like) or all Warrant Shares represented by this Warrant if less than 15,000
Warrant Shares (as adjusted for stock splits, stock dividends, subdivisions and
the like) remain outstanding in the aggregate.

         SECTION 10.  NOTICES, ETC.

         All notices and other communications from the Company to the Holder of
this Warrant shall be mailed by recognized overnight courier first class
registered or certified air mail, postage prepaid, at such address as may have
been furnished to the Company in writing by such Holder, or, until an address is
so furnished, to and at the address of the last Holder of this Warrant who has
so furnished an address to the Company.

                                      -8-
<PAGE>

         SECTION 11.  MISCELLANEOUS.

         This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought. This
Warrant is being delivered in The Commonwealth of Massachusetts and shall be
construed and enforced in accordance with and governed by the laws of such
commonwealth. All section headings herein are for purposes of reference only and
shall not limit or otherwise affect the meaning hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
unenforceability of any other provision. For purposes of this Warrant, the term
"Business Day" shall mean a day other than a Saturday, Sunday or any day on
which commercial banks in Boston, Massachusetts are authorized or required by
law to close.

         IN WITNESS WHEREOF, MICROFINANCIAL INCORPORATED has caused this
instrument to be duly executed by its duly authorized officer this 29th day of
September, 2004.

Attest:                                        MICROFINANCIAL INCORPORATED

____________________________________________   By:______________________________
James R. Jackson , Chief Financial Officer        Richard F. Latour, President

                                      -9-
<PAGE>

ELECTION TO PURCHASE

MICROFINANCIAL INCORPORATED
10-M Commerce Way
Woburn, Massachusetts 01801

Ladies and Gentlemen:

         The undersigned hereby subscribes for _______ shares of the Common
Stock of MICROFINANCIAL INCORPORATED covered by the within Warrant and tenders
payment herewith in the amount of $________________ in accordance with the terms
thereof.

         Such payment is hereby tendered in the form of $ in cash or certified
or bank check.

         You are instructed as follows:

         1. To issue certificate(s) for said shares to

            Name:

            Address:

         2. To deliver said certificate(s) by registered mail, return receipt
            requested, to

            Name:

            Address:

                                           Very truly yours,

                                           [INSERT HOLDER]

                                           _____________________________________
                                           Name:
                                           Title:
                                           Address:

                                      -10-
<PAGE>

                               FORM OF ASSIGNMENT

[To be signed only upon transfer of Warrant]

For value received, the undersigned hereby sells, assigns and transfers unto
____________ _______________________________ the right represented by the within
Warrant to purchase ___________ shares of Common Stock of MICROFINANCIAL
INCORPORATED to which the within Warrant relates, and appoints
_____________________ Attorney to transfer such right on the books of
MICROFINANCIAL INCORPORATED with full power of substitution in the premises.

Dated:

                         _______________________________________________________
                         (Signature must conform in all respects to name of
                         Holder as specified on the face of the Warrant)

(Address)

Signed in the presence of:

______________________________________

                                      -11-

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