EX-10.5 SECURITY AGREEMENT BETWEEN REGISTRANT AND AGENT DATED AUGUST 2, 2007

Exhibit 10.5

SECURITY AGREEMENT

     This SECURITY AGREEMENT (this “Agreement”) is made as of the 2 ^nd day of August, 2007, by MICROFINANCIAL INCORPORATED, a Massachusetts corporation (“ MFI ”), and its Subsidiaries from time to time party hereto (together with MFI, each an “ Obligor ”, and collectively, the “ Obligors ”), in favor of SOVEREIGN BANK, in its capacity as Agent (in such capacity, the “ Agent ”) for the Secured Parties (as defined below).

WITNESSETH :

     WHEREAS, TimePayment Corp. (the “ Borrower ”), the Agent and the Lenders intend to enter into a Credit Agreement, dated as of even date herewith (as amended, modified, supplemented or restated from time to time, the “ Credit Agreement ”);

     WHEREAS, MFI is executing and delivering its Guaranty of even date herewith in favor of the Agent (the “ Guaranty ”) guarantying all Obligations;

     WHEREAS, it is a condition precedent to the Agent and the Lenders entering into the Credit Agreement and making extensions of credit thereunder that each Obligor execute and deliver this Agreement and grant the security interests herein provided;

     NOW, THEREFORE, in order to induce the Agent and the Lenders to enter into the Credit Agreement and the Lenders to make or extend to the Borrower one or more loans, advances or other extensions of credit upon the terms and subject to the conditions set forth therein, and in consideration thereof, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, each Obligor agrees as follows:

     Section 1. Definitions . The following capitalized terms used herein or in any certificate, report or other document delivered pursuant hereto shall have the meanings assigned to them below. Unless otherwise defined herein, the terms defined in the Credit Agreement are used herein, and in any certificate, report or other document delivered pursuant hereto, as defined in the Credit Agreement. Except as otherwise defined herein or in the Credit Agreement, terms defined in the Uniform Commercial Code and used herein shall have the meanings set forth therein; provided , however , that the term “instrument” shall be such term as defined in Article 9 of the Uniform Commercial Code rather than Article 3 of the Uniform Commercial Code.

      Accounts . All rights of each Obligor to payment of a monetary obligation (i) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for a secondary obligation incurred or to be incurred, or (iv) arising out of the use of a credit or charge card or information contained on or for use with the card; and all sums of money and other proceeds due or becoming due thereon, all notes, bills, drafts, acceptances, instruments, documents and other debts, obligations and liabilities, in whatever form, owing to such Obligor with respect thereto, all guarantees and security therefor, and each Obligor’s rights pertaining to and interest in such property, including the right of stoppage in transit, replevin or reclamation; all chattel paper; all amounts due from Affiliates of each Obligor; all insurance proceeds; all other rights and claims to the payment of money, under

contracts or otherwise; and all other property constituting “accounts” as such term is defined in the Uniform Commercial Code.

      Collateral . All property belonging to each Obligor or in which such Obligor has any rights, of every kind and description, tangible and intangible, whether now owned or existing or hereafter arising or acquired; including, without limitation, all Accounts, Equipment, General Intangibles, Inventory and Investment Property, together with all goods, instruments (including promissory notes), documents of title, policies and certificates of insurance, commercial tort claims, chattel paper (whether tangible or electronic), deposit accounts, letter of credit rights (whether or not the letter of credit is evidenced by a writing), and other property owned by each Obligor or in which such Obligor has an interest; and including, without limitation, any cash that is now or may hereafter be in the possession, custody or control of the Agent or the Secured Parties or their participants or assigns for any purpose; any and all additions, substitutions, replacements and accessions to the foregoing and all supporting obligations relating to the foregoing; and all Proceeds and products of any of the foregoing.

      Collateral Account . See Section 3.9(a).

      Encumbrance . Any mortgage, pledge, security interest, lien or other charge or encumbrance of any kind or nature (including, without limitation, the lien or retained security title of a conditional vendor) upon or with respect to any property.

      Equipment . All machinery, equipment and fixtures, furniture, furnishings, trade fixtures, specialty tools and parts, motor vehicles and materials handling equipment of each Obligor, together with each Obligor’s interest in, and right to, any and all manuals, computer programs, data bases and other materials relating to the use, operation or structure of any of the foregoing; and all other property constituting “equipment” as such term is defined in the Uniform Commercial Code.

      General Intangibles . All rights with respect to trademarks, service marks, trade names, trade styles, patents, copyrights, mask works, trade-secrets information, all intellectual property listed on Exhibit B hereto, other proprietary rights and rights to prevent others from doing acts that constitute unfair competition with any Obligor or misappropriation of its property, including without limitation any sums (net of expenses) that such Obligor may receive arising out of any claim for infringement of its rights in any of the foregoing, and all rights of each Obligor under contracts to enjoy performance by others or to be entitled to enjoy rights granted by others, including without limitation any licenses; all payment intangibles; all obligations and indebtedness of any kind (other than Accounts) owing to each Obligor from whatever source arising; all contract rights; all rights of each Obligor as a bailor; all tax refunds; all right, title and interest of each Obligor in and to all software, documents, books, records, files and other information (on whatever medium recorded, and including without limitation computer programs, tapes, discs, data processing software and related property and rights) maintained by each Obligor that reflect the conduct of such Obligor’s business, such as financial records, marketing and sales records, research and development records, and design, engineering and manufacturing records; all rights under service bureau service contracts; all computer data and the concepts and ideas on which said data is based; all developmental ideas and concepts, papers, plans, schematics, drawings, blueprints, sketches and documents; all data bases; all customer

lists; and all other property constituting “general intangibles” as such term is defined in the Uniform Commercial Code.

      Inventory . All goods, merchandise and other personal property (including warehouse receipts and other negotiable and non-negotiable documents of title covering any such property) of each Obligor that are held for sale, lease or other disposition or to be furnished under contracts of service (or that are so furnished), or for display or demonstration, or leased or consigned, or that are raw materials, piece goods, work-in-process, finished goods or supplies or other materials used or consumed or to be used or consumed in such Obligor’s business, whether in transit or in the possession of such Obligor or another, including without limitation all goods covered by purchase orders and contracts with suppliers and all goods billed and held by suppliers and goods located on the premises of any carriers, forwarding agents, truckers, warehousemen, vendors, selling agents or other third parties; all proprietary rights, patents, plans, drawings, diagrams, schematics, assembly and display materials relating to any of the foregoing; and all other property constituting “inventory” as such term is defined in the Uniform Commercial Code.

      Investment Property . All of the securities (whether certificated or uncertificated) of each Obligor, including without limitation all stocks, bonds, Treasury bills, certificates of deposit, mutual or money market fund shares, security entitlements, securities accounts, commodity contracts and commodity accounts; and all sums due or to become due on any of the foregoing, and all securities, instruments or other property purchased or acquired as a result of the investment and reinvestment thereof as hereinafter provided, and all other property constituting “investment property” as such term is defined in the Uniform Commercial Code.

      Lease . Any lease agreement, installment sales contract or other agreement (including any and all schedules, supplements and amendments thereon and modifications thereof) entered into by an Obligor as lessor or seller with respect to Equipment.

      Perfection Certificate . A certificate signed by a Responsible Officer of each Obligor in the form attached hereto as Exhibit A .

      Proceeds . All proceeds of and all other profits, rentals and receipts, in whatever form, received or arising from any Collateral, including: whatever is received or acquired upon the sale, lease, exchange, assignment, licensing or other disposition of any Collateral; whatever is received, collected on or distributed on account of any Collateral; all rights arising out of any Collateral; all claims arising out of the loss, nonconformity, interference with the use of, defects or infringement of rights in, or damage to or destruction of, any Collateral; any insurance payable by reason of the loss or nonconformity of, defects or infringement of rights in, or damage to or destruction of, any Collateral; any unearned premiums with respect to policies of insurance in respect of any Collateral; any condemnation or requisition payments with respect to any Collateral; and all other property constituting “proceeds” as such term is defined in the Uniform Commercial Code; in each case whether now existing or hereafter arising.

      Secured Obligations . All Obligations (as defined in the Credit Agreement) and all obligations of the Obligor hereunder and under the Guaranty.

      Secured Parties . Collectively, the Agent, the Lenders and any other Persons the Secured Obligations owing to which are or are purported to be secured by the Collateral under the terms of the Security Documents.

      Security Interests . The security interests and liens granted pursuant to Section 2 hereof, as well as all other security interests created or assigned as additional security for the Secured Obligations pursuant to this Agreement.

      Uniform Commercial Code . The Uniform Commercial Code as in effect in The Commonwealth of Massachusetts from time to time, provided , that if by reason of mandatory provisions of law, perfection, or the effect of perfection or nonperfection, of the Security Interests in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than Massachusetts, “Uniform Commercial Code” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection, as the case may be.

     Section 2. Grant .

     (a) To secure the full and punctual payment and performance of the Secured Obligations, each Obligor hereby assigns and pledges to the Agent for the benefit of the Secured Parties all of its respective rights, title and interest in, and grants to the Agent for the benefit of the Secured Parties a continuing security interest in, the Collateral of such Obligor. The Security Interests are granted as security only and shall not subject the Agent or any Secured Party to, or transfer to the Agent or any Secured Party or in any way affect or modify, any obligation or liability of any Obligor with respect to any of the Collateral or any transaction in connection therewith.

     (b) Contemporaneously with the execution of this Agreement, and from time to time thereafter, each Obligor (i) shall deliver to the Agent such assignments, intellectual property mortgages and assignments, instruments and notices and assignments under the Assignment of Claims Act of 1940, as amended, as may reasonably be deemed necessary or desirable by the Agent to perfect its Security Interest in the Collateral and (ii) authorizes the Agent to file such Uniform Commercial Code financing statements and amendments as may be deemed necessary or desirable by the Agent to perfect its Security Interest in the Collateral, which financing statements may identify the collateral as being all assets of the Obligor (or words of similar effect) or of equal or lesser scope or with lesser or greater detail and may be filed by the Agent at any time in any jurisdiction and may be signed by the Agent on behalf of the Borrower.

     Section 3. Representations, Warranties and Covenants . The Obligors hereby, jointly and severally, make the following representations and warranties, and agree to the following covenants, each of which representations, warranties and covenants shall be continuing and in force so long as this Agreement is in effect:

     3.1 Name; Location; Changes .

     (a) The name of each Obligor set forth in Section 1(a) of its Perfection Certificate is the true and correct legal name of such Obligor, and except as otherwise

disclosed to the Agent in the Perfection Certificate, such Obligor has not done business as or used any other name.

     (b) The type and state of organization of each Obligor set forth in Sections 1(c) and 1(d) of its Perfection Certificate is the true and correct type and state of organization of such Obligor and the organizational identification number set forth in Section 1(e) of its Perfection Certificate is the true and correct organizational identification number issued to such Obligor by its state of organization (or if such state did not issue such Obligor an organizational identification number such Obligor has so indicated in Section 1(e) of its Perfection Certificate) and such Obligor is duly organized and in good standing in such state on the date hereof.

     (c) The address of each Obligor set forth in Section 2(a) of its Perfection Certificate is such Obligor’s chief executive office and the place where its business records are kept. Except as disclosed on the Perfection Certificate, all business records of such Obligor are located at such chief executive office.

     (d) No Obligor will change its name, identity or organizational structure, nature or jurisdiction of organization, or chief executive office or place where its business records are kept, or merge into or consolidate with any other entity, unless such Obligor shall have given the Agent at least 30 days’ prior written notice thereof and such Obligor shall have delivered to the Agent such new documents as may be necessary or reasonably required by the Agent to ensure the continued perfection and priority of the Security Interests.

     (e) Each Obligor has delivered a Perfection Certificate to the Agent on the date hereof. All information set forth in each Perfection Certificate is true and correct in all material respects. Each Obligor agrees to supplement its Perfection Certificate promptly after obtaining information which would require a correction or addition thereto.

          3.2 Ownership of Collateral; Absence of Liens and Restrictions . Each Obligor is, and in the case of property acquired after the date hereof, will be, the sole legal and equitable owner of the Collateral of such Obligor, holding good and marketable title to the same free and clear of all Encumbrances except for the Security Interests and Permitted Encumbrances, and has good right and legal authority to assign, deliver, and create a security interest in such Collateral in the manner herein contemplated. The Collateral is genuine and is what it is purported to be. The Collateral is not subject to any restriction that would prohibit or restrict the assignment, delivery or creation of the security interests contemplated hereunder.

          3.3 First Priority Security Interest . This Agreement creates a valid and continuing lien on and security interest in the Collateral, and upon the filing of Uniform Commercial Code financing statements in the appropriate filing offices of each Obligor’s state of organization and where Collateral consisting of fixtures is located, in each case as identified in such Obligor’s Perfection Certificate, the Security Interests will be perfected (except to the extent a security interest may not be perfected by filing under the Uniform Commercial Code) prior to all other Encumbrances (other than the Permitted Encumbrances), and are enforceable as such against creditors of each of the Obligors, any owner of the real property where any of the

Collateral is located, any purchaser of such real property and any present or future creditor obtaining a lien on such real property. The Agent acknowledges that the attachment of its security interest in any commercial tort claim of any Obligor as original collateral is subject to such Obligor’s compliance with Section 5(e).

          3.4 No Conflicts . Neither any Obligor nor any of their respective predecessors has performed any acts or is bound by any agreements which might prevent the Agent or the Secured Parties from enforcing the Security Interests or any of the terms of this Agreement or which would limit the Agent or the Secured Parties in any such enforcement. No financing statement under the Uniform Commercial Code of any state or other instrument evidencing a lien that names any Obligor as debtor is on file in any jurisdiction and no Obligor has signed any such document or any agreement authorizing the filing of any such financing statement or instrument, except (i) as specifically disclosed in a Perfection Certificate, (ii) with respect to Permitted Encumbrances and (iii) with respect to which the secured party has authorized in writing, on or before the date hereof, the filing of a termination statement.

          3.5 Sales and Further Encumbrances . No Obligor will sell, grant, assign or transfer any interest in, or permit to exist any Encumbrance on, any of the Collateral of such Obligor, except the Security Interests, Permitted Encumbrances and as permitted by the Credit Agreement.

          3.6 Fixture Conflicts; Required Waivers . Each Obligor intends, to the extent not inconsistent with applicable law, that the Collateral of such Obligor shall remain personal property of such Obligor and shall not be deemed to be a fixture irrespective of the manner of its attachment to any real estate. Each Obligor will deliver to the Agent such disclaimers, waivers, or other documents as the Agent may reasonably request to confirm the foregoing, executed by each person having an interest in such real estate.

          3.7 Validity of Accounts . Each Account arises and will arise in the ordinary course of an Obligor’s business out of or in connection with the sale or lease of goods or the rendering of services and is and shall be a valid, legal and binding obligation of the party purported to be obligated thereon, enforceable in accordance with its terms and free of material setoffs, defenses or counterclaims. No Obligor has knowledge of any fact that would materially impair the validity or collectibility of any of the Accounts.

          3.8 Maintenance of Books, Records and Leases; Legends; Verification of Accounts; Computer Access .

     (a) Each Obligor shall keep complete and accurate books and records relating to the Collateral, including without limitation all Leases, and upon request of the Agent shall stamp, or otherwise mark or place legends on, such books and records, including without limitation all Leases, in such manner as the Agent may reasonably request in order to reflect the Security Interests.

     (b) Each Obligor will allow the Agent and its designees to examine, inspect and make extracts from or copies of such Obligor’s books and records, inspect the Collateral and arrange for verification of Accounts directly with any account debtors or by

other methods, under reasonable procedures established by the Agent after consulting with the Obligor. Such access to such Obligor’s books and records shall include access to all computer files, systems and servers maintained by such Obligor.

     (c) Each Obligor will maintain its original documents of all Leases forming part of the Collateral in a separate, fireproof cabinet on the Obligor’s premises or at a third-party storage site reasonably acceptable to the Agent. Upon request of the Agent, each Obligor will deliver to the Agent or a third-party custodian designated by the Agent the original documents of any or all Leases.

          3.9 Collection and Delivery of Proceeds .

     (a) Each Obligor will diligently collect all of its Accounts until the Agent exercises its rights to collect the Accounts pursuant to this Agreement. Upon the occurrence and during the continuance of any Event of Default, each Obligor shall deliver daily to the account at the Agent designated by the Agent for receipt of such collections (the “ Collateral Account ”) all Proceeds of Accounts and Inventory received by such Obligor and all other cash Proceeds of Collateral regardless of the source or nature of such Proceeds, whether in the form of wire or ACH transfers, cash, checks, notes or other instruments, in the identical form received (properly endorsed or assigned where required to enable the Agent to collect same), and until such delivery such Obligor shall hold such Proceeds in trust for and as the property of the Agent and shall not commingle such Proceeds with any of such Obligor’s other funds or property. All deposits in the Collateral Account shall constitute Proceeds of Collateral and shall not constitute payment of the Secured Obligations. If any Accounts are at any time evidenced by tangible chattel paper, promissory notes, trade acceptances or other instruments, upon the occurrence and during the continuance of any Event of Default, each Obligor will, upon the request of the Agent, promptly deliver the same to the Agent appropriately endorsed to the Agent’s order and, regardless of the form of such endorsement, each Obligor hereby waives presentment, demand, notice of dishonor, protest, notice of protest and all other notices with respect thereto.

     (b) Each Obligor shall, at the request of the Agent at any time upon the occurrence and during the continuance of an Event of Default, notify its account debtors, and the Agent may itself, after the occurrence and during the continuance of an Event of Default notify such Obligor’s account debtors directly, of the Security Interest of the Agent in any Account and that payment thereof is to be made directly to the Agent.

     (c) The Agent shall credit amounts received by the Agent pursuant to this Section 3.9 as of the second Business Day after receipt thereof by the Agent. Such credit shall be conditional upon final payment in cash or solvent credits of the items giving rise thereto.

          3.10 [ Intentionally Omitted ].

          3.11 Insurance . Each Obligor will keep the Collateral of such Obligor insured at all times by insurance in such form and amounts as may be reasonably satisfactory to the

Agent, and in any event (without specific request by the Agent) will insure such Collateral against physical hazard on an “all risks” basis, including fire, theft, and, in the case of motor vehicles, collision. Such insurance shall be with insurance companies reasonably satisfactory to the Agent and shall be pa