ASSET ACCEPTANCE CAPITAL CORP
GUARANTY AGREEMENT - ASSET ACCEPTANCE HOLDINGS LLC
<DOCUMENT>
<TYPE>EX-10.25
<SEQUENCE>7
<FILENAME>k82504exv10w25.txt
<DESCRIPTION>GUARANTY AGREEMENT - ASSET ACCEPTANCE HOLDINGS LLC
<TEXT>
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                                                                   EXHIBIT 10.25

                                                                  EXECUTION COPY

                               GUARANTY AGREEMENT

         THIS GUARANTY AGREEMENT (this "Guaranty") is made as of the 30th day of
January, 2004, by ASSET ACCEPTANCE HOLDINGS, LLC a Delaware limited liability
company (the "Guarantor") in favor of the Agent, for the benefit of the Agent
and Banks (as such terms are defined below);

                                   WITNESSETH:

                  WHEREAS, Asset Acceptance, LLC, a Delaware limited liability
company, Financial Credit, LLC, a Delaware limited liability company , CFC
Financial, LLC, a Delaware limited liability company, Consumer Credit LLC, a
Delaware limited liability company, and Med-Fi Acceptance, LLC, a Delaware
limited liability company (collectively, the "Borrowers" and, individually, a
"Borrower"), certain lenders identified therein (together with any other lenders
party thereto from time to time, collectively, the "Banks" and, individually, a
"Bank"), and Bank One, NA, a national banking association with its main office
in Chicago, Illinois, as Agent (in such capacity, the "Agent"), for the Banks,
are parties to a certain Credit Agreement dated as of September 30, 2002, as
amended by the First Amendment to Credit Agreement, dated as of June 25, 2003,
and the Second Amendment to Credit Agreement, dated as of August 11, 2003 (as
same may be amended or modified from time to time, including any agreement
entered into in substitution therefor, the "Credit Agreement"), providing,
subject to the terms and conditions thereof, for extensions of credit to be made
by the Banks to the Borrowers;

         WHEREAS, the Borrowers, the Banks and the Agent have entered into a
certain Third Amendment to Credit Agreement dated as of even date herewith (the
"Third Amendment"), providing, subject to the terms and conditions thereof, for
certain amendments to the Credit Agreement desired by the Borrowers;

         WHEREAS, it is a condition precedent to the effectiveness of the Third
Amendment that the Guarantor execute and deliver this Guaranty whereby the
Guarantor shall guarantee the payment when due, subject to Section 9 hereof, of
all Guaranteed Obligations, as defined below;

         WHEREAS, in order to induce the Banks and the Agent to enter into the
Third Amendment, and extend credit to the Borrowers under the Credit Agreement
as amended by the Third Amendment, and to induce the Banks and their Affiliates
from time to time to enter into one or more Rate Management Transactions with
the Borrowers, and because the Guarantor has determined that executing this
Guaranty is in its interest and to its financial benefit, the Guarantor is
willing to guarantee the obligations of the Borrowers under the Credit
Agreement, any Note, any Rate Management Transaction, and the other Loan
Documents; and

         WHEREAS, each of the Borrowers is directly wholly-owned by the
Guarantor;

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

         SECTION l.1. Selected Terms Used Herein.

         "Guaranteed Obligations" is defined in Section 3 below.

         "Obligations" means all indebtedness, obligations and liabilities of
the Borrowers, and each of them to the Banks or to any Bank or to the Agent
arising under the Credit Agreement, the Notes and the other Loan Documents,
whether now existing or hereafter arising, including without limitation unpaid
principal of and accrued interest on the Loans, all Obligations and all
Reimbursement Obligations each (as defined in the Credit Agreement), all fees
and all expenses, reimbursements, indemnities and other obligations.

         SECTION 1.2. Terms in Credit Agreement. Other capitalized terms used
herein but not defined herein shall have the meaning set forth in the Credit
Agreement.

         SECTION 2.1. Representations and Warranties. The Guarantor represents
and warrants (which representations and warranties shall be deemed to have been
renewed upon each date of a Borrowing or issuance of a Facility LC under the
Credit Agreement) that:

                  (a) It is a limited liability company organized, validly
existing and in good standing under the laws of the State of Delaware and has
all requisite authority to conduct its business in each jurisdiction in which
its business is conducted.

                  (b) It has the power and authority and legal right to execute
and deliver this Guaranty and to perform its obligations hereunder. The
execution and delivery by it of this Guaranty and the performance of its
obligations hereunder have been duly authorized by proper company proceedings,
and this Guaranty constitutes a legal, valid and binding obligation of the
Guarantor enforceable against it in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally.

                  (c) Neither the execution and delivery by it of this Guaranty,
nor the consummation of the transactions herein contemplated, nor compliance
with the provisions hereof will violate (i) any law, rule, regulation, order,
writ, judgment, injunction, decree or award binding on it or any of its
subsidiaries or (ii) its articles or certificate of organization or operating or
other management agreement or (iii) the provisions of any indenture, instrument
or agreement to which it or any of its subsidiaries is a party or is subject, or
by which it, or any of its property or assets, is bound, or conflict with or
constitute a default thereunder, or result in, or require, the creation or
imposition of any Lien in, of or on any of the property or assets of the
Guarantor or a subsidiary thereof pursuant to the terms of any such indenture,
instrument or agreement. No order, consent, adjudication, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, or other action in respect of any governmental or public body or
authority, or any subdivision thereof, which has not been obtained by it or any
of its

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subsidiaries, is required to be obtained by it or any of its subsidiaries in
connection with the execution and delivery of this Guaranty or the performance
by it of its obligations hereunder or the legality, validity, binding effect or
enforceability of this Guaranty.

         SECTION 2.2. Covenants. The Guarantor covenants that, so long as any
Bank has any Commitment outstanding under the Credit Agreement, any Facility LC
or Rate Management Transaction remains in effect or any of the Guaranteed
Obligations shall remain unpaid, that it will, and, if necessary, will enable
each of the Borrowers to, fully comply with those covenants and agreements set
forth in the Credit Agreement.

         SECTION 3. The Guaranty. Subject to Section 9 hereof, the Guarantor
hereby absolutely and unconditionally guarantees, as primary obligor and not as
surety, the full and punctual payment (whether at stated maturity, upon
acceleration or early termination or otherwise, and at all times thereafter) and
performance of the Obligations and the Rate Management Obligations, including
without limitation any such Obligations or Rate Management Obligations incurred
or accrued during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, whether or not allowed or allowable in such proceeding
(collectively, subject to the provisions of Section 9 hereof, being referred to
collectively as the "Guaranteed Obligations"). Upon failure by any Borrower to
pay punctually any such amount, the Guarantor agrees that it shall forthwith on
demand pay to the Agent for the benefit of the Banks and, if applicable, their
Affiliates, the amount not so paid at the place and in the manner specified in
the Credit Agreement, any Note, any Rate Management Transaction or the relevant
other Loan Document, as the case may be. This Guaranty is a guaranty of payment
and not of collection. The Guarantor waives any right to require the Agent or
any Bank to sue the Borrowers, any other guarantor, or any other person
obligated for all or any part of the Guaranteed Obligations, or otherwise to
enforce its payment against any collateral securing all or any part of the
Guaranteed Obligations.

         SECTION 4. Guaranty Unconditional. Subject to Section 9 hereof, the
obligations of the Guarantor hereunder shall be unconditional and absolute and,
without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:

         (i) any extension, renewal, settlement, compromise, waiver or release
         in respect of any of the Guaranteed Obligations, by operation of law or
         otherwise, or any obligation of any other guarantor of any of the
         Guaranteed Obligations, or any default, failure or delay, willful or
         otherwise, in the payment or performance of the Guaranteed Obligations;

         (ii) any modification or amendment of or supplement to the Credit
         Agreement, any Note, any Rate Management Transaction or any other Loan
         Document;

         (iii) any release, nonperfection, failure to maintain perfection or
         invalidity of any direct or indirect security for any obligation of the
         Borrowers under the Credit Agreement, any Note, the Security Documents,
         any Rate Management Transaction, any other Loan Document, or any
         obligations of any other guarantor of any of the Guaranteed
         Obligations, or any action or failure to act by the Agent, any Bank or
         any Affiliate of any Bank with respect to any collateral securing all
         or any part of the Guaranteed Obligations;

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         (iv) any change in the corporate, limited liability company or other
         organizational existence, structure or ownership of any Borrower or any
         other guarantor of any of the Guaranteed Obligations, or any
         insolvency, bankruptcy, reorganization or other similar proceeding
         affecting any Borrower, or any other guarantor of the Guaranteed
         Obligations, or its assets or any resulting release or discharge of any
         obligation of any Borrower, or any other guarantor of any of the
         Guaranteed Obligations;

         (v) the existence of any claim, setoff or other rights which the
         Guarantor may have at any time against any Borrower, any other
         guarantor of any of the Guaranteed Obligations, the Agent, any Bank or
         any other Person, whether in connection herewith or any unrelated
         transactions;

         (vi) any invalidity or unenforceability relating to or against any
         Borrower, or any other guarantor of any of the Guaranteed Obligations,
         for any reason related to the Credit Agreement, any Rate Management
         Transaction, any other Loan Document, or any provision of applicable
         law or regulation purporting to prohibit the payment by the Borrowers,
         or any other guarantor of the Guaranteed Obligations, of the principal
         of or interest on any Note or any other amount payable by the Borrowers
         under the Credit Agreement, any Note, any Rate Management Transaction
         or any other Loan Document; or

         (vii) any other act or omission to act or delay of any kind by any
         Borrower, any other guarantor of the Guaranteed Obligations, the Agent,
         any Bank or any other Person or any other circumstance whatsoever which
         might, but for the provisions of this paragraph, constitute a legal or
         equitable discharge of any Guarantor's obligations hereunder.

         SECTION 5. Discharge Only Upon Payment In Full; Reinstatement In
Certain Circumstances. The Guarantor's obligations hereunder shall remain in
full force and effect until all Guaranteed Obligations shall have been
indefeasibly paid in full, the Commitments under the Credit Agreement shall have
terminated or expired and all Rate Management Transactions and Facility LCs have
terminated or expired. If at any time any payment of the principal of or
interest on any Note or any other amount payable by any Borrower or any other
party under the Credit Agreement, any Rate Management Transaction or any other
Loan Document is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of any Borrower or otherwise, the
Guarantor's obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.

         SECTION 6. Waivers. The Guarantor irrevocably waives acceptance hereof,
presentment, demand, protest and, to the fullest extent permitted by law, any
notice not provided for herein, as well as any requirement that at any time any
action be taken by any Person against any Borrower, any other guarantor of any
of the Guaranteed Obligations, or any other Person.

         SECTION 7. Subrogation. The Guarantor hereby agrees not to assert any
right, claim or cause of action, including, without limitation, a claim for
subrogation, reimbursement, indemnification or otherwise, against any Borrower
arising out of or by reason of this Guaranty

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or the obligations hereunder, including, without limitation, the payment or
securing or purchasing of any of the Guaranteed Obligations by the Guarantor
unless and until the Guaranteed Obligations are indefeasibly paid in full, any
commitment to lend under the Credit Agreement is terminated and all Rate
Management Transactions and Facility LCs have terminated or expired.

         SECTION 8. Stay of Acceleration. If acceleration of the time for
payment of any of the Guaranteed Obligations is stayed upon the insolvency,
bankruptcy or reorganization of any of the Borrowers, all such amounts otherwise
subject to acceleration under the terms of the Credit Agreement, any Note, any
Rate Management Transaction or any other Loan Document shall nonetheless be
payable by the Guarantor hereunder forthwith on demand by the Agent made at the
request of the Required Banks.

         SECTION 9. Limitation on Obligations. (a) The provisions of this
Guaranty are severable, and in any action or proceeding involving any state
corporate law, or any state, federal or foreign bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally, if the
obligations of the Guarantor under this Guaranty would otherwise be held or
determined to be avoidable, invalid or unenforceable on account of the amount of
the Guarantor's liability under this Guaranty, then, notwithstanding any other
provision of this Guaranty to the contrary, the amount of such liability shall,
without any further action by the Guarantor, the Agent or any Bank, be
automatically limited and reduced to the highest amount that is valid and
enforceable as determined in such action or proceeding (such highest amount
determined hereunder being the Guarantor's "Maximum Liability"). This Section
9(a) with respect to the Maximum Liability of the Guarantor is intended solely
to preserve the rights of the Agent hereunder to the maximum extent not subject
to avoidance under applicable law, and neither the Guarantor nor any other
person or entity shall have any right or claim under this Section 9(a) with
respect to the Maximum Liability, except to the extent necessary so that the
obligations of the Guarantor hereunder shall not be rendered voidable under
applicable law.

         (b) The Guarantor agrees that the Guaranteed Obligations may at any
time and from time to time exceed the Maximum Liability of the Guarantor, and
may exceed the aggregate Maximum Liability of the Guarantor and all other
guarantors, without impairing this Guaranty or affecting the rights and remedies
of the Agent hereunder. Nothing in this Section 9(b) shall be construed to
increase the Guarantor's obligations hereunder beyond its Maximum Liability.

         SECTION 10. Notices. All notices, requests and other communications to
any party hereunder shall be given or made by facsimile or other writing and
faxed, or mailed or delivered to the intended recipient at its address or fax
number set forth on the signature pages hereof or such other address or fax
number as such party may hereafter specify for such purpose by notice to the
Agent in accordance with the provisions of Section 8.2 of the Credit Agreement.
Except as otherwise provided in this Guaranty, all such communications shall be
deemed to have been duly given when transmitted by telecopier, or personally
delivered or, in the case of a mailed notice sent by certified mail
return-receipt requested, on the date set forth on the receipt (provided, that
any refusal to accept any such notice shall be deemed to be notice thereof as of
the time of any such refusal), in each case given or addressed as aforesaid.

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         SECTION 11. No Waivers. No failure or delay by the Agent or any Banks
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies provided in this Guaranty, the Credit Agreement, any
Note, any Rate Management Transaction and the other Loan Documents shall be
cumulative and not exclusive of any rights or remedies provided by law.

         SECTION 12. No Duty to Advise. The Guarantor assumes all responsibility
for being and keeping itself informed of each Borrower's and other guarantor's
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks that the Guarantor assumes and incurs under this Guaranty,
and agrees that neither the Agent nor any Bank has any duty to advise the
Guarantor of information known to it regarding those circumstances or risks.

         SECTION 13. Successors and Assigns. This Guaranty is for the benefit of
the Agent and the Banks and their respective successors and permitted assigns
and in the event of an assignment of any amounts payable under the Credit
Agreement, any Note, any Rate Management Transaction, or the other Loan
Documents, the rights hereunder, to the extent applicable to the indebtedness so
assigned, shall be transferred with such indebtedness. This Guaranty shall be
binding upon the Guarantor and its successors and permitted assigns.

         SECTION 14. Changes in Writing. Neither this Guaranty nor any provision
hereof may be changed, waived, discharged or terminated orally, but only in
writing signed by the Guarantor and the Agent with the consent of the Required
Banks.

         SECTION 15. Costs of Enforcement. The Guarantor agrees to pay all costs
and expenses including, without limitation, all court costs and attorneys' fees
and expenses paid or incurred by the Agent or any Bank or any Affiliate of any
Bank in endeavoring to collect all or any part of the Guaranteed Obligations
from, or in prosecuting any action against, the Borrowers, the Guarantor or any
other guarantor of all or any part of the Guaranteed Obligations.

         SECTION 16. GOVERNING LAW; WAIVER OF JURY TRIAL. THIS GUARANTY SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF MICHIGAN.
EACH OF THE GUARANTOR, AND THE AGENT AND THE BANKS ACCEPTING THIS GUARANTY,
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE TRANSACTIONS
CONTEMPLATED HEREBY.

         SECTION 17. Taxes. etc. All payments required to be made by the
Guarantor hereunder shall be made without setoff or counterclaim and free and
clear of and without deduction or withholding for or on account of, any present
or future taxes, levies, imposts, duties or other charges of whatsoever nature
imposed by any government or any political or taxing authority thereof (but
excluding Excluded Taxes), provided, however, that if the Guarantor is required
by law to make such deduction or withholding, the Guarantor shall forthwith (i)
pay to the Agent or any Bank, as applicable, such additional amount as results
in the net amount

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received by the Agent or any Bank, as applicable, equaling the full amount which
would have been received by the Agent or any Bank, as applicable, had no such
deduction or withholding been made, (ii) pay the full amount deducted to the
relevant authority in accordance with applicable law, and (iii) furnish to the
Agent or any Bank, as applicable, certified copies of official receipts
evidencing payment of such withholding taxes within 30 days after such payment
is made.

         SECTION 18. Setoff. Without limiting the rights of the Agent or the
Banks under applicable law, if all or any part of the Guaranteed Obligations is
then due, whether pursuant to the occurrence of an Event of Default or
otherwise, then the Guarantor authorizes the Agent and the Banks to apply any
sums standing to the credit of the Guarantor with the Agent or any Bank toward
the payment of the Guaranteed Obligations.

         SECTION 19. Amended and Restated Guaranty. This Guaranty amends and
restates in its entirety that certain Guaranty Agreement dated as of September
30, 2002 made by the Guarantor in favor of the Agent for the benefit of the
Banks in connection with the Credit Agreement

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         IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed by its authorized officer as of the day and year first above written.

                                    ASSET ACCEPTANCE HOLDINGS, LLC

                                    By: _________________________

                                    Title: President

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