CONTINUING GUARANTY AND INDEMNITY FOR INTERNATIONAL CREDITS
(For U.S. Resident Guarantors)
GUARANTY: To induce NBD Bank of 611 Woodward Avenue, Detroit, Michigan
48226, directly or through any of its affiliates including The First
National Bank of Chicago, acting through any of their respective branch
offices, subsidiaries or affiliates (the "Bank"), at its option, to make
loans, extend or continue credit or some other transaction, including
letters of credit and foreign exchange contracts, present or future, direct
and indirect, and whether several, joint or joint and several (referred to
collectively as "Liabilities"), to Interface Systems International, Ltd.,
and its their successors (the "Borrowers"), and because the undersigned (the
"Guarantor) has determined that executing this Guaranty is in its interest
and to its financial benefit, the Guarantor absolutely and unconditionally
guarantees to the Bank, a primary obligor and not merely as surety, that the
Liabilities will be paid when due, whether by acceleration or otherwise, in
accordance with the terms and conditions of the documentation related to the
Liabilities. The Guarantor will not only pay the Liabilities, but will also
reimburse the Bank for accrued and unpaid interest, taxes and any expenses,
including reasonable attorneys' fees, that the Bank may pay in relation to
the Liabilities or this Agreement, and for liquidating any collateral.
INDEMNITY: As an additional and continuing obligation, the Guarantor
independently, unconditionally and irrevocably agrees that, should the
Liabilities not be recoverable from the Guarantor under the preceding
paragraph for any reason whatsoever, the Guarantor will on demand pay the
Bank in the currency and otherwise as provided in the documentation for the
Liabilities, the outstanding balance of the Liabilities, including accrued
and unpaid interest, taxes and expenses, including reasonable attorneys'
fees, that the Bank may pay in relation to the Liabilities or this
Agreement, and for liquidating any collateral, by way of a full indemnity.
NO DEDUCTION: All payments of the Liabilities will be made by the Guarantor
without deduction for or on account of any present or future charges of
whatever nature imposed by any governmental authority. If those charges are
imposed, the Guarantor will pay them in addition to paying the Liabilities
as required by this Agreement, and will furnish certified copies of all
official receipts evidencing payment of the charges to the Bank within 45
days after their due date.
LIMITATION: [The Guarantor's obligation under this Agreement is UNLIMITED.]
[Regardless of the amount of Liabilities outstanding at any time, the
Guarantor's obligation under this Agreement does not exceed the principal
amount of N/A ( ) the amount(s) reflected in Exhibit A, plus
interest, expenses, and fees.]
CONTINUED RELIANCE: The Bank may continue to make loans or extend credit to
the Borrower based on this Agreement until it receives written notice of
termination from the Guarantor. That notice shall be effective at the
opening of the Bank on the first business day following receipt of the
notice at the address specified above. If terminated, the Guarantor will
continue to be liable to the Bank for any Liabilities created, assumed or
committed to at the time the termination becomes effective, and all
subsequent renewals, extensions, modifications and amendments of those
Liabilities.
SECURITY: As security for this Agreement, the Guarantor pledges and grants
to the Bank a continuing security interest in the property described below
and all of its additions, substitutions, increments, proceeds and products,
whether now owned or later acquired (the "Collateral"):
1. All securities and other property of the Guarantor in the custody,
possession or control of the Bank's Commercial Loan Department except
property held in a fiduciary capacity.
2. All property or securities declared or acknowledged to constitute
security for any past, present or future liability, direct or indirect, of
the Guarantor to the Bank;
3. All balances of deposit accounts of the Guarantor with the Bank.
4. The following additional property of the Guarantor: accounts
receivable, inventory, machinery and equipment, general intangibles and real
property located at 5855 Interface Dr. and 7232 Jackson Rd., Ann Arbor, MI
48103.
The Bank has the right at any time to apply its own debt or liability to the
Guarantor in whole or partial payment or this Agreement or other present or
future liabilities of the Guarantor to the Bank, direct or indirect, without
any requirement of mutual maturity.
INCORPORATION: The Guarantor agrees that so long as any Liability remains
outstanding, it will observe, for the benefit of the Bank, the covenants and
events of default set forth in the Credit Authorization Agreement dated
February 19, 1997 between NBD Bank and the Guarantor, as amended (the
"Credit Agreement"), which are incorporated by reference. Those covenants
and events of default shall remain in force until this Guaranty is no longer
in force, notwithstanding any termination of the Credit Agreement.
EVENTS OF DEFAULT/ACCELERATION: The Bank has the right to terminate any
commitment to extend credit or complete other transactions with any
Borrower, and demand payment under this Agreement whether or not all of any
part of the Liabilities have matured, if any of the following events occurs:
1. Any Guarantor or Borrower fails to pay when due any amount payable
under this Agreement or under any agreement or instrument evidencing debt to
any creditor.
2. Any Guarantor or Borrower (i) fails to observe or perform any term of
this Agreement or the Liabilities; (ii) makes any materially incorrect or
misleading representation, warranty, or certificate to the Bank (iii) makes
any materially incorrect or misleading representation in any financial
statement or other information delivered to the Bank; or (iv) defaults under
the terms of any agreement or instrument relating to any debt for borrowed
money (other than the debt evidenced by this Agreement), including any
capitalized lease obligation, such that the creditor declares the debt due
before its maturity.
3. There is a default under the terms of any loan agreement, mortgage,
security agreement, or any other document executed as part of any loan by
any Borrower or Guarantor from any creditor, or any guarantor fails to
promptly perform under its guaranty.
4. A "reportable event" (as defined in the Employee Retirement Income
Security Act of 1974 as amended) occurs that would permit the Pension
Benefit Guaranty Corporation to terminate any employee benefit plan of any
Guarantor or Borrower or any affiliate of any Guarantor or Borrower, or if
any of them becomes subject to any multi-employer plan.
5. Any Guarantor or Borrower becomes insolvent or unable to pay its
debts as they become due.
6. Any Guarantor or Borrower (i) makes an assignment for the benefit of
creditors; (ii) consents to the appointment of a custodian, receiver, or
trustee for itself or for a substantial part of its assets; or (iii)
commences any proceeding under any bankruptcy, reorganization, liquidation,
insolvency or similar laws of any jurisdiction.
7. A custodian, receiver or trustee is appointed for any Guarantor or
Borrower or for a substantial part of its assets without its consent, and is
not removed within 60 days after the appointment.
8. Proceedings are commenced against any Guarantor or Borrower under any
bankruptcy, reorganization, liquidation, insolvency or similar laws of any
jurisdiction, and they remain dismissed for 60 days after commencement; or
any Guarantor or Borrower consents to the commencement of those proceedings.
9. Any judgment is entered against any Guarantor or Borrower, or any
attachment, levy, or garnishment is issued against any property of any
Guarantor or Borrower, where the USD equivalent of the claim exceeds $ N/A.
10. Any Guarantor or Borrower dies.
11. Any Guarantor or Borrower, without the Bank's written consent, (i) is
dissolved, (ii) merges or consolidates with any third party, (iii) leases,
sells or otherwise conveys a material part of its assets or business outside
the ordinary course of business, (iv) leases, purchases or otherwise
acquires a material part of the assets of any other corporation or business
entity except in the ordinary course of such business, or (v) agrees to do
any of the foregoing.
12. The loan-to-value ratio of any pledged securities at any time exceeds
N/A % and that excess continues for five (5) days after notice from the Bank
to any Guarantor.
13. There is a substantial change in the existing or prospective
financial condition of any Guarantor or Borrower which the Bank in good
faith determines to be materially adverse.
14. The Bank in good faith deems itself insecure.
REMEDIES ON DEFAULT: In addition, the Bank has all of the rights and
remedies provided by law or under any other agreement to liquidate or
foreclose on and sell the Collateral, including but not limited to the
rights and remedies of a secured part under the Uniform Commercial Code.
These rights and remedies are cumulative and not exclusive. If the
Guarantor is entitled to notice, that requirement is met if the Bank sends
notice at least seven (7) days prior to the date of sale, disposition or
other event which requires notice. The proceeds of any sale will be applied
first to costs, then toward payment of the amount owing under this
Agreement. The Bank may cause all or any part of the Collateral to be
transferred to or registered in its name or in the name of any other person
or business entity, with or without designating the capacity of that
nominee.
For purposes of the following paragraphs, "any collateral" shall
include the Guarantor's Collateral and any other collateral securing the
Liabilities.
NEGATIVE PLEDGE: The Guarantor will not allow any lien to exist on any of
its property or any property belonging to any Borrower, except liens known
to the Bank and existing on the date of this Agreement and new liens which
in aggregate, total less than USD -------- or equivalent with respect to the
Guarantor and -------- or equivalent in the aggregate with respect to the
Borrowers. Guarantor further agrees that it will not execute any agreement
containing a negative pledge clause with any other lender.
ACTION REGARDING BORROWER: If any monies become available that the Bank can
apply to the Liabilities, the Bank may apply them in any manner it chooses,
including but not limited to applying them against liabilities which are not
covered by this Agreement. The Bank may take any action against any
Borrower, any collateral, or any other person liable for any of the
Liabilities. The Bank may release any Borrower or anyone else from the
Liabilities, either in whole or in part, or release any collateral, and need
not perfect a security interest in any collateral. The Bank does not have
to exercise any rights that it has against any Borrower or anyone else, or
make any effort to realize on any collateral or right of set-off. If any
borrower requests more credit or any other benefit, the Bank may grant it
and the Bank may grant renewals, extensions, modifications and amendments of
the Liabilities and otherwise deal with any Borrower or any other person as
the Bank sees fit and as if this Agreement were not in effect.
The Guarantor's obligations under this Agreement are not released or
affected by (a) any act or omission of the Bank, (b) the voluntary or
involuntary liquidation, sale or other disposition of all or substantially
all of the assets of the Borrower, (c) any receivership, insolvency,
bankruptcy, reorganization, or other similar proceedings affecting any
Borrower or any of its assets, (d) any change in the composition or
structure or any Borrower or Guarantor, including a merger or consolidation
with any other person or entity, or (e) the full or partial assignment of
any Liability.
NATURE OF GUARANTY: This Agreement is a guaranty of payment and not of
collection. Therefore, the Bank may insist that the Guarantor pay
immediately, and the Bank is not required to attempt to collect first from
the Borrower, any collateral, or any other person liable for the
Liabilities. The obligation of the Guarantor is unconditional and absolute,
even if all or any part of any agreements between the Bank and the Borrower
is unenforceable, void voidable or illegal, and regardless of the existence
of any defense, setoff or counterclaim which the Borrower may assert.
OTHER GUARANTORS: Any Guarantor's obligations under this Agreement are
joint and several with any other guarantor of the Liabilities. If the Bank
elects to enforce its rights against less than all guarantors of the
Liabilities, that election does not release any Guarantor from its
obligations under this Agreement. The compromise or release of any of the
obligations of any of the other guarantors or the Borrower does not serve to
waive, alter or release the Guarantor's obligations.
RIGHTS OF SUBROGATION: The Guarantor will not enforce any rights of
subrogation, contribution or indemnification that it has against the
Borrower, any person liable on the Liabilities, or any collateral, until the
Borrower and the Guarantor have fully performed all their obligations to the
Bank, even if those obligations are not covered by this Agreement. The
Guarantor further agrees that if all or any part of the payments to the Bank
on the Liabilities are invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, receiver or
any other party under any bankruptcy act or code, state or federal law,
common law or equitable doctrine, then this Agreement and any Collateral
remain in full force and effect (or are reinstated as the case may be) until
payment in full of those amounts. That payment is due on demand.
WAIVERS: The Guarantor waives any right it may have to receive notice of
the following matters before the Bank enforces any of its rights: (i) the
Bank's acceptance of this Agreement, (ii) any credit that the Bank extends
to the Borrower, (iii) the Borrower's default, (iv) any demand, (v) any
action that the Bank takes regarding the Borrower, anyone else, any
collateral, or any Liability, which it is entitled to by law or under any
other agreement. Any waiver affects only the specific terms and time period
stated in the waiver. The Bank may waive or delay enforcing any of its
rights without losing them. No modification or waiver of this Agreement is
effective unless it is in writing and signed by the party against whom it is
being enforced.
REPRESENTATIONS BY GUARANTOR: Each Guarantor represents that: (a) the
execution and delivery of this Agreement and the performance of the
obligations it imposes do not violate any law, conflict with any agreement
by which it is bound, or require the consent or approval of any governmental
authority or any third party; (b) this Agreement is a valid and binding
agreement enforceable according to its terms; and (c) all balance sheets,
profit and loss statements, and other financial statements furnished to the
Bank are accurate and fairly reflect the financial condition of the
organizations and persons to which they apply on their effective dates,
including contingent liabilities of every type, which financial condition
has not changed materially and adversely since those dates. Each Guarantor,
other than a natural person, further represents that: (a) it is duly
organized, existing and in good standing under the laws where it is
organized; and (b) the execution and delivery of this note and the
performance of the obligations it imposes (i) are within its powers; (ii)
have been duly authorized by all necessary action of its governing body; and
(iii) do not contravene the terms of its articles of incorporation or
organization, its by-laws or any agreement governing its affairs.
NOTICES: Notice from one party to another relating to this Agreement is
effective if made in writing (including telecommunications) and delivered to
the recipients address, telex number or facsimile number set forth under its
name by any of the following means: (a) hand delivery, (b) registered or
certified mail, postage prepaid, with return receipt requested, (c) first
class or express mail, postage prepaid, (d) Federal Express, Purolator
Courier or like overnight courier service, or (e) telex, facsimile or other
wire transmission with request for assurance of receipt in a manner typical
with respect to communications of that type. Notice made in accordance with
this section is deemed delivered on receipt if delivered by hand or wire
transmission, on the third business day after mailing by first class,
registered or certified mail or on the next business day after mailing or
deposit with an overnight courier service.
LAW AND JUDICIAL FORUM THAT APPLY: This Agreement is governed by Michigan
law. The Guarantor agrees that any legal action or proceeding against it
with respect to any of its obligations under this Agreement may be brought
in any court of the State of Michigan or of the United States of America for
the Eastern or Western District of Michigan, as the Bank in its sole
discretion elects. By the execution and delivery of this Agreement, the
Guarantor submits to and accepts the jurisdiction of those courts with
regard to any action or proceeding, for itself and in respect of its
property, generally and unconditionally, and agrees that service of process
pursuant to the NOTICE section, or pursuant to court rule, will grant
personal jurisdiction over the Guarantor to that court. The Guarantor
waives any claim that the State of Michigan is not a convenient forum or the
proper venue for any suit, action or proceeding.
FOREIGN CURRENCY: The specification of payment in a specific place and time
pursuant to the documentation relating to the Liabilities is essential.
That currency or those currencies are also the currency of account and
payment under this Agreement. In the event that any payment, whether
pursuant to a judgment or otherwise, does not result in payment of the
amount of currency due under this Agreement upon conversion to the currency
of account and transfer to the place specified for payment, the Bank has an
independent cause of action against the Guarantor for the deficiency.
MISCELLANEOUS: The Guarantor's liability under this Agreement is
independent of its liability under any other guaranty previously or
subsequently executed by the Guarantor or any one of them, singularly or
together with others, as to all or any part of the Liabilities, and may be
enforced for the full amount of this Agreement regardless of the Guarantor's
liability under any other guaranty. This Agreement binds the Guarantor's
heirs, successors and assigns, and benefits the Bank and its successors and
assigns. The use of headings does not limit the provisions of this
Agreement.
WAIVER OF JURY TRIAL: The Bank and the Guarantor, after consulting or
having had the opportunity to consult with counsel, knowingly, voluntarily
and intentionally waive any right either of them has to a trial by jury in
any litigation based on or arising out of this Agreement or any related
instrument or agreement, or any of the transactions implied by this
Agreement, or any course of conduct, dealing, statements (whether oral or
written), or actions of either of them. Neither the Bank nor the Guarantor
may seek to consolidate, by counterclaim or otherwise, any action in which a
jury trial has been waived with any other action in which a jury trial
cannot be or has not been waived. These provisions may not be modified in
any respect or relinquished by either the Bank or any Guarantor except by a
written instrument executed by all of them.
Dated: February 19, 1997
GUARANTOR
Interface Systems, Inc.
Address for Notices: By: David O. Schuppp
5855 Interface Dr. Its: Treasurer
Ann Arbor, MI 48103