CONTINUING PLEDGE AGREEMENT
PLEDGE: To induce NBD Bank, of 611 Woodward Avenue, Detroit,
Michigan 48226-3497 (the "Bank"), at its option, to make loans, extend or
continue credit or some other benefit, including guaranties, letters of
credit and foreign exchange contracts, present or future, direct or
indirect, and whether several, joint or joint and several (referred to
collectively as "Liabilities"), to the undersigned and its successors (the
"Pledgor"), and
(check if applicable)
[ ] to Interface Systems, Inc. and its successors (the
"Borrower"), and because the Pledgor has determined that executing this
Pledge is in its interest and to its financial benefit, the Pledgor pledges
and transfers to the Bank, and grants the Bank a continuing security
interest in the property listed below under the heading "Schedule of
Collateral." If the Collateral consists of securities, the grant includes
any stock rights, stock dividends, liquidating dividends, new securities and
other property to which the Pledgor may become entitled because it owns the
Collateral. The Pledgor has transferred the securities to the Bank. In the
event the transfer is not complete, the Pledgor will complete it within 10
days. This security interest shall secure all Liabilities and includes
principal, interest, expenses, reasonable attorneys' fees, and all other
costs of collection. The Pledgor agrees to hold the Bank harmless from any
liability caused by its reliance on this Pledge.
SCHEDULE OF COLLATERAL:
1,400,000 shares Interface Systems, International, Ltd., Certificate #15
including substitutions, replacements, additions and proceeds. Any
securities or other property of the Pledgor at any time in the custody,
possession or control of the Bank shall also constitute Collateral, unless
the Bank holds such property solely in a fiduciary capacity.
WARRANTIES AND COVENANTS: The Pledgor warrants it owns the Collateral free
and clear of any liens. The Pledgor will not attempt to sell or assign the
Collateral or create any lien or claim against it. The Pledgor agrees to
reimburse the Bank, on demand, for any amounts paid or advanced by the Bank
for the purpose of preserving all or any part of the Collateral. The Bank
shall exercise reasonable care in the custody and preservation of the
Collateral to the extent required by applicable statute. The Bank shall use
its best efforts to take any action the Pledgor may reasonably request in
writing, but the failure to do so shall not be deemed a failure to exercise
reasonable care.
REGISTRATION RIGHTS: If any of the Collateral consists of securities not
registered under the Securities Act of 1933, and the issuer proposes to
register any of its securities, the Pledgor will give the Bank notice of
that fact. In addition, and at no cost to the Bank, the Pledgor will use
its best effort to induce the issuer to register the pledged securities so
that they may be disposed of by public sale or other public disposition.
Upon the completion of registration, the Pledgor will deliver certificates
without any restrictive legend in exchange for the unregistered securities.
The Pledgor indemnifies and holds the Bank harmless against any loss, claim,
damage or liability arising out of the registration process, and will
reimburse the Bank for any legal or other expenses incurred by the Bank as a
result.
INSTRUCTIONS REGARDING THE COLLATERAL: The Bank may act upon any
instructions given by the Pledgor whether in writing or not, with regard to
additions or substitutions or sale or other disposition of the Collateral
and its proceeds. The Pledgor agrees that any additions to, substitutions
for or proceeds of the Collateral that it or the Borrower receives will be
held for the Bank's benefit and turned over to the Bank. The Pledgor also
gives the Bank permission to have the Collateral or any part of it
transferred to or registered in the Bank's name or in the name of any other
person, firm or corporation, with or without designation of the capacity of
such nominee, and will hold the Bank harmless from any liability or
responsibility that might result. In furtherance of the Bank's rights under
this Pledge, the Pledgor irrevocably appoints the Bank as its attorney-in-
fact, with full power of substitution.
CONTINUED RELIANCE: The Bank may continue to make loans or extend credit to
the Borrower based on this Pledge until it receives written notice of
termination from the Pledgor. That notice shall be effective at the opening
of the Bank for business on the day after receipt of the notice. The
termination will not affect any of the rights given to the Bank in this
Pledge with respect to any of the Liabilities that were created, assumed or
committed to prior to the Bank's receipt of the notice, and all subsequent
renewals, extensions, modifications and amendments of the Liabilities. Upon
receipt of the notice, the Bank does not have to take any action against the
Borrower or the Collateral in order to maintain its rights. If the Pledgor
is the Borrower, this Pledge is not terminable.
LOAN-TO-VALUE RATIO: If the unpaid balance of the Liabilities shall at any
time exceed an amount equal to -------% of the then fair market value (as
reasonably determined by the Bank) of any securities constituting all or a
portion of the Collateral, and such excess continues for five (5) days after
notice from the Bank to the Pledgor, the Pledgor shall be in default under
this Pledge and the Bank may sell all or any portion of such securities and
otherwise exercise any or all of the rights and remedies set forth in this
Pledge.
DEFAULT/REMEDIES: If the Pledgor or the Borrower fails to pay any of the
Liabilities when due, or if a default exists under the terms of any
agreement related to any of the Liabilities, or if the Pledgor dies or fails
to observe or perform any term of this Pledge, or if any representation or
warranty of the Pledgor contained in this Pledge is untrue in any material
respect, or if there is a material change in the financial condition of the
Pledgor which the Bank in good faith determines to be materially adverse,
then the Bank shall have all of the rights and remedies provided by any law
to liquidate or foreclose on and sell the Collateral, including but not
limited to the rights and remedies of a secured party under the Uniform
Commercial Code. The Pledgor agrees and acknowledges that because of
applicable securities laws, the Bank may not be able to effect a public sale
of the Collateral, and sales at a private sale may be on terms and at a
price less favorable than if the securities were sold at a public sale. The
Pledgor agrees that all private sales made under these circumstances shall
be deemed to have been made in a commercially reasonable manner. These
rights and remedies shall be cumulative and not exclusive. If the Pledgor
is entitled to notice, that requirement will be met if the Bank sends notice
at least seven (7) days prior to the date of sale, disposition or other
event requiring notice. The proceeds of any sale shall be applied first to
costs, then toward payment of the Liabilities, whether or not the
Liabilities have been declared to be due and owing; provided that, to the
extent any Liabilities consist of extensions of credit to the Borrower by
the issuance of letters of credit or other like obligations of the Bank to
third parties which have not been utilized, such proceeds shall be held by
the Bank in a cash collateral account as security for the Liabilities.
WAIVERS: The Pledgor waives any right it may have to receive notice of any
of the following matters before the Bank enforces any of its rights: (a)
the Bank's acceptance of this Pledge, (b) any credit that the Bank extends
to the Borrower, (c) the Borrower's default, (d) any demand, or (e) any
action that the Bank takes regarding the Borrower, anyone else, any
collateral, or any Liability, which it might be entitled to take by law or
under any other agreement. No modification or waiver of this Pledge shall
be effective unless it is in writing and signed by the party against whom it
is being enforced. The Bank may waive or delay enforcing any of its rights
without losing them. Any waiver shall affect only the specific terms and
time period stated in the waiver. The Bank shall not be obligated to take
any action in connection with any conversion, call, redemption, retirement
or any other event relating to any of the Collateral.
WAIVER OF SUBROGATION: Until thirteen months after the principal balance of
and interest on the Liabilities, even if not covered by this Pledge, shall
have been paid in full and the Borrower shall have fully performed all of
its obligations to the Bank, the Pledgor expressly waives any and all rights
of subrogation, contribution, reimbursement, indemnity, exoneration, implied
contract, recourse to security or any other claim (including any claim, as
that term is defined in the federal Bankruptcy Code, and any amendments)
which the Pledgor may now have or later acquire against the Borrower, any
other entity directly or contingently liable for the Liabilities, or against
the Collateral arising from the existence or performance of the Pledgor's
obligations under this Pledge.
The Pledgor further agrees that such waiver is permanent and shall not be
revoked or terminated, in any event, including payment in full of the
principal balance of and interest on the Liabilities in the event that
proceedings are commenced at any time after execution of this Pledge by or
against the Borrower under any bankruptcy, reorganization, liquidation or
similar laws of any jurisdiction, including the federal Bankruptcy Code.
The Pledgor further agrees that should any payments to the Bank on the
Liabilities be in whole or in part 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, this Pledge and any Collateral shall
remain in full force and effect (or be reinstated as the case may be) until
payment in full of any such amounts, which payment shall be due on demand.
REPRESENTATIONS BY PLEDGOR: Each Pledgor represents: (a) that the execution
and delivery of this Pledge 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) that this Pledge is a valid and binding agreement,
enforceable according to its terms; and (c) that 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 Pledgor, other
than a natural person, further represents: (a) that it is duly organized,
existing and in good standing pursuant to the laws under which it is
organized; and (b) that the execution and delivery of this Pledge and the
performance of the obligations it imposes (i) are within its powers and have
been duly authorized by all necessary action of its governing body; and (ii)
do not contravene the terms of its articles of incorporation or
organization, its by-laws, or any partnership, oeprating or other agreement
governing its affairs.
NOTICES: Notice from one party to another relating to this Pledge shall be
deemed effective if made in writing (including telecommunications) and
delivered to the recipient's 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, (d) Federal Express, Purolator
Courier or like overnight courier service, or (e) telecopy, 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 shall be deemed delivered on receipt if
delivered by hand or wire transmission, on the third business day after
mailing if mailed by first class, registered or certified mail or on the
next business day after mailing or deposit with an overnight courier service
if delivered by express mail or overnight courier. Notwithstanding the
foregoing, notice of termination of this Pledge shall be deemed received
only upon the receipt of actual written notice by the Bank in accordance
with the paragraph above labeled "Continued Reliance."
MISCELLANEOUS: The Pledgor consents to (a) any extension, postponement,
renewal, modification and amendment of any Liability, (b) the release or
discharge of all or any part of any security for the Liabilities, and (c)
the release or discharge or suspension of any rights and remedies against
any person who may be liable for the Liabilities. The Bank does not have to
look to any other right, any other collateral or any other person for
payment before it exercises its rights under this Pledge. The Pledgor's
obligations to the Bank under this Pledge are not subject to any condition,
precedent or subsequent, and shall not be released or affected by any change
in the composition or structure of the Borrower or Pledgor, including a
merger or consolidation with any other person or entity. If this Pledge is
signed by more than one person, all shall be jointly and severally bound.
This Pledge is binding on the Pledgor and its heirs, successors and assigns,
and is for the benefit of the Bank and its successors and assigns. This
Agreement is governed by Michigan law. The use of section headings shall
not limit the provisions of this Pledge.
WAIVER OF JURY TRIAL: The Bank and the Pledgor, after consulting or having
had the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in
any litigation based upon or arising out of this Pledge or any related
instrument or agreement, or any of the transactions contemplated by this
Pledge, or any course of conduct, dealing, statement (whether oral or
written), or actions of either of them. Neither the Bank nor the Pledgor
shall 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 shall not be deemed to
have been modified in any respect or relinquished by either the Bank or the
Pledgor except by a written instrument executed by both of them.
Dated: February 1997.
Address: PLEDGOR:
5855 Interface Drive By:David Schupp
Ann Arbor, MI 48103
Its:Treasurer
Its:---------------------