EXHIBIT 1(E)
LIMITED GUARANTY OF PAYMENT
FOR VALUE RECEIVED and in consideration of any loan or any other financial
accommodation heretofore or hereafter made or granted to FORWARD INDUSTRIES,
INC. (hereinafter referred to as the "Borrower") by 1ST SOURCE BANK (hereinafter
referred to as "1st Source"), and as an inducement to 1st Source to make such
loans and financial accommodations to Borrower, the undersigned, jointly and
severally if more than one person or entity (hereinafter designated as
"Guarantors") hereby promise and guarantee to 1st Source that Borrower shall
promptly and fully pay any and all Indebtedness, and upon failure of Borrower so
to pay, Guarantors jointly and severally promise to pay all Indebtedness to 1st
Source on demand, up to a maximum of FIVE HUNDRED THOUSAND AND NO/100 Dollars
($500,000.00) in payments by Guarantors, together with all expenses of enforcing
this Guaranty, including attorneys' and legal assistants' fees, legal expenses
and all other costs of collection, which expenses and costs shall not be subject
to the dollar amount limitation set forth above. This Guaranty constitutes and
is an absolute and continuing guarantee of payment and shall apply to each and
every default in payment by Borrower and shall remain in full force and effect
until the full amounts set forth above have been paid to 1st Source by
Guarantors, or until 1st Source has received repayment of all amounts due from
Borrower and 1st Source is no longer obligated to extend credit to Borrower. It
is understood that repeated and successive demands may be made and recoveries
had hereunder.
In this Guaranty, "Indebtedness" means all indebtedness and obligations of
Borrower now or hereafter owing to 1st Source, including, but not limited to,
future advances, and all obligations of Borrower under all notes, mortgages,
security agreements, assignments, leases, guaranties and any other agreements or
documents heretofore or hereafter executed by Borrower including all interest,
late charges, prepayment penalties and other amounts set forth in any such
documents, whether such indebtedness or obligations be direct or indirect,
absolute or contingent, or primary or secondary, and all partial or full
extensions, renewals and modifications of the indebtedness and obligations.
This Guaranty shall continue until 1st Source has received from Guarantors, by
registered or certified mail, postage-prepaid at 100 North Michigan, South Bend,
Indiana 46601 (Attention: Commercial Loan Services), written notice of
termination of this Guaranty respecting future loans, which termination shall
not affect the obligation of Guarantors to pay all Indebtedness existing at the
time of such notice and interest accruing thereon.
The liability of the Guarantors hereunder shall be discharged and this Guaranty
shall terminate 120 days after payment in full of the Indebtedness if within
such 120-day period no petition is filed by or against the Borrower pursuant to
the United States Bankruptcy Code, as amended from time to time, or under any
similar law of any jurisdiction. If such a petition is filed within said 120-
day period, this Guaranty shall continue and shall remain in full force and
effect until such time as the Indebtedness has been paid in full and is no
longer subject to repayment by, or recovery from, 1st Source under any such law.
Demand, presentment for payment, notice of dishonor, notice of non-payment,
protest, notice of protest, diligence by 1st Source in collection or bringing
suit on this Guaranty, notice of the creation and existence of any Indebtedness,
all benefits of valuation and appraisement laws, and all rights of sureties and
accommodation parties are hereby waived by Guarantors. Guarantors hereby also
assume the same obligations as a co-maker of the Indebtedness and waive all
rights to have 1st Source first attempt to secure payment of the Indebtedness
from Borrower or any collateral now or hereafter held by 1st Source. 1st Source
may take new, additional or substitute security for the
Indebtedness without releasing or impairing the obligation of Guarantors to 1st
Source hereunder, which security may be taken without notice to Guarantors. The
liability of the Guarantors hereunder shall not be affected or impaired by any
existing or future irregularity in or amendment of the Indebtedness or any loan
agreement, security document or other instrument related thereto or (a) any
collateral security therefor, (b) any transfer of the collateral security
therefor, (c) any documents or instruments executed in connection therewith, (d)
any compromise, release, renewal, extension, forebearance, indulgence,
alteration, change in, modification of, grant of participation in, or other
disposition of any such loan agreement, security document, or other instrument
or any note executed in connection therewith, or of any collateral therefor, (e)
any release of any Guarantor or any other person or the failure of 1st Source to
pursue its remedies against any one or more of the Guarantors or any other
person, (f) failure to collect any of the Indebtedness when due, (g) failure to
notify any Guarantors of any payments owing hereunder, or (h) any delay or
omission by 1st Source in the exercise of any right or remedy hereunder.
Guarantors waive all defenses at law or in equity other than payment and agree
this instrument shall be binding on the heirs, personal representatives,
successors and assigns of Guarantors and shall inure to the benefit of the
successors and assigns of 1st Source.
Notwithstanding any payments made by Guarantors hereunder, the Guarantors shall
not by reason of this Guaranty have, and Guarantors hereby waive, (i) any claim
or right of subrogation in and to the Indebtedness or any loan agreement,
security document, note or other instrument related thereto or any collateral
security therefor, (ii) any claim or right of reimbursement, exoneration,
contribution or indemnification from or against any party, and (iii) any right
to participate in any claim or remedy of 1st Source against the Borrower or any
collateral security for the Indebtedness, whether or not such claim, right or
remedy arises in equity or under contract, statute, or common law.
1st Source shall have the right to apply all amounts received hereunder, in such
amounts and in such proportions as 1st Source in its sole discretion shall
determine, to the costs and expenses of enforcement and collection and to the
full or partial satisfaction of the Indebtedness. Demand for payment under this
Guaranty shall be effective upon 1st Source placing notice in the United States
mail addressed to Guarantors at the addresses stated below by first class,
registered or certified mail.
1st Source is hereby granted and shall have a lien upon and a right of setoff
against all balances, credits, deposits, accounts, moneys, securities, and other
property of Guarantors now or hereafter in the possession of or on deposit with
1st Source, and every such lien and right of setoff may be exercised without
demand upon or notice to Guarantors.
To induce 1st Source to make the loans to Borrower, each of the undersigned
covenants and agrees to provide to 1st Source, on an annual basis within ninety
(90) days after the end of each year, a complete financial statement in form
satisfactory to 1st Source.
This Guaranty has been delivered at South Bend, Indiana, and shall be
interpreted, construed and governed by the laws of the State of Indiana.
Wherever possible, each provision of this Guaranty shall be interpreted in such
manner as to be effective and valid under applicable law, and any provision of
this Guaranty prohibited or unenforceable under applicable law shall be
ineffective only to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Guaranty.
Each Guarantor agrees to give 1st Source written notice, by registered or
certified mail, postage-prepaid, of any action or inaction by 1st Source or any
agent or attorney of 1st Source in connection with the Indebtedness or this
Guaranty or the transactions contemplated thereby that may be actionable against
1st Source or any agent or attorney of 1st Source or a defense to payment of the
Indebtedness or this Guaranty, including, but not limited to, commission of a
tort or violation of any contractual duty or duty implied by law. Each
Guarantor hereby agrees that unless such notice is
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duly given as promptly as possible (and in any event within thirty (30) days)
after such Guarantor has knowledge or with the exercise of reasonable diligence
should have had knowledge of any such action or inaction, such Guarantor shall
not assert, and such Guarantor shall be deemed to have waived, any such claim or
defense.
DUE TO THE HIGH COST AND TIME INVOLVED IN COMMERCIAL LITIGATION BEFORE A JURY,
GUARANTORS WAIVE ALL RIGHT TO A JURY TRIAL ON ALL ISSUES IN ANY ACTION OR
PROCEEDING RELATING TO THIS GUARANTY, THE INDEBTEDNESS, THE TRANSACTIONS
EVIDENCED THEREBY, OR ANY DOCUMENTS EXECUTED IN CONNECTION THEREWITH, AND NO
ATTEMPT SHALL BE MADE TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH
ACTION OR PROCEEDING WITH ANY OTHER ACTION OR PROCEEDING IN WHICH THERE IS A
TRIAL BY JURY OR IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
SIGNED AND DELIVERED this MARCH 30, 1996
GUARANTORS:
X: /s/ Theodore H. Schiffman
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THEODORE H. SCHIFFMAN
ADDRESS: 124 BROADWAY
LAWRENCE, NEW YORK 11559
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