<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Three Months Ended September 30, 1995
Commission File No. 0-12728
MEDAR, INC.
38700 Grand River Avenue
Farmington Hills, Michigan 48335
(810) 477-3900
STATE OF INCORPORATION: MICHIGAN E.I.N.: 38-2191935
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 12 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AT OCTOBER 31, 1995
----- -------------------------------
<S> <C>
Common stock, no par value, stated
value $.20 per share 8,711,589 shares
</TABLE>
Page 1
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1995 1994
--------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS - Note E
Cash and cash equivalents $ 670,927 $ 586,227
Short-term investments 4,018,360
Accounts receivable, less allowance of
$275,000 at September 30, 1995 and $311,000
at December 31, 1994 12,599,696 11,938,278
Inventories - Note C 15,662,289 11,431,635
Costs and estimated earnings in excess of
billings on incomplete contracts - Note D 1,460,616 2,290,559
Other current assets 1,265,294 743,839
------------- -------------
TOTAL CURRENT ASSETS 31,658,822 31,008,898
PROPERTY, PLANT AND EQUIPMENT - Note E
Land and land improvements 325,325 324,021
Building and building improvements 3,713,165 3,537,670
Production and engineering equipment 2,573,101 2,169,908
Furniture, fixtures and other 1,439,875 870,511
Computer equipment 3,385,640 2,623,608
------------- -------------
11,437,106 9,525,718
Less accumulated depreciation 4,702,840 3,906,149
------------- -------------
6,734,266 5,619,569
OTHER ASSETS
Capitalized computer software
development costs, net of amortization 6,747,717 5,701,274
Deferred income taxes 1,428,000 73,000
Other 3,402,246 1,119,808
------------- -------------
11,577,963 6,894,082
------------- -------------
$ 49,971,051 $ 43,522,549
============= =============
</TABLE>
See notes to consolidated financial statements.
Page 2
<PAGE> 3
CONSOLIDATED BALANCE SHEETS - CONTINUED
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1995 1994
---------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 72,276 $ 146,126
Accounts payable 3,314,735 4,389,662
Employee compensation 889,167 1,106,882
Accrued and other liabilities 897,609 1,154,937
Current maturities of long-term debt - Note E 380,416 471,695
Deferred income taxes 288,000 280,000
Patent litigation accrual-Note H 3,576,853
------------ ------------
TOTAL CURRENT LIABILITIES 9,419,056 7,549,302
LONG-TERM DEBT, less current maturities - Note E 8,989,529 1,971,942
STOCKHOLDERS' EQUITY - Note G
Common stock, without par value, stated
value $.20 per share; 15,000,000 shares
authorized; 8,711,589 shares issued and
outstanding (8,630,469 shares at
December 31, 1994) 1,742,318 1,726,094
Additional paid-in capital 29,438,746 29,101,516
Retained earnings 466,159 3,261,704
Accumulated translation adjustment (84,757) (88,009)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 31,562,466 34,001,305
------------ ------------
$ 49,971,051 $ 43,522,549
============ ============
</TABLE>
See notes to consolidated financial statements.
Page 3
<PAGE> 4
CONSOLIDATED STATEMENTS OF OPERATIONS
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30
1995 1994
---------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
Net sales $ 9,776,577 $10,838,021
Cost of sales 7,908,188 6,651,366
------------ -----------
GROSS MARGIN 1,868,389 4,186,655
Costs and expenses:
Marketing 1,251,340 1,018,868
General and administrative 879,027 692,532
Research and development 510,803 774,857
Patent litigation costs - Note H 86,000 125,000
------------ -----------
2,727,170 2,611,257
------------ -----------
EARNINGS (LOSS) FROM OPERATIONS (858,781) 1,575,398
Interest:
Expense 131,849 65,339
Income (7,716) (90,663)
------------ -----------
124,133 (25,324)
------------ -----------
EARNINGS (LOSS) BEFORE INCOME TAXES (982,914) 1,600,722
Provision (credit) for income taxes - Note F (334,000) 189,000
------------ -----------
NET EARNINGS (LOSS) $ (648,914) $ 1,411,722
============ ===========
Net earnings (loss) per share $ (.07) $ .16
============ ===========
Weighted average number of shares of
common stock (and common stock equivalents in
1994) outstanding 8,708,964 9,019,764
============ ===========
</TABLE>
See notes to consolidated financial statements.
Page 4
<PAGE> 5
CONSOLIDATED STATEMENTS OF OPERATIONS
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
1995 1994
--------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
Net sales $ 32,329,011 $ 30,753,556
Cost of sales 23,757,441 19,975,522
------------ ------------
GROSS MARGIN 8,571,570 10,778,034
Costs and expenses:
Marketing 3,540,120 2,741,726
General and administrative 2,271,869 1,833,270
Research and development 1,222,341 1,752,752
Patent litigation costs - Note H 5,461,000 200,000
------------ ------------
12,495,330 6,527,748
------------ ------------
EARNINGS (LOSS) FROM OPERATIONS (3,923,760) 4,250,286
Interest:
Expense 282,349 182,847
Income (64,564) (114,940)
------------ ------------
217,785 67,907
------------ ------------
EARNINGS (LOSS) BEFORE INCOME TAXES (4,141,545) 4,182,379
Provision (credit) for income taxes - Note F (1,346,000) 697,000
------------ ------------
NET EARNINGS (LOSS) $ (2,795,545) $ 3,485,379
============ ============
Net earnings (loss) per share $ (.32) $ .42
============ ============
Weighted average number of shares of
common stock (and common stock equivalents in
1994) outstanding 8,684,844 8,338,084
============ ============
</TABLE>
See notes to consolidated financial statements.
Page 5
<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
1995 1994
-----------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings (loss) $(2,795,545) $ 3,485,379
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,400,059 1,721,134
Provision (credit) for deferred income taxes (1,346,000) 669,000
Changes in operating assets and liabilities (6,686,862) (2,444,490)
Increase in patent litigation accrual 3,576,853
----------- ------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (4,851,495) 3,431,023
INVESTING ACTIVITIES
Sale of short-term investments 4,018,360
Purchase of property and equipment (1,911,953) (1,291,634)
Investment in capitalized software (2,413,224) (1,923,062)
----------- ------------
NET CASH USED IN INVESTING ACTIVITIES (306,817) (3,214,696)
FINANCING ACTIVITIES
Net decrease in borrowings under line of credit (75,854) (14,746)
Debt repayments on long-term debt and capital
lease obligations (6,470,348) (12,611,274)
Proceeds from long-term borrowings 11,399,900 6,765,000
Proceeds from exercise of stock options 377,993 85,680
Net proceeds from sale of common stock 13,666,045
----------- ------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 5,231,691 7,890,705
----------- ------------
Effect of exchange rate changes on cash 11,321 1,876
----------- ------------
INCREASE IN CASH 84,700 8,108,908
Cash at beginning of period 586,227 499,593
----------- ------------
CASH AT END OF PERIOD $ 670,927 $ 8,608,501
=========== ============
</TABLE>
See notes to consolidated financial statements.
Page 6
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MEDAR, INC. AND SUBSIDIARIES
SEPTEMBER 30, 1995
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the three month
period ended September 30, 1995 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1995. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Registrant Company and Subsidiaries' annual report on
Form 10-K for the year ended December 31, 1994.
Certain items in the 1994 financial statements have been reclassified to
conform with the corresponding 1995 presentation.
Note B - Acquisition of Integral Vision Ltd.
Effective January 1, 1995, the Company acquired 100% of the common stock and
preference shares of Integral Vision Ltd. (Integral) for 654,282 previously
unissued shares of Medar, Inc. common stock. Integral is a machine vision
company located in the United Kingdom, which develops and manufactures
solutions for OEM's and end-users. This transaction has been accounted for as
a pooling of interests and accordingly, the consolidated financial statements
for all periods presented have been restated to include the accounts of
Integral.
Combined and separate results of Medar and Integral for the nine months ended
September 30, 1994 are as follows:
<TABLE>
<CAPTION>
Medar Integral Combined
-------------- ------------------- ------------------
<S> <C> <C> <C>
Net sales $ 28,376,817 $ 2,376,739 $ 30,753,556
Net income (loss) 3,593,449 (108,070) 3,485,379
</TABLE>
Intercompany transactions and adjustments to conform financial statement
presentation were not material to the above numbers.
Note C - Inventories
Inventories are stated at the lower of first-in, first-out cost or market, and
the major classes of inventories at the dates indicated were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1995 1994
----------------------------------------------------
<S> <C> <C>
Raw materials $ 7,989,614 $ 4,997,585
Work-in-process 4,556,903 4,031,832
Finished goods 3,115,772 2,402,218
-------------- --------------
$ 15,662,289 $ 11,431,635
============= =============
</TABLE>
Page 7
<PAGE> 8
Note D - Costs and Estimated Earnings in Excess of Billings on Incomplete
Contracts
Revenues on long-term contracts are recognized using the percentage of
completion method based on the ratio of labor costs incurred to date on the
contract to estimated total labor costs for the contract. The effects of
changes to estimated total contract costs are recognized in the period
determined and losses, if any, are recognized fully when identified. Costs
incurred and earnings recognized in excess of amounts billed are classified
under current assets as costs and estimated earnings in excess of billings on
incomplete contracts. Long-term contracts include a relatively high percentage
of engineering costs and are generally less than one year in duration.
Costs and estimated earnings in excess of billings on incomplete contracts at
September 30, 1995 and December 31, 1994 are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1995 1994
----------------------------------------------------
<S> <C> <C>
Contract costs to date $ 2,713,586 $ 5,681,635
Estimated contract earnings 3,055,860 5,415,595
------------- -------------
5,769,446 11,097,230
Less billings to date (4,308,830) (8,806,671)
------------- -------------
Costs and estimated earnings in excess
of billings on incomplete contracts $ 1,460,616 $ 2,290,559
============= =============
</TABLE>
Note E - Long Term Debt and Other Financing Arrangements
Long-term debt at September 30, 1995 and December 31, 1994 consisted of the
following:
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1995 1994
----------------------------------------------------
<S> <C> <C>
Term note payable to bank $ 1,937,500 $ 2,125,000
Revolving note payable to bank 5,291,500
Patent license payable 2,000,000
Other 140,945 318,637
------------- -------------
9,369,945 2,443,637
Less current maturities 380,416 471,695
------------- -------------
$ 8,989,529 $ 1,971,942
============= =============
</TABLE>
The term note payable to the bank is payable in quarterly installments of
$62,500 plus interest at the bank's prime rate (the bank's prime rate was 8.75%
and 8.50% at September 30, 1995 and December 31, 1994, respectively), with the
balance becoming due June 29, 1998. This note is collateralized by the Medar
office and production facility in Farmington Hills, Michigan and equipment,
inventory and accounts receivable at all North American locations.
Page 8
<PAGE> 9
Note E - Long Term Debt and Other Financing Arrangements (continued):
The Company has a revolving note payable to its bank with a maximum balance of
$10,000,000. This note expires August 10, 1997 and has advances which bear
interest at the bank's prime rate or other rates made available under the terms
of the agreement.
Maturities of long-term debt, excluding those payable within twelve months from
September 30, 1995 (which are stated as current maturities of long-term debt),
are $210,000 in 1996; $5,690,000 in 1997; $1,535,000 in 1998; $174,000 in 1999;
and $1,381,000 thereafter.
Note F - Income Taxes
Significant components of the provision (credit) for income taxes for the nine
months ended September 30 are as follows:
<TABLE>
<CAPTION>
1995 1994
-------------- -------------
<S> <C> <C>
Current:
Foreign $ (8,000)
State 36,000
-------------
28,000
-------------
Deferred:
Federal $ (1,358,000) 690,000
Foreign 12,000 (21,000)
------------ -------------
(1,346,000) 669,000
------------ -------------
$ (1,346,000) $ 697,000
============ =============
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
September 30 December 31
1995 1994
------------ -----------
<S> <C> <C>
Deferred tax liabilities:
Deductible software development costs, net of
amortization $ 2,239,000 $1,947,000
Tax over book depreciation 365,000 368,000
Percentage of completion 736,000 736,000
----------- ----------
Total deferred tax liabilities 3,340,000 3,051,000
Deferred tax assets:
Net operating loss carryforwards 3,112,000 1,518,000
Credit carryforwards 873,000 823,000
Reserve for obsolescence 167,000 155,000
Other 328,000 348,000
----------- ----------
Total deferred tax assets 4,480,000 2,844,000
----------- ----------
Net deferred tax liabilities (assets) $(1,140,000) $ 207,000
=========== ==========
</TABLE>
Page 9
<PAGE> 10
Note F - Income Taxes (continued)
The reconciliation of income taxes computed at the U.S. federal statutory rates
to income tax expense for the nine months ended September 30 is as follows:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Tax (credit) at U.S. statutory rates $ (1,408,000) $ 1,422,000
Utilization of net operating loss
carryforward (823,000)
Other nondeductible expenses 66,000 44,000
Other (4,000) 18,000
State income taxes 36,000
------------ ------------
$ (1,346,000) $ 697,000
============ ============
</TABLE>
Note G - Stock Options
At September 30, 1995, there were options to purchase 790,238 shares
outstanding ranging in price from $1.50 to $11.50. These options were not
included in the calculation of net loss per share, as the effect was
antidilutive.
Note H - Settlement of Legal Proceedings
In July 1995, Medar, Inc. reached a settlement of its patent litigation which
was initiated by Square D Company in April of 1994 in the Federal District
Courts in Eastern District of Michigan and in Delaware. This resolution also
settles claims made by Medar against Square D. The terms of the settlement
made under the auspices of the Federal District Court in Delaware provide for a
cross license agreement on all single phase welding patents held by either
company and call for a single payment related to use of technology in prior
years as well as yearly payments for the use of technology in the future.
The single payment, which will be paid in the fourth quarter of 1995, was
recorded as an expense in the second quarter of 1995 and as a current liability
at September 30, 1995. The future payments have been reflected as a noncash
transaction which increased both long-term debt and other assets by $2,000,000.
This amount will be amortized over future periods.
Page 10
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
Three Months Ended September 30, 1995 Compared to September 30, 1994
Net sales decreased 9.8% to $9.8 million from $10.8 million. This decrease was
due to an decrease in volume of vision sales.
Cost of sales increased to $7.9 million from $6.7 million and as a percentage
of net sales to 80.9% from 61.4%. The increased percentage is primarily the
result of costs incurred related to the introduction of certain new products as
well as lower absorption of overhead associated with the lower sales volume.
Management has implemented changes which it expects will improve gross margins.
The full impact of these changes are not expected to be realized until 1996,
however.
Sales backlog for the Company at September 30, 1995 was $13.7 million compared
to $4.7 million at September 30, 1994. Most of the increase is due to receipt
of a large order from one of the Company's major customers. This order is
expected to be delivered over the next 18 months.
Marketing expense increased to $1.3 million from $1.0 million and as a
percentage of net sales to 12.8% from 9.4%. The increase was primarily due to
increased personnel and activity associated with new promotion programs and
product introductions in the vision product line.
General and administrative expense increased to $0.9 million from $0.7 million
and as a percentage of net sales to 9.0% from 6.4%. The increase is primarily
the result of additional professional fees incurred for various projects.
Research and development expense decreased to $0.5 million from $0.8 million
and as a percentage of net sales to 5.2% from 7.1%. The decrease was due to
the Company concentrating more of its engineering resources in areas other than
product hardware development in the current quarter.
Patent litigation costs relate to the costs incurred to defend the patent
litigation with Square D.
Net interest expense increased in 1995 from 1994 as there were cash balances
invested in 1994 and borrowings in 1995. The Company had cash balances during
1994 following sales of 1,300,000 common shares to the public.
Nine Months Ended September 30, 1995 Compared to September 30, 1994
Net sales increased 5.1% to $32.3 million from $30.8 million. The increase was
due to an increase in volume of vision sales.
Cost of sales increased to $23.8 million from $20.0 million and as a percentage
of net sales to 73.5% from 65.0%. The increased percentage is principally the
result of increased manufacturing costs, costs incurred related to the
introduction of certain new products and changes in the mix of welding
products.
Marketing expense increased to $3.5 million from $2.7 million and as a
percentage of net sales to 11.0% from 8.9%. The increase was primarily due to
increased personnel and activity associated with new promotion programs and
product introductions in the vision product line.
General and administrative expense increased to $2.3 million from $1.8 million
and as a percentage of net sales to 7.0% from 6.0%. The increase was primarily
due to additional support needed for expansion of the Company's U.K. facility
and additional professional fees incurred for various projects.
Page 11
<PAGE> 12
Patent litigation costs relate to costs of settlement of the Company's patent
litigation with Square D as well as the costs incurred to defend the case.
Net interest expense increased in 1995 from 1994 as 1994 was favorably impacted
by gains realized upon the sale of interest rate swaps, cash balances resulting
from the sale of 1,300,000 common shares to the public in 1994 which were
invested and from borrowings in 1995.
Liquidity and Capital Resources
The Company has a revolving note payable to its bank with a maximum balance of
$10,000,000. This note expires August 10, 1997 and has advances which bear
interest at the bank's prime rate or a choice of other rates made available
under the terms of the agreement.
During the nine months ended September 30, 1995, the Company utilized cash
generated from the sale of short-term investments and the proceeds from
long-term borrowings to fund investments in property and equipment and
capitalized software as well as the increase in inventory. The increase in
inventory is primarily related to the increase in business activity in 1995 and
expected future activity.
The Company believes that current financial resources, together with available
unused bank lines and cash generated from operations, will be adequate to meet
known cash requirements. Subsequent to September 30, 1995, the Company
acquired an additional building for $2.2 million to increase it's production
capacity. This building was entirely financed with bank borrowings. The
Company does not currently anticipate additional capital expenditures for which
it would not be able to obtain appropriate financing.
Page 12
<PAGE> 13
PART II. OTHER INFORMATION
Item 1. Legal proceedings
In July 1995, Medar, Inc. reached a settlement of its patent litigation which
was initiated by Square D Company in April of 1994 in the Federal District
Courts in Eastern District of Michigan and in Delaware. This resolution also
settles claims made by Medar against Square D. The terms of the settlement
made under the auspices of the Federal District Court in Delaware provide for a
cross license agreement on all single phase welding patents held by either
company and call for a single payment related to use of technology in prior
years as well as yearly payments for the use of technology in the future.
Page 13
<PAGE> 14
Item 6. Exhibits and reports on Form 8-K
(a) EXHIBITS
Exhibit
Number Description of Document
2.1 Stock Purchase Agreement of Integral Vision effective January
1, 1995 (filed as Exhibit 2.1 to the registrant's Form 8-K
dated March 2, 1995, SEC file 0-12728, and incorporated herein
by reference).
2.2 Stock Purchase Agreement for Preference Shares of Integral
Vision effective January 1, 1995 (filed as Exhibit 2.2 to the
registrant's Form 8-K dated March 2, 1995, SEC file 0-12728,
and incorporated herein by reference).
3.1 Articles of Incorporation, as amended (filed as Exhibit 3.1 to
the registrant's Form 10-K for the year ended December 31,
1993, SEC file 0-12728, and incorporated herein by reference).
3.2 Bylaws of the Registrant, as amended (filed as Exhibit 3.1 to
the registrant's Form 10-K for the year ended December 31,
1994, SEC file 0-12728, and incorporated herein by reference).
10.1 Incentive Stock Option Plan of the Registrant as amended
(filed as Exhibit 10.4 to the registrant's Form S-1
Registration Statement effective July 2, 1985, SEC file
2-98085, and incorporated herein by reference).
10.2 Second Incentive Stock Option Plan (filed as Exhibit 10.2 to
the registrant's Form 10-K for the year ended December 31,
1992, SEC file 0-12728, and incorporated herein by reference).
10.3 Amendment to Medar, Inc. Incentive Stock Option Plan dated May
10, 1993 (filed as Exhibit 10.3 to the registrant's Form 10-K
for the year ended December 31, 1993, SEC file 0-12728, and
incorporated herein by reference).
10.4 Non-qualified Stock Option Plan (filed as Exhibit 10.3 to the
registrant's Form 10-K for the year ended December 31, 1992,
SEC file 0-12728, and incorporated herein by reference).
10.5 Medar, Inc. Employee Stock Option Plan.
10.6 Form of Confidentiality and Non-Compete Agreement Between the
Registrant and its Employees (filed as Exhibit 10.4 to the
registrant's Form 10-K for the year ended December 31, 1992,
SEC file 0-12728, and incorporated herein by reference).
10.7 Contract between Shanghai Electric Welding Machine Works,
Medar, Inc. and Lida U.S.A. dated August 30, 1993, related to
joint venture agreement (both the original Chinese version and
the English translation) (filed as Exhibit 10.7 to the
registrant's Form 10-K for the year ended December 31, 1993,
SEC file 0-12728, and incorporated herein by reference).
10.8 Asset Purchase Agreement between Medar, Inc. and Air Gage
Company dated February 28, 1994 (filed as Exhibit 10.8 to the
registrant's Form 10-K for the year ended December 31, 1993,
SEC file 0-12728, and incorporated herein by reference).
Page 14
<PAGE> 15
10.9* License Agreement number 9303-004 between Medar, Inc. and
Allen-Bradley Company, Inc. dated April 12, 1993 (filed as
Exhibit 10.9 to the registrant's Form 10-K for the year ended
December 31, 1993, SEC file 0-12728, and incorporated herein
by reference).
10.10* License Agreement number 9304-009 between Medar, Inc. and
Allen-Bradley Company, Inc. dated May 10, 1993 (filed as
Exhibit 10.10 to the registrant's Form 10-K for the year ended
December 31, 1993, SEC file 0-12728, and incorporated herein
by reference).
10.11 Agreement by and between Medar, Inc. and ABB Robotics, Inc.
dated December 1992 regarding joint development to integrate a
weld controller into the S3 robot control (filed as Exhibit
10.11 to the registrant's Form 10-K for the year ended
December 31, 1993, SEC file 0-12728, and incorporated herein
by reference).
10.12 1993 Incentive Program (filed as Exhibit 10.14 to the
registrant's Form 10-K for the year ended December 31, 1993,
SEC file 0-12728, and incorporated herein by reference).
10.13 1994 Incentive program (filed as Exhibit 10.12 to the
registrant's Form 10-K for the year ended December 31, 1994,
SEC file 0-12728, and incorporated herein by reference).
10.14 Term Note dated June 29, 1993 by and between Medar, Inc. and
NBD Bank, N.A. (filed as Exhibit 4.2 to the registrant's Form
10-Q for the quater ended June 30, 1993, SEC file 0-12728, and
incorporated herein by reference).
10.15 Amended and Restated Mortgage and Security Agreement dated
June 29, 1993 by and between Medar, Inc. and NBD Bank, N.A.
(filed as Exhibit 4.5 to the registrant's Form 10-K for the
year ended December 31, 1993, SEC file 0-12728, and
incorporated herein by reference).
10.16 Revolving Credit and Loan Agreement dated August 10, 1995 by
and between Medar, Inc., Automatic Inspection Devices, Inc.
and Integral Vision, Ltd. and NBD Bank (filed as Exhibit 10.1
to the registrant's Form 10-Q for the quarter ended June 30,
1995, SEC file 0-12728, and incorporated herein by reference).
10.17 Amendment No. 2 to Loan and Credit Agreement and Term Note
dated August 10, 1995 by and between Medar, Inc., Automatic
Inspection Devices, Inc. and NBD Bank (filed as Exhibit 10.2
to the registrant's Form 10-Q for the quarter ended June 30,
1995, SEC file 0-12728, and incorporated herein by reference).
10.18 First Amendment to Revolving Credit and Loan Agreement dated
October 12, 1995 by and between Medar, Inc., Automatic
Inspection Devices, Inc. and Integral Vision, Ltd. and NBD
Bank.
10.19 Second Amended and Restated Revolving Note dated October 12,
1995 by and between Medar, Inc., Automatic Inspection Devices,
Inc. and Integral Vision, Ltd. and NBD Bank.
10.20 Second Amendment to Revolving Credit and Loan Agreement dated
October 31, 1995 by and between Medar, Inc., Automatic
Inspection Devices, Inc. and Integral Vision, Ltd. and NBD
Bank.
10.21 Mortgage dated October 31, 1995 by and between Medar, Inc. and
NBD Bank.
10.22 Installment Business Loan Note dated October 31, 1995 by and
between Medar, Inc. and NBD Bank.
Page 15
<PAGE> 16
10.23 Guarantee and Postponement of Claim dated August 10, 1995 by
and between Medar Canada, Ltd. and NBD Bank.
10.24** Patent License Agreement dated October 4, 1995 by and between
Medar, Inc. and Square D Company.
11 Calculation of Earnings per Share
* The Company has been granted confidential treatment with
respect to certain portions of this exhibit pursuant to Rule
24b-2 under the Securities Exchange Act of 1934, as amended.
** The Company has requested confidential treatment with
respect to certain portions of this exhibit pursuant to an
application for confidential treatment filed with the
Commission under Rule 24b-2 under the Securities and Exchange
Act of 1934, as amended.
(b) A Form 8-K was filed dated July 28, 1995 covering the
settlement of patent litigation.
Page 16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
//CHARLES J. DRAKE// 11/08/95
- -----------------------------------------
Charles J. Drake
President & Chairman of the Board
Medar, Inc.
(Principal Executive Officer)
//RICHARD R. CURRENT// 11/08/95
- ------------------------------------------
Richard R. Current
Vice President of Finance
Medar, Inc.
(Principal Financial & Accounting Officer)
Page 17
<PAGE> 18
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
2.1 Stock Purchase Agreement of Integral Vision effective January 1, 1995 (filed as Exhibit 2.1 to the registrant's
Form 8-K dated March 2, 1995, SEC file 0-12728, and incorporated herein by reference).
2.2 Stock Purchase Agreement for Preference Shares of Integral Vision effective January 1, 1995 (filed as Exhibit
2.2 to the registrant's Form 8-K dated March 2, 1995, SEC file 0-12728, and incorporated herein by reference).
3.1 Articles of Incorporation, as amended (filed as Exhibit 3.1 to the registrant's Form 10-K for the year ended
December 31, 1993, SEC file 0-12728, and incorporated herein by reference).
3.2 Bylaws of the Registrant, as amended (filed as Exhibit 3.1 to the registrant's Form 10-K for the year ended
December 31, 1994, SEC file 0-12728, and incorporated herein by reference).
10.1 Incentive Stock Option Plan of the Registrant as amended (filed as Exhibit 10.4 to the registrant's Form S-1
Registration Statement effective July 2, 1985, SEC file 2-98085, and incorporated herein by reference).
10.2 Second Incentive Stock Option Plan (filed as Exhibit 10.2 to the registrant's Form 10-K for the year ended
December 31, 1992, SEC file 0-12728, and incorporated herein by reference).
10.3 Amendment to Medar, Inc. Incentive Stock Option Plan dated May 10, 1993 (filed as Exhibit 10.3 to the
registrant's Form 10-K for the year ended December 31, 1993, SEC file 0-12728, and incorporated herein by
reference).
10.4 Non-qualified Stock Option Plan (filed as Exhibit 10.3 to the registrant's Form 10-K for the year ended
December 31, 1992, SEC file 0-12728, and incorporated herein by reference).
10.5 Medar, Inc. Employee Stock Option Plan.
10.6 Form of Confidentiality and Non-Compete Agreement Between the Registrant and its Employees (filed as Exhibit
10.4 to the registrant's Form 10-K for the year ended December 31, 1992, SEC file 0-12728, and incorporated
herein by reference).
10.7 Contract between Shanghai Electric Welding Machine Works, Medar, Inc. and Lida U.S.A. dated August 30, 1993,
related to joint venture agreement (both the original Chinese version and the English translation) (filed as
Exhibit 10.7 to the registrant's Form 10-K for the year ended December 31, 1993, SEC file 0-12728, and
incorporated herein by reference).
10.8 Asset Purchase Agreement between Medar, Inc. and Air Gage Company dated February 28, 1994 (filed as Exhibit
10.8 to the registrant's Form 10-K for the year ended December 31, 1993, SEC file 0-12728, and incorporated
herein by reference).
10.9* License Agreement number 9303-004 between Medar, Inc. and Allen-Bradley Company, Inc. dated April 12, 1993
(filed as Exhibit 10.9 to the registrant's Form 10-K for the year ended December 31, 1993, SEC file 0-12728,
and incorporated herein by reference).
10.10* License Agreement number 9304-009 between Medar, Inc. and Allen-Bradley Company, Inc. dated May 10, 1993 (filed
as Exhibit 10.10 to the registrant's Form 10-K for the year ended December 31, 1993, SEC file 0-12728, and
incorporated herein by reference).
10.11 Agreement by and between Medar, Inc. and ABB Robotics, Inc. dated December 1992 regarding joint development to
integrate a weld controller into the S3 robot control (filed as Exhibit 10.11 to the registrant's Form 10-K for
the year ended December 31, 1993, SEC file 0-12728, and incorporated herein by reference).
10.12 1993 Incentive Program (filed as Exhibit 10.14 to the registrant's Form 10-K for the year ended December 31,
1993, SEC file 0-12728, and incorporated herein by reference).
10.13 1994 Incentive program (filed as Exhibit 10.12 to the registrant's Form 10-K for the year ended December 31,
1994, SEC file 0-12728, and incorporated herein by reference).
10.14 Term Note dated June 29, 1993 by and between Medar, Inc. and NBD Bank, N.A. (filed as Exhibit 4.2 to the
registrant's Form 10-Q for the quater ended June 30, 1993, SEC file 0-12728, and incorporated herein by
reference).
10.15 Amended and Restated Mortgage and Security Agreement dated June 29, 1993 by and between Medar, Inc. and NBD
Bank, N.A. (filed as Exhibit 4.5 to the registrant's Form 10-K for the year ended December 31, 1993, SEC file
0-12728, and incorporated herein by reference).
10.16 Revolving Credit and Loan Agreement dated August 10, 1995 by and between Medar, Inc., Automatic Inspection
Devices, Inc. and Integral Vision, Ltd. and NBD Bank (filed as Exhibit 10.1 to the registrant's Form 10-Q for
the quarter ended June 30, 1995, SEC file 0-12728, and incorporated herein by reference).
10.17 Amendment No. 2 to Loan and Credit Agreement and Term Note dated August 10, 1995 by and between Medar, Inc.,
Automatic Inspection Devices, Inc. and NBD Bank (filed as Exhibit 10.2 to the registrant's Form 10-Q for the
quarter ended June 30, 1995, SEC file 0-12728, and incorporated herein by reference).
10.18 First Amendment to Revolving Credit and Loan Agreement dated October 12, 1995 by and between Medar, Inc.,
Automatic Inspection Devices, Inc. and Integral Vision, Ltd. and NBD Bank.
10.19 Second Amended and Restated Revolving Note dated October 12, 1995 by and between Medar, Inc., Automatic
Inspection Devices, Inc. and Integral Vision, Ltd. and NBD Bank.
10.20 Second Amendment to Revolving Credit and Loan Agreement dated October 31, 1995 by and between Medar, Inc.,
Automatic Inspection Devices, Inc. and Integral Vision, Ltd. and NBD Bank.
10.21 Mortgage dated October 31, 1995 by and between Medar, Inc. and NBD Bank.
10.22 Installment Business Loan Note dated October 31, 1995 by and between Medar, Inc. and NBD Bank.
10.23 Guarantee and Postponement of Claim dated August 10, 1995 by and between Medar Canada, Ltd. and NBD Bank.
10.24** Patent License Agreement dated October 4, 1995 by and between Medar, Inc. and Square D Company.
11 Calculation of Earnings per Share
* The Company has been granted confidential treatment with respect to certain portions of this exhibit pursuant
to Rule 24b-2 under the Securities Exchange Act of 1934, as amended.
** The Company has requested confidential treatment with respect to certain portions of this exhibit pursuant
to an application for confidential treatment filed with the Commission under Rule 24b-2 under the Securities
and Exchange Act of 1934, as amended.
(b) A Form 8-K was filed dated July 28, 1995 covering the settlement of patent litigation.
</TABLE>
<PAGE> 1
EXHIBIT 10.5
MEDAR, INC.
EMPLOYEE STOCK OPTION PLAN
1. Purpose. This Employee Stock Option Plan (the
"Plan") is intended to further the growth and development of MEDAR, INC. (the
"Company") by affording an opportunity to eligible officers and key employees
of the Company and its subsidiaries, as well as nonemployee directors,
consultants or advisors, who are in a position to contribute materially to the
prosperity of the Company, to purchase shares of its common stock. It is
further intended that options issued pursuant to the Plan may be either
nonqualified stock options or incentive stock options within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended.
2. Stock Offering. The Board of Directors of the Company
are authorized to offer and sell stock pursuant to this Plan. The aggregate
amount of stock which may be sold and delivered under the Plan, against payment
therefor, shall not exceed five hundred thousand (500,000) shares, except as
such total amount may be adjusted by reason of a stock dividend or
recapitalization of the Company. In the event that any outstanding option
under the Plan expires or is terminated for any reason prior to the end of the
period during which options may be granted, the shares of common stock
allocable to the unexercised or cancelled portion of such Plan may again be
subjected to an option under the Plan.
3. Designation of Participants and Administration of
Plan. The Board of Directors, or not less than two (2) Board Members appointed
from time to time by the Board of Directors, shall act as a Committee to
administer the Plan; provided, however, that a Member of the Board of Directors
who is a member of the Option Committee shall not, during the one year prior to
serving as a Committee member or during such service, be eligible to be granted
an option pursuant to the Plan. The employees eligible to participate in the
Plan shall be the officers and any other key employees of the Company and its
subsidiaries as the Board of Directors may designate. Directors who are not
also employees of the Company, consultants and advisors are not eligible to
receive incentive stock options, but may be granted nonqualified stock options.
4. Unauthorized Employees. In no event shall an
incentive stock option be granted to any individual who, immediately before
such option is granted, owns (as defined in Section 422 and 425(d) of the
Internal Revenue Code of 1986, as amended) stock possessing more than ten
percent (10%) of the total combined voting power or value of all classes of
stock of the Company or of its parent or subsidiary corporation, unless the
option price to such individual is no less than 110% of the fair market value
of the stock at the time the option is granted and such option by its terms is
not exercisable after the expiration of five years from the date such option is
granted.
5. Effective Date of Plan. The Plan is effective on the
date of ratification by a vote of the holders of a majority of the common stock
of the Company after adoption by the Board of Directors. The Company shall not
be required to issue any stock hereunder, however, until the approvals required
by the proper public authorities have been obtained, if any, and the
<PAGE> 2
Board of Directors shall have been advised by counsel for the Company that all
other applicable legal requirements have been complied with.
6. Termination of Plan. The Plan shall remain in effect
until and shall terminate upon the expiration of ten (10) years from the date
the Plan is adopted. The Plan may be terminated at an earlier date by action
of the Board of Directors. Termination of the Plan shall not affect the rights
of beneficiaries under options heretofore granted to purchase common stock
under the Plan or to complete payment for and to receive any pledged shares,
and all such options shall continue in force and operation after termination of
the Plan, except as they may be terminated in accordance with the terms of the
Plan. The Board of Directors of the Company may from time to time suspend or
discontinue the Plan with respect to any shares as to which options have not
been granted.
7. Offering to Designated Beneficiaries. Beneficiaries
designated by the committee shall be granted options to purchase stock. Option
periods shall be fixed by the committee, but shall not exceed ten (10) years,
(subject to the provisions of paragraph 4).
8. Exercise of Options. Options may be exercised in
whole or in part from time to time, but in no event may any option be exercised
after ten (10) years from the date on which such option is granted (subject to
the provisions of paragraph 4).
9. Option Price. The option price shall be not less
than 100% of the fair market value of the stock at the time the option is
granted (subject to the provisions of paragraph 4). The fair market value per
share shall be the closing price of the common stock on the Over The Counter
Market on the day the option is granted, as reported by the National
Association of Security Dealers, Automatic Quotation System (NASDAQ), or if no
sale of the Company's common stock shall have been made on that day, on the
next preceding day on which there was a sale of such stock. If the stock is
listed upon an established stock exchange or exchanges, fair market value shall
be deemed to be the highest closing price of the common stock on such stock
exchange or exchanges on the day the option is granted. Subject to the
foregoing, the Committee in fixing the option price shall have full authority
and discretion and be fully protected in doing so.
10. Non-Transferability. Beneficiaries' rights under the
Plan are wholly personal and no assignment or transfer of a beneficiary's
rights and interests in the Plan will be permitted or recognized other than at
death. An option is exercisable during the lifetime of the beneficiary to whom
the option was granted only by such beneficiary.
11. Limit on Annual Eligibility. A participant in the
Plan shall not be granted or be entitled to exercise, in any calendar year,
incentive stock options on which the aggregate fair market value of the stock
(determined at the date the option is granted) exceeds the annual limit
established by Section 422 of the Internal Revenue Code of 1986, as amended.
12. Payment. Upon exercise of any option granted
hereunder, payment in full shall be made at the time of such exercise for all
shares then being purchased; except, however,
<PAGE> 3
that the committee may in its discretion permit the issuance of stock upon such
plan of partial payment as it deems reasonable.
13. Offset. The Company shall be authorized to apply the
payment of any amount due to it under this Plan, to any compensation or other
amount due from the Company or subsidiary to the beneficiary.
14. Termination of Employment. In the event that an
optionee who has been granted an incentive stock option shall cease to be
employed by the Company, his option shall terminate at the expiration of three
(3) months from such cessation. If any cessation of employment is due to
permanent and total disability the optionee shall have the right to exercise
his option at any time within twelve (12) months after leaving employment.
15. Stock Dividends or Recapitalization. If any stock
dividend is declared upon the common stock, or if there is any recapitalization
of the Company with respect to its common stock, resulting in a split-up or
combination or exchange or shares:
(a) the aggregate number of shares which may thereafter
be offered under the Plan shall be proportionately
and appropriately adjusted;
(b) the number and kind of shares then subject to options
granted to beneficiaries under the Plan shall be
proportionately and appropriately adjusted, without
any change in the aggregate purchase prices to be
paid therefore.
Subject to any required action by the stockholders, if the
company shall be the surviving corporation in any merger or consolidation, any
option granted hereunder shall pertain to and apply to the securities to which
a holder of the number of shares of common stock subject to the option would
have been entitled, but a dissolution or liquidation of the Company or a merger
or consolidation in which the Company is not the surviving corporation, shall
cause every unexercised option outstanding hereunder to terminate.
16. Fractional Shares. No fractional shares of stock
shall be issued upon the exercise of any option, and in case a participating
beneficiary shall become entitled to any interest in a fractional share, by
reason of a stock dividend or otherwise, the Company shall either (a) sell the
same and credit the proceeds of the sale to the beneficiary or (b) credit to
the beneficiary a cash sum equal to the market value of such fractional share
interest on the date when such stock dividend was paid for or such fractional
share interest was otherwise created.
17. Administration and Amendment of Plan. The Option
Committee of the Board of Directors shall have the power to interpret the
provisions of the Plan, to make regulations, and to formulate administrative
provisions for carrying it out, and to make such changes in the Plan and in the
regulations and administrative provisions as, from time to time, the committee
deems proper and in the best interest of the Company; provided, it may not
increase the number of shares authorized for the Plan, nor reduce the option
price below the minimum price provided in the Plan. Without limiting the
generality of the foregoing, the committee shall have the power in its
discretion to make such changes in the Plan as to termination of the options
granted to designated beneficiaries as the committee may deem
<PAGE> 4
advisable because of changes in the law while the Plan is in effect or for any
other reason; provided, further, no change in an option already granted to an
beneficiary shall be made without the written consent of the beneficiary
concerned. No member of the committee or the Board of Directors shall be
liable for any action or determination made in good faith. All actions of the
committee shall be final.
18. Other Provisions. The option agreement authorized
under the Plan shall contain such other provisions as the committee shall deem
advisable.
19. Application of Funds. The proceeds received by the
Company from the sale of common stock pursuant to options, except as otherwise
provided herein, will be used for general corporate purposes.
20. Indemnification and Exculpation.
(a) Each person who is or shall have been a member of the
Board of Directors or the Option Committee shall be
indemnified and held harmless by the Company against
and from any and all loss, cost, liability, or
expense that may be imposed upon or reasonably
incurred by him, in connection with or resulting from
any claim, action, suit, or proceeding to which he
may be or become a party or in which he may be or
become involved by reason of any action taken or
failure to act under the Plan and against and from
any and all amount paid by him in settlement thereof
(with the Company's written approval) or paid by him
in satisfaction of a judgment in any such action,
suit, or proceeding, except a judgment in favor of
the Company based upon a finding of his lack of good
faith; subject, however, to the condition that upon
the institution of any claim, action, suit, or
proceeding against him, he shall in writing give the
Company an opportunity, at its own expense, to handle
and defend the same before he undertakes to handle
and defend it on his own behalf. The foregoing right
of indemnification shall not be exclusive of any
other right to which such person may be entitled as a
matter of law or otherwise, or any power that the
Company may have to indemnify him or hold him
harmless.
(b) Each member of the Board, the Option Committee and
each officer and employee of the Company shall be
fully justified in relying or acting in good faith
upon any information furnished in connection with the
administration of the Plan by any appropriate person
or persons other than himself. In no event shall any
person who is or shall have been a member of the
Board, the Option Committee, or an officer or
employee of the Company be held liable for any
determination made or other action taken or any
omission to act in reliance upon any such
information, or for any action (including the
furnishing of information) taken or any failure to
act, if in good faith.
Plan adopted by the Board of Directors on February 11, 1995
<PAGE> 5
Plan approved by the Shareholders on May 31, 1995
<PAGE> 1
EXHIBIT 10.18
FIRST AMENDMENT TO
REVOLVING CREDIT AND LOAN AGREEMENT
This FIRST AMENDMENT TO REVOLVING CREDIT AND LOAN AGREEMENT ("First
Amendment") is dated as of October 12, 1995 and is among MEDAR, INC., a
Michigan corporation (the "Company"), AUTOMATIC INSPECTION DEVICES, INC., an
Ohio corporation ("AID") and INTEGRAL VISION LTD., a corporation established
under the laws of the United Kingdom ("Integral"), as Borrowers, and NBD Bank,
a Michigan banking corporation ("NBD"). This First Amendment amends the
Revolving Credit and Loan Agreement dated as of August 10, 1995 (the "Loan
Agreement"), among the Company, AID, Integral and NBD. The Company, AID and
Integral are collectively referred to as the "Borrowers" and individually as a
"Borrower". Capitalized terms not otherwise defined in this First Amendment
shall have the meanings given to them in the Loan Agreement.
WHEREAS, the Borrowers have requested that NBD increase the Commitment
from $8,000,000 to $10,000,000.
WHEREAS, NBD is willing to increase its Commitment on the terms and
conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties agree as follows:
1. Increased Loan Facility. The following definition contained
in Section 1.1 of the Loan Agreement are hereby amended effective October 12,
1995 to read as follows:
"Commitment" means the commitment of NBD to make Revolving Loans
pursuant to Section 2.1 in the amount of $10,000,000, as such amount
may be reduced from time to time pursuant to Section 2.2.
2. New Note. Borrowers will deliver to NBD simultaneously with
this First Amendment a new promissory note, substantially in the form of
Exhibit 2.1 (2nd) to this First Amendment, and all references to the "Revolving
Note" will hereafter refer to such new note.
3. Activation. As of October 12, 1995, the Activated Amount is
increased by $2,000,000.
4. Reaffirmation of Loan Agreement; Conflicts. The parties
hereto acknowledge and agree that the terms and provisions of this First
Amendment, amend, add to and constitute a part of the Loan Agreement. Except
as expressly modified and amended by the terms of this First Amendment, all of
the other terms and conditions of the Loan Agreement and all of the documents
executed in connection therewith or referred or incorporated therein, remain in
full force and effect and are hereby ratified, confirmed and approved. If
there is an express conflict between the terms of this First Amendment and the
terms of the Loan Agreement, or any of the
<PAGE> 2
other agreements or documents executed in connection therewith are referred to
or incorporated therein, the terms of this First Amendment shall govern and
control. Any reference in any other document or agreement to the Loan
Agreement shall hereafter refer to the Loan Agreement as amended by this First
Amendment.
5. Representations True. The representations and warranties of
the Borrowers contained in the Loan Agreement are true on the date hereof and
there does not exist any Default or Event of Default under the Loan Agreement.
6. Expenses. Borrowers acknowledge and agree that the Borrowers
will pay all attorneys' fees and out-of-pocket costs of NBD in connection with
or with respect to this First Amendment.
IN WITNESS WHEREOF, the Borrowers and NBD have executed the foregoing
document by their duly authorized officers as of the day and year first written
above.
NBD BANK
By: /s/ Joseph Kabourek
------------------------------
Joseph Kabourek
Its: Vice President
and
By: /s/ Glenn Ansiel
------------------------------
Glenn Ansiel
Its: Loan Officer
MEDAR, INC.
By: /s/ Charles Drake
------------------------------
Charles Drake
Its: President
AUTOMATIC INSPECTION DEVICES, INC.
By: /s/ Charles Drake
------------------------------
Charles Drake
Its: President
(Signatures continue on next page)
<PAGE> 3
INTEGRAL VISION LTD.
By: /s/ Richard Current
-------------------------
Richard Current
Its: Secretary
REAFFIRMATION OF GUARANTY
The undersigned, Medar Canada Ltd., hereby acknowledges the terms of
this First Amendment to Revolving Credit and Loan Agreement and hereby
reaffirms each and every term of its Guarantee and Postponement of Claim dated
August 10, 1995, given in favor of NBD Bank with respect to the obligations of
Medar, Inc., Automatic Inspection Devices, Inc. and Integral Vision Ltd.
MEDAR CANADA LTD.
By: /s/ Charles Drake
-------------------------
Charles Drake
Its: President
<PAGE> 1
EXHIBIT 10.19
EXHIBIT 2.1 (2nd)
SECOND
AMENDED AND RESTATED
REVOLVING NOTE
$10,000,000 October 12, 1995
Detroit, Michigan
FOR VALUE RECEIVED, the undersigned, MEDAR, INC. ("Medar"), AUTOMATIC
INSPECTION DEVICES, INC. ("AID"), and INTEGRAL VISION, LTD. ("Integral"),
jointly and severally (collectively, "Borrowers"), hereby promise to pay to the
order of NBD Bank, ("Bank"), pursuant to that Revolving Credit and Loan
Agreement, entered into as of August 10, 1995, as amended by the First
Amendment to Revolving Credit and Loan Agreement dated October 12, 1995 (the
"Loan Agreement"), among Borrowers and Bank, at the main office of Bank in
Detroit, Michigan with respect to Revolving Loans made in U.S. Dollars, and at
Bank's office in London, England with respect to Revolving Loans made in Pounds
Sterling, in accordance with the Loan Agreement, in immediately available
funds, the principal sum of Ten Million and 00/100 Dollars (U.S. $10,000,000),
or such lesser amount as is recorded on the books and records of Bank, on
August 10, 1997, or such later Termination Date as may be agreed to under the
Loan Agreement as amended from time to time, together with interest on the
outstanding balance thereof as provided in the Loan Agreement. All payments of
principal and interest shall be made (i) if the Revolving Loan is in Dollars
and advanced by Bank in the United States, then in lawful money of the United
States of America, and (ii) if the Revolving Loan is in Pounds Sterling and
advanced by Bank's London Branch, then in lawful money of the United Kingdom.
Bank is hereby authorized by Borrowers to record on its books and
records, the date and amount of each Revolving Loan, the currency, the Loan
Period, the applicable interest rate (including any changes therein), the
amount of each payment of principal thereon and such other information as
appropriate, which books and records shall constitute rebuttable presumptive
evidence of the information so recorded, provided, however, that any failure by
Bank to record any such information shall not relieve Borrowers of their
obligation to repay the outstanding principal amount of all Revolving Loans
made by Bank, all accrued interest thereon and any amount payable with respect
thereto in accordance with the terms of this Note and the Loan Agreement.
Capitalized terms used but not defined in this Note shall have the respective
meanings assigned to them in the Loan Agreement.
This Note is subject to, and evidences the Revolving Loans made by
Bank under, the Loan Agreement, to which reference is hereby made for a
statement of the circumstances and terms under which all or a portion of this
Note is subject to prepayment and under which its due date may be accelerated
and other terms applicable to this Note. An Event of Default under the Loan
Agreement constitutes a default hereunder. During the period that any amount
owing on this Note is not paid in full when due (whether at stated maturity, by
acceleration or otherwise), such amount shall bear interest at the Default Rate
applicable to each Revolving Loan in effect from time to time or the maximum
rate permitted by law, whichever is lower, for the period commencing on the due
date until the same is paid in full. In addition to the foregoing, during
<PAGE> 2
the period that any other Event of Default has occurred and shall be
continuing, Borrower shall pay on demand, at the election of Bank, interest at
the Default Rate or the maximum rate permitted by law, whichever is lower, on
the outstanding principal amount of all the Obligations which are outstanding
during such period from and after the date of any such demand.
This Amended and Restated Revolving Note amends and restates, but does
not satisfy, certain existing obligations of the Borrowers evidenced by the
Amended and Restated Revolving Note in the principal amount of $8,000,000 dated
August 10, 1995, from the Borrowers to Bank and the Master Promissory Note in
the principal amount of $5,000,000 dated June 13, 1994, from Medar and AID to
Bank (f/k/a NBD Bank, N.A.).
Borrowers and each endorser or guarantor hereof waive demand,
presentment, protest, diligence, notice of dishonor and any other formality in
connection with this Note. Borrowers further agree to pay, in addition to the
principal, interest and other sums due and payable hereon, all costs of
collecting this Note, including reasonable attorneys' fees and expenses.
This Note is made under, and shall be governed by and construed in
accordance with, the laws of the State of Michigan applicable to contracts made
and to be performed entirely within the State of Michigan and without giving
effect to the choice of law principles of the State of Michigan.
MEDAR, INC.,
a Michigan corporation
By: /s/ Charles Drake
---------------------------
Charles Drake
Its: President
AUTOMATIC INSPECTION DEVICES, INC.,
an Ohio corporation
By: /s/ Charles Drake
---------------------------
Charles Drake
Its: President
INTEGRAL VISION, LTD.
an English corporation
By: /s/ Richard Current
---------------------------
Richard Current
Its: Corporate Secretary
<PAGE> 1
EXHIBIT 10.20
SECOND AMENDMENT TO
REVOLVING CREDIT AND LOAN AGREEMENT
This SECOND AMENDMENT TO REVOLVING CREDIT AND LOAN AGREEMENT ("Second
Amendment") is dated as of October 31, 1995 and is among MEDAR, INC., a
Michigan corporation (the "Company"), AUTOMATIC INSPECTION DEVICES, INC., an
Ohio corporation ("AID") and INTEGRAL VISION LTD., a corporation established
under the laws of the United Kingdom ("Integral"), as Borrowers, and NBD Bank,
a Michigan banking corporation ("NBD"). This Second Amendment amends the
Revolving Credit and Loan Agreement dated as of August 10, 1995, (as amended,
the "Loan Agreement"), as amended by the First Amendment to Revolving Credit
and Loan Agreement dated October 12, 1995 (the "First Amendment") among the
Company, AID, Integral and NBD. The Company, AID and Integral are collectively
referred to as the "Borrowers" and individually as a "Borrower". Capitalized
terms not otherwise defined in this Second Amendment shall have the meanings
given to them in the Loan Agreement.
WHEREAS, the Company has negotiated to purchase certain real property
commonly known as 24755 Crestview Court, Farmington Hills, Michigan (the
"Farmington Hills Property"), pursuant to an Offer to Purchase Real Estate
dated as of August 29, 1995, between the Company and Graco, Inc.
WHEREAS, the Company has requested that NBD provide the Company with a
secured term loan in the principal amount of $2,540,000, the proceeds of which
will be used to purchase the Farmington Hills Property and to make certain
improvements thereon.
WHEREAS, AID, Integral and Guarantor have determined that it is in
their best interest to reaffirm their guaranties, including guarantying this
new loan because it will enable the Company to reduce costs and increase
production capacity.
WHEREAS, NBD is willing to make such a loan on the terms and
conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties agree as follows:
1. New Loan Facility. The Loan Agreement is hereby amended such
that a new Section 2.6 is added to read as follows:
2.6 Term Loan to the Company.
(a) Establishment of Loan. Subject to the terms and conditions of
this agreement, NBD will extend a term loan to the Company in the
original principal amount of $2,540,000 ("1995 Mortgage Loan"), to be
evidenced by a Installment Business Loan Note in substantially the
form of Exhibit 2.6 attached to the Second Amendment (together with
any amendments, restatements, replacements or
<PAGE> 2
renewals, the "1995 Term Note"). The 1995 Mortgage Loan will be
repaid in 59 consecutive monthly installments of $14,111 plus interest
and with a final balloon payment of $1,707,444 (assuming timely
payment of prior installments) plus accrued but unpaid interest. NBD
will be granted a mortgage on the Farmington Hills Property to secure
the 1995 Term Note and any other amounts owed by the Company to NBD.
(b) Interest Options. The outstanding principal balance of the
1995 Mortgage Loan will bear interest at the Floating Rate unless NBD
and the Company shall have agreed in writing to a fixed per annum rate
of interest on the 1995 Mortgage Loan for a time period ("Fixed Rate
Period") of not less than one year nor longer than the maturity date
of the 1995 Term Note ("Negotiated Term Rate"), in which case the
outstanding principal shall bear interest at such Negotiated Term Rate
during the Fixed Rate Period. The Company may request that the 1995
Mortgage Loan bear interest at a Negotiated Term Rate at any time, and
from time to time, upon one business Days prior written notice to NBD
specifying the requested Fixed Rate Period. NBD shall quote a
Negotiated Term Rate to the Company and shall have sole and absolute
discretion to determine such Negotiated Term Rate or to refuse to
establish a Negotiated Term Rate (in which case the Floating Rate
shall apply). The Company shall confirm its agreement to the quoted
rate in writing confirming such Negotiated Term Rate and the
applicable Fixed Rate Period.
2. Revise Definitions. The following definitions contained in
Section 1.1 of the Loan Agreement are hereby amended to read as follows:
"Applicable Rate" means, (i) with respect to the Revolving Loans, the
Floating Rate, the Adjusted Base Rate, the Adjusted Eurodollar Rate or
the Negotiated Rate, as applicable, (ii) with respect to any Equipment
Loan the rate specified as the non-default interest rate in the
applicable Equipment Loan Documents for such Equipment Loan, and (iii)
with respect to the 1995 Mortgage Loan, the Floating Rate or
Negotiated Term Rate (defined in Section 2.6), as then applicable.
"Loan Documents" means this Agreement, the Notes, the Guaranty
Agreement, the L/C Documents, the Bank Guaranty Documents, the
Equipment Loan Documents, the Mortgage, the First Amendment, the
Second Amendment and all other agreements, documents or instruments
now or hereafter executed by or on behalf of any of the Borrowers or
the Guarantor and delivered to NBD in connection with this Agreement
or any amendment thereof.
"Loans" means (i) the Revolving Loans made by NBD to the Borrowers
pursuant to Section 2.1, including those made by NBD through the
London Branch, in each case evidenced by the Revolving Note, (ii) the
Equipment Loans made by NBD
<PAGE> 3
to any one or more of the Borrowers pursuant to Section 2.4, and (iii)
the 1995 Mortgage Loan made by NBD to the Company pursuant to Section
2.6.
"Notes" means the Revolving Note and the 1995 Term Note, together with
any amendments, restatements, replacements or renewals thereof, and
the promissory notes, leases and conditional sales contracts given by
any Borrower pursuant to the credit granted under Section 2.4,
together with any amendments, restatements, replacements or renewals
thereof.
3. Prepayments of 1995 Term Note. The Loan Agreement is hereby
amended such that a new Section 4.1(e) is added to read as follows:
(e) Prepayment of 1995 Term Note. The Company may at any time and
from time to time prepay all or a portion of the 1995 Mortgage Loan
without premium or penalty; provided, however, that any prepayment of
principal during a Fixed Rate Period and prior to the last day of such
Fixed Rate Period must be accompanied by the indemnity payment set
forth in Section 4.8 below. All prepayments will be applied first to
accrued but unpaid interest and then to principal installments due in
the inverse order of maturity.
4. Interest on 1995 Mortgage Loan. Section 4.2(a) of the Loan
Agreement is hereby amended by adding the following sentence at the end of that
section: "The Company will pay interest on the 1995 Mortgage Loan, provided in
Section 2.6(b), payable monthly in arrears on the 30th day of each month (or
28th day of each February) beginning November 30, 1995, and at maturity.
5. Term Loan Indemnity. Section 4.8 of the Loan Amendment is
hereby amended by adding the following sentence at the beginning of that
section: "If the Company prepays any principal of the 1995 Term Note during a
Fixed Rate Period, the Company will reimburse NBD for any loss or expense
incurred by NBD as calculated pursuant to the prepayment provisions specified
in the 1995 Term Note and assuming that the maturity dates referenced in such
section are no later than the final day of the Fixed Rate Period."
6. Purchase Money Indebtedness. The parties agree that the 1995
Mortgage Loan will not be considered a Purchase Money Lien for purposes of
Section 6.2(d)(v) of the Loan Agreement.
7. Conditions Precedent. Notwithstanding any other term of this
Second Amendment or the Loan Agreement, NBD will not be required to make the
1995 Mortgage Loan unless the following conditions have been met:
(a) NBD shall have received a closing fee of $25,400 from
the Company prior to or simultaneously with the funding of the 1995 Mortgage
Loan (which the Company hereby authorizes NBD to withhold from the proceeds of
the 1995 Term Note).
<PAGE> 4
(b) NBD shall have received a fully executed copy of this
Second Amendment and the 1995 Term Note.
(c) NBD shall have received a mortgage, in form and
substance satisfactory to NBD (as amended and restated from time to time, the
"Mortgage"), from the Company on the Farmington Hills Property, together with a
mortgage survey and a commitment for a mortgagee title insurance policy (to be
issued without standard exceptions).
(d) NBD shall have received an environmental certificate
from the Company together with a Phase I Environmental Audit of the Farmington
Hills Property prior to the funding of the 1995 Mortgage Loan.
(e) NBD shall have received a copy of the resolutions (i)
authorizing the Company to purchase the Farmington Hills Property, to obtain
the requested loan from NBD and to secure its obligations by a mortgage on such
Farmington Hills Property, certified by the secretary of the Company, and (ii)
authorizing the Borrowers to complete the transactions contemplated in the
First Amendment and Second Amendment, certified by the secretary of each
Borrower.
(f) NBD shall have received the opinion of counsel to the
Borrowers, in form and substance satisfactory to NBD and its counsel, covering
matters related to the First Amendment and this Second Amendment.
(g) All of the terms and conditions in Section 3.7 of the
Loan Agreement continue to be met.
8. Reaffirmation of Loan Agreement; Conflicts. The parties
hereto acknowledge and agree that the terms and provisions of this Second
Amendment, amend, add to and constitute a part of the Loan Agreement. Except
as expressly modified and amended by the terms of this Second Amendment, all of
the other terms and conditions of the Loan Agreement and all of the documents
executed in connection therewith or referred or incorporated therein, remain in
full force and effect and are hereby ratified, confirmed and approved. If
there is an express conflict between the terms of this Second Amendment and the
terms of the Loan Agreement, or any of the other agreements or documents
executed in connection therewith or referred to or incorporated therein, the
terms of this Second Amendment shall govern and control. Any reference in any
other document or agreement to the Loan Agreement shall hereafter refer to the
Loan Agreement as amended by this Second Amendment.
9. Representations True. The representations and warranties of
the Borrowers contained in the Loan Agreement are true on the date hereof and
there does not exist any Default or Event of Default under the Loan Agreement.
<PAGE> 5
10. Expenses. Borrowers acknowledge and agree that the Borrowers
will pay all attorneys' fees and out-of-pocket costs of NBD in connection with
or with respect to this Second Amendment and the 1995 Mortgage Loan.
IN WITNESS WHEREOF, the Borrowers and NBD have executed the foregoing
document by their duly authorized officers as of the day and year first written
above.
NBD BANK
By: /s/ Joseph Kabourek
---------------------------
Joseph Kabourek
Its: Vice President
and
By: /s/ Glenn Ansiel
---------------------------
Glenn Ansiel
Its: Loan Officer
MEDAR, INC.
By: /s/ Charles Drake
---------------------------
Charles Drake
Its: President
AUTOMATIC INSPECTION DEVICES, INC.
By: /s/ Charles Drake
---------------------------
Charles Drake
Its: President
INTEGRAL VISION LTD.
By: /s/ Richard Current
---------------------------
Richard Current
Its: Company Secretary
<PAGE> 6
REAFFIRMATION OF GUARANTY
The undersigned, Medar Canada Ltd., hereby acknowledges the terms of
this Second Amendment to Revolving Credit and Loan Agreement and hereby
reaffirms each and every term of its Guarantee and Postponement of Claim dated
August 10, 1995, given in favor of NBD Bank with respect to the obligations of
Medar, Inc., Automatic Inspection Devices, Inc. and Integral Vision Ltd.
MEDAR CANADA LTD.
By: /s/ Charles Drake
---------------------------
Charles Drake
Its: President
<PAGE> 1
EXHIBIT 10.21
MORTGAGE
THIS IS A FUTURE ADVANCE MORTGAGE
================================================================================
THIS MORTGAGE is made as of October 31, 1995, between MEDAR, INC., a
Michigan corporation, whose address is 38700 Grand River, Farmington Hills, MI
48335-1563 (the "Mortgagor"), and NBD Bank, with an office at 235 Sheldon Road,
Plymouth, Michigan 48170 (the "Mortgagee").
The Mortgagor MORTGAGES AND WARRANTS to the Mortgagee real property and all the
buildings, structures and improvements on it, more fully described on Schedule
A attached hereto, located in the City of Farmington Hills, County of Oakland,
State of Michigan (the "Premises") commonly known as: 24755 Crestview,
Farmington Hills, Michigan. Tax Parcel Identification No. 23-19-326-048
The Premises shall also include all of the Mortgagor's right, title and
interest in and to the following:
(1) All easements, rights-of-way, licenses, privileges and hereditaments.
(2) Land lying in the bed of any road, or the like, opened, proposed or
vacated, or any strip or gore, adjoining the Premises.
(3) All machinery, apparatus, equipment, fittings, fixtures and articles
of personal property of every kind and nature whatsoever located now
or in the future in or upon the Premises and used useable in
connection with any present or future operation of the Premises (all
of which is called "Equipment"). It is agreed that all Equipment is
part of the Premises and appropriated to use of the real estate and,
whether affixed or annexed or not, shall for the purposes of this
Mortgage unless the Mortgagee shall otherwise elect, be deemed
conclusively to be real estate and mortgaged and warranted to the
Mortgagee.
(4) All mineral, oil, gas and water rights, royalties, water and water
stock, if any.
(5) All awards or payments including interest made as a result of: the
exercise of the right of eminent domain, the alteration of the grade
of any street, any loss of or damage to any building or other
improvement on the Premises, any other injury to or decrease in the
value of the Premises, any refund due on account of the payment of
real estate taxes, assessments or other charges levied against or
imposed upon the Premises, and the reasonable attorney fees, costs and
disbursements incurred by the Mortgagee in connection with the
collection of any such award or payment.
(6) All of the rents, issues, income and profits of the Premises under
present or future leases, or otherwise, including but not limited to
all rights conferred by Act No. 210 of Michigan Public Acts of 1953,
as amended. (MCL 554.231 ET SEQ.)
The Premises are unencumbered except as set forth on Schedule B attached
hereto. ("Permitted Encumbrances"). If the Premises are encumbered by
Permitted Encumbrances, the Mortgagor shall perform all obligations and make
all payments as required by the Permitted Encumbrances. The Mortgagor shall
provide copies of all writings pertaining to Permitted Encumbrances, and the
Mortgagee is authorized to request and receive that information from any other
person without the consent or knowledge of the Mortgagor.
<PAGE> 2
THE DEBT. This Mortgage secures the following (the "Debt"):
(i) NOTE: The Installment Business Loan Note dated October 31, 1995 in
the principal amount of $2,540,000 executed and delivered by Mortgagor
to the Mortgagee, together with all extensions, renewals,
modifications, and replacements; and
(ii) FUTURE ADVANCES AND CROSS-LIEN: All other present and future, direct
and indirect obligations and liabilities of the Mortgagor, with or
without others, however evidenced, to the Mortgagee, and all future
advances, whether obligatory or optional, from the Mortgagee to the
Mortgagor, with or without others. (This shall not apply to any
obligation or debt incurred for personal, family or household purposes
unless the note or guaranty expressly states that it is secured by
this Mortgage.)
This Mortgage shall also secure the performance of the promises and agreements
contained in this Mortgage.
The Mortgagor promises and agrees as follows:
1. PAYMENT OF DEBT; PERFORMANCE OF OBLIGATIONS. The Mortgagor
shall promptly pay when due, whether by acceleration or otherwise, the Debt for
which the Mortgagor is liable, and shall promptly perform all obligations to
which the Mortgagor has agreed under the terms of this Mortgage and any loan
documents evidencing the Debt.
2. TAXES. The Mortgagor shall pay, when due, and before any
interest, collection fees or penalties shall accrue, all taxes, assessments,
fines, impositions, and other charges which may become a lien prior to this
Mortgage. Should the Mortgagor fail to make such payments, the Mortgagee may,
at its option and at the expense of the Mortgagor, pay the amounts due and
receipts evidencing payment. The Mortgagor shall promptly notify the Mortgagee
of any lien on all or any part of the Premises and shall promptly discharge any
unpermitted lien or encumbrance.
3. CHANGE IN TAXES. In the event of the passage of any law or
regulation, state, federal or municipal, subsequent to the date of this
Mortgage in any manner changing or modifying the laws now in force governing
the taxation of mortgages or debts secured by mortgages, or the manner of
collecting such taxes, the Debt shall become due and payable immediately at the
option of the Mortgagee.
4. INSURANCE. Until the debt is fully paid the Mortgagor shall
keep the Premises and the present and future buildings and other improvements
on the Premises, constantly insured for the benefit of the Mortgagee, against
fire and such other hazards and risks customarily covered by the standard form
of extended coverage endorsement available in the State of Michigan, including
risks of vandalism and malicious mischief, and shall further provide flood
insurance (if the Premises are situated in an area designated as a flood risk
area by the Director
<PAGE> 3
of the Federal Emergency Management Agency or as otherwise required by the
Flood Disaster Protection Act of 1973 and regulations issued under it), and
such other appropriate insurance as the Mortgagee may require from time to
time. All insurance policies and renewals must be acceptable to Mortgagee,
must provide for payment to the Mortgagee in the event of nonrenewal or
cancellation, and must be delivered to the Mortgagee. Should the Mortgagor
fail to insure or fail to pay the premiums on any insurance or fail to deliver
the policies or certificates or renewals to the Mortgagee, then the Mortgagee
at its option may have the insurance written or renewed and pay the premiums
for the account of the Mortgagor. In the event of loss or damage, the proceeds
of the insurance shall he paid to the Mortgagee alone. No loss or damage shall
itself reduce the Debt. The Mortgagee is authorized to adjust and compromise a
loss without the consent of the Mortgagor, to collect, receive and receipt for
any proceeds in the name of the Mortgagee and the Mortgagor and to endorse the
Mortgagors name upon any check in payment of proceeds. The proceeds shall be
applied first toward reimbursement of all costs and expenses of the Mortgagee
in collecting the proceeds and then toward payment of the Debt or any portion
of it, whether or not then due or payable, or the Mortgagee at its option may
apply the proceeds, or any part to the repair or rebuilding of the Premises
provided that Mortgagor is not then or at any time during the course of
restoration of the Premises in default under this Mortgage and has complied
with all requirements for application of the proceeds to restoration of the
Premises as Mortgagee, in its sole discretion, may establish.
5. RESERVES FOR TAXES AND INSURANCE. The Mortgagor shall, if
requested by the Mortgagee, pay to the Mortgagee, at the time of and in
addition to the scheduled installments of principal and/or interest due under
the Debt a sum equal to one-twelfth (1/12th) of (a) the amount estimated by
Mortgagee to be sufficient to enable Mortgagee to pay at least thirty (30) days
before they become due and payable, all taxes assessments and other similar
charges levied against the Premises' and (b) the amount of the annual premiums
on any policies of insurance required to be carried by Mortgagor. Mortgagee
shall apply the sums to pay the tax and insurance items. These sums may be
commingled with the general funds of Mortgagee, and no interest shall be
payable on them nor shall these sums be deemed to be held in trust for the
benefit of Mortgagor. Upon notice at any time, the Mortgagor will, within ten
(10) days, deposit such additional sum as may be required for the payment of
increased taxes, assessments, charges or premiums. In the event of foreclosure
of this Mortgage, any of the moneys then remaining on deposit with the
Mortgagee or its agent shall he applied against the Debt prior to the
commencement of foreclosure proceedings. The obligation of the Mortgagor to pay
taxes, assessments, charges or insurance premiums is not affected or modified
by the arrangements set out in this paragraph. Any default by the Mortgagor in
the performance of the provisions of this paragraph shall constitute a default
under this Mortgage. Mortgagee shall not request the reserves provided for in
this clause as long as there is no default by Mortgagor under this Mortgage and
Mortgagor retains title to the Premises.
6. WASTE. The Mortgagor shall keep the Premises in good repair,
shall not commit or permit waste on the Premises nor do any other act causing
the Premises to become less valuable. Non-payment of taxes and cancellation of
insurance shall each constitute waste as provided by MCL 600.2927. The
Mortgagor consents to the appointment of a receiver under this
<PAGE> 4
statute should the Mortgagee elect to seek such relief. Should the Mortgagor
fail to effect the necessary repairs, the Mortgagee may at its option and at
the expense of the Mortgagor make the repairs for the account of the Mortgagor.
The Mortgagor shall use and maintain the Premises in conformance with all
applicable laws, ordinances and regulations. The Mortgagee or its authorized
agent shall have the right to enter upon and inspect the Premises at all
reasonable times.
7. ALTERATIONS, REMOVAL. No building, structure, improvement,
fixture or personal property constituting any part of the Premises shall be
removed, demolished or substantially altered without the prior written consent
of the Mortgagee.
8. PAYMENT OF OTHER OBLIGATIONS. The Mortgagor shall also pay all
other obligations which may become liens or charges against the Premises for
any present or future repairs or improvements made on the Premises, or for any
other goods, services, or utilities furnished to the Premises and shall not
permit any lien or charge of any kind securing the repayment of borrowed funds
(including the deferred purchase price for any property) to accrue and remain
outstanding against the Premises.
9. ASSIGNMENT OF LEASES AND RENTS. As additional security for the
Debt, the Mortgagor assigns to the Mortgagee all oral or written leases, and
the rents, issues, income and profits under all leases or licenses of the
Premises, present and future, including all rights conferred by MCL 554.231 ET
SEQ. and MCL 554.211 ET SEQ. This assignment shall he operative in the event of
default and during any foreclosure or other proceeding taken to enforce this
Mortgage, and during any redemption period. The Mortgagor will comply with all
terms of all leases.
10. ASSIGNMENT OF INTEREST AS TENANT OR PURCHASER. If the
Mortgagor's interest in the Premises is that of a tenant or a purchaser, the
Mortgagor also assigns, mortgages and warrants to the Mortgagee, as additional
security for the Debt, all of the Mortgagor's right, title and interest in and
to any leases, land contracts or other agreements by which the Mortgagor is
leasing or purchasing any part or all of the premises, including all
modifications, renewals and extensions and all of the Mortgagor's right, title
or interest in any purchase options contained in any lease or other agreement.
The Mortgagor agrees to pay each installment of rent, principal and interest
required to be paid by it under the lease, land contract or other agreement
when each installment becomes due and payable whether by acceleration or
otherwise. The Mortgagor further agrees to pay and perform all of its other
obligations under the lease, land contract or other agreement.
If the Mortgagor defaults in the payment of any installment of rent,
principal, interest or in the payment or performance of any other obligation
under the lease, land contract or other agreement, the Mortgagee shall have the
right, but not the obligation, to pay the installment or installments and to
pay or perform the other obligations on behalf of and at the expense of the
Mortgagor. On receipt by the Mortgagee from the landlord or seller under the
lease, land contract or other agreement of any written notice of default by the
Mortgagor, the Mortgagee
<PAGE> 5
may rely on the notice as cause to take any action it deems necessary or
reasonable to cure a default even if the Mortgagor questions or denies the
existence or nature of the default.
11. SECURITY AGREEMENT. This Mortgage also constitutes a security
agreement within the meaning of the Michigan Uniform Commercial Code ("UCC")
and Mortgagor grants to Mortgagee a security interest in any Equipment and
other personal property included within the definition of Premises.
Accordingly, Mortgagee shall have all of the rights and remedies available to a
secured party under the UCC. Upon the occurrence of an event of default under
this Mortgage, the Mortgagee shall have in addition to the remedies provided by
this Mortgage, the right to use any method of disposition of collateral
authorized by the UCC with respect to any portion of the Premises subject to
the UCC.
12. REIMBURSEMENT OF ADVANCES. If Mortgagor fails to perform any
of its obligations under this Mortgage, or if any action or proceeding is
commenced which materially affects Mortgagee's interest in the Premises
(including but not limited to a lien priority dispute, eminent domain, code
enforcement, insolvency, bankruptcy or probate proceedings), then Mortgagee at
its sole option may make appearances, disburse sums and take any action it
deems necessary to protect its interest (including but not limited to
disbursement of reasonable attorney's fees and entry upon the Premises to make
repairs). Any amounts disbursed shall become additional Debt, shall be
immediately due and payable upon notice from the Mortgagee to the Mortgagor,
and shall bear interest at the highest rate payable on the Debt.
13. DUE ON TRANSFER. If all or any part of the Premises or any
interest in the Premises is transferred without Mortgagee's prior written
consent, Mortgagee may, at its sole option, declare the Debt to be immediately
due and payable.
14. NO ADDITIONAL LIEN. Mortgagor covenants not to execute any
mortgage, security agreement, assignment of leases and rentals or other
agreement granting a lien against the interest of Mortgagor in the Premises
without the prior written consent of Mortgagee, and then only when the document
granting that lien expressly provides that it shall he subject to the lien of
this Mortgage for the full amount secured by this Mortgage, and shall also be
subject and subordinate to any then existing or future leases affecting the
Premises.
15. EMINENT DOMAIN. Notwithstanding any taking under the power of
eminent domain, alteration of the grade of any road, alley, or the like, or
other injury or damage to or decrease in value of the Premises by any public or
quasi-public authority or corporation, the Mortgagor shall continue to pay the
Debt in accordance with the terms of the underlying loan documents until any
award or payment shall have been actually received by Mortgagee. By executing
this Mortgage, the Mortgagor assigns the entire proceeds of any award or
payment and any interest to the Mortgagee. The proceeds shall he applied first
toward reimbursement of all costs and expenses of the Mortgagee, including
reasonable attorney fees of the Mortgagee in collecting the proceeds and then
toward payment of the Debt whether or not then due or payable, or the Mortgagee
at its option may apply the proceeds, or any part to the alteration,
restoration or rebuilding of the Premises.
<PAGE> 6
16. ENVIRONMENTAL MATTERS. The Mortgagor represents and warrants
to the Mortgagee that (a) the Mortgagor has not used Hazardous Materials (as
defined below), on, from or affecting the Premises in any manner which violates
any Governmental Regulation (as defined below) governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials and, to the best of the Mortgagor's knowledge,
no prior owner of the Premises or any existing or poor tenant, or occupant has
used Hazardous Materials on, from or affecting the Premises in any manner which
violates any Governmental Regulation governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal of
Hazardous Materials; (b)the Mortgagor has never received any notice of any
violations (and is not aware of any existing violations) of Governmental
Regulations governing the use, storage, treatment, transportation, manufacture,
refinement, handling,production or disposal of Hazardous Materials at the
Premises and, to the best of the Mortgagor's knowledge, there have been no
actions commenced or threatened by any party for noncompliance which affects
the Premises; (c) Mortgagor shall keep or cause the Premises to be kept free of
Hazardous Materials except to the extent that such Hazardous Materials are
stored and/or used in compliance with all applicable Governmental Regulation
and, without limiting the foregoing, Mortgagor shall not cause or permit the
Premises to be used to generate, manufacture, refine, transport, treat, store,
handle, dispose of, transfer, produce, or process Hazardous Materials, except
in compliance with all applicable Governmental Regulation, nor shall Mortgagor
cause or permit, as a result of any intentional or unintentional act or
omission on the part of Mortgagor or any tenant, subtenant or occupant, a
release, spill, leak or emission of Hazardous Materials onto the Premises or
onto any other contiguous property; (d) the Mortgagor shall conduct and
complete all investigations, including a comprehensive environmental audit,
studies, sampling, and testing, and all remedial, removal and other actions
necessary to clean up and remove all Hazardous Materials on, under, from or
affecting the Premises as required by all applicable Governmental Regulation,
to the satisfaction of the Mortgagee, and in accordance with the orders and
directives of all federal, state and local governmental authorities. If the
Mortgagor fails to conduct an environmental audit required by such governmental
authorities or the Mortgagee, then the Mortgagee may at its option and at the
expense of the Mortgagor, conduct such an audit. Any such audit conducted by
Mortgagee shall be conducted solely for the benefit of and to protect the
interests of Mortgagee and shall not be relied upon by Mortgagor or any third
party for any purpose whatsoever, including, but not limited to Mortgagor's or
any third party's obligation, if any, to conduct an independent environmental
investigation of its own. By conducting any such audit, Mortgagee does not
assume any control over the environmental affairs or operations of Mortgagor
nor assume any obligation or liability to Mortgagor or any third party.
Subject to the limitations set forth below, the Mortgagor shall defend,
indemnify and hold harmless the Mortgagee, its employees, agents, officers and
directors, from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs or expenses, including, without limitation,
attorney's and consultant's fees, investigation and laboratory fees, court
costs and litigation expenses, known or unknown, contingent or otherwise,
arising out of or in any way related to (a) the presence, disposal, release or
threatened release of any Hazardous Materials on, over, under, from or
affecting the Premises or the soil, water, vegetation,
<PAGE> 7
buildings, personal property, persons or animals; (b) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or related to such Hazardous Materials on the Premises, (c) any lawsuit brought
or threatened, settlement reached or government order relating to such
Hazardous Materials with respect to the Premises, and/or (d) any violation of
laws, orders, regulations, requirements or demands of government authorities,
or any policies or requirements of the Mortgagee, which are based upon or in
any way related to such Hazardous Materials used on the Premises. The
indemnity obligations under this paragraph are specifically limited as follows:
(i) The Mortgagor shall have no indemnity obligation with respect to
Hazardous Materials that are first introduced to the Premises or any part of
the Premises subsequent to the date that the Mortgagor's interest in and
possession of the Premises or any part of the Premises shall have fully
terminated by foreclosure of this Mortgage or acceptance of a deed in lieu of
foreclosure;
(ii) The Mortgagor shall have no indemnity obligation with respect to any
Hazardous Materials introduced to the Premises or any part of the Premises by
the Mortgagee, its successors or assigns.
The Mortgagor agrees that in the event this Mortgage is foreclosed or
the Mortgagor tenders a deed in lieu of foreclosure, the Mortgagor shall
deliver the Premises to the Mortgagee free of any and all Hazardous Materials
which are then required to be removed (whether over time or immediately)
pursuant to applicable federal, state and local laws, ordinances, rules or
regulations affecting the Premises.
The provisions of this section shall he in addition to any and all
other obligations and liabilities the Mortgagor may have to the Mortgagee under
the Debt, any loan document, and in common law, and shall survive (a) the
repayment of all sums due for the debt, (b)the satisfaction of all of the other
obligations of the Mortgagor in this Mortgage and under any loan document, (c)
the discharge of this Mortgage, and (d) the foreclosure of this Mortgage or
acceptance of a deed in lieu of foreclosure. Notwithstanding anything to the
contrary contained in this Mortgage, it is the intention of the Mortgagor and
the Mortgagee that the indemnity provisions of this section shall only apply to
an action commenced against any owner or operator of the Premises in which any
interest of the Mortgagee is threatened or any claim is made against the
Mortgagee for the payment of money.
For purposes of this Mortgage, "Hazardous Materials", means any
materials or substance: (i) which is or becomes defined as a "hazardous
substance", "pollutant" or "contaminant" pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act (42 USC 9601 et seq.)
and amendments thereto and regulations promulgated thereunder: (ii) containing
gasoline, oil, diesel fuel or other petroleum products; (iii) which is or
becomes defined as a "hazardous waste" pursuant to the federal Resource
Conservation and Recovery Act (42 USC 6901 et seq.) and amendments thereto
and regulations promulgated thereunder; (iv) containing polychlorinated
byphenyls (PCBs); (v) containing asbestos; (vi) which is radioactive: (vii) the
presence of which requires investigation or remediation under any
<PAGE> 8
Governmental Regulation: or (viii) which is or becomes defined as a "hazardous
waste", "hazardous substance", "pollutant", "contaminant" or biologically
hazardous material under any Governmental Regulation.
"Governmental Regulation(s)" means any law, regulation, rule. policy,
ordinance or similar requirement of the United States, any state. and any
county, city or other agency or subdivision of the United States or any state.
17. EVENTS OF DEFAULT/ACCELERATION: Upon the occurrence of any of
the following, the Mortgagee shall he entitled to exercise its remedies under
this Mortgage or as otherwise provided by law: (l) The Mortgagor or, if other
than the Mortgagor or all of the undersigned, any principal obligor of the Debt
(collectively, the "Principal Obligor") fails to pay when due any amount
payable under the note(s), the guaranty, or any other agreement evidencing the
Debt: (2) the Mortgagor or Principal Obligor (a) fails to observe or perform
any other term of the note(s), the guaranty, or any other agreement evidencing
the Debt,or (b) makes any materially incorrect or misleading representation in
any financial statement or other information delivered to the Mortgagee; (3)
the Mortgagor or Principal Obligor defaults under the terms of this Mortgage,
any loan agreement, mortgage, security agreement, or other document executed as
part of the Debt transaction or any guaranty of the Debt becomes unenforceable
in whole or in part, or any guarantor fails to promptly perform under such a
guaranty: (4) the Mortgagor fails to pay when due any amount payable under any
note or agreement evidencing debt to the Mortgagee or defaults under the terms
of any agreement or instrument relating to or securing any debt for borrowed
money owing to the Mortgagee; (5) 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 the Mortgagor or Principal Obligor or any affiliate of the
Mortgagor or Principal Obligor; (6) the Mortgagor or Principal Obligor becomes
insolvent or unable to pay its debts as they become due; (7) the Mortgagor or
Principal Obligor (a) makes an assignment for the benefit of creditors, or
(b)consents to the appointment of a custodian, receiver, or trustee for itself
or for a substantial part of its assets, or (c) commences any proceeding under
any bankruptcy, reorganization, liquidation, insolvency or similar laws of any
jurisdiction; (8) a custodian, receiver, or trustee is appointed for the
Mortgagor or Principal Obligor or for a substantial part of its assets without
the consent of the party against which the appointment is made and is not
removed within 60 days after such appointment; (9) proceedings are commenced
against the Mortgagor or Principal Obligor under any bankruptcy,
reorganization, liquidation, or similar laws of any jurisdiction, and such
proceedings remain undismissed for 60 days after commencement; or the Mortgagor
or Principal Obligor consents to the commencement of such proceedings; (10) any
judgment is entered against the Mortgagor or Principal Obligor, or any
attachment, levy, or garnishment is issued against any property of the
Mortgagor or Principal Obligor; (11) any proceedings are instituted for the
foreclosure or collection of any mortgage, judgment or lien affecting the
Premises; (12) if Mortgagor sells, transfers or hypothecates any part of the
Premises except as provided in this Mortgage without the prior written consent
of the Mortgagee; (13) the Mortgagor or Principal Obligor dies; (14) the
Mortgagor or Principal Obligor, without the Mortgagee's written consent, (a) is
dissolved, (b) merges or consolidates
<PAGE> 9
with any third party, (c) sells a material part of its assets or business
outside the ordinary course of its business, or (d) agrees to do any of the
foregoing; (15) there is a substantial change in the existing or prospective
financial condition of the Mortgagor or Principal Obligor which the Mortgagee
in good faith determines to be materially adverse.
18. REMEDIES UPON DEFAULT. Upon the occurrence of any of the
events of default set forth in this Mortgage, the Mortgagee is authorized to
commence foreclosure proceedings against the Premises through judicial
proceedings or by advertisement, at the option of the Mortgagee, and to sell
the Premises at public auction pursuant to law, and out of the proceeds to
retain all sums due the Mortgagee, including the costs of the sale and
reasonable attorney's fees, rendering any surplus to the Mortgagor. The
Premises may be sold in one parcel as an entirety or in such parcels, manner
and order as Mortgagee may elect. By executing this Mortgage, the Mortgagor
waives, in the event of foreclosure of this Mortgage or the enforcement by the
Mortgagee of any other rights and remedies in this Mortgage, any right
otherwise available in respect to marshalling of assets which secure the Debt
or to require the Mortgagee to pursue its remedies against any other such
assets. The Mortgagor waives all rights to a hearing prior to sale in
connection with any foreclosure of this Mortgage by advertisement and all
notice requirements except as set forth in any applicable state statute
providing for foreclosure by advertisement.
19. PLEDGE. If a Principal Obligor owes all or any portion of the
Debt ("Principal Obligor Debt(s)"), then the Mortgagor or those of the
undersigned not personally liable on the Principal Obligator Debt(s), as the
case may be (collectively, for purposes of this paragraph 19, the
"Pledgor(s)"), agree(s) as follows:
(a) If any monies become available to the Mortgagee that the Mortgagee can
apply to any Principal Obligor Debt(s), the Mortgagee may apply them in any
manner it chooses, including applying them against liabilities of any Principal
Obligor to the Mortgagee that are not part of any Principal Obligor Debt(s).
Without notice to or the consent of any of the Pledgor(s), the Mortgagee may
take any action it chooses against any Principal Obligor, against any
collateral for any of the Principal Obligor Debt(s) or any other debt or
obligation of any Principal Obligor to the Mortgagee, or against any other
person liable for any of the Principal Obligor Debt(s). Without notice to or
the consent of any of the Pledgor(s), the Mortgagee may release any Principal
Obligor or anyone else from liability on any Principal Obligor Debt(s), either
in whole or in part, or release any collateral for any Principal Obligor
Debt(s) or any other debt or obligation of any Principal Obligor to the
Mortgagee, and need not perfect a security interest in any collateral therefor.
Before exercising its rights under this Mortgage, the Mortgagee need not
exercise any rights that it has against any Principal Obligor or anyone else,
including any right of set-off, or make any effort to realize on any other
collateral securing any debt or other obligation (including Principal Obligor
Debt(s)) of any Principal Obligor to the Mortgagee. If any Principal Obligor as
is for more credit or any other benefit from the Mortgagee to be secured by
this Mortgage, or agrees to incur additional obligations to the Mortgagee to be
secured by this Mortgage, the Mortgagee may grant or permit it, as the case may
be, without notice to or the consent of any of the Pledgor(s). The Mortgagee
may similarly renew, extend,
<PAGE> 10
modify, and/or amend any debt or other obligation of any Principal Obligor to
the Mortgagee (including Principal Obligor Debt(s)) and otherwise deal with any
Principal Obligor or any other person as the Mortgagee chooses, all without
notice to or the consent of any of the Pledgor(s). None of the obligations of
any of the Pledgor(s) under this Mortgage shall be released or affected by (i)
any act or omission of the Mortgagee; (ii) the voluntary or involuntary
liquidation, sale, or other disposition of all or substantially all of the
assets of any Principal Obligor; (iii) any receivership, insolvency,
bankruptcy, reorganization, or other similar proceedings affecting any
Principal Obligor or any of its assets; or (iv) any change in the composition
or structure of any Principal Obligor or any of the Pledgor(s), including a
merger or consolidation with any other entity.
(b) Before exercising any of its rights under this Mortgage, the Mortgagee
is not required to try to collect first from any Principal Obligor, from any
collateral for any debt or other obligation of any Principal Obligor to the
Mortgagee (including Principal Obligor Debt(s)), or from any other person
liable for any debt or other obligation of any Principal Obligor to the
Mortgagee (including Principal Obligor Debt(s)). The Mortgagee's rights under
this paragraph 19 and this Mortgage are unconditional and absolute, regardless
of the unenforceability of any provision of any agreement between any Principal
Obligor and the Mortgagee or the existence of any defense, setoff, or
counterclaim that a Principal Obligor may or might be able to assert against
the Mortgagee.
(c) Each of the Pledgor(s) expressly waive(s) all rights of subrogation,
contribution, reimbursement, indemnity, exoneration, implied contract, recourse
to security, and any other claim (as that term is defined in the federal
Bankruptcy Code, as amended from time to time) that it may have or acquire in
the future against a Principal Obligor, anyone else who may be liable on any
Principal Obligor Debt(s), or any collateral therefor because of the existence
of this Mortgage, its performance under this Mortgage, or the Mortgagee's
availing itself of any rights or remedies under this Mortgage.
Each of the Pledgor(s) further agree(s) that if any payments to the Mortgagee
on any of the Principal Obligor Debt(s) are wholly or partially invalidated,
set aside, declared fraudulent, and/or required to be repaid to a trustee,
receiver, or anyone else under any bankruptcy or insolvency act or code, under
any state or federal law, or under common law or equitable principles, this
Mortgage shall remain in full force and effect or reinstated, as the case may
be, until payment in fall to the Mortgagee of (i) such repaid amounts, and (ii)
all of the Debt, including Principal Obligor Debt(s), if any. If this Mortgage
must be reinstated, the Mortgagor, including each of the Pledgor(s), agree(s)
to execute and deliver to the Mortgagee a new mortgage in form and substance
acceptable to the Mortgagee covering the Premises.
20. REPRESENTATIONS. Mortgagor represents that it is a
corporation duly organized, existing and in good standing under the laws of its
state of incorporation, and that the execution and delivery of this Mortgage
and the performance of the obligations it imposes are within its corporate
powers, have been duly authorized by all necessary action of its board of
directors, and do not contravene the terms of its articles of incorporation or
by-laws.
<PAGE> 11
Mortgagor represents that the execution and delivery of this Mortgage and the
performance of the obligations it imposes do not violate any law and do not
conflict with any agreement by which it is bound, and that no consent or
approval of any governmental authority or any third party is required for the
execution or delivery of this Mortgage or the performance of the obligations it
imposes and that this Mortgage is a valid and binding agreement, enforceable in
accordance with its terms. Mortgagor further represents that all balance
sheets, profit and loss statements, and other financial statements, if any,
furnished to the Mortgagee 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.
21. NOTICES. Notice from one party to another relating to this
Mortgage shall be deemed effective if made in writing (including
telecommunications) and delivered to the recipient's address, telex number or
telecopier number set forth above 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) telecopy,
telex or other wire transmission with request for assurance of receipt in a
manner typical with respect to communication of that type. Notice made in
accordance with this paragraph shall be deemed delivered upon receipt if
delivered by hand or wire transmission, 3 business days after mailing if mailed
by first class registered or certified mall or one business day after mailing
or deposit with an overnight courier service if delivered by express mall or
overnight courier. This notice provision shall be inapplicable to any judicial
or non- judicial proceeding where Michigan law governs the manner and timing of
notices in foreclosure or receivership proceedings.
22. MISCELLANEOUS. If any provision of this Mortgage is in
conflict with any statute or rule of law or is otherwise unenforceable for any
reason whatsoever, then the provision shall be deemed null and void to the
extent of such conflict or unenforceability and shall be deemed severable from
but shall not invalidate any other provisions of this Mortgage. No waiver by
the Mortgagee of any right or remedy granted or failure to insist on strict
performance by the Mortgagor shall affect or act as a waiver of any right or
remedy of the Mortgagee, nor affect the subsequent exercise of the same right
or remedy by the Mortgagee for any subsequent default by the Mortgagor, and all
rights and remedies of the Mortgagee are cumulative.
These promises and agreements shall bind and these rights shall be to the
benefit of the parties and their respective heirs, successors and assigns. If
there is more than one Mortgagor or Pledgor(s), the obligations under this
Mortgage shall be joint and several.
This Mortgage shall be governed by Michigan law except to the extent it is
preempted by federal law or regulation.
23. WAIVER OF JURY TRIAL. THE MORTGAGEE AND THE MORTGAGOR AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY,
VOLUNTARILY
<PAGE> 12
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 MORTGAGE OR ANY RELATED
INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
MORTGAGE OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS, WHETHER ORAL OR WRITTEN
OR ACTIONS OF EITHER OF THEM. NEITHER THE MORTGAGEE NOR THE MORTGAGOR SHALL
SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH 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 MORTGAGEE OR THE
MORTGAGOR EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY BOTH OF THEM.
WITNESS: MORTGAGOR:
/s/ Glenn Ansiel
- ------------------------------ MEDAR, INC.
Name: Glenn Ansiel
By: /s/ Charles Drake
------------------------------------
/s/ Julio Benitez
- ------------------------------ Its: President
Name: Julio Benitez --------------------------------
ACKNOWLEDGEMENT
State of Michigan )
) SS
County of )
This foregoing instrument was acknowledged before me on
______________, 1995 by ____________________________ the ________________ of
Medar, Inc. who by me duly sworn did state that he executed the foregoing by
authority of the Board of Directors of Medar, Inc.
___________________________________
Notary Public, _________ County, MI
My Commission expires: ____________
DRAFTED BY AND WHEN
RECORDED RETURN TO:
Rebecca L. Burtless-Creps
Honigman Miller Schwartz and Cohn
2290 First National Building
Detroit, MI 48226
<PAGE> 13
SCHEDULE A
LEGAL DESCRIPTION
City of Farmington Hills, County of Oakland, State of Michigan: Part of Lot 6,
all of Lot 7, and part of Lot 8 of "Farmington Grand River Industrial Park
Subdivision" in part of the SW 1/4 of Section 19, TIN, R9E., City of Farmington
Hills, Oakland County, Michigan (as recorded in Liber 144 of Plats, Pages 30,
40 and 41, Oakland County Records) and more particularly described as beginning
at the Southerly corner of Lot 7, thence N. 56 Degrees 10' 46" W. 261.50 Ft.;
thence S. 87 Degrees 46' 48" W. 321.45 Ft. to a point on the Southerly R.O.W.
Line of M-102 Limited Access Highway (formerly I-96 Highway), thence N. 33
Degrees 08' 48" E. along said R.O.W. line 189.14 ft.; thence N. 45 Degrees 08'
48" E. along said R.O.W. line 284.34 ft.; thence W. 57 Degrees 08' 48" E along
said R.O.W. line 283.77 ft; thence N. 69 Degrees 08' 48 E. along said R.O.W.
line 69.00 ft; thence S. 02 Degrees 21' 11" E. 617.93 ft. to a point on the
Northerly R.O.W. line of Crestview court (120 radius), thence on a curve to the
left along said R.O.W. line (radius equals 120.00 ft, long Chord Bears S 60
Degrees 44' 16" W 108.63 ft.) a distance of 112.73 ft to the point of
beginning.
<PAGE> 14
SCHEDULE B
PERMITTED ENCUMBRANCES
(All recorded in Oakland County Records)
1. Water Main Easements recorded at: (a) Liber 7790, Page 576;
(b) Liber 7790, Page 577; (c) Liber 10142, Page 241.
2. Easements in favor of The Detroit Edison Company and Michigan
Bell Telephone recorded at Liber 5379, Page 403 and Liber
4389, Page 156.
3. Public Utilities easements recorded at Liber 5132 of Plats,
Page 527 and Liber 144 of Plats, Pages 39- 41.
4. Building and Use Restrictions recorded at Liber 5132, Page 527
and Liber 10609, Page 312.
<PAGE> 1
EXHIBIT 10.22
[LOGO] INSTALLMENT BUSINESS LOAN NOTE
================================================================================
Due October 31, 2000 $2,540,000
No. ________________________ Date October 31, 1995
PROMISE TO PAY: For value received, the undersigned (the "Borrower") promises
to pay to NBD BANK N.A. (the "Bank") or order at, any office of the Bank in the
State of Michigan, the sum of Two Million Five Hundred Forty Thousand and
00/100 DOLLARS ($2,540,000) plus interest computed on the basis of the actual
number of days elapsed in a year of 360 days at the rate specified in the Loan
Agreement (defined below):
In no event shall the interest rate exceed the maximum rate allowed by law; any
interest payments which would for any reason be deemed unlawful under
applicable law shall be applied to principal.
The Borrower will pay this sum in 59 monthly principal installments of $14,111
plus accrued interest on the 30th day of each month (or the 28th day of each
February) beginning November 30, 1995 to and including September 30, 2000 and a
final principal payment of $1,707,444 plus accrued but unpaid interest due on
October 31, 2000, at which time the entire balance of unpaid principal plus
accrued interest shall be due and payable immediately. Each payment will be
applied first to accrued interest, then to principal.
LOAN AGREEMENT: [complete if applicable] This note evidences a debt under the
terms of a Revolving Credit & Loan Agreement between the Bank and the
Borrower, Automatic Inspection Devices, Inc. and Integral Vision, Ltd., dated
August 10, 1995 and any amendments (the "Loan Agreement").
PREPAYMENT: If a fixed interest rate is specified above, the Borrower may
prepay all or any part of the principal balance of this note on one business
day's notice provided that, in addition to all principal, interest and costs
owing at the time of prepayment, the Borrower pays a prepayment premium equal
to the Current Value of (i) the interest that would have accrued on the amount
prepaid at the Note Rate, minus (ii) the interest that could accrue on the
amount prepaid at the Treasury Rate. In both cases, interest will be
calculated from the prepayment date to the maturity dates of the installments
being prepaid. Such maturity dates shall be determined by applying the
prepayment to the scheduled installments of principal in their inverse order of
maturity. "Treasury Rate" means the yield, as of the date of prepayment, on
United States Treasury bills, notes or bonds, selected by the Bank in its
discretion, having maturities comparable to the schedule maturities of the
installments being prepaid. "Current Value" means the net present value of the
dollar amount of the interest to be earned, discounted at the Treasury Rate.
In no event shall the prepayment premium be less than zero. The Borrower's
notice of its intent to prepay shall be irrevocable. If the balance of this
note is accelerated in accordance with the terms of this note, the resulting
balance due shall be irrevocable. If the balance of this note is accelerated
in accordance with the terms of this note, the resulting balance due shall be
considered a prepayment due and payable as of the date of acceleration. The
Borrower agrees that the prepayment premium is a reasonable estimate of loss
and not a penalty. The prepayment premium is payable as liquidated damages for
the loss of bargain and its payment shall not in any way reduce, affect or
impair any other obligation of the Borrower under this note.
SECURITY: To secure the payment of this note and any other present or future
liability of the Borrower, whether several, joint, or joint and several, the
Borrower pledges and grants to the Bank a continuing security interest in the
following described property and all of its additions, substitutions,
increments, proceeds and products, whether now owned or later acquired
("Collateral"):
1. All securities and other property of the Borrower in the custody,
possession or control of the Bank (other than property held by the
Bank solely in a fiduciary capacity);
2. All property or securities declared or acknowledged to constitute
security for any past, present or future liability of the Borrower to
the Bank;
3. All balances of deposit accounts of the Borrower with the Bank.
4. The following additional property: Mortgage on real property
commonly known as 24775 Crestview Ct., Farmington Hills, MI.
BANK'S RIGHT TO SETOFF: The Bank shall have the right at any time to apply its
own debt or liability to the Borrower or to any other party liable on this note
in whole or partial payment of this note or other present or future
liabilities, without any requirement of mutual maturity.
REPRESENTATIONS BY BORROWER: If the Borrower is a corporation, it represents
that it is a corporation duly organized, existing and in good standing under
the laws of its state of incorporation, and that the execution and delivery of
this note and the performance of the obligations it imposes are within its
corporate powers, have been duly authorized by all necessary action of its
board of directors, and do not contravene the terms of its articles of
incorporation or by-laws. If the Borrower is a general or limited partnership,
it represents that it is duly organized and existing ship agreement and have
been duly authorized by all necessary action of its partners. Each Borrower
represents that the execution and delivery of this note and the performance of
the obligations it imposes and that this note is a valid and binding agreement,
enforceable according to its terms. Each Borrower further represents that all
balance sheets, profit and loss statements, and other financial statements, if
any, 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.
WAIVER OF JURY TRIAL: The Bank and the Borrower, 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 note or any related instrument or
agreement or any of the transactions contemplated by this note or any course of
conduct, dealing, statements, whether oral or written, or actions of either of
them. Neither the Bank nor the Borrower shall seek to consolidate, by
counterclaim or otherwise, any such 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 Borrower except by a written
instrument executed by both of them.
SEE REVERSE SIDE FOR ADDITIONAL TERMS AND CONDITIONS INCLUDING EVENTS OF DEFAULT
BORROWER:
Address: 38700 Grand River Avenue MEDAR, Inc.
Farmington Hills, MI 48335
Address: ______________________________ By: /s/ Charles Drake
------------------------------
______________________________ Its: President
-------------------------
- ---------------------------------------
Approved By N
- ---------------------------------------
PN
----------
R
----------
PR
----------
S
----------
SUPP
----------
U
- ---------------------------------------
<PAGE> 2
ADDITIONAL TERMS AND CONDITIONS
EVENTS OF DEFAULT/ACCELERATION: If any of the following events occurs:
1. The Borrower or any Guarantor of this note ("Guarantor") fail to pay
when any amount payable under this note or under any agreement or
instrument evidencing debt to any creditor;
2. The Borrower or any Guarantor (a) fails to perform any other term of
this note: (b) makes any materially incorrect or misleading
representation, warranty, or certificate to the Bank; (c) makes any
materially incorrect or misleading representation in any financial
statement or other information delivered to the Bank; or (d) defaults
under the terms of any agreement or instrument relating to any debt
for borrowed money (other than the debt evidenced by this note) 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 the loan
evidenced by this note, or any guaranty of the loan evidenced by this
note becomes unenforceable in whole or in part, or any guarantor fails
to promptly perform under such a 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
the Borrower or any affiliate of the Borrower;
5. The Borrower or any Guarantor becomes insolvent or unable to pay its
debts as they become due;
6. The Borrower or any Guarantor (a) makes an assignment for the benefit
of creditors; (b) consents to the appointment of a custodian,
receiver, or trustee for itself or for a substantial part of its
assets; or (c) commences any bankruptcy, reorganization, liquidation,
insolvency, or similar laws of any jurisdiction;
7. A custodian, receiver, or trustee is appointed for the borrower or any
Guarantee or for a substantial part of its assets without its consent
and is not removed within 60 days after such appointment;
8. Proceedings are commenced against the Borrower or any Guarantor under
any bankruptcy, reorganization, liquidation, or similar laws of any
jurisdiction, and such proceedings remain undismissed for 60 days
after commencement; or the Borrower or Guarantor consents to the
commencement of such proceedings;
9. Any judgement is entered against the Borrower or any Guarantor, or any
attachment, levy, or garnishment is issued against any property of the
Borrower or any Guarantor;
10. The Borrower or any Guarantor dies;
11. The Borrower or any Guarantor, without the Bank's written consent, (a)
is dissolved, (b) merges or consolidates with any third party, (c)
leases, sells or otherwise conveys a material part of its assets or
business outside the ordinary course of its business, or (d) leases,
purchases or otherwise acquires conveys a material part of its assets
or busiess outside the ordinary course of its business, or (e) agrees
to do any of the foregoing (notwithstaning the foregoing, any
subsidiary may merge or consolidate with any other subsidiary, or with
the Borrower so long as the Borrower is the survivor);
12. The loan-to-value ratio of any pledged securities at any time exceeds
________________%, ad such excess continues for five (5) days after
notice from the Bank to the Borrower;
13. There is a substantial change in the existing or prospective financial
condition of the Borrower or any Guarantor which the Bank in good
faith determines to be materially adverse;
14. The Bank in good faith deems itself insecure;
then this note shall become due immediately, without notice, at the Bank's
option.
REMEDIES: If this note is not paid at maturity, whether by acceleration or
otherwise, the Bank shall have all of the rights and remedies provided by any
law or agreement. Any requirement of reasonable notice shall be met if the
Bank sends the notice to the Borrower at least seven (7) days prior to the date
of sale, disposition or other event giving rise to the required notice. The
Bank is authorized to 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, firm or
corporation, with or without designation of the capacity of such nominee. The
Borrower shall be liable for any deficiency remaining after disposition of any
Collateral. The Borrower is liable to the Bank for all reasonable costs and
expenses of every kind incurred in the making or collection of this note,
including, without limitation, reasonable attorneys' fees and court costs.
These costs and expenses shall include, without limitation, any costs or
expenses incurred by the Bank in any bankruptcy, reorganization, insolvency or
other similar proceeding.
WAIVER: Each endorser and any other party liable on this note severally waives
demand, presentment, notice of dishonor and protest, and consents to any
extension or postponement of time of its payment without limit as to the number
or period, to any substitution, exchange or release of all or part of the
Collateral, to the addition of any party, and to the release or discharge of,
or suspension of any rights and remedies against, any person who may be liable
for the payment of this note. No delay on the part of the bank in the exercise
of any right or remedy shall operate as a waiver. No single or partial
exercise by the Bank of any right or remedy shall preclude any other future
exercise of it or the exercise of any other right or remedy. No waiver or
indulgence by the Bank of any default shall be effective unless in writing and
signed by the Bank, nor shall a waiver on one occasion be construed as a bar to
or waiver of that right on any future occasion.
MISCELLANEOUS: The Borrower, if more than one, shall be jointly and severally
liable, and the term "Borrower" shall mean any one or more of them. This note
shall be binding on the Borrower and its successors, and shall insure to the
benefit of the Bank, its successors and assigns. Any reference to the Bank
shall include any holder of this note. This note is delivered in the State of
Michigan and governed by Michigan law. Section headings are for convenience of
reference only and shall not affect the interpretation of this note.
================================================================================
PAYMENT GUARANTEED BY:
- --------------------------------------------------------------------------------
(Signature) (Address)
- --------------------------------------------------------------------------------
(Signature) (Address)
- --------------------------------------------------------------------------------
(Signature) (Address)
- --------------------------------------------------------------------------------
For Bank use Only
- --------------------------------------------------------------------------------
Facility Authorized to Lend Under
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Method of Disbursement
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Loan Classification
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Country Code ORC Address Sic Code Bar Code
- ------------------ ---------------------------- ------------- ----------------
DIV Reg GT Sec ORC
- ------------------ ----- ----- ---- ----- ----- ------------- ----------------
- --------------------------------------------------------------------------------
Branch Number Social Security Number
- ------------------ --------------------------------------------
- ------------------ -------------------------------------------- ----------------
- --------------------------------------------------------------------------------
Maximum Account Limit Special ID LNTM FRB Code Officer Initials
- ----------------------- -------------- ---------- ----------- ----------------
- ----------------------- -------------- ---------- ----------- ----------------
- --------------------------------------------------------------------------------
Loan Purpose Profit Center Tx Ex Pr. Rel Yr. Ba Main Coll. Type Reg U
- --------------- ----------------- ----- ------- ------ ----------------- -----
- --------------- ----------------- ----- ------- ------ ----------------- -----
- --------------------------------------------------------------------------------
Billing Instructions
- --------------------------------------------------------------------------------
Payment Amount 1st Principal Payment 1st Interest Payment Interest Principal
- -------------- --------------------- -------------------- --------- ---------
Incl Cycle
--------- ---------
- -------------- ----------------- ----------------
Interest Cycle Lead Time Day of Month
- -------------- ----------------- ----------------
- --------------------------------------------------------------------------------
Int Collars Charge DDA Account Number Pymt Chg Rev Part Maximum Note Limit
- ----------- ------------------------- Type Type CR BGHT/ ---------------------
High Low Sold
- ----------- ------------------------- ---- ---- --- ---- ----------------------
- ----------- ------------------------- ---- ---- --- ---- ----------------------
================================================================================
<PAGE> 1
EXHIBIT 10.23
GUARANTEE AND POSTPONEMENT OF CLAIM
TO: NBD BANK
FOR VALUABLE CONSIDERATION, receipt whereof is hereby acknowledged,
the undersigned MEDAR CANADA, LTD., hereby guarantee(s) payment on demand to
NBD BANK, a Michigan banking corporation (hereinafter called the "Bank") of all
debts and liabilities, present or future, direct or indirect, absolute or
contingent, matured or not, at any time owing by MEDAR, INC., AUTOMATIC
INSPECTION DEVICES, INC. AND INTEGRAL VISION, LTD., or any one of them, whether
joint, joint and several, or several (hereinafter collectively and inividually
referred to as the "Customer") to the Bank or remaining unpaid by the Customer
to the Bank, heretofore or hereafter incurred or arising and whether incurred
by or arising from agreement or dealings between the Bank and the Customer or
by or from any agreement or dealings with any third party by which the Bank may
be or become in any manner whatsoever a creditor of the Customer or however
otherwise incurred or arising anywhere within or outside the country where this
guarantee is executed and whether the Customer be bound alone or with another
or others and whether as principal or surety (such debts and liabilities being
hereinafter call the "Liabilities"); the liability of the undersigned hereunder
is unlimited and includes interest from the date of demand for payment at the
rate of the Bank's Prime Interest Rate.
AND THE UNDERSIGNED HEREBY AGREE(S) WITH THE BANK AS FOLLOWS:
(1) The Bank may grant time, renewals, extensions, indulgences,
releases and discharges to, take securities (which word as used herein includes
other guarantees) from giving credit or making loans or advances to, accept
compositions from and otherwise deal with, the customer and others and with all
securities as the Bank may see fit, and may apply all moneys at any time
received from the Customer or others or from securities upon such part of the
Liabilities as the Bank deems best and change any such application in whole or
in part from time to time as the Bank may see fit, the whole without in any way
limiting or lessening the liability of the undersigned under this guarantee,
and no loss of or in respect of any securities received by the Bank from the
customer or others, whether occasioned by the fault of the Bank or otherwise,
shall in any way limit or lessen the liability of the undersigned under this
guarantee.
(2) This guarantee shall be a continuing guarantee and shall cover
all the Liabilities, and it shall apply to and secure any ultimate balance due
or remaining unpaid to the Bank.
<PAGE> 2
(3) The Bank shall not be bound to exhaust its recourse against
the Customer or others or any securities it may at any time hold before being
entitled to payment from the undersigned of the liabilities. The undersigned
renounces to all benefits of discussion and division.
(4) The undersigned may, by notice in writing delivered to the
Manager of the branch or agency of the Bank receiving this instrument,
determine its liability under this guarantee in respect of liabilities
thereafter incurred or arising but not in respect of any laibilities
theretofore incurred or arising even though not then matured, provided,
however, that notwithstanding receipt of any such notice the Bank may fulfill
any requirements of the customer based on agreements express or implied made
prior to the receipt of such notice and any resulting liabilities shall be
covered by this guarantee.
(5) All indebtedness and liability, present and future, of the
Customer to the undersigned are hereby assigned by the Bank and postponed to
the Liabilities, and all moneys received by the undersigned in respect thereof
shall be received in trust for the Bank and forthwith upon receipt shall be
paid over to the Bank, the whole without in any way limiting or lessening the
liability of the undersigned under the foregoing guarantee; and this assignment
and postponement is independent of the said guarante and shall remain in full
effect notwithstanding that the liability of the undersigned under the said
guarantee may be extinct. The term "Liabilities", as previously defined, for
purposes of the postponement feature provided by this agreement, and this
section in particular, includes any funds advanced or held at the disposal of
the Customer under any line(s) of credit.
(6) This guarantee and agreement shall not be affected by the
death or loss or diminution of capacity of the undersigned or any of them or by
any change in the name of the Customer or in the membership of the Customer's
firm through the death or retirement of one or more partners or the
introduction of one or more other partners of otherwise, or by the acquisition
of the customer's business by a corporation, or by any change whatsoever in the
objects, capital structure or constitution of the customer, or by the
customer's business going amalgamated with a corporation, but shall
notwithstanding the happening of any such event continue to apply to all the
Liabilities whether theretofore or therafter incurred or arising and in this
instrument the word "Customer" shall include every such firm and corporation.
(7) This guarantee shall not be considered as wholly or partially
satisfied by the payment or liquidation at any time or times of any sum or sums
of money for the time being due or remaining unpaid to the Bank, and all
dividends, compositions, proceeds or security valued and payments received by
the Bank
<PAGE> 3
from the customer or from others or from estates shall be regarded for all
purposes as payments in gross with out any rights on the part of the
undersigned to claim in reduction of the liability under this guarantee the
benefit of any such dividends, compositions, proceeds or payments or any
securities held by the Bank or proceeds thereof, and the undersigned shall have
no right to be subrogated in any rights of the Bank until the Bank shall have
received payment in full of the liabilities.
(8) The undersigned hereby grants to the Bank the right to set off
against any and all accounts, credits or balances maintained with the Bank or
at any affiliate of the Bank, including without limitation at NBD Bank Canada,
the aggregate amount of any and all Liabilities of the undersigned hereunder if
and when the same shall become due and payable.
(9) All moneys received by the Bank in respect of the Liabilities
may be applied on such part or parts of the Liabilities as the Bank may see fit
and the Bank shall at all times and from time to time have the right to change
any appropriation of any moneys received by it and to re-apply the same on any
other part or parts of the Liabilities as the Bank may see fit, notwithstanding
any previous application by whomsoever made.
(10) Without in any manner limiting the generality of the
foregoing, the undersigned agrees that the Bank may, from time to time, consent
to any action or non-action of the Customer which, in the absence of such
consent, violates or may violate any agreement or agreements between the
Customer and the Bank relating to any of the Liabilities, with or without
consideration and on such terms and conditions as may be acceptable to the
Bank, without in any manner affecting or impairing the liability of the
undersigned hereunder.
(11) The undersigned shall at all times and from time to time do,
execute, acknowledge and deliver or cause to be done, executed, acknowledged
and delivered all and singular every such further act, deed, transfer,
assignment, assurance, document and instrument as the Bank may reasonably
require for the better accomplishing and effectuating of this guarantee and the
provisions contained herein, and every officer of the Bank and each of them
irrevocably appointed attorneys or attorney to execute in the name and on
behalf of the undersigned any document or instrument for the said purpose.
(12) All moneys, advances, renewals and credits in fact borrowed or
obtained from the Bank shall be deemed to form part of the Liabilities,
notwithstanding any lack or limitation of status or of power, incapacity or
disability of the Customer or of the directors, partners or agents thereof, or
that the Customer may not be a legal or suable entity, or any
<PAGE> 4
irregularity, defect or informality in the borrowing or obtaining of such
moneys, advances, renewals or credits, the whole whether known to the Bank or
not; and any sum which may not be recoverable from the undersigned on the
footing of a guarantee shall be recoverable from the undersigned as sole or
principal debtor in respect thereof and shall be paid to the Bank on demand
with interest and accessories.
(13) This guarantee is in addition to and not in substitution of
any other guarantee, by whomsoever given, at any time held by the Bank, and any
present or future obligation to the Bank incurred or arising otherwise than
under a guarante, of the undersigned or any of them or of any other obligant,
whether bound with or apart from the Customer; excepting any guarantee
surrendered for cancellation on delivery of this instrument.
(14) The undersigned and each of them shall be bound by any account
settled between the Bank and the Customer, and if no such account has been so
settled immediately before demand for payment under this guarantee any account
stated by the Bank shall be accepted by the undersigned as conclusive evidence
of the amount which at the date of the account so stated is due by the Customer
to the Bank or remains unpaid by the Customer to the Bank.
(15) This guarantee shall continue to be effective or be reinstated
(as the case may be) if at any time payment by the Customer or all or any part
of the Liabilities of the Customer to the Bank is rescinded or must otherwise
be returned by the Bank upon the insolvency, bankruptcy or reorganization of
the Customer or otherwise, all as if such payment to the Bank had not been
made.
(16) This guarantee and agreement shall be operative and binding
upon every signatory thereof notwithstanding the non-execution thereof by any
other proposed signatory or signatories, and possession of this instrument by
the Bank shall be conclusive evidence against the undersigned that this
instrument was not delivered in escrow or pursuant to any agreement that it
should not be effective until any conditions precedent or subsequent had been
complied with, unless at the time of receipt of this instrument by the Bank
each signatory thereof obtains from the Manager of the branch or agency of the
Bank receiving this instrument a letter setting out the terms and conditions
under which this instrument was delivered and the conditions, if any, to be
observed before it becomes effective.
(17) a. The undersigned agrees to make immediate payment to
the Bank of all Liabilities owing or payable to the Bank upon receipt of a
demand for payment therefor by the Bank to the undersigned in writing. Each
payment to be made by the undersigned in respect of the Liabilities shall be
payable in the currency in which such Liabilities are denominated, and shall be
<PAGE> 5
made --
(i) without set-off or counterclaim; and
(ii) free and clear of and without deduction or
withholding for or on account of any present or
future taxes unless the undersigned is compelled by
law to make payment subject to such taxes.
b. All taxes in respect of the Guaranty or any amounts
payable or paid under this Guarantee shall be paid by the undersigned when due
and in any event prior to the date on which penalties attach thereto. The
undersigned will indemnify the Bank against and in respect of all such taxes.
Without limiting the generality of the foregoing, if
any taxes or amounts in respect thereof must be deducted or withheld from any
amounts payable or paid by the undersigned under this Guarantee, the
undersigned shall pay such additional amounts as may be necessary to ensure
that the Bank receives a net amount equal to the full amount which it would
have received had payment not been made subject to such taxes. Within thirty
(30) days of each payment by the undersigned under this Guarantee of taxes or
in respect of taxes, the undersigned shall deliver to the Bank satisfactory
evidence (including originals, or certified copies, of all relevant receipts)
that such taxes have been duly remitted to the appropriate authority or
authorities.
(18) If for the purposes of obtaining judgement in any court in any
jurisdiction with respect to this Guarantee, it becomes necessary to convert
into the currency of such jurisdiction (herein called the "Judgement Currency")
any amount due under this Guarantee in US currency, then conversion shall be
made at the rate of exchange prevailing on the business day before the day on
which judgement is given. For this purpose, "rate of exchange" means the rate
at which the Bank would , on the relevant date, be prepared to sell a similar
amount of US currency in Detroit, Michigan, against the Judgement Currency. In
the event that there is a change in the rate of exchange prevailing between the
business day before the day on which the judgement is given and the date of
payment of the amount due, the undersigned will, on the date of payment, pay
such additional amounts (if any) as may be necessary to ensure that the amount
paid on such date is the amount in the Judgement Currency which then converted
at the rate of exchange prevailing on the date of payment is the amount then
due under this Guarantee in US currency.
(19) No suit based on this guarantee shall be instituted until
demand for payment has been made, and demand for payment shall be deemed to
have effectually made upon any guarantor if and when an envelope containing
such demand, addressed to such guarantor at the address of such guarantor last
known to the
<PAGE> 6
Bank, is posted, postage prepaid, in the post office, and in the event of the
death of any guarantor demand for payment addressed to any of such guarantor's
heirs, executors, administrators or legal representatives at the address of the
addressee last known to the Bank and posted a aforesaid shall be deemed to have
effectually made upon all of them. Moreover, when demand for payment has been
made, the undersigned shall also be liable to the Bank for all legal costs (on
a solicitor and customer basis) incurred by or on behalf of the Bank resulting
from any action instituted on the basis of this guarantee. All payments
hereunder shall be made to the Bank at a branch or agency of the Bank.
(20) This instrument covers all agreements between the parties
hereto relative to this guarantee and assignment and postponement, and none of
the parties shall be bound by any representation or promise made by any person
relative thereto which is not embodied herein.
(21) This guarantee and agreement shall extend to and enure to the
benefit of the Bank and its successors and assigns, and every reference herein
to the undersigned or to each of them or to any of them, is a reference to and
shall be construed as including the undersigned and the heirs, executors,
administrators, legal representatives, successors and assigns of the
undersigned or of each of them or of any of them, as the case may be, to and
upon all of whom this guarantee and agreement shall extend and be binding.
(22) Prime Interest Rate is the annual rate of interest announced
from time to time by NBD BANK as a reference rate then in effect for
determining interest rates on US dollar commercial loans in the United States.
(23) This instrument shall be governed by the laws of the Province
of Ontario and the undersigned agrees that any legal suit or action or other
proceedings arising out of or relating to this agreement may be brought in the
courts of such province, and the undersigned hereby irrevocably accepts and
submits to the non-exclusive jurisdiction of such courts and agrees to be bound
by any judgement thereof.
GIVEN UNDER SEAL THIS 10TH DAY OF AUGUST, 1995.
SIGNED, SEALED AND DELIVERED
in the presence of MEDAR CANADA, LTD.
/s/ Richard R. Current By:/s/ Charles J. Drake
Charles J. Drake
Its: President
<PAGE> 1
EXHIBIT 10.24
PATENT LICENSE AGREEMENT
THIS AGREEMENT, made and entered into as of the 4th day of October, 1995 (the
"Effective Date") between SQUARE D COMPANY, a Delaware corporation (hereinafter
"SQUARE D"), and MEDAR, INC., a Michigan corporation (hereinafter "MEDAR");
WITNESSETH:
WHEREAS SQUARE D is the present owner of patents and patent
application(s) directed to single phase resistance weld controller TECHNOLOGY
(hereinafter called "TECHNOLOGY"), each of which is listed in Group I of
Appendix A hereof and MEDAR is the present owner of the patents and patent
application(s) directed to the TECHNOLOGY, each of which is listed in Group II
of Appendix A; and
WHEREAS SQUARE D has filed two lawsuits (hereinafter called "the
litigation") against MEDAR alleging patent infringement of certain patents
listed in Group I of Appendix A hereof as the result of MEDAR's manufacture and
sale of certain weld control units ("WCU") and MEDAR filed a counterclaim in
one lawsuit for patent infringement of a patent in Group II of Appendix A; and
WHEREAS SQUARE D AND MEDAR desire and wish to receive a non-exclusive,
paid up license under all the patents listed in Groups I and II, respectively,
in Appendix A hereof to manufacture, have made, use and sell, WCUs as well as
provide services and replacements parts therefore worldwide; and
WHEREAS SQUARE D AND MEDAR further desire and wish to receive a
non-exclusive paid up license to enhance its commercial opportunities by being
able to utilize TECHNOLOGY covered by the patents and patent applications
listed in Groups I and II of Appendix A hereof to manufacture, have made, use
and sell, complete or partial WCUs and replacement parts therefore worldwide;
and
WHEREAS SQUARE D AND MEDAR are desirous of granting the paid up
license under each others patents which both parties acknowledge are valid by
neither party acquiesces on the issue of infringement; and
WHEREAS SQUARE D AND MEDAR are not desirous of granting each other a
paid up license which would allow the other to sublicense that TECHNOLOGY or to
in any other way grant the TECHNOLOGY to a third party which allows that third
party to manufacture or have made WCUs that involves the licensed TECHNOLOGY.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Definitions: As utilized herein, the term "Licensed Patents"
is defined as all patents listed in Appendix A hereof and all patents issuing
from patent applications listed in Appendix A hereof, including all
continuations, continuation-in-part, reissues or extensions
<PAGE> 2
thereof, together with all counterpart patent rights thereof throughout the
world.
2. Subject only to the provisions of paragraph 6, each party
hereby grants and agrees to grant to the other party a worldwide non-exclusive,
fully paid-up, non-cancelable right and license under the Licensed Patents to
manufacture, have made, use and sell products covered by one or more claims of
the Licensed Patents. Neither party grants the other party a right to
sublicense or in any other way to grant to another party the right to
manufacture or have made WCUs containing the TECHNOLOGY under any of the
Licensed Patents. In order to fully and completely resolve the current dispute
between the parties and to attempt to avoid new disputes over the Licensed
Patents, it is agreed: a.)
3. The term of this AGREEMENT shall extend from the Effective
Date until the expiration of the last to expire of the Licensed Patents.
4. SQUARE D, upon receipt of the payment specified in paragraph
5 below, releases MEDAR, all purchasers and users of products acquired
previously from MEDAR, MEDAR's shareholders, directors, officers, employees,
agents, successors and assigns from all claims, demands, and rights of action
which SQUARE D may have on account of any alleged infringement of the Licensed
Patents and on account of the manufacture, use, sale or other disposition by
MEDAR of products allegedly covered by one or more claims thereof prior to the
Effective Date of this AGREEMENT. MEDAR as part of the Agreement to settle
this dispute with SQUARE D releases SQUARE D, all purchasers and users of
products acquired previously from SQUARE D, SQUARE D's stockholder, directors,
officers, employees, agents, successors and assigns from all claims, demands,
and rights of action which MEDAR may have on account of the manufacture, use,
sale or other disposition by SQUARE D of products allegedly covered by one or
more claims thereof prior to the Effective Date of this AGREEMENT.
5. As consideration for entry of SQUARE D into this AGREEMENT,
MEDAR irrevocably promises to pay Square D the nonrefundable, lump sum of
_________________________________ U.S. Dollars (US $_________) as follows:
(a) contemporaneously with the execution and delivery of this
AGREEMENT to SQUARE D, MEDAR shall pay to SQUARE D
___________________________ ($____________), representing the total
amount due for any alleged past infringement of the Licensed Patents;
and
(b) the remaining amount of _____________ U.S. dollars (US
$_________) which MEDAR has promised to pay SQUARE D shall be payable
and actually delivered to SQUARE D in installment payments of
______________________ U.S.
<PAGE> 3
Dollars (US $_______) on or before each anniversary date of this
AGREEMENT for next ten (10) years, representing the consideration for
the paid up license and other rights granted herein.
6. Notwithstanding the fact that any or all of the claims for the
patents listed in Group I are held invalid subsequent to this Agreement, in the
event that MEDAR fails to make an installment payment due under the provision
of the preceding paragraph of this AGREEMENT, which has not been cured within
ten (10) days from the date of notice thereof given to MEDAR, the license
granted by SQUARE D to MEDAR may be terminated by SQUARE D in its sole
discretion. In the event that MEDAR's failure to make an installment payment
is not cured within ten (10) day notice period, all payments due and to become
due in the future under the provisions of the preceding paragraph if this
AGREEMENT shall become immediately due and payable to SQUARE D including
reasonable attorney fees associated therewith.
7. Overdue payments to SQUARE D payable pursuant to this
AGREEMENT shall bear interest at an annual rate of five percent (5%) above the
average prime lending rate in effect for corporations of comparable size to
MEDAR offered by Citibank N.A. and Chemical Bank N.A. of New York, New York
during default.
8. Any delay, waiver or omission by SQUARE D in the exercise by
it of any right or power arising from any breach or default in payment by MEDAR
under the terms of this AGREEMENT shall not be construed to be a waiver by it
of any subsequent breach or default of payment by MEDAR.
9. The litigation shall be dismissed with prejudice, but without
costs. Within three business days after the date of execution of this
AGREEMENT and the payment by MEDAR to SQUARE D of the consideration call for in
Section 5a of this AGREEMENT, the parties shall cause their respective
attorneys to execute and present to the courts Stipulation of Dismissal with
Prejudice in the form attached hereto as Appendix B and C.
10. Both parties represents and warrant that the patents and
patent application(s) listed in Groups I and II, respectively, in Appendix A
hereof are each and every issued United States patent, foreign counterpart
thereof and pending United States patent application directed to the TECHNOLOGY
owned by each party.
11. Both parties represent and warrant that they have good title
to the Licensed Patents and the right to grant the rights, license and release
granted by them hereunder but DO NOT warrant in any way that the manufacture,
use and/or sale of products hereunder will not infringe the intellectual
property rights of any third party, nor do they make any warranty or
representation as to the validity, enforceability or scope of any of the
Licensed Patents. However, with regard to the foregoing, both parties have no
knowledge that any of their products covered by the claims of the Licensed
Patents infringe the intellectual property rights of any third party as of the
Effective Date of this AGREEMENT. Neither party warrants in any way that
apparatus covered by the claims of the Licensed Patents has commercial utility.
12. No rights are granted or implied by this AGREEMENT by either
party under any
<PAGE> 4
patents other than the Licensed Patents.
13. This AGREEMENT shall be governed by and construed in
accordance with the laws of the State of Delaware.
14. This AGREEMENT shall inure to the benefit of and be binding
upon any successor in title of the Licensed Patents and may be assigned, only
in its entirety, to the successor of the entire business of either party to
which this AGREEMENT pertains providing such successor expressly agrees in
writing to be bound by the terms hereof. The grant that any such successor
receives under paragraph 2 hereof shall be limited to products of either party
in existence at the time of assignment to the first such successor of either
party or previously in existence. In the event this AGREEMENT is so assigned,
any successor's license is understood to apply only to the activity of those
portions of the successor's business originally acquired from either party and
not to any prior activity of such successor or activity engaged in by the
successor's other business. This AGREEMENT may not be otherwise assigned,
either in whole or in part, by either party without the written consent of the
other party which consent shall not be unreasonable withheld. Further, should
either party, its successors or assigns desire in the future to obtain rights
under any future patent issued by either party in addition to those granted by
this AGREEMENT, both parties will consider in good faith meeting with the
other, its successors or assigns to discuss the terms under which such rights
might be granted.
15. The parties agree that specific terms of this AGREEMENT will
not be disclosed to third parties. However, the specific terms of this
AGREEMENT may be disclosed to others for the purpose of informing stockholders
and the like or potential future licensees and both parties in so doing will
advise the others of the confidential nature of this AGREEMENT. The specific
terms of this AGREEMENT may also be disclosed pursuant to the order or
requirement of a Court, to the Exchange Commission with the specific proviso
that confidentiality will be requested or upon written consent of the other
party.
16. Both parties shall exercise their best efforts to notify the
other promptly of any actual or suspected infringement of Licensed Patents.
Both parties will consider the elimination of the infringement of the Licensed
Patents, taking into account such matters as the likelihood of success, the
expected costs, and the potential adverse effect of pursuing the matter. If
either party has failed to eliminate such infringement and is not diligently
taking steps to do so after one year has expired from the time either party has
notified the other party of the existence of an actual or suspected
infringement, and if either party notifies the other party again, in writing,
of a desire to pursue the actual or alleged infringers, then either party shall
in good faith consider granting the other party the right to pursue such
infringer in the other party's name, provided that pursuing party shall
indemnify the other party against the outside costs and expenses incurred by
other party in connection therewith. The other party shall cooperate with the
pursuing party in such matters and shall share with pursuing party any damages,
award or license fees in equal proportion after first subtracting therefrom and
reimbursing the pursuing party for its and other party's outside expenses in
connection with such action.
17. Each party agrees to defend, indemnify and hold the other
party, its officers, agents and employees, harmless from any injury, loss,
damage, claim or cause of action to the extent
<PAGE> 5
caused by any act or omission on the part of the party granting the license in
connection with a third party claiming injury against the licensor with regard
to any licensed product made by licensee under this AGREEMENT.
18. SQUARE D and MEDAR shall destroy all documents and deposition
transcripts and other materials of the other party designated or marked by the
other as confidential in the litigation.
19. Payments and any notices to SQUARE D hereunder are to be sent
to:
SQUARE D COMPANY
Law Department, Intellectual Property Section
1415 South Roselle Road
Palatine, Illinois 60067
Any notices to MEDAR hereunder are to be sent to:
MEDAR, INC.
38700 Grand River Avenue
Farmington Hills, Michigan 48835-1563
Attention: Charles, Drake
Chairman of Board, CEO and President
20. Each party will notify the other of the granting of any type
of license to a third party on any of the Licensed Patents.
21. All taxes imposed as a result of the existence of this
AGREEMENT or the performance of the parties hereunder shall be borne and paid
by the party required to do so by applicable law.
22. Should any clause, sentence, or paragraph of this AGREEMENT
judicially be declared to be invalid, unenforceable, or void, such decision
shall not have the effect of invalidating or voiding the remainder of this
AGREEMENT, and the parties hereto hereby agree that the part or parts of this
AGREEMENT so held to be invalid, unenforceable, or void shall be deemed to have
been stricken, and the remainder shall have the same force and effect as if
such part or parts had never been included herein.
23. This AGREEMENT sets forth the entire AGREEMENT and
understanding between the parties as to the subject matter of this AGREEMENT
and merges all prior discussions between them, and neither of the parties shall
be bound by any modification of this AGREEMENT, other than as expressly
provided in this AGREEMENT or as duly set forth on or subsequent to the date
hereof in writing and signed by a duly authorized representative of the party
to be bound thereby.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
properly executed and effective as of the day and year first above indicated,
and the persons signing warrant that they are duly authorized to sign for and
on behalf of their respective parties.
<PAGE> 6
SQUARE D COMPANY
By: /s/ Walter W. Kurczeaski
----------------------------------
Name: Walter W. Kurczeaski
Title: Corporate Vice President
General Counsel & Secretary
Date: October 4, 1995
WITNESS:
________________________
MEDAR, INC.
By: /s/ Charles J. Drake
----------------------------------
Name: Charles J. Drake
Title: Chairman of Board, Chief
Executive Officer & President
Date: October 12, 1995
WITNESS:
________________________
<PAGE> 1
EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30
1995 1994
----------------------------------------------------------
<S> <C> <C>
Per common share and common share equivalents:
Outstanding shares - beginning of period 8,706,057 7,967,887
Shares issued to acquire Integral Vision Ltd. 654,282
Weighted average of:
Exercise of stock options and other 2,907 2,833
Net effect of dilutive stock options based on
treasury stock method using average market price 394,762
------------- ------------
TOTAL SHARES 8,708,964 9,019,764
============ ============
Net earnings (loss) $ (648,914) $ 1,411,722
============ ============
Net earnings (loss) per share $ (.07) $ .16
============ ============
Per common share assuming full dilution:
Outstanding shares - beginning of period 8,706,057 7,967,887
Shares issued to acquire Integral Vision Ltd. 654,282
Weighted average of:
Exercise of stock options and other 2,907 2,833
Net effect of dilutive stock options based on
treasury stock method using quarter-end market
price if higher than average market price 415,672
------------- ------------
TOTAL SHARES 8,708,964 9,040,674
============ ============
Net earnings (loss) $ (648,914) $ 1,411,722
============ ============
Net earnings (loss) per share $ (.07) $ .16
============ ============
</TABLE>
<PAGE> 2
EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
1995 1994
-------------------------------------------------------
<S> <C> <C>
Per common share and common share equivalents:
Total shares for quarter ended:
March 31 8,648,872 7,725,259
June 30 8,696,697 8,269,228
September 30 8,708,964 9,019,764
------------ ------------
26,054,533 25,014,251
============ ============
Average number of common shares and
common share equivalents 8,684,844 8,338,084
============ ============
Net earnings (loss) $ (2,795,545) $ 3,485,379
============ ============
Net earnings (loss) per share $ (.32) $ .42
============ ============
Per common share and common share
equivalents assuming full dilution:
Total shares for quarter ended:
March 31 8,648,872 7,725,259
June 30 8,696,697 8,269,228
September 30 8,708,964 9,040,674
------------ ------------
26,054,533 25,035,161
============ ============
Average number of common shares and
common share equivalents 8,684,844 8,345,054
============ ============
Net earnings (loss) $ (2,795,545) $ 3,485,379
============ ============
Net earnings (loss) per share $ (.32) $ .42
============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 670,927
<SECURITIES> 0
<RECEIVABLES> 12,874,696
<ALLOWANCES> 275,000
<INVENTORY> 15,662,289
<CURRENT-ASSETS> 31,658,822
<PP&E> 11,437,106
<DEPRECIATION> 4,702,840
<TOTAL-ASSETS> 49,971,051
<CURRENT-LIABILITIES> 9,419,056
<BONDS> 9,369,945
<COMMON> 1,742,318
0
0
<OTHER-SE> 29,820,148
<TOTAL-LIABILITY-AND-EQUITY> 49,971,051
<SALES> 9,776,577
<TOTAL-REVENUES> 9,784,293
<CGS> 7,908,188
<TOTAL-COSTS> 7,908,188
<OTHER-EXPENSES> 2,727,170
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 131,849
<INCOME-PRETAX> (982,914)
<INCOME-TAX> (334,000)
<INCOME-CONTINUING> (648,914)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (648,914)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
