<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________to ____________
Commission File Number
0-12728
MEDAR, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Michigan 38-2191935
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
38700 Grand River Ave., Farmington Hills, Michigan 48335
-------------------------------------------------- ------------
(Address of principal executive offices (Zip Code)
(810) 471-2660
----------------------------------------------------
(Registrant's telephone number, including area code)
(not applicable)
--------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [ X ] No [ ]
The number of shares outstanding of the registrant's Common Stock, no par
value, stated value $.20 per share, as of July 31, 1996 was 8,802,401.
Page 1
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1996 1995
------------------------------------
(Unaudited)
(In thousands)
ASSETS
<S> <C> <C>
CURRENT ASSETS - Note D
Cash $ 767 $ 1,556
Accounts receivable, less allowance of $443,000 at June 30,
1996 and $355,000 at December 31, 1995 9,296 8,618
Inventories - Note B 16,117 13,167
Costs and estimated earnings in excess of billings on incomplete
contracts - Note C 2,891 681
Other current assets 643 849
------------------------------------
TOTAL CURRENT ASSETS 29,714 24,871
PROPERTY, PLANT AND EQUIPMENT - Note D
Land and land improvements 329 329
Building and building improvements 6,123 6,109
Production and engineering equipment 3,085 2,733
Furniture and fixtures 968 891
Vehicles 847 660
Computer equipment 4,572 3,907
------------------------------------
15,924 14,629
Less accumulated depreciation 5,781 4,965
------------------------------------
10,143 9,664
OTHER ASSETS
Capitalized computer software development costs, net of
amortization 7,316 6,761
Patents 2,422 2,507
Other 873 920
------------------------------------
10,611 10,188
------------------------------------
$50,468 $44,723
====================================
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 3
CONSOLIDATED BALANCE SHEETS - CONTINUED
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1996 1995
-----------------------------------
(Unaudited)
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $6,410 $3,202
Employee compensation 827 674
Accrued and other liabilities 1,134 1,567
Current maturities of long term debt - Note D 721 752
-----------------------------------
TOTAL CURRENT LIABILITIES 9,092 6,195
LONG-TERM DEBT, less current maturities - Note D 17,122 15,685
DEFERRED INCOME TAXES 76
STOCKHOLDERS' EQUITY - Note F
Common stock, without par value, stated value $.20 per share;
10,000,000 shares authorized; 8,801,901 shares issued and
outstanding (8,711,589 shares at December 31, 1995) 1,760 1,742
Additional paid-in capital 29,699 29,438
Retained earnings deficit (7,107) (8,321)
Accumulated translation adjustment (98) (92)
-----------------------------------
TOTAL STOCKHOLDERS' EQUITY 24,254 22,767
-----------------------------------
$50,468 $44,723
====================================
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
CONSOLIDATED STATEMENTS OF OPERATIONS
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30
1996 1995
---------------------------------
(Unaudited)
(In thousands, except for per share data)
<S> <C> <C>
Net sales $12,216 $11,194
Cost of sales 8,303 7,375
----------------------
GROSS MARGIN 3,913 3,819
Costs and expenses:
Marketing 1,026 1,145
General and administrative 797 761
Research and development 889 257
Patent litigation costs 4,625
Excessive product quality, warranty and other costs 351
----------------------
2,712 7,139
----------------------
EARNINGS (LOSS) FROM OPERATIONS 1,201 (3,320)
Interest:
Expense 311 82
Income (20) (14)
----------------------
291 68
----------------------
EARNINGS (LOSS) BEFORE INCOME TAXES 910 (3,388)
Provision (credit) for income taxes - Note E 23 (1,094)
----------------------
NET EARNINGS (LOSS) $ 887 $ (2,294)
======================
Net earnings (loss) per share $ .10 $ (.26)
======================
Weighted average number of shares of common stock and
common stock equivalents where applicable 9,081 8,697
======================
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF OPERATIONS
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
1996 1995
-----------------------------------------
(Unaudited)
(In thousands, except for per share data)
<S> <C> <C>
Net sales $ 22,438 $ 22,552
Cost of sales 15,058 14,963
--------------------------
GROSS MARGIN 7,380 7,589
Costs and expenses:
Marketing 2,147 2,224
General and administrative 1,538 1,573
Research and development 1,911 681
Patent litigation costs 5,375
Excessive product quality, warranty and other costs 801
--------------------------
5,596 10,654
--------------------------
EARNINGS (LOSS) FROM OPERATIONS 1,784 (3,065)
Interest:
Expense 636 151
Income (29) (57)
--------------------------
607 94
--------------------------
EARNINGS (LOSS) BEFORE INCOME TAXES 1,177 (3,159)
Credit for income taxes - Note E (37) (1,012)
--------------------------
NET EARNINGS (LOSS) $ 1,214 $ (2,147)
==========================
Net earnings (loss) per share $ .13 $ (.25)
==========================
Weighted average number of shares of common stock and
common stock equivalents where applicable 9,038 8,673
==========================
</TABLE>
5
<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
1996 1995
---------------------
(Unaudited)
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings (loss) $ 1,214 $(2,147)
Adjustments to reconcile net earnings to net cash provided by (used
in) operating activities:
Depreciation and amortization 2,069 1,547
Provision for deferred income taxes (75) (1,012)
Changes in operating assets and liabilities (3,118) (4,935)
Increase in patent litigation accrual 4,553
---------------------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 90 (1,994)
INVESTING ACTIVITIES
Sale of short-term investments 4,018
Purchase of property and equipment (905) (1,357)
Investment in capitalized software (1,657) (1,663)
---------------------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES (2,562) 998
FINANCING ACTIVITIES
Net increase (decrease) in borrowings under line of credit 32
Debt repayments on long-term debt and capital lease obligations (9,594) (249)
Proceeds from long-term borrowings 11,000 998
Proceeds from exercise of stock options 278 365
---------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,684 1,146
---------------------
Effect of exchange rate changes on cash (1) 1
---------------------
INCREASE (DECREASE) IN CASH (789) 151
Cash at beginning of period 1,556 586
---------------------
CASH AT END OF PERIOD $ 767 $ 737
=====================
</TABLE>
See notes to consolidated financial statements.
6
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MEDAR, INC. AND SUBSIDIARIES
JUNE 30, 1996
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 June 30, 1996 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1996. 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, 1995.
Certain items in the 1995 financial statements have been reclassified to
conform with the corresponding 1996 presentation.
Note B - 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>
JUNE 30 DECEMBER 31
1996 1995
--------------------
(In thousands)
<S> <C> <C>
Raw materials $ 7,576 $ 7,095
Work-in-process 6,696 3,305
Finished goods 1,845 2,767
--------------------
$16,117 $13,167
====================
</TABLE>
Note C - Costs and Estimated Earnings in Excess of Billings on Incomplete
Contracts
Revenues on long-term contracts are recognized using the percentage of
completion method. 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.
7
<PAGE> 8
Note C - Costs and Estimated Earnings in Excess of Billings on Incomplete
Contracts (cont)
Activity on long-term contracts is summarized as follows:
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1996 1995
--------------------
(In thousands)
<S> <C> <C>
Contract costs to date $ 3,824 $ 4,278
Estimated contract earnings 4,431 1,985
--------------------
8,255 6,263
Less billings to date (5,364) (5,582)
--------------------
Costs and estimated earnings in excess of billings on
incomplete contracts $ 2,891 $ 681
====================
</TABLE>
Note D - Long Term Debt and Other Financing Arrangements
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1996 1995
--------------------
(In thousands)
<S> <C> <C>
Revolving note payable to bank $11,369 $ 9,818
Term notes payable to bank 4,253 4,463
Patent license payable 2,000 2,000
Other 221 156
--------------------
17,843 16,437
Less current maturities 721 752
--------------------
$17,122 $15,685
====================
</TABLE>
The revolving notes payable to bank has a maximum balance of $16,000,000
($458,000 available at June 30, 1996) based on eligible accounts receivable and
inventory as defined. This note expires August 31, 1998 and has advances which
bear interest at the bank's prime rate (8.25% at June 30, 1996 and 8.5% at
December 31, 1995). In connection with this note, as amended, the Company has
agreed, among other covenants, to maintain net worth and debt to equity, as
defined, at specified levels.
The Company has two term notes payable to bank. One is payable in quarterly
installments of $62,500 plus interest at the bank's prime rate, with the
balance becoming due June 29, 1998. The second note is payable in monthly
installments of $14,111 plus interest at the bank's prime rate or other rates
made available under the terms of the agreement, with the balance becoming due
September 30, 2000. The notes are collateralized by the Medar office and
production facilities in Farmington Hills, Michigan, and machinery and
equipment, inventory and accounts receivable at all North American locations.
The patent license payable relates to future payments to be made to Square D
Company related to the settlement of patent litigation. The payments are due
in ten equal installments and have been discounted at 8%.
The fair values of these financial instruments approximates their carrying
amounts at June 30, 1996.
8
<PAGE> 9
Note D - Long Term Debt and Other Financing Arrangements (cont)
Maturities of long-term debt, excluding those payable within twelve months from
June 30, 1996 (which are stated as current maturities of long-term debt), are
$377,000 in 1997; $13,114,000 in 1998; $387,000 in 1999; $2,049,000 in 2000;
and $1,195,000 thereafter.
Note E - Income Taxes
Significant components of the provision for income taxes for the three months
ended June 30 are as follows:
<TABLE>
<CAPTION>
1996 1995
------------------
(In thousands)
<S> <C> <C>
Current:
Federal $ 35
Foreign 3
State
------------------
38
------------------
Deferred (credit):
Federal $(1,037)
Foreign (75) 25
------------------
(75) (1,012)
------------------
$(37) $(1,012)
==================
</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>
JUNE 30 DECEMBER 31
1996 1995
------------------
(In thousands)
<S> <C> <C>
Deferred tax liabilities:
Deductible software development costs, net of amortization $2,461 $2,224
Tax over book depreciation 335 346
Percentage of completion 184 184
------------------
Total deferred tax liabilities 2,980 2,754
Deferred tax assets:
Net operating loss carry forwards 4,579 4,840
Credit carry forwards 1,062 987
Reserve for warranty 237 237
Other 557 510
------------------
Total deferred tax assets 6,435 6,574
Valuation allowance for deferred tax assets 3,455 3,896
------------------
Net deferred tax assets 2,980 2,678
------------------
Net deferred tax liabilities $ 0 $ 76
==================
</TABLE>
9
<PAGE> 10
Note E - Income Taxes (cont)
The reconciliation of income taxes computed at the U.S. federal statutory rates
to income tax expense for the three months ended June 30 is as follows:
<TABLE>
<CAPTION>
1996 1995
-------------------
(In thousands)
<S> <C> <C>
Tax at U.S. statutory rates $ 400 $(1,074)
Utilization of net operating loss carryforward (549)
Other 112 62
-------------------
$ (37) $(1,012)
===================
</TABLE>
Note F - Stock Options
At June 30, 1996, there were options outstanding to purchase 777,900 shares at
prices ranging from $1.50 to $9.25.
10
<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Three Months Ended June 30, 1996 Compared to June 30, 1995.
Net sales increased to $12.2 million from $11.2 million (8.9%) in the second
quarter of 1996. The increase was due to an increase in volume of resistance
welding sales offsetting a decrease in vision sales. The increase in welding
sales was primarily the result of a large order received from one of the
Company's major customers. The decrease in vision sales is believed to be
related to the tenative nature of the introduction of DVD technology to the
marketplace. DVD, which is expected to become an industry standard for audio,
video, and computer uses, was scheduled to be introduced in late 1996. At this
time, introduction of DVD in 1996 is not believed to be probable. The delay of
the introduction appears to have caused a delay in orders for the company's CD
and DVD inspection equipment.
Cost of sales increased to $8.3 million from $7.4 million and as a percentage
of net sales to 68.0% from 65.9%. The increase in percentage is primarily due
to increased levels of overhead, without a corresponding increase in sales
volume.
Sales backlog for the Company at June 30, 1996 was $11.5 million, compared to
$16.8 million at June 30, 1995. The majority of the decrease is the result of
sales recognized in 1996 on a large order received in June, 1995 from one of
the company's major customers.
Marketing expense decreased to $1.0 million from $1.1 million and as a
percentage of net sales to 8.4% from 10.2%. The decrease in expense was
primarily the result of an effort to control certain marketing expenses.
General and administrative expense was relatively unchanged at $0.8 million and
decreased as a percentage of net sales to 6.5% from 6.8%.
Research and development expense increased to $0.9 million from $0.3 million
and as a percentage of net sales to 7.3% from 2.3%. The increase is due to the
addition of engineering resources as well as the concentration of more
engineering resources on development projects such as a new version of disc
inspection equipment and a new mid-frequency weld control.
Net interest expense increased to $0.3 million from $0.1 million and as a
percentage of net sales to 2.4% from 0.6%. The increase is primarily the
result of increased debt in 1996. There was more activity on the revolving
note with the bank during 1996 and one of the term notes related to a building
purchase was not added until after June 30, 1995. In addition, the patent
license payable was not added until the end of the second quarter in 1995.
The effective tax rate in 1996 is lower than in 1995 due to the net operating
losses generated during the latter portion of 1995.
Six Months Ended June 30, 1996 Compared to June 30, 1995.
Net sales decreased slightly to $22.4 million in 1996 from $22.6 million (0.5%)
in 1995. The Company's welding products showed an increase in sales while
sales of vision products decreased. The increase in welding sales was
primarily the result of a large order received from one of the company's major
customers. The decrease in vision sales is believed to be related to the
tentative nature of the introduction of DVD technology to the marketplace.
DVD, which is expected to become an industry standard for audio, video, and
computer uses, was scheduled to be introduced in late 1996. At this time,
introduction of DVD in 1996 is not believed to be probable. The delay of the
introduction appears to have caused a delay in orders for the company's CD and
DVD inspection equipment.
Cost of sales increased slightly to $15.1 million from $15.0 million and as a
percentage of net sales to 67.1% from 66.3%.
Marketing expense decreased slightly to $2.1 million from $2.2 million and as a
percentage of net sales to 9.6% from 9.9%.
General and administrative expense decreased slightly to $1.5 million from $1.6
million and as a percentage of net
11
<PAGE> 12
sales to 6.9% from 7.0%
Research and development expense increased to $1.9 million from $0.7 million
and as a percentage of net sales to 8.5% from 3.0%. The increase is due to the
addition of engineering resources as well as the concentration of more
engineering resources on development projects such as a new version of disc
inspection equipment and a new mid-frequency weld control.
Net interest expense increased to $0.6 million from $0.1 million and as a
percentage of net sales to 2.7% from 0.4%. The increase is primarily the
result of increased debt in 1996. There was more activity on the revolving
note with the bank during 1996 and one of the term notes related to a building
purchase was not added until after June 30, 1995. In addition, the patent
license payable was not added until the end of the second quarter in 1995.
The credit for income taxes in 1996 is the result of losses experienced at the
Company's UK subsidiary. In addition, the Company has a lower U.S. effective
tax rate in 1996 due to net operating loss carry forwards generated during the
latter portion of 1995.
Liquidity and Capital Resources
The Company has a revolving note payable to its bank with a maximum balance of
$16,000,000 ($458,000 available at June 30, 1996) based on eligible accounts
receivable and inventory, as defined. This note expires August 31, 1998 and
has advances which bear interest at the bank's prime rate.
During the six months ended June 30, 1996, the Company utilized cash generated
from operations, the increase in accounts payable and the revolving note
payable to bank, and cash on hand at December 31, 1995 to fund increases in
accounts receivable, inventories, and costs and estimated earnings in excess of
billings on incomplete contracts, the purchase of property and equipment, and
investments in capitalized software.
The Company believes that current financial resources (working capital and its
ability to obtain additional financing, if needed), together with cash
generated from operations, will be adequate to meet known cash requirements.
No significant commitments for capital expenditures existed as of June 30,
1996. The company expects to capitalize approximately $3,500,000 of software
development costs in 1996 and has no other plans for any significant capital
expenditures.
12
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 4. RESULTS OF VOTES OF SECURITY HOLDERS
The annual meeting of the Company was held on May 29, 1996. The matters voted
upon were the election of directors and other business which may come before
the meeting (of which there was none). The results of the votes were as
follows:
<TABLE>
<CAPTION>
For Withheld Non-Votes
--------- -------- ---------
<S> <C> <C> <C>
Max Coon 5,906,838 20,325 1,000
Richard R. Current 5,908,838 18,325 1,000
Charles J. Drake 5,908,828 18,335 1,000
Stephan Sharf 5,908,838 18,325 1,000
Vincent Shunsky 5,908,838 18,325 1,000
William B. Wallace 5,906,838 20,325 1,000
Stephen R. Zynda 5,908,838 18,325 1,000
Frederico de Magalhaes 5,908,838 18,325 1,000
</TABLE>
<TABLE>
<CAPTION>
For Against Abstentions Non-Votes
--------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Other business which may
come before the meeting 5,391,811 447,070 88,282 1,000
</TABLE>
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
- -------- -----------------------
<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, 1995, 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).
</TABLE>
13
<PAGE> 14
<TABLE>
<S> <C>
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 (filed as Exhibit 10.5 to the
registrant's Form 10-Q for the quarter ended September 30, 1995, SEC file
0-12728, and incorporated herein by reference).
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 quarter
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).
</TABLE>
14
<PAGE> 15
<TABLE>
<S> <C>
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 (filed as Exhibit 10.18 to the
registrant's Form 10-Q for the quarter ended September 30, 1995, SEC File
0-12728, and incorporated herein by reference).
10.19 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 (filed as Exhibit 10.20 to the
registrant's Form 10-Q for the quarter ended September 30, 1995, SEC File
0-12728, and incorporated herein by reference).
10.20 Mortgage dated October 31, 1995 by and between Medar, Inc. and NBD Bank
(filed as Exhibit 10.21 to the registrant's Form 10-Q for the quarter
ended September 30, 1995, SEC File 0-12728, and incorporated herein by
reference).
10.21 Installment Business Loan Note dated October 31, 1995, by and between
Medar, Inc. and NBD Bank (filed as Exhibit 10.22 to the registrant's Form
10-Q for the quarter ended September 30, 1995, SEC File 0-12728, and
incorporated herein by reference).
10.22 Guarantee and Postponement of Claim dated August 10, 1995 between Medar
Canada, Ltd. and NBD Bank (filed as Exhibit 10.23 to the registrant's Form
10-Q for the quarter ended September 30, 1995, SEC File 0-12728, and
incorporated herein by reference).
10.23* Patent License Agreement dated October 4, 1995 by and between Medar,
Inc. and Square D Company (filed as Exhibit 10.24 to the registrant's Form
10-Q for the quarter ended September 30, 1995, SEC File 0-12728, and
incorporated herein by reference).
10.24 Third Amendment to Revolving Credit and Loan Agreement dated March 29,
1996 by and between Medar, Inc., Integral Vision-AID, Inc., Integral Vision
Ltd. and NBD Bank (filed as Exhibit 10.24 to the registrant's Form 10-Q for the
quarter ended March 31, 1996, SEC file 0-12728, and incorporated herein by
reference).
10.25 Third Amended and Restated Revolving Note dated March 29, 1996 by and
between Medar, Inc., Integral Vision-AID, Inc., Integral Vision Ltd. and NBD
Bank (filed as Exhibit 10.25 to the registrant's Form 10-Q for the quarter
ended March 31, 1996, SEC file 0-12728, and incorporated herein by reference).
10.26 General Security Agreement dated March 29, 1996 by and between Medar,
Inc. and NBD Bank (filed as Exhibit 10.26 to the registrant's Form 10-Q for the
quarter ended March 31, 1996, SEC file 0-12728, and incorporated herein by
reference).
10.27 General Security Agreement dated March 29, 1996 by and
between Integral Vision-AID, Inc. and NBD Bank (filed as Exhibit 10.27 to the
registrant's Form 10-Q for the quarter ended March 31, 1996, SEC file 0-12728,
and incorporated herein by reference).
10.28 General Security Agreement dated May 1, 1996 by and between Medar Canada
Ltd. and NBD Bank.
10.29 Composite Guarantee and Debenture dated May 29, 1996 by and between
Integral Vision Ltd. and NBD Bank.
11 Calculation of Earnings per Share.
(b) There were no reports on Form 8-K filed in the quarter ended June 30, 1996.
* 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.
</TABLE>
15
<PAGE> 16
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.
/s/ Charles J. Drake 8/12/96
- ---------------------------------
Charles J. Drake
President & Chairman of the Board
Medar, Inc.
(Principal Executive Officer)
/s/ Richard R. Current 8/12/96
- ---------------------------------
Richard R. Current
Executive Vice President, Finance & Operations
Medar, Inc.
(Principal Financial & Accounting Officer)
16
<PAGE> 17
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.28 GENERAL SECURITY AGREEMENT
10.29 COMPOSITE GUARANTEE AND DEBENTURE
11 CALUCATIONS OF EARNINGS PER SHARE
27 FINANCIAL DATA SCHEDULE
<PAGE> 1
EXHIBIT 10.28
GENERAL SECURITY AGREEMENT
This General Security Agreement (the "Agreement"), dated as of May 1,
1996, is made by Medar Canada Ltd., a corporation incorporated pursuant to the
laws of Canada ("Debtor"), in favour of NBD Bank ("NBD").
Recitals
A. Medar, Inc. and its subsidiaries, Integral Vision-AID, Inc. (formerly
known as Automatic Inspection Devices, Inc.) and Integral Vision Ltd.
(collectively such subsidiaries and Medar, Inc. are referred to as the
"Borrowers") and NBD have entered into a Revolving Credit and Loan Agreement
dated August 10, 1995, as amended by a First Amendment to Revolving Credit and
Loan Agreement dated October 12, 1995, a Second Amendment to Revolving Credit
and Loan Agreement dated October 31, 1995 and a Third Amendment to Revolving
Credit and Loan Agreement dated March 29, 1996 (as amended from time to time,
the "Loan Agreement") pursuant to which NBD has agreed to make certain credit
facilities available to the Borrowers, including, without limitation, a
revolving line of credit in the maximum principal amount of $16,000,000, and
various term loans, all as more fully described in the Loan Agreement.
B. The Debtor has guaranteed the obligations of the Borrowers under the
Loan Agreement pursuant to a guarantee and postponement of claim dated August
10, 1995 (the "Guarantee") which has been the subject of various reaffirmations
duly executed by the Debtor.
C. In consideration of the continuation of the credit facilities, the
Debtor has agreed to execute and deliver this agreement to NBD.
THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Debtor hereby agrees with NBD as follows:
1. Defined Terms. In addition to those terms defined elsewhere in this
Agreement, terms defined in the Loan Agreement shall have their defined
meanings when used herein (unless otherwise defined herein) and the following
terms shall have the following meanings, unless the context otherwise requires:
"Accounts" means any "account" or "chattel paper", as such terms are
defined in the Personal Property Security Act, R.S.O. 1990, c.P.10 as amended
(the "PPSA"), now or hereafter owned by Debtor or in respect of which the
Debtor now has or hereafter acquires rights, and shall also mean and include
(i) all accounts receivable, contract rights, book debts, notes, drafts,
instruments, documents, acceptances, payments under leases and other forms of
obligations, now owned or hereafter received or acquired by or belonging or
owing to Debtor (including under any trade names, styles or divisions thereof)
whether arising out of goods sold or leased or services rendered by it or from
any other transaction, whether or not the same involves the sale of goods or
services by Debtor (including, without limitation,
<PAGE> 2
-2-
any such obligation which might be characterized as an account, contract right,
intangible or chattel paper under the PPSA in effect in any jurisdiction); (ii)
all of Debtor's rights in, to and under all purchase orders now owned or
hereafter received or acquired by it for goods or services, and all of Debtor's
rights to any goods represented by any of the foregoing (including returned or
repossessed goods and unpaid sellers' rights of rescission, replevin,
reclamation and stoppage in transitu); and (iii) all monies due to or to become
due to Debtor under all contracts for the sale or lease of goods or the
performance of services by it (whether or not yet earned by performance on the
part of Debtor) now in existence or hereafter arising, including, without
limitation, the right to receive the proceeds of such purchase orders and
contracts and all collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing.
"Chattel Paper" means all "chattel paper" as such term is defined in
the PPSA.
"Act" means the PPSA as in effect on the date hereof or hereafter in
the Province of Ontario.
"Collateral" has the meaning provided in Section 2.
"Contract Rights" means all rights of Debtor (including, without
limitation, all rights to payment) under each Contract.
"Contract(s)" means, collectively, all licensing agreements and any and
all other contracts, instruments, undertakings, documents or other agreements
in or under which Debtor may now or hereafter have any right, title or interest
and which pertain to the lease, sale or other disposition by Debtor of any
Inventory or Equipment, fixtures, real property or any interest in real
property, as any of the same may from time to time be amended, supplemented or
otherwise modified.
"Equipment" means any "equipment", as such term is defined in the PPSA
now or hereafter owned by Debtor or in respect of which the Debtor has now or
hereafter acquires rights, and shall also mean and include all machinery,
equipment, vehicles, furnishings and fixtures (as such term is defined in the
PPSA) now owned or hereafter acquired by Debtor, including, without limitation,
all items of machinery and equipment of any kind, nature and description,
whether affixed to real property or not, as well as all additions to,
substitutions for, replacements of or accessions to any of the foregoing items
and all attachments, components, parts (including spare parts) and accessories
whether installed thereon or affixed thereto.
"Intangibles" means all "intangibles", as such term is defined in the
PPSA, now or hereafter owned by Debtor or in respect of which the Debtor has
now or hereafter acquires rights, including, without limitation, all tax
refunds, customer lists, rights in intellectual property, goodwill, trade
names, service marks, trade secrets, patents, trademarks,
<PAGE> 3
- 3 -
copyrights, applications therefor, permits and licenses now owned or hereafter
acquired by Debtor, but excluding items described in the definition of
"Accounts".
"Instruments" means all "instruments", as such term is defined in the
PPSA.
"Inventory" means any "inventory", as such term is defined in the PPSA,
wherever located, now owned or hereafter acquired by Debtor or in respect of
which Debtor now has or hereafter may acquire any right, title or interest
including, without limitation, all goods and other personal property now or
hereafter owned by Debtor which are leased or are held for sale or lease or are
furnished or are to be furnished under a contract of service or which
constitute raw materials, work in process or materials used or consumed or to
be used or consumed in Debtor's business, or in the processing, packaging or
shipping of the same, and all finished goods.
"Obligations" means the obligations of the Debtor under the Guarantee.
"Proceeds" shall have the meaning provided it under the PPSA and, in
any event, shall include, but not be limited to, (i) any and all proceeds of
any insurance, indemnity, warranty or guarantee payable to Debtor from time to
time with respect to any of the Collateral, (ii) any and all payments (in any
form whatsoever) made or due and payable to Debtor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental body,
authority, bureau or agency (or any Person acting under colour of governmental
authority) and (iii) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.
"Requirement of Law" shall mean, as to any Person, the charter and
by-laws or other organizational or governing documents of such Person, and any
material law, treaty, rule or regulation or determination of arbitration or a
court or other governmental authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.
"Secured Obligations" shall have the meaning provided in Section 2(a).
2. Grant of Security Interest.
(a) General. As collateral security for the prompt and complete
payment and performance of all the Obligations including those under the
Guarantee and any other indebtedness or obligation owed by Debtor to NBD
(collectively, with the Obligations, the "Secured Obligations"), Debtor hereto
grants to NBD a continuing security interest in all of the following property
now owned, or at any time hereafter acquired, by Debtor or in which Debtor now
has or at any time in the future may acquire any right, title or interest (all
of which is hereinafter collectively referred to as the "Collateral"):
<PAGE> 4
- 4 -
(i) all existing and future Contracts;
(ii) all existing and future Accounts, Contract Rights and
Intangibles (including, without limitation, (a) all money due and to
become due under any Contract, (b) any damages arising out of or for
breach or default in respect of any Contract or Account, (c) all other
amounts from time to time paid or payable under or in connection with
any Contract or Account, and (d) the right of Debtor to terminate any
Contract or to perform or exercise all remedies thereunder);
(iii) all existing and future Equipment;
(iv) all existing and future Inventory; and
(v) to the extent not otherwise included, all Proceeds and
products of any or all of the foregoing.
(b) Business Records. In addition to the grant of the
security interest under subsection 2(a), Debtor hereby grants to NBD a lien and
first security interest in all of Debtor's books and records pertaining to the
Collateral, including without limitation, all books of accounts, ledgers,
computer software, computer printouts and other computerized records and
cabinets in which there are reflected or maintained the Collateral in which NBD
has a security interest, or which relate to any other Collateral NBD may hold
from Debtor and all supporting evidence and documents relating to such security
in the form of written applications, credit information, account cards, payment
records, correspondence, delivery and installation certificates, invoice
copies, delivery receipts, notes and other evidences of indebtedness, insurance
certificates and the like. For convenience, these books, records and documents
are called "Business Records". The Business Records, presently included in
this Agreement are described as follows:
accounts receivable subsidiary ledger including unpaid invoice
file, cash receipts journal, cash disbursements journal and
filing cabinets containing customer orders, correspondence,
paid invoice files and any other books and records, filing
cabinets, or places of storage of data and information,
including all computer storage facilities, records
and software usually located at Debtor's places of business
identified on Schedule I or elsewhere.
3. Rights of NBD; Limitations on NBD's Obligations. It is
expressly agreed by Debtor that, anything herein to the contrary
notwithstanding, Debtor shall remain liable under each of the Accounts and
Contracts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise to such Account and in accordance with the terms and
provisions of each such Contract. NBD has no obligation or liability under any
Account (or
<PAGE> 5
- 5 -
agreement giving rise thereto) or under any Contract by reason of or arising
out of this Agreement or its assignment to NBD or the receipt by NBD of any
payment relating to any Account or Contract pursuant hereto, nor will NBD be
required or obligated in any manner to perform or fulfil any of the obligations
of Debtor under or pursuant to any Account (or any agreement giving rise
thereto) or under or pursuant to any Contract, to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received by any of
them or as to the sufficiency of any performance by any party under any Account
(or any agreement giving rise thereto) or under any Contract, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to any of them or to which
any of them may be entitled at any time or times.
4. Representations and Warranties. Debtor hereby represents and
warrants to NBD that:
(a) Title; No Other Security Interests. Except for the security
interest granted hereunder to NBD and any security interests set forth in
Schedule II hereunder (the "Permitted Liens"), Debtor owns each item of the
Collateral free and clear of any and all security interests or claims of
others.
(b) Addresses. The Debtor's chief executive office and the
place where its records concerning the Accounts and other Collateral are kept
and the other addresses of Debtors business, if any, are set forth on Schedule I
hereto. The Provinces in which Collateral is located, and Debtor's chief
executive office and principal place of business in each Province, shall not be
changed without prior written notice to NBD, but the Collateral, wherever
located, is covered by this Agreement. Debtor shall immediately advise NBD in
writing of any change in its name, address or form of organization.
(c) Trade Names. Any and all trade names under which Debtor
transacts any part of its business, and all former names of Debtor, are set
forth on Schedule I hereto.
(d) Accuracy of Information. All information, certificates or
statements given to NBD pursuant to this Agreement shall be true and complete
in all material respects, when given.
5. Covenants. Debtor covenants and agrees with NBD that from and
after the date of this Agreement until the Secured Obligations are fully
satisfied:
(a) Further Documentation; Pledge of Instruments. At any time
and from time to time, upon the written request of NBD, and at the sole expense
of Debtor, Debtor will promptly and duly execute and deliver any and all such
further instruments and documents and take such further action as NBD may
reasonably request for the purpose of obtaining the full benefits of this
Agreement and of the rights and powers herein granted, including, without
limitation, the filing of any financing or financing change statements under
<PAGE> 6
- 6 -
the PPSA or similar legislation in effect in any jurisdiction with respect to
the security interests granted hereby.
(b) Maintenance of Records. If an Event of Default has
occurred and is continuing and if requested by NBD, Debtor will mark the
Business Records pertaining to the Collateral to evidence this Agreement and
the security interests granted hereby.
(c) Indemnification. Debtor agrees to pay, and to save NBD
harmless from, any and all liabilities, costs and expenses (including, without
limitation, reasonable legal fees and expenses on a solicitor and client basis
properly incurred) (i) with respect to, or resulting from, any delay in paying
any and all excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral, (ii) with respect to, or
resulting from, any delay in complying with any Requirement of Law applicable
to any of the Collateral or (iii) in connection with any of the transactions
contemplated by this Agreement. In any suit, proceeding or action brought by
NBD under any Account or Contract for any sum owing thereunder, or to enforce
any provisions of such Account or Contract, Debtor will save, indemnify and
keep NBD harmless from and against all expense, loss or damage suffered by
reason of any defence, set-off, counterclaim, recoupment or reduction or
liability whatsoever of the account debtor of obligor thereunder, arising out
of a breach by Debtor of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favour of such
account debtor or obligor or its successors from Debtor, and all such
obligations of Debtor shall be and remain enforceable against and only against
Debtor and shall not be enforceable against NBD.
(d) Payment of Obligations. Debtor will pay promptly when
due, all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labour, materials
and supplies) against or with respect to the Collateral.
(e) Limitation on Security Interests on Collateral. Debtor
will not create, incur or permit to exist, and will defend the Collateral
against, and will take such other action as is necessary to remove, any
security interest or claim on or to the Collateral other than the security
interests created hereby, and other than Permitted Liens and will defend the
right, title and interest of NBD in and to any of the Collateral against the
claims and demands of all Persons whomsoever. Debtor will not sell or otherwise
dispose of any type or item of Collateral except as expressly permitted by this
Agreement.
(f) Limitations on Modifications of Contracts, Accounts; No
Waivers, Extensions. Other than in the ordinary course of business, Debtor
will not (i) amend, modify, terminate or waive any provision of any Contract or
any agreement giving rise to an Account in any manner which might materially
adversely affect the value of such Contract or Account as Collateral, or (ii)
fail to exercise promptly and diligently each and every right which it may have
under each Contract and each agreement giving rise to an Account (other
<PAGE> 7
- 7 -
than any right of termination) in any manner which could materially adversely
affect the value of such Contract.
(g) Limitations on Discounts, Compromises, Extension of Accounts. Other
than in the ordinary course of business, Debtor will not grant any extension of
the time of payment of any of the Accounts, compromise, compound or settle the
same for less than the full amount thereof, release, wholly or partially, any
person liable for the payment thereof or allow any credit or discount
whatsoever thereon.
(h) Maintenance of Insurance. Debtor will maintain all risks, insurance
policies in force with respect to the Collateral showing NBD as a loss payee.
(i) Right of Inspection. NBD shall, at all times, have full and free
access during normal business hours to all the books, correspondence and
records of Debtor, and NBD or its representatives may examine the same, take
extracts therefrom and make photocopies thereof, and Debtor agrees to render to
NBD, at Debtor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. NBD and its representatives, will at
all times, also have the right to enter into and upon any premises where any of
the Inventory or Equipment is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein. NBD will take
reasonable steps to maintain the confidentiality of information obtained by
them pursuant to this subsection, except as required by law and to minimize any
interference with the business operations of Debtor.
(j) Maintenance. Debtor will keep the Equipment in good repair and
operating condition.
6. Sale and Collections.
(a) Sale of Inventory. So long as no Event of Default has occurred and
is continuing, Debtor may sell or otherwise dispose of Inventory in the ordinary
course of Debtor's business.
(b) Proceeds of Collateral. After an Event of Default and upon the
written request of NBD, all full and partial payments on any Collateral
thereafter received by Debtor shall immediately be (i) delivered by Debtor to
NBD in their original form, except for endorsement where necessary, to be held
as cash collateral in a special bank account (the "Collateral Account")
maintained by NBD subject to withdrawal by NBD only or (ii) deposited in
accounts at other financial institutions acceptable to NBD and thereafter be
transferred directly to the Collateral Account. Until such payments are so
delivered or deposited and transferred, Debtor shall hold such payments in
trust for and as NBD's property and Debtor shall not commingle such payments
with any of Debtor's own funds. Immediately upon receipt of any funds in the
Collateral Account from a depository bank which participates in Debtor's cash
management program acceptable to NBD or deposit in
<PAGE> 8
- 8 -
the Collateral Account for collection of other cheques and instruments and NBD,
in its sole discretion, may: (A) hold funds therein; (B) apply funds on deposit
therein to the payment of the Secured Obligations in such order as NBD may
elect; or (C) transfer funds on deposit therein to the Debtor's general
chequing account with NBD for its general use; provided, however, that any
application to the Secured Obligations is conditioned upon final payment of any
cheque or other instrument.
(c) Verification. NBD may verify Collateral in any reasonable manner and
Debtor shall assist NBD in so doing. Anything contained herein to the contrary
notwithstanding, NBD may at any time during the continuance of an Event of
Default, enforce collection of, settle, compromise, extend or renew the
indebtedness of such account debtors. NBD may also, notwithstanding any other
provision of this Agreement, notify the bailee of any Inventory of its security
interest therein.
7. Settlement of Insurance Claims. In the event of any casualty to the
Equipment or other Collateral which is covered by insurance, Debtor authorizes
NBD, if default has occurred under the Loan Agreement, to settle any claim or
proceed to suit and judgment for all insurance proceeds arising out of the
casualty to the Equipment or other Collateral, and, whether or not default has
occurred under the Guarantee, upon receipt of payment of such proceeds NBD, at
its option, may apply all payments to the Security Obligations in any order NBD
determines or to the restoration or replacement of the Equipment or other
Collateral.
8. NBD's Appointment as Attorney.
(a) General Appointment. Debtor hereby irrevocably constitutes and
appoints NBD, with power of substitution to appoint any person to act on its
behalf where such appointment is required by applicable law, as its true and
lawful attorney with full irrevocable power and authority in the place and
stead of Debtor and in the name of Debtor or in its own name, from time to time
in NBD's discretion, for the purpose of carrying out the terms of this
Agreement, on behalf of Debtor, to do the following:
(i) to ask, demand, collect, receive and give acceptance and receipts for
any and all monies due and to become due under any Contract or Account and, in
the name of Debtor or its own name or otherwise, to take possession of and
endorse and collect any cheques, drafts, notes, acceptances or other
instruments for the payment of monies due under any Contract or Account and to
file any claim or to take any other action or proceeding in any court of law
or equity or otherwise deemed appropriate by NBD for the purpose of collecting
any and all such monies due under any Contract or Account whenever payable;
(ii) to pay or discharge taxes, security interests or other encumbrances
levied or placed on or threatened against the Collateral, to effect any repairs
or any insurance called for by the terms of this Agreement and to pay all or
any part of the premiums therefor and the costs thereof; and
<PAGE> 9
- 9 -
(iii) (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all monies due and to become due
thereunder directly to NBD or as NBD shall direct; (B) to receive payment of
and give receipt for any and all monies, claims and other amounts due and to
become due at any time in respect of or arising out of any Collateral; (C) to
sign and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any thereof and to enforce any right in respect of
any Collateral; (E) to defend any suit, action or proceeding brought against
Debtor with respect to any Collateral; (F) to settle, compromise or adjust any
suit, action or proceeding described above and, in connection therewith, to
give such discharges or releases as NBD may deem appropriate; and (G) to do, at
NBD's option and Debtor's expense, at any time to protect, preserve or realize
upon the Collateral and NBD's security interest therein, in order to effect the
intent of this Agreement all as fully and effectively as Debtor might do.
This power of attorney is a power coupled with an interest and shall be
irrevocable until the obligations have been satisfied.
(b) Duties of NBD. The powers conferred on NBD hereunder are solely to
protect its interests in the Collateral and shall not impose any duty upon it
to exercise any such powers. NBD shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers and neither NBD
nor any of its officers, directors, employees or agents shall be responsible to
Debtor for any act or failure to act, except for its own negligence or wilful
misconduct.
9. Performance by NBD of Debtor's Obligations. If Debtor fails to perform
or comply with any of its agreements contained herein and NBD, as provided for
by the terms of this Agreement, shall itself perform or comply, or otherwise
cause performance or compliance, with such agreement, the costs and expenses
of NBD reasonably incurred in connection with such performance or compliance,
together with interest thereon at the default rate provided for in the Loan
Agreement, shall be payable by Debtor to NBD on demand and shall constitute
Secured Obligations secured hereby.
10. Proceeds as Collateral. During the continuance of an Event of Default,
any and all such Proceeds received by NBD (wether from Debtor or otherwise may,
in the sole discretion of NBD, be held by NBD as collateral security for, or
then or at any time thereafter applied in whole or in part by NBD, against all
or any part of the Secured Obligations in the manner provided in Section 13.
Any balance of such payments held by NBD and remaining after payment in full of
all the Secured Obligations shall be paid over to Debtor in the manner provided
in Section 20.
<PAGE> 10
- 10 -
11. Events of Default. Failure to fulfil the terms of the Guarantee shall
be deemed an Event of Default hereunder.
12. Remedies.
(a) General. If an Event of Default shall occur and be continuing, NBD
may exercise in addition to all other rights and remedies granted to it in this
Agreement and in any other instrument or agreement security, evidencing or
relating to the Secured Obligations, all rights and remedies of a secured party
under the PPSA. Without limiting the generality of the foregoing, Debtor
expressly agrees that in any such event NBD may forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and may
forthwith sell, lease, assign, or otherwise dispose of and deliver such
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at such prices as it may
deem commercially reasonable for cash or on credit or for future delivery
without assumption of any credit risk. NBD will have the right upon any such
public sale or sales, and, to the extent permitted by law; upon any such
private sale or sales, to purchase the whole or any part of such Collateral so
sold free of any such right or equity of redemption in Debtor which right or
equity is hereby waived or released. Debtor further agrees, at NBD's request,
to assemble the Collateral, make it available to NBD, as requested, at places
which NBD shall reasonably select, whether at Debtor's premises or elsewhere,
at Debtor's sole cost and expense. NBD shall pay over the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of any kind incurred therein or
incidental to the care, safekeeping or otherwise of any or all of the
Collateral or in any way relating to the rights of NBD hereunder, including,
without limitation, legal fees and legal expenses on a solicitor and client
(full reimbursement) basis, to NBD for application by it to the payment in
whole or in part of the Secured Obligations, in the manner provided in Section
13, and only after so paying over such net proceeds and after the payment by
NBD of any other amount required by any provision of law, including the
provisions of the PPSA, will NBD be required to account for the surplus, if
any, to Debtor. To the extent permitted by applicable law, Debtor waives all
claims, damages, and demands against NBD arising out of the repossession,
retention or sale of the Collateral. Debtor agrees that NBD need not give more
than fifteen days' notice of the time and place of any public sale or of the
time after which a private sale may take place and that such notice is
reasonable notification of such matters. Debtor shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which NBD is entitled, Debtor also being
liable for the reasonable fees of any solicitors employed by NBD to collect
such deficiency.
(b) Costs. Debtor also agrees to pay all costs of NBD, including,
without limitation, reasonable legal fees and legal expenses on a solicitor
and client (full reimbursement) basis, incurred with respect to the collection
of any of the Secured Obligations and the enforcement by NBD of any of its
rights hereunder.
<PAGE> 11
- 11 -
13. Application of Proceeds.
(a) Payment of Expenses. All monies collected by NBD upon any sale
or other disposition of the Collateral, together with all other monies received
by NBD hereunder, shall first be applied to the payment of all reasonable costs
and expenses incurred by NBD in connection with such sale, the delivery of the
Collateral or the collection of any such monies (including, without limitation,
legal fees and expenses as referred to above) and the balance of such monies
(the "Remaining Proceeds") shall be applied by NBD as required below.
(b) Payment of Other Secured Obligations. Any Remaining Proceeds
shall be applied to satisfy any other Secured Obligations.
(c) Payment to Debtor. Any Remaining Proceeds of the Collateral not
otherwise applied pursuant to this Section 13 or disposed of in accordance with
the PPSA or other applicable legislation or rules of law, shall in each case be
paid over to Debtor pursuant to the terms of Section 20.
14. Limitation on NBD's Duty in Respect of Collateral. NBD's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under the PPSA or otherwise, shall be to deal with
it in the same manner as NBD deals with similar property for its own account.
Neither NBD nor any of its directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of Debtor or otherwise.
15. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
16. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
17. Section Headings, etc. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or to be taken into consideration in the interpretation hereof. All
references to Sections, Schedules and Exhibits are to Sections, Schedules and
Exhibits in or to this Agreement unless otherwise specified.
18. No Waiver; Cumulative Remedies. NBD will not by any act (except a
written instrument pursuant to Section 19 hereof), delay, indulgence, omission
or otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Event
<PAGE> 12
- 12 -
of Default or in any breach of the terms and conditions hereof. A waiver by
NBD of any/right or remedy hereunder on any one occasion shall not be construed
as a bar to any right or remedy which NBD would otherwise have had on any
future occasion. No failure to exercise nor any delay in exercising on the
part of NBD any right, power or privilege hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by the Guarantee, any
other agreement or applicable law.
19. Waivers and Amendments; Successors and Assigns; Governing Law. None
of the terms or provisions of this Agreement may be waived, altered, modified or
amended except by a written instrument, duly executed by Debtor and NBD. This
Agreement and all obligations of Debtor hereunder shall be binding upon the
successors and assigns of Debtor, and shall, together with the rights and
remedies of NBD hereunder, enure to the benefit of NBD and its successors and
assigns; provided that Debtor may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of NBD. This Agreement
shall be governed by, and be construed and interpreted in accordance with, the
internal laws (and not the laws of conflict) of the Province of Ontario. The
Debtor irrevocably and for all time waives any right to security for costs that
it may have in the event legal proceedings are commenced in respect of the
Guarantee or hereunder by NBD.
20. Termination; Release.
(a) Release Prior to Termination Date. Collateral may be released
in whole or in part only with the consent of NBD; provided that, without NBD's
consent, (i) Debtor may sell Inventory in the ordinary course of business and
(ii) Collateral may be released pursuant to the terms of the Loan Agreement.
Upon any such release of Collateral, NBD shall, at the request and expense of
Debtor, release the Collateral being sold and execute and deliver to Debtor a
proper instrument or instruments acknowledging the release of such Collateral
from this Agreement, and will duly assign, transfer and deliver to Debtor
(without recourse and without any representation or warranty) the Collateral
being sold as described above.
(b) End of Security Interest. Upon the irrevocable payment by
Debtor of all the Obligations under the Guarantee and the termination of any
obligation on the part of the NBD to make further loans under the Loan
Agreement, this Agreement shall terminate, and NBD, at the request and expense
of Debtor, will promptly execute and deliver to Debtor a proper instrument or
instruments acknowledging the satisfaction and termination of this Agreement,
and will duly assign, transfer and deliver to Debtor (without recourse and
without any representation or warranty) such of the Collateral as may be in the
possession of NBD and which has not theretofore been sold or otherwise applied
or released pursuant to this Agreement, together with any monies at the time
held by NBD hereunder.
<PAGE> 13
- 13 -
(c) Certificate of Debtor. At any time that Debtor desires that
Collateral be released as provided in the foregoing Sections 20(a) and (b), it
shall deliver to NBD a certificate signed by a senior or financial officer of
Debtor stating that the release of the respective Collateral is permitted
pursuant to Section 20(a) or (b), as the case may be.
21. Notices. All notices, requests and other communications that are
required or may be given under this Agreement shall be in writing, and shall be
deemed to have been given on the date of delivery, if delivered by hand,
telecopy or courier, or two Business Days after mailing, if mailed by priority
post or registered mail, postage prepaid, return receipt requested, addressed as
set forth below (which addresses may be changed, from time to time, by notice
given in the manner provided in this Section):
If to Debtor: Medar Canada Ltd.
c/o Medar Inc.
38700 Grand River Avenue
Farmington Hills, Michigan 48335
Telecopy: 810-615-2971
Attention: Richard R. Current
If to NBD: NBD Bank
235 Sheldon Road
Plymouth, Michigan 48170
Telecopy: (313) 454-7723
Attention: Glenn Ansiel
22. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
IN WITNESS WHEREOF, Debtor and NBD have caused this Agreement to be
executed by their duly authorized officers on the date first set forth above.
MEDAR CANADA LTD.
a Canadian corporation
By: Charles J. Drake
-----------------------
Its: President
-----------------
<PAGE> 14
- 14 -
NBD BANK
By: Deborah J. Farley
-----------------------------------
Its: Vice President
----------------------------
By: Glen Ansiel
-----------------------------------
Its: Assistant Vice President
----------------------------
<PAGE> 15
SCHEDULE I
Medar Canada Ltd.
Places of Business, Trade Names
Places of Business
240 Cordova Road
Box 858
Oshawa, Ontario
L1H 7N1
Tradenames
<PAGE> 16
SCHEDULE II
Medar Canada Ltd.
Permitted Encumbrances
(i) any liens permitted by paragraph 6.2(d) of the Loan
Agreement, as that term is defined in the General Security
Agreement to which this Schedule is attached.
<PAGE> 1
EXHIBIT 10.29
DATED May 29, 1996
INTEGRAL VISION LIMITED (1)
AND
NBD BANK (2)
COMPOSITE GUARANTEE AND DEBENTURE
NORTON ROSE
London
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
CLAUSE HEADING PAGE
<C> <S>
1 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Secured obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3 Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
5 Undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6 Further Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7 Certain powers of the Bank: Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8 Appointment and Powers of Receiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
9 Application of Proceeds; Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10 Indemnities; Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
12 Continuing Security and Other Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
13 Currencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
14 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
15 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
17 Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
<PAGE> 3
THIS COMPOSITE GUARANTEE AND DEBENTURE dated 1996 and made
BETWEEN:
(1) INTEGRAL VISION LIMITED (No. 2170808) whose registered office is at
Unit 12 Railton Road, Woburn Industrial Estate, Kempsteon MK42 7PW
(the "CHARGOR"); and
(2) NBD BANK a Michigan banking corporation whose main office is at 611
Woodward Avenue, Detroit, Michigan 48226, U.S.A. (the "BANK", which
expression shall include any branch or division of the said NBD
Bank in any territory)
WITNESSES as follows:
1 INTERPRETATION
1.1 Definitions: In this Deed, unless the context otherwise requires:
"CHARGED ASSETS" means all the undertaking, goodwill, property,
assets and rights of the Chargor described in clauses 3.1 and 3.2;
"COLLATERAL INSTRUMENTS" means negotiable and non-negotiable
instruments, guarantees, indemnities and other assurances against
financial loss and any other documents or instruments which contain
or evidence an obligation (with or without security) to pay,
discharge or be responsible directly or indirectly for, any
liabilities of any person and includes any document or instrument
creating or evidencing an Encumbrance;
"COMPANY" means Medar, Inc., a Michigan Corporation, and/or
Integral Vision-AID, Inc. (formerly Automatic Inspection Devices,
Inc.), an Ohio Corporation;
"DEBTS" means the assets of the Chargor described in clause 3.1(d);
"DEFAULT RATE" means 2 per cent. per annum over the Applicable Rate
(as defined in the Revolving Credit and Loan Agreement dated as of
10th August 1995 and made between Medar, Inc., Integral Vision-AID,
Inc. (formerly Automatic Inspection Devices, Inc.), the Chargor and
the Bank, as amended or restated from time to time);
"DISPOSAL" includes any sale, lease, sub-lease, assignment or
transfer, the grant of an option or similar right, the grant of any
easement, right or privilege, the creation of a trust or other
equitable interest in favour of a third party, a sharing or parting
with possession or occupation whether by way of licence or otherwise
and the granting of access to any other person over any intellectual
property, and "dispose" and "disposition" shall be construed
accordingly;
1
<PAGE> 4
"ENCUMBRANCE" means any mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, standard security, assignment by way of
security or other security interest of any kind;
"ENFORCEMENT DATE" means the date on which the Bank demands the payment or
discharge of all or any part of the Secured Obligations or, if earlier, the
date on which a petition for an administration order is presented in
relation to the Chargor;
"ENVIRONMENTAL CLAIM" means any claim, notice of violation, prosecution,
demand, action, official warning, abatement or other order (conditional or
otherwise) relating to Environmental Matters and any notification or order
requiring compliance with the terms of any Environmental Licence or
Environmental Law;
"ENVIRONMENTAL LAWS" includes all or any laws, statutes, rules, regulations,
treaties, directives, directions, by-laws, codes of practice, circulars,
guidance notes, orders, notices, demands, decisions of the courts or
anything like any of the foregoing of any governmental authority or agency
or any regulatory body or any other body whatsoever in any jurisdiction or
the European Community relating to Environmental Matters applicable to the
Chargor, the business carried on at any time by the Chargor, the Properties,
the operation of any business from or using any of the Properties or the
occupation or use of any of the Properties;
"ENVIRONMENTAL LICENCE" means any permit, licence, authorisation, consent or
other approval required at any time by any Environmental Law in relation to
the Chargor, the business carried on by the Chargor, the Properties or the
occupation or use of, or the operation of any business from or using, any of
the Properties;
"ENVIRONMENTAL MATTERS" means (a) the generation, deposit, disposal,
keeping, treatment, transportation, transmission, handling, importation,
exportation, processing, collection, sorting, presence or manufacture of any
waste (as defined in the Environmental Protection Act 1990) or any Relevant
Substance; (b) nuisance, noise, defective premises, health and safety at
work or elsewhere; (c) the carrying out of any development (as defined in
section 55(1) Town and Country Planning Act 1990); and (d) the pollution,
conservation or protection of the environment (both natural and built) or
of man or any living organisms supported by the environment or any other
matter whatsoever affecting the environment or any part of it;
"FLOATING CHARGE ASSETS" means the assets of the Chargor from time to time
expressed to be charged by this Deed by way of floating charge;
"GUARANTEE" means the obligations of the Chargor pursuant to clause 2.1(b)
and includes the obligations arising by virtue of clauses 2.3, 2.7 and 12;
2
<PAGE> 5
"INCAPACITY", in relation to a person, means the insolvency, liquidation,
dissolution, winding-up, administration, receivership, amalgamation,
reconstruction or other incapacity of that person whatsoever (and, in the
case of a partnership, includes the termination or change in the composition
of the partnership);
"INSURANCES" means all present and future contracts or policies of insurance
(including life policies) in which the Chargor from time to time has an
interest;
"INTELLECTUAL PROPERTY RIGHTS" means the assets of the Chargor described in
clause 3.1(g);
"MATERIAL ENVIRONMENTAL EFFECT" means a material adverse effect in the
opinion of the Bank on (i) the financial condition of the Chargor or any of
its Subsidiaries or (ii) the ability of the Chargor to perform its
obligations under or otherwise comply with the terms of this Deed or (iii)
the value or marketability of any premises owned, leased or occupied by the
Chargor or any of its Subsidiaries;
"PARI PASSU DEED" means the Deed so entitled made between, inter alia, the
Bank and the Chargor and dated the same date as this Deed;
"PERMITTED ENCUMBRANCE" means any Encumbrance (a) arising by way of
retention of title of goods by the supplier of such goods where such goods
are supplied on credit and are acquired in the ordinary course of trading of
the Chargor or (b) regulated by the Pari Passu Deed;
"PROPERTIES" means the assets of the Chargor described in clause 3.1(a) and
all present and future heritable and leasehold property of the Chargor
situate in Scotland and all liens, charges, options, agreements, rights and
interests in or over land or the proceeds of sale of land situate in
Scotland and all buildings, fixtures (including trade fixtures) and fixed
plant and machinery from time to time on such property or land together with
all rights, easements, servitudes and privileges appurtenant to, or
benefitting, the same, in all cases both present and future;
"RECEIVER" means any one or more receivers and/or managers or administrative
receivers appointed by the Bank pursuant to this Deed in respect of the
Chargor or over all or any of the Charged Assets;
"RELEVANT SUBSTANCE" means any substance whatsoever (whether in a solid or
liquid form or in the form of a gas or vapour and whether alone or in
combination with any other substance) or waste (as defined in the
Environmental Protection Act 1990) which is capable of causing harm to man
or any other living organism supported by the Environment, or damaging the
Environment or public health or welfare;
"SECURED OBLIGATIONS" means all moneys, obligations and liabilities
covenanted to be paid or discharged under or pursuant to clause 2;
3
<PAGE> 6
"SECURITIES" means the assets of the Chargor described in
clause 3.1(c);
"SUBSIDIARY" shall have the meaning given to it by section 736
Companies Act 1985.
1.2 Successors and assigns: The expressions "BANK", "COMPANY", and
"CHARGOR" include, where the context admits, their respective
successors, and, in the case of the Bank, its transferees and
assignees, whether immediate or derivative.
1.3 Headings: Clause headings and the contents page are inserted for
convenience of reference only and shall be ignored in the
interpretation of this Deed.
1.4 Construction of certain terms: In this Deed, unless the context
otherwise requires:
(a) references to clauses and schedules are to be construed as
references to the clauses of, and the schedules to, this
Deed and references to this Deed include its schedules;
(b) reference to (or to any specified provision of) this Deed
or any other document shall be construed as references to
this Deed, that provision or that document as in force for
the time being and as amended in accordance with the terms
thereof or, as the case may be, with the agreement of the
relevant parties and (where such consent is, by the terms
of this Deed or the relevant document, required to be
obtained as a condition to such amendment being permitted)
the prior written consent of the Bank;
(c) words importing the plural shall include the singular and
vice versa;
(d) references to a person shall be construed as including
references to an individual, firm, company, corporation,
unincorporated body of persons or any State or any agency
thereof; and
(e) references to statutory provisions shall be construed as
references to those provisions as replaced, amended or re-
enacted from time to time.
1.5 Effect as a deed: This Deed is intended to take effect as a deed
notwithstanding that the Bank may have executed it under hand only.
1.6 Pari Passu Deed: This Deed is regulated by, and is subject to, the
Pari Passu Deed and, in the event of any conflict or inconsistency
between this Deed and the Pari Passu Deed, the Pari Passu Deed
shall prevail.
4
<PAGE> 7
2 SECURED OBLIGATIONS
2.1 Covenant to Pay: Guarantees: The Chargor hereby:
(a) covenants that it will on demand pay to the Bank all moneys
and discharge all obligations and liabilities now or
hereafter due, owing or incurred by it to the Bank; and
(b) guarantees that it will on demand pay to the Bank all
moneys and discharge all liabilities now or hereafter due,
owing or incurred to the Bank by (i) each Company and (ii)
any other present or future Subsidiary of any Company
(except any obligations or liabilities of such other
Company or Subsidiary as guarantor for a Company);
in each case when the same become due for payment or discharge
whether by acceleration or otherwise, and whether such moneys,
obligations or liabilities are express or implied; present, future
or contingent; joint or several; incurred as principal or surety;
originally owing to the Bank or purchased or otherwise acquired by
it; denominated in sterling or in any other currency; or incurred on
any banking account or in any other manner whatsoever.
2.2 Certain liabilities: The liabilities referred to in clause 2.1
shall, without limitation, include:
(a) all liabilities under or in connection with foreign
exchange transactions, interest rate swaps and other
arrangements entered into for the purpose of limiting
exposure to fluctuations in interest or exchange rates;
(b) all liabilities arising from the issue, acceptance,
endorsement, confirmation or discount of any negotiable or
non-negotiable instruments, documentary or other credits,
bonds, guarantees, indemnities or other instruments of any
kind; and
(c) interest (both before and after judgment) to date of
payment at such rates and upon such terms as may from time
to time be agreed, commission, fees and other charges and
all legal and other costs, charges and expenses on a full
and unqualified indemnity basis which may be incurred by
the Bank in relation to any such moneys, obligations or
liabilities or generally in respect of each such Company.
2.3 Chargor as principal debtor; indemnity: As a separate and
independent stipulation, the Chargor agrees that if any purported
obligation or liability of any Company or other person which would
have been the subject of a Guarantee had it been valid and
enforceable is not or ceases to be valid or enforceable against
such Company or other person on any ground whatsoever whether or
not known to the Bank (including, without limitation, any irregular
exercise or absence of any corporate power or lack of authority of,
or breach of duty by, any person purporting to act on behalf of
such Company or other person or any legal or other limitation,
whether under the Limitation Acts or otherwise, any disability
5
<PAGE> 8
or Incapacity or any change in the constitution of such Company or
other person) the Chargor shall nevertheless be jointly and
severally liable to the Bank in respect of that purported
obligation or liability as if the same were fully valid and
enforceable and the Chargor was the principal debtor in respect
thereof. The Chargor hereby agrees to keep the Bank fully
indemnified on demand against all damages, losses, costs and
expenses arising from any failure of a Company or other person to
perform or discharge any such purported obligation or liability.
2.4 Statements of account conclusive: Any statement of account of a
Company or other person liable, signed as correct by an officer of
the Bank, showing the amount of the indebtedness and liabilities of
that Company or other person liable which are the subject of the
Guarantees shall, in the absence of manifest error, be binding and
conclusive on and against the Chargor.
2.5 No security taken by the Chargor: The Chargor warrants that it has
not taken or received, and undertakes that until all the Secured
Obligations have been paid or discharged in full it will not
exercise any right of subrogation or contribution it may have or
otherwise take or receive, any security from any
Company or other person liable in respect of its obligations under
its Guarantee.
2.6 Interest: The Chargor agrees to pay interest on each amount
demanded of it under its Guarantee from the date of such demand
until payment (as well after as before judgment) at the Default
Rate. Such interest shall be compounded at the end of each period
determined for this purpose by the Bank in the event of it not
being paid when demanded but without prejudice to the Bank's right
to require payment of such interest.
2.7 No set-off or counterclaim: All payments to be made by the Chargor
under this Deed shall be made in full, without any set-off or
counterclaim whatsoever and, subject as provided below, free and
clear of any deductions or withholdings in the relevant currency on
the due date to such account as the Bank may from time to time
specify. If at any time the Chargor is required to make any
deduction or withholding in respect of taxes from any payment due
under this Deed for the account of the Bank, the sum due from the
Chargor in respect of such payment shall be increased to the extent
necessary to ensure that, after the making of such deduction or
withholding, the Bank receives on the due date for such payment
(and retains, free from any liability in respect of such deduction
or withholding) a net sum equal to the sum which it would have
received had no such deduction or withholding been required to be
made and the Chargor shall indemnify the Bank against any losses or
costs incurred by it by reason of any failure of the Chargor to
make any such deduction or withholding or by reason of any
increased payment not being made on the due date for such payment.
The Chargor shall promptly deliver to the Bank any receipts,
certificates or other proof evidencing the amount (if any) paid or
payable in respect of any deduction or withholding as aforesaid.
6
<PAGE> 9
3 CHARGES
3.1 Fixed Charge: The Chargor hereby charges to the Bank by way of
fixed charge (and as regards all those parts of the freehold and
leasehold property in England and Wales now vested in the Chargor
by way of legal mortgage) with full title guarantee and as a
continuing security for the payment and discharge of the Secured
Obligations the following assets, both present and future, from
time to time owned by the Chargor or in which the Chargor may from
time to time have an interest:
(a) Properties: all freehold and leasehold property of the
Chargor situate in England and Wales and all liens, charges,
options, agreements, rights and interests in or over land
or the proceeds of sale of land situate in England and Wales
and all buildings, fixtures (including trade fixtures) and
fixed plant and machinery from time to time on such property or
land together with all rights, easements and privileges
appurtenant to, or benefitting, the same;
(b) Plant and Machinery: all plant, machinery, vehicles,
computers and office and other equipment and the benefit of all
contracts and warranties relating to the same;
(c) Securities: all stocks, shares, bonds and securities of any
kind whatsoever whether marketable or otherwise and all other
interests (including but not limited to loan capital) in any
person, including all allotments, rights, benefits and
advantages whatsoever at any time accruing, offered or arising
in respect of or incidental to the same and all money or
property accruing or offered at any time by way of conversion,
redemption, bonus, preference, option, dividend, distribution,
interest or otherwise in respect thereof;
(d) Debts: all accounts receivable, book and other debts,
revenues and claims, whether actual or contingent, whether
arising under contracts or in any other manner whatsoever and
whether originally owing to the Chargor or purchased or
otherwise acquired by it including, without limitation, any
amount from time to time standing to the credit of any bank or
other account with the Bank or with any other person and all
things in action which may give rise to any debt, revenue or
claim, together with the full benefit of any Encumbrances,
Collateral Instruments and any other rights relating thereto
including, without limitation, reservations of proprietary
rights, rights of tracing and unpaid vendor's liens and
associated rights;
(e) Insurances: all moneys from time to time payable to the
Chargor under or pursuant to the Insurances including without
limitation the refund of any premiums;
(f) Goodwill and uncalled capital: all goodwill and uncalled
capital;
7
<PAGE> 10
(g) Intellectual Property Rights: all patents, patent
applications, trade marks and service marks (whether registered
or not), trade mark applications, service mark applications,
trade names, registered designs, design rights, copyrights,
computer programmes, know-how and trade secrets and all
other industrial or intangible property or rights and all
licences, agreements and ancillary and connected rights
relating to, intellectual and intangible property;
3.2 Floating Charge: The Chargor hereby charges to the Bank by way of
floating charge with full title guarantee and as a continuing
security for the payment and discharge of the Secured Obligations
its undertaking and all its property, assets and rights whatsoever
and wheresoever both present and future, other than any property or
assets from time to time effectively charged by way of legal
mortgage or fixed charge or assignment pursuant to clause 3.1 or
otherwise pursuant to this Deed but including (without limitation
and whether or not so effectively charged) any of its property and
assets situated in Scotland.
3.3 Restrictions on dealing with Charged Assets: The Chargor hereby
covenants that it will not without the prior consent in writing of
the Bank:
(a) dispose of, or create or attempt to create or permit to
subsist or arise any Encumbrance on or over, the Debts or any
part thereof or release, set off or compound or deal with the
same otherwise than in accordance with clause 5.1(a);
(b) create or attempt to create or permit to subsist in favour
of any person other than the Bank any Encumbrance (except a
Permitted Encumbrance and a lien arising by operation of law
in the ordinary course of trading over property other than
land) on or affecting the Charged Assets or any part thereof;
or
(c) dispose of the Charged Assets or any part thereof or
attempt or agree so to do except in the case of:
(i) stock-in-trade, which may, subject to the other provisions
of this Deed, be sold at full market value in the usual
course of trading as now conducted and for the purpose of
carrying on the Chargor's business; and
(ii) other Floating Charge Assets which may, subject to the
other provisions of this Deed, be disposed of in the
ordinary course of business.
3.4 Credit balances: The Chargor irrevocably and unconditionally
agrees that if there shall from time to time be any credit balance
on any of its accounts with the Bank, the Bank shall have the
absolute right to refuse to permit such credit balance to be
utilised or withdrawn by the Chargor whether in whole or in part if
at that time there are outstanding any of the Secured Obligations
and there is
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a default under any agreement between the Bank and the Chargor or
the Bank and the Company.
3.5 Automatic conversion of floating charge: Notwithstanding anything
expressed or implied in this Deed, if the Chargor creates or
attempts to create any Encumbrance over all or any of the Floating
Charge Assets without the prior consent in writing of the Bank or
if any person levies or attempts to levy any distress, execution,
sequestration or other process or does or attempts to do any
diligence in execution against any of the Floating Charge Assets,
the floating charge created by clause 3.2 over the property or
asset concerned shall thereupon automatically without notice be
converted into a fixed charge.
3.6 Conversion of floating charge by notice: Notwithstanding anything
expressed or implied in this Deed but without prejudice to clause
3.5, the Bank shall be entitled at any time by giving notice in
writing to that effect to the Chargor to convert the floating
charge over all or any part of the Floating Charge Assets into a
fixed charge as regards the assets specified in such notice.
3.7 H.M. Land Registry: The Chargor hereby applies to the Chief Land
Registrar for the registration of the following restriction against
each of the registered titles to any Property (and against any
title to any unregistered property which is or ought to be the
subject of a first registration of title at H.M. Land Registry at
the date of this Deed):
"Except under an Order of the Registrar no disposition or
charge or other security interest is to be registered or noted
without the consent of the proprietor for the time being of
Charge No. o".
4 SET-OFF
4.1 Set-off: The Chargor hereby agrees that the Bank may at any time
after a default under any agreement between the Bank and the
Chargor or the Bank and the Company, without notice,
notwithstanding any settlement of account or other matter
whatsoever, combine or consolidate all or any of its then existing
accounts wheresoever situate (including accounts in the name of the
Bank or of the Chargor jointly with others), whether such accounts
are current, deposit, loan or of any other nature whatsoever,
whether they are subject to notice or not and whether they are
denominated in sterling or in any other currency, and set-off or
transfer any sum standing to the credit of any one or more such
accounts in or towards satisfaction of its Secured Obligations
which, to the extent not then payable, shall automatically become
payable to the extent necessary to effect such set-off.
4.2 Purchase of currencies: For the purpose of clause 4.1, the Chargor
authorises the Bank to purchase with the moneys standing to the
credit of such accounts such other currencies as may be necessary
to effect such applications.
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5 UNDERTAKINGS
5.1 The Chargor hereby undertakes with the Bank that during the continuance
of this security the Chargor will:
(a) Debts: collect in the ordinary course of its business in a proper
and efficient manner and pay into its account with the Bank or such
other account as the Bank may from time to time specify all moneys
which it may receive in respect of the Debts forthwith on receipt
and not, without the prior written consent of the Bank, seek to
compromise, compound, vary, discharge, postpone or release any of
the Debts or waive its right of action in connection therewith or
do or omit to do anything which may delay or prejudice the full
recovery thereof provided that (and in the absence of contrary
written notice by the Bank) the Bank hereby authorises the Chargor
to compromise, compound, vary or postpone any Debt where, in the
reasonable opinion of the Chargor, it is commercially expedient to
do so in order to maximise the recovery of such Debt;
(b) Deposit of deeds: deposit with the Bank (to be held at the risk of
the Chargor):
(i) all deeds and documents of title relating to the Properties
and to any subordinate interest in any of them and the
insurance policies relating thereto;
(ii) all certificates and documents of title relating to the
Securities and such deeds of transfer in blank and other
documents as the Bank may from time to time require for
perfecting the title of the Bank to the Securities (duly
executed by or signed on behalf of the registered holder)
or for vesting or enabling it to vest the same in itself or
its nominees or in any purchaser; and
(iii) all such other documents relating to the Charged Assets as
the Bank may from time to time require;
(c) Calls etc: duly and promptly pay all calls, instalments or other
moneys which may from time to time become due in respect of any of
its Securities, it being acknowledged by the Chargor that the Bank
shall not in any circumstances incur any liability whatsoever in
respect of any such calls, instalments or other moneys;
(d) Provision of information: provide the Bank with such financial and
other information relating to the Chargor, its Subsidiaries and
their respective businesses as the Bank may from time to time
require;
(e) Supplemental Deeds: ensure that each Subsidiary of the Chargor,
promptly on becoming such a Subsidiary, will, if so requested by
the Bank and at the cost of the Chargor, execute such deeds as may
be
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requisite to the intent that such Subsidiary shall become party to
the guarantee and security arrangements contemplated by this Deed;
(f) Conduct of business: conduct and carry on its business, and
procure that each of its Subsidiaries conducts and carries on its
business, in a proper and efficient manner and keep or cause or
procure to be kept proper books of account relating to such
business and not make any material alteration in the nature or mode
of conduct of any such business;
(g) Compliance with covenants etc: observe and perform all covenants,
burdens, stipulations, requirements and obligations from time to
time affecting the Charged Assets and/or the use, ownership,
occupation, possession, operation, repair, maintenance or other
enjoyment or exploitation of the Charged Assets whether imposed by
statute, law or regulation, contract, lease, licence, grant or
otherwise, carry out all registrations or renewals and generally do
all other acts and things (including the taking of legal
proceedings) necessary or desirable to maintain, defend or preserve
its right, title and interest to and in the Charged Assets without
infringement by any third party and not without the prior consent
in writing of the Bank enter into any onerous or restrictive
obligations affecting any of the same or, after a default under any
agreement between the Bank and the Chargor or the Bank and the
Company, agree any rent review relating to any interest in any of the
Properties;
(h) Alteration or development of Properties: not make any structural
or material alteration to or to the user of any of the Properties
or do or permit to be done anything which is a "development" within
the meaning of the Town and Country Planning Acts from time to time
or any orders or regulations under such Acts or do or permit or
omit to be done any act, matter or thing as a consequence of which
any provision of any statute, bye-law, order or regulation or any
condition of any consent, licence, permission or approval (whether
of a public or private nature) from time to time in force affecting
any of the Properties is or may be infringed;
(i) Maintenance of buildings, machinery and plant: keep, and procure
that each of its Subsidiaries will keep, all its buildings,
machinery, plant, fixtures, vehicles, computers and office and
other equipment in good and substantial repair and in good working
order and condition and permit the Bank and its agents or
representatives to enter and view their state and condition;
(j) Insurance:
(i) (subject to clause 5.1(j)(iv)) insure and keep insured, and
procure that each of its Subsidiaries will insure and keep
insured, at its own expense to the full replacement or
reinstatement value thereof from time to time (including,
where applicable, the cost
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of demolition and site clearance, architects',surveyors' and
other professional fees and incidental expenses in connection
with replacement or reinstatement) all its assets of an
insurable nature with insurers reasonably acceptable to the
Bank against loss or damage (including loss of rent and
profits) by fire, storm, lightning, explosion, riot, civil
commotion, malicious damage, impact, flood, burst pipes,
aircraft and other aerial devices or articles dropped therefrom
(other than war risk), third party and public liability and
liability under the Defective Premises Act 1972 and such other
risks and contingencies as the Bank shall from time to time
request, such insurances to be effected with the interest of
the Bank noted on the policy and with the policy containing
such provisions for the protection of the Bank as the Bank may
require;
(ii) maintain such other insurance policies (with the interest
of the Bank noted thereon) containing like provisions for
the protection of the Bank as are normally maintained by
prudent companies carrying on businesses similar to those
of the Chargor or, as the case may be, its Subsidiaries;
(iii) duly and promptly pay all premiums and other moneys
necessary for effecting and keeping up such insurances and
on demand produce to the Bank the policies of such
insurance and evidence of such payments and comply in all
other respects with the terms and conditions of the
relevant policies including without limitation any
stipulations or restrictions as to the use and/or operation
of any asset;
(iv) (in the case of any leasehold property where the Chargor or
any Subsidiary is prohibited by the terms of the relevant
lease from complying with the obligations referred to in
clause 5.1(j)(i)) procure (where it is empowered to do so)
or otherwise use all reasonable efforts to procure the
maintenance by the landlord (or other third party) of such
insurance obligations in accordance with the provisions of
the relevant lease;
(k) Property outgoings: punctually pay, or cause to be paid, and
indemnify the Bank and any Receiver (on a several basis) against,
all present and future rent, rates, taxes, duties, charges,
assessments, impositions and outgoings whatsoever (whether imposed
by agreement, statute or otherwise) now or at any time during the
continuance of this security payable in respect of the Properties
or any part thereof or by the owner or occupier thereof;
(l) Possession of Properties: without prejudice to the generality of
clause 3.3(c), not without the prior consent in writing of the Bank
grant any lease, part with possession or share occupation of the
whole or any part of any of the Properties or confer any licence,
right or interest to
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occupy or grant any licence or permission to assign, underlet or
part with possession of the same or any part thereof or permit any
person:
(i) to be registered (jointly with the Chargor or otherwise) as
proprietor under the Land Registration Acts of any of the
Properties nor create or permit to arise any overriding
interest affecting the same within the definition in those
Acts or within the meaning of the Land Registration
(Scotland) Act 1979; or
(ii) to become entitled to any right, easement, covenant,
interest or other title encumbrance which might adversely
affect the value or marketability of any of the Properties;
(m) Variation of leasehold interests: not, after a default under any
agreement between the Bank and the Chargor or the Bank and the
Company, without the prior consent in writing of the Bank vary,
surrender, cancel or dispose of, or permit to be forfeit, any
leasehold interest in any of the Properties;
(n) Equipment leases etc.: not without the prior consent in writing of
the Bank surrender, cancel or dispose of, any credit sale, hire
purchase, leasing, rental, licence or like agreement for any
equipment used in its business or agree to any material variation
of the same;
(o) Acquisition of property: immediately inform the Bank before
contracting to purchase any estate or interest in freehold,
leasehold or heritable property and supply the Bank with such
details of the purchase as the Bank may from time to time request;
(p) Environmental Licences: obtain and maintain and procure that its
Subsidiaries obtain and maintain in full force and effect all
Environmental Licences and ensure that its business and the
business of its Subsidiaries and of any occupier of each of the
Properties and of properties owned, leased, occupied or otherwise
used by it or its Subsidiaries complies in all respects with all
Environmental Laws and all Environmental Licences and promptly on
receipt provide the Bank with copies of all Environmental Licences
and the terms and conditions thereof and any amendments thereto;
(q) Environmental Claims: promptly on becoming aware of it inform the
Bank of any Environmental Claim which has been made or threatened
against the Chargor or any of its Subsidiaries or any occupier of
any of the Properties or of any property owned, leased, occupied or
otherwise used by the Chargor or any of its Subsidiaries or any of
the officers of the Chargor or any of its Subsidiaries in their
capacity as such or any requirement by any Environmental Licence or
applicable Environmental Laws to make any investment or expenditure
or take or desist from taking any action which might, if
substantiated, have a Material Environmental Effect;
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(r) Access: procure that representatives designated by the Bank and
its representatives will be allowed access at reasonable times to
inspect the Properties and, where the Bank reasonably believes it
to be necessary, to require testing or the taking of samples at the
expense of the Chargor to verify compliance with Environmental Law
and Environmental Licences;
(s) Relevant Substances: notify the Bank forthwith upon becoming aware
of any Relevant Substance at or brought on to any of the Properties
which might give rise to any material Environmental Claim, and take
or procure the taking of all necessary action to deal with, remedy
or remove from such Property or prevent the incursion of (as the
case may be) that Relevant Substance in order to prevent a material
Environmental Claim and in a manner that complies with all
requirements of Environmental Law;
(t) Intellectual Property Rights: without prejudice to the generality
of clause 5.1(g):
(i) take all necessary action to safeguard and maintain its
rights, present and future, in or relating to all
Intellectual Property Rights including, without limitation,
observing all covenants and stipulations relating thereto,
paying all renewal fees and taking all other steps
necessary to maintain all registered design, patent, trade
mark and service mark registrations held by it;
(ii) use all reasonable efforts to effect registration of
applications for registration of any registered design,
patent, trade mark and service mark and keep the Bank
informed of events relevant to any such application and not
without the prior consent in writing of the Bank permit any
Intellectual Property Rights to be abandoned or cancelled,
to lapse or to be liable to any claim of abandonment for
non-use or otherwise;
(iii) notify the Bank forthwith of any infringement or suspected
infringement or any challenge to the validity of any of its
present or future Intellectual Property Rights which may come
to its notice, supply the Bank with all information in its
possession relating thereto and take all steps necessary to
prevent or bring to an end any such infringement and to defend
any challenge to the validity of any such rights;
(u) Purchase of Shares; dividends: not (without the prior consent in
writing of the Bank) redeem or purchase any of its own shares or
pay any dividend;
(v) Disposals to connected persons: without prejudice to the
generality of clause 3.3(c), not (without the prior consent in
writing of the Bank) dispose of any Charged Assets to any person
who is connected (within
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the meaning of section 249 Insolvency Act 1986) with the Chargor
save on terms previously approved in writing by the Bank;
(w) Report on title: forthwith on request by the Bank, provide the
Bank with a report from solicitors approved by the Bank in such
form as the Bank may require as to the title of the Chargor to such
of the Properties as the Bank shall specify;
(x) Jeopardy: not do or cause or permit to be done anything which may
in any way depreciate, jeopardise or otherwise prejudice the value
to the Bank of any of the Charged Assets;
(y) No Subsidiaries to be formed or acquired: not (without the prior
consent in writing of the Bank) form or acquire any Subsidiary; and
(z) Loans and guarantees: without prejudice to the generality of
clause 3.3(c), not (without the prior consent in writing of the
Bank):
(i) lend any money or provide any other form of financial
assistance; or
(ii) otherwise dispose of any part of the Charged Assets,
to a Company or any Subsidiary of the Chargor or of a Company or
attempt or agree so to do.
5.2 Power to remedy: If the Chargor at any time defaults in complying
with any of its obligations contained in this Deed, the Bank shall,
without prejudice to any other rights arising as a consequence of
such default, be entitled (but not bound) to make good such default
and the Chargor hereby irrevocably authorises the Bank and its
employees and agents by way of security to do all such things
(including, without limitation, entering the Chargor's property)
necessary or desirable in connection therewith. Any moneys so
expended by the Bank shall be repayable by the Chargor to the Bank
on demand together with interest at the Default Rate from the date
of payment by the Bank until such repayment, both before and after
judgment. No exercise by the Bank of its powers under this clause
5.2 shall make it liable to account as a mortgagee in possession.
6 FURTHER ASSURANCE
6.1 Further assurance: The Chargor shall if and when at any time
required by the Bank execute such further Encumbrances and
assurances in favour of the Bank and do all such acts and things as
the Bank shall from time to time require over or in relation to all
or any of the Charged Assets to secure the Secured Obligations or
to perfect or protect the security intended to be created by this
Deed over the Charged Assets or any part thereof or to facilitate
the realisation of the same.
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6.2 Certain documentary requirements: Such further Encumbrances and
assurances shall be prepared by or on behalf of the Bank at the
expense of the Chargor and shall contain (a) an immediate power of
sale without notice, (b) a clause excluding section 93 Law of
Property Act 1925 and the restrictions contained in section 103 Law
of Property Act 1925 and (c) such other clauses for the benefit of
the Bank as the Bank may require (but so that in relation to
property in Northern Ireland such references shall be deemed to be
references to sections 17 and 20 respectively of the Conveyancing
and Law of Property Act 1881).
6.3 Specific security documents required: Without prejudice to the
generality of the provisions of clauses 6.1 and 6.2 the Chargor
shall execute as and when so required by the Bank:
(a) a mortgage, charge, standard security or hypothecation (as
specified by the Bank) over any heritable property in Scotland
owned, or any recorded lease of heritable property in Scotland
held, by it at the date of this Deed, any leasehold or freehold
property in Northern Ireland or the Republic of Ireland owned by it
at the date of this Deed, and any and all heritable fixtures and
fittings and fixed plant and machinery at any time situate thereon
including (without prejudice to the generality of the foregoing)
tenant's fixtures and fittings in and upon any such leased
property; and/or
(b) a legal mortgage, legal charge, standard security or hypothecation
(as specified by the Bank) over any freehold, leasehold and
heritable properties acquired by it after the date of this Deed
(including all or any of the Properties as and when the same are
conveyed, transferred, or let to it) and over any and all fixtures,
trade fixtures and fixed plant and machinery at any time and from
time to time situate thereon.
7 CERTAIN POWERS OF THE BANK: ENFORCEMENT
7.1 The Securities:
(a) The Bank and its nominees at the discretion of the Bank may
exercise in the name of the Chargor or otherwise at any time
whether before or after demand for payment and without any further
consent or authority on the part of the Chargor (but subject to
clause 7.1(d)) in respect of the Securities any voting rights and
all powers given to trustees by section 10(3) and (4) Trustee Act,
1925 (as amended by section 9 Trustee Investments Act, 1961) in
respect of securities or property subject to a trust and any powers
or rights which may be exercisable by the person in whose name any
of the Securities is registered or by the bearer thereof.
(b) The Chargor will if so requested by the Bank transfer all or any of
the Securities to such nominees or agents as the Bank may select.
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(c) Until the Enforcement Date the Bank will hold all dividends,
distributions, interest and other moneys paid on and received by it
in respect of the Securities for the account of the Chargor and
will, subject to any right of set-off and to clause 3.4, pay such
dividends, interest and other moneys to the Chargor upon request.
(d) Until the Enforcement Date the Bank will exercise all voting and
other rights and powers attached to the Securities as the Chargor
may from time to time in writing reasonably direct provided that
the Bank shall be under no obligation to comply with any such
direction where compliance would, in the Bank's opinion, be
prejudicial to the security created by this Deed.
7.2 Powers on enforcement: At any time on or after the Enforcement
Date or if requested by the Chargor, the Bank may, without further
notice, without the restrictions contained in section 103 Law of
Property Act 1925 (or in the case of property in Northern Ireland
section 20 of the Conveyancing and Law of Property Act 1881) and
whether or not a Receiver shall have been appointed, exercise all
the powers conferred upon mortgagees by the Law of Property Act
1925 (or in the case of property in Northern Ireland the
Conveyancing and Law of Property Act 1881) as varied or extended by
this Deed and all the powers and discretions conferred by this Deed
on a Receiver either expressly or by reference.
7.3 Subsequent Encumbrances: If the Bank receives notice of any
subsequent Encumbrance affecting the Charged Assets or any part
thereof, the Bank may open a new account for the Chargor. If it
does not do so then, unless the Bank gives express written notice
to the contrary to the Chargor, it shall nevertheless be treated as
if it had opened a new account at the time when it received such
notice and as from that time all payments made by or on behalf of
the Chargor to the Bank shall be credited or be treated as having
been credited to the new account and shall not operate to reduce
the amount due from the Chargor to the Bank at the time when it
received such notice.
7.4 Statutory power of leasing: The Bank shall have the power to lease
and make agreements for leases at a premium or otherwise, to accept
surrenders of leases and to grant options on such terms as the Bank
shall consider expedient and without the need to observe any of the
provisions of sections 99 and 100 Law of Property Act 1925 (or in
the case of property in Northern Ireland section 18 of the
Conveyancing and Law of Property Act 1881).
7.5 Contingencies: If, after a default under any agreement between the
Bank and the Chargor or the Bank and the Company, the Bank enforces
the security constituted by this Deed, the Bank (or the Receiver)
may pay the proceeds of any recoveries effected by it into an
interest-bearing suspense account. The Bank may (subject to the
payment of any claims having priority to this security) withdraw
amounts standing to the credit of such suspense account for
application as follows:
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(a) paying all costs, charges and expenses incurred and payments
made by the Bank (or the Receiver) in the course of such
enforcement;
(b) paying remuneration to the Receiver as and when the same becomes
due and payable; and
(c) paying amounts due and payable in respect of the Secured
Obligations as and when the same become due and payable.
8 APPOINTMENT AND POWERS OF RECEIVER
8.1 Appointment: At any time on or after the Enforcement Date or if
requested by the Chargor, the Bank may by instrument in writing
executed as a deed or under the hand of any director or other duly
authorised officer appoint any qualified person to be a Receiver of
the Charged Assets or any part thereof. Where more than one
Receiver is appointed, each joint Receiver shall have power to act
severally, independently of any other joint Receivers, except to
the extent that the Bank may specify to the contrary in the
appointment. The Bank may (subject, where relevant, to section 45
Insolvency Act 1986) remove any Receiver so appointed and appoint
another in his place. In this clause 8 a "qualified person" is a
person who, under the Insolvency Act 1986, is qualified to act as a
receiver of the property of any company with respect to which he is
appointed or, as the case may be, an administrative receiver of any
such company.
8.2 Receiver as agent: A Receiver shall be the agent of the Chargor
and the Chargor shall be solely responsible for his acts or
defaults and for his remuneration.
8.3 Powers of Receiver: A Receiver shall have all the powers conferred
from time to time on receivers and administrative receivers by
statute (in the case of powers conferred by the Law of Property Act
1925, without the restrictions contained in section 103 of that
Act) and power on behalf and at the expense of the Chargor
(notwithstanding liquidation of the Chargor) to do or omit to do
anything which the Chargor could do or omit to do in relation to
the Charged Assets or any part thereof. In particular (but without
limitation) a Receiver shall have power to do all or any of the
following acts and things:
(a) Take possession: take possession of, collect and get in all or any
of the Charged Assets and exercise in respect of the Securities
all voting or other powers or rights available to a registered
holder thereof in such manner as he may think fit;
(b) Carry on business: carry on, manage, develop, reconstruct,
amalgamate or diversify the business of the Chargor or any part
thereof or concur in so doing; lease or otherwise acquire and
develop or improve properties or other assets without being
responsible for loss or damage;
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(c) Borrow money: raise or borrow any money from or incur any other
liability to the Bank or others on such terms with or without
security as he may think fit and so that any such security may be
or include a charge on the whole or any part of the Charged
Assets ranking in priority to this security or otherwise;
(d) Dispose of assets: without the restrictions imposed by section 103
Law of Property Act 1925 (or in the case of property in Northern
Ireland section 20 of the Conveyancing and Law of Property Act
1881) or the need to observe any of the provisions of sections 99
and 100 of such Act (or section 18 of the Conveyancing and Law of
Property Act 1881 in the case of Northern Ireland), sell by public
auction or private contract, let, surrender or accept surrenders,
grant licences or otherwise dispose of or deal with all or any of
the Charged Assets or concur in so doing in such manner for such
consideration and generally on such terms and conditions as he may
think fit with full power to convey, let, surrender, accept
surrenders or otherwise transfer or deal with such Charged Assets
in the name and on behalf of the Chargor or otherwise and so that
covenants and contractual obligations may be granted and assumed in
the name of and so as to bind the Chargor (or other the estate
owner) if he shall consider it necessary or expedient so to do; any
such sale, lease or disposition may be for cash, debentures or
other obligations, shares, stock, securities or other valuable
consideration and be payable immediately or by instalments spread
over such period as he shall think fit and so that any
consideration received or receivable shall ipso facto forthwith be
and become charged with the payment of all the Secured Obligations
of the Chargor; plant, machinery and other fixtures may be severed
and sold separately from the premises containing them and the
Receiver may apportion any rent and the performance of any
obligations affecting the premises sold without the consent of the
Chargor;
(e) Form subsidiaries: promote the formation of companies with a view
to the same becoming a Subsidiary of the Chargor and purchasing,
leasing, licensing or otherwise acquiring interests in all or any
of the Charged Assets or otherwise, arrange for such companies to
trade or cease to trade and to purchase, lease, license or
otherwise acquire all or any of the Charged Assets on such terms
and conditions whether or not including payment by instalments
secured or unsecured as he may think fit;
(f) Compromise contracts: make any arrangement or compromise or enter
into or cancel any contracts which he shall think expedient;
(g) Repair and maintain assets: make and effect such repairs, renewals
and improvements to the Charged Assets or any part thereof as he
may think fit and maintain, renew, take out or increase insurances;
(h) Appoint employees: appoint managers, agents, officers and
employees for any of the purposes referred to in this clause 8.3 or
to guard or
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protect the Charged Assets at such salaries and commissions and for
such periods and on such terms as he may determine and may dismiss
the same;
(i) Make calls: make calls conditionally or unconditionally on the
members of the Chargor in respect of uncalled capital;
(j) Exercise statutory leasehold powers: without any further consent
by or notice to the Chargor exercise for and on behalf of the
Chargor all the powers and provisions conferred on a landlord or a
tenant by the Landlord and Tenant Acts, the Rent Acts, the Housing
Acts or the Agricultural Holdings Act or any other legislation from
time to time in force in any relevant jurisdiction relating to
rents or agriculture in respect of any part of the Properties but
without any obligation to exercise any of such powers and without
any liability in respect of powers so exercised or omitted to be
exercised;
(k) Legal proceedings: institute, continue, enforce, defend, settle or
discontinue any actions, suits or proceedings in relation to the
Charged Assets or any part thereof or submit to arbitration as he
may think fit;
(l) Execute documents: sign any document, execute any deed and do all
such other acts and things as may be considered by him to be
incidental or conducive to any of the matters or powers aforesaid
or to the realisation of the security created by or pursuant to
this Deed and to use the name of the Chargor for all the purposes
aforesaid; and
(m) Insolvency Act powers: do all the acts and things described in
schedule 1 to the Insolvency Act 1986 as if the words "he" and
"him" referred to the Receiver and "company" referred to the
Chargor.
8.4 Remuneration: The Bank may from time to time determine the remuneration
of any Receiver and section 109(6) Law of Property Act 1925 (or in
the case of property in Northern Ireland section 24(6) of the
Conveyancing and Law of Property Act 1881) shall be varied accordingly.
A Receiver shall be entitled to remuneration appropriate to the work and
responsibilities involved upon the basis of charging from time to time
adopted by the Receiver in accordance with the current practice of his
firm.
9 APPLICATION OF PROCEEDS; PURCHASERS
9.1 Application of proceeds: All moneys received by the Bank or by any
Receiver shall be applied, after the discharge of the remuneration
and expenses of the Receiver and all liabilities having priority to
the Secured Obligations, in or towards satisfaction of such of the
Secured Obligations and in such order as the Bank in its absolute
discretion may from time to time conclusively determine, except
that the Bank may credit the same to a suspense account for so long
and in such manner as the Bank may from time to time determine and
the Receiver may retain the same for such period as he and the Bank
consider expedient.
20
<PAGE> 23
9.2 Insurance proceeds: All moneys receivable by virtue of any of the
Insurances shall be paid to the Bank (or if not paid by the
insurers directly to the Bank shall be held on trust for the Bank)
and shall at the option of the Bank be applied in replacing,
restoring or reinstating the property or assets destroyed, damaged
or lost (any deficiency being made good by the Chargor) or (except
where the Chargor is obligated (as landlord or tenant) to lay out
such insurance moneys under the provisions of any lease of any of
the Charged Assets) in reduction of the Secured Obligations.
9.3 Protection of purchasers: No purchaser or other person shall be
bound or concerned to see or enquire whether the right of the Bank
or any Receiver to exercise any of the powers conferred by this
Deed has arisen or be concerned with notice to the contrary or with
the propriety of the exercise or purported exercise of such powers.
10 INDEMNITIES; COSTS AND EXPENSES
10.1 Enforcement costs: The Chargor hereby undertakes with the Bank to
pay on demand all costs, charges and expenses incurred by the Bank
or by any Receiver in or about the enforcement, preservation or
attempted preservation of any of the security created by or
pursuant to this Deed or any of the Charged Assets on a full
indemnity basis, together with interest at the Default Rate from
the date on which such costs, charges or expenses are so incurred
until the date of payment by the Chargor (both before and after
judgment).
10.2 No liability as mortgagee in possession: Neither the Bank nor any
Receiver shall be liable to account as mortgagee or heritable
creditor in possession in respect of all or any of the Charged
Assets or be liable for any loss upon realisation or for any
neglect or default of any nature whatsoever for which a mortgagee
or heritable creditor in possession may be liable as such.
10.3 Indemnity from Charged Assets: The Bank and any Receiver,
attorney, agent or other person appointed by the Bank under this
Deed and the Bank's officers and employees (each an "INDEMNIFIED
PARTY") shall be entitled to be indemnified out of the Charged
Assets in respect of all costs, losses, actions, claims, expenses,
demands or liabilities whether in contract, tort, delict or
otherwise and whether arising at common law, in equity or by
statute which may be incurred by, or made against, any of them (or
by or against any manager, agent, officer or employee for whose
liability, act or omission any of them may be answerable) at any
time relating to or arising directly or indirectly out of or as a
consequence of:
(a) anything done or omitted in the exercise or purported exercise
of the powers contained in this Deed; or
(b) any breach by the Chargor of any of its obligations under this
Deed; or
(c) an Environmental Claim made or asserted against an Indemnified
Party which would not have arisen if this Deed had not been
executed and
21
<PAGE> 24
which was not caused by the wilful default of the relevant
Indemnified Party.
11 POWER OF ATTORNEY
11.1 Power of attorney: The Chargor by way of security hereby irrevocably
appoints each of the Bank and any Receiver severally to be its attorney
in its name and on its behalf:
(a) to execute and complete any documents or instruments which the Bank
or such Receiver may require for perfecting the title of the Bank
to the Charged Assets of the Chargor or for vesting the same in the
Bank, its nominees or any purchaser;
(b) to sign, execute, seal and deliver and otherwise perfect any
further security document referred to in clause 6; and
(c) otherwise generally to sign, seal, execute and deliver all deeds,
assurances, agreements and documents and to do all acts and
things which may be required for the full exercise of all or any
of the powers conferred on the Bank or a Receiver under this Deed
or which may be deemed expedient by the Bank or a Receiver in
connection with any disposition, realisation or getting in by the
Bank or such Receiver of the Charged Assets of the Chargor or any
part thereof or in connection with any other exercise of any power
under this Deed.
11.2 Recovery of Debts: The Bank and any manager or officer of the Bank
or of any branch is hereby irrevocably empowered to receive all
Debts and on payment to give an effectual discharge therefor and on
non-payment to take (if the Bank in its sole discretion so decides)
all steps and proceedings either in the name of the Chargor or in
the name of the Bank for the recovery thereof and also to agree
accounts and to make allowances and to give time to any surety.
The Bank shall have no liability or responsibility of any kind to
the Chargor arising out of the exercise or non-exercise of such
rights and shall not be obliged to make any enquiry as to the
sufficiency of any sums received by it in respect of any Debts or
to make any claims or take any other action to collect or enforce
the same.
11.3 Ratification: The Chargor ratifies and confirms and agrees to
ratify and confirm all acts and things which any attorney as is
mentioned in clause 11.1 shall do or purport to do in the exercise
of his powers under such clause.
12 CONTINUING SECURITY AND OTHER MATTERS
12.1 Continuing security: This Deed and the obligations of the Chargor
under this Deed (including, without limitation, the Guarantees) shall:
22
<PAGE> 25
(a) secure the ultimate balance from time to time owing to the Bank by
each Company and any other person liable and shall be a continuing
security notwithstanding any settlement of account or other matter
whatsoever;
(b) be in addition to, and not prejudice or affect, any present or
future Collateral Instrument, Encumbrance, right or remedy held by
or available to the Bank; and
(c) not merge with or be in any way prejudiced or affected by the
existence of any such Collateral Instruments, Encumbrance, rights
or remedies or by the same being or becoming wholly or in part
void, voidable or unenforceable on any ground whatsoever or by the
Bank dealing with, exchanging, releasing, varying or failing to
perfect or enforce any of the same, or giving time for payment or
indulgence or compounding with any other person liable.
12.2 New accounts: If a Guarantee ceases to be continuing for any reason
whatsoever the Bank may nevertheless continue any account of any
Company or any other person liable or open one or more new accounts and
the liability of the Chargor under its Guarantee shall not in any
manner be reduced or affected by any subsequent transactions or
receipts or payments into or out of any such account.
12.3 Liability unconditional: The liability of the Chargor shall not be
affected nor shall any Guarantee be discharged or reduced by reason
of:
(a) the Incapacity or any change in the name, style or constitution of
any Company or other person liable;
(b) the Bank granting any time, indulgence or concession to, or
compounding with, discharging, releasing or varying the liability
of, any Company or any other person liable or renewing,
determining, varying or increasing any accommodation, facility or
transaction or otherwise dealing with the same in any manner
whatsoever or concurring in, accepting or varying any compromise,
arrangement or settlement or omitting to claim or enforce payment
from any Company or any other person liable; or
(c) any act or omission which would not have discharged or affected the
liability of the Chargor had it been a principal debtor instead of
a guarantor or anything done or omitted which but for this
provision might operate to exonerate the Chargor.
12.4 Collateral Instruments: The Bank shall not be obliged to make any
claim or demand on the Chargor or other person liable or to resort
to any Collateral Instrument or other means of payment now or
hereafter held by or available to it before enforcing this Deed
(including, without limitation, the Guarantees) and no action taken
or omitted by the Bank in connection with any such Collateral
Instrument or other means of payment shall discharge, reduce, prejudice
or
23
<PAGE> 26
affect the liability of the Chargor (including, without limitation,
the liability of the Chargor under the Guarantees) nor shall the Bank be
obliged to account for any money or other property received or recovered
in consequence of any enforcement or realisation of any such Collateral
Instrument or other means of payment.
12.5 Waiver of Chargor's rights: Until all the Secured Obligations have
been paid, discharged or satisfied in full (and notwithstanding
payment of a dividend in any liquidation or under any compromise or
arrangement or the discharge by the Chargor of its liability under
its Guarantee) the Chargor agrees that without the prior written
consent of the Bank it will not:
(a) exercise its rights of subrogation, reimbursement and indemnity
against any Company or other person liable;
(b) demand or accept repayment in whole or in part of any obligations
or liabilities now or hereafter due to the Chargor from any Company
or any other person liable or demand or accept any Collateral
Instrument in respect of such obligations or liabilities or dispose
of the same;
(c) take any step to enforce any right against any Company or any other
person liable in respect of any such obligations or liabilities;
(d) claim any set-off or counter-claim against any Company or any other
person liable or claim or prove in competition with the Bank in the
liquidation of any Company or other person liable or have the
benefit of, or share in, any payment from or composition with, any
other Company or other person liable or any other Collateral
Instrument now or hereafter held by the Bank for any obligations or
liabilities of any Company or other person liable but so that, if
so directed by the Bank, it will prove for the whole or any part of
its claim in the liquidation of any Company or other person liable
on terms that the benefit of such proof and of all money received
by it in respect thereof shall be held on trust for the Agent and
the Bank and applied in or towards discharge of the Secured
Obligations in such manner as the Bank shall deem appropriate.
12.6 Suspense accounts: Any money received in connection with a Guarantee
(whether before or after any Incapacity of a Company or other person
liable) may be placed to the credit of a suspense account with a view to
preserving the rights of the Bank to prove for the whole of its claims
against the Companies or any other person liable or may be applied in or
towards satisfaction of such of the Secured Obligations as the Bank may
from time to time conclusively determine in its absolute discretion.
12.7 Settlements Conditional: Any release, discharge or settlement between
the Chargor and the Bank shall be conditional upon no security,
disposition or payment to the Bank by the Chargor, any of the Companies
or any other person being void, set aside or ordered to be refunded
pursuant to any enactment or law
24
<PAGE> 27
relating to liquidation, administration or insolvency or for any other
reason whatsoever and if such condition shall not be fulfilled the Bank
shall be entitled to enforce this Deed subsequently as if such release,
discharge or settlement had not occurred and any such payment had not
been made.
12.8 Final Redemption: Subject, and without prejudice, to clauses 12.l,
12.4, 12.7 and 12.9, upon proof being given to the satisfaction of
the Bank that all the Secured Obligations have terminated, the Bank
shall at the request and cost of the Chargor execute and do all
such deeds, acts and things as may be necessary to release the
Charged Assets from the charges constituted by clauses 3.1 and 3.2.
12.9 Avoidance of Payments: No assurance, security, guarantee or payment
which may be avoided under any law relating to bankruptcy, insolvency,
administration or winding-up (including, without limitation, Sections
238, 239, 242, 243 or 245 of the Insolvency Act 1986) and no release,
settlement, discharge or arrangement given or made by the Bank on the
faith of any such assurance, security, guarantee or payment, shall
prejudice or affect the right of the Bank to enforce this Deed to the
full extent of the Secured Obligations or any other rights which the
Bank may have in respect of the Secured Obligations or any part thereof.
The Chargor agrees that in such circumstances this Deed shall be deemed
to have remained in full force and effect notwithstanding any such
assurance, security, guarantee, payment, release, settlement, discharge
or arrangement. Without prejudice to the foregoing, as promptly as
practicable after proof satisfactory to the Bank has been given to the
Bank in accordance with clause 12.8, the Bank shall return this Deed
and shall release such of the Secured Assets which remain from the
charges constituted by clauses 3.1 and 3.2 unless the Bank determines
that at such time there exists a possibility of the avoidance or
invalidation of any payment or repayment of the Secured Obligations
within a period of one month plus the relevant statutory period after
the Secured Obligations shall have been discharged in full. The Chargor
shall promptly provide to the Bank any evidence (including, if required
by the Bank, a solvency report from the auditors of the Chargor in form
and substance satisfactory to the Bank) requested by the Bank, in order
that it may determine whether or not at such time there exists such a
possibility. If at any time within such period (i) a petition shall be
presented to a competent court for an order for the administration or
winding-up (or for any equivalent or similar order in any relevant
jurisdiction) of the Chargor or of any other person that has given the
relevant assurance, security, guarantee or payment or (ii) the Chargor
or any such other person shall commence to be wound-up voluntarily (or
shall commence any equivalent or similar proceedings in any relevant
jurisdiction), the Bank may continue to retain this Deed and not to
release Secured Assets for and during such further period as the Bank in
its absolute discretion shall determine.
12.10 Chargor to deliver up certain property: If, contrary to clauses 2.5 or
12.5 the Chargor takes or receives the benefit of any security or
receives or recovers any money or other property, such security, money
or other property shall be held on trust for the Bank and shall be
delivered to the Bank on demand.
25
<PAGE> 28
13 CURRENCIES
13.1 Conversion of Currencies: All moneys received or held by the Bank
or by a Receiver under this Deed at any time on or after the
Enforcement Date in a currency other than a currency in which the
Secured Obligations are denominated may from time to time be sold
for such one or more of the currencies in which the Secured
Obligations are denominated as the Bank or Receiver considers
necessary or desirable and the Chargor shall indemnify the Bank
against the full sterling cost (including all costs, charges and
expenses) incurred in relation to such sale. Neither the Bank nor
any Receiver shall have any liability to the Chargor respect of any
loss resulting from any fluctuation in exchange rates after any
such sale.
13.2 Currency Indemnity: No payment to the Bank (whether under any
judgment or court order or otherwise) shall discharge the
obligation or liability of the Chargor in respect of which it was
made unless and until the Bank shall have received payment in full
in the currency in which such obligation or liability was incurred.
To the extent that the amount of any such payment shall on actual
conversion into such currency fall short of such obligation or
liability expressed in that currency the Bank shall have a further
separate cause of action against the Chargor and shall be entitled
to enforce the charges hereby created to recover the amount of the
shortfall.
14 REPRESENTATIONS AND WARRANTIES
14.1 Representations: The Chargor represents and warrants to the Bank
that:
(a) Due incorporation: it is duly incorporated and validly
existing under the laws of England and Wales and each of its
Subsidiaries is duly incorporated and validly existing under
the laws of the country of its incorporation and has power to
carry on its business as it is now being conducted and to own
its property and other assets;
(b) Corporate Power: it has power to execute, deliver and
perform its obligations under this Deed; all necessary
corporate, shareholder and other action has been taken to
authorise the execution, delivery and performance of the same
and no limitation on the powers of the Chargor will be exceeded
as a result of the execution and delivery of this Deed or the
performance of its obligations under this Deed;
(c) Binding obligations: this Deed constitutes valid and
legally binding obligations of the Chargor enforceable in
accordance with its terms;
(d) No conflict with other obligations: the execution and
delivery of, the performance of its obligations under, and
compliance with the provisions of, this Deed by the Chargor
will not (i) contravene any existing applicable law, statute,
rule or regulation or any judgment or permit to which it is
subject, (ii) conflict with, or result in any breach of any of
the terms of, or constitute a default under, any agreement or
other
26
<PAGE> 29
instrument to which it or any of its Subsidiaries is a party or is
subject or by which it or any of its property is bound, (iii)
contravene or conflict with any provision of its Memorandum and
Articles of Association, or (iv) result in the creation of or
oblige the Chargor or any of its Subsidiaries to create an
Encumbrance in favour of any person other than the Bank;
(e) Title to Charged Assets: it has good and marketable title to the
Charged Assets and has full power and authority to grant to the
Bank the security interest in the Charged Assets created pursuant
to this Deed and to execute, deliver and perform its obligations in
accordance with the terms of this Deed without the consent or
approval of any other person other than any consent or approval
which has been obtained;
(f) Ownership of Charged Assets: the Charged Assets are beneficially
owned by it free and clear of any Encumbrance other than
Encumbrances created by this Deed and any Permitted Encumbrance;
(g) Compliance with Environmental Laws: each of the Chargor and its
Subsidiaries complies and has at all times complied with all
Environmental Laws and Environmental Licences and has obtained and
maintained in full force and effect all Environmental Licences, and
there are no facts or circumstances entitling any such
Environmental Licences to be revoked, suspended, amended, varied,
withdrawn or not renewed where such revocation, suspension,
amendment, variation, withdrawal or non-renewal might have a
Material Environmental Effect;
(h) No requirement to invest under Environmental Laws: neither the
Chargor nor any of its Subsidiaries is required by any
Environmental Licence or Environmental Law to make any investment
or expenditure or to take or desist from taking any action in
either case where this might have a Material Environmental Effect;
(i) No Environmental Claims: no Environmental Claim is pending or has
been made or threatened against the Chargor or any of its
Subsidiaries or any occupier of any of the Properties or any of
their respective officers in their capacity as such and neither
such Company nor any of its Subsidiaries has any reason to believe
that it has or is likely to have any liability in relation to
Environmental Matters which, in either case, might have a Material
Environmental Effect;
(j) No Relevant Substances: no Relevant Substance has been deposited,
disposed of, kept, treated, imported, exported, transported,
processed, manufactured, used, collected, sorted or produced at any
time, or is present in the environment (whether or not on property
owned, leased, occupied or controlled by the Chargor or any of its
Subsidiaries) in circumstances which are likely to result in an
Environmental Claim against the Chargor or any of its Subsidiaries
which, in either case, might have a Material Environmental Effect;
and
27
<PAGE> 30
(k) Details of environmental audits: full details have been
given to the Bank of any inspections, investigations,
studies, audits, tests, reviews or other analyses in
relation to Environmental Matters relating to the Chargor
and its Subsidiaries or to the best of the Chargor's
knowledge any property now or previously owned, leased or
occupied by such Company and its Subsidiaries and of all
Environmental Licences.
14.2 Repetition: The representations and warranties in clause 14.1
shall be deemed to be repeated by the Chargor on each day until all
the Secured Obligations have been paid or discharged in full as if
made with reference to the facts and circumstances existing on each
such day.
15 MISCELLANEOUS
15.1 Remedies Cumulative: No failure or delay on the part of the Bank
to exercise any power, right or remedy shall operate as a waiver
thereof nor shall any single or any partial exercise or waiver of
any power, right or remedy preclude its further exercise or the
exercise of any other power, right or remedy.
15.2 Statutory power of leasing: During the continuance of this
security the statutory and any other powers of leasing, letting,
entering into agreements for leases or lettings and accepting or
agreeing to accept surrenders of leases or tenancies shall not be
exercisable by the Chargor in relation to the Charged Assets or any
part thereof.
15.3 Successors and assigns: Any appointment or removal of a Receiver
under clause 8 and any consents under this Deed may be made or
given in writing signed or sealed by any successors or assigns of
the Bank and accordingly the Chargor hereby irrevocably appoints
each successor and assign of the Bank to be its attorney in the
terms and for the purposes set out in clause 11.
15.4 Consolidation: Section 93 Law of Property Act 1925 shall not apply
to the security created by this Deed or to any security given to
the Bank pursuant to this Deed.
15.5 Reorganisation of the Bank: This Deed shall remain binding on the
Chargor notwithstanding any change in the constitution of the Bank
or its absorption in, or amalgamation with, or the acquisition of
all or part of its undertaking by, any other person, or any
reconstruction or reorganisation of any kind. The security granted
by this Deed shall remain valid and effective in all respects in
favour of any assignee, transferee or other successor in title of
the Bank in the same manner as if such assignee, transferee or
other successor in title had been named in this Deed as a party
instead of, or in addition to, the Bank.
15.6 Unfettered discretion: Any liability or power which may be
exercised or any determination which may be made under this Deed by
the Bank may be exercised or made in its absolute and unfettered
discretion and it shall not be obliged to give reasons therefor.
28
<PAGE> 31
15.7 Provisions severable: Each of the provisions of this Deed is
severable and distinct from the others and if any time one or more
of such provisions is or becomes invalid, illegal or unenforceable
the validity, legality and enforceability of the remaining
provisions of this Deed shall not in any way be affected or impaired
thereby.
15.8 Law of Property (Miscellaneous Provisions) Act 1989: For the
purposes of the Law of Property (Miscellaneous Provisions) Act 1989
any provisions any of facility agreement and any other relevant
loan agreements relating to any disposition of an interest in land
shall be deemed to be incorporated in this Deed.
16 NOTICES
16.1 Mode of service: Any notice or demand for payment by the Bank
under this Deed shall, without prejudice to any other effective
mode of making the same, be deemed to have been properly served on
the Chargor if served on any one of its Directors or on its
Secretary or delivered or sent by letter, telex or telefax to the
Chargor at its registered office or any of its principal places of
business for the time being.
16.2 Time of service: Any such notice or demand shall be deemed to have
been served (in the case of a letter) when delivered, (in the case
of a telex) at the time of despatch with the correct answerback
appearing at the beginning and end of the transmission and (in the
case of a telefax) when received in complete and legible form.
16.3 Notices conclusive: Any such notice or demand or any certificate
as to the amount at any time secured by this Deed shall, save for
manifest error be conclusive and binding upon the Chargor if signed
by an officer of the Bank.
17 LAW
This Deed shall be governed by and shall be construed in accordance
with English law.
IN WITNESS whereof this Deed has been executed and delivered by or on behalf of
the parties on the date stated at the beginning of this Deed.
29
<PAGE> 32
THE COMMON SEAL of )
INTEGRAL VISION LIMITED )
affixed to this Deed )
in the presence of )
Director
Secretary
[OR]
EXECUTED and DELIVERED as a DEED )
by INTEGRAL VISION LIMITED )
Charles J. Drake
--------------------
Director
Richard R. Current
--------------------
Secretary
SIGNED for and on behalf
of NBD BANK
By: Deborah J. Forley
------------------
Its: Vice President
By: Glenn Ansiel
-----------------------------
Its: Assistant Vice President
30
<PAGE> 1
EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30
1996 1995
------------------------------
<S> <C> <C>
Per common share and common share equivalents:
Outstanding shares - beginning of period 8,802 8,664
Weighted average of:
Exercise of stock options 33
Net effect of dilutions based on treasury
stock method using average market price 279
-------------------------
TOTAL SHARES 9,081 8,697
=========================
Net earnings (loss) $ 887 $ (2,294)
=========================
Net earnings (loss) per share $ .10 $ (.26)
=========================
Per common share assuming full dilution:
Outstanding shares - beginning of period 8,802 8,664
Weighted average of:
Exercise of stock options 33
Net effect of dilutive stock options based on
treasury stock method using quarter-end market
price if higher than average market price 283
-------------------------
TOTAL SHARES 9,085 8,697
=========================
Net earnings (loss) $ 887 $ (2,294)
=========================
Net earnings (loss) per share $ .10 $ (.26)
=========================
</TABLE>
<PAGE> 2
EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
1996 1995
--------------------------------
<S> <C> <C>
Per common share and common share equivalents:
Total shares for quarter ended:
March 31 8,995 8,649
June 30 9,081 8,697
------- -------
18,076 17,346
======= =======
Weighted average number of shares of common
stock and common stock equivalents where
applicable 9,038 8,673
======= =======
Net earnings (loss) $ 1,214 $(2,147)
======= =======
Net earnings (loss) per share $ .13 $ (.25)
======= =======
Per common share and common share equivalents
assuming full dilution:
Total shares for quarter ended:
March 31 9,020 8,649
June 30 9,085 8,697
------- -------
18,105 17,346
======= =======
Weighted average number of shares of common
stock and common stock equivalents where
applicable 9,053 8,673
======= =======
Net earnings (loss) $ 1,214 $(2,147)
======= =======
Net earnings (loss) per share $ .13 $ (.25)
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 767
<SECURITIES> 0
<RECEIVABLES> 9,739
<ALLOWANCES> 443
<INVENTORY> 16,117
<CURRENT-ASSETS> 29,714
<PP&E> 15,924
<DEPRECIATION> 5,781
<TOTAL-ASSETS> 50,468
<CURRENT-LIABILITIES> 9,092
<BONDS> 17,843
0
0
<COMMON> 1,760
<OTHER-SE> 22,494
<TOTAL-LIABILITY-AND-EQUITY> 50,468
<SALES> 12,216
<TOTAL-REVENUES> 12,236
<CGS> 8,303
<TOTAL-COSTS> 8,303
<OTHER-EXPENSES> 2,712
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 311
<INCOME-PRETAX> 910
<INCOME-TAX> 23
<INCOME-CONTINUING> 887
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 887
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
