<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, 1997
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)
<TABLE>
<S> <C>
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)
</TABLE>
(248) 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, 1997 was 9,022,901.
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
1997 1996
-----------------------------------
(Unaudited)
(In thousands)
ASSETS
<S> <C> <C>
CURRENT ASSETS - Note D
Cash $ 789 $ 215
Accounts receivable, less allowance of $400,000 7,296 9,415
Inventories - Note B 14,957 15,991
Costs and estimated earnings in excess of billings on
incomplete contracts - Note C 3,075 1,841
Other current assets 1,281 543
----------------------------
TOTAL CURRENT ASSETS 27,398 28,005
PROPERTY, PLANT AND EQUIPMENT - Note D
Land and land improvements 375 368
Building and building improvements 6,245 6,147
Production and engineering equipment 3,442 3,303
Furniture and fixtures 1,013 990
Vehicles 928 878
Computer equipment 5,018 5,058
----------------------------
17,021 16,744
Less accumulated depreciation 7,456 6,625
----------------------------
9,565 10,119
OTHER ASSETS
Capitalized computer software development costs, net of
amortization 9,364 8,908
Patents 2,214 2,328
Other 1,067 916
----------------------------
12,645 12,152
----------------------------
$ 49,608 $ 50,276
============================
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 3
CONSOLIDATED BALANCE SHEETS - Continued
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
June 30 December 31
1997 1996
------------------------------------
(Unaudited)
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 4,249 $ 5,218
Employee compensation 683 1,001
Accrued and other liabilities 1,215 1,108
Current maturities of long term debt - Note D 2,212 3,637
---------------------------------------
TOTAL CURRENT LIABILITIES 8,359 10,964
LONG-TERM DEBT, less current maturities - Notes D and H 19,479 18,010
STOCKHOLDERS' EQUITY - Notes F and H
Common stock, without par value, stated value $.20 per
share; 15,000,000 shares authorized; 8,852,401 shares issued
and outstanding 1,771 1,771
Additional paid-in capital 29,767 29,767
Retained-earnings deficit (9,874) (10,300)
Accumulated translation adjustment 106 64
---------------------------------------
TOTAL STOCKHOLDERS' EQUITY 21,770 21,302
---------------------------------------
$ 49,608 $ 50,276
=======================================
</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
1997 1996
-------------------------------
(Unaudited)
(In thousands, except for per share data)
<S> <C> <C>
Net sales $ 10,985 $ 12,216
Cost of sales 7,654 8,303
----------------------------------
GROSS MARGIN 3,331 3,913
Costs and expenses:
Marketing 1,052 1,026
General and administrative 639 797
Research and development 751 889
----------------------------------
2,442 2,712
----------------------------------
EARNINGS FROM OPERATIONS 889 1,201
Interest:
Expense 499 311
Income (11) (20)
----------------------------------
488 291
----------------------------------
EARNINGS BEFORE INCOME TAXES 401 910
Provision for income taxes -0- 23
----------------------------------
NET EARNINGS $ 401 $ 887
==================================
Net earnings per share $ .04 $ .10
==================================
Weighted average number of shares of common stock and common
stock equivalents, where applicable 8,902 9,081
==================================
</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
1997 1996
-----------------------------
(Unaudited)
(In thousands, except for per share data)
<S> <C> <C>
Net sales $21,196 $22,438
Cost of sales 15,088 15,058
------------------------------
GROSS MARGIN 6,108 7,380
Costs and expenses:
Marketing 2,084 2,147
General and administrative 1,258 1,538
Research and development 1,367 1,911
------------------------------
4,709 5,596
------------------------------
EARNINGS FROM OPERATIONS 1,399 1,784
Interest:
Expense 996 636
Income (23) (29)
------------------------------
973 607
------------------------------
EARNINGS BEFORE INCOME TAXES 426 1,177
Credit for income taxes -0- (37)
------------------------------
NET EARNINGS $ 426 $ 1,214
==============================
Net earnings per share $ .05 $ .13
==============================
Weighted average number of shares of common stock and common
stock equivalents, where applicable 8,898 9,038
==============================
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Six Months ended June 30
1997 1996
-------------------------------------
(Unaudited)
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 426 $ 1,214
Adjustments to reconcile net earnings to net cash provided by
(used in) operating activities:
Depreciation and amortization 2,830 2,069
Provision for deferred income taxes -0- (75)
Changes in operating assets and liabilities (150) (3,118)
-----------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,106 90
INVESTING ACTIVITIES
Purchase of property and equipment (277) (905)
Investment in capitalized software (2,341) (1,657)
-----------------------------------
NET CASH USED IN INVESTING ACTIVITIES (2,618) (2,562)
FINANCING ACTIVITIES
Increase in long-term debt 44 1,406
Proceeds from exercise of stock options -0- 278
----------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 44 1,684
----------------------------------
Effect of exchange rate changes on cash 42 (1)
-----------------------------------
INCREASE (DECREASE) IN CASH 574 (789)
Cash at beginning of period 215 1,556
-----------------------------------
CASH AT END OF PERIOD $ 789 $ 767
===================================
</TABLE>
See notes to consolidated financial statements.
6
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MEDAR, INC. AND SUBSIDIARIES
JUNE 30, 1997
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, 1997 are not necessarily indicative of the results that
may be expected for the year ended December 31, 1997. 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, 1996.
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 1997 December 31 1996
----------------------------------------
(In thousands)
<S> <C> <C>
Raw materials $ 8,916 $ 7,677
Work-in-process 4,263 3,106
Finished goods 1,778 5,208
-----------------------------------
$ 14,957 $ 15,991
</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 1997 December 31 1996
----------------------------------------
(In thousands)
<S> <C> <C>
Contract costs to date $ 6,904 $ 4,567
Estimated contract earnings 4,773 3,040
----------------------------------------
11,677 7,607
Less billings to date (8,602) (5,766)
----------------------------------------
Costs and estimated earnings in
excess of billings on incomplete
contracts $ 3,075 $ 1,841
========================================
</TABLE>
Note D - Long Term Debt and Other Financing Arrangements
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
June 30 1997 December 31 1996
----------------------------------------
(In thousands)
<S> <C> <C>
Revolving note payable to bank $ 9,673 $ 12,604
Notes payable to bank 6,000 3,000
Term notes to bank, payable in varying
amounts to 2003 3,889 3,967
Patent license to corporation, payable
$300,000 yearly including interest 1,863 1,863
Other 266 213
----------------------------------------
21,691 21,647
Less current maturities 2,212 3,637
----------------------------------------
$ 19,479 $ 18,010
========================================
</TABLE>
At June 30, 1997, the revolving note payable to bank has a maximum balance of
$16,000,000 (including notes payable to bank) based upon levels of eligible
accounts receivable and inventories. In July, 1997 the note was extended to be
due July 31, 1999, with interest at the banks prime rate plus 1/4%. The
maximum balance of this note will be $15,000,000 beginning October 1, 1997.
Substantially all of the Company's assets are pledged in connection with the
various notes with the bank. In addition the company has agreed to maintain
levels of net worth, as defined.
On July 15, 1997, the Company issued $7,000,000 of 12.95% eight year
subordinated debentures. Proceeds totaling $4,500,000 were used to pay notes
payable to bank. The remaining note payable to bank ($1,500,000) is due
December 31, 1997. Classification of current maturities as of June 30, 1997
gives effect to the subsequent refinancing of the notes payable to bank.
The fair values of these financial instruments approximate their carrying
amounts at June 30, 1997.
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, 1997 (which are stated as current maturities of long-term debt), are
$414,000 in 1998; $10,366,000 in 1999; $2,798,000 in 2000; $936,000 in 2001;
and $4,965,000 thereafter.
Note E - Income Taxes
Significant components of the provision for income taxes for the
six months ended June 30 are as follows:
<TABLE>
<CAPTION>
1997 1996
---------------------------
(In thousands)
<S> <C> <C>
Current:
Federal $ 0 $ 35
Foreign 3
State
---------------------------
0 38
---------------------------
Deferred (credit):
Federal
Foreign (75)
---------------------------
(75)
---------------------------
$ 0 $ (37)
===========================
</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
1997 1996
-------------------------------
(In thousands)
<S> <C> <C>
Deferred tax liabilities:
Deductible software development costs,
net of amortization $ 3,074 $ 2,931
Tax over book depreciation 338 344
Percentage of completion 558 491
-----------------------
Total deferred tax liabilities 3,970 3,766
Deferred tax assets:
Net operating loss carry forwards 7,722 6,836
Credit carry forwards 1,087 987
Reserve for warranty 68 68
Other 216 219
-----------------------
Total deferred tax assets 9,093 8,110
Valuation allowance for deferred tax assets 5,123 4,344
-----------------------
Net deferred tax assets 3,970 3,766
-----------------------
Net deferred tax liabilities $ -0- $ -0-
=======================
</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 six months ended June 30 is as follows:
<TABLE>
<CAPTION>
1997 1996
-----------------
(In thousands)
<S> <C> <C>
Tax at U.S. statutory rates $ 145 $ 400
Utilization of net operating loss carry forward (17) (549)
Other (128) 112
------- -----
$ -0- $ (37)
======= =====
</TABLE>
Note F - Stock Options
At June 30, 1997, there were options outstanding to purchase 714,900 shares at
prices ranging from $1.75 to $9.25.
Note G - Segment Data
Quarter Ended June 30, 1997
<TABLE>
<CAPTION>
Vision-based Resistance Welding
Inspection Systems Controls Consolidated
- ---------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Net sales $ 4,986 $ 5,999 $ 10,985
Amortization of software development cost 617 233 850
Research and development expense 507 244 751
Earnings (loss) from operations (26) 915 889
Net interest expense 488
- ---------------------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 401
=====================================================================================================================
</TABLE>
Quarter Ended June 30, 1996
<TABLE>
<CAPTION>
Vision-based Resistance Welding
Inspection Systems Controls Consolidated
- ---------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Net sales $ 4,398 $ 7,918 $ 12,216
Amortization of software development cost 232 243 474
Research and development expense 663 266 889
Earnings (loss) from operations (798) 1,999 1,201
Net interest expense 291
- ---------------------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 910
=====================================================================================================================
</TABLE>
10
<PAGE> 11
Note G - Segment Data (cont)
Six Months Ended June 30, 1997
<TABLE>
<CAPTION>
Vision-based Resistance Welding
Inspection Systems Controls Consolidated
- ---------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Net sales $ 8,490 $ 12,706 $ 21,196
Amortization of software development cost 1,212 465 1,677
Research and development expense 836 531 1,367
Earnings (loss) from operations (724) 2,123 1,399
Net interest expense 973
- ---------------------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 426
=====================================================================================================================
</TABLE>
Six Months Ended June 30, 1996
<TABLE>
<CAPTION>
Vision-based Resistance Welding
Inspection Systems Controls Consolidated
- ---------------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Net sales $ 9,276 $ 13,162 $ 22,438
Amortization of software development cost 624 484 1,108
Research and development expense 1,370 541 1,911
Earnings (loss) from operations (1,197) 2,981 1,784
Net interest expense 607
- ---------------------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 1,177
=====================================================================================================================
</TABLE>
Note H - Subsequent Event
On July 15, 1997, the Company privately placed $7,000,000 of 12.95% eight year
subordinated debentures (see Note D to the Consolidated Financial Statements).
Additionally, 150,000 shares of unregistered common stock was sold in a private
transaction to Maxco, Inc., a 21% stockholder of the Company. The proceeds of
the debt and equity issuance was used to reduce bank borrowings by $4,500,000
and to provide capital.
In connection with the above described transactions, the agreement covering
the senior indebtedness with the bank was re-negotiated and extended to July
31, 1999.
The debenture holders received 1,400,000 warrants for the purchase of the
Company's common stock at $6.86 per share. Under certain circumstances the
warrants can be redeemed through July 15, 1998 by exchange for newly issued
common stock.
11
<PAGE> 12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Three Months Ended June 30, 1997 Compared to June 30, 1996.
Net sales in the second quarter of 1997 decreased 8.9% to $11.0 million from
$12.2 million. Increased vision sales (13.4%) were offset by a decrease in
welding sales (24.2%). Increases in vision sales resulted from the Company's
success in marketing products based on VisionBlox technology offset by
continued disappointing sales of CD audio inspection systems. Welding sales
decreased as fewer large automotive programs were scheduled in the second
quarter of 1997 as compared to the second quarter of 1996.
Cost of sales decreased to $7.7 million from $8.3 million and as a percentage
of net sales increased to 69.7% from 68.0%. Cost of sales as percentage of net
sales increased principally from the effects of the lower production volume.
Sales backlog for the Company at June 30, 1997 was $6.8 million compared to
$11.5 million at June 30, 1996. A large order included in the June 30, 1996
backlog was substantially completed prior to June 30, 1997.
Marketing expense was relatively unchanged and increased as a percentage of net
sales to 9.6% from 8.4% due primarily to lower sales volumes.
General and administrative expense decreased to $.6 million from $.8 million
and as a percentage of net sales to 5.8% from 6.5%, principally as the result
of continued cost saving measures.
Research and development expense decreased to $.8 million from $.9 million and
as a percentage of net sales to 6.8% from 7.3%. Fewer research and development
projects were scheduled in the second quarter of 1997 compared to 1996 with
personnel terminated or re-assigned.
Net interest expense increased to $.5 million from $.3 million and as a
percentage of sales to 4.4% from 2.4%, as the 1997 quarter had increased
average debt.
Six Months Ended June 30, 1997 Compared to June 30, 1996.
Net sales decreased 5.5% to $21.2 million from $22.4 million in 1996 with
vision division sales down 8.5% and welding division sales down 3.5%. The
vision division continues to experience diminished CD audio inspection demand
offset by increases in sales of VisionBlox based products. Welding division
sales were down principally as the result of fewer large automotive programs
scheduled in 1997 as compared to 1996.
Cost of sales remained the same at $15.1 million and as a percentage of net
sales increased to 71.2% from 67.1%. Cost of sales as a percentage of net
sales increased principally from the effects of lower production volume.
Marketing expense remained at prior period levels and as a percentage of net
sales increased to 9.8% from 9.6%.
General and administration expense decreased to $1.3 million from $1.5 million
and as a percentage of net sales to 5.9% from 6.9%, principally as the result
of continued cost saving measures.
Research and development expense decreased to $1.4 million from $1.9 million
and as a percentage of net sales to 6.5% from 8.5%. Fewer research and
development projects were scheduled in 1997 compared to 1996 with personnel
terminated or re-assigned.
Net interest expense increased to $1.0 million from $.06 million and as a
percentage of net sales to 4.6% from 2.7%, as 1997 had increased average debt.
12
<PAGE> 13
Liquidity and Capital Resources
Subsequent to June 30, 1997, the Company issued $7,000,000 of subordinated
notes, sold $750,000 of common stock and refinanced its revolving note payable
to bank. Following this transaction availability under the bank line was
$4,000,000.
During the three months ended June 30, 1997 the company used cash provided by
operating activities principally to fund investments in capitalized software.
The Company believes that current financial resources, together with cash
provided by operations, are adequate to meet cash needs for the next 12 months.
No significant commitments for capital expenditures exist as of June 30, 1997.
The Company does not expect that software development costs capitalized during
1997 will exceed amortization of software development costs recognized during
the year, plus $500,000. The Company has no other plans for significant
capital expenditures.
13
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 4. RESULTS OF VOTES OF SECURITY HOLDERS
The annual meeting of the Company was held on May 28, 1997. 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:
For Withheld Non-Votes
--- -------- ---------
Max Coon 7,997,977 71,690 2,300
Richard R. Current 7,997,277 72,390 2,300
Charles J. Drake 7,999,057 70,610 2,300
Stephan Sharf 7,992,927 76,740 2,300
Vincent Shunsky 7,998,077 71,590 2,300
William B. Wallace 7,999,177 70,490 2,300
Stephen R. Zynda 7,998,877 70,790 2,300
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description of Document
- ------- -----------------------
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).
4.1 Note and Warrant Purchase Agreement (filed as Exhibit 4.1
to the registrants Form 8-K dated July 15, 1997, SEC file
0-12728, and incorporated herein by reference).
4.2 Form of 12.95% Senior Subordinated Secured Note (filed as
Exhibit 4.2 to the registrants Form 8-K dated July 15, 1997, SEC
file 0-12728, and incorporated herein by reference).
4.3 Form of Medar, Inc. Common Stock Purchase Warrant
Certificate (filed as Exhibit 4.3 to registrants Form 8-K dated
July 15, 1997, 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).
14
<PAGE> 15
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).
10.15 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).
15
<PAGE> 16
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 (filed as Exhibit
10.28 to the registrant's form 10Q for the quarter ended June
30, 1996, SEC file 0-12728, and incorporated herein by
reference).
10.29 Composite Guarantee and Debenture dated May 29, 1996 by
and between Integral Vision Ltd. and NBD Bank (filed as
Exhibit 10.29 to the registrant's form 10Q for the quarter
ended June 30, 1996, SEC file 0-12728, and incorporated herein
by reference).
10.30 Fourth Amendment to Revolving Credit and Loan Agreement
dated August 11, 1996 by and between Medar, Inc., Integral
Vision-AID, Inc., Integral Vision Ltd. and NBD Bank (filed as
Exhibit 10.30 to the registrant's Form 10-Q for the quarter
ended September 30, 1996, SEC file 0-12728, and incorporated
herein by reference).
16
<PAGE> 17
10.31 Fifth Amendment to Revolving Credit and Loan Agreement
dated February 27, 1997 by and between Medar, Inc. and Integral
Vision, Ltd. and NBD Bank (filed as Exhibit 10.31 to the
registrant's Form 10-K for the year ended December 31, 1996, SEC
file 0-12728, and incorporated herein by reference).
10.32 Over Formula Loan Note dated February 27, 1997 by and
between Medar, Inc., Integral Vision, Ltd., and NBD Bank (filed
as Exhibit 10.32 to the registrant's Form 10-K for the year
ended December 31, 1996, SEC file 0-12728, and incorporated
herein by reference).
10.33 Bridge Loan Note dated February 27, 1997 by and between
Medar, Inc., Integral Vision, Ltd., and NBD Bank (filed as
Exhibit 10.33 to the registrant's Form 10-K for the year ended
December 31, 1996, SEC file 0-12728, and incorporated herein by
reference).
10.34 Sixth Amendment to Revolving Credit and Loan Agreement
dated March 28, 1997 by and between Medar, Inc. and Integral
Vision, Ltd. and NBD bank.
10.35 Seventh Amendment to Revolving Credit and Loan Agreement
dated June 27, 1997 by and between Medar, Inc. and Integral
Vision, Ltd. and NBD bank.
10.36 Eighth Amendment to Revolving Credit and Loan Agreement
dated July 15, 1997 by and between Medar, Inc. and Integral
Vision, Ltd. and NBD bank.
10.37 Amended and Restated Term Note dated July 15, 1997 by and
between Medar, Inc. and NBD bank.
10.38 Collateral Assignment of Property Rights and Security
Agreement dated July 15, 1997 by and between Medar, Inc. and NBD
bank.
10.39 Stock Purchase Agreement between Maxco, Inc. and Medar,
Inc. dated July 23, 1997.
11 Calculation of Earnings per Share.
* The Company has been granted confidential treatment with
respect to certain portions of this exhibit pursuant to Rule
24b-2 under the Securities Exchange Act of 1934, as amended.
17
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
//CHARLES J. DRAKE// 8/14/97
- ---------------------------------
Charles J. Drake
President & Chairman of the Board
Medar, Inc.
(Principal Executive Officer)
//RICHARD R. CURRENT// 8/14/97
- ----------------------------------------------
Richard R. Current
Executive Vice President, Finance & Operations
Medar, Inc.
(Principal Financial & Accounting Officer)
18
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.34 Sixth Amendment to Revolving Credit and Loan Agreement
10.35 Seventh Amendment to Revolving Credit and Loan Agreement
10.36 Eighth Amendment to Revolving Credit and Loan Agreement
10.37 Amended and Restated Term Note
10.38 Collateral Assignment of Property Rights and Security
Agreement
10.39 Stock Purchase Agreement
11. Earnings per Share
27. Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.34
SIXTH AMENDMENT TO
REVOLVING CREDIT AND LOAN AGREEMENT
This SIXTH AMENDMENT TO REVOLVING CREDIT AND LOAN AGREEMENT ("Sixth
Amendment") is dated as of March 28, 1997, and is among MEDAR, INC., a Michigan
corporation (the "Company"), and INTEGRAL VISION LTD., a corporation
established under the laws of the United Kingdom ("Integral"), as Borrowers,
and NBD BANK, a Michigan banking corporation ("NBD"). This Sixth Amendment
amends the Revolving Credit and Loan Agreement dated as of August 10, 1995 (as
amended, the "Loan Agreement"), as amended by the First Amendment to Revolving
Credit and Loan Agreement dated October 12, 1995 (the "First Amendment"), the
Second Amendment to Revolving Credit and Loan Agreement dated October 31, 1995
(the "Second Amendment"), the Third Amendment to Revolving Credit and Loan
Agreement dated as of March 29, 1996 ("Third Amendment"), the Fourth Amendment
to Revolving Credit and Loan Agreement dated as of August 11, 1996 ("Fourth
Amendment") and the Fifth Amendment to Revolving Credit and Loan Agreement
dated as of February 27, 1997 ("Fifth Amendment"), among the Company, Integral
and NBD. The original Loan Agreement and the first four amendment also had as a
party a former subsidiary of the Company, Integral Vision-AID, Inc., a Michigan
corporation ("AID") (successor by merger to Integral Vision-Aid, Inc., an Ohio
corporation, formerly known as Automatic Inspection Devices, Inc.). AID has
since been merged into the Company and no longer exists as a separate
corporation. The Company and Integral are collectively referred to as the
"Borrowers" and individually as a "Borrower". Capitalized terms not otherwise
defined in this Sixth Amendment shall have the meanings given to them in the
Loan Agreement.
WHEREAS, the Borrowers have requested that NBD extend the maturity of the
Bridge Loan and Maxco, Inc. has agreed to such extension.
WHEREAS, NBD has agreed that to extend the maturity on the terms and
conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties agree as follows:
1. Extended Bridge Loan. Sections 2.7 of the Loan Agreement is hereby
amended such that the Bridge Loan will be due and payable on the date set forth
in the current Bridge Loan Note.
2. Conditions. Notwithstanding any other term of this Sixth Amendment
or the Loan Agreement, NBD will not be required to give effect to this Sixth
Amendment unless the following conditions have been met:
a. NBD shall have received a fully executed copy of this Sixth
Amendment and an Amended and Restated Bridge Loan Note, in form and substance
satisfactory to NBD.
b. NBD shall have received a reaffirmation of their respective
guaranties from Maxco, Inc. and Medar Canada Ltd., including a consent to the
terms of this Sixth Amendment.
c. All of the terms and conditions in Section 3.7 of the Loan
Agreement continue to be met.
3. Reaffirmation of Loan Agreement; Conflicts. The parties hereto
acknowledge and agree that the terms and provisions of this Sixth Amendment,
amend, add to and constitute a part of the Loan Agreement. Except as expressly
modified and amended by the terms of this Sixth Amendment, all of the other
terms and conditions of the Loan Agreement and all of the documents executed in
connection therewith or referred to or incorporated therein, remain in full
force and effect and are hereby ratified, confirmed and approved. If there is
an express conflict between the terms of this Sixth Amendment and the terms of
the Loan Agreement, or any of the other agreements or documents executed in
connection therewith or referred to or incorporated therein, the terms of this
Sixth Amendment shall govern and control. Any reference in any other
<PAGE> 2
document or agreement to the Loan Agreement shall hereafter refer to the
Loan Agreement as amended by this Sixth Amendment.
4. Representations True. The representations and warranties of the
Borrowers contained in the Loan Agreement are true on the date hereof and,
after giving effect hereto, there does not exist any Default or Event of
Default under the Loan Agreement.
5. Expenses. Borrowers acknowledge and agree that the Borrowers will
pay all attorneys' fees and out-of-pocket costs of NBD in connection with or
with respect to this Sixth Amendment and the conditions set forth herein.
IN WITNESS WHEREOF, the Borrowers and NBD have executed the foregoing
document by their duly authorized officers as of the day and year first written
above.
NBD BANK
By:____________________________
Richard P. Haslinger
Its: Senior Vice President
and
By:____________________________
Glenn Ansiel
Its: Assistant Vice President
(signatures continue on next page)
<PAGE> 3
MEDAR, INC.
By:____________________________
Charles Drake
Its: President
INTEGRAL VISION LTD.
By:____________________________
Richard Current
Its: Company Secretary
<PAGE> 1
EXHIBIT 10.35
SEVENTH AMENDMENT TO
REVOLVING CREDIT AND LOAN AGREEMENT
This SEVENTH AMENDMENT TO REVOLVING CREDIT AND LOAN AGREEMENT ("Seventh
Amendment") is dated as of June 27, 1997, and is among MEDAR, INC., a Michigan
corporation (the "Company"), and INTEGRAL VISION LTD., a corporation established
under the laws of the United Kingdom ("Integral"), as Borrowers, and NBD BANK, a
Michigan banking corporation ("NBD"). This Seventh Amendment amends the
Revolving Credit and Loan Agreement dated as of August 10, 1995 (as amended, the
"Loan Agreement"), as amended by the First Amendment to Revolving Credit and
Loan Agreement dated October 12, 1995 (the "First Amendment"), the Second
Amendment to Revolving Credit and Loan Agreement dated October 31, 1995 (the
"Second Amendment"), the Third Amendment to Revolving Credit and Loan Agreement
dated as of March 29, 1996 ("Third Amendment"), the Fourth Amendment to
Revolving Credit and Loan Agreement dated as of August 11, 1996 ("Fourth
Amendment"), the Fifth Amendment to Revolving Credit and Loan Agreement dated as
of February 27, 1997 ("Fifth Amendment"), and the Sixth Amendment to Revolving
Credit and Loan Agreement dated as of March 28, 1997 ("Sixth Amendment"), among
the Company, Integral and NBD. The original Loan Agreement and the first four
amendment also had as a party a former subsidiary of the Company, Integral
Vision-AID, Inc., a Michigan corporation ("AID") (successor by merger to
Integral Vision-Aid, Inc., an Ohio corporation, formerly known as Automatic
Inspection Devices, Inc.). AID has since been merged into the Company and no
longer exists as a separate corporation. The Company and Integral are
collectively referred to as the "Borrowers" and individually as a "Borrower".
Capitalized terms not otherwise defined in this Seventh Amendment shall have the
meanings given to them in the Loan Agreement.
WHEREAS, NBD has agreed to increase the Bridge Loan to $3,000,000, while
the Borrowers seek additional equity or subordinated debt, pursuant to the terms
and conditions of this Seventh Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties agree as follows:
1. Increased Bridge Loan. Section 2.7 of the Loan Agreement is
hereby amended in its entirety to read as follows:
2.7 Bridge Loan to the Borrowers. Subject to the terms and conditions
of the Loan Agreement, the Fifth Amendment and the Seventh Amendment,
NBD will increase the amount of its short term loan to the Borrowers,
jointly and severally, from the original principal amount of
$1,500,000 to $3,000,000 ("Bridge Loan"), effective as of June 27,
1997, to be evidenced by a promissory note in substantially the form
of Exhibit 2.7 attached to the Seventh Amendment (together with any
amendments, restatements, replacements or renewals, the "Bridge Loan
Note"). The proceeds of the additional $1,500,000 of the Bridge Loan
will be advanced to the Borrowers upon their request. The Bridge Loan
will bear interest at 1% per annum above the Prime Rate in effect from
time to time. Interest on the Bridge Loan will be due and payable
monthly on the last business day of each month, beginning March 31,
1997. The principal outstanding under the Bridge Loan shall be due
and payable as set forth in the current Bridge Loan Note. Any payments
on the Bridge Loan will be applied first to unpaid interest and then
to principal, and once repaid, principal may not be reborrowed. So
long as there exists any Default or Event of Default, unless otherwise
consented to in writing by NBD, all payments received by NBD from the
Borrowers generated from operations, rather than from Subordinated
Debt or additional equity contributions, will be applied first to the
outstanding obligations under the Revolving Loans and Over-Formula
Loan before being applied to the Bridge Loan.
2. Conditions. Notwithstanding any other term of this Seventh
Amendment or the Loan Agreement, NBD will not be required to give effect to this
Seventh Amendment unless the following conditions have been met:
a. NBD shall have received a fully executed copy of this
Seventh Amendment and the new Bridge Loan Note.
<PAGE> 2
b. NBD shall have received a reaffirmation of the guaranties
from Medar Canada Ltd. and Maxco, Inc., including a consent to the
terms of this Seventh Amendment and agreement to cover the increased
amount of the Bridge Loan.
c. All of the terms and conditions in Section 3.7 of the Loan
Agreement continue to be met.
3. Reaffirmation of Loan Agreement; Conflicts. The parties hereto
acknowledge and agree that the terms and provisions of this Seventh Amendment,
amend, add to and constitute a part of the Loan Agreement. Except as expressly
modified and amended by the terms of this Seventh Amendment, all of the other
terms and conditions of the Loan Agreement and all of the documents executed in
connection therewith or referred to or incorporated therein, remain in full
force and effect and are hereby ratified, confirmed and approved. If there is
an express conflict between the terms of this Seventh Amendment and the terms of
the Loan Agreement, or any of the other agreements or documents executed in
connection therewith or referred to or incorporated therein, the terms of this
Seventh Amendment shall govern and control. Any reference in any other document
or agreement to the Loan Agreement shall hereafter refer to the Loan Agreement
as amended by this Seventh Amendment.
4. Representations True. The representations and warranties of the
Borrowers contained in the Loan Agreement are true on the date hereof and, after
giving effect hereto, there does not exist any Default or Event of Default under
the Loan Agreement.
5. Expenses. Borrowers acknowledge and agree that the Borrowers will
pay all attorneys' fees and out-of-pocket costs of NBD in connection with or
with respect to this Seventh Amendment and the conditions set forth herein.
IN WITNESS WHEREOF, the Borrowers and NBD have executed the foregoing
document by their duly authorized officers as of the day and year first written
above.
NBD BANK
By:____________________________
Richard P. Haslinger
Its: Senior Vice President
and
By:____________________________
Glenn Ansiel
Its: Assistant Vice President
MEDAR, INC.
By:____________________________
Charles Drake
Its: President
INTEGRAL VISION LTD.
2
<PAGE> 3
By:____________________________
Richard Current
Its: Company Secretary
3
<PAGE> 1
EXHIBIT 10.36
EIGHTH AMENDMENT TO
REVOLVING CREDIT AND LOAN AGREEMENT
This EIGHTH AMENDMENT TO REVOLVING CREDIT AND LOAN AGREEMENT ("Eighth
Amendment") is dated as of July 15, 1997, and is among MEDAR, INC., a Michigan
corporation (the "Company"), and INTEGRAL VISION LTD., a corporation established
under the laws of the United Kingdom ("Integral"), as Borrowers, and NBD BANK, a
Michigan banking corporation ("NBD"). This Eighth Amendment amends the
Revolving Credit and Loan Agreement dated as of August 10, 1995 (as amended, the
"Loan Agreement"), as amended by the First Amendment to Revolving Credit and
Loan Agreement dated October 12, 1995 (the "First Amendment"), the Second
Amendment to Revolving Credit and Loan Agreement dated October 31, 1995 (the
"Second Amendment"), the Third Amendment to Revolving Credit and Loan Agreement
dated as of March 29, 1996 ("Third Amendment"), the Fourth Amendment to
Revolving Credit and Loan Agreement dated as of August 11, 1996 ("Fourth
Amendment"), the Fifth Amendment to Revolving Credit and Loan Agreement dated as
of February 27, 1997 ("Fifth Amendment"), the Sixth Amendment to Revolving
Credit and Loan Agreement dated as of March 28, 1997 ("Sixth Amendment"), and
the Seventh Amendment to Revolving Credit and Loan Agreement dated as of June
27, 1997 ("Seventh Amendment"), among the Company, Integral and NBD. The
original Loan Agreement and the first four amendment also had as a party a
former subsidiary of the Company, Integral Vision-AID, Inc., a Michigan
corporation ("AID") (successor by merger to Integral Vision-Aid, Inc., an Ohio
corporation, formerly known as Automatic Inspection Devices, Inc.). AID has
since been merged into the Company and no longer exists as a separate
corporation. The Company and Integral are collectively referred to as the
"Borrowers" and individually as a "Borrower". Capitalized terms not otherwise
defined in this Eighth Amendment shall have the meanings given to them in the
Loan Agreement.
WHEREAS, the Borrowers have negotiated to obtain $7,000,000 of subordinate,
secured debt and have requested that NBD consent to such debt and security.
WHEREAS, NBD has agreed to consent to the Company incurring the additional
debt on the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties agree as follows:
1. Revised Definitions.
(a) The following definitions contained in Section 1.1 of the Loan
Agreement, as amended, are hereby amended, effective the date hereof, to read as
follows:
"Commitment" means the commitment of NBD to make Revolving Loans pursuant
to the terms of Section 2.1, which together with the outstanding principal
amount of the Bridge Loan and the Over-Formula Loan shall not exceed
$16,000,000 until September 29, 1997, and $15,000,000 on and after
September 30, 1997, as such amounts may be further reduced from time to
time pursuant to Section 2.2.
"Eligible Accounts Receivable" means each account owing to any of the
Borrowers or Guarantor ("Loan Party") which meets the following
specifications:
<PAGE> 2
(a) it arose from a bona fide sale of goods, in the ordinary course of
business, such goods having been delivered or shipped to the account debtor
and the appropriate Loan Party has genuine purchase orders, invoices and
shipping documents or receipts;
(b) has been outstanding for no more than 120 days from the date of
shipment or delivery;
(c) it is owned by the appropriate Loan Party, free and clear of any
Lien, other than the perfected, first priority Lien created in favor of NBD
and a Lien subject to the Subordination Agreement;
(d) it is enforceable against the account debtor for the amount
included in the Borrowing Base, is in compliance with applicable laws and
regulations, is not subject to any set-off, credit allowance or adjustment
(except discounts for prompt payment reflected in the computation thereof)
and the account debtor has not returned the goods or disputed liability
with respect to such account;
(e) none of the Loan Parties have notice or knowledge of any fact or
occurrence which could reasonably be expected to impair the credit
worthiness of the account debtor;
(f) the account debtor is not an Affiliate of any Loan Party, nor is
it the United States of America, or any agency thereof;
(g) the account debtor has its principle place of business in the
United States, Britain or Canada, or the account is covered by acceptable
credit insurance; and
(h) NBD has not notified the Borrowers that the account or account
debtor is unsatisfactory, in the discretion of NBD.
"Loans" means (i) the Revolving Loans made by NBD to the Borrowers pursuant
to Section 2.1, including those made by NBD through the London Branch, in
each case evidenced by the Revolving Note, (ii) the Equipment Loans made by
NBD to any one or more of the Borrowers pursuant to Section 2.4, (iii) the
Over-Formula Loan, (iv) the 1995 Mortgage Loan made by NBD to the Company
pursuant to Section 2.6, and (v) the term loan evidenced by the Amended and
Restated Term Note, dated July 15, 1997, in the original principal amount
of $1,500,000, from the Company to NBD.
"Loan Documents" means this Agreement, the Notes, the Guaranty Agreement,
the L/C Documents, NBD Guaranty Documents, the Equipment Loan Documents,
the Security Documents, any mortgages given to NBD, the First Amendment,
the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth
Amendment, the Sixth Amendment, the Seventh Amendment, the Eighth Amendment
and all other agreements, documents or instruments now or hereafter
executed by or on behalf of any of the Borrowers or the Guarantor and
delivered to NBD in connection with this Agreement or any amendment
thereof.
2
<PAGE> 3
"Notes" means the Revolving Note, the 1995 Term Note, the Over-Formula Loan
Note, and the Amended and Restated Term Note, dated July 15, 1997, in the
original principal amount of $1,500,000, from the Company to NBD, together
with any amendment, restatement, replacement or renewal thereof, and the
promissory notes, leases, and conditional sale contracts given by any
Borrower pursuant to the credit granted under Section 2.4, together with
any amendment, restatement, replacement or renewal thereof.
"Tangible Net Worth" means (a) the excess, if any, of the assets of the
Borrowers and the Guarantor (excluding capitalized software development
costs, goodwill, patents, trademarks, trade names, copyrights and other
assets properly classified as intangible assets in accordance with GAAP)
over the liabilities of the Borrowers and the Guarantors, determined on a
combined basis in accordance with GAAP; provided, however, that, in
determining Tangible Net Worth, (i) there shall be included in liabilities
any and all evidences of Indebtedness of the Borrowers or any Guarantor,
including notes and debentures of any Borrower or Guarantor which are
subordinated indebtedness, and (ii) there shall be excluded from assets any
and all assets of the Borrowers and the Guarantor which are Investments in
any other Person.
"Termination Date" means the earlier to occur of (a) August 31, 1999, and
(b) the date on which the Commitment shall be terminated pursuant to
Section 2.2 or 7.2.
(b) The following definitions are hereby added in alphabetical order to
Section 1.1 of the Loan Agreement to read as follows:
"Aggregate Net Income" means the aggregate amount of positive annual net
income after taxes for each fiscal year of the Borrowers and the Guarantor
on a consolidated basis, as determined in accordance with GAAP, beginning
with the fiscal year ending December 31, 1997 through the date of
determination, without any offset for any negative net income during such
period. Aggregate Net Income will only be adjusted as of the last day of
each fiscal year.
"Note Subordination Agreement" means the Subordination Agreement given to
NBD by the holders of the Subordinated Notes, in substantially the form of
Exhibit 1 attached to the Eighth Amendment, and any amendment, replacement
or restatement thereof.
"Subordinated Notes" means Indebtedness of the Company under seven 12.95%
Senior Subordinated Secured Notes dated July 14, 1997, in the aggregate
original principal amount of $7,000,000, which have been issued under the
Note and Warrant Purchase Agreement, dated as of July 14, 1997, and any
replacements thereof; provided that such Indebtedness, any guaranties and
any Liens are made subordinate to the Obligations and Liens of NBD on terms
satisfactory to NBD.
2. Letter of Credit Fees. The reference in the third line of Section
2.3(a)(iii) of the Loan Agreement to "1.00%" is hereby amended to read "1.25%".
3. Cancellation of Inventory Reliance Fee. When the outstanding
principal of and interest
3
<PAGE> 4
on the Bridge Loan is paid in full and when the outstanding principal balance of
the Over-Formula Loan is at or below $1,500,000, the Inventory Reliance Fee
described in Section 2.1(b)(iii) shall cease to accrue.
4. Equipment Line. Section 2.4(a) of the Loan Agreement is hereby amended
to read in its entirety to read as follows:
(a) Requests for Loans. Subject to the terms and conditions of this
Agreement and at the sole discretion of NBD before July 31, 1998, NBD may
extend term loans to, or enter into leases or conditional sales contracts
with, either the Company or AID in a total amount not to exceed $500,000 to
be used for the acquisition of equipment. All requests under this Section
2.4 must be submitted in writing to NBD, together with all information
reasonably requested by NBD with respect to the equipment to be acquired.
5. Quarterly Audits. Section 6.1(g) of the Loan Agreement is hereby
amended to read in its entirety to read as follows:
(g) Audits. Prior to the occurrence of an Event of Default, permit NBD's
representatives to conduct quarterly, on-site audits of the Borrowers' and
Guarantor's business operations, after the occurrence of an Event of
Default, NBD may audit the Borrowers, Guarantor and their respective
businesses as frequently as NBD desires, and the Borrowers must reimburse
NBD for all costs (including its standard auditor fees) incurred in
connection therewith within 10 days after receipt of an invoice therefor.
6. Revised Financial Covenants. Sections 6.2(a) and (b) of the Loan
Agreement are hereby amended in their entirety to read as follows:
(a) Tangible Net Worth. Permit or suffer Tangible Net Worth to be less
than, on June 30, 1997 and September 30, 1997, $9,500,000, and as of the
end of each fiscal quarter of the Borrowers beginning December 31, 1997 and
thereafter, less than (i) $9,500,000, plus (ii) as of the date of
determination, 50% of Aggregate Net Income.
(b) Debt to Worth Ratio. Permit or suffer the Debt to Worth Ratio to
exceed (i) 3.50 to 1.00 on December 31, 1996 and as of the end of each
fiscal quarter of the Borrowers to and including June 30, 1998, and (ii)
3.25 to 1.00 on September 30, 1998 and as of the end of each fiscal quarter
of the Borrowers thereafter.
7. Revised Indebtedness and Lien Covenants. Sections 6.2(c)(iv) and
(d)(vi) of the Loan Agreement are hereby amended in their entirety to read as
follows:
(iv) Indebtedness of the Company under the Subordinated Notes and the
guarantee of such debt by Integral and Guarantor.
. . . .
(vi) Liens in favor of NBD and Liens granted in connection with the
Subordinated
4
<PAGE> 5
Notes by the Company and subordinated to NBD's Liens under the Note
Subordination Agreement.
8. Conditions. Notwithstanding any other term of this Eighth Amendment or
the Loan Agreement, NBD will not be required to give effect to this Eighth
Amendment unless the following conditions have been met:
a. NBD shall have received a fully executed copy of this Eighth
Amendment and the Amended and Restated Term Note, dated July 15, 1997, in
the original principal amount of $1,500,000, from the Company to NBD
(together with any amendments, restatements or renewals thereof, the "1997
Term Note"), in substantially the form of Exhibit 8 attached hereto.
b. NBD shall have received a reaffirmation of the guaranty from
Medar Canada Ltd. and Maxco, Inc., including a consent to the terms of this
Eighth Amendment.
c. The outstanding principal of and interest on the Bridge Loan
is paid in full from the proceeds of the Subordinated Notes and a principal
payment of $1,500,000 on the Over-Formula Loan is made from the proceeds of
the Subordinated Notes.
d. NBD shall have received the Note Subordination Agreement,
fully executed by all holders of the Subordinated Note and the Agent for
such holders.
e. NBD shall have received an updated Collateral Assignment of
Proprietary Rights and Security Agreement with updated information on the
Borrowers' intellectual property.
f. All of the terms and conditions in Section 3.7 of the Loan
Agreement continue to be met.
g. NBD shall have received an amendment fee of $60,000 from the
Borrowers, which is due and payable upon the execution of this Eighth
Amendment. Such amendment fee is in addition to all other interest, fees,
costs and expenses due from the Borrowers.
9. Additional Equity; Termination of Guaranty. The Company agrees that it
will obtain at least $750,000 of additional equity from Maxco, Inc. by August
15, 1997. After payment in full of the Bridge Loan as contemplated hereby and
Maxco, Inc. pays the Company at least $750,000 for additional equity, NBD
acknowledges that the Guaranty to NBD by Maxco, Inc. will be terminated and it
will provide written confirmation thereof to Maxco, Inc.
10. Reaffirmation of Loan Agreement; Conflicts. The parties hereto
acknowledge and agree that the terms and provisions of this Eighth Amendment,
amend, add to and constitute a part of the Loan Agreement. Except as expressly
modified and amended by the terms of this Eighth Amendment, all of the other
terms and conditions of the Loan Agreement and all of the documents executed in
connection therewith or referred to or incorporated therein, remain in full
force and effect and are hereby ratified, confirmed and approved. If there is
an express conflict between the terms of this Eighth Amendment and the terms of
the Loan Agreement, or any of the other agreements or
5
<PAGE> 6
documents executed in connection therewith or referred to or incorporated
therein, the terms of this Eighth Amendment shall govern and control. Any
reference in any other document or agreement to the Loan Agreement shall
hereafter refer to the Loan Agreement as amended by this Eighth Amendment.
11. Representations True. The representations and warranties of the
Borrowers contained in the Loan Agreement are true on the date hereof and,
after giving effect hereto, there does not exist any Default or Event of
Default under the Loan Agreement.
12. Expenses. Borrowers acknowledge and agree that the Borrowers will pay
all attorneys' fees and out-of-pocket costs of NBD in connection with or with
respect to this Eighth Amendment and the conditions set forth herein.
6
<PAGE> 7
IN WITNESS WHEREOF, the Borrowers and NBD have executed the foregoing
document by their duly authorized officers as of the day and year first written
above.
NBD BANK
By:____________________________
Richard P. Haslinger
Its: Senior Vice President
and
By:____________________________
Glenn Ansiel
Its: Assistant Vice President
MEDAR, INC.
By:____________________________
Charles Drake
Its: President
INTEGRAL VISION LTD.
By:____________________________
Richard Current
Its: Company Secretary
7
<PAGE> 8
REAFFIRMATION OF GUARANTY
The undersigned, Medar Canada Ltd., hereby acknowledges and agrees to
the terms of this Eigth Amendment to Revolving Credit and Loan Agreement and
hereby reaffirms each and every term of its (i) Guarantee and Postponement of
Claim dated August 10, 1995, given in favor of NBD Bank with respect to the
obligations of Medar, Inc., Automatic Inspection Devices, Inc. (also known as
Integral Vision-AID, Inc. and now merged into Medar, Inc.) and Integral Vision
Ltd., and (ii) General Security Agreement dated as of May 1, 1996, given in
favor of NBD Bank.
MEDAR CANADA LTD.
By:__________________________
Charles Drake
Its: President
Dated ________________________
8
<PAGE> 9
REAFFIRMATION OF GUARANTY
The undersigned, Maxco, Inc., hereby acknowledges and agrees to the
terms of this Eighth Amendment to Revolving Credit and Loan Agreement, dated
July __, 1997, among Medar, Inc., Integral Vision Ltd. and NBD Bank. The
undersigned hereby agrees that the term "Indebtedness" in its Guaranty dated
February 27, 1997, given in favor of NBD Bank, is hereby amended to refer to up
to the principal amount of $750,000 of the Obligations ("Guaranteed Portion")
owing to NBD Bank (as defined in the Revolving Credit and Loan Agreement, dated
August 10, 1995, as amended), and hereby reaffirms each and every term of its
Guaranty as amended hereby. It is agreed that any payment on the Obligations
from any source other than Maxco, Inc. will not reduce the Guaranteed Portion.
MAXCO, INC.
By:__________________________
Its: ____________________
Dated ________________________
9
<PAGE> 1
EXHIBIT 10.37
AMENDED AND RESTATED TERM NOTE
$1,500,000.00 Detroit, Michigan
Due: June 29, 2002 July 15, 1997
For Value Received, the undersigned (also referred to as "Borrower")
promises to pay to the order of NBD BANK, a Michigan banking corporation,
formerly known as NBD Bank, N.A. ("Bank"), at any of its offices in the State
of Michigan, the principal sum of ONE MILLION FIVE HUNDRED THOUSAND AND 00/100
DOLLARS ($1,500,000.00), with interest computed on the balance from time to
time unpaid on the basis of the actual number of days elapsed in a year of 360
days at the rate of one fourth of one percent (1/4%) per annum more than the
rate announced from time to time by the Bank as its "prime" rate, which rate
may not necessarily be the lowest rate charged by the Bank to any of its
customers ("Note Rate"), until maturity, whether by acceleration or otherwise,
and at a rate of three percent (3%) per annum above the Note Rate on overdue
principal from the date when due until paid. Each change in the "prime" rate
will immediately change the Note Rate. The Borrower will pay this sum as
follows:
In nineteen (19) consecutive quarterly installments of
$62,500.00, plus interest, commencing September 29,
1997, and continuing on the 29th day of each December,
March, June and September thereafter through March 29,
2002, and a final installment of $312,500.00 on June
29, 2002, at which time the balance plus accrued
interest then unpaid shall be due and payable
immediately.
In no event shall the interest rate exceed the maximum rate allowed by
law. Any interest which would for any reason be deemed unlawful under
applicable law shall be applied to principal.
Waiver: The Borrower and each indorser of this note and any other party
liable for the debt evidenced by this note severally waives demand,
presentment, notice of dishonor and protest of this note, and consents to any
extension or postponement of time of its payment without limit as to number or
period, to any substitution, exchange or release of all or any part of the
collateral security this note, to the addition of any party, and to the
release, discharge, or suspension of any rights and remedies against any person
who may be liable for the payment of this debt. No delay on the part of the
holder in the exercise of any right or remedy shall operate as a waiver. No
single or partial exercise by the holder of any right or remedy shall preclude
any other further exercise of that right or remedy or the exercise of any other
right or remedy. No waiver or indulgence by the holder of any default shall be
effective unless it is in writing and signed by the holder, nor shall a waiver
on one occasion be construed as a bar to or waiver of any right on any future
occasion.
Miscellaneous: The Borrower, if more than one, shall be jointly and
severally liable, and the term "Borrower" shall mean any one or more of them.
This note shall be binding on the Borrower and its successors, and shall inure
to the benefit of the Bank, its successors and assigns. Any reference to the
Bank shall include any holder of this note. This note is delivered in the
State of Michigan and governed by Michigan law. Section headings are for
convenience of reference only and shall not affect the interpretation of this
note.
This note evidences a debt under the terms a Loan and Credit Agreement
dated June 29, 1993, and any amendments, among the Bank, the Borrower, and
Automatic Inspection Devices, Inc., which is incorporated by reference for
additional terms and conditions, including default and acceleration provisions.
<PAGE> 2
This note amends and restates (but does not discharge) the indebtedness
outstanding under a Term Note dated June 29, 1993, in the original principal
amount of $2,500,000, from the Borrower to the Bank, and as such is an
extension of the "Term Note" referred to in and secured by the Amended and
Restated Mortgage and Security Agreement, dated June 29, 1993, from Borrower,
recorded at Liber 13885, Page 40 of the Oakland County, Michigan real estate
records.
WAIVER OF JURY TRIAL: THE BANK AND THE BORROWER, AFTER CONSULTING OR
HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT EITHER OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION BASED UPON OR ARISING OUT OF THIS NOTE, OR ANY RELATED INSTRUMENTS
OR AGREEMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS NOTE OR ANY
RELATED INSTRUMENT OR AGREEMENT, OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN), OR ACTIONS OF EITHER OF THEM. NEITHER THE BANK NOR
THE BORROWER SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE, ANY SUCH
ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE PROVISIONS SHALL NOT BE
DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY EITHER THE BANK
OR THE BORROWER EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY BOTH OF THEM.
BORROWER:
Address: MEDAR, INC.
38700 Grand River Avenue
Farmington Hills, Michigan 48335 By:________________________________
Charles Drake
Its: President
2
<PAGE> 1
EXHIBIT 10.38
COLLATERAL ASSIGNMENT OF
PROPRIETARY RIGHTS AND SECURITY AGREEMENT
THIS COLLATERAL ASSIGNMENT OF PROPRIETARY RIGHTS AND SECURITY AGREEMENT
("Agreement"), dated as of July 15, 1997, is made by Medar, Inc., a Michigan
corporation, in favor of NBD Bank, a Michigan banking corporation ("NBD" or
"Lender").
Recitals:
A. Assignor, certain of its affiliates and Lender are parties to that
certain Revolving Credit and Loan Agreement dated as of August 10, 1995, as
amended by agreements dated October 12, 1995, October 31, 1995, March 29, 1996,
August 11, 1996, February 27, 1997, June 27, 1997 and the date hereof (such
agreement, as amended, modified or supplemented from time to time, is referred
to herein as the "Loan Agreement").
B. It is a condition to the Eighth Amendment to Revolving Credit and Loan
Agreement being executed simultaneously herewith, that Assignor executes and
delivers this Agreement.
NOW THEREFORE, in consideration of the premises and to induce Lender to
make extensions of credit to Assignor under the Loan Agreement, and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Assignor agrees with Lender 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:
"Collateral" means all of the Trademarks, Copyrights, Patents and
Intellectual Property Rights, whether now existing or hereafter created
or acquired (including, without limitation, such of the foregoing as are
listed on Schedule A attached hereto and made a part hereof).
"Copyrights" means all United States copyrights, registered or
unregistered, in and to all copyrightable works now owned or hereafter
acquired by Assignor, including all registrations and applications
therefor and all licenses thereof and (a) any renewals or extensions of
the registrations therefor that may be secured under the laws now or
hereafter in effect in the United States, (b) all income, royalties,
damages and payments now and hereafter due or payable under and with
respect thereto, including, without limitation, payments under all
licenses entered into in connection therewith and damages and payments
for past or future infringements thereof, (c) the right to sue and
recover for past, present and future infringements thereof, and (d) all
rights corresponding thereto throughout the world.
"Event of Default" means an Event of Default as defined in the Loan
Agreement.
"Intellectual Property Rights" means all intellectual property
rights other than Trademarks, Copyrights and Patents, now owned or
hereafter acquired by Assignor, including, without limitation, trade
secrets, know-how and confidential business information, computer
software, data and documentation (including electronic media) and
licenses thereof, and (a) all
<PAGE> 2
income, royalties, damages and payments now and hereafter due or payable
under and with respect thereto, including, without limitation,
payments under all licenses entered into in connection therewith and
damages and payments for past or future infringements thereof, (b) the
right to sue and recover for past, present and future infringements
thereof, and (c) all rights corresponding thereto throughout the
world.
"Patents" means all United States patents and patent applications,
now owned or hereafter acquired by Assignor, including, without
limitation, the inventions and improvements described and claimed
therein, all licenses thereof and (a) the reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof,
(b) all income, royalties, damages and payments now and hereafter due or
payable under and with respect thereto, including, without limitation,
payments under all licenses entered into in connection therewith and
damages and payments for past or future infringements thereof, (c) the
right to sue and recover for past, present and future infringements
thereof, and (d) all rights corresponding thereto throughout the world.
"Trademarks" means all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos, other source or business identifiers, prints and
labels on which any of the foregoing have appeared or appear, designs and
general intangibles of like nature, trademark registrations and
applications for registration owned by Assignor and all licenses thereof,
together with the goodwill of the business connected with the use of, and
symbolized by, the foregoing, and (a) the registration renewals thereof,
(b) all income, royalties, damages and payments now and hereafter due or
payable under and with respect thereto including, without limitation,
payments under all licenses entered into in connection therewith and
damages and payments for past or future infringements thereof, (c) the
right to sue and recover for past, present and future infringements
thereof, and (d) all rights corresponding thereto throughout the world.
2. Collateral Assignment of Security Interest in Trademarks, Copyrights
and Patents and Intellectual Property Rights. To secure the prompt and
complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of all the Obligations, Assignor hereby grants to
Lender and its assignees a continuing security interest in the
Collateral, and, subject to Section 7 hereof, shall assign, transfer and convey
to Lender all right, title and interest, in the United States and throughout
the world, in, to and under the Collateral.
3. Continuing Liability. Assignor hereby expressly agrees that, anything
herein to the contrary notwithstanding, it shall remain liable under each
license, interest and obligation assigned to Lender hereunder to observe and
perform all the conditions and obligations to be observed and performed by
Assignor thereunder, all in accordance with and pursuant to the terms and
provisions thereof. Lender shall have no obligation or liability under any
such license, interest or obligation by reason of or arising out of this
Agreement or the assignment thereof to Lender or the receipt by Lender of any
payment relating to any such license, interest or obligation pursuant hereto,
nor shall Lender be required or obligated in any manner to perform or fulfill
any of the obligations of Assignor thereunder or pursuant thereto, or to make
any payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by any of them or the sufficiency of any performance by any
party under any such license, interest or obligation, or to present or file any
claim, or to take any action to collect or enforce any performance of the
payment of any amounts which may have been assigned to Assignor or to which
Assignor may be entitled at any time or times.
2
<PAGE> 3
4. Representations and Warranties. Assignor hereby represents and
warrants to Lender:
(a) All of Assignor's Copyrights, Patents and Trademarks (whether
or not registered) which are material to its business are listed on
Schedule A hereto or have already been specifically pledged to Lender
prior to the date hereof, as updated from time to time.
(b) Except as set forth in Schedule A and except for Permitted
Liens, Assignor owns free and clear of all Liens all right, title and
interest in, or has full right and authority to use, all Collateral
necessary or desirable for the conduct of its business as currently
conducted, as previously conducted or as currently proposed to be
conducted.
5. Updated Information and Filings. Assignor agrees that it will deliver
to Lender an updated Schedule A to this Agreement on at least a quarterly
basis, and more often if requested by Lender. Assignor also agrees that it
will take such actions as requested by Lender to allow Lender to record and
perfect its Lien on Assignor's Copyrights, Patents, Trademanrks and
Intellectual Property Rights, including without limitation, filing and
registering its rights with appropriate governmental entities.
6. Restrictions on Future Agreements. Assignor agrees that until all of
the Obligations have been paid in full and the Loan Agreement has been
terminated, it will not, without Lender's prior written consent, enter into any
agreement, including, without limitation, any license agreement, which is
inconsistent with Assignor's obligations under this Agreement or which is
prohibited by the Loan Agreement.
7. Effect of Collateral Assignment and Remedies. (a) If an Event of
Default has occurred and is continuing, Lender may exercise, in addition to all
other rights and remedies granted to it in this Agreement, the Loan Agreement
and any other Loan Document, all rights and remedies of a secured party under
the Uniform Commercial Code or any other applicable law. Without limiting the
generality of the foregoing, Assignor expressly agrees that in any such event
Lender may forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, or may forthwith sell, lease, assign or sell
or otherwise dispose of and deliver said Collateral (or contract to do so), or
any part thereof, in one or more public or private sale or sales, at any
exchange, broker's board or at any of Lender's offices or elsewhere at such
prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk, and Lender shall apply the net proceeds
(after expenses) of any such sale, lease, assignment or other disposition
against the Obligations in such order as Lender in its sole discretion shall
determine (subject to the terms of the Loan Agreement), Assignor remaining
liable for any deficiency thereon. Lender shall 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 the Collateral so
sold, free of any right or equity of redemption in Assignor, which right or
equity is hereby expressly waived and released. To the extent permitted by
applicable law, Assignor waives all claims, damages and demands against Lender
arising out of the repossession, retention or sale of the Collateral. Assignor
agrees that Lender need not give more than ten 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 matter.
(b) During the continuance of an Event of Default, Assignor hereby
authorizes Lender
3
<PAGE> 4
to make, constitute and appoint any officer or agent of Lender as Lender may
select, in Lender's sole discretion, as Assignor's true and lawful
attorney-in-fact, with power: (i) to endorse Assignor's name on all
applications, documents, papers and instruments necessary or desirable for
Lender in the use of Collateral; (ii) to notify any licensee of Assignor that
such licensee should make future payments under the license directly to Lender;
(iii) to take any other actions with respect to the Collateral as Lender deem
in its best interest; and (iv) to assign, pledge, convey or otherwise transfer
title in or dispose of the Collateral to any Person. Assignor hereby ratifies
all that such attorney shall lawfully do or cause to be done by virtue of this
Agreement. This power of attorney shall be irrevocable until all of the
Obligations have been paid in full and all of the financing arrangements
between Assignor and Lender have been terminated. Assignor agrees that, in
addition to all other rights and remedies granted to Lender in this Agreement,
the Loan Agreement and any other Loan Document, Lender shall be entitled to
specific performance and injunctive and other equitable relief, and Assignor
further agrees to waive any requirement for the securing or posting of any bond
or other security in connection with the obtaining of any such specific
performance and injunctive or other equitable relief.
8. Indemnification. Assignor shall indemnify and hold harmless Lender
from and against any and all losses, claims, damages, liabilities and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
sustained, suffered or incurred by Lender arising out of, with respect to, or
resulting from any commercially reasonable exercise by Lender of its rights
under this Agreement, including without limitation, after a default by
Assignor, the exercise by Lender of its rights to sell, lease, assign, give
option or options to purchase, or sell and otherwise dispose of the Collateral.
In any suit, proceeding or action brought by Lender to enforce its rights in
the Collateral, Assignor will save, indemnify and hold Lender harmless from and
against all expenses, loss or damage suffered by reason of any defense,
set-off, counterclaim, recoupment or reduction or liability whatsoever of any
third party, arising out of a breach by Assignor of any obligation or arising
out of any other agreement, indebtedness or liability at any time owing to or
in favor of such third party or its successors from Assignor; provided that
Assignor shall have no obligation under this Section 8 to indemnify any Person
under this Agreement for liabilities arising from the gross negligence or
willful misconduct of such Person or arising from the breach by any such Person
of its obligations under applicable law (including the obligation to act in a
commercially reasonable manner in the disposition of certain Collateral).
9. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
10. 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.
11. 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 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.
12. No Waiver: Cumulative Remedies. Lender shall not by any act (except a
written instrument pursuant to Section 13 hereof), delay, indulgence, omission
or otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Event of Default or in any
4
<PAGE> 1
EXHIBIT 10.39
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is entered into between Maxco, Inc., a
Michigan corporation of 1118 Centennial Way, Lansing, Michigan 48917 ("Maxco")
and Medar, Inc., a Michigan corporation of 38700 Grand River Avenue,
Farmington Hills, MI 48335 ("Medar"), effective July 15, 1997.
Sale of Stock . Medar hereby agrees to sell the One Hundred Fifty
Thousand (150,000) shares of its common stock (the "Shares") to Maxco and Maxco
agrees to purchase such shares.
Consideration. The consideration for the transfer of the Shares is
Five Dollars ($5) per share, for a total consideration of Seven Hundred Fifty
Thousand Dollars ($750,000), to be paid in cash upon delivery of the Shares.
Delivery of Shares . Medar agrees to deliver the Shares to Maxco upon
execution of this Agreement.
Representations of Medar . Medar hereby represents that it has the full
right, power and authority to transfer the Shares subject to this Agreement,
and that when delivered pursuant to this Agreement against the payment of the
consideration therefor, Maxco will acquire good and marketable title, free and
clear of any claims, liens, equities, encumbrances or security interests
whatsoever. It is understood, however, that the Shares are being transferred in
a private transaction without registration with the Securities and Exchange
Commission, and will be restricted securities which cannot be transferred
without registration or pursuant to an applicable exemption from registration.
Representations of Maxco . Maxco represents that it is purchasing the
Shares for investment and not with a view to resale.
No Warranties. Both parties to this transaction are fully
knowledgeable regarding the affairs and conditions of each of the affected
companies and have full ability to obtain any information regarding the
companies. Other than the representations set forth above, neither party to
this transaction makes any representations or warranties whatsoever.
Wherefore, the parties have signed this Agreement effective on the date
first above written.
Medar, Inc. Maxco, Inc.
By:________________________ By:___________________
Charles J. Drake, President Max A. Coon, President
<PAGE> 1
EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
1997 1996
-------- --------
<S> <C> <C>
Per common share and common share equivalents:
Outstanding shares - beginning of period 8,852 8,802
Net effect of dilutive stock options based on treasury
stock method using average market price 50 279
------ ------
Weighted average of common shares and common share equivalents 8,902 9,081
====== ======
Net earnings $ 401 $ 887
====== ======
Net earnings per share $ .04 $ .10
====== ======
Per common share and common share equivalents, assuming
full dilution:
Outstanding shares - beginning of period 8,852 8,802
Weighted average of:
Net effect of dilutive stock options based on treasury
stock methodusing quarter-end market price if higher
than average market price 58 283
------ ------
Weighted average of common shares, assuming full dilutions 8,910 9,085
====== ======
Net earnings $ 401 $ 887
====== ======
Net earnings per share $ .04 $ .10
====== ======
</TABLE>
<PAGE> 2
EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1997 1996
-------- --------
<S> <C> <C>
Per common share and common share equivalents:
Weighted average of common shares and common share equivalents
for quarter ended:
March 31 8,893 8,995
June 30 8,902 9,081
------- -------
17,795 18,076
======= =======
Weighted average number of shares of common stock and common
stock equivalents, where applicable, for the six months ended
June 30. 8,898 9,038
======= =======
Net earnings $ 426 $ 1,214
======= =======
Net earnings per share $ .05 $ .13
======= =======
Per common share and common share equivalents assuming
full dilution:
Weighted average of common shares, assuming full dilution
March 31 8,897 9,020
June 30 8,910 9,085
------- -------
17,807 18,105
======= =======
Weighted average of shares of common stock and common stock
equivalents, where applicable, for the six months ended
June 30. 8,904 9,053
======= =======
Net earnings $ 426 $ 1,214
======= =======
Net earnings per share $ .05 $ .13
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 789
<SECURITIES> 0
<RECEIVABLES> 7,696
<ALLOWANCES> 400
<INVENTORY> 14,957
<CURRENT-ASSETS> 27,398
<PP&E> 17,021
<DEPRECIATION> 7,456
<TOTAL-ASSETS> 49,608
<CURRENT-LIABILITIES> 8,359
<BONDS> 19,479
0
0
<COMMON> 1,771
<OTHER-SE> 19,999
<TOTAL-LIABILITY-AND-EQUITY> 49,608
<SALES> 10,985
<TOTAL-REVENUES> 10,996
<CGS> 7,654
<TOTAL-COSTS> 7,654
<OTHER-EXPENSES> 2,442
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 499
<INCOME-PRETAX> 401
<INCOME-TAX> 0
<INCOME-CONTINUING> 401
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 401
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
