Integral Vision (INVI) DEF 14A Definitive proxy

TABLE OF CONTENTS

SCHEDULE 14A
(Rule 14A-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )

      Filed by the registrant   

      Filed by a party other than the registrant   

      Check the appropriate box:

Preliminary proxy statement	Confidential, for use of the
	Commission only (as permitted by
	Rule 14a-6(e)(2).

         Definitive proxy statement.

         Definitive additional materials.

         Soliciting material pursuant to Rule 14a-12.

INTEGRAL VISION, INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

      Payment of filing fee (check the appropriate box):

         No fee required.

         Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

      (1) Title of each class of securities to which transaction applies:

      (2) Aggregate number of securities to which transaction applies:

      (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

      (4) Proposed maximum aggregate value of transaction:

      (5) Total fee paid:

         Fee paid previously with preliminary materials.

         Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.

      (1) Amount Previously Paid:

      (2) Form, Schedule or Registration Statement No.:

      (3) Filing Party:

      (4) Date Filed:

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To the Shareholders of Integral Vision, Inc.:

      Notice is hereby given that the Annual Meeting of Shareholders of Integral Vision, Inc., a Michigan corporation, will be held at the corporate offices, 38700 Grand River Avenue, Farmington Hills, Michigan 48335, on Wednesday, May 23, 2001, at 4:00 p.m. local time for the following purposes, all of which are more completely set forth in the accompanying proxy statement.

1.	To elect four Directors; and
2.	To transact such other business as may properly come before the meeting.

      In accordance with the Bylaws of the Company and a resolution of the Board of Directors, the record date for the meeting has been fixed at March 23, 2001. Only Shareholders of record at the close of business on that date will be entitled to vote at the meeting.

By Order of the Board of Directors

Max A. Coon

Secretary

Farmington Hills, Michigan

April 20, 2001

YOUR VOTE IS IMPORTANT

      YOU ARE URGED TO DATE AND SIGN THE ENCLOSED PROXY FORM, INDICATE YOUR CHOICE WITH RESPECT TO THE MATTERS TO BE VOTED UPON, AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A QUORUM MAY BE ASSURED. THE PROMPT RETURN OF YOUR SIGNED PROXY, REGARDLESS OF THE NUMBER OF SHARES YOU HOLD, WILL AID THE COMPANY IN REDUCING THE EXPENSE OF ADDITIONAL PROXY SOLICITATION. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE MEETING.

PROXY STATEMENT

      This statement is furnished in connection with the solicitation of proxies on behalf of the Board of Directors of Integral Vision, Inc. (the Company) for use at the Annual Meeting of Shareholders of the Company to be held on May 23, 2001 at 4:00 p.m., or any adjournments thereof. This Proxy Statement is being mailed on or about April 20, 2001 to all holders of record of common stock of the Company as of the close of business on March 23, 2001.

PURPOSE OF THE MEETING

      The purpose of this Annual Meeting of Shareholders shall be to elect Directors and to transact such other business as may properly come before the meeting.

VOTING

      Common Stock with no par value is the only voting stock of the Company. Holders of record at the close of business on March 23, 2001 are entitled to one (1) vote for each share held. As of March 23, 2001, the Company had 9,029,901 shares outstanding. Holders of stock entitled to vote at the meeting do not have cumulative voting rights with respect to the election of Directors.

      All shares represented by proxies shall be voted “FOR” each of the matters recommended by management unless the Shareholder, or his duly authorized representative, specifies otherwise or unless the proxy is revoked. Any Shareholder who executes the proxy referred to in this statement may revoke it before it is exercised, provided written notice of such revocation is received at the office of the Company in Farmington Hills, Michigan at least twenty-four (24) hours before the commencement of the meeting, or provided the grantor of the proxy is present at the meeting and, having been recognized by the presiding officer, announces such revocation in open meeting. All Shareholders are encouraged to date and sign the enclosed proxy form, indicate your choice with respect to the matters to be voted upon and return it to the Company.

      Directors are elected by plurality vote, meaning that the four persons receiving the most votes at the meeting, assuming a quorum is present, are elected as directors of the Company. Most corporate governance actions other than elections of directors are approved by a majority of the votes cast. Although state law and the articles of incorporation and bylaws of the Company are silent on the issue, it is the intent of the Company that proxies received which contain abstentions or broker non-votes as to any matter will be included in the calculations as to the presence of a quorum, but will not be counted as votes cast in such matter in the calculation as to the needed majority vote.

ELECTION OF DIRECTORS

      It is the intention of the persons named in the proxy to vote for election of the following nominees to the Board of Directors to hold office until the next Annual Meeting or until their successors are elected. In the event any nominee should be unavailable, which is not anticipated, the shares may, in the discretion of the proxy holders, be voted for the election of such persons as the Board of Directors may submit. Directors are elected for a term of one (1) year and until their successors are elected and qualified. Although the Company’s Board of Directors is currently composed of four members, the bylaws of the Company allow for up to nine directors. In addition, the Audit Committee Charter adopted by the Board of Directors (see “Audit Committee Report,” below) requires that the Audit Committee of the Board of Director be comprised of three independent directors by June 14, 2001. This will require that two new independent directors be added to the Board of Directors, and the Company is presently looking for qualified individuals who are willing to serve in this capacity. In the event such individuals are identified prior to the May 23, 2001 meeting date, proxies will be voted for the election of such additional nominees. In the event qualified individuals are identified after the Annual Meeting of Shareholders, up to five additional directors could be appointed at such later date by the Board.

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      The following information is furnished concerning the nominees, all of whom have been nominated by the Board of Directors and are presently Directors of the Company.

	Present Position with the
	Company and Principal			Served as
Name	Occupation	Age		Director Since
Max A. Coon	Secretary and Vice Chairman of the Board of Integral Vision, Inc.; President and Chairman of the Board of Maxco, Inc.		66		1978
Charles J. Drake	Chairman of the Board and Chief Executive Officer of Integral Vision, Inc.		60		1978
Vincent Shunsky	Treasurer and acting Chief Financial Officer of Integral Vision, Inc.; Director, Treasurer and Vice President of Finance of Maxco, Inc.		52		1978
William B. Wallace	Senior Managing Director of Equity Partners, Ltd., a Troy, Michigan based private investment banking firm		56		1990

      All of the foregoing Directors and nominees have been engaged in the principal occupation specified for the previous five years with the exception of the following:

      Charles J. Drake resigned his position as President of the Company in February 1998. He continues to serve as the Chairman and Chief Executive Officer of the Company as he has since 1978.

      Messrs. Coon, Drake and Shunsky are also Directors of Maxco, Inc., the stock of which is traded on the Nasdaq Stock Market.

      During the period ended December 31, 2000, there were a total of eight meetings of the Board of Directors. Max A. Coon was the only one of the above nominees who attended fewer than 75% of the meetings held during the period.

      The Board of Directors has established a Compensation Committee whose members are Max A. Coon and Vincent Shunsky. The Compensation Committee is responsible for establishing compensation for the Company’s Chief Executive Officer, approving executive compensation levels of all other executives and authorizing the levels and timing of bonus payments. In addition, this committee is responsible for administering the Company’s Stock Option Plans, including designating the recipients and terms of specific option grants. The Compensation Committee met one time during the period ended December 31, 2000 to establish compensation criteria and levels. The Company does not have a standing nominating committee.

Audit Committee Report

      The board of directors has adopted a Charter to govern the operations of its audit committee. A copy of this Charter is included as an exhibit to this proxy statement. The Charter requires that the Audit Committee shall comprise at least three directors, each of whom are independent of management and the Company, which is defined to mean that they have no relationship that may interfere with the exercise of their independence from management and the Company. While the make-up of the Company’s board of directors does not yet permit the appointment of three independent directors to the Audit Committee, the Company intends to meet this requirement on or before June 14, 2001.

      For the year ended December 31, 2000 the board of directors appointed an Audit Committee whose members were William B. Wallace, Charles J. Drake and Stephan Sharf (Mr. Sharf resigned from the board of directors effective March 21, 2001). The Audit Committee oversees the Company’s financial reporting process on behalf of the board of directors. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the committee reviewed the audited financial statements to be included in the Company’s Annual Report with management including a discussion of the quality, not just the acceptability, of the

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accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements.

      The committee reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the committee under generally accepted auditing standards. In addition, the committee has discussed with the independent auditors the auditors’ independence from management and the Company including the matters in the written disclosures required by the Independence Standards Board.

      The committee discussed with the Company’s independent auditors the overall scope and plans for their respective audits. The committee meets with the independent auditors, with and without management present, to discuss the results of the examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The committee held four meetings during the year ended December 31, 2000.

      In reliance on the reviews and discussions referred to above, the committee recommended to the board of directors (and the board has approved) that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2000 for filing with the Securities and Exchange Commission.

William B. Wallace
Charles J. Drake

Director Compensation

      Directors who are not officers of the Company receive $200 for each meeting attended. In addition, Mr. Wallace has a consulting agreement with the Company pursuant to which he has agreed to provide consulting services to the Company for so long as he holds office as a director. Mr. Wallace earned $9,600 for such consulting services during the fiscal year.

EXECUTIVE OFFICERS

      The following table sets forth information concerning the Executive Officers of the Company.

	Present Position with the
	Company and Principal			Served as
Name	Occupation	Age		Officer Since
Charles J. Drake	Chairman of the Board and Chief Executive Officer of Integral Vision, Inc.		60		1978
Mark R. Doede	President and Chief Operating Officer of Integral Vision, Inc.		43		1989
Arthur D. Harmala	Vice President of Marketing of Integral Vision, Inc.		57		1995
Max A. Coon	Secretary and Vice Chairman of the Board of Integral Vision, Inc.; President and Chairman of the Board of Maxco, Inc.		66		1978
Vincent Shunsky	Treasurer, acting Chief Financial Officer and Director of Integral Vision, Inc.; Treasurer, Vice President of Finance and Director of Maxco, Inc.		52		1978

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      All of the foregoing officers of the Company have been engaged in the principal occupations specified above for the previous five years except as stated above and as follows:

      Mark R. Doede was appointed as President and Chief Operating Officer of the Company in February 1998. Prior to that time, Mr. Doede served as Vice President and Chief Operating Officer of the Welding Products Division of the Company since 1996 and served the Company in various other capacities since 1980.

EXECUTIVE COMPENSATION

Compensation Committee Report on Executive Compensation

Compensation Committee Interlocks and Insider Participation

      The Compensation Committee of the Board of Directors (the “Committee”) consists of Max A. Coon and Vincent Shunsky. Messrs. Coon and Shunsky, although officers of the Company, are also officers and directors of Maxco, Inc., are paid by Maxco, Inc. and receive no compensation from the Company. Mr. Charles J. Drake, the Company’s Chief Executive Officer, is a director of Maxco, Inc.

Overview and Philosophy

      The Committee is responsible for developing and making recommendations to the Board with respect to the Company’s executive compensation policies. In addition, the Compensation Committee, pursuant to authority delegated by the Board, determines on an annual basis the compensation to be paid to the Chief Executive Officer and each of the other executive officers of the Company.

      The objectives of the Company’s executive compensation program are to:

—  Support the achievement of desired Company performance.

—  Provide compensation that will attract and retain superior talent and reward performance.

—  Align the executive officers’ interests with the success of the Company by placing a portion of pay at risk, with payout dependent upon corporate performance, and through the granting of stock options.

      The executive compensation program provides an overall level of compensation opportunity that is competitive with companies of comparable size and complexity. The Compensation Committee will use its discretion to set executive compensation where, in its judgment, external, internal or an individual’s circumstances warrant it.

Executive Officer Compensation Program

      The Company’s executive officer compensation program is comprised of base salary, long-term incentive compensation in the form of stock options, and various benefits, including medical and deferred compensation plans, generally available to employees of the Company.

Base Salary

      Due to the Company’s circumstances, base salary levels for the Company’s executive officers were unchanged from the prior year.

Stock Option Program

      The stock option program is the Company’s long-term incentive plan for executive officers and key employees. The objectives of the program are to align executive and shareholder long-term interests by creating a strong and direct link between executive pay and shareholder return, and to enable executives to develop and maintain a significant, long-term stock ownership position in the Company’s common stock.

      In June 1999 a stock option plan allowing the issuance of options on up to 500,000 shares of the Company’s common stock was approved by the Shareholders. This stock option plan provides for the grant of

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both options intended to qualify as “incentive stock options” within the meaning of Section 422A of the Internal Revenue Code, as amended, and nonstatutory stock options which do not qualify for such treatment.

      The stock option plan authorizes a committee of directors to award executive and key employee stock options, as well as options to directors and nonemployees who are in a position to materially benefit the Company. Stock options are granted at an option price equal to the fair market value of the Company’s common stock on the date of grant, have ten year terms and can have exercise restrictions established by the committee.

      A stock option plan authorizing options on 500,000 shares of common stock of the Company on substantially the same terms was approved by the Shareholders in 1995.

Deferred Compensation

      Effective July 1, 1986, the Company adopted a 401(k) Employee Savings Plan. The 401(k) is a “cash or deferred” plan under which employees may elect to contribute a certain portion of their compensation which they would otherwise be eligible to receive in cash. The Company has agreed to make a matching contribution of 20% of the employees’ contributions of up to 6% of their compensation. In addition, the Company may make a profit sharing contribution at the discretion of the Board. All full time employees of the Company who have completed six months of service are eligible to participate in the plan. Participants are immediately 100% vested in all contributions. The plan does not contain an established termination date and it is not anticipated that it will be terminated at any time in the foreseeable future.

Benefits

      The Company provides medical benefits to the executive officers that are generally available to Company employees. In addition, executive officers may be provided with other benefits, such as life insurance and automobiles. The amount of perquisites, as determined in accordance with the rules of the Securities and Exchange Commission relating to executive compensation, did not exceed 10% of salary for any executive officer for fiscal 2000.

Chief Executive Officer

      Charles J. Drake has served as the Company’s Chief Executive Officer since 1978. His base salary for the 2000 year was $160,000. No bonus was paid to Mr. Drake for 2000.

      Due to the Company’s circumstances, Mr. Drake’s salary was unchanged from the prior year.

The Compensation Committee

Max A. Coon
Vincent Shunsky

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Summary Compensation Table

      The following table sets forth the cash and noncash compensation for each of the last three fiscal years awarded to or earned by the Chief Executive Officer of the Company and to the other executive officers whose compensation for the 1999 year exceeded $100,000:

			Annual				Long Term
			Compensation				Compensation
										All Other
Name and			Salary		Bonus		Options			Comp(1)
Principal Position	Year		($)		($)		(#)			($)
Charles J. Drake		2000		160,000		0		0			520
Chief Executive Officer		1999		160,000		0		350,000	(2)		500
		1998		160,000		0		0			7,308	(3)
Mark R. Doede		2000		120,000		0		0			520
President and		1999		120,000		0		100,000			500
Chief Operating Officer		1998		115,962		0		0			520
Arthur D. Harmala		2000		100,000		0		0			1,266
Vice President of Marketing		1999		100,000		0		30,000			1,176
		1998		93,077		0		0			1,117

(1)	Unless otherwise indicated, compensation in this category represents the Company’s 20% match of employee deferrals of currently earned income into the 401(k) Employee Savings Plan.
(2)	250,000 of these options are not exercisable until Integral Vision common stock reaches certain stated levels, as follows:

Stock Price	Number of Shares Exercisable
$ 6		100,000
$ 8		100,000
$10		50,000

(3)  Includes a premium of $6,520 paid by the Company on executive term life insurance in 1998.

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Options

      The following table summarizes the value of the options held by the executive officers named in the Summary Compensation Table above as of December 31, 2000. No options were granted to or exercised by such persons during 2000.

Year End Option Values

				Value of
	Number of			Unexercised
	Unexercised Options			In-the-Money Options
	at FY-End			at FY-End
Name	Exercisable/Unexercisable			Exercisable/Unexercisable
Charles J. Drake		350,000/250,000	(1)		$0/0
Mark R. Doede		119,896/6,104			$0/0
Arthur D. Harmala		34,000/30,000			$0/0

(1)  These options are not exercisable until Integral Vision common stock reaches certain stated levels, as follows:

Stock Price	Number of Shares Exercisable
$ 6		100,000
$ 8		100,000
$10		50,000

Transactions With Management

      Charles J. Drake, the Chairman and CEO of the Company, was indebted to the Company during 2000, with the largest aggregate amount of such indebtedness being $412,911. This debt was incurred by Mr. Drake in order to exercise options to purchase 150,000 shares of the Company’s common stock and to satisfy certain personal obligations and is evidenced by promissory notes bearing interest at 9%. At March 31, 2001, the amount of this indebtedness was $382,171.

      Mark R. Doede, the President and COO of the Company, was indebted to the Company during 2000 with the largest aggregate amount of such indebtedness being $265,906. This debt was incurred by Mr. Doede in order to satisfy certain personal obligations and is evidenced by a promissory note bearing interest at 9%. At March 31, 2001, the amount of this indebtedness was $271,889.

      Max A. Coon, the Vice Chairman and Secretary of the Company, loaned the Company $87,000 through January 2001 to permit the Company to meet its obligations. The loans are evidenced by a written document, are secured by a second mortgage on the Company’s real estate, and provide for interest at the rate of prime plus 0.5%. The Company believes that the terms of these transactions are at least as favorable as it could obtain from outside sources.

Compliance with Reporting Requirements

      Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s Directors and Executive Officers or beneficial owners of over 10% of any class of the Company’s equity securities to file certain reports regarding their ownership of the Company’s securities or any changes in such ownership. During the year ended December 31, 2000, William B. Wallace, a director of the Company, failed to file the required Form 4 when he exercised options to purchase 5,000 shares of the Company’s common stock and subsequently sold such shares. The delinquent form has now been filed.

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COMPARATIVE STOCK PERFORMANCE

      The graph below compares the cumulative total shareholder return on the Common Stock of the Company for the last five years with the cumulative total return on the CRSP Total Return Index for the NASDAQ Stock Market (US Companies) (1) and the Dow Jones Industrial Technology Index (2) over the same period, assuming the investment of $100 in the Company’s Common Stock, the NASDAQ Index and the Industrial Technology Index on December 31, 1995, and reinvestment of all dividends.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*

Among Integral Vision, Inc., The NASDAQ Stock Market (U.S.) Index

and the Dow Jones Advanced Industrial Equipment Index

*  $100 invested on 12/31/95 in stock or index — including reinvestment of dividends. Fiscal year ending December 31.

(1)	The CRSP Total Return Index for the NASDAQ Stock Market (US Companies) is composed of all domestic common shares traded on the NASDAQ National Market and the NASDAQ Small-Cap Market.
(2)	The Dow Jones Industrial Technology Index is composed of companies whose technology and high-tech products are primarily directed toward industrial production and/or quality control.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth information as of March 31, 2001 regarding the beneficial ownership of the Company’s Common Stock by (i) the Principal Shareholder (Maxco, Inc.), (ii) the only other beneficial owners of more than 5% of the Company’s outstanding stock that are known to the Company, (iii) each of the Company’s Directors, (iv) each of the Company’s Executive Officers listed in the Summary Compensation Table, above, and (v) all Officers and Directors of the Company as a group.

Amount and Nature of Beneficial Ownership

		Sole Voting and			Shared Voting and
		Investment Power			Investment Power		Percent
Maxco, Inc.			2,390,605	(1)				26.04	%
	1118 Centennial Way
	Lansing, MI 48917
State Street Bank and Trust Company			1,000,000	(2)				9.97	%
as Trustee of the Textron Master Trust
	One Enterprise Drive
	North Quincy, MA 02171
Charles J. Drake			441,500	(3)				4.81	%
Max A. Coon			259,200	(4)				2.87	%
Mark R. Doede			155,136	(5)				1.69	%
Arthur D. Harmala			66,000	(6)				*
Vincent Shunsky			21,183	(4)		2,000		*
William B. Wallace			21,000	(7)		3,000		*
All Directors and Officers as a Group (6 persons)			978,019	(8)		5,000		10.23	%

*	Beneficial ownership does not exceed 1%.
(1)	Includes warrants for the purchase of 150,000 shares of Integral Vision Stock held by Maxco, but does not include warrants for the purchase of 240,000 shares of Integral Vision stock held by a company of which Maxco is a 50% shareholder.
(2)	Represents warrants for the purchase of Common Stock.
(3)	Includes 350,000 shares on which Mr. Drake holds options which he is eligible to exercise.
(4)	Does not include shares of the Company held by Maxco, Inc., of which Mr. Coon is the President and Chairman of the Board and the owner of 27.1% of its common stock, or shares of the Company held by the Maxco, Inc. Employee Profit Sharing Plan of which Messrs. Coon and Shunsky are trustees.
(5)	Includes 126,000 shares on which Mr. Doede holds options which he is eligible to exercise.
(6)	Includes 64,000 shares on which Mr. Harmala holds options which he is eligible to exercise.
(7)	Includes 2,000 shares on which Mr. Wallace holds options which he is eligible to exercise.
(8)	Includes 542,000 shares on which four officers or directors hold options which they are eligible to exercise.

RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

      Effective December 15, 1999, the board of directors of the Company, based on the recommendation of the Audit Committee, determined that the firm of Ernst & Young LLP (E&Y) would not be reappointed, and approved the engagement of Moore Stephens Doeren Mayhew as its independent auditors for the year ended December 31, 1999. A representative of Moore Stephens Doeren Mayhew is expected to be present at the Annual Meeting of Shareholders, will be available to respond to appropriate questions, and will have the opportunity to make a statement if he desires to do so.

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      During the year ended December 31, 2000, Moore Stephens Doeren Mayhew billed the Company for its services as follows:

     Audit Fees. $56,500 for aggregate fees billed for professional services rendered for the audit of the Company’s annual financial statements for the year ended December 31, 2000 and the reviews of the financial statements included in the Company’s quarterly reports filed with the Securities and Exchange Commission during the year.

     All Other Fees.  $15,000 for the aggregate fees billed for services to the Company other than the above. These services related to tax compliance services and services for audits of the Company’s employee benefits plans.

      The report of E&Y on the Company’s financial statements for the year ended December 31, 1998 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles, except the reports of E&Y with respect to those financial statements were modified for going-concern uncertainty.

      In connection with the audit of the Company’s financial statements for the year ended December 31, 1998, and in the two subsequent interim periods, there were no disagreements with E&Y on any matters of accounting principles or practices, financial statement disclosure, or auditing scope and procedures which, if not resolved to the satisfaction of E&Y, would have caused E&Y to make reference to the matter in its report.

      The Company periodically evaluates its external audit requirements. The Audit Committee of the Board of Directors will make a decision as to the selection of external auditors for the year ending December 31, 2001 based on cost, response time and quality of services available.

SHAREHOLDER PROPOSALS

      Any proposals which Shareholders of the Company intend to present at the next annual meeting of the Company must be received at the Company by December 20, 2001, for inclusion in the Company’s proxy statement and proxy form for that meeting. Where a Shareholder making a proposal does not choose to seek to have such proposal included in the Company’s proxy materials, such proposal will not be considered timely for submission at the next Annual Meeting unless it is received by the Company by March 5, 2002, and in such case, the Company’s proxy will provide the management proxies with discretionary authority to vote on such proposal without any discussion of the matter in the proxy statement. Proposals should be directed to the attention of Investor Relations at the offices of the Company, 38700 Grand River Avenue, Farmington Hills, Michigan 48335.

OTHER BUSINESS

      Except for the potential for the addition of additional nominees to the Board of Directors (see “Election of Directors,” above) the management knows of no other matters that may come before the meeting. However, if other matters do come before the meeting, the proxy holders will vote in accordance with their best judgment.

      The cost of solicitation of proxies will be borne by the Company. In addition to solicitations by use of the mails, officers and regular employees of the Company may solicit proxies by telephone or in person.

By Order of the Board of Directors

Max A. Coon

Secretary

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INTEGRAL VISION, INC.

AUDIT COMMITTEE CHARTER

Organization

      This charter governs the operations of the audit committee. The committee shall review and reassess the charter at least annually and obtain the approval of the Board of Directors. The committee shall be appointed by the Board of Directors and effective June 14, 2001 shall comprise at least three directors, each of whom are independent of management and the Company. Members of the committee shall be considered independent if they have no relationship that may interfere with the exercise of their independence from management and the Company. All committee members shall be financially literate, [or shall become financially literate within a reasonable period of time after appointment to the committee,] and at least one member shall have accounting or related financial management expertise.

Statement of Policy

      The audit committee shall provide assistance to the Board of Directors in fulfilling their oversight responsibility to the shareholders, potential shareholders, the investment community, and others relating to the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, the internal audit function, the annual independent audit of the Company’s financial statements, and the legal compliance and ethics programs as established by management and the Board. In so doing, it is the responsibility of the committee to maintain free and open communication between the committee, independent auditors, the internal auditors, and management of the Company. In discharging its oversight role, the committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company and the power to retain outside counsel, or other experts for this purpose.

Responsibilities and Processes

      The primary responsibility of the audit committee is to oversee the Company’s financial reporting process on behalf of the Board and report the results of their activities to the Board. Management is responsible for preparing the Company’s financial statements, and the independent auditors are responsible for auditing those financial statements. The committee in carrying out its responsibilities believes its policies and procedures should remain flexible, in order to best react to changing conditions and circumstances. The committee should take the appropriate actions to set the overall corporate “tone” for quality financial reporting, sound business risk practices, and ethical behavior.

INTEGRAL VISION, INC.

AUDIT COMMITTEE CHARTER

(Continued)

      The following shall be the principal recurring processes of the audit committee in carrying out its oversight responsibilities. The processes are set forth as a guide with the understanding that the committee may supplement them as appropriate.

•  The committee shall have a clear understanding with management and the independent auditors that the independent auditors are ultimately accountable to the Board and the audit committee, as representatives of the Company’s shareholders. The committee shall have the ultimate authority and responsibility to evaluate and, where appropriate, recommend to the Board the replacement of the independent auditors. The committee shall discuss with the auditors their independence from management and the Company and the matters included in the written disclosures required by the Independence Standards Board. Annually, the committee shall review and recommend to the board the selection of the Company’s independent auditors.

•  The committee shall discuss with the internal auditors and the independent auditors the overall scope and plans for their respective audits including the adequacy of staffing and compensation. Also, the committee shall discuss with management, the internal auditors, and the independent auditors the adequacy and effectiveness of the accounting and financial controls, including the Company’s system to monitor and manage business risk, and legal and ethical compliance programs. Further, the committee shall meet separately with the internal auditors and the independent auditors, with and without management present, to discuss the results of their examinations.

•  The committee shall review the interim financial statements with management and the independent auditors prior to the filing of the Company’s Quarterly Report on Form 10-Q. Also, the committee shall discuss the results of the quarterly review and any other matters required to be communicated to the committee by the independent auditors under generally accepted auditing standards. The chair of the committee may represent the entire committee for the purposes of this review.

•  The committee shall review with management and the independent auditors the financial statements to be included in the Company’s Annual Report on Form 10-K (or the annual report to shareholders if distributed prior to the filing of Form 10-K), including their judgment about the quality, not just acceptability, of accounting principles, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements. Also, the committee shall discuss the results of the annual audit and any other matters required to be communicated to the committee by the independent auditors under generally accepted auditing standards, including matters required to be discussed by SAS 61. The committee is to make a recommendation to the Board of Directors each year as to whether the audited financial statements be included in the Company’s Annual Report on Form 10-K filing with the Securities Exchange Commission. The committee will review the required disclosures to be made by the Company in the annual proxy statement of the Company and approve such disclosures prior to filing with the Securities Exchange Commission.

Adopted May 24, 2000

IVICM-PS-01

INTEGRAL VISION, INC.
Proxy solicited on behalf of the Board of Directors
for Annual Meeting of Shareholders
to be held May 23, 2001.

The undersigned hereby constitutes and appoints Max A. Coon and Charles J. Drake, and each or any of them, attorney and proxy for and in the names and stead of the undersigned, to vote all stock of Integral Vision, Inc. (Integral Vision) on all matters unless the contrary is indicated herein at the Annual Meeting of Shareholders to be held at the corporate offices, 38700 Grand River Avenue, Farmington Hills, Michigan on May 23, 2001, at 4:00 p.m. local time or at any adjournments thereof, according to the number of votes that the undersigned could vote if personally present at said meeting. The undersigned directs that this proxy be voted as follows on the reverse side.

This proxy, when properly executed will be voted in the manner directed herein by the undersigned Shareholder. If no direction is made, this proxy will be voted FOR Proposal 1.

PLEASE MARK, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.
Please sign exactly as your name(s) appear(s) on the reverse side. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person.

HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?

1.         ELECTION OF DIRECTORS

		For All		For All
		Nominees	Withhold	Except
M. Coon	V. Shunsky	_______	______	________
C. Drake	W. Wallace

INSTRUCTION: To WITHHOLD AUTHORITY to vote for any individual nominee, mark the “For All Except” box and strike a line through the Name(s) of the nominee(s). Your shares will be voted for the remaining nominee(s).

2.	In their discretion, the Proxies are authorized to vote upon such other business as may come before the meeting.
	Mark box at right if an address change or comment has been noted on the reverse side of this card.

RECORD DATE SHARES:

Please be sure to sign and date this Proxy.     DATED:                               , 2001

Shareholder sign here Co-owner sign here