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EXHIBIT 10.26
GENERAL SECURITY AGREEMENT
This General Security Agreement (this "Agreement"), dated as of March
29, 1996, is made by Medar, Inc., a Michigan corporation ("Debtor"), in favor of
NBD Bank ("NBD").
Recitals
A. Debtor and its subsidiaries, Integral Vision-AID, Inc.
(formerly known as Automatic Inspection Devices, Inc.) and Integral Vision Ltd.
(collectively such subsidiaries and Debtor are referred to as the "Borrowers")
and NBD have entered into a Revolving Credit and Loan Agreement dated August
10, 1995, as amended by a First Amendment to Revolving Credit and Loan
Agreement date October 12, 1995 and a Second Amendment to Revolving Credit and
Loan Agreement dated October 31, 1995 (as amended from time to time, the "Loan
Agreement") pursuant to which NBD has agreed to make certain credit facilities
available to the Borrowers, including, without limitation, a revolving line of
credit in the maximum principal amount of $10,000,000, and various term loans,
all as more fully described in the Loan Agreement.
B. The Borrowers have requested that NBD increase the amount of
the line of credit to Borrower and make certain revisions to the financial
covenants in the Loan Agreement and NBD has agreed that it will make such
changes pursuant to the terms and conditions of a Third Amendment to Revolving
Credit and Loan Agreement dated the date hereof ("Third Amendment").
C. It is a condition precedent to NBD to enter into the Third
Amendment that Debtor execute and deliver this Agreement to NBD.
THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtor hereby agrees with NBD as follows:
1. Defined Terms. In addition to those terms defined elsewhere
in this Agreement, terms defined in the Loan Agreement shall have their
defined meanings when used herein (unless otherwise defined herein) and the
following terms shall have the following meanings, unless the context otherwise
requires:
"Accounts" means any "account" or "chattel paper," as such terms are
defined in Sections 9-106 and 9-105, respectively, of the Code, now or
hereafter owned by Debtor, and shall also mean and include (i) all accounts
receivable, contract rights, book debts, notes, drafts, instruments, documents,
acceptances, payments under leases and other forms of obligations, now owned or
hereafter received or acquired by or belonging or owing to Debtor (including
under any trade names, styles or divisions thereof) whether arising out of
goods sold or leased or services rendered by it or from any other transaction,
whether or not the same involves the sale of goods or services by Debtor
(including, without limitation, any such obligation which might be
characterized as an account, contract right, general intangible or chattel
paper under the Uniform Commercial Code in effect in any jurisdiction); (ii)
all of Debtor's rights in, to and under all
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purchase orders now owned or hereafter received or acquired by it for goods or
services, and all of Debtor's rights to any goods represented by any of the
foregoing (including returned or repossessed goods and unpaid sellers' rights
of rescission, replevin, reclamation and stopping in transit); and (iii) all
monies due to or to become due to Debtor under all contracts for the sale or
lease of goods or the performance of services by it (whether or not yet earned
by performance on the part of Debtor) now in existence or hereafter arising,
including, without limitation, the right to receive the proceeds of such
purchase orders and contracts and all collateral security and guarantees of any
kind given by any Person with respect to any of the foregoing.
"Chattel Paper" means all "chattel paper" as such term is defined in
Section 9-105(b) of the Code.
"Code" means the Uniform Commercial Code as in effect on the date
hereof in the State of Michigan.
"Collateral" has the meaning provided in Section 2.
"Contract Rights" means all rights of Debtor (including, without
limitation, all rights to payment) under each Contract.
"Contract(s)" means, collectively, all licensing agreements and any
and all other contracts, instruments, undertakings, documents or other
agreements in or under which Debtor may now or hereafter have any right, title
or interest and which pertain to the lease, sale or other disposition by Debtor
of any Inventory or Equipment, fixtures, real property or any interest in real
property, as any of the same may from time to time be amended, supplemented or
otherwise modified.
"Equipment" means any "equipment," as such term is defined in Section
9-109(2) of the Code, now or hereafter owned by Debtor, and shall also mean and
include all machinery, equipment, vehicles, furnishings and fixtures (as such
term is defined in Section 9-313(a) of the Code) now owned or hereafter
acquired by Debtor, including, without limitation, all items of machinery and
equipment of any kind, nature and description, whether affixed to real property
or not, as well as all additions to, substitutions for, replacements of or
accessions to any of the foregoing items and all attachments, components, parts
(including spare parts) and accessories whether installed thereon or affixed
thereto.
"General Intangibles" means all "general intangibles," as such term is
defined in Section 9-106 of the Code, now or hereafter owned by Debtor,
including, without limitation, all tax refunds, customer lists, rights in
intellectual property, goodwill, trade names, service marks, trade secrets,
patents, trademarks, copyrights, applications therefor, permits and licenses
now owned or hereafter acquired by Debtor, but excluding items described in the
definition of "Accounts."
"Instruments" means all "instruments," as such term is defined in
Section 9-105(i) of the Code.
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"Inventory" means any "inventory," as such term is defined in Section
9-109(4) of the Code, wherever located, now owned or hereafter acquired by
Debtor or in which Debtor now has or hereafter may acquire any right, title or
interest including, without limitation, all goods and other personal property
now or hereafter owned by Debtor which are leased or are held for sale or lease
or are furnished or are to be furnished under a contract of service or which
constitute raw materials, work in process or materials used or consumed or to
be used or consumed in Debtor's business, or in the processing, packaging or
shipping of the same, and all finished goods.
"Lien Termination Date" has the meaning provided in Section 20.
"Obligations" has the meaning provided in the Loan Agreement.
"Proceeds" shall have the meaning provided it under the Code and, in
any event, shall include, but not be limited to, (i) any and all proceeds of
any insurance, indemnity, warranty or guaranty payable to Debtor from time to
time with respect to any of the Collateral, (ii) any and all payments (in any
form whatsoever) made or due and payable to Debtor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental body,
authority, bureau or agency (or any Person acting under color of governmental
authority) and (iii) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.
"Requirement of Law" shall mean, as to any Person, the charter and
by-laws or other organizational or governing documents of such Person, and any
material law, treaty, rule or regulation or determination of arbitration or a
court or other governmental authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.
"Secured Obligations" shall have the meaning provided in Section 2(a).
2. Grant of Security Interest.
(a) General. As collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of all the Obligations and any other indebtedness or
obligation owed by Debtor or the other Borrowers to NBD (collectively, with the
Obligations, the "Secured Obligations"), and in order to induce NBD to enter
into the Loan Agreement and make loans to Debtor and the other Borrowers in
accordance with the terms thereof, Debtor hereby grants to NBD a continuing
security interest in all of the following property now owned, or at any time
hereafter acquired, by Debtor or in which Debtor now has or at any time in the
future may acquire any right, title or interest (all of which is hereinafter
collectively referred to as the "Collateral"):
(i) all existing and future Contracts;
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(ii) all existing and future Accounts, Contract Rights and
General Intangibles (including, without limitation, (a) all money due
and to become due under any Contract, (b) any damages arising out of
or for breach or default in respect of any Contract or Account, (c)
all other amounts from time to time paid or payable under or in
connection with any Contract or Account, and (d) the right of Debtor
to terminate any Contract or to perform or exercise all remedies
thereunder);
(iii) all existing and future Equipment;
(iv) all existing and future Inventory; and
(v) to the extent not otherwise included, all Proceeds
and products of any or all of the foregoing.
(b) Business Records. In addition to the grant of the
security interest under subsection 2(a), Debtor hereby grants to NBD a Lien and
first security interest in all of Debtor's books and records pertaining to the
Collateral, including without limitation, all books of accounts, ledgers,
computer software, computer printouts and other computerized records and
cabinets in which there are reflected or maintained the Collateral in which NBD
has a security interest, or which relate to any other Collateral NBD may hold
from Debtor and all supporting evidence and documents relating to such security
in the form of written applications, credit information, account cards, payment
records, correspondence, delivery and installation certificates, invoice
copies, delivery receipts, notes and other evidences of indebtedness, insurance
certificates and the like. For convenience, these books, records and documents
are called "Business Records." The Business Records, presently included in
this Agreement, are described as follows:
accounts receivable subsidiary ledger including unpaid invoice
file, cash receipts journal, cash disbursements journal and
filing cabinets containing customer orders, correspondence,
paid invoice files and any other books and records, filing
cabinets, or places of storage of data and information,
including all computer storage facilities, records and
software usually located at Debtor's places of business
identified on Schedule I or elsewhere.
3. Rights of NBD; Limitations on NBD's Obligations. It is
expressly agreed by Debtor that, anything herein to the contrary
notwithstanding, Debtor shall remain liable under each of the Accounts and
Contracts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise to such Account and in accordance with the terms and
provisions of each such Contract. NBD has no obligation or liability under any
Account (or agreement giving rise thereto) or under any Contract by reason of
or arising out of this Agreement or its assignment to NBD or the receipt by NBD
of any payment relating to any Account or Contract pursuant hereto, nor will
NBD be required or obligated in any manner to perform or fulfill any of the
obligations of Debtor under or pursuant to any Account (or any agreement giving
rise thereto)
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or under or pursuant to any Contract, to make any payment, to make any inquiry
as to the nature or the sufficiency of any payment received by any of them or
as to the sufficiency of any performance by any party under any Account (or any
agreement giving rise thereto) or under any Contract, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to any of them or to which any of
them may be entitled at any time or times.
4. Representations and Warranties. Debtor hereby represents and
warrants to NBD that:
(a) Title; No Other Security Interests. Except for the
security interest granted hereunder to NBD and Permitted Liens under the Loan
Agreement, Debtor owns each item of the Collateral free and clear of any and
all security interests or claims of others.
(b) Addresses. The Debtor's chief executive office and
the place where its records concerning the Accounts and other Collateral are
kept and the other addresses of Debtor's business, if any, are set forth on
Schedule I hereto. The states in which Collateral is located, and Debtor's
chief executive office and principal place of business in each state, shall not
be changed without prior written notice to NBD, but the Collateral, wherever
located, is covered by this Agreement. Debtor shall immediately advise NBD in
writing of any change in its name, address or form of organization.
(c) Trade Names. Any and all trade names under which
Debtor transacts any part of its business, and all former names of Debtor, are
set forth on Schedule I hereto.
(d) Accuracy of Information. All information,
certificates or statements given to NBD pursuant to this Agreement shall be
true and complete in all material respects, when given.
5. Covenants. Debtor covenants and agrees with NBD that from and
after the date of this Agreement until the Secured Obligations are fully
satisfied:
(a) Further Documentation; Pledge of Instruments. At
any time and from time to time, upon the written request of NBD, and at the
sole expense of Debtor, Debtor will promptly and duly execute and deliver any
and all such further instruments and documents and take such further action as
NBD may reasonably request for the purpose of obtaining the full benefits of
this Agreement and of the rights and powers herein granted, including, without
limitation, the filing of any financing or continuation statements under the
Uniform Commercial Code in effect in any jurisdiction with respect to the
security interests granted hereby. A carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement for
filing in any jurisdiction.
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(b) Maintenance of Records. If an Event of Default has
occurred and is continuing and if requested by NBD, Debtor will mark the
Business Records pertaining to the Collateral to evidence this Agreement and
the security interests granted hereby.
(c) Indemnification. Debtor agrees to pay, and to save
NBD harmless from, any and all liabilities, costs and expenses (including,
without limitation, legal fees and expenses) (i) with respect to, or resulting
from, any delay in paying any and all excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral, (ii)
with respect to, or resulting from, any delay in complying with any Requirement
of Law applicable to any of the Collateral or (iii) in connection with any of
the transactions contemplated by this Agreement. In any suit, proceeding or
action brought by NBD under any Account or Contract for any sum owing
thereunder, or to enforce any provisions of such Account or Contract, Debtor
will save, indemnify and keep NBD harmless from and against all expense, loss
or damage suffered by reason of any defense, set-off, counterclaim, recoupment
or reduction or liability whatsoever of the account debtor or obligor
thereunder, arising out of a breach by Debtor of any obligation thereunder or
arising out of any other agreement, indebtedness or liability at any time owing
to or in favor of such account debtor or obligor or its successors from Debtor,
and all such obligations of Debtor shall be and remain enforceable against and
only against Debtor and shall not be enforceable against NBD.
(d) Payment of Obligations. Debtor will pay promptly
when due, all taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of its income or profits therefrom, as well
as all claims of any kind (including, without limitation, claims for labor,
materials and supplies) against or with respect to the Collateral, except that
no such charge need be paid if and to the extent not required to be paid
pursuant to the Loan Agreement.
(e) Limitation on Security Interests on Collateral.
Debtor will not create, incur or permit to exist, and will defend the
Collateral against, and will take such other action as is necessary to remove,
any security interest or claim on or to the Collateral other than the security
interests created hereby, and other than Permitted Liens pursuant to the Loan
Agreement, and will defend the right, title and interest of NBD in and to any
of the Collateral against the claims and demands of all Persons whomsoever.
Debtor will not sell or otherwise dispose of any type or item of Collateral
except as expressly permitted by this Agreement or the Loan Agreement.
(f) Limitations on Modifications of Contracts, Accounts;
No Waivers, Extensions. Other than in the ordinary course of business, Debtor
will not (i) amend, modify, terminate or waive any provision of any Contract or
any agreement giving rise to an Account in any manner which might materially
adversely affect the value of such Contract or Account as Collateral, or (ii)
fail to exercise promptly and diligently each and every right which it may have
under each Contract and each agreement giving rise to an Account (other than
any right of termination) in any manner which could materially adversely affect
the value of such Contract.
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(g) Limitations on Discounts, Compromises, Extension of
Accounts. Other than in the ordinary course of business, Debtor will not grant
any extension of the time of payment of any of the Accounts, compromise,
compound or settle the same for less than the full amount thereof, release,
wholly or partially, any person liable for the payment thereof or allow any
credit or discount whatsoever thereon.
(h) Maintenance of Insurance. Debtor will maintain
insurance policies as required by the Loan Agreement.
(i) Right of Inspection. NBD at all times have full and
free access during normal business hours to all the books, correspondence and
records of Debtor, and NBD or its representatives may examine the same, take
extracts therefrom and make photocopies thereof, and Debtor agrees to render to
NBD, at Debtor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. NBD and its representatives, will at
all times also have the right to enter into and upon any premises where any of
the Inventory or Equipment is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein. NBD will take
reasonable steps to maintain the confidentiality of information obtained by
them pursuant to this subsection, except as required by law.
(j) Maintenance. Debtor will keep the Equipment in good
repair and operating condition.
6. Sale and Collections.
(a) Sale of Inventory. So long as no Event of Default
has occurred and is continuing, Debtor may sell or otherwise dispose of
Inventory in the ordinary course of Debtor's business.
(b) Proceeds of Collateral. After an Event of Default
and upon the written request of NBD, all full and partial payments on any
Collateral thereafter received by Debtor shall immediately be (i) delivered by
Debtor to NBD in their original form, except for endorsement where necessary,
to be held as cash collateral in a special bank account (the "Collateral
Account") maintained by NBD subject to withdrawal by NBD only or (ii) deposited
in accounts at other financial institutions acceptable to NBD and thereafter be
transferred directly to the Collateral Account. Until such payments are so
delivered or deposited and transferred, Debtor shall hold such payments in
trust for and as NBD's property and Debtor shall not commingle such payments
with any of Debtor's own funds. Immediately upon receipt of any funds in the
Collateral Account from a depository bank which participates in Debtor's cash
management program acceptable to NBD or deposit in the Collateral Account for
collection of other checks and instruments and NBD, in its sole discretion,
may: (A) hold funds therein; (B) apply funds on deposit therein to the payment
of the Secured Obligations in such order as NBD may elect; or (C) transfer
funds on deposit therein to the Debtor's general checking account with NBD for
its general use; provided, however, that any application to the Secured
Obligations is conditioned upon final payment of any check or other instrument.
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(c) Verification. NBD may verify Collateral in any
reasonable manner and Debtor shall assist NBD in so doing. Anything contained
herein to the contrary notwithstanding, NBD may at any time during the
continuance of an Event of Default enforce collection of, settle, compromise,
extend or renew the indebtedness of such account debtors. NBD may also,
notwithstanding any other provision of this Agreement, notify the bailee of any
Inventory of its security interest therein.
7. Settlement of Insurance Claims. In the event of any casualty
to the Equipment or other Collateral which is covered by insurance, Debtor
authorizes NBD, if default has occurred under the Loan Agreement, to settle any
claim or proceed to suit and judgment for all insurance proceeds arising out of
the casualty to the Equipment or other Collateral, and, whether or not default
has occurred under the Loan Agreement, upon receipt of payment of such proceeds
Lender, at its option, may apply all payments to the Secured Obligations in any
order NBD determines or to the restoration or replacement of the Equipment or
other Collateral.
8. NBD's Appointment as Attorney-in-Fact.
(a) General Appointment. Debtor hereby irrevocably
constitutes and appoints NBD, with power of substitution to appoint any person
to act on its behalf where such appointment is required by applicable law, as
its true and lawful attorney-in-fact with full irrevocable power and authority
in the place and stead of Debtor and in the name of Debtor or in its own name,
from time to time in NBD's discretion, for the purpose of carrying out the
terms of this Agreement, on behalf of Debtor, to do the following:
(i) to ask, demand, collect, receive and give
acquittances and receipts for any and all monies due and to become due
under any Contract or Account and, in the name of Debtor or its own
name or otherwise, to take possession of and endorse and collect any
checks, drafts, notes, acceptances or other instruments for the
payment of monies due under any Contract or Account and to file any
claim or to take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by NBD for the purpose of
collecting any and all such monies due under any Contract or Account
whenever payable;
(ii) to pay or discharge taxes, security interests or
other encumbrances levied or placed on or threatened against the
Collateral, to effect any repairs or any insurance called for by the
terms of this Agreement and to pay all or any part of the premiums
therefor and the costs thereof; and
(iii) (A) to direct any party liable for any payment under
any of the Collateral to make payment of any and all monies due and to
become due thereunder directly to NBD or as NBD shall direct; (B) to
receive payment of and give receipt for any and all monies, claims and
other amounts due and to become due at any time in respect of or
arising out of any Collateral; (C) to sign and endorse any invoices,
freight or express bills, bills of lading, storage or warehouse
receipts, drafts against debtors, assignments,
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verifications and notices in connection with Accounts and other
documents relating to the Collateral; (D) to commence and prosecute
any suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any thereof and to
enforce any other right in respect of any Collateral; (E) to defend
any suit, action or proceeding brought against Debtor with respect to
any Collateral; (F) to settle, compromise or adjust any suit, action
or proceeding described above and, in connection therewith, to give
such discharges or releases as NBD may deem appropriate; and (G) to
do, at NBD's option and Debtor's expense, at any time, or from time
to time, all acts and things which NBD deems necessary or desirable to
protect, preserve or realize upon the Collateral and NBD's security
interest therein, in order to effect the intent of this Agreement, all
as fully and effectively as Debtor might do.
This power of attorney is a power coupled with an interest and
shall be irrevocable until the Lien Termination Date.
(b) Duties of NBD. The powers conferred on NBD hereunder
are solely to protect its interests in the Collateral and shall not impose any
duty upon it to exercise any such powers. NBD shall be accountable only for
amounts that it actually receives as a result of the exercise of such powers
and neither NBD nor any of its officers, directors, employees or agents shall
be responsible to Debtor for any act or failure to act, except for its own
gross negligence or willful misconduct.
9. Performance by NBD of Debtor's Obligations. If Debtor fails
to perform or comply with any of its agreements contained herein and NBD, as
provided for by the terms of this Agreement, shall itself perform or comply, or
otherwise cause performance or compliance, with such agreement, the costs and
expenses of NBD incurred in connection with such performance or compliance,
together with interest thereon at the default rate provided for in the Loan
Agreement, shall be payable by Debtor to NBD on demand and shall constitute
Secured Obligations secured hereby.
10. Proceeds as Collateral. During the continuance of an Event of
Default, any and all such Proceeds received by NBD (whether from Debtor or
otherwise) may, in the sole discretion of NBD, be held by NBD as collateral
security for, or then or at any time thereafter applied in whole or in part by
NBD, against all or any part of the Secured Obligations in the manner provided
in Section 13. Any balance of such payments held by NBD and remaining after
payment in full of all the Secured Obligations shall be paid over to Debtor in
the manner provided in Section 20.
11. Events of Default. The occurrence of an Event of Default
under the Loan Agreement shall be deemed an Event of Default hereunder.
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12. Remedies.
(a) General. If an Event of Default shall occur and be
continuing, NBD may exercise in addition to all other rights and remedies
granted to it in this Agreement and in any other instrument or agreement
securing, evidencing or relating to the Secured Obligations, all rights and
remedies of a secured party under the Code. Without limiting the generality of
the foregoing, Debtor expressly agrees that in any such event NBD may forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and may forthwith sell, lease, assign, or otherwise dispose of and
deliver such Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange or broker's board or at any of NBD'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. NBD will have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such private sale
or sales, to purchase the whole or any part of such Collateral so sold, free of
any right or equity of redemption in Debtor which right or equity is hereby
waived or released. Debtor further agrees, at NBD's request, to assemble the
Collateral, make it available to NBD, as requested, at places which NBD shall
reasonably select, whether at Debtor's premises or elsewhere, at Debtor's sole
cost and expense. NBD shall pay over the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to
the care, safekeeping or otherwise of any or all of the Collateral or in any
way relating to the rights of NBD hereunder, including, without limitation,
attorneys' fees and legal expenses, to NBD for application by them to the
payment in whole or in part of the Secured Obligations, in the manner provided
in Section 13, and only after so paying over such net proceeds and after the
payment by NBD of any other amount required by any provision of law, including
Section 9-504(l)(c) of the Code, will NBD be required to account for the
surplus, if any, to Debtor. To the extent permitted by applicable law, Debtor
waives all claims, damages, and demands against NBD arising out of the
repossession, retention or sale of the Collateral. Debtor agrees that NBD need
not give more than 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 matters. Debtor shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which NBD are entitled, Debtor also being
liable for the fees of any attorneys employed by NBD to collect such
deficiency.
(b) Costs. Debtor also agrees to pay all costs of NBD,
including, without limitation, attorneys' fees and legal expenses, incurred
with respect to the collection of any of the Secured Obligations and the
enforcement by NBD of any of its rights hereunder.
13. Application of Proceeds.
(a) Payment of Expenses. All monies collected by NBD
upon any sale or other disposition of the Collateral, together with all other
monies received by NBD hereunder, shall first be applied to the payment of all
costs and expenses incurred by NBD in connection with such sale, the delivery
of the Collateral or the collection of any such monies (including, without
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limitation, attorneys' fees and expenses) and the balance of such monies (the
"Remaining Proceeds") shall be applied by NBD as required below.
(b) Payment of Obligations. Prior to the Lien
Termination Date, the Remaining Proceeds shall be applied to satisfy the
Obligations in accordance with the Loan Agreement.
(c) Payment of Other Secured Obligations. Prior to the
Lien Termination Date, any Remaining Proceeds not otherwise applied pursuant to
Section 13(b) shall be applied to satisfy any other Secured Obligations.
(d) Payment to Debtor. At the Lien Termination Date, any
Remaining Proceeds of the Collateral not otherwise applied pursuant to this
Section 13, shall in each case be paid over to Debtor pursuant to the terms of
Section 20, except as otherwise required by law.
14. Limitation on NBD's Duty in Respect of Collateral. NBD's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as NBD deals with similar property
for its own account. Neither NBD nor any of its directors, officers, employees
or agents shall be liable for failure to demand, collect or realize upon all or
any part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
Debtor or otherwise.
15. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and
powers coupled with an interest.
16. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
17. Section Headings, etc. The Section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof. All references to Sections, Schedules and Exhibits are to Sections,
Schedules and Exhibits in or to this Agreement unless otherwise specified.
18. No Waiver; Cumulative Remedies. NBD will not by any act
(except a written instrument pursuant to Section 19 hereof), delay, indulgence,
omission or otherwise be deemed to have waived any right or remedy hereunder or
to have acquiesced in any Event of Default or in any breach of the terms and
conditions hereof. A waiver by NBD of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which NBD would
otherwise have had on any future occasion. No failure to exercise nor any
delay in exercising on the part of NBD any right, power or privilege hereunder,
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder
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preclude any other or future exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not exclusive
of any rights and remedies provided by the Loan Agreement, any other Loan
Document or applicable law.
19. Waivers and Amendments; Successors and Assigns; Governing Law.
None of the terms or provisions of this Agreement may be waived, altered,
modified or amended except by a written instrument, duly executed by Debtor and
NBD. This Agreement and all obligations of Debtor hereunder shall be binding
upon the successors and assigns of Debtor, and shall, together with the rights
and remedies of NBD hereunder, inure to the benefit of NBD and its successors
and assigns; provided that Debtor may not assign or transfer any of its rights
or obligations hereunder without the prior written consent of NBD. This
Agreement shall be governed by, and be construed and interpreted in accordance
with, the internal laws (and not the laws of conflict) of the State of
Michigan.
20. Termination; Release.
(a) Releases Prior to Termination Date. Collateral may
be released in whole or in part only with the consent of NBD; provided that,
without NBD's consent, (i) Debtor may sell Inventory in the ordinary course of
business and (ii) Collateral may be released pursuant to the terms of the Loan
Agreement. Upon any such release of Collateral, NBD shall, at the request and
expense of Debtor, release the Collateral being sold and execute and deliver to
Debtor a proper instrument or instruments acknowledging the release of such
Collateral from this Agreement, and will duly assign, transfer and deliver to
Debtor (without recourse and without any representation or warranty) the
Collateral being sold as described above.
(b) Lien Termination Date. Upon the irrevocable payment
by Debtor of all the Obligations under the Loan Documents including, without
limitation, the repayment in full of all loans made to Debtor or Parent, the
termination of any guaranties given by Debtor in favor of NBD and the
termination of any obligation on the part of the NBD to make further loans
under the Loan Agreement (the "Lien Termination Date"), this Agreement shall
terminate, and NBD, at the request and expense of Debtor, will promptly execute
and deliver to Debtor a proper instrument or instruments acknowledging the
satisfaction and termination of this Agreement, and will duly assign, transfer
and deliver to Debtor (without recourse and without any representation or
warranty) such of the Collateral as may be in the possession of NBD and which
has not theretofore been sold or otherwise applied or released pursuant to this
Agreement, together with any monies at the time held by NBD hereunder.
(c) Certificate of Debtor. At any time that Debtor
desires that Collateral be released as provided in the foregoing Sections 20(a)
and (b), it shall deliver to NBD a certificate signed by a senior or financial
officer of Debtor stating that the release of the respective Collateral is
permitted pursuant to Section 20(a) or (b), as the case may be.
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21. Notices. All notices, requests and other communications that
are required or may be given under this Agreement shall be in writing, and
shall be deemed to have been given on the date of delivery, if delivered by
hand, telecopy or courier, or two Business Days after mailing, if mailed by
certified or registered mail, postage prepaid, return receipt requested,
addressed as set forth below (which addresses may be changed, from time to
time, by notice given in the manner provided in this Section):
If to Debtor: Medar, Inc.
38700 Grand River Ave.
Farmington Hills, MI 48335
Telecopy: 810/477-8897
Attention: Richard Current
If to NBD: NBD Bank
235 Sheldon Rd.
Plymouth, Michigan 48170
Telecopy: (313) 454-7723
Attention: Glenn Ansiel
22. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
IN WITNESS WHEREOF, Debtor and NBD have caused this Agreement to be
executed by their duly authorized officers on the date first set forth above.
MEDAR, INC.,
a Michigan corporation
By: /s/ Charles Drake
----------------------------------------
Its: President
------------------------------
NBD BANK
By: /s/ Glenn Ansiel
----------------------------------------
Its: Loan Officer
------------------------------
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SCHEDULE I
Medar, Inc.
Places of Business, Trade Names
Names we do business under:
Integral
Integral Vision-AID
Medar
Business/Inventory
Medar, Inc./Inventory Integral Vision-AID
38700 Grand River Avenue 1708 N. Westwood
Farmington Hills, Michigan 48335 Toledo, Ohio 43607
Medar, Inc.
24775 Crestview Court
Farmington Hills, Michigan 48335
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