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EXHIBIT 10.28
GENERAL SECURITY AGREEMENT
This General Security Agreement (the "Agreement"), dated as of May 1,
1996, is made by Medar Canada Ltd., a corporation incorporated pursuant to the
laws of Canada ("Debtor"), in favour of NBD Bank ("NBD").
Recitals
A. Medar, Inc. and its subsidiaries, Integral Vision-AID, Inc. (formerly
known as Automatic Inspection Devices, Inc.) and Integral Vision Ltd.
(collectively such subsidiaries and Medar, Inc. are referred to as the
"Borrowers") and NBD have entered into a Revolving Credit and Loan Agreement
dated August 10, 1995, as amended by a First Amendment to Revolving Credit and
Loan Agreement dated October 12, 1995, a Second Amendment to Revolving Credit
and Loan Agreement dated October 31, 1995 and a Third Amendment to Revolving
Credit and Loan Agreement dated March 29, 1996 (as amended from time to time,
the "Loan Agreement") pursuant to which NBD has agreed to make certain credit
facilities available to the Borrowers, including, without limitation, a
revolving line of credit in the maximum principal amount of $16,000,000, and
various term loans, all as more fully described in the Loan Agreement.
B. The Debtor has guaranteed the obligations of the Borrowers under the
Loan Agreement pursuant to a guarantee and postponement of claim dated August
10, 1995 (the "Guarantee") which has been the subject of various reaffirmations
duly executed by the Debtor.
C. In consideration of the continuation of the credit facilities, the
Debtor has agreed to execute and deliver this agreement to NBD.
THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Debtor hereby agrees with NBD as follows:
1. Defined Terms. In addition to those terms defined elsewhere in this
Agreement, terms defined in the Loan Agreement shall have their defined
meanings when used herein (unless otherwise defined herein) and the following
terms shall have the following meanings, unless the context otherwise requires:
"Accounts" means any "account" or "chattel paper", as such terms are
defined in the Personal Property Security Act, R.S.O. 1990, c.P.10 as amended
(the "PPSA"), now or hereafter owned by Debtor or in respect of which the
Debtor now has or hereafter acquires rights, and shall also mean and include
(i) all accounts receivable, contract rights, book debts, notes, drafts,
instruments, documents, acceptances, payments under leases and other forms of
obligations, now owned or hereafter received or acquired by or belonging or
owing to Debtor (including under any trade names, styles or divisions thereof)
whether arising out of goods sold or leased or services rendered by it or from
any other transaction, whether or not the same involves the sale of goods or
services by Debtor (including, without limitation,
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any such obligation which might be characterized as an account, contract right,
intangible or chattel paper under the PPSA in effect in any jurisdiction); (ii)
all of Debtor's rights in, to and under all purchase orders now owned or
hereafter received or acquired by it for goods or services, and all of Debtor's
rights to any goods represented by any of the foregoing (including returned or
repossessed goods and unpaid sellers' rights of rescission, replevin,
reclamation and stoppage in transitu); and (iii) all monies due to or to become
due to Debtor under all contracts for the sale or lease of goods or the
performance of services by it (whether or not yet earned by performance on the
part of Debtor) now in existence or hereafter arising, including, without
limitation, the right to receive the proceeds of such purchase orders and
contracts and all collateral security and guarantees of any kind given by any
Person with respect to any of the foregoing.
"Chattel Paper" means all "chattel paper" as such term is defined in
the PPSA.
"Act" means the PPSA as in effect on the date hereof or hereafter in
the Province of Ontario.
"Collateral" has the meaning provided in Section 2.
"Contract Rights" means all rights of Debtor (including, without
limitation, all rights to payment) under each Contract.
"Contract(s)" means, collectively, all licensing agreements and any and
all other contracts, instruments, undertakings, documents or other agreements
in or under which Debtor may now or hereafter have any right, title or interest
and which pertain to the lease, sale or other disposition by Debtor of any
Inventory or Equipment, fixtures, real property or any interest in real
property, as any of the same may from time to time be amended, supplemented or
otherwise modified.
"Equipment" means any "equipment", as such term is defined in the PPSA
now or hereafter owned by Debtor or in respect of which the Debtor has now or
hereafter acquires rights, and shall also mean and include all machinery,
equipment, vehicles, furnishings and fixtures (as such term is defined in the
PPSA) now owned or hereafter acquired by Debtor, including, without limitation,
all items of machinery and equipment of any kind, nature and description,
whether affixed to real property or not, as well as all additions to,
substitutions for, replacements of or accessions to any of the foregoing items
and all attachments, components, parts (including spare parts) and accessories
whether installed thereon or affixed thereto.
"Intangibles" means all "intangibles", as such term is defined in the
PPSA, now or hereafter owned by Debtor or in respect of which the Debtor has
now or hereafter acquires rights, including, without limitation, all tax
refunds, customer lists, rights in intellectual property, goodwill, trade
names, service marks, trade secrets, patents, trademarks,
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copyrights, applications therefor, permits and licenses now owned or hereafter
acquired by Debtor, but excluding items described in the definition of
"Accounts".
"Instruments" means all "instruments", as such term is defined in the
PPSA.
"Inventory" means any "inventory", as such term is defined in the PPSA,
wherever located, now owned or hereafter acquired by Debtor or in respect of
which Debtor now has or hereafter may acquire any right, title or interest
including, without limitation, all goods and other personal property now or
hereafter owned by Debtor which are leased or are held for sale or lease or are
furnished or are to be furnished under a contract of service or which
constitute raw materials, work in process or materials used or consumed or to
be used or consumed in Debtor's business, or in the processing, packaging or
shipping of the same, and all finished goods.
"Obligations" means the obligations of the Debtor under the Guarantee.
"Proceeds" shall have the meaning provided it under the PPSA and, in
any event, shall include, but not be limited to, (i) any and all proceeds of
any insurance, indemnity, warranty or guarantee payable to Debtor from time to
time with respect to any of the Collateral, (ii) any and all payments (in any
form whatsoever) made or due and payable to Debtor from time to time in
connection with any requisition, confiscation, condemnation, seizure or
forfeiture of all or any part of the Collateral by any governmental body,
authority, bureau or agency (or any Person acting under colour of governmental
authority) and (iii) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.
"Requirement of Law" shall mean, as to any Person, the charter and
by-laws or other organizational or governing documents of such Person, and any
material law, treaty, rule or regulation or determination of arbitration or a
court or other governmental authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of its
property is subject.
"Secured Obligations" shall have the meaning provided in Section 2(a).
2. Grant of Security Interest.
(a) General. As collateral security for the prompt and complete
payment and performance of all the Obligations including those under the
Guarantee and any other indebtedness or obligation owed by Debtor to NBD
(collectively, with the Obligations, the "Secured Obligations"), Debtor hereto
grants to NBD a continuing security interest in all of the following property
now owned, or at any time hereafter acquired, by Debtor or in which Debtor now
has or at any time in the future may acquire any right, title or interest (all
of which is hereinafter collectively referred to as the "Collateral"):
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(i) all existing and future Contracts;
(ii) all existing and future Accounts, Contract Rights and
Intangibles (including, without limitation, (a) all money due and to
become due under any Contract, (b) any damages arising out of or for
breach or default in respect of any Contract or Account, (c) all other
amounts from time to time paid or payable under or in connection with
any Contract or Account, and (d) the right of Debtor to terminate any
Contract or to perform or exercise all remedies thereunder);
(iii) all existing and future Equipment;
(iv) all existing and future Inventory; and
(v) to the extent not otherwise included, all Proceeds and
products of any or all of the foregoing.
(b) Business Records. In addition to the grant of the
security interest under subsection 2(a), Debtor hereby grants to NBD a lien and
first security interest in all of Debtor's books and records pertaining to the
Collateral, including without limitation, all books of accounts, ledgers,
computer software, computer printouts and other computerized records and
cabinets in which there are reflected or maintained the Collateral in which NBD
has a security interest, or which relate to any other Collateral NBD may hold
from Debtor and all supporting evidence and documents relating to such security
in the form of written applications, credit information, account cards, payment
records, correspondence, delivery and installation certificates, invoice
copies, delivery receipts, notes and other evidences of indebtedness, insurance
certificates and the like. For convenience, these books, records and documents
are called "Business Records". The Business Records, presently included in
this Agreement are described as follows:
accounts receivable subsidiary ledger including unpaid invoice
file, cash receipts journal, cash disbursements journal and
filing cabinets containing customer orders, correspondence,
paid invoice files and any other books and records, filing
cabinets, or places of storage of data and information,
including all computer storage facilities, records
and software usually located at Debtor's places of business
identified on Schedule I or elsewhere.
3. Rights of NBD; Limitations on NBD's Obligations. It is
expressly agreed by Debtor that, anything herein to the contrary
notwithstanding, Debtor shall remain liable under each of the Accounts and
Contracts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of
any agreement giving rise to such Account and in accordance with the terms and
provisions of each such Contract. NBD has no obligation or liability under any
Account (or
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agreement giving rise thereto) or under any Contract by reason of or arising
out of this Agreement or its assignment to NBD or the receipt by NBD of any
payment relating to any Account or Contract pursuant hereto, nor will NBD be
required or obligated in any manner to perform or fulfil any of the obligations
of Debtor under or pursuant to any Account (or any agreement giving rise
thereto) or under or pursuant to any Contract, to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received by any of
them or as to the sufficiency of any performance by any party under any Account
(or any agreement giving rise thereto) or under any Contract, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to any of them or to which
any of them may be entitled at any time or times.
4. Representations and Warranties. Debtor hereby represents and
warrants to NBD that:
(a) Title; No Other Security Interests. Except for the security
interest granted hereunder to NBD and any security interests set forth in
Schedule II hereunder (the "Permitted Liens"), Debtor owns each item of the
Collateral free and clear of any and all security interests or claims of
others.
(b) Addresses. The Debtor's chief executive office and the
place where its records concerning the Accounts and other Collateral are kept
and the other addresses of Debtors business, if any, are set forth on Schedule I
hereto. The Provinces in which Collateral is located, and Debtor's chief
executive office and principal place of business in each Province, shall not be
changed without prior written notice to NBD, but the Collateral, wherever
located, is covered by this Agreement. Debtor shall immediately advise NBD in
writing of any change in its name, address or form of organization.
(c) Trade Names. Any and all trade names under which Debtor
transacts any part of its business, and all former names of Debtor, are set
forth on Schedule I hereto.
(d) Accuracy of Information. All information, certificates or
statements given to NBD pursuant to this Agreement shall be true and complete
in all material respects, when given.
5. Covenants. Debtor covenants and agrees with NBD that from and
after the date of this Agreement until the Secured Obligations are fully
satisfied:
(a) Further Documentation; Pledge of Instruments. At any time
and from time to time, upon the written request of NBD, and at the sole expense
of Debtor, Debtor will promptly and duly execute and deliver any and all such
further instruments and documents and take such further action as NBD may
reasonably request for the purpose of obtaining the full benefits of this
Agreement and of the rights and powers herein granted, including, without
limitation, the filing of any financing or financing change statements under
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the PPSA or similar legislation in effect in any jurisdiction with respect to
the security interests granted hereby.
(b) Maintenance of Records. If an Event of Default has
occurred and is continuing and if requested by NBD, Debtor will mark the
Business Records pertaining to the Collateral to evidence this Agreement and
the security interests granted hereby.
(c) Indemnification. Debtor agrees to pay, and to save NBD
harmless from, any and all liabilities, costs and expenses (including, without
limitation, reasonable legal fees and expenses on a solicitor and client basis
properly incurred) (i) with respect to, or resulting from, any delay in paying
any and all excise, sales or other taxes which may be payable or determined to
be payable with respect to any of the Collateral, (ii) with respect to, or
resulting from, any delay in complying with any Requirement of Law applicable
to any of the Collateral or (iii) in connection with any of the transactions
contemplated by this Agreement. In any suit, proceeding or action brought by
NBD under any Account or Contract for any sum owing thereunder, or to enforce
any provisions of such Account or Contract, Debtor will save, indemnify and
keep NBD harmless from and against all expense, loss or damage suffered by
reason of any defence, set-off, counterclaim, recoupment or reduction or
liability whatsoever of the account debtor of obligor thereunder, arising out
of a breach by Debtor of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favour of such
account debtor or obligor or its successors from Debtor, and all such
obligations of Debtor shall be and remain enforceable against and only against
Debtor and shall not be enforceable against NBD.
(d) Payment of Obligations. Debtor will pay promptly when
due, all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labour, materials
and supplies) against or with respect to the Collateral.
(e) Limitation on Security Interests on Collateral. Debtor
will not create, incur or permit to exist, and will defend the Collateral
against, and will take such other action as is necessary to remove, any
security interest or claim on or to the Collateral other than the security
interests created hereby, and other than Permitted Liens and will defend the
right, title and interest of NBD in and to any of the Collateral against the
claims and demands of all Persons whomsoever. Debtor will not sell or otherwise
dispose of any type or item of Collateral except as expressly permitted by this
Agreement.
(f) Limitations on Modifications of Contracts, Accounts; No
Waivers, Extensions. Other than in the ordinary course of business, Debtor
will not (i) amend, modify, terminate or waive any provision of any Contract or
any agreement giving rise to an Account in any manner which might materially
adversely affect the value of such Contract or Account as Collateral, or (ii)
fail to exercise promptly and diligently each and every right which it may have
under each Contract and each agreement giving rise to an Account (other
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than any right of termination) in any manner which could materially adversely
affect the value of such Contract.
(g) Limitations on Discounts, Compromises, Extension of Accounts. Other
than in the ordinary course of business, Debtor will not grant any extension of
the time of payment of any of the Accounts, compromise, compound or settle the
same for less than the full amount thereof, release, wholly or partially, any
person liable for the payment thereof or allow any credit or discount
whatsoever thereon.
(h) Maintenance of Insurance. Debtor will maintain all risks, insurance
policies in force with respect to the Collateral showing NBD as a loss payee.
(i) Right of Inspection. NBD shall, at all times, have full and free
access during normal business hours to all the books, correspondence and
records of Debtor, and NBD or its representatives may examine the same, take
extracts therefrom and make photocopies thereof, and Debtor agrees to render to
NBD, at Debtor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. NBD and its representatives, will at
all times, also have the right to enter into and upon any premises where any of
the Inventory or Equipment is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein. NBD will take
reasonable steps to maintain the confidentiality of information obtained by
them pursuant to this subsection, except as required by law and to minimize any
interference with the business operations of Debtor.
(j) Maintenance. Debtor will keep the Equipment in good repair and
operating condition.
6. Sale and Collections.
(a) Sale of Inventory. So long as no Event of Default has occurred and
is continuing, Debtor may sell or otherwise dispose of Inventory in the ordinary
course of Debtor's business.
(b) Proceeds of Collateral. After an Event of Default and upon the
written request of NBD, all full and partial payments on any Collateral
thereafter received by Debtor shall immediately be (i) delivered by Debtor to
NBD in their original form, except for endorsement where necessary, to be held
as cash collateral in a special bank account (the "Collateral Account")
maintained by NBD subject to withdrawal by NBD only or (ii) deposited in
accounts at other financial institutions acceptable to NBD and thereafter be
transferred directly to the Collateral Account. Until such payments are so
delivered or deposited and transferred, Debtor shall hold such payments in
trust for and as NBD's property and Debtor shall not commingle such payments
with any of Debtor's own funds. Immediately upon receipt of any funds in the
Collateral Account from a depository bank which participates in Debtor's cash
management program acceptable to NBD or deposit in
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the Collateral Account for collection of other cheques and instruments and NBD,
in its sole discretion, may: (A) hold funds therein; (B) apply funds on deposit
therein to the payment of the Secured Obligations in such order as NBD may
elect; or (C) transfer funds on deposit therein to the Debtor's general
chequing account with NBD for its general use; provided, however, that any
application to the Secured Obligations is conditioned upon final payment of any
cheque or other instrument.
(c) Verification. NBD may verify Collateral in any reasonable manner and
Debtor shall assist NBD in so doing. Anything contained herein to the contrary
notwithstanding, NBD may at any time during the continuance of an Event of
Default, enforce collection of, settle, compromise, extend or renew the
indebtedness of such account debtors. NBD may also, notwithstanding any other
provision of this Agreement, notify the bailee of any Inventory of its security
interest therein.
7. Settlement of Insurance Claims. In the event of any casualty to the
Equipment or other Collateral which is covered by insurance, Debtor authorizes
NBD, if default has occurred under the Loan Agreement, to settle any claim or
proceed to suit and judgment for all insurance proceeds arising out of the
casualty to the Equipment or other Collateral, and, whether or not default has
occurred under the Guarantee, upon receipt of payment of such proceeds NBD, at
its option, may apply all payments to the Security Obligations in any order NBD
determines or to the restoration or replacement of the Equipment or other
Collateral.
8. NBD's Appointment as Attorney.
(a) General Appointment. Debtor hereby irrevocably constitutes and
appoints NBD, with power of substitution to appoint any person to act on its
behalf where such appointment is required by applicable law, as its true and
lawful attorney with full irrevocable power and authority in the place and
stead of Debtor and in the name of Debtor or in its own name, from time to time
in NBD's discretion, for the purpose of carrying out the terms of this
Agreement, on behalf of Debtor, to do the following:
(i) to ask, demand, collect, receive and give acceptance and receipts for
any and all monies due and to become due under any Contract or Account and, in
the name of Debtor or its own name or otherwise, to take possession of and
endorse and collect any cheques, drafts, notes, acceptances or other
instruments for the payment of monies due under any Contract or Account and to
file any claim or to take any other action or proceeding in any court of law
or equity or otherwise deemed appropriate by NBD for the purpose of collecting
any and all such monies due under any Contract or Account whenever payable;
(ii) to pay or discharge taxes, security interests or other encumbrances
levied or placed on or threatened against the Collateral, to effect any repairs
or any insurance called for by the terms of this Agreement and to pay all or
any part of the premiums therefor and the costs thereof; and
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(iii) (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all monies due and to become due
thereunder directly to NBD or as NBD shall direct; (B) to receive payment of
and give receipt for any and all monies, claims and other amounts due and to
become due at any time in respect of or arising out of any Collateral; (C) to
sign and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any thereof and to enforce any right in respect of
any Collateral; (E) to defend any suit, action or proceeding brought against
Debtor with respect to any Collateral; (F) to settle, compromise or adjust any
suit, action or proceeding described above and, in connection therewith, to
give such discharges or releases as NBD may deem appropriate; and (G) to do, at
NBD's option and Debtor's expense, at any time to protect, preserve or realize
upon the Collateral and NBD's security interest therein, in order to effect the
intent of this Agreement all as fully and effectively as Debtor might do.
This power of attorney is a power coupled with an interest and shall be
irrevocable until the obligations have been satisfied.
(b) Duties of NBD. The powers conferred on NBD hereunder are solely to
protect its interests in the Collateral and shall not impose any duty upon it
to exercise any such powers. NBD shall be accountable only for amounts that it
actually receives as a result of the exercise of such powers and neither NBD
nor any of its officers, directors, employees or agents shall be responsible to
Debtor for any act or failure to act, except for its own negligence or wilful
misconduct.
9. Performance by NBD of Debtor's Obligations. If Debtor fails to perform
or comply with any of its agreements contained herein and NBD, as provided for
by the terms of this Agreement, shall itself perform or comply, or otherwise
cause performance or compliance, with such agreement, the costs and expenses
of NBD reasonably incurred in connection with such performance or compliance,
together with interest thereon at the default rate provided for in the Loan
Agreement, shall be payable by Debtor to NBD on demand and shall constitute
Secured Obligations secured hereby.
10. Proceeds as Collateral. During the continuance of an Event of Default,
any and all such Proceeds received by NBD (wether from Debtor or otherwise may,
in the sole discretion of NBD, be held by NBD as collateral security for, or
then or at any time thereafter applied in whole or in part by NBD, against all
or any part of the Secured Obligations in the manner provided in Section 13.
Any balance of such payments held by NBD and remaining after payment in full of
all the Secured Obligations shall be paid over to Debtor in the manner provided
in Section 20.
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11. Events of Default. Failure to fulfil the terms of the Guarantee shall
be deemed an Event of Default hereunder.
12. Remedies.
(a) General. If an Event of Default shall occur and be continuing, NBD
may exercise in addition to all other rights and remedies granted to it in this
Agreement and in any other instrument or agreement security, evidencing or
relating to the Secured Obligations, all rights and remedies of a secured party
under the PPSA. Without limiting the generality of the foregoing, Debtor
expressly agrees that in any such event NBD may forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and may
forthwith sell, lease, assign, or otherwise dispose of and deliver such
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at such prices as it may
deem commercially reasonable for cash or on credit or for future delivery
without assumption of any credit risk. NBD will have the right upon any such
public sale or sales, and, to the extent permitted by law; upon any such
private sale or sales, to purchase the whole or any part of such Collateral so
sold free of any such right or equity of redemption in Debtor which right or
equity is hereby waived or released. Debtor further agrees, at NBD's request,
to assemble the Collateral, make it available to NBD, as requested, at places
which NBD shall reasonably select, whether at Debtor's premises or elsewhere,
at Debtor's sole cost and expense. NBD shall pay over the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of any kind incurred therein or
incidental to the care, safekeeping or otherwise of any or all of the
Collateral or in any way relating to the rights of NBD hereunder, including,
without limitation, legal fees and legal expenses on a solicitor and client
(full reimbursement) basis, to NBD for application by it to the payment in
whole or in part of the Secured Obligations, in the manner provided in Section
13, and only after so paying over such net proceeds and after the payment by
NBD of any other amount required by any provision of law, including the
provisions of the PPSA, will NBD be required to account for the surplus, if
any, to Debtor. To the extent permitted by applicable law, Debtor waives all
claims, damages, and demands against NBD arising out of the repossession,
retention or sale of the Collateral. Debtor agrees that NBD need not give more
than fifteen days' notice of the time and place of any public sale or of the
time after which a private sale may take place and that such notice is
reasonable notification of such matters. Debtor shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all amounts to which NBD is entitled, Debtor also being
liable for the reasonable fees of any solicitors employed by NBD to collect
such deficiency.
(b) Costs. Debtor also agrees to pay all costs of NBD, including,
without limitation, reasonable legal fees and legal expenses on a solicitor
and client (full reimbursement) basis, incurred with respect to the collection
of any of the Secured Obligations and the enforcement by NBD of any of its
rights hereunder.
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13. Application of Proceeds.
(a) Payment of Expenses. All monies collected by NBD upon any sale
or other disposition of the Collateral, together with all other monies received
by NBD hereunder, shall first be applied to the payment of all reasonable costs
and expenses incurred by NBD in connection with such sale, the delivery of the
Collateral or the collection of any such monies (including, without limitation,
legal fees and expenses as referred to above) and the balance of such monies
(the "Remaining Proceeds") shall be applied by NBD as required below.
(b) Payment of Other Secured Obligations. Any Remaining Proceeds
shall be applied to satisfy any other Secured Obligations.
(c) Payment to Debtor. Any Remaining Proceeds of the Collateral not
otherwise applied pursuant to this Section 13 or disposed of in accordance with
the PPSA or other applicable legislation or rules of law, shall in each case be
paid over to Debtor pursuant to the terms of Section 20.
14. Limitation on NBD's Duty in Respect of Collateral. NBD's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under the PPSA or otherwise, shall be to deal with
it in the same manner as NBD deals with similar property for its own account.
Neither NBD nor any of its directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of Debtor or otherwise.
15. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
16. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
17. Section Headings, etc. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or to be taken into consideration in the interpretation hereof. All
references to Sections, Schedules and Exhibits are to Sections, Schedules and
Exhibits in or to this Agreement unless otherwise specified.
18. No Waiver; Cumulative Remedies. NBD will not by any act (except a
written instrument pursuant to Section 19 hereof), delay, indulgence, omission
or otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Event
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of Default or in any breach of the terms and conditions hereof. A waiver by
NBD of any/right or remedy hereunder on any one occasion shall not be construed
as a bar to any right or remedy which NBD would otherwise have had on any
future occasion. No failure to exercise nor any delay in exercising on the
part of NBD any right, power or privilege hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or future exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
hereunder provided are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by the Guarantee, any
other agreement or applicable law.
19. Waivers and Amendments; Successors and Assigns; Governing Law. None
of the terms or provisions of this Agreement may be waived, altered, modified or
amended except by a written instrument, duly executed by Debtor and NBD. This
Agreement and all obligations of Debtor hereunder shall be binding upon the
successors and assigns of Debtor, and shall, together with the rights and
remedies of NBD hereunder, enure to the benefit of NBD and its successors and
assigns; provided that Debtor may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of NBD. This Agreement
shall be governed by, and be construed and interpreted in accordance with, the
internal laws (and not the laws of conflict) of the Province of Ontario. The
Debtor irrevocably and for all time waives any right to security for costs that
it may have in the event legal proceedings are commenced in respect of the
Guarantee or hereunder by NBD.
20. Termination; Release.
(a) Release Prior to Termination Date. Collateral may be released
in whole or in part only with the consent of NBD; provided that, without NBD's
consent, (i) Debtor may sell Inventory in the ordinary course of business and
(ii) Collateral may be released pursuant to the terms of the Loan Agreement.
Upon any such release of Collateral, NBD shall, at the request and expense of
Debtor, release the Collateral being sold and execute and deliver to Debtor a
proper instrument or instruments acknowledging the release of such Collateral
from this Agreement, and will duly assign, transfer and deliver to Debtor
(without recourse and without any representation or warranty) the Collateral
being sold as described above.
(b) End of Security Interest. Upon the irrevocable payment by
Debtor of all the Obligations under the Guarantee and the termination of any
obligation on the part of the NBD to make further loans under the Loan
Agreement, this Agreement shall terminate, and NBD, at the request and expense
of Debtor, will promptly execute and deliver to Debtor a proper instrument or
instruments acknowledging the satisfaction and termination of this Agreement,
and will duly assign, transfer and deliver to Debtor (without recourse and
without any representation or warranty) such of the Collateral as may be in the
possession of NBD and which has not theretofore been sold or otherwise applied
or released pursuant to this Agreement, together with any monies at the time
held by NBD hereunder.
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(c) Certificate of Debtor. At any time that Debtor desires that
Collateral be released as provided in the foregoing Sections 20(a) and (b), it
shall deliver to NBD a certificate signed by a senior or financial officer of
Debtor stating that the release of the respective Collateral is permitted
pursuant to Section 20(a) or (b), as the case may be.
21. Notices. All notices, requests and other communications that are
required or may be given under this Agreement shall be in writing, and shall be
deemed to have been given on the date of delivery, if delivered by hand,
telecopy or courier, or two Business Days after mailing, if mailed by priority
post or registered mail, postage prepaid, return receipt requested, addressed as
set forth below (which addresses may be changed, from time to time, by notice
given in the manner provided in this Section):
If to Debtor: Medar Canada Ltd.
c/o Medar Inc.
38700 Grand River Avenue
Farmington Hills, Michigan 48335
Telecopy: 810-615-2971
Attention: Richard R. Current
If to NBD: NBD Bank
235 Sheldon Road
Plymouth, Michigan 48170
Telecopy: (313) 454-7723
Attention: Glenn Ansiel
22. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
together shall constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
IN WITNESS WHEREOF, Debtor and NBD have caused this Agreement to be
executed by their duly authorized officers on the date first set forth above.
MEDAR CANADA LTD.
a Canadian corporation
By: Charles J. Drake
-----------------------
Its: President
-----------------
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NBD BANK
By: Deborah J. Farley
-----------------------------------
Its: Vice President
----------------------------
By: Glen Ansiel
-----------------------------------
Its: Assistant Vice President
----------------------------
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SCHEDULE I
Medar Canada Ltd.
Places of Business, Trade Names
Places of Business
240 Cordova Road
Box 858
Oshawa, Ontario
L1H 7N1
Tradenames
16
SCHEDULE II
Medar Canada Ltd.
Permitted Encumbrances
(i) any liens permitted by paragraph 6.2(d) of the Loan
Agreement, as that term is defined in the General Security
Agreement to which this Schedule is attached.