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EXHIBIT 10.36
EIGHTH AMENDMENT TO
REVOLVING CREDIT AND LOAN AGREEMENT
This EIGHTH AMENDMENT TO REVOLVING CREDIT AND LOAN AGREEMENT ("Eighth
Amendment") is dated as of July 15, 1997, and is among MEDAR, INC., a Michigan
corporation (the "Company"), and INTEGRAL VISION LTD., a corporation established
under the laws of the United Kingdom ("Integral"), as Borrowers, and NBD BANK, a
Michigan banking corporation ("NBD"). This Eighth Amendment amends the
Revolving Credit and Loan Agreement dated as of August 10, 1995 (as amended, the
"Loan Agreement"), as amended by the First Amendment to Revolving Credit and
Loan Agreement dated October 12, 1995 (the "First Amendment"), the Second
Amendment to Revolving Credit and Loan Agreement dated October 31, 1995 (the
"Second Amendment"), the Third Amendment to Revolving Credit and Loan Agreement
dated as of March 29, 1996 ("Third Amendment"), the Fourth Amendment to
Revolving Credit and Loan Agreement dated as of August 11, 1996 ("Fourth
Amendment"), the Fifth Amendment to Revolving Credit and Loan Agreement dated as
of February 27, 1997 ("Fifth Amendment"), the Sixth Amendment to Revolving
Credit and Loan Agreement dated as of March 28, 1997 ("Sixth Amendment"), and
the Seventh Amendment to Revolving Credit and Loan Agreement dated as of June
27, 1997 ("Seventh Amendment"), among the Company, Integral and NBD. The
original Loan Agreement and the first four amendment also had as a party a
former subsidiary of the Company, Integral Vision-AID, Inc., a Michigan
corporation ("AID") (successor by merger to Integral Vision-Aid, Inc., an Ohio
corporation, formerly known as Automatic Inspection Devices, Inc.). AID has
since been merged into the Company and no longer exists as a separate
corporation. The Company and Integral are collectively referred to as the
"Borrowers" and individually as a "Borrower". Capitalized terms not otherwise
defined in this Eighth Amendment shall have the meanings given to them in the
Loan Agreement.
WHEREAS, the Borrowers have negotiated to obtain $7,000,000 of subordinate,
secured debt and have requested that NBD consent to such debt and security.
WHEREAS, NBD has agreed to consent to the Company incurring the additional
debt on the terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties agree as follows:
1. Revised Definitions.
(a) The following definitions contained in Section 1.1 of the Loan
Agreement, as amended, are hereby amended, effective the date hereof, to read as
follows:
"Commitment" means the commitment of NBD to make Revolving Loans pursuant
to the terms of Section 2.1, which together with the outstanding principal
amount of the Bridge Loan and the Over-Formula Loan shall not exceed
$16,000,000 until September 29, 1997, and $15,000,000 on and after
September 30, 1997, as such amounts may be further reduced from time to
time pursuant to Section 2.2.
"Eligible Accounts Receivable" means each account owing to any of the
Borrowers or Guarantor ("Loan Party") which meets the following
specifications:
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(a) it arose from a bona fide sale of goods, in the ordinary course of
business, such goods having been delivered or shipped to the account debtor
and the appropriate Loan Party has genuine purchase orders, invoices and
shipping documents or receipts;
(b) has been outstanding for no more than 120 days from the date of
shipment or delivery;
(c) it is owned by the appropriate Loan Party, free and clear of any
Lien, other than the perfected, first priority Lien created in favor of NBD
and a Lien subject to the Subordination Agreement;
(d) it is enforceable against the account debtor for the amount
included in the Borrowing Base, is in compliance with applicable laws and
regulations, is not subject to any set-off, credit allowance or adjustment
(except discounts for prompt payment reflected in the computation thereof)
and the account debtor has not returned the goods or disputed liability
with respect to such account;
(e) none of the Loan Parties have notice or knowledge of any fact or
occurrence which could reasonably be expected to impair the credit
worthiness of the account debtor;
(f) the account debtor is not an Affiliate of any Loan Party, nor is
it the United States of America, or any agency thereof;
(g) the account debtor has its principle place of business in the
United States, Britain or Canada, or the account is covered by acceptable
credit insurance; and
(h) NBD has not notified the Borrowers that the account or account
debtor is unsatisfactory, in the discretion of NBD.
"Loans" means (i) the Revolving Loans made by NBD to the Borrowers pursuant
to Section 2.1, including those made by NBD through the London Branch, in
each case evidenced by the Revolving Note, (ii) the Equipment Loans made by
NBD to any one or more of the Borrowers pursuant to Section 2.4, (iii) the
Over-Formula Loan, (iv) the 1995 Mortgage Loan made by NBD to the Company
pursuant to Section 2.6, and (v) the term loan evidenced by the Amended and
Restated Term Note, dated July 15, 1997, in the original principal amount
of $1,500,000, from the Company to NBD.
"Loan Documents" means this Agreement, the Notes, the Guaranty Agreement,
the L/C Documents, NBD Guaranty Documents, the Equipment Loan Documents,
the Security Documents, any mortgages given to NBD, the First Amendment,
the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth
Amendment, the Sixth Amendment, the Seventh Amendment, the Eighth Amendment
and all other agreements, documents or instruments now or hereafter
executed by or on behalf of any of the Borrowers or the Guarantor and
delivered to NBD in connection with this Agreement or any amendment
thereof.
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"Notes" means the Revolving Note, the 1995 Term Note, the Over-Formula Loan
Note, and the Amended and Restated Term Note, dated July 15, 1997, in the
original principal amount of $1,500,000, from the Company to NBD, together
with any amendment, restatement, replacement or renewal thereof, and the
promissory notes, leases, and conditional sale contracts given by any
Borrower pursuant to the credit granted under Section 2.4, together with
any amendment, restatement, replacement or renewal thereof.
"Tangible Net Worth" means (a) the excess, if any, of the assets of the
Borrowers and the Guarantor (excluding capitalized software development
costs, goodwill, patents, trademarks, trade names, copyrights and other
assets properly classified as intangible assets in accordance with GAAP)
over the liabilities of the Borrowers and the Guarantors, determined on a
combined basis in accordance with GAAP; provided, however, that, in
determining Tangible Net Worth, (i) there shall be included in liabilities
any and all evidences of Indebtedness of the Borrowers or any Guarantor,
including notes and debentures of any Borrower or Guarantor which are
subordinated indebtedness, and (ii) there shall be excluded from assets any
and all assets of the Borrowers and the Guarantor which are Investments in
any other Person.
"Termination Date" means the earlier to occur of (a) August 31, 1999, and
(b) the date on which the Commitment shall be terminated pursuant to
Section 2.2 or 7.2.
(b) The following definitions are hereby added in alphabetical order to
Section 1.1 of the Loan Agreement to read as follows:
"Aggregate Net Income" means the aggregate amount of positive annual net
income after taxes for each fiscal year of the Borrowers and the Guarantor
on a consolidated basis, as determined in accordance with GAAP, beginning
with the fiscal year ending December 31, 1997 through the date of
determination, without any offset for any negative net income during such
period. Aggregate Net Income will only be adjusted as of the last day of
each fiscal year.
"Note Subordination Agreement" means the Subordination Agreement given to
NBD by the holders of the Subordinated Notes, in substantially the form of
Exhibit 1 attached to the Eighth Amendment, and any amendment, replacement
or restatement thereof.
"Subordinated Notes" means Indebtedness of the Company under seven 12.95%
Senior Subordinated Secured Notes dated July 14, 1997, in the aggregate
original principal amount of $7,000,000, which have been issued under the
Note and Warrant Purchase Agreement, dated as of July 14, 1997, and any
replacements thereof; provided that such Indebtedness, any guaranties and
any Liens are made subordinate to the Obligations and Liens of NBD on terms
satisfactory to NBD.
2. Letter of Credit Fees. The reference in the third line of Section
2.3(a)(iii) of the Loan Agreement to "1.00%" is hereby amended to read "1.25%".
3. Cancellation of Inventory Reliance Fee. When the outstanding
principal of and interest
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on the Bridge Loan is paid in full and when the outstanding principal balance of
the Over-Formula Loan is at or below $1,500,000, the Inventory Reliance Fee
described in Section 2.1(b)(iii) shall cease to accrue.
4. Equipment Line. Section 2.4(a) of the Loan Agreement is hereby amended
to read in its entirety to read as follows:
(a) Requests for Loans. Subject to the terms and conditions of this
Agreement and at the sole discretion of NBD before July 31, 1998, NBD may
extend term loans to, or enter into leases or conditional sales contracts
with, either the Company or AID in a total amount not to exceed $500,000 to
be used for the acquisition of equipment. All requests under this Section
2.4 must be submitted in writing to NBD, together with all information
reasonably requested by NBD with respect to the equipment to be acquired.
5. Quarterly Audits. Section 6.1(g) of the Loan Agreement is hereby
amended to read in its entirety to read as follows:
(g) Audits. Prior to the occurrence of an Event of Default, permit NBD's
representatives to conduct quarterly, on-site audits of the Borrowers' and
Guarantor's business operations, after the occurrence of an Event of
Default, NBD may audit the Borrowers, Guarantor and their respective
businesses as frequently as NBD desires, and the Borrowers must reimburse
NBD for all costs (including its standard auditor fees) incurred in
connection therewith within 10 days after receipt of an invoice therefor.
6. Revised Financial Covenants. Sections 6.2(a) and (b) of the Loan
Agreement are hereby amended in their entirety to read as follows:
(a) Tangible Net Worth. Permit or suffer Tangible Net Worth to be less
than, on June 30, 1997 and September 30, 1997, $9,500,000, and as of the
end of each fiscal quarter of the Borrowers beginning December 31, 1997 and
thereafter, less than (i) $9,500,000, plus (ii) as of the date of
determination, 50% of Aggregate Net Income.
(b) Debt to Worth Ratio. Permit or suffer the Debt to Worth Ratio to
exceed (i) 3.50 to 1.00 on December 31, 1996 and as of the end of each
fiscal quarter of the Borrowers to and including June 30, 1998, and (ii)
3.25 to 1.00 on September 30, 1998 and as of the end of each fiscal quarter
of the Borrowers thereafter.
7. Revised Indebtedness and Lien Covenants. Sections 6.2(c)(iv) and
(d)(vi) of the Loan Agreement are hereby amended in their entirety to read as
follows:
(iv) Indebtedness of the Company under the Subordinated Notes and the
guarantee of such debt by Integral and Guarantor.
. . . .
(vi) Liens in favor of NBD and Liens granted in connection with the
Subordinated
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Notes by the Company and subordinated to NBD's Liens under the Note
Subordination Agreement.
8. Conditions. Notwithstanding any other term of this Eighth Amendment or
the Loan Agreement, NBD will not be required to give effect to this Eighth
Amendment unless the following conditions have been met:
a. NBD shall have received a fully executed copy of this Eighth
Amendment and the Amended and Restated Term Note, dated July 15, 1997, in
the original principal amount of $1,500,000, from the Company to NBD
(together with any amendments, restatements or renewals thereof, the "1997
Term Note"), in substantially the form of Exhibit 8 attached hereto.
b. NBD shall have received a reaffirmation of the guaranty from
Medar Canada Ltd. and Maxco, Inc., including a consent to the terms of this
Eighth Amendment.
c. The outstanding principal of and interest on the Bridge Loan
is paid in full from the proceeds of the Subordinated Notes and a principal
payment of $1,500,000 on the Over-Formula Loan is made from the proceeds of
the Subordinated Notes.
d. NBD shall have received the Note Subordination Agreement,
fully executed by all holders of the Subordinated Note and the Agent for
such holders.
e. NBD shall have received an updated Collateral Assignment of
Proprietary Rights and Security Agreement with updated information on the
Borrowers' intellectual property.
f. All of the terms and conditions in Section 3.7 of the Loan
Agreement continue to be met.
g. NBD shall have received an amendment fee of $60,000 from the
Borrowers, which is due and payable upon the execution of this Eighth
Amendment. Such amendment fee is in addition to all other interest, fees,
costs and expenses due from the Borrowers.
9. Additional Equity; Termination of Guaranty. The Company agrees that it
will obtain at least $750,000 of additional equity from Maxco, Inc. by August
15, 1997. After payment in full of the Bridge Loan as contemplated hereby and
Maxco, Inc. pays the Company at least $750,000 for additional equity, NBD
acknowledges that the Guaranty to NBD by Maxco, Inc. will be terminated and it
will provide written confirmation thereof to Maxco, Inc.
10. Reaffirmation of Loan Agreement; Conflicts. The parties hereto
acknowledge and agree that the terms and provisions of this Eighth Amendment,
amend, add to and constitute a part of the Loan Agreement. Except as expressly
modified and amended by the terms of this Eighth Amendment, all of the other
terms and conditions of the Loan Agreement and all of the documents executed in
connection therewith or referred to or incorporated therein, remain in full
force and effect and are hereby ratified, confirmed and approved. If there is
an express conflict between the terms of this Eighth Amendment and the terms of
the Loan Agreement, or any of the other agreements or
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documents executed in connection therewith or referred to or incorporated
therein, the terms of this Eighth Amendment shall govern and control. Any
reference in any other document or agreement to the Loan Agreement shall
hereafter refer to the Loan Agreement as amended by this Eighth Amendment.
11. Representations True. The representations and warranties of the
Borrowers contained in the Loan Agreement are true on the date hereof and,
after giving effect hereto, there does not exist any Default or Event of
Default under the Loan Agreement.
12. Expenses. Borrowers acknowledge and agree that the Borrowers will pay
all attorneys' fees and out-of-pocket costs of NBD in connection with or with
respect to this Eighth Amendment and the conditions set forth herein.
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IN WITNESS WHEREOF, the Borrowers and NBD have executed the foregoing
document by their duly authorized officers as of the day and year first written
above.
NBD BANK
By:____________________________
Xxxxxxx X. Xxxxxxxxx
Its: Senior Vice President
and
By:____________________________
Xxxxx Xxxxxx
Its: Assistant Vice President
MEDAR, INC.
By:____________________________
Xxxxxxx Xxxxx
Its: President
INTEGRAL VISION LTD.
By:____________________________
Xxxxxxx Current
Its: Company Secretary
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REAFFIRMATION OF GUARANTY
The undersigned, Medar Canada Ltd., hereby acknowledges and agrees to
the terms of this Eigth Amendment to Revolving Credit and Loan Agreement and
hereby reaffirms each and every term of its (i) Guarantee and Postponement of
Claim dated August 10, 1995, given in favor of NBD Bank with respect to the
obligations of Medar, Inc., Automatic Inspection Devices, Inc. (also known as
Integral Vision-AID, Inc. and now merged into Medar, Inc.) and Integral Vision
Ltd., and (ii) General Security Agreement dated as of May 1, 1996, given in
favor of NBD Bank.
MEDAR CANADA LTD.
By:__________________________
Xxxxxxx Xxxxx
Its: President
Dated ________________________
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REAFFIRMATION OF GUARANTY
The undersigned, Maxco, Inc., hereby acknowledges and agrees to the
terms of this Eighth Amendment to Revolving Credit and Loan Agreement, dated
July __, 1997, among Medar, Inc., Integral Vision Ltd. and NBD Bank. The
undersigned hereby agrees that the term "Indebtedness" in its Guaranty dated
February 27, 1997, given in favor of NBD Bank, is hereby amended to refer to up
to the principal amount of $750,000 of the Obligations ("Guaranteed Portion")
owing to NBD Bank (as defined in the Revolving Credit and Loan Agreement, dated
August 10, 1995, as amended), and hereby reaffirms each and every term of its
Guaranty as amended hereby. It is agreed that any payment on the Obligations
from any source other than Maxco, Inc. will not reduce the Guaranteed Portion.
MAXCO, INC.
By:__________________________
Its: ____________________
Dated ________________________
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