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                                                                   EXHIBIT 10.12

                            ASSET PURCHASE AGREEMENT

      THIS AGREEMENT is made on August 24, 2001 between Integral Vision, Inc., a
Michigan corporation of 38700 Grand River Avenue, Farmington Hills, Michigan
48335 ("Parent"), Integral Vision Ltd., an English corporation of Unit 8/9
Railton Road, Woburn Rd, Industrial Estate, Kempston, Bedford MK42 7PW, and
wholly owned subsidiary of Parent ("Subsidiary") ("Parent" and "Subsidiary"
sometimes collectively referred to as "Seller") and n.v. DIMACO s.a., a Belgium
corporation of Parc Scientifique Gembloux-Namur, 30 Ph. Lejeune, 5032 Isnes,
Belgium ("Buyer").

                                   BACKGROUND

A.    Seller is engaged in the business of developing and manufacturing a Full
      Bottle Inspection System (as defined in Section 1), a Code and Label
      Inspection System (as defined in Section 1), a Keg Inspection System (as
      defined in Section 1), a System for Tobacco Instrumentation (as defined in
      Section 1), an Inspection System for Web Based Print Quality (as defined
      in Section 1) and a Solar Cell Inspection System (as defined in Section 1)
      (the "Business"). Buyer desires to purchase, and Seller desires to sell to
      Buyer, the Purchased Assets (as defined in Section 1) on the terms and
      subject to the conditions of this Agreement.

B.    The parties acknowledge that the Seller is engaged in business lines other
      than the Business, including but not limited to, inspection systems for
      the optical disc industry, inspection of label printing and digital
      printing other than the Code and Label Inspection System, inspection in
      the packaging and bottling industries other than the Full Bottle
      Inspection System, inspection of small flat panel displays, and the sale
      of various hardware and software packages that can be configured to allow
      end users and integrators to develop their own solutions to many simple
      vision inspection applications ("Unrelated Business") and this Asset
      Purchase Agreement does not include any assets of such Unrelated Business,
      including those assets which are used in both the Business and the
      Unrelated Business, unless specifically identified as being purchased as
      part of this Agreement.

C.    Seller has also agreed not to compete with Buyer in the conduct of the
      Business as provided in a non-competition agreement in substantially the
      form as attached in Schedule 6.A (the "Non-competition Agreement").

                                   AGREEMENTS

      NOW, THEREFORE, in consideration of the Background and the terms and
conditions set forth in this Agreement, the Seller and Buyer agree as follows:

1.    Assets Purchased. At the Closing Date, Seller shall sell, assign, convey,
      transfer all title of ownership in, set over, and deliver to Buyer all of
      the following assets, rights, and

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      interests used in the Business. These include the following (collectively,
      the "Purchased Assets"):

      A.    The Full Bottle Inspection System which shall mean a product
            developed only to inspect clear PET bottles at the end of a filling
            line, and which performs all of the following checks: label
            identification (i.e, is it the correct label), label placement, fill
            level, cap colour, cap position, cap skew and tamper evident seal
            ("Full Bottle Inspection System" or "FBIS").

      B.    Code and Label Inspection System which shall mean a product
            developed only to inspect the front and back labels on fillings
            lines, and which performs all of the following checks: label
            identification, label position, label skew, date/lot code
            verification and gross label damage ("Code and Label Inspection
            System").

      C.    Keg Inspection System which shall mean a product developed only to
            inspect beer kegs for leaks, missing spears, cap presence/absence,
            label identification and foreign keg detection ("Keg Inspection
            System").

      D.    A System for Tobacco Instrumentation which shall mean a product
            developed only to measure the diameter, ovality, length and filter
            position of cigarettes as part of a complete tobacco instrumentation
            system ("System for Tobacco Instrumentation").

      E.    An Inspection System for Web Based Print Quality which shall mean a
            product developed only to inspect the quality of labels printed
            directly onto a continuous roll of material (web) ("Inspection
            System for Web Based Print Quality").

      F.    A Solar Cell Inspection System which shall mean a machine vision
            system for the alignment, breakage check and print quality
            inspection of solar panels.

      G.    The items of good and saleable inventory being used to complete Work
            in Process orders for the Business which are listed on Schedule 1.G
            ("WIP Inventory"), and any consigned inventory listed on Schedule
            1.G ("Consigned Inventory") (the WIP Inventory and the Consigned
            Inventory collectively referred to as "Inventory"). Provided
            however, the WIP Inventory to complete the Buyer's orders, which
            Buyer's orders are separately listed on the attached Schedule
            1.K.(1), sub (2), is excluded;

      H.    Except as provided on Schedule 1.H, all Seller's right, title,
            benefit, and interest in and to application codes, improvements,
            designs, prototypes, trade secrets, manufacturing and engineering
            drawings, process sheets, specifications, bills of material,
            formulae and secret and confidential processes, know-how,
            technology, and other industrial property (whether patentable or
            unpatentable) used exclusively in the Business (the "Intellectual
            Property").

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      I.    A paid-up, non-exclusive license, in the form attached as Exhibit
            1.H-A, to use the tools and source codes owned by Parent which are
            listed under the heading "Parent Owned Tools to be Licensed to
            Buyer" on Schedule 1.H.

      J.    The fixed assets listed on Schedule 1.J ("Fixed Assets"), which are
            located at Seller's U.K. location.

      K.    The full benefit of:

            (1)   Any and all purchase orders placed with and accepted by Seller
                  on or before the Closing Date in connection with the Business
                  that have not been completely performed or filled before the
                  Closing Date, covering the purchase from Seller of products to
                  be supplied by Seller in the Business, or covering the
                  rendition by Seller of service on products supplied by Seller
                  in the Business and including all deposits, progress payments,
                  and credits of the Business, as set forth on Schedule 1.K.(1),
                  except for the Buyer's orders listed on the attached Schedule
                  1.K.(1), sub (2), which Buyer's orders shall be subject to the
                  Manufacturing Agreement between Buyer and Seller, which
                  Manufacturing Agreement shall be in the form of Schedule 6.D;
                  and

            (2)   The purchase orders listed on Schedule 1.K.(2) placed by
                  Seller prior to the Closing Date in connection with the
                  Business that have not been completely performed before the
                  Closing Date, covering Seller's purchase of inventory,
                  supplies, or materials in the ordinary course of business.

            (All the items listed in this Section 1.K are the "Contracts and
            Commitments").

      L.    All records and lists used exclusively in the Business that pertain
            directly or indirectly, in whole or in part, to any one or more of
            the following: the Seller's Business customers, suppliers,
            advertising, promotional material, sales, services, delivery, and
            operations.

      M.    All security deposits and similar items in connection with the
            Business, in the amount accrued as of the Closing Date.

      Seller shall update all Schedules described in this Section 1, where
      appropriate, as of the Closing Date.

2.    Excluded Assets. Buyer is not purchasing any Excluded Assets from Seller.
      "Excluded Assets" means:

      A.    All of Seller's books of account (although copies of such books and
            records relating to the Business shall, on reasonable request made
            by representatives of Buyer, be provided to Buyer);

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      B.    Claims for refunds of federal and state income taxes, tax credits of
            any kind;

      C.    Cash or cash equivalents;

      D.    Patents, software and source codes for such software as to which
            Buyer is specifically granted only a license, as listed under the
            heading "Parent owned Tools to be Licensed to Buyer" on Schedule
            1.H;

      E.    The name "Intelicheck" or "Integral Vision, Inc.", or "Integral
            Vision Ltd," or any assumed names, trade names or variations
            thereof;

      F.    The WIP Inventory for the Buyer's orders, and the Buyer's orders, as
            such Buyer's orders are listed on Schedule 1.K.(1), sub (2), and

      G.    The Unrelated Business.

3.    Liabilities Assumed. Seller agrees that Buyer assumes no liabilities of
      Seller, whether accrued, absolute, contingent, known, unknown, or
      otherwise, except for any executory obligations of Seller's continued
      performance arising in the ordinary course of business under any Contracts
      and Commitments of the Business that become performable or payable on or
      after the Closing Date that have been purchased by the Buyer pursuant to
      this Agreement, and except for the lease of the Subsidiary's U.K. premises
      pursuant to the terms set forth in Section 6.C.

      (All of the items listed in this Section 3 are "Assumed Liabilities")

4.    Purchase Price for Purchased Assets.

      A.    Purchase Price. The purchase price to be paid by Buyer to Seller for
            the Purchased Assets the Noncompetition Agreement pursuant to
            Section 6.A and the License for the Parent Owned Tools (listed on
            Schedule 1.H) (the "Purchase Price") shall, in addition to the
            Assumed Liabilities, if any, be the total of the following:

            (1)   Inventory. For the Inventory, the sum of Eight Thousand Seven
                  Hundred Sixty Seven Pounds Sterling (L8,767.00), as may be
                  adjusted pursuant to paragraph 5.

            (2)   Fixed Assets. For the Fixed Assets, the sum of Eighty Eight
                  Thousand Five Hundred Sixty Pounds Sterling and 70 pence
                  (L88,560.70);

            (3)   Inspection System. As partial payment for the application code
                  for the Full Bottle Inspection System, Buyer will pay Two
                  Thousand Five Hundred (2500) Euros for each Full Bottle
                  Inspection System sold by Buyer for the three years
                  immediately following the Closing.

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            (4)   Remaining Purchased Assets. For the balance of the Purchased
                  Assets, including the Noncompetition Agreement, the sum of
                  Three Hundred Sixty Thousand Eight Hundred Twenty One Dollars
                  and Thirty Nine Cents ($360,821.39US).

      B.    Payment of Purchase Price. Buyer shall pay the Purchase Price, on
            the Closing Date as follows:

            (1)   As to the Purchase Price set forth in Sections 4.A(1), (2) and
                  (4), above, Buyer shall deliver to Subsidiary an amount equal
                  to the amounts set forth in Sections 4.A (1) and (2) and to
                  the Parent an amount equal to Three Hundred Sixty Thousand
                  Eight Hundred Twenty One Dollars and Thirty Nine Cents
                  ($360,821.39) US Dollars, both by cashier's or certified check
                  or wire transfer ("Readily Available Funds").

            (2)   The payment due under 4.A(3) shall be paid by Buyer to Parent
                  within 30 days following the sale of any FBIS in U.S. dollars
                  with conversion at the rate published in the Wall Street
                  Journal on a date within 3 business days of the date of
                  payment. Seller shall have the right to review, or have its
                  agents review, Buyer's books and records at any time during
                  normal working hours in order to insure compliance with this
                  provision.

      C.    Allocation of Purchase Price. The Purchase Price shall be allocated
            among the Purchased Assets in accordance with attached Schedule 4.C.
            Buyer and Seller agree to file all returns and reports in a manner
            consistent with the allocations in this Section.

5.    Adjustment to Purchase Price for Inventory. Seller shall conduct a
      physical inventory of the Inventory listed on Schedule 1.G as of the
      Closing Date or other agreed upon date as soon as practicable on or after
      Closing. Buyer shall be able to observe the taking of such inventory. A
      copy of such Inventory shall be delivered to Buyer, along with (i) the
      breakdown of the actual direct cost incurred by Seller for the WIP
      Inventory used as of the Closing Date toward completion of the Work in
      Process orders for the Business, and (ii) the Seller's listed cost of the
      Consigned Inventory. If the actual direct cost incurred by Seller for the
      WIP Inventory plus the Seller's listed cost of the Consigned Inventory
      differs from the sum set forth in 4.A.(1), such difference shall be paid
      by Buyer or Subsidiary, as the case may be, to the other, in readily
      available Pound Sterling funds, within 10 days of the date of delivery of
      the copy of the Inventory by Seller to Buyer.

6.    Related Agreements.

      A.    Non-competition Agreement At the Closing, Seller shall execute and
            deliver to Buyer the Non-competition Agreement in the form attached
            as Schedule 6.A.

      B.    License Agreement The License Agreement attached as Exhibit 1.H-A
            granting Buyer and DIMACO U.K. Ltd. a paid-up, nonexclusive license
            in the specified

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            software, shall be signed and delivered at Closing by the parties to
            the License Agreement.

      C.    Lease Agreement.

            (1)   The parties shall endeavor to have the Assignment of Lease
                  Agreement attached as Schedule 6.C, whereby Buyer assumes all
                  of Seller's rights and obligations pursuant to the Lease for
                  units 8 and 9 of the Subsidiary's U.K. premises, to be signed
                  and delivered by the parties to it at Closing. Provided
                  however, in such event, Seller shall pay Buyer the rent for
                  Unit 9, as such rent comes due each quarter, for the remainder
                  of the present term of the lease of Unit 9 or until Unit 9 is
                  sublet, whichever shall first occur.

            (2)   In the event the Assignment of Lease Agreement is not able to
                  be signed and delivered by the parties to it, Buyer and
                  Subsidiary shall sign the Sublease of Lease Agreement in the
                  form of Schedule 6.C-1 whereby Buyer sub-leases all of
                  Seller's rights and obligations pursuant to the lease for Unit
                  8 of the Subsidiary's U.K. premises.

            (3)   Seller shall pay the solicitor's fees incurred by the U.K.
                  premises landlords in reviewing Schedule 6.C or Schedule
                  6.C-1, as the case may be.

      D.    Manufacturing Agreement. The Manufacturing Agreement in the form
            attached as Schedule 6.D, shall be executed and delivered by the
            parties to it at Closing.

      (All of the Agreements contained in this Section 6 are hereinafter
      referred to collectively as "Related Agreements.")

7.    Delivery Free of Encumbrances. Seller shall deliver good title to the
      Purchased Assets free and clear of all mortgages, liens, claims, demands,
      charges, options, equity interests, leases, tenancies, easements, pledges,
      security interests, and other encumbrances ("Encumbrances"), except for
      any Assumed Liabilities that results in any Encumbrance.

8.    Preclosing Actions. Before the Closing Date:

      A.    Conduct of Business. Seller shall carry on and conduct the Business
            only in the ordinary course consistent with past practices, without
            any change in the policies, practices, and methods that Seller
            pursued before the date of this Agreement. Seller will use its best
            efforts to preserve the Business organization intact; to preserve
            the relationships with Seller's customers, suppliers, and others
            having business dealings with it; and to preserve the services of
            Seller's agents and representatives. Without limitation of the
            foregoing, (i) Seller shall not undertake any action without the
            prior written consent of Buyer that, if taken before the date of
            this Agreement, would have been required to be disclosed on any
            Schedule to

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            this Agreement; and (ii) Seller will not alter the physical content
            or character of any of the Business' Inventory so as to affect the
            nature of the Business or result in a change in the total dollar
            valuation of the Inventory or otherwise take action or refrain from
            taking action that would result in any change in the Purchased
            Assets or Assumed Liabilities, other than in the ordinary course of
            business consistent with past practices.

      B.    Accuracy of Representations and Warranties and Satisfaction of
            Conditions. Seller will immediately advise Buyer in writing if (i)
            Seller's representations or warranties are untrue or incorrect in
            any material respect or (ii) Seller becomes aware of the occurrence
            of any event or of any state of facts that results in any of the
            representations and warranties of Seller being untrue or incorrect
            as if Seller were then making them. Seller will not take any action,
            or omit to take any action, that would cause Seller's
            representations and warranties set forth in this Agreement to be
            untrue or incorrect as of the Closing Date. Seller will use its best
            efforts to cause all conditions within its control that are set
            forth in Section 9 to be satisfied as promptly as practicable under
            the circumstances.

9.    Conditions Precedent to Buyer's Obligations. Buyer's obligation to
      consummate the transactions contemplated by this Agreement is subject to
      the fulfillment (or waiver by Buyer) before or at the Closing of each of
      the following conditions:

      A.    Accuracy of Representations and Warranties. The representations and
            warranties of Seller contained in this Agreement and all Related
            Agreements shall be true and correct at and as of the Closing Date
            as though such representations and warranties were made on that
            date.

      B.    Performance of Covenants. The Seller shall have in all respects
            performed and complied with all covenants, agreements, and
            conditions that this Agreement and all related documents require to
            be performed or complied with before or on the Closing Date,
            specifically including all of the Related Agreements referred to in
            Section 6.

      C.    No Casualty. Prior to the Closing Date, Seller shall not have
            incurred, or be threatened with, a material liability or casualty
            that would materially impair the value of the Purchased Assets.

      D.    Instruments of Transfer, etc. Effective as of the Closing Date,
            Seller shall have delivered to Buyer all bills of sale, general
            instruments of transfer, conveyances, assurances, transfers,
            assignments, approvals, consents, and any other instruments and
            documents containing the usual and customary covenants and
            warranties of title and that shall be convenient, necessary, or
            reasonably required to effectively transfer the Purchased Assets to
            Buyer with good title, free and clear of all Encumbrances.

      E.    Certificates Regarding Conditions Precedent. Seller shall have
            delivered to Buyer

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            certificates of the Seller certifying that as of the Closing Date
            all of the conditions set forth in this Section, except those
            totally within the Buyer's control, have been satisfied.

      F.    No Litigation. No action, suit, proceeding, or investigation shall
            have been instituted before any court or governmental body, or
            instituted by any governmental agency, (i) to restrain or prevent
            the carrying out of the transactions contemplated by this Agreement,
            or (ii) that might affect Buyer's right to own, operate, and control
            the Purchased Assets after the Closing Date.

      G.    Consents. Seller shall have obtained, in writing, all consents
            necessary to consummate or to facilitate consummation of this
            Agreement and any related transactions. The consents shall be
            delivered to Buyer before Closing and shall be reasonably acceptable
            to Buyer in form and substance. In the event Seller is unable to
            obtain consents to the assignment of any customer purchase order,
            Seller will act as Buyer's agent in fulfilling such orders.

      H.    Board Approval. The Boards of Directors of the Seller and Buyer
            shall have taken the necessary Board action approving this
            transaction.

      I.    Other Documents and Instruments. Buyer shall have received such
            other documents and instruments as it has reasonably requested.

      J.    Approvals by Buyer's Counsel. Buyer's counsel shall reasonably
            approve all legal matters and the form and substance of all
            documents that Buyer or Seller are to deliver at the Closing.

10.   Conditions Precedent to Seller's Obligations. Seller's obligations to
      consummate the transactions contemplated by this Agreement are subject to
      the fulfillment of each of the following conditions before or at the
      Closing Date:

      A.    Accuracy of Representations and Warranties. Buyer's representations
            and warranties contained in this Agreement and all Related
            Agreements shall be true and correct at and as of the Closing Date
            as though such representations and warranties were made at the
            Closing.

      B.    Performance of Covenants. Prior to and at the Closing Date, Buyer
            shall have in all respects performed and complied with its
            obligations under all the covenants, agreements, and conditions that
            this Agreement and all Related Agreements require.

      C.    Board Approval. The Boards of Directors of the Seller and Buyer
            shall have taken the necessary action approving this transaction.

      D.    Other Documents and Instruments. Seller shall have received such
            other documents and instruments as it has reasonably requested.

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      E.    Approvals by Seller's Counsel. Seller's counsel shall reasonably
            approve all legal matters and the form and substance of all
            documents that Buyer or Seller are to deliver at the Closing.

11.   Closing Matters.

      A.    Closing. The closing of the transactions contemplated in this
            Agreement (the "Closing") shall take place at the offices of
            Subsidiary at 10:00 a.m. US Eastern Standard Time on August 24, 2001
            or at such other place and time and/or on such other date and time
            as the parties may agree upon (the "Closing Date").

      B.    Updated Schedule. Certain Schedules will need to be up-dated to the
            Closing Date. This shall include Schedules 1.K.(1) (Customer
            Orders), 1.K.(2) (Vendor Orders) and 12.O (Progress Payments) and
            shall include only those changes that have occurred in the ordinary
            course of business consistent with past practices.

      C.    Certain Closing Expenses; Prorations. Seller shall be liable for and
            shall pay all US, Michigan, and local sales, use, excise, and
            documentary stamp taxes and all other taxes, duties, or other like
            charges properly payable on and in connection with Seller's
            conveyance and transfer of the Purchased Assets to Buyer. It is
            agreed, however, that Buyer shall be responsible for any VAT, export
            or import taxes associated with transferring the Inventory. Personal
            property taxes and other service contracts assumed by Buyer shall be
            prorated ratably as of the Closing Date. To the extent practicable,
            all such prorations shall be computed and paid at the Closing, and
            to the extent not practicable, as soon as practicable thereafter.

      D.    Further Assurances. Seller shall cooperate with and assist Buyer
            with the transfer of the Purchased Assets under this Agreement and
            take all other reasonable actions to assure that the Business is
            smoothly transferred to Buyer. From time to time after the Closing
            Date, Seller shall, at the request of Buyer, execute and deliver
            such additional conveyances, transfers, documents, instruments,
            assignments, applications, certifications, papers, and other
            assurances that Buyer requests as necessary, appropriate,
            convenient, useful or desirable to effectively carry out the intent
            of this Agreement and to transfer the Purchased Assets to Buyer.

12.   Seller's Representations and Warranties. As of the Closing, the Seller
      represents and warrants to Buyer, and acknowledges and confirms, that
      Buyer is relying on these representations and warranties in entering into
      this Agreement:

      A.    Organization and Standing. Parent is a corporation duly organized,
            validly existing, and in good standing under the laws of the State
            of Michigan, Subsidiary is a corporation duly organized, validly
            existing and in good standing under English law, and Seller has all
            requisite power and authority (corporate and

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            otherwise) to own its properties and conduct its business as it is
            now being conducted.

      B.    Authorization. Seller has all requisite power and authority
            (corporate and otherwise), all requisite legal capacity (i) to
            execute, deliver, and perform this Agreement and the Related
            Agreements and (ii) to consummate the transactions contemplated
            under this Agreement and the Related Agreements. Seller has taken,
            or will have taken at the time of the Closing, all necessary
            corporate action (including the approval of its board of directors)
            to approve the execution, delivery, and performance of this
            Agreement and the Related Agreements to be executed and delivered by
            it and the consummation of the transactions contemplated in this
            Agreement. This Agreement is, and the Related Agreements when
            executed and delivered by the parties to them, will be legal, valid,
            and binding obligations of the Seller, enforceable against the
            Seller in accordance with the Agreement and Related Agreement's
            respective terms, except as such enforcement may be limited by
            bankruptcy, insolvency, moratorium, or similar laws relating to the
            enforcement of creditors' rights and by general principles of equity
            (regardless of whether such enforceability is considered in a
            proceeding at law or in equity).

      C.    Existing Agreements and Governmental Approvals.

            (1)   Except as provided in Schedule 12.C.(1) the execution,
                  delivery, and performance of this Agreement and the Related
                  Agreements and the consummation of the transactions
                  contemplated by them:

                  a.    Do not and will not violate any provisions of law
                        applicable to the Seller, the Business, or the Purchased
                        Assets;

                  b.    As of the Closing, does not and will not conflict with,
                        result in the breach or termination of any provision of,
                        or constitute a default under (in each case whether with
                        or without the giving of notice or the lapse of time or
                        both) Seller's Articles of Incorporation or Bylaws, or
                        any indenture, mortgage, lease, deed of trust, or other
                        instrument, contract, or agreement or any order,
                        judgment, arbitration award, or decree to which the
                        Seller is a party or by which it or any of its assets
                        and properties are bound (including, without limitation,
                        the Purchased Assets); and

                  c.    Do not and will not result in the creation of any
                        Encumbrance on the Seller's properties, assets, or
                        Business (including, without limitation, the Purchased
                        Assets).

            (2)   No approval, authority, or consent of, or filing by, the
                  Seller with, or notification to, any federal, state, or local
                  court, authority, or governmental or regulatory body or agency
                  or any other corporation, partnership, individual, or other
                  entity is necessary:

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                  a.    To authorize the execution and delivery of this
                        Agreement or any of the Related Agreements by the
                        Seller,

                  b.    To authorize the consummation of the transactions
                        contemplated by this Agreement or any of the Related
                        Agreements by the Seller, or

                  c.    To continue Buyer's use and operation of the Purchased
                        Assets after the Closing Date.

      D.    Financial Statements. Seller has delivered to Buyer, and Buyer
            acknowledges receipt of, the financial statements on the Business
            listed in Schedule 12.D, dated December 31, 2000 (audited) and June
            30, 2001 (unaudited, internally prepared) (the " Financial
            Statements").

      E.    No Undisclosed Liabilities. Except as otherwise disclosed in the
            Financial Statements or any Schedules to this Agreement, and to the
            Best of Seller's Knowledge, Seller does not have any liabilities or
            obligations related to the Business, whether accrued, absolute,
            contingent, or otherwise, and there exists no fact or circumstance
            that could give rise to any such liabilities or obligations in the
            future.

      F.    Conduct of Business. Except as otherwise disclosed on attached
            Schedule 12.F, or any Schedules in this Agreement, since June 30,
            2001, Seller has not:

            (1)   Entered into, materially amended, or terminated any contract,
                  license, lease, commitment, or permit, involving the Business,
                  except in the ordinary course of business consistent with past
                  practices;

            (2)   Incurred or become subject to any obligation or liability
                  (absolute, accrued, contingent, or otherwise), involving the
                  Business, except (1) in the ordinary course of business
                  consistent with past practices and (2) in connection with the
                  performance of this Agreement;

            (3)   Mortgaged, pledged, or subjected to any Encumbrance any of the
                  Purchased Assets;

            (4)   Sold, transferred, or agreed to sell or transfer any asset,
                  property, or business; canceled or agreed to cancel any debt
                  or claim; or waived any right involving the Business, except
                  in the ordinary course of business consistent with past
                  practices;

            (5)   Disposed of or permitted to lapse any Intellectual Property of
                  the Business;

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            (6)   Experienced any material damage, destruction, or loss (whether
                  or not covered by insurance) affecting its properties, assets,
                  or Business that is the subject of this Agreement;

            (7)   Entered into any other transaction other than in the ordinary
                  course of business consistent with past practices in
                  connection with the Business; and

            (8)   Agreed or committed to do any of the foregoing.

      G.    No Adverse Changes. Since June 30, 2001 there has not been, to the
            Best Knowledge of the Seller, any occurrence, condition, or
            development that has adversely affected, or is likely to adversely
            affect, Seller, its prospects, its condition (financial or
            otherwise), its affairs, its operations, the Business, or the
            Purchased Assets.

      H.    Contracts. Except for the contracts, commitments or leases listed on
            Schedules 1.K.(1), 1.K.(2), 12.H or any other Schedule of this
            Agreement, Seller is not a party to nor bound by any agreement or
            commitment that affects the Business, the Purchased Assets, or the
            Assumed Liabilities which has a value of more than $10,000 or will
            last for more than one year from the Closing Date (all these
            contracts and commitments referred to as "Significant Contracts").
            All Significant Contracts are valid and binding obligations of the
            parties thereto in accordance with their respective terms. No
            default or alleged default exists on the part of Seller, nor, to the
            Best Knowledge of Seller, on the part of any other party, under any
            of the Significant Contracts. True and complete copies of all
            Significant Contracts have been delivered to Buyer.

      I.    Title to Purchased Assets. Seller is the sole and absolute owner of
            the Purchased Assets and has good title to all of the Purchased
            Assets, which are, or will be at the time of the Closing, free and
            clear of any and all Encumbrances. Schedule 12.I lists or describes
            all property used in the conduct of the Business that is owned by or
            an interest in which is claimed by any other person (whether a
            customer, supplier, or other person) and for which Seller is
            responsible, together with copies of all related agreements. All
            such assets are situated on the Premises or other of Seller's
            facilities, except for Consigned Inventory, and to the Best of
            Seller's Knowledge is in such condition that upon return to its
            owner, Buyer will not be liable in any amount to the owner.

      J.    Condition of Purchased Assets. The Inventory and the Fixed Assets
            are in good condition (except as may have been so recorded on the
            books and records of the Seller), and are usable or saleable in the
            usual and ordinary course of business. The Inventory and the Fixed
            Assets are situated at the Seller's facilities unless specifically
            disclosed to Buyer.

                                       12
<PAGE>
      K.    Taxes.

            (1)   For the purposes of this Section, "Tax" or "Taxes" shall mean
                  all foreign, federal, state, county, local, and other taxes
                  (including, without limitation, income taxes; premium taxes;
                  single-business taxes; excise taxes; sales taxes; use taxes;
                  value-added taxes; gross receipts taxes; franchise taxes; ad
                  valorem taxes; real estate taxes; severance taxes; capital
                  levy taxes; transfer taxes; stamp taxes; employment,
                  unemployment, and payroll-related taxes; withholding taxes;
                  and governmental charges and assessments), and include
                  interest, additions to tax, and penalties.

            (2)   As it relates to the Business and the Purchased Assets, Seller
                  has filed on a timely basis all Tax returns it is required to
                  file under foreign, federal, state, or local law and has paid
                  or established an adequate reserve with respect to all Taxes
                  for the periods covered by such returns. No agreements have
                  been made by or on behalf of Seller for any waiver or for the
                  extension of any statute of limitations governing the time of
                  assessment or collection of any Taxes. Except as disclosed on
                  Schedule 12.L, Seller and its officers have received no notice
                  of any pending or threatened audit by the IRS or any foreign,
                  state or local agency related to Seller's Tax returns or Tax
                  liability for any period, and no claim for assessment or
                  collection of Taxes has been asserted against Seller. There
                  are no federal, state, or local tax liens outstanding against
                  any of Seller's assets (including, without limitation, the
                  Purchased Assets) or the Business.

      L.    Litigation. Except as disclosed on Schedule 12.L, there are no
            claims, disputes, actions, suits, proceedings, or investigations
            pending or, to the Best Knowledge of the Seller, threatened against
            or affecting Seller, involving the Business or the Purchased Assets.

      M.    Product Liability. No known defect or deficiency exists in any of
            the products manufactured or sold by Seller in the Business, or in
            any finished Inventory of the Business, that could give rise to any
            liabilities or claims for breach of warranty, product liability, or
            similar liabilities or claims.

      N.    Compliance with Laws. At all times prior to the Closing Date, except
            as disclosed on Schedule 12.L, Seller has, to the Best of Seller
            Knowledge, complied with all laws, orders, regulations, rules,
            decrees, and ordinances affecting to any extent or in any manner any
            aspects of the Business or the Purchased Assets.

      O.    Progress Payments. Attached Schedule 12.O contains a true and
            complete list and description of all security deposits, progress
            payments, and the like that Seller has received relating in any way
            to any purchase orders, leases, or other agreements that are part of
            the Business.

                                       13
<PAGE>
      P.    No Brokers. Seller has not engaged, and is not responsible for any
            payment to, any finder, broker, or consultant in connection with the
            transactions contemplated by this Agreement.

      Q.    Intellectual Property. Schedule 12.Q lists all Intellectual Property
            of the Seller that Seller directly or indirectly owns, licenses,
            uses, requires for use, or controls in whole or in part and all
            licenses and other agreements allowing Seller to use the
            intellectual property of third parties in connection with the
            Business. Seller does not own, directly or indirectly, or use any
            patents, copyrights, trademarks, or service marks in the Business
            except as listed. Except as set forth in Schedule 12.Q, Seller is
            the sole and exclusive owner of the Intellectual Property, free and
            clear of all Encumbrances. Buyer acknowledges that the non-owned
            software listed on Schedule 12.Q is readily available in the open
            market and will not be transferred by Seller. Except as set forth in
            Schedule 12.Q, to the Best Knowledge of the Seller, none of the
            Seller's Intellectual Property infringes on any other person's
            intellectual property and no activity of any other person infringes
            on any of the Intellectual Property. Seller's manufacturing and
            engineering drawings, process sheets, specifications, bills of
            material, trade secrets, "know-how," and like data used in the
            Business are in such form and of such quality that they can,
            following the Closing Date, be used in the process of designing,
            producing, manufacturing, assembling, and selling the products and
            providing the services previously provided by Seller so that such
            products and services meet applicable specifications and conform
            with the quality standards Seller previously met or was required to
            meet.

      R.    Employee Matters. Seller shall use its best efforts to assist Buyer
            in obtaining the agreement of the employees listed on Schedule 14 to
            remain employed by Buyer or DIMACO U.K. Ltd.

13.   Buyer's Representations and Warranties. Buyer represents and warrants to
      Seller that:

      A.    Organization and Standing. Buyer is a stock corporation duly formed
            and in good standing under the laws of Belgium, and has all the
            requisite power and authority (corporate and otherwise) to own its
            properties and to conduct its business as it is now being conducted.

      B.    Authorization. Buyer has taken all necessary corporate action (i) to
            duly approve the execution, delivery, and performance of this
            Agreement and the Related Agreements and (ii) to consummate any
            related transactions. Buyer has duly executed and delivered this
            Agreement. This Agreement is, and the Related Agreements when
            executed and delivered by the parties to them will be, legal, valid,
            and binding obligations of Buyer enforceable against Buyer in
            accordance with their respective terms, except as such enforcement
            may be limited by bankruptcy, insolvency, moratorium, or similar
            laws relating to the enforcement of creditor's rights and by general
            principles of equity (regardless of whether such enforceability is
            considered in a proceeding at law or in equity).

                                       14
<PAGE>
      C.    Existing Agreements and Governmental Approvals.

            (1)   The execution, delivery, and performance of this Agreement and
                  the Related Agreements and the consummation of the
                  transactions contemplated by this Agreement:

                  a.    Do not and will not violate any provisions of the law
                        applicable to Buyer;

                  b.    Do not and will not conflict with, result in the breach
                        or termination of any provision of, or constitute a
                        default under (in each case whether with or without the
                        giving of notice or the lapse of time, or both) Buyer's
                        Articles of Incorporation or Bylaws or any indenture,
                        mortgage, lease, deed of trust, or other instrument,
                        contract, or agreement or any order, judgment,
                        arbitration award, or decree to which Buyer is a party
                        or by which it or any of its assets and properties are
                        bound; and

                  c.    Except for financing in connection with this Agreement,
                        do not and will not result in the creation of any
                        Encumbrance on any of the Buyer's properties, assets, or
                        business.

      D.    No Additional Approval. No approval, authority, or consent of, or
            filing by Buyer with, or notification to, any federal, state, or
            local court, authority, or governmental or regulatory body or agency
            or any other corporation, partnership, individual, or other entity
            is necessary:

            (1)   To authorize Buyer's execution and delivery of this Agreement
                  and Related Agreements; or

            (2)   To authorize Buyer's consummation of the transactions
                  contemplated by this Agreement and the Related Agreements.

14.   Employees. Buyer agrees that it or one of its Affiliates will hire those
      of Seller's employees employed in the Business at the U.K premises who are
      listed on Schedule 14. Affiliates means any legal entity, at least 50%
      owned or controlled, directly by Mr. Luc Tricot or by n.v DIMACO s.a.,
      either individually or collectively (but only so long as such ownership or
      control equity interest exists).

15.   Indemnification.

      A.    Seller. Seller shall defend, indemnify, and hold harmless Buyer and
            its directors, officers, shareholders, successors, and assigns from
            and against any and all costs, losses, claims, suits, actions,
            assessments, diminution in value, liabilities, fines, penalties,
            damages (compensatory, consequential, and other), and expenses

                                       15
<PAGE>
            (including reasonable legal fees) in connection with or resulting
            from:

            (1)   Except as otherwise expressly assumed by Buyer in the
                  Agreement, all debts, liabilities, and obligations of Seller,
                  whether accrued, absolute, contingent, known, unknown, or
                  otherwise, but excluding any Assumed Liabilities.

            (2)   Any inaccuracy in any representation or breach of any warranty
                  of Seller contained in this Agreement or any Related
                  Agreement.

            (3)   Any failure by Seller to perform or observe in full, or to
                  have performed or observed in full, any covenant, agreement,
                  or condition to be performed or observed by Seller under this
                  Agreement or any Related Agreement.

            Provided, however, such indemnification shall be limited to the
            total of the Purchase Price plus all monies paid by Buyer under any
            Related Agreement.

      B.    Buyer. Buyer shall defend, indemnify, and hold harmless Seller and
            its directors, officers, shareholders, successors, and assigns from
            and against any and all costs, losses, claims, suits, actions,
            assessments, diminution in value, liabilities, fines, penalties,
            damages (compensatory, consequential, and other), and expenses
            (including reasonable legal fees) in connection with or resulting
            from:

            (1)   All debts, liabilities, and obligations of Buyer, whether
                  accrued, absolute, contingent, known, unknown, or otherwise.

            (2)   Any inaccuracy in any representation or breach of any warranty
                  of Buyer or DIMACO U.K. Ltd. contained in this Agreement or
                  any Related Agreement.

            (3)   Any failure by Buyer or DIMACO U.K. Ltd. to perform or observe
                  in full, or to have performed or observed in full, any
                  covenant, agreement, or condition to be performed or observed
                  by the Buyer or DIMACO U.K. Ltd. under this Agreement or any
                  Related Agreement.

      C.    Notice of Claim. Each person entitled to indemnification under this
            Section 15 (the "Indemnified Party") shall give notice to the party
            required to provide indemnification (the "Indemnifying Party")
            promptly after such Indemnified Party has actual knowledge of any
            claim as to which indemnity may be available or sought, and shall
            permit the Indemnifying Party to participate in the defense of any
            such claim or any resulting litigation, and the Indemnifying Party
            may participate in such defense at such party's expense. The failure
            of any Indemnified Party to give the notice required by this
            Agreement shall not relieve the Indemnifying Party of its
            obligations unless such failure results in actual detriment to the
            Indemnifying Party. In the event that a claim or litigation is
            partially, but not wholly covered by an indemnity set forth in this
            Section 15 the

                                       16
<PAGE>
            Indemnified and the Indemnifying Parties shall share in the
            resulting losses in proportion to their respective liabilities.
            Except with the consent of each Indemnified Party, which consent
            shall not be unreasonably withheld, no Indemnifying Party shall
            consent to the entry of any judgment or enter into any settlement
            which does not include a release of such Indemnified Party from all
            liability in respect to such claim or litigation to the extent it is
            covered by the indemnity in this Section 15.

      D.    Limit of Liability. Neither party shall have any liability (for
            indemnification or otherwise) under this Section 15 except to the
            extent that the total of all Damages exceeds Twenty Five Thousand
            Dollars and No Cents ($25,000.00US).

16.   Expenses. Each of the parties shall pay all of the costs that it incurs
      incident to the preparation, execution, and delivery of this Agreement and
      the performance of any related obligations, whether or not the
      transactions contemplated by this Agreement shall be consummated, except
      that all such costs and all such liabilities of Seller other than the
      Assumed Liabilities, including, without limitation, Tax liabilities, shall
      be paid out of the proceeds of the Purchase Price.

17.   Risk of Loss. The risk of loss of or damage to the Purchased Assets from
      fire or other casualty or cause shall be on Seller at all times up to the
      Closing Date, and it shall be the responsibility of Seller to repair, or
      cause to be repaired, and to restore the property to the condition it was
      before the loss or damage.

18.   Termination.

      A.    This Agreement may be terminated at any time before the Closing Date
            as follows:

            (1)   By Buyer and Seller in a written instrument.

            (2)   By either Buyer or Seller if the Closing does not occur on the
                  Closing Date.

            (3)   By Buyer or Seller if there has been a material breach of any
                  of the representations or warranties set forth in this
                  Agreement on the part of the other, and this breach by its
                  nature cannot be cured before the Closing.

            (4)   By Buyer or Seller if there has been a breach of any of the
                  covenants or agreements set forth in this Agreement on the
                  part of the other, and this breach is not cured within ten
                  (10) business days after the breaching party receive written
                  notice of the breach from the other party.

      B.    If terminated as provided in Section 18, this Agreement shall
            forthwith become void and have no effect, except for Sections 18.C
            and except that no party shall be relieved or released from any
            liabilities or damages arising out of the party's

                                       17
<PAGE>
            breach of any provision of this Agreement or of the Confidentiality
            Agreement between the parties dated April 30, 2001.

      C.    Buyer warrants and agrees that if this Agreement is terminated
            pursuant to Section 18, each party will not, during the two (2) year
            period following the termination, directly or indirectly solicit any
            employee of the other party to leave the other party's employment.

19.   Miscellaneous Provisions.

      A.    Representations and Warranties. All representations, warranties, and
            agreements made by the parties pursuant to this Agreement shall
            survive the consummation of the transactions contemplated by this
            Agreement for two (2) years after the Closing date.

      B.    Notices. All notices, demands, and requests required or permitted to
            be given under the provisions of this Agreement shall be in writing
            and shall be deemed given (i) when personally delivered or sent by
            facsimile transmission to the party to be given the notice or other
            communication or (ii) on the business day following the day such
            notice or other communication is sent by overnight courier to the
            following:

            If to Seller:    Charles J. Drake
                             Integral Vision, Inc.
                             38700 Grand River Avenue,
                             Farmington Hills, Michigan 48335
                             (248) 471-2660 Phone Number
                             (248) 615-2971 Fax Number;

            If to Buyer:     Luc Tricot
                             n.v. DIMACO s.a.
                             Parc Scientifique Gembloux-Namur
                             30, Ph. Lejeune
                             5032 Isnes
                             Belgium
                             32 81 569909 Phone Number
                             32 81 569919 Fax Number;

            or to such other address or facsimile number that the parties may
            designate in writing.

      C.    Assignment. Neither Seller nor Buyer shall assign this Agreement, or
            any interest in it, without the prior written consent of the other.

      D.    Parties in Interest. This Agreement shall inure to the benefit of,
            and be binding on, the named parties and their respective successors
            and permitted assigns, but any other person.

                                       18
<PAGE>

      E.    Choice of Law. This Agreement shall be governed, construed, and
            enforced in accordance with the laws of the State of Michigan,
            without regard to choice of law.

      F.    Counterparts. This Agreement may be signed in any number of
            counterparts with the same effect as if the signature on each
            counterpart were on the same instrument.

      G.    Entire Agreement. This Agreement, all Related Agreements and all
            related documents, schedules, exhibits, or certificates represent
            the entire understanding and agreement between the parties with
            respect to the subject matter and supersede all prior agreements or
            negotiations between the parties. This Agreement may be amended,
            supplemented, or changed only by an agreement in writing that makes
            specific reference to this Agreement and that is signed by the party
            against whom enforcement of any such amendment, supplement, or
            modification is sought.

      H.    Mediation and Arbitration.

            (1)   Any dispute, controversy, or claim arising out of or relating
                  to this Agreement or relating to the breach, termination, or
                  invalidity of this Agreement, whether arising in contract,
                  tort, or otherwise, that cannot be resolved by the parities,
                  the matter will be submitted to mediation under the then
                  current Mediation Rules of the American Arbitration
                  Association.

            (2)   If the matter is not resolved by such mediation, the matter
                  shall, at the request of any party, be resolved in binding
                  arbitration. Any arbitration shall proceed in accordance with
                  the current Commercial Arbitration Rules (the "Arbitration
                  Rules") of the American Arbitration Association ("AAA") to the
                  extent that the Arbitration Rules do not conflict with any
                  provision of this Section.

            (3)   No provision of or the exercise of any rights under this
                  Section shall limit the right of any party to seek and obtain
                  provisional or ancillary remedies (such as injunctive relief,
                  attachment, or the appointment of a receiver) from any court
                  having jurisdiction before, during, or after the pendency of
                  an arbitration proceeding under this Section. The institution
                  and maintenance of any such action or proceeding shall not
                  constitute a waiver of the right of any party (including the
                  party taking the action or instituting the proceeding) to
                  submit a dispute, controversy, or claim to arbitration under
                  this Section.

            (4)   Any award, order, or judgment made pursuant to arbitration
                  shall be deemed final and may be entered in any court having
                  jurisdiction over the enforcement of the award, order, or
                  judgment.

                                       19
<PAGE>

            (5)   The arbitration shall be held before one arbitrator
                  knowledgeable in the general subject matter of the dispute,
                  controversy, or claim and selected by AAA in accordance with
                  the Arbitration Rules.

            (6)   The arbitration shall be held at the office of AAA located in
                  Detroit, Michigan (as the same may be from time to time
                  relocated), or at another place the parties agree on.

            (7)   In any arbitration proceeding under this Section, subject to
                  the award of the arbitrator(s), each party shall pay all its
                  own expenses and an equal share of the fees and expenses of
                  the arbitrator. The arbitrator shall have the power to award
                  recovery of costs and fees (including reasonable attorney
                  fees, administrative and AAA fees, and arbitrator's fees)
                  among the parties as the arbitrator determines to be equitable
                  under the circumstances.

The parties have executed this Agreement on the date set forth on the first page
of this Agreement.

SELLER                                          BUYER:
Integral Vision, Inc.                           n.v. DIMACO s.a.

By:                                             By:
     ----------------------------                  -----------------------------
     Charles J. Drake
Its: Chairman                                   Its:
                                                    ----------------------------

Integral Vision Ltd.

By:
     ----------------------------
     Charles J. Drake
Its:
     ----------------------------
     Director

                                       20
<PAGE>
                                    SCHEDULES
                            SCHEDULE 1.G - INVENTORY
                           (See Page 2 for discussion)

(1) WIP Inventory

List of Inventory Located at U.K. Premises Which Will be Transferred to Buyer

<TABLE>
<CAPTION>
Customer      IV Order #      Qty      Part #        Cost
<S>           <C>             <C>      <C>           <C>
Gillette      107             1        990-5014      BPS 2,887
</TABLE>

This Gillette Order may be shipped and moved to Consignment Inventory by
Closing.

(2) Consigned Inventory

List of Consigned Inventory Which Will be Transferred to Buyer

<TABLE>
<CAPTION>
CUSTOMER      IV ORDER #      QTY      PART #        COST
<S>           <C>             <C>      <C>           <C>
Gillette      109             1        990-5021      BPS 5,880
</TABLE>

                                       21
<PAGE>
               SCHEDULE 1.H - INTELLECTUAL PROPERTY NOT BEING SOLD
                       ( See page 2 and 4 for discussion)

1.    Parent Owned Tools to be Licensed to Buyer

Tools and access to the Source Codes for the Tools For Which a Paid-up,
Non-exclusive, Non-assignable License is Being Granted to Buyer and DIMACO U.K.
Ltd. from Parent in the Form of Exhibit 1.H-A

FEATURE FIND - A software program that locates and provides data about a trained
pattern of light intensity within a defined region of interest in an image

EDGE - A software program that locates and provides data about a transition in
light intensity over a linear region within a defined region of interest in an
image

BLOB - A software program that locates and provides data about regions having
light intensity within a defined range within a defined region of interest in an
image

LIGHTMETER - A software program that provides a histogram of light intensity
within a region of interest

TEMPLATE - A software program that compares an image with a stored image and
reports the differences

WARP ENGINE - A software program that compensates for linear distortions
resulting from acquiring an image from a round object

CALIPER - A software program that determines the distance between two edges
within a defined region of interest in an image

COLOUR METER - A software program that provides a numerical representation of
the difference between the trained colour and the inspected colour

INTELLIGENT COLOUR HISTOGRAM - A software program that compares the colour
histogram inspected with trained reference libraries to determine a probability
of the inspected imaged matching a reference image

2.    Tools which Parent Distributes:

      Buyer will purchase either direct from Seller or from any third party at
      conditions to be determined by the parties, all of the following Tools
      needed by Buyer in the Business:

      CVB Image Manager- distributed by Parent
      CVB Minos - distributed by Parent
      IVC/Imagineer

                                       22
<PAGE>
                                 EXHIBIT 1. H-A
                         NONEXCLUSIVE LICENSE AGREEMENT

      This Agreement made and entered into as of this 24th day of August , 2001
and between Integral Vision, Inc., a Michigan corporation having its principal
offices at 38700 Grand River Avenue, Farmington Hills, Michigan 48335
("LICENSOR"); and n.v. DIMACO s.a., a Belgium corporation having its principal
offices at Parc Scientifique Gembloux-Namur, 30 Ph. Lejeune, 5032 Isnes, Belgium
("n.v. DIMACO") , and DIMACO U.K. Ltd. a United Kingdom corporation having its
principal offices at _________________________________ ("___________) ("n.v.
DIMACO and DIMACO U.K. Ltd. collectively referred to as "LICENSEE").

                               Factual Statements

      A.    LICENSOR and n.v. DIMACO are parties to an Asset Purchase Agreement
            dated August 24, 2001 ("Purchase Agreement");

      B.    LICENSOR is the owner of all right, title and interest in and to
            certain LICENSOR SOFTWARE and SOURCE CODES for such LICENSOR
            SOFTWARE relating to inspections systems for the packaging industry;

      C.    LICENSEE desires to obtain a nonexclusive license for said LICENSOR
            SOFTWARE and SOURCE CODES pursuant to the Purchase Agreement;

                                    Agreement

1.    Definitions. As used herein, the term:

      A.    "Feature Find" shall mean a software program that locates and
            provides data about a trained pattern of light intensity within a
            defined region of interest in an image.

      B.    "Edge" shall mean a software program that locates and provides data
            about a transition in light intensity over a linear region within a
            defined region of interest in an image.

      C.    "Blob" shall mean a software program that locates and provides data
            about regions having light intensity within a defined range within a
            defined region of interest in an image.

      D.    "Lightmeter" shall mean a software program that provides a histogram
            of light intensity within a region of interest.

      E.    "Template" shall mean a software program that compares an image with
            a stored image and reports the differences.

      F.    "Warp Engine" shall mean a software program that compensates for
            linear distortions resulting from acquiring an image from a round
            object.

                                       23
<PAGE>

      G.    "Caliper" shall mean a software program that determines the distance
            between two edges within a defined region of interest in an image.

      H.    "Colour Meter" shall mean a software program that provides a
            numerical representation of the difference between the trained
            colour and the inspected colour.

      I.    "Intelligent Colour Histogram" shall mean a software program that
            compares the colour histogram inspected with trained reference
            libraries to determine a probability of the inspected imaged
            matching a reference image.

      J.    "LICENSOR SOFTWARE" shall mean Feature Find, Edge, Blob, Lightmeter,
            Template, Warp Engine, Caliper, Colour Meter and Intelligent Colour
            Histogram.

      K.    "SOURCE CODE(S)" shall mean the programming statements and
            instructions for the LICENSOR SOFTWARE written by a computer
            programmer that must be converted into machine language so that the
            LICENSOR SOFTWARE can operate on a computer.

2.    Grant.

      A.    Upon the terms and conditions set forth herein, LICENSOR hereby
            grants to LICENSEE a paid-up, worldwide, nonexclusive license to:

            (1)   make, have made, use, offer to sell or sell products covered
                  by one or more claims of the LICENSOR SOFTWARE; and

            (2)   access to, and use of, the SOURCE CODES for the LICENSOR
                  SOFTWARE for the sole purpose of LICENSEE custom programming
                  of the features and functions of the LICENSOR SOFTWARE within
                  the scope of the grant to make, have made, use, offer to sell,
                  or sell products covered by one or more claims of the LICENSOR
                  SOFTWARE, and for no other purpose. LICENSEE shall not, and
                  shall cause its affiliates not to, sell or sub-license the
                  SOURCE CODES, or otherwise use or allow other use of the
                  SOURCE CODES by any means under any condition, except as
                  expressly provided in this Agreement.

      B.    The foregoing grant of license shall not be construed as a license,
            by implication or otherwise, under (i) any patent applications or
            patents owned by LICENSOR or under which LICENSOR has or acquires
            the right to grant licenses, (ii) any software other than those
            fitting within the definition of LICENSOR SOFTWARE, or (iii) any
            source codes other than the SOURCE CODES for the LICENSOR SOFTWARE.

                                       24
<PAGE>
      C.    The grant made herein does not include any right to sub-license on
            the part of the LICENSEE and the LICENSEE is specifically prohibited
            from granting any such sub-license, except:

            (1)   LICENSEE shall have the limited right to sub-license LICENSOR
                  SOFTWARE solely for the purpose of the manufacture of the
                  LICENSEE'S Products by LICENSEE'S contractors, and

            (2)   LICENSEE shall have the right to sublicense LICENSOR SOFTWARE
                  to LICENSEE'S Affiliates which are defined to include only any
                  legal entity, at least 50% owned or controlled, directly by
                  Mr. Luc Tricot or by n.v DIMACO SA, either individually or
                  collectively (but only so long as such ownership or control
                  equity interest exists).

            In the event of any permitted sub-license by LICENSEE, LICENSEE
            shall notify LICENSOR in writing of such sub-license together with a
            copy of the sub-license agreement and such other material as
            LICENSOR shall reasonable request regarding the transaction.
            Furthermore, such ability to sub-license does not include the right
            to sub-license the SOURCE CODES. In the event a permitted
            sub-license is made, the LICENSEE maintains its total obligations
            and responsibilities under this Agreement.

      D.    The grant made herein of LICENSOR SOFTWARE is agreed to relate only
            to the LICENSOR SOFTWARE and SOURCE CODES as they currently exist.
            LICENSOR undertakes no duty to maintain or service any LICENSOR
            SOFTWARE or SOURCE CODES.

      E.    LICENSEE shall be entitled (directly as well as with the assistance
            of a third party contractor) to enhance, develop, and modify
            LICENSOR SOFTWARE. LICENSEE shall have all rights, title and
            interest, including intellectual property rights in and to all
            LICENSEE'S modification; provided, however, LICENSEE can only use
            such modifications for incorporation into its own products and is
            prohibited from selling such modified software as a separate
            product.

3.    Licensor information.

      LICENSEE agrees that all documentation and information made available or
      disclosed to LICENSEE by LICENSOR as a result of or related to this
      Agreement, or any negotiations therefor, shall be received and treated by
      LICENSEE on a confidential and restricted basis, and shall not be
      disclosed to any third parties or used for any purpose (other than this
      Agreement) without the prior written consent of LICENSOR, unless required
      to do so by law.

                                       25
<PAGE>
4.    Marking.

      A.    LICENSEE agrees to affix to each Product containing LICENSOR
            SOFTWARE or to the package containing such Product or to any
            insertion slip in the package with each such Product a legible
            notice reading: "Software licensed from Integral Vision, Inc." or as
            may otherwise be instructed by LICENSOR.

      B.    The granting of the license herein shall not constitute an approval
            of or acquiescence in LICENSEE's practices with respect to
            trademarks, trade names, corporation names, advertising, or similar
            practices with respect to the LICENSEE'S Product, nor does the
            granting of any license hereunder constitute an authorization or
            approval of, or acquiescence in the use of any trade name or
            trademark of LICENSOR or its affiliates in connection with the
            manufacture, advertising or marketing of LICENSEE's Product; and
            LICENSOR hereby expressly reserves all rights with respect thereto.

5.    Intellectual Property Rights

      A.    LICENSOR warrants, represents and covenants that (i) it is the sole
            owner of the LICENSOR SOFTWARE and has, as sole owner, all right,
            title and interest, including intellectual property rights in
            LICENSOR SOFTWARE; (ii) it has the right to enter into this
            Agreement and accord the rights granted per the terms of this
            Agreement; and (iii) it is not a party to nor will it enter into any
            agreement, covenant or encumbrance which may in any way prejudice
            the rights created in this Agreement.

      B.    LICENSEE recognizes that the exclusive ownership of LICENSOR
            SOFTWARE belongs to LICENSOR and that LICENSEE has no right to use
            LICENSOR SOFTWARE except for the rights expressly granted in this
            Agreement.

6.    Duration and Termination.

      A.    Unless otherwise terminated as hereinafter set forth, this Agreement
            and the licenses granted hereby shall continue in full force and
            effect indefinitely.

      B.    If LICENSEE shall at any time default in fulfilling any of the
            obligations hereof, and such default shall not be cured within
            thirty (30) days after written notice thereof is given by LICENSOR
            to LICENSEE, LICENSOR shall have the right to terminate this
            Agreement by giving written notice of termination to LICENSEE; this
            Agreement thereby being terminated thirty (30) days after such
            notice of termination is mailed by LICENSOR. LICENSEE shall have the
            right to cure any such default up to, but not after, the giving of
            such notice of termination.

      C.    LICENSOR shall have the right to terminate this Agreement by giving
            written notice of termination to LICENSEE in the event of any one of
            the following, such termination being effective upon receipt of such
            notice or five (5) days after such notice is mailed, whichever is
            earlier:

                                       26
<PAGE>

            (1)   Liquidation of LICENSEE;

            (2)   Insolvency or bankruptcy of LICENSEE, whether voluntary or
                  involuntary;

            (3)   Inability of LICENSEE to meet its obligations hereunder;

            (4)   Appointment of a trustee or receiver for LICENSEE;

            (5)   Any breach or default by LICENSEE of its obligations,
                  representations or warranties, or otherwise, under the
                  Purchase Agreement, or any Related Agreement thereunder;

            (6)   Any assignment by LICENSEE for the benefit of creditors.

      D.    The waiver of any default under this Agreement by LICENSOR shall not
            constitute a waiver of the right to terminate this Agreement for any
            subsequent or like default, and the exercise of the right of
            termination shall not have the effect of waiving any damages to
            which LICENSOR might otherwise be entitled.

7.    Notices.

      A.    All notices, requests, demands and other communications under this
            Agreement or in connection therewith shall be given to or be made
            upon the respective parties hereto as follows, or at such other
            addresses as from time to time may be provided:

                To LICENSEE:

                n.v. DIMACO s.a.
                Parc Scientifique Gembloux-Namur
                30, Ph. Lejeune
                5032 Isnes
                Belgium
                32 81 569909 Phone Number
                32 81 569919 Fax Number;

                To LICENSOR:

                Integral Vision, Inc.
                38700 Grand River Avenue
                Farmington Hills, Michigan 48335
                (248) 471-2660 Phone Number
                (248) 615-2971 Fax Number

      B.    All notices, requests, demands and other communications given or
            made in accordance with the provisions of this Agreement shall be in
            writing, shall be forwarded by registered air mail, and shall be
            deemed to have been given when deposited postage prepaid, addressed
            as specified in the preceding paragraph.

                                       27
<PAGE>
8.    Construction and Assignment.

      A.    This Agreement shall be binding upon and inure to the benefit of
            LICENSOR, its legal representatives, successors, heirs and assigns.
            Any voluntary or involuntary transfer, sale, assignment, pledge, or
            encumbrance of any or all of the LICENSOR SOFTWARE or Source Codes
            shall be subject to LICENSEE's right to license same on a
            royalty-free basis from the transferee or trustee, as the case may
            be. The transferee or trustee shall deliver to LICENSEE a written
            undertaking in which the transferee or trustee will expressly agree
            to be bound by all terms and provisions of the Agreement to same
            extent and in the same manner as LICENSOR.

      B.    This Agreement shall be binding upon and inure to the benefit of
            LICENSEE, but shall not be transferable or assignable without the
            prior written consent of LICENSOR.

      C.    This Agreement shall be deemed to be a contract made under the laws
            of the United States of America, the State of Michigan, and for all
            purposes shall be interpreted in its entirety in accordance with the
            laws of said State.

      D.    Nothing contained in this Agreement shall be construed as conferring
            upon LICENSEE or its customers, directly or by implication, estoppel
            or otherwise, any license under any trade secrets or know-how of
            LICENSOR, and no such license or other rights shall arise from this
            Agreement or from any acts, statements or dealings resulting in or
            related to the execution of this Agreement.

9.    Negation of warranty.

      No representation or warranty has been or is made by LICENSOR that
      LICENSEE's Product or parts or subassemblies thereof may be manufactured,
      used, sold, or leased free of infringement of patent rights or other
      proprietary rights of others; it being understood that LICENSOR shall not
      be liable for any loss, damage, or expense arising from any claim of
      patent or other proprietary right infringement upon the manufacture, use,
      lease, or sale of LICENSEE's Product or any portions thereof or the
      exercise of any license or right under this Agreement.

10.   Modification.

      This Agreement embodies all of the understanding and obligations between
      the parties with respect to the subject matter hereof. No amendment or
      modification of this Agreement shall be valid or binding upon the parties
      unless made in writing, signed on behalf of each of the parties by their
      respective proper duly authorized officers.

                                       28
<PAGE>
11.   Compliance with Laws.

      A.    Any payment which requires governmental approval or permission under
            foreign exchange control laws or other laws, if any, shall be made
            in accordance with such laws.

      B.    LICENSEE agrees to comply with all provisions of the Export
            Administration Regulations of the United States Department of
            Commerce, as they currently exist and as they may be amended from
            time to time.

In witness whereof the respective duly authorized representatives of the parties
have caused this Agreement to be executed as of the date first above written.

                                                  LICENSOR
                                                  Integral Vision, Inc.

-----------------------------                     ------------------------------
                                                  By:
                                                  Its:

                                                  LICENSEE
                                                  n.v. DIMACO s.a.

-----------------------------                     ------------------------------
                                                  By:
                                                  Its:

                                                  DIMACO U.K. Ltd.

-----------------------------                     ------------------------------
                                                  By:
                                                  Its:

                                       29
<PAGE>
                           SCHEDULE 1.J - FIXED ASSETS
                           (See page 3 for discussion)

          Buyer will receive L88,560.87 of selected assets as follows:

INTEGRAL VISION UK                 COMPLETE ASSET SUMMARY          AUGUST-2001

Worksheet List

<TABLE>
<CAPTION>
                                   AUGUST-2001
                                   -----------
                                   SALE PRICE        TOTALS
                                   ----------        ------
<S>                            <C>                <C>
COMPUTER EQUIPMENT:
SALES & MARKETING:
Christina Jenkins                      485.01
                               --------------
                                                        485.01
APPLICATION ENGINEERS:
Will Everitt                         5,051.37
Nasir Mahmood                        5,238.88
Dave Robinson                          493.43
Tim Wesley                           1,547.51
Apps Misc                              464.87
                               --------------
                                                     12,796.06
SERVICE ENGINEERS:
Andy Smith                             596.50
Andy Harrison                           85.33
Service Misc                         4,289.25
                               --------------
                                                      4,971.08
DIRECT MANUFACTURING:
Andy Mucha                           1,573.90
Peter Lane                          10,846.33
                               --------------
                                                     12,420.23
OPERATIONS:
Val Caton                              506.87
Molly Newbury                          725.40
                               --------------
                                                      1,232.27
MISC:
Internet PC                            607.54
Network                              6,300.39
Printer & Laptops etc                2,963.63
Demo Equipment Upstairs              7,277.40
Demo Equipment Downstairs              671.80
                               --------------
                                                     17,820.77

FIXTURE AND FITTINGS:                                 9,389.03
LEASEHOLD:                                                0.00
SOFTWARE:                                            22,222.19
TOOLING EQUIPMENT:                                    1,500.00
</TABLE>

                                       30
<PAGE>
<TABLE>
<S>                            <C>                <C>
EXHIBITION EQUIPMENT:                                 2,724.24
INCIDENTALS:                                          3,000.00
                                                  ------------
                  GRAND TOTAL:                       88,560.87
                                                  ============
</TABLE>

                                       31
<PAGE>
FIXED ASSETS BY EMPLOYEE             C.JENKINS                       AUGUST-2001

Worksheet List

<TABLE>
<CAPTION>
ASSET                                                                                 UNIT     TOTAL
NUMBER            ITEM             DESCRIPTION              SERIAL NO      QUANT.    VALUE     VALUE            SALE PRICE
------            ----             -----------              ---------      ------    -----     -----            ----------
<S>               <C>              <C>                      <C>            <C>       <C>       <C>              <C>

    1-Jan         Box              ATX Midi Tower                            1          29        29                20.78

                  Motherboard                                                1          60        60                48.00

                                   PII 266                                   1         132       132               105.60

                                   64Mb DIMMS                                1          69        69                55.36

                                   FD235HF IDE FDD                           1          20        20                 2.00

                                   DS V550 16Mb                              1          60        60                48.00

                  Network Card                                               1          88        88                 8.80

   Feb-99         Monitor          Targa 17" Monitor                         1         152       152                81.07

                  Keyboard         Cherry                                    1          49        49                 4.90

                  Mouse                                                      1          45        45                 4.50

                  HardDisk         6.0Gb                                     1          63        63                50.40

                  HardDisk         2Gb Western Digital                       1          89        89                35.60

                  CDROM            24x                                       1          40        40                20.00
                                                                                               -----            ----------
                                                                           TOTAL
                                                                           VALUE                 896                485.01
                                                                                               =====            ==========
</TABLE>

                                       32
<PAGE>
FIXED ASSETS BY EMPLOYEE             WILL EVERITT                    AUGUST-2001

Worksheet List

<TABLE>
<CAPTION>
ASSET                                                                                          TOTAL
NUMBER            ITEM             DESCRIPTION              SERIAL NO      QUANT.    COST      VALUE            SALE PRICE
------            ----             -----------              ---------      ------    -----     -----            ----------
<S>               <C>              <C>                      <C>            <C>       <C>       <C>              <C>

                                   Box                                       1          49        49                 39.20
                                   MotherBoard                               1          49        49                 39.20
                                   P3 733                                    1         175       175                140.00
                  DIMMS            128Mb                                     1         138       138                110.40
                  Graphics         G400                                      1          99        99                 79.20
                  HDD              10Gb                                      1          89        89                 71.20
                                   CDROM                                     1          25        25                 20.00
                                   Network Card                              1          19        19                 15.20
                                   PC Vision                                 1         824       824                659.20
                                   Adavtech 725 I/O                          1          82        82                 65.60

                  Monitor          21"  Iiyama                               1       1,300     1,300                130.00
                  Monitor          15MVX                                     1         348       348                 34.80

                                   Keyboard                                  1          29        29                 16.92
                                   Mouse                                     1          29        29                 16.92

                  BOX              Intel pentium PII 233                     1         626       626                187.80
                                   64Mb Simms                                2         600     1,200                120.00
                                   Dimond Stealth 220                        1         101       101                 10.10
                                   Adavtech 730 I/O                          1          82        82                 65.60
                                   FD235HF IDE FDD                           1          20        20                  2.00

                  HDD              MISC                                      10         89       890                445.00

                                   ISO Tech Power Supply -
                                    on KC Desk                               1         200       200                 53.33
                  Camera           Pulnix                                    1         348       348                 34.80
                  Lens             MISC                                      7          50       350                 35.00
                  Camera           Sony XC-E150                              1         348       348                 34.80
                                   Kaiserstand                               1         211       211                 21.10

                                   Tektronix Oscilloscope                    1       1,630     1,630              1,304.00

                                   Diverse Colour Optical
                                    Head with Camera                                                              1,000.00
                                   I/O Test Box                                                                     200.00
                                   PLC Omron                                                                        100.00
                                                                                               -----            ----------
                                                                           TOTAL
                                                                           VALUE               9,261              5,051.37
                                                                                               =====            ==========
</TABLE>

                                       33
<PAGE>
FIXED ASSETS BY EMPLOYEE             N MAMHOOD                       AUGUST-2001

Worksheet List

<TABLE>
<CAPTION>
ASSET                                                                                          TOTAL
NUMBER            ITEM             DESCRIPTION              SERIAL NO      QUANT.    COST      VALUE            SALE PRICE
------            ----             -----------              ---------      ------    -----     -----            ----------
<S>               <C>              <C>                      <C>            <C>       <C>       <C>              <C>

                  Monitor          17" Belina                                 1        149       149                69.53
                  Mouse                                                       1         45        45                14.25
                  Keyboard                                                    1         49        49                15.52
                  Camera           JAI M10                                    1        767       767               613.60
                  Camera           Pulnix                                     2        348       696                69.60

                  KaiserStand                                                 1        220       220                22.00

                  HDD              MISC                                       6         64       381               222.53

                                   ATX                                        1         49        49                31.03
                                   Dual Processor Motherboard                 1         89        89                56.37
                                   PIII500                                    1        129       129               103.20
                                   128Mb Memory                               1        150       150                95.00
                                   Matrox Millenium 32Mb                      1         69        69                43.70
                                   Network Card                               1         35        35                22.17
                                   ITI + Daughter Card                        1      1,125     1,125               900.00
                                   PC Vision                                  1        824       824               659.20
                  I/O Card         PC Labs                                    1        383       383               121.28
                                   CD ROM 48x                                 1         45        45                28.50
                                   FDD                                        1         19        19                12.03
                                   HDD - 3.2Gb                                1         89        89                56.37

                                   M70 Camera                                 1                                  1,008.00
                                   Lens                                      15                                    150.00
                                   Lightbox                                   1                                     20.00
                                   Turntable                                  1                                    100.00
                                   Ledu Lamp                                  1                                     15.00
                                   Thrlby Thandar Trigger Box                 1                                    700.00
                                   Retort Stands                              3                                     90.00
                                                                                               -----            ----------
                                                                            TOTAL
                                                                            VALUE               5,313            5,238.88
                                                                                               =====            ==========
</TABLE>

                                       34

<PAGE>
FIXED ASSETS BY EMPLOYEE             DAVE ROBINSON                   AUGUST-2001

Worksheet List
<TABLE>
<CAPTION>

ASSET                                                                                            TOTAL
NUMBER            DESCRIPTION                         SERIAL NO       QUANT.        COST         VALUE            SALE PRICE
------            -----------                         ---------       ------        ----         -----            ----------
<S>               <C>                                 <C>             <C>           <C>          <C>              <C>

                  17" Monitor                                           1            124          124                99.20
  IV 00248        Cherry                              G0383414S         1             49           49                 4.90
  IV 00227        Microsoft Mouse                                       1             49           49                 4.90
   Mar-99         GIG 10BX Chipset Mthbrd                               1             79           79                43.45
   Mar-99         Intel PPRO400Mhz                                      1            169          169                92.95
                  128Mb of Simms                                        1            800          800                80.00
                  2Gb HDD Western                                       1             89           89                32.63
   Apr-99         8.4Gb IBM HDD                                         1             88           88                49.87
                  FD235HF IDE FDD                                       1             20           20                 2.00
                  Diamond Stealth                                       1            101          101                10.10
                  Network Card                                          1             88           88                 8.80
                  CD ROM                                                1             60           60                 6.00

  IV 00143        Ledu Lamp                                             1            130          130                13.00

  IV 00250        JVC Camera KY F55BE                  9050241          1            260          260                26.00
                  Cypress USB Starter kit                               1             62           62                19.63
                                                                                                 -----            ----------
                                                                      TOTAL
                                                                      VALUE                      2,168              493.43
                                                                                                 =====            ==========
</TABLE>

                                       35
<PAGE>
FIXED ASSETS BY EMPLOYEE                 T.WESLEY                    AUGUST-2001

Worksheet List

<TABLE>
<CAPTION>
ASSET                                                                                          UNIT      TOTAL
NUMBER          ITEM            DESCRIPTION                 SERIAL NO              QUANT.      VALUE     VALUE           SALE PRICE
------          ----            -----------                 ---------              ------      -----     -----           ----------
<S>             <C>             <C>                         <C>                    <C>         <C>       <C>             <C>

                BOX                                                                  1           39        39                 3.90
                Monitor         19" Targa                                            1          179       179               146.18
                Keyboard        Cherry d91275               6X041375H05              1           49        49                 4.90
                Mouse           Logitech                                             1           45        45                 4.50

                Motherboard                                                          1           49        49                39.20
                                PIII 750                                             1          175       175               140.00
                                3c 509b network card                                 1           88        88                 8.80
                                64Mb DIMMS                                           2           69       138               110.72
                Hard Disk       8Gb                                                  1          114       114                38.00
     Aug-00     Hard Disk       8.4 Seagate                                          1           48        48                40.00
                Graphics        All In Wonder 32Mb                                   1          119       119               105.12
     Mar-00     CD Rom          52x                                                  1           21        21                15.75

                HDD             10Gb                                                 1           89        89                71.20
                                Scanerjet 11cx              From Internet Mach       1          495       495                49.50

                CKS BOX         A758-000                    44144                    1        1,941     1,941               485.17
                                Network Card                                         1           62        62                 6.20
     Nov-98     DIMMS           64Mb                                                 2           69       138               110.72
                Monitor         Hitachi MVX                                          1          348       348                34.80
                Keyboard        Cherry                                               1           49        49                 4.90
                Graphics        All In Wonder 16Mb                                   1           99        99                74.25
                Trackman        Logitech                                             1           45        45                 4.50
                                Dongle                                               1           20        20                 2.00
                Sound Card      AWE 64                                               1           38        38                30.40
                CD Rom          52x                                                  1           21        21                16.80
                                                                                                         -----             --------
                                                                                   TOTAL
                                                                                   VALUE                 4,409             1,547.51
                                                                                                         =====             ========
</TABLE>

                                       36
<PAGE>
DEPARTMENT: APPLICATIONS ENGINEERS    APPLICATIONS MISC.             AUGUST-2001

Worksheet List

<TABLE>
<CAPTION>
ASSET                                                                                                    TOTAL
NUMBER          ITEM    DESCRIPTION                          SERIAL NO    QUANTITY         COST          VALUE            SALE PRICE
-------         ----    -----------                          ---------    --------         ----          -----            ----------
<S>             <C>     <C>                                  <C>          <C>              <C>          <C>               <C>

CD WRITER:
                        Box                                                    1             39            39                 3.90
                        Pentium 200Mhz                                         1            270           270                27.00
                        64Mb Simms                                             1            400           400                40.00
                        8Gb HDD                                                1             89            89                71.20
                        1.44FDD                                                1             19            19                 1.90
                        Diamond Stealth VGA                                    1            101           101                10.10
                        Network Card                                           1             38            38                 3.80
                        Hitachi 15 MVX                                         1            348           348                34.80
                        Keyboard                                               1             49            49                 4.90
                        Mouse                                                  1             45            45                 4.50
                        CDROM 36XE                                             1             36            36                17.40
                        HP Surestore CD Writer                                 1            218           218               105.37
                                                                                                        ------              ------
                                                                                                        1,652               324.87
                                                                                                        ======              ======

                        Kaiserstands                                           2                                             40.00
                                                                                                                            ------
                        Pulnix Camera + zoom lens 6-12mm                       1                                            100.00
                                                                                                                            ======

                                                                                                                            140.00
                                                                                                        ------              ------
                                                                                          SHEET
                                                                                          TOTAL          1,652              464.87
                                                                                                        ======              ======
</TABLE>

                                       37
<PAGE>
FIXED ASSETS BY EMPLOYEE             A.SMITH                         AUGUST-2001

Worksheet List

<TABLE>
<CAPTION>
ASSET                                                                                       UNIT       TOTAL
NUMBER           ITEM            DESCRIPTION                   SERIAL NO       QUANT.       VALUE      VALUE           SALE PRICE
------           ----            -----------                   ---------       ------       -----      -----           ----------
<S>              <C>             <C>                           <C>             <C>          <C>        <C>             <C>

                 LAPTOP          DELL
                 Trackmen        logitech                                         1           45         45                4.50

      04-99                      4.3 Gb HDD for Lap Top                           1           96         96               54.40

                                 New PC ~ P3667                                   1          427        427              398.53
                                 + 17" Monitor                                    1          149        149              139.07
                                                                                                       -----             ------
                                                                               TOTAL
                                                                               VALUE                    717              596.50
                                                                                                       =====             ======
</TABLE>

                                       38
<PAGE>
FIXED ASSETS BY EMPLOYEE           A.HARRISON                        AUGUST-2001

Worksheet List

<TABLE>
<CAPTION>
ASSET                                                                                       UNIT       TOTAL
NUMBER          ITEM         DESCRIPTION                       SERIAL NO       QUANT.       VALUE      VALUE             SALE PRICE
------          ----         -----------                       ---------       ------       -----      -----             ----------

                DELL ISPERON LAP TOP FROM BL
                ----------------------------
<S>             <C>          <C>                               <C>             <C>          <C>        <C>               <C>

                Keyboard     Cherry Click                      876923             1            45        45                  4.50
                Trackmen     Logitech                          lt513cos416        1            45        45                  4.50
                             6" monitor for on site
                             testing                                              1           259       259                 25.90
                HDD          4.3Gb                                                1            89        89                 50.43
                                                                                                       -----                -----
                                                                                TOTAL
                                                                                VALUE                   438                 85.33
                                                                                                       =====                =====
</TABLE>

                                       39
<PAGE>
FIXED ASSETS BY EMPLOYEE         SERVICE DEPT. MISC.                 AUGUST-2001

Worksheet List

<TABLE>
<CAPTION>
ASSET                                                                                          UNIT      TOTAL
NUMBER           ITEM             DESCRIPTION                   SERIAL NO      QUANT.          VALUE     VALUE           SALE PRICE
------           ----             -----------                   ---------      ------          -----     -----           ----------

CKS BOX (A758-00 46120)
-----------------------
<S>              <C>              <C>                           <C>            <C>             <C>       <C>             <C>
       04-99     Cable            2 Camera PC Vision B/O                          1              83        83               47.03
       04-99     VGA              ATI Rage 2 4Mb                                  1              50        50               40.00

MISC
----
                 Camera           Pulnix                                          7             349     2,443            1,384.37
                 Lens                                                             6              40       240              136.00
                                  Logitech Trackball                              2              45        90               51.00

                 PC               Booksiz PC with CDROM                           1             461       461              391.85
                 Keyboard         cherry                                          1              49        49                4.90

                 CKS Box          Large A758-00 46120                                                                      500.00
                 CKS Box          Small                                                                                    500.00

                 Monitor          15 mvx                                          3             348     1,044              104.40
                 Monitor          14mvx                                           1             348       348               34.80
                 Monitor          NEC                                             1             348       348               34.80
                 Monitor          Sony                                            1             348       348               34.80
                 Monitor          Hitachi 9"                                      1             259       259               25.90

                 Keyboard         cherry                                          3              49       147               14.70
                                  Mouse                                           1              45        45                4.50
                                  Trackball                                       1              45        45                4.50
                                  Kaiserstand                                     1             220       220               22.00
                 Framegrabber     ITI                                             1             647       647              506.82
                 Framegrabber     Daughter Card                                   1             559       559              446.88
                                                                                                         -----           --------
                                                                                GRAND
                                                                                TOTAL                    7,426           4,289.25
                                                                                                         =====           ========
</TABLE>

                                       40
<PAGE>
FIXED ASSETS BY EMPLOYEE            A MUCHA                          AUGUST-2001

Worksheet List

<TABLE>
<CAPTION>
ASSET                                                                                      UNIT     TOTAL
NUMBER              ITEM            DESCRIPTION                   SERIAL NO    QUANT.      VALUE    VALUE             SALE PRICE
------              ----            -----------                   ---------    ------      -----    -----             ----------
<S>                 <C>             <C>                           <C>          <C>         <C>      <C>               <C>

                    Box             In house                                     1           39        39                 3.90
                    Monitor         CTX                                          1          355       355                35.50
                    Keyboard        Cherry                                       1           45        45                 4.50
                    Mouse           A4 TechTrak                                  1           45        45                 4.50
                    Motherboard     Apollo Pro                                   1           49        49                39.20
                                    PII350                                       1          127       127               101.60
                                    64Mb DIMMS                                   1           69        69                55.20
                                    ATI 8Mb All In Wonder                        1           69        69                55.20
                                    Network Card                                 1           88        88                 8.80
                    HDD             10Gb                                         1           89        89                71.20
                    HDD             2.5Gb                                        1           69        69                55.20
                                    teac fdl35hf                                 1           20        20                 2.00
                                    Compressor                                   1          300       300                30.00
                                    Ledu Lamp                                    1           97        97                 9.70
                                    Pillar Drill                                 1          150       150                15.00
                    Programmer      From DR                                      1          500       500                50.00
                                    52x CDROM                                    1           23        23                18.40

                    Camera          Sony 3CCD                                    1        1,920     1,920               960.00
                    Camera          Pulnix                                       1          340       340                34.00
                    Lens            Misc.                                        4           50       200                20.00
                                                                                                    ------            --------
                                                                               TOTAL
                                                                               VALUE                4,594             1,573.90
                                                                                                    ======            ========
</TABLE>

                                       41
<PAGE>
FIXED ASSETS BY EMPLOYEE              P.LANE                         AUGUST-2001

Worksheet List

<TABLE>
<CAPTION>
ASSET                                                                                     UNIT         TOTAL
NUMBER           ITEM          DESCRIPTION                     SERIAL NO      QUANT.      VALUE        VALUE             SALE PRICE
------           ----          -----------                     ---------      ------      -----        -----             ----------
<S>              <C>           <C>                             <C>            <C>         <C>          <C>               <C>

                 Box                                                            1            39           39                 3.90
                 Motherbrd                                                      1            49           49                39.20
                 Processor     PIII 600                                         1           129          129               103.20
                 HDD           7Gb                                              1            80           80                65.33
                 HDD           8Gb                                              1            80           80                38.67
                 DIMMS         64Mb                                             1            43           43                34.07
                               Floppy                                           1            20           20                 2.00
                 Graphics      ATI 3D Rage                                      1            69           69                55.20
                               Network Card                                     1            88           88                 8.80
                               CDROM                                            1            23           23                18.40
                 Camera        Pulnix TM6 CN                                    5           340        1,700               170.00
                 Camera        Pulnix 565                                       1           360          360                36.00
                 Camera        Pulnix 460                                       1           360          360                36.00
                 Camera        JAI Progressive Scan                             1         1,920        1,920             1,088.00
                 Camera        Sony 3CCD                                        2         1,920        3,840             1,920.00
                 Lenses        50mm/25mm/75mm                                   2            50          100                10.00
                               Cable checker                                    1           600          600                60.00
                               JVC TM 150 RGB monitor                           1           555          555                55.50
                 Printer       Star sp300 printer                               1           175          175                17.50
                               Keyboards                                        4            49          196                19.60
                 Trackmen      Logitech                                         4            45          180                18.00
                               Mouse                                            3            45          135                13.50
                 Monitor       Hitachi 14mvx                                    1           348          348                34.80
                 Monitor       NEC Multisync                                    2           325          650                65.00
                 Monitor       15 mvx monitor                                   3           348        1,044               104.40
                 Monitor       Hitachi mono composite input                     2           211          422                42.20
                 HDD           Various                                          15           89        1,335               667.50
                               Optical Head with TM6EX + Lens                   2         1,390        2,780               278.00
      Jul-98     CDROM         External                                         1            50           50                21.67
      Jul-98     Memory        64mb RAM - DIMM - 100mhz                         3            50          150                65.00
                               Network Cards                                    7            88          616                61.60
                               I/O Boards                                       4           383        1,532               766.00
                               ITI Framegrabber Boards                          6           647        3,882             1,941.00
                               Sonix ISDN Plus                                  1           100          100                10.00
      Feb-00     Toolkit       BIOS Board                                       1           249          249               182.60
                 Graphics      ATI cards                                        3            41          123                90.20

                 PLEXWRITER:   Box                                              1            44           44                35.20
                               Motherboard                                      1            49           49                39.20
                               P3 350                                           1           125          125               100.00
                               DIMMS 64Mb                                       1            69           69                55.36
                               Graphics All In Wonder - ATI                     1            49           49                39.20
                               HDD                                              1            63           63                50.40
                               CDROM                                            1            25           25                20.00
</TABLE>

                                       42
<PAGE>
<TABLE>
<S>              <C>           <C>                             <C>            <C>         <C>      <C>                   <C>

                               10A Plextor CD Burner                            1           179          179               155.13
                               Tower - empty                                                                                40.00
                               2 PC's                                                                                      400.00
                                                                                                   ---------             --------
                                                                              TOTAL
                                                                              VALUE                24,624.79             9,077.33
                                                                                                   =========             ========
</TABLE>

                                       43
<PAGE>
FIXED ASSETS BY EMPLOYEE               P.LANE (2)                    AUGUST-2001

Worksheet List

<TABLE>
<CAPTION>
ASSET                                                                                 UNIT        TOTAL
NUMBER             ITEM               DESCRIPTION         SERIAL NO      QUANT.       VALUE       VALUE              SALE PRICE
------             ----               -----------         ---------      ------       -----       -----              ----------
<S>           <C>                     <C>                 <C>            <C>          <C>         <C>                <C>

              TEST BOX 1              NOW IN COMMON ROOM:
                   Case               PCP ATX                              1             55          55                 20.17
                   Mthbrd             Gig                                  1            150         150                120.00
                   Processor          PII  266Mhz                          1            125         125                 45.83
                   VGA                ATI AGP                              1             60          60                 22.00
                   Dimm               128Mb                                1            150         150                105.00
                   HDD                1.6Gb                                1             79          79                 28.97
                   Drive              Floppy                               1             19          19                  6.97
                   CD ROM             24X                                  1             39          39                 14.30
                                      Network Card                         1             19          19                  6.97
                                                                                               --------              --------
                                                                                                    696                370.20
                                                                                               ========              ========

              TEST BOX 2
                   Case               PCP ATX                              1             55          55                 20.17
                   Mthbrd             Super Micro                          1            199         199                 72.97
                   Processor          P II 350Mhz                          1            267         267                 97.90
                   Graphics           Diamond Vipper 4Mb                   1             69          69                 25.30
                   Dimm               64Mb                                 1            150         150                 55.00
                   Drive              Floppy                               1             19          19                  6.97
                                      I/O Card                             1             89          89                 32.63
                   CD ROM             48X                                  1             39          39                 14.30
                                                                                               --------              --------
                                                                                                    887                325.23
                                                                                               ========              ========

              TEST BOX 3
                   Case               PCP ATX                              1             55          55                 20.17
                   Mthbrd             Gig                                  1             89          89                 71.20
                   Processor          Socket 370 800Mhz                    1            159         159                127.20
                   Dimm               64mb                                 2             69         138                 50.60
                   Drive              Floppy                               1             19          19                  6.97
                   HDD                8Gb                                  1             99          99                 36.30
                   CD ROM             24X                                  1             39          39                 14.30
                                      PC Vision                            1            383         383                140.43
                                                                                               --------              --------
                                                                                                    981                467.17
                                                                                               ========              ========

              BOX 3 - WITH TREVOR
                   Case               PCP ATX                              1             55          55                 44.00
                   Mthbrd             Tian Tigar Dual                      1             99          99                 79.20
                   Processor          PIII 800                             2            159         318                254.40
                   Graphics           ATI Rage 128                         1             99          99                 79.20
                   Dimm               64mb                                 1             69          69                 55.20
                   Drive              Floppy                               1             19          19                 15.20
                   HDD                8Gb                                  1             99          99                 79.20
                                                                                               --------              --------
                                                                                                    758                606.40
                                                                                               ========              ========
</TABLE>

                                       44
<PAGE>
<TABLE>
<S>           <C>                     <C>                 <C>            <C>          <C>         <C>                <C>

                                                                                               --------              --------
                                                                         TOTAL
                                                                         VALUE                 3,322.00              1,769.00
                                                                                               ========              ========
</TABLE>

                                       45
<PAGE>
FIXED ASSETS BY EMPLOYEE                V.CATON                      AUGUST-2001

Worksheet List

<TABLE>
<CAPTION>
ASSET                                                                                      UNIT     TOTAL
NUMBER          ITEM            DESCRIPTION             SERIAL NO             QUANT.      VALUE     VALUE             SALE PRICE
------          ----            -----------             ---------             ------      -----     -----             ----------
<S>             <C>             <C>                     <C>                   <C>         <C>       <C>               <C>

                Monitor         Targa 17"                                       1                                         80.00
                Keyboard        Cherry                                          1            49        49                  4.90
                Motherboard     PII 266                                         1           188       188                150.15
                DIMMS           64Mb                                            2            69       138                110.72
                HDD             2.6Gb                                           1            69        69                 55.20
                HDD             500Mb                                           1           120       120                 12.00
                VGA             ATI Rage 128                                    1            99        99                 79.20
                                Network Card                                    1            88        88                  8.80
                                Floppy                                          1            20        20                  2.00
                                pc case                                         1            39        39                  3.90
                                                                                                    -----             ---------
                                                                             TOTAL
                                                                              VALUE                   810                506.87
                                                                                                    =====             =========
</TABLE>

                                       46
<PAGE>
FIXED ASSETS BY EMPLOYEE          MOLLY                              AUGUST-2001

Worksheet List

<TABLE>
<CAPTION>
ASSET                                                                                        UNIT     TOTAL
NUMBER          ITEM                 DESCRIPTION                 SERIAL NO      QUANT.      VALUE     VALUE            SALE PRICE
------          ----                 -----------                 ---------      ------      -----     -----            ----------
<S>             <C>                  <C>                         <C>            <C>         <C>       <C>              <C>

                Monitor              IBM 17"                                                                                40.00
                Keyboard             Cherry                                       1            45        45                 27.00
                Trackmen             Logitech                                     1            30        30                 18.00
                Motherboard          PII 266                                      1           357       357                214.20
                                     16mb ram                                     4           100       400                240.00
                Video                Diamond Stealth  2Mb                         1            30        30                 18.00
                Network Card                                                      1            88        88                 52.80
                                     4Gb HDD                                      1           100       100                 80.00
                                     teal fdl35hf                                 1            20        20                 12.00
                                     pc case                                      1            39        39                 23.40
                                                                                                      -----            ----------
                                                                               TOTAL
                                                                                VALUE                 1,109                725.40
                                                                                                      =====            ==========
</TABLE>

                                       47
<PAGE>
FIXED ASSETS BY EMPLOYEE               INTERNET BOX                  AUGUST-2001

Worksheet List

<TABLE>
<CAPTION>
ASSET                                                                                           UNIT      TOTAL
NUMBER             ITEM             DESCRIPTION                   SERIAL NO         QUANT.      VALUE     VALUE          SALE PRICE
------             ----             -----------                   ---------         ------      -----     -----          ----------
<S>                <C>              <C>                           <C>               <C>         <C>       <C>            <C>

INTERNET BOX

                   Box                                                                 1           39       39                 3.90
                   Monitor          15mvx                                              1          348      348                34.80
                   Keyboard         cherry                                             1           45       45                 4.50
                   Mouse                                                               1           45       45                 4.50
                   Motherboard      600 PIII                                           1          250      250               204.17
                                    128mb simms                                        1          400      400                40.00
                   Graphics         ATI 8Mb AGP All in Wonder                          1           69       69                55.20
                   Hard Disks       17Gb HDD                                           1          100      100                80.00
                                    3Gb HDD                                            1          100      100                10.00
                   CDROM            52x                                                1           23       23                18.40
                                    fd 235hf teac                                      1           20       20                 2.00
                   Network card                                                        1           88       88                 8.80

         1-Jul     Scanner          Epson 1200s                                        1          173      173               141.28
                                                                                                          -----          ----------
                                                                                     TOTAL
                                                                                     VALUE                1,700              607.54
                                                                                                          =====          ==========
</TABLE>

                                       48
<PAGE>
FIXED ASSETS                            NETWORK                      AUGUST-2001

Worksheet List

<TABLE>
<CAPTION>
ASSET                                                                                           UNIT       TOTAL
NUMBER          ITEM                   DESCRIPTION                     SERIAL NO    QUANT.      VALUE      VALUE         SALE PRICE
------          ----                   -----------                     ---------    ------      -----      -----         ----------
<S>             <C>                    <C>                             <C>          <C>         <C>        <C>           <C>

                  I.V PRIMARY SERVER:  (In Cupboard)
                                       Tower Unit                                      1          60          60               16
                                       PII 233Mhz                                      1         350         350               93
                                       128mb memory                                    1         256         256               68
                                       UPS Power Source - Smart
                                        UPS 600                                        1         200         200               20
                                                                                                           -----         --------
                                                                                                             866              198
                                                                                                           =====         ========

                         I.V. REMOTE:
                                       Tower Case                                      1          60          60                6
                                       CD ROM Drive                                    1         100         100               10
                                       Pentium Pro Mthbrd - 200Mhz                     1         380         380               38
                                       128Mb Memory                                    1       1,200       1,200              120
                                       US Robotics Modem Board                         1         100         100               10
                                       D Stealth VGA Card                              1         101         101               10
                                       1.6 Gb HD                                       1         150         150               15
     Jun-99     HDD                    10Gb IBM Deckstar                               2          99         198              122
                                                                                                           -----         --------
                                                                                                           2,289              331
                                                                                                           =====         ========

                        IV SECONDARY:
                                       Box                                             1          60          60                6
                                       Seattle Motherboard +
                                        processor                                      1         250         250               25
                                       128Mb Dimms Memory                              1         250         250               25
     Jan-99     HDD                    Maxtor Eide 17.2Gb                              1         221         221              114
                HDD                    12Gb                                            1         135         135               70
                HDD                    5.3Gb                                           1          89          89               46
                                       Floppy Drive                                    1          20          20                6
                                       CD ROM Drive 4X                                 1         100         100               10
                                       28.8k Modem boards                              4         100         400               40
                                       Diamond Stealth 2001                            1         893         893               89
                                       Tornado Modem                                   1         120         120               12
                                       Tempest Modem                                   1          80          80                8
                                       Network Card                                    1          88          88                9
                                       Multi-Modem 28.8k                               1          80          80                8
                                                                                                           -----         --------
                                                                                                           2,786              468
                                                                                                           =====         ========

                          FAX SERVER:
                                       24 Port Link Switch                             1         200         200               20
                                       Black Box Monitor/Keyboard
                                        Switch                                         1         200         200               20
                                       Linkbuilder FMS II Hub                          1         100         100               10
                                       Xyplex 3000 Router                              1         250         250               25
                                       BT ISDN Connection                              1         100         100               10
                                                                                                           -----         --------
                                                                                                             850               85
                                                                                                           =====         ========
</TABLE>

                                       49

<PAGE>
<TABLE>
<CAPTION>
FIXED ASSETS                  NETWORK (CONT'D)                                                                          AUGUST-2001
------------                  ----------------                                                                          -----------
Worksheet List
--------------
ASSET                                                                                           UNIT          TOTAL
NUMBER   ITEM                 DESCRIPTION                         SERIAL NO      QUANT.         VALUE          VALUE     SALE PRICE
------   ----                 -----------                         ---------      ------         -----          -----     ----------
<S>      <C>                 <C>                                  <C>            <C>          <C>         <C>           <C>
         I.V. NOTES SERVER:
                              Tower Box                                           1               60             60            19
                              Pegasus Mthbd                                       1              353            353           112
                              Pentium II Processor                                1              360            360           114
                              Floppy Drive                                        1               20             20             6
                              Panasonic CD ROM                                    1               38             38            12
                              SMC Network Card                                    1               88             88            28
                              4.3Gb  HD                                           2              167            334           106
                              64 Mb Memory                                        2              238            476           151
                              VGA Card Dell                                       1               80             80            25
                              Lotus Notes Installation                            1            3,000          3,000         1,000
                              US Robotics Sportster Modem 28                      1              127            127            13
                                                                                                           --------        ------
                                                                                                              4,936          1,586
                                                                                                           ========        ======
            NEW SERVER:

  Nov-00                      ATX Server Case                                     1              240          240.00          212

  Aug-00                      Motherboard                                         1              342          342.00          285

  Aug-00                      PIII 800 Processor                                  1              159          159.00          133

  Nov-00                      DIMMS - 64Mb                                        3               69          207.60          183

  Aug-00                      ATI All In Wonder                                   1              105          105.00           88

  Nov-00                      Raid Controller Board                               1              459          459.00          405

  Nov-00                      Quantum Atlas 18.2Gb SCSI Drive                     5              279        1,395.00        1,232

  Nov-00                      HDD Rack for SCSI Drives                            4               45          179.24          158

  Nov-00                      HDD 10Gb                                            1               69           69.00           61

  Nov-00                      52x CDROM                                           1               14           14.00           12

  Nov-00                      Seagate Tapestore 12/24 Gb                          1              610          609.99          539

  Nov-00                      Backup V8 Accelerator                               1              288          287.95          254

  Nov-00                      3 COM Network Boar                                  1               79           79.00           70
                                                                                                            --------       ------
                                                                                                               4,147        3,633
                                                                                                            ========       ======

                                                                                                 TOTAL
                                                                                                 VALUE        15,874        6,300
                                                                                                            ========       ======
</TABLE>

                                       50
<PAGE>
<TABLE>
<CAPTION>

INTEGRAL VISION UK                                        COMPUTER EQUIPMENT                          (0060)          AUGUST-2001
------------------                                   -----------------------------------                              -----------
Worksheet List
------------------
                                                                                   MONTHS
                                                                                     DEP
ACQUIRED          DESCRIPTION                         SUPPLIER                     TO DATE             COST            SALE PRICE
------            -----------                         ---------                    ------            ---------         --------
<S>               <C>                                 <C>                          <C>               <C>               <C>
July 96           QMS Laser printer                   BITS                            60              1,925.00           100.00
Nov 98            Stylus Colour 740-1440 Ink Jet      CHS                             33                167.00            75.15
Apr-00            Seikosha CDP-2000 CD printer        Micro Peripherals               15                257.00           192.75

Jan 96            Six portables - ONE OF THESE        Dell computers                  60             17,256.01           200.00

Jul 99            Dell Lap Tops - PR & AH             Dell computers                  25              3,650.00         2,129.17
Aug-99            Modems & PCMICA's for LapTops       Stock Issues                    24                104.00            62.40

Aug-00            FujiFilm FP-1400 Digital Camera     From Stores                     10                245.00           204.17
                                                                                                     ---------           ------

                                                      TOTALS AS AT AUGUST-2001                       23,604.01         2,963.63
                                                                                                     =========         ========
</TABLE>

                                       51
<PAGE>

<TABLE>
<CAPTION>

INTEGRAL VISION UK           UPSTAIRS DEMO AREA                                                           AUGUST-2001
------------------           ------------------                                                           -----------
Worksheet List
--------------
                                                                                 UNIT        TOTAL
ITEM                         DESCRIPTION                            QUANT.       VALUE       VALUE        SALE PRICE
----                         -----------                            ------       -----       -----        ----------
<S>                          <C>                                    <C>          <C>       <C>            <C>

MONITORS                      VM920                                   1             211      211.00            21.10
                              Electrohome Monitor 1440                1          403.75      403.75            40.38

                              IBM G70                                 1              70       70.00            49.00

                              21"  Iiyama Vision master - From TW     1            1300    1,300.00           130.00

CAMERAS                       JAI Progressive Scan                    1             742      742.00            618.33

LENSES                        25mm lens                               1              50       50.00

                              50mm lens                               2              50      100.00            10.00

                              16mm Lens                               1              40       40.00             4.00

                              12.5mm lens                             1              50       50.00             5.00

                              8.5mm lens                              1              35       35.00             3.50

                              18 - 108 lens                           1             142      142.00            14.20

                              12.5 - 75 lens 200m                     3              98      294.00            29.40

                              2x extender                             2              35       70.00             7.00

                              4" telephoto                            1             135      135.00            13.50

MISC:                         Rollerball                              2              45       90.00             9.00

                              Mice                                    3              49      147.00            14.70

                              Keyboard                                5              45      225.00            22.50

                              CDI light bba P                         1            1500    1,500.00          150.00

                              A3 lightbox                             1             140      140.00            14.00

                              Schott light source                     1             250      250.00            25.00

                              Fostec light source                     1             550      550.00            55.00

                              Dennard spot light                      1             175      175.00            17.50

                              Kaiserstand (1 with W.E.)               2             211      422.00            42.20

                              Ledu lamp                               1              97       97.00             9.70

                              Tripods                                 2              20       40.00             4.00

                              Alrad Power Supply                      1             800      800.00            80.00

                              XYZ Stage - top missing                 1            2307    2,307.00           230.70

                              PC Vision                               1              75       75.00             7.50

                              ITI Cards                               2             560    1,120.00           112.00

HDD:                          MISC                                    3              89      267.00            97.90

Magic Matrox Jumpstart Kit    116RO19606042 - In Production           1            4288    4,288.00           428.80

Teach Three Stepper Box       2-000469 - In Service Misc.             1            3134    3,134.00           313.40

                              Trigger Box                             1                                        50.00

                              Omron PLC                               1                                       100.00

                              Motor Controller                        1                                       500.00

                              Demo Cabinet Closed                     1                                       400.00

                              Demo Cabinet Open                       1                                     1,200.00

TEST BOX FROM B LORENZETTO:   19" Torch Box ~ 16mb VGA                1           1,523       1,523         1,218.40
</TABLE>
                                       52
<PAGE>

<TABLE>
<CAPTION>
<S>                          <C>                                   <C>          <C>      <C>              <C>

                              PIII 650                                2             150         300           240.00

                              DIMMS                                   1              69          69            55.36

                              PC Vision                               1           1,125       1,125           900.00

                              Network Card                            1              88          88            29.33
                                                                                           --------         --------

                                                                    GRAND TOTAL           22,374.95         7,277.40
                                                                                          =========         ========
</TABLE>
                                       53
<PAGE>

<TABLE>
<CAPTION>
FIXED ASSETS                                            DEMO AREA DOWNSTAIRS
------------                                            --------------------
Worksheet List                                                                                                     AUGUST-2001
--------------                                                                                                     -----------
ASSET                                                                                               TOTAL
NUMBER       ITEM                 DESCRIPTION          SERIAL NO          QUANTITY      COST        VALUE           SALE PRICE
------       ----                 -----------          ---------          --------      ----        -----           ----------
<S>          <C>                  <C>                  <C>                <C>         <C>          <C>             <C>
             Brewery Box                               116R019605039          1        2,000        2,000             200.00

IV00110      Kaiser Stand                                                     1          220          220              22.00

             Monitor              Hitachi 15 MVX                              1          348          348              34.80

             PC Anywhere
             Box with 52K Modem                                               1                                       400.00

             Keyboard                                                         1                                        10.00

             Mouse                                                            1                                         5.00

                                                                                                  -------           ----------
                                                                                      TOTAL
                                                                                      VALUE         2,568              671.80
                                                                                                  =======           =========
</TABLE>

                                       54
<PAGE>

<TABLE>
<CAPTION>
INTEGRAL VISION UK                                    FIXTURES & FITTINGS                        (0040)            AUGUST-2001
------------------                                    -------------------                                          ------------
                                                      (15% ie 6.67years ie 80 months)
Worksheet List
--------------
                                                                               MONTHS DEP           117
ACQUIRED          DESCRIPTION                         SUPPLIER                 TO DATE             COST             SALE PRICE
--------          -----------                         --------                 -------             ----             ----------
<S>               <C>                                 <C>                      <C>          <C>                 <C>
                  Chairs & Tables                                                                                1,500.00
                  Filing Cabinets and Bookcases
                   - min of 15                                                                                     500.00
Mar 95            Blinds                              Concord Blinds              76           263.05               13.15
Mar 95            Fire extinguishers                  MK Fire                     76           635.00               31.75
Mar 95            Fire extinguishers                  MK Fire                     76           140.64                7.03
Mar 95            13 bays rivetier                    Action                      76           955.00               47.75
Mar 95            4 bays rivetier                     Action                      76           300.00               15.00
April 95          Cable master                        Cablemaster                 75           313.00               19.56
April 95          Telephone system                    Datasharp                   75        10,198.30              637.39
                  Additional security
April 95                                              BSS                         75         1,171.00               73.19
April 95          Telephone system                    Datasharp                   75         2,097.02              131.06
April 95          3 bays rivetier                     Action                      75           307.64               19.23
June 95           Shelves/fixing                      Rittal                      73         1,166.84              102.10
Mar 96            Bike shed                                                       64           511.71              102.34
May 96            Safe for stores                     Neat ideas                  62           349.00               78.53
Oct 98            Video Recorder                      PH Credit Card              32            99.99               59.99
Feb-00            Cisco Router/Site Survey            K& B Computers              17         2,180.00            1,716.75
Mar-00            2 Chairs + 1 Table (Reception)      Inter County                16           363.00              290.40
Mar-00            1 Table                             Inter County                16            85.00               68.00
Aug-00            Voice Mail System                   Anglia Telecom              11         3,095.00            2,669.44
Aug-00            Franking Machine - SMILE            Ascom Hasler                11           699.00              602.89
Sep-00            Instapak Quick Bag Warmer           MacFarlane                  10           299.00              261.63
Sep-00            Cupboards/Filing Cabinets           Pedder & Summers            10           504.97              441.85
                                                                                            ---------            --------

                                                      TOTAL AS AT AUGUST-2001               25,471.11            9,389.03
                                                                                            =========            ========
</TABLE>

                                       55
<PAGE>

<TABLE>
<CAPTION>

INTEGRAL VISION UK                             LEASEHOLD IMPROVEMENTS                       (0110)                     AUGUST-2001
------------------                             ----------------------                        ------                    -----------
                                               (33% ie 3 years ie 36 months)
Worksheet List
--------------
                                                                         MONTHS
                                                                           DEP               10
ACQUIRED          DESCRIPTION                   SUPPLIER                 TO DATE             COST             DEP       SALE PRICE
--------          -----------                   --------                 -------             ----             ----
<S>               <C>                           <C>                      <C>                  <C>             <C>
                  Sign at Front of
Sep-00            Building                      Denmark Signs            10                  1,725.00         1,725.00     0.00
                                                                                             --------         --------     ----

                                                                                             1,725.00         1,725.00     0.00
                                                TOTAL AS AT AUGUST-2001                      ========         ========     =====
</TABLE>
                                       56
<PAGE>

<TABLE>
<CAPTION>
INTEGRAL VISION UK                                         CAPITAL SOFTWARE - 0500                                     AUGUST-2001
------------------                                         -----------------------                                     -----------
Worksheet List                                             (Five years ie 60 months)
--------------
                                                                                   MONTHS DEP           75
ACQUIRED          DESCRIPTION                              SUPPLIER                 TO DATE             COST            SALE PRICE
--------          -----------                              --------                 -------             ----            -----------
<S>               <C>                                      <C>                      <C>                 <C>             <C>
Feb 95            Microsoft mail license/install.          Net connect                 60                1,071.00            0.00
April 95                                                   Adept scientific            60                  793.85            0.00
May 95            TG Cad                                   Greymatter                  60                1,080.00            0.00
May 95            AutoCAD                                  Stanford marsh              60                1,490.00            0.00
June 95           PVCS Tracker for windows                 Intersolv                   60                  708.00            0.00
July 95           Businessmaster                           Barclays                    60                  575.00            0.00
July 95           User licenses for Word & Excel           Global microsystems         60                5,132.58            0.00
Aug 95            'May cash expenses'                                                  60                  524.55            0.00
Aug 95            Framemaker for windows                   Mekon                       60                  550.00            0.00
Aug 95            NW NFS v 2.1                             Azlan                       60                1,255.00            0.00
Sept 95           NW Net UG any 100 user                   CHS                         60                1,390.00            0.00
Sept 95           NW Net NFS                               CHS                         60                1,596.00            0.00
Nov 95            Node LAN for windows                     PR Aug cc                   60                  447.95            0.00
Feb 96            Q Pulse 3 user network                   Adept sxientific            60                  759.00            0.00
Mar 96            Connect 2 gateway                        Net connect                 60                1,265.00            0.00
July 96           Virus software                           S & S                       58                2,184.00           72.80
Aug 96            Windows licenses (55)                    CHS                         57                3,542.00          177.10
Aug 96            Windows NT upgrades (5)                  Global                      57                1,040.00           52.00
Aug 96            Visual C++ upgrades/subscriptions        Global                      57                6,063.00          303.15
Aug 96            MS DOS tools                             CHS                         57                  742.00           37.10
Sept 96           Windows NT license                       CHS                         56                  710.00           47.33
Sept 96           Windows NT license                       CHS                         56                  710.00           47.33
Sept 96           MS DOS tools                             CHS                         56                  106.00            7.07
Sept 96           MS DOS tools                             CHS                         56                  106.00            7.07
                  V Basic CD ROM                           CHS                         45                  823.70          205.93
                  Dr Solomon's                                                         45                  598.00          149.50
Feb-98            Licenses                                 CHS                         41                  699.50          221.51
Feb-98            Licenses                                 CHS                         41                1,264.00          400.27
Feb-98            OEM NT V4                                CHS                         41                1,330.00          421.17
Feb-98            Licenses                                 CHS                         41                1,675.97          530.72
Feb-98            Visual C++ Pro 5.0                       CHS                         41                  163.60           51.81
Feb-98            Proteus 4 level 3                        Labcenter                   41                1,329.00          420.85
Feb-98            Windows Graphics Astound 2.1 V4          Software Warehouse          41                  145.85           46.19
Feb-98            Company A/c's Windows upgrade            Sage                        41                   54.00           17.10
Feb-98            Notes Domino Server V4.6                 Trilogy Computers           41                3,066.00          970.90
Jun-98            Act Licenses for Lotus Notes *10         Trilogy Computers           35                1,560.00          650.00
Sep-98            Mathcad 8.0 Professional Upgrade         Adept Scientific            33                  159.00           71.55
Oct-98            Vstudio Ent Edition 6.0 Licenses         CHS                         33                4,251.25        1,913.06
Nov-98            Vstudio Ent Edition 6.0 CD               CHS                         32                1,005.00          469.00
Nov-98            Visual Basic 5.0                         Forefront                   32                  775.00          361.67
</TABLE>

                                       57
<PAGE>

<TABLE>
<CAPTION>
INTEGRAL VISION UK                                      CAPITAL SOFTWARE - 0500   (CONT'D)                          AUGUST-2001
------------------                                      ----------------------------------                          -----------
Worksheet List                                          (Five years ie 60 months)
--------------
                                                                                    MONTHS DEP          75
ACQUIRED          DESCRIPTION                           SUPPLIER                    TO DATE             COST       SALE PRICE
--------          -----------                            --------                 -------               ----       -----------
<S>               <C>                                   <C>                      <C>                 <C>          <C>
Jan-99            Paint Shop Pro 5 licenses                                                 29          443.17           228.97
Feb-99            Robohelp HMTL 7.0                     System Science                      28          304.00           162.13
Jan-99            Dr. Solomons AV License 20 User       SMC                                 29          861.00           444.85
Feb-99            Diskeeper - 10 Users                  MISCO                               28          277.95           148.24
Mar-99            Winzip v7 - 20 Users                  User Interface                      28          335.00           178.67
Mar-99            MS Windows NT Workstation - 10        WCS Power PC                        28          598.00           318.93
Feb-00            AutoCAD - T.W.                        Cadline                             17          855.99           613.46
Mar-00            Internet Dreamweaver V3               Software Warehouse                  16          228.99           167.93
Apr-00            Mathcad 2000/Image Processing         Adept Scientific                    15          700.00           525.00
Aug-00            NT/Win98/Office97 License             CA International                    11          444.00           362.60
Nov-00                                                  Proteus PCB
                  Labcenter                             Upgrade                              8          390.00           338.00
Oct-00            Made to Manage                        4Front Consulting                    9        8,625.00         7,331.25
                  Made to Manage - Training for
                   5 People - still to be agreed                                                                       3,750.00
                                                                                                     ---------         --------
                                                        TOTAL AS AT AUGUST-2001                      66,803.90        22,222.19
                                                                                                     ==========       ==========
</TABLE>

                                       58
<PAGE>

<TABLE>
<CAPTION>
INTEGRAL VISION UK                                       TOOLING & EXHIBITION                                          AUGUST-2001
------------------                                       --------------------                                          -----------
                                                         (20% ie 5 years ie 60 months)
Worksheet List
--------------

                                                                                  MONTHS DEP              99
ACQUIRED          DESCRIPTION                            SUPPLIER                 TO DATE                 COST         SALE PRICE
--------          -----------                            --------                 -------                 ----         -----------
<S>            <C>                                    <C>                     <C>                        <C>           <C>

               TOOLING EQUIPMENT                      (0070)
               -----------------

                  Andy Smith's and Andy Harrison's                                                                        500.00
                  Andy Mucha's                                                                                            500.00
                  Will Everitt's & Nasir's                                                                                500.00
                                                                                                         --------       --------

                                                                                TOTAL TOOLING                0.00       1,500.00
                                                                                                         =========      ========

               EXHIBITION EQUIPMENT                   (0100)
               --------------------

Jan 99            Phillips Hopper SV10 Projector         Av Northampton                   29             3,179.00       1,642.48
Mar-00            Coffee Machine                         Luis Sousa Expenses              16               247.85         181.76
                  All Other Exhibition Equipment                                                                          900.00

                                                                                                         --------       --------
                                                                              TOTAL EXHIB. EQUIP         3,426.85       2,724.24
                                                                                                         =========      ========
</TABLE>

                                       59
<PAGE>

                       SCHEDULE 1.K.(1) - CUSTOMER ORDERS
                           (See page 3 for discussion)

(1) Customer Orders to be transferred

<TABLE>
<CAPTION>

CUSTOMER ORDER #     IV ORDER #        UNIT PRICE       QTY      TOTAL PRICE
----------------     ----------        ----------       ---      -----------
<S>                  <C>               <C>              <C>     <C>
601570 Gillette        107             BPS 1,900         1        BPS 1,900
12248/1021 Dimaco       98             Euro 10,562       1      Euro 10,562
</TABLE>

Gillette may be shipped and final invoiced by Closing

(2) Buyer's Orders that are not being transferred, but are subject to the
Manufacturing Agreement between Buyer and Seller

<TABLE>
<CAPTION>
DIMACO ORDER #    IV ORDER #       UNIT PRICE       QTY      TOTAL PRICE
--------------    ----------       ----------       ---      -----------
<S>               <C>              <C>              <C>      <C>
12014/1015        1004             Euro 10,665       3        Euro   31,995
12037/1016        1022             Euro   8,175      2        Euro   16,350
12139/SOPR        1107             Euro   7,700      16       Euro 123,200
</TABLE>

                                       60
<PAGE>

                        SCHEDULE 1.K(2) - PURCHASE ORDERS
                           (See page 3 for discussion)

<TABLE>
<CAPTION>
            SUPPLIER                PURCHASE ORDER       VALUE IN L
            --------                  NUMBER
<S>                               <C>                       <C>
Actebis                           0067                       1,063.50
FirstSight Vision                 0066                       3,839.00
FirstSight Vision                 0062                       7,685.00
FirstSight Vision                 0027                      14,280.00
</TABLE>

                                       61
<PAGE>

                   SCHEDULE 4.C - ALLOCATION OF PURCHASE PRICE
                           (see page 5 for discussion)

                 To be provided by Buyer and approved by Seller

                                       62
<PAGE>

                    SCHEDULE 6.A - NON-COMPETITION AGREEMENT
                           (See page 5 for discussion)

                            NON-COMPETITION AGREEMENT

      Agreement made this 24th day of August, 2001 by and between n.v. DIMACO
s.a., a Belgium corporation of Parc Scientifique Gembloux-Namur, 30 Ph. Lejeune,
5032 Isnes, Belgium ("Buyer"), Integral Vision, Inc., a Michigan corporation of
38700 Grand River Avenue, Farmington Hills, Michigan 48335 ("Parent"), Integral
Vision Ltd., an English corporation of Unit 8/9 Railton Road, Woburn Rd,
Industrial Estate, Kempston, Bedford MK42 7PW, a wholly owned subsidiary of
Parent ("Subsidiary") ("Parent" and "Subsidiary" sometimes collectively referred
to as "Seller")(Seller herein called "Restricted Party").

                                    Recitals

      WHEREAS, Buyer has purchased certain assets of the Seller associated with
its business of developing and manufacturing a certain Full Bottle Inspection
System, a certain Code and Label Inspection System, a certain Keg Inspection
System, a certain System for Tobacco Instrumentation, a certain Inspection
System for Web Based Print Quality and Solar a Cell Inspection System (the
"Business") pursuant to an Asset Purchase Agreement dated August 24, 2001
("Purchase Agreement");

      THEREFORE, for good and valuable consideration as hereinafter set forth,
it is agreed as follows:

      1.    Covenant Not to Compete. For a period of five (5) years from the
            date of this agreement the Restricted Party will not separately or
            in association with others, establish, engage in or become
            interested, directly or indirectly, as owner, partner, shareholder,
            consultant or advisor or otherwise in the development and
            manufacture of a Full Bottle Inspection System, except Restricted
            Party may own stock in publicly held companies so long as the
            Restricted Party own less than 5%. The Full Bottle Inspection System
            shall mean the Intelicheck system developed only to inspect clear
            PET bottles at the end of a filling line, and which performs all of
            the following checks: label identification (i.e., is it the correct
            label), label placement, fill level, cap colour, cap position, cap
            skew and tamper evident seal.

      2.    Consideration. The consideration for this Covenant Not to Compete
            shall be included in the Purchase Price payable pursuant to the
            Purchase Agreement.

      3.    Injunctive Relief. In the event the Restricted Party breaches the
            covenant not to compete contained herein, the parties agree that
            Buyer lacks an adequate remedy at law for breach by the Restricted
            Party of the provisions of this Agreement and the Buyer shall be
            entitled to obtain, in addition to any other remedies to which it
            may be entitled at law or in equity, injunctive relief (including
            temporary and preliminary injunctive relief) against the breaching
            party enjoining or restraining such party from continuing such
            breach.

                                       63
<PAGE>

            Nothing herein contained shall be construed as prohibiting Buyer
            from pursuing or obtaining any other or additional remedies
            available at law or in equity for such breach against any or all of
            the Restricted Party in any court of competent jurisdiction, and
            Buyer shall have such additional relief, including but not limited
            to money damages, as the court may deem appropriate. All remedies
            shall be cumulative and not exclusive.

The parties have executed this agreement on the date written above.

RESTRICTED PARTY:                                 BUYER:
Integral Vision, Inc.                             n.v. DIMACO s.a.

---------------------------------          ------------------------------------
By: Charles J. Drake                       By:
Its: Chairman                              Its:

Integral Vision Ltd

---------------------------------
By:  Charles J. Drake
Its: Director

                                       64
<PAGE>

                       SCHEDULE 6.C - ASSIGNMENT OF LEASE
                           (See page 6 for discussion)

                            ASSIGNMENT OF UNDERLEASE
                          AND CONSENT OF THE LANDLORDS

         The undersigned, INTEGRAL VISION LTD, an English corporation of 12
Railton Road, Woburn Road Industrial Estate, Kempston, Bedford MK42 7PW
("Assignor") does hereby assign, transfer and convey to n.v. DIMACO s.a., a
Belgium corporation of Parc Scientifique Gembloux-Namur, 30 Ph. Lejeune, 5032
Isnes, Belgium ("Assignee"), for good and valuable consideration, receipt of
which is acknowledged, all of its right, title and interest in and to that
certain Underlease dated August 18, 1995 between Assignor as Tenant and Sapreco
(UK) Limited of 21 St. Thomas Street, Bristol BS1 6JS as "Landlord", relative to
Units 8 and 9, Wolseley Business Park, Kempston, Bedford ("Underlease"),
including any security deposit. The current rent is _________ per annum.
Assignor warrants that the Underlease as to Units 8 and 9 is not in default and
all rent and invoiced obligations of Landlord and Tenant for Units 8 and 9 are
current. Uninvoiced obligations of Assignor (Tenant) for Units 8 and 9 will be
prorated between Assignor and Assignee. Landlords do hereby release Assignor
from all obligations of the Underlease for Units 8 and 9 arising from and after
the date hereof. Tenant's rights to full performance of all the terms,
conditions, and covenants of the Underlease for Units 8 and 9 remain in effect
regardless of this Assignment.

         Assignee shall abide by the same provisions as set forth in the
Underlease as to Unit Units 8 and 9. The signatures of Landlords below shall
attest to their consent to this Assignment and acceptance of Assignee as the
Tenant for Units 8 and 9, notwithstanding any prior prohibition against
assignment in the Underlease or Superior Lease.

     IN WITNESS WHEREOF, the undersigned have executed this Assignment on this
____ day of________, 2001.

Approved and Agreed:

Landlord (Underlease):
Sapreco (UK) Limited                       Integral Vision Ltd

---------------------------------          ------------------------------------
By:                                        By:      Charles J. Drake
   ------------------------------          Its:     Director
Its:
   ------------------------------

Landlord (Superior Lease):                  Assignee:
Kalamati Enterprises Limited                n.v. Dimaco s.a.
------------------------------              ---------------------------------
By:                                         By:
   ------------------------------              ---------------------------------
Its:                                        Its:
   ------------------------------              ---------------------------------

                                       65
<PAGE>

                       SCHEDULE 6.C-1 - SUBLEASE OF LEASE
                           (See page 6 for discussion)

                             SUBLEASE OF UNDERLEASE

         The undersigned, INTEGRAL VISION LTD, an English corporation of 12
Railton Road, Woburn Road Industrial Estate, Kempston, Bedford MK42 7PW
("Subleassor") does hereby Sublease, to n.v. DIMACO s.a., a Belgium corporation
of Parc Scientifique Gembloux-Namur, 30 Ph. Lejeune, 5032 Isnes, Belgium
("Subleasee"), for good and valuable consideration, receipt of which is
acknowledged, all of its right, title and interest in and to that certain
Underlease dated August 18, 1995 between Subleassor as Tenant and Sapreco (UK)
Limited of 21 St. Thomas Street, Bristol BS1 6JS as "Landlord", relative to Unit
8, Wolseley Business Park, Kempston, Bedford ("Underlease"), including any
security deposit. The current rent is _________ per annum. Subleassor warrants
that the Underlease as to Unit 8 is not in default and all rent and invoiced
obligations of Landlord and Tenant for Unit 8 are current.

         Uninvoiced obligations of Subleassor (Tenant) for Unit 8 will be
prorated between Subleassor and Subleasee.

         Subleasee shall abide by the same provisions as set forth in the
Underlease as to Unit 8.

     IN WITNESS WHEREOF, the undersigned has executed this Assignment on this
24th day of August, 2001.

Approved and Agreed:

                                           Integral Vision Ltd
                                           ------------------------------------
                                           By:      Charles J. Drake
                                           Its:     Director

                                           n.v. Dimaco s.a.

                                           By:
                                               ---------------------------------
                                           Its:
                                               ---------------------------------

                                       66
<PAGE>

                     SCHEDULE 6.D - MANUFACTURING AGREEMENT
                           (See page 6 for discussion)

         THIS MANUFACTURING AGREEMENT, dated as of August 24, 2001 (the
"Effective Date"), is made between Integral Vision, Inc., a Michigan corporation
("Integral Vision"), with offices at 38700 Grand River, Farmington Hills,
Michigan 48335-1563 and n.v. DIMACO s.a., a Belgium corporation ("Dimaco") of
Parc Scientifique Gembloux-Namur, 30 Ph. Lejeune, 5032 Isnes, Belgium and DIMACO
UK Ltd., a United Kingdom corporation (collectively "Dimaco").

                                    RECITALS

         A. Integral Vision is selling the Business in the United Kingdom to
n.v. Dimaco s.a. (the "Purchase") pursuant to the terms and conditions of an
Asset Purchase Agreement between n.v. Dimaco s.a. and Integral Vision dated
August 24, 2001 (the "Purchase Agreement").

         B. Prior to the Purchase, Integral Vision provided certain
manufacturing services in the United Kingdom to support Integral Vision's
inspection systems for the optical disc industry including an Identification
Code Verification System, a Screen and Offset Printed Label Inspection System,
and an Optical Disc Orientation System (the "Optical Disc Business").

         C. Integral Vision has three (3) pending orders in the Business which
are not being sold under the Purchase Agreement but which need to be
manufactured ("Pending Orders"). See Schedule 1.K.(1), sub (2), of the Purchase
Agreement.

         D. Integral Vision desires and Dimaco is willing to provide certain
manufacturing services for Integral Vision's Optical Disc Business and for the
Pending Orders.

                                   AGREEMENTS

1.       Manufacturing Services Provided By Dimaco. Subject to the terms and
         conditions provided herein, Dimaco shall provide Integral Vision with
         Manufacturing Services (hereafter referred to as "Services" or
         "Service") on an interim basis, consisting of the manufacture and
         assembly of products for the Optical Vision Business and for Pending
         Orders.

         A.       On receipt of a customer purchase order for either the Optical
                  Vision Business or Pending Orders, Integral Vision will
                  request Dimaco to manufacture the system ordered by the
                  customer.

         B.       Dimaco will work with Integral Vision's sales agent in order
                  to define the system that has been ordered.

         C.       Dimaco will then take full responsibility for procurement,
                  building, testing and shipping of the equipment according to
                  the time scales agreed upon by the parties hereto at the time
                  of order confirmation. Installation and commissioning of
                  orders

                                       67
<PAGE>
                  in the Optical Disc Business will be the responsibility of
                  Integral Vision and for the Pending Orders will be the
                  responsibility of Dimaco.

         D.       Integral Vision may request Services that it desires for
                  Dimaco to perform within commercially reasonable time prior to
                  the performance of such Services. Upon request, Dimaco will
                  take those actions which it reasonably believes necessary to
                  perform the Services.

2.       Fees and Additional Charges. Integral Vision agrees to pay for the
         Services received hereunder as follows:

         A.       Payment for Manufacturing Services. For the manufacturing
                  services referenced in section 1, upon completion of the
                  order, Dimaco will invoice Integral Vision for the material,
                  at cost, plus a commission of 12.5% of the value of the
                  invoice to be billed to the customer for whom the order was
                  placed. Dimaco will bill Integral Vision for the Services on a
                  monthly basis and such amount shall be paid by Integral Vision
                  within 30 days of invoice.

         B.       Optical Disc Business. For the Optical Disc Business,
                  invoicing, collection of invoices and credit control will be
                  handled by Integral Vision.

         C.       Pending Orders. For the Pending Orders, after the
                  manufacturing is complete, Integral Vision will bill Dimaco at
                  the previously agreed price. This will be paid under strict
                  net 45 day terms. Dimaco is totally responsible for the
                  collection of invoices and credit control from its customers
                  for the Pending Orders.

         D.       Payment Option by Integral Vision. Under the terms of the
                  Purchase Agreement, Dimaco owes certain additional sums to
                  Integral Vision. Integral may offset any funds owed to Dimaco
                  under this manufacturing agreement against the sums still due
                  Integral Vision by Dimaco until such sums are paid in full.

3.       Warranty. For all Manufacturing Services, Dimaco will warrant its
         workmanship for up to one year from the time the services are
         performed. In the event any product is determined to be defective due
         to workmanship in Manufacturing Services, Dimaco will repair or replace
         the product.

4.       Term. This Agreement shall be effective on August 24, 2001 or such
         other date as agreed upon by the parties ("Effective Date") and can be
         terminated by either party upon thirty (30) days written notice.

5.       Force Majeure. Neither party shall be liable to the other if such
         party's fulfillment or performance of any terms or provisions of this
         Agreement is delayed or prevented by revolution or other civil
         disorders, wars, act of enemies, strikes, electrical equipment
         availability failures, labor disputes, fires, floods, act of God,
         federal, state, or municipal action, statute, ordinance or regulation,
         or, without limiting the foregoing, any other causes not within its
         reasonable control, and which by the exercise of reasonable

                                       68
<PAGE>
         diligence it is unable to prevent, whether of the class of causes
         hereinbefore enumerated or not.

6.       Miscellaneous.

         A.       Governing Law. This Agreement shall be construed in accordance
                  with the internal laws of the State of Michigan, without
                  regard to choice of law.

         B.       Limitations. Nothing in this Agreement is to be construed as
                  an assignment or grant of any right, title or interest in any
                  trademark, copyright, design or trade dress or patent right.

         C.       Parties in Interest. This Agreement may be assigned to a
                  parent or subsidiary of a party, or to a third party acquiring
                  substantially all of the assets of a party, provided that
                  prior to such assignment the other party has granted its
                  written consent to the assignment, and further provided that
                  neither party may unreasonably withhold its consent to a
                  request for assignment and by Dimaco to DIMACO UK Ltd. Except
                  as provided above, this Agreement may not be assigned to a
                  third party.

         D.       Entire Agreement. This Agreement is the entire agreement
                  between the parties in connection with the matters set forth
                  herein. This Agreement may only be amended in writing signed
                  by both parties.

         E.       Notices. All notices and communications required or permitted
                  under this Agreement shall be in writing and any communication
                  or delivery hereunder shall be deemed to have been duly made
                  if personally delivered, or if mailed by first class mail,
                  postage prepaid, or by air express service, with charges
                  prepaid and addressed as follows:

                              If to Integral Vision:

                              Integral Vision, Inc.
                              38700 Grand River
                              Farmington Hills, MI 48335-1563
                              Attn.: Charles J. Drake, Chairman of the Board

                              If to Dimaco:

                              n.v. Dimaco s.a.
                              Parc Scientifique Gembloux-Namur
                              30 Ph. Lejeune, 5032
                              Isnes, Belgium

                  Either party may, by written notice so delivered to the other,
                  change the address to which future delivery shall be made.

                                       69
<PAGE>

                  F. No Reliance. No third party is entitled to rely on any of
         the representations, warranties and agreements of the parties contained
         in this Agreement. The parties assume no liability to any third party
         because of any reliance on the representation, warranties and
         agreements of the parties contained in this Agreement.

       IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first written above.

                                 Integral Vision, Inc.

                                 By:  ______________________________
                                      Charles J. Drake, Chairman of the Board

                                 n.v. DIMACO s.a.

                                 By:
                                    ---------------------------------

                                 Its:
                                    ---------------------------------

                                 DIMACO UK Ltd.

                                 By:
                                    ---------------------------------

                                 Its:
                                    ---------------------------------

                                       70
<PAGE>
                     SCHEDULE 12.C.(1) - REQUIRED APPROVALS
                          (See page 10 for discussion)

Approval by Board of Directors

                                       71
<PAGE>
                      SCHEDULE 12.D - FINANCIAL STATEMENTS
                          (See page 11 for discussion)
                                  See Attached

                                       72
<PAGE>

          SCHEDULE 12.F - DISCLOSURE OF CHANGES IN CONDUCT OF BUSINESS
                          (See page 11 for discussion)

                                      NONE

                                       73
<PAGE>

                      SCHEDULE 12.H - ADDITIONAL CONTRACTS
                          (See page 12 for discussion)

<TABLE>
<CAPTION>
<S>                              <C>                   <C>
Lex Vehicle Partners             Seat Leon (auto)      BPS 457.60 per month
--------------------------------------------------------------------------------
JSR Equipment Leasing            2 water coolers       BPS   32.50 per month
--------------------------------------------------------------------------------
Xerox Finance                    Photocopy/Fax         BPS 157.33 per month
--------------------------------------------------------------------------------
</TABLE>

                                       74
<PAGE>

               SCHEDULE 12.I - LIST OF PROPERTY USED BUT NOT OWNED
                          (See page 12 for discussion)

        On Schedule 12.Q, see "Intellectual Property Not Owned by Seller"

                                       75
<PAGE>

                       SCHEDULE 12.L - CLAIMS OR DISPUTES
                          (See page 13 for discussion)

         Seller owes certain payments to the U.K. National Insurance system for
periods when some of Seller's employees who were U.K. citizens were employed in
the United States. Seller acknowledges that Buyer is not assuming these
liabilities, and Seller will indemnify Buyer against any expense or liability
arising from these matters.

                                       76
<PAGE>
                        SCHEDULE 12.O - PROGRESS PAYMENTS
                          (See page 13 for discussion)

                                      NONE

                                       77
<PAGE>

                      SCHEDULE 12.Q - INTELLECTUAL PROPERTY
                           (See page 14 for discussion)

(1) SEE ALSO SCHEDULE 1.H

(2) INTELLECTUAL PROPERTY OWNED BY SELLER

         Application Codes for the Full Bottle Inspection System, the Code and
Label Inspection System, the Keg Inspection System, the System for Tobacco
Instrumentation, an Inspection System for Web Based Print Quality, and a Solar
Cell Inspection System.

(3) ADDITIONAL INTELLECTUAL PROPERTY OWNED BY SELLER

         Inventions, discoveries, improvements, designs, prototypes, trade
secrets, manufacturing and engineering drawings, process sheets, specifications,
bills of material, formulae and secret and confidential processes, know-how,
technology, and other industrial property (whether patentable or unpatentable)
used exclusively in the Business, including bills of material, assembly drawing,
mechanical drawing, application software, and wiring diagrams for products.

See Exhibit 12.Q-A for Assignment of Intellectual Property

(4) INTELLECTUAL PROPERTY NOT OWNED BY SELLER

         Certain Intellectual Property, including but not limited to the
following, is not transferable by Seller:

NT 4.0

PcAnywhere

Intel IPL (Image Processing Library which is public domain)

CVB Image Manager

CVB Minos

POSSIBLE INFRINGEMENT CLAIMS

         The Lemelson Foundation is the owner of numerous vision patents and
seems to take the position that anything dealing with machine vision infringes
on their patents. Although there is serious question about the validity of
Lemelson's patents, Lemelson has brought claims and

                                       78
<PAGE>
lawsuits, and has had some success, against end users of machine vision
products. According to Lemelson, any of these end-user's use of machine vision
products could be infringing on Lemelson's patents. There is currently major
litigation by certain machine vision manufacturers attacking the validity of
Lemelson's patents. Seller makes no warranty nor shall Seller indemnify Buyer as
to any Lemelson claim or derivative action.

                                       79
<PAGE>

                                 EXHIBIT 12.Q-A
                      ASSIGNMENT OF INTELLECTUAL PROPERTIES

       THIS ASSIGNMENT OF INTELLECTUAL PROPERTIES, effective the 24th day of
August, 2001, is between Integral Vision, Inc., a Michigan corporation
("Assignor"), and n.v. DIMACO s.a., a Belgium corporation of Parc Scientifique
Gembloux-Namur, 30 Ph. Lejeune, 5032 Isnes, Belgium ("Assignee").

                                    RECITALS

       A.     The Assignor and Assignee are parties to a certain Asset Purchase
              Agreement dated August 24, 2001 ("Asset Purchase Agreement"). All
              capitalized terms not otherwise defined in this Assignment shall
              have the meanings set forth in the Asset Purchase Agreement.

       B.     The Assignor is the owner of all right, title and interest in and
              to certain intellectual properties relating to developing and
              manufacturing a Full Bottle Inspection System, a Code and Label
              Inspection System, a Keg Inspection System, a System for Tobacco
              Instrumentation, an Inspection System for Web Based Print Quality,
              and a Solar Cell Inspection System ("Business").

       C.     The Assignor desires to assign all Assignor's right, title and
              interest in these properties to the Assignee and the Assignee
              desires to accept such assignment.

                                   AGREEMENTS

         In consideration of the recitals and mutual agreements which follow and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Assignee and the Assignor agree as follows:

       1. Assignment of Application Codes. The Assignor assigns and contributes
to the Assignee, and the Assignee assumes, all Assignor's right, title and
interest worldwide in and to the application codes listed in Schedule A attached
hereto.

       2. Assignment of Trade Secrets. The Assignor assigns and contributes to
the Assignee, and the Assignee assumes, all of the Assignor's right, title and
interest worldwide in

                                       80
<PAGE>
and to all trade secrets, unfiled patent or invention disclosures, confidential
information and know-how related solely to the Business.

          3. Assignment of Accrued Enforcement Rights. The Assignor assigns and
contributes to the Assignee, and the Assignee assumes, any of Assignor's causes
of action for infringement of any of the intellectual properties specified in
Paragraphs 1 and 2 above that may have accrued prior to the execution date of
this Agreement.

         4. Further Assurances. The Assignor shall provide the Assignee, its
successors, assigns or other legal representatives, cooperation and assistance
at the Assignee's reasonable request and expense (including the execution and
delivery of any and all affidavits, declarations, oaths, exhibits, assignments,
powers of attorney or other documentation as may be reasonably required): (1) in
the preparation and prosecution of any applications for patents or registration
of the intellectual property assigned pursuant to this Assignment; (2) in the
prosecution or defense of any interference, opposition, infringement or other
proceedings that may arise in connection with any of the intellectual property
assigned pursuant to this Assignment; and (3) in the implementation or
perfection of this Assignment. The Assignor agrees that it shall not assist or
encourage, through action or inaction, any challenge to the validity,
enforceability or ownership of the intellectual property assigned hereby.

       5. Governing Law. This Agreement shall be governed by the laws of the
State of Michigan, without regards to any conflicts of laws provisions to the
contrary.

                                       81
<PAGE>

       IN WITNESS WHEREOF, we have hereunto set our hands and seal.

                                            For ASSIGNOR, Integral Vision, Inc.:

                                            By:
                                               -------------------------------
                                            Printed Name: Charles J. Drake
                                            Title: Chairman of the Board and CEO

                                            For ASSIGNEE, n.v. DIMACO s.a.

                                            By:
                                               -------------------------------
                                            Printed Name:
                                            Title:

                                       82
<PAGE>

                                   SCHEDULE A

Application Code for Full Bottle Inspection System
Application Code for Code and Label Inspection System
Application Code for Keg Inspection System
Application Code for System for Tobacco Instrumentation
Application Code for Inspection System for Web Based Print Quality
Application Code for Solar Cell Inspection System

                                       83
<PAGE>
                             SCHEDULE 14 - EMPLOYEES
                          (See page 15 for discussion)

          LIST OF EMPLOYEES AGREED TO BE EMPLOYED BY BUYER OR AFFILIATE

                  Caton, Valerie
                  Everitt, Will
                  Harrison, Andy
                  Jenkins, Christina
                  Lane, Peter
                  Mahmood, Nasir
                  Mucha, Andrew
                  Newbury, Molly
                  Smith, Andrew
                  Wesley, Tim

                                       84
<PAGE>

                                  BILL OF SALE

         For good and valuable consideration, receipt of which is hereby
acknowledged, Integral Vision, Inc., a Michigan corporation, of 38700 Grand
River Avenue, Farmington Hills, Michigan 48335, and Integral Vision Ltd, an
English corporation, of Unit 8/9 Railton Road, Woburn Rd., Industrial Estate,
Kempston Bedford MK42 7PW (hereinafter collectively, "Seller"), does hereby
sell, assign, transfer and deliver to n.v. DIMACO s.a., a Belgium corporation of
Parc Scientifique Gembloux-Namur, 30 Ph. Lejeune, 5032 Isnes, Belgium
(hereinafter "Buyer"), all of its right, title and interest in and to the
following and does hereby warrant title to the same:

1.     All Purchased Assets specifically segregated for Buyer's benefit, as
       Purchased Assets and Business are defined in the Asset Purchase Agreement
       between the parties dated August 24, 2001 ("Agreement") but excluding any
       used in the Unrelated Business (as defined in the Agreement), and
       excluding the Excluded Assets set forth in the Agreement.

2.     All of its intellectual property, including but not limited to
       inventions, discoveries, improvements, designs, prototypes, trade
       secrets, manufacturing and engineering drawings, process sheets, know-how
       and technology used in the Business but excluding any used in the
       Unrelated Business.

3.     Any and all purchase orders for products or supplies of Seller listed on
       Schedule 1.K.(2) of the Agreement.

4.     Any and all customer orders set forth on Schedule 1.K.(1) of the
       Agreement, except the Buyer's orders listed on Schedule 1.K.(1) sub (2),
       of the Agreement.

5.       All records and lists that pertain directly or indirectly, in whole or
         in part, to any one or more of the following: the Seller's customers,
         suppliers, advertising, promotional material, sales, services,
         delivery, internal organization, employees or operations used in the
         Business but excluding any used in the Unrelated Business.

         To have and to hold the same unto the Buyer, it successors and assigns,
forever, free, clear and discharged of all former grants, security interests,
taxes, judgments, mortgages, liens and encumbrances of whatever nature, pursuant
to the Agreement between the parties.

       Attached hereto as Exhibit A is a list of Excluded Assets.

       The undersigned has executed this instrument effective the 24th day of
August, 2001

SELLER:

Integral Vision, Inc.                           Integral Vision Ltd

-------------------------                       ------------------------------
Charles J. Drake, Chairman                      Charles J. Drake, Director

                                       85
<PAGE>

                                  Attachment A
                                "Excluded Assets"

Buyer is not purchasing the Excluded Assets. "Excluded Assets" shall include the
following:

1.     All of Seller's books of account (although copies of such books and
       records relating to the Business shall, on reasonable request made by
       representatives of Buyer, be provided to Buyer);

2.     Claims for refunds of federal and state income taxes, tax credits of any
       kind;

3.     Cash or cash equivalents;

4.     Patents, software and Source Codes for such software as to which Buyer is
       specifically granted only a license under the heading "Parent owned Tools
       to be Licensed to Buyer" on Schedule 1.G of the Agreement; and

5.     The name "Intelicheck" or "Integral Vision, Inc.", or "Integral Vision
       Ltd," or any assumed names, trade names or variations thereof;

6.     The WIP Inventory for the Buyer's orders, and such Buyer's orders, as
       such Buyer's orders are listed on Schedule 1.K.(1), sub (2), to the
       Agreement, and

7.     The Unrelated Business.

                                       86<PAGE>

                                                   EXECUTED IN
                                                   COUNTERPARTS OF WHICH
                                                   THIS IS COUNTERPART NO.    .

                           THE DETROIT EDISON COMPANY
                               (2000 2nd Avenue,
                         Detroit, Michigan 48226-1279)

                                       TO
                          FIRST CHICAGO TRUST COMPANY
                                  OF NEW YORK
                                (14 Wall Street,
                           New York, New York 10005)

                                                     AS TRUSTEE

                            ------------------------

                                   INDENTURE
                          Dated as of August 15, 2001

                            ------------------------

                   SUPPLEMENTAL TO MORTGAGE AND DEED OF TRUST
                          DATED AS OF OCTOBER 1, 1924

                                 PROVIDING FOR

                   (A) GENERAL AND REFUNDING MORTGAGE BONDS,
                  2001 SERIES CP, DUE SEPTEMBER 1, 2029,

                                      AND

                         (B) RECORDING AND FILING DATA
<PAGE>
                                        i

                               TABLE OF CONTENTS*

                            ------------------------

<Table>
<Caption>
                                                                PAGE
                                                                ----
<S>                                                             <C>
PARTIES.....................................................      1
RECITALS
  Original Indenture and Supplementals......................      1
  Bonds heretofore issued...................................      2
  Reason for creation of new series.........................      9
  Bonds to be 2001 Series CP................................     10
  Further Assurance.........................................     10
  Authorization of Supplemental Indenture...................     10
  Consideration for Supplemental Indenture..................     10

                              PART I.
              CREATION OF THREE HUNDRED TWENTY-EIGHTH
                          SERIES OF BONDS
               GENERAL AND REFUNDING MORTGAGE BONDS,
                           2001 SERIES CP
Sec. 1. Certain terms of Bonds of 2001 Series CP............     11
Sec. 2. Redemption of Bonds of 2001 Series CP...............     14
Sec. 3.Redemption of Bonds of 2001 Series CP in event of
       acceleration of Strategic Fund Revenue Bonds.........     14
Sec. 4. Form of Bonds of 2001 Series CP.....................     15
        Form of Trustee's Certificate.......................     21

                              PART II.
                     RECORDING AND FILING DATA
Recording and filing of Original Indenture..................     21
Recording and filing of Supplemental Indentures.............     21
Recording of Certificates of Provision for Payment..........     28

                             PART III.
                            THE TRUSTEE
Terms and conditions of acceptance of trust by Trustee......     28

                              PART IV.
                           MISCELLANEOUS
Confirmation of Section 318(c) of Trust Indenture Act.......     29
Execution in Counterparts...................................     29
Testimonium.................................................     29
Execution...................................................     30
Acknowledgement of execution by Company.....................     30
Acknowledgement of execution by Trustee.....................     31
Affidavit as to consideration and good faith................     32
</Table>

------------------------
* This Table of Contents shall not have any bearing upon the interpretation of
  any of the terms or provisions of this Indenture.
<PAGE>

                                        1

PARTIES.                SUPPLEMENTAL INDENTURE, dated as of August 15,
                      2001 among THE DETROIT EDISON COMPANY, a corporation
                      organized and existing under the laws of the State of
                      Michigan and a transmitting utility (hereinafter called
                      the "Company", party of the first part, and FIRST CHICAGO
                      TRUST COMPANY of New York, a trust company organized and
                      existing under the laws of the State of New York, having
                      its corporate trust office at 14 Wall Street, in the
                      Borough of Manhattan, The City and State of New York, as
                      Trustee under the Mortgage and Deed of Trust hereinafter
                      mentioned (hereinafter called the "Trustee"), party of the
                      second part.

ORIGINAL
INDENTURE AND
SUPPLEMENTALS.          WHEREAS, the Company has heretofore executed and
                      delivered its Mortgage and Deed of Trust (hereinafter
                      referred to as the "Original Indenture"), dated as of
                      October 1, 1924, to the Trustee, for the security of all
                      bonds of the Company outstanding thereunder, and pursuant
                      to the terms and provisions of the Original Indenture,
                      indentures dated as of, respectively, June 1, 1925, August
                      1, 1927, February 1, 1931, June 1, 1931, October 1, 1932,
                      September 25, 1935, September 1, 1936, November 1, 1936,
                      February 1, 1940, December 1, 1940, September 1, 1947,
                      March 1, 1950, November 15, 1951, January 15, 1953, May 1,
                      1953, March 15, 1954, May 15, 1955, August 15, 1957, June
                      1, 1959, December 1, 1966, October 1, 1968, December 1,
                      1969, July 1, 1970, December 15, 1970, June 15, 1971,
                      November 15, 1971, January 15, 1973, May 1, 1974, October
                      1, 1974, January 15, 1975, November 1, 1975, December 15,
                      1975, February 1, 1976, June 15, 1976, July 15, 1976,
                      February 15, 1977, March 1, 1977, June 15, 1977, July 1,
                      1977, October 1, 1977, June 1, 1978, October 15, 1978,
                      March 15, 1979, July 1, 1979, September 1, 1979, September
                      15, 1979, January 1, 1980, April 1, 1980, August 15, 1980,
                      August 1, 1981, November 1, 1981, June 30, 1982, August
                      15, 1982, June 1, 1983, October 1, 1984, May 1, 1985, May
                      15, 1985, October 15, 1985, April 1, 1986, August 15,
                      1986, November 30, 1986, January 31, 1987, April 1, 1987,
                      August 15, 1987, November 30, 1987, June 15, 1989, July
                      15, 1989, December 1, 1989, February 15, 1990, November 1,
                      1990, April 1, 1991, May 1, 1991, May 15, 1991, September
                      1, 1991, November 1, 1991, January 15, 1992, February 29,
                      1992, April 15, 1992, July 15, 1992, July 31, 1992,
                      November 30, 1992, December 15, 1992, January 1, 1993,
                      March 1, 1993, March 15, 1993, April 1, 1993, April 26,
                      1993, May 31, 1993, June 30, 1993, June 30, 1993,
                      September 15, 1993, March 1, 1994, June 15, 1994, August
                      15, 1994,
<PAGE>
                                        2

                      December 1, 1994, August 1, 1995, August 1, 1999, August
                      15, 1999, January 1, 2000, April 15, 2000, August 1, 2000,
                      March 15, 2001 and May 1, 2001 supplemental to the
                      Original Indenture, have heretofore been entered into
                      between the Company and the Trustee (the Original
                      Indenture and all indentures supplemental thereto together
                      being hereinafter sometimes referred to as the
                      "Indenture"); and

BONDS HERETOFORE
ISSUED.                 WHEREAS, Bonds in the principal amount of Nine billion,
                      ninety-six million five hundred seventeen thousand dollars
                      ($9,096,517,000) have heretofore been issued under the
                      indenture as follows, viz:

<Table>
<C>                                    <S>                       <C>  <C>
                                  (1)  Bonds of Series A         --   Principal Amount
                                                                      $26,016,000,
                                  (2)  Bonds of Series B         --   Principal Amount
                                                                      $23,000,000,
                                  (3)  Bonds of Series C         --   Principal Amount
                                                                      $20,000,000,
                                  (4)  Bonds of Series D         --   Principal Amount
                                                                      $50,000,000,
                                  (5)  Bonds of Series E         --   Principal Amount
                                                                      $15,000,000,
                                  (6)  Bonds of Series F         --   Principal Amount
                                                                      $49,000,000,
                                  (7)  Bonds of Series G         --   Principal Amount
                                                                      $35,000,000,
                                  (8)  Bonds of Series H         --   Principal Amount
                                                                      $50,000,000,
                                  (9)  Bonds of Series I         --   Principal Amount
                                                                      $60,000,000,
                                 (10)  Bonds of Series J         --   Principal Amount
                                                                      $35,000,000,
                                 (11)  Bonds of Series K         --   Principal Amount
                                                                      $40,000,000,
                                 (12)  Bonds of Series L         --   Principal Amount
                                                                      $24,000,000,
                                 (13)  Bonds of Series M         --   Principal Amount
                                                                      $40,000,000,
                                 (14)  Bonds of Series N         --   Principal Amount
                                                                      $40,000,000,
                                 (15)  Bonds of Series O         --   Principal Amount
                                                                      $60,000,000,
                                 (16)  Bonds of Series P         --   Principal Amount
                                                                      $70,000,000,
</Table>
<PAGE>
                                        3
<Table>
<C>                                    <S>                       <C>  <C>
                                 (17)  Bonds of Series Q         --   Principal Amount
                                                                      $40,000,000,
                                 (18)  Bonds of Series W         --   Principal Amount
                                                                      $50,000,000,
                                 (19)  Bonds of Series AA        --   Principal Amount
                                                                      $100,000,000,
                                 (20)  Bonds of Series BB        --   Principal Amount
                                                                      $50,000,000,
                                 (21)  Bonds of Series CC        --   Principal Amount
                                                                      $50,000,000,
                                 (22)  Bonds of Series UU        --   Principal Amount
                                                                      $100,000,000,
                              (23-31)  Bonds of Series DDP
                                       Nos. 1-9                  --   Principal Amount
                                                                      $14,305,000,
                              (32-45)  Bonds of Series FFR
                                       Nos. 1-14                 --   Principal Amount
                                                                      $45,600,000,
                              (46-67)  Bonds of Series GGP
                                       Nos. 1-22                 --   Principal Amount
                                                                      $42,300,000,
                                 (68)  Bonds of Series HH        --   Principal Amount
                                                                      $50,000,000,
                              (69-90)  Bonds of Series IIP
                                       Nos. 1-22                 --   Principal Amount
                                                                      $3,750,000,
                              (91-98)  Bonds of Series JJP Nos.
                                       1-8                       --   Principal Amount
                                                                      $6,850,000,
                             (99-107)  Bonds of Series KKP
                                       Nos. 1-9                  --   Principal Amount
                                                                      $34,890,000,
                            (108-122)  Bonds of Series LLP
                                       Nos. 1-15                 --   Principal Amount
                                                                      $8,850,000,
                            (123-143)  Bonds of Series NNP Nos.
                                       1-21                      --   Principal Amount
                                                                      $47,950,000,
                            (144-161)  Bonds of Series OOP Nos.
                                       1-18                      --   Principal Amount
                                                                      $18,880,000,
                            (162-180)  Bonds of Series QQP Nos.
                                       1-19                      --   Principal Amount
                                                                      $13,650,000,
</Table>
<PAGE>
                                        4
<Table>
<C>                                    <S>                       <C>  <C>
                            (181-195)  Bonds of Series TTP Nos.
                                       1-15                      --   Principal Amount
                                                                      $3,800,000,
                                (196)  Bonds of 1980 Series A    --   Principal Amount
                                                                      $50,000,000,
                            (197-221)  Bonds of 1980 Series CP
                                       Nos. 1-25                 --   Principal Amount
                                                                      $35,000,000,
                            (222-232)  Bonds of 1980 Series DP
                                       Nos. 1-11                 --   Principal Amount
                                                                      $10,750,000,
                            (233-248)  Bonds of 1981 Series AP
                                       Nos. 1-16                 --   Principal Amount
                                                                      $124,000,000,
                                (249)  Bonds of 1985 Series A    --   Principal Amount
                                                                      $35,000,000,
                                (250)  Bonds of 1985 Series B    --   Principal Amount
                                                                      $50,000,000,
                                (251)  Bonds of Series PP        --   Principal Amount
                                                                      $70,000,000,
                                (252)  Bonds of Series RR        --   Principal Amount
                                                                      $70,000,000,
                                (253)  Bonds of Series EE        --   Principal Amount
                                                                      $50,000,000,
                            (254-255)  Bonds of Series MMP and
                                       MMP No. 2                 --   Principal Amount
                                                                      $5,430,000,
                                (256)  Bonds of Series T         --   Principal Amount
                                                                      $75,000,000,
                                (257)  Bonds of Series U         --   Principal Amount
                                                                      $75,000,000,
                                (258)  Bonds of 1986 Series B    --   Principal Amount
                                                                      $100,000,000,
                                (259)  Bonds of 1987 Series D    --   Principal Amount
                                                                      $250,000,000,
                                (260)  Bonds of 1987 Series E    --   Principal Amount
                                                                      $150,000,000,
                                (261)  Bonds of 1987 Series C    --   Principal Amount
                                                                      $225,000,000,
                                (262)  Bonds of Series V         --   Principal Amount
                                                                      $100,000,000,
                                (263)  Bonds of Series SS        --   Principal Amount
                                                                      $150,000,000,
                                (264)  Bonds of 1980 Series B    --   Principal Amount
                                                                      $100,000,000,
</Table>
<PAGE>
                                        5
<Table>
<C>                                    <S>                       <C>  <C>
                                (265)  Bonds of 1986 Series C    --   Principal Amount
                                                                      $200,000,000,
                                (266)  Bonds of 1986 Series A    --   Principal Amount
                                                                      $200,000,000,
                                (267)  Bonds of 1987 Series B    --   Principal Amount
                                                                      $175,000,000,
                                (268)  Bonds of Series X         --   Principal Amount
                                                                      $100,000,000,
                                (269)  Bonds of 1987 Series F    --   Principal Amount
                                                                      $200,000,000,
                                (270)  Bonds of 1987 Series A    --   Principal Amount
                                                                      $300,000,000,
                                (271)  Bonds of Series Y         --   Principal Amount
                                                                      $60,000,000,
                                (272)  Bonds of Series Z         --   Principal Amount
                                                                      $100,000,000,
                                (273)  Bonds of 1989 Series A    --   Principal Amount
                                                                      $300,000,000,
                                (274)  Bonds of 1984 Series AP   --   Principal Amount
                                                                      $2,400,000,
                                (275)  Bonds of 1984 Series BP   --   Principal Amount
                                                                      $7,750,000,
                                (276)  Bonds of Series R         --   Principal Amount
                                                                      $100,000,000,
                                (277)  Bonds of Series S         --   Principal Amount
                                                                      $150,000,000,
                                (278)  Bonds of 1993 Series D    --   Principal Amount
                                                                      $100,000,000,
                                (279)  Bonds of 1992 Series E    --   Principal Amount
                                                                      $50,000,000,
                                (280)  Bonds of 1993 Series B    --   Principal Amount
                                                                      $50,000,000,
                                (281)  Bonds of 1989 Series BP   --   Principal Amount
                                                                      $66,565,000,
                                (282)  Bonds of 1990 Series A    --   Principal Amount
                                                                      $194,649,000
                                (283)  Bonds of 1993 Series G    --   Principal Amount
                                                                      $225,000,000
                                (284)  Bonds of 1993 Series K    --   Principal Amount
                                                                      $160,000,000
</Table>

                      all of which have either been retired and cancelled, or no
                      longer represent obligations of the Company, having been
                      called for redemption and funds necessary to effect the
                      payment, redemption and retirement thereof having been
<PAGE>

                                        6

                      deposited with the Trustee as a special trust fund to be
                      applied for such purpose;

                      (285-290) Bonds of Series KKP Nos. 10-15 in the principal
                      amount of One hundred seventy-nine million five hundred
                      ninety thousand dollars ($179,590,000), of which Ninety
                      million four hundred ninety thousand dollars ($90,490,000)
                      principal amount have heretofore been retired and
                      eighty-nine million one hundred thousand dollars
                      ($89,100,000) principal amount are outstanding at the date
                      hereof;

                      (291) Bonds of 1990 Series B in the principal amount of
                      Two hundred fifty-six million nine hundred thirty-two
                      thousand dollars ($256,932,000) of which One hundred
                      fourteen million one hundred ninety-two thousand dollars
                      ($114,192,000) principal amount have heretofore been
                      retired and One hundred forty-two million seven hundred
                      forty thousand dollars ($142,740,000) principal amount are
                      outstanding at the date hereof;

                      (292) Bonds of 1990 Series C in the principal amount of
                      Eighty-five million four hundred seventy-five thousand
                      dollars ($85,475,000) of which Forty-one million
                      twenty-eight thousand dollars ($41,028,000) principal
                      amount have heretofore been retired and Forty-four million
                      four hundred forty-seven thousand dollars ($44,447,000)
                      principal amount are outstanding at the date hereof;

                      (293) Bonds of 1991 Series AP in the principal amount of
                      Thirty-two million three hundred seventy-five thousand
                      dollars ($32,375,000), all of which are outstanding at the
                      date hereof;

                      (294) Bonds of 1991 Series BP in the principal amount of
                      Twenty-five million nine hundred ten thousand dollars
                      ($25,910,000), all of which are outstanding at the date
                      hereof;

                      (295) Bonds of 1991 Series CP in the principal amount of
                      Thirty-two million eight hundred thousand dollars
                      ($32,800,000), all of which are outstanding at the date
                      hereof;

                      (296) Bonds of 1991 Series DP in the principal amount of
                      Thirty-seven million six hundred thousand dollars
                      ($37,600,000), all of which are outstanding at the date
                      hereof;

                      (297) Bonds of 1991 Series EP in the principal amount of
                      Forty-one million four hundred eighty thousand dollars
                      ($41,480,000), all of which are outstanding at the date
                      hereof;
<PAGE>

                                        7

                      (298) Bonds of 1991 Series FP in the principal amount of
                      Ninety-eight million three hundred seventy-five thousand
                      dollars ($98,375,000), all of which are outstanding at the
                      date hereof;

                      (299) Bonds of 1992 Series BP in the principal amount of
                      Twenty million nine hundred seventy-five thousand dollars
                      ($20,975,000), all of which are outstanding at the date
                      hereof;

                      (300) Bonds of 1992 Series AP in the principal amount of
                      Sixty-six million dollars ($66,000,000), all of which are
                      outstanding at the date hereof;

                      (301) Bonds of 1992 Series D in the principal amount of
                      Three hundred million dollars ($300,000,000), of which One
                      hundred thirty million four hundred ninety-five thousand
                      dollars ($130,495,000) principal amount have heretofore
                      been retired and One hundred sixty-nine million, five
                      hundred and five thousand ($169,505,000) principal amount
                      are outstanding at the date hereof;

                      (302) Bonds of 1992 Series CP in the principal amount of
                      Thirty-five million dollars ($35,000,000), all of which
                      are outstanding at the date hereof;

                      (303) Bonds of 1989 Series BP No. 2 in the principal
                      amount of Thirty-six million dollars ($36,000,000), all of
                      which are outstanding at the date hereof;

                      (304) Bonds of 1993 Series C in the principal amount of
                      Two hundred twenty-five million dollars ($225,000,000), of
                      which Eighty-one million six hundred thousand dollars
                      ($81,600,000) principal amount have heretofore been
                      retired and One hundred forty-three million four hundred
                      thousand dollars ($143,400,000) principal amount are
                      outstanding at the date hereof;

                      (305) Bonds of 1993 Series E in the principal amount of
                      Four hundred million dollars ($400,000,000), of which Two
                      hundred twenty-nine million six hundred twenty-five
                      thousand dollars ($229,625,000) principal amount have
                      heretofore been retired and One hundred seventy million
                      three hundred seventy-five thousand dollars ($170,375,000)
                      principal amount are outstanding at the date hereof;

                      (306) Bonds of 1993 Series FP in the principal amount of
                      Five million six hundred eighty-five thousand dollars
                      ($5,685,000), all of which are outstanding at the date
                      hereof;
<PAGE>

                                        8

                      (307) Bonds of 1993 Series J in the principal amount of
                      Three hundred million dollars ($300,000,000), of which One
                      hundred twenty-two million three hundred ninety-five
                      thousand dollars ($122,395,000) principal amount have
                      heretofore been retired and One hundred seventy-seven
                      million six hundred and five thousand dollars
                      ($177,605,000) principal amount are outstanding at the
                      date hereof;

                      (308) Bonds of 1993 Series IP in the principal amount of
                      Five million eight hundred twenty-five thousand dollars
                      ($5,825,000), all of which are outstanding at the date
                      hereof;

                      (309) Bonds of 1993 Series AP in the principal amount of
                      Sixty-five million dollars ($65,000,000), all of which are
                      outstanding at the date hereof;

                      (310) Bonds of 1993 Series H in the principal amount of
                      Fifty million dollars ($50,000,000), all of which are
                      outstanding at the date hereof;

                      (311) Bonds of 1994 Series AP in the principal amount of
                      Seven million five hundred thirty-five thousand dollars
                      ($7,535,000), all of which are outstanding at the date
                      hereof;

                      (312) Bonds of 1994 Series BP in the principal amount of
                      Twelve million nine hundred thirty-five thousand dollars
                      ($12,935,000), all of which are outstanding at the date
                      hereof;

                      (313) Bonds of 1994 Series C in the principal amount of
                      Two hundred million dollars ($200,000,000), of which One
                      hundred million dollars ($100,000,000) principal amount
                      have heretofore been retired and One hundred million
                      dollars ($100,000,000) principal amount are outstanding at
                      the date hereof;

                      (314) Bonds of 1994 Series DP in the principal amount of
                      Twenty-three million seven hundred thousand dollars
                      ($23,700,000), all of which are outstanding at the date
                      hereof;

                      (315) Bonds of 1995 Series AP in the principal amount of
                      Ninety-seven million dollars ($97,000,000), all of which
                      are outstanding at the date hereof;

                      (316) Bonds of 1995 Series BP in the principal amount of
                      Twenty-two million, one hundred seventy-five thousand
                      dollars ($22,175,000), all of which are outstanding at the
                      date hereof;

                      (317) Bonds of 1999 Series AP in the principal amount of
                      One hundred eighteen million three hundred sixty thousand
<PAGE>
                                        9

                      dollars ($118,360,000), all of which are outstanding at
                      the date hereof;

                      (318) Bonds of 1999 Series BP in the principal amount of
                      Thirty-nine million seven hundred forty-five thousand
                      dollars ($39,745,000), all of which are outstanding of the
                      date hereof;

                      (319) Bonds of 1999 Series CP in the principal amount of
                      Sixty-six million five hundred sixty-five thousand dollars
                      ($66,565,000), all of which are outstanding at the date
                      hereof;

                      (320) Bonds of 1999 Series D in the principal amount of
                      Forty million dollars ($40,000,000), all of which are
                      outstanding at the date hereof;

                      (321) Bonds of 2000 Series A in the principal amount of
                      Two Hundred Twenty million dollars ($220,000,000) of which
                      Fifty-eight million eight hundred twenty thousand dollars
                      ($58,820,000) principal amount have heretofore been
                      retired and One hundred sixty-one million one hundred
                      eighty thousand dollars ($161,180,000) principal amount
                      are outstanding at the date hereof;

                      (322) Bonds of 2000 Series B in the principal amount of
                      Fifty million seven hundred forty-five thousand dollars
                      ($50,745,000), all of which are outstanding at the date
                      hereof;

                      (323) Bonds of 2001 Series AP in the principal amount of
                      Thirty-one million ($31,000,000), all of which are
                      outstanding at the date hereof;

                      (324) Bonds of 2001 Series BP in the principal amount of
                      Eighty-two million three hundred fifty thousand
                      ($82,350,000) all of which are outstanding at the date
                      hereof; and

                      accordingly, the Company has issued and has presently
                      outstanding Two billion three hundred forty-three million
                      four hundred eighty-seven thousand dollars
                      ($2,343,487,000) aggregate principal amount of its General
                      and Refunding Mortgage Bonds (the "Bonds") at the date
                      hereof; and

REASON FOR
CREATION OF
NEW SERIES.             WHEREAS, the Company will enter into a Loan
                      Agreement, dated as of September 1, 2001, with the
                      Michigan Strategic Fund in connection with the issuance of
                      the Collateralized Series 2001C Bonds in order to refund
                      certain pollution control related bonds, and pursuant to
                      such Loan Agreement the Company has agreed to issue its
                      General and Refunding Mortgage Bonds under the Indenture
                      in order
<PAGE>
                                        10

                      further to secure its obligations under such Loan
                      Agreement; and

                        WHEREAS, for such purposes the Company desires to issue
                      a new series of bonds to be issued under the Indenture and
                      to be authenticated and delivered pursuant to Section 8 of
                      Article III of the Indenture; and

BONDS TO BE 2001
SERIES CP.              WHEREAS, the Company desires by this Supplemental
                      Indenture to create a new series of bonds, to be
                      designated "General and Refunding Mortgage Bonds, 2001
                      Series CP;" and

FURTHER
ASSURANCE.              WHEREAS, the Original Indenture, by its terms, includes
                      in the property subject to the lien thereof all of the
                      estates and properties, real, personal and mixed, rights,
                      privileges and franchises of every nature and kind and
                      wheresoever situate, then or thereafter owned or possessed
                      by or belonging to the Company or to which it was then or
                      at any time thereafter might be entitled in law or in
                      equity (saving and excepting, however, the property
                      therein specifically excepted or released from the lien
                      thereof), and the Company therein covenanted that it
                      would, upon reasonable request, execute and deliver such
                      further instruments as may be necessary or proper for the
                      better assuring and confirming unto the Trustee all or any
                      part of the trust estate, whether then or thereafter owned
                      or acquired by the Company (saving and excepting, however,
                      property specifically excepted or released from the lien
                      thereof); and

AUTHORIZATION OF
SUPPLEMENTAL
INDENTURE.              WHEREAS, the Company in the exercise of the powers and
                      authority conferred upon and reserved to it under and by
                      virtue of the provisions of the Indenture, and pursuant to
                      resolutions of its Board of Directors has duly resolved
                      and determined to make, execute and deliver to the Trustee
                      a supplemental indenture in the form hereof for the
                      purposes herein provided; and

                        WHEREAS, all conditions and requirements necessary to
                      make this Supplemental Indenture a valid and legally
                      binding instrument in accordance with its terms have been
                      done, performed and fulfilled, and the execution and
                      delivery hereof have been in all respects duly authorized;

CONSIDERATION FOR
SUPPLEMENTAL
INDENTURE.              NOW, THEREFORE, THIS INDENTURE WITNESSETH:
                      That The Detroit Edison Company, in consideration of the
                      premises and of the covenants contained in the Indenture
                      and of the sum of One Dollar ($1.00) and other good and
                      valuable
<PAGE>
                                        11

                      consideration to it duly paid by the Trustee at or before
                      the ensealing and delivery of these presents, the receipt
                      whereof is hereby acknowledged, hereby covenants and
                      agrees to and with the Trustee and its successors in the
                      trusts under the Original Indenture and in said indentures
                      supplemental thereto as follows:

                                               PART I.

                       CREATION OF THREE HUNDRED TWENTY-EIGHTH SERIES OF BONDS.

                         GENERAL AND REFUNDING MORTGAGE BONDS, 2001 SERIES CP

CERTAIN TERMS OF
BONDS OF 2001
SERIES CP.              SECTION 1. The Company hereby creates the Three
                      hundred twenty-eighth series of bonds to be issued under
                      and secured by the Original Indenture as amended to date
                      and as further amended by this Supplemental Indenture, to
                      be designated, and to be distinguished from the bonds of
                      all other series, by the title "General and Refunding
                      Mortgage Bonds, 2001 Series CP" (elsewhere herein referred
                      to as the "bonds of 2001 Series CP"). The aggregate
                      principal amount of bonds of 2001 Series CP shall be
                      limited to One hundred thirty-nine million eight hundred
                      fifty-five thousand dollars (139,855,000), except as
                      provided in Sections 7 and 13 of Article II of the
                      Original Indenture with respect to exchanges and
                      replacements of bonds.

                        Each bond of 2001 Series CP is to be irrevocably
                      assigned to, and registered in the name of, Bank One Trust
                      Company, National Association, as trustee, or a successor
                      trustee (said trustee or any successor trustee being
                      hereinafter referred to as the "Strategic Fund Trust
                      Indenture Trustee"), under the Trust Indenture, dated as
                      of September 1, 2001 (hereinafter called the "Strategic
                      Fund Trust Indenture"), between the Michigan Strategic
                      Fund (hereinafter called "Strategic Fund"), and the
                      Strategic Fund Trust Indenture Trustee, to secure payment
                      of the Michigan Strategic Fund Limited Obligation
                      Refunding Revenue Bonds (The Detroit Edison Company
                      Pollution Control Bonds Project), Collateralized Series
                      2001C (hereinafter called the "Strategic Fund Revenue
                      Bonds"), issued by the Strategic Fund under the Strategic
                      Fund Trust Indenture, the proceeds of which have been
                      provided for the refunding of certain pollution control
                      related bonds which the Company has agreed to refund
                      pursuant to the provisions of the Loan Agreement, dated as
                      of September 1,
<PAGE>

                                        12

                      2001 (hereinafter called the "Strategic Fund Agreement"),
                      between the Company and the Strategic Fund.

                        The bonds of 2001 Series CP shall be issued as
                      registered bonds without coupons in denominations of a
                      multiple of $5,000. The bonds of 2001 Series CP shall be
                      issued in the aggregate principal amount of $139,855,000,
                      shall mature on September 1, 2029 and shall bear interest,
                      payable semi-annually on March 1 and September 1 of each
                      year (commencing March 1, 2002), at the rate of 5.45%,
                      until the principal thereof shall have become due and
                      payable and thereafter until the Company's obligation with
                      respect to the payment of said principal shall have been
                      discharged as provided in the Indenture.

                        The bonds of 2001 Series CP shall be payable as to
                      principal, premium, if any, and interest as provided in
                      the Indenture, but only to the extent and in the manner
                      herein provided. The bonds of 2001 Series CP shall be
                      payable, both as to principal and interest, at the office
                      or agency of the Company in the Borough of Manhattan, The
                      City and State of New York, in any coin or currency of the
                      United States of America which at the time of payment is
                      legal tender for public and private debts.

                        Except as provided herein, each bond of 2001 Series CP
                      shall be dated the date of its authentication and interest
                      shall be payable on the principal represented thereby from
                      the March 1 or September 1 next preceding the date thereof
                      to which interest has been paid on bonds of 2001 Series
                      CP, unless the bond is authenticated on a date to which
                      interest has been paid, in which case interest shall be
                      payable from the date of authentication, or unless the
                      date of authentication is prior to March 1, 2002, in which
                      case interest shall be payable from September 1, 2001.

                        The bonds of 2001 Series CP in definitive form shall be,
                      at the election of the Company, fully engraved or shall be
                      lithographed or printed in authorized denominations as
                      aforesaid and numbered 1 and upwards (with such further
                      designation as may be appropriate and desirable to
                      indicate by such designation the form, series and
                      denominations of bonds of 2001 Series CP). Until bonds of
                      2001 Series CP in definitive form are ready for delivery,
                      the Company may execute, and upon its request in writing
                      the Trustee shall authenticate and deliver in lieu
                      thereof, bonds of 2001 Series CP in temporary form, as
                      provided in Section 10 of Article II of the Indenture.
<PAGE>

                                        13

                      Temporary bonds of 2001 Series CP, if any, may be printed
                      and may be issued in authorized denominations in
                      substantially the form of definitive bonds of 2001 Series
                      CP, but with such omissions, insertions and variations as
                      may be appropriate for temporary bonds, all as may be
                      determined by the Company.

                        Bonds of 2001 Series CP shall not be assignable or
                      transferable except as may be required to effect a
                      transfer to any successor trustee under the Strategic Fund
                      Trust Indenture, or, subject to compliance with applicable
                      law, as may be involved in the course of the exercise of
                      rights and remedies consequent upon an Event of Default
                      under the Strategic Fund Trust Indenture. Any such
                      transfer shall be made upon surrender thereof for
                      cancellation at the office or agency of the Company in the
                      Borough of Manhattan, The City and State of New York,
                      together with a written instrument of transfer (if so
                      required by the Company or by the Trustee) in form
                      approved by the Company duly executed by the holder or by
                      its duly authorized attorney. Bonds of 2001 Series CP
                      shall in the same manner be exchangeable for a like
                      aggregate principal amount of bonds of 2001 Series CP upon
                      the terms and conditions specified herein and in Section 7
                      of Article II of the Indenture. The Company waives its
                      rights under Section 7 of Article II of the Indenture not
                      to make exchanges or transfers of bonds of 2001 Series CP,
                      during any period of ten days next preceding any
                      redemption date for such bonds.

                        Bonds of 2001 Series CP, in definitive and temporary
                      form, may bear such legends as may be necessary to comply
                      with any law or with any rules or regulations made
                      pursuant thereto or as may be specified in the Strategic
                      Fund Agreement.

                        Upon payment of the principal or premium, if any, or
                      interest on the Strategic Fund Revenue Bonds, whether at
                      maturity or prior to maturity by redemption or otherwise,
                      or upon provision for the payment thereof having been made
                      in accordance with Articles I or IV of the Strategic Fund
                      Trust Indenture, bonds of 2001 Series CP in a principal
                      amount equal to the principal amount of the Strategic Fund
                      Revenue Bonds, shall, to the extent of such payment of
                      principal, premium or interest, be deemed fully paid and
                      the obligation of the Company thereunder to make such
                      payment shall forthwith cease and be discharged, and, in
                      the case of the payment of principal and premium, if any,
                      such bonds shall be
<PAGE>
                                        14

                      surrendered for cancellation or presented for appropriate
                      notation to the Trustee.

REDEMPTION OF
BONDS OF 2001
SERIES CP               SECTION 2. Bonds of the 2001 Series CP shall be
                      redeemed on the date and in the respective principal
                      amount which correspond to the redemption date for, and
                      the principal amount to be redeemed of, the Strategic Fund
                      Revenue Bonds.

                        In the event the Company elects to redeem any Strategic
                      Fund Revenue Bonds prior to maturity in accordance with
                      the provisions of the Strategic Fund Trust Indenture, the
                      Company shall on the same date redeem bonds of 2001 Series
                      CP in the principal amount and at the redemption price
                      corresponding to the Strategic Fund Revenue Bonds so
                      redeemed. The Company agrees to give the Trustee notice of
                      any such redemption of bonds of 2001 Series CP on the same
                      date as it gives notice of redemption of Strategic Fund
                      Revenue Bonds to the Strategic Fund Trust Indenture
                      Trustee.

REDEMPTION OF
BONDS OF 2001
SERIES CP IN EVENT
OF ACCELERATION OF
STRATEGIC FUND
REVENUE BONDS.          SECTION 3. In the event of an Event of Default under the
                      Strategic Fund Trust Indenture and the acceleration of all
                      Strategic Fund Revenue Bonds, the bonds of 2001 Series CP
                      shall be redeemable in whole upon receipt by the Trustee
                      of a written demand (hereinafter called a "Redemption
                      Demand") from the Strategic Fund Trust Indenture Trustee
                      stating that there has occurred under the Strategic Fund
                      Trust Indenture both an Event of Default and a declaration
                      of acceleration of payment of principal, accrued interest
                      and premium, if any, on the Strategic Fund Revenue Bonds,
                      specifying the last date to which interest on the
                      Strategic Fund Revenue Bonds has been paid (such date
                      being hereinafter referred to as the "Initial Interest
                      Accrual Date") and demanding redemption of the bonds of
                      said series. The Trustee shall, within five days after
                      receiving such Redemption Demand, mail a copy thereof to
                      the Company marked to indicate the date of its receipt by
                      the Trustee. Promptly upon receipt by the Company of such
                      copy of a Redemption Demand, the Company shall fix a date
                      on which it will redeem the bonds of said series so
                      demanded to be redeemed (hereinafter called the "Demand
                      Redemption Date"). Notice of the date fixed as the Demand
                      Redemption Date shall be mailed by the Company to the
                      Trustee at least ten days prior to such Demand Redemption
                      Date. The date to be fixed by the Company as and for the
                      Demand Redemption Date may be any date up to and including
                      the earlier of (x) the 60th day after receipt by the
                      Trustee of the Redemption Demand or
<PAGE>

                                        15

                      (y) the maturity date of such bonds first occurring
                      following the 20th day after the receipt by the Trustee of
                      the Redemption Demand; provided, however, that if the
                      Trustee shall not have received such notice fixing the
                      Demand Redemption Date on or before the 10th day preceding
                      the earlier of such dates, the Demand Redemption Date
                      shall be deemed to be the earlier of such dates. The
                      Trustee shall mail notice of the Demand Redemption Date
                      (such notice being hereinafter called the "Demand
                      Redemption Notice") to the Strategic Fund Trust Indenture
                      Trustee not more than ten nor less than five days prior to
                      the Demand Redemption Date.

                        Each bond of 2001 Series CP shall be redeemed by the
                      Company on the Demand Redemption Date therefore upon
                      surrender thereof by the Strategic Fund Trust Indenture
                      Trustee to the Trustee at a redemption price equal to the
                      principal amount thereof plus accrued interest thereon at
                      the rate specified for such bond from the Initial Interest
                      Accrual Date to the Demand Redemption Date plus an amount
                      equal to the aggregate premium, if any, due and payable on
                      such Demand Redemption Date on all Strategic Fund Revenue
                      Bonds; provided, however, that in the event of a receipt
                      by the Trustee of a notice that, pursuant to Section 604
                      of the Strategic Fund Trust Indenture, the Strategic Fund
                      Trust Indenture Trustee has terminated proceedings to
                      enforce any right under the Strategic Fund Trust
                      Indenture, then any Redemption Demand shall thereby be
                      rescinded by the Strategic Fund Trust Indenture Trustee,
                      and no Demand Redemption Notice shall be given, or, if
                      already given, shall be automatically annulled; but no
                      such rescission or annulment shall extend to or affect any
                      subsequent default or impair any right consequent thereon.

                        Anything herein contained to the contrary
                      notwithstanding, the Trustee is not authorized to take any
                      action pursuant to a Redemption Demand and such Redemption
                      Demand shall be of no force or effect, unless it is
                      executed in the name of the Strategic Fund Trust Indenture
                      Trustee by its President or one of its Vice Presidents.

FORM OF BONDS OF
2001 SERIES CP.         SECTION 4. The bonds of 2001 Series CP and the form of
                      Trustee's Certificate to be endorsed on such bonds shall
                      be substantially in the following forms, respectively:
<PAGE>

                                        16

                                        [FORM OF FACE OF BOND]

                                      THE DETROIT EDISON COMPANY
                                 GENERAL AND REFUNDING MORTGAGE BOND
                             2001 SERIES CP, 5.45%, DUE SEPTEMBER 1, 2029

                        Notwithstanding any provisions hereof or in the
                      Indenture, this bond is not assignable or transferable
                      except as may be required to effect a transfer to any
                      successor trustee under the Trust Indenture, dated as of
                      September 1, 2001 between the Michigan Strategic Fund and
                      Bank One Trust Company, National Association, as trustee,
                      or, subject to compliance with applicable law, as may be
                      involved in the course of the exercise of rights and
                      remedies consequent upon an Event of Default under said
                      Trust Indenture.

                       $.............................   No. ....................

                        THE DETROIT EDISON COMPANY (hereinafter called the
                      "Company"), a corporation of the State of Michigan, for
                      value received, hereby promises to pay to the Michigan
                      Strategic Fund, or registered assigns, at the Company's
                      office or agency in the Borough of Manhattan, The City and
                      State of New York, the principal sum of           dollars
                      ($          ) in lawful money of the United States of
                      America on the date specified in the title hereof and
                      interest thereon at the rate specified in the title
                      hereof, in like lawful money, from September 1, 2001, and
                      after the first payment of interest on bonds of this
                      Series has been made or otherwise provided for, from the
                      most recent date to which interest has been paid or
                      otherwise provided for, semi-annually on March 1 and
                      September 1 of each year (commencing March 1, 2002), until
                      the Company's obligation with respect to payment of said
                      principal shall have been discharged, all as provided, to
                      the extent and in the manner specified in the Indenture
                      hereinafter mentioned on the reverse hereof and in the
                      supplemental indenture pursuant to which this bond has
                      been issued.

                        Under a Trust Indenture, dated as of September 1, 2001
                      (hereinafter called the "Strategic Fund Trust Indenture"),
                      between the Michigan Strategic Fund (hereinafter called
                      "Strategic Fund"), and Bank One Trust Company, National
                      Association, as trustee (hereinafter called the "Strategic
                      Fund Trust Indenture Trustee"), the Strategic Fund has
                      issued Limited Obligation Refunding Revenue Bonds (The
                      Detroit Edison Company Pollution Control Bonds Project),
                      Collateralized Series 2001C (hereinafter called the
                      "Strategic
<PAGE>

                                        17

                      Fund Revenue Bonds"). This bond was originally issued to
                      the Strategic Fund and simultaneously irrevocably assigned
                      to the Strategic Fund Trust Indenture Trustee so as to
                      secure the payment of the Strategic Fund Revenue Bonds.
                      Payments of principal of, or premium, if any, or interest
                      on, Strategic Fund Revenue Bonds shall constitute like
                      payments on this bond as further provided herein and in
                      the supplemental indenture pursuant to which this bond has
                      been issued.

                        Reference is hereby made to such further provisions of
                      this bond set forth on the reverse hereof and such further
                      provisions shall for all purposes have the same effect as
                      though set forth at this place.

                        This bond shall not be valid or become obligatory for
                      any purpose until First Chicago Trust Company of New York,
                      the Trustee under the Indenture hereinafter mentioned on
                      the reverse hereof, or its successor thereunder, shall
                      have signed the form of certificate endorsed hereon.

                        IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY has
                      caused this instrument to be executed by its Vice
                      President and Treasurer, with his manual or facsimile
                      signature, and its corporate seal, or a facsimile thereof,
                      to be impressed or imprinted hereon and the same to be
                      attested by its Assistant Corporate Secretary by manual or
                      facsimile signature.

<Table>
<S>                                   <C>          <C>
Dated:                                             THE DETROIT EDISON COMPANY
                                                   By  ......................................
                                                       Vice President and Treasurer
[SEAL]
Attest:
 .....................................
Assistant Corporate Secretary
</Table>
<PAGE>

                                        18

                                      [FORM OF REVERSE OF BOND]

                        This bond is one of an authorized issue of bonds of the
                      Company, unlimited as to amount except as provided in the
                      Indenture hereinafter mentioned or any indentures
                      supplemental thereto, and is one of a series of General
                      and Refunding Mortgage Bonds known as 2001 Series CP,
                      limited to an aggregate principal amount of $139,855,000,
                      except as otherwise provided in the Indenture hereinafter
                      mentioned. This bond and all other bonds of said series
                      are issued and to be issued under, and are all equally and
                      ratably secured (except insofar as any sinking,
                      amortization, improvement or analogous fund, established
                      in accordance with the provisions of the Indenture
                      hereinafter mentioned, may afford additional security for
                      the bonds of any particular series and except as provided
                      in Section 3 of Article VI of said Indenture) by an
                      Indenture, dated as of October 1, 1924, duly executed by
                      the Company to First Chicago Trust Company of New York, as
                      successor in interest to Bankers Trust Company, a
                      corporation of the State of New York, as Trustee, to which
                      Indenture and all indentures supplemental thereto
                      (including the Supplemental Indenture dated as of August
                      15, 2001) reference is hereby made for a description of
                      the properties and franchises mortgaged and conveyed, the
                      nature and extent of the security, the terms and
                      conditions upon which the bonds are issued and under which
                      additional bonds may be issued, and the rights of the
                      holders of the bonds and of the Trustee in respect of such
                      security (which Indenture and all indentures supplemental
                      thereto, including the Supplemental Indenture dated as of
                      August 15, 2001, are hereinafter collectively called the
                      "Indenture"). As provided in the Indenture, said bonds may
                      be for various principal sums and are issuable in series,
                      which may mature at different times, may bear interest at
                      different rates and may otherwise vary as in said
                      Indenture provided. With the consent of the Company and to
                      the extent permitted by and as provided in the Indenture,
                      the rights and obligations of the Company and of the
                      holders of the bonds and the terms and provisions of the
                      Indenture, or of any indenture supplemental thereto, may
                      be modified or altered in certain respects by affirmative
                      vote of at least eighty-five percent (85%) in amount of
                      the bonds then outstanding, and, if the rights of one or
                      more, but less than all, series of bonds then outstanding
                      are to be affected by the action proposed to be taken,
                      then also by affirmative vote of at least eighty-five
                      percent (85%) in amount of the series of bonds so to be
<PAGE>

                                        19

                      affected (excluding in every instance bonds disqualified
                      from voting by reason of the Company's interest therein as
                      specified in the Indenture); provided, however, that,
                      without the consent of the holder hereof, no such
                      modification or alteration shall, among other things,
                      affect the terms of payment of the principal of or the
                      interest on this bond, which in those respects is
                      unconditional.

                        This bond is redeemable upon the terms and conditions
                      set forth in the Indenture, including provision for
                      redemption upon demand of the Strategic Fund Trust
                      Indenture Trustee following the occurrence of an Event of
                      Default under the Strategic Fund Trust Indenture and the
                      acceleration of the principal of the Strategic Fund
                      Revenue Bonds.

                        Under the Indenture, funds may be deposited with the
                      Trustee (which shall have become available for payment),
                      in advance of the redemption date of any of the bonds of
                      2001 Series CP (or portions thereof), in trust for the
                      redemption of such bonds (or portions thereof) and the
                      interest due or to become due thereon, and thereupon all
                      obligations of the Company in respect of such bonds (or
                      portions thereof) so to be redeemed and such interest
                      shall cease and be discharged, and the holders thereof
                      shall thereafter be restricted exclusively to such funds
                      for any and all claims of whatsoever nature on their part
                      under the Indenture or with respect to such bonds (or
                      portions thereof) and interest.

                        In case an event of default, as defined in the
                      Indenture, shall occur, the principal of all the bonds
                      issued thereunder may become or be declared due and
                      payable, in the manner, with the effect and subject to the
                      conditions provided in the Indenture.

                        Upon payment of the principal of, or premium, if any, or
                      interest on, the Strategic Fund Revenue Bonds, whether at
                      maturity or prior to maturity by redemption or otherwise
                      or upon provision for the payment thereof having been made
                      in accordance with Articles I or IV of the Strategic Fund
                      Trust Indenture, bonds of 2001 Series CP in a principal
                      amount equal to the principal amount of such Strategic
                      Fund Revenue Bonds and having both a corresponding
                      maturity date and interest rate shall, to the extent of
                      such payment of principal, premium or interest, be deemed
                      fully paid and the obligation of the Company thereunder to
                      make such payment shall forthwith cease and be discharged,
                      and, in the case of the payment of principal and premium,
                      if any, such bonds of said
<PAGE>

                                        20

                      series shall be surrendered for cancellation or presented
                      for appropriate notation to the Trustee.

                        This bond is not assignable or transferable except as
                      may be required to effect a transfer to any successor
                      trustee under the Strategic Fund Trust Indenture, or,
                      subject to compliance with applicable law, as may be
                      involved in the course of the exercise of rights and
                      remedies consequent upon an Event of Default under the
                      Strategic Fund Trust Indenture. Any such transfer shall be
                      made by the registered holder hereof, in person or by his
                      attorney duly authorized in writing, on the books of the
                      Company kept at its office or agency in the Borough of
                      Manhattan, The City and State of New York, upon surrender
                      and cancellation of this bond, and thereupon, a new
                      registered bond of the same series of authorized
                      denominations for a like aggregate principal amount will
                      be issued to the transferee in exchange therefor, and this
                      bond with others in like form may in like manner be
                      exchanged for one or more new bonds of the same series of
                      other authorized denominations, but of the same aggregate
                      principal amount, all as provided and upon the terms and
                      conditions set forth in the Indenture, and upon payment,
                      in any event, of the charges prescribed in the Indenture.

                        No recourse shall be had for the payment of the
                      principal of or the interest on this bond, or for any
                      claim based hereon or otherwise in respect hereof or of
                      the Indenture, or of any indenture supplemental thereto,
                      against any incorporator, or against any past, present or
                      future stockholder, director or officer, as such, of the
                      Company, or of any predecessor or successor corporation,
                      either directly or through the Company or any such
                      predecessor or successor corporation, whether for amounts
                      unpaid on stock subscriptions or by virtue of any
                      constitution, statute or rule of law, or by the
                      enforcement of any assessment or penalty or otherwise
                      howsoever; all such liability being, by the acceptance
                      hereof and as part of the consideration for the issue
                      hereof, expressly waived and released by every holder or
                      owner hereof, as more fully provided in the Indenture.
<PAGE>

                                        21

                                   [FORM OF TRUSTEE'S CERTIFICATE]

FORM OF TRUSTEE'S
CERTIFICATE.            This bond is one of the bonds, of the series designated
                      therein, described in the within-mentioned Indenture.

                                  FIRST CHICAGO TRUST COMPANY OF NEW YORK,
                                    as Trustee

                                  By  ..........................................
                                    Authorized Officer

<Table>
<S>                      <C>
                                                PART II.
                                       RECORDING AND FILING DATA

RECORDING AND FILING OF      The Original Indenture and indentures supplemental
ORIGINAL INDENTURE.        thereto have been recorded and/or filed and
                         Certificates of Provision for Payment have been
                         recorded as hereinafter set forth.
                             The Original Indenture has been recorded as a real
                         estate mortgage and filed as a chattel mortgage in the
                         offices of the respective Registers of Deeds of
                         certain counties in the State of Michigan as set forth
                         in the Supplemental Indenture dated as of September 1,
                         1947, has been recorded as a real estate mortgage in
                         the office of the Register of Deeds of Genesee County,
                         Michigan as set forth in the Supplemental Indenture
                         dated as of May 1, 1974, has been filed in the Office
                         of the Secretary of State of Michigan on November 16,
                         1951 and has been filed and recorded in the office of
                         the Interstate Commerce Commission on December 8,
                         1969.

RECORDING AND FILING OF      Pursuant to the terms and provisions of the
SUPPLEMENTAL               Original Indenture, indentures supplemental thereto
INDENTURES.              heretofore entered into have been recorded as a real
                         estate mortgage and/or filed as a chattel mortgage or
                         as a financing statement in the offices of the
                         respective Registers of Deeds of certain counties in
                         the State of Michigan, the Office of the Secretary of
                         State of Michigan and the Office of the Interstate
                         Commerce Commission, as set forth in supplemental
                         indentures as follows:
</Table>

<Table>
<Caption>
                                                                                RECORDED AND/OR
                                                                             FILED AS SET FORTH IN
                            SUPPLEMENTAL                PURPOSE OF               SUPPLEMENTAL
                              INDENTURE                SUPPLEMENTAL                INDENTURE
                             DATED AS OF                INDENTURE                DATED AS OF:
                            ------------               ------------          ---------------------
                        <S>                    <C>                           <C>
                        June 1, 1925
                          (a)(b).............  Series B Bonds                February 1, 1940
                        August 1, 1927
                          (a)(b).............  Series C Bonds                February 1, 1940
</Table>
<PAGE>

                                        22

<Table>
<Caption>
                                                                                RECORDED AND/OR
                                                                             FILED AS SET FORTH IN
                            SUPPLEMENTAL                PURPOSE OF               SUPPLEMENTAL
                              INDENTURE                SUPPLEMENTAL                INDENTURE
                             DATED AS OF                INDENTURE                DATED AS OF:
                            ------------               ------------          ---------------------
                        <S>                    <C>                           <C>
                        February 1, 1931
                          (a)(b).............  Series D Bonds                February 1, 1940
                        June 1, 1931
                          (a)(b).............  Subject Properties            February 1, 1940
                        October 1, 1932
                          (a)(b).............  Series E Bonds                February 1, 1940
                        September 25, 1935
                          (a)(b).............  Series F Bonds                February 1, 1940
                        September 1, 1936
                          (a)(b).............  Series G Bonds                February 1, 1940
                        November 1, 1936
                          (a)(b).............  Subject Properties            February 1, 1940
                        February 1, 1940
                          (a)(b).............  Subject Properties            September 1, 1947
                        December 1, 1940
                          (a)(b).............  Series H Bonds and            September 1, 1947
                                                 Additional Provisions
                        September 1, 1947
                          (a)(b)(c)..........  Series I Bonds, Subject       November 15, 1951
                                                 Properties and Additional
                                                 Provisions
                        March 1, 1950
                          (a)(b)(c)..........  Series J Bonds and            November 15, 1951
                                                 Additional Provisions
                        November 15, 1951
                          (a)(b)(c)..........  Series K Bonds Additional     January 15, 1953
                                                 Provisions and Subject
                                                 Properties
                        January 15, 1953
                          (a)(b).............  Series L Bonds                May 1, 1953
                        May 1, 1953(a).......  Series M Bonds and Subject    March 15, 1954
                                                 Properties
                        March 15, 1954
                          (a)(c).............  Series N Bonds and Subject    May 15, 1955
                                                 Properties
                        May 15, 1955
                          (a)(c).............  Series O Bonds and Subject    August 15, 1957
                                                 Properties
                        August 15, 1957
                          (a)(c).............  Series P Bonds Additional     June 1, 1959
                                                 Provisions and Subject
                                                 Properties
                        June 1, 1959
                          (a)(c).............  Series Q Bonds and Subject    December 1, 1966
                                                 Properties
                        December 1, 1966
                          (a)(c).............  Series R Bonds Additional     October 1, 1968
                                                 Provisions and Subject
                                                 Properties
</Table>
<PAGE>

                                        23

<Table>
<Caption>
                                                                                RECORDED AND/OR
                                                                             FILED AS SET FORTH IN
                            SUPPLEMENTAL                PURPOSE OF               SUPPLEMENTAL
                              INDENTURE                SUPPLEMENTAL                INDENTURE
                             DATED AS OF                INDENTURE                DATED AS OF:
                            ------------               ------------          ---------------------
                        <S>                    <C>                           <C>
                        October 1, 1968
                          (a)(c).............  Series S Bonds and Subject    December 1, 1969
                                                 Properties
                        December 1, 1969
                          (a)(c).............  Series T Bonds and Subject    July 1, 1970
                                                 Properties
                        July 1, 1970(c)......  Series U Bonds and Subject    December 15, 1970
                                                 Properties
                        December 15, 1970
                          (c)................  Series V and Series W Bonds   June 15, 1971
                        June 15, 1971(c).....  Series X Bonds and Subject    November 15, 1971
                                                 Properties
                        November 15, 1971
                          (c)................  Series Y Bonds and Subject    January 15, 1973
                                                 Properties
                        January 15, 1973
                          (c)................  Series Z Bonds and Subject    May 1, 1974
                                                 Properties
                        May 1, 1974..........  Series AA Bonds and Subject   October 1, 1974
                                                 Properties
                        October 1, 1974......  Series BB Bonds and Subject   January 15, 1975
                                                 Properties
                        January 15, 1975.....  Series CC Bonds and Subject   November 1, 1975
                                                 Properties
                        November 1, 1975.....  Series DDP Nos. 1-9 Bonds     December 15, 1975
                                                 and Subject Properties
                        December 15, 1975....  Series EE Bonds and Subject   February 1, 1976
                                                 Properties
                        February 1, 1976.....  Series FFR Nos. 1-13 Bonds    June 15, 1976
                        June 15, 1976........  Series GGP Nos. 1-7 Bonds     July 15, 1976
                                                 and Subject Properties
                        July 15, 1976........  Series HH Bonds and Subject   February 15, 1977
                                                 Properties
                        February 15, 1977....  Series MMP Bonds and Subject  March 1, 1977
                                                 Properties
                        March 1, 1977........  Series IIP Nos. 1-7 Bonds,    June 15, 1977
                                                 Series JJP Nos. 1-7 Bonds,
                                                 Series KKP Nos. 1-7 Bonds
                                                 and Series LLP Nos. 1-7
                                                 Bonds
                        June 15, 1977........  Series FFR No. 14 Bonds and   July 1, 1977
                                                 Subject Properties
</Table>
<PAGE>

                                        24

<Table>
<Caption>
                                                                                RECORDED AND/OR
                                                                             FILED AS SET FORTH IN
                            SUPPLEMENTAL                PURPOSE OF               SUPPLEMENTAL
                              INDENTURE                SUPPLEMENTAL                INDENTURE
                             DATED AS OF                INDENTURE                DATED AS OF:
                            ------------               ------------          ---------------------
                        <S>                    <C>                           <C>
                        July 1, 1977.........  Series NNP Nos. 1-7 Bonds     October 1, 1977
                                                 and Subject Properties
                        October 1, 1977......  Series GGP Nos. 8-22 Bonds    June 1, 1978
                                                 and Series OOP Nos. 1-17
                                                 Bonds and Subject
                                                 Properties
                        June 1, 1978.........  Series PP Bonds, Series QQP   October 15, 1978
                                                 Nos. 1-9 Bonds and Subject
                                                 Properties
                        October 15, 1978.....  Series RR Bonds and Subject   March 15, 1979
                                                 Properties
                        March 15, 1979.......  Series SS Bonds and Subject   July 1, 1979
                                                 Properties
                        July 1, 1979.........  Series IIP Nos. 8-22 Bonds,   September 1, 1979
                                                 Series NNP Nos. 8-21 Bonds
                                                 and Series TTP Nos. 1-15
                                                 Bonds and Subject
                                                 Properties
                        September 1, 1979....  Series JJP No. 8 Bonds,       September 15, 1979
                                                 Series KKP No. 8 Bonds,
                                                 Series LLP Nos. 8-15
                                                 Bonds, Series MMP No. 2
                                                 Bonds and Series OOP No.
                                                 18 Bonds and Subject
                                                 Properties
                        September 15, 1979...  Series UU Bonds               January 1, 1980
                        January 1, 1980......  1980 Series A Bonds and       April 1, 1980
                                                 Subject Properties
                        April 1, 1980........  1980 Series B Bonds           August 15, 1980
                        August 15, 1980......  Series QQP Nos. 10-19 Bonds,  August 1, 1981
                                                 1980 Series CP Nos. 1-12
                                                 Bonds and 1980 Series DP
                                                 No. 1-11 Bonds and Subject
                                                 Properties
                        August 1, 1981.......  1980 Series CP Nos. 13-25     November 1, 1981
                                                 Bonds and Subject
                                                 Properties
                        November 1, 1981.....  1981 Series AP Nos. 1-12      June 30, 1982
                                                 Bonds
                        June 30, 1982........  Article XIV Reconfirmation    August 15, 1982
                        August 15, 1982......  1981 Series AP Nos. 13-14     June 1, 1983
                                                 and Subject Properties
                        June 1, 1983.........  1981 Series AP Nos. 15-16     October 1, 1984
                                                 and Subject Properties
</Table>
<PAGE>

                                        25

<Table>
<Caption>
                                                                                RECORDED AND/OR
                                                                             FILED AS SET FORTH IN
                            SUPPLEMENTAL                PURPOSE OF               SUPPLEMENTAL
                              INDENTURE                SUPPLEMENTAL                INDENTURE
                             DATED AS OF                INDENTURE                DATED AS OF:
                            ------------               ------------          ---------------------
                        <S>                    <C>                           <C>
                        October 1, 1984......  1984 Series AP and 1984       May 1, 1985
                                                 Series BP Bonds and
                                                 Subject Properties
                        May 1, 1985..........  1985 Series A Bonds           May 15, 1985
                        May 15, 1985.........  1985 Series B Bonds and       October 15, 1985
                                                 Subject Properties
                        October 15, 1985.....  Series KKP No. 9 Bonds and    April 1, 1986
                                                 Subject Properties
                        April 1, 1986........  1986 Series A and Subject     August 15, 1986
                                                 Properties
                        August 15, 1986......  1986 Series B and Subject     November 30, 1986
                                                 Properties
                        November 30, 1986....  1986 Series C                 January 31, 1987
                        January 31, 1987.....  1987 Series A                 April 1, 1987
                        April 1, 1987........  1987 Series B and 1987        August 15, 1987
                                                 Series C
                        August 15, 1987......  1987 Series D and 1987        November 30, 1987
                                                 Series E and Subject
                                                 Properties
                        November 30, 1987....  1987 Series F                 June 15, 1989
                        June 15, 1989........  1989 Series A                 July 15, 1989
                        July 15, 1989........  Series KKP No. 10             December 1, 1989
                        December 1, 1989.....  Series KKP No. 11 and 1989    February 15, 1990
                                                 Series BP
                        February 15, 1990....  1990 Series A, 1990 Series    November 1, 1990
                                                 B, 1990 Series C, 1990
                                                 Series D, 1990 Series E
                                                 and 1990 Series F
                        November 1, 1990.....  Series KKP No. 12             April 1, 1991
                        April 1, 1991........  1991 Series AP                May 1, 1991
                        May 1, 1991..........  1991 Series BP and 1991       May 15, 1991
                                                 Series CP
                        May 15, 1991.........  1991 Series DP                September 1, 1991
                        September 1, 1991....  1991 Series EP                November 1, 1991
                        November 1, 1991.....  1991 Series FP                January 15, 1992
                        January 15, 1992.....  1992 Series BP                February 29, 1992 and
                                                                             April 15, 1992
                        February 29, 1992....  1992 Series AP                April 15, 1992
                        April 15, 1992.......  Series KKP No. 13             July 15, 1992
                        July 15, 1992........  1992 Series CP                November 30, 1992
                        July 31, 1992........  1992 Series D                 November 30, 1992
</Table>
<PAGE>

                                        26

<Table>
<Caption>
                                                                                RECORDED AND/OR
                                                                             FILED AS SET FORTH IN
                            SUPPLEMENTAL                PURPOSE OF               SUPPLEMENTAL
                              INDENTURE                SUPPLEMENTAL                INDENTURE
                             DATED AS OF                INDENTURE                DATED AS OF:
                            ------------               ------------          ---------------------
                        <S>                    <C>                           <C>
                        April 1, 1986........  1986 Series A and Subject     August 15, 1986
                                                 Properties
                        August 15, 1986......  1986 Series B and Subject     November 30, 1986
                                                 Properties
                        November 30, 1986....  1986 Series C                 January 31, 1987
                        January 31, 1987.....  1987 Series A                 April 1, 1987
                        April 1, 1987........  1987 Series B and 1987        August 15, 1987
                                                 Series C
                        August 15, 1987......  1987 Series D and 1987        November 30, 1987
                                                 Series E and Subject
                                                 Properties
                        November 30, 1987....  1987 Series F                 June 15, 1989
                        June 15, 1989........  1989 Series A                 July 15, 1989
                        July 15, 1989........  Series KKP No. 10             December 1, 1989
                        December 1, 1989.....  Series KKP No. 11 and 1989    February 15, 1990
                                                 Series BP
                        February 15, 1990....  1990 Series A, 1990 Series    November 1, 1990
                                                 B, 1990 Series C, 1990
                                                 Series D, 1990 Series E
                                                 and 1990 Series F
                        November 1, 1990.....  Series KKP No. 12             April 1, 1991
                        April 1, 1991........  1991 Series AP                May 1, 1991
                        May 1, 1991..........  1991 Series BP and 1991       May 15, 1991
                                                 Series CP
                        May 15, 1991.........  1991 Series DP                September 1, 1991
                        September 1, 1991....  1991 Series EP                November 1, 1991
                        November 1, 1991.....  1991 Series FP                January 15, 1992
                        January 15, 1992.....  1992 Series BP                February 29, 1992 and
                                                                             April 15, 1992
                        February 29, 1992....  1992 Series AP                April 15, 1992
                        April 15, 1992.......  Series KKP No. 13             July 15, 1992
                        July 15, 1992........  1992 Series CP                November 30, 1992
                        November 30, 1992....  1992 Series E and 1993        March 15, 1993
                                                 Series D
                        December 15, 1992....  Series KKP No. 14 and 1989    March 15, 1992
                                                 Series BP No. 2
                        January 1, 1993......  1993 Series C                 April 1, 1993
                        March 1, 1993........  1993 Series E                 June 30, 1993
</Table>
<PAGE>

                                        27

<Table>
<Caption>
                                                                                RECORDED AND/OR
                                                                             FILED AS SET FORTH IN
                            SUPPLEMENTAL                PURPOSE OF               SUPPLEMENTAL
                              INDENTURE                SUPPLEMENTAL                INDENTURE
                             DATED AS OF                INDENTURE                DATED AS OF:
                            ------------               ------------          ---------------------
                        <S>                    <C>                           <C>
                        March 15, 1993.......  1993 Series D                 September 15, 1993
                        April 1, 1993........  1993 Series FP and 1993       September 15, 1993
                                                 Series IP
                        April 26, 1993.......  1993 Series G and Amendment   September 15, 1993
                                                 of Article II, Section 5
                        May 31, 1993.........  1993 Series J                 September 15, 1993
                        September 15, 1993...  1993 Series K                 March 1, 1994
                        March 1, 1994........  1994 Series AP                June 15, 1994
                        June 15, 1994........  1994 Series BP                December 1, 1994
                        August 15, 1994......  1994 Series C                 December 1, 1994
                        December 1, 1994.....  Series KKP No. 15 and 1994    August 1, 1995
                                                 Series DP
                        August 1, 1995.......  1995 Series AP and 1995       August 15, 1999
                                                 Series DP
</Table>

-------------------------
(a) See Supplemental Indenture dated as of July 1, 1970 for Interstate Commerce
    Commission filing and recordation information.

(b) See Supplemental Indenture dated as of May 1, 1953 for Secretary of State of
    Michigan filing information.

(c) See Supplemental Indenture dated as of May 1, 1974 for County of Genesee,
    Michigan recording and filing information.
<PAGE>

                                        28

RECORDING OF
CERTIFICATES OF
PROVISION FOR
PAYMENT.                All the bonds of Series A which were issued under the
                      Original Indenture dated as of October 1, 1924, and of
                      Series B, C, D, E, F, G, H, I, J, K, L, M, N, O, P, Q, R,
                      S, W, Y, Z, AA, BB, CC, DDP Nos. 1-9, FFR Nos. 1-14, GGP
                      Nos. 1-22, HH, IIP Nos. 1-22, JJP Nos. 1-8, KKP Nos. 1-9,
                      LLP Nos. 1-15, NNP Nos. 1-21, OOP Nos. 1-18, QQP Nos.
                      1-17, TTP Nos. 1-15, UU, 1980 Series A, 1980 Series CP
                      Nos. 1-25, 1980 Series DP Nos. 1-11, 1981 Series AP Nos.
                      1-16, 1984 Series AP, 1984 Series BP, 1985 Series A, 1985
                      Series B, 1987 Series A, PP, RR, EE, MMP, MMP No. 2, 1989
                      Series A 1990 Series A, 1993 Series D, 1993 Series G and
                      1993 Series H which were issued under Supplemental
                      Indentures dated as of, respectively, June 1, 1925, August
                      1, 1927, February 1, 1931, October 1, 1932, September 25,
                      1935, September 1, 1936, December 1, 1940, September 1,
                      1947, November 15, 1951, January 15, 1953, May 1, 1953,
                      March 15, 1954, May 15, 1955, August 15, 1957, December
                      15, 1970, November 15, 1971, January 15, 1973, May 1,
                      1974, October 1, 1974, January 15, 1975, November 1, 1975,
                      February 1, 1976, June 15, 1976, July 15, 1976, October 1,
                      1977, March 1, 1977, July 1, 1979, March 1, 1977, March 1,
                      1977, March 1, 1977, September 1, 1979, July 1, 1977, July
                      1, 1979, September 15, 1979, October 1, 1977, June 1,
                      1978, October 1, 1977, July 1, 1979, January 1, 1980,
                      August 15, 1980, November 1, 1981, October 1, 1984, May 1,
                      1985, May 15, 1985, January 31, 1987, June 1, 1978,
                      October 15, 1978, December 15, 1975, February 15, 1977,
                      September 1, 1979, June 15, 1989 February 15, 1990 and
                      March 15, 1993 April 26, 1992 and September 15, 1992 have
                      matured or have been called for redemption and funds
                      sufficient for such payment or redemption have been
                      irrevocably deposited with the Trustee for that purpose;
                      and Certificates of Provision for Payment have been
                      recorded in the offices of the respective Registers of
                      Deeds of certain counties in the State of Michigan, with
                      respect to all bonds of Series A, B, C, D, E, F, G, H, K,
                      L, M, O, W, BB, CC, DDP Nos. 1 and 2, FFR Nos. 1-3, GGP
                      Nos. 1 and 2, IIP No. 1, JJP No. 1, KKP No. 1, LLP No. 1
                      and GGP No. 8.

                                             PART III.

                                            THE TRUSTEE.

TERMS AND
CONDITIONS OF
ACCEPTANCE OF TRUST
BY TRUSTEE.             The Trustee hereby accepts the trust hereby declared and
                      provided, and agrees to perform the same upon the terms
                      and conditions in the Original Indenture, as amended to
                      date and as supplemented by this Supplemental Indenture,
                      and in this
<PAGE>
                                        29

                      Supplemental Indenture set forth, and upon the following
                      terms and conditions:

                        The Trustee shall not be responsible in any manner
                      whatsoever for and in respect of the validity or
                      sufficiency of this Supplemental Indenture or the due
                      execution hereof by the Company or for or in respect of
                      the recitals contained herein, all of which recitals are
                      made by the Company solely.

                                              PART IV.

                                           MISCELLANEOUS.

CONFIRMATION OF
SECTION 318(C)
OF TRUST
INDENTURE ACT.          Except to the extent specifically provided therein, no
                      provision of this supplemental indenture or any future
                      supplemental indenture is intended to modify, and the
                      parties do hereby adopt and confirm, the provisions of
                      Section 318(c) of the Trust Indenture Act which amend and
                      supercede provisions of the Indenture in effect prior to
                      November 15, 1990.

EXECUTION IN
COUNTERPARTS.           THIS SUPPLEMENTAL INDENTURE MAY BE SIMULTANEOUSLY
                      EXECUTED IN ANY NUMBER OF COUNTERPARTS, EACH OF WHICH WHEN
                      SO EXECUTED SHALL BE DEEMED TO BE AN ORIGINAL; BUT SUCH
                      COUNTERPARTS SHALL TOGETHER CONSTITUTE BUT ONE AND THE
                      SAME INSTRUMENT.

TESTIMONIUM.            IN WITNESS WHEREOF, THE DETROIT EDISON COMPANY
                      AND FIRST CHICAGO TRUST COMPANY OF NEW YORK HAVE CAUSED
                      THESE PRESENTS TO BE SIGNED IN THEIR RESPECTIVE CORPORATE
                      NAMES BY THEIR RESPECTIVE CHAIRMEN OF THE BOARD,
                      PRESIDENTS, VICE PRESIDENTS, ASSISTANT VICE PRESIDENTS,
                      TREASURERS OR ASSISTANT TREASURERS AND IMPRESSED WITH
                      THEIR RESPECTIVE CORPORATE SEALS, ATTESTED BY THEIR
                      RESPECTIVE SECRETARIES OR ASSISTANT SECRETARIES, ALL AS OF
                      THE DAY AND YEAR FIRST ABOVE WRITTEN.

<Table>
<S>                       <C>
                          THE DETROIT EDISON COMPANY,

(Corporate Seal)          By
                                                 ----------------------
                                                 N.A. Khouri
                                                 Vice President
                                                 Treasurer
</Table>
<PAGE>

                                        30

EXECUTION.            Attest:

                      ---------------------------------------
                                  Jack L. Somers
                           Assistant Corporate Secretary

                      Signed, sealed and delivered by THE
                      DETROIT EDISON COMPANY, in the presence
                      of

                      ---------------------------------------
                                      K. Hier

                      ---------------------------------------
                                 Wayne Ginste, Jr.

                      STATE OF MICHIGAN
                      SS.:
                      COUNTY OF WAYNE

ACKNOWLEDGMENT
OF EXECUTION BY
COMPANY.                On this 31st day of August, 2001, before me, the
                      subscriber, a Notary Public within and for the County of
                      Wayne, in the State of Michigan, personally appeared N.A.
                      Khouri, to me personally known, who, being by me duly
                      sworn, did say that he does business at 2000 2nd Avenue,
                      Detroit, Michigan 48226 and is the Vice President
                      Treasurer of THE DETROIT EDISON COMPANY, one of the
                      corporations described in and which executed the foregoing
                      instrument; that he knows the corporate seal of the said
                      corporation and that the seal affixed to said instrument
                      is the corporate seal of said corporation; and that said
                      instrument was signed and sealed in behalf of said
                      corporation by authority of its Board of Directors and
                      that he subscribed his name thereto by like authority; and
                      said N.A. Khouri, acknowledged said instrument to be the
                      free act and deed of said corporation.

<Table>
<S>                       <C>
                          ------------------------------------------------
(Notarial Seal)
</Table>
<PAGE>
                                        31

<Table>
<S>                                             <C>
                                                FIRST CHICAGO TRUST COMPANY OF
                                                New York,

(Corporate Seal)                                By
                                                   ---------------------------------
                                                   Steven M. Wagner
                                                   Vice President
</Table>

                      Attest:

                      ---------------------------------------

                      Signed, sealed and delivered by FIRST
                      CHICAGO TRUST COMPANY of New York, in
                      the presence of

                      ---------------------------------------

                      ---------------------------------------

                      STATE OF ILLINOIS
                      SS.:
                      COUNTY OF COOK

ACKNOWLEDGMENT
OF EXECUTION BY
TRUSTEE.                On this      day of           , 2001, before me, the
                      subscriber, a Notary Public within and for the County of
                      Cook, in the State of Illinois, personally appeared Steven
                      M. Wagner, to me personally known, who, being by me duly
                      sworn, did say that his business office is located at 1
                      Bank One Plaza, Chicago, Illinois, and he is a Vice
                      President of FIRST CHICAGO TRUST COMPANY of New York, one
                      of the corporations described in and which executed the
                      foregoing instrument; that he knows the corporate seal of
                      the said corporation and that the seal affixed to said
                      instrument is the corporate seal of said corporation; and
                      that said instrument was signed and sealed in behalf of
                      said corporation by authority of its Board of Directors
                      and that he subscribed his name thereto by like authority;
                      and said Steven Wagner acknowledged said instrument to be
                      the free act and deed of said corporation.

<Table>
<S>                       <C>
                          ------------------------------------------------
(Notarial Seal)
</Table>
<PAGE>
                                        32

                      STATE OF MICHIGAN
                                          SS.:
                      COUNTY OF WAYNE

AFFIDAVIT AS TO
CONSIDERATION AND
GOOD FAITH.             N.A. Khouri, being duly sworn, says: that he is the Vice
                      President and Treasurer of THE DETROIT EDISON COMPANY, the
                      Mortgagor named in the foregoing instrument, and that he
                      has knowledge of the facts in regard to the making of said
                      instrument and of the consideration therefor; that the
                      consideration for said instrument was and is actual and
                      adequate, and that the same was given in good faith for
                      the purposes in such instrument set forth.

<Table>
<S>                       <C>
                          ------------------------------------------------
                          N.A. Khouri
</Table>

                      Sworn to before me this 31st day of August, 2001

  This instrument was drafted by Frances B. Rohlman, Esq., 2000 2nd Avenue,
Detroit, Michigan 48226

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}]]