SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
Date of Report (date of earliest event reported): October 31, 1996
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PRAB, INC.
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(Exact name of registrant as specified in its charter)
Michigan 0-10187 38-1654849
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(State or other jurisdiction) (Commission (IRS Employer
or incorporation) File Number) Identification No.)
5944 E. Kilgore Road, Kalamazoo, Michigan 49003
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (616) 382-8200
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Item 1. Changes in Control of Registrant.
Management of the Company believes the events described below
constitute a change in control of the Company. It is unclear to management
which person or persons acquired control of the Company as a result of such
events.
On October 31, 1996, the Company purchased from the State of Michigan
Retirement Systems ("SMRS") the following shares of the Company's stock:
600,000 shares of non-convertible preferred stock for a purchase price of
$300,000, plus accrued unpaid dividends; 1,633,333 shares of convertible
preferred stock at a price of $1.35 per share; and 1,013,770 shares of common
stock at a price of $1.35 per share (collectively the "Repurchased Shares").
The aggregate purchase price of $3,897,589.05 (including accrued dividends)
for the Repurchased Shares was paid in cash by the Company on October 31,
1996. The purchase prices for the Repurchased Shares were determined by
negotiations between the Company and SMRS.
Prior to the Company's purchase of the Repurchased Shares, SMRS
beneficially owned 66% of the common stock of the Company. After sale of the
Repurchased Shares, SMRS beneficially owned 17% of the common stock of the
Company.
To finance the purchase of the Repurchased Shares, the Company
borrowed: (i) $2,704,000 from FMB-Arcadia Bank pursuant to a $1,800,000 term
note bearing interest at the Bank's prime rate plus 1/2% per annum and payable
in 20 quarter annual installments of $90,000 each plus interest and a
revolving line of credit in the maximum amount of $1,670,000 bearing interest
at the Bank's prime rate plus 1/2% per annum and payable in monthly
installments of interest only with all principal due on March 31, 1997; and
(ii) $680,000 from certain management personnel and other persons pursuant to
Subordinated Capital Notes (the "Subordinated Capital Notes"). The Company
used cash on hand of $513,589.05 to pay the balance of the purchase prices for
the Repurchased Shares.
The Subordinated Capital Notes in the aggregate principal amount of
$680,000 provide for interest at the rate of 12% per annum payable in quarter
annual installments commencing January 31, 1997 and for payment of all
principal on October 31, 2001. Payment of the Subordinated Capital Notes has
been subordinated to payment of: (i) the Company's debt to FMB-Arcadia Bank
pursuant to certain Subordination Agreements executed by the payees of the
Subordinated Capital Notes in favor of such bank; and (ii) all indebtedness
and obligations of the Company pursuant to the terms of the Subordinated
Capital Notes. In consideration of the loans evidenced by the Subordinated
Capital Notes, the payees of such Notes were issued warrants by the Company to
purchase an aggregate of 123,249 shares of the common stock of the Company for
nominal value. All of such warrants were exercised on October 31, 1996. The
following chart sets forth the names of the lenders holding the Subordinated
Capital Notes, the principal amount borrowed by the Company from each such
lender, and the number of shares of common stock issued
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to each such lender pursuant to his exercise of the warrants issued in
connection with the Subordinated Capital Notes:
<TABLE>
<CAPTION>
Name Amount Loaned Number of Shares
---- ------------- ----------------
<S> <C> <C>
Gary Herder $ 77,500 14,047
Robert Meyer 40,000 7,250
Robert Klinge 25,000 4,531
Joseph Durlach 15,000 2,719
Eric Brown, Jr. 53,250 9,651
William Blunt 117,000 21,206
David Blunt 117,000 21,206
John Garside 118,250 21,433
Richard Leet 117,000 21,206
</TABLE>
As a result of the Company's purchase of the Repurchased Shares: the
Company's long-term debt increased from $ 0 to $2,342,000; total stockholders'
equity decreased by approximately $4,008,000; the number of outstanding shares
of common stock decreased from 2,647,860 shares to 1,757,339 shares; cash
decreased by $720,000 (including the payment of certain expenses arising from
the purchase of the Repurchased Shares); the Company anticipates that its
annual interest expense will increase by approximately $360,000; and during
fiscal year 1997, the Company intends to repay approximately $1,000,000 of the
indebtedness borrowed from FMB-Arcadia Bank to purchase the Repurchased Shares
(which $1,000,000 will include the $360,000 of scheduled principal payments on
the Company's long-term debt to FMB-Arcadia Bank), assuming that sufficient
cash flow is available to the Company.
In connection with the purchase of the Repurchased Shares: the
Company's Profit Sharing Plan purchased 52,897 shares of the Company's common
stock from SMRS at a price of $1.35 per share; John J. Wallace, Chairman of
the Board of the Company and the beneficial owner of 356,424 shares of the
outstanding common stock of the Company entered into a Standstill Agreement
with SMRS pursuant to which Mr. Wallace agreed not to sell any of the
Company's common stock for a period of three (3) years; and Gary A. Herder,
President of the Company and certain other senior management personnel entered
into Standstill Agreements with SMRS providing for such persons to refrain
from exercising any stock options granted to them by the Company for a period
of three (3) years.
Item 7. Financial Statements and Exhibits.
(a) Financial statements - none
(b) Proforma financial information - none
(c) Exhibits
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Exhibit No. Description of Exhibit
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4a $77,500 Subordinated Capital Note dated
October 31, 1996 from the Company to Gary
A. Herder (except for varying principal
amounts, the terms of Mr. Herder's
Subordinated Capital Note are identical to the
terms of all other Subordinated Capital Notes
issued by the Company in the aggregate
principal amount of $680,000 on October 31,
1996).
4b $1,800,000 Commercial Term Note
dated October 31, 1996 from the
Company to FMB-Arcadia Bank.
4c Security Agreement with Addendum dated
October 31, 1996 from the Company to
FMB-Arcadia Bank.
4d Future Advance Mortgage dated
October 30, 1992 from the Company
to FMB-Arcadia Bank (formerly
known as Arcadia Bank), together
with Amendment to Mortgage dated
October 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 14, 1996 PRAB, INC.
By: /s/ Gary A. Herder
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Gary A. Herder
Its: President
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EXHIBIT INDEX
Exhibit No. Description of Exhibit
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4a $77,500 Subordinated Capital Note dated
October 31, 1996 from the Company to Gary
A. Herder (except for varying principal
amounts, the terms of Mr. Herder's
Subordinated Capital Note are identical to the
terms of all other Subordinated Capital Notes
issued by the Company in the aggregate
principal amount of $680,000 on October 31,
1996).
4b $1,800,000 Commercial Term Note
dated October 31, 1996 from the
Company to FMB-Arcadia Bank.
4c Security Agreement with Addendum dated
October 31, 1996 from the Company to
FMB-Arcadia Bank.
4d Future Advance Mortgage dated
October 30, 1992 from the Company
to FMB-Arcadia Bank (formerly
known as Arcadia Bank), together
with Amendment to Mortgage dated
October 31, 1996.
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EXHIBIT 4a
SUBORDINATED CAPITAL NOTE
Date: October 31, 1996 Amount $77,500.00
Final Installment Due Date: October 31, 2001
1. Promise to Pay. The undersigned promises to pay to the order of
Gary A. Herder (the "Lender"), at 5944 East Kilgore Road, Kalamazoo, Michigan
49001, the sum of Seventy-Seven Thousand Five Hundred and No/100 U.S. Dollars
($77,500.00) and to pay interest on the unpaid balance at the rate of 12% per
annum until this Note becomes due, whether by default or maturity.
Interest on the unpaid balance of this Note shall be payable in
quarter annual installments commencing January 31, 1997 and on the last day of
each April, July, October and January thereafter, until October 31, 2001 on
which date the entire unpaid balance of principal and interest shall be due
and payable in full.
The Lender may charge a late charge equal to 1 1/2% of each
installment which is received by the Lender more than ten (10) days after such
payment is due under the terms of this Note. If any payment applied by the
Lender to this Note is subsequently set aside, recovered, rescinded or
otherwise required to be returned or disgorged by the Lender for any reason
(pursuant to bankruptcy proceedings, fraudulent conveyance statutes, or
otherwise), this Note shall be deemed to have continued in existence,
notwithstanding the application, and this Note shall be enforceable as to the
amount of such payment as fully as if the Lender had not received and applied
the payment.
2. Prepayment. Except as set forth in Section 3 below, this Note
may be prepaid in whole or in part at any time, without premium or penalty,
and in the case of prepayment of less than all the outstanding principal and
interest of this Note, the prepayment shall be applied first to accrued and
unpaid interest and then to principal; provided, however, that any prepayment
of principal shall be prorated among the principal debt outstanding for all
Subordinated Notes issued by the undersigned on the date hereof in the
aggregate principal amount of $680,000.
3. Subordination and Cancellation. The indebtedness evidenced by
this Note, principal and interest, shall be subordinate and junior in right to
payment to the extent set forth in this Section 3 to all principal and
interest of all indebtedness and obligations of the undersigned PRAB, INC.
(the "Company") whether outstanding at the date hereof or created or incurred
after the date hereof, including, but not limited to, indebtedness and
obligations arising out of loans, accounts payable, and all contractual
obligations of the Company (the "Senior Debt"); provided that for purposes of
this Section 3, Senior Debt does not include the indebtedness and obligations
of the undersigned to FMB-Arcadia Bank whether such indebtedness is
outstanding at the date hereof or created or incurred after the date hereof
(the "Bank Debt"). The indebtedness evidenced by this Note has been
subordinated in right of payment to the Bank Debt pursuant to the terms of a
Subordination Agreement from the Company and the Lender to FMB-Arcadia Bank of
even date herewith. Any transferee of this Note takes this Note subject to the
provisions of such Subordination Agreement which imposes certain restrictions
on payment of this Note.
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a. Interest Payments. The Lender and any subsequent holder
hereof (collectively the "Payees"), shall have the right (subject to
Sections b and j below) to enforce payment of all interest when due
under this Note; provided that the Payees hereby agree not to
accelerate payment of this Note upon occurrence of any event of
default hereunder, until all Senior Debt has been paid in full.
b. Liquidation, Etc. Upon any distribution of all or
substantially all of the Company's assets prior to payment of all
principal due under this Note in accordance with the provisions of
Section c below, whether by reason of sale, reorganization,
liquidation, dissolution, arrangement, bankruptcy, receivership,
assignment for the benefit of creditors, foreclosure or otherwise,
holders of Senior Debt (the "Senior Debt Holders") shall be entitled
to receive payment in full for the Senior Debt before any payment on
account of principal or interest is made upon this Subordinated Note.
c. Payment of Principal. Notwithstanding anything to the
contrary contained herein, the principal amount due under this Note
may be paid by the Company to the Payees (whether as a prepayment or
on and after maturity on October 31, 2001) if, and only if, at the
time of each such payment of principal, such payment could lawfully be
made by the Company as a distribution to its shareholders pursuant to
Section 345 of the Michigan Business Corporation Act (MCLA ss.
450.1345)
d. Receipt of Certain Payments. In the event the Payees shall
receive any payment with respect to this Subordinated Note that they
are not entitled to retain pursuant to Sections b and c, such payment
shall be immediately paid by the Payees to the Company and, until so
delivered, shall be held in trust by the Payees on behalf of the
Company.
e. Transfer. The Payees shall not assign this Subordinated Note
without having first delivered to the Company prior written notice of
any assignment and an acknowledgement and agreement of the assignee to
be bound by the terms and provisions of this Section 3.
f. Continuing Subordination. This Section 3 shall constitute a
continuing agreement of subordination, and any Senior Debt Holder may,
without notice to the Payees, lend monies, extend credit and make
other financial accommodations to or for the account of the Company.
g. Further Agreements with the Company. Any Senior Debt Holder,
at any time and from time to time, may enter into such agreement or
agreements with the Company as such holder may deem proper extending
the time of payment or renewing or otherwise altering the terms of all
or any Senior Debt or affecting any security or guaranty underlying
any or all of such indebtedness, or may exchange, sell or surrender or
otherwise deal with any security, or may release any balance of funds
of the Company, without notice to the Payees and without in any way
impairing of affecting the subordination provided in this Section 3.
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h. No Waiver. A Senior Debt Holder's delay in or failure to
exercise any right or remedy shall not be deemed a waiver of any
obligation of the Payees or right of such holder. This Section 3 may
be modified, or any Senior Debt Holder's rights hereunder waived, only
by agreement in writing signed by the Senior Debt Holders, the
undersigned and the Payees.
i. Benefit. This Section shall inure to the benefit of the
successors and assigns of all Senior Debt Holders and bind the
successors, heirs, legal representatives, and assigns of the Payees.
j. Cancellation of Debt. In the event any judgment, order, or
finding is issued by any federal, state, or bankruptcy court of
competent jurisdiction determining that all or any part of the
"Acquisition Transactions" (as defined below) constituted a
"Fraudulent Transfer" (as defined below), then: (i) this Note shall be
discharged, void and unenforceable; (ii) all amounts paid by the
Company to the Payees pursuant to the terms of this Note shall be
immediately returned by the Payees to the Company; and (iii) the
Company shall have no obligation to pay any amounts to the Payees
arising from the indebtedness and loans evidenced by this Note. The
term "Acquisition Transactions" means, the transactions arising out of
or relating to the purchase by the Company of stock of the Company
from the State of Michigan Retirement Systems as contemplated by a
Stock Purchase and Sale Agreement of even date herewith; the issuance
of this Note by the Company; and the indebtedness incurred by the
Company to FMB-Arcadia Bank and the granting of liens in the Company's
property to FMB-Arcadia Bank to secure such indebtedness. The term
"Fraudulent Transfer" means: a conveyance determined to be fraudulent
under the Michigan Uniform Fraudulent Conveyance Act (MCLA ss. 566.11
et seq.); any transfer which may be avoided pursuant to Section 548 of
the Bankruptcy Code (11 U.S.C. ss. 548); any other conveyance
determined to be fraudulent as to creditors of the Company under any
existing or future federal or state statute; or a "distribution"
prohibited by Section 345 of the Michigan Business Corporation Act
(MCLA ss. 450.1345).
4. Default. Occurrence of any of the following events shall be an
"Event of Default" under this Note: (a) non-payment when due of any payment
due under this Note if such non-payment continues for ten (10) days; (b)
failure of the undersigned to comply with any material term of any agreement
between the undersigned and the Lender; (c) the undersigned becomes insolvent
or unable to pay debts as they mature or makes an assignment for the benefit
of creditors or any proceeding is instituted by or against the undersigned
under any bankruptcy, insolvency or similar laws or any judgment is entered or
any writ of attachment, garnishment or execution or tax lien is issued or
levied against the undersigned or any of its properties; (d) any material
indebtedness of the undersigned becomes due by reason of default and/or
acceleration of the maturity thereof; (e) dissolution, merger, or
consolidation of the undersigned; or (f) cessation of the normal business
operations of the undersigned.
5. Remedies on Default. Upon occurrence of an Event of Default:
(a) this Note shall, at the Lender's option, be immediately due and payable
without demand or notice; and (b) the Lender may exercise any right and
remedies granted to it by this Note or otherwise available to the Lender under
applicable law. The undersigned agrees to pay all expenses of
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<PAGE>
the Lender, including reasonable attorneys' fees incurred by the Lender, in
seeking collection of this Note (including participating or taking action in
any bankruptcy or other insolvency proceeding of the undersigned).
6. Waivers. The undersigned waives demand, presentment, notice
of dishonor and protest and consents to: (a) any extension or postponement of
the time for payment; and (b) any renewal of this Note or indulgences granted
by the Lender with respect to enforcement of its terms.
7. Miscellaneous. All persons signing this Note on behalf of a
corporation warrant to the Lender that they are duly and properly authorized
to execute this Note and that the proceeds will be used by the entity for
business purposes. Nothing in this Note shall waive or restrict any right of
the Lender granted in any other document or by law. No delay on the part of
the Lender in the exercise of any right or remedy shall operate as a waiver.
No single or partial exercise by the Lender of any right or remedy shall
preclude any other future exercise of that right or remedy or the exercise of
any other right or remedy. The terms and conditions of this Note may not be
amended, waived or modified except in a writing signed by the Lender expressly
stating that the writing constitutes an amendment, waiver, or modification of
the terms of this Note. A waiver on one occasion shall not be construed as a
waiver of that term on any future occasion. Acceptance of partial or late
payments owing on this Note at any time shall not be deemed a waiver of any
default. All rights, remedies and security granted to the Lender herein are
cumulative and in addition to other rights, remedies or security which may be
granted elsewhere or by law. Whenever possible, each provision of this Note
shall be interpreted in such manner as to be effective and valid under
applicable law. If any provision hereof shall be declared invalid or illegal
it shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of the provision or the remaining
provisions of this Note. Any reference to the Lender shall include any holder
of this Note and any holder shall succeed to the Lender's rights. This Note
shall bind the successors and assigns of the undersigned. The undersigned
agrees that any action for enforcement of this Note may be brought in any
municipal or state court in Kalamazoo County, Michigan, having jurisdiction of
the subject matter; it consents to personal jurisdiction over it by such
courts; and it consents to venue in such courts. This Note has been executed
in Michigan and is governed by Michigan law.
Borrower's Address: Borrower:
5944 East Kilgore Road PRAB, INC., a Michigan corporation
Kalamazoo, MI 49001
By: /s/ Gary A. Herder
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Gary A. Herder
Its: President
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EXHIBIT 4b
COMMERCIAL TERM NOTE
Date October 31, 1996 Amount $1,800,000 Customer No. 600398
Final Installment Due Date October 31, 2001 Note No. 60027042
Promise to Pay. The undersigned promise(s) to pay to the order of
FMB-ARCADIA BANK (the "Bank"), at any office of the Bank in the State of
Michigan, the sum of One Million Eight Hundred Thousand and no/100 U.S.
Dollars and to pay interest on the unpaid balance at the rate of 0.50% per
annum above the prime rate until either an Event of Default (as defined below)
occurs or this Note becomes due, whether by default, demand or maturity, and
thereafter at a rate equal to the rate of interest otherwise prevailing
hereunder plus 2% per annum. In no event shall the interest rate exceed the
maximum rate allowed by law.
This Note shall be payable in 20 installments beginning on the 31st
day of January, 1997, and continuing on the same day of each subsequent
quarter. The amount of each installment, except the final installment, shall
be $90,000 plus accrued interest to date of payment. The final installment
shall be equal to the entire unpaid balance of principal and accrued interest.
The Bank may charge a late charge equal to five percent (5%) of each
installment which is received by the Bank more than ten (10) days after due.
Acceptance of the late charge shall not waive any default under this Note. All
payments hereunder shall be in immediately available United States funds,
without setoff or counterclaim. Any payments of principal in excess of the
installment payments required shall apply to the installments last falling
due. If this Note or any installment thereon shall become payable on a day
other than a day on which the Bank is open for business, such payment shall be
extended to the next succeeding business day and interest thereon shall be
payable at the rate herein specified during the extension. In the event the
Bank's Prime Rate increases, the Bank in its sole discretion may, from time to
time, recalculate the amount of the installment payments so that each
installment will be in an amount sufficient to pay the principal due for each
installment plus all accrued interest at the same rate of amortization which
was in effect on the date of this Note and the undersigned agrees to pay the
installments as recalculated by the Bank. If any payment applied by the Bank
to this Note is subsequently set aside, recovered, rescinded or otherwise
required to be returned or disgorged by the Bank for any reason (pursuant to
bankruptcy proceedings, fraudulent conveyance statutes, or otherwise), this
Note shall be deemed to have continued in existence, notwithstanding the
application, and this Note shall be enforceable as to the amount of such
payment as fully as if the Bank had not received and applied the payment.
<PAGE>
Calculation of Interest. Interest shall be calculated for the actual
number of days outstanding on the basis of a 360 day year. Any reference in
this Note to "Prime Rate" means the annual rate of interest designated by the
Bank as its Prime Rate which may be changed at any time by the Bank and which
may not be the lowest rate charged by the Bank to any of its customers. If the
rate of interest on this Note is determined by reference to the Prime Rate;
interest rate changes will be effective, as and when the Bank changes its
Prime Rate.
Security. This Note and any other indebtedness and liabilities of any
of the undersigned to the Bank, and all renewals or extensions thereof,
whether joint or several, contingent or absolute, now existing or hereafter
arising, and howsoever evidenced (herein collectively called the
"Liabilities") are secured by all items now or hereafter deposited in any
account of any of the undersigned and any guarantor with the Bank and by all
proceeds of such items (cash or otherwise), by all account balances of any of
the undersigned and any guarantor now or hereafter with the Bank, by all
property of any of the undersigned and any guarantor now or hereafter in the
possession of the Bank, and by any other collateral, rights and properties
described in each and every mortgage, security agreement, pledge, assignment
and other security or collateral agreement which has been, or will hereafter
be, executed by any of the undersigned or any guarantor to or for the benefit
of the Bank (all herein collectively called the "Collateral").
Default. Occurrence of any of the following events shall be an "Event
of Default" under this Note: (a) non-payment when due, of this Note or any
other Liabilities, or any obligations of any guarantor to the Bank; (b)
failure of the undersigned or any guarantor to comply with any term of any
agreement between any of them and the Bank; (c) the Bank discovers that any
warranty or representation made to it by the undersigned or any guarantor was
or is false; (d) the undersigned or any guarantor becomes insolvent or unable
to pay debts as they mature or makes an assignment for the benefit of
creditors or any proceeding is instituted by or against any of them under any
bankruptcy, insolvency or similar laws or any judgment is entered or any writ
of attachment, garnishment or execution or tax lien is issued or levied
against any one of them, any of their property or the Collateral; (e) any
indebtedness of the undersigned or any guarantor becomes due by reason of
default and/or acceleration of the maturity thereof; (f) death or incompetency
of the undersigned or any guarantor, if a natural person; dissolution or death
of a partner of the undersigned or any guarantor, if a partnership;
dissolution, merger, consolidation or a material change in the ownership of
the voting stock of the undersigned or any guarantor, if a corporation;
dissolution, merger, or change in the members of the undersigned, if a limited
liability company; (g) cessation of the normal business operations of the
undersigned or any guarantor; (h) actual, impending, or reasonably anticipated
decline in the value of the Collateral or the Bank deems the margin of the
Collateral securing the Liabilities to be insufficient; (i) sale of any assets
of the undersigned, other than sales of inventory in the ordinary course of
business; (j) if the control or management of the undersigned or any guarantor
changes in a manner which adversely affects, in the sole judgment of the Bank,
the ability of the undersigned or any guarantor to carry on its business as
previously conducted; (k) failure of the undersigned or any guarantor to pay,
when due, any federal, state, or local tax, assessment, withheld tax, or
similar obligation; (l) any guaranty of, or document granting security for,
any of the Liabilities shall, at any time, cease to be in full force and
effect or be declared null and void, or any party to such guaranty or security
document (other than the Bank) denies that it has any further liability
thereunder (by giving notice to such effect or otherwise) or contests the
validity or
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enforceability thereof; or (m) the Bank deems itself insecure, in good faith,
believing that the prospect of payment of this Note or any of the Liabilities
is impaired or in good faith fearing deterioration, removal or waste of any of
the Collateral.
Remedies on Default. Upon occurrence of an Event of Default: (a) this
Note and all of the other Liabilities (regardless of any contrary terms of
such Liabilities) shall, at the Bank's option, be immediately due and payable
without demand or notice; (b) the Bank may exercise any right and remedies
granted to it by this Note, any of the Liabilities or any present or future
agreement with any of the undersigned or any guarantor, or otherwise available
to the Bank under applicable law; (c) the Bank may exercise its right of
set-off and/or take possession of and dispose of any of the Collateral. The
undersigned and all guarantors agree to pay all expenses of the Bank,
including reasonable attorneys' fees incurred by the Bank, in seeking
collection of this Note and the other Liabilities (including participating or
taking action in any bankruptcy or other insolvency proceeding of the
undersigned or any guarantor).
WAIVERS. Each of the undersigned and every guarantor severally waives
demand, presentment, notice of dishonor and protest and consents to: (a) any
extension or postponement of the time for payment; (b) any renewal of this
Note or indulgences granted by the Bank with respect to enforcement of its
terms; (c) any substitution, exchange or release of all or any part of the
Collateral; (d) the addition, substitution or release of any maker or
guarantor; and (e) the election by the Bank not to seek enforcement against
any person or entity which may be liable for payment of this Note.
Miscellaneous. "Guarantor" as used herein means any person or entity
endorsing or guaranteeing, or granting security for this Note in any manner.
The obligations of the undersigned and all guarantors under this Note shall be
joint and several; and each of the undersigned and each guarantor shall be
individually liable for all amounts due under this Note. All persons signing
this Note on behalf of a corporation, partnership, trust or other entity
warrants to the Bank that they are duly and properly authorized to execute
this Note and that the proceeds will be used by the entity for business
purposes. Nothing in this Note shall waive or restrict any right of the Bank
granted in any other document or by law. No delay on the part of the Bank in
the exercise of any right or remedy shall operate as a waiver. No single or
partial exercise by the Bank of any right or remedy shall preclude any other
future exercise of that right or remedy or the exercise of any other right or
remedy. The terms and conditions of this Note may not be amended, waived or
modified except in a writing signed by an officer of the Bank expressly
stating that the writing constitutes an amendment, waiver, or modification of
the terms of this Note. A waiver on one occasion shall not be construed as a
waiver of that term on any future occasion. Acceptance of partial or late
payments owing on this Note at any time shall not be deemed a waiver of any
default. All rights, remedies and security granted to the Bank herein are
cumulative and in addition to other rights, remedies or security which may be
granted elsewhere or by law. Whenever possible, each provision of this Note
shall be interpreted in such manner as to be effective and valid under
applicable law. If any provision hereof shall be declared invalid or illegal
it shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of the provision or the remaining
provisions of this Note. Any reference to the Bank shall include any holder of
this Note and any holder shall succeed to the Bank's rights. This Note shall
bind the respective heirs, personal representatives, successors and assigns of
the undersigned and all guarantors. The undersigned and all guarantors agree
that any action against them for enforcement of this Note may be brought in
any municipal or state court in
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Kalamazoo County, Michigan, having jurisdiction of the subject matter; they
consent to personal jurisdiction over them by such courts; and they consent to
venue in such courts. This Note has been executed in Michigan and is governed
by Michigan law. The undersigned and all guarantors agree to reimburse the
Bank for all expenses incurred by the Bank in its investigation, processing,
and preparation for closing of the loan evidenced by this Note including
attorneys' fees and costs, title insurance fees, survey fees, appraisal fees,
and other out-of-pocket expenses.
WAIVER OF JURY TRIAL. THE UNDERSIGNED AND THE BANK EACH HEREBY
KNOWINGLY AND VOLUNTARILY, WITHOUT COERCION, WAIVE ALL RIGHTS TO A TRIAL BY
JURY OF ALL DISPUTES BETWEEN THEM ARISING OUT OF THIS NOTE, ANY OF THE
LIABILITIES, OR ANY ALLEGED ACT OR NEGLECT OF THE BANK.
Renewal. This Note is, in part or whole, a renewal of the unpaid
balance of a $___________________ note dated _______________________, 19____
from the undersigned to the Bank.
Borrower(s)' Address: Borrower(s):
PRAB, INC.
5944 East Kilgore Road By: /s/ Gary A. Herder
Kalamazoo, MI 49003 ------------------
Gary A. Herder
Its: President
4
EXHIBIT 4c
SECURITY AGREEMENT
Date: October 31, 1996
Debtor's Name: Prab, Inc. ("Debtor")
Debtor's Mailing Address: 5944 E. Kilgore Road, Kalamazoo, Michigan 49003
Bank may give all notices to Debtor at the above address until
advised in writing by Debtor to the contrary
Bank's Name: FMB-Arcadia Bank (the "Bank")
Bank's Mailing Address: 251 E. Michigan Avenue, Kalamazoo, Michigan 490078
- ------------------------------------------------------------------------------
Debtor agrees with the Bank as follows:
1. Liabilities Secured. The obligations which are secured by this
Agreement are referred to collectively as the "Liabilities" and are as
follows: Payment of all loans, advances and/or commitments made by the Bank to
Debtor, together with interest thereon and other sums owing pursuant thereto;
payment and performance of the provisions of this Security Agreement; payment
and performance of all notes, undertakings, obligations, debts, liabilities,
agreements, applications or agreements for issuance of letters of credit,
assignments, guarantees, or promises of or by Debtor to or with the Bank,
whether due, existing or arising, now or in the future, absolute or
contingent, direct or indirect, however arising or acquired by the Bank, and
including obligations originally owing by Debtor to a third party and assigned
by such third party to the Bank; payment and performance of all existing and
future obligations (including the kinds of obligations described above) to the
Bank of any persons or entities for which Debtor is or becomes an
accommodation party, surety or guarantor or whose obligations this Security
Agreement is given to secure; and all extensions, renewals and modifications
of the foregoing. If more than one person appears as Debtor above, the
Liabilities shall include, without limitation, all of the foregoing joint,
several and individual obligations of each such person to the Bank. Debtor
agrees that if the proceeds of any of the Liabilities created in the future
are utilized to pay and/or renew any of the Liabilities existing at this time,
such future Liabilities shall be presumed to be renewals or extensions of the
existing Liabilities.
2. Collateral. As security for the "Liabilities" as defined in
Section 1 above, Debtor hereby assigns and grants to the Bank a continuing
security interest and lien in the following (hereinafter referred to as the
"Collateral"): All personal property and fixtures owned by Debtor or in which
Debtor has rights, whether now or hereafter existing or acquired by Debtor and
wherever located; all accessions, additions,
<PAGE>
replacements and substitutions of or for the foregoing; and all cash,
non-cash, insurance and other proceeds of the foregoing. The term "Personal
Property" means all tangible and intangible property and rights in which a
security interest or lien may be taken including, but not limited to, all
goods, equipment, inventory, accounts, contract rights, documents,
instruments, general intangibles, chattel paper, money, and deposit accounts
of Debtor with the Bank.
3. Special Representations, Warranties and Agreements. Debtor
represents, warrants and agrees that at all times this Agreement is in effect:
3.1 Assumed Names. Any business conducted by Debtor under
any assumed name shall be subject to this Agreement and any assets now or
hereafter owned by Debtor under any assumed name shall be subject to the
security interest granted by this Agreement. Debtor represents that all
assumed names under which Debtor presently conducts business are as follows:
Prab Conveyors, Hapman Conveyors, Prab Hapman, Prab Robots, Inc., Prab Robots.
Debtor will immediately notify the Bank of any new assumed name, and any
change in its name or any assumed name.
3.2 Addresses.
A. Debtor's Chief Executive Office (or residence if
Debtor is an individual) is in the State of Michigan, County of
Kalamazoo. The address is 5944 East Kilgore Road, Kalamazoo, MI 49003.
B. All other places of business or residences of
Debtor or places where the Collateral may be kept are as follows:
(List State, County and Address)
1. None
C. The Collateral shall not be kept at any location
other than the locations specified in this Section 3.2, and Debtor
shall not remove its Chief Executive Office from the State indicated
in Section 3.2A., without the prior written consent of the Bank.
3.3 TIN. Debtor warrants that Debtor's federal employer
tax identification number is 38-1654849 or, if Debtor is an individual,
Debtor's social security number is ________________________.
3.4 Financial Information. Debtor shall furnish to the
Bank the following:
A. Within thirty (30) days after each _____________
during its fiscal year, a balance sheet and statement of income as
at the
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end of and for such period, all in reasonable detail and certified by
Debtor's chief financial officer to be true, accurate and complete.
B. Within ninety (90) days after the end of each
fiscal year, a balance sheet and income statement, reconciliation of
capital account and source and application of funds as at the end of
and for the fiscal year just closed setting forth the corresponding
figures of the previous fiscal year in comparative form, all in
reasonable detail and certified by Debtor's chief financial officer to
be true, accurate and complete. At the request of the Bank, Debtor
shall provide to the Bank an unqualified certificate, without
exception, by an independent certified public accountant acceptable to
the Bank as to such financial statements.
C. Within ten (10) days after and as of the end of
each month (and at such other time or times as the Bank may request),
a schedule identifying each of Debtor's accounts receivable and
further identifying each Eligible Accounts Receivable (as defined in
Section 8.1). Debtor will from time to time deliver to the Bank at the
Bank's request additional schedules, certificates and information as
the Bank may require respecting the Collateral, the terms or amounts
received by Debtor in full or partial payment of any of the
Collateral, and any goods (the sale or lease of which by Debtor shall
have given rise to any of the Collateral) possession of which has been
obtained by Debtor. Any such schedule, certificate or other
information shall be executed by a duly authorized officer of Debtor
and shall be in such form and detail as the Bank may specify. Whenever
Debtor provides information to the Bank regarding Debtor's accounts
receivable and/or inventory Debtor shall be deemed to have warranted
that, except as otherwise indicated, each account receivable referred
to in such information is an Eligible Accounts Receivable and all
inventory referred to in such information is Eligible Inventory (as
defined in Section 8.1). Any schedule identifying any account
receivable shall be accompanied (if the Bank so requests) by a true
and correct copy of the invoice evidencing such account receivable and
by evidence of shipment or performance by Debtor.
D. Promptly upon request by the Bank, any additional
financial or other information regarding Debtor as the Bank may
request. Any information shall be executed by a duly authorized
officer of Debtor and shall be in such form and detail as the Bank may
specify.
4. Basic Representations, Warranties and Agreements. Debtor
represents, warrants and agrees that at all times this Agreement is in effect:
4.1 Use of Collateral. The Collateral shall be used
primarily for business purposes.
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4.2 Fixture Collateral. If any of the Collateral does or
will consist of fixtures, timber, minerals (including oil or gas), or accounts
resulting from the sale of minerals at the wellhead or minehead ("Fixture
Collateral"), the full legal name of the record owner of the real estate on
which such fixtures, timber or minerals are located and the legal description
of such real estate shall be attached to this Agreement as Schedule "A". It is
the intent of Debtor to subject all Fixture Collateral to the security
interest granted hereby, whether or not a Schedule "A" is attached to this
Agreement. Debtor upon request of the Bank shall furnish the Bank with
consents or disclaimers filed by all persons having an interest in the real
estate upon which any of the Fixture Collateral is located (including owners,
mortgage holders, and Lessees) consenting to the Bank's security interest and
acknowledging its priority or disclaiming any interest in the Collateral. At
the Bank's request, Debtor shall promptly furnish the Bank with a complete
list describing all items of Collateral which are or may be or may become
Fixture Collateral and the location thereof, as well as other information with
respect to such Fixture Collateral reasonably requested by the Bank. Debtor
shall promptly notify the Bank of any Collateral acquired after the date of
this Agreement which may be or become Fixture Collateral under applicable law.
4.3 Transfer of Collateral. Except as otherwise permitted in
Section 4.16, Debtor shall not sell, assign, rent, lend or otherwise dispose
of any interest in the Collateral without the prior written consent of the
Bank.
4.4 Ownership; No Liens. Debtor owns and shall preserve the
Collateral (and, as to after-acquired Collateral, shall own and preserve the
same) free and clear of all taxes, liens, claims and security interests other
than in favor of the Bank. Debtor shall defend the Collateral against all
claims of anyone claiming an interest therein or tax or lien thereon.
4.5 Disbursement of Loan Proceeds. If any of the Collateral
is to be acquired with the proceeds of loans secured by this Agreement, Debtor
authorizes the Bank to disburse the loan proceeds directly to the seller.
4.6 Financing Statements, Titles, Etc. Immediately upon
request of the Bank, at any time, Debtor shall execute and deliver to the Bank
all financing statements, security agreements, applications for certificates
of title and other instruments and documents which the Bank may request for
the purpose of implementing or confirming the terms of this Agreement, all of
which shall be in a form satisfactory to the Bank. Debtor hereby irrevocably
appoints the Bank, or any of its officers, as its true and lawful attorney,
with full power of substitution, in the name of Debtor, to execute and file,
at any time, any financing statement, continuation statement or amendments
thereto, which the Bank deems necessary or convenient to protect, perfect or
maintain the security interests and liens granted to the Bank.
4.7 Identification of Collateral. Upon demand of the Bank,
Debtor shall mark any or all Collateral in a manner sufficient to identify the
security interest of the Bank.
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<PAGE>
4.8 Collateral and Business Records. All records and
information maintained by Debtor with respect to the Collateral and its
account debtors and all other information set forth in any writing now or
hereafter furnished to the Bank by Debtor shall be true and correct as of the
date furnished. All financial statements and data furnished to the Bank shall
be prepared in accordance with generally accepted accounting principles,
consistently applied, and shall fairly present the financial condition of
Debtor as of the dates, and the results of its operations for the periods, for
which the same are furnished to the Bank. Debtor shall maintain accurate and
complete records of the Collateral. All records of Debtor relating to the
Collateral, its account debtors and any of the Debtor's financial affairs
shall be maintained by Debtor at its chief executive office and shall not be
removed therefrom without the prior written approval of the Bank.
4.9 Maintenance and Warranties. Debtor shall at all times
regularly maintain, repair, and keep in good working order and condition all
of the Collateral and protect the same from damage, deterioration or injury.
Debtor shall at all times do everything necessary to keep in force any
manufacturer's and seller's warranties with respect to the Collateral.
4.10 Compliance With Law. Debtor shall not use the
Collateral for any unlawful purpose nor in violation of any statute or
ordinance.
4.11 Taxes and Charges. Debtor shall promptly pay when
due all taxes, assessments, fees, licenses and charges upon or necessary for
the use or operation of the Collateral.
4.12 Insurance. All Collateral shall be insured from loss by
fire, theft and other casualties (including extended coverage) in an amount,
in a manner and with companies satisfactory to the Bank. Such insurance shall
be payable to Debtor and the Bank as their interests may appear. Debtor shall
provide proof of insurance satisfactory to the Bank upon request. All
insurance policies shall provide that the Bank must receive at least thirty
(30) days prior written notice before any cancellation, non-renewal or
reduction in coverage. Debtor hereby assigns to the Bank, as additional
security for payment of the Liabilities, all rights of Debtor under or with
respect to, all policies of insurance covering the Collateral, and all money
which becomes due under such policies. Debtor hereby directs the issuer of any
such policy to pay such money directly to the Bank. Both before and after the
occurrence of an Event of Default, the Bank may (but need not), in its own
name or in Debtor's name, execute and deliver proofs of claim, receive money
due under such insurance policies, endorse checks and other instruments
representing payment of such money, and adjust, litigate, compromise or
release any claim against the issuer of any such policy.
4.13 Inspection. The Bank may take any actions reasonably
necessary or convenient to ascertain the existence, condition and value of the
Collateral. Debtor shall permit representatives of the Bank to visit and
inspect any of the properties and facilities of Debtor and examine, copy (by
electronic or other means) and abstract any
5
<PAGE>
of the books and accounting and Collateral records of Debtor at any time and
as often as may be desired by the Bank. Debtor hereby authorizes the Bank to
undertake or to have third parties undertake on its behalf (not more often
than twice in any 12 month period) environmental investigations regarding
Debtor and its properties and operations including research into the previous
and current ownership, use, and condition (by taking samples or borings or
otherwise) of any real or personal property owned, leased or used by Debtor
for the purpose of attempting to determine whether: (i) Debtor has violated
any federal, state or local laws involving the protection of the environment
and/or the disposition of, or exposure to, hazardous or toxic substances, as
now existing or as hereinafter amended or enacted, or any rules, regulations,
guidelines or standards promulgated pursuant thereto; and (ii) whether any
hazardous or toxic substances have been used or disposed of on Debtor's
facilities or elsewhere. Such investigations may be performed at any time
before or after any of the Liabilities are incurred and Debtor will permit the
Bank and persons acting on its behalf to have access to Debtor's facilities
and records for the purpose of conducting such investigations. The cost of all
such investigations shall be immediately paid by Debtor to the Bank, shall be
added to the Liabilities secured hereby and shall bear interest at the highest
rate specified in any of the Liabilities secured hereby from the date incurred
by the Bank until paid.
4.14 Actions by the Bank; Reimbursement. The Bank may
immediately take any action or pay any sum required to be done or paid by
Debtor under this Agreement if the Bank, in its discretion, determines that it
is necessary or convenient to do so in order to protect, preserve or maintain
the Collateral or the rights of the Bank therein. The amount of such payment
or the cost of doing such act shall be immediately paid by Debtor to the Bank,
shall be added to the Liabilities secured hereby, and shall bear interest at
the highest rate specified in any of the Liabilities secured hereby from the
date incurred by the Bank until paid. No act done or amount paid by the Bank
under this Section shall be deemed to constitute a waiver of any default of
Debtor.
4.15 Consignment Sales. Debtor will obtain the Bank's
written consent before making sales on consignment. For all consignment sales,
Debtor will comply with Sections 9-114 (MCLA ss.440.9114) and 2-236 (MCLA
ss.440.2326) so as to preserve the priority of Debtor's and the Bank's
interest in the Collateral sold on consignment, over the interest of any
consignee or creditors of any consignee.
4.16 Debtor's Rights to Deal With the Collateral. Except
under the circumstances set forth in Section 4.17, the Collateral shall be on
a non-remittance basis, which means the following provisions apply:
A. In the ordinary course of its business, Debtor may
use, process, manufacture, display, demonstrate or otherwise deal with
inventory and may sell, lease or dispose of inventory (except for bulk
sales) and collect, hold and use all proceeds from disposition of
inventory.
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<PAGE>
B. In the ordinary course of business, Debtor may grant
to any party obligated on any account, instrument, chattel paper or
other item of Collateral, any rebate, refund or adjustment to which
such party may be lawfully entitled, may accept, in connection
therewith, the return of goods, the sale or lease of which gave rise
to any account, instrument, chattel paper or other item of Collateral,
and may dispose of returned goods.
C. At its own expense, Debtor may collect, when due, all
amounts due Debtor under any account, instrument, chattel paper or
other item of Collateral, and use the amounts collected in the
ordinary course of business.
4.17 The Bank's Right to Collect Amounts Owing to Debtor. The
Bank may, in its good faith discretion, at any time prior to or after
occurrence of an Event of Default, notify Debtor that the Collateral is on a
remittance basis which means the following provisions apply:
A. Immediately upon receipt, Debtor shall deliver to the
Bank in the form received, all cash, checks, drafts, credit card
charges, and other instruments for the payment of money (properly
endorsed, where required, so that such items may be collected by the
Bank) which are received by Debtor at any time, in full or partial
payment of any sale, lease, collection or other disposition of any of
the Collateral or for services rendered. Debtor shall, immediately
upon receipt deliver to the Bank (properly endorsed as directed by the
Bank) any document of title, account receivable, contract right, note,
trade acceptance, chattel paper, instrument, or other evidence of an
obligation to Debtor given as payment for any of the Collateral sold,
leased or disposed of by Debtor or for services rendered. Any such
items which are received by Debtor will not be commingled with any of
its other funds or property, but will be held in trust for the Bank
separate and apart from Debtor's own funds or property until delivery
is made to the Bank.
B. All amounts which are delivered by Debtor to the Bank
which represent partial or full payment for any of the Collateral
shall, at the Bank's option: (1) be applied to payment of the
Liabilities secured hereby, whether then due or not, in any order
which the Bank desires; or (2) be deposited to the credit of a
non-interest bearing deposit account in the name of the Bank, as
security for payment of the Liabilities. Debtor shall have no right to
withdraw any funds deposited in such account. Upon request of Debtor
(but not more than once each week) or as often as the Bank desires,
the Bank may apply all or any part of the collected funds in such
account, toward payment of the Liabilities, whether or not then due,
in any order which the Bank desires. The Bank may, from time to time,
in its discretion, release some or all of the balance in such account
to Debtor.
7
<PAGE>
C. Whenever Debtor obtains possession (by return,
repossession or otherwise) of any goods, previously constituting
inventory, it shall, unless the Bank consents otherwise in writing,
segregate, label and hold such goods subject to the security interest
of the Bank hereunder, and will, at its own expense, dispose of such
goods in the manner, and at the times, directed by the Bank. In
addition to all amounts otherwise payable by Debtor hereunder, Debtor
will pay to the Bank, not later than ten (10) days after obtaining
possession of such goods, an amount equal to the unpaid purchase price
or lease rental of such goods or any rebate, refund or adjustment
granted by Debtor in connection with obtaining possession of such
goods, whichever is greatest. If at the time of such payment no
default exists hereunder, such goods shall be discharged of the
security interest hereunder.
D. If requested by the Bank, Debtor shall direct all
account debtors or other parties obligated on any of the Collateral to
make payments due and to become due thereon to a United States Post
Office Box or other mailing address designated by the Bank in the name
of Debtor at a location designated by the Bank. The post office box
shall be under the exclusive custody and control of the Bank.
E. The Bank may, in its own name, or in the name of
Debtor, notify any or all of the parties obligated on any of the
Collateral to make all payments due and to become due thereon directly
to the Bank, and thereupon Debtor's authority to collect any accounts
receivable, chattel paper, instruments or other Collateral in the
ordinary course of business shall be terminated.
F. The Bank shall have the right, in its own name or in
the name of Debtor, to enforce payment and collect the accounts,
instruments, chattel paper and other items of Collateral (by legal
proceedings or otherwise); to take control in any manner of any cash
or non-cash payments or proceeds thereof and any returned or
repossessed goods relating thereto; to demand, receive, receipt for,
settle, compromise, sell, assign, extend or renew any and all amounts
due or to become due to Debtor on any item of Collateral upon such
terms and in such amounts and at such times as the Bank deems
advisable; and to discharge and release any such debt in the name of
Debtor.
G. Debtor hereby irrevocably appoints the Bank, or any
of its officers, as its true and lawful attorney, with full power of
substitution, in the name of Debtor, to: (i) establish and maintain
the United States Post Office Box referred to above; (ii) open and
dispose of all mail, howsoever received by the Bank, representing any
payment on, or other proceeds of, any of the Collateral; (iii) endorse
and collect any check or other item received by the Bank representing
payment on or
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<PAGE>
other proceeds of the Collateral; and (iv) take all other actions
necessary or convenient to carry out the provisions of this Section
4.17.
H. For the purpose of calculating interest on the
Liabilities, the Bank may impose a standard one to three business day
delay in crediting payments received by the Bank on the Collateral
against the Liabilities to allow time for collection (or the Bank may,
at the Bank's option, make such credits when such payments are
actually collected by the Bank in immediately available funds). For
the purpose of calculating the principal amounts available for
borrowing by Debtor under any borrowing arrangements with the Bank,
the Bank may, at the Bank's option, use a method different from that
used for the purpose of calculating interest, and such methods may
include either of the options described above, or the Bank may, at the
Bank's option and solely for the purposes described in this sentence,
elect to credit payments received by the Bank on the Collateral on the
date of receipt.
4.18 Indemnity. In addition to payments of the Liabilities,
Debtor agrees to indemnify, pay and hold harmless the Bank and any holder of
any of the Liabilities, and the officers, directors, employees, agents and
affiliates of the Bank and such holders (collectively called the
"Indemnitees") from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs
(including, without limitation, settlement costs), expenses or disbursements
of any kind or nature whatsoever (including, without limitation, the
reasonable fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto), which may be imposed on, incurred by, or asserted against that
Indemnitee, in any manner relating to or arising out of this Agreement, the
Liabilities, the Bank's relationship with Debtor, the use or intended use of
the proceeds of any of the Liabilities or any environmental matter (the
"Indemnified Claims"); provided that the Debtor shall have no obligation to an
Indemnitee hereunder with respect to Indemnified Claims if it has been
determined by a final decision (after all appeals and the expiration of time
to appeal) by a court of competent jurisdiction that such Indemnified Claims
arose primarily from the gross negligence or willful misconduct of that
Indemnitee. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it
is violative of any law or public policy, Debtor shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.
The foregoing indemnity set forth in this Section 4.18 shall include,
without limitation, indemnification by Debtor to each Indemnitee for any and
all expenses and costs (including, without limitation, remedial, removal,
response, abatement, clean-up, investigative, closure and monitoring costs),
losses, claims (including claims for contribution or indemnity and including
the costs of investigating or defending any claim and whether or not such
claim is ultimately defeated, and whether such claim
9
<PAGE>
arose before, during or after Debtor's ownership, operation, possession or
control of its business, property or facilities, or before, on or after the
date hereof, and including also any amounts paid incidental to any compromise
or settlement by the Indemnitees or any Indemnitee to the holders of any such
claim), lawsuits, liabilities, obligations, actions, judgments, suits,
disbursements, encumbrances, liens, damages (including, without limitation,
damages for contamination or destruction of natural resources), penalties and
fines of any kind or nature whatsoever (including, without limitation, in all
cases the reasonable fees and disbursements of counsel in connection
therewith) incurred, suffered or sustained by that Indemnitee based upon,
arising under or relating to any federal, state or local laws involving the
protection of the environment and/or the disposition of, or exposure to,
hazardous or toxic substances, as now existing or as hereinafter amended or
enacted, or any rules, regulations, guidelines or standards promulgated
pursuant thereto, based on, arising out of or relating to, in whole or in
part, the exercise and/or enforcement of any rights or remedies by any
Indemnitee under this Agreement or any of the Liabilities, and including, but
not limited to, taking title to, owning, possessing, operating, controlling,
managing or taking any action in respect of any real property or facilities of
Debtor. The provisions of Section 4.18 shall survive payment of the
Liabilities and termination of this Agreement.
5. Default and Rights of the Bank.
5.1 Events of Default. Occurrence of any of the following
events shall constitute an "Event of Default" under this Agreement:
A. Non-payment when due, by default, demand,
maturity, or otherwise, of any of the Liabilities;
B. Failure of Debtor to comply with any term of this
Agreement, any of the documents evidencing the Liabilities, or any
agreement between Debtor and the Bank;
C. The Bank discovers that any warranty or
representation made to it by Debtor was or is false;
D. Debtor becomes insolvent or unable to pay debts
as they mature or makes an assignment for the benefit of creditors or
any proceeding is instituted by or against Debtor under any
bankruptcy, insolvency or similar laws or any judgment is entered or
any writ of attachment, garnishment or execution or tax lien is issued
or levied against Debtor, any of its property or the Collateral;
E. Any indebtedness of Debtor becomes due by reason
of default and/or acceleration of the maturity thereof;
F. Death or incompetency of Debtor, if a natural
person; dissolution or death of a partner of Debtor, if a partnership;
dissolution,
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merger, consolidation or a material change in the ownership of the
voting stock of Debtor, if a corporation;
G. Cessation of the normal business operations of
Debtor;
H. Actual, impending, or reasonably anticipated
decline in the value of the Collateral or the Bank deems the margin of
the Collateral securing the Liabilities to be insufficient;
I. If the control or management of Debtor changes
in a manner which adversely affects, in the sole judgment of the Bank,
the ability of Debtor to carry on its business as previously
conducted;
J. Failure of Debtor to pay, when due, any federal,
state, or local tax, assessment, withheld tax, or similar obligation;
K. Any guaranty of, or document granting security
for, any of the Liabilities shall, at any time, cease to be in full
force and effect or be declared null or void, or any party to such
guaranty or security document (other than the Bank) denies that it has
any further liability thereunder (by giving notice to such effect or
otherwise) or contests the validity or enforceability thereof; or
L. The Bank deems itself insecure, in good faith,
believing that the prospect of payment of the Liabilities is impaired
or in good faith fearing deterioration, removal or waste of any of the
Collateral.
5.2 Bank's Rights Upon Default. Upon occurrence of an Event
of Default, all of the Liabilities (regardless of any contrary terms thereof)
shall, at the option of the Bank, be immediately due and payable without
demand or notice, and the Bank may exercise any of the rights and remedies of
a creditor under the Uniform Commercial Code, any other law, or any Court Rule
and/or take any one or more of the actions specified below (which rights and
remedies are cumulative) without notice and without providing Debtor or any
guarantor or surety for Debtor with a hearing:
A. Exercise any right or action set forth herein or
in any of the documents evidencing the Liabilities, including but not
limited to, the rights and actions set forth in Section 4.17 above.
B. Institute legal proceedings to foreclose the
lien and security interest described herein; recover judgment on the
Liabilities; and/or sell any or all of the Collateral.
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C. Personally or by agents or attorneys, enter upon
any premises where the Collateral or any part thereof may then be
located, and take possession of all or any part thereof and/or render
it unusable.
D. Without being personally responsible for loss or
damage to the Collateral, hold, store, and keep idle, or lease,
operate, remove or otherwise use or permit the use of, the Collateral
or any part thereof, for such time and upon such terms as the Bank may
in its sole discretion deem to be in its best interest. Demand,
collect and retain all rentals, earnings, and other sums due and to
become due with respect to the Collateral from any party, accounting
only for net earnings, if any, arising from such use (unless the
Collateral is retained in satisfaction of the indebtedness, in which
case no accounting will be necessary). The net earnings may be applied
against the Liabilities. Charge against all receipts from use of the
Collateral or from the sale thereof, by court proceedings or pursuant
to Section E. below, all other costs, expenses, charges, damages, and
other losses resulting from such use.
E. Without being responsible for loss or damage to
the Collateral, sell, lease and dispose of, or cause to be sold,
leased and disposed of, all or, any part of the Collateral at one or
more public or private sales, leasings or other dispositions, at such
places and times and on such terms and conditions as the Bank deems
fit, without any previous demand or advertisement. The Bank will give
notice to Debtor of any such sale, lease or other disposal if and in
the manner required by law, and if there is any legal requirement of
reasonable notification, Debtor agrees that requirement shall be met
if the Bank sends notice to Debtor at least seven (7) days prior to
the date of any such sale, lease or other disposal. Except as provided
herein, all notice of sale, lease, or other disposition, and
advertisement, and other notice or demand, any right or equity of
redemption, any obligation of a prospective purchaser or lessee to
inquire as to the power and authority of the Bank to sell, lease or
otherwise dispose of the Collateral, and any obligations of a
prospective purchaser or lessee to inquire as to the application by
the Bank of the proceeds of sale or otherwise, which would otherwise
be required by, or available to Debtor under, applicable law are
hereby expressly waived by Debtor to the fullest extent permitted by
such law.
5.3 Conduct of Sale. At any sale pursuant to this Section 5,
whether under the power of sale granted herein or by virtue of judicial
proceedings, it shall not be necessary for the Bank or a public officer under
order of a court to have present physical or constructive possession of the
Collateral to be sold. The recitals contained in any conveyance and receipts
made and given by the Bank or such public officer to any purchaser at any sale
made pursuant to this Agreement shall, to the extent permitted by applicable
law, conclusively establish the truth and accuracy of the matters therein
stated (including, without limiting the generality of the foregoing, the
amounts of the principal of and interest on the Liabilities, the accrual and
non-payment
12
<PAGE>
thereof and advertisement and conduct of such sale in the manner provided
herein and by applicable law). All prerequisites to such sale shall be
presumed to have been satisfied and performed. Upon any sale hereunder of any
of the Collateral or any interest therein, the receipt of the officer making
such sale under judicial proceedings or of the Bank shall be sufficient
discharge to the purchaser for the purchase price, and the purchaser shall not
be obligated to see to the application of the purchase price. Any sale
hereunder of any of the Collateral or any interest therein shall forever be a
perpetual bar against Debtor with respect to the sold Collateral.
5.4 Proceeds of Collateral. Proceeds of any collection or
disposition by the Bank of any of the Collateral may be applied by the Bank
first to the reasonable expense of retaking, conserving, collecting (by suit
or otherwise) or disposing of (by sale or otherwise) the Collateral, including
reasonable attorneys' fees and legal expenses incurred, and then to the
satisfaction of all the Liabilities secured hereby in such order of
application as the Bank elects. After such application and any further
application required by law, the Bank will account to Debtor for any surplus
and Debtor and every guarantor of Debtor shall remain liable to the Bank for
any deficiency.
5.5 Assembling Collateral. Upon occurrence of an Event of
Default and demand by the Bank, Debtor shall promptly assemble and collect the
Collateral at a place designated by the Bank and, if necessary, move or ship
such Collateral to a place designated by the Bank at Debtor's expense and
shall make the Collateral available for disposition by the Bank.
6. Assignment and Subrogation. Any transferee of, or endorser,
guarantor or surety or other party providing security who pays the Liabilities
secured hereby may take over all or any part of the Collateral subject to this
Agreement, and shall succeed to all rights of the Bank with respect to such
Collateral and the Bank shall be under no further responsibility therefor. No
party shall succeed to any of the rights of the Bank so long as any of the
Liabilities remain unpaid to the Bank.
7. Freedom to Deal With Collateral and Liabilities. Debtor agrees
that the Bank may, without liability to Debtor: release any security for the
Liabilities which has been provided by any other obligor before or after
maturity of any of the Liabilities; enforce its rights as to any of the
Collateral covered by this Agreement without being obliged to first do so as
to any other security, whether owned by Debtor or any other person; add,
substitute or release any maker or guarantor of the Liabilities; and/or
extend, renew, modify, or make any accommodations with regard to the
Liabilities. Debtor further agrees that the Bank has no duty to preserve its
or Debtor's rights against prior parties with respect to any account,
instrument or chattel paper in the Bank's possession.
8. Definitions. In addition to the terms elsewhere defined
herein, the following definitions shall apply to terms used herein:
13
<PAGE>
8.1 Eligible Accounts Receivable. The term "Eligible
Accounts Receivable" shall mean an account receivable arising in the ordinary
course of Debtor's business which meets each of the following requirements:
A. If it arises from the sale or lease of goods,
such goods have been shipped or delivered to an account debtor under
such account receivable; if it arises from services rendered, such
services have been performed.
B. It is a valid, legally enforceable,
unconditional obligation of the account debtor thereunder, and is not
subject to any off-set, counterclaim, right to return goods or demand
for repurchase by Debtor, or other defense to payment on the part of
such account debtor, or to any claim on the part of such account
debtor denying liability in whole or in part.
C. It is subject to the first priority security
interest of the Bank and is not subject to any other lien or security
interest whatsoever.
D. It is evidenced by an invoice, dated not later
than the date of shipment or performance rendered to such account
debtor or some other evidence of billing acceptable to the Bank and is
not evidenced by any instrument or chattel paper.
E. It is not owing by any account debtor who is
affiliated with Debtor or whose obligations the Bank in its sole
discretion, shall have determined are not deemed to constitute
eligible accounts receivable, because of concerns regarding ability to
pay or otherwise.
F. It is not owing by an account debtor who shall
have failed to pay in full any invoice evidencing any account
receivable within ninety (90) days after the date of such invoice.
G. It is owing by an account debtor which is
organized under the laws of the United States or any state thereof and
which has its principal place of business in the United States.
H. If it arises from a contract which provides for
"progress billings," the contract has been performed in full by
Debtor.
I. It is not owing by the United States of America,
any state or municipality, or any department, agency, authority, or
instrumentality thereof.
An account receivable which is at any time an Eligible Accounts
Receivable, but which subsequently fails to meet any of the foregoing
14
<PAGE>
requirements, shall forthwith cease to be an Eligible Accounts
Receivable.
8.2 Eligible Inventory. The term "Eligible Inventory" shall
mean all of Debtor's inventory of raw materials and finished goods, but shall
not include work in process or inventory which is damaged or has become
obsolete.
8.3 Terms Defined by Statute. All other terms, not expressly
defined herein, shall be defined and construed in accordance with the Uniform
Commercial Code as in force in the State of Michigan on the date hereof, being
MCLA ss.440.1101 et seq.
9. Attorneys' Fees and Costs. All expenses incurred by the Bank in
perfecting its security interest in any Collateral or insuring, protecting,
maintaining, enforcing, selling, or disposing of the Collateral and all
expenses, including reasonable attorneys' fees and legal expenses, incurred by
the Bank in seeking to collect or enforce any rights to or under the
Collateral and, in case of default, incurred by the Bank in seeking to collect
or enforce the Liabilities secured hereby (through formal or informal
collection actions, workout or otherwise) and enforce its rights hereunder
(including participating or taking action in any bankruptcy or other
insolvency proceeding of Debtor) shall be immediately reimbursed to the Bank
by Debtor and shall be part of the Liabilities secured by this Agreement.
10. Miscellaneous. The paragraph headings used in this Agreement are
for convenience only and shall not be used in the interpretation hereof. The
obligations of each of the undersigned under this Agreement, if there is more
than one Debtor, shall be joint and several; each of the undersigned shall be
individually liable for performance of and for all amounts due under this
Agreement. All persons signing this Agreement on behalf of a corporation,
partnership, trust or other entity warrant to the Bank that they are duly and
properly authorized to execute this Agreement. Nothing in this Agreement shall
waive or restrict any right of the Bank granted in any other document or by
law. No delay on the part of the Bank in the exercise of any right or remedy
shall operate as a waiver. No single or partial exercise by the Bank of any
right or remedy shall preclude any other future exercise of that right or
remedy or the exercise of any other right or remedy. No waiver or indulgence
by the Bank of any default shall be effective unless in writing and signed by
the Bank, nor shall a waiver on one occasion be construed as a bar to or
waiver of that right on any future occasion. Acceptance of partial or late
payments owing on any of the Liabilities at any time shall not be deemed a
waiver of any default. All rights, remedies and security granted to the Bank
herein are cumulative and in addition to other rights, remedies or security
which may be granted elsewhere or by law. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law. If any provision hereof shall be declared invalid
or illegal it shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of the provision or the
remaining provisions of this Agreement. Notice from the Bank to Debtor, if
mailed, shall be deemed given when mailed to Debtor, postage prepaid, at
Debtor's address set forth at the beginning of
15
<PAGE>
this Agreement or at any other address of Debtor in the records of the Bank.
Any reference to the Bank shall include any holder of the Liabilities and any
holder shall succeed to the Bank's rights under this Agreement. This Agreement
shall bind the respective heirs, personal representatives, successors and
assigns of Debtor. Debtor agrees that any action against Debtor for
enforcement of this Agreement may be brought in any municipal or State court
in Kalamazoo County, Michigan, having jurisdiction of the subject matter;
Debtor consents to personal jurisdiction over it by such courts; and consents
to venue in such courts. Either party may terminate this Agreement at any time
on written notice to the other; provided, however, that such termination shall
in no way affect, and this Agreement shall remain fully operative as to, any
transactions entered into or rights or security interests granted or
Liabilities secured hereby which are incurred prior to receipt of such notice
by the party to whom given. After termination, the Bank's security interest in
the Collateral and all rights of the Bank and duties of Debtor described
herein shall continue in full force and effect until all of the Liabilities
secured hereby are paid in full. This Agreement has been executed in Michigan,
and is governed by Michigan law. A carbon, photographic or other reproduction
of this Agreement shall be sufficient as a financing statement and may be
filed by the Bank as such. If any payment applied by the Bank to the
Liabilities is subsequently set aside, recovered, rescinded or otherwise
required to be returned or disgorged by the Bank for any reason (pursuant to
bankruptcy proceedings, fraudulent conveyance statutes, or otherwise), the
Liabilities to which the payment was applied shall for the purposes of this
Agreement be deemed to have continued in existence, notwithstanding the
application, and shall be secured by the Collateral as fully as if the Bank
had not received and applied the payment.
11. WAIVER OF JURY TRIAL. THE UNDERSIGNED AND THE BANK EACH HEREBY
KNOWINGLY AND VOLUNTARILY, WITHOUT COERCION, WAIVE ALL RIGHTS TO A TRIAL BY
JURY OF ALL DISPUTES BETWEEN THEM ARISING OUT OF THIS SECURITY AGREEMENT, ANY
OF THE LIABILITIES, OR ANY ALLEGED ACT OR NEGLECT OF THE BANK.
Debtor(s): PRAB, INC.
By: /s/ Gary A. Herder
-------------------
Gary A. Herder
Its: President
16
<PAGE>
ADDENDUM TO SECURITY AGREEMENT
DATED OCTOBER 31, 1996, FROM
PRAB, INC.
("Debtor")
TO FMB-ARCADIA BANK
(the "Bank")
Incorporation and Conflict
The provisions of this Addendum are hereby made a part of the Security
Agreement described above. In the event of a conflict between the terms of
this Addendum and the terms of such Security Agreement, the terms of this
Addendum shall control. If the date of signing of this Addendum is later than
the date of signing of any other Addendum to such Security Agreement, this
Addendum shall supersede and replace such prior Addendum.
Additional Provisions
12. Borrowing Base. The unpaid balance of the $1,670,000 Note dated
October 31, 1996, and all extensions, renewals and replacements thereof,
including replacements with a different principal amount (the "Base Note"),
shall not at any time exceed the sum of the following amounts, which sum is
hereinafter referred to as the "Borrowing Base":
(a) 75% of Debtor's "Eligible Accounts Receivable"; plus
(b) 35% of the fair market value or cost (whichever is less)
of Debtor's "Eligible Inventory", not to exceed $450,000; plus
Notwithstanding any conflicting provisions contained in the
Base Note, if at any time the unpaid balance of the Base Note exceeds the
Borrowing Base, Debtor shall immediately pay to the Bank the difference,
including all accumulated interest.
13. Affirmative Covenants. Until the Liabilities are paid in full,
Debtor covenants and agrees that it will:
13.1 Maintain Net Current Assets and Tangible Net Worth of
not less than the amounts during the periods specified below:
<PAGE>
Minimum Net Minimum Tangible
Time Period Current Assets Net Worth
----------- -------------- ----------------
(a) from October 31, 1997 $800,000 $1,200,000
to October 30, 1998
(b) from October 31, 1998 $1,200,000 $2,200,000
and thereafter
"Net Current Assets" means "Current Assets" less "Current Liabilities".
Current Assets shall include only cash, Eligible Accounts Receivable, United
States Government Securities, and Eligible Inventory. Current Liabilities
means that portion of the Liabilities payable within a twelve-month period and
other liabilities considered current in accordance with generally accepted
accounting principles, consistently applied.
"Tangible Net Worth" means: (i) the amount of all assets which, under
generally accepted principles of accounting, consistently applied, would
appear as such on the balance sheet of Debtor, but excluding (a) intangible
items such as goodwill, treasury shares, reserves, patents, trademarks,
research and development expenses and the like, (b) any write-up in the book
value of such assets resulting from a re-evaluation thereof, and (c) all
receivables from and loans, advances and similar transfers to any officers,
directors or shareholders of Debtor which are due and owing to Debtor; less
(ii) all liabilities of Debtor as defined in accordance with generally
accepted accounting principles, consistently applied ("Debt").
13.2 Maintain the ratio of Current Assets to Current
Liabilities (as defined in subparagraph 13.1) of not less than: 1.1 to 1.0
from October 31, 1997 to October 30, 1998; 1.2 to 1.0 from October 31, 1998,
and thereafter.
13.3 Maintain the ratio of Debt to Tangible Net Worth of not
more than: 3.75 to 1.0 from October 31, 1997 to October 30, 1998; 2.25 to 1.0
from October 31, 1998, and thereafter.
13.4 Comply with all applicable federal, state and local laws,
ordinances, rules and regulations, including, but not limited to, all
environmental laws, ordinances, rules and regulations, all applicable federal,
state and local laws, ordinances, rules and regulations concerning wage
payments, minimum wages, overtime laws and payment of withholding taxes, and
deliver to the Bank such reports and information in form satisfactory to the
Bank as the Bank may request from time to time to establish compliance with
such laws.
14. Negative Covenants. Until the Liabilities are paid in full,
Debtor covenants and agrees that it will not:
14.1 Pay, create, incur, assume or have outstanding any
indebtedness for borrowed money except the Liabilities, and amounts owing
under Subordinated Capital Notes dated October 31, 1996.
14.2 Merge with or into, or enter into a share exchange, with
any other corporation or entity, nor sell, lease, transfer or otherwise
dispose of all or any substantial part
2
<PAGE>
1of its property, assets or business (other than sales of inventory made in
the ordinary course of business).
14.3 Enter into an agreement providing for the leasing by it
of property which has been or is to be sold or transferred by it.
14.4 Make any loans or advances to, or investments in, other
persons, corporations or entities (including, but not limited to, any
officers, directors, or shareholders of Debtor), except investments in (i)
bank certificates of deposit and savings accounts; (ii) obligations of the
United States; and (iii) prime commercial paper maturing within ninety (90)
days of the date of acquisition by Debtor.
14.5 Guarantee or become a surety or otherwise contingently
liable for any obligations of others, except pursuant to the deposit and
collection of checks and similar items in the ordinary course of its business.
14.6 Transfer any real or personal property, tangible or
intangible, to any of its subsidiaries, but not limited to, Prab Command, Inc.
and Prab Ltd. (formerly known as Prab Robots International, Ltd.).
Date of Signing: October 31, 1996
Debtor(s): PRAB, INC.
By: /s/ Gary A. Herder
-------------------
Gary A. Herder
Its: President
3
EXHIBIT 4d
FUTURE ADVANCE
MORTGAGE
THIS IS A FUTURE ADVANCE MORTGAGE made October 30, 1992, between PRAB
ROBOTS, INC., a Michigan corporation, whose address is 5944 East Kilgore Road,
Kalamazoo, Michigan 49003, hereinafter collectively referred to as the
"Mortgagor", and ARCADIA BANK, a Michigan banking corporation, having its
principal office at 251 East Michigan Avenue, Kalamazoo, Michigan 49007,
hereinafter referred to as the "Bank".
The Mortgagor represents, warrants, covenants and agrees to and with
the Bank that at all times this Mortgage is in effect:
1. Liabilities. This Mortgage secures the following obligations
to the Bank (hereinafter collectively referred to as the "Liabilities"):
A. The indebtedness and obligations (including future
advances) evidenced by,
Name of Instrument Date of
(including face amount, if any) Name of Obligor Instrument
- ------------------------------- --------------- ----------
$500,000 Commercial Revolving Note Prab Robots, Inc. October 30, 1992
and any extensions, renewals, modifications, or replacements thereof; and
B. ALL EXISTING AND FUTURE OBLIGATIONS OF MORTGAGOR TO THE
BANK, WHETHER OR NOT THE INSTRUMENTS EVIDENCING SUCH OBLIGATIONS ARE DESCRIBED
ABOVE, including, but not limited to, payment and performance of the
provisions of this Mortgage and all existing and future assignments of leases
and/or rents arising from the Property; payment and performance of all
advances (including future advances), notes, undertakings, obligations, debts,
liabilities, agreements, applications or agreements for issuance of letters of
credit, assignments, guarantees, or promises of or by the Mortgagor to or with
the Bank, whether due, existing or arising, now or in the future, absolute or
contingent, direct or indirect, however arising or acquired by the Bank, and
including obligations originally owing by the Mortgagor to a third party and
assigned by such third party to the Bank; payment and performance of all
existing and future obligations (including the kinds of obligations described
above) to the Bank of any persons or entities for which the Mortgagor is or
becomes an accommodation party, surety or guarantor or whose obligations this
Mortgage is given to secure; and all extensions, renewals and modifications of
the foregoing. If more than one person appears as the Mortgagor above, the
Liabilities shall include, without limitation, all of the foregoing joint,
several and individual obligations of each such person to the Bank. Mortgagor
agrees that if the proceeds of any of the Liabilities created in the future
are utilized to pay and/or renew any of the Liabilities existing at this time,
such future Liabilities shall be presumed to be renewals or extensions of such
existing Liabilities.
2. Grant of Mortgage and Lien. In consideration of and to secure
the Liabilities, the Mortgagor hereby mortgages and warrants to the Bank, its
successors and assigns, land,
<PAGE>
premises and property situated in the Township of Pavilion, County of
Kalamazoo, Michigan, described as:
The East 247-1/2 feet of the Northeast quarter of Section 6,
Town 3 South, Range 10 West.
The Mortgagor also mortgages and warrants to the Bank:
(a) The privileges, appurtenances, improvements, buildings,
tenements, hereditaments, easements, rights of way, riparian and littoral
rights, and all other rights belonging to the above-described premises and
which may hereafter attach thereto; and
(b) All equipment and fixtures of every kind and nature
whatsoever, now or hereafter located in or upon such premises or any part
thereof and used or useable in connection with any present or future operation
of such premises (hereinafter called "Fixtures"), whether now owned or
hereafter acquired by the Mortgagor, including, without limitation, all
heating, air conditioning, ventilation, lighting, incinerating and power
equipment, engines, signs, security systems, fences, hoists, cranes,
compressors, pipes, pumps, tanks, motors, plumbing, cleaning, fire prevention,
fire extinguishing, apparatus, elevators, escalators, shades, awnings,
screens, storm doors and windows, appliances, attached cabinets, partitions,
carpeting, ground maintenance equipment, and similar types of equipment, all
of which shall be deemed to be real estate and mortgaged hereby.
The Mortgagor agrees to execute, acknowledge and deliver, from
time to time, such financing statements or other instruments as may be
requested by the Bank to confirm, protect and perfect the lien of this
Mortgage on any Fixtures under the provisions of the Uniform Commercial Code
or other applicable statutes in effect in Michigan or otherwise, and this
Mortgage shall also constitute a security agreement with reference to the
Fixtures, and upon the Mortgagor's default the Bank shall, in addition to all
other remedies herein provided, have the remedies provided for under the
Uniform Commercial Code in effect in Michigan. The above described premises,
real property, Fixtures and other property rights related thereto are referred
to herein as the "Property".
3. Payment and Performance of Obligations. The Mortgagor shall
pay the Liabilities in accordance with the terms thereof and shall keep and
perform all the terms, conditions and covenants of the Liabilities.
4. Title to Property/Priority of Lien. The Mortgagor does and
shall own good and marketable title to the Property, free of all easements,
liens, mortgages, security interests, encroachments, encumbrances, leasehold
interests, rights, claims, and other interests of any nature (herein
"Interests"), other than Interests which are consented to in writing by the
Bank. The Mortgagor shall forever warrant and defend the Property against any
and all Interests not consented to in writing by the Bank and the lien created
hereby is and shall be kept as a first lien upon the Property, unless
otherwise agreed in writing by the Bank. Upon request, the Mortgagor shall, at
its cost, provide the Bank with a title insurance policy and other evidence of
title as the Bank may request from time to time which shall be in form and
substance satisfactory to the Bank.
2
<PAGE>
5. Condition, Maintenance and Use of the Property. The Property is
and shall be in good condition sufficient for the use contemplated by the
Mortgagor, and free of all material defects. None of the easements, rights, or
other Interests consented to by the Bank shall materially impair or restrict
the use of the Property as contemplated by the Mortgagor. The Mortgagor shall
not commit, now or hereafter, waste on the Property and shall maintain all of
the Property in good condition and working order satisfactory to the Bank, and
shall make all repairs necessary to maintain the value of the Property and
keep it in compliance with all applicable laws, regulations, and ordinances.
The Mortgagor shall do everything necessary to keep in force any
manufacturer's and seller's warranties with respect to the Fixtures. The
Mortgagor shall hold all valid permits and licenses necessary to operate and
maintain the Property as contemplated by the Mortgagor and the Property shall
be used only for lawful purposes and in compliance with all applicable laws,
regulations and ordinances.
6. Payment of Taxes. The Mortgagor shall pay and discharge all
taxes, assessments, fees, licenses, liens, and charges at any time levied upon
or assessed against the Mortgagor or the Property. The Mortgagor shall not do
anything or permit anything to be done which would impair the lien of this
Mortgage. Notwithstanding the foregoing, the Mortgagor shall not be required
to pay any tax, assessment, fee, license, lien, or charge so long as it is in
good faith contesting the validity thereof. If such contest is made, the
Mortgagor shall provide security for the payment of such tax, assessment, fee,
license, lien, or charge in a manner satisfactory to the Bank.
7. Insurance. The Mortgagor shall carry insurance against such
risks, with such companies, and in such amounts as shall be satisfactory to
the Bank (including but not limited to, hazard insurance and flood insurance,
if the Property is located within a flood hazard area); each policy shall be
in a form satisfactory to the Bank and contain provisions for payment in case
of loss to the Bank as its interest may appear. The Mortgagor shall promptly
pay all premiums therefor, and deliver to the Bank all such policies of
insurance. All insurance policies shall provide that notice of non-renewal or
cancellation must be given to the Bank at least thirty (30) days before such
non-renewal or cancellation. Any insurance money received by the Bank may, at
its sole election, be paid, either in whole or in part, to the Mortgagor for
the purpose of defraying the costs and expenses of repair, restoration or
replacement of the Property damaged or destroyed, or be retained and applied
toward the payment of any of the Liabilities with the excess, if any, over the
Liabilities to be repaid to the Mortgagor, without impairing the Mortgagor's
duties under this Mortgage or the Liabilities. In the event of loss with
respect to the Property, the Mortgagor shall promptly notify the Bank thereof
and the Bank may make any proof of loss not promptly made by the Mortgagor. In
the event of foreclosure or other disposition of the Property in partial or
full payment of the Liabilities, the Bank shall be entitled to all of the
Mortgagor's right, title and interest in and to all policies of insurance with
respect to the Property, including, without limitation, the right to collect
any unearned premium refund relating to such policies.
8. Escrow of Tax and Insurance. Upon demand by the Bank, the
Mortgagor shall pay monthly to the Bank a sum equal to 1/12 of the annual
taxes and assessments on the Property next coming due, and 1/12 of the annual
premiums on required insurance policies on the Property next coming due, all
as estimated by the Bank so as to enable the Bank to pay such taxes,
assessments and insurance premiums in full thirty (30) days before the due
date thereof. Upon occurrence of an Event of Default, moneys so held by the
Bank may be applied against the Liabilities. If the funds so paid to the Bank
are insufficient to pay such taxes,
3
<PAGE>
assessments and insurance premiums in full thirty (30) days before the due
dates thereof, the Mortgagor shall immediately upon written demand therefor,
pay to the Bank such additional sums as are required to pay such taxes,
assessments and insurance premiums in full thirty (30) days before the due
date thereof. If the funds so paid to the Bank shall exceed the amount of
taxes, assessments and insurance premiums paid by the Bank, such excess shall
be credited by the Bank to subsequent payments required to be made by the
Mortgagor pursuant to this paragraph.
9. Assignment of Awards and Tax Refunds. The Mortgagor hereby
assigns to the Bank, in their entirety, all judgments, decrees and awards for
injury or damage to the Property, all awards pursuant to proceedings for
condemnation thereof, and all refunds of local, state or federal income or
other taxes relating to the Property or the disposition thereof by the
Mortgagor (the "Claims"). The Mortgagor authorizes the Bank, at its sole
election (and as to refunds of taxes, after default), to apply the Claims, or
the proceeds thereof, to the Liabilities in such manner as the Bank may elect;
and the Mortgagor hereby authorizes the Bank, at its option (and as to refunds
of taxes, after default), in the name of the Mortgagor, to appear and
participate in any proceeding related to the Claims and to execute and deliver
valid receipts, discharges, and settlements for, and to appeal from, any
award, judgment or decree with respect to the Claims.
10. Bank's Right to Perform. If the Mortgagor defaults in the
payment of any taxes, assessments or charges (or in providing security as
provided in Section 6), in procuring or maintaining insurance in maintaining
the Property, or in performing any of the other obligations of this Mortgage,
then the Bank may, at its option, (notwithstanding anything to the contrary
contained in any of the Liabilities) take any action or pay any amount
required to be taken or paid by the Mortgagor hereunder. The cost of such
action or payment by the Bank shall be immediately paid by the Mortgagor,
shall be added to the Liabilities, shall be secured hereby, and shall bear
interest at the highest rate specified in the Liabilities from the date
incurred by the Bank until fully paid. No such action taken or amount paid by
the Bank shall constitute a waiver of any default of the Mortgagor hereunder.
11. Removal of the Property. Except for maintenance in the ordinary
course of business, the Mortgagor shall not, without the prior written consent
of the Bank, remove or demolish any timber, topsoil, minerals, fixture,
building, or improvement forming part of the Property.
12. Transfer of the Property. The Bank is relying upon the integrity
of the Mortgagor and its promises to perform the covenants of this Mortgage.
The Mortgagor shall not sell, transfer, convey, assign, rent for a period
exceeding one year, dispose of, or further encumber, voluntarily or
involuntarily, its interest in any of the Property by deed, land contract,
mortgage or otherwise, without the prior written consent of the Bank. Subject
to the foregoing, if the ownership of the Property, or any part thereof,
becomes vested in a person other than the Mortgagor, the Bank may deal with
such successor or successors in interest in the same manner as with the
Mortgagor, without in any manner vitiating or discharging the Mortgagor's
liability hereunder or upon the Liabilities. The Mortgagor shall at all times
continue to be primarily liable on the Liabilities until fully discharged or
until the Mortgagor is formally released in writing by the Bank.
4
<PAGE>
13. Additional Documents. At any time, upon request of the Bank, the
Mortgagor shall execute and deliver or cause to be executed and delivered to
the Bank and, where appropriate, shall cause to be recorded and/or filed at
such time and in such offices and places designated by the Bank, any and all
such other and further mortgages, financing statements, instruments of further
assurance, certificates and other documents as may, in the opinion of the Bank
or its counsel, be necessary or desirable to effectuate, complete, perfect,
continue or preserve the obligation of the Mortgagor under this Mortgage and
the lien of this Mortgage as a first lien upon all the Property (excepting
prior liens consented to in writing by the Bank). If the Mortgagor fails to
comply with the foregoing sentence, the Bank may execute, record, file,
re-record and refile any and all such mortgages, financing statements,
instruments, certificates and documents for and in the name of the Mortgagor
and the Mortgagor hereby irrevocably appoints the Bank as its agent and
attorney in fact to do so.
14. Assignment of Leases and Rents. As additional security for the
payment and performance of the Liabilities, and for the performance of the
agreements herein contained, the Mortgagor hereby assigns and transfers to the
Bank, its successors and assigns, all the rents, profits, and income under any
lease or leases of the Property (including any extensions, amendments, or
renewals thereof), whether due or to become due, including all such leases in
existence or coming into existence during the period this Mortgage is in
effect. This assignment of rents shall run with the land and be good and valid
against the Mortgagor or those claiming under or through the Mortgagor, from
the date of the recording of this Mortgage. This assignment shall continue to
be operative during foreclosure or any other proceedings taken to enforce this
Mortgage. In the event of a sale or foreclosure which shall result in a
deficiency this assignment shall stand as security during the redemption
period for the payment of such deficiency. This assignment is given as
collateral security only and shall not be construed as obligating the Bank to
perform any of the covenants or undertakings required to be performed by the
Mortgagor contained in any assigned leases.
Upon occurrence of an Event of Default, the Mortgagor shall,
upon demand by the Bank, and to the extent allowed by law, deliver possession
of the Property to the Bank, who shall thereafter collect the rents and income
therefrom, rent or lease the Property or portion thereof upon terms and for a
time as it deems best, terminate any tenancy and maintain proceedings to
recover rents or possession of the Property from any tenant or trespasser. The
Bank may apply the net proceeds of such rent and income to the following
purposes: (a) preservation of the Property; (b) payment of taxes; (c) payment
of insurance premiums; (d) payment of the Liabilities. In the event that the
Mortgagor fails, refuses, or neglects to deliver or surrender possession, the
Bank shall be entitled to the appointment of a receiver for the Property and
of the earnings, income, issue and profits thereof, with such powers as the
court making such appointment may confer. The Mortgagor hereby irrevocably
consents to such appointment and waives notices of any application therefor.
The Mortgagor agrees to execute and deliver to the Bank further assignments of
rents on all future leases on the Property during the term of this Mortgage,
such assignments to be in a form and manner reasonably satisfactory to the
Bank.
15. Waste and Receiver. The failure, refusal or neglect of the
Mortgagor to pay any of the taxes assessed against the Property before any
interest or penalty attaches thereto and to provide adequate security therefor
shall constitute waste hereunder and in accordance with the provisions of Act
No. 236 of the Public Acts of Michigan for 1961. The failure, refusal or
neglect of the Mortgagor to keep the Property adequately insured as herein
provided, or to
5
<PAGE>
pay the premiums therefor, shall likewise constitute waste hereunder and in
accordance with the provisions of Act No. 236. Upon the happening of any act
of waste and on proper application made therefor by the Bank to a court of
competent jurisdiction, the Bank shall forthwith be entitled to the
appointment of a receiver of the Property and of the earnings, income, issue
and profits thereof, with such powers as the court making such appointment
shall confer. The Mortgagor hereby irrevocably consents to such appointment
and waives notice of any application therefor.
16. Reimbursement of Expenses. The Mortgagor shall pay or reimburse
the Bank for expenses reasonably necessary or incidental to the protection of
the lien and priority of this Mortgage and for expenses incurred by the Bank
in seeking to enforce the provisions hereof and of the Liabilities (whether
before or after default), including but not limited to costs of evidence of
title to and survey of the Property, costs of recording this and other
instruments, actual, reasonable attorney fees (including, but not limited to,
fees incurred in participating or taking action in any bankruptcy or other
insolvency proceeding of Mortgagor), trustees' fees, court costs, and expenses
of advertising, selling and conveying the Property. All such payments or
reimbursements shall be paid immediately to the Bank, shall be added to the
Liabilities, shall be secured by this Mortgage, and shall bear interest at the
highest rate specified in the Liabilities from the date incurred by the Bank
until fully paid.
17. Inspection and Reports. At all reasonable times, the Bank and
its agents may inspect the Property to ascertain whether the covenants and
agreements contained herein or in any supplementary agreement are being
performed. Upon demand by the Bank, the Mortgagor shall promptly deliver to
the Bank all financial reports, statements and other documents relating to the
Property and the Mortgagor, as shall be reasonably requested by the Bank.
Mortgagor hereby authorizes the Bank to undertake or to have third parties
undertake on its behalf (not more often than twice in any 12 month period)
environmental investigations regarding the Property and its operation
including research into the previous and current ownership, use, and condition
(by taking samples or borings or otherwise) of the Property for the purpose of
attempting to determine whether: (i) Mortgagor or any current or past occupant
of the Property has violated any federal, state or local laws involving the
protection of the environment and/or the disposition of, or exposure to,
hazardous or toxic substances, as now existing or as hereinafter amended or
enacted, or any rules, regulations, guidelines or standards promulgated
pursuant thereto; and (ii) whether any hazardous or toxic substances have been
used or disposed of on the Property. Such investigations may be performed at
any time before or after occurrence of an Event of Default and Mortgagor will
permit the Bank and persons acting on its behalf to have access to the
Property and records concerning the Property for the purpose of conducting
such investigations. The cost of all such investigations shall be immediately
paid by Mortgagor to the Bank, shall be added to the Liabilities secured
hereby and shall bear interest at the highest rate specified in any of the
Liabilities secured hereby from the date incurred by the Bank until paid.
18. Events of Default. Occurrence of any one of the following
events shall constitute an "Event of Default" under this Mortgage:
(a) Breach, failure of payment or performance, or default by
the Mortgagor of or under any of the terms, conditions, or covenants of this
Mortgage, any of the Liabilities, or any other instrument or agreement
executed by the Mortgagor with or in favor of the Bank;
6
<PAGE>
(b) Breach, failure of payment or performance, or default by
any obligor other than the Mortgagor of or under any of the terms, conditions
or covenants of any of the Liabilities for which this Mortgage is given as
security, or of any other instrument or agreement executed by such obligor
with or in favor of the Bank;
(c) The Mortgagor makes an assignment for the benefit of
creditors, or a receiver, liquidator, or trustee is appointed for the
Mortgagor or any of its property;
(d) Any proceeding under any insolvency or bankruptcy law is
instituted by or against the Mortgagor or any action is taken to realize upon
or any proceeding is instituted to foreclose any mortgage, security interest,
or lien of any kind against the Property; and/or
(e) Any default in the terms, conditions or covenants of any
mortgage, lease, land contract, easement or other instrument which evidences
an interest in the Property by any third party.
19. Bank's Rights Upon Default. Upon occurrence of an Event of
Default all of the Liabilities (regardless of any contrary terms thereof)
shall, at the option of the Bank, be immediately due and payable without
demand or notice, and the Bank may take any one or more of the following
actions not contrary to law:
(a) Foreclose this Mortgage by legal proceedings and collect
its actual attorney fees as awarded by the Court;
(b) Sell, grant, and convey the Property, or cause the Property
to be sold, granted and conveyed at public sale and to execute and deliver to
the purchaser at such sale a good and sufficient deed or deeds of conveyance
at law, pursuant to the statute in such case made and provided and out of the
proceeds of such sale to retain the sums due under this Mortgage and all costs
and charges of the sale (including, without limitation, the attorney fees
provided by statute), rendering the surplus moneys, if any, to the Mortgagor
or as otherwise provided by law, and in the event of a public sale and unless
otherwise prohibited by law, the Property may be sold as one or more parcels,
the Bank may sell the Property for cash and/or secured credit, and the Bank
may give a warranty deed to the purchaser binding upon the Mortgagor and all
claiming under the Mortgagor;
(c) As to the Fixtures, exercise any of the rights and remedies
of a creditor under the Uniform Commercial Code, any other law, and any Court
Rule;
(d) Exercise any and all rights granted to the Bank herein or
in any of the Liabilities; and/or
(e) Take any other action allowed by law.
20. Application of Payments After Default. Notwithstanding
anything to the contrary contained in this Mortgage or in any of the
Liabilities, upon occurrence of an Event of Default under this Mortgage, any
proceeds of any foreclosure, voluntary sale, or other disposition of the
Property shall be applied by the Bank to reduction of the Liabilities in such
order as the Bank shall determine in its sole judgment and the Mortgagor shall
have no right to require the Bank to apply such proceeds to any specific
Liabilities.
7
<PAGE>
21. Subrogation. Any transferee of, or endorser, guarantor or
surety or other party providing security who pays the Liabilities secured
hereby in full may take over all or any part of the Property and shall succeed
to all rights of the Bank in respect thereto and the Bank shall be under no
further responsibility therefor. No party shall succeed to any of the rights
of the Bank so long as any of the Liabilities remain unpaid to the Bank.
22. Release of Security. The Mortgagor agrees that the Bank may,
without impairing the obligation of the Mortgagor hereunder: release any other
obligors or guarantors from their obligations to pay or perform the
Liabilities; release any security of any obligor or guarantor of the
Liabilities before or after maturity of any of the Liabilities; take, release
or enforce its rights with respect to any of the Property without being
obliged first to do so to any other security, whether owned by the Mortgagor
or any other person; and agree with any obligor of the Liabilities to extend,
modify, forbear or make any accommodations with regard to the terms of the
Liabilities owed by such obligor.
23. WAIVER OF RIGHTS REGARDING SALE BY ADVERTISEMENT. The Mortgagor
understands, acknowledges, and agrees that, upon occurrence of an Event of
Default, the Bank has the right, at its option, to foreclose this Mortgage by
advertisement pursuant to relevant Michigan statutes and that such statutes
provide for notice of a sale solely by advertisement and posting and afford no
right to a hearing to the Mortgagor. The Mortgagor hereby voluntarily and
knowingly agrees and consents to the right of the Bank, at its option, to
foreclose this Mortgage by advertisement and waives its rights, if any, under
the Constitution of the United States and/or the State of Michigan to notice
or a hearing regarding such foreclosure by advertisement, except for the
notice requirements described in the Michigan statutes providing for such
sale.
24. No Consent. Nothing in this Mortgage shall be deemed or
construed in any way as constituting the consent or request by the Bank,
express or implied, to any contractor, subcontractor, laborer, mechanic or
materialman for the performance of any labor or the furnishing of any material
for any improvement, construction, alteration or repair of the Property. The
Mortgagor further agrees that the Bank does not stand in any fiduciary
relationship to the Mortgagor.
25. Indemnity. In addition to payments of the Liabilities,
Mortgagor agrees to indemnify, pay and hold harmless the Bank and any holder
of any of the Liabilities, and the officers, directors, employees, agents and
affiliates of the Bank and such holders (collectively called the
"Indemnitees") from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs
(including, without limitation, settlement costs), expenses or disbursements
of any kind or nature whatsoever (including, without limitation, the
reasonable fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened, whether or not such Indemnitee shall be designated a
party thereto), which may be imposed on, incurred by, or asserted against that
Indemnitee, in any manner relating to or arising out of this Mortgage and/or
its enforcement, the Liabilities, the Bank's relationship with Mortgagor, the
use or intended use of the proceeds of any of the Liabilities or any
environmental matter (the "Indemnified Claims"); provided that Mortgagor shall
have no obligation to an Indemnitee hereunder with respect to Indemnified
Claims if it has been determined by a final decision (after all appeals and
the expiration of time to appeal) by a court of competent jurisdiction that
such Indemnified Claims arose primarily from the gross
8
<PAGE>
negligence or willful misconduct of that Indemnitee. To the extent that the
undertaking to indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law or public
policy, Mortgagor shall contribute the maximum portion which it is permitted
to pay and satisfy under applicable law, to the payment and satisfaction of
all Indemnified Claims incurred by the Indemnitees or any of them.
The foregoing indemnity set forth in this Section 25 shall
include, without limitation, indemnification by Mortgagor to each Indemnitee
for any and all expenses and costs (including, without limitation, remedial,
removal, response, abatement, clean-up, investigative, closure and monitoring
costs), losses, claims (including claims for contribution or indemnity and
including the costs of investigating or defending any claim and whether or not
such claim is ultimately defeated, and whether such claim arose before, during
or after Mortgagor's ownership, operation, possession or control of the
Property, or before, on or after the date hereof, and including also any
amounts paid incidental to any compromise or settlement by the Indemnitees or
any Indemnitee to the holders of any such claim), lawsuits, liabilities,
obligations, actions, judgments, suits, disbursements, encumbrances, liens,
damages (including, without limitation, damages for contamination or
destruction of natural resources), penalties and fines of any kind or nature
whatsoever (including, without limitation, in all cases the reasonable fees
and disbursements of counsel in connection therewith) incurred, suffered or
sustained by that Indemnitee based upon, arising under or relating to any
federal, state or local laws involving the protection of the environment
and/or the disposition of, or exposure to, hazardous or toxic substances, as
now existing or as hereinafter amended or enacted, or any rules, regulations,
guidelines or standards promulgated pursuant thereto, based on, arising out of
or relating to, in whole or in part, the exercise and/or enforcement of any
rights or remedies by any Indemnitee under this Mortgage or any of the
Liabilities, and including, but not limited to, taking title to, owning,
possessing, operating, controlling, managing or taking any action in respect
of the Property. The provisions of this Section 25 shall survive payment of
the Liabilities and termination of this Mortgage.
26. Miscellaneous. The paragraph headings used in this Mortgage are
for convenience only and shall not be used in the interpretation hereof. All
persons signing this Mortgage on behalf of a corporation, partnership, trust
or other entity warrant to the Bank that they are duly and properly authorized
to execute this Mortgage. Nothing in this Mortgage shall waive or restrict any
right of the Bank granted in any other document or by law. No delay on the
part of the Bank in the exercise of any right or remedy shall operate as a
waiver. No single or partial exercise by the Bank of any right or remedy shall
preclude any other future exercise of that right or remedy or the exercise of
any other right or remedy. No waiver or indulgence by the Bank of any default
shall be effective unless in writing and signed by the Bank, nor shall a
waiver on one occasion be construed as a bar to or waiver of that right on any
future occasion. Acceptance of partial or late payments owing on any of the
Liabilities at any time shall not be deemed a waiver of any default. All
rights, remedies and security granted to the Bank herein are cumulative and in
addition to other rights, remedies or security which may be granted elsewhere
or by law. Whenever possible, each provision of this Mortgage shall be
interpreted in such manner as to be effective and valid under applicable law.
If any provision hereof shall be declared invalid or illegal it shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of the provision or the remaining provisions of
this Mortgage. Notice from the Bank to the Mortgagor, if mailed, shall be
deemed given when mailed to the Mortgagor, postage prepaid, at the Mortgagor's
address set forth at the beginning of this Mortgage or at any other address of
the Mortgagor in the
9
<PAGE>
records of the Bank. Any reference to the Bank shall include any holder of the
Liabilities and any holder shall succeed to the Bank's rights under this
Mortgage. This Mortgage shall bind the respective heirs, personal
representatives, successors and assigns of the Mortgagor. If any payment
applied by the Bank to the Liabilities is subsequently set aside, recovered,
rescinded or otherwise required to be returned or disgorged by the Bank for
any reason (pursuant to bankruptcy proceedings, fraudulent conveyance
statutes, or otherwise), the Liabilities to which the payment was applied
shall for the purposes of this Mortgage be deemed to have continued in
existence, notwithstanding the application, and shall be secured by this
Mortgage as fully as if the Bank had not received and applied the payment.
27. Joint and Several Obligations. If two or more persons execute
this Mortgage as the Mortgagor, the obligations and grants of liens of such
persons herein shall be joint, several, and individual.
28. WAIVER OF JURY TRIAL. MORTGAGOR AND THE BANK EACH HEREBY
KNOWINGLY AND VOLUNTARILY, WITHOUT COERCION, WAIVE ALL RIGHTS TO A TRIAL BY
JURY OF ALL DISPUTES BETWEEN THEM ARISING OUT OF THIS MORTGAGE, ANY OF THE
LIABILITIES, OR ANY ALLEGED ACT OR NEGLECT OF THE BANK.
IN WITNESS WHEREOF, the Mortgagor has executed this Mortgage on the
day and year first above written.
Signed, sealed and delivered in the presence of:
/s/ Lawrence B. Fitch PRAB ROBOTS, INC.
- -----------------------
/s/ Gwendolyn C. Pryor
- ----------------------- By: /s/ Gary A. Herder
-------------------
Gary A. Herder
Its: President
STATE OF MICHIGAN )
)SS:
COUNTY OF KALAMAZOO )
The foregoing instrument was acknowledged before me this 30th day of
October, 1992, by Gary A. Herder, President of Prab Robots, Inc., a Michigan
corporation, on behalf of the corporation.
/s/ Gwendolyn C. Pryor
------------------------
Notary Public
Kalamazoo County, Michigan
My Commission Expires: 10-02-96
This instrument drafted by:
John R. Cook, Esq.
Miller, Canfield, Paddock and Stone
444 West Michigan Avenue
Kalamazoo, Michigan 49007
KZFS1\172100.1\071779-00042
10
<PAGE>
AMENDMENT TO MORTGAGE
For good and valuable consideration, receipt of which is hereby
acknowledged, PRAB, INC., formerly known as Prab Robots, Inc., a Michigan
corporation, whose address is 5944 East Kilgore Road, Kalamazoo, Michigan
49003 (herein collectively referred to as "Mortgagor"), and FMB-ARCADIA BANK,
formerly Arcadia Bank, a Michigan banking corporation, 251 East Michigan
Avenue, Kalamazoo 49007 ("Bank") hereby amend and modify the Future Advance
Mortgage between Mortgagor and the Bank dated October 30, 1992, and recorded
on November 2, 1992, in Liber 1599, Pages 0464-0468, Kalamazoo County Records,
(the "Mortgage") by adding the following language as paragraph 29 thereof:
29. Description of Certain Liabilities. The Liabilities secured
by the Mortgage shall include, but not be limited to, the indebtedness and
obligations to the Bank (including future advances) evidenced by the following
instruments and documents.
Name of Instrument Name of Person(s) Date of
(including face amount, if any) Signing Instrument Instrument
------------------------------- ------------------ ----------
$1,800,000 Commercial Term Note Prab, Inc. October 31, 1996
$1,670,000 Commercial Revolving Note Prab, Inc. October 31, 1996
Except as specifically amended above, all terms and conditions of the
Mortgage shall continue in full force and effect. This Amendment is being
filed to give notice of certain Liabilities (as defined in the Mortgage)
existing on the date hereof, but shall not be construed as limiting the
existing or future Liabilities secured by the Mortgage.
IN WITNESS WHEREOF, Mortgagor and the Bank have executed this Amendment
to Mortgage on this 31st day of October, 1996.
WITNESSES:
/s/ Allison A. Batkiewicz PRAB, INC.
- -------------------------
/s/ Linda Heilig By: /s/ Gary A. Herder
- ------------------------- -------------------
Gary A. Herder
Its: President
<PAGE>
STATE OF MICHIGAN )
)SS:
COUNTY OF KALAMAZOO )
The foregoing instrument was acknowledged before me this 31st day of
October, 1996, by Gary A. Herder, President of Prab, Inc., a Michigan
corporation, on behalf of the corporation.
/s/ Allison A. Batkiewicz
--------------------------------
Notary Public
Kalamazoo County, Michigan
My commission expires: 5-15-2001
WITNESSES: FMB-ARCADIA BANK
/s/ Allison A. Batkiewicz By: /s/ Lawrence B. Fitch
- ------------------------- ---------------------
Lawrence B. Fitch
/s/ Linda Heilig Its: President
- -------------------------
STATE OF MICHIGAN )
)SS:
COUNTY OF KALAMAZOO )
The foregoing instrument was acknowledged before me this 31st day of
October, 1996, by Lawrence B. Fitch, President of FMB-Arcadia Bank, a Michigan
banking corporation, on behalf of the corporation.
/s/ Allison A. Batkiewicz
-------------------------
Notary Public
Kalamazoo County, Michigan
My commission expires:
This instrument drafted by and
when recorded return to:
Allison A. Batkiewicz
FMB-Arcadia Bank
251 East Michgian Avenue
Kalamazoo, Michigan 49007
KZFS1\172104.1\071779-00042
2
