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to this Note is subsequently set aside, recovered, rescinded or otherwise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.
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
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