Exhibit 4f
FMB
Arcadia Bank
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 $1,670,000.00 Note dated March
9, 1998, 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 the 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 $450,000.00.
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:
Minimum Net Minimum Tangible
Time Period Current Assets Net Worth
----------- -------------- ----------------
(a) from 10/31/97 0 $1,200,000.00
to 10/30/98
(b) from 10/31/98 0 $2,200,000.00
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) liabilities, but excluding Subordinated Capital Notes, of the Debtor as
defined in accordance with generally accepted accounting principles,
consistently applied ("Debt").
"Net Worth" means: (i) the amount of all assets which, under generally
accepted accounting principles, consistently applied, would appear as such on
the balance sheet of Debtor, less (ii) all liabilities of the 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 10/31/97
to 10/30/98; 1.2 to 1.0 from 10/31/98, and thereafter.
13.3. Maintain the ratio of Debt to Tangible Net Worth of not more
than: 3.75 to 1.0 from 10/31/97 to 10/30/98; 2.25 to 1.0 from 10/31/98, 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.
13.5 Maintain all of its deposit accounts at the Bank.
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 of 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: Xxxxx 0, 0000
Xxxxxx(x): Prab, Inc.
/s/ Xxxx X. Xxxxxx
-------------------------
Xxxx X. Xxxxxx, President
