<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------------- ----------------------
Commission file number 0-12808
CADE INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
WISCONSIN 39-1371038
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5640 ENTERPRISE DRIVE, LANSING, MICHIGAN 48911
(Address of principal executive offices)
(Zip Code)
(517) 394-1333
(Registrant's telephone number, including area code)
-----------------------------------------------------
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common stock, $0.001 Par Value -- 21,686,341 shares as of
November 9, 1995
<PAGE> 2
INDEX
CADE INDUSTRIES, INC.
---------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I - FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of
Operations for the three months ended
September 30, 1995 and 1994 3
Condensed Consolidated Statements of
Operations for the nine months ended
September 30, 1995 and 1994 4
Condensed Consolidated Statements of
Cash Flows for the nine months
ended September 30, 1995 and 1994 5
Note to Condensed Consolidated Financial
Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
PART II - OTHER INFORMATION
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Item 6. Exhibits & Reports on Form 8-K
</TABLE>
<PAGE> 3
PART I, ITEM 1 - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
CADE INDUSTRIES, INC.
<TABLE>
<CAPTION>
September 30,
1995 December 31,
(Unaudited) 1994*
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 55,391 $ 71,537
Trade accounts receivable 4,789,101 4,817,958
Inventories:
Finished goods and
work in progress 6,146,811 6,653,385
Materials and supplies 2,626,679 2,667,904
----------- -----------
8,773,490 9,321,289
Deferred income taxes 153,000 153,000
Prepaid expenses and other
current assets 255,212 170,375
----------- -----------
TOTAL CURRENT ASSETS 14,026,194 14,534,159
PROPERTY, PLANT AND EQUIPMENT
Land and improvements 500,864 500,864
Buildings 4,307,156 4,290,599
Machinery and equipment 8,732,160 8,128,368
Tooling 10,021,653 9,256,142
----------- -----------
23,561,833 22,175,973
Less accumulated depreciation 8,235,119 6,624,101
----------- -----------
15,326,714 15,551,872
INTANGIBLE AND OTHER ASSETS
Goodwill 2,675,843 2,707,361
Other assets 160,636 143,491
----------- -----------
2,836,479 2,850,852
----------- -----------
$32,189,387 $32,936,883
=========== ===========
</TABLE>
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<PAGE> 4
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
CADE INDUSTRIES, INC.
<TABLE>
<CAPTION>
September 30,
1995 December 31,
(Unaudited) 1994*
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<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable to bank $ 1,556,982 $ 3,100,000
Trade accounts payable 1,803,378 2,552,679
Employee compensation and amounts
withheld 516,363 633,736
Accrued expenses 621,320 507,568
Accrued income taxes (145,436) 237,101
Current portion of long-term debt 1,156,016 937,648
------------ ------------
TOTAL CURRENT LIABILITIES 5,508,623 7,968,732
LONG-TERM DEBT 6,726,765 4,616,991
DEFERRED INCOME TAXES 313,000 313,000
SHAREHOLDERS' EQUITY
Preferred Stock, 10% cumulative,
non-voting, stated value $300
per share; authorized 500 shares,
none issued
Common Stock, par value $.001 per
share; authorized 100,000,000
shares, issued 21,886,409 shares;
outstanding 21,686,341 shares
(1994-21,881,499) 21,886 21,881
Additional paid-in capital 8,828,552 8,824,874
Retained earnings 11,045,003 11,445,847
------------ ------------
19,895,441 20,292,602
Less cost of Common Stock in treasury 254,442 254,442
------------ ------------
19,640,999 20,038,160
------------ ------------
$ 32,189,387 $ 32,936,883
============ ============
</TABLE>
* The balance sheet at December 31, 1994 has been derived from the audited
financial statements at that date.
See notes to condensed consolidated financial statements.
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<PAGE> 5
PART I ITEM 1 - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
CADE INDUSTRIES, INC.
<TABLE>
<CAPTION>
Three Months Ended September 30,
---------------------------------
1995 1994
------------ ------------
<S> <C> <C>
Sales $ 6,955,259 $ 5,025,159
Operating expenses:
Cost of sales 5,453,939 3,926,558
Selling, general and
administrative expenses 1,334,356 997,897
------------ ------------
6,788,295 4,924,455
------------ ------------
INCOME FROM OPERATIONS 166,964 100,704
Interest expense - net 188,900 72,969
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (21,936) 27,735
Income taxes (credit) (47,000) 10,000
------------ ------------
NET INCOME $ 25,064 $ 17,735
============ ============
NET INCOME PER SHARE $ 0.00 $ 0.00
============ ============
Weighted average number of
shares of common stock
outstanding 21,686,341 16,962,238
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE> 6
PART I ITEM 1 - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
CADE INDUSTRIES, INC.
<TABLE>
<CAPTION>
Nine Months Ended September 30,
--------------------------------
1995 1994
------------ ------------
<S> <C> <C>
Sales -- Note B $ 22,943,990 $ 14,676,738
Operating expenses:
Cost of sales -- Note B 19,117,823 11,436,300
Selling, general and
administrative expenses 4,012,426 2,965,647
------------ ------------
23,130,249 14,401,947
------------ ------------
INCOME (LOSS) FROM OPERATIONS (186,259) 274,791
Interest expense - net 544,632 233,538
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (730,891) 41,253
Income taxes (credit) (340,000) 15,000
------------ ------------
NET INCOME (LOSS) $ (390,891) $ 26,253
============ ============
NET INCOME (LOSS) PER SHARE $ (0.02) $ 0.00
============ ============
Weighted average number of
shares of common stock
outstanding 21,683,140 16,939,198
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE> 7
PART I, ITEM 1 - FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
CADE INDUSTRIES, INC.
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------------------
1995 1994
---- ----
<S> <C> <C>
NET CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES $ 488,491 $ 2,491,276
INVESTING ACTIVITIES
Additions to property, plant
and equipment (1,191,820) (584,724)
Increase in other assets (101,624) (259,722)
----------- -----------
(1,293,444) (844,446)
FINANCING ACTIVITIES
Increase (decrease) in note payable to bank (1,543,018) (900,000)
Payments and refinancing of long-term debt 2,328,142 (671,785)
Exercise of stock options 52,350
Purchase of common stock for Treasury (16,250)
Other 3,683
----------- -----------
788,807 (1,535,685)
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (16,146) 111,145
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 71,537 31,534
----------- -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 55,391 $ 142,679
=========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
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<PAGE> 8
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CADE INDUSTRIES, INC.
SEPTEMBER 30, 1995
NOTE A -- BASIS OF PRESENTATION
The condensed consolidated financial statements as of and for the three and
nine month periods ended September 30, 1995 and 1994, have been prepared by the
Company without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. In the opinion of management, such condensed
consolidated financial statements reflect all adjustments necessary (consisting
only of normal recurring accruals) for a fair presentation. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
December 31, 1994.
NOTE B - SPECIAL CHARGE TO OPERATIONS
Nine month operations includes a special pre-tax charge in the 1995 second
quarter of $1,130,000 to write-off certain costs at the Company's Cade
Composites subsidiary associated with work in process, non-recurring
engineering charges, contract termination costs, tooling investments,
prototype development costs, and accounts receivable charges. The provision
was based on the Company's review of development costs and related project
investments, and its best estimate of matching such costs against future
revenue.
NOTE C - DEBT AGREEMENT
In September, 1995 the Company completed the negotiation of an amendment to its
revolving credit and term loan agreement. The amended agreement consists of a
$4,000,000 line of credit and a $3,600,000 term loan.
* The $4,000,000 line of credit is unsecured, is effective until April
1, 1996 and bears interest at the bank's announced prime interest rate
minus one-half percent. Also, at the Company's option, certain
increments of the outstanding line of credit may be placed on a
Eurodollar-based rate and fixed for specified periods of time not to
exceed ninety days. This agreement replaced the Company's previous
$5,000,000 line of credit arrangement.
* The $3,600,000 term loan is secured by substantially all of the
Company's and it's subsidiaries tangible assets and bears interest at
the bank's announced prime interest rate minus one-quarter percent.
The term note requires equal quarterly payments of $128,571 until
October 1, 2002. This amended term note is subject to similar
guarantees and restrictions as contained in the previous term note
agreement. Pre-existing term debt of $642,857 and line of credit debt
of $2,943,018 was retired with the proceeds from this term loan.
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<PAGE> 9
PART I, ITEM 2 - MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CADE INDUSTRIES, INC.
RESULTS OF OPERATIONS
SALES
The Company's net sales of $6,955,000 in the third quarter of 1995 increased
38.4% or $1,930,000 from the same quarter of 1994, while net sales of
$22,944,000 for the nine months ended September 30, 1995 increased $8,267,000
or 56.3% compared to the same nine month period of the prior year. Net sales
for the three and nine months ended September 30, 1995 included $3,035,000 and
$8,812,000 of net sales, respectively, by the Company's H.A.C. subsidiary which
was acquired November 30, 1994. Sales for the quarter and the nine-month
period ended September 30, 1995 (excluding the effect of H.A.C.'s sales)
decreased $1,105,000 (22.0%) and $545,000 (3.7%), respectively, from the
comparable periods of the prior year. The significant decrease for the quarter
primarily reflects reduced shipments of test nacelles and other ground support
equipment and to a lesser extent, gas turbine engine and airframe components.
The decrease in net sales for the year-to-date period mainly reflects reduced
shipments of test nacelles and other ground support equipment partially offset
by higher sales of gas turbine engine and airframe components. In addition,
inclusion of H.A.C. resulted in higher sales of military aircraft components
and repair and overhaul services in both 1995 periods.
Sales for 1995 are expected to increase slightly over those of the prior year
before consideration of a full year's sales from the Company's H.A.C.
subsidiary. This sales increase is expected to result from higher gas turbine
engine and airframe component sales as well as increased test nacelle
shipments.
Sales backlog (representing orders for delivery through 1996) was approximately
$14,000,000, including $3,300,000 related to H.A.C., at September 30, 1995,
compared to $13,000,000 at the same date in 1994.
The Company's backlog includes only "firm" orders supported by customer
purchase orders with fixed delivery dates and excludes "blanket" purchase
orders against which customers issue production releases covering relatively
short time periods. The decrease (excluding H.A.C.) in order backlog from the
third quarter of 1994 primarily reflects the continued efforts by customers to
reduce both inventory levels and production lead times, however the order
backlog is increased from the second quarter of 1995.
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<PAGE> 10
COST OF SALES
Cost of sales for the third quarter of 1995 increased $1,527,000 or 38.9% from
the same quarter of 1994 and for the nine months ended September 30, 1995
increased $7,682,000 or 67.2% from the comparable period in 1994. The
increases for both the three and nine month periods were due in large part to
the increase in sales levels in such 1995 periods of 38.4% and 56.3%,
respectively. In addition, approximately $960,000 of the increase in cost of
sales in the 1995 year-to-date period related to the write off in the second
quarter of certain costs at the Company's Cade Composites subsidiary associated
with work in process, non-recurring engineering charges, contract termination
costs, tooling investments, and prototype development costs. This provision
came as a result of the Company's review of development costs and related
project investments and the Company's best estimate of matching such costs
against future revenue. Without regard to H.A.C. and the special charge, cost
of sales for the 1995 quarter decreased 24.5% or $963,000 and for the 1995
year-to-date period decreased 4.3% or $488,000 from the comparable 1994
periods.
Cost of sales as a percentage of sales was 78.4% and 78.1% for the 1995 and
1994 third quarters, respectively, and for the nine months ended September 30,
1995 and 1994 was 82.7% (including the special charge) and 77.9%, respectively.
Excluding the effect of H.A.C.'s operations and the special charge, cost of
sales as a percentage of sales was 75.6% and 77.5% for the 1995 three and nine
month periods, respectively.
The cost of sales percentages (excluding the effect of the special charge on
the 1995 year-to-date amounts) increased slightly for both the three and nine
month periods. This increase is attributed primarily to the inclusion of
H.A.C. in the 1995 periods whose current material and overhead cost percentages
are higher than the Company's historical cost relationships. Partially
offsetting the impact of H.A.C. on the cost relationships was a shift in
product mix at the Company's other manufacturing operations resulting in a
larger portion of sales of gas turbine engine and airframe components
reflecting lower material and higher labor contents.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses ("administrative expenses") as a
percent of net sales were 19.2% (24.6% excluding H.A.C.) and 19.9% for the
third quarter of 1995 and 1994, respectively, and 17.4% (20.8% excluding
H.A.C.) and 20.2% for the nine month periods ended September 30, 1995 and 1994,
respectively. Actual amounts expended increased by $336,000 from the third
quarter of 1994 to the same quarter of 1995 and by $1,046,000 from the nine
month period ended September 30, 1994 to the same period in 1995. The
increased expenditures for the periods primarily reflect the inclusion of
H.A.C. in the 1995 periods with some offset due to decreased commission expense
as a result of changes in the customer mix of test nacelle and ground support
equipment sales. The decreased percentages primarily resulted from the
positive effect of H.A.C.'s administrative expenses as a percent of sales which
is lower than the Company's historical cost relationship with partial offset
from the lower sales base over which to spread fixed costs at the Company's
other subsidiaries.
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<PAGE> 11
NET INTEREST EXPENSE
Net interest expense as a percent of sales was 2.7% and 1.6% for the third
quarters of 1995 and 1994, respectively, and was 2.4% and 1.6% of sales for the
nine month periods ended September 30, 1995 and 1994, respectively. These
increases resulted primarily from higher borrowing (due in large part to the
acquisition of H.A.C.) and higher interest rates.
INCOME TAX EXPENSE
Income taxes were a negative expense of ($47,000) or (0.7%) of sales in the
1995 third quarter compared to $10,000 or 0.2% of sales for the same quarter of
1994. Income taxes were a negative expense of ($340,000) or (1.5%) of sales
(positive expense of $43,000 or 0.2% of sales excluding the special charge) for
the nine months ended September 30, 1995 compared to $15,000 or 0.1% of sales
for the comparable period of 1994.
NET INCOME (LOSS)
The net income of $25,000 in the third quarter of 1995 represents an increase
in after-tax earnings of $7,000 from the 1994 third quarter, while the net loss
of ($391,000) for the nine months ended September 30, 1995 ($356,000 net income
excluding the special charge) reflects a $417,000 decrease in after-tax
earnings from the comparable period of 1994. The primary reason for the net
loss in the nine month period ended September 30, 1995 is the special charge
discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company has met its working capital and longer term capital needs through
short and long-term bank debt, a tax-exempt bond issue and leasing arrangements
on certain items of capital equipment.
Capital has principally been used to fund the Company's business development
and capital expenditure programs. Management presently expects to continue
investing at the current level in production technology, tooling and equipment
for improved manufacturing efficiency and quality enhancement. The Company
will also continue to seek acquisition opportunities to expand and/or diversify
its markets.
The Company maintains a $4,000,000 unsecured credit line with a bank,
$2,443,000 of which was available at September 30, 1995. The Company also has
outstanding approximately $4,217,000 of secured term debt, $805,000 of
tax-exempt bonds and $2,861,000 of subordinated notes. See Note C of Notes to
Condensed Financial Statements.
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<PAGE> 12
Management believes that expected increased revenues and continued emphasis on
working capital management will lead to improved cash flow from operations. As
a result, the Company's cash flow from operations and its current credit
facilities (see Note C to the condensed consolidated financial statements) are
felt to be adequate to finance its operations and capital expenditure
requirements at present and forecasted levels.
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<PAGE> 13
ITEM 6
(A) The following exhibits are filed herewith:
Exhibit 4.1. Third Amendment to Amended and Restated Revolving Credit and
Term Loan Agreement dated September 29, 1995 by and between
Cade Industries, Inc. and Comerica Bank
Exhibit 27. Financial Data Schedule
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<PAGE> 14
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 thereunto duly authorized.
CADE INDUSTRIES, INC.
November 14, 1995
By /s/ Edward B. Stephens
----------------------
Edward B. Stephens
Vice President, Treasurer and
Chief Financial Officer
<PAGE> 15
CADE INDUSTRIES, INC.
* * *
EXHIBIT INDEX
TO
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED
SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED HEREIN FILED
NUMBER DESCRIPTION BY REFERENCE TO: HEREWITH
- ------ ----------- ------------------- --------
<S> <C> <C> <C>
4.1 Third Amendment to
Amended and Restated
Revolving Credit and Term
Loan Agreement dated
September 29, 1995 by
and between Cade
Industries, Inc. and
Comerica Bank X
27 Financial Data
Schedule X
</TABLE>
<PAGE> 1
Exhibit 4.1
Cade Industries, Inc.
September 30, 1995 10-Q
<PAGE> 2
THIRD AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT AND
TERM LOAN AGREEMENT
This Amendment, made and delivered as of September 29, 1995, by and
between CADE INDUSTRIES, INC. ("Borrower") and COMERICA BANK ("Bank").
WITNESSETH:
WHEREAS, the Borrower and the Bank are parties to that certain Amended
and Restated Revolving Credit and Term Loan Agreement dated January 30, 1995,
as amended as of March 3, 1995 and June 1, 1995 (the "Agreement"); and
WHEREAS, the Bank and the Borrower desire to amend the Agreement as
set forth below;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, the Borrower and the Bank agree as follows;
1. The phrase "Five Million Dollars ($5,000,000)" in Section
1.A.1 is replaced by "Four Million Dollars ($4,000,000)."
2. Section 1.A.2 is replaced in its entirety with the following:
The principal indebtedness represented by the Revolving Credit Note
and all interest thereon shall be payable in accordance with the terms of the
Revolving Credit Note.
3. The phrase "Seven Hundred Eighty Five Thousand Seven Hundred
Fourteen and 31/100 Dollars ($785,714.31)" is replaced by "Three Million Six
Hundred Thousand Dollars ($3,600,000)."
4. Section 1.B.2 is replaced in its entirety with the following:
The principal indebtedness represented by the Term Note and all
interest thereon shall be payable in accordance with the terms of the Term
Note.
5. Section 1.B.4 is deleted.
6. Section 4.10 is replaced in its entirety with the following:
Maintain a Tangible Net Worth of not less than $16,500,000 from the
date of the Amendment through December 30, 1996;
<PAGE> 3
$17,000,000 from December 31, 1996 through December 30, 1997; and increase an
additional $250,000 on December 31, 1997 and each December 31st thereafter.
7. Section 4.12 is amended by replacing "1.75" with "2.0."
8. Section 4.13 is replaced in its entirety by the following:
Maintain Cash Flow Coverage Ratio. On a consolidated and
non-consolidated basis, maintain a Cash Flow Coverage Ratio of not greater than
6.5 to 1.0.
CASH FLOW COVERAGE RATIO" of any person shall mean, for any applicable
period of determination, the ratio of (a) the sum of net income for such period
before interest and taxes, plus depreciation, amortization and other non-cash
charges and expenses for such period, to (b) principal payments on all Debt
(including, without limitation, the Indebtedness) which were due and payable
during such period, whether or not such payments were actually made, plus
interest paid during such period. The Cash Flow Coverage Ratio shall be
calculated as of the end of each of Borrowers fiscal quarters, and shall be
based upon the four (4) immediately preceding fiscal quarters of Borrower then
ending.
9. Exhibit "A" is replaced with the Exhibit "A" attached hereto.
10. Exhibit "B" is replaced with the Exhibit "B" attached hereto.
11. Exhibit "C" is replaced with the Exhibit "C" attached hereto.
12. Exhibit "D" is amended by replacing paragraph 2.1 (c) with the
following: "that certain Term Note dated September 29, 1995 made in the
principal amount of Three Million Six Hundred Thousand Dollars ($3,600,000) by
Borrower payable to Bank" and by amending paragraph 2.1(d) by replacing the
phrase "January 30, 1995 in the principal amount of Five Million Dollars
($5,000,000) with "September 29, 1995 in the principal amount of Four Million
Dollars ($4,000,000)."
13. Borrower is responsible for all costs incurred by Bank,
including reasonable attorney fees, with regard to the preparation and
execution of this Amendment.
14. The execution of this Amendment shall not be, nor deemed to
be, a waiver of any Default or Event of Default.
2
<PAGE> 4
15. All the terms used herein which are defined in the Agreement
shall have the same meanings as used therein, unless the context clearly
requires otherwise.
16. Borrower hereby waives, discharges, and forever releases Bank,
Bank's employees, officers, directors, attorneys, stockholders and successors
and assigns, from and of any and all claims, causes of action, allegations or
assertions that Borrower has or may have had at any time up through and
including the date of this Amendment, against any or all of the foregoing,
regardless of whether any such claims, causes of action, allegations or
assertions are known to Borrower or whether any such claims, causes of action,
allegations or assertions arose as a result of Bank's actions or omissions in
connection with the Agreement, or any amendments, extensions or modifications
thereto, or Bank's administration of debt evidenced by the Agreement or
otherwise.
17. Borrower expressly acknowledges and agrees that except as
expressly amended herein, the Agreement, as amended, shall remain in full force
and effect and is hereby ratified, confirmed and restated.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the day and year first set forth above.
CADE INDUSTRIES, INC.
By /s/ Edward B. Stephens
----------------------
Its Vice President
COMERICA BANK
By /s/ Lori M. Fisher
-------------------------
Its Vice President
3
<PAGE> 5
EXHIBIT "A" TAX I.D. NO. __________________________
PROMISSORY NOTE
$4,000,000.00 Detroit, Michigan
September 29, 1995
On or before April 1, 1996 (herein called the "Maturity Date"), FOR
VALUE RECEIVED, the undersigned, CADE INDUSTRIES, INC. (herein called
"Borrower"), promises to pay to the order of COMERICA BANK (herein called
"Bank"), in lawful currency of the United States of America, the sum of FOUR
MILLION DOLLARS ($4,000,000.00), or so much of said sum as has been advanced
and is then outstanding under this Note, together with interest thereon as
hereinafter set forth.
This Note is a note under which Advances, repayments and re-Advances
may be made from time to time, subject to the terms and conditions of this
Note; provided however, in no event shall Bank be obligated to make any
Advances or re-Advances hereunder (notwithstanding anything expressed or
implied herein or elsewhere to the contrary).
Each of the Advances made hereunder shall bear interest at the
Eurodollar-based Rate or the Prime-based Rate, as elected by Borrower or as
otherwise determined under this Note.
Accrued and unpaid interest on the unpaid balance of each outstanding
Prime-based Advance shall be payable quarterly, in arrears, commencing on
December 31, 1995, and on the last Business Day of each succeeding quarter
thereafter. Interest accruing at the Prime-based Rate shall be computed on the
basis of a year of 360 days, and shall be assessed for the actual number of
days elapsed, and in such computation, effect shall be given to any change in
the Prime-based Rate as a result of any change in the Prime-based Rate on the
date of each such change.
Accrued and unpaid interest on each Eurodollar-based Advance shall be
payable on the last day of the Interest Period applicable thereto. Interest
accruing at the Eurodollar-based Rate shall be computed on the basis of a 360
day year and shall be assessed for the actual number of days elapsed from the
first day of the Interest Period applicable thereto but not including the last
day thereof.
From and after the occurrence of any Default hereunder, and so long as
any such Default remains unremedied or uncured thereafter,
<PAGE> 6
the Indebtedness outstanding under this Note shall bear interest at a per annum
rate of three percent (3%) above the otherwise Applicable Interest Rate, which
interest shall be payable upon demand.
The amount and date of each Advance, its Applicable Interest Rate, its
Interest Period, if any, and the amount and date of any repayment shall be
noted on Bank's records, which records shall be conclusive evidence thereof,
absent manifest error; provided, however, any failure by Bank to make any such
notation, or any error in any such notation, shall not relieve Borrower of its
obligations to repay Bank all amounts payable by Borrower to Bank under or
pursuant to this Note, when due in accordance with the terms hereof.
Borrower may request an Advance hereunder, including the refunding of
an outstanding Advance as the same type of Advance or the conversion of an
outstanding Advance as the same type of Advance, upon the delivery to Bank of a
Request for Advance executed by an authorized officer of Borrower, subject to
the following:
(a) no Default, and no condition or event which, with the giving
of notice or the running of time, or both, would constitute a Default, shall
have occurred and be continuing or exist under this Note:
(b) each such Request for Advance shall set forth the information
required on the Request for Advance form annexed hereto as Exhibit "A";
(c) each such Request for Advance shall be delivered to Bank by
11:00 a.m. (Detroit, Michigan time) one (1) Business Day prior to the proposed
date of Advance in the case of Eurodollar-based Advances, and by 11:00 a.m.
(Detroit, Michigan time) on the proposed date of Advance in the case of
Prime-based Advances;
(d) the principal amount of each Eurodollar-based Advance shall be
at least Five Hundred Thousand Dollars ($500,000.00);
(e) the proposed date of any refunding of any outstanding
Eurodollar-based Advance as another Eurodollar-based Advance or the conversion
of any outstanding Eurodollar-based Advance to a Prime-based Advance shall only
be on the last day of the Interest Period applicable to such outstanding
Eurodollar based Advance; and
(f) a Request for Advance, once delivered to Bank, shall not be
revocable by Borrower; provided, however, as aforesaid, Bank shall not be
obligated to make any Advance under this Note.
2
<PAGE> 7
If, as to any outstanding Eurodollar-based Advance, Bank shall not
receive a timely Request for Advance in accordance with the foregoing
requesting the refunding of such Advance as a Eurodollar-based Advance, the
principal amount of such Advance which is not then repaid shall be
automatically converted to a Prime-based Advance on the last day of the
Interest Period applicable thereto, subject in all respects to the terms and
conditions of this Note. The foregoing shall not in any way whatsoever limit
or otherwise affect any of Bank's rights or remedies under this Note upon the
occurrence of any Default hereunder, or any condition or event which, with the
giving of notice or the running of time, or both, would constitute a Default.
Borrower may prepay all or part of the outstanding balance of any
Prime-based Advance under this Note at any time. Borrower may prepay all or
part of any Eurodollar-based Advance on the last day of the Interest Period
applicable thereto, provided that the aggregate balance of Eurodollar-based
Advances outstanding after such prepayment shall be at least Five Hundred
Thousand Dollars ($500,000.00), and the unpaid portion of such Eurodollar-based
Advance which is then refunded or converted shall be subject to the limitations
set forth in this Note. Any prepayment made in accordance with this paragraph
shall be without premium or penalty. Any other prepayment shall be otherwise
restricted by and subject to the terms of this Note.
Subject to the definition of an "Interest Period" hereunder, in the
event that any payment under this Note becomes due and payable on any day which
is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day, and, to the extent applicable, interest shall continue
to accrue and be payable thereon during such extension at the rates set forth
in this Note.
All payments to be made by Borrower to Bank under or pursuant to this
Note shall be in immediately available funds, without setoff or counterclaim,
and in the event that any payments submitted hereunder are in funds not
available until collected, said payments shall continue to bear interest until
collected. Borrower hereby authorizes Bank to charge any account of Borrower
with Bank for all sums due hereunder when due in accordance with the terms
hereof.
If Borrower makes any payment of principal with respect to any
Eurodollar-based Advance on any day other than the last day of the Interest
Period applicable thereto (whether voluntarily, by acceleration, or otherwise),
or if Borrower fails to borrow any Eurodollar-based Advance after notice has
been given by Borrower to Bank in accordance with the terms of this Note
requesting such Advance, or if Borrower fails to make any payment of principal
or
3
<PAGE> 8
interest in respect of a Eurodollar-based Advance when due, Borrower shall
reimburse Bank, on demand, for any resulting loss, cost or expense incurred by
Bank as a result thereof, including, without limitation, any such loss, cost or
expense incurred in obtaining, liquidating, employing or redeploying deposits
from third parties, whether or not Bank shall have funded or committed to fund
such Advance. Such amount payable by Borrower to Bank may include, without
limitation, an amount equal to the excess, if any, of (a) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed, refunded
or converted, for the period from the date of such prepayment or of such failure
to borrow, refund or convert, through the last day of the relevant Interest
Period, at the applicable rate of interest for said Advance(s) provided under
this Note, over (b) the amount of interest (as reasonably determined by Bank)
which would have accrued to Bank on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. Calculation of any amounts payable to Bank under this paragraph shall be
made as though Bank shall have actually funded or committed to fund the relevant
Eurodollar-based Advance through the purchase of an underlying deposit in an
amount equal to the amount of such Advance and having a maturity comparable to
the relevant Interest Period; provided, however, that Bank may fund any
Eurodollar-based Advance in any manner it deems fit and the foregoing
assumptions shall be utilized only for the purpose of the calculation of amounts
payable under this paragraph. Upon the written request of Borrower, Bank shall
deliver to Borrower a certificate setting forth the basis for determining such
losses, costs and expenses, which certificate shall be conclusively presumed
correct, absent manifest error.
For any Eurodollar-based Advance, if Bank shall designate a Eurodollar
Lending Office which maintains books separate from those of the rest of Bank,
Bank shall have the option of maintaining and carrying such Advance on the
books of such Eurodollar Lending Office.
If, with respect to any Interest Period, Bank determines that, (a) by
reason of circumstances affecting the foreign exchange and interbank markets
generally, deposits in Eurodollars in the applicable amounts or for the
relative maturities are not being offered to Bank for such Interest Period, or
(b) if the rate of interest referred to in the definition of "Eurodollar-based
Rate" upon the basis of which the rate of interest for a Eurodollar-based
Advance is to be determined does not accurately or fairly cover or reflect the
cost to Bank of making or maintaining a Eurodollar-based Advance hereunder,
then Bank shall forthwith give notice thereof to the Borrower. Thereafter,
until Bank notifies Borrower that such conditions or circumstances no longer
exist, the right of Borrower to request a Eurodollar-based Advance and to
4
<PAGE> 9
convert an Advance to or refund an Advance as a Eurodollar-based Advance shall
be suspended.
If, after the date hereof, the introduction of, or any change in, any
applicable law, rule or regulation or in the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by Bank (or its Eurodollar Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, shall make it unlawful or impossible for the Bank (or
its Eurodollar Lending Office) to make or maintain any Advance with interest at
the Eurodollar-based Rate, Bank shall forthwith give notice thereof to
Borrower. Thereafter, (a) until Bank notifies Borrower that such conditions or
circumstances no longer exist, the right of Borrower to request a
Eurodollar-based Advance and to convert an Advance to or refund an Advance as a
Eurodollar-based Advance shall be suspended, and thereafter, Borrower may
select only the Prime-based Rate as the Applicable Interest Rate hereunder, and
(b) if Bank may not lawfully continue to maintain an outstanding Advance to the
end of the then current Interest Period applicable thereto, the Prime-based
Rate shall be the Applicable Interest Rate for the remainder of such Interest
Period with respect to such outstanding Advance.
If the adoption after the date hereof, or any change after the date
hereof in, any applicable law, rule or regulation of any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Bank (or its Eurodollar Lending
Office) with any request or directive (whether or not having the force of law)
made by any such authority, central bank or comparable agency after the date
hereof:
(a) shall subject Bank (or its Eurodollar Lending Office) to any
tax, duty or other charge with respect to this Note or any Advance hereunder or
shall change the basis of taxation of payments to Bank (or its Eurodollar
Lending Office) of the principal of or interest on any Advance or any other
amounts due under this Note in respect thereof (except for changes in the rate
of tax on the overall net income of Bank or its Eurodollar Lending Office
imposed by the jurisdiction in which Bank's principal executive office or
Eurodollar Lending Office is located); or
(b) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by Bank (or its
Eurodollar Lending Office) or shall impose on Bank (or its Eurodollar Lending
Office) or the foreign exchange and interbank markets any other condition
affecting any Advance under this Note;
5
<PAGE> 10
and the result of any of the foregoing is to increase the cost to Bank of
maintaining any part of the indebtedness hereunder or to reduce the amount of
any sum received or receivable by Bank under this Note by an amount deemed by
the Bank to be material, then Borrower shall pay to Bank, within fifteen (15)
days of Borrowers receipt of written notice from Bank demanding such
compensation, such additional amount or amounts as will compensate Bank for
such increased cost or reduction. A certificate of Bank, prepared in good
faith and in reasonable detail by Bank and submitted by Bank to Borrower,
setting forth the basis for determining such additional amount or amounts
necessary to compensate Bank shall be conclusive and binding for all purposes,
absent manifest error in computation.
In the event that any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect and whether or not
presently applicable to Bank, or any interpretation or administration thereof
by any governmental authority charged with the interpretation or administration
thereof, or compliance by Bank with any guideline, request or directive of any
such authority (whether or not having the force of law), including any
risk-based capital guidelines, affects or would affect the amount of capital
required or expected to be maintained by Bank (or any corporation controlling
Bank), and Bank determines that the amount of such capital is increased by or
based upon the existence of any obligations of Bank hereunder or the making or
maintaining any Advances hereunder, and such increase has the effect of
reducing the rate of return on Banks (or such controlling corporations) capital
as a consequence of such obligations or the making or maintaining of such
Advances hereunder to a level below that which Bank (or such controlling
corporation) could have achieved but for such circumstances (taking into
consideration its policies with respect to capital adequacy), then Borrower
shall pay to Bank, within fifteen (15) days of Borrower s receipt of written
notice from Bank demanding such compensation, additional amounts as are
sufficient to compensate Bank (or such controlling corporation) for any
increase in the amount of capital and reduced rate of return which Bank
reasonably determines to be allocable to the existence of any obligations of
the Bank hereunder or to the making or maintaining any Advances hereunder. A
certificate of Bank as to the amount of such compensation, prepared in good
faith and in reasonable detail by the Bank and submitted by Bank to Borrower,
shall be conclusive and binding for all purposes absent manifest error in
computation.
This Note and any other indebtedness and liabilities of any kind of
Borrower to Bank, and any and all modifications, renewals or extensions
thereof, whether joint or several, contingent or absolute, direct or indirect,
now existing or later arising, and however evidenced (collectively the
"Indebtedness"), are secured by
6
<PAGE> 11
and Bank is granted a security interest in all items at any time deposited in
any account of Borrower with Bank and by all proceeds of these items (cash or
otherwise), all account balances of Borrower from time to time with Bank, by all
property of Borrower from time to time in the possession of 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 at any time(s) later be, executed by Borrower
or others to or for the benefit of Bank (collectively the "Collateral").
If Borrower or any guarantor under a guaranty of all or part of the
Indebtedness ("guarantor") (a) fail(s) to pay this Note, or any part thereof,
or any of the Indebtedness when due, by maturity, acceleration or otherwise, or
fail(s) to pay any Indebtedness owing on a demand basis upon demand; or (b)
fail(s) to comply with any of the terms or provisions of any agreement between
Borrower or any guarantor and Bank; or (c) become(s) insolvent or the subject
of a voluntary or involuntary proceeding in bankruptcy, or a reorganization,
arrangement or creditor composition proceeding, (if a business entity) cease(s)
doing business as a going concern, (if a natural person) die(s) or become(s)
incompetent, (if a partnership) dissolve(s) or any general partner of it dies,
becomes incompetent or becomes the subject of a bankruptcy proceeding, or (if a
corporation) is the subject of a dissolution, merger or consolidation; or (d)
if any warranty or representation made by Borrower or any guarantor in
connection with this Note or any of the Indebtedness shall be discovered to be
untrue or incomplete in any material respect; (e) or if there is any
termination, notice of termination, or breach of any guaranty, pledge,
collateral assignment or subordination agreement relating to all or any part of
the Indebtedness; or (f) if there is any failure by Borrower or any guarantor
to pay, when due, any of its indebtedness (other than to the Bank) or in the
observance or performance of any term, covenant or condition in any document
evidencing, securing or relating to such indebtedness; or (g) if Bank deems
itself insecure, believing in good faith that the prospect of payment or
performance of this Note or any of the Indebtedness is impaired or shall fear
deterioration, removal or waste of any of the Collateral; or (h) if there is
filed or issued a levy or writ of attachment or garnishment or other like
judicial process upon Borrower or any guarantor or any of the Collateral,
including, without limit, any accounts of Borrower or any guarantor with Bank,
then Bank, upon the occurrence and at any time during the continuance or
existence of any of these conditions or events (each a "Default"), may at its
option and without prior notice to Borrower, declare any or all of the
Indebtedness to be immediately due and payable (notwithstanding any provisions
contained in the evidence of it to the contrary), sell or liquidate all or any
portion of the Collateral, set off against the Indebtedness any
7
<PAGE> 12
amounts owing by Bank to Borrower, and exercise any one or more of the rights
and remedies granted to Bank by any agreement with Borrower or given to it
under applicable law, or otherwise.
Borrower waives presentment, demand, protest, notice of dishonor,
notice of demand or intent to demand, notice of acceleration or intent to
accelerate, and all other notices, and agrees that no extension or indulgence
to Borrower, or release, substitution or nonenforcement of any security, or
release or substitution of any guarantor or any other party, whether with or
without notice, shall affect the obligations of Borrower. Borrower waives all
defenses or right to discharge available under Section 3-605 of the Uniform
Commercial Code and waives all other suretyship defenses or right to discharge.
Borrower agrees that Bank has the right to sell, assign, or grant
participations, or any interest, in any or all of the Indebtedness, and that,
in connection with such right, but without limiting its ability to make other
disclosures to the full extent allowable, Bank may disclose all documents and
information which the Bank now or later has relating to Borrower and the
Indebtedness.
Borrower agrees to reimburse Bank, or any other holder or owner of
this Note, for any and all costs and expenses (including, without limit, court
costs, legal expenses and reasonable attorneys fees, whether inside or outside
counsel is used, whether or not suit is instituted, and, if suit is instituted,
whether at the trial court level, appellate level, in a bankruptcy, probate or
administrative proceeding or otherwise) incurred in collecting or attempting to
collect this Note or the Indebtedness or incurred in any other matter or
proceeding relating to this Note or the Indebtedness.
Borrower acknowledges and agrees that there are no contrary
agreements, oral or written, establishing a term of this Note and agrees that
the terms and conditions of this Note may not be amended, waived or modified
except in a writing signed by a duly authorized officer of Bank expressly
stating that the writing constitutes an amendment, waiver or modification of
the terms of this Note. If any provision of this Note is unenforceable in
whole or part for any reason, the remaining provisions shall continue to be
effective. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF MICHIGAN.
This Note shall bind Borrower and Borrower's respective successors and
assigns.
For the purposes of this Note, the following terms have the following
meanings:
"Advance" means a borrowing requested by Borrower and made by
8
<PAGE> 13
Bank under this Note, including any refunding of an outstanding Advance as the
same type of Advance or the conversion of any such outstanding Advance to
another type of Advance, and shall include a Eurodollar-based Advance and a
Prime-based Advance.
"Applicable Interest Rate" means the Eurodollar-based Rate or the
Prime-based Rate, as selected by Borrower from time to time or as otherwise
determined in accordance with the terms and conditions of this Note.
"Business Day" means any day, other than a Saturday, Sunday or
holiday, on which Bank is open for all or substantially all of its domestic and
international business (including dealings in foreign exchange) in Detroit,
Michigan.
"Eurodollar-based Advance" means an Advance which bears interest at
the Eurodollar-based Rate.
"Eurodollar-based Rate" means a per annum interest rate which is equal
to the sum of two and ten-hundredths percent (2.10%), plus the quotient of:
(a) the per annum interest rate at which Bank's Eurodollar Lending
Office offers deposits to prime banks in the eurodollar market in an amount
comparable to the relevant Eurodollar-based Advance and for a period equal to
the relevant Interest Period at or about 11:00 a.m. (Detroit, Michigan time)
(or as soon thereafter as practical) one (1) Business Day prior to the first
day of such Interest Period:
divided by
(b) a percentage equal to 100% minus the maximum rate during such
Interest Period at which Bank is required to maintain reserves on Euro-currency
Liabilities as defined in and pursuant to Regulation D of the Board of
Governors of the Federal Reserve System or, if such regulation or definition is
modified, and as long as Bank is required to maintain reserves against a
category of liabilities which includes eurodollar deposits or includes a
category of assets which includes eurodollar loans, the rate at which such
reserves are required to be maintained on such category.
"Eurodollar Lending Office" means Bank's office located in the Cayman
Islands, British West Indies, or such other branch of Bank, domestic or
foreign, as it may hereafter designate as its Eurodollar Lending Office by
notice to Borrower.
"Interest Period" means a period of from one (1) to ninety (90) days,
as selected by Borrower pursuant to the terms of this Note, commencing on the
day a Eurodollar-based Advance is made,
9
<PAGE> 14
provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Business Day shall be extended to the next succeeding Business Day,
except that if the next succeeding Business Day falls in another calendar
month, the Interest Period shall end on the next preceding Business Day, and
when an Interest Period begins on a day which has no numerically corresponding
day in the calendar month during which such Interest Period is to end, it shall
end on the last Business Day of such calendar month, and
(b) no Interest Period shall extend beyond the Maturity Date.
"Prime-based Advance" shall mean an Advance which bears interest at
the Prime-based Rate.
"Prime Rate" means the per annum interest rate established by Bank as
its prime rate for its borrowers, as such rate may vary from time to time,
which rate is not necessarily the lowest rate on loans made by Bank at any such
time.
"Prime-based Rate" shall mean a per annum Interest rate which is equal
to the Prime Rate minus one-half (1/2%) percent.
"Request of Advance" means a Request for Advance Issued by Borrower
under this Note in the form annexed to this Note as Exhibit "A".
Borrower agrees to make all payments to Bank of any and all amounts
due and owing by Borrower to Bank hereunder, including, without limitation, the
payment of principal and interest on any Advance, on the date provided for such
payment in United States Dollars in immediately available funds, at the office
of Bank located at Comerica Tower at Detroit Center, 500 Woodward Avenue,
Detroit, Michigan 48226, or such other address as Bank may notify Borrower in
writing.
No delay or failure of Bank in exercising any right, power or
privilege hereunder shall affect such right, power or privilege, nor shall any
single or partial exercise thereof preclude any further exercise thereof, or
the exercise of any other power, right or privilege. The rights of Bank under
this Agreement are cumulative and not exclusive of any right or remedies which
Bank would otherwise have, whether by other instruments or by law.
This Note amends and restates that certain Promissory Note dated
January 30, 1995 in the original principal amount of $5,000,000 by Borrower to
Bank.
BORROWER AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY
10
<PAGE> 15
IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT
TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR INDEBTEDNESS HEREUNDER.
CADE INDUSTRIES, INC.
By:_____________________________
Its:____________________________
11
<PAGE> 16
EXHIBIT "B"
REQUEST FOR ADVANCE
The undersigned hereby requests COMERICA BANK ("Bank") to make a(an)
___________________________(*) Advance to the undersigned on ______________,
19______, in the amount of_________________________________________ Dollars
($________________) under the Promissory Note dated as of September 29, 1995,
issued by the undersigned to said Bank in the face amount of Four Million
Dollars ($4,000,000.00) (herein called the "Note"). The Interest Period for the
requested Advance, if applicable, shall be ____________________(**). In the
event that any part of the Advance requested hereby constitutes the refunding or
conversion of an outstanding Advance, the amount to be refunded or converted is
_______________________________________ Dollars ($_____________), and the last
day of the Interest Period for the amounts being converted or refunded
hereunder, if applicable, is ____________________, 19___.
The undersigned represents, warrants and certifies that no Default, or
any condition or event which, with the giving of notice or the running of time,
or both, would constitute a Default, has occurred and is continuing under the
Note, and none will exist upon the making of the Advance requested hereunder.
The undersigned further certifies that upon advancing the sum requested
hereunder, the aggregate principal amount outstanding under the Note will not
exceed the face amount thereof. If the amount advanced to the undersigned
under the Note shall at any time exceed the face amount thereof, the
undersigned will immediately pay such excess amount, without any necessity of
notice or demand.
The undersigned hereby authorizes Bank to disburse the proceeds of
this Request for Advance by crediting the account of the undersigned with Bank
separately designated by the undersigned or as the undersigned may otherwise
direct, unless this Request for Advance is being submitted for a conversion or
refunding of all or any part of any outstanding Advance(s), in which case, such
proceeds be deemed to be utilized, to the extent necessary, to refund or
convert that portion stated above of the existing outstandings under such
Advance(s).
* Insert, as applicable, "Eurodollar-based" or "Prime-based."
** For a Eurodollar-based Advance insert, as applicable, any Interest
Period from one (1) day through ninety (90) days.
<PAGE> 17
Capitalized terms used but not otherwise defined herein shall have the
respective meanings given to them in the Note.
Dated this _______ day of ____________________, 19___.
CADE INDUSTRIES, INC.
By:_____________________________
Its:____________________________
2
<PAGE> 18
SCHEDULE "C"
VARIABLE RATE-INSTALLMENT NOTE
OBLIGOR #: 1289932796
NOTE #:
NOTE DATE: September 29, 1995
TAX IDENTIFICATION NUMBER: 39-1371038
AMOUNT: $3,600,000.00
Lansing, Michigan
MATURITY DATE: October 1, 2002
For Value Received, the undersigned promise(s) to pay to the order of Comerica
Bank ("Bank"), at any office of the Bank in the State of Michigan, Three
Million Six Hundred Thousand and No/100 Dollars (U.S.) in installments of
$128,571.43 each PLUS interest on the unpaid balance from the date of this Note
at a per annum rate equal to the Bank's prime rate from time to time in effect
minus 0.25% per annum until maturity, whether by acceleration or otherwise, or
until Default, as later defined, and after that at a default rate equal to the
rate of interest otherwise prevailing under this Note plus 3% per annum (but in
no event in excess of the maximum rate permitted by law). Interest shall be
calculated for the actual number of days the principal is outstanding on the
basis of a 360-day year if this Note evidences a business or commercial loan or
a 365/366-day year if a consumer loan. The Bank's "prime rate" is that annual
rate of interest so designated by the Bank and which is changed by the Bank
from time to time. Interest rate changes will be effective for interest
computation purposes as and when the Bank's prime rate changes. Installments
of principal and accrued interest due under this Note shall be payable on the
1st day of each quarter, commencing January 1, 1996, and the entire remaining
unpaid balance of principal and accrued interest shall be payable on October 1,
2002, (the "Maturity Date"). If the frequency of principal and interest
installments is not otherwise specified, installments of principal and interest
due under this Note shall be payable monthly on the first day of each month.
In the event the periodic installments set forth above are inclusive of
interest, these installments are calculated at an assumed fixed interest rate
and an assumed amortization term. In the event the Bank's prime rate changes,
the Bank, at its sole option, may from time to time recalculate the periodic
installment amount so that the remaining periodic installments will fully
amortize the remaining loan balance within the remaining amortization term in
equal installments at the interest rate then being charged under this Note.
THE UNDERSIGNED AGREE(S) TO PAY THE PERIODIC INSTALLMENTS AS THEY MAY BE
RECALCULATED BY THE BANK, AT
<PAGE> 19
THE BANK'S SOLE OPTION, FROM TIME TO TIME AND ACKNOWLEDGE(S) THAT A
RECALCULATION SHALL NOT AFFECT THE MATURITY DATE OR THE OTHER TERMS AND
PROVISIONS OF THIS NOTE. If this Note or any installment under this Note shall
become payable on a day other than a day on which the Bank is open for business,
this payment may be extended to the next succeeding business day and interest
shall be payable at the rate specified in this Note during this extension. Any
payments of principal in excess of the installment payments required under this
Note need not be accepted by the Bank (except as required under applicable law),
but if accepted shall apply to the installments last falling due. A late
installment charge equal to 5% of each late installment may be charged on any
installment payment not received by the Bank within 10 calendar days after the
installment due date, but acceptance of payment of this charge shall not waive
any default under this Note.
This Note and any other indebtedness and liabilities of any kind of the
undersigned (or any of them) to the Bank, and any and all modifications,
renewals or extensions of it, whether joint or several, contingent or absolute,
now existing or later arising, and however evidenced (collectively
"Indebtedness") are secured by and the Bank is granted a security interest in
all items deposited in any account of any of the undersigned with the Bank and
by all proceeds of these items (cash or otherwise), all account balances of any
of the undersigned from time to time with the Bank, by all property of any of
the undersigned from time to time 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 agreement which has been, or
will at any time(s) later be, executed by any (or all) of the undersigned to or
for the benefit of the Bank (collectively "Collateral"). Notwithstanding the
above, to the extent that any portion of the Indebtedness is a consumer loan,
that portion shall not be secured by any mortgage on or other security interest
in the undersigned's principal dwelling which is not a purchase money security
interest as to that portion, unless expressly provided to the contrary in
another place.
If the undersigned (or any of them) or any guarantor under a guaranty of all or
part of the Indebtedness (guarantor) (a) fail(s) to pay this Note or any of the
Indebtedness when due, by maturity, acceleration or otherwise, or fail(s) to
pay any Indebtedness owing on a demand basis upon demand; or (b) fail(s) to
comply with any of the terms or provisions of any agreement between the
undersigned (or any of them) or any guarantor and the Bank; or (c) become(s)
insolvent or the subject of a voluntary or involuntary proceeding in
bankruptcy, or a reorganization, arrangement or creditor composition
proceeding, (if a business entity) cease(s) doing business as a going concern,
(if a natural person) die(s) or become(s) incompetent, (if a partnership)
dissolve(s) or any
2
<PAGE> 20
general partner of it dies, becomes incompetent or becomes the subject of a
bankruptcy proceeding or (if a corporation) is the subject of a dissolution,
merger or consolidation; or (d) if any warranty or representation made by any of
the undersigned or any guarantor in connection with this Note or any of the
Indebtedness shall be discovered to be untrue or incomplete; or (e) if there is
any termination, notice of termination, or breach of any guaranty, pledge,
collateral assignment or subordination agreement relating to all or any part of
the Indebtedness; or (f) if there is any failure by any of the undersigned or
any guarantor to pay when due any of its indebtedness (other than to the Bank)
or in the observance or performance of any term, covenant or condition in any
document evidencing, securing or relating to such indebtedness; or (g) if the
Bank deems itself insecure, believing that the prospect of payment of this Note
or any of the Indebtedness is impaired or shall fear deterioration, removal or
waste of any of the Collateral; or (h) if there is filed or issued a levy or
writ of attachment or garnishment or other like judicial process upon the
undersigned (or any of them) or any guarantor or any of the Collateral,
including without limit, any accounts of the undersigned (or any of them) or any
guarantor with the Bank, then the Bank, upon the occurrence of any of these
events (each a Default), may at its option and without prior notice to the
undersigned (or any of them), declare any or all of the indebtedness to be
immediately due and payable (notwithstanding any provisions contained in the
evidence thereof to the contrary), sell or liquidate all or any portion of the
Collateral, set off against the Indebtedness any amounts owing by the Bank to
the undersigned (or any of them), charge interest at the default rate provided
in the document evidencing the relevant Indebtedness and exercise any one or
more of the rights and remedies granted to the Bank by any agreement with the
undersigned (or any of them) or given to it under applicable law All Payments
under this Note shall be in immediately available United States funds, without
setoff or counterclaim.
If this Note is signed by two or more parties (whether by all as makers or by
one or more as an accommodation party or otherwise), the obligations and
undertakings under this Note shall be that of all and any two or more jointly
and also of each severally. This Note shall bind the undersigned, and the
undersigned's respective heirs, personal representatives, successors and
assigns.
The undersigned waive(s) presentment, demand, protest, notice of dishonor,
notice of demand or intent to demand, notice of acceleration or intent to
accelerate, and all other notices and agree(s) that no extension or indulgence
to the undersigned (or any of them) or release, substitution or nonenforcement
of any security, or release or substitution of any of the undersigned, any
guarantor or any other party, whether with or without notice, shall
3
<PAGE> 21
affect the obligations of any of the undersigned. The undersigned waive(s) all
defenses or right to discharge available under Section 3-606 of the Uniform
Commercial Code and waive(s) all other suretyship defenses or right to
discharge. The undersigned agree(s) that the Bank has the right to sell,
assign, or grant participations, or any interest, in any or all of the
Indebtedness, and that, in connection with this right, but without limiting its
ability to make other disclosures to the full extent allowable, the Bank may
disclose all documents and information which the Bank now or later has relating
to the undersigned or the Indebtedness.
The undersigned agree(s) to reimburse the holder or owner of this Note for any
and all costs and expenses (including without limit, court costs, legal
expenses and reasonable attorney fees, whether inside or outside counsel is
used, whether or not suit is instituted and, if suit is instituted, whether at
the trial court level, appellate level, in a bankruptcy, probate or
administrative proceeding or otherwise) incurred in collecting or attempting to
collect this Note or incurred in any other matter or proceeding relating to
this Note.
The undersigned acknowledge(s) and agree(s) that there are no contrary
agreements, oral or written, establishing a term of this Note and agree(s) that
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. As used in this Note, the word "undersigned" means, individually and
collectively, each maker, accommodation party, indorser and other party signing
this Note in a similar capacity. If any provision of this Note is
unenforceable in whole or part for any reason, the remaining provisions shall
continue to be effective. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN.
THE MAXIMUM INTEREST RATE SHALL NOT EXCEED 25%, OR THE HIGHEST APPLICABLE USURY
CEILING, WHICHEVER IS LESS.
THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.
4
<PAGE> 22
"This Note amends and restates that certain Term Note dated January 30, 1995 in
the original principal amount of $785,714.31 by the undersigned to Bank."
For Corporations or Partnerships
Cade Industries, Inc.
P.O. Box 23094
Lansing, MI 48909
By:___________________________
Its:__________________________
Title:________________________
For Individuals, Sole Proprietorships, Trusts, or Estates
Name(s) of Obligor(s) (Type or Print):
Signature(s) of Obligor(s):
_________________________________
Street Address
_________________________________
City State ZIP Code
For Bank Use Only
LOAN OFFICER INITIALS: LOAN GROUP NAME:
LOAN OFFICER I.D. NO.: LOAN GROUP NO.:
5
<PAGE> 23
EXECUTED PROMISSORY NOTE
<PAGE> 24
TAX I.D. NO. 39-1371038
PROMISSORY NOTE
$4,000,000.00 Detroit, Michigan
September 29, 1995
On or before April 1, 1996 (herein called the "Maturity Date"), FOR
VALUE RECEIVED, the undersigned, CADE INDUSTRIES, INC. (herein called
"Borrower"), promises to pay to the order of COMERICA BANK (herein called
"Bank"), in lawful currency of the United States of America, the sum of FOUR
MILLION DOLLARS ($4,000,000.00), or so much of said sum as has been advanced
and is then outstanding under this Note, together with interest thereon as
hereinafter set forth.
This Note is a note under which Advances, repayments and re-Advances
may be made from time to time, subject to the terms and conditions of this
Note; provided however, in no event shall Bank be obligated to make any
Advances or re-Advances hereunder (notwithstanding anything expressed or
implied herein or elsewhere to the contrary).
Each of the Advances made hereunder shall bear interest at the
Eurodollar-based Rate or the Prime-based Rate, as elected by Borrower or as
otherwise determined under this Note.
Accrued and unpaid interest on the unpaid balance of each outstanding
Prime-based Advance shall be payable quarterly, in arrears, commencing on
December 31, 1995, and on the last Business Day of each succeeding quarter
thereafter. Interest accruing at the Prime-based Rate shall be computed on the
basis of a year of 360 days, and shall be assessed for the actual number of
days elapsed, and in such computation, effect shall be given to any change in
the Prime-based Rate as a result of any change in the Prime-based Rate on the
date of each such change.
Accrued and unpaid interest on each Eurodollar-based Advance shall be
payable on the last day of the Interest Period applicable thereto. Interest
accruing at the Eurodollar-based Rate shall be computed on the basis of a 360
day year and shall be assessed for the actual number of days elapsed from the
first day of the Interest Period applicable thereto but not including the last
day thereof.
From and after the occurrence of any Default hereunder, and so long as
any such Default remains unremedied or uncured thereafter,
<PAGE> 25
the Indebtedness outstanding under this Note shall bear interest at a per annum
rate of three percent (3%) above the otherwise Applicable Interest Rate, which
interest shall be payable upon demand.
The amount and date of each Advance, its Applicable Interest Rate, its
Interest Period, if any, and the amount and date of any repayment shall be noted
on Bank's records, which records shall be conclusive evidence thereof, absent
manifest error; provided, however, any failure by Bank to make any such
notation, or any error in any such notation, shall not relieve Borrower of its
obligations to repay Bank all amounts payable by Borrower to Bank under or
pursuant to this Note, when due in accordance with the terms hereof.
Borrower may request an Advance hereunder, including the refunding of
an outstanding Advance as the same type of Advance or the conversion of an
outstanding Advance as the same type of Advance, upon the delivery to Bank of a
Request for Advance executed by an authorized officer of Borrower, subject to
the following:
(a) no Default, and no condition or event which, with the giving
of notice or the running of time, or both, would constitute a Default, shall
have occurred and be continuing or exist under this Note:
(b) each such Request for Advance shall set forth the information
required on the Request for Advance form annexed hereto as Exhibit "A";
(c) each such Request for Advance shall be delivered to Bank by
11:00 a.m. (Detroit, Michigan time) one (1) Business Day prior to the proposed
date of Advance in the case of Eurodollar-based Advances, and by 11:00 a.m.
(Detroit, Michigan time) on the proposed date of Advance in the case of
Prime-based Advances;
(d) the principal amount of each Eurodollar-based Advance shall be
at least Five Hundred Thousand Dollars ($500,000.00);
(e) the proposed date of any refunding of any outstanding
Eurodollar-based Advance as another Eurodollar-based Advance or the conversion
of any outstanding Eurodollar-based Advance to a Prime-based Advance shall only
be on the last day of the Interest Period applicable to such outstanding
Eurodollar based Advance; and
(f) a Request for Advance, once delivered to Bank, shall not be
revocable by Borrower; provided, however, as aforesaid, Bank shall not be
obligated to make any Advance under this Note.
2
<PAGE> 26
If, as to any outstanding Eurodollar-based Advance, Bank shall not
receive a timely Request for Advance in accordance with the foregoing
requesting the refunding of such Advance as a Eurodollar-based Advance, the
principal amount of such Advance which is not then repaid shall be
automatically converted to a Prime-based Advance on the last day of the
Interest Period applicable thereto, subject in all respects to the terms and
conditions of this Note. The foregoing shall not in any way whatsoever limit
or otherwise affect any of Bank's rights or remedies under this Note upon the
occurrence of any Default hereunder, or any condition or event which, with the
giving of notice or the running of time, or both, would constitute a Default.
Borrower may prepay all or part of the outstanding balance of any
Prime-based Advance under this Note at any time. Borrower may prepay all or
part of any Eurodollar-based Advance on the last day of the Interest Period
applicable thereto, provided that the aggregate balance of Eurodollar-based
Advances outstanding after such prepayment shall be at least Five Hundred
Thousand Dollars ($500,000.00), and the unpaid portion of such Eurodollar-based
Advance which is then refunded or converted shall be subject to the limitations
set forth in this Note. Any prepayment made in accordance with this paragraph
shall be without premium or penalty. Any other prepayment shall be otherwise
restricted by and subject to the terms of this Note.
Subject to the definition of an "Interest Period" hereunder, in the
event that any payment under this Note becomes due and payable on any day which
is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day, and, to the extent applicable, interest shall continue
to accrue and be payable thereon during such extension at the rates set forth
in this Note.
All payments to be made by Borrower to Bank under or pursuant to this
Note shall be in immediately available funds, without setoff or counterclaim,
and in the event that any payments submitted hereunder are in funds not
available until collected, said payments shall continue to bear interest until
collected. Borrower hereby authorizes Bank to charge any account of Borrower
with Bank for all sums due hereunder when due in accordance with the terms
hereof.
If Borrower makes any payment of principal with respect to any
Eurodollar-based Advance on any day other than the last day of the Interest
Period applicable thereto (whether voluntarily, by acceleration, or otherwise),
or if Borrower fails to borrow any Eurodollar-based Advance after notice has
been given by Borrower to Bank in accordance with the terms of this Note
requesting such Advance, or if Borrower fails to make any payment of principal
or
3
<PAGE> 27
interest in respect of a Eurodollar-based Advance when due, Borrower shall
reimburse Bank, on demand, for any resulting loss, cost or expense incurred by
Bank as a result thereof, including, without limitation, any such loss, cost or
expense incurred in obtaining, liquidating, employing or redeploying deposits
from third parties, whether or not Bank shall have funded or committed to fund
such Advance. Such amount payable by Borrower to Bank may include, without
limitation, an amount equal to the excess, if any, of (a) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed, refunded
or converted, for the period from the date of such prepayment or of such failure
to borrow, refund or convert, through the last day of the relevant Interest
Period, at the applicable rate of interest for said Advance(s) provided under
this Note, over (b) the amount of interest (as reasonably determined by Bank)
which would have accrued to Bank on such amount by placing such amount on
deposit for a comparable period with leading banks in the interbank eurodollar
market. Calculation of any amounts payable to Bank under this paragraph shall
be made as though Bank shall have actually funded or committed to fund the
relevant Eurodollar-based Advance through the purchase of an underlying deposit
in an amount equal to the amount of such Advance and having a maturity
comparable to the relevant Interest Period; provided, however, that Bank may
fund any Eurodollar-based Advance in any manner it deems fit and the foregoing
assumptions shall be utilized only for the purpose of the calculation of amounts
payable under this paragraph. Upon the written request of Borrower, Bank shall
deliver to Borrower a certificate setting forth the basis for determining such
losses, costs and expenses, which certificate shall be conclusively presumed
correct, absent manifest error.
For any Eurodollar-based Advance, if Bank shall designate a Eurodollar
Lending Office which maintains books separate from those of the rest of Bank,
Bank shall have the option of maintaining and carrying such Advance on the
books of such Eurodollar Lending Office.
If, with respect to any Interest Period, Bank determines that, (a) by
reason of circumstances affecting the foreign exchange and interbank markets
generally, deposits in Eurodollars in the applicable amounts or for the
relative maturities are not being offered to Bank for such Interest Period, or
(b) if the rate of interest referred to in the definition of "Eurodollar-based
Rate" upon the basis of which the rate of interest for a Eurodollar-based
Advance is to be determined does not accurately or fairly cover or reflect the
cost to Bank of making or maintaining a Eurodollar-based Advance hereunder,
then Bank shall forthwith give notice thereof to the Borrower. Thereafter,
until Bank notifies Borrower that such conditions or circumstances no longer
exist, the right of Borrower to request a Eurodollar-based Advance and to
4
<PAGE> 28
convert an Advance to or refund an Advance as a Eurodollar-based Advance shall
be suspended.
If, after the date hereof, the introduction of, or any change in, any
applicable law, rule or regulation or in the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by Bank (or its Eurodollar Lending
Office) with any request or directive (whether or not having the force of law)
of any such authority, shall make it unlawful or impossible for the Bank (or
its Eurodollar Lending Office) to make or maintain any Advance with interest at
the Eurodollar-based Rate, Bank shall forthwith give notice thereof to
Borrower. Thereafter, (a) until Bank notifies Borrower that such conditions or
circumstances no longer exist, the right of Borrower to request a
Eurodollar-based Advance and to convert an Advance to or refund an Advance as a
Eurodollar-based Advance shall be suspended, and thereafter, Borrower may
select only the Prime-based Rate as the Applicable Interest Rate hereunder, and
(b) if Bank may not lawfully continue to maintain an outstanding Advance to the
end of the then current Interest Period applicable thereto, the Prime-based
Rate shall be the Applicable Interest Rate for the remainder of such Interest
Period with respect to such outstanding Advance.
If the adoption after the date hereof, or any change after the date
hereof in, any applicable law, rule or regulation of any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Bank (or its Eurodollar Lending
Office) with any request or directive (whether or not having the force of law)
made by any such authority, central bank or comparable agency after the date
hereof:
(a) shall subject Bank (or its Eurodollar Lending Office) to any
tax, duty or other charge with respect to this Note or any Advance hereunder or
shall change the basis of taxation of payments to Bank (or its Eurodollar
Lending Office) of the principal of or interest on any Advance or any other
amounts due under this Note in respect thereof (except for changes in the rate
of tax on the overall net income of Bank or its Eurodollar Lending Office
imposed by the jurisdiction in which Bank's principal executive office or
Eurodollar Lending Office is located); or
(b) shall impose, modify or deem applicable any reserve (including,
without limitation, any imposed by the Board of Governors of the Federal Reserve
System), special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by Bank (or its Eurodollar Lending
Office) or shall impose on Bank (or its Eurodollar Lending Office) or the
foreign exchange and interbank markets any other condition affecting any Advance
under this Note;
5
<PAGE> 29
and the result of any of the foregoing is to increase the cost to Bank of
maintaining any part of the indebtedness hereunder or to reduce the amount of
any sum received or receivable by Bank under this Note by an amount deemed by
the Bank to be material, then Borrower shall pay to Bank, within fifteen (15)
days of Borrowers receipt of written notice from Bank demanding such
compensation, such additional amount or amounts as will compensate Bank for
such increased cost or reduction. A certificate of Bank, prepared in good
faith and in reasonable detail by Bank and submitted by Bank to Borrower,
setting forth the basis for determining such additional amount or amounts
necessary to compensate Bank shall be conclusive and binding for all purposes,
absent manifest error in computation.
In the event that any applicable law, treaty, rule or regulation
(whether domestic or foreign) now or hereafter in effect and whether or not
presently applicable to Bank, or any interpretation or administration thereof
by any governmental authority charged with the interpretation or administration
thereof, or compliance by Bank with any guideline, request or directive of any
such authority (whether or not having the force of law), including any
risk-based capital guidelines, affects or would affect the amount of capital
required or expected to be maintained by Bank (or any corporation controlling
Bank), and Bank determines that the amount of such capital is increased by or
based upon the existence of any obligations of Bank hereunder or the making or
maintaining any Advances hereunder, and such increase has the effect of
reducing the rate of return on Banks (or such controlling corporations) capital
as a consequence of such obligations or the making or maintaining of such
Advances hereunder to a level below that which Bank (or such controlling
corporation) could have achieved but for such circumstances (taking into
consideration its policies with respect to capital adequacy), then Borrower
shall pay to Bank, within fifteen (15) days of Borrower s receipt of written
notice from Bank demanding such compensation, additional amounts as are
sufficient to compensate Bank (or such controlling corporation) for any
increase in the amount of capital and reduced rate of return which Bank
reasonably determines to be allocable to the existence of any obligations of
the Bank hereunder or to the making or maintaining any Advances hereunder. A
certificate of Bank as to the amount of such compensation, prepared in good
faith and in reasonable detail by the Bank and submitted by Bank to Borrower,
shall be conclusive and binding for all purposes absent manifest error in
computation.
This Note and any other indebtedness and liabilities of any kind of
Borrower to Bank, and any and all modifications, renewals or extensions
thereof, whether joint or several, contingent or absolute, direct or indirect,
now existing or later arising, and however evidenced (collectively the
"Indebtedness"), are secured by
6
<PAGE> 30
and Bank is granted a security interest in all items at any time deposited in
any account of Borrower with Bank and by all proceeds of these items (cash or
otherwise), all account balances of Borrower from time to time with Bank, by all
property of Borrower from time to time in the possession of 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 at any time(s) later be, executed by Borrower
or others to or for the benefit of Bank (collectively the "Collateral").
If Borrower or any guarantor under a guaranty of all or part of the
Indebtedness ("guarantor") (a) fail(s) to pay this Note, or any part thereof,
or any of the Indebtedness when due, by maturity, acceleration or otherwise, or
fail(s) to pay any Indebtedness owing on a demand basis upon demand; or (b)
fail(s) to comply with any of the terms or provisions of any agreement between
Borrower or any guarantor and Bank; or (c) become(s) insolvent or the subject
of a voluntary or involuntary proceeding in bankruptcy, or a reorganization,
arrangement or creditor composition proceeding, (if a business entity) cease(s)
doing business as a going concern, (if a natural person) die(s) or become(s)
incompetent, (if a partnership) dissolve(s) or any general partner of it dies,
becomes incompetent or becomes the subject of a bankruptcy proceeding, or (if a
corporation) is the subject of a dissolution, merger or consolidation; or (d)
if any warranty or representation made by Borrower or any guarantor in
connection with this Note or any of the Indebtedness shall be discovered to be
untrue or incomplete in any material respect; (e) or if there is any
termination, notice of termination, or breach of any guaranty, pledge,
collateral assignment or subordination agreement relating to all or any part of
the Indebtedness; or (f) if there is any failure by Borrower or any guarantor
to pay, when due, any of its indebtedness (other than to the Bank) or in the
observance or performance of any term, covenant or condition in any document
evidencing, securing or relating to such indebtedness; or (g) if Bank deems
itself insecure, believing in good faith that the prospect of payment or
performance of this Note or any of the Indebtedness is impaired or shall fear
deterioration, removal or waste of any of the Collateral; or (h) if there is
filed or issued a levy or writ of attachment or garnishment or other like
judicial process upon Borrower or any guarantor or any of the Collateral,
including, without limit, any accounts of Borrower or any guarantor with Bank,
then Bank, upon the occurrence and at any time during the continuance or
existence of any of these conditions or events (each a "Default"), may at its
option and without prior notice to Borrower, declare any or all of the
Indebtedness to be immediately due and payable (notwithstanding any provisions
contained in the evidence of it to the contrary), sell or liquidate all or any
portion of the Collateral, set off against the Indebtedness any
7
<PAGE> 31
amounts owing by Bank to Borrower, and exercise any one or more of the rights
and remedies granted to Bank by any agreement with Borrower or given to it under
applicable law, or otherwise.
Borrower waives presentment, demand, protest, notice of dishonor,
notice of demand or intent to demand, notice of acceleration or intent to
accelerate, and all other notices, and agrees that no extension or indulgence to
Borrower, or release, substitution or nonenforcement of any security, or release
or substitution of any guarantor or any other party, whether with or without
notice, shall affect the obligations of Borrower. Borrower waives all defenses
or right to discharge available under Section 3-605 of the Uniform Commercial
Code and waives all other suretyship defenses or right to discharge. Borrower
agrees that Bank has the right to sell, assign, or grant participations, or any
interest, in any or all of the Indebtedness, and that, in connection with such
right, but without limiting its ability to make other disclosures to the full
extent allowable, Bank may disclose all documents and information which the Bank
now or later has relating to Borrower and the Indebtedness.
Borrower agrees to reimburse Bank, or any other holder or owner of
this Note, for any and all costs and expenses (including, without limit, court
costs, legal expenses and reasonable attorneys fees, whether inside or outside
counsel is used, whether or not suit is instituted, and, if suit is instituted,
whether at the trial court level, appellate level, in a bankruptcy, probate or
administrative proceeding or otherwise) incurred in collecting or attempting to
collect this Note or the Indebtedness or incurred in any other matter or
proceeding relating to this Note or the Indebtedness.
Borrower acknowledges and agrees that there are no contrary
agreements, oral or written, establishing a term of this Note and agrees that
the terms and conditions of this Note may not be amended, waived or modified
except in a writing signed by a duly authorized officer of Bank expressly
stating that the writing constitutes an amendment, waiver or modification of
the terms of this Note. If any provision of this Note is unenforceable in
whole or part for any reason, the remaining provisions shall continue to be
effective. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF MICHIGAN.
This Note shall bind Borrower and Borrower's respective successors and
assigns.
For the purposes of this Note, the following terms have the following
meanings:
"Advance" means a borrowing requested by Borrower and made by
8
<PAGE> 32
Bank under this Note, including any refunding of an outstanding Advance as the
same type of Advance or the conversion of any such outstanding Advance to
another type of Advance, and shall include a Eurodollar-based Advance and a
Prime-based Advance.
"Applicable Interest Rate" means the Eurodollar-based Rate or the
Prime-based Rate, as selected by Borrower from time to time or as otherwise
determined in accordance with the terms and conditions of this Note.
"Business Day" means any day, other than a Saturday, Sunday or
holiday, on which Bank is open for all or substantially all of its domestic and
international business (including dealings in foreign exchange) in Detroit,
Michigan.
"Eurodollar-based Advance" means an Advance which bears interest at
the Eurodollar-based Rate.
"Eurodollar-based Rate" means a per annum interest rate which is equal
to the sum of two and ten-hundredths percent (2.10%), plus the quotient of:
(a) the per annum interest rate at which Bank's Eurodollar Lending
Office offers deposits to prime banks in the eurodollar market in an amount
comparable to the relevant Eurodollar-based Advance and for a period equal to
the relevant Interest Period at or about 11:00 a.m. (Detroit, Michigan time) (or
as soon thereafter as practical) one (1) Business Day prior to the first day of
such Interest Period:
divided by
(b) a percentage equal to 100% minus the maximum rate during such
Interest Period at which Bank is required to maintain reserves on Euro-currency
Liabilities as defined in and pursuant to Regulation D of the Board of
Governors of the Federal Reserve System or, if such regulation or definition is
modified, and as long as Bank is required to maintain reserves against a
category of liabilities which includes eurodollar deposits or includes a
category of assets which includes eurodollar loans, the rate at which such
reserves are required to be maintained on such category.
"Eurodollar Lending Office" means Bank's office located in the Cayman
Islands, British West Indies, or such other branch of Bank, domestic or
foreign, as it may hereafter designate as its Eurodollar Lending Office by
notice to Borrower.
"Interest Period" means a period of from one (1) to ninety (90) days,
as selected by Borrower pursuant to the terms of this Note, commencing on the
day a Eurodollar-based Advance is made,
9
<PAGE> 33
provided that:
(a) any Interest Period which would otherwise end on a day which
is not a Business Day shall be extended to the next succeeding Business Day,
except that if the next succeeding Business Day falls in another calendar
month, the Interest Period shall end on the next preceding Business Day, and
when an Interest Period begins on a day which has no numerically corresponding
day in the calendar month during which such Interest Period is to end, it shall
end on the last Business Day of such calendar month, and
(b) no Interest Period shall extend beyond the Maturity Date.
"Prime-based Advance" shall mean an Advance which bears interest at
the Prime-based Rate.
"Prime Rate" means the per annum interest rate established by Bank as
its prime rate for its borrowers, as such rate may vary from time to time,
which rate is not necessarily the lowest rate on loans made by Bank at any such
time.
"Prime-based Rate" shall mean a per annum Interest rate which is equal
to the Prime Rate minus one-half (1/2%) percent.
"Request of Advance" means a Request for Advance Issued by Borrower
under this Note in the form annexed to this Note as Exhibit "A".
Borrower agrees to make all payments to Bank of any and all amounts
due and owing by Borrower to Bank hereunder, including, without limitation, the
payment of principal and interest on any Advance, on the date provided for such
payment in United States Dollars in immediately available funds, at the office
of Bank located at Comerica Tower at Detroit Center, 500 Woodward Avenue,
Detroit, Michigan 48226, or such other address as Bank may notify Borrower in
writing.
No delay or failure of Bank in exercising any right, power or
privilege hereunder shall affect such right, power or privilege, nor shall any
single or partial exercise thereof preclude any further exercise thereof, or
the exercise of any other power, right or privilege. The rights of Bank under
this Agreement are cumulative and not exclusive of any right or remedies which
Bank would otherwise have, whether by other instruments or by law.
This Note amends and restates that certain Promissory Note dated
January 30, 1995 in the original principal amount of $5,000,000 by Borrower to
Bank.
BORROWER AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY
10
<PAGE> 34
IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT
TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR INDEBTEDNESS HEREUNDER.
CADE INDUSTRIES, INC.
By: /s/ Edward B Stephens
-------------------------
Its: Vice President
11
<PAGE> 35
EXHIBIT "A" TO NOTE
REQUEST FOR ADVANCE
The undersigned hereby requests COMERICA BANK ("Bank") to make a(an)
___________________________(*) Advance to the undersigned on________________,
19______, in the amount of ____________________________ Dollars
($________________) under the Promissory Note dated as of September 29, 1995,
issued by the undersigned to said Bank in the face amount of Four Million
Dollars ($4,000,000.00) (herein called the "Note"). The Interest Period for the
requested Advance, if applicable, shall be ____________________(**). In the
event that any part of the Advance requested hereby constitutes the refunding or
conversion of an outstanding Advance, the amount to be refunded or converted is
_______________________________________ Dollars ($_____________), and the last
day of the Interest Period for the amounts being converted or refunded
hereunder, if applicable, is ____________________, 19___.
The undersigned represents, warrants and certifies that no Default, or
any condition or event which, with the giving of notice or the running of time,
or both, would constitute a Default, has occurred and is continuing under the
Note, and none will exist upon the making of the Advance requested hereunder.
The undersigned further certifies that upon advancing the sum requested
hereunder, the aggregate principal amount outstanding under the Note will not
exceed the face amount thereof. If the amount advanced to the undersigned
under the Note shall at any time exceed the face amount thereof, the
undersigned will immediately pay such excess amount, without any necessity of
notice or demand.
The undersigned hereby authorizes Bank to disburse the proceeds of
this Request for Advance by crediting the account of the undersigned with Bank
separately designated by the undersigned or as the undersigned may otherwise
direct, unless this Request for Advance is being submitted for a conversion or
refunding of all or any part of any outstanding Advance(s), in which case, such
proceeds be deemed to be utilized, to the extent necessary, to refund or
convert that portion stated above of the existing outstandings under such
Advance(s).
* Insert, as applicable, "Eurodollar-based" or "Prime-based."
** For a Eurodollar-based Advance insert, as applicable, any Interest
Period from one (1) day through ninety (90) days.
<PAGE> 36
Capitalized terms used but not otherwise defined herein shall have the
respective meanings given to them in the Note.
Dated this _______ day of ____________________, 19___.
CADE INDUSTRIES, INC.
By:_____________________________
Its:____________________________
2
<PAGE> 37
EXECUTED VARIABLE RATE-INSTALLMENT NOTE
<PAGE> 38
VARIABLE RATE-INSTALLMENT NOTE
OBLIGOR #: 1289932796
NOTE #:
NOTE DATE: September 29, 1995
TAX IDENTIFICATION NUMBER: 39-1371038
AMOUNT: $3,600,000.00
Lansing, Michigan
MATURITY DATE: October 1, 2002
For Value Received, the undersigned promise(s) to pay to the order of Comerica
Bank ("Bank"), at any office of the Bank in the State of Michigan, Three
Million Six Hundred Thousand and No/100 Dollars (U.S.) in installments of
$128,571.43 each PLUS interest on the unpaid balance from the date of this Note
at a per annum rate equal to the Bank's prime rate from time to time in effect
minus 0.25% per annum until maturity, whether by acceleration or otherwise, or
until Default, as later defined, and after that at a default rate equal to the
rate of interest otherwise prevailing under this Note plus 3% per annum (but in
no event in excess of the maximum rate permitted by law). Interest shall be
calculated for the actual number of days the principal is outstanding on the
basis of a 360-day year if this Note evidences a business or commercial loan or
a 365/366-day year if a consumer loan. The Bank's "prime rate" is that annual
rate of interest so designated by the Bank and which is changed by the Bank
from time to time. Interest rate changes will be effective for interest
computation purposes as and when the Bank's prime rate changes. Installments
of principal and accrued interest due under this Note shall be payable on the
1st day of each quarter, commencing January 1, 1996, and the entire remaining
unpaid balance of principal and accrued interest shall be payable on October 1,
2002, (the "Maturity Date"). If the frequency of principal and interest
installments is not otherwise specified, installments of principal and interest
due under this Note shall be payable monthly on the first day of each month.
In the event the periodic installments set forth above are inclusive of
interest, these installments are calculated at an assumed fixed interest rate
and an assumed amortization term. In the event the Bank's prime rate changes,
the Bank, at its sole option, may from time to time recalculate the periodic
installment amount so that the remaining periodic installments will fully
amortize the remaining loan balance within the remaining amortization term in
equal installments at the interest rate then being charged under this Note.
THE UNDERSIGNED AGREE(S) TO PAY THE PERIODIC INSTALLMENTS AS THEY MAY BE
RECALCULATED BY THE BANK, AT THE BANK'S SOLE OPTION, FROM TIME TO TIME AND
ACKNOWLEDGE(S) THAT A RECALCULATION SHALL NOT AFFECT THE MATURITY DATE OR THE
OTHER
<PAGE> 39
TERMS AND PROVISIONS OF THIS NOTE. If this Note or any installment under this
Note shall become payable on a day other than a day on which the Bank is open
for business, this payment may be extended to the next succeeding business day
and interest shall be payable at the rate specified in this Note during this
extension. Any payments of principal in excess of the installment payments
required under this Note need not be accepted by the Bank (except as required
under applicable law), but if accepted shall apply to the installments last
falling due. A late installment charge equal to 5% of each late installment may
be charged on any installment payment not received by the Bank within 10
calendar days after the installment due date, but acceptance of payment of this
charge shall not waive any default under this Note.
This Note and any other indebtedness and liabilities of any kind of the
undersigned (or any of them) to the Bank, and any and all modifications,
renewals or extensions of it, whether joint or several, contingent or absolute,
now existing or later arising, and however evidenced (collectively
"Indebtedness") are secured by and the Bank is granted a security interest in
all items deposited in any account of any of the undersigned with the Bank and
by all proceeds of these items (cash or otherwise), all account balances of any
of the undersigned from time to time with the Bank, by all property of any of
the undersigned from time to time 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 agreement which has been, or
will at any time(s) later be, executed by any (or all) of the undersigned to or
for the benefit of the Bank (collectively "Collateral"). Notwithstanding the
above, to the extent that any portion of the Indebtedness is a consumer loan,
that portion shall not be secured by any mortgage on or other security interest
in the undersigned's principal dwelling which is not a purchase money security
interest as to that portion, unless expressly provided to the contrary in
another place.
If the undersigned (or any of them) or any guarantor under a guaranty of all or
part of the Indebtedness (guarantor) (a) fail(s) to pay this Note or any of the
Indebtedness when due, by maturity, acceleration or otherwise, or fail(s) to
pay any Indebtedness owing on a demand basis upon demand; or (b) fail(s) to
comply with any of the terms or provisions of any agreement between the
undersigned (or any of them) or any guarantor and the Bank; or (c) become(s)
insolvent or the subject of a voluntary or involuntary proceeding in
bankruptcy, or a reorganization, arrangement or creditor composition
proceeding, (if a business entity) cease(s) doing business as a going concern,
(if a natural person) die(s) or become(s) incompetent, (if a partnership)
dissolve(s) or any general partner of it dies, becomes incompetent or becomes
the subject of a bankruptcy proceeding or (if a corporation) is the
2
<PAGE> 40
subject of a dissolution, merger or consolidation; or (d) if any warranty or
representation made by any of the undersigned or any guarantor in connection
with this Note or any of the Indebtedness shall be discovered to be untrue or
incomplete; or (e) if there is any termination, notice of termination, or breach
of any guaranty, pledge, collateral assignment or subordination agreement
relating to all or any part of the Indebtedness; or (f) if there is any failure
by any of the undersigned or any guarantor to pay when due any of its
indebtedness (other than to the Bank) or in the observance or performance of any
term, covenant or condition in any document evidencing, securing or relating to
such indebtedness; or (g) if the Bank deems itself insecure, believing that the
prospect of payment of this Note or any of the Indebtedness is impaired or shall
fear deterioration, removal or waste of any of the Collateral; or (h) if there
is filed or issued a levy or writ of attachment or garnishment or other like
judicial process upon the undersigned (or any of them) or any guarantor or any
of the Collateral, including without limit, any accounts of the undersigned (or
any of them) or any guarantor with the Bank, then the Bank, upon the occurrence
of any of these events (each a Default), may at its option and without prior
notice to the undersigned (or any of them), declare any or all of the
indebtedness to be immediately due and payable (notwithstanding any provisions
contained in the evidence thereof to the contrary), sell or liquidate all or any
portion of the Collateral, set off against the Indebtedness any amounts owing by
the Bank to the undersigned (or any of them), charge interest at the default
rate provided in the document evidencing the relevant Indebtedness and exercise
any one or more of the rights and remedies granted to the Bank by any agreement
with the undersigned (or any of them) or given to it under applicable law All
Payments under this Note shall be in immediately available United States funds,
without setoff or counterclaim.
If this Note is signed by two or more parties (whether by all as makers or by
one or more as an accommodation party or otherwise), the obligations and
undertakings under this Note shall be that of all and any two or more jointly
and also of each severally. This Note shall bind the undersigned, and the
undersigned's respective heirs, personal representatives, successors and
assigns.
The undersigned waive(s) presentment, demand, protest, notice of dishonor,
notice of demand or intent to demand, notice of acceleration or intent to
accelerate, and all other notices and agree(s) that no extension or indulgence
to the undersigned (or any of them) or release, substitution or nonenforcement
of any security, or release or substitution of any of the undersigned, any
guarantor or any other party, whether with or without notice, shall affect the
obligations of any of the undersigned. The undersigned waive(s) all defenses
or right to discharge available under Section
3
<PAGE> 41
3-606 of the Uniform Commercial Code and waive(s) all other suretyship defenses
or right to discharge. The undersigned agree(s) that the Bank has the right to
sell, assign, or grant participations, or any interest, in any or all of the
Indebtedness, and that, in connection with this right, but without limiting its
ability to make other disclosures to the full extent allowable, the Bank may
disclose all documents and information which the Bank now or later has relating
to the undersigned or the Indebtedness.
The undersigned agree(s) to reimburse the holder or owner of this Note for any
and all costs and expenses (including without limit, court costs, legal
expenses and reasonable attorney fees, whether inside or outside counsel is
used, whether or not suit is instituted and, if suit is instituted, whether at
the trial court level, appellate level, in a bankruptcy, probate or
administrative proceeding or otherwise) incurred in collecting or attempting to
collect this Note or incurred in any other matter or proceeding relating to
this Note.
The undersigned acknowledge(s) and agree(s) that there are no contrary
agreements, oral or written, establishing a term of this Note and agree(s) that
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. As used in this Note, the word "undersigned" means, individually and
collectively, each maker, accommodation party, indorser and other party signing
this Note in a similar capacity. If any provision of this Note is
unenforceable in whole or part for any reason, the remaining provisions shall
continue to be effective. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN.
THE MAXIMUM INTEREST RATE SHALL NOT EXCEED 25%, OR THE HIGHEST APPLICABLE USURY
CEILING, WHICHEVER IS LESS.
THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER CONSULTING
(OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE,
KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO
TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.
4
<PAGE> 42
"This Note amends and restates that certain Term Note dated January 30, 1995 in
the original principal amount of $785,714.31 by the undersigned to Bank."
For Corporations or Partnerships
Cade Industries, Inc.
P.O. Box 23094
Lansing, MI 48909
By: /s/ Edward B. Stephens
- ---------------------------------
Signature of: Edward B. Stephens
Its: Vice President
For Individuals, Sole Proprietorships, Trusts, or Estates
Name(s) of Obligor(s) (Type or Print):
Signature(s) of Obligor(s):
_________________________________
Street Address
_________________________________
City State ZIP Code
For Bank Use Only
LOAN OFFICER INITIALS: LMF
LOAN GROUP NAME: Central MI - Lansing
LOAN OFFICER I.D. NO.: 01109
LOAN GROUP NO.: 90929
5
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CADE
INDUSTRIES, INC. QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED
SEPTMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 55,391
<SECURITIES> 0
<RECEIVABLES> 4,789,101
<ALLOWANCES> 0
<INVENTORY> 8,773,490
<CURRENT-ASSETS> 14,026,194
<PP&E> 23,561,833
<DEPRECIATION> 8,235,119
<TOTAL-ASSETS> 32,189,387
<CURRENT-LIABILITIES> 5,508,623
<BONDS> 6,726,765
<COMMON> 21,886
0
0
<OTHER-SE> 19,619,113
<TOTAL-LIABILITY-AND-EQUITY> 32,189,387
<SALES> 22,943,990
<TOTAL-REVENUES> 22,943,990
<CGS> 19,117,823
<TOTAL-COSTS> 19,117,823
<OTHER-EXPENSES> 4,012,426
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 544,632
<INCOME-PRETAX> (730,891)
<INCOME-TAX> (340,000)
<INCOME-CONTINUING> (390,891)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (390,891)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
