<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Cade Industries, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: Not Applicable
-----------------------------------------------
(2) Form, Schedule or Registration Statement No.:
--------------------------
(3) Filing Party:
----------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------
<PAGE>
CADE INDUSTRIES, INC.
2365 WOODLAKE DRIVE, SUITE 120
OKEMOS, MICHIGAN 48864
(517) 347-1333
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Cade Industries, Inc. will be held at
the Sheraton Lansing Hotel, 925 South Creyts Road, Lansing, Michigan on
Tuesday, May 5, 1998 at 10:00 a.m. (Eastern Time) for the following purposes:
(1) to elect seven directors;
(2) to consider and vote upon the Cade Industries, Inc. 1998 Omnibus
Incentive Stock Plan; and
(3) to transact such other business as may properly come before the
meeting and any adjournment thereof;
all as set forth in the accompanying Proxy Statement.
The Board of Directors has established the close of business on March 19,
1998, as the record date for determining the shareholders entitled to notice
of and to vote at the meeting or any adjournment thereof; only shareholders of
record at the close of business on that date will be entitled to vote.
A proxy, which is solicited on behalf of the Board of Directors, is
enclosed, together with a return envelope which requires no postage if mailed
in the United States. The affirmative vote of a plurality of the votes cast by
the outstanding shares represented at the meeting and entitled to vote, a
quorum being present, is required for the election of directors. If a quorum
exists, the affirmative vote of the holders of a majority of shares cast at
the meeting is required for the approval of the Cade Industries, Inc. 1998
Omnibus Incentive Stock Plan.
It is important that your shares be represented at the meeting. WHETHER OR
NOT YOU EXPECT TO ATTEND THE MEETING, YOU ARE REQUESTED TO INDICATE YOUR
VOTING DIRECTIONS, SIGN, DATE AND PROMPTLY RETURN YOUR PROXY IN THE ENCLOSED
POSTPAID ENVELOPE. IF YOU LATER DESIRE TO REVOKE YOUR PROXY, YOU MAY DO SO AT
ANY TIME BEFORE THE VOTING BY GIVING WRITTEN NOTICE OF REVOCATION TO THE
COMPANY'S SECRETARY, OR BY GIVING ORAL NOTICE TO THE PRESIDING OFFICER DURING
THE MEETING.
A copy of the 1997 Annual Report to Shareholders and a Proxy Statement
accompany this Notice.
Persons attending the annual meeting are cordially invited to join a tour of
the Company's facilities immediately following the meeting.
By Order of the Board of Directors
Conrad G. Goodkind
Secretary
Okemos, Michigan
March 24, 1998
<PAGE>
CADE INDUSTRIES, INC.
2365 WOODLAKE DRIVE, SUITE 120
OKEMOS, MICHIGAN 48864
(517) 347-1333
----------------
PROXY STATEMENT
----------------
SOLICITATION AND VOTING
The enclosed proxy is solicited by the Board of Directors of Cade
Industries, Inc. ("Cade" or the "Company") for use at the Annual Meeting of
Shareholders to be held on May 5, 1998. All properly executed proxies received
in time will be voted at the meeting. A proxy may be revoked at any time prior
to its exercise by giving written notice of revocation to the Company's
Secretary, or by giving oral notice to the presiding officer during the
meeting.
Each shareholder of record at the close of business on March 19, 1998, will
be entitled to one vote for each share registered in such shareholder's name.
At that date there were outstanding 22,004,083 shares of common stock, the
Company's only class of stock.
The expense of printing and mailing proxy material, including forwarding
expense to beneficial owners of stock held in the name of another, will be
borne by the Company. No solicitation other than by mail is contemplated,
except that officers or employees of the Company may solicit the return of
proxies from certain shareholders by telephone.
This proxy Statement is being mailed to shareholders commencing on or about
March 31, 1998. A copy of the 1997 Annual Report to Shareholders, including
financial statements, is enclosed but is not a part of this Proxy Statement
nor incorporated herein.
PRINCIPAL SECURITY HOLDERS AND
SECURITY HOLDINGS OF MANAGEMENT
The following table shows the beneficial ownership of the outstanding common
stock of the Company as of February 28, 1998, by each person known to the
Company to own beneficially more than 5% of such stock outstanding, each
director and nominee, each executive officer named in the Summary Compensation
Table below and all directors and executive officers of the Company as a
group:
<TABLE>
<CAPTION>
NUMBER OF SHARES AND
NATURE OF BENEFICIAL PERCENT
NAME OWNERSHIP(1)(2) OF CLASS
---- -------------------- --------
<S> <C> <C>
Advent International Corporation(3)........ 1,913,460(4) 8.5%
Molly F. Cade(5)........................... 5,208,762(6) 23.0%
Conrad G. Goodkind......................... 300,300 1.3%
William T. Gross........................... 60,000(7) *
Richard A. Lund............................ 229,131 1.0%
Joseph R. O'Gorman......................... -0- *
Terrell L. Ruhlman......................... 290,000 1.3%
John W. Sandford........................... 172,444(8) *
Edward B. Stephens......................... 111,228(9) *
All directors and executive officers as a
group (8 persons)......................... 6,371,865 28.2%
</TABLE>
- --------
*Less than 1.0%
<PAGE>
(1) Except as otherwise indicated, the specified persons have sole voting
and/or dispositive power as to all of the shares indicated.
(2) Includes the following shares which may be acquired by options currently
exercisable or within 60 days of the record date: 50,000 as to Ms. Cade,
Mr. Goodkind and Mr. Gross; 206,000 as to Mr. Lund; 87,000 as to Mr.
Stephens; 150,000 as to Mr. Sandford; and 593,000 as to all directors and
executive officers as a group.
(3) The business address of Advent International Corporation is 101 Federal
Street, Boston, Massachusetts 02110.
(4) All shares are held of record by the following venture capital funds
managed by Advent International Corporation in the amounts indicated:
Adventact Limited Partnership, 268,672 shares; Adhill Limited Partnership,
216,510 shares; Adval Limited Partnership, 193,997 shares; Adwest Limited
Partnership, 216,510 shares; Advent International Technology Fund Limited
Partnership, 72,788 shares; Hong Kong Venture Investment Trust, 121,176
shares; International Network Fund Limited Partnership, 823,807 shares.
(5) Ms. Cade's business address is 2365 Woodlake Drive, Suite 120, Okemos,
Michigan 48864.
(6) Excludes 16,200 shares held by Ms. Cade's spouse as to which Ms. Cade
disclaims beneficial ownership.
(7) Includes 10,000 shares held in a trust controlled by Mr. Gross.
(8) Record ownership of 20,000 shares held by family trust controlled by Mr.
Sandford.
(9) Voting and dispositive power shared with spouse as to 7,100 shares.
The above beneficial ownership information is based upon information
furnished by the specified persons and determined in accordance with Rule 13d-
3 under the Securities Exchange Act of 1934, as amended, as required for
purposes of this filing, which is not necessarily the same as beneficial
ownership for other purposes, and includes shares as to which beneficial
ownership may be disclaimed.
ELECTION OF DIRECTORS
The Company's Bylaws provide for the election of directors at each Annual
Meeting of Shareholders to hold office until the next succeeding Annual
Meeting and until their successors are elected.
Shares represented by the enclosed proxy will be voted for the nominees
named below, unless otherwise specified on the proxy. If any of the nominees
should decline or be unable to act as a director, which is not anticipated,
the proxies may be voted for a substitute nominee designated by the Board of
Directors. In no event may the proxies be voted for more than seven nominees.
NOMINEES:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
---- --- -------------------- --------
<S> <C> <C> <C>
Molly F. Cade(2) 48 Educator 1986
Conrad G. Goodkind(1)(2)(3) 53 Partner, Quarles & Brady (law firm) 1989
William T. Gross(1)(4) 68 Consultant 1992
Richard A. Lund(4) 46 President and Chief Operating 1991
Officer of the Company
Joseph R. O'Gorman 54 Chairman of the Board, President --
and Chief Executive Officer of
Reno Air Inc.
Terrell L. Ruhlman(1)(4) 71 Consultant 1987
John W. Sandford(2)(4) 63 Chairman of the Board and Chief 1990
Executive Officer of the Company
</TABLE>
- --------
(1) Member of the Audit Committee, which met once in 1997. The Audit Committee
annually considers the report and recommendations of the Company's
independent public accountants and is available for
2
<PAGE>
additional meetings upon request of such accountants. The Audit Committee's
functions also include making recommendations to the Board of Directors
regarding the engagement or retention of such accountants, directing the
activities of and considering the reports and recommendations of the
Company's principal accounting officer, adoption of accounting methods and
procedures, public disclosures required for compliance with securities laws
and other matters relating to the Company's financial accounting.
(2) Mr. Goodkind is the Chair and Ms. Cade and Mr. Sandford were members of
the Compensation Committee, which met one time in 1997. Mr. Ruhlman
replaced Mr. Sandford on the Committee effective September 1, 1997, upon
Mr. Sandford's becoming the Company's Chief Executive Officer. The
Compensation Committee meets to consider and make recommendations to the
Board of Directors with respect to salaries, bonuses and benefit plans for
officers and other salaried employees.
(3) Mr. Goodkind serves as Secretary of the Company.
(4) Member of the Strategic Planning Committee, a joint Board of
Directors/Management committee which reviews the Company's strategic
direction and makes recommendations to the Board of Directors. The
Committee met once in 1997.
The Board of Directors held five meetings during 1997. Each director
attended 75% or more of the total of all meetings of the Board and any
committee on which he or she served during the year. The Board of Directors
currently has committees for Audit, Compensation, and Strategic Planning. The
Board has not appointed a Nominating Committee.
The principal occupation of each director during the past five years was
that shown in the above table, except that: (1) Mr. Gross is also a director
of Ocal, Inc (manufacturer of steel tubing); (2) Mr. Lund was President of the
Company's Auto-Air Composites, Inc. subsidiary from January 1989 to November
1994 and was elected President and Chief Operating Officer of the Company in
April 1990; Mr. Lund also is a director of Blue Care Network Health Central
and Comerica Bank; (3) Mr. O'Gorman was Executive Vice President of United Air
Lines, Inc. from February 1991 to September 1997; (4) Mr. Ruhlman was
previously Chairman and Chief Executive Officer of the Company from 1991 to
September 1997 and is a director of EI Environmental Engineering Concepts Ltd.
(manufacturer of industrial misting systems); (5) Mr. Sandford was President
and Chief Executive Officer of Rolls Royce, Inc. from 1990 to January 1993,
and Managing Director, Rolls-Royce plc, Aerospace Group from January 1993 to
January 1995, and is currently a Director of Rolls-Royce plc, a nominee for
director for Avcorp Industries (manufacturer of aircraft components) and
several other privately held entities.
COMPENSATION OF DIRECTORS
The Company pays directors who are not full-time employees of the Company
$12,000 per year, and pays non-employee members of the Audit, Compensation,
and Strategic Planning Committees an additional $6,000 per year for service on
such committees in the aggregate. It is the Company's policy to grant each new
director an option to purchase 50,000 shares of the Company's common stock at
an exercise price equal to the then fair market value thereof. All options may
be exercised only for so long as the optionee remains a director of the
Company and for one year thereafter, but in no event more than ten years after
the date of grant. Mr. Goodkind is a partner in the law firm of Quarles &
Brady, general counsel to the Company, which performed legal services for the
Company in 1997 and is expected to do so in 1998.
3
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
Set forth below is a table summarizing the compensation of the Company's
Chief Executive Officer, its President and Chief Operating Officer and its
Vice President, Chief Financial Officer and Treasurer ("Named Executive
Officers") for each of the three preceding fiscal years. Effective September
1, 1997, Terrell Ruhlman resigned as Chief Executive Officer and on that same
day John W. Sandford was appointed Chief Executive Officer. No other executive
officer received salary and bonus in excess of $100,000 during the year ended
December 31, 1997. Although the Company maintains certain stock option plans,
it has no other long-term incentive plan. The Company has not issued, and
there are not currently outstanding, any restricted stock awards or stock
appreciation rights.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------
ANNUAL COMPENSATION AWARDS
--------------------------------------- ---------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL OTHER ANNUAL OPTIONS/SARS COMPENSA-
POSITION YEAR SALARY ($) BONUS ($)(1) COMPENSATION (NO. OF SHARES) TION ($)
- ------------------ ---- ---------- ------------ ------------ --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Terrell L. Ruhlman...... 1997 50,418(2) -0- (4) -0- -0-
Chairman of the Board
and 1996 75,000(2) -0- (4) -0- -0-
Chief Executive Officer 1995 75,000(2) -0- (4) -0- -0-
(until August 31, 1997)
John W. Sandford........ 1997 37,839(2) 15,431(3) (4) 100,000 -0-
Chairman of the Board
and 1996 10,000(2) -0- (4) -0- -0-
Chief Executive Officer 1995 10,000(2) -0- (4) -0- -0-
(after August 31, 1997)
Richard A. Lund......... 1997 185,000 111,220(3) (4) 25,000 10,196(5)
President and 1996 170,616 43,916(3) (4) 15,000 10,196(5)
Chief Operating Officer 1995 165,333 9,920 (4) 25,000 8,076(6)
Edward B. Stephens...... 1997 99,399 59,759(3) (4) 15,000 8,338(7)
Vice President, Chief 1996 96,720 24,897(3) (4) 10,000 6,672(8)
Financial Officer and 1995 95,480 5,729 (4) 20,000 5,157(9)
Treasurer
</TABLE>
- --------
(1) Represents bonus earned in the current fiscal year, but paid in the
succeeding fiscal year.
(2) Includes $10,000 received for serving as a director.
(3) Consists of 75% cash and 25% Company common stock valued at date the bonus
was awarded. See "Report of the Compensation Committee of the Board of
Directors" below.
(4) Personal benefits in an aggregate amount less than 10% of the total of
annual salary and bonus.
(5) 401(k) matching contribution of $9,500; term life insurance premium of
$696.
(6) 401(k) matching contribution of $7,500; term life insurance premium of
$576.
(7) 401(k) matching contribution of $7,474; term life insurance premium of
$864.
(8) 401(k) matching contribution of $6,150; term life insurance premium of
$522.
(9) 401(k) matching contribution of $4,635; term life insurance premium of
$522.
4
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
The following table sets forth certain information regarding stock option
grants to each Named Executive Officer during the fiscal year ended December
31, 1997.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS(1) OPTION TERM(2)
------------------------------------------------- ----------------
NUMBER OF % OF TOTAL
SECURITIES OPTION/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR PER SHARE DATE 5% ($) 10% ($)
---- ------------ ------------ ----------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Terrell L. Ruhlman...... -- -- -- -- -- --
John W. Sandford........ 100,000(3) 55.6% $1.3750 2/10/2007 $86,488 $219,175
Richard A. Lund......... 25,000(4) 13.9% 1.3750 2/10/2007 21,622 54,794
Edward B. Stephens...... 15,000(4) 8.3% 1.3750 2/10/2007 12,973 32,876
</TABLE>
- --------
(1) Consist entirely of stock options.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock appreciation of 5% or 10% compounded
annually from the date the respective options were granted to their
expiration date and are not presented to forecast possible future
appreciation, if any, in the price of the Common Stock. The potential
realizable value of the foregoing options is calculated by assuming that
the market price of the underlying security appreciates at the indicated
rate for the entire term of the option and that the option is exercised at
the exercise price and sold on the last day of its term at the appreciated
price.
(3) Exercisable in full as of August 10, 1997.
(4) Exercisable in equal increments 6, 12, 24, 36 and 48 months after the
2/10/97 grant date.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The table below sets forth information regarding the number and value of
unexercised options held by the Company's Named Executive Officers as of
December 31, 1997. No Named Executive Officer exercised options during 1997.
The Company has no outstanding SARs.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)(1)
------------------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Terrell L. Ruhlman...... 100,000(2) -0- $156,250 $ -0-
John W. Sandford........ 150,000 -0- 178,125 -0-
Richard A. Lund......... 201,000 49,000 243,280 63,282
Edward B. Stephens...... 84,000 31,000 89,671 40,485
</TABLE>
- --------
(1) Value is based upon closing price of $2.3750 as reported on the Nasdaq
National Market for December 31, 1997, minus the exercise price,
multiplied by the number of shares underlying the option.
(2) Mr. Ruhlman exercised these options on February 18, 1998.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Richard A. Lund entered into an employment agreement with the Company dated
as of May 2, 1995 pursuant to which he continued to be retained to act as the
Company's President and Chief Operating Officer and to act in such other
capacities as directed by the Company's Board of Directors until his
resignation or termination by the Board of Directors. The agreement provides
for an initial annual base salary of $168,000 per year (to be reviewed
annually by the Board of Directors), a bonus not to exceed 50% of base salary
and certain
5
<PAGE>
other benefits. The Company must continue to pay benefits for one year if Mr.
Lund is terminated by the Company without cause. Compensation ceases upon
termination for cause or six months after death or disability. In the event
Mr. Lund's employment terminates within one year after a change in control of
the Company, the Company shall pay him an amount equal to his compensation for
the preceding year.
Edward B. Stephens, who joined the Company in July 1989, serves the Company
as Vice President, Chief Financial Officer and Treasurer pursuant to an
agreement with the Company terminable by the Company for cause at any time or
for any reason upon six months' written notice. The agreement originally
provided for an annual salary of $75,000 plus discretionary bonuses and
certain medical, dental and life insurance benefits. Under a 1991 amendment to
this agreement, Mr. Stephens would be entitled to a payment equal to his
compensation from the Company in the preceding year in the event his
employment by the Company is terminated for any reason within one year of a
change of control of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is composed of Molly F.
Cade, Conrad G. Goodkind, and Terrell L. Ruhlman. Mr. Ruhlman replaced Mr.
Sandford as a member of the Committee effective September 1997. Mr. Goodkind
is the Secretary of the Company.
PERFORMANCE GRAPH
Set forth below is a graph comparing the cumulative total shareholder return
on the Company's common stock to the cumulative total return of (i) the
Standard & Poors 500 Stock Index and (ii) the Value Line Aerospace/Defense
Industry Index through December 31, 1997. The graph is generated by assuming
that $100 was invested at the close of trading on the last trading day of 1992
in each of Cade common stock, the Standard & Poors 500 and the
Aerospace/Defense Industry Index, and that all dividends were reinvested.
LOGO
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Cade Industries, Inc. $100.00 $ 88.46 $ 80.77 $ 76.92 $161.60 $292.31
Standard & Poors 500 $100.00 $110.09 $111.85 $153.80 $189.56 $252.82
Aerospace/Defense $100.00 $126.11 $137.28 $211.88 $289.53 $350.21
</TABLE>
6
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors, its
executive officers, and any persons holding more than 10% of the Company's
Common Stock are required to report their initial ownership of the Company's
Common Stock and any subsequent changes in that ownership to the SEC. Specific
due dates for these reports have been established, and the Company is required
to disclose any failure to file by those dates. The Company believes that all
of these filing requirements were satisfied during the year ended December 31,
1997. In making these disclosures, the Company has relied solely on written
representations of those persons it knows to be subject to the reporting
requirements and copies of the reports that they have filed with the SEC.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Development of Compensation Committee. The Company's Compensation Committee
is composed of three non-employee Directors and the Chief Executive Officer,
who is not a full-time employee. The Compensation Committee, which met one
time in 1997, reviews and approves adjustments to executive compensation. The
Company's policy with respect to compensation of its executive officers is to
provide benefits which are fair and which provide incentives to maximize
performance. A significant portion of each executive officer's potential
compensation is linked to overall Company performance.
Compensation. The Company's Chief Executive Officer ("CEO") is not a full-
time employee of the Company. The CEO's compensation is primarily based on a
subjective determination by the Committee of the amount necessary to ensure
the continued availability of his experience and knowledge, which is believed
to be of substantial value to the Company. This amount is a function, in part,
of the amount of time which the Committee and the CEO believe will be required
to be devoted during the succeeding year and the difficulty of the issues with
which he is expected to deal during that year. While there was a change in
CEO's, the level of compensation was unchanged in 1997, except that Mr.
Sandford was granted an additional stock option in connection with his
election as CEO and a performance based bonus similar to those provided to the
Company's full-time officers.
Compensation of the Company's full-time executive officers is composed of a
base salary, cash and stock bonuses, and stock option grants. The compensation
is reviewed by the Committee in February of each year and changes, if any,
typically are effective in the month of May. The base salary is determined
subjectively by the Committee without formal guidelines, but taking into
account (without applying any specific weights) the officer's then existing
base compensation, increases in prior years, the Company's revenue and
earnings performance for the preceding fiscal year and compensation trends
among other manufacturing and similarly sized companies.
Bonuses, consisting of 75% cash and 25% stock, are awarded on the basis of
the Company's or a subsidiary's earnings and other performance criteria for
the preceding fiscal year in relation to performance targets previously
established by the Committee for such year and subject to a maximum total
bonus expressed as a percentage of base compensation. The Committee annually
establishes a minimum and aggressive target for earnings and other performance
criteria. If a minimum target is not achieved, the executive is not entitled
to any bonus with respect to that criteria. If the aggressive target is
achieved, the executive is entitled to the maximum bonus for that criteria,
subject to any additional performance criteria that may be imposed. The
maximum bonus for each recipient is established each year on the same basis as
base salary, but may not exceed 50% of base salary. The stock bonus is
computed on the basis of the per share price of the Company's stock on the
first day of the fiscal year.
Stock Incentive Compensation. Stock option grants are designed to provide
incentives for key employees both as a reward for good performance and as a
benefit that increases in value as the Company's stock price rises. Individual
grants are made by the Committee from time to time on the basis of a
subjective evaluation, without formal guidelines, of the recipient's
individual contribution to the Company's earnings performance in the preceding
year and, to a lesser extent, of such recipient's total compensation for such
year.
7
<PAGE>
In 1998, the Board of Directors adopted the Cade Industries, Inc. 1998
Omnibus Incentive Stock Plan, subject to approval by the Company's
Shareholders at the 1998 Annual Meeting of Shareholders. If the 1998 Omnibus
Incentive Stock Plan is approved, it will replace the Company's 1990
Nonqualified Stock Option Plan and the Committee, which is charged with the
responsibility of administering the 1998 Omnibus Incentive Stock Plan, will
have available to it an aggregate of 2,000,000 shares of Common Stock for
grants of incentives to Company employees, including executive officers,
provided that no participant may be granted an award or awards covering more
than 300,000 shares in any calendar year.
The compensation of the Company's Chief Operating Officer ("COO") was
reviewed in February 1997. In February, the COO's annual base compensation
rate was continued at the $185,000 rate established in November 1996. Among
the factors considered by the Committee were the previous November 1996
increase, the Company's financial performance during 1996, the improved
management planning and integration of operations accomplished under the COO's
direction during the year, the competitive situation for experienced
management in the industry in which the Company operates, and the COO's years
of service to the Company.
The COO was eligible to receive a bonus in 1997 of up to 50% of the COO's
base compensation, based on the Company's performance in fiscal 1997. If the
Company's after-tax consolidated earnings failed to exceed the minimum
earnings target, the amount of the COO's bonus would be zero. If the Company's
after-tax consolidated earnings exceed the minimum earnings target, the COO is
entitled to a bonus which would be calculated pursuant to a performance-based
formula weighted as follows: after-tax consolidated earnings, 70%; and cash
flow from operations, 30%. The bonus would be paid 75% in cash and 25% in
Company common stock, computed on the basis of the stock's price on the first
day of 1997. The COO's bonus paid in 1997 was calculated in accordance with
such formula, and was $92,500 or 50% of base salary. This bonus is worth
$111,220 if the stock portion of the bonus were valued at the date the bonus
was awarded.
Tax Deductibility of Executive Compensation. Section 162(m) of the Internal
Revenue Code, added by the Omnibus Budget Reconciliation Act of 1993,
generally disallows a tax deduction to public companies for compensation over
$1,000,000 paid to the corporation's chief executive officer and the other
proxy-named executive officers. Qualifying performance-based compensation will
not be subject to the deduction limit if certain requirements are met. Cade's
executive compensation program, as presently constructed, is not likely to
generate non-deductible compensation in excess of these limits. The Committee
will continue to review these evolving tax regulations as they apply to Cade's
executive compensation program. It is the Committee's intent to preserve the
deductibility of executive compensation to the extent reasonably practicable
and to the extent consistent with its other compensation objectives.
Compensation Committee
Conrad G. Goodkind, Chair Molly F. Cade
John W. Sandford (until August 31, Terrell L. Ruhlman (after August 31,
1997) 1997)
PROPOSAL TO APPROVE CADE INDUSTRIES, INC.
1998 STOCK PLAN
On February 2, 1998, the Company's Board of Directors adopted the Cade
Industries, Inc. Omnibus Incentive Stock Plan (the "Stock Plan"), subject to
approval by the Company's shareholders at their 1998 Annual Meeting. A copy of
the Stock Plan in the form adopted by the Board of Directors is attached as
Annex A to this Proxy Statement. If the Stock Plan is approved by the
shareholders of the Company, no further awards or grants will be made under
the Cade Industries, Inc. 1990 Nonqualified Stock Option Plan (the "1990
Plan"), although options granted under that plan (and prior plans) will remain
in effect until they have been exercised or have expired and such options
shall be administered in accordance with their terms and in accordance with
the plan under which they were granted.
8
<PAGE>
The affirmative vote of holders of a majority of the shares cast at the
Meeting, in person or by proxy, will be required for approval of the Stock
Plan, provided that the total vote cast on the Stock Plan represents over 50%
of the shares entitled to vote thereon.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT COMPANY SHAREHOLDERS VOTE
FOR APPROVAL OF THE STOCK PLAN.
The Stock Plan replaces the Company's existing 1990 Plan as described above.
The principal objectives of the Stock Plan are the same as the objectives of
the 1990 Plan: to provide incentive for the key employees of the Company and
its subsidiaries to improve corporate performance on a long-term basis, and to
attract and retain key employees.
PRINCIPAL TERMS OF THE STOCK PLAN
Under the Stock Plan, nonqualified stock options and restricted stock (each,
an "Award") may be granted to any regular salaried employee of the Company or
a subsidiary of the Company who, in the sole opinion of the Compensation
Committee, contributes significantly to the growth and success of the Company
or a subsidiary. This includes employees who are members of the Board of
Directors, but excludes directors who are not employees of the Company or any
of its subsidiaries. Such eligible participants in the Stock Plan are referred
to as "Eligible Employees."
The total number of shares of Common Stock available for issuance under the
Stock Plan may not exceed two million (2,000,000) shares, although no Eligible
Employee may be granted an Award or Awards covering more than 300,000 shares
of Common Stock in any calendar year. These stock thresholds are subject to
adjustment in the event of a stock split, stock distribution or other capital
event, as described in the Stock Plan.
Shares available for an Award under the Stock Plan may be either authorized
but unissued or reacquired shares of Common Stock. Shares subject to, but not
issued under, an option which expires, terminates, is cancelled or forfeited
for any reason under the Stock Plan and shares of restricted stock which have
been forfeited before the grantee has received any benefit of ownership (such
as dividends) shall again become available for the granting of Awards under
the Stock Plan.
The Stock Plan is administered by the Compensation Committee of the Board of
Directors of the Company (the "Committee"). The Committee shall be constituted
so as to afford Stock Plan participants an exemption for Stock Plan
transactions pursuant to Rule 16b-3 under the Securities Exchange Act of 1934.
The Committee is empowered to adopt such rules, regulations and procedures and
take such other action as it deems necessary or proper for administration of
the Stock Plan, including any modification, extension or renewal of any option
granted thereunder. The Committee has the authority to interpret the
provisions of the Stock Plan, which interpretations shall be final and
conclusive. Specifically, the Committee is empowered, subject to any contrary
provisions of the Stock Plan, to designate the persons to whom Awards shall be
granted, to grant Awards in such form and amount as the Committee shall
determine, to impose such limitations, restrictions and conditions upon any
such Award as the Committee shall deem appropriate, and to waive in whole or
in part any limitations, restrictions or conditions imposed upon any such
Award as the Committee shall deem appropriate. The Board of Directors may also
amend, modify, suspend or terminate the Stock Plan from time to time;
provided, however, that no such action can be taken without shareholder
approval if required by applicable law. Furthermore, subject to the terms and
conditions of the Stock Plan, the Committee may modify, extend or renew
outstanding Awards granted under the Stock Plan, accept the surrender of
outstanding options (to the extent not theretofore exercised), reduce the
exercise price of outstanding options and authorize the granting of new
options in substitution therefor (to the extent not theretofore exercised);
provided, however, that no such modification of an Award (either directly or
through modification of the Stock Plan) shall, without the consent of the
grantee, alter or impair any rights of the grantee under the Award.
9
<PAGE>
STOCK OPTIONS
Stock Options ("Options") may be granted to Eligible Employees at any time
as determined by the Committee (subject to the volume limitations set forth
above). Options granted under the Stock Plan are not intended to qualify as
Incentive Stock Options ("Nonqualified Stock Options"). Each Option must be
evidenced by an agreement between the Company and the grantee which must
contain the terms and conditions required by the Stock Plan and such other
terms and conditions not inconsistent therewith as the Committee may deem
appropriate.
The exercise price of an Option granted under the Stock Plan may not be less
than 100% of the Fair Market Value of the Common Stock (as defined in the
Stock Plan) when the Option is granted.
For purposes of the Stock Plan, an Option is considered as having been
granted on the date on which the Committee authorized its grant (unless the
Committee has designated a later grant date). Options granted under the Stock
Plan may be exercisable at such times and subject to such restrictions and
conditions as the Committee in each instance approves, but no Option granted
to a person subject to the requirements of Section 16(b) of the Securities and
Exchange Act of 1934 may be exercisable until at least six months have elapsed
from the date of grant or prior to shareholder approval of the Stock Plan.
Furthermore, the period of exercisability may not exceed 10 years from the
date the Option is granted.
An Option may be exercised in whole or in part from time to time as
specified in the Option agreement by the grantee giving a written notice of
exercise to the Company specifying the number of shares to be purchased,
accompanied by payment in full of the exercise price. The exercise price may
be paid either (i) in cash or by check, or (ii) with the approval of the
Committee, through delivery of shares of Common Stock ("Delivered Stock"), or
(iii) through a combination of cash and Delivered Stock. Delivered Stock is
valued at its Fair Market Value as of the date of the exercise. The holder of
an Option shall not have any rights as a shareholder with respect to the
shares subject to the Option until certificates evidencing such shares are
delivered to him or her.
Special provisions are contained in the Stock Plan covering a merger,
consolidation or reorganization of the Company with another corporation in
which the Company is not the surviving corporation. In that circumstance, the
Committee may, subject to the approval of the Board of Directors of the
Company or the Board of Directors of any corporation assuming the obligations
of the Company under the Stock Plan, take action regarding each outstanding
unexercised option to either (i) substitute on an equitable and economically
equivalent basis an appropriate number of shares of the surviving corporation
for the shares of Common Stock covered by the Option, or (ii) cancel the
Option and provide for a payment to the optionee of an amount equal to the
cash value of the Option (determined in accordance with the provisions of the
Stock Plan). In addition, the Stock Plan permits Options to be granted to new
Eligible Employees who become such as a result of the Company's acquisition of
property or stock from an unrelated corporation in substitution for options
granted to such Eligible Employees by their former employer.
RESTRICTED STOCK
The Committee, at any time, may grant Awards of restricted stock under the
Stock Plan. The Committee may condition the grant of restricted stock upon
such factors or criteria as the Committee shall determine. The provisions of
various restricted stock Awards need not be identical; provided, however, that
such restricted stock Awards shall be subject to the following terms and
conditions: (i) until all applicable restrictions lapse, the grantee shall not
be permitted to sell, assign, transfer, pledge, or otherwise encumber the
shares of restricted stock; (ii) the grantee shall have all of the rights of a
shareholder of the Company with respect to the shares of restricted stock
(including the right to vote the shares and the right to receive any cash
dividends); (iii) unless otherwise provided in the applicable restricted stock
agreement or pursuant to (iv) below, all shares of restricted stock shall be
forfeited by the grantee upon termination of employment; (iv) in the event of
a hardship or other special circumstances under which a grantee's employment
is involuntarily terminated (other than for cause), the Committee may waive in
whole or in part any or all remaining restrictions attendant to shares of
restricted stock
10
<PAGE>
held by such grantee; (v) upon the lapse of all applicable restrictions,
unlegended certificates for such shares shall be delivered to the grantee; and
(vi) each Award shall be subject to the terms of a restricted stock agreement.
All grantees of restricted stock shall be issued a certificate in respect of
such shares, registered in such grantee's name and bearing an appropriate
legend. In its discretion, the Committee may require that the certificates
evidencing such shares of restricted stock be held in custody by the Company
until the restrictions thereon have lapsed.
TERM OF STOCK PLAN
The Stock Plan will terminate 10 years after its effective date (i.e., May
5, 2008), except as to Awards then outstanding, which Awards shall remain in
effect until they have been exercised, the restrictions have lapsed or the
Awards have expired or been forfeited.
GENERAL TERMS
The Company may require, as a condition to the exercise of an Option or the
issuance of an unrestricted stock certificate, that the grantee concurrently
pay to the Company any taxes which the Company is required to withhold by
reason of such exercise or lapse of restrictions. Such payment may be made
either in cash or, at the discretion of the Committee, and subject to all
applicable rules and regulations, through shares of Delivered Stock or shares
of stock withheld from the Award having a Fair Market Value equal to the
amount of the tax obligation. No Award granted under the Stock Plan shall be
transferable by a grantee other than by will or the laws of descent and
distribution; provided, however, that the Committee, in its discretion but in
accordance with Internal Revenue Service guidance, may grant Options that are
transferable, without payment of consideration, to family members of the
grantee or to trusts or partnerships for such family members.
As of the date hereof, there are no outstanding Options or shares of
restricted stock under the Stock Plan and no shares of Common Stock have been
issued upon the exercise of Options granted under the Stock Plan. The number
of grants to be made in the future to current executive officers and key
employees is subject to the discretion of the Committee and cannot be
determined at this time. As of such date, there were approximately 20
employees participating in the Company's 1990 Plan, the basis for eligibility
in which is the same as in the Stock Plan.
FEDERAL TAX CONSEQUENCES
An Eligible Employee realizes no taxable income at the time an Option is
granted under the Stock Plan. An Eligible Employee generally realizes no
taxable income at the time of an Award of restricted stock, so long as the
restricted stock is not vested. Stock is vested for this purpose if it is
either transferable or is not subject to a substantial risk of forfeiture.
With regard to Options, ordinary income generally is realized by the
Eligible Employee at the time of his exercise of an Option. The amount of
income is generally equal to the difference between the exercise price and the
Fair Market Value of the shares on the date of exercise. Tax withholding is
currently required on such income. When an Eligible Employee disposes of
shares acquired upon the exercise of an Option, any amount received in excess
of the Fair Market Value of the shares on the date of exercise will be treated
as long-term or short-term capital gain, depending upon the holding period of
the shares, and if the amount received is less than the Fair Market Value of
the shares on the date of exercise, the loss will be treated as long-term or
short-term capital loss, depending upon the holding period of the shares.
With regard to restricted stock, ordinary income is realized by an Eligible
Employee at the time that such restricted stock vests. The amount of income is
generally equal to the excess of the Fair Market Value of the shares at the
time of vesting over the purchase price for such shares, if any. Tax
withholding is required on such income. When an Eligible Employee disposes of
restricted stock, any amount received in excess of the Fair Market Value of
the shares on the date of vesting will be treated as long-term or short-term
capital gain,
11
<PAGE>
depending upon the holding period of the shares, and if the amount received is
less than the Fair Market Value on the date of vesting, the loss will be
treated as long-term or short-term capital loss, depending on the holding
period of the shares. Dividends paid on restricted stock which has not vested
and which has not been the subject of an election under Section 83(b) of the
Code are treated as compensation income. Section 83(b) of the Code permits the
Eligible Employee to elect, not more than 30 days after the date of grant of
the restricted stock, to include as ordinary income the difference between the
Fair Market Value of the restricted stock on the date of grant and the
purchase price of the restricted stock, if any. If no Section 83(b) election
is made, then the ordinary income inclusion occurs on the date the restricted
stock becomes vested and the amount of such inclusion will be the spread
between the Fair Market Value of the restricted stock and the purchase price
for the restricted stock at the time of vesting, if any.
If an Eligible Employee pays the exercise price of an Option by tendering
other vested shares then owned by the Eligible Employee, the difference
between the Fair Market Value and adjusted basis of the tendered shares will
not produce a taxable gain or loss to the Eligible Employee; however, the
Eligible Employee's tax basis for an equal number of acquired shares will be
the same as the Eligible Employee's tax basis for the tendered shares. The
remaining acquired shares will have an original tax basis equal to the sum of
the amount paid in cash, if any, plus any amount that the optionee is required
to recognize as income as a result of the exercise of the Option.
The Company will be entitled to a deduction for federal income tax purposes
at the same time and in the same amount as the Eligible Employee is considered
to have realized ordinary income in connection with the exercise of an Option
and the grant of restricted stock, unless disallowed by Section 162(m) of the
Code.
The foregoing discussion is based upon presently applicable provisions of
the federal income tax laws, and thus is subject to change if and when such
laws change.
VOTING PROCEDURES
The seven nominees receiving the highest number of affirmative votes
(whether or not a majority) cast by the outstanding shares represented at the
meeting and entitled to vote, a quorum being present, shall be elected as
directors. Abstentions and broker non-votes are not considered to be votes
cast under applicable state law and the Company's Articles of Incorporation
and Bylaws. Only affirmative votes are relevant in the election of directors.
A majority of the votes entitled to be cast by shares entitled to vote,
represented in person or by proxy, constitutes a quorum for action on a matter
at the Meeting. Directors are elected by a plurality of the votes cast by the
holders of shares entitled to vote in the election at a meeting at which a
quorum is present. A "plurality" means that the individuals who receive the
largest number of votes are elected as directors up to the maximum number of
directors to be elected at the meeting. Shares for which authority is withheld
to vote for director nominees and broker non-votes (i.e., proxies from brokers
or nominees indicating that such persons have not received instructions from
the beneficial owners or other persons entitled to vote shares as to a matter
with respect to which the brokers or nominees do not have discretionary power
to vote) are considered present for purposes of establishing a quorum, but
will have no effect on the election of directors except to the extent that the
failure to vote for a director nominee results in another nominee receiving a
larger number of votes. Votes attempted to be cast against a candidate are not
given legal effect and are not counted as votes cast in an election of
directors.
If a quorum exists, the affirmative vote of the holders of a majority of the
shares cast at the Meeting, in person or by proxy, will be required for
approval of the 1998 Omnibus Incentive Stock Plan, provided that the total
vote cast represents over 50% of the shares entitled to vote thereon. Because
abstentions and broker non-votes are not considered to be votes cast, neither
will have an effect on the vote so long as enough votes are cast to satisfy
the 50% requirement set forth above.
The votes will be counted by the Company's transfer agent, Firstar Trust
Company, and certified to the Company in writing.
12
<PAGE>
AUDIT MATTERS
Representatives of Deloitte & Touche LLP, the independent public accountants
who have audited the Company since 1995 will be present at the Shareholders
Meeting to respond to questions and to make a statement if they so desire.
OTHER MATTERS
At the date of this Proxy Statement, the Company has not been informed and
is not aware that any other matters will be brought before the meeting.
However, proxies may be voted with discretionary authority with respect to any
other matters that may properly be presented to the meeting.
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by the Company no later than November
30, 1998 in order to be considered for inclusion in next year's Annual Meeting
Proxy Statement.
Cade Industries, Inc.
Conrad G. Goodkind
Secretary
Okemos, Michigan
March 24, 1998
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER OR NOT
YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, SHAREHOLDERS ARE REQUESTED
TO COMPLETE, DATE, SIGN AND RETURN THEIR PROXY AS SOON AS POSSIBLE.
A COPY (WITHOUT EXHIBITS) OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES
AND EXCHANGE COMMISSION ON FORM 10-K AND FINANCIAL STATEMENTS AND SCHEDULES
THERETO FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 WILL BE PROVIDED WITHOUT
CHARGE TO EACH RECORD OR BENEFICIAL OWNER OF THE COMPANY'S COMMON SHARES AS OF
THE RECORD DATE FOR THE ANNUAL MEETING, ON THE WRITTEN REQUEST OF SUCH PERSON
DIRECTED TO: SHERYL A. MULL, SHAREHOLDER RELATIONS, CADE INDUSTRIES, INC.,
2365 WOODLAKE DRIVE, SUITE 120, OKEMOS, MICHIGAN 48864.
13
<PAGE>
ANNEX A
CADE INDUSTRIES, INC.
1998 OMNIBUS INCENTIVE STOCK PLAN
I. INTRODUCTION
1.01 Purpose. This plan shall be known as the Cade Industries, Inc. 1998
Omnibus Incentive Stock Plan. The purpose of the Plan is to provide an
incentive for employees of Cade Industries, Inc. and its Affiliates to improve
corporate performance on a long-term basis, and to attract and retain
employees by enabling employees to participate in the future successes of the
Company, and by associating the long term interests of employees with those of
the Company and its shareholders. It is intended that the Plan and its
operation comply with the provisions of Rule 16b-3 under the Securities
Exchange Act of 1934 (or any successor rule). The Plan is intended to permit
the grant of Nonqualified Stock Options and shares of Restricted Stock. The
proceeds received by the Company from the sale of Company Stock pursuant to
the Plan shall be used for general corporate purposes.
1.02 Effective Date. The effective date of the Plan shall be May 5, 1998,
subject to approval of the Plan by holders of a majority of the outstanding
voting common stock of the Company provided that such approval is given within
12 months of the effective date. Any Award granted prior to such shareholder
approval shall be expressly conditioned upon shareholder approval of the Plan.
II. PLAN DEFINITIONS
For Plan purposes, except where the context clearly indicates otherwise, the
following terms shall have the meanings set forth below:
(a) "Affiliates" means any "subsidiary corporation" or "parent
corporation" as such terms are defined in Section 424 of the Code.
(b) "Agreement" means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the
terms and conditions of an Award.
(c) "Award" shall mean the grant of any form of Stock Option or
Restricted Stock.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Committee" shall mean the Committee described in Section 4.01.
(g) "Company" shall mean Cade Industries, Inc., a Wisconsin corporation.
(h) "Company Stock" shall mean the Company's Common Stock, $.001 par
value, and such other stock and securities as may be substituted therefor
pursuant to Section 3.02.
(i) "Eligible Employee" shall mean any regular salaried employee of the
Company or an Affiliate, including an employee who is a member of the
Board, who satisfies the requirements of Section 5.01.
(j) "Exercise Period" shall mean the period of time provided pursuant to
Section 6.05 within which a Stock Option may be exercised.
(k) "Fair Market Value" on any date shall mean, with respect to Company
Stock, if the stock is then listed and traded on a registered national
securities exchange, or is quoted in the NASDAQ National Market System, the
average of the high and low sale prices recorded in composite transactions
as reported in the Wall Street Journal (Midwest Edition) for such date or,
if such date is not a business day or if no sales of Company Stock shall
have been reported with respect to such date, the next preceding business
date with respect to which sales were reported. In the absence of reported
sales or if the stock is not so listed or quoted, but is traded in the
over-the-counter market, Fair Market Value shall be the average of the
closing bid and asked prices for such shares on the relevant date.
(l) "Participant" means an Eligible Employee who has been granted an
Award under this Plan.
A-1
<PAGE>
(m) "Person" means any individual or entity, and the heirs, personal
representatives, executors, administrators, legal representatives,
successors and assigns of such Person as the context may require.
(n) "Plan" shall mean the Cade Industries, Inc. 1998 Omnibus Incentive
Stock Plan, as set forth herein, as it may be amended from time to time.
(o) "Restricted Stock" means shares of Company Stock granted to a
Participant under Article VII.
(p) "Stock Option" means an option to purchase a stated number of shares
of Company Stock at the price set forth in an Agreement.
III. SHARES SUBJECT TO AWARD
3.01 Available Shares. The total number of shares of Company Stock
authorized for issuance shall not exceed two million 2,000,000 shares, subject
to adjustments under Section 3.02. The shares authorized for issuance under
the Plan may consist, in whole or in part, of authorized but unissued Company
Stock, or of treasury stock of the Company. Shares subject to and not issued
under a Stock Option that expires, terminates, is canceled or forfeited for
any reason under the Plan and shares of restricted Company Stock which have
been forfeited for any reason shall again become available for the granting of
Awards.
3.02 Changes in Company Stock. In the event of any change in the Company
Stock resulting from a reorganization, recapitalization, stock split, stock
dividend, merger, consolidation, rights offering or like transaction, the
Committee shall, in its discretion, proportionately and appropriately adjust:
(a) the aggregate number and kind of shares authorized for issuance under the
Plan and (b) in the case of previously granted Stock Options, the option price
and the number and kind of shares subject to the Stock Options, without any
change in the aggregate purchase prices to be paid for the Stock Options.
IV. ADMINISTRATION
4.01 Administration by the Committee. The Plan shall be administered by the
Committee. The Committee shall be a committee designated by the Board to
administer the Plan and shall initially be the Compensation Committee of the
Board. The Committee shall be constituted to permit the Plan to comply with
the provisions of Rule 16b-3 under the Securities Exchange Act of 1934 (or any
successor rule). A majority of the members of the Committee shall constitute a
quorum. The approval of such a quorum, expressed by a majority vote at a
meeting held either in person or by conference telephone call, or the
unanimous consent of all members in writing without a meeting, shall
constitute the action of the Committee and shall be valid and effective for
all purposes of the Plan.
4.02 Committee Powers. Subject to Section 9.06, the Committee is empowered
to adopt, amend and rescind such rules, regulations and procedures and take
such other action as it shall deem necessary or proper for the administration
of the Plan and, in its discretion, may modify, extend or renew any Award
theretofore granted. The Committee shall also have authority to interpret the
Plan, and the decision of the Committee on any questions concerning the
interpretation of the Plan shall be final and conclusive. The express grant in
the Plan of any specific power to the Committee shall not be construed as
limiting any power or authority of the Committee. The Committee shall not
incur any liability for any action taken in good faith with respect to the
Plan or any Award.
Subject to the provisions of the Plan, the Committee shall have full and
final authority to:
(a) designate the Eligible Employees to whom Awards shall be granted;
(b) grant Awards in such form and amount as the Committee shall
determine;
(c) impose such limitations, restrictions and conditions upon any such
Award as the Committee shall deem appropriate, including conditions (in
addition to those contained in this Plan) on the exercisability of all or
any portion of a Stock Option or on the transferability or forfeitability
of Restricted Stock;
(d) prescribe the form of Agreement with respect to each Award;
A-2
<PAGE>
(e) waive in whole or in part any limitations, restrictions or conditions
imposed upon any such Award as the Committee shall deem appropriate
(including accelerating the time at which any Stock Option may be exercised
or the time at which Restricted Stock may become transferable or
nonforfeitable);
(f) determine the extent to which leaves of absence for governmental or
military service, illness, temporary disability and the like shall not be
deemed interruptions of continuous employment.
V. PARTICIPATION
5.01 Eligibility. Any employee of the Company and its Affiliates (including
officers and employees who may be members of the Board) who, in the sole
opinion of the Committee, has contributed or can be expected to contribute to
the profits, growth and success of the Company shall be eligible for Awards
under the Plan. From among all such Eligible Employees, the Committee shall
determine from time to time those Eligible Employees to whom Awards shall be
granted. No Eligible Employee shall have any right whatsoever to receive an
Award unless so determined by the Committee.
5.02 No Employment Rights. The Plan shall not be construed as conferring any
rights upon any person for a continuation of employment, nor shall it
interfere with the rights of the Company or any Affiliates to terminate the
employment of any person or to take any other action affecting such person.
VI. STOCK OPTIONS
6.01 Stock Options; General. Stock Options granted under the Plan shall be
in the form of Nonqualified Stock Options. Each Stock Option granted under the
Plan shall be evidenced by an Agreement which shall contain the terms and
conditions required by this Article VI, and such other terms and conditions,
not inconsistent herewith, as the Committee may deem appropriate in each case.
6.02 Stock Option Holder's Rights as a Shareholder. The holder of a Stock
Option shall not have any rights as a shareholder with respect to the shares
covered by a Stock Option until such shares have been delivered to him or her.
6.03 Option Price. The price at which each share of Company Stock covered by
a Stock Option may be purchased shall be not less than 100% of the Fair Market
Value of such stock on the date on which the option is granted. The option
price shall be subject to adjustment as provided in Section 3.02 hereof.
6.04 Date Stock Option Granted. For purposes of the Plan, a Stock Option
shall be considered as having been granted on the date on which the Committee
authorized the grant of the Stock Option except where the Committee has
designated a later date, in which event the later date shall constitute the
date of grant of the Stock Option; provided, however, that notice of the grant
of the Stock Option shall be given to the Participant within a reasonable
time.
6.05 Exercise Period. The Committee shall have the power to set the time or
times within which each Option shall be exercisable, and to accelerate the
time or times of exercise; provided, however, that
(a) no Stock Option granted under this Plan to any Person subject to the
reporting requirements of Section 16(b) of the Securities and Exchange Act
of 1934 may be exercised until at least six months from the later of (i)
the date of grant or (ii) shareholder approval of the Plan, and
(b) no Stock Option shall be exercisable after the expiration of ten (10)
years from the date the Stock Option is granted. Each Agreement with
respect to a Stock Option shall state the period or periods of time within
which the Stock Option may be exercised by the Participant, in whole or in
part.
A-3
<PAGE>
Subject to the foregoing, unless the Agreement with respect to a Stock Option
expressly provides otherwise, a Stock Option shall be exercisable in
accordance with the following schedule:
<TABLE>
<CAPTION>
YEARS AFTER
DATE OF GRANT PERCENTAGE OF SHARES
------------- --------------------
<S> <C>
Less than 1......... 20%
1 but less than 2... 40%
2 but less than 3... 60%
3 but less than 4... 80%
4 or more........... 100%
</TABLE>
6.06 Method of Exercise. Subject to Section 6.05, each Stock Option may be
exercised in whole or in part from time to time as specified in the Agreements
provided, however, that each Participant may exercise a Stock Option in whole
or in part by giving written notice of the exercise to the Company, specifying
the number of shares to be purchased by payment in full of the purchase price
therefor. The purchase price may be paid (a) in cash, (b) by check, (c) with
the approval of the Committee, or if the applicable Agreement so provides, by
delivering shares of Company Stock ("Delivered Stock), or (d) with a
combination of cash, check and Delivered Stock. For purposes of the foregoing,
Delivered Stock shall be valued at its Fair Market Value determined as of the
business day immediately preceding the date of exercise of the Stock Option.
No Participant shall be under any obligation to exercise any Stock Option
hereunder.
6.07 Dissolution or Liquidation. Anything contained herein to the contrary
notwithstanding, on the effective date of any dissolution or liquidation of
the Company, any unexercised Stock Options shall be deemed cancelled, and the
holder of any such unexercised Stock Options shall be entitled to receive
payment under Section 9.04.
VII. RESTRICTED STOCK
7.01 Administration. Shares of Restricted Stock may be issued either alone
or in addition to other Awards granted under the Plan. The Committee shall
determine the Eligible Employees to whom and the time or times at which grants
of Restricted Stock will be made, the number of shares to be granted, the time
or times within which such Awards may be subject to forfeiture or otherwise
restricted and any other terms and conditions of the Awards. By way of example
and not of limitation, the restrictions may provide that the shares will be
forfeited if the Participant's employment with the Company or its Affiliates
terminates before the expiration of a stated term or if the Company fails to
attain specified performance goals or such other factors or criteria as the
Committee shall determine. Subject to Sections 7.02 and 7.03 hereof the
provisions of Restricted Stock Awards need not be the same with respect to
each recipient.
7.02 Certificates. Each individual receiving a Restricted Stock Award shall
be issued a certificate in respect of such shares of Restricted Stock which
certificate shall be held in custody by the Company until the restrictions
thereon shall have lapsed. In addition, each individual receiving a Restricted
Stock Award shall, as a condition of any such Restricted Stock Award, have
delivered to the Company a stock power, endorsed in blank, with respect to the
Company Stock covered by such Award. Each certificate in respect of shares of
Restricted Stock shall be registered in the name of the Participant to whom
such Restricted Stock has been granted and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Award,
substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Cade Industries, Inc. 1998 Omnibus Incentive Stock Plan
and a Restricted Stock Agreement. Copies of such Plan and Agreement are on
file at the offices of Cade Industries, Inc."
In addition each certificate in respect of shares of Restricted Stock may bear
such legends and statements as the Committee may deem advisable to assure
compliance with the federal and state laws and regulations.
A-4
<PAGE>
7.03 Terms and Conditions. Shares of Restricted Stock shall be subject to
the following terms and conditions:
(a) Until the applicable restrictions lapse, the Participant shall not be
permitted to sell, assign, transfer, exchange, pledge, hypothecate or
otherwise dispose of or encumber shares of Restricted Stock.
(b) Unless and until a forfeiture of the Restricted Stock, the
Participant shall have, with respect to the shares of Restricted Stock, all
of the rights of a shareholder of the Company, including the right to vote
the shares (if applicable) and the right to receive any cash dividends.
Unless otherwise determined by the Committee, cash dividends shall be
automatically paid in cash and dividends payable in Company Stock shall be
paid in the form of additional Restricted Stock.
(c) Except to the extent otherwise provided in the applicable Restricted
Stock Agreement and (d) below, all shares still subject to restriction
shall be forfeited by the Participant upon termination of a Participant's
employment for any reason.
(d) In the event of hardship or other special circumstances of a
Participant whose employment is involuntarily terminated (other than for
cause), the Committee may waive in whole or in part any or all remaining
restrictions with respect to such Participant's shares of Restricted Stock.
(e) If and when the applicable restrictions lapse, unlegended
certificates for such shares shall be delivered to the Participant.
(f) Each Award shall be confirmed by, and be subject to the terms of, a
Restricted Stock Agreement.
7.04 Lapse of Restrictions. Unless different terms are expressly provided in
a grant of Restricted Stock, the restrictions provided in Section 7.03(a)
shall lapse in accordance with the following schedule:
<TABLE>
<CAPTION>
YEARS AFTER DATE PERCENTAGE OF
OF GRANT SHARES
---------------- -------------
<S> <C>
Less than 1................ 0%
1 but less than 2.......... 20%
2 but less than 3.......... 40%
3 but less than 4.......... 60%
4 but less than 5.......... 80%
5 or more.................. 100%
</TABLE>
VIII. WITHHOLDING TAXES
8.01 General Rule. Pursuant to applicable federal and state laws, the
Company is or may be required to collect withholding taxes upon the exercise
of a Stock Option or the lapse of stock restrictions. The Company may require,
as a condition to the exercise of a Stock Option or the issuance of a stock
certificate, that the Participant concurrently pay to the Company (either in
cash or, at the request of Participant, but subject to such rules and
regulations as the Committee may adopt from time to time, in shares of
Delivered Stock) the entire amount or a portion of any taxes which the Company
is required to withhold by reason of such exercise or lapse of restrictions,
in such amount as the Committee or the Company in its discretion may
determine. If and to the extent that withholding of any federal, state or
local tax is required in connection with the exercise of an Option or the
lapse of stock restrictions, the Participant may, subject to such rules and
regulations as the Company may adopt from time to time, elect to have the
Company hold back from the shares to be issued upon the exercise of the Stock
Option or the lapse of stock restrictions, the number of shares of Company
Stock having a Fair Market Value equal to such withholding obligation.
8.02 Special Rule for Insiders. Any such request or election (to satisfy a
withholding obligation using shares) by an individual who is subject to the
provisions of Section 16 of the Securities Exchange Act of 1934 shall be made
in accordance with the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
A-5
<PAGE>
IX. GENERAL
9.01 Nontransferability. No Award granted under the Plan shall be
transferable or assignable (or made subject to any pledge, lien, obligation or
liability of a Participant) except by last will and testament or the laws of
descent and distribution. Upon a transfer or assignment pursuant to a
Participant's last will and testament or the laws of descent and distribution,
any Stock Option must be transferred in accordance therewith. During the
Participant's lifetime, Stock Options shall be exercisable only by the
Participant or by the Participant's guardian or legal representative.
9.02 General Restriction. Each Award shall be subject to the requirement
that if at any time the Board or the Committee shall determine, in its
discretion, that the listing, registration, or qualification of securities
upon any securities exchange or under any state or federal law, or the consent
or approval of any government regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such Stock Option or the
issue or purchase of securities thereunder, such Stock Option may not be
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free
of any conditions not accept able to the Board or the Committee. The Committee
shall have the right to rely on an opinion of its counsel as to whether any
such listing, registration, qualification, consent or approval shall have been
effected or obtained.
9.03 Effect of Termination of Employment, Disability or Death. Except as
otherwise provided by the Committee upon any Award, all rights under any Stock
Option granted to a Participant shall terminate and any Restricted Stock
granted to a Participant shall be forfeited on the date such Participant
ceases to be employed by the Company or its subsidiaries, except that (a) if
the Participant's employment is terminated by the death of the Participant,
any unexercised, unexpired Stock Options granted hereunder to the Participant
shall be 100% vested and fully exercisable, in whole or in part, at any time
within one year after the date of death, by the Participant's personal
representative or by the person to whom the Stock Options are transferred
under the Participant's last will and testament or the applicable laws of
descent and distribution; (b) if the Participant's employment is terminated as
a result of the disability of the Participant (a disability means that the
Participant is disabled as a result of sickness or injury, such that he or she
is unable to satisfactorily perform the material duties of his or her job, as
determined by the Board of Directors, on the basis of medical evidence
satisfactory to it), any unexercised, unexpired Stock Options granted
hereunder to the Participant shall become 100% vested and fully exercisable,
in whole or in part, at any time within one year after the date of disability;
and (c) if the Participant's employment is terminated for any reason other
than the death or disability of the Participant, any unexercised, unexpired
Stock Options granted hereunder and exercisable as of the date of such
termination of employment shall be exercisable in whole or in part at any time
within 90 days after such date of termination. If a Participant's employment
is terminated because of the Participant's voluntary separation from the
Company, or for cause (as determined by the Committee in its sole discretion),
all of the Participant's unexercised Stock Options shall expire and all of the
Participant's Restricted Stock shall be forfeited. Notwithstanding the
foregoing, no Stock Option shall be exercisable after the date of expiration
of its term.
9.04 Merger, Consolidation or Reorganization. In the event of (a) the merger
or consolidation of the Company with or into another corporation or
corporations in which the Company is not the surviving corporation, (b) the
adoption of any plan for the dissolution of the Company, or (c) the sale or
exchange of all or substantially all the assets of the Company for cash or for
shares of stock or other securities of another corporation, all then-
unexercised Stock Options shall become fully exercisable, and all restrictions
imposed on any then-Restricted Stock shall terminate (such that any Restricted
Stock shall become fully transferable) immediately prior to any such merger or
consolidation in which the Company is not the surviving corporation.
Notwithstanding the foregoing, in the case of then-unexercised Stock Options
held by any Participant, the Committee may elect to cancel any then-
unexercised Stock Option. If any Stock Option is canceled, the Company, or the
corporation assuming the obligations of the Company hereunder, shall pay the
Participant an amount of cash or stock, as determined by the Committee, equal
to the Fair Market Value per share of the Company Stock immediately preceding
such cancellation over the option price, multiplied by the number of shares
subject to such cancelled Stock Option.
A-6
<PAGE>
9.05 Expiration and Termination of the Plan. This Plan shall remain in
effect until all of the Awards made under the Plan have been exercised, the
restrictions thereon have lapsed or the Awards have expired, terminated, or
been canceled or forfeited. Notwithstanding the foregoing, no Awards shall be
granted under the Plan, after that date which is ten years after the Plan is
approved by the Board; or such earlier date as the Board determines in its
sole discretion.
9.06 Limitation on Awards. No individual Eligible Employee may be granted an
Award or Awards covering more than 300,000 shares of Company Stock in any
calendar year.
9.07 Amendments. The Board may from time to time amend, modify, suspend or
terminate the Plan; provided, however, that no such action shall (a) impair
without the Participant's consent any Award theretofore granted under the Plan
or deprive any Participant of any shares of Company Stock which he may have
acquired through or as a result of the Plan or (b) be made without shareholder
approval where such approval would be required as a condition of compliance
with Rule 16b-3.
9.08 Wisconsin Law. Except as otherwise required by applicable federal laws,
the Plan shall be governed by, and construed in accordance with, the laws of
the State of Wisconsin.
9.09 Unfunded Plan. The Plan, insofar as it provides for Awards, shall be
unfunded and the Company shall not be required to segregate any assets that
may at any time be represented by Awards under this Plan. Any liability of the
Company to any Person with respect to any Award under this Plan shall be based
solely upon any contractual obligations that may be created pursuant to this
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.
9.10 Rules of Construction. Headings are given to the articles and sections
of this Plan solely as a convenience to facilitate reference. The reference to
any statute, regulation, or other provision of law shall be construed to refer
to any amendment to or successor of such provision of law.
9.11 Gender and Number. Except when otherwise required by the context, words
in the masculine gender shall include the feminine, the singular shall include
the plural, and the plural the singular.
A-7
<PAGE>
CADE INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS - MAY 5, 1998
P R O X Y
COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
MOLLY F. CADE AND JOHN W. SANDFORD, and each of them, are hereby authorized as
Proxies, with full power of substitution, to represent and vote the Common Stock
of the undersigned at the Annual Meeting of Shareholders of Cade Industries,
Inc., a Wisconsin corporation, to be held on Tuesday, May 5, 1998, or any
adjournment thereof, with like effect as if the undersigned were personally
present and voting, upon the following matters:
<TABLE>
<S> <C> <C>
1. Election of Directors [_] FOR all nominees listed [_] WITHHOLD AUTHORITY
below (except as marked to to vote for all
the contrary below) nominees listed below
</TABLE>
MOLLY F. CADE, CONRAD G. GOODKIND, WILLIAM T. GROSS, RICHARD A. LUND,
JOSEPH R. O'GORMAN, TERRELL L. RUHLMAN, JOHN W. SANDFORD
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
2. To approve the Cade Industries, Inc. 1998 Omnibus Incentive Stock Plan:
<TABLE>
<S> <C> <C>
[_] FOR [_] AGAINST [_] ABSTAIN
</TABLE>
3. In their discretion, upon such other business as may properly come before
the Meeting or any adjournment thereof; all as set out in the Notice and Proxy
Statement relating to the Meeting, receipt of which is hereby acknowledged.
(Continued on reverse side)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
<PAGE>
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Continued from reverse side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER SPECIFIED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1. AND 2.
Dated: , 1998
-----------------
--------------------------------------
--------------------------------------
Signature(s) of Shareholder(s)
PLEASE SIGN PERSONALLY AS NAME APPEARS AT LEFT.
When signing as attorney, executor, administrator,
personal representative, trustee or guardian, give
full title as such. If signer is a corporation,
sign full corporate name by duly authorized
officer. If stock is held in the name of two or
more persons, all should sign.
PLEASE SIGN AND DATE THIS PROXY AND RETURN IN ENCLOSED PREPAID ENVELOPE - PLEASE
DO NOT FOLD
