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During each of the years 1981 through 1990, Mr. Kadlec
advanced funds to SLI to enable it to meet its payroll and
current operating expenses. At the end of each year, the unpaid
balance of the advances was totaled and memorialized in an
interest-bearing promissory note. Between 1981 and 1985, Mr.
Kadlec advanced the following amounts to SLI:
Amount Date of Note Maturity Date Interest Rate
$56,090.32 12/31/81 12/31/84 15% per annum
17,664.76 12/31/82 12/31/85 15% per annum
74,512.89 12/31/83 12/31/85 13% per annum
5,111.07 12/31/84 12/31/86 13% per annum
29,071.99 12/31/85 12/31/87 12% per annum
The average bank prime rates for the periods at issue were as
follows:
Year Interest Rate
1981 18.87% per annum
1982 14.86% per annum
1983 10.79% per annum
1984 12.04% per annum
1985 9.93% per annum
Mr. Kadlec's 1981 and 1982 advances were subordinated to the
then-outstanding Hudson National 3-year loan executed on November
20, 1980. On April 20, 1982, at a special meeting of SLI’s board
of directors, the board ratified Mr. Kadlec’s 1981 advance. The
corporate minutes state that funds needed by SLI to continue
operations while SLI developed new products had become impossible
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Last modified: May 25, 2011