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EXHIBIT 10.79
PAYMENT AND DEFERRAL AGREEMENT
This Payment and Deferral Agreement (the "Agreement") is made as of this
9th day of July, 1998 (the "Effective Date"), by and among Decora, Incorporated,
a Delaware corporation (the "Company"), Decora Industries, Inc. a Delaware
corporation ("Decora"), and each of the "Holders" identified and listed on
Schedule A attached hereto and made a part hereof, in furtherance of the
satisfaction of the obligations of Decora and the Company to the Holders
pursuant to Section 9 of the Exchange Agreement (as hereinafter defined). Except
to the extent otherwise specifically required to give effect to the express
terms of this Agreement, this Agreement does not amend, modify, or alter the
terms and conditions of the Exchange Agreement, which Exchange Agreement remains
in full force and effect in accordance with its terms.
WITNESSETH:
WHEREAS, the Company, Decora, and each of the Holders entered into that
certain Exchange Agreement dated as of March 31, 1996 (the "Exchange
Agreement"), pursuant to which the Holders exchanged warrants held by them to
purchase 250 shares of the common stock of the Company for, among other things,
One Million (1,000,000) shares of the common stock of Decora, which shares were
issued to the Holders on June 28, 1996 in the share amounts listed on Schedule
A. Shares of the common stock of Decora are hereinafter referred to in this
Agreement as "Decora Common Stock".
WHEREAS, as a result of a one-for-five reverse stock split of Decora
Common Stock, which reverse split became effective as of December 29, 1997, the
Holders are the holders of all the beneficial interests in Two Hundred Thousand
(200,000) shares of Decora Common Stock (the "Existing Shares") in the share
amounts listed on Schedule A.
WHEREAS, pursuant to Section 9.1 of the Exchange Agreement, the Company
and Decora covenanted and agreed on the Valuation Date (as defined in Exchange
Agreement) to deliver to the Holders such (i) additional shares of Decora Common
Stock, (ii) cash, or (iii) combination of additional shares of Decora Common
Stock and cash, as would provide the Holders with Decora Common Stock and/or
cash having a Current Market Value (as defined in the Exchange Agreement) as of
the Valuation Date of Three Million Dollars ($3,000,0000).
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WHEREAS, as of the Valuation Date, the Current Market Value (as defined
in the Exchange Agreement) of the Existing Shares (valued at $5.563 per share)
beneficially held by the Holders was One Million One Hundred Twelve Thousand Six
Hundred Dollars ($1,112,600), thereby resulting in a Current Market Value
shortfall on the Valuation Date of One Million Eight Hundred Eighty-Seven
Thousand Four Hundred Dollars ($1,887,400) (the "Shortfall Amount") or Three
Hundred Thirty-Nine Thousand Two Hundred Seventy-Seven (339,277) shares of
Decora Common Stock (the "Shortfall Stock").
WHEREAS, pursuant to the Exchange Agreement, the Holders were entitled
to payment of the Shortfall Amount or delivery to them of the Shortfall Stock as
of the Valuation Date.
WHEREAS, pursuant to and in accordance with Section 11.2 of the Exchange
Agreement, the Holders have the right to require Decora, at its sole cost and
expense, to effect a registration (a "Registration") under the Securities Act of
1933, as amended (the "Securities Act"), of any Shortfall Stock issued to the
Holders in satisfaction of Decora's obligations under Section 9 of the Exchange
Agreement, and in connection therewith to require Decora to effect a
Registration of the Existing Shares.
WHEREAS, the Holders have agreed to defer payment of the Shortfall
Amount and/or delivery of the Shortfall Stock required by the terms of the
Exchange Agreement, subject to the terms and conditions set forth herein.
WHEREAS, the parties now desire to set forth the terms and conditions of
their agreement with respect to payment of the Shortfall Amount and/or delivery
of the Shortfall Stock to the Holders.
NOW THEREFORE, in consideration of the agreements of the parties set
forth herein, and for other good and valuable consideration, the receipt of
which each of the parties hereby acknowledges, the parties hereto hereby agree
as follows:
AGREEMENT
1. The Shortfall Amount is hereby adjusted to Two Million Two Hundred
Twenty-Six Thousand Five Hundred Five Dollars ($2,226,505) (the "Adjusted
Shortfall Amount") to reflect the appreciation in the Market Value of the
Shortfall Stock from the Valuation Date to June 3, 1998, the date on which the
parties hereto reached agreement in principle as to the terms and conditions of
this Agreement.
2. On the Effective Date, Decora will deliver the sum of Two Hundred
Thousand Dollars ($200,000) (the "Initial Payment") to the Holders by wire
transfer of immediately available funds for the account of the Holders to:
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Chase Manhattan Bank, X.X.
Xxxxx NYC/CTR/
BNF=CIGNA Private Placements/AC=9009001802
ABA#000000000
The Initial Payment, minus interest on the Initial Payment at the rate of Eleven
and One-Half Percent (11.5%) per annum (the "Applicable Rate") calculated and
compounded at one-twelfth (1/12th) of the Applicable Rate for each month or
portion thereof for the period from the Valuation Date to the Effective Date,
shall be credited to the Adjusted Shortfall Amount as the "Initial Amount". For
the avoidance of doubt, the Initial Amount is set out on Schedule B attached
hereto and made a part hereof.
The balance of the Adjusted Shortfall Amount remaining after crediting payment
of the Initial Amount is hereinafter referred to as the "Shortfall Balance".
3. The sum of (i) the Shortfall Balance, plus (ii) interest accrued on
the Shortfall Balance at the Applicable Rate from the Effective Date until the
Payment Date (as defined in Section 4 below), shall equal the "Settlement
Amount". For purposes of this Section 3, the amount of interest included in the
Settlement Amount shall be calculated and compounded at one-twelfth (1/12th) of
the Applicable Rate for each month or portion thereof until payment of the
Settlement Amount. For the avoidance of doubt, the Settlement Amount for each
month from the Effective Date through June 30, 1999 is set out on Schedule B
attached hereto and made a part hereof.
4. Decora shall pay to the Holders the Settlement Amount on the earlier
of (x) June 30, 1999, or (y) six (6) Trading Days after any Public Offering of
Decora Common Stock (the "Payment Date").
The term "Public Offering" as used herein shall mean any sale of Decora
Common Stock in a transaction either registered under, or requiring registration
under, Section 5 of the Securities Act.
The term "Trading Day(s)" as used herein shall mean any trading day on
the market or exchange on which Decora Common Stock is then listed or admitted
to trading.
5. Any payment in accordance with Section 4 shall be made a follows:
A. By delivery to the Holders of the Settlement Amount in
immediately available funds in accordance with the
instructions for wiring such funds to Holders set forth
in Section 2 hereof;
B. By delivery to the Holders or their nominees of fully
registered and freely tradeable shares of Decora Common
Stock meeting the Registration requirements of Section
11.2 of the Exchange Agreement, valued, for purposes of
determining the number of shares of Decora Common Stock
required to equal the Settlement Amount, as the median
daily closing price of Decora Common Stock, as reported
on Bloomberg, for the five (5) Trading
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Days immediately preceding the delivery of Decora Common
Stock to the Holders pursuant to this Section 5.B.; or
C. By delivery to the Holders of a combination of cash and
shares of Decora Common Stock in accordance with
subsections A. and B. above totaling the Settlement
Amount, with each Holder participating pro-rata, to the
extent practicable, in any combination of cash and
Decora Common Stock delivered by Decora in satisfaction
of its payment obligations pursuant to Section 4.
6. Decora may, at its option, upon notice as provided below, prepay all,
but not less than all, of the Settlement Amount in accordance with this Section
6. Decora will give each Holder written notice of any prepayment under this
Section 6 not less than five (5) days and not more than thirty (30) days prior
to the date fixed for prepayment. Such notice shall specify the date of
prepayment (the "Prepayment Date") and the amount of the Settlement Amount
determined by reference to Schedule B. Payment of the Settlement Amount to the
Holders on the Prepayment Date may be made by Decora in any manner permitted
pursuant to Section 5 above.
7. The Holders shall have the right to require Decora, at its sole cost
and expense, to effect a registration of the Existing Shares in accordance with
the provisions of Section 11.2 of the Exchange Agreement at any time after
September 30, 1998; provided that, if on or prior to September 30, 1998, Decora
identifies (without solicitation) a purchaser or purchasers acceptable to
Holders and which Holders confirm would be willing to purchase all of Holders'
Existing Shares (with a closing no later than September 30, 1998) at a Market
Price on terms reasonably satisfactory to the Holders, and such sale fails to
close solely because of the unwillingness of the Holders or any of them to sell
their Existing Shares at such Market Price, then Decora's obligation to effect a
Registration of the Existing Shares pursuant to this Section 7 shall terminate.
Except to complete a sale to a purchaser or purchasers identified (without
solicitation) by Decora in accordance with this Section 7, the Holders agree not
to sell any of the Existing Shares prior to October 1, 1998 without first
obtaining the written consent of Decora.
For purposes of this Section 7, the term "Market Price" shall mean the
median daily closing price of Decora Common Stock, as reported on Bloomberg, for
such five (5) Trading Days prior to the proposed sale of the Existing Shares as
the parties shall mutually designate.
8. Miscellaneous Provisions.
8.1 Notices. All communications under this Agreement shall be
delivered (a) to the Holders at the address set forth in Schedule A hereto,
marked for attention as there indicated, or at such other address as any such
Holder shall be furnished to the Company and to Decora in writing, and (b) to
Decora or the Company at the following address, or at such other address as
Decora or the Company shall have furnished to the Holders in writing, and in
each case shall be deemed delivered upon receipt:
Decora, Incorporated
0 Xxxx Xxxxxx
0
0
Xxxx Xxxxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
Decora Industries, Inc.
0 Xxxx Xxxxxx
Xxxx Xxxxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
8.2 Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns, and shall inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and assigns permitted hereunder.
8.3 Amendment and Waiver. This Agreement may be amended or
supplemented, and the observance of any term hereof may be waived, only by the
written agreement of all the parties.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original but all of which shall
constitute one instrument. Each counterpart may consist of a number of copies
hereof, each signed by less than all, but together signed by all, of the parties
hereto.
8.5 Governing Law. This Agreement shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the law
of the State of New York, excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction other
than such State.
8.6 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
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IN WITNESS WHEREOF, each of the parties has executed and delivered this
Agreement as of the Effective Date.
DECORA, INCORPORATED,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Vice President
DECORA INDUSTRIES, INC.
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Executive Vice President
(Signatures continued on next page)
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CIGNA MEZZANINE PARTNERS II, L.P.
By CIGNA Investments, Inc., Agent
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Xxxxxx X. Xxxxxx, Xx.
Managing Director
CIGNA PROPERTY AND CASUALTY
INSURANCE COMPANY By CIGNA
Investments, Inc.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Xxxxxx X. Xxxxxx, Xx.
Managing Director
CENTURY INDEMNITY COMPANY
By CIGNA Investments, Inc.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
--------------------------------------
Xxxxxx X. Xxxxxx, Xx.
Managing Director
CONNECTICUT GENERAL LIFE
INSURANCE COMPANY By CIGNA
Investments, Inc.
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Xxxxxx X. Xxxxxx, Xx.
Managing Director
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SCHEDULE A
(See next 4 pages)
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MATTER NAME: DECORA Industries, Inc.
NAME OF HOLDER CONNECTICUT GENERAL LIFE INSURANCE COMPANY
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Name in which shares are CIG & Co.
registered
Share Amount 32,800
Address for Notices CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
FAX: 000-000-0000
Signature Format CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By CIGNA Investments, Inc.
By
--------------------------------------
Name:
Title:
Tax Identification Number 00-0000000
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MATTER NAME: DECORA Industries, Inc.
NAME OF HOLDER CIGNA PROPERTY AND CASUALTY INSURANCE COMPANY
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Name in which shares are CIG & Co.
registered
Share Amount 37,600
Address for Notices CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
FAX: 000-000-0000
Signature Format CIGNA PROPERTY AND CASUALTY INSURANCE COMPANY
By CIGNA Investments, Inc.
By
--------------------------------------
Name:
Title:
Tax Identification Number 00-0000000
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MATTER NAME: DECORA Industries, Inc.
NAME OF HOLDER CIGNA MEZZANINE PARTNERS II, L.P.
-------------- ---------------------------------
Name in which shares are CIG & Co.
registered
Share Amount 92,000
Address for Notices CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
FAX: 000-000-0000
Signature Format CIGNA MEZZANINE PARTNERS III, L.P.
By CIGNA Investments, Inc., Agent
By
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Name:
Title:
Tax Identification Number 00-0000000
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MATTER NAME: DECORA Industries, Inc.
NAME OF HOLDER CENTURY INDEMNITY COMPANY
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Name in which shares are CIG & Co.
registered
Share Amount 37,600
Address for Notices CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
000 Xxxxxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
FAX: 000-000-0000
Signature Format CENTURY INDEMNITY COMPANY
By CIGNA Investments, Inc.
By
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Name:
Title:
Tax Identification Number 00-0000000
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SCHEDULE B
(See next page)
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Assumes Effective Day July 15 or earlier
SETTLEMENT AMOUNT 2,226,505
INTEREST RATE 11.5%
INITIAL SETTLEMENT
PAYMENT DATE AMOUNT AMOUNT
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2,226,505
03-Jun-98 through 02-Jul-98 194,250 2,053,592
03-Jul-98 through 02-Aug-98 2,073,273
03-Aug-98 through 02-Sep-98 2,093,141
03-Sep-98 through 02-Oct-98 2,113,201
03-Oct-98 through 02-Nov-98 2,133,452
03-Nov-98 through 02-Dec-98 2,153,898
03-Dec-98 through 02-Jan-99 2,174,539
03-Jan-99 through 02-Feb-99 2,195,379
03-Feb-99 through 02-Mar-99 2,216,418
03-Mar-99 through 02-Apr-99 2,237,658
03-Apr-99 through 02-May-99 2,259,103
03-May-99 through 02-Jun-99 2,280,752
03-Jun-99 through 30-Jul-99 2,302,610
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