<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------
FORM 10-K/A
AMENDMENT NO. 1
------------------
/X/ Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (no fee required)
For the fiscal year ended March 31, 1995.
Commission File Number: 0-016072
DECORA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 68-0003300
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1 MILL STREET
FORT EDWARD, NEW YORK 12828
(Address of principal executive offices) (Zip Code)
(518) 747-6255
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each exchange
Title of Each Class on which registered
- ------------------- ---------------------
<S> <C>
NONE NONE
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $ .01 PAR VALUE
<PAGE> 2
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (229.405 of this chapter) is not contained
herein, and will not be contained to the best of registrant's
knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Yes X No
----- -----
As of June 28, 1995, the Registrant had 30,717,737 shares of Common
Stock outstanding. The aggregate market value of the Common Stock held
by nonaffiliates as of June 28, 1995, was approximately $29,511,640
based on the average of the closing bid and asked prices on that date.
<PAGE> 3
ITEM 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. Financial statements. See Index to Consolidated Financial
Statements.
2. Financial Statement Schedules. See Index to Consolidated
Financial Statements.
3. Exhibits.
The following exhibits are filed or incorporated by reference as part of this
Report.
(3) Articles of Incorporation and By-Laws
3.1 Certificate of Incorporation filed on March 27, 1992.(8)
3.2 By-laws.(8)
(4) Instruments Defining the Rights of Security Holders
4.1 Certificate of Incorporation (see Exhibits 3.1-3.2).
4.2 Form of Specimen Certificate.
(10) Material Contracts
10.1 Utilitech, Incorporated, 1987 Stock Option Plan.(1)
10.2 Management Agreement dated as of April 18, 1990 by and between
Utilitech and Decora Manufacturing.(2)
10.3 Loan and Security Agreement dated as of April 18, 1990 by and
between Decora Manufacturing, Utilitech and Norstar Bank of
Upstate NY ("Norstar").(2)
10.4 Mortgage dated as of April 18, 1990 by and between Decora
Manufacturing and Norstar.(2)
10.5 Guaranty of Utilitech to Norstar dated as of April 18, 1990.(2)
10.6 Secured Revolving Line of Credit Agreement dated as of
April 18, 1990 by and between Decora Manufacturing and
Norstar.(2)
1
<PAGE> 4
10.7 Form of Warrant to Purchase Common Stock of Decora
Manufacturing expiring April 15, 1998 dated as of April 18,
1990 by and between Decora and CIGNA Mezzanine Partners II,
L.P., CIGNA Property and Casualty Insurance Company and Zande
and Co.(2)
10.8 Forms of 14% Senior Subordinated Notes due April 15, 1998 dated
as of April 18, 1990 in the amounts of $3,206,480.21,
$1,327,732.26, $1,138,055.27 and $1,327,732.26 to CIGNA
Mezzanine Partners II, L.P., CIGNA Property and Casualty
Property and Casualty Insurance Company and Zande and Co.(2)
10.9 Securities Purchase Agreement dated as of April 15, 1990 by and
between Utilitech, Decora Manufacturing and Purchasers of 14%
Senior Subordinated Notes due 1998 and Warrants to Purchase
Common Stock of Decora Manufacturing.(2)
10.10 Agreement and Plan of Merger by and between Decora Industries,
Inc. and Utilitech, Incorporated dated March 3, 1992.(3)
10.11 Option Agreement dated as of January 7, 1992, by and between
Utilitech, Incorporated and Nathan Hevrony.(4)
10.12 Option Agreement dated as of January 7, 1992, by and between
Utilitech, Incorporated and Roger Grafftey-Smith.(4)
10.13 Option Agreement dated as of January 7, 1992, by and between
Utilitech, Incorporated and Gabriel Thomas.(4)
10.14 Note and Warrant Purchase Agreement by and between Decora
Industries, Inc. and Robert W. Johnson IV, dated November 3,
1992.(5)
10.15 Convertible Negotiable Promissory Note by and between Decora
Industries, Inc. and Robert W. Johnson IV, dated November 3,
1992.(5)
10.16 Series A Warrant to Purchase Common Stock of Decora Industries,
Inc., dated November 3, 1992 issued to Robert W. Johnson IV.(5)
10.17 Series B Warrant to Purchase Common Stock of Decora Industries,
Inc., dated November 3, 1992 issued to Robert W. Johnson IV.(5)
10.18 Settlement and Release Agreement dated April 19, 1993 among
Decora Industries, Inc., Yorkville Industries, Inc. and certain
members of the Rabinowitz Family.(6)
2
<PAGE> 5
10.19 License Agreement dated August 9, 1991, by and between the
Company and John Smith.(7)
10.20 Loan and Security Agreement, in the amount of $1,000,000, dated
September 28, 1992, by and between ComTel Industries, Inc.
ComTel Metals, Inc., Decora Manufacturing and Fleet Bank of New
York.(7)
10.21 Term Note, in the amount of $1,000,000, executed by ComTel
Industries, Inc. and ComTel Metals, Inc. in connection with the
Loan and Security Agreement.(7)
10.22 Secured Revolving Working Capital Line of Credit Agreement, in
the amount of $2,500,000 dated September 28, 1992, by and
between ComTel Industries, Inc. and Fleet Bank of New York.(7)
10.23 Secured Working Capital Promissory Note, in the amount of
$1,500,000 executed by ComTel Industries, Inc. in connection
with the Working Capital Line of Credit Agreement dated as of
September 28, 1992.(7)
10.24 Option Agreement dated as of May 5, 1993, by and between Arnold
Zimmerman and the Company.(7)
10.25 Form of Option Agreement dated as of January 11, 1993, by and
between Richard A. DeCoste and the Company.(7)
10.26 Form of Option Agreement dated as of July 15, 1992, by and
between Richard G. Winslow and the Company.(7)
10.27 Asset Purchase Agreement date May 14, 1993 by and among ComTel
Industries, Inc., the Company and Sun Financial Group, Inc.(7)
10.28 Employment Agreement, dated as of July 1, 1993, by and between
the Company and Timothy J. Burditt.(7)
10.29 1988 Employee Stock Purchase Plan.(7)
10.30 Amendment Agreement dated as of July 3, 1993 by and between the
Company and InterEast Capital. (8)
10.31 Second Amendment to Secured Revolving Line of Credit Agreement
dated as of July 29, 1993 by and between Decora and Fleet Bank
of New York (successor to Norstar).(8)
3
<PAGE> 6
10.32 Revision to Secured Promissory Note (originally dated July 5,
1990, in the principal amount of $850,000), effective September
28, 1992, by and between ComTel Metals, Inc. and Siemens
Stromberg-Carlson.(8)
10.33 Subordination Agreement, dated September 28, 1992, by and among
ComTel, ComTel Metals, Inc., Siemens Stromberg- Carlson and
Fleet Bank of New York.(8)
10.34 Labor Agreement, effective June 9, 1992, by and between Decora
Manufacturing and Local #13 United Paperworkers International
Union.(8)
10.35 Asset Purchase Agreement by and between Fujitsu Business
Communications, Inc. and ComTel Industries, Inc. dated as of
December 10, 1993.(8)
10.36 Manufacturing Agreement dated as of February 18, 1994, by and
Between Decora Industries, Inc., Decora Incorporated and
Rubbermaid Incorporated.(8)
10.37 Promissory Note in the amount of $8,500,000 by and between
Decora Incorporated and Fleet Bank of New York dated July 20,
1994.(8)
10.38 Amendment No. 1 to Loan and Security Agreement between Decora
Incorporated and Fleet Bank of New York dated July 20, 1994.(8)
10.39 Promissory Note in the amount of $1,000,000 by and between
Decora Incorporated and Fleet Bank of New York dated July 20,
1994.(8)
10.40 Loan and Security Agreement in the amount of $1,000,000 by and
between Decora Incorporated and Fleet Bank of New York dated
July 20, 1994.(8)
10.41 Revolving Line of Credit Note in the amount of $6,000,000 by
and between Decora Incorporated and Fleet Bank of New York
dated July 20, 1994.(8)
10.42 Third Amendment to Secured Revolving Line of Credit Agreement
by and between Decora Incorporated and Fleet Bank of New York
dated July 20, 1994.(8)
10.43 Asset Purchase Agreement by and among ComTel Metals, Inc.,
ComTel Industries, Inc. and Keptel, Inc. dated June 28,
1994.(8)
10.44 Amendment to License Agreement dated March 31, 1994 by and
among Decora Industries, Inc., Decora Incorporated and John R.
Smith.(8)
4
<PAGE> 7
10.45 Assignment of Ownership dated June 30, 1994 by and among Decora
Industries, Inc., Decora Incorporated and John R. Smith
relating to License Agreement.(8)
10.46 Form of InterEast Warrant dated May 4, 1994 to purchase common
stock of Decora.(8)
10.47 Warrant to Confidesa AG to Purchase 100,000 Shares of Common
Stock dated June 29, 1993.(8)
10.48 Form of Warrant to Confidesa AG to Purchase 50,000 shares of
Common Stock dated June 1994.(8)
10.49 Form of Convertible Promissory Note dated June 1994, in the
amount of $550,000 by and between Confidesa AG and Decora
Industries, Inc.(8)
10.50 Letter of Fleet Bank to Decora Industries dated July 29, 1994
regarding the extension of the line of credit of ComTel
Industries, Inc.(8)
10.51 Amendment to Securities Purchase Agreement dated as of July 19,
1994 by and between Decora, Incorporated and Cigna Mezzanine
Partners, Inc., Cigna Property and Casualty and Insurance
Company of North America.(8)
10.52 General Mutual Releases, Settlement Agreement and Covenants for
Peace from Further Litigation, Proceedings, Claims, Purported
Advocacy of Claims and Unwanted Publicity, by and between
Jacqueline B. Cotsen and Decora Industries, Inc., dated July
20, 1994.(8)
10.53 Assignment Agreement by and among Chase Manhattan Bank, N.A.,
Decora Industries, Inc., and Winslow Bank Limited, dated July
20, 1994.(8)
10.54 Restated Settlement and Release Agreement by and between
Stanley Rabinowitz, Milton Rabinowitz, the Estate of Solomon
Rabinowitz, the Estate of Clara Rabinowitz, Sherri Rabinowitz
Sussman, Suzanne Rabinowitz, Jeffrey Rabinowitz, Laurence
Rabinowitz and Barbie Rabinowitz Lieber, on the one hand, and
Decora Industries, Inc., and Yorkville Industries, Inc., on the
other hand, dated July 20, 1994.(8)
10.55 Agreement and Release by and between InterEast Capital Limited
and Decora Industries, Inc., dated July 20, 1994.(8)
10.56 Promissory Note in the amount of $6,000,000 dated as of July
20, 1994 by and between Decora Industries as borrower and
Decora Incorporated as lender.(8)
5
<PAGE> 8
10.57 Option Agreement dated as of July 15, 1994, by and between
Decora Industries, Inc. and Walter E. Buske.(8)
10.58 Form of Employment Agreement dated as of June 1, 1994 by and
between Decora Industries, Inc. and Nathan Hevrony.(8)
10.59 Form of Option Agreement dated as of July 5, 1994 by and
between Decora Industries, Inc. and Stephen Verchick.(8)
10.60 Form of Option Agreement dated as of July 5, 1994 by and
between Decora Industries, Inc. and Ronald Artzer.(8)
10.61 Form of Option Agreement dated as of August 15, 1994 by and
between Decora Industries, Inc. and Nathan Hevrony.(9)
10.62 Employment Agreement effective as of August 1, 1994 between the
Company and Walter Buske.(9)
10.63 Letter dated November 18, 1994 from Fleet Bank to Richard J.
Winslow, President, ComTel Industries, Inc. re extension of
revolving working capital line of credit in the amount of
$2,000,000 until December 31, 1994.(9)
10.64 Letter dated November 18, 1994 from Fleet Bank to Richard J.
Winslow, President, ComTel Industries, Inc. re extension of
revolving working capital line of credit in the amount of
$2,000,000 until January 31, 1995.(9)
10.65 Registration Rights Agreement dated as of April 19, 1993 by and
between Decora Industries, Inc. and members of the Rabinowitz
family.(10)
10.66 Modification, Extension and Restatement Agreements by and
between Fleet Bank and ComTel.(10)
10.67 Asset Purchase Agreement dated as of March 31, 1995 by and
between ComTel Systems Corporation and ComTel Industries, Inc.
10.68 Secured Promissory Note I dated as of March 31, 1995 in the
amount of $850,000 by and between ComTel Systems Corporation,
as Debtor, and ComTel Industries, Inc., as Lender.
10.69 Secured Promissory Note II dated as of March 31, 1995 in the
amount of $710,000 by and between ComTel Systems Corporation,
as Debtor, and ComTel Industries, Inc., as Lender.
6
<PAGE> 9
10.70 Amendment to Securities Purchase Agreement dated as of April 1,
1995, by and among Decora, Incorporated and Cigna Mezzanine
Partners II, L.P., Cigna Property and Casualty Insurance
Company and Insurance Company of North America.
10.71 Manufacturing Agreement dated April 12, 1995 by and among
Decora Industries, Inc., Decora, Incorporated and Rubbermaid
Incorporated (11)(12).
10.72 Agreement of Purchase and Sale of Assets dated June 13, 1995,
by and between DMX Integration, Inc. and ComTel Metals, Inc.
10.73 Secured Promissory Note dated June 13, 1995, in the amount of
$270,809.90 by and between DMX Integration, Inc., as Debtor and
ComTel Metals, Inc., as Lender.
10.74 Guaranty of Datamax Corporation dated June 13, 1995.
10.75 Employment Agreement dated June 28, 1995 by and between John
Tattersall and Decora Incorporated.
10.76 Option Agreement dated June 28, 1995 by and between John
Tattersall and Decora Industries, Inc.
10.77 Option Agreement dated July 6, 1995 by and between Gabriel
Thomas and Decora Industries, Inc.
(22) Subsidiaries of the Registrant(8)
(24) Consents of Experts and Counsel
24.1 Consent of Price Waterhouse LLP.
Notes
(1) Previously filed as Exhibits to the Company's Annual Report
on Form 10-K for the fiscal year ended March 31, 1988.
(2) Previously filed as Exhibits to the Company's Report on
Form 8-K dated April 18, 1990.
7
<PAGE> 10
(3) Previously filed as Exhibit to the Company's Report on Form
8-K dated April 6, 1992.
(4) Previously filed as Exhibits to the Company's Report on
Form 10-K for the fiscal year ended March 31, 1992.
(5) Previously filed as Exhibits to the Company's Report on
Form 8-K dated November 5, 1992.
(6) Previously filed as Exhibit to the Company's Report on Form
8-K dated April 19, 1993.
(7) Previously filed as Exhibit to the Company's Report on Form
10-K for the fiscal year ended March 31, 1993.
(8) Previously filed as Exhibit to the Company's Report on Form
10-K for the fiscal year ended March 31, 1994.
(9) Previously filed as Exhibit to the Company's Report on Form
10-Q for the fiscal quarter ended December 31, 1994.
(10) Previously filed as Exhibit to the Company's Report on Form
8-K dated March 2, 1995.
(11) Confidential treatment requested.
(12) Filed herewith.
(b) REPORTS ON FORM 8-K
A report was filed on March 2, 1995 voluntarily including certain
material contracts.
(c) FINANCIAL STATEMENT SCHEDULES
Not Applicable.
8
<PAGE> 11
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
DECORA INDUSTRIES, INC.
By: /s/ Nathan Hevrony
-----------------------
Nathan Hevrony
Chief Executive Officer
Dated: July 24, 1995
9
<PAGE> 1
EXHIBIT 10.71
ALL SECTIONS MARKED WITH TWO ASTERISKS ("**") REFLECT PORTIONS WHICH HAVE BEEN
REDACTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION BY
DECORA INDUSTRIES, INC. AS PART OF A REQUEST FOR CONFIDENTIAL TREATMENT
MANUFACTURING AGREEMENT
AGREEMENT made this 17th day of April, 1995 by and among DECORA
INDUSTRIES, INC., a Delaware corporation having its principal place of business
at 1 Mill Street, Fort Edward, New York 12828 and its wholly owned subsidiary,
DECORA, INCORPORATED, a Delaware corporation having its principal place of
business at 1 Mill Street, Fort Edward, New York 12828 (collectively "DECORA"),
on the one hand, and RUBBERMAID INCORPORATED, an Ohio corporation having its
principal place of business at 1147 Akron Road, Wooster, Ohio 44691,
("RUBBERMAID"), on the other hand.
WITNESSETH
WHEREAS, the parties, or their predecessors, entered into a
Manufacturing Agreement dated February 18, 1994 (the "Previous Agreement"); and
WHEREAS, the parties desire to enter into a new Manufacturing Agreement
(the "Agreement") which will supersede the Previous Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. Term
Except as otherwise provided for herein, the Agreement shall remain in
full force and effect from July 1, 1995 (the "Effective Date") through March 31,
1999. Thereafter the Agreement shall automatically be renewed for additional one
(1) year terms unless either party gives the other written notification of
termination not less than one (1) year prior to the expiration of the then
current term.
2. Production of RUBBERMAID Requirements
RUBBERMAID shall purchase one hundred percent (100%) of its requirement
of Product (as defined herein) from DECORA. "Product" shall be defined as all
pressure sensitive, self-adhesive decorative products presently manufactured by
DECORA for RUBBERMAID, other than "New Product" as defined in Section 23, below,
or future products substituted therefor.
3. Exclusivity
<PAGE> 2
DECORA agrees that neither it, nor any of its affiliates, shall
manufacture Product for, nor sell Product to, any party other than RUBBERMAID,
except as set forth below:
- DECORA may sell Product or in-process goods for the manufacture
of Product to licensees, in good standing, of the trademark
"Con-Tact"; provided that sales to such licensees do not
interfere with DECORA's commitment to supply Product to
RUBBERMAID; and
- DECORA may sell seconds, that is, Product which unintentionally
fails to meet RUBBERMAID's specifications, to third parties
acceptable to RUBBERMAID, whose acceptance of such third
parties shall not be unreasonably withheld; provided that
DECORA remits to RUBBERMAID an amount equivalent to any royalty
which RUBBERMAID is obligated to pay on the sale of such
seconds. It is the joint intent of the parties to diminish and
eventually eliminate the sale of seconds.
- DECORA may solicit orders for and ship obsolete patterns, this
is, Product identified by RUBBERMAID from time to time that
RUBBERMAID has ceased selling to its customers, subject to
order approval and acceptance by RUBBERMAID in each such
instance;
- DECORA may solicit orders for and ship slow moving Product,
this is, Product or in-process inventory in quantities in
excess of minimum run requirements established by DECORA and
agreed to by RUBBERMAID held by DECORA for more than ninety
(90) days, subject to order approval and acceptance by
RUBBERMAID in each such instance;
In addition to the foregoing, DECORA may act as a non-exclusive
independent sales agent for RUBBERMAID, outside of the U.S. and Canada, subject
to RUBBERMAID's prior approval of all sales activities and the following
conditions:
- The right to act as sales agent shall expire on March 31, 1999;
- All orders taken (as it regards customers, markets and Product)
shall be subject to RUBBERMAID's approval and acceptance;
- DECORA shall neither take title to Product ordered; nor bill
direct; nor ship direct, without the prior written consent of
RUBBERMAID;
- The minimum prices quoted shall be those established and
adjusted from time to time by RUBBERMAID after consultation
with a team comprised of one representative of DECORA and the
RUBBERMAID decorative coverings business team (the "Business
Team"),
- 2 -
<PAGE> 3
DECORA shall receive a commission of ______**_____ (__*__%) of the net
sales of all Product for which it acted as sales agent (except Product sold in
Saudi Arabia, where no commission shall be paid).
RUBBERMAID shall, subject to the other terms and conditions of this
Agreement, use its best efforts to:
- Support the international business generated by DECORA
hereunder; and
- Ship Product, constituting standard finished goods, to DECORA's
customer within three (3) weeks of order approval by
RUBBERMAID.
4. Performance Specifications
Product manufactured, packaged and sold pursuant to this Agreement
shall meet the product performance, packaging and manufacturing specifications
outlined in Exhibit A, which will include but not be limited to the Exhibit A
currently attached hereto and which will be prepared by Rubbermaid within two
(2) weeks of the date of execution of this Agreement.
5. Confidentiality
Simultaneous with the execution of this Agreement, the parties agree to
execute and be bound by the terms of the Confidentiality Agreement set forth in
Exhibit B.
6. Waiver of Claims
Each party waives any and all claims which it may have had against the
other, and its predecessors, related solely to price increases for any Product
purchased through the execution date of this Agreement, not including raw
material and other cost reimbursements owed to DECORA or RUBBERMAID pursuant to
the terms of the Previous Agreement.
7. Buttstock Pricing Mechanism
Buttstock pricing during the term of this Agreement shall be in
accordance with the following schedule and adjustments:
Minimum Order
----------------------------------------------------
Product Price Per Narrow Yard Quantity in Wide Yards
------- --------------------- ----------------------
**
- 3 -
<PAGE> 4
**
- RUBBERMAID will pay DECORA $0.125 per wide yard for each wide
yard for each SKU of Product not purchased by RUBBERMAID up to a
** wide yard
threshold, plus an amount equal to the unfavorable cost
variances, against the base line material costs set forth on the
attached Exhibit C, experienced by DECORA on Product sold to
RUBBERMAID for each of the twelve-month periods concluding March
31, 1996, 1997, 1998 and 1999; and
- DECORA will pay RUBBERMAID $0.0475 per wide yard for each wide
yard for each SKU of Product purchased by RUBBERMAID above
** wide yards for each of
the twelve-month periods concluding March 31, 1996, 1997 and
1998 and above fifty-five million (55,000,000) wide yards for
the twelve-month period concluding March 31, 1999, plus an
amount equal to seventy-five percent (75%) of the favorable cost
variances, against the base line material costs set forth on the
attached Exhibit C, experienced by DECORA on Product sold to
RUBBERMAID during such period.
DECORA shall use its best efforts to purchase in economical order
quantities.
RUBBERMAID shall pay for unfavorable raw material cost variances,
regardless of volume threshold achieved, on a quarterly basis within fifteen
(15) days of receipt of the last of the three (3) purchase price variance
reports for said quarter, and shall negotiate with DECORA in good faith
regarding price adjustments for Product resulting from additional costs incurred
by DECORA because of additional state or federal statutory or regulatory
requirements.
8. Packing Materials Purchase
DECORA shall purchase point of purchase packaging and corrugated
containers
- 4 -
<PAGE> 5
from vendors and at prices specified in Exhibit D, which shall be adjusted by
RUBBERMAID from time to time to reflect actual prices from such vendors.
For each twelve-month period concluding March 31, 1996, 1997, 1998 and
1999 DECORA will pay RUBBERMAID an amount equal to the favorable cost variances
against the packaging costs set forth on Exhibit D, plus five percent (5%),
experienced by DECORA on product sold to RUBBERMAID during such period.
RUBBERMAID shall pay for unfavorable packaging cost variances on a quarterly
basis within fifteen (15) days of receipt of the last of the three (3) purchase
price variance reports for said quarter, plus five percent (5%).
In the event that DECORA locates a vendor offering said materials at
like quality at a lower price, DECORA may purchase said materials from said
vendor and retain the difference in price, providing that such materials meet
the packaging specification in Exhibit A and are acceptable to RUBBERMAID.
9. Engineering Standard
RUBBERMAID shall provide DECORA with an engineering standard, which is
attached hereto as Exhibit E, for each Stock Keeping Unit ("SKU") of Product
setting forth the number of hours of production time for each unit of each SKU
produced and the number of yards of buttstock necessary to produce each unit of
each SKU including the buttstock scrap factor for each unit of each SKU. The
parties hereto reserve the right to adjust Exhibit E on or before June 30, 1996
as provided for in Paragraph 10 below.
10. Product Pricing Mechanism
RUBBERMAID shall pay DECORA for each unit of each SKU of Product based
on the following formula:
**
- 5 -
<PAGE> 6
For the term commencing _____**_______ and concluding ___**____, the
department ______**_______as called for in the _____**_____ formula above shall
be $__**__ which was calculated on the basis of a _______**_______ of
_____**_____ divided by the _______ ** ________ per ___**___ of ____**____. On
or before ______**______ DECORA and RUBBERMAID shall negotiate in good faith to
____________________** ____________ as well as the number of _______**_______,
and the number of _______**_______ (_______ ** _______ in the formula above
respectively). During such negotiations DECORA will make available to RUBBERMAID
_______ ** _______ to its ________ ** _______ during said time frame and
RUBBERMAID will make available to DECORA _______________ ** _____________. In
the event the parties are unable to reach a mutually acceptable agreement as to
said ___ ** ___ by _______ ** _______ then _____________ ** _________ shall be
determined in the manner set forth in the attached _______ ** _______ in which
event the ___ ** ___ set forth above shall remain in effect until the
commencement of the _________ ** ________, as that term is defined in ______ **
_______.
11. On time Performance Criteria
DECORA shall use its best efforts to meet the following criteria for on
time performance, which shall be defined to mean the percentage of units of
Product shipped complete by SKU to RUBBERMAID within twenty-four (24) hours of
receipt of the purchase orders referenced in Section 21 below:
- 80% with respect to purchase orders received from April 1, 1996
through September 30, 1996
- 85% with respect to purchase orders received from October 1,
1996 through March 31, 1997
- 90% with respect to purchase orders received on or after April
1, 1997
DECORA and RUBBERMAID shall work together to develop a reporting system
to provide RUBBERMAID with a monthly report regarding on time performance which
shall include the SKU's, their quantities and the date specified in RUBBERMAID's
purchase orders and the SKU's, their quantities and the date actually shipped by
DECORA.
RUBBERMAID will make efforts to provide DECORA with operational support
including maximizing order lead times and truck shipment scheduling in order to
assist DECORA in meeting the above objectives.
The parties hereto agree to work jointly towards the achievement of the
on time performance criteria.
12. Productivity Improvement Criteria
- 6 -
<PAGE> 7
DECORA shall use its best efforts to meet the following criteria for
productivity improvement by implementing a:
- __**__% reduction in buttstock cost component exclusive of
baseline material cost identified in Exhibit C of the formula
contained in Section 10 above no later than March 31, 1996,
March 31, 1997, March 31, 1998 and March 31, 1999, with the
baseline for each year being March 31st of the previous year
- __**__% reduction in the non-buttstock cost components exclusive
of packaging material cost identified in Exhibit D of the
formula contained in Section 10 above versus a baseline of March
31, 1996 no later than March 31, 1997
- __**__% reduction in the non-buttstock cost components exclusive
of packaging material cost identified in Exhibit D of the
formula contained in Section 10 above versus a baseline of March
31, 1997 no later than March 31, 1999
The Business Team will meet monthly to prepare a report for RUBBERMAID
which tracks productivity improvement savings. All such savings will be
re-invested into the growth of RUBBERMAID's decorative coverings business by
DECORA by the means selected by RUBBERMAID after consultation with DECORA.
The parties hereto agree to work jointly towards the achievement of
this productivity improvement criteria.
13. Additional Operations
In the event that DECORA meets the ____________ ** __________ specified
in ________ ** ________ above and the ____________ ** ______________ specified
in Section __**__ above, the parties hereto will negotiate in good faith
____________ ** ___________ and _________ ** _________ RUBBERMAID's ___________
** ___________ and/or the ___ ** ___ of a RUBBERMAID __________ ** _________
RUBBERMAID's _________ ** __________ to DECORA's _____ ** _____ in ___________
** _________.
14. Financial Information and Investments
DECORA shall maintain its books and records in accordance with
generally accepted accounting principles ("GAAP"), except as otherwise
specifically provided for in the Agreement. No later than June 30th of
each year, DECORA shall have its independent auditors provide
RUBBERMAID with audited financial statements of Decora Industries, Inc.
as of the end of March 31 st of each year and a statement of the
purchase price variance and volume variance referred to in Section 7
above for that year.
15. Competitive Pricing
- 7 -
<PAGE> 8
RUBBERMAID has the right to negotiate new material costs for material
of equivalent or better yields and equal quality, based on measurement against
quality assurance specifications and actual production testing, both to be
provided by DECORA. DECORA must either purchase negotiated materials or provide
materials of like quality at the negotiated price, if lower. Monthly memo
advices will be provided by DECORA to RUBBERMAID to show the trend of actual
versus estimated material costs.
- 8 -
<PAGE> 9
16. Alternative Source
Anything in this Agreement to the contrary notwithstanding, if, as
a_____ ** _____ of __________ ** ________ by the _________ ** _________ DECORA
to RUBBERMAID, the __________ ** ________ by RUBBERMAID ____ ** ____ by _______
** _______ or __**__ when ____**____ to the ______ ** ______and the __**__ is
not ________ ** ______ RUBBERMAID, DECORA will be ___________ ** _________ to
___________ ** _______ by ________ ** _______ which it _______ ** _______ for
Product. If, after the parties' joint efforts, ________ ** _________ RUBBERMAID
may, ___________ ** _________ an _________ ** _______ at ________ ** ______
provided that such ______ ** _______ are ______ ** _____ DECORA's.
In the event that RUBBERMAID ___________ ** ________ any such _____ **
_____ DECORA shall be ___ ** ___, not __________ ** _________ to the _______ **
_______ notwithstanding Section __ ** __, above; provided that DECORA ___ ** ___
to RUBBERMAID an __________ ** __________ to any ____ ** ____ which ________ **
______ is _____ ** _____ to ___ ** ___ on the ___ ** ___ of such ___ ** ___.
RUBBERMAID shall ______ ** _________ DECORA, at the _____ ** _____ for in
Section ___ ** ___ above, _______ ** ______ of ____ ** ____ the _______ **
_______ in an ______**______ not to _______ ** __________ the ______ ** ________
by RUBBERMAID.
17. Print Rollers
Any new or replacement print rollers required by DECORA to manufacture
Product for RUBBERMAID shall be purchased by DECORA, after prior approval from
RUBBERMAID, and shall thereafter be immediately resold to RUBBERMAID at DECORA's
cost.
RUBBERMAID shall lease to DECORA, rent free, any print rollers thus
purchased until the expiration or termination of this Agreement, at which time
they shall be returned to RUBBERMAID in the same condition as originally [eased,
normal wear and tear excepted.
DECORA agrees that duplicate rollers will be made for those patterns
having sufficient volume to economically justify backup and that such duplicate
rollers will be stored at all times in a building different from that in which
the principal rollers are utilized and stored.
Upon termination or expiration of this Agreement, except a termination
resulting from RUBBERMAID's exercise of a right of first refusal pursuant to
Section 24, below, DECORA shall sell to RUBBERMAID, at a price of ______ **
______ per print roller, any remaining print rollers owned by DECORA and
required for the manufacture of Product for RUBBERMAID.
RUBBERMAID may, from time to time, request the re-engraving of print
rollers. The first __________ ** ___________ (____ ** ____) of such
re-engraving prior to March 31, 1996
- 9 -
<PAGE> 10
and each March 31st thereafter shall be borne by DECORA. Costs of re-engraving
in excess of such amounts shall be borne by RUBBERMAID.
18. Pallets
DECORA shall invoice RUBBERMAID for all pallets and other shipping
materials, not included in Exhibit E and required by Rubbermaid used to ship
Product at the actual cost thereof. Payment terms for said invoices shall be in
accordance with the provisions of Section 20 below. In the event that RUBBERMAID
locates a vendor offering pallets and other shipping materials at like quality
at a lower price, DECORA shall purchase pallets and other shipping material from
said vendor.
19. Equipment Lease
Under the terms of a lease agreement in the form attached as Exhibit G,
RUBBERMAID's affiliate, Rubbermaid-Cortland Inc. is leasing certain equipment to
DECORA.
20. Invoicing and Payment
DECORA shall invoice RUBBERMAID for Product (F.O.B. Manufacturing
Plant), on net ten (10) day terms.
21. Orders and Projections
RUBBERMAID shall provide DECORA with thirty (30), sixty (60) and ninety
(90) day estimated order forecasts, weekly Rupics reports and with daily written
purchase orders for Product. Minimum order requirements for said purchase orders
shall be one (1) full pallet per SKU and one (1) full truckload per order.
DECORA shall ship Product within twenty-four (24) hours of receipt of such
purchase orders.
22. Non-Competition
In addition to Product, DECORA presently manufactures, and provides
services with respect to, the following pressure sensitive, adhesive products
for the industrial and commercial markets only:
- Decorative surface protection products, only for customers who
do not market such products so as to be competitive with Product
at retail:
- Custom coated substrates and coating services;
- Custom printed substrates and printing services;
- 10 -
<PAGE> 11
- Custom laminated substrates and laminating services; and
- Tapes, roll label stock and custom printed labels.
RUBBERMAID shall not, directly or indirectly, manufacture products
competitive with products immediately above, or those pressure sensitive,
self-adhesive products presently manufactured by DECORA for RUBBERMAID, or
future products substituted therefor, except as otherwise provided for herein;
provided, however, that if RUBBERMAID is interested in selling industrial and/or
consumer tapes, it shall obtain DECORA's prior written consent and shall offer
DECORA the right of first refusal to manufacture such tapes for RUBBERMAID at
the same price, quality and service otherwise available to RUBBERMAID.
RUBBERMAID presently manufactures a pressure sensitive, adhesive shelf
liner product. Neither DECORA nor any of its affiliates shall, directly or
indirectly, manufacture products competitive with this product, except as
otherwise provided for herein.
23. New Product
DECORA is ______________ ** ____________ or __________ ** ___________
which it shall ________ ** _______ to RUBBERMAID on the ____ ** ____ set forth
below. _____ ** _______ shall be _____ ** _____ as ___________ **
____________(or _____ ** _________therefor), _________ ** __________ in Section
__**__ above, which are ________ ** _________ or _____ ** _____ in terms of
_________ ** ________ or ___ ** ___ to ____ ** ____ them from _____ ** ____.
With respect to each ______ ** ______, DECORA shall ____ ** ____ to
RUBBERMAID a notice in writing which shall contain:
- ___________ ** ________ of such ____ ** ____, in _____ **
_____;
- A ________ ** _________ of the ____**____ to _____**_____ such
____**____;
- The ___**___ on which ______**______ and ______**______ can
___**___; and
- The ____**___ of _____**_____ of such ____**____ which DECORA
can _____**_____ and ___**___ on a ________**______.
Within ______**_____ of ____**___ by RUBBERMAID of such notice,
RUBBERMAID shall ____**____ DECORA,________ ** _________ it ____**____ to
___**___ a _______ ** _________for the ___**___ of such ___**____ from DECORA.
- 11 -
<PAGE> 12
If RUBBERMAID ___**___ DECORA that it ______ ** ______ to ____**____
such an _____ ** _____ DECORA shall be ___**___ to ____**____ with _____ **
_____such ___**___.
If RUBBERMAID ____**____ DECORA that it ________ ** _____ to ____**____
such an ____**____, the parties shall _______ ** ______ within ______ **
________ of the _____ ** ______ by DECORA. During such _______ ** _______ DECORA
shall ___**___ from _____ ** _____ with _____ ** ______ such ___**___.
If the parties are unable to _______ ** _______ during such ________ **
________ DECORA shall be _____ ** ______ with _______ ** ______ such ___**___.
Any _____ ** ______ between DECORA and RUBBERMAID for ____ **
____shall, by its ___**___ be ___**___ and ____**____. Any ______ ** ______
between DECORA and ____ ** ____ for _____ ** ______ shall, _______ ** _____ or
_____ ** ______ the _____ ** _____ of _____ ** ______ to the _____**_____ that
it ___**___ with ______ ** ____ to______ ** ______ or _____ ** ____ for
______**______.
24. Right of First Refusal
In the event DECORA shall receive an offer for, and decide to sell, its
plant, equipment and tooling (collectively referred to as the "DECORA Assets")
during the term of this Agreement, RUBBERMAID shall have a right of first
refusal to purchase the DECORA Assets. DECORA shall give notice to RUBBERMAID of
the amount if any offer by a third party to purchase the DECORA Assets following
which RUBBERMAID shall have sixty (60) days to match said offer, in which event
the DECORA Assets will be sold to RUBBERMAID. Should RUBBERMAID, however, fail
to match said offer within the period set forth herein, DECORA shall have the
right to sell the DECORA Assets to the third party. In the event RUBBERMAID does
not purchase the DECORA Assets and they are sold to a third party, DECORA shall
guarantee that it will remain a continuous source of supply for RUBBERMAID,
either through the DECORA Assets or otherwise, for a period of six (6) months
after the date of the notice to RUBBERMAID by DECORA, referenced above, or until
the end of the present contract term, whichever occurs first.
In the event Decora Industries, Inc. shall receive an offer for, and
decide to sell any of the shares of capital stock of Decora, Incorporated
("Share Capital") during the term of the Agreement, RUBBERMAID shall have a
right of first refusal to purchase Share Capital. Decora Industries, Inc. shall
give notice to RUBBERMAID of the amount of any offer by a third party to
purchase Share Capital, following which RUBBERMAID shall have sixty (60) days to
match said offer, in which event Share Capital shall be sold to RUBBERMAID.
Should RUBBERMAID, however, fail to match said offer within the period set forth
herein, Decora Industries, Inc., shall have the right to sell Share Capital to
the third party. In the event RUBBERMAID does not purchase Share Capital and it
is sold to a third party, Decora Industries, Inc. shall guarantee that Decora,
Incorporated will remain a continuous source of supply for RUBBERMAID for a
period of six (6) months after the date of the notice to RUBBERMAID by
- 12 -
<PAGE> 13
Decora Industries, Inc. referenced above, or until the end of the present
contract term, whichever occurs first. Notwithstanding the foregoing, the
Fourteen Percent (14%) Senior Subordinated Noteholders (the "Noteholders") shall
receive redeemable warrants to purchase up to twenty percent (20%) of the Share
Capital in Decora, Incorporated which sale shall not be subject to RUBBERMAID's
right of first refusal.
25. Force Majure
None of the parties shall be liable for its failure to perform
hereunder if performance is made impossible due to any occurrence beyond its
reasonable control, including: acts of God, acts of war, condemnation,
appropriation, governmental regulations or orders, floods, the elements, fire,
explosions and other casualties, riots, public commotion, strikes, lockouts,
labor difficulties, inability to obtain labor and/or materials, accidents,
transportation delays, embargo or similar occurrences ("Force Majeure"), In the
event that either RUBBERMAID or DECORA claims excused performance under this
paragraph, the other parties relieved of any obligation to supplement or adjust
the earnings of the claiming party to compensate for expenses attributable to
the Force Majeure. For any period during which DECORA fails to perform under
this section, RUBBERMAID shall be permitted to manufacture its Product
requirements at a manufacturing facility of its choice.
In the event DECORA is unable to deliver Product to RUBBERMAID for a
period in excess of thirty (30) consecutive days due to any Force Majeure,
DECORA shall supply to RUBBERMAID, for the duration of the Force Majeure, all
existing print rollers needed to,manufacture Product. Upon DECORA's resumption
of production, RUBBERMAID shall immediately return said print rollers to DECORA.
DECORA and RUBBERMAID shall, during the first Contract Year, jointly
develop a contingency plan to provide RUBBERMAID, within six (6) months of any
Force Majeure, an alternate source of supply to meet RUBBERMAID's Product
requirements. This contingency plan shall be reviewed annually, thereafter, at
the request of either party.
26. Work Stoppage
DECORA shall advise RUBBERMAID of impending or actual work stoppages or
labor negotiations affecting any plant at which it manufactures Product.
27. Termination Transition
In the event that either party provides the other with notice of
termination as provided for above, then:
- DECORA shall provide RUBBERMAID, within thirty (30) days of
notice date, with a report on the nature and extent of
inventory as of notice date;
- 13 -
<PAGE> 14
RUBBERMAID shall provide DECORA, within sixty (60) days of
notice date, with a listing of what Product it will buy from
such inventory; and DECORA shall, thereafter, be free to sell
to third parties Product in such inventory not purchased by
RUBBERMAID; and
- From notice date to termination date, DECORA shall produce for
RUBBERMAID no more than five percent (5%) in excess of Product
ordered by RUBBERMAID and RUBBERMAID shall purchase all such
Product, provided it meets the product performance and
manufacturing specifications outlined in Exhibit &
- RUBBERMAID shall have the right, notwithstanding Section 2,
above, to purchase Product from third parties for a period of
eight (8) months prior to termination date; and
- DECORA shall have the right, notwithstanding Section 3, above,
to sell product competitive with Product to third parties for a
period of eight (8) months prior to termination date.
28. Further Assurances
Except for the warrants issued to the Noteholders described in Section
24, all of the issued Share Capital of Decora, Incorporated is currently held by
Decora Industries. Inc. Except for a pledge of the Share Capital to Fleet Bank
of New York ("Fleet'), Decora Industries, Inc. shall neither pledge nor
hypothecate any of the Share Capital nor consent to any corporate restructuring
of DECORA, whether by merger, consolidation or otherwise, without the prior
written consent of RUBBERMAID.
Except as described in Section 24, Decora, incorporated shall issue no
additional Share Capital to any party except Decora Industries, Inc. without the
prior, written consent of RUBBERMAID. Except for the warrant described in
Section 24 (and shares issued upon exercise of the warrant), all of the
certificates issued by DECORA representing Share Capital shall carry a legend
indicating the applicable restrictions set forth in this paragraph and Section
24 above.
29. Notices
All requests and demands (other than those in the normal course of the
manufacture and sale of Product) provided for by this Agreement shall be in
writing and sent by registered or certified mail, return receipt requested, and
shall be deemed to have been given at the time they are received by the party to
whom addressed at the following addresses:
- If to DECORA:
DECORA, INCORPORATED
- 14 -
<PAGE> 15
1 Mill Street
Fort Edward, New York 12828
Attention: Chairman and CEO
- If to RUBBERMAID:
RUBBERMAID INCORPORATED
1147 Akron Road
Wooster, Ohio 44691
Attention: Senior Vice President,
General Counsel and Secretary
30. Binding Effect: Assignment
This Agreement shall inure to the benefit of, and be binding upon,
RUBBERMAID and DECORA their respective successors and assigns; it may not,
however, be assigned by either party without the prior written consent of the
other party hereto, which consent shall not be unreasonably withheld.
31. Entire Agreement
This Agreement sets forth the entire understanding of the parties
hereto and shall not be modified, amended or terminated except by a writing
signed by a duly authorized officer of each party. As of the Effective Date of
this Agreement, it supersedes all prior agreements and understandings between
the parties, excepting therefrom a certain Consent Agreement between RUBBERMAID
and Decora Incorporated dated October 5, 1994 regarding the sale of product to
Friedola, and no restrictions, promises, warranties, covenants or undertakings
exist, other than those expressly set forth herein. No amendments or other
modifications to this Agreement shall be binding unless in writing and signed by
an authorized officer of each of the parties to this Agreement.
32. Governing Law
This Agreement is made in and shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed wholly in the State of Ohio.
33. Non-Waiver
The failure by any party to insist upon strict compliance with any of
the terms, covenants or conditions hereof shall not be deemed a waiver of any
such or other term, covenant or condition or a waiver of any future breach of
any term, covenant or condition hereof.
- 15 -
<PAGE> 16
34. Severability
The invalidity or unenforceability for any reason whatsoever of any
provision term, condition or obligation set forth herein in no way shall affect
the validity or enforceability of any other provision, term, condition or
obligation set forth in this Agreement.
35. Headings
The headings contained herein are solely for the purpose of reference
and shall not affect the interpretation of the terms of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day and year first above written.
RUBBERMAID INCORPORATED
By: _________________________
Name: _________________________
Title: _________________________
Date: _________________________
DECORA INDUSTRIES, INC.
By: _________________________
Name: _________________________
Title: _________________________
Date: _________________________
DECORA, INCORPORATED
By: _________________________
Name: _________________________
Title: _________________________
Date: _________________________
- 16 -
<PAGE> 17
EXHIBIT A
Product Specifications
[To include but not be limited to the attached and which will be prepared by
Rubbermaid within two (2) weeks of the date of execution of the Agreement]
<PAGE> 18
EXHIBIT B
Under the terms of a Manufacturing Agreement of even date, ("Manufacturing
Agreement') RUBBERMAID INCORPORATED ("RUBBERMAID") and DECORA INDUSTRIES, INC.
and its wholly-owned subsidiary, DECORA, INCORPORATED (collectively, "DECORA")
will each be disclosing to the other information which the disclosing party
considers confidential ("Confidential Information").
In consideration of the execution of, and fulfillment of the obligations under,
the Manufacturing Agreement, the parties further agree that during the pendency
of the Manufacturing Agreement each party will preserve the secrecy of, and
refrain from using for its own benefit and the benefit of third parties,
Confidential Information which may be made known to it by the other party, its
officers, employees, contractors or suppliers. Each party agrees further that
neither this agreement nor disclosure by the other party of Confidential
Information shall, in and of itself, constitute a right or license with respect
to such Confidential Information.
Anything herein to the contrary notwithstanding, neither party shall have duties
under this agreement with respect to information:
1. which, on the date of this agreement is generally known to the public;
2 which is subsequently published by someone having a right to do so, from the
date of such publication;
3. which is received from someone, not referred to in this agreement, who is not
under obligation to preserve its secrecy, from the date of such receipt; or
4. the release of which has been authorized in writing by an officer of the
disclosing party, from the date of such authorization.
This agreement was executed on the 17th day of April, 1995 at Wooster, Ohio
RUBBERMAID INCORPORATED DECORA, INDUSTRIES, INC.
By: ___________________ By: ____________________
Title:_________________ Title: _________________
DECORA, INCORPORATED
By: ___________________
Title: ________________
<PAGE> 19
EXHIBIT C
BASE LINE MATERIAL COSTS
Price as of
November 1993 01-Nov-93
------------- -----------
**
(CONFIDENTIAL TREATMENT REQUESTED BY DECORA INDUSTRIES, INC.)
<PAGE> 20
Packaging Items - ConTact Line
(EXHIBIT D)
ITEM NUMBER DESCRIPTION CURRENT SUPPLIER CURRENT PRICE QUANTITY
----------- ----------- ---------------- ----------------------
**
(CONFIDENTIAL TREATMENT REQUESTED BY DECORA INDUSTRIES, INC.)
Decorative Coverings
UPC STICKERS, HISTORICAL PURCHASE COSTS
MPI Quote Number Size Typical Order Quantity Price per thousand
- --------------------------------------------------------------------------------
(CONFIDENTIAL TREATMENT REQUESTED BY DECORA INDUSTRIES, INC.)
<PAGE> 21
EXHIBIT E
FORECASTED MACHINE HOURS TOTAL MACHINE
ITEM DESCRIPTION UNITS PER UNIT (MH) HOURS
- --------------------------------------------------------------------------------
**
(CONFIDENTIAL TREATMENT REQUESTED BY DECORA INDUSTRIES, INC.)
Buttstock Scrap Factor (as a Percent of Good Product)
**
(CONFIDENTIAL TREATMENT REQUESTED BY DECORA INDUSTRIES, INC.)
<PAGE> 22
EXHIBIT F
For purposes of this Exhibit F, the term Contract Year shall mean the three
(3) terms running from September 18, 1996 through March 31, 1997; April 1, 1997
through March 31, 1998; and April 1, 1998 through March 31,1999.
RUBBERMAID and DECORA shall, with respect to the Product manufacturing
business ("Business"), develop an operating plan ("Plan") for the Contract Year.
The Plan shall have
**
(CONFIDENTIAL TREATMENT REQUESTED BY DECORA INDUSTRIES, INC.)
as its objective earnings before taxes of ** on Net Sales (as defined
below) of Product and shall contain, in detail, all of the data and assumptions
necessary to support such objective.
The following is the procedure to be used in developing a mutually agreeable
Plan for such Contract Year:
- Eighty (80) days prior to the Contract Year, RUBBERMAID shall
provide DECORA with both a domestic and an international marketing
plan for the Contract Year.
- Fifty (50) days prior to the Contract Year, DECORA shall submit to
RUBBERMAID a draft Plan;
- Thirty (30) days prior to the Contract Year, RUBBERMAID shall
submit to DECORA its proposed changes, if any;
- Between the twenty-ninth day and the fifteenth day prior to the
Contract Year, the parties shall meet to address unresolved
issues, if any;
- If any issues remain unresolved fifteen (15) days prior to the
Contract Year, either party may terminate the Agreement by
providing written notice to the other five (5) days prior to the
Contract Year. The effective date of such termination shall be the
last day of the eighteenth month after the month in which said
Contract Year would have commenced. In the event of termination
under this Exhibit F prior to the commencement of the first
Contact Year, pricing during the period between notice and
termination shall be in accordance with Paragraph 10 of this
Agreement. In the event of termination prior to commencement of a
subsequent Contract Year the Plan for the immediately preceding
Contract Year shall remain in effect during the period between
notice and termination.
"Net Sales" shall mean gross sales of Product to RUBBERMAID as evidenced by
invoice, less credits, returns, allowances, discounts, rebates, shipping costs
specifically itemized as such, taxes based on sales and other non-merchandise
items stated on the invoice.
<PAGE> 23
DECORA shall, at the same time as it provides RUBBERMAID with the Plan,
review with RUBBERMAID the operating plan for the entire DECORA manufacturing
business. RUBBERMAID shall, upon DECORA's request but in no event more
frequently than quarterly, review with DECORA the marketing plan for Product.
Any cost improvement requiring a capital investment which is implemented by
DECORA during a given Contract Year shall not be included as a cost reduction in
the Plan for the next succeeding Contract Year. The cost to DECORA of leasing
new equipment for the manufacture of Product shall be included In computing the
selling price of Product under the Plan.
During each Contract Year, DECORA shall charge RUBBERMAID the price for each
category of Product set forth in the Plan for that Contract Year. DECORA shall
advise RUBBERMAID within ten (1 0) working days after the end of each Plan
accounting month of the actual material purchases for the month and the actual
purchase price variance.
DECORA shall adjust the selling price charged to RUBBERMAID for Product
during a given Contract Year at the conclusion of the second Plan accounting
month after the Plan accounting month in which either of the following events
occur:
- The cumulative, unbudgeted, material price variance incurred by
DECORA exceeds or falls short of the total Plan material cost by
more than five percent (5%), as measured from the [after of, the
commencement of the Contract Year; or, the commencement of the
Plan accounting month during which the selling price charged to
RUBBERMAID was last adjusted; or
- RUBBERMAID announces to its customers an increase in selling price
affecting one-third (1/3) or more of the items in its Product
line;
Provided, that such adjustments in the selling price to RUBBERMAID shall:
- Reflect only: the impact of the material costs being incurred by
DECORA at the time of implementation, in accordance with the
mutually agreed to formula in the Plan; and, if mutually agreed to
between the parties, material costs, not included in the Plan,
anticipated to arise over the succeeding three (3) month period;
- Be imposed prospectively only;
- Be made no more frequently than once every three (3) Plan
accounting months; and
- Be superseded by a mutually agreed to Plan for the succeeding
Contract Year.
For each Contract Year in which DECORA's earnings before taxes on Net Sales
equal eleven and sixty-six one-hundredths percent (1 1.66%), no adjustment shall
be made between the parties. For each Contract Year in which DECORA's earnings
before taxes on Net Sales exceed eleven and sixty-six one-hundredths percent (1
1.66%), DECORA shall pay RUBBERMAID one-half ( 1/2) of such excess. For each
Contract Year in which DECORNs earnings before taxes on Net Sales fall
<PAGE> 24
short of eleven and sixty-six one-hundredths percent (11.66%), RUBBERMAID shall
pay DECORA one-half (1/2) of such shortfall.
For purposes of computing earnings before taxes, debt service charges
shall be excluded. Other charges assessed against DECORA shall be identified
as "Capital Charge' and 'Other Corporate Charges":
- The Capital Charge for each Contract Year shall be equal to the
sum of "Net Working Capital" times one-twelfth (1/12) of the
"Borrowing Factor" for each month of that Contract Year, where:
Net Working Capital equals current net assets less current
liabilities excluding short-term, interest bearing debt), as of
the last day of the month; and,
Borrowing Factor is a rate equal to one percent (1%) over the
Citibank, N.A. base rate on corporate loans, as of the last day of
the month.
- Other Corporate Charges for each Contract Year shall not exceed
two and thirty-five hundredths percent (2.35%) of that Contract
Year's actual gross sales of Product and shall include the
following overhead costs:
Insurance, Pension and tax administration; treasury and financial
reporting services; payroll, A/P, AIR, G/L processing services, as
necessary; legal, personnel, engineering, purchasing,
environmental oversight and general management staff services; MIS
support.
Provided, however, that the parties may by mutual agreement, for any
Contract Year after the initial Contract Year, adjust the maximum rate
and categories of overhead costs set forth in this sub-paragraph.
DECORA shall maintain its books and records in accordance with generally
accepted accounting principles ("GAAP"), except as otherwise specifically
provided for in the Agreement. Within ninety (90) days after the end of each
Contract Year, DECORA shall have its independent auditors provide RUBBERMAID
with audited financial statements of DECORA as of the end of and for that
Contract Year and a Statement of Operations Adjustment Schedule for that
Contract Year. The Statement of Operations Adjustment Schedule shall reflect the
adjustments necessary to determine the results of operations of the Business in
accordance with the Agreement and shall compute the amount, if any, due from
DECORA to RUBBERMAID or due from RUBBERMAID to DECORA as set forth under this
Exhibit F.
With respect to capital investment projects relating to the Business,
DECORA:
- Must consult with RUBBERMAID before engaging in any such project
with a value in excess of $250,000 during the first six (6) months
of the Agreement, and $150,000 thereafter.
<PAGE> 25
- Shall use straight line depreciation; provided, however, that on
cost reduction projects, DECORA may use double declining balance
depreciation, with the prior approval of RUBBERMAID.
DECORA shall neither invest in additional capital assets nor incur
additional capital lease charges, the annual aggregate value of which exceeds
$1,000,000.00 without the prior written approval of RUBBERMAID, which approval
shall not be unreasonably withheld.
After assignment to RUBBERMAID of expenses attributable exclusively to
Business and assignment to DECORA of all other expenses attributable to the
DECORA manufacturing business, DECORA shall, with respect to each Contract Year,
allocate to RUBBERMAID that portion of manufacturing overhead and general and
administrative expenses (excluding research and development and selling
expenses) allocable under GAAP to RUBBERMAID, plus the lesser of:
- The smallest percentage, between zero (0) and fifty (50), of that
portion of manufacturing overhead and general and administrative
expenses (excluding research and development and selling expenses)
allocable under GAAP to DECORA, necessary to yield DECORA five and
eight tenths percent (5.8%) net earnings before taxes excluding
Business; or
- $550,000.00 for a twelve (12) month Contract Year, or a pro-rata
portion of this amount for any Contract Year which consists of
less than twelve (12) months; provided, however, that the parties
may, by mutual agreement, adjust this amount for any Contract
Year.
<PAGE> 26
EXHIBIT G
LEASE AGREEMENT
This Lease Agreement ("Agreement') is entered into by and among Rubbermaid
Cortland Inc., a Delaware corporation having its principal place of business at
106 Central Avenue, Cortland, New York 13045 ("Lessor") and Decora Industries,
Inc., a Delaware corporation having its principal place of business at 1 Mill
Street, Fort Edward, New York 12828 and its wholly owned subsidiary, Decora,
Incorporated, a New York corporation having its principal place of business at
1 Mill Street, Fort Edward, New York 12828 (collectively 'Lessee').
WHEREAS, Lessor desires to lease the equipment listed on the attached
Schedule(s) A (collectively "Equipment") to Lessee so that Lessee may
manufacture product for resale to Lessor's affiliate, Rubbermaid Incorporated
("Rubbermaid"); and
WHEREAS, Lessee has indicated a willingness to receive Equipment for such
purposes subject to the terms and conditions of this Agreement;
NOW THEREFORE, in consideration of the premises, Ten and no/oo ($10.00)
Dollars herewith paid and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Title; Liens. Equipment is, and shall at all times be and remain, the
sole and exclusive personal property of Lessor and Lessee shall have no
right, title or interest therein except as expressly set forth in the
Agreement. Lessee shall keep Equipment free and clear of all levies, liens
and encumbrances.
2. Location; Inspection; Labels. Equipment shall be delivered to Lessee in the
county in which its principal place of business is located and shall not,
without Lessor's prior written consent, be removed therefrom. Lessor shall
have the right to inspect Equipment at any reasonable time. Lessee shall
not remove any serial number, name or other indices of Lessor's ownership
which Lessor may, at it's option, affix to Equipment.
3. Installation. Set-up, installation and removal of Equipment listed on
Schedule(s) A shall be performed by Lessor at its expense.
4. Equipment as Personal Property. All Equipment is personal property and the
attachment of Equipment to real property shall not be construed as changing
that status. Equipment shall not be attached to real property which does
not belong to Lessee without the prior written consent of Lessor and the
prior written consent of the owner of such real property, stating that upon
termination of the Agreement, Equipment may be removed.
5. Warranty; Limitation of Liability. Lessor makes NO WARRANTY, express or
implied, as to any matter whatever, including condition of Equipment, its
<PAGE> 27
MERCHANTABILITY or its fitness for any particular purpose. In no event
shall Lessor be liable for special, indirect, incidental or consequential
damages.
6. Care; Use. Lessee shall, at its own expense, maintain Equipment in good
operating condition, repair and appearance and protect it from
deterioration, other than normal wear and tear. Lessee shall use Equipment
solely to manufacture product for Rubbermaid pursuant to purchase orders
which Rubbermaid shall, from time to time, issue to Lessee. Any other use
of Equipment by Lessee is expressly prohibited. Lessee shall not make
modifications, alterations or additions to Equipment without the written
consent of Lessor.
7. Insurance. Lessee shall provide, maintain and pay for (a) insurance against
the loss or theft of or damage to Equipment, for the full replacement value
thereof, with loss payable to Lessor, and (b) public liability and property
damage insurance naming Lessor as an additional insured. All insurance
shall be in a form and amount and with companies satisfactory to Lessor and
shall contain the insurer's agreement to give 30 days written notice to
Lessor before cancellation or material change of any policy of insurance.
Prior to the commencement of the lease term and at any time thereafter that
Lessor may request, Lessee shall deliver the policies or copies thereof or
certificates of insurance to Lessor.
8. Indemnification. Lessee shall indemnify and hold Lessor harmless from and
against any and all claims, losses, liabilities)an d expenses (including
attorney's fees) resulting from damage to property or death or injury to
persons (whether employees or agents of Lessee or third parties) in
whatever way arising, directly or indirectly from, or incidental to, the
use, operation or storage of Equipment; provided, however, that Lessee
shall not be liable for losses which are proven to be the direct result of
Lessors sole negligence.
9. Taxes. Lessor shall pay all charges and taxes (federal, state and local)
which may now or hereafter be imposed or levied upon the sale, purchase,
ownership, leasing, possession or use of Equipment. For Federal Income Tax
purposes, Lessor shall be treated as the owner of Equipment and shall
derive the entire benefit from any Federal Investment Tax Credit.
10. Financing Statement. Lessee shall, at the request of Lessor, execute a Form
UCC-1 or other financing statement and any necessary continuations thereof.
Lessee consents to the filing of such statement to give notice of the lease
of Equipment.
11. Assignment. Lessor shall have the right to assign the Agreement and
Equipment leased hereunder without prior notice to Lessee. Lessee shall not
assign, transfer, pledge or otherwise grant any interest in the Agreement
or Equipment leased hereunder without the prior written consent of Lessor.
Subject to the foregoing, the Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the parties hereto.
12. Expiration of Term; Return of Equipment. The Agreement shall continue in
full force and effect through March 3, 1999 or the termination of a certain
Manufacturing Agreement amongst Lessee and Rubbermaid of even date herewith
("Manufacturin g Agreement)", whichever occurs sooner. Lessee shall, within
five days of notice, return or make available to Lessor: during the
pendency of the Agreement, those items of Equipment requested by Lessor, in
writing, from time to time; at the conclusion of the Agreement, all
remaining items of
<PAGE> 28
Equipment. Lessee shall pack Equipment listed on Schedule(s) A and shall
ship it per Lessors instructions and at Lessor's expense.
13. Default. Any of the following shall constitute a default hereunder: (a)
Lessee's violation of, or failure to perform, any term or condition of the
Agreement where such violation or failure continues for a period of IO days
after written notice by Lessor; (b) commencement of proceedings under the
Federal Bankruptcy Act, or any similar federal or state statute, against
Lessee; appointment of a receiver or similar officer for Lessee or any of
its property; attachment or levy against Equipment, where any such action
is not vacated or fully stayed within 30 days of its commencement; (c)
Lessee's assignment for the benefit of creditors, initiation of proceedings
under any bankruptcy or similar law or admission in writing of its
inability to pay its debts as they become due; (d) Lessee's material
misrepresentat ion to Lessor by warranty, statement or report in writing
concerning the Agreement, (e) default under the Manufacturing Agreement.
14. Remedies. In the event of a default by Lessee, Lessor shall have the right,
without further notice, to take any actions permitted to it by law
including, but not limited to, the following: (a) to take possession of
Equipment, without demand or notice, wherever it may be located with the
resultant damages, if any, to be borne by Lessee; (b) to lease or sell any
or all of Equipment upon such terms as Lessor may from time to time elect;
(c) in its sole discretion, to terminate the Agreement. All remedies
available to Lessor are cumulative. Lessor's exercise, or failure to
exercise, any remedy shall not prevent any future exercise of the same or
different remedies nor
15. Confidentiality. Lessor considers all information disclosed to Lessee
regarding Equipment, the product to be made therefrom, product
specifications, production volume and the composition, cost and sourcing
of raw materials to be confidential. Lessee shall not use such confidential
information for its own benefit, nor disclose it to a third party, without
the prior written permission of Lessor.
16. General. Time is of the essence as to each provision hereof. The Agreement
shall be governed by the laws of the state of Ohio, constitutes the entire
agreement and understanding between the parties regarding Equipment and
shall not be amended except in writing signed by an authorized
representative of Lessor and Lessee, or in the case of Schedule(s) A, by
attachment of the shipping document referencing additional Equipment
leased. The invalidity of any provision hereof shall not affect the
validity of any other provision. Notice to either party shall be by U.S.
Mail sent to their respective principal places of business noted on the
face hereof or to such other addresses as the parties may, from time to
time, designate.
IN WITNESS WHEREOF, the undersigned have executed this Agreement the 17th of
April, 1995.
RUBBERMAID-CORTLAND INC., LESSOR
<PAGE> 29
BY: ___________________________
TITLE: ________________________
DECORA INDUSTRIES, INC., LESSEE
BY: ___________________________
TITLE: ________________________
DECORA, INCORPORATED, LESSEE
BY: ___________________________
TITLE: ________________________
<PAGE> 30
SCHEDULE A
EQUIPMENT LIST TO DECORA FROM STATESVILLE
Equipment including, but not limited to:
**
(CONFIDENTIAL TREATMENT REQUESTED BY DECORA INDUSTRIES, INC.)
and all subsequent additions thereto and substitutions thereof
**
(CONFIDENTIAL TREATMENT REQUESTED BY DECORA INDUSTRIES, INC.)
