<PAGE> 1
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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
DECORA 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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DECORA INDUSTRIES, INC.
-----------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held November 21, 1997
-----------------------
To the Stockholders of
Decora Industries, Inc.:
The Special Meeting of Stockholders of Decora Industries, Inc., a
Delaware corporation (the "Company"), has been scheduled in order to conduct the
special items of business outlined below which result in part from the recent
acquisition of 73.2% of the voting stock of Konrad Hornschuch AG. Neither a
formal presentation regarding the recent acquisition nor a review of the
Company's business and future strategies and prospects will be made at this
Special Meeting; instead, such presentation will be conducted at a general
annual meeting to be held in February 1998. This Special Meeting will be held at
the Queensbury Hotel located at 88 Ridge Street, Glens Falls, New York on
November 21, 1997, at 9:00 a.m., local time, and any adjournments thereof, to
consider and act upon the following matters:
(1) To vote upon a proposal to amend the Certificate of Incorporation
of the Company to effect a one-for-five reverse split of the
Common Stock of the Company and thus to exchange outstanding
shares for new share certificates on a 1 for 5 basis; and
(2) If Proposal 1 is adopted, to vote upon a proposal to amend the
Company's Certificate of Incorporation to decrease the number of
authorized shares of Common Stock from 45,000,000 to 20,000,000;
(3) The transaction of such other business as may properly come
before the meeting and any adjournments thereof.
The subject matter of each of the above proposals is described within
the Proxy Statement.
The Board of Directors has fixed the close of business on October 24,
1997, as the record date for the determination of stockholders entitled to
notice of, and to vote at, the Special Meeting.
In order to constitute a quorum for the conduct of business at the
Special Meeting, holders of a majority of all outstanding shares of Common Stock
must be present in person or be represented by proxy.
Whether or not you expect to attend the Special Meeting in person,
please date, sign and mail the enclosed Proxy in the postage-paid return
envelope provided as promptly as possible. The Proxy is
<PAGE> 3
revocable and will not affect your right to vote in person if you attend the
meeting.
By Order of the Board of Directors
Timothy N. Burditt
Secretary
Fort Edward, New York
October 24, 1997
<PAGE> 4
DECORA INDUSTRIES, INC.
1 Mill Street
Fort Edward, NY 12828
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PROXY STATEMENT
for
SPECIAL MEETING OF STOCKHOLDERS
To Be Held November 21, 1997
-----------------------
To Our Stockholders:
Your Board of Directors furnishes this Proxy Statement in connection
with its solicitation of your Proxy in the form enclosed to be used at the
Company's Special Meeting of Stockholders to be held on November 21, 1997, at
the time and place and for the purposes set forth in the accompanying Notice of
Special Meeting of Stockholders.
We cordially invite you to attend the Special Meeting. Whether or not
you plan to attend, please date, sign and return your Proxy promptly in the
postage paid return envelope provided. You may revoke your Proxy at any time
prior to its exercise at the meeting by notice to the Company's Secretary, and,
if you attend the meeting, you may vote your shares in person. You may also
revoke your Proxy by returning a duly executed Proxy bearing a later date. If no
instruction is given, the proxy will be voted FOR each of the proposals
described herein. The named proxies may vote in their discretion upon such other
matters as may properly come before the meeting.
Only stockholders of record at the close of business on October 24,
1997, will be entitled to vote at the meeting. At the close of business on
October 24, 1997, there were 36,656,890 shares of Common Stock of the Company
outstanding, with each share of Common Stock being entitled to one vote on each
matter to be voted upon. There is no right to cumulate votes as to any matter.
An affirmative vote of a majority of all outstanding shares is required
for approval of Proposals 1 and 2. Proposal 2 will only be presented if Proposal
1 is adopted. For purposes of determining whether a matter has received a
majority vote either of shares present or of all outstanding shares, abstentions
will be included in the vote totals, with the result that an abstention has the
same effect as a negative vote. In instances where brokers are prohibited from
exercising discretionary authority for beneficial owners who have not returned a
proxy (so-called "broker nonvotes"), those shares will not be included in the
vote totals and therefore will have a negative effect on the vote on Proposals 1
and 2.
The Company has been advised by its directors and officers that they
intend to vote the 1,128,750 shares of Common Stock which they hold,
representing 3.1% of the total shares outstanding as of the record date, in
favor of the proposals presented in this Proxy Statement. See "Beneficial
Ownership of Securities."
The entire cost of soliciting proxies will be borne by the Company,
including expenses in connection with preparing and mailing proxy solicitation
materials. In addition to use of the mails, proxies may be solicited by
officers, directors and regular employees of the Company, without extra
compensation,
<PAGE> 5
by telephone, telegraph or personal solicitation, and no additional compensation
will be paid to such persons. If requested, the Company will reimburse brokerage
houses and other custodians, nominees and fiduciaries for their reasonable
expenses incurred in mailing proxy material to their principals.
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BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth as of October 15, 1997, certain
information with respect to the Common Stock of the Company which may be deemed
to be beneficially owned by each stockholder who is known by the Company to own
more than 5% of the outstanding Common Stock, by each director, by each
executive officer and by all directors and officers as a group.
<TABLE>
<CAPTION>
NAME AND PERCENT
ADDRESS OF COMMON OTHER OF
BENEFICIAL OWNER(1) STOCK SECURITIES TOTAL CLASS
------------------- ----- ---------- ----- -----
<S> <C> <C> <C> <C>
Nathan Hevrony 753,750 750,000(2) 1,503,750 4.0%
1 Mill Street
Fort Edward, NY 12828
Gabriel Thomas -0- 512,000(2) 512,000 1.4%
1 Mill Street
Fort Edward, NY 12828
Roger Grafftey-Smith 375,000 362,000(2) 737,000 2.0%
1 Mill Street
Fort Edward, NY 12828
Stephen H. Verchick -0- 175,000(2) 175,000 (4)
21550 Oxnard Street
Suite 300
Woodland Hills, CA 91367
Ronald A. Artzer -0- 150,000(2) 150,000 (4)
315 Mullins Street
Mullins, South Carolina 29574
Timothy N. Burditt -0- 125,000(2) 125,000 (4)
1 Mill Street
Fort Edward, NY 12828
John F. Tattersall -0- 100,000(2) 100,000 (4)
1 Mill Street
Fort Edward, NY 12828
Richard A. DeCoste -0- 175,000(2) 175,000 (4)
1 Mill Street
Fort Edward, NY 12828
Frank J. Nolfi, Jr. -0- -0- -0- (4)
1 Mill Street
Fort Edward, NY 12828
Robert W. Johnson, IV 2,006,325(3) 1,207,353(2)(5) 3,213,678 8.5%
The Johnson Company
630 Fifth Avenue, Suite 918
New York, NY 10111
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C>
All directors and officers as
a group including the named
persons (9 persons) 1,128,750 2,349,000 3,477,750 8.9%
</TABLE>
- ----------
(1) Unless otherwise indicated, each person included in the table has sole
investment power and sole voting power with respect to the securities
beneficially owned.
(2) The amounts shown reflect shares of common stock underlying stock
options, convertible notes or warrants which are exercisable within 60
days of October 15, 1997.
(3) Mr. Johnson disclaims beneficial interest in 185,000 shares which are
held by trusts for which he is a trustee.
(4) Each of these persons owns less than 1% of the outstanding common stock
of the Company.
(5) Includes 882,353 shares issuable upon the conversion of a convertible
promissory note (the "Johnson Notes") in the principal amount of
$1,500,000 at the rate of $1.70 per share. Does not include a warrant to
purchase 1,700,000 shares which can only be exercised if the Johnson
Note is paid in full without conversion.
PROPOSAL 1 - REVERSE STOCK SPLIT
GENERAL
In September 1997, the Board of Directors of the Company adopted
resolutions approving, and authorizing the submission to stockholders for their
approval, a proposal to amend Article Fourth of the Certificate of Incorporation
of the Company to effect a one-for-five reverse stock split (the "Reverse
Split") of the presently issued and outstanding shares of the Common Stock. The
complete text of this proposed amendment of Article Fourth of the Certificate of
Incorporation is set forth in Appendix A to this Proxy Statement, along with the
text of the related resolutions to be adopted by the stockholders. The text of
the amendment is subject to change as may be required by the Delaware Secretary
of State.
The Reverse Split would be effected by amending the Certificate of
Incorporation to provide that, upon the effective date of the amendment, each
issued and outstanding share of the Common Stock will be automatically converted
into one-fifth of a new share of Common Stock, par value $.01 per share. The
rights and privileges of the holders of the Common Stock will be substantially
unaffected by the Reverse Split and each stockholder's percentage ownership
interest in the Company, proportional voting power and other rights will remain
unchanged, except to the extent stockholders receive cash in lieu of fractional
shares as described below.
The Company presently is authorized under the Certificate of
Incorporation to issue 45,000,000 shares of the Common Stock. As of October 24,
1997, 36,656,890 shares of the Common Stock were issued and outstanding. The
Reverse Split will reduce the number of issued and outstanding shares of the
Common Stock to approximately 7,331,378; however, the number of authorized
shares will remain at 45,000,000. Following the Reverse Split, the Company would
have a very large number of authorized but unissued shares outstanding;
therefore, Proposal 2 sets forth a decrease in the number of authorized shares
of Common Stock from 45,000,000 to 20,000,000. The Reverse Split will not affect
the Company's retained deficit, and stockholders' equity will remain
substantially unchanged.
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REASONS FOR THE REVERSE SPLIT
SHARE PRICE ISSUES
The Company believes that the relatively low current market price per
share of the Common Stock may impair the acceptability of the Common Stock to
certain institutional investors and other members of the investing public.
Theoretically, the number of shares outstanding should not, by itself, affect
the marketability of the Common Stock, the type of investor who acquires it, or
the Company's reputation in the financial community. In practice, this is not
necessarily the case, as certain investors view low-priced stock as
unattractive, although certain other investors may be attracted to low-priced
stock because of the greater trading volatility sometimes associated with such
securities. Many brokerage houses are reluctant to recommend lower-priced stock
to their clients or to hold it in their own portfolios. Further, a variety of
brokerage house policies and practices discourage individual brokers within
those firms from dealing in low-priced stock because of the time-consuming
procedures that make the handling of low-priced stock unattractive to brokerage
houses from an economic standpoint.
In addition, since the broker's commissions on low-priced stock
generally represent a higher percentage of the stock price than commissions on
higher priced stock, the current share price of the Common Stock can result in
individual stockholders paying transaction costs (commission, markups or
markdowns) which are a higher percentage of their total share value than would
be the case if the share price were substantially higher. This factor also may
limit the willingness of institutions to purchase the Common Stock at its
current relatively low per share market price.
The Company believes that the proposed Reverse Split will enhance the
Company's flexibility in its future financing and capitalization needs.
If adopted, the Reverse Split may result in some stockholders owning
"odd lots" of less than 100 shares of the Common Stock received as a result of
the Reverse Split. Brokerage commissions and other costs of transactions in
odd-lots may be higher, particularly on a per-share basis, than the cost of
transactions in even multiples of 100 shares.
NEED FOR ADDITIONAL AUTHORIZED SHARES
The Certificate of Incorporation authorizes 45,000,000 shares of Common
Stock, of which 36,656,890 shares were issued and outstanding on the record
date. In addition, 15,736,234 shares were subject to outstanding options,
warrants and convertible debt previously issued by the Company, including the
additional 9,092,234 shares of its Common Stock to be issued pursuant to the
exercise of certain warrants and the conversion of certain Preferred Stock both
discussed below (subject to availability of sufficient shares of Common Stock).
Including such required reserves, the Company does not have sufficient
authorized shares of Common Stock. The Reverse Split would indirectly result in
the authorization of a significant number of additional shares of Common Stock
since its outstanding shares of Common Stock would be decreased to 7,371,578,
but the authorized would remain at 45,000,000.
On October 1, 1997, the Company purchased 73.2% of the outstanding
shares (the "Shares") of Konrad Hornschuch AG ("Hornschuch"), a German company
which is one of the world's leaders in the self-adhesive decorative products
market with 1996 revenues of approximately $115 million. Within the next 18
months, the Company plans to complete a tender offer under German law for the
remaining shares of Hornschuch, which are listed on a German Stock Exchange, for
the purpose of owning all of the shares of Hornschuch (the "Hornschuch Tender
Offer").
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<PAGE> 9
As part of the financing for the purchase of the Shares, effective
September 30, 1997, the Company entered into a loan transaction (the "Loan") and
warrant agreements with Textron Master Trust ("Textron"), a pension fund of
Textron, Inc., whereby Decora Manufacturing, a wholly owned subsidiary of the
Company, borrowed $18 million from Textron. The warrant agreements allow Textron
to purchase 2,136,534 shares of the Common Stock of the Company at a purchase
price of $1.00 per share (the "Common Warrant"), a warrant (the "Preferred
Warrant") to purchase 69,557 shares of its Series A Convertible Preferred Stock
(the "Preferred Stock") which are convertible into a total of 6,955,700 shares
of the Common Stock of the Company at a purchase price of $1.00 per share of
Common Stock. The Company also issued a warrant to purchase shares of its Common
Stock at a purchase price of $1.00 per share (the "Contingent Common Warrant")
the exercise of which and the number of shares which may be purchased pursuant
thereto are contingent upon the occurrence of a public offering of Common Stock
in connection with the Hornschuch Tender Offer or the issuance of certain shares
to CIGNA affiliates pursuant to an existing contractual obligation which would
increase the number of outstanding shares of Common Stock of the Company. The
Common Warrant, the Preferred Warrant and the Contingent Common Warrant, if it
becomes exercisable, may be exercised at any time prior to September 30, 2005.
The Loan documents also provide that Textron shall be entitled to nominate one
member to the Company's Board of Directors.
Currently, the Certificate of Incorporation of the Company provides that
it may issue up to a maximum of 45,000,000 shares of its Common Stock. On
October 24, 1997, there were 36,656,890 shares of Common Stock issued and
outstanding and, prior to the Textron transaction, 6,644,000 shares were
reserved for issuance upon exercise of outstanding options, warrants and
conversion of convertible debt. Without the Reverse Split and accompanying
increase in authorized shares, the Company would not currently have sufficient
shares of its authorized but unissued Common Stock available to provide for the
Contingent Common Warrant, if exercisable, and for conversion of the Preferred
Stock and to provide a reserve of shares to meet its corporate purposes,
including without limitation, an exchange offer or a potential public offering
in connection with the Hornschuch Tender Offer, issuances to finance other
acquisitions or grants of stock options to aid in retaining and attracting
executive talent.
Because the Company does not have sufficient authorized but unissued
shares of its Common Stock to provide for exercise of the Contingent Common
Warrant, if exercisable, and for conversion of the Preferred Stock, the terms of
the Loan provide that the Company will request stockholder approval of the
increase in its authorized Common Stock as soon as administratively practicable.
In the event the increase in the authorized Common Stock of the Company is not
approved by the stockholders, the terms of the Loan provide that the interest
rate payable by the Company will increase from the existing 13% rate to 14% on
December 31, 1997 and to 15% on March 31, 1998. Once stockholder approval is
obtained, the interest rate returns to 13%. If stockholder approval for the
increase in authorized Common Stock has not been obtained by June 1, 1998, the
terms of the Loan provide that this will constitute a "Event of Default" under
the Loan. If Textron were to declare the Loan to be in default, it could result
in significant financial consequences to the Company, including permitting
Textron to call the Loan, and an increase in the interest rate to 17%. A default
under the Loan could also result in the Company being declared in default under
the provisions of its other outstanding financing arrangements. In addition, if
there is an Event of Default, then Textron shall be entitled to elect an
additional member of the Board of Directors of the Company.
The Company believes that, in addition to meeting the terms of the Loan,
the authorization of additional shares of Common Stock will enhance the
Company's flexibility for purposes of its further financing needs. At this time,
the Company is unable to issue any additional shares of Common Stock.
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<PAGE> 10
The Company believes that having such additional shares available for issuance
will enable the Company to take prompt action on such corporate opportunities as
may materialize in the future, if the Board of Directors of the Company deems
such issuance to be in the best interest of the Company, as well as provide
continued incentives to employees through the issuance of stock options. The
Board of Directors believes an increase in the authorized shares of Common Stock
is essential for the future well being of the Company. However, the disadvantage
of such increase is that any additional issuances of Common Stock will dilute
the percentage of the Company owned by existing stockholders.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated Federal income
tax consequences of the Reverse Split to holders of the Common Stock. This
summary is based on the Federal income tax laws now in effect and as currently
interpreted; it does not take into account possible changes in such laws or
interpretations, including amendments to applicable statutes, regulations and
proposed regulations or changes in judicial or administrative rulings, some of
which may have retroactive effect. This summary is provided for general
information only and does not purport to address all aspects o the possible
Federal income tax consequences of the Reverse Split and IS NOT INTENDED AS TAX
ADVICE TO ANY PERSON. In particular, and without limiting the foregoing, this
summary does not consider the Federal income tax consequences to stockholders of
the Company in light of their individual investment circumstances or to holders
subject to special treatment under the Federal income tax laws (for example,
life insurance companies, regulated investment companies and foreign taxpayers).
The summary does not address any consequence of the Reverse Split under any
state, local or foreign tax laws.
No ruling from the Internal Revenue Service or opinion of counsel will
be obtained regarding the Federal income tax consequences to the stockholders of
the Company as a result of the Reverse Split. ACCORDINGLY, EACH STOCKHOLDER IS
ENCOURAGED TO CONSULT HIS OR HER TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES OF THE PROPOSED TRANSACTION TO SUCH STOCKHOLDER, INCLUDING THE
APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX LAWS.
The Company believes that the Reverse Split would be a tax-free
recapitalization to the Company and its stockholders. If the Reverse Split
qualifies as a recapitalization under Section 368(a)(1)(E) of the Internal
Revenue Code of 1986, as amended, a stockholder of the Company who exchanges his
or her shares of the Common Stock solely for shares of the Common Stock (the
"New Common Stock") received from the Company as a result of the Reverse Split
should recognize no gain or loss for Federal income tax purposes, except for any
cash received by a stockholder in lieu of a fractional share. A stockholder's
aggregate tax basis in his or her shares of the New Common Stock received from
the Company as a result of the Reverse Split should be the same as his or her
aggregate tax basis in the shares of the Common Stock exchanged therefor. The
holding period of shares of the New Common Stock received from the Company as a
result of the Reverse Split should include the period during which shares of the
Common Stock surrendered in exchange therefor were held, provided all such
shares were held as a capital asset on the date of the exchange.
A stockholder who receives cash in lieu of fractional shares will be
treated as if the Company has issued fractional shares to him and then
immediately redeemed such shares for cash. Such stockholder should generally
recognize gain or loss, as the case may be, measured by the difference between
the amount of cash received and the basis of such stockholder's Common Stock
allocable to the fractional shares, had they actually been issued. Such gain or
loss will generally be a capital gain or loss if such stockholder's Common Stock
was held as a capital asset, and any such capital gain or loss will generally
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<PAGE> 11
be a long-term capital gain or loss to the extent such stockholder's holding
period for this Common Stock exceeds twelve months.
IMPACT ON OPTIONS, WARRANTS AND CONVERTIBLE SECURITIES
If the Reverse Split is adopted, the number of shares that may be
purchased upon exercise of options, warrants or other convertible instruments
pursuant to existing stock option agreements, warrant agreements or other
convertible instruments and the exercise prices thereof will be adjusted
appropriately pursuant to the terms of such agreements.
OTHER EFFECTS OF THE REVERSE SPLIT
The par value of the Common Stock will remain at $.01 per share
following the Reverse Split, and the number of shares of the Common Stock
outstanding will be reduced. As a consequence, the aggregate par value of the
outstanding Common Stock will be reduced, while the aggregate capital in excess
of par value attributable to the outstanding Common Stock for statutory and
accounting purposes will be correspondingly increased.
If the Reverse Split is effected, the per share information and the
average number of shares outstanding as presented in previously issued
consolidated financial statements and other publically available information of
the Company would be restated following the Effective Date to reflect the
Reverse Split.
EFFECTIVE DATE
If Proposal 1 is adopted, an amendment of the Restated Certificate of
Incorporation substantially in the form of Appendix A will be filed with the
Secretary of the State of Delaware as soon after the Special Meeting as is
practicable and that the effective date thereof is expected to be November 22,
1997 (the "Effective Date"). Thereupon, without any further action on the part
of the Company or its stockholders, each share of the issued and outstanding
Common Stock will be converted into one-fifth of a share of the New Common
Stock. The Board of Directors of the Company may abandon the proposed amendment
of the Certificate of Incorporation of the Company to effect the Reverse Split
without further action by the Company's stockholders, at any time prior to the
filing of such proposed amendment and notwithstanding adoption of such proposed
amendment by the Company's stockholders.
NO FRACTIONAL SHARES
No fractional shares of the New Common Stock will be issued to any
stockholder as a result of the Reverse Split. Instead, a stockholder who would
otherwise be entitled to receive a fractional share will receive, in lieu
thereof, cash in an amount equal to the product of the number of shares of
Common Stock which have not been reclassified into a whole share of the New
Common Stock multiplied by the average closing price of the Common Stock on the
five most recent business days preceding the Effective Date that the Common
Stock was traded. The Company believes that the cost of purchasing such
fractional shares will not be material.
EXCHANGE OF STOCK CERTIFICATES
As soon as practicable after the Effective Date, the Company will send a
letter of transmittal to each stockholder of record on the Effective Date for
use in transmitting certificates representing shares of
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<PAGE> 12
the Common Stock to the Company's transfer agent (the "Exchange Agent"). The
letter of transmittal will contain instructions for the surrender of
certificates representing shares of the Common Stock to the Exchange Agent in
exchange for certificates representing the number of whole shares of the New
Common Stock. No new certificates will be issued to a stockholder until such
stockholder has surrendered all old certificates together with a properly
completed and executed letter of transmittal to the Exchange Agent.
Upon proper completion and execution of the letter of transmittal and
return thereof to the Exchange Agent, together with all certificates
representing shares of the Common Stock, stockholders will receive a new
certificate or certificates representing the number of whole shares of the New
Common Stock into which their shares of the Common Stock have been reclassified
as a result of the Reverse Split. Until surrendered, outstanding certificates
representing shares of the Common Stock held by stockholders will be deemed for
all purposes to represent the number of whole shares of the New Common Stock to
which such stockholders are entitled as a result of the Reverse Split.
Stockholders should not send their certificates representing shares of the
Common Stock to the Exchange Agent until they have received the letter of
transmittal. Shares not presented for surrender as soon as is practicable after
the letter of transmittal is sent shall be exchanged at the first time they are
presented for transfer.
Provided certificates representing shares of the New Common Stock are
issued in the same name as the certificates representing shares of the Common
Stock surrendered for exchange, no service charges or transfer taxes will be
payable by stockholders in connection with the exchange of certificates, all
expenses of which be borne by the Company.
OTHER
No stockholder's interest will be completely eliminated by virtue of the
Reverse Split, except for those stockholders, if any, owning fewer than five
shares of the Common Stock. No officer, director, associate or affiliate of the
Company will derive any material benefit from the Reverse Split other than the
benefits which would be enjoyed by any other person holding the same number of
shares.
NO APPRAISAL RIGHTS
There are no appraisal rights in connection with Proposal 1 provided to
dissenting stockholders under the Certificate of Incorporation or the laws of
the State of Delaware.
RECOMMENDATION AND VOTE REQUIRED
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO EFFECT A
ONE-FOR-FIVE REVERSE SPLIT OF THE ISSUED AND OUTSTANDING COMMON STOCK
SET FORTH IN THIS PROXY STATEMENT. PROXIES SOLICITED BY THE COMPANY WILL
BE VOTED FOR AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
IMPLEMENT THE REVERSE SPLIT UNLESS OTHERWISE INSTRUCTED.
Approval of the Reverse Split will require the affirmative vote of a
majority of the outstanding shares of Common Stock entitled to vote at the
Special Meeting.
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<PAGE> 13
PROPOSAL 2 - AMENDMENT TO CERTIFICATE OF INCORPORATION
TO DECREASE AUTHORIZED COMMON STOCK
Assuming approval of the Reverse Split set forth in Proposal 1, which
would result in a total of 7,371,578 shares of Common Stock issued and
outstanding and a total of 3,147,247 shares of Common Stock reserved, in
September 1997, the Company's Board of Directors unanimously approved a
resolution to amend the Company's Certificate of Incorporation to decrease the
number of authorized shares of the Company's Common Stock from 45,000,000 to
20,000,000. If Proposal 1 is not approved, Proposal 2 will not be presented for
voting. The complete text of this proposed amendment of Article Fourth of the
Certificate of Incorporation is set forth in Appendix B to this Proxy Statement,
along with the text of the related resolutions to be adopted by the
stockholders. The text of the amendment is subject to change as may be required
by the Delaware Secretary of State.
Proposal 2 was adopted by the Board of Directors because although the
Reverse Split appropriately provides the Company with excess authorized but
unissued Common Stock to use for various corporate purposes, including an
exchange offer or public offering in connection with the Hornschuch Tender Offer
as well as other acquisition financings and stock option grants, the Board of
Directors after considering the Company's outstanding shares and reserves
believes that 20,000,000 shares of authorized Common Stock is sufficient.
Therefore, Proposal 2 authorizes the decrease of the Company's authorized Common
Stock to meet the Company's needs from 45,000,000 to 20,000,000.
If Proposal 2 is approved, after appropriately reserving 3,147,247 post
Reverse Split shares for outstanding options, warrants and convertible debt, the
Company would be authorized to issue up to approximately 9,521,375 shares of the
20,000,000 authorized shares of Common Stock, ($.01) par value, without further
stockholder approval. Although the ability of the Board of Directors to issue
additional shares of Common Stock without further stockholder approval could
have the effect of discouraging takeover attempts, this proposal is not intended
as an anti-takeover device, and no anti-takeover measures presently are being
contemplated by the Board of Directors. In addition, management is not aware of
any specific effort to accumulate the Company's Common Stock or to obtain
control of the Company.
EFFECTIVE DATE
If Proposal 2 is adopted, an amendment of the Restated Certificate of
Incorporation substantially in the form of Appendix B will be filed with the
Secretary of the State of Delaware. If Proposal 2 is adopted, it is currently
expected that such filing will take place as soon after the Special Meeting as
is practicable and that the effective date thereof will be November 22, 1997
(the "Effective Date"). The Board of Directors of the Company may abandon the
proposed amendment of the Certificate of Incorporation of the Company to effect
the increase in authorized Common Stock without further action by the Company's
stockholders, at any time prior to the filing of such proposed amendment and
notwithstanding adoption of such proposed amendment by the Company's
stockholders.
RECOMMENDATION AND VOTE REQUIRED
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO DECREASE THE
AUTHORIZED COMMON STOCK. PROXIES SOLICITED BY THE COMPANY WILL BE VOTED
FOR AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO DECREASE
THE AUTHORIZED COMMON STOCK UNLESS OTHERWISE INSTRUCTED.
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<PAGE> 14
Approval of the decrease in the authorized Common Stock will require the
affirmative vote of a majority of the outstanding shares of Common Stock
entitled to vote at the Special Meeting.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the Special Meeting. However, if any other matter shall properly come
before the Special Meeting, the proxy holders named in the proxy accompanying
this statement will have discretionary authority to vote all proxies in
accordance with their best judgment.
STOCKHOLDER PROPOSALS
Any stockholder who wishes to present resolutions to be included in the
proxy statement for the Company's next Annual Meeting (for the fiscal year
ending March 31, 1998) must file such resolutions with the Company not later
than May 23, 1998.
Fort Edward, New York By Order of the Board of Directors
October 24, 1997
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<PAGE> 15
APPENDIX A
RESOLVED, that the Certificate of Incorporation of Decora Industries,
Inc., (the "Corporation") be amended by means of a Certificate of Amendment
substantially in the form set forth below:
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
DECORA INDUSTRIES, INC.
Pursuant to Section 242 of the Delaware
General Corporation Law
Decora Industries, Inc., a Delaware corporation (the "Corporation"),
hereby certifies as follows:
FIRST: The name of the Corporation is Decora Industries, Inc.
SECOND: The Certificate of Incorporation of the Corporation is hereby
amended to effect a one-for-five reverse split of the Common Stock by adding a
new paragraph C to Article FOURTH to read as follows:
"C. Simultaneously with the effective date of this amendment (the
"Effective Date"), each share of the Common Stock issued and outstanding
immediately prior to the Effective Date and each such share held in the
corporation's treasury (the "Old Common Stock") shall automatically and
without any action on the part of the holder thereof be reclassified as
and changed into one-fifth (1/5) of a share of the Common Stock, par
value $.01 per share (the "Common Stock"), subject to the treatment of
fractional share interests as described below. Each holder of a
certificate or certificates which immediately prior to the Effective
Date represented outstanding shares of the Old Common Stock (the "Old
Common Certificates," whether one or more) shall be entitled to receive
upon surrender of the Old Common Certificates to the Corporation's
Transfer Agent for cancellation, a certificate or certificates
representing the number of whole shares of the Common Stock (the "Common
Certificates") into which and for which the shares of the Old Common
Stock formerly represented by the Old Common Certificates so surrendered
are reclassified under the terms hereof. No certificate or scrip
representing fractional share interests in the Common Stock will be
issued, and no such fractional share interest will entitle the holder
thereof to vote or to any rights of a stockholder of the Corporation. A
holder of the Old Common
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<PAGE> 16
Certificates shall receive, in lieu of any fraction of a share of the
Common Stock to which the holder otherwise would be entitled, a cash
payment equal to the product of the number of shares of the Old Common
Stock which have not been reclassified into a whole share of the Common
Stock multiplied by the average closing price of the Old Common Stock on
the NASDAQ Small Cap Market on the five most recent business days
preceding the Effective Date that the Old Common Stock was traded. If
more than one Old Common Certificate shall be surrendered at one time
for the account of the same stockholder, the number of full shares of
the Common Stock for which Common Certificates shall be issued shall be
computed on the basis of the aggregate number of shares represented by
the Old Common Certificates so surrendered.
In the event that the Corporation's Transfer Agent determines
that a holder of the Old Common Certificates has not tendered all of his
or her certificates for exchange, the Transfer Agent shall carry forward
any fractional share until all certificates of such holder have been
presented for exchange so that payment for fractional shares to such
holder shall not exceed the value of one (1) whole share of the Common
Stock as a result of the rounding up of fractional shares. If any Common
Certificate is to be issued in a name other than that in which the Old
Common Certificates surrendered for exchange are issued, the Old Common
Certificates so surrendered shall be properly endorsed and otherwise in
proper form for transfer, and the person or persons requesting such
exchange shall affix any requisite stock transfer tax stamps to the Old
Common Certificates surrendered, or provide funds for their purchase or
establish to the satisfaction of the Transfer Agent that such taxes are
not payable."
THIRD: This Certificate of Amendment of Certificate of Incorporation
shall be effective as of _________, 1997.
FOURTH: This Certificate of Amendment of Certificate of Incorporation
was duly adopted by the requisite vote of the Board of Directors and by the vote
of the holders of a majority of the outstanding shares of the Corporation
entitled to vote thereon in accordance with Section 242 of the Delaware General
Corporation Law.
IN WITNESS WHEREOF, Decora Industries, Inc. has caused this Certificate
of Amendment of Certificate of Incorporation to be executed by its Chief
Executive Officer and attested by its Secretary this ___ day of _____________,
1997.
DECORA INDUSTRIES, INC.
By __________________________________
Nathan Hevrony
Chief Executive Officer
14
<PAGE> 17
ATTEST:
- -----------------------------------
Timothy N. Burditt
Secretary
and be it further
RESOLVED, that at any time prior to the filing of the foregoing
Certificate of Amendment of Certificate of Incorporation of the Corporation,
notwithstanding authorization of such proposed Certificate of Amendment by the
stockholders of the Corporation, the Board of Directors may abandon such
proposed Certificate of Amendment without further action by the stockholders.
15
<PAGE> 18
APPENDIX B
RESOLVED, that the Certificate of Incorporation of Decora Industries,
Inc., (the "Corporation") be amended by means of a Certificate of Amendment
substantially in the form set forth below:
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
DECORA INDUSTRIES, INC.
Pursuant to Section 242 of the Delaware
General Corporation Law
Decora Industries, Inc., a Delaware corporation (the "Corporation"),
hereby certifies as follows:
FIRST: The name of the Corporation is Decora Industries, Inc.
SECOND: The Certificate of Incorporation of the Corporation is hereby
amended to decrease the number of authorized shares of the Common Stock of the
Corporation from 45,000,000 shares to 20,000,000 shares by amending subsection A
of Article FOURTH of the Certificate of Incorporation so that, as amended,
subsection A of said Article shall be and read as follows:
"FOURTH:
A. The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is twenty five million
(25,000,000), consisting of:
(1) Twenty million (20,000,000) shares of Common Stock, par value
one cent ($.01) per share (the "Common Stock"); and
(2) Five million (5,000,000 shares of Preferred Stock, par value
one cent ($.01) per share (the "Preferred Stock")."
THIRD: This Certificate of Amendment of Certificate of Incorporation
shall be effective as of ____________, 1997.
FOURTH: This Certificate of Amendment of Certificate of Incorporation
was duly adopted by the requisite vote of the Board of Directors and by the vote
of the holders of a majority of the outstanding shares of the Corporation
entitled to vote thereon in accordance with Section 242 of the Delaware General
Corporation Law.
16
<PAGE> 19
IN WITNESS WHEREOF, Decora Industries, Inc. has caused this Certificate
of Amendment of Certificate of Incorporation to be executed by its Chief
Executive Officerand attested by its Secretary this ___ day of _____________,
1997.
DECORA INDUSTRIES, INC.
By __________________________________
Nathan Hevrony
Chief Executive Officer
ATTEST:
- -----------------------------------
Timothy N. Burditt
Secretary
and be it further
RESOLVED, that at any time prior to the filing of the foregoing
Certificate of Amendment of Certificate of Incorporation of the Corporation,
notwithstanding authorization of such proposed Certificate of Amendment by the
stockholders of the Corporation, the Board of Directors may abandon such
proposed Certificate of Amendment without further action by the stockholders.
17
<PAGE> 20
[Form of Proxy]
DECORA INDUSTRIES, INC.
1 MILL STREET, FORT EDWARD, NEW YORK 12828
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, as owner of shares of Common Stock of Decora
Industries, Inc., a Delaware corporation (the "Company"), hereby acknowledges
receipt of the Proxy Statement and the notice of the stockholders meeting to be
held on November 21, 1997, at 9:00 a.m. local time, at the Queensbury Hotel,
located at 88 Ridge Street, Glens Falls, New York and hereby further revokes all
previous proxies and appoints Nathan Hevrony and Timothy N. Burditt, or either
of them, as proxy of the undersigned at said meeting and any adjournments
thereof with the same effect as if the undersigned were present and voting the
shares.
(1) For the proposal to amend the Certificate of Incorporation of the
Company to effect a one-for-five reverse split of the Common Stock.
(2) If Proposal 1 is adopted, for the proposal to amend the Certificate of
Incorporation of the Company to increase the number of shares of
authorized Common Stock from 45,000,000 to 20,000,000.
(3) In their discretion upon such other matters as may properly come before
the meeting and any adjournments thereof.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS YOU HAVE INDICATED ABOVE.
IF NO INDICATION HAS BEEN MADE, THE SHARES REPRESENTED BY THIS PROXY WILL BE
VOTED FOR THE ABOVE NOMINEES AND IN FAVOR OF SUCH PROPOSALS, AND AS SAID PROXY
DEEMS ADVISABLE ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
Dated: ___________________________, 1997
________________________________________
________________________________________
(Sign exactly as your name appears on
your share certificate.) When signing as
attorney, executor, administrator,
trustee or guardian, please give full
title. If more than one trustee, all
should sign. All joint owners should
sign. If a corporation, sign in full
corporation name by president or other
authorized officer. If a partnership,
sign in partnership name by authorized
person. Persons signing in a fiduciary
capacity should indicate their full
title in such capacity.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
