SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934)
(AMENDMENT NO. )
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ThermoView Industires, Inc.
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THERMOVIEW INDUSTRIES, INC.
1101 HERR LANE
LOUISVILLE, KY 40222
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 20, 2000
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We will hold our 2000 annual meeting of stockholders on June
20, 2000 at 10:00 a.m., eastern daylight time, at the Louisville
Marriott East, 1903 Embassy Square Blvd., Louisville, Kentucky.
At the annual meeting, we plan to consider the following
proposals recommended by our Board of Directors for approval:
* Elect three individuals as Class I members of our Board
of Directors.
* An amendment to our restated certificate of
incorporation reducing the authorized number of shares
of our common stock from 100 million to 25 million
shares and our preferred stock from 50 million to 5
million shares.
* The issuance of 3.75 million shares of our common stock
upon the terms and conditions described in the attached
proxy statement.
* Ratify the selection of Ernst & Young LLP as our
independent auditors for the 2000 fiscal year.
* Consider and act upon such other matters as may
properly come before the annual meeting or any
adjournment of the meeting.
We may act on these matters at the annual meeting on June
20, 2000, or on any date or dates to which we may adjourn the
annual meeting.
The Board of Directors has fixed the close of business on
May 10, 2000 as the record date for determining the stockholders
entitled to notice of, and to vote at, our 2000 annual meeting
and at any adjournments of that meeting.
Please read these materials so that you will know what we
plan to do at the annual meeting. We request you to complete and
sign the enclosed proxy card, which our Board of Directors is
soliciting, and to mail it promptly in the enclosed postage-
prepaid envelope. You may revoke any proxy by notice to our
secretary or by delivery of a later dated proxy. Stockholders of
record who attend the annual meeting may vote in person, even if
they have previously delivered a signed proxy.
By Order of the Board of Directors
/s/ Charlton C. Hundley
Charlton C. Hundley
Secretary
Louisville, Kentucky
May 12, 2000
THERMOVIEW INDUSTRIES, INC.
1101 HERR LANE
LOUISVILLE, KENTUCKY 40222
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PROXY STATEMENT
We are furnishing this proxy statement in connection with
the solicitation of proxies on behalf of the Board of Directors
of ThermoView Industries, Inc., a Delaware corporation, for use
at our annual meeting of stockholders. We will hold the meeting
at 10:00 a.m., eastern daylight time, on Tuesday, June 20, 2000,
at the Louisville Marriott East, 1903 Embassy Square Blvd.,
Louisville, Kentucky, and at any and all adjournments of the
meeting, for the purposes we have described in the notice of the
meeting. We are mailing this proxy statement and the accompanying
form of proxy to stockholders commencing on or about May 12,
2000.
PROXIES
We will vote the shares represented by duly executed proxies
in the accompanying form received prior to the meeting and not
revoked at the meeting or at any adjournments within 120 days
after the adjournment of the meeting in accordance with the
choices specified on the ballot. If you do not specify any
choices, the proxies named in the form of proxy intend to vote:
* For the nominees for election as directors;
* For the proposed amendment to our restated certificate
of incorporation to reduce the number of our authorized
shares of common stock from 100 million to 25 million
shares and our preferred stock from 50 million to 5
million shares;
* For the authorization to issue up to 3.75 million
shares of our common stock in a private placement or
private placements, subject to the terms outlined in
this proxy statement; and
* For the ratification of Ernst & Young LLP as our
independent auditors for the 2000 fiscal year.
You may revoke your proxy by:
* giving written notice of your revocation to the
secretary of ThermoView before the meeting;
* delivery of a duly executed proxy bearing a later date;
or
* by voting in person at the meeting.
Attendance at the meeting will not have the effect of
revoking a proxy unless you notify the secretary of the meeting
in writing prior to voting of the proxy at the annual meeting.
EXPENSES OF SOLICITING PROXIES
We will bear the expenses of soliciting proxies for the
annual meeting, including the cost of preparing, assembling and
mailing this proxy statement and the accompanying form of proxy.
In addition to the solicitation of proxies by mail, our
directors, officers and employees, without additional
compensation, may use their personal efforts, by telephone or
otherwise, to obtain proxies. We will also request persons,
firms and corporations holding shares in their names, or in the
names of their nominees, which shares other persons beneficially
own, to send this proxy material to and obtain proxies from the
beneficial owners, and will reimburse the holders for their
reasonable expenses.
QUORUM AND VOTING
The presence in person or by proxy of stockholders holding a
majority of our outstanding shares of common stock entitled to
vote will constitute a quorum for the transaction of all business
at the annual meeting. You may withhold authority to vote for
all nominees for directors or may withhold authority to vote for
individual nominees for directors. You may also abstain from
voting on the proposals to approve:
* the proposed amendment to our restated certificate of
incorporation to reduce the number of our authorized
shares of common stock from 100 million to 25 million
shares and our preferred stock from 50 million to 5
million shares;
* the authorization to issue up to 3.75 million shares of
our common stock in a private placement or private
placements, subject to the terms outlined in this proxy
statement; and
* the proposal to ratify the selection of Ernst & Young
LLP as our independent auditors for the 2000 fiscal
year.
We will treat votes withheld from the election of any
nominee for director and abstentions from any other proposal as
shares that are present and entitled to vote for purposes of
determining the presence of a quorum, but we will not count those
votes in the number of votes cast on any matter. If a broker
does not receive voting instructions from you, as a beneficial
owner, on a matter and indicates on the proxy that the broker
does not have discretionary authority to vote on that matter, we
will not consider those shares as present and entitled to vote
with respect to that matter. American Stock Exchange Rules
require the affirmative vote of a majority of the votes cast to
approve the proposal to issue common stock.
VOTING SECURITIES
Only stockholders of record at the close of business on May
10, 2000 may vote at the annual meeting or any adjournments
within 120 days of the meeting. On May 10, 2000, we had
7,324,550 shares of our common stock outstanding and entitled to
vote at the annual meeting. Each share of common stock entitles
the holder to one vote on all matters presented at the annual
meeting.
The following table sets forth information regarding
beneficial ownership of our common stock as of March 1, 2000 for:
* each executive officer and director of ThermoView;
* each person known by us to own of record or
beneficially more than 5% of the outstanding shares of
our common stock; and
* all executive officers and directors of ThermoView as a
group.
In accordance with the SEC's rules, the following table
gives effect to the shares of common stock that could be issued
upon (A) the exercise of outstanding options and warrants and (B)
the conversion of Series C preferred stock, each within 60 days
of March 1, 2000. Unless otherwise indicated, each of the persons
named in the following table has sole voting, conversion and
investment power with respect to the shares they own.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
BENEFICIALLY PERCENTAGE
BENEFICIAL OWNER OWNED OF CLASS(1)
---------------- ----- -----------
<S> <C> <C>
Brown Simpson Strategic Growth
Fund, Ltd. and Brown Simpson
Strategic Growth Fund, L.P.(2)........... 819,792 10.0%
Stephen A. Hoffmann (3).................... 568,650 7.3
GE Capital Equity Investments, Inc.(4)..... 555,343 7.0
LD Capital, Inc.(5)........................ 492,802 6.3
Robert E. Anderson(6)...................... 433,548 5.9
Charles L. Smith(7)........................ 206,615 2.8
John H. Cole(11)........................... 161,162 2.1
Robert C. Pearson(8)....................... 158,335 *
Nelson E. Clemmens(9)...................... 143,483 1.9
Delores P. Kesler(10)...................... 132,323 1.8
Raymond C. Dauenhauer, Jr.(12)............. 104,352 1.4
James J. TerBeest(13)...................... 65,833 *
Ronald L. Carmicle(14)..................... 16,667 *
Michael A. Toal(15)........................ 16,667 *
J. Sherman Henderson III................... 8,334 *
Richard E. Bowlds(16)...................... 7,363 2.1
All directors and executive officers
as a group (13 persons)(17)..............1,923,332
</TABLE>
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* Less than 1% of total.
(1) Based on 7,324,550 shares of common stock outstanding, plus,
for each individual or entity, the number of shares of common
stock that each individual or entity may acquire upon the
exercise of stock options or warrants or conversion of
convertible securities within 60 days of March 1, 2000.
(2) Includes 400,000 shares issuable upon conversion of shares of
Series C preferred stock, 19,792 shares of common stock
issued as dividends on the Series C preferred stock and
400,000 shares issuable upon exercise of outstanding
warrants. Brown Simpson Strategic Growth Fund, Ltd. and Brown
Simpson Strategic Growth Fund, L.P. are controlled by their
general and managing partner, Brown Simpson Asset Management,
LLC. The principal address for Brown Simpson Strategic Growth
Fund, Ltd. and Brown Simpson Strategic Growth Fund, L.P. is
152 West 57th Street, 40th Floor, New York, New York 10019.
(3) Includes 11,596 shares deemed beneficially owned by Mr.
Hoffmann as trustee of two trusts, as to which Mr. Hoffmann
disclaims beneficial ownership. Includes 422,770 shares
issuable upon exercise of outstanding stock options granted
to Mr. Hoffmann. Includes 100,000 shares owned by Founders
Group, LLC, a limited liability company in which Mr. Hoffmann
owns one-third of the outstanding ownership interest.
Includes 33,334 shares beneficially owned by Mr. Hoffmann as
trustee of two trusts, as to which Mr. Hoffmann disclaims
beneficial ownership. Mr. Hoffmann's address is ThermoView
Industries, Inc., 1101 Herr Lane, Louisville, Kentucky 40222.
(4) Represents shares issuable upon exercise of outstanding
warrants. GE Capital Equity Investments, Inc. is a subsidiary
of General Electric Company. GE Capital Equity Investments,
Inc.'s address is 120 Long Run Road, Stamford, Connecticut
06927.
(5) Represents shares issuable upon exercise of outstanding stock
options granted to LD Capital, Inc. Substantially all of the
outstanding stock of LD Capital, Inc. is held by Lindsey
Maxwell, the spouse of Mr. Maxwell, our Corporate Development
Manager, as custodian for their minor children. Mr. Clemmens
is also a minority shareholder and the President, Secretary,
Treasurer and sole director of LD Capital, Inc. The address
for LD Capital, Inc. is 133 South Third Street, Suite 402,
Louisville, Kentucky 40202.
(6) Includes 433,548 shares owned by the Robert E. Anderson Trust
UA DTD 4/15/98 for which Mr. Anderson is the trustee and
beneficiary. Mr. Anderson's address is 2645 Pleasant Valley
Road, Owensboro, Kentucky 42303.
(7) Mr. Smith resigned as a director of ThermoView effective
February 2000. Includes 278 shares issuable upon exercise of
outstanding stock options granted to Mr. Smith.
(8) Includes 158,335 shares held by funds managed by Renaissance
Capital Group, Inc., of which Mr. Pearson is the Senior Vice
President of Corporate Finance.
(9) Includes 110,149 shares issuable upon exercise of outstanding
stock options granted to Mr. Clemmens.
(10) Includes 3,334 shares beneficially owned by the spouse
of Ms. Kesler, as to which Ms. Kesler disclaims beneficial
ownership. Includes 100,000 shares owned by Founders Group,
LLC, a limited liability company in which Ms. Kesler owns one-
third of the outstanding ownership interest.
(11) Includes 116,667 shares issuable upon exercise of
outstanding stock options granted to Mr. Cole.
(12) Mr. Dauenhauer became a director of ThermoView effective
March 1, 2000.
(13) Includes 62,500 shares issuable upon exercise of
outstanding stock options granted to Mr. TerBeest.
(14) Mr. Carmicle became a director of ThermoView effective
February 14, 2000. Represents shares held by Lyncar
Enterprises, Inc., of which Mr. Carmicle owns 100% with his
spouse.
(15) Represents 16,667 shares owned by the Michael A. Toal
Revocable Living Trust DTD 6/14/96 for which Mr. Toal is the
trustee and beneficiary. Mr. Toal resigned as a director of
ThermoView in March 2000.
(16) Mr. Bowlds resigned as a director of ThermoView
effective March 1, 2000. Excludes 20,834 shares sold by Mr.
Bowlds to Renaissance Capital Growth & Income Fund III, Inc.
and Renaissance US Growth & Income Trust, PLC but subject to
a put option pursuant to a stock purchase agreement, dated as
of December 10, 1998, by and among Mr. Bowlds, Renaissance
and Douglas I. Maxwell, III. Mr. Bowlds disclaims beneficial
ownership of these shares. Includes 6,945 shares deposited in
escrow pursuant to an escrow agreement, dated as of December
17, 1998, by and among Mr. Bowlds, Renaissance, Mr. Maxwell
and Bank One, Texas, NA and subject to delivery to
Renaissance pursuant to the Renaissance stock purchase
agreement. Robert Pearson, Senior Vice President of
Renaissance, is a director of ThermoView.
(17) Includes 712,364 shares issuable upon exercise of
outstanding stock options and warrants owned by all directors
and officers as a group which vest within 60 days of March 1,
2000. Includes only 100,000 shares owned by Founders Group,
LLC, but which shares are included in the individual totals
for both Mr. Hoffmann and Ms. Kesler.
PROPOSAL 1:
ELECTION OF DIRECTORS
The first proposal on the agenda for this year's annual
meeting will be to elect three directors to serve as Class I
directors for a three-year term beginning at the meeting and
expiring at the 2003 annual meeting of stockholders or until
succeeded by another qualified director who the stockholders have
properly elected. The Board of Directors currently consists of
seven directors divided into three classes, Class I, Class II and
Class III, serving staggered three-year terms. The Class I
directors are up for election at the meeting. The nominees for
election are Ronald L. Carmicle, Robert C. Pearson and Raymond C.
Dauenhauer, Jr., all current Class I directors. The Class II and
Class III directors will continue in office following the
meeting. Their terms will expire in 2001 and 2002, respectively.
Any alteration, amendment or repeal of the staggered board
requirement in our restated certificate of incorporation would
require the affirmative vote of stockholders owning at least 66
2/3% of the total shares outstanding and entitled to vote
generally in the election of directors, voting together as a
single class.
We will vote your shares as you specify when providing your
proxy. If you do not specify how you want your shares voted when
you provide your proxy, we will vote them for the election of all
nominees. If unforeseen circumstances, such as death or
disability, make it necessary for the Board of Directors to
substitute another person for any of the nominees, we will vote
your shares for that other person.
Following is the principal occupation with ThermoView, age
and other information for each director nominee and other
directors serving unexpired terms.
NOMINEES FOR ELECTION AT THIS MEETING TO A TERM EXPIRING IN 2003:
NAME AGE POSITION
- ---- --- --------
Ronald L. Carmicle ..........51 Director
Robert C. Pearson ...........64 Director
Raymond C. Dauenhauer, Jr. ..56 Director
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ABOVE
NOMINEES.
DIRECTORS WHOSE TERMS CONTINUE UNTIL 2001:
NAME AGE POSITION
- ---- --- --------
J. Sherman Henderson, III ...57 Director
Delores P. Kesler ...........59 Director
DIRECTORS WHOSE TERMS CONTINUE UNTIL 2002:
NAME AGE POSITION
- ---- --- --------
Stephen A. Hoffmann .........54 Chairman of the Board and
Chief Executive Officer
Nelson E. Clemmens ..........50 President and Director
NOMINEES FOR CLASS I DIRECTORS -- TERMS EXPIRING IN 2003:
RONALD L. CARMICLE. Mr. Carmicle has served as a director of
ThermoView since February 2000. Mr. Carmicle has served as the
President of River City Development Corporation, a construction
company, since February 1975. Mr. Carmicle has also served as the
Managing Member of Tates Builders Supply Co. since September
1994. Mr. Carmicle served as President and a National Director of
the Associated Builders and Contractors, Inc., a national trade
association from 1977 to 1978 and is currently Chairman of the
Construction Training Institute. Mr. Carmicle also serves as a
director of various private and charitable organizations. Mr.
Carmicle received a B.S. degree from Western Kentucky University.
ROBERT C. PEARSON. Mr. Pearson has served as a director of
the Company since March 1, 2000. Mr. Pearson has been Senior Vice-
President of Corporate Finance for Renaissance Capital Group,
Inc., which manages funds investing in emerging growth companies,
since September 1997. Mr. Pearson served as a professional
management and financial consultant from May 1994 to May 1997.
Mr. Pearson formerly served as Executive Vice President and Chief
Financial Officer for the Thomas Group, Inc. from May 1990 to
March 1994, and was Vice President of Finance and Controller for
Supercollider Laboratory, a division of Texas Instruments
Incorporated prior to 1990. Mr. Pearson was an Associate Director
for the Supercollider Laboratory and is currently a Director of
four publicly held companies, as well as an advisor to the Board
for three other firms. Mr. Pearson holds an M.B.A. from the
University of Michigan and a B.S. degree from the University of
Maryland.
RAYMOND C. DAUENHAUER, JR. Mr. Dauenhauer has served as a
director of the Company since March 1, 2000. Mr. Dauenhauer
served as Chief Executive Officer of Dauenhauer & Son Plumbing
and Piping, Inc., a Louisville, Kentucky based plumbing operation
from July 1997 to September 1999. Mr. Dauenhauer currently serves
as a Director of First Bank of Louisville, Kentucky and is a life
member of the Board of Directors for the Louisville Association
of Home Builders. Additionally, Mr. Dauenhauer serves as
President and Director of the Cerebral Palsy Kids Center. Mr.
Dauenhauer has held numerous offices in state and national
associations of the plumbing heating and cooling industry, and is
a recipient of the "Distinguished Citizen" award from the City of
Louisville.
CLASS II DIRECTORS - TERMS EXPIRING IN 2001:
J. SHERMAN HENDERSON, III. Mr. Henderson has served as a
director of ThermoView since August 1998. Mr. Henderson has
served as President and Chief Executive Officer of UniDial
Communications, a telecommunications company, since August 1993.
Mr. Henderson is also a founder, President and Chief Executive
Officer of UniDial Direct, which sells commercial
telecommunication products. Mr. Henderson has served as the
Chairman of the Telecom Resellers Association, a national trade
organization, since May 1994. Mr. Henderson received a B.S. in
Business Management from Florida State University in 1965.
DELORES P. KESLER. Ms. Kesler has served as a director of
ThermoView since August 1998. Ms. Kesler was a co-founder of
AccuStaff and from August 1991 to September 1998 served as
Chairperson and Chief Executive Officer of AccuStaff. Ms. Kesler
has been a member of The Founders Group LLC, a Louisville,
Kentucky based venture capital firm, since 1997. Since 1993, Ms.
Kesler has been a director of PSS/World Medical, Incorporated, a
distributor of medical supply equipment and pharmaceuticals to
office-based physicians. Ms. Kesler also serves as a director of
various private and charitable organizations.
CLASS III DIRECTORS - TERMS EXPIRING IN 2002:
STEPHEN A. HOFFMANN. Mr. Hoffmann has served as Chairman of
the Board and Chief Executive Officer of ThermoView since April
1998 and as President from April 1998 to November 1998. From May
1992 to February 1997, Mr. Hoffmann, a co-founder of AccuStaff
Incorporated, served in various positions with AccuStaff
including Vice Chairman and Vice President of Acquisitions.
AccuStaff is now known as Modis Professional Services, Inc., a
New York Stock Exchange listed temporary staffing company based
in Jacksonville, Florida, with annual revenues of approximately
$2.5 billion as of August 1998. The principal growth of AccuStaff
revenues has been through an aggressive consolidation strategy in
the temporary staffing industry. Mr. Hoffmann was also a co-
founder of MetroTech, Inc., a predecessor entity to AccuStaff.
Additionally, Mr. Hoffmann has been a member of The Founders
Group LLC, a Louisville, Kentucky based venture capital firm,
since 1997. Mr. Hoffmann received a B.S. in Commerce with a minor
in Accounting from the University of Louisville in 1972.
NELSON E. CLEMMENS. Mr. Clemmens has served as a director of
ThermoView since April 1998 and as President of ThermoView since
November 1998. Mr. Clemmens formerly served as Vice President-
Finance and Administration and Secretary of ThermoView from April
1998 to November 1998. Mr. Clemmens has been Managing Director of
Pine South Capital, a private investment banking firm, since its
founding in April 1986. Mr. Clemmens has also been active as
owner, principal or investor in seven operating companies during
the same period, including a multi-service home health company
consolidation. From February 1999 to August 1999, Mr. Clemmens
was the majority owner of HCP, Inc., a regional health care
services company. Since August 1999, he has served as managing
member of Viscount III, LLC, the majority owner of HCP, Inc. From
November 1997 until July 1999, Mr. Clemmens was Chairman of WBC,
Inc., a railroad equipment distribution company. From May 1989
until May 1990, Mr. Clemmens was also a co-owner of Courier
Graphics, Inc., a specialized printer, and from May 1987 until
December 1989 President and co-owner of Transue & Williams
Stamping Co., a parts fabrication company. From August 1983 until
April 1986, Mr. Clemmens served as Vice President of
Finance/Administration with Olicon/Raytel, a health care venture.
From January 1982 until August 1983, Mr. Clemmens served as
Senior Vice President of Stratford Leasing Company. From June
1977 until January 1982, Mr. Clemmens served in several corporate
finance management positions with General Electric Capital
Corporation. Mr. Clemmens holds a B.A. degree from Stetson
University and an M.B.A. from Western Kentucky University.
MEETINGS OF THE BOARD
The Board of Directors meets on a quarterly basis and at
other times from time to time. The Board of Directors also
undertakes action by unanimous written consent as permitted by
Delaware law. In 1999, the Board of Directors met eight times.
All directors attended at least 75% of the meetings of the Board
of Directors and of the committees on which they served during
the period in which they held office.
COMMITTEES OF THE BOARD
The Board of Directors has an audit committee and a
compensation committee, but does not have a nominating committee.
Members of the Board of Directors make recommendations to the
full Board for future nominations for membership to the Board of
Directors.
AUDIT COMMITTEE. The Board of Directors established its
audit committee in December 1998. This committee reviews, acts on
and reports to the Board of Directors with respect to various
auditing and accounting matters, including the recommendation of
ThermoView's independent auditors, the scope of the annual
audits, fees that ThermoView agrees to pay to the independent
auditors, the performance of ThermoView's independent auditors
and the accounting practices of ThermoView. The members of the
audit committee are Messrs. Henderson and Dauenhauer and Ms.
Kesler. The members of the audit committee are independent for
purposes of the listing standards of the American Stock Exchange.
COMPENSATION COMMITTEE. The Board of Directors established
the compensation committee in December 1998. This committee
determines the salaries and benefits, including stock option
grants, for ThermoView's employees, consultants, directors and
other individuals. The compensation committee also administers
ThermoView's compensation plans. The members of the compensation
committee are Messrs. Henderson, Dauenhauer and Carmicle.
STRATEGIC OPERATIONS COMMITTEE
We have a strategic operations committee comprised of five
managers of our subsidiaries, each of whom has substantial
experience in the replacement window and related product
businesses. The members of the Strategic Operations Committee are
Messrs. Clark, Haines, Kron, Leingang and Thomas. This committee
serves as a formal advisory, problem-solving and communications
forum for us. The committee evaluates and advises our
subsidiaries related to:
* our product mix and lines;
* our product design and features;
* our manufacturing facility locations, processes,
quality controls and expansions;
* our delivery and installation services;
* our purchasing programs;
* our marketing, sales and advertising programs; and
* industry trends and issues.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the compensation committee of the
Board of Directors is an officer or employee of ThermoView. No
executive officer of ThermoView serves as a member of the Board
of Directors or compensation committee of any entity that has one
or more executive officers serving on ThermoView's compensation
committee.
COMPENSATION OF DIRECTORS
We currently pay our directors a fee of $10,000 per annum
plus reimbursement for expenses incurred in connection with their
services performed as directors. Outside directors also receive
$500 per meeting for attendance by person or by phone conference.
Additionally, we have committed to grant to each outside director
an option to purchase 2,500 shares of common stock at the market
price of the Common Stock on the date of grant with a vesting
over three years as compensation for service as a director. In
May 1999, the compensation committee granted to Messrs. Henderson
and Michael A. Toal, a former director, and Ms. Kesler,
ThermoView's three outside directors at that time, non-qualified
stock options to purchase, in the aggregate, 7,500 shares of
common stock under the 1999 stock option plan as compensation for
services rendered as directors. These options are exercisable in
whole or in part and one-third of these options vest in each of
May 2000, 2001 and 2002. These options expire in May 2009.
PROPOSAL 2:
REDUCTION OF AUTHORIZED SHARES OF OUR COMMON STOCK AND PREFERRED
STOCK
INTRODUCTION. Our Board of Directors has unanimously
adopted a resolution setting forth a proposed amendment to our
restated certificate of incorporation reducing the number of
authorized shares that we may issue and directing that we submit
this amendment to stockholders for their consideration and vote
at the annual meeting. The proposed amendment would revise
Article 4 of our certificate of incorporation to reduce the
number of authorized shares to no more than 30 million, with 5
million for preferred stock and the balance of 25 million for
common stock.
PURPOSES AND EFFECTS OF THE AMENDMENT. We propose the
amendment to reduce the amount of the franchise tax levied by the
state of Delaware. Delaware calculates the franchise tax two
ways. We may elect the method that produces the lower tax.
The authorized shares method multiplies the number of
authorized shares by a fixed amount determined by Delaware. Using
this method, we would pay the maximum tax of $150,000 annually
based upon either the current number of authorized shares or the
reduced number of shares proposed by this amendment.
The assumed par value capital method calculates the tax
based upon an assumed par value for all outstanding shares.
Delaware multiplies the assumed par value by the number of our
authorized shares. Due to the large number of shares we currently
have authorized, but not outstanding, we must bear a higher
burden of this franchise tax than is necessary. Based upon our
current capitalization and assets, two variable factors that
affect the amount of the franchise tax, we believe that a reduction
of the authorized shares will reduce our annual franchise tax by
approximately 50% from the maximum of $150,000 in 2000 to
approximately $75,000 in 2001.
ADVANTAGES AND DISADVANTAGES OF THE AMENDMENT. The proposed
amendment has both advantages and disadvantages to you. Our Board
of Directors believes that, by reducing the number of authorized
shares as proposed by this amendment, we can reduce our liability
to Delaware. The disadvantage is our future need to seek
stockholder approval to amend our certificate of incorporation in
the event that we desire to issue common or preferred stock in an
amount which exceeds the number of authorized shares.
We currently have 7,324,550 shares of common stock
outstanding and 3,625,708 shares of common stock reserved for the
conversion of outstanding preferred stock and the exercise of
warrants and options. We propose to reduce the number of
authorized common shares from 100 million to 25 million. We do
not currently anticipate the need to issue additional common
shares in an amount that would exceed the number of authorized
common shares as proposed by this amendment.
We currently have 1,445,316 shares of preferred stock
outstanding. The current number of authorized shares of preferred
stock is 50 million. The proposed amendment would reduce the
number of authorized shares of preferred stock to 5 million. We
do not currently anticipate the need to issue additional shares
of preferred stock in an amount that would exceed the number of
authorized preferred shares as proposed by this amendment.
Before voting on the adoption of this proposal, we urge you
to review carefully the following proposals in this proxy
statement which contain information relating to the proposed
amendment to article 4 of our certificate of incorporation. We
qualify the description of this amendment by reference to the
full text of the amendment, contained in Appendix I of this proxy
statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL 3:
AUTHORIZATION TO ISSUE UP TO 3.75 MILLION SHARES OF COMMON STOCK
INTRODUCTION. Our management believes that we will need the
ability to raise additional capital through the sale of our
common stock in public or private offerings. We will not need
stockholder approval to undertake a public offering of our common
stock. However, we need stockholder approval for private
issuances of our common stock as required by the American Stock
Exchange, the exchange on which our common stock trades. The pre-
approval of a potential private offering of our common stock will
provide us the flexibility to raise additional capital in a
timely manner should we elect to sell our common stock in the
future.
REASON FOR STOCKHOLDER APPROVAL. Although the Board of
Directors has the authority under our certificate of
incorporation to approve the issuance of common stock, American
Stock Exchange rules require approval by a majority of votes cast
by stockholders for the private issuance of common stock if the
proposed issuance exceeds by more than 20% our outstanding common
stock and the price at which we sell the common stock is less
than the greater of the market value or the book value of our
common stock at the time of sale.
This proposal seeks approval for the issuance of up to 3.75
million shares of our common stock, which is more than 20% of the
current outstanding number of approximately 7.5 million shares.
Additionally, the price that investors may pay for the newly
issued shares could potentially be less than the book value or
market value at the time that we offer the new shares in a
private placement or private placements. Consequently, we believe
that the prudent course of action is to seek stockholder approval
in the event we choose to pursue a private placement or private
placements of our common stock.
NEED FOR ADDITIONAL EQUITY AND WORKING CAPITAL.
If we seek additional capital, it will be to:
* redeem all or a portion of the 1,439,316 shares of
our 12% Series D preferred stock issued in April
2000 to satisfy our obligations under earn-out
provisions with previous owners of our
subsidiaries;
* finance the opening of new retail locations and
expand the market areas of our existing retail
subsidiaries;
* finance high quality acquisition targets that we
may identify; and
* finance unanticipated working capital needs.
GENERAL EFFECT OF TRANSACTION ON EXISTING STOCKHOLDERS. If
our stockholders approve this proposal and we elect to privately
issue our common stock on terms as we have described above, our
stockholders will suffer dilution of their voting rights and
earnings per share. Additionally, we have legal obligations,
commonly referred as anti-dilution provisions, to the holders of
our Series C preferred stock or common stock equivalents, and our
subordinated debt holder that would require further issuances of
our common stock so as to maintain, and in the case of the
holders of our Series C preferred stock to substantially
increase, their current percentage of ownership in ThermoView in
the event of an issuance as described in this proposal.
Therefore, the approval of this proposal would dilute the
percentage ownership interests of our current holders of common
stock not only by the number of shares issued to purchasers, but
also by the shares of common stock equivalents issued to the
holders with anti-dilution protection.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL 4:
RATIFICATION OF INDEPENDENT AUDITORS
Our Board of Directors has appointed Ernst & Young LLP as
independent auditors for the year 2000, subject to ratification
by our stockholders.
On November 10, 1998, our Board of Directors approved the
engagement of Ernst & Young LLP, and the dismissal of Singer,
Lewak, Greenbaum & Goldstein, LLP, as our independent auditors in
preparation for our initial public offering. During the year
ended December 31, 1997, and the subsequent interim period
preceding the dismissal of Singer, Lewak, Greenbaum & Goldstein,
LLP in November 1998, there were no disagreements between them
and us on any matters of accounting principles or practices,
financial statement disclosure or auditing scope or procedure,
and no reportable events relating to the relationship between
Singer, Lewak, Greenbaum & Goldstein and us.
We expect a representative of Ernst & Young to be present at
our annual meeting and will have the opportunity to make a
statement if desired, and we expect this representative to be
available to respond to appropriate questions.
In the event our stockholders fail to ratify the
appointment, we will consider this failure as a direction to our
Board of Directors to select another independent auditing firm.
Although our stockholders may ratify the selection of Ernst &
Young, our Board of Directors, in their discretion, may direct
the appointment of a new independent auditing firm at any time
during the year if they feel that a change would be in the best
interests of ThermoView and our stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG.
EXECUTIVE COMPENSATION
The following table sets forth all compensation awarded to,
earned by or paid to ThermoView's Chief Executive Officer and the
four other highest compensated executive officers and officers no
longer serving as of December 31, 1999 whose annual salary and
bonus exceeded $100,000 in 1999 for services rendered in all
capacities to ThermoView during 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG -TERM
COMPENSATION AWARDS
-------------------
ANNUAL COMPENSATION SECURITIES
------------------------------------- UNDERLYING
NAME AND OTHER ANNUAL OPTIONS/SARS ALL OTHER
PRINCIPAL POSITION YEAR SALARY COMPENSATION (# SHARES) COMPENSATION
------------------ ---- ------ ------------ --------- ------------
<S> <C> <C> <C> <C> <C>
Stephen A. Hoffmann 1999 $150,000 $20,414(1)(2)(3) - $87,500(4)
Chief Executive Officer 1998 106,250 10,100(1)(2) 426,104 -
Nelson E. Clemmens 1999 154,167 13,564(1)(5) - 87,500(4)
President 1998 89,583(6) 6,631(1)(5) 110,149 -
Richard E. Bowlds(7) 1999 145,000 25,341(1)(8) - 87,500(4)
Former Vice Chairman 1998 167,507(9) 22,409(1)(8) - -
Former Chief Operating Officer
James J. TerBeest(10) 1999 158,000 12,089(11) 41,667
Senior Vice President 1998 100,000 7,303(11) 41,667
Former Chief Financial Officer
Charles L. Smith 1999 185,000(12) 23,411(1)(13) 834
Former Chief Operating Officer 1998 152,933(12) 23,396(1)(13) -
Former Vice President/Manufacturing
Operations
John H. Cole 1999 120,833 4,316(14) 33,334
Chief Financial Officer 1998 16,667 643(14) 100,000
</TABLE>
- ---------------
(1) Includes $10,000 in director fees for 1999 and $5,000 for
1998.
(2) Includes $7,200 in automobile benefits for 1999 and $5,100 in
1998.
(3) Includes $3,214 in insurance benefits.
(4) Represents loan origination fees in connection with a $5.5
million loan and a $2.5 million loan made to ThermoView by a
group of individuals.
(5) Includes $3,564 in insurance benefits for 1999 and $1,631 in
1998.
(6) Includes $6,250 in consulting fees received from Thermo-Tilt
in April 1998.
(7) Resigned as Chief Operating Officer in July 1999 and Vice
Chairman in March 2000.
(8) Includes $9,000 in automobile benefits and $6,341 in
insurance benefits for 1999, and $12,652 in automobile
benefits and $4,757 in insurance benefits in 1998.
(9) Represents $58,174 in salary paid by Thermo-Tilt from January
1998 to May 1998 and $109,333 in salary paid by ThermoView
from April 1998 to December 1998.
(10) Mr. TerBeest resigned as Chief Financial Officer in July
1999.
(11) Includes $6,000 in automobile benefits and $6,089 in
insurance benefits for 1999 and $4,000 in automobile benefits
and $3,303 in insurance benefits in 1998.
(12) Represents $125,000 in salary paid by Primax Window Co.
and $65,000 in salary paid by Precision Window for 1999 and
$137,308 in salary paid by Primax from January to November
1998 and $15,625 in salary paid by ThermoView from November
1998 to December 1998.
(13) Includes $9,360 in automobile benefits and $4,051 in
insurance benefits for 1999 and $9,598 in automobile benefits
and $8,798 in insurance benefits for 1998.
(14) Represents insurance benefits.
STOCK OPTION GRANTS
The following table sets forth information regarding options
granted by ThermoView to the named executive officers during the
year ended December 31, 1999. Each option represents the right to
purchase one share of common stock. ThermoView has not granted
any stock appreciation rights.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------- Potential realizable value
Number of at assumed annual rates of
securities Percentage Per stock price appreciation
underlying of total share for option term
options granted options exercise Expiration --------------------------
Name (# shares) granted price Date 5% 10%
---- ---------- ------- ----- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
John H. Cole 33,334 5.8% $11.43 07/29/09 $239,614 $607,228
Charles L. Smith 834 .1 15.93 01/01/09 8,355 21,174
James J. TerBeest 41,667 7.2 11.43 07/29/09 299,513 759,026
</TABLE>
OPTION EXERCISES AND HOLDINGS
The following table sets forth information concerning the
number and value of unexercised options held by each of the named
executive officers at December 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-
END OPTION VALUES
<TABLE>
<CAPTION>
Number of securities Value of unexercised
underlying unexercised in-the-money
Shares options at fiscal options at
acquired year end (# shares) fiscal year end(1)
on exercise Value -------------------------- -------------------------
Name (# shares) Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ---------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen Hoffmann 3,334 $34,607 422,770 0 $208,473 0
Nelson E. Clemmens 0 0 110,149 0 55,874 0
James J. TerBeest 0 0 62,501 20,834 17,708 0
Charles L. Smith 0 0 278 556 0 0
John H. Cole 0 0 116,667 16,667 42,500 0
</TABLE>
- ---------------
(1) The value of the in-the-money options is based on the $3.875
per share closing price of our common stock on the American
Stock Exchange on December 31, 1999.
1998 EMPLOYEE STOCK OPTION PLAN
The 1998 employee stock option plan became effective as of
April 15, 1998. In December 1998, the Board of Directors declared
that, effective January 1, 1999, it would not grant any
additional options under the 1998 employee stock option plan due
to the implementation of the 1999 stock option plan. The purpose
of the 1998 employee stock option plan was to promote the
interests of ThermoView by attracting key employees, providing
its key employees with an additional incentive to work to
increase the value of the common stock and providing key
employees with a stake in the future of ThermoView which
corresponds to the stake of the stockholders. The Board of
Directors granted options to purchase 493,334 shares under the
1998 employee stock option plan at prices ranging from $3.45 to
$15.93. On January 1, 1999, the Board of Directors authorized the
transfer of the remaining 6,667 authorized but unissued shares
reserved for the 1998 employee stock option plan to the 1999
stock option plan. The 1998 employee stock option plan provided
for the granting to key employees of either incentive stock
options within the meaning of Section 422 of the Internal Revenue
Code of 1986 or non-qualified stock options under the Internal
Revenue Code.
1999 STOCK OPTION PLAN
The 1999 stock option plan became effective as of January 1,
1999. The purpose of the 1999 stock option plan is to promote the
interests of ThermoView by attracting key employees and
directors, providing each of its key employees and directors with
an additional incentive to work to increase the value of the
common stock and providing key employees and directors with a
stake in the future of ThermoView which corresponds to the stake
of the stockholders. ThermoView authorized for issuance a total
of 833,334 shares of common stock under the 1999 stock option
plan. As of December 31, 1999, the Board of Directors had granted
options to purchase 458,541 shares of common stock at prices
ranging from $11.43 to $25.86.
STOCK OPTIONS. Each stock option granted under the 1999
stock option plan entitles the holder to purchase the number of
shares of common stock specified in the grant at the purchase
price specified. The 1999 stock option plan authorizes the
Compensation Committee to grant:
* incentive stock options within the meaning of Section
422 of the Internal Revenue Code to key employees, and
* non-qualified stock options under the Internal Revenue
Code to key employees or non-employee directors.
If an option granted under the 1999 employee stock option
plan expires, is canceled or is exchanged for a new option before
a holder exercises the option in full, the shares reserved for
the unexercised portion of the option will become available again
for use under the 1999 stock option plan. Shares underlying an
option that a holder surrenders and shares used to satisfy an
option price or withholding obligation will not become available
for use under the 1999 stock option plan.
401(K) PLAN
In January 1999, our Board of Directors created a 401(k)
profit sharing plan for its employees. Participants may elect to
make contributions pursuant to salary withholding not to exceed
$10,000 per annum. We intend to make matching contributions on
the first 25% of the first 6% of a participant's annual
compensation that a participant contributes.
EMPLOYMENT AGREEMENTS
Thermo-Tilt and Mr. Hoffmann were parties to an employment
agreement, as amended, governing his employment with Thermo-Tilt.
The agreement expired in January 2000.
ThermoView and Mr. Hoffmann were parties to an employment
agreement, as amended, governing his employment with ThermoView.
The agreement expired in April 2000. The agreement provided that
Mr. Hoffmann receive a base salary of $150,000 per annum and be
eligible to receive an annual bonus equal to two percent of
ThermoView's pre-tax income.
Thermo-Tilt and Mr. Clemmens were parties to an employment
agreement, as amended, governing his employment with Thermo-Tilt.
The agreement expired in January 2000.
ThermoView and Mr. Clemmens were parties to an employment
agreement, as amended, governing his employment with ThermoView.
The agreement expired in April 2000. The agreement provided that
Mr. Clemmens receive a base salary of $150,000 per annum.
ThermoView and Mr. Bowlds were parties to an employment
agreement governing his employment with ThermoView. The agreement
expired in January 2000. The agreement provided that Mr. Bowlds
receive a base salary of $145,000 per annum.
ThermoView and Mr. TerBeest are parties to an employment
agreement governing his employment with ThermoView as its Senior
Vice President-Finance and Accounting. The agreement expires in
May 2001. The agreement provides that Mr. TerBeest will receive a
base salary of $158,000 per annum.
ThermoView and Mr. Smith are parties to an employment
agreement governing his employment with Primax Window Co. The
agreement expires in April 2001. The agreement provides that Mr.
Smith will receive a base salary of $125,000 per annum.
ThermoView and Mr. Smith are also parties to an employment
agreement governing his employment with Precision Window Mfg.,
Inc. The agreement expires in January 2002. The agreement
provides that Mr. Smith will receive a base salary of $60,000 per
annum.
ThermoView and Mr. Cole are parties to an employment
agreement governing his employment with ThermoView. The agreement
expires in October 2000. The agreement provides that Mr. Cole
will receive a base salary of $150,000 per annum.
Each of the employment agreements summarized above provides
that the executive retains his salary and benefits until the
expiration of the employment agreement if we terminate the
executive without cause.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SALES OF STOCK TO INSIDERS
Since July 1997, we have issued and sold securities to the
following persons or entities who are our executive officers,
directors or principal stockholders. These figures reflect
activity through March 31, 2000.
<TABLE>
<CAPTION>
PER SHARE
TYPE OF NUMBER OF PURCHASE OR
INVESTOR SECURITY SHARES DATE ISSUED EXERCISE PRICE
- -------- -------- ------ ----------- --------------
<S> <C> <C> <C> <C>
Brown Simpson Strategic Growth Preferred 6,000 April 1999 $1,000
Fund, Ltd. and Brown Simpson (Series C)
Strategic Growth Fund, L.P. ........ Warrant 400,000 April 1999 18.00
Common 6,246 October 1999 (1)
Common 13,546 January 2000 (1)
Richard E. Bowlds .................... Common 1,627,286 July 1997 (2)
GE Capital Equity Investments, Inc. .. Warrant 555,343 July 1999 0.03
Stephen A. Hoffmann .................. Common 2,899 March 1998 3.45
Options 7,248 October 1997 0.87
Options 105,083 January 1998 3.45
Options 266,667 April 1998 3.45
Robert E. Anderson .................. Common 231,907 November 1997 3.09
Common 57,977 March 1998 3.45
LD Capital, Inc. ..................... Common 35,189 July 1997 0.57
Options 492,802 October 1997 0.87
Evangel Christian Life Center ........ Common 339,024 July 1997 0.57
Charles L. Smith ..................... Common 153,000 April 1998 (3)
Nelson E. Clemmens ................... Options 14,495 October 1997 0.87
Options 28,988 January 1998 3.45
Options 66,667 November 1998 6.90
Delores P. Kesler .................... Common 14,495 March 1998 3.45
Options 2,500 May 1999 11.64
John H. Cole ......................... Options 100,000 April 1998 3.45
Options 33,334 July 1999 11.43
Michael A. Toal ...................... Preferred(4) 50,000 July 1998 5.00
(Series A)
Options 2,500 May 1999 11.64
J. Sherman Henderson III ............. Options 2,500 May 1999 11.64
Robin C. Edwardsen ................... Options 66,667 July 1999 11.43
</TABLE>
- ---------------
(1) Represents dividends on the Series C preferred stock.
(2) Thermo-Tilt issued these shares to Mr. Bowlds in connection
with the conversion of his sole proprietorship into a
corporation. No value was assigned to these shares for
accounting purposes since the business exchanged for the
shares had no basis for accounting purposes.
(3) Issued in connection with an acquisition.
(4) Converted to 16,667 shares of common stock in December 1999.
SERIES C PREFERRED STOCK AND WARRANTS
In April 1999, we issued an aggregate of 6,000 shares of
Series C preferred stock to two institutional accredited
investors, Brown Simpson Growth Fund, L.P., a New York limited
partnership, and Brown Simpson Growth Fund, Ltd., a Grand Cayman,
Cayman Islands limited partnership, at a per share purchase price
of $1,000, for a total investment of $6.0 million. Each share of
the Series C preferred stock converts into 66 2/3 shares of our
common stock, subject to adjustment. In conjunction with the
issuance of the Series C preferred stock, we issued to the two
funds warrants to purchase up to a total of 400,000 shares of
common stock at $21.00 per share, subject to adjustment, which
expire in April 2004. In August 1999 we amended the exercise
price of the warrants to $18.00 per share in exchange for a
commitment of the two funds to refrain from selling any of our
securities from the closing of our initial public offering to
January 31, 2000. We also granted registration rights to the two
funds and pursuant to those rights we filed a registration
statement on Form S-1 to register 1,200,000 shares of our common
stock to be offered for sale by the two funds. The shares subject
to the registration statement represent 150% of the shares of our
common stock issuable upon conversion of the Series C preferred
stock and exercise of the warrants.
SERIES D PREFERRED STOCK
In April 2000, we agreed to issue an aggregate of 1,439,316
shares of 12% Cumulative Series D preferred stock with a
liquidation value of $5.00 per share to Michael Haines, Alvin W.
Leingang and Rodney H. Thomas, three of our key employees and two
other individuals, all of whom were prior principals of companies
we acquired. We agreed to issue these shares as full payment of
post closing earn-out incentives owed to these key employees and
principals that were due and payable in cash and common stock and
full payment of interest earned by these individuals prior to
settlement of the earn-out incentives. The Series D preferred
stock is senior to our common stock and is on parity with the
Series C preferred stock. The Series D preferred stock will pay
cumulative dividends at the rate of $.60 per share annually,
subject to the legal availability to pay the dividends and the
consent of our senior lender. The shares of Series D preferred
stock are redeemable by ThermoView for cash or common stock that
equals the liquidation value of the shares redeemed, plus
cumulative unpaid dividends. The shares of Series D preferred
stock are not convertible into common stock, have no voting
rights and contain no registration rights.
SENIOR SUBORDINATED NOTE AND WARRANTS
In July 1999, we received $10.0 million in senior
subordinated financing from GE Capital Equity Investments, Inc.
Interest under the note is payable quarterly in arrears at 12%
per annum, subject to substantial increases in certain
circumstances. Principal under the note is payable in full in
July 2002. We may prepay the note at a premium prior to its
maturity. The note requires us to comply with certain affirmative
and negative covenants. The note, which is subordinate to our
line of credit with PNC Bank, is secured by a lien on
substantially all of our assets, a guarantee executed by our
subsidiaries and a pledge of our ownership in our current and
future subsidiaries. In conjunction with the issuance of the
note, we issued to GE Capital warrants to purchase 555,343 shares
of our common stock at $0.03 per share which expire during July
2007. We have also granted to GE Capital two demand registration
rights and unlimited piggyback registration rights for the shares
of common stock issuable upon exercise of the warrants.
ThermoView is contractually obligated to use its best
efforts to cause a designee of GE Capital to be elected to its
Board of Directors for so long as GE Capital holds any portion of
its note or warrant. Additionally, while no designee of GE
Capital is serving on the Board of Directors, GE Capital has the
right to designate an individual observer to attend all meetings
of the Board of Directors and any committees of the Board of
Directors in a non-voting observer capacity. GE Capital
negotiated these rights as part of its financing arrangements
with ThermoView.
TERM NOTE
In October 1999, we amended our line of credit with PNC Bank
to provide for additional short-term borrowings under a multiple
advance term note up to $2.5 million. The note bore interest at
prime plus one percent per annum and interest was payable
monthly. We paid the principal and interest of this note in
December 1999 from the proceeds of our initial public offering.
Stephen A. Hoffmann, Richard E. Bowlds, Nelson E. Clemmens and
Douglas I. Maxwell, III guaranteed the note for an aggregate in
fees of $100,000. Messrs. Hoffmann and Clemmens are officers and
directors of ThermoView, Mr. Bowlds is a former director and
officer of ThermoView and Mr. Maxwell is an employee of
ThermoView.
RELATED-PARTY LEASES
ThermoView leases its headquarters from Glenn Lyon Lease
Development, Inc., a corporation controlled by Mr. Hoffmann, for
$111,000 annually. Primax leases its headquarters from Mr. Smith
for $82,000 annually. Additionally, on December 20, 1997, Thermo-
Tilt entered into a sale-leaseback transaction on its
headquarters with Industrial Leasing of Florida, Inc., a Florida
corporation controlled by Robert E. Anderson, a stockholder of
ThermoView. Industrial Leasing of Florida purchased Thermo-Tilt's
headquarters for $620,000 and Thermo-Tilt deferred the $55,000
gain on the sale, which is being amortized to income over the
term of the lease. Thermo-Tilt leases its headquarters from
Industrial Leasing of Florida for $78,000 annually.
RELATED-PARTY NOTES AND LOAN GUARANTEES
During 2000, we amended our line of credit with PNC Bank. In
connection with the amendment, Stephen A. Hoffmann, Richard E.
Bowlds, Nelson E. Clemmens and Douglas I. Maxwell, III guaranteed
$3.0 million of our line of credit for fees equal to an annual
rate of 5% from April 2000 through June 2000 and 10% thereafter,
subject to Board of Director approval.
During 1998 and 1999, ThermoView had a $5.5 million note
payable to Stephen A. Hoffmann, Nelson E. Clemmens, Richard E.
Bowlds and Douglas I. Maxwell, III. Messrs. Hoffmann and Clemmens
are officers and directors of ThermoView, Mr. Bowlds is a former
director and officer of ThermoView, and Mr. Maxwell is an
employee of ThermoView. The note, which evidenced a loan from
these individuals to ThermoView, bore interest at a Euro-Rate
based variable rate until we repaid it in July 1999. ThermoView
paid a $250,000 fee to these individuals in connection with the
note.
During 1999, ThermoView had a $750,000 note payable to
Stephen A. Hoffmann, ThermoView's Chairman of the Board and Chief
Executive Officer. The note, which evidenced a loan from Mr.
Hoffmann to ThermoView, bore interest at 12% per annum until we
repaid it in April 1999.
During 1999, ThermoView had a $150,000 note payable to
Richard E. Bowlds, ThermoView's former Vice Chairman of the Board
and former Executive Vice President- Acquisitions. The note,
which evidenced a loan from Mr. Bowlds to ThermoView, bore
interest at 12% per annum until we repaid it in April 1999.
During 1999, ThermoView had a note payable in the original
principal amount of $600,000 to Charles L. Smith, our former
Chief Operating Officer and a former director. The note, which
was issued as partial consideration in our acquisition of
Precision Window Mfg., Inc., bore interest at 5.0% per annum. The
note matured concurrently with the effectiveness of our initial
public offering. We used a portion of the proceeds of our initial
public offering to retire the remaining principal balance of
$450,000 under the note.
During 1999, Thermo-Tilt had a note receivable from
Bluegrass Water Treatment, Inc., a Kentucky corporation. James A.
Bowlds, the son of Richard E. Bowlds, our former Vice Chairman of
the Board and former Executive Vice President-Acquisitions,
controls Bluegrass Water Treatment, Inc. In January 1999, Mr.
James Bowlds repaid the $181,000 note. The note bore interest at
8% per annum.
RELATED-PARTY LINE OF CREDIT COMMITMENT
In April 1998, the Founders Group, LLC, a venture capital
firm controlled by Stephen A. Hoffmann and Delores P. Kesler,
committed to provide ThermoView a $5.0 million revolving line of
credit. The line of credit was never used and in September 1999
the Founders Group terminated the commitment to provide the
revolving line of credit.
RELATED-PARTY RECEIVABLES
During 1998 and 1999, Thermo-Tilt had receivables due from
Richard E. Bowlds, our former Vice Chairman of the Board and
former Executive Vice President-Acquisitions, in an amount which
never exceeded $201,000. The receivables represented short-term
non-interest bearing loans from Thermo-Tilt to Mr. Bowlds for a
variety of personal expenditures made by Mr. Bowlds. Mr. Bowlds
repaid the receivables in January 1999.
PRIVATE STOCK SALES
During December 1998 and January 1999, Richard E. Bowlds,
former Vice Chairman of the Board and former Executive Vice
President of ThermoView sold 4,958 shares of common stock to
Raymond C. Dauenhauer, Jr., in two private transactions at $12
per share. During October 1999 and November 1999, Mr. Bowlds sold
496,011 shares of common stock in private transactions to 27
individuals or entities at $3.00 per share. Charles L. Smith,
former Chief Operating Officer and a former director of
ThermoView, purchased 53,334 shares from Mr. Bowlds. John H.
Cole, Chief Financial Officer of ThermoView, purchased 28,334
shares, from Mr. Bowlds. Joel S. Kron, Rodney H. Thomas and
Robert L. Cox, II, who are all Vice Presidents of ThermoView,
purchased 33,334, 55,000 and 55,000 shares, respectively, from
Mr. Bowlds. Mr. Bowlds, who formerly beneficially owned in excess
of 10% of ThermoView's common stock, currently beneficially owns
less than 1% of the common stock.
COMPANY POLICY
Our Board of Directors has reviewed the lease transactions
summarized above and believes that those transactions were made
on terms no less favorable than terms we could have obtained from
unaffiliated third parties. Our Board of Directors has not made a
determination as to whether the other related-party transactions
described above were made on terms no less favorable than terms
we could have obtained from unaffiliated third parties. The Board
of Directors has adopted a policy that any future transactions
between ThermoView and its officers, directors or principal
stockholders will be approved by a majority of the disinterested
directors and will be on terms no less favorable than we could
obtain from an unaffiliated third party.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The compensation committee of the Board of Directors is
comprised entirely of independent outside directors, none of whom
is a current or former employee of ThermoView or its
subsidiaries.
The employment agreements for our Chief Executive Officer
and the four other highest compensated executive officers and
those officers no longer serving as of December 31, 1999, whose
annual salary and bonus exceeded $100,000 in 1999, stipulated the
compensation awarded to, earned by or paid to such executives in
1999. All such employment agreements are disclosed in this
report. The Board of Directors approved all of the employment
agreements, which were executed prior to the formation of the
compensation committee in December 1998.
As these employment agreements expire, we shall assist the
Board of Directors in monitoring the compensation arrangements
with our senior executives. We will consider the following
factors, among others, in determining appropriate compensation
arrangements with our senior executives:
* our desire to attract and retain the best qualified and
most talented executives available in our business to
lead ThermoView in the creation of shareholder value;
* our desire to motivate and reward annual and long-term
results achieved by the executives for our shareholders
based upon corporate and individual performance; and
* our desire to pay competitively as measured against
other companies in our industry.
At least annually, we will meet and review performance
evaluations of the senior executives.
During 1999, ThermoView did not pay any bonuses to its
senior executives.
COMPENSATION COMMITTEE:
Raymond C. Dauenhauer, Jr.
J. Sherman Henderson, III
Ronald L. Carmicle
PERFORMANCE GRAPH
The following graph sets forth the cumulative total
shareholder return (assuming reinvestment of dividends) to the
shareholders during the 20-month period ended December 31, 1999,
as well as an overall stock market index, the Russell 2000, and
ThermoView's peer group index utilized for a comparable period
which we have selected on an industry basis. The component
companies utilized in the Peer Group are Comfort Systems USA,
Inc., Integrated Electrical Services, Nortek, Inc., and Royal
Group Technologies, LTD. The market capitalization of each peer
group company is weighted in the performance graph set forth
below.
COMPARATIVE ANNUAL TOTAL RETURN
THERMOVIEW INDUSTRIES, INC., RUSSELL 2000 INDEX AND PEER GROUP
(PERFORMANCE RESULTS THROUGH 12/31/99)*
<TABLE>
<CAPTION>
NAME 04/15/98 12/31/98 12/31/99
- ---- -------- -------- --------
<S> <C> <C> <C>
ThermoView Industries, Inc. $100.00 $61.59 $ 19.47
Russell 2000 Index 100.00 88.01 103.71
Peer Group 100.00 79.97 59.18
</TABLE>
* Assumes $100 invested at the close of trading April 15,1998 in
ThermoView Industries, Inc. Common Stock, Russell 2000 Index
and Peer Group and reinvestment of all dividends.
STOCKHOLDER PROPOSALS
We must receive at our corporate office in Louisville,
Kentucky, on or before December 31, 2000, any stockholder
proposals intended for our 2001 annual meeting. If a stockholder
desires us to include a stockholder proposal in the proxy
statement and form of proxy for the 2001 annual meeting, that
proposal must comply with applicable requirements of federal
securities laws.
ADDITIONAL INFORMATION
Upon request made to Charlton C. Hundley, Esq., our
corporate counsel, our officers will be available to answer
questions about ThermoView prior to the annual meeting.
OTHER MATTERS
Our Board of Directors knows of no business which our
stockholders will consider at the annual meeting other than the
proposals described in this proxy statement. However, if any
other business should properly come before the annual meeting,
the proxies listed in the form of proxy intend to take action
relating to any other business as they determine in their best
judgment.
By Order of the Board of Directors
Charlton C. Hundley
Corporate Counsel and Secretary
Louisville, Kentucky
May 12, 2000
APPENDIX I
PROPOSED AMENDMENT TO
RESTATED CERTIFICATE OF INCORPORATION OF
THERMOVIEW INDUSTRIES, INC.
4. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is Thirty Million
(30,000,000), consisting of (i) Twenty Five Million (25,000,000)
shares, par value $.001 per share, of Common Stock ("Common
Stock") and (ii) Five Million (5,000,000) shares, par value $.001
per share, of Preferred Stock ("Preferred Stock").
PROXY
THERMOVIEW INDUSTRIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Nelson E. Clemmens and Charlton C.
Hundley, and each of them, as proxies, with full power of substitution, and
authorizes them, and each of them, to vote and act with respect to all
shares of Common Stock, $0.001 par value per share of ThermoView
Industries, Inc., a Delaware corporation (the "Company"), which the
undersigned is entitled to vote at the Annual Meeting of Stockholders to be
held on Tuesday, June 20, 2000, at 10:00 A.M. EDT, at the Louisville
Marriott East, 1903 Embassy Square Blvd., Louisville, Kentucky, and at any
and all adjournments thereof.
The Board of Directors recommends a vote FOR each of the following
proposals:
1. ELECTION OF DIRECTORS TO CLASS I
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY
below (except as marked to vote for all nominees
to the contrary below) listed below
NOMINEES: Ronald L. Carmicle, Robert E. Pearson, and Raymond C.
Dauenhauer, Jr.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE
INDIVIDUAL NOMINEES, WRITE SUCH NAME OR NAMES IN THE SPACE
PROVIDED BELOW. UNLESS AUTHORITY TO VOTE FOR ALL THE NOMINEES
LISTED ABOVE IS WITHHELD, THIS PROXY WILL BE DEEMED TO CONFER
AUTHORITY TO VOTE FOR EVERY NOMINEE WHOSE NAME IS NOT ENTERED
BELOW.)
-------------------------------------------------------------------
2. PROPOSAL TO AMEND THE RESTATED CERTIFICATE OF INCORPORATION
OF THE COMPANY TO REDUCE THE NUMBER OF AUTHORIZED SHARES OF THE
COMPANY'S COMMON STOCK, $.001 PAR VALUE, FROM 100 MILLION SHARES
TO 25 MILLION SHARES AND THE COMPANY'S PREFERRED STOCK, $.001 PAR
VALUE, FROM 50 MILLION SHARES TO 5 MILLION SHARES
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO APPROVE THE ISSUANCE BY THE COMPANY OF UP TO
3.75 MILLION SHARES OF ITS COMMON STOCK, $.001 PAR VALUE, IN A
PRIVATE PLACEMENT OR PRIVATE PLACEMENTS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. PROPOSAL TO RATIFY THE SELECTION OF ERNST & YOUNG LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such
other matters as may properly come before the meeting.
THE PROXIES SHALL VOTE SUCH SHARES AS SPECIFIED HEREIN. IF A CHOICE
IS NOT SPECIFIED, THEY SHALL VOTE FOR THE ELECTION OF ALL NOMINEES FOR
DIRECTORS AND IN FAVOR OF PROPOSALS 2, 3 AND 4.
Dated: , 2000
------------------------
------------------------------------
Signature
------------------------------------
Signature
Name(s) should be signed exactly as shown to
the left hereof. Title should be added if
signing as executor, administrator, trustee,
etc.
PLEASE DATE, SIGN AND RETURN THIS PROXY
PROMPTLY IN THE ACCOMPANYING ENVELOPE
